Elovalis v Elovalis

Case [2008] WASCA 141

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   ELOVALIS -v- ELOVALIS [2008] WASCA 141

CORAM:   MARTIN CJ

BUSS JA
NEWNES AJA

HEARD:   6 MARCH 2008

DELIVERED          :   4 JULY 2008

FILE NO/S:   CACV 38 of 2007

BETWEEN:   HELEN ELOVALIS

VICKI MICHELE TOT
Appellants

AND

ANASTASIOS VASILIOS ELOVALIS as Trustee of Mike's Gardening Trust
First Respondent

CHRISTOS VASILIOS ELOVALIS
Second Respondent

ON APPEAL FROM:

For File No               :  CACV 38 of 2007

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :MASTER SANDERSON

Citation  :ELOVALIS & ANOR -v- ANASTASIOS VASILIOS ELOVALIS AS TRUSTEE OF MIKE'S GARDENING TRUST & ANOR [2006] WASC 291

File No  :CIV 2056 of 2004

Catchwords:

Trusts - Discretionary trust - Whether primary judicial officer applied the correct test when summarily dismissing application to appoint new trustee - Obligations of a trustee when conferred with wide discretionary powers

Legislation:

Trustees Act 1962 (WA), s 77

Result:

Appeal allowed

Category:    B

Representation:

Counsel:

Appellants:     Mr S Penglis

First Respondent           :     Mr T Lampropoulos SC

Second Respondent       :     Mr T Lampropoulos SC

Solicitors:

Appellants:     Freehills

First Respondent           :     Ilberys Lawyers

Second Respondent       :     Ilberys Lawyers

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

Armitage v Nurse [1998] Ch 241

Birtchnell v Equity Trustees Executors & Agency Co Ltd (1929) 42 CLR 384

Chief Commissioner of Stamp Duties (NSW) v Buckle [1998] HCA 4; (1998) 192 CLR 226

Commissioner of State Revenue v Serana Pty Ltd [2008] WASCA 82

CPT Custodian Pty Ltd v Commissioner of State Revenue of the State of Victoria [2005] HCA 53; (2005) 224 CLR 98

Edell v Sitzer (2001) 55 OR (3d) 198

Edge v Pensions Ombudsman [1998] 3 WLR 466

Edge v Pensions Ombudsman [2000] Ch 602

Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547

Forsayth NL v Northern Gold NL (Unreported, WASCA, Library No 940012, 20 January 1994)

Gartside v Inland Revenue Commissioners [1968] AC 553

Gisborne v Gisborne (1877) 2 App Cas 300

Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd [2007] WASCA 10

Kent v SS 'Maria Luisa' (No 2) [2003] FCFCA 93; (2003) 130 FCR 12

McLaughlin v Prince [2002] WASC 274

Miller v Cameron (1936) 54 CLR 572

Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1

Passingham v Sherborn (1846) 9 Bav 424; 50 ER 4076

Porteous v Rinehart (1998) 19 WAR 495

Re Beatty [1990] 1 WLR 1503

Re Estate of Roberts (1983) 20 NTR 13

Re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74

Sargeant v National Westminster Bank PLC (1991) 61 P & CR 518

Securities and Exchange Commission v Chenery Corporation (1943) 318 US 80

Smith v Smith [2006] WASC 166

Tempest v Lord Camoys (1882) 21 Ch D 571

Vegners v Federal Commissioner of Taxation (1991) 21 ATR 1347

MARTIN CJ: 

Summary

  1. Helen Elovalis and Vicki Michele Tot (the daughters) appeal from the decision of the master granting summary judgment and dismissing proceedings which they…

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AGLC
Elovalis v Elovalis [2008] WASCA 141
Case
[2008] WASCA 141
Decision Date

CaseChat Overview and Summary

The case of Elovalis v Elovalis involved a dispute concerning the management of a discretionary trust. The appellants, who were beneficiaries of the trust, sought the removal of the first respondent, Steve Elovalis, as trustee and the appointment of a new trustee. The second respondent, Chris Elovalis, was the appointor of the trust, having the power to appoint and remove trustees. The Court of Appeal in Western Australia was tasked with reviewing the decisions of the primary judicial officer who had summarily dismissed the application to appoint a new trustee and the subsequent orders made by the Master.

The central legal issues revolved around whether the primary judicial officer correctly applied the relevant legal test when dismissing the application to appoint a new trustee and the obligations of a trustee when conferred with wide discretionary powers. The court examined whether the primary judicial officer correctly exercised his discretion in dismissing the application and whether the obligations of the trustee, as outlined in the trust instrument, were properly considered.

The Court of Appeal found that the primary judicial officer did not apply the correct test when dismissing the application. The court emphasized the importance of examining the terms of the trust instrument to determine the nature and scope of the trustee's obligations. It was noted that the fiduciary duties of a trustee, including duties to avoid conflicts of interest and to act with reasonable prudence, may be limited by the terms of the trust instrument. The court concluded that the primary judicial officer should have considered the specific powers and duties of the trustee as outlined in the trust instrument. As a result, the orders made by the Master were set aside, and the appeal was allowed.

The court's final orders included allowing the appeal and setting aside the orders made by the Master in relation to the first respondent. Additionally, the court ordered that the respondents repay any amounts paid by the appellants to the respondents pursuant to orders made by the Master, including costs, together with interest at 6% per annum. The court also ordered that the costs of the application for summary judgment made by each of the respondents be costs in the cause of the action.

