Re Smallacombe and Zausa

[2019] NSWSC 1626

Supreme Court

New South Wales

Medium Neutral Citation:	Re Smallacombe and Zausa [2019] NSWSC 1626
Hearing dates:	22 October 2019
Decision date:	22 October 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1.   Note that Steven Brian Smallacombe of 54 Baden Powell Street, Maroochydore, Queensland and Helen Bernadette Zausa of 18 Barakula Street, South Ripley, Queensland retire as trustees of the trust created by the Deed of Trust dated 22 December 1986 and known as The Jennifer Zausa Trust, at 10am on 2 December 2019. 2.   The Public Trustee of Queensland of 444 Queen Street Brisbane, Queensland be appointed trustee of the trust created by the Deed of Trust dated 22 December 1986 and known as the Jennifer Zausa Trust, in substitution for Steven Brian Smallacombe and Helen Bernadette Zausa from 10am on 2 December 2019. 3.   Order that the property, investments, moneys and all other assets of whatsoever kind and wheresoever situated now, subject to the trust created by the Deed of Trust dated 22 December 1986 and known as the Jennifer Zausa Trust, vest in the Public Trustee of Queensland, upon the trusts of the said Deed of Trust, so far as the same are now subsisting and capable of taking effect. 4.   Order that the plaintiffs’ costs be paid out of the trust fund on the common fund basis.
Catchwords:	EQUITY — Trusts and trustees — Court’s supervision of — Appointment and removal of trustees – application for court approval of retirement of trustees and appointment of the Public Trustee of Queensland in place of the retiring trustees
Legislation Cited:	Public Trust Act 1978 (Qld),s 11A Trustee Act 1925 (NSW), s 70
Cases Cited:	Allison v Permanent Trustee Australia Limited (Supreme Court (NSW), Powell K, 8 September 1988, unrep) In Re Hood’s Will (1899) 16 WN 20 In Re Powell’s Trust (1902) 19 WN 199 Richardson and Wrench Limited v Plomley (1892-1894) 15 NSWLR 131
Category:	Principal judgment
Parties:	Steven Brian Smallacombe (First Plaintiff) Helen Bernadette Zausa (Second Plaintiff)
Representation:	Counsel: P Wallis (Plaintiffs)   Solicitors: Adams Legal (Plaintiffs)
File Number(s):	2019/00253776
Publication restriction:	Nil

Judgment

1. HER HONOUR: This is an application, by summons filed on 15 August 2019, for orders in effect approving the retirement of the trustees of a trust created by deed of trust dated 22 December 1986 (the Jennifer Zausa Trust) and for the appointment pursuant to s 70 of the Trustee Act 1925 (NSW) (Trustee Act) of the Public Trustee of Queensland (the Public Trustee) in place of the retiring trustees, as well as for consequential orders in relation to the vesting of the assets of the trust in the replacement trustee.

2. Read in support of the application are affidavits from each of the present trustees (Steven Brian Smallacombe (Mr Smallacombe) and Helen Bernadette Zausa (Ms Zausa)) as well as an affidavit sworn 8 August 2019 of the Director, Estates and Trusts employed by the Public Trustee, Ms Linda Fay Blackburne, who is a delegate of the Public Trustee pursuant to s 11A of the Public Trust Act 1978 (Qld) for the purpose, amongst other things, of: signing documents to be filed in court; making affidavits permitted to be made by the Public Trustee; and giving or signing a consent or other document that the Public Trustee is required or permitted to give or sign. Ms Blackburn has deposed to the signing by her, as delegate of the Public Trustee, of a consent to act as trustee.

3. Also relied upon on the present application are four affidavits sworn by the plaintiff’s solicitor (Mr Steven Edward Quartermain) deposing relevantly to his notification of the present application to the beneficiary of the trust, Ms Jennifer Zausa (Jennifer). I will return to that issue shortly.

Background

4. By way of background, the circumstances in which the trust was established are deposed to in the affidavit sworn 7 August 2019 of Ms Zausa. Helen is the sister of the beneficiary of the trust (Jennifer). Helen has deposed that Jennifer is her older sister and the sole beneficiary of the trust. Jennifer is 57 years old, having been born in May 1962.

5. Ms Zausa has deposed that the trust was established for her sister by their late father (Anthony Zausa) in 1986 following the sustaining by Jennifer of head injuries in a motorbike accident at Tocumwal in New South Wales. Ms Zausa has deposed that her sister’s injuries meant that she was unable to work or properly look after her then only five month old son and that Jennifer’s son is cared for by their parents and by Ms Zausa.

6. On the establishment of the trust, the funds of the trust were the proceeds of a claim for damages for personal injuries in respect of the motor vehicle accident. The assets of the trust now comprise principally two real estate properties in Queensland, one of which is Jennifer’s place of residence and the other is apparently used as an investment property.

7. One of the trustees, Mr Smallacombe, whose occupation is that of an accountant, has deposed to the financial assets of the trust and the arrangements in relation to Jennifer’s day-to-day expenses. He has deposed that Jennifer receives a disability pension from Centrelink and that the income from the rental property is used to provide for the annual costs associated with both properties and some of Jennifer’s personal expenses.

8. There have in the past been other trustees of the trust, Mr Smallacombe and Ms Zausa having been appointed as trustees pursuant to an order made by this Court on 10 February 2003.

