Panizza v Clathington Pty Ltd as trustee for P and D Panizza Family Trust - [2019] WASC 344

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PANIZZA -v- CLATHINGTON PTY LTD as trustee for P AND D PANIZZA FAMILY TRUST [2019] WASC 344
CORAM:   KENNETH MARTIN J
HEARD:   10 SEPTEMBER 2019
DELIVERED          :   10 SEPTEMBER 2019
PUBLISHED           :   23 SEPTEMBER 2019
FILE NO/S:   CIV 2575 of 2015
BETWEEN:   GIOVANNI PANIZZA
Plaintiff
AND
CLATHINGTON PTY LTD as trustee for P AND D PANIZZA FAMILY TRUST
First Defendant
SILVANA CARANNA
Second Defendant
DOMENICA MARIA PANIZZA
Third Defendant
ANTONIO CARANNA
Fourth Defendant

Catchwords:

Trusts and trustees - Preliminary issue - Application to remove and replace trustee - Underlying family disputes between brother and sister as specified beneficiaries of discretionary trust - Alleged misconduct by trustee whilst under control of second defendant - Replacement trustee to have independent lawyer co-director

Legislation:

Residential Tenancies Act 1987 (WA)
Trustees Act 1962 (WA), s 77

Result:

First defendant removed as trustee and replacement corporate trustee with independent co-director appointed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr A J Goldfinch
First Defendant	:	No appearance
Second Defendant	:	In Person
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Stables Scott
First Defendant	:	No appearance
Second Defendant	:	In Person
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance

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

Deutsch v Deutsch [2011] VSC 345
Guest v Warner [2018] NZAR 423
Hancock v Rienhart [2015] NSWSC 464; (2015) 106 ACSR 207
Letterstedt v Broers (1884) 9 App Cas 371
Low v Rothschild Trust (Schweiz) AG [2017] NZAR 288
Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572
Northwest Capital Management v Westlake Capital Ltd [2012] WASC 121; (2012) 264 FLR 442
Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146
Ying Mui Pty Ltd v Hoh (No 6) [2017] VSC 730

KENNETH MARTIN J:

Background and procedural history

The present action was commenced by the plaintiff in 2015. After three years, it was entered in the CMC List and referred to me for case management. That was in June 2018 and then in the context following an application for urgent ex parte interim injunctive orders sought by the plaintiff against the first and second defendants in May 2018. The first defendant, Clathington Pty Ltd (Clathington), is the corporate trustee of the P and D Panizza Family Trust (the Trust). The second defendant, Ms Silvana Caranna, was at the time a director of and substantively the controller of Clathington.
Given some allegedly concerning events to the plaintiff bearing upon the security of the Trust property, I issued ex parte interim restraints on 29 May 2018 directed against Clathington and Ms Caranna. I also issued orders against Ms Caranna's husband, the fourth defendant, restraining Ms and Mr Caranna from using, accessing, withdrawing money and drawing down any loans from bank accounts in the name of Clathington.
The duration of the initial interim injunctive orders was for one week. However, on 7 June 2018, after service on Clathington and Ms Caranna was effected, I essentially renewed and extended those ex parte injunctions, still on an interlocutory basis, but now extending until further order (June 2018 injunction orders). At that time those restraints were still essentially unopposed, notwithstanding service effected upon Clathington and Ms Caranna in the interim period.
The June 2018 injunction orders against the second defendant remain in place. The restraint against Clathington was consensually removed in October 2018 in circumstances I will explain later.
I should mention that the plaintiff and the second defendant are brother and sister and that the essence of the underlying dispute in this matter relates to the control and management over time of the corporate trustee, Clathington, as regards the Trust and its significant property assets. The Trust is a discretionary trust established in 1988 by the parents of the protagonists of this matter, but within which the only specified (discretionary) beneficiaries since 1989, have been the plaintiff and second defendant.
In multiple affidavits sworn by the plaintiff since mid‑2018 in support of interlocutory relief he raises matters in which he asserts gross mismanagement of the substantial real property assets owned by the Trust, which are essentially residential unit developments established on or being completed upon land that is owned by the Trust at Spearwood, Western Australia.
The current dispute which has seen the protagonists come head to head relates to the plaintiff's efforts as, he would see it, to bring about a degree of proper order and control to the affairs of the Trust, particularly regarding the issues of neglect concerning the management of its real property assets. The plaintiff also contends that the second defendant had caused Clathington (before October 2018) to not only neglect and mismanage its affairs but essentially to plunder its assets over time by diverting money and benefits to herself, rather than causing Clathington (as a trustee) to act in the interests of the Trust itself.
This dispute has now resulted in a two‑part trial of preliminary issues heard before me. I will turn to these hearings now.

