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Leave to Appeal Refused – Further Application for Judicial Direction Considered Appropriate

Rachael Hocking

Olrey Pty Ltd (ATF FRG Investments Trust) [2016] VSCA 8

On 17 November 2015 His Honour Justice McDonald handed down a decision in respect of an application made by the Trustee of the FRG Investments Trust pursuant to r. 54.02 (Re Olrey Pty Ltd [2015] VSC 643). The questions that the Trustee sought advice upon and His Honour’s respective decisions were as follows:

  • Whether the trustee would be justified in defending a proceeding brought against it and bringing a counterclaim;
    The Court found that It would be appropriate and the trustee would be justified in defending the claims made against it.
  • Whether the trustee would be entitled to have recourse to the assets of the trust to pay its costs of:
    1. The application for advice;
      The Court directed that the costs of the application for advice were to be paid out of the assets of trust.
    2. the defence of the proceeding; and
    3. The prosecution of the counterclaim.
      Subject to further order, the Court found that it would not be appropriate and the trustee would not be justified in paying the costs of defending and pursuing a counterclaim out of the assets of the trust.

The trustee brought this leave to appeal application against Justice McDonald’s decision.

The heart of the claims against the trustee were two Barns v Addy (knowing receipt) claims. After delivery of Justice McDonald’s judgment, the Plaintiffs gave notice that they would be withdrawing both Barns v Addy claims and seeking entirely new relief against the trustee. The Plaintiffs were subsequently granted leave to amend their statement of claim in this regard.

After delivery of the amended statement of claim, the trustee issued a fresh s. 54.02 application for judicial advice.

The Court of Appeal considered it appropriate, and indeed the proper course, for the fresh judicial advice application to be made as the subject matter that Justice McDonald had reference to, namely the two Barns v Addy claims, had now disappeared. In his reasons Justice McDonald based his decision not to direct that the trustee’s costs be paid from the trust assets due to the nature of the knowing receipt claims. Their Honours commented that they would expect a fresh application to be made when there is a radical change of circumstances so as to render the first judicial advice redundant or irrelevant. The judge hearing the application will have different considerations to apply.

The Court of Appeal concluded that the subject matter for the leave to appeal application was now moot and dismissed the application.

The second judicial advice application can be located as Re Olrey Pty Ltd (No 2) [2016] VSC 18.