Storti & Storti v Andrews No. Scgrg-97-1264 Judgment No. S6737
[1998] SASC 6737
•2 July 1998
STORTI & STORTI V ANDREWS
Application
LANDER J
This is an application by the plaintiffs for the removal of their grandmother and the substitution of their father as trustee of certain trusts.
The plaintiffs, who were born on 1 August 1991, are the twin infant children of Mr Tony Storti and Ms Georgina Murphy. Georgina Murphy died on 26 July 1993.The plaintiffs are the grandchildren of the defendant who is their mother’s mother.
Tony Storti and Georgina Murphy lived in a de facto relationship between December 1990 and June 1993. They separated about a month before her death.
The circumstances of their relationship and its ending are set out in detail in the reasons for judgment of 10 December 1993 of McGovern J in which His Honour heard applications by the plaintiffs’ father and grandmother for their custody.
When the plaintiffs’ parents met their father knew that their mother had contracted breast cancer and had undergone surgery for a mastectomy. It was known to both of them that should she not remain in remission her lifespan would be considerably shortened.
When she was seven months pregnant with the plaintiffs she suffered a recurrence of the cancer and underwent further surgery. After returning home with the children she developed complications arising out of the previous surgery and underwent two further operations. In the second half of 1992 she was treated with a high dose chemotherapy for the cancer but the treatment was unsuccessful and she developed secondary lung cancer.
In the trial before McGovern J it was the father’s evidence that his de facto wife’s continuing deterioration put a significant strain upon their relationship and eventually they agreed, shortly before her death, that he should leave the home but continue to keep in contact with her until she died.
He said that he continued to keep in touch with his wife and children up until the time that she died.
The defendant who lived with the plaintiffs’ father and mother during this time claimed in the proceedings before McGovern J that prior to leaving the home the plaintiffs’ father told Ms Murphy that he did not love her. He left and thereafter had irregular contact with the plaintiffs’ mother in the short period to her death. He visited her only twice during the time that she was in hospital and the second occasion only as a result of her pleading for him to do so.
There is no doubt from the material before me that there is a strained relationship between the plaintiffs’ father and their grandmother. She believes that he acted irresponsibly in leaving her daughter and in failing to show support and care during her daughter’s terminal illness. It would appear from the evidence that he recognises that he did not act as well as he should have acted and he further recognises that he failed to give his childrens’ mother the appropriate support during her terminal illness.
All that is a matter of history but I mention those matters for the purpose of showing that these proceedings have a significant emotional overlay, which in all of the circumstances is perfectly understandable.
In determining the issues between the plaintiffs and the defendant this Court will be motivated by two principles. The first is the need to protect trust property and the second is to ensure that the best interests of the infant children are protected.
Shortly after her de facto husband had left, on 25 June 1993, a month before she died, Georgina Murphy executed a new will appointing the defendant executrix and trustee of the will. She left her car as a legacy to her brother but otherwise left the whole of her estate upon trust for her children.
Georgina Murphy had little or no estate. As at the date of her death, the plaintiffs’ mother was in receipt of a pension and she possessed no money except for about $200. She was, however, a member of a personal superannuation programme which forms part of an individual superannuation fund administered by MLC Limited. She had joined that superannuation programme in about 1989.
She declared in her will that it was her wish that the defendant should have the care, control, custody and guardianship of her children during their infancy.
Four days after executing her will the plaintiffs’ mother signed a fresh nomination for payment of the proceeds of the moneys payable under the individual superannuation fund directing payment to the defendant.
In making the fresh nomination the plaintiffs’ mother signed the following acknowledgment:
“I understand that under the terms of the Trust Deed governing the Fund the benefit in the event of my death shall be paid to any one or more of my Dependants or if in the opinion of the Trustee there are no such Dependants to my personal representative and/or any persons nominated by me, as the Trustee in absolute discretion may determine. I would like the Trustee to know when exercising the discretion that if it was my decision I would distribute the benefits to the following persons indicated in the proportions and I nominate accordingly.”
