Beck v Henley

[2014] NSWCA 201

Court of Appeal (NSW)|2014-05-02|Before: Beazley P, Leeming JA

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Source facts

Court

Court of Appeal (NSW)

Decision date

2014-05-02

Before

Beazley P, Leeming JA

Source

Original judgment source is linked above.

Judgment (16 paragraphs)

[1]

Ch App 485 Re Mitchell (1913) WN (NSW) 137 Re O'Grady (1900) 26 VLR 171 Re Sandeman's Will Trusts [1937] 1 All ER 368 Re Weiner's Will Trusts [1956] 1 WLR 579; [1956] 2 All ER 482 Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482 Stephenson v Barclays Bank Trust Co Ltd [1975] 1 All ER 625 Sydney Futures Exchange Ltd v Australian Stock Exchange Ltd (1995) 56 FCR 236 The Age Company Ltd v Liu [2013] NSWCA 26; 82 NSWLR 286 Weinstock v Beck [2013] HCA 14; 87 ALJR 554 Wester v Borland [2007] EWHC 2484 White v Shortall [2006] NSWSC 1379; 68 NSWLR 650 Texts Cited: Cockshott & Lamb, The Statutes of New South Wales, 1898, vol 2 A Dean, "When does an Executor become a Trustee?" (1935) 1 Res Judicata 92 W Hohfeld, Fundamental Legal Conceptions As Applied In Judicial Reasoning (Lawbook Exchange reprint, 2000) T Lewin, A Practical Treatise on the Law of Trusts and Trustees (Maxwell, 1837) P Matthews, "The Comparative Importance of the Rule in Saunders v Vautier" (2006) 122 LQR 266 Scott and Ascher on Trusts (5th ed, 2008) G Thomas and A Hudson, The Law of Trusts (2nd ed, Oxford University Press, 2010) D Waters, Waters' Law of Trusts in Canada (Carswell, 4th ed 2012) Category: Principal judgment Parties: Tamar Rivqa Beck (Appellant) Michael Victor Henley in his capacities as administrator cta of the estate of the late Hedy Jadwiga Weinstock and trustee under the will of the late Hedy Jadwiga Weinstock (First Respondent) Amiram David Weinstock (Second Respondent) Representation: Counsel: Bret Walker SC / G Colyer (Appellant) S Robertson (First Respondent) I Jackman SC / J Hmelnitsky SC / D Hume (Second Respondent) Solicitors: McCabes Lawyers (Appellant) TressCox Lawyers (First Respondent) Baker & McKenzie Lawyers (Second Respondent) File Number(s): 2013/273638 Decision under appeal Citation: [2013] NSWSC 975 Date of Decision: 2013-07-22 00:00:00 Before: Slattery J File Number(s): 2012/75034

[2]

HEADNOTE Two adult beneficiaries were absolutely and indefeasibly entitled to trust property which included two of the four voting shares in a private company. One requested the trustee to transfer to him half of the shares. The other opposed the transfer. The trustee sought judicial advice, pursuant to s 63 of the Trustee Act 1925 (NSW). The primary judge found that there were no "special circumstances" so as to prevent the "rule" in Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482 from applying, and directed the trustee to transfer the shares to Ami as requested. The other beneficiary appealed. The Court held, dismissing the appeal:

Because the "rule" in Saunders v Vautier amounted to a power on the part of beneficiaries which prevailed over the terms of the trust instrument, it was not to the point to rely on the fact that the trust was a trust for sale: at [32]-[35], [72]. CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; 224 CLR 98 at [42]-[44], applied.
The power of some, but not all, adult, absolutely and indefeasibly entitled beneficiaries to direct the transfer of their share of trust property which is divisible is qualified by "special circumstances", in the absence of which there is no breach of the trustee's duty of impartiality to accede to the request: at [41], [65]-[66], [73].
There was insufficient warrant to depart from the long established principle that the splitting of a controlling interest in shares by itself to constitute special circumstances. What was required was evidence of loss of value: at [60]-[64], [67]-[71], [74]-[81], [84]-[85]. In re Marshall [1914] 1 Ch 192, Re Sandeman's Will Trusts [1937] 1 All ER 368, Re Weiner's Will Trusts [1956] 1 WLR 579; [1956] 2 All ER 482 and Lloyds Bank Ltd v Duker [1987] 1 WLR 1324; [1987] 3 All ER 193, approved and applied. Gough v Strahl [2013] NZHC 3184, In re Trustee Act; In Re Burger Estate [1949] 1 WWR 280, Re Campeau Family Trust (1984) 44 OR (2d) 549, Ho Yuen Ki Winnie v Hotung [2010] HKCFI 546 and [2010] HKCFI 605, cited.
The relationship between the law of trusts and statute, considered: at [82]-[84]. Associated Alloys v ACN 001 452 106 Pty Ltd [2000] HCA 25; 202 CLR 588 at [51], cited.
The history and nature of an application for judicial advice, considered: at [45]-[59] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar [2008] HCA 42; 237 CLR 66, applied Re Mitchell (1913) WN (NSW) 137 and In re the Trustee Act; In Re Burger Estate [1949] 1 WWR 280, considered.

[4]

