DOWNES and Paust as executors of the Will of Noreen Mary Paust (Deceased) v Paust
[2020] WASC 351
•2 OCTOBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DOWNES and PAUST as executors of the Will of NOREEN MARY PAUST (Deceased) -v- PAUST [2020] WASC 351
CORAM: CURTHOYS J
HEARD: 12 JUNE 2020
DELIVERED : 2 OCTOBER 2020
FILE NO/S: CIV 1128 of 2020
BETWEEN: SUSAN DOWNES and GREGORY PAUST as executors of the Will of NOREEN MARY PAUST (Deceased)
Plaintiffs
AND
GREGORY PAUST
First Defendant
SUSAN DOWNES
Second Defendant
ROBIN ADAM DOWNES
Third Defendant
MATTHEW GREGORY DOWNES
Fourth Defendant
ANIKA LILIAN PAUST
Fifth Defendant
ELOISE SUSANNE LEEMING
Sixth Defendant
Catchwords:
Will - Rectification - Incorporation of terms of will by reference
Legislation:
Succession Act 2006 (NSW), s 29(1)
Wills Act 1970 (WA), s 50
Result:
Rectification ordered
Category: B
Representation:
Counsel:
| Plaintiffs | : | M Curwood |
| First Defendant | : | In person |
| Second Defendant | : | In person |
| Third Defendant | : | In person |
| Fourth Defendant | : | In person |
| Fifth Defendant | : | In person |
| Sixth Defendant | : | In person |
Solicitors:
| Plaintiffs | : | Formbys Lawyers |
| First Defendant | : | In person |
| Second Defendant | : | In person |
| Third Defendant | : | In person |
| Fourth Defendant | : | In person |
| Fifth Defendant | : | In person |
| Sixth Defendant | : | In person |
Case(s) referred to in decision(s):
Estate of Spinks, Re Application of Mortensen and Eassie (Unreported, NSWSC, 22 August 1990)
Lauder v Lauder [2018] WASC 91
Mortensen v New South Wales (Unreported, NSWCA, 12 December 1991)
Re Swain [2008] NSWSC 1343
Shirdon v Cox [2019] WASC 433
The Public Trustee v McLean [2009] WASC 158
CURTHOYS J:
Introduction
Noreen Mary Paust ('Mrs Paust') died on 17 August 2018.
Mrs Paust was survived by two adult children, her daughter Susan Downes and her son Gregory Paust.
Mrs Paust made her final will on 7 August 2018 (the Will), some 10 days before her death. Probate of the Will was granted to the plaintiffs, her executors, on 9 January 2019.[1]
[1] See Affidavit of Susan Downes sworn 22 January 2020 at Annexure 'B', pages 12 - 13.
The plaintiffs seek an order for rectification of the Will, pursuant to s 50 of the Wills Act 1970 (WA) ('the Wills Act') on the basis that it does not give effect to her testamentary intentions.
All of Mrs Paust's grandchildren over the age of 18 support the application for rectification. Consents have been filed.
Legal requirements for rectification
Section 50 of the Wills Act relevantly provides:
Court may rectify a will
(1)The Court may make an order rectifying a will to carry out the intentions of a deceased testator if the Court is satisfied that the will does not carry out the testator's intentions because -
(a)… ; or
(b)the will does not give effect to the testator's instructions.
(2)Any application for an order under this section must be made within 6 months after the death of the testator.
(3)The Court may extend the period of time for making an application, even if the original period has expired, but not if the final distribution of the estate has been made.
(4)…
Extension of time
Section 50(4) of the Wills Act required an application for rectification to be made by 16 February 2019. Gregory Paust deposes to the explanations for the delay.[2] The delay appears to be largely attributable to the failure of the solicitors to advise the executors of the time limit, obtaining probate and briefing counsel. The estate of Mrs Paust, which for probate purposes was valued at approximately $2.5 million,[3] has not been administered and no assets have been distributed.[4]
[2] Affidavit of Gregory Paust at [7] ‑ [40].
[3] Affidavit of Susan Downes at pages 9 and 10.
[4] Affidavit of Gregory Paust at [35].
The court has a wide discretion to grant an extension of time under s 50(3). In Lauder v Lauder[5], Pritchard J said it was not necessary or appropriate to attempt to formulate any exhaustive list of factors which might be relevant to the exercise of the discretion. However, her Honour noted that the prospects of an application (or its merits) would clearly be relevant in determining whether, in the interests of justice, an extension should be granted. The length of the delay in bringing the application and the question of any prejudice to any beneficiary or third party would also be relevant.
[5] Lauder v Lauder [2018] WASC 91 [20].
There was not a lengthy delay in seeking rectification and no prejudice has occurred. In fact, all beneficiaries of the estate who have attained the age of 18 have completed and filed consent forms to the orders sought in the originating summons.
Rectification - principle
The legal principles relating to rectification under s 50 of the Wills Act were recently discussed in Shirdon v Cox,[6] where it was noted that before making any order for rectification the court needs to be satisfied of the following:
(a)the testator's testamentary intentions at the time the Will was made;
(b)that the Will as drafted, on a proper construction, does not give effect to the testator's testamentary intentions;
(c)that the Will does not express the testator's testamentary intentions because of a clerical error or because of a failure to give effect to the testator's instructions; and
(d)the proposed rectification is in a form that gives effect to the testator's intentions.
[6] Shirdon v Cox [2019] WASC 433 [9].
The testator's intention
The court has consistently said that what is required to grant an application for rectification is clear proof of the testator's intention. Otherwise, the proper execution of a Will raises a presumption that the testator knew and approved of its contents: The Public Trustee v McLean;[7] Lauder v Lauder.[8]
[7] The Public Trustee v McLean [2009] WASC 158 [12].
[8] Lauder v Lauder [2018] WASC 91 [25].
Section 29A(1) of the Succession Act 2006 (NSW) is in substantially similar terms to s 50 of the Wills Act.
In Mortensen v New South Wales,[9] Sheller JA, with whom Mahoney and Meagher JJA agreed, stated that rectification under s 29A:
… is available for mistakes, not for lack of vision or perception or knowledge. It is a section directed at mistakes in expressing the testator's intentions.
