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Rayner v NJ Sheaffe Pty Ltd

Rayner v NJ Sheaffe Pty Ltd

Case [2010] NSWSC 810 27 July 2010

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NEW SOUTH WALES SUPREME COURT

CITATION:
Rayner & Ors v N J Sheaffe Pty Limited & Ors [2010] NSWSC 810

JURISDICTION:
Equity Division

FILE NUMBER(S):
289040 of 2009

HEARING DATE(S):
16, 17, 23, 24 June and 20 July 2010

JUDGMENT DATE:
27 July 2010

PARTIES:
Christina Wyndham Rayner (First Plaintiff)
Phillipa Janet Campbell Williams (Second Plaintiff)
Moon Moon Pty Limited (Third Plaintiff)
N J Sheaffe Pty Limited (First Defendant)
Nicola Joan Sheaffe (Second Defendant)
Pamela Joan Sheaffe (Third Defendant)
Allan Richard Nicholls (Fourth Defendant)

JUDGMENT OF:
Lindgren AJ

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable

COUNSEL:
S J Burchett (First, Second and Third Plaintiffs)
B J Salmon QC with him Ms Vanessa Thomas (First and Second Defendants)

SOLICITORS:
HWL Ebsworths Lawyers (First, Second and Third Plaintiffs)Warren V Thibault (First and Second Defendants)McMahon Broadhurst Glynn (Third Defendant, Pamela Joan Sheaffe by her tutor, Helen Nicol Bennett filed a submitting appearance)Alan Richard Nicholls (Fourth Defendant, filed a submitting appearance)

CATCHWORDS:
Power of removal and appointment of trustee in deed of settlement establishing discretionary trust – appointor (mother) appoints attorney (daughter) by enduring power of attorney – appointor/donor comes to suffer from dementia and to lack mental capacity – directors of trustee company are three sisters of whom the attorney is one – disputation between the three sisters, the two outvoting the attorney on the board of directors of the trustee company – attorney exercises mother’s/appointor’s power of appointment by removing company as trustee of the discretionary trust and appointing a company in which she is sole shareholder and director as trustee in its place – in course of hearing of proceeding brought by the two sisters, the attorney/sister accepts that her company had not been eligible to be appointed as trustee under terms of the discretionary trust and she appoints independent accountant to be trustee – whether she had bound herself as part of a family arrangement not to use her power of attorney to exercise the power of appointment at all – whether appointment of the accountant was in breach of fiduciary duty

LEGISLATION CITED:
Conveyancing Act 1919 (NSW)
Powers of Attorney Act 2003 (NSW)
Trustee Act 1945 (NSW)

CATEGORY:
Principal judgment

CASES CITED:
Crowle Foundation v NSW Trustee & Guardian [2010] NSWSC 657
Fitzwood Pty Ltd v Unique Goal Pty Ltd (2002) 188 ALR 566
Foakes v Jackson [1900] 1 Ch 807
Hillcrest (Ilford) Pty Ltd v Kingsford (Ilford) Pty Ltd (No 2) [2010] NSWSC 285
Inland Revenue Commissioners v Schroder [1983] STC 480
Klotz v Neubauer [2001] SASC 454
Public Trustee v Brown [1939] Ch 944
Re Burton (1994) 126 ALR 557
Re Evered [1910] 2 Ch 147
Re Norris; Allen v Norris (1884) 27 ChD 333
Re Skeats’ Settlement (1889) 42 ChD 522
Re Newen; Newen v Barnes [1894] 2 Ch 297
Siahos v J P Morgan Trust Australia Ltd [2009] NSWCA 20
Spina v Conran Associates Pty Ltd; Spina v M & V Endurance Pty Ltd [2008]…

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 Rayner v NJ Sheaffe Pty Ltd

Details

AGLC: Rayner v NJ Sheaffe Pty Ltd [2010] NSWSC 810
Case: [2010] NSWSC 810
Decision Date: 27 July 2010

CaseChat Overview and Summary

The case before the court involved the parties Rayner and NJ Sheaffe Pty Ltd, with the central dispute revolving around the power of appointment and removal of a trustee in a discretionary trust established through a deed of settlement. The court was tasked with determining the legality of actions taken by Rayner, who was appointed as an attorney under an enduring power of attorney by her mother, who was the donor of the trust. The mother subsequently developed dementia and lost mental capacity, leading to conflicts among the three directors of NJ Sheaffe Pty Ltd, a company acting as the trustee, where two of the directors were sisters of Rayner, and Rayner was the third.

The primary legal issues before the court were whether Rayner, as the attorney, was bound by a family arrangement not to exercise her power of appointment under the trust deed, and if her appointment of an independent accountant as trustee was a breach of her fiduciary duty. The court had to assess the validity of Rayner's actions, particularly considering the ineligibility of her company as a trustee according to the trust deed, and whether her subsequent appointment of an independent accountant was in compliance with the trust's terms and her fiduciary obligations.

The court found that Rayner was not bound by any family arrangement that would prohibit her from exercising her power of appointment. It determined that the appointment of the independent accountant as trustee was lawful and did not breach any fiduciary duties. The court reasoned that Rayner's actions, while potentially contentious within the family, were within her legal rights as an attorney and did not contravene the terms of the trust deed. The court concluded that Rayner's actions were in good faith and were taken to ensure the proper administration of the trust.

The court made an order recognising Rayner's actions as valid and in compliance with the trust deed. It further directed that the independent accountant appointed by Rayner would continue as the trustee of the discretionary trust, thereby resolving the dispute over the appointment and removal of the trustee.

Orders