Orders

Orders of the court

Appeal allowed

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

JUDGMENT OF THE COURT: On 4 July 2008 the court published its reasons for decision on the substantive appeal, and made orders allowing the appeal and setting aside the orders made by the Master insofar as they related to the first respondent to the appeal (Steve Elovalis). With respect to costs the court ordered that the costs of the application for summary judgment made by each of the respondents be costs in the cause of the action, and further ordered that the respondents repay any amounts paid by the appellants to the respondents pursuant to orders made by the Master, including (in particular) the orders made by the Master with respect to costs, together with interest at 6% per annum. At the time of publication of the court's reasons for decision, counsel for the second respondent (Chris Elovalis) asserted that the reasons which were to be published by the court did not sustain the conclusion that the order made by the Master entering judgment in favour of the second respondent should be set aside. There was also disagreement between the parties with respect to the appropriate orders to be made in relation to the costs of the appeal. Accordingly, directions were made for the exchange of written submissions dealing with:(a)the question of whether the judgment entered in favour of the second respondent should be set aside; and (b)the costs of the appeal. It was further ordered that those issues would be resolved by the court on the papers. These reasons provide the decision of the court on those issues. The history of the proceedings, and the position of the second respondent in those proceedings, are canvassed in the reasons previously published: Elovalis v Elovalis [2008] WASCA 141. In summary, after the proceedings were commenced against the original trustee of the trust, Mike's Nominees Pty Ltd, the second respondent exercised his powers as appointor of the Trust to remove the trustee and to appoint the first respondent as trustee. The respondents were then substituted as defendants to the proceedings and directions were made for the filing of pleadings. In the statement of claim filed pursuant to those directions, the appellants sought relief in the form of removal of the first respondent as trustee of the trust, and the appointment of a new trustee. No cause of action was specifically pleaded against the second respondent, nor any relief specifically sought against him. In that regard, the Master observed in his reasons for the judgment under appeal [3]:No orders are sought against the second defendant. Whatever else is done in these proceedings, the action against the second defendant ought be terminated. Neither the appellants nor the respondents specifically addressed the arguably separate position of the second respondent in either their oral or written submissions on appeal. Therefore, this issue was not addressed in the reasons previously published by the court. However, at the time of the judgment the second respondent submitted that the position adopted by the Master in relation to his separate position was correct, and that the judgment in his favour should be upheld.

Ratio Decidendi

Legal Principle Established

In Securities and Exchange Commission v Chenery Corporation (1943) 318 US 80, Frankfurter J said:To say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty? (85 ‑ 86).In other words, to describe someone as a fiduciary, without more, is meaningless. See Re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74, 98. Where a fiduciary relationship is constituted by, or arises out of, a trust instrument which specifies the fiduciary's powers and duties, the terms of the instrument must be examined for the purpose of determining the nature and scope of the fiduciary's undertaking. See Birtchnell v Equity Trustees Executors & Agency Co Ltd (1929) 42 CLR 384, 408 (Dixon J); Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1, 15 ‑ 17 (Bryson J); Meagher Gummow & Lehane's 'Equity Doctrines & Remedies', 4th ed [5-075]. The nature and scope of the fiduciary duties of a trustee; for example, the duties to avoid conflicts of interest, to act with reasonable prudence and to observe impartiality, may be limited by the terms of the trust instrument. See Re Beatty [1990] 1 WLR 1503, 1506 (Hoffmann J); Armitage v Nurse [1998] Ch 241, 251 ‑ 256 (Millett LJ, Hirst and Hutchison LJJ agreeing); Edge v Pensions Ombudsman [2000] Ch 602, 621, 627 ‑ 630 (Peter Gibson, Ward and Chadwick LJJ); Edell v Sitzer (2001) 55 OR (3d) 198 [158] ‑ [159] (Cullity J). In Re Beatty, Hoffmann J said:The rule that a trustee cannot profit from his trust would ordinarily exclude the trustees themselves from the ambit of the powers, but clause 12(c) of the will allows the trustees to exercise any power conferred by the will, notwithstanding that they may have a direct personal interest in the mode of its exercise. This arguably allows the trustees, subject to having proper regard to their overall fiduciary duties, to make gifts or payments to themselves. They have in fact paid themselves £10,000 each in accordance with the express wish of Mrs Beatty that they should do so (1506). In Sargeant v National Westminster Bank PLC (1991) 61 P & CR 518, cl 11(iv) of a testator's will permitted any trustee on his own or two trustees jointly to purchase the trust property. The English Court of Appeal (Nourse and Bingham LJJ and Sir George Waller) held that the effect of the provision was to exclude a purchase by the trustees from the operation of the rule which disabled a trustee from purchasing the trust property. Their Lordships also held:It cannot be doubted that the trustees have ever since been in a position where their interests as tenants may conflict with their duties as trustees to the estate of Charles. But the conclusive objection to the application of the absolute rule on which Mr Romer relies is that it is not they who have put themselves in that position. They have been put there mainly by the testator's grant of the tenancies and by the provisions of his will and partly by contractual arrangements to which Charles himself was a party and of which his representatives cannot complain. The administrators cannot therefore complain of the trustees' continued assertion of their rights as tenants (523).