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Dunstone v Irving [2000] VSC 488 (21 November 2000) Last Updated: 29 November 2000

SUPREME COURT OF VICTORIA

COMMERCIAL & EQUITY DIVISION Not Restricted

No. 461 of 1998

JOHN WILLIAM DUNSTONE Plaintiff v

CHESTER IRVING Defendant

--- JUDGE: Hansen J

WHERE HELD: Melbourne

DATE OF 21-23, 26-29 June 2000 HEARING:

DATE OF 21 November 2000 JUDGMENT:

CASE MAY BE Dunstone v Irving CITED AS:

MEDIUM NEUTRAL CITATION: [2000] VSC 488 --- Superannuation fund - Plaintiff and defendant as sole trustees and members - Fund used as working capital via interposed unit trust - Entitlement to fund - Whether agreement to equalise entitlements - Annual members' statements claiming to "vest" entitlements - Definition of "Employer-Financed Vested Benefit" - Whether valid exercise of trustees' discretion under article 5.12 of the trust deed. --- APPEARANCES: Counsel Solicitors

For the Plaintiff Mr G H Garde QC with Coulter Burke Mr M J Stiffe

For the Defendant Mr R L Berglund QC with Hill Perkins & Co Ms F J Alpins

HIS HONOUR: 1. This case concerns entitlements to the Iverston Pty Ltd Superannuation Fund ("the fund") on the part of its two members, the plaintiff John William Dunstone and the defendant Chester Irving. They were also the trustees of the fund. 1. The dispute arises as a result of the plaintiff's departure at the end of the 1997 calendar year from a construction and development business that the plaintiff and defendant jointly operated. The plaintiff wished to roll over his entitlements into another superannuation fund. At the time the fund contained approximately $2.1 million. The plaintiff claimed he was entitled to about $1.3 million, an amount derived in essence from his annual member's statements. The defendant claimed that the fund should be divided equally. He later also claimed that allowance should be made for certain tax liabilities. 1. The proceeding came before me for trial in Melbourne, having not been reached at the Geelong circuit in March this year. 1. The pleadings and issues 1. The case turns on interpretation of the trust deed under which the fund is constituted, as well as the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth) ("the SIS Act") and the Superannuation Industry (Supervision) Regulations 1994 (Cth) ("the SIS Regulations"). 1. The writ was filed on 21 May 1998. The plaintiff seeks: a declaration as to his present entitlement to the fund; a mandatory injunction ordering the defendant to do all things necessary to allow the plaintiff's entitlement to be transferred at the plaintiff's direction; and damages under s. 55(3) of the SIS Act. 1. The plaintiff alleges that on or about 23 February 1998 the defendant agreed that the plaintiff could have the amount standing to the plaintiff's credit in the fund (which was then $1,365,478). This constituted an exercise of the trustees' discretion in art. 5.12 of the deed to pay the plaintiff that sum as a withdrawal benefit. Since then, the defendant has prevented payment of any amount to the plaintiff out of the fund, in breach of his duties as trustee, including those arising under art. 6.17 of the deed and s. 52(2) of the SIS Act. The plaintiff has suffered loss and damage as a result of the defendant's conduct. 1. The defendant denies there was an agreement on 23 February 1998 in the terms described by the plaintiff and denies that the amount claimed by the plaintiff is payable under the terms of the trust deed. The discretion in art. 5.12 has not been exercised, and should not be exercised in light of possible tax liabilities of the fund relating to a unit trust structure adopted for the purpose of using the fund in effect as working capital. The defendant alleges an agreement that benefits in the fund were to be equal. By way of counterclaim, the defendant sought rectification of the deed to provide for such equality. 1. The issues run before me in the trial can be expressed in terms of the following questions. 1. Was there an agreement in 1986 to equalise the fund? 2. What is the significance of the annual statements provided to members? 3. Was any discretion properly exercised under art. 5.12 of the trust deed? 4. What is the appropriate course of action on the part of the Court? 5. What is the effect of the interposed unit trust arrangement? I will outline counsel's arguments when I deal with the respective issues. 1. For the sake of completeness, I mention the following further points arising out of the pleadings. 1. First, the plaintiff's Amended Statement of Claim alleges that each party is engaged in the litigation both on his own behalf and as trustee of the fund. In this respect the indorsement complied with RSC Chapter I Rule 5.06. The Amended Defence denies that the defendant was acting on his own behalf. Rather, it alleges, he was acting as trustee of the fund at all times and that any cause of action against him is only in that capacity; by contrast, the plaintiff was suing only on his own behalf and had ceased to act as trustee of the fund as at 15 September 1997. These limited admissions perhaps in part anticipated issues of costs; certainly no point was taken that the proceeding was not properly constituted. 4 1. Secondly, the allegation in the Counterclaim is that the equalisation agreement was made at the time of establishing the fund in 1986 and also at the time of amending the deed in 1994. There was no evidence of an agreement in 1994. By implication, this claim was abandoned. 1. Thirdly, while the defendant still contended that the parties had agreed on equality in the fund, the counterclaim for rectification of the deed to reflect the equalisation agreement was abandoned on the second day of the trial. Consequently, I ordered by consent that the counterclaim be struck out. Costs of the counterclaim remain to be dealt with. 1. I make no further comment on these points. 2. The facts 1. I now set out the factual matrix of the case. I believe the facts I recount in this section of the judgment are common to the parties and not contentious. Except where I have indicated otherwise, to the extent that they are in dispute they are facts as I find them to be. Establishment of a new trading entity 1. The plaintiff (born in 1940) is some 13 years older than the defendant (born 1953). Each has a long involvement in the building industry. They first met in 1975, and by 1981 they had begun working in partnership doing minor building contract works. In 1983 or 1984 (depending on the account), they established a new business structure to conduct building projects together. In particular, they established a company Iverston Pty Ltd ("Iverston"), of which they were the shareholders and directors, to act as trustee of the Iverston Unit Trust. The units in the Iverston Unit Trust were held in equal shares by or for the parties (or associated persons). Other entities were later added to the structure. The business operated initially from the defendant's home in Kilgour Street, Geelong and, from March 1995, from leased premises in Moorabool Street, Geelong. 1. In establishing this structure, and later in maintaining it, the parties relied on advice from accounting firm Manning & Perry Pty Ltd, located in Richmond, Melbourne, and specifically one of its principals Phillip John Harrington. Harrington had been the defendant's personal accountant since some time in the 1970s and continued to act in that capacity. Where appropriate in relation to the affairs of Iverston and its associated entities, Harrington obtained the services of solicitors or specialist advisers. 1. The plaintiff and defendant drew equal salaries as employees of Iverston but developed mutually agreed roles within the business. The plaintiff was in charge of obtaining new clients and projects, and maintaining accounts. Essentially he managed the books. The defendant was the building estimator, meaning he assessed the pricing of potential projects and monitored the cost of ongoing ones. Within the office, the plaintiff and defendant had desks side by side. The defendant opened the office mail: he glanced at its contents and passed on to the plaintiff anything that required his attention. Creation of a superannuation fund 1. The business began to produce profits. In 1986, partly with the objective of reducing Iverston's assessable income, Harrington advised the parties to set up a superannuation fund. They did so, establishing an accumulation fund by means of a trust deed dated 24 April 1986. The plaintiff and defendant were trustees of the fund. The trust deed was amended in 1990 and again in 1994, each time on Harrington's advice in response to regulatory changes. The current trust deed of the fund, under which any current entitlements are to be determined, is that dated 1 July 1994. The deed consists of seven clauses, to which detailed articles are annexed. I set out relevant parts of this deed later in the judgment. 1. In most years Iverston as employer contributed to the fund on behalf of its employee members, the plaintiff and defendant. In some years Iverston made no contribution. Following losses to the fund in the collapse of the Pyramid Building Society in 1990, it was transferred to the Commonwealth Bank of Australia ("the CBA") to be held in a cash deposit account and has remained there since. 1. Manning & Perry acted as auditors of the fund. A standard procedure was followed in preparing the financial statements and auditor's report each year. They were prepared on a financial year basis. The plaintiff would provide Harrington with the records of the fund. Harrington would create draft financial statements and report containing, amongst other things, the amount of contributions that he considered appropriate: I discuss below the basis for his recommendations. He would send the draft to Iverston's office and invite the plaintiff and defendant to Manning & Perry's offices for a discussion or "adjudication". Once any queries had been cleared up, the final documents would then be sent to the plaintiff and defendant for signature as required. 1. Although the composition of the final documents varied from year to year, by the 1996/1997 year they consisted of statements setting out the financial position of the fund, together with: 1. notes to the financial statements, which refer to the total amount of the fund as accrued benefits ("the plan's present obligation to pay benefits to members and beneficiaries") and vested benefits ("benefits which are not conditional upon continued membership of the plan (or any factor other than resignation from the plan)" ); 2. an independent audit report signed by Harrington to declare that the financial statements were accurate and that they complied with the relevant accounting standards; 3. a resolution and statement by the trustees that the financial statements presented fairly the financial position of the fund and had been prepared in accordance with the trust deed, and that the fund had operated in accordance with the trust deed and the SIS Act during that year; and 4. an annual member's statement for each member, referring to the entire member's balance as "vested" and "preserved" and stating that "[u]pon leaving the fund the benefit payable is your vested benefit as shown above". 1. Each year to 1997 the relevant parts of the documents were signed by the trustees. The evidence, which I accept, from the superannuation expert Geoffrey Ian Roberts, who audited the fund's operations, was essentially that there were no irregularities with the documents. The 1997/1998 accounts were prepared in draft form in accordance with previous practice, but were not signed by the trustees, this dispute having commenced. 1. In relation to the amount of contributions, Harrington suggested that greater contributions be made in the name of the plaintiff than the defendant, and this was in fact done, from which I infer that the plaintiff and defendant consented to it. The contributions for the plaintiff were approximately double those for the defendant. This was apparently in order to obtain the maximum tax advantage from the provisions relating to Reasonable Benefit Limits ("RBLs"), which allowed greater contributions at a concessional tax rate in respect of persons the closer they were to retirement age. Harrington's office then adopted the conventional approach of apportioning earnings pro rata based on existing contributions. In other words, the same earnings rate was applied to each member's balance and the approximate 2:1 ratio in favour of the plaintiff was maintained. Harrington checked the trust deed from time to time as required to ensure compliance. 