Belfield v Belfield

Court of Appeal (NSW)|2012-11-09|Before: Campbell JA

Powers of Attorney Act 2003 Suitors Fund Act 1951 Testator's Family Maintenance and Guardianship of Infants Act 1916 Trustee Act 1925 (UK) Trustee (Powers of Attorney) Amendment Act 1983 Cases Cited: Adams v Bank of NSW [1984] 1 NSWLR 285 Belfield v Belfield [2011] NSWSC 1146 Clifford v Mayr [2010] NSWCA 6 Commissioner of Taxation (Cth) v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 Durham v Durham [2011] NSWCA 62 Flinn v Fearne [1999] NSWSC 1041 Gorton v Commissioner of Taxation (Cth) (1965) 113 CLR 604 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 House v R (1936) 55 CLR 499 Kavalee v Burbidge (1998) 43 NSWLR 422 Ord Forrest Pty Ltd v Commissioner of Taxation (Cth) (1974) 130 CLR 124 Robertson v Federal Commissioner of Taxation (1952) 86 CLR 463 Schaeffer v Schaeffer (1994) 36 NSWLR 315 Texts Cited: Ford & Lee, Law of Trusts, Thomson Reuters Hardingham & Baxt, Discretionary Trusts, Butterworths (1975) Jacobs On Trusts, 7th ed (2006) LexisNexis JC Campbell, "Should the 'rule in Hastings-Bass' be followed in Australia? -Trustees' duty to enquire and trustees' mistakes´ (2011) 34 Australian Bar Review 259 P W Young, "Non-Fiduciary Trust Administrators" (2010) 84 Australian Law Journal 668 SEK Hulme QC, "Difficulties in the Use of Trusts in Estate Planning", (1976) 5 Australian Tax Review 134 Category: Principal judgment Parties: Richard Edgar Home Belfield (Appellant) Charles Home Belfield (First Respondent) Kialami Pty Limited (Second Respondent) Taloye Holdings Pty Ltd (Third Respondent) Representation: Counsel: Mr RS Angyal SC (Appellant) Mr L Ellison SC (Respondents) Solicitors: GL Abbott & Co (Appellant) Watson McNamara & Watt (Respondents) File Number(s): 2012/21446 Decision under appeal Citation: Belfield v Belfield [2011] NSWSC 1146 Date of Decision: 2011-10-19 00:00:00 Before: Associate Justice Macready File Number(s): 2010/231284

Nature of the Case 2The late Madge Clarendon Belfield ("the Deceased") died on 16 July 2004 aged 95. Her husband, Edgar Belfield, had died in 1962. They had two children, Richard, born in 1937, and Charles, born in 1944. 3The Deceased left a Will, made in 1990, that appointed Charles as her sole executor and gave him all her net assets. However, probate was never obtained of that Will, because at the time of her death the Deceased had no assets of any significance. 4Section 16(1)(b) of the Family Provision Act 1982 ("FPA") prescribed a period of eighteen months after the death of a deceased person for the bringing of an application under the FPA concerning his or her estate. About four and a half years out of time, in July 2010, Richard began proceedings under the FPA concerning the estate of the Deceased. His contention was that, even though there was no actual estate, there was an asset that should be designated as notional estate, from which provision should be made for him. He obtained a limited grant of administration of the estate of the Deceased to enable those proceedings to continue. Charles came to have the role of resisting Richard's claim. He is the First Respondent to this appeal. 5Macready AsJ dismissed Richard's application: Belfield v Belfield [2011] NSWSC 1146. The primary judge extended the time for bringing of the proceedings and found that Richard was an eligible person, but declined to make the designation of notional estate that Richard sought. The primary judge reached that conclusion because he was not satisfied that there was a "prescribed transaction" within the meaning of s 22 FPA. 6Against the possibility that he was wrong in holding that there was no "prescribed transaction", the primary judge went on to consider whether an order should be made, and if so, the nature and quantum of that order. He found that there were "special circumstances" within the meaning of s 28(5)(d) FPA, and that if there had been notional estate an award "in the order of $300,000" would be appropriate. The appeal has been conducted as though the primary judge had found that $300,000 (exactly) would have been the appropriate award. 7In this appeal, Richard challenges the judge's finding that there was no "prescribed transaction". It is of considerable importance for the usefulness (or lack of usefulness) of these reasons for judgment as a guide for the decision of future cases, to bear in mind the precise reasons why the primary judge held that there was no "prescribed transaction", and the particular challenges that Richard's Notice of Appeal makes to those reasons. 8By a Notice of Contention, Charles challenges the judge's findings that if notional estate had been available provision should have been made for Richard, and that the appropriate quantum of any provision was $300,000. Charles makes no challenge to the primary judge's extension of time, nor to his finding of "special circumstances". 9On the appeal Richard has been represented by Mr R Angyal SC, while Charles and the other respondents have been represented by Mr L Ellison SC.

The Notional Estate Contended for 10Edgar Belfield had owned a rural property known as Kialami, which lies to the west of Armidale. Pursuant to Edgar's Will, title to Kialami was transferred to the Deceased as to a one-fifth share, to Richard as to a two-fifths share and to Charles as to the remaining two-fifths share. 11For some years the Deceased, Richard and Charles carried on a partnership business on that property, but disputes arose, and the partnership was dissolved as at 30 June 1972. There was a division of partnership assets with a cash adjustment, in consequence of which the title to Kialami came to be held by Charles as to a three-fifths share and by the Deceased as to a two-fifths share. 12On 20 November 1978, two trusts were established, known as the "CH Belfield Family Trust No 1" and the "CH Belfield Family Trust No 2". The trustee of each of those trusts was Sandon Nominees Pty Ltd ("Sandon Nominees"). Apart from the names of the trusts, the trust deeds of the trusts were in identical terms. Broadly, each was a discretionary trust, of a type commonly encountered, that aimed to benefit Charles and his family. I will return to certain specific provisions of the trust deeds later. 13Also on 20 November 1978, a document entitled "Deed of Appointment" was entered between Sandon Nominees and the Deceased. In broad terms, Sandon Nominees agreed to act in accordance with directions that the Deceased gave it concerning certain matters connected with the operation of the CH Belfield Family Trust No 1. I will return to the specific provisions of that Deed later in this judgment. 14In March 1979, the Deceased and Charles transferred their respective interests in the Kialami property to Kialami Pty Ltd. Its issued capital was fifty-two shares, twenty of which were owned by Sandon Nominees on trust for the CH Belfield Family Trust No 1, and thirty of which were owned by Sandon Nominees on trust for the CH Belfield Family Trust No 2. The Deceased and Charles each owned one of the remaining shares beneficially, but the parties to the appeal have agreed that these additional two shares can for present purposes be ignored. From 1 May 2007, Taloye Holdings Pty Ltd ("Taloye Holdings"), has succeeded Sandon Nominees to hold twenty shares in Kialami Pty Ltd on trust for the CH Belfield Family Trust No 1. Kialami Pty Ltd is the Second Respondent to this appeal. Taloye Holdings is the Third Respondent to this appeal. 15The asset that Richard sought to have designated as notional estate was the twenty shares in Kialami Pty Ltd that Taloye Holdings held on trust for the CH Belfield Family Trust No 1. In broad terms, Richard's argument was that the Deceased had had the power, pursuant to the Deed of Appointment, to require the beneficial interest in those shares to be dealt with as she directed, including by transfer to herself or Richard, and her failure to give any such direction fell within the definition of "prescribed transaction". At the time of the trial, the Kialami property was valued at $5,670,000. Various debts totalling $1,519,000 were charged upon it, leaving a net equity of $4,151,000. The value of the forty percent beneficial interest that Richard contended lay within the Deceased's power was, thus, approximately $1,660,400.

Designation of Notional Estate 16Section 22 FPA sets out the circumstances in which, so far as presently relevant, a "prescribed transaction" is entered: "Prescribed transactions (1) A person shall be deemed to enter into a prescribed transaction if: (a) ... the person ... omits to do, any act, as a result of which: (i) property becomes held by another person (whether or not as trustee), or (ii) property becomes subject to a trust, whether or not the property becomes in either case so held immediately, and (b) full valuable consideration in money or money's worth for the first mentioned person's ... omitting to do, that act is not given. ... (4) In particular and without limiting the generality of subsection (1), a person shall, for the purposes of subsection (1) (a), be deemed to ... omit to do, an act, as a result of which property becomes held by another person or subject to a trust if: (a) the person is entitled ... to exercise a power to appoint, or dispose of, property which is not in the person's estate but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled and, as a result of the omission to exercise the power and of the person's death or the occurrence of the other event: (i) the property becomes held by another person (whether or not as trustee) or subject to a trust (whether or not the property becomes in either case so held immediately), or (ii) another person becomes (whether or not immediately) or, if the person was previously entitled, continues to be, entitled to exercise the power, ... (5) Except as provided in subsection (6), a prescribed transaction involving the ... omitting to do, an act as referred to in subsection (4) (paragraph (f) excepted) shall be deemed to be entered into immediately before, and to take effect on, the death or the occurrence of the other event referred to in that subsection in relation to that ... omission." 17In construing s 22(4)(a), there is an extended definition of "property" in s 6(1) FPA. "property includes real and personal property and any estate or interest (whether a present, future or contingent estate or interest) in real or personal property, and money, and any debt, and any cause of action for damages (including damages for personal injury), and any other chose in action, and any right with respect to property, and any valuable benefit." 18Further, s 6(7) FPA provides: "A reference in this Act to a person entitled to exercise a power is a reference to a person entitled to exercise the power whether the power is absolute or conditional and whether or not the power arises under a trust, and includes a reference to a person entitled to exercise the power together with one or more other persons, whether jointly or severally."

The Trust Deed of the CH Belfield Family Trust No 1 19Clause 1(c) of the trust deed defined "the Eligible Beneficiaries": ""the Eligible Beneficiaries" shall mean: (i) Charles Home Belfield; (ii) Gillian Ruth Belfield (the wife of Charles Home Belfield); (iii) Samuel Charles Belfield, Juliet Caroline Belfield and Emma Kate Belfield (being the children of Charles Home Belfield and Gillian Ruth Belfield); and further issue of Charles Home Belfield; (iv) The children and further issue of Samuel Charles Belfield, Juliet Caroline Belfield and Emma Kate Belfield; (v) SUBJECT to Clause 8(u) such other person or persons as the Trustee may by Deed nominate PROVIDED such person(s) are alive or in existence at the date hereof or capable of being determined before the Closing Date without infringing the rule against perpetuities and excluding there-from the Ineligible Beneficiaries:" 20Clause 1(d) defined "the Ineligible Beneficiaries" as meaning the Settlor, his executors or administrators and the Trustee. The Settlor was, as often happens with trusts like these, a person who had provided a small amount of money to constitute the initial trust fund, and who appears to have had nothing to do with the trust thereafter. 21Clause 1(e) defined the "Closing Date" as a date ascertained in accordance with a "royal lives" clause, or such earlier date as the Trustee might, consistently with the rule against perpetuities, in its discretion determine. 22Clause 4 provided for the income in each year to be paid to such one or more of the Eligible Beneficiaries then alive as the Trustee in its absolute discretion determined, and to the extent that no such determination had been made, to the Eligible Beneficiaries then living as tenants in common in equal shares. 23Clause 5 conferred on the Trustee an obligation to hold the trust capital at the Closing Date upon trust for such one or more of the Eligible Beneficiaries then living in such proportions as the Trustee in its absolute discretion determined. Clause 6 identified certain male issue of Charles who would take the capital if the Trustee made no such determination. 24Under clause 8(h) the Trustee had power to appropriate any investment towards the beneficial interest of any person in the trust fund. Under clause 8(u) the Trustee had power to advance the Closing Date. 25Clause 10 provided that every discretion or power conferred on the Trustee is an absolute and uncontrolled discretion or power. 26Clause 15 of the trust fund conferred a power to make certain alterations to the trust: "Notwithstanding the trusts powers and provisions herein declared and contained the Trustee may at any time or times during the Trust Period if it shall in its absolute discretion think fit either; (a) Transfer the whole or any part or parts of the Trust Fund (but excluding any part thereof to which any person shall previously have become entitled to an absolute and indefeasibly vested interest in possession) or the income thereof to the trustees or trustee (including the Trustee) of any settlement or trust wherever established or administered, so that upon any such transfer the property so transferred shall be held upon the trusts and with and subject to the powers and provisions declared and contained in the settlement or trust to the trustees or trustee whereof the same is transferred freed and discharged from all the trusts powers and provisions of this Settlement; (b) By Deed alter revoke or add to any of the provisions or powers of this Settlement and make new provisions and powers to the exclusion of or in addition to any of the provisions and powers at the time being in force and any such alteration provocation or addition to the provisions or powers of this Settlement shall be subject in like manner to be altered revoked or added to by a subsequent deed; or (c) By Deed in accordance with paragraph (b) to add further Eligible Beneficiaries under Clause 1(c)(v); PROVIDED ALWAYS as follows; (i) no such transfer alteration revocation or addition shall be made unless the Trustee is satisfied that the same is for the benefit of all or any one or more exclusively of the others or other of the Eligible Beneficiaries herein referred to; (ii) The Ineligible persons [sic] shall by terms of such settlement trust or deed be wholly excluded from any benefit there under; (iii) No such transfer alteration revocation or addition shall offend the rules against the perpetuities or the law relating to the accumulation of income; and (iv) The Trustee may at any time or times during the Trust Period by any revocable or irrevocable deed or deeds wholly or partially release or restrict the powers contained in this Clause.

The Deed of Appointment 27The Deed of Appointment relating to the CH Belfield Family Trust No 1 was between Sandon Nominees (referred to as "the Trustee") and the Deceased (referred to as "the Appointor"). It recited that: "The Trustee is the trustee of the CH Belfield Family Trust No 1 established by Leslie Clarendon Cox by a Settlement made on the 20th day of November One thousand nine hundred and seventy-eight." 28Thus, the Deed of Appointment should be understood as having been executed after the trust deed itself. 29The operative part of the Deed of Appointment was: "1. The Trustee shall and does hereby irrevocably covenant and agree with the Appointor and the legal personal representative of the Appointor that it shall act in relation to any one or more of the matters set forth in the following paragraphs of this Clause and that it shall execute and deliver such deed documents and/or notices relating to any such one or more of the said matters in accordance with any written notice(s) (given by the Appointor or which the Trustee may require the Appointor to give) and which may be served or posted by prepaid post upon or to the Trustee at its registered office signed by Madge Clarendon Belfield, viz (a) That the Trustee shall retire as a Trustee from the C.H. Belfield Family Trust No. 1, (b) That the Trustee prior to its retirement shall appoint such person or persons and/or corporation or corporations to be the Trustee or Trustees for the time being of the said C.H. Belfield Family Trust No. 1 as Madge Clarendon Belfield shall nominate, (c) That the Trustee shall exercise the rights conferred upon it in relation to the appointment of new Trustees under the provisions of the Trustee Act, 1925 as amended in such manner as Madge Clarendon Belfield shall direct, and (d) That the Trustee shall exercise any discretions and powers conferred upon it under the said Settlement in such manner as Madge Clarendon Belfield shall direct." 30The Deed of Appointment also provided: "4 Any notice given pursuant to this Deed by Madge Clarendon Belfield may be given by Madge Clarendon Belfield personally or by a duly authorised attorney or agent AND Madge Clarendon Belfield shall be entitled to (either by deed or will) delegate the rights powers and privileges granted to her pursuant to this Deed to any such person or persons and/or corporation or corporations as Madge Clarendon Belfield may think fit."

The Deceased's Capacity 31From 1995, the Deceased's behaviour gave rise to a suspicion that she might have been suffering from the onset of dementia. In 1996, following a medical assessment, the Deceased moved into the high care dementia section of a retirement village. In late 2000 to 2001 the Deceased was admitted to a nursing home, from which time her dementia increased dramatically. The primary judge found that "from the end of 2000 or the beginning of 2001 ... the Deceased suffered from severe dementia" ([88]). There is no appeal against that factual finding. 32Further, the primary judge held that the onus was on Richard to establish that, at any particular time, the Deceased had capacity to exercise the powers given under the Deed of Appointment. The judge was not satisfied that (seemingly, in the period from the end of 2000 or the beginning of 2001 until her death) the Deceased was capable of addressing the matters to be considered in exercising powers under the Deed of Appointment, and thus his Honour was not satisfied that during the period she had the legal capacity to exercise those powers. Further, he held that, by reason of her lack of capacity, during that period the Deceased was not "entitled ... to exercise a power to appoint or dispose of, property" within the meaning of s 22(4)(a) FPA. He held that her coming to lack capacity was "the occurrence of any other event" within the meaning of the words "before the person ceases (by reason of death or the occurrence of any other event) to be so entitled" within the meaning of s 22(4)(a). Similarly, her coming to lack capacity was "the occurrence of the other event", within the meaning of s 22(5) FPA. 33It followed that, even if the Deceased's power under the Deed of Appointment had meant that she was once "entitled to exercise a power to appoint, or dispose of, property which is not in the person's estate" any prescribed transaction resulting from her failure to exercise that power would, pursuant to s 22(5), be deemed to be entered into at a time more than three years before her death. 34The significance of that three year period arises as follows. Section 23 FPA sets out matters of which the Court must be satisfied before it can make an order designating property as notional estate of a deceased person. One of those matters is: "(b) that, at any time before death, the deceased person entered into a prescribed transaction: (i) which took effect within the period of 3 years before death and was entered into with the intention, wholly or in part, of denying or limiting, wholly or in part, provision for the maintenance, education or advancement in life of that or any other eligible person out of the deceased person's estate or otherwise, (ii) which took effect within the period of 1 year before death, and was entered into at a time when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education and advancement in life of that or any other eligible person which was substantially greater than any moral obligation of the deceased person to enter into the prescribed transaction, or (iii) which took effect or is to take effect on or after the death of the deceased person, the Court may, subject to sections 26, 27 and 28, make an order designating as notional estate of the deceased person such property as it may specify, being property which is held by, or on trust for the disponee or, where there is more than one disponee, any of the disponees, whether or not that property was the subject of the prescribed transaction." 35Presumably because of the way the case was argued in the court below, the reasons for judgment paid attention only to the largest possible time before the death of a deceased person within which a prescribed transaction could take effect before the court could make an order designating property as notional estate, namely, that the prescribed transaction took effect within three years before the death of that person. There was no finding about whether any prescribed transaction that might have taken effect within three years before the death of the Deceased had been entered with the intention of denying or limiting provision for Richard or anyone else out of a deceased's estate. 36The absence of that finding was of no importance because, if attention was confined to the power of the Deceased to exercise in person rights under the Deed of Appointment, the onset of the Deceased's incapacity would have had the effect that any prescribed transaction resulting from her failing to exercise powers under the Deed of Appointment would have occurred too early to have enabled the court to make an order designating any notional estate of the Deceased. No appeal is brought from this aspect of the primary judge's reasoning.

The Power of Attorney 37However, on 20 April 1995 the Deceased had executed an enduring power of attorney, appointing Charles as her attorney. Part of Mr Angyal's argument for there having been a "prescribed transaction" was that, during such time as the Deceased lacked the capacity to exercise in person the powers given to her by the Deed of Appointment, it remained open to Charles to exercise those powers on her behalf, pursuant to the power of attorney. Mr Angyal submitted that the failure of the Deceased to exercise powers under the Deed of Appointment, and the failure of Charles to exercise those powers pursuant to the power of attorney, continued right up to the time of the Deceased's death. He submitted that both ss 23 (b)(ii) and (iii) FPA would apply, and would provide a route to the designation of notional estate once the prescribed transaction was found. Mr Ellison did not contest the proposition that one or other of those provisions would apply if Charles was entitled to exercise, pursuant to the power of attorney, the powers under the Deed of Appointment. However, Mr Ellison disputed that Charles was entitled to exercise any of those powers pursuant to the power of attorney. He submitted that the primary judge had been correct in holding that s 163B(2)(a) Conveyancing Act 1919 prevented Charles from exercising those powers. 38Section 163B Conveyancing Act, as in force during the three years immediately before the death of the Deceased, provided: "(1) Subject to this section, an instrument (whether or not under seal) in or to the effect of the form in Schedule 7 confers on the attorney thereby appointed authority to do on behalf of the person executing the instrument anything the person executing the instrument may lawfully authorise an attorney to do." "(2) The authority conferred by an instrument referred to in subsection (1) does not include: (a) authority to exercise or perform any power, authority, duty or function as a trustee conferred or imposed on the person executing the instrument, or (b) unless it is expressly conferred by the instrument - authority to execute an assurance or other document, or do any other act, as a result of which a benefit would be conferred on the attorney appointed by the instrument." 39Though s 163B was repealed upon the coming into effect of the Powers of Attorney Act 2003, the transitional provisions of that Act have the effect that s 163B continues in force with respect to this particular power of attorney. 40The power of attorney was in the form prescribed by Schedule 7 of the Conveyancing Act. The terms of the power of attorney echoed the language of s 163B(1), stating that it conferred on Charles: "... the authority conferred on him by s 163B of the Conveyancing Act 1919 to do on my behalf anything I may lawfully authorise an attorney to do." It was not subject to any conditions or limitations. It included the provision that it was given "with the intention that it will continue to be effective notwithstanding that after its execution I suffer loss of capacity through unsoundness of mind".

Submissions and Findings in the Court Below 41The particular way in which Richard contended, in the court below, that there had been a prescribed transaction was that the Deceased (either in person, or by Charles as her legal attorney) had until the time she died, power, pursuant to the Deed of Appointment to require the Trustee of the CH Belfield Family Trust No 1 to: "(a) nominate either the plaintiff or the deceased as an eligible beneficiary; (b) pay income or appropriate trust property including 20 shares in Kialami Pty Ltd in favour of the plaintiff or the deceased; and (c) bring forward the closing date and thereupon hold the capital including 20 shares in Kialami Pty Ltd on trust for the plaintiff and/or the deceased in such proportions as she shall direct." and that she failed to exercise any of those powers. 42No specific challenge was made, either in the court below or in this Court, to the validity of the Deed of Appointment. Nor was there a challenge in either court to whether, assuming the validity of the Deed of Appointment, the power that the Deceased had pursuant to the Deed of Appointment was in principle the type of power the non-exercise of which could give rise to a "prescribed transaction". However, it is in accord with an earlier decision in this Court that it is. In Kavalee v Burbidge (1998) 43 NSWLR 422, a Mr Hyland had procured the establishment of a stiftung in Liechtenstein, an institution whose name is sometimes translated as "foundation", that is neither a trust nor a company. Mr Hyland had arranged for substantial assets to be transferred to it. The "Founder" of the stiftung had the right to decide how the assets of the stiftung would be disposed of. The Founder was a Swiss firm. Mr Hyland had the right to compel an officer of the Founder to require the Founder to act as Mr Hyland directed. Mason P (Meagher JA agreeing) held, at 451, that this indirect means of deciding how the property of the stiftung should be dealt with counted as a "power to ... dispose of property" within the meaning of s 22(4)(a). He held, at 451, that a "power ... to dispose of property" is not a technical term of law, and "must mean something more than a traditional power of appointment". It follows from Mason P's remarks that any legal rights the exercise of which can achieve the result that property is disposed of can count as a "power to ... dispose of property". It is unnecessary to consider whether a practical ability to achieve the result that property is disposed of can be a "power to ... dispose of property" if the result is achieved other than through the exercise of legal rights. 43Furthermore, Mason P held at 453-454 that s 22(4)(a)(ii) was satisfied. The particular words in s 22(4)(a) that were satisfied, were "as a result of the omission to exercise the power and of the person's death ... another person becomes ... or, if the person was previously entitled, continues to be, entitled to exercise the power". The way the words were satisfied was because, as a result of Mr Hyland's omission to exercise the power and of his death, the Founder continued to be entitled to exercise the power. There was a causal relationship between Mr Hyland's omission to exercise the power and the Founder continuing to be entitled to exercise the power because, had Mr Hyland exercised his power during his lifetime to require assets to be distributed from the stiftung, the Founder would not have had the power to distribute those assets after Mr Hyland's death because the stiftung would no longer own them. Analogously in the present case, the right of the Deceased to compel the Trustee to act in accordance with her wishes to distribute property of the trust would count as a "power to ... dispose of property" within the meaning of s 22(4)(a), and as a result of her death and her omission previously to exercise the power the Trustee continued to be entitled to exercise the power. 44Charles advanced three separate submissions in the court below why Richard's arguments that there was a "prescribed transaction" were incorrect. The primary judge summarised those as being: "(a) Pursuant to clause 15 of the trust deed, the addition of any other beneficiary must be for the benefit of one of the then eligible beneficiaries and it is not. (b) Alternatively, the deceased became incapable by reason of her dementia more than three years before her death and therefore she ceased to be "entitled" to exercise the power of appointment. (c) It is no answer to the deceased's incapacity to rely on the existence of the enduring power of attorney to Charles as any use of the power of attorney would be exercising the power of a trustee contrary to s 163B(2)(a) of the Conveyancing Act 1919." 45The primary judge rejected the first of those submissions. He approached the submission on the basis that the Deed of Appointment took effect under proviso (iv) of clause 15 of the trust deed (judgment [76]), and that the Deed of Appointment was valid and within the terms of the trust deed (judgment [78]). He appears to have proceeded on the basis that there could be circumstances in which it would be for the benefit of one of Charles' children (who is clearly an Eligible Beneficiary) to appoint property to the Deceased, and thus it could not be said that an exercise of the Deed of Appointment to require the Trustee to add the Deceased as an Eligible Beneficiary, and appoint property to her, would be outside the scope of the transactions permitted under the trust deed. 46The Notice of Contention does not challenge the correctness of any of those propositions. 47As already mentioned, the judge accepted the second of Richard's submissions, and there is no challenge to his having done so. 48The judge also accepted the third of Richard's submissions. In substance, the sole ground of the Notice of Appeal is that the primary judge should have rejected the submission. 49Mr Ellison submits that, regardless of whether the judge was right in rejecting the third of Richard's submissions, the judge's finding that the Deceased became incapable of exercising any power under the Deed of Appointment more than three years before her death was sufficient to justify the dismissal of Richard's summons. I do not accept that submission. The judge's finding was, in substance, that if there had been no power of attorney the incapacity of the Deceased would have had the effect that any "prescribed transaction" occurred more than three years before the Deceased's death. However, it remained necessary to decide whether the existence of the enduring power of attorney altered that situation, because Charles remained entitled to exercise the powers that the Deceased had had under the Deed of Appointment. The judge found that the power of attorney did not authorise Charles to exercise those powers. The summons was dismissed because of the combined effect of the Deceased having lost her capacity to act personally under the Deed of Appointment more than three years before her death, and the power of attorney not authorising Charles to exercise those powers after the Deceased had lost capacity. 50The reason why the primary judge held that the power of attorney did not authorise Charles to exercise the power of the Deceased to give directions to the Trustee was because the Trustee was bound to follow those directions, that "in effect the deceased had the power to exercise the functions in the trust deed" ([102]), and that s 163B(2)(a) prevented Charles from exercising any such power. The question for decision in the appeal is whether the legal right of the Deceased under the Deed of Appointment to require the Trustee to deal with the trust assets in a particular way counts as authority to act "as a trustee" within the meaning of s 163B(2)(a). In my view it does not.

Meaning of "as a trustee" in Section 163B(2)(a) 51There is no extended definition of the word "trustee" or of the phrase "as a trustee" contained in s 163B(2)(a), that could assist in coming to understand its meaning. To make matters worse, there is some semantic ambiguity in the phrase "as a trustee" in s 163B(2)(a). In ordinary English, one can exercise a power "as a trustee" if one exercises the power in the manner a trustee exercises it. If "as a trustee" were interpreted in that way, it might cover many exercises of power by a fiduciary who was not a trustee. It is likewise in accordance with ordinary English to say that one exercises a power "as a trustee" if one exercises the power in the capacity of (ie, because one is) a trustee. If it were interpreted in that way, it could cover only powers that a trustee has, by virtue of being a trustee. 52That ambiguity makes it of particular importance to consider the purpose of the introduction of the provisions in the Conveyancing Act dealing with enduring powers of attorney, and in particular the purpose sought to be achieved by excluding from the wide powers conferred by a general-form power of attorney "authority to exercise or perform any power, authority, duty or function as a trustee". The English Model 53Section 163B was introduced into the law of New South Wales by the Conveyancing (Powers of Attorney) Amendment Act 1983. That legislation was strongly influenced by earlier law reform in England that began with a report of the Law Commission of England, in September 1970, concerning powers of attorney (Law Com. No 30). One of the topics dealt with in that report concerned powers of attorney given by trustees. It is elementary that powers or functions that a person has by virtue of being of a trustee could be delegated only under an express power to delegate contained in the trust instrument, or by virtue of a power contained in legislation, or to do ministerial acts involving no exercise of discretion, or where in common business usage a person would employ an agent whose ordinary business it was to do acts of the type delegated to that agent: Jacobs On Trusts, 7th ed (2006) LexisNexis at [1723]: JC Campbell, "Should the 'rule in Hastings-Bass' be followed in Australia? -Trustees' duty to enquire and trustees' mistakes´ (2011) 34 Australian Bar Review 259 at 271-272. 54Section 25 of the Trustee Act 1925 (UK) enabled a trustee who intended to remain out of the United Kingdom for a period exceeding one month to delegate any of his powers or discretions by a power of attorney. The Report, at [11]-[16], suggested that this procedure had inadequacies, including that it operated only when the trustee was intending to be abroad for more than one month, that a separate power of attorney needed to be executed each time the trustee proposed to go abroad, and that there were occasions like illness of the trustee, or the trustee being in a remote part of the UK, when there would be the same practical desirability of a trustee being able to delegate when the trustee was in the UK as when he was abroad. The recommendation in [19]-[24] was that the trustee should be able to delegate any of his powers by a power of attorney, up to a maximum period of time, "so long as he notifies in writing (a) the person or persons entitled to appoint new trustees, and (b) his co-trustees, if any." Clause 8 of a draft Bill annexed to the Report was a draft of legislation to give effect to that recommendation. 55Another topic considered by the Report was whether powers of attorney could be standardised, simplified and given greater certainty. At the time of writing that Report it was common for powers of attorney to be pages long, and to seek to list, somewhat in the fashion of the memorandum of association of a company, every type of transaction into which the attorney was authorised to enter. Inevitably, that sometimes gave rise to doubts about whether a transaction that the attorney proposed to enter fell within one of the types of transaction that the power of attorney listed. Concerning a proposal that a simple statutory form of power of attorney be authorised, the Commission Report said, at [39]: "We have concluded that the best way to achieve the objective of having a statutory form of general power which would avoid argument as to the extent of the authority conferred would be to provide in the Act itself that a power in the statutory form should confer on the attorney authority to do on behalf of the donor anything which the donor can lawfully do by an attorney. The power itself can then be a very simple one-paragraph document referring to the relevant section of the Act. This in our view will quieten argument more effectively than any general words in the power itself (which, as experience shows, people are reluctant to take at their face value) or a long string of specific clauses which can never be all-embracing. It will enable the attorney to say firmly: 'I can do anything that the donor could do; the Act says so'. This one exception must be in respect of the donor's powers and discretions as a trustee. It is already recognised as the better practice in such a case to refer specifically to the trusts concerned and it is thought that this practice should be encouraged and that the statutory form should not embrace a delegation of this sort. Under our foregoing recommendations attention will have to be directed to the particular trusts involved since the delegation will be effective only if the requisite notices are given."(emphasis added) 56Clause 9 of the draft Bill annexed to the Report was: "(1) Subject to subsection (2) of this section, a general power of attorney in the form set out in Schedule 1 to this Act, or in a form to the like effect, shall operate to confer- (a) on the donee of the power; or (b) if there is more than one donee, on the donees acting jointly or acting jointly or severally, as the case may be, authority to do on behalf of the donor anything which he can lawfully do by an attorney. (2) This section does not apply to functions which the donor has as a trustee or personal representative or as a tenant for life or statutory owner within the meaning of the Settled Land Act 1925." 57The Explanatory Note to that proposed clause said: "2. Accordingly subsection (1) provides that a power in the form set out in the Schedule operates to confer authority to do anything that the donor could lawfully do by an attorney. In general this means everything that the donor could do in his own person. But there are some acts which, under English law, can only be done personally and not by an agent, for example marrying in England where marriage by proxy is not permitted. ... 4. Subsection (1) is expressly subject to subsection (2) which makes it clear that the statutory power of attorney does not cover the delegation by a trustee, personal representative or statutory owner of his discretions under section 25 of the Trustee Act 1925 (as proposed to be amended by clause 8 of this Bill): see paragraph 39 of the Report. 58That Report led to the enactment of the Powers of Attorney Act 1971 (UK), s 9 of which, as originally enacted, provided: "(1) Section 25 of the Trustee Act 1925 (power to delegate trusts etc., during absence abroad) shall be amended as follows. (2) For subsections (1) to (8) of that section there shall be substituted the following subsections- '(1) Notwithstanding any rule of law or equity to the contrary, a trustee may, by power of attorney, delegate for a period not exceeding twelve months the execution or exercise of all or any of the trusts, powers and discretions vested in him as trustee either alone or jointly with any other person or persons. (2) The persons who may be donees of a power of attorney under this section include a trust corporation but not (unless a trust corporation) the only other co-trustee of the donor of the power. (3) An instrument creating a power of attorney under this section shall be attested by at least one witness. (4) Before or within seven days after giving a power of attorney under this section the donor shall give written notice thereof (specifying the date on which the power comes into operation and its duration, the donee of the power, the reason why the power is given and, where some only are delegated, the trusts, powers and discretions delegated) to- (a) each person (other than himself), if any, who under any instrument creating the trust has power (whether alone or jointly) to appoint a new trustee; and (b) each of the other trustees, if any; but failure to comply with this subsection shall not, in favour of a person dealing with the donee of the power, invalidate any act done or instrument executed by the donee. (5) The donor of a power of attorney given under this section shall be liable for the acts or defaults of the donee in the same manner as if they were the acts or defaults of the donor.' (3) Subsections (9) and (10) of the said section 25 shall stand as subsections (6) and (7) and for subsection (11) of that section there shall be substituted the following subsection- '(8) This section applies to a personal representative, tenant for life and statutory owner as it applies to a trustee except that subsection (4) shall apply as if it required the notice there mentioned to be given- (a) in the case of a personal representative, to each of the other personal representatives, if any, except any executor who has renounced probate; (b) in the case of a tenant for life, to the trustees of the settlement and to each person, if any, who together with the person giving the notice constitutes the tenant for life; (c) in the case of a statutory owner, to each of the persons, if any, who together with the person giving the notice constitute the statutory owner and, in the case of a statutory owner by virtue of section 23(1)(a) of the Settled Land Act 1925, to the trustees of the settlement.' (4) This section applies whenever the trusts, powers or discretions in question arose but does not invalidate anything done by virtue of the said section 25 as in force at the commencement of this Act." 59Section 10 of the Powers of Attorney Act 1971 (UK), as originally enacted, provided: "Effect of general power of attorney in specified form (1) Subject to subsection (2) of this section, a general power of attorney in the form set out in Schedule 1 to this Act, or in a form to the like effect but expressed to be made under this Act, shall operate to confer - (a) on the donee of the power; or (b) if there is more than one donee, on the donees acting jointly or acting jointly or severally, as the case may be, authority to do on behalf of the donor anything which he can lawfully do by an attorney. (2) This section does not apply to functions which the donor has as a trustee or personal representative or as a tenant for life or statutory owner within the meaning of the Settled Land Act 1925." 60The purpose of s 10 of the UK legislation was thus that in most circumstances a short form power of attorney should be effective to delegate authority to perform every conceivable act that the person granting the power of attorney could perform. However, concerning actions that a person could perform by way of administering a trust, such a general power of attorney should not be effective. Rather, a special form of delegation should be required when powers that a person has by virtue of being a trustee are delegated, because the delegation should be effective only if specific notice of it is given to the persons entitled to appoint new trustees, and the co-trustees. Thus in the English legislation, when s 10(2) uses the phrase "functions which the donor has a trustee", it means functions that he has in the capacity of holding the office of trustee. The New South Wales Adaptation 61In New South Wales, the Law Reform Commission produced a report in June 1974 on powers of attorney (LRC 18). Appendix D to that Report was a Working Paper that the Commission had produced in April 1973. At [165], the Working Paper set out the text of s 10 of the Powers of Attorney Act 1971 (UK). The Commission said, at [175]: "We believe that no short form should confer on the donee authority to discharge a function which the donor has as a trustee or legal personal representative (Powers of Attorney Act 1971 (UK), s 10(2)). The office of trustee or legal personal representative attracts such special duties and responsibility that in our view its delegation always demands particular consideration of the terms in which the delegation is to be made." 62Notwithstanding that remark in the Working Paper, the draft of a new s 163B Conveyancing Act, contained in the Report, made no mention of any exemption of powers as a trustee. 63The Working Paper, at [176], said it made no specific proposals for a statutory form of power of attorney, but invited the views of interested persons. However, by the time the recommendations of the Law Reform Commission came to be enacted, the English model for a short-form power of attorney was followed, including its exception relating to exercise of powers, etc, "as a trustee". 64When the Bill for the Conveyancing (Powers of Attorney) Amendment Act was given its Second Reading Speech in the Legislative Council, the Minister, Mr Walker, explained that its purpose was to: "... provide for the operation of a statutory short form power of attorney conferring on the attorney authority to do on behalf of the principal anything that principal may lawfully authorize [sic] an attorney to do." (Hansard, 9 March 1983, p 4411) 65At the time of introduction of the 1983 amendments in New South Wales, the power of a trustee to delegate was circumscribed. Section 64 Trustee Act 1925 allowed a trustee who was absent from New South Wales or about to depart therefrom, to delegate the execution of the trust by a registered deed. The deed required the consent of his co-trustee or co-trustees (if any) and anyone else who was empowered to appoint trustees. Only a limited class of people could be appointed as a delegate of the trustee - the public trustee, a trustee company, or a person residing in New South Wales who is either a co-trustee or is capable of being appointed a trustee of the trust. A trustee who delegated his trust remained liable for any breaches of trust committed by the delegate. The power to delegate could be exercised only if there was no contrary intention in the instrument creating the trust. Further, any such delegation could not operate beyond two years from the date of the deed by which the delegation was effected. 66Another Bill that travelled through Parliament with the Bill that led to the 1983 amendments to the Conveyancing Act, became the Trustee (Powers of Attorney) Amendment Act 1983. It amended the Trustee Act by altering some references in it to sections of the Conveyancing Act that had been amended or added by the 1983 amendments to the Conveyancing Act, but did not follow s 9 of the English model by expanding the circumstances in which statute permitted a trustee to delegate. 67In light of this history, and the existing law concerning delegation by trustees, it is clear that the purpose sought to be achieved by s 163B(2) was the same as that of s 10(2) of the English legislation. It was to enable a simple form of power of attorney to be effective in all circumstances, apart from the exception contained in s 163B(2)(b) (a New South Wales addition to the English model), and except when the power of attorney purports to delegate any power, authority, duty or function that a person has by virtue of occupying the office of a trustee Purpose of Notional Estate Provisions in FPA 68That purpose is to be contrasted with the purpose of introduction of the notional estate provisions of the FPA. Under the predecessor of the FPA, the Testator's Family Maintenance and Guardianship of Infants Act 1916, the power of a court to make provision for the spouse or children of a person who had died leaving them without adequate provision, either under the will or upon intestacy, was confined to distribution from assets that the deceased owned at the time of death. That left open the possibility that a person could seek to prevent the court from making any order for provision by giving away assets before they died, or by transferring assets into a structure over which that person had a measure of practical control, even though they lacked actual ownership of the assets. The notional estate provisions of the FPA were designed to enable the court to make provision for the dependents of a deceased person in certain circumstances such as these. 69Concerning the construction of s 22 FPA, Mason P said in Kavalee v Burbidge at 441: "It is obvious that the legislature has cast the net very wide, in pursuit of its goal of providing adequate provision in favour of eligible persons. As beneficial legislation, a liberal approach to construction is called for, notwithstanding the obvious impact of a designating order upon existing property rights: see Wentworth v Wentworth (Court of Appeal, 16 December 1991, unreported) at 45, per Priestley JA; Schaeffer v Schaeffer (1994) 36 NSWLR 315 at 319-320." 70The passage in Schaeffer v Schaeffer (1994) 36 NSWLR 315 to which Mason P referred was a statement by Handley JA (Kirby P and Sheller JA agreeing) that schemes involving a transfer of value of assets upon death were well known, as a means of avoiding death duties, at the time the FPA was enacted in 1982 - eg Robertson v Federal Commissioner of Taxation (1952) 86 CLR 463; Gorton v Commissioner of Taxation (Cth) (1965) 113 CLR 604; Ord Forrest Pty Ltd v Commissioner of Taxation (Cth) (1974) 130 CLR 124 and Commissioner of Taxation (Cth) v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336. As Handley JA explained it at 319-320: "Such schemes enable their users to control a company, its assets and income until their death while ensuring that the benefits they enjoyed in their lifetime then pass to persons of their choice independently of their testamentary dispositions and transmissible property. In such cases the articles of the company have the same practical effect as either a will or a settlement by the deceased reserving a life interest to himself. Robertson and Gorton schemes were so common and so notorious in the years prior to 1982 that it is impossible to believe that this legislation was not intended to cover them. Indeed the report of the New South Wales Law Reform Commission (LRC 28 1977) which led to the passing of this Act establishes the existence of a close association between the notional estate provisions of this Act and the existing notional estate provisions in the Stamp Duties Act 1920 introduced to counter death duty avoidance." 71Similarly, when the FPA was enacted in 1982, it was common and well known that there were significant advantages for a person with some capital (who I will call the instigator) to arrange the setting up of a family trust, with a structure like that of the present trust deed. Common features of such trusts were that the trust was established by a settlor who was not the instigator or someone the instigator wished to benefit, the eligible beneficiaries were relatives by blood or marriage of the instigator, and there could be a discretionary allocation of income each year amongst eligible beneficiaries and ultimately a discretionary allocation of capital amongst eligible beneficiaries. Other common features were that there was power to alter the eligible beneficiaries, certainty achieved by provisions stating where income, and capital respectively would be distributed in default of a specific allocation of income or capital, and distribution of capital delayed for as long as permissible under the rule against perpetuities but with a discretionary power to advance the distribution date: see, eg, Hardingham & Baxt, Discretionary Trusts, (1975) Butterworths. Those discretions were usually conferred on the trustee of the trust. Such trusts enabled an instigator who was concerned to provide for a family, usually a parent or grandparent, to arrange for assets that they had accumulated to be made available to different members of the family as the need for money presented itself. Such trusts also had the effect of lessening the impact of death duties, while death duties remained in force in Australia, and of lessening the impact of income tax on the members of a family unit considered collectively, by enabling income to be appointed to those members of a family who had a lower marginal rate of taxation. 72While it was far from universal, it was by no means uncommon for such trusts to be associated with a device whereby the instigator achieved at least some practical control or influence over the decisions the trustee made. Sometimes this was done by a document that was not part of the trust deed, and was often kept secret from the beneficiaries, called a "memorandum of wishes". In such a document, the instigator made known to the trustee certain guidelines that he or she wished the trustee to observe in exercising its discretion. That expression of wishes was usually not legally binding on the trustee, and the instigator acted in the hope that the trustee would act in accordance with that memorandum of wishes: eg Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405, which concerned a trust established in 1971. Sometimes, however, an instigator placed capital into a structure that enabled the instigator to have legal rights, not merely hope, that his or her wishes concerning what was done with the property would be carried out. The stiftung that gave rise to Kavalee v Burbidge was created in 1971 and in practice the legal rights associated with it gave Mr Hyland a power to dispose of its property. 73One device that has come to be used sometimes is to create a discretionary family trust that has an office, separate to that of the trustee, which is commonly called by a name such as "protector" or "guardian": P W Young, "Non-Fiduciary Trust Administrators" (2010) 84 Australian Law Journal 668; Jacobs on Trusts, 7th ed (2006) LexisNexis [320]; Ford & Lee, Law of Trusts, Thomson Reuters para [12.250], [5.12170], [8180]. Such devices were well known before 1982 to Australian lawyers who practiced in trusts and estate planning: eg SEK Hulme QC, "Difficulties in the Use of Trusts in Estate Planning", (1976) 5 Australian Tax Review 134 at 143. Commonly, a trustee who is proposing to exercise a discretionary power is required to give the "protector" or "guardian" a particular period of notice before that power is actually exercised. If the "protector" or "guardian" disapproves of that decision, the "protector" or "guardian" has the power to remove the trustee and replace it with another whose opinions are more in accord with those of the "protector" or "guardian". Alternatively, the "protector" or "guardian" could be given a power of veto of decisions of the trustee. As well, other powers could be conferred on a "protector" or "guardian". When there is any such arrangement, it will require a close analysis of the terms of the particular trust documentation to decide whether the powers of the "protector" or "guardian" add up to "a power to appoint, or to dispose of, property", within the meaning of s 22 FPA, and thus whether the failure of the "protector" or "guardian" to exercise any of those powers can give rise to a prescribed transaction. 74We were referred to the decision of Master McLaughlin (as he then was) in Flinn v Fearne [1999] NSWSC 1041. Flinn concerned a family trust under which the instigator was called the Nominator. He had power under the trust documentation to remove the trustee and appoint a replacement trustee, and power to designate the "nominated beneficiaries" from the "eligible beneficiaries". As well, the power of the trustee to dispose of capital could be exercised only with the consent of the Nominator. The Master held that the failure of the deceased before his death to cause the corpus of the trust assets to be transferred to himself did not constitute a prescribed transaction. The argument seems to have concentrated particularly on the power of the Nominator to replace the trustee. It is not possible to identify, from the reasons for judgment, the full range of the powers of the Nominator. I do not find the decision helpful in resolving the present case, because it depends upon the terms of the particular trust documentation, which are not fully revealed by the reasons, and in any event there is no challenge in the present case to whether the exercise of powers under the Deed of Appointment was capable of giving rise to a prescribed transaction: the only challenge was to whether the power of attorney enabled Charles to exercise those powers. 75The Deed of Appointment in the present case, executed in 1978, demonstrates that arrangements whereby an instigator sought to have legal rights to control decisions of the trustee of a family discretionary trust were known at the time of enactment of the FPA. The terms of the deed of trust and Deed of Appointment in the present case differed from the usual arrangements for a "governor" or "protector" in that the powers accorded to the Deceased were contained in a separate document, rather than in the trust deed itself. There was a further difference from the more common arrangements concerning a "guardian" or "protector" in that under the Deed of Appointment the Trustee abandoned its discretion to make up its own mind concerning disposition of trust income and capital in any case where the Deceased directed it how to exercise a discretion. On its face, the Deed of Appointment purports to give the Deceased legal rights to direct the Trustee concerning topics that include how and when the Trust fund is distributed. Assuming its validity, as we must within the scope of the issues raised on this appeal, that arrangement is within the purpose of the notional estate provisions of the FPA. It could be said that it is within the purpose of those provisions (as well as the words of s 22 FPA) because it puts the Deceased into the practical position of exercising the powers of the Trustee. However, in contrast, the exception that s 163B(2)(a) Conveyancing Act creates to the full efficacy of a general form power of attorney does not depend on the practical position that can be achieved by the exercise of powers. It depends solely on whether the power that is purportedly delegated is one that the delegator has by virtue of being a trustee. The powers that the Deceased had under the Deed of Appointment are not ones that the Deceased had by virtue of being a trustee. Particular Textual Arguments 76Whether powers purportedly delegated are ones "as a trustee" must depend on a close analysis of the particular documentation that is involved in the case. Mr Angyal submitted that there were four reasons why the power that the Deceased had under the Deed of Appointment was not a power to act "as a trustee": "The first reason is that the Deed of Appointment was not a deed of trust capable of conferring power as a trustee on the deceased, for several reasons: a. It was entitled "Deed of Appointment". b. It did not purport to create a trust. c. It did not appoint a trustee. d. There was no trust property. e. While it conferred powers on the deceased, it did not impose any duties. f. In clause 1, it referred to the C.H. Belfield Family Trust No. 1 as "the Settlement", recognised that Sandon Nominees Pty Limited was the trustee of that trust (established, as his Honour recognised at [63] ... at the same time as the Deed of Appointment) and stated in clause 1 that the trustee would act in accordance with the directions of Mrs Belfield. In particular, it provided in clause 1(d) that: "... the Trustee shall exercise any discretion and powers conferred upon it under the same Settlement in such manner as Madge Clarendon Belfield shall direct". The Deed of Appointment thus was not capable of conferring or imposing on Mrs Belfield any power, authority, duty or function as a trustee. The second reason that the Deed of Appointment did not confer or impose on the deceased any power, authority, duty or function as a trustee is that the powers given to the deceased by the Deed of Appointment were discretionary, not mandatory. In the case of a trust, the trustee must act; a trust in this sense is imperative. By contrast, Mrs Belfield could choose whether or not to exercise the powers given to her by the Deed of Appointment. This indicates that the Deed of Appointment did not confer or impose on the deceased any power, authority, duty or function as a trustee: Re Gulbenkian's Settlements [1970] AC 508 at 524-525; McPhail v Doulton [1971] AC 424 at 456-457. The third reason that the Deed of Appointment did not confer or impose on the deceased any power, authority, duty or function as a trustee was that, under clause 5 of the Deed of Appointment, Mrs Belfield could release all her powers. Had she been a trustee, that would have left the trust without a trustee. This was a strong indication that the Deed of Appointment did not impose any power, authority, duty or function on the deceased as a trustee. The fourth reason is that the Deed of Appointment by clause 1(d) conferred on Mrs Belfield the power to direct the Trustee to: "... exercise any discretions or powers conferred upon it under the said Settlement in such manner as Madge Clarendon Belfield shall direct". The Deed of Appointment thus on its face distinguished between, on the one hand, the powers conferred on the trustee by the trust deed and, on the other hand, the powers conferred on Mrs Belfield by the Deed of Appointment. I accept those submissions.

