Lea v Mo-Mont Pacific

[2016] NSWSC 809

Supreme Court

New South Wales

Medium Neutral Citation:	Lea v Mo-Mont Pacific & Ors [2016] NSWSC 809
Hearing dates:	15 June 2016
Decision date:	15 June 2016
Jurisdiction:	Equity
Before:	White J
Decision:	Order that the defendants' notice of motion be dismissed with costs.
Catchwords:	PRACTICE AND PROCEDURE — Pleadings — Application to strike out amended statement of claim pursuant to UCPR r 14.28 — Application to dismiss proceedings pursuant to UCPR r 13.4 — Amended statement of claim discloses a reasonable cause of action — Application dismissed
Cases Cited:	Avanes v Marshall [2007] 68 NSWLR 595 Gartside v Inland Revenue Commissioners [1968] AC 553 Schmidt v Rosewood Trust Limited [2003] 2 AC 709 Spellson v George [1987] 11 NSWLR 300
Category:	Procedural and other rulings
Parties:	Carissa Sloane Lea (Plaintiff) Mo-Mont Pacific Pty Ltd as trustee of the Montague Neville Lea Trust (2nd Defendant) Nathan William Samuel Lea (3rd Defendant) Leighland Blythe Courtney Lea (4th Defendant)
Representation:	Counsel: M S Henry with D A Hughes (Plaintiff) D E Grieve QC with E Cohen (Defendants)   Solicitors: Kosmin & Associates (Plaintiff) Broun Abrams Burreket (Defendants)
File Number(s):	2015/353354

Judgment

1. HIS HONOUR: This is a notice of motion, filed on 15 April 2016, in which the defendants seek an order that the plaintiff's amended statement of claim be struck out and that the proceedings be dismissed.

2. The notice of motion was filed after the service of the plaintiff's evidence and after the time fixed by the Chief Judge in Equity for the defendants to serve their evidence.

3. I was told that when the matter was before the Registrar counsel for the plaintiff sought to have the proceedings listed for hearing and counsel for the defendants submitted that the notice of motion seeking summary dismissal or striking out of the statement of claim should be heard first. The Registrar evidently acceded to the submission of counsel for the defendants.

4. The discretion, having been so exercised, it is appropriate that I deal with this application.

5. It should not be taken, however, that it is appropriate for such applications always to be entertained. Paragraph 62 of the Practice Note Sc Eq 3 which refers to practice in the Commercial List and the Technology and Construction List says that, as a general rule, applications to strike out or for summary judgment will not be entertained. Sometimes such applications are appropriate, but practitioners should expect strictness in declining to entertain such applications.

6. The philosophy underlying that statement, in my view, should apply generally to proceedings in the Division. As a general rule interlocutory processes should be discouraged as in most cases it is better for the matter simply to be made ready for final hearing as soon as it can be, consistently with the parties having proper opportunity to prepare their case. That is not to say that there are not appropriate cases in which such applications should be made.

7. I think it must be a rare case where it would be appropriate for such an application to be made when the matter is ready for hearing.

8. Be that as it may, it is necessary to deal with the application.

9. The plaintiff is a discretionary object under a discretionary trust known as the NML Trust.

10. The second defendant is the trustee.

11. The third and fourth defendants are the directors of the trustee.

12. The third defendant is the plaintiff's brother.

13. In her statement of claim the plaintiff seeks orders that the second defendant be removed as trustee of the trust.

14. In the events that have happened the third defendant is the appointor of the trust with power to remove and appoint the trustee. The plaintiff seeks an order that the third defendant be removed as appointor. She seeks an order for the service of accounts and she seeks the appointment of a new trustee and appointor of the trust.

15. She also seeks an order that the third defendant pay to her moneys retained by him from distributions from the trust in excess of a certain proportion.

16. The plaintiff accepts that the relief presently sought in the amended statement of claim in this respect, that is the payment to her of one-sixth of the trust income, is not the relief which the law requires and she proposes to amend that prayer to seek an order requiring the third defendant to restore to the trust an amount of money equal to distributions received by him consequent upon the alleged failure of the trustee to give real and genuine consideration to the exercise of the discretion to make distributions.

17. The plaintiff complains that the third defendant is not a fit and proper person to be a director of the trustee. She gives particulars of those matters. She alleges that the trustee and its directors have not given fair and proper consideration to the claims of all of the discretionary objects in their administration of the trust. The factual issues raised in that respect are matters for trial.

18. The plaintiff has served evidence of statements being made by the third defendant to the effect that he has said that as appointor he can do with the trust moneys what he wants and will be retaining the plaintiff's share.

19. There is other evidence which, if accepted at trial, might establish that the trustee's discretion in relation to the distribution of the income of the trust has not been made in good faith.

20. The defendants submit that the plaintiff as a discretionary object does not have a legal or equitable interest in any of the trust's assets. I do not understand that contention to be in dispute. It does not follow that the plaintiff does not have a right to enforce the trustee's obligation properly to exercise its discretionary powers (Gartside v Inland Revenue Commissioners [1968] AC 553 at 617-618; and see also Spellson v George [1987] 11 NSWLR 300; Schmidt v Rosewood Trust Limited [2003] 2 AC 709; Avanes v Marshall [2007] 68 NSWLR 595).

21. In their written submissions the defendants contended that they were not required to give reasons for the exercise of their discretion in relation to the distribution of income or capital. It is said that as they have not done so, the Court would not enquire whether or not the exercise of discretions in the past for the distribution of income have been exercised wisely, fairly or reasonably.

22. The difficulty with this submission is that, first, it only addresses part of the plaintiff's claim. It does not address the part of the plaintiff's claim that seeks the removal of the trustee and the appointor.

23. Secondly, the plaintiff points to admissions said to have been made upon which it will rely, as well as the fact that the plaintiff has not received distributions which she had formerly received, as indicating that the trustee has not exercised its discretion properly and in good faith.

24. It seems to me that these are all matters for trial.

25. No submission was made that the Court in its inherent jurisdiction would not have power to remove the third defendant as appointor.

26. In their submissions counsel for the plaintiff have referred to authorities supportive of the existence of such a power. It is unnecessary and inappropriate to address those on this application. The question is clearly arguable.

27. For these reasons I order that the defendants' notice of motion be dismissed with costs.

28. I stand the matter over into the Registrar's list on Monday 20 June 2016 for the purpose of fixing a hearing date.

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Decision last updated: 17 June 2016