Bloom v Waites

[2020] VSC 367

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2019 05133

JONATHAN BLOOM	Plaintiff
v
MARIANNE WAITES	Defendant

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	22 June 2020
CASE MAY BE CITED AS:	Bloom v Waites
MEDIUM NEUTRAL CITATION:	[2020] VSC 367

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TRUSTS & TRUSTEES — Where parties misunderstood operation of trustee succession provision — Where plaintiff purported to be appointed trustee by person not a trustee — Where plaintiff’s proposal to rectify error is erroneous — Standing of remaindermen to appoint trustee — Settled Land Act 1958 (Vic) ss 8–10, 12, 20, 30, 36, 41–2; Administration and Probate Act 1958 (Vic) s 17.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr WF Gillies	RB Legal Pty Ltd
For the Defendant	Neesham White Gentle

HER HONOUR:

Introduction

1. Hammie George Campbell Waites (‘the deceased’) died on 16 July 1978.  Probate of the deceased’s will dated 22 May 1978 was granted to the defendant and Geoffrey Neill Doolan on 29 August 1978.  The deceased devised a life interest in two properties to the defendant and, on her death, the properties pass to the remaindermen, Bradley Campbell Waites and Terri-Ann Waites (‘the remaindermen’). 

1. Accordingly, this constitutes a settlement within the meaning of s 8 of the Settled Land Act 1958 (‘the SLA’). The properties are settled land within the meaning of s 10 of the SLA, and are not excluded under s 9 of the SLA by being held on trust for sale.

Background

1. Geoffrey Doolan died on 21 August 2004. Probate of his will was granted to his son, David Doolan, on 9 November 2004. David Doolan then purported to be a trustee of the deceased’s estate, pursuant to s 17 of the Administration and Probate Act 1958 (‘the APA’).

1. On 27 May 2015, a deed of retirement and appointment was executed whereby David Doolan purported to retire as trustee and Mr Bloom purported to be appointed trustee in his place.  Mr Bloom submitted that the defendant confirmed the appointment by executing the deed. 

1. The defendant is elderly and is represented by Mr Misso of Neesham White Gentle.  Mr Bloom states that, sometime after his purported appointment, the defendant appointed a friend, Irene Brown, as her attorney under an enduring power of attorney.  The defendant has now moved into a nursing home and, based on his discussions with Ms Brown, Mr Bloom believes that the defendant no longer has capacity.  Mr Misso informed Mr Bloom in September 2019 that, while the defendant had some short-term memory loss, her general understanding was good and he was able to obtain instructions from her and her attorney.  In October 2019, Mr Misso indicated that the defendant may or may not have capacity to be a trustee and he did not dispute the defendant’s inability to continue as trustee.

Mr Bloom’s application

1. Mr Bloom seeks the removal of the defendant as trustee of the estate and for Mr Charles Rechnitzer to be appointed trustee in substitution for the defendant.  Mr Rechnitzer is a partner of the law firm RB Legal Pty Ltd, as is Mr Bloom. 

1. In fact, David Doolan did not become a trustee of the deceased’s estate, as the chain enabling a further appointment under s 17 of the APA only applies where an executor is the sole or last surviving proving executor of the estate. In this proceeding, the defendant is the sole surviving proving executor.

1. As a result, the deed of appointment, which purported to substitute David Doolan with Mr Bloom as trustee, did not have its intended effect. 

1. Mr Bloom submitted that, regardless the misunderstanding, the deed validly appointed Mr Bloom under s 30(3) of the SLA because the defendant consented to his appointment by signing the deed. The deed makes no reference to the SLA at all. It is clear from its terms that the defendant was only consenting to a purported substitution of Mr Bloom for David Doolan. The deed cannot be read in the manner submitted by Mr Bloom.

1. In the circumstances, the defendant has been the only trustee of the settled land since the death of Geoffrey Doolan.  Since the directions hearing on 4 May 2020, Mr Bloom now appears to accept that this is the case and that, as a result, he does not have standing to bring the proceeding.

1. Mr Bloom now seeks to amend the proceeding and, to that end, forwarded a draft summons and a draft affidavit by him to the Court. The draft summons seeks that the remaindermen be substituted as the plaintiffs in the proceeding and that Mr Bloom and Mr Rechnitzer be appointed as trustees of the estate of the deceased, so as to comply with s 30(3) of the SLA.

1. In the draft affidavit, Mr Bloom states that the remaindermen have consented to be the plaintiffs in the proceeding and seek that Mr Bloom and Mr Rechnitzer be appointed as trustees.  Mr Bloom also states that he believes these matters are consented to by the defendant given Mr Misso’s comments at the directions hearing on 4 May 2020.

1. Although not stated explicitly, it is assumed that Mr Bloom considers the remaindermen have standing to bring the application under the SLA. In circumstances where there are no trustees of the settlement, an interested person may make an application pursuant to s 36 of the SLA. However, as the defendant is a trustee of the settlement, pursuant to s 30(3) of the SLA, it is obligatory for her to make the application to appoint an additional trustee to act with her for the purposes of the SLA and for the provisions of the Trustee Act 1958 that relate to the appointment of new trustees and the vesting of trust property.

1. As a final note, the substantive failings of Mr Bloom’s applications were coupled with numerous formal errors, including:

·Despite r 5.06 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the SCR’), neither the plaintiff nor defendant is stated to sue, or be sued, in their capacity as executor and trustee of the estate of the deceased;

·The heading of the proceeding states the proceeding is brought, inter alia, pursuant to Order 54 of the SCR, r 6.03 of the Supreme Court (Administration and Probate) Rules 2014, and s 28 of the APA ⁠— no relief is sought pursuant to these provisions;

·The documents cite obsolete versions of the rules;

·No amended originating motion was provided alongside the draft summons and affidavit;

·The draft documents bear different and incorrect proceeding numbers.

Conclusions

1. Although the defendant may lack capacity, she can issue a proceeding by a duly appointed litigation guardian pursuant to Order 15 of the SCR. In such a proceeding, she may seek orders pursuant to s 30(3) of the SLA for the appointment of two trustees of the estate and then seek that she be discharged as a trustee of the estate.

1. As the defendant is also the tenant for life of the settled land within the meaning of s 12 of the SLA, she has several powers pursuant to pt II of the SLA, including the power to lease pursuant to ss 41 and 42. It is inferred from the exhibited correspondence that the settled land has been leased since the death of the deceased. Pursuant to s 20 of the SLA, until the defendant appoints a second trustee, she is not permitted to exercise many of the powers of a tenant for life under the SLA, including the power to lease under s 41, without obtaining an order of the Court. This section is designed to protect and preserve the settled land to ensure that it is not wasted by a life tenant when he or she is also the sole trustee of the settlement.

1. As the defendant has been the sole trustee of the estate since 22 August 2004, she may consider it appropriate to obtain orders pursuant to s 20 of the SLA in respect of the exercise of any of her powers as a tenant for life since that date. Further, she may also consider whether she has committed a breach of trust and, if so, seek to be excused for any breach, pursuant to s 67 of the Trustee Act 1958.

1. Mr Bloom and Mr David Doolan should similarly consider their own positions and, particularly in regard to Mr Bloom, any personal liability arising from their conduct as purported trustees of the settled land.

1. The parties are to inform the Court by 13 July 2020 as to whether this proceeding is to be discontinued and a proceeding is to be issued by the defendant seeking to remedy the issues arising pursuant to the SLA.

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