Notice of Contention 77Richard has been married to Elspeth Belfield since 1967. He has adult children, who are not dependent on him. Elspeth was diagnosed with breast cancer in 1994 and underwent surgery. The judge made the following findings about Richard's financial circumstances: "46 Richard is presently aged 73 years. He is married with no dependent children. He and his wife live on a 180 acre property Kinleigh near Armidale valued at $900,000. He and his wife own the property jointly. He has plant and equipment worth $773, bank accounts of a little over $5,500 and a motor vehicle worth $4,250. He owes $378,005 to his wife and his two children who over the years have been lending him funds. The funds have in the main been reinvested in the Kinleigh property owned by him and his wife. The $378,005 is secured by a mortgage over the property. 47 Richard has an income of $3,254 per month and he estimates his expenses to be $3,638 per month. He no longer does work with the earth moving equipment which he had used most of his working life. He now receives a modest income writing articles about earthmoving. 48 So far as the relationship with the deceased is concerned it is plain that in 1972 there was a substantial break between the plaintiff and the defendant. The deceased refused to become involved and she left her sons to sort out the problem. The deceased continued to live on the property Kialami where Charles and his family also lived. In these circumstances, until his mother moved from the property in 1995, Richard only saw his mother occasionally in that period, although it is not clear in the evidence precisely how often they saw each other. The plaintiff was somewhat evasive on this aspect. He said he saw her more often once she moved into town to the nursing homes but there was no detail given on this aspect. 49 It is clear that there was a complete break in the financial relationship between the parties with the result that the parties compromised their position and accepted the result of that compromise. In these circumstances, it is plain that since then there has been no contribution to the property by the plaintiff. On one or two occasions the plaintiff did some paid work in relation to earth works on Kialami. 50 Apart from having had cancer, Elspeth Belfield was involved in a motor vehicle accident in which she sustained serious injuries. As a result she is not able to work." 78On the hearing of the appeal, Mr Ellison accepted that Richard had made out a case of need. However, he submitted that the lack of contribution by Richard to either the assets, or the welfare of the Deceased was such that no order for provision should have been made. 79In Clifford v Mayr [2010] NSWCA 6, at [67]-[76], I collected authorities concerning the basis upon which this Court conducts appellate review of orders for provision under the FPA. In summary, even though the decision about whether an applicant has been left with provision that is inadequate for his or her proper maintenance, education and advancement in life (the relevant test in s 9(2) FPA) is not a discretionary decision, review of the decision of a primary judge concerning both the jurisdictional question, and the quantum of any provision awarded, should be conducted in accordance with the tests applicable to discretionary judgments. That test is articulated in House v R (1936) 55 CLR 499 at 504-5: "It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 80Charles' written submissions did not identify any wrong principle; any extraneous or irrelevant matter that the primary judge took into account; any mistake that the primary judge made in the facts; or any material consideration that the primary judge had failed to take into consideration. Charles' submission of error, as clarified in argument, was that even though no particular error was identifiable, the result was such that an error must have been made. 81The written submissions contended that there was "really no meaningful mother-son relationship from 1972 until death", that the award of $300,000 was approximately 13.2% of the Deceased's notional entitlement to the real estate, and that able-bodied adult children have no automatic entitlement to an order. All those matters can be accepted. It should be said, however, that a significant reason for the lack of a mother-son relationship was not that there was any personal rift between Richard and the Deceased. Rather it was that the Deceased continued to live on the Kialami property until she moved into the retirement village, and Charles' attitude was that Richard was not welcome at Kialami. There was greater contact between Richard and the Deceased after she moved from Kialami. 82Further, as the primary judge recognised, Richard is no longer an "able-bodied adult", in the sense that expression is usually used in connection with family provision litigation, of someone who is well able to earn enough by his own exertions to provide for his or her needs. His capital position is not strong, his age is such that he is past earning a living income through his own exertions in the way he once did, he cannot look to his wife to earn income to support him, and his own income is inadequate to meet his expenses. The judge recognised, correctly, that the Kialami property had increased in value since 1972 due in large measure to considerable effort on Charles' part. He also recognised that Charles had provided for the Deceased generously, including by providing overseas trips for her each year. He took the view that an order of $300,000 could be met without unduly impacting upon Charles' legitimate expectations of being able to keep and develop the property. In all these circumstances, I am not persuaded that an order of $300,000 would be outside the range of permissible discretionary decisions. 83The grounds identified in the Notice of Contention were: "1 The trial Judge erred in finding that but for the unavailability of notional estate, provision should be made for the Appellant. 2 The trial Judge erred in finding that but for the unavailability of notional estate, provision should be made for the Appellant in the sum of $300,000.00." 84Those grounds lack the specificity that an appellate challenge to an award under the FPA should have: cf Durham v Durham [2011] NSWCA 62 at [74], [84]-[86]. In substance, the Notice of Contention in the present case was nothing more than an invitation for the appeal court to substitute its own discretionary decision for that of the primary judge. More than that is needed to succeed in an appeal against an award under the FPA. 85Because there is no actual estate, and Charles is not even the person who has a limited grant of administration of the estate, it is not possible for the usual order to be made whereby costs of the Respondent on the appeal are paid from the estate. However, in argument the possibility was raised of the Court, in the event that the appeal succeeded, making an order for costs against the Respondents jointly and severally, pursuant to its powers under s 98 Civil Procedure Act 2005. No substantial reason was given why that would not be an appropriate course.

