WOOD (AS CO-EXECUTOR AND TRUSTEE OF THE WILL OF THE DECEASED) -v- WOOD [No 4] [2014] WASC 393 (27 October 2014)

How many people out of the suit Jardyce and Jarndyce has stretched forth its unwholesome hand to spoil and corrupt would be a very wide question.

2 As we shall see, there looms here an emerging Jarndyce v Jarndyce. The parties would be well advised to take whatever urgent steps are necessary to see that for them, at the cusp of their personal Jarndyce v Jarndyce, life does not imitate art.

3 I am dealing with an amended application for private judicial advice and directions sought by the first and second plaintiffs (the Executors) (severally, Professor Fiona Wood and Mr Morgan Solomon) pursuant to s 92 of the Trustees Act 1962 (WA) under their amended originating summons filed 4 August 2014.

4 Section 92 allows an application to be made for directions by '[a]ny trustee'. There is no dispute that Professor Wood and Mr Solomon meet the requirement of being trustees; see s 6 of the Trustees Act and its definition of 'trustee'. Those definitions include, where the context admits, 'a personal representative'.

5 In brief terms, the late Jennifer Ballantyne died on 7 July 2012. She left a will made 28 March 2012 and a codicil to that will of 18 April 2012. She appointed Professor Wood and Mr Solomon as her executors and her trustees. They accepted that office and obtained a grant of probate out of this court in respect of those testamentary instruments, on 4 October 2012.

6 Professor Wood is a surgeon and burns specialist of world renown. She is referred to in the materials as being the late Ms Ballantyne's best friend. I am sensitive of that relationship. Mr Solomon was admitted to practise as a solicitor in Western Australia in 2000 and is a partner in the law firm trading as Bowen Buchbinder Vilensky, which operates as an incorporated legal practice BBV Legal Pty Ltd (BBV).

7 Mr Solomon had acted for Ms Ballantyne and her numerous corporations for over a decade before her death. He obviously enjoyed her complete confidence. He is the person who drew her last testamentary instruments.

8 Mr Solomon appears to have held considerable insights in relation to Ms Ballantyne's businesses and assets, including a number of companies which she operated and controlled before her death, including Ondit Pty Ltd (the 10th defendant) (Ondit), Second Skin Pty Ltd (Second Skin), Zenbay Holdings Pty Ltd and Ballanco Pty Ltd.

9 It appears that Ms Ballantyne was very ill and hospitalised for some months in 2012 prior to her death in July 2012. She had been suffering from breast cancer for some time. In this period her personal assistant, Ms Shirley Fletcher, the sixth defendant, visited Ms Ballantyne frequently. Ms Fletcher would convey instructions back and forth concerning Ms Ballantyne's affairs and that of her corporations to Mr Solomon for his legal advice.

10 At the time of her death Ms Ballantyne's long-standing de facto partner was Mr Kurt Rudolf Baur, the second defendant.

11 Many years earlier, Ms Ballantyne had been in a failed de facto relationship with Mr Robert Charles Scott, the third defendant. Mr Scott is the beneficiary of a conditional disposition of a half share in land (he having the other half share) at South Perth under cl 2 of Ms Ballantyne's will, which I will identify later.

12 This application by the Executors for directions and advice as trustees by s 92, is advanced in a context of their current involvement in no less than five other actions issued out of and pending in this court, including two case managed by me in the CMC list. Obviously, I will disqualify myself from any further involvement in those two actions, if they are to proceed further. That, as I explain, is necessary in order for me to be available to be able to resolve this more urgent and wider application by the plaintiffs for advice under s 92 of the Trustees Act.

13 The summary character of these proceedings and a need for a relatively swift rendering of the Court's advice upon question one will make it necessary to adopt two measures - mainly out of expediency. First, it will be necessary to read with these reasons the transcript of the hearing 1 September 2014. Much was said there of significance, but which is cumbersome to report verbatim. There will be frequent references to the transcript (ts) in these reasons which will not be the subject of much elaboration. Second, I will need to schedule to these reasons what is the reamended statement of claim currently filed on behalf of Mr Baur (REASOC) in CIV 1412 of 2014. I do that again on the basis of not having the luxury of being able to elaborate too greatly upon its context in these reasons.

14 Before discussing the surrounding actions I must note what is the oppressively voluminous state of the evidence submitted for the hearing of this application, particularly from the Executors.

15 When the application began to be heard on 1 September 2014 counsel for the Executors (ts 328 - 333) identified the Executors' reliance upon six different affidavits by Mr Solomon. These were his affidavits sworn 4 August 2014 (with 745 pages of documentary attachments across a three volume hearing bundle), 5 August 2014 (also accompanied by three smaller volumes of documents), 18 August 2014, 21 August 2014, 27 August 2014 and a further 'supplementary' affidavit of 21 August 2014 (with its further 'supplementary' hearing bundle of additional materials across 299 pages).

16 For the Executors there were also three affidavits of Ms Fletcher, who is the sixth defendant in these proceedings (affidavits of 23 and 31 July and 21 August 2014, with her affidavit of 21 August sworn in action CIV 1492 of 2014). There was also a single affidavit by Mr Christopher Roos of 4 August 2014, Ms Simone Varner sworn 23 July 2014, Ms Betty Ballantyne (the late Jennifer Ballantyne's mother) sworn 23 July 2014, Ms Janice Morris sworn 23 July 2014, Ms Lisa Hannan sworn 20 August 2014 and Mr Giovanni Groppoli sworn 20 August 2014 (in action CIV 1492 of 2014).

17 After lunch counsel for the Executors told me he also relied on an affidavit by Professor Wood sworn 4 August 2014 (ts 406).

18 No objections were raised against any of this material from the other participants. This was no doubt due to the special character of this application for private advice.

19 Mr Baur, as the second defendant, sought to adduce his own evidence, particularly his long sixth affidavit sworn 20 August 2014, and referred to some other limited material by an affidavit of Ms Tegan Short, a solicitor employed by BBV, sworn 2 July 2014 in CIV 1412 of 2014 (ts 430).

20 Mr Scott read his own affidavit of 12 August 2014, and also an extra affidavit sworn by him in CIV 1373 of 2014 of 6 May 2014 (ts 426).

21 I need to briefly recount the different actions concerning Ms Ballantyne's estate and the Executors currently pending, before discussing the directions sought under the Executors' amended originating summons of 1 August 2014, pursuant to s 92 of the Trustees Act.

Surrounding actions: the pending litigation Mr Scott

22 First I mention CIV 1492 of 2014 and CIV 1373 of 2014, both currently active and case managed in the CMC list of Pritchard J.

23 By CIV 1492 of 2014, Mr Scott brings proceedings against Second Skin as first defendant, and with Mr Solomon and Professor Wood as second defendants.

24 Mr Scott seeks, in effect, declaratory relief to confirm that he is the legal and beneficial owner of one of the only two issued shares (ie, that he enjoys a 50% legal and beneficial shareholding in the corporation Second Skin).

25 An ASIC search of the corporation Second Skin of 14 July 2014 (found at page 127 of the Executors' hearing bundle) shows Mr Scott as currently the registered holder of one of the only two issued and ordinary shares in Second Skin.

26 It would appear Second Skin actively resists Mr Scott's claim for recognition as a shareholder at all, let alone any acknowledgement of him as a 50% shareholder. Mr Scott's pending application for summary judgment had been listed before her Honour, Pritchard J, on Monday, 8 September 2014.

27 As I understand it, the application for summary judgment by Mr Scott is resisted by Second Skin, apparently based on arguments as to a wholly contrary oral agreement that Mr Scott is alleged to have made and partly implemented with Ms Ballantyne - when their relationship ended. That oral agreement is asserted by Second Skin as being perfected between the late Ms Ballantyne with Mr Scott some time around 1995 or possibly earlier. Absent Ms Ballantyne's evidence, a factual basis for that assertion denying a legal or beneficial shareholding position in Second Skin for Mr Scott (contrary to the Second Skin share register) is otherwise not apparent from the materials before me.

28 Concerning the litigation involving Mr Scott, under pars 5 and 6 of the amended originating summons, the Executors ask this court for advice as trustees pursuant to s 92 of the Trustees Act, in relation to two questions, namely:

1. whether the plaintiffs are justified in defending the application for summary judgment filed by Robert Charles Scott in Supreme Court Action CIV 1492 of 1492 [sic]; and
2. in the event that the application for summary judgment filed by Robert Charles Scott in Supreme Court Action CIV 1492 of 1492 [sic] is dismissed, whether the plaintiffs are justified in defending the claim by Robert Scott in that action that he is the beneficial owner of 1 of the 2 shares in Second Skin Pty Ltd (ACN 009 350 467);

29 For the purposes of resolving the s 92 application for this advice, I gave leave to Mr Scott to be represented and then by counsel, Mr Macdonald, to make written and verbal submissions at the hearing. This was in the face of some strong opposition to that course by the Executors, expressed at earlier directions hearings. They contended Mr Scott held no rights at all to be heard on their s 92 application, as he was 'not a beneficiary'.

30 However, I did allow Mr Scott, through counsel, to attend at the s 92 application for directions and to be heard on his written submissions and then orally by counsel.

31 On my assessment, it was helpful and wholly expedient to hear Mr Scott's counter positon. I allowed that level of participation by Mr Scott pursuant to s 92(2) of the Trustees Act. I assess Mr Scott as a person legitimately interested and affected by the application for advice under s 92 (in my view, vitally interested).

