Segelov v Ernst & Young Services Pty Ltd

The dispute in *Segelov v Ernst & Young Services Pty Ltd* concerned the construction and operation of a discretionary services trust established by a large accounting firm. The appellant, Mr. Segelov, a former partner of the firm, sought to establish that the trustee, Ernst & Young Services Pty Ltd, had breached its duties to him and his spouse, who was a potential object of the trust. The matter came before the Court of Appeal of the Supreme Court of New South Wales.

The central legal issues before the court were whether the trust deed permitted interim distributions of 'income', whether the trustee was discharged from liability upon payment of distributions into a bank account, whether the trustee owed a duty to inform a beneficiary of their entitlement, and whether the trustee was entitled to exemption from liability under the terms of the trust deed. These issues arose in circumstances where distributions were paid into a joint bank account held by Mr. Segelov and his spouse, who was unaware of the distributions or her entitlement.

The Court of Appeal, in dismissing the appeal, reasoned that the trust deed, properly construed, permitted interim distributions of income. Furthermore, the court held that the trustee was afforded the discharge provided by the trust deed upon payment of distributions into the nominated bank account, irrespective of whether the nominated beneficiary was aware of the payment or their entitlement. The court found no express or implied duty on the trustee to inform beneficiaries of their entitlements, nor was there any basis to depart from the clear terms of the trust deed regarding the trustee's exemption from liability.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs.