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Deutsch v Trumble

Deutsch v Trumble

Case [2016] VSC 263 20 May 2016

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 5388

ERWIN DEUTSCH	Plaintiff
v
MICHAEL TRUMBLE as trustee for the Deutsch Grandchildren Trust, the Cooee Trust, the Deutsch Children Family Trust, the International Development Unit Trust, the Delfrid Superannuation Fund, the Tzedoko Unit Trust & the International Fabrics Trust	Defendant

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JUDGE:	HARGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	2 February 2016
DATE OF JUDGMENT:	20 May 2016
CASE MAY BE CITED AS:	Deutsch v Trumble	1^st Revision: 9 June 2016, [22]
MEDIUM NEUTRAL CITATION:	[2016] VSC 263

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TRUSTS – Court-appointed trustee of deadlocked trusts – Trusts included fixed and discretionary trusts – Discretionary powers effectively removed by Court order – Application by beneficiary for production of trust accounts and other trust documents – Whether ‘proprietary approach’ or ‘discretionary approach’ should be applied – O’Rourke v Darbishire [1920] AC 581 applied – Schmidt v Rosewood Trust Limited [2003] 2 AC 709 not followed – Orders made for production and inspection.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W Smith	KWS Legal
For the Defendant	Mr M Barrett	Michael Trumble Legal

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

The application................................................................................................................................... 7

Background to the application........................................................................................................ 9

Applicable law.................................................................................................................................. 15

What documents should Mr Trumble produce for inspection and copying?...................... 22

When should Mr Deutsch pay Mr Trumble’s costs of review and production?.................. 24

Conclusion......................................................................................................................................... 25

HIS HONOUR:

Introduction

This proceeding concerns an application by a beneficiary of certain trusts for orders that the trustee produce trust accounts and specified trust documents to him for inspection and copying. It is necessary to set out the background to the application.

In 2012, I was the trial judge in a proceeding between Erwin Deutsch, the plaintiff in this proceeding, and his estranged brother, Robert Deutsch (the ‘original proceeding’).[1] There were subsequent judgments delivered by me in the proceeding.[2] The full context of the disputes between the Deutsch brothers is set out in those judgments. For present purposes, it is enough to give a brief summary of relevant matters.
[1]Deutsch v Deutsch [2012] VSC 227.
[2]Deutsch v Deutsch (No 2) [2013] VSC 15; Deutsch v Deutsch (No 3) [2014] VSC 494.

The original proceeding involved a bitter family dispute in circumstances where each brother was:

(1) one of the only two directors of corporate trustees of the trusts referred to in (2); and

(2) a beneficiary of fixed trusts, including a superannuation trust, and an object under discretionary trusts (‘the trusts’).

Because of the disputes between the brothers, control of the trusts was deadlocked. On 22 September 2008, the brothers entered into terms of settlement of the original proceeding. In substance, the terms of settlement provided for administrators to be appointed to the trusts and for them to:

(a) arrange for the orderly sale of the trust assets;

(b) pay trust debts, including agreed amounts to Robert Deutsch;

(c) arrange for the trusts to comply with their statutory obligations, including for the…

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 Deutsch v Trumble

Details

AGLC: Deutsch v Trumble [2016] VSC 263
Case: [2016] VSC 263
Decision Date: 20 May 2016

CaseChat Overview and Summary

The parties involved in this case are Deutsch and Trumble, with Deutsch being a beneficiary of certain trusts and Trumble serving as the trustee. The dispute arose due to the deadlocked nature of the trusts, which included both fixed and discretionary elements. The trustee's discretionary powers had been effectively removed by a court order, prompting Deutsch to seek the production of trust accounts and other related documents. The case was heard in the Supreme Court.

The legal issues before the court centred around the appropriate approach to apply in determining whether the trust documents should be disclosed to the beneficiary. The court had to decide whether the 'proprietary approach' or the 'discretionary approach' was more suitable in this context. The 'proprietary approach' would grant the beneficiary access to the trust documents, while the 'discretionary approach' would allow the trustee to withhold such information. The court was required to examine the principles established in O'Rourke v Darbishire and Schmidt v Rosewood Trust Limited to determine the appropriate course of action.

In delivering the judgment, the court held that the 'proprietary approach' should be applied in this case, finding O'Rourke v Darbishire to be more relevant than Schmidt v Rosewood Trust Limited. The court reasoned that the beneficiary's right to information about the trust property should not be undermined by the discretionary nature of the trust. Consequently, the court made orders for the production and inspection of the trust accounts and other relevant documents, granting Deutsch the access they sought.

The final orders of the court mandated the trustee to provide Deutsch with the requested trust accounts and documents for inspection, ensuring transparency and accountability in the administration of the trusts. The court's decision underscored the importance of upholding the beneficiary's right to information about the trust property, particularly in situations where the discretionary powers of the trustee have been curtailed.

Orders