32 As matters transpired across 1 September 2014, the early position as expressed by the Executors through their counsel, Mr Tsaknis, at the hearing was that each of questions 5 and 6 concerning the Scott litigation in this court, ought be answered in the negative. That was my prima facie assessment (see ts 334 - 335). It was also the position advocated on behalf of Mr Scott by his counsel. Hence, some (surprisingly unique) unanimity emerged early in the hearing upon questions 5 and 6 as posed.

33 In short, with Mr Scott currently registered as the legal owner of one of the two issued shares in Second Skin there is, I assess, no more viable position other than for the Executors to not participate in actively resisting action CIV 1492 of 2014 - beyond filing a submitting appearance, then abiding by whatever decision the Court might ultimately reach as regards Mr Scott and his share in Second Skin. That corporation, of course, is actively participating in that action and resisting Mr Scott's summary judgment application.

34 Questions 5 and 6 were therefore resolved in the negative during the course of the hearing on 1 September 2014 (ts 355).

35 The other subsisting litigation concerning Mr Scott is action CIV 1373 of 2014.

36 This is an action brought by the Executors as plaintiffs against Mr Scott. The action would appear to be an attempted invocation by the Executors of s 64 of the Trustees Act against Mr Scott to effectively require him to take steps to commence actions against the estate within a fixed time period - see s 64(1) (three months).

37 However, during the course of the discussions I had with respective counsel over the course of 1 September 2014, it emerged that such an action by the Executors may well be misconceived (see ts 363) as regards a foreshadowed derivative action by Second Skin (at the behest of Mr Scott) against Ms Ballantyne's estate.

38 The essence of what has been communicated by Mr Scott, through his previous solicitors, to the Executors and Second Skin, only appears to be raising grievances articulated on a basis of the non-pursuit to date by Second Skin of causes of action asserted by Mr Scott to be held by Second Skin against the estate of Ms Ballantyne. This seems to be on a basis of contentions that various business decisions by the late Ms Ballantyne, taken whilst she was in absolute control of Second Skin during her lifetime, were actually decisions implemented in breach of the fiduciary duty she owed as a director to Second Skin as its then controlling mind. Mr Scott says these decisions, correctly understood, were taken for the benefit of other entities (also absolutely controlled then by Ms Ballantyne) who were advantaged by her decisions - and ultimately to the financial detriment of Second Skin.

39 Essentially then, Mr Scott would appear, as against the Ballantyne estate, only to be articulating what are just potentially derivative claims (ie, causes of action) of Second Skin, not personal claims by him. This is in circumstances where the current board of Second Skin (now comprising Ms Catherine Harries, the fourth defendant, Ms Lisa Hannan and Ms Fletcher, plus Professor Wood) apparently reject or at least appear to show no inclination towards resolving or moving to have Second Skin advance any claims against Ms Ballantyne's estate.

40 There may be some substance in Mr Scott's derivative concerns expressed regarding Second Skin: see ts 368. But that is not a matter for me to resolve.

41 No proceedings have been commenced against the estate by Second Skin of the derivative character as postulated through Mr Scott under the common law pursuant to the Foss v Harbottle [1843] EngR 478; (1843) 2 Hare 461; 67 ER 189 line of authority. That would be by a derivative action and by which Mr Scott seeks effectively to be authorised to advance litigation for and in the name of Second Skin, in the face of inaction by the current board of Second Skin to take any steps to pursue Ms Ballantyne's estate. Alternatively, the provisions of pt 2F.1A of the Corporations Act 2001 (Cth) might be, but have not to date been, invoked by Mr Scott as a 'member' (ie, shareholder of Second Skin), in order to authorise a similarly conceived derivative action on behalf of Second Skin against Ms Ballantyne's estate.

42 For present purposes, I record that none of the parties represented at the hearing on 1 September 2014 appeared to be of a view that s 64 of the Trustees Act could properly be invoked - to thwart a derivative proceeding by Second Skin of the character as explained.

43 That position accords with my prima facie assessment of the workings of s 64 as well: see ts 361 - 364.

44 Two other significant actions involving the same estate have to date been case managed in my CMC list. First is CIV 1412 of 2014, since May this year. This is an action by Mr Baur against the Executors ultimately seeking orders for their removal under s 77 of the Trustees Act or the inherent jurisdiction of the Court, revocation of the grant of probate in the Executors' favour, and an appointment of new executors and trustees.

45 Those proceedings first came to my attention late one evening in urgent circumstances. That was in the context of an urgent opposed application by Mr Baur for an interim injunction on 21 May 2014 restraining the Executors from attempting to perfect the sale of a property in Edinburgh, Scotland (the Hermiston Gardens property). That land in Scotland is owned by Ondit, albeit encumbered by a mortgage securing a loan to Ondit from Barclays Bank. The injunction, having been granted at 7.00 pm on 21 May 2014, was then extended on an interlocutory basis at trial on 27 May 2014.

46 By the terms of Ms Ballantyne's will (cl 4), as I explain later, all 2,000 issued shares in Ondit she had owned at her death were left to Mr Baur, her longterm partner and surviving de facto spouse.

47 Ondit also owns other valuable real estate aside from the Hermiston Gardens property, including a residence at May Street, Scarborough. There, Ms Ballantyne and Mr Baur had jointly resided for some years prior to Ms Ballantyne's death in July 2012.

48 Ondit also holds or held a leasehold interest in other property at Bondi Beach, New South Wales, and in some personalty.

49 In short, and by what is a significant understatement, it is now apparent as time has passed in the two years subsequent to Ms Ballantyne's death in July 2012, that Mr Baur as a significant beneficiary of the will (mostly by receiving all shares in Ondit) has lost all confidence in the ability of the present Executors to fairly, competently and rationally discharge their duties as executors and trustees of his late partner's estate. Consequently, he presses for their removal by CIV 1412 of 2014. That is resisted.

50 Mr Baur's REASOC filed in CIV 1412 of 2014 was before me as document 116, pages 746 - 779 in the supplementary bundle of documents attached to Mr Solomon's 18 August affidavit. I will, as I said, attach it as Schedule A to these reasons - so that the extensive nature of Mr Baur's grievances against these Executors is apparent.

51 It is also very clear to all concerned that whilst Ondit owns valuable real estate assets, it faces serious present liquidity issues. Ondit also suffers a lack of manifest strategic direction at board level (its directors being Mr Solomon, Professor Wood and, by my order, Mr Baur).

52 Ondit shares are currently registered in the names of Professor Wood and Mr Solomon, but they are, of course, held in their capacity as the executors and trustees of Ms Ballantyne's estate.

53 Mr Baur has also commenced a Corporations action, COR 108 of 2014, against the Executors and others - also managed in my CMC list.

54 Within both CIV 1412 of 2014 and COR 108 of 2014 Mr Baur seeks, but has not yet obtained, short term orders that the Executors be compelled to transfer to him immediately and in specie (notwithstanding that Mrs Ballantyne's estate is far from resolved and wound up) all the Ondit shares - as Ms Ballantyne's will provided.

55 By some earlier orders I issued in CIV 1412 of 2014 and COR 108 of 2014, I effectively required Mr Solomon and Professor Wood as the (then only) Ondit directors to use their power as directors, under Ondit's constitution, to appoint Mr Baur as a further codirector.

56 That whole exercise became more difficult than it should have been. But eventually, Mr Baur was appointed as a third Ondit director. This was so Mr Baur would get a better level of direct insight to the workings of the Ondit board and decisions which were being taken on Ondit's behalf by Mr Solomon as one Ondit director. Mr Solomon is also an executor of the Ballantyne estate. Essentially Mr Solomon's decisions as a director for Ondit were acquiesced in by Professor Wood as the other director. Professor Wood was not actively participating as an Ondit director, as she was also a director of Second Skin and there is a clear conflict between the interests of the two corporations.

57 In a context of Mr Baur's two actions, I had been told for some time by counsel that Professor Wood and Mr Solomon were fully amenable to relinquishing their positions as directors of Ondit, but then were unwilling to relinquish board control of Ondit to Mr Baur.

58 Nor were or are they amenable to transferring to him in specie the shares in Ondit at this time. This was on the expressed basis that the shares in Ondit are a significant asset of the estate with an attributed value (see Mr Solomon's first affidavit of 4 August 2014, page 32) of about $1,985,000 (assessed by reason of the worth of Ondit's underlying capital assets).

59 A view has been taken by the Executors that they might in the future need to use their current legal ownership and thereby their control over all the shares in Ondit, to cause some or more of Ondit's assets to be sold off - and thereby to raise more liquid funds for the estate. But this is largely so they can be placed in a position to fund the future legal costs of defending or prosecuting the litigation I have now discussed. In other words, litigation either already commenced or foreshadowed involving Second Skin (at the behest of Mr Scott) or, indeed, Mr Baur's litigation against the Executors seeking their removal.

60 This position was maintained, notwithstanding Mr Baur has offered in CIV 1412 of 2014 an undertaking (amended 10 June 2014) concerning a promised nondisposition of the assets in Ondit in the event all the Ondit shares are transferred to him in specie by the Executors, to accord with cl 4 of Ms Ballantyne's will.

61 I also mention a further action of Mr Baur, CIV 1525 of 2013, brought against the Executors and others. Mr Baur is there invoking provisions of the Family Provision Act 1972 (WA), on a basis of the asserted inadequate provision for him under the will as her surviving spouse.

62 Those proceedings are not yet case managed in the CMC list. Effectively, however, that further action presents as something of a back-up for Mr Baur, in the event the end worth of the Ondit shares (inter alia) he eventually receives has diminished by the attrition of Ondit's assets by the Executors - to that extent that Mr Baur is, in the end result, inadequately provided for by his late partner's will.

63 Clearly, as the underlying assets of the Ballantyne estate dissipate through meeting the savage legal costs (as I explain) of funding a participation by the Executors in ongoing litigation of legion proportions, Mr Baur and the other estate beneficiaries will all stand a serious risk of having the worth of bequests or legacies directed to them under Ms Ballantyne's will (and codicil) eroded.

64 To that end, it is a matter of some note that counsel for the Executors told me (but with no other detail) in response to a question I had to ask at just after lunch as of 1 September 2014, that to that point $465,000 of the estate's funds had, in just under two years, been expended on legal fees incurred by the Executors to that point (ts 403).

65 There is clearly even more heavy legal expenditure on the horizon. Nevertheless, I can detect (from the Executors' materials, mainly Mr Solomon's affidavit and counsel for the Executors' submissions) no real sense of any concern over that state of affairs. Indeed, I rather got the contrary impression, namely, that if the whole worth of the Ballantyne estate had to be spent on legal fees, then so be it. I am left wholly aghast at that prospect and what is a discernible attitude of total nonchalance about it emanating from the Executors.

66 Mr Solomon, of course, is a principal of the legal business BBV. That corporation has acted for the Executors, Second Skin and Ondit in or around most of the litigation that I have now mentioned, at one point or another. This delivers real conflict of interest concerns. It is another significant understatement for me to observe:

(a) the litigation prospect for the Ballantyne estate in terms of it incurring ongoing heavy future expenditure by more legal costs, presently looks bleak all fronts, with very little ground for optimism at present towards any likely short-term exits from the litigation; and

(b) viewing matters presently, even in a context of an estate with assets once worth (roughly) $5.6 million, a level of expenditure on legal costs already totalling $465,000 over only two years of the current administration by the Executors of the estate displays rather poor value for money.

67 The estate is approaching the event horizon of a litigation black hole, from which none of its assets will emerge to the advantage of the intended beneficiaries.

68 In a context of Mr Baur's pending actions it is necessary to note the remaining area of directions and advice sought by the Executors under their amended originating summons.

69 The first posed (question 1) is whether the plaintiffs are justified in defending the action brought against them by the second defendant, Mr Baur (as plaintiff, in Supreme Court action CIV 1412 of 2014) for their removal as executors and trustees of Ms Ballantyne's estate, the revocation of the grant of probate to them, and for their replacement. That is now the overwhelmingly significant remaining question, for the purposes of this private advice application.

70 Nevertheless, I will divert briefly, to record the somewhat less significant, but related, questions. They essentially concern the corporation Ondit, its shares, board control and Mr Baur.

71 Questions 2 and 3 under the Executors' amended originating summons were:

1. whether the plaintiffs [the Executors] are justified in not transferring the shares in Ondit Pty Ltd in specie to Kurt Rudolf Baur as provided for in the will of the deceased until the hearing and determination of Supreme Court Action CIV 1525 of 2013 [Mr Baur's Family Provision action], Supreme Court Action CIV 1412 of 2014 [Mr Baur's action seeking the removal of the Executors and their replacement], Supreme Court Action 1492 of 2014 [Mr Scott's action against the Executors and Second Skin Pty Ltd seeking a declaration that he is currently the legal and beneficial owner of 50% of the shares] and Supreme Court Action CIV 1373 of 2014 [the action brought by the Executors to compel Mr Scott to commence proceedings by way of an invocation of s 64 of the Trustees Act] and any action brought by Robert Charles Scott the subject of that Action;
2. whether the plaintiffs are justified in immediately transferring the shares in Ondit Pty Ltd in specie to Kurt Rudolf Baur as provided for in the will of the deceased notwithstanding the hearing and determination of [the same actions referred to under direction 2 above];

72 The questions and advice sought by questions 2 and 3 are effectively the converse of each other. I was told by counsel for the Executors the questions had been so formulated, to indicate to the Court the Executors were not favouring either course, in terms of either not transferring or immediately transferring the Ondit shares to Mr Baur.

73 As matters unfolded across the course of the hearing on 1 September 2014, another overwhelming impression I obtained was that Ondit as a corporation currently suffers a critical lack of management direction.

74 That arises by reason of Ondit having a currently disengaged but deadlocked board. Mr Baur was eventually appointed a director of Ondit after the orders I made in June 2014 in the two CMC list actions I case managed. But Mr Baur still finds himself very much in a minority board position even so.

75 As seen, questions 2 and 3 address an issue of possibly transferring the Ondit shares in specie to Mr Baur. The two questions do not address the associated issue of Ondit's board and its present detrimental lack of direction.

76 At the hearing on 1 September 2014 the Executors by their counsel again indicated a general amenability to relinquishing their Ondit board positions. Again, however, that was on a basis of relinquishing their current management control of Ondit to anyone but Mr Baur.

77 By question 4 the Executors proposed an appointment of a receiver and manager to Ondit Pty Ltd (presumably a court appointed receiver and manager). During the course of submissions on 1 September their counsel also raised an alternative of an administrator, pursuant to s 35 of the Administration Act 1903 (WA): see ts 358 - 359 and 419 - 420. But all such proposals under question 4 concerning Ondit seem to me to be wholly misconceived.

78 Ondit, on the materials before me, faces pressing liquidity problems at present. But at least on the face of it, Ondit owns a significant unencumbered capital asset worth almost $2 million, namely the May Street property at Scarborough where Mr Baur has continued to reside after the death of his partner.

79 On my assessment, it is not appropriate to view either question 2 or 3 concerning a transfer of the shares in Ondit in specie to Mr Baur - until the more fundamental but obvious issue of Ondit securing for itself an independent and capable board is properly addressed and resolved.

80 On the face of it, I can see no convincing reason why Mr Baur, plus at least one more competent person or persons nominated by him, ought not to comprise the board of Ondit without the Executors. This rudderless corporation needs to be swiftly empowered to effectively make sensible business decisions, to escape what is a current decision-making gridlock. Ondit's board is currently dysfunctional, first from the reluctance of Professor Wood (who essentially by reason of her board membership of Second Skin, which is presently in serious conflict with Ondit, either abstains or just follows Mr Solomon's major Ondit decisions) and a less understandable failure of Mr Solomon to arrange for some independent and effective decision-making by other directors on Ondit's behalf.

81 The present three person Ondit board is consequently not independent. With Mr Baur in a minority position on the board, this is only perpetuating a clearly unsatisfactory status quo. That position needs to be corrected swiftly. Professor Wood and Mr Solomon should immediately resign from the board of Ondit, leaving Mr Baur to remain as a director, and then to appoint further independent directors as he sees fit.

82 Once Ondit achieves a board of management which is workable and independent (of the Executors), then the issue in respect of Ondit's shares possibly being transferred from the Executors to Mr Baur can be contemplated. This issue raises the unpalatable context of possible later recourse being needed to the proceeds of sale of some assets of Ondit, in order to fund more legal expense by the estate.

83 My assessment is that an in specie transfer issue to Mr Baur can be adequately implemented with the Executors' asset recovery and realisation concerns addressed by extending the amended undertaking of Mr Baur offered on 10 June 2014. That undertaking would need to be strengthened by being reasonably secured. That could be done by some form of security, such as a charge, given by Ondit over the May Street property at Scarborough - to a reasonable level - which I would presently assess as security for an amount not exceeding $300,000 (assuming rateable contributions by other beneficiaries towards ongoing estate legal costs).

84 The transcript of proceedings of 1 September 2014 records the belatedly expressed amenability of the Executors through their counsel (see ts 412) to accepting a proposal along those lines - on the basis of an undertaking of Mr Baur secured by a charge.

85 Currently, questions under par 2 and par 3 of the amended originating summons are inappropriate to answer. But with some sensible movements, in terms of Ondit's management passing to a more viable and independent board, plus then a secured undertaking from Mr Baur in place, I would at that point indicate my in-principle preparedness to issue an amended advice answering question 3 (incorporating the additional factors) in the affirmative.

86 I should now set out the wholly misconceived question 4 which, during the course of argument across 1 September 2014, was effectively withdrawn (ts 420) as a question requiring my advice. It was ultimately accepted by counsel for the Executors as being inappropriate. As drawn, question 4 reads:

1. whether Fiona Wood and Morgan Solomon are justified in putting and voting in favour of a resolution of members as shareholders of Ondit Pty Ltd removing the current directors of Ondit Pty Ltd and appointing a receiver and manager of Ondit Pty Ltd;

87 The misconceptions in that formulation are selfevident. They emerged swiftly during the hearing of 1 September 2014, culminating in the Executors withdrawing the request for advice in those terms (ts 419).

88 The surrounding observations I have made concerning questions 2 and 3, however, would effectively endorse the board management of Ondit passing to Mr Baur, as soon as possible.

89 That leaves essentially for substantive residual evaluation the private advice sought under question 1, asking whether Mr Solomon and Professor Wood are justified in defending the action against them by Mr Baur seeking their removal as executors and trustees by CIV 1412 of 2014.

90 An affirmative answer to that question would pragmatically mean, in effect, that the Executors' future legal costs, incurred in their ongoing resistance to Mr Baur's action seeking their removal would, subject to s 95(2) of the Trustees Act (where there is proven fraud or concealment) be incurred at the expense of the estate - and irrespective of the end outcome regarding Mr Baur in CIV 1412 of 2014.

91 On what is an unsatisfactory state of voluminous and ill-considered materials put before me on behalf of the Executors, I would not in my discretion see it as appropriate to provide that advice. For instance, it has not been explained why Mr Solomon needed to swear six affidavits to advance this application.

92 Whilst I appreciate that the Executors eventually engaged legal representation separate to BBV in the Scott actions, and that lawyers Dwyer Durack have prepared a separate affidavit for Mr Solomon in that quarter, that does not satisfactorily explain a need for six affidavits from Mr Solomon, or why so much seemingly unnecessary documentation was tacked on to his affidavits. Rather than an adroit assemblage of key documents which could actually be referred to and commented on usefully in the space of a one-day hearing, the Court was made the subject of a document bombardment. I am tempted to say the affidavits of Mr Solomon were more in the nature of a discovery exercise, but it would be generous to say that all of the material was relevant even in a tangential, nebulous Peruvian Guano sense.

93 The Solomon affidavits prepared by BBV are very poorly drafted. They contain far too much comment, argument, blanket conclusions and unsourced hearsay.

94 On this type of application the applicant trustee's evidence is usually accepted, unchallenged. But what is submitted to a court still must be factual evidence - not long-winded, self-serving argument, as much of what was in Mr Solomon's BBV affidavits proved to be.

95 Nor do I consider it appropriate that the Court approve some form of 'halfway house' option, as was suggested by Mr Tsaknis, such as approving the Executors filing a defence in Mr Baur's action, or for some further period - and subject to a review before trial.

96 Nevertheless, upon what are oppressive, disorganised, unhelpful and wholly unsatisfactory materials submitted from the Executors, I will endeavour to provide some limited observations to assist as far as I can.

97 But before doing that it is necessary to say more about:

(a) the nature of an application for directions by executors and trustees under s 92 and s 95 of the Trustees Act, including discussing some guiding case authority in that respect; and

(b) the provisions of Ms Ballantyne's will and codicil.

Legal principles and observations as to s 92 and s 95 of the Trustees Act 1962 (WA) as amended

98 Section 92 of the Trustees Act is found within pt VII div 3 under a divisional heading 'Jurisdiction to make other orders'. The implications from an economic perspective of an advice and directions from a court under s 92(1) (if followed by trustees) manifest in the later provisions of s 95(1).

99 Accordingly, I will set out below both those provisions from pt VII div 3 of the Trustees Act. Before doing that, however, I note that they bear a close textual parallel to the New South Wales legislation, discussed by the High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66. The New South Wales legislation was s 63 and s 85 of the Trustee Act 1925 (NSW), and was canvassed by plurality Justices, Gummow ACJ and Kirby, Hayne and Heydon JJ, at [34] - [35] of that decision.

100 I will return to that decision in a moment to discuss the present implications of eight general points made, addressing s 63 in the New South Wales legislation (bearing upon an understanding of s 92 and s 95 of the WA Trustees Act, in the present context) between [54] and [76] of the plurality reasons.

101 Locally, s 92 and s 95 of the Trustees Act (WA) provide:

(1) Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.

(2) Every application made under this section shall be served upon, and the hearing thereof may be attended by, all persons interested in the application or such of them as the Court thinks expedient.

1. Trustee acting under Court's direction, protection of

(1) Any trustee acting under any direction of the Court shall be deemed, so far as regards his own responsibility, to have discharged his duty as trustee in the subjectmatter of the direction, notwithstanding that the order giving the direction is subsequently invalidated, overruled, set aside or otherwise rendered of no effect, or varied.

(2) This section does not indemnify any trustee in respect of any act done in accordance with any direction of the Court if he has been guilty of any fraud or wilful concealment or misrepresentation in obtaining the direction or in acquiescing in the Court making the order giving the direction.

102 Eight general points identified by the plurality in Macedonian Church addressed the New South Wales counterpart to s 92, s 63 of the Trustee Act 1925 (NSW). They provide a stepping off point, as regards the state of law in this venerable, unique, nonadversarial jurisdiction.

103 Without repeating those general points verbatim, I mention the following sub-aspects which present to me as particularly relevant to the present task, namely:

(a) There is nothing in the New South Wales legislation which limits its application to 'nonadversarial' proceedings, or to proceedings other than those in which a trustee is being sued for breach of trust, or to proceedings other than those in which one remedy sought is the removal of a trustee from office: see Macedonian Church [56]. There is also nothing in s 92 to suggest that the West Australian legislation is any different.

(b) The jurisdictional bar to a pursuit of relief under provisions like s 92 is simply that the applicants must point to an existence of a question respecting the management or administration of trust property, or a question respecting the interpretation of a trust instrument: see Macedonian Church [58], a case about a dispute surrounding a charitable trust. Clearly, that pre-requisite as regards the ongoing management or administration of the estate of the late Ms Ballantyne left to Professor Wood and Mr Solomon as her executors and trustees is well satisfied in present circumstances.

(c) The Court exercises a discretion when considering applications for advice brought by trustees under private advice provisions like s 92. Advice does not have to be provided.

(d) The plurality observed that the trustee directions provisions 'should not be yoked to a general first principle that, where there is a contest or where there are adversaries, it is not appropriate to give advice': Macedonian Church [60]. There is no lack of adversaries for these executors and trustees in the underlying litigation I have identified as currently active.

(e) The procedure for seeking judicial advice via provisions like s 92 is summary in character. In 1857, Lord St Leonard's speech concerning the Trustees Relief Bill proposed a substitution of a 'cheap and simple process of determining questions': see Macedonian Church [62]. Regrettably, I have not found the process to be simple here and I very much doubt, given a daunting level of materials indiscriminately assembled for me, that it will in the end be cheap for the beneficiaries of the estate.

(f) The nature of the advice provided by a court under provisions such as s 92 is 'an exception to the Court's ordinary function of deciding disputes between competing litigants' and provides a facility for the giving of 'private advice': Macedonian Church [64], quoting Re Application of Macedonian Orthodox Community Church St Petka Inc [No 2] [2005] NSWSC 558; (2005) 63 NSWLR 441 [23].

(g) The High Court observed at [64] upon a level of personal protection afforded a trustee who receives and acts upon the court's private advice. It continued, referring to the New South Wales Trustee Act:

Section 63(2) precludes any trustee, who acts in accordance with the private advice, from being held liable for breach of trust in the event that in conventional proceedings it is later held that the legal position does not correspond with the advice given so long as the proviso to s 63(2) is satisfied. [65]

Section 63(2) of the New South Wales legislation corresponds to s 95 of the West Australian Trustees Act, s 95(1) setting out the general, protective rule, and s 95(2) the proviso.

(h) The Macedonian Church plurality at [65] observed upon the status of others in an application for private advice as being participants, not 'parties' to the trustee's advice proceedings, albeit permitted to be heard and allowed to participate in the proceedings, to some extent.

(i) Trustees, particularly those sued for breach of trust, may sometimes experience uncertainty over whether they ultimately will be able to obtain an indemnity as to their incurred costs of defending litigation. Were a trustee sued for breach of trust (including breach of trust alleged to arise out the defence of the proceedings) an application for private advice should not be seen as one which should rarely if ever succeed. The plurality observed at [70]:

Instead it should be seen as a standard instance to which s 63 can in appropriate circumstances apply.

Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs.

See also [72] explaining the wider purpose in a private advice application, going beyond the personal protection of the trustee to a 'no less important purpose of protecting the interests of the trust'.

(j) In resolving a private advice application by trustees, in the context of deciding whether it would be proper for a trustee to defend proceedings instituted concerning a trust, it is to be recognised that such an application is 'radically different from deciding the issues that are to be agitated in the principal proceeding', and the 'two steps are not to be elided'. Judicial advice proceedings 'are not to be treated as a trial of the issues that are to be agitated in the principal proceedings' [74].

104 Beyond principles emerging in this area from the Macedonian Church decision, whilst reviewing the law in this area, I have been assisted as well by some recent observations by Edelman J in Plan B Trustees Ltd v Parker [No 2] [2013] WASC 216.

105 I particularly mention his Honour's consideration of matters relevant to directions concerning the justification of legal action, under [37] - [53] of his Honour's observations.

106 Edelman J in Plan B Trustees was considering an application for directions asking whether a failure to bring legal proceedings by the trustee was justified. The application in this case, of course, concerns essentially an obverse scenario - namely, to sanction the trustees' defence of and ongoing resistance to proceedings brought against them by Mr Baur for their removal - which they steadfastly resist and foreshadow will continue to resist at the expense of the estate for as long as it takes, and particularly so, as I assess it, if the Court provides an affirmative answer to question 1.

107 The removal of Professor Wood and Mr Solomon as executors is sought by Mr Baur in CIV 1412 of 2014. He is supported to that end by Mr Scott plus one of the named beneficiaries under Ms Ballantyne's codicil, the seventeenth defendant to these proceedings, Ms Michelle Ann Matthews: see the further par 11(h) added by the codicil.

