A v A

The question of power

1. It is convenient to begin by setting out the relevant statutory provisions. In doing so, I do not overlook the inherent jurisdiction of the Court as an alternative source of power.
2. UCPR Part 7, r 7 includes: "7.14 PROCEEDINGS TO BE COMMENCED OR CARRIED ON BY TUTOR (1) A person under legal incapacity may not commence or carry on proceedings except by his or her tutor. (2) Unless the court orders otherwise, the tutor of a person under legal incapacity may not commence or carry on proceedings except by a solicitor. 7.15 TUTORS GENERALLY (1) Subject to this Division, a person may become the tutor of a person under legal incapacity without the need for any formal instrument of appointment or any order of a court. (2) Any person (other than a corporation) is eligible to be the tutor of a person under legal incapacity, in respect of any proceedings, unless the person is-- (a) a person under legal incapacity, or (b) a judicial officer, a registrar or any other person involved in the administration of a court, or (c) a person who has an interest in the proceedings adverse to the interests of the person under legal incapacity. … (5) A person may not replace another person as tutor of a person under legal incapacity except by order of the court. (6) Anything that these rules authorise or require a party to do in relation to the conduct of proceedings may, if the party is a person under legal incapacity, be done on his or her behalf by his or her tutor. … 7.18 COURT MAY APPOINT AND REMOVE TUTORS (1) In any proceedings in which a party is or becomes a person under legal incapacity-- (a) if the person does not have a tutor, the court may appoint a tutor, or (b) if the person has a tutor, the court may remove the party's tutor and appoint another tutor. … (3) If the court removes a party's tutor, it may also stay the proceedings pending the appointment of a new tutor. (4) Subject to any order of the court, notice of any motion under this rule is to be served on the person under legal incapacity and, if it proposes removal of the person's tutor, on the tutor. (5) In proceedings on a motion for the appointment of a tutor, evidence in support of the motion must include-- (a) evidence that the party for whom a tutor is to be appointed is a person under legal incapacity, and (b) evidence that the proposed tutor consents to being appointed and does not have any interest in the proceedings adverse to the interests of the person under legal incapacity. (6) An application for appointment as tutor under this rule may be made by the court of its own motion or on the motion of any other person, including the proposed tutor."
3. The CP Act includes: "76 SETTLEMENT OF PROCEEDINGS COMMENCED BY OR ON BEHALF OF, OR AGAINST, PERSON UNDER LEGAL INCAPACITY (1) This section applies to proceedings commenced by or on behalf of, or against, any of the following persons-- (a) a person under legal incapacity, (b) a person who, during the course of the proceedings, becomes a person under legal incapacity, (c) a person whom the court finds, during the course of the proceedings, to be incapable of managing his or her own affairs. (2) The court may make a finding referred to in subsection (1) (c) only on the basis of evidence given in the proceedings in which it is made, and such a finding has effect for the purpose only of those proceedings. (3) Except with the approval of the court, there may not be-- (a) any compromise or settlement of any proceedings to which this section applies, or (b) any acceptance of money paid into court in any such proceedings, as regards a claim made by or on behalf of, or against, a person referred to in subsection (1). … (4) If an agreement for the compromise or settlement of any matter in dispute in any such proceedings is made by or on behalf of a person referred to in subsection (1), the court may approve or disapprove the agreement. (5) An agreement disapproved by the court does not bind the person by whom or on whose behalf it was made. (6) An agreement approved by the court binds the person by whom or on whose behalf it was made as if he or she were of full capacity and (if it was made by some other person on his or her behalf) as if that other person had made the agreement as his or her agent. … 80 DIRECTIONS TO TUTOR OF PERSON UNDER LEGAL INCAPACITY On the application of the tutor for a person under legal incapacity, the Supreme Court may give directions with respect to the tutor's conduct of proceedings, whether before the Supreme Court or any other court, on behalf of that person."
4. The TA includes: "5 DEFINITIONS In the interpretation of this Act, unless the context or subject-matter otherwise indicates or requires-- … "Legal representative" means executor or administrator. … "Trustee" has a meaning corresponding with that of trust; and includes legal representative and the NSW Trustee and a trustee company. … 63 ADVICE (1) A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. (2) If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee's own responsibility, to have discharged the trustee's duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction. (3) Rules of court may provide for the use, on an application under this section, of a written statement signed by the trustee or the trustee's Australian legal practitioner, or for the use of other material, instead of evidence. (4) Unless the rules of court otherwise provide, or the Court otherwise directs, it shall not be necessary to serve notice of the application on any person, or to adduce evidence by affidavit or otherwise in support of the application. …"

