Re Olrey Pty Ltd (No 2) - [2016] VSC 18

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 5526

IN THE MATTER OF an application by Olrey Pty Ltd (ACN 140 494 319) for judicial advice and directions under r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015

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JUDGE:	McDONALD J
WHERE HELD:	Melbourne
DATE OF HEARING:	25 January 2016
DATE OF JUDGMENT:	3 February 2016
CASE MAY BE CITED AS:	Re Olrey Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2016] VSC 18

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TRUSTS AND TRUSTEES – Judicial advice – Trustee’s right to indemnification from trust assets – Claim against trustee for knowing receipt of trust property abandoned – Plaintiffs ordered to pay Trustee’s costs thrown away – Trustee advised that it is justified in accessing trust funds for purpose of undertaking limited role in defence of amended claim against it − Supreme Court (General Civil Procedure) Rules 2015 O 54.

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

HIS HONOUR:

On 17 November 2015, I delivered reasons for judgment and made orders in respect of an application by Olrey Pty Ltd (‘Olrey’) for judicial advice pursuant to Order 54.02 of the Supreme Court (General Civil Procedure) Rules 2015.[1]The Court made three orders:
[1]Re Olrey Pty Ltd [2015] VSC 643.

(i) Olrey Pty Ltd is directed that it would be appropriate and that it would be justified in defending the claims made against it in its capacity as trustee of the FRG Investments Trust in proceeding No SCI 2012 6147 in the Supreme Court of Victoria;

(ii) Subject to further order of the Court, Olrey Pty Ltd is directed that it would be not be appropriate and Olrey Pty Ltd is not justified in paying the costs of defending the 2012 proceeding and pursuing a counterclaim in that proceeding out of the assets of the FRG Investments Trust; and

(iii) Olrey Pty Ltd’s costs of the originating motion dated 23 October 2015 are to be paid out of the assets of the FRG Investments Trust.[2]

[2]Ibid [29].

As at 17 November 2015, the plaintiffs’ claims against Olrey involved two claims of knowing receipt of trust property based upon:

(a) Olrey’s acquisition of a property located at 800-802 Burke Road, Camberwell, on 10 December 2009 (‘the Camberwell property’); and

(b) Olrey’s receipt of an interest-free loan of $1.87 million from Ying Mui Pty Ltd, such loan having been approved by the first, second and fourth defendants in proceeding No SCI 2012 6147 in the Supreme Court of Victoria (‘the main proceeding’).

Shortly after the Court delivered judgment on 17 November 2015, the plaintiffs notified Olrey of their intention to withdraw the two Barnes v Addy[3] (‘Barnes v Addy’) claims referred to above. In addition, the plaintiffs withdrew a caveat which had been lodged over the Camberwell property and which underpinned an application by Olrey by way of counterclaim for the withdrawal of the caveat.
[3] (1874) LR 9 Ch App 244

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: [2016] VSC 18
Decision Date: 3 February 2016

CaseChat Overview and Summary

Re Olrey Pty Ltd (No 2) was a case that involved the trustees of an Australian company, Olrey Pty Ltd, and the plaintiffs who sought to claim against the trustees for their alleged misconduct. The case was heard in the Supreme Court of New South Wales, where the plaintiffs had abandoned their claim against the trustees for knowing receipt of trust property. The primary legal issue before the court was whether the plaintiffs were entitled to have their costs reimbursed from the trust assets, and if so, to what extent. The court also had to determine whether the trustees were justified in using trust funds to defend the amended claim against them.

The court considered the principles of equity, which allow for the reimbursement of costs in certain circumstances, and the relevant provisions of the Supreme Court (General Civil Procedure) Rules 2015. The court found that the plaintiffs were not entitled to have their costs reimbursed from the trust assets as they had abandoned their claim against the trustees. The court also found that the trustees were justified in using trust funds to defend the amended claim against them, as they had a limited role in the proceedings and were acting in the best interests of the trust. The court ordered that the plaintiffs pay the trustees' costs that had been thrown away and advised that the trustees were justified in accessing trust funds for the purpose of defending the amended claim against them.

In conclusion, the court found in favour of the trustees and ordered that the plaintiffs pay the trustees' costs that had been thrown away. The court also advised the trustees that they were justified in accessing trust funds for the purpose of defending the amended claim against them, as they had a limited role in the proceedings and were acting in the best interests of the trust. This decision provides important guidance for trustees and beneficiaries in similar situations and highlights the importance of acting in the best interests of the trust.

Orders