JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: HORWOOD -v- AEGES PTY LTD [2020] WASC 299
CORAM: CURTHOYS J
HEARD: 23 JUNE 2020
DELIVERED : 3 SEPTEMBER 2020
FILE NO/S: CIV 2457 of 2019
BETWEEN: LOUISE HORWOOD
Plaintiff
AND
AEGES PTY LTD
Defendant
Catchwords:
Trust - Liquidation - Removal of trustee
Legislation:
Trustees Act 1962
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | D Thompson |
| Defendant | : | H Robinson |
Solicitors:
| Plaintiff | : | Butcher Paull & Calder |
| Defendant | : | Haydn Robinson |
Case(s) referred to in decision(s):
Nil
CURTHOYS J:
On 15 August 2019 Ms Horwood filed an originating summons in the Supreme Court seeking the following orders:
1.Aeges Pty Ltd be removed as trustee of the FJ (Angus) Horwood Family Trust.
2.Paralo Pty Ltd be appointed as trustees of the FJ (Angus) Horwood Family Trust.
3.All property now held by Aeges Pty Ltd be vested in the new trustees on their appointment as trustees.
4.All documents and business records of Aeges Pty Ltd be delivered up to Paralo Pty Ltd.
5.Further and in the alternative Aeges Pty Ltd pay all beneficiary loan accounts standing in the books of accounts of the FJ (Angus) Horwood Family Trust.
6.The directors of Aeges Pty Ltd namely Genevieve Anne Robinson, Jill Horwood and Peter Horwood personally pay the costs of this application to the Plaintiff.
7.The said directors of Aeges Pty Ltd pay to Paralo Pty Ltd any money paid out of Aeges Pty Ltd for defending these proceedings.
8.Such further or other relief as this Honourable Court considers appropriate.
The matter was argued before me on 23 June 2020. Following the hearing I reserved my decision.
On 4 August 2020 I was advised by CX Law Pty Ltd that pursuant to a resolution of creditors Aeges Pty Ltd was wound up as a creditor's voluntary winding up on 31 July 2020. The court invited the parties to make submissions on the effect of the liquidation of Aeges Pty Ltd on these proceedings. The parties did not make any submissions.
Trustees Act 1962
Sections 77 and 78 of the Trustees Act relevantly provides:
77.New trustees, Court may appoint
(1)The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient, difficult or impracticable so to do without the assistance of the Court, make an order for the appointment of a new trustee or new trustees, either in substitution for, or in addition to, any existing trustee or trustees, or although there is no existing trustee.
(2)In particular, and without limiting the generality of the provisions of subsection (1), the Court may make an order appointing a new trustee in substitution for a trustee who -
…
(b)has been held by the Court to have misconducted himself in the administration of the trust; or
…
(f)is a corporation that has ceased to carry on business, or is in liquidation, or has been dissolved.
(3)An order under this section, and any consequential vesting order or conveyance,…
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- Case
- [2020] WASC 299
- Decision Date
CaseChat Overview and Summary
The legal issues the court had to decide were whether the liquidator of Aeges Pty Ltd was entitled to a possessory lien over the trust-related documents and information, and if so, whether this entitlement enabled him to retain possession of these documents and information. The court had to consider the nature of the books and records of a trust and whether they are trust property themselves, or if they are property that may be paid or applied for the benefit of the trust's beneficiaries. The court concluded that the liquidator was not entitled to a possessory lien and was obliged to deliver up the documents and information to the new trustee.
The court reasoned that given the liquidator was not entitled to a possessory lien, it was not necessary to determine whether the books and records of a trust are trust property themselves. The court found that the liquidator was not entitled to retain possession of the trust-related documents and information, and ordered that they be delivered up to the new trustee. The court also decided that there be no order as to costs, as there was no resolution of the primary action and no evidence that Aeges was placed into liquidation to avoid costs sought by the plaintiff.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The plaintiff submitted:[16]The books and records of a trust are not (or not normally) trust property themselves. They are not property that is being held for the benefit of the trust's beneficiaries, or which may be paid or applied for their benefit: see Equity Trust (Bahamas) Ltd -v- Basel Trust Corporation [2012] JRC 006, at [21].[16] Plaintiff's Submissions [4]. Given that I have concluded that the liquidator of Aeges is not entitled to a possessory lien and is obliged to deliver up the documents and information which relate to the administration of the trust, it is not necessary to determine this question. The liquidator opposed the delivery up of the documents and information which relate to the administration of the trust to Paralo as the new trustee. He was unsuccessful. The plaintiff seeks an order against or payment of her costs of this proceeding, to be taxed if not agreed.[17][17] Plaintiff's Submissions [15]. The plaintiff seeks this order:[18][O]n the basis of the general rule that costs follow the event. She has succeeded in obtaining the relief she set out to obtain in commencing these proceedings. The fact that the directors of the defendant pre-empted the Court's decision by placing the defendant into voluntary administration, and ultimately into liquidation, should make no difference. This is not a case where, through no act of either party, the basis for the litigation has fallen away. Placing the defendant into external administration was the choice of the defendant and its directors, and they should not thereby be allowed to evade the costs consequences of their opposition to the relief sought by the plaintiff.[18] Plaintiff's Submissions [16]. In relation to the general costs of the proceedings, there has been no resolution of the primary action. The general rule is that if there is no resolution then each party should bear their own costs. I am not persuaded that there is any reason not to follow the general rule. There is no evidence that Aeges was placed into liquidation to avoid costs sought by the plaintiff. That assumes that the relief would have been granted, a point which has not been determined. There is some force in the liquidator's submission that by email dated 13 August 2020, the plaintiff did not seek costs against the defendant and that the defendant was only a party as it was necessary for it to be so. However, that was before a lien was asserted by the liquidator. Neither party substantially engaged with the decisive issue in the application, namely, whether the lien claimed by the liquidator of Aeges is possessory so as to enable the liquidator to retain possession of documents and information which relate to the administration of the trust. In the circumstances, the appropriate order is that there be no order as to costs. The Court orders that:1.The liquidator of Aeges Pty Ltd deliver up to Paralo Pty Ltd all documents and information which relate to the administration of the FJ (Angus) Horwood Trust.2.There be no order as to costs.