Simon Dirk KENWORTHY-GROEN as executor of the estate of William Grove v Grove
[2023] WASC 87
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SIMON DIRK KENWORTHY-GROEN as executor of the estate of WILLIAM GROVE -v- GROVE [2023] WASC 87
CORAM: ACTING MASTER MCDONALD
HEARD: 21 MARCH 2022
DELIVERED : 22 MARCH 2023
PUBLISHED : 22 MARCH 2023
FILE NO/S: CIV 2188 of 2020
BETWEEN: SIMON DIRK KENWORTHY-GROEN as executor of the estate of WILLIAM GROVE
Plaintiff
AND
NICHOLAS GROVE
First Defendant
SIMON DIRK KENWORTHY-GROEN as trustee for THE GROVE GRAND FATHER FAMILY TRUST
Second Defendant
Catchwords:
Construction of a will – Executor's application for directions – Principles of construction of testamentary instruments – s 45 Administration Act 1903 (WA)
Legislation:
Administration Act 1903 (WA), s 45
Partnership Act 1895 (WA), s 33, s 44, s 57
Trustees Act 1962 (WA), s 92
Wills Act 1970 (WA), s 26, s 28A
Result:
Directions made
Category: B
Representation:
Counsel:
| Plaintiff | : | L A Tsaknis |
| First Defendant | : | P G Donovan |
| Second Defendant | : | R Nash |
Solicitors:
| Plaintiff | : | Fort Knox Legal |
| First Defendant | : | MDS Legal |
| Second Defendant | : | Croftbridge |
Cases referred to in decision:
Atwell v Roberts [2013] WASCA 37; (2013) 43 WAR 507
Australian Executor Trustees Ltd v Attorney General (WA) [2015] WASC 439
Brennan v Permanent Trustee Co of New South Wales [1945] 73 CLR 404
Carter Brothers v Renouf [1962] HCA 67
Chopra v Bindra [2009] EWCA Civ 203 (CA); [2009] Fam Law 581
Commissioner of State Revenue v Rojoda Pty Ltd [2020] HCA 7
Corbett v Corbett (1888) 13 PD 136
Fell v Fell (1922) 31 CLR 268
Grove v Fisher [2002] WASC 247
Hammersley v Newton (2005) 30 WAR 568
In Re Edwards; Jones v Jones [1906] 1 Ch 570
Jeffrey Laurence Herbert (as trustee for The Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) [2019] WASC 389
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66
Pacella v Sherborne [2009] WASC 58
Plan B Trustees Ltd v Maitland Parker [2012] WASC 392
Pringle v Pringle [2010] WASC 206
Re Dugdale; Dugdale v Dugdale (1888) 38 Ch D 176
Re Wragg (decd); Hollingsworth vWragg [1959] 1 WLR 922
Rojoda Pty Ltd v Commissioner for State Revenue [2018] WASCA 224
Wash v Sloan [2019] WASCA 107
Wood (as Co‑executor and trustee of the will of the dec'd) v Wood (No 4) [2014] WASC 393
ACTING MASTER MCDONALD:
The late William Grove died on 30 October 2015 and was survived by three adult children, Simon Kenworthy‑Groen, John Grove and Andrew Grove. At the time of his death he had a 70% share in a partnership which carried on a hotel business at the Indian Ocean Hotel (IOH). He left a will dated 11 September 2015 appointing Simon Kenworthy‑Groen as the sole executor and trustee. Probate was granted on 8 February 2016.
Simon Kenworthy‑Groen, in his capacity as executor and trustee of the estate of William Grove, is applying for directions as to the proper construction of the gift in cl 6 of the will to Nicholas Grove, the first defendant, grandson of the late William Grove.
In the remainder of these reasons I will refer to William Grove as the deceased and without intending any disrespect I will refer to Simon, John, Andrew and Nicholas by their first names to avoid any confusion caused by shared surnames.
Background facts
The IOH operated as a hotel business under a partnership (IOH partnership) from premises located at 23 Hastings Street, Scarborough (the Premises).[1]
[1] Affidavit of Simon Dirk Kenworthy‑Groen sworn 30 November 2020 [12] (Plaintiff's affidavit).
In the IOH partnership the deceased had a 70% share, John had a 20% share and Andrew had a 10% share.[2]
[2] Plaintiff's affidavit [17].
There was no written partnership agreement.[3]
[3] Plaintiff's affidavit [18].
The partners were registered proprietors of the Premises as tenants in common in the same proportions as their shares in the IOH partnership.[4]
[4] Plaintiff's affidavit [19].
Clause 6 of the deceased's will purports to give the first defendant, Nicholas, 5% of the IOH.[5]
[5] Plaintiff's affidavit [27].
Simon, in his capacity as trustee of The Grove Grand Father Family Trust,[6] is the second defendant. The Grove Grand Father Family Trust is the residuary beneficiary under the will. Simon's four children are the only beneficiaries of The Grove Grand Father Family Trust.[7]
[6] Added as second defendant by orders of Master Sanderson made on 13 May 2021.
[7] Plaintiff's affidavit (15) 'SKG-2' (cl 11 of the will).
Following the death of the deceased the business was placed in the hands of receivers and managers which, by way of deed of assignment, settlement and release, continued under a new partnership.[8]
[8] Plaintiff's affidavit [25] ‑ [26].
Application
The application is brought by Simon in his capacity as executor of the deceased's estate for directions concerning the construction of cl 6 of the will pursuant to s 45 of the Administration Act 1903 (WA) which provides as follows:
Court may settle all questions arising in administration
(1)The Court may make such order with reference to any question arising in respect of any will or administration, or with reference to the distribution or application of any real and personal estate which an executor or administrator or Public Trustee may have in hand, or as to the residue of the estate, as the circumstances of the case may require.
(2)Such order shall bind all persons whether sui juris or not.
(3)No final order for distribution shall be made except upon notice to all the parties interested, or as the Court may direct.
In Pacella v Sherborne [2009] WASC 58, Master Sanderson held in relation to s 45 of the Administration Act:[9]
But s 45 is in broad and general terms. It refers to 'any question arising in respect of any will or administration'. That phrase is entirely open‑ended. It clearly shows the legislature was intending to provide the court with the widest possible discretion to deal with problems which arise in relation to the estate. The reference is to questions arising in respect of 'any will' or 'administration'.
[9] Pacella v Sherborne [2009] WASC 58 [12].
