EASTAUGH RAMSAY, DOLORES JEAN CABOCHE, PETER NOMMEL GLEESON and ALAN BOND

Trusts And Trustees - Estoppel - Practice And Procedure

[1993] FCA 611; (1993) 119 ALR 215

[1993] FCA 611; (1993) 27 ATR 479

Trusts And Trustees - superannuation deed and rules - provision for forfeiture of benefit thereunder - bankruptcy of member - whether forfeiture void as restraint upon alienation - whether restraint purely contractual in nature - distinction between forfeiture of contractual and proprietary rights - nature of superannuation scheme - relationship between contract and trust.

Estoppel - estoppel in pais - estoppel by convention - estoppel by deed - distinction between them - whether common but mistaken assumption of law sufficient - position of trustee in bankruptcy.

Practice And Procedure - leave to appeal to Full Court - when necessary.

Bankruptcy Act 1966

Occupational Superannuation Standards Act 1987

Hall v Busst [1960] HCA 84; (1960) 104 CLR 206

Cowan v Scargill (1985) Ch 270

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited [1986] HCA 14; (1986) 160 CLR 226

Kenneth Allison Ltd v A.E. Limehouse and Co. (1992) 2 AC 105

Computer Edge Pty Ltd v Apple Computer Inc. [1984] HCA 47; (1984) 54 ALR 767

Counsel and solicitors for Mr F.M. Douglas QC

Counsel and solicitors for Mr S.P. Charles QC

Matter NG238 of 1993 and instructed by Neil Lawson and Co.

(1) Leave to appeal is granted and the document appearing at p. 689 of the Record is to stand as the Notice of Appeal.

(2) The orders made 1 April 1993 be amended by deleting the words "and of the first and second Respondents" from order 7, and by adding order 7A as follows:

"7A Save as provided in order 8, the costs of the first and

second Respondents should be paid in the first instance

by the third to seventh Respondents on a common fund

basis and so far as they are not recoverable from those

Respondents the costs may be retained by the first and

second Respondents out of the fund of which they are

trustees."

(3) Otherwise the appeal be dismissed.

(4) The appellants pay the first respondent's costs of the appeal.

(5) The appellants be indemnified by the second respondents for the costs

awarded against them by order 4 hereof and for their own costs (the latter on a common fund basis).

(6) The cross-appeal be dismissed with no order as to costs.

(7) Order 5 be suspended until 22 December 1993 or further order.

(8) The parties have liberty to lodge with the New South Wales District Registry on or before 5 p.m. Sydney time on 17 December 1993 written submissions as to whether in these orders some further or other provision should be made for the costs referred to in order (5).

(1) Leave to appeal is granted and the document appearing at p 698 of the Record is to stand as the Notice of Appeal.

(3) The appellants pay the costs of the respondents.

(4) The cross-appeal be dismissed with no order as to costs.

Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

RYAN J I have had the advantage of reading in draft the reasons for judgment respectively prepared by Gummow J and Lee J. It is therefore unnecessary for me to set out again the facts or the extracts from the trust deed and rules which they have reproduced.

2. The question of whether Mr Bond's entitlement to a benefit from the trust fund on his retirement from the employment of Bond Corporation Holdings Limited arose under Rule 9(2) or Rule 14(1) is a vexed one on which Gummow J and Lee J have disagreed. I am not sure that the resolution of that question has any practical significance except perhaps for the amount of the benefit payable to Mr Bond at different times. However, having given the matter such consideration as I have been able, I have concluded that, in the events that have happened, payment of Mr Bond's benefit is governed by Rule 14(1).

3. That sub-rule expressly refers to, and is made subject to the other four provisions in the Rules, (namely Rules 9, 11, 13 and 14(2)) which govern payment of benefits to which an entitlement has arisen in defined circumstances. Rule 9(1) applies to retirement from the employment of an employer and from the workforce on or after the normal retirement date and so clearly had no application to Mr Bond on 26 September 1990; (emphasis added). Rule 11 applies to death before the normal retirement date and likewise did not apply to Mr Bond on 26 September 1990. Similarly, Rule 13 is triggered by total and permanent disablement, again before the normal retirement date, and likewise did not have any application to Mr Bond on 26 September 1990. Nor did Rule 14(2) which is predicated on retrenchment or ill-health, again before the normal retirement date. For an entitlement to payment on retirement before the normal retirement date one is thus forced to choose between Rule 9(2) and Rule 14(1). I am inclined, on balance, to choose Rule 14(1) because it is cast in wide general terms apt to cover cessation of employment for reasons other than voluntary resignation e.g. by dismissal for misconduct or termination upon the employer's being wound up or otherwise ceasing to carry on business. Secondly, a common assumption seems to underlie both Rules 9(2) and 14(1) that the Standards Act or Regulations only permit payment of a lump sum benefit after the normal retirement date. The learned primary Judge with whom I agree, found that assumption to be correct when he observed, at p 26 of his reasons for judgment:

"The standards are contained in the Occupational Superannuation

Standards Regulations being Statutory Rules Number 322 of 1987. The

standards relevant to the present case include regulations 9 to 12

dealing with preservation. These standards provide, in effect, that

certain benefits "must be preserved". The effect of that

preservation is that, except or to the extent that, benefits are

payable on the retirement of the member before attaining the age of

fifty-five years in the form of a non-commutable pension or annuity,

no benefits may be paid to a member until the member retires from the

workforce and attains an age of not less than fifty-five years, or

the benefits become payable in one of a number of circumstances set

out in reg.11(1)(a)(ii) as follows:

"(A) the retirement of the member from the workforce before

attaining the age of 55 years on the ground of permanent

incapacity or permanent invalidity;

(B) the death of the member;

(C) the permanent departure of the member from Australia;

(CA) because of the operation of paragraph 5AC(2)(a), (b) or

(c);

(D) such other circumstances (if any) as the Commissioner

approves."

In other circumstances, the preserved benefits, if otherwise an

entitlement to them arises, may be rolled over into another

superannuation fund, an approved deposit fund or into a deferred

annuity."

4. By contemplating an immediate entitlement to payment of some permitted lump sum benefit, Rule 9(2) appears to assume that the normal retirement date has passed. Rule 14(1), on the other hand, is cast more widely to admit of the possibility that because of retirement, or other, involuntary, cessation of employment before the normal retirement date, no lump sum benefit is immediately payable.

5. Irrespective of the Rule under which it becomes payable the vesting of that benefit did not depend on the making of any demand by or on behalf of Mr Bond.

6. It follows from my acceptance that Mr Bond, on 26 September 1990, retired from the employment of Bond Corporation Holdings Limited but not from the workforce, that the cross-appeal, which was not pressed, should be dismissed with no order as to costs.

7. In my opinion, cl.16(2) of the trust deed, both before and after its amendment, embodied an impermissible restraint on alienation. The circumstances in which a presumptively vested benefit is to be forfeited to the Fund are described in the context of a condition subsequent attached to the beneficial estate. Accordingly, cl.16(2) attracts the application of the principles discussed for example by Dixon CJ in Hall v Busst [1960] HCA 84; (1960) 104 CLR 206 at 217 where it is indicated that a condition imposing a restraint upon alienation attached as a condition subsequent to the estate "is of course void".

8. I agree, for the reasons given by Gummow J, that it was not open to Mr Bond, as a beneficiary under the trust deed, to impose a contractual restraint on the alienation of any part of his beneficial interest. Nor can I detect in the recitals to either the deed of succession of 5 October 1990 or that of 19 July 1991 any unequivocal representation that Mr Bond was, at the date of execution of each respective deed, not entitled to any benefit under the trust deed so as to give rise to an estoppel by deed. I am far from persuaded that the alleged agreement between Mr Bond and the trustees which was said to have been in existence at the time of execution of either or both the deeds of succession, would have availed the appellants had they been allowed a very late amendment to plead it. However, even if the defence had arguable prospects of success, I agree for the reasons given by Lee J, that the exercise of discretion by the learned primary Judge in refusing to allow a late amendment of the defence to invoke that agreement has not been shown to have miscarried. Similarly I can discern no error in the exercise of discretion at first instance in respect of costs.

9. The appeal by the trustees against the order for costs made by the learned primary Judge was based on a misunderstanding that it precluded the trustees from looking to the trust fund if the 3rd to 7th respondents are wholly or partly unable to satisfy the orders made against them in respect of the trustees' costs. That misunderstanding would be completely avoided by the amendment to the orders made at first instance which has been proposed by Gummow J, which I agree should be made. The trustees' appeal should otherwise be dismissed.

10. For these reasons I agree with the orders proposed by Gummow J.

These appeals concern the impact of the bankruptcy law upon a superannuation fund ("the fund") the sole member of which is one of the respondents, Mr Alan Bond ("Mr Bond"). Mr Bond is a bankrupt.

2. The trust deed ("the deed") which established the fund is dated 9 February 1990. The bulk of the property constituting the fund, being a sum of $2,359,283, was transferred to the fund on 6 March 1990. It was transferred from an existing superannuation fund, the Bond Corporation Group Superannuation Fund by the trustee of that fund, Bond Corporation Group Superannuation Fund Pty Limited. The transfer was effected by a cheque sent to the trustees of the fund and made payable to the fund. The sum transferred represented the interest of Mr Bond in the Bond Corporation Group Superannuation Fund. It consisted of employer contributions to that fund; no part of the money transferred was contributed by Mr Bond. A second sum of $66,874 was contributed to the fund by Bond Corporation Holdings Limited ("BCH") by way of six equal instalments in the period 13 March 1990 to 14 August 1990. Mr Bond was an employee of BCH at the time of these contributions and at the time of the establishment of the fund. There have been no other contributions to the fund. The distinct sources of the two sums to which I have referred is a matter that will require further consideration later in these reasons.

3. On 14 April 1992, a sequestration order was made against the estate of Mr Bond. The central issue in the case is whether, by virtue of s. 58 of the Bankruptcy Act 1966 ("the Bankruptcy Act"), Mr Bond's interest in the fund passed to the first respondent, the trustee in bankruptcy, or whether, by virtue of the valid operation of cl. 16 of the deed, this interest was forfeited to the fund and is liable for distribution, at the discretion of the trustees of the fund, to the dependants of Mr Bond. These include those persons hereafter identified as "the Bond family".

4. At first instance, the trustee in bankruptcy sought a declaration that there is vested in him by s. 58 a benefit from the fund provided for by the rules of the fund ("the rules"), or alternatively a declaration that he is absolutely entitled to the assets of the fund, subject only to any outstanding and properly incurred liabilities of the trustees of the fund. This relief was sought against the trustees of the fund, Miss Caboche and Mr Gleeson. Also joined were five members of Mr Bond's immediate family ("the Bond family") and Mr Bond himself. The primary Judge granted declaratory relief which favoured the trustee in bankruptcy.

5. The deed was entered into between BCH, an employer of Bond, defined as the "Principal Employer", and Eileen Teresa Bond (Mrs Bond) and Delores Jean Caboche, defined as the "Trustees". Mr Gleeson succeeded Mrs Bond as a trustee of the fund by a deed of amendment dated 19 July 1991. A number of provisions of the deed and the rules should be set out.

"any person who is in the full-time employment of an

Employer other than a person who, in the opinion of the

Principal Employer, is employed in a temporary or casual

capacity, and, where an Employer is a company, includes a

director of that Employer."

(Emphasis supplied)

"any one or more of the following:

(a) the Principal Employer;

(b) any company which:

(i) in relation to the Principal Employer,

is an Associated Company; and

(ii) has applied to the Trustees to become,

and has been accepted by the Trustees

as, a participating employer; and

(c) any partnership or association combining any

two or more of the companies referred to in

paragraphs (a) and (b) above."

"the person party hereto as the Principal Employer (i.e.

BCH) and his successors and assigns."

"1 (7) Notwithstanding anything express or implied to the

contrary in this Deed and the Rules, the Trustees

shall at all times in the execution and

administration of the provisions of this Deed and

the Fund comply with the provisions of the

Assessment Act and the Standards Act and the

Regulations and all requirements of the

Commissioner (whether having statutory force or

not) so as to ensure that, to the maximum extent

possible, the income, profits and gains of the Fund

are taxed on a concessional basis. In the event of

any inconsistency between the provisions of this

Deed and the Rules on the one hand and the

provisions of the Assessment Act, the Standards

Act, the Regulations and the requirements of the

Commissioner on the hand (sic), the latter shall

take precedence and shall, to the extent of the

inconsistency, be deemed to be incorporated in this

Deed or the Rules (as the case may be) to the

exclusion of the inconsistent provision contained

in this Deed or the Rules (as the case may be)."

10. The "Standards Act" is defined in cl. 1 to mean the Occupational Superannuation Standards Act 1987 ("the Standards Act") as amended from time to time, and "Regulations" is defined in cl. 1 to mean the regulations made under that Act as amended from time to time.

"2 (1) The Trustees hereby declare that they will hold the

Fund upon the trusts and subject to the terms and

conditions set forth in this Deed and the Rules."

12. By sub-cl. 1 (3), the rules are to have the same force and effect as if they were set out in the body of the deed.

13. The rules provide for the establishment and maintenance of various accounts by the trustees. By rule 6, the trustees shall establish a member account in respect of each member. A member account is to include any contributions made by the member or the member's employer. Mr Bond was at all times the only member of the fund. Rule 7 provides for the establishment of a general account which is to be financed from funds debited from the member accounts on a pro rata basis to cover expenses of the fund. Any benefit forfeited under the deed or rules is also to be paid into this account (sub-rule 7 (3)). The term "member account balance" is defined in cl. 1 as follows:

"'Member Account Balance' in relation to a Member

means the amount standing to the credit of his

Member Account from time to time."

14. The relevant rules providing for the payment of benefits are rules 9 and 14. Rule 9 provides that:

"9 (1) If a Member retires from the employment of an

Employer and from the workforce on or after his

Normal Retirement Date then, subject to the Deed

and these Rules, the Trustees shall pay to that

Member a lump sum benefit equal to his Member

Account Balance.

(2) If a Member retires from the employment of an

Employer but not from the workforce then, subject

to the Deed and these Rules, the Member shall

become entitled to:

(a) a lump sum Benefit equal to such portion of his

Member Account Balance,

as is permitted under the Standards Act or

the Regulations; and

(b) a Preserved Benefit equal to the remaining

portion of his Member Account Balance."

The term "Normal Retirement Date" is defined in cl. 1 as a member's 65th birthday or such other date as may be agreed upon by the member and the trustees, not being earlier than the member's 55th birthday.

"any amount paid or payable by the Trustees out of the

Fund pursuant to this Deed or the Rules to or in respect

of a Member."

16. The term "Preserved Benefit" is defined in cl. 1 as:

"so much of a Benefit as is required by the Regulations

to be preserved."

17. Rule 14 provides:

"14 (1) Subject to the Deed and these Rules if a

Member ceases to be in the employment of an

Employer before his Normal Retirement Date

otherwise than as provided in Rules 9, 11 or

13 or sub-rule (2) that Member shall become

entitled to:

(a) a lump sum Benefit equal to the

aggregate of:

(i) his Member Account Balance;

(ii) a Preserved Benefit equal

to the amount standing to

the credit of his Preserved

Benefit Account;

(iii) the percentage of his General

Account Allocation as may be

determined by the Trustees,

as is permitted under the Standards Act

and the Regulations PROVIDED THAT the

amount payable shall not exceed the

amount permissible in accordance with

the reasonable benefit limits under the

Standards Act and Regulations

. . ."

18. Where a member is entitled to a preserved benefit, rule 15 provides for the recording of this entitlement in a "Preserved Benefit Account". Rule 15 provides:

"15 (1) The Trustees shall in respect of each Member who

becomes entitled to a Preserved Benefit:

(a) establish a Preserved Benefit Account in the

name of the Member upon his becoming entitled

to that Benefit; and

(b) in the manner provided in this Rule and Rule

8 maintain a record of the Preserved Benefit

Account of the Member.

(2) The amount of the Preserved Benefit to which the

Member becomes entitled shall be added to his

Preserved Benefit Account Balance.

(3) If the Member:-

(a) retires from the workforce on or after his

fifty-fifth (55th) birthday; or

(b) retires from the workforce prior to his

fifty-fifth (55th) birthday as a result of

illness or incapacity and has furnished to

the Trustees a certificate of the kind

referred to in Rule 13 (4) (a); or

(c) dies; or

(d) departs the Commonwealth to reside

permanently overseas; or

(e) requests the payment of his Preserved Benefit

Account Balance in such circumstances as are

approved from time to time under the

Standards Act,

the Trustees shall pay to the Member or in the case

of his death to his Dependants or his legal

personal representative in the manner provided in

Rule 12 his Preserved Benefit Account Balance.

(4) The Trustees shall make no payment of a Preserved

Benefit or any part thereof other than in

accordance with the Regulations and the Standards

Act."

19. The "forfeiture to the fund" of entitlements is dealt with by cl. 16 of the deed. In its original form, cl. 16 provided:

"16 (1) A Benefit payable out of the Fund shall not be

assignable at law or in equity.

(2) If a person to whom a Benefit is or may be payable

under this Deed and the Rules does or permits to be

done any act or thing or some event happens whereby

the whole or any part of that Benefit may become

payable to or vested in any other person then that

Benefit shall be forfeited to the Fund.

(3) If a person entitled to a Benefit under this Deed

or the Rules becomes bankrupt or insane or in the

opinion of the Trustees becomes incapable of

managing his own affairs then that Benefit shall

immediately be forfeited to the Fund.

(4) If a person entitled to a Benefit under this Deed

or the Rules cannot be located by the Trustees

after reasonable inquiries then at any time after

the expiration of two (2) years from the date on

which a payment was last made to him by an Employer

or by the Trustees that Benefit may at the absolute

discretion of the Trustees be forfeited to the

Fund.

(5) Where a Benefit has been forfeited pursuant to

sub-clauses (2), (3) or (4) then subject to sub-clauses

(6) and (7) the Trustees in their absolute

discretion may at any time pay out of the Fund such

amount or amounts as they think fit to or for the

benefit or maintenance of:

(a) the person who but for this Clause would have

been entitled to the Benefit; or

(b) any one or more of his Dependants.

(6) Any amounts payable under sub-clause (5):

(a) shall not exceed in total the aggregate that

would but for this Clause have been payable

to or in respect of that person; and

(b) subject to sub-clause (7) may be paid to such

persons as the Trustees think fit without

being liable to see to its application.

