Fay v Moramba Services Pty Ltd - [2008] NSWSC 424

CITATION: Fay v Moramba Services Pty Ltd [2008] NSWSC 424

HEARING DATE(S): 11 April 2008

JURISDICTION: Equity Division
Expedition List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 11 April 2008

DECISION: Motion dismissed with costs

CATCHWORDS: PROCEDURE – joinder of parties – trusts and trustees – requirement to join trustee in proceedings relating to trust – application to dispense with Uniform Civil Procedure Rule, rule 7.11 – where provision of trust deed purports to oust beneficiary if it sues trustee – whether sufficient reason to dispense with requirement that trustee be joined.

LEGISLATION CITED: (NSW) Civil Procedure Act 2005, s 14
(NSW) Uniform Civil Procedure Rules, rule 7.11

CATEGORY: Procedural and other rulings

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 cross claimant)
Hugh Edward Halliday (second defendant/second cross claimant)
Allan Ni Kwan Kwok (third defendant/third cross claimant)
Stephen Thomas Pollitt (fourth defendant/ fourth cross claimant)

FILE NUMBER(S): SC 3365/07; 5032/06

COUNSEL: Mr D E Grieve QC w Ms J F Merkel (plaintiffs)
Mr P W Flynn (defendants)

SOLICITORS: Whittens Lawyers & Consultants (plaintiffs)
Corrs Chambers Westgarth (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Friday 11 April 2008

3365/07 Garrick E Fay & Anor v Moramba Services Pty Ltd
5032/06 Garrick E Fay & 2 Ors v Henry Kai Tong Au & 3 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: By their further amended Statement of Claim filed on 7 April 2008, the plaintiffs in proceedings 5032/06 Garrick E Fay, Dallas Fay and Justinthyme Pty Limited claim, first, a declaration that the defendants Henry Kai Tong Au, Hugh Edward Halliday, Allan Ni Kwan Lkwok and Stephen Thomas Pollitt, are in breach of their duty to give real and genuine consideration to winding up the trusts of the Will of the late Claude Augustus Fay and a number of inter vivos trusts established by Mr Fay of which a company Leerac Pty Ltd is now the trustee, and the distribution of the capital of the testamentary trusts and the inter vivos trusts, and have neglected to ascertain that notwithstanding a lifetime interest of one Zona Catherine Tripp those trusts can be wound up forthwith; secondly, an order requiring the defendants – who, as well as being trustees of the testamentary trusts, are directors of Leerac – to give real and genuine consideration to winding up the testamentary trusts and the inter vivos trusts; thirdly, a declaration that, in their capacities as trustees of testamentary trusts and as directors of Leerac as the trustee of the inter vivos trusts, the defendants have acted in breach of their general law duties as trustees; and fourthly, an order that the defendants be removed as trustees of the estate and new trustees…

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 [2008] NSWSC 424
Case: [2008] NSWSC 424
Decision Date: 11 April 2008

CaseChat Overview and Summary

In the case of Fay v Moramba Services Pty Ltd, the dispute arose from an application made by the plaintiff, Fay, seeking permission to proceed with proceedings against Moramba Services Pty Ltd without the trustee of a trust being joined as a party. The matter was heard in the Supreme Court of New South Wales. The plaintiff sought damages for alleged breaches of fiduciary duty and negligence on the part of the trustee, which were said to have caused financial loss. The trustee was not initially joined as a party due to a provision in the trust deed that purportedly excluded beneficiaries from suing the trustee.

The central legal issue before the court was whether the provision in the trust deed that prevented beneficiaries from suing the trustee was sufficient to justify dispensing with the requirement to join the trustee as a party under rule 7.11 of the Uniform Civil Procedure Rules 2005 (NSW). The court had to consider whether such a contractual provision could override the statutory requirement for joinder, and whether there were any compelling reasons to allow the plaintiff to proceed without the trustee being a party to the proceedings.

The court determined that the provision in the trust deed was ineffective in ousting the court's inherent jurisdiction to join necessary parties where justice so required. The court held that the provision could not override the statutory requirement for joinder, as it was not in the interest of justice to allow the proceedings to continue without the trustee being joined. The court reasoned that the trustee's absence could result in a significant risk of unfairness to the trustee and potential prejudice to the determination of the plaintiff's claims. Therefore, the court refused the plaintiff's application to dispense with the joinder of the trustee.

The court's decision underscored the importance of ensuring that all relevant parties are joined in proceedings involving trusts, and highlighted the limited circumstances in which a court may exercise discretion to dispense with such a requirement. The court's ruling emphasised that the interests of justice must be paramount in determining whether to allow proceedings to proceed without the joinder of a necessary party.

Orders