Willis v Willis

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Willis v Willis [2016] NSWSC 1546
Hearing dates: 31 October 2016
Date of orders: 31 October 2016
Decision date: 01 November 2016
Jurisdiction: Equity
Before: Stevenson J
Decision:
Trustee removed; new trustee appointed

Catchwords: TRUSTS AND TRUSTEES – trust established for benefit of defendant trustee’s daughters with proceeds of medical negligence proceedings arising from injuries suffered by one daughter in infancy – evidence that trustee has misappropriated trust property and otherwise not acted in the interests of the beneficiaries – whether trustee should be removed – whether new corporate trustee should be appointed
Legislation Cited: Trustee Act 1925 (NSW)
Cases Cited: Miller v Cameron (1936) 54 CLR 572
Texts Cited: P Young, C Croft and M Smith, On Equity, (2009, Lawbook Company)
J D Heydon and M J Leeming, Jacob’s Law of Trusts in Australia, (8th ed 2016, LexisNexis Butterworths)
Category: Principal judgment
Parties: Grace Elizabeth Willis (First Plaintiff)
Jeannette Cotterill (Second Plaintiff)
Kylie Sharee Willis (First Defendant)
Bendigo and Adelaide Bank Limited (Second Defendant)
Nicholas Paul Christian Driver as interim trustee for the Grace Elizabeth Willis Trust and Skye Alexandria Willis Trust (Third Defendant)
Matthew Jason Hogg as interim trustee for the Grace Elizabeth Willis Trust and Skye Alexandria Willis Trust (Fourth Defendant)
Grace & Skye Willis Company Pty Ltd (Fifth Defendant)
Representation:
Counsel:
W Terracini SC (First and Second Plaintiffs)
M Hogg (Third, Fourth and Fifth Defendants)
Solicitors:
Wright Lawyers & Associates (Plaintiffs)

File Number(s): SC 2015/356835

Judgment

On 31 October 2016, I ordered the first defendant, Kylie Sharee Willis, be removed as trustee of the Grace Elizabeth Willis Trust and Skye Alexandria Willis Trust. I ordered that a new trustee be appointed and made orders to secure the assets of the trusts.
These are my reasons for making those orders.
Kylie Willis is the mother of Grace and Skye Willis.
The Grace Elizabeth Willis Trust was created by deed on 20 October 2006. It was originally endowed with some $6.4 million, being the proceeds of a medical negligence claim arising out of injuries sustained by Grace in 1997 when she was six months old.
The Skye Alexandria Willis Trust was established on the same day and originally endowed with $130,000 arising from the same medical negligence claim.
That claim arose from Grace’s diagnosis with meningococcal disease as a result of which Grace suffered, as an infant, amputation of her left leg just below the knee, her right leg through the knee, her left arm just below the elbow and her right arm just below the elbow.
Grace and Skye’s father died in 2006.
Grace and Skye were removed from Kylie Willis’s care in October 2014 by the South Australian Child Protection Services. Since then Grace and Skye have lived with Kylie’s parents, Jeannette and Doug Cotterill in Wagga Wagga.
Grace is now 19 and was, when she swore an affidavit in these proceedings in December 2015 studying small animal handling in a Distance Education Program through TAFE NSW. In her affidavit she said she expected to finish that course in February this year. I am informed that she is still studying.
Skye is now 15 and is at school in Wagga.
The removal of Grace and Skye from Kylie’s care was a result of a significant deterioration in Kylie’s mental health and other distressing circumstances.
These proceedings were commenced on 4 December 2015 and, on 11 December 2015, Bergin CJ in Eq appointed Matthew Hogg, a barrister, and Nicholas Driver, an accountant, as interim trustees of both Trusts.
Mr Driver has since investigated the financial position of the Trusts.
His conclusion is that the current assets of the Grace Elizabeth Willis Trust are in the order of $4.5 million comprising real estate at Oura (a suburb of Wagga) and in Aldgate in South Australia together with funds on deposit. The assets of the Skye Alexandria Willis Trust comprise funds on deposit in the order of $105,000.
Mr Driver’s investigations show that during the life of the Grace Elizabeth Willis Trust, some $7.9 million of capital income has been paid into the Trust and that some $4.8 million has been paid out of the Trust.
Of those withdrawals, some $1.5 million had been paid in cash to Kylie. Mr Driver’s assessment is that, of that sum, only 25 per cent has been applied for the benefit of Grace or Skye. It is not known how Kylie has used the balance of the funds.
Kylie has been served with the summons, statement of claim and affidavits in these proceedings. Her present whereabouts, however, are unknown.
The Court has power to remove Kylie as trustee under s 70 of the Trustee Act 1925 (NSW) or pursuant to its inherent power.
The Court may remove a trustee where such action is necessary to protect the trust property and the interest of the beneficiaries: Miller v Cameron (1936) 54 CLR 572 and see generally P Young, C Croft and M Smith, On Equity, (2009, Lawbook Company) at [6.1260] and J D Heydon and M J Leeming, Jacob’s Law of Trusts in Australia, (8th ed 2016, LexisNexis Butterworths) at [15-46].
As was submitted on behalf of Grace and Skye by Mr Terracini SC, on any reading of the evidence, Kylie has failed to act in a manner which adhered to or carried out the terms of the two trusts. A powerful case has, in my opinion, been made out for her removal as trustee.
What is proposed is that a corporate trustee, Grace & Skye Willis Company Pty Ltd (of which company Mr Hogg and Mr Driver are appointed as directors) will become trustee.
That is clearly the appropriate course.
In those circumstances I had no hesitation in making orders removing Kylie as trustee of the two Trusts, appointing Grace & Skye Willis Company Pty Ltd as trustee and declaring that the Oura and Aldgate properties and the relevant Bendigo Bank account to be assets of the Grace Elizabeth Willis Trust.
I have also granted Mr Hogg, Mr Driver and Grace & Skye Willis Company Pty Ltd liberty to apply on short notice for such further orders as are needed to ensure that the assets of each Trust are vested in the new trustee and otherwise to protect Grace’s and Skye’s interests as beneficiaries of the Trusts.

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Amendments

02 November 2016 - Grammatical error in [24] corrected

In the case of Willis v Willis, the dispute arose from a trust established for the benefit of the defendant trustee's daughters. The trust was funded by the proceeds from medical negligence proceedings, which were the result of injuries sustained by one of the daughters during infancy. The plaintiffs alleged that the defendant had misappropriated trust property and had otherwise failed to act in the best interests of the beneficiaries. The primary concern was whether the trustee should be removed from their position and whether a new corporate trustee should be appointed to manage the trust.

The legal issues that the court was required to address included the proper interpretation of the trust deed and the fiduciary duties owed by the trustee to the beneficiaries. The plaintiffs argued that the defendant had breached their fiduciary duties by misappropriating trust funds and acting contrary to the interests of the beneficiaries. The court had to determine whether the evidence supported the claim that the defendant had indeed acted in a manner that warranted their removal as trustee.

The court found that the evidence demonstrated that the defendant had indeed misappropriated trust property and acted contrary to the interests of the beneficiaries. The court concluded that the defendant's actions were a clear breach of their fiduciary duties and that their continued role as trustee would not serve the best interests of the beneficiaries. Consequently, the court ordered the removal of the defendant as trustee and directed that a new corporate trustee be appointed to manage the trust. The court emphasised the importance of maintaining the integrity of the trust and ensuring that the beneficiaries' interests were protected.

The final orders of the court were that the defendant trustee be removed from their position and that a new corporate trustee be appointed to manage the trust. The court directed that the new trustee be given clear instructions regarding their duties and responsibilities in managing the trust for the benefit of the beneficiaries. The court also ordered that the defendant provide full disclosure of all trust assets and any actions taken by them during their tenure as trustee. This decision underscores the importance of trustees acting in the best interests of the beneficiaries and the court's willingness to intervene where necessary to ensure the proper administration of trusts.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

Medium Neutral Citation:	Willis v Willis [2016] NSWSC 1546
Hearing dates:	31 October 2016
Date of orders:	31 October 2016
Decision date:	01 November 2016
Jurisdiction:	Equity
Before:	Stevenson J
Decision:	Trustee removed; new trustee appointed
Catchwords:	TRUSTS AND TRUSTEES – trust established for benefit of defendant trustee’s daughters with proceeds of medical negligence proceedings arising from injuries suffered by one daughter in infancy – evidence that trustee has misappropriated trust property and otherwise not acted in the interests of the beneficiaries – whether trustee should be removed – whether new corporate trustee should be appointed
Legislation Cited:	Trustee Act 1925 (NSW)
Cases Cited:	Miller v Cameron (1936) 54 CLR 572
Texts Cited:	P Young, C Croft and M Smith, On Equity, (2009, Lawbook Company) J D Heydon and M J Leeming, Jacob’s Law of Trusts in Australia, (8th ed 2016, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	Grace Elizabeth Willis (First Plaintiff) Jeannette Cotterill (Second Plaintiff) Kylie Sharee Willis (First Defendant) Bendigo and Adelaide Bank Limited (Second Defendant) Nicholas Paul Christian Driver as interim trustee for the Grace Elizabeth Willis Trust and Skye Alexandria Willis Trust (Third Defendant) Matthew Jason Hogg as interim trustee for the Grace Elizabeth Willis Trust and Skye Alexandria Willis Trust (Fourth Defendant) Grace & Skye Willis Company Pty Ltd (Fifth Defendant)
Representation:	Counsel: W Terracini SC (First and Second Plaintiffs) M Hogg (Third, Fourth and Fifth Defendants) Solicitors: Wright Lawyers & Associates (Plaintiffs)
File Number(s):	SC 2015/356835