The will
Clause 6 of the will is in the following terms:
PARTNERSHIP SHARE OR PARTNERSHIP INTEREST AFTER DISSOLUTION
I give 5% of the Indian Ocean Hotel (IOH), being taken from my 70% partnership share, or my share in partnership property (my share), free from estate expenses, to my grandson Nicholas Grove (Nick) and the remaining 65% of the IOH, which was the balance of my share, to be vested into THE GROVE GRAND FATHER FAMILY TRUST.
i.My Executor and Trustee will support Andrew being the manager in charge of the IOH, subject to:
a.The Executor and Trustee approving purchase and expense of the IOH greater than $100,000; and
b.The Executor and Trustee approving salaries of the IOH staff;
My Executor and Trustee, in his absolute discretion may review, maintain or revoke the support give[n] to Andrew being the manager in charge of the IOH, at any time.
ii.If the IOH remains an asset in which THE GROVE GRANDFATHER TRUST has a majority interest, the Executor and Trustee is to encourage, but not force members of my immediate family to work at the IOH. I wish that the business be a place in which the immediate family can always be employed, no matter their circumstances.
Clause 7 of the will commences by expressing the deceased's wish that Andrew and Nicholas make a ‘joint effort to not have John as part of any entity or structure that manages or controls the IOH'. Further, if Simon as trustee, Andrew and Nicholas resolve to purchase John's share of the partnership from the proceeds of the sale, they must take into account a number of matters which are set out in cl 7.
Clause 7 then sets out how the profits from the sale of the IOH are to be paid to the partners in the event it is sold prior to 1 July 2016. Clause 7 replicates the manner of distribution set out in s 57(2) and (3) of the Partnership Act 1895 (WA) with the ultimate residue being divided among the partners in the proportion in which the profits are divisible, namely 65% to The Grove Grand Father Family Trust, 20% for John, 10% for Andrew and 5% for Nicholas.[10]
[10] Plaintiff's affidavit (13) 'SKG-2' (cl 7(b)(iv) of the will).
In the event the IOH is sold after 1 July 2016, cl 7 says it is the deceased's wish that Andrew be provided with the benefit of the improved sale price. The benefit above and beyond Andrew's 10% is to be taken from The Grove Grand Father Family Trust's share (65%) and given to Andrew.
Clause 8 deals with the property at Glenelg Avenue, Wembley Downs (the Glenelg property) and permits Andrew to be tenant for life at the trustee's discretion.
Clause 9 gives the unit on West Coast Highway (the Scarborough property) to The Grove Grand Father Family Trust.
Clause 10 establishes The Grove Family House Trust into which the Glenelg property and some of its contents together with an ANZ share portfolio are held on trust for some of the deceased's grandchildren.
Clause 11 leaves the residue of the deceased's estate to Simon as trustee of The Grove Grand Father Family Trust to hold on trust for the beneficiaries.
Questions arising
The difficulty with the interpretation of the will and cl 6 in particular, is that it appears to be predicated on the incorrect assumption that the partnership either continued after the death of the deceased or that the business of the IOH would continue under a new partnership.
For these reasons the questions posed by the plaintiff in this application refer to the 'Old Partnership', namely that which existed prior to the death of the deceased, so as to distinguish between that partnership and that which the deceased assumed would continue or could be created by his will after his death. For the purpose of these reasons Old Partnership has the same meaning as the IOH partnership.
The questions raised in relation to the proper construction of cl 6 of the will are as follows:[11]
(1)What is the meaning of the 'Indian Ocean Hotel', does it mean the business being conducted, the Premises or both;
(2)did the Premises form part of the Old Partnership property;
(3)was the gift of 5% interest to Nicholas intended to be a gift in specie of either the Premises, or the business, or both, or rather a gift of 5% of the value of the Premises, or the business, or both;
(4)is the gift to Nicholas a gift of a 5% interest in the Old Partnership or a gift of a 5% share of the deceased's interest in the Old Partnership;
(5)is the gift to Nicholas void because it is not possible to ascertain the deceased's intention, or to give effect to it?
[11] Plaintiff's affidavit [27].
The first defendant states that the plaintiff's submissions now impermissibly seek to raise a further question, namely:[12]
(6)was the plaintiff entitled to deal with Nicholas' bequest on the basis that Nicholas has a right to 5% proportion of the surplus, calculated on the basis as if all liabilities of the Old Partnership had been paid and the assets of the Old Partnership realised, as at the date of the death of the Deceased?
[12] Minute of First Defendant's Proposed Answers to Questions to be Determined dated 21 March 2022 [2(a)].
The first defendant says this sixth question should not be answered for the following reasons:[13]
(1)there are other proceedings on foot in which Nicholas seeks the removal of Simon as executor of the estate of the deceased (the Removal Proceedings);
(2)Nicholas claims Simon is now seeking a direction as to how the estate should be administered in relation to the bequest to Nicholas in cl 6, which is one of the fundamental issues to be determined in the Removal Proceedings;
(3)the complaint made by Nicholas in the Removal Proceedings relates to the difference in the way Simon, as executor, has allegedly dealt with the bequest to Nicholas compared to the bequest to Simon as trustee of The Grove Grand Father Family Trust and whether that gives rise to grounds to remove Simon as executor of the will.
[13] First defendant's submissions filed 17 March 2022 [74].
The submission, in short, is that the direction now sought by the plaintiff in these proceedings attempts to validate what is the subject of complaint in the Removal Proceedings without disclosure of the relevant factual basis as to how Nicholas' bequest has been dealt with by Simon.[14]
[14] First defendant's submission filed 17 March 2022 [12] ‑ [13]; ts 198, 210.
The second defendant says that the relevant questions for the court are as follows:[15]
(1)did the Premises form part of the IOH partnership property;
(2)on a proper construction of the Will, what property interest was bequeathed/devised by the gift of 5% of the IOH to Nicholas in cl 6;
(3)is the reference to 5% in cl 6:
a.5% of the deceased's 70% interest in the IOH; or
b.5% of the IOH?
[15] Second defendant's submissions filed 28 February 2022 [17].
The second defendant's questions are largely subsumed by those posed by the plaintiff and will be dealt with together.
Principles of construction of a will
Section 26 of the Wills Act 1970 (WA) sets out the general rules of construction of a will. Section 26(1) provides:
General rules of construction
(1)Unless the contrary intention appears by the will ‑
(a)the will is to be construed, with reference to the property comprised in it, to speak and take effect as if it has been executed immediately before the death of the testator;
(b)property that is the subject of a disposition, other than the exercise of a power of appointment, that is void or fails to take effect is to be included in any residuary disposition contained in the will;
(c)a general disposition of land or of the land in a particular area includes leasehold land whether or not the testator owns freehold land;
(d)a general disposition of all the testator's property or of all the testator's property of a particular kind includes property over which the testator had a general power of appointment exercisable by will and operates as an execution of the power;
(e)a disposition of property without words of limitation whether to a person beneficially or as executor or trustee is to be construed as passing the whole estate or interest of the testator therein;
(f)a disposition of the residue of the estate of a testator, or of the whole of the estate of a testator, that refers only to ‑
(i)the real estate of the testator; or
(ii)the personal estate of the testator,
is to be construed to include both the real and personal estate of the testator;
(g)if any part of a disposition in fractional parts of the whole or of the residue of the estate of a testator fails, the part that fails accrues to the part that does not fail, and, if there is more than one part that does not fail, to all those parts proportionately.
The principles of construction of testamentary instruments were summarised by Kenneth Martin J in Pringle v Pringle [2010] WASC 206[16] as follows:
[16] Pringle v Pringle [2010] WASC 206 [25].
1.The object of construing a will is to ascertain the testator's intention as expressed in the will itself. In a passage frequently cited from Perrin v Morgan [1943] AC 399, 406, Lord Simon LC famously observed:
[T]he fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case ‑ what are the 'expressed intentions' of the testator.
2.The overriding consideration is always the language used in the testamentary instrument. In Parnell v Hinkley [2007] WASC 102 [12] and [15], Master Newnes (as he then was) observed:
The Will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the Will, read in the light of the circumstances in which the Will was made. The language employed in the Will should be read in the sense which the testator appears to have attached to the expressions used, albeit it is not to be construed on the basis of what it is suspected the testator intended, other than as expressed in the terms of the Will: Fell v Fell (1922) 31 CLR 268 at 273; WA Trustee, Executor & Agency Co Ltd v Birkbeck (1921) 23 WALR 27 at 29, 31 ‑ 32; Perrin v Morgan [1943] AC 399 at 406, 414 ‑ 415, 416, 420; Borlaug v The University of Western Australia [2001] WASCA 425 at [15]. The overriding consideration is the language used by the testator and the Court can neither ignore the plain meaning of words nor unnecessarily introduce words to give effect to an intention that is not expressed: In re Crocombe (decd) [1949] SASR 302 at 315.
…
There is a presumption against intestacy, namely that the will should, if possible, on a fair and reasonable construction, be construed so as to lead to a testacy rather than an intestacy or partial intestacy: Fell v Fell (supra) at 275 ‑ 276, 284; Hamersley v Newton (2005) 30 WAR 568 at 583. But the presumption against intestacy 'is not a strong presumption': Marks v Pope [2001] NSWSC 105 at [17]. A court should not lean too heavily against a construction that produces an intestacy and, cannot, in order to avoid an intestacy, misconstrue the language of the will: In re Edwards; Jones v Jones [1906] 1 Ch 570 at 574; Re Wragg (decd); Hollingsworth v Wragg [1959] 1 WLR 922 at 929.
3.The testamentary instrument must obviously be read as a whole. Surrounding cl s may be helpful in explaining, amplifying or modifying the scope of a provision: see Ritchie v Magree [1964] HCA 10; (1964) 114 CLR 173, 181 (Kitto J), Dalton v Dalton [2008] WASC 56 [76] ‑ [77] (Beech J) referring to Brennan v Permanent Trustee Company of New South Wales [1945] HCA 17; (1945) 73 CLR 404. In Brennan, Dixon J said (significantly, I think, in the circumstances of the present application):
When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared (414).
4.In Dalton, Beech J observed by reference to the above passage in Dixon J's reasons in Brennan, that the approach is to be applied only when a court is able to identify from the will as a whole, 'the main purpose and intention of the testator' [77].
5.As to use of surrounding circumstances in the exercise of interpretation, in Bakranich v Robertson [2005] WASC 12, Master Newnes approved a passage at [13] from Williams on Wills, 8th ed, Butterworths (2002) Vol 1 at 586 as follows:
The meaning of the will is dependent upon the intention of the testator and in the court of construction the primary evidence of the testator's intention is the will itself but extrinsic evidence of circumstances may be given the nature and effect of which is to explain what the testator has written, but not what he intended to write. Thus, extrinsic evidence is admissible to make intelligible something in the will which without that evidence would not be intelligible. (Footnotes omitted)
6.Section 28A of the Wills Act 1970 (WA) now, of course, expressly permits the use of extrinsic evidence, including evidence of a testator's intention, to clarify a will. …
7.The so‑called 'armchair principle', by reference to the observations made in Boyes v Cook (1880) 14 Ch D 53 at 56, allows a court to consider the circumstances which surrounded a testator or testatrix, at the time he or she made their will. In Mustard v Oikonomov (Unreported, WASC, Library No 980468, 19 August 1998), Owen J (as he then was) said of the armchair principle:
This principle allows the court to admit extrinsic evidence about the testator's property, family, acquaintances and friends for the purpose of putting the court in a position to read the will as the testator would have read it. That is, the court will allow evidence to be admitted of factual circumstances surrounding the testator when the will was made: Layer v Burns Philp Trustee Co Ltd (1986) 6 NSWLR 60 at 65. Under this approach, evidence as to the testator's intentions is not admissible. If after the admission of this factual evidence the words still remain ambiguous, then (except in the case of equivocation) no further evidence will be admitted and the disposition will be void for uncertainty (7).
8.But the armchair principle is not to be stretched to a point of giving words or phrases a meaning which they are incapable of bearing or reaching the point of the court, in effect, making a fresh will for the testator or testatrix: see Higgins v Dawson [1902] AC 1, 4 ‑ 6 (Earl of Halsbury LC); Perrin.
…
12.If after applying the principles of construction, a court is still unable to ascertain the testator's intention, the provision must be assessed to be void for uncertainty, see Bakranich [14].
The armchair principle referred to in Pringle v Pringle is reflected in s 28A of the Wills Act,[17] which provides:
[17] Walsh v Adrian Cory Sloan as executor of the estate of the late Laurette Dorothy Keddie [2019] WASCA 107 [25] ‑ [27].
Use of extrinsic evidence to clarify will
(1)In proceedings to construe a will, evidence, including evidence of the testator's intention, is admissible to the extent that the language used in, or other content of, the will renders the will or any part of the will ‑
(a)meaningless; or
(b)ambiguous on the face of the will; or
(c)ambiguous in the light of the surrounding circumstances.
