LOWER COURT FILE NUMBER(S): Not Applicable
LOWER
COURT JUDICIAL OFFICER:
Not Applicable
COUNSEL
S D
Epstein SC (plaintiffs)
J E Lazarus (applicant/defendant)
J Johnson (first
& second respondents)
M Mitchell (guardian) (third & fourth
respondents)
SOLICITORS
James Legal Pty Ltd
(plaintiffs)
McLachlan Thorpe Partners (applicant/defendant)
Gary I Castle
& Partners (first & second respondents)
CATCHWORDS
PROCEDURE›Supreme Court Procedure›New South Wales›Procedure under Uniform Civil Procedure Rules and other rules of court›Paries›Joinder and addition of parties›beneficiaries›whether necessary or proper›where no relief sought against beneficiaries
LEGISLATION CITED
(NSW) Uniform Civil Procedure Rules 2005 r 6.24, r 7.12(2)
CATEGORY:
Procedural and other rulings
CASES CITED
TEXTS CITED
DECISION: Motion dismissed with costs
REASONS FOR JUDGMENT
[1]
HIS HONOUR: By notice of motion filed on 28 September 2010, the defendant Roger Dulhunty applies for orders that Annabel Dulhunty, Emmeline Dulhunty, Coco Dulhunty and Clark Dulhunty be joined as second, third, fourth and fifth defendants in the proceedings. That relief is opposed by the plaintiffs, who do not wish those persons to be joined as parties. The respondents Annabel, Emmeline, Coco and Clark, state their position as consenting to, or not opposing, being joined, provided that their costs are paid out of the trust to which I shall refer.
[2]
The trust is a discretionary trust, so that the so-called beneficiaries, the class of which is constituted by the children of Alina Dulhunty – namely Roger, Peter and Jinks, and her grandchildren, namely, Emmeline, Annabel, Coco and Clark – have a only a right to due administration of the trust, and no proprietary interest in the trust assets. Peter, Jinks and Roger are children of Alina Dulhunty. Annabel and Emmeline, and Clark and Coco are children of Peter and Roger Dulhunty, respectively.
[3]
The substantive claim by the plaintiffs Peter Dulhunty and Jinks Dulhunty is for a declaration that Roger Dulhunty, as a trustee of the Alina Dulhunty Family Trust, is bound, by clause 15 of a Deed of Settlement made between the three parties on 4 April 2008, to exercise the powers of a trustee of that trust, so as to wind it up and distribute its net assets as to 30 per cent to each of the plaintiffs and the defendant, and as to 2.5 per cent to each of Annabel, Emmeline, Clark and Coco. Roger's defence includes a contention that clause 15 of the deed of settlement is void or unenforceable by reason of being an act by the trustees fettering the future exercise of their discretion. It is not necessary to consider further the viability of that defence, save to observe that it is arguable.
[4]
In substance, what the plaintiffs seek is to enforce a private agreement made between the three trustees in resolution of various disputes between them, not all of them related to the trust. If, in the absence the grandchildren, that dispute were resolved adversely to Roger, it seems to me that the children would remain at liberty to assert that for the trustees to act as they propose would be a breach of trust.
[5]
There has been foreshadowed on behalf of at least two of the grandchildren – that is, Alina Dulhunty's grandchildren – a complaint that the trustees or some of them have committed breaches of trust. That complaint has not yet been formulated in any detail and has certainly not yet been articulated in of any pleading or other legal proceeding.
[6]
The plaintiffs' summons claims no relief against the grandchildren. It claims relief only against Roger. If the relief sought were granted in the absence of the grandchildren being joined as parties, their legal rights would be unaffected because, although the order sought, if made, would bind Roger to take certain action it would not preclude the grandchildren from complaining that such action was in breach of the trustee's obligations as trustee under the deed of trust.
[7]
The defendant invoked (NSW) Uniform Civil Procedure Rules 2005 , r 6.24, contending that the children ought to have been joined, or that their joinder was necessary to the determination of all matters in dispute in the proceedings. In circumstances where no relief is sought against them and where the relief sought, if granted, would not preclude them from contending that the proposed distribution was in breach of trust, I do not see that their legal interests are affected by the relief sought. Those are significant factors in favour of the view that the joinder is not necessary or proper.
[8]
Moreover, in the context of proceedings relating to trusts, r 7.12(2) provides that all persons having a beneficial interest under the trust need not be parties, but the plaintiff may make parties such of those persons as he or she thinks fit. Although it does not refer to authority, the commentary at r 7.12.5 observes that the appropriateness of joining beneficiaries will usually depend on the extent to which their interests are likely to be adequately represented by the existing parties in the proceedings. In this case, the argument that could be advanced on behalf of the grandchildren – that clause 15 of the 4 April 2008 deed is void – will be advanced in any event by one of the trustees, namely Roger, and as a result of the judicial advice already given, he will be advancing that argument at the cost of the trust. In those circumstances it appears to me unnecessary that others be joined so that there be a proper contradictor: Roger will be a contradictor in any event. It would also be undesirable to visit another set of costs on the trust estate.
[9]
I have already described the grandchildren's attitude to the present application. Because I do not think that it would be appropriate to order, at least at this stage, that their costs be borne by the trust, I think I must treat their position as not consenting to be joined. That is a further consideration that tells against their joinder, since it would appear neither the plaintiffs nor the parties proposed to be joined wish to be joined (except on a condition which I consider inappropriate to impose).
[10]
Finally, if Roger, as defendant, wishes to have the grandchildren engaged in the proceedings and bound by their outcome, it would be a simple matter for him to file a cross-claim, seeking a declaration that clause 15 was void or unenforceable and joining the grandchildren as defendants himself, rather than seeking to compel the plaintiffs to do so.
[11]
The circumstance that potential claims of breach of trust by some of the grandchildren against some or all of the trustees have been foreshadowed is no reason to join them to the existing proceedings. If they wish to agitate those claims they can do so, and if they do so in a timely manner it may be that the Court will order that all the proceedings be heard together. But they cannot be compelled to bring those claims by joining them as defendants, when no relief is sought against them and where their joinder is not otherwise proper or necessary.
