Re Cooper Street Property Trust (No 2) - [2017] VSC 291

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2016 02764

IN THE MATTER of the Cooper Street Property Trust

-and-

IN THE MATTER of an application pursuant to ss 48 and 51 of the Trustee Act 1958

ROBERT SCOTT WOODS (as trustee of the bankrupt estate of Ergun Omer)

Plaintiff

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 March 2017
DATE OF JUDGMENT:	26 May 2017
CASE MAY BE CITED AS:	Re Cooper Street Property Trust (No 2)
MEDIUM NEUTRAL CITATION:	[2017] VSC 291

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TRUSTS — Appointment of new trustee — Where trustee company deregistered and appointor bankrupt — Application by appointor’s trustee in bankruptcy for appointment of new trustee by the Court — Where no statutory standing — Inherent jurisdiction to appoint new trustee — Welfare of the beneficiaries — Where no evidence from beneficiaries — Where no new trustee appointed — Trustee Act 1958, ss 48 and 64.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Moffatt	Mills Oakley

HER HONOUR:

By originating motion filed 14 July 2016, the plaintiff sought the appointment of a new trustee to the Cooper Street Property Trust (‘the Trust’) pursuant to s 48(1) of the Trustee Act 1958 (‘the Act’).

On 6 December 2016, the Court delivered a ruling which considered the application in detail (‘the ruling’).[1] In summary, the plaintiff is the trustee in bankruptcy of Mr Ergun Omer. Mr Omer has not been in contact with the plaintiff since 6 June 2016. He is the only specified beneficiary of the Trust. The objects of the Trust also include a class of general beneficiaries, that extends to present and future relatives of Mr Omer. The former trustee of the Trust, Omer Property Group Pty Ltd (‘OPG’), became deregistered. The effect of the deregistration of OPG is that the Trust no longer has a trustee. Although the trust deed provided a number of avenues to appoint a new trustee, none were applicable in the circumstances.
[1]Re Cooper Street Property Trust [2016] VSC 756 (9 December 2016).

The plaintiff sought to appoint a registered liquidator, Mr Michael Carrafa, as the new trustee of the Trust. The purpose of the appointment was for the new trustee to seek to pursue a claim against DNP Constructions Australia Pty Ltd (‘DNP Constructions’) in relation to the proceeds of sale of a property at 127 Metrolink Circuit, Campbellfield (‘the property’). The property was said to be purchased in association with a partnership between the Trust and DNP Constructions. The value of the claim was estimated to be in the vicinity of $300,000. Other than this interest, the Trust has no assets.

There were issues as to the plaintiff’s standing to appoint a new trustee, specifically as to whether Mr Omer was a person ‘beneficially interested’ in the Trust for the purposes of s 64 of the Act, and further, whether such an interest vested in the plaintiff in…

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.

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Details

Case: [2017] VSC 291
Decision Date: 26 May 2017

CaseChat Overview and Summary

The case of Re Cooper Street Property Trust (No 2) involved the Cooper Street Property Trust and the issue of appointing a new trustee. The Trust's former trustee, a company, had been deregistered, and the person who appointed the original trustee had become bankrupt. The trustee in bankruptcy sought the court's intervention to appoint a new trustee for the Trust. The case was heard in the Supreme Court of Victoria.

The primary legal issue before the court was whether it had the inherent jurisdiction to appoint a new trustee despite the lack of statutory authority or evidence from the beneficiaries. The court had to determine whether it could exercise its inherent jurisdiction to make an appointment in the absence of a statutory framework and in the absence of any evidence from the beneficiaries of the Trust. The court had to balance the welfare of the beneficiaries against the statutory requirements for trustee appointments.

The court held that, while the statutory provisions for appointing trustees were generally exclusive, there were circumstances where the court could exercise its inherent jurisdiction. The court noted that it had the power to appoint a new trustee when it was in the best interests of the beneficiaries and when there was no other means to ensure the Trust's administration. However, the court found that it could not appoint a new trustee in this case because there was no evidence from the beneficiaries. The court concluded that, in the absence of such evidence, it could not exercise its inherent jurisdiction to appoint a new trustee.

The court declined to appoint a new trustee for the Cooper Street Property Trust and did not make any orders regarding the Trust's administration.

Orders