HER HONOUR: By summons filed on 23 October 2020, the plaintiff (James Eric Anthony Simpson) seeks orders in relation to a trust established by a Trust Deed executed on 12 July 1962 (the Trust), namely an order pursuant to s 70(1) of the Trustee Act 1925 (NSW) (Trustee Act) that the trustees of the Trust be replaced, and an order pursuant to s 71(2)(a) of the Trustee Act that the Trust is vested.
[2]
Background
The background to the present application is set out in the affidavit sworn on 24 September 2020 by the plaintiff, and in the affidavit sworn on 3 September 2020 by the plaintiff's mother (Jlorie Eykhos).
The plaintiff's late father, Maxwell James Simpson, was the settlor of the Trust (the Settlor). As adverted to above, the Trust was established by a Trust Deed executed on 12 July 1962. The Trustees appointed pursuant to the Trust Deed were William Walter McGregor, a manager, and John Joseph Lyons, a solicitor, (both of whom have since died - Mr Lyons on 6 December 2000; Mr McGregor on 23 August 2004).
Pursuant to the Trust Deed, the sum of £12,000 (together with any additions or accretions thereto, whether of capital or income) (the Trust Fund) was to be held by the Trustees on trust to pay from the income of the Trust the sum of £5 or such larger or other sum each week at their absolute discretion to the Settlor's mother so long as the Settlor resided in her home; and to pay any medical hospital or other expenses connected with the treatment of the Settlor for any illness; and in their unrestricted discretion to apply the balance of such income, after making reasonable reserve for taxes, for the use or benefit of the Settlor during his lifetime. The Trust Deed also empowered the Trustees at their discretion to use or apply any part of the capital of the Trust Fund for the benefit and maintenance and advancement of the Settlor.
After the death of the Settlor, the Trust Fund was to be held on the trusts there specified. Relevantly, if the Settlor was married, the Trust Fund was left in trust in equal shares as tenants in common for the widow of the Settlor (so long as she remained his widow and unmarried) and such of the Settlor's children as shall obtain the age of 21 years.
The sum of £12,000 which was to be held on trust is believed to have represented a compensation payment for injuries sustained in a motor vehicle accident some time before the Settlor met his wife, Jlorie Ekyhos (see her affidavit at [13]).
Jlorie has deposed that she had known the Settlor since around 1975 and that they were married on 23 July 1977 (see her affidavit at [11]). Jlorie has also deposed that, from the time of the receipt of the compensation payment, Mr McGregor took care of the Settlor's finances, and that Mr Lyons was the Settlor's solicitor at the time (see her affidavit at [15]-[16]).
In or around November 1977, a property in Barraba, New South Wales (the Barraba Property) was purchased at auction by Mr McGregor on behalf of the Settlor for the sum of $21,100. Jlorie, who attended the auction with Mr McGregor, has deposed that she was told at the auction that the money to purchaser the Barraba Property would be taken from the Trust (see her affidavit at [20]). It has been calculated that, in 1977, the sum of £12,000.00 would equal $21,000.00 (see the plaintiff's affidavit at [25]). Thus, it is contended that the £12,000 vested in the Trust Fund was used to purchase the Barraba Property. The Barraba Property has since been held in the names of Mr Lyons and Mr McGregor as joint tenants (see the memorandum of transfer dated 5 December 1977).
The Settlor died on 18 December 2010. He was predeceased by both Mr Lyons and Mr McGregor. However, the Barraba Property continues to be held in the names of Mr McGregor and Mr Lyons as joint trustees. A Grant of Probate in respect of Mr Lyons' estate was obtained on 9 March 2001. That Grant of Probate did not acknowledge that Mr Lyons had an interest as a joint Trustee in the Trust; nor his interest as joint tenant of the Barraba Property. No grant of probate was obtained in respect of Mr McGregor's estate.
The Settlor was survived by Jlorie (who has remained unmarried) and by their sole child, the plaintiff (who is over 21 years old). Jlorie still resides in the Barraba Property.
The present application is brought in circumstances where the real property held by the Trust (the Barraba Property) was not dealt with in either Mr McGregor's estate or Mr Lyons's estate. The plaintiff seeks orders to enable the Barraba Property to be transferred to Jlorie and himself as tenants in common in equal shares.
[3]
Relevant provisions
Pursuant to s 70(1) of the Trustee Act the Court may make an order for the appointment of a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. Pursuant to s 70(2) of the Trustee Act, such an appointment may be made whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient, difficult, or impracticable to do so without the assistance of the Court.
Section 71(2)(a) of the Trustee Act empowers the Court to make a vesting order where the Court appoints or has appointed a new trustee.
[4]
Determination
Clearly it is necessary for orders to be made to rectify the difficulty caused by the fact that the Barraba Property is still held in the names of the deceased Trustees, and that this cannot be done without the assistance of the Court.
I accept that the evidence establishes that the Barraba Property was acquired with funds out of the Trust Fund and was held by the Trustees for the benefit of the Settlor and on the terms of the Trust Deed.
On the Settlor's death, the Trust Fund was to be held in equal shares for his widow (Jlorie) and their child, the plaintiff. Without the assistance of the Court, the Barraba Property, which was acquired with Trust funds and which is a Trust asset, cannot be dealt with or disposed of (since there are now, and have not been since 2004, no Trustees with the power to do so).
Making the orders sought will cause not only the Trust to be properly administrated through the appointment of trustees, but also has the result that the Trust has been fulfilled; effectively bringing the Trust to an end (the purpose of the Trust having been satisfied through the vesting in possession of the Trust property in the remaining beneficiaries - namely the Settlor's widow and their child). In Re Dickson's Settlement Trusts (1872) 27 LT 671, the Vice-Chancellor appointed the beneficiary as the trustee, and ordered that the trust property be transferred to him, in circumstances where the previous trustees were both deceased, there was no personal legal representative of the last surviving trustee, and the beneficiary was absolutely entitled to the trust property. A similar outcome occurred in Re Godrey's Trust (1883) 23 Ch D 205. I note also the discussion of principle in Simpson v Trust Company Fiduciary Services Limited [2009] NSWSC 912 at [31]-[33]; In the matter of David Michael Parsons [2017] NSWSC 349 at [16]-[20]; and the commentary J D Heydon and M J Leeming, Jacobs Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [15-59].
I am satisfied that the orders sought should be made.
[5]
Orders
For the above reasons, I make the following orders, as sought by the plaintiff.
1. Order, pursuant to s 70(1) of the Trustee Act 1925 (NSW), that Jlorie Eykhos and James Eric Anthony Simpson be appointed as Trustees of the Trust Deed executed 12 July 1962 in place of the late William Walter McGregor and the late John Joseph Lyons.
2. Order pursuant to s 71(2)(a) of the Trustee Act 1925 (NSW), that the property the subject of the Trust Deed executed 12 July 1962 has vested in Jlorie Eykhos and James Eric Anthony Simpson as tenants in common in equal shares.
3. Order that title to the property known as 57 Fitzroy Street Barraba, New South Wales, 2347 be transferred into the names of Jlorie Eykhos and James Eric Anthony Simpson as tenants in common in equal shares.
[6]
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Decision last updated: 02 December 2020