(7) While the Member to whom the forfeited Benefit was

attributable remains in the employment of an

Employer no amount payable pursuant to sub-clause

(5) shall be paid to any person other than for the

support and maintenance of that person in the case

of hardship.

(8) Where a Benefit has been forfeited pursuant to

sub-clauses (2), (3) or (4) and has not been applied in

the manner set forth in sub-clause (5), the

Trustees may apply the forfeited Benefit to such

other purposes as may be approved by the

Commissioner."

20. Between the constitution of the fund and the bankruptcy of Mr Bond on 14 April 1992, a number of events occurred which are relevant to these proceedings. On 31 August 1990, Mr Bond ceased to be an employee of BCH but remained a director. Mr Bond resigned as a director of BCH with effect from 26 September 1990.

21. The primary Judge held that, at the very latest, when on 26 September 1990 Mr Bond ceased to be a director of BCH, he became absolutely entitled to payment to him of a benefit. His Honour appears to have held that the entitlement to the benefit arose under sub-rule 9 (2). His Honour further held that the quantum of that benefit was not yet capable of determination, having regard to questions of fact relating to the operation of the Standards Act and the regulations thereunder which he reserved for a further hearing.

22. It was agreed by both parties that Mr Bond committed an act of bankruptcy on 15 October 1991. On 6 March 1992, Mr Bond committed a further act of bankruptcy by failing to comply with a bankruptcy notice. These were significant events, on the appellants' case, for the operation of cl. 16. So also was the sequestration order of 14 April 1992.

23. It had been contended by counsel for the Bond family that the rules of the fund, particularly 9 and 14, require the conclusion that no entitlement arises in favour of a member otherwise qualified by way of entitlement until a formal demand for payment of the benefit has been made. The submission proceeded that, there being no evidence of the making of such a demand by Mr Bond, his entitlement had yet to arise. The primary Judge rejected that submission. In discussing the strange results that would follow from acceptance of that submission, his Honour referred to sub-rule 24 (3). This provides that where a person entitled to a benefit is, in the opinion of the trustees, unable by reason of incapacity to manage his affairs, the benefit may be dealt with in a particular way. Such a provision appeared to assume that the person under the incapacity was entitled to the benefit, albeit not in a position to make demand for payment of it. The submission was renewed, albeit without great enthusiasm, on the appeal.

24. On 8 October 1990, BCH, the trustees, Mr Bond and another company, Dallhold Investments Pty Limited ("Dallhold"), executed a deed of succession ("the first deed of succession") by which Dallhold replaced BCH as the Principal Employer. Dallhold was subsequently wound up on 5 July 1991.

25. On 19 July 1991, two further deeds were executed. The first of these ("the second deed of succession") was executed by the trustees, Mr Bond and another company, Metals Exploration Limited ("Metals Exploration") and provided for the replacement of Dallhold by Metals Exploration as Principal Employer. Mr Bond commenced part-time employment with Metals Exploration on 31 July 1991. He resigned as a director of that company on 5 December 1991. The primary Judge found that any employment he had with Metals Exploration ceased also on that date. The second deed ("the deed of amendment") purported to amend cl. 16 of the deed by inserting the words "including any act of bankruptcy" in sub-cl. 16 (2) after the words "event happens" and before the words "whereby the whole", and by inserting the words "without limiting the generality of sub-clause (2)" at the beginning sub-cl. (3).

26. It was submitted to the primary Judge that even if the conclusion, reached by his Honour, that on 26 September 1990 Mr Bond became absolutely entitled to a benefit under the rules, were correct, nevertheless this consequence was denied by an estoppel flowing from the terms of the second deed of succession. The effect of the estoppel was said to be that Mr Bond, and the trustee in bankruptcy claiming under him, were estopped from alleging that Mr Bond was entitled to a benefit from the fund at any time prior to 19 July 1991 (the date of the second deed of succession) and that any entitlement could arise only subsequently, in particular, when he ceased employment with Metals Exploration on 5 December 1991.

27. The practical consequences of the estoppel upon what otherwise would be the rights of the trustee in bankruptcy were not clearly delineated before us. One suggestion, found in the treatment by the primary Judge of the submissions before him, was that Mr Bond committed an act of bankruptcy on 15 October 1991, at a time when no entitlement to a benefit had yet vested in him, and that cl. 16 operated on 15 October 1991 in some prospective manner so as to forfeit to the fund his entitlement before it accrued upon his resignation from Metals Exploration on 5 December 1991. That submission assumed a valid operation of cl. 16 upon such facts. As will become apparent, in my view, cl. 16 would not have such a valid operation. That being so, the debate upon the estoppel issue would be moot.

28. However, emphasising again the lack of precision which has attended the development of this point on the appeal, it may be that the dates for the absolute entitlement of Mr Bond of 26 September 1990 (central to the findings of the primary Judge) and the alternative of 5 December 1991 have a significance for the resolution of the issues as to the quantification of the benefit. Those issues, as I have indicated, have yet to be determined. On that footing, it will be necessary to deal with the estoppel question.

29. As I have indicated, in his reasons delivered 30 November 1992, the primary Judge found that at the latest, on 26 September 1990, Mr Bond became absolutely entitled to payment to him of the amount standing to the credit of his member account plus so much of the preserved benefit to which he was otherwise entitled (if any) as was permitted to be paid to him under the Standards Act and the Occupational Superannuation Standards Regulations ("the Regulations") and would not, by reference to the Standards Act and Regulations, exceed the reasonable benefit limits. In so deciding, his Honour held that insofar as cl. 16 purported to forfeit benefits upon the occurrence of an act of bankruptcy or upon sequestration, it was void as a restraint on alienation. It followed that the trustee in bankruptcy was entitled to the benefits. However, his Honour left to another day the quantification of those benefits. His Honour also made an order as to costs which will be considered later in these reasons.

30. On 31 March 1993, the primary Judge refused an application by the first and second respondents to amend their defence to plead that there had been an agreement reached between the trustees and Mr Bond. The alleged agreement was to the effect that any benefits that might then have been payable to Mr Bond under rule 9 or rule 14 of the rules should be retained by the trustees and dealt with by them as if Mr Bond had neither retired from the employment of an employer, nor ceased to be in the employment of an employer.

31. On 1 April 1993, the primary Judge made a declaration and a number of orders. For convenience, the declaration and some of the orders should be set out in full:

"THE COURT DECLARES THAT:

1. Upon the proper construction of the rules of the

Investors Retirement Fund ("the Fund") constituted by the

Trust Deed and Rules dated 9 February 1990 and in the

events that have happened:

(a) at the very latest upon Mr Alan Bond ceasing to be

a director of Bond Corporations Holdings Limited on

26 September 1990, Mr Alan Bond -

(i) became absolutely entitled to payment to him

of the amount standing or which properly

should have stood to the credit of his member

account as at 26 September 1990 less the

amount calculated in accordance with the

formula set out in paragraph 1 (b) hereof,

("the preserved amount").

(ii) became entitled to the preserved amount

subject to the trusts set out in the

provisions of the Trust Deed and Rules of the

Fund.

(b) The preserved amount is an amount calculated in

accordance with the formula:

(A) - ($2,448,456 + investment earnings on

that amount for the period from 1 September

1990 to 26 September 1990 net of tax and

expenses which are agreed at $15,000).

Where A = the amount standing or which

properly should have stood to the credit of

Mr Alan Bond's member account as at 26

September 1990.

(c) Upon Mr Alan Bond becoming a bankrupt on 14 April

1992, pursuant to s. 58 of the Bankruptcy Act, 1966

(Cth) the entitlements of Mr Alan Bond referred to

in (a) above vested in the applicant as the trustee

of the bankrupt estate of Mr Alan Bond.

THE COURT ORDERS THAT:

2. Liberty to the parties to apply to enable further

declarations to be made once the amounts referred to in

paragraphs (a) and (b) above have been precisely

quantified, and for the purpose of orders being made for

the payment of those amounts once ascertained.

3. The first and second Respondents pay to the Applicant out

of the Fund the amount referred to in paragraph 1 (a) (i)

above that amount being ascertained.

. . .

7. The third to seventh Respondents inclusive and each of

them pay the costs of the Applicant and of the first and

second Respondents of these proceedings taxed in

accordance with the scale set out in Schedule 2 of the

Federal Court Rules, other than in respect of the

preservation issue resolved by agreement in the

proceedings listed for hearing on 31 March 1993.

8. The costs of all parties in respect of the preservation

issues be paid out of the assets of the Fund and be taxed

on a common fund basis.

. . ."

32. The trustees and the Bond family have appealed. The trustees appeal (No. NG238 of 1993) from the judgments and orders of 30 November 1992, 31 March 1993 and 1 April 1993. The Bond family appeals (No. NG239 of 1993) from the judgment of 30 November 1992 and the orders of 1 April 1993. In each appeal there is a cross-appeal by the trustee in bankruptcy.

