Plaintiffs v Defendants

Supreme Court of Victoria|2005-04-28|Before: Mandie, J

TRUSTS - restructure proposal in relation to trusts of estate involving the transfer in specie to beneficiaries of shares in company in satisfaction of their beneficial interests - whether orders pursuant to s.63 of Trustee Act 1958 (Vic) are expedient in the interests of all beneficiaries - whether court should approve or authorise entry into and implementation of Restructure Implementation Agreement by trustees

2 The background to the proceeding is set out in my reasons for judgment in Hornsby v Playoust [2004] VSC 472 handed down on 23 November 2004 and in the reasons for judgment of the Court of Appeal in Playoust v Hornsby [2005] VSCA 73 handed down on 7 April 2005 and Playoust v Hornsby [2005] VSCA 84 handed down on 14 April 2005. The present reasons should be read together with my reasons for judgment in Hornsby v Playoust [2005] VSC 107 handed down on 22 April 2005.

3 On 18 April 2005 the Court decided, as part of the orders made on that day, that orders might be made pursuant to s.63 of the Trustee Act 1958 (Vic) to confer on the Trustees such powers together with all powers which are ancillary and incidental thereto, to enable them to distribute the shares in Tattersall's Ltd to the beneficiaries (see the document which was "Exhibit A - Confidential" in that hearing). The Court now has before it "Exhibit SGD-1 - Confidential", referred to in the affidavit of Simon Geoffrey Doyle sworn 27 April 2005 which is the current version of the Restructure Implementation Agreement between the Trustees and Tattersall's Ltd ("the Restructure Implementation Agreement").

4 The essence of the Restructure Proposal is the transfer of all of the assets of the estate to Tattersall's Ltd, the issue of shares in Tattersall's Ltd to the Trustees, the distribution of those shares to the beneficiaries and the public flotation and listing of Tattersall's Ltd.

5 I note that clause 2.1(a) of the Restructure Implementation Agreement provides that it is conditional on the Supreme Court of Victoria granting the Trustees such powers, together with all powers which are ancillary and incidental thereto, to enable them to distribute the [Tattersall's Ltd] shares as contemplated by the agreement. I further note that clause 10 of the Restructure Implementation Agreement provides:

"The Trustees will immediately after Completion distribute:

(a) five percent of the [Tattersall's Ltd] Shares to the Tattersall's Clause Y Employee Trust in accordance with the Employee Compromise;

(b) such number of [Tattersall's Ltd] Shares as would be distributed to such Beneficiaries who cannot be located or would have not completed the necessary documentation to become members of [Tattersall's Ltd] as specified in Schedule 9 in respect of those Beneficiaries to the Tattersall's Non-Responding Beneficiaries Trust; and

6 Having regard to what flows from s.231 of the Corporations Act 2001 (Cth), I am satisfied that the answer 4(b) given on 18 April 2005 should be varied by specifically providing that the ancillary and incidental powers which may be granted to the Trustees pursuant to s.63 of the Trustee Act include powers to distribute the shares in Tattersall's Ltd, in respect of those beneficiaries who have not yet agreed to become members of Tattersall's Ltd or whose entry in the register of members of Tattersall's Ltd has not been effected in accordance with s.231(b) of the Corporations Act 2001, generally in the manner contemplated by clause 10(b) of the Restructure Implementation Agreement.

7 The question now is whether, in the light of the whole of the material before the Court, including the material filed for this hearing, it is in the opinion of the Court expedient to confer the powers referred to in answer 4(b) upon the Trustees. The question is whether it is so expedient in the interests of all of the beneficiaries. I am satisfied that it is so expedient in the interests of all beneficiaries, essentially for the reasons deposed to by Mr Hornsby in his original supporting affidavit sworn 24 August 2004 (see in particular the whole of paras [105] to [114] of that affidavit). I would also accept and refer to what is deposed to by Mr Playoust in para [29] of his affidavit sworn today. I have previously noted the consultations with beneficiaries and their overwhelming support for what is proposed. I note the further facts deposed to in that regard included in affidavits filed today and yesterday.

8 Accordingly power will be conferred on the Trustees pursuant to s.63 of the Trustee Act to distribute shares in Tattersall's Ltd to the beneficiaries of the estate in accordance with clause 10 of the Restructure Implementation Agreement.

9 The parties also seek that the Court "approve" the entry by the Trustees into an agreement in or substantially in the terms of the Restructure Implementation Agreement and the carrying into effect of that agreement pursuant to Order 54.04(2)(c)(i) of Chapter I of the Supreme Court Rules. That rule refers to "an order ... approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee".

10 The Court has undoubted jurisdiction and power to advise and direct trustees and executors in relation to the performance of their trusts and, where appropriate, to approve their entering into and performance of a transaction - for example see Re Green deceased [1972] VicRp 98; [1972] VR 848, 850 and see the discussion in Templeton v Leviathan Pty Ltd [1921] HCA 55; (1921) 30 CLR 34, 41, 74 and what was said by Gillard J in Re Atkinson deceased [1971] VicRp 73; [1971] VR 612, 615.

11 Clause NN of the Will gives the Trustees power to "corporatise" the business and in the present proceeding, the Court, by deciding that it is expedient in the interests of all beneficiaries to grant the Trustees the power to distribute the shares as part of the overall proposal, a power which they would not otherwise have had, has necessarily recognised the expediency of the entry into and implementation of a Restructure Proposal involving the essential elements to which I have already referred and which have been referred to also in earlier judgments. It is unnecessary and in my view inappropriate for the Court to expressly approve the precise terms, or even the complex substance, of the Restructure Implementation Agreement and its Schedules and Annexures, the precise details of which are a matter for the Trustees and their advisers. What the Court has already done indicates that it is, in the Court's view, appropriate for the Trustees to enter into a transaction of this kind. Rather than expressly "approve" the entry into of the Restructure Implementation Agreement, the Court will order that the Trustees "may", subject to the orders of the Court made in this proceeding, enter into and implement a Restructure Implementation Agreement substantially in the form of the agreement contained in "Exhibit SGD-1 - Confidential" to the affidavit of Simon Geoffrey Doyle sworn 27 April 2005.

12 As to costs, I am persuaded to make an order for the costs of all parties on an indemnity basis. In the realities of this case, such order will be no different in practice from the solicitor-client basis which is the usual order.

At a glance

Court

Decision date

Before

Source

Judgment (18 paragraphs)

Parties

Cases Cited (1)