(Cited in Re Swain [2008] NSWSC 1343).
[9] Mortensen v New South Wales (Unreported, NSWCA, 12 December 1991), citing Estate of Spinks, Re Application of Mortensen and Eassie (Unreported, NSWSC, 22 August 1990) (Needham AJ.
The proposed rectification - what is to be substituted?
In Re Swain Young CJ in Eq succinctly summarised the Mortensen case as follows:
[26]… [T]he testatrix had made it manifestly clear that she did not want her money to 'go to the government' which for all intents and purposes meant she did not want to die intestate. However, there was a failure of one of the gifts she made and the result was that there was a partial intestacy. It was argued that the testatrix's intentions were that no monies should go to the government, and accordingly the will should be rectified.
[27]The Court of Appeal, like Needham J at first instance, dismissed the application. Sheller JA said that it would seem on the evidence that the will was so expressed as not to carry out the testatrix's intentions. However, the section does not only require the court to find that fact, but also to find that the court can rectify the will 'as to carry out the testator's intention.' In the Mortensen case even though the intentions were that no monies should pass to the government, the testatrix had not indicated which of the possible options she would wish to pursue had she realised that her primary gift failed. Accordingly, the will could not be rectified.
His Honour went on to state:
[45]I think that line of thinking must be applied in the instant case. What is to be taken as the testatrix's intention is what she meant either from the will and codicil that she signed (whether she actually read it or not) as well as extrinsic evidence.
…
[47]As in all rectification cases, not only must it be established that there is a mistake, but also what should be written down to express the intention. Here there is clearly a mistake. What, however, is to be substituted?
Re Swain - an example of rectification by incorporation
In Re Swain, a decision of Young CJ in Eq, granted rectification of a Will to incorporate provisions from another document, (a trust deed), to regulate the terms of a testamentary trust created by the Will.
The relevant facts in Re Swain were as follows:
(a)Mrs Swain made a Will on 25 June 2002.
(b)Clause 4 of her Will provided:
I give the whole of my estate to my son
(c)In March 2005, Mrs Swain executed a codicil to her Will.[10] The codicil was in simple terms, having two clauses, the second of which merely confirmed the Will made 25 June 2002. The first clause read as follows:[11]
[10] Mrs Swan died several days later on 11 March 2005.
[11] See Re Swain [5].
1.I ADD an additional clause 8 to my said Will, as follows:
8.Excluded from my assets in clause 4 herein are the following:
(i)all my debentures;
(ii)all my bank accounts;
(iii)all my shares and stocks;
(iv)the real estate property, [address given]; and
(v)all my allocated Pensions;
These assets will go into a discretionary trust for the benefit of my son, Anthony … and his family.
(e)The codicil to the Will was prepared by a solicitor. The evidence at trial was that there was a general understanding in the family, including Mrs Swain, that she was willing to leave her estate to her son in the form of a testamentary trust in order to allow the family to minimise its liability for tax. She left all the arrangements about this to her son.[12]
(f)Mrs Swain's son, Anthony, organised the codicil. In addition to the codicil the solicitor prepared a 'discretionary trust deed'.[13] The trust deed was 20 pages in length.[14]
(g)The evidence before the court was that another solicitor travelled to hospital to see Mrs Swain on 9 March 2005. Anthony was also present. The solicitor asked Mrs Swain if she knew what he was there for, to which the testatrix replied, 'Yes, I've already discussed this with Anthony. I know what it is all about'.[15]
(h)The testatrix never read the trust deed nor was it ever read to her in full.
(i) Mrs Swan died on 11 March 2005.
[12] See Decision at [29].
[13] See Decision at [33].
[14] See Decision at [38].
[15] See Decision at [34].
The court allowed rectification and made orders adding at the end of cl 1 of the codicil (cl 8 of the Will), the words:
Such trust to be in accordance with the provisions of the Discretionary Trust Deed executed by me contemporaneously with this will.
The effect of the Will of Mrs Paust
The Will is a one page document which reads as follows:
PERSONAL DETAILS
My name is Noreen Mary Paust
…
This is my last will and revokes all of my former wills and testamentary acts.
EXECUTORS
I appoint my daughter, Susan Downes, and my son, Gregory Paust, as executors of my estate and as joint trustees.
INHERITORS OF MY ESTATE
I trust (sic) the total of my estate to be divided equally between two TESTAMENTORY TRUSTS (sic). One trust to have Susan Downes as trustee and the other to have Gregory Paust as trustee. The beneficiaries of the respective trusts being Susan Downes and Gregory Paust and their biological children and their issue.
As the plaintiffs submitted:
The Will provides that Mrs Paust's estate would be divided equally between two trusts. The trustees of each trust are identified, Susan for one and Gregory the other. The Will also identifies the beneficiaries of each trust, being Susan and Gregory and their biological children and their issue (which would include any grandchildren and great‑grandchildren as at the date of Mrs Paust's death). The Will contains no provisions about how each trust would be administered. There is no provision for vesting the trust and no provisions conferring any discretion as to how income and capital of each trust would be divided or distributed. Those trusts would need to be administered in accordance with the statutory powers conferred under the Trustees Act 1962. The effect of the Will is that the two trusts established under the 2018 Will are trusts which confer a fixed interest on each identifiable beneficiary, being Susan, Gregory and their biological children, grandchildren (and potentially remoter issue).
March 2012 Will
Mrs Paust made an earlier Will on 5 March 2012 (the March 2012 Will).
The March 2012 Will made a number of specific gifts to family members and one charity and made provision for the residue of the estate, subject to the payment of debts and testamentary expenses, to be held on trust for two separate testamentary trusts.
Specifically, cl 8 of the March 2012 Will provided:
MY TRUSTEES shall divide the remainder of my residuary estate into two equal parts to be HELD UPON TRUST as follows:
8.1As to the first part:
For the NM PAUST NO. 1 TESTAMENTARY TRUST established in accordance with clause 9 of this my Will.
8.2As to the second part:
For the NM PAUST NO. 2 TESTAMENTARY TRUST established in accordance with clause 10 of this my Will."
The terms of the testamentary N.M Paust No 1 Testamentary Trust appear at Annexure A to these reasons.
Clause 9 of the March 2012 Will relevantly provided:
MY TRUSTEES shall set up a fund to consist of the part of my residuary estate described in clause 8.1 of this my Will and shall hold the fund on the trusts and on and subject to the provisions set out in this clause, and on and subject to the provisions set out in schedule 1 to this my Will:
9.1In this clause 9:
9.1.1'Beneficiaries' means:
(a)Susan Downes;
(b)The biological children and grandchildren of Susan Downes born before the Distribution Date and excluding step-children;
(c)…
The 'Distribution Date' (or vesting date) was defined as being 80 years from Mrs Paust's death (cl 9.1.3).
Clauses 9.2 and 9.3 provide a discretion to the trustee of the trust to distribute income or capital to beneficiaries at the discretion of the trustee. Clause 9.6 contains a provision for the removal and appointment of a trustee.
Clause 10 is in similar terms to cl 9 save that it sets out the beneficiaries and mechanical provisions for the trust for the benefit of Gregory, rather than Susan, his biological children and grandchildren. Clause 10 has virtually identical provisions to cl 9.
Clause 11 of the Will contains a suspension provision and confers upon a trustee a discretion to apply capital or income for the advancement and support of a beneficiary by making payments to another person for the benefit of the beneficiary.
Clause 12 contains an indemnity for trustees relieving them from liability except for loss attributable to dishonesty or the wilful omission of a breach of trust.
Schedule 1 to the Will contains a number of additional powers to the trustees.
Differences between the Will and the March 2012 Will
The Will was different to the March 2012 Will[16] in two significant respects.
[16] See Affidavit of Susan Downes sworn 22 January 2020 at Annexure 'C', pages 14 ‑ 34.
Firstly, the March 2012 Will (in cl 5) made 11 specific gifts totalling $510,000. Five of those gifts were for $20,000 each to two nieces, a daughter‑in‑law, son‑in‑law and step‑grandson. The clause also made four $100,000 gifts to four of her grandchildren, and two $5,000 gifts to her two sisters. Clause 6 also gifted $1,000 to a cancer charity.
The second significant difference is as to the gift of the residue. Clauses 8, 9, 10, 11, 12 and the schedule to the March 2012 Will create two testamentary trusts, one for the benefit of Susan, her children and grandchildren, and one for the benefit of Gregory, his children and grandchildren.
The evidence re Mrs Paust's testamentary intention
The circumstances in which the Will was made were as follows:
(a)As of 6 August 2018, Mrs Paust was living with Susan at her home. She had lived there since March 2017.
(b)Approximately one month before her death on 17 August 2018, Mrs Paust had received a diagnosis of advanced large B‑cell lymphoma. Although physically frail and house bound, she was mentally alert.
(c)At approximately 7.00 am on 6 August 2018, Susan went to her mother's bedroom to help her rise as usual. Mrs Paust said that she wanted to simplify her Will. She said words to the effect, 'Susan, I am very worried about my Will, I want to change it, I want to simplify it. I just want to make it so that it gets divided equally between you and Greg, for your families' benefit'.[17]
(d)Mrs Paust said words to the effect that 'circumstances have greatly changed since my previous Will made in 2013 ... people had died, more great grandchildren had been born ... financial circumstances have changed for others ...' and she was concerned that her previous Will could be upsetting for those left out when others were included.[18] Mrs Paust told Susan words to the effect that "she wanted to continue the testamentary trusts for Gregory and Susan as provided in her previous Will, but without any of the other bequests".[19]
(e)Susan telephoned the law firm Gibson & Gibson to speak to a solicitor who prepared Mrs Paust's previous Will but was told that he no longer worked there. She asked if anyone at the firm could make a home visit but was told no. Susan then phoned the Wheatbelt Community Legal Centre but was advised that Mrs Paust would need to attend in person for the preparation of her new Will. That was not possible due to her frailty.[20]
(f)When Susan told her mother she could not arrange for a solicitor to make a home visit, she recalls that Mrs Paust said words to the effect that 'I have been worrying about it for ages, but I just haven't been able to concentrate with all the medical stud going on; I don't want your or Greg's children to have that much money yet. You and Greg can decide when and how much to give them later.' She also said words to the effect that testamentary trusts were explained to her by Gibson & Gibson when they wrote her previous Will. She also said words to the effect 'I know about it and it has got financial advantages. I think that would be good for you and Greg and the kids. We need to speak to Greg but he is at that conference.'[21]
(g)Susan's evidence is that her mother was insistent that she make another Will and demanded that they do it together that day, and that her mother was afraid of dying with the previous Will still current. Mrs Paust told Susan what she wanted, including that she wanted two testamentary trusts for the benefit of her brother and her. Susan states that she typed on her laptop computer what she thought expressed her mother's wishes and what she had told her about wanting two testamentary trusts, one for the benefit of her brother and his family, and one for herself and her family. After the typing of the Will, she gave it to her mother to read.[22]
(h)Gregory was at a conference in Perth and Susan sent him a photograph of the Will to his mobile phone, and her brother later phoned and spoke to Mrs Paust in her presence. In this respect, Gregory deposes that he spoke to his mother on 7 August, that she sounded cheerful, and when she discussed the Will she wanted, he told her, that whatever she wanted in her Will was fine, and his mother had told him that she wanted to simplify the existing Will and remove bequests to others but maintain the testamentary trusts.[23] Gregory suggested that a lawyer should look over the document before it was signed and he deposes that his mother was insistent and wanted the Will signed that day because Daniel and John would be there and available to witness it.[24] These men are Daniel Jeffrey and John Barron, the witnesses to the Will, and men who were performing work at Susan's property.
(i)On 7 August 2018, Daniel Jeffrey and John Barron witnessed Mrs Paust execute the Will.[25]
The plaintiffs' position as to Mrs Paust's testamentary intention
[17] Affidavit of Susan Downes at [10].
[18] Affidavit of Susan Downes at [12].
[19] Affidavit of Susan Downes at [13].
[20] Affidavit of Susan Downes at [14].
