David Kerr as additional trustee for S.E.A.S Sapfor Forests Pty Limited Scheme

[2021] NSWSC 720

Supreme Court

New South Wales

Medium Neutral Citation:

David Kerr as additional trustee for S.E.A.S Sapfor Forests Pty Limited Scheme [2021] NSWSC 720

Hearing dates:

18 June 2021

Decision date:

18 June 2021

Jurisdiction:

Equity - Commercial List

Before:

Hammerschlag J

Decision:

Orders in terms of paragraphs 1 and 2 of the Notice of Motion dated 6 May 2021

Catchwords:

EQUITY – Trusts and trustees – Application by additional trustee appointed to investigate and bring proceedings for authority to distribute proceeds of verdict obtained – HELD – Orders sought should be made

Legislation Cited:

Corporations Act 2001 (Cth)

Cases Cited:

Australian Executor Trustees (SA) Limited v Kerr [2021] NSWCA 5

Kerr v Australian Executor Trustees (SA) Ltd; Australian Executor Trustees (SA) Ltd v Fuller and others trading as Sparke Helmore Lawyers [2019] NSWSC 1279

Category:

Principal judgment

Parties:

David Kerr as additional trustee for S.E.A.S Sapfor Forests Pty Limited Scheme - Plaintiff

Representation:

Counsel:
A. Sullivan QC with S. Hartford-Davis - Plaintiff

Solicitors:
Piper Alderman - Plaintiff

File Number(s):

2016/385969

EX TEMPORE JUDGMENT

1. HIS HONOUR:   On 15 July 2016, the Court appointed the plaintiff (Kerr) as an additional trustee of the pine forestry scheme known as the S.E.A.S. Sapfor Forests Pty Limited Scheme (the Scheme), to investigate and prosecute (for the benefit of covenantholders of the Scheme) a claim against Australian Executor Trustees (SA) Ltd (AET), the trustee of the Scheme, in connection with AET’s oversight of the Scheme.

2. Kerr brought proceedings in this List. The proceedings succeeded. On 26 September 2019, the trial judge, Stevenson J, handed down judgment finding that AET had breached its duties as trustee of the Scheme and was liable for equitable compensation: see Kerr v Australian Executor Trustees (SA) Ltd; Australian Executor Trustees (SA) Ltd v Fuller and others trading as Sparke Helmore Lawyers [2019] NSWSC 1279.

3. A final verdict of $76,619,978 in favour of Kerr, nomine officii, was entered on 22 October 2019. The Court also made costs orders in favour of Kerr.

4. An appeal by AET to the Court of Appeal was dismissed on 4 February 2021: see Australian Executor Trustees (SA) Limited v Kerr [2021] NSWCA 5.

5. The litigation was funded by a litigation funder, Omni Bridgeway Ltd, (previously known as IMF Bentham Ltd) (the litigation funder). As at 17 June 2021, Kerr had received $74,498,981.12 in satisfaction of the judgment, plus $1,590,000 in satisfaction of the costs orders in its favour. The funder has been paid $39,739,599.67.

6. There are approximately 5000 covenantors waiting to receive a distribution.

7. There is presently a dispute concerning an amount of $3,900,000 which Kerr claims is still to be paid in satisfaction of the judgment. Kerr has served a statutory demand under the Corporations Act 2001 (Cth) on AET. It is not necessary for the purposes of this application to delve into that aspect any further.

8. By Notice of Motion filed on 6 May 2021, Kerr seeks the following orders:

1.   Pursuant to the inherent jurisdiction of the Court, an order that the Plaintiff’s appointment as additional trustee of the scheme the subject of the Trust Deed be extended to include the distribution of the proceeds of judgment recovered by him as a consequence of the prosecution of the Supreme Court of New South Wales proceeding number 2017/00164674 (Judgment Proceedings).

2.   The Plaintiff be entitled to recover his costs of this application from the Judgment Proceeds.

9. The Notice of Motion is necessitated because Kerr has a concern, clearly a legitimate one, that his powers of investigation and prosecution of the proceedings may not comprehend power to distribute the judgment proceeds, which powers may formally reside with AET, who plainly is in a position of conflict with respect to distribution.

10. Satisfactory steps have been taken by Kerr to inform the covenantholders of this application. There is no opposition to it. It is supported by affidavits sworn by Kerr on 4 May 2021 and 17 June 2021 respectively. The Court has had the benefit of comprehensive written submissions dated 16 June 2021 which will be placed and kept on the Court file.

11. In all the circumstances, orders as sought in the Notice of Motion are plainly appropriate.

12. I make orders in terms of paragraphs 1 and 2 of the Notice of Motion.