1. For the years for which I have evidence, I have summarised the contributions and balances (in round dollar terms) at the end of each financial year in Table 1, which is annexed. The plaintiff's proportion of the fund varied slightly in the initial years, but in the last few years was consistently 64.36%. In the years I have listed, the overwhelming majority of the movement in balances was caused by earnings or losses on the fund's investments (i.e. mainly units in the unit trust), not by contributions by Iverston. The "black book" 1. Later in 1986, after the fund had been put in place, the parties took a further step to reduce Iverston's tax liability. They established a personal purchases register, which became known as the "black book". It was maintained by a member of Iverston's staff with supervision and access by both parties, but mostly the plaintiff. The purpose of the black book was to allow the plaintiff and defendant to have Iverston pay for materials or the services of tradesmen, which would appear to be related to Iverston's activities but were in fact for their personal benefit. The black book also recorded motor vehicle expenses and superannuation contributions. Certainly, the entire procedure was not set up with Harrington's advice or sanction: he first heard about it in 1993 or 1994. 1. Paul Raymond Jones of Day Neilson Chartered Accountants (who are the plaintiff's accountants) reviewed the black book for the purpose of this litigation, and his evidence as to the amounts entered in it can be summarised in the form in Table 2, which is annexed. From the totals in Table 2 it is apparent that the plaintiff received about $49,843 more than the defendant in superannuation benefits. In relation to non- superannuation benefits, the plaintiff had about $13,711 more in motor vehicle expenses and the defendant took about $46,616 more than the plaintiff in personal purchases: the defendant therefore had about $32,905 more than the plaintiff in non- superannuation benefits. The total benefit was in the plaintiff's favour to the tune of $16,939. Three property developments 1. In 1991 the possibility arose for the plaintiff and defendant to develop a property in Reservoir for the prospective use of the Ministry of Housing. The project involved purchasing the property, demolishing existing structures, erecting a new building and then selling the property, with the Ministry of Housing as tenant. The plaintiff and defendant conducted a feasibility study and approached Harrington for advice on how to fund a project of this size. Harrington suggested a way to utilise the amount held in the fund, despite provisions that prevented superannuation funds from borrowing: the trustees of the fund would purchase all the units in a unit trust, the trustee of which would borrow the funds required to undertake the project. Acting on this advice, the plaintiff and defendant obtained the contract in the name of DM Therapies Pty Ltd ("DM Therapies") as trustee for the Iverston Investment Unit Trust. DM Therapies sub-contracted the actual building works to Iverston on a cost-plus-10% basis. The plaintiff and defendant held the shares in DM Therapies equally. They held all the units in the new unit trust in their capacity as trustees of the fund. DM Therapies obtained finance from the CBA for $1 million or more, about 60-70% of the project cost. Security was in the form of joint and several guarantees by the plaintiff and defendant as well as mortgages over properties owned by them. 1. The project was successful. Iverston charged its 10% fee, and the surplus from the sale of the property went via DM Therapies and the Iverston Investment Unit Trust back to the fund. 1. In 1994, the plaintiff and defendant conducted a feasibility study on a project to develop commercial offices in Box Hill. They obtained the contract. Harrington advised them to adopt the same structure as for the Reservoir project. They did so, using the same finance and security arrangements. The property was developed by DM Therapies and built by Iverston. 1. In 1996, the plaintiff and defendant repeated the same process, this time for a project developing Commonwealth government offices in Ballarat. 1. I should add that, in spite of any feasibility studies, the evidence was that for each project it was only when the property was sold that it was known that it would be profitable. 1. As a result of each of these projects, a substantial surplus or profit was attributed to the fund. Whereas any profit to Iverston was presumably distributed to the unit holders of the Iverston Unit Trust, that is equally between the interests of the plaintiff and defendant, the surplus received by the fund was split by Manning & Perry in accordance with the procedure described above. In other words, they apportioned the amounts according to the ratio of existing amounts in the members' accounts. This produced the annual balances that I have quoted above. It is apparent that a greater amount was attributed to the plaintiff. The plaintiff leaves Iverston 1. During the course of 1997, the plaintiff began to consider leaving Iverston and associated entities to pursue other business opportunities. He approached his accountants Day Neilson several times during the year for advice about his superannuation entitlements. Day Neilson advised, based on the annual statements produced by Manning & Perry, that he was entitled to an amount equal to approximately 65% of the value of the fund. Eventually, the plaintiff made up his mind to leave Iverston at the end of the calendar year, when a particular project would be close to completion. He mentioned his decision to Harrington in August when they were reviewing the annual accounts. He then informed the defendant on 15 September, suggesting that the defendant could continue in business using the Iverston structure they had created. He began to make arrangements for a destination for his superannuation benefits. 1. On 27 October, while conducting a final review of accounts for the year ended 30 June 1997 with Harrington, the plaintiff confirmed his intention to leave Iverston. Harrington raised the topic of "equalising" the super fund. According to Harrington, the plaintiff said the defendant had had his equalisation through the black book. I will refer to this conversation in greater detail below. 1. In November and December, various administrative steps were taken in relation to the plaintiff's departure. The plaintiff and defendant signed a CBA form requiring both of their signatures to operate the fund's account, where previously only one had been required. The plaintiff arranged for account balances to be prepared in relation to the various entities. He asked Harrington to prepare an Eligible Termination Payment ("ETP") statement for submission to the Australian Taxation Office ("the ATO"). On 19 January 1998 Harrington's office prepared a statement giving the amount as $1,325,848. This was the plaintiff's account balance as at 30 June 1997. When the plaintiff pointed out that the balance should be updated to 31 December 1997, Harrington's office immediately produced a new statement in the amount of $1,356,225. Harrington did not prepare the statement himself because he was departing for London that day, but instructed his staff to prepare it in accordance with the existing accounts. 1. At about this stage, the facts become more contentious. I merely outline the events, most of which I will discuss in detail below. 1. The defendant returned from his annual leave on about 19 January. Soon after that, the plaintiff and defendant met at Iverston's offices. The plaintiff presented the defendant with the calculations that had been prepared and the ETP statement. The defendant queried why the plaintiff's superannuation benefits were more than 50% of the balance of the fund. They attempted to obtain a copy of the trust deed from Manning & Perry to clarify the situation. The matter was not resolved and it was decided to leave it unresolved until Harrington returned from London. On 30 January the defendant telephoned Harrington in London and discussed the issue of entitlements to the fund. 1. Throughout this time, the defendant was negotiating for a contract to construct premises for Australia Post. It was intended that the defendant would conduct the project on his own without any involvement by the plaintiff. As part of this process, on 30 January the defendant had discussions with Australia Post. 1. Harrington returned on 16 February and a meeting to resolve the question of entitlements to the fund was arranged for 19 February, a Thursday, at Manning & Perry's offices. At the meeting, the plaintiff asked the defendant to sign an ETP statement updated to 19 February. The defendant asked, if he agreed to sign the ETP statement, whether the plaintiff would resign from Iverston without causing hassles or delays. The plaintiff agreed he would do so. But the defendant did not sign the ETP statement on that day. 1. On the following Monday, 23 February, there were several conversations. The sequence of events, as given in evidence, was as follows. First the defendant spoke with Harrington, who suggested that he use Iverston Developments Pty Ltd, a related company within the Iverston group that was inactive and unencumbered, as the trading entity for the purposes of the Australia Post project. He then telephoned the plaintiff and said the plaintiff could have his share of the fund but "please, please, please do not ask me to sign anything". Later, the defendant heard from Australia Post. He then rang the plaintiff again and said he had had a "brainwave" and that he could use Iverston Developments Pty Ltd for the Australia Post contract. The plaintiff agreed in principle, but wished to check with his solicitor. Objectively, it seems more probable that the conversation between the defendant and Harrington occurred just before the "brainwave" conversation, since Harrington was the source of the so-called brainwave. I have only the defendant's account to judge by. Perhaps he wished to speak with Australia Post before presenting the idea to the plaintiff. Ultimately, the timing of the conversation with Harrington is not important. I do not decide the point. 1. In the following days, there were discussions and exchanges of documents between the plaintiff, his solicitor, Harrington and the CBA. The objective was to finalise documentation required for the plaintiff to resign from Iverston and for him to obtain his superannuation entitlements from the fund. The documents were prepared on the basis of the figures in the members' accounts: the amount in the plaintiff's ETP statement was $1,365,478. The plaintiff signed a resignation as director of Iverston Developments Pty Ltd. 1. Then, on Friday 27 February, the defendant attended the local branch of the CBA to prepare documentation relating to the Australia Post project. He spoke to Michael Taylor, the branch manager. Taylor informed the defendant that the plaintiff was taking his superannuation that afternoon. The defendant asked the amount and was told $1.3 million. He said "Michael, is that correct?" and asked "How could that be when you haven't asked me to sign anything?" Taylor replied that he had a document verifying that the signature of one trustee was sufficient for any documentation. The defendant responded "Michael, if that's the case you should be sure that what you are doing is totally correct". Taylor left the room and later telephoned the defendant to tell him that the payment was not proceeding. 1. Various telephone conversations and letters ensued between the parties and their representatives, which it is not necessary to mention, leading eventually to the writ. 3. The witnesses 1. Before I turn to the issues arising out of the pleadings, I will briefly comment on the witnesses in the case. The plaintiff and defendant each gave evidence. The plaintiff also called Geoffrey Ian Roberts, Stephen Romic, Paul Raymond Jones and Michael John Williams. The defendant called Harrington. 1. I accept the plaintiff as an honest witness. He presented a version of events that was generally probable, consistent and not subject to overstatement. I cannot comment adversely as to his credit, nor did the defendant's counsel seek to put it in issue. 1. By contrast, the defendant's evidence was more difficult to accept. He did not impress me as a witness of truth. 