Reid v Brett [2005] VSC 18

Supreme Court of Victoria|2005-02-08|Before: HABERSBERGER J

WILLS - Application to appoint first plaintiff and her solicitor trustees of one of two funds set up under the will of the deceased - First defendant appointed administrator of the deceased's estate - Proceeding commenced by administrator seeking answers to questions concerning what was to be done with the net residue of the estate - Proceeding commenced by plaintiff seeking certain relief including orders sought in summons - Two proceedings set down for hearing - Application held to be premature. PRACTICE AND PROCEDURE - Application for leave to adduce further evidence - Relevant test.

(a) an order removing Bruce Sundberg and Dennis Francis Dalton as trustees of "Susan's Fund" under the terms of the will and estate of John Rickett Hubbard, deceased;

(b) an order appointing the first plaintiff and Claire Genevieve Jackman as trustees of "Susan's Fund"; and

(c) an order vesting all of the proceeds of execution of the judgment in proceeding No. 5682 of 2002 in the first plaintiff and Claire Genevieve Jackman as trustees of "Susan's Fund".

The Background

In order to understand what this application involved it is necessary to set out in some detail the relevant background in respect of the proceeding itself.

John Rickett Hubbard ("the deceased') died on 7 November 1998. He was survived by his widow, Minnie Isabel Hubbard, and his two adult children, John Harold Hubbard ("Mr John H. Hubbard") and Susan Reid ("Mrs Reid"). The deceased left as his last will, a will dated 16 October 1997.

In the deceased's last will, Mr John H. Hubbard and a solicitor, Mr Bruce Sundberg, were appointed to be the executors and trustees of his estate. In the event of either or both of Mr John H. Hubbard and Mr Sundberg predeceasing the deceased, renouncing probate, or retiring by death or otherwise as an executor or trustee, then Mr Sundberg's partner, Mr Dennis Dalton, was to be appointed an executor and/or trustee in his or their place. The number of executors or trustees was not to be less than two and nothing was to be done by a sole trustee for such time as the number was less than two save for the appointment of a new trustee.

By the terms of his last will, the deceased's residuary estate was to be divided into two equal parts, one part to form the corpus of a discretionary testamentary trust entitled "John's Fund" and the other part to form the corpus of a discretionary testamentary trust entitled "Susan's Fund". The General Beneficiaries of "John's Fund" were Mr John H. Hubbard, his wife, his children, grandchildren and great grandchildren and any of their spouses. The General Beneficiaries of "Susan's Fund" were Mrs Reid, her children, grandchildren and great grandchildren and any of their spouses. The trustees of the deceased's estate were to be the trustees of both funds.

On 13 January 1999, Mr John H. Hubbard and Mr Sundberg applied for a grant of probate of the deceased's last will supported by an affidavit as to the estate's assets and liabilities. The net assets of the estate were said to be approximately $1.22 million. Probate was granted on 25 January 1999.

It was subsequently revealed that substantial assets totalling about $11 million had been omitted from the statement of assets and liabilities. They included a loan of approximately $9.163 million by the deceased to Hubbard Holdings Pty Ltd, the trustee of the JRH Family Trust, superannuation monies of some $1.54 million and a tax refund of nearly $150,000. Thus, the deceased's estate was worth over $12 million and not $1.22 million. At the date of the deceased's death Mr John H. Hubbard and Mr Sundberg were the only directors of Hubbard Holdings Pty Ltd.

It was also discovered that a large proportion of the deceased's estate had been directly and indirectly advanced, without security, to Billingsby Estate Pty Ltd, the trustee of the Billingsby Estate Trust, of which Mr John H. Hubbard, his wife Anne, and their three adult sons were beneficiaries. Billingsby Estate Pty Ltd, of which Mrs Anne Hubbard was then the sole director and shareholder, operated a vineyard, winery and restaurant on land owned by Currawong Consultants Pty Ltd, the trustee of Mr John H. Hubbard's superannuation fund. Other monies were invested in, or advanced to, companies associated with Mr John H. Hubbard. All of these monies have for all intents and purposes been lost.

