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Wareham v Marsella (No 2)

Wareham v Marsella (No 2)

Case [2020] VSCA 118 13 May 2020

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0022

CAROLINE ELIZABETH WAREHAM and MARTIN WAREHAM (as trustees of the Swanson Superannuation Fund)	Appellants
v
RICCARDO GIACOMO MARSELLA (both personally and as executor of the estate of Helen Freeth Marsella (also known as Helen Freeth Swanson)) [No 2]	Respondent

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JUDGES:	TATE, McLEISH and HARGRAVE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	13 May 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 118
JUDGMENT APPEALED FROM:	[2019] VSC 65 (McMillan J)

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COSTS – Trustees – Self-managed superannuation fund – Trustees unsuccessfully appealed removal and adverse finding – Whether trustees entitled to indemnity from trust fund in respect of costs order – Appeal in trustees’ personal interests not interests of trust – Miller v Cameron (1936) 54 CLR 572, Pope v Pope [2001] SASC 26, considered – No entitlement to indemnity – Superannuation Industry (Supervision) Act 1993 (Cth), s 56 – Personal costs orders against trustees in respect of costs of appeal.

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WRITTEN SUBMISSIONS:	Counsel	Solicitors
For the Applicants	Dr N F Orow	Hill Legal
For the Respondent	Mr S P Newton	Stidston Warren Lawyers

TATE JA
McLEISH JA
HARGRAVE JA:

On 20 April 2020, this Court granted leave to appeal but dismissed an appeal brought by the appellants contesting their removal as trustees of a self-managed superannuation fund.[1] The appellants also failed in challenging the trial judge’s finding that they had not given real and genuine consideration to the exercise of a discretion as to the beneficiary of the death benefit, when they exercised that discretion in favour of the first appellant.
[1]Wareham v Marsella [2020] VSCA 92.

The respondent submits that the appellants ought to pay the costs of the appeal and of the trial personally, without the right to be indemnified from the trust fund. He makes this submission on the basis that the appellants defended the proceeding at trial and pursued the appeal for the personal benefit of the first appellant and not for the benefit of the trust. He submits that the appellants’ conduct as trustees, which gave rise to the litigation, involved a conscious, deliberate and wrongful breach of their duties as trustees, with a view to delivering themselves a financial benefit.

The appellants concede that orders for costs should be made against them, both at trial and on appeal, but submit that they have a right to full indemnity from the trust fund.

We do not propose to make any order as to the costs of the trial. New trustees are yet to be appointed. The proceeding is therefore not complete, and the trial judge has made no orders as to the costs of the trial to date. The question of those costs is properly a matter for the trial judge.

The appellants rely on cl 11 of the trust deed for the fund, which relevantly provides as follows:

11.1 Limitation of Liability — General
Subject to clause 11.2 the Trustee shall not…

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 Wareham v Marsella (No 2)

Details

AGLC: Caroline Elizabeth Wareham and Martin Wareham (as trustees of the Swanson Superannuation Fund) v Riccardo Giacomo Marsella (both personally and as executor of the estate of Helen Freeth Marsella (also known as.. [2020] VSCA 118
Case: [2020] VSCA 118
Decision Date: 13 May 2020

CaseChat Overview and Summary

The appeal in Wareham v Marsella (No 2) before the South Australian Supreme Court involved the trustees of a self-managed superannuation fund who sought an indemnity from the trust fund for costs incurred in an unsuccessful appeal. The appeal itself pertained to the trustees' removal and an adverse finding against them, which they sought to challenge. The trustees argued that they were entitled to indemnity costs from the trust fund under the Superannuation Industry (Supervision) Act 1993, as they had acted in the best interests of the trust. The court had to determine whether the trustees' appeal was taken in their personal capacity or in the interests of the trust, which would affect their entitlement to indemnity costs.

The legal issues before the court included whether the trustees were acting in their personal capacity or for the benefit of the trust when they pursued the appeal, and whether they were entitled to indemnity costs under the Superannuation Industry (Supervision) Act 1993. The court considered precedents such as Miller v Cameron and Pope v Pope, which established that indemnity costs are only available when a party acts in the interests of the trust. In this case, the court found that the appeal was taken in the trustees' personal interests, not in the interests of the trust, as they had a personal grievance against the removal decision. Consequently, the court ruled that the trustees were not entitled to indemnity costs from the trust fund.

In reaching its decision, the court emphasised that the appeal was driven by the trustees' personal dissatisfaction with the removal decision, rather than any benefit to the trust. This conclusion was supported by the statutory provisions of the Superannuation Industry (Supervision) Act 1993, which require that indemnity costs be granted only when the party acts in the interests of the trust. Given that the trustees' appeal was self-serving, the court held that they were not entitled to indemnity costs. The court further ordered that the trustees bear their own costs of the appeal.

Orders