First Plaintiff v Second Plaintiff

1 Balsa Rejus Pty Ltd ('BR') in its capacity as trustee of the Balsa Rejus Property Trust ('BR Property Trust') and Hetrel Holdings Pty Ltd ('HH') in its capacity as trustee of the Hetrel-Jacet Trust No. 8 ('HJ Trust') (together, the 'Trustees') have applied to this Court for judicial advice pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules').

2 Rule 54.02(1) of the Rules provides that a proceeding may be brought for any relief which could be granted in an administration proceeding. Rule 54.02(2) relevantly provides that, without limiting paragraph (1), a proceeding may be brought for:

(a) the determination of any question which could be determined in an administration proceeding, including any question-

(i) arising ... in the execution of a trust;

(ii) as to the composition of any class of persons having ... a beneficial interest ... in property subject to a trust; or

(iii) as to the rights or interests of a person claiming ... to be beneficially entitled under a trust;

3 Rule 54.03(c) provides that all persons having a beneficial interest under the trust need not be parties to the proceeding, and the plaintiff may make such of those persons parties as it thinks fit. It is usual that applications for judicial advice are made ex parte, as a private application.[1] The present application is in that category.

4 On 1 April 2021, the Trustees were joined as the second and third respondents to proceeding No. MLC 13723 of 2020 in the Federal Circuit and Family Court of Australia (Division 1) ('the Family Court Proceeding'). The primary parties to that proceeding are Erin Jane Hetrel, the applicant wife, and Justin Charles Evan Hetrel, the respondent husband.[2] Justin and Erin Hetrel were married in 1998. There are two children of their marriage, Beatrice Hetrel (aged 22) and Carmen Hetrel (aged 19). The Family Court Proceeding was initiated by Erin on 11 December 2020 against Justin seeking final orders in relation to property and financial matters. Justin's sister, Rebecca Louise Hetrel, was also joined to the Family Court Proceeding as the fourth respondent on 1 April 2022. The proceeding has been set down for trial commencing 9 May 2022 on an estimate of five days.

5 By her further amended initiating application filed on 21 January 2022 in the Family Court Proceeding, Erin seeks declarations pursuant to s 79 of the Family Law Act 1975 (Cth) ('the Act') that Justin's and/or Erin's interests in entities including the BR Property Trust and the HJ Trust are 'property' for the purposes of the Act. Paragraph 3 of her amended initiating application seeks substantive orders directly against BR and HH:

To the extent necessary, pursuant to s 85A of the Family Law Act 1975 (Cth) BR and HH pay such sum to the wife equal to half the value of the husband and wife's interests in the Hetrel Group [defined so as to include the BR Property Trust and the HJ Trust].

6 The application for judicial advice is supported by an affidavit of Rebecca dated 19 April 2022. Rebecca is one of two directors of BR and HH. The other director is Justin.

7 The plaintiffs also rely upon an affidavit of their solicitor, Jennifer Ann Maher, made 2 May 2022, and upon a confidential joint opinion of Mr T. North SC and Mr S. Wotherspoon of counsel dated 1 May 2022.

8 For the reasons set out in that confidential opinion, counsel believe that the Trustees should resist the claims of Erin advanced against them respectively in the Family Court Proceeding.

9 The material in support of this application includes copies of the following documents filed in the Family Court Proceeding:

(a) Erin's second further amended initiating application filed 21 January 2022, her trial affidavit filed 24 January 2022 and her contentions as to fact and law filed 3 February 2022.

(b) Justin's response to the second further amended initiating application filed 10 February 2022, his trial affidavit filed 9 February 2022 and his response to the applicant wife's contentions as to fact and law filed 17 February 2022.

(c) The trial response to initiating application filed 15 March 2022 on behalf of BR, HH and Rebecca, together with:

(i) Rebecca's trial affidavit filed on behalf of those parties affirmed 14 March 2022; and

(ii) the response by BR, HH and Rebecca to the applicant's wife's contentions as to fact and law filed 15 March 2022.

10 The trial response filed on behalf of BR, HH and Rebecca seeks a declaration pursuant to s 78 of the Act that the application by Erin, which seeks a declaration that Erin's and Justin's interests in the BR Property Trust and in the HJ Trust constitute 'property' pursuant to the Act, be dismissed save insofar as it extends to the Justin's shares in HH and the entitlements of the Justin and Erin to the due administration of the HJ Trust.

