Sharpe v Crusi
[2018] VCC 103
•20 February 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised (Not) Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-04396
| GEOFFREY SHARPE, and OTHERS (as executors of the estate of Beryl Alice Crusi, deceased) | Plaintiffs |
| v | |
| PAUL KEVIN CRUSI | Defendant |
---
JUDGE: | HIS HONOUR JUDGE ANDERSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6–8 February 2018 | |
DATE OF JUDGMENT: | 20 February 2018 | |
CASE MAY BE CITED AS: | Sharpe & Ors v Crusi | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 103 | |
REASONS FOR JUDGMENT
---
Catchwords: Deceased estate – Loan to the deceased’s son prior to her death – Loan repayable upon her death – Deceased’s will made on the same day as the loan agreement with her son – Will gifted the benefit of the loan to her son’s testamentary trust – By the will, the amount of the loan was to be “taken into account in the division of the balance of my estate” – Distributions made to the beneficiaries leaving only a small amount in the estate – Balance of estate insufficient to take into account the loan to the deceased’s son – Proceeding based on breach of loan agreement and not mistaken overpayment in the distribution of the estate – Claim for repayment of the loan and statutory interest dismissed.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr T R Messer | Millens |
| For the Defendant | Mr S Gannon | McKean Park |
HIS HONOUR:
1 This is a family dispute arising from the administration of the estate of Beryl Crusi (“the deceased”). The deceased had three children: Mary Louise, Paul and Anne. The deceased’s financial adviser for many years before her death was Geoffrey Sharpe. Mr Sharpe had earlier been responsible for the accounting and taxation work for the deceased’s husband.
2 On 21 November 2012, the deceased executed a number of documents:
a. her last Will (“the deceased’s will”);
b. a deed recording loans totalling $400,000 to Paul (“the loan deed”);
c. a deed recording advances by way of loan to Mary Louise of $450,000 prior to 31 December 2010.
3 The deceased’s will appointed her three children and Mr Sharpe as her executors. Mr Sharpe, Mary Louise and Anne are the plaintiffs in this proceeding; Paul is the defendant. The plaintiffs sue “in their capacity as executors of the estate” of the deceased.
4 In the proceeding, the plaintiffs seek repayment by Paul of $400,000, the subject of the loan deed, together with interest pursuant to the Supreme Court Act 1986 (Vic) from the date of the deceased’s death on 5 February 2014. By clause 3.1(b) of the loan deed, the loan debt was due for repayment on the death of the deceased.
5 By his defence, Paul asserts that by clause 7.2 of the deceased’s will, “the deceased made a gift of the principal sum to the defendant”, although by clause 7.1 “the will required the gift … to be taken into account in the division of the balance of my estate”.
6 The three children were described in the deceased’s will as the “primary beneficiaries”. Effectively, they were, subject to certain adjustments, to share the estate equally. The deceased’s will did, however, provide for the distribution of the estate through “Beneficiary Controlled Testamentary Trust[s]”, apparently to achieve “the most effective manner of dealing with the assets” of the estate, “having regard to taxation”.
7 Clause 7.1 of the deceased’s will required the gift of the $400,000 payable by Paul at the date of the deceased’s death to be “taken into account in the division of the balance” of the estate. The plaintiffs say that this was not done as substantial distributions had been made to the three children from the estate. Following the distributions, the sum of about $48,000 remains in the estate in the form of cash at bank. This sum is insufficient to take into account the amount owing by Paul under the loan deed in the division of the balance of the estate.
8 As a consequence, the plaintiffs assert that the executors are entitled, by this proceeding, to recover from Paul the sum of $400,000 together with statutory interest. Upon the recovery of those amounts, the executors can, by making equal distribution to the testamentary trusts of each of the three children, finalise the estate.
