Jones v Hirst

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.