Waites v Brown
[2021] VSC 509
•19 August 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2021 00074
IN THE MATTER of an application pursuant to s 36 of the Settled Land Act 1958 (Vic)
BETWEEN:
| BRADLEY CAMPBELL WAITES and TERRI-ANN LE PAGE | Plaintiffs |
| v | |
| IRENE ALICE BROWN (as the executor and trustee of the estate of Marianne Waites, deceased and the executor and trustee by representation of the estate of Hammie George Campbell Waites, deceased) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 19 August 2021 |
CASE MAY BE CITED AS: | Waites & Anor v Brown |
MEDIUM NEUTRAL CITATION: | [2021] VSC 509 |
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WILLS AND TRUSTS – Where remaindermen of settled land seek vesting orders on death of sole surviving trustee – Where executor of sole surviving trustee of settled land is executor by representation – Where executor by representation is trustee of settled land for purposes of transferring properties to remaindermen – Settled Land Act 1958 (Vic) ss 30, 36; Administration and Probate Act 1958 (Vic) s 17; Trustee Act 1958 (Vic) ss 51, 52, 70.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr WF Gillies | RB Legal Pty Ltd |
| For the Defendant | Mr D G L Misso Neesham White Gentle |
HER HONOUR:
Introduction
Hammie George Campbell Waites (‘the deceased’) died on 16 July 1978. Probate of the deceased’s will dated 22 May 1978 was granted to Marianne Waites (‘Ms Waites’) and Geoffrey Neill Doolan on 29 August 1978. The deceased devised a life interest in two properties to Ms Waites and, on her death, the properties were to pass to the plaintiffs who are the remaindermen in respect of the two properties.
Geoffrey Neill Doolan died on 21 August 2004. Probate of his will was granted to his son, David Doolan, on 9 November 2004. David Doolan then purported to be a trustee of the estate of the deceased, pursuant to s 17 of the Administration and Probate Act 1958 (Vic).
On 27 May 2015, a deed of retirement and appointment was executed whereby David Doolan purported to retire as trustee and Jonathan Bloom (‘Mr Bloom’) purported to be appointed trustee in his place. Mr Bloom is a solicitor at the firm RB Legal Pty Ltd.
In an earlier proceeding (‘the earlier proceeding’) Mr Bloom as plaintiff sought the removal of Ms Waites as trustee of the estate of the deceased and the appointment of Charles Rechnitzer (‘Mr Rechnitzer’) in substitution for her. Mr Rechnitzer is also a solicitor in the firm RB Legal Pty Ltd.[1]
[1]Bloom v Waites [2020] VSC 367, [6] (McMillan J).
In the course of the earlier proceeding, Mr Bloom sought to amend the proceeding and, to that end, forwarded a draft summons and a draft affidavit by him to the Court. The draft summons seeks that the remaindermen be substituted as the plaintiffs in the proceeding and that Mr Bloom and Mr Rechnitzer be appointed as trustees of the estate of the deceased, so as to comply with s 30(3) of the Settled Land Act 1958 (Vic) (‘the SLA’).
The Court informed Mr Bloom that as Ms Waites was a trustee of the settlement, pursuant to s 30(3) of the SLA, it was obligatory for her to make the application to appoint an additional trustee to act with her for the purposes of the SLA and the provisions of the Trustee Act 1958 (Vic) that relate to the appointment of new trustees and for the vesting of trust property. It was only where there were no trustees of the settlement that an interested person, such as the remaindermen, would make such an application and it would be made pursuant to s 36 of the SLA, not s 30(3).
Ruling in the earlier proceeding was delivered on 22 June 2020.
The Court determined that David Doolan did not become a trustee of the estate of the deceased and the deed of retirement and appointment did not have its intended effect. As a consequence, Mr Bloom was not a trustee of the estate of the deceased. This meant that since the death of Geoffrey Neill Doolan, Ms Waites was the sole trustee of the two properties. In these circumstances, Mr Rechnitzer could not be appointed as a trustee of the estate. The Court concluded that although Ms Waites may be lacking some capacity, a duly appointed litigation guardian on her behalf could seek orders pursuant to s 30(3) of the SLA for the appointment of two trustees of the estate of the deceased and Ms Waites could be discharged as a trustee of that estate.
On 2 July 2020, Ms Waites died. Her will dated 31 October 2017 appointed her friends, Irene Alice Brown (‘Mrs Brown’) and John Henry Brown, as the executors of her estate.
