Jones v Hirst - [2013] NSWSC 163

Supreme Court

New South Wales

Medium Neutral Citation: Jones v Hirst [2013] NSWSC 163
Hearing dates: 18 February 2013
Decision date: 08 March 2013
Jurisdiction: Equity Division
Before: Young AJ
Decision:
Order made giving judicial advice

Catchwords:
EQUITY - Trusts and trustees - Applications to court for advice and authority - Petition or summons for advice - Jurisdiction - Trustee Act 1925 s 63 - Discretion to refuse advice - Categories of trustee - Where proceedings against trustees

EQUITY - Trusts and trustees - Applications to court for advice and authority - Petition or summons for advice - Whether appropriate to defend proceedings for removal of trustees - Whether appropriate to defend proceedings using trust funds

EQUITY - Trusts and trustees - Applications to court for advice and authority - Petition or summons for advice - Whether trustees should seek to recover amounts paid to third party beneficiaries allegedly in breach of trust - Basis for recovery - Money had and received - Moneys not paid by mistake - Change of position - Action under doctrine in Re Diplock available only to beneficiaries - Trustees Act 1962 (WA) s 65 inapplicable

EQUITY - Trusts and trustees - Applications to court for advice and authority - Petition or summons for advice - Whether appropriate to settle proceedings with potential beneficiaries within a given range - Whether appropriate to defend proceedings where settlement within a given range unobtainable

EQUITY - Trusts and trustees - Applications to court for advice and authority - Petition or summons for advice - Whether duty to identify other potential beneficiaries - Nature of Creditors' Trust - Position of claimants under Creditors' Trust analogous to that of potential beneficiaries of a discretionary trust - Position of trustees of Creditors' Trust analogous to position of liquidators generally - Duty of liquidator to act honestly and impartially between creditors - Duty of liquidator to inquire into potential claims of which he or she is aware
EQUITY - Trusts and trustees - Applications to court for advice and authority - Petition or summons for advice - Proper construction of Creditors' Trust - In the event of insufficient funds for distribution to beneficiaries - Whether to proceed pari passu or on some other basis
Legislation Cited: Trustee Act 1925 s 63
Trustees Act 1962 (WA) ss 65, 92
Cases Cited: Austin Securities Ltd v Northgate & English Stores Ltd [1969] 1 WLR 529; 2 All ER 753
Harry Goudias Pty Ltd v Port Adelaide Freezers Pty Ltd (1992) 7 ACSR 303
Macedonian Orthodox Community Church and Petka Incorporated v Bishop Petar [2008] HCA 402; 237 CLR 66
Re Armstrong-Whitworth Services Co Ltd [1947] Ch 673; [1947] 2 All ER 479
Re Australian Pipeline Ltd [2006] NSWSC 1316; 60 ACSR 625
Re Diplock [1948] Ch 465 (CA)
Re Ion Ltd [2010] FCA 1119; 80 ACSR 302
Re Jay-O-Bees Pty Ltd [2004] NSWSC 818; 50 ACSR 565
Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; 169 CLR…

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 Jones v Hirst

Details

AGLC: Jones v Hirst [2013] NSWSC 163
Case: [2013] NSWSC 163
Decision Date: 08 March 2013

CaseChat Overview and Summary

The matter of Jones v Hirst came before the court regarding advice sought by trustees of a Creditors' Trust on various actions they could take. The trustees sought the court's guidance on multiple issues, including whether to defend proceedings for their removal, whether to use trust funds for such defence, whether to seek recovery of amounts allegedly paid in breach of trust to third parties, whether to settle proceedings with potential beneficiaries, and whether they had a duty to identify other potential beneficiaries.

The court examined the statutory provisions and principles of equity to determine the appropriate course of action for the trustees. It considered the nature of the Creditors' Trust, the position of claimants and trustees, and the duties owed by the trustees. The court also looked at the proper construction of the Creditors' Trust in the event of insufficient funds for distribution to beneficiaries.

The court found that the trustees had a duty to act honestly and impartially between creditors, and to inquire into potential claims of which they were aware. The court also held that trustees should not defend proceedings for their removal or use trust funds for such defence. In relation to recovery of amounts allegedly paid in breach of trust, the court held that trustees could not seek recovery based on the doctrine in Re Diplock, but could do so under the principle of money had and received. The court further held that trustees should seek to settle proceedings with potential beneficiaries within a given range, but should not defend proceedings where such settlement was unobtainable. Finally, the court held that in the event of insufficient funds for distribution to beneficiaries, the trustees should proceed pari passu.

The court's advice to the trustees provided them with clear guidance on their duties and the appropriate course of action in various situations. The court's decision was based on a thorough analysis of the relevant legal principles and statutory provisions, and provided much-needed clarity for the trustees in managing the Creditors' Trust.

Orders