Mamo v Perpetual Trustee Pty Ltd [2014] NSWSC 1366

Supreme Court New South Wales

Medium Neutral Citation: Mamo v Perpetual Trustee Pty Ltd [2014] NSWSC 1366 Hearing dates: 2/10/2014 Decision date: 02 October 2014 Jurisdiction: Common Law Before: Campbell J Decision: See paragraph 22 Catchwords: ORDERS - consent orders - orders to dissolve trust and transfer legal ownership of property to beneficiary - where court approval required as plaintiff formerly lacked legal capacity Legislation Cited: Civil Procedure Act 2005 (NSW) Supreme Court Act 1970 (NSW) Category: Interlocutory applications Parties: Yoro Mamo (Plaintiff) Margarita Portes (First Defendant) Representation: Counsel: Solicitors: File Number(s): 2004/191204

EX TEMPORE Judgment (Revised) 1I am considering by notice of motion an application that the appointment of the Perpetual Trustee as trustee under a Deed of Trust executed on 23 October 2006 be terminated forthwith. That trust was created after the compromise of a motor accident claim was approved by the District Court in 2006. 2The matter has come to this Court by way of an order made on 5 September 2014 in the District Court of New South Wales under s 144(2) Civil Procedure Act 2005 (NSW) which is in the following terms: If, during proceedings to which this section applies, the District Court decides that it lacks, or may lack, jurisdiction to hear and dispose of the proceedings, the District Court must order that the proceedings be transferred to the Supreme Court. (See also section 144(5)). 3In support of the application, Mr Freeman of counsel has read the affidavit of his client Yora Mamo either sworn or affirmed on 22 July 2014 and of his client's employer sworn on 10 July 2014. 4The property held on trust represents the remainder of the proceeds of the settlement of the action brought by Mr Mamo in the District Court. That Court approved the settlement in accordance with s 76(4) of the Civil Procedure Act and made orders under s 77 of that Act paying the money to Perpetual Trustee in accordance with a draft trust Deed that was exhibited to the Court at the time the orders were made. 5The plaintiff was born on 30 January 1986 and accordingly at the date of the order was aged twenty years. He had suffered his injuries in a motor accident which occurred on 7 August 2001 when he was fifteen years of age. He suffered a traumatic brain injury. When he was first treated by ambulance officers he had a Glasgow Coma Scale of 11 to 12 out of 15 and had been incontinent of urine. A cerebral CT scan taken at Liverpool Hospital revealed evidence of a right parietal hematoma and an intracranial contusion consistent with an extra-dural hematoma. He also suffered orthopaedic injuries. However, on admission it was said there was no evidence of post traumatic amnesia. Nonetheless, he was referred to the brain injury rehabilitation unit six months after his initial injury and neuropsychological testing carried out disclosed impairment in cognitive functioning along with other possible indicia of head injury including lack of temper control, dizziness and tearfulness. The neuropsychologist who examined him at the Brain Rehabilitation Unit concluded that he had marked deficit across problem solving, reasoning, attention, new learning and executive control. 6An issue in the case seemed to have been that the experts retained on behalf of the insurer disputed the severity of the brain injury and opined that he was grossly exaggerating if not totally feigning cognitive impairment. I assume that this issue was reflected in the settlement approved in the District Court which also represented a significant compromise on account of Mr Mamo's contributory negligence. 7I should also add that the District Court Judge who approved the settlement was clearly of the view that at that time Mr Mamo was a person under a legal incapacity, otherwise approval under s 76 and orders under s 77 would have been unnecessary. I proceed on the basis that at that time Mr Mamo was unable to manage his own financial affairs by reason of his brain injury. 8The Trust Deed is an annexure to Mr Mamo's affidavit at tab 3. 9I note in passing that Mr Freeman has drawn to my attention "the Court" in that Deed is defined as meaning the "District Court of New South Wales", presumably because the orders for payment to the trustee were made by that Court. To the extent to which there was doubt about the jurisdiction of the District Court and that Court has transferred these proceedings to the Supreme Court, I interpret the Deed as extending to this Court. However, as Mr Freeman reminded me, should there be any lingering doubt about that I have ample power under the provisions of s 23 of the Supreme Court Act 1970 (NSW) by way by the conferral of that section of all jurisdiction which may be necessary for the administration of justice in New South Wales. 10I inquired of counsel whether the Trustee Act 1925 (NSW) or the Trustee Companies Act 1964 (NSW) cast any light upon, or informed, the exercise of my jurisdiction, and he informed me that that consideration was fully ventilated when the matter was before the District Court and it was considered that they had no application to the present circumstances. I am prepared to proceed on the assumption that, to the extent to which there may be provisions of the Trustee Act 1925 which would affect the exercise of the powers invoked today, that those provisions are displaced by the express terms of the deed of 23 October 2006. 11There are some relevant definitions I need to refer to. The "Determination date" means the earliest of a range of dates including the following: Such earlier date being not later than the 79th anniversary of the date of this deed as the Trustee may determine at any time with the approval of the Court. 12"Principal beneficiary" means Mr Mamo, and "general beneficiary" includes him and other persons extending to dependents and persons whom he might be expected to wish to benefit if, as a disabled person, he had the capacity to make a Will. Cl 3.2 of the deed provides for payment on the determination date. Its terms are as follows: On and from the determination date, the Trustee must stand possessed of the trust fund in trust as follows: (a) ... (b) Where the event giving rise to the determination date is other than the death of the principal beneficiary, to pay or transfer the whole of the remaining income and capital of the trust fund to any one or more of the general beneficiaries including the principal beneficiary in such shares and amounts and in such manner as the Trustee may, in the Trustee's absolute discretion, determine, and without any obligation to make payments to or for the benefit of any one or more of the general beneficiaries including the principal beneficiary or to ensure equality amongst the beneficiaries to whom payments are made provided that the Trustee will only distribute to a general beneficiary other than the principal beneficiary for that general beneficiary's benefit if (certain conditions which is not necessary to spell out, are satisfied). 13There was no evidence that any of the conditions which would permit the Trustee to pay to other than the principal beneficiary have been satisfied in this case. Indeed, I interpolate that I am satisfied that if I approve the determination of the trusts, the evidence before me is that the Trustee has resolved to transfer all of the property to Mr Mamo. I draw that inference from the letters of 18 August 2014 and 20 August 2014 from the trustee's solicitors to the legal representatives of the plaintiff. They are exhibits A and B. They seem to necessarily imply that subject to the Court's approval as I have said, the whole of the trust property will be transferred to Mr Mamo. That impression rises to the level of an inference when one considers that the form of consent orders that have been handed up, signed by Mr Freeman and by Ms McPhillips, the solicitor for the Trustee in express terms provide that "subject to the Court's approval" all the property will be transferred to Mr Mamo." The solicitor could only sign those orders and write the letters she wrote if she had the instructions of her client that it had so resolved. In any event, I think I am entitled to rely upon her ostensible authority to make those representations on behalf of her client. 14The basis of the application is notwithstanding the fact that Mr Mamo was labouring under a legal incapacity as at 2006 at the time the orders were made in the District Court approving the settlement, he has now achieved such a level of recovery from the effects of his head injury that he is fully able to manage his own affairs to the point where he is entitled to be regarded as sui juris. In that regard, I will rely upon the affidavit evidence. I will refer to some of it. 15Mr Polly is Mr Mamo's employer and has been for the last 5 years. Mr Mamo has been employed as a production manager, and since 2012 as the general manager. He is able to manage production, supervise quality control, manage despatch of goods, manage receivables, take incoming orders from all customers, place orders for supplies and operate the company's computer and records. He has authority to control the company's financial accounts including signing cheques. Mr Polly, who I accept would be in a position to form these impressions, has always found him to be honest, competent and diligent in the discharge of his duties dealing with staff and customers. The staff respect him. 16Mr Mamo tells me that since 2006, he has made progress in his physical and mental condition and that he is able to conduct and manage the business and his own financial affairs and has been in that position for the last 5 years. He has obtained and maintains a driver's licence, a Medicare card, a passport, and credit cards. He has acquired real property and has managed to keep up with his mortgage. Mr Mamo married in 2012 and sold the property he was then living in to buy one closer to his place of employment. 17It seems to me that that evidence from him and Mr Polly certainly strongly supports a conclusion that he is living an entirely independent life in all respects. Moreover, the application is supported by the neuro-psychological report of Dr Jeanette Stewart of 18 September 2013. Dr Stewart has seen Mr Mamo twice; on 13 August 2010 and 18 September 2013. She has, on each occasion, carried out psychometric testing which shows that all of the standard results place Mr Mamo in either the average or high-average range. 18There is one exception which relates to some difficulties in terms of verbal abilities in one respect, that is that "his naming to confrontation fell within the borderline range". I confess I am not sure what this means, but Dr Stewart says that in her view, this one difficulty relates to Mr Mamo's non-English speaking background, she observed no problems on her clinical interview and she did not regard this single aspect of his performance as clinically significant. 19She concluded a long, detailed and careful report with the following expression of opinion. "I am not of the opinion that Mr Mamo has any evidence of cognitive, behaviour or psychological impairments that would negatively impact on his ability to independently manage his financial affairs". I accept this evidence. 20It seems to me that, doubtless, the orders made in 2006 were entirely appropriate for the protection of Mr Mamo. I am now satisfied that he has so far recovered from his incapacity to have achieved the level of being sui juris and that it is entirely appropriate that the trust, in his favour, be determined on the condition that the whole of the trust property, including real property and funds the Trustee holds on investment for his benefit be transferred to him and no-one else. 21Accordingly, I expressly approve the determination of the Yora Mamo Trust established by the deed of trust dated 23 October 2006. I otherwise make orders in accordance with the consent orders signed by the legal representatives of Mr Mamo and of Perpetual Trustee Company Limited and signed by me today. 22I direct that the seal of the Court be affixed to those consent orders.