On 2 May 2002 Mrs Reid commenced proceeding No. 5390 of 2002 seeking to have her brother and Mr Sundberg removed as executors of the deceased's estate. On 8 and 9 May 2002 each of Mr Sundberg and Mr John H. Hubbard commenced his own proceeding seeking to be discharged as executor. On 9 and 16 May 2002 respectively, each of these applicants was discharged as an executor of the deceased's estate by an order made in his own proceeding. On 16 May 2002, by order of this Court, in proceeding No. 5390 of 2002, a solicitor, Mr Charles Brett, was appointed administrator of the deceased's estate. In his affidavit sworn on 4 May 2002 in support of his own application to be discharged as executor, Mr Sundberg said as follows:

"At the first conference referred to by Sue in her affidavit ... I indicated that I was prepared to retire as an executor and trustee of the estate of John Rickett Hubbard and the trustees established under his Will and not seek appointment as an executor or a trustee of the estate of Minnie Isabel Hubbard, if that was the wish of Sue and John. I have never deviated from that position."

On 23 May 2002 Mrs Reid, on her own behalf and as litigation guardian for her son, commenced proceeding No. 5682 of 2002 seeking equitable damages from Mr John H. Hubbard personally in respect of his breaches of trust as an executor of the deceased's estate. This proceeding was heard by Nettle J (as his Honour then was) commencing on 1 October 2003. At the end of the hearing Mr Charles Brett was added by consent as a defendant. Judgment was given in favour of Mrs Reid on 3 October 2003.[1] His Honour found that out of the estate which less than five years ago had been worth at least $12.3 million there was then only some $1.515 million left in hand, "plus a slight chance that over time the estate may recover up to another $1.4 million by enforcement against the trust of the debt which is due."[2] However, the chances of recovery of any of that amount were regarded by his Honour as so speculative that he treated its present value at nil.[3] Accordingly, his Honour estimated the loss to the estate at $10,817,509.80 and the loss to "Susan's Fund" of half that amount or $5,408,754.90.[4] The order made by Nettle J read as follows:

"(1) The first defendant pay to the second defendant, in his capacity as trustee of 'Susan's Fund' under the will dated 17 October 1997 of John Rickett Hubbard deceased, the sum of $5,408,754.90. (2) The first defendant pay to the second defendant, in his capacity as trustee of Susan's Fund under the will dated 17 October 1997 of John Rickett Hubbard deceased, interest on the sum referred to in paragraph 1 calculated at 8% compounding from 25 January 1999 to 3 October 2003, in the sum of $2,254,617.55. (3) The first defendant pay to the second defendant, in his capacity as trustee of Susan's Fund under the will dated 17 October 1997 of John Rickett Hubbard deceased, interest on the sum referred to in paragraph (1), calculated at 8% compounding from 4 October 2003 to the date of payment or satisfaction of this judgment. (4) The plaintiffs' costs and disbursements of and incidental to the proceeding, including all reserved costs be taxed on an indemnity basis and when taxed paid by the first defendant to the plaintiffs."

In her principal affidavit in this proceeding sworn on 28 April 2004, Mrs Reid said that in January 2004 she was informed by Mr Charles Brett that the administration of the deceased's estate was at an end. Mrs Reid said that she told Mr Charles Brett that neither Mr John H. Hubbard nor Mr Sundberg should hold the office of trustee of "Susan's Fund" and that she wished both of them to retire and that she and her solicitor, Ms Jackman, become the trustees of "Susan's Fund".

Mr Charles Brett prepared a Deed of Renunciation/Retirement of Trustees by which Mr John H. Hubbard and Mr Sundberg renounced the office of Trustees and retired from the trusts of the deceased's will and Mr Dalton was appointed in their place. On 13 February 2004 Mr Charles Brett faxed a copy of this Deed, which was already signed by Mr John H. Hubbard, to Mrs Reid's legal representatives. In his accompanying letter, Mr Charles Brett advised that:

"2. It is appropriate to treat the administration of the Estate as completed at this stage; and 3. Dennis Dalton is a Senior Member of the Legal Profession and having been named in the Will is, in my view, the only appropriate person to assume the Office of Trustee. I understand that it is his intention to act as Trustee."

Correspondence then ensued between Aitken Walker & Strachan, the solicitors acting for Mr Sundberg and Mr Dalton, and Ms Jackman at Marshalls & Dent, concerning their intentions with respect to the position of trustee of the deceased's estate and in particular the appointment of trustees of "Susan's Fund". It was stated in a letter dated 5 March 2004 from Aitken Walker & Strachan to Marshalls & Dent that:

"Mr Brett's administratorial functions have not been completed and therefore Mr Sundberg is not in a position to retire from office or otherwise as suggested in your letter ..."

In a subsequent letter dated 18 March 2004, this statement was said to have been based on Mr Brett's view as to whether his administratorial functions had been completed. In that same letter, Aitken Walker & Strachan advised that:

"Mr Sundberg has already indicated his willingness to retire as Trustee when his appointment crystallises."

It was also indicated that, in that case, as provided by the deceased's will, Mr Dalton would assume the appointment as trustee.

Marshalls & Dent in a letter dated 17 March 2004 threatened that unless Mr Sundberg appointed Mrs Reid, Ms Jackman and Mr Charles Brett as trustees of "Susan's Fund" and retired as trustee, proceedings would be issued pursuant to s.48 of the Trustee Act 1958. A Deed of Disclaimer and Retirement and Appointment of New Trustees, drawn by Mrs Reid's legal representatives, was forwarded to Aitken Walker & Strachan for signing by Mr Sundberg and Mr Dalton.

There was also correspondence from Mr Charles Brett informing Mrs Reid's legal advisers that he had been advised by counsel that administration of the deceased's estate was not complete because there was a possibility that action would need to be taken to recover further assets of the estate.

On 31 March 2004 Mr Brett commenced proceeding No. 5260 of 2004 pursuant to r.54.02 of the Supreme Court (General Civil Procedure) Rules 1996 ("the Supreme Court Rules") seeking answers from the Court to certain questions concerning what was to be done with the net residue of the deceased's estate, in particular whether it should all be paid to "John's Fund" or to "Susan's Fund" or divided into two equal shares, and to whom that part of the residuary estate should be paid, that is, should the trustees of each Fund be Mr Sundberg and Mr Dalton or some other, and which, persons.

On 29 April 2004 Mrs Reid, on her own behalf and as litigation guardian for her son, commenced this proceeding by an originating motion which sought the following orders:

"1. An order that the first defendant, in his capacity as administrator of the estate, pay to or reimburse the plaintiffs for their costs and disbursements of Supreme Court Proceeding No. 5682 of 2002, such costs to be taxed on a solicitor-client basis in default of agreement. 2. An order that the first defendant, in his capacity as administrator of the estate, pay to the trustees of the trust referred to in the will of the deceased as 'Susan's Fund' ('Susan's Fund'); (a) $50,000.00, being the costs which the estate is required to pay to John Harold Hubbard pursuant to orders of this Honourable Court made: (i) 9 May 2002 in Proceeding No. 5467 of 2002; (ii) 16 May 2002 in proceeding No. 5527 of 2002; and (iii) 16 May 1002 in Proceeding No. 5390 of 2002; and (b) $45,000.00, being the value of the BMW motor vehicle owned by the estate which John Harold Hubbard has had the exclusive use of since the death of the deceased on 7 November 1998. 3. An order that in the circumstances which have occurred, the first defendant, in his capacity as administrator of the estate, is required to appropriate the whole of the net residuary estate of the deceased to Susan's Fund. 4. An order that in the circumstances which have occurred the first defendant pay the whole of the net residuary estate of the deceased to the trustees of 'Susan's Fund'. 5. An order removing Bruce Sundberg and Denis Francis Dalton as trustees of Susan's Fund. 6. An order appointing the first plaintiff and Claire Genevieve Jackman as trustees of Susan's Fund. 7. An order that the first defendant, in his capacity as administrator of the estate, pay the plaintiffs' costs of this proceeding."

The defendants to the proceeding were Mr Charles Brett; Mr John H. Hubbard; his three adult sons, Jonathan, Andrew and Robert Hubbard; Mrs Anne Hubbard; Mr Sundberg and Mr Dalton. An affidavit by Mrs Reid sworn on 28 April 2004 set out the above, and more, history of the disputes arising from the deceased's estate.

On 8 June 2004 Master Kings set this proceeding down for trial on 10 March 2005 and ordered that it be heard together with Mr Charles Brett's proceeding, No. 5260 of 2004, and that evidence in this proceeding be evidence in the other proceeding. On the same day Master Kings made mirror orders in proceeding No. 5260 of 2004.

In support of her summons dated 30 July 2004 Mrs Reid relied on her affidavit sworn on 28 April 2004 and a further affidavit sworn on 29 July 2004. In the second affidavit Mrs Reid deposed that she was informed by her solicitor and believed that on 23 June 2004 Master Evans granted leave to Mr Charles Brett as the judgment creditor in proceeding No. 5682 of 2002 to file and serve a garnishee summons on Mr John H. Hubbard and the Australia and New Zealand Banking Group Limited ("the ANZ"), which was selling the former's home in Brighton as mortgagee in possession. Nearly $1.47 million was held by the ANZ to which it made no claim.

By a letter dated 16 July 2004 Aitken Walker & Strachan wrote to Marshalls & Dent concerning the garnishee application. In that letter it was stated that Mr Charles Brett has "never been appointed as trustee of [Susan's] fund" and it was pointed out that in his reasons for judgment Nettle J referred to the amounts being paid to the administrator of the estate.

Mrs Reid further deposed in her second affidavit that other garnishee proceedings were expected to recover about another $118,000 and that further garnishee proceedings would follow the sale of shares in a company owning a ski lodge at Mt Buller, and the resolution of whichever of the three wills of the late Mrs Minnie Hubbard, who died on 18 January 2002, was to be admitted to probate. The proceedings in respect of the mother's will were set down for hearing in September 2004. Mr John H. Hubbard stood to receive possibly two or three million dollars from his mother's estate, and at least $200,000 from the sale of the shares.

Mrs Reid deposed in her second affidavit that until trustees were appointed to "Susan's Fund", there was no one to make distributions of any of the monies received into "Susan's Fund" to the beneficiaries of that fund. She stated that:

"My sixteen year old son Michael and I are the only beneficiaries of Susan's Fund."

This statement was not correct, unless Mrs Reid intended to refer to the only living and ascertained beneficiaries.

Further, the statement by Mrs Reid was made despite the fact that Mr Sundberg, in his affidavit in this proceeding sworn on 3 June 2004 referred to the order sought by Mrs Reid that she and Ms Jackman be appointed as the trustees of "Susan's Fund" and stated that:

"I am concerned that a serious conflict of interest would arise or may already have arisen between the interests of Susan and her advisers and the beneficiaries of 'Susan's Fund'. Claire Jackman is Susan's Solicitor and takes instructions from her. The only other living beneficiary of the fund is Michael Reid who is a minor. Moreover, the class of beneficiaries potentially includes persons other than Susan and Michael. On this basis, my Solicitors have previously written on my instructions expressing the view that once my appointment as trustee crystallised, I would be happy to retire but that it would not be appropriate for me to appoint Susan and Claire Jackman as trustees in my place. However, I have only an interest in this question to the extent that I have any trustee duties to carry out. Now that the Court is seized of the matter I do not seek to take any position on this question of who should be appointed as Trustees of Susan's Fund, when that fund can be established."

Mrs Reid complained in her second affidavit that the opportunity to have her proceeding heard in the Practice Court in May 2004 was lost by counsel for Mr Sundberg and Mr Dalton seeking time in which to file this affidavit.

Ms Molyneux QC, who appeared with Mr Kirby of counsel for the plaintiffs, submitted that none of the defendants in the proceeding had standing to oppose the orders sought in the plaintiffs' summons because they were neither beneficiaries nor trustees of "Susan's Fund". Ms Molyneux pointed out that in any event none of the defendants in this proceeding had filed any affidavits opposing the appointment by the Court of Mrs Reid and Ms Jackman as trustees of "Susan's Fund". Indeed, Mrs Anne Hubbard in her affidavit sworn on 25 May 2004 had expressly stated that she did not oppose the appointments. Although the position previously adopted by Mr Sundberg had been that it was not appropriate for him to appoint Mrs Reid and Ms Jackman as trustees in his place, as he said in his affidavit sworn on 3 June 2004 now that the Court was seized of the matter he did not seek to take any position on the question of who should be appointed as trustees of "Susan's Fund".

Ms Molyneux further submitted that as the administration of the deceased's estate had been completed, Mr Sundberg on his own or with Mr Dalton, in place of Mr John H. Hubbard who had executed the Deed of Disclaimer/Retirement, were now the trustees of the deceased's estate, despite their denial that they yet held that office. It was submitted that, in all the circumstances, it was appropriate for the Court to make an order, under s.48 of the Trustee Act 1958, removing Mr Sundberg and Mr Dalton, or substituting Mrs Reid and Ms Jackman for Mr Sundberg and Mr Dalton, as the trustees of "Susan's Fund".

In response to the suggestion that the appointment of Mr Sundberg or Mr Sundberg and Mr Dalton had not yet "crystallised", Ms Molyneux drew attention to the wording of Nettle J's order that Mr John H. Hubbard pay to Mr Charles Brett "in his capacity as trustee of 'Susan's Fund' " the amount of the loss which his Honour had fixed and interest thereon. She therefore submitted that Mr Charles Brett had been appointed trustee of "Susan's Fund". Ms Molyneux further submitted that now that Mr Charles Brett had received over $1.4 million on behalf of "Susan's Fund" pursuant to part of the execution of the judgment against Mr John H. Hubbard, there could be no doubt that "Susan's Fund" had been established. It simply needed two trustees to be appointed to act as the trustees of that Fund.

It seemed to me that there was a certain lack of logic in these submissions. First, the submission that there should be an order removing Mr Sundberg and Mr Dalton as trustees of "Susan's Fund" was inconsistent with the submission that these defendants had no standing to oppose the plaintiffs' application because they were neither beneficiaries nor trustees. When this was pointed out, Ms Molyneux accepted that Mr Sundberg and Mr Dalton were entitled to be heard on such an application.

Secondly, the submission that there should be an order removing Mr Sundberg and Mr Dalton as trustees of "Susan's Fund" was inconsistent with the submission that Mr Charles Brett had been appointed trustee of "Susan's Fund" when he received the first part of the proceeds of execution of the judgment against Mr John H. Hubbard. When this was pointed out, Ms Molyneux sought leave to amend the plaintiffs' summons to include an order that Mr Charles Brett be removed as trustee of "Susan's Fund". I ruled, however, that I would not consider such an application at that stage.

Thirdly, the submission that the administration of the deceased's estate had been completed was inconsistent with the seeking of orders that Mr Charles Brett, "in his capacity as administrator of the estate", pay certain specified amounts to either the plaintiffs or the trustees of "Susan's Fund" and that he "appropriate the whole of the net residuary estate of the deceased to 'Susan's Fund'." The confusion over whether or not the administration of the deceased's estate had been completed was, perhaps, understandable given that, as will be seen below, all of the parties seemed to have undergone a change of mind on that matter.

Nevertheless, counsel for the plaintiffs submitted, there was a need for new trustees to be appointed to "Susan's Fund". Until that was done, there was no one willing and able to make distributions to the beneficiaries of "Susan's Fund" of any of the monies received into "Susan' s Fund". Mr Charles Brett had indicated that he would not make any distributions prior to the determination of his proceeding No. 5260 of 2004 and Messrs Sundberg and Dalton had indicated that until "Susan's Fund" was constituted their appointment as trustees would not have "crystallised" and therefore they could not retire. In response to an issue raised by me, Ms Molyneux told me that the proposed trustees, Mrs Reid and Ms Jackman, would be prepared to undertake to distribute only the income and not the capital of "Susan's Fund" to the beneficiaries pending the hearing of the two proceedings in March 2005.

Mr Colbran QC, who appeared with Mr Rimmer of counsel for Mr Charles Brett, submitted that the application for the appointment of Mrs Reid and Ms Jackman as trustees of "Susan's Fund" was premature. He submitted that administration of the deceased's estate had not yet been completed. In response to the submission by the plaintiffs that this submission was inconsistent with the fact that on 13 February 2004 Mr Charles Brett had written a letter in which he stated that it was "appropriate to treat the administration of the Estate as completed at this stage", Mr Colbran submitted that the situation was not clear and that Mr Charles Brett had subsequently indicated that he had changed his mind. He also drew attention to a letter from the plaintiffs' legal advisers to Mr Charles Brett dated 12 February 2004 in which it was said that the administration of the deceased's estate was "clearly ... not yet complete" and that "no trust has yet been constituted under clause 5" of the will. In other words, it could be said that everyone was confused about whether or not the administration had been completed.

Mr Colbran therefore submitted that if the administratorial duties were still being carried out, the trusts created in the will had not yet come into existence. In the circumstances, he argued that it was premature to consider the removal of trustees because trustees could not be removed from office until they had assumed that office.

