Plaintiffs v Defendant

1 The James Williams Trust is established by the will of the late James Williams for the primary benefit of his youngest son, Mark Williams. In this proceeding the plaintiffs, Ian Biggs and Rodney Williams, seek orders under s 48 of the Trustee Act 1958 (Vic) removing the defendant, James Miller, as trustee of the Trust, and appointing a new, independent trustee. In June 2017, the parties reached an agreement at mediation and signed terms of settlement. They are now in dispute as to whether the terms of settlement have been performed, or repudiated, and whether any of the terms are still operative.

2 The proceeding was listed for trial commencing on 25 October 2018. At a mention on 23 October 2018 I directed, pursuant to s 49 of the Civil Procedure Act 2010 (Vic), that the following issues be determined before any other issues:

(1) Do the plaintiffs have standing to bring the proceeding, given paragraph 47 of the affidavit of Ian Biggs affirmed 6 October 2016?

(2) Have the Terms of Settlement dated 7 June 2017 been performed?

(3) Has performance of the Terms of Settlement become impossible?

(4) Has the first defendant by his conduct or otherwise repudiated his obligations under the Terms of Settlement?

(5) If yes to issue (4), have the plaintiffs accepted such repudiation and terminated the Terms of Settlement agreement such that it is no longer of force and effect?

(6) If no to issue (4), are the Terms of Settlement entered into on 7 June 2017 still capable of being performed?

(7) Did the releases in the Terms of Settlement agreement entered into on 7 June 2017 take effect immediately upon the entry of the parties into the agreement?

(8) If yes to issue (7), what consequence does this have for the relief being sought by the plaintiffs in this proceeding?

(9) Has Hugo Patrick White been appointed as co-trustee of the Trust with James Miller?

(10) If yes to issue (9), was Hugo White's appointment in furtherance of the Terms of Settlement such that they have been fully performed?

(11) If yes to issue (9) and no to issue (10), should Hugo White be joined as a defendant to the proceeding?

(12) Should Leslie Giles Miller be removed as a defendant to the proceeding?

3 The parties agreed that Leslie Miller was no longer a necessary party to the proceeding and should be removed as the second defendant. I made that order at the commencement of the trial on 25 October 2018.

4 I have determined the remaining issues, in a slightly different order, as follows:

(1) Do the plaintiffs have standing to bring the proceeding, given paragraph 47 of the affidavit of Ian Biggs affirmed 6 October 2016?

Yes. In addition, I will join Mark Williams as a plaintiff to the proceeding, if he applies to be joined.

(2) Have the Terms of Settlement dated 7 June 2017 been performed?

(3) Has the defendant by his conduct or otherwise repudiated his obligations under the Terms of Settlement?

(4) Have the plaintiffs accepted such repudiation and terminated the Terms of Settlement agreement such that it is no longer of force and effect?

(5) Has performance of the Terms of Settlement become impossible?

(6) Are the Terms of Settlement still capable of being performed?

(7) Did the releases in the Terms of Settlement take effect immediately upon the entry of the parties into the agreement?

(8) If yes to issue (7), what consequence does this have for the relief being sought by the plaintiffs in this proceeding?

The releases did not take effect and have no consequence for the plaintiffs' claim for relief. Even if the releases did take immediate effect, they would not have been a bar to the plaintiffs seeking relief in this proceeding on the basis of matters since 7 June 2017.

(9) Has Hugo Patrick White been appointed as co-trustee of the Trust with James Miller?

(10) Was Hugo White's appointment in furtherance of the Terms of Settlement such that they have been fully performed?

(11) Should Hugo White be joined as a defendant to the proceeding?

Yes. As a co-trustee, who the plaintiffs seek to have removed, Mr White is a necessary party to the proceeding. He should be joined as a defendant.

5 The following facts are agreed by the parties:[1]

(1) James Francis Williams (the deceased), died on 13 June 2003. He was married to Adele Williams and he is survived by their three children

(a) Rodney Bertram Williams, the second plaintiff;

(b) Wendy Lillian Jeeves; and

(c) Mark James Williams (born 29 July 1967).

(2) The deceased left a will dated 26 August 1999.

(3) On 20 November 2003, probate of the will was granted to the deceased's children Rodney and Wendy.

(4) By paragraph 3(c) of his will the deceased gave one third of his residuary estate to each of Rodney and Wendy. By paragraph 3(c)(iii) he directed that the third share of the residue be held to form a trust fund to be known as the James Williams Trust. The beneficiaries of the Trust are stated to be:

(a) the deceased's son, Mark James Williams;

(b) the children and grandchildren and de facto spouses of the said Mark James Williams and his brothers sisters and nieces and nephews and their issue and his uncles and aunts and their issue (the Family of the Beneficiary);

(c) the trustee (in its capacity as such) of any trust or settlement under which Mark James Williams or any of the Family of the Beneficiary is a beneficiary, whether vested or contingent or by way of expectancy whether or not liable to be defeated by the exercise of any power of appointment or revocation or to be diminished by the increase of the class to which any such beneficiary belongs;

(d) any corporation at least one share of which is legally or beneficially owned by the Beneficiary or any of the Family of the Beneficiary or by any trustee referred to in the preceding paragraph; and

(e) any corporation institution organisation association trust or body of persons (whether corporate or unincorporated) established and maintained only for any religious, scientific, charitable or public education purpose.

(5) The initial trustee and controller of the Trust was Leslie Giles Miller.

(6) The appointment of Leslie Miller as the trustee was confirmed by a deed dated 14 June 2006 executed by the two executors, Rodney and Wendy, in their capacity as executors, and by Leslie Miller in his capacity as 'the new Trustee'.

(7) By the 2006 deed, Leslie Miller confirmed that he would hold the assets of the Trust on the trust set out in the will. The assets were specified in the Schedule to that Deed, and they included three units in West Brunswick and 25 parcels of shares in public companies.

(8) By deed dated 30 September 2015, Leslie Miller retired as trustee and controller of the Trust and his brother James Harwood Miller was appointed as the new trustee and controller.

(9) The first plaintiff, Ian Grainge Biggs, is a cousin of Mark.

(10) Leslie Miller and James Miller are cousins of Mark.

(11) Mark was brought up and lived in the household of the family of his mother's brother, Kelvin Miller and his wife Patrecia. Mark referred to Kelvin and Patrecia as 'Dad' and 'Mum' and his 'parents'. Their children include Leslie Miller and the defendant James Miller. From around six weeks of age Mark grew up with Leslie Miller and James Miller in the same house. Mark has always referred to Kelvin and Patrecia Miller's children as his brothers and sisters. From about six years of age until aged around 18 to 21 he went by the name Mark Miller, before reverting back to the name Mark Williams.

(12) Ian Biggs discovered Mark 'sleeping rough' on Dromana Beach. Mark during 2015, and for at least a decade previously, had accommodation at Eliza Park, a supported residential facility, in Mt Eliza. Mark also had accommodation available to him at the defendant's mother's (whom Mark called 'mum') house in Mt Eliza. Further, from time to time he visited and stayed with a friend of the family, Graeme Doreian. Mark, however, has a history of sleeping rough either on the beach or elsewhere.

(13) On 31 July 2015, Mark appointed Ian Biggs as his attorney under an Enduring Power of Attorney signed by Ian Biggs on 3 August 2015.

(14) By letter dated 6 August 2015, Donaldson Whiting & Grindal Lawyers, on the instructions of Ian Biggs, sent a letter to Leslie Miller in which they requested Leslie Miller to provide financial type documents relating to the Trust.

(15) By letter dated 10 August 2015, James Miller wrote to Ian Biggs thanking him for taking responsibility for Mark, explaining that Mark is troubled and the difficulties his family had encountered with Mark, by reference to both past and present matters. James Miller also asked Ian Biggs to talk to Leslie Miller by telephone.

(16) Between August 2015 and September 2015, there was an exchange of correspondence between Leslie Miller, Ian Biggs and Donaldson Whiting & Grindal Lawyers about the provision of documents relating to the Trust.

(17) During Leslie Miller's period of time as trustee of the Trust from his appointment in November 2003 under the will until his resignation in September 2015, accounts for the Trust had not been completed for several financial years.

(18) By deed entitled 'Deed Appointing New Trustee & Controller' dated 30 September 2015, Leslie Miller retired as trustee and controller of the Trust and appointed his brother, James Miller, as the new trustee and controller.

(19) Following his appointment as trustee, James Miller:

(a) attended to bringing the accounting records of the Trust up to date and engaged a Chartered Accountant for this purpose; and

(b) initially sent money to Mark by posting Australia Post money orders. However, as these were not being used after several months, James Miller instead opened an account at a bank which permits access via an ATM and regularly deposited money into the account. James Miller forwarded a card and PIN number to Ian Biggs requesting him to provide them to Mark, and later forwarded the returned PIN number to Whiting Lawyers requesting them to provide it to Mark; and

(c) contacted Mark to ascertain how he would like to benefit from the Trust by other means.

(20) The bank account statements show that Mark has regularly and frequently been withdrawing money from the account opened by James Miller.

(21) On 7 October 2016, the plaintiffs issued this proceeding against both James Miller and Leslie Miller seeking orders that:

(a) they file an account of their administration of the Trust;

(b) they be removed as trustees of the Trust; and

(c) the plaintiffs be appointed as the new trustees of the Trust, with vesting orders being made.

(22) The first plaintiff, Ian Biggs, affirmed an affidavit on 6 October 2016 in support of the application.

(23) By consent orders made on 11 November 2016 the Court ordered that the defendants provide an account of their administration of the Trust by 9 December 2016. The matter was referred to mediation.

(24) James Miller swore an affidavit in response on 29 November 2016.

(25) A mediation was held on 22 December 2016 and interim terms of settlement were signed.

(26) The interim terms of settlement provided that:

(a) the plaintiffs will appoint a forensic accountant, to be selected by them, to prepare a report on the administration of the Trust since its establishment;

(b) the plaintiffs will, in the first instance, pay the cost of the preparation of the report;

(c) James Miller will make available to the forensic accountant all books records and accounts of or relating to the trust, including copies of all bank statements and tax returns, for him or her to examine;

(d) James Miller will use his best endeavours to recover from Printing-Online.com.au Pty Ltd the debt which it currently owes to James Miller as trustee of the Trust;

(e) when it is available a copy of the report of the forensic accountant will be provided by the plaintiffs to the lawyer for James Miller and Leslie Miller;

(f) the mediation is adjourned to a date to be agreed, being 60 days from the date when the report from the forensic accountant has been provided to the lawyer for James Miller and Leslie Miller.

(27) Gary B Allan, a forensic accountant appointed by the plaintiffs pursuant to the interim terms of settlement, prepared a report dated 3 April 2017. A copy of the report was provided to the defendant's lawyer on 3 April 2017.

(28) The company Printing-Online.com.au Pty Ltd, commonly referred to as Printing-Online Pty Ltd, is a company (ACN 112 132 395) in which the only shareholders and directors are Leslie Miller and the defendant James Miller. The company is insolvent and was insolvent at the time of the mediation on 22 December 2016. The debt owed to the Trust by Printing-Online Pty Ltd is an amount of $267,238.60.

(29) Following the report of the forensic accountant, the mediation was reconvened and held on 7 June 2017 at which Terms of Settlement were entered into between the parties.

(30) The June 2017 Terms of Settlement provided, inter alia, that:

(a) Subject to its agreeing to be appointed, James Miller would appoint Equity Trustees Ltd to be co-trustee of the Trust with him;

(b) If Equity Trustees is not willing to be appointed then the parties will co-operate in finding an independent trustee company, or some other independent trustee, to act as co-trustee with James Miller. Subject to James Miller consenting to the selection, James Miller will instead appoint that independent trustee company or independent trustee to be co-trustee of the Trust with him;

(c) James Miller and the co-trustee were to be equal co-trustees, each having full plenary power of a co-trustee of the Trust;

(d) The plaintiffs (in their capacity as plaintiffs in this proceeding and in their capacity as the attorneys under power for Mark James Williams) hereby release and forever discharge each defendant (in each case personally and in their capacity as former trustee, and as current trustee of the Trust) from all actions, claims and demands which they or any of them had, now have, or may hereafter have, relating to the administration and management of the Trust, and relating in any way to any of the matters raised in the application and affidavits filed in this proceeding;

(e) Each defendant (personally, and in his representative capacities as aforesaid) hereby releases and forever discharges the plaintiffs (both personally and in their representative capacities as foresaid) from all actions, claims and demands which they or any of them had, now have, or may hereafter have, relating to the administration and management of the Trust and relating in any way to any of the matters raised in the application and affidavits filed in this proceeding.

(31) Equity Trustees could not be appointed as a co-trustee.

(32) In August 2017, without any prior consultation with the plaintiffs or their solicitors or Leslie Miller, James Miller in an effort to carry out the Terms of Settlement approached a solicitor, Hugo Patrick White, to ask if he was prepared to be a co-trustee with him of the Trust.

(33) On 10 August 2017, in an effort to carry out the Terms of Settlement, the plaintiffs approached State Trustees to find out whether it would be prepared to accept appointment as co-trustee with James Miller. By emails dated 6 October, State Trustees declined to accept such appointment, and indicated that it was not prepared to accept trusteeship, 'even if as sole trustee'.

(34) In August 2017, following the approach by James Miller, Hugo Patrick White as co-trustee and James Miller as trustee and controller of the Trust, signed before a witness a document entitled 'Deed Appointing Co-Trustee to the James Williams Trust'.

(35) In October 2017, James Miller resided in Merimbula. Hugo Patrick White is a principal in a law firm, Sautelle White Lawyers, which has an office in Merimbula.

(36) By letter dated 18 August 2017, the defendant's solicitor provided a copy of the Deed Appointing Co-Trustee to the James Williams Trust to the plaintiffs' solicitors, Whiting Lawyers.

(37) The plaintiffs do not accept that Hugo White has been appointed as co-trustee and first indicated that Hugo White would not be acceptable to the plaintiffs as co-trustee with James Miller in an outline of submissions from their counsel in this proceeding dated 19 October 2017.

(38) The plaintiffs have not taken any steps to join Hugo White as a party to the present proceeding.

Issue 1: Do the plaintiffs have standing to bring the proceeding?

6 Ian Biggs and Rodney Williams are members of the group described in the will as 'the Family of the Beneficiary' and are potential beneficiaries of the Trust. There was no dispute that this gave each of them an interest in the proper administration of the Trust, which they could enforce by taking legal action against the trustee. The nature of that interest is a chose in action rather than an interest in the Trust's property.

7 The proceeding was commenced by an originating motion filed in this Court on 7 October 2016. On 6 October 2016 Mr Biggs made an affidavit in support of the originating motion, which he said he was duly authorised to make on behalf of Rodney Williams. In paragraph 47 of that affidavit Mr Biggs stated:

To the extent that either my co-plaintiff or I would be eligible to receive distributions from the Trust we both expressly disclaim any beneficial interest in the Trust.

8 The defendant contended that the effect of this paragraph was to deprive both plaintiffs of standing. The submission was put thus:

At the time they began this proceeding, the plaintiffs disclaimed any beneficial interest in the Trust. The plaintiffs do not resile from the disclaimer, and there is no reason to think that it wasn't effective (Cf Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd [2017] NSWCA 184; Commissioner of Taxation v Ramsden [2005] FCAFC 39). This means that neither is a beneficiary under the Trust.

The Trust is a private trust. The primary beneficiary of the Trust, Mark, brings no application for the removal of James or Leslie as trustees.

9 To be effective, a disclaimer of an interest in a trust must be intentional and unequivocal. A disclaimer may be retracted where it was made without full intention or full knowledge.[2]

10 I do not consider that paragraph 47 in Mr Biggs' first affidavit was effective to disclaim his or Rodney Williams' interest in the proper administration of the Trust. It was plainly not his intention to do that, in circumstances where the plaintiffs were emphatically asserting their interest by commencing the proceeding. Nor is it an unequivocal disclaimer by the plaintiffs; indeed, the paragraph does not accurately describe the nature of their interest. I understand the paragraph to be no more than a statement by Mr Biggs that he and Rodney Williams do not bring the proceeding with a view to receiving any financial benefit from the Trust.

11 Even if the paragraph had, unintentionally, the effect contended by the defendant, for the last two years the plaintiffs have continued to assert their interest in the proper administration of the trust by prosecuting this proceeding. This had the effect of retracting any disclaimer that might have been effected by paragraph 47 of Mr Biggs' first affidavit. The defendant did not raise any issue about the plaintiffs' standing during the first two years of this litigation and, if there was a disclaimer and retraction, the defendant acquiesced in the retraction.

12 No party explored whether Rodney Williams has standing to bring the proceeding in his capacity as the executor of the will under which the Trust was established.

13 The plaintiffs take a pragmatic approach to the question of their standing. They submit that Mark Williams, the person for whose benefit they bring the proceeding, would be a proper plaintiff. The defendant did not contend otherwise, although he queried whether Mark requires a litigation guardian and whether he should be separately represented.

14 As the primary beneficiary of the Trust, Mark Williams would obviously be a proper plaintiff in this proceeding. If he applies to be joined, I will order that he be added as a plaintiff. Unless there is evidence to the contrary, I will assume that he has capacity to make that application and to decide whether to be jointly represented with the existing plaintiffs. If he does not have capacity those decisions would have to be made on his behalf by a person appointed as his litigation guardian.

15 In summary, the plaintiffs have standing to bring the proceeding. If Mark Williams applies to be joined as a plaintiff, I will grant the application.

Issue 2: Have the Terms of Settlement been performed?

16 As mentioned, in August 2017 James Miller signed a document appointing Hugo White as a co-trustee of the Trust. He did this without any prior consultation with the plaintiffs, who have never agreed to the appointment of Mr White as a co-trustee. Mr White is a solicitor with a practice in Merimbula, New South Wales, where James Miller was living at the time.[3]

17 James Miller contends that the appointment of Mr White was in performance of his obligations under the Terms of Settlement. The plaintiffs contend that it repudiated the agreement.

18 The parties are in dispute about the meaning of the Terms of Settlement, and so it is necessary to set out the relevant terms in full. The parties were identified by use of the heading used in court documents filed in this proceeding. The recitals set out some of the context:

1. James Francis Williams, "the Deceased", died on 13 June 2003
2. By his Will the Deceased established the James Williams Trust, "the Trust" for the benefit of, inter alia, his son Mark James Williams, "Mark Williams".

1. The initial trustee of the Trust was Leslie Giles Miller, "Leslie Miller".

1. By deed dated 30 September 2015 Leslie Miller retired as trustee of the Trust and James Harwood Miller, "James Miller", was appointed as the new trustee.
2. The Second Plaintiff, Rodney Bertram Williams, "Rodney Williams", is one of the executors of the Will of the Deceased.
3. The First Plaintiff, Ian Grainge Biggs, "Ian Biggs", is the attorney under power of Mark Williams.
4. In this proceeding the Plaintiffs sought, inter alia, an account from the Defendants of their administration of the Trust, and the removal of the Defendants as trustees of the Trust.
5. Upon the matter coming on for mediation this day the parties have reached the following agreement.

1. Subject to Equity Trustees Ltd, "EQT", agreeing to be appointed, James Miller will appoint EQT to be Co-trustee of the Trust with him.
2. If EQT is not willing to be appointed then the parties will co-operate in finding an independent Trustee Company, or some other independent trustee, to act as co-trustee with James Miller. Subject to James Miller consenting to the selection, James Miller will instead appoint that independent Trustee Company or independent trustee to be Co-trustee of the Trust with him.
3. For the avoidance of doubt it is recorded that the [sic] James Miller and the Co-trustee of the Trust are to be equal co-trustees, each having the full plenary power of a co-trustee of the Trust.

1. The Plaintiffs (in their capacity as Plaintiffs in this proceeding and in their capacity as the attorneys under power for Mark James Williams) hereby release and forever discharge each Defendant (in each personally and in their representative capacity as former trustee, and as current trustee of the Trust) from all actions claims and demands which they or any of them had, now have, or may hereafter have, relating to the administration and management of the Trust, and in any way relating to any of the matters raised in the application and affidavits filed in this proceeding.
2. Each Defendant (personally, and in his representative capacities as aforesaid) hereby releases and forever discharges the Plaintiffs (both personally) and in their representative capacities as aforesaid) from all actions claims and demands which they or any of them had, now have, or may hereafter have, relating to the administration and management of the Trust and relating in any way to any of the matters raised in the application and affidavits filed in this proceeding.

1. Ian Biggs agrees to resign as attorney under power for Mark Williams. Subject to Mark Williams agreeing to this, Rodney Williams will be appointed his new attorney under power.
2. When EQT has been appointed co-trustee of the Trust, (or if and when, by agreement, some other Trustee Company or independent trustee has been appointed co-trustee of the Trust), the parties will join in seeking consent orders "on the papers" that this proceeding be dismissed with no order as to costs.
3. In the meantime the parties will join in seeking on 16 June 2017 consent orders 'on the papers' that the further hearing of the proceeding be adjourned for two months.

20 The plaintiffs submit that the essence of the Terms of Settlement is that, in the event that Equity Trustees could not be appointed as co-trustee, James Miller would appoint an alternative independent co-trustee agreed between the parties. Alternatively, the plaintiffs submit that the Terms of Settlement obliged the parties to co-operate in selecting the alternative co-trustee to be appointed by Mr Miller. The obligation to co-operate required Mr Miller to engage in some consultation or dialogue with the plaintiffs about whether Mr White should be appointed co-trustee, and to give genuine consideration to their views on the matter. Neither construction of the Terms of Settlement permitted Mr Miller to appoint a co-trustee unilaterally, without reference to the plaintiffs.

21 James Miller submits that, in the event that Equity Trustees was not willing to be appointed, clause 2 of the Terms of Settlement obliges the parties to co-operate in finding a co-trustee. He further submits that clause 2 contains an implicit promise on his part to proceed to the appointment of an independent co-trustee as soon as practicable, whether or not the plaintiffs put forward a candidate and whether or not the plaintiffs co-operate with him in finding a candidate. Put in another way, Mr Miller submits that he was not excused from his implicit obligation to appoint an equal co-trustee by a lack of co-operation on the plaintiffs' part. He refutes the suggestion that clause 2 obliged him to appoint a co-trustee agreed with the plaintiffs, or that it obliged him to consult with them before making an appointment.

22 The rights and liabilities of the parties under the Terms of Settlement are to be determined objectively, by reference to the agreement's text, context and purpose. The relevant context includes the entire text of the agreement, as well as any document referred to in it, the circumstances addressed by the agreement, and the purpose or objects to be secured by it. Ordinarily, an agreement is to be construed by reference to its terms alone. However, if there is doubt about the plain meaning of the language used, that doubt may be resolved by recourse to matters external to the agreement, which are known to the parties and which assist in identifying its purpose or object.[4]

23 There are several aspects of the text of the Terms of Settlement, read as a whole, that support the plaintiffs' primary construction - namely, that any alternative independent trustee appointed by James Miller was to be agreed between the parties:

(1) First, clause 2 was the fall-back position if the agreed independent trustee, Equity Trustees, was not willing to be appointed.

(2) Second, the introductory words of the second sentence of clause 2 contemplate the appointment of a co-trustee selected by the parties, subject to James Miller's consent. This implies that the agreement of all parties was required.

(3) Third, clause 9 specifically refers to the appointment of some other co-trustee 'by agreement'.

24 The language of clause 2 is not entirely clear, however, and there is sufficient doubt about its meaning to warrant recourse to the external context. Here, there are a number of matters external to the Terms of Settlement that assist me in identifying the purpose of the clause. The Terms were entered into to resolve this proceeding, in which the plaintiffs seek James Miller's removal as trustee of the Trust, and in which they make the following allegations:

(1) James Miller and the former trustee, Leslie Miller, have not administered the Trust in the best interests of its primary beneficiary, Mark Williams;

(2) James Miller and Leslie Miller and a company owned by them have been benefitting from the Trust; and

(3) the Millers have not provided proper information concerning the Trust's financial position.

25 In addition, in April 2017, a forensic accountant had reported on his analysis of the operation of the Trust. The report included the following information:

(1) The total income of the trust recorded in its accounts between 2004 and 30 June 2016 was $362,737. Of this amount, $293,145 was distributed to Leslie Miller (to 30 June 2015) and $30,341 was distributed to Mark Williams (between 2008 and 2016).

(2) The Trust's assets as at 30 June 2016 totalled $1,366,834. This included a loan to Printing On-line Pty Ltd of $267,239.

(3) It was uncertain whether the shares in Printing On-line were held personally by Leslie Miller and James Miller, or were an asset of the Trust, and further investigation was warranted.

26 That context resolves the uncertainty about the meaning of clause 2. At the time the Terms of Settlement were agreed, the plaintiffs were making serious allegations about the Millers' conduct as trustees and the parties were at odds about the future management of the Trust. The object of clause 2 was to provide a failsafe mechanism to resolve the dispute if the parties' agreed independent trustee company could not be appointed. That object, in the context here, was to be achieved by the parties agreeing on an alternative independent trustee. They were to co-operate in finding one and, if James Miller consented to the parties' selection, he was to make the appointment. Since that did not occur, the Terms of Settlement have not been performed.

27 On no view could James Miller's obligations under clause 2 be met by appointing an independent trustee chosen by him without any reference to the plaintiffs. His appointment of Hugo White as co-trustee was not in performance of the Terms of Settlement.

Issue 3: Has the defendant repudiated the Terms of Settlement?

28 The plaintiffs contend that James Miller repudiated the Terms of Settlement by acting in a manner contrary to the fundamental obligation of those Terms, which was to appoint a co-trustee approved by the plaintiffs. His repudiatory conduct was said to have commenced with his dealings with Equity Trustees, and to have culminated in the appointment of Mr White as co-trustee.

29 In the Terms of Settlement the parties agreed that Equity Trustees would be appointed as co-trustee, subject to its agreement. It is an agreed fact that Equity Trustees 'could not be appointed'. The evidence reveals that there is more to the story.

30 James Miller telephoned Equity Trustees on 9 June 2017 and spoke with Rachel Browne. He understood from their conversation that, if appointed as co-trustee, Equity Trustees would charge annual fees of 6.8% of the value of the Trust's assets. Mr Miller does not appear to have advised the plaintiffs of any concern he held about the cost of appointing Equity Trustees, which they both understand to be considerably lower. Mr Miller took no further steps to give effect to his agreement to appoint Equity Trustees.

31 Separately, Ian Biggs contacted Equity Trustees and arranged a meeting. On 12 July 2017, Mr Biggs and Rodney Williams met with Rachel Browne and Suzanne Willis of Equity Trustees. They provided various documents concerning the Trust and were frank about the background to the proposed appointment of Equity Trustees and their lack of confidence in James Miller as trustee.

