Trustees
Successive trustee – Fiduciary duty
In Naaman v Jaken Properties Australia Pty Limited [2025] HCA 1 (5 February 2025),the High Court dismissed an appeal from the Full Court of the Supreme Court of NSW with costs.
A trustee is ordinarily entitled to be indemnified for their costs, but the High Court considered whether a trustee owes a fiduciary duty for a successor trustee to ensure that there are funds sufficient to indemnify the previous trustee (at [1]).
The appellant is a creditor of the former trustee and sued the respondent in the Supreme Court of NSW under the subrogated rights, relying on the indemnification of the former trustee.
Kunc J, sitting as the primary judge, found that a fiduciary duty did exist, applying Rothmore Farms Pty Ltd (In liq) v Belgravia Pty Ltd [2005] SASC 117, which was a case decided by a single judge in South Australia (at [70]).
The Full Court of the Supreme Court of NSW rejected the argument and held that a fiduciary duty did not exist. Bell CJ dissented (at [71]).
The appellant then appealed to the High Court, which held that the successor trustee does not owe a fiduciary duty to the former trustee in relation to satisfying their indemnification and cited Maguire v Makaronis [1997] HCA 23 (at [33]).
Equity
Estoppel – Proprietary estoppel by encouragement
In Kramer v Stone [2024] HCA 48 (11 December 2024), the High Court by majority dismissed an appeal from the Supreme Court of NSW, with costs.
The respondent, David Lindsay Stone, is a farm worker who since 1975 had worked on the farm of Dame Leonie Kramer and her husband, Dr Harry Kramer (at [3]).
There were two promises made to Mr Stone by Dr Kramer. In the early 1980s, Dr Kramer promised Mr Stone a life interest in the farm, so that he could work it as his own for life, provided that Dr Kramer’s family could have use of a cottage on the property (at [9]).
The second promise to Mr Stone was made when Dr Kramer was diagnosed with cancer, that he would leave the farm to Dame Leonie, who would leave it to Mr Stone, who would be free to do what he liked with it (at [10]).
Dr Kramer died in 1988. Dame Leonie promised that she would leave the farm and a sum of money to Mr Stone in her will (at [11]). Mr Stone continued to work on the farm for the next thirty years. Following the death of Dame Leonie, Mr Stone was given a legacy of $200,000 but did not receive the farm (at [24]).
Not only did Mr Stone work the farm for a reduced income, he did not make plans to pursue other employment.
The trial judge held that these circumstances gave rise to an estoppel against the estate, and a subsequent appeal to the Court of Appeal was dismissed.
The High Court cited the requirements for equitable estoppel set out by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, being a clear and unequivocal promise that a reasonable person in the promisor’s position would expect or intend that the promisee would rely on, that the promise was relied on by act or omission, and that detriment must be suffered if the promise is not fulfilled (at [36]–[41]).
Courts
Judicial immunity – Contempt of court
In Queensland v Mr Stradford (a pseudonym); Commonwealth of Australia v Mr Stradford (a pseudonym); His Honour Judge Vasta v Mr Stradford (a pseudonym) [2025] HCA 3 (12 February 2025), the High Court unanimously allowed appeals from the Federal Court of Australia, with costs.
The High Court cited the rationale for judicial immunity elucidated by Mason CJ in Fingleton v R [2005] HCA 34:
“However, the public interest in maintaining the independence of the judiciary requires security, not only against the possibility of interference and influence by governments, but also against retaliation by persons or interests disappointed or displeased by judicial decisions” (at [74]).
On 6 December 2018, after “a parody of a court hearing”, His Honour Judge Vasta convicted Mr Stradford (a pseudonym) of contempt of court and imprisoned him (at [5]).
Mr Stradford was released on 12 December 2018 and brought an action against Judge Vasta, Queensland and the Commonwealth for false imprisonment (at [7], [9]). Mr Stradford was awarded $50,000 in exemplary damages by the primary judge, who held that Judge Vasta had “demonstrated a thoroughly reckless disregard of, if not contempt for, Mr Stradford and his rights” (at [9]).
The Commonwealth was found liable for the court guards, and the State of Queensland was found liable for the conduct of the Queensland police officers and Queensland correctional officers (at [9]).
Three principal issues were raised on appeal:
1. whether the order of Judge Vasta was valid even though it was affected by jurisdictional error, pursuant to s17 of the Federal Circuit Court of Australia Act 2021 (Cth)
2. the scope of the immunity from civil suit of judges of inferior courts, such as judges of the Federal Circuit Court
3. whether the MSS Guards, Queensland police and Queensland correctional officers have a defence to executing an order that appeared valid, even though it was invalidated by errors committed by Judge Vasta in sentencing Mr Stradford (at [10]).
On the first issue, s17 did not confer jurisdiction for contempt on Judge Vasta, so the imprisonment and warrant were not valid (at [11]).
Secondly, the High Court held that there was no established common law rule relating to immunity of a judge of an inferior court, citing that the rule in Gallo v Dawson (1992) 66 ALJR 859 and Re East [1998] HCA 73 “applies to judges of both superior and inferior courts, save that it should be expressed as immunity from actions arising out of acts done in the exercise, or purported exercise, of their judicial function or capacity” (at [112]).
The High Court held that despite the orders being invalid there was immunity from suit, and this extended to the MSS Guards, Queensland police and Queensland corrections officers (at [14]).
