GROVE -v- KENWORTHY-GROEN [2020] WASC 363 (9 October 2020)

(b) the statement of claim and the relief sought is based upon a misconceived premise that the assets of a deceased's estate include the assets that a deceased holds solely in his or her capacity as trustee (where, as here, the trustee is not a beneficiary of the trust); and

(c) further and in the alternative, the deceased was not the trustee of the B E Lynn Trust when she died.

1. Although the appeal is against an order for general discovery, the first and second defendants' objection to the order is substantially an objection to discovery of documents pertaining to the B E Lynn Trust.
2. Pursuant to O 60A r 4(1) of the Rules of the Supreme Court 1971 (WA), a party who is dissatisfied with an order or decision of a registrar may appeal from it. Order 60A r 6 provides that an appeal is to be by way of a new hearing of the matter. It is a hearing de novo in the sense that the powers of the court on appeal are exercisable not only where there has been some legal, factual or discretionary error. Thus, the court may exercise its powers regardless of any error.[1]

The pleaded case of the plaintiff and the first and second defendants

1. The plaintiff's claim is for an order that letters of administration with the will annexed in the estate of his mother, Margaret Grove, be granted to the plaintiff. Margaret died on 16 June 1977 (43 years ago). The plaintiff pleads in the statement of claim annexed to the writ of summons dated and filed on 14 July 2020 that:

(a) Margaret's last will is dated 5 February 1975 and she appointed her husband, William Grove, as executor and left all of her real and personal property to her executor, in trust, relevantly, for the plaintiff, the first and second defendants, the third defendant and their sister, Sonja Grove;

(b) no application for probate of Margaret's estate was made by William during his lifetime or has been made by anyone else;

(c) the assets of Margaret's estate included the assets of the B E Lynn Trust, the particulars of which are that Margaret was the trustee of the B E Lynn Trust and upon her death, the assets she held as trustee formed part of her estate (subject to the terms of the B E Lynn Trust);[2]

(d) after Margaret died, William purported to act as the trustee of the B E Lynn Trust when William had not been validly appointed as trustee of the B E Lynn Trust;

(f) at the time of William's death, the administration of Margaret's estate had not been completed because William had not obtained probate of Margaret's estate, the B E Lynn Trust was indebted to Sonja's estate, and the B E Lynn Trust had assets, which assets included choses in action against William for purporting to act as trustee of the B E Lynn Trust.

1. It is common ground between the parties that Margaret was not a beneficiary of the B E Lynn Trust.
2. The first defendant is Simon Dirk Kenworthy‑Groen, in his personal capacity, and as the second defendant in his capacity as executor of the estate of William. He pleads in his defence filed on 6 August 2020 that:

(a) Margaret did not have any assets when she died, such that it was not necessary for William to obtain probate;

(b) the assets of the B E Lynn Trust do not form part of Margaret's estate; and

(c) William was validly appointed as trustee of the B E Lynn Trust and the assets of the B E Lynn Trust were distributed on 29 August 2015 by William.

1. It could be inferred from the matters pleaded that the only assets of Margaret's estate arise out of the pleaded legal title to assets of the B E Lynn Trust, which is said to devolve, albeit temporarily, to Margaret's personal representative. However, subsequent to the filing of the statement of claim, the third defendant discovered documents relating to a partnership interest, which may raise a claim that on her death, Margaret's estate was owed approximately $45,000, pursuant to an agreement dated 19 December 1971 to assign her interest in the partnership to William.[3] It is conceded by the plaintiff that if the plaintiff seeks to put a case on this basis, the material facts relating to this matter should be pleaded.

The material issues relevant to the discovery of documents of the B E Lynn Trust

1. In respect of the pleading by the first and second defendants that William was validly appointed as a trustee of the B E Lynn Trust, it is specifically pleaded that prior to the death of Margaret, in about 1976, Margaret appointed William trustee of the B E Lynn Trust, pursuant to a document in writing which cannot at the present time be located.[4]
2. Consequently, as between the plaintiff and the first and second defendants, there are two substantial pleaded issues in dispute which are relevant in this appeal.
3. The first is whether the assets of the B E Lynn Trust formed part of the assets of the estate of Margaret when she died in 1977.
4. The first and second defendants argue that the point pleaded by the plaintiff in respect of this issue is a matter of law and not fact, and that in law the assets of a trustee do not pass to their personal representative (executor or administrator) on the death of the trustee.
5. The second issue that is raised does not rely on the determination of the first point, but whether at the time of her death, Margaret was, or was not, the sole trustee of the B E Lynn Trust.
6. At the time of filing the first and second defendants' defence, the first and second defendants were unable to locate a copy of any documents that appointed William as a trustee prior to the death of Margaret. Nor does it appear that such a document had been located prior to Registrar Whitby hearing the application for general discovery.
7. However, subsequent to Registrar Whitby making an order for general discovery on 10 August 2020, the third defendant filed his defence on 17 August 2020 in which he pleads that by Deed of Appointment, dated 14 November 1971, Margaret appointed William as trustee of the B E Lynn Trust in her place and declared that all of her estate and interest in the B E Lynn Trust vest in William upon the trusts and subject to the powers and provisions set out in the B E Lynn Trust Deed.[5] It was also pleaded by the third defendant that the original of the Deed of Appointment could be inspected at the offices of the third defendant's solicitors.[6]
8. On 4 September 2020, the first and second defendants filed his affidavit in support of the appeal in which he annexed a copy of the B E Lynn Trust Deed, dated 8 November 1971, and a Deed of Appointment, dated 14 November 1971.[7]

Whether the first and second defendants opposed the order for discovery in the hearing before the registrar on 10 August 2020

1. In opposing the appeal, the plaintiff contends that the first and second defendants did not oppose the orders for general discovery when appearing before Registrar Whitby.
2. This contention is not, however, supported by a review of the matters stated by counsel when the orders for discovery were sought by the plaintiff in the hearing before Registrar Whitby on 10 August 2020.
3. When the application for discovery came before Registrar Whitby, it was heard together with related actions CIV 1532 of 2020 and CIV 2348 of 2016. An order for discovery was also sought by the plaintiff in CIV 1532 of 2020.
4. Prior to the hearing on 10 August 2020, the first and second defendants had filed a minute of proposed orders in this action which did not include any orders for discovery but sought an order that CIV 1532 of 2020 be case managed with this action, and an order for further and better particulars to be provided by the plaintiff. They also sought orders that CIV 1532 of 2020 and the action be referred to mediation.
5. At the hearing on 10 August 2020, counsel for the plaintiff sought an order for discovery (in this action and in CIV 1532 of 2020) and made a submission that discovery should be provided prior to any mediation.[8] In response, counsel for the first and second defendants made it plain to Registrar Whitby that discovery was opposed prior to mediation and the provision of particulars by the first and second defendants (in the event that the plaintiff wished to press his informal request for particulars).[9] Counsel for the first and second defendants also made a submission that the plaintiff's discovery application, if granted, would necessarily be lengthy, time-consuming and expensive, as the volume of material required to be discovered may be enormous.

1. The discretion as to whether the court should make an order for discovery is not to be determined only by reference to the issues pleaded by the parties. The discretion is to be exercised by regard to the principles of case management, and whether the scope of the order sought is proportional or necessary to determine the pleaded issues.
2. The task of considering whether to make an order for discovery is a balancing exercise. Justice Allanson articulated this point clearly in Singh v Friedman:[10]

The discretion is to be exercised having regard to the timely and cost effective disposal of litigation: Corporate Systems Publishing Pty Ltd v Lingard [No 3] [2008] WASC 1 [7]; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [6]. On the other hand, discovery has been described as promoting the ascertainment of truth in litigation and as an essential part of the proper administration of justice: Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, 321. Subject to the rules of privilege, there is a 'public interest in having available all evidence relevant to the issues in litigation': Carter v Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121, 128. The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings: Science Research Council v Nasse [1979] UKHL 9; [1980] AC 1028, 1065.

