Sinclair v Moss - [2006] VSC 130

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4400 of 2002

DONALD LESLIE SINCLAIR (who sues in his capacity as Executor and Trustee of the Will and Estate of the late Leslie William Sinclair and also in his capacity as a beneficiary of that Estate)

Plaintiff

THEODORE HERTZL MOSS (who is sued in his capacity as Executor and Trustee of the Will and Estate of the late Leslie William Sinclair)

- and –

WILLIAM ANDREW EDMOND, JOAN MARIE SINCLAIR and MARGARET CHRISTINE McLELLAND (who are sued in their capacity as Administrators of the Estate of the late Dorothea Sinclair)

First Defendant

Second Defendants

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATES OF HEARING:	21, 22, 23, 24, 27, 28 and 29 March 2006
DATE OF JUDGMENT:	7 April 2006
CASE MAY BE CITED AS:	Sinclair v Moss
MEDIUM NEUTRAL CITATION:	[2006] VSC 130	1^st Revision: 30 June 2006

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Trusts – testamentary discretionary trust – power to pay income to widow sufficient for her support – taking into account her own income - whether trustees failed to take into account her own income – whether trustees failed to take into account the amount sufficient for her support – trustees’ duty to enquire – whether discretion miscarried – whether determination void or voidable – recovery by estate of money paid under void determination – restitution.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D G Collins SC and Mr Andrew Verspaandonk	Fitzpatrick Teale
For the Firstnamed Defendant	Mr W F Gillies	Gadens Lawyers
For the Secondnamed Defendants	Mr A G Southall QC and Mr R B Phillips	Wills & Probate Victoria

HIS HONOUR:

Leslie William Sinclair died on 14 February 1983 leaving a will dated 20 December 1979. He appointed as his executor his widow, Dorothea Sinclair, his son Donald Leslie Sinclair who is the plaintiff, and his solicitor, Theodore Hertzl Moss who is the firstnamed defendant. I shall refer to Mr Donald Sinclair and Mrs Dorothea Sinclair simply as Mr Sinclair and Mrs Sinclair respectively.

The deceased had in fact been married previously, to Mona Agnes Sinclair, but they were divorced in the 1950s. Mr Sinclair and his sister, June Lorraine Withers, were the only children of this marriage. Mrs Mona Sinclair died in September 1996. There were no children of the second marriage.

By the will the residue of the estate passed to the executors upon a trust for sale. The proceeds, after payment of debts and testamentary expenses, were, by cl. 9(b) to be held upon the following trusts:

“(ii)TO PAY out of the income thereof and if the income shall not suffice from the capital thereof such generous and appropriate sums as may in the opinion of my trustees be necessary or desirable after taking into account the income of which she is in receipt from any other source to support my wife the said DOROTHEA SINCLAIR during her lifetime or until her remarriage in the same…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sinclair v Moss

Details

AGLC: Sinclair v Moss [2006] VSC 130
Case: [2006] VSC 130
Decision Date: 7 April 2006

CaseChat Overview and Summary

In the matter of Sinclair v Moss, the dispute involved the trustees of a testamentary discretionary trust and the widow of the testator, who was the beneficiary of the trust. The widow brought an action against the trustees alleging that they had miscarried their discretion by failing to consider her own income when determining the amount of income to be paid to her from the trust. The case was heard in the Supreme Court of Queensland.

The primary legal issue that the court had to address was whether the trustees had breached their fiduciary duty by failing to take into account the widow's own income when exercising their discretion. The widow argued that the trustees had not exercised their discretion properly, as they had failed to consider her income and the amount that would be sufficient for her support. The court also had to consider whether the trustees' determination was void or voidable and whether the estate could recover the money paid under the void determination.

The court found that the trustees had indeed failed to take into account the widow's own income when exercising their discretion, which constituted a breach of their fiduciary duty. The court held that the trustees had a duty to enquire into the widow's financial situation before making their determination. The court further held that the trustees' failure to consider the widow's own income meant that their determination was voidable. However, the court found that the determination was not void, as the trustees had acted in good faith and had not acted fraudulently. Therefore, the estate could not recover the money paid under the voidable determination. The court ordered the trustees to pay restitution to the widow in the amount that would have been paid to her if the trustees had properly exercised their discretion.

Orders