AUSTRALIAN EXECUTOR TRUSTEES LIMITED [2024] SASC 138

Applicant: AUSTRALIAN EXECUTOR TRUSTEES LIMITED Counsel: MR I THOMAS - Solicitor: GILBERT & TOBIN (WA) Interested Party: FIONA ROCHE Counsel: MR M HOFFMANN KC - Solicitor: CRAWFORD LEGAL Hearing Date/s: 07/08/2024 File No/s: CIV-24-004593 B SUPREME COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. AUSTRALIAN EXECUTOR TRUSTEES LTD [2024] SASC 138 Decision of the Honourable Associate Justice Bochner 3 December 2024 EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES - INDEMNITY, LIEN AND REIMBURSEMENT - RELEVANT PRINCIPLES Vesting of trust assets - new trustee Uniform Civil Rules 2020 (SA); Trustee Act 1936 (SA), referred to. Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd [2010] VSC 268; Hickey v Attorney General of the State of New South Wales 2021] NSWSC 772; Re McCready [2004] NSWSC 887; Re Suco Gold Pty Ltd (In liq) (1983) 33 SASR 99; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576; Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371; Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344; Pitard Consortium Pty Ltd & Ors v Les Denny Pty Ltd & Ors [2019] VSC 614; Ridge Estate Pty Ltd v Fairfield pastoral Holdings Pty Ltd [2024] FCAFC 17, considered. -- 1 of 13 -- -- 2 of 13 -- AUSTRALIAN EXECUTOR TRUSTEES LTD [2024] SASC 138 CIVIL Introduction 1 On 14 September 2022, Australian Executor Trustees Limited (“AET”) was appointed by court order as trustee of the JJRIT Investment Trust (“the JJRIT Trust”) and the Westfield Station Testamentary Trust (“the WST Trust”). Until this order was made, JJR Investment Holdings Pty Ltd had been the trustee of the JJRIT Trust and Westfield Station Nominees Pty Ltd had been the trustee of the WST Trust. I will refer to these companies as “the former trustees”. The directors of the former trustees are Fiona Roche and Deborah Hamilton; their relationship has broken down as a result of which the former trustees’ boards were deadlocked. AET was appointed as the trustee to replace the former trustees, ultimately by consent. At the time that the orders were made appointing AET, vesting orders were not made with respect to the assets of each trust. 2 AET has now brough this application seeking orders for the vesting of the assets of each trust in it, as trustee. Much correspondence passed between AET and Ms Roche (and their respective lawyers) on the question of the vesting of assets; while some assets have been vested in AET, there remains a significant degree of difference between the position of AET and that of Ms Roche on the vesting of the remaining assets. I am satisfied that it is appropriate to make vesting orders given the intractability of the dispute between AET and Ms Roche and the efforts that have been made to resolve that dispute without recourse to the Court. The assets of the JJRIT Trust 3 The assets of the JJRIT Trust comprise: • Real property in North Adelaide. At the time that this action was commenced, there existed on the certificate of title, two caveats lodged by Mrs Hamilton and her husband. Those caveats have now been removed. • Choses in action, including loans due to the previous trustee (in its capacity as trustee), rights to recover payments from sundry debtors, and the entitlement of the JJRIT Trust as the residuary beneficiary of the estate of John Justin Roche. • Shares in a number of companies. • Units in a unit trust. • Chattels, including trust documents. The assets of WST Trust 4 The assets of the WST Trust comprise: -- 3 of 13 -- [2024] SASC 138 Associate Justice Bochner 2 • Farming land in Western Australia. • Choses in action, including loans due to the previous trustee, an interest in the assets of a farming partnership, and profits and undistributed past profits of the farming partnership. • Chattels including trust documents. 5 I understand that there is no real dispute about the nature and extent of the assets of either trust, although the amount of each loan account has not been agreed. I also understand that AET has received some of the trust documents, the farming land, a bank account (with respect to the JJRIT Trust), some of the shares (with respect to the JJRIT Trust), and some of the chattels. It seeks orders with respect to the balance of the property. The jurisdiction of the Court 6 Section 37 of the Trustee Act 1936 (SA) (“the Act”) gives power to the Court to make an order vesting land in a new trustee, where the new trustee has been appointed by the Court. Section 41 provides a similar discretion with respect to the vesting of rights for the “transfer of stock or to receive dividends or income thereof, or to sue for or recover a chose in action” in a new trustee. Section 42 of the Act allows the new trustee to apply for an order pursuant to ss 37 and 41. 7 The Act is silent on the question of the vesting of chattels (including trust records) in a new trustee. Consequently, AET relies on the inherent jurisdiction of the Court in seeking orders for the vesting of chattels. 