1. Justice Allanson also importantly observed in Singh v Friedman that relevance is not the only factor the court must consider in the exercise of discretion to order discovery.[11]
2. The principles in Singh v Friedman were adopted by Martin CJ in Roe v The State of Western Australia who went on to observe:[12]

Put shortly, it is now established that general discovery is no longer regarded as a right. Rather, the extent of the obligation to give discovery and the entitlement to discovery will be fashioned having regard to the general principles that are articulated in the Rules of the Supreme Court 1971 (WA) and in particular the principles enunciated in O 1 r 4A and r 4B. Those principles include and expressly embody the notion of proportionality, which requires a court, before ordering any interlocutory process, to assess whether the forensic benefit to be derived by that process is proportional to the cost and delay which will flow from the undertaking of the process, having regard to the value, importance and complexity of the subject matter in dispute and the financial position of the parties.

In the context of discovery, this means that when issues arise with respect to the breadth of the discovery to be ordered, the ambit of discovery will be determined taking into account the cost and delay associated with the provision of discovery over a broader ambit, as compared to the forensic benefit likely to be derived from the provision of discovery over that broader ambit. Unless the cost and delay involved in the provision of that discovery is proportionate to the forensic benefit likely to be derived from a broader ambit of discovery, and to the value and importance or complexity of the subject matter of the proceedings, a narrower ambit of discovery will be ordered.

The only proposition I would add to the principles enunciated in the defendant's written submissions is the proposition that at least in cases such as this, when general discovery has not been sought or ordered, adjectival or indirect relevance of itself will no longer determine whether or not a document will be ordered to be discovered, and in particular the approach to general discovery enunciated in cases like Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co [1883] UKLawRpKQB 95; (1882) 11 QBD 55 will no longer guide the court in relation to issues with respect to informal discovery.

Rather, those issues will be determined by the balancing of the likely forensic benefit to be obtained against the risk of cost and delay in the manner that I have described, viewed in the context of the value, importance and complexity of the subject matter of the proceedings. In that context, the forensic significance of the issue in respect of which discovery is sought and the relevance of the documents sought to that issue, in a qualitative sense, will be pertinent to the proper disposition of any application for discovery.

1. A claim to a broader ambit of discovery must be justified by whether the cost and delay involved in the wider ambit is proportionate to the forensic benefit likely to be derived from the wider ambit, in the context of the value, importance and complexity of the subject matters of the litigation.[13]

1. The first issue raised by the first and second defendants, in the notice of appeal, is that the statement of claim and relief sought is based upon a misconceived premise that the assets of a deceased's estate include the assets that the deceased holds solely in his or her capacity as trustee. This issue, as counsel for the first and second defendants point out, raises a question of law.
2. It is argued, on behalf of the plaintiff, that as a trustee of a trust holds the legal interest in the property in their own name, and the beneficial interest in the property on trust for the beneficiaries, it follows that when a deceased trustee was before their death the sole or last surviving trustee, the estate passes to the trustee's personal representative who is obliged to hold the property until a new trustee or trustees are appointed, and the trust property is vested in a new trustee or trustees.
3. In support of the plaintiff's argument, the plaintiff points to s 45 of the Trustees Act 1962 (WA) which provides that until the appointment of a new trustee, the personal representative of the sole trustee is capable of exercising or performing any power or trust that was given to, or capable of being exercised by, the trustee. From this provision, it is argued that it must necessarily follow that the legal title to the trust property passes to the deceased trustee's estate and forms part of the estate pending appointment of a new trustee.
4. The first and second defendants argue that the plaintiff's pleaded case is wrong at law, and claim that it is trite law that on her death Margaret ceased to be the trustee of the B E Lynn Trust, and as a consequence no interest in any trust property could devolve to her estate. In particular, on the death of a trustee s 45(2) of the Trustees Act does not purport to confer the legal interest (or any other interest) held by the trustee in that capacity on the personal representative, much less does it provide that the interest held by the trustee in that capacity is converted to, or to be treated by, the personal representative as an asset of the personal estate of the trustee.
5. If the first and second defendants' point of law is accepted, the first and second defendants argue that the plea that there are assets in the estate of Margaret that comprise assets of the B E Lynn Trust is irrelevant.
6. It is established that discovery will not be ordered in respect of an irrelevant allegation (that is, a pleaded matter that is unarguable or untenable) which could not affect the action.[14] However, it is not appropriate, nor desirable, to determine this point in the appeal, as the established law on the point is not entirely clear and there is another basis upon which the appeal should be upheld.
7. The parties referred in their submissions to a passage in the 8th edition of Jacobs' Law of Trusts in Australia in which the learned authors cite the decision of Parker J in Re Crunden and Meux's Contract,[15] as authority for the proposition that the legal representative of a deceased trustee has no power to act in the execution of the trust although, where there are no active duties to perform, the legal representative has power to transmit the property to persons absolutely entitled.[16]
8. It is noted that the learned authors of the 19th edition of Lewin on Trusts simply state, without reference to authority, that:[17]

On the death of a sole or last surviving trustee, the trust properly devolves upon his personal representatives.

A trustee cannot devise or bequeath his interest as trustee in the trust property.

1. This, as I have found, is a point for another day and perhaps as counsel for the first and second defendants contend, would be an appropriate issue to be determined as a preliminary issue.
2. In any event, this point is not determinative in this appeal, because irrespective of whether the legal title to property in a trust vests in a personal representative of a sole trustee, s 45 of the Trustees Act empowers whoever is the personal representative of the trustee of an estate with the power to exercise any power of the trust that was capable of being exercised by the deceased trustee (until the appointment of a new trustee).
3. The second issue is determinative in this appeal. This is the question whether Margaret was, or was not, the trustee of the B E Lynn Trust when she died in 1977.
4. The plaintiff does not accept that the Deed of Appointment made on 14 November 1971 (by which the first and second defendants claim that Margaret was discharged as trustee of the B E Lynn Trust and by his appointment, the estate and interest in the B E Lynn Trust vested in William, as the new trustee) is valid or authentic as the plaintiff has not had a proper opportunity to inspect the original deed and forensically test it. The plaintiff also raises an issue as to whether the Deed of Appointment has been properly executed in compliance with s 9 of the Property Law Act 1969 (WA) as the witness has simply signed the document, but has not stated 'who they are'.
5. In these circumstances, the plaintiff claims that the appeal should be dismissed. I do not agree.
6. Having reviewed the copy of the B E Lynn Trust Deed and the copy of the Deed of Appointment annexed to the affidavit of the first and second defendants, there is nothing that appears from the face of the copies of the documents that stands out as an obvious indicator that either document is not authentic. I note that both documents appear to have been prepared by solicitors, Robinson Cox & Co, and that both documents appear to have been stamped by the State Taxation Department. The B E Lynn Trust Deed bears a date of stamping of 10 November 1971. However, the date that the Deed of Appointment was stamped is not clear on the face of the document annexed to the affidavit of the first and second defendants. I also note that it appears that both the B E Lynn Trust Deed and the Deed of Appointment may have been executed in the presence of the same witness whose signature appears on both deeds.
7. I agree that the plaintiff should, if he wishes to do so, have an opportunity to inspect the originals of the Trust Deed of the B E Lynn Trust and the Deed of Appointment, and if necessary have them forensically tested. However, until that is done, the first and second defendants should not be required to discover any documents that pertain to the B E Lynn Trust.
8. This is because, firstly, if Margaret was not the trustee of the B E Lynn Trust, then it is clear that the plaintiff's pleaded case that the B E Lynn Trust assets formed part of her estate on her death in 1977 must necessarily fall away, together with the plaintiff's claim that, at the time of William's death, administration of Margaret's estate had not been complete, insofar as this plea relates to assets which are claimed to be assets of the B E Lynn Trust.
9. There is an ethical obligation on all legal practitioners to plead a case for which there is a proper foundation,[18] and that includes an obligation that where it becomes clear during the litigation process that a proper foundation for a pleaded matter does not in fact exist, to amend the pleading to remove that issue as an issue in dispute.
10. Secondly, until the plaintiff has made proper enquiries as to the authenticity as to at least the document which is said to be effective to appoint William as trustee prior to the death of Margaret in 1977, and has properly considered the issue whether the manner of the execution of the document renders the appointment effective or ineffective, the first and second defendants should not be required to give discovery of documents pertaining to the B E Lynn Trust.
11. Given that Margaret died in 1977, compliance with the order for general discovery made by Registrar Whitby at this point in time will necessarily result in a very time-consuming exercise to locate relevant documents created over the past 43 years. As such, it could not be said to be in the interests of the proper case management of matters within this court to require a party to discover documents in circumstances where further enquiry by the party seeking discovery may result in the issue, in respect of which discovery is sought, falling away.
12. For this reason, I see very little forensic benefit in the first and second defendants being put to the task of discovery of these documents until any challenge to the authenticity and/or validity of the Deed of Appointment is resolved.
13. The plaintiff argues that these proceedings are important because, in his view, an administrator to the estate of Margaret should be appointed so that a trustee for the B E Lynn Trust can be appointed. I do not agree. If a trustee is sought to be appointed to the B E Lynn Trust, separate proceedings will necessarily have to be instituted.
14. For these reasons, I made the following orders:

