Re Mary Donald Nominees Pty Ltd as trustee for The D.J. MacCormick Family Trust

The case involved Mary Donald Nominees Pty Ltd, acting as trustee for The D.J. MacCormick Family Trust, seeking judicial advice concerning their recourse to trust funds to cover costs incurred in defending a legal action against them. The application was made under section 92 of the Trustees Act 1962 (Western Australia) and sought a declaration of justification in defending the action, as well as an indemnity for the costs incurred. The primary legal issues the court had to address were whether the trustees were justified in using trust funds to cover the costs of defending the action and, if so, whether they were entitled to an indemnity for those costs.

The court examined the relevant provisions of the Trustees Act 1962 (WA) and considered the principles governing the use of trust funds by trustees. It determined that the trustees were justified in using trust funds to cover the costs of defending the action, as the action was bona fide and the trustees had acted reasonably and in good faith. The court found that the trustees were entitled to an indemnity for the costs incurred, as they had acted within their powers and in the best interests of the beneficiaries. The court emphasised the importance of trustees seeking judicial advice when in doubt about the use of trust funds and highlighted the need for trustees to act prudently and in accordance with their statutory obligations.

In conclusion, the court granted the trustees' application for a declaration of justification in defending the action and ordered that they were to be indemnified for the costs incurred. The court's decision provided clarity for trustees in similar situations, reinforcing the importance of seeking judicial advice and acting within the bounds of their powers. This case serves as a useful precedent for trustees facing similar challenges in the future.