Ruthenberg v Howard
[2010] QSC 448
•12 November 2010, ex tempore
SUPREME COURT OF QUEENSLAND
CITATION:
Ruthenberg v Howard [2010] QSC 448
PARTIES:
DARLENE LOUISE RUTHENBERG
(applicant/plaintiff)
v
DOUGLAS GRAHAM HOWARD
(respondent/defendant)
FILE NO/S:
No 12689 of 2008
DIVISION:
Trial
PROCEEDING:
Application filed 26 October 2010
ORIGINATING COURT:
Brisbane
DELIVERED ON:
12 November 2010, ex tempore
DELIVERED AT:
Brisbane
HEARING DATE:
12 November 2010
JUDGE:
Byrne SJA
ORDER:
Adjourn the application to a date to be fixed.
CATCHWORDS:
FAMILY LAW – ALTERATION OF PROPERTY INTERESTS – Property and financial resources of the parties – Particular matters – Trust assets – Application, by consent, for orders pursuant to the Property Law Act 1974, s 286 adjusting the interests of the parties in respect of property – where secondary beneficiaries exist who could be adversely affected by an order – where no notice given – where the power to apply the trust fund inconsistent with draft orders – whether Court can make orders.
Property Law Act 1974, s 286
COUNSEL:
C Forrest for the applicant
No appearance for the defendant
SOLICITORS:
Murdoch Lawyers for the applicant
This matter comes before me seeking a consent order to give effect to a compromise concluded between the parties to proceedings in this Court for declaratory relief in respect of a claim to a constructive trust in property or, alternatively, for orders pursuant to section 286 of the Property Law Act 1974 adjusting the interests of the parties in respect of property.
The proposed draft order provides that the Court would direct the defendant to cause the Graham Howard Family Trust to pay the plaintiff $1 million by instalments.
That trust is a family discretionary trust. The primary beneficiaries are “the children of the principal, the wife or widow of the principal and the principal”. The principal is the defendant.
The notion that the defendant should be ordered to cause the “trust” to pay the sum agreed in compromise of the plaintiff's claim against him encounters two important impediments.
The first is that there are secondary beneficiaries who are potentially the object of the annual exercise of a discretion to pay income. None has been given notice of the application. As they could be adversely affected in their economic interests by a diminution in the trust assets by $1 million, notice ought to have been given to them, affording them an opportunity to be heard.
There is a second, important obstacle to making the proposed order.
The power to apply the trust fund is to be exercised exclusively for the benefit of one or more “of the primary beneficiaries, the second beneficiaries or the tertiary beneficiaries”.
There is not a proposal to pay money to (or at the direction of) the defendant as a beneficiary of the trust, perhaps for tax reasons. The proposal rather is that the defendant cause trust money to be paid to someone who is not entitled to receive it under the terms of the trust.
On the face of things, therefore, the Court is being asked to order the defendants to cause a breach of trust.
There is no warrant, in the circumstances of this case at any rate, for such an order.
Accordingly, the application for the consent orders is refused.
I shall adjourn the application to a date to be fixed to see if any other proposal emerges with respect to a fresh compromise.
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