Premier Land Holdings Pty Ltd v Excellent Development Pty Ltd (No 2)

On 20 November 2017, I published my reasons for concluding that the plaintiff, Premier Land Holdings Pty Ltd, is the trustee of the Excellent Unit Trust [1] . I directed the parties to file any further evidence on which they wished to rely as to the nature of the relief that should be granted in light of the conclusions that I reached. In these reasons, I shall use terms as they were defined in those earlier reasons.

The parties are not entirely agreed on the orders that should be made in light of the conclusions that I reached. It is common ground that there should be a declaration that the plaintiff is the trustee of the Excellent Unit Trust, having been appointed on 14 August 2015. It is also accepted that there should be a vesting order, although there is some disagreement as to its terms.

Section 78(1) of the Trustee Act 1925 (NSW) relevantly provides that, in the case of a vesting order consequential on the appointment of a new trustee, the vesting order has the same effect as if the persons who were the trustees before the appointment had duly executed all proper conveyances of the property for such estate or interest as the Court directs. A vesting order may be appropriate in a case where the original trustee is unable or unwilling to co-operate to convey the rights of the original trustee to the new trustee. Premier asserts that there will be benefits with such an order in that it will likely entitle Premier to execute a legally effective rescission of the contract between Excellent and High Quality in relation to the Meadowbank Property (the Contract) and otherwise assist Premier in pursuing an application for refund of stamp duty on the Contract following its purported rescission.

In early March 2016, an application was made on behalf of Excellent to the Office of State Revenue (now known as Revenue NSW) for refund of the stamp duty paid on the Contract. On 8 April 2016, Revenue NSW issued a requisition requiring the provision of the original Rescission Deed showing the signature of High Quality, the provision of a copy of the new contract between Premier and High Quality and the re-writing and re-signature of documents directing payment of any refund. These proceedings were commenced on 21 April 2016 and those requisitions have not been answered. Rather, Premier sought interlocutory relief to restrain any further action by Excellent in relation to the application for refund of stamp duty.

On 17 May 2016, orders were made by consent that, if the Chief Commissioner of Revenue NSW determined that a refund of stamp duty would be made, the repayment would be made to the trust account of Goodwin & Co, who were acting for Excellent in relation to the application for refund. Excellent was required to give any authority required by the Chief Commissioner for the refund to be paid into the trust account of Goodwin & Co, who were to deposit the refund to an interest bearing controlled money account in the joint names of Excellent and Premier. Goodwin & Co were not to release any part of that fund until further order of the Court. In addition, if the Chief Commissioner determined that he would issue a refund but would not pay it into the trust account of Goodwin & Co, the payment of a refund was to be restrained until the determination of the proceedings.

Since those orders were made, no action has been taken to obtain a refund of the stamp duty or to obtain the documents held by Revenue NSW. Goodwin & Co understand that Revenue NSW is of the view that the money should be held by them pending the outcome of the proceedings.

On 9 November 2017, an officer of Revenue NSW, in response to inquiries from Goodwin & Co, indicated the following:

Excellent and Ms Liu are concerned that, if a refund were to be received by Premier, the funds could be diverted to Hong Kong or mainland China, thereby making it difficult for Ms Liu to obtain any share of the monies to which she may be beneficially entitled through her interest in Project 117. They therefore seek an order restraining Premier from dealing with the property of the Trust without first providing 14 days’ notice to the seven investors of such intention, including the details of any proposed dealing.

In the circumstances, the preferable course is for the solicitors retained by Excellent to prosecute the claim for refund of the stamp duty on the basis that, if and when the refund is made, in the name of Excellent, the funds be paid to Premier forthwith. It is also appropriate for Premier to undertake not to deal with the funds without first giving notice to Ms Liu.

As I indicated in the earlier reasons, there are two aspects to the cross-claim. The first aspect was the obverse of the relief sought by Premier concerning the effectiveness of the change of trustees. The second aspect concerned alleged misrepresentation by Premier and its inducement of High Quality to breach a contract. Excellent and Ms Liu have asked that they be given leave to discontinue the second aspect of the cross-claim with no penalty as to costs. I do not see any utility in that course. The second aspect was predicated upon an assumption that the removal of Excellent and appointment of Premier was ineffective. I have concluded that the change of trustees was effective. Accordingly, there is no basis for the second aspect. I do not see any reason why the cross-claim should not be dismissed.

The final matter of contention concerns costs. Premier seeks an order that the costs be paid jointly by Excellent and Ms Liu. Ms Liu contends, however, that she was not a necessary party to the proceedings and acted at all times in her capacity as a director of Excellent.

Premier seeks a costs order against Ms Liu on the basis that, having been joined as defendant, she actively opposed the relief claimed. When the question of Ms Liu’s joinder was raised on 16 June 2016, Premier’s solicitors responded on 21 June 2016, asserting that Ms Liu had disputed the validity of the change of trustees. The solicitors asserted that it was appropriate that she be joined as a defendant because she possessed documents of the Trust and because it would ensure that she was bound by the declarations as to the validity of the change of trustee. Following receipt of that letter, Ms Liu had the opportunity to file a submitting appearance but, on 24 June 2016, filed a defence disputing the claims made by Premier.

On 14 September 2016, Ms Liu’s solicitors again complained about her joinder. Premier’s solicitors responded that she had been joined and remained a proper party. Ms Liu could have elected to submit at that stage but did not. As a consequence, she actively opposed the relief sought by Premier, including the declaration as to the effective appointment of Premier as trustee. In addition, Premier points to allegations made in the defence filed on behalf of Excellent and Ms Liu raising questions concerning Project 117. Those allegations may be summarised as follows:

The contentions implicit in those allegations were advanced on behalf of both Excellent and Ms Liu. At no time did Ms Liu formally submit to such order as the Court might make, save as to costs. Further, it appears that Ms Liu is the only director and shareholder of Excellent and is effectively the person behind Excellent.

On the other hand, it is not clear that Ms Liu was a necessary party to the proceedings. Nevertheless, in the circumstances, I consider that it is appropriate that, having resisted all of the orders and caused Excellent to resist the making of the orders, in circumstances where there was very little prospect of success in resisting the primary declaration, it is appropriate that the orders for costs be made against both defendants jointly.

However, Ms Liu was not a party to the cross-claim. It may well be that she was the directing mind of Excellent in filing the cross-claim. If, as seems likely, Excellent would not be in a position to meet any order for costs, the consequence may be that Ms Liu would have personal responsibility for permitting Excellent to incur liabilities in circumstances where it had no reasonable prospect of meeting them. That, of course, is not an issue before me. In the circumstances, I do not consider that it is appropriate to order Ms Liu to pay the costs of the cross-claim.

Excellent and Ms Liu also complain about the failure on the part of Premier to make admissions pursuant to a notice to admit facts and the authenticity of documents given on 18 October 2017. Excellent and Ms Liu contend that most of the matters that were not admitted were in fact proved, most of them relating to the provenance of the agreement establishing Project 117. Ultimately, the documents were proved. Some costs would have been incurred unnecessarily. It is appropriate to make some small allowance in that regard. Rather than requiring assessment of those costs separately, the appropriate course would be to discount the order for costs against the defendants.

In all of the circumstances, I consider the appropriate orders are as follows: