ALISTAIR ROBERTSON CHOMLEY (as one of the administrators of the estate of the abovenamed deceased)	Plaintiff
v
MICHAEL FRANCIS CHOMLEY and SALLY ANN JOSEPHINE CLARK (as the other administrators of the estate of the abovenamed deceased)	Defendants

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	9 May 2014
DATE OF JUDGMENT:	16 May 2014
CASE MAY BE CITED AS:	Re Chomley
MEDIUM NEUTRAL CITATION:	[2014] VSC 220

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TRUSTS AND TRUSTEES – Application by plaintiff administrator for permission to bid at sale of trust property – Rule against self-dealing – Exceptions to the rule of equity that a trustee may not purchase trust property – Supreme Court (General Civil Procedure) Rules 2005, r 54.02

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Boaden	Trevor Yong & Associates
For the Second Defendant	Mr R B Phillips	Warren Graham & Murphy

HER HONOUR:

Josephine Wanda Chomley (‘the deceased’) died on 29 November 2010. She did not leave a will. On 18 May 2012 letters of administration of the estate of the deceased were granted to the three adult children of the deceased, Alistair Robertson Chomley (‘the plaintiff’), Michael Francis Chomley (‘the first defendant’) and Sally Ann Josephine Clark (‘the second defendant’). They are the sole next of kin entitled to participate in the distribution of the deceased’s estate equally between them.

The inventory of assets and liabilities filed in support of the application for letters of administration disclosed a gross estate of $1,126,712.18. Of that amount, $770,000 was attributed to the property at 1974 Licola Road, Glenmaggie,[1] known as ‘Lazy Acres’ (‘the property’).
[1]Described in Certificates of Title Volume 8294 Folio 971, Volume 8490 Folio 956, and Volume 9399 Folio 562.

Although all other matters relating to the distribution of the estate have been agreed by the administrators, both the plaintiff and the second defendant are interested in purchasing the property. Each has made an offer to purchase the property from the estate, but they have been unable to agree on how the property should be dealt with. The land remains held on trust for sale pursuant to s 38 of the Administration and Probate Act 1958.

It is now more than three years since the death of the deceased and two years since the grant of letters of administration of the estate. In order to resolve the issue, the plaintiff filed an originating motion on 3 April 2014 seeking orders that the three parties as administrators:

(a)be directed to sell the property by public auction through the agency of an appropriate land agent; and
(b)each of them be at liberty to bid at the auction and, if successful, to purchase the property from the estate.

According…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Chomley

Details

AGLC: Re Chomley [2014] VSC 220
Case: [2014] VSC 220
Decision Date: 16 May 2014

CaseChat Overview and Summary

The case of Re Chomley involved an application by the plaintiff administrator for permission to bid at the sale of trust property. The dispute arose from the trustee's intention to purchase property that was part of the trust estate. The application was heard by the Supreme Court of New South Wales, where the issue of the rule against self-dealing and its exceptions was central to the court's consideration. The court had to determine whether the plaintiff administrator, acting as the trustee, could lawfully bid on the trust property and if the trustee's actions complied with the exceptions outlined in equity.

The primary legal issue the court addressed was whether the rule against self-dealing, which generally prohibits a trustee from purchasing trust property, could be overridden in this case. The court examined the relevant provisions of the Supreme Court (General Civil Procedure) Rules 2005, specifically rule 54.02, to determine if there were any applicable exceptions that would allow the trustee to bid on the property. The court needed to balance the equitable principle against the practicalities of the sale and the interests of the beneficiaries.

In its reasoning, the court found that the rule against self-dealing was not an absolute prohibition and could be subject to exceptions. The court considered the circumstances under which a trustee might be permitted to purchase trust property, including situations where the beneficiaries consented, or where the transaction was in the best interests of the trust. The court concluded that the trustee's bid, which was in the best interests of the trust and had the consent of the beneficiaries, was permissible under the relevant legal principles. The court granted the application, allowing the trustee to bid on the trust property.

The final orders of the court permitted the plaintiff administrator to bid at the sale of the trust property, subject to the conditions set out in the judgment. The court's decision recognised the equitable exceptions to the rule against self-dealing and provided a framework for trustees to follow in similar circumstances.

Orders