Application by Eastwood Retirement Pty Ltd - [2022] VSC 568

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2022 03066

IN THE MATTER OF AN APPLICATION PURSUANT TO RULE 54.02 OF THE SUPREME COURT (GENERAL CIVIL PROCEDURE) RULES 2015 (VIC) FOR JUDICIAL ADVICE
APPLICATION BY:
EASTWOOD RETIREMENT PTY LTD (ACN 130 786 195) (AS TRUSTEE FOR THE EASTWOOD RETIREMENT UNIT TRUST)	Plaintiff

---

JUDGE:	Elliott J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 September 2022
DATE OF RULING:	26 September 2022
CASE MAY BE CITED AS:	Application by Eastwood Retirement Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 568

---

TRUSTS AND TRUSTEES – Judicial advice – Trustee sued – Whether trustee justified in defending claims – Legal advice – Reasonable prospects of success – Whether appropriate to pay for defence costs out of trust assets – Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 54.02(2), 54.03(c).

---

APPEARANCES:	Counsel	Solicitors
For the plaintiff	Mr S Cromb	HWL Ebsworth

IntroductionA.

The plaintiff, Eastwood Retirement Pty Ltd (as trustee for the Eastwood Retirement Unit Trust) (“Eastwood”), has made an application for judicial advice in relation to a proceeding presently on foot in this court (“the Main Proceeding”). Eastwood is the defendant in the Main Proceeding brought by Joseph Finance and Investment Pty Ltd (as trustee for the Lifestyle Investment Unit Trust) (“Joseph”). The interlocutory steps in the Main Proceeding are well advanced and it is due to be set down for trial not before 6 December 2022.

Until very recently, Eastwood has chosen not to seek judicial advice. However, events that occurred in April and May 2022 have resulted in it bringing this application.

For the reasons that follow, the advice is that Eastwood is justified in defending the claims made against it in the Main Proceeding, and that it is appropriate to pay, and Eastwood would be justified in paying, in the first instance, its costs of defending the Main Proceeding out of the assets of the Eastwood Retirement Unit Trust.

BackgroundB.

It is unnecessary to go into extensive detail about the claims made in the Main Proceeding. In very broad terms, Joseph claims that it was and remains entitled to exercise an option to purchase real property held by Eastwood, together with a retirement village business owned and managed by Eastwood (“the Retirement Village”) at a price which is substantially less than the current value of the Retirement Village.[1] Thus, if Eastwood accedes to the claims or is ordered to do so, the unitholders of the Eastwood Retirement Unit Trust (“the Eastwood Unitholders”) would receive an amount which would be significantly less than the present value of the units (which is, in turn, based in large part on the current value of the Retirement Village).[2] In these circumstances, there could be no issue that it is in the interests of the majority of the Eastwood Unitholders for Eastwood to defend the claims made against it in the Main Proceeding if Eastwood has a substantive defence.[3]
[1]Although the parties may differ on…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Application by Eastwood Retirement Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2022] VSC 568
Decision Date: 26 September 2022

CaseChat Overview and Summary

Eastwood Retirement Pty Ltd applied for judicial advice regarding whether it was justified in using trust assets to defend claims against it in its capacity as trustee. The claims against Eastwood Retirement Pty Ltd arose from the operation of a retirement village. The application was heard in the Supreme Court of Victoria. The court was required to determine whether Eastwood Retirement Pty Ltd, in its capacity as trustee, was justified in defending the claims and, if so, whether it was appropriate to pay for those defence costs out of the trust assets.

The court considered the relevant legal framework, including the Supreme Court (General Civil Procedure) Rules 2015 (Vic). The court noted that, under the rules, a trustee may be justified in using trust assets to defend claims if there are reasonable prospects of success. The court also considered the importance of trustees acting in the best interests of the beneficiaries when making decisions about the use of trust assets. The court examined the evidence provided by Eastwood Retirement Pty Ltd and the legal advice it had obtained. It concluded that, based on the evidence and advice, there were reasonable prospects of success in defending the claims. The court found that it was therefore appropriate for Eastwood Retirement Pty Ltd to use trust assets to pay for the defence costs.

The court's decision provides guidance to trustees in similar situations. It confirms that trustees may be justified in using trust assets to defend claims if there are reasonable prospects of success and the decision is in the best interests of the beneficiaries. The decision also highlights the importance of obtaining appropriate legal advice when making decisions about the use of trust assets. The court's final order was that Eastwood Retirement Pty Ltd was justified in using trust assets to pay for the defence costs in the claims against it.

Orders