Factual and procedural background 3The active parties on appeal are the appellant and the second respondent, who are sister and brother. I shall follow the approach of their counsel and refer to them as "Tami" and "Ami" respectively, without intending any lack of respect. The first respondent Mr Henley is the administrator of the estates of Tami's and Ami's deceased parents, Leo and Hedy Weinstock. For many years the siblings have been engaged in a wider dispute, aspects of which may be seen in Weinstock v Beck [2013] HCA 14; 87 ALJR 554 and Beck v Weinstock [2013] HCA 15; 87 ALJR 570. The primary judge referred to their "apparently unquenchable determination to litigate away the very considerable value of their parents' estates", which is undisputed and indisputable, and as will be seen below is relevant to the determination of this appeal. 4Tami and Ami are residuary beneficiaries under Hedy's will. Hedy's distributable residuary estate consisted of 2 "A" class shares and 1 "B" class share in a private company, Zipor Pty Ltd. Zipor conducts a furniture business and owns an interest in commercial property which generates substantial revenue. Zipor's issued capital consists of 4 "A" class shares, 2 "B" class shares and 1000 "C" class shares. Speaking generally, the "A" class shares confer the right to vote at ordinary meetings of members, but do not enjoy an entitlement to dividends, while the "B" and "C" class shares are non-voting shares in respect of which dividends may be declared and paid. Attention focussed on the two "A" class shares in Hedy's residuary estate, because their owner can block any special resolution at a general meeting. (Zipor's constitution does not give the chair a casting vote: cl 15.14, so the owner of the two shares cannot secure the passage of an ordinary resolution, even with the support of the chair.) 5Hedy's will established a trust to "sell call in collect and convert into money" but "with full power and discretion to postpone such sale calling in collection and conversion either indefinitely or during such period as my Trustee think fit". There were broad powers of investment, a power of appropriation (cl 10) and special provisions enabling one sibling to buy out the other's shares (cl 9): "[I]f either of my said children shall be desirous of selling any shares in any proprietary company which shall form part of my Estate then the child wishing to sell such shares shall in the first instance offer the said shares for sale to the other child at the fair market value which value shall in the event of dispute be determined by the auditor for the time being of the company in which such shares are held and in the event of the other child wishing to acquire such shares or any part thereof such child shall be entitled to purchase such shares at the agreed or determined fair market value which shall be paid by five (5) equal annual instalments free of interest the first such instalment to be paid on the date of acquisition." It was common ground that neither the power of appropriation nor the provisions relating to one sibling buying out the other had been used. 6The correspondence between the solicitors acting for Tami, Ami and their trustee is voluminous, and addresses many matters outside the scope of the appeal, but includes a letter from Ami's solicitors to those of the trustee dated 6 February 2012 which concluded: "We now formally request on behalf of Ami (as a beneficiary of the Hedy Estate) that the Administrator make an interim in specie distribution of that Estate, with the final distribution pending only the outcome of the appeal application by Tami Beck to the High Court in relation to the redemption of the C class shares held by the estate in LWFCA. We request that this interim distribution be done expeditiously." 7It seems likely that the parties treated this request, made shortly prior to the filing of the summons seeking judicial advice, as the direction claimed to invoke the "rule" in Saunders v Vautier (at least, after the dismissal of the appeal in Beck v Weinstock [2013] HCA 15; 87 ALJR 570). In any event, the appeal was heard on the basis that Ami had directed Mr Henley to transfer to him a one half aliquot share of the "A" and "B" class shares held by Hedy's estate in Zipor. 8Acceding to Ami's request was straightforward in the case of the "A" class shares; the trustee would merely transfer one of the two to him. For the single "B" class share which Mr Henley held as trustee of the Hedy's estate, it would be necessary for the company to resolve to split the "B" class shares in accordance with the existing provisions of Zipor's constitution (cl 3.9). Although this was one matter on which Tami relied before the primary judge, his Honour's rejection of it was not challenged on appeal. Indeed the Court was told that that had occurred after the primary judge had given advice, by an ordinary resolution of "A" class members. 9Aware that Tami opposed Ami's direction, Mr Henley approached the Court for advice pursuant to s 63 of the Trustee Act 1925 (NSW). He did so on the basis that he had essentially completed the administration of Hedy's estate, and had determined that the Zipor shares were not required for administration purposes. His functions as administrator in respect of the shares having been performed, he held them as trustee: Pagels v MacDonald (1936) 54 CLR 519 at 526. As will be seen below, there was some dispute about this before the primary judge. However, even if in fact he had remained an administrator, he was entitled to seek advice under the section (see the definition of "trustee" in s 5); the problematic question analysed by A Dean, "When does an Executor become a Trustee?" (1935) 1 Res Judicata 92 does not arise. 10Tami and Ami were joined to their trustee's application for advice. Tami opposed, and Ami supported, the transfer of the shares. It will be convenient to deal with the submissions each made in the course of summarising the reasons of the primary judge. 11There was no dispute that Mr Henley has not completed the administration of Leo's estate, which is subject to large liabilities. Mr Henley continues to hold the remaining two "A" and one "B" class (after the split) shares in Zipor as administrator of that estate, and acknowledged the possibility that they might need to be sold. Leo's will made no specific bequest of the Zipor shares and divided his residuary estate to be held on trust as to two thirds for Ami and his children and grandchildren, and as to one third for Tami and her children and grandchildren. 12The interrelationship between Leo's estate and Hedy's estate assumed much greater prominence at trial than on appeal. On appeal, in contrast to her submissions at trial, Tami placed no weight, for the purposes of the law of trusts, upon the other two "A" class shares held by Mr Henley as administrator of Leo's estate; as her counsel put it: "What happens under the other will and what is available to the person who happens to be the trustee under both with respect to company law is what might be called a relevant extraneous circumstance, but it doesn't affect the trust questions at all." 13This was candidly described as "something in the nature of a climb-down from our first instance position ... not a contradiction of it, but it is removing a factor that was energetically pushed below". It follows that the abbreviated summary of the factual background given above is sufficient.

[5]

Reasons of the primary judge 14The primary judge referred to the discussion of the "rule" in Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482 in CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; 224 CLR 98 at [43]-[48], and said that there were two limitations to its operation where a beneficiary called for his or her aliquot share: it did not apply to real property at all, and it did not apply to personal property where there were "special circumstances". Courts have also used the expressions "some good ground to the contrary": Re Sandeman's Will Trusts [1937] 1 All ER 368 at 371 and "very special circumstances": Stephenson v Barclays Bank Trust Co Ltd [1975] 1 All ER 625 at 637-638, but it was not suggested that anything turns upon the different expressions, and it is convenient to use the language employed by the parties and the primary judge of "special circumstances". 15Before the primary judge, Tami's first submission was that Ami did not have an absolute indefeasible interest in Hedy's estate. The primary judge rejected that submission at [57]-[85] and no challenge was made to this aspect of his Honour's reasoning on appeal. The second submission advanced to the primary judge, which was the principal submission on appeal, was that there were "special circumstances" such as to exclude the general "rule" in Saunders v Vautier. 16His Honour rejected Tami's argument that a distribution of shares to Ami would cause prejudice to her. There were two strands to his Honour's reasons, summarised at [93]. The first was that Tami's argument was "inconsistent with the course of English and Australian authority that considers 'special circumstances' in relation to shares in private companies". The second was that his Honour considered that there was "no evidence here to support a finding of special circumstances". 17In elaboration of the first strand, the primary judge considered at [94]-[108] four English decisions on the finding of "special circumstances" in relation to the transfer of shares in private companies following a Saunders v Vautier direction: In re Marshall [1914] 1 Ch 192, Re Sandeman's Will Trusts [1937] 1 All ER 368, Re Weiner's Will Trusts [1956] 1 WLR 579; [1956] 2 All ER 482 and Lloyds Bank Ltd v Duker [1987] 1 WLR 1324; [1987] 3 All ER 193, of which he considered the first three to be the "guiding authorities". His Honour regarded those authorities as precluding a finding of special circumstances by the mere fact that a direction would break up a parcel of shares in a private company with a control interest. 18His Honour then addressed four arguments advanced by Tami to the effect that the distribution would cause prejudice to her. The first was that the distribution would destroy value, because it would no longer be possible for the trustee to co-operate with himself as administrator of Leo's estate to sell all of the voting shares of the company, thereby gaining a control premium. This was rejected because (a) the breaking up of a control interest was answered by In re Sandeman's Will Trusts and Re Weiner's Will Trusts, (b) it was wrong to regard the trustee as owning a single majority parcel of shares, since the administration of the separate estates might require him to act quite differently, and (c) there was too much uncertainty in the future to predict a risk of prejudice to Tami. 19It will be seen below that Tami's submissions on appeal are confined to one aspect of the first argument, so I shall deal with the remaining arguments briefly. Tami's second argument was that the distribution would result in Ami taking control of Zipor, which could lead to prejudice to Tami (it will be recalled that Ami was entitled to two thirds of Leo's residuary estate). His Honour said that that concern did not arise until Leo's estate was administered, that the distribution of identical shares to Tami did not lead to any obvious inequality of value in he two parcels, and if there were unfairness to Tami as a minority shareholder, she would be protected by legislation providing for remedies where a majority shareholder engages in oppressive conduct. Tami's third and fourth arguments were that the distribution might cause litigation and that it would be necessary to divide the "B" class share. His Honour rejected the third as irrelevant having regard to the past history of the parties, and dismissed the fourth as a mere matter of administration. 20His Honour accordingly concluded that there were no special circumstances, and said that he would advise the trustee "that he may transfer the Zipor shares as Ami has requested" (at [119]).