Orders 86The orders I propose are: (1) Appeal allowed. (2) Set aside the orders of Macready AsJ in the court below. (3) Pursuant to s 23 of the Family Provision Act 1982, order that the twenty fully paid ordinary shares in the issued capital of the Second Respondent owned by the Third Respondent as Trustee of the CH Belfield Family Trust No 1 be designated as notional estate of the late Madge Clarendon Belfield to the extent necessary to satisfy orders 4 and 5. (4) Order that the Appellant receive the payment of a legacy in the sum of $300,000 from the notional estate of the late Madge Clarendon Belfield. (5) Order that the Appellant's legacy referred to in order 4 be charged against the shareholding in the Second Respondent held by the Third Respondent. (6) Order that the Respondents pay the Appellant's costs of the proceedings below and of this appeal. (7) Order that the Respondents have a certificate under the Suitors Fund Act 1951, if qualified, concerning the costs of this appeal. 87SACKVILLE AJA: I agree with the orders proposed by Campbell JA and with his Honour's reasons. 88YOUNG AJA: The basic facts and circumstances are well set out in the reasons of Campbell JA and it would be superfluous for me to repeat them except to a minor extent. 89The question before this Court is the proper construction of s 163B of the Conveyancing Act 1919 in force in the period of three years prior to the death of the deceased. 90Section s 163B reads so far as is relevant: (1) Subject to this section, an instrument (whether or not under seal) in or to the effect of the form in Schedule 7 confers on the attorney thereby appointed authority to do on behalf of the person executing the instrument anything the person executing the instrument may lawfully authorise an attorney to do. (2) The authority conferred by an instrument referred to in subsection (1) does not include: (a) authority to exercise or perform any power, authority, duty or function as a trustee conferred or imposed on the person executing the instrument, 91It is also necessary to consider s 22 of the Family Provision Act 1982, the material parts of which for present purposes are as follows: (1) A person shall be deemed to enter into a prescribed transaction if: (a) on or after the appointed day the person does, directly or indirectly, or omits to do, any act, as a result of which: (i) property becomes held by another person (whether or not as trustee), or (ii) property becomes subject to a trust, whether or not the property becomes in either case so held immediately, and (b) full valuable consideration in money or money's worth for the first mentioned person's doing, or omitting to do, that act is not given. . . . (4) In particular and without limiting the generality of subsection (1), a person shall, for the purposes of subsection (1) (a), be deemed to do, or omit to do, an act, as a result of which property becomes held by another person or subject to a trust if: (a) the person is entitled, on or after the appointed day, to exercise a power to appoint, or dispose of, property which is not in the person's estate but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled and, as a result of the omission to exercise the power and of the person's death or the occurrence of the other event: (i) the property becomes held by another person (whether or not as trustee) or subject to a trust (whether or not the property becomes in either case so held immediately), or (ii) another person becomes (whether or not immediately) or, if the person was previously entitled, continues to be, entitled to exercise the power, . . . (c) holding an interest in property in which another interest is held by another person (whether or not as trustee) or is subject to a trust, the person is entitled, on or after the appointed day, to exercise a power to extinguish the other interest in the property but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled and, as a result of the omission to exercise the power and of the person's death or the occurrence of the other event, the other interest in the property continues to be so held or subject to that trust, . . . 92The matters which I consider I need to address are: (a) What materials should I consider when construing s 163B? (b) What do the words "as a trustee" mean in that section? (c) Does the failure to exercise the testator's authority conferred by the deed of appointment result in a prescribed transaction? I must then examine the consequences of the answers to these questions. 93As Campbell JA has pointed out, some basic issues which might be thought to arise cannot be considered by this Court because of the way in which the case was argued. The Court is to deal with the case as presented. Thus, as neither party wished to argue that the Deed of Appointment was invalid, any feeling that I may have that it probably was invalid must be put to one side. 94I have read with awe and interest the draft reasons of Campbell JA. However, with respect, I found it difficult on first reading to accept some of his Honour's conclusions on points along the way and needed to convince myself of the proper outcome of the appeal. I have set my thought process down in the hope that others will find my thoughts of assistance. As will appear, I have reached the position that, in the way the case was presented to us by the parties, the conclusion reached by Campbell JA is the correct one. 95I now turn to the questions which I have posed myself.

