Hughes v Blacklow & Anor [2011] NSWSC 1546

Supreme Court New South Wales

Medium Neutral Citation: Hughes v Blacklow & Anor [2011] NSWSC 1546 Hearing dates: 25 November 2011 Decision date: 25 November 2011 Jurisdiction: Equity Division - Duty List Before: White J Decision: Refer to paras [12]-[15], [16], [19], [20], [23] of judgment Catchwords: EQUITY - trusts - trustees - removal and appointment - Trustee Act 1925, s 70(1) - administration of trust stultified - co-trustee removed as trustee and remaining co-trustee reappointed as sole trustee Legislation Cited: Trustee Act 1925 Category: Principal judgment Parties: Sharyn Hughes (Plaintiff) Trevor Blacklow (1st Defendant) Denise Blacklow (2nd Defendant) Representation: R W Tregenza (Plaintiff) No appearance (Defendants) Watson Stafford Zipkis (Plaintiff) File Number(s): 2011/229995

Judgment 1HIS HONOUR : These proceedings concern the estate of the late Alma Blacklow. She died on 1 November 2006. By her will she left her whole estate to her three children in equal shares. She appointed her son, Trevor Blacklow, and her daughter, Sharyn Hughes, as her executors. Probate was granted on 7 February 2007. 2The principal asset of the estate is land situated at [xx xxxxxx xxxx], Canley Vale. The expenses of the estate have been paid and all other assets have been distributed. The only remaining asset of the estate that remains to be either transferred in specie or sold and the proceeds distributed, is property at Canley Vale. 3The defendant, Trevor Blacklow, has been in possession of that property and has remained in possession. He has not accounted to the estate for any rent. The property comprises a large block of land with an old weatherboard residence without services and is barely habitable. 4On 20 May 2009 the plaintiff, Sharyn Hughes, wrote to her brother saying that she and her sister were anxious to proceed with the sale of the property and the distribution of the estate. She asked if he was agreeable to the sale taking place. Further correspondence was sent to the defendant in June 2009. 5On 17 June 2009 the first defendant told the plaintiff that he did not want to sell and had nowhere else to go. 6In a subsequent conversation in July the defendant indicated his willingness to contact a solicitor and participate in arrangements for the sale of the property. For more than two years he has failed to take any step to permit the property to be sold. This is notwithstanding repeated correspondence. 7A point was reached in March of last year when the Legal Aid Commission, acting for the defendant, advised the plaintiff's solicitor that the defendant denied he had been obstructing the sale of the property and was willing to co-operate with the sale, including allowing the property to be viewed, providing the real estate agent was present. The Legal Aid Commission advised that the defendant intended to move out of the property as soon as he could. The Commission advised the defendant estimated he should be able to move out within three months. That did not happen. 8There was further correspondence from the plaintiff's solicitor seeking the defendant's instructions which are needed for the plaintiff and the defendant, as trustees of the estate, to sell the property. There has been no response from the defendant. 9In October 2010 the Fairfield City Council required the premises to be placed in a healthy condition by the removal of overgrown vegetation and possible harbourage of vermin. The Council solicitors also said, in substance, that if the defendant did not wish to engage a contractor, the council could arrange for the necessary work to be done and the costs added to the rates. Forms of permission were enclosed for execution by the plaintiff and the defendant to allow that to be done. Again, the defendant failed to respond. The defendant advised the plaintiff that he had sent the form back to the Council, but that was false. 10The administration of the trust is stultified. The Court, in its inherent jurisdiction, has power to remove a trustee where the welfare of the beneficiary and the trust requires that course. The defendant took an oath when he applied for probate that required him properly to administer the estate. He is in clear breach of his duty as trustee. He is in breach by continuing to occupy the trust property without rent and he is in breach by failing to co-operate with the plaintiff to allow the trust asset to be realised and distribution made to beneficiaries. It is necessary that he be removed in order that the trust can be properly executed. 11I am satisfied that the plaintiff and the defendant now hold the office of trustees and no longer hold office as executors. If, however, they were still holding office as executors, this would be an appropriate case for removal of the defendant from that office. As it is, however, it is only necessary to remove the defendant as trustee. 12I order that the first defendant be removed as trustee of the estate of the late Alma Blacklow. 13Pursuant to s 70(1) of the Trustee Act 1925 I order that the plaintiff be reappointed as the sole trustee for the property referred to in para 1 of the amended summons in accordance with the trusts established in the will of the late Alma Blacklow of which probate was granted on 7 February 2007. 14I order that the said property vest in the plaintiff as trustee in accordance with s 71 of the Trustee Act . 15Pursuant to s 81 of the Trustee Act , I order that the plaintiff have power to sell the said property on the following terms: (a) that the plaintiff be at liberty to sell the property by private treaty or by auction; (b) that she be at liberty to sell the property at a price not below $800,000 without further order of the Court; (c) that the sale be on terms of the draft contract for sale contained in exhibit PZO1 to the affidavit of Peter Zipkis of 14 November 2011 subject to the deletion from the special conditions of that draft contract of special condition 5. The plaintiff may sell on terms of the contract that include a usual term for the payment of interest if the sale is not completed by the completion date. 16I give liberty to the plaintiff to apply. 17No order is sought in the amended summons that the first defendant deliver up possession of the property. As he has been removed as trustee, he does not have any legal right to continue in occupation of the property. The plaintiff does not, at this stage, seek any order for possession. If it is necessary to seek such an order, the plaintiff can exercise the liberty to apply. 18Finally, there is the question of costs. The first defendant was an executor and trustee. He owed fiduciary duties to his sisters. Through his failure to comply with those duties, he has subjected the estate to unnecessary costs. 19I order that the first defendant pay the plaintiff's costs of the proceedings on the indemnity basis. 20I direct that the plaintiff would be justified in deducting the amount of such costs, once they have been agreed or assessed, from the first defendant's share of the proceeds of sale of the property. 21In these reasons I have referred to Mr Blacklow as the defendant. The other beneficiary of the will, Denise Blacklow, was also joined as second defendant. She has not taken part in the proceedings, although it is clear from solicitors' correspondence she supports the substance of the relief claimed by the plaintiff. 22In referring to the defendant I have been referring to the first defendant, Mr Trevor Blacklow. 23The orders may be entered forthwith. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 December 2011