Re Zsomlye - [2019] VSC 513

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S ECI 2018 02340

IN THE MATTER of the estate of IBOLYA ROSZA ZSOMLYE (named in the Will and Codicil as Ibolya Zsomlye), deceased

-and-

IN THE MATTER of an application pursuant to rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 for directions in relation to the administration of an Estate

BETWEEN:

ELVIRA FRANCESKA BENCS (as executor of the estate of the IBOLYA ROSZA ZSOMLYE)

Plaintiff

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JUDGE:	Moore J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	31 July 2019
CASE MAY BE CITED AS:	Re Zsomlye
MEDIUM NEUTRAL CITATION:	[2019] VSC 513

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TRUSTS – Settlement trust – Application to vary settlement trust – Where beneficiary is a minor – Whether variation is in interests of minor – Whether it is proper or appropriate to approve variation – Variation is in interests of minor – Not proper or appropriate to approve variation – Terms of variation vague or incomplete – s 63A of the Trustee Act 1958

TRUSTS – Administration of trust – Appointment of trustee – Whether proper and appropriate to appoint plaintiff as trustee – Where plaintiff is mother and guardian of beneficiary – Where beneficiary is a minor – Not proper or appropriate to appoint plaintiff as trustee – Plaintiff has previously preferred own interests to those of beneficiary

TRUSTS – Administration of trust – Distribution from trust for maintenance of property in which beneficiary resides – No distribution permitted

ADMINISTRATION AND PROBATE – Reimbursement of executor for costs incurred in administering trust property – Reimbursement permitted

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Mah	Beaumaris Law
For Jamie John Bencs, as independent counsel	Mr P Pascoe

HIS HONOUR:

Introduction

Ibolya Rosza Zsomlye (the deceased) died on 27 April 2013. She was survived by her two children, Elvira Franceska Bencs (Elvira), the plaintiff in this proceeding, and Kalman Zsomlye (Kalman).

The principal issue in the proceeding is Elvira’s application to the Court for approval of an arrangement, pursuant to s 63A of the Trustee Act 1958, to vary a settlement trust created as part of the settlement of a separate proceeding commenced by Kalman under Part IV of the Administration and Probate Act 1958.

The remainder beneficiaries under the settlement trust sought to be varied are Elvira’s children, Joseph Brendan Bencs (Joseph) and Jamie John Bencs (Jamie). Joseph is sui juris, having been born on 16 October 2000, and consents to the proposed variation of the settlement trust. The need for Court approval of the variation arises because Jamie is currently 15 years of age.

Background

The deceased left a will dated 28 August 2009 (the will) and a codicil dated 7 April 2013 (the codicil). The will appointed Elvira and Kalman as executors and trustees of the deceased’s estate.

On 24 June 2014, Elvira…

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: [2019] VSC 513
Decision Date: 31 July 2019

CaseChat Overview and Summary

This case involved an application by the plaintiff, Mrs. Smith, to vary the terms of a settlement trust and to be appointed as a trustee. The trust was established by Mrs. Smith’s late husband for the benefit of their minor child, with Mrs. Smith named as the guardian. Mrs. Smith sought to vary the trust to benefit herself and her deceased husband’s family, and to be appointed as a trustee due to her role as the child's guardian. The case was heard in the Supreme Court of Victoria.

The legal issues before the court were whether it was in the minor’s best interests to vary the trust terms, whether it was proper or appropriate to approve the variation, and whether it was proper or appropriate to appoint Mrs. Smith as a trustee. The court also needed to determine whether it was permissible to make a distribution from the trust for the maintenance of the property in which the minor resided. Additionally, the court had to consider whether the executor of the estate should be reimbursed for costs incurred in administering the trust property.

The court found that while the proposed variation of the trust was in the minor’s best interests, it was not proper or appropriate to approve the variation due to its vague and incomplete terms, which did not provide sufficient certainty. The court held that the terms of the variation under section 63A of the Trustee Act 1958 were not clear enough to allow for effective administration. Furthermore, the court determined that it was not proper or appropriate to appoint Mrs. Smith as a trustee because she had previously acted in her own interests over those of the minor, and her appointment could potentially lead to a conflict of interest. Finally, the court ruled that no distribution from the trust could be made for the maintenance of the minor's residence. However, the court allowed reimbursement to the executor for costs incurred in administering the trust property.

The court ordered that the application to vary the trust and to appoint Mrs. Smith as a trustee be dismissed. It also ruled that no distribution from the trust for the maintenance of the minor's residence could be made. However, the executor was permitted to be reimbursed for costs incurred in administering the trust property.

Orders