(a) What materials should I consider when construing s 163B? 96In order to construe s 163B, his Honour appears to have been influenced by the way in which the English Law Reform body dealt with the problems with enduring powers of attorney. 97Section 34 of the Interpretation Act 1987 permits a court to consider any material which may assist it. Subsection (2)(b) which is expressed not to limit the width of that power specifically refers to Law Reform Commission Reports which are laid before the NSW Parliament. 98Subsection (3) commences as follows: In determining whether consideration should be given to any material, or in considering the weight to be given to any material, regard shall be had, in addition to any other relevant matters, to: (a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision... 99The legislature clearly wished courts to be free of the former shackles which prevented them from looking at helpful material such as the minister's speech introducing the measure to parliament, but also made it clear that it was in the public interest that ordinarily, people should be able to read and understand an Act without recourse to such material. 100I am not at all sure that ordinarily it would be helpful to refer to English law Reform material even if it was referred to by the local Law Reform Commission. One reason for this is that even with local Law Reform Commission Reports, the parliamentary counsel drafting local legislation and the parliament itself do not always follow every line suggestion or line of reasoning put forward by the Commission. Referential material is even one step further removed. 101However, as counsel for the appellant referred to this material based on his reference to an earlier decision in equity and there was no protest by counsel for the respondent, it is legitimate to consider it in the present appeal.

