For the reasons which follow, I do not consider that this passage assists the respondents. Warman concerned a claim for an account of profits earned by the former managing director of a company dishonestly and in breach of his fiduciary duty. The High Court found it appropriate to permit an allowance for expenses, skill, expertise, effort and resources contributed by the fiduciary. What is in issue here is not the profits of a business, but the interests of the beneficiaries in an "imperative trust for distribution".
The allowances which the respondents submit should be made are for stewardship by the respondents of the trust funds, wages for Mr and Mrs Benson and for rent said to be payable to the partnership. As was also stated in Warman, "[I]t is necessary to keep steadily in mind the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts." I will consider each claimed allowance in turn.
Counsel for the respondents submit that an amount should be paid to the trustees in the nature of commission, variously called stewardship or directors fees, for their conduct of the trust businesses during the accounting period. The respondents submit that equity requires such an allowance, which on the basis of Mr Rands' report, should be $75,000. It was submitted that the applicants were "quite happy" to approve an equivalent allowance for the replacement trustees when they were appointed. The submission should not be accepted. Equity does not favour payment of such an allowance. As was earlier explained, Porter J found, consistent with my own views based on the evidence before me, that the respondents, by their directors, failed to acknowledge the interests of the applicants in the trust assets, utilised the amounts to which the applicants were entitled by continuing to carry on the business without any recognition in the books of account that amounts were owed to the applicants, used all assets of the trust funds in which the applicants had an interest and did not account to the applicants for use of their entitlements.
As to the claim for wages and rent claimed as allowances for Mr and Mrs Benson, I would first record and accept the submission of counsel for the applicants concerning the conflict of interest which the submission discloses. This account and inquiry concerns the obligations of the respondents as trustees of the fixed trusts. In that capacity, their duty is to the beneficiaries of the fixed trusts. A submission that the fixed trusts should be subject to a claim for wages and rent payable to Mr and Mrs Benson, to my mind is a continuation of the failure to distinguish between the roles and interests of Mr and Mrs Benson and the obligations and duties of the trustees.
In any event, the claims should not be allowed. Both are based on the expressions of opinion by Mr Rands in his report about what arrangements may be fair, and appropriate claims by Mr and Mrs Benson against trust assets. In this context, Mr Rands' opinion is, with greatest respect to him, irrelevant.
As to wages, Mr Rands' report records that he was told by Ian Benson that he "frequently worked up to seven days a week" in the business, and Gloria Benson worked "seven or eight hour days for five days a week". Based on other accounting and actuarial material he took into account, Mr Rands calculated what he thought to be an appropriate allowance of $90,000 for Mr Benson and $39,488 for Mrs Benson, a total of $129,488. No such wage was ever paid. There is no evidence that wages were ever previously paid. There was no evidence of any employment agreement. In my view, in all of the circumstances which have been outlined, there is no proper basis, in equity, for the fixed trusts to be burdened with a claim of this nature.
The other allowance claimed is for rent. It was submitted by the respondents that an allowance in the account should be made for rental which should be paid to Mr and Mrs Benson's partnership for use during the accounting period of the farming properties at Forest Hill, Cymbrook and Strathdon. Rent is now claimed on a notional basis derived from applying a percentage figure to the market value of the properties. The calculation is set out in Appendix 22 of Mr Rands' report. It expressed the notional rental allowance at $341,719 reduced by interest already charged, resulting in a claimed allowance of $250,478. I would not make any such allowance. Equity does not require it. Prior to the accounting period no rent was ever paid by the farming business to Mr and Mrs Benson's partnership. There was no lease agreement. Payment of such a notional sum by the trustees would be contrary to the interests of the beneficiaries of the fixed trusts and in conflict with the nature of the trust. It should not be authorised, permitted or ordered on this account.
[2]
The result is that there is a sum found due to the applicants by the respondents on taking the account, and the respondents will be required to pay it. Subject to one qualification, my calculation of the amounts to be proportionally reimbursed to the fixed trusts is:
[3]
Categories 5, 6, 7, 8 and 9 - Works at 1 Forest Hill Road 47,664.87
[4]
Category 18 - Personal loan account transactions 11,400.00
[5]
The qualification concerns the superannuation sum claimed in Category 18. If these reasons are not sufficient to enable the parties to agree whether the sum should be included, then I will hear further submissions. In any event, I will allow the parties an opportunity to consider these reasons. If the terms of the final orders cannot be agreed I would hear further from them.
