Robert Stewart Sampson as Executor of the Estate of Marjory Frances Nimmo v Sampson
[2007] WASC 85
•5 APRIL 2007
ROBERT STEWART SAMPSON AS EXECUTOR OF THE ESTATE OF MARJORY FRANCES NIMMO -v- SAMPSON & ORS [2007] WASC 85
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 85 | |
| Case No: | CIV:1187/2005 | 27 SEPTEMBER 2006 & 8 MARCH 2007 | |
| Coram: | MASTER SANDERSON | 5/04/07 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Trustee to remain Full account to be provided | ||
| B | |||
| PDF Version |
| Parties: | ROBERT STEWART SAMPSON AS EXECUTOR OF THE ESTATE OF MARJORY FRANCES NIMMO IAN GREGORY SAMPSON TERI-LEE LEWIS NATASHA KRISTINA SAMPSON |
Catchwords: | Trusts and trustees Application to remove trustee Turns on own facts |
Legislation: | Nil |
Case References: | LHR Nominees Pty Ltd v Kenworthy [2002] WASCA 291 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
IAN GREGORY SAMPSON
First Defendant
TERI-LEE LEWIS
Second Defendant
NATASHA KRISTINA SAMPSON
Third Defendant
Catchwords:
Trusts and trustees - Application to remove trustee - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Trustee to remain
Full account to be provided
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Segler
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Mr D L Jones
Solicitors:
Plaintiff : Martin Lee Segler
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Holyoak-Roberts Legal
Case(s) referred to in judgment(s):
LHR Nominees Pty Ltd v Kenworthy [2002] WASCA 291
(Page 3)
1 MASTER SANDERSON: Mr Robert Sampson, the plaintiff, is the executor of the Will of his late mother, Marjory. By the terms of the Will the plaintiff was to hold the residuary estate on trust for the deceased's great grandchildren who were born prior to September 2009 and who attained the age of 18 years. The residuary estate was all in cash and it was to be held in certain specified savings bank accounts. The Will also gave Mr Sampson the power to make distributions from time to time on certain conditions to the benefit of the great grandchildren.
2 On 25 March 2000 Mr Sampson purchased a motor vehicle for his daughter, Mrs Teri-Lee Lewis (the second defendant). The vehicle was paid for out of the residuary estate. Mr Sampson then gave the rest of the residuary estate to his two children (the first and second defendants). There is no dispute that in doing so he was in breach of the trust created under the Will.
3 Mr Sampson now proposes to pay into the bank accounts specified in the Will an amount some $50,000 less than the full amount of the residuary estate.
4 There are two issues that arise in this case. First, should Mr Sampson be replaced as the trustee? Second, should Mr Sampson be required to pay back the full amount of the residuary estate or some lesser amount?
Should Mr Sampson be replaced as the trustee?
5 Mr Sampson readily admitted that he breached the terms of the trust. He said that he did so in good faith. It was common ground between the parties that mere carelessness or honest blundering will not negative good faith. But the trustee must not act irresponsibly, capriciously or wantonly: see LHR Nominees Pty Ltd v Kenworthy [2002] WASCA 291 at [314].
6 In my view, Mr Sampson was irresponsible both in buying the car for his daughter and in paying the residuary estate to his children. He knew he was not authorised under the Will to take either step. He took no legal advice about his obligations as trustee. The Will is clear about the obligations of the trustee and as to how the residuary estate ought be held. Even without the advantage of legal advice it should have been clear to Mr Sampson that he was not authorised to deal with the residuary estate in the way that he did.
7 Both parties agree the Court has an inherent power to replace a trustee. The dominant consideration is the welfare of the beneficiaries, in
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- particular, consideration of whether the trust property will be safe and the trust properly executed in the interests of the beneficiaries. What is proposed by the third defendant is that the plaintiff be replaced as trustee and that an independent trustee be appointed in his place. The third defendant anticipates this would be one of the trustee companies who undertake this type of work.
8 Given the nature of the default by the plaintiff there is a strong argument for replacing him as trustee. But, on balance, I am satisfied that would not be the appropriate course. I have reached that conclusion for two reasons. First, the plaintiff, whatever may have been his faults in the past, now clearly understands his obligations as trustee. That is clear from the evidence. He can no longer have any doubts about how the trust funds are to be held and the basis upon which they are to be distributed. Furthermore, there is nothing to suggest that the plaintiff was actively dishonest. He did not benefit from the breach of trust. I am satisfied that he will in future administer the trust according to the terms of the Will.
9 Second, there is the power the trustee has pursuant to the Will to make advances to the deceased's great grandchildren from time to time. The plaintiff is the person best placed to know when these advances should be made. A trustee company will necessarily be remote from such decisions and although doubtless the company will act in accordance with best practice and exercise good faith, the intimate knowledge of the plaintiff of the situation of his grandchildren seems to me to be paramount.
10 Therefore, I am satisfied that the plaintiff ought remain trustee of the trust.
Should Mr Sampson be required to pay back to the residuary estate the full amount to which it is entitled?
11 The authorities on this question are all one way. Where a breach of trust causes loss to the trust estate the claimants are entitled to equitable compensation. This compensation is a sum of money, the purpose of which is to make good the loss caused by the breach. It is the only remedy that is always available for breach of trust causing loss. This case is no exception.
12 It is not entirely clear from the documents precisely what loss the trust has suffered. This will need to be the subject of an account in the absence of agreement between the parties. The appropriate order then
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- would seem to be that the plaintiff account to the trust for the loss it has suffered as a consequence of his breach of the trust.
Conclusion
13 I am satisfied that the plaintiff ought remain trustee of the trust. However, he ought account to the trust for losses consequent upon his breach of trust. I will hear the parties as to the precise form of orders and as to costs.