Due to the Covid-19 pandemic restrictions, Mr David Misso, solicitor, encountered some difficulties in obtaining the necessary documents for an application for the grant of probate in the estate of Ms Waites. Correspondence was exchanged between Mr Bloom and Mr Misso on behalf of the estate of Ms Waites. Of relevance, on 13 November 2020 Mr Misso informed Mr Bloom that Mrs Brown had applied for probate of the will of Ms Waites. In anticipation of the grant being made and to enable Mrs Brown to finalise the estate of the deceased as the executor by representation, he asked Mr Bloom to forward the contact details of the remaindermen and the inventory of assets and liabilities for the estate of the deceased. This was on the understanding that when Mrs Brown obtained the grant of probate of the estate of Ms Waites, she would be responsible for the finalisation of the estate of the deceased.
On 17 December 2020 Mr Misso wrote again to Mr Bloom seeking this information.
On 18 December 2020, Mr Bloom informed Mr Misso that he acted for the remaindermen and they opposed Mrs Brown’s involvement in the estate of the deceased. He stated that he was instructed to lodge an application by surviving proprietor and thereafter transfer both titles of the properties to the remaindermen. Mr Bloom required a reply from Mr Misso by close of business on 22 December 2020, failing which his clients would commence their application without further notice.
Plaintiffs’ application
On 22 December 2020 Mr Bloom forwarded a hearing date information form together with a proposed originating motion to the Court for its consideration. Although the information form described the parties as Mr Bloom and Mr Rechnitzer, the proposed originating motion described the remaindermen as the plaintiffs and was an ex parte application.
On 15 January 2021 the plaintiffs filed the originating motion ex parte seeking orders, pursuant to s 36 of the SLA, that Mr Rechnitzer and Mr Bloom be appointed as trustees of the settlement estate of the deceased, alternatively, an order that the properties the subject of the settlement be vested pursuant to ss 51 and 52 of the Trustee Act 1958 (Vic).
On 11 February 2021, Mr Misso advised the Court that he had been sent a copy of the Court’s email requesting Mr Bloom to forward a copy of Ms Waites’ will. Mr Misso attached a copy of the will to his email and advised that his firm was in the process of applying for a grant of Ms Waites’ will. Mr Misso had not been served with the plaintiffs’ application.
At the first directions on 12 February 2021 the Court informed the plaintiffs that the executors of the estate of Ms Waites should be notified of the proceeding.
On 12 February 2021 probate of the will of Ms Waites was granted to Mrs Brown, with leave reserved to John Henry Brown. Mr Misso forwarded a copy of the grant to the Court and the up to date title searches of the two properties which still recorded the names of Ms Waites and Mr Bloom as the joint proprietors.
On 12 March 2021, orders were made granting leave to Mrs Brown to file a summons seeking to be joined as a defendant to the proceeding.
On 5 March 2021 Mrs Brown filed a summons seeking to be added as a defendant to the proceeding. Prior to the return date of the summons, the Court informed the practitioners that as Ms Brown had now obtained a grant of probate of the will of Ms Waites, the two properties could now be transferred in accordance with the terms of the will of the deceased and the administration of the estate could be finalised. The remaining issues appeared to be the costs of both proceedings. The Court asked to be updated as to whether the plaintiffs intended seeking any orders in the proceeding or whether there was any objection to the Court dismissing the proceeding, save as to costs. In regard to costs, the Court informed the parties that short submissions should be made addressing the costs of this proceeding and the earlier proceeding.
The parties were unable to resolve the issues and the proceeding was listed for hearing on 26 March 2021.
Plaintiffs’ submissions
The plaintiffs submit that under s 36 of the SLA the Court may, if it thinks fit, on the application of any person having an estate or interest under the settlement, remainder or otherwise, appoint fit persons to be trustees of the settlement for the purposes of the SLA. They also submit that as the last surviving trustee died on 2 July 2020, Mr Rechnitzer and Mr Bloom should be appointed trustees pursuant to s 36 of the SLA for the purpose of transferring the two properties from the estate of the deceased to the plaintiffs. They contend that Mr Rechnitzer and Mr Bloom are fit persons to be appointed trustees on the basis that they are principals of RB Legal Pty Ltd and officers of the Court.
In the alternative, the plaintiffs submit their application ‘was made simply to enable the transfer of the property from Mr Bloom to the remaindermen’ and that it is not necessary to transfer the properties back to the estate. Instead, the properties need only be transferred directly to the remaindermen. They rely on Re Purkiss[2] where they submit that the Court’s view was that where all conveyancing methods were exhausted and s 36 of the SLA could not be utilised, then ss 51 and 52 of the Trustee Act 1958 (Vic) were called in aid. They submit that in Re Purkiss the Court also took the view there was no need to join the Registrar of Titles to the proceeding as it would give ‘a spurious appearance of regularity to the proceedings’ and, in short, there is no necessity to join the Registrar of Titles in the proceeding.[3]
[2][1999] 3 VR 223 (‘Re Purkiss’).
[3]Ibid [22] (Warren J), citing Chang v Registrar of Titles (1976) 137 CLR 117, 188 (Jacobs J).
Consideration
Section 36 of the SLA provides:
If at any time there are no trustees of a settlement within the definition of this Act, or where in any other case it is expedient, for the purposes of this Act, that new trustees of a settlement be appointed, the Court may, if it thinks fit, on the application of the tenant for life, statutory owner or of any other person having, under the settlement, an estate or interest in the settled land, in possession, remainder or otherwise, or, in the case of an infant, of his testamentary or other guardian or next friend, appoint fit persons to be trustees of the settlement for the purposes of this Act.
Section 36 of the SLA is applicable where if at any time there are no trustees of a settlement or where it is expedient that new trustees of a settlement be appointed. As determined in the earlier proceeding, Ms Waites was the last surviving trustee of the two properties and the only life tenant under the will of the deceased. Pursuant to s 30(3) of the SLA, it was obligatory for her to make an application to appoint an additional trustee to act with her for the purposes of the SLA and the provisions of the Trustee Act 1958 (Vic) that relate to the appointment of new trustees and for the vesting of trust property.[4] Had she still been alive, she was the appropriate person to seek the appointment of a second trustee of the settled land. Upon her death, the two properties ceased to be the subject of the settlement created by the will of the deceased. As Mrs Brown is the executor of the estate of Ms Waites, pursuant to s 17 of the Administration and Probate Act 1958 (Vic), Mrs Brown is the executor by representation of the estate of the deceased and is the person who has the power to transfer the remainder interests in the two properties to the plaintiffs.
[4]Trustee Act 1958 (Vic) s 70.
In respect of the plaintiffs’ alternative submission, the facts in Re Purkiss are quite different to this proceeding. In Re Purkiss there was no person currently available to effect the required transfer and the plaintiff sought vesting orders pursuant to ss 51 and 52 of the Trustee Act 1958 (Vic). In the circumstances of the estate of the deceased, Mrs Brown as the executor by representation of that estate is the person who is able to effect the required transfer of the two properties to the remaindermen. As observed by her Honour in Re Purkiss, ‘[t]he courts have demonstrated a reluctance to make a vesting order where the procedure is used “to facilitate or be a substitute for ordinary conveyancing practice”’.[5]
[5]Re Purkiss (n 2) [18] (Warren J), quoting Dotter v Evans [1969] VR 41, 45 (Gillard J).
Mr Bloom’s stance that the application was made to enable the transfer of the two properties from himself to the remaindermen and that it was not necessary to transfer the properties back to the estate and the properties need only be transferred directly to the remaindermen is improper and cannot be considered as ordinary conveyancing practice. As Ms Waites was the only trustee of the two properties during her life time, she should have been registered as the legal personal representative on the titles of the two properties. By reason of the decision in the earlier proceeding, Mr Bloom should not be registered on the titles of the two properties at all.
Mr Misso deposed to his concerns about Mr Bloom’s proposal on a number of grounds. First, notwithstanding ruling in the earlier proceeding, Mr Bloom remained on the titles of the two properties and he continued holding himself out as the trustee of the estate of the deceased. Next, Mr Bloom was registered on the titles of the two properties in his own right, rather than as a legal personal representative. Quite properly, Mr Misso was concerned as via the electronic settlement platform PEXA, a survivorship application could be lodged by a person recorded as joint proprietor and, if there is no mortgage on a property, it is unnecessary to lodge evidence of the death of the other proprietor. PEXA only requires the lodging party to have the death certificate in their possession. Once the application is lodged, Mr Bloom would be registered as the sole the proprietor in his own right on the titles to the two properties. It is no surprise that Mr Misso placed alerts and caveats on the titles of the two properties.
Mrs Brown is the only person entitled to be registered on the titles to the two properties. This is because she is the executor of the estate of Ms Waites and, as such, she is also the executor by representation of the estate of the deceased. Mr Bloom must co-operate with Mr Misso so that the documents can be filed regularising the titles of the two properties. Vesting orders are unnecessary in the circumstances.
Costs and orders
In submissions for costs, Mr Bloom submits that there can be no utility in re-transferring the properties to Mrs Brown because he is a trustee de son tort, and even though he was not validly appointed as trustee, as a trustee de son tort he still has all of the respective obligations of a trustee.
A trustee de son tort may be described as a person who, not being a trustee, and not having authority from a trustee, takes it upon himself or herself, to intermeddle with trust matters or to do acts characteristic of the office of trustee thereby making himself a trustee of his own wrong, that is, a form of constructive trustee.[6] As a constructive trustee, the person erroneously asserting themselves as trustee may be liable to account to the beneficiaries for breaches of trust or breaches of fiduciary obligations.[7]
[6]Mara v Browne [1896] 1 Ch 199, 209 (Smith LJ); David J Hayton, Underhill and Hayton: Law relating to Trusts and Trustees (London Butterworths, 14th ed, 1987) 351–2; John D Heydon and Mark J Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis Butterworths, 8th ed, 2016) [13-03].
[7]Malcolm Cope, Constructive Trusts (The Law Book Company, 1992) 370; see also Malcolm Cope, Equitable Obligations Duties, Defences and Remedies (The Law Book Company, 2007) [6.110]–[6.140].
In support of this submission, the plaintiffs refer to Re McGowan & Valentini Trusts.[8] This case involved, inter alia, the validity of two trusts in circumstances where the named trustee, a corporation, was not in existence at the time of the execution of the original trust deeds.[9] It did not involve a constructive trustee, but rather two inter-vivos trusts, where it was found that two individual persons were the trustees of the trusts in the intervening period between the inception of the trusts and the incorporation of the intended corporate trustee.[10] The principle applied in that case was applied due to the intentions of the settlor, the individual persons undertaking the role of trustee being the soon-to-be director and company secretary of the relevant corporate trustee and the subsequent actions of the corporate trustee, once incorporated.[11] The circumstances in this proceeding do not enliven the principle applied in Re McGowan & Valentini Trusts.
[8][2021] VSC 154 (‘Re McGowan & Valentini Trusts’).
[9]Ibid [28] (Macaulay J).
[10]Ibid [47] (Macaulay J).
[11]Ibid.
It may be that Mr Bloom was a trustee de son tort from the time of his purported appointment on 27 May 2015 until the date of the earlier judgement for the purposes of a claim for breach of trust against him. However, in the earlier ruling it was determined that Ms Waites was the sole trustee of the estate until her death on 2 July 2020.[12]
[12]Bloom v Waites (n 1) [17] (McMillan J).
Mr Bloom also sought to rely on correspondence between his firm and Mr Misso alleging an agreement in respect of costs of the earlier proceeding and this proceeding. Mr Misso objects to any reliance on the correspondence on the basis that the correspondence is without prejudice, alternatively, on the basis that no agreement was ever reached.
Mr Bloom has now initiated two proceedings concerning the estate of the deceased: the earlier proceeding where he was the plaintiff and this proceeding where he acts on behalf of the remaindermen as plaintiffs. After ruling in the earlier proceeding, Mr Bloom failed to rectify the titles to the two properties. Notwithstanding the ruling in the earlier proceeding, Mr Bloom issued this proceeding. He failed to notify Mr Misso or include the estate of Ms Waites as a defendant and failed to produce relevant documents. Both proceedings were misconceived. Costs should follow the event and be assessed on an indemnity basis. The issue of who should pay those costs is important given Mr Bloom’s role in both proceedings and the only assets in the estate are the two properties. Short written submissions may be filed as to whether Mr Bloom personally should pay the costs of both proceedings on an indemnity basis.
The submissions of Mr Misso set out the orders that he seeks in the proceeding. His proposed orders as to costs have been addressed above. His first order naming Mrs Brown as executor and trustee of the estate of the deceased is unnecessary by reason of s 17 of the Administration and Probate Act 1958 (Vic) and s 70 of the Trustee Act 1958 (Vic).
Mr Misso also seeks orders that Mr Bloom, at his own cost, remove his name from the titles of the two properties and complete transmission applications so that Mrs Brown is registered as the legal personal representative and that Mr Bloom bear any tax and other consequences arising from Mr Bloom removing his name from the titles of the two properties.
Mr Misso seeks that Mr Bloom provide him with the files for the estate of the deceased, including contact details for the plaintiffs and full financial accounting for the estate of the deceased from the date of the grant of probate in that estate to the date of transfer.
In the peculiar circumstances of this case, the Court will make an order that Mr Bloom, at his own cost, remove his name from the titles of the two properties and complete the necessary transmission applications. The Court will also order that Mr Bloom provide Mr Misso with the files and accounting of the estate that is requested by Mr Misso.
Accordingly, at this stage, the Court orders that:
(a) Mr Bloom remove his name from the titles of the two properties and complete the necessary transmission applications at his own cost;
(b) Mr Bloom provide Mr Misso with files for the estate of the deceased, including contact details for the plaintiffs and full financial accounting for the estate of the deceased from the date of the grant of probate in that estate to the date of transfer;
(c) on or before 9 September 2021, Mr Bloom file and serve written submissions as to whether he should pay the costs of both proceedings on an indemnity basis;
(d) on or before 30 September 2021, Mr Misso file and serve written submissions in response;
(e) liberty to apply.
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