[21] Affidavit of Susan Downes at [15].
[22] Affidavit of Susan Downes at [17].
[23] Affidavit of Gregory Paust at [45].
[24] Affidavit of Gregory Paust at [46].
[25] Affidavit of Gregory Paust at [21].
The plaintiffs submit that the Will does not give effect to Mrs Paust's testamentary intentions.
Specifically, they submitted that it was Mrs Paust's intention for her Will:
(a)To dispose of her assets to two testamentary trusts;
(b)One such trust to be for the benefit of Susan, Susan's children and grandchildren, with Susan to be the trustee of that trust so as to administer the trust at her discretion for the benefit of herself, her children and grandchildren;
(c)The other such trust to be for the benefit of Gregory, Gregory's children and grandchildren, with Gregory to be the trustee of that trust so as to administer the trust at his discretion for the benefit of himself, his children and grandchildren;
(d)The terms of the two trusts to be consistent with the provisions of an earlier Will which had been executed by Mrs Paust on 5 March 2012 and which had been prepared by the law firm Gibson and Gibson.
The rectification sought of Mrs Paust's Will seeks to invoke the provisions of clauses 8 to 12 and the schedule of her Will dated 5 March 2012 on the basis that those clauses reflect her instructions in the making of her Will such instructions being dictated to her daughter, Susan. The provisions sought to be invoked are set out in Annexure A: see also par 24 above.
I accept that the plaintiffs' submissions are an accurate statement of Mrs Paust's testamentary intention as evidenced by the affidavits of Susan and Gregory, the substance of which is set out above.
Analysis
The effect of the Will is that each of the beneficiaries, once ascertained, have a fixed equal interest in the trust assets. There is no flexibility afforded to the trustees to distribute capital or income to one beneficiary at the expense of the other. Further, any beneficiaries under the age of 18 would have to have their share of the trust assets held on trust for them until they attain the age of 18 whereupon they would take the interest for their absolute benefit.
I am satisfied that the Will does accurately give effect to Mrs Paust's intentions.
What is to be substituted?
In Re Swain, the Court incorporated the terms of the testamentary trust by reference. Given Re Swain involved similar circumstances to those in the present case, it is appropriate to apply the same method of incorporation by reference. Incorporation by reference in this case can be achieved by the following clause as proposed by the Plaintiffs':
The terms under which the respective trusts shall be administered shall be in accordance with the provisions of clauses 8, 9, 10, 11, 12 and schedule 1 of my Will executed 5 March 2012.
The Will as rectified would read as follows:
PERSONAL DETAILS
My name is Noreen Mary Paust
...
This is my last will and revokes all of my former wills and testamentary acts.
EXECUTORS
I appoint my daughter, Susan Downes, and my son, Gregory Paust, as executors of my estate and as joint trustees.
INHERITORS OF MY ESTATE
I trust (sic) the total of my estate to be divided equally between two TESTAMENTORY TRUSTS (sic). One trust to have Susan Downes as trustee, and the other to have Gregory Paust as trustee. The beneficiaries of the respective trusts being Susan Downes and Gregory Paust and their biological children and their issue. The terms under which the respective trusts shall be administered shall be in accordance with the provisions of clauses 8, 9, 10, 11, 12 and schedule 1 of my Will executed 5 March 2012.
I thank counsel for the detailed and accurate submissions prepared on behalf of the plaintiffs. Those submissions largely provide the basis for these reasons for decisions.
Orders
I order that:
1.Pursuant to s 50(3) of the Wills Act 1970 (WA), the time for the making of this application be extended.
2.Pursuant to s 50(1) of the Wills Act 1970, the Will of the late NOREEN MARY PAUST late of 2500 Spencers Brook - York Road, Wilberforce in the State of Western Australia be rectified as follows:
(a)The clause of the Will under the heading 'Inheritors of my estate' be rectified as follows:
I trust (sic) the total of my estate to be divided equally between two TESTAMENTORY TRUSTS (sic). One trust to have Susan Downes as trustee, and the other to have Gregory Paust as trustee. The beneficiaries of the respective trusts being Susan Downes and Gregory Paust and their biological children and their issue. The terms under which the respective trusts shall be administered shall be in accordance with the provisions of clauses 8, 9, 10, 11, 12 and schedule 1 of my Will executed 5 March 2012.
3.A certified copy of these orders be attached to the Grant of Probate and the plaintiffs produce the original of Grant Number PRO/7214/2018 for that purpose.
4.The costs of this application be paid out of the estate of NOREEN MARY PAUST pursuant to O 66 r 4(1) of the Rules of the Supreme Court 1971 (WA).
ANNEXURE "A"
My Trustees shall set up a fund to consist of the part of my residuary estate described in clause "8.1" (for the NM PAUST NO. 1 TESTAMENTARY TRUST) and shall hold the fund on the trusts and on and subject to the provisions set out in this clause and on and subject to the provisions set out in the Schedule to this my Will:
9.1In this Clause 9:
9.1.1. 'Beneficiaries' means -
(a) SUSAN DOWNES;
(b)the biological children and grandchildren of SUSAN DOWNES born before the Distribution Date and excluding step-children;
(c)a trust, company or other entity in which a person mentioned in paragraphs (a) - (b) above has an interest whether absolute, direct, indirect, present, contingent or expectant, or as a director, shareholder or trustee;
(d)a charity or charitable or religious entity in Australia.
