HLB v Trust Company Ltd - [2010] QCAT 40

CITATION: HLB v Trust Company Ltd [2010] QCAT 40

PARTIES: HLB

v
Trust Company Limited

APPLICATION NUMBER: GAA5651-09

MATTER TYPE: Guardianship and administration matters

HEARING DATE: 2 February 2010

HEARD AT: Brisbane

DECISION OF: J Allen (Presiding Member)
L Clarkson (Member)

DELIVERED ON: 12 February 2010

DELIVERED AT: Brisbane

DIRECTIONS MADE:

The Tribunal orders Trust Company Limited to compensate HLB within 28 days for its failure to comply with section 51 of the Guardianship and Administration Act 2000.

The amount of compensation shall be calculated on the difference between the return on investment of an amount of $3,641,695:

(a)held in the Trust Cash Management Fund and the
Commonwealth Bank of Australia 90 day Bank Bill for the period
1 April 2009 to 29 June 2009; and

(b)held in the Trust Cash Management Fund and the Commonwealth Bank of Australia 60 day Bank Bill or term deposit for the period 30 June 2009 to 28 August 2009.

Trust Company Limited shall provide the Tribunal with a copy of its calculation in respect of the compensation payment and supporting documents within 28 days.

CATCHWORDS: Authorised investments – sections 52 Guardianship and Administration Act 2000 Compensation for failure to comply – section 59 Guardianship and Administration Act 2000.

APPEARANCES and REPRESENTATION (if any):

The active parties attending the hearing were Mrs HAJ, Mr Ross Spence representing Trust Company Limited and Mr Brian Norman representing the Public Trustee of Queensland. Mr Peter Bryant attended as an interested party for Trust Company Limited.

REASONS FOR DECISION

BACKGROUND

[1]Trust Company Limited were appointed administrator for Ms HLB by order of Mullins J of the Supreme Court of Queensland on 18 August 2008 in respect of a damages award in the amount of $4,250,000.00. Trust Company Limited was ordered by Mullins J to give a management plan within the meaning of the Guardianship and Administration Act 2000 to the former Guardianship and Administration Tribunal within sixty (60) days of the date of that order. The requirement to submit the plan was in accordance with section 20 of the Guardianship and administration Act 2000 which requires a person who agrees to appointment as an administrator to give a financial management plan to the Tribunal fro approval.
[2]The plan was lodged with the Guardianship and Administration Tribunal on 8 July 2009 following a series of extensions of time which were granted by that Tribunal. As was the practice of that Tribunal an oral hearing occurred on 28 August to enable the tribunal to consider the plan.
[3]At that hearing it was disclosed that Trust Company Limited had received the settlement sum in respect of the damages award on 18 September 2008 and that it was held in the Trust Company limited at call fund known as the Trust Company Cash Management Fund and that as at the date of the hearing the earning rate for that fund was 2% per annum. The Guardianship and Administration Tribunal made directions that Trust Company Limited (described as trust Company of Australia Limited)…

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 HLB v Trust Company Ltd

Details

AGLC: HLB v Trust Company Ltd [2010] QCAT 40
Case: [2010] QCAT 40
Decision Date: 12 February 2010

CaseChat Overview and Summary

HLB v Trust Company Ltd [2010] QCAT 40 involved a dispute between HLB, a beneficiary, and Trust Company Limited, an administrator. The matter before the court was whether Trust Company Limited had breached its duties as an administrator under the Guardianship and Administration Act 2000 by not investing HLB's funds in accordance with the prudent person rule. The issue at hand was whether Trust Company Limited had failed to comply with section 51 of the Act, which mandates that an administrator must invest in authorised investments, and whether HLB had suffered any loss as a result of this alleged failure. The court considered the evidence and submissions from both parties, including the market conditions at the time, the investment strategies employed, and the applicable legal principles. The court concluded that Trust Company Limited had indeed breached its duty by not investing in accordance with the prudent person rule, resulting in HLB suffering a loss. Consequently, the court ordered Trust Company Limited to compensate HLB for the loss caused by their failure to comply with the Act.

In delivering the decision, the Tribunal noted that Trust Company Limited, as the administrator, had a duty to invest HLB's funds in a manner consistent with the prudent person rule, which requires taking into account various factors such as the nature and risk of investments, the need to maintain the real value of the capital, and the potential for capital appreciation. The Tribunal found that Trust Company Limited had failed to adequately consider alternative investments that could have provided a higher return without compromising capital security, especially when the differential in interest rates between the Trust Cash Management Fund and bank bills became apparent. The Tribunal emphasised that Trust Company Limited, being in the business of managing trust funds, should have been aware of prevailing market trends and regularly reviewed the return on HLB's funds. The court ordered Trust Company Limited to compensate HLB for the loss, calculated based on the difference in earnings between the Trust Cash Management Fund and higher-yielding investments over specified periods.

Orders