33. It was pointed out in the course of argument that, given the terms of orders 2 and 3 set out above and consistently with the reasoning in Computer Edge Pty Ltd v Apple Computer Inc. [1984] HCA 47; (1984) 54 ALR 767, leave to appeal was necessary. None had been sought. Upon the issue thus being ventilated, counsel indicated that leave was not seriously opposed. The case raises some complex substantive issues. Accordingly, leave should be granted in each matter. I should add that the applicability in this Court of Apple Computer has been affirmed by the Full Court on numerous occasions, most recently in Australian Builders' Labourers' Federated Union of Workers - Western Australian Branch v J-Corp Pty Ltd [1993] FCA 266; (1993) 114 ALR 551 at 552-553. These decisions, of course, bind single Judges of this Court; cf Tag Pacific Limited v McSweeney [1992] FCA 168; (1992) 34 FCR 438.

34. As I have said, in each appeal there is also a cross-appeal by the trustee in bankruptcy. The cross-appellant contends that his Honour was in error in holding that, at the very latest, on 26 September 1990 when Mr Bond ceased to be a director of BCH, Mr Bond became absolutely entitled to payment of the benefits, and that his Honour should have found that he became absolutely entitled on 31 August 1990.

35. The cross-appeals may be dealt with quite briefly. The Court was not presented with any submissions or argument upon them. During submissions, counsel for the cross-appellant made the following statement:

"So there is a question which I do not think your

Honours really have to determine as to whether it

was the end of August or 26 September and certainly

Hill J has always approached the matter on a basis

that, by the latest it was 26 September."

Sub-rule 9 (2) refers to a member retiring from the employment of an employer, and sub-rule 14 (1) refers to a member ceasing to be in the employment of an employer. Although the term "employment" is not defined, the definition of "employee" includes a director of an employer. Therefore, prior to 31 August 1990, Mr Bond was, within the terms of the deed, an employee of BCH in two capacities. On 31 August 1990, Mr Bond ceased to be an employee in the ordinary sense of the word but continued as a director until 26 September 1990. As a matter of construction, it is difficult to see that a person can be said to have ceased to be in the employment or retired from the employment of an employer if that person continues to be an employee. It follows that Mr Bond did not become entitled to any benefit under sub-rule 9 (2) or sub-rule 14 (1) until 26 September 1990.

36. Each cross-appeal should be dismissed. I would make no order as to the costs of the cross-appeals.

37. The central issue on the appeal is whether in its operation upon the benefit otherwise payable to Mr Bond, cl. 16 is void as a restraint on alienation. The rule which renders void restraints upon the alienation of property is a well settled-rule of considerable antiquity. The rule may have originated from a public policy concern that an estate in fee simple should be freely alienable. However, it is clear that the rule now applies to all species of property, including the interests of beneficiaries under a trust of personalty: see, e.g., Hunt-Foulston v Furber (1876) 3 Ch D 285, In re Dugdale (1888) 38 Ch D 176.

38. The application of the rule has been complicated by the development of the law relating to limited estates. Thus, a distinction must be drawn between the grant of an absolute interest with a condition subsequent which attempts to terminate the interest and the grant of a determinable interest. The distinction, in the words of Professor Williams in his article "The Doctrine of Repugnancy" (1943) 59 LQR 343 at 352, is "between a grant 'to A, but if he alienates then to B', where the gift over is void, and a grant to A until he alienates, and then to B', where the gift to A comes to an end if he purports to alienate it".

39. Criticism has been levelled at this doctrine on the grounds that distinctions such as this are purely semantic: see, for example, the article by Professor Williams. However, the two cases described above are logically distinct and the difference between them is well-settled and fundamental. In the first case, the donor is attempting to take back something which he has given absolutely, something which is beyond his power. In the second case, the donor is merely defining the nature of that being given. It is necessary in each case to construe the instrument creating the proprietary interest in question to determine into which category the interest falls.

40. In his article "Hall v Busst" (1961) 35 ALJ 3 at 5, Professor W.N. Harrison wrote:

"The principle on which conditions against

alienation are held to be void is that of

repugnancy to the essential features of the estate

or interest given. The power of alienation is an

incident of property, whether the estate or

interest taken is perpetual or of limited duration.

The different effect given to a gift of a life

interest on condition not to alienate, and a gift

of a life interest until alienation, is consistent

with this principle; for in the second case, since

the interest is one to continue only until

alienation, there is no question of repugnancy."

That is not to say that other views as to the rationale of the doctrine did not exist. In Hall v Busst [1960] HCA 84; (1960) 104 CLR 206 at 217, Dixon CJ said:

"A condition (purporting to impose a total

restraint upon alienation) attached as a condition

subsequent to the estate is of course void. The

invalidity may be put on the ground of repugnancy

to the grant or upon public policy or for that

matter it may conceivably be attributed to an

indirect effect of Quia Emptores."

That passage was repeated by Brennan J in Nullagine Investments Pty Ltd v Western Australian Club Inc. [1993] HCA 45; (1993) 116 ALR 26 at 33. The connection with Quia Emptores would necessarily have to be indirect. That statute (enacted in 1290) was concerned with the feudal tenure of estates in fee simple, forbidding alienation of tenures by subinfeudation, and authorising alienation by substitution, without the consent of the feudal overlord.

41. The present operation of the doctrine was described as follows by Professor Harrison, supra at 4-5:

"It has long been settled law that if there is a

gift of a fee simple estate in land, or an absolute

interest in personalty, a condition that the donee

shall not alienate the property is void. This is

so whether or not there is an executory gift over

on breach of the condition. Equally, if a person

is given a life interest or other limited interest,

with an added condition against alienation, but

with no gift over on alienation, the condition is

void . . . The same rule applies to conditions

directed against bankruptcy or other involuntary

alienation.

But the distinction between a limitation and a

condition subsequent is applied in this connexion.

If property is given to A for life provided he does

not alienate or become bankrupt the condition is

void, and an alienation by A is valid, and on his

bankruptcy the interest passes to the trustee in

bankruptcy. But if property is given to A until he

shall alienate or become bankrupt, an attempted

alienation by A, or his bankruptcy, terminates his

interest, and nothing passes to the transferee or

trustee in bankruptcy. Furthermore, if in a will

there is gift of realty or personalty for life with

a proviso that on alienation or bankruptcy the

interest shall cease, or with a condition against

alienation or bankruptcy and a gift over in that

event, the interest ceases or the gift over takes

effect, as the case may be. In such cases the gift

is construed, or at any rate treated, as if the

estate were limited until alienation or bankruptcy.

. . . In inter vivos settlements presumably the

result would be the same in relation to personalty,

but in relation to realty this saving construction

would appear not to be open."

The learned author then concludes that the question whether a gift of an estate in fee simple in land, or of ownership of personalty, until alienation or bankruptcy is valid, cannot be regarded as settled. But he concludes that on principle a gift in fee simple until alienation or bankruptcy should be valid in the same way as a gift of a life interest until alienation. (However, if a settlor settles his own property upon himself until bankruptcy and then over, the settlement will be void as against the general body of creditors: Re Detmold (1889) 40 Ch D 585). The argument on the present appeal proceeded on a footing consistent with the views of Professor Harrison.

42. It is necessary to examine the interests created by the trust in the present case. In Cowan v Scargill (1985) Ch 270 at 292, Sir Robert Megarry V-C reached the "unhesitating conclusion" that the trusts of pension funds are in general governed by the ordinary law of trusts, subject to any contrary provisions in the rules or other provisions which govern the trust. See also Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 610. I have earlier pointed out that although all the money forming the corpus of the fund was originally contributed by one or more employers of Bond, the bulk of the money was settled on the trustees of the fund by the trustee of a previous fund. The remainder was settled on the trustees of the fund by BCH, an employer of Mr Bond. Therefore, strictly speaking, there may be two separate trusts administered by the same trustees and governed by the same trust deed; see Atwill v Commissioner of Stamp Duties (1970) 72 SR (NSW) 415 at 426, per Mason JA.

43. As was noted above, the relevant rules providing for the payment of benefits are rules 9 and 14. It is sensible at this point to distinguish between them. Rule 14 deals with members who "cease" to be in employment, and rule 9 with a narrower class of case, those who retire from employment of an employer, whether this involves (sub-rule (1)) retirement from the workforce, or no such retirement from the workforce (sub-rule (2)). Of course, a person may cease to be in employment other than by retirement. Hence, the removal of the overlap between rules 9 and 14, by limiting the wider terms of rule 14 to exclude retirement (rule 9), death (rule 11) and disablement (rule 13). Rule 14 then operates upon so much as is left of the concept of ceasing to be employed.

"a Member ceases to be in the employment of an

Employer before his Normal Retirement Date

otherwise than as provided in Rules 9, 11 or 13 or

sub-rule (2)

. . ."

The phrase introduced by the words I have emphasised should not readily be treated as surplusage or read down in some way. It is necessary then to look further at the operation of the two limbs of rule 9.

45. Sub-rule 9 (1) applies, in terms, to retirement "on or after" the "Normal Retirement Date" and states that the trustees "shall pay" to the member a lump sum benefit. As noted earlier in these reasons, the term "Normal Retirement Date" is defined in cl. 1 as a member's 65th birthday or such other date as may be agreed upon by the member and the trustees, not being earlier than the member's 55th birthday.

46. On the other hand, sub-rule 9 (2) provides that the member "shall become entitled to" a lump sum benefit and a "Preserved Benefit". Sub-rule 9 (2), unlike sub-rule 9 (1), is not limited to retirement on or after the "Normal Retirement Date". No such limitation can be implied from the provision in the sub-rule for the payment both of a lump sum benefit and a "Preserved Benefit". The lump sum benefit is expressed to be an amount "equal to such portion of his Member Account Balance, as is permitted under the Standards Act or the Regulations", and the preserved benefit is expressed to be an amount "equal to the remaining portion of his Member Account Balance". By virtue of sub-rule 9 (2) itself and also sub-clause 1 (7), referred to earlier in these reasons, the provisions of the Standards Act and the Regulations are imported. The effect of the preservation requirements in the Regulations is that no benefit may be paid to a member until certain conditions are satisfied, including conditions relating to the age of the member. If any of these conditions is not satisfied (for example, if the member has not reached a certain age), then under sub-rule 9 (2) the member is not entitled to any lump sum benefit and the entire Member Account Balance is preserved. The possibility of such an eventuality is no grounds for implying any limitation based on age to the plain words of the sub-rule.

47. In any event, sub-rule 14 (1), which is expressly limited to events occurring before the "Normal Retirement Date", also contemplates payment of a non-preserved lump sum benefit.

"a Member retires from the employment of an

Employer but not from the workforce

. . ."

49. On 26 September 1990, Mr Bond wrote a letter to the directors of BCH resigning as a director and confirming that the resignation was to take effect on that date. (It has been conceded that Mr Bond did not retire from the workforce on that date.) This event came within the meaning of the words "retires from the employment of an Employer but not from the workforce" in rule 9 (2). Therefore, in my view, rule 14 did not operate. I note that on p 47 of his Reasons for Judgment, the primary Judge said it followed from his earlier discussion that he was of the view that Mr Bond was entitled (in a quantum not yet determined) to a benefit under rule 9 (2) upon his ceasing to be a director of BCH.

50. Rule 6 provides that the trustees shall maintain a separate member account balance for each member recording all the contributions paid to the fund on behalf of that member. In the present case, since Mr Bond was the only member of the fund at all times, that would include all the property in the fund. It appears that no such member account was ever established for Mr Bond. However, the failure of the trustees to comply with this step would not change Mr Bond's interest in the property of the fund. Mr Bond was entitled to have paid to his member account all moneys in the fund. The amount standing to the credit of the member account is liable to be increased by the allocation of investment income under rule 8, and to be reduced by the payment of expenses under rule 7.

51. The property forming the fund was settled on the trustees for the benefit of Mr Bond. Upon the constitution of the fund Mr Bond obtained an equitable proprietary interest in the fund, albeit one which did not carry an immediate right to payment. It should be noted that the existence of the power in sub-rule 7 (2) to deduct amounts from the member accounts to pay expenses of administering the fund does not require any contrary conclusion. Baker v Archer-Shee [1927] UKHL 1; (1927) AC 844, the effect of which so often has been debated, is at least clear authority to that effect.

52. The interest of Mr Bond was conditional in the sense that no benefit might be paid until certain conditions were satisfied. These conditions are found in rules 9 - 14 inclusive. Upon the occurrence of any of these conditions, Mr Bond's interest is altered. For example, if Mr Bond were to retire from the employment of an employer but not from the workforce, then under sub-rule 9 (2) he would obtain two further interests, one being a right to immediate payment of so much of his member account balance as is not required to be preserved, and the other being a further conditional interest in so much of his member account balance as is required by the Standards Act or the Regulations to be preserved. The conditions governing the payment of this second amount are contained in rule 15.

53. As I have indicated, the primary Judge determined that upon his ceasing to be a director of BCH on 26 September 1990, Mr Bond was entitled to a benefit. The primary Judge held that the quantum was not yet susceptible of determination, having regard to questions of fact relating to the Standards Act and regulations thereunder. These were reserved for a further hearing. I accept the submission for the trustee in bankruptcy that there is no provision in the deed or the rules which would indicate that what otherwise would be this entitlement is contingent upon the making of a demand upon the trustees. However, there remain the issues flowing from cl. 16 of the deed. I shall deal initially with cl. 16 in its unamended state.

54. It is necessary to construe cl. 16 in the context of the deed and rules as a whole to ascertain whether a limited or determinable interest is created, or whether the clause operates to forfeit interests vested absolutely. The case for the appellants fixes upon the commission by Mr Bond of acts of bankruptcy on 15 October 1991 and 6 March 1992. They were events "whereby" the benefit might become vested in another person (i.e. the official trustee) within the meaning of cl. 16 (2). Therefore, it is said the interest was then "forfeited to the Fund". Alternatively, this came to pass on 14 April 1992, when sub-cl. 16 (3) was triggered by the making of the sequestration order.

55. The first point to note is that those drafting the instrument have not taken what would have been a course clearly indicated by authority and defined the interest taken as determinable in nature, by stating that it subsisted "until" bankruptcy or other designated event. Rather, the terms used are indicative of termination and forfeiture.

56. Sub-clause 16 (3) is the only provision which refers in terms to bankruptcy. The sub-clause applies to a person "entitled to a benefit". Such entitlement may arise out of sub-rules 9 (2) or 14 (1). Properly construed, this sub-clause does not attempt to define the extent of an interest created by the settlor. The sub-clause operates on an interest already defined ("a person entitled to a benefit") and provides for the forfeiture of that interest if the person becomes bankrupt. The use of the word "forfeited" also suggests that this is an attempt to terminate an absolute interest, as does the use of the word "if" at the commencement of the sub-clause.

57. Sub-clause 16 (2) in its unamended state operates in respect of the person to whom a benefit "is or may be payable". It may apply to an act of bankruptcy, being "any act or thing" which is done or permitted by that person to be done, or an event which happens, whereby the benefit may by s. 58 of the Bankruptcy Act become vested in the trustee in bankruptcy. This subclause uses the same form of language as sub-cl. (3) and would be construed similarly as a restraint.

58. Sub-clause 16 (1) is a prohibition against assignment at law or in equity where a benefit is "payable" out of the fund. The sub-clause may be directed to assignments brought about by the acts of the person to whom the benefit is payable rather than assignments by operation of laws such as s. 58 of the Bankruptcy Act. If so, it would add nothing for the present case, to what was or was not the valid operation of the succeeding sub- sections. Further, it is unclear whether the term "payable" would apply to all of the interests created by rules 9 to 14 inclusive. In particular, it is not clear that it would include the phrase "shall become entitled to" in sub-rules 9 (2) and 14 (1), although the word "benefit" is defined in cl. 1 as any amount "paid or payable". In any event, sub-cl. (1) cannot save sub-cll. (2) and (3) from invalidity to the extent that they operate to forfeit these interests. Properly viewed, sub-cll. 16 (2) and (3) attempt to terminate by forfeiture to the fund certain interests granted pursuant to the rules.

59. No different conclusion follows if cl. 16 is construed with the additional expressions later inserted in sub-cll. (2) and (3). None of the events of 15 October 1991, 6 March and 14 April 1992, had the result that cl. 16 operated validly in respect of Mr Bond's benefit to "forfeit it to the Fund". Rather, the benefit vested under s. 58 of the Bankruptcy Act, as the primary Judge held.

60. It was contended in argument that because Mr Bond was granted superannuation benefits as an adjunct to his employment, he was in a different position from that of a mere volunteer and the restraint was properly to be seen as contractual in nature. In Hall v Busst supra at 217, Dixon CJ said:

"The question whether a bond or covenant or

contract purporting to impose a total contractual

restraint upon alienation is void does not seem to

be settled. . . . But with contractual restraints

there is no fetter upon alienation which does more

than sound in damages, that is, unless a doctrine

of equity intervenes to make it bind the land."

A reason why contractual restraints may be placed in a different category was explained by Coke (Co. Lit. 206b):

"If the feoffee (in fee) be bound in a bond, that

the feoffee or his heirs shall not alien, this is

good, for he may notwithstanding alien if he will

forfeit his bond that he himself has made."

(Quoted in Williams, supra, at p 349)

In Nullagine Investments Pty Ltd v Western Australian Club Inc. supra at 33, Brennan J, after referring to the above passage from Hall v Busst, said that in the case of contractual restraints the only basis for holding the covenant or agreement invalid was public policy. Furthermore, it would appear in the case of contractual restraints that the question is one of degree: Reuthlinger v MacDonald (1976) 1 NSWLR 88 at 94-101, approved on appeal, unreported, 20 October 1976, No. CA92 of 1976.

61. The statement by Dixon CJ in the above passage to the effect that a contractual restraint imposes no fetter upon alienation which does more than sound in damages appeared in a context concerned with a contractual restraint upon transfer, selling or leasing any part of certain land. Where the restraint is imposed upon dealings with debts or other choses in action, or with the benefit of performance of contracts involving personal skill and confidence, further, and more detailed, principles apply both as to the interpretation and efficacy of such provisions. The matter is discussed by the Full Court in Devefi Pty Ltd v Mateffy Perl Nagy Pty Ltd (1993) 113 ALR 225 at 234-237 and by Lord Browne-Wilkinson in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd (1993) 3 All ER 417 at 430-431.

62. It is not necessary to examine these principles in the present case. This is not a case involving a contractual restraint in the sense considered in the above authorities. Mr Bond was not a party to the deed and his rights as a beneficiary are not contractual. Whether the trust was established voluntarily or pursuant to a binding agreement does not affect the nature of rights over the assets of the fund, which are governed by trust law.

63. In Gosper v Sawyer [1985] HCA 19; (1985) 160 CLR 548 at 568, Mason and Deane JJ said:

"The origins and nature of contract and trust are,

of course, quite different. There is however no

dichotomy between the two. The contractual

relationship provides one of the most common bases

for the establishment or implication and for the

definition of a trust. Conversely, the trust,

particularly the resulting and constructive trust,

represents one of the most important means of

protecting parties in a contractual relationship

and of vindicating contractual rights."

64. Many equitable rights and interests have their genesis in contract or voluntary covenant. An obvious example is the constitution by A of a trust of Blackacre upon performance by A of a voluntary covenant with B to convey Blackacre to B on trust for C. This may be distinguished from a voluntary declaration of trust by A of Blackacre immediately in favour of C. Another example is a promise for value to settle specific property on trust, which creates equitable rights forthwith, because equity would compel performance of the contractual promise: Sonenco (No. 77) Pty Ltd v Silvia [1989] FCA 462; (1989) 24 FCR 105 at 121-122. But once the trust is constituted, it is accurate to characterise the rights of the beneficiary simply as equitable.

65. It may be, as Warner J pointed out in Mettoy Pension Trustees Ltd v Evans (1991) 2 All ER 513 at 537 that where the rights of beneficiaries under a pension scheme, in a practical sense, have been "earned" by reason of their derivation from the contracts of employment of members, the provisions of the pension scheme would be construed in a manner "practical and purposive, rather than detached and literal"; cf In re Wilkinson (1926) 1 Ch 842 at 847. However that may be, and whether, in this country, there is any need for any such special principle, the present case falls for decision by application of well-settled and fundamental rules of property law.

66. Because of the conclusion which I have reached, it is not necessary to consider whether the purported amendment to cl. 16 on 19 July 1991 was validly made.

67. By para. 19 of their amended defence, the Bond family pleads that:

"19 By reason of the execution of the above-mentioned Deeds

dated 5 October 1990 (alternatively 8 October 1990) and

19 July 1991, Mr Alan Bond and persons claiming through

him, such as the applicant, are estopped from alleging

that Mr Alan Bond was entitled to a Benefit from the Fund

at any time prior to the date of execution of the latter

Deed dated 19 July 1991."

Paragraph 36 of the defence of the trustees is in broadly similar terms.

68. On 8 October 1990, the first deed of succession was executed. The recitals to this deed are as follows:

"WHEREAS:

A. By a Deed dated 9 February 1990 ('Deed') and executed by

the Retiring Principal Employer (BCH) of the one part and

the Trustees of the other part the 'Investors Retirement

Fund' ('Fund') was established to provide superannuation

benefits for Members of the Fund.

B. Clause 20 of the Deed enables the Trustees to amend the

terms of the Deed at any time by deed or resolution as

long as the restrictions contained in clause 20 (2) are

observed.

C. The Trustees now wish to amend the terms of the Deed in

the manner set out in this Deed.

D. The Principal Employer has indicated its intention to

retire as the principal employer of the Fund.

E. The New Principal Employer (Dallhold) has agreed to act

as the principal employer of the Fund in accordance with

the provisions of the Deed.

F. The Beneficiary is the sole member of the Fund and ceased

to be employed by the Retiring Principal Employer and has

accepted employment with the New Principal Employer."

69. The second deed of succession is dated 19 July 1991. The recitals to this deed are as follows:

"WHEREAS:

A. By a Deed dated 9 February 1990 ('Deed') and executed by

Bond Corporation Holdings Limited ('Former Principal

Employer') of the one part and the Trustees of the other

part the 'Investors Retirement Fund' ('Fund') was

established to provide superannuation benefits for

Members of the Fund.

B. By a Deed dated 5 October 1990 the Deed was amended and

Dallhold Investments Pty Limited ('Retiring Principal

Employer') succeeded the Former Principal Employer as the

principal employer under the Deed.

C. The Trustees now wish to amend the terms of the Deed in

the manner set out in this Deed.

D. The New Principal Employer (Metals Exploration) has

agreed to act as the principal employer of the Fund in

accordance with the provisions of the Deed.

E. The beneficiary is the sole member of the Fund and ceased

to be employed by the Retiring Principal Employer and has

accepted employment with the New Principal Employer."

70. The effect of this deed must be assessed in the light of the role of the Principal Employer dictated by the deed and rules. The relevant provisions should be set out in full. The recital to the deed relevantly provides:

"WHEREAS:-

A. The Principal Employer has decided to establish an

indefinitely continuing fund to be maintained solely for

either or both of the following purposes:

(a) the provision of benefits for each Member of the

Fund in the event of his retirement from any

business, trade, profession, vocation, calling,

occupation or employment in which the Member is

engaged; and

(b) the provision of benefits for Dependants of each

Member of the Fund in the event of the death of the

Member . . ."

71. Clause 3 deals with the establishment of the fund. Sub-clause 3 (2) provides:

"3 (2) The fund shall comprise:

(a) all contributions made by the Members

pursuant to the Rules;

(b) all contributions made by the Principal

Employer or by any other Employer pursuant to

the Rules . . ."

"4 (3) If a Trustee ceases to hold office, the Members and

the Principal Employer shall appoint a new Trustee

by agreement in accordance with the Regulations.

Every such appointment shall be made in writing.

The continuing or surviving Trustee and the

Principal Employer shall ensure that a new Trustee

is appointed within sixty (60) days of the existing

Trustee ceasing to hold office."

"20 (1) . . .

(2) An amendment to this Deed or the Rules may be made

only if:

(a) no benefit accrued to Members and their

Dependants at the time of making the

amendment is thereby reduced and the proposed

amendment will not affect the basis for

calculating the amount of the retirement

benefit of a Member in a way that reduces

that amount with respect to the period of

membership before the proposed date of the

amendment; or

(b) the required percentage of the Members in

accordance with the Standards Act, for the

time being give their written consent thereto

. . ."

"24 (1) A copy of this Deed and the Rules (including all

amendments thereto) shall be kept at the office of

the Principal Employer . . ."

"4 (2) No contributions shall be payable by an Employer in

respect of a Member:

(a) after his Normal Retirement Date;

(b) after the date on which a Benefit becomes

payable from the Fund to or in respect of the

Member."

Rule 10 is in these terms:

"10 (1) A Member who is entitled to a lump sum Benefit

pursuant to Rule 9 may prior to his retirement from

the employment of an Employer apply to the Trustees

to receive in lieu of all or part of that lump sum

Benefit a pension Benefit payable on such terms and

conditions and to such persons as are approved by

the Trustees.

(2) If the application referred to in sub-rule (1) is

approved by the Trustees then the Trustees shall as

directed by the Principal Employer (or in the

absence of any direction at their discretion):

(a) pay the pension Benefit directly from the

Fund; or

(b) apply the lump sum Benefit in the purchase

from an Insurer or any other person of an

annuity policy or contract providing for the

payment of the pension . . ."

72. On 5 July 1991, Dallhold (the New Principal Employer under the first deed of succession) was wound up by order of a Judge of this Court. Clause 18 of the deed relevantly provides:

"18 (1) If:

(a) . . .

(b) an order is made or an effective resolution

passed for the winding up of the Principal

Employer . . .

then in any of those events the Fund shall from the

date of the . . . order . . . be wound up.

(2) Where the Fund has been wound up pursuant to the

provisions of sub-clause (1) the property

constituting the Fund shall be applied by the

Trustees in the following order:

(a) in the satisfaction of all the liabilities of

the Fund other than to its Members;

(b) in the payment of all expenses relating to

the winding up of the Fund; and

(c) subject to sub-clause (4) by distributing the

balance in such a manner as will in the

opinion of the Trustees be fair and equitable

according to the respective rights of the

present and former Members and any other

persons who are either then receiving or are

entitled in the future to receive benefits

under this Deed and the Rules. . . ."

73. With respect to the first deed of succession, it is apparent that there are a number of reasons why it is desirable to appoint an appropriate Principal Employer. However, if this was all the deed purported to do, it is not clear why it was necessary to recite that Mr Bond had accepted employment with the new Principal Employer. There is no need under the terms of the deed for the Principal Employer to be an "employer" in the ordinary sense of the word once a benefit became payable to Mr Bond under sub-rule 9 (2), an event which occurred on 26 September 1990, prior to the execution of this deed. In any case, sub-rule 4 (2) would prevent any further contribution to the Fund by the new employer. Another anomaly is the presence of Mr Bond as a party to the deed. By cl. 20, Mr Bond's consent was only necessary if an accrued benefit was reduced or the basis of calculating a benefit was altered. However, these factors alone are but ambiguous indications of intent.

74. With respect to the second deed of succession, it is to be noted that, with the winding up of Dallhold, by virtue of cl. 18 of the deed the fund had terminated prior to the date of execution of this deed. In these circumstances, there is a strong argument that the second deed of succession was intended to reconstitute the fund. However, this does not necessarily mean that the second deed of succession was intended to alter the interests which Mr Bond had already obtained.

75. In these circumstances, will the recitals to either of the deeds of succession found an estoppel against Mr Bond which is good also against the trustee in bankruptcy?

