New South Wales Supreme Court CITATION : PHILIP MACPHERSON ROBERTSON v. ROBERT SAMUEL ALLEN & ORS [2004] NSWSC 199 HEARING DATE(S) : 15/03/2004 JUDGMENT DATE : 15 March 2004 JURISDICTION: EQUITY JUDGMENT OF : Bryson J at 1 DECISION : Declaration that appointment of the 4th defendant and the removal of the 3rd defendant as trustee of the Leith Trust were effectual. 1st and 2nd defendants are to transfer to the 4th defendant the 48,002 shares held by the 1st and 2nd defendants in Multi Transit Company Pty Ltd. see [28] CATCHWORDS : WILLS PROBATE AND ADMINISTRATION- further consideration of transfer of shares considered in [2003] NSWSC 848 after appointment of new trustee - executors obliged to transfer shares directly to new trustee. - TRUSTS AND TRUSTEES- new trustee-new trustee entitled to transfer from executors of shares left in will to former trustee without first transferring shares to former trustee-equity regards as done that which ought to have been done. CASES CITED : Saunders v Vautier (1841) 41 ER 482 Robertson v Allen [2003] NSWSC 848 Philip Macpherson Robertson - Plaintiff Robert Samuel Allen - First Defendant PARTIES : Christopher William Welsh - Second Defendant Philrob Nominees Pty Limited (CAN 055 131 706) - Third Defendant Lance Raymond Boswell - Fourth Defendant FILE NUMBER(S) : SC SC 6090/01 Dr C Birch SC & J Loofs - Plaintiff COUNSEL : A Hill - 1st and 3rd Defendants Evans - 2nd Defendant Kell Moore - Plaintiff SOLICITORS : Addisons - Defendants Submitting- 4th Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON J. MONDAY 15 MARCH 2004 6090/01 PHILIP MACPHERSON ROBERTSON v ROBERT SAMUEL ALLEN & ORS JUDGMENT 1 HIS HONOUR: These reasons relate to further consideration of claims in these proceedings which I reserved in the orders made on 26 September 2003. The reasons I now give must be read with, and understood with, reasons published on that day [2003] NSWSC 848. 2 Since then the plaintiff has, by leave, filed a second further amended statement of claim, in fact filed in court today, which adds as a new party the fourth defendant, Mr L R Boswell, and makes claims based on some events which have happened since 26 September. 3 The plaintiff appointed Mr Boswell new trustee of the Leith Trust in place of the third defendant Philrob Nominees Pty Ltd, by a deed of appointment of 3 October 2003. The plaintiff did this in exercise of a power conferred on him as appointor in the deed of settlement which constituted the Leith Trust, and the operative provision which appoints Mr Boswell as new trustee also removes the third defendant Philrob Nominees as trustee of the Trust. There has been no suggestion in the hearing before me today that this appointment was not fully effectual in accordance with its purport. 4 Mr Boswell proceeded by a letter of 9 October 2003 directed to the executors, who are the first and second defendants Mr Allen and Mr Welsh, to notify them of his appointment and to call for transfer to him, as new trustee of the Leith Trust, of the shares held by the executors in Multi Transit Company Pty Ltd, pursuant to cl 3 of the will. He forwarded a stamped transfer form and asked that each executor sign it and return it to him with the share certificate. This letter went on to give reasons, referring to a passage in my earlier judgment at para 25, in support of Mr Boswell's entitlement as new trustee to make such demand. In a reply of 13 October 2003 solicitors representing the executors refused to comply with the request and looked forward to the proceedings being brought back again before me. 5 Mr Boswell, who was joined as a fourth defendant in the second further amended statement of claim, has filed a submitting appearance. The burden of argument in favour of his demand has been undertaken by counsel for the plaintiff, whose standing is first as appointor and, I would say, the promoter of Mr Boswell's appointment and removal of Philrob Nominees, but also as potentially, according to discretionary decisions which may be made by Mr Boswell, beneficially entitled to some part of the advantages flowing from the Leith Trust's ownership of assets, including the shares now under consideration. 6 There is no evidence that there has been any decision conferring any benefit on Mr Robertson, but no suggestion has been made that he does not have standing to test the entitlement of Mr Boswell to make an enforced demand, and in my view there could not be in such challenge. 7 In my earlier reasons I pointed out that the orders which I was to make were limited to the state of facts which then existed. Although I referred to the possibility of there being a call for a present transfer of the shares to a trustee of the Leith Trust, before the expiry of the en years referred to in cl 3 of the will, being the time at which the executors were directed to transfer the shares, I did not speak finally on that subject and the declaration in order 1 of 26 September 2003 dealt only with what was then the present position. 8 Events since then quite transform the view which should be taken and render concrete the controversy about the entitlement, or possible entitlement, of a trustee of the Leith Trust transfer of the shares at the present time; there is a new trustee and he has made a clear demand for transfer of the shares well in advance of the time pointed to in cl 3. 9 Mr Allen the first defendant and Philrob Nominees the third defendant, who appeared by counsel, opposed the claim for declarations and orders which would give effect to Mr Boswell's demand. Notwithstanding the executors' refusal, the second defendant, Mr Welsh, has not joined in resisting the plaintiff's claim. Indeed his solicitor told me that he consented to the orders, but wished to attend to Mr Welsh's interest with respect to any order as to costs. Mr Boswell has simply filed a submitting appearance. 10 Counsel for the first and third defendants took a position which stood firmly on the express terms of the will and the rights conferred by its language. Counsel contended that Mr Boswell had called for transfer of the shares by the executors in his character as trustee of the Leith Trust. Counsel submitted that the Leith Trust has no interest in the shares, and that the will confers a gift on Philrob Nominees. Counsel also referred to terms of my earlier judgment in support of the contention that there was a clear finding that the rights conferred in the will belonged to Philrob Nominees. Counsel referred to a number of passages in my earlier judgment, particularly paras 16, 21, 22, 26 and 29, and contended that para 29 makes it clear that the trustee of the Leith Trust cannot call for the shares; that paragraph, counsel said, clearly set out that the only person who can call for the shares from the executors was Philrob Nominees. 11 Counsel's references to terms of my earlier judgment are indeed accurate, but my observations there, including observations which clearly had the tenor that the only person who could call for the shares was Philrob Nominees, must be understood as addressed to the facts at that time and do not have any real relation to resolution of the controversy as it now stands and to the claim of Mr Boswell, who has been established to be the new trustee of the Leith Trust, to have the shares transferred to him. 12 In my understanding the observations which I made on 26 September established, and I am still of the view, that the gift in cl 3 was a present gift of the entire interest in the shares in Multi Transit Company Pty Ltd to Philrob Nominees in the character of the trustee of the Leith Trust, and also that the direction to transfer on the tenth anniversary was no more than a direction requiring transfer then, empowering the executors to bring about the transfer earlier, but saying nothing about equitable entitlement to ownership of the shares, and leaving general principles about such entitlement to operate as they do in the event, of which the will does not at all speak, that Philrob Nominees calls for a transfer forthwith or at some time before the tenth anniversary, or before mutual agreement among the executors. The same entitlement exists whether or not Philrob Nominees remains trustee of the Leith Trust; and would exist, indeed, if Philrob Nominees were to go out of existence. The trustee of the Leith Trust, when identified, would be in a position to exercise all rights which Philrob Nominees, had it continued to be trustee, indeed had it continued to exist in the hypothesis I mentioned, would have been entitled to exercise. 13 Mr Boswell's claim for direct transfer to him of the shares, being a claim which he made after he had become the new trustee, abridged what might be thought by the literal reader of the will to be a chain of entitlements. As new trustee he was entitled to call for Philrob Nominees to transfer to him every asset of the Leith Trust; and he was entitled to call for Philrob Nominees to exercise every right or power held by Philrob Nominees as executor which might enure for the benefit of the Leith Trust or enhance its assets, including the right under the doctrine in Saunders v Vautier to call for a transfer of the shares subject to the gift in cl 3 of the will at any time before the direction for transfer in the latter part of cl 3 operated. 14 In effect Mr Boswell, by making a direct claim to the executors, sought to abridge the chain of entitlements, and leave out the steps where he forced Philrob Nominees to act, and Philrob Nominees, so compelled, forced the executors to act and pass shares along a chain of two transfers. There would have been no difficulty in so acting. It was clearly Philrob Nominees's obligation to comply with an instruction Mr Boswell gave it, had he given it one, to insist upon transfer of the shares by the executors to Philrob Nominees and then to comply with Mr Boswell's further demand. Equity does not require the full chain of events actually to be enacted. They would have effected a ceremony only; the substance of the entitlement ought to be observed and carried out, and equity will treat as done what ought to have been done in the hypothetical, but unnecessary, chain of demands and transfers. The substance of Mr Boswell's entitlement as new trustee is not affected at all by the machinery provision in cl 3 of the will, which he has not sought to avail himself of. 15 For these reasons I am of the view that Mr Boswell was entitled to call directly for a transfer of the shares by the executors to him and Mr Robertson is entitled to obtain declarations by the court establishing that that is so. 16 I made declaration 1 on 26 September 2003, which speaks as of the date on which it was made. The further orders which I now proceed to make will speak as of today. 17 My orders do not follow exactly the claims in the second further amended statement of claim but give effect to the substance. 18 From 26 September 2003 onwards what remained before the court was that I reserved for further consideration claims 4, 5 and 6 in the further amended statement of claim. The reference was to the further amended statement of claim which was filed in court on 10 September 2003, a further copy of which with verification dated 27 October 2003 was filed in the Registry on 9 March 2004. That document looked forward to a future appointment by Mr Robertson of Mr Boswell as new trustee. 