9.1.2"category" in relation to income or capital of the Fund means a part or parts of the income or capital which the Trustee has identified by means or particular characteristics so that parts so identified may be separately distributed or dealt with;
9.1.3"Distribution Date" means the eightieth anniversary of the date of my death or such earlier date as the Trustee of the fund may in her absolute discretion decide;
9.1.4"domestic partner" in relation to a Beneficiary means a person not married to a beneficiary but with whom the beneficiary is living as a couple in a marriage-like relationship on a genuine basis (irrespective of gender) for a continuous period in excess of five (5) years;
9.1.5 "Fund" means the fund known as the N.M. PAUST NO 1 TESTAMENTARY TRUST and includes:-
(a)the part of my residuary estate described in Clause 2 (a) 1;
(b)income or property added or accumulated to the fund from time to time; and
(c)the proceeds of any loan taken out by the Trustee of the fund on behalf of the trust;
9.1.6"Guardian" means SUSAN DOWNES, MATTHEW GREGORY DOWNES and ROBIN ADAM DOWNES or their respective personal representative or personal representatives;
9.1.7"Trustee of the Fund" shall mean SUSAN DOWNES during her lifetime and upon her death, her personal representative or personal representatives or such other person or corporation as may be appointed in accordance with Clause 9.6 of this my Will;
9.2Distribution of Income
prior to the Distribution Date the Trustee of the Fund may at her discretion pay or apply all or part of the income of the Fund and all or part of the capital of the Fund to any one or more of the Beneficiaries in such shares and amounts and from such categories and at such times as the Trustee of the Fund thinks fit without obligation to make payments to all Beneficiaries or to ensure equality amongst those to whom payment is made.
9.3Distribution of Capital
upon the Distribution Date the Trustee of the Fund must distribute the Fund or the balance of it among such of the Beneficiaries living or in existence at that time as the Trustee of the Fund shall in her absolute discretion determine from such categories and in such proportions without regard to payments previously made to or in respect of any of the Beneficiaries PROVIDED THAT in the event that no Beneficiary exists or is living at the Distribution Date the Trustee of the Fund shall
9.4Payment to Minors
any payment made to or application for a minor Beneficiary pursuant to Clauses 9.2 and 9.3 may be paid by the Trustee of the Fund to a parent or guardian of that minor Beneficiary without being bound to see to the application of it by the parent or guardian;
9.5Trustee Powers (Taxation)
the Trustee of the fund may in relation to these trusts and the Fund with the consent of the Guardian (if there is a Guardian in office) exercise any powers given to her by Jaw or by this Will and may in addition:
9.5.1subject to any restriction imposed by Jaw on the accumulation of income, accumulate income and, if she thinks fit, add all or part of any accumulated income to the Fund;
9.5.2determine in her absolute discretion (in the event of the Trustee of the Fund having disposed of or having been deemed to have disposed of any asset of the Fund) what part of the capital or income will be resorted to in relation to any income tax liability flowing from disposal or deemed disposal;
9.5.3if the Trustee of the Fund so chooses at any time and from time to time she may:
(a)treat any profit, gain or receipt which is assessable income for the purposes of the Income Tax Assessment Act, 1936 (as amended) as nett income of the Fund; or
(b)treat any expenditure, payment or Joss which is an allowable deduction for the purposes of the Income Tax Assessment Act, 1936 (as amended) as expenditure against the nett income of the Fund;
9.5.4 the Trustee of the Fund shall have power in her absolute discretion to classify into categories and create a separate account in respect of any particular type or source of nett income of the Fund including but not limited to nett capital gains, dividend income with imputation credit, dividend income without imputation credit, trading income, interest, primary production income, nett prescribed payment income or such other categories as the Trustee or the Fund in her discretion may from time to time deem appropriate or otherwise upon receipt of that type or source of nett income of the Fund the Trustee of the Fund may pay such monies into the separate account;
9.5.5in a determination by the Trustee of the Fund pursuant to Clause 9.2 to pay apply or set aside any part or parts of the nett income of the Fund the Trustee of the Fund may expressly distinguish between and apply the same to any one or more of the said separate accounts and the Trustee of the Fund may determine to distribute income of any one or more of the said separate accounts to any one or more of the Beneficiaries and may exclude any one or more of the Beneficiaries from distribution of any income of any one or more such separate accounts and may in determining the amount or portion of nett income of the Fund to be distributed to any Beneficiary apportion and deduct as the Trustee of the Fund sees fit costs and expenses incurred by the Trustee of the Fund in each year to 30 th June;
9.5.6upon the Trustee of the Fund exercising her discretion pursuant to sub-paragraph 9.5.4, any amount thereby paid to any such Beneficiary shall retain its character and shall be of the same type, nature and substance in the hands of such Beneficiary as was the case in the hands of the Trustee of the Fund in each accounting year at the time of payment into the aforesaid separate accounts prior to such distribution, payment or application in favour of any such Beneficiary;
9.5.7the Trustee of the Fund shall have power in her absolute discretion to determine the particular type or source of the nett income of the Fund or the account against which the losses and outgoings incurred in deriving the nett income of the Fund are paid and the separate accounts in which any capital losses shall be set off;
9.5.8the Trustee of the Fund may lend any sums out of the Fund to any Beneficiary either with or without security and on such terms and conditions as to repayment and with or without interest as the Trustee of the Fund in her absolute discretion thinks fit;
9.5.9the Trustee of the Fund may appropriate any asset of the fund at such value as he may determine without the consent of the Beneficiary in full or partial satisfaction of any entitlement;
9.6.Removal and Appointment of Trustee
the Guardian shall have the power and authority from time to time to appoint a new trustee in place of the Trustee of the Fund or in addition to and jointly with the Trustee of the Fund and shall have the power to remove the trustee, such powers to be exercised by deed;
9.6.1where a trustee or additional trustee is appointed pursuant to the power of appointment comprised in this Clause 9.6 the Fund shall at the time vest in the person, or jointly in the persons, who become the trustees without the necessity for any vesting, declaration, transfer, conveyance or other assurance;
9.6.2the place of the trustee who retires, resigns, or disqualified in terms of Clause 9.7 or is removed may be filled by a sole appointment or the appointment of more than one new trustee.
9.7. Automatic disqualification of Trustee
9.7.1Subject to sub-paragraph 9.7.6 each of the following is an 'ineligible trustee':
(a)if an individual who is a Beneficiary meets one or more of the criteria in sub-paragraph 9.7.2:- the individual; and
(b)if an individual who is a Beneficiary, who meets one or more of the criteria in sub-paragraph 9.7.2 and is a director of or holds a controlling interest in a company: the company.
