Curwen & Ors v Vanbreck Pty Ltd
[2008] VSC 414
•7 October 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 4606 of 2007
| SANDRA STUART CURWEN & ORS | Plaintiffs |
| v | |
| VANBRECK PTY LTD (AS TRUSTEE FOR THE WS AND NR HARVEY FAMILY TRUST) (ACN 005 850 359) | Defendant |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 7 OCTOBER 2008 | |
DATE OF JUDGMENT: | 7 OCTOBER 2008 | |
CASE MAY BE CITED AS: | CURWEN & ORS v VANBRECK PTY LTD | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 414 | |
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TRUSTS - Application to restrain a trustee from exercising discretion to exclude beneficiaries under a trust deed pending appeal – Whether rights under the trust deed would be rendered nugatory if trustee were to exercise power – Whether the Court being asked to interfere with a discretion lawfully reposing in the trustee – No suggestion trustee intended to unlawfully exercise its powers – Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M. Borsky | Holding Redlich |
| For the Defendant | Mr M. Osborne | Madgwicks |
HIS HONOUR:
This is an application made by summons dated 2 October 2008 by the plaintiffs for orders that until further order the defendant, whether by its servants or otherwise, be restrained from excluding any or all of certain persons from a class of beneficiaries under a trust deed known as the D.S. and N.R. Harvey family trust. The beneficiaries concerned are the third plaintiff, Nigel Curwen, and the fourth plaintiff, Hamish Alexander Curwen Baird.
In submissions put to me on behalf of the plaintiffs, Mr Borsky has submitted that I should view the application in the light of an appeal which the plaintiffs have instituted against the judgment of Justice Mandie pronounced on 11 September 2008.
His Honour then held that the defendant had acted within its power as trustee in excluding the plaintiffs as beneficiaries, and that accordingly those persons did not have the right which beneficiaries have to inspect documents relevantly relating to the trust.
Mr Borsky tells me, and I accept, that the appeal is directed not merely at obtaining a declaration from the Court of Appeal to the effect that the relevant exclusion was invalid, but also the resultant and very important allied relief, that the relevant beneficiaries be accorded the right they would then have to inspect the documents and records which they wish to inspect.
That right, Mr Borsky submits, would be rendered nugatory if between now and the conclusion of the appeal by the pronouncement of the judgment of the Court of Appeal, the trustee were to seek somehow to further exclude the relevant beneficiaries.
There is an initial logical problem with the proposition that the trustees could further exclude persons who have already been excluded. Once one is excluded, then one is excluded. I am not sure how a further exclusion could have any effect. That, however, is not a point upon which I wish to base my judgment.
I do accept Mr Borsky's submission that theoretically the trustee might seek, out of what the trustee might call an abundance of caution, to re-exercise the discretion which, as I understand it, the trust deed confers on the trustee to exclude the relevant beneficiaries.
I have reason to think that the defendant/trustee would not seek to exercise any discretionary rights it might have retained in relation to the plaintiffs; but even if it did, that further exclusion would either be within the discretion conferred by the trust deed, and therefore within the trustee's power, or it would not.
If I were to accede to the plaintiffs’ application, then I would in effect be interfering with and rewording the trust deed by removing for the time being the discretion which that deed gives to the trustee to exclude beneficiaries. I am not persuaded that I have any power to inhibit the trustee in that way – or, rather, to remove from the trustee the discretionary powers which the trust deed gives it.
Of course if those powers are not exercised in accordance with the trust deed, then the plaintiffs will have such relief as in law or in equity they are entitled to obtain.
The fact remains that any purported further exclusion would either be within the discretionary powers of the trustee as conferred by the deed (in which case the court has no right or power to prevent the trustee exercising that discretion); or the trustee would act outside its discretionary powers, in which case the plaintiffs would in any event have their remedy.
Mr Borsky sought to impress me with the danger that the trustee would improperly seek to exclude the relevant beneficiaries.
Given the present circumstances - that is, that the matter has been before a judge of the trial division and is now on appeal - the trustee would of necessity have to be very careful before it sought to do that which Mr Borsky fears it might do.
If the trustee were found to have exercised or purported to exercise its discretion in a way which was designed to interfere with the course of justice or which was otherwise improper, although of course I cannot predict the outcome of any litigation based upon such action, the trustee would be exposed to an order for indemnity costs as well as to what other adverse orders the court might think appropriate.
The trustee is bound to act only in accordance with the powers conferred upon it. A trustee that acts beyond power, and knowingly acts beyond power for an improper purpose, would certainly, it seems to me, be exposed to an order for indemnity costs by the party or parties seeking to rectify that breach by the trustee.
I come back to my fundamental proposition: it is that I have no right or power to interfere with a discretion lawfully reposing in the trustee and lawfully exercised by the trustee. Accordingly an injunction which purported to have the effect of inhibiting the trustee from exercising its lawful powers would itself be inappropriate, if not unlawful. Of course I cannot make an injunction of that kind.
Were the injunction solely directed to preventing the trustee from improperly exercising its discretionary powers, then a basis for that injunction - over and above the prevention of a wrongful act that at present is not being threatened - would have to be shown. The court does not grant injunctions to prevent unlawful behaviour unless there is a real basis for thinking that unlawful behaviour will, if not prevented by injunction, take place. There is nothing before me to suggest that the trustee will unlawfully seek to further exclude the plaintiffs.
Mr Borsky has properly taken me to the relevant correspondence. I see nothing in that to indicate any intention by the trustee unlawfully to exercise its powers.
For those reasons, in my opinion, the summons should be dismissed.
(Submissions re costs)
The petition taken by the trustee was that there were no grounds for it to provide an undertaking. In my opinion that was a correct position for the trustee to take and accordingly I think the costs of the summons should be paid by the plaintiffs.
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