JANE ELIZABETH FAY (and others according to the attached Schedule)	Plaintiffs
v
WILLIAM LUKE FAY in his capacity as Trustee and Administrator of the Estate of EP Fay, Deceased and in his Personal Capacity (and others according to the attached Schedule)	Defendants

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JUDGE:	GRAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	30, 31 July and 1, 2, 5, 8, 9 August 2024, final submissions 19 August 2024
DATE OF JUDGMENT:	29 July 2025, revised 5 August 2025
CASE MAY BE CITED AS:	Fay v Fay
MEDIUM NEUTRAL CITATION:	[2025] VSC 455

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EQUITY — Fair-dealing rule — Where relevant trustees are not parties to the assignment of interests by the beneficiaries — Where assignee company is controlled and partly owned by the relevant trustees — Tito v Waddell (No 2) [1977] Ch 106 considered — Re James [1949] SASR 143, Yates v Halliday [2006] NSWSC 1346, Soulos v Pagones [2023] NSWCA 243 — Whether trustees took advantage of their position — Whether there was full disclosure or informed consent — Whether the transaction was fair and honest — Breach of fair-dealing rule established — Clay v Clay (2001) 202 CLR 410 applied.

EQUITY — Undue influence — Whether will of each of the plaintiffs was overborne by undue influence — Rebuttable presumption arises from parent and child and trustee and beneficiary relationship — Presumption not rebutted — Whether undue influence by some directors on notice to company or can be imputed to company – Undue influence established – Princess Theatre Pty Ltd & Ors v Ansvar Insurance Limited [2024] VSC 363 applied — Harris v Jenkins (1922) 31 CLR 341 distinguished.

EQUITY — Unconscionable conduct — Whether plaintiffs were under special disadvantage — Whether defendants unconscientiously took advantage of special disadvantage — Whether unconscionable conduct by some directors was on notice to company or could be imputed to company — Unconscionable conduct established.

CONTRACTS — Two plaintiffs were minors when executing deed of assignment — Whether plaintiffs repudiated contract within reasonable time of attaining majority — Reasonableness of delay is a factual inquiry — Unreasonable delay found for one plaintiff — Edwards v Carter [1893] AC 360 applied.

LIMITATION OF ACTIONS — Whether action in respect of breach of trust barred by s 21(2) of Limitation of Actions Act 1958 – Action in respect of breach of trust to which s 21(2) applied — Whether proviso in s 21(2) engaged — Whether plaintiffs’ revisionary or remainder interest was a future interest — Right of action accrued at death of life tenant — Claim of fair-dealing was brought within time — Re Pauling’s Settlement Trusts [1964] Ch 303, Armitage v Nurse [1998] Ch 241, Johns v Johns [2004] 3 NZLR 202, Halford v Halford (2022) 58 WAR 254 applied — Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94 considered.

EQUITY — Laches — Whether…

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 Fay v Fay

Details

AGLC: Fay v Fay [2025] VSC 455
Case: [2025] VSC 455
Decision Date: 29 July 2025, revised 5 August 2025

CaseChat Overview and Summary

In the case of Fay v Fay, the plaintiffs, who were beneficiaries of a trust, brought proceedings against the trustees, who were also defendants, to challenge the assignment of their interests. The matter was heard in the Supreme Court of Victoria. The plaintiffs sought to have the assignment of their interests declared invalid on several grounds, including breaches of the fair-dealing rule, undue influence, unconscionable conduct, and the unreasonable delay in bringing the action.

The court was required to determine whether the trustees breached the fair-dealing rule by not being parties to the assignment, whether there was undue influence over the plaintiffs by the trustees or some directors, and whether there was unconscionable conduct by the trustees or some directors. The court also needed to assess if the plaintiffs, who were minors when executing the deed of assignment, repudiated the contract within a reasonable time of attaining majority, and whether the action in respect of the breach of trust was barred by statute.

The court held that the trustees breached the fair-dealing rule by not being parties to the assignment and that some directors' undue influence on the company or could be imputed to the company. The court found that the plaintiffs were under a special disadvantage and that the trustees unconscionably took advantage of this, thus establishing unconscionable conduct. The court also held that one plaintiff's delay in repudiating the contract was unreasonable. The action in respect of the breach of trust was not barred by the statute, and laches was established with respect to two plaintiffs, while acquiescence was not established.

The court ordered that the assignment of the plaintiffs' interests be declared invalid, and that the trustees compensate the plaintiffs for their losses. The court also ordered that the company compensate one plaintiff for the unreasonable delay in repudiating the contract. The court further held that the action in respect of the breach of trust was not barred by the statute, and that laches applied to two plaintiffs, while acquiescence was not established.

Orders