She then indicated her mother.
The children were not two when their mother died and they were left in the custody of their grandmother.
After their mother’s death the plaintiffs’ father approached the defendant seeking custody of the children but his request was refused. On 24 August 1993 he applied to the Family Court of Australia for the custody of the plaintiffs. The matter came on for hearing before Justice McGovern on 30 November and 1 December 1993. On 10 December 1993, McGovern J ordered that the plaintiffs’ father have the guardianship and custody of the children and the defendant access to them.
McGovern J ordered that the transition from the custody of the grandmother to the father should be effected gradually. He ordered that the defendant have the care of the children for the majority of time until Easter 1994 but thereafter the plaintiff’s father have custody of them for four days from Friday to Tuesday of each week and the defendant the remainder of the week. He ordered that the care of the grandmother reduce to three days per week and after they started school he ordered that she should have access to them on alternate weekends from 5pm on Friday to 5pm on Sunday and for half of all school holidays.
The children have now started school so it is the case that the defendant has the responsibility of caring for them on alternate weekends and half of the school holidays. Otherwise the plaintiffs are in the custody of their father.
The defendant has not sought probate of her daughter’s will of 25 June 1993 for the obvious reason that the estate has little or no assets.
The defendant’s mother, who, of course, is the great grandmother of the plaintiffs has sworn an affidavit in these proceedings. She claims, and there is no reason to suspect otherwise, that she was close to her deceased grand-daughter and had a number of conversations with her shortly prior to her death. Those conversations occurred, so she said, after the plaintiffs’ father left her grand-daughter to begin a relationship with her grand-daughter’s best friend with whom he has since had a child. The plaintiffs’ mother spoke to her grandmother about a wish that the children should have a permanent home and that it was her wish that the proceeds of her insurance policy should be used for the purpose of providing a permanent home for the defendant and the twin children. She said that her grand-daughter wanted the insurance moneys to be used to provide a permanent home for her daughter (the defendant) and her great grandchildren which would be eventually used as a nest egg for the twins when her mother (the defendant) died.
Shortly after her daughter’s death, the defendant contacted MLC Limited in relation to the proceeds of the personal superannuation.
She signed a statutory declaration acknowledging that the plaintiffs were the only two persons fully dependent upon her deceased daughter. On 31 August 1993 she also advised the MLC as follows:
“This is to verify that my daughter prior to her death directed me to purchase a home with the proceeds of her life assurance. This home was to be in my name with a will made out, that in the event of my death the house was to be left to the children. Please find an attached copy of the will.”
That advice was given to MLC on 31 August 1993.
She sent a copy of her daughter’s will in support. She later provided the MLC with a copy of her own will in which she has appointed Steven Andrews, her son, to be executor and trustee and in which she has left all her real estate of which she may die possessed to the plaintiffs and her residuary estate to her son.
On 3 September 1993 MLC wrote to the defendant in the following terms:
“Thank you for returning the documents.
The Trustee of the above mentioned Fund has determined that the Fund Benefit shall be paid to you as Trustee for Luke A Storti and Peta M Storti as dependants of the deceased member.
The amount payable from the Fund will be for their absolute benefit and will not be a distributable asset in the deceased’s estate.
We now enclose our cheque for $84,168.61.
Should you require any more information please do not hesitate to contact us.”
That letter is in accordance with an advice later given by the MLC to the defendant’s solicitors. In that later communication dated 27 May 1997 MLC wrote:
“The trustees of this fund determined that the fund benefit be paid to Mrs Ann Andrews in trust for Luke A Storti and Peter (sic) Maree Storti as dependants of the deceased member.
We can not locate any documentation on our files permitting the money to be used for buying a house and would be pleased if you could forward any evidence so that we may look into this matter further.
Our practise is that we do not specify what can be done with the funds.”
There is no dispute that the proceeds of the superannuation programme did not form part of the estate of the plaintiffs’ mother. It follows therefore that the proceeds were not subject to the trusts in the will.
I do not think that there is any doubt that the proceeds of the superannuation fund have been impressed with a trust in favour of the plaintiffs. Indeed the defendant has acknowledged that she received those moneys on trust for the children. The proceeds of the MLC investment are the subject of this application.
The plaintiffs claim that the defendant should be removed as the trustee of the proceeds of the MLC superannuation fund and that their father ought to be substituted as trustee.
Before that question can be decided it is however necessary to understand how the trust funds have been used since their receipt by the defendant.
When the defendant received those moneys she was represented by a solicitor who in a letter dated 26 August 1993 gave her the following advice:
“We note that the money coming to you from MLC is money to which you are entitled under the terms of the assignment of the policy.
When it was intended that the money be invested for the children MLC was directed to make the cheque payable to the Estate of Georgina Murphy Deceased. In view of the fact that you are now buying a house in your own name you should ensure that MLC make the cheque out to you and not to the Estate. You should speak to them about this soon.”
The defendant says that acting upon that advice she purchased a property at 38 Manningford Road, Elizabeth South in her own name. I cannot accept that that advice would have caused or allowed her to think that she could use the moneys to purchase a house. More particularly the advice could not have allowed her to think that she could use the trust funds to purchase a property unless the purchase was in the best interests of the beneficiaries.
I am not sure what question was asked of the solicitor but, in my opinion, the advice tendered in that letter would not support a suggestion that she purchased that property as a result of that advice.
There is another reason why it cannot be said that that advice was a catalyst for her to purchase a property. That is because she entered into the contract to buy the property before she received the advice on 24 August 1993. Moreover the contract for the purchase of the property acknowledged that she had previously entered into a contract for the purchase of the same property on 17 August 1993.
I think the evidence supports a finding that on 17 August 1993 the defendant agreed to purchase a property at 38 Manningford Road, Elizabeth South. A week later she entered into a further contract which was subject to two conditions. Those conditions were:
“1..... This contract is subject to the purchaser receiving not less than $65,000 from MLC Ins Ltd on or before 17.9.93.
2...... This contract is subject to the termination by mutual consent of the contract dated 17.8.93. between the parties hereto for the sale and purchase of the within described property on or before 28.08.93.”
There can be no doubt that the trust moneys were used for the purchase of that property. The purchase price was $60,000. Stamp duty on the transfer was $1,430. Adjustments of rates, taxes fees and costs took the total payment to $62,434.71. Of the figure received from the MLC $62,434.71was applied in purchase of Manningford Road.
It can be seen that the defendant entered into that contract about a week before the plaintiffs’ father brought his application for custody. It may be assumed, I think not unfairly, that she did so knowing that the plaintiffs’ father intended to seek custody of the children. I do not mean by that to be critical of the defendant. I can well understand that she would have used those trust moneys for the purpose of buying a house for the use and occupation of the children and herself. Such a purchase was consistent with her daughter’s express wishes as recounted by the defendant and the defendant’s mother. It was also consistent with her daughter’s nomination of the defendant to receive the moneys. Moreover, it was consistent with the terms of the will in which the plaintiffs’ mother expressed the desire that the defendant have the custody, care and control of the plaintiffs.
At the time of the purchase s5a (now repealed) of the Trustee Act 19360 permitted such an acquisition where the trustee was of the opinion that it was desirable to purchase a dwelling house for the use of a beneficiary under the trust and the purchase of the dwelling house would not unfairly prejudice the interest of any other beneficiary under the trust.
I can understand that she was then of that opinion that it was desirable to purchase a dwelling house for the use of the beneficiaries, namely the plaintiffs. Of course the purchase of that dwelling house could not prejudice anyone else’s interests because no other person’s interest could have been affected.
However s5a(3) provided:
“The price paid for a dwellinghouse purchased in pursuance of this section must not exceed the value of the dwellinghouse as certified by a licensed valuer who is reasonably believed by the trustee to be competent to make the valuation and to be acting independently of the dwellinghouse.”
The defendant did not obtain a valuation opinion by a licensed valuer at any time prior to the purchase of the property and in that respect she was in breach of s5a(3).
The defendant and the two children resided in that property until the completion of the family law proceedings. Thereafter the defendant occupied the premises and the children were in occupation in accordance with the order of McGovern J.
Since they had been going to school the children have only occupied the premises one weekend in every fortnight and for half of the school holidays.
For some of that time I think that the defendant’s son also occupied the property at Manningford Road.
The plaintiffs’ solicitor has filed an affidavit exhibiting the details of a valuation of the property situated at 38 Manningford Road for each of the years ended 30th June 1993, 1994, 1995, 1996 and 1997 by the Department of Environment and Natural Resources. In 1993 the capital value was expressed to be $53,000. No alteration in the capital value occurred in the opinion of the valuer between 1993 and 1996. In 1997 the capital value was expressed to be $48,000.
If those valuations are correct then the defendant may have paid too much for the property. Moreover the property may have declined in value since the date of purchase.
The defendant claims that she has used the balance of the sum of $84,000 in the following way.
I set out the payments which she has deposed to in her affidavit.
“Date Description Paid to Amount
28.07.93 Death Notice Advertisement in The Advertiser on 27th
July 1993 announcing
the death of Georgina
Murphy on 26.7.1993 $94.35
10.08.93 Funeral Expenses Berry Funeral Directors $3815.00
14.10.93 Memorial Stone Enfield Memorial Park $445.00
31.08.93 Solicitors Account
for reading of will/
discussions with
MLC Land Agent
etc. Jamison & Associates $245.00
31.08.93 Solicitor’s Account
for reading of will
etc. Jamison & Associates $65.00
23.09.93 New Fly Wire for
Damage and Repair
Door at Daughter’s
Home at Mary Jane
Court at Modbury
Heights Banner Hardware
Golden Grove $15.90
25.10.93 Telecom Account
on behalf of
Georgina Murphy
at mother’s home at
38 Manningford Rd,
Elizabeth South for period 7 July to
5 October 1993 $215.98
05.08.93 Telecom Account
on behalf of
Georgina Murphy
at 6 Mary Jane Court for period 6 April to
Modbury Heights - 7 July 1993 $141.75
28.09.93 ETSA Account -
Georgina Murphy
at 6 Mary Jane Court for period of 111 days
Modbury Heights to 06.09.1993 $376.10
18.10.93 ETSA Account -
Georgina Murphy
at 6 Mary Jane for period of 25 days
Court, Modbury to 01.10.93 $46.10
Heights
02.09.93 Gas Account -
Georgina Murphy
6 Mary Jane Court for reading period
Modbury Heights 18.08.1993 $16.45
08.10.93 Gas Account
Georgina Murphy
6 Mary Jane Court for reading period
Modbury Heights 01.10.1993 $8.60
20.08.93 Deposit for Paid to Weeks &
Purchase of House Macklin $100.00
22.09.93 Balance of Purchase
of House M A Lyon $62,334.71
10.01.93 Disconnect gas Plumbing & Gas
(sic heater at Supplies $50.00
01.10.93) Daughter’s Home
09.10.93 Redirection of
mail being received
at Daughter’s Home
after death Australia Post $10.00
26.10.93 redirection of Mother
& Brother’s Mail Australia Post $15.00
22.09.93 Erection of Pool
Safety Fence for
safety of children
unfenced previously Stratco (SA) Ltd
Guardian Panel Rail
2766 MM - 4 itemsGuardian Panel 1/2
Rail PK 1528 MM
- 1 itemGuardian Short Strut
1165MM Alpine
- 9 itemsGuardian Post with
Flange 1280MM
- 9 itemGuardian single gate
1200 Alpine including
self closing hinges
- 2 itemsMagna Latch-top pull
pool gate - 2 itemsDelivery/Handling
charges other zones
- 1 item
Total $1385.23
22.09.93 Hardware for Pool
Fence for Masonry
Anchor 10.00mm x
50mm for 36 items Stratco (SA) Ltd $28.80
22.10.93 Security Screens for
Windows and Door at
38 Manningford Road
Elizabeth South for
home security for
children Alcatraz Security $1105.00
22.11.93 Solicitor’s Account
for Family Court for
payment of legal
proceedings for
custody of children
