Blenkinsop v Herbert - [2017] WASC 4

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BLENKINSOP -v- HERBERT [2017] WASC 4

CORAM: CHANEY J

HEARD: 13 DECEMBER 2016

DELIVERED : 13 DECEMBER 2016

PUBLISHED : 11 JANUARY 2017

FILE NO/S: CIV 3029 of 2016

BETWEEN: ROSS ALEXANDER BLENKINSOP
Plaintiff
AND
JEFFREY LAURENCE HERBERT
Defendant

Catchwords:

Injunction - Validity of appointment of trustee restraint on interfering with management and administration of trust

Legislation:

Nil

Result:

Injunction granted

Category: B

Representation:

Counsel:

Plaintiff: In person
Defendant: Mr S J Dundas

Solicitors:

Plaintiff: In person
Defendant: HWL Ebsworth Lawyers

Case(s) referred to in judgment(s):

Nil
CHANEY J:
(This judgment was delivered extemporaneously on 13 December 2016 and has been edited from the transcript)

The application before me today is an application commenced by chamber summons filed on 9 December 2016, which in substance seeks an interlocutory injunction against the plaintiff in favour of the defendant to restrain the plaintiff from:
•interfering with or removing the defendant as trustee of the Blenkinsop Family Trust or the Blenkinsop Family Trust No 2;
•interfering with or removing the defendant from conducting the day to day management and administration of the Blenkinsop Family Trust and the Blenkinsop Family Trust No 2; and
•representing to any person that is not the defendant or a beneficiary of the trusts that the plaintiff is the trustee of the two Trusts and that the defendant is not the trustee.
Further orders that the defendant seeks is that he be permitted to operate, deposit, transact, dispose or otherwise deal with any of the funds held in the bank account for the benefit of the two Trusts, in accordance with the powers of the trust deeds, and that there be liberty to apply on 24 hours' notice.
The matter arises in a context where the defendant was appointed as trustee of the two Trusts on 15 December 2015 following defended proceedings before Allanson J. The defendant is a registered liquidator, official liquidator and chartered accountant and was appointed in the context of very considerable dispute and breakdown in the relationship between the various beneficiaries of the two Trusts.
In September of this year the plaintiff circulated an email to three of his family members whom he asserts are the present appointors under the Trusts, or more particularly (although without providing any evidence in relation to this question), he says that two of those three are not currently appointors under the Trust but were sent the email to avoid argument on that question. That email contained within it a document described as 'Appointor Paper' which outlined a number of concerns which the plaintiff had in relation to the administration of the Trust by the defendant as trustee. In the body of that paper, which extends for three pages, it is said 'if Herbert is terminated, then I propose the new trustee be Ross Blenkinsop' - that is the plaintiff himself.
Towards the end of the Appointor Paper, there is reference to a proposed resolution that Mr Herbert be removed as a trustee. The email was sent according to what the plaintiff asserts is a protocol which applied to meetings of appointors. That protocol was said to be recited in the closing passage of the Appointor Paper, with the words:
As per prior voting procedure if you do not vote that will be counted as a positive voting in favour of removing Herbert. (Either you did not bother to vote or you abstained.) Voting closes within five calendar days of the date of this email. If you vote against removal of Herbert please provide reasons which may be referred to a court.
I note that that 'protocol' does not mention voting in favour of the appointment of the plaintiff as trustee, which the plaintiff says was a proposed resolution contained earlier in the document.
In any event, it is apparent that none of the other three recipients of the email responded within five days. The plaintiff treated that as an abstention from voting and executed a document entitled 'Appointor Meeting'. That document set out the two resolutions in the Appointor Paper to which I have referred and recited that the three other recipients had abstained in relation to each resolution, and that the plaintiff had voted in favour.
On the basis of that 'meeting', the plaintiff then executed two documents, which are annexure RB5 to his affidavit, which are described as 'Instrument of Appointment and Removal of Trustee', in the same terms in relation to each of the two Trusts. Those documents recited that the defendant 'is hereby removed as trustee of the Trust and Ross Blenkinsop of [his address] is hereby appointed as trustee of the Trust'.
