Guo v HD International Pty Ltd - [2024] NSWSC 1283

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Guo v HD International Pty Ltd [2024] NSWSC 1283
Hearing dates: 4 September 2024
Date of orders: 14 October 2024
Decision date: 14 October 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision:
Orders made for replacement of trustee and vesting.

Catchwords:
EQUITY – trusts and trustees – beneficiary seeks order for removal of deadlocked corporate trustee – where trustee has ignored repeated requests for information and access to trust documents – where there is a risk of trustee not prosecuting causes of action worth $26.9 million on beneficiary’s behalf before becoming statute-barred – replacement of a trustee, principles at [57]–[60].
TRUSTS – vesting orders where new trustee is appointed – Trustee Act 1925 (NSW) s 71(1) – principles at [68]-[71].

Legislation Cited:
Trustee Act 1925 (NSW), ss 70, 71, 78

Cases Cited:
Aspinallv Aqua Sports Pty Ltd (2018) 57 Fam LR 594; [2018] NSWSC 706
Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd(in its own capacity and as trustee of the Stevedore Street Development Unit Trust) (2010) 6 ASTLR 271
Cordes as Trustee for George v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235; [2009] QCA 302
Cowan v Scargill [1984] 2 All ER 750
Crowle Foundationv NSW Trustee & Guardian [2010] NSWSC 647
Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 618
Deputy Commissioner of Taxation v Huang [2019] FCA 1537
DulhuntyvDulthunty [2010] NSWSC 1465
Gleeson v J Wippell & Co [1977] 1 WLR 510
Hancock v Rinehart (2015) 106 ACSR 207
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41
Miller v Cameron (1936) 54 CLR 572
ReBeechworthLandEstatesPtyLtd(inliq)andGriffıth Estates Pty Ltd (in liq) [2018] NSWSC 1703
Sir Moses Montefiore Jewish Home v Perpetual Company Ltd & Anor [2012] NSWSC 210
United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157

Texts Cited:
JD Heydon & MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, Lexis Nexis)

Category: Principal judgment
Parties: Wencheng Guo (First Plaintiff)
Huidong Guo (Second Plaintiff)
HD International Pty Ltd (Defendant)
Changran Huang (First Interested Party)
Jiquan Huang (Second Interested Party)
Representation:
Counsel:
DJ Delany (Plaintiffs)
N Li (First Interested party)
F Corsaro SC / J Doyle (Second Interested Party)
Solicitors:
Arnold Bloch Leibler (Plaintiffs)
Unsworth Legal (First Interested Party)
Connor & Co Lawyers (Second Interested Party)

File Number(s): 2024/296187

JUDGMENT

HER HONOUR: This is an application under ss 70 and 71 of the Trustee Act 1925 (NSW) to replace a trustee and vest trust property in the new trustee, in advance of a trial in the Commercial List on 4 November 2024.
The trust is the Guo Family Trust. The plaintiffs, Wencheng (Jeff) Guo and his son Huidong (William) Guo, are beneficiaries of the Guo Family Trust. Mr Guo Snr is the only named beneficiary whilst Mr Guo Jnr, as his child, is…

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.

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Details

Case: [2024] NSWSC 1283
Decision Date: 14 October 2024

CaseChat Overview and Summary

In the case of Guo v HD International Pty Ltd, the respondent sought relief from the Supreme Court of New South Wales to address the deadlock in the management of a trust by its corporate trustee. The trust was established under an agreement between the parties, and the petitioner, as a beneficiary, was concerned about the trustee's refusal to provide necessary information and access to trust documents. Additionally, the petitioner argued that the trustee's inaction posed a risk of losing significant causes of action worth $26.9 million before they became statute-barred.

The court was tasked with determining whether the petitioner was entitled to an order for the removal of the corporate trustee and whether a new trustee should be appointed to manage the trust. The primary legal issue was whether the petitioner had demonstrated that the trustee had breached its duties to the beneficiary, creating a deadlock that warranted judicial intervention. Furthermore, the court needed to assess the principles that should guide the appointment of a new trustee and the implications of such an appointment under the Trustee Act 1925 (NSW).

The court found that the petitioner had established grounds for the removal of the existing trustee due to the trustee's failure to act in accordance with its fiduciary duties. The petitioner had made repeated requests for information and access to trust documents, which the trustee had ignored, thereby creating a deadlock. The court also concluded that there was a significant risk of the trustee not pursuing valuable causes of action before they became statute-barred. Based on these findings, the court ordered the removal of the existing trustee and the appointment of a new trustee to manage the trust. The principles guiding the appointment were considered in light of the specific circumstances of the case, and the court provided detailed guidance on the process for vesting the trust in the new trustee.

The final orders included the removal of the existing corporate trustee and the appointment of a new trustee to manage the trust. The court also ordered that the new trustee be vested with the trust property in accordance with the principles set out in the Trustee Act 1925 (NSW).

Orders