Halford v Halford

[2017] WASC 33

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HALFORD -v- HALFORD [2017] WASC 33

CORAM:   MASTER SANDERSON

HEARD:   10 NOVEMBER 2016 & 7 FEBRUARY 2017

DELIVERED          :   16 FEBRUARY 2017

FILE NO/S:   CIV 2106 of 2016

BETWEEN:   KAI PHILLIP HALFORD

Plaintiff

AND

JEFFERY GEORGE HALFORD as Trustee of the Estate of MAURICE HOLMAN HALFORD (Dec)
Defendant

Catchwords:

Summary judgment - Application for access to trust documents - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr C Chenu

Defendant:     Dr P MacMillan

Solicitors:

Plaintiff:     Bennett + Co

Defendant:     Pacer Legal

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

Nil

1. MASTER SANDERSON:  This was the plaintiff's application for summary judgment.  As I have determined the application ought be dismissed, it is inappropriate that I provide detailed reasons for my conclusion.  But this case does raise the question of the circumstances in which a beneficiary can have access to documents held by a trustee of a trust.  The facts are slightly unusual and give rise to some other reason why judgment ought not be entered.  As such an explanation is called for.

2. A statement of claim was endorsed on the writ of summons.  It is pleaded the plaintiff was the son of Maurice Holman Halford (the deceased) and his wife Iris Elvie Halford deceased (Mrs Halford).  The defendant is the plaintiff's brother.  The deceased died on 3 January 1966 and was survived by Mrs Halford, the plaintiff, the defendant and Ewart Evan Halford (Ewart) who was also a son of the deceased and Mrs Halford.

3. The deceased left a will which was admitted to probate on 22 August 1966.  The deceased's mother, Sophia Emily Halford and Mrs Halford were the executors and trustees of the will.  The will directed all the property of the deceased after payment of all expenses should be held in trust for Mrs Halford during her life and after Mrs Halford's death for such of the deceased's children as survived him and if more than one in equal shares.  So the will of the deceased established a trust in favour of Mrs Halford and after her death the trust property was to pass to any of the three boys living at the date of Mrs Halford's death.

4. The main asset of the deceased at the date of his death was a number of farming properties in the Esperance area known collectively as the Glen Iris Farms.  It also included a four‑twentieth share in a partnership with the plaintiff, the defendant, Mrs Halford, Credo Pastoral Co Pty Ltd and Halford Pastoral Co Pty Ltd.  This partnership effectively worked the Glen Iris Farms and traded under the business name Halford Brothers.

5. On 11 May 1968 Sophia Halford died leaving Mrs Halford the sole trustee of the trust.  By deed dated 13 May 1999 the defendant was purportedly appointed joint trustee with Mrs Halford of the trust.  On 30 April 1980 the plaintiff retired from the partnership and Ewart became a partner in Halford Brothers.  It would appear no accounts were prepared as at the date of the retirement of the plaintiff from the partnership.  The plaintiff alleges that as from 1 May 1980 the remaining parties, the trustees of the trust and Ewart carried on the partnership.

6. The plaintiff alleges on or about 9 February 2010 and 11 May 2010 the defendant and Mrs Halford encumbered each of the properties comprising the Glen Iris Farms with first registered mortgages for the purpose of securing borrowings from Bank West.  Mrs Halford died on 1 September 2014 and the plaintiff says the defendant then became sole trustee of the trust.  On 15 February 2016 the Glen Iris Farms were sold for a price of $4,800,000.  Of the sale price $3,225,677.78 went to Bank West to discharge the mortgages.  The balance of just over $1.4 million went into the defendant's solicitor's trust account.

7. The plaintiff pleads that between February 2016 and May 2016 he requested from the defendant inspection of documents in relation to the trust.  Unnecessarily it is pleaded the defendant as trustee of the trust owed the plaintiff a fiduciary duty to maintain the trust documents and to provide copies of those documents to the plaintiff upon request.  In the prayer for relief the plaintiff seeks provision of the trust documents and a copy of the accounts maintained by the trust.

8. It is worth making the point the action is concerned with the provision of documents.  It is not concerned with any allegations of breach of trust by the defendant.  That is however implicit in the pleading - the plaintiff says the defendant mortgaged the Glen Iris Farms presumably for his own benefit or the benefit of the Halford Brothers partnership.  So while the action seeks access to trust documents it seems in effect to be directed more at establishing whether or not there was a breach of trust and if so what loss has been suffered by the plaintiff.

9. In response to the application the defendant raised two matters.  First, the defendant says there is a doubt as to the validity of the deed which purported to appoint the defendant as trustee of the trust.  Without going into detail the defendant says the deed is only effective if Mrs Halford was at the time of its execution acting as the trustee of the trust and not executor of the will.  The defendant says determination of that question depends upon the then state of administration of the estate and that is not clear on the evidence.  The plaintiff responds by saying that even if the appointment was not valid the defendant can be regarded as a trustee de son tort.  After all he acted at all material times as if he was the trustee of the trust and therefore de facto he should be regarded as such.  The plaintiff says any question about the validity of the defendant's appointment as trustee should not stand in the way of the obligations of the defendant to provide the plaintiff with the documents he seeks.

10. The second point raised by the defendant is the scope of the documents to be provided.  He says the request for all of the trust documents, meaning all documents extending back over many years, is onerous and unnecessary.  But more importantly the defendant says the trust documents are intermingled with the personal documents belonging to the defendant, in his personal capacity, and to his wife.  The defendant says it will be necessary for him to engage a forensic accountant to determine which documents relate to the trust and which are his own personal documents.  He maintains if any order is to be made the cost associated with compiling the documents and determining which documents relate to the trust should be borne by the trust itself.  The plaintiff, while conceding some of the costs of providing the documents should be paid for by the trust, maintains what is being sought at the moment is an open‑ended commitment and that is unreasonable.

11. In my view the issue at the heart of this case is whether or not in mortgaging the Glen Iris Farms the defendant acted in breach of trust.  As part of determining that issue it will be necessary to reach some conclusion as to whether the defendant was in fact the trustee of the trust.  That in turn will require a determination as to whether he was validly appointed by the deed, whether he is a trustee de son tort or whether he acted as an agent of the trust.  But that still leaves the question of whether or not the defendant had the right to mortgage the Glen Iris Farms.  If he did not and he acted in breach of trust then he would be liable to account to the plaintiff on the basis of wilful default.  If that conclusion were to be reached then the scope of the documents to be made available to the plaintiff is far wider than just those documents which relate directly to the trust.  On the other hand if there has been no breach of trust the defendant is entitled to extract his personal papers from those documents which are trust documents.  But whether or not he is entitled to the cost of that exercise and the scope of the documents to be provided to the plaintiff can best be determined after the facts are fully ventilated.  Moreover once the facts are in a determination can be made as to who should bear the costs of the exercise.

12. In summary then while I was satisfied the plaintiff has a right to trust documents to grant now what would effectively be part summary judgment may be in no one's interests.  It would not really facilitate the resolution of the primary issue between the parties.  If they cannot settle their differences then the best thing to do is determine the scope of the disclosure to be made by the defendant based upon a proper analysis of the equitable rights of the parties.  I can see no real benefit in giving part summary judgment now while leaving the real issues to be determined at a later date.

13. For these reasons I would refuse an order for summary judgment.  The costs of the application including the reserved costs ought be costs in the cause.