Batmor Mortgages Pty Ltd v Salvatore Arcuri

[2017] NSWSC 84

Supreme Court

New South Wales

Medium Neutral Citation:	Batmor Mortgages Pty Ltd v Salvatore Arcuri [2017] NSWSC 84
Hearing dates:	8-9 February 2017
Date of orders:	10 February 2017
Decision date:	10 February 2017
Jurisdiction:	Equity
Before:	Rein J
Decision:	See [18] and [43]
Catchwords:	TRUST AND TRUSTEES – trust property registered in the name of First Defendant as trustee – whether trustee was validly removed – whether subsequent trustees were validly appointed – whether the trustee provided a “service” to the trust in the administration of the trust by entering into a loan contract with a bank and whether the trustee can, under the trust deed or pursuant to the inherent jurisdiction of the Court, recover a share of the benefit that was thereby produced – whether mortgage debt to another lender had been repaid and hence mortgage relied on by Second Defendant should be discharged
Legislation Cited:	Crimes Act 1900 (NSW) Crimes (Administration of Sentences) Act 1999 (NSW)
Cases Cited:	Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319
Texts Cited:	Jacobs’ Law of Trusts in Australia, (6th ed, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	Batmor Mortgages Pty Ltd (First Plaintiff and First Cross Defendant) Gregory Huxley (Second Plaintiff and Third Cross Defendant) Pace Cassidy Buckley (Third Plaintiff and Second Cross Defendant) Salvatore Arcuri (First Defendant and First Cross Claimant) Bigzy Corp Pty Ltd (Second Defendant) Westpac Banking Corporation (Fifth Cross Defendant)
Representation:	Counsel: D.L Cook SC (Plaintiffs) B. Kock (Fifth Cross Defendant)   Solicitors: T. Orlizki (Plaintiffs) J. Talakovski (Fifth Cross Defendant)
File Number(s):	2016/154076
Publication restriction:	Nil

Judgment

1. These proceedings concern a residential property at 218 Warimoo Avenue St Ives, NSW (“the property”).

2. The First Defendant Mr Salvatore Arcuri (“Mr Arcuri”) is the registered owner of the property.

3. The property is the subject of a mortgage to Westpac Banking Corporation (“Westpac”) to secure a loan of $1.25 million made by Westpac to Mr Arcuri. The Westpac loan with interest presently stands at $2.05 million.

4. Batmor Mortgages Pty Ltd (“Batmor”) claims that it is now the trustee of a trust known as the Residential Trust (“the Trust”) and that Mr Arcuri was removed as trustee on 22 October 2013, being replaced at that time by Ms Joanne Dib and that Ms Dib was removed on 21 January 2015 with Batmor being appointed as trustee of the Trust.

5. The Trust was established as a unit trust of one hundred units and units were issued to the following persons:

1. Adam Peter Huxley (“Adam”) 1 unit

2. Vanessa Lee Watson (“Vanessa”) 1 unit

3. Gregory John Huxley (“Mr Huxley”) 1 unit

4. Daniel William Huxley (“Daniel”) 1 unit

5. Robert Gregory Huxley (“Robert”) 1 unit

6. Adam in trust for Edward Thomas Huxley (“Edward”) 32 units

7. Adam in trust for Pace Cassidy Buckley (“Pace”) 32 units

8. Adam in trust for Zara Jean Huxley (“Zara”) 31 units.

6. Vanessa was Mr Huxley’s wife at that time and Adam, Daniel, Robert, Edward, Pace, being Mr Huxley’s stepson, and Zara are children of Mr Huxley. At the time that the Trust was established Edward, Pace and Zara were minors but they each turned eighteen some years ago. The evidence supports the conclusions that as at 2013, Zara and Pace were 18 years of age or older, and that Edward may have been (see T125).

7. Batmor, Pace and Greg are the Plaintiffs and are represented by Mr D.L. Cook SC. Mr Arcuri now appears for himself but was until November 2016 represented by Kemp Strang solicitors.

8. The Second Defendant Bigzy Corp Pty Ltd (“Bigzy”) has never appeared in the proceedings. Service of the Further Amended Statement of Claim (and earlier process) was established through the affidavit of Mr Tim Orlizki of 5 February 2017. I shall explain why Bigzy has been joined later in these reasons.

9. Mr Arcuri cross claimed against the Plaintiffs and joined Westpac as a defendant to that cross claim. Mr Koch of counsel appears for Westpac but for reasons which will become apparent he was excused from attending the balance of the hearing.

10. After the hearing commenced there were discussions between Mr Arcuri and Mr Cook on behalf of the Plaintiffs, following which there was a narrowing of the issues between the parties (see T27.44-T30.50). Yesterday Mr Cook handed up the declarations and orders which the Plaintiffs and Westpac seek. The only matters in that document which are in contest or not agreed by Mr Arcuri are 2-4 and 12, which do not affect Westpac. Before I describe the issues that remain, I will summarise what is not in dispute between the Plaintiffs and Mr Arcuri.

11. Mr Arcuri accepts that he has only ever held the title to the property as trustee for the Trust. He says, and the Plaintiffs accept, that he agreed to become the trustee so that a debt then owed by the then trustee (ICA Nominees Pty Ltd) could be refinanced with Westpac. Mr Arcuri has never paid any mortgage repayments to Westpac. He is personally liable to Westpac and for council rates and water rates levied in respect of the property. These rates he says are in the order of $40,000. Neither the Plaintiffs nor Mr Arcuri dispute that Westpac is owed $2.05 million and that it would be entitled to sell the property if refinancing cannot be organised. There is also agreement that the property is worth approximately $3.3 million.

12. Mr Arcuri was in practice as an accountant and he performed accounting work for Mr Huxley and some of the many companies which Mr Huxley controlled or had an interest.

13. There is a dispute as to the terms of the conversation by which Mr Arcuri agreed to become trustee but the Plaintiffs accept that Mr Arcuri as trustee is entitled to be indemnified for the debt to Westpac, the Council, and Sydney Water relating to the property for which Mr Arcuri is liable. There is another debt of Mr Arcuri’s which is in dispute, and that is a debt of approximately $55,000 owed to Toyota Finance in connection with vehicles leased by Mr Arcuri and driven by Mr Huxley and Vanessa.

14. It is clear that the Trust was established at the behest of Mr Huxley and that he had a continuing involvement with the Trust and the property made even more obvious by the fact that he has, since it was purchased, resided in the property with Vanessa and his children, although the details of who amongst them are still residing in the property is not clear. Mr Huxley, Pace and Batmor say that Batmor wishes to refinance the Westpac debt but is unable to do so because Mr Arcuri is the registered owner and maintains that he is the trustee and ought to remain as trustee until the Westpac debt is paid out.

15. After the Westpac debt had been in place for some time there were failures to make the monthly payments due and Mr Huxley arranged for a loan to Mr Arcuri from Mr and Mrs Powers. The Powers were not repaid the debt owed to them and they sought possession of the property. Those proceedings ended in a judgment debt of $438,556.12 being entered against Mr Arcuri on 30 January 2013 (“the judgment debt”).

16. The Plaintiffs assert that the judgment debt was paid and that therefore the mortgage which Mr Arcuri entered into on behalf of the Trust must be discharged. There is in evidence (see Exhibit B2 p 372) a deed of assignment of the Powers mortgage to Joanne Dib and an assignment of it from Ms Dib to Bigzy for a consideration of $1 (see Exhibit B3 p 487). There is also a document which appears to have been created in the office of Mr Dib which purports to show $1.8 million owing by Ms Dib as trustee for the Trust to Mr Dib as a result of the transfer of the Powers loan and mortgage (see Exhibit B3 pp 497-500).

17. Mr Arcuri and the Plaintiffs are all in agreement that Bigzy’s claim that $1.8 million is owing to it by the Trust is completely unfounded and based on the false premise that the Powers were not paid the amount due to them in respect of their mortgage. In evidence is the trust account ledger of McLaughlin & Riordan, solicitors for the Powers, which shows the repayment of the judgment debt (see exhibit C) and other documents including receipts for portions of the remaining debt (see Exhibit B2 p 259-261) and a letter from McLaughlin & Riordan to the NSW Sheriff’s Officer confirming that “payment in settlement” had been made (see Exhibit B2 p 262).

18. The fact that Bigzy has not appeared to answer the Plaintiff’s case is not surprising. In my view the Plaintiffs have demonstrated that the Powers debt supported by the Powers mortgage merged in the judgment debt and that the judgment debt was paid in full and to the satisfaction of the Powers. It follows that the Plaintiffs are entitled to the declarations they seek in relation to the Powers/Bigzy mortgage.

19. The matters which I need to decide in order to determine whether or not the declarations and orders that the Plaintiffs seek (in addition to the declarations and orders relating to the Powers/Bigzy mortgage) are these:

1. Was Mr Arcuri validly removed as trustee of the Trust and replaced by Ms Dib?

2. Was Ms Dib validly removed as trustee of the Trust and replaced by Batmor?

3. Is Mr Arcuri entitled to remuneration from Trust assets?

Removal of Mr Arcuri and Ms Dib

20. On 22 October 2013, all of the unitholders, Adam, Daniel, Robert, Mr Huxley, Vanessa, Pace, Zara and Edward (by his mother Vanessa) signed a deed by which Mr Arcuri was removed and Joanne Dib was appointed (Exhibit B2 p.301). The document was also signed by Vanessa on behalf of Ava, another child, although it is not clear why Ava or her guardian needed to be a party to the deed.

21. The background to the deed, according to Mr Huxley, is that Mr Arcuri had been found guilty of fraud charges in 2011 and Mr Arcuri also was accused in 2013 of misappropriating funds from the proceeds of a refinancing of a property at Beechworth, a company with which Mr Huxley had a connection, from which funds Mr Arcuri paid $120,000 to Mr Simon Piscopo as trustee of an arrangement with creditors into which Mr Arcuri entered in late 2012. In relation to the 2011 fraud conviction Mr Arcuri appealed and in 2014 was successful in that appeal. In relation to the Beechworth funds Mr Arcuri was convicted in November 2016 of dishonestly obtaining a financial advantage under s192E(1)(b) of the Crimes Act 1900 (NSW) and in January 2016 he was sentenced to a twenty month term of imprisonment, with a non-parole period of ten months. Mr Arcuri has appealed that conviction but bail was refused and he is presently incarcerated and was brought to Court by Correctional Service Officers consequent upon the issue of an order under s77 of the Crimes (Administration of Sentences) Act 1999 (NSW). There is another charge brought against Mr Arcuri by the Australian Taxation Office in respect of which he was convicted on 24 October 2016 but for which he has not yet been sentenced. Mr Arcuri has also appealed from that conviction.

22. Mr Arcuri was, following the execution of the Deed, notified of his removal (see Exhibit B2 pp 341-369) and did not challenge that removal at that time, although lawyers retained by him wrote to lawyers retained on behalf of the new trustee (see Exhibit B2 p 359).

23. Mr Arcuri offered no effective reason as to why he claims that his removal and replacement by Ms Dib was not authorised by the trust deed or effected by the deed of October 2013. Clause 6.4 of the Trust Deed (Exhibit B2 p23) provides:

(d) The unitholders may decide at any time to do any one or more of the following:

(i) to remove any trustee

(ii) to appoint a substitute Trustee or Substitute Trustees or any Trustee or Trustees ceasing for any reason to be a Trustee or Trustees

24. If reason was needed, and the Trust Deed does not require it, the fact that Mr Arcuri entered into an arrangement or composition with his creditors in November 2012, as evidenced by Exhibit D, meant that he was required to retire (see Clause 6.4(a) of the Trust Deed Exhibit B2 p 22). I find that the unitholders were entitled to remove Mr Arcuri as trustee on 12 October 2013.

25. On 21 January 2015 there was a meeting at which Mr John Batiste, Adam and Mr Huxley attended. As at that date Mr Batiste and Mr Huxley were directors of Batmor. Adam owned one share in his own name but held 95 shares in trust for Pace, Edward and Zara. It appears that in 2016 on Adam transferred the holding on behalf of Pace into Pace’s own name (see exhibit B3 pp 594-595). As at 21 January 2015 Mr Huxley held one unit and Adam had one unit, although he may have been bankrupt at that time. Whilst Adam many not have been free to exercise a vote in respect of his own unit (if he was a bankrupt at that time) he was not precluded from exercising his authority to vote for the units on behalf of Edward, Pace and Zara and to make decisions on their behalf.

26. It will be noted that when the 2013 Deed was executed, Adam did not execute it on behalf of Pace, Zara, and Edward, but only himself, yet he did hold units in trust for Pace, Zara, and Edward. No argument was addressed as to the anomaly of the execution of the Deed by persons who were not registered unitholders but if Adam remained as trustee for these beneficiaries so far as the Trust was concerned, and he executed the Deed, all registered unitholders effectively entered into the Deed. In any event, the decision to remove Ms Dib in 2015 and replace her with Batmor was taken by Adam and Mr Huxley and they together held either for their own account or as trustee 97% of the units in the Trust.

27. It follows that Mr Arcuri was validly removed and replaced by Ms Dib as trustee in October 2013 and that Ms Dib was validly removed and replaced by Batmor as trustee in January 2015.

28. I should note that Mr Arcuri, supported by a director of Denmar Pty Ltd (which it is claimed is a creditor of Mr Huxley) Mr James Photios (whose application to make submissions on the matter was refused) wanted to introduce allegations against Mr Huxley that Mr Huxley used “other people’s money” to repay the Westpac loan, being money which he or the company using that money had no authority to use for that purpose. Mr Huxley does not dispute that he did not himself pay any amounts due to Westpac but quite apart from the absence of any evidence that the monies utilised to make monthly payments to Westpac were not legitimately obtained, the allegation has no relevance to the matters I must decide.

29. A further theme advanced by Mr Arcuri was that Batmor was not a suitable trustee because of Mr Huxley’s involvement with it as a director, and the allegation that Mr Batiste, who is a director of Batmor, lost money in a venture set up by Mr Huxley. Mr Huxley retired as a director of Batmor last year and was replaced by a Mr Steven Vickers, but, as Mr Cook pointed out, it is not at all surprising that Mr Huxley might be a director of the trustee since the only trust asset, the property, is inhabited by Mr Huxley and his children (or some of them), and he established the Trust in 2000.

30. The suitability of Batmor to administer the Trust would need to be considered if the Court was required to appoint a new trustee, but if Batmor was appointed trustee in 2015 any question of the fitness of Batmor to be or continue as trustee would be something which would be a matter for the beneficiaries of the trust, not a former trustee or creditor of Mr Huxley.

The Remuneration Claim

31. Mr Arcuri puts his claim to remuneration on three bases:

1. He says he had a conversation with Mr Huxley in which it was agreed that he would be paid $3,000 per month.

2. That the Trust Deed expressly provides for his remuneration without the need for an oral agreement as alleged, as that he is entitled to remuneration pursuant to clause 6(1)(g).

3. That the Court should award him remuneration even if (1) and (2) are not established, pursuant to the inherent jurisdiction of the Court because that would be a fair or equitable outcome.

32. Mr Arcuri claims that at, or shortly before, the time he became trustee of the Trust he had a conversation with Mr Huxley in which Mr Huxley said to him words to the effect:

SA: Greg, I appreciate your trust in appointing me as trustee of the house. Of course the flip side is that I am carrying a $2 million debt on my shoulders which could affect any future capital raising which may be required in future.

GH: I know, but the residual equity is substantial and as I said in the letter that I wrote to you, you are my last chance to save my home and avoid seeing my kids out on the street.

SA: Greg with due respect its more than a favour of getting the milk for you. In any event, what did you have in mind by way of payment for this huge responsibility?

GH: Well what do you think is fair?

SA: What are your current instalments under the mortgage?

GH: About $19,000 per month.

SA: What would the new instalments under the proposed Westpac mortgage be?

GH: Rounded about $8,000 per month.