1. Much of his evidence was put on the basis that he was oblivious to documents he saw or signed, and to events relating to his personal affairs. For instance, he said that he attended the adjudication with Harrington (not necessarily each year) and listened attentively, but did not fully participate. He opened the mail for Iverston each day, but he said he did not read it before distributing it - he merely glanced at it. Despite being a building estimator, he said he was not quick with figures - he was methodical and systematic. He claimed that he would not necessarily understand a set of company accounts. He said he never had regard to the trust deed. 1. However, his manner of giving evidence was not consistent with a picture of him as a person who did not pay attention to detail. He frequently objected to the use of words by his cross-examiner and asked for clarification of the sense of words used in questions. My impression was that he did so to ensure he did not make some inadvertent concession or let anything slip. 1. Nor could it be said that he was a person who was not alert to his own position. The evidence was that he owned various properties, which he had negatively geared so that he had "hardly ever" paid income tax over a period of 10 years or more. Of course, there is nothing wrong with arranging one's affairs to make oneself liable to the least amount of tax, but it does tend to show a certain financial shrewdness. By his own evidence, the defendant had signed fund accounts for the years 1993 and 1994: from my observation of him in the witness box and from the shrewdness to which I have just referred, it seems implausible that he was so unaware of his own affairs that he would not even have looked at annual financial statements for the fund that passed across his desk and so ignorant of accounting that he could not see that the figures in annual members' statements for himself and the plaintiff were not identical. He agreed in cross-examination that he would be interested to look at paperwork arriving in the mail which related to his superannuation entitlements. In addition, at any stage he could have consulted Harrington, who had all the relevant information in his capacity as accountant and auditor for the Iverston group and who was his own personal accountant. 1. In addition, he showed an inclination towards stubbornness and unreasonableness in advancing his own case, which gives me some reluctance in accepting his evidence generally. Some instances are as follows. 1. Since this litigation commenced, despite being requested to do so, he has refused to sign a cheque to allow the plaintiff to access any part of the fund, even though he does not claim that the plaintiff's entitlement is nil. 2. He was interrogated as to whether on 27 February 1998 he directed the CBA not to transfer money from the fund's account at the plaintiff's direction. In his answers to interrogatories, he merely swore "no". He asserted in cross-examination that this answer was correct because he was never asked by the CBA to give approval. His answer may be literally correct, but in light of my findings about his level of knowledge of the two signature requirement on that date is hardly full and frank: see [113] below. 3. He is resisting a claim by the plaintiff for division of the assets of Iverston itself, despite acknowledging that the plaintiff is entitled to half of them. This has necessitated the plaintiff commencing a County Court proceeding for recovery. 4. As I discuss in more detail at [135-140] below, the defendant has agitated the issue of possible additional tax liabilities to the fund as a result of the interposed unit trust structure, which is as much against own financial interests as against those of the plaintiff. 1. Finally, and I consider very damagingly, he admitted making false declarations to the ATO, in the sense that he did not disclose in his income tax returns all benefits received via the black book. He was quite prepared to accuse Harrington, his own accountant of many years' standing, of having the same capacity to make false declarations: he claimed that Harrington submitted false auditor's statements each year, to the extent that they did not take account of the alleged equalisation agreement. I reject below the existence of any equalisation agreement, and accordingly I reject this claim about Harrington. 1. For all of these reasons, I conclude that the defendant is not a witness whose evidence I can accept without question. Where the evidence of the plaintiff and defendant conflict, all else being equal I accept the plaintiff's version. 1. I now briefly mention the other witnesses. 1. I have already referred to Roberts' evidence: see [22] above. He is a superannuation expert, being familiar with the regulatory regime, and was engaged by the plaintiff to review the operation of the fund. In a nutshell, his evidence was that the fund in this case was at all times a complying fund: it completed all normal procedures and lodged all normal returns; it complied with the trust deed and the regulatory regime; it provided adequate member statements each year; it had received no notice of non- compliance from the relevant regulatory authorities. I accept his evidence. 1. Romic was called as an accounting expert. His evidence was not significantly challenged by the defendant. First, the evidence went towards showing what the plaintiff's entitlement to the amount standing in the CBA account would now be if it was $1,365,478 in February 1998. Romic stated that, on his analysis, by 30 April 2000 the plaintiff's component of the fund had increased to $1,490,249: this allowed for the 15% superannuation investment earnings tax but not financial institutions duty and the like. Secondly, Romic's evidence went towards the plaintiff's claim for damages by demonstrating what the plaintiff could have earned on his entitlement if he had invested the money as he wished to, rather than leaving it in the CBA account. If the plaintiff had invested his entitlement in an average industry balanced superannuation fund, Romic said the plaintiff's funds would have grown to $1,614,340: if the plaintiff had placed his entitlement in a superannuation fund in which the investments were allocated as the plaintiff said he had proposed, the amount would be $1,692,974. In both cases the calculation was to 30 April 2000. I accept Romic's evidence as reliable and accurate in its research, calculations and opinions. 1. Jones, the plaintiff's chartered accountant, was an uncontroversial witness who merely presented the evidence about the black book that I have referred to. I have already accept this evidence. 1. Williams is the plaintiff's solicitor in this litigation. Before 1998 he advised the Iverston group generally. His evidence related to steps taken for the plaintiff after 23 February 1998. I do not need to refer to the substance of his evidence. 1. In relation to Harrington, he either was not forthright or did not have a good recollection of events. I acknowledge that he was placed in a difficult position by this litigation: he was the defendant's personal accountant on the one hand, and on the other the auditor and accountant of the Iverston group of entities (including the fund); also, as I have mentioned, he was accused of making false declarations by the defendant, for whom he had been called to give evidence. If it becomes necessary, I will assess Harrington's evidence in light of these circumstances. 1. I now return to the issues for determination. 4. Was there an agreement in 1986 to equalise the fund? 1. Mr Berglund QC, who appeared with Ms Alpins for the defendant, invited me to find as a fact that the plaintiff and defendant had agreed from the outset to equalise the fund, although he did not greatly elaborate on the evidentiary basis for such a finding. 1. According to the defendant, equalisation was agreed on one specific occasion with three people in one room, from which I infer he meant the plaintiff, the defendant and Harrington. The principle was that the fund was "a pool of money, it was to be equalised or divided equally at the end of the day, otherwise the contributions would have been made equally at the beginning." It was always believed and understood that there would be an equalisation, although the method of achieving this was never defined and nothing was recorded in writing. In relation to the methodology, the defendant suggested that "one day the black book and the superannuation fund would be opened up and there would be basically a sit down and a swathe of cheques over a table", requiring the plaintiff to sacrifice some of his entitlement. He said that the reason the agreement was not reduced to writing was that the plaintiff believed it was not possible to "contract outside the law". 1. There was no evidence from the plaintiff or from Harrington confirming that such a specific conversation occurred or that agreement was reached in such terms. The plaintiff expressly denied discussing equalisation of the fund with the defendant or Harrington at the time the fund was established. In cross-examination the plaintiff did acknowledge that there were some discussions about sharing equally the benefits from Iverston, at least in relation to the black book which did record superannuation contributions. Mr Berglund relied on this evidence in support of the equalisation agreement. However, I would not infer from this evidence that there was an agreement to equalise the fund. I would not even infer an agreement to equalise the balances in the black book. The fact was that the black book was never equalised. I accept the plaintiff's evidence that it was merely used to maintain a general balance between the expenditures of the two parties. Nor do statements ascribed to the plaintiff, by Harrington in relation to the conversation on 27 October 1997 that the defendant had had his equalisation through the black book, or by the defendant in relation to the conversation on 19 February 1998 that the defendant had had his entitlements in other ways, support a finding that there was an agreement for equalisation of either the fund or the black book. I would take the statements to refer merely to the general balance achieved by the black book and to reflect the factual imbalance in benefits; they do not demonstrate a view by the plaintiff as to what was required by any agreement. In addition, I note that although the defendant is seeking equalisation of the fund he has not offered to equalise the non-superannuation entries in the black book which had been in his favour, as would be the logical consequence if I took the plaintiff's statements in the way Mr Berglund contends. 1. Having set out the basic evidence, I should say immediately that I consider the defendant's version of events inherently improbable. When the fund was first put in place in 1986, no consideration had yet been given to using an interposed unit trust to utilise the fund for development projects, which ended up having the effect of creating uneven member balances. It was possible that members would make their own contributions, which could affect relative entitlements. The black book had not yet been conceived, or had only just been conceived, and it was not yet known how it would operate in practice. In conclusion, it could simply not have been in the minds of the parties that equalisation of the type described would be required. Also, I have already referred to Harrington's evidence, which I accept, that he did not know of the black book until 1993 or 1994. In other words, he could not have been involved in a discussion of the type the defendant has alleged. 1. In addition, no evidence or argument was directed to elucidating why equalisation would constitute a "contract outside the law" and thus clarifying why the alleged agreement was not reduced to writing. I consider it extremely unlikely that, in a conversation involving the professional adviser Harrington, no file note was kept and that the plaintiff's word was accepted as to the legality of the proposed equalisation arrangement. If the plaintiff had raised possible legal problems, the natural course would be for Harrington to look into the matter or advise the parties how to do so independently. Even on the defendant's evidence, this was not done. 1. I conclude from the above that the defendant's evidence in this regard is based on fabrication or reconstruction. I am reinforced in this view by my earlier findings relating to the defendant's character. 1. Furthermore, the defendant's evidence is not in accord with the probabilities, based on an objective consideration of the other evidence in the case. All of the indications are to the contrary. I now discuss this other evidence in some detail. The 1994/1995 conversation 1. First, there is a conversation between the plaintiff and defendant in either late 1994 (according to the plaintiff) or March or April of 1995 (according to the defendant). The date is not important: it is clear that both parties are referring to the same conversation, which I accept did occur. 1. By the plaintiff's account, in the course of reviewing the fund's accounts the defendant asked how he could increase his benefits or even up the entitlements in the fund. The plaintiff replied that the only method he was aware of was for the defendant to contribute additional funds of his own. The defendant did not respond. 