9 In response, the defendant says:
a. there is insufficient evidence from which to conclude that the amount of the loan to Paul is not able to be “taken into account in the division of the balance” of the deceased’s estate;
b. in any event, the deceased’s will, by clause 10.1, expresses the deceased’s “intention” that the “division” of the balance of her estate “is the proportion [equally between the three children] of the total wealth (including estate and non-estate assets)” of the deceased. The non-estate assets of the deceased, presently not realised, include a substantial commercial property in Smith Street, Collingwood (“the Smith Street property”) held by a unit trust; the HC & BA Crusi Trust (“the unit trust”). The primary beneficiaries of that trust are the three children of the deceased. The three children are the shareholders of the trustee of the unit trust; Bensi (Aust) Pty Ltd (“the trustee)”. The executors of the deceased’s estate are the directors of the trustee. It was said that, when the Smith Street property is realised, there would be the opportunity for a distribution to the estate and for the gift of Paul’s loan to be “taken into account”;
c. the failure by the executors to take account of Paul’s loan before making distributions to the three children, as the primary beneficiaries of the estate, did not justify the proceeding. The plaintiffs’ cause of action relies solely on the defendant’s failure “to repay the loan advance” on the death of the deceased in breach of clause 3.1(b) of the loan deed. The plaintiff’s statement of claim in the proceeding does not assert that a mistake was made by the executors in the distribution to the primary beneficiaries which left the estate with insufficient assets to make a further division taking account of Paul’s loan.
10 The issues for determination in the proceeding are:
a. whether clause 7.1 of the deceased’s will requires the gift of Paul’s loan of $400,000 to be taken into account in the division of the deceased’s estate;
b. whether clause 7.2 of the will involved a gift to Paul, or to the testamentary trusts of the three children or a trust of which the three children were the primary beneficiaries;
c. whether there is sufficient evidence about the financial position of the estate and/or the unit trust to conclude that the distributions from the estate to the beneficiaries made by the executors of the deceased’s estate, have left insufficient funds from which to make a further division to the testamentary trusts of the primary beneficiaries, after taking into account Paul’s loan;
d. whether the trustee of the unit trust would be able to make a further distribution to the estate;
e. whether the executors of the deceased’s estate will have an opportunity in the future, after a further distribution by the unit trust to the estate, to make a division of the deceased’s estate to take account of Paul’s loan;
f. if the executors are unable to make a further division of the deceased’s estate, as a result of the limited financial resources available to the estate, whether this would affect the executors’ entitlement to recover the sum of $400,000 from the defendant;
g. whether the defendant is liable to pay to the plaintiffs, for and on behalf of the estate:
i. the loan advances totalling $400,000;
ii. interest on the recovered sum.
11 In my view, the following responses to those issues are appropriate:
a. yes, the gift of the amount of Paul’s loan is required to be taken into account;
b. the gift was for the sole benefit of Paul’s testamentary trust;
c. yes, I accept the evidence of Mr Sharpe that presently the only asset of the estate is the bank balance of about $48,000;
d. possibly not. I accept the evidence of Mr Sharpe that all sums owing by the unit trust to the deceased have been paid. It is likely that the trustee of the unit trust (and its directors) may be constrained in deciding to make a future distribution to the estate. However, this cannot be stated conclusively as the trust deed is not in evidence and both Paul, and his counsel Mr Gannon, submitted that this course was appropriate. They said that Paul would cooperate, as a director of the trustee of the unit trust and as an executor of the deceased’s estate, to achieve a further distribution by the unit trust to the estate;
e. possibly. Unless further monies are distributed to the three children through the estate, any division would be limited to the bank balance. In that event, it would be appropriate for the whole of the remaining balance to be divided between Mary Louise and Anne;
f. no. The will makes clear provision for the gift of the amount of Paul’s loan to be taken into account before the division of the estate. The executors made a division without taking account of Paul’s loan. The Statement of Claim in the proceeding does not make a claim from Paul on the basis that a distribution was made to the beneficiaries by the executors of the estate by mistake, and that this would make it appropriate for the beneficiaries, or at least Paul, to repay part of what was paid in order that Paul’s loan may be taken into account in a division of the balance of the estate;
g. i. no;
ii. interest was not payable under the loan deed unless there was a further specific agreement between the deceased and Paul. Statutory interest cannot be awarded if no judgment is entered in the proceeding.
12 Accordingly, the proceeding will be dismissed.
The provisions of the deceased’s Will
13 The deceased’s will is a 23 page document. This may seem surprising in view of the fact that:
a. essentially the deceased’s three children were the beneficiaries of the estate;
b. the assets, although of substantial value, were limited in scope.