The first trial of preliminary issues – 5 October 2018

Background

On 2 July 2018, the plaintiff applied by chamber summons for orders seeking a trial of preliminary issues. The application was made in a context of an amended substituted statement of claim (ASSOC) filed by the plaintiff on 28 May 2018 that seeks wide ranging equitable relief from against either Clathington and the second defendant, including declaratory relief, injunctions, equitable compensation and provision of an account by the first defendant and the second defendant for financial years relating to the family trust from 2009/2010 to the date of judgment.
Nevertheless, a discrete aspect of the relief sought under the ASSOC sought, first, orders that Clathington be removed as trustee of the Trust and, second, that a new trustee be appointed for the Trust in substitution for Clathington: see prayers for relief pars 12 and 13.
It was that limited trustee removal and replacement relief which was sought to be addressed as a matter of priority and urgency under the plaintiff's chamber summons seeking the determination by trial of only those preliminary issues on an expedited basis.
To add some additional context to the plaintiff's application, much affidavit evidence was adduced by the plaintiff at the hearings of preliminary issues concerning the delinquent state of loans caused to be taken out by Clathington whilst under the control of the second defendant and, indeed, that Clathington's exposures in mid‑2018 to being wound up for failure to meet various debts and obligations - which led to a winding up exposure then pending in the Federal Circuit Court (Western Australian District Registry). These winding up proceedings have since been resolved.
On 7 August 2018, I ordered the determination of preliminary issues as sought by the plaintiff. I set down the matter for an urgent hearing on 5 and 8 October 2018. Ultimately, only 5 October was utilised.
Such orders for the preliminary issue hearing were not opposed by Clathington at the time. But they were opposed by Ms Caranna who at that time acted in person, albeit foreshadowing her engagement of legal representation (as, indeed, she did again at the recent hearing on 10 September 2019 which I will turn to later).
On 7 August 2018, I also resolved that the determination of those preliminary issues would be conducted as a trial upon affidavit evidence to be exchanged between the parties and with the plaintiff to have the carriage of the preliminary issue. I issued further directions to facilitate that end as regards further evidence (by affidavit) and the exchanges of written submissions.
On 26 September 2018, Dwyer Durack became the lawyers of record for the second defendant, filing a notice of representation to that effect.
On 28 September 2018, Dwyer Durack, on behalf of Ms Caranna filed a chamber summons which sought leave to argue for orders in the terms of an attached minute of proposed orders at the trial of the preliminary issue. Leave was also sought for Ms Caranna to adduce an affidavit from a Mr Ian Torrington Blatchford, a local legal practitioner, and for that affidavit to be read and relied upon at the preliminary issue hearing on Ms Caranna's behalf.
The minute of proposed orders foreshadowed that the court would be moved for orders seeking, in effect, that the current trustee of the Trust, Clathington, be removed (akin to the first tranche of relief as sought by the plaintiff) and also that Mr Blatchford be appointed as the new replacement trustee to that Trust, in lieu of Clathington. Consequential vesting relief was also sought.
The new lawyers for Ms Caranna duly caused an affidavit of Mr Blatchford sworn on 28 September 2018 to be filed - by which Mr Blatchford advised that he had been approached by the solicitors for the second defendant to ascertain his amenability and availability to act essentially as an independent replacement trustee. The approach was on a basis of his longstanding professional expertise and a lack of any prior association with either the plaintiff or the second defendant. Mr Blatchford indicated his amenability as an experienced and independent local legal adviser to act as the replacement trustee on a professional basis.
On 28 September 2018, I granted leave (on the papers) for Ms Caranna through her solicitors to have leave to seek the rival orders by the terms of her minute of orders as filed (albeit somewhat out of time) at the hearing of the preliminary issue.
Hence, the essential looming disputed issue for the trial of the preliminary issue, fixed for 5 and 8 October 2018 as between the parties, was not over the removal of Clathington as trustee of the Trust. Rather, it was the disagreement over who would be the appointed replacement trustee. The plaintiff nominated his company Cologna Investments Pty Ltd. The second defendant had lately proposed the replacement trustee should be an independent experienced legal practitioner holding no prior connection to any of the parties, namely, Mr Blatchford.
I would add that the then expressed position by Clathington, for the preliminary issue, was effectively neutral.
Essentially then, the position to be determined at the preliminary issue in early October 2018 was for the court, if otherwise satisfied, to choose as between the alternate suggested replacement trustees for the Trust.

The 5 October 2018 hearing

At the 2018 hearing of the preliminary issue the plaintiff was represented by Mr Goldfinch and the second defendant was represented by counsel, Mr Yeldon. As I have mentioned, Clathington adopted a neutral position. Given this position, although counsel for Clathington, Mr Butcher attended, he was given leave to withdraw.
There ensued at that time some discussion between counsel for the active parties. That discussion resulted in what looked to be an interim compromise of sorts. At the end of that hearing, I essentially issued orders as were then proposed by consent in terms that:
1.Clathington Pty Ltd remains as trustee of the P & D Panizza Family Trust until further order of the Court.
2.Silvana Caranna is hereby ordered not to take any steps as a shareholder of Clathington Pty Ltd as trustee of the P & D Panizza Family Trust and she hereby undertakes to the Court and to the Plaintiff that she will not take any steps as shareholder of Clathington Pty Ltd as trustee of the P & D Panizza Family Trust without either obtaining an order of the Court, or obtaining the consent of the Plaintiff and Clathington Pty Ltd as the First Defendant accompanied by the consent of Mr Blatchford.
3.The Trial of the Preliminary Issue is hereby adjourned to a date to be fixed with all costs reserved.
(The 5 October 2018 orders).
The 5 October 2018 orders essentially reflected the interim compromise that was reached between the active parties at the time. Albeit not ordered, the 'deal' then struck essentially saw the preliminary issue hearing adjourned, with Ms Caranna resign immediately as director of Clathington. Further, the plaintiff and Mr Blatchford would thereafter be appointed as Clathington's new directors to so constitute its board.
Those arrangements established around the 5 October 2018 orders, coupled with a further restraint (per order 2) as agreed against Ms Caranna acting on her position as majority shareholder in Clathington (she being then recorded as the registered proprietor of three of the four issued shares in Clathington - with the other share being recorded as held by the plaintiff), essentially were implemented on the basis of then seeking to achieve:
(a)a removal of Ms Caranna from future management decisions taken by the board of the trustee;
(b)a fresh replacement board for the existing trustee, Clathington; and
(c)the professional engagement of an independent experienced legal practitioner, Mr Blatchford, who would now act co‑operatively with the plaintiff, as a co-director of the trustee, essentially to provide an appropriate level of expertise, independence and experience for that trustee's board of directors.
The appointment of Mr Blatchford as a co-director with the plaintiff to the trustee was an important 'check and balance' against seeing the unfettered control of the trustee pass essentially from one side of the family wholly across to the other side in the context of a pending family based dispute. The appointment also sought to provide a check against exclusive control by the plaintiff, from a perspective of both protecting the assets of the Trust for the benefit both of its beneficiaries, whilst also providing the second defendant some level of comfort as regards a level of independent and professional oversight by directorial participation of the very person she herself had nominated to be the replacement trustee of the plaintiff's dealings as a co‑director of the trustee, Clathington.
The post 5 October 2018 status quo subsequently prevailed in this action – until now.

Procedural events subsequent to 5 October 2018

On 1 November 2018 I issued, by consent, a removal and variation to a term of the interlocutory injunction which I had issued against Clathington by my June 2018 injunction orders. However, the balance of the restraints issued on 7 June 2018, including as against Ms Caranna, remained in place.
On 5 April 2019, the second defendant filed a notice, now indicating she was once again acting in person. Dwyer Durack ceased to act for her at that time.
On 1 July 2019, Irwin Legal filed a notice of change of representation, communicating that they were now acting on behalf of the second defendant.
On 2 July 2019, Clathington filed a notice of intent to abide by court decision – communicating that it did not intend to take any further part in the proceedings and that it would accept any order made by the court, other than as to costs.
Also on 2 July 2019 the plaintiff, by his lawyers, filed a minute of proposed orders seeking that the as adjourned hearing of the preliminary issue be relisted for a substantive determination. That requested relisting direction became the subject of consideration at a directions hearing convened in chambers in the CMC List on 3 July 2019. At this time the second defendant was represented by a Mr Neagu of Irwin Legal.
On 3 July 2019, after hearing the participating parties, I issued further orders relisting the adjourned hearing of the preliminary issue for a substantive hearing, on 10 and 11 September 2019 (however, only 10 September 2019 was utilised). I also issued some further consequential orders concerning materials to be exchanged for that resumed hearing.
Subsequent to my 3 July 2019 directions, the second defendant on 2 August 2019 filed another notice of change of representation, indicating that she was again acting in person.
For the purposes of a resumed preliminary issue hearing three important further affidavits were filed on behalf of the plaintiff. These affidavits supported the removal of Clathington as trustee and the appointment of its replacement - the plaintiff's corporation, Cologna Investments Pty Ltd - as new trustee. These were two affidavits sworn by the plaintiff on 7 and 20 August 2019 respectively and further, an affidavit of Mr Blatchford sworn on 7 August 2019.
Written submissions were also filed on behalf of the plaintiff in support of this relief.
Prior to the hearing fixed for 10 September, my chambers received a number of communications from the second defendant sent by email. In these communications, Ms Caranna indicated that she was legally unrepresented, was seeking to engage fresh representation and, consequently, asked for the hearing to be adjourned. However, the plaintiff's communicated position was to firmly oppose any adjournment and pressed for a substantive determination of the preliminary issue at the September 2019 hearing, dates which had been fixed in early July 2019.

The second trial of preliminary issues - 10 September 2019

The preliminary issue hearing was called on for its hearing substantively on Tuesday, 10 September 2019. The plaintiff was represented again by Mr Goldfinch. The only other participant was the second defendant, Ms Caranna, who appeared in person. Her primary position was again to request an adjournment on the basis she was in strained financial circumstances, however, she said that she hoped to secure fresh legal representation within six weeks.
Nevertheless, Ms Caranna's application for an adjournment was opposed by the plaintiff. Primarily, the plaintiff's opposition was by reason of a looming end of October 2019 deadline concerning the duration of the Trust's interest only multi-million dollar loan facilities with the ANZ Bank needing to be attended to by a refinancing or otherwise (see ts 127).
I decided that it was not feasible to adjourn the determination of the preliminary issue any further and to proceed with the trial. From there the affidavit materials relied on by the plaintiff were received and read. Ms Caranna did not tender any evidence.
At the conclusion of the hearing, I ordered that Clathington be removed and replaced by the new trustee nominated by the plaintiff. I provided some very summary reasons for that decision at the time, indicating I would provide more detailed reasons in due course. These are those reasons.
Essentially, I had acceded at the hearing on 10 September 2019 to the application of the plaintiff, which was then actively supported by Mr Blatchford, to replace Clathington as trustee of the Trust and to appoint the plaintiff's nominated corporation, Cologna Investments Pty Ltd, as the Trust's replacement trustee.
The orders I issued on 10 September 2019 were in the following terms:
... SUBJECT TO THE PLAINTIFF'S UNDERTAKING MADE TO THE COURT (WHICH IS ACCEPTED) TO APPOINT IAN TORRINGTON BLATCHFORD AS A CO‑DIRECTOR OF THE NEW TRUSTEE IDENTIFIED IN PARAGRAPH 2 OF THESE ORDERS, IT IS ORDERED THAT:
1.Clathington Pty Ltd (ACN 061 990 485) be and is HEREBY REMOVED as Trustee of the Trust created by the Deed made on 25 October 1988 between Michael David Babich as Settlor and Pietro Giovanni Panizza and Domenica Maria Panizza as Trustees and known as the P. and D. Panizza Family Trust.
2.Cologna Investments Pty Ltd (ACN 627 940 925) of C/- Greenwich & Co, Level 2, 35 Outram Street, West Perth be and is HEREBY APPOINTED Trustee of the P. and D. Panizza Family Trust in place of Clathington Pty Ltd (ACN 061 990 485).
3.The First and Second Defendants shall deliver up to Cologna Investments Pty Ltd (ACN 627 940 925) within 21 days all books and documents of the P. and D. Panizza Family Trustee in their possession, custody or power.
4.There is liberty to apply.
5.The costs of the hearing of the Preliminary Issue are reserved.
6.The balance of matters outstanding in the present action are to be the subject of further case management directions to be issued at a future hearing at a time to be fixed.

