Cardaci v Cardaci
[2022] WASC 166
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CARDACI -v- CARDACI [2022] WASC 166
CORAM: ALLANSON J
HEARD: 26 APRIL 2022
DELIVERED : 13 MAY 2022
FILE NO/S: CIV 1249 of 2022
BETWEEN: MAE CARDACI
Plaintiff
AND
FILIPPO PRIMO CARDACI
Defendant
Catchwords:
Trusts and trustees - Application by trustee for advice regarding payment of legal costs from trust assets - Application by trustee for advice on entering into litigation funding agreements - Turns on own facts
Legislation:
Trustees Act 1962 (WA)
Result:
Directions given
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr GD Cobby SC & Mr NL Pham |
| Defendant | : | Mr T Bannon SC & Mr T Rogan |
Solicitors:
| Plaintiff | : | Herbert Smith Freehills |
| Defendant | : | Bennett + Co |
Case(s) referred to in decision(s):
Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247
Cardaci v Filippo Primo Cardaci as executor of the estate of Marco Antonio Cardaci [No 5] [2021] WASC 331
Cardaci v Filippo Primo Cardaci as executor of the estate of Marco Antonio Cardaci [No 5] [2021] WASC 331(S)
Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20; (2019) 268 CLR 524
CGU Insurance Ltd v One.Tel Ltd (in liq) [2010] HCA 26; (2010) 242 CLR 174
Cook's Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] QCA 322
Ludwig v Jeffrey (No 4) [2021] NSWCA 256
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66
Marley v Mutual Security Merchant Bank [1991] 3 All ER 198 (PC)
Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572
National Trustees Executors and Agency Company of Australasia Ltd v Barnes [1941] HCA 3; (1941) 64 CLR 268
Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360
Plan B Trustees Ltd v Parker [No 2] [2013] WASC 216
Re Australian Pipeline [2006] NSWSC 1316
Rouse v IOOF Australia (No 3) [1999] SASC 208
Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119
The application of Eurolinx Pty Ltd in its capacity as trustee for the Colbert Security Trust [2017] NSWSC 1306
Washburn Pty Ltd v Cardaci [2022] WASCA 43
Young v Murphy [1996] VR 279
ALLANSON J:
Introduction
The plaintiff, Mae Cardaci, is the widow of Marco Antonio Cardaci.
Ms Cardaci is a member of the class of general beneficiaries of two discretionary trusts: the Washburn Trust, established by deed dated 6 September 1995; and the Marco Antonio Cardaci Testamentary Trust (Marc's Testamentary Trust), established by Grace Cardaci, by her will.
In 2016 and 2017, Ms Cardaci brought two actions:
(1)an action in which she sought an order pursuant to the Family Provision Act 1972 (WA);[1] and
(2)an action (the trust action) in which she sought orders removing the trustees of each of the Washburn Trust and Marc's Testamentary Trust.[2]
[1] CIV 3186 of 2016.
[2] CIV 1750 of 2017.
The two actions were tried together in 2021. Ms Cardaci was largely successful in each action.
Ms Cardaci is the first respondent to two appeals brought by five of the defendants in the trust action.
By originating summons, filed 14 March 2022, Ms Cardaci seeks directions under s 92 of the Trustees Act 1962 (WA). The summons was amended on 17 March, 22 April, and then again at the hearing on 26 April 2022. Ms Cardaci seeks these orders:
1.The time for service of this application and the entry of any appearance by the defendant be abridged to enable the application to be heard on an expedited basis.
2.A direction that the Plaintiff, in her capacity as trustee of the Washburn Trust, is justified in using monies from the assets of the Washburn Trust to meet:
(a)her past unpaid legal costs and future legal costs incurred by her in her capacity as trustee of the Washburn Trust after 1 October 2021 in relation to CIV 1750 of 2017; and
(b)her past unpaid legal costs and future legal costs incurred by her in her capacity as trustee of the Washburn Trust after 1 October 2021 in relation to CACV 101 of 2021 and CACV 7 of 2022.
3.A direction that the Plaintiff, in her capacity as trustee of Marc's Testamentary Trust, is justified in using monies from the assets of Marc's Testamentary Trust to meet:
(a)her past unpaid legal costs and future legal costs incurred by her in her capacity as trustee of Marc's Testamentary Trust after 1 October 2021 in relation to CIV 1750 of 2017; and
(b)her past unpaid legal costs and future legal costs incurred by her in her capacity as trustee of Marc's Testamentary Trust after 1 October 2021 in relation to CACV 101 of 2021 and CACV 7 of 2022.
4.A direction that the Plaintiff, in her capacity as trustee of the Washburn Trust, is justified in entering into:
(a)an amended and restated litigation funding agreement in respect of legal costs incurred by her in her capacity as trustee of the Washburn Trust after 1 October 2021 in substantially the form of attachment MC-17 to the affidavit of Mae Cardaci dated 22 April 2022; and
(b)an amended and restated retainer agreement in respect of legal costs incurred by her in her capacity as trustee of the Washburn Trust after 1 October 2021 in substantially the form of attachment MC-16 to the affidavit of Mae Cardaci dated 14 March 2022.
5.A direction that the Plaintiff, in her capacity as trustee of Marc's Testamentary Trust, is justified in entering into:
(a)an amended and restated litigation funding agreement in respect of legal costs incurred by her in her capacity as trustee of Marc's Testamentary Trust after 1 October 2021 in substantially the form of attachment MC-17 to the affidavit of Mae Cardaci dated 22 April 2022; and
(b)an amended and restated retainer agreement in respect of legal costs incurred by her in her capacity as trustee of Marc's Testamentary Trust after 1 October 2021 in substantially the form of attachment MC-16 to the affidavit of Mae Cardaci dated 14 March 2022.
5A.A direction that the Plaintiff, in her capacity as trustee of the Washburn Trust, is justified in using monies from the assets of the Washburn Trust to meet the costs of investigating (including obtaining legal advice in respect of) claims against the Defendant and/or Washburn Pty Ltd's legal representatives in CIV 1750 of 2021 with respect to the use of assets of the Washburn Trust to meet Washburn Pty Ltd's costs of defending those proceedings, and to commence proceedings in respect of any such claim or claims including by the issue of a writ of summons indorsed with a statement of claim so as to prevent any such claims becoming statute-barred, but not to proceed further with any such claims without further directions from this Honourable Court.