(2)Evidence of a testator's intention is not admissible to establish any of the circumstances referred to in subsection (1)(c).
(3)Nothing in this section prevents evidence that is otherwise admissible at law from being admissible in proceedings to construe a will.
(4)This section applies to the will of any person dying on or after the day on which section 22 of the Wills Amendment Act 2007 comes into operation, whether the will was made or executed before, on or after that day, but does not apply to the will of a person who died before that day.
Evidence
I have read the following affidavits:
(a)affidavit of Mr Simon Dirk Kenworthy‑Groen sworn 30 November 2020 (Plaintiff's affidavit);
(b)affidavit of Ms Camilla D'Angelo Radenti sworn on 2 June 2021 (Ms Radenti's affidavit);
(c)affidavit of Ms Helen Jennifer Burnside sworn 14 February 2022 (Ms Burnside's Affidavit);
(d)affidavit of Mr Nicholas William Grove sworn 15 February 2022 (Mr Grove's affidavit);
(e)supplementary affidavit of Ms Helen Jennifer Burnside sworn on 18 February 2022 (Ms Burnside's supplementary affidavit); and
(f)supplementary affidavit of Ms Helen Jennifer Burnside sworn on 17 March 2022 (Ms Burnside's further supplementary affidavit).
Preliminary matter raised by the first defendant
Despite the volume of evidence filed and the fact that there have been several contested interlocutory applications, it became evident at the hearing of the application that the parties are now in agreement as to the meaning of cl 6 of the will.
The origin of these proceedings appears to be the opinion given by counsel for the plaintiff dated 30 October 2020,[18] annexed to the Plaintiff's affidavit, advising that the competing constructions of the gift to Nicholas in cl 6 meant its meaning was unclear and attendant with considerable uncertainty.[19]
[18] Plaintiff's affidavit [28] ‑ [31], (168) 'SKG‑11'.
[19] Plaintiff's affidavit (179) 'SKG-11' [35].
Counsel's opinion was that the most natural meaning of the gift to Nicholas was a gift of 5% of the Premises or 5% of the value of the Premises, and that in either case the gift would fail, being an incomplete gift with the deceased only being entitled to the proportionate proceeds of that asset converted into cash in the process of winding up.[20]
[20] Plaintiff's affidavit (178) 'SKG-11' [35].
The other construction proposed by counsel in the opinion was that the deceased intended to give Nicholas 5% of the value of his 70% interest in the IOH partnership, although counsel considered this was difficult to reconcile with the wording of cl 6.[21]
[21] Plaintiff's affidavit (179) 'SKG-11' [29].
In light of the competing interpretations, the plaintiff's counsel concluded that cl 6 might be assessed to be void for uncertainty in which case the purported gift to Nicholas would fall into the residue.[22] This application was then commenced.
[22] Plaintiff's affidavit (179) 'SKG-11' [31].
The various interpretations given by plaintiff's counsel are now no longer contended for by the plaintiff. The parties are now broadly in agreement as to the meaning of cl 6 of the will.
I raise this by way of background as the first defendant takes issue with this change of direction by the plaintiff[23] and I propose to deal with this as a preliminary issue.
[23] First defendant's submissions filed 17 March 2022 [36], [43].
Although this application is not brought under s 92 of the Trustees Act 1962 (WA), the first defendant submits the interpretation that has been given to s 92 of the Trustees Act should inform the limits of a direction that can or should be given under s 45 of the Administration Act.[24]
[24] First defendant's submissions filed 17 March 2022 [33] ‑ [34].
Section 92(1) of the Trustees Act provides:
Directions, trustee may ask Court for
(1)Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.
In Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) [2019] WASC 389, Allanson J held in relation to applications under s 92 of the Trustees Act: [25]
These are not proceedings in which the court can or should determine issues of fact, …. The application for judicial advice is founded upon facts stated to the court by the trustee, untested by adversarial procedure, and assumed by the court to be true for the purpose of the application. The advice is given on that basis. The trustee must fully and fairly disclose the facts known to him to the court. The protection afforded to the trustee by the process for judicial direction is lost should he have been guilty of any fraud or wilful concealment or misrepresentation in obtaining the direction. (footnotes omitted).
[25] Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) [56].
The first defendant says applying the principles in Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) the plaintiff must come to the court with a clear identification of the nature of the advice sought. Given the basis for the application was a construction that is no longer held by the plaintiff, the first defendant submits the identification of the advice sought is unclear and further contends that there has been a failure by the plaintiff to disclose the relevant facts in relation to the additional question posed.[26]
[26] First defendant's submission filed 17 March 2022 [74.2] ‑ [74.3].
The application in Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) was made under s 92(1) of the Trustees Act. Section 92 is used for the protection of the property of the trust and the protection of a trustee acting properly and in accordance with the direction of the court.[27] Provided the trustee acts in accordance with the advice or direction given on the application under s 92, and provided the trustee has not been guilty of fraud, wilful concealment or misrepresentation, the trustee will be protected against any future claim asserting that he or she failed to discharge his or her duties as trustee.[28]
[27] Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) [49]; Australian Executor Trustees Ltd v Attorney General (WA) [2015] WASC 439 [32] ‑ [33]. See also Plan B Trustees Ltd v Maitland Parker [2012] WASC 392 [45] ‑ [47].
[28] Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2) [50], [56]; Trustees Act, s 95(2).
The conduct complained of by the first defendant is that the plaintiff brought these proceedings shortly after the first defendant foreshadowed proceedings to remove the executor on the grounds that the plaintiff's treatment of Nicholas' bequest was different to that of The Grove Grand Father Family Trust bequest.[29] The first defendant says that when these proceedings were commenced, they raised a real question as to whether the gift to Nicholas fails entirely and falls into the residue or is so uncertain as to be void for uncertainty. The effect of either of these interpretations is that Nicholas would have no beneficial interest in the estate such that he would have no standing to bring the Removal Proceedings.
[29] First defendant's submission filed 17 March 2022 [32].
There is no evidence sufficient to satisfy me that there has been any fraud, wilful concealment or misrepresentation as described in Herbert (as trustee for Blenkinsop Family Trust As Trustee For The Blenkinsop Family Trust No 2) v Blenkinsop (No 2). The conduct complained of, namely the late agreement with the other parties as to what cl 6 means and adding the question for judicial advice, does not offend the principles set out in that case. Whether there is sufficient evidence upon which to make a direction in relation to the additional question (6) will be dealt with later in these reasons.
