Perpetual Trustee Company Limited in its capacity as trustee of the HIH NZ Converting Notes 1998 Trust

In the Supreme Court of New South Wales, Perpetual Trustee Company Limited, acting as trustee of the HIH NZ Converting Notes 1998 Trust, sought judicial advice regarding the institution and continuation of proceedings and the obtaining of litigation funding. The dispute centred around the appropriateness of the trustee's intention to pursue legal action, the potential for commercial benefits to the beneficiaries, and the circumstances under which litigation funding from a beneficiary could be considered reasonable. The court was tasked with determining whether the trustee's actions in this regard were reasonable and prudent.

The central legal issues involved the assessment of the trustee's decision-making process in relation to the institution of proceedings, the consideration of litigation funding, and the potential for parallel proceedings in New South Wales. The court had to consider whether the trustee's belief that there were reasonable grounds for thinking the proceedings had prospects of success was justified, and whether the potential commercial benefits to the beneficiaries warranted the continuation of the proceedings. Additionally, the court needed to examine the reasonableness of the trustee's decision to seek litigation funding from a beneficiary and the implications of doing so, including the potential financial reward for the funding party.

The court found that the trustee had acted reasonably and prudently in seeking judicial advice and in its intention to bring proceedings. The court held that it was not unreasonable for a trustee to consider litigation funding from a beneficiary if the proceedings had a reasonable prospect of success and would bring commercial benefits to the beneficiaries. Furthermore, the court determined that the trustee's intention to institute parallel proceedings in New South Wales was not unreasonable or imprudent, given the exclusive jurisdiction clause and the potential cost savings. The court also noted that the New Zealand courts were not unfamiliar with Australian law, which supported the reasonableness of the decision to bring proceedings in New South Wales.

The court's final orders were that the trustee was justified in its decision to seek litigation funding from a beneficiary, provided there were reasonable grounds for thinking the proceedings had prospects of success and would bring commercial benefits to the beneficiaries. The court also ruled that the institution of parallel proceedings in New South Wales was not unreasonable or imprudent, given the exclusive jurisdiction clause and potential cost savings.