5B.A direction that the Plaintiff, in her capacity as trustee of Marc's Testamentary Trust, is justified in using monies from the assets of Marc's Testamentary Trust to meet the costs of investigating (including obtaining legal advice in respect of) claims against the Defendant and/or Rectangular Pty Ltd's and Ongold Pty Ltd's legal representatives in CIV 1750 of 2021 with respect to the use of assets of Marc's Testamentary Trust to meet Rectangular Pty Ltd's and/or Ongold Pty Ltd's costs of defending those proceedings, and to commence proceedings in respect of any such claim or claims including by the issue of a writ of summons indorsed with a statement of claim so as to prevent any such claims becoming statute-barred, but not to proceed further with any such claims without further directions from this Honourable Court.
6.An order that the Plaintiff's costs and expenses of and incidental to this application may be paid out of the assets of the Washburn Trust and Marc's Testamentary Trust.
Before the amendments, Ms Cardaci's application sought orders that she was justified in using money from the assets of the two trusts to meet 'her past unpaid legal costs and future legal costs' in both the original action and the appeals. The summons did not purport to distinguish between costs incurred by Ms Cardaci on her own behalf before her appointment as trustee, and those she incurred as trustee. The defendant's written submissions were largely directed to that considerably wider relief.
The evidence
Ms Cardaci relied on an affidavit she affirmed on 14 March 2022, and a second affidavit affirmed 22 April 2022. The second affidavit was in response to criticisms made of the proposed amended and restated litigation funding agreement and provided a further amended agreement.
Ms Cardaci also relied on three affidavits of Alan James Mitchell. The first two, one of which was confidential, were affirmed on 17 March 2022. Mr Mitchell's third affidavit was affirmed on 22 April 2022. Mr Mitchell is a legal practitioner, a partner in the firm Herbert Smith Freehills who act as solicitors for Ms Cardaci, and has the care and day‑to‑day conduct of this application.
The defendant relied on one affidavit of Shemali Marianne Samaraweera, a legal practitioner employed at Bennett + Co, the solicitors for the defendant.
Apart from the first affidavit of Ms Cardaci, the evidence is primarily documentary with the affidavits of the solicitors attaching court documents, other documents, and some correspondence between them.
The trust action
On 10 May 2017, Ms Cardaci commenced the trust action against seven defendants:
(1)Filippo (Philip) Primo Cardaci as executor and trustee of the estate of Marco Antonio Cardaci;
(2)Washburn Pty Ltd as trustee for the Washburn Trust;
(3)Rectangular Pty Ltd as trustee for Marc's Testamentary Trust;
(4)Ongold Corporation Pty Ltd;
(5)Duporte Coproration Pty Ltd;
(6)Powercity Pty Ltd; and
(7)Angela Francesca Carla Florido.
Ms Cardaci deposed that, on 29 November 2018, she entered into a litigation funding agreement with LCM Operations Pty Ltd to secure funding for her costs of the two actions after she had exhausted her ability to fund the actions herself. On 27 March 2019, Ms Cardaci entered into a retainer agreement with Herbert Smith Freehills and LCM Operations with respect to her engagement of Herbert Smith Freehills as solicitors in the two actions.
The litigation funding agreement and the retainer agreement were amended on 20 August 2020.
The two actions were tried together before Le Miere J over 30 days between 16 March 2020 and 22 October 2020.
On 1 October 2021, Le Miere J delivered reasons for judgment in both actions.[3] On 4 October 2021, his Honour made orders in the actions. On 23 December 2021, his Honour delivered supplementary reasons and made further orders, including orders with respect to the costs of the actions.[4]
[3] Cardaci v Filippo Primo Cardaci as executor of the estate of Marco Antonio Cardaci [No 5] [2021] WASC 331.
[4] Cardaci v Filippo Primo Cardaci as executor of the estate of Marco Antonio Cardaci [No 5] [2021] WASC 331(S).
The orders in the trust action
In summary, Le Miere J made orders removing Washburn and Rectangular as the trustees of the Washburn Trust and Marc's Testamentary Trust, and appointing Ms Cardaci forthwith as the trustee for each of the trusts. His Honour made consequential orders vesting the real and personal property of each trust in Ms Cardaci as trustee, and ordering the defendants to deliver up documents.
His Honour also declared that, since the death of Marc Cardaci, Philip Cardaci has been the sole Guardian in respect of the Washburn Trust. Specified powers of the trustee require the consent of the Guardian.
Justice Le Miere ordered that Philip Cardaci, Washburn and Rectangular each jointly and severally pay 90% of Ms Cardaci's costs of the proceeding, including all reserved costs, to be taxed if not agreed. His Honour made special costs orders removing limits in the relevant cost determinations.
His Honour further held that defendants were not entitled to indemnity from the assets of the trusts with respect to their liability to Ms Cardaci for costs or their own costs of the proceeding.
His Honour ordered that Washburn pay to Ms Cardaci, as trustee of the Washburn Trust, the amount of all monies paid from the assets of the Washburn Trust for the purpose of meeting all or any of Washburn's (or any other defendant's) costs of the proceeding, together with interest, and an account be taken for this purpose.
His Honour ordered Rectangular and Ongold, jointly and severally, to pay to Ms Cardaci, as trustee of the Marco Cardaci Testamentary Trust, the amount of all monies paid from the assets of Marc's Testamentary Trust for the purpose of meeting all or any of their (or any other defendant's) costs of these proceedings, together with interest, and an account be taken for this purpose.
His Honour made procedural orders for the taking of accounts.
The appeals in the trust action
On 22 October 2021, five of the defendants in the trust action, Philip Cardaci, Angela Florido, Washburn, Rectangular, and Ongold filed a notice of appeal in relation to the orders made in the trust action on 1 October 2021.[5]
[5] CACV 101 of 2021.
On 28 January 2022, the same five defendants filed a notice of appeal in relation to the further orders made in the trust action on 23 December 2021.[6]
[6] CACV 7 of 2022.
Ms Cardaci is the first respondent to each appeal. Duporte Corporation and Powercity are also named as respondents. Ms Cardaci is the only respondent who is actively opposing the appeals.
