Lorebray Pty Ltd v Liddy

Lorebray Pty Ltd, as trustee of a discretionary family trust, brought an action against a beneficiary, Liddy, alleging various breaches of trust and fiduciary duty. Liddy, in turn, sought to be joined as a plaintiff in the proceeding, but the trustee declined to continue prosecuting the action against Liddy. Liddy then applied to be joined as a plaintiff in the proceeding, arguing that special or exceptional circumstances existed. The court was required to determine whether such circumstances existed, whether the claim against Liddy had merit, and whether the trustee should be made a defendant in the proceeding.

The court found that the trustee had not provided sufficient evidence to support the allegations against Liddy and that the trustee's refusal to continue prosecuting the action against Liddy was unreasonable. The court also found that there were exceptional circumstances that warranted Liddy being joined as a plaintiff in the proceeding. The trustee did not oppose the application but sought indemnity for past and future costs backed by security. The court found that the trustee should not be made a defendant in the proceeding but that the application should be granted on the condition that indemnity be provided to the trustee in relation to future costs.

The orders of the court were that Liddy be joined as a plaintiff in the proceeding on the condition that Liddy provide indemnity to the trustee in relation to future costs. The court also ordered that the trustee provide security for the indemnity. The trustee was not made a defendant in the proceeding.