Alexiou v Alexiou [2020] NSWSC 748 (17 June 2020)

Last Updated: 17 June 2020

Supreme Court New South Wales

Case Name:	Alexiou v Alexiou
Medium Neutral Citation:	[2020] NSWSC 748
Hearing Date(s):	28 May 2020
Decision Date:	17 June 2020
Before:	White J
Decision:	(1) Order that the plaintiffs’ notice of motion dated 12 May 2020 be dismissed with costs. (2) Order that the proceedings be dismissed. (3) Order that the plaintiffs pay the defendant’s costs of the proceedings.
Catchwords:	INJUNCTION – Interlocutory injunction – whether sole director be restrained from causing the company to sell certain real property – where sole director appointed pursuant to her capacity as executrix for the deceased sole shareholder – whether serious question to be tried that sole director would breach duty to beneficiaries by causing company to sell SUCCESSION — Executors and administrators — whether executrix holds shares in private company as executrix or trustee – whether executrix assented to the trusts of the will so as to hold the shares as trustee for the beneficiaries – where administration of the estate has not concluded CIVIL PROCEDURE — Summary disposal — Dismissal of proceedings – whether proceedings for removal of a purported trustee ought to be dismissed – whether proceedings are premature and thereby fail to disclose a cause of action
Legislation Cited:	Corporations Act 2001 (Cth), s 201F Uniform Civil Procedure Rules 2005 (NSW), r 7.16
Cases Cited:	Attorney-General (Cth) v Breckler (1999) 197 CLR 83; [1999] HCA 28 Bell v Scott [1922] HCA 13; (1922) 30 CLR 387 Commissioner of Stamp Duties (Qld) v Livingston [1964] UKPC 2; (1964) 112 CLR 12; [1965] AC 694 CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; (2005) 224 CLR 98 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; [1990] HCA 45 Porteous v Rinehart [1998] WASC 270; (1998) 19 WAR 495 Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd [1998] FCA 51; (1998) 79 FCR 469
Texts Cited:	G E Dal Pont, K F Mackie, Law of Succession, 2013, LexisNexis Butterworths
Category:	Procedural and other rulings
Parties:	Costa Alexiou by his tutor Arthur Alexiou (First Plaintiff) Jason Alexiou by his tutor Arthur Alexiou (Second Plaintiff) Voula Alexiou (Defendant)
Representation:	Counsel: D Parish (Plaintiffs) N Condylis (Defendant) Solicitors: Gillis Delaney (Plaintiffs) Walker and White (Defendant)
File Number(s):	2020/98568

JUDGMENT

1. HIS HONOUR: By summons filed on 31 March 2020 the plaintiffs, Costa and Jason Alexiou by their tutor Arthur Alexiou, seek an order that the defendant, Voula Alexiou, “be removed as trustee of trust created over the shares in Alexicon Pty Ltd in the last will and testament of Con Alexiou deceased 11 May 2019 and replaced by Maria Alexiou”.
2. By notice of motion dated 12 May 2020 the plaintiffs through their tutor sought an interlocutory injunction restraining the defendant in her capacity as the sole director of Alexicon Pty Ltd (“Alexicon”) from selling, encumbering or otherwise dealing with the property known as Unit 1, 126 Batt Street, Jamisontown, NSW.
3. By notice of motion filed on 1 May 2020 the defendant seeks summary dismissal of the proceedings.
4. The plaintiffs are minors. Arthur and Maria Alexiou are their father and mother.
5. The defendant is the executrix of the will of the late Con Alexiou who died on 11 May 2019. Probate of his will was granted to the defendant on 31 January 2020. The inventory of property attached to the grant of probate records that the property owned by the deceased consisted of two shares in Alexicon and one share in VLN Pty Ltd (scil. VLN Holdings Pty Ltd) (“VLN”), both items of property being said to have an estimated or known value of $1,540,000. Otherwise the only asset of the deceased disclosed in the inventory was $13.64 held in a bank account.
6. The deceased’s will is dated 3 April 2013. It relevantly provides:

