Tamcelik v Savas

Will and estate

1. The deceased left a Will dated 10 May 2013.
2. The defendant is under that Will appointed as executor and trustee.
3. The deceased by her Will left her estate on trust for sale and conversion and made provision for her debts funeral and testamentary expenses to be paid from her estate: clause 6(a).
4. Clauses 6(b) and (c) of the Will are in the following terms: "My trustees hold my estate on trust: … (b) To give to my grandson Mesut TAMCELIK the sum of $100,00.00 provided that he survive me and attain the age of 25 years and if not this gift shall form part of the rest and residue of my estate; (c) To give the rest and residue of my estate to my son Fatih SAVAS who survive me provided always that should he not survive me to take under this my will leaving children living at my death then such children having attained the age of 18 years shall take by substitution and if more than one equally the share in my estate which their parent would otherwise have taken"
5. The deceased provided for the trustee to have certain powers, which powers include the power to apply for the maintenance, education (including travel to broaden the mind), advancement or benefit of a beneficiary the whole or any part of the capital and income of that part of the deceased's estate which the beneficiary is entitled or may in future be entitled: clause 7(b).
6. Following the deceased's death the evidence does not clearly disclose what, if anything, the defendant as nominated executor in the Will did to apply for probate of the Will nor (apart from participating in family provision proceedings) administer the estate.
7. On about 19 October 2018, Mehtap filed a summons seeking family provision relief and that that claim has been resolved.
8. On 27 August 2019, Hallen J made orders in those proceedings. The orders indicate that a limited grant of administration of the deceased estate was granted to the defendant for the purpose only of enabling Mehtap's family provision claim to be dealt with: see orders 1 and 2.
9. The order made pursuant to s 91 Succession Act 2006 (NSW) was expressly made for the purposes only of permitting the family provision application concerned to be "dealt with": s 91(2) Succession Act; see for example Stanford v Stanford [2021] NSWSC 1469 per Hallen J at [27]-[33].
10. Such a grant is an example of a type of special or limited grant issued by the Court. The extent of the grant given is not defined by reference the usual or common name given to the grant (often by the use of a Latin appellation such as "ad litem", "pendente lite" or "ad colligenda bona defuncti") but rather by reference to the precise wording of the Court order making the grant: see e.g. "Grants in administration of deceased estates" (2016) 43 Aust Bar Rev 115 at 125.
11. Likewise, the representative order made pursuant to r 7.10(2)(b) UCPR was expressly limited to permit the defendant to represent the deceased's estate and notional estate for the purposes (only) of the family provision proceedings.
12. Neither the s 91 Succession Act order nor the r 7.10(2)(b) UCPR order gave the defendant any general authority to administer the deceased's estate.
13. The evidence does not disclose details regarding the deceased estate or the current whereabouts of the estate.

Correspondence regarding plaintiff's 'entitlement'

1. Following the determination of the family provision application it appears that representations were made on the part of the plaintiff by Mr Lambley and/or Mr Vassili to solicitors Shanahans Butlers (who then appeared to have been acting for the defendant) for the plaintiff to receive his 'entitlement' under the Will of the deceased.
2. On 18 December 2019, Mr Ronis of Shanahans Butlers sent a letter to Mr Lambley.
3. Mr Ronis in the letter referred to discussions between himself and Mr Vassili earlier that day.
4. Mr Ronis confirmed he held instructions seemingly from the defendant to arrange for what he describes as the legacy payable to the plaintiff to be invested in a term deposit account pending the plaintiff attaining the age of 25 years "as stipulated in the Will".
5. The email asserted: "We note Mr Tamcelik is now of legal age and if he elects to do so, he may file the appropriate application with the Court for an order seeking payment of his legacy prior to him attaining the legal age or to appoint an alternate Trustee to hold legacy in accordance with the terms of the Will. Unless a Court Order to this effect is received by the Executor, the legacy entitlement will be invested on behalf of this beneficiary in accordance with the terms of the Will. Noting the time of year and as discussed between yourself and the writer, we advise that the funds will be held in my Trust Account following settlement on Friday 20 December 2019 until the end of January 2020 to provide you sufficient time to advise us of your client's position."
6. On 4 December 2020, Mr Lambley sent an email letter to Mr Ronis further pressing the claims of the plaintiff and referring to the provisions of the Will including clause 7(b).
7. The letter noted that the plaintiff intended to seek to obtain a payment from the funds held on trust in order to attend to various things including purchasing a motor vehicle, paying for driving lessons, enrolling in a Tafe course and a martial arts course, and purchasing furniture.
8. On 8 December 2020, Mr Ronis responded to Mr Lambley by email noting that he had obtained instructions from the executor that the defendant has: 1. used his discretion as executor when considering the plaintiff's request as per the correspondence dated 7 December 2020; and 2. instructed Mr Ronis that the plaintiff will receive his entitlement under the Will when he has attained the age of 25 years.
9. On 24 December 2021, the plaintiff filed a summons in the Equity Division of this Court naming Fatih as defendant and seeking the following orders: "1 An order that: a. The Testamentary Trust made on 27 May 2018 by Fethiye Savas, deceased (the Trust) in favour of the Plaintiff, Mesut Tamcelik be dissolved; b. The property of the Trust vest in the Plaintiff solely; and c. The Trustee of the Trust cause for the property of the Trust to be transferred to the Plaintiff. 2 In the alternative to Orders 1 (a), (b) and (c) a declaration that Fatih Savas is a person who is unfit to act in such Trust. 3 In the alternative to Orders 1 (a), (b) and (c), an order that: a. Fatih Savas be removed as trustee of the Trust; b. Per Section 6 of the Trustee Act 1925 (NSW), Mehtap Savas, the Plaintiff's mother, be appointed as Trustee of the Trust; and c. Fatih Savas do all things necessary to give practical effect to Orders 3(a) and 3(b). 4 An order that the cost of the plaintiff be taxed on the trustee basis and paid out of the assets of the said trust."