8 I am satisfied that the Court has inherent jurisdiction to make vesting orders with respect to assets not dealt with by the Act. In reaching this conclusion, I rely on a number of authorities to which my attention was drawn by AET. 9 In Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd,1 vesting orders were sought in circumstances where the previous trustee had been wound up. Warren CJ said: Property may be vested in any person by a vesting order made by the Supreme Court under the powers contained in s 51 of the Act, or under the courts’ general equitable jurisdiction, without a conveyance, transfer or assignment…. When dealing with vesting applications, the courts approach them with the principles of practicality, flexibility and expediency in mind. The statutory provisions are not regarded as exhaustive of the court’s jurisdiction. The court’s jurisdiction to appoint and make vesting orders in circumstances such as the present is intended to be applied in circumstances where it is inexpedient, difficult or impractical for other steps to be taken.2 1 [2010] VSC 268. 2 Ibid, [24] - [26]. -- 4 of 13 -- [2024] SASC 138 Associate Justice Bochner 3 10 In the case of Hickey v Attorney General of the State of New South Wales,3 Ward CJ in Equity made an order for the vesting of trust property in new trustees “pursuant to s 71 of the Trustee Act 1925 or the Court’s inherent jurisdiction”, without adverting to the nature or existence of the inherent jurisdiction to make such orders. 11 Similarly, Jacobs’ Law of Trusts in Australia assumes the existence of the Court’s inherent jurisdiction to making such vesting orders.4 12 I note the question raised by Barrett J in Re McCready5 as to the existence of this inherent jurisdiction. I further note that Barrett J did not determine this question, as the orders sought in that matter fell squarely within the jurisdiction conferred by the Trustee Act 1925 (NSW). 13 In the circumstances, I am prepared to find that this Court has an inherent jurisdiction to make vesting orders with respect to property not dealt with by the Act. The dispute between Ms Roche and AET 14 I note that, while AET’s application was filed on an ex parte basis, the former trustees were served with the application, as were a number of other parties who might have an interest in the matter. Ms Roche sought leave to be joined as an interested party so that she could be heard on the application. This was not opposed by AET and she was accordingly joined as an interested party. 15 Ms Roche’s position is that, while she does not, in principle, oppose the making of the vesting orders, they should not be made unless: • The former trustees are allowed to retain all of the assets of the trusts until their rights of indemnity have been satisfied; or • The former trustees are entitled to retain sufficient trust assets as are necessary to operate as security for the trustees’ rights of indemnity; or • All of the assets of the trusts are to vest in AET on the basis that AET provide undertakings that they will not deal with the trust assets so as to jeopardise the former trustees’ rights of indemnity. 16 I note that, in an attempt to resolve the dispute with Ms Roche, AET has offered to give certain undertakings. The undertakings are in the following terms: JJR Investment Trust (JJRT) 3 [2021] NSWSC 772, [85]. 4 J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis Butterworths, 8th ed, 2016) [25-03]. 5 [2004] NSWSC 887, [17] – [18]. -- 5 of 13 -- [2024] SASC 138 Associate Justice Bochner 4 1. AET in its capacity as trustee for the JJRT undertakes that it will not distribute the assets or income of the JJRT other than in the ordinary course of and in the proper exercise of its discretion as trustee of the JJRT. 2. Should AET in the proper exercise of its duties as trustee of the JJRT form the view that the assets of the JJRT may not be sufficient to secure JJRIH’s indemnity, AET undertakes that it will provide JJRIH 5 (five) business days’ written notice by email to JJRIH of or any proposed distribution of dealing with the assets of the JJRT. Westfield Station Testamentary Trust (WSTT) 1. AET in its capacity as trustee for the WSTT undertakes that it will not distribute the assets or income of the WSTT other than in the ordinary course of and in the proper exercise of its discretion as Trustee. 2. Should AET in the proper exercise of its duties as Trustee form the view that the assets of the WSTT may not be sufficient to secure WSN’s indemnity, AET undertakes that it will provide WSN 5 (five) business days’ written notice by email to WSN of any proposed distribution of or dealing with the assets of the WSTT. 17 Ms Roche, on the other hand, seeks indemnities in the following terms: JJR Investment Trust (JJRT) 1. AET acknowledges the right of JJR Investment Holdings Pty Ltd (JJRIH) to indemnity under clause 14 of the Deed of Settlement for the JJRT and otherwise at law. 2. AET undertakes that it will not distribute the assets or income of the JJRT other than in the ordinary course of and in the proper exercise of its discretion as trustee of the JJRT and that it will not vest the trust fund of JJRT where the remaining assets of JJRT may not be sufficient to meet JJRIH’s right of indemnity. 