The late agreement between the parties as to the meaning of cl 6 does not divest me of jurisdiction to deal with the issues arising that are no longer in dispute. His Honour Kenneth Martin J in Wood (as Co‑executor and trustee of the will of the dec'd) v Wood (No 4) [2014] WASC 393 described the court's jurisdiction to provide trustees with advice in the context of s 92 of the Trustees Act as a 'venerable, unique, non‑adversarial jurisdiction.'[30] Kenneth Martin J further held:[31]
The jurisdictional bar to a pursuit of relief under provisions like s 92 is simply that the applicants must point to an existence of a question respecting the management or administration of trust property, or a question respecting the interpretation of a trust instrument: see Macedonian Church [58], a case about a dispute surrounding a charitable trust.
[30] Wood (as Co‑executor and trustee of the will of the dec'd) v Wood (No 4) [102].
[31] Wood (as Co‑executor and trustee of the will of the dec'd) v Wood (No 4) [103].
I note that the cited decision of Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 did involve adversarial proceedings. The point was made that the provision in the NSW legislation was not limited to non‑adversarial proceedings. Kenneth Martin J observed that there was nothing in the equivalent NSW legislation to suggest s 92 of the Trustees Act was any different, in other words, s 92 applies to both non-adversarial and contested proceedings.[32]
[32] Wood (as Co‑executor and trustee of the will of the dec'd) v Wood (No 4) [103].
Therefore, to the extent that s 92 of the Trustees Act informs the limits of s 45 of the Administration Act, I am of view an executor and trustee may seek direction in relation to any question arising under the will under s 45(2) of the Administration Act even if all parties are in agreement as to the meaning of the will.
Disposition in relation to the construction questions
(1) What is the meaning of the 'Indian Ocean Hotel', does it mean the business being conducted, the Premises or both?
Clause 6 is entitled 'PARTNERSHIP SHARE OR PARTNERSHIP INTEREST AFTER DISSOLUTION'. In cl 6, the deceased gives to Nicholas
5% of the Indian Ocean Hotel (IOH) being taken from [his] 70% partnership share, or [his] share in partnership property ('[his] share')…and the remaining 65% of the IOH, which was the balance of [his] share, to be vested in THE GROVE GRAND FATHER FAMILY TRUST.
By cl 6(i), the deceased makes clear that he wants Andrew to be the manager in charge of the IOH subject to the executor and trustee approving any 'purchase and expense of the IOH greater than $100,000' and subject to the executor and trustee approving the salaries of the staff of the IOH. The deceased also gives the executor and trustee absolute discretion to review, maintain or revoke the support given to Andrew being the manager in charge of the IOH at any time. This suggests the IOH refers to the business of running the hotel.
On the other hand, cl 6(ii) refers separately to both the IOH and the business. It refers to the IOH remaining an asset in which The Grove Grand Father Family Trust has a majority interest. It refers to the IOH as a place at which the deceased's family are encouraged to work and the business as a place in which immediate family can always be employed.
Even if the deceased in cl 6(ii) was expressing his wish that his family be employed at the IOH, being the place at which the business is conducted, for the purpose of the gift to Nicholas in cl 6(i) and reading the will as a whole, I am of the view the deceased did not intend to distinguish between the Premises and the business.
The references in cl 6 to management, salaries and expenses of the IOH is consistent with the reference to the IOH being the business run by the partnership. If the IOH was intended to mean the Premises, it makes no sense for the Premises to have staff and a manager. They are not employed by the Premises. They must be employed by the business.
Similarly, cl 7 refers to 'mismanagement of the IOH' which must necessarily mean the IOH is a reference to the business.
Further, cl 7 makes provision for how the assets are to be applied and how the ultimate residue is to be divided if the IOH is sold both before and after 1 July 2016 (bearing in mind the deceased considered that following his death the partnership would continue). To the extent that cl 6 and cl 7 distinguish between the Premises, and the entity or structure that manages or controls those Premises, the will when read as a whole does not indicate that the deceased intended to dispose of the Premises separately to his partnership share.
If the intent of the deceased to give '5% of the Indian Ocean Hotel (IOH) being taken from [the deceased's] 70% partnership share',[33] is a reference to the Premises only, then the will makes no distribution in relation to the deceased's share in the partnership.
[33] Plaintiff's affidavit (12) 'SKG-2' (cl 6 of the will).
I consider the reference to the IOH by the deceased was not intended to be confined to the Premises. It is a reference to the partnership. I am fortified in that interpretation by the clauses dealing with the Glenelg and Scarborough properties which refer to those properties' certificates of title details, rates, taxes, tenancies all of which are consistent with the distribution of real property, none of which are mentioned in relation to the IOH.
The first defendant relies on extrinsic evidence to support the view that the deceased prior to his death intended Nicholas to have a management role in the business, and not just a share of the asset of the hotel.[34] However, in my view the deceased has sufficiently declared his intention from a reading of the whole of the will and extrinsic evidence is not required to make sense of the meaning of IOH.
[34] First defendant's submissions filed 17 March 2022 [61] ‑ [63]; Mr Grove's affidavit [13], (8) 'NWG-2', (10 ‑ 11) 'NWG-4'; Ms Burnside's affidavit (25) 'HJB-30', (93) 'HJB-36'.
For these reasons the reference to the IOH is a reference to the business run by the partnership.
(2) Did the Premises form part of the IOH partnership property?
The next issue is whether the partnership assets included the freehold land and buildings which constitute the Premises from which the hotel operates.
Annexed to the Plaintiff's affidavit are the management accounts of the IOH.[35] Those accounts are for the financial years ending 30 June 2012 up until 30 June 2016.
[35] Plaintiff's affidavit [21], (42 ‑ 90) 'SKG-6'.
The partnership accounts for 30 June 2015[36] (being the completed financial year immediately preceding the will dated 11 September 2015 and the death of the deceased on 30 October 2015) [37] and the accounts for 30 June 2016,[38] both record that the IOH trades under the business name ‘Indian Ocean Hotel'. That business is referred to as having partners, partners' salaries, liabilities in the form of partners' loans, fixed assets comprising of freehold land and buildings, property, plant, and equipment and extensions of the IOH.[39] Each year's balance sheet contains the same description of fixed assets, namely freehold land and buildings and property, plant and equipment. The notes to the financial statements refer to hotel extensions. It was submitted by the plaintiff that the reference to hotel extensions refers to the Indian Ocean Hotel.[40]
[36] Plaintiff's affidavit (70 ‑ 79) 'SKG-6'.
[37] Plaintiff's affidavit [2] ‑ [3], (7) 'SKG-1', (20) 'SKG-2'.
[38] Plaintiff's affidavit (80 ‑ 90) 'SKG-6'.
[39] Plaintiff's affidavit (76 ‑ 78) 'SKG-6', (86 ‑ 88) 'SKG-6'.
[40] ts 191.
The freehold land and buildings are not described in the accounts and are valued significantly under the value attributed to the Premises in the plaintiff's statement of the estate's assets and liabilities filed pursuant to rule 9B of the Non-contentious Probate Rules 1967(WA)[41] and the valuation done of 4 May 2016.[42]
[41] Plaintiff's affidavit (32 ‑ 33) 'SKG-3'
[42] Plaintiff's affidavit [19] ‑ [22], (91 ‑ 139) 'SKG-7'.
Despite the difference in the value attributed to the item referred to as freehold land and buildings in the partnership accounts and that contained in the valuation obtained, there is no evidence before me that suggests that the reference to freehold land in the partnership accounts is a reference to any other land. It was not disputed that the land described in the partnership accounts was a reference to the Premises.
The will also supports a construction that the Premises formed part of the IOH partnership assets. The land is referred to in cl 12 of the will which stipulates from where funds are to be derived 'to develop the land the IOH is currently located on' but the land is not described and distributed under the will unlike the Glenelg property in cl 8 and the Scarborough property in cl 9 which is headed, 'Real Property'.
I am the view the Premises form part of the IOH partnership property. The deceased is registered as having a 70/100ths share as tenant in common on the title of the Premises.[43] Where partners are registered proprietors of partnership property, they hold their respective legal interests as registered proprietors on trust for the partnership: Carter Bros v Renouf [1962] HCA 67; Rojoda Pty Ltd v Commissioner of State Revenue[2018] WASCA 224 at [104]-[106].
[43] Plaintiff's affidavit (39) 'SKG-5'.
Accordingly, although the deceased is registered on the certificate of title of the Premises as being the holder of a share as tenant in common,[44] the deceased held his registered legal interest in the Premises on trust for the partnership, just as the other partners did.
(3) Was the gift of the 5% interest to Nicholas intended to be a gift in specie of either the Premises, the hotel business, or both, or rather a gift of 5% of the value of the Premises, the hotel business, or both?
[44] Plaintiff's affidavit (39) 'SKG-5'.
The share of a partner in the partnership property at any time is the proportion of the then existing partnership assets to which the partner would be entitled if the whole were realised and converted into money, and after all the then existing debts and liabilities of the firm had been discharged: s 33 Partnership Act.
In their joint judgment, Bell, Keane, Nettle and Edelman JJ of the High Court stated in Commissioner of State Revenue v Rojoda Pty Ltd [2020] HCA 7 at [21]:
[T]he interest of partners in relation to partnership assets is not an interest in any particular asset but is an indefinite and fluctuating interest in relation to the assets, being the right to a proportion of the surplus after the realisation of the assets and payment of the debts and liabilities of the partnership. … [T]his remains the position after the 'general' dissolution of the partnership following death or retirement of a partner.
The gift of 5% of the IOH made to Nicholas to be taken from the deceased's partnership share in cl 6 of the will was, on a proper construction, not a gift of an interest in the Premises, but rather a gift of an interest in the IOH partnership for the reasons given in response to Question (1) above.
Clause 7 refers to the prospect of Andrew, Nicholas, and the Trustee resolving to purchase John's share of the partnership, which suggests the deceased viewed Nicholas as a person holding a partnership interest rather than holding a purely passive property interest.
Clause 7 refers to the deceased's intention in the event of the sale of the IOH before 1 July 2016, and in particular how the 'assets of the firm' are to be applied, which supports the interpretation that references to the 'IOH' were intended to include the assets and undertakings of the IOH partnership. The proposed division on winding up in cl 7(b)(iv) 'among the partners' with Nicholas receiving 5%, further supports the interpretation that the 5% interest in the IOH gifted to Nicholas, is 5% of the partnership interest.
For the reasons stated in response to Question (1) above, the gift to Nicholas must be a reference to the deceased's share of the IOH partnership (comprising both the Premises and the business). If the deceased intended to make a gift of 5% of the Premises only, the gift would fail as the Premises were a partnership asset.
In my view the meaning is clear and I do not need to rely on the extrinsic evidence filed by the first defendant to ascertain whether the deceased's intention in gifting Nicholas 5% of the partnership included the Premises.
(4) Is the gift to Nicholas a 5% interest in the IOH Partnership, or a gift of 5% of the deceased's interest in the IOH Partnership?
The question is whether the gift in Clause 6 of the will of:
5% of the Indian Ocean Hotel (IOH), being taken from my 70% partnership share, or my share in partnership property (my share), free from estate expenses to my grandson, Nicholas Grove (Nick) and the remaining 65% of the IOH, which was the balance of my share, to be vested into THE GROVE GRAND FATHER FAMILY TRUST
is a reference to:
(a)5% of the deceased's 70% interest (i.e. 3.5% of the partnership); or
(b)5% of the partnership to be taken out of the deceased's 70% interest.
In cl 6 the deceased defines the term 'my share' as his share in the partnership property and then gifts 'the remaining 65% of the IOH, which was the balance of [his] share' to The Grove Grand Father Family Trust. Clause 7(b) of the will applies the assets of the firm in the manner as set out in s 57(3) of the Partnership Act on the final settlement of partnership accounts with remaining profits being divisible in the following proportions: 65% to The Grove Grand Father Family Trust, 20% to John, 10% to Andrew and 5% to Nicholas. This must mean that the 5% to Nicholas was 5% of the whole, namely, the partnership, with that 5% being taken from the deceased's 70% share.
If the gift to Nicholas of 5% was intended to be calculated as 5% of the deceased's 70% share, it would leave 1.5% of the estate undistributed. There is a presumption against intestacy or partial intestacy[45] and the will should be construed, where the language allows, to lead to testacy.[46]
[45] Fell v Fell (1922) 31 CLR 268, 275 ‑ 276, 284; Hammersley v Newton (2005) 30 WAR 568, 583.
[46] In re Edwards; Jones v Jones [1906] 1 Ch 570, 574; Re Wragg (decd); Hollingsworth v Wragg [1959] 1 WLR 922, 929.
The references in the will to the 'remaining 65%'[47] being gifted to The Grove Grand Father Family Trust and the references in cl 7(b)(iv) to Nicholas' proposed share of the ultimate residue of any future proceeds amongst the partners is consistent with the 5% gift to Nicholas being 5% of the partnership and not 5% of the deceased's 70% share.
(5) Is the gift to Nicholas void because it is not possible to ascertain deceased's intention, or give effect to it?
[47] Plaintiff's affidavit (12) 'SKG-2' (cl 6 of the will).
Given the agreement between the parties that the deceased's intention as to the meaning of cl 6 is ascertainable, the submissions made at the hearing related to whether the deceased, in purporting to do something he could not do, namely authorising the partnership to continue on after his death or creating a new partnership by his will, had the effect of depriving Nicholas of his 5% interest in the partnership. [48]
[48] ts 194.
The IOH partnership dissolved as a consequence of the deceased's death. [49] The deceased had no authority to unilaterally create a new partnership nor force the other partners to accept Nicholas into a new partnership.
[49] Partnership Act 1895 (WA) s 44; Atwell v Roberts [2013] WASCA 37; (2013) 43 WAR 507 [11].
A partner's share in a partnership is chose in action, namely a right to his or her proportion of the surplus after the realisation of assets and the payment of debts and liabilities. The share is not a title to specific property.[50]
[50] Atwell v Roberts [142]. Partnership Act 1895 (WA), s 33; Commissioner of State Revenue v Rojoda Pty Ltd[21].
The effect of the disposition of property being void or failing to take effect is that it will be included in the residuary disposition contained in the will.[51]
[51] Wills Act 1970 (WA), s 26(1)(b).
The plaintiff relies on the following decisions in support of his submission that the gift to Nicholas is valid. In Corbett v Corbett (1888) 13 PD 136 the testator sought to devise an estate in fee simple to his sons subject to the express condition that the sons should not have power to 'mortgage, sell, alien, charge or incumber' the land. Butt J upheld the devise of an estate in fee simple but found provision for forfeiture in the case of alienation was invalid as inconsistent with the incidents the law attaches to a fee simple estate.[52] The Court of Appeal upheld the decision.[53] The outcome was the son retained the property left to him by his father but could be used as security. In Inre Dugdale; Dugdale v Dugdale (1888) 38 Ch D 176 McKay J for similar reasons held the grant of a fee simple estate cannot revert back to the donor by failure of the donee to comply with a condition imposed by the testator.[54] In that case the beneficiary took the interest in the estate absolutely under the will.
[52] Corbett v Corbett (1888) 13 PD 136, 139.
[53] Corbett v Corbett (1888) 14 PD 7.
[54] In re Dugdale; Dugdale v Dugdale (182); See also Bindra v Chopra [2009] EWCA Civ 203 (CA); [2009] Fam Law 581.
In Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 404, Dixon J held:[55]
But, to determine the meaning of the will, the language of the testator must be read in the sense which he himself appears to have attached to the expressions he used, that is, unless a rule of law gives them some fixed operation. When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared (my emphasis).
[55] Brennan v Permanent Trustee Co of NSW Ltd (414).
Each of the decisions relied upon by the plaintiff are examples of where a court upheld the gift under the will despite the testator attempting to impose conditions which were contrary to a rule of law, legally ineffective, or contrary to a legally binding agreement.
The assumptions made by the deceased did not impose conditions on the gift to Nicholas that would deprive him of his 5% entitlement. It is possible to give effect to the intention to gift Nicholas a 5% share in the IOH partnership despite the fact cl 6 and cl 7 of the will either treat the partnership as continuing after the death of the deceased or there being a new partnership created. The gift is not void. None of the parties are now contending that it is.[56]
(6) How and when should Nicholas' share be calculated?
[56] Plaintiff's submissions filed on 28 February 2022 [11], [15]; First defendant's submissions filed on 17 March 2022 [44], [68]; Second defendant's submissions filed on 28 February 2022 [43].
The plaintiff submits that I should find that Nicholas' interest in the 5% of the surplus be calculated on the basis as if all the liabilities of the partnership had been paid and the assets of the partnership realised as at the date of death of the deceased and that Nicholas is entitled to that payment at an appropriate time in the course of the administration of the estate.[57]
[57] Plaintiff's submissions filed on 28 February 2022 [15].
Similarly, the second defendant submits that once the estate administration has been completed and the estate is ready to be distributed, Nicholas' entitlement is the value of a 5% share in the IOH partnership assessed as if the whole were realised and converted into money, and after all the existing debts and liabilities of the partnership had been discharged, the residual balance was paid to the partners according to their respective shares.[58]
[58] Second defendant's submissions filed on 28 February 2022 [43].
The first defendant says I should decline to make directions in terms of how Nicholas' interest should be calculated for the following reasons.
The first defendant asserts that the plaintiff, in seeking a direction as to how and when Nicholas' gift in cl 6 should be properly calculated, is an endeavour to have the court approve the manner in which the plaintiff has administered the bequest. The suggestion is that Nicholas' bequest has been converted to cash and held in the estate account whereas The Grove Grand Father Family Trust's interest in the estate now forms part of a new partnership thereby taking the benefit of any income or capital growth.[59]
[59] Ms Radenti's affidavit (6) 'CDR‑1'; First defendant's submissions filed on 17 March 2022 [46].
On 18 December 2020 the first defendant in this action, commenced the Removal Proceedings against Simon as executor of the estate to remove him as executor.[60] In the Removal Proceedings, Nicholas pleads, among other things, that the plaintiff purported to:[61]
46.1convert Mr Nicholas Grove's Bequest to a fixed sum of cash by placing a sum equivalent to 5% of what the Plaintiff estimated to be the value of the IOH Partnership (including the Premises) as at that time into a bank account in the name of the Estate;
46.2thereafter treat the 70% interest of the Estate in the New Partnership (including the Premises) as solely being for the benefit of the Grand Father Trust; and
46.3deal with the new partnership such that the Grand Father Trust will receive the sole benefit of all income from the Hotel Business and all capital growth in the Premises.
[60] See Writ of Summons in CIV 2249 of 2020 filed 18 December 2020.
[61] First defendant's submissions filed on 17 March 2022 [46].
Nicholas further claims in the Removal Proceedings that, in acting in the manner outlined in the above paragraph, the plaintiff:[62]
47.1has distinguished between Mr Nicholas Grove's Bequest and the Grand Father Trust Bequest despite the fact that he is precluded from distributing the assets of the Estate and, as executor of the Estate, is the sole legal and equitable owner of all of the assets of the Estate;
47.2has treated assets of the Estate that have been divided between Mr Nicholas Grove and the Grand Father Trust as if they were held on particular and different trusts for those different beneficiaries; and
47.3has dealt with Mr Nicholas Grove's Bequest and the Grand Father Trust Bequest so as to disadvantage Mr Nicholas Grove in a manner that advantages the Grand Father Trust,
and in so doing, has placed himself in a position of actual or alternatively potential conflict between his duty as executor of the Estate and his personal interest as trustee of the Grand Father Trust, of which his children are the beneficiaries.
[62] First defendant's submissions filed on 17 March 2022 [47].
A defence has not yet been filed in the Removal Proceedings which stand adjourned. However, the first defendant submits the question raised as to how Nicholas' entitlement should be calculated, should not be answered without the factual position of the alleged distribution being made clear by the production of evidence by the plaintiff.[63] The first defendant raises concerns that the direction sought by the plaintiff in these proceedings may have an impact on the ability of Nicholas to take or continue an action against the plaintiff in relation to the manner in which the plaintiff may have dealt with the bequest to Nicholas[64] and in any event should be ventilated in the presence of all beneficiaries or potential beneficiaries.[65] The first defendant says the plaintiff is impermissibly seeking retrospective approval of the manner or method of ascertaining the value of the bequest to Nicholas[66] and that such direction should be sought at the time for distribution, when a number of other factors may be influential.[67]
[63] First defendant's submissions filed on 17 March 2022 [74.2], [74.3].
[64] First defendant's submissions filed on 17 March 2022 [74.4].
[65] First defendant's submissions filed on 17 March 2022 [74.6].
[66] First defendant's submissions filed on 17 March 2022 [74.5].
[67] First defendant's submissions filed on 17 March 2022 [74.7].
The directions sought by the plaintiff on this issue are:[68]
3.On a proper construction of clause 6 of the Will:
…
(d)the First Defendant's 5% interest in the IOH partnership is not an interest in any particular asset of the partnership but is a right to 5% of the surplus after the Property of the IOH partnership is applied in payment of the debts and liabilities of the Partnership.
4.The estate of the Deceased is in the course of administration. During the administration the entire ownership of the Deceased's interest in all the estate assets (including the IOH Partnership) is vested in the executor, and the beneficiaries (including the First Defendant) have a right (or chose in action) to compel the due administration of [the] Deceased's estate.
[68] Plaintiff's Draft Minute of Orders dated 21 March 2022.
I decline to make the directions sought for the following reasons:
First, the proposed answers in the plaintiff's minute are no more than statements of law, rather than raise a construction issue.
Secondly, how the plaintiff has treated Nicholas' interest is not the subject of evidence filed in this action and it is not appropriate that I determine the matter even at the level of generality now proposed by the plaintiff and the second defendant.
Thirdly, caution should be exercised in giving judicial advice under the Administration Act and the Trustees Act on the very issue raised in an action brought against the trustee. In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand case, the High Court considered the relevance of adversarial proceedings to the issue of giving a trustee advice on whether it would be entitled to defend itself against allegations of breach of a trust. Their Honours Gummow A-CJ, Kirby, Hayne and Heydon JJ held:[69]
A necessary consequence of the provisions of s 63 of the Act is that a trustee who is sued should take no step in defence of the suit without first obtaining judicial advice about whether it is proper to defend the proceedings. In deciding that question a judge must determine whether, on the material then available, it would be proper for the trustee to defend the proceedings. But deciding whether it would be proper for a trustee to defend proceedings instituted about the trust is radically different from deciding the issues that are to be agitated in the principal proceeding. The two steps are not to be elided. In particular, the judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings.
[69] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [74].
The Removal Proceedings involve issues relating to the alleged differential treatment between the bequests left to Nicholas and the residuary beneficiary. The first defendant takes issue with the plaintiff's submission that Nicholas' 5% of the net assets of the IOH Partnership is secure by reference to the valuation of the Hotel business including the premises as at 4 May 2016 and other substantial assets of the estate.[70] The differential treatment arises, according to the first defendant, in that the residuary share of the deceased's estate has been reinvested in the new partnership earning income and obtaining the benefit of capital growth.[71]
[70] Plaintiff's submission filed on 28 February 2022 [13] (and footnote 6); ts 202.
[71] ts 210; Plaintiff's affidavit [24 ‑ 26].
In addition, the first defendant alleges that there has been a failure to produce documentation and records relating to the financial affairs of the IOH partnership, presumably to determine the appropriate calculation of the value of Nicholas' interest.[72]
[72] Ms Radenti's affidavit [8]; ts 205 ‑ 206.
In the circumstances, the issue of how and when Nicholas' interest is calculated should be left to be determined in the Removal Proceedings.
Finally, both Nicholas and the deceased's son, John, have commenced proceedings under the Family Provision Act 1972 (WA). An estate should not be administered while there are claims pending.[73] Until the estate has been administered and is ready for distribution, Nicholas has no interest in any of the estate property, only a chose in action to compel the due administration of the estate.[74]
[73] Grove v Fisher [2002] WASC 247 [55].
[74] Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12, 27; Official Receiver in Bankruptcy v Schultz [1990] 170 CLR 306, 312 ‑ 313.
Nicholas' ultimate interest is unknown while the Family Provision Act claims are on foot.
Conclusion
The questions raised in the Plaintiff's affidavit filed in support of the originating summons as amended on 10 May 2021 as to the proper construction of the gift to Nicholas provided for in cl 6 of the will executed by the deceased on 11 September 2015,[75] should be answered as follows:
1.The reference to the Indian Ocean Hotel or IOH in cl 6 of the will refers to the IOH partnership, the assets of which comprise of both the Premises and the hotel business conducted at the Premises;
2.The Premises do form part of the property of the IOH partnership;
3.The gift to Nicholas was intended to be a gift of the deceased's share of the IOH partnership;
4.The reference in cl 6 to the gift of 5% is intended to be 5% of the IOH partnership taken from the deceased's share, not 5% of the deceased's share;
5.The gift to Nicholas is not void for uncertainty.
[75] Plaintiff's affidavit [27].
The parties have liberty to apply in relation to costs.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
BR
Court Officer
22 MARCH 2023
26
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