The NSW Supreme Court has made an order replacing a trustee of an SMSF where the trustee’s conduct amounted to a breach of fiduciary duty.
The parties to this case were 2 brothers – Basil and Brinos Notaras. They were the only trustees and members of the SMSF. Basil sought the removal of Brinos as a trustee on the following grounds:
- the sale by Brinos of shares held by the SMSF and the withdrawal of funds (in excess of Brinos’ entitlement), without consulting Basil; and
- a failure to take part in the management of the SMSF and to sign documents (including tax returns and member statements) necessary to ensure the fund complied with its obligations under the SIS Act.
The Court was satisfied that, in view of the breakdown in the relationship between the 2 trustees, Brinos should be replaced as a trustee of the SMSF (pursuant to s 70 of the Trustee Act 1925 (NSW)).
The replacement trustee was a company controlled by Basil (the Court acknowledged that this was unusual, but did not consider it inappropriate in the circumstances).
(Notaras v Notaras [2012] NSWSC 947, NSW Supreme Court, Rein J, 19 July 2012.)
[LTN 166, 28/8]