Evidentiary basis of application to remove and replace trustee

As earlier indicated, I had ordered a trial of the preliminary issues be conducted on exchanged affidavits. To that end, the plaintiff tendered and relied upon 13 affidavits he had earlier sworn over time, plus a further affidavit of Mr Blatchford sworn 7 August 2019. The pre‑2019 affidavits of the plaintiff traverse together an array of issues in contest between the parties in this action.
The present preliminary issue hearing, however, was only directed at the removal and replacement trustee relief pursued via s 77 of the Trustees Act 1962 (WA) (or, if necessary, via the inherent jurisdiction of the court) to remove and replace Clathington as trustee of the Trust.
Relevantly to that relief, I record that s 77(1) and s 77(2)(b) of the Trustees Act are in the following terms:
(1)The Court may, whenever it is expedient to appoint a new trustee or new trustees, entities, 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 –
(a)…
(b)has been held by the Court to have misconducted himself in the administration of the trust;
The plaintiff's present application was said to be grounded on s 77(2)(b), as regards the asserted misconduct of the current trustee expressly, as the basis for a removal of and the substitution of a new trustee.
The facts relied upon supporting the application are scattered across the multiple affidavits of the plaintiff and in the affidavit of Mr Blatchford. I point out that all of this evidence is essentially unchallenged at present by Ms Caranna from a rival evidence perspective. However, at the trial Ms Caranna stated verbally whilst acting for herself in person that, in effect, her conduct both personally and vis-à-vis the management of Clathington, was or had been entirely proper or justifiable in her eyes.
There was a considerable opportunity afforded under my prior directions (made prior to the 5 October 2018 hearing) for a deponent of any affidavit be made available for cross‑examination on their affidavit, if required. During the course of the hearing I offered Ms Caranna the opportunity to cross‑examine the plaintiff or Mr Blatchford on the affidavits comprising the evidence relied upon (see ts 148). However, Ms Caranna declined the opportunity to cross‑examine, essentially on the basis that she was not legally represented at the hearing. So be it.
The plaintiff's essential contentions of trustee misconduct by Clathington which occurred prior to 5 October 2018 traverse multiple acts and omissions. These included (without limitation) allowing the Trust's loan facilities as had been taken out by the trustee with the ANZ Bank to fall into arrears and to not be met for over 12 months ‑ resulting in a significant arrears of interest that needed to be addressed by Clathington's new board in the amount of $128,000. The taking out of further loans by the trustee (at the behest of Ms Caranna) from a private lender, CRS Pty Ltd, in (three separate) tranches aggregating to $450,000 was also complained of. These were essentially loans in respect of which the proceeds are said to have been diverted wholly to the private receipt of the second defendant.
Also asserted as trustee misconduct occurring prior to 5 October 2018 and appointment of the trustee's new board is Clathington's failure to meet various Trust property utilities accounts, allowing the accounts to fall into a significant state of arrears, particularly as regards the Water Corporation. Further complained of is a failing by the trustee to meet its statutory obligations under the Residential Tenancies Act 1987 (WA) as regards a secure holding of bonds provided by various tenants of the Trust's Spearwood residential unit. Added to those grievances are asserted failures over time to secure the preparation of proper accounts for the Trust over multiple earlier financial years. Also put at issue is the second defendant's directing of the managing agent of the Spearwood units (Empire Property Solutions) to pay over the rental income from the Trust properties to her own bank account rather than into the account of Clathington as trustee. There are various other trustee acts of misconduct that I do not need to elaborate upon.
I should say again that in relation to all these matters that the plaintiff's evidence stood essentially uncontradicted by any rival evidence at the hearing. Before elaborating upon the misconduct evidence and rendering conclusions about it, it is necessary that I divert briefly to discuss legal principles in terms of the removal and replacement of trustees on applications of this kind.

Legal principles: trustee removal and replacement

For present purposes, it is convenient to collect and recall for orientation purposes the observations upon principle by Murphy JA and Hall J in Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 and rendered in the following terms at between [171] - [179]:
Section 77 is of wide import: Vagliviello v Vagliviello [2003] WASC 61 [7]. This statutory jurisdiction appears to reflect the inherent jurisdiction of the court to remove a trustee: Vagliviello v Vagliviello [5]; cf Pope v DRP Nominees Pty Ltd [30]. The same test of expediency underlies the exercise of the statutory power and the court's inherent power: Vagliviello v Vagliviello [7].
The court has power under s 77 to remove a trustee and appoint a new trustee, notwithstanding that there is an appointor who is capable of appointing and is willing to appoint a new trustee: Pope v DRP Nominees Pty Ltd [35] ‑ [43]; Webb v The Earl of Shaftesbury (1802) 7 Ves Jun 480, 487 ‑ 488. It will, however, be reluctant to do so where the power exists and has never been exercised, although it may do so where the applicant has had to apply to the court for other purposes and a refusal would probably save no expense to the trust estate: In re Tunstall [1921] VLR 559; In re John Gibbon's Trusts (1882) 30 WR 287.
[NOTE: I point out here that under the previous June 2018 injunction orders I restrained the second defendant from any attempted exercise of a power of appointment of a new trustee in the wake of it being arguable that she was bequeathed that power as appointor under the P. and D. Panizza Family Trust after the death of her mother, Mrs Domenica Panizza, the third defendant, on 25 June 2018].
The words 'expedient' and 'inexpedient' are words of wide meaning. The word 'expedient' may mean advantageous or merely appropriate or suitable to the circumstances of the case. The word 'inexpedient' has the opposite meaning: Pope v DRP Nominees Pty Ltd [33]. See also Elovalis v Elovalis [35] ‑ [40], Martin CJ (Buss and Newnes JJA agreeing).
Hostility or friction between the trustees and beneficiaries is not of itself a reason for the removal of the trustees: Letterstedt v Broers (389). Nevertheless, it is a factor which may be considered in conjunction with other factors, and may assume particular significance in the case of a family trust where the relationship between the parties has broken down completely: Smith v Smith [2006] WASC 166 [13], [15].
The jurisdiction to remove a trustee and appoint a new one can be exercised whenever it is expedient to do so in the sense described in the cases, and without it being necessary to establish bad faith, misconduct or breach of trust: Elovalis v Elovalis [40].
In an application for the administration of a trust by the court, where the court decrees that some 'proper person' be appointed as trustee, the decree does not take away from the donee of the power of appointment under the instrument, the power of nominating for appointment new trustees, but after the decree the power may only be exercised subject to the supervision of the court. If the donee of the power repeatedly nominated improper persons, that would amount to a refusal to exercise the power, and the court could then makes its own appointment: In re Gadd (1883) 23 Ch D 134, 136 ‑ 137. … A general administration action has been virtually superseded by other specific actions in more recent times, such as an application for orders of the kind available under s 77 of the Trustees Act: Pope v DRP Nominees [41]. The power in the court under s 77(1) of the Act to 'make an order for the appointment of a new trustee' would, in our view, on its proper construction, include the power to order, in appropriate circumstances, the appointment of a 'proper person' as trustee, with the particular person to be nominated by the donee of the power under the supervision of the court in accordance with the decision of In re Gadd. See also In re Norris (1833) 27 Ch D 333.
The considerations which would guide the court's assessment of whether a person is a 'proper person' would include the general rules upon which a court acts in the appointment of new trustees. These are, first, that the court will have regard to the wishes of the settlor as expressed in the trust instrument or clearly to be collected from it; secondly, a person will not be appointed with a view to promoting the interests of some of the beneficiaries in opposition to the interests of others; thirdly, regard will be had to whether the appointment of a particular person will promote or impede the execution of the trust: Re Tempest [1866] LR 1 Ch App 485, 487 ‑ 488; Saul v Lin (No 2) [48]; see also Jacob's [1557].
The second of those considerations invites attention to whether the appointee would have a conflict of interest. Generally, a person would be unsuitable if the appointment would place the appointee in a conflict of interest: Re Cunningham's Settled Estates (1909) 27 WN (NSW) 28; Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (1990) 3 ACSR 183, 185 ‑ 186. Thus, if it appears to the court to be expedient to appoint a new trustee, ordinarily the court would not appoint a beneficiary, or a close relative of a beneficiary, particularly if there is ill‑feeling amongst the beneficiaries: Johnstone v Johnstone (1902) 2 SR (NSW) Eq 90, 92; Re Friend's Trusts (1904) 21 WN (NSW) 166, 167; Wilding v Bolder (1855) 21 Beav 222; Hobkirk v Ritchie (1933) 29 Tas LR 14, 46. Similarly, a fiduciary of a beneficiary would not generally be appointed: In re Spencer's Settled Estates (1902) 1 Ch 75, 81 ‑ 82.
If the court does itself appoint under s 77, the statutory power once exercised overrides the donee's power to appoint: Elovalis v Elovalis [2008] WASCA 141(S) [8] ‑ [9]; Vagliviello v Vagliviello [61] [171] ‑ [179].
Generally as to principles in this area, see also Letterstedt v Broers (1884) 9 App Cas 371; Ying Mui Pty Ltd v Hoh (No 6) [2017] VSC 730; Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572; Deutsch v Deutsch [2011] VSC 345; Low v Rothschild Trust (Schweiz) AG [2017] NZAR 288; Guest v Warner [2018] NZAR 423; Hancock v Rienhart [2015] NSWSC 464; (2015) 106 ACSR 207; Northwest Capital Management v Westlake Capital Ltd [2012] WASC 121; (2012) 264 FLR 442.

