Australia, June 24 -- New South Wales Land and Environment Court issued text of the following judgement on May 23:
1. LEEMING JA: The second and third appellants, Mr David Carr and Ms Rosalind Carr, and their company, the first appellant David & Ros Carr Holdings Pty Ltd (DRCH), appeal from the dismissal of proceedings brought by them and heard over eight days in the Equity Division of this Court. The appeal is opposed by Mr Ivan Ritossa and Ms Marina Ritossa, the first and second respondents. The third respondent, Darbalara Holdings Pty Ltd, is the trustee of a unit trust known as the "Darbalara Property Trust", the units in which were originally issued to the Carrs and the Ritossas in equal shares. Subsequently, the Carrs and the Ritossas have continued, directly or indirectly, each to own or control 50% of the units. All four of the Carrs and the Ritossas are directors of Darbalara, and Mr Carr and Mr Ritossa each own one of its two ordinary shares.
2. In 2010, the Carrs and the Ritossas agreed to acquire agricultural property through the Darbalara Property Trust, which was established for that purpose. The first major purchase was a property called "The Junction" near Gundagai, to which was added in 2017 "Bogolara", a property located between Gundagai and Yass around an hour's drive away. Substantial numbers of cattle and sheep graze on both properties. Darbalara is a typical example of the trustee of a trading trust, that actively conducts commercial operations with a view to achieving a profit; this is common in Australia and New Zealand but much less so in the United Kingdom: Equity Trust (Jersey) Ltd v Halabi [2023] AC 877; [2022] UKPC 36 at [95]. Since around 2019, the Carrs and the Ritossas have disagreed on a number of issues. Many concerned the operations of the agricultural business, and were eventually resolved. However, the couples are at an impasse concerning the future of their investment. In short, the Carrs would like to realise their one half interest in the properties. There is a mechanism under the trust deed for this to occur (broadly speaking, one unit holder cannot sell without first offering the units to the others at the proposed price), but the Carrs have not invoked it, presumably because they have located no purchaser of their one half interest who is prepared to pay what they say is one half of the value of the net assets of the trust. Hence they seek orders which will have the effect of "winding up" the trust, which is to say, selling the trust assets, discharging trust liabilities and distributing the surplus to the unit holders (as will be seen, this description is somewhat elliptic).
3. This appeal advances three bases on which, so it is said, the trust should be wound up. They are (1) the construction of cl 2 of the Rules of the Darbalara Property Trust, (2) statutory oppression contrary to s 232(d) or (e) of the Corporations Act 2001 (Cth), and (3) the appointment of a receiver to the assets of the trust on the basis of, or by analogy with, the principles in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360.
4. The first basis (ground 1) turns on construction. The second (grounds 2-8) is factual, and challenges the conclusion by the primary judge that the disaffection between the Carrs and the Ritossas fell short of conduct amounting to statutory oppression. The third (ground 9) is a concededly novel proposition of law. For the reasons which follow, I would accept none of those arguments, with the result that the appeal should be dismissed.
5. These reasons take the same course as the parties' written and oral submissions, and deal with the three bases in order. It is most efficient to provide a streamlined overview of the factual background which is sufficient for the purposes of resolving the submissions advanced in respect of the first and third bases (which are questions of law) before giving more detail in order to address the factual submissions advanced in support of the second basis. In an appeal where the issues are considerably narrower than was the case at trial, it will not be necessary to summarise the entirety of his Honour's reasons of 287 paragraphs, delivered on 5 September 2024, some six weeks after the conclusion of an eight day trial.
*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/196eb9efea13ada48525c553)
Disclaimer: Curated by HT Syndication.
