Kevin Gustav Karlson, Leonard Charles James and Dorothy Veronica Walker in their capacity v Clay

[2001] WASC 17

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   KEVIN GUSTAV KARLSON, LEONARD CHARLES JAMES and DOROTHY VERONICA WALKER in their capacity as Trustees of the Clay Trust -v- CLAY & ORS [2001] WASC 17

CORAM:   ANDERSON J

HEARD:   29 & 30 NOVEMBER 2000

DELIVERED          :   25 JANUARY 2001

FILE NO/S:   CIV 1375 of 1999

BETWEEN:   KEVIN GUSTAV KARLSON, LEONARD CHARLES JAMES and DOROTHY VERONICA WALKER in their capacity as Trustees of the Clay Trust

Plaintiffs

AND

PAUL JAMES CLAY
First Defendant

MARK GREGORY CLAY
Second Defendant

MOIRA HELEN CLAY
Third Defendant

JEANETTE RAMONA CLAY
Fourth Defendant

JEANNETTE SIMONE CLAY
Fifth Defendant

Catchwords:

Trust and trustees - Deed of settlement expiring on 10 June 1974 - Duties of trustees - Trustees failing to wind up trust - Costs incurred in administering trust - Entitlement of trustees to be reimbursed - Exoneration - Questions asked in originating summons not able to be answered without trial of factual issues

Legislation:

Nil

Result:

Not applicable

Representation:

Counsel:

Plaintiffs:     Mr L G Foster SC & Mr M J Deleuil

First Defendant             :     Mr M G Clay

Second Defendant         :     Mr M G Clay

Third Defendant           :     Mr M G Clay

Fourth Defendant          :     Mr G R Donaldson

Fifth Defendant            :     Mr G R Donaldson

Solicitors:

Plaintiffs:     Mallesons Stephen Jaques

First Defendant             :     Martin de Haas

Second Defendant         :     Martin de Haas

Third Defendant           :     Martin de Haas

Fourth Defendant          :     Durack & Zilko

Fifth Defendant            :     Durack & Zilko

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

Nil

Case(s) also cited:

Barrett v Wyatt [1862] 54 ER 960

Broughton v Broughton (1855) 5 DeGM & G 160

Burges v Lamb [1809] 33 ER 950

Burrows v Greenwood (1841) 5 Jur 384

Church v Talbot (1901) 1 SR(NSW) Eq 13

Davies v Hodgson [1858] 53 ER 604

Froste v Hamilton (1842) 6 Jur 525

Gough v Etty (1869) 20 LT 358

Harrison v Randall [1852] 68 ER 562

Hilliard v Fulford (1876) 4 Ch D 389

In re Hulkes (1886) 33 Ch D 552

In re Knight's Trusts [1859] 54 ER 18

In re Knott (1887) 56 LJ Ch 318

In re Tempest (1866) 1 Ch App 485

Knight v Martin [1829] 39 ER 27

Knox v Mackinnon [1888) 13 AC 753

McGregor v McGregor (No 2) [1919] NZLR 286

National Trustee Executors & Agency Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373

Partridge v Equity Trustees Executors & Agency Co Ltd (1947) 75 CLR 149

Penfold v Bouch [1844] 67 ER 650

Perpetual Trustees WA Ltd v Goyder, unreported; SCt of WA; Library No 990138; 24 March 1999

Price v Loaden [1856] 52 ER 955

Re Price (1935) 35 SR(NSW) 444

Read v Chown (1929) 46 WN(NSW) 154

Richardson v Bank of England [1838] 41 ER 165

Watts v Turner [1830] 39 ER 244

Wilson v Levi, unreported; SCt of WA; Library No 990057; 11 February 1999

Wood v Calvert (1886) 55 LT 53

1. ANDERSON J:  This is an originating summons seeking answers to certain questions arising in dispute between parties to a deed of settlement.  The originating summons was heard together with the originating summons in CIV 1501 of 1999.  It can be disposed of quite shortly.

2. The first question that is asked is:

   "If the question in paragraph 1.3 of the amended originating summons in CIV 1501 of 1999 is answered by the Court in the affirmative, to what extent, if any, is the one‑fifth share of each defendant in regard to the net assets of the Clay Trust to be varied by reason of moneys or other assets received by any defendant since the vesting of the Clay Trust in 1974."

3. To the extent that I am prepared to answer this question, the answer is contained in my answer to question 1.3 of the amended originating summons in CIV 1501 of 1999.  I do not add anything to that answer.  All of the parties to this originating summons are parties to that originating summons.

4. The other questions asked in this originating summons concern the entitlement of the trustees to be reimbursed from the assets of the trust for payments made by them, or on their behalf, to accountants and lawyers in the course of the administration of the trust.  These questions cannot be answered without going into the whole question of exoneration.  Mr Foster SC rightly accepted that it was not appropriate for me to go into that question in these proceedings.  The question of exoneration involves factual issues on which it is easy to see that much evidence will have to be given.  The payments will have to be examined to see whether they were made for services provided to the trustees in their capacity as trustees of the Clay trust and to see whether the charges in respect to which the payments were made were reasonable and so on.  These matters do not appear to be agreed.  There is not even any agreement on the fundamental question whether the trustees were honestly mistaken in their belief that the trust had not vested, nor on the question whether, if that belief was honestly held, it was reasonably held.  It is accepted on all sides that these are factual issues which cannot be tried on affidavit or, at any rate, on the affidavits that have been filed.  None of the parties had prepared for the hearing of the originating summons on the basis that there would be a factual contest.

5. I would answer question 1 in the manner indicated and decline to answer any other question.