Wright v Paxton (WA) Pty Ltd

[2021] WASC 124

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

CITATION:   WRIGHT -v- PAXTON (WA) PTY LTD [2021] WASC 124

CORAM:   MASTER SANDERSON

HEARD:   ON THE PAPERS

DELIVERED          :   29 APRIL 2021

PUBLISHED           :   29 APRIL 2021

FILE NO/S:   CIV 3013 of 2019

BETWEEN:   ADAM DAVID WRIGHT

Plaintiff

AND

PAXTON (WA) PTY LTD

Defendant

Catchwords:

Trusts - Effect of deed appointing new trustees - Turns on own facts

Legislation:

Nil

Result:

Validity of deeds determined

Category:    B

Representation:

Counsel:

Plaintiff	:	No appearance
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Chad Silver & Associates
Defendant	:	In Person

Case(s) referred to in decision(s):

Nil

MASTER SANDERSON:

1. These reasons deal with whether or not certain deeds validly enact purported appointments and resignations of the trustee.  There are four deeds which are relevant.  The first is a Deed of Trust for the Wright Family Property Trust which has been designated by the parties as AW1.  The second document is a Deed of Appointment of Trustee, The Wright Family Property Trust which is designated AW2.  It was entered into on 17 June 2016.  The third document also designated Deed of Appointment of Trustee, The Wright Family Property Trust is document AW3.  That document is undated.  At the head of the document there is provision made for the entry of the date but while the year of 2016 is noted, the date is blank.  The document was stamped 21 April 2017 as was AW2.  The final document is designated Deed of Recognition of Trustee, The Wright Family Property Trust and is dated 15 November 2018. It is designated AW4.

2. On 4 March 2021, the plaintiff lodged copies of the deeds and a statement of what is described as 'relevant non‑contentious facts'.  Those facts are as follows:

   Relevant Non Contentious Facts:

   Background

   1. On 1 January 1984, the Wright Family Property Trust (The Trust) was established by a deed executed by John Leslie Kurthy as settler as per the Trust Deed (Deed AW1)

   2. Gary Wright, Simon Wright and Adam Wright are brothers. There is a history of them acting jointly in business dealings.

   3. Simon Wright has children, namely Jason Wright and Teresa Fairchild.

   4. Gary Wright died in 2009. He did not have a will or deed that appointed anyone to his role as joint appointer after his death.

   The Formation of Deed AW2

   5. During 2016, both Mr Adam Wright and Simon Wright retained the services of Mr John Park.

   6. In 2016, John Park advised Adam Wright and Simon Wright to resign as trustees of the trust.

   7. As a result of the advice, Mr Adam Wright and Simon Wright instructed John Park to draft a deed appointing Jason Wright and Teresa Fairchild as trustee of the trust.

   8. John Park drafted the deed marked AW2 to affect the advice he gave to Adam Wright and Simon Wright.

   The Formation of Deed AW3

   9.In 2016, Mr Simon Wright, Jason Wright and Teresa Fairchild sought the advice of Mr John Park in relation to the appointment of a corporate trustee.

   10.Mr John Park drafted the deed AW3, a deed which was intended to appoint the corporate trustee Paxton (WA) Pty Ltd.

   The Formation of Deed AW4

   11.The deed AW2 and AW3 were drafted without the benefit of having a full copy of the original trust deed.

   12.It is asserted that the third last page of the trust deed was missing. (Page 37 of Bundle) The parties are unable to ascertain whether the final two pages of the deed (Pages 38, page 39) were provided to John Park when he drafted deeds AW2 and AW3.

   13.In November of 2018, Mr Simon Wright, Jason Wright and Teresa Fairchild presented to Mr John Park a full copy of the Trust Deed.

   14.In November 2018, Mr Park advised Mr Simon Wright, Jason Wright and Teresa Fairchild that a Deed of Ratification should be drafted.

   15.In 2018, Mr Park drafted the deed of ratification marked AW4.

3. This matter was initiated by originating summons filed 23 November 2019.  The summons sought a declaration that on the proper construction of the trust deed, the purported appointment of the defendant as trustee was and is invalid.  The parties have agreed this matter should be dealt with on the papers.  The plaintiff filed submissions through his solicitor on 4 March 2021.  The defendant, who is unrepresented, also filed submissions by Simon Jon Wright.  These submissions are succinct and in fairness to the defendant I will quote them in full:

   1.I am, together with the Plaintiff, an Appointer of the Wright Family Property Trust.  I was also an original Trustee together with my late brother Gary Wright and the Plaintiff who I had worked with for in excess of forty years.

   2.In or around June 2016 I, together with the Plaintiff, instructed our solicitor, Mr John Park, to prepare a variation to the Trust appointing Jason Wright and Teresa Fairchild as Trustees to the Trust.

   3.It was the intent of both myself and the Plaintiff as well as Jason Wright and Teresa Fairchild to change the Trustees of the Trust for the purposes of succession planning, it was understood by all parties involved that the new Trustees would continue to utilise the Trust assets as collateral for the purpose of raising funds for property developments as had operated since the Trusts formation in 1984.

   4.Deed AW2 dated the 17^th June 2016 was prepared by John Park and signed by both myself and the Plaintiff.

   5.I have, at all times, remained involved in a full-time capacity in the operations of the Trust.

4. The plaintiff's position, as set out in his submissions, is as follows:

   1.The Plaintiff asserts that:

   1.1.On the proper construction of the Trust Deed, Jason Spencer Wright and Teresa Claire Fairchild could not be appointed joint trustees of the Wright Family Property Trust by the then current trustee whilst a person was entitled to exercise the powers of the Appointor.

   1.2.On the proper construction of the Trust Deed, Mr Jason Wright, and Teresa Fairchild as trustees, did not have the power to appoint Paxton (WA) Pty Ltd as trustee of the Wright Family Property Trust whilst a person was entitled to exercise the powers of the Appointor.

   1.3.On the proper construction of the Trust Deed, Mr Simon Wright as appointor could not appoint Paxton (WA) Pty Ltd as the trustee of the Wright Family Property Trust by exercising his power as appointor independently of the other joint appointor, namely Adam David Wright.

   1.4.As a result of the above, Deeds AW2, AW3, AW4 should be declared invalid.

5. Clearly it is the trust deed (AW1) which is crucial to determining the issues in question.  Clause 1(g) of that document defines a trustee as 'the trustee or trustees for the time being of this Trust whether originally appointed or substituted'.  Clause 1(i) defines the appointor as:

   successively the person or persons successively named and described or defined as such in the Schedule or determined according to the provisions of clause 13. 

6. Clause 13(1) gives the appointor the power to remove any trustee, appoint an additional trustee or trustees, or appoint a new trustee or trustees in place of any trustee who resigns as trustee or ceases to be a trustee for any reason.  Clause 13(3) states that 'if at any time there is no one entitled to exercise the powers conferred in subclause 1 of this clause, the statutory and other rights of removing and appointing the Trustee may be exercised by the Trustee or by the legal personal representative or the liquidator of the last Trustee'.

7. According to the schedule, the appointor is specified to be Edward Litchfield Wright during his lifetime then the said Gary Edward Wright (Gary), Simon John Wright (Simon) and the plaintiff during their joint lives and thereafter such person as each of them may appointment by will or deed.

8. It is the plaintiff's position that clause indicates that the three brothers, Gary, Simon and the plaintiff, were to make decisions together whilst they were alive, however each could appoint another person to replace them by deed or will. 

9. Deed AW2 seeks to appoint Jason Wright and Teresa Fairchild as trustees of the trust.  Recital D states that:

   By this Deed, the Trustee removes the current Trustee of the Trust and appoints in the Trustee's place the New Trustee and recognises that such action will cause the Trust Fund to vest in the New Trustee. 

10. Clause 1.3 of the deed seeks to appoint the new trustees relying upon the power found in cl 13(3) of AW1.  The deed is signed by Simon, the plaintiff and Jason Spencer Wright, all of whom are said to be acting in their capacity as trustees.

11. There is no doubt as the plaintiff submits, it was not open to Simon and Adam to appoint new trustees pursuant to cl 13(3) of the Trust Deed (AW1).  It was, however, open to Simon and Adam to appoint a new trustee in their capacity as appointors.  In my view, that is the effect of AW2.  True it is the deed is mistaken in its reference to the power and its origins in the deed.  It is also true that there is a misdescription of Simon and Adam – they are purporting to act in their capacities as trustees rather than their capacity as appointors.  But even allowing for these defects, it is clear what was intended by AW2.  All of the parties intended Jason Wright and Teresa Fairchild would be appointed the new trustees of the trust.  It would be excessively technical and legalistic not to recognise the true intention of the parties.  Accordingly, I am satisfied AW2 represents a proper exercise of the power of appointment.

12. The position with AW3 is different.  By that deed Jason Wright and Teresa Fairchild purport to appoint Paxton (WA) Pty Ltd as a new trustee of the trust.  Again, they purport to do so pursuant to cl 13(1) of the Trust Deed (AW1).  But that power of appointment still rests with the appointors who were still Simon and Adam.  Accordingly, AW3 is of no force and effect and did not validly appoint Paxton (WA) Pty Ltd as trustee of the trust. 

13. A similar difficulty arises with AW4.  That deed appears to recognise Simon as the sole appointor of the trust.  In fact that is not correct.  Simon and Adam are the appointors.  To appoint a new trustee they have to act together.  They did not do so.  Accordingly, that document is of no force and effect.  On the clear wording of the definition of 'appointor' found in the schedule to the Trust Deed (AW1), all named individuals must act together.  It was not open to Simon to act unilaterally. 

14. The position then is as follows:

    (1)AW2 is a valid appointment of Jason Wright and Teresa Fairchild as trustees of the trust; and

    (2)neither of the deeds AW3 and AW4 are effective as to the appointment of new trustees.

15. On publication of these reasons the parties should bring in a minute of agreed orders.  If orders cannot be agreed then the parties should file competing minutes.  Within seven days of the publication of these reasons the parties should file short submissions as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CB

Associate to Master Sanderson

29 APRIL 2021