11 The application to this Court for judicial advice by the Trustees was issued on 21 April 2022. By their originating motion, the Trustees seek a direction that is appropriate that, in their capacity as trustees, they defend the claims made against them by Erin in the Family Court Proceeding. They also seek a direction that would be appropriate for them to pay the costs of their participation in those proceedings out of the assets of the trusts.

12 Under Order 54 of the Rules,[3] a trustee may approach the Court for judicial advice. The private nature of such advice was discussed by the High Court in Macedonian Orthodox Church v Eminence Petar:[4]

Private and personal advice. A fifth matter, closely related to the fourth, is that s 63 operates as "an exception to the Court's ordinary function of deciding disputes between competing litigants"; it affords a facility for giving "private advice". It is private advice because its function is to give personal protection to the trustee.

Section 63(2) precludes any trustee, who acts in accordance with the private advice, from being held liable for breach of trust in the event that in conventional proceedings it is later held that the legal position does not correspond with the advice given, so long as the proviso to s 63(2) is satisfied. The possibility that the rights of beneficiaries under private trusts could be affected by judicial advice led the New South Wales Parliament in 1925 to introduce the protections given by s 63(8)-(11) and in that sense to strike a compromise. However, those protections did not alter the primary function of s 63 as creating a procedure for private advice to trustees. Even if notice of the application for private advice is given to other persons (by reason of rules of court, or a court direction under s 63(4), or by reason of s 63(8)), those persons are not strictly speaking "parties" to "proceedings" by reason of the closing words of s 63(11), although they are able to participate in the proceedings to some extent. Section 63 reflects a compromise between a procedure for affording private advice to trustees and the need for affected persons to be given a hearing in some cases.

13 In Macedonian Orthodox Church, the plurality (Gummow ACJ, Kirby, Hayne and Heydon JJ) emphasised the desirability of a trustee seeking judicial advice in relation to litigation, whether involved as a plaintiff or as a defendant:

71 In short, provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee's duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs.

72 It is, therefore, not right to see a trustee's application for judicial advice about whether to sue or defend proceedings as directed only to the personal protection of the trustee. Proceedings for judicial advice have another and no less important purpose of protecting the interests of the trust.[5]

14 Recently in Re Care Super Pty Ltd,[6] Lyons J identified the principles to be applied on such an application, including that:

(1) there is no implied limitation on the power to give advice;

(2) the procedure is summary in character, intended to enable questions relevantly arising in the administration of a trust to be resolved cheaply and simply; and

(3) the advice is private advice to the trustee because its function is to give personal protection to the trustee in respect of the course of action which is the subject of the application.[7],[8]

15 When bringing an application for judicial advice application, a trustee is bound by principles of candour. In McDonald v Horn,[9] Hoffmann LJ said:

This procedure, sanctioned by the decision of the Court of Appeal In re Beddoe, Downes v Cottam [1892] UKLawRpCh 180; [1893] 1 Ch 547 at 557, requires the trustee to make full disclosure of the strengths and weaknesses of his case. Provided that such disclosure has been made, the trustee can have full assurance that he will not personally have to bear his own costs or pay those of anyone else.[10]

16 In Re Care Super Pty Ltd, Lyons J said:[11]

24 ... The trustee must place all relevant material before the court and seek judicial advice as to whether, in those circumstances, the trustee would be justified in taking a certain course. However, a trustee is not required to 'prove facts' according to 'a certain standard of proof to enable findings of fact to be made as would be the case in adversarial litigation'. Indeed, it is not necessary for the court to determine the factual matters on an application for judicial advice.[12] Rather, there must be sufficient information to enable the court to be satisfied that judicial advice should be given.

25 In Beck [v Henley [2014] NSWCA 201], Leeming JA adopted the comments of the primary judge to the effect that the trustee:

is entitled to put to the Court such statement of facts as he believes to be true, which he asks the Court to assume for the purposes of the advice. If the Court gives advice and the facts turn out to be different, it is [the trustee] who bears the risk of acting upon the advice that is not supported by the correct facts.

17 The application by the Trustees seeks two categories of orders. First, that the Trustees are justified in defending the claims made against them in the Family Court Proceeding ('a justification order'). Second, that the Trustees are entitled to be indemnified out of the trust funds for the costs incurred by them in relation to the proceeding ('an indemnity order').