The plaintiff's evidence under his affidavits of August 2019

Mr Panizza's latest affidavits of August 2019 essentially seek to detail the financial position of the Trust, as encountered by he and Mr Blatchford as co‑directors after 5 October 2018, following the orders I issued at that time. As mentioned, as a result of those orders, Clathington remained trustee of the Trust, but the plaintiff and Mr Blatchford would comprise the board, without Ms Caranna.
In the plaintiff's substantive affidavit sworn 7 August 2019 (Panizza 7 August 2019 affidavit) he relates matters that I will now summarise.

Panizza 7 August 2019 affidavit

At par 2 of the Panizza 7 August 2019 affidavit, Mr Panizza relates that at the time that he and Mr Blatchford were appointed as co‑directors of Clathington the financial position of the trustee was of major concern. He relates that although he and Mr Blatchford did not realise it at the time, no repayments had been caused to be made by Ms Caranna on behalf of the trustee Clathington on either of the two ANZ facilities for approximately 12 months prior.
Mr Panizza further relates at par 3, that there were problems encountered with the Trust's rental properties including, he says, by failure to ensure the properties had appropriate insurance cover plus, as I have mentioned, a failure to forward bonds to the Bond Administrator in accord with the requirements of the Residential Tenancies Act. He says further that there were also problems with electrical and security compliance for the properties and that accounts for the properties from Alinta, Synergy, the City of Cockburn and the Water Corporation were outstanding. Mr Panizza relates that under prior management of his sister, the trustee had let insurance policies over the rental properties lapse - being policies taken out with RAC and SGIO. Mr Panizza says it was necessary to pay approximately $9,000 for bonds to the Bonds Administrator and to deal with a complaint in relation to the non‑compliance with the bond provisions in the Residential Tenancies Act which could have resulted in penalty proceedings being brought against the trustee.
Mr Panizza says further that all outstanding issues were dealt with and various bills and expenses paid, but that the Trust had limited working capital (par 4). Mr Panizza says that he had to personally pay the various accounts out of his own resources, or to arrange finance. Mr Panizza relates that some of the Trust properties (ie, units at Spearwood) had been directly managed by his sister personally whereas others had been managed by Empire Property Solutions. He says he and Mr Blatchford since arranged for Empire Property Solutions to manage all of the Trust properties in the future (par 5).
At par 6 Mr Panizza next relates that Empire Property Solutions up until July 2018 had been remitting rental payments (after deduction of costs and fees) to a bank account operated by the trustee, Clathington. However, it appears that in the wake of my June 2018 injunction orders, including as against the second defendant restraining her from withdrawing further monies from the trustee's accounts, that Empire Property Solutions was then instructed by Ms Caranna to pay future rental proceeds directly into her personal bank account. Mr Panizza relates how this occurred as between 31 July 2018 and 31 October 2018 and resulted in a total of $26,059.76 of Trust funds paid by that manner away from Clathington and directly into the second defendant's personal account.
Mr Panizza next relates (par 7) that his sister had retained approximately $3,720 which she had received directly as cash from tenants for rent which were held by her at the time of his and Mr Blatchford's appointment as directors (ie, in early October 2018). Mr Panizza relates that this rent money was not given back to the Trust by the second defendant despite written request to that end being made.
Mr Panizza next relates he has discovered that a loan of $300,000 had been caused to be taken out by the second defendant from CRS Pty Ltd (par 8). This happened at a time just before the June 2018 injunctions were granted. But this $300,000 loan by the Trust was in default at 5 October 2018, as discovered when he and Mr Blatchford became directors of the trustee.
Further, at par 9, it was related that in late December 2018 and notwithstanding that my June 2018 injunction orders were still in place at that time against the second defendant, that Ms Caranna had caused Clathington to further borrow even more money from CRS Pty Ltd, totalling another $150,000. Mr Panizza says at par 9:
The loans were taken out in September 2018 and the proceeds were paid directly into the Second Defendant's bank account and not the First Defendant's bank account.
Mr Panizza says further, at par 9, that he also did not know about these further loans until default notices were served on Clathington in late December 2018. Given the seriousness of that allegation in the context of a possible breach of my June 2018 injunction orders made binding on Ms Caranna as from June 2018, a separate section of these reasons to follow will collect some further evidence on the issue of the $150,000 in loan funds borrowed further by Clathington at the behest of Ms Caranna after June 2018.
It is next said, at par 10, that despite owning her own home, Ms Caranna had remained living at 15 Bardolph Road, Spearwood (one of the Trust properties). That situation continued following the date of the death of their mother, Mrs Domenica Panizza (25 January 2018). Mr Panizza relates that his sister, despite requests, the second defendant has refused to move out of 15 Bardolph Road, Spearwood. She has not paid or offered any rental or other consideration to the Trust for her use of this Trust property. Consequently, this has prevented the Trust from earning rental income for that property as it continues to be occupied by her.
Mr Panizza next relates at par 11:
The ANZ interest loan of $1,705,000.00 has a three year interest only period expiring in October 2019. The interest only period for the ANZ loan of $500,000.00 expires in or about April 2020.
Mr Panizza says both loans need to be refinanced because the trustee will have great difficulty meeting interest and principal repayments for the two loans. He continues at par 10:
I applied for refinancing and received a favourable response. However, the bank would not agree to lend money to the First Defendant while the Second Defendant was a shareholder of that company.
On 5 December 2018, CRS Pty Ltd issued a default notice in respect of the registered mortgage it holds over 15 Bardolph Road, Spearwood through its lawyers - Valenti Lawyers. See the Panizza 7 August 2019 affidavit at par 15 and attachment GP7.
All up then, Mr Panizza had discovered the Trust suffered a liability secured by unregistered mortgage securing a debt of $450,000 to CRS Pty Ltd, but which Mr Panizza relates he knew nothing until receiving that notice from the lawyers for that lender towards the end of 2018 calendar year (par 18). By reason of default in failing to render any repayments those loans from CRS Pty Ltd, the loans were accruing penalty interest at the rate of 11.5% to the lender as at and from 6 February 2019 (see par 21).
Mr Panizza relates (par 24) that on 6 May 2018 he borrowed funds through his own business, Insight Mercantile Pty Ltd, in order to secure funds for the Trust to clear the loans with CRS Pty Ltd. To that end, on 6 May 2019 he has caused to be paid out $485,030.87, to discharge those loans by the Trust from CRS Pty Ltd.
Next, as regards the ANZ loan facilities, Mr Panizza relates how he learned that payments on those loans (interest only loans) had stopped after 24 October 2017, being the last payments (see par 25). Default notices had also been issued by the ANZ Bank in respect of arrears. Penalty interest was being charged by reason of the default (pars 26 ‑ 27).
Mr Panizza and Mr Blatchford caused the first defendant to recommence making interest payments as at 4 January 2019. Moreover, in order to clear the full arrears of interest due to the ANZ Bank, Mr Panizza obtained further funds from his company, Insight Mercantile Pty Ltd. Again, he says that was because the trustee, Clathington, did not have the funds to render payment (par 30). Consequently, on 1 March 2019, $26,024.37 has been since paid over to ANZ as interest arrears on one account, and $102,626.69 as interest arrears was paid on the other loan account. Insight Mercantile Pty Ltd in turn has been granted a first registered mortgage over 15 Bardolph Street, Spearwood to secure all (loan) funds advanced to the benefit of the Trust as regards amounts needing to be paid to CRS Pty Ltd and in clearing the ANZ arrears on those two loans of the Trust.