Mr Hodges is not a trustee

1. Section 63 of the TA can only be invoked by a "trustee" as defined in the TA. On any view, Mr Hodges is not a trustee. As a tutor, Mr Hodges may owe fiduciary duties to Mr Darley, but that does not make him a trustee of any property.
2. Nor can Mr Hodges prove that Mr Darley is a trustee so as to obtain standing in some derivative or representative way, if that were possible. If Mr Darley was a trustee under incapacity, an application for judicial advice could conceivably be brought by Mr Darley by his tutor Mr Hodges. However, the present application is brought by Mr Hodges in his own right as a tutor, and not on behalf of Mr Darley
3. In any event, Mr Darley is at best only an "alleged trustee" and there is clear and persuasive authority that s 63 is not available to an "alleged trustee". Although her Honour was considering the issue of a former trustee, I respectfully adopt what fell from Ward CJ in Equity in Hancock v Rinehart [2019] NSWSC 1451 ("Hancock"): "172. The relevant sections in the NSW legislation allowing for judicial advice (and equally those in the WA legislation) are recognised as being rooted in the historical practice of the Court of Chancery to give directions and advice to those entrusted with the administration of property under control of the Court who have assumed, and continue to assume, the onerous obligation of administering the trust for the benefit of others (see Application of Macedonian Church (No 2) per Palmer J at [40]). 173. Nevertheless, the legislation in its terms is focussed on the applicant for the judicial advice being a "trustee". Despite the High Court in Macedonian Church case (see [55]-[57]) attributing a broad and flexible operation to s 63 of the NSW Trustee Act, and notwithstanding that the rationale underlying the statutory jurisdiction to give judicial advice to a trustee would equally seem to apply to a situation where a former trustee is seeking advice as to how to discharge duties arising out of and incidental to the office of trustee formerly held by him or her, it is doubtful that the legislation extends to enable a former trustee to obtain judicial advice. 174. While the issue as to whether a former trustee has standing to seek or obtain judicial advice does not appear to have been dealt with directly by the Courts (other than insofar as it was dealt with in Re Baylily), it seems likely that the legislature (by predicating the power to give judicial advice on there being a trustee) contemplated that only a current trustee could obtain such advice (in respect of trust property and/or in respect of the management and administration of the trust). 175. In Application of Macedonian Church (No 2), Palmer J considered an application for judicial advice by an "alleged trustee" who denied that it was a trustee. It was there submitted (see his Honour's reasons noting this submission at [15]) that s 63 "is a beneficial provision and should be given a liberal construction" in light of the definition of trustee in s 5 of the NSW Trustee Act. However, Palmer J held that the advisory jurisdiction of the Court of Equity as encapsulated now in s 63 of the NSW Trustee Act was "never intended to be exercised where there was any doubt as to whether the person applying for advice was a trustee administering a trust estate" (at [19]). 176. His Honour (at [19]) stated that: The researches of counsel and my own researches have found no case in which the Court, in exercise of either its statutory jurisdiction or its general jurisdiction to give judicial advice, has given advice concerning a trust to a person who positively asserts that he or she is not a trustee… 177. Palmer J emphasised the exceptional nature of the Court's jurisdiction to give judicial advice and stressed that an individual seeking judicial advice must show an entitlement to receive it. His Honour (at [23]-[24]) stated: …This exceptional jurisdiction, which is derived from the practice of the Court of Chancery under the general law in giving directions to those entrusted with the administration of property under the control of the Court, may now be regarded as affording special assistance to those, such as trustees, liquidators, bankruptcy trustees and receivers, who have no direct pecuniary interest in a fund but have assumed the onerous obligation of administering it for the benefit of others: see e.g. Re G.B. Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674, at 677; Gardner v London Chatham & Dover Railway Company (No 1) (1867) LR 2 Ch App 201, at 211. To avail oneself of that special assistance from the Court, one has to show that one is entitled to it. In my opinion, the Court has no power to give judicial advice under s.63 Trustee Act to a person who does not establish to the Court's satisfaction that he or she is, in fact, a trustee and that the advice sought relates to the management or administration of trust property or the interpretation of a trust instrument. 178 This view was adopted by Brereton J in Application of Uncle's Joint Pty Ltd [2014] NSWSC 321 (see at [17]). 179. In the High Court (in Macedonian Church case), the decision of Palmer J at first instance in Application of Macedonian Church (No 2) was affirmed. While the High Court did not consider directly the question of standing, the following obiter dicta is instructive. The High Court (Gummow A-CJ, Kirby, Hayne and Heydon JJ) stated that the "[o]nly one jurisdictional bar to s 63 relief exists: the applicant must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument" (at [58]). While the High Court also said that no implied limitations should be read into the power to give judicial advice by implication (see at [55]-[56]), this should not be read as suggesting that there is a broad and unlimited standing to apply for judicial advice as the High Court was there referring to the fact that there is "nothing in s 63 which limits its application to 'non-adversarial' proceedings, or proceedings other than those in which the trustee is being sued for breach of trust, or proceedings other than those in which one remedy sought is the removal of a trustee from office". 180. At [65], the High Court discussed the history of s 63, stating that: … The possibility that the rights of beneficiaries under private trusts could be affected by judicial advice led the New South Wales Parliament in 1925 to introduce the protections given by s 63(8)-(11) and in that sense to strike a compromise. However, those protections did not alter the primary function of s 63 as creating a procedure for private advice to trustees. … Section 63 reflects a compromise between a procedure for affording private advice to trustees and the need for affected persons to be given a hearing in some cases. 181. At [196], Kiefel J, as her Honour then was, observed that: … The principal purpose of the section, and the opinion, advice or direction given under it, is the protection of the interests of the trust. Another purpose is the protection of a trustee who is acting in that regard and upon advice. Securing the latter purpose may ensure the attainment of the principal purpose, by removing the concern of a trustee about exposure beyond their usual indemnity. [footnote omitted] … 192. As to the inherent jurisdiction of a court of equity to give judicial advice, in Chow Cho-Poon, Lindsay J noted (at [172]) that the High Court in Macedonian Church case "expressly did not consider how far this Court may have jurisdiction to give judicial advice by reason of the inherent jurisdiction of a court of equity, or by reason of the Supreme Court Act 1970 NSW, s 22 or s 23". 193. Thus, while the better view appears to be that judicial advice is not available to a former trustee pursuant to the NSW Trustee Act (or the corresponding WA Trustees Act), advice arguably may still be given by a court to a former trustee in the court's inherent jurisdiction (though I note that in Application of Macedonian Church (No 2), Palmer J appears to have been of the opinion that the advisory jurisdiction of the court did not cover "non-trustees"); the inherent jurisdiction of this Court being broad and not confined to defined and closed categories, but being limited only by the requirements of the administration of justice."
4. Insofar as the inherent jurisdiction of the Court is concerned, I respectfully agree with the view of Palmer J to which her Honour refers (at paragraph [193] of Hancock), that the inherent jurisdiction does not extend to advise a non-trustee, which I take to mean someone who has never been a trustee of the trust in issue.