pursuant to their
mother’s wishes Robinson & Mason $2070.00
22.08.94 Car Repairs to
ensure motor
vehicle safe and
reliable for
transporting
children for example
to their father’s home
on access, social
outings medical
appointments, etc. Lube Mobile $745.40
22.03.94 Car Repairs to
ensure motor vehicle
safe and reliable for Steves Auto &
transportation of Airconditioning
children Service $405.00
15.11.93 Car Repairs for new
tyres to ensure
motor vehicle safe
and reliable for
children Beaurepaires $453.00
08.11.93 New Furniture - 6
drawer tall boy,
single book case
- items purchased Parafield Discount
for children’s use City furniture $274.00
02.01.94 New Furniture - 2
single beds and 2
mattresses - items
purchased for Parafield Discount
children’s needs City Furniture $368.00
26.09.93 New Furniture -
lounge suite for Parafield Discount
use by children City furniture $750.00
26.09.93 New Furniture -
coffee table - for
use by children in
drawing etc. doing Parafield Discount
jigsaw puzzles City furniture $146.00
Inv No Lawn Mower -
0986 large back yard
to ensure lawns
mowed for safety
of children Mowers & More $429.00
04.01.95 Cool & Cosy
Insulation for supply
and fit cellulose
fibre to ensure house
cooling and warmth
for children Cool or Cosy $530.00
08.03.94 SES Safety Switch
to ensure children
did not electrocute Safety Electrical $169.00
themselves Services
08.11.94 New Hot Water
Heater - Installed J Carey, Plumber $840.00
02.11.93 Carpet Cleaning of
23 Fordingbridge Rd
Elizabeth West Odyssey Carpets $90.00
13.12.94 Purchase of 2
wardrobes from
personal friend for
use by children Mrs K Jones $100.00
undated Plumber Call Out
- unblock drains x 2 J Carey, Plumber $100.00
undated Plumbers Call Out
- Repair Burst Water
Pipe J Carey, Plumber $90.00
undated Pool Chemicals -
Average $25.00 per
month to ensure
pool safe for
children’s use $600.00
Feb 1995 Trip to Brisbane -
Fares by Coach 3 x
$280.00 - to attend
as page boy and
flower girl for
nephew’s wedding Greyhound Pioneer $840.00
Feb 1995 Food Both Ways $90.00
Feb 1995 Food, Fares and
Entertainment
whilst in Brisbane
(roughly) $350.00
Booster Seats for Car
- required for transport-
ing children to father’s
home on access, social
visits and general other
transportation of
children $90.00
From 1993 Swimming Aids and Pool
Toys for use by
children whilst swimming $200.00
Two Bikes & Helmets for
use by children $230.00
Inv No Sand Pit and Cubby
62 House for children’s
use in backyard Mitre 10, Smithfield $300.00
Sand for pit $75.00
Jan 94 Bedding for 2 Single
Beds - Quilts $35.00
x 2 for children’s
personal needs $70.00
Bedding for 2 Single
Beds - Cover $18 x 2
for children’s personal
needs $36.00Bedding for 2 Single
Beds - Sheet set x 3
$45.00 ($15.00 per
set) - for personal
use by children $90.00Bed spread 2 x $20.00
for personal use by
children $40.00Mattress Protectors
x 2 for children’s
personal use $16.00Pillow for use by
child $10.00Pillow Case 4 x $7.00
for personal use by
children $28.00Clothing for 2
children for 3 years
- rough estimates- socks - for
children’s personal
use $72.00- jocks - for
children’s personal
use $30.00- Knickers - for
children’s personal
use $30.00- Singlets - for
children’s personal
use $54.00- P J’s - Summer &
Winter - for
children’s personal
use $225.00- Nighties & P.J’s -
for children’s
personal use $270.00- Skivvies - for
children’s personal
use $162.00- T-Shirts - for
children’s personal
use $108.00- Shorts - for
children’s personal
use $90.00- Dresses - for child’s
personal use $186.00- Track Suites (sic)
- Winter for children’s
personal use $336.00- Parkers - for
children’s personal
use $120.00- Dressing Gowns
- for children’s
personal use $110.00- Jumpers - hand
knitted for
children’s personal
use $60.00Cardigans - hand
knitted for children’s
personal use $60.00- Shoes and Boots
for children’s
personal use $360.00- Sandals
- for children’s
personal use $120.00- Slippers
- for children’s
personal use $60.00
16.12.93 E&WS, SA Water $915.75
31.12.96 - for use by children
and grandmother
in house
1993-1996 Council Land Rates $1257.10
SA Pest Exterminators
x by $130.00 - to
ensure home safe for
children - done on 3
occasions first
treatment in 1994,
thereafter yearly SA Pest Exterminators $260.00Out Door Setting
Table & 4 chairs -
for use by children
& family & visitors $75.00Bird Aviary
- for entertainment
of children $150.003 Tier Fish Pond
and Pump - for
children’s
entertainment and
personal growth $280.00Trailer Hire for
Moving children
from 6 Mary Jane
Court to 38
Manningford Road
Elizabeth South $60.00TOTAL $86589.19”
It is clear that the defendant has used some of these moneys for the purpose of paying what would otherwise be the debts of the estate. All of the items prior to the deposit for purchase of the house are estate expenses.
She has also used some of the moneys for improvements at 38 Manningford Road. It would appear that moneys are being spent on an ongoing basis on the house property even though the children only reside in it for two days each fortnight and half of their school holidays.
She has also used some of the moneys for payment of her solicitors fees in the custody proceedings. She has used other moneys for car repairs to her motor vehicle. Other moneys have been used for supporting the children.
The result of all of those payments, however, and the purchase of the property is that of the sum of $84,000, which was paid to the defendant in 1993 on trust for the plaintiffs, the only asset, apart from some furniture which would now have little or no value, subject to the trust is the house property at 38 Manningford Road, Elizabeth.
That property has not improved in value and probably has lost value.
The house is now and has been for sometime occupied by the defendant apparently rent free and occupied only by the beneficiaries of the trust for one weekend a fortnight and half of their holidays. It is difficult to see how the retention of the house property, which is not earning income and apparently not only not improving in value but losing value could be in the best interests of the beneficiaries. Indeed it seems to me that it is the defendant who mostly benefits by living in the premises rent free.
The plaintiffs submit that the defendant has failed to carry out her obligations as a trustee in accordance with the provisions of the Trustee Act 1936. They complain that she has not complied with a number of requirements of s7 of the Trustee Act and in particular she has not at least once each year reviewed the performance of the trust investments (s7(3)).
It is further submitted that she has failed to exercise her powers as a trustee in the best interests of the beneficiaries of the trust. It is also claimed that she has not taken into account the various matters which she is obliged to take into account under s9 of the Act.
Her obligation, it is submitted, is to invest the trust funds so that income will be earned for the benefit of the beneficiaries. She has neglected to do that but instead has allowed the trust funds to be invested in a property which does not return income nor is appreciating in value.
In that respect, it is submitted, she is failing to put the trust funds to proper use.
Moreover it is put that she has had the benefit of the trust property to the exclusion of the beneficiaries. In that respect it is said that she is in breach of her duties as a trustee.
I do not think the defendant understands her role as trustee. I think that is clearly so from the evidence which she has adduced in opposition to this application.
She still seems to believe that she has an interest in the property which she may dispose of under her will. She has said that she will not deal with the property without giving the plaintiffs’ father notice. She has said that she will leave the property to her grandchildren. She does not understand that her interest in the property is only that of a trustee and that the property will not form part of her estate on her death.
She has deposed:
“2.I acknowledge that I hold the house at 38 Manningford Road, Elizabeth Downs in the said State in trust for PETA MARIE STORTI and LUKE ANTHONY STORTI and have always done so.
3.I am unable to afford to convey the house into my name as trustee for the two children at present but undertake that I shall do so when I am in a position so to do and undertake moreover that I hold the said property in trust for them and that I will not sell, encumber or otherwise deal with the said property without notifying TONY STORTI, the father, at least twentyone (21) days before such event.
4.I undertake that I shall ensure that the children receive the house property upon my death by making such provision in my will.”
I think that her misunderstanding of her role as a trustee and the circumstances in which she holds the trust property has led her to fail in her obligations as trustee. It is not appropriate, in my opinion, for the defendant to continue to occupy the premises rent free particularly so since the plaintiffs started school. In my opinion the proper course of action for the appellant after the decision in the Family Court would have been to sell the property and invest the moneys in some asset which would return income or capital to the beneficiaries.
In continuing to reside in the premises rent free she has put her interests in advance of the interests of the beneficiaries of the trust. It would appear, although I need not decide it, that she has not complied with her obligations under s7 of the Trustee Act. For the reasons I have already given I do not think she has complied with s8.
I think it would be appropriate in the circumstances if she was removed as trustee.
I have power to order her removal and for the substitution of a new trustee either under s36 of the Trustee Act or in this court’s inherent jurisdiction: Benzija v Adriatic Fisheries (1984) 37 SASR 545.
In Benzija v Adriatic Fisheries Pty Ltd (supra) Bollen J held that the Court has power pursuant to s36 of the Trustee Act to remove a trustee who does not wish to retire and to substitute another trustee. That decision has been doubted in Jacobs Law of Trusts 6th Edition Paragraph 1584. The learned authors of that work suggest that the jurisdiction to remove a trustee who is not willing to retire is exercised pursuant to the Court’s inherent jurisdiction.
There is no doubt that the Court has inherent jurisdiction to remove a trustee where such removal is required in the interests of the beneficiaries and for the protection of the trust property. The jurisdiction is exercised where the Court believes that unless the trustee is removed the continuance of the trust is threatened.
I do not need to determine whether there is a separate jurisdiction under s36 of the Trustee Act because I am prepared to act under the inherent jurisdiction of this Court.
I believe that whilst the defendant remains trustee of this trust there is a risk that the assets will be diminished and there is a probability that the assets will not be properly employed in the interests of the beneficiaries.
It is therefore in the interests of the beneficiaries that the defendant be removed. It will be necessary to appoint a trustee in substitution for the defendant. In the event that I was to reach a conclusion that the defendant should be removed neither the plaintiffs nor the defendant sought the appointment of the Public Trustee. The plaintiffs sought the appointment of their next friend their father, as a substitute trustee. The defendant was silent on that matter.
Having regard to the size of the trust fund which now remains and the costs of administering such a fund it would be appropriate in the circumstances of this case to order that the next friend be appointed as trustee for those trust funds and I so order.
The plaintiffs sought a vesting order under s37 I of the Trustee Act vesting the land at 38 Manningford Road, Elizabeth South in the substituted trustee. I think such an order would be appropriate.
I therefore order that:
1.The defendant be removed as trustee of the moneys received by her on trust for the plaintiffs being the proceeds of MLC Life Limited insurance policy number 1449-0518J held over the life of Georgina Murphy.
2.Tony Storti of 28 Wheeler Avenue, Pooraka in the State of South Australia be appointed the trustee of the trust in substitution for the defendant.
3.That the whole of the land described in Certificate Of Title Register Book Volume 5140 Folio 948 of which the defendant is the registered proprietor for an estate in fee simple and all other assets purchased with the moneys the subject of the trust do hereby vest in the said Tony Storti to be held by him upon trust for the plaintiffs.
I shall hear the parties as to any consequential orders.
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