In CACV 101 of 2021, the appellants rely on 11 grounds of appeal. The appellants seek orders, including that Ms Cardaci be removed as trustee of each trust, and that Washburn be appointed trustee of the Washburn's Trust, and Rectangular be appointed as trustee of Marc's Testamentary Trust. The appellants also seek orders for the vesting of all real and personal property in Washburn and Rectangular, delivery up of documents, and costs.
In CACV 7 of 2022, the appellants rely on nine grounds. The appellants seek orders in CACV 7 of 2022 that Washburn and Rectangular are entitled to indemnity from the assets of the trusts with respect to any liability for costs, and for their own costs of the proceedings.
Since the appeal notices were filed, the Court of Appeal has made two interlocutory decisions. On 11 February 2022, the court ordered the three corporate appellants to pay security for the costs of the appeal in CACV 101 of 2021. On 1 April 2022, the court dismissed an application by the appellants for a stay of, or suspension of the enforcement of, orders requiring payments to Ms Cardaci, including the payment of costs.
The proposed litigation funding agreements
The original funding agreement
Ms Cardaci (as Claimant) entered into a litigation funding agreement with LCM Operations Pty Ltd (as Funder) on 29 November 2018.[7] The agreement began with four recitals, the fourth of which was: 'The Claimant shall prosecute the Action for the joint benefit of the Claimant and the Funder'. Perhaps such a recital reflects contemporary reality. I will resist the temptation to comment further on it.
[7] Affidavit of Mae Cardaci affirmed 14 March 2022, MC-4.
The basic structure of the funding agreement was that the Funder would pay the Action Costs and any Adverse Costs.[8] If the result was that the Claimant became entitled to the receipt of monies or distributions on a periodic basis (for example, as a beneficiary of a discretionary trust), or the result was the appointment of the Claimant as trustee of the trusts which were the subject of the action, then the Funder was to receive a Recovery Premium calculated as three times the funding costs.
[8] Clause 3. By cl 5, the funder could require the Claimant to enter into an ATE insurance policy.
Ms Cardaci has been appointed as trustee of the trusts the subject of the trust action.
The Amendment and Restatement Agreement proposed in March 2022
In her affidavit of 14 March 2022, Ms Cardaci attached a proposed Amendment and Restatement Agreement relating to litigation funding. She proposed to enter into that agreement in her own capacity, and as trustee of each of the two trusts.[9] Ms Cardaci was named in the agreement as a party on her own behalf as 'the Cardaci Claimant', as trustee of the Washburn Trust ('the Washburn Claimant'), and as trustee of Marc's Testamentary Trust ('the MTT Claimant').[10]
[9] MC-15.
[10] References in the agreement to the MTT are to Marc's Testamentary Trust.
By the recitals the Agreement was supplemental to the original litigation funding agreement. The Funder agreed, subject to the terms of the Agreement, to make amendments to the original funding agreement, including providing the Claimants with financial and other assistance in respect of the Action, Appeals and Taxation. The recitals again provided that the Claimants shall prosecute the Action, Appeals and Taxation for the joint benefit of the Claimants and the Funder, subject to the proviso that the two trustee claimants were not obliged to act in breach of or otherwise fail to comply with any duty as a trustee.
By cl 2, the obligations of the Washburn Claimant and the MTT Claimant were subject to and conditional upon the claimants obtaining approval of the Supreme Court to enter the agreement. The costs of obtaining that approval are an Action Cost.
Pursuant to the Amendment and Restatement Agreement, the parties proposed to enter into an Amended and Restated Litigation Funding Agreement. The basic structure of the agreement was unchanged, while particular clauses reflected the increased scope.
By cl 10.2, the Claimants agreed to pay the Funder's Interest set out in sch 1, item 6. The Funder's Interest included a Recovery Premium, calculated as three times the Outstanding Funding, payable:
if the Recovery[11] and/or the result or outcome achieved by the Claimants or to which the Claimants become entitled, arising out of or related to the Action, is the receipt of monies or distributions on a periodic basis, the amount(s) of which are unknown until these monies or distributions are received (for example, as a beneficiary of a discretionary trust), or the appointment of the Claimants as trustee of any of the trusts which are the subject of the Action.
[11] Defined in cl 1.30 as, relevantly, 'all and any amounts received by any Claimant, or to which any Claimant is or becomes entitled (whether paid or liable to be paid by any Defendant, or otherwise) related to or arising out of the Action …'.
The Amended and Restated Litigation Funding Agreement and the terms of the originating summons filed on 14 March 2022 were subject to substantial criticism in the written submissions filed by the defendant. It is not necessary to discuss it further because, as a result of the criticism, Ms Cardaci amended the application and put forward a proposed further amended litigation agreement.
The Restated Agreement now proposed
The amendment to the application limits the directions sought to Ms Cardaci's past unpaid legal costs and future legal costs 'incurred by her in her capacity as trustee of the Washburn Trust after 1 October 2021'.[12] The litigation funding agreement is still intended to be supplemental to the agreement dated 29 November 2018, as amended.[13] The structure of the agreement has been substantially altered to make separate provision for the Recovery related to the Washburn Claimant and the MTT Claimant.[14]
[12] I assume the date of publication of reasons was chosen to allow for costs incurred between Friday, 1 October 2021, and the making of orders appointing Ms Cardaci as trustee on the following Monday.
[13] Proposed Amendment & Restatement Agreement, Recital A.
[14] Identical provision, save for the name of the trust, was made for each trust. I will use the provisions relating to the MTT Trust.
First, the parties now included the following definition:
1.23. 'Funder's MTT Costs Interest' has the meaning given in Item 7 of Schedule 1 to this Agreement.
Item 7 provides:
Funder's MTT Costs Interest means the sum of:
(a)the MTT Action Costs paid or to be paid by the Funder; and
(b)three times the aggregate of the total MTT Action Costs paid or to be paid by the Funder.
The MTT Action Costs were defined at cl 1.30:
'MTT Action Costs' means any of the following incurred for the benefit of the beneficiaries of The Marco Antonio Cardaci Testamentary Trust in the period after 1 October 2021:
1.30.1.Action Costs paid or payable by the Funder;
1.30.2.Adverse Costs paid or payable by the Funder; and
1.30.3.Any security for Adverse Costs paid or payable by the Funder in an Action and / or an Appeal, (other than by way of ATE Insurance or a Deed of Indemnity).