Mr Hodges is tutor

1. In A v A [2015] NSWSC 1778, Lindsay J summarised the Court's powers in relation to tutors: Appointment and Supervision of a Tutor 53. The key legislative provisions, in the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005, relating to the necessity for, and the appointment, removal and supervision of, a tutor in adversarial proceedings may be summarised as follows, as far as presently material: (a) a "person under legal incapacity" is defined as including: (1) a person who is incapable of managing his or her affairs (UCPR rule 7.13); and (2) a "protected person" within the meaning of the NSW Trustee and Guardian Act (CPA section 3(1) namely (by virtue of section 38 of the NSW Trustee and Guardian Act), a person in respect of whom an order is in force under the NSW Trustee and Guardian Act or the Guardianship Act that the whole or any part of the person's estate be subject to management under the NSW Trustee and Guardian Act. (b) a person under legal incapacity is not permitted to commence or carry on proceedings except by a tutor: UCPR rules 7.14(1). (c) a person may become the tutor of a person under legal incapacity without the need for an order of the court: UCPR rule 7.15(1). (d). ordinarily, in the case of proceedings with respect to the estate of a protected person, the tutor of that person is to be the person who has the management of the person's estate (as a protected estate manager) under the NSW Trustee and Guardian Act. (e) anything that the UCPR authorise or require a party to do in relation to the conduct of proceedings may, if the party is a person under legal incapacity, be done on his or her behalf by his or her tutor: UCPR rule 7.15(6). (f) the Court may appoint and remove a tutor, control the appointment process, and make ancillary orders: eg, UCPR rules 7.15(4), 7.15(5) and 7.18. (g) on the application of a tutor, the Court may give directions with respect to the tutor's conduct of proceedings, whether before the Court or any other court, on behalf of the person under legal incapacity: CPA section 80. 54. Independently of these provisions, the Court's inherent protective jurisdiction extends to supervision of the appointment, and conduct, of tutors, including the appointment of a tutor in proceedings pending in the Court itself or proceedings pending in the District Court of NSW: Re P [2006] NSWSC 1082, approved in Bobolas v Waverley Council [2012] NSWCA 126 at [60]-[62]."
2. As a tutor, Mr Hodges is undoubtedly entitled to approach the Court under s 80 of the CP Act for directions "with respect to [his] conduct of [the Primary Proceedings]". "Conduct" of proceedings includes both defending and settling proceedings. If authority for this is required, I respectfully adopt what Hallen J said in Rappard v Williams [2013] NSWSC 1279 when considering the meaning of "in relation to the conduct of legal proceedings": "76. Whether a person is under a legal incapacity is always a task, and time, specific, matter, dependent upon whether the person has the ability to understand and evaluate the particular task that is in question at the particular time: Guthrie v Spence [2009] NSWCA 369; (2009) 78 NSWLR 225 at [174] - [175]; Azar v Kathirgamalingan [2012] NSWCA 429, per Campbell JA, at [168]. In this case, whether the Plaintiff is a "person who is under a legal incapacity in relation to the conduct of legal proceedings" must be considered. Thus, even though a party may be able to carry out tasks associated with daily living, she, or he, may lack the capacity to understand and evaluate the matters involved in the conduct of legal proceedings, and for that reason fall within the definition of "person under legal incapacity". 77 Chadwick LJ in Masterman-Lister v Brutton & Co (referred to in the passage quoted above) also said, at [75]: "... the test to be applied, as it seems to me, is whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings. If he has capacity to understand that which he needs to understand in order to pursue or defend a claim, I can see no reason why the law - whether substantive or procedural - should require the interposition of a next friend or guardian ad litem ..." 