Dulhunty v Dulhunty

In the case of Dulhunty v Dulhunty, the dispute involved trustees of a discretionary trust. The majority of the trustees sought orders to enforce an agreement to distribute trust assets and wind up the trust. In opposition, a minority trustee had obtained judicial advice under section 63 of the Trustee Act, which allowed him to defend the proceedings and use trust assets for this purpose. The majority trustees refused to authorise the disbursement of trust funds for the minority trustee's legal costs. The minority trustee subsequently sought orders for the disbursement of trust funds to cover his legal costs.

The primary legal issues before the court were whether all trustees should have been joined in the application for advice under section 63 of the Trustee Act and whether the majority trustees could and should be ordered to disburse trust funds for the minority trustee’s legal costs. The court had to determine whether the minority trustee’s right to obtain judicial advice without notice to the majority trustees affected the majority’s ability to control the disbursement of trust funds.

The court found that the minority trustee was entitled to seek judicial advice under section 63 of the Trustee Act and that he could defend the proceedings using trust assets. Despite the majority trustees' refusal to authorise the disbursement of trust funds, the court determined that the minority trustee was entitled to have his legal costs covered by the trust. The court made an order for the disbursement of trust funds for the minority trustee’s legal costs, reserving costs on the present application for further consideration. This decision highlights the interplay between the rights of trustees under a discretionary trust and the protection afforded to beneficiaries through the Trustee Act.