Re Baylily Pty Ltd - [2010] NSWSC 6

CITATION: Re Baylily Pty Ltd [2010] NSWSC 6

HEARING DATE(S): 15 January 2010

JUDGMENT DATE :
21 January 2010

JURISDICTION: Equity Division

JUDGMENT OF: Harrison J

DECISION: Questions answered as follows:
1. Yes.
2. Yes.
3. No.
5. No.
6. Not answered.

CATCHWORDS: TRUSTS - s 63 Trustee Act 1925 – judicial advice – whether corporation removed as trustee of a discretionary trust pursuant to an exercise by an appointor of his power to appoint a new trustee would be justified in defending proceedings taken against it in its capacity as trustee of the trust – question answered 'no'.

LEGISLATION CITED: Acts Interpretation Act 1901 (Cth)
Corporations Act 2001 (Cth)
First Corporate Law Simplification Act 1995 (Cth)
Fringe Benefits Tax Assessment Act 1986
Interpretation Act 1987
Trustee Act 1925

CATEGORY: Procedural and other rulings

CASES CITED: Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Bluescope Steel Ltd (formerly BHP Steel Ltd) v Australian Workers' Union [2004] NSWIRComm 222; (2004) 137 IR 176
Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129
Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66

PARTIES: Baylily Pty Ltd (ACN 003 993 397)

FILE NUMBER(S): SC 2010/11275

COUNSEL: G A Sirtes SC with E M Peden (Plaintiff)

SOLICITORS: Bruce Stewart Dimarco Lawyers (Plaintiff)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HARRISON J

21 January 2010

2010/11275 Re Baylily Pty Ltd (ACN 003 993 397)

JUDGMENT

1 HIS HONOUR: Baylily Pty Ltd seeks judicial advice pursuant to s 63 of the Trustee Act 1925. It wishes to know whether or not it should defend Supreme Court Equity Division proceedings number 50127 of 2009 commenced against it that are currently pending in this Court.

Background

2 David MacRae and Susan MacRae operate various farming and agricultural activities through several companies and trusts, which are collectively known as Pacific Plantations. Baylily is one of the companies in that group. Mr and Mrs MacRae have two children, one of whom is Scott Alexander MacRae. Scott MacRae Investments Pty Ltd and Scott MacRae are the plaintiffs in the proceedings just referred to. Baylily is the first defendant together with other companies in the Pacific Plantation group.

3 James Mathers, the settlor, appointed Baylily as the trustee of the Scott MacRae Trust pursuant to a settlement on 12 December 1996. Some of the terms of the Trust Deed are referred to later in these reasons. Mr and Mrs MacRae and Robert Bruce are the directors of Baylily. Scott MacRae was a director of Baylily between 7 January 1997 and 9 April 2009. Scott MacRae is a discretionary beneficiary of the Scott MacRae Trust.

4 On 13 November 2008 Scott MacRae executed a Deed of Change of Trustee appointing…

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 Re Baylily Pty Ltd

Details

AGLC: Re Baylily Pty Ltd [2010] NSWSC 6
Case: [2010] NSWSC 6
Decision Date: 21 January 2010

CaseChat Overview and Summary

The case of Re Baylily Pty Ltd involved the issue of whether a corporation, which had been removed as a trustee of a discretionary trust, could be justified in defending proceedings taken against it in its capacity as trustee of the trust. The question arose due to an exercise by an appointor of his power to appoint a new trustee under section 63 of the Trustee Act 1925. The case was heard by the Supreme Court of Queensland.

The primary legal issue before the court was whether the corporation could defend the proceedings despite being removed as a trustee of the trust. The court was required to determine whether the corporation was entitled to judicial advice as to its position, and whether the removal of the corporation as a trustee would affect its ability to defend the proceedings. The court also had to consider whether the appointor had the power to appoint a new trustee, and whether the corporation could challenge the removal as a trustee.

The court found that the corporation was not entitled to judicial advice as to its position, and that the removal of the corporation as a trustee would affect its ability to defend the proceedings. The court held that the appointor had the power to appoint a new trustee, and that the corporation could not challenge the removal as a trustee. The court also found that the corporation could not be justified in defending the proceedings taken against it in its capacity as trustee of the trust.

The court held that the corporation was not entitled to judicial advice as to its position, and that the removal of the corporation as a trustee would affect its ability to defend the proceedings. The court found that the appointor had the power to appoint a new trustee, and that the corporation could not challenge the removal as a trustee. As a result, the corporation was not justified in defending the proceedings taken against it in its capacity as trustee of the trust.

Orders