Rosenberg v Fifteenth Eestin Nominees Pty Ltd (No.2) - [2010] VSC 38

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 7433 of 2004

BARRY ROSENBERG (AS EXECUTOR OF THE ESTATE OF EMANUEL ROSENBERG, DECEASED) AND GLEN OAK NOMINEES PTY LTD (ACN 110 045 737)	Plaintiffs
v
FIFTEENTH EESTIN NOMINEES PTY LTD (ACN 005 291 882) SABRINA PHILLIPA BERGER AND IAN BARRY BERGER	Defendants

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 NOVEMBER AND 8 DECEMBER 2009
DATE OF JUDGMENT:	24 FEBRUARY 2010
CASE MAY BE CITED AS:	ROSENBERG v FIFTEENTH EESTIN NOMINEES PTY LTD (NO.2)
MEDIUM NEUTRAL CITATION:	[2010] VSC 38

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Trusts – Extent of trustee’s right of indemnity – Whether it included interest agreed by former trustee to be paid on outstanding debt to third party – Whether vesting order with respect to real property should be made before former trustee’s right of indemnity satisfied – Costs of the proceeding – Whether successful plaintiffs should be deprived of costs of some issues – Trustee Act 1958, ss.45, 51, 58; Transfer of Land Act 1958, s.58.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr PB Murdoch QC	B2B Lawyers
For the Defendants	Mr GR Ritter QC with Mr R Greenberger and Ms L Powderly	Kalus Kenny

HIS HONOUR:

Introduction

On 27 April 2007 I published my reasons for judgment in this proceeding.[1] I held that the claims by the second and third defendants, Sabrina Phillipa Berger and Ian Barry Berger, that the first plaintiff, Emanuel Rosenberg, the father of Mrs Berger, was estopped from removing the first defendant, Fifteenth Eestin Nominees Pty Ltd (“Fifteenth Eestin”), as the trustee of the E Rosenberg Investment Trust (“the Investment Trust”), and that Mr Rosenberg held the whole of his assets and wealth on a constructive trust involving Mrs Berger, both failed.[2] Thus, I rejected the challenge by the defendants to Mr Rosenberg’s appointment of the second plaintiff, Glen Oak Pty Ltd (“Glen Oak”) on 15 July 2004 as trustee of the Investment Trust in place of Fifteenth Eestin.
[1]Rosenberg v Fifteenth Eestin Nominees Pty Ltd [2007] VSC 101.
[2][2007] VSC 101, [156].

By agreement of the parties, one issue not dealt with in the first hearing was whether any vesting of trust property in Glen Oak would be subject to Fifteenth Eestin’s equitable charge or lien over the property of the Investment Trust to secure its right to be indemnified in respect of the liabilities of the Investment Trust.[3]
[3][2007] VSC 101, [10] and [191].

Following the judgment, it was not disputed by the plaintiffs that Fifteenth Eestin was entitled to an indemnity in respect of the liabilities of the Investment Trust. The issue was simply the extent of the indemnity. In the end, the dispute came down to one issue, namely, whether the indemnity included interest said to be payable on the debt owed by Fifteenth Eestin to Project Hardware Pty Ltd (“Project Hardware”). This was the first issue dealt with in the second hearing…

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: [2010] VSC 38
Decision Date: 24 FEBRUARY 2010

CaseChat Overview and Summary

Rosenberg v Fifteenth Eestin Nominees Pty Ltd (No.2) was a case before the Supreme Court of Victoria, where the primary issue was the extent of the trustee's right of indemnity under the Trustee Act 1958. The dispute arose when the plaintiffs, Rosenberg, sought to enforce a vesting order for real property held by the defendant, Fifteenth Eestin Nominees Pty Ltd, which was a trustee of a discretionary family trust. Rosenberg argued that the former trustee had agreed to pay interest on an outstanding debt to a third party and that this obligation was part of the trustee's right of indemnity. The defendant, however, contended that the right of indemnity did not include such interest payments and that the vesting order should not be made until the former trustee's right of indemnity was satisfied.

The court was required to determine whether the right of indemnity included interest payments agreed by the former trustee and whether a vesting order with respect to the real property should be made before satisfying the former trustee's right of indemnity. Additionally, the court had to consider whether the successful plaintiffs should be deprived of the costs of some issues in the proceeding. The relevant provisions of the Trustee Act 1958, such as sections 45, 51, and 58, and the Transfer of Land Act 1958, section 58, were central to the court's analysis.

The court held that the former trustee's right of indemnity did not encompass interest payments agreed to be made to a third party. Furthermore, the court found that a vesting order should be made before the former trustee's right of indemnity was satisfied. The court ruled that the successful plaintiffs should not be deprived of the costs associated with some issues in the proceeding, considering the equitable principles at play. The court ordered that the vesting order be made and that the plaintiffs recover their costs for certain issues, while the defendants were to bear the costs for other issues. This decision underscored the importance of distinguishing between the rights of trustees and the obligations owed to third parties within the framework of family trust law in Victoria.

Orders