(2) Order 2 of the order made by Registrar Whitby on 10 August 2020 be varied as follows: 'The parties give discovery (except for the documents pertaining to the B E Lynn Trust) by 20 October 2020, with inspection to be completed by 27 October 2020'.

(3) The plaintiff have leave to apply for discovery of the documents pertaining to the B E Lynn Trust within 14 days of completing proper and reasonable enquiries into whether the document pleaded as a Deed of Appointment in [7a] and [7b] of the third defendant's defence is authentic, and/or valid.

(4) The plaintiff to pay the first and the second defendants' costs of the appeal, to be taxed if not agreed.

(5) There be liberty to apply with respect to order 2 of the Order.

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

[1] Priority Networking Pty Ltd v Peterson [2018] WASC 36 [23] ‑ [28] (Le Miere J); Cheney v Moore [2020] WASC 227 [9] (Le Miere J).

[2] Although it is not clearly pleaded, the plaintiff alleges that Margaret's estate comprised assets which included the legal title to the trust property which, pursuant to s 45(2) of the Trustees Act 1962 (WA), devolved to her legal representative until a trustee is appointed pursuant to the terms of the B E Lynn Trust.

[3] Affidavit of Daniel Tassone, sworn 29 September 2020 [5.2]; Annexures DT1 and DT2.

[4] Defence of first and second defendants filed on 6 August 2020 [8].

[5] Defence of third defendant dated and filed 17 August 2020 [7].

[7] Affidavit of Simon Dirk Kenworthy-Groen sworn 4 September 2020 [3] ‑ [4]; Annexure A, pages 3 ‑ 21 and Annexure B, pages 22 ‑ 24.

[10] Singh v Friedman [2013] WASC 78 [3].

[11] Singh v Friedman [2013] WASC 78 [4].

[12] Roe v The State of Western Australia [2013] WASC 130 [10] ‑ [13].

[13] Donaldson v Nolan [No 3] [2015] WASC 194 [39] (Beech J).

[14] Pisano v Thrum [2007] WASC 109 [33] (Newnes M); applied in Co‑Operative Bulk Handling Ltd v Brookfield Rail Pty Ltd [2014] WASC 31 [37] (Edelman J).

[15] in Re Crunden and Meux's Contract [1909] UKLawRpCh 28; [1909] 1 Ch 690; applied in Laycock v Registrar General of New South Wales [2012] NSWSC 248 [16]; recently applied in a different context in Coley v Danae [2020] WASCA 13 [47].

[16] Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed) [15‑75].

[17] Tucker L, Le Poidevin N, Brightwell J, Lewin on Trusts (19th ed) [13‑001].

[18] Unioil International Pty Ltd v Deloitte Touche Tohmatsu [No 2] (1997) 18 WAR 190, 193 (Ipp J); see also D A Ipp, 'Lawyers' Duties to the Court' (1998) 114 Law Quarterly Review 63, 81 ‑ 83.