Re Primary Securities Ltd - [2016] VSC 536

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2016 03252

IN THE MATTER OF AN APPLICATION BY PRIMARY SECURITIES LTD (ACN 089 812 635) (IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE PHILLIP ISLAND RESORT SCHEME (ARSN 155 658 307)) FOR JUDICIAL ADVICE AND DIRECTIONS UNDER RULE 54.02 OF THE SUPREME COURT (GENERAL CIVIL PROCEDURE) RULES 2015 (VIC)

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JUDGE:	Kennedy J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 August 2016
DATE OF JUDGMENT:	9 September 2016
CASE MAY BE CITED AS:	Re Primary Securities Ltd
MEDIUM NEUTRAL CITATION:	[2016] VSC 536

Trusts and trustees- Judicial Advice- Whether trustee has proper basis to defend proceeding- Whether appropriate to fund defence out of assets of the trust- Supreme Court (General Civil Procedure) Rules 2015 Vic r 54.02

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr O Bigos	Mills Oakley
Other	Ms K E Foley for Moss Willis Capital Pty Ltd (ACN 135 330 568)	Arnold Bloch Leibler

HER HONOUR:

This is the return of an originating motion brought by Primary Securities Ltd (Primary) filed 15 August 2016 for orders that Primary is justified in defending proceeding S ECI 2016 01155 in this Honourable Court (the relevant proceeding) and, further, that it may have recourse to the scheme property of the Phillip Island Resort Scheme (the Scheme) to pay its cost of defending the relevant proceeding. The application was supported by an affidavit of Mr Robert Garton-Smith affirmed on 15 August 2016 which included a confidential advice.

Pursuant to orders made by Elliott J of 29 July 2016, Primary provided written notice to scheme members of the making of this application. Although I was informed that a number of scheme members were present in Court, only Moss Willis Capital Pty Ltd (Moss) sought to oppose the application. It was granted leave to appear and provided two affidavits in support by Mr William James Moss of 25 August 2016 and Ms Vicki Elizabeth Bell of 25 August 2016.

The parties also provided further affidavits following the oral hearing.[1]
[1]Primary provided the further affidavit of Mr Robert Garton-Smith of 29 August 2016 and Moss provided affidavits of Ms Marianne Ossovani of 1 September 2016 and Mr Robert Charles Bishop of 1 September 2016.

Jurisdiction

The plaintiff seeks orders pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 which provides as follows:

54.02 Relief without general administration
(1)A proceeding may be brought for any relief which could be granted in an administration proceeding and a claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which the relief is sought.
(2) Without limiting paragraph (1), a proceeding may be brought for—
(a) the determination of any question which could be determined in an administration proceeding, including any question—
(i) arising in the administration of an estate or in the execution of a…

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 Primary Securities Ltd

Details

AGLC: Re Primary Securities Ltd [2016] VSC 536
Case: [2016] VSC 536
Decision Date: 9 September 2016

CaseChat Overview and Summary

In this case, Primary Securities Ltd, as the Responsible Entity of the Phillip Island Resort Scheme, sought judicial advice and directions under Rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) to determine whether it was justified in defending a proceeding against it and if it could use the scheme's property to fund its defence costs. The proceeding in question was initiated by Resort Management by Wyndham Pty Ltd, which challenged the validity of the termination notice issued by Primary Securities Ltd. Moss Willis Capital Pty Ltd opposed the application.

The court had to decide whether it was proper for Primary Securities Ltd to defend the proceeding and whether it could use the scheme's property to fund its defence costs. In considering these issues, the court applied the legal principles established in the Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar decision, which emphasised the importance of propriety in the exercise of a trustee's power.

The court found that it was proper for Primary Securities Ltd to defend the proceeding as it was acting in the best interests of the scheme members. The court also determined that it was in the best interests of the trust for Primary Securities Ltd to have recourse to the scheme's property to fund its defence costs. The court based its decision on the provisions of the Constitution of the Scheme, which allowed the Responsible Entity to be indemnified out of the Assets for any liability incurred in properly performing its powers and duties and to be reimbursed out of the Scheme for expenses properly incurred in connection with any court proceeding.

The court made the following orders: (1) it is proper for Primary Securities Ltd to defend the proceeding and fund the costs of its defence from the scheme property; (2) Primary's costs of the application be paid from the scheme property; (3) Moss Willis Capital Pty Ltd bear its own costs of the application; and (4) the confidential opinion and costs estimate be placed in a sealed envelope marked "Confidential" and not to be opened without an order of the Court.

Orders