1. According to the defendant, the plaintiff left superannuation documents on the defendant's desk for him to sign. The plaintiff asked whether the defendant had seen the figures for distribution of the fund. He asked "Aren't you worried that they're not equal?" He then said "And if you want to do something you'll have to put some money in". The defendant saw this as a statement, not an invitation for discussion. He had nothing to add, so said nothing: he was not concerned because he knew that the fund was to be equalised. He did not see the necessity to seek advice. 1. I prefer the plaintiff's account of this exchange. While I cannot necessarily determine from my own observations of the plaintiff whether the more aggressive tone attributed to him by the defendant is in or out of character, what I can say quite clearly is that I do not accept that the plaintiff asked "Aren't you worried that they're not equal?" This seeks to ascribe to him some sort of knowledge of an equalisation agreement, which I have already found did not exist. The attribution is self-serving and I reject it. 1. Further, in relation to this conversation, it seems an unnatural flow of events for the defendant to merely stay quiet when presented with a view that was clearly contrary to the supposed equalisation agreement. If such an agreement existed, the likelihood is that he would have referred to it at this point. This may be even more the case if the plaintiff had adopted the more aggressive tone in the defendant's version. Or at least he would have asked Harrington, who was allegedly privy to the discussion when equalisation was agreed, whether it was indeed the case that the defendant would have to make additional contributions to even up the members' entitlements. The defendant did not do so, by any account. The 15 September 1997 conversation 1. Secondly, there is the conversation between the plaintiff and defendant on 15 September 1997. This is when the plaintiff informed the defendant of his intention to resign at the end of the year and suggested that he could continue in business using the business structure they had established together. 1. If it was the case that the equalisation agreement existed as an unspoken sub-current at this time, then this would have been another opportunity for it to well forth. Yet the defendant did not mention it. The 22 January 1998 conversation 1. Thirdly, there is the conversation between the parties on or about 22 January 1998, when the plaintiff presented to the defendant his calculations of his various entitlements. There is a dispute as to the date, the plaintiff claiming it was 22 January and the defendant claiming it was 28 January. The timeframe of events suggests that the earlier date is more likely. The defendant had returned from annual leave on 19 or 20 January, and it is probable that the plaintiff would present him with the figures soon thereafter, having had from his resignation on 31 December 1997 to consider the matter and liaise with Manning & Perry to obtain calculations. I accept the plaintiff's evidence as to the date of the conversation. 1. The plaintiff's evidence goes on to say that the defendant asked why the figures did not reflect a 50/50 split, to which the defendant replied that the figures were in accordance with the trust deed and that the difference was because of his age. The defendant said he was sure that there was a schedule to the deed indicating that benefits would be 50/50 between members. 1. The defendant's version of events is that when he asked why the benefits were not split 50/50, the plaintiff turned white and quivered from head to toe. The plaintiff said that the distribution had been made in accordance with the trust deed and that it was a fait accompli. The plaintiff also asked the defendant to sign an ETP statement: only one trustee's signature was required, but it would look better if the one trustee was the defendant. The defendant said he would prefer to read the trust deed first. 1. By either account, there was no copy of the trust deed at the Iverston office. There followed a series of events, which I do not propose to set out and in relation to which it is not necessary to make findings despite the conflicting evidence of the plaintiff and defendant, by which it was attempted to obtain the trust deed from Manning & Perry. The defendant was not able to demonstrate that there was any schedule of the type he remembered. At no stage did he refer to the alleged equalisation agreement. 1. I do find in relation to this conversation that the attribution of anger to the plaintiff by the defendant is self-serving and does not ring true. I reject this evidence of the defendant. I also find that there was no schedule to the trust deed of the type described by the defendant: this is apparent from the deed as presented to me, which I accept as complete. 1. In relation to the alleged equalisation agreement, this exchange is yet another indicator that there was no such agreement. If there had been, then the natural response in the circumstances would again have been to refer to it, rather than go hunting for a schedule to the trust deed. Even if the defendant thought that the terms of the alleged equalisation agreement were recorded in a schedule to the deed, reasonable behaviour for the defendant in the circumstances would have been to refer to the alleged agreement rather than play his cards close to his chest by waiting for the trust deed to arrive. The 19 February 1998 conversation 1. Fourthly, there is the conversation between the plaintiff, defendant and Harrington at Manning & Perry's offices. This meeting was called specifically to resolve the question of entitlements to the fund after Harrington returned from overseas. 1. The plaintiff's account of the conversation is that Harrington introduced the topic that the fund was always to be split 50/50. The plaintiff said the first he heard of that was from Harrington on 23 October 1997. If any such agreement had existed, the trustees would have insisted on a written record. He referred to the 1994 conversation, which the defendant said he did not remember. He understood the entitlements to be in accordance with the trust deed. He asked Harrington to prepare an updated ETP statement, and asked the defendant if he would sign it. The defendant asked whether, if he signed the ETP statement, the plaintiff would resign from Iverston without causing any hassles or delays. The plaintiff said he would, whereupon the defendant said he would tell him his response the next day. In fact he did not do so until 23 February, the following Monday. 1. The defendant's account again ascribes to the plaintiff a rather sharp tone of voice. Harrington began the conversation by asking how the plaintiff proposed to do the equalisation. The plaintiff then said he was not doing it. He was taking the $1.3 million and that was it. He said "Chester has had his entitlement in other ways". He said that he expected, requested and demanded that the defendant sign the ETP statement on the spot. The "deadline" imposed by the plaintiff was gradually deferred. The conversation lasted about 30-45 minutes, and there was no mention of the 1994/1995 conversation. 1. My main comment in relation to this conversation is that again there is no reference to the equalisation agreement by the defendant. Harrington raises the topic of equalisation, but not in a way that refers to an express agreement: this is consistent with my findings below about his motives. The defendant does not refer to it at all. The tart and rehearsed tones that the defendant attributes to the plaintiff again do not ring true, and are not consistent with the conversation taking 30-45 minutes as the defendant claims. Again the evidence leans towards the absence of any equalisation agreement. Harrington's evidence 1. Fifthly, there is the evidence of Harrington. He gave evidence that at his conversation with the plaintiff on 27 October 1997 he raised the issue of equalisation not because of awareness of any agreement between the plaintiff and defendant, but because he believed this to be fair and equitable since the fund was tantamount to a trading arm of the Iverston group. 1. There was earlier evidence of Harrington that on 31 March 1994 he asked one of his employees, Jeremy Ooi, to investigate whether distributions of the fund could be made other than pro rata under the terms of the trust deed then in force. Ooi wrote a memorandum in response, setting out a method by which a different distribution might be possible. The memorandum does not refer to any agreement between the plaintiff and defendant. Harrington's oral evidence was that the task was not undertaken at the request of either party. I infer that on this occasion too his acts were self-motivated based on his sense of what was fair and equitable, not on the existence of any agreement between the parties. From the fact that he did not take any further steps to change the method of distribution, I infer that he did not have any major concern about it. 1. Harrington also gave evidence that he spoke with the defendant on 30 January 1998. Harrington was in London at this time, and the defendant had telephoned him to ask what his recollection of the trust deed was, and what he thought the distribution of proceeds should be. Notably, the defendant did not refer to an earlier oral agreement, but to the trust deed. According to the defendant, Harrington replied that the fund should be split 50/50 and that there should be some sort of equalisation, which he had expected the plaintiff to volunteer. Harrington himself said that this was the first time he had discussed equalisation with the defendant. I accept that a telephone conversation between the defendant and Harrington occurred on this date, but not necessarily in the terms described. Even if I accepted that Harrington made the statement in the terms ascribed to him, it is perfectly consistent with Harrington's evidence that he thought an equal distribution would be fair and equitable. It does not support the existence of an earlier agreement. In fact, Harrington's evidence that this was the first time he had discussed equalisation with the defendant flatly contradicts the defendant's account of him being present when the agreement was allegedly reached. Further correspondence 1. Finally, as I have mentioned, there was various correspondence between the events of 23 February 1998 and the issuing of the writ on 21 May. The only comment I make in this regard is that there was no written reliance on the supposed equalisation agreement. As far as I have been made aware, the existence of an equalisation agreement was asserted for the first time by the Defence, dated 3 June 1998, and later appeared in a letter dated 18 August 1998 from the defendant to Harrington. 1. Mr Berglund objected that the evidence of correspondence and conversations was without prejudice, a dispute already having come into existence. This was his line of questioning in cross-examining Williams, based on the fact that on or about 30 January 1998 Williams recommended that the defendant seek independent advice. I accept Williams' evidence that there was not necessarily a dispute about the superannuation entitlements at that point: his referral of the defendant to other solicitors would be an appropriate course when entitlements were being determined and assets were being transferred. I do not sustain Mr Berglund's objection. However, it is not necessary to refer to or rely on the evidence, except in the most general sense that Williams and Harrington acted in apparent reliance on the existence of an agreement between the trustees. 5. What is the significance of the annual statements provided to members? 1. Counsel appeared to have some difficulty in attributing significance to the annual statements in the context of the deed and the SIS Act and Regulations. The source of the difficulty is art. 5.12 of the deed, under which the trustees may exercise a discretion to pay a withdrawal benefit upon the termination of a member's employment. At first glance, the deed does not create a mechanism by which amounts can "vest" in members before termination of employment, as the annual statements claim to do. 1. On the basis that entitlements upon resignation are to be determined under the deed solely pursuant to art. 5.12, Mr Garde QC, who appeared with Mr Stiffe for the plaintiff, argued that the annual statements were an example of the operation of the "greater protection" principle espoused in the SIS Regulations, and the Regulations override anything in the deed. Under reg. 5.01B, the trustee of a superannuation fund may have the power, despite anything in the governing rules of the fund, to protect the benefits of members: "(a) to a greater degree than is required by [Part 5]; or (b) from an earlier date than is required by [Part 5]; if the trustee does so in a way that is consistent with [Part 5]". Part 5 is headed "Benefit protection standards" and regulates minimum benefits and protection of members. If entitlements upon resignation were to be determined under art. 5.12, reg. 5.01B could give meaning to the "vesting" in the annual statements. In other words, the so-called vesting in the annual statements was providing "greater protection". 