Progression of proceedings in absence of defendant

1. The summons it appears was served on the defendant on 21 February 2022 by a process server who has sworn an affidavit of service.
2. Between that occasion and the filing of the notice of motion there have been a number of listings before Registrar Walton in the Equity Directions List.
3. As appears from the Court file, and as was confirmed by Mr Lambley who appeared for the plaintiff on the application before me, at no stage has the defendant participated in the proceedings.
4. Prior to the hearing Mr Lambley applied to dispense with the requirement for the preparation of a court book in accordance with the orders made by Registrar Walton on 14 September 2022.
5. In circumstances where it was evident that no appearance had been made by on behalf of the defendant, I dispensed with the requirement of the court book.
6. Prior to the listing Mr Lambley provided written submissions in support of the application.

Application for summary judgment

1. On the hearing of the application Mr Lambley moved on the notice of motion seeking summary judgment, he read an affidavit of himself in support of the notice of motion sworn 10 August 2022 and another affidavit addressing matters of service and giving of notice to the defendant such affidavit being sworn on 2 November 2022.
2. Further Mr Lambley read and relied upon an affidavit of the plaintiff sworn 7 July 2022.
3. I asked whether Mr Ronis who had earlier acted for the defendant was continuing to act and Mr Lambley indicated that to his understanding Mr Ronis was not acting: T2-3.
4. The written submissions of Mr Lambley helpfully identified some background details, the procedural history, the evidence relied upon in support of the application and the arguments said to favour summary judgment.
5. Mr Lambley's submissions confirmed that the power relied upon for the orders was indeed summary judgment pursuant to r 13.1 UCPR. Mr Lambley accepted that summary judgment is only to be used with great care and only if there is no real question to be tried.
6. Mr Lambley submitted that the wording of the Will was unambiguous in terms of providing a legacy to the plaintiff and referred to the decision in Saunders v Vautier (1841) 41 ER 482 for the proposition that the plaintiff was an adult beneficiary of a trust who was not under any disability and could seek the property the subject of the trust be transferred to him.
7. Mr Lambley asserted that the defendant had no available defence.

Legal principles

1. Applications for summary judgment are to be distinguished from applications for default judgment per se or judgments in the absence of a defendant.

Summary judgment

1. The power to order summary judgment or dismissal should only be exercised with great care and should not be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99; [1983] HCA 25; Webster v Lampard (1993) 177 CLR 598 at 602-603; [1993] HCA 57 per Mason CJ, Deane and Dawson JJ; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27 at [46]; Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 per French CJ and Gummow J at [24].
2. When considering an application for summary judgment the Court must give effect to the overriding purpose of the Civil Procedure Act 2005 (NSW) and the rules of court: s 56(2).
3. The plaintiff generally cannot succeed on a summary judgment application unless there is evidence of the facts on which the claim is based. That does not mean, that presentation of such evidence is a sufficient condition for the exercise of the power. The evidence must be both sufficient and able to be accepted: Chalak v G & G Mikhael Pty Ltd [2022] NSWCA 116 (Chalak) per Baston AJA at 16 (Ward P and Simpson AJA at [1]-[2] agreeing).
4. Further evidence must be given by the plaintiff "or by some responsible person" of a belief that the defendant has no defence to the claim or part of the claim: r 13.1(1)(b) UCPR. That requirement is no mere technicality but a relevant consideration for the Court in addressing any such claim: Chalak at [17].