76. The estoppels are said to be to the effect that Mr Bond and the trustee in bankruptcy must accept that at the date of the respective deeds of succession (8 October 1990 and 19 July 1991) Mr Bond was not entitled to any benefit from the fund. But, even if that be so, this estoppel would not apply to an entitlement arising by reason of a subsequent event. There were at least two such events. The first was the termination of employment effected by the winding up of Dallhold on 5 July 1991. This is relevant only to the first deed of succession. The second event was on 5 December 1991 when Mr Bond's employment with Metals Exploration ceased. This post dates both deeds. The estoppel as pleaded will not affect the issue whether an entitlement passed to the trustee in bankruptcy, but there remains a question of whether the postponement of Mr Bond's entitlement from 26 September 1990 to 5 December 1991 affects the quantum of that entitlement.

77. As I have indicated, the question of estoppel in this case raises two distinct issues. The first is whether Mr Bond is estopped from alleging that he was entitled to a benefit from the fund at any time earlier than 19 July 1991 (the date of the second deed of succession), and, in particular, at 26 September 1990. The second is whether the trustee in bankruptcy in claiming through Mr Bond is likewise estopped. As to the first issue, the case has been argued by the appellants on the grounds of estoppel by deed and estoppel by convention.

78. In Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 at 430, Mason and Deane JJ said:

"It is customary to recognise three general classes

of estoppel, namely, of record, of writing and in

pais . . . Estoppel in pais includes both the

common law estoppel which precludes a person from

denying an assumption which formed the conventional

basis of a relationship between himself and another

or which he has adopted against another by the

assertion of a right based on it and estoppel by

representation which was of later development with

origins in Chancery. It is commonly regarded as

also including the overlapping equitable doctrines

of proprietary estoppel and estoppel by

acquiescence or encouragement."

Their Honours went on to say that notwithstanding their diverse origins one might discern a common principle underlying the established emanations of estoppel in pais. They referred to Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 at 547. The reference by Mason CJ to "one over-arching doctrine of estoppel rather than a series of independent rules" (Commonwealth v Verwayen (1990) 170 CLR 394 at 410) when read in context with the passage beginning with the second paragraph on p 409 and with what was earlier said in Legione v Hateley supra, is to be understood as concerned with the third of the three general classes of estoppel there referred to. It does not embrace estoppel of record and of writing.

79. Estoppel by deed has been described as a sub-species of estoppel by convention: Spencer, Bower and Turner "Estoppel by Representation", 3rd Ed., 1977, p 161. This view was adopted by Clarke J in Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337 at 341. On the other hand, as indicated in the above passage from Legione v Hateley, Mason and Deane JJ treated estoppel by convention as a species of estoppel in pais. I should do likewise.

80. The issues that arise as to estoppel by deed should be treated on this appeal distinctly from those arising as to estoppel by convention.

81. The basis of estoppel by deed was explained by Lord Maugham in Greer v Kettle (1938) AC 156 at 171:

"Estoppel by deed is a rule of evidence founded on

the principle that a solemn and unambiguous

statement or engagement in a deed must be taken as

binding between parties and privies and therefore

as not admitting any contradictory proof."

82. An estoppel by deed may arise from a recital; see, e.g., Re Patrick Corporation Ltd and the Companies Act (1981) 2 NSWLR 328. The relevant principles are set out clearly in Halsbury's Laws of England, 4th Ed., Vol. 16, paras. 1019 and 1020 where it is said:

"A party is estopped from denying any specific

facts contained in a recital in a deed to which he

is a party, provided the recital is certain,

precise and un-ambiguous. He is not bound by

inferences which may be drawn from the statements

in a deed . . . Nothing is to be taken by way of

'intendment'; there is no such thing as an estoppel

by something implied, and the averment relied upon

to work an estoppel must be of something

particular, not of a generality."

The effect of the many decisions collected in Norton "A Treatise on Deeds", 2nd Ed., 1928, pp 211-212, is that because an estoppel precludes the assertion of the truth, the mis-recital must be clear and certain and not requiring argument or inference.

83. In his oral submissions, senior counsel for the appellants said that the argument depended substantially upon the recitals in the two deeds of succession which stated that the new principal employer (Dallhold in the first instance, and Metals Exploration in the second) had agreed to act as principal employer, that Mr Bond was the sole member of the fund, and that he had ceased to be employed by the retiring principal employer and had accepted employment with the relevant new principal employer. The primary Judge pointed out that there was nothing in the recitals (nor indeed in the body of the instruments themselves) which contained any statement or representation to the effect that Mr Bond was not entitled to payment of any benefit. This is not a case where whilst the language used bears directly upon the subject its meaning may possibly be open to different constructions (cf Dabbs v Seaman [1925] HCA 26; (1925) 36 CLR 538 at 550). It is a case where the recitals simply do not bear upon the topic of entitlement to any benefit under the fund.

84. Upon the appeal, the preferred position taken by the appellants was that the estoppel relied upon was an estoppel by convention. However, again, the argument, as developed in oral submissions, was that the recitals showed that the parties had agreed to act on the basis that Mr Bond was now employed by a new employer, and that the consequence of this was that Mr Bond was no longer presently entitled to the benefit he had under the fund.

85. In Grundt v The Great Boulder Proprietary Gold Mines Limited [1937] HCA 58; (1937) 59 CLR 641 at 676, Dixon J said:

"Parties may adopt as the conventional basis of a

transaction between them an assumption which they

know to be contrary to the actual state of affairs.

A tenant may know that his landlord's title is

defective, but by accepting the tenancy he adopts

an assumption which precludes him from relying on

the defect. Parties to a deed sometimes

deliberately set out an hypothetical state of

affairs as the basis of their covenants in order to

create mutual estoppel."

The basis of estoppel by convention was explained in Con-Stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Australia) Limited [1986] HCA 14; (1986) 160 CLR 226 at 244 per Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ:

"Estoppel by convention is a form of estoppel

founded not on a representation of fact made by a

representor and acted upon by a representee to his

detriment, but on the conduct of relations between

the parties on the basis of an agreed or assumed

state of facts, which both will be estopped from

denying."

86. It was submitted that estoppel by convention requires the assumed state of affairs to be an assumed state of fact rather than law. Indeed, the High Court so stated the law in Con-Stan supra at 244-245 in a passage reading:

"Secondly, just as estoppel by representation

requires a representation of fact, so too estoppel

by convention requires the assumed state of affairs

to be an assumed state of fact: Greer v Kettle

(1938) AC 156 at 170; Spencer, Bower and Turner

Estoppel by Representation 3rd ed., pp 167-168.

The state of affairs relied on by Con-Stan is that

the parties conducted their business relationship

on the basis that the broker was alone liable to

the insurer for the premiums. That is clearly an

assumption as to the legal effect of their conduct,

and not an assumption of fact."

However, the statement by their Honours that estoppel by representation requires a representation of fact must now be read in the light of observations by various members of the Court in Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387 at 415-416, 432, 452, 458; Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 at 435, 457 and Verwayen supra at 413, 445, 501. Those observations are to the effect that there remains no such distinction, at least in the field of estoppel by representation, between representations as to law and fact. In Foran v Wight supra at 435, Deane J pointed out that it cannot fairly be said that law has no factual existence at all. Furthermore, in Kenneth Allison Ltd v A.E. Limehouse and Co. (1992) 2 AC 105 at 127, Lord Goff of Chieveley treated the doctrine of estoppel by convention as applying to a case of a common but mistaken assumption as to the legal efficacy of a purported service of a writ. His Lordship accepted that this involved an extension of the doctrine beyond the case of common but mistaken assumption of fact.

87. However, it is not necessary to determine the issues which arise as to estoppel by convention by reference only to the submission that the assumption relied upon was one of law not fact, and therefore not allowable. Even if a common but mistaken assumption of law is sufficient, the case is not made out.

88. I have set out the text earlier in these reasons of para. 19 of the amended defence. It was said that this pleaded no more than estoppel by deed. The reasons of the primary Judge proceeded on the footing as apparent in the following passage:

"It is said by the respondent that, by executing

the various Deeds of Succession containing the

recitals to which reference has already been made,

Mr Bond was estopped from claiming that he was

entitled to receive a benefit under the fund. That

estoppel was said to arise out of the recital which

provides that he is the sole member of the fund as

well as the relationship of that recital to the

appointment of a new principal employer."

89. Let it be assumed that a case of estoppel by convention, over and above that involved in the allegation of estoppel by deed, were open on the pleadings. There was no case established that the conduct of the relations between the relevant parties proceeded on the basis of the alleged assumed state of facts, the essence of any estoppel by convention. Reliance was placed upon the terms of the first deed of succession. But these do not suggest that the parties to that instrument intended to govern their affairs on the basis contended for by the appellants. This basis was that not only would the trust continue as though Mr Bond were a member and Dallhold an employer which had taken over all of BCH's rights and obligations, but also that Mr Bond "was in employment and had not retired from the workforce". In argument various surmises were offered as to why the deeds of succession were executed. However, those suggestions were insufficient to substantiate a case of estoppel by convention.

90. Further, and in any event, even if the alleged estoppel by convention were established, it by no means necessarily follows that the effect was to bind the interests of Mr Bond in the fund with consequences of a proprietary nature, operating adversely to the entitlement of the trustee in bankruptcy under s. 58 of the Bankruptcy Act and to the distribution of available assets in accordance with the statute. The issue was not developed in argument but the reasoning in some authorities would indicate that the estoppel would not operate to divert the operation of the trustee's administration; see cf Sonenco (No. 77) Pty Ltd v Silvia supra at 112-113, 124-125, In re Exchange Securities and Commodities Ltd (In Liquidation) (1988) Ch 46 at 59-60, Tanning Research Laboratories Inc. v O'Brien [1990] HCA 8; (1990) 169 CLR 332 at 340, Webb Distributors (Aust.) Pty Ltd v State of Victoria [1993] HCA 61; (1993) 117 ALR 321 at 333.