1. Mr Garde also submitted that any employer contribution to the fund could be taken to be mandated employer contributions under reg. 5.05(1), which would form part of the member's minimum benefit pursuant to reg. 5.04(2)(b). It was also submitted that the amounts in the plaintiff's member's account constituted preserved benefits under reg. 6.15. I take it that it was also submitted that they constituted accrued benefits. Mr Garde then pointed to regulations protecting these categories of benefit, namely reg. 5.08 (minimum benefits), reg. 6.16(2) (preserved benefits) and reg. 13.16(1) (accrued benefits). 1. Mr Berglund submitted that the annual apportionment to members' accounts did not create any entitlement to those amounts. The relevant part of the deed in relation to termination of the plaintiff's employment was art. 5.12, under which a discretion was exercisable by the trustees only when the member ceased employment. They did not exercise the discretion in the annual financial statements. For the trustees to allocate amounts in advance of a member ceasing employment would be for the trustees to attempt to bind themselves in advance, which is not permissible. Despite any terminology of benefits being vested, it was clear from the fact that in some years there could be a loss and thus a negative attribution to members' accounts that members did not have any certain or immediate entitlement, whether vested in interest or possession, to any part of the fund. 1. I believe that the meaning of the annual members' accounts can be resolved without resort to the SIS Act and Regulations or to the cases referred to by Mr Berglund, rather relying solely on the trust deed. There is no question of the trustees binding themselves in advance. The error lies in assuming that art. 5.12 is to be read alone in governing the relevant members' entitlements. 1. In applying the deed, the first question to be clarified is whether the plaintiff was "retiring" or "withdrawing". This determines whether the relevant article of the deed is 5.1 or 5.12. 1. Article 5.1 states: "5.1 A Member shall be entitled to a Retirement Benefit in the event that: (a) the Member retires from the employment with his Employer on or after his Normal Retirement Date ..." Under art. 1.1, "retirement" or "retires" has the same meaning as defined in the SIS Regulations. Regulation 6.02(2) provides that "retirement" has the meaning given in reg. 6.02(7), which states that a person's retirement is taken to occur: "(a) in the case of a person who has reached a preservation age that is less than 60 -- if: (i) an arrangement under which the member was gainfully employed has come to an end; and (ii) the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis". 1. The plaintiff, who was born in 1940, had reached his preservation age of 55 in 1998. His employment with Iverston had come to an end, but he did not intend to retire from the workforce in 1998: so much was admitted in the plaintiff's Amended Reply. He therefore did not "retire" in the relevant sense and thus art. 5.1 is not the appropriate provision by which to determine his entitlement. In addition, there is no age specified as the "normal retirement date" in the SIS Regulations, failing which Normal Retirement Date must mean the day of attaining age 65. The result is that the plaintiff had not reached the Normal Retirement Date and accordingly art. 5.1 could not apply. 1. I then turn to art. 5.12, which reads: "OTHER TERMINATIONS OF EMPLOYMENT 5.12 Should a Member's employment terminate before his Normal Retirement Benefit Date for any reason not specified in Articles 5.1 to 5.11 inclusive the Trustees may decide to pay a Withdrawal Benefit and such entitlement and the amount thereof shall be determined by the Trustees in their absolute discretion PROVIDED THAT the amount of the said Withdrawal Benefit shall not exceed the balance of the Member's Individual Account at the date of termination PROVIDED FURTHER THAT the amount of the said Withdrawal Benefit shall not be less than the Member-Financed Benefit and the Employer-Financed Vested Benefit of the Member at the date of withdrawal and any other requirements of the Commissioner ..." 1. Notwithstanding any uncertainty about the meaning of Normal Retirement Date, it was not disputed that it is under art. 5.12 that the plaintiff's entitlements are to be determined. The trustees' "absolute discretion" to determine the amount of the benefit is limited by the proviso that it may not be less than the total of the Member-Financed Benefit and the Employer-Financed Vested Benefit. "Member-Financed Benefit" as defined in art. 1.1 relevantly means the Member's own contributions and net earnings on those contributions. There were no Member-Financed Benefits in this case. "Employer-Financed Vested Benefit" in respect of a Member is defined in art. 1.1 to mean: "any part or all of the contributions made by the Employer of that Member ... and conferred on that Member to be an entitlement on resignation or withdrawal and includes amounts to which that Member becomes entitled upon withdrawal or as a result of the exercise of a discretion by the Trustees or the Employer as to the amounts of benefits payable upon withdrawal or which are otherwise deemed by the Commissioner to be an Employer-Financed Vested Benefit." In essence, Employer-Financed Vested Benefits consist of any amounts paid by the employer. Mr Berglund pointed out that, in contrast to the Member-Financed Benefits, Employer-Financed Vested Benefits do not include net earnings on the amounts contributed. 1. By the clear words of this definition, the deed clearly contemplates Employer- Financed Vested Benefits being conferred on a resigning member as an entitlement outside the terms of art. 5.12 itself. The words "conferred on that Member to be an entitlement on resignation or withdrawal" do not indicate that the conferral must be at the time of resignation or withdrawal. If anything, the words suggest the possibility of conferral before that time. In addition, the use in the definition of includes gives a broad meaning to the conferral. The specified instances relate to the member becoming entitled to amounts upon resignation or withdrawal, clearly contemplating that the member may already be entitled to other amounts. Finally, the option of conferral by exercise of a discretion by the Employer is outside the scope of art. 5.12. In summary, art. 5.12 is not the only route by which amounts can become Employer- Financed Vested Benefits. Indeed, it would be curious and inconsistent if contributions could only be attributed or allocated under the deed upon the exercise of the trustees' discretion at the time of resignation: art. 4.8(c) contemplates that Employer-Financed Vested Benefits will be recorded in the member's Individual Account each year. This does not leave the discretion in art. 5.12 meaningless, since there may be reserves in the fund which require discretionary allocation at the time of a member's withdrawal. However, its extent is limited. 1. The effect of the definition is that, despite the lack of specific reference to amounts vesting in or accruing to member's accounts, it is quite possible for amounts to effectively vest or accrue by virtue of being "conferred" as an entitlement. I am in no doubt that it was possible under the deed to confer a benefit as an Employer-Financed Vested Benefit on the plaintiff (or, for that matter, the defendant) during his employment. I find that this is what was done each year during his employment by means of the annual statements. When those statements referred to member's benefits being vested, this is what was contemplated. Mr Berglund may be correct in saying that the amounts allocated in the annual accounts were not vested in interest or possession, but this is not what was required to be done under the deed. 1. I add that once an entitlement is created, the trustees are required to prevent a member's benefits being reduced. Mr Garde referred to provisions of the SIS Regulations, which I have already mentioned. He also pointed to cl. 7 of the deed, which states: "The Trustees with the agreement of the Principal Employer may at any time by oral resolution or by instrument in writing amend all or any of the provisions of this Deed PROVIDED THAT any amendment which reduces any benefit that has accrued to any Member ... and which retrospectively reduces benefits accrued or payable to any Member, shall require the written approval of the Commissioner or all the Members of the Fund or any other requirement of the Commissioner ..." This provides a clear level of protection for a member's benefits. In this case, no agreement has been reached among the trustees to amend the deed in such a way as to reduce benefits accrued to the plaintiff, and no such agreement has obtained the approval of all the members or the Commissioner. 1. I can but conclude from the plain words of the deed that the entire amount shown in the plaintiff's annual statements up to 30 June 1997 were Employer-Financed Vested Benefits, and that accordingly his withdrawal benefit could not fall below that amount under the terms of art. 5.12. 1. The question remains of how to deal with amounts accrued to the fund after 30 June 1997. The issue, in the context of my analysis of the deed, is whether amounts had been conferred on the plaintiff. I do not think it can be said that there was any act, whether by the trustees or by Iverston as employer, to confer amounts on one member or another, unless I find that there was an agreement amounting to an exercise of discretion under art. 5.12 on 23 February 1998. I now turn to consider this question. 6. Was any discretion properly exercised under art. 5.12 of the trust deed? 1. In order to determine whether any discretion was exercised under art. 5.12 of the deed on 23 February 1998, it is necessary to set out the events of that day in greater detail. To summarise the situation leading up to that date as I have found the facts: on 22 January the plaintiff presented calculations of his entitlements to the defendant and specific figures were raised for the first time; they then satisfied themselves that the trust deed did not provide for a 50/50 split; on 30 January the defendant telephoned Harrington in London for advice; on 19 February the plaintiff and the defendant met with Harrington, the plaintiff asked the defendant to sign an updated ETP statement, the defendant asked the plaintiff to resign from Iverston without causing hassles or delays, and the conversation ended on the basis that the defendant would take some time to consider his position. 1. 19 February was a Thursday. The following Monday, 23 February, there were several telephone conversations, as I have mentioned above. The critical conversation is the one where the defendant said "please, please, please do not ask me to sign anything". The exact words used are significant, so I will quote from the transcript at some length. The plaintiff gave the following account of the conversation in examination in chief. "When he phoned you, what did he say? --- He said he understood where I was coming from with respect of the super moneys, he said that as far as he was concerned I could have them - he said that don't ask him to sign the termination statement, that it was asking too much that he felt uncomfortable about signing and he enquired of Mr Harrington that I as trustee could sign and he was happy for me to have the funds. Yes? --- I asked him if this was - if he was sure that this was his decision, he said that he was - that his word was his bond. Did he ask you anything about your resignation? --- Yes. I said that we'd meet the following day - I suggested we meet the following day at Iverston's offices to get under way the conclusion of the financial statement of the half year ending '97, to enable the winding up of Iverston - from my withdrawal from the company." There was a similar account in cross-examination: "Mr Irving said that he understood where I was coming from and I don't know what that meant, but he - that he said I could have the - my share of the super fund and would I resign from Iverston and help get those things under way, but don't ask him to sign, it was a - may feel awkward about it, of signing. He said he had checked with Phil Harrington, and Phil Harrington advised him, and he told me that I could sign as trustee, I hadn't thought about it at that stage. And asked me not to delay. I asked Mr Irving if he was sure that this is his decision. He said it was, that his word was his bond." 1. The plaintiff went on to describe that he specifically remembered the defendant using the words "My word is my bond" because it was an expression that the plaintiff used often, but the defendant rarely. The defendant denied using those words which he said were completely foreign to him. While it is not of central importance whether the defendant used these words, in my view the plaintiff's explanation has the ring of truth and I accept and prefer the plaintiff's account that the defendant did use them. 1. I also accept the plaintiff's evidence in relation to the remainder of the conversation. The defendant's account is much briefer. He said: "You can have your share of the superannuation fund but please, please, please do not ask me to sign anything". In giving his evidence, he emphasised the words "his share", as though they had a special meaning which, I take it, was exactly half of the fund. I am prepared to find that the defendant did use the words "his share". They appear in one of the plaintiff's accounts of events. The question is whether they can be given the meaning contended for by the defendant. I do not think they can, for a number of reasons. 