32 On 25 July 2017, Equity Trustees wrote the following letter to James Miller's solicitors:

We are in receipt of the Terms of Settlement, date 7 June 2017, in relation to proceedings S CI 2016 No. 4095 and have conducted our initial due diligence in relation to the proposed appointment of Equity Trustees ("Equity") as co-trustee of the James Williams Trust.

We understand as follows:

• The tax returns have been completed to 30 June 2016.
• All acquisition dates and cost bases in relation to the shareholdings and properties are available and can be supplied upon request.
• A forensic investigation of the trust's records has been undertaken by Gary B Allan, his findings of which are contained in a report dated 3 April 2017. That report has identified what appear to be some irregularities or anomalies in the administration of the trust.
• Since the inception of the trust, Mark James Williams ("Mark") has only received distributions of $30,341, while the current and previous trustees (who are also discretionary objects of the trust) have received the benefit of cash distributions and loans from the trust.
• Mark may wish the trustees to consider purchasing a property, as an asset of the trust, in which he can reside.
• The company Printing.On.Line Pty Ltd, which owes the trust $267,239, is insolvent.

Based on our review of the documents to hand, we are pleased to confirm that Equity would be prepared to accept the appointment as co-trustee of the James Williams Trust, provided that certain conditions are met or agreed upon prior to acceptance of that appointment.

Conditions upon which Equity Trustees will accept the appointment

1. Prior to accepting the appointment, a meeting between the current trustee, Mr James Miller and representatives of Equity, to discuss the potential working relationship and for Equity to gain a better understanding of Mr Miller's position in relation to the proposed appointment.
2. Confirmation of the whereabouts of the Certificates of Title for all three properties and the agreement of Mr Miller to deliver them to Equity within seven days of acceptance of its appointment by deed.
3. Provision of copies of the current leases, rental information and condition reports in relation to all three properties.
4. Mr Miller arranges for the trust's tax return to 30 June 2017 to be prepared and lodged by 31 October 2017.
5. Thereafter Equity Trustees will be appointed as the taxation agent for the trust and will assume responsibility for the preparation and lodgement of annual tax returns.
6. Mr Leslie Giles Miller vacates the role of controller of the trust, prior to Equity's acceptance of the appointment.
7. The deed of appointment includes a suitable clause indemnifying Equity in relation to the administration of the trust prior to its appointment.
8. Agreement from Mr Miller, as co-trustee, that he will fully co-operate with any investigation Equity deems necessary into the matters raised by Mr Allan in his report and any subsequent action required to rectify any abnormalities.
9. Agreement from Mr Miller, as co-trustee, that upon acceptance of appointment Equity will obtain inspections of all three real properties owned by the trust. Subject to the results of those inspections, we reserve the right to sell any or all three properties, the timing of which would be determined after Equity has had the opportunity to review the capital gains position of the properties and the portfolio as a whole.
10. Agreement from Mr Miller that he will assist Equity in taking all reasonable steps to liaise with Printing.On.Line to recover or enter into an agreement to recover the amount owing from that company to the trust.
11. Agreement from Mr Miller that he will make himself available to sign all documents necessary to transfer the assets into the names of himself and Equity and that, upon the request to sign such documentation, he undertakes to do so within a reasonable timeframe but not longer than 21 days from the date of the request.
12. It appears that the testator's intention was that his son, Mark, was to be treated as the primary beneficiary of the James Williams Trust. As such, while Equity does not intend to fetter its discretion in any way, Mark will be treated as the primary beneficiary and his needs in relation to the distribution of income and capital will be treated accordingly.

We hope that this assists and will await further correspondence from the parties as to whether the proposal is acceptable.

33 The conditions set out in this letter do not appear unreasonable, although some might have been the subject of further discussion. However, James Miller took offence to the letter. His response, dated 26 July 2017 speaks for itself:

Thank you for your letter of yesterday, impolitely addressed & emailed to Charles WHITE.

I am an old man, and I respectfully and sincerely proffer some sage advice: Calm down. Those two words say it all. You would do well to read this letter, re-read my previous letter to you, set both letters aside for some time, read each letter again, do not reply to this letter, and make your reply to my previous letter in a few days time. That will give you time to better reflect on the contents of each - particularly my previous letter. You are missing some important implications within that letter. Letters are about communication, not a contest of will or an opportunity to assert one's place.

Before I conduct my due diligence of Equity, I must be confident that Equity (and any agent acting on Equity's behalf) has suitable capabilities, including but not limited to:

• Following simple instructions;
• Has proper protocols in place for:
• Handling trust documents;
• Conducting due diligence;
• Negotiating contracts to be co-executor;
• Is not likely to make unreasonable demands; and,
• Has an ability to properly analyse situations likely to arise.

When confident of Equity's capabilities, my due diligence of Equity will be observing how well Equity conducts their due diligence.

I, politely, informed you that you were to communicate directly with me, and not via Charles WHITE. That was a simple instruction, which you did not follow; either, by choice or lack of cognitive function. Who will be paying for Mr WHITE's mail-forwarding services? You? I shall certainly not be paying for it, and neither will the trust pay for it. Will Equity pay for that service, being sure to not then pass-on those charges the trust? It should be apparent to Equity that; it is not improper that I have Equity negotiate with me (sans Mr WHITE), and, that it is highly improper that Equity insist I negotiate or communicate through Charles WHITE. Equity needs to lift its game when given simple instructions.

In your second letter Equity has stated that Equity is prepared to accept co-trusteeship subject to the self-same conditions that where [sic] put in your first letter. Even though you were offered more information and the possibility to examine more documents, you chose to make the self-same demands. This does not make sense. Equity has been offered (at the absolute minimum by implication) the opportunity to examine additional trust-related documents by which Equity will be better able to determine the conditions under which Equity may be prepared to accept co-trusteeship. Such examinations are called "due diligence". By not accepting the opportunity to examine all relevant trust-related documents Equity is accepting those documents (and the continuation of any and all arrangements pertaining to or deriving from those documents) "as is". The demands put forward in Equity's letters will seemingly absolve Equity of any criminal, improper, or other conduct undertaken by the trust prior to Equity becoming co-trustee, but by accepting all documentation and existing trust arrangements "as is" (that is, without examination) Equity becomes a consenting party to all such arrangements - illegal or otherwise - from the very day that Equity becomes co-trustee. Equity cannot claim lack of prior knowledge because Equity has refused the opportunity to examine the trust in more detail; to conduct proper due diligence. Such behaviour is cavalier. One hopes Equity would not be as cavalier in their co-administration of the James WILLIAMS Trust.

Equity demands, again, that Leslie Giles MILLER be removed as controller of the trust, despite being informed that Leslie is not a controller of the trust. Equity is making demands without seeing all relevant documents, and in particular those documents that appoint and remove trustees and controllers. I could understand Equity being desirous of proof of Leslie's removal as controller, or, wanting Leslie removed as controller excepting if Leslie has already been removed as controller. No such request was made. Actually, I cannot understand Equity making any demands without first inspecting the relevant documents. Equity demands that Leslie be removed as controller. I would seem [sic], to me at least, that Equity should examine all documents appointing and removing trustees and controllers prior to making demands and prior to accepting co-trusteeship. It is called "due diligence". I inform you that I will not accede to your demand that Leslie be removed as controller of the trust; which would necessitate making Leslie controller of the trust, again. I cannot see why Equity demands that Leslie be made controller of the trust. I cannot see the logic of wanting this happen. Besides, this would be a waste of time and money. It is a foolish demand. It lacks professionalism.

I reiterate that I am an old man, and I respectfully and sincerely proffer some sage advice:

1. Calm down;

2. Read this letter, again;

3. Re-read my previous letter to you;

4. Set both letters aside for some time;

5. Read each letter yet again;

6. Do not reply to this letter; and,

7. Make your reply to my previous letter in a few days time.

This will give you time to better reflect on the contents of each - particularly my previous letter.

34 That same day, Ms Willis of Equity Trustees wrote to the plaintiffs' solicitors enclosing a copy of Mr Miller's letter. She advised that Equity Trustees had not received any 'previous letter' from Mr Miller. She wrote:

The aggressive tone of his correspondence gives us cause for concern as to any potential working relationship with him, as co-trustee.

As such, she advised that Equity Trustees was no longer prepared to accept an appointment as co-trustee with James Miller.

35 Once it was clear that Equity Trustees was not willing to be appointed, as agreed in clause 1 of the Terms of Settlement, clause 2 applied. On 7 August 2017, the plaintiffs' solicitors wrote to the defendant's solicitors, nominating State Trustees as an alternative co-trustee. Ultimately, State Trustees was not prepared to accept appointment.

36 As noted above, on 16 August 2017 James Miller signed a document appointing Hugo White as co-trustee. The plaintiffs did not agree to, and were not consulted about, the appointment of Mr White.

37 Did this conduct on Mr Miller's part repudiate the Terms of Settlement, by evincing 'an unwillingness or an inability to render substantial performance' or an intention no longer to be bound by the Terms of Settlement or to fulfil it only in a manner substantially inconsistent with his obligations?[5] I conclude that it did.

38 Mr Miller's fundamental obligation under the Terms of Settlement was to appoint an agreed independent co-trustee - either Equity Trustees or, if it was not willing, another trustee agreed between the parties. He did not appoint Equity Trustees as agreed. Instead, he responded so intemperately to its letter setting out the conditions on which it would accept appointment that it was not prepared to proceed. He did not seek agreement or even consult with the plaintiffs about an alternative co-trustee. Instead, he acted unilaterally to appoint Mr White as co-trustee. Mr Miller's conduct was such that the plaintiffs were entitled to conclude that the Terms of Settlement would not be performed substantially according to their requirements.[6]

Issue 4: Have the plaintiffs accepted the repudiation?

39 The plaintiffs contend that they accepted the repudiation of the Terms of Settlement by their conduct in continuing the proceeding, in particular by filing and serving outlines of submissions in October 2017, in which they pressed for orders removing James Miller as trustee and appointing Equity Trustees in his place. While they could have sought specific performance of the Terms of Settlement, they elected to accept the repudiation and continue with the proceeding.

40 The defendant submits that the plaintiffs were not entitled to terminate the Terms of Settlement, because they were themselves in breach of the duty to co-operate in clause 2. He relies on the principle that a party in breach of contract cannot terminate for fundamental breach if the obligations breached are interdependent or it has caused the breach that it wishes to rely upon.[7]

41 It is not entirely clear what the plaintiffs are said to have done, or not done, that was in breach of the Terms of Settlement. Their approach to Equity Trustees was in furtherance of clause 1, in circumstances where Mr Miller had not given effect to the agreement in that clause. They nominated State Trustees as an alternative, fairly promptly after Equity Trustees withdrew. The evidence does not reveal any response by Mr Miller to that nomination. Mr Miller did not involve the plaintiffs in his discussions with Mr White, and it cannot be said that they failed to co-operate in an appointment that was made without their knowledge. I do not find that the plaintiffs were in breach of the Terms of Settlement. It is therefore not necessary to consider whether the obligations breached were interdependent or whether the alleged breach by the plaintiffs somehow caused Mr Miller's repudiatory conduct.

42 An alternative submission by the defendant was that the plaintiffs had not accepted the repudiation. It is the case that there was no formal communication, either directly or between solicitors, in which the plaintiffs terminated the Terms of Settlement. However, they did not seek consent orders that the proceeding be dismissed with no order as to costs, as contemplated by clause 9 of the Terms of Settlement. Nor did they seek specific performance of the Terms of Settlement. Instead, in October 2017 the plaintiffs sought directions to have the matter listed for trial, and pressed their claim for an order removing James Miller as trustee. They have, by their conduct since that time, made it entirely clear that they accept Mr Miller's repudiation of the Terms of Settlement and regard them as at an end.

Issue 5: Has performance of the Terms of Settlement become impossible?

43 In view of the conclusions I have reached in relation to Issues 3 and 4, it is unnecessary to determine this issue.

Issue 6: Are the Terms of Settlement still capable of being performed?

44 The Terms of Settlement are no longer operative, and hence it is not necessary to address this issue.

Issue 7: Did the releases in the Terms of Settlement take immediate effect?

45 The defendant points out that the consequence of terminating a contract for breach is to discharge the parties from further performance. He submits that rights and obligations that arise from the partial execution of such a contract continue unaffected by the termination.[8] In this case, he says that the Terms of Settlement constitute an accord and satisfaction as regards the matters referred to in the releases, and that the releases took effect notwithstanding that the rest of the agreement was not performed and is at an end.

46 Whether there was accord and satisfaction depends upon what was agreed in the Terms of Settlement:

The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given, the accord remains executory and cannot bar the claim.[9]

47 Construing the Terms of Settlement as a whole and in context, it is plain that the releases in clauses 5 and 6 were provided in exchange for the performance of the promise in clauses 1 and 2 to appoint an agreed independent co-trustee. The releases are expressed in the present tense and, in isolation, might be understood to take immediate effect. However, they cannot bear that meaning in the context of the entire agreement. In particular, clause 9 expressly provides that the proceeding will not be dismissed until after the appointment of the agreed independent co-trustee. The releases were contingent upon the performance of that promise. Since it was not performed, the releases never took effect.

48 It is therefore unnecessary to deal with the submission, raised for the first time at trial, that the releases in the Terms of Settlement bind Mark Williams as well as the plaintiffs.

Issue 8: What consequence does this have for the relief being sought by the plaintiffs?

49 Since the releases did not take effect, they have no consequence for the plaintiffs' claim for relief.

50 Even if the releases did take immediate effect, the defendant acknowledges that it would remain open for the plaintiffs to seek his removal on grounds arising since the Terms of Settlement were reached on 7 June 2017. Many of the matters relied upon in the plaintiffs' outline of submissions dated 22 October 2018 occurred after 7 June 2017. The releases, even if effective, were not a bar to the relief sought by the plaintiffs in this proceeding.

Issue 9: Has Hugo White been appointed as co-trustee of the Trust?

51 James Miller and Hugo White signed a deed on 16 August 2017, appointing Mr White as co-trustee of the Trust. As the controller of the Trust, Mr Miller had power to make that appointment under clause 3(c)(G) of the will. Ultimately the plaintiffs accepted that the appointment was effective. Their complaint is that it was contrary to the Terms of Settlement.

52 I find that Mr White has been appointed as co-trustee of the Trust.

Issue 10: Was Hugo White's appointment in performance of the Terms of Settlement?

53 As discussed above, James Miller's appointment of Hugo White was in breach of the Terms of Settlement.

Issue 11: Should Hugo White be joined as a defendant?

54 The plaintiffs submitted that, if I concluded that the appointment of Hugo White was effective, they would be seeking orders to remove both Mr Miller and Mr White as trustees of the Trust. If I am to consider whether Mr White should be removed, he is in my view a necessary party to the proceeding.

55 I will order, pursuant to r 9.06 of the Supreme Court (General Civil Procedure) Rules 2015, that Hugo Patrick White is added as a defendant to the proceeding.

56 As to the balance of the trial, I propose to list the trial for further hearing on or after 3 December 2018, subject to the availability of counsel and the witnesses to be called at trial. I will hear from the parties as to the estimated duration of the further hearing, and any further directions that are needed to ensure that the trial proceeds on the date listed.

[1] The agreed facts set out substantially reproduce the facts agreed in the parties' Trial Summary provided to the Court on 2 November 2017.

[2] Tantau v MacFarlane [2010] NSWSC 224, [108]-[110].

[3] Mr Miller has since moved to Maryborough in Queensland.

[4] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104, [46]-[52] (French CJ, Nettle and Gordon JJ).

[5] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 233 CLR 115 (Koompahtoo), [44] (Gleeson CJ, Gummow, Heydon and Crennan JJ) (citations omitted). See also Earney v Australian Property Investment Strategic Pty Ltd [2010] VSC 621, [77].

[7] Sharjade Pty Ltd v Commonwealth of Australia [2009] NSWCA 373, [54]-[56] (Hodgson JA).

[8] McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 476-7 (Dixon J).

[9] McDermott v Black [1940] HCA 4; (1940) 63 CLR 161, 183-4 (Dixon J).