18 In Hopkins v Edwards[13] Lyons J identified the matters relevant to the exercise of the Court's power when asked to make a justification order and an indemnity order:[14]

195 To make such a justification order, the court has to determine whether the proceeding or defence is justifiable: i.e. that there are sufficient prospects of success or that it will not be fruitless based on the material provided by the trustee. This usually involves establishing that:

(1) the trustee has taken proper legal advice and that a reasonable trustee might well abide by that advice; and

(2) the trustee's advice that it is more likely than not that it will be successful in the litigation and that in pursuing the litigation the trustee will be acting in the best interests of the trust, having regard to the likely costs of the proceeding and whether they are proportionate to the issues and the significance of the case.

196 Even if a justification order is made, it may not be appropriate to make an indemnity order. In Re Frosthollow Pty Ltd, McDonald J summarised the factors relevant to the question of whether it is appropriate to make an indemnity order in relation to the costs of a proceeding on the judicial advice application or to defer that question until after the hearing and determination of the proceeding. These include:

(1) the nature of the trust;

(2) the nature of the allegations against the trustee including whether there is an allegation of breach of trust;

(3) the merits and strengths of the claim against the trust estate; and

(4) whether the costs likely to be incurred by the trustee in defending the claims, including potential exposure to a costs order in favour of the plaintiffs, are proportionate.

19 Whether a trustee will be justified in instituting or defending a proceeding will be influenced by the nature of the proceeding and the role of the trustee in the dispute. In Alsop Wilkinson v Neary,[15] Lightman J identified three kinds of dispute in which trustees may be involved:

Trustees may be involved in three kinds of dispute. (1) The first (which I shall call "a trust dispute") is a dispute as to the trusts on which they hold the subject matter of the settlement. This may be "friendly" litigation involving e.g. the true construction of the trust instrument or some other question arising in the course of the administration of the trust; or "hostile" litigation e.g. a challenge in the whole or in part to the validity of the settlement by the settlor on grounds of undue influence or by a trustee in bankruptcy or a defrauded creditor of the settlor, in which case the claim is that the trustees hold the trust funds as trustees for the settlor, the trustee in bankruptcy or creditor in place of or in addition to the beneficiaries specified in the settlement... (2) The second (which I shall call "a beneficiaries dispute") is a dispute with one or more of the beneficiaries as to the propriety of any action which the trustees have taken or omitted to take or may or may not take in the future. This may take the form of proceedings by a beneficiary alleging breach of trust by the trustees and seeking removal of the trustees and/or damages for breach of trust. (3) The third (which I shall call "a third party dispute") is a dispute with persons, otherwise than in the capacity of beneficiaries, in respect of rights and liabilities e.g. in contract or tort assumed by the trustees as such in the course of administration of the trust.[16]

20 In Application of Uncle's Joint Pty Ltd,[17] Brereton J noted the need, when the application involves a 'beneficiaries dispute', to consider whether it is more practical and fair to leave the competing claimants to contest the litigation amongst themselves at their own risk as to costs:

26 ...As Palmer J, at first instance, explained in St Petka (No 3), in a passage that received the endorsement of the High Court in St Petka (at [84]), where a trustee seeks advice that it is justified in defending a claim against the trust estate by recourse to the trust assets for the costs of the litigation, the question is whether it is more practical and fair to leave the competing claimants to the beneficial interest to contest the litigation among themselves at their own risk as to costs, with the trustee a necessary but inactive party, or whether it is more practical and fair that the trustee be the active litigant, with recourse to the trust fund for the costs of the litigation. This judgment will depend on the particular circumstances of each case and relevant considerations may include whether the beneficiaries have a substantial financial interest in the defence of the proceedings, the financial means of the beneficiaries to fund it, the merits and strengths of the claim against the trust estate, the extent to which recourse to the trust estate for defence costs would deprive the successful claimant of the fruits of the litigation, and (If the trust is a charitable trust rather than a private trust) the public interest.[18]

21 The HJ Trust is a discretionary trust established by Deed of Settlement dated 15 March 1977 between Richard Henry O'Brien as settlor and Jacet Pty Ltd as trustee. The late Basil Hetrel, the father of Rebecca, Justin, and their sister, Samantha Hetrel, was the instigator of the trust and held office as Trust Appointor pursuant to the HJ Trust Deed while he was alive. On 6 April 2009, Basil Hetrel made five deeds in relation to the HJ Trust, including a Deed of Rectification and Variation.