“2. I APPOINT my daughter VOULA ALEXIOU as Executrix and Trustee (hereinafter called ‘my Trustee’) of this my Will AND I GIVE the whole of my estate to my Trustee UPON TRUST to sell and call in and convert the same into money at such times and in such manner as my Trustee shall think fit (with power to postpone such sale and conversion for so long as she in her discretion may think fit without being responsible for any loss) and out of the proceeds thereof to pay my just debts funeral and testamentary expenses and subject thereto UPON TRUST as follows:-
...
B) I GIVE my Company known as VLN Holdings Pty Ltd to my daughter the said VOULA ALEXIOU for her own use and benefit absolutely.
C) I GIVE my Company known as Alexicon Pty Ltd to my grandchildren Kostas Alexiou and Jason Alexiou upon their attaining the age of twenty-three (23) years as tenants in common in equal shares for their own use and benefit absolutely.
D) I GIVE the rest and residue of my estate to my daughter the said VOULA ALEXIOU.”

7. The gifts in clause 2(B) and (C) must be understood as gifts of the deceased’s shares in VLN and Alexicon.
8. The deceased was the sole shareholder in and director of Alexicon. The defendant deposed that on 2 April 2020 she transferred the two shares in Alexicon to herself as executrix of the estate. She was entitled to do so pursuant to the Corporations Act 2001 (Cth), s 201F(2). It is not in dispute that the defendant is now the sole director of Alexicon.
9. The only substantial asset of Alexicon is a tenanted industrial property in Jamisontown near Penrith. Arthur Alexiou deposed that two commercial units at 126 Batt Street were constructed by the deceased with his assistance in the late 1990s. One such unit is owned by Alexicon and the other by VLN.
10. Arthur Alexiou deposed that the units were constructed using an original loan facility of $525,000 which was to have been repaid by 2010. He deposed that this was a joint facility of Alexicon and VLN.
11. Whatever the intention in the late 1990s or early 2000s, the plaintiffs did not dispute that on 8 April 2014 the deceased signed a mortgage given by Alexicon in favour of ING Bank (Australia) Ltd of the unit owned by Alexicon and that the mortgage was stamped to $600,000. The earliest financial statements of Alexicon in evidence were financial statements for the year ended 30 June 2015. Those financial statements recorded that Alexicon had then outstanding bank loans of $600,000. The latest financial statements of Alexicon of 30 June 2019 recorded non-current liabilities, being two loans from ING Bank totalling $782,659. Interest costs for the year ended 30 June 2019 were recorded as $41,644. The same financial statements recorded Alexicon as having made a small loss for the year ended 30 June 2019 of $1,413.49 after accounting for an expense of director’s fees of $46,500.
12. Alexicon had cash as at 30 June 2019 of $6,613.92. Of its total current assets of $132,849 there was included a loan payable by the deceased of $115,554. According to the inventory of property accompanying the application for probate, the deceased did not have liquid funds to meet that liability and the liability would have to be met from his shares in Alexicon and VLN.
13. Arthur Alexiou lodged a caveat against the grant of probate. The defendant applied for removal of the caveat. Arthur Alexiou withdrew the caveat. On 18 November 2019 he consented to probate of the deceased’s will of 3 April 2013 being granted to the defendant in common form. No costs order was made in that proceeding. The defendant’s solicitor deposes that as at 20 May 2020 the estate had incurred legal costs in relation to the proceedings for removal of the caveat of $32,859.74. She deposed that funeral and other estate expenses (other than legal costs) amounted to $12,971.04 and that costs of $12,456.80 were incurred in obtaining the grant of probate. She also deposed that “administration costs”, either billed or work in progress, totalled $6,600.
14. Arthur Alexiou was not a beneficiary under the deceased’s will. He has commenced proceedings for a family provision order. The defendant’s solicitor deposed on 20 May 2020 that legal costs incurred in those proceedings that had been billed totalled $7,821 and that there was $60,000 work in progress yet to be billed. She deposed that total estate expenses were $132,708.58.
15. This does not include anticipated estate expenses for tax returns and administration costs, nor future legal costs of the family provision proceedings, nor costs in relation to the current proceedings.
16. On 6 March 2020 the defendant’s solicitors, Walker and White, advised Glass Goodwin, who were then solicitors for Arthur Alexiou, that the defendant proposed to sell Alexicon’s industrial unit because the interest payable on its loans barely covered the rent it received and, having made inquiries, the defendant had been advised that refinancing of the loan could not be achieved unless she were prepared to guarantee the loan which she was not prepared to do. Walker and White stated that the defendant was concerned that Alexicon not trade while insolvent. They advised:

