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Smorgon v Es Group Operations Pty Ltd

Smorgon v Es Group Operations Pty Ltd

Case [2021] VSC 608 27 September 2021

Discretionary Beneficiary

Inspection of Trust Documents

Presumption of Disclosure

Named Beneficiary

Trusts & Equity

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST

S ECI 2020 03496

IN THE MATTER of an application pursuant to Order 54 of the Supreme Court Rules of Civil Procedure

BETWEEN:

SAMANTHA JANE SMORGON	Plaintiff
v
ES GROUP OPERATIONS PTY LTD (ACN 069 851 305) as Trustee of THE ES GROUP OPERATING TRUST NO 1 & ORS (according to the schedule)	Defendants

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 May 2021
DATE OF JUDGMENT:	27 September 2021
CASE MAY BE CITED AS:	Smorgon v ES Group Operations Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2021] VSC 608

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EQUITY – Trusts – Application by discretionary beneficiary for inspection of trust documents – Discretionary approach applied – Whether presumption of disclosure to discretionary beneficiary - Proximity of beneficiary to trusts – Whether applicant is a ‘named beneficiary’ in the trust deeds – No allegation of breach of trust – Schmidt v Rosewood Trust [2003] 2 AC 709; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405; Deutsch v Trumble (2016) 51 VR 108; Chan v Valmorbida Custodians Pty Ltd [2020] VSC 590; Erceg v Erceg [2017] 1 NZLR 320; Wright v Stevens [2018] NSWSC 548; Chaine-Nickson v Bank of Ireland [1976] IR 393 HC; Spellson v George (1987) 11 NSWLR 300; Murphy v Murphy [1999] 1 WLR 282; Foreman v Kingston [2004] 1 NZLR 841 considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms C Sparke QC	KCL Law
For the Defendants	Mr L Glick QC with Mr R Kruse	Aptum Legal

HIS HONOUR:

Introduction

The plaintiff, Samantha Smorgon (‘Ms Smorgon’) is the daughter of the late Robert Smorgon. Robert Smorgon was the son of the late Eric Smorgon. Robert Smorgon passed away on 23 September 2019.

Ms Smorgon was born to Robert Smorgon’s first wife, Michelle. Ms Smorgon has been told she was conceived by artificial insemination. Ms Smorgon’s birth certificate names Robert Smorgon as her father. However, Robert Smorgon’s will describes Ms Smorgon as his stepchild and states that he had no biological children.

In this proceeding, Ms Smorgon seeks orders that the defendants, each a trustee of one or more discretionary trusts, produce various categories of documents for her inspection. There are 18 trusts in total. Each trustee is a member of the Escor Group founded by Eric Smorgon. The directors of each trust include members of the Smorgon family. The relevant trusts are:

(a) The ES Group Operating Trust No. 1 (the trustee of which is ES Group Operations Pty Ltd ACN 069 851 305);

(b) The ES Group Operating Trust No. 2 (the trustee of which is ES Group Holdings (OPS) Pty Ltd ACN 069 851 314);

(c) The Escor Property (Yanchep) Trust (the trustee of which is Escor Property (Yanchep) Pty Ltd ACN 108 438 731);

(d) The Escor Opportunity Trust No. 1 (the trustee of which is Escor Opportunity Pty…

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 Smorgon v Es Group Operations Pty Ltd

Details

AGLC: Smorgon v ES Group Operations Pty Ltd [2021] VSC 608
Case: [2021] VSC 608
Decision Date: 27 September 2021

CaseChat Overview and Summary

Smorgon v Es Group Operations Pty Ltd is a case that came before the court in relation to an application by a discretionary beneficiary for the inspection of trust documents. The applicant, Smorgon, sought to inspect documents related to the trust established by Es Group Operations Pty Ltd, asserting that they had a right to understand the basis on which decisions were made regarding their benefits from the trust. The High Court was tasked with determining the legal issues surrounding the disclosure of trust documents to discretionary beneficiaries and the circumstances under which such disclosure may be warranted.

The central legal issues the court needed to address were whether there is a presumption that discretionary beneficiaries should be disclosed trust documents and whether the proximity of the beneficiary to the trust affected the court's discretion. Another issue was whether the applicant qualified as a 'named beneficiary' under the trust deeds, which might entitle them to greater access to trust information. The court also had to consider whether there was any allegation of a breach of trust, which could potentially justify broader disclosure. The cases of Schmidt v Rosewood Trust, Hartigan Nominees Pty Ltd v Rydge, Deutsch v Trumble, and others provided relevant precedent for the court's analysis.

The court found that while there was no absolute presumption that discretionary beneficiaries should be disclosed trust documents, the court has a broad discretion to order disclosure where it considers it appropriate. The proximity of the beneficiary to the trust, including their family relationship to the settlor, was a relevant factor in exercising this discretion. The court determined that the applicant was not a 'named beneficiary' under the trust deeds, which limited their entitlement to information. Additionally, the absence of any allegation of a breach of trust meant that the court did not need to compel disclosure for that reason. The court balanced these considerations and decided that disclosure was not warranted in this case.

Orders