Glenister v Glenister

[2001] WASC 133

GLENISTER & ORS -v- GLENISTER & ORS [2001] WASC 133

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 133
Case No:	CIV:1357/2001	Heard:	23 MAY 2001
Coram:	HASLUCK J	Delivered:	23/05/01
No of pages:	8	Judgment Part:	1 of 1
Result:	Application approved
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Parties:	SHIRLEY DAWN GLENISTER CRAIG RODERICK GLENISTER RODNEY PHILLIP GLENISTER DIANE ELAINE GLENISTER CHRISTINE ROBYN GLENISTER AMBER MAI GLENISTER JADE FRANCIS GLENISTER SAXON JAMES GLENISTER JOELLE ELISE GLENISTER
Catchwords:	Trustees Act Application to vary trust provisions Proposal for variation of vesting date Function of court Tax factors and absence of dissent Application approved
Legislation:	Trustees Act 1962, s 90
Case References:	Faye v Faye [1973] WAR 66 Re Greenwood [1988] 1 NZLR 197 Re Steed's Wills Trusts [1960] Ch 407 Re Beetham's Trusts [1964] NZLR 576 Re Whittome's Trust [1962] NZLR 773 Thompson v Thompson & Anor [1954] 2 All ER 462

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : GLENISTER & ORS -v- GLENISTER & ORS [2001] WASC 133 CORAM : HASLUCK J HEARD : 23 MAY 2001 DELIVERED : 23 MAY 2001 FILE NO/S : CIV 1357 of 2001 BETWEEN : SHIRLEY DAWN GLENISTER

CRAIG RODERICK GLENISTER
RODNEY PHILLIP GLENISTER
Plaintiffs

AND

DIANE ELAINE GLENISTER
CHRISTINE ROBYN GLENISTER
First Defendants

AMBER MAI GLENISTER
JADE FRANCIS GLENISTER
SAXON JAMES GLENISTER
JOELLE ELISE GLENISTER
Second Defendants

Catchwords:

Trustees Act - Application to vary trust provisions - Proposal for variation of vesting date - Function of court - Tax factors and absence of dissent - Application approved

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Legislation:

Trustees Act 1962, s 90

Result:

Application approved

Representation:

Counsel:

Plaintiffs : Mr C J L Pullin QC & Mr J G Young
First Defendants : No appearance
Second Defendants : Mr C P Stokes

Solicitors:

Plaintiffs : Marks and Sands
First Defendants : No appearance
Second Defendants : Chris Stokes & Associates

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

Faye v Faye [1973] WAR 66
Re Greenwood [1988] 1 NZLR 197
Re Steed's Wills Trusts [1960] Ch 407

Case(s) also cited:

Re Beetham's Trusts [1964] NZLR 576
Re Whittome's Trust [1962] NZLR 773
Thompson v Thompson & Anor [1954] 2 All ER 462

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1 HASLUCK J: This is an application to vary trust deeds made by the plaintiffs pursuant to an originating summons. The relief sought is in these terms: the plaintiffs claim (1) that the Court approves, on behalf of the second, third and fourth-named second defendants, the variation of cl 1 of the trust deeds respectively, establishing the Glenister Family Trust No 1 and the Glenister Family Trust No 2, by substituting for 1st day of July 2001 in the definition of vesting day, 30th day of September 2050; (2) the costs of the defendants to be taxed and paid equally out of trust funds of the Glenister Family Trust No 1 and the Glenister Family Trust No 2.

2 The application is made under s 90 of the Trustees Act 1962. The Court is being asked to exercise its discretionary jurisdiction to approve the arrangement proposed by the plaintiffs to vary the two trusts by altering the vesting date from 1 July 2001 to 30 September 2050.

3 Section 90 of the Trustees Act reads, in part, as follows:

"90. (1) Without limiting any other powers of the Court, it is hereby declared that, where any property is held on trusts arising under any will, settlement or other disposition, or on the intestacy or partial intestacy of any person, or under any order of the Court, the Court may, if it thinks fit, by order approve on behalf of -

(a) any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who, by reason of infancy or other incapacity, is incapable of assenting; or

(b) any person (whether ascertained or not) who may become entitled, directly or indirectly, to an interest under the trusts as being, at a future date or on the happening of a future event, a person of any specified description or a member of any specified class of persons; but this paragraph does not include any person who would be of that description or a member of that class, if that date had fallen or that event had happened at the date of the application to the Court; or

(c) any unborn or unknown person; or

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(d) any person, in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined,

any arrangement (by whomever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts, or enlarging the powers of the trustees in managing or administering any of the properties subject to the trusts.