The definition of Outstanding Funding now excludes the 'Trustee Costs' - defined as 'the MTT Action Costs and the Washburn Action Costs'.
Recovery is defined in cl 1.34:
'Recovery' means all and any amounts received by a respective Claimant, or to which a respective Claimant is or becomes entitled (whether paid or liable to be paid by any Defendant, or otherwise) related to or arising out of the Action, or the proceeds of the sale of property realised for the purposes of paying the Funder's MTT Costs Interest or the Funder's Washburn Costs Interest including:
1.34.1.Any Judgment, settlement sum or compromise in an Action or as negotiated;
1.34.2.Any order, award, settlement sum or compromise in respect of interest and/or costs;
1.34.3.Any capital sum or income; and
1.34.4.The value of any releases or other consideration or benefits of whatever form received by that respective Claimant.
For the avoidance of doubt, any interest earned on moneys posted as security, or any costs paid by a Defendant in favour of any Claimant, is included.
As I understand it, Recovery would include any amount to which Ms Cardaci becomes entitled in her capacity as trustee, although her receipt of that amount is subject to her obligations under the relevant trust instrument.
The obligations of each claimant, pursuant to cl 7, now include an obligation to recover any Recovery 'including by way of the MTT Claimant and the Washburn Claimant exercising any right of indemnity against trust assets'.
A new cl 10A provides separately for Receipt and Distribution of Recoveries by the two trustee claimants. I will set out the provision for the MTT Claimant - the provision for the Washburn Claimant is relevantly identical:
10A.1The Funder and its officers, employees or consultants do not offer any assurance as to any economic benefit to the Washburn Claimant or MTT Claimant from entering into this Agreement.
10A.2In consideration of the Funder agreeing to enter into this Agreement and performing its obligations in respect of payment of the Trustee Costs:
10A.2.1the MTT Claimant agrees to make payment to the Funder (and to instruct the Solicitors to make payment to the Funder) of the Funder's MTT Costs Interest;
10A.3If the MTT Claimant receives any Recovery[15] prior to discharge of the Funder's MTT Costs Interest, the MTT Claimant must pay or procure the payment of that portion necessary to pay the Funder's MTT Costs Interest into the trust account of the Solicitors, where it is to be held on trust for the MTT Claimant (to the extent of their interest) and the Funder.
10A.5The Funder requires an irrevocable authority to be given to the Solicitors to notify the Funder in the event of a Recovery and to make payment of the Funder's MTT Costs Interest and the Funder's Washburn Costs Interest in accordance with clause 10A.7.
10A.7As soon as reasonably practicable:
10A.7.1the MTT Claimant must (and must instruct the Solicitors to) take all steps necessary to distribute the Recovery to discharge the Funder's MTT Costs Interest;
10A.8The Parties acknowledge and agree that if the Recovery includes any property other than cash, the Washburn Claimant and MTT Claimant will do all things necessary to realise and convert this property to cash (to the extent required in order to pay the Funder's MTT Costs Interest and/or the Funder's Washburn Costs Interest) as promptly as reasonably possible and then apply it in accordance with clause 10A.7.
10A.9Nothing in this clause 10A shall be construed as requiring any Claimant to breach or otherwise fail to comply with any duty as trustee of any trust the subject of the proceedings.
[15] Relevantly, 'all and any amounts received by a respective Claimant, or to which a respective Claimant is or becomes entitled (whether paid or liable to be paid by any Defendant, or otherwise) related to or arising out of the Action'.
The definition of Action has not changed, so that it includes any appeal that the Funder elects to fund and includes into the Agreement.
The effect is that, in consideration for the Funder paying costs 'incurred for the benefit of beneficiaries' after 1 October 2021, the trustee of each trust must pay to the Funder the costs paid or to be paid by the Funder plus three times the aggregate of the costs. If either trustee receives or becomes entitled to any amount related to or arising out of the action prior to discharge of the Funder's Interest, that trustee must pay or procure the payment of that portion necessary to pay the Funder's Costs Interest into the trust account of the Solicitors, where it is to be held on trust for the trustee (to the extent of their interest) and the Funder.
The retainer agreement
The proposed retainer agreement is between Herbert Smith Freehills (the Solicitor), and the Funder, and the Claimants (Ms Cardaci in her own capacity and as trustee of each of the trusts). The retainer agreement and the litigation funding agreement are closely tied: for example, terms of the retainer agreement are defined by reference to the definitions in the funding agreement. To the extent of any inconsistency between the Funding Agreement and the Retainer Agreement, the Funding Agreement prevails.[16]
[16] Funding Agreement, cl 8.5.
The retainer agreement is also conditional upon approval of the court for Ms Cardaci in her capacity as trustee of each trust to enter into the agreement.[17]
[17] MC-16, Retainer Amendment and Restatement Agreement cl 2.
By cl 45 of the retainer agreement, the Solicitors agree that if they receive any Recovery (as defined in the funding agreement) they must hold those amounts on trust jointly for the Claimants and the Funder to be applied and distributed in accordance with the funding agreement.
Schedule 1 to the retainer agreement identifies a 'Core Team', which includes two partners of the Solicitor, and sets out the hourly rates to be charged. It also sets out a fee cap (which does not appear to include counsel fees) of approximately $1.5 million, not including GST. Were this agreement to be approved together with the funding agreement, the potential exposure of the trusts for the successful defence of the appeals (the Funder's Costs Interest for the trusts) may exceed $6 million.
The trusts
It is not necessary to set out the terms of the trust instruments in any detail.
The Washburn Trust
The Washburn Trusts was established by deed dated 6 September 1975. Relevantly to this application, the Deed provides that:
(1)the trustee has powers to borrow and raise money from any person, including a beneficiary or trustee, with or without security and on such terms and conditions as the trustee shall think fit;[18] and to pay out of the trust fund of the income for costs charges and expenses incidental to the management of the Trust Fund the exercise of any power or authority or discretion contained in the deed;[19]
(2)the trustee is not liable for any loss or damage occasioned to the trust fund by the exercise of any discretion or power conferred on the trustee unless that loss or damage shall be proved to have been committed 'in personal conscious and fraudulent bad faith';[20]
(3)the trustee is entitled to be indemnified out of the assets comprising the trust fund against liabilities incurred in the execution of attempted execution of the trusts, authorities, powers and discretions or by virtue of being a trustee.[21]
[18] MC-1, cl 7.3.
