In the matter of Australian Property Custodian Holdings Limited (in liquidation) (receivers and managers appointed) (as responsible entity of the Prime Retirement Aged Care Property Trust)

The case involved Australian Property Custodian Holdings Limited (in liquidation), with receivers and managers appointed, as the responsible entity of the Prime Retirement Aged Care Property Trust. The dispute centred around the application to strike out a proceeding brought by the trust. The matter was heard in the Supreme Court of New South Wales. The trust sought to enforce a contractual promise made by the custodian in relation to the property, which was intended to benefit the trust but was not directly binding on it due to the privity of contract rule.

The primary legal issue was whether the trust could enforce the contractual promise made by the custodian, despite not being a party to the original contract. The court examined the qualification to the privity rule that allows a party to hold a contractual promise on trust for a third party if there is evidence suggesting the trust of the promise has prospects of success. The court needed to decide whether the trust had demonstrated sufficient grounds to assert that the custodian held the benefit of the promise on trust for the trust.

The court found that the trust had provided evidence which suggested that the custodian held the benefit of the promise on trust for the trust. This evidence was sufficient to allow the trust to proceed with its claim. The court concluded that the trust had prospects of success in establishing the trust of the promise and therefore had the right to enforce it. The application to strike out the proceeding was dismissed.

The court's final order was that the proceeding would not be struck out, and the trust was permitted to continue with its claim. This decision recognised the trust's ability to enforce the contractual promise held by the custodian on trust for its benefit.