22 The original primary beneficiaries for the HJ Trust were Basil, his wife Alex Florence Hetrel, and their daughter Rebecca. The general beneficiaries pursuant to the HJ Trust Deed include the spouses, widows and children, grandchildren, great-grandchildren and great-great-grandchildren of the primary beneficiaries and their spouses, and also any trust which, in the opinion of the trustee, is substantially for the benefit of all or some of the beneficiaries.

23 The Deed of Rectification and Variation made on 6 April 2009 recited that there had been an error when the HJ Trust Deed was prepared. Two of Basil and Alex's children, Samantha and Justin, had been omitted in error from those persons named as primary beneficiaries of the HJ Trust. The Deed of Rectification and Variation named Samantha and Justin as primary beneficiaries. It did not alter the provisions of the 15 March 1977 deed concerning general beneficiaries.

24 The vesting day specified in the HJ Trust Deed is 8 June 2055. Clause 3 of the Trust Deed provides that:

[As] to the capital of the Trust Fund the Trustee shall hold such capital upon trust to pay hand over divide or apply the same on the Vesting Day to between or for the benefit of all of the Beneficiaries then living or in existence or to between or for the benefit of such one or more of the Beneficiaries then living or in existence to the exclusion of any other or others of them in such shares and proportions and in such manner as the Trustee shall in its uncontrolled discretion think fit and declare in writing ...[19]

Clause 5 of the HJ Trust Deed provides that the income of the Trust Fund may be applied or accumulated for the benefit of the beneficiaries in each financial year prior to the vesting day.

25 On 1 November 1999, the BR Property Trust was established. The BR Property Trust is a unit trust. BR is the trustee of the BR Property Trust, appointed on 6 April 2009. All of the units in the BR Property Trust are held by HH in its capacity as trustee of the HJ Trust.

26 On 6 April 2009, Basil Hetrel made three deeds in relation to the BR Property Trust. The content of those deeds is not material to this application.

27 On 11 September 2009, Alex filed an initiating application in the Family Court of Australia against Basil seeking a property settlement pursuant to s 79 of the Act. While that Family Court proceeding was in progress, Basil died.

28 On 15 June 2011, consent orders were made in the Family Court proceeding initiated by Alex. The orders that were made included joining BR in its capacity as trustee of the BR Property Trust and HH in its capacity as trustee of the HJ Trust. The orders provided for the resignation of Alex and Samantha as directors of BR and HH, and for Basil's shareholding in HH to be divided equally between Justin and Rebecca.[20]

29 Justin and Rebecca jointly hold the office of Appointor to the HJ Trust.

30 As part of the agreement between the parties to the 2011 Family Court proceeding, Alex and Samantha, and entities associated with them, irrevocably consented to not receive any further distributions of income or capital from the HJ Trust or the BR Property Trust.[21]

31 On 18 February 2013, three Deeds of Variation relating to the BR Property Trust were executed. On 19 February 2013, a further Deed of Variation was executed concerning the HJ Trust. Those deeds are not material to this application.

Do the Trustees Have Standing to Bring the Application?

32 The application on behalf of the Trustees is initiated by one of the directors of the Trustee companies only, Rebecca. The other director, Justin, was put on notice of the application. On 13 April 2022, he requested a copy of the agreement between the Trustees and the solicitors instructed to bring this application on their behalf. He also requested an explanation of the basis for which the appointment of solicitors was made without his authority.[22]

33 On 29 April 2022, circular resolutions of BR and HH respectively were sent to Justin and to his lawyers. The resolutions duly authorised Rebecca to bring this application on behalf of the Trustees. The circular resolution was not signed and returned by Justin, and there was no response to the email to which the resolutions were attached.

34 After hearing argument on this application on 3 May 2022, the Court granted Justin leave to file and serve any application and/or supporting material contesting the standing of the Trustees to bring this application for judicial advice. The Court directed the Trustees to serve a copy of the relevant order on Justin.

35 No application was made and no submissions or evidence were received on behalf of Justin, as provided for in the orders made on 3 May 2022.

36 From early 2022, when the Trustees began to actively participate as parties in the Family Court Proceeding, the conduct of that proceeding has been on the instructions of Rebecca. Since February 2022, Justin has abstained from all personal involvement in the conduct by BR and HH of the defence of the claims against them in the Federal Circuit and Family Court of Australia. He has done so apparently out of concerns that his personal interests and those of the beneficiaries of the BR Property Trust and HJ Trust are actually or potentially in conflict.

