Smith v Smith
[2006] WASC 166
SMITH & ORS -v- SMITH & ANOR [2006] WASC 166
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 166 | |
| Case No: | CIV:2206/2005 | 30 MAY 2006 | |
| Coram: | MURRAY J | 30/05/06 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Independent trustees appointed | ||
| B | |||
| PDF Version |
| Parties: | MURRAY WILLIAM SMITH MARILYN HELEN BURTON IAN JAMES BURTON ROBERT JOHN SMITH JUNE ELIZABETH SMITH |
Catchwords: | Trusts Application to remove and appoint trustees Turns on own facts |
Legislation: | Trustees Act (WA), s 77 |
Case References: | Miller v Cameron (1936) 54 CLR 572 Porteous v Rinehart (1998) 19 WAR 495 Breen v Williams (1995) 186 CLR 71 Gava v Grljusich, unreported; SCt of WA; Library No 960010, 11 January 1996 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 Re: Estate of Roberts (1983) 70 FLR 158 Tallents v Caine [2001] WASC 63 Vagliviello v Vagliviello [2003] WASC 61 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Plaintiff
MARILYN HELEN BURTON
Second Plaintiff
IAN JAMES BURTON
Third Plaintiff
AND
ROBERT JOHN SMITH
First Defendant
JUNE ELIZABETH SMITH
Second Defendant
Catchwords:
Trusts - Application to remove and appoint trustees - Turns on own facts
Legislation:
Trustees Act (WA), s 77
(Page 2)
Result:
Independent trustees appointed
Category: B
Representation:
Counsel:
First Plaintiff : Mr G R Donaldson SC
Second Plaintiff : Mr G R Donaldson SC
Third Plaintiff : Mr G R Donaldson SC
First Defendant : In person
Second Defendant : No appearance
Solicitors:
First Plaintiff : McCallum Donovan Sweeney
Second Plaintiff : McCallum Donovan Sweeney
Third Plaintiff : McCallum Donovan Sweeney
First Defendant : In person
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Miller v Cameron (1936) 54 CLR 572
Porteous v Rinehart (1998) 19 WAR 495
Case(s) also cited:
Breen v Williams (1995) 186 CLR 71
Gava v Grljusich, unreported; SCt of WA; Library No 960010, 11 January 1996
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405
Re: Estate of Roberts (1983) 70 FLR 158
Tallents v Caine [2001] WASC 63
Vagliviello v Vagliviello [2003] WASC 61
(Page 3)
1 MURRAY J: The application before the Court is made by Mr Murray Smith, Ms Marilyn Burton and Mr Ian Burton against Mr Robert Smith and his wife June Smith. I accepted and permitted, as I forced the matter on by my refusal of an adjournment, that Mr Robert Smith might, as he then commenced to do, represent and make submissions for and give evidence in respect of the interests of both respondents. The applicants and the respondents are related. Mr Murray Smith, Ms Burton and Mr Robert Smith are brothers and sister. Mr Ian Burton is, as the name suggests, Ms Burton's husband, and I have said that Ms June Smith is Mr Robert Smith's wife.
2 The application is made under s 77 of the Trustees Act. It is not an application which places reliance upon the inherent jurisdiction of the Court. Reliance is placed squarely upon the provisions of s 77. Section 77 is a remedial provision. It provides in s 77(1) that:
"The Court may, whenever it is expedient to appoint a new trustee or new trustees and it is inexpedient, difficult or impractical so to do without the assistance of the Court, make an order for the appointment of a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee."
3 It is an ample power and the operative term in relation to its exercise is the word "expedient". There have been any number of cases which have dealt with the meaning of that term in the context of the legislation or equivalent legislation, because this is not an unusual provision. The decision of White J in Porteous v Rinehart (1998) 19 WAR 495 is a convenient location to find a discussion about the exercise of jurisdiction in relation to the removal of a trustee, whether under the inherent jurisdiction or within the ambit of the statutory jurisdiction. It has been held that in the context the word "expedient" is one which carries the meaning that the action of appointment would be fit, or proper, or suitable, having regard to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee.
4 As I have said, the jurisdiction is a remedial one but it is a power which, because it interferes with the appointments, by deed ordinarily, by the parties, will be exercised cautiously and only where the Court is satisfied that there is a clear need for the appointment to be made.
(Page 4)
5 As to the approach that the Court should take, I need only otherwise refer, I think, to the decision of the High Court in the well-known and oft-cited case of Miller v Cameron(1936) 54 CLR 572, and in relation to the exercise of this power the Court adverted to the dominant consideration being the welfare of the beneficiaries and their interests. For my part, I would say that it matters not that they may themselves be in dispute as to what their respective entitlements may be and what fair treatment they might expect from a properly acting trustee.
6 The passage most often quoted from Miller v Cameron is that from the judgment of Dixon J, as his Honour then was, at 580 - 581, where his Honour said:
"The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security … to remove the trustee is one upon which the decision of a primary Judge is entitled to a special weight."
7 Viewing the power vested in the Court by s 77 as remedial for the objects and having regard to the interests to which the cases refer, it follows in my opinion that there is not necessarily a judgmental character in the decision, in the sense that in a case such as this the Court should not, in my opinion, on the evidence before it, be taken to adopt a position which is particularly identified with that of one set of disputing parties over another.
8 One has only to look to the sort of considerations to which s 77(2) refers to see that it is not a judgmental decision but one which is required to be made having regard to what are seen to be the best interests of the trust, its disposition and administration, and the interests of the potential beneficiaries, because s 77(2) refers to some particular aspects which may justify an order under subs (1). They are provisions that apply without limiting the generality of the concept of expediency to which subs (1) refers and they include such matters as the trustee's desire to be discharged, where the Court holds that a trustee has misconducted himself in the administration of the trust, where a trustee has been convicted of an indictable offence, is of unsound mind, is bankrupt, or is a corporation that has ceased to carry on business, or is in liquidation, or has been dissolved.
9 The question of misconduct is, on the authorities as I understand them, not a matter which necessarily carries an implication of fault or deliberate misconduct. It is a term which may be applied to a trustee who
(Page 5)
- has failed to understand what are the obligations properly imposed upon him or her in the administration of the trust.
10 Against that background I look very briefly only, in the circumstances, to the evidence in this case. There is, I do not doubt, rightly said to be uncertainty at least as to the current trustees of the trusts. So far as Mr Robert Smith is concerned, there are no trustees of any of the trusts which are the subject of the application. He explains why that is so, but why it is so involves the necessity to take a particular view as to what transactions have occurred by deed and what their binding and legal effect is or is not.
11 However, the position finally adopted by Mr Robert Smith is, on behalf of the respondents, an acceptance that the various matters of disputation between the beneficiaries of the trusts to which the evidence adverts may not be advanced, resolved or settled unless a trustee is appointed and, as I understand him, he recognises that it would be inappropriate for the trustee to be a person who may have an interest in the outcome of the various disputes which are now occurring between the parties to the application before me.
12 That, without more, is a significant element which bears upon the decision I must make. It confirms the view which I have, that it is important, if the proper administration of these trusts are to be advanced, for independent trustees of a suitable kind to be now appointed. I would not think that it would be appropriate to leave the matter so that those who are regarded by the respondents as the appointors should themselves be left to appoint new trustees. It is convenient for that reason and expedient for that reason alone that this Court should act to make an independent appointment.
13 There are other matters concerning Mr Smith's evidence and submissions to which I should briefly refer, not because I take a particular view about where the rights and wrongs lie, but because the existence of these matters seem to me to be confirmatory of the fact that long since the relationship between these parties, which bears directly upon the effective administration of these trusts, has broken down completely.
14 I need not, I think, canvass the detail of the evidence, but at a number of important points in relation to the activities and the nature of these trusts, Mr Smith has been of the view that he has not only been left to carry the burden of their resolution, but has done so against a background that he perceives to be one of deliberate deception and dishonesty on the
(Page 6)
- part of the applicants, at least his brother and sister, and behaviour on their part is referred to, which in his mind at least, has been deliberately obstructive against what the applicants ought to have perceived to be their best interests.
15 As I say, I make no judgment about where the rights and wrongs of those matters lie. On the evidence before me it is clear that it is a matter upon which I could make no firm judgment, although I should say that, much more bearing upon those issues, to the extent that they are relevant, has been placed before me in the affidavits of Mr Murray Smith than appears from evidence adduced on behalf of the respondents. However that may be, the important aspect of those matters to my mind is the fundamental breakdown of the relationship.
16 There are other matters to which I should refer, albeit only briefly, as they bear upon my judgment. For the applicants, the contrary view which is taken is that the respondents have benefited themselves by an exclusive administration of trust assets without reasonable care and skill to ensure that trust assets are preserved debt-free, particularly taxation debt-free, and so as to maximise their income-producing capacities.
17 There is dispute between the parties as to the proper preparation of financial statements; in other words, as to proper accounting by the respondents in relation to trust business and the assets. There is the action following the deregistration of Bunyah Nominees and there is, in short, within the affidavit evidence put on by the applicants, equally clear evidence of the incapacity of the parties to deal properly with each other which I am satisfied is having a deleterious effect upon the proper administration of these trusts.
18 For the better preservation of the assets of these trusts, for the resolution of where the best interests of the beneficiaries lie respectively, for the capacity to discharge the trusts so as to advance those interests when they are ultimately established, it seems to me that all the evidence in this case points overwhelmingly towards the view that it is expedient that new trustees, independent persons, be appointed to assume the burden of the administration of these trusts.
19 As to that, there is on affidavit before me from Mr Norman Ashton, evidence both on his behalf and on behalf of his associate, Mr Jeffrey Herbert, which shows what the character of those gentlemen is and their particular expertise. There are curriculums vitae annexed to the affidavit which give details. These gentlemen are chartered accountants, not only
(Page 7)
- official liquidators, but importantly, I think, specialists in business and commercial reconstruction or, as they perhaps put it better than I, financial reorganisation and reconstruction. They seem to me to be persons eminently suitable to conduct these trusts as trustees.
20 So far as the applicants are concerned, if the proper position is that they are numbered among the trustees, they wish to be relieved of that obligation in favour of the appointments to be made. They desire to be discharged. It is not stretching too long a bow to say that Mr Robert Smith takes a similar view.
21 My interpretation of the evidence in that regard is clear. So far as the Trailezy Settlement Trust is concerned, if Trailezy Boats Pty Ltd is the trustee, as some part of the body of evidence would suggest, then that corporate entity was deregistered, it appears on 26 July 1996, and so it is a trustee which has been dissolved.
22 Having regard to those matters, but overwhelmingly, as I say, having regard to the view I take about the incapacity of any of those who may be the present trustees to work properly in the administration of the trusts, in my opinion the application made to the Court by originating summons should be granted, and pursuant to s 77 of the Act, the orders for the appointment of the trustees of the nominated trusts should be made. It is appropriate, in an application of this kind, to reserve liberty to apply and I would do so.
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