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Owies v JJE Nominees Pty Ltd

Owies v JJE Nominees Pty Ltd

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Case Copied 20 July 2022 79 min read

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0067

PAUL ANDREW OWIES	First Applicant
and
DEBORAH OWIES	Second Applicant
v
JJE NOMINEES PTY LTD (ACN 004 856 366) (IN ITS CAPACITY AS THE TRUSTEE FOR THE OWIES FAMILY TRUST)	Respondent

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JUDGES:	KYROU, NIALL and WALKER JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	18 May 2022
DATE OF JUDGMENT:	20 July 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 142
JUDGMENT APPEALED FROM:	[2020] VSC 716 (Moore J)

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TRUSTS – Family trust – Whether trustee had sufficient knowledge of applicants’ circumstances to exercise its discretion to distribute income of trust – Whether judge erred in finding trustee exercised its discretion upon real and genuine consideration in certain years – Whether decision of trustee void or voidable – Wareham v Marsella (2022) 61 VR 262; [2020] VSCA 92 discussed – Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 applied – Leave to appeal granted – Appeal allowed.

TRUSTS – Removal of trustee – Whether trustee should be removed following breach of trust – Conflict between trustee and two of three remaining beneficiaries – Where judge erred in finding trustee exercised discretion upon real and genuine consideration – Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 applied – Order for removal of trustee.

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Counsel
Applicants:		Dr KP Hanscombe QC with Mr AP Dickenson
Respondent:		Mr J Evans QC with Ms RG Morison
Solicitors
Applicants:	KCL Law
Respondent:	Tisher Liner FC Law

KYROU JA
NIALL JA
WALKER JA:

Introduction

The late Dr John and Dr Eva Owies had three children: Michael, Deborah and Paul.[1] Each of the five members of the Owies family were objects or beneficiaries of a family trust (‘the trust’), settled by Deed in 1970 (‘the trust deed’) and in respect of which JJE Nominees Pty Ltd (‘the trustee’) is the trustee. Amongst other things, the trust deed, in conventional form for a family trust of its era, conferred discretionary powers on the trustee for the distribution of the net income of the trust in each ‘accounting period’.[2] In default of an appointment of income or a resolution to accumulate, the trust deed provided that the net income would be held on trust for each of the children in equal shares. The assets of the trust, and the income derived from them, are substantial, with an estimated value in the order of $23 million and an annual income in the hundreds of thousands of dollars.
[1]Without any disrespect to the parties, first names are used because of the common surname.
[2]Defined to mean ‘the period from the date hereof to the next ensuing thirtieth day of June and thereafter each period of twelve months ending on the thirtieth day of June in each year until the thirtieth day of June next preceding the Vesting Day and the succeeding period terminating on the Vesting Day.’
In each of the financial years ending 30 June from 2011 to 2019, the trustee distributed all…

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: [2022] VSCA 142
Decision Date: 20 July 2022

CaseChat Overview and Summary

Owies v JJE Nominees Pty Ltd was a case that came before the court where the applicants sought to challenge the decisions of the trustee of a family trust and sought the removal of the trustee. The trust had been established by the applicants' father, and the applicants were beneficiaries of the trust. The dispute centred on whether the trustee had exercised its discretion to distribute the trust income in accordance with the trust deed and whether the trustee should be removed due to a breach of trust and conflicts with two of the three remaining beneficiaries.

The legal issues before the court were whether the trustee had sufficient knowledge of the applicants' circumstances to exercise its discretion to distribute the income of the trust and whether the judge had erred in finding that the trustee had exercised its discretion upon real and genuine consideration in certain years. The court was also required to determine whether the decision of the trustee was void or voidable and whether the trustee should be removed due to a breach of trust and conflicts with two of the remaining beneficiaries.

The court held that the trustee had not exercised its discretion to distribute the trust income in accordance with the trust deed, and the judge had erred in finding that the trustee had exercised its discretion upon real and genuine consideration in certain years. The court held that the decision of the trustee was voidable, and the trustee should be removed due to a breach of trust and conflicts with two of the remaining beneficiaries. The court relied on the decision in Miller v Cameron and the principles set out in Pitt v Holt and Wareham v Marsella. The court granted leave to appeal and allowed the appeal, ordering the removal of the trustee.

The court's decision in Owies v JJE Nominees Pty Ltd highlights the importance of trustees exercising their discretion in accordance with the trust deed and the need for trustees to act in the best interests of the beneficiaries. The decision also highlights the need for trustees to avoid conflicts of interest and to act impartially when making decisions about the distribution of trust income. The court's decision in this case provides guidance to trustees and beneficiaries about the standards expected of trustees in the administration of trusts.

Orders