SA: So that’s about an $11.000 saving per month.

GH: Yes that’s about right.

SA: Well how about the Trust pays me a third of the savings?

GH: Sal, that is about $3,600 but let’s say $3,000 per month is very reasonable, let’s shake on it (which we then did).

(See [155] of the Affidavit of Salvatore Arcuri dated 2 August 2016)

33. Mr Huxley denies that he had such a conversation with Mr Arcuri. Mr Huxley says that he discussed with Mr Arcuri the issue of refinancing the debt of the Trust to CKM Mortgages by utilising a mainstream lender at a lower rate of interest and that neither he, Mr Huxley, nor the then trustee, would be regarded as suitable borrowers. Mr Huxley told Mr Arcuri how much he wanted to borrow on security of the property and according to Mr Huxley Mr Arcuri said:

“There is no doubt that there is the ability for you to service the loan, so I am happy to put myself up as borrower. I am happy to help. It costs me nothing. I won’t be making the loan payments. It doesn’t affect my borrowing capacity and you and I are doing business together and I’m sure we will do more in the future.”

(see also T106.45-T107.19 evidence of Mr Huxley)

34. Mr Arcuri was cross examined by Mr Cook and Mr Huxley was cross examined by Mr Arcuri. Of course it was no easy task for Mr Arcuri to cross examine Mr Huxley and I take that into account but I formed an adverse view as to Mr Arcuri’s credibility and I was not satisfied that Mr Huxley was in any respect untruthful in his evidence before me.

35. In part Mr Arcuri’s case suffered as a result of a number of matters which I shall enumerate:

1. He has no note or record of the conversation by which, on his case, Mr Huxley agreed that the Trust would pay him $3,000 per month. It would be an important matter for a trustee to record if there had been such an agreement.

2. He says that he invoiced ‘the Trust’ for several months at the outset for the $3,000 but then stopped sending those invoices. He was not able to produce a copy of a single invoice that he says he sent to Mr Huxley.

3. When he swore an affidavit on 8 November 2013 he made no reference to any agreement of the sort he now makes (see exhibit B2 p 328). I set out the contents of paragraphs 3-7 of his affidavit:

3. On or about June 2009 I was approached by Gregory Huxley [Huxely] who proposed to me whether I would help him and his family.

4. Huxley said to me that because of his bad credit rating he was unable to refinance his family home. The proposal to me was: ‘would I be prepared to stand in as borrower so that he could refinance the family’s principal place of residence [PPR] situated at 218 Warimoo Avenue St Ives’. I recall distinctly Huxley saying to me: “Sal, you are my last chance, otherwise my whole family is in the streets.”

5. I carefully thought about Huxley’s plight and I took into consideration the value of the PPR being in excess of $2,500,00 and the intended loan being $1,750,000 with a LVR of only 70%. At all times, the loan repayments would be paid by Huxley.

6. After carefully considering the financial and personal risks to me, I concluded that the associated risks were relatively minimal compared to seeing a family of 8 be thrown out on the streets.

7. Based on my excellent credit rating at the time I agreed to step in for Huxley as Borrower to refinance his PPR.

That affidavit was prepared in connection with an attempt by Mr Arcuri to stop Mr Huxley from being discharged from his bankruptcy and relations between Mr Arcuri and Mr Huxley had turned sour. The version of events which he deposes to in that affidavit is consistent with Mr Huxley’s version and entirely inconsistent with the version which Mr Arcuri asserts in these proceedings.

4. In October 2012 Mr Arcuri informed Mr Piscopo (appointed as his controlling trustee) he was not receiving any remuneration as trustee. Mr Arcuri’s explanation for this was that he had not received any remuneration (which was in fact true) but it is clear that Mr Piscopo was endeavouring to ascertain what assets and entitlements Mr Arcuri held as at October 2013 and if he had had an agreement with Mr Huxley on behalf of the Trust for remuneration that is something he was obliged to disclose. Mr Piscopo recorded Mr Arcuri as having informed him that he had no debt owed to him (see p2 of Exhibit D). I find that Mr Arcuri informed Mr Piscopo that he had received no remuneration intending to convey the meaning that he was not entitled to any remuneration.

5. Mr Arcuri says that he did make a claim against Mr Huxley personally for some monthly payments of $3,000 plus GST (i.e. $3,300) and it appears that he lodged a proof of debt as a creditor of Mr Huxley in Mr Huxley’s bankruptcy (see Exhibit B2 pp 140-148), although the proof of debt is not in evidence and it is not possible to verify for what in fact it was that Mr Arcuri claimed he was owed money.

6. I think it is rather unlikely that Mr Huxley would agree that Mr Arcuri would receive such a generous payment for becoming trustee. It would involve the trust in losing 30% of the saving of moving from what objectively was a very high rate of interest to a normal (and not special) bank rate of interest.

7. There were some specific aspects of Mr Arcuri’s evidence under cross examination which reinforced my inability to accept his account as truthful:

1. I found his explanation as to why he did not tell Mr Piscopo of the debt owed to him by the Trust, namely that he had overlooked the fact that he was owed $3,000 for each month he was trustee, as entirely unconvincing, particularly given his attempt to explain that by saying he had not received remuneration he meant only that he had not been paid. I think it is much more likely that he knew he did not have any such debt owed to him from the Trust.

2. I set out what is found at T83.11-T83.48 of the transcript:

Q. All right, but you didn't create any invoices each month to record your entitlement to any fees?

A. I did initially, I did initially, because it wasn't just this, there was invoices for renting my offices and other services, and after a while I just gave up.

Q. And you are not able to show his Honour a single invoice today which reflects your entitlement to $3,000 per month for other services, being a trustee, are you?

A. No.

Q. And you never sent Mr Huxley an invoice for $3,000 or any multiple of $3,000 for your services as a trustee, had you?

A. As, as I said initially, but in, in all honesty it didn't ‑ it lasted for a, a period.

Q. In all honesty--

HIS HONOUR

Q. Lasted a few what?

A. Look, about three or four months.

COOK

Q. Yes, and why did you stop - well, first of all, do you then say that you did send Mr Huxley an invoice for $3,000 for your services as a trustee?

A. I'm, I'm pretty sure I, I - I'm pretty sure that I did. I can't recall because it included other services.

Q. The fact is you didn't, did you?

A. The fact is that I did. It lasted for a time and then it ceased.

Q. Do you recall precisely when you ceased sending invoices?

A. No.

Q. What was the reason for stopping sending invoices?

A. Because of our relationship and because it was really a futile exercise and because I was going to be renumerated(as said) in other projects.

3. Mr Arcuri said he could not recall if he had prepared a ledger or account for the Trust showing that the Trust had a liability to him for $3,000 per month (see T84.20) when, as he admitted shortly after, there were no ledgers for the Trust because he had never done any accounting work for the Trust.

4. He could produce no copies of invoices and gave no explanation as to why he would not have kept copies of such invoices (see T86.37-T86.49).

5. He made no reference in his affidavit in these proceedings to having initially created and sent invoices to Mr Huxley for the remuneration claims.

6. He made no demand on Mr Huxley as agent for the Trust for the remuneration (see T88.1-T88.34) although he says he did assert a claim against Mr Huxley personally for the remuneration claims in 2010.

I prefer the evidence of Mr Huxley that he did not agree with Mr Arcuri that the Trust would pay $3,000 per month to Mr Arcuri. I gained the distinct impression that Mr Arcuri had invented the conversation because he believes that the Huxley family benefited by his willingness to become trustee and take on a debt to Westpac. I think it is clear that Mr Arcuri did assist the Huxley family by agreeing to take on the role of trustee but that is a very different matter to an agreement to pay him a fee for that assistance.

36. There is another problem with Mr Arcuri’s claim under this head. Mr Huxley held only one unit in the Trust. He had no authority within the Trust structure to agree to any payment or remuneration to Mr Arcuri unless he had either express of implied authority from other unitholders. There is no evidence that he had express authority from the other unitholders, and particularly Adam, to bind them on behalf of the Trust. Given my conclusion in respect of the alleged oral agreement I do not need to determine whether Mr Huxley had implied authority to bind the beneficiaries but I note it was not put to Mr Huxley that he did act on behalf of the beneficiaries in his dealings with Mr Arcuri and that Mr Arcuri did not respond to Mr Cook’s submission that there was no evidence to support that allegation.

