and Nicholson Street Pty Ltd (ACN 069 104 089) (Receivers & Managers Appointed) (in Liquidation) v Mark Ronald Letten and Paul James Lane

Nicholson Street, as liquidators of companies in liquidation, commenced proceedings against former officers of the companies, Mark Ronald Letten and Paul James Lane, alleging breaches of trust and accessory liability in relation to managed investment schemes. The primary judge stayed the proceeding on the basis that, because the plaintiffs were allegedly dishonest and fraudulent trustees, an independent party representing the beneficiaries’ interests should be joined to the proceeding. The plaintiffs appealed the decision. The former officers cross-appealed on the basis that the primary judge should have found them not liable for breaches of trust or accessory liability. The appeal was allowed and the cross-appeal dismissed. The primary judge’s stay order was set aside and the proceeding remitted to the primary judge for further consideration on the merits.

The appeal required the court to determine whether the primary judge was correct in staying the proceeding. The primary judge held that the plaintiffs were not appropriate parties to bring the proceeding because they were allegedly dishonest and fraudulent. The primary judge considered it necessary for an independent party to be joined to the proceeding to represent the interests of the beneficiaries. The plaintiffs submitted that the primary judge erred in requiring an independent party to be joined because a trustee, even if itself party to wrongdoing, may bring a proceeding to redress a breach of trust without joining beneficiaries or a representative if the trustee can properly represent the interests of the beneficiaries. The former officers submitted that the primary judge should have found them not liable for breaches of trust or accessory liability. The court held that the primary judge was incorrect in staying the proceeding as the plaintiffs were able to properly represent the interests of the beneficiaries in the proceeding. The court held that the plaintiffs could bring the proceeding to redress the breaches of trust without joining an independent party or a beneficiary representative. The court held that, even if the plaintiffs were party to wrongdoing, they could still bring the proceeding if they could properly represent the interests of the beneficiaries.

The primary judge’s stay order was set aside. The proceeding was remitted to the primary judge for further consideration on the merits. The former officers’ cross-appeal was dismissed. The appeal was allowed.