78 The "conduct of legal proceedings" refers to doing the various things that would need to be done in the course of the proceedings in which the party is involved, including seeking advice as to the nature of the proceedings, about the difficulties, risks, costs and effort, involved in pursuing the claim, and the likely result, including the type of order that may be made, comprehending and evaluating that advice, and engaging in the continuing process of co-operation, interaction and decision-making that exists between lawyer and client in running any civil action. In other words, the sort of incapacity involved in the requirement for a tutor is incapacity to do the range of things that is involved in, not only starting, but also continuing, litigation and being able to give instructions and consider advice about settling the proceeding: see, for example, Pistorino v Connell [2012] VSC 438, per Dixon J, at [21] - [24]."

Consideration

1. Mr Gunning's helpful written submissions properly - and correctly - accepted that there were difficulties for his client in relying on s 63 of the TA. Mr Gunning identified other potential sources of power for the present application, including s 80 of the CP Act. I accept that s 80 is the most obvious source of power and I will proceed accordingly. It is unnecessary to consider the Court's inherent jurisdiction.
2. While there may be superficial similarities between a trustee's application for advice under s 63 of the TA and a tutor's application for directions under s 80 of the CP Act, there are important distinctions to be made.
3. In providing judicial advice to a trustee, the Court is primarily concerned with what is in the interests of the trust and, as an incident of that, the interests of the trustee: see Hancock paragraph [181] quoted in paragraph [14] above.
4. An example of an incidental benefit for a trustee is the protection conferred on the trustee by s 63(2) of the TA: see paragraph [11] above.
5. The Court's jurisdiction in relation to tutors is quite different. It is a manifestation of the Court's protective jurisdiction where the Court's paramount consideration is what is in the best interests of the protected person: AC v OC [2014] NSWSC 53 at [37].
6. That consideration must govern the Court's approach in giving the tutor directions under s 80. Unlike the benefit a trustee may obtain under s 63(2) of the TA, there is no express statutory benefit for the tutor in obtaining those directions, although, for example, obtaining and acting in accordance with such directions would normally demonstrate that a tutor has acted bona fide so as to be entitled to recoup his or her expenses from the protected person's estate.
7. During the course of the hearing, further evidence emerged regarding the current state of the Settlement Offer. This was that the Settlement Offer was crystallised by the Links' solicitors in a letter of 21 September 2020. That put the offer both as an offer of compromise under the Uniform Civil Procedure Rules and, in the alternative, as an offer in accordance with the principles in Calderbank v Calderbank [1976] Fam Law 93. That offer was said to be open for acceptance until 3 December 2020. Obviously, it was not accepted and has now lapsed in accordance with its terms.
8. I raised this with Mr Gunning. He now has instructions that Mr Hodges has spoken to Senior Counsel for the Links, who has confirmed that an offer in terms of the letter of 21 September 2020 is now again open for acceptance for seven days. This development means that any advice I give will not be purely hypothetical, insofar as there is now an offer which Mr Hodges may accept if he so chooses.
9. In the circumstances referred to in paragraph [5] above, it is clear that Mr Hodges cannot ethically defend the Primary Proceedings. For this and other reasons set out in Mr Gunning's opinion (Confidential Exhibit 2P), the Court is satisfied that it is in Mr Darley's best interests that Mr Hodges settle the primary proceedings on terms no less favourable to Mr Darley than the terms of the reopened Settlement Offer. I propose to give the advice in those terms because I regard it as a matter for Mr Hodges' judgement, in the proper exercise of his role as tutor, whether he thinks he should attempt to negotiate better terms for Mr Darley than those contained in the reopened Settlement Offer.
10. Because there can be no doubt that the present application has been brought by Mr Hodges bona fide in the exercise of his role as a Court appointed tutor, there will also be an order that Mr Hodges have his costs of the summons on the indemnity basis.