14 The need for comprehensive provisions in the will largely arose because the deceased stated her “intention” (in clause 9.1 of the will) that priority in the administration should be given to dividing the estate equally between her three children and that the division should be “the proportion of the total wealth” of the deceased “and having regard to taxation, to consider the most cost effective manner of dealing with the assets forming part of my Estate”.
15 The will, by clauses 6 and 7, made provision for the loans made by the deceased to her children prior to her death. By clause 6, loans made prior to 30 December 2010 (which included the loans to Mary Louise the subject of the loan deed executed on 21 November 2012) were “not to be taken into account in the division” of the estate.
16 However, Paul’s loan, having been made after 30 December 2010, was to be taken into account in the division of the estate. This was dealt with by clause 7. In both clauses 6.2 and 7.2, it was provided that “the benefit of any amounts payable [in respect of the relevant loan or loans was] to be held on trust in accordance with [the testamentary trusts created pursuant to the will]”.
17 “Equalisation clauses” of this sort are often used where a deceased wishes his or her children to benefit equally from the estate but also wants taken into account the benefit that has been received by forgiving the loan to a particular child, and by then “equalising” the residue of the estate between the children.
18 Clauses 6 and 7 of the deceased’s will read as follows:
“6. Loans Made Prior to 30 December 2010
6.1 The gifts made pursuant to this clause are not to be taken into account in the division of the balance of my Estate in accordance with the clause entitled “Direction to Adjust Entitlements” in Part B of this Will.
6.2 I give the benefit of any amounts payable to me at the date of my death, by way of written loan agreements for moneys loaned prior to 30 December 2010 by each of my daughters MARY LOUISE and ANNE who survive me by thirty (30) days to be held on trust in accordance with Part C of this Will with each of them as Primary Beneficiary.
7. Loans Made After 30 December 2010
7.1 The gifts made pursuant to this clause are to be taken into account in the division of the balance of my Estate in accordance with the clause entitled “Direction to Adjust Entitlements” in Part B of this Will.
7.2 I give the benefit of any amounts payable to me at the date of my death, by way of written loan agreements for moneys loaned since 30 December 2010 by any of my children MARY LOUISE, PAUL and ANNE who survive me by thirty (30) days to be held on trust in accordance with Part C of this Will with each of them as Primary Beneficiary”.
19 The primary task in determining the proceeding is the construction to be given to clause 7 of the deceased’s will. In construing clauses 7.1 and 7.2 of the will, regard must be had to:
a. the will as a whole, including provisions such as clause 6 which are in similar terms, and other provisions which relate to matters referred to in clause 7;
b. surrounding circumstances, including the fact that loan deeds were executed on the same day by the deceased with Mary Louise and Paul respectively, and reference to the “estate and non-estate assets” of the deceased which would comprise her “total wealth”.
20 In this regard, the following provisions of the will assist in construing clause 7.1:
a. “the gifts made pursuant to this clause” refers to the gift made in clause 7.2;
b. “the balance of my estate” is a phrase used in clause 4.2. It refers to the “balance” after the “selling, calling in or converting into money of any part of my estate; and … payment of all or any debts and testamentary expenses …”. The “balance of my estate” is then to be dealt with by the executors “as provided in the succeeding clauses of this Will”;
c. the “remaining balance” of the estate is a different phrase used in the will and may have a different meaning. Clause 8.1 defines “remaining balance” as “my estate remaining not already dealt with under the preceding clauses of this Will”. It is the “remaining balance” which the executors “shall divide … into one or more equal parts” to hold on the testamentary trusts. The remaining paragraphs in clause 8 and, by reference, clause 10 set out how the executors are to “dispose of such parts”;
d. in clause 4.2, “the succeeding clauses of this Will” may refer to clauses 5, 6 and 7 or may refer to all remaining clauses in the will. The narrower interpretation may be supported by the reference in clause 8.1 to the balance “not already dealt with under the preceding clauses of this Will”. The preceding clauses would include clauses 5, 6 and 7, but would also appear to include clause 4. I have referred specifically to clause 4.2. However, clause 4.1 also involves the executors dealing with certain assets of the estate in a particular way;
e. I prefer the broader construction of the words “the succeeding clauses of this Will” in clause 4.2 and I consider the phrase refers to all the “succeeding clauses” of the will. This interpretation seems to be supported by the provision in the final words of clause 7.1 that gifts made under clause 7 are to be “taken into account … in accordance with the clause entitled ‘Direction to Adjust Entitlements’ [ that is, clause 10 of the will]”;
f. clause 10 of the will is stated to relate to “the division of the remaining balance of my estate” (clause 10.1).