Likewise, Mr Panizza relates that after November 2018 he has arranged for payment of City of Cockburn rates then due in the amount of $22,339.40 to be made along with a payment to the Water Corporation in the amount of $9,045.11 (par 32). It was also necessary, he relates at par 33, to deal with electrical and security compliance matters concerning the Trust's rental properties.
Mr Panizza further explains that the property insurance cover with SGIO and RAC was discovered to have lapsed because the policy premiums had not been paid (par 35). General contents and building insurance cover had been previously taken out, prior to those policies lapsing through the non‑payments. However, Mr Panizza learned that comprehensive landlord insurance had never been arranged. Subsequently, Mr Panizza has arranged for insurance coverage on a more comprehensive basis with Empire Insurance Group, funded through Macquarie Pacific Finance.
Mr Panizza then relates facts concerning the trustee's discovered failures to forward rental bonds moneys to the Bond Administrator (par 37). This, he says, caused problems in obtaining landlord insurance. He and Mr Blatchford have since caused the position in relation to tenant's bonds to be rectified and monies paid over to the Bond Administrator as he and Mr Blatchford attended to the administration of the Trust after October 2018 (par 38).
At par 42 of his affidavit, Mr Panizza further relates that since he and Mr Blatchford have been appointed directors of the trustee that they have caused demands to be made upon Ms Caranna seeking repayment of $3,720 cash as the rent of the Trust that she has received and that ought to have been the funds of the Trust. They have also sought a repayment of $26,059.77 from her, as rental proceeds of the Trust caused to be paid by her to her personal account after the June 2018 injunctions were granted in this action. Such amounts have also not been repaid.
Ms Caranna also failed to agree to vacate 15 Bardolph Road, Spearwood on or before 29 March 2019 as had been sought by Stables Scott, lawyers for the plaintiff (pars 46 – 47). She still offers no rent for her continued occupancy of a Trust property.
Considerable correspondence had been sent to the second defendant first via Dwyer Durack and later, after they ceased acting for Ms Caranna, to her personally (par 47). This has not been answered.
During the hearing on 10 September 2019, Ms Caranna, speaking for herself in person, told me that she remained a resident of those premises and, as I would infer, will not agree to leave voluntarily (see ts 121 ‑ 122).
In terms of the changing of corporate trustee, notwithstanding that its board management has obviously changed completely, following the orders of 5 October 2018, Mr Panizza relates the following regarding an abiding and pressing need of the Trust to refinance loans with ANZ (pars 49 – 50):
I negotiated a new loan with the Commercial Bank of Australia ('CBA'). The CBA agreed, at my request, to not require a personal guarantee from Mr Ian Blatchford. The person guarantee was required from me and my company, Insight Mercantile Pty Ltd. The 'stumbling block' was the involvement of the Second Defendant. The position was made worse by the discovery of the extra CRS Pty Ltd loans taken out by the Second Defendant. When I first approached the CBA because I was not aware of these loans I had not advised the CBA of these loans. When I became aware of these extra loans, I advised the CBA. Although the loan application was positively received the CBA is not prepared to lend any money while the Second Defendant is involved with the Trustee even as a shareholder. As stated in the letter dated 6 February 2019 from Stable Scott to Dwyer Durack … I advised CBA of the order and undertaking by the Second Defendant not to exercise any rights as a shareholder in the First Defendant. Notwithstanding the order and the undertaking the CBA maintains its position that it wont lend any money to the trust while the Second Defendant is a 'stakeholder'.
I also contacted Perth Home Loans who attempted to obtain finance from a 'sub prime' lender. This application was unsuccessful because of, inter alia, the involvement of the Second Defendant in the First Defendant … The rates on offer would have made it difficult for the First Defendant to service the loan and I would not have proceeded with a loan on those terms even if a loan offer had been made.
I reiterate that all this evidence of Mr Panizza relied upon on the present application stands as essentially uncontradicted by any rival evidence.