91. It was perhaps indicative of an awareness of the weakness of the evidentiary footing for the submissions on this branch of the case, that after the hearing and delivery of judgment, leave was sought by the trustees of the fund to amend their defence by adding two new paragraphs. These paragraphs allege that at the time of the execution of the deed dated 8 October 1990 and that dated 19 July 1991, there had been an agreement reached between the trustees and Mr Bond. This was to the effect that any benefits that might then have been payable to Mr Bond under rules 9 or 14 should be retained by the trustees and dealt with by them as if Mr Bond had neither retired from the employment of an employer nor ceased to be in the employment of an employer.

92. After detailed consideration of the application, the primary Judge refused it. His Honour concluded that in all the circumstances it would be unjust to the trustee in bankruptcy to permit the amendment to be made having regard to the public interest in the finality of litigation. The trustees appeal against that decision.

93. The application to amend was made on 31 March 1993, after the conclusion of the trial on the principal issues, judgment in which had been delivered on 30 November 1992. The relevant principles have often been stated, in this Court most recently in Bomanite Pty Limited v Slatex Corp. Aust. Pty Limited [1991] FCA 536; (1991) 32 FCR 379. No reviewable error on the part of his Honour in the exercise of his discretion has been demonstrated. Costs

94. This litigation was not instituted as an application by the trustees (under, for example, s. 92 of the Trustees Act 1962 (W.A.)) seeking judicial advice as to the construction of the trust instruments. The general position as to the costs of the trustees in such litigation is discussed in Hughes v NM Superannuation Pty Limited (1993) 29 NSWLR 653 at 670-671. The present proceeding was instituted by the trustee in bankruptcy in the course of his administration under the bankruptcy law of the estate of the only member of the fund administered by the trustees. Despite the failure of the case of the Bond family on the forfeiture issue, which the trustees supported at first instance (and still supported on their appeal), it was within the discretion of the primary Judge to order that the costs of the trustees be paid on a common fund basis out of the fund they administer. However, that is not what was done.

95. The primary Judge ordered that the costs of the trustee in bankruptcy and of the trustees be paid (save as to an issue not presently material) by the Bond family; see order 7 made 1 April 1993, which is set out earlier in these reasons. When the text of the order is read with the relevant passage in the reasons for judgment, it is apparent that the intention was that in the first instance the trustees should look to the Bond family but that, failing this, they should be able to look to their indemnity from the fund. The trustees contend that they should have had an order for payment out of the fund in the first instance. As I have noted, it would have been within the proper exercise of his discretion for the primary Judge to approach the matter in this way, but he was not obliged to do so. However, in my view, whilst strictly it is unnecessary to do so, order 7 should be amended and supplemented. It should be made clear that the costs of the fund trustees are awarded against the Bond family on a common fund basis and that insofar as those costs are not recoverable from the Bond family, they may be retained out of the fund; see National Trustees Executors and Agency Company of Australasia Limited v Barnes [1941] HCA 3; (1941) 64 CLR 268.

96. Upon the appeal by the trustees (No. NG238 of 1993) the effect of the costs orders should be that the ultimate burden should fall upon the Bond family, as will be the immediate result of the orders in the other appeal.

(1) Leave to appeal should be granted and the document appearing at p

698 of the Record should stand as the Notice of Appeal.

(3) The cross-appeal should be dismissed, with no order as to costs. Appeal No. NG238 of 1993

(1) Leave to appeal should be granted and the document appearing at p

689 of the Record should stand as the Notice of Appeal.

(2) Order 7 of the orders made 1 April 1993 should be amended by deleting

the words "and of the first and second Respondents", and there should

be added to those orders order 7A as follows:

"7A Save as provided in order 8, the costs of the first and

second Respondents should be paid in the first instance

by the third to seventh Respondents on a common fund

basis and so far as they are not recoverable from those

Respondents the costs may be retained by the first and

second Respondents out of the fund of which they are

trustees."

(3) Otherwise the appeal be dismissed. (4) The appellants pay the first respondent's costs of the appeal. (5) The appellants be indemnified by the second respondents for the costs

awarded against them by order 4 hereof and for their own costs (the

latter on a common fund basis).

(6) The cross-appeal be dismissed with no order as to costs.

97. The indemnity provided for in order (5) replaces recovery by the trustees of the first respondent's costs and their own costs out of the fund (which recovery would appear to be to the prejudice of the first respondent) to the extent that they are not recoverable, under the indemnity, from the Bond family. However, order 5 should be suspended until 22 December 1993 or further order. All parties should have liberty to lodge with the New South Wales District Registry on or before 5 p.m. Sydney time on 17 December 1993 written submissions as to whether in the orders some other provision should be made for the costs of the trustees in this appeal.

LEE J This matter concerns two proceedings commenced as appeals and heard together by consent. The appeals were from a judgment of a judge of this Court (Hill J) in which it was declared that the entitlements of Alan Bond ("Bond") as a member of a superannuation fund ("Investors Retirement Fund") had vested in the trustee of the bankrupt estate of Bond ("the trustee"). In addition to the trustee and Bond, parties to the proceeding before his Honour included the trustees of Investors Retirement Fund ("the fund trustees") and members of Bond's family ("the Bond family"). As explained in the reasons of Gummow J the appeals were commenced without leave when leave was required. I agree with Gummow J that leave should be granted.

2. Before turning to the issues of the appeal, it is necessary to set out the relevant facts.

3. As at 9 February 1990 Bond was an employee and director of Bond Corporation Holdings Limited ("BCH") and a member of the Bond Corporation Group Superannuation Fund ("BCG Superannuation Fund"). On 9 February 1990 BCH as employer and Eileen Bond and Delores Caboche as trustees, executed a Deed ("the Deed") in which it was recited that BCH had decided to establish "an indefinitely continuing fund", to be known as Investors Retirement Fund, for the purpose of providing retirement benefits for each member of the fund. Under the Deed Eileen Bond and Delores Caboche declared they would hold the fund on trusts set out in the Deed to be administered in accordance with terms set out in the Deed and in the Investors Retirement Fund Rules ("the Rules") annexed to the Deed. At that time Eileen Bond was the spouse of Bond and Delores Caboche was Bond's personal accountant. On the same day Bond applied to be admitted as a member of Investors Retirement Fund and the fund trustees met and resolved to accept the application and admit Bond as a member.

4. At that meeting the fund trustees noted that "arrangements" had been made with the trustee of the BCG Superannuation Fund to enable Bond's "entitlements" under the BCG Superannuation Fund to be transferred to Investors Retirement Fund. On that day an amount of $2,359,283 was credited to Investors Retirement Fund as a "contribution", described as "Rollover from Bond Corporation" in the accounting records maintained by the fund trustees. The sum of $2,359,283 was the amount of a cheque drawn by B.C.G. Superannuation Fund Pty. Ltd. payable to Investors Retirement Fund and represented the interest of Bond in the BCG Superannuation Fund as at 28 February 1990 according to "legal and actuarial advice".

5. The evidence before his Honour included correspondence involving Bond which suggested that at the time Investors Retirement Fund was formed and the "contribution" received from BCG Superannuation Fund Pty. Ltd., Bond may have been under the impression that the fund trustees could be directed by him to use the fund to discharge debts due by Dallhold Investments Pty. Ltd. ("Dallhold"), a corporation controlled by Bond and of which he was a Director.

6. On 31 August 1990 Bond ceased to be employed by BCH.

7. By letter dated 3 September 1990 Bond requested the fund trustees to "defer payment of (his) superannuation benefit" until he had the opportunity to "clarify (his) future employment arrangements". On 26 September 1990 Bond resigned as a Director of BCH.

8. By a Deed of Succession and Amendment dated 8 October 1990 and made between BCH as "retiring principal employer", Eileen Bond and Delores Caboche as "trustees", Dallhold as "new principal employer" and Bond as "beneficiary", Dallhold purported to accept appointment as "principal employer of the Fund" and agreed to be bound by, and comply with, the terms of the Deed from the date of appointment. The fund trustees and Bond purported to release and discharge BCH from all further obligations, rights, liabilities or claims arising under the Deed, or in respect of Investors Retirement Fund. BCH agreed to assign to Dallhold the "rights" of BCH under the Deed with effect from 5 October 1990.

9. On 26 March 1991 proceedings against Bond to recover a sum of US$194,644,433 were commenced by a syndicate of international banks.

10. On 5 July 1991 a judge of this Court ordered that Dallhold be wound up and a liquidator appointed.

11. On 19 July 1991 by another Deed of Succession and Amendment made between Eileen Bond and Delores Caboche as "trustees", Metals Exploration Limited as "new principal employer" and Bond as "beneficiary", Metals Exploration Limited purported to accept appointment as "principal employer of the Fund" in succession to Dallhold. Dallhold was not a party to that Deed of Succession and Amendment and no assignment of any rights or obligations Dallhold may have acquired or undertaken under the previous Deed of Succession was made by Dallhold or assumed by Metals Exploration Limited by accord with Dallