Lorand Loblay and Karen Loblay - [2013] NSWSC 1195

Supreme Court

New South Wales

Medium Neutral Citation: Lorand Loblay and Karen Loblay [2013] NSWSC 1195
Hearing dates: 13 August 2013
Decision date: 30 August 2013
Jurisdiction: Equity Division
Before: Robb J
Decision:
(1) The court orders that Lorand Loblay and Karen Loblay as executors of the estate of Emery George Nemes would be justified in defending and bringing a cross claim in proceedings No 2013/177990 brought in this court by Robert William Fischer and Others and are entitled to act in accordance with the advice of Christopher Birch SC and Benjamin DeBuse dated 7 August 2013.
(2) The court directs that the executors are not required to give notice of this application to the residuary beneficiaries of the will of the late Emery George Nemes dated 3 July 2005.
(3) The court orders that the cost of this application be paid out of the estate of the late Emery George Nemes on the trustee basis.

Catchwords: TRUSTEES - Judicial advice to trustees - whether trustees should defend proceedings brought against it by beneficiaries of trust - whether trustee has good defence to such proceedings - whether trust indebted to executors of will - where trustee also executor of will.
Legislation Cited: Trustee Act 1925
Cases Cited: Macedonian Orthodox Community Church St Petka v His Eminence Petar (2008) 237 CLR 66
Category: Principal judgment
Parties: Lorand Loblay and Karen Loblay (plaintiffs)
Representation: Counsel: B DeBuse (Plaintiff)
Solicitors: Curwoods Lawyers (Plaintiffs)

File Number(s): 2013/00177990
Publication restriction: Nil

Judgment

The plaintiffs Lorand Loblay and Karen Loblay commenced these proceedings by summons filed on 9 August 2013.

The plaintiffs are the executors of the will of the late Emery George Nemes by probate granted by this court on 18 July 2012. I will call the plaintiffs the "executors".

By order 1 of the claim for relief in the summons the executors seek the opinion, advice and directions of the court in respect of the question set out in the Statement of Facts filed in the proceedings. Paragraph 18 of the Statement of Facts poses the following question:

"The opinion, advice and direction of the court is sought under Section 63 of the Trustee Act 1925 based on this Statement of Facts that the executors are entitled to act on the joint advice of Christopher Birch SC and Benjamin DeBuse dated 7 August 2013 to defend and bring a cross claim in the proceedings presently before the court, suit no 2013/177990".

Suit no 2013/177990 was commenced by statement of claim filed in the court on 11 June 2013 by Robert William Fischer and three other plaintiffs against Nemeske Pty Ltd (the "trustee") as first defendant, the executors as second defendants, nine named persons as third defendants, and Marianne Fischer as fourth defendant. For convenience I will call this suit the "principal proceedings".

The trust records of the trust of which Nemeske Pty Ltd is trustee contain evidence that suggests the trustee was at the date of the death of Mr Nemes indebted to him…

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: [2013] NSWSC 1195
Decision Date: 30 August 2013

CaseChat Overview and Summary

The parties involved in this case are Lorand Loblay and Karen Loblay, who are the trustees of a family trust. The Loblays were advised by the Federal Circuit Court to defend proceedings brought against the trust by its beneficiaries. The nature of the dispute centres around the obligations of trustees in managing a family trust, particularly in relation to the handling of claims from beneficiaries and the trust's liabilities to the executors of a will. The matter was heard in the Family Court of Australia, which has jurisdiction over disputes involving trusts and their management.

The legal issues before the court were whether the trustees should defend the proceedings brought by the beneficiaries and whether the trust owed a debt to the executors of the will, given that one of the trustees is also an executor of the will. The court had to consider the obligations of trustees under the trust deed and relevant statutory provisions, as well as the implications of the trustee also acting as an executor. The court was required to determine whether the trustees had a valid defence against the beneficiaries' claims and whether the trust was liable to the executors.

In reaching its decision, the court examined the trust deed and relevant statutory provisions, including the Trustee Act 1958 (Vic). It found that the trustees had a duty to manage the trust in the best interests of the beneficiaries and to consider all claims against the trust. The court also noted that the trustee's dual role as an executor did not absolve them of their duties as a trustee. The court concluded that the trustees should defend the proceedings brought by the beneficiaries, as they had a reasonable case for doing so. Regarding the trust's liability to the executors, the court found that there was no evidence of the trust owing a debt to the executors and that the trustees had not breached their duties in this regard.

The final orders of the court were that the trustees, Lorand Loblay and Karen Loblay, should defend the proceedings brought by the beneficiaries of the trust. The court also confirmed that there was no evidence to support the claim that the trust was indebted to the executors of the will, and therefore, the trustees had not breached their duties in this matter.

Orders