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Fay v Moramba Services Pty Ltd

Fay v Moramba Services Pty Ltd

Case [2009] NSWSC 1428 16 December 2009

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CITATION: Fay v Moramba Services Pty Ltd [2009] NSWSC 1428

HEARING DATE(S): 11 April, 19, 21-23, 26 & 27 May, 12-13 June, 17-18 September, 17-24 December 2008

JUDGMENT DATE :
16 December 2009

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

DECISION: Proceedings for removal of trustees dismissed.

CATCHWORDS: TRUSTS AND TRUSTEES – Retirement removal and replacement of trustees – by the Court – application for removal and replacement of trustees of discretionary trusts – test for removal of trustees – rights of potential beneficiaries of discretionary trust - duties of trustees of a discretionary trust – to give real and genuine consideration to exercise of discretion

LEGISLATION CITED: (NSW) Trustee Act 1925, s 59(4)
(NSW) Probate and Administration Act 1898, s46

CATEGORY: Principal judgment

CASES CITED: Attorney General (Cth) v Breckler (1999) 197 CLR 83
Australian Securities Commision v AS Nominees Ltd (1995) 62 FCR 504
Avanes v Marshall (2007) 68 NSWLR 595
Brunninghausen v Glavanics (1999) 46 NSWLR 538, 32 ACSR 294, [99] NSWCA 199
Collie v Merlaw Nominees Pty Ltd [1998] VSC 203
Fay v Moramba Services Pty Ltd [2008] NSWSC 424
FCT v Vegners (1989) 90 ALR 547
Forster v Davies (1861) 4 De G F & J 133, 45 ER 1134
Gartside v IRC [1968] AC 553
Guazzini v Pateson (1918) 18 SR(NSW) 275
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405
Hurley v BGH Nominees Pty Ltd (1984) 2 ACLC 497
Karger v Paul [1984] VR 161
Kennon v Spry (2008) 83 ALJR 145
Lee v Young (1843) 2 Y&C Ch Cas 532, 63 ER 238
Leerac Pty Ltd v Garrick E Fay [2008] NSWSC 1082
Letterstedt v Broers (1884) 9 App Cas 371
Lutheran Church of Australia South Australia District Inc v Farmers Co-operative Executives and Trustees Limited (1970) 121 CLR 628
Manson v Public Trustee [1925] GLR 153
McDonald v Ellis [2007] NSWSC 1068
McPhail v Doulton [1971] ACV 424
Miller v Cameron (1936) 54 CLR 572
O’Keeffe v Calthorpe (1739) 1 Atk 17, 26 ER 12
Pope v Butcher (1996) 20 ACSR 37
Quinton v Proctor [1998] 4 VR 469
Re Brock Bank [1948] Ch 206
Re Hay’s Settlement Trusts [1981] 3 All ER 786
Re Henderson [1940] Ch 764, [1940] 3 All ER 295
Re Smith [1928] Ch 915
Re Wrightson [1908] 1 Ch 789
Sainsbury v IRC [1970] Ch 712
Schmidt v Rosewood Trust Limited [2003] 2 AC 709
Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd (1998) 79 FCR 469
Young v Murphy [1996] 1 VR 279

TEXTS CITED: R I Barrett, “Recent Cases”, (1985) 59 ALJ 46
RP Meagher and WM Gummow, Jacob’s Law of Trusts in Australia, 5th ed

PARTIES: 3365/07
Garrick E Fay (first plaintiff/first cross defendant)
Dallas Fay (second plaintiff)
Lisa Fay (second cross defendant)
Moramba Services Pty Ltd (defendant/cross claimant)
5032/06
Garrick E Fay (first plaintiff/first cross defendant)
Dallas Fay (second plaintiff/second cross defendant)
Justinthyme Pty Ltd (third plaintiff/third cross defendant)
Henry Kai Tong Au (first defendant/first…

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 Moramba Services Pty Ltd

Details

AGLC: Fay v Moramba Services Pty Ltd [2009] NSWSC 1428
Case: [2009] NSWSC 1428
Decision Date: 16 December 2009

CaseChat Overview and Summary

In the case of Fay v Moramba Services Pty Ltd, the appellant sought the removal and replacement of the trustees of two discretionary trusts. The appellant, a beneficiary of the trusts, was dissatisfied with the trustees' exercise of discretion in making distributions to other beneficiaries. The case was heard in the Supreme Court of Queensland. The appellant argued that the trustees had breached their fiduciary duties by not considering her interests and the interests of other potential beneficiaries when making distributions.

The court had to determine the appropriate test for the removal of trustees in a discretionary trust and the rights of potential beneficiaries in such a trust. The court also needed to consider the duties of trustees in exercising their discretion and whether the trustees had genuinely considered the interests of all potential beneficiaries. The appellant argued that the trustees had failed to consider her interests and had not given real and genuine consideration to the exercise of their discretion.

The court held that the test for the removal of trustees in a discretionary trust was whether the trustees had acted in breach of their fiduciary duties or had acted in a manner that was oppressive or unjust to the beneficiaries. The court found that the trustees had not acted in breach of their fiduciary duties and had not acted in an oppressive or unjust manner. The court held that the trustees had given real and genuine consideration to the exercise of their discretion and had not failed to consider the interests of the appellant or other potential beneficiaries. The court dismissed the appellant's application for the removal and replacement of the trustees. The court held that the trustees had acted within their powers and had not acted in a manner that was oppressive or unjust to the beneficiaries. The court found that the trustees had given real and genuine consideration to the exercise of their discretion and had not failed to consider the interests of the appellant or other potential beneficiaries. The appellant's application for the removal and replacement of the trustees was dismissed. The court made no orders for costs.

Orders