Fischer v Nemeske Pty Ltd [2016] HCA 11

HIGH COURT OF AUSTRALIA

FRENCH CJ, KIEFEL, BELL, GAGELER AND GORDON JJ

ROBERT WILLIAM FISCHER & ORS APPELLANTS

AND

NEMESKE PTY LTD & ORS RESPONDENTS

Fischer v Nemeske Pty Ltd [2016] HCA 11 6 April 2016 S223/2015

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of New South Wales

Representation

N C Hutley SC with A B Edington and R A Yezerski for the appellants (instructed by S Moran & Co Solicitors)

Submitting appearance for the first respondent

C J Birch SC with B DeBuse for the second and third respondents (instructed by Curwoods Lawyers)

Submitting appearance for the fourth to twelfth respondents

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Fischer v Nemeske Pty Ltd

Trusts – Trustees' powers – Power of advancement – Where trust property included shares in a company – Where value of shares recorded in "asset revaluation reserve" – Where trustee made resolution to distribute entire asset revaluation reserve to specified beneficiaries – Where trustee covenanted to pay specified beneficiaries on demand – Whether valid exercise of power to "advance" and "apply" trust capital or income – Whether trustee indebted to specified beneficiaries – Whether action for money had and received maintainable.

Words and phrases – "advance", "apply", "pay", "pay or apply", "raise".

Trustee Act 1925 (NSW), s 44. Trustee Act 1925 (UK), s 32.

FRENCH CJ AND BELL J. Introduction This appeal, from a decision of the Court of Appeal of New South Wales, primarily concerns the power of the trustee of a discretionary trust to advance and apply to two designated beneficiaries, by resolution and entry in the trust accounts, an amount of money representing the value of unrealised trust assets comprising shares in a company. Also in issue is the effect of a deed reciting the alleged indebtedness of the trustee to the designated beneficiaries in that amount and purporting to charge the shares in their favour. The detailed facts are set out in the judgments of Kiefel J and Gordon J. The trust was the Nemes Family Trust ("the Trust"). Nemeske Pty Ltd was its trustee ("the Trustee"). The designated beneficiaries were Mr Emery Nemes and his wife, Madeleine. The shares were in a company, Aladdin Ltd ("Aladdin"). The value of the shares in September 1994 was recorded in an "Asset Revaluation Reserve" in the amount of $3,904,300, created as an entry in the accounts of the Trust. The entry did not describe an asset or a fund from which amounts could be withdrawn or paid. On 23 September 1994, the Trustee passed a resolution in the following terms: "RESOLVED that pusuant [sic] to the powers conferred on the Company as Trustee in the Deed of Settlement of the Nemes Family Trust:- That a final distribution be and is hereby made out of the asset revaluation reserve for the period ending 30th September, 1995 [sic] and that it be paid or credited to:- the beneficiaries in the following manner and order: The entire reserve if any, to be distributed to:- [Mr and Mrs Nemes] as joint tenants."