Application by Stevens

[2016] NSWSC 1523

Supreme Court

New South Wales

Medium Neutral Citation:	Application by Stevens [2016] NSWSC 1523
Hearing dates:	26 October 2016
Decision date:	26 October 2016
Jurisdiction:	Equity
Before:	Stevenson J
Decision:	Advice given that trustee would be justified in defending proceedings 2016/206770
Catchwords:	TRUSTS AND TRUSTEES – JUDICIAL ADVICE – whether trustee would be justified in defending proceedings brought by non-beneficiary seeking information concerning the trust and an order that the trustee pass accounts – whether trustee justified in drawing on trust funds to pay her costs of those proceedings – whether trustee justified in pursuing a motion for summary dismissal of the proceedings
Legislation Cited:	Trustee Act 1925 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Category:	Principal judgment
Parties:	Beryl Joan Stevens (Plaintiff)
Representation:	Counsel: P Blackburn-Hart SC with S Fitzpatrick (Plaintiff)   Solicitors: Reynolds & Reynolds Legal Services Solicitors (Plaintiff)
File Number(s):	SC 2016/286033

EX TEMPORE Judgment

1. The plaintiff, Ms Beryl Stevens ("the Trustee") is the trustee of the George and Annie Cork Memorial Trust. The Trust was established under the will of the late Cyril David Cork who died on 6 November 2007.

2. The Trust has assets in the order of some $6.2 million. It has no significant liabilities.

3. By the terms of the Trust, its income and capital is to be applied for the benefit of the "Beneficiaries" who are defined, relevantly, to be:

“Such persons...residing in or otherwise carrying on business in Dorrigo in New South Wales or surrounding areas as defined by postcode 2453...as the Trustees shall before the vesting date appoint in writing to be beneficiaries...”.

4. Mr Nicholas Wright resides in and carries on business in the Dorrigo area. He has not, however, been appointed in writing by the Trustee as a beneficiary.

5. On 7 July 2016, Mr Wright commenced proceedings in this Court, numbered 2016/206770 (“the Proceedings”) against the Trustee, seeking orders that:

1. the Trustee provide him with information about the assets, the beneficiaries and the financial position of the Trust; and

2. the Trustee verify, file and pass accounts of the Trust.

6. The Trustee seeks the Court's advice under s 63 of the Trustee Act 1925 (NSW) as to whether or not she is warranted in:

1. defending the Proceedings;

2. pursuing a Notice of Motion that she filed in the Proceedings on 15 August 2016 seeking to have the Proceedings dismissed under r 13.4 of Uniform Civil Procedure Rules 2005 (NSW); and

3. drawing on funds of the Trust to pay her legal costs of defending the Proceedings and pursuing the Motion.

7. The Trust also seeks an order that she be indemnified from the Trust for the costs of this application.

8. I have had the benefit of reading an opinion of senior and junior counsel as to the merits of Mr Wright's claim in the Proceedings.

9. I am not asked to express any opinion as to whether a valid trust has been created. Indeed, Mr Wright's claim seems to assume the Trust is valid.

10. Based on the opinion of counsel and my own consideration of the matter, I have serious doubts as to Mr Wright’s standing to bring the Proceedings and, if he does, as to whether the Court would exercise its discretion in its favour as to grant the orders he seeks. That provides a basis for me to conclude that the Trustee would be justified in defending the Proceedings and drawing on the Trust for her costs for that purpose.

11. However, I am not satisfied that the Trustee's position in the Proceedings is so clear, and that Mr Wright's claim in the Proceedings is so weak, that I should go further and find that the Trustee would be justified in prosecuting the Motion.

12. It is true that, on the Motion, it is unlikely that there will be any dispute as to the facts. However, that would be the beginning and not the end of the inquiry on the Motion as the Trustee would have to establish that the Proceedings brought by Mr Wright are either frivolous or vexatious, are an abuse of process of the Court or that no reasonable cause of action is disclosed.

13. A possible, if not likely, result of the Motion is that the judge hearing it will conclude that the matter is not sufficiently clear to warrant summary dismissal.

14. It may be that the Trustee will come to the view that the more practical approach will be simply to seek to have Mr Wright's claim brought on for early final hearing.

15. In those circumstances, I answer the questions that the Trustee has proposed as follows:

1. Is the plaintiff warranted in defending Supreme Court of New South Wales proceedings number 2016/206770? Answer: Yes.

2. Is the plaintiff warranted in pursuing her Motion filed on 15 August 2016 in the Proceedings? Answer: No.

3. Is the plaintiff warranted in drawing on the funds of the Trust to pay the legal costs of defending the Proceedings? Answer: Yes.

4. Is the plaintiff warranted in drawing on the funds of the Trust to pay the legal costs of pursuing the Motion? Answer: No.

16. I order that the plaintiff be indemnified from the Trust for her costs of these proceedings.

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Decision last updated: 28 October 2016