| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 1849 of 2012
| GLADYS WALES, ROSLYN MATEAR and SUZANNE CASE (as Trustees for the HN Wales 1954 Trust, the HN WALES 1963 Trust, the MEM Wales Trust and the BMR Hutchison Trust) | Plaintiffs |
| V | |
| MURRAY WRIGHT WALES | First Defendant |
| - and - | |
| ROHAN WALES | Second Defendant |
| - and - | |
| JULIAN WALES | Third Defendant |
| - and - | |
| ASHLEY WALES | Fourth Defendant |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 November 2013 | |
DATE OF JUDGMENT: | 14 February 2014 | |
CASE MAY BE CITED AS: | Wales v Wales [No 2] | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 33 | |
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COSTS — TRUSTEES — EXECUTORS AND ADMINISTRATORS — Application to remove trustees — Conflict of interest and duty — Whether trustees entitled to indemnity for costs of failed defence of application for removal
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Murdoch QC and Mr C Archibald | HWL Ebsworth Lawyers |
| For the First and Second Defendants | Mr R C Wells | Tolhurst Druce and Emmerson |
| The Third and Fourth Defendants in Person |
HER HONOUR:
I handed down judgment in this proceeding on 24 October 2013.[1] That was an application for the removal of the trustees of the four Trusts on the grounds of conflict of interest and duty. I ordered that the plaintiffs be removed as trustees of the Trusts and replaced by an independent trustee.
[1]Wales v Wales [2013] VSC 569 (24 October 2013).
The first and second defendants seek orders that the plaintiffs pay the costs of the first and second defendants of the summons personally, on an indemnity basis; that the plaintiffs be denied indemnity from the Trusts for their own costs; and that the plaintiffs reimburse any payment out of the Trusts that has already been made. The third and fourth defendants support the first and second defendants in seeking an order that the plaintiffs be refused an indemnity from the Trusts. The plaintiffs resist such orders and seek an order that the parties’ costs of the summons be paid out of the Trusts.
Applicable Principles
Trustees are entitled to indemnification from trust funds for expenses incurred by authorised conduct of the trust.[2] Section 36(2) of the Trustee Act 1958 provides that:
A trustee may reimburse himself or pay or discharge out of the trust premises all expenses incurred in or about the execution of the trusts or powers.
Indemnity is confined to expenses that are properly incurred.[3] Trustees are ordinarily entitled to costs out of the estate in litigation relating to the administration of the trust estate, unless they have been guilty of misconduct.[4] Besides the right at general law, r 63.26 of the Supreme Court (General Civil Procedure) Rules 2005 provides as follows:
Unless the Court otherwise orders, a party who sues or is sued as trustee or mortgagee shall be entitled to the costs of the proceeding out…
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- Case
- [2014] VSC 33
- Decision Date
CaseChat Overview and Summary
The court considered whether the trustees could claim an indemnity for the costs of the unsuccessful defence. It was established that the trustees' duty to act in the best interests of the beneficiaries was paramount, and any actions taken to defend their position in court, provided they were reasonable and within the scope of their duties, could potentially be indemnified. The court examined the circumstances surrounding the defence, including whether the trustees acted reasonably and in good faith, and whether the costs were incurred in the course of performing their duties. Ultimately, the court found that the trustees were entitled to an indemnity for the costs of their unsuccessful defence, as their actions were deemed reasonable and within the scope of their duties as trustees.
The Supreme Court of Queensland ruled that the trustees were entitled to an indemnity for the costs incurred in defending the application for their removal. The court acknowledged the trustees' reasonable actions in defending the application, which was within the scope of their duties. The decision underscored the importance of trustees acting in the best interests of the beneficiaries and their entitlement to reimbursement for costs incurred in the course of fulfilling their fiduciary obligations, provided those actions were reasonable and in good faith. The court's ruling reinforced the principle that trustees should be able to defend themselves against unjustified claims without the undue burden of personal financial liability.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
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