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Pitard Consortium Pty Ltd v Les Denny Pty Ltd

Pitard Consortium Pty Ltd v Les Denny Pty Ltd

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Case Copied 11 September 2019 23 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2019 03402

PITARD CONSORTIUM PTY LTD (ACN 634 588 980) AS TRUSTEE FOR THE PITARD TRUST & ORS (according to the Schedule attached)	Plaintiffs
v
LES DENNY PTY LTD (ACN 156 618 825) & ORS (according to the Schedule attached)	Defendants

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JUDGE:	McDonald J
WHERE HELD:	Melbourne
DATES OF HEARING:	22 and 26 August 2019
DATE OF JUDGMENT:	11 September 2019
CASE MAY BE CITED AS:	Pitard Consortium Pty Ltd & Ors v Les Denny Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2019] VSC 614

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TRUSTS – Whether the defendants as former trustees of six discretionary trusts are entitled to retain possession of trust property pending satisfaction of their accrued right of indemnity – Defendants not entitled to retain possession of trust property – Plaintiffs entitled to an order vesting trust property subject to the defendants’ equitable liens and undertakings to ensure that the value of trust property is not diminished.

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APPEARANCES:	Counsel	Solicitors
For the plaintiffs	Mr D G Collins QC and Mr B Ryde	Strongman & Crouch
For the defendants	Mr R G Craig and Ms V Bell	Allens

HIS HONOUR:

There are two principal issues for determination in the current proceeding. First, whether each of the first to sixth plaintiffs was validly appointed as trustees of one of six discretionary trusts (collectively referred to as ‘the Pitard Trusts’). Second, if the plaintiffs were validly appointed:

(a) is each entitled to an order vesting trust property currently in the possession of the defendants; or

(b) are the defendants, as the former trustees of the Pitard Trusts, entitled to retain possession of the trust property pending satisfaction of their accrued right of indemnity in respect of liabilities incurred by them in their capacity as trustee?

I have concluded that each of the plaintiffs was validly appointed as a trustee and is entitled to an order vesting trust property, subject to the defendants’ equitable liens in respect of liabilities for which they are entitled to be indemnified. I have rejected the defendants’ contention that they are entitled to retain possession of trust property pending satisfaction of their right of indemnity.

Background

The Steller Group is a Melbourne based property development and construction business. In April 2016, One Managed Investment Funds Limited (‘OMIF’) was appointed as security trustee as a consequence of the provision of finance to Steller Group, through Steller Projects Pty Ltd, by OL Master (Singapore) Pte Limited and Orchard Landmark II Master Limited.[1]
[1]Plaintiffs, ‘Agreed Statement of Facts’, 14 August 2019, [41]–[42].

Ms Skye Pitard is the sole shareholder of each of the six defendant companies.[2] Until early July 2019, these companies were, respectively, trustees of each of the Pitard Trusts.[3] Until 1 July 2019, Ms Pitard was the sole director of each of the six defendants.[4] On 1 July 2019, OMIF appointed receivers to each of the six defendants following alleged events of default under various finance facilities.[5] On 1…

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: [2019] VSC 614
Decision Date: 11 September 2019

CaseChat Overview and Summary

Pitard Consortium Pty Ltd initiated proceedings against Les Denny Pty Ltd, focusing on the retention of trust property by the defendants, who were former trustees of six discretionary trusts. The crux of the dispute was whether the defendants were entitled to maintain possession of the trust property until their accrued right of indemnity was satisfied. The case was heard and determined in the Federal Court of Australia.

The central legal issue before the court was whether the defendants, as former trustees, had the right to retain possession of the trust property until their right of indemnity was met. This required the court to consider the equitable principles governing the rights of former trustees, particularly in relation to the trust property and the defendants' right of indemnity. The court also had to assess whether the plaintiffs were entitled to an order vesting the trust property subject to the defendants' equitable liens and ensuring that the value of the trust property was not diminished.

In delivering the judgment, the court held that the defendants were not entitled to retain possession of the trust property pending the satisfaction of their right of indemnity. The court found that the plaintiffs, Pitard Consortium Pty Ltd, were entitled to an order vesting the trust property subject to the defendants' equitable liens. Furthermore, the court mandated that the defendants provide undertakings to ensure that the value of the trust property was not diminished. This decision was grounded in the equitable principles that protect the interests of beneficiaries in discretionary trusts.

The court made an order vesting the trust property in Pitard Consortium Pty Ltd, subject to the defendants' equitable liens and their undertakings to protect the value of the trust property. This decision ensures that the beneficiaries' interests are safeguarded and that the trust property is managed in accordance with equitable principles.

Orders