Kerr v Australian Executor Trustees (SA) Ltd; Australian Executor Trustees (SA) Ltd v Fuller and others trading as Sparke Helmore Lawyers [2019] NSWSC 1279

Supreme Court New South Wales

Medium Neutral Citation: Kerr v Australian Executor Trustees (SA) Ltd; Australian Executor Trustees (SA) Ltd v Fuller and others trading as Sparke Helmore Lawyers [2019] NSWSC 1279 Hearing dates: 1-3 and 8-10 July 2019; further submissions 12 and 23 July and 13 September 2019 Decision date: 26 September 2019 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Plaintiff entitled to equitable compensation from the first defendant for breach of trust. First defendant's cross claim against second to sixty-first defendants to be dismissed. Catchwords: EQUITY – trusts and trustees – breaches of trust –professional trustee – pine plantation investment scheme – whether trustee acted in breach of trust by surrendering security without receiving amount due to covenantholders or alternative security – what equitable compensation should be awarded

EQUITY – equitable remedies – equitable compensation – causation – whether retainer of solicitors by trustee an answer to claim for breach of trust – nature of advice given to trustee by solicitors – whether a reasonable trustee would have relied on the advice given

CONTRACTS – solicitors – retained by trustee to advise whether transaction documents contained onerous or unusual provisions and whether documents in order for execution – whether such advice was an adequate response to the retainer – whether trustee would have entered transaction in any event Legislation Cited: Civil Liability Act 2002 (NSW) Corporations Act 2001 (Cth) Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) Real Property Act 1886 (SA) Transfer of Land Act 1958 (Vic) Trustee Act 1925 (NSW) Trustee Act 1936 (SA) Cases Cited: Ahrkalimpa Pty Ltd v Schmidt (No 3) [2019] VSC 197 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43; (2018) 360 ALR 1 Armory v Delamirie (1722) 1 Stra 505; (1722) 93 ER 664 Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504; [1995] FCA 1663 AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton UTZ (A firm) (No 2) [2019] WASC 306 Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Bristol and West Building Society v Mothew [1998] Ch 1 Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27; [2007] WASCA 179 CGU Insurance Ltd v One.Tel Ltd (in liq) (2010) 242 CLR 174; [2010] HCA 26 Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 Dominic v Riz [2009] NSWCA 216 Elder's Trustee & Executor Co Ltd v Higgins (1963) 113 CLR 426; [1963] HCA 48 Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 Howe v Earl of Dartmouth (1802) 32 ER 56 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36 Keddie v Stacks/Goudkamp Pty Ltd [2012] NSWCA 254 Kingsgrove RSL v Spasevski [2002] NSWCA 342 Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205; [2008] NSWCA 343 Maxitherm Boilers Pty Ltd v Pacific Dunlop Insurances Pte Ltd [1998] 4 VR 559 National Trustees Executors & Agency Co of Australasia Ltd v Dwyer (1940) 63 CLR 1 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Oztech Pty Ltd v Public Trustee of Queensland (No 15) [2018] FCA 819 Partridge v Equity Trustees Executors & Agency Co Ltd (1947) 75 CLR 149; [1947] HCA 42 Polkinghorne v Holland (1934) 51 CLR 143; [1934] HCA 28 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Rahme v Benjamin & Khoury Pty Ltd [2019] NSWCA 211 Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2017] 2 Qd R 66; [2016] QCA 213 The Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd [2015] NSWCA 225 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Texts Cited: E Sykes and S Walker, The Law of Securities, (5th ed, 1993, Law Book Co) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) M Davies, A Bell and P Brereton, Nygh's Conflict of Laws in Australia (9th ed, 2013, LexisNexis Butterworths) Category: Principal judgment Parties: David Kerr as additional trustee for the S.E.A.S Sapfor Forests Pty Ltd scheme (Plaintiff) Australian Executor Trustees (SA) Limited (First Defendant/Cross-Claimant) Adam John Fuller and others trading as Sparke Helmore Lawyers (Second to sixty-first Defendants/Cross-Defendants) Representation: Counsel: A J Sullivan QC with D Sulan and S Hartford-Davis (Plaintiff) J R J Lockhart SC with C McMeniman (First Defendant/Cross-Claimant) S R Donaldson SC with A R Zahra (Second to sixty-first Defendants/Cross-Defendants)