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Teterin v Linrod Pty Ltd

Teterin v Linrod Pty Ltd

Case [2024] NSWSC 1635 19 December 2024

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Trusts & Equity

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Supreme Court

New South Wales

Medium Neutral Citation: Teterin v Linrod Pty Ltd [2024] NSWSC 1635
Hearing dates: 25 – 28 November 2024
Date of orders: 19 December 2024
Decision date: 19 December 2024
Jurisdiction: Equity
Before: Pike J
Decision:
(1)   Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.
(2)   Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 28 January 2025.
(3)   In the event there is no agreement, including as to costs, direct the parties to provide to my Associate by no later than 5pm on 28 January 2025 any submissions and supporting material, such submissions not to exceed 3 pages.
(4)   Direct the parties to provide to my Associate by no later than 5pm on 4 February 2025 any submissions and supporting material in reply, such submissions not to exceed 3 pages, whereupon the remaining issues will be determined on the papers.

Catchwords:
EQUITY – trusts – discretionary family trust – beneficiary application for removal of trustee – whether trustee has breached fiduciary duties – where trust generates no income – where defendant beneficiary is the sole director and shareholder of trustee company and has been paying for trust expenses personally – determination that no breach of fiduciary duty in the circumstances – whether even if breach of duty, case for removal made out
EQUITY – whether principal beneficiary under discretionary family trust disclaimed any interest, benefit, or entitlement in or under the trust – where principal beneficiary has been receiving aged pension since April 2002 – where a variation to the trust deed was executed – no effective disclaimer – finding of an intention to remain as principal beneficiary

Legislation Cited:
Trustee Act 1925 (NSW) ss 14DA and 70
Uniform Civil Procedure Rules 2005 (NSW) rr 7.11(2) and 42.19

Cases Cited:
Ancient Order of Foresters in Victoria Friendly Society Ltd v LifeplanAustralia Friendly Society Ltd (2018) 265 CLR 1
Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504
Chamberlin, Bennett (in their capacity as trustees of the estate of the late Spry) v Spry [2008] VSC 562
Chan v Zacharia (1984) 154 CLR 178
Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd (2017) 106 ATR 151; [2017] NSWCA 184
Commissioner of Taxation(Cth) v Ramsden [2005] FCAFC 39
Fay v Moramba Services Pty Ltd [2009] NSWSC 1428
FCT v Cornell (1946) 73 CLR 394
Gillespie v Gillespie Cranes Nominees Pty Ltd (2022) 405 ALR 680
JPD as Guardian v DMS as Trustee [2022] QSC 181
Kanjian Holdings No. 1 Pty Ltd v Kanjian; Kanjian v Kanjian(No. 3) [2021] NSWSC 839
Leerac Pty Ltd v Fay [2008] NSWSC 1082
Miller v Cameron (1936) 54 CLR 572
Owies v JJE Nominees Pty Ltd (2022) 22 ASTLR 89
Princess Ann of Hesse v Field [1963] NSWR 998
Re Gulbenkian's Settlements (No.2) Stephens & Anor v Maun &…

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 Teterin v Linrod Pty Ltd

Details

AGLC: Teterin v Linrod Pty Ltd [2024] NSWSC 1635
Case: [2024] NSWSC 1635
Decision Date: 19 December 2024

CaseChat Overview and Summary

The case involved the parties Teterin and Linrod Pty Ltd, with the dispute centred on a discretionary family trust. The trust, managed by Linrod Pty Ltd, had generated no income and was in a dormant state. Teterin, a beneficiary of the trust, applied for the removal of Linrod Pty Ltd as trustee, alleging breaches of fiduciary duty. Linrod Pty Ltd, the defendant, was not only a trustee but also the sole director and shareholder of the trustee company, and had been covering the trust's expenses from personal funds. The central legal issues revolved around whether Linrod Pty Ltd had breached its fiduciary duties and, if so, whether this constituted sufficient grounds for removal as trustee. Additionally, the court examined whether the principal beneficiary had effectively disclaimed any interest in the trust.

The court ruled that there had been no breach of fiduciary duty by Linrod Pty Ltd, considering the circumstances of the case. The court found that even if there had been a breach, the case for removal was not made out. The primary reason for this conclusion was the personal financial support Linrod Pty Ltd had provided to cover the trust's expenses, which negated any significant detriment to the trust. Furthermore, the court determined that the principal beneficiary had not effectively disclaimed any interest in or under the trust. The beneficiary had been receiving an aged pension since April 2002 and had executed a variation to the trust deed, but this did not amount to a disclaimer. The court inferred an intention to remain as the principal beneficiary from the beneficiary's actions.

The court's decision was that Linrod Pty Ltd was not to be removed as trustee. The principal beneficiary had not disclaimed any interest in the trust, and there was no breach of fiduciary duty sufficient to warrant removal. The court's findings ensured that the trust remained in its current structure, with Linrod Pty Ltd continuing in its role as trustee.

Orders