Alexander v Perpetual Trustees Wa Ltd

[2004] HCA 7
(2004) 78 ALJR 411
(2004) 204 ALR 417
(2004) 216 CLR 109

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(Judgment by: Gleeson CJ, Gummow J, Hayne J)

Alexander
vPerpetual Trustees Wa Ltd

Court:

Judges:
Gleeson CJMcHugh J

Gummow JKirby J

Hayne JCallinan J

Legislative References:
Civil Liability (Contribution) Act 1978 (UK) - The Act
Trustee Companies Act 1987 (WA) - The Act
Trustee Companies Act 1964 (NSW) - The Act
Fair Trading Act 1985 (Vic) - The Act
Wrongs (Contribution) Act 1985 (Vic) - The Act
Chancery Procedure Act 1852 (UK) - The Act
Fair Trading Act 1985 (Vic) - s 11
Wrongs Act 1958 (Vic) - s 23B; s 23B(1); Pt IV
Law Reform (Married Women and Tortfeasors) Act 1935 (UK) - The Act
Law Reform (Miscellaneous Provisions) Act 1946 (NSW) - s 5
Trade Practices Act 1974 (Cth) - s 87(1A)

Hearing date:
Judgment date: 12 February 2004

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Judgment by:
Gleeson CJ
Gummow J
Hayne J

[1] This appeal is brought from the New South Wales Court of Appeal (Stein JA, Davies AJA, Ipp AJA) ^[1] which upheld the decision of the Supreme Court (Rolfe J) ^[2] . The proceedings at trial and in the Court of Appeal involved a range of issues but in this Court the appeal turns upon the construction of Pt IV of the Wrongs Act 1958 (Vic) ("the Act") and its application to a claim for contribution under the statute made by trustees.

[2] Part IV of the Act (ss 23A-24AD) is headed "CONTRIBUTION" and ss 23B and 24 operate to create both a new right and a remedy for the recovery of what s 23B identifies as contribution from any person "liable in respect of the same damage" as the claimant for contribution ^[3] . The Act has its provenance in British legislation, the Civil Liability (Contribution) Act 1978 (UK) ("the UK Act"), and reference will be made to decisions construing that statute.

[3] It is essential to recognise at the outset that both the Act and the UK Act provide for contribution where the claimant and the person from whom contribution is sought are each liable to a common plaintiff. Neither Act provides for contribution between those who may have had some role in an interconnected set of transactions but who are not both liable to a common plaintiff. Nothing in the text of either the Act or the UK Act, or any law reform or other material which preceded either Act, suggests that the aim of the legislation was to provide for contribution between those who were parties to the same transaction or a series of related transactions. It is, therefore, wrong to proceed, whether from general notions of "distributive justice" or otherwise, as if the legislative purpose or object were wider than providing for contribution between those liable to a common plaintiff. These reasons demonstrate that the parties to the appeal in this Court were not liable to a common plaintiff.

[4] The Act has no precise analogue in other Australian jurisdictions. The litigation giving rise to this appeal was conducted in the courts of New South Wales, not in those of Victoria. It is not now disputed that Pt IV of the Act was applicable in the New South Wales litigation if its terms otherwise were satisfied. Section 23B(6) states that references in the section to liability in respect of any damage are to liability which has been or could be established in an action brought in Victoria, and that it is immaterial that any issue in that litigation would be determined, in accordance with the rules of private international law, by reference to the law of a place outside Victoria. The various breaches of trust which were committed appear to have occurred in Victoria ^[4] and, in any event, there are no relevant differences in the principles of trust law in Victoria and New South Wales.

The facts

[5] The relevant facts are not disputed and may shortly be stated. However, for a proper appreciation of the issues of law which arise it is necessary to bear in mind that there were transactions involving what may be described as two different levels of trusts. There were trusts of which the respondents were trustees, and trusts of which the appellants were trustees.

[6] The first respondent, Perpetual Trustees WA Ltd ("PTWA"), was a trustee company enjoying special status conferred by the Trustee Companies Act 1987 (WA) ^[5] and the second respondent, Perpetual Trustee Co Ltd ("PT"), had that status under the Trustee Companies Act 1964 (NSW) ^[6] . The companies were members of what was described in the evidence as the Perpetual Group.