[6]

The second hearing before the primary judge 21The primary judge had acceded to a request for a further hearing before orders were made. When orders were made, the permissive language of the Court's reasons at [119] was replaced by mandatory words of compulsion. The first order from which this appeal is brought was that: "[T]he plaintiff is required to make an in specie distribution of half of "A" class and half of the "B" class share capital owned by him in Zipor Pty Ltd (Zipor) in his capacity as the trustee of the estate of Hedy ... to the beneficiary Ami ... ." 22In order to deal with the first ground of appeal, it is necessary to say something of the debate at the second hearing. Although the form of orders was agreed, there were further disputes between the parties, as to whether judicial advice should be given then or following a further hearing, and as to costs. Relevantly for present purposes, although it was common ground that Mr Henley was entitled to have his costs borne by Hedy's estate, Tami contended for, and the trustee and Ami opposed, an order for the beneficiaries' costs to be borne, at least in part, by Hedy's estate. In response to that, Mr Henley said that in a worst case scenario, the subject matter of the advice, the Zipor shares, might have to be sold. That in turn led to Tami's rejoinder that the premise on which advice was given was thrown into doubt, and that no advice should be given at all until further evidence as to the state of Hedy's estate had been obtained. 23The primary judge rejected Tami's submissions in a second judgment: [2013] NSWSC 1105. He gave two reasons for doing so. The first was that the trustee approached the Court for advice on the basis of facts which he believed to be true. The second was that if inadvertently there was a shortfall in Hedy's estate, funds could be called back from the beneficiaries in accordance with Attenborough v Solomon [1913] AC 76. 24Accordingly, his Honour advised the trustee that he was required to transfer half of the "A" and "B" class shares to Ami (in the case of the latter, after causing them to be subdivided). His Honour considered that the beneficiaries should bear their own costs. He made no order as to the trustee's costs on the basis that the ordinary provisions of r 42.25 of the Uniform Civil Procedure Rules 2005 (NSW) would permit the trustee to recover his costs from the estates of Hedy and Leo (some of his costs were attributable to the administration of Leo's estate, owing to the procedural history of this litigation, the details of which are not necessary to state).

[7]

The principal ground of appeal 25It is convenient to defer consideration of the first ground of appeal, which was only addressed in oral submissions in reply, and only then in answer to questions from the bench. Oral addresses focussed upon the second ground, which asserted error of law in applying a long-standing line of English and Australian authority in respect of the "rule" in Saunders v Vautier. Tami's notice of appeal was drafted with commendable clarity. It invited this Court to find error in the reasons of the primary judge by (a) declining to follow the existing authorities and (b) recognising a further general exception that "destruction of value by breaking up a parcel of shares in a private company constitutes a further exception to the general rule" in Saunders v Vautier, which (c) "should not be permitted to occur in the absence of a unanimous direction from the beneficiaries", and (d) finding "that destruction of value will occur in the circumstances of this case if the estate's 2 'A' class shares controlling 50% of the voting rights in Zipor Pty Limited are distributed or appropriated in any manner which interferes with their existing common ownership". 26It will be seen that this ground of appeal raises a much more confined challenge than the wide-ranging submissions made by Tami at first instance. In particular, no point was taken of the happenstance that the remaining "A" and "B" class shares were also owned by Mr Henley, as administrator of Leo's estate. Instead, the only prejudice on which reliance was placed was the destruction of value occurring if and when the two "A" class shares in Hedy's estate became separately held. 27The essential point made by Tami is simply stated. Accepting, as all parties did, that the "rule" in Saunders v Vautier does not apply to an undivided share of a parcel of land, it was said that the same applied here, to the parcel of two "A" class shares in circumstances where the parcel, comprising 50% of the voting shares in the company, amounted to a "blocking stake" to which additional value attached by reason of its "negative control". For the owner of the parcel could block any special resolution of "A" class members; that was said to give to the parcel value which would be destroyed if one share were transferred to Ami, and it was said that that was prejudice so as to justify a further exception to the general rule. 28Tami's oral and written submissions invoked some additional considerations. Mr Walker SC said that the trust, after all, was ultimately a trust for sale (albeit with a power of indefinite postponement) and that both beneficiaries were entitled to have the trustee sell the parcel of shares, thereby realising such control premium as it might command. He also said that there would be a breach of the duty of impartiality by the trustee yielding to the request of one beneficiary, who sought title to half of the "A" and "B" class shares in circumstances where the other beneficiary did not. He said that there was a danger in treating the label of "special circumstances" (and variations on that label) as legislative, leading to "unnecessary and inappropriate exercises of exegesis and interpretation", hence most of his address was directed to a close reading of the English decisions relied upon by the primary judge. His principal point was encapsulated by the submission that: "the matter ought properly yield simply to an application and observance of the duty of impartiality and [appealing] to the terms of the trust as to the intended beneficial share between the competing parties." 29Mr Jackman SC for Ami emphasised that the factual premise of Tami's principal ground was not established, in that there was no evidence of any loss in value by splitting the parcel of two "A" class shares. He further said that even if there were evidence of a premium for control, it was inapplicable to the present question, which was directed to prejudice to the rights of minority shareholders amongst themselves, in contrast to the case of someone outside the company seeking to acquire it. The consequence was that there was no issue of inequality, because each sibling would finish up with shares of equal value. 30In the face of two beneficiaries who were represented and making opposing submissions, Mr Robertson for the trustee appropriately took a neutral position. 31The parties' submissions appealed to an analysis at the level of first principle. This appeal is most conveniently resolved by first recalling the basic principles applicable to private trusts and the nature of the application made under s 63 of the Trustee Act 1925 (NSW), and then addressing the parties' submissions.