(b) What do the words "as a trustee" mean in that section? 102As Campbell JA points out in [51] there is semantic ambiguity in the expression "as a trustee" in s 163B. (Probably it is better to consider the composite phrase "powers....as a trustee"). Indeed there is ambiguity both with the use of the word "as" and with the use of the word "trustee". 103Campbell JA noted that "As" could mean "because the person occupies the office of trustee" or it could mean "in the same way in which a trustee would act". At [67] he concludes that the former is the position. 104Leaving that thought for the present, what does the word "trustee" mean? 105It is clear for the reasons given by Campbell JA that the deceased was not a trustee in the strict sense. However, does the section use the word "trustee' in the strict sense? 106The word "trustee" is often used in a loose sense to include people like company directors and fiduciary agents. 107During argument I put to counsel that it would be strange if one could appoint an attorney who could make authoritative decisions with respect to a person's role as an executor or administrator of an estate or as a director of a company, but not when he or she was a trustee strictly so called. 108There is also the question of how the section affects a person who is a constructive trustee. 109This problem was not satisfactorily addressed in argument. One answer to it may be that the line has to be drawn somewhere even if there are odd results at the interface. 110The problem also does not appear to have been considered in the Law Reform Commission's reports. 111It seems quite clear that, under the general law, an attorney cannot exercise the donor's office as an executor, administrator or a director. 112It may be that this provides the answer to the problem as s 163B only authorises the attorney to do what the donor could lawfully authorise an attorney to do. As a person cannot delegate his or her powers etc as an executor so he or she cannot use an enduring power of attorney to do so. 113The trouble with this reasoning is that it makes the words "as a trustee" otiose. However, one can say that the words were inserted to make it clear to a lay person that there was at least that exception to the general operation of the section. It also runs contrary to the analysis derived from the Law Reform commissioners in England and NSW. 114Another difficulty is that there are some people who are clearly trustees such as a mortgagee holding surplus proceeds of a mortgagee's sale (Adams v Bank of NSW [1984] 1 NSWLR 285) who would not be considered by lay people to be trustees. If the deceased in this case was a mortgagee in such a position would it be the case that her attorney under power could not decide what to do in and about such surplus? 115However, in the long run, this analysis does not seem to matter as whatever the meaning of the expression "power .... as a trustee" means what the deceased omitted to do had virtually no connection with the powers or functions of a trustee. 116Thus empowering an attorney to give or omit to give omitting to give a direction to a trustee could not in any sense of the phrase be referring to a power or function as a trustee.

(c) Does the failure to exercise the testator's authority conferred by the deed of appointment result in a prescribed transaction? 117As the Deed of Appointment postdates the trust instrument, the deceased's authority could not be a power of appointment strictly so called. A power strictly so called operates by way of shifting use as if the trust deed said "on trust for A but if B exercises her power of appointment in favour of C then on trust for C". This deed cannot operate in that way. 118On the assumption that the Deed of Appointment is valid, its only effect is to give the deceased a contractual right against the trustee. If the trustee disregarded the deceased's direction, it would be liable in damages (though if the trustee was a company with no assets, this would be a rather naked right). It is doubtful whether equity would give a mandatory injunction in these circumstances. 119Because of this thinking I would not equate the authority given to the deceased by the deed with the legal right given under the law of Lichtenstein to the "Duck Feather King" in Kaverlee v Burbidge (1998) 43 NSWLR 422. 120Even if I am wrong in this view, I must confess I have some difficulty in seeing how an omission to exercise a contractual power can result in the situation where property becomes held by another person or becomes subject to a trust (vide s 22(1) of the Family Provision Act 1982. The word "becomes" denotes a change or a new beginning not the continuation of an existing state of affairs. 121However, s 22(4) deems this to be the situation where "as a result of the omission to exercise a power another person" (that is, a person other than the person with the power) continues to exercise the power". I would have thought that "power" when last occurring means the power to appoint or its equivalent. In the instant case, the power to add to the list of beneficiaries always remained in the trustee and was not a result of the deceased by her attorney omitting to give a direction to the trustee. 122Surely the "power" referred to in s 22(4)(a)(ii) is the power to give a direction to the trustee not the power to add to or modify the list of discretionary beneficiaries. 123It is very difficult for me to see how just because the deceased (by her attorney) omitted to give a direction to the trustee that she had no obligation to give and the trustee had no obligation to obey, that the whole of the trust fund can become notional property that a court can then redistribute under the Family Provision Act. 124However, as the matters discussed in the previous few paragraphs were not argued, I must keep my difficulties to myself. I mention them because I would not wish this case to be taken to be dealing with these difficulties; they are not relevant because of the way in which the parties have posed the issues for determination. 125Thus, I agree with the orders proposed by Campbell JA.

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: 13 December 2012

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