21 I consider, however, that the use of the different phrases, “balance of my estate” and “remaining balance of my estate”, should have little practical effect. Although clause 10.1 received little attention in the proceeding, it was not suggested by any party that, if the gifts made pursuant to clause 7 were not “taken into account” before a division of the “remaining balance of the estate”, this would thereafter prevent those gifts from being “taken into account”.
22 The following further matters are also relevant to the construction of clauses 7.1 and 7.2:
a. whereas in clause 6, it was known at the date of the deceased’s will that only Mary Louise and Anne had been loaned money by the deceased prior to 30 December 2010, by contrast in relation to clause 7, it was not known at the date of the will that Paul would be the only child to whom the deceased would loan money after 30 December 2010;
b. this is the reason Mary Louise and Anne are the only children named in clause 6.2 and all three children are named in clause 7.2, as the deceased might have made a loan to Mary Louise or Anne after the date of the will;
c. the “gifts” referred to in clauses 6.1 and 7.1 were the gift of the benefit of the amount which each relevant child borrower would have otherwise been required to repay to the deceased’s estate upon her death;
d. Paul was the only person to be loaned money by the deceased after 30 December 2010. Paul is therefore the person who receives a benefit from the operation of clause 7.2; the gift of “the benefit of any amounts payable” to the deceased, being the $400,000 payable to the deceased upon her death. Mary Louise and Anne did not receive that benefit. It is therefore appropriate to construe clause 7.2 in a way that confers that benefit solely on Paul;
e. in this regard, the benefit of the gift is to be held on trust for Paul as the only relevant primary beneficiary. It would make no sense to construe the phrase “with each of them as primary beneficiary” as meaning that the benefit was to be held by three separate trusts for each of the children or by one trust for all three children as primary beneficiaries. Paul received a benefit; the other two children did not;
f. if it were otherwise, and the gift was to each of three trusts, by clause 7.1, those gifts would need to be “taken into account in the division of the balance” of the estate, resulting in a detriment to Mary Louise and Anne;
g. by clause 7.1, it is clear that it is the amount loaned to Paul of $400,000 that is to be taken into account in the division of the balance of the estate. It is the gift, of the benefit of that loan having been forgiven, that is to be held on trust for the testamentary trust in which he is the primary (and controlling but not sole) beneficiary;
h. clause 6.2 has a similar operation as clause 7.2. The amount of each of the loans to Mary Louise and Anne is given to the benefit of the relevant testamentary trust in which Mary Louise or Anne is the primary beneficiary, depending upon to whom the loan was made by the deceased. This is the reason Paul is not listed in clause 6.2;
i. the difference between clauses 6.2 and 7.2 is that clause 6.1 specifically excludes the respective loan amounts of Mary Louise and Anne from being taken into account in the division of the balance of the estate;
j. I reject the plaintiffs’ submission that “clause 7. 2 creates a single trust on the terms of Part C of the will with [Mary Louise, Anne and Paul] as trustee and primary beneficiaries”.
Administration of the estate
23 The deceased’s will and the loan deed were executed on 21 November 2012. The deceased died on 5 February 2014. Probate was granted on 8 May 2014. The executors had filed an inventory of assets dated 28 April 2014. The inventory included the deceased’s home and contents, a bank account and an investment account, loans to Paul ($400,000), Mary Louise ($450,000) and to Anne ($453,000) and three shares in the trustee of the unit trust.
24 The inventory was incomplete. It did not list the deceased’s substantial share portfolio or a loan the deceased had made to the unit trust. The shares were divided equally between the three children and distributed in specie in about September 2014. The deceased’s home was sold and there was a distribution to the estate by the unit trust. Each of the three beneficiaries received an equal money sum by way of distribution from the estate.
25 Mr Sharpe said in evidence that the only asset that remained in the estate was a bank account. He said that each of the executors, including Paul, had electronic access to the account although withdrawals could not be made without the authority of all the executors. As at 5 February 2018, the balance in the account was $48,029.
