Australia: Trustees must take care when investing trust funds: a cautionary tale from the life of Crocodile Dundee

Last Updated: 9 July 2013
Article by Bernadette Carey

In brief - Trustees must ensure that they invest trust money wisely

In exercising or delegating its power of investment, a trustee must remember it owes a duty of care to its beneficiaries and ensure that the investment is both prudent and as safe as possible.

Paul Hogan's lost millions a cautionary tale for trustees and beneficiaries alike

Trustees of Australian trusts have a duty to invest trust money. This duty is particularly important in circumstances where the trust funds are significant and investment will bring a good return for the beneficiaries of the trust.

A particularly good example of an investment by a trustee apparently gone awry was recently to be found beneath sordid headlines in the local newspapers. Crocodile Dundee's Missing Cash No Joke and Hogan has $34m stolen from Swiss Bank Account both headed stories that Paul Hogan was battling to recover more than US$34 million of the royalties he had earned through his involvement in the lucrative Crocodile Dundee films.

According to the newspapers, those moneys had been settled on a trust called the Carthage Trust, but then transferred by the trustee into the control of an investment manager who maintained the trust moneys in a bank account in Switzerland.

While the full story has yet to reveal itself other than in the pages of tabloids, the allegations are that the trustee of the Carthage Trust recently discovered that the investment manager had "suddenly and without warning taken the position" that the moneys were not assets of the trust at all and may have "absconded with or spent all" of the money instead of holding it for the beneficiaries of the trust, including Mr Hogan. The trustee commenced court action in the United States to recover the missing millions.

Investments must conform to the wording of the trust deed or statute

Back here in Australia, the investment of trust funds is tightly controlled. The primary source of powers to invest and otherwise deal with trust funds is, for most trustees, to be found in the trust deed itself. However, in NSW there is also a statutory framework that confers a general power of investment on trustees which operates subject to the wording of the relevant trust deed.

The relevant legislation is section 14 of the Trustee Act 1925 (Act). This section provides that a trustee may, unless expressly forbidden by the trust deed, invest trust funds in any form of investment.

Section 14A of the Act provides that, in exercising the power of investment, a professional trustee must exercise the care, diligence and skill that a prudent person engaged in the profession would exercise in managing the affairs of other persons. If the trustee is not a professional trustee, he or she must exercise the care, diligence and skill that a prudent person would exercise in managing the affairs of other persons.

The different standards applicable to professional trustees and lay trustees are premised on the idea that professional trustees are required to have a greater degree of competence and understanding of trust investments than lay trustees.

Trustees should consider needs of beneficiaries, risks and tax implications

The Act also sets out matters to which the trustee should have regard in exercising his or her power of investment. These include, but are not limited to, the purposes of the trust and the needs and circumstances of the beneficiaries; the nature of, and the risk associated with, existing trust investments and other trust property; the length of the term of the proposed investment; and the effect of the proposed investment in relation to the tax liability of the trust.

Trustees should consider obtaining independent and impartial advice

Investing trust funds with regard to these factors, particularly if the trust fund is large or the trust structure is complicated, can be fraught with difficulty. With this in mind, a trustee would be well advised to obtain and consider independent and impartial advice for the investment of trust funds or the management of the investment from a person whom the trustee reasonably believes to be competent to give the advice. The trustee's reasonable costs of doing so will ordinarily be payable out of trust funds.

A breach of trust action in relation to any investment gone wrong will usually turn on the court determining whether the trustee had proper regard to these factors in investing trust moneys and/or sought independent and competent advice.

Trustees can avoid problems by adhering to investment strategies and communicating carefully with investment managers

Sadly for Mr Hogan, the trustee's legal action to recover the funds apparently missing from the Carthage Trust fell at the first hurdle: but at this stage only because of issues as to the Court's jurisdiction over the claims being made by the trustee.

In declining to grant relief, US District Court Judge Otis D Wright II described the claim as "a sordid tale of wayward fiduciaries and international fraudsters supposedly absconding with millions of dollars in funds from a Swiss bank account". The case will likely be revived in a different court, possibly in the British Virgin Islands or Switzerland, in the near future. In the meantime, the investment manager has gone public and denied all claims against him.

Whether there is any truth to the allegations that the Crocodile Dundee royalties are gone for good remains to be seen. However, the allegations and the bad press faced by Mr Hogan and his trustees are more than enough to remind trustees that the investment of trust funds is not to be taken lightly.

Trustees should be prudent, seek expert advice and keep careful records

Trustees should at all times:

  • Determine what investments are in line with the investments allowed by the trust deed or the Act and will also secure the economic growth of trust investments.
  • Maintain a prudent investment strategy and monitor compliance with it by investment professionals
  • Seek and take expert or independent advice when the situation calls for it
  • Keep a full record of reasons for investment decisions and notes of meetings with experts
  • Seek advice from the court, at any early stage, where complications involving investments arise

As the Crocodile Dundee case shows, a secret Swiss bank account and an international investment manager of mystery will not always be the key ingredients to investment success. But prudence and professionalism just might be.

Bernadette Carey
Trusts and estates
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Bernadette Carey
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.