[8]

(a) The "rule" in Saunders v Vautier 32First, as the primary judge recognised, the High Court has said that "rule" in Saunders v Vautier is not a rule, and was not in terms formulated either by the Master of the Rolls or the Lord Chancellor in the decision of the former or the rehearing by the latter: CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; 224 CLR 98 at [43]. The "rule" pre-dates the decision; it may be found in the first edition of Thomas Lewin's A Practical Treatise on the Law of Trusts and Trustees (Maxwell, 1837) at 496. Both Love v L'Estrange (1727) 5 Bro PC 59; 2 ER 532 and Barnes v Rowley (1797) 3 Ves Jr 305; 30 ER 1024 presuppose that an adult beneficiary could call for settled property contrary to the terms of the trust (in Love v L'Estrange the property was to be invested so as to provide an annuity for life; in Barnes v Rowley it was to be held until the beneficiary attained the age of 24). 33Moreover, the "rule" is best described as a power on the part of the beneficiaries, with a correlative liability on the part of the trustees: CPT at [44]. The exercise of the power does not involve the performance by the trustees of any part of their office as active trustees; instead, it brings their office to an end. The exercise of this power is a canonical example of, to use Hohfeld's language, effecting a change in a given legal relation: W Hohfeld, Fundamental Legal Conceptions As Applied In Judicial Reasoning (Lawbook Exchange reprint, 2000) pp 50-51. 34Secondly, Anglo-Australian law has taken the course of giving primacy to adult beneficiaries who enjoy an absolute vested and indefeasible interest in trust property, such that the power overrides restrictions imposed by testators and settlors in the trust instrument: CPT at [43]-[44]. United States trusts law took a different course, influenced by early New York and Michigan statutes; the process by which courts in other States followed those statutes is thoughtfully described in P Matthews, "The Comparative Importance of the Rule in Saunders v Vautier" (2006) 122 LQR 266 at 282-287. The different approach in the United States of America reflects a policy choice, expressed in Scott and Ascher on Trusts (5th ed, 2008) at s34.1.3 thus: "How far should a settlor be permitted to control not only the disposition but also the enjoyment of property?" The resultant divergence has practical consequences; for example, it made it vital to determine whether English or Texan law governed the testamentary trust in Re Barton [2002] EWHC 264; [2002] WTLR 649. 35The upshot is that it is not to the point to observe, as Tami did, that the trust established by Hedy's will is a trust for sale, with special provisions directed to a sale (including the right of first refusal which contemplates by its existence and by the provision for payment over time without interest that the shares will remain in single ownership). Adult beneficiaries who are absolutely and indefeasibly entitled have power to "overbear and defeat the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a will or trust instrument": Goulding v James [1997] 2 All ER 239 at 247, cited in CPT at [43]. 36Thirdly, the power is not unqualified, even where the beneficiaries are unanimous and absolutely and indefeasibly entitled. The exercise of the power may be subject to the trustee's right to reimbursement or exoneration for the discharge of liabilities incurred in the administration of the trust: CPT at [50]-[51]. That said, it seems clear that since the trustee's rights to reimbursement and exoneration are a consequence of the trustee being a fiduciary with ownership and control of trust property, the exercise of those rights by the trustee is subject to the trustee's fiduciary duties. Thus, the trustee may not refuse to accede to a Saunders v Vautier direction in order to keep the trust in existence for the trustee's own benefit: Wester v Borland [2007] EWHC 2484 at [12]-[13]. It likewise seems clear that the trustee's lien over trust assets does not detract from the beneficiaries having power to give a Saunders v Vautier direction, although the terms of the trust may require the trustee's interest to be protected: CPT at [49]; why should the position be different from trust property subject to a charge or mortgage? These matters are considered in G Thomas and A Hudson, The Law of Trusts (2nd ed, Oxford University Press, 2010) pp 165-166. Professor Thomas also states (at 166) that the power may be defeated by an exercise by the trustee of a power of appropriation; it is not necessary to consider this aspect, although mentioned during the course of argument, since that power was not exercised. The only point of present relevance is that the power is not unqualified. This reflects the merely equitable nature of the beneficiaries' interest. 37Fourthly, the power of some but not all of the beneficiaries to bring the trust to an end in part (and the correlative liability on the part of the trustees for their office to cease to that extent) is also qualified, and to a greater extent than would be the case if they were unanimous. In addition to the foregoing, as Sugerman J said in Manfred v Maddrell (1950) 51 SR (NSW) 95 at 97, its exercise is "governed by practical considerations and, in particular, by considerations of convenience of division and of the risk of prejudice to other beneficiaries". These two considerations may overlap but are distinct. 38It has been traditional to proceed on the basis that where land is held on trust, the power on the part of some but not all of the beneficiaries is unavailable. It was said in In re Marshall at 199 that "it is a matter of notoriety ... that an undivided share of real estate never fetches quite its proper proportion of the proceeds of sale of the entire estate" (it is not necessary to consider whether that statement continues to be universally correct or what follows if it is not). The same is true of indivisible personal property, such as a racehorse or painting. 39Tami's written submissions referred to various examples where a trustee lacked power to direct a trustee to transfer trust property. If two adult beneficiaries are absolutely and indefeasibly entitled to personal property constituting volumes 1-84 of the New South Wales Law Reports (to take one example posed by Tami), one cannot call for a half share. The set is not divisible, even though it comprises an even number of volumes, for there is no way that the set may be divided so as to produce two equal halves. The same is true of the other examples offered by Tami's written submissions: a collection of stud animals or a professional sporting team. A precondition to the exercise of the Saunders v Vautier power by a subclass of the adult beneficiaries absolutely and indefeasibly entitled is that the property be divisible. The position is at least analogous (I suspect in fact it is identical) with what was said by Dixon CJ and Fullagar J in Brady v Stapleton (1952) 88 CLR 322 at 339: the distinction drawn by equity is whether it is practicable to give effect to the rights of the beneficiary by appropriating a specific severable part of the available property. 40Shares are plainly specifically severable. Hence their name. "One share ... is the same as another, and share No 1 is not distinguishable from share No 2 in the same way as a grey horse is distinguishable from a black horse": In re International Contract Co (1872) 7 Ch App 485 at 487; see the analyses by Lockhart J in Sydney Futures Exchange Ltd v Australian Stock Exchange Ltd [1995] FCA 1106; 56 FCR 236 at 255-256 and Campbell J in White v Shortall [2006] NSWSC 1379; 68 NSWLR 650 at [193]-[200]. 41Where personal property which can be conveniently and fairly divided is held on trust, courts have long stated that the power of some but not all beneficiaries to bring an end to the trust is qualified by "special circumstances". The metes and bounds of "special circumstances" have never been fully defined. Indeed, as Clauson J said in Re Sandeman's Will Trusts at 372, courts have been "rather careful never to define in precise terms exactly what would be good ground to the contrary". 42It follows that trustees of divisible personal property faced by a Saunders v Vautier direction by some but not all of the adult beneficiaries who enjoy an absolute vested and indefeasible interest must determine whether they are obliged to accede to the direction. In the way that issue has repeatedly been framed that has required a determination by them of whether there are "special circumstances" such as to disentitle the beneficiaries from the valid exercise of the power. 43Fifthly, in such cases, the critical question is whether there is prejudice to those beneficiaries who oppose the Saunders v Vautier direction. In all contested cases, at least one absolutely entitled beneficiary will claim there is no relevant prejudice, while another will assert that there is prejudice. 44Sixthly, none of the decisions which this Court has been invited to review was an application for judicial advice. In re Marshall and Lloyds Bank Ltd v Duker were originating summonses filed by trustees; Re Sandeman's Will Trusts and Re Weiner's Will Trusts were originating summonses filed by beneficiaries. All four cases sought final determinations of whether the beneficiary had an entitlement to the transfer of the assets called for. This difference reflects the divergent legislative history in England and New South Wales, and makes it appropriate to pause to consider the nature of the proceedings at first instance, which after all is the starting point for analysis of whether appellable error has been shown.