37. A further matter is that even if he were entitled to remuneration it could only be for the period that he was validly trustee – he could not be entitled to remuneration for any period after he was required to retire by the terms of the Trust Deed.

38. I turn now to Mr Arcuri’s claim, based on the terms of clause 6.1(g) of the Trust Deed (Exhibit B2 p 14), which is in the following terms:

(g) Any Trustee hereof who may be a solicitor or accountant or any firm of which he may be a member shall be entitled to make all usual and proper charges for both his professional and other services in the administration for the trusts hereof and for his time and trouble that he would have been entitled to make if not a Trustee and so employed.

39. Mr Arcuri says that by agreeing to borrow from Westpac he was providing a service to the Trust because it enabled the Trust to reduce the amount of interest paid each month from approximately $18,000 to $7,000, a saving of $11,000. He submits that 30% of that saving i.e. $3,000 is a reasonable figure for the benefit which the Trust, and hence the beneficiaries, obtained. There are two problems with that contention:

1. The subclause speaks of “professional and other services in the administration for the trusts and for his time and trouble that he would have been entitled to make if not a Trustee and so employed” (my emphasis). Mr Arcuri admitted that he performed no accounting or professional work of any kind for the Trust: (see Transcript T84.26-T84.27). I do not think that borrowing on behalf of the Trust is a service in the administration of the Trust or something characterisable as time or trouble for which he could claim if employed; rather it is simply Mr Arcuri acting in his role as trustee. Every trustee is personally liable for debts incurred on behalf of the trust: Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at pp 323-324 per Latham CJ but he is entitled to an indemnity in respect of those debts out of assets of the estate: Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at p 324 per Latham CJ.

2. His claim is based on the assertion that he is entitled to be recompensed as trustee on the basis of a share of the benefits that his being a trustee has produced. The idea that a trustee could be entitled to a share of benefits gained by a trust is, as Mr Cook submitted, completely alien to the role and concept of a trustee. In the past trustees were expected to act gratuitously and the position is put as follows in J.D Heydon & M.J Leeming, Jacobs’ Law of Trusts in Australia, (6th ed, LexisNexis Butterworths) at [1739]:

In accordance with the rule of equity that trustees must not profit by their trust, trustees are not, as a general rule, entitled to remuneration for their labours in the trust; they are entitled to no compensation either for their personal trouble of for loss of time. Equity ‘looks upon trusts as honorary and a burden upon the honour and conscience of the trustee’; trusts are not considered to be undertaken from mercenary views.

40. A trustee is entitled to fair payment for the work they have performed for the trust, principally but not necessarily, of a professional nature. There is, in my view, no scope for a trustee to claim a share of profits or benefits accruing to the trust by reason of whatever work he has done.

41. In my view similar considerations apply to the claim that the Court should pursuant to its inherent jurisdiction award Mr Arcuri remuneration when he has done no work for and provided no services to the Trust whilst acting as trustee.

42. I do not need to consider Mr Cook’s alternate argument that Mr Arcuri should be denied any amount because of his conduct in seeking to block repayments of the loan amounts (see Exhibit B2 pp 350-351), failing to consider the interest of the beneficiaries, failing to retire as trustee as required by the Trust Deed and refusing to relinquish his position leading to extensive costs and depletion of the net equity of the Trust in the property.

Conclusion

43. I conclude that:

1. Mr Arcuri was validly removed as trustee in October 2013 and replaced by Ms Joanne Dib.

2. That Ms Dib was validly removed as trustee in January 2015 and replaced by Batmor.

3. That Mr Arcuri is not entitled to any remuneration as trustee.

4. That the declaration and orders sought by the Plaintiffs relating to Mr Arcuri, Batmor, The Powers/Bigzy mortgage and consequential registration of Batmor as registered owner of the property should be made.

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Decision last updated: 15 February 2017