Plaintiff v Defendants

Supreme Court of Victoria|2008-02-07|Before: Mandie J

TRUSTS - application for removal of trustees pursuant to s.48 of the Trustee Act 1958.

1 In this proceeding I ordered that the defendants be removed as trustees of the estate of Leonard Roy Fry deceased and that John Lindholn and George Georges be appointed as new trustees in substitution for the defendants. I indicated that I would give my reasons for those orders later and these are those reasons.

2 By his last will dated 29 September 1982 Leonard Roy Fry ("the deceased") appointed the first and second defendants as the executors of his will and trustees of his estate. The will then gave a freehold house property on certain trusts that are not presently material. The deceased gave his residuary estate upon trust as to the income therefrom for his wife during her lifetime and, upon her death, upon trust "as to all those my shares in the capital of L.R.F. Investments Pty. Ltd." and the units in a specified unit trust for his son (who is the first defendant) absolutely, and as to the balance of his residuary estate for his daughter ( who is the plaintiff) absolutely.

3 On 1 January 1986 the deceased died and on 22 April 1986 probate of the said will was granted to the first and second defendants. The inventory filed by the executors showed that the deceased held shares in a number of companies in addition to shares in L.R.F. Investments Pty. Ltd.

4 On 1 August 2007 the deceased's widow, the mother of the plaintiff and the first defendant, died.

5 As a result of the provisions of the deceased's will with regard to his residuary estate, the plaintiff says that she is or may be entitled to possibly valuable shares in a number of companies (other than L.R.F. Investments Pty Ltd).

6 In September and October 2007 the plaintiff's solicitors requested detailed accounts of the deceased's estate and copies of tax returns. It appears that no tax returns have ever been filed and that no accounts have ever been prepared although the latter are now said to be in the course of preparation. It further appears that the second defendant has ceased to be a trustee of the estate of the deceased and that the third defendant (a son of the first defendant) has purportedly been appointed in his place.

7 By originating motion filed 3 December 2007 the plaintiff applied pursuant to s. 48 of the Trustee Act 1958 for the removal and replacement of the defendants as trustees of the estate of the deceased. Section 48 of the Trustee Act provides that "the Court may whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient difficult or impracticable so to do without the assistance of the Court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees..". Counsel for the plaintiff sought an order pursuant to this provision. Counsel for the defendants, whilst not contending that the Court at this juncture lacked the power to make the order sought under that provision, opposed the making of the order, contending that, in the circumstances, it was premature to do so and that such an order should only be made as a last resort.

8 An affidavit of George Ian Stogdale, a member of the firm of Middletons, was sworn yesterday. Mr Stogdale deposed that he had the conduct of the defence of this proceeding on behalf of the defendants. However I was informed by Mr Boaden of Counsel, who appeared with Mr Cook, for the defendants that they were instructed by Aitken Walker & Strachan as there was a potential conflict of interest between the defendants and Middletons.

9 Mr Stogdale's affidavit provided some information about the shares in various companies held by the deceased's estate.

10 Of importance, Mr Stogdale deposed that the first defendant believes that the last will of the deceased "does not reflect the intention of the deceased nor his instructions and that he proposes to commence a proceeding .. seeking to rectify it or vary its terms" and had engaged independent solicitors for this purpose (namely, Aitken Walker & Strachan).

11 According to a written outline of submissions relied upon by the defendants the alleged error in the will was first noticed in the year 2005 but no explanation has been advanced as to why nothing was done about it until now. The written outline also discloses that the first and third defendants are investigating the possibility of seeking revocation of the grant of probate and having a fresh grant of probate made of the will in an amended form.

12 The written outline of submissions accepts that the complaint that the trustees failed to keep accounts was valid but that such failure was due to the advice "probably negligent" that they received about the operation of the will.

13 The defendants sought an adjournment of the application so that accounts could be prepared and for a mediation to take place. I would accept that accounts need to be prepared and it would no doubt be desirable for a mediation to take place and such can take place if all parties consent thereto.

14 However it seemed to me that the defendants (or at least the first and third defendants) were in a situation of acute conflict of interest in that there was a conflict between their duties as trustees and their personal financial interests. Indeed Mr Boaden conceded that there was "a degree of tension" between these two sets of interests. The plaintiff on the one hand, and the first defendant on the other, presently have a significant dispute about their entitlements under the will of the deceased. The first defendant (and, naturally, his son, the third defendant) clearly intend to establish their claimed entitlement to the sole ownership of the business interests operated by the various companies in which the estate is said to have a shareholding. To that end, they intend to seek revocation of probate and/or rectification of the will. I say nothing about the validity of those claims one way or the other but they are clearly in conflict both with their obligation as trustees to uphold the existing will and also in conflict with the apparent entitlement of the plaintiff as the will stands.

15 In those circumstances I consider that it is inappropriate for the defendants to continue any longer as trustees of the estate of the deceased and most desirable that independent trustees be appointed who can be defendants to any proceeding brought by the defendants to the present proceeding and who can act impartially in accordance with the terms of the deceased's will as it presently stands.

16 For the foregoing reasons, I concluded that it was expedient to appoint new trustees and to make the orders sought by the plaintiff.

At a glance

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Decision date

Before

Source

Judgment (18 paragraphs)

Parties