Legal Research
Cases
Highland v Labraga (No 2)

Highland v Labraga (No 2)

Case [2005] NSWSC 1212 29 November 2005

Costs

Discretionary Trust

Derivative Action

Civil Litigation & Procedure

Trusts & Equity

No judgment structure available for this case.

Type to search within this case.

CITATION:
Highland v Labraga (No 2) [2005] NSWSC 1212

HEARING DATE(S): 11/10/05 [then written submissions]

JUDGMENT DATE :

29 November 2005

JURISDICTION:
Equity Division

JUDGMENT OF:
Young CJ in Eq

DECISION:
First defendant to pay plaintiffs' costs.

CATCHWORDS:
PROCEDURE [553]- Costs- Plaintiffs successful- Proceedings originally brought by a beneficiary of a discretionary trust- Proceedings amended to add trustee prior to hearing- Proceedings not incompetent prior to amendment- Whether plaintiffs to get whole of costs of suit or only those incurred after amendment. EQUITY [225]- Discretionary trust- Co-trustees deadlocked- Whether beneficiary had standing to bring derivative action to remove one trustee- Generally derivative action can only be brought in special circumstances- Beneficiary may bring derivative action where there is substantial impediment to trustee prosecuting proceedings.

CASES CITED:
Gandy v Gandy (1885) 30 Ch D 57
Hayim v Citibank NA [1987] AC 730
Middleton v O'Neill (1943) 43 SR (NSW) 178
Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 96 FCR 217
Re Gestetner Settlement [1953] Ch 672
Yeatman v Yeatman (1877) 7 Ch D 210

PARTIES:
Penelope Louise Highland (P1)
Philip Edward Pomfret (P2)
Julio Cesar Labraga (D1)
Nowhere In Particular Pty Limited (D2)

FILE NUMBER(S):
SC 2466/05

COUNSEL:
G K Burton SC (P)
M Ashhurst (D1)

SOLICITORS:
Dibbs Abbott Stillman (P)
Kemp Strang (D1)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Tuesday 29 November 2005

2466/05 – HIGHLAND v LABRAGA (NO 2)

JUDGMENT

1 HIS HONOUR: I handed down reasons for judgment in this matter on 29 September 2005 ([2005] NSWSC 973) and made formal orders on 11 October 2005. However, I reserved for consideration after I had received further written submissions the question of costs.

2 As noted in my earlier reasons, the late Mr Highland whose estate was in question in the case, was a co-venturer with Messrs Pomfret and Labraga. Mr Highland’s will left his property to the Highland Family Trust and named Messrs Pomfret and Labraga as his executors. A common form grant of probate was made to those men.

3 The trustee of the Highland Family Trust at the relevant time was a company, Nowhere In Particular Pty Ltd, the directors of which were Messrs Pomfret and Labraga.

4 Mrs Highland was a beneficiary under the Highland Family Trust. Whilst, on a strict construction of the Trust Deed, she was only one of many possible beneficiaries under that trust, it would not take a jury long to find that, in practice, she would probably be its principal beneficiary.

5 Mrs Highland commenced these proceedings to remove Mr Labraga as executor.

6 That application was bound to fail for a number of reasons.

7 The proceedings were amended by order of Barrett J on 6 June 2005 by adding Mr Pomfret as a co-plaintiff and seeking an order that the grant be revoked and a fresh grant made. That order was made following my earlier reasons.

8 Mr Burton SC provided…

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 Highland v Labraga (No 2)

Details

AGLC: Highland v Labraga (No 2) [2005] NSWSC 1212
Case: [2005] NSWSC 1212
Decision Date: 29 November 2005

CaseChat Overview and Summary

The case of Highland v Labraga (No 2) involved proceedings initiated by a beneficiary of a discretionary trust, with subsequent amendments to include a trustee. The central dispute centred on the costs associated with the litigation, particularly whether the plaintiffs were entitled to the entirety of the costs incurred or only those that arose post the amendment of the proceedings. Additionally, the case addressed the issue of whether the beneficiary had the requisite standing to pursue a derivative action to remove a trustee in the context of a deadlocked co-trustee scenario.

The primary legal issues the court had to resolve were the scope of the costs recoverable by the plaintiffs and the standing of the beneficiary to initiate a derivative action against the trustee. The court needed to determine if the amendment of the proceedings rendered the original proceedings incompetent or if the plaintiffs were entitled to claim costs from the entire litigation process. Furthermore, the court had to decide whether the beneficiary could legitimately bring a derivative action to remove a trustee, considering the general principle that such actions can only be pursued in special circumstances.

In addressing the costs issue, the court ruled that the plaintiffs were entitled to the entire costs of the suit, not just those incurred after the amendment. The reasoning was that the amendment did not invalidate the original proceedings, and thus the costs associated with the initial litigation were properly recoverable. Regarding the derivative action, the court held that the beneficiary did have standing to bring such an action, given the substantial impediment created by the deadlocked co-trustees which prevented the trustee from effectively managing the trust.

Consequently, the court ordered that the plaintiffs were to receive the full costs of the litigation, including those incurred prior to the amendment of the proceedings. Additionally, the court affirmed the beneficiary's standing to pursue a derivative action to remove the trustee, recognising the impediment to the trustee's ability to act.

Orders