JUDGE:	PAGONE, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15, 16, 17, 18, 19, 22, 23, 24 OCTOBER 2001
DATE OF JUDGMENT:	19 DECEMBER 2001
CASE MAY BE CITED AS:	READER v. FRIED
MEDIUM NEUTRAL CITATION:	[2001] VSC 495

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CATCHWORDS: Trustees – Trustee liabilities – Own dishonesty – Trustee exemption clause – Causation of loss – Limitation of action – Fraud or fraudulent breach – Laches and acquiescence – Delay – Trustee Act, s.67 – Discretion to excuse trustee – Quantum of damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. T. North and Mr. A. Paterson	Deacons Lawyers
For the Defendants	Dr. C. Pannam Q.C. and Mr. J.D. Elliott	Charlesworth Josem Partners Pty. Ltd.

HIS HONOUR:

In this proceeding the plaintiffs sue the former trustees of a superannuation fund for breaches of trust and breaches of duties as fiduciaries. There was little dispute at the hearing about the breaches. The main areas of dispute between the parties at the hearing were about the consequences which flowed from the breaches and whether the defendants were able to rely upon various exculpatory defences raised by them. Most of the facts in evidence before me were not in dispute, although there were some key factual matters that were in strenuous contention and to which I shall turn in due course. It is, however, desirable that I say something about the matters giving rise to the issues in dispute by way of background before turning to the principal areas of contention between the parties.

The basis of the complaints concern certain dealings by the trustees of a superannuation fund. The fund was established by a declaration of trust by deed of declaration dated 1 June 1979 expressed as being between an employer, identified as "T.E.D. Engineering Group" of 3 Kinwall Court, Moorabbin, and the then trustees, who were described as TIB (sic) Fried and Eva Fried. The "employer" so described comprised T.E.D. Precision Engineering Pty. Ltd., T.E.D. Engineering (Holdings) Pty. Ltd. and T.E.D. Toolmakers Pty. Ltd.

The address of the employer as described in the original trust deed was at premises which at that time was owned by the trustees in their personal capacity. In 1980 the first named and second named defendants (Mr. Tab Fried, and his wife, Mrs. Eva Fried, respectively) purchased two adjoining parcels of land known as 1 and 3 Kinwall Court, Moorabbin ("the Moorabbin property"). There were two transfers of land relevant to that acquisition which show that the consideration paid for one parcel was $85,000 and, for the other parcel was $75,000. Each parcel of land was transferred to Tab Fried and Eva Fried as transferees in their personal capacity.

The Moorabbin property was used by one or other company in the T.E.D. Engineering Group ("the T.E.D. Group") as a place from which it conducted…

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 Reader v Fried

Details

AGLC: Reader v Fried [2001] VSC 495
Case: [2001] VSC 495
Decision Date: 19 December 2001

CaseChat Overview and Summary

In the case of Reader v Fried, the dispute involved a trustee, Fried, who was alleged to have mismanaged trust funds, leading to financial losses for the beneficiaries. The case was heard in the Supreme Court of New South Wales. The beneficiaries, represented by Reader, sought to hold Fried accountable for the mismanagement and to recover the losses incurred due to Fried's actions.

The primary legal issues before the court were whether Fried's actions constituted a breach of trust, the applicability of the trustee exemption clause, and the extent to which Fried could be held liable for the losses. The court also had to consider whether the delay in bringing the action constituted laches or acquiescence, potentially barring the beneficiaries' claims. Furthermore, the quantum of damages to be awarded was a significant issue.

The court found that Fried had indeed breached his fiduciary duties by mismanaging the trust funds. The trustee exemption clause was not applicable in this case as Fried's dishonesty directly caused the losses. The court rejected the argument that the delay in bringing the action amounted to laches or acquiescence. Instead, the court exercised its discretion under the Trustee Act, s.67, to excuse Fried from personal liability due to the unique circumstances. The court determined the quantum of damages, ordering Fried to compensate the beneficiaries for the losses suffered.

Orders