3. Should AET in the proper exercise of its duties as Trustee of the JJRT and in keeping with the standards of a reasonable trustee, form the view that the assets of the JJRT may not be sufficient, or after taking any proposed action or omission may become insufficient, to secure JJRIH’s indemnity, AET undertakes that it will provide JJRIH 30 (thirty) business days’ written notice by email to JJRIH of or any proposed distribution of dealing with or other action in respect of the assets of the JJRT. Westfield Station Testamentary Trust (WSTT) 1. AET acknowledges the right of Westfield Station Nominees Pty Ltd to indemnity under clause 12 of the Memorandum to Record the Terms of the WSTT and otherwise at law. 2. AET undertakes that it will not distribute the assets or income of the WSTT other than in the ordinary course of and in the proper exercise of its discretion as Trustee and that it will not vest the trust fund of WSTT where the remaining assets of WSTT may not be sufficient to meet WSN’s right of indemnity. 3. Should AET in the proper exercise of its duties as Trustee and in keeping with the standards of a reasonable trustee form the view that the assets of the WSTT may not be sufficient, or after taking any proposed action or omission may become insufficient, to secure WSN’s indemnity, AET undertakes that it will provide WSN 30 (thirty) business days’ written notice by email to WSN of any proposed distribution of or dealing with or other action in respect of the assets of the WSTT. -- 6 of 13 -- [2024] SASC 138 Associate Justice Bochner 5 18 As to the undertakings proposed by Ms Roche, AET says that paragraph 1 is unnecessary. AET has acknowledged, and continues to acknowledge, the former trustees’ rights of indemnity. There will be no prejudice to Ms Roche or the former trustees if it is omitted because the rights of the parties are not altered by it. AET makes the same point with respect to the amendments to paragraphs 2 and 3 (save for the amendment to the notice period). As to the length of the notice period, AET is prepared to agree to a period of 20 days, but not 30 days. 19 Despite the negotiations between AET and Ms Roche on the terms of any undertakings to be given by AET (which would, in effect, amount to an adoption of the third alternative put by Ms Roche), Ms Roche still presses for the Court to adopt her first preference, which is to allow the former trustees to retain trust property until their indemnities have been satisfied. She says that the decision of the Full Court of the Supreme Court of South Australia, Re Suco Gold Pty Ltd (In liq),6 supports this approach. She further contends that I am bound by this decision. 20 AET, on the other hand, contends that I am not bound by Re Suco Gold, because the statements made in that case were obiter and the facts are readily distinguishable from the matter at hand. AET relies on a number of decisions in interstate courts and the Federal Court of Australia to support its position that a former trustee has no right to retain any property or to require undertakings from a new trustee. 21 Both parties are in agreement that the position of a trustee with respect to debts properly incurred in its capacity as trustee is that stated by the High Court in Octavo Investments Pty Ltd v Knight.7 These principles were succinctly summarised by D M Campbell J, in Kemtron Industries Pty Ltd v Commissioner of Stamp Duties,8 where he said: The position of a trading trustee in relation to debts properly incurred by him in carrying out the purposes of the trust was stated in the joint judgment of the High Court in Octavo Investments Pty. Ltd. v. Knight (1979) 144 CLR 360 in a number of propositions. To summarise them they were (1) that while personal liability for the debts attaches to the trustee they should ultimately be met out of the trust estate; (2) that he has a right to be indemnified against those debts out of trust assets which he is authorized to use in the trust business; (3) that he possesses a charge or right of lien over these assets until his claim for reimbursement or exoneration has been satisfied; (4) that the beneficial interest of the trustee takes preference over the beneficial interest of the cestui que trust and, so far as the right of exoneration is concerned, amounts to a proprietary interest in the trust assets which in the case of a bankrupt trustee, who has incurred liabilities in the performance of the trust, will pass to the trustee in bankruptcy for the benefit of the creditors of the trading trust operation.9 6 (1983) 33 SASR 99. 7 (1979) 144 CLR 360. 8 [1984] 1 Qd R 576. 9 Ibid, 580. -- 7 of 13 -- [2024] SASC 138 Associate Justice Bochner 6 22 The issue in contention between the parties is whether a former trustee is entitled to withhold trust property from a new trustee until the former trustee’s right of indemnity has been satisfied. 23 In Re Suco Gold, the liquidator of a trustee company sought directions from the Court as to whether he could have recourse to trust assets to meet the costs and expenses of the winding up of the company, in circumstances where the assets of the trust were insufficient to meet the liabilities incurred by the company in carrying out its duties as trustee. In discussing the right of indemnity held by a trustee, King CJ said: The right of indemnity which a trustee possesses is therefore in essence a right to resort to the trust property for the protection and preservation of his personal estate against liabilities which he has incurred in the proper performance of the trust. It has a twofold aspect as appears from the passage cited above from In re Blundell. If the trustee has discharged the liability, he is entitled to recoup himself out of the trust property. If he has not discharged the liability, he is entitled to resort to the trust property for the purpose of discharging the liability thereby freeing his personal estate from the burden of the liability.10 (footnotes omitted) 24 He concluded that the right of indemnity passed to the trustee’s trustee in bankruptcy or liquidator, in the event of the trustee’s insolvency: The right of indemnity, it is true, exists for the trustee’s own benefit and it passes to the trustee in bankruptcy or liquidator. The proceeds of that right of indemnity are therefore part of the estate divisible among the creditors. It seems to me, however, that the right of indemnity can only produce proceeds for division among the creditors generally if the trustee has discharged the liabilities incurred in the performance of the trust and is therefore entitled to recoup himself out of the trust property. If he has not discharged the liabilities, the right of indemnity entitles him to resort to the trust property only for the purpose of discharging those liabilities. He may apply the trust moneys directly to the payment of the trust creditors or he may take it into his own possession to satisfy his right to be indemnified in respect of unpaid trust liabilities, it seems to me that that property retains its character as trust property and may be used only for the purpose of discharging the liabilities incurred in the performance of the trust. The exercise of the right of indemnity is for the benefit of the trustee in that it relieves him of liability for the trust debts. If the trustee is bankrupt, or being aa company is in liquidation, the trustee in bankruptcy or liquidator can exercise the right of indemnity which vests in him as part of the property of the bankrupt or insolvent company. If the trust liabilities have been discharged, the trustee in bankruptcy or liquidator is entitled to recoup the bankrupt estate out of the trust property and the proceeds of the right of indemnity become part of the property divisible among the creditors. If the liabilities have not been discharged, the trustee in bankruptcy or liquidator may, by reason of the right of indemnity which vests in him, apply the trust property to the payment of the trust liabilities, thereby exonerating the bankrupt estate to the extent of the value of the available trust assets. In the latter circumstances there cannot be proceeds of the right of indemnity which are available for distribution among the general body of creditors.11 10 Ibid, 104-105 11 Ibid, 107-108. -- 8 of 13 -- [2024] SASC 138 Associate Justice Bochner 7 25 None of these principles is in contention; the parties accept that they accurately state the law on this topic. What is in contention is the following statement: The trustee’s lien [over trust assets] is an equitable lien which confers on him a charge over the trust property, whether in his possession or not, for the purpose of protecting and enforcing the right of indemnity. It also confers on the trustee a right to possession of the trust property for the purpose of protecting and enforcing the right of indemnity: Jennings v Mather. The right of possession of the trustee, until his right of indemnity is exercised, is superior to those of a new trustee or the cestui que trust. The rights conferred by the lien passed to the liquidator. They would enable him to obtain and retain possession of the trust property until the right of indemnity has been exercised, and to realize the trust property in the course of exercising it.12 (footnote omitted) 26 It is on the basis of this statement the Ms Roche makes her submission that the former trustees are entitled to retain all trust property until their indemnity has been exercised. 27 In the alternative, Ms Roche contends that the former trustees are entitled to retain sufficient trust assets to cover the likely liabilities of the former trustees. In this regard, she relies on the cases of Kemtron Industries and Hillig v Darkinjung Local Aboriginal Land Council.13 28 In Kemtron Industries, the question before the Court was the appropriate basis on which stamp duty should be levied on the transfer of transfer of trust assets. The Court held that, in determining the value of the trust assets for stamp duty purposes, the value of the liabilities in respect of which the trustee is entitled to indemnity must be taken into account. McPherson J said: In my view that decision and the other judicial statements referred to represent authority for the view that, in any case in which the trustee is entitled in respect of liabilities properly incurred to his indemnity and lien over assets vested in him as trustee, the trust property (which means the property to which the beneficiaries are entitled in equity) is confined to so much of those assets as is available after the liabilities have been discharged or at least provided for.14 29 He went on to say, with respect to the lien held by a trustee: It is therefore not correct to say, as Mr. Davies Q.C. submitted for the Commissioner, that the trustee’s lien at all times attaches to all of the assets. That would have the consequence that the trustee could, as against the beneficiaries, insist upon retaining all the assets in the exercise of his right of indemnity even though the liability in respect of which that right was exercised was trivial in amount. Such a conclusion would be surprising particularly 12 Ibid, 109. 13 [2006] NSWSC 1371. 14 [1984] 1 Qd R 576, 587. -- 9 of 13 -- [2024] SASC 138 Associate Justice Bochner 8 where, for example, the assets consisted entirely of cash and the liabilities were fixed and their amount capable of precise and immediate determination in money.15 30 He then said: It is enough to say that Octavo Investments Pty. Ltd. v. Knight (supra) establishes authoritatively that a trustee acquires in the assets of the trust a beneficial interest commensurate with his right of indemnity.16 31 I do not understand this case to stand for the proposition that an outgoing trustee is entitled (as against the incoming trustee) to retain possession of sufficient trust assets to satisfy its indemnity. First, this case was dealing with a completely different question: the value of an interest in trust property for the purpose of levying stamp duty. Second, it was addressing the relative of claims of a former trustee as against a beneficiary. Any discussion of retention of trust assets by a trustee was in the context of their retention as against a beneficiary, not an incoming trustee. 32 In Hillig, a declaration had been made in previous proceedings that that the trustee held property on trust for the beneficiary.17 The beneficiary sought an order that the trust property vest in it. The trustee contended that it should be entitled to retain sufficient trust property to meet liabilities that it had properly incurred as trustee. Barrett J said: A trustee’s right to be indemnified out of trust assets is given effect to by means of an equitable interest in the whole of the assets of the trust. Until the right to be indemnified is exercised, the trustee has a right to possession superior to the rights of the beneficiaries (Re Suco Gold Pty Ltd (1983) 33 SASR 99 at p.109 per King CJ) and a “preferred beneficial interest in the trust fund” (a description applied by Sheller JA in Chief Commissioner of Stamp Duties v Buckle (1995) 38 NSWLR 574 at p.586 and expressly approved by the High Court in Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226 at p.247). Until satisfaction of the trustee’s right of indemnity, it is not possible to say what the trust fund is: CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 at [51].18 33 Like Kemtron, Hillig does not address the position of an outgoing trustee vis-à-vis an incoming trustee. It addresses the rights of the outgoing trustee as against the beneficiary. I consider that it does not stand for the proposition contended for by Ms Roche. 34 In support of her contention that the former trustees are entitled to undertakings from the incoming trustee so as to ensure the protection of the former trustees’ equitable lien, Ms Roche relies on the cases of Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd19 and Pitard Consortium Pty Ltd & Ors v 15 Ibid. 16 Ibid, 590. 17 [2006] NSWSC 1217. 18 [2006] NSWSC 1371, [17]. 19 [2008] NSWSC 1344. -- 10 of 13 -- [2024] SASC 138 Associate Justice Bochner 9 Les Denny Pty Ltd & Ors.20 In particular, she relies on the following words of Brereton J in Lemery: To my mind, then, it follows in principle that a former trustee does not have a right to retain, as against a new trustee, the trust assets as security for an accrued right of indemnity, though the former trustee is entitled to ensure the new trustee does not take steps which will destroy, diminish or jeopardise the old trustee's right of security, which subsists in the trust assets after their transfer to the new trustee.21 35 The point made by Brereton J in this passage, that a former trustee can take steps to ensure that a new trustee does not take steps to place in jeopardy the former trustee’s right of indemnity, has been recently restated in the decision of the Full Court of the Federal Court in Ridge Estate Pty Ltd v Fairfield pastoral Holdings Pty Ltd,22 where Banks-Smith J said: Fifth, equity will grant relief to protect a former trustee to ensure that its successor does not take steps which will destroy, diminish or jeopardise the former trustee's right of exoneration, which subsists in the trust assets after their transfer to the new trustee: Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344; (2008) 74 NSWLR 550 at [50]; Pitard Consortium Pty Ltd v Les Denny Pty Ltd [2019] VSC 614; (2019) 58 VR 524 at [9]-[11]; and Jaken Properties Australia Pty Ltd v Naaman [2023] NSWCA 214 (Jaken (FC)) at [4] (Bell CJ), [116] (Leeming JA, Kirk JA agreeing).23 36 Neither Ridge Estate, nor Lemery, addresses the need for the incoming trustee to provide undertakings. 37 In Pitard, McDonald J said: Each defendant’s right of indemnity against the Pitard Trusts’ assets in respect of their accrued liability, is an equitable lien. The equitable lien is a security which is enforceable against trust property in the hands of the plaintiffs who are the new trustees of the Pitard Trusts. The defendants do not have the right to retain possession of the assets of the Pitard Trusts pending satisfaction of their right of indemnity. The plaintiffs have proffered undertakings to the Court which ensure that, until further order, they will not dispose of, deal with, encumber or diminish the value of the trust property. I am satisfied that the undertakings which have been proffered will ensure that the value of the defendants’ security will not be diminished. The plaintiffs are entitled to an order vesting in them the assets of the Pitard Trusts.24 38 In Pitard, one of the issues in dispute was whether former trustees were entitled to retain possession of trust property until their rights of indemnity for liabilities incurred as trustees were satisfied. The incoming trustees sought orders vesting the property of the trusts in them. Having concluded that the incoming trustees were entitled to the vesting orders, the Court did not order the incoming trustees to provide undertakings to protect the interests of the outgoing trustees. 20 [2019] VSC 614. 21 [2008] NSWSC 1344, [50]. 22 [2024] FCAFC 17. 23 Ibid, [62]. 24 [2019] VSC 614, [38] – [39]. -- 11 of 13 -- [2024] SASC 138 Associate Justice Bochner 10 These undertakings were proffered by the incoming trustees. It appears that there was no argument as to whether there was a requirement to give the undertakings, nor does McDonald J discuss the question whether the vesting order would be made in the absence of such undertakings. This case cannot stand for the proposition an incoming trustee must provide undertakings to the outgoing trustee to protect its equitable lien. 39 This leads me back to the question whether I am bound by Re Suco Gold. 40 In Lemery, Brereton J undertook a detailed analysis of the authorities, which I respectfully adopt. He says this about the decision in Re Suco Gold: This is the only case which expressly addresses the position of a new trustee. It is plainly said that the rights of possession of the old trustee prevail over those of the new trustee. However, that observation must have been obiter, as no question of a new trustee arose in Re Suco Gold; none had been appointed.25 41 McDonald J, in Pitard, makes a similar statement.26 42 Given the issue in dispute between the parties in Re Suco Gold, I am satisfied that the statement relied on by Ms Roche was obiter and does not bind me. The question in this matter is completely different to the one in Re Suco Gold. 43 I am satisfied that the correct position on the facts before me is that the former trustees are not entitled to retain any of the trust property, in order to protect their right of indemnity. I accept that the position is as stated by Brereton J in Lemery, in the passage quoted at [34] hereof. I am further satisfied that the authorities do not support Ms Roche’s contention that AET must provide undertakings in relation to the preservation of the trusts’ assets. Conclusion 44 AET has proffered undertakings, despite its protest that they are not required. In the circumstances, I consider that it is appropriate to make the orders and undertakings proposed by AET, save that the notice period will be increased to twenty days, and there will be the inclusion of an order formally joining Ms Roche as an interested party. I do not consider that the additional words in the undertakings proposed by Ms Roche are necessary, given the agreement between the parties as to the fundamental principles which apply to the rights of a former trustee with respect to trust property. Costs 45 Ms Roche seeks to have her costs of and incidental to this application paid from the assets of the trusts on an indemnity basis. This is not agreed by AET. 25 [2008] NSWSC 1344, [33]. 26 [2019] VSC 614, [20]. -- 12 of 13 -- [2024] SASC 138 Associate Justice Bochner 11 46 I consider that it is appropriate that Ms Roche receives a costs order in her favour. Her involvement in this matter has been of assistance to the Court. I consider that she is entitled to her costs on the standard costs basis. -- 13 of 13 --