[9]

(b) The nature of the trustee's application for judicial advice 45It might be thought that an appeal from the giving of judicial advice was an unlikely procedure to determine the matters raised by Tami - a review of the finding of absence of prejudice, and a reappraisal of a long-standing line of authority. It would have been open to Tami or Ami or their trustee to commence proceedings seeking declaratory relief instead of, or in conjunction with, the application for advice. 46Two other features of the litigation might also appear, at first blush, to call into question the appropriateness of the s 63 procedure: the fact that the beneficiaries are seemingly implacably opposed to each other, and the fact that the judicial advice ultimately was an order requiring performance by the trustee, rather than merely authorising him to take a particular course if he was otherwise of the view that it was a proper exercise of his powers. 47However, this appeal well illustrates the danger of referring in generic terms to "applications for judicial advice". The New South Wales legislation has particular attributes which reflect the appositeness of precisely what has occurred. That is a product of its history. 48In 1857, Lord St Leonards said, when introducing the Trustee's Relief Bill in the House of Lords, that the summary right it conferred upon a trustee: "would be a great benefit to trustees, and, by substituting a cheap and simple process of determining questions, prevent the necessity of expensive suits." The essence of Lord St Leonards' scheme was a cheap, summary procedure available to trustees for "opinion, advice or direction" on any question respecting "the management or administration of the trust property". If the trustee acted upon the opinion, advice or direction, and had not been guilty of "any fraud or wilful concealment or misrepresentation" in obtaining it, then the trustee's duty was deemed to have been discharged. The language quoted above appears in the present form of s 63(1) and (2) of the Trustee Act 1925 (NSW), but exactly the same words and structure were found in Lord St Leonards' legislation a century and a half ago. 49The history of the adoption of Lord St Leonards' legislation explains how the New South Wales counterpart is appropriate for the resolution of this dispute. The law was copied in New South Wales by s 30 of the Trust Property Act 1862 (26 Vic No 12). Under the rationalisation of colonial statutes for which the Honourable Charles Gilbert Heydon QC, the Commissioner for the Consolidation of Statute Law, was responsible, it was reproduced in s 20 of the Trustee Act 1898 (NSW). The 1898 Act brought together eight separate enactments dealing with trustees (see the Memorandum and Certificate reproduced at p 6 of Cockshott and Lamb's volume of 1898 statutes, and their dedication of that volume). 50The traditional view was that judicial advice ought not to be given where there was a dispute as to facts: see In re Mockett's Trusts (1860) 6 Jur (NS) 142 and Re O'Grady (1900) 26 VLR 171 where applications for judicial advice were refused because they involved determining factual matters. Further, it was thought that there was no right of appeal. Under s 20 of the Trustee Act 1898 (NSW), the trustee was not required to commence a suit, and no orders were made. In Re Mitchell (1913) WN (NSW) 137 at 138, Harvey J doubted that an appeal would lie, since the section was expressed as "being a personal advice of the Judge"; in the event that a question needed to be determined by the Full Court, an originating summons had to be used. 51Those limitations (and others) were reversed by the Trustee Act 1925 (NSW), which was the result of a review by the Commissioner for Law Reform, Sir John Peden, and passed with bipartisan support, with indeed at least some popular acclamation: the front page of the Sunday Times reported the passage of substantially the same bill on 24 October 1924 under the headline "Here is a Bill! Trustees Law Brought Up-to-date. Professor Peden's Skill". The 1924 bill failed to pass through the chambers before Parliament was prorogued in December 1924 (see NSW Parliamentary Record, (NSW Government Printer, 1988), Vol 4 p 11). When the 1925 bill was in Committee in the Legislative Council late the following year, following a general election, Sir John Peden said of cl 63 that: "I think what is new in the clause is the provision at the end with regard to appeal. It is subject to such right of appeal to the Full Court as may be prescribed. Otherwise the clause is as it was before": Hansard, Legislative Council, 19 November 1925, p 2424. Consistently with the foregoing, on 24 February 1926 r 313 of the Consolidated Equity Rules was made, which confirmed that an appeal lay to the Full Court. 52The point of permitting appeals was to enhance the availability of the judicial advice procedure. In Re Mitchell, Harvey J had been confronted with an earlier first instance decision (In re Pugh [1887] WN 143) holding that a trustee under a will, although entitled to accept an allotment of bonus shares, ought promptly to sell them. Harvey J said (at 138): "If this were an originating summons, and all parties interested before the Court so that a binding decision could be given in the matter, I might feel myself in a position to reconsider the authority of In re Pugh in the light of the later decisions, but a petition for advice stands on somewhat exceptional grounds. ... [T]he Judge, in advising under that section, ought always to give very conservative advice ... and not refuse to follow the decisions which have been given in cases where the matter was litigated between adverse parties ... [If] the adult parties interested in the funds feel strongly on the point, it is certainly a case in which they would be justified in having the matter decided on an originating summons, when, if necessary, the point could be carried to the Full Court for decision." 53The amendments made in 1925 dealt expressly with the rights of beneficiaries amongst themselves in advance of a distribution, and required the trustee before conveying or distributing any property in accordance with the opinion advice or direction to give notice to any beneficiary prejudiced, unless the Court otherwise ordered: s 63(8). New s 63(10) provided that any such beneficiary had a right to apply to the Court, and "during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution". New s 63(11) provided that all persons notified were bound by the advice, opinion, direction or order given or made "as if the opinion advice direction or order had been given or made in proceedings to which the person was a party". 54Those amendments also make it plain that matters involving disputation between beneficiaries, including as to the appropriateness of an intended distribution, are within the scope of s 63. As was said in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar [2008] HCA 42; 237 CLR 66 at [56]-[57], there is nothing in s 63 which limits its application to "non-adversarial" proceedings. 55Ordinarily, judicial advice does not incorporate orders compelling the trustee to act in a particular way. The full effect of the legislation upon property rights, and the rights a beneficiary may have against third parties, if the trustee acts upon judicial advice which is properly obtained, raises questions about which the parties asked this Court not to express any views; these reasons should not be read as touching on that question. 56However, the nature of the power exercised by Ami is such that the trustee is bound to comply with his direction, subject to there being "special circumstances". Where as here there is a dispute as to whether the special circumstances qualification is present, then its resolution may conveniently be resolved in proceedings to which the beneficiaries are joined. It will be seen that ss 63(8)-(10) contemplate a regime whereby persons who are affected by a proposed distribution may be heard, and indeed imposes an automatic stay upon the trustee. (In the present case, notwithstanding Tami's appeal, but with her knowledge, the trustee followed the advice and transferred the "A" and "B" class shares to Ami. Nothing in these reasons is to be taken as expressing a view on the operation of s 63(10) during the pendency of an appeal.) Those provisions (for which there are no counterparts in other Australian states) confirm the appropriateness of the procedure. 57Moreover, if the determination is that there are no special circumstances, then the form of the advice is, appropriately although unusually, mandatory. It took that form in In re the Trustee Act; In re Burger Estate [1949] 1 WWR 280 where the widow entitled to one third of the estate but who had been granted a monthly allowance called for a transfer of one third of the estate, which largely comprised shares in a private company. 58It also follows from the foregoing that Tami's appeal is as of right. The successor to r 313 to the Consolidated Equity Rules is r 55.2 of the Uniform Civil Procedure Rules. From an order of the kind made in the present case, an appeal lies under s 101(a) of the Supreme Court Act 1970 (NSW), and it is as of right because the order is one that "involves (directly or indirectly) any claim, demand or question to or respecting any property" of the value of $100,000 or more. Zipor's assets exceed $20 million, and the "A" class shares the subject of the direction were 50% of its voting shares. 59Finally, in terms of the principles applicable to appellate review, s 63 confers a wide discretion upon the Court. A review of the exercise of that discretion requires the appellant to establish House v The King error: Macedonian Church at [190]. The principal error for which Tami contended was failing to find there was a loss of value through destruction of a blocking interest in a parcel of shares in a private company.

[10]

(c) No evidence of loss of value 60A partial answer to Tami's principal submission is that its factual premise is not made out. Tami tendered a report by a qualified valuer, who was not cross-examined, who expressed views to the effect that parcels of shares in private companies may attract a premium for control. The high points of his report were (emphasis added): "A shareholder holding between 25.1% (ie more than 25%) and 50% of the voting shares of a private company has some influence over the company as the shareholder is able to block a special resolution being passed by the other shareholder(s). This is sometimes referred to as 'negative control'." "A purchaser acquiring more than 25% but less than 50% of the voting shares in a private company may pay a small premium above the price that would be paid for an interest of 25% or less because the purchaser would obtain 'negative control' of the company." 61As Ami said, the opinions were entirely general, unrelated to the particular company Zipor, and speculative. The opinion was, expressly, left at the level of possibility ("may pay a small premium"). No opinion was expressed at all in relation to the particular parcels of shares in Zipor. Yet no one could contemplate buying a minority interest in shares in Zipor without being conscious of the years of dispute and litigation dividing the existing shareholders. 62Contrary to Tami's submissions, I would not read [110] of the reasons of the primary judge as an acceptance of the proposition that the break-up of the parcel of two "A" class shares will result in an actual loss of value. His Honour said only that he was prepared to accept expert evidence adduced that "control premiums for controlling interests (that is more than 50%) in private companies in Australia generally range between 15% and 20% and could be higher depending upon the circumstances." His Honour's statement was directed to parcels of shares which could secure the passage of an ordinary resolution, and not directed to Zipor at all. 63Contrast the quantified prejudice established on the evidence in Lloyds Bank v Duker, where John Mowbray QC, sitting as a Deputy Judge of the High Court, relied on a trustee's duty of impartiality between beneficiaries, so as to prevent a beneficiary entitled to 46/80ths of the estate from directing the transfer of 46/80ths of the shares in a private company. There was evidence (including valuation evidence and evidence of an offer) which was inherently plausible and which enabled the court to find that the value per share of a holding of 46/80ths of the company's ordinary shares was "markedly higher" than the value per share of a minority parcel. "The result is that, if Mr Duker takes 574 shares, the value of what he takes will be markedly more than 46/80ths of the aggregate values of his and the other holdings" (at 1328-9; 197). It was held that for that reason the trustee was required to sell all the shares and pay 46/80ths of the proceeds to Mr Duker, rather than transferring the majority parcel to him. The narrowness of that holding is emphasised by the fact that it was expressly based upon the valuation evidence, and indeed the distinguished Deputy Judge accepted (at 1330; 198): "Re Sandeman's Will Trusts and Re Weiner's Will Trusts as authorities which ought to be followed at first instance that the general rule is not excluded by the fact that the distribution breaks up a controlling interest, and so reduces the value of the whole." 64To return to Zipor, it would be unreal to think that there were any appreciable premium attaching to the two "A" class shares as a parcel, as opposed to the shares individually. The certainty is that any purchaser would be acquiring a minority interest in a company whose other shareholders have demonstrated a prodigious appetite for litigation. In the absence of any other evidence at all, it was entirely open to the primary judge to conclude that Tami had failed to establish any diminution in value by the splitting of the parcel of two "A" class shares.

[12]

(e) English authorities 67Once the submissions highlighted in oral address as to the terms of the trust and the duty of impartiality are put to one side, the question is whether the splitting of a controlling interest in shares amounts to relevant prejudice. Most of the authorities on this question are English. It is true, as Tami observed, that when read carefully those decisions provide somewhat qualified support for this submission. In particular, in In re Marshall [1914] Ch 192 at 199, Cozens-Hardy MR proceeded on the basis that the case where "the testator held a control by holding the majority of the shares, or anything of that kind" was outside the qualification to the ordinary rule. It was for that reason that the Court adjourned for a week to permit further information to be obtained: "When the case was first before us we suggested that we should like to know what were the facts about the company; what was its capital, and the number of its shareholders, and what were the special circumstances of the case" at 199. 68As I read Lloyd's Bank v Duker, there is likewise some reticence about accepting that submission, although the court expressly considered itself bound to follow earlier decisions, and ultimately the ratio of the case is that but for the evidence of actual value, the beneficiary's application would have been granted. 69However the same general proposition advanced by Tami was advanced and rejected in Re Weiner's Will Trusts at 583-4; 485: "[It was submitted that] in the case of any private company where the trustees held a control, no special circumstances need be adduced at all; the mere fact that a controlling interest was held and would not be held if the shares were to be divided was enough to make the court refuse to make the trustees divide. I cannot take that view at all. It would mean, in effect, that there never could be a division, because that must always involve the loss of control. I cannot see that there is anything short of some special circumstances which would justify me in holding up these shares. The trustees have not come forward and said that there are good reasons why they do not wish to divide now, since they may be able to effect some scheme within the next year or so, and they happen to know that the plaintiff is opposed to the scheme. No special circumstances are made here." 70Further, in Re Sandeman's Will Trusts, the adult beneficiary who was entitled to one half of the trust property was empowered to direct the testamentary trustees of his father's estate to transfer to him one half of a controlling parcel of shares in a private company, even where the will gave the trustees an unfettered power to retain the shares "so long as they in their absolute and uncontrolled discretion shall think fit", and where they formed the view that it was in the interests of the trust fund to retain shares which could control a general meeting of the company. 71In short, there is a consistent line of English authority to the effect that mere division of a controlling interest of shares is not a breach of an obligation of impartiality, nor does it disentitle a beneficiary otherwise entitled to call for his or her aliquot share of a parcel of shares.

[13]

(f) Conclusion on principal ground of appeal 72The primacy accorded to the beneficial owners over the settlor means that the first matter relied on by Tami, the form of the trust (a trust for sale) and other restrictions in the instrument, are disregarded if the beneficiaries are adult, capacitated and absolutely and indefeasibly entitled. 73The second matter raised by Tami, the trustee's duty of impartiality, proves too much. If the fact that one beneficiary opposed a Saunders v Vautier direction of the other in respect of divisible policy were sufficient, then the power would only ever be available if the beneficiaries were unanimous. 74The ultimate question, where as here the trust property is readily divisible, is whether the primary judge erred in finding no relevant prejudice. 75Equity long ago took the step to subject the terms of the trust established by the settlor or testator to the exercise of power by adult beneficiaries who are absolutely and indefeasibly entitled collectively. The question which then arose was what was to occur when they were not unanimous but the property could be divided. The answer was to have regard to any prejudice to a beneficiary who opposes an in specie distribution. However, not every form of prejudice is sufficient. 76To take an extreme case, one of three beneficiaries of a small trust where the trust property comprises listed securities may be prejudiced by a Saunders v Vautier direction made by another beneficiary, for it may not be possible to secure the same investment return if the principal is diminished, and the fees charged by the trustee will be borne by two rather than three beneficiaries. Yet no one would suggest that those considerations could defeat an adult beneficiary absolutely and indefeasibly entitled to his or her share of the trust property from calling for it. That is to say, the exercise of power by one but not all beneficiaries may be attended by actual prejudice upon the other, yet be insufficient to disentitle the exercise of power by the beneficiary. 77Similarly, suppose a parcel of non-voting preference shares is held on trust for a number of adult beneficiaries. To the extent that the rights attaching to those shares comprise, for practical purposes, the right to a preferred dividend and return on capital, it is difficult to see how there could be any prejudice if one beneficiary called for his or her share of the parcel. That would be so even if the parcel were large, and its division meant that no longer would a single shareholder be able to block a special resolution of preference shareholders varying class rights. 78On the other hand, if ten particular shares entitle their owner to exclusive occupation of an apartment in a company title building, and the parcel is held on trust for two adult beneficiaries absolutely and indefeasibly entitled, for my part I would find it difficult to see that one beneficiary would be entitled to call for five of the shares, leaving the balance held by the trustee for the other beneficiary. The prejudice is real and immediate, even though both beneficiaries are treated identically. The purpose of that parcel of shares is to confer a right to live in the apartment, and the analogy with trusts of land is very strong. 79The point of the foregoing is to emphasise that there are shares and there are shares. Company constitutions are flexible institutions, and it does not follow that principles applicable to one private company will apply to all private companies. 80Here, the only prejudice Tami relied on was the loss of a measure of control at an ordinary meeting of Zipor's members. For the reasons identified above, there was no error by the primary judge in finding no quantified loss of value. And the English decisions amount to a uniform line of authority precisely a century old rejecting as sufficient prejudice the mere break up of a parcel of shares which enjoys a measure of control. 81Not lightly ought this Court depart from a line of authority which is long-standing and consistent. The reasons of the primary judge have now themselves been approved and followed in New Zealand: Gough v Strahl [2013] NZHC 3184. The same principles apply in Canada: In re Trustee Act; In Re Burger Estate [1949] 1 WWR 280; Re Campeau Family Trust (1984) 44 OR (2d) 549 at 553, appeal dismissed 18 DLR (4d) 159; Waters' Law of Trusts in Canada (Carswell, 4th ed 2012) p 1236. The reasoning in the English decisions has been applied in Hong Kong: Ho Yuen Ki Winnie v Hotung [2010] HKCFI 546 at [39] and [2010] HKCFI 605 at [25]. It is not possible to quantify the costs - in terms of certainty, and upsetting the considered and informed desires of settlors, testators and beneficiaries, of the change in the law for which Tami contends. All that can be said is that those costs would be real. 82What is more, the law of trusts has long been substantially affected by statute. Statute now confers a suite of powers on trustees with or without curial approval (see for example Trustee Act 1925 (NSW), ss 14-63 and ss 70-93 respectively). Statute has also addressed one aspect of the "rule" in Saunders v Vautier by empowering one of a number of beneficiaries to apply to the Court for an order dividing chattels provided that the applicant is "interested in a moiety or upwards": Trustee Act 1925, s 87. In Canada, provincial statutes in Alberta and Manitoba have qualified the "rule" in Saunders v Vautier by making the termination of the trust subject to judicial consent, thereby conferring a discretion upon the Court to approve direction's overriding the settlor's or testator's intention: see D Waters, Waters' Law of Trusts in Canada, pp 1258-1262. As was said (albeit in a different context) in Associated Alloys v ACN 001 452 106 Pty Ltd [2000] HCA 25; 202 CLR 588 at [51], "It is not for the courts to destroy or impair property rights, such as those arising under trusts, by supplementing the list of those rights which the legislature has selected for such treatment". 83Where as here there is a well-settled line of authority, where different legislative approaches are open to be taken and have indeed been taken elsewhere in the common law world, and where the New South Wales legislature has for many years given detailed attention to, and in many cases altered, the rights and powers of trustees and beneficiaries, there is good reason to reject Tami's invitation to change the law. It is not that the change she invites is wholly without attraction. But this is not a case where there is a blot on the legal landscape which calls for removal. Indeed, there is a principled basis underlying the policy decision which has been struck for a century in this area. 84The authorities which Tami has invited this Court to review and depart from make it plain that even where there is a loss of value by the splitting of a controlling parcel of shares, something more is required to defeat the Saunders v Vautier power. What is required is an unequal outcome (as would have occurred in Lloyd's Bank v Duker), not merely unequal treatment (which is inevitable when the beneficiaries are not unanimous). Accepting as I do that the choice as to the extent to which equity confers power on beneficiaries collectively or individually to extinguish pro rata the institution established by the settlor or testator is ultimately a matter of policy, the existing balance struck by decisions over the last century, which the Legislature has not seen fit to alter, is not one which so offends principle or is so out-of-step with other decisions that it should be changed. 85In short, in the absence of actual prejudice in terms of a diminution in value, the mere fact that there is a loss of a measure of control does not prevent Ami from exercising his power. It follows that no House v The King error of principle is demonstrated in the reasoning of the primary judge.

