AUSTRUST LTD (Formerly Known as Elders Trustee and Executor Co Ltd) v YSF PTY LTD [1993] NSWCA 12

AUSTRUST LTD (Formerly Known as Elders Trustee and Executor Co Ltd) v YSF PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, MEAGHER and CRIPPS JJA 28 April 1993, 26 May 1993 [1993] NSWCA 12

Public unit trust formed to facilitate public participation in a pig farming operation — trust manager ordered pig food — seller not paid — did the manager order the stock as agent for the trustee as principal.

Held:

Upon proper construction of the deed the manager's covenant to manage, maintain and supervise the fund's real and personal investments (ie manage the piggery) included the authority to purchase stock feed to keep the pigs alive despite no express authority to pledge the credit of the trustee.

Mahoney JA I agree with the judgment of Cripps JA. Mr Cotman's submissions were or included that, whilst the manager was authorised to manage the piggery, it could not incur liabilities without the prior approval of the trustee. Ido not think that that submission should be accepted. Whatever be the extent of the power to manage the piggery, it included, in my opinion, the power to buy food for the feeding of the pigs from day to day.

I agree with the orders proposed.

Meagher JA I agree with Cripps JA.

Cripps JA The GGI Rural Income and Growth Trust was established by deed dated6 August 1984. Elders Trustee and Executor Co Ltd (later to become Austrust Ltd) was the trustee and Golden Grove Industries Ltd the settler and manager. The Trust was a public unit trust formed to facilitate public participation in what was described as "an intensive pig farming operation".

During 1984 and 1985 the manager ordered from YSF Pty Ltd stock feed to the value of $82,515.96 to feed the pigs. YSF Pty Ltd was not paid. It sued Austrust Ltd in the District Court at Young. Later the proceedings were transferred to the Supreme Court and on 22 April 1991 Young J entered Judgment for YSF Pty Ltd in the sum of $173,314.58 (being the amount outstanding together with interest). The Trustee appealed.