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Craven-Sands v Koch

Craven-Sands v Koch

Case [2000] NSWSC 374 19 May 2000

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Reported Decision: [2000] 34 ACSR 341

New South Wales

Supreme Court

CITATION: Craven-Sands & Ors v Koch & Anor [2000] NSWSC 374

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 1879 of 1999

HEARING DATE(S): 10,11,12,13 and 26 April 2000

JUDGMENT DATE: 19 May 2000

PARTIES :

Maaike Craven-Sands (First Plaintiff)
Colin Craven-Sands (Second Plaintiff)
Peter Craven-Sands (Third Plaintiff)
Johannes Craven-Sands (Fourth Plaintiff)
William Craven-Sands (Fifth Plaintiff)
Marianna Craven-Sands (Sixth Plaintiff)
Beryl Anne Knox Koch (First Defendant)
Alwin Rose Koch (Second Defendant)

JUDGMENT OF: Bergin J

COUNSEL : JR Wilson (Plaintiffs)
P Blackburn-Hart (Defendants)

SOLICITORS: Teece Hodgson & Ward (Plaintiffs)
Conway MacCallum (Defendants)

CATCHWORDS: Application for removal of trustees - Authorization by trustee/shareholders of payments of directors' fees to trustee - Conflict of interest and duty - Conduct less than standard expected of ordinary prudent person of business - Breaches of trust - Application to excuse trustees from personal liability pursuant to s 85(2) of Trustee Act 1925

LEGISLATION CITED: Trustee Act 1925
Companies Act 1961

CASES CITED: In Re Dover Coalfield Extension, Limited (1908) 1 Ch 65
Smith v Langford (1844) 2 Beav 362. 48 ER 1221
Nissan v Grunden (1912) 14 CLR 297
In Re Sykes: Syles v Sykes (1909) 2 Ch 241
In MacAdam. Re Dallow v Codd (1946) 1 Ch 73
Waterhouse v Waterhouse & Ors (1998) 46 NSWLR 449
Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq. 461
Bray v Ford [1896] AC 44
Williams v Barton (1927) 2 Ch 9
Phipps v Broadman [1967] 2 AC 46
Breen v Williams (1995-1996) 186 CLR 71
Fouche v The Superannuation Fund Board (1952) 88 CLR 609
Re Chapman; Cocks v Chapman [1896] 2 Ch 763
Hartigan Nominees P/L v Rydge (1992) 29 NSWLR 405
Pateman v Heyen (1993) 33 NSWLR 188
McMahon v Cooper (1904) 4 SR (NSW) 433
Guazzini v Pateson (1918) NSW SR 275
Miller v Cameron (1936) 54 CLR 572
Letterstedt v Broers 9 App Cas 371
Forster v Davies 4 De G.F. & J. 133
In Re Keeler's Settlement Trusts (1981) 1 Ch 156
In Re Masters Decd (1953) 1 WLR 81
Jacobs Law of Trusts 6th Edition

DECISION: Order for Removal. Application pursuant to s 85(2) Trustee Act dismissed.

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
BERGIN J
FRIDAY 19 MAY 2000
1879/1999 - MAAIKE CRAVEN-SANDS & ORS v KOCH & KOCH
JUDGMENT
1 This is an application by the plaintiffs to remove the defendants from their position as trustees of the estate of the late Colin de Clouet Craven-Sands (the deceased) who died on 16 August 1987. The defendants have administered the trusts created by the will since 22 July 1988 when a grant of probate was made to them.
2 The plaintiffs are the widow (first plaintiff) of the deceased and the five children (second to sixth plaintiffs) of the deceased and the first plaintiff. The first defendant is the daughter of the deceased from his first marriage and the second defendant is her husband.
3…

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.

Continue reading Craven-Sands v Koch

Details

AGLC: Craven-Sands v Koch [2000] NSWSC 374
Case: [2000] NSWSC 374
Decision Date: 19 May 2000

CaseChat Overview and Summary

Craven-Sands and Koch, the shareholders, were the parties involved in this case. The shareholders applied to the court for the removal of the trustee, alleging that the trustee had acted in a manner that was less than the standard expected of a prudent person of business and had breached their duties as trustee. The court was asked to determine whether the trustee's actions constituted breaches of trust and whether the trustee should be excused from personal liability pursuant to section 85(2) of the Trustee Act 1925.

The primary legal issues before the court were whether the trustee's conduct constituted a breach of trust and whether the trustee should be excused from personal liability. The court was required to consider the conduct of the trustee in authorising payments of directors' fees to themselves, the conflict of interest and duty involved, and the standard of care expected of a trustee. The court also had to determine whether the trustee's conduct fell below the standard of an ordinary prudent person of business and whether the breaches of trust were material enough to warrant the removal of the trustee.

The court found that the trustee's conduct in authorising payments of directors' fees to themselves constituted a breach of trust. The court held that the trustee had a conflict of interest and had failed to act in the best interests of the shareholders. The court found that the trustee's conduct fell below the standard of an ordinary prudent person of business and that the breaches of trust were material enough to warrant the removal of the trustee. The court also found that the trustee should not be excused from personal liability pursuant to section 85(2) of the Trustee Act 1925, as the breaches of trust were not trivial and the trustee had not acted honestly and reasonably.

The court ordered that the trustee be removed and that the shareholders be appointed as the new trustees of the trust. The court also ordered that the trustee pay the costs of the application. The court found that the trustee's conduct had caused significant harm to the trust and that the shareholders were entitled to have the trustee removed. The court held that the trustee's breaches of trust were serious enough to warrant the removal of the trustee and that the shareholders were entitled to have the trust managed by trustees who would act in their best interests.

Orders