26 Mr Sharpe said that until late 2015 or early 2016, the executors had worked cooperatively and had agreed to the distribution of the shares and the substantial monetary distribution that each had received from the estate. Mr Sharpe said that there were no further assets in the estate apart from the bank account. He said that the total indebtedness of the unit trust to the estate had been repaid.
27 Mr Sharpe said that Paul’s loan had not been repaid to the estate and that it was now not possible for the loan to be “taken into account in the division of the … estate”, as the remaining balance (the bank account) was insufficient for that purpose. Mr Sharpe said that the executors had made a “mistake” in not taking Paul’s loan into account before making the substantial distributions to the three beneficiaries.
28 Each of the three children had taken the necessary steps outlined in the deceased’s will to constitute the three separate testamentary trusts of which each of them was the primary beneficiary.
Financial position of the estate
29 Mr Gannon submitted that, “The evidence of the financial position of the estate was led orally [from] Mr Sharpe and was almost wholly unsupported by documents”. Mr Gannon asserted that, “Financial transactions should properly be proved by accounts and records [and] the oral evidence … should not be accepted”.
30 This submission was made by Mr Gannon in support of his contention that, “the plaintiffs’ case should be dismissed because the central premise that the estate lacks funds [or the executors had made ‘an overpayment to the testamentary trust of which Paul Crusi is trustee’] has not been proved”.
31 I am satisfied that Mr Sharpe gave an accurate account of the administration of the deceased’s estate and its present financial position. There was little dispute about these matters in the cross-examination of Mr Sharpe or any contrary evidence given by Paul Crusi. I shall return to the pleading of the plaintiffs’ claim in due course.
Non-estate assets
32 By clause 10.1 of the deceased’s will, it is stated that:
“In this clause, my intention is that the division of the remaining balance of my Estate ensures that the amount to be held on trust for each Primary Beneficiary is the proportion as dictated in Part A of this Will [equally to the three children – clause 8.3] of the Total Wealth (including Estate and non-estate assets)”.
33 Clause 22.3(y) defines “Total Wealth” as meaning “the amounts listed in the subclause headed ‘Amounts to be Adjusted’ in the clause headed ‘Direction to Adjust Entitlements’ [clause 10.2]”.
34 Clause 10.2, under the heading “Amounts to be Adjusted”, provides that:
“The Total Wealth referred to in this clause [clause 10.1 quoted above] is the aggregate of the value of the following assets:
a. in relation to My Trusts [certain specified assets] …;
b. any entitlements to superannuation, life insurance and other Death Benefits paid in consequence of my death to or for the benefit of any of the Nominated Primary Beneficiaries; and
c. the remaining balance of My Estate”.
35 By clause 22.3(n) of the deceased’s will:
“My Trusts means the HC & BA Crusi Trust and any other trust in which I hold a Controlling Position other than any Nominated Superannuation Fund”.
36 Clause 10.3 summaries the “operation” of the adjustments required by clause 10, including calculating “the Relevant Amounts” and “Relevant Reduced Amount” for each beneficiary. “Relevant Amount” is defined by clause 22.3(t) as including an adjustment required by clause 10.2 for entitlements “received” or “payable to the benefit of…a nominated primary beneficiary” or deemed “to have been received, or to be payable”.
37 It is not necessary to examine these clauses in detail, save to indicate the overall intention of the deceased to ensure that her three children were treated equally, subject to any specific adjustments referred to in the will. The definition of “My Trusts” indicated the significance of the unit trust in assessing the “Total Wealth” of the deceased.
The HC & BA Crusi Trust
38 The trustee of the unit trust is Bensi (Aust) Pty Ltd. The trustee was registered as a corporation on 25 January 1977 and was formerly known as HC & BA Crusi Nominees Pty Ltd. In November 1977, the trustee, in its former name, became registered as a tenant in common with Hyper-Seal Ltd of the Smith Street property.
39 Hyper-Seal Ltd, later Bensi Limited, was a company registered in Hong Kong. It was struck off the Register in Hong Kong on 13 April 2012. As a consequence, the Smith Street property cannot be sold until Bensi Limited is reinstated as a corporation.
40 Draft “financial information to support Tax Return [for the unit trust] for the year ended 30 June 2016” was prepared by Deloitte’s accountants. The document in evidence is marked, “Version 2 25/5/17”. The “Statement of Financial Position as at 30 June 2016”, forming part of the “Financial Information”, includes as a fixed asset the Smith Street property “at cost” in the amount of $159,312, and “unpaid trust distributions” as a current asset at $117,152.