[7] PTWA and PT were trustees of certain managed superannuation funds. These trusts may be identified as the first level trusts. Some of the beneficiaries thereunder may themselves have been acting as trustees, for example, of family trusts, but with that level of trusts (if any) we are not concerned. Between 1993 and 1995 a number of beneficiaries under the managed funds directed that moneys be invested by the trustees in EC Consolidated Capital Ltd ("ECCCL"). The total amounts so invested were $2,377,400 (by PTWA) and $7,179,700 (by PT). Each investment by PTWA and PT was in the sum of $500,000 or a greater amount; the refusal by ECCCL of investments in a sum less than $500,000 removed the requirement of compliance by ECCCL with the prospectus provisions of the then Corporations Law ^[7] . However, the sums provided by the individual beneficiaries, before they were pooled by PTWA and PT for investment with ECCCL, in each case were less than $500,000.

[8] The terms on which the moneys were to be invested by PTWA and PT called for the provision of security by the issue of a bearer certificate of deposit. In breach of their duties as trustees, PTWA and PT failed to ensure that the manner in which the moneys were invested conformed with these terms and, in particular, PTWA and PT did not ensure that the investments were secured by bearer certificates of deposit. On 15 July 1997, ECCCL was placed in liquidation. As a result of the absence of the certificates, the investments were lost.

The plaintiffs sue PTWA and PT

[9] Forty of the beneficiaries under the managed funds ("the plaintiffs") successfully sued PTWA and PT for breach of trust. The plaintiffs' case was that PTWA and PT had failed in their duties to exercise the same degree of skill and diligence as an ordinary prudent person would exercise in dealing with the property of another, and to ensure that their duties and powers were exercised in the best interests of the members of the managed funds. Rolfe J ordered the relevant respondent to pay to each plaintiff the amount of the plaintiff's investment. The amounts recovered by the plaintiffs in their action against the respondents were, against PTWA $1,744,683, and against PT $2,112,135.

[10] No challenge is made in this Court to these findings and orders respecting the liability of the respondents to the plaintiffs.

[11] The respondents had paid the investment moneys on each occasion to the appellants ("Minters"), a well-known national firm of solicitors. Minters acted as solicitor for ECCCL. At all relevant times, a partner in Minters' Melbourne office had the carriage of the matter. Minters was obliged to hold the moneys received from the respondents upon trust for, and to the account of, the relevant respondent, with the power (and duty) to disburse the moneys in accordance with the subscription agreements executed by the respondents. The agreements were governed by the law of Victoria. Minters later released the funds to ECCCL in breach of the terms on which it held them. The trust relationship, with respect to these funds, was between Minters as trustee and the respondents as beneficiaries and constituted the second level trusts. It should, however, be noted that the funds paid by the respondents were derived from the first level trusts, of which the respondents were trustees.

[12] The particular respects in which, in the action against them by the plaintiffs, the respondents were found to have acted in breach of their duties to the plaintiffs under the first level trusts were:

(a)

their appointment of Minters as their agent, notwithstanding the potential conflict of interest;

(b)

the failure of the respondents to make any inquiry from Minters as to whether settlement had been completed regularly and, in particular, whether a bearer certificate of deposit had been obtained as required by the subscription agreements;

(c)

the failure to seek to inspect the required bearer certificates of deposit.

PTWA and PT cross-claim against Minters

[13] The respondents each brought successful cross-claims against Minters, which acted in the investment transactions both as agent for the respondents (in which capacity it received the investment funds from the respondents, held them on trust for the respondents, and wrongly disbursed them to ECCCL) and as solicitor for ECCCL. The cross-claim by PTWA was the second cross-claim in the proceedings and that by PT was the third cross-claim.

[14] Several points should be noted here. First, no claim in the litigation was made by the plaintiffs against Minters; nor were the plaintiffs joined in either the second or the third cross-claim. Secondly, PTWA and PT sued Minters for breaches of the second level trusts, of which they were the beneficiaries; it was not relevantly to the point that, in turn, PTWA and PT were trustees of the managed funds whence the moneys invested with ECCCL originated. It will be necessary to return to this matter. Thirdly, as has been indicated above, the amounts which Minters received from the respondents included, but were not confined to, the amounts invested for the plaintiffs; the cross-claims were not limited to the amounts invested from the funds of the plaintiffs, but included all amounts invested in ECCCL by the respondents as trustees.

[15] Other conduct of Minters in relation to the ECCCL investments is described in the reasons for judgment of this Court in Youyang Pty Ltd v Minter Ellison Morris Fletcher ^[8] . There, as in the present case, Minters preferred the interests of its client ECCCL, disregarded its obligations as trustee and paid moneys over without obtaining the necessary bearer certificates of deposit. Rolfe J said in his judgment in the present case ^[9] :

The continued failure of [Minters] to advise the investor that conforming deposit certificates were not being obtained was, in my opinion, inexcusable.

[16] On the cross-claims by PTWA and PT against Minters, Rolfe J made the following orders (which included a component of interest) in favour of the respondents against Minters:

8. Judgment be entered for PTWA against [Minters] in the sum of $3,620,722.00 on terms that PTWA applies that money to replenish the relevant trust funds or to pay the Plaintiffs.

9. Judgment be entered for PT against [Minters] in the sum of $8,818,802.00 on terms that PT applies that money to replenish the relevant trust funds or to pay the Plaintiffs.

The form of these orders reflects the circumstance already remarked that the cross-claims extended beyond the funds claimed by the plaintiffs to include all amounts invested by PTWA and PT in ECCCL.

[17] The cross-claims against Minters were based on three causes of action: breach of trust, negligence, and misleading and deceptive conduct in breach of the Fair Trading Act 1985 (Vic) ("the Fair Trading Act"). Section 11 thereof forbade the engagement, in trade or commerce, in conduct that was misleading or deceptive or was likely to mislead or deceive and s 37 provided, subject to a time limitation, a remedy for the recovery of the loss or damage suffered by reason of such conduct. Rolfe J found that there were breaches of trust, negligence, and misleading and deceptive conduct. He made the orders set out above on the basis of equitable compensation for breach of trust. In particular, he treated the failure to obtain the required security as causative of the whole of the loss of the amounts invested in ECCCL by the respondents.

The present appeal - Minters' cross-claim against PTWA and PT

[18] This appeal does not involve a challenge to any of the above aspects of the decision of Rolfe J, which was confirmed by the Court of Appeal. The appeal arises from another branch of the litigation, a cross-claim by Minters against PTWA and PT

[19] Minters, by what was the seventh cross-claim in the action, claimed against PTWA and PT contribution under s 23B of the Act. That claim was rejected by Rolfe J and the Court of Appeal. That rejection is the subject of the present appeal. If its appeal succeeds, Minters seeks the remitter of the proceedings to the Supreme Court of New South Wales for the determination of the amount of contribution it may recover under the Act.

[20] As noted above, the plaintiffs did not sue Minters or otherwise seek to establish any liability to them on the part of Minters. However, Minters (for the purposes of its claim to contribution under the Act) asserts the existence of that liability to the plaintiffs (and other investor-beneficiaries) and says that it is entitled by the statute to share that liability with the respondents. The respondents emphasise that it was necessary for Minters to plead in its cross-claim and to prove a direct liability to these investors. In the Court of Appeal and in this Court, it is said that there has been a failure in this respect which is fatal to Minters' case. That submission should be accepted. It is now convenient to turn to the provisions of Pt IV of the Act.

Part IV of the Act

[21] Part IV, in substantially its present form, was inserted by the Wrongs (Contribution) Act 1985 (Vic) ("the Contribution Act") and came into force on 12 February 1986. Prior to the enactment of that legislation, contribution under the Act was restricted to claims between tortfeasors. Section 24(1)(c) had provided that:

any tort-feasor liable in respect of [damage suffered by any person as a result of a tort (whether a crime or not)] may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage (whether as a joint tort-feasor or otherwise).

[22] The amendments made in 1985 to the Act primarily were designed to remove this restriction and permit, for the first time in Victoria, contribution between persons liable in respect of the same damage where the legal basis of liability arose out of a breach of contract, a breach of trust or otherwise ^[10] . No doubt the amendments were also designed to resolve the conceptual and practical difficulties for which the earlier legislation had become notorious ^[11] .

[23] Such reforms were not without precedent. In 1978, the United Kingdom Parliament had enacted the UK Act. This statute, the relevant provisions of which do not extend to Scotland (s 10(3)), removed the restriction then operative on the availability of the statutory right to contribution in areas other than tort ^[12] . The UK Act was enacted as a result of a recommendation by the English Law Commission to the effect that ^[13] :

statutory rights of contribution should not be confined, as at present, to cases where damage is suffered as a result of a tort, but should cover cases where it is suffered as a result of tort, breach of contract, breach of trust or other breach of duty ... [T]he statutory right to recover contribution should be available to any person liable in respect of the damage, not just persons liable in tort.

[24] The recommendations of the Law Commission were adopted with approval by the Chief Justice of Victoria's Law Reform Committee in 1979 and the Contribution Act in large part mirrored the reforms contained within the UK Act ^[14] .

[25] The issue currently before the Court is not to be resolved primarily through reference to common law and equitable principles governing contribution, nor through a misplaced reliance on the circumstance that the areas of liability in respect of which the right to contribution potentially may apply have significantly been widened by the Act. Cautionary observations to like effect were made with respect to the UK Act by the House of Lords in Royal Brompton Hospital NHS Trust v Hammond ^[15] .