9.7.2 The criteria referred to in sub-paragraph 9.7.1 are:
(a)the individual is married or has been living with a partner in a marriage-like relationship with a person of the same sex or different sex (howsoever described) and begins to live separately and apart from her or his spouse or partner in a manner that constitutes a separation for the purposes of a law of the Commonwealth or a law of a state or territory, and has not settled, by way of a court order or financial agreement, the financial claims or rights arising from the relationship of both the individual or her or his spouse or partner; or
(b)the individual is the subject of a declaration by a board or tribunal governing the appointment of guardians and administrators under Commonwealth, state or territory law, made on the grounds of disability, infirmity, or lack of legal capacity, or the individual's treating doctor attests that the individual is unable to understand the nature or effect of the individual's own decisions, or is no longer able to communicate his or her decisions;
(c)the individual in unable to pay debts as and when they fall due, or is or becomes an undischarged bankrupt, is in liquidation, receivership or administration, or is unable in Jaw to act or continue to act as trustee.
9.7.3Where a person (and in sub-paragraphs 9.7.3, 9.7.4, 9.7.5 and 9.7.6 'person' includes a company) is or becomes an ineligible trustee:
(a)that person may not be appointed as a Trustee of the Fund;
(b)if that person has been appointed as a Trustee of the Fund, that appointment is terminated by operation of this clause and the person is removed as Trustee of the Fund;
(c)if that person holds a power of appointment, that power is terminated by operation of this clause, and that person may no longer exercise that power to appoint or remove a Trustee of the Fund;
(d)the provisions of clause 9.7 apply (subject to subparagraph 9.7.3(b)).
9.7.4A person who is an ineligible trustee ceases to be an ineligible trustee when that person no longer meets the terms of the definition in sub-paragraph 9.7.1.
9.7.5 A person who has ceased to be an ineligible trustee:
(a)may be appointed as Trustee of the Fund; and
(b)if the person previously held a power of appointment under this trust but the power of appointment was terminated by operation of this clause: the person regains the power of appointment on the terms and conditions which governed the power of appointment before the person became an ineligible trustee.
9.7.6The Guardian (not including an ineligible trustee who is also a Guardian) has the power (subject to law) in their discretion to declare a person who would otherwise be or become an ineligible trustee to be, or remain eligible to be, a Trustee of the Fund.
9.8Variation of Trust
9.8.1the Trustee of the Fund may with the consent of the Guardian (if there is a Guardian in office) by instrument in writing vary the provisions of the trust subject to the following:-
(a)any variations are restricted to the Trustee of the Fund's powers and discretions, the investment of the Fund and the management of the trust;
(b)a variation may operate from a stated future date only; and
(c)a variation is ineffective if it -
(i)brings about an infringement of any rule or Jaw against perpetuities or remoteness of vesting;
(ii) alters the Beneficiaries; or
(iii) causes a resettlement of the trust.
10My Trustees shall set up a fund to consist of the part of my residuary estate described in clause described in clause "8.2" (for the NM PAUST NO. 2 TESTAMENTARY TRUST) and shall hold the fund on the trusts and on and subject to the provisions set out in this clause and on and subject to the provisions set out in Schedule 1 to this my Will:
10.1 In this Clause 10:
10.1.1 "Beneficiaries" means -
(a)GREGORY PAUST;
(b)the biological children and grandchildren of GREGORY PAUST born 'before the Distribution Date and excluding step-children;
(c)a trust, company or other entity in which a person mentioned in paragraphs (a) - (b) above has an interest whether absolute, direct, indirect, present, contingent or expectant, or as a director, shareholder or trustee;
(d)a charity or charitable or religious entity in Australia.
10.1.2"category" in relation to income or capital of the Fund means a part or parts of the income or capital which the Trustee has identified by means of particular characteristics so that parts so identified may separately distributed or dealt with;
10.1.3"Distribution Date" means the eightieth anniversary of the date of my death or such earlier date as the Trustee of the fund may in his absolute discretion decide;
10.1.4"domestic partner" in relation to a Beneficiary means a person not married to a beneficiary but with whom the beneficiary is living as a couple in a marriage-like relationship on a genuine basis (irrespective of gender) for a continuous period in excess of five (5) years;
10.1.5"Fund" means the fund known as the N.M. PAUST NO 2 TESTAMENTARY TRUST and includes:-
(a)the part of my residuary estate described in Clause 2 (a) 2;
(b)income or property added or accumulated to the fund from time to time; and
(c)the proceeds of any Joan taken out by the Trustee of the fund on behalf of the trust;
10.1.6"Guardian" means GREGORY PAUST, ANIKA LILIAN PAUST and ELOISE SUSANNE PAUST or their respective personal representative or personal representatives;
10.1.7"Trustee of the Fund" shall mean Gregory Paust during his lifetime and upon his death, his personal representative or personal representatives or such other person or corporation as may be appointed in accordance with Clause 9.6 of this my Will;
10.2Distribution of Income
prior to the Distribution Date the Trustee of the Fund may at his discretion pay or apply all or part of the income of the Fund and all or part of the capital of the Fund to any one or more of the Beneficiaries in such shares and amounts and from such categories and at such times as the Trustee of the Fund thinks fit without obligation to make payments to all Beneficiaries or to ensure equality amongst those to whom payment is made.
10.3 Distribution of Capital
upon the Distribution Date the Trustee of the Fund must distribute the Fund or the balance of it among such of the Beneficiaries living or in existence at that time as the Trustee of the Fund shall in her absolute discretion determine from such categories and in such proportions without regard to payments previously made to or in respect of any of the Beneficiaries PROVIDED THAT in the event that no Beneficiary exists or is living at the Distribution Date the Trustee of the Fund shall distribute the Fund to such of the next of kin of GREGORY PAUST as shall be living at the date as tenants in common in equal shares.