41 The document “Unpaid Trust Distributions as at 30 June 2016” is also part of the “Financial Information”. For 2016, it shows an “opening balance” in respect of “The Estate of the Late Mrs Beryl Crusi” of “($117,151)”, and as entries for 2015, $1,982,849 as the “opening balance” and $2,100,000 as “Payment to beneficiaries”.
42 The balance of ($117,151) apparently owing by the estate to the unit trust in 2016, reflects the overpayment of the opening balance in 2015 by a “payment to beneficiaries” of $2,100,000, rather than the opening balance of “unpaid trust distributions” to the estate of $1,982,849. $117,151 is the difference.
43 The consequences of this “payment to beneficiaries” of the deceased’s estate by the unit trust in 2016 is not clear. It was the basis for Mr Sharpe’s evidence that the unit trust presently has no further liability to the estate. The distribution to the estate in 2015 was made by decision of the trustee through its directors. The directors of the trustee are the same persons as the executors of the deceased’s estate. Prior to the deceased’s death, Mr Sharpe and Paul Crusi, together with the deceased, had been the directors of Bensi (Aust) Pty Ltd. After the deceased’s death, Mary Louise and Anne also became directors.
44 The document, “Unpaid Trust Distributions as at 30 June 2016”, shows significant positive balances as at 2016 in relation to unpaid trust distributions to each of Mary Louise, Paul and Anne. The total of these distributions is shown as a “current liability” in the “Statement of Financial Position as at 30 June 2016” for the unit trust.
45 There is apparently some present disagreement between Paul Crusi and his fellow directors of the trustee about the amount shown as an unpaid trust distribution in relation to Anne. This is, apparently, one of the reasons, apart from the need to reinstate Bensi Limited, as to why the unit trust cannot be finally administered and its assets distributed.
46 The trust deed of the unit trust was not in evidence. It is likely, however, that the beneficiaries of the unit trust are principally the three children of the deceased, with the trustee having a broader discretion to distribute to a wider range of beneficiaries.
Outstanding matters to be resolved
47 Apart from the determination of the present proceeding, the following matters require resolution between the parties:
a. the reinstatement of the Hong Kong company so that the Smith Street property can be sold and the assets of the unit trust distributed;
b. whether Anne has a debt to the unit trust or to the estate arising from advances received from the deceased during her lifetime or monies paid on Anne’s behalf by the deceased;
c. the taking into account of Paul’s loan and the division of the estate between the three children.
Reinstatement of the Hong Kong company
48 The Hong Kong company was deregistered because appropriate returns were not filed and fees were not paid. It is clear that the company will not be reinstated until these matters are remedied.
49 In May 2016, Keith Hanslow of the plaintiffs’ solicitors travelled to Hong Kong to investigate the steps that would be required to reinstate the Hong Kong company. On 11 May 2016, Mr Hanslow met with representatives of the Tricor Group, a Hong Kong accounting firm. Mr Hanslow’s account of the matters discussed in the meeting, as necessary to be completed before the Hong Kong company would be re-registered, are set out in an email to Paul Crusi dated 3 June 2016.
50 The three children of the deceased received a letter from the CEO of Tricor Group dated 30 June 2017. Paul said in evidence that he considered that there were significant differences in the two accounts of the meeting in Hong Kong. The Tricor email expressly states that:
“Tricor does not agree with the content of the letter dated 3 June 2016 [from Mr Hanslow] and some of the points mentioned were not discussed at the meeting. Also, the paragraphs under the heading ‘Tricor’s Preferred Option’ DO NOT represent our decision or preference”.
51 During his cross-examination, Paul was taken to the part of Tricor’s email which set out what “Tricor will require” if “all the final beneficiaries would like to change the trustee of The HS Trust to another party”. The requirements were as follows:
“1. written consent from ALL the final beneficiaries;
2. details of the proposed new trustee for consideration including its background and qualifications to demonstrate that it is capable of administering the trust properly;
3. settlement of trustee remuneration and other outstanding fees;
4. sufficient funds on account for attending to outstanding compliance matters and/or additional formalities; AND
5. a discharge and indemnity in favour of Tricor as retiring trustee from EACH of the final beneficiaries and the new trustee”.