19 While the plaintiff's claim was expressed in that way it remained in the realm of the academic, in which a considerable part of the discussion in my reasons of 26 September 2003 was also found. The controversy took more concrete shape with correspondence in October, and on 28 October the matter came before me for directions, when I directed that any affidavit in answer to the plaintiff's affidavit be filed and served by 7 November 2003 and said that I intended to make an appointment for further consideration later in the Term. No further affidavit was filed by either party by 21 November 2003 when I made an appointment for further hearing today. 20 As far as any application presented to the court showed, the plaintiff's claim remained in the realm of the theoretical until today when the second further amended statement of claim was filed in court, with my leave, containing reference to the actual appointment of Mr Boswell as new trustee and as fourth defendant. 21 While Mr Welsh, the second defendant, could well and reasonably have expected that some such application would be made, he prudently chose Friday last, 12 March 2004, to adopt the position that he would not oppose it. As he adopted this position before any application was actually made to the court I do not see any ground on which he should be ordered to pay any costs of the proceedings today. 22 I go further and say, with respect to the first defendant, Mr Allen, that clearly enough, as he could have foreseen, some such controversy as that debated today would eventually be brought forward. The attendances which took place on 28 October and thereafter, while perhaps he could have avoided them by conceding the effectuality of Mr Boswell's claim for a transfer of the shares, took place in the absence of any clear or distinct application to the court for any decision on that claim; it took place in the presence of clearly expressed correspondence rather than an application to the court. 23 It seems to me that I should leave the plaintiff and first defendant between each other to bear their own costs of attendances relating to this litigation in the period between 26 September and today, to which I will make the exception that the plaintiff has read today Mr Williams' affidavit of 3 March 2004, which was required for the application today and for which the plaintiff should recover costs. If any regard at all is paid to form, the case on which the plaintiff succeeded was presented to the court today with the filing of the second further amended statement of claim. It was immediately and fully disputed by the first and third defendants on considered grounds, but without success. 24 The debate today and the ruling went very little further than making actual a clearly contemplated, but then academic case which was under consideration and indeed under observations of my own in September 2003. In my view, having regard to what I then held as to the entitlement of the then trustee of the Leith Trust to the Multi Transit shares, there was little room, indeed no real room, for further debate about the entitlement of any other trustee of the Leith Trust once any such trustee was appointed, as in October one was. 25 The principle that in equity what ought to be done is treated as having been done, and of enforcing the substance of the entitlements of the new trustee to an asset, without going through the form of compelling the former trustee to enforce what, on the face of things is its right, is an elementary principle readily acted on in many instances, I would think for practical purposes daily. 26 While the arguments today did not literally and exactly repeat matters considered in September, they came very close to dealing with the same things with much the same result. Notwithstanding his position as executor, and his responsibilities under the trust referred to in cl 3 of the will, I am of the view that Mr Allen should not receive the usual protection available to executors and trustees, but should be treated for the purpose of ordering costs in the way usually adopted in contested litigation, that is, as he did not succeed he should be ordered to pay the costs of his opponent. 27 These observations do not relate to the third defendant, which is a mere cipher. There is no reason to think it has any significant assets, or could meet costs, and it dropped out of any real part in the controversy when it was discharged as trustee of the Leith Trust. 28 The order is: 1. I declare that the appointment by the plaintiff of the fourth defendant, and the removal by the plaintiff of the third defendant as trustee of the Leith Trust by the plaintiff's deed of appointment of 3 October 2003 was fully effectual according to its terms; and further declare that it was and is the duty of the first and second defendants to comply with the demand made by the fourth defendant on 9 October 2003 for transfer to the fourth defendant the 48,002 shares held by the first and second defendants in Multi Transit Company Pty Ltd. 2. I order that the first and second defendants transfer to the fourth defendant the 48,002 shares held by the first and second defendants in Multi Transit Company Pty Ltd. 3. I reserve further consideration of claim 7 in the second further amended statement of claim and I direct that documents produced to the court on subpoena by the third defendant be handed out to the fourth defendant. 4. I order that the first defendant pay the plaintiff's costs of the affidavit of Andrew McArthur Williams sworn 3 March 2004. Of the attendance at court today, I say as aforesaid, each party is to pay or bear its or his own costs of attendance today. 5. I reserve liberty to apply with respect to claim 7 in the second further amended statement of claim. 29 All documents produced to the court on subpoena, other than documents produced by Philrob Nominees Pty Ltd, are now to be returned to the parties by whom they were produced. oOo Last Modified: 03/23/2004 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.