[14]

The remaining ground of appeal 86The first ground of appeal asserted that the primary judge failed to take into account three matters, and did take into account three erroneous conclusions, so as to amount to appellable error in the exercise of discretion. Although not abandoned, this ground was scarcely pressed orally. This ground arose from the Court's second judgment, which was directed to costs and whether the orders (whose form was agreed) should be made. 87Tami complained of the Court having failed to take into account "the first respondent's equivocation about [Hedy's] Zipor shares being required for administration purposes", "the lack of information about the extent of [Hedy's] assets and liabilities" and "the risk to creditors and beneficiaries if s 63 orders were made on the basis of incorrect facts, or on the basis of facts which may never arise". 88The trustee sought advice on the basis that the Zipor shares were not required for administration. That premise will either turn out to be right or to be wrong, although the trustee confirmed in his final submissions that he "continues to be of the view (as presently advised) that he does not require Hedy's Zipor shares for administration purposes"; Tami's response was that he should prove by affidavit how he reached that view. But either way, it does not invalidate the exercise of discretion to give advice in the terms given on the basis sought by the trustee. 89The same is true of the alleged lack of information about the assets and liabilities of Hedy's estate, or any errors in the factual premises. Lord St Leonards' goal of providing a cheap and speedy method to assist trustees is reflected in the rules of court that evidence is not required (instead advice is given on a statement of facts) and would be frustrated if a more formal approach were necessary. 90It is not necessary for the Court to determine factual matters on an application for judicial advice. It is for the Court to assist the trustee by providing guidance, which if it is followed and there has been sufficient disclosure, will amount to a defence. This is implicit in the structure of the Act, and in particular the deemed discharge of duty which occurs in the absence of fraud or wilful concealment or misrepresentation. I respectfully agree with the statements by the primary judge (second judgment at [8]): "Mr Henley is entitled to put to the Court such statement of facts as he believes to be true, which he asks the Court to assume for the purposes of the advice. If the Court gives advice and the facts turn out to be different, it is Mr Henley who bears the risk of acting upon advice that is not supported by correct facts. That is a matter for him." 91Far from there being any error in principle in proceeding on that basis, the primary judge was correct to do so. 92The first erroneous conclusion of which Tami complained was said to be that the trustee alone would be exposed to risk if section 63 orders were made on the basis of incorrect facts. For the reasons given above, it was correct for the primary judge to proceed on the basis that the point of the exercise was to create a defence to the trustee. The primary judge was dealing with a submission that the agreed form of judicial advice should be delayed until the trustee had provided affidavit evidence of the financial position of Hedy's estate. 93The second challenged conclusion was that it was said to have been erroneous to have regard to the possibility of recovering funds from the beneficiaries if it turned out that that was necessary following the in specie distribution of the Zipor shares. There was no error in having regard to the right "that always remains to executors" 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": Attenborough v Solomon [1913] AC 76 at 85. 94The third challenged conclusion was said to be "that postponing the making of final orders for the purpose of requiring the first respondent to place information before the court concerning the capacity of [Hedy's] estate to fund its present and future liabilities without resorting to the Zipor shares would be far worse than making final orders immediately". The primary judge was well-placed to assess the merit of giving advice on the basis proposed by the trustee, or deferring it on the application of the unsuccessful beneficiary. Tami's submissions provide no articulation of how there was any error in reaching the conclusion his Honour reached, which was well open to his Honour to reach. 95More generally, the exercise of discretion which Tami seeks to attack by her first ground of appeal is not the content of the judicial advice, but merely its timing, and whether it was to be preceded by further information about the financial position of Hedy's estate. There is nothing in Tami's complaints that comes close to House v The King error in respect of this aspect of the primary judge's decision, let alone error satisfying the additional requirements of appellate review of decisions relating to practice and procedure which do not determine substantive rights: The Age Company Ltd v Liu [2013] NSWCA 26; 82 NSWLR 286 at [13].