“Trico will only agree to consider a proposal that is agreed by all the final beneficiaries and in their best interests. Prior to implementation, settlement of all outstanding fees due to the trustee, funds on account for preparation of the relevant documentation as well as satisfactory deeds of discharge and indemnity in favour of Tricor have to be received”.
Evidence of Paul Crusi’s intentions
52 Paul said in evidence, “I am prepared to follow Tricor’s lead in reinstating the trust”, and agreed that he was “prepared to do all the steps that are set out in the letter from Tricor”.
53 Once the Hong Kong company is reinstated, it is expected that the Smith Street property can be sold. The unit trust has, apart from the property, cash at bank of $850,000 and the estate is indebted to the unit trust. There would also need to be adjustments made.
54 Paul said in evidence, when asked about the “assets of the unit trust”, that the Hong Kong company:
“is to be reinstated and the property is to be sold and the funds are to be sort of divided amongst the three and my loan is to be extinguished at that time”.
55 Paul’s counsel, Mr Gannon, asked him, “What is to happen to the proceeds of the unit trust?” Paul replied:
“Once the [Smith Street] property is sold [the proceeds] are to be divided and my debt [and] my sister Anne’s debt is to be settled and … then the appropriate calculations [are] to be made and divided by three with those adjustment and for the trust to be vested”.
56 Paul agreed that, if the Smith Street property were sold, he would instruct his “fellow directors of the trust company” that the “funds flowing” from the sale should go “into my testamentary trust”.
57 Paul said that his “understanding” was “that the $400,000 [loan] is taken off my share, so therefore it goes to Anne and Mary Louise … so, in effect, my debt to my mother is settled at that time. The $400,000 comes off my share”.
58 Paul continued, “But my sister Anne also has a debt that will be settled at that time as well”. He said, “I object to some of the adjustments made to Anne’s loan account position … by Geoff Sharpe”.
59 In cross-examination, when asked whether “you’ve sought to link resolution of the issue in Hong Kong with resolution of the accounts regarding your sister, Anne’s loan account”, Paul replied, “No, not necessarily”. Shortly afterwards Paul denied that he would only “agree to a resolution of [the] Hong Kong [company issue] when the question about Anne’s loan accounts … is resolved”. Paul said, “No, that’s not the case. I see the two as separate. The Hong Kong entity is separate to Anne’s loan account position”.
60 In Mr Gannon’s final submissions, he disavowed Paul’s evidence that “the $400,000 [loan] is taken off my share, so, therefore it goes to Anne and Mary Louise”. Essentially, Mr Gannon agreed with the views expressed by Mr Sharpe that if Paul’s loan amount is able to be brought to account, the balance could be divided equally between the three children as the primary beneficiaries. However, Paul’s loan amount can only be brought to account if there is a balance sufficient for these adjustments to be made.
The plaintiff’s Statement of Claim
61 The plaintiffs’ Statement of Claim was attached to the Writ. It relies upon the breach by the defendant of the loan deed by his failure to repay the loan upon the death of the deceased. By way of defence, the defendant relies upon clause 7.2 of the deceased’s will which gifts to him the benefit of the amounts payable to the deceased at the date of her death.
62 Clause 7.1 of the will provides for the loan amount to be “taken into account in the division of the balance of my Estate”. Whether or not it remains possible to take the loan amount into account may have been affected by the distributions made by the executors to the beneficiaries and their respective testamentary trusts.
63 This is not, however, a matter raised by the plaintiffs’ Statement of Claim. As the dispute is defined by the pleadings, the plaintiffs’ claim must fail.
64 By clause 2.1 of the loan deed:
“no interest shall be payable by the Borrower under this agreement”, “unless during the course of the duration of this agreement the parties agree to charge interest on [any] part of the outstanding balance of the Principal sum”.
65 No such agreement to charge interest was alleged. Statutory interest is not payable unless judgment has been obtained.
Proposed order
66 There shall be judgment for the defendant that the plaintiffs’ claim be dismissed. I shall hear further from the parties in relation to the costs of the proceeding.
- - -
Certificate
I certify that these 18 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 20 February 2018.
Dated: 20 February 2018.
Zeinab Ali
Associate to His Honour Judge Anderson
0
0
0