Re Magarey Farlam Lawyers Trust Accounts

[2006] SASC 223

Supreme Court of South Australia

(Civil: Application)

RE MAGAREY FARLAM LAWYERS TRUST ACCOUNTS

[2006] SASC 223

Judgment of The Honourable Justice Debelle (ex tempore)

26 July 2006

EQUITY - TRUSTS AND TRUSTEES - TRUSTEES - THEIR APPOINTMENT, DISMISSAL, ESTATE, ETC

Appointment of new trustee - where it is suitable for court to appoint.

Trustee Act 1936 (SA) s 14, referred to.

RE MAGAREY FARLAM LAWYERS TRUST ACCOUNTS
[2006] SASC 223

Civil

1. DEBELLE J.        This is an application to appoint a new trustee in respect of two separate estates.  Each estate is the estate of a deceased person.

2. Dudley Bertram Pettitt and Dorothea Rosalie Pettitt were husband and wife.  They had two children only, both daughters.  The daughters are now known as Mrs Jillian Sykes and Mrs Valmai Williams.

3. On 24 February 1985 Dorothea Rosalie Pettitt died. Probate of her will was granted on 24 April 1985 to Brian Attiwill Magarey (“Mr Brian Magarey”) and Michael Roy Magarey (“Mr Michael Magarey”), leave being reserved to Dudley Bertram Pettitt and Robert Ernest Penhall to apply for a grant of probate. Neither Mr Pettitt nor Mr Penhall made any such application. On 18 October 1991, acting pursuant to s 14 of the Trustee Act 1936, the then trustees Mr Brian Magarey and Mr Michael Magarey by deed appointed Gimalo Administrators Pty (“Gimalo”) as an additional trustee.  Mr Brian Magarey and Mr Michael Magarey were partners of the firm Magarey & Magarey.  Gimalo was a company incorporated by the firm to act as a trustee.

4. On 17 August 1994 Dudley Bertram Pettitt died.  Probate of his will was granted on 28 February 1995 to Mr Brian Magarey and to Mr Michael Magarey, leave being reserved to Mr Penhall, the other executor named in the will, to apply for a grant of probate.  Mr Penhall has not made any such application.  By deed dated 13 January 2003 Mr Michael Magarey retired as trustee and Gimalo was appointed a new trustee in his place.  Mr Brian Magarey and Gimalo remain trustees of the estate of the late Dudley Bertram Pettitt.

5. The administration of the estates of both Mr Dudley Pettitt and Mrs Dorothea Pettitt continues.  It is unnecessary for the purposes of this application to note the details of the trusts in each estate.  It is sufficient to note that Mrs Jillian Sykes and Mrs Valmai Williams each have life interests in each estate and that the children of Mrs Jillian Sykes have an interest in remainder in each estate upon the death of their mother and Mrs Williams.

6. Mrs Jillian Sykes and all her children consent to the application. All of her children are of full age.

7. Mrs Williams has been asked if she will consent to the application.  She has stated that she does not.  The correspondence between the solicitors for Mrs Sykes and Mrs Williams discloses that Mrs Williams does not understand the reasons for this application.

8. The application is a consequence of fraudulent dealings with the trust account of Magarey Farlam Lawyers by a clerk named Willoughby.  Magarey Farlam Lawyers is the present name of the firm previously known as Magarey & Magarey.  Legal proceedings in relation to the management and supervision of the firm and other considerations require that partners of the firm and Gimalo no longer act as trustees of individual estates.

9. Ms Thomas, who has been appointed the manager of the firm by the Law Society of South Australia, believes it to be in the best interests of each estate that new trustees are appointed to administer the affairs and business of each estate.  She consents to the application.  Ms Bishop, who has been appointed supervisor of the trust accounts of the firm by the Law Society of South Australia, also consents to the application.  The consent of both Ms Thomas and Ms Bishop is on the footing that the new trustee give certain undertakings to the court.  Those undertakings have been prepared by Ms Thomas and have been approved by the court.

10. The existing trustees in each of these two estates have also expressed their consent to the application, conscious of the fact that it is no longer appropriate for them to continue as trustees.

11. I am satisfied that it is in the best interests of the two estates that new trustees be appointed.  The existing trustees can no longer act as such and it is imperative that another trustee or trustees be appointed in their stead in order to administer each estate and to protect the interests of the beneficiaries in each estate.  Those beneficiaries include Mrs Williams.

12. Australia Executor Trustees Ltd is willing to act as trustee.  It is willing to give the required undertaking.  However, it was necessary for the undertaking to be given by an officer of the trustee company who has authority to do so.  I therefore adjourned the application to enable that to be done.  The appropriate undertaking given by an officer of the trustee company has now been proved.  I am satisfied with the terms of the undertaking.

13. For these reasons, it is proper to make an order in each estate removing the existing trustees and appointing Australia Executor Trustees Ltd as the new trustee. In this way the interests of all beneficiaries in each of the two estates will be best protected. I will make the orders necessary to give effect to these reasons.