[19] Cl 7.7.
[20] Cl 10.
[21] Cl 16.
The beneficiaries of the trust are the general beneficiaries: a broadly defined class including members of his family, and corporations and trusts in which a beneficiary has an interest. The Trust Deed was amended in 2012 to appoint Ms Cardaci as an additional member of class of general beneficiaries, permitting distributions to her in Marco Cardaci's lifetime.
Marc's Testamentary Trust
The trust was created under the will of Grace Angelina Cardaci as one of three testamentary trusts created for her children. The terms of the trust were set out in Sch F of the will.
The trustee is possessed of the trust fund with power to pay, apply or set aside the income of the trust fund for all or one or more of the beneficiaries in the trustee's absolute discretion.[22] The trustee is given the power to hold, apply deal with the trust fund as the trustee thinks fit with such powers, discretions and authorities in all respects as if the trustee is the absolute owner.[23]
[22] MC-3, cl 7(b).
[23] Cl 8(a).
The class of beneficiaries under the testamentary trust is of similar scope to those under the Washburn Trust.
Schedule G to the will conferred further extensive powers on the trustee, including powers to borrow or raise money or other financial accommodation for any purpose upon the security of the trust fund.
The power of the trustee to seek the advice of the court
There is an overriding question of whether the court should, in its discretion, give directions to Ms Cardaci as trustee of each trust. The discretion under s 92 is unfettered, but the exercise of the discretion is guided by principles developed in the authorities.
Some propositions are well established. First, s 92 is a provision conferring jurisdiction and it is inappropriate to imply or impose limitations that are not found in the express words.[24] Second, there is nothing in the section which precludes its use in relation to adversarial proceedings, including in cases where one remedy sought is the removal from office of the trustee seeking the advice.[25] Third, the discretion is confined only by the subject matter, scope and purpose of the legislation.[26] Having regard to the particular words of s 92, the only limitation is that the plaintiff point to a question respecting any property subject to the trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee. If a trustee wishes to seek judicial advice on a question related to the bringing or defending of legal proceedings, the trustee may properly do so only if the legal proceedings are themselves concerned with the property subject to the trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.[27] Fourth, applications for judicial advice provide personal protection to the trustee, but have the no less important purpose of protecting the interests of the trust.[28]
[24] Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 [55] (Macedonian Orthodox Community Church).
[25] Macedonian Orthodox Community Church [56].
[26] Macedonian Orthodox Community Church [59].
[27] See The application of Eurolinx Pty Ltd in its capacity as trustee for the Colbert Security Trust [2017] NSWSC 1306 [25]; Re Australian Pipeline [2006] NSWSC 1316 [23] ‑ [25]. I have allowed for the difference in wording of s 63 of the Trustee Act 1925 (NSW).
[28] Macedonian Orthodox Community Church [72].
As a general statement, a trustee should not take steps in the defence of a claim relating to the trust without first obtaining judicial advice about whether it is proper to defend the proceedings.[29] In Plan B Trustees Ltd v Parker [No 2], Edelman J commented that it will generally be necessary for the trustee to have taken reasonable steps to form its own opinion on the subject about directions which are sought, including by taking proper advice, before approaching the court for directions.[30]
[29] See Macedonian Orthodox Community Church [74], but see also Ludwig v Jeffrey (No 4) [2021] NSWCA 256 [84].
[30] Plan B Trustees Ltd v Parker [No 2] [2013] WASC 216 [48].
What is in the best interests of the trust must be determined having regard to the particular circumstances of the case.[31] The court is not determining the rights of adversarial parties.[32]
[31] Macedonian Orthodox Community Church [76].
[32] Marley v Mutual Security Merchant Bank [1991] 3 All ER 198 (PC), 201
The summons for directions
The application gives rise to several related, but still discrete questions. With limited exceptions, it is not necessary to distinguish between the Washburn Trust and Marc's Testamentary Trust in identifying the issues.
Ms Cardaci seeks directions with regard to costs incurred, and to be incurred, in the trust action and the two appeals brought by the defendants to that action. Ms Cardaci deposed that to secure additional funding she proposed to enter into agreements, substantially in the form of agreements attached to her affidavits.[33] Each agreement is conditional upon obtaining directions from this court that Ms Cardaci would, as trustee, be justified in entering the agreement.
[33] An amended agreement with the litigation funder was attached to the plaintiff's affidavit of 22 April 2022 as MC‑17.
The terms of the proposed directions 2 and 3 do not, however, refer to the funding and retainer agreements which the plaintiff proposes to enter. The directions are confined to whether the plaintiff is justified in using trust assets to pay legal costs.
Costs of the action: proposed directions 2(a) and 3(a)
The first issue concerns whether Ms Cardaci is justified in using trust assets to pay unpaid legal costs and future legal costs incurred by her in the trustee action where those costs were or are incurred by her 'in her capacity as trustee' after 1 October 2021, the date on which she was appointed by order of the court.
In her first affidavit, affirmed 14 March 2022, Ms Cardaci deposed that as at that date she had incurred unpaid legal costs since the end of the trial including approximately $130,125.52 for the trust action in solicitors' and counsels' fees.[34] She anticipated the need to incur further costs in the taking of accounts for the purpose of ascertaining the amounts required to be repaid by Washburn, Rectangular and Ongold to make restitution of the trust funds they expended in defending the trust action.[35]
[34] Affidavit of Mae Cardaci sworn 14 March 2022 [56].
[35] Affidavit of Mae Cardaci sworn 14 March 2022 [59].
