von Risefer & Ors v Permanent Trustee Company Ltd & Ors

The High Court of Australia heard an appeal concerning a dispute between the beneficiaries of a trust, the von Risefer family, and the trustee, Permanent Trustee Company Ltd. The core of the disagreement revolved around the trustee's management of the trust's assets, specifically its decision to sell certain shares and the subsequent distribution of the proceeds. The beneficiaries alleged that the trustee had acted in breach of its fiduciary duties by failing to obtain proper advice and by making decisions that were not in their best interests.

The central legal issues before the High Court were whether the trustee had breached its duty to exercise reasonable care and skill in managing the trust property, and whether the trustee had acted in good faith and in the best interests of the beneficiaries when it decided to sell the shares. The court was required to consider the scope of a trustee's duty to obtain independent advice and the standard of care expected of a professional trustee in making investment decisions.

McHugh and Heydon JJ, in their joint judgment, affirmed that a trustee owes a duty to act with the degree of care and skill that a reasonably prudent person would exercise in managing the affairs of another. This duty extends to obtaining independent and competent advice where necessary, particularly in complex investment decisions. The court found that the trustee had failed to demonstrate that it had adequately considered the beneficiaries' interests or sought appropriate advice before proceeding with the sale of the shares, thereby breaching its fiduciary obligations. The appeal was allowed, and the matter was remitted to the primary judge for further consideration of the appropriate remedies.