Those documents were signed by the plaintiff but not by the other recipients of the Appointor Paper email.
Subsequent to those documents being signed on 29 September 2016, they were provided to the defendant. The affidavit of Cassandra Guy indicates that the plaintiff has undertaken communications with various bodies with whom the trustee was dealing in relation to Trust matters, including the National Australia Bank. Those communications have resulted in the bank effectively restraining any drawings from the Trust bank accounts. Mr Blenkinsop has also been in touch with the Main Roads Department, with whom Mr Herbert has been dealing in relation to an offer of compensation for compulsory acquisition of Trust property. That offer, which needs to be actioned by way of acceptance or rejection within a limited time, is subject to appeal rights limited by time.
Following correspondence which then ensued between the defendant and the plaintiff as to the validity of the plaintiff's appointment as trustee, the plaintiff commenced this action. The originating summons seeks directions pursuant to s 92 of the Trustee's Act 1962 (WA), to confirm the defendant's removal and the plaintiff's appointment as trustee. Alternatively, an order is sought for removal of the trustee, pursuant to s 77 of the Trustee's Act, essentially by reason of the plaintiff's assertions that the trustee has conducted himself in a way which is inconsistent with the interests of the beneficiaries and which justifies his removal, in particular in respect to the extent to which he has incurred costs of administration of the Trusts.
The originating summons was issued on 24 November 2016 and remains to be dealt with in due course. The issue today turns on the question of whether or not there is a serious question to be tried as to the plaintiff's entitlement to conduct himself as the trustee of the two Trusts, and to assume control of negotiations in relation to various Trust assets.
It is clear on the materials before me that Mr Herbert was appointed by the court and holds office by reason of that appointment. The question for today's purposes turns on the validity of Mr Blenkinsop's appointment in light of the fact that Mr Herbert has been appointed by the court and holds the position subject to any effective removal by the appointors in accordance with the trust deeds.
The defendant has, in support of his application, adduced copies of the trust deeds and of variations to the trust deeds. Under the terms of each of the trust deeds, the original appointors were Frederick William Blenkinsop, who is now deceased, and Judith Ann Blenkinsop during their lives, or the survivors of them.
There is a deed of variation, which appears to have been executed in August 2011, by which the schedules of the deeds were amended so as to identify Judith Blenkinsop and her five children as the appointors under the Trusts. The variation deed, which appointed the six family members as appointors, provided that they were to act jointly and unanimously. Clause 10 of the trust deed provided, in relation to removal or appointment of trustees, that the appointor shall have a power, exercisable only by instrument in writing, at any time and from time to time, to remove a trustee or to appoint any additional trustee or trustees and to appoint any new trustee in place of any trustee so removed.
Having regard to those provisions, the defendant says that the process undertaken by the plaintiff in having himself appointed as the trustee of the Trust, and having the defendant removed as trustee, does not accord with the terms of the trust deed as varied, which require unanimity of all six appointors. On that basis, the defendant contends that the plaintiff has no authority to take the steps which he has taken in relation to Trust assets, and should be restrained from doing so until such time as the substantive application is dealt with, and any question of removal by the court is considered in the proceedings which have been commenced by the plaintiff.
In response, the plaintiff says that the document of August 2011, appointing the six appointors, may or may not be valid. He says that, as a result of events which have taken place since then, or perhaps since 2013, when the same six appointors executed a further deed confirming that they were the appointors of the trust, two or possibly four of the six nominated appointors are no longer appointors.
No evidence as to those events is before me. The plaintiff says he has not had time to garner the extensive email exchanges which lead to the conclusion that there are either only four or two remaining appointors. Even accepting that difficulty, it seems to me that, having regard to the provisions of the trust deeds, which specify processes for variations or amendments to the trust deed, it is unlikely that any exchange of emails could be said to constitute an effective variation or amendment to the Trusts.