1. First is the context of the preceding discussions. It is quite clear that the plaintiff's position was that his entitlement was in accordance with the annual statements and that the defendant's position was that the fund should be divided equally. There is not the slightest indication that the plaintiff considered "his share" of the fund to be an equal portion. It would be disingenuous to suggest, based on the evidence as given, that the defendant thought he had conveyed that meaning or that the plaintiff understood that to be his meaning. Remember that the plaintiff went on to discuss with Harrington, Williams and the CBA the payment of $1.3 million, not some lesser amount. If the defendant intended to convey that the plaintiff was welcome to 50% of the fund but not what the plaintiff actually claimed, he would, if acting reasonably, have gone further to clarify the situation. This was not a circumscribed discussion where words were few and deliberately chosen. It was a normal conversation, although there was much at stake. 1. Secondly, it must be remembered that the discussions involved a negotiation process: the plaintiff wanted the defendant to sign the ETP statement and thus to approve the amount of his entitlement; the defendant wanted the plaintiff to resign from Iverston so that he could get on with the Australia Post project on his own. The tenor of the conversation on 23 February, by whichever account, is that each side is making a concession. It cannot be realistic to think that the plaintiff would agree to give up his bargaining tool, namely his resignation from Iverston (which he thought he still had at that stage because the defendant had not yet conveyed his "brainwave"), without anything in return and without saying more. I again refer to the fact that the plaintiff acted in the following days on the basis that he was entitled to the $1.3 million and, I add, on the basis that he would resign from Iverston. 1. Thirdly, if the defendant had in fact meant that he agreed to the plaintiff having half of the fund and this was accepted by the plaintiff, it is difficult to understand why he would have any reluctance to sign any paperwork required to put the supposed consensus into effect. He had negotiated and won. If anything, he would want to sign the documentation promptly before the plaintiff changed his mind. 1. This brings me to the statement "please, please, please do not ask me to sign anything". What significance can be attached to this statement? In particular, can it mean that the defendant was refusing to sign a CBA cheque required to transfer monies out of the fund? 1. The following exchange occurred in cross-examination of the defendant. "You would have no problem about signing something that gave him half of the fund? --- At that point in time, no. No problem about it whatever, would you? --- I couldn't bring myself to sign it or wouldn't bring myself to sign it. Why not? --- I had been taken down an emotional road that was unnecessary and he had reassured me he could sign the fund on his own account as one trustee." It is apparent from these answers that the defendant's objective in not signing "anything" was not to prevent the plaintiff from having access to whatever it was they had agreed he was entitled to. Rather, it was a question of his emotions. It would be extraordinary indeed, regardless of whether the defendant wished the plaintiff to have $1.3 million or half of the fund, if he refused to do anything to put the agreement into effect. In fact, it makes a nonsense of the entire conversation. Remember that the ETP statement was a document that all believed (whether that is the fact I am unaware) could have been signed by the plaintiff himself, but which he wished the defendant to sign for appearance's sake. In this context, the request by the defendant not to make him sign anything is consistent with the "anything" being merely the ETP statement. It was the document under consideration in this conversation and the conversations leading up to it, and would have been at the forefront of the defendant's mind. There were no CBA documents before the defendants. The singular "it" he refers to in his second quoted answer can, I think, only be the ETP statement. While the defendant gave evidence in cross-examination that he was aware in general terms that his signature was required to operate the fund's account from about November 1997 when he signed the CBA form, I find that, if sense is to be made of this conversation on 23 February, he cannot have had this in his mind when he said what he did. It would be absurd if he made the offer while intending not to allow it to be put into effect. 1. I should mention the conversation that the defendant had with Michael Taylor of the CBA on 27 February: see [42] above. On this occasion, the defendant asked Taylor whether he was sure he could proceed to make a payment without the defendant's signature. I think the inference is clear that at this stage the defendant was aware of the requirement for his signature to operate the account, at least to the extent necessary to raise it as a possible issue. The defendant in fact said in cross- examination that it was from the time of this meeting that he knew that it was not possible to withdraw moneys from the fund without his signature. This answer of the defendant supports my earlier conclusions about his level of awareness on 23 February. I do not think it is possible to infer from the defendant's awareness on 27 February that this matter was in the forefront of his mind constantly from the time he signed the CBA form, and that he was fully aware of the consequences of that form. 1. Based on the above paragraphs, I conclude as follows about the conversation between the plaintiff and defendant on 23 February 1998. The defendant said words to the effect that the plaintiff could have his share of the fund. For the reasons I have given above, this cannot be taken to be an offer of 50% of the fund. Rather, I find that the defendant acceded to what the plaintiff had said all along was "his share". In other words, there was a meeting of the minds that the plaintiff was entitled to an amount calculated in accordance with his annual statements. The defendant also said "please, please, please do not ask me to sign anything". For the reasons I have given, the "anything" cannot be taken in an absolute sense. In particular, and I so find, it cannot be taken to mean that the defendant was refusing to sign documents required to operate the CBA account to effect the meeting of the minds I have just referred to. The "anything" was, in fact, the ETP statement showing the plaintiff's benefit in the vicinity of $1.3 million. 1. The consequence of these conclusions of fact would be that the trustees had resolved to grant the plaintiff his entitlement as per the ETP statement requested by the plaintiff on 19 February 1998, i.e. they had exercised their discretion under art. 5.12 that his withdrawal benefit should be $1,365,478. The effect of my conclusion must be subject to two questions of law raised by Mr Berglund. 1. The first question is whether the trustees were unable to exercise any discretion in the trust deed because they were unaware of its terms. The evidence in this case is that at no stage until some days before the trial did the plaintiff have regard to art. 5.12. In fact, he "didn't know it existed" and "really didn't understand the import of it". Mr Berglund submits that any purported exercise of discretion under art. 5.12 must therefore be a nullity, relying on Turner v Turner. 1. In that case, the settlor established a trust, the trustees of which were his father, his sister-in-law and her husband. None of the trustees were familiar with trusts or understood their duties as trustees. Two of them thought that any duties under the trust would only arise if something happened to the settlor, in which case they would be responsible for looking after the interests of the settlor's family. Decisions about the trust were made by the settlor based on legal advice; the trustees were not consulted, but were merely asked by the settlor to sign documents which they did not read and which were not explained to them. One trustee said he had no business looking into the settlor's affairs. The trustees did not meet. Two of them did not realise that the documents they were signing required any consideration or decision by them. 1. Mervyn Davies J, having referred to the obligation of trustees to periodically consider whether to exercise a power as described by Megarry V-C in Re Hay's Settlement Trusts, said: "Accordingly the trustees exercising a power come under a duty to consider. It is plain on the evidence that here the trustees did not in any way 'consider' in the course of signing the three deeds in question. They did not know they had any discretion during the settlor's lifetime, they did not read or understand the effect of the documents they were signing and what they were doing was not preceded by any decision. They merely signed when requested. The trustees therefore made the appointments in breach of their duty, in that it was their duty to 'consider' before appointing, and this they did not do." Later, his Honour said: "The authorities I have mentioned, including Re Hastings-Bass, permit the inference that, in a clear case on the facts, the court can put aside the purported exercise of a fiduciary power, if satisfied that the trustees never applied their minds at all to the exercise of the discretion entrusted to them. If appointors fail altogether to exercise the duties of consideration referred to by Sir Robert Megarry V-C then there is no exercise of the power and the purported appointment is a nullity."[22] His Honour proceeded to set aside the appointments on the facts before him. 1. I note that those facts were quite exceptional. The trustees' only involvement in the operation of the trust was to sign documents that were placed before them. Their understanding of the purpose, functions and operations of the trust were extremely limited. 1. I further note in relation to the first passage I have quoted that the central issue is not the failure to read or understand documents, but rather the failure to consider whether to exercise the power. The former may be an indicator of the latter and may be consistent with it, but I do not consider his Honour to be saying that the one is determinative of the other. 1. Thus the real question I must answer in this case is whether the trustees properly considered whether to exercise the relevant power. One factor that may be relevant is whether the trustees read and understood the trust deed, and specifically art. 5.12. 1. The facts in this case are quite different to those in Turner. I do not think it fatal to the question of consideration whether the plaintiff (or, for that matter, the defendant) knew of the terms of art. 5.12. On the facts as I have found them, I think it is clear that the trustees did give consideration to their power and went through a process of discussion and negotiation to reach a decision. They may not have known the article number, but they were aware that the deed governed their activities as trustees and that any decision as to entitlements would be made by them as trustees. So much can be inferred from the hunt for the trust deed following the conversation on 22 January 1998: see [77] above. They, or more likely Harrington, would then have had to look to the deed for the precise source of their decision-making power. 1. While it does not decide the question, it might be noted that, if I upheld Mr Berglund's submission in this case, there would be many trustees in this country whose decisions might be subject to nullification because of ignorance of the terms of their trust deed. 1. The second question raised by Mr Berglund is whether I can look behind the exercise of discretion by the trustees to examine and review it. Australian law in this area is well settled. In Karger v Paul, McGarvie J stated: "In my opinion the effect of the authorities is that, with one exception, the exercise of a discretion in these terms will not be examined or reviewed by the courts so long as the essential component parts of the exercise of the particular discretion are present. Those essential component parts are present if the discretion is exercised by the trustees in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. The exception is that the validity of the trustees' reasons will be examined and reviewed if the trustees choose to state their reasons for their exercise of discretion."[24] His Honour went on to describe how the Court may examine the evidence in order to decide whether the "essential component parts" are present. However, it is not open to the Court to use that evidence to impugn the exercise of the discretion as unwise or unjustified or based on wrong facts. "In short, the Court examines whether the discretion was exercised but does not examine how it was exercised." 1. Karger has been followed in Victoria in cases such as ASEA Brown Boveri Superannuation Fund No 1 Pty Ltd v ASEA Brown Boveri Pty Ltd and Esso Australia Ltd v Australian Petroleum Agents' & Distributors' Association. It has also been followed in other Australian jurisdictions. 1. Mr Berglund submitted, on the basis of the principles as expressed by McGarvie J, that in this case the plaintiff had acted in his own interests at all times without regard to the deed and his obligations as trustee. In other words, he had not acted upon real and genuine considerations. In addition, the plaintiff had held a predetermined view as to his entitlement, thus acting for an improper purpose. Accordingly, Mr Berglund submitted, I should review the trustees' decision. 1. I do not agree. The plaintiff may have been acting in his own interests, in the sense that he would receive a benefit from the trustees' decision, but in the circumstances of two trustees being the two members it would be impossible for the trust to operate if either trustee did not take part in decisions from which he benefited. What is more relevant is whether the plaintiff sought to deliver himself any improper benefit. In this regard, I note my earlier findings in relation to the annual statements, namely that under the latest deed they operated to confer the entire amount in the member's account as Employer-Financed Vested Benefits to which the member was entitled upon withdrawal in accordance with art. 5.12. This continued up to the 1997 annual statement. Thus the only real discretion to be exercised was in relation to any amount accrued to the fund after 30 June 1997, and it was not unreasonable, in my opinion, for the plaintiff to expect that this amount would be divided pro rata in accordance with Harrington's calculations in the same way it had been done in previous years. It cannot be said that the plaintiff acted dishonestly in any way to procure himself the entitlement. In these circumstances, it is not open for me to conclude that the plaintiff did not act upon real and genuine considerations or that he acted for an improper purpose. This submission too must fail. I will not look behind the trustees' decision. 1. In the result, I find that the trustees did exercise a discretion consistent with art. 5.12 on 23 February 1998, and that there is no legal reason for the decision not to stand. Regardless of Mr Berglund's legal submissions, however, my findings of fact in relation to 23 February 1998, namely that the trustees reached agreement, would allow me to conclude that the amount in the ETP statement was "conferred" on the plaintiff as an entitlement on resignation or withdrawal and therefore constituted his Employer-Financed Vested Benefit, the minimum amount for his withdrawal benefit. The scope of the "absolute discretion" in art. 5.12 was therefore essentially nil. 7. What is the appropriate course of action on the part of the Court? 1. I heard submissions from counsel on what course I should adopt if I found that the discretion in art. 5.12 had not been exercised, in particular whether I should exercise the discretion on behalf of the trustees or whether I should appoint new trustees to exercise it independently. 1. Mr Garde submitted that the Court has the widest powers to administer the fund in this case under RSC Chapter I Rule 54.02. If necessary, I should exercise the discretion under art. 5.12 myself and order payment out of the fund. 1. Mr Berglund submitted that the Court should only exercise a discretion on behalf of a trustee when there is only one course open to the trustee acting properly. He relied on Minehan v AGL Employees Superannuation Pty Ltd and cases referred to by Gallop ACJ therein, namely Rapa v Patience and Vidovic v Email Superannuation Pty Ltd. 1. Having found that the plaintiff and defendant reached agreement on 23 February 1998, I do not need to consider the submission in relation to art. 5.12. However, there is a further discretion to be exercised under the deed, contained in art. 5.13 with reference to art. 2.6. This discretion arises when a member requests that a withdrawal benefit be paid in the form of a transfer to another superannuation fund, which is what the plaintiff did in fact request. In these circumstances, art. 2.6 states that: "the Trustees may with the agreement of the Member transfer ... directly to the trustees of that other superannuation fund ... such portion of the assets of the Fund as the Trustees consider equitable ..." 1. I do not think this discretion, which is in an article relating to what can perhaps be called the technicality of payment, can be considered to supplant or override the discretion in art. 5.12 which creates an entitlement. The purpose of the discretion in art. 2.6 is, I think, to prevent payment to an unregulated fund. It is not to affect a member's entitlement bestowed in another part of the deed. 1. I think, therefore, in the circumstances of this case, that the discretion can only be exercised in one way and that is to pay to the plaintiff the amount that the trustees determined to give him on 23 February 1998. Regardless of whether I accept Mr Garde or Mr Berglund's submissions, and I do not decide the question either way, I am not restrained from exercising the discretion. 8. What is the effect of the interposed unit trust arrangement? 1. As already mentioned, the plaintiff and defendant conducted the Reservoir, Box Hill and Ballarat projects by means of the fund investing in units in a geared unit trust. 1. Mr Berglund submitted that the interposed unit trust arrangement breached the SIS Act, as a result of which the fund may be subject to substantial tax liability. The tax advantages afforded to superannuation funds would cease to apply to the fund because it invested in an associated entity prohibited by the in-house test in s. 71(2), and because the transactions were not on an arm's length basis as required by s. 109. As a consequence, the fund ceased to be for the sole purpose of providing benefits to the members in accordance with s. 62. In addition, the sole purpose test was not satisfied, Mr Berglund seemed to submit, because of the risky nature of the projects: the evidence was that it was not known until completion whether each project would make a profit, and this tended to show that the purpose of investing in the projects was to assist Iverston in funding a building project. For all of these reasons, Mr Berglund submitted, it would be improper for the trustees to allow distributions from the fund until the tax liability of the fund is clarified. The fact that the trustees took professional advice does not affect the validity of the scheme. 1. Mr Garde submitted that the validity of the arrangement was not raised by the Defence, and that there was neither the evidence nor the necessary parties to properly decide the matters referred to by Mr Berglund. I agree. The relevant paragraphs of the Amended Defence, omitting particulars, are as follows. "31. ... [T]he Defendant as trustee of the Fund: 31.1 is not satisfied that the amount said to be standing to the credit of the Plaintiff as his entitlement and standing to the credit of other members of the Fund as their entitlement are amounts which are final because he is of the opinion that there is a question of the liability of the Fund to pay tax and penalty tax pursuant to the provisions of the Income Tax Assessment Act 1936, and 31.2 is of the opinion that until such liability is determined it would be improper for the Trustees to exercise any discretion vested in them pursuant to the provisions of the Amended Trust Deed or to make any payment to any person entitled to any payment under the provisions of the Amended Trust Deed. 32. The Plaintiff has not agreed to refer to the Income Tax Commissioner the issue of compliance of the Fund with the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth) and the liability of the Fund to tax as set out in paragraph 31 hereof. 33. Until the matters referred to in paragraph 31 hereof [are] referred to the Income Tax Commissioner it would be improper for the Trustees to make any determination as to entitlement of any member of the Fund or to make any payment to any member entitled to any payment." 1. These paragraphs are somewhat loosely worded. Paragraph 31 merely addresses the defendant's state of mind. It does not allege breach by the trustees. Paragraphs 32 and 33 envisage that the question of tax liability should be referred to the Commissioner of Taxation. The clear inference is that I should not determine the matter in this proceeding. And I would not do so. The Commissioner of Taxation is the logical and, I think, proper contender on this issue but was not a party to the proceeding. Nor was there satisfactory evidence or argument on the point. If the matter is to be pursued, it must be at another time in another context. 1. I note that in the plaintiff's Reply, he offered to undertake that, in the event of the Commissioner of Taxation assessing any amount as due and payable in respect of the plaintiff's benefit and entitlement in the fund, he would pay the assessment from his own monies or indemnify the defendant and the fund for the amount of the assessment. This offer stood at the end of the trial. In fact, the plaintiff was even prepared to offer security. In light of my conclusion in the previous paragraph, I do not require the plaintiff to provide any such undertaking or security as a condition of this judgment. 1. While it is not necessary to make any factual findings in this area, I do point out that it could be found on the facts that issues relating to the sole purpose, in-house and arm's length tests were not in the mind of the defendant at any time before this litigation was commenced. His action in making inquiries of the ATO and attempting to run the argument about invalidity, which are clearly against his own financial interests, could be seen as evidence of a vendetta mentality and judged to impact adversely on his credit. 9. Conclusions 1. The plaintiff sought a declaration as to his entitlement in the fund and it is appropriate to grant it. That was $1,365,478 as at 23 February 1998. 1. In view of the history of this matter I will also order that within a limited period, which Mr Garde suggested be in the order of 30 days, the defendant do all things necessary to effect a transfer to or at the direction of the plaintiff of the amount to which he is entitled. 1. The other aspect of relief is a claim for damages, being the loss suffered by the plaintiff as a result of not having the use of his entitlement. The plaintiff sought damages either under s. 55(3) of the SIS Act or on account of the defendant's breach of his obligations as trustee. Mr Berglund did not address a submission as to the basis on which damages, or an award of compensation in equity for a breach of trust, might be awarded, and in view of the conclusions I have reached it is unnecessary to do so. I have accepted the evidence of the expert Romic in relation to calculations.I also accept his opinion that, in effect, $1,614,340 is a conservative estimate of what the plaintiff's entitlement would be worth as at 30 April 2000. This amount, being what the plaintiff would have obtained in a balanced fund, is less than the $1,692,974 he would have achieved if he invested the entitlement as he stated he would have, but in my observation the plaintiff is a cautious man and the return from investment in a balanced fund is more reflective of the likelihood of investment he would have made. 1. It will be necessary to bring the amounts in Romic's evidence up to date. The form of orders can then be determined. Accordingly, I will stand the matter over and in due course hear counsel on the terms of the orders appropriate to implement the judgment and as to costs. --- Table 1 The Fund Dunstone Irving

