Queensland Judgments
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Sedgwick Australia Pty Ltd v JLOC Super Pty Ltd

Unreported Citation:

[2024] QCA 218

EDITOR'S NOTE

The respondent, a trustee of a superannuation trust fund, brought an action claiming damages to trust property caused by a breach of a duty of care which had been owed by the appellant to the original trustees. A question for determination was whether s 12(6) of the Trusts Act 1973 entitled a new trustee to sue in respect of a breach of a duty of care which had been owed to the previous trustee. Bond JA, with whom Callaghan and Crowley JJ agreed, concluded that s 12(6) entitled a new trustee to sue in respect of damage caused to the trust property by an alleged breach of a duty of care, despite the duty of care at the time of the breach having been owed to the original trustees.

Bond JA, Callaghan and Crowley JJ

12 November 2024

A commercial property was held by a superannuation trust fund. [1]. That building suffered damage as a result of a storm, which resulted in the appellant being appointed as a loss adjuster and builders carrying out rectification works. [2]. A new trustee, the respondent, was appointed as trustee of the superannuation trust fund with the original trustees retiring. [3]. A second storm caused further damage, and the respondent brought an action in tort alleging property damage and economic loss. [3]–[4]. The appellant sought to strike out various paragraphs of the statement of claim; relevantly for this note, one of those purported grounds for strike out was that the new trustee was not the proper plaintiff to make a claim for a breach of duty of care which had been owed to the original trustees. [5]. The primary judge dismissed the application. [6].

The question of note was whether the primary judge erred in construing s 12(6) Trusts Act 1973 as allowing the respondent to sue for the breach of the duty of care owed to the original trustees. [7].

New trustee suing on a duty of care owed to a previous trustee

Bond JA, Callaghan and Crowley JJ agreeing, concluded that s 12(6) Trusts Act 1973 supports two propositions:

(1)after appointment, a trustee has the same powers, authorities, and discretions as if the new trustee had originally been appointed a trustee by the instrument (if any) creating the trust, both before and after all the trust property becomes by law or by assurance or otherwise vested in the trustee. [54];

(2)and, after appointment a new trustee may in every respect act, as if the new trustee had originally been appointed a trustee by the instrument (if any) creating the trust, both before and after all the trust property becomes by law or by assurance or otherwise vested in the trustee. [55].

Those propositions justify the conclusion that a new trustee may sue in respect of a breach of a duty of care owed in respect of trust property which had been vested in an old trustee. [56]. Referring to the primary judge’s reasoning, Bond JA observed that to find otherwise would be to prevent a new trustee from fulfilling their core fiduciary duty to act in the best interests of the trust by protecting its assets. [58].

Disposition

Although the argument in respect of s 12(6) Trusts Act 1973 was unsuccessful, the appellant was successful in having particular paragraphs of the statement of claim struck out, with leave to replead.

B Wilson of Counsel

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