Furthermore, there is evidence before the court that at least three others of the named appointors do not support the removal of the defendant as trustee and do not accept that any proper meeting has been convened. So there is an issue between the plaintiff and, it would seem, the other nominated appointors as to whether or not they remain appointors.
As to the validity of the actions taken by the plaintiff, he relies centrally in these proceedings on the proposition that the protocol, which he specified in the 'Appointor Paper' document, is a valid and effectual method of conducting a meeting and treating a failure to vote as a positive vote in favour of the resolution proposed. The support for the existence of that protocol is said to be illustrated by an email in October 2014 from Christine Blenkinsop, one of the other named appointors, in relation to the payment of certain Trust expenses and identifying that those expenses would be paid unless some objection was received by a specified time. I am told that those emails were sent in the context of payment by the then trustee company of accounts on behalf of the Trust, and it seems to me that those letters fall, on the face of it, well short of any suggestion of some adopted protocol in relation to matters of central importance to the Trust and, in particular, amendment to the terms of the two trust deeds.
It does appear to me that there has been a unilateral action by the plaintiff and that his claim to have been validly appointed as trustee faces very significant difficulties and looks, on the face of the materials which I have seen, to be very weak indeed. On that basis, it follows that the defendant remains the trustee of the Trusts. The plaintiff conceded that if his appointment was invalid, then that would necessarily follow.
There is evidence that there are some time critical issues to be dealt with in respect of the Trusts, and it would be highly undesirable to proceed, as the plaintiff wishes to, by effectively suspending the operations of the Trusts until the whole question of the appointment of the trustee is resolved. That course may well be detrimental to the Trusts and to the interests of the beneficiaries.
The plaintiff asserts that there is a significant danger in allowing the trustee, that is the defendant, to continue as trustee of the Trust, and there will be significant jeopardy to the Trust property if that occurs. In particular, he has considerable concern about ongoing fees and charges which are being incurred by the Trust.
Weighing the balance of convenience, in the context of this case, if there is some misconduct by the trustee, or there are unjustifiable costs incurred by the trustee in the course of operating the Trusts, and if those matters are ultimately established so that the trustee is liable to removal, then he would also be, potentially, liable to account to the Trust for any losses or expenses incurred by reason of misconduct. The defendant has provided an undertaking as to damages in the usual course, and it seems to me that damages would be an adequate remedy, or compensation would be an adequate remedy, in the event that the plaintiff is ultimately successful in obtaining the removal of the defendant.
On that basis I consider that there ought to be an injunction in the interests of protecting the Trust assets.
There will be an order in the following terms:
1.The matter be admitted to the CMC List to be managed by the Honourable Justice Chaney.
2.The time for hearing the summons be abridged.
3. The requirements of O 59 r 9 be dispensed with.
4.The plaintiff be restrained, until further order of this Honourable Court, from:
(a)interfering with the defendant's conduct of the day to day management and administration of the Blenkinsop Family Trust and The Blenkinsop Family Trust No 2;
(b)representing to any person that is not the defendant or a beneficiary of the Trusts, that:
(i)the plaintiff is the trustee of the Blenkinsop Family Trust or the Blenkinsop Family Trust No 2; and
(ii)the defendant is not the trustee of the Blenkinsop Family Trust or the Blenkinsop Family Trust No 2.
5.The defendant be permitted to operate, deposit, transact, dispose and otherwise deal with any funds held in any bank account for the benefit of The Blenkinsop Family Trust and the Blenkinsop Family Trust No 2 in accordance with the powers provided to the trustee of The Blenkinsop Family Trust and The Blenkinsop Family Trust No 2 under the applicable trusts' deeds and at law.
6.The parties have liberty to apply on 24 hours' notice.
7.The costs of the application be reserved.