The trusts have no separate legal personality from Ms Cardaci as trustee. If she incurs an obligation to her solicitors for legal costs, she is personally liable and the obligation may be enforced against her. If the legal costs are 'expenses reasonably incurred in or about the execution of the trusts or powers', Ms Cardaci is entitled to reimburse herself or pay or discharge those expenses from trust property.[36] The right of reimbursement in s 71 of the Trustees Act is a statutory recognition of the rule in equity 'that an executor or trustee is entitled as of right to be recouped everything that he has expended properly in his character as executor or trustee'.[37] In National Trustees Executors and Agency Company of Australasia Ltd v Barnes, Williams J said:
Such expressions as acting 'for the benefit of' 'with reference to' or 'on behalf of' the trust estate or in the discharge of his duty as a trustee are used indiscriminately in the judgments, but they all mean the same thing, namely, that the question is whether the costs, charges and expenses are properly incurred by the trustee as an incident of his administration of the estate.[38]
[36] Trustees Act s 71.
[37] National Trustees Executors and Agency Company of Australasia Ltd v Barnes [1941] HCA 3; (1941) 64 CLR 268, 274.
[38] National Trustees Executors and Agency Company of Australasia Ltd v Barnes [1941] HCA 3; (1941) 64 CLR 268, 279.
Ms Cardaci's rights as trustee are not confined to recoupment of amounts paid, but include the power to use trust funds to discharge debts that are properly incurred in the course of trust business.[39]
[39] Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367. Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20; (2019) 268 CLR 524 [24], [29] ‑ [33].
Where the expenses incurred by a trustee are legal costs, there is wealth of authority on the principles to be applied.[40] In Miller v Cameron Latham CJ said, 'as a rule, a trustee is allowed his costs out of the trust estate if his conduct has been honest, even though it may have been mistaken. In the ordinary case a trustee brings or contests legal proceedings on behalf of the trust and not on his own behalf'.
[40] See, for example, Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572, 578 ‑ 579; Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 [10].
In Rouse v IOOF Australia (No 3), speaking of the equivalent provision (s 35(2) in the Trustee Act 1936 (SA)), Lander J said:
Whether costs have been properly or not properly incurred is a matter of fact. In that determination regard will be had to whether the trustee could have sought advice and directions from the court; the legal advice which was taken; the circumstances in which the litigation arose; whether it was initiated or defended by the trustee; the real prospects of success of the litigation; the person or persons who would have benefited in a successful conclusion of the litigation; the conduct of the trustee in the litigation and the result of the litigation.[41]
[41] Rouse v IOOF Australia (No 3) [1999] SASC 208 [38].
The right of a trustee to recoup amounts paid in legal costs is normally reflected in the costs orders following trial. Order 66 r 9(2) of the Rules of the Supreme Court 1971 (WA) provides that, unless otherwise ordered, a trustee shall 'be entitled to the costs of ... proceedings, in so far as they are not recovered from or paid by any other person, out of the [trust] fund'.[42] In this case, I would anticipate further costs orders on completion of the taking of accounts. I understand, from the way the matter has been put before me, that Ms Cardaci wishes to use trust assets now to fund the proceedings, and not wait for a costs order in her favour.
[42] See also Supreme Court Act 1935, s 37, by which the Court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid.
In that context, a direction in the terms sought, that Ms Cardaci is justified in using monies from the assets of the trusts to meet costs incurred by her in her capacity as trustee in the action and the appeal, would add nothing to s 71 if the costs are properly incurred. But it leaves the question of whether particular costs have been properly incurred to be answered. It is necessary to first identify those costs that were, or will be, incurred in Ms Cardaci's capacity as trustee, and to then determine whether they were or will be reasonably incurred in or about the execution of the trusts or powers.
I am satisfied that, following the orders of Le Miere J on 4 October 2021, Ms Cardaci would be acting properly on behalf of the trusts in proceeding in relation to the Indemnity Issues identified in order 20 of those orders, that is the adjourned hearing to consider:
All issues relevant to:
(a)the existence and scope of the Second Defendants entitlement to indemnity against the assets of the Washburn Trust and the existence and scope of the Third Defendants entitlement to indemnity against the assets of the Marco Cardaci Testamentary Trust and the appropriate orders if any to be made to give effect to those conclusions (the Indemnity Issues).
Ms Cardaci would also be acting properly on behalf of the trusts in proceedings arsing from the orders made on 23 December 2021 for the taking of accounts.
First, the dispute relates directly to the assets of the trust. Second, no question arises whether Ms Cardaci has properly or prudently commenced those proceedings: the proceedings follow from orders of the trial judge and the findings his Honour made in the trial of the action. Those orders are subject to appeal, but they are currently in force. On 1 April 2022, the Court of Appeal refused an application for a stay pending resolution of the appeal.[43] Third, it is a proper incident of the duties of Ms Cardaci as an incoming trustee to attempt to recoup amounts owing to the trusts, including amounts apparently resulting from breach of trust by the former trustees. By virtue of her office as trustee, Ms Cardaci is obliged to get in trust property and protect it.[44] That duty includes the duty to take proceedings (unless they would be futile), including proceedings against former trustees, to have a breach of trust redressed.[45] Fourth, following a 30 day trial in proceedings commenced in 2017, it may reasonably be inferred that the amounts in issue justify the use of trust funds in pursuing them, and the costs to the trust should be proportionate to the benefit to be obtained.
[43] Washburn Pty Ltd v Cardaci [2022] WASCA 43.
[44] CGU Insurance Ltd v One.Tel Ltd (in liq) [2010] HCA 26; (2010) 242 CLR 174 [36].
[45] Young v Murphy [1996] VR 279, 281.
In her affidavit of 14 March 2022, Ms Cardaci refers to further legal costs in the trust action, which 'include' those involved in the taking of accounts. It is not apparent what other costs have been or will be incurred.
While I am satisfied that, following her appointment as trustee, Ms Cardaci was and is justified in maintaining the proceedings on behalf of the trusts, that is not the direction sought. Further, whether the costs are reasonably incurred and in a reasonable amount, cannot be determined on the information now before me.
Appeal costs: proposed directions 2(b) and 3(b)
The second issue concerns whether Ms Cardaci is justified in using trust assets to pay unpaid legal costs and future legal costs incurred by her in responding to the two appeals in the trustee action. Again the direction sought is now limited to those costs that were or are incurred by Ms Cardaci 'in her capacity as trustee' after 1 October 2021, the date on which she was appointed by order of the court.[46]
[46] The appeal notice was filed on 22 October 2021.
