Re Olrey Pty Ltd - [2015] VSC 643

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 05526

IN THE MATTER OF an application by Olrey Pty Ltd (ACN 140 494 319) for judicial advice and directions under rule 54.02 of the Supreme Court (General Civil Procedure Rules) 2005

OLREY PTY LTD (ACN 140 494 319) (as trustee of the FRG Investments Trust)

Plaintiff

---

JUDGE:	McDONALD J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 November 2015
DATE OF JUDGMENT:	17 November 2015
CASE MAY BE CITED AS:	Re Olrey Pty Ltd
MEDIUM NEUTRAL CITATION:	[2015] VSC 643

---

TRUSTS AND TRUSTEES — Judicial advice — Trustee’s right to indemnification from trust assets — Three plaintiffs and four defendant beneficiaries of trust — Claim against trustee for knowing receipt of trust property contingent upon Court upholding allegations of breach of fiduciary duties against three defendants — Claims of breach of fiduciary duty actively defended — Trustee having to borrow funds from director to fund its defence — Not in interests of beneficiaries of trust for trustee to access trust funds to fund defence.

Supreme Court (General Civil Procedure) Rules 2005 O 54; Corporations Act 2001 ss 181, 182 and 197; Transfer of Land Act 1958 s 42.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Wotherspoon	Thomson Geer

HIS HONOUR:

Olrey Pty Ltd (Olrey) is the trustee of the FRG Investments Trust. Olrey is the 8^th defendant in proceeding No SCI 2012 6147 in the Supreme Court of Victoria (‘the proceedings’). Olrey has made an application pursuant to Order 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 seeking judicial advice that it would be proper for it to defend the proceedings and to make a counterclaim seeking removal of a caveat lodged on the title of its primary asset, a property located at 800-802 Burke Road, Camberwell (‘Camberwell property’). Olrey also seeks an order that it would be proper for it to access trust funds for the purpose of funding both its application under Order 54.02 and its defence and counterclaim in the proceedings.

On 25 September 2015, I delivered judgment in Re Frosthollow Pty Ltd (‘Re Frosthollow’).[1] Frosthollow is the 7^th defendant in the proceedings. Lynn Hoh is the 3^rd defendant. Ms Hoh is currently the sole director of Frosthollow and is also, currently, the sole director of Olrey. However, in December 2009 to March 2010, the relevant period in respect of the events underpinning the plaintiffs’ claims against Olrey, its directors were Frank Hoh and his wife Pooi Hoh. They are the 1^st and 2^nd defendants in the proceedings.
[1][2015] VSC 512.

The primary beneficiaries of the FRG Investments Trust include the 1^st, 3^rd and 4^th plaintiffs in the proceedings: Ying Mui Pty Ltd (‘Ying Mui’), George Hoh and Han Hoh; and the 1^st, 3^rd, 4^th and 5^th defendants: Frank Hoh, Lynn Hoh, Ian Hoh…

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.

Keep reading for free

Create a free CaseChat account to read Re Olrey Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2015] VSC 643
Decision Date: 17 November 2015

CaseChat Overview and Summary

The parties in this case were the three plaintiffs, acting as trustees of a trust, and the four defendant beneficiaries of the trust. The dispute involved claims against the trustees for knowing receipt of trust property, contingent on the Court upholding allegations of breach of fiduciary duties against three of the defendants. The trustees had borrowed funds from a director to fund their defence, and the beneficiaries sought to prevent this, arguing it was not in their interests. The case was heard in the Supreme Court of Victoria.

The primary legal issue before the Court was whether the trustees were entitled to be indemnified from trust assets for their legal costs in defending against claims of breach of fiduciary duty. The Court had to determine if it was in the interests of the beneficiaries for the trust assets to be used to fund the trustees' defence against allegations of fiduciary breaches. This involved considering the statutory provisions under the Supreme Court (General Civil Procedure) Rules 2005, the Corporations Act 2001, and the Transfer of Land Act 1958, as well as the equitable principles governing trustees' rights to indemnification.

The Court held that it was not in the interests of the beneficiaries for the trust assets to be used to fund the trustees' defence. The trustees had actively defended the claims of breach of fiduciary duty, and the Court found that permitting the trustees to access trust funds for this purpose would undermine the principle of fiduciary loyalty and potentially prejudice the beneficiaries' interests. The Court noted that the trustees could seek personal indemnity from the defendants if they were successful in their defence, but this was not a matter for the Court to decide at that stage. The Court granted the relief sought by the beneficiaries, prohibiting the trustees from using trust assets to fund their legal defence.

The final orders of the Court were that the trustees were not to use trust assets to fund their defence against the claims of breach of fiduciary duty, and the trustees were directed to repay the funds borrowed from the director. The Court also noted that the beneficiaries could seek further orders if the trustees did not comply with the directions.

Orders