Palmer v Palmer[2022] QSC 263

SUPREME COURT OF QUEENSLAND

Brief history of this proceeding

1. [1]
   This proceeding (BS10625/20) commenced by way of an originating application on 6 October 2020.^[1]  The applicant, Ryan Andrew Palmer (Ryan^[2]) as trustee of the Ross Leslie Palmer Testamentary Trust (the RLPTT), sought relief pursuant to s. 96 of the Trusts Act 1973 (Qld) (Trusts Act) for directions that Ryan would be justified in taking certain steps which included the institution of a proposed proceeding.  An amended originating application was filed on 5 May 2021.^[3]  
2. [2]
   The respondents to proceeding BS10625/20 comprise nine persons, each of whom is a beneficiary (or representative of a beneficiary) of the RLPTT.  The first respondent, Ross Leslie Palmer (Ross), the namesake of the trust, is either the father or grandfather of the other respondents (that include Ryan in his personal capacity). 
3. [3]
   The RLPTT was one of three discretionary trusts established by the will of Ross’s father, Leslie Harold Palmer (Les). 
4. [4]
   The proceeding has a history that is not necessary to set out in full here.  Suffice to say that when the proceeding was before the court on 25 June 2021, it was adjourned to permit the proceeding to be served on Ian Lindsay Palmer (Ian) as an interested person.^[4] Ian is the other son of Les, and brother to Ross.  Ian and Ross have a sister – Nola Margaret Palmer (Nola).  
5. [5]
   A draft of the unfiled claim and statement of claim for the proposed proceeding, that was the subject of the originating application for directions as filed, is exhibit SJFS24 to the affidavit of Ms Forward-Smith filed 19 November 2020.^[5]  The proposed proceeding contemplates Ryan (as trustee of the RLPTT) making claims against:

1. Ian, as executor of the estate of Les, as former trustee of the RLPTT and as trustee of the Ian Lindsay Palmer Testamentary Trust (the ILPTT);
2. Ross, as executor of the estate of Les, and as former trustee of the RLPTT; and
3. Yusuf Hussein as trustee of the Nola Margaret Palmer Testamentary Trust (the NMPTT).

6. [6]
   The ILPTT and the NMPTT are the other two testamentary trusts established by the will of Les.
7. [7]
   Various relief pursuant to the Succession Act 1981 (Qld) and the Trusts Act is sought in the proposed proceeding, in addition to declarations, claims for equitable compensation, damages, an account of profits, and costs. 
8. [8]
   It is plain from the material before the court that the proposed proceeding was only one part of a wider dispute or disputes that have been ongoing between what can be broadly described as the Palmer family.  In that context, on 30 September 2021, the court made orders referring Ryan, Ross and Ian to mediation.^[6]  The mediation was conducted over approximately 4 days over a total period of approximately 11 months, and a mediator’s certificate was filed on 8 November 2022.^[7] The mediator’s certificate discloses that:

   1. Ryan, Ross and Ian participated in a mediation and the procedure has finished;
   2. the referred dispute between Ryan and Ross has not been resolved;
   3. the referred dispute between Ross and Ian has not been resolved; and
   4. the referred dispute between Ryan and Ian has been resolved.
9. [9]
   As a consequence of the agreement reached at mediation between Ryan and Ian, Ryan no longer presses for the relief sought in the originating application or the amended originating application but instead seeks the relief (on a final basis) set out in an interlocutory application filed 9 November 2022.^[8] 
10. [10]
    In so far as that application seeks relief pursuant to s. 95 of the Trusts Act, Ryan does not press for that relief at the present time in proceeding BS10625/20.  Such relief would properly be the subject of a separate originating application in any event. 
11. [11]
    The application otherwise seeks different relief pursuant to s. 96 of the Trusts Act.  Namely, that the applicant is directed, upon the written statement of facts that is exhibit SJFS101 to the affidavit of Ms Forward-Smith filed on 9 November 2022,^[9] that he would be justified in entering into and proceeding with the settlement deed in the form exhibited to the confidential affidavit of Ms Forward-Smith (which the parties have subsequently varied on 18 November 2022 in relation to one transaction which is not important for present purposes). 
12. [12]
    That settlement deed records the resolution of disputes between Ryan and Ian that were resolved at mediation.  The settlement deed provides that the making of certain court orders on or before 30 November 2022 is a condition precedent to the settlement.  Those court orders (defined in the settlement deed^[10]) are:

3. “(a)
   A direction pursuant to s 96 of the Trusts Act 1973 (Qld) that Ryan ATF the RLPTT is justified in entering into and proceeding with this Deed; and

3. (b)
   the Proceeding^[11] is discontinued with no order for payment of any costs by or to Ian.” 