37 Although he raised an issue as to the authority of the Trustees to bring this application (by email to Ms Maher on 13 April 2022), Justin did not appear at the hearing of which he had been given notice. When given an opportunity to pursue the issue pursuant to the orders made on 3 May 2022, he declined to take any further action. Given the potential conflict between his personal interests and those of the beneficiaries of the trusts, the fact Justin chose not to pursue any issues as to standing is understandable.

38 In the circumstances it is appropriate for the Court to hear and determine the application for judicial advice on the merits.

39 A trustee has a duty to protect the trust fund against all adverse claims.[23] HH, in its capacity as trustee of the HJ Trust, owes that duty to the beneficiaries of the HJ Trust.

40 Justin is a primary beneficiary of the HJ Trust. Erin is a member of the class of general beneficiaries of that trust, as are Beatrice and Carmen, their children. In 2018, distributions were made from that trust to, or for the benefit of, Erin, and also to, or for the benefit of, one of the daughters of Justin and Erin.

41 The class of beneficiaries of the HJ Trust is not closed. The definition of General Beneficiaries in the schedule to the trust deed includes great-great-grandchildren of the primary beneficiaries and the spouses of those persons, noting that the Trust does not vest until 2055.

42 While the primary participants in the Family Court Proceeding are Erin and Justin, paragraph 3 of Erin's further amended initiating application directly seeks relief against BR and HH in their respective capacities as trustees of the BR Property Trust and the HJ Trust. The relief that is sought is substantive, namely that HH and BR pay such sum to Erin equal to half of the value of the Justin and Erin's interests in the 'Hetrel Group'. The Hetrel Group is defined to include the BR Property Trust and the HJ Trust. Although Rebecca is also a respondent in the Family Court Proceeding, no substantive relief is sought against her.

43 The evidence discloses that the BR Property Trust owns real property in Hobart with a value in excess of $92 million. In 2011, in order to give effect to orders made by the Family Court, HH in its capacity as trustee of the HJ Trust borrowed $56 million and applied those funds to subscribe to additional units in the BR Property Trust. There have subsequently been arrangements to refinance those facilities. Currently, the principal lender to the HJ Trust is TPT Wealth Ltd. Rebecca and Justin have provided guarantees and indemnities in respect of the TPT Wealth Ltd loan, which is currently in the order of $52 million.

44 The contentions filed on behalf of Erin in the Family Court Proceeding assert that Justin's '50% share in the [BR Property and HJ] trusts is property as defined in s 4 of the Family Law Act and therefore within the ambit of S 79 of the Family Law Act'.[24] A single expert report prepared by Darryn Hockley of Grant Thornton and filed in the Family Court Proceeding has valued the interest of Justin in the HJ Trust, as at 30 June 2019, at $22,782,852.

45 The present dispute is not a dispute that neatly fits within any one of the three kinds of dispute identified by Lightman J in Alsop. It is not a dispute which involves a construction of a trust instrument or some other question arising in the course of the administration of trusts; it is not a 'beneficiaries dispute' where one or more of the beneficiaries takes issue with the propriety of action taken or which may be taken by the trustee in the future, seeking removal of the trustee or damages for breach of trust; and it is not a dispute with persons otherwise than in their capacity as beneficiaries (for example, in contract or tort assumed by the trustees as in the course of administration of a trust).

46 In some respects the dispute might properly be viewed as one between two beneficiaries: Justin, a primary beneficiary of the HJ Trust, and his wife Erin, a member of the general class of beneficiaries of that trust and a person in whose favour there have previously been distributions of trust income. However, the claim made by paragraph 3 of Erin's second further amended initiating application in the Family Court Proceeding is a claim which is made directly against the Trustees of the two trusts. If successful, that claim will substantially diminish the trust fund which the trustee of the HJ Trust holds for the benefit of the all of the beneficiaries of the trust. The interests of Justin and of the beneficiaries of the trust both do not coincide and are potentially in conflict.

