Perpetual Trustee Company Limited as Trustee of the Estate of the late Keith William Corbett v John Keith Corbett

[2014] NSWSC 878

Supreme Court

New South Wales

Case Title:	Perpetual Trustee Company Limited as Trustee of the Estate of the late Keith William Corbett v John Keith Corbett
Medium Neutral Citation:	[2014] NSWSC 878
Hearing Date(s):	27 June 2014
Decision Date:	27 June 2014
Jurisdiction:	Equity Division
Before:	Rein J
Decision:	Judicial advice given
Catchwords:	EQUITY - trusts and trustees - application for judicial advice pursuant to s 63 of the Trustee Act 1925 - Judicial advice given to an administrator of an estate in respect of the commencement of proceedings in connection with a claim made by a beneficiary as to an interest in a trust asset.
Legislation Cited:	Succession Act 2006 Trustee Act 1925
Cases Cited:	Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66
Category:	Principal judgment
Parties:	Perpetual Trustee Company Limited as Trustee of the Estate of the late Keith William Corbett (Applicant)
Representation
- Counsel:	Counsel: Mr C Harris SC (Applicant)
- Solicitors:	Solicitors: Diamond Conway
File Number(s):	2014/159778
Publication Restriction:	Nil

EX TEMPORE JUDGMENT

1. In this matter the plaintiff, Perpetual Trustee Company Limited ("the trustee") is the administrator and trustee of the estate of the late Keith William Corbett ("the deceased"). Letters of administration in his intestate estate were granted on 17 November 2010.

2. The deceased was survived by eight adult children (his wife having predeceased him), each of whom is entitled by virtue of s 127(1) of the Succession Act 2006 to one eighth of his estate.

3. The trustee has experienced delays in making distribution to the beneficiaries due to potential liability arising under a guarantee of significant proportion which has now been terminated. The trustee now wishes to sell one of the more valuable assets of the deceased's estate, being a property in Picton ("the property"). However, one of the beneficiaries ("John") asserts the deceased entered into an oral agreement to give him the property, and claims that he (or his companies) have spent $734,000 on improvements.

4. On 3 December 2013 John lodged a caveat on the title to the property claiming an interest in the land described as "constructive trust by virtue of contribution of interest granted in land." In the circumstances the trustee is concerned it is unable to provide good title to the property to a prospective purchaser, and has thus withdrawn the property from sale. The trustee wishes to obtain clarification of the nature and extent of John's interest in the property as it is precluded from selling the property and distributing the estate until such a determination is made.

5. The trustee seeks judicial advice pursuant to s 63(1) the Trustee Act 1925 as to whether it would be justified in:

   (a)Commencing and prosecuting proceedings in accordance with the Statement of Claim annexed to the Statement of Facts which has been filed in this matter with such subsequent amendment as might be advised by its legal advisers; and

   (b)Appropriating and paying its legal and other expenses associated with those proceedings out of the estate of the late Keith William Corbett.

6. The trustee, prior to seeking this advice, has properly sought and obtained a memorandum of advice from Mr Harris SC, a copy of which was provided to the Court. The advice recommends the trustee seek declarations to the effect set out (and also the trustee seek judicial advice about these steps).

7. Section 63(1) and (2) of the Trustee Act are in the following terms:

   (1)A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument.

   (2)If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee's own responsibility, to have discharged the trustee's duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction.

8. The High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 has made clear that this Court can give judicial advice to a trustee who seeks protection in utilising the assets of the trust to defend the trust from proceedings brought against the trustee and there can be no doubt that it can do so where the trustee's ability to realise an asset forming part of the estate is impeded by a caveat lodged on title. Here the need for the trustee to have the question of John's entitlement determined is so obvious that it is difficult to see that any beneficiary (including John) could have any basis for attacking the trustee for taking such action.

9. Consideration has been given by Mr Harris in his advice as to the appropriate steps that could be taken by the trustee and his advice, after considering other alternatives, was that the most effective and appropriate step was to commence proceedings seeking declarations in relation to matters to which I have referred.

10. It is my view the trustee would be justified in commencing proceedings in accordance with the Statement of Claim and paying for those proceedings out of the estate's assets since a major asset of the estate cannot effectively be realised by the trustee until the caveat is either removed or, if reflecting a genuine entitlement of John, is the subject of appropriate adjustment on sale as determined by the Court. I so advise.

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