13. [13]
    There is evidence before me of compliance with the service requirements of s. 96(2) of the Trusts Act.  Ian makes no submissions in respect of the application but is a signatory to the settlement deed that requires this application to be brought.  There is evidence before me that all of the beneficiaries of the RLPTT, bar Ross, support the application.  Ross opposes the application and appeared (representing himself) on the hearing of the application. 

The nature of the application

14. [14]
    Section 96 of the Trusts Act enables a trustee to approach the court to seek directions.  It is the statutory analogue of the power that was discussed in the case of Re Beddoe.^[12]  Such an application is made upon a written statement of facts provided by the trustee.  Here, the relevant statement of facts now relied upon is an amended statement of facts which is exhibit SJFS119 to the affidavit of Ms Forward-Smith filed 18 November 2022.^[13]
15. [15]
    Applications and orders under s. 96 of the Trusts Act have consequences under s. 97 of the Trusts Act, in that if a trustee acts in accordance with directions given by the Court, the trustee is entitled to an indemnity from the trust against all costs, expenses and liabilities that are properly incurred. 
16. [16]
    The relevant principles to be applied in applications under s. 96 of the Trusts Act are conveniently summarised in the decision of Coore v Coore,^[14] referring to the High Court decision in Macedonian Church v Eminence Petar.^[15]  In determining this application, the purpose of proceedings of this nature should be kept firmly in mind.  Judicial advice proceedings are not an appropriate vehicle to settle disputes between parties to a trust.  In the ordinary case, the Court acts upon the statement of facts that has been provided by the applicant and then (relevantly to this case) determines whether the trustee is justified in entering into and proceeding with the settlement deed.  The applicant will be so justified if the Court determines that entering into and proceeding with the settlement deed is in the best interests of the trust estate and beneficiaries. 
17. [17]
    The nature of the direction sought is properly considered as the Court providing private advice to a trustee.  The Court can be assisted in its task of providing private advice to the trustee by having regard to confidential legal advice provided to the applicant. Such advice was provided in this case, justifying the trustee entering into and proceeding with the settlement deed.

The applicant’s material

18. [18]
    The applicant’s material^[16] includes:

    1. an amended statement of facts;
    2. evidence to support the amended statement of facts, including information to place the proposed proceeding, the wider disputes and the settlement into context;
    3. the unfiled claim and statement of claim for the proposed proceeding and a confidential advice provided by counsel in support of the originating application as filed relating to the proposed proceeding;
    4. the settlement deed (which is confidential);
    5. a confidential advice provided by counsel in support of the current application.

Ross’s material

19. [19]
    Ross’s material relied upon in respect of the application comprises:

    1. nearly all of the documents filed in proceeding BS10625/20 (court docs 1-7, 11-18, 22, 25-81);
    2. from file BS9305/17, court doc 17 (being an affidavit of Ross sworn 9 July 2018);
    3. full transcripts of hearings that have occurred in the proceeding BS10625/20 before:
       1. (i)
          Bradley J on 27 November 2020 (exhibit 3);
       1. (ii)
          Callaghan J on 25 June 2021 (exhibit 4);
       1. (iii)
          Jackson J on 30 September 2021 (exhibit 5) ;
       1. (iv)
          Freeburn J on 3 March 2022 (exhibit 6);
       1. (v)
          Williams J on 17 November 2022 (exhibit 7),
    4. a summary of expenses incurred by Ross related to his role as executor and beneficiary of the estate of Les (exhibit 8). 
20. [20]
    Of that extensive material, the document that appeared to assume the most importance in Ross’s oral submissions was the affidavit of Vicki Ann Crawford.^[17]
21. [21]
    It is difficult to see how the vast majority of the material relied upon by Ross has any direct relevance to the application presently before the Court.  

The affidavit of Ms Crawford

22. [22]
    Whilst the applicant’s counsel made brief submissions as to the admissibility of the affidavit of Ms Crawford, ultimately no formal objection to its admission into evidence was made, and so it was not necessary for me to rule upon the admissibility of the affidavit during the hearing.  However, whilst it has been admitted into evidence in the application, it is not an affidavit upon which I would be prepared to place any significant weight.  The affidavit is replete with hearsay, inadmissible evidence, opinions, scandalous allegations, and matters that could be viewed as no more than arguments (rather than evidence) sought to be advanced on behalf of Ross.  Whilst Ms Crawford describes herself as a bookkeeper with qualifications that enable her registration as a BAS agent with the Tax Practitioners Board with over 40 years’ experience in accounting, there is insufficient information provided in her affidavit for me to conclude that she is sufficiently qualified to provide opinions as to the complex relevant accounting matters dealt with in her affidavit.  She is certainly not qualified to express opinions as to various legal matters that her affidavit traverses.  The affidavit smacks of having a bias towards Ross and against all other parties and so, even insofar as any of the affidavit may be admissible, I would act with caution before accepting that any of the allegations made in the affidavit are true. What can be taken from Ross’s reliance on the affidavit of Ms Crawford is that Ross has a firm belief that all other parties, including Ian and Ryan, and Mr Hussein (mentioned in [5] above), have acted and are acting in a way adverse to his interests.

The grounds of Ross’s opposition to the application

23. [23]
    It has been difficult to ascertain from Ross the precise grounds of his opposition to the application.  Ross’s complaints go far beyond the scope of this application.
24. [24]
    When pressed, Ross:

    1. confirmed that he considered it was not in the best interests of the beneficiaries for the RLPTT to enter into the deed of settlement;
    2. could not identify with any precision why it was not in the best interests of the beneficiaries for the RLPTT to enter into the deed of settlement;
    3. suggested that there was some alternate arrangement that would be in the best interests of everyone (seemingly including in ‘everyone’ the ILPTT, the NMPTT and the beneficiaries of both);
    4. was unable to articulate in any coherent way what that alternate arrangement would be (except that it involved himself, and perhaps Ryan, being directors).
25. [25]
    I note that the settlement deed does not affect Ross’s status as executor of the estate, or as a discretionary beneficiary of relevant trusts, including the RLPTT, the Remlap 7 Trust and the Cloud Nine Trust. 

Resolution of the application

26. [26]
    I proceed on the basis of the facts stated by the trustee in the amended statement of facts.  In so far as Ross, or any other person, considers those facts to be contested or controversial, it is not part of my role in this application to resolve any such dispute.  I note that the trustee will lose the protection of s. 97(1) of the Trusts Act if the trustee “has been guilty of any fraud or wilful concealment or misrepresentation” in obtaining the direction given by the Court. 
27. [27]
    I am satisfied that Ryan is justified in entering into and proceeding with the settlement deed in the form exhibited to the confidential affidavits of Ms Forward-Smith.  The trustee has obtained a legal opinion of Counsel in favour of the proposed settlement, which I have carefully read, and I consider it is reasonable for the trustee to act on that opinion.^[18]  I consider that it is in the best interests of the trustee estate and the beneficiaries of the RLPTT for Ryan to enter into and proceed with the settlement deed. 
28. [28]
    Further, based on the material before me, I am satisfied that:

    1. Ryan’s decision to agree to the compromise set out in the settlement deed is within power;
    2. there is no impropriety in Ryan’s decision;
    3. Ryan has exercised his discretion in good faith;
    4. Ryan has given fair consideration to the relevant issues.^[19] 
29. [29]
    My reasons for those findings follow.  I will attempt to simplify the facts as much as possible, noting again that I also rely upon the facts as set out in the amended statement of facts.  
30. [30]
    Les died in 2009.  At the time of his death Les had assets in his personal name and assets held through a group of companies and trusts.  Some of those assets fell within the scope of the estate and others did not.  The estate was a valuable and complicated one.  In broad terms, the estate (excluding personal items) was left to the three testamentary trusts already mentioned – the RLPTT, the ILPTT, the NMPTT. 
31. [31]
    Up until about 2012, Ian and Ross as executors of the estate, and variously as trustees of the testamentary trusts, allegedly made and implemented certain arrangements regarding both estate and non-estate assets, the intention seeming to be to ensure that each of Les’s children’s families received the benefit of a third of the total assets.  In that respect each of Ian, Ross and Mr Hussein (as trustees of the three trusts) signed a Consent to Distribution in late November and early December 2012.  Dealing with the assets in that way ultimately led to Ryan (who became  a trustee of the RLPTT in 2017) expressing concern with the way in which the estate had been administered by Ross and Ian.  A proceeding was commenced by Ryan for directions in 2017 (BS9305/17).  Amongst other relief, Ryan sought directions as to whether the trustees should pursue the provision of an estate account from the executors.  That proceeding was able to be resolved between the parties with an agreement being reached as to the provision of certain documents and information from Ian to Ryan to attempt to address Ryan’s concerns.
32. [32]
    The documents and information received and reviewed by Ryan did not put Ryan’s concerns to rest and gave Ryan reason to believe that the proposed proceeding by RLPTT should be commenced.  That proposed proceeding would not resolve all matters in dispute – it was specifically in relation to the estate and its administration.  The monetary amount claimed in the proposed proceeding was $2,258,155.31.  
33. [33]
    The proposed proceeding suffered from the potential problem that Ross (as trustee of the RLPTT at the relevant times) may have competently consented to certain assets being dealt with in particular ways (both favourably and unfavourably to the RLPTT).  Even if that consent could somehow be re-wound, whether that would result in a more favourable outcome overall for the RLPTT is not known with certainty.  There was the added difficulty that the estate appeared to have been fully distributed, apart from household items.  
34. [34]
    In the meantime, there are also ongoing disputes (primarily relating to what is known as The Twelve Trusts, Longon and the Remlap Partnership), that have resulted in certain deadlocks between Ian and Ryan, which adversely affect funds available to the RLPTT to distribute to beneficiaries.  That position appears unlikely to improve without litigation.  And even if litigation were to occur, the likely result of such litigation would be the appointment of receivers over assets which may have the consequence of reducing the amounts available to the beneficiaries (taking into account receivers’ costs and possible reduced sale proceeds where sales of assets occur by receivers).      
35. [35]
    The real options then available to Ryan seem to be (in simplified terms):

    1. Litigate the proposed proceeding and additional proceedings, with no guarantee of outcome, significant cost expenditure, delays, reduced monies being able to be passed to beneficiaries at least in the short to medium term, and ongoing family conflict; or
    2. Enter into the deed of settlement which has the effect untangling the interests of the RLPTT from the interests of the other two trusts going forward (giving it its own pool of assets), sees the RLPTT get its full one third of its interests in the remaining assets (the subjects of deadlocks) plus an amount that can be viewed as the settlement component of the proposed proceeding, and avoids the costs, risks and time associated with further litigation bringing certainty and the possibility of the family rift not worsening. 
36. [36]
    A consideration of the circumstances set out in the amended statement of facts and the two real options set out in summary above, overwhelmingly point towards the entry into the settlement deed being a reasonable course of action in the best interests of the beneficiaries of the RLPTT.  The settlement of the proposed proceeding and other disputes has both tangible and intangible benefits.^[20]    
37. [37]
    Accordingly, I order that:

    1. Pursuant to section 96 of the Trusts Act 1973 (Qld), the applicant is directed, upon the written amended statement of facts that is exhibit SJFS119 to the affidavit of Ms Forward-Smith filed 18 November 2022, that he would be justified in entering into and proceeding with the settlement deed in the amended form that is exhibited to the two confidential affidavits of Ms Forward-Smith filed by leave on 23 November 2022.
    2. The opinion of Counsel and the two confidential affidavits of Ms Forward-Smith sworn on 21 November 2022 and 22 November 2022 filed by leave on 23 November 2022 be placed in a sealed envelope and marked “Not to be opened without order of the Court.”
    3. The applicant’s costs of the proceeding be paid on an indemnity basis from the assets of the Ross Leslie Palmer Testamentary Trust.
    4. Except as ordered above, the proceeding is otherwise dismissed with no order as to costs.