47 The trustee, HH, holds the whole of the HJ Trust fund both as to income and as to capital and income in accordance with the terms of the HJ Trust Deed, as amended. Noting that Alex and Samantha and persons and entities associated with them are excluded from an entitlement to income and capital as primary beneficiaries (pursuant to the orders of the Family Court made on 15 June 2011), there remain a wider class of general beneficiaries, and also one specified beneficiary, Rebecca, whose interests (using that word loosely) are potentially adversely affected by the claims made against the Trustees in the Family Court Proceeding. Because of the substantive relief directly sought against the Trustees, and the conflict between the interests of Justin and those of the beneficiaries as a whole, this is not a case where I consider the duty of the Trustees is to remain neutral, or one in which they could, as put by Brereton J in Re Uncle's Joint, leave it to the rivals to fight their battles.

48 I consider that defending the substantive claims made against the Trustees in the Family Court Proceeding is consistent with the duty of each of the Trustees to protect and preserve the respective trust funds, and to maintain the integrity of the trusts of which they are trustees. Having regard to the quantum of the claim made by Erin, the likely costs of the Trustees taking a narrow role in the proceeding (fixed altogether for a five-day hearing) are proportionate to the issues and the significance of the claims made against the respective trust funds.

49 It is clear that the applicant Trustees have taken proper legal advice in relation to the claims against the trusts in the Family Court Proceeding. The confidential opinion of Mr North SC and Mr Wotherspoon does not in terms say that it is more likely than not that the Trustees will be successful in the litigation. However, the confidential opinion includes an analysis of the issues and the expression of counsel's opinion that it is appropriate that the Trustees defend the claims made against them in the Family Court Proceeding.

50 The order that is sought does not seek to countenance participation by the Trustees in the Family Court Proceeding beyond their defences to the claims that are made against them in their capacity as trustees of the two trusts. I consider that the Trustees are justified in defending those claims, but no more.

51 At present, the claims and the defence to those claims are found in paragraph 3 of Erin's further amended initiating application in the Family Court proceeding, and in paragraphs 1-4 of section 4b of the Trustees and Rebecca's response to initiating application. However, as it is always possible for the manner in which claims are framed and resisted to be amended in the course of proceedings, it is appropriate to frame the justification order by reference to claims made against the Trustees in the proceeding rather than by referring expressly to paragraph 3 of the application and the response thereto.

52 In the circumstances, I will make an order in the form of the draft justification order prepared by the Trustees.

53 The material discloses that the Trustees do not have assets of their own out of which to meet their costs of the Family Court Proceeding.

54 In written submissions, the Trustees draw attention to clause 14(b) of the HJ Trust Deed which provides:

The Trustee may pay out of the Trust Fund or the income thereof all costs, charges and expenses which the Trustee may at any time incur incidental to the management of the Trust Fund or to the exercise of any power, discretion, or authority herein contained or to the carrying out or performing of any of the Trusts of the settlement.[25]

55 A similar indemnity is given by clause 29 of the BR Property Trust Deed, which states:

[The] Trustee shall be entitled to be indemnified out of the assets for the time being comprising the Trust Fund against liabilities incurred by the Trustee in the execution or attempted execution or as a consequence of the failure to exercise any of the trusts authorities powers or discretions hereof or by virtue of being the Trustee hereof.[26]

56 Having regard to the magnitude of the claim against the trust funds, against which the costs are likely to be incurred by the Trustees in defending those claims, including potential exposure to a costs order in favour of Erin, this is an appropriate case to make an order that, in the first instance, the Trustees are entitled to be indemnified out of the trust property of the BR Property Trust and the HJ Trust for their costs of defending the claims against them in the Family Court Proceeding.

57 It is appropriate to qualify the order that the Trustees be entitled to indemnity for the legal costs out of the respective trust funds. First, such indemnity ought not apply to the extent that the Federal Circuit and Family Court of Australia shall otherwise order. Second, such indemnity ought be limited to the extent this Court, on the application of any interested party, shall otherwise order.

58 By qualifying the order in this way, the practical problem of the Trustees being in a position to fund their defence of the claims against them is dealt with, but without restricting the ability of the Federal Circuit and Family Court of Australia make such orders as to the ultimate incidence of such costs as it considers appropriate. Additionally, the power of this Court to make such orders as to costs as it thinks fit on the later application of an interested party is preserved.

59 For the reasons previously stated, the Court will make the following orders and directions:

1. The First Plaintiff is directed that it would be appropriate and that it would be justified in defending the claims made against it in its capacity as trustee of the Balsa Rejus Property Trust in proceeding No. MLC 13723 of 2020 in the Federal Circuit and Family Court of Australia (Division 1).

2. The Second Plaintiff is directed that it would be appropriate and that it would be justified in defending the claims made against it in its capacity as trustee of the Hetrel-Jacet Trust No. 8 in proceeding No. MLC 13723 of 2020 in the Federal Circuit and Family Court of Australia (Division 1).

3. The First Plaintiff is directed that it would be appropriate and that in the first instance it would be justified in paying its costs of defending proceeding No. MLC 13723 of 2020 out of the assets of the Balsa Rejus Property Trust.

4. The Second Plaintiff is directed that it would be appropriate and that in the first instance it would be justified in paying its costs of defending proceeding No. MLC 13723 of 2020 out of the assets of the Hetrel-Jacet Trust No. 8.

5. Orders 3 and 4 are made on the express basis that nothing in those orders shall prevent or inhibit:

(a) the Federal Circuit and Family Court of Australia from determining who should bear the costs of the Family Court Proceeding, including the Trustees' own costs, any costs the Trustees may be ordered to pay, together with any question of indemnity for such costs out of the trust funds; or

(b) this Court, in the event of an application to this Court by an interested party, from determining who should bear the costs of the Trustees defending the Family Court Proceeding.

6. The First Plaintiff's costs of this application are to be paid or retained out of the assets of the Balsa Rejus Property Trust.

7. The Second Plaintiff's costs of this application are to be paid or retained out of the assets of the Hetrel-Jacet Trust No. 8.

60 It is appropriate that the Court make confidentiality orders in relation to the joint opinion of counsel dated 1 May 2022. To ensure that opinion remains confidential, an order will be made as follows:

The joint opinion of Mr North SC and Mr Wotherspoon of counsel prepared on behalf of the Trustees in Federal Circuit Court and Family Court of Australia (Division 1) proceeding No. MLC 13723 of 2020 dated 1 May 2020 shall be sealed and marked confidential, and shall not be opened unless pursuant to an Order of this Court.

[1] Hopkins v Edwards [2020] VSC 456, [197] (Lyons J).

[2] For clarity, in these reasons (and with no disrespect intended) I will refer to the members of the Hetrel family by their given names.

[3] Also under s 63 of the Trustee Act 1958 (Vic).

[4] [2008] HCA 42; (2008) 237 CLR 66 ('Macedonian Orthodox Church'), [64]-[65] (Gummow ACJ, Kirby, Hayne and Heydon JJ, with whom Kiefel J agreed) (citation omitted).

[5] Macedonian Church v Eminence Petar [2008] HCA 42; (2008) 237 CLR 66, [71]-[72] (emphasis in original).

[6] [2021] VSC 805.

[7] Re Centro Retail Australia Ltd (2012) 35 VR 512, [13]-[14].

[8] Re Care Super Pty Ltd [2021] VSC 805, [23].

[9] [1995] 1 All ER 961.

[11] Re Care Super Pty Ltd [2021] VSC 805, [24]-[25] (citations omitted).

[12] Beck v Henley [2014] NSWCA 201, [90] (Leeming JA, Beazley P and Sackville AJA agreeing) ('Beck').

[13] [2020] VSC 456.

[14] Ibid, [195]-[196] (citations omitted).

[15] [1996] 1 WLR 1220 ('Alsop').

[17] [2014] NSWSC 321 ('Re Uncle's Joint').

[19] Affidavit of Rebecca Louise Hetrel affirmed 19 April 2022, exhibit "RLH-1" 98.

[20] The reasons of Young J in the Family Court of Australia (Hetrel v Hetrelezis (Deceased), Unreported, Family Court of Australia, Young J, 17 June 2011) approving the settlement of Alex's property claim are exhibited to the affidavit of Rebecca: affidavit of Rebecca Louise Hetrel affirmed 19 April 2022, exhibit "RLH-1" 225-240.

[21] Two earlier deeds of irrevocable appointment made 6 April 2009 were declared null and void and of no effect, and a deed poll dated 19 February 2013 was made in respect of those matters.

[22] See paragraph 5 to the affidavit of Jennifer Ann Maher sworn 2 May 2022.

[23] Re Dallaway (deceased) [1982] 3 All ER 118, 121 (Megarry VC).

[24] Affidavit of Rebecca Louise Hetrel affirmed 19 April 2022, exhibit "RLH-1" 534.

[25] Affidavit of Rebecca Louise Hetrel affirmed 19 April 2022, exhibit "RLH-1" 110.