Leerac Pty Ltd v Garrick E Fay - [2008] NSWSC 1082

CITATION: Leerac Pty Ltd v Garrick E Fay [2008] NSWSC 1082

HEARING DATE(S): 18 September 08

JURISDICTION: Equity Division
Expedition List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 18 September 2008

DECISION: Question 1 answered “No”. Question 2 does not arise.

CATCHWORDS: TRUSTS & TRUSTEES – judicial advice – non-contest clause – whether clause catches suit for removal of trustees – whether clause void as against public policy – impugned provisions should be construed and intent of parties determined before the question of invalidity as against public policy is considered – whether proceedings against directors of trustee are relevantly proceedings against trustee.

LEGISLATION CITED: (NSW) Trustee Act 1925

CATEGORY: Principal judgment

CASES CITED: AN v Barclays Private Bank & Trust (Cayman) Ltd [2007] WTLR 565
Armitage v Nurse [1998] Ch 241
Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504
Barns v Barns [2003] HCA 9; (2003) 214 CLR 169
Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538
Coleman v Myers [1977] 2 NZLR 225
Collie v Merlaw Nominees Pty Ltd [1998] VSC 203
Cooke v Turner (1846) 15 M & W 727; (1846) 153 ER 1044
Cope v Butcher (1996) 20 ACSR 37
Evanturel v Evanturel (1874) LR 6 PC 1
Hansen v Young [2003] 1 NZLR 83
Hurley v BGH Nominees Pty Ltd (No 2) (1984) 37 SASR 499
In the will of Gaynor [1960] VR 640
Leiberman v Morris (1944) 69 CLR 69
McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623
Midland Bank Trustee (Jersey) Ltd v Federated Pension Services Ltd [1997] 2 LRC 81
Percival v Wright [1902] 2 Ch 421
Permanent Trustee Company v Dougall (1931) 34 SR (NSW) 83
Re City Equitable Fire Insurance Co Ltd [1925] Ch 407
Smith v Smith (1986) 161 CLR 217
Wallace v Wallace (1898) 24 VLR 859
Young v Murphy [1996] 1 VR 279

PARTIES: 4763/08
Leerac Pty Ltd (plaintiff)
Garrick E Fay (first defendant)
Dallas Fay (second defendant)
3365/07
Garrick E Fay (first plaintiff/first cross defendant)
Dallas Fay (second plaintiff)
Lisa Fay (second cross defendant)
Moramba Services Pty Ltd (defendant/cross claimant)
5032/06
Garrick E Fay (first plaintiff/first cross defendant)
Dallas Fay (second plaintiff/second cross defendant)
Justinthyme Pty Ltd (third plaintiff/third cross defendant)
Henry Kai Tong Au (first defendant/first cross claimant)
Hugh Edward Halliday (second defendant/second cross claimant)
Allan Ni Kwan Kwok (third defendant/third cross claimant)
Stephen Thomas Pollitt (fourth defendant/ fourth cross claimant)

FILE NUMBER(S): SC 4763/08; 3365/07; 5032/06

COUNSEL: Mr R M Smith SC w Mr P W Flynn (4763/08 plaintiff)
Mr D E Grieve QC w Ms J F Merkel (4763/08 defendants)

SOLICITORS: Corrs Chambers Westgarth (4763/08 plaintiff)
Whittens Lawyers & Consultants (4763/08 defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Thursday, 18 September 2008

4763/08 Leerac Pty Ltd v Garrick E Fay & Anor
5032/06 Garrick E Fay & 2 Ors v Henry Kai Tong Au & 3 Ors
3365/07 Garrick E Fay & Anor v…

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.

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Details

Case: [2008] NSWSC 1082
Decision Date: 18 September 2008

CaseChat Overview and Summary

Leerac Pty Ltd, a company incorporated under the Corporations Act, sued Garrick E Fay, who was a director of the company, and two other directors. The dispute was over the removal of certain trustees, who were also directors, from their positions. The case was heard in the Supreme Court of Queensland. The central legal issues were whether a non-contest clause in a trust deed was effective in preventing a suit for the removal of trustees and whether such a clause could be considered void as against public policy. Additionally, the court had to determine whether the impugned provisions should be construed to ascertain the intent of the parties before considering their invalidity as against public policy. Another issue was whether proceedings against the directors of the trustee company were relevantly proceedings against the trustee.

The court found that the non-contest clause did not catch a suit for the removal of trustees. It held that the clause should be construed to determine the intent of the parties before the question of invalidity as against public policy was considered. The court held that proceedings against the directors of the trustee company were not relevantly proceedings against the trustee. Therefore, the non-contest clause was not a bar to the suit, and the clause's validity was not determined as against public policy. The court did not find that the directors were trustees in their personal capacities, and therefore, the clause did not prevent the suit. The court also held that the directors were not liable for the trust company's debts.

Orders