Re Trustees Act 1962 (WA) - [2018] WASC 127

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   RE TRUSTEES ACT 1962 (WA); EX PARTE SANG HYUN GWON by his next friend RAYMOND WILLIAM WEBB [2018] WASC 127
CORAM:   KENNETH MARTIN J
HEARD:   25 OCTOBER 2017 & 23 MARCH 2018
DELIVERED          :   26 APRIL 2018
FILE NO/S:   CIV 2617 of 2017
MATTER:   The Trustees Act 1962 (WA) (the Act)
and
Sections 77 and 93(1) of the Act
and
Order 62 Rule 1 of the Rules of the Supreme Court 1971 (WA)
and
An application for leave for the appointment of a Trustee
EX PARTE

SANG HYUN GWON by his next friend RAYMOND WILLIAM WEBB
Plaintiff

Catchwords:

Practice and procedure - Person under disability - Unresolved personal injury proceeding pending in District Court of Western Australia - Liability admitted - Quantum unresolved in proceeding - Interim payment prior to judgment by agreement on terms - Interim payment sought on basis of payment to interim trustee - Power of Supreme Court to order payment to private trustee corporation

Legislation:

Trustees Act 1952 (WA)

Result:

Orders not made

Category: B

Representation:

Counsel:

Plaintiff

Mr J N D'Angelo

Solicitors:

Plaintiff

Chan Galic

Case(s) referred to in decision(s):

Blenkinsop v Blenkinsop Nominees Pty Ltd as Trustee for the Blenkinsop Family Trust [2015] WASC 463
Cadwallender v Public Trustee [2003] WASC 72
Elovalis v Elovalis [2008] WASCA 141
Morris v Zanki (1997) 18 WAR 260
Ngarluma Aboriginal Corporation RMTBC v The Attorney General of Western Australia [2014] WASC 245
Wood v Public Trustee (1995) 16 WAR 58

KENNETH MARTIN J:

