Stephens v Chee

In the case of Stephens v Chee, the trustees of the Chee Family Trust sought advice from the Queensland Supreme Court on whether to proceed with litigation against certain entities. The dispute primarily involved the trustees' potential claims against Timothy Chee, who was both a beneficiary and the former sole director of the corporate trustee. The trustees also sought orders for indemnity from the trust assets and an injunction preventing the disclosure of certain trust documents to Timothy Chee. The court had to determine whether it should advise the trustees to proceed with litigation and whether to grant the requested indemnity and injunction.

The legal issues before the court included whether the trustees should be advised to bring proceedings against Timothy Chee and other entities, and if so, whether the costs of litigation should be borne by the trust assets. The court also considered whether the trustees should remain neutral and avoid litigating for the benefit of one group of beneficiaries over another. Furthermore, the court had to decide whether to grant an injunction preventing the disclosure of specific trust documents to Timothy Chee, who was both a beneficiary and the principal defendant in the proposed litigation.

The court found that while the trustees could bring proceedings against certain entities, it was not necessary to make a distinct order indemnifying the trustees from the trust assets, as the trustees would be entitled to costs from the trust fund if they obtained court approval. The court declined to advise the trustees to bring proceedings against Timothy Chee, considering the dispute largely a matter between beneficiaries and the potential for conflict of interest. The court also declined to make an order preventing the disclosure of documents to Timothy Chee, as there was no demonstrated need for such an order at that stage. The application was dismissed, with the court directing the trustees to seek further advice after the completion of disclosure if the proceedings were not determined earlier.

The court made orders advising the trustees that proceedings could and should be brought against Acebeck Pty Ltd, THLC Pty Ltd, and Mexibrook Pty Ltd for repayment of moneys owed to the Chee Family Trust. The trustees were directed to seek further advice from the court after the completion of disclosure if the proceedings were not resolved before then. The originating application was otherwise dismissed, and the court ordered that the copies of the Report, counsel’s opinion, and the draft statement of claim be placed in sealed envelopes and marked “Not to be opened without the leave of the court or a judge”.