Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jaques (No 2)

In the Federal Circuit Court, Lanai Unit Holdings Pty Ltd sued Mallesons Stephen Jaques, contending that the defendant's conduct was misleading or deceptive under the Trade Practices Act 1974 (Cth) and that the plaintiff, as the replacement trustee of a unit trust, was entitled to recover damages. The primary legal issues for the court were whether damages under section 82 of the Trade Practices Act could only be recovered by the person who suffered loss due to the misleading conduct, whether the Trade Practices Act claim constituted "property" under section 15(1) of the Trusts Act 1973 (Qld), and if the Trade Practices Act claim vested in the plaintiff under that section. Additionally, the court had to consider whether section 15(1) of the Trusts Act operated to vest the Trade Practices Act claim in the plaintiff, and if it was inconsistent with section 82 of the Trade Practices Act and therefore invalid under section 109 of the Constitution.

The court determined that the Trade Practices Act claim was not property within the meaning of section 15(1) of the Trusts Act, as it was a chose in action, not a tangible asset. The court found that the claim did not automatically vest in the plaintiff upon their appointment as trustee. Furthermore, the court held that section 15(1) of the Trusts Act did not operate to vest the Trade Practices Act claim in the plaintiff, as it was subject to the provisions of the Trade Practices Act. The court concluded that the claim could only be pursued by the person who suffered loss due to the misleading conduct, which in this case, was the original trustee, not the replacement trustee.

Consequently, the court struck out paragraphs 26-49 of the further amended statement of claim and ordered the plaintiff to pay the defendant's costs of the application. The plaintiff's claim for damages under the Trade Practices Act was dismissed due to the vesting issues and the requirement that the claim be brought by the person who suffered loss.