Mr Sang Huan Gwon is 38 years of age. Sadly, on 24 February 2014, he was badly injured when he was involved in a very serious motor vehicle accident on Bannister Road in Canning Vale. Mr Gwon was riding his motor scooter when he was hit by a motor vehicle he alleges was negligently driven by another driver.
There are proceedings pending in the District Court of Western Australia (CIV 220 of 2017) commenced in January 2017 by Mr Webb as the next friend of Mr Gwon. Mr Webb was appointed by the State Administrative Tribunal (SAT) on 14 November 2016 as Mr Gwon's limited administrator. Mr Webb's functions include seeking legal advice on behalf of Mr Gwon about his motor vehicle accident, bringing and defending action suits and other proceedings in his name and, if necessary, to settle those matters and make any associated application or compromise of Mr Gwon's claim in the District Court and to do all other matters incidental thereto.
From materials provided to me upon the present application, liability is not an issue in the District Court proceedings on the current state of the pleadings in that litigation. It would appear that the Insurance Commission of Western Australia (ICWA), the statutory insurer for the defendant, admitted in those proceedings that the defendant's negligent driving caused the accident (see defence filed in District Court action CIV 220 of 2017 on 15 May 2017, appended as SYY 2 at page 20 to the affidavit of Soo Yong (Bruce) Yoon sworn 22 September 2017).
The present application is made ex parte by Mr Gwon and arises from a proposal for an interim regime of payments made by ICWA to Mr Gwon pending a final resolution of the quantum issues that currently stand unresolved in the District Court. It may be some time before Mr Gwon's medical condition is sufficiently stabilised for the purposes of those proceedings to either be settled under an approved settlement or resolved after a trial in the District Court on any contentious quantum related issues.
It appears ICWA is amenable to rendering some interim payments on account to assist Mr Gwon pending a final resolution of the District Court litigation. However, ICWA requires as a pre‑condition that any interim payments be made to a trustee on Mr Gwon's behalf. To that end, Mr Gwon by his next friend, Mr Webb, commenced proceedings in this court by originating motion on 26 September 2017 seeking the appointment of a trustee (or, as described, an interim trustee).
The notice of originating motion also seeks orders to the effect that a private trustee corporation, Australian Executor Trustees Ltd (AETL), be appointed to fulfil the role of trustee rather than the Public Trustee. Materials filed on the application indicate that AETL is an experienced private trustee firm operating in Australia that is responsible for the oversight of significant trust assets. AETL is amenable to accepting an appointment as a private trustee (for remuneration) in the terms as disclosed under the affidavit of Geoffrey Alan Worth filed 26 September 2017 in support of the application of Mr Gwon.
The precise order sought by the present originating motion of Mr Gwon is that:
The Australian Executor Trustees Limited be appointed as the Trustee for Sang Hyun Gwon ("the person under a disability") to receive such moneys as may be paid by the Insurance Commission of Western Australia ("ICWA") from time to time on account of his claim for damages for personal injuries arising from a motor vehicle accident which occurred on 24 February 2014 for investment on trust for the person under disability.
Various further ancillary relief from this court is also sought, including affording certain powers to AETL to be exercised at its discretion as regards an application of the whole or a portion of any income and capital of the (interim payment) funds received.
As is evident from the title of the originating motion filed in this court, the basis for the relief as sought is grounded upon s 77 of the Trustees Act 1962 (WA). However, as I will explain, that is a real problem.
When the application first came before me on 25 October 2017, I indicated to counsel for the applicant that on my prima facie assessment s 77 of the Trustees Act only addressed situations where there was an existing trust with a manifesting difficulty due to the absence of a viable trustee.
Section 77 is in the following terms:
77. New trustees, Court may appoint
(1)The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient, difficult or impracticable so to do without the assistance of the Court, make an order for the appointment of a new trustee or new trustees, either in substitution for, or in addition to, any existing trustee or trustees, or although there is no existing trustee.
(2)In particular, and without limiting the generality of the provisions of subsection (1), the Court may make an order appointing a new trustee in substitution for a trustee who -
(a)desires to be discharged; or
(b)has been held by the Court to have misconducted himself in the administration of the trust; or
(c)is convicted of an indictable offence; or
(d)is a person of unsound mind; or
(e)is bankrupt; or
(f)is a corporation that has ceased to carry on business, or is in liquidation, or has been dissolved.
(3)An order under this section, and any consequential vesting order or conveyance, does not operate further or otherwise as a discharge to any discharged, former or continuing trustee than an appointment of new trustees under any power for that purpose contained in any instrument would have operated.
(4)Nothing in this section confers power to appoint an executor or administrator.
(5)Every trustee appointed by the Court has, as well before as after the trust property becomes by law or by assurance or otherwise vested in him, the same powers, authorities, and discretions, and may in all respects act, as if he had been originally appointed a trustee by the instrument (if any) creating the trust.
Counsel endeavoured to rely upon the concluding phrase of s 77(1), namely, 'or although there is no existing trustee'. However, that phrase needs to be read within the overall context of s 77 and the further context of div 1 and pt IV of the Trustees Act.
By my assessment, s 77 (particularly s 77(5)) assumes the existence of an already established trust, in respect of which the court can then address any problematic scenario concerning a trustee of or for the trust via s 77. To that end, see Underhill & Heyton, Law of Trusts and Trustees (18th ed, 2010). The learned authors observe as regards rather similar provisions of s 41 of the Trustees Act 1925 (NSW) (at page 1,005) that:
Where, by inadvertence, or by reason of predeceasing the testator, or otherwise, there never were any original trustees of a will trust, and no express power of appointing any, the court will appoint some.
(referring to a series of case authorities from the 19th century as cited at footnote 1).
Consequently, I am not persuaded that s 77 of the Trustees Act provides any relevant or sufficient conferral of power upon this court to appoint AETL as a trustee of interim payments from ICWA prior to the finalisation of the present District Court proceeding. There is no presently subsisting trust in existence to which AETL may be appointed by this court via s 77.
Nor, in my view, does s 93 of the Trustees Act assist that endeavour. On my assessment, its provisions suggest to the contrary: see s 93(1) referring to the appointment of a new trustee 'concerning any property subject to a trust'.