Panizza 20 August 2019 affidavit

In a further affidavit by Mr Panizza sworn 20 August 2019 (Panizza 20 August 2019 affidavit), he clarifies the position concerning the rental bonds for properties being units 2, 3, 4, 5, 6 and 8 of 14 Bardolph Road, Spearwood, which moneys he says would have been received by Ms Caranna. The Panizza 20 August 2019 affidavit concludes (par 7):
If Cologna Investments Pty Ltd were appointed trustee of the P. and D. Panizza Family Trust I would take immediate steps to appoint Mr Ian Blatchford a director of that company. I am the sole director and shareholder of Cologna Investments Pty Ltd.

Mr Blatchford's affidavit

Mr Blatchford's affidavit sworn 6 August 2019 relates that he was appointed a director of the trustee, Clathington, on 5 October 2018 (par 1). From that time the board of Clathington has comprised himself and the plaintiff, Mr Panizza.
Mr Blatchford relates that Ms Caranna had advised him at the court hearing for this matter on 5 October 2018 that she would give him all documents relating to the Trust (par 2). But Mr Blatchford relates that this did not occur immediately. When meeting with her at 15 Bardolph Road, Spearwood on 30 October 2018 in person that she had 'showed him numerous lever arch files which she said contained documents relating to the trust' (par 3). He relates furthermore that he was advised by Ms Caranna that '… she wanted to keep these documents to assist the Trust's accountants in finalising the Trust's accounts but I could have a copy of whatever I wanted in the meantime' (par 3).
Mr Blatchford next relates that it took some time for him to be provided with documents from Ms Caranna (par 9). He had been in that respect dealing with Dwyer Durack as lawyers then acting for her. See attachment ITB4 being an email sent by Mr Blatchford to a Ms Maree van der Kwast of Dwyer Durack of 28 November 2018.
It will be remembered Mr Blatchford had, in fact, been Ms Caranna's nominee to be appointed as the replacement trustee, when the preliminary issue was first listed to be heard on 5 October 2018. He has since then, essentially by agreement, acted as a co‑director of Clathington along with the plaintiff.
Importantly to the present application are pars 14 through 17 of Mr Blatchford's affidavit. The importance of this professionally independent evidence at pars 14 through 17 by Mr Blatchford as a neutral co‑director and experienced lawyer, is such that I had read these paragraphs aloud to Ms Caranna at the hearing on 10 September 2019 (ts 158 – 159). That was done to offer her some opportunity to provide a responsive comment or clarification, if she could. Nothing that I could discern from her then was substantively responsive to what is said by Mr Blatchford. Mr Blatchford's evidence was (at pars 14 - 17):
At the time the Plaintiff and I were appointed directors, the Trust was in a very poor financial position. There were outstanding accounts, insurance had lapsed and the mortgages were in arrears. In addition, there were the extra loans owing to CRS Pty Ltd which had not been disclosed by the Second Defendant at the time Mr Panizza and I were appointed directors. Bonds for a number of properties had not been paid to the Bond Administrator as required by the Residential Tenancies Act. The preparation of the Trust financial statements, income tax returns and related documents for the financial years ending 30 June 2015, 2016, 2017 and 2018 had not been attended to. A large amount of work was done and money spent to deal with all these matters.
At present, the Trust is meeting its day to day expenses although accounting fees are still outstanding. The interest only period on the major loan to the Trust from the ANZ Bank expires in October 2019. If the Trust is required to start making principle repayments and interest repayments this will put very severe financial constraints on the Trust. In the circumstances, the ANZ loans need to be refinanced at a more favourable rate before the loans change from interest only loans to loans requiring principle and interest payments.
The Trust does not have sufficient resources or cash on hand or income to pay the costs of an independent Trustee. This position is reinforced by the fact that I have agreed to continue in my role as a director without payment until funds become available. Since my appointment in October 2018 I have been paid $4,400 (inclusive of GST) for the period 6 October 2018 to 1 November 2018. The Trust was only able to continue in operation after the Plaintiff and I were appointed directors because of the funds provided to the Trust by the Plaintiff's company, Insight Mercantile Pty Ltd.
If Clathington Pty Ltd were removed as the trustee of the Trust and Cologna Investments Pty Ltd was appointed Trustee, I would consent to being a director of that company.
I accept that evidence.
Next, I turn briefly to discuss in greater detail the events around the two further loans of $100,000 and $50,000 taken from CRS Pty Ltd.

Loan funds received by the second defendant from CRS Pty Ltd

Having issued ex parte injunctive orders on 7 June 2018, I issued further orders by way of variation and by consent, on 6 September 2018. Those consent orders only concerned the first and second defendants being authorised to release moneys to pay accounts. They did not affect that substantive restraints applicable against the second defendant under order 5 of my June 2018 injunction orders.
I note that as regards an advance of $300,000 a letter of authority signed by Clathington on 29 May 2018 (GP10, pages 62 and 64) authorised an advancement of $300,000 to Clathington, utilising the security of 14 Bardolph Road, Spearwood and to advance the funds to a CBA bank account of Ms Caranna.
Although no direct evidence was put to the court on this point, it appears that the 29 May 2018 letter of authority was executed on Clathington's behalf by Ms Caranna (see GP10, page 64).
In the Panizza 7 August 2019 affidavit at par 12, the plaintiff deposes that Ms Caranna personally signed the 6 September 2018 consent variation orders on her own behalf, as second defendant. Ms Caranna sent the orders to the solicitors for the first defendant.
On 6 September 2018, the very same day as the consent variation orders were signed and orders made, a deed was executed between CRS Pty Ltd and Clathington (as mortgagor) and Silvana Caranna (as guarantor) (the $100,000 loan). The deed evidenced a further loan of $100,000, said to be advanced on 23 August 2018 (GP10, pages 65 ‑ 66). The security for this loan (as with the previous loan of $300,000) was an unregistered second mortgage over 14 Bardolph Road, Spearwood. The deed appeared to have been executed on Clathington's behalf by Ms Caranna.
The same day, the amount of $100,000 was deposited into the bank account of Ms Caranna by CRS Pty Ltd (see GP3, page 31).
Several weeks later, on 21 September 2018, a further deed was executed between CRS Pty Ltd, Clathington and Ms Caranna for a loan of $50,000 (the $50,000 loan). The conditions and terms of the loan were the same as the $100,000 loan, except the date the funds were to be advanced was 23 September 2018 (see GP10, pages 67 ‑ 68).
On 21 September 2018, an amount of $49,450 was deposited into the account of the second defendant from CRS Pty Ltd (see GP4). It appears a fee of $550 from the agent for CRS Pty Ltd (Samson & Associates) was deducted by the $50,000 loan prior to the loan being deposited (see GP11, pages 82 ‑ 83).
Included in the Panizza 7 August 2019 affidavit at GP11, page 82 is an email chain between the second defendant and Samson & Associates regarding the $50,000 loan in which Ms Caranna asks for them to 'deposit funds in the CBA account previously used'.
On 25 September 2018, a letter was sent from Graeme W Sansom (of Sansom & Associates) to the second defendant confirming settlement of the $50,000 loan on 21 September 2018 (GP11, page 83).
On 20 December 2018, as I previously mentioned, notices of default were issued on CRS Pty Ltd's behalf to Clathington and Ms Caranna in respect of both loans (GP10, pages 69 ‑ 79 (the $100,000 loan) and 71 ‑ 72 (the $50,000 loan).
On 21 December 2018, a letter from Valenti Lawyers (acting for CRS Pty Ltd) was sent to the lawyers for the plaintiff (GP10, pages 32 ‑ 63). That letter confirmed that funds had been deposited into the account of Ms Caranna pursuant to, and in accordance with, a letter of authority signed by Clathington dated 29 May 2018. The letter also enclosed copies of the two deeds, the two default notices, and a ledger of the accounts Clathington had with CRS Pty Ltd.
As I have previously mentioned, the plaintiff's evidence is that it was only at this time that he became aware of the loans from CRS Pty Ltd to Clathington.
On 11 January 2018, CRS Pty Ltd lodged caveats over 14 Bardolph Road, Spearwood (GP12 and GP13).
On 8 March 2019, a letter was sent from the lawyers for the plaintiff to Dwyer Durack (at the time acting for the second defendant) (GP14). This letter concerned the two loans and the plaintiff's concerns regarding them.
Given the overwhelming, essentially uncontradicted, documentary evidence presented regarding the two loans from CRS Pty Ltd (of, in aggregate, $150,000) which I have now outlined in detail above, it is difficult for me to see how Ms Caranna would not have known that she was then acting contrary to my June 2018 injunction orders made against her by causing more loans to be taken out by Clathington with CRS Pty Ltd. This is particularly so in circumstances where Ms Caranna had signed off personally on the consent orders varying the June 2018 injunction orders on 6 September - the very same day she signed a deed with CRS Pty Ltd for the $100,000 loan. Not only did Ms Caranna enter into a loan agreement and borrow more money in the name of Clathington on 6 September 2018, she looks to have done that again on 21 September 2018.
Most of the extra loan tranches of funds from these $150,000 in loan funds were then deposited into Mr Caranna's personal bank account (by instruction, it would appear) rather than to a Clathington trustee account.

Determination

Bearing in mind the trustee removal and replacement principles as earlier discussed, I am of the view it is wholly expedient, presently, in accord with s 77 of the Trustees Act for Clathington, for the current trustee, to be removed and also equally expedient for it to be replaced by Cologna Investments Pty Ltd.
Of course, in a perfect world a wholly independent replacement trustee would present as the preferable alternative. But the financial circumstances for the Trust as currently prevailing, in my view, provide no other viable pragmatic option at present other than to proceed as the plaintiff proposed.
Any in principle concerns over heightening family tensions, or propounding conflicts of interest by the plaintiff's nominated corporation becoming the new trustee, are mitigated to some extent by the appointment of Mr Blatchford as a co‑director alongside the plaintiff to the new trustee.
This is essentially uncontradicted evidence before the court as regards trustee misconduct prior to 5 October 2018. That amply supports a removal of Clathington and its replacement as the trustee of this Trust.
During the course of her verbal remarks on 10 September 2019 Ms Caranna, in person, offered at a point before the lunch adjournment to seek to have the trustee status quo maintained as regards Clathington continuing, by offering to transfer over the three shares which she is shown to be currently holding in Clathington, to her brother (as I would infer for a nil dollar consideration) (see ts 131 – 132). However, that proposal had lately emerged from her only during the hearing. When it did, it was the basis of an adjournment which was then sought by the plaintiff, which I granted, to enable the plaintiff to obtain urgent specialist taxation advice as regards the potential implications of such a voluntary share transfer in the trustee's shares.
Whilst the advice obtained by the plaintiff was urgent and only provisional, the resulting position of the plaintiff as communicated to the court by counsel for the plaintiff was that it wished to press for a removal of Clathington and the appointment of the replacement trustee Cologna Investments Pty Ltd (see ts 140 and 142).
There were expressed concerns then articulated for the plaintiff, communicated through counsel, over potential revenue exposure difficulties - best mitigated by the appointing of a new trustee.
The plaintiff's basis for adopting that stance seemed to me, in all the circumstances, not to be unreasonable. Indeed, this 'clean' trustee situation will differ only to a small extent from a management perspective from the prior management of the Trust perspective after the post October 2018 status quo.
I was also moved by a need for swift steps to be taken by a viable and 'clean' trustee in terms of addressing refinancing arrangements as regards the trust's current loan facilities with the ANZ Bank which sees their interest only terms reaching their conclusion at the end of October 2019. Refinancing could take a few weeks to perfect and should not be delayed or held up.
Given the evidence as to the negative expressed stance of those currently approached lending institutions as communicated to the plaintiff, against any level of trustee shareholder status being held by Ms Caranna in Clathington, as, in effect, a negative lending consideration, I did accept that it would now be cleaner and more viable in all the circumstances for a new trustee arrangement to be implemented.
I reiterate, however, that the new trustee will manifest a significant level of professional independence and expertise by the future participation of Mr Blatchford as a co‑director. Indeed, as seen, the orders I ultimately issued on 10 September 2019 proceed on the foundation of the court's acceptance of an undertaking of the plaintiff to appoint Mr Blatchford to act as a co‑director with him of Cologna Investments Pty Ltd, in the role as replacement trustee.
Those arrangements provide the court, and hopefully even Ms Caranna, with some level of assurance that the future control and administration of the Trust is not being passed over to the plaintiff without an accompanying oversight and control regime applicable to a new trustee. On that basis, the orders seen at [45] of these reasons were issued.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
23 SEPTEMBER 2019