A final word of caution

1. Especially since the decision of the High Court in the Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand & Anor (2008) 237 CLR 66; [2008] HCA 42, applications to this Court by trustees for judicial advice in relation to the conduct of litigation (and more generally) have increased markedly. Although the Court has dealt with the present application, any perceived similarity between trustees and tutors should not lead to a similar increase in applications for directions by tutors, especially in relation to potential - as opposed to concluded - settlements.
2. In my respectful view, while it is legally open to Mr Hodges to have made the present application, it represents an unnecessary departure from what should be the normal practice in relation to settlements involving parties under a legal incapacity. This is because of s 76(3) of the CP Act (set out in paragraph [10] above).
3. Notwithstanding the advice I will give today, any settlement in the Primary Proceedings by reason of the acceptance of the Settlement Offer or any other terms which Mr Hodges is able to negotiate will still require the Court's approval under s 76(3). That application will have to be made in the Primary Proceedings and not by a separate application such as that currently before the Court.
4. In terms of the matters to be considered by the Court, the only material difference between this application and a future application under s 76(3) to approve the settlement of the Primary Proceedings is that in this application there is a settlement offer, whereas the future application will concern the agreement created by acceptance of the Settlement Offer, albeit presumably on terms that the agreement is conditional upon the Court approving the settlement. Issues such as the difficulty of advancing a defence, the terms of the Settlement Offer, and the risks and benefits of settling the Primary Proceedings will all inform the Court's consideration of whether approval of the settlement is in Mr Darley's best interests. The same evidence upon which the Court has relied today will serve (and should serve) equally well for the approval application, updated only to prove the fact of the parties having agreed to settle the Primary Proceedings on whatever terms.
5. In other words, and with respect to those involved in the present case, in my view anticipatory applications by tutors for directions as to whether they are justified in settling proceedings should be very much the exception and not the norm. The rather unusual circumstances in which Mr Hodges finds himself are a sufficient explanation for why this application has been made. Nevertheless, such applications are undesirable for at least three reasons.
6. First, in nearly all - if not all - cases, such voluntary anticipatory applications will do no more than unnecessarily duplicate the mandatory application for approval required under s 76(3). Such duplication is not in accordance with the overriding purpose in s 56 of the CP Act.
7. Second, applications of this kind may require the Court to consider whether the particular settlement offer is likely to be the best the offeree is going to get. That is quintessentially a matter for the tutor to decide rather than something to be second guessed by the Court.
8. Third, to the extent a tutor is concerned to obtain some kind of protection, approval of a settlement under s 76(3) necessarily means that the Court is satisfied that settlement is in the best interests of the protected person and that, therefore, the tutor has properly discharged her or his role in bringing about that settlement.

Orders

1. The orders of the Court are: 1. The Court advises the applicant that he would be justified in settling proceedings intituled Links & Anor v Darley Equity 2019/229657 on terms no less favourable to Mr Eric Darley than those terms set out in a letter to the applicant from Heckenberg Lawyers dated 21 September 2020. 2. The applicant should have his costs of these proceedings paid out of the Estate of Eric Darley on the indemnity basis. 3. Liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 February 2021