[26] The evident remedial purpose of the legislation has been relied upon, in both the United Kingdom and this country ^[16] , to support what is said to be a wide or broad interpretation of the statutory right and remedy which it created. Such expressions mask the requirement that the legislation be given its proper construction having regard to its purpose and scope ^[17] . The new statutory right and remedy do not operate at large. Rather, they are available only to a party who meets the criteria specified in Pt IV. In Royal Brompton Hospital, Lord Bingham of Cornhill said of the UK Act ^[18] :

When any claim for contribution falls to be decided the following questions in my opinion arise. (1) What damage has A suffered? (2) Is B liable to A in respect of that damage? (3) Is C also liable to A in respect of that damage or some of it?

Translated to the present appeal, A represents the plaintiffs, B the respondents, and C Minters ^[19] .

[27] Where a person has suffered damage in connection with some transactions or events involving the wrongful conduct of others, the statutory creation of rights of contribution between the wrongdoers seeks to address the injustice that may result in some cases if the victim, by his or her selection of defendants, could throw the burden of liability on to one or some of the wrongdoers, to the exclusion of the others. A policy of preventing or limiting such injustice will require a legislature to make choices between different methods of giving effect to that policy. Those choices will be reflected in the terms of the legislation. The Act directs attention to a common liability by using in s 23B the expression "in respect of the same damage". This is a narrower concept than that of liabilities arising out of, or by reason of, the same transactions or related transactions. In resolving questions of construction of the legislation, it is not to be assumed that the legislative purpose is always to provide the widest possible sharing of liabilities, actual or potential, real or hypothetical.

The construction of Pt IV

[28] Section 23B is headed "Entitlement to contribution". Subsection (1) thereof provides that:

Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise).

(emphasis added)

Section 24(2) provides that the amount of contribution recoverable under s 23B from a person is that found to be "just and equitable having regard to the extent of that person's responsibility for the damage".

[29] The first phrase emphasised in s 23B(1) as set out above identifies the position to be established respecting Minters as the "person liable". The phrase is given content by s 23A. Subsections (1) and (2) thereof provide:

(1) For the purposes of this Part a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependants of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise .

(2) References in this Part to an action brought by or on behalf of the person who suffered any damage includes references to an action brought for the benefit of the estate or dependants of that person.

(emphasis added)

[30] The terms of s 23A(1) which have been emphasised indicate that, consistently with the recommendations of the English Law Commission which have been set out earlier in these reasons, the legal basis of the alleged liability of Minters in the present case is not limited to tort, but includes contract and trust or other breach of duty. It appears not to be disputed that the phrase "or otherwise" extends to liability based in the Fair Trading Act.

[31] It should be added that a person is entitled to recover contribution pursuant to s 23B(1) notwithstanding that that person (ie, the claimant) has ceased to be liable in respect of the damage in question. This is so provided that the claimant was liable immediately before the claimant made or was ordered or agreed to make the payment in respect of which contribution is sought (s 23B(2)). Further, a person is liable to make contribution notwithstanding that that person has ceased to be liable in respect of the damage in question. This is so unless that person ceased to be liable by virtue of the expiry of a limitation period which extinguished the right on which the claim against that person in respect of the damage was made (s 23B(3)).

[32] Two relevant propositions are, therefore, central to the proper application of s 23B as it is to be understood in the light of s 23A. First, the party claiming contribution ("the claimant") must show that it is liable in respect of damage suffered by another person ("the injured plaintiff"). Secondly, the claimant may recover contribution from any other person ("the potential contributor") who is also liable to the injured plaintiff in respect of the same damage. The relevant inquiry is not confined to whether the damage for which each is liable can be said to be the same; both claimant and potential contributor must be liable to the injured plaintiff.

[33] It will be necessary to deal in detail with the arguments that were advanced in the present matter. It is convenient to say at once, however, that Minters' claim for contribution should be held to have failed. Minters was not liable to the plaintiffs (the investors) for the damage in respect of which it sought contribution. PTWA and PT were liable to the plaintiffs for breach of the first level trusts. Minters was held liable to PTWA and PT for breach of different trusts (the second level trusts) and for that breach it was not liable to the plaintiffs. PTWA and PT having sued Minters to judgment, the plaintiffs could not have sued Minters for that breach. Minters, therefore, did not show that it was liable to the plaintiffs in respect of the damage which the plaintiffs had suffered and for which PTWA and PT were also liable to the plaintiffs.

The issues

[34] Two vital questions arise. The first is whether Minters may properly be characterised for s 23B(1) as a "person liable in respect of any damage suffered by another person". The answer necessarily depends upon an identification of the person, or persons, by whom the relevant damage was suffered, and requires consideration of s 23A(1).

[35] Minters' submissions on this point are somewhat equivocal. One reading of its written submissions suggests that the persons who suffered the relevant damage are the plaintiffs; another suggests that the relevant class is not so confined but includes all the investor-beneficiaries. The distinction would be of great significance in the quantification of the amount of contribution to be awarded under s 24, were that stage in the litigation to be reached. However, as will appear, whatever reading of the submissions be adopted, Minters' case fails at the threshold before questions of quantification arise.

[36] Given the terms of s 23A(1) of the Act, Minters' case depends upon acceptance of the proposition that the plaintiffs (or the investor-beneficiaries) are "entitled to recover compensation" from Minters in respect of "damage" suffered by them. Minters submits that such an entitlement arises in one of two ways. The primary submission is that the status of the plaintiffs as beneficiaries of the respective first level trusts of which the respondents were trustees rendered them under the general law "entitled" to recover compensation directly from Minters in respect of loss or damage suffered to the trust property. Secondly, the plaintiffs are said to enjoy a right pursuant to s 37 of the Fair Trading Act to recover compensation for loss or damage suffered by them as a result of Minters' misleading and deceptive conduct. Neither submission should be accepted.

[37] The second question which is of critical importance is presented by the requirement in s 23B(1) that the respondents, the parties against whom Minters asserts an entitlement to contribution, be liable "in respect of the same damage". In Royal Brompton Hospital it was held that this requirement in the UK Act was not satisfied. The hospital claimed damages against the architect it had engaged under a building contract in respect of, among other lapses, the negligent issue of extension certificates to the builder. The claim by the architect against the builder for contribution was struck out. This was because the claim by the hospital against the builder was for damages for delay in completion, whilst its claim against the architect was for the impairment of its ability to proceed against the builder. Thus, the Law Lords held that the statutory criterion that the claims be for "the same damage" was not met. Lord Steyn said that the "natural and ordinary meaning" of that phrase was controlling ^[20] . Lord Bingham of Cornhill described that phrase as emphasising the need, which was "a constant theme of the law of contribution", for the "one loss to be apportioned among those liable" ^[21] .

[38] But what is the "damage" which must have this identity? The legislation offers no definitions. In Royal Brompton Hospital ^[22] , the House of Lords held that "damage" does not mean the "damages" awarded as compensation by a court, usually as a single sum. That is consistent with decisions in this Court construing similar legislation ^[23] , but does not take the matter very far.

[39] The definition in s 23A(1), which has been set out, suggests that there may be the necessary sameness in the "damage" for which the two parties to the contribution claim are liable to a third, even without an identical legal basis for that liability. So it may be in a given case that the liability of one party is founded in contract and the other is in tort. But that does not resolve the present problem, which concerns liabilities founded in breaches of trusts at the two levels. The legal basis of liability may in each case be located in trust law, but what is meant by the requirement of "the same damage" where a plurality of trusts is involved?

[40] Minters' submission is to the effect that "any damage" identifies interference with any legal or equitable right or interest. The "interference" would include the infliction of injury to proprietary interests and the infliction of personal injury as an interference with the interest in bodily integrity ^[24] . Understood in this fairly broad sense, the submission by Minters may be accepted for present purposes, without finally ruling on the question ^[25] . That is because, even on the basis that the relevant interests damaged were those conferred by law upon the beneficiaries of trusts, the appeal must fail.

Conclusions respecting breaches of trust

[41] Here, the claim under s 23B proceeds upon the basis that Minters is liable in respect of certain damage, and that, although it has never been sued, it is entitled to recover contribution from the respondents, who are said to be persons liable in respect of the same damage. The relevant damage is said to be damage suffered by the plaintiffs and other investors who were beneficiaries of the first level trusts, of which PTWA and PT were trustees. The liability in respect of that damage exists if the plaintiffs and the other investor-beneficiaries were entitled to recover compensation from Minters in respect of that damage.

[42] The proposition that the plaintiffs and the other investor-beneficiaries were entitled to recover compensation from Minters in respect of damage, and the proposition that the respondents were liable to the plaintiffs and others in respect of the same damage, are contested, and were rejected by Rolfe J and the Court of Appeal. Additionally, Davies AJA in the Court of Appeal, with whom Ipp AJA agreed, said that, in the circumstances of the case, it was not just and equitable, within the meaning of s 24(2), that an order for contribution be made and that the respondents were entitled to be fully indemnified by Minters in respect of any damages which might otherwise fall within the provisions of s 23B.