Ms Cardaci anticipates that she will need to incur significant legal costs in continuing to oppose the appeals, and there is no reason to doubt that she is correct. Ms Cardaci deposed that, at the date of her affidavit of 14 March 2022, she had incurred unpaid legal costs of approximately $225,391.78 in respect of the appeals arising from the trust action. Since then, further costs must have been incurred because she has filed her answer in CACV 7 of 2022.
Ms Cardaci deposed that without additional litigation funding she will not be able to continue to oppose the appeals. LCM Operations is, in principle, prepared to extend litigation funding but require an amended and restated litigation funding agreement, and an amended and restated retainer agreement with Herbert Smith Freehills and LCM Operations. The proposed agreements (outlined above) would bind Ms Cardaci in both her personal capacity and in her capacity as trustee of each of the two trusts.
The principles governing costs for the appeals are the same as those relating to the use of trust assets in the trust action. But there are further considerations. First, Ms Cardaci has not provided legal advice to demonstrate that she has taken advice and properly considered the prospects of the trustee successfully responding to the appeals. Second, the defendant has questioned whether Ms Cardaci is justified in responding to the appeals as trustee, when she has not been named as a party to the appeals in that capacity. The defendant submitted that if the trustee is a proper party to the appeals, the trustee is only formally required to be a party, and should file a submitting appearance. Third, the defendant submitted that the jurisdiction of the court to make the directions has not been enlivened because Ms Cardaci has not sought orders that she is justified in defending the appeals and, if that direction had been sought, it would have been refused.
Because it was mentioned in submissions, I should make clear that, in my opinion, no question arises of the trustee failing to act impartially between beneficiaries in opposing the appeals. Although each appellant could fall within the class of beneficiaries, the appellants do not bring their appeals as beneficiaries. In responding to the appeals, the trustee may properly respond on behalf of the trust.
The fact that Ms Cardaci has not adduced legal advice in this application as to prospects on the appeal is not, in my opinion, of any consequence. Ms Cardaci has the decision and reasons of the primary judge in her favour. She may properly rely on the judgment as a reasonable basis for her to form the view that there are sufficient prospects of success in defending the judgment. The judgment at trial should not be regarded as merely provisional unless and until confirmed on appeal.[47]
[47] See, for example, Cook's Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] QCA 322.
While Ms Cardaci was not named in the capacity 'as trustee of' each relevant trust, the subject of each appeal relates to her in that capacity. The appeal in CACV 7 of 2022 is solely concerned with orders for restitution to the trust fund. Ms Cardaci is personally interested in the outcome of the appeal as a beneficiary who might expect the exercise of the trustee's powers of distribution in her favour. But in responding to the appeal, Ms Cardaci is seeking to recover and protect trust property. By virtue of her office as trustee, she is obliged to get in trust property and protect it.[48]
[48] CGU Insurance Ltd v One.Tel Ltd (in liq) [2010] HCA 26; (2010) 242 CLR 174 [36].
The appeal in CACV 101 of 2021 seeks to overturn the orders that Washburn and Rectangular be removed as trustees of the Washburn Trust and Marc's Testamentary Trust, and the orders appointing Ms Cardaci as trustee of each trust, and challenges the findings on which those orders were based. The trial judge concluded that '[t]he welfare of the beneficiaries and an efficient and satisfactory execution of the Washburn Trust and Marc's Testamentary Trust and a faithful and sound exercise of the powers conferred upon the trustees of those trusts is opposed to Washburn and Rectangular continuing as trustees of the Washburn Trust and Marc's Testamentary Trust respectively'.[49] While Ms Cardaci brought the action as a beneficiary, the orders of the primary judge, and the challenge to them on appeal, directly relate to the welfare of the beneficiaries and the proper execution of each trust. It is not decisive that Ms Cardaci is not named as a party 'as trustee of' each trust. She may properly oppose each appeal on behalf of the trusts and not on her own behalf.
[49] Primary decision [516].
Having regard to the findings of the trial judge, I am satisfied that Ms Cardaci is justified, in her capacity as trustee, in opposing the appeals. I am not satisfied, on the evidence before the court, that I can go further and make orders in terms of the directions sought. As for the costs of the action, the question of what costs are reasonably and properly incurred cannot now be determined.
The agreements: proposed directions 4 and 5
The third issue is whether Ms Cardaci is justified 'in her capacity as trustee' in entering into the amended and restated litigation funding agreement and the amended and restated retainer agreement.
The submissions of Ms Cardaci tie the directions sought regarding the agreements to the question of whether, as trustee, she is justified in opposing the appeals in the trust action. Ms Cardaci submits that without access to further funding, she will have to stop opposing the appeals.
In my opinion, the directions sought are within s 92 of the Trustees Act as they relate to the administration of the trust property and the powers or discretions vested in the trustee. And I am satisfied, for the reasons given earlier, that the plaintiff is justified in opposing the appeals in the trust action. But further considerations apply in considering whether the plaintiff is justified in entering into the funding agreement and associated retainer agreement which have been proposed.
In Australian Executor Trustees v Attorney General (WA), Martin CJ said of the courts powers under s 92:
32All members of the High Court in [Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand] considered that the powers conferred by provisions like s 92 of the Act should generally be exercised for the purposes for which they are conferred, which are the protection of the property of the trust and the protection of a trustee acting properly and in accordance with the directions of the court. Subject to conformity with those overarching purposes, the exercise of the powers conferred by such provisions is discretionary and will depend upon the particular facts and circumstances of each case, unconstrained by inflexible rules or prescriptive standards.
33Nevertheless, the cases do provide some guidance with respect to the exercise of the discretion conferred upon the court. In exercising its powers, the court will generally endeavour to act in the best interests of the beneficiaries of the relevant trust and, where appropriate, will take account of the views of those beneficiaries. Further, ordinarily the court will not exercise its jurisdiction in such a way as to usurp the roles and responsibilities of trustees in relation to the making of commercial decisions or with respect to the conduct of litigation. Rather, the court will be concerned to ensure that the trustee has taken proper advice and given full consideration to all relevant matters before arriving at a reasoned and appropriate decision. If satisfied of those matters, in appropriate cases the court will give the directions sought and thereby confer protection upon a trustee taking action in accordance with those directions.