(2) Except where the Court approves an arrangement on behalf of a person referred to in paragraph (d) of subsection (1) of this section, the Court shall not approve an arrangement on behalf of any person if the arrangement is to his detriment; and, in determining whether any such arrangement is to the detriment of a person, the Court may have regard to all the benefits that may accrue to him directly or indirectly in consequence of the arrangement, including the welfare and honour of the family to which he belongs."

4 Counsel for the plaintiffs has referred me to a number of previously decided cases bearing upon the exercise of a power of the kind I have just described. One useful point of reference is the decision of Lavan J in Faye v Faye[1973] WAR 66. In that case it was said that a function of the Court in an application of this nature is to act as a substitute for the persons who are incapable, either because they lack capacity or because they are not born, to signify their consent.

5 The proposal for variation is to be considered as a whole. In that case, although the application was designed to interfere with the intention of the settler, no detriment would accrue to any person contingently interested under the settlement and all interests would be best served by approving of the application that was before the Court. A similar view of the matter is reflected in the decision of Re Greenwood[1988] 1 NZLR 197.

6 As I look at those cases, it is also material to note that the Court may approve a proposal to vary a trust if it is proposed in order to gain a taxation advantage.

7 Against that background, I come to the affidavit of the plaintiffs sworn 16 February 2001 in which the matters bearing upon the application are put before me. It appears from the affidavit that Shirley Glenister is

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the widow of Cecil George Glenister, known as Clarrie Glenister, and that Shirley and Clarrie Glenister are the parents of Craig Glenister and Rodney Glenister. Both Craig and Rodney are married and each has two children whose ages range from 19 years to 10 years. It is apparent from other portions of the affidavit that all those parties are represented before me in regard to this application.

8 The affidavit refers to the establishment of the two subject trusts by trust deeds dated 28 October 1970. The initial trustees appointed under both trust deeds were Clarrie Glenister and Shirley Glenister. They continued as trustees until 25 January 1995 when Clarrie Glenister died. Upon his death, Craig Glenister and Rodney Glenister became additional trustees. The trustees of the two trusts remain as the deponents of the affidavit, Shirley Glenister, Craig Glenister and Rodney Glenister.

9 I do not intend to traverse the full provisions of the two trust deeds. It is sufficient to note that the trust fund is defined to mean and include the settled sum plus money, property and assets at any time paid or transferred by persons to or accepted by the trustees. It is also material to note for present purposes that under the trust deeds the vesting date of each trust is 1 July 2001, being the date I mentioned earlier, and thus the date the subject of the application before me.

10 Each trust deed provides that until the vesting day the trustees may in their absolute discretion pay or apply the income of the trust fund in the manner indicated by the trust provisions. It is also material to note from the affidavit that the trust deeds do not contain any power of amendment or variation, hence the present application.

11 In par 21 to par 25 of the affidavit, the beneficiaries are described and it is apparent from the description that the beneficiaries belong to a close-knit and harmonious family circle, comprising the parties to this application.

12 The circumstances surrounding the establishment of the trusts are described in full in the affidavit. For present purposes, it is sufficient to note that prior to establishing the trust, Clarrie and Shirley Glenister had carried on a business of car wrecking and the development of factory units through a proprietary company. They were advised by a respected lawyer and taxation adviser, Mr John Wheatley senior, of Wheatley and Sons, that the existing structure of the business, which had been appropriate while an active business was being conducted, was inappropriate as matters were likely to develop because of the payment of excessive rates

(Page 6)

of tax. The principals of the company were advised that the assets of the company should be transferred to a trust or trusts.

13 Mr Wheatley advised Mr and Mrs Glenister to establish two trusts on the basis that each trust would acquire one-half of the property from the company and would carry on business in partnership.

14 I note from par 33 of the affidavit, that on the advice of Mr Wheatley the vesting date for each trust was fixed as 1 July 2001. It is said that Mr Wheatley considered the continuation beyond that date had potential to create family conflict arising out of control issues as between Clarrie and Shirley Glenister on the one hand, and their sons Craig and Rodney on the other, and also as between Craig and his family, and Rodney and his family.

15 The affidavit goes on to say that in fact the possible conflicts adverted to by Mr Wheatley have not arisen. The original purpose for establishment of the trust continues and it is the desire of the trustees and the adult beneficiaries that the trust should continue to serve the same purposes as before.

16 When one looks at the operations of the trust at the present day, I note from the affidavit that other than moneys due by beneficiaries and minor trade debtors, the underlying assets of the trust comprise the Bayswater land, the Lakelands leisure village land and the Exmouth land. I note that the Exmouth Caravan Park is being conducted on the Exmouth land.

