Reda v Reda

These sets of proceedings concern three properties - 10, 12 and 12A XXXX Street, Arncliffe.

They are essentially a dispute between two brothers - David Reda and Jawad Reda. Without intending any disrespect or informality, I will refer to each by their given names.

David and Jawad are registered as tenants in common in equal shares of number 10. At all material times David has resided in number 10 and, at least at the present time, lives there with his 25-year-old son.

On 6 December 2024, Peden J made orders pursuant to s 66G of the Conveyancing Act 1919 (NSW) (CA) appointing Joshua-Lee Robb and Jason Porter (Trustees) as trustees for the sale of number 10. The orders made by Peden J on 6 December 2024 also included, relevantly:

On 3 February 2025, order 4 as made by Peden J on 6 December 2024 was set aside.

Although appointed on 6 December 2024, the Trustees were not made aware of their appointment until 21 February 2025 and were not provided with a copy of the orders appointing them until 3 March 2025.

On 5 May 2025, McGrath J made orders by consent in proceedings commenced by David in which he contended that Jawad held 50% of his 100% ownership interest in both 12 and 12A on behalf of David. Consent declarations were relevantly made on 5 May 2025 that Jawad held on trust for David a 50% ownership interest in each of 12 and 12A XXXX Street.

Jawad is presently incarcerated and is likely to be so for a considerable period of time. It is not necessary to go into the details behind this. There has also been a complete breakdown in the relationship between David and Jawad and their immediate families. Again, it is not necessary to descend into the detail as to why this is so.

It is also not necessary to detail the various proceedings that have been commenced and motions filed by the parties that are returnable for hearing today. There are many.

In circumstances where Jawad is incarcerated and therefore cannot perform his role as trustee in respect of 12 and 12A XXXX Street, he seeks the appointment of replacement trustees. He also seeks an order that the Trustees appointed to sell number 10 be removed and replaced with his proposed appointees in relation to 12 and 12A.

David, in turn, seeks the appointment of the Trustees as trustees to sell 12 and 12A in addition to their appointment over number 10.

These competing positions of the parties are against the background, which appeared to be common ground today, that the same trustees should be appointed over all three properties. It also appeared to be common ground today that there is at least a prospect that the three properties may fetch more if they are sold together to one purchaser as opposed to separately, and that it should be up to whoever is appointed over the three properties to decide how the properties should be sold.

At the commencement of the hearing today, Mr D Allen - who appears as counsel for Jawad - candidly and quite properly conceded that the key issue is whether the Trustees should be removed as trustees of number 10, it being accepted that if they are not to be removed, it makes sense that they should also be appointed over number 12 and 12A. Conversely, if they are to be removed, they should not be appointed over number 12 and 12A, and Jawad’s appointees should be appointed over all three.

Mr MW Young SC and Mr N Simone appeared today for David and Ms M Painter SC appeared for the Trustees. Ms Painter quite properly did not take a position on whether the Trustees should be removed but rather confined her submissions to responding to the criticisms made by Jawad in relation to the Trustees’ conduct.

Each party read affidavit evidence. Ms Anaya Ali Saab, David and the Trustees were cross-examined. Prior to the hearing each party provided written submissions and each party addressed me orally after the conclusion of evidence.

I turn now to consider whether the Trustees should be removed from their appointment over number 10.

It is not in dispute that the Court has both the inherent jurisdiction and the power under s 70 of the Trustee Act 1925 (NSW) (Trustee Act) to remove or replace the Trustees.

No general rule can be laid down for the removal of trustees from their office. In Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 at 580-581, Dixon J (with whom Evatt and McTiernan JJ agreed) stated:

Two primary grounds were advanced by Mr Allen. I deal with each in turn.

First, it was contended that the Trustees had not performed what they were appointed to do - namely sell number 10 - because they had unilaterally decided not to do so.

Reference was made in this regard to what Brereton J said in Harb v Harb (2010) 17 BPR 33,295; [2010] NSWSC 1251 at [18]-[20], as follows:

Rather than sell number 10, it was contended that in about May 2025 the Trustees decided not to sell number 10 at the request of David’s lawyers, but rather decided not to proceed with the sale of number 10 pending the outcome of the applications of the parties in relation to number 12 and 12A. It was contended that if the Trustees did not propose to continue with the sale of number 10 the appropriate course was for the Trustees to approach the Court pursuant to the liberty to apply granted by Peden J on 6 December 2024.

I do not accept the criticisms levelled at the Trustees in this regard. The focus is on the conduct of the Trustees in May 2025. No criticism is now made of the conduct of the Trustees after they learned of their appointment in late February 2025 and were provided with a copy of the orders made in early March 2025.

It is to be remembered that on 5 May 2025, orders were made by McGrath J declaring that Jawad held 50% of numbers 12 and 12A on trust for David.

Shortly thereafter, David’s solicitors appear to have raised with the Trustees whether they would accept an appointment over 12 and 12A. One of the Trustees, Mr Joshua-Lee Robb gave evidence of seeking advice at or about this time as to whether it was likely that the three properties would fetch more if sold together. He was told by the agent that they would. It was at or about this time that Jawad filed his application in relation to the appointment of replacement trustees over 12 and 12A.

On 20 May 2025, Mr Robb sent the following email to Jawad’s solicitor:

On 26 May 2025, Jawad’s solicitor responded to the following effect:

It was in these circumstances - and in particular the prospect of a higher return being received from the sale of all three properties together - that the Trustees, in the exercise of their discretion, decided not to press on blindingly with the sale of number 10 but rather to await the outcome of the issue of who was to be appointed to sell number 12 and 12A.

The Trustees are not to be criticised for adopting this course. There is a very real chance that they would have been criticised if they did not. The position that the three properties may fetch more if sold together is also now supported by expert valuation evidence. They also ought not be criticised for not filing their own application with the Court. This would have further crowded an already crowded playing field, increasing the costs and to no avail.

I thus reject the first criticism. The Trustees have not decided not to carry out their duty but simply to do it in a particular way.

Second, it was contended that the Trustees should have forced the issue with David as to whether he is to pay rent for continuing to reside in number 10. Mr Robb gave evidence that he did not do this but rather he decided to proceed in accordance with his usual practice of adjusting any occupation rent (if sought) at the time of the distribution of sale proceeds.

Again, I reject any criticism of the Trustees’ conduct in this regard. I do not regard their conduct as providing any basis for their removal. It is well within the bounds of the discretion afforded to the Trustees in carrying out their duty.

I thus reject the second criticism.

For completeness, I also reject any suggestion that the Trustees have been acting or are likely in the future to act, other than in an impartial way. The evidence identifies one instance of when David complained about the agent proposed to be appointed. That complaint was investigated and dealt with quite properly by the Trustees.

For these reasons I am not satisfied that there is any basis for the removal of the Trustees from their appointment as trustees over number 10. In the circumstances, it follows that they should be appointed over numbers 12 and 12A. I propose to so order. I do so under the power contained in the Trustee Act. I do not need to venture into the interesting question of whether David is a co-owner entitled to relief under s 66G of the CA.

[Counsel addressed on costs]

I am now dealing with the question of who should pay the costs of today.

As set out in the substantive reasons that I have just given, the essence of the dispute that has been agitated today boils down to whether the existing Trustees in relation to number 10 should be removed. On that issue Jawad has failed and as a result the Trustees over number 10 are to be appointed over number 12 and 12A. In these circumstances, it seems to me that the appropriate costs order is that Jawad pays the costs of all parties adverse to Jawad today, including the preparation for the hearing today. I propose to so order.

The orders of the Court are: