Trustees Act 1962 (WA), s 77

Hunter v Hunter [1938] NZLR 526

Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572

Porteous v Reinhardt (1998) 10 WAR 495

1 WHEELER J: On 23 February 2001 I ordered the removal of the first defendant as a joint trustee of the estate of the late Robert John Tallents ("the deceased"), and the appointment of Mr Ross McCallum in lieu of the first defendant. I did not then make any order as to costs, but it is my view that the first defendant should pay the costs of the application from 14 November 2000. My reasons are as follows.

2 The deceased died on 3 September 1997. The executors and trustees under his Will were the first defendant and the plaintiffs. The firstnamed plaintiff was the widow of the deceased. Pursuant to the Will, Mrs Tallents was to have use of the deceased's residence so long as she required it and use and enjoyment of any motor vehicle of which he died possessed (there was in fact a Mercedes vehicle) for so long as she required it and then, subject to some small bequests to the trustees and to nephews of the deceased's former wife, the residue of the estate was to be held to apply so much of the income and capital as was "required to supplement the income of [Mrs Tallents] to provide her with an appropriate and comfortable lifestyle", and on her death the capital was to be divided equally between the second and third defendants. There was also a bequest of the motor vehicle to the first defendant, but subject to the exclusive use and enjoyment of Mrs Tallents as long as she required it.

3 The second and third defendants did not object to the orders sought by the plaintiffs for removal of the first defendant and substitution of Mr McCallum in lieu.

4 It appears that the relationship between the firstnamed plaintiff, Mrs Tallents, and the first defendant was not a particularly amicable one. Mrs Tallents in her affidavits does not depose to any pre-existing difficulty or resentment in the relationship, and nor does Mr House, who knew both the deceased and Mrs Tallents prior to the deceased's death. However, the first defendant deposes at considerable length in his affidavits to what he regards as Mrs Tallents' resentful attitude towards him. He says that she became resentful of his relationship with the deceased shortly after she and the deceased married, and he surmises that the resentment which he perceived stemmed in part from Mrs Tallents' view that the deceased's refusal to share his capital and income with her during his lifetime (although he met all joint expenses of himself and Mrs Tallents). Other aspects of the alleged resentment displayed by the firstnamed plaintiff to the first defendant, and its causes, are plainly hearsay; what is important for present purposes, however, is that the first defendant himself perceives some friction in that relationship. It also appears from his affidavits that, because of the view which he has formed about the likely wishes of the deceased, he considers it appropriate that when acting as trustee, he take what he described as a "niggardly" approach to the requirements of Mrs Tallents; at first blush, it does not appear that it is desirable to approach the bequest with any such preconception, since it refers to not only an appropriate, but also a "comfortable" lifestyle for Mrs Tallents.

5 Whatever the reasons, it appears that the relationship between the first defendant on the one hand and the plaintiffs on the other has gradually broken down. There is some friction and difference of opinion concerning the appropriate use of the motor vehicle. However, the primary complaint of the plaintiffs is that the first defendant has refused to sign cheques necessary to give effect to the bequests to Mrs Tallents, even when the cheques represented sums which the first defendant had previously agreed it was appropriate to pay. On the other hand, the first defendant asserts that he has been inadequately consulted, has been asked to sign cheques when he has not agreed to relevant expenditure, and had not been given information which he sought in order to enable him to carry out his duties as trustee.

6 Counsel for the plaintiffs conceded that there was some truth in the allegations made by the first defendant, and that there were occasions on which he was not provided with information in a timely and appropriate way. However, notwithstanding that, his submissions were that the majority of the unpaid cheques related to quite straightforward matters and were not cheques to which the first defendant could have any reasonable objection. He also submitted, relying upon the circumstances of Mrs Tallents (who is elderly, has spent some time in hospital, and now resides in a home for the aged) and upon an affidavit sworn by her deposing to the distress and difficulty experienced as a result of the first defendant's failure to sign certain cheques, that notwithstanding the fault is not all on the first defendant's side, it is nevertheless desirable to remove him as trustee.

7 It appears that the attitude of the first defendant towards this application has fluctuated over time. As early as January 1999, he wrote to the plaintifffs expressing his concern that communication between them had broken down to the point where it appeared that they were unable to work together and that the estate was suffering as a result. He proposed the appointment of an independent trustee to replace all of them. When it was proposed that he retire as trustee, he did not suggest that such a course was inappropriate but, rather in May 1999, expressed the view that he could not retire without leave of the Supreme Court and requested an up to date statement of financial circumstances of the estate in order to facilitate such an application. After some further correspondence which really took the matter no further, in September 1999 he expressed the view that the residuary beneficiaries wished him to remain as trustee (a view no longer taken by them, even if the first defendant's understanding at the time was correct) and suggested that the plaintiffs should retire instead. In March 2000 he was willing to support an application for an order appointing a new trustee to replace him on condition that any orders made included a discharge from all past, present and future liability to any person interested in the estate. That condition was inappropriately broad and was not the subject of agreement by the plaintiffs. In June 2000 he expressed the view that if anyone should be removed, it was Mrs Tallents and that he would make an application for such removal in the near future if no application was made by either of the plaintiffs. In an affidavit sworn September 2000, however, he deposed that he had no objection to being relieved of his duties by the court subject to a full account being taken up to the date of his retirement.

8 On more than one occasion, the plaintiffs invited the first defendant to advise them in what circumstances he would be prepared to consent to an order for his replacement as trustee, or to draft such a proposed order himself. On 14 November 2000 they referred to his affidavit of September 2000 and suggested that the matter could be dealt with by way of a consent order, in which event they would not seek any order for costs against him. He did not directly respond to that letter, but wrote back to seek further information and to query the jurisdictional basis of any application to the court. After a further invitation as to the terms upon which he would be prepared to retire, he wrote to the solicitors for the plaintiffs in February this year suggesting that the only appropriate course was for the plaintiffs to discontinue their application or to have it dismissed.

9 It appears from the materials before me that the estate has been got in and debts of the deceased paid, so that the plaintiffs and first defendant are now in the position simply of trustees administering the estate. Section 77 of the Trustees Act therefore gives the court power whenever it is "expedient" to do so to appoint a new trustee in substitution for an existing trustee.

10 In view of the concessions which have been made on either side, I do not think it is necessary to explore the facts in further detail. Mere friction or hostility between trustees and beneficiaries is not in itself a reason for the removal of trustees. However, it is a relevant consideration if it appears that it is not a friction or hostility engineering by a beneficiary for the purpose of ensuring a trustee is removed, and if it appears that the hostility is likely to affect the future administration of the trust: see the useful discussion of principle by Kennedy J in Gava v Grljusich, unreported; SCt of WA; Library No 960010; 11 January 1996, particularly at pp 36-37.

11 The evidence before me suggests that Mrs Tallents does not have enough independent income of her own to provide for a comfortable lifestyle, and for the remainder of her life, questions of the appropriate amounts to be disbursed from the trust estate for that purpose will continue to arise. The first defendant assures me he feels no hostility towards Mrs Tallents; this may be so, but the materials set out in his affidavits suggest a state of mind which is less than sympathetic towards her and which appears to have led the first defendant to read into the trust created by the Will for Mrs Tallents restriction which is not apparent on its face. The first defendant himself recognised some time ago that the amount of friction between the trustees was such that it would be desirable that they did not all continue to attempt to administer the estate together. In those circumstances, it is my view that the welfare of the beneficiary Mrs Tallents is opposed to the continuation as trustee of the first defendant.

12 So far as the replacement trustee is concerned, Mr McCallum is a legal practitioner. There is no suggestion that he has any interest in the trust estate or that he is the partisan of any of the parties involved in this application. He is acceptable to the residuary beneficiaries. He therefore appears to me to be an appropriate replacement for the first defendant.

13 So far as the question of costs is concerned, there are competing considerations. The allegations made against the first defendant were broadly to be categorised as allegations of misconduct, in that it was suggested that he was not attending promptly and efficiently to his duties as trustee. He was justified in my view in resisting those allegations, particularly in circumstances where it appears that on occasion a less than co-operative attitude was taken by either the secondnamed plaintiff or the solicitors for the plaintiffs (Mrs Tallents herself has apparently taken a very limited direct role in the administration of the estate). However, it is also the case that he has long recognised that it was not possible for the trustees to work together for the benefit of the estate, and he was invited to propose a form of order which would avoid that difficulty but nevertheless safeguard the integrity of the estate. The replacement proposed for him was a person independent of the plaintiffs and in whom there is no suggestion that the first defendant lacked confidence. Once it appeared from his affidavit of 26 September and the letter in reply of 14 November 2000 that the parties were at one in the view that the first defendant might be replaced provided appropriate orders were made, particularly with respect to accounts, it seems to me that there was no further justification for the first defendant in resisting this application. For that reason, I have taken the view that it would not be appropriate to order him to pay costs prior to that correspondence, but that thereafter, since the matter could have been resolved by a consent order, the costs of the application should be borne by the first defendant.