Default judgment as distinct from judgment in absence of defendant

1. A default judgment at least by that name is not available in proceedings commenced by and continuing on a summons.
2. The provisions of the UCPR relating to default judgment only apply to proceedings on a statement of claim: r 16.1 UCPR.
3. Where a party to a summons is faced with a situation in which a defendant has not entered any appearance or otherwise actively applied to defend the proceedings it is not usual for the plaintiff to apply for summary judgment. Summary judgment, as noted, has a high threshold of satisfaction before the Court can grant relief. Rather the appropriate course is generally for the plaintiff to seek to have the summons heard in the absence of the defendant.
4. The Court is empowered to proceed with a hearing in the absence of a party including a defendant: r 29.7 UCPR.
5. Various tactical and forensic considerations will ordinarily be considered by an applicant before requesting the Court to proceed with a hearing in the absence of a defendant. Some of these considerations are addressed in NSW Court Forms and Precedents "Default & Summary Disposal", at [1675].

Determination of application

1. There are essentially two types of relief sought in the summons.
2. The first claim for relief is a claim to 'dissolve' the trust (paragraph 1 of the summons).
3. The second claim for relief is essentially for removal of the defendant as trustee and appointment of an alternative trustee (paragraphs 2 and 3 of the summons).
4. There are a number of impediments to both types of claim on a summary judgment application.

Claim to 'dissolve' the trust

1. As has been noted an application for summary judgment casts a fairly high threshold on the party moving the Court to demonstrate that there is no arguable defence to the claim.
2. In support of the relief to 'dissolve' the trust Mr Lambley relied upon the principle in Saunders v Vautier to underpin the plaintiff's alleged entitlement.
3. The so-called "rule" in Saunders v Vautier is not a "rule" per se but rather better described as a power on the part of beneficiaries with a correlative liability on the part of a trustee.
4. For present purposes it suffices to note that considerations regarding the power were very helpfully analysed and set out by Leeming JA in Beck v Henley [2014] NSWCA 201 at [32] - [44].
5. The exercise of the power does not involve the performance by a trustee of any part of its office as active trustee. Rather instead it brings the office to an end: Beck v Henley at [33].
6. As explained by Leeming JA adult beneficiaries who are absolutely and indefeasibly entitled have power to "overbear and defeat the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a will or trust instrument" citing Goulding v James [1997] 2 All ER 239 at 247, as noted CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53 (CPT Custodian) at [43]: Beck v Henley at [35].
7. In any event the power is not unqualified. Even when beneficiaries are unanimous and absolutely and indefeasibly entitled the exercise of the power may be subject to qualifications including a trustee's right to reimbursement or exoneration for the discharge of liabilities incurred in the administration of the trust: Beck v Henley at [36] citing CPT Custodian at [50] - [51].
8. It is not clear to me that provisions of clause 6(b) of the Will create in the plaintiff an absolute and indefeasible entitlement. The sum provided pursuant to clause 6(b) arguably (though I do not need to decide) is provisioned at least upon the plaintiff attaining the age of 25 years. That argument is reinforced by the provision in the concluding words of clause 6(b) providing for a gift over into residue.
9. The plaintiff is currently aged 21 and will not attain the age of 25 until 2026.
10. It is of note that the defendant is under the Will entitled to the residue of the deceased estate.
11. In the above circumstances I am not persuaded that it is appropriate to give summary judgment in favour of the plaintiff in respect of the claims in paragraph 1 of the summons.