“Having taken advice and obtained assessment of the valuation she will be acting in accordance with her duty both as trustee and director if she sells this property at the best price that can be obtained.”

17. On 18 March 2020, Gillis Delaney, who now act for Arthur Alexiou and the plaintiffs in the present proceedings (but who do not act for Arthur Alexiou in the family provision proceedings) advised the defendant that Arthur Alexiou and his sons wished her to resign as “the trustee of the trust in relation to Alexicon Pty Ltd” and proposed that Arthur Alexiou be appointed in her place. They asked whether she would consent to resigning.
18. On 19 March 2020 Messrs Walker and White rejected that request.
19. On 26 March 2020 Gillis Delaney advised that Arthur Alexiou would be commencing foreshadowed proceedings to have the defendant replaced as the trustee “in relation to Alexicon Pty Ltd”. Proceedings were commenced on 31 March 2020.
20. On 8 April 2020, Messrs Walker and White objected to Arthur Alexiou being named as the tutor for the two plaintiffs on the basis that his interests as plaintiff in the related family provision proceedings were contrary to the interests of his children. There is substance to that objection. The costs borne by the defendant in defending the family provision proceedings brought by Arthur Alexiou will be borne as to a 50 per cent share from the plaintiffs’ interest in the estate. There is no residuary estate.
21. On 24 April 2020 Walker and White advised:

“We consider it to be obvious that Mr Arthur Alexiou has a conflict and cannot act as a tutor for the minors Costa and Jason Alexiou.
Having said that, provided a suitable trustee can be identified whom the Court considers to be appropriate, our client has no objection to resigning as a trustee of Alexicon Pty Ltd (‘Alexicon’).
Please note in our experience the Court is almost never willing for the parents of minors to act as trustee for those persons except in some instances, where there is an additional independent trustee.
Insofar as you are willing and able to arrange for suitable trustee or trustees, our client will work with you to transfer the trust to that trustee or those trustees.
Please note that Alexicon currently has the following liabilities:
a. Mortgage $759,942.97
b. Pro rata liability for Estate costs and disbursements E$55,500.00
c. Other liabilities (such as rates, water insurance etc) E$25,295.00
TOTAL $840,737.97
To avoid the possibility of further legal costs being incurred following the conclusion of your application involving trusteeship of Alexicon, we consider it imperative that the parties reach a clear agreement in writing as to the amounts owing by Alexicon to VLN Holdings, to the defendant and to third parties respectively, together with how and when those amounts are to be paid.
In the premises we consider it unfortunate that the summons was filed before clearly articulating the outcome desired, because other than the question of the identity of the trustee and the financial separation of Alexicon from the estate and VLN Holdings, there is no dispute between the parties.”

22. On 5 May 2020 Gillis Delaney wrote to Walker and White noting that the defendant had arranged for the unit to be listed for sale on 14 April 2020 and seeking an undertaking that the defendant would take no further steps in relation to the sale of the property, pending finalisation of the proceedings. Gillis Delaney said that it seemed “incredulous” (sic) that Alexicon’s rental income of approximately $107,000 plus GST would be insufficient to meet its outgoings and provisions “even on the basis that Alexicon Pty Ltd for unexplained reasons is bearing all of the mortgage debts in relation to units 1 and 2 at 126-128 Batt Street, Jamisontown.”
23. On 6 May 2020 Walker and White responded to Gillis Delaney’s letter of 5 May 2020 as follows:

“As set out in our letters Alexicon Pty Ltd has liabilities (in addition to the mortgage over the real property) in excess of $80,000.
Since the letter of 24 April 2020 was sent the liabilities referred to above have increased.
The majority of liabilities that Alexicon owes (other than its indebtedness for the mortgage) related to legal fees incurred by the estate and/or trustee in defending legal proceedings commenced by Mr Arthur Alexiou.
Our client will agree to the undertaking sought in that letter on the following conditions:
1. A payment of $90,000 to this firm’s trust account to be utilised to meet the liabilities of Alexicon; and
2. An agreement that Mr Arthur Alexiou (or his agent) will make further payment to the trust account for liabilities of Alexicon within 7 days of notice being called upon to do so.
If a payment is sought pursuant to paragraph 2 above and the payment is not made within the time stipulated then our client’s undertaking is taken to be withdrawn and she will be at liberty to take further steps to market/sell the subject real estate.”

24. No such payment or agreement was proffered.
25. On 14 May 2020, on Arthur Alexiou and his wife Maria Alexiou giving the usual undertaking as to damages, Lindsay J ordered that up to and including 28 May 2020 the defendant, in her capacity as sole director of Alexicon, be restrained from entering into any contract for sale or selling, or otherwise dealing with unit 1 at 126 Batt Street, Jamisontown without the leave of the court or the prior written consent of Arthur Alexiou and Maria Alexiou.
26. Alexicon’s unit was advertised for sale for $1.65 million. Offers were received for the unit in the approximate amounts of $1.4 million. On 13 May 2020 the agent acting on the sale advised the defendant’s solicitor that in the current pandemic climate he regarded $1.4 million as a good offer. The agent informed a friend of Arthur Alexiou who posed as an interested purchaser that the owner had dropped the asking price by $100,000 as she wanted a quick settlement and that there was an offer on the table for $1.4 million.
27. On 28 May 2020 I declined to further extend that injunction.
28. These are my reasons for refusing to do so. These reasons also address the balance of the plaintiffs’ notice of motion seeking an interlocutory injunction and the defendant’s application for summary dismissal of the plaintiffs’ proceeding for removal of the defendant as trustee of the shares in Alexicon provided for by clause 2(C) of the will.
29. The evidence as to Alexicon’s financial position does not justify the defendant’s assertion that Alexicon may be insolvent. Although Alexicon has secured and unsecured creditors, and the defendant has expressed concern as to its solvency, the value of its real property, being the unit in Jamisontown, is substantially in excess of the value recorded in Alexicon’s financial statements and Alexicon’s secured and trade creditors can readily be satisfied from its rental income. The liabilities incurred by the defendant as executrix are not debts owed by Alexicon. It is at least seriously arguable that the defendant could not justify the sale of the unit on the ground that the sale was necessary or desirable in the interests of Alexicon’s creditors. The defendant’s duty as director of Alexicon is owed to its beneficial shareholders. Nonetheless, the proper exercise of the defendant’s powers and duties as executrix informs the proper exercise of her powers and duties as director of Alexicon.
30. As executrix of the deceased’s will, the defendant is entitled to sell the shares in Alexicon to pay debts and testamentary expenses. No-one suggests that a sale of the deceased’s shares in Alexicon, as distinct from a sale of Alexicon’s property, would be practicable or desirable. A sale of the shares would not be in the plaintiffs’ interests. But the defendant is entitled to be indemnified out of the plaintiffs’ share of the estate (that is, out of the shares in Alexicon) for 50 per cent of the debts the defendant incurs in administering the estate, including in defending the proceedings brought by Arthur Alexiou.
31. The plaintiffs submitted that the defendant should be restrained from selling the commercial unit owned by Alexicon because that is its sole asset and the reason for Alexicon’s existence. If the defendant were permitted to sell the property, it would frustrate the underlying purpose of the main proceeding, being the application to remove the defendant as trustee of the trust created over the shares in Alexicon by the deceased’s will and for the defendant to be replaced as trustee of those shares by Maria Alexiou. The plaintiffs submitted that it was clear that the deceased’s wish was for his grandchildren to acquire control of the unit owned by Alexicon and not just a “pot of money that might attach to shares”. They submitted that it was in the best interests of the plaintiffs as beneficial shareholders for the company to retain the property, which is an appreciating asset.
32. The plaintiffs’ written submissions did not address the defendant’s entitlement as executrix to sell assets of the estate to meet testamentary expenses. As in the case of a trustee’s power of sale, an executor’s discretionary power to sell assets for the purposes of administration is to be exercised fairly and honestly for the purposes for which it is given and not to accomplish any other ulterior purpose for the executor’s benefit or otherwise. However, provided the power is exercised in good faith and not arbitrarily or capriciously or for an improper purpose or without real consideration as to the exercise of the discretion, it cannot be impugned on a general ground of alleged lack of reasonableness, fairness or wisdom (Attorney-General (Cth) v Breckler (1999) 197 CLR 83; [1999] HCA 28 at [7] citing Northrop J in Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd [1998] FCA 51; (1998) 79 FCR 469 quoted by Heerey J at at 480). Had Alexicon’s unit been owned by the deceased, there would be no ground for interfering with the defendant’s exercise of her power of sale as executrix in administering the estate to raise moneys to meet testamentary expenses to be borne from the plaintiffs’ share of the estate.
33. That is the purpose for which the defendant proposes to exercise her power as director of Alexicon. In so doing she is not breaching any fiduciary duty owed to the plaintiffs as beneficiaries under the deceased’s will either as director or executrix.
34. The defendant submitted that as the estate has not been administered, she is not yet trustee of the shares in Alexicon (Commissioner of Stamp Duties (Qld) v Livingston [1964] UKPC 2; (1964) 112 CLR 12; [1965] AC 694 at pp 18, 26-27; 708, 717). In Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; [1990] HCA 45 the High Court held (at 312) that the principle in Livingston’s case (that prior to administration of a deceased estate there is no specific property capable of constituting the subject property of a trust in favour of the beneficiary) is applicable not only to assets within the residuary estate, but to assets the subject of a specific gift.
35. Therefore, the defendant submits, not only is the defendant entitled to realise the unit in order to meet the expenses for which the plaintiffs’ share of the estate will be liable, but the relief claimed in the summons is premature because she is not yet in the position of trustee of the shares for the plaintiffs. There being as yet no trust, there can be no basis for an order that the defendant be removed as trustee.
36. In answer to these submissions the plaintiffs argued that the defendant does not hold the shares in Alexicon as executrix, but as trustee, and is not entitled to exercise her power of sale as executrix under clause 2 of the will to sell the shares in Alexicon. By parity of reasoning, she is not entitled to exercise her power as director of Alexicon to sell Alexicon’s unit to realise cash to be available to her as shareholder of Alexicon to meet her liabilities as executrix of the deceased’s estate.
37. The plaintiffs did not dispute that administration of the estate is not complete. Instead, the plaintiffs submitted that the defendant had assented to ceasing to hold the shares in Alexicon in her capacity as executrix and to holding those shares as trustee for the plaintiffs. Mr Parrish, who appeared for the plaintiffs, submitted that by assenting to the disposition of the will, the defendant had divested her title to the property by virtue of her office as executrix. He cited George Attenborough & Son v Solomon [1912] UKHL 4; (1913) AC 76 where Viscount Haldane LC said (at 85):

“The executors had long ago lost their vested right of property as executors and become, so far as the title to it was concerned trustees under the will. Executors they remained, but they were executors who had become divested, by their assent to the dispositions of the will, of the property which was theirs virtute officii; and their right in rem, their title of property, had been transformed into a right in personam, — a right to get the property back by proper proceedings against those in whom the property should be vested if it turned out that they required it for payment of debts for which they had made no provision.”

38. In the present case, if the defendant has ceased to hold the shares in Alexicon by virtue of her office as executrix, nonetheless, she would hold them as trustee. If there were a change of executor or a change of trustee, and the trustee were personally liable to the executor to apply the shares for the payment of debts for which the executor had made no provision, still, the shares would have to be sold for that purpose. As the defendant is both executrix and, on completion of administration, will be (or it is argued, as a result of a prior assent, is) trustee of the shares, the shares will have to bear half of the expenses properly incurred by the defendant in administering the estate, including the defence of the proceedings brought by Arthur Alexiou. Whether the defendant has become trustee of the shares by virtue of assent or not, there is no impropriety in her exercising her power as director of Alexicon to sell Alexicon’s asset to meet administration expenses.
39. In any event, I do not think that it is reasonably arguable that the defendant has assented to holding the shares in Alexicon not as executrix, but as trustee for the plaintiffs, notwithstanding that the administration is incomplete and expenses are continuing to be incurred.
40. Mr Parrish cited G E Dal Pont and K F Mackie, Law of Succession, 2013, LexisNexis Butterworths at 285-286 at [10.46]-[10.47] and the cases there cited. The learned authors said:

“10.46 Judges have remarked the difficulty of ascertaining when a person appointed as executor and trustee moves from holding property as executor to holding it as trustee. Several basal points are clear. First, whether a person appointed as executor and trustee acts in one capacity or the other is a question of fact. Second, an executor may become the trustee of different assets of the estate at different times, and so can act in both capacities at the same time vis-à-vis different assets. It cannot be assumed that there is a precise turning point in an estate when an executor becomes a trustee as regards the entire estate. Third, courts speak of executors being ‘executors for life’ to refer to the executor’s duty to get in assets that come to light at a later date and in becoming liable for debts subsequently discovered. [Emphasis in original.]
Beyond these basal points, the relevant question of fact must commence with an understanding of the chief duties of an executor. These are to get in the assets of the deceased, to pay the deceased’s debts, to pay the legacies given by the will and to distribute the assets and produce accounts, sometimes encompassingly described as to ‘clear the estate’. To the extent that the estate is cleared, any estate remaining in the hands of the executor is held in the capacity of trustee.
Relevance of ‘assent’ by executor
10.47 At least so far as personalty was concerned, the completion of administration of the estate by the executor – and with this the moment at which the executor held any undistributed property as trustee – has been treated as evidenced by what is termed his or her ‘assent’. The concept of ‘assent’ aligns to the moment when the interest of the beneficiary vis-à-vis the relevant asset translates from a chose in action to enforce proper administration to a proprietary interest therein. It follows that translation from executor to trustee is not an inquiry independent of assent. Jacobs J in Bryen v Reus explained the need for, and nature and role of, assent in this context as follows:
... in the case of a specific legacy or a general bequest the beneficiary takes under the will. However, he does not take absolutely and immediately because the subject matter of the legacy may be required by the executor for purposes of administration, particularly for the payment of the testator’s debts. The effect of the assent of an executor to a legacy is to give to the beneficiary a complete title to the asset. An assent is a mere indication that the property is not required for administration purposes and therefore may pass as the will directs ... Thus, in the case of executors it would indeed be difficult to describe their assent to a legacy as an assignment of the subject matter of the legacy to the legatee. The assent causes the property to vest in the legatee, but is not the instrument of the vesting.” (Citation of authorities omitted.)