[43] In dealing with the claim for contribution, Rolfe J said ^[26] :

If the case turned on the negligence of [Minters] then, in my opinion, it would be appropriate to consider whether PTWA and PT had been guilty of contributory negligence. If that was a matter I had to consider I would have come to the conclusion, essentially for the reasons I have given in articulating why they are liable to the plaintiffs, that they had been guilty of contributory negligence and, as between them and [Minters] I would have apportioned the damages as to 40% and 60% respectively.

If I had come to the conclusion that the matter turned on the Fair Trading Act, I would have found that [Minters] engaged in misleading conduct and it would have been necessary for me to mould relief conformably with the decision of the Court of Appeal in Akron Securities Ltd v Iliffe ^[27] . My inclination, prima facie, would have been to grant relief reflecting the culpability between the parties in the terms to which I have referred in considering contributory negligence. It is not necessary to reach a final conclusion on this point.

In my view, the highest duty owed by [Minters] to PTWA and PT was as trustee and, accordingly, I am of the view that PTWA and PT are entitled to judgment against [Minters] for the full amount required to replenish the trusts, together with compound interest on yearly rests on the trustee basis and for costs.

[44] It may be noted that the first two causes of action are fault-based and the third, restitutionary or restorative, in the sense used by Street J in Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd ^[28] , and recently exemplified in Youyang ^[29] . Hence the use by Rolfe J of the term "highest duty". Rolfe J said that, where a trustee is ordered to pay equitable compensation for breach of trust, the amount is not reduced by contributory negligence on the part of the beneficiary. That was correct ^[30] . Further, Rolfe J said the amount recoverable by the respondents by way of equitable compensation from Minters was not in respect of the same damage as that suffered by the plaintiffs; the "damage springs from different breaches and there is no co-ordinate liability" ^[31] .

[45] The same reasoning prevailed in the Court of Appeal but cannot be fully accepted. The question raised by s 23B is whether Minters and the respondents were liable to the plaintiffs (and, it would seem, to the other investor-beneficiaries) in respect of the same damage sustained by the plaintiffs. But that is not necessarily the same question as whether the liability of Minters to the respondents under the cross-claims by the respondents was in respect of the same damage as the liability of both Minters and the respondents to the plaintiffs and the other investor-beneficiaries.

[46] The respondents' cross-claims against Minters, in so far as they were based on a cause of action in negligence, were always exposed to the possibility of a reduction on account of contributory negligence ^[32] . It does not follow that any other cause of action available to the respondents was exposed to the same reduction ^[33] . As to the matter of the claim under the Fair Trading Act, it is convenient to leave that to one side for the moment.

[47] The rights or interests the infringement of which constituted the damage for which equitable compensation by Minters to the respondents was ordered by way of remedy on the respondents' cross-claims were different from, although related to, the rights or interests of the plaintiffs and others which were infringed by the acts and omissions of the respondents. Minters was liable to make restitution to the respondents of the moneys it received on the second level trusts for the respondents and paid away in breach of trust.

[48] Even so, it is said on behalf of Minters that the plaintiffs (and the other investor-beneficiaries) were privy to the respondents' cross-claims against Minters, in the sense that, if the cross-claims had failed, they would have been bound by that outcome and would have lost whatever prospect they might have had of proceeding directly against Minters for breach of trust ^[34] . That directs attention to the question raised by s 23A(1). Were the plaintiffs entitled to recover compensation from Minters?

[49] In answering that question it is necessary first to further consider the nature and form of the two cross-claims of the respondents against Minters for breach of trust.

[50] The cross-claims asserted that PTWA and PT "invested trust funds at the direction of trust members" including the plaintiffs, and that they now sought to recover those trust moneys. It also was alleged, as Rolfe J held to be the case, that the moneys paid to Minters in the course of making that investment were held on trust for PTWA and PT The cross-claims did not make it plain that the beneficiaries of these second level trusts were PTWA and PT but that appears to be the assumption. This being so, the cross-claims were brought by the beneficiaries of the second level trusts against the trustee thereof. It was not to the point that, as was the case with the orders made by Rolfe J, the moneys so recovered would be funds for which PTWA and PT were bound to account as trustees of the first level trusts. If a beneficiary, who happens to be a trustee of another trust, sues its trustee for breach of trust, it is not readily apparent that the beneficiaries of the other trust are necessarily proper parties to that suit.

[51] However, the appeal was argued on the assumptions (more favourable to Minters' case) that what was being enforced by the cross-claims were the first level trusts, and that PTWA and PT were in a similar position to that of trustees to whom a third party owes an equitable debt created in the course of the exercise of the investment powers of PTWA and PT under the first level trusts. Those assumptions, which give the beneficiaries of the first level trusts a more direct interest, may be accepted for present purposes.

[52] On one of the cross-claims the claimant was PTWA and on the other PT; the plaintiffs and the other investor-beneficiaries were not joined. It was not necessary that they be joined. Order 8 r 15(1) of the Supreme Court Rules 1970 (NSW) provided that when any proceedings were brought by a trustee it was not necessary to join as a party any of the persons having a beneficial interest under the trust. That provision had its origins in the Chancery Procedure Act 1852 (UK) ^[35] and is found in other jurisdictions, for example in r 16.02 of the Supreme Court (General Civil Procedure) Rules 1996 (Vic) ^[36] .

[53] The present issue is rather different and may be expressed by asking whether those for whom PTWA and PT were trustees had been entitled themselves to institute the cross-claims brought against Minters. The orders made by Rolfe J on the cross-claims by PTWA and PT for equitable compensation plainly were an exercise of the equitable jurisdiction of the Supreme Court to remedy breaches of trust.

[54] Reference has been made earlier in these reasons to the provisions made in s 23B(2) and (3) with respect to the cessation of liability in respect of the damage in question. However, as the respondents submit, in the context of a claim for contribution under the statute, the entitlement which it postulates must be actual, not purely hypothetical and conditional. The statute should be applied by reference to the facts that exist, and the events that have occurred, in the particular case. If it were otherwise, Minters would have a claim for contribution with respect to a liability that may not exist.

[55] In Ramage v Waclaw ^[37] , Powell J reviewed many of the authorities, including the judgment of James LJ in Sharpe v San Paulo Railway Co ^[38] , which support the proposition that, where relief is sought in the equitable jurisdiction of the Supreme Court against a third party, a beneficiary may sue in his own name, joining as defendants the trustee and any other beneficiaries, but only where there are "special circumstances". One reason for this restriction, given by James LJ in Sharpe ^[39] , is the avoidance of the vexation of the third party by multiple suits. Powell J held that the "special circumstances" were not confined to collusion between the trustee and the third party, or the insolvency of the trustee ^[40] . But the general principle is that stated by Scott ^[41] :

The interests of the beneficiaries of a trust are protected against a third person acting adversely to the trustee through proceedings brought against him by the trustee and not by the beneficiaries. As long as the trustee is ready and willing to take the proper proceedings against the third person, the beneficiaries cannot maintain a suit against him.

[56] Minters referred to statements of principle by the Privy Council in Hayim v Citibank NA ^[42] . Their Lordships referred to some of the authorities discussed by Powell J in Ramage, including Sharpe, and concluded that "special circumstances" included a failure by the trustees to perform their duty to the beneficiaries to protect the trust estate or the interests of the beneficiary therein ^[43] . Nothing there said assists the arguments by Minters that the plaintiffs had the necessary entitlement for Pt IV of the Act.

[57] In the present litigation, no question arises respecting the solvency of PTWA and PT, or of collusion between them and Minters. To the contrary, PTWA and PT were ready and willing to take and did take, by instituting and pursuing the second and third cross-claims to judgment, the proper steps against Minters to restore the first level trusts. The plaintiffs and the other investor-beneficiaries thus had no entitlement themselves to recover compensation from Minters.

[58] There is a further point, which involves discarding the assumption made above concerning the nature of the cross-claims made against Minters. In the circumstances of this litigation, the plaintiffs and the other investor-beneficiaries, by reason of the breach by the respondents of the first level trusts, were entitled to equitable compensation by the respondents, an entitlement which the plaintiffs enforced to judgment. But there was no entitlement in the plaintiffs or other beneficiaries of the first level trusts to institute or prosecute the second and third cross-claims in fact pursued by the respondents against Minters. These cross-claims were the enforcement of the entitlement of the respondents arising by reason of the breach by Minters of the second level trusts of which the respondents were the beneficiaries. That entitlement of the respondents was not gainsaid or diminished or supplemented by the circumstance that the respondents were trustees of the first level trusts in favour of the plaintiffs and the other investor-beneficiaries. Accordingly, for these further reasons, there was no liability in respect of which Minters could sue against the respondents the order for contribution brought on the seventh cross-claim.

[59] It was pointed out in the Court of Appeal that, even if the statutory conditions of an entitlement to contribution were otherwise satisfied, it would become necessary, given the terms of s 24(2) of the Act, to consider the amount of the contribution that would be just and equitable. Davies AJA, with whom Ipp AJA agreed, held that the amount would be nil. As trustee for the respondents, Minters was obliged to make full restitution in respect of the trust property which, in breach of trust, it paid away. It was obliged, and ordered, to replenish the trust funds. If that were the liability in respect of which it was seeking contribution from the respondents, then it is difficult to see that justice and equity would require any such contribution.

[60] But, according to Minters, that is not the relevant liability. The relevant liability, it is said, is the liability of Minters (and the respondents) to the plaintiffs and others. There may be some force in the argument that, if there were otherwise a liability in respect of the same damage, which could form the basis of a claim by Minters for contribution by the respondents, then the justice and equity spoken of in s 24(2) would require a fault-based approach to contribution. This would lead to the same practical result as that reached by Rolfe J in relation to contributory negligence. However, in view of the conclusion reached on the anterior question, it is unnecessary to express a final view on the argument.

The Fair Trading Act

[61] There remains for consideration the Fair Trading Act. Rolfe J, on the cross-claims by the respondents, held that Minters had engaged in misleading or deceptive conduct. However, it is not the liability of Minters to the respondents for contravention of the statute which is the basis of the claim by Minters for contribution under the Act. That basis lies in what is said to be a liability of Minters to the plaintiffs and the other investor-beneficiaries. But, however that may be, the respondents have not been found to have engaged in misleading and deceptive conduct. There was no liability of Minters and the respondents to the plaintiffs and the other investor-beneficiaries for "the same damage" sustained by contravention by them of the Fair Trading Act. It is true that the respondents had been the causes of damage to the beneficial interests under the first level trusts. But that was not "the same damage" as that sustained by the respondents by reason of the misrepresentations made to them by Minters.

[62] Rolfe J found that Minters had engaged in misleading and deceptive conduct, specifically by writing letters to the respondents which failed to disclose that no bearer deposit certificates had been obtained. Those letters, he found, "amounted to misrepresentations by silence in so far as they conveyed the impression, on a fair reading of them, that settlement had taken place conformably with the subscription agreements whereas it had not" ^[44] . Because Rolfe J took the view that "the highest duty owed by [Minters] to PTWA and PT was as trustee", he did not go on to deal with the precise form of the relief to which the respondents would have been entitled under the Fair Trading Act, other than to say that his provisional view was that he would have had to mould relief which would reflect the comparative culpability of the parties, that is to say, the respondents as cross-claimants and Minters.

[63] Since he was prepared to make orders on the cross-claims to provide equitable compensation, there was no need to give further consideration to the causes of action in negligence or for contravention of the Fair Trading Act. The respondents were entitled to relief on their cross-claims on the basis most favourable to them. In Henderson v Merrett Syndicates Ltd ^[45] , Lord Goff of Chieveley, in a passage cited by this Court in Astley v Austrust Ltd ^[46] , said:

I do not find it objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him.

His Lordship was there speaking of concurrent liability in contract and tort. The same applies in principle in the present case.

[64] Rolfe J appears to have envisaged, without deciding the matter, that, without recourse to s 24(2) of the Act, he would have been able, by granting appropriate relief under the Fair Trading Act, to limit the entitlement of the respondents by reference to what he called their own "culpability". He never made any assessment, or award, of damages in respect of the contravention of the Fair Trading Act. Nor did he address the kinds of question that would have arisen under ss 23A and 23B of the Act. He did not examine the question of any entitlement of the plaintiffs to sue Minters under s 37 of the Fair Trading Act to recover the amount of the loss or damage they could show they had sustained by reason of Minters' misleading and deceptive conduct, an entitlement that may have been supported by the construction given to the Trade Practices Act 1974 (Cth) in Poignand v NZI Securities Australia Ltd ^[47] . He did not deal with the significance, if any, of the time limit upon proceedings for relief imposed by s 37(2) of the Fair Trading Act. He did not compare the nature of the relief to which the plaintiffs might have been entitled against Minters with that to which the respondents would have been entitled against Minters.

[65] In particular, Rolfe J did not consider whether, if the respondents had replenished the trust estates of which they were trustees, there would have been any loss or damage suffered by the plaintiffs by reason of Minters' contravention of the Fair Trading Act. The existence of any such liability remains purely theoretical. No loss by the plaintiffs and the other investor-beneficiaries has been established. So long as the respondents made good, out of the funds available to them (including their own assets, or the proceeds of the exercise of their entitlement against Minters for breach of the second level trusts), the loss to the first level trusts of which they were trustees, there would be no loss to the plaintiffs and others resulting from the contravention of the Fair Trading Act.

Conclusion

[66] The appeal should be dismissed with costs.