17 Particulars are set out in the affidavit as to the earnings of the trusts and the manner in which those earnings are being distributed. In par 49, it is said that if no order is made to vary the vesting day, the trustees have determined that, prior to the vesting day, they will exercise the powers contained in cl 4 of each of the trusts to vest the assets in the manner described. The proposed vesting reflects the presence of a close-knit and apparently harmonious family circle.

18 At par 53 of the affidavit, it is said that if the variation of the trust deeds is approved so as to postpone the respective vesting days, then it is the trustees' present intention to continue the current income distribution policy whilst taking advantage of the inherent flexibility to make distributions to the beneficiaries in accordance with their requirements and subject to achieving broad equality between the families of Craig and Rodney and equity between the generations. Thus, again, one notices that

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there has been no conflict to date and against that background it seems that the harmonious position which has prevailed to date will continue.

19 The affidavit addresses some of the taxation implications of the situation presently confronting the trust. Reference is made to advice obtained from Mr Young as a solicitor experienced in this area of the law, and also to rulings that have been obtained from the Taxation Department. One notices at the conclusion of par 58 that the position in that regard is drawn together in the proposition that the adverse taxation consequences of the early vesting date mentioned earlier will be able to be deferred if the vesting dates of the trust are postponed.

20 It is against this background that the application is placed before the court. I have already mentioned some of the legal principles that bear upon an application of this kind. I note from the decided cases that the word "arrangement" in s 90 of the Trustees Act 1962 is wide and includes any proposal put forward for variations. See Re Steed's Wills Trusts [1960] Ch 407 at 419.

21 The submissions on behalf of the plaintiffs are framed in these terms: the only existing beneficiaries of the trusts are the plaintiffs and the first defendants, who are all over the age of 18 years, and the second defendants who, with the exception of Amber Glenister, are infant beneficiaries. The Court is therefore asked to approve the proposed arrangement on behalf of the infant beneficiaries and that is reflected in the terms of the orders sought.

22 It is also put to the Court that the two trusts are discretionary trusts. If no order is made, then the trustees have determined that they will exercise their powers under cl 4 of the trust deeds, that is to say, to vest the assets of the number 1 trust in the second and third-named plaintiffs as beneficiaries, or to the second and third-named plaintiffs and the first defendants and, as to the number 2 trust, to vest the assets in the first-named plaintiff. No assets would be vested in the children for the reasons indicated in par 50 of the affidavit.

23 I have already noted that if the Court approves the variation, then the present intention of the trustees is to continue the current income distribution policy and to maintain and build the assets of the trust to generate income and capital growth for the benefit of present and future beneficiaries.

24 It is put to the Court that if no order is made by the Court, then there are disadvantages to some or all of the beneficiaries as follows: first,

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there will be the problem of deciding upon an appropriate amount to be vested in Shirley Glenister, this being a matter referred to at par 51 to par 52 of the affidavit, the resultant decision being to the potential advantage or disadvantage of Shirley Glenister and therefore to the potential corresponding disadvantage or advantage of Craig and Rodney Glenister; second, after the vesting which is proposed if no order is made, the second defendants, who are the children of Craig and Rodney Glenister, will not have any further interest in the trust assets; third, capital gains tax will be payable by the beneficiaries when vesting occurs, whether this is on 1 July 2001 or as a result of the vesting of assets before that date as a result of a decision of the trustees; fourth, stamp duty at ad valorem rates would also be payable in the circumstances set out in par 59(c) of the affidavit.

25 It was put to the Court that the arrangement which is proposed will benefit all of the beneficiaries. It was also put to the Court that all of the adult beneficiaries approve of the proposed arrangement to vary the trusts.

26 It is against this background that I again take note of the fact that all the parties who have an existing interest in this matter are before me. A signed consent of the first defendants has been made available to the Court signifying consent to the orders that are proposed. Mr Stokes as counsel for the second defendants is before me and has had the opportunity to be heard and, indeed, he puts the submission to the Court that he has considered the position of the clients he represents and it is his view that the application should be approved.

27 Thus, in summary, the position is that no adverse consequences of an unexpected or unforeseen kind have been foreshadowed or drawn to the attention of the Court. There is no party before the Court actively opposing what is proposed and those who are before the Court are consenting to it. It follows from my review of the relevant circumstances that there is much to be said in favour of what is proposed, including certain taxation benefits. Accordingly, I exercise the power allowed to the Court by s 90 to approve orders in terms of the summons before me.