Mavris & Anor v Level 12 Property Holdings Pty Ltd &; Anor

The Family Trust and the Unit Trust

1. The Unit Trust's real property is encumbered to secured private lenders. The loans from these lenders expire on 24 June 2018 and fall due today, Monday, 25 June 2018.
2. There is indeed a degree of uncertainty concerning the power under the Trust Deed to appoint new trustees of the Family Trust. But the uncertainty is not great. The Trust Deed, clause 24 for the Family Trust gives the power to appoint and replace trustees to a "Protector". Both the deceased and the first plaintiff, Despina Mavris, held the position of "Protector" jointly: Trust Deed, 26.1(a)(i). Upon the death of the deceased, a "Retirement Event" occurred: Trust Deed, 2(f)(i). The deceased thereby automatically vacated the office of Protector: Trust Deed, 26.1(b). The second plaintiff, Anthony Mavris, being the deceased's eldest lineal descendant, will therefore replace the deceased as a joint Protector with the First plaintiff: Trust Deed, 26.1(a)(ii)(C).
3. But that possible outcome is subject to the deceased appointing a Protector by will: Trust Deed, 26.1(a)(ii)(A) and (B). Searches have been conducted by Mrs Despina Mavris for the deceased's last will and any documents that relate to the Family Trust. Mrs Mavris has found a document, dated 7 August 2017, that appears to be the deceased's last will. It appoints her as his sole executor. But this document does not take advantage of the liberty provided under the Trust Deed, 26.1(a)(ii)(A) and (B) to appoint a Protector. On the available evidence the plaintiffs probably hold the position of "Protectors" of the Family Trust jointly, unless a subsequent, as yet unfound will appoints another Protector. Although this seems unlikely.
4. But the question of who are the "Protectors" is currently unresolved. The question will soon definitively be resolved one way or another. In the meantime, the imminent transactions require attention.
5. The Unit Trust has received offers to purchase the Unit Trust's Pyrmont properties. A deposit has already been paid. The plaintiffs want the trustee of the Unit Trust to be able to deal with the lenders to the Unit Trust and the potential purchasers of these properties as soon as possible.
6. The lack of certainty about the power to appoint and the uncertain liabilities of the existing trustees, make it expedient for the Court to remove Level 12 and to appoint, in its stead, Mavris Holdings as trustee of the Family Trust. Upon the appointment of Mavris Holdings, it can remove Investments as trustee of the Unit Trust, and appoint a new trustee that can then attend to urgent matters and protect and preserve trust property.

Consideration of the Proper Course to be Followed

1. The dominant considerations when considering the proper course in the removal and appointment of trustees were outlined by Dixon J in Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 at 580. These are the interests of the beneficiaries, the security of the trust property, an efficient and satisfactory execution of the trusts, and a faithful and sound exercise of the powers conferred on the trustee.
2. The purpose of the appointment proposed here is principally to preserve the value of the Unit Trust's real property from the potential loss that might flow from an inability to deal with it in the immediate future to the best advantage of the Unit Trust and the Family Trust.
3. But to the extent the appointment of new trustees in place of Level 12 is to avoid unknown potential liabilities for Mrs Mavris as a prospective director of Level 12, in my view, the proposed solution is not effective. The present creditors of Level 12 do not lose their right of recourse to the Family Trust's or the Unit Trust's assets for existing liabilities (through the trustee's right of indemnity) by the mere expedient of changing trustees. And these creditors may have a right to be heard on the change of trustee. And Mrs Mavris upon becoming a director of the new trustee, Mavris Holdings, may yet become a director of a company that will assume all of the liabilities of the Family Trust anyway, thereby exposing her to uncertain liability in her new role as a director.
4. Another faster and simpler solution is possible. Under Probate and Administration Act 1898, s 74 where the requirements of necessity or convenience are satisfied, the Court may appoint a person to act as administrator of an estate pending the Court formally granting probate. A wide range of persons have been appointed under powers equivalent to those that s 74 confers. Even strangers may be appointed in an appropriate case to meet the occasion: Re Wyckoff (1862) 3 Sw & Tr 20.
5. The exercise of the s 74 power is grounded in convenience or necessity. The appointment should be crafted to meet that convenience or necessity. For example, the appointment of a creditor will usually be limited to collecting the estate in order to pay the debt due to the creditor: Re Stewart (1869) LR 1 P & D 727. A common objective of such appointments is to preserve the estate by collecting, securing and preventing the wasting of estate assets, as the old Latin title of this form of appointment suggests - the administration is ad colligenda bona defuncti for the collection of assets. Such limited grants do not normally encompass the investment, sale or distribution of estate assets. Probate and Administration Act, s 74 permits "every such administration may be limited as the Court thinks fit".
6. The plaintiffs decided to take this course. With leave, the plaintiffs' amended the Summons. They proposed Mrs Mavris as an interim administrator. The Court is willing to appoint her and the circumstances call for such an appointment.
7. Some limitations should be placed on Mrs Mavris' appointment so that the ordinary business affairs of the Unit Trust can continue to be conducted to preserve the value of its property assets. But her appointment does not, in my view, mean that she should yet be given all the powers that as executor she may have in the affairs of these trustees once she has a grant of probate. For example, she should not be able to dispose of Trust assets, or wind up the trust without the further leave of the Court.
8. Once a Corporations Act, s 201F(2) appointment of a new director, such as Mrs Mavris, to Level 12 is made (after the interim Wills and Probate Act, s 74 appointment), the director is able to act in relation to Level 12, Investments and the trusts as she sees fit and without any other restriction. But were that to happen, in my view, the result would exceed the purpose of a Wills and Probate Act, s 74 urgent appointment.
9. It is appropriate to appoint the first plaintiff as administrator in order to make a Corporations Act, s 201F appointment of a new director to Level 12 and Investments. And Corporations Act, s 201F makes clear that the first plaintiff may so appoint herself.
10. But the grant will be limited so that Level 12's and Investments' short-term conduct of the affairs of the Family Trust and the Unit Trust is restricted until a full grant is received, unless the further leave of the Court is sought. The trustees will be restricted to administering these Trusts in the ordinary course of business and doing such other acts as are necessary for the preservation of the assets of the trusts of which Level 12 and Investments are trustees. But they will not be able, without leave, to sell trust assets other than in the ordinary course of business, wind up the trusts, or to distribute the assets of the trusts before a grant of probate. The undertakings received and orders made below reflect these limitations but nevertheless permit the first plaintiff to advance the immediate objective of selling the apartments to satisfy the secured liabilities that have fallen due. Level 12 or Investments may still be subject to Corporations Act liquidation or administration. But that may yet be necessary to protect their creditors.
11. The Court's power to grant relief under Probate and Administration Act, s 74 is discretionary. In this case the Court notes that the late Mr Dimitrios Mavris died after serious criminal charges had been brought against him. The Court sought a disclosure from the plaintiffs that no notice had been received from any Government authority that any of the funds the subject of the Family Trust or the Unit Trust may be the subject of proceeds of crime applications. Mrs Despina Mavris indicated on oath that no such notice had been received. Nothing else was disclosed to the Court by the plaintiffs, which would weigh against the exercise of the Court's useful jurisdiction under Probate and Administration Act, s 74 to preserve the value of these trust estates.

Conclusions and Orders

1. For these reasons the Court makes the following orders and directions: 1. The Court notes the undertakings given to it by the First Plaintiff, that the First Plaintiff will not until further order or until a grant of probate or letters of administration, and as the sole Director of Level 12 Holdings Pty Ltd (A.C.N. 612 950 722) and Mazzco Investments Pty Ltd (A.C.N. 164 617 654) ("the Companies"): 1. cause the wind up of the trust estates known as the Mavris Family Trust or the Mazzco Investments Unit Trust (collectively "the Trusts") 2. subject to 1(c) below, deal with any of the assets of the said Companies except in the normal course of their activities, including as trustees of the Trusts; 3. the undertaking does not extend to: 1. the execution of Contracts of Sale of Land and Real Property Act 1900 (NSW) Transfers for the purposes of disposing the items of real property known as: A. [address not published], Pyrmont, in the State of New South Wales; B. [address not published], Pyrmont, in the State of New South Wales; C. [address not published], Pyrmont, in the State of New South Wales; D. [address not published], Pyrmont, in the State of New South Wales; E. [address not published], Pyrmont, in the State of New South Wales; F. [address not published], Pyrmont, in the State of New South Wales (collectively "the Properties"); 1. the discharging of the secured creditors known as Costa Management Pty Ltd (A.C.N. 079 151 894) and Triumph Commercial Pty Ltd (A.C.N. 619 070 192) ("the Secured Creditors") 2. appointing, by way of book entry and / or resolutions of the Trusts only, of any income and / or capital gains of the Trusts as at 30 June 2018. However, no monies or property held subject to the Trusts are to be physically distributed or transferred until further order or earlier grant of probate or administration of the estate of the late Dimitrios Mavris. 1. For the avoidance of any doubt, and except for the payment of ordinary expenses of the Companies (including in their capacity as trustees of the Trusts), which includes any taxation or State tax charges, the First Plaintiff undertakes not to deal with, or cause any of the Companies to deal with, the net proceeds of sale of the properties referred to in [1(c)(i)] above, after the payment of the Secured Creditors referred to in [1(c)(ii)] above, and agents fees and reasonable legal costs. 2. An order (until further order or earlier grant of probate or administration) that special letters of administration ad colligenda bona defuncti of the estate of the late Dimitrios Mavris ("Deceased"), who died on 25 May 2018, be granted to the First Plaintiff subject to the limitations described in orders 4 and 5 hereof. 3. The Court dispenses with: 1. publication of the notice of intention to make this application; 2. the need for any administration bond or sureties; and 3. the further requirements of the Probate Rules in relation to the plaintiffs' application for interim relief. 1. The First Plaintiffs' administration of the Estate is limited to: 1. being appointed as the sole Director of Level 12 Holdings Pty Ltd (A.C.N. 612 950 722) and Mazzco Investments Pty Ltd (A.C.N. 164 617 654): and after such appointment, 2. causing the disposal of the Properties referred to in order 1(c)(i) above, and the discharge of the liabilities referred to in order 1(c)(ii) above; 3. conducting the affairs of each of the Companies in the ordinary course of their existing activities, including as trustees of the Trusts and subject to those matters referred to in Order 1(c)(i) and 1(c)(ii) above, doing only such other acts as are necessary for the preservation of the assets of those companies pending a grant of probate or administration of the deceased's estate, and is also limited until a grant of probate or general administration be made or until further order and such administration shall proceed no further or otherwise than as aforesaid or in any other manner whatsoever. 1. The Court orders that the First Plaintiff have power to execute all or any instruments as may be necessary and proper to give effect to the activities referred to in order 5 hereof. 2. The Court orders that the First Plaintiff does deliver up to the Court this grant of letters of administration when required to do so by the Court. 3. The Court grants liberty to apply to Slattery J on 1 days' notice. 4. The Court orders that the Plaintiffs' claims for final relief in the Amended Summons be referred to the Registrar in Probate to be dealt with in accordance with the rules of Court. 5. The Court orders that the costs of this proceeding to date be paid out of the proceeds of the sale of the Properties referred to in Order 1(c)(i) on the indemnity basis. 6. The Court orders that these orders be entered forthwith.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 June 2018