Permanent Trustee Co Ltd v Bernera Holdings Pty Ltd - [2004] NSWSC 56

CITATION: Permanent Trustee Co Ltd v Bernera Holdings Pty Ltd [2004] NSWSC 56

HEARING DATE(S): 10/12/03

JUDGMENT DATE:
18 February 2004

JURISDICTION:
Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: No adjustment made in the liabilities between the parties.

CATCHWORDS: CORPORATIONS LAW [89] Directors- Donee of power of attorney of a director may not exercise office of director. EQUITY [82]- Defences- Acquiescence- Ratification. SUCCESSION [273]- Administration- Conflict between deceased's personal estate and his family trust- Missing entries in records- How conflict resolved- Whether overpaid beneficiary can be sued.

LEGISLATION CITED: Corporations Act 2001, s 201M

CASES CITED: Cashman v 7 North Golden Gate Mining Co (1897) 7 QLJ 152
Clark v Clark (1882) 8 VLR (Eq) 303
David Securities v Commonwealth Bank of Australia (1992) 175 CLR 353
Davies v National Trustees etc [1912] VLR 397
Edmunds v Pickering (No 3) (1999) 75 SASR 407
Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50
Glasson v Fuller [1922] SASR 148
Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549
Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624
Lapraik v Burrows (The Australia) (1859) 13 Moo PCC 132; 15 ER 50
Leeds (Duke) v Amherst (Earl) (1846) 2 Ph 117; 41 ER 886
Morris v Kanssen [1946] AC 459
Orr v Ford (1989) 167 CLR 316
Re Diplock's Estate [1948] Ch 251
Reid v Deane [1906] VLR 138
Sterndale v Hankinson (1827) 1 Sim 393; 57 ER 625
Wall v Cockerell (1863) 10 HLC 229

PARTIES :
Permanent Trustee Company Limited (P)
Bernera Holdings Pty Limited (D)

FILE NUMBER(S): SC 2370/02

COUNSEL: P H Blackburn-Hart (P)
D Davies SC (D)

SOLICITORS: Windeyer Dibbs (P)
Makinson & d'Apice (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 18 February 2004

2370/02 - PERMANENT TRUSTEE COMPANY LIMITED v BERNERA HOLDINGS PTY LIMITED

JUDGMENT

1 HIS HONOUR: This is an unusual case involving considering the dealings of a person now deceased with a family trust of which he was the controlling director on the board of the company that was the trustee of the trust.

2 The plaintiff seeks by summons filed on 22 April 2002 a determination that the defendant (the trustee of the McDermott Family Trust) is indebted to the plaintiff (the trustee of the McDermott deceased estate) or, alternatively a determination as to whether the plaintiff is indebted to the defendant.

3 The jurisdiction attracted is that under Part 68 of the Supreme Court Rules, the summary procedure replacing the old administration suit. No cross claim has been filed.

4 The basal facts are that the defendant, Bernera Holdings Pty Ltd ("Bernera") was incorporated on 27 August 1974 and became the trustee of The McDermott Family Trust ("the Trust") on 12 September 1974.

5 The Trust is a discretionary trust with a relatively wide class of possible beneficiaries.

6 Dr John Lawler McDermott was a director of Bernera from 14 November 1974 until 21 February 1995. He was Chairman of…

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: [2004] NSWSC 56
Decision Date: 18 February 2004

CaseChat Overview and Summary

The case of Permanent Trustee Co Ltd v Bernera Holdings Pty Ltd involved a dispute regarding the authority of a donee of a power of attorney to exercise the office of director. The court was required to determine whether the donee could act on behalf of a director who had executed a power of attorney. The dispute also involved issues of equity, including whether the donee's actions could be ratified or if the company could claim acquiescence. Additionally, the court considered succession issues, such as conflicts between a deceased's personal estate and a family trust, and whether a beneficiary who had been overpaid could be sued.

The central legal issues in this case were whether the donee of a power of attorney could exercise the office of director and if the company's actions could be considered as ratification or acquiescence of the donee's actions. The court had to determine the extent of the donee's authority and whether the company's conduct could be interpreted as an acceptance of the donee's actions. Furthermore, the court needed to address whether an overpaid beneficiary could be held liable for the excess amount received.

The court held that the donee of a power of attorney could not exercise the office of director, as this would amount to the donee acting in a dual capacity, which is generally prohibited. The court found that the company's actions did not amount to ratification or acquiescence of the donee's actions, as there was no clear indication that the company intended to accept the donee's authority. Regarding the succession issues, the court determined that the missing entries in the records did not create a conflict between the deceased's personal estate and the family trust. The court also found that the overpaid beneficiary could be sued for the excess amount received. Consequently, the court ruled in favour of the plaintiff, Permanent Trustee Co Ltd.

Orders