108 Other supporting affidavit material was filed by the Executors on behalf of other beneficiaries under Ms Ballantyne's will, supporting a continuance in office of the current Executors (including from the late Ms Ballantyne's mother). I obviously respect the views and the underlying confidence as is expressed in the Executors. But generically expressed statements declaring support and confidence, with no underlying reasoning, carry little intellectually persuasive weight towards confronting or dealing with the substantive grievances of Mr Baur and Mr Scott, which I must weigh (albeit, not resolve).

109 I also observe that, like the position in the Plan B advice application, the evidence before me, particularly from the Executors, is voluminous (see Plan B [5]) in a context where under a s 92 application for advice Edelman J (ironically for present circumstances) observed at [38]:

It is common in an application for the directions to be uncontested.

110 Even more relevantly to my end position here, his Honour also said, I observe, that:

if the material put before the Court is insufficient for the Court to make a confident answer to the relevant issues then discretion will generally be exercised to refuse to make any directions.

111 In the present case, the vast level of materials assembled and put to me on behalf of the Executors, even allowing for two sets of solicitors, particularly the BBV submitted materials, was prolix and shambolically assembled. The multiple Solomon and Fletcher affidavits, especially the BBV prepared affidavits of Mr Solomon, repeatedly displayed content that would have drawn heavy criticism and excision in adversarial litigation. No witness, including Mr Solomon, of course, was cross-examined upon their affidavits in this application.

112 Mr Solomon's affidavits also manifested, as I have said, the undesirable and wasteful feature of just attaching page after page of passing solicitor or email correspondence to lump together what I assessed at the end was close to being just a mindless document dump.

113 It troubles me greatly that the Ballantyne estate might ultimately be asked to bear the expense of a largely wasted tree felling exercise.

114 Making that position worse, however, and again most unhelpfully, the Executors' written submissions eventually provided were so bland as to be largely of no help to me.

115 Their arrival needed to be put back and reprogrammed later than the original directions timetable I first set on 17 July 2014 (ts 257) in anticipation of a 1 September 2014 hearing. Revised directions were necessarily issued on 20 August 2014 (ts 270). On 22 August 2014 there was further discussion about the expected submissions (ts 320 - 323).

116 Upon the arrival of the Executors' written submissions on 27 August 2014, I despaired to see that with so much documentary material attached to affidavits and so presumably relied upon, the written submissions mainly addressed general legal principle (most of which was uncontentious). The written submissions of the Executors eschewed any real effort to draw together or analyse from a relevance perspective a vast array of documents tacked on to multiple affidavits, including six by Mr Solomon, one by Professor Wood, and three by Ms Fletcher.

117 The submissions also blandly canvassed many of Mr Baur's pleaded grievances on a legalistic and disengaged basis - frequently asserting no cause of action had been shown. This was again unhelpful and unacceptable. It leads me in the end to refuse advice on question 1, as a matter of discretion.

118 Even during oral submissions at the 1 September 2014 hearing, which ran the whole day to just past 5.15 pm, only a handful of appended documents attached to the affidavit material were referred to by the Executors' counsel.

119 A written (sealed by envelope) opinion from counsel for the Executors (sent to my chambers under cover of a letter to my Associate on the afternoon of Friday, 29 August 2014) unexpectedly arrived just before the hearing of 1 September 2014.

120 I did not access that legal advice of counsel before hearing the application. I was not afforded any practical opportunity to do so. A provision to me of counsel's confidential advice to the Executors was not even foreshadowed to me at any point, in accord with a directions timetable I made, and then later revised (due to slippage) over the course of the three directions hearings prior to the substantive hearing date of 1 September 2014. There were more than ample opportunities to do that - yet such an option was not even whispered of as a possibility (see ts 248 17/7/14; ts 269 - 270 20/8/14, and ts 321 for 22/8/14).

121 Recourse to the counsel's opinion was strongly objected to by the counsel for Mr Baur, and for Mr Scott and Ms Matthews on 1 September 2014. Naturally, they had not expected let alone seen it. The Executors did not waive privilege in this opinion, albeit Mr Tsaknis on 1 September 2014 was unapologetic and pressed me to take it into account by way of support for their position on the application.

122 I was told this advice of counsel canvassed more of the underlying affidavit factual material. It did not, as I explain.

123 Opposing any recourse by me to the opinion, counsel for Mr Baur referred to observations of Edelman J in the Plan B decision at [42] and following. His Honour there observed:

But the better view today may be that it should not be the practice of courts to assess the prospects of success of an action by reference to an 'expert opinion' from senior counsel.

124 With respect, these remarks have my full support.

125 Counsel's written opinion I learned was from Mr Tsaknis, who of course is the Executors' counsel moving this application.

126 In 2014 all notions of a private written side bar with a court, after delivering an otherwise confidential legal opinion, over which legal professional privilege is otherwise maintained to the world, present to me as anachronistic and well past their 'use by' date. The phenomenon, even in this unique private advice context, grates as being conceptually offensive to modern notions of an unbiased curial process that delivers untainted procedural fairness to all participants.

127 An ongoing counsel's opinion receipt position in New South Wales as discussed by the New South Wales Court of Appeal in an earlier appeal, Macedonian Orthodox Community Church St Petka Inc v His Eminence Peter, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand [2006] NSWCA 160; (2006) NSWLR 112 [34] - [39] presents as there being explicitly governed by a rule of court, not found in Western Australia (ts 344).

128 Nevertheless, despite my strong and abiding misgivings, I have in the end reluctantly decided that at first instance I should open and have regard to the written advice of counsel for the purpose of resolving the state of the materials in the present application.

129 I took that reluctant step given the high level of historic curial support for a receipt of counsel's advice practice as a component of the Court of Chancery's unique private assistance to trustees: see also the historical context as McLelland J explained in Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674, 677 (dealing with an application by a liquidator).

130 But having now read counsel's advice, my impression is that it adds very little to the evaluation. It largely echoes written or verbal submissions of counsel openly received already, in my view.

131 I note that Edelman J observed at [43] in Plan B:

Almost any matter which could be contained in an expert opinion could also be made in submissions.

132 In Plan B Edelman J was, of course, dealing with circumstances in which that trustee was seeking a direction to the effect that it would be justified in not commencing legal action. But the same policy considerations, as I see it, apply with even greater force in present circumstances - where these Executors seek to resist at the ongoing cost to the estate Mr Baur's application for their removal.

133 I would need, of course, to weigh what are serious allegations put against the Executors as to conflict, delay and bias - raised by Mr Baur and supported by Mr Scott and Ms Matthews. These are, of course, detailed at greater length in Mr Baur's current pleading, the REASOC, which I have scheduled to these reasons.

134 But these are summary proceedings. Following the observations of Macedonian Church, it ought not be mistakenly thought I am proceeding to finally resolve the merits of the underlying proceedings. Those tasks, if they must be undertaken, would be for other judicial officers of this court.

135 Nevertheless, the underlying issues raised by Mr Baur and Mr Scott need to be sufficiently investigated to determine whether, for the present application, a long term defence to the removal application of Mr Baur is warranted, in effect, at the expense of the estate: see by analogy Re Atkinson [1971] VicRp 73; [1971] VR 612, 615 - 616.

136 As should now be apparent, my task was rendered a lot more difficult than it should have been. As I have said, I found it particularly unhelpful for the Executors' written, then verbal, submissions of counsel across 1 September 2014 (and even counsel's 69 page opinion) to articulate only dismissive broad brush summary judgment type defence arguments - concerning most aspects of Mr Baur's REASOC of 29 July 2014 in CIV 1412 of 2014. This was essentially done using sweepingly legalistic assertions - contending repeatedly that no arguable cause of action has been demonstrated by Mr Baur. By way of example only, I mention as regards CIV 1412 of 2014 the Executors' written submissions of 27 August 2014, pars 21 - 39 and see ts 412 - 413. Counsel's opinion also exhibited the same sweepingly dismissive but, I thought, ultimately unhelpful approach. I am, of course, heavily constrained as to what I can say here as to the content of counsel's advice.

137 Against what are inadequate materials from the Executors, I have also received the written submissions of Mr Baur of 29 August 2014 and as well from Mr Scott of 28 August 2014, uniformly opposing this court giving an affirmative answer to the question posed by the Executors under question 1 of the amended originating summons. They, of course, are participants, not parties in this application. This is also not an application in which facts put before the Court by the trustees seeking advice are supposed to be seriously challenged - factually.

138 I have necessarily therefore afforded Mr Baur's and Mr Scott's affidavits and submissions, lesser weight than the Executors' materials (doing the best I could with them). Nevertheless, at the end of the day I am left deeply concerned by what Mr Baur and Mr Scott raise against these Executors. I certainly do not think it wise or appropriate to just brush off most of these allegations as unarguable or untenable, as the Executors' legal advisers have seemingly attempted.

139 It is necessary now to say more about the dispositions under the late Ms Ballantyne's will and codicil.

Dispositions under Ms Ballantyne's will and codicil admitted to probate on 4 October 2012

140 When Ms Ballantyne passed away in mid-2012 she left a significant estate, approaching the order of $5.7 million. She appointed Professor Wood and Mr Solomon as her joint executors and trustees under cl 1 of her will, and referring to Mr Solomon as her solicitor.

141 By cl 16, Ms Ballantyne provided that any solicitor or accountant acting as her executor or trustee would be entitled to render all usual and proper charges for their professional and other services in the administration of the estate and the trusts, and for their time and trouble if not so employed as an executor or trustee. That reinvestor clause applies to Mr Solomon and the following heavy deployment of his firm BBV for numerous parties.

142 As regards Mr Baur, her disposition under cl 4 was in these terms:

I GIVE to my de facto spouse KURT BAUR all shares in and all right, title and interest in the assets of the company ONDIT PTY LTD (ACN 008 934 709) PROVIDED THAT ...

143 The Ondit shares are assessed as worth $1,985,000 as at 18 July 2014 (see document 4 attached to Mr Solomon's affidavit of 4 August 2014) essentially by reference to the perceived worth of Ondit's assets. There followed a conditional provision concerning Mr Baur's daughter, Esther Baur, upon the May Street property at Scarborough being sold - a provision of no real significance in the current evaluation.

144 Mr Baur was also left two vehicles under cl 8 of the will, including Ms Ballantyne's Porsche 911 Carrera motor vehicle (valued at $130,000) and a Mazda vehicle (valued at $4,000). He also received a general bequest of $200,000 by cl 11(b) of the will.

145 Concerning Mr Scott, cl 2 and cl 12 of the will are significant. By cl 2 Ms Ballantyne said:

I GIVE all of my interest in the property known as 7 Swan Street, South Perth ('Swan Street Property') to my ex de facto spouse ROBERT CHARLES SCOTT formerly of 7 Swan Street, PROVIDED THAT he relinquish and transfer to my Estate absolutely any or all share and interest in and of the business known as Second Skin and the company SECOND SKIN PTY LTD (ACN 009 350 467) that he may have or be entitled to whatsoever including any beneficial entitlement by way of Trust, and in the event the said ROBERT CHARLES SCOTT does not comply with this proviso then I GIVE all my interest in the Swan Street Property to my friends and employees CATHERINE ANNE HARRIES ... and LISA HANNAN ... as tenants in common in equal shares.

146 Bearing in mind the litigation brought against the Executors by Mr Scott (CIV 1492 of 2014) I observe at this point that, on the materials before me, he is a current registered holder of one of only two issued shares in Second Skin Pty Ltd. The other Second Skin share had been held by Ms Ballantyne, and then after her death in July 2012 was transferred to the Executors jointly.

147 During her lifetime Ms Ballantyne would appear to have deployed some sophisticated, ostensibly tax effective inter-company arrangements, as between the corporations she controlled, including Second Skin, Ondit and Zenbay. It appears that she controlled absolutely the decisions of those corporations during her lifetime. But that state of affairs has now contributed to some significant conflicts of interest and management complications in the aftermath of her death, particularly concerning Second Skin.

148 The half interest in the Swan Street property offered to Mr Scott on condition that he relinquish all claims to any interest in Second Skin, has not to date been accepted.

149 Controversy also now arises over his election decision, with Mr Scott alleging undue and improper pressure being put on him to make an election for the purposes of cl 2 by Mr Solomon.

150 At all events, Mr Scott has not to date relinquished his one (50% shareholding) Second Skin share. He is currently via CIV 1492 of 2014, seeking declaratory relief out of this court to the effect that he is and remains a full legal and beneficial owner of 50% of the shares in Second Skin. That action is strongly resisted by Second Skin, it would appear.

151 As regards the Executors I have already answered questions 5 and 6 on 1 September 2014 at the hearing of this originating summons concerning Mr Scott. They should not participate in CIV 1492 of 2014 other than to abide by its outcome.

152 Mr Solomon's affidavit of 4 August 2014 attached a statement of assets and liabilities for Ms Ballantyne's estate at 18 July 2014 (pages 43 - 44 of the attachments to that affidavit). This indicates that the value of a half share in (vacant) land at 7 Swan Street, (the other undivided half interest in the land being already owned by Mr Scott) is $1.3 million, but with unpaid land tax debt of $24,000 subsisting (and the subject of a memorial against the land).

153 If Mr Scott vindicates via CIV 1492 of 2014 his (apparently retained) interest in a 50% shareholding in Second Skin, then obviously he will not, by cl 2 of the will, receive the other half of 7 Swan Street, South Perth.

154 That half share would then pass, by cl 2, to Ms Catherine Harries and Ms Lisa Hannan, as tenants in common in equal shares.

155 Correlatively, the value of one share (a 50% shareholding) in Second Skin Pty Ltd - by the valuation conducted by accountants Crowe Horwath in December 2012 would be (approximately) $714,000.

156 By cl 3 of Ms Ballantyne's will, she bequeathed her right, title and interest in her one share in Second Skin to six different named beneficiaries (adding a proviso concerning dividends).

157 The cl 3 bequest left Ms Ballantyne's 50% shareholding in Second Skin, to:

PROVIDED THAT only the Chief Executive Officer together with the directors of Second Skin Pty Ltd are able to determine if and how a dividend is payable by the company and to which shareholders of the company may receive any dividend [sic].

159 Prior to her death, Ms Ballantyne appointed Ms Hannan, Ms Harries and Ms Fletcher as directors of Second Skin. Professor Wood was also appointed to the board on 2 April 2012: see ASIC search at page 125 (document 15) of the attachments to Mr Solomon's affidavit of 4 August 2014.

160 As far as I could ascertain from the materials, there has been no attempt by the directors of Second Skin to declare any dividend to shareholders - in the period subsequent to Ms Ballantyne's death.

161 The same six persons, in exactly the same proportions (who I refer to as the Second Skin beneficiaries) were also the subject of cl 10 in Ms Ballantyne's will. There was, by cl 10, a disposition to them of the 'entire benefit of the Ballantyne Investment Trust' ('BIT'). For present purposes it appears Hannan, Harries, Fletcher, Morris, Varner and Taylor are all persons who are either officers or employees of the corporation Second Skin.

162 A death policy benefit from the Ballantyne Super Fund was also directed under cl 7 to Ms Hannan and Ms Harries, as tenants in common in equal shares.

163 As mentioned, in the case of Ms Hannan, Ms Harries and Ms Fletcher, they comprise, with Professor Wood, Second Skin's current board of directors. Their engaged lawyer initially and for some period was Mr Morgan Solomon and his firm BBV. This has created conflict problems.

164 Ms Ballantyne's will and codicil made a further series of bequests of money (cl 11 as supplemented by the codicil) in the total amount of $720,000 to 11 named beneficiaries in various nominated amounts including, as I mentioned, the $200,000 bequest to Mr Baur, under cl 11(b).

165 There was a residual bequest in the will to what is referred to at cl 11(g) (as amended to 11(l) by the codicil) as the McCombe Foundation Inc, now known as the Fiona Wood Foundation. However, there are unlikely to be sufficient funds to meet a residual bequest - in fact, the level of expenditure on legal costs by the Executors sees a number of the bequests now significantly exposed to the risk of suffering a rateable reduction (or even extinction) of the gift to meet the ongoing expenditures, mainly, it is to be regretted, anticipated future legal costs.

166 It is convenient to recall the observations by Martin CJ in Elovalis v Elovalis [2008] WASCA 141 between [29] [48], under 'The removal of a trustee'. In particular, I note the Chief Justice's observations referring to a leading decision of the High Court Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572:

Dixon J went on to conclude, on the facts of Miller's case, that a lack of confidence in the trustee's further administration of the Trust was sufficient to justify his removal, without the necessity of establishing misconduct. [34]

These various decisions establish that the jurisdiction to remove a trustee and appoint a substitute can be exercised whenever it is expedient to do so, in the sense described in the cases, and without it being necessary to establish bad faith, misconduct, or breach of trust.

167 Those observations concerned, of course, the position of a trustee.

168 I understood at points in the argument on 1 September 2014 that counsel for the Executors was making a submission by way of legal distinction, in the context of a potential removal by a court, between the position of a trustee and that of an executor - invoking reliance upon s 77(4) of the Trustees Act (as regards appointing an executor), by reference particularly to an earlier decision of this court, Porteous v Rinehart (1998) 19 WAR 495 (White J). This is so even though the Executors bring this very application as 'trustee' for the purposes of s 92 of the Trustees Act and they clearly do meet that definition.

169 Nevertheless, as regards their removal, it is said that the legal position as between trustee and executor is different, and that the legal threshold to remove an executor is higher than for a trustee.

170 These two Executors are, of course, also the trustees of the property of Ms Ballantyne's estate, once it has been got in and held by them: see Porteous (502 - 503).

171 Even if the executor/trustee legal distinction be accepted as relevant here, as regards a distinct removal exposure of Executors under the Trustees Act (about which I express no final views), then nevertheless it seems to be undisputed, beyond what may be done removal-wise under the Trustees Act with an executor, that the Court's inherent jurisdiction can also be invoked by Mr Baur against the Executors to validly seek the removal orders he wants (coupled also with a revocation of the grant of probate to the executors).

172 In the inherent removal jurisdiction of the Court as regards executors (who are also trustees of the estate property that has been got in and held), I see no reason in principle why the observations under [40] from Elovalis should not apply with full force towards the threshold for their argued removal. In this same arena, involving executors being removed, in Green v Wildren Pty Ltd [2005] WASC 83 Hasluck J said [1193]:

In Porteous v Rinehart (1998) 19 WAR 495 White J confirmed that the Court has an inherent jurisdiction to remove a trustee. The jurisdiction will be exercised cautiously, the dominant consideration being the welfare of the beneficiaries and the preservation of the Trust estate. Where the ground for removal is alleged to be a conflict of interest in duty, the Court will only exercise its inherent jurisdiction to remove the trustee where it is satisfied the conflict has caused or is likely to cause mischief at a reasonably high level of seriousness.

173 Subsequently, in Grey v Youngson [2006] WASC 123 [47] - [51] and [55] Hasluck J observed again:

However, it emerges from Porteous v Rinehart (1998) 19 WAR 495 that a distinction must be drawn between the duties of a trustee and the role of an executor or administrator who is concerned with getting in the assets of the deceased, paying his debts, distributing the assets and producing accounts. As matters progress, a person will commence to hold the property as trustee when his executorial duties in respect of that property have ended. Accordingly, a situation might arise in which the executor is simultaneously (albeit in respect of different assets of the estate) an executor and trustee under the Will.

In that case, the defendants were named as executors and trustees in a Will for which probate was granted. The plaintiff, a named beneficiary, made an application to remove them as executors and as trustees. The Hon Justice White held that the Court has an inherent jurisdiction to remove an executor and appoint a replacement by revocation of the grant of probate where it is necessary to ensure the due and proper administration of the estate.

His Honour said that the jurisdiction will be exercised cautiously, the dominant consideration being the welfare of the beneficiaries and the preservation of the trust estate. Where the ground for removal is alleged to be a conflict of interest and duty, the Court will only exercise its inherent jurisdiction to remove a trustee where it is satisfied the conflict has caused, or is likely to cause, mischief at a reasonably high level of seriousness.

Counsel for the plaintiff submitted that where there are otherwise equal competing claims for a grant of Letters of Administration, the Court has the right to select an administrator. Counsel contended that the selection ought to be based on the Court's assessment as to who is most likely to be able to ensure the due and proper administration of an estate. It followed, having regard to the principles mentioned earlier, and the circumstances of the present case, that the joint Letters of Administration should be revoked, because the intransigence of the defendant had rendered the administration of the estate unworkable. The plaintiff should be appointed the sole administrator upon the basis that such an appointment would best serve the welfare of the beneficiaries and the preservation of the estate.

Further, in making its determination, the Court should have regard to the parties' past conduct in the administration prior to the revocation and whether they have shown an understanding, or lack of understanding, of what is required to discharge the functions of administrator in a proper and accountable manner. The preference of the majority of the beneficiaries is also relevant to the choice where there are otherwise equal competing claims for a grant of Letters of Administration. In this case, the third beneficiary, Harold Youngson, favoured the sole appointment of the plaintiff.

...

The defendant admitted under cross-examination that the parties cannot work together and administration of the estate is in a state of deadlock. It is clear to me that this impasse must be resolved so that matters can move forward. I am of the view that the welfare of the beneficiaries and proper preservation and administration of the estate will best be served if the current grant is revoked and the plaintiff is appointed sole administrator. I am prepared to make an order pursuant to s 29 of the Administration Act and related provisions accordingly.

174 One of the case authorities White J had discussed in Porteous v Rinehardt was Re The Goods of Loveday [1900] P 154 (Jeune P). There this was said:

The real object which the Court must always keep in view is the due and proper administration of the estate and the interests of the parties beneficially entitled thereto; and I can see no good reason why the Court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient. If the Court has in certain circumstances made a grant in the belief and hope that the person appointed will properly and fully administer the estate, and if it turns out that the person appointed will not or cannot administer, I do not see why the Court should not revoke an inoperative grant and make a fresh grant. (156)

175 Proceeding cautiously, I nevertheless would invoke as fully appropriate the terminology of Dixon J from Miller v Cameron towards trustees. It is then necessary to ask whether the Court here holds a sufficient degree of confidence in the further administration of the estate of the late Ms Ballantyne by her executors and trustees. The welfare of the beneficiaries' interests and the preservation of the trust estate are the dominant considerations.

176 I also accept that Professor Wood's and Mr Solomon's individual respective conduct and positions will need to be evaluated distinctly. That is particularly so here, as regards decisions made on behalf of the corporation Ondit, where Professor Wood, as a director of Ondit, has nevertheless found it appropriate to surrender significant decisionmaking to Mr Solomon (they were, of course, joined by Mr Baur in June 2014).

177 Professor Wood has chaired Second Skin after she was invited to join the board by Ms Ballantyne in April 2012, prior to her death. She has chaired meetings of the Second Skin board in her capacity as a nonexecutive director. But the consequence of that has been to effectively deprive Ondit of the input from an independent director - in circumstances where there is an undeniable conflict of interests - as between Ondit and Second Skin. Because of that conflict there is a consequent tension as between the interests of the corporation Ondit (all the shares being left to Mr Baur) and the interests of Second Skin - in which the share held by Ms Ballantyne at the time of her death was left to the six persons I identified as the 'Second Skin beneficiaries'.

178 I am, notwithstanding the submissions counsel for the Executors made across the course of 1 September 2014 and in his confidential opinion, left in a position of lacking substantive confidence in the Executors' further administration of this estate. I am particularly concerned over the following:

(a) There is an obvious, acknowledged and ongoing conflict (ts 366) as between the interests of the corporations Ondit and Second Skin - arising in the administration of Ms Ballantyne's estate. Yet there subsists what I perceive to be currently an inadequate recognition and management of that conflict by the Executors, chiefly by Mr Solomon. This has manifested in the past by Mr Solomon's deployment of his legal corporation BBV in dealings with Mr Baur and Mr Scott and their legal representatives.

I am not persuaded by arguments of legal differentiation run by counsel for the Executors, along the lines of conduct by Mr Solomon and Professor Wood as Ondit directors not being conduct attributable to them as executors and trustees of the estate, because they are acting in different capacities. Accepting the legal basis of such a distinction, nevertheless, the whole picture needs to be looked at, and an exercise in sophistry avoided. When acting as Ondit directors Mr Solomon and Professor Wood did not act or claim to act independently of the estate. Mr Solomon, as an Ondit director, acted, as I would assess his conduct, to advance what he perceived to be the interests of the estate. Professor Wood deferred to his decisions as an Ondit director, due to her role in Second Skin. But there can be no legalistic veil draped over Ondit director conduct on the basis that it must be quarantined from conduct as executor - conduct in both capacities proceeded hand in glove.

(b) My perception is that Mr Solomon, having professionally assisted Ms Ballantyne for almost 13 years or so prior to her death by his legal assistance, and in that period having drawn her will and subsequent codicil, is too closely involved in these issues and now lacks a sufficiently independent commercial perspective. Mr Solomon as an executor and trustee of estate property looks to me now to be implementing what are his own personal perceptions as to what he believes Ms Ballantyne's testamentary instruments were intended to achieve, rather than what they actually say (see point (e) below). To that end, he is making and implementing unilateral decisions, using the assistance of BBV.

(c) I am particularly concerned that the financial interests of the corporation Ondit have been significantly harmed in the longer term by decisions essentially taken by Mr Solomon as its director, including decisions to pay over significant amounts of money to Second Skin in response to formal notices of demand from Second Skin - requiring immediate payments to be made. That is in circumstances where it was obvious to any competent lawyer that Ondit should have had the benefit of independent professional advice over the merits of such demands, before responding affirmatively or otherwise to such payment demands. That is particularly a concern in circumstances where loan agreement documentation subsequently came to be found (and in what I summarily assess as unsatisfactorily unexplained circumstances) after a partial payment by Ondit to Second Skin of the funds demanded. The terms of that loan agreement effectively record that significant components at least of the monies paid over by Ondit were not in fact then due, and were not payable upon that demand at that time.

Counsel for the Executors strenuously endeavoured to persuade me upon this application that in the end, other tranches of money were also said to be due from Ondit to Second Skin, and that Ondit in the end had suffered no real prejudice. That, I must say, I doubt. In response to that submission, Mr Bennett, counsel for Mr Baur, made the submission that this contention was 'nonsense on stilts': see ts 431 434. I accept the substance of that submission - without the hyperbole.

Certainly, as I assess it, Ondit's present liquidity problems look to be directly attributable to a loss of significant funds to Second Skin and to the loss of its rental income from Second Skin for the Hermiston Gardens property in Edinburgh, and from its other rental premises at Bondi, New South Wales.

There is enough for me to express my concerns that Ondit may have suffered significant financial prejudice to the advantage of Second Skin, in the underlying circumstances.

The Ondit/Second Skin conflict problem could have been easily circumvented if Mr Solomon and Mr Solomon's law firm BBV had not at the relevant times been advising, on both sides of those demand/payment issues - that is, the demand for payment by Second Skin and an acquiescent and compliant payment response by Ondit.

(d) Both Mr Baur and Mr Scott complain that decisions of the Executors, particularly by Mr Solomon, have invariably favoured Second Skin and the Second Skin beneficiaries - at the expense of Mr Baur's ultimate 100% shareholder's interest in Ondit.

As far as Mr Scott is concerned, his complaints are over the high level of illegitimate pressure allegedly applied against him by Mr Solomon to force him to elect to surrender any and all interest in Second Skin. I do not express any final view about those criticisms, but on the basis of the materials before me the Executors' decisions overall do seem to repeatedly favour Second Skin over others and for me that is a concern.

(e) I am also troubled by an apparent volteface by the Executors, again arguably favouring the Second Skin beneficiaries, by an apparent change of position, regarding an interpretation of cl 10 in the will, concerning the BIT (which owns all the units in the Ballantyne Unit Trust).

