AUSTRALIAN EXECUTOR TRUSTEES LTD

Case [2024] SASC 138

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

AUSTRALIAN EXECUTOR TRUSTEES LTD

[2024] SASC 138

Decision of the Honourable Associate Justice Bochner  

EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES - INDEMNITY, LIEN AND REIMBURSEMENT - RELEVANT PRINCIPLES

Vesting of trust assets - new trustee

Uniform Civil Rules 2020 (SA); Trustee Act 1936 (SA), referred to.
Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd [2010] VSC 268; Hickey v Attorney General of the State of New South Wales 2021] NSWSC 772; Re McCready [2004] NSWSC 887; Re Suco Gold Pty Ltd (In liq) (1983) 33 SASR 99; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576; Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371; Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344; Pitard Consortium Pty Ltd & Ors v Les Denny Pty Ltd & Ors [2019] VSC 614; Ridge Estate Pty Ltd v Fairfield pastoral Holdings Pty Ltd [2024] FCAFC 17, considered.

AUSTRALIAN EXECUTOR TRUSTEES LTD
[2024] SASC 138

CIVIL

Introduction

  1. On 14 September 2022, Australian Executor Trustees Limited (“AET”) was appointed by court order as trustee of the JJRIT Investment Trust (“the JJRIT Trust”) and the Westfield Station Testamentary Trust (“the WST Trust”). Until this order was made, JJR Investment Holdings Pty Ltd had been the trustee of the JJRIT Trust and Westfield Station Nominees Pty Ltd had been the trustee of the WST Trust. I will refer to these companies as “the former trustees”. The directors of the former trustees are Fiona Roche and Deborah Hamilton; their relationship has broken down as a result of which the former trustees’ boards were deadlocked. AET was appointed as the trustee to replace the former trustees, ultimately by consent. At the time that the orders were made appointing AET, vesting orders were not made with respect to the assets of each trust.

  2. AET has now brough this application seeking orders for the vesting of the assets of each trust in it, as trustee. Much correspondence passed between AET and Ms Roche (and their respective lawyers) on the question of the vesting of assets; while some assets have been vested in AET, there remains a significant degree of difference between the position of AET and that of Ms Roche on the vesting of the remaining assets. I am satisfied that it is appropriate to make vesting orders given the intractability of the dispute between AET and Ms Roche and the efforts that have been made to resolve that dispute without recourse to the Court.

    The assets of the JJRIT Trust

  3. The assets of the JJRIT Trust comprise:

    ·Real property in North Adelaide. At the time that this action was commenced, there existed on the certificate of title, two caveats lodged by Mrs Hamilton and her husband. Those caveats have now been removed.

    ·Choses in action, including loans…

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AUSTRALIAN EXECUTOR TRUSTEES LTD [2024] SASC 138
Case
[2024] SASC 138
Decision Date

CaseChat Overview and Summary

The case before the court involved Australian Executor Trustees Limited, which sought to establish the appropriate terms under which former trustees could retain trust property for indemnity purposes. The legal dispute centred around the rights of the former trustees to retain trust property to protect their right of indemnity and whether the current trustee, AET, was obligated to provide undertakings regarding the preservation of the trusts' assets. The matter was heard in the Supreme Court.

The court was tasked with determining whether the former trustees had a legitimate claim to retain any trust property to safeguard their right of indemnity, and whether the current trustee was required to provide specific undertakings to ensure the preservation of the trust assets. Additionally, the court needed to resolve the issue of costs, specifically whether the former trustee, Ms Roche, was entitled to have her costs paid from the trust assets on an indemnity basis or if she should receive costs on the standard basis.

The court ruled that the former trustees were not entitled to retain any trust property to protect their right of indemnity, aligning with the principles outlined by Brereton J in Lemery. The court found that the authorities did not support Ms Roche’s argument that AET must provide specific undertakings regarding the preservation of the trust assets. Despite AET's protest, the court accepted the proposed undertakings with modifications, including an increased notice period and formal inclusion of Ms Roche as an interested party. The court also decided that Ms Roche was entitled to her costs on the standard costs basis, acknowledging her contribution to the proceedings.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

I am satisfied that the correct position on the facts before me is that the former trustees are not entitled to retain any of the trust property, in order to protect their right of indemnity. I accept that the position is as stated by Brereton J in Lemery, in the passage quoted at [34] hereof. I am further satisfied that the authorities do not support Ms Roche’s contention that AET must provide undertakings in relation to the preservation of the trusts’ assets.Conclusion AET has proffered undertakings, despite its protest that they are not required. In the circumstances, I consider that it is appropriate to make the orders and undertakings proposed by AET, save that the notice period will be increased to twenty days, and there will be the inclusion of an order formally joining Ms Roche as an interested party. I do not consider that the additional words in the undertakings proposed by Ms Roche are necessary, given the agreement between the parties as to the fundamental principles which apply to the rights of a former trustee with respect to trust property.Costs Ms Roche seeks to have her costs of and incidental to this application paid from the assets of the trusts on an indemnity basis. This is not agreed by AET. I consider that it is appropriate that Ms Roche receives a costs order in her favour. Her involvement in this matter has been of assistance to the Court. I consider that she is entitled to her costs on the standard costs basis.

Ratio Decidendi

Legal Principle Established

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