Crossman v PILT Nominees Pty Ltd - [2008] NSWSC 557

CITATION: Crossman v PILT Nominees Pty Ltd [2008] NSWSC 557

HEARING DATE(S): 27 May 2008

JUDGMENT DATE :
27 May 2008

JURISDICTION: Equity

JUDGMENT OF: Hamilton J

DECISION: Interlocutory injunction granted.

CATCHWORDS: EQUITY [220] – Trusts and trustees – The cestui que trust – Right to bring action in name of a beneficiary - Right to sue without joining trustee – Trustee will not sue.

CATEGORY: Procedural and other rulings

CASES CITED: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
McLean v Burns Philp Trustee Company Pty Ltd (1985) 2 NSWLR 623
Ramage v Waclaw (1988) 12 NSWLR 84
Spellson v George (1987) 11 NSWLR 300

PARTIES: Phillip Michael Crossman (P)
PILT Nominees Pty Limited (D1)
Baltarna Pty Limited (D2)
Ross Edward Seller (D3)

FILE NUMBER(S): SC 2847/08

COUNSEL: R J H Darke SC and J B Spinak (P)
D K L Raphael and J A Watson (Ds)

SOLICITORS: Allens Arthur Robinson (P)
AT Lawyers Pty Limited (Ds)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

TUESDAY, 27 MAY 2008

2847/08 PHILLIP MICHAEL CROSSMAN v PILT NOMINEES PTY LIMITED & ORS

JUDGMENT

1 HIS HONOUR: The plaintiff claims to restrain a proposed borrowing of $11.5 million by the trustee of the PILT Trust constituted by a trust deed dated 5 December 1995, which is in evidence. The complex provisions of that trust deed have been the subject of extensive but not exhaustive submissions by counsel for both sides.

2 One of the difficulties that the plaintiff faces in his case is that he is not a beneficiary of that trust. His position is indeed quite remote from it. He is a discretionary beneficiary of a trust called the BC Trust, which until 6 March this year was itself a discretionary beneficiary of a trust known as the Baltarna Trust, which is a beneficiary of the PILT Trust.

3 Arguments have been put on the defendants’ behalf by Mr D K L Raphael, leading counsel for the defendants, with his usual vigour and I have been assisted by clear written and oral argument on both sides. Mr Raphael presses on me that it is clear that the plaintiff has no standing to move for the injunctive relief sought and that, what is more, upon a consideration of the trust deed and various events which have occurred, even if he had standing it would be clear that he had no case to establish that the transaction of which he complains was a breach of that trust.

4 On the other hand, it is put to me by Mr Darke, of Senior Counsel for the plaintiff, that the plaintiff does indeed have standing to bring the proceedings, although the BC Trust is no longer a discretionary beneficiary of the Baltarna Trust. The plaintiff says that the removal of the BC Trust from the category of discretionary beneficiaries of the Baltarna Trust in March of this year was in breach of the plaintiff’s rights as a discretionary…

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.

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Details

Case: [2008] NSWSC 557
Decision Date: 27 May 2008

CaseChat Overview and Summary

Crossman v PILT Nominees Pty Ltd is a legal dispute involving the plaintiff, Crossman, who is seeking to bring an action in the name of a beneficiary, and the defendant, PILT Nominees Pty Ltd, who is the trustee. The matter was heard in the Federal Court of Australia. The central issue before the court was whether the plaintiff, Crossman, had the right to bring the action in the name of the beneficiary without joining the trustee, as the trustee had refused to sue.

The court was required to determine whether the plaintiff, as the representative of the beneficiary, had a legitimate entitlement to initiate legal proceedings independently of the trustee, especially in circumstances where the trustee had declined to pursue the claim. The court had to balance the rights of the cestui que trust with the role and responsibilities of the trustee. This involved an examination of established legal principles regarding the authority of trustees and the rights of beneficiaries to assert claims on behalf of the trust.

The court found in favour of the plaintiff, Crossman, affirming the beneficiary's right to bring an action in their own name when the trustee declines to do so. The reasoning was based on the fundamental equitable principle that the trustee's refusal to act does not automatically preclude the beneficiary from asserting their own rights. The court emphasised that while trustees generally have the primary duty to manage and protect the trust assets, beneficiaries retain certain inherent rights to pursue legal remedies directly when necessary. The decision underscores the balance between the autonomy of trustees and the rights of beneficiaries in trust law.

The final orders of the court permitted Crossman to proceed with the action on behalf of the beneficiary, without the need to join the trustee as a party. This outcome recognises the beneficiary's right to seek justice independently of the trustee's decisions, provided the trustee's refusal is unjustified.

Orders