Claim for removal of trustee

1. The claim for removal of the defendant as trustee raises a number of issues.
2. First, there was a lack of clarity on the evidence as to what if any steps had been taken the defendant to apply for probate of the will.
3. In the hearing of the application, I asked Mr Lambley whether any probate had been obtained in relation to the Will. Mr Lambley referred to the fact that family provision proceedings had been commenced. However, I noted that the s 91 order made by Hallen J was not an order that permitted general administration of the estate: T2.
4. Thus, it remains unclear to me what if any steps have been taken by the defendant to obtain probate and whether the defendant is acting effectively as an executor de son tort or as a constructive trustee of any funds held or in some other capacity. It is not entirely clear whether whatever administration duties there were related to the estate have been completed or not. These are all matters which I consider ought to be clarified.
5. Secondly, the evidence before the Court does not disclose where any of the funds are currently held. Mr Lambley indicated that Mr Ronis had previously indicated that the funds were held in a term deposit. However, on the hearing of the application Mr Lambley noted that there was no disclosure provided as to which bank (or other institution) held such funds or what if any arrangement has been made regarding the holding of such funds: T3.
6. At the very least the lack of clarity as to where the funds the subject of the application are held and whether they are available to be accessed is a serious practical impediment to the application.
7. Thirdly, the application for removal based on the asserted unfitness of the defendant was predicated, at least in part, on the basis that the defendant had rebuffed a request for provision of funds to the plaintiff.
8. It is not so clear to me that the plaintiff has an entitlement under the Will that is vested such that the plaintiff can simply call for the funds. It seems to me that there is a triable issue as to the proper construction of the benefit to the plaintiff under the Will.
9. That begs the question of what justification or basis the Court might have to consider removing the defendant as trustee - assuming the above issues (regarding the status of the defendant and whether the defendant has applied for any grant of probate or whether he is an executor de son tort or a constructive trustee) can be clarified.
10. Because there is a triable issue over the plaintiff's entitlement and whether the plaintiff is entitled to call for the funds or is only entitled at this stage to an exercise of discretionary power perhaps under clause 7(b) of the Will, that begs the question as to whether the Court might be justified in removing the defendant simply because the defendant has on one occasion declined a request for funds.
11. It is conceptually possible that a trustee (assuming for the moment that the status of the defendant might be that of a trustee) might be removed on the basis of a single refusal to exercise a discretionary power to provide funds if in the context of that refusal there was intimated a complete lack of willingness to properly exercise the discretionary power.
12. However, it is not clear to me that that is evident from the limited materials placed before the Court and certainly not to the standard required on a summary judgment application.
13. Fourthly, the question of who might be an appropriate new trustee requires further consideration. The proposal of the plaintiff is that his mother be appointed as trustee of the trust: see the claims for alternative relief in order 3 of the summons.
14. An order for the removal of a trustee will be made where it is for the welfare of the trust estate as a whole that the trustee should be removed: Kennedy v Kennedy [2011] NSWSC 1619 (Kennedy) per Slattery J at [16] citing Guazzini v Pateson (1918) 18 SR (NSW) 275 of 293.
15. There is a longstanding authority of the Court to the effect that the Court has a reluctance to appoint as a new trustee a beneficiary of the trust: Kennedy at [18] citing Johnstone v Johnstone (1902) 2 SR (NSW) Eq 90. The reluctance is even stronger where there are close family ties between the trustee and the beneficiaries, unless no suitable (e.g. independent) other person can be found, or there are special circumstances: Kennedy at [18].
16. The reasons for this are explained in caselaw see for example Saul v Lin (No 2) (2004) 60 NSWLR 275 at 278; [2004] NSWSC 332 at [9] - [11] where Palmer J stated as follows: "9 In my opinion, the general rule that the Court will not appoint as new trustees persons who have close family ties to the beneficiaries is applied as carefully today as it ever was in the old cases. The reason is obvious - Sir John Romilly MR put it in a nutshell in Wilding v. Boulder (1855) 21 Beav 222 (52 ER 845): "I have always observed that the worst breaches of trust are committed by relatives who are unable to resist the importunities of their cestuis qui trust, when they are nearly related to them." Human nature has not changed since those words were uttered. 10 Ms Needham says that the proposed new trustees are not "nearly related" to the beneficiaries. The evidence shows, however, that although the proposed trustees are not members of the immediate families of the beneficiaries, they have longstanding close family ties. 11 In my opinion, the general rule that the Court prefers not to appoint relatives of beneficiaries as new trustees is not confined to the appointment of relatives of any particular degree of propinquity to the beneficiaries. It is a commonsense rule and it is to be applied in a commonsense way whenever it is apparent that the proposed new trustees have such family connections with the beneficiaries as to be susceptible to the influences and partialities which almost inevitably pervade family histories and family affairs, particularly where money is concerned."
17. What is stated above shows the reluctance is borne out of human common sense and out of centuries of collected legal wisdom of life experience in cases coming before Courts. Application of the prima facie reluctance is not to be elevated to an inflexible rule but rather yields to the facts and exigencies of each given case. Thus, it is of course always possible to find cases where the Court has considered it appropriate to appoint a family member as a substitute trustee having regard to the particular facts of the case: see for example Dixon v Dixon [2022] NSWSC 721 per Parker J.
18. Fifthly, ordinarily, where it is proposed that persons other than the NSW Trustee or a trustee company are to be appointed as trustees, there should be placed before the Court evidence of the fitness of such proposed trustees.
19. There is no such evidence before the Court as yet.

Conclusion

1. In the above circumstances the application for summary judgment is dismissed.
2. The dismissal of the application for summary judgment of course is without prejudice to the plaintiff making any further application to the Court for the hearing of the summons potentially in the absence of the defendant if the defendant continues to take a position of not appearing in the matter.
3. What if any consideration the plaintiff gives to the matters that I have raised above is ultimately a matter for the plaintiff.
4. The order of the Court is the notice of motion filed by the plaintiff on 10 August 2022 is dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 November 2022