9. It is noted that, pursuant to cl 5.1 of the trust deed which deals with the retirement of the trustee, there is a proviso that requires the retiring trustee or trustees prior to retirement to obtain the consent and approval of the Supreme Court of New South Wales, hence the making of the present application.

10. The reasons for the respective plaintiffs each seeking consent to his or her retirement as trustee are to be found in their respective affidavits.

11. Mr Smallacombe has deposed that he is now looking to scale back the provision of his accounting services to the company Russell & Wood Pty Ltd (a Maroochydore accounting firm of which he was variously an employee and then director and is now a contractor). He has deposed that he does not believe he will be in a position to continue to provide to the trust the services that he has carried out for the trust since his appointment. Those services are set out at [14] of his affidavit. He has also deposed to his belief that should the relief sought be granted this would be highly likely to avoid the need for applications of this type in the future, thus saving the trust the associated cost.

12. Ms Zausa’s reasons for seeking to retire as trustee are somewhat different. Ms Zausa has deposed to her role as trustee. She has deposed that, since about 2010, her relationship with her sister has become increasingly difficult and fractious; and she perceives that her sister has concerns about her (Ms Zausa) having a level of control in respect of her sister’s affairs. In particular, she has deposed that, in her opinion, part of the deterioration in her relationship with her sister is due to the fact that she exercises a degree of control over Jennifer’s financial affairs in her role as trustee.

13. Ms Blackburne, in her affidavit deposing to the consent by the Public to its appointment to act as trustee of the trusts in question, has calculated the likely fees that will be charged on a yearly basis for the Public Trustee to act as trustee of the trust. Those currently are estimated as $4,747.10 per year comprising an asset management fee, a service level fee and a realty fee in different amounts. By reference to the financial statements relating to the trust which are annexed to Mr Smallacombe’s affidavit, it is apparent that those costs are in the order of the costs which have historically been charged by way of accountancy fees and trustee services.

Determination

14. The jurisdiction of this Court to consent to the retirement of the existing trustees and their replacement by the new trustee arises both under the Court’s inherent jurisdiction and pursuant to s 70 of the Trustee Act. One issue that has, quite properly, been raised on the present application is whether the beneficiary, Jennifer, should have been joined as a party to the proceedings.

15. Reference was made to a decision of Powell J in this Court in Allison v Permanent Trustee Australia Limited (Supreme Court (NSW), Powell K, 8 September 1988, unrep) in which his Honour acceded to an application that had been commenced by way of summons in relation to a particular trust but said the following (at 29), in the context of explaining the reason for having sought an assurance that the persons named in this second schedule to the summons would be served within the time which his Honour had indicated:

…The reason for my seeking that assurance is to be found to lie in the practice of the Court that, in the absence of some reason why they should not be joined as parties, all persons interested in the relevant trust estate should, either, join in as Plaintiffs in, or, be joined as Defendants to, or, at least be given notice of any application to remove the trustee or, to appoint a new trustee.

16. His Honour there referred to Richardson and Wrench Limited v Plomley (1892-1894) 15 NSWLR 131 at 144-5 per Earl of Selborne; In Re Hood’s Will (1899) 16 WN 20; and In Re Powell’s Trust (1902) 19 WN 199.

17. Mr Quartermain’s affidavits have deposed to the various notices that have been sent to Jennifer informing her of the bringing of this application and of the various changes of date or court listing times in relation to this application. In particular, Mr Quartermain has annexed to his first affidavit sworn 9 August 2019 a copy of a letter dated 2 July 2019 to Ms Zausa which notes that instructions had been received that, given each of their personal circumstances, the current trustees wished to retire as trustees and seek to have the Public Trustee appointed as the new trustee; and that for this to occur the trustee required an order to be obtained from the Supreme Court of New South Wales and the written consent of the Public Trustee. The letter noted that the Public Trustee required that the beneficiary be advised of the proposed application and that the beneficiary’s consent be sought to it becoming the new trustee should the Court in its discretion make such an order. The letter noted that the Public Trustee would charge fees for acting as a trustee but also noted that Mr Smallacombe in his capacity as an accountant currently charged the trust professional fees, as he was entitled to under the trust deed.

18. Annexed to Mr Quartermain’s first affidavit is a copy of that letter signed by Ms Jennifer Zausa on 8 July 2019 under the words, “I am agreeable to the QPT [sic] accepting the role of trustee of the Jennifer Zausa Trust and charging the fees outlined above”.

19. It has been explained by Counsel for the plaintiffs that the reason the decision was made not to join the beneficiary as a party to the proceedings was concern as to any exacerbation of the relationship between Jennifer and her sister which might arise from the service of the summons and affidavit in support deposing to the basis on which Ms Zausa is seeking to retire as trustee.

20. In the circumstances, I am satisfied that Jennifer is on notice of the application. Although in the evidence there is reference to Jennifer having suffered head injuries as a result of the accident that led to the claim made that has resulted in the funds which constituted the trust fund when it was established, it would appear from the evidence that Jennifer is able to live independently, albeit on a disability pension. There is nothing to suggest that it is necessary for Jennifer to have a tutor appointed in order to consent to the appointment of the Public Trustee as replacement trustee and in circumstances where there would appear to be no additional costs that will be incurred by the appointment of the professional trustee, and where there is a legitimate reason for the retirement of the existing trustees, I am of the opinion that it is in order for the order sought in the summons to be made.

21. Accordingly, I will make orders in accordance with the short minutes of order which have been handed up and which I will initial and date and which will dispose of the proceedings.

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Decision last updated: 22 November 2019