Petricevic’s Family Trust Scuttles Aid Application

Petricevic’s Family Trust Scuttles Aid Application
Saturday July 30, 2011

I thought I would read over Justice Wylie’s decision rejecting Rod Petricevic’s attempt to secure criminal legal aid in respect to the Serious Fraud Office’s charges laid against him under the Crimes Act. The charges relate to Rod Petricevic’s involvement in various Bridgecorp transactions.  Bridgecorp Limited is a failed finance company of which he was the managing director and major shareholder. The background facts relating to his family trust (known as the R M Petricevic Family Trust) could, in part (certainly not in relation to value of its assets), apply to the large majority of trusts that I have come across in the last 14 years. Rod Petricevic was the settlor of his own trust, he and his wife Mary were the only trustees (presumably until he was declared bankrupt) and he had the power to appoint or remove any trustee.  He did, however, limit the beneficiaries to his wife, children and any grandchildren or great grandchildren that Mary and he may have.  He and Mary, as trustees, were given the standard directions to hold the trust fund and any income until the date of distribution and to pay or apply the capital or income from time to time as they saw fit.  Interestingly, Rod Petricevic was not named as a beneficiary.  However, I suspect he would not be left out in respect of any distributions to his wife Mary.  In the past, Rod Petricevic had received reasonably large advances (exceeding $3.8 million) from the trust, all presumably sanctioned by Mary. Rod Petricevic’s application for legal aid disclosed that his trust had a net income of $44,371, $447,202 in its bank account and equity “of some $5.2 million” as at 31 March 2009.  The Legal Services Agency (“LSA”) determined that his trust had sufficient assets to fund his defence and therefore declined his aid application.  The Legal Aid Review Panel likewise determined that Rod Petricevic had a substantial interest in the trust’s assets through his wife and therefore had sufficient assets to fund his defence.  As a side note the trust had engaged a Queen’s Counsel so it was not averse to incurring a few legal fees of its own. Rod Petricevic’s main argument in the High Court was that his wife, as a beneficiary, merely had an expectation of receiving a benefit from the trust rather than holding a specific resource.  It did not take much for Justice Wylie to conclude that Mary’s expectations of receiving a benefit from the trust could be regarded as one of her resources.  He noted that all she needed was Rod Petricevic’s support as her co-trustee for her to receive a payment from the trust. Justice Wylie ran through the relevant legislation which makes it clear that a spouse’s resources are to be taken into consideration by the LSA.  In short, Justice Wylie held, what I would have thought was blatantly obvious “that Mrs Petricevic has access to the trust’s assets at Mr Petricevic’s discretion … [therefore] the trust assets can properly be described as one of her resources … if they are her resources, then equally, they must also be treated as Mr Petricevic’s resources.” The intention of the relevant legislation is to combine spouses’ resources to determine whether someone can meet their own legal costs.  To me it makes perfect sense to do so.  I am fairly sure that when they married they agreed to support each other for better for worse, in richer or for poorer (assuming I have the standard marriage vows right).  The trust had treated Rod Petricevic well in the past and presumably the same would apply for Mary.  Why would Mary suddenly want to turn her back on Rod Petricevic in his hour of need?  I guess that question will be answered on the 5th of September when his trial is scheduled to commence.  I wonder if any of his creditors will click that the trust is liable to come under attack as one of his assets.

 

By Chris Patterson