Lenyco Pty Ltd; Application of

[2010] NSWSC 1094

CITATION:	Lenyco Pty Ltd; Application of [2010] NSWSC 1094
HEARING DATE(S):	5 August 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	5 August 2010
DECISION:	That the applicant would be justified in doing all things necessary or reasonably incidental to conducting the defence of proceedings 09/288131
CATCHWORDS:	EQUITY – Trusts and trustees – Applications to court for advice and authority – whether trustees justified in defending proceedings
LEGISLATION CITED:	(CTH) Trade Practices Act 1974, s 52 (NSW) Trustee Act 1925, s 63
CATEGORY:	Principal judgment
CASES CITED:	Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42
PARTIES:	Lenyco Pty Limited (applicant)
FILE NUMBER(S):	SC 09/288416
COUNSEL:	Ms T Wong (applicant) Mr C P Lock (trustees in 09/288131)
SOLICITORS:	Thomson Playford Cutlers (applicant) Argyle Lawyers (trustees in 09/288131)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday, 5 August 2010

2009/288416 Lenyco Pty Limited; Application of

JUDGMENT (ex tempore)

1 HIS HONOUR: In this application under the (NSW) Trustee Act 1925, s 63, the plaintiff Lenyco Pty Ltd, in conformity with the course commended by the High Court of Australia in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42, seeks advice as to whether in its capacity as trustee of the D’Aquino Family Trust it would be justified in defending proceedings 2090/09 (09/288131) in which various of the class of potential beneficiaries are the plaintiffs.

2 Essentially, the plaintiffs in the substantive proceedings contend that a power of appointment formally held by Giuseppe D’Aquino – who, until his death, was one of the potential beneficiaries and the appointor of the trust – is now held by his executors, and that those executors are bound to exercise that power in accordance with wishes of the beneficiaries of the estate, including the plaintiffs. The plaintiffs in the substantive proceedings also claim that Lenyco holds assets of the trust on trust for the executors of the estate, and/or that Lenyco is bound to administer the trust in accordance with Giuseppe’s will. Alternatively, the plaintiffs seek removal of Lenyco as trustee and substitution of another trustee, removal of the executors as trustees of the trusts created by the will and the appointment of replacement trustees of the estate, and, in the further alternative, relief under the (NSW) Family Provision Act 1982, including a designating order in respect of assets of the trust. There is an additional allegation that Lenyco has engaged in misleading and deceptive conduct, in contravention of (CTH) Trade Practices Act 1974 s 52.

3 On 28 April 2009, I made an order pursuant to s 63 that Lenyco would be justified in doing all things necessary or reasonably incidental to conducting the defence of the substantive proceedings, on certain bases outlined in a letter from its solicitors and on such other bases as it may be advised from time to time, also expressing the view that Lenyco would not be justified in funding the defence of the other defendants out of the trust assets, though to the extent that they were beneficiaries of the trust it was a matter for them as to how they might apply the proceeds of any distributions made to them from the trust. I limited that advice at that time up to and including the close of pleadings in the substantive proceedings, and I adjourned the proceedings for further hearing on 12 June 2009.

4 Subsequently, after a draft defence had been provided and advices obtained from counsel, which were provided to the court, on 30 July 2009 I made an order pursuant to s 63 to the effect that Lenyco would be justified in doing all things necessary or reasonably incidental to conducting the defence of the substantive proceedings in relation to all defences raised by it set out in the draft defence and on such other bases as it may be advised from time to time, up to and including the setting down of the substantive proceedings for hearing. The advice was given in those terms because it seemed to me then possible that, while a prima facie view could be formed on the face of the pleadings, further evidence might impact on whether that view would survive the filing of evidence.

5 Although the evidence in the substantive proceedings is not entirely complete – it having been indicated that there may be some expert evidence yet to be served by the plaintiffs in those proceedings – it is substantially complete. Before the court is a bundle of the principal affidavits relied on by the plaintiffs and by the defendants in those proceedings.

6 A further supplementary advice has been obtained from senior and junior counsel which analyses the issues, considers to what extent the evidence in the plaintiffs’ case is capable of proving the allegations in the plaintiffs’ amended statement of claim in the substantive proceedings, evaluates the factors which bear on the acceptance of that evidence, refers to additional documentary evidence that has emerged since the earlier advices were given, and concludes that Lenyco continues to have good prospects of resisting each of the plaintiffs’ claims.

7 The circumstance that the trustee has what on its face appears to be careful, competent and considered advice from senior and junior counsel as to the viability of its defences is a powerful consideration on an application such as this. As I have earlier recorded, although the decision of the High Court in the Macedonian Orthodox Church case encourages this type of application for judicial advice, such applications are not an opportunity for the substantive plaintiff to have a preliminary judicial examination of the case. The question is whether the trustees would be justified in defending the proceedings in their capacity as such, not whether they will ultimately succeed.

8 In my view the trustee Lenyco would be justified in defending the substantive proceedings until entry of judgment therein, in the absence of any further material matter bearing on the viability of their defences emerging.

9 It also ought be added that I do not by that rider intend that any adverse matter arising in the course of cross-examination or otherwise of the trial would necessitate a further application for judicial advice. Obviously, it is not beyond the realm of human experience that there might be some development, not adverted to now, which could radically change the prospects. If there were such a radical development, then it would be appropriate for the trustees to relist this matter to protect their position. But not every swing and roundabout in the course of the proceedings, so long as it does not result in a radical change in the prospects of success, would necessitate such a course.

10 My orders are:

1. Order that the plaintiff Lenyco Pty Limited would be justified in doing all things necessary or reasonably incidental to conducting the defence of proceedings 2090/09 (09/288131) in relation to all defences raised by Lenyco Pty Limited set out in the defence filed in those proceedings, and on such other basis as it may be advised from time to time up to and including the entry of judgment in those proceedings.

2. Reserve liberty to apply by arrangement with my associate on three days’ notice.

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