Parties
Applicant/Plaintiff:
Benson
Respondent/Defendant:
Doloraine Pty Ltd & Anor [2025] TASSC 25
Cases Cited (10)
Benson v Doloraine Pty Ltd & Anor [2025] TASSC 25 (16 April 2025)
On 31 August 2015 Porter J, (as he then was), ordered that an account be taken of the property of six fixed trusts which his Honour found to exist. As will be explained, the order was for an account for the period between 5 December 2014 and the date of the order, that enquiries be made, and that the respondents pay any amount found to be due on taking the account: Benson v Doloraine Pty Ltd[2015] TASSC 41, 26 Tas R 252. Almost nine years later the taking of the account was referred to me.
"I am satisfied that the effect of the consent orders was that each applicant obtained a vested interest in 20 per cent of the net value of each trust fund as it stood at that time in terms of the agreed values. What that means is that, in respect of each discretionary trust and each applicant, there is an 'imperative trust for distribution' of the relevant amount, to use the words of the court in Queensland Trustees Limited v Commissioner of Stamp Duties[1952] HCA 52; (1952) 88 CLR 54 at 64.
Thus, the relevant accounting period is between 5 December 2014, the date of the Federal Court orders, and 31 August 2015, the date of Porter J's order and the date from which the trustees were removed.
Pursuant to the order that the respondents file accounts, Gloria Benson swore an affidavit on 24 May 2016. The affidavit annexed general ledgers which, according to Mrs Benson, listed all of the transactions entered into during the accounting period by Doloraine on behalf of the IR and GM Benson Family Trust and by FHFT on behalf of the Benson Family Trust. At that stage, according to Mrs Benson, she did not have access to all of the "source documentation" which by then was in the possession of the new trustees, Steven Hernyk and Salvatore Algeri.
For some reason, not fully explained by the material available to me, it was not until 2 May 2018 that Holt AsJ made the formal order for the filing and service of accounts. The order required the respondents, as former trustees of the IR and GM Benson Family Trust and the Benson Family Trust respectively, to file and serve "an account of the Trust property including transactions entered into by the relevant Trust in respect of the Fixed Trusts so created" for the period 5 December 2014 to 31 August 2015 inclusive. The accounts were, amongst other things, to state what the respective directors of the respondent companies claimed to be the assets and liabilities of the relevant trusts as at 31 August 2015 and set out the dealings and transactions of the Trusts for the accounting period. On 18 September 2018 Mrs Benson swore a further affidavit which annexed financial statements for the trusts as at 5 December 2014 and June 2015 which she said had been provided by the new trustees. Further affidavits were then filed on behalf of the respondents, respectively an affidavit sworn by Ian Benson on 24 October 2018, affidavits sworn by Mrs Benson on 12 December 2018, 29 January 2019 and 16 May 2019, and a further affidavit of Ian Benson sworn 16 May 2019.
Porter J's order was for taking accounts in common form. As counsel for the respondents correctly submitted, such an order is to be distinguished from taking accounts on the basis of wilful default. Under an order for accounts on the basis of wilful default, an accounting party must not only account for what has actually been received, but also for what should have been received if the duties of the accounting party had been properly discharged: Meehan and Ors v Glazier Holdings Pty Ltd[2002] NSWCA 22, 54 NSWLR 146 at - . However, nothing turns on the distinction in this case because the applicants seek only to challenge payments made by the respondents from funds actually received.
Mark Benson, on behalf of all three applicants, prepared affidavits in response to the accounts annexed to Gloria Benson's affidavits. Mark Benson's first affidavit was sworn 30 January 2020. For present purposes, no issue arises about whether Doloraine and FHFT prepared accounts in compliance with the order. However, the applicants challenge the accounts. In an account in common form, the account may be challenged on the basis of surcharge or falsification. If a party can show that more was in fact received, that is a surcharge. If a party shows that disbursements were not properly incurred and should be disallowed, they are falsifications: Meehan and Ors v Glazier Holdings Pty Ltd at [13]; Rowe v National Australia Bank Ltd[2019] WASCA 140, 56 WAR 1 at [97]. In this case, no surcharge is claimed. However, the applicants claim falsifications: that the accounts are erroneous because they disclose payments made by the trustees during the accounting period which should not have been made to the detriment of the fixed trusts. They seek an order that the total amount of those payments be reinstated to the fixed trusts.
In response to the challenges to the account made by the applicants, Mrs Benson filed a further affidavit, sworn 21 September 2020, and delivered reports by a forensic chartered accountant, Daniel Rands respectively dated 3 August 2020, 16 September 2020 and 22 December 2022. Mark Benson then swore a further affidavit on 29 September 2021.
Mr Rands prepared a consolidated expert witness statement dated 2 August 2024 delivered just before the hearing. In his report, Mr Rands reviewed the records of the respondent companies and, based on material provided to him with adjustments he thought appropriate, provided a general ledger, compiled balance sheets and profit and loss statements for the period of accounting, set out his opinion about "disbursements to beneficiaries" during the period of accounting, commented on the matters raised by Mark Benson, gave an opinion about "the entitlements to trust assets of Ian and Gloria Benson and the applicants as represented by their loan balances at the start and end of the period of accounting" and determined a "notional loan account". It is the final form of accounts contained in Mr Rands' report on which the respondents rely as their account. I will return to the issue, but the admissibility of Mr Rands' opinion evidence concerning the accounting treatment of some of the disputed items, and the entitlements or otherwise of the beneficiaries of the trusts, was objected to by the applicants as irrelevant.
Underlying all of the opposing contentions in the account was the meaning and combined effect of the Federal Court orders made on 5 December 2014, and the findings of Porter J about the terms of the respective trusts. These reasons can only be sufficiently understood when read with the full reasons of Porter J. What follows is a simplified version but which will hopefully provide a sufficient explanation.
The deeds of settlement for the IR and GM Benson Family Trust and the Benson Family Trust provided for Doloraine and FHFT respectively, as trustees, to hold the trust fund created by the deed on the trusts and subject to the powers and duties expressed in the deed. In each case, the trustee was empowered to, at its discretion, pay, apply or set aside all or part of the capital or net income of the trust fund to the benefit of one or more of the beneficiaries, effectively Ian and Gloria Benson, their children, grandchildren and great grandchildren and their respective spouses. As Porter J pointed out in his reasons at [68], "each trust deed [in varying terms] gave the trustee powers of sale, expenditure, business management engagement and employment, and allocation of asset valuation fluctuation to income or capital."
The proceedings before Porter J were, as were the proceedings in the Federal Court, conducted in a highly adversarial manner. The respondents submitted to his Honour that it was not possible to determine the "net value" of each trust fund at the time the Federal Court declaration was made because the net value was "yet to be ascertained." The submission was rejected by his Honour who, as I have already pointed out, found at [73], that "the 'net value of the Trust Fund' meant the value of the assets as agreed in the proceedings, as offset by the liabilities as agreed." (My emphasis.) His Honour found at [79] that the resolutions "of themselves operate to vest absolute interests in the proportion of net value". He also, at [79], rejected the respondent's submission that the declarations did not create a beneficial interest greater than the usual interest held by a beneficiary of a discretionary trust. He found that the purpose of the declarations was that they be declarations of beneficial interest in something which was then ascertainable. His Honour made the findings set out in full above at [7] of these reasons of the creation for each applicant of "a vested interest in 20 per cent of the net value of each trust as it stood at the time in terms of the agreed values." The result, as his Honour stated at [83], was that there were "fixed trusts in favour of the applicants, and it is recognised that new trusts occur within the administration of discretionary trusts".
Those findings are not to be revisited on an account and inquiry and are, in my view, of particular importance in determining how the account and inquiry is to be approached.
[20] In the present case, the cumulative effect of the first three matters which I have set out in par [12] above, is that the trustees misconducted themselves in the relevant sense. When the hostility of those controlling the trustees is factored in, there ought to have been acceptance that the trustees were in an impossible position and their resignation would to have been brought about. The resistance to the application for their removal was unreasonable. Overall the conduct of the entire litigation can be described as adversarial, as distinct from involving true questions relating to the administration of the trusts; Garrett v Yiasemides[2004] NSWSC 828 at [32]."
In respect to the falsifications claimed by the applicants, the respondents submit that the claim is defeated by the related equitable defences of laches and acquiescence: Warman International Ltd v Dwyer[1995] HCA 18, 182 CLR 544 at 557‑558. The onus to establish the defences is on the respondents. In this case, neither defence can succeed.
A plea of laches may arise in this case if the respondents were to establish that the applicants had, by delay, created or allowed a situation in which it would be unjust or unreasonable to order the respondents to pay a sum found to be due on account: Orr v Ford[1989] HCA 4, 167 CLR 316, per Deane J at 341. There is no such delay on the part of the applicants. They expeditiously sought the relief ultimately granted by Porter J. Then, as counsel for the applicants correctly submits, it was not until mid-2019 that the respondents filed the affidavits which formed the basis of the account which Porter J ordered. That followed applications to the Court by the applicants seeking to enforce compliance. There may have been explanations for the delay but none were attributable to the applicants. Mark Benson filed a response without undue delay. That prompted a further exchange of extensive material and a further delay before a final hearing. Again, however, the delay was not attributable to the applicants.
It was also submitted that there was acquiescence by the applicants. As the submission was put: "Acquiescence is an equity against the applicants; the manifest injustice to the respondents of clawing back further funds from the respondents having purchased property of the fixed trusts under an arrangement with the replacement trustees without the consent of the respondents is, it is submitted, fatal to ... their claims."
In Halford v Halford[2022] WASCA 1, 58 WAR 254 the Court of Appeal of Western Australia explained at [147]:
In all, the court books contain in excess of 3000 pages of material. However, my task in undertaking the account and enquiry was greatly assisted by the agreement of the parties to the production of a spreadsheet, initially prepared by Mark Benson, which lists the disputed payments and the reasons for the dispute in each case. The document, and a schedule of remaining falsifications agreed by the parties during the course of the hearing, greatly narrowed the areas of dispute and identified the disputed payments. The disputed items are to be considered on the basis of the evidence in the various affidavits and the oral evidence given in court during the hearing over the course of about three days. The disputed items fall into a number of different categories and may be conveniently considered accordingly.
The evidence given in this account makes clear that, following the Federal Court declarations, the respondents did nothing to recognise the vested beneficial interest of each applicant in the net value of the trust funds as ascertained by reference to the agreed values on 5 December 2014. No separate funds were created in the books of account either to the credit of the beneficiaries of the fixed trusts, or to reflect liabilities of the trust. In effect, the respondents continued to operate the farming business in an unaltered way. The substance of the submission advanced by the respondents in these proceedings is that their powers and duties under the trust deeds, including to operate the farming business, continued without substantial alteration except perhaps that there was a fixed proportionate entitlement to the income of the trusts during the accounting period. In her affidavit of 21 September 2020, Mrs Benson advanced the contention that the valuation was obtained "as if the assets were sold to a third party as a going concern including goodwill (underlining in original)". In her evidence Mrs Benson, when describing the position of her sons, consistently maintained that when the business was sold, "they would have got their share then."
The submissions and contentions advanced by the respondents and by Mrs Benson in her affidavit cannot be accepted. In my view, the position advanced is contrary to the finding of Porter J. The effect of the finding is that the powers and duties of the respondents, as trustees of the discretionary trusts were, as a result of the resolutions and declarations of 5 December 2014 and for the remainder of the accounting period, burdened by and impressed with their obligations as trustees of the fixed trusts which his Honour found to exist. During the period of accounting the assets of the trusts were used in the conduct of the farming business. However, during that period, the duty of Doloraine and FHFT, as trustees of the fixed trusts, was to obey the terms of those trusts: Youyang Pty Ltd v Minter Ellison Morris Fletcher[2003] HCA 15, 212 CLR 484 at [34]. What had been, for each applicant, an interest in mere expectancy in the capital and income of a discretionary trust, after 5 December 2014 became a vested beneficial interest in the net agreed value of the trust fund, subject to a "fixed trust for distribution" according to that agreed value. Thereby, the nature of the obligation to administer the trust, and the power to make payments to either the trustees themselves or to Mr and Mrs Benson as beneficiaries of the discretionary trust or in some other capacity, was fundamentally changed. The duty of the trustee to avoid conflict between their own interests and their duties as trustees of the fixed trusts, and to not favour the interests of Ian and Gloria Benson, was brought into sharp focus.
The trustees were bound to deal with the trust property for the benefit of the beneficiaries in such manner as "is prudent and right": Khoo Tek Keong v Ch'Ng Joo Tuan Neoh[1934] AC 529 at 536‑537. Included in the reasons which led Porter J to remove Doloraine and FHFT as trustees of the trusts were what his Honour found to be:
the high level of hostility on the part of Mr and Mrs Benson towards their sons;
a situation of irretrievable conflict of interest in which the trustees were placed. The trustees, controlled by Mr and Mrs Benson who, as primary beneficiaries of the discretionary trusts which were "now represented by 40 per cent of the net value as things stood at 5 December 2014.", had the duty to the beneficiaries of the fixed trusts to administer assets in accordance with those fixed trusts.
In his reasons, Porter J recorded the evidence of Ian Benson that, amongst other things, he had not consulted his sons nor obtained their consent since 5 December 2014 for the continued use of a 60 per cent interest in the net assets of the trust, and after 5 December 2014, he had simply continued to conduct the business under each trust as usual utilising all of the assets of the business. Whilst Mr Benson did not give evidence before me, other than in the form of affidavits substantially adopting the evidence of his wife, the evidence of Gloria Benson and the manner in which the accounts were prepared on behalf of the respondents is to the same effect. It is in that context that purported exercise of trustee powers during the period of accounting, and the disputed items in the accounts and the claimed allowances, are to be considered. I turn to consideration of the contentious account items.