JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	28 October 2010
DATE OF JUDGMENT:	12 November 2010
CASE MAY BE CITED AS:	Pistorino v Connell & anor
MEDIUM NEUTRAL CITATION:	[2010] VSC 511

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COSTS – costs against trustee in breach – failure to take account and transfer to beneficiary - whether conduct delinquent and justifying indemnity costs - calculation of interest payable – whether mercantile rate or trustee rate – Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 21; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms C H Sparke	Lawson Hughes Peter Walsh Lawyers
For the First and Second Defendant	Mr J O’Bryan	O’Donnell Salzano Lawyers

HIS HONOUR:

These proceedings were commenced by writ and statement of claim filed on 12 May 2010. In substance, the plaintiff claimed to be entitled to a one-third share in funds held in accounts maintained within a Singapore branch of the Hong Kong and Shanghai Banking Corporation (“the HSBC”).

I made orders on 11 June 2010 which, amongst other things, gave leave to the plaintiff to file and serve an amended statement of claim, and joined Mr Christopher Roy Connell, the husband of the original defendant, Mrs Giovanna Grace Connell, as a defendant. For present purposes I refer to Mrs Connell as the defendant as Mr Connell played no relevant part in events with which the present applications are concerned.

In the context of the present applications it is not necessary to dwell on the underlying facts and circumstances in which this proceeding arose.

The defendant deposed in an affidavit dated 11 June 2010, which was filed in the proceedings on that day, that the money now held in the account with the HSBC in Singapore, the subject of these proceedings, was a gift to the defendant and her children. Further, she deposed that the purpose of the money was to meet the cost of holidays and sundry expenses when the family was overseas. Critically in the present context it is common ground that the beneficial entitlement to this money included the defendant’s one-third interest and also the plaintiff’s one-third interest. Also critical in the present context is that it is common ground that the quantum of the fund as at 11 June 2010 was in the vicinity of $US2.1 million. It should also be noted that in spite of the fact that the evidence given by the defendant for the purposes of the hearing on 11 June 2010 was not accurate with respect to the amount of money she had withdrawn from the fund for her own purposes there is no suggestion or claim that the total amount of money which she did draw…

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.

Continue reading Pistorino v Connell

Details

AGLC: Pistorino v Connell [2010] VSC 511
Case: [2010] VSC 511
Decision Date: 12 November 2010

CaseChat Overview and Summary

Pistorino v Connell involved a dispute between the plaintiff, Mr Pistorino, and the defendant, Mr Connell, concerning the administration of a trust. The case was heard in the Supreme Court of Victoria. Mr Pistorino sought costs against Mr Connell, who had been the trustee of a trust but had failed to transfer funds to the beneficiary. The court needed to determine whether Mr Connell's conduct was delinquent enough to warrant indemnity costs, and if so, what the appropriate rate of interest payable should be.

The primary legal issue was whether Mr Connell's failure to transfer funds to the beneficiary constituted delinquent conduct warranting indemnity costs. The court also had to decide between the two rates of interest that could apply: the mercantile rate or the trustee rate. The court referred to several authorities, including Re Dawson and Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd, to guide its decision.

The court found that Mr Connell's conduct was indeed delinquent, as he had failed to take reasonable steps to ensure that the beneficiary received the trust funds. This justified the award of indemnity costs. Regarding the interest rate, the court held that the appropriate rate to apply was the trustee rate, as established by the relevant authorities. The court ordered Mr Connell to pay the costs and interest as determined.

The court's final orders included a directive for Mr Connell to pay the indemnity costs to Mr Pistorino and interest at the trustee rate from the date of the breach until the date of judgment. This decision underscores the importance of trustees adhering to their fiduciary duties and the consequences of failing to do so.

Orders