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Re Owies Family Trust

Re Owies Family Trust

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Case Copied 28 October 2020 75 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST

S ECI 2018 02534

PAUL ANDREW OWIES	First Plaintiff
and
DEBORAH OWIES	Second Plaintiff
v
JJE NOMINEES PTY LTD (ACN 004 856 366) (in its capacity as the trustee for the OWIES FAMILY TRUST)	First Defendant
and
MICHAEL BENJAMIN OWIES	Second Defendant

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JUDGE:	MOORE J
WHERE HELD:	Melbourne
DATE OF HEARING:	10, 11, 12, 13, 26 February 2020 (and further written submissions provided on 4, 7 September 2020)
DATE OF JUDGMENT:	28 October 2020
CASE MAY BE CITED AS:	Re Owies Family Trust
MEDIUM NEUTRAL CITATION:	[2020] VSC 716

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TRUSTS – Validity of resolutions purporting to amend trust deed – Whether trustee had power to vary identity of guardian and appointor by deed – Where trust deed permits addition to or variation of existing trusts and declaration of new trusts and powers – Question of validity turns on construction of specific terms of trust deed – Trust deed does not permit variation to identity of guardian and appointor – Byrnes v Kendle (2011) 243 CLR 253, applied – Scaffidi v Montevento Holdings Pty Ltd (2012) 246 CLR 325, applied – Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99, applied – Schreuders v Grandiflora Nominees Pty Ltd [2016] VSCA 93, applied – Kearns v Hill (1990) 21 NSWLR 107, applied – Mercanti v Mercanti (2016) 50 WAR 495, applied – Re Scott (dec’d) [1948] SASR 193, considered.

TRUSTS – Distribution of income – Whether trustee failed to properly exercise discretion to distribute income – Where class of beneficiaries limited to five natural persons who are members of the same family – Where trustee did not distribute income to plaintiffs on last 10 occasions – Plaintiffs time-barred in relation to some occasions on which discretion was purportedly exercised – Whether trustee gave genuine consideration to distributing income to plaintiffs – Knowledge of identity of beneficiaries insufficient to constitute genuine consideration of exercise of discretion – Where trustee had no knowledge of plaintiffs’ circumstances on some occasions on which it exercised its discretion – Trustee failed to properly exercise discretion on those occasions – Limitation of Actions Act 1984, s 21 – Karger v Paul [1984] VR 161, applied – Wareham v Marsella [2020] VSCA 92, applied – Sinclair v Moss [2006] VSC 130, applied – Finch v Telstra Super Pty Ltd (2010) 242 CLR 254, applied – Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276, applied.

TRUSTS – Removal of trustee – Whether trustee should be removed – Where trustee has acted in breach of trust – Where breaches of trust occurred when trustee was under control of previous directors – Whether trustee is incapable of acting impartially – Where trustee has recently distributed capital to one of the plaintiffs – Court not satisfied that trustee will fail to act impartially – Welfare of…

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: [2020] VSC 716
Decision Date: 28 October 2020

CaseChat Overview and Summary

In the case of Re Owies Family Trust, the Supreme Court of Victoria was tasked with addressing several contentious issues surrounding the Owies Family Trust. The plaintiffs sought to challenge the decisions of the trustees regarding the appointment of a guardian and appointor, the distribution of trust income, and the removal of the trustees. The legal issues at the heart of this case involved the validity of trust deed amendments, the trustees' exercise of discretion over income distribution, and the potential removal of the trustees and the guardian and appointor.

The court commenced its analysis by examining the validity of the resolutions that purported to amend the trust deed, specifically concerning the appointment of a new guardian and appointor. The court held that the trust deed did not permit changes to the identity of the guardian and appointor, thus these resolutions were invalid. This conclusion was reached through a detailed construction of the specific terms of the trust deed and was supported by several precedents including Byrnes v Kendle, Scaffidi v Montevento Holdings Pty Ltd, and Australian Broadcasting Commission v Australian Performing Right Association Ltd. Regarding the distribution of income, the court found that the trustees had not properly exercised their discretion to distribute income to the plaintiffs, as they had not given genuine consideration to the plaintiffs' circumstances on certain occasions. The court held that the plaintiffs were time-barred in relation to some of the occasions on which the discretion was purportedly exercised, further supporting the conclusion that the trustees had not acted properly.

The court then turned to the issue of whether the trustees should be removed. The plaintiffs argued that the trustees should be removed due to breaches of trust, particularly because the breaches occurred while the trustees were under the control of previous directors. However, the court found that there was insufficient evidence to suggest that the trustees were incapable of acting impartially. The court also noted that the welfare of the beneficiaries did not oppose the trustees continuing in their roles. The court's decision was informed by provisions of the Trustee Act 1958 and relevant case law, including Miller v Cameron and Monty Financial Services Ltd v Delmo.

Lastly, the court considered the removal of the guardian and appointor. The court held that it did not have jurisdiction to remove the guardian and appointor as they were not established trustees of the trust. This conclusion was based on the authority of Blenkinsop v Herbert. The court's final orders reflected its findings, affirming the invalidity of the amendments to the guardian and appointor, the trustees' failure to properly exercise their discretion, and the refusal to remove the trustees or the guardian and appointor.

Orders