The unit trust ultimately owns a valuable piece of real estate in Perth that has been leased to Second Skin in Osborne Park and from where that corporation conducts a local business.

Apparently, a revised view has been taken by Mr Solomon that the disposition the subject of cl 10 of the will does not form any part of the assets of the Ballantyne estate - albeit the opposite interpretation was clearly taken when the will and codicil of Ms Ballantyne were admitted to probate. This BIT trust property was then listed as an asset of the estate.

An underlying clash of interpretations over this point raises a complex issue. It essentially raises an issue as to the interpretation of cl 10 and whether that clause can just be regarded as a mere direction of the testatrix, which the Executors and trustees are at liberty to ignore, or then whether the subject matter trust property was ever in fact given to 'trustees' in their capacity as executors and trustees of the will, or as trustees of the BIT.

My present concerns relate more to what looks to be a recent change to a unilateral view about the meaning of cl 10, then arbitrarily communicated to Mr Baur and Mr Scott by Mr Solomon and BBV over Mr Baur's opposition.

This issue is the subject of Mr Baur's grievance as set out under pars 61 71 of his REASOC. A change of interpretation concerning BIT appears to have been implemented in the face of a communicated opposition by Mr Baur, through his then solicitors of 26 June 2013.

The recent change of view could ultimately be to the advantage of the Second Skin beneficiaries, delivering a consequence of excluding the unit trust's underlying real estate asset from exposure to it making a rateable contribution towards the ongoing expenses of the administration of the estate - most significantly, of course, the entities' ongoing legal costs: see ts 465.

That issue of construction of the true meaning of cl 10 of the will is precisely the sort of narrow issue the Executors might have usefully sought the private advice of the Court about, pursuant to s 92 of the Trustees Act. They have not. I add, still taking a high level view upon this clash, that I do not assess the construction position taken by Mr Solomon and BBV to be so clear or straightforward in terms of its outcome as to accept the Executors' interpretation as being overwhelmingly or unarguably correct.

(f) There is also arguable merit upon a high level assessment, in criticisms of Mr Baur that the Executors are not acting sensibly or timeously, as they should be. One manifestation of that emerges in what was said in the opposed hearings of the injunction in CIV 1412 of 2104 (Mr Baur then seeking to extend an interim injunction until trial or further order, on Wednesday, 27 May 2014). At that time, counsel for the Executors said:

[t]he Executors are of the view that Ondit should they should have no role to play in Ondit. That has been made clear to me, and they are my instructions. So either through transfer or appointment of other directors, Ondit is not going to be controlled by someone who also wears the hat of an executor, if I can try to separate the two roles. So that is appropriate, in our submission, and that will happen.

(Transcript, Baur v Wood & Ors, Supreme Court of Western Australia, 99)

Yet for all that was then said by counsel as to Ondit's position on 27 May 2014, that which was recognised and should obviously have happened, has still not happened.

Mr Solomon on his affidavits has now at some length sought to rationalise this inaction. But most unpersuasively, as I assessed it, by what was really just argument.

Again, without descending to resolving final merits concerning what has transpired, the end result is disturbing and reflective of deeper problems, particularly from Mr Solomon, in terms of an overall lack of commercial judgment combined with a lack of dedicated commitment to wrapping up this administration, rather than seeing it run on interminably.

(g) I was also troubled that there was little, if any, information afforded within all the voluminous affidavit material assembled by the Executors about the level of and basis for the calculation of what are very significant legal costs, already incurred by the Executors in their administration of the estate to date - over a period of just under two years. A total lack of costs information on the 'bottom line' issue impacting against most beneficiaries was surprising. In the end I needed to personally extract what emerged as a worrying global figure out of counsel: see ts 403. What I learned was a global expenditure amount of $465,000 on legal costs to date. I did not assess that as including the costs of running and preparing for the present application, or at least its hearing. Even as at 1 September, there were other pending applications with costs implications: see Wood (as Co-Executor and Trustee of the Will of the deceased) v Wood [No 3] [2014] WASC 388.

Wasted legal costs incurred by the Executors of the estate is another aspect of the grievances raised by Mr Baur: see his REASOC [22] - [25].

The strong sustaining connection between Mr Solomon and his law firm BBV in acting for the Executors (save for them being replaced by Dwyer Durack in relation to the two actions concerning Mr Scott, that I have mentioned, and in certain respects now for Second Skin) seems to provide little incentive for Mr Solomon as an executor to advance and implement a timeous strategy to bring the administration of this estate to a conclusion. Depending on what billing arrangement is in place, he and his firm BBV may well profit on an ongoing basis from its legal representation of the Executors in long-running disputation. I am making no adverse findings based upon the present materials (more correctly, a total lack of materials on the legal costs issue). But it seems that there is no incentive for Mr Solomon and BBV to bring this estate's administration to an end.

The concluding phases of Mr Tsaknis's verbal submissions were followed by what he has written in a lengthy opinion supporting the approach of spending estate funds to the extent of, in effect, whatever it took to vindicate the Executors against all allegations of breach of trust. I gained overall a distinct impression of an attitude, almost Stalingradlike in its magnitude, to spend the estate's funds down to the last cent, if necessary. That may well be an accurate reflection of counsel's present instructions. But the attitude is to be deprecated as alien to the interests of the beneficiaries and as sadly lacking in an appropriate level of good sense and commerciality. Underlying attitudes of that character need to be eschewed at the earliest possible time in protection of the interests of the beneficiaries of this estate.

(h) Professor Wood's position, of course, as executor is distinct from Mr Solomon's and, as I said, needs to be assessed separately. She has not charged at all for her time commitments towards her late friend's estate, as her executor and trustee. She is a director and chair of the board of Second Skin. But the concern I hold is that due to Professor Wood's high workload and other commitments, plus her commitment to Second Skin, she has surrendered too much responsibility for significant decisions, particularly concerning Ondit as an Ondit director, to Mr Solomon. That is in circumstances where independent and commercially oriented minds are clearly needed for Ondit at board level. An independent director for Ondit may have assisted to put a brake against some of Mr Solomon's more aggressive decisions taken, as I see it at this level, to Ondit's detriment. This, I said, looks to be to the financial detriment of Ondit and to the financial advantage of Second Skin. It is not a satisfactory ongoing situation.

179 I have not attempted any comprehensive evaluation of all presenting issues at this point. I have drawn attention to significant features that present to me as high level concerns, in a context of the advice that is sought.

180 On a high level assessment of various issues advanced by Mr Baur in CIV 1412 of 2014, seen formulated under his REASOC (Schedule A to these reasons) the Executors, particularly Mr Solomon, now face what they should, if advised competently, see as a worrying (for them) longer term exposure in respect of the assembled grievances from Mr Baur (supported by Mr Scott and Ms Matthews) ultimately seeking that they be removed.

181 My observations, I repeat, are no evaluation of the final merits of CIV 1412 of 2014. The present proceedings are summary in character. Nevertheless, I am obliged to form some view of the underlying merits of the grievances advanced and how they have been responded to - as foreshadowed in materials assembled on behalf of the Executors by way of their (many) affidavits, written submissions and the oral submissions via counsel during the hearing of 1 September 2014 (and, of course, counsel's somewhat unexpected opinion).

182 Coming to grips with so much material has been an oppressively difficult task - given the jumbled magnitude of the materials, particularly Mr Solomon's six affidavits attaching innumerable amounts of ostensibly relevant but seemingly unexplained passing correspondence, most of which was never touched upon in submission - either in writing or verbally (or, for that matter, in counsel's opinion, once I read it).

183 In the end then, in the exercise of discretion, I decline to provide an answer to question 1. The consequence will be that no comfort for the Executors from s 95 of the Trustees Act is obtained.

184 Were I to venture closer towards answering question 1, I would only say, in some endeavour to assist, that the seriousness and ostensible plausibility of what is now raised against the Executors by Mr Baur, supported by Mr Scott and Ms Matthews, should see them very concerned.

185 In my view, the Executors ought not via s 92 and s 95 obtain, on the present materials, any preemptive 'open cheque book' for their future legal costs of defending CIV 1412 of 2014 so as, in effect, to fight at all cost to preserve their current positions as executors and trustees of Ms Ballantyne's estate.

186 Should the Executors continue to resist their removal sought at Mr Baur's behest in CIV 1412 of 2014, and ultimately be vindicated at a trial, they then may be in a position to move for their taxed party and party legal costs to be met by Mr Baur, and for any shortfall in terms of solicitor and client costs not met by Mr Baur to be recovered from the estate, if anything remains of it.

187 On the other hand, if one or more of the worrying arrows now directed their way by Mr Baur strike home at a trial, then the Executors' no doubt costly resistance against Mr Baur's removal application will have been proven misplaced. On what is before me, it would be appropriate in that situation that the Executors run all risks of personally funding their decision to resist removal and to thereby incur more legal costs. That is a high level view, reached with little pleasure, but in the end comfortably enough in the face of concerns I identified and the matters currently put against the Executors by Mr Baur and Mr Scott.

188 In the circumstances, and in the exercise of discretion, I decline to answer question 1, by reason of the unsatisfactory way in which the application under s 92 has been run. In any event, had I otherwise been enabled to resolve question 1 on those materials, the (negative) factors I have canvassed as causing me deep concern all combine to orient me away from answering question 1 in the affirmative.