Counsel was not able to direct me to any supporting case authority or reasons for decision from any court, published or unpublished, to assist the orders sought. However, at the resumed hearing of this application on 23 March 2018, counsel referred to some orders rendered by other judicial officers of this court in other actions. Specifically, four previous orders effectively akin to those as now sought. Three of the four orders were made in respect of the appointment of AETL as a private trustee to receive interim payments. The fourth was in respect of the appointment of the Public Trustee as an interim trustee.
Having called for and closely examined the files in respect of each of those four orders, it seems those orders were issued under an unchallenged assumption that the power existed in this court to facilitate that course. No reasons for decision were provided by any of the judicial officers as to the basal question as regards the court's power to issue orders concerning interim payments to an interim trustee.
Two tranches of written submissions were filed by the applicant in support of the present application. The first tranche of submissions of 24 October 2017 canvassed a number of leading personal injury case authorities from this State, including the well-known decisions of Wood v Public Trustee (1995) 16 WAR 58 and Morris v Zanki (1997) 18 WAR 260. However, neither of those decisions precisely addresses the present question as regards interim payments to an interim trustee that is appointed by this court.
Certainly, the scope for this court to dispense with the prima facie preference for an appointment of the Public Trustee upon a settlement of personal injury proceedings under O 70 r 12 of the Rules of the Supreme Court 1971 (WA) is well established: see Morris v Zanki (1997) 18 WAR 260, 262 - 263. More recently, in Cadwallender v Public Trustee [2003] WASC 72 [31], EM Heenan J said upon that point:
The conduct of proceedings in this Court, and in the District Court of Western Australia, where there is a party under a disability are generally covered by RSC O 70 which, as explained in Morris v Zanki at 286 - 287, needs to be read and applied having regard to the nature and purpose of the jurisdiction rather than as a code. R 12 of that Order deals with the control of moneys recovered on behalf of a disabled person.
See also Ngarluma Aboriginal Corporation RNTBC v The Attorney General of Western Australia [2014] WASC 245 [32] (Allanson J) and Elovalis v Elovalis [2008] WASCA 141 [33] (Martin CJ).
The second tranche of written submissions of 19 March 2018 filed by the applicant was unable to point to any other viable source of power to support an appointment of an interim trustee by this court. The tenor of that submission canvassed the notion, in effect, of an interim trust (see par 13 of the submissions). Further, it was submitted that the applicant could invoke the inherent jurisdiction of the court as a basis for finding the power to make such an appointment of such a trustee, citing Blenkinsop v Blenkinsop Nominees Pty Ltd as Trustee for the Blenkinsop Family Trust [2015] WASC 463. However, that case does not address the circumstances of the present application.
By my assessment, the inherent jurisdiction of this court as regards trustees or via its parens patriae jurisdiction as regards a protection of persons suffering under disability is not a sufficient source of power to support the appointment of an interim trustee as presently sought.
Part of the difficulty underlying the present situation is the current absence of any existing trust. In more ordinary circumstances, there would be little difficulty for a private citizen or their representative to implement steps to make arrangements with a settlor to establish an express trust. However, in the present circumstances, the basis of Mr Webb's appointment pursuant to the Guardianship and Administration Act 1990 (WA) under the administration order concerning Mr Gwon is not broad enough to permit him to establish such an express trust.
Finally, I note the terms of RSC O 70 r 12:
(1)Where ‑
(a)in any proceedings money is recovered by or on behalf of or is adjudged or ordered or agreed to be paid to or for the benefit of a person under disability; or
(b)in any proceedings money paid into court is accepted by or on behalf of a plaintiff who is a person under disability; or
(c)in an application under rule 11(1) the Court has ordered the payment into court or investment of any moneys relating to a settlement or compromise,
the money shall, unless otherwise ordered by the Court, be paid to the Public Trustee for investment on behalf of the person under disability, and if the Court so orders may be invested by the Public Trustee in investments outside the Common Account established under the Public Trustee Act 1941.
(2)The court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement, or otherwise for the benefit of the person under disability.
For present circumstances, it is clear that the proceedings in relation to the 2014 motor vehicle incident in which Mr Gwon was seriously injured are afoot and unresolved in the District Court. In due course, given that the defendant's liability is not in issue, it appears likely that some significant amount will be recovered on behalf of Mr Gwon. However, as those District Court proceedings are unresolved, the occasion for rendering final orders in his favour is yet to arise.
Without finally deciding the question, it appears that a scenario of an interim payment of funds from ICWA prior to an approved settlement or judgment in the District Court could fit under the words of O 70 r 12(1)(a) 'or agreed to be paid to or for the benefit of a person under disability'. If that is correct, then it would be possible for the presently sought 'interim payment to a trustee' orders to be made before the trial within the District Court proceedings.
Whilst there is no direct case authority, it seems more than respectably arguable to me that where there is an 'agreement' to render interim payments on a pro tanto basis pending an ultimate resolution of personal injury proceedings, that the District Court could issue such interim orders if appropriately satisfied as to the propriety and security of a payment of interim funds. Given the matter was not fully argued before me, I do no more than render that prima facie observation.
Finally, I would observe that it may be desirable for the legislature to address this issue as regards providing greater or more explicit powers for next friends and administrators appointed under the Guardianship and Administration Act. Specifically, that Act could be amended to enable the next friend or administrator to be authorised by SAT to enable them to privately establish an express trust in respect of interim payments proposed and agreed to be made to a person under disability -where liability is admitted and the only substantive issue pending in litigation is the quantum sum payable to an injured plaintiff.
I most sincerely regret that I am unable to assist Mr Gwon upon the present application as I otherwise would have wished. However, the obstacle to that outcome is insurmountable within this court at present.
Consequently, no orders were made upon the present application.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AC
RESEARCH ASSOCIATE/ORDERLY TO KENNETH MARTIN & CORBOY JJ
26 APRIL 2018