McLean v Burns Philp Trustee Co

McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623

Young J at pp 633 stated:

“I think it necessary to consider the basis of the law of trusts when considering whether to make an order for the general administration, because the order emphasizes just how closely this Court controls trusts. ………..

AS is well-known, at common law beneficiaries in a trust have no rights at all because the common law does not look past the owner of the relevant property. It is usually the case that laws have been made for the purposes of making it quite clear to taxation authorities and other who is the owner of valuable property and these laws govern the ownership situation at common law. However, this Court, has always enforced against the legal owner of property personal obligations. When the situation occurs that the legal owner is not to have any beneficial interest in the property at all, but is to hold it on behalf of other persons, we have what we now call a “trust“. The only way of enforcing those obligations is to take some personal actions against the trustee. Because a trust is of this nature, in any trust, no matter what the commercial circumstances, it is always open for a beneficiary to come to this Court and say: “This trust has not been properly administered. please make sure that the legal owner of the property who has assumed these obligations carries them out”

Young J then continues:

“Such was the control of this Court which took over trusts, that by 1850 the law was that if any beneficiary came to the court at all and asked for general administration, general administration would be decreed as of course. The court would order that the trust was to be specifically performed under its supervision, that nothing was to be dome without its imprimatur, that accounts should be taken to see what the trust assets were and the court would give directions as to how the trust would be carried out.”

However there were subsequently many reforms to this process and at pp 635 Young J states:

“The present position is summed-up in the 13th ed (1979) of Underhill on Trusts (at 699) where the learned author say taht a general administration order will be made only in three category cases:

  • (1) where the trustees cannot pull together, or
  • (2) the circumstances of the estate give rise to ever recurring difficulties requiring the frequent direction of the court, or
  • (3) where a prima facie doubt is thrown on the bona fides or the discretion of one or more of the trustees.

Young J at 635 states:

“The reforms made in the 19th century mean that today there a series of quite relative simple procedures which the beneficiary can take to protect his right in the trust fund. These are often listed in text books on trusts headed “The Rights of Beneficiaries”…..

However, it would be wrong to compartmentalize the rights of beneficiaries under the law of trusts. The beneficiary’s real right is to approach the court for the appropriate order for the performance of the trust, a specific order if that will meet his case, or a general decree, if that is called for, subject to the beneficiary paying the costs of any unnecessary application, and subject also to the restrictions which the court has over the years put on that right to approach it”

Young J at 636 states:

“I think it comes down to this. A beneficiary, if he complains to the court, about the administration of a trust is, as a matter of course, entitled to the appropriate order, either to answer his question as to the construction of a trust instrument, or to settle a dispute as to the administration of the trust in whole or in part under the authority of the court, unless the court is satisfied there is no question which requires a decision. Suspicion of irregularities on very scanty material with respect to mal-administration may be sufficient because the sanction is if, on the court’s further inquiry, its initial order is made wrongly, then it will be discharged and the plaintiff must pay the costs of the inquiry. A fortiori, if the affairs of the trust are in great confusion or there have been significant breaches of trust”

 

 

 

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