10.4 Payment to Minors
any payment made to or application for a minor Beneficiary pursuant to Clauses 10.2 and 10.3 may be paid by the Trustee of the Fund to a parent or guardian of that minor Beneficiary without being bound to see to the application of it by the parent or guardian;
10.5 Trustee Powers (Taxation)
the Trustee of the fund may in relation to these trusts and the Fund with the consent of the Guardian (if there is a Guardian in office) exercise any powers given to him by law or by this Will and may in addition:
10.5.1 subject to any restriction imposed by law on the accumulation of income, accumulate income and, if he thinks fit, add all or part of any accumulated income to the Fund;
10.5.2determine in his absolute discretion (in the event of the Trustee of the Fund having disposed of or having been deemed to have disposed of any asset of the Fund) what part of the capital or income will be resorted to in relation to any income tax liability flowing from disposal or deemed disposal;
10.5.3.if the Trustee of the Fund so chooses at any time and from time to time she may:
(a)treat any profit, gain or receipt which is assessable income for the purposes of the Income Tax Assessment Act, 1936 (as amended) as nett income of the Fund; or
(b)treat any expenditure, payment or loss which is an allowable deduction for the purposes of the Income Tax Assessment Act, 1936 (as amended) as expenditure against the nett income of the Fund;
10.5.4the Trustee of the Fund shall have power in his absolute discretion to classify into categories and create a separate account in respect of any particular type or source of nett income of the Fund including but not limited to nett capital gains, dividend income with imputation credit, dividend income without imputation credit, trading income, interest, primary production income, nett prescribed payment income or such other categories as the Trustee or the Fund in his discretion may from time to time deem appropriate or otherwise upon receipt of that type or source of nett income of the Fund the Trustee of the Fund may pay such monies into the separate account;
10.5.5in a determination by the Trustee of the Fund pursuant to Clause 10.2 to pay apply or set aside any part or parts of the nett income of the Fund the Trustee of the Fund may expressly distinguish between and apply the same to any one or more of the said separate accounts and the Trustee of the Fund may determine to distribute income of any one or more of the said separate accounts to any one or more of the Beneficiaries and may exclude any one or more of the Beneficiaries from distribution of any income of any one or more such separate accounts and may in determining the amount or portion of nett income of the Fund to be distributed to any Beneficiary apportion and deduct as the Trustee of the Fund sees fit costs and expenses incurred by the Trustee of the Fund in each year to 30th June;
10.5.6upon the Trustee of the Fund exercising his discretion pursuant to sub-paragraph 10.5.4, any amount thereby paid to any such Beneficiary shall retain its character and shall be of the same type, nature and substance in the hands of such Beneficiary as was the case in the hands of the Trustee of the Fund in each accounting year at the time of payment into the aforesaid separate accounts prior to such distribution, payment or application in favour of any such Beneficiary;
10.5.7the Trustee of the Fund shall have power in his absolute discretion to determine the particular type or source of the nett income of the Fund or the account against which the losses and outgoings incurred in deriving the nett income of the Fund are paid and the separate accounts in which any capital losses shall be set off;
10.5.8the Trustee of the Fund may lend any sums out of the Fund to any Beneficiary either with or without security and on such terms and conditions as to repayment and with or without interest as the Trustee of the Fund in his absolute discretion thinks fit;
10.5.9the Trustee of the Fund may appropriate any asset of the fund at such value as he may determine without the consent of the Beneficiary in full or partial satisfaction of any entitlement;
10.6Removal and Appointment of Trustee
the Guardian shall have the power and authority from time to time to appoint a new trustee in place of the Trustee of the Fund or in addition to and jointly with the Trustee of the Fund and shall have the power to remove the trustee, such powers to be exercised by deed;
10.6.1where a trustee or additional trustee is appointed pursuant to the power of appointment comprised in this Clause 10.6 the Fund shall at the time vest in the person, or jointly in the persons, who become the trustees without the necessity for any vesting, declaration, transfer, conveyance or other assurance;
10.6.2the place of the trustee who retires, resigns, or disqualified in terms of Clause 10.7 or is removed may be filled by a sole appointment or the appointment of more than one new trustee.
10.7Automatic disqualification of Trustee
10.7.1Subject to sub-paragraph 10.7.6 each of the following is an 'ineligible trustee':
(a)if an individual who is a Beneficiary meets one or more of the criteria in sub-paragraph 10.7.2:- the individual; and
(b)if an individual who is a Beneficiary, who meets one or more of the criteria in sub-paragraph 10.7.2 and is a director of or holds a controlling interest in a company: the company.
10.7.2The criteria referred to in sub-paragraph 10.7.1 are:
(a)the individual is married or has been living with a partner in a marriage-like relationship with a person of the same sex or different sex (howsoever described) and begins to live separately and apart from her or his spouse or partner in a manner that constitutes a separation for the purposes of a law of the Commonwealth or a law of a state or territory, and has not settled, by way of a court order or financial agreement, the financial claims or rights arising from the relationship of both the individual or her or his spouse or partner; or
(b)the individual is the subject of a declaration by a board or tribunal governing the appointment of guardians and administrators under Commonwealth, state or territory law, made on the grounds of disability, infirmity, or lack of legal capacity, or the individual's treating doctor attests that the individual is unable to understand the nature or effect of the individual's own decisions, or is no longer able to communicate his or her decisions;
(c)the individual in unable to pay debts as and when they fall due, or is or becomes an undischarged bankrupt is in liquidation, receivership or administration or is unable in law to act or continue to act as trustee.
10.7.3Where a person (and in sub-paragraphs 10.7.3, 10.7.4, 10.7.5 and 10.7.6 'person' includes a company) is or becomes an ineligible trustee:
(a)that person may not be appointed as a Trustee of the Fund;
(b)if that person has been appointed as a Trustee of the Fund, that appointment is terminated by operation of this clause and the person is removed as Trustee of the Fund;
(c)if that person holds a power of appointment, that power is terminated by operation of this clause, and that person may no longer exercise that power to appoint or remove a Trustee of the Fund;
(d)the provisions of clause 10.7 apply (subject to subparagraph 10.7.3 (b)).
10.7.4 A person who is an ineligible trustee ceases to be an ineligible trustee when that person no longer meets the terms of the definition in sub-paragraph 10.7.1.
10.7.5 A person who has ceased to be an ineligible trustee:
(a)may be appointed as Trustee of the Fund; and
(b)if the person previously held a power of appointment under this trust but the power of appointment was terminated by operation of this clause: the person regains the power of appointment on the terms and conditions which governed the power of appointment before the person became an ineligible trustee.