Mr Colbran also submitted that it was not clear in what capacity Nettle J intended Mr Charles Brett to hold any monies received pursuant to execution of the judgment against Mr John H. Hubbard. Mr Colbran contrasted the wording of Nettle J's order with the statement in his Honour's judgment that Mr Charles Brett had been joined as a defendant to that proceeding in his capacity as administrator of the deceased's estate[5] and that his Honour considered that Mr John H. Hubbard was liable "to pay an amount of $5,408,754.90 to the administrator of the estate to the use of the 'Susan fund'."[6] Not only that, Mr Colbran submitted that it was not clear that his Honour intended that such monies be held on behalf of "Susan's Fund" rather than on behalf of the estate as a whole. He said that the plaintiffs' complaint in the proceeding against Mr John H. Hubbard had been the removal of monies from the deceased's estate to their detriment as potential beneficiaries. Nevertheless, the relief sought was only that the defendant pay compensation or damages to "Susan's Fund". In any event, Mr Colbran submitted, all of these matters could be dealt with at the trial of this proceeding and Mr Charles Brett's proceeding, both of which were listed for hearing on 10 March 2005.

Dr Hanscombe SC and Mr Wells of counsel, who appeared for Mr Sundberg and Mr Dalton, submitted that the granting of the relief sought by the plaintiffs in their summons would pre-empt the determination of the questions posed and directions sought by Mr Charles Brett in his proceeding, No. 5260 of 2004. Therefore, the application was in one sense premature. Messrs Sundberg and Dalton did not, however, oppose any order being made by the Court at this stage. They simply felt obliged as the potential trustees to put before the Court what they considered to be the relevant issues in respect of the plaintiffs' application.

It was submitted that Mr Sundberg had since May 2002, being shortly prior to the time that he sought to be discharged as executor of the deceased's will, consistently maintained that he did not seek to be appointed as trustee of either of the two trusts created in the will. On behalf of Mr Dalton it was submitted that whilst he maintained that he was an appropriate person to be one of the trustees, he had always been prepared to transfer such trusteeship to appropriate independent persons by appointing them to act in his stead. He had not acted on Mrs Reid's request that she and her solicitor be appointed trustees of "Susan's Fund" because he did not regard them as appropriate independent persons.

Counsel for Mr Sundberg and Mr Dalton further submitted that they were necessary parties to both this proceeding and Mr Charles Brett's proceeding, but that, save for being named as trustee and substitute trustee of all of the trusts created in the deceased's will, they had no interest in the proceedings. Mr Sundberg's and Mr Dalton's position was that it was not certain at what point in time any of the trusts created in the will came into existence. They contended that the trusts could not come into existence until funds were received by the trustees from the administrator to constitute the trusts. Now that the issue was before the Court, Mr Sundberg and Mr Dalton were content to abide any order made by the Court as to who should be appointed the trustees. Although neither Mr Sundberg nor Mr Dalton sought to be appointed as one of the trustees, they submitted that they could not resign until the Court appointed two other trustees in their stead. It was also indicated on behalf of Mr Sundberg and Mr Dalton that if Mr Charles Brett, in his capacity as administrator of the estate, was prepared to agree that all of their costs incurred by them in relation to the estate be paid out of the estate on the usual trustee basis, then they would take no further part in either of the proceedings.

Finally, in oral submissions, Mr Wells emphasised the importance and relevance of clause 6.3 of the will, which read as follows:

"In addition to the powers otherwise conferred upon trustees by law and the powers conferred upon the Trustees elsewhere in this my Will, my Trustees shall have the following powers:- ... 6.3 notwithstanding anything in this my Will contained, until the vesting date to raise any sum out of the income and capital of my estate including that of JOHN'S FUND and SUSAN'S FUND and to do any one or more of the following: (a) to pay the same to or towards the maintenance, comfort and benefit in life of my wife the said MINNIE ISABEL HUBBARD if my Trustees at any time or times in their absolute discretion think it necessary for her maintenance support or benefit; (b) to pay or apply the same for the maintenance, education (including travel to broaden the mind) advancement or benefit of any of the General Beneficiaries of the Trusts established by this my Will (hereinafter called 'the Trusts'); (c) to lend the same to any of the General Beneficiaries of the Trusts upon such terms and conditions as to repayment and otherwise and either with or without interest and with or without security as the Trustees shall in their absolute discretion decide."

The significance of clause 6.3 was, Mr Wells submitted, that the ability of the trustees of one of the Funds to look to the income and capital of the other Fund in order to pay for "the maintenance, education ... advancement or benefit" of any of the General Beneficiaries of the trusts established by the will raised the very real question of whether it was preferable or even essential to appoint the same persons as trustees of both Funds. Mr Wells submitted that at the very least this was an arguable proposition and that it would be wrong for the Court to consider the question of the appointment of trustees to "Susan's Fund" in isolation without considering the broader issues which would be raised at the hearing of this proceeding and Mr Charles Brett's proceeding.

The Summons for Leave to Re-Open the Application

Before finalising my determination of the above issues I should refer to the following matter. At the time when I was considering my reasons for deciding whether or not to grant the plaintiffs' application, the plaintiffs applied by summons dated 16 September 2004 for leave to re-open their application and "have read into evidence" two further affidavits of Mrs Reid respectively sworn on 8 and 15 September 2004 and filed in this proceeding. The plaintiffs also sought leave to amend their summons dated 30 July 2004 in order to seek the following orders:

"2A Further, and alternatively, an order removing the first defendant as trustee of 'Susan's Fund' under the terms of the will and estate of the abovenamed deceased. 2B. Further, and alternatively, an order removing the first defendant as trustee of 'Susan's Fund' pursuant to the terms of the orders made and judgment delivered by the Honourable Justice Nettle on 3 October 2003 in Proceeding No. 5682 of 2002."

The criteria governing the exercise of the discretionary power to re-open a case to admit further evidence where the hearing has concluded but judgment has not been delivered have been said to be as follows:

(a) the further evidence is so material that the interests of justice require its admission;

(b) the further evidence, if accepted, would most probably affect the result of the case;

(c) the further evidence could not by reasonable diligence have been discovered earlier; and

(d) no prejudice would ensue to the other party by reason of the late admission of the further evidence.[7]

In Smith v New South Wales Bar Association[8], the High Court of Australia stated that in such a situation it was difficult to see why "the primary consideration should not be that of embarrassment or prejudice to the other side."[9]

It was submitted by Mr Robin Brett QC, who on this occasion appeared with Mr Rimmer of counsel for Mr Charles Brett, that neither of the two further affidavits of Mrs Reid contained any relevant new allegations that were not known to the plaintiffs at the time of the hearing on 6 August 2004. Mr Robin Brett submitted that Mrs Reid's affidavit sworn on 8 September 2004, which was filed in support of a separate application by the plaintiffs for an interlocutory injunction restraining Mr Charles Brett from expending any funds of, or incurring any liabilities on behalf of, the estate on legal fees in respect of any proposed or contemplated litigation or any advice in connection with such litigation, covered much of the same ground as Mrs Reid's previous affidavits in support of the plaintiffs' application. It was further submitted that although Mrs Reid's affidavit sworn on 15 September 2004 did bring the history of the garnishee applications up to date, it otherwise simply covered much the same material already canvassed at the first hearing before me.

In response, Ms Molyneux referred to a number of matters which she submitted justified the re-opening application. It is unnecessary to refer to these matters in detail because, even if they were not known to the plaintiffs on 6 August 2004, which has to be a doubtful proposition with respect to some of them, I am quite satisfied that the alleged new evidence put forward by the plaintiffs would not affect my decision on the original application. As will be discussed below, nothing said by Ms Molyneux in this hearing addressed the critical objection that the original application was premature. The interests of justice, therefore, do not require that the plaintiffs be permitted to re-open their case.

The second aspect of the plaintiffs' summons dated 16 September 2004 was the application to amend the summons dated 30 July 2004 to seek an order removing Mr Charles Brett as trustee of "Susan's Fund". Counsel for Mr Charles Brett opposed this application. They submitted that its form was defective in that the originating motion itself did not seek any such order. It was further submitted that even if the plaintiff were given leave to amend the originating motion, there was no basis made out for dealing with such an application prior to the hearing of the originating motion. Even more importantly, counsel for Mr Charles Brett submitted that nowhere in the material was there any statement of the grounds upon which his removal as trustee of "Susan's Fund" was sought. If it was being suggested that Mr Charles Brett was unfit to act then this was a most serious allegation which should not be permitted to proceed until it had been spelt out in great detail. This was particularly the case where although the application was to remove Mr Charles Brett as trustee of "Susan's Fund", no application was made to remove him as the administrator of the deceased's estate, and he had never been asked to resign as trustee. Finally, counsel objected to many of the paragraphs in Mrs Reid's two further affidavits on the ground that they were hearsay. It was submitted that an application for removal of a trustee or trustees sought final relief and that hearsay ought not be relied on for that purpose.

Ms Molyneux's submission on this issue simply was that Mr Charles Brett was the trustee of "Susan's Fund" and that his removal was a necessary precursor to the appointment of Mrs Reid and Ms Jackman as the trustees of that fund. Once again, for the reasons discussed below, I am of the opinion that the application to amend the summons dated 30 July 2004 to seek the removal of Mr Charles Brett as trustee of "Susan's Fund", prior to the final hearing of this proceeding and Mr Charles Brett's proceeding, was premature. This is not to say that it would be inappropriate for the plaintiffs to apply to amend the originating motion in this proceeding to seek an order that, in the circumstances, Mr Charles Brett should be replaced as trustee of "Susan's Fund", if that is what the plaintiffs say he now is, by Mrs Reid and Ms Jackman.

The result is, therefore, that the plaintiffs have been wholly unsuccessful in their application by summons dated 16 September 2004. That application was, in my opinion, an unnecessary step. Accordingly, the plaintiffs' summons dated 16 September 2004 will be dismissed.

Determination of the Plaintiffs' Summons dated 30 July 2004

I return then to consider further the issues raised by the parties' submissions in respect of the plaintiffs' summons dated 30 July 2004.

The critical issue, as far as I am concerned, was whether it would be premature to appoint Mrs Reid and her solicitor Ms Jackman as trustees of "Susan's Fund" prior to the hearing of this proceeding and Mr Charles Brett's proceeding and consideration by the Court of whether it was preferable or essential to appoint the same persons as trustees of both "Susan's Fund" and "John's Fund". This issue was raised as a result of the submission that the wording of clause 6.3 of the deceased's will meant that the trustees of one of those funds was able to look at the income and capital of the other fund in order to pay for "the maintenance, education ... advancement or benefit" of any of the General Beneficiaries of the trusts established by the will.

It seemed to me that counsel for the plaintiffs were unable to advance any argument against the proposition that it would be premature to appoint Mrs Reid and Ms Jackman as trustees of "Susan's Fund" prior to the hearing, as distinct from arguments about whether this was a correct construction of clause 6.3 of the will or whether "Susan's Fund" and "John's Fund" should, in the circumstances, now be treated as two separate funds. I have therefore concluded that the question of whether Mrs Reid and Ms Jackman should be appointed as trustees of "Susan's Fund" should not be decided prior to the final hearing of the two proceedings in March 2005.

Given the firm conclusion I have reached on what I have described as the critical issue, it is both unnecessary and undesirable for me to express any opinion on the many other issues argued before me on this interlocutory application, which will probably be the subject of submissions to the judge at the final hearing of both this proceeding and Mr Charles Brett's proceeding. Some, if not all, of these issues could possibly have also led to the conclusion that the plaintiffs' application was premature, but as I have said, it is better that I do not express any further views on issues such as whether the administration of the deceased's estate had been completed; whether, if it had, Mr Charles Brett became the trustee of the trusts created by the will and whether he then had the power to appoint new trustees;[10] whether Mr Sundberg and Mr Dalton were now the trustees of the deceased's estate; whether pursuant to the order of Nettle J in proceeding No. 5682 of 2002 Mr Charles Brett had been appointed trustee of "Susan's Fund" or trustee of any monies recovered by him by way of execution on that judgment[11] and whether, in the circumstances, Mrs Reid and Ms Jackman were appropriate persons to be appointed as trustees of "Susan's Fund". Even a determination of one or more of those issues in favour of the plaintiffs would not have altered my conclusion that the application for the appointment of Mrs Reid and Ms Jackman as trustees of "Susan's Fund" was premature. Accordingly, the plaintiffs' summons dated 30 July 2004 will be dismissed.

[1] Reid v Hubbard [2003] VSC 387

[7] Re Australasian Meat Industry Employees' Union (WA Branch); Ex parte Ferguson (1986) 67 ALR 491 at 493-494 per Toohey J, citing Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88 and Murray v Figge (1974) 4 ALR 612.

[9] [1992] HCA 36; (1992) 176 CLR 256 at 267 per Brennan, Dawson, Toohey and Gaudron JJ

[10] See Re Cockburn's Will Trusts [1957] Ch 438 and Re Whitchurch [1990] VicRp 61; [1990] VR 719.

[11] See Porteous v Rinehart (1998) 19 WAR 495.

At a glance

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Before

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Judgment (81 paragraphs)

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Cases Cited (4)