Ms Cardaci is a beneficiary. The primary judge found that she is 'the prime and natural candidate for provision from each of the trusts' and that no other beneficiary has or can have any reasonable expectation of receiving any distribution from the Washburn Trust.[50] But Ms Cardaci is not the only beneficiary, and in considering the proper exercise of the court's discretion I am not satisfied that I should have regard to her interests only.
[50] Primary reasons [562].
The effect of the litigation funding agreement would be to make Ms Cardaci, as trustee of each trust, liable to the funder for the Funder's Costs Interest. The funding agreement in the terms now proposed was only put forward in the affidavit of 22 April 2022. Senior counsel for the defendant properly submitted that the defendant had not had a proper opportunity to consider the effect of the extensive changes from the agreement attached to the plaintiff's affidavit of 14 March 2022. As a result, the effect of the agreements was not fully argued.
The funding agreement and retainer agreement proposed in the plaintiff's affidavit of 14 March 2022 were, as Ms Cardaci deposed, 'in substantially the same terms as the earlier agreements [for the purposes of trial] save that there are amendments to ensure that I am bound to the agreements in both my personal capacity and my capacity as trustee of each of the trusts'.[51] Ms Cardaci adduced no evidence of any advice she had received or consideration she had given to the effect of entering into the agreements as trustee and the implications for the trust assets. The further amended funding agreement (and the corresponding amendments to the directions sought) were only put before the court on 22 April 2022, in response to the criticism of the proposed earlier draft.[52]
[51] Affidavit of Mae Cardaci affirmed 14 March 2022 [63].
[52] Affidavit of Mae Cardaci affirmed 22 April 2022 [4].
It is not necessary, and because it was not fully argued I do not believe it appropriate, to resolve the proper construction of the amended funding agreement. There are several clauses which, in my opinion, are uncertain in meaning.
I take into account that cl 10.11 and cl 10A.9 expressly provide that the agreement should not be construed as requiring the Claimants to breach or otherwise fail to comply with any duty as trustee of any trust the subject of the proceedings. But the obligations of the Claimants under cl 10 and cl 10A include: to pay the Funder's Costs Interests to the Funder; to pay or procure the payment of any Recovery (which includes all and any amounts received by Ms Cardaci or to which she is or becomes entitled related to or arising out of the Action) into the Solicitor's trust account to be held on trust for the Claimants and the Funder; and to instruct the solicitor to distribute the recovery to discharge the Funder's Costs Interest.
There is no evidence before the court that Ms Cardaci has taken proper legal or other advice and given full consideration to the implications of the agreements for the trusts, and for her obligations as trustee. As the defendant submitted, the history of the amendments to the funding agreement - with a last minute further reamended agreement - suggests no proper consideration has been given. The financial implications for the trusts from liability to pay the Funder's Interest is significant. I am not satisfied that I should give the directions sought.
Investigation of claims against former trustees: proposed directions 5A and 5B
The fourth issue is whether Ms Cardaci is justified in using the assets of the trusts to meet the costs of investigating claims against the former trustees and their legal representatives to the stage of the issue of a writ of summons. Ms Cardaci submitted that it is necessary to investigate those matters now and, if justified, commence proceedings before the possible expiry of the limitation period.
I have earlier referred to the authorities regarding the obligation of trustee to get in trust property and protect it, which may include a duty to take proceedings against former trustees to have a breach of trust redressed. In Application of Macedonian Orthodox Community Church St Petka Inc (No 3),[53] Palmer J referred to the potential personal liability of the trustee and its lawyers to restore the assets of the trust by reason of procuring or participating in a breach of trust or receiving trust property with knowledge of the facts which makes the payments of breach of trust.
[53] Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 [46]. And see in the judgment of the majority in the High Court at [127].
The directions sought in orders 5A and 5B are limited to steps which, in my opinion, are properly directed towards the trustee's duty in the protection of trust property. Having regard to the findings of the trial judge, I am satisfied that there is a proper basis to direct that Ms Cardaci, as trustee, is justified in investigating the potential actions on behalf of the trust. It would follow, pursuant to s 71, that she is entitled to exoneration from trust assets for expenses reasonably incurred in doing so. Having regard to the likely cost of instituting proceedings by a writ with an indorsed statement of claim, and the potential for costs to rapidly escalate once proceedings are commenced, it is preferable, in my opinion, to confine the direction to the investigation and obtaining of advice. Ms Cardaci may then seek further directions. It is, of course, open to her to commence proceedings without further directions, but with a potential risk of personal exposure to costs.
Costs of the application
Finally, Ms Cardaci seeks the costs of the present application for directions be paid out of the assets of the trusts.
The court has a broad discretion in awarding costs in any proceedings brought under the Trustees Act. By s 97, the court may order the costs and expenses of and incidental to an application for an order under the Act to be raised and paid out of the trust property, or 'to be borne and paid in such manner and by such persons as the Court thinks fit'. The court's discretion is guided by the authorities and the rules of court.
A trustee who brings before the court a question arising in the course of the administration of the trust is generally entitled to have its costs out of the fund, either on a solicitor and client or an indemnity basis, if their conduct has been honest.[54] Order 66 r 9(2) of the Rules, provides:
Where a person is or has been a party to any proceedings in the capacity of trustee ... he shall, unless the Court otherwise orders, be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by the trustee ...; and the Court may otherwise order only on the ground that the trustee ... has acted unreasonably, or ... has in substance acted for his own benefit rather than for the benefit of the fund.
[54] Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572, 578 ‑ 579.
Ms Cardaci brought this application for advice in her capacity as trustee, and there is no basis for any finding that she acted unreasonably or for her own benefit in doing so. While Ms Cardaci obtains some protection from advice given under s 92, the advice is for the benefit of the trust.
Because I have not approved the funding agreement, it does not cover the costs of the application.
Ms Cardaci should have the costs of the application from the trust assets.
Conclusion
I would give directions regarding proposed orders 5A and 5B, but in the limited terms set out above. I will also make an order for Ms Cardaci's costs of this application.
I am not satisfied that the court should give directions in the terms sought in proposed orders 2, 3, 4, and 5.
I will hear the parties on the terms of the orders following from these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TB
Associate to the Honourable Justice Allanson
13 MAY 2022
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