Re Baylily Pty Ltd [2010] NSWSC 6

Re Baylily Pty Ltd [2010] NSWSC 6

The appointment of a company, of which the appointor is the sole director and shareholder, as trustee is valid as there is no express or implied prohibition in the Trust Deed; 'person' in the clause refers to the appointor and does not extend to corporate alter egos. The Trust Deed unambiguously allows such appointment, and the interpretation excluding it is not supported by the instrument or commercial logic. The 'trustee' reference in clause 7(6) refers only to the incoming trustee, not the outgoing trustee. Accordingly, Baylily is not the trustee and not entitled to indemnity or reimbursement from trust assets, and no advice is given as to justification for defending proceedings.

Parties
Plaintiff: Baylily Pty Ltd
Jurisdiction
Australia
Judgment Date
21 January 2010
Procedural Posture
Judicial Advice Application / Judgment on Questions for Judicial Advice
Outcome
Questions answered: 1. Yes; 2. Yes; 3. No; 5. No; 6. Not answered.
Legal Topics
Trustee Appointment, Judicial Advice, Trust Deed Construction, Removal of Trustee, Indemnity From Trust Property
Trusts Trustee Appointment Judicial Advice Trust Deed Construction Removal of Trustee Indemnity From Trust Property

Case Brief

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Parties

Baylily Pty Ltd

Plaintiff

Procedural Posture

Judicial Advice Application / Judgment on Questions for Judicial Advice

Legal Issues

  1. 1 Whether the power of appointment in clause 7(5) of the Scott MacRae Trust Deed is validly exercised if the person exercising it then appoints his or her corporate alter ego as trustee
  2. 2 Whether the reference to 'trustee' in clause 7(6) of the Scott MacRae Trust Deed is restricted to the incoming trustee
  3. 3 Whether Baylily remains the trustee of the Scott MacRae Trust

Ratio Decidendi

The appointment of a company, of which the appointor is the sole director and shareholder, as trustee is valid as there is no express or implied prohibition in the Trust Deed; 'person' in the clause refers to the appointor and does not extend to corporate alter egos. The Trust Deed unambiguously allows such appointment, and the interpretation excluding it is not supported by the instrument or commercial logic. The 'trustee' reference in clause 7(6) refers only to the incoming trustee, not the outgoing trustee. Accordingly, Baylily is not the trustee and not entitled to indemnity or reimbursement from trust assets, and no advice is given as to justification for defending proceedings.

Court Disposition

Questions answered: 1. Yes; 2. Yes; 3. No; 5. No; 6. Not answered.

Orders

  • Question 1: Yes
  • Question 2: Yes