Maloof v Uncle's Joint Pty Ltd; Maloof v Uncle's Joint Pty Ltd

[2014] NSWSC 210

Supreme Court

New South Wales

Medium Neutral Citation:	Maloof v Uncle's Joint Pty Ltd; Maloof v Uncle's Joint Pty Ltd [2014] NSWSC 210
Hearing dates:	7 March 2014
Decision date:	12 March 2014
Jurisdiction:	Equity Division - Expedition List
Before:	Stevenson J
Decision:	Orders of 5 December 2013 to be varied
Catchwords:	PROCEDURE - judgments and orders - application to vary orders - whether court should vary orders to enable trustee defendants to pay costs of proposed application for judicial advice EQUITY - trusts - trustee - judicial advice -whether court should vary orders to enable defendants to pay costs of proposed application for judicial advice
Legislation Cited:	Succession Act 2006 Trustee Act 1925
Cases Cited:	Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66
Category:	Interlocutory applications
Parties:	In proceedings 2013/360586: Frances Rita Maloof (Plaintiff) Uncle's Joint Pty Ltd (First Defendant) Darren Pernice (Second Defendant) Einasleigh Nominees Pty Ltd (Third Defendant) Albert & May Pty Ltd (Fourth Defendant) In proceedings 2013/360672: Tiba Clementine Maloof (First Plaintiff) Sarah Mariel Maloof (Second Plaintiff) Uncle's Joint Pty Ltd (First Defendant) Darren Pernice (Second Defendant) Einasleigh Nominees Pty Ltd (Third Defendant) Albert & May Pty Ltd (Fourth Defendant)
Representation:	Counsel: C M Harris SC with M Luitingh (Plaintiff) M Izzo (Defendants) Solicitors In proceedings 2013/360586: TressCox Lawyers (Plaintiff) Stacks The Law Firm (Defendants) In proceedings 2013/360672: Knight Lawyers (First and Second Plaintiff) Stacks The Law Firm (Defendants)
File Number(s):	SC 2013/360586; 2013/360672
Publication restriction:	Nil

Judgment

1. The substantial issue in these two proceedings (2013/360586 and 2013/360672), which are to be heard together, is the identity of the trustee of two trusts established by the late Mr Clement Maloof; the "CJ Maloof Family Trust" and the "Einasleigh Trust".

1. The third defendant was trustee of both trusts. However, the first defendant now purports to be trustee of the CJ Maloof Family Trust (following the alleged resignation by the third defendant as trustee) and the second defendant now purports to be trustee of the Einasleigh Trust (following the alleged removal of the third defendant as trustee).

1. The plaintiffs in the two proceedings are three of Mr Maloof's daughters. They seek declarations that the purported appointment of the first and second defendants as trustees is "invalid" and that the third defendant remains trustee, together with various consequential orders.

1. The allegations made by the plaintiffs in the proceedings are grave. According to the submissions of Mr Harris SC, who appeared with Mr Luitingh for the plaintiffs, "the first and second defendants became trustees of the respective trusts through secrecy and stealth, and with the purpose of subverting the deceased's will".

1. The two matters are before me as Expedition Judge and are fixed for hearing on 2 and 3 April 2014.

1. Four other proceedings are pending before Hallen J in which each of the plaintiffs before me (and another daughter of Mr Maloof) seeks provision from Mr Maloof's estate pursuant to s 59 of the Succession Act 2006 ("the Family Provision Proceedings"). The first and second defendants in the two proceedings before me are joined as defendants in each of the Family Provision Proceedings. The parties agree that the Family Provision Proceedings cannot be determined until the outcome of these proceedings is known.

1. On 5 December 2013, the first and second defendants consented to orders in these proceedings that they would not take any action as trustee of either trust without the agreement of the plaintiffs, or leave of the Court.

1. The first and second defendants, as the purported trustees of the trusts, propose to seek the Court's advice pursuant to s 63 of the Trustee Act 1925 as to whether they are justified in defending these two proceedings and the Family Provision Proceedings.

1. That is the appropriate course for the first and second defendants to take (see Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66). In that case, the High Court held at [74] that a trustee who is sued "should take no step in defence of the suit without first obtaining judicial advice as to whether it is proper to defend the proceedings."

1. The question before me now is whether I should vary the orders of 5 December 2013 to enable the first and second defendants to pay the costs of the proposed application for advice (estimated to be in the range of $25,000 to $40,000) from the assets of the trusts.

1. The evidence reveals that neither of the first and second defendants has the financial capacity to meet those costs from its or his own resources; nor to reimburse the trusts in the event that should be required.

1. However, I accept the submissions of Mr Izzo, who appeared for the first and second defendants, that it is implicit in the observations of the High Court in the Macedonian Orthodox Community Church St Petka Inc case that a trustee seeking judicial advice under s 63 (even one facing an application that he or it be removed from office) is entitled to use the trust resources to obtain that advice.

1. The obtaining of judicial advice is a step the first and second defendants are obliged to take as a part of the administration of the trusts; even if the advice ultimately given is that the first and second defendants are not justified in defending these proceedings.

1. In those circumstances, I am persuaded that I should vary the 5 December 2013 orders to enable the first and second defendants to take this course.

1. Accordingly, I make the following order in both of the proceedings before me:

The order made on 5 December 2013 be varied so as to allow the first and second defendants to pay from the assets of the CJ Maloof Family Trust and Einasleigh Trust (as the case may be) their reasonable costs of seeking judicial advice pursuant to s 63 of the Trustee Act 1925 as to whether they are justified in defending proceedings 2010/368617, 2010/370107, 2010/370153, 2010/370186, 2013/360586 and 2013/360672.

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Decision last updated: 12 March 2014