10.7.6The Guardian (not including an ineligible trustee who is also a Guardian) has the power (subject to law) in their discretion to declare a person who would otherwise be or become an ineligible trustee to be, or remain eligible to be, a Trustee of the Fund.
10.8 Variation of Trust
10.8.1the Trustee of the Fund may with the consent of the Guardian (if there is a Guardian in office) by instrument in writing vary the provisions of the trust subject to the following:-
(a)any variations are restricted to the Trustee of the Fund's powers and discretions, the investment of the Fund and the management of the trust;
(b)a variation may operate from a stated future date only; and
(c)a variation is ineffective if it -
(i)brings about an infringement of any rule or law against perpetuities or remoteness of vesting;
(ii) alters the Beneficiaries; or
(iii) causes a resettlement of the trust.
NO Trustee purporting to act in the execution of the trusts and powers hereof shall be liable for any loss not attributable to his own dishonesty or to the wilful commission or omission by him of any act known by him to be a breach of trust and in particular shall not be bound to take any proceedings against a co-trustee for any breach or alleged breach of trust committed by such co‑trustee.
SCHEDULE
The Trustee of the Funds created under this will shall have the following additional powers to those granted or vested in them by Jaw, equity or statute which they may exercise in their absolute discretion:
open in their name such current or cheque accounts as they thinks fit with full power to operate such accounts;
exercise the powers of a trustee for sale in respect of any assets and my Trustee may without being liable for any Joss caused by so doing:
2.1postpone any sale;
2.2retain in its form of investment at my death any part of my estate, even though it is wasting, hazardous or reversionary;
2.3sell by public auction or private sale, for cash or on credit;
determine whether receipts or outgoings are capital income or partly income or capital so as to bind the beneficiaries notwithstanding that the receipts are from a company that has made a decision on the matter;
apply for the maintenance, education (including travel to broaden the mind}, advancement or benefit of any beneficiary entitled in expectancy the whole or any part of the capital and income of that part of my estate to which that beneficiary is entitled or may in the future be entitled and make a payment or payments to a minor beneficiary's parent or guardian or a person with whom the minor beneficiary resides and accept the receipt of that payee as an absolute discharge;
invest or reinvest in or acquire for the purpose of receiving income, interest, profit or capital gain in any country of the World in any of the following:
5.1shares, stock units, debentures, debenture stock, bonds, notes including convertible notes, or other securities of a company whether public or proprietary or of a statutory authority;
5.2land of any tenure including leasehold and land held by company title and land subject to any mortgage or charge;
5.3mortgages, including contributory mortgages;
5.4the units or interest of or in a trust including a fixed or flexible trust;
5.5mutual trusts;
5.6friendly society investments;
5.7insurance bonds;
5.8bank accepted or endorsed bills of exchange;
5.9deposits in the authorised short term money market or in a cash management trust;
5.10 deposits with any public company, bank, credit union, building or cooperative society, trust or public body;
5.11antiques, works of art; coins, stamps or other collectables;
make loans to any beneficiary or any person or company associated with any beneficiary whether:
6.1secured or unsecured;
6.2on interest or interest free;
6.3alone or jointly; and
6.4on whatever terms;
acquire or lease assets for occupation, use or enjoyment by a beneficiary (whether alone or with some other person or persons);
vote in and exercise all rights, of whatsoever nature for voting in any company or trust in which my residuary estate or any Fund arising from my residuary estate may be interested or concerned;
apply for and accept directorship of any company in which my residuary estate or any Fund arising from my residuary estate may be interested or concerned;
apply for, accept or take up bonus shares or units or other rights or benefits made available by a Company or unit trust in which my residuary estate or any Fund arising from my residuary estate may be interested or concerned;
borrow money or raise money for any purpose connected with these trusts either with or without giving security and enter into any mortgage, charge, bill of sale, lien or security over any part of the property which forms part of my estate or any Fund arising from my residuary estate;
lease any part of the Fund:
12.1for the periods and upon and subject to the covenants and conditions which the Trustee of the Fund thinks fit; and
12.2either with or without provisions for renewal or otherwise accept surrenders of leases or tenancies of any part of the Fund;
maintain, repair, improve, develop, alter, renovate, pull down, erect or re erect any part of the Fund;
14. enter, participate in, enter and participate in, take out, maintain or take out and maintain any one or more of the following:
14.1any insurance policy against risks affecting the Fund;
14.2any life insurance policy against risks affecting the Fund or on the life of any Beneficiary whether or not any such policy shall stand in the name of the Trustee of the Fund;
14.3any annuity and the purchasing and/or the advancing of any monies upon reversionary, contingent or other interests of any nature whatsoever in real or personal property;
14.4any policy or contract of health or accident insurance or benefit in respect of any person;
14.5any friendly society, trade union or association of employees benefit scheme in respect of any person;
14.6any superannuation or pension scheme in relation to any person;
14.7any funeral benefit or payment scheme in relation to any person;
use income, capital or both income and capital to pay income tax and capital gains tax levied on the Fund;
employ and pay at the expense of the Fund, any agent or professional advised to transact any business or do any act required to be transacted or done in the execution of the trusts hereof or, if my Trustee sees fit, to seek or act upon the advice of any agent or professional adviser; and
carry on, either alone or in partnership with any person or persons, the whole or part of any business and for that purpose my Trustee as he thinks fit:
17.1lease, purchase or acquire any property;
17.2engage or dismiss staff and agents (and may engage or dismiss as staff or agents who are executors, trustees or beneficiaries of my Will);
17.3use any assets of my estate including money;
17.4borrow money on the security of any part of the Fund;
17.5provide financial accommodation on the security of any part of the Fund;
17.6incur liabilities binding on the Fund on the following terms:
17.7the use of such assets and credit of the Fund is an advance to the business;
17.8the business pays for the advance at rates at which the use of similar assets or credits could be obtained from outside sources;
17.9other terms as the Trustee of the funds thinks fit to impose;
17.10all other matters as the Trustee of the Fund considers necessary to further the trusts established pursuant to this my Will.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MDM
Associate to the Honourable Justice Curthoys1 OCTOBER 2020
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