FY Balance Movement Balance Contribution by Balance Contribution by Iverston Iverston

1990 121,287 31,887 79,850 16,212 41,437 8,145

1991 176,522 55,235 114,363 35,932 62,158 21,954

1992 229,512 52,990 148,058 Nil 81,456 Nil

1993 776,451 546,939 500,550 1,350 275,900 1,350

1994 809,027 32,068 521,218 1,350 287,807 1,350

1995 712,825 (96,202) 458,799 1,800 254,026 1,800

1996 2,630,086 1,917,261 1,692,618 Nil 937,466 Nil

1997 2,060,177 (569,909) 1,325,848 Nil 734,328 Nil

1998 2,129,153 68,976 1,370,238 Nil 758,914 Nil Table 2 Dunston Irving e

FY Motor Persona Super- Total Motor Persona Super- Total vehicle l annuatio benefit vehicle l annuati benefit purchas n purchas on es es

1986 Nil Nil 14,302.0 14,302.0 Nil Nil 7,700.00 7,700.00 0 0

1987 15,493.0 8,077.81 14,302.0 37,872.8 11,369.4 16,191.4 7,700.00 35,260.86 6 0 7 2 4

1988 17,134.4 1,679.60 14,302.0 33,116.0 12,260.8 12,396.4 7,700.00 32,357.25 0 0 0 4 1

1989 13,831.1 11,494.3 15,959.0 41,284.4 11,165.5 30,829.4 7,967.00 49,962.04 6 2 0 8 6 8

1990 7,259.55 14,163.2 16,212.0 38,634.7 4,203.83 17,352.7 8,145.00 29,701.58 2 0 7 5

1991 Nil Nil 35,932.0 35,932.0 180.83 3,475.25 21,954.0 25,610.08 0 0 0

1992 87.98 1,216.41 Nil 1,304.39 457.30 2,698.69 Nil 3,155.99

1993* Nil 1,448.68 1,350.00 2,798.68 457.00 1,751.69 1,350.00 3,558.69

Total 53,806.1 38,080.0 112,359. 204,245. 40,094.7 84,695.7 62,516.0 187,306.4 5 4 00 19 8 1 0 9

* Includes up to 31 Decemb er 1993

I refer below to the plaintiff signing a resignation as director of Iverston Pty Ltd. On the same day he signed a resignation as trustee of the fund, that resignation was accepted and the defendant's wife was appointed replacement trustee. He signed the documents in the belief that he was to receive his entitlement in the fund. When it became apparent that that would not happen, he recalled his resignation as director of Iverston Pty Ltd. Before me, counsel for the defendant said that in the circumstances the resignation as a trustee was of no effect and that the appointment of the replacement trustee was not relied on as "a valid or considered appointment". The case was conducted on the basis that the plaintiff and defendant continued to be the trustees of the fund. In relation to annual members' statements, which formed part of the bundle of documents, the defendant claimed that he only saw and signed the members' statements in 1993 and 1994. Roberts' review of the documentary evidence found the defendant's signature on the members' statements only in 1994. If any documents were signed by a single trustee, their validity was not called into question on that account during the trial. The plaintiff's evidence was that for the first three years the contributions were equal and that Harrington's suggestion came after that. This is not consistent with the amounts recorded in the black book (see below) and the amounts particularised under paragraph 12 of the plaintiff's Reply. I reject the plaintiff's evidence on this point. In fact, there is evidence in a letter from the plaintiff to Jones dated 24 November 1994 that the plaintiff was already considering retirement on his 55th birthday in March 1995. In the letter, the plaintiff seeks to clarify the value of his superannuation benefits, in what form they might be withdrawn and the tax implications of withdrawal. He refers to his benefits being "over subscribed in respect to the R.B.L." This letter was not referred to in the course of the trial but was in evidence, being part of the material referred to by Roberts in preparing his expert witness statement and being attached to that statement. The resignation was later withdrawn. That was the date to which he could take his analysis on the data he had before him when he prepared his report. I add that I accept the plaintiff's evidence as to his intention to transfer his entitlement to his own fund, which was established in January 1998, and to invest it in the areas he stated. See the definition of "mandated employer-financed benefits" in reg. 5.01(1). See Dunstan v Houison (1901) 1 SR(NSW)Eq 212; 18 WN(NSW) 302; Watson's Bay and South Shore Ferry Co Ltd v Whitfield [1919] HCA 69; (1919) 27 CLR 268 at 277; and Re Allen-Meyrick's Will Trusts; Mangnall v Allen-Meyrick [1966] 1 All ER 740 at 743-4. See Glenn v Federal Commissioner of Land Tax [1915] HCA 57; (1915) 20 CLR 490 at 495-6 and 499-500. "Normal Retirement Date" is defined in art. 1.1 to mean "the day of attaining age 65 or such other age as specified by [the SIS Regulations]". See the definition of "preservation age" in reg. 6.02(2). It may be that the current reference in the Regulations should be to "preservation age" as defined in reg. 6.02(2) but this was not put to me. Even if this were the case, art. 5.1 would still not apply in this case given my conclusion that the plaintiff did not "retire". I take it that this is a typographical error and that the reference should be to "Normal Retirement Date". These articles deal with termination of employment by reason of retirement, death, or permanent or temporary disablement. A Member's Individual Account is the separate account maintained in respect of the Member in accordance with art. 4.8 and containing information such as contributions made in respect of the Member and net earnings on those amounts. I restate that the 1997/1998 accounts were never signed. See [[] above. [1983] 2 All ER 745. [1981] 3 All ER 786 at 793. Mr Berglund also referred in support of such an obligation to Whishaw v Stephens; Re Gulbenkian's Settlement Trusts [1970] AC 508 at 518 and Karger v Paul [1984] VicRp 13; [1984] VR 161 at 164. [1983] 2 All ER 745 at 752. [1974] 2 All ER 193; [1975] Ch 25. [1983] 2 All ER 745 at 753. [1984] VicRp 13; [1984] VR 161. [1984] VicRp 13; [1984] VR 161 at 163-4. [1984] VicRp 13; [1984] VR 161 at 164. [1999] 1 VR 144. [1999] 3 VR 642. [1998] ACTSC 114; (1998) 134 ACTR 1. Supreme Court of NSW, McLelland J, 14 April 1985, unreported at 14-5: see Minehan at [65]. Supreme Court of NSW, Bryson J, 3 March 1995, unreported: see Minehan at [66]. He relied on Trevisan v Commissioner of Taxation (1991) 29 FCR 157 and Australian Prudential Regulation Authority v Holloway [2000] FCA 579; BC 200002383. See Mahoney v Commissioner of Taxation (1965) 39 ALJR 62; [1966] ALR 888 and AAT Case 10,301 (1995) 95 ATC 374; (1995) 31 ATR 1067 (The "Swiss Chalet" case). In fact, it was the Amended Defence in which these paragraphs appeared for the first time.

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