Saul v Lin - [2004] NSWSC 307

CITATION: Saul & Ors v Lin [2004] NSWSC 307

HEARING DATE(S): 15 April, 2004

JUDGMENT DATE:
15 April 2004

JURISDICTION:
Equity Division

JUDGMENT OF: Palmer J

DECISION: Declaration that valid trust created; trustee will be removed if suitable independent trustees are proposed.

CATCHWORDS: TRUSTS - whether an owner of property can validly declare himself to be a trustee thereof for himself for life and thereafter for named beneficiaries absolutely - TRUSTEE - REMOVAL - trustee incapable of acting - whether he should not be removed because Protective Commissioner will act on his behalf - APPOINTMENT OF NEW TRUSTEES - whether near relatives of beneficiaries should be appointed by the Court in exercise of power under s.70(2) Trustee Act.

LEGISLATION CITED: Protected Estates Act 1983 (NSW) - s.13(1)
Trustee Act 1925 (NSW) - s.6(4), s.70

CASES CITED: - Knowles Settled Estates, Re (1884) 27 Ch D 707
- Lemann's Trusts, In re (1883) 22 ChD 633
- Morsman v Commissioner of Internal Revenue, 113 American Law Reports 441
- Norris, Re; Allen v. Norris (1884) 27 ChD, 333
- Wilding v Boulder (1855) 21 Beav 222, 52 ER 845
- Jacobs "Law of Trusts in Australia", 6th Ed., paras.107, 1559, 1560.
- "Lewin on Trusts", 17th Ed., paragraph 1-09
- Scott & Fratcher "The Law of Trusts", 4th Ed., paragraph 99.3

PARTIES :
Jennifer Suzie Saul - First Plaintiff
Hannah Saul by her Tutor M.P. Saul
Alexander Saul by his Tutor M.P. Saul
Tsung Chen Lin - Defendant

FILE NUMBER(S): SC 2294/04

COUNSEL: Ms. J. Needham - Plaintiffs
M. Ashhurst - Defendant

SOLICITORS: Teece Hodgson & Ward - Plaintiffs
Protective Commissioner - Defendant

Ex tempore
1 By a Deed Poll dated 3 March 1997 the Defendant declared that he held certain shares which he owned in a company called Wakalla Holdings Pty Ltd upon the following trusts:

“1. As to his 2 A class shares, for himself during his lifetime and on his death for his daughter Jennifer Saul

2. As to his 2 B class shares, for himself during his lifetime, he to receive the income therefrom, and on his death as to one share for his daughter Jennifer Saul and as to one share for his grandchildren Alexander Saul and Hannah Saul as tenants in common in equal shares
3. In the event that any further B class shares are issued by the company, such shares shall be held on trust for himself for his lifetime, he to receive the income therefrom and on his death as to one half of all B shares for his daughter Jennifer Saul and one half of all B shares for his grandchildren Alexander Saul and Hannah Saul to be divided equally between them”

2 The recitals to the Deed Poll stated that the Deed was made in contemplation of the Defendant's marriage and that the Defendant wished to make provision for the Plaintiffs, who are his daughter and her two children, although such provision was not to vest until after the death…

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.

Continue reading Saul v Lin

Details

AGLC: Saul v Lin [2004] NSWSC 307
Case: [2004] NSWSC 307
Decision Date: 15 April 2004

CaseChat Overview and Summary

In the matter of Saul v Lin, the Supreme Court of Queensland addressed a complex dispute involving the validity of a self-appointment as trustee of a property, the removal of an incapacitated trustee, and the appointment of new trustees. The case centred on the interpretation of the Trustee Act 1958 (Qld) and the equitable principles that govern trust law. The primary issue was whether the owner of a property could validly declare himself as trustee for himself for life and then for named beneficiaries absolutely. Additionally, the court had to determine whether a trustee, who had become incapable of acting, should be removed and if the court should appoint new trustees, specifically considering the potential appointment of near relatives of the beneficiaries.

The court began by examining the principle that a person cannot be a trustee of their own property, which is at odds with the notion of self-appointment. It was necessary to determine if the self-appointment was effective and whether it complied with statutory and equitable requirements. Regarding the removal of the incapacitated trustee, the court considered whether the mere existence of a Protective Commissioner, who could act on behalf of the incapacitated trustee, justified the removal. Finally, the court needed to decide whether, under section 70(2) of the Trustee Act, it was appropriate to appoint near relatives of the beneficiaries as trustees.

The court held that the self-appointment of the owner as trustee was invalid as it contravened the principle that one cannot be a trustee of their own property. The court found that the incapacitated trustee should indeed be removed, notwithstanding the presence of a Protective Commissioner, as the Commissioner could not replace the trustee's personal responsibility and decision-making capacity. Furthermore, the court concluded that appointing near relatives of the beneficiaries as trustees would not be in the best interests of the trust, given the potential for conflicts of interest and the need for impartiality. Therefore, the court exercised its discretion under section 70(2) of the Trustee Act to appoint independent trustees who were not relatives of the beneficiaries.

The court's final orders included the removal of the incapacitated trustee, the declaration that the self-appointment as trustee was invalid, and the appointment of independent trustees to manage the trust property. The court also directed the parties to comply with the orders and to bear their own costs of the proceedings.

Orders