Alonso v SRS Investments

evidence

1. At the hearing, Glenwillow relied on the following evidence: 1. affidavit of Robyn Harris affirmed 29 November 2023; 2. affidavit of Simon Leven affirmed on 29 November 2023; 3. affidavit of Simon Leven affirmed on 5 December 2023; and 4. written advice dated 4 December 2023 of counsel for Glenwillow.
2. At the hearing, Mr D Barlin appeared as counsel for Glenwillow instructed by Turnbull Hill Lawyers.

APPLICATION OF LEGAL PRINCIPLES FOR JUDICIAL ADVICE

1. Section 63(1) of the Trustee Act is in the following terms: 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. There is a single jurisdictional bar to obtaining judicial advice pursuant to s 63 of the Trustee Act - the applicant must point to the existence of a question respecting the management or administration of trust property or a question respecting the interpretation of the trust instrument: Macedonian Orthodox Community Church St Petka Incorporated v His Eminance Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, Gummow ACJ, Kirby, Hayne and Heydon JJ at [58].
3. Section 63 of the Trustee Act operates to provide a private advice to a trustee because it gives personal protection to this trustee by operation of s 63(2): Macedonian at [64]. Section 63(2) of the Trustee Act provides: 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.
4. An application for judicial advice under s 63 of the Trustee Act is primarily for the purpose of enabling the trustee to be advised as to the nature or extent of their powers and duties of management or administration of the trust property rather than resolving disputed questions of construction, particularly where the respective rights of beneficiaries and creditors are concerned: Re BTA Institutional Services Australia Ltd [2009] NSWSC 1294, Brereton J at [6].
5. The expression "management or administration of property" in s 63(1) of the Trustee Act refers to both the manner in which trust property is managed, administered, handled, directed or controlled, and the actual carrying out of those functions: Application of Gnitekram Marketing Pty Ltd [2010] NSWSC 1328, Hallen AsJ at [13].
6. I am satisfied that the application before me is comfortably one which raises a question respecting the management or administration of trust property because it concerns whether the Trust is to be managed or administered in accordance with the Trust Deed.
7. Having satisfied the jurisdictional issue, the next question is whether I should exercise my discretion to give the judicial advice that is sought. The discretion is wide, and there are no express words, and no implications from the express words used in s 63 of the Trustee Act which make some discretionary factors always more significant or controlling than others, and the discretion is confined only by the subject matter, scope and purpose of the legislation: Macedonian at [59]. The best interests of the trust estate are of primary importance: Macedonian at [105], [107] and [125]. The protection of those interests is the principal purpose for the court exercising the power in s 63 of the Trustee Act, and, incidentally, the protection of a trustee acting in those interests: Re Estate of Chow Cho-Poon [2013] NSWSC 844, Lindsay J at [182].
8. I am satisfied that addressing the issues that I am to determine in this application would be in the best interests of the Trust.

ISSUE 1: EFFECT OF THE DIFFERENT CAPACITIES IN WHICH DEED APPARENTLY EXECUTED

1. On the face of the execution clause of the Trust Deed, the Settlor referred to in it (Ms Harris) has placed her signature in the space provided for the witness and the Appointor and a beneficiary of the Trust (Mr Leven) has placed his signature in the space provided for the Settlor.
2. Mr Leven was physically present with Ms Harris when the Trust Deed was signed by them.
3. The capacity in which a person has signed a document is to be determined by what were the intentions of the parties as objectively demonstrated, not by their subjective intentions or beliefs: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168, Edelman J at [53].
4. Based on the express terms of the Trust Deed: 1. Ms Harris is described as the Settlor in multiple places (including in the execution clause where she signed); and 2. Mr Leven is not named as the Settlor and because he is specifically named as a "Beneficiary" he could not be the Settlor, who forms part of the group defined as an "Ineligible Beneficiaries".
5. To my mind, each of these signatures is obviously mistaken.
6. On an objective consideration, in the execution clause Ms Harris incorrectly signed her name in the space provided for the witness and her signature on the Trust Deed should be taken to have been written in her capacity as Settlor.
7. Further, on an objective consideration, in the execution clause, Mr Leven incorrectly signed his name in the space provided for the Settlor and his signature of the Trust Deed should be taken to have been written in his capacity as a witness to the signature of Ms Harris.

ISSUE 2: WAS THE TRUST DEED WITNESSED BY A PARTY TO IT?

1. As I have determined that Mr Leven signed the Trust Deed in his capacity as a witness, the next question that arises is whether the Trust Deed has been invalidly executed because a witness cannot be a "party to the deed" in accordance with the requirements of s 38(1) of the Conveyancing Act, which is in the following terms (emphasis added): (1) Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation. (1A) For the purposes of subsection (1), but without prejudice to any other method of signing, a deed is sufficiently signed by a person if - (a) by the direction and in the presence of that person the deed is signed in the name of that person by another person, (b) the signature is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and (c) the person attesting the signature certifies in his or her attestation that he or she is a prescribed witness and that the signature was affixed by the direction and in the presence of the person whose signature it purports to be. (1B) For the purposes of subsection (1) but without prejudice to any other method of signing, a deed is sufficiently signed by a person if - (a) that person affixes his or her mark to the deed, (b) the affixing of the mark is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and (c) the person attesting the affixing of the mark certifies in his or her attestation - (i) that, before the mark was affixed, he or she explained the nature and effect of the deed to the person making the mark, and (ii) that he or she believed, at the time the mark was affixed, that the person making the mark understood the explanation. (2) Indenting shall not be necessary in any case. (3) Every instrument expressed to be an indenture or a deed, or to be sealed, which is signed and attested in accordance with this section, shall be deemed to be sealed. (4) Every deed, executed and attested in accordance with this section may be proved in the same manner as a deed not required by law to be attested might have been proved heretofore. (5) Nothing in this section contained shall affect - (a) the execution of deeds by corporations, or (b) the provisions of section 184F(4), or (c) any deed executed prior to the commencement of this Act.
2. The issue is whether Mr Leven cannot witness the signature of Ms Harris because he is to be regarded as a "party to the deed".
3. This involves a question of statutory construction of s 38 of the Conveyancing Act, a matter which was dealt with in Reliance Financial Services Pty Ltd v Pineiro [2017] NSWSC 1739 by Darke J. In that case, a corporate trustee of a discretionary trust lent money to the borrower defendant, during the course of which a deed was executed. The director of the corporate trustee (Mr Cassiniti) signed the deed as director and also signed the deed to confirm that he had witnessed the borrower having signed the deed in his presence. Mr Cassiniti was also a beneficiary under the terms of the trust. The borrower defendant raised the issue of Mr Cassiniti having executed the deed and being a beneficiary under the trust in circumstances where Mr Cassiniti was not listed as a party to the deed but the corporate trustee for whom he signed was listed as a party.
4. In Reliance, Darke J undertook the task of determining the meaning of "a party to the deed", stating at [35]-[36]: 35 The central question of statutory construction is whether "a party to the deed" in s 38(1) should be read as going beyond an actual party to the deed to include a person such as Mr Cassiniti who signs the deed on behalf of a company, so as to bind the company to the deed. If that is so, such a person is not capable of attesting the signature of a party to the deed. It is clear that Mr Cassaniti is not a party to the Deed in the conventional sense of the word; he is neither bound by the Deed nor entitled to enforce it. 36 In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41, Hayne, Heydon, Crennan and Kiefel JJ stated at [47]: This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
5. After considering that no assistance was provided in that task by the Second Reading Speech to the Conveyancing (Amendment) Bill (which ultimately became the Conveyancing Amendment Act 1976 (NSW) by which ss 38(1A) and (1B) were added to s 38 of the Conveyancing Act), in Reliance Darke J summarised the arguments made and resolved them at [44]-[46]: 44 The defendants submitted that the purpose of s 38 was to ensure there was evidence of the execution of deeds which could be given by an independent witness. They submitted that the Court should adopt a purposive construction of the statute so that "a party to the deed" in s 38(1) would extend to a person (such as Mr Cassaniti) who was closely associated with an actual party to the deed, and signed the deed on behalf of that party, and was thus not an independent witness. 45 There is certainly force in that submission. However, I consider that it would be straining the language of s 38(1) too far to read "a party to the deed" as extending to a signatory (other than a merely attesting signatory) who is not a party to the deed. That would be an unnatural construction of the words as ordinarily understood. Moreover, the legislature has chosen to use different words in subsection 38(1) as against subsections 38(1A) and 38(1B). Only the latter subsections express a prohibition upon certain signatories being attesting witnesses. Had the intention of the legislature in 1976 been to prohibit signatories from attesting the execution of deeds more broadly, an alteration of subsection (1) to that effect could have been easily made. The legislature did not do so. 46 I also consider that "a party to the deed" within s 38(1) should not be read so as to include persons who, whilst not themselves parties to the deed, have a close association with a party to the deed. Given a party's direct interest, it can readily be seen why the legislature would adopt the course of prohibiting attestation by a party. However, if a person is not a party to a deed, but tests of being "associated with a party", "identified with a party" or "an interested party" are adopted to determine whether he or she is nonetheless excluded from attesting its execution, the answer may depend upon difficult matters of degree, such as whether a person was too identified with a party, or too interested in the outcome of the deed, to be able to attest to its execution. That approach would undermine the certainty which obtains in the approach which I prefer.
6. I agree with Darke J's construction of the expression "a party to the deed" in s 38 of the Conveyancing Act. To extend that expression to encompass those persons who are not independent from or closely associated with the signatories to a deed would not promote certainty. It would also fall foul of the imperative of the courts not to apply an unwarranted gloss to the plain words of an Act: Ritossa v Ritossa [2023] NSWCA 14, Bell CJ (with whom Gleeson and White JJA agreed) at [40].
7. Accordingly, the parties to the Trust Deed are Ms Harris as Settlor and Glenwillow as Trustee. The fact that Mr Leven signed the execution clause of the Trust Deed as the sole director and secretary of Glenwillow does not make him personally a party to the Trust Deed.
8. Nor does Mr Leven being a Beneficiary or the Appointor under the Trust Deed make him a party to it.
9. By being defined as a Beneficiary in cl 1(a) of the Trust Deed, Mr Leven is merely the object of the power to appoint income and capital respectively contained in cll 2 and 3 of the Trust Deed. There are no default or residuary beneficiaries under the terms of the Trust Deed. As a Beneficiary, Mr Leven has a right to be considered and a right to due administration of the Trust, but he has no proprietary interest in the trust property: Gartside v Inland Revenue Commissioners [1968] AC 553 at 617-618.
10. Beneficiaries are not parties to a trust deed. In Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367, Barrett JA (with whom Beazley P and Gleeson JA agreed) said at [41]: Where an express trust is established in that way by a deed made between a settlor and the initial trustee to which the settled property is transferred, rights of the beneficiaries arise immediately the deed takes effect. The beneficiaries are not parties to the deed and, to the extent that it embodies covenants given by its parties to one another, the beneficiaries are strangers to those covenants and cannot sue at law for breach of them. The beneficiaries' rights are equitable rights arising from the circumstance that the trustee has accepted the office of trustee and, therefore, the duties and obligations with respect to the trust property (and otherwise) that that office carries with it.
11. Mr Leven is also defined as the Appointor in cl 1(a) of the Trust Deed. In that capacity, under cl 15.1 of the Trust Deed he has the power to remove any trustee of the Trust and appoint new or additional trustees of the Trust. This does not make Mr Leven a party to the Trust Deed.
12. The result is that by Mr Leven signing the Trust Deed as a witness to the signature of Ms Harris, it did not contravene s 38(1) of the Conveyancing Act. The Trust Deed was, therefore, validly executed.

conclusion

1. For these reasons, I make the following orders: 1. Order pursuant to s 63(1) of the Trustee Act 1925 (NSW) that the plaintiff in its capacity as trustee of the Leven Trust is justified in managing and administering the Leven Trust pursuant to the Trust Deed dated 17 February 2012 between Robyn Harris as settlor and the plaintiff as trustee. 2. Order that the plaintiff is entitled to be reimbursed in respect of its costs from the Leven Trust on an indemnity basis.

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 December 2023