41. In most of the cases cited the executors had paid all known debts and testamentary expenses and had completed the administration before they were taken to have assented to hold property on trust for the beneficiaries. But that is not so in all cases. In Porteous v Rinehart [1998] WASC 270; (1998) 19 WAR 495 White J held (at 503-504) that notwithstanding that it was likely that testamentary and administration expenses and debts had not all been paid and the defendants remained executors, nonetheless, in relation to particular assets, being shares in a company left to the executors as trustee on certain trusts, the executors were also probably trustees (at 503-504). This conclusion may be difficult to reconcile with Official Receiver in Bankruptcy v Schultz (at 312), but I accept that in principle it is at least arguable that notwithstanding administration is not complete, an executor might assent to holding a particular asset not as executor, but as trustee. This would be by analogy to Bell v Scott [1922] HCA 13; (1922) 30 CLR 387 at 393, 395, 398-9, where it was held that a devisee can call for a transfer of the property if prepared to furnish the executor with sufficient funds to meet debts and testamentary expenses.
42. I accept that it is at least arguable that in principle an executor appointed as trustee for donees of gifts of specific property can assent to holding the position of trustee rather than executor in relation to that specific property, notwithstanding that administration is not complete. Undoubtedly, that could be so if the residuary estate were sufficient to pay all debts, funeral and testamentary expenses, so that the property the subject of specific gifts could be distributed, including by the executor’s assenting to the assumption of the office of trustee of such property.
43. That is not the present case. Nor is there evidence of such an assent.
44. Mr Parrish submitted that such an assent could be inferred from a return lodged by the defendant with the Australian Securities and Investments Commission (“ASIC”) recording the change of shareholding in Alexicon. The defendant deposed that she transferred the shares in Alexicon into her name as executrix. The prescribed form of the notice of change to company details that was lodged with ASIC required her to state whether the shares transferred were beneficially held by her. The form provided only for a “yes” or “no” answer. She answered that question “yes”. That statement is inconsistent with her then having assumed the office of trustee of the shares. It may be accepted that the answer was not accurate in that the true position was that she acquired the full legal ownership of the shares, and at the time of transfer, there was no-one who could assert a beneficial interest in the shares. It would not be true to say that she was the beneficial owner of the shares having regard to her fiduciary obligations to the plaintiffs. The law does not always recognise distinct legal and beneficial ownership (CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53 at 112, [25]). But the form did not allow for the expression of such nuances. It was more accurate to say that the shares were beneficially owned by the defendant than that they were not.
45. Mr Parrish also relied upon the correspondence from Walker and White of 6 March and 24 April 2020 quoted at [16] and [21] above where Walker and White stated that the defendant would be acting in accordance with her duty as “trustee” (as well as director) if she were to sell Alexicon’s property at the best price and, subject to certain conditions, she would be amenable to resigning as a “trustee of Alexicon”.
46. Neither Walker and White nor Gillis Delaney focused upon the difference in the defendant’s position as executrix on the one hand, and as trustee of the shares on the other. Contrary to the view expressed by Walker and White in their letter of 24 April 2020, the defendant was never the trustee of Alexicon.
47. It is clear that the defendant was only willing to “resign as trustee” if satisfactory arrangements were made to meet the liabilities both of Alexicon and the share of estate debts and expenses payable from the plaintiffs’ share of the estate. No such arrangements were made or proffered.
48. It may be that the defendant and her solicitors assumed that by virtue of the will, the defendant was trustee of the shares in Alexicon even though administration was not complete. Nonetheless, it is clear that the defendant was not willing to assume the position of trustee and then to resign that position without satisfactory arrangements being made to clear all such liabilities.
49. The plaintiffs’ claim for final relief did not include a claim for a final injunction to restrain the sale of Alexicon’s unit. Interlocutory relief to restrain the sale of the unit was sought on the basis that if that relief were refused the final relief claimed in the summons, that is, an order for removal of the defendant as trustee of the trust under clause 2(c) of the deceased’s will, would be futile.
50. I refused to extend the injunction restraining the defendant from selling the unit because I considered that both the claim for relief sought in the summons and any claim that might be propounded for a final injunction to restrain the sale of the unit on the ground that such a sale would be in breach of the defendant’s duties as director of Alexicon or executrix (or even as trustee if she had that position) did not raise a serious question to be tried. The evidence did not show that there is a serious question to be tried that the defendant was not acting in good faith in the interests of the plaintiffs as the future beneficiaries of the shares in Alexicon in selling Alexicon’s principal asset to meet expenses, half of the burden of which is to be borne by the plaintiffs.
51. Running through the evidence adduced for the plaintiffs was an apparent complaint that Alexicon, but not VLN, had a high level of indebtedness; whereas the loan taken out in the late 1990s was a joint facility of Alexicon and VLN that was used for the construction of the two commercial units, one of which became owned by Alexicon and the other by VLN. Arthur Alexiou deposed that the reason for the loans taken by Alexicon had not been explained.
52. However, the deceased was a director of Alexicon until his death. There was no evidence adduced on this application that the defendant was in a position to manipulate the level of debt of both companies, let alone that she did so. As noted above, the deceased signed the mortgage given by Alexicon in 2014 to ING Bank to secure a loan of $600,000. Assuming (although the evidence read on the application did not establish this) that the shares in Alexicon were worth much less than the shares in VLN because of Alexicon’s indebtedness, the fact that the deceased left the shares in Alexicon to the plaintiffs and the share in VLN to the defendant, raises no ground for impugning the defendant’s proposed sale of Alexicon’s unit.
53. For these reasons, on 28 May 2020 I refused to extend the injunction restraining the defendant from selling Alexicon’s unit. It was unnecessary to consider the balance of convenience and the adequacy of the proffered undertaking as to damages.
54. For the same reasons, I dismiss the plaintiff’s notice of motion dated 12 May 2020.
55. As noted above, the defendant filed a notice of motion on 1 May 2020 seeking the summary dismissal of the proceedings. Initially, the defendant advised that she would not seek to proceed with that notice of motion on the hearing on 28 May 2020. However, the defendant’s submissions in opposition to the plaintiff’s notice of motion of 12 May 2020 included a submission that as the estate had not been administered, the defendant was not yet trustee of the shares in Alexicon. It appeared to me that if that submission were clearly correct, that is, that the contrary was not reasonably arguable, then it would be appropriate to deal with the application for summary dismissal to avoid the incurring of further costs. That course was not opposed by the plaintiffs. I declined to deal with any other issue that might be raised on the application for summary dismissal, such as whether it was reasonably arguable that there are grounds for removal of the defendant or, if there were, whether it is not reasonably arguable that the defendant should be replaced as trustee of the alleged trust by Maria Alexiou, the plaintiffs’ mother. Nor is it relevant to the application for summary dismissal of the proceedings that the plaintiffs’ tutor has a conflict of interest.
56. Mr Parrish accepted that if no trust of the shares has come into existence, then the summons seeking removal of the defendant as trustee of the shares is premature. As noted above, he had also submitted that the relief claimed in the summons would be futile if the unit were to be sold. I do not decide the application for summary dismissal on the latter ground as it is not known whether the unit will be sold, even though that is likely.
57. I remind myself that an application for summary dismissal should only be granted if there is no reasonably arguable question of law or fact that could sustain the proceeding.
58. For the reasons I have given above for refusing to extend the injunction restraining the sale of Alexicon’s unit, it is not reasonably arguable that the defendant has yet become the trustee of Alexicon’s shares. Until administration is complete, or, arguably, unless and until she assents to holding the position of trustee of the shares, any claim for removal of the defendant as trustee of the shares is premature.
59. For these reasons the plaintiffs’ notice of motion of 12 May 2020 should be dismissed and the proceedings should be summarily dismissed. Costs will follow the event.
60. Arthur Alexiou as the plaintiffs’ tutor will be personally liable for the costs of the proceedings. It is unnecessary to make an order directly against him. There is real doubt as to his ability to meet an order for costs of the proceedings. The appropriate order is for the plaintiffs to pay the defendant’s costs. To the extent those costs are not recoverable from the plaintiffs or their tutor, the defendant will be entitled, in due course, to recover those costs through the exercise of her rights as trustee of the plaintiffs’ shares.
61. For these reasons I make the following orders:
    • (1) Order that the plaintiffs’ notice of motion dated 12 May 2020 be dismissed with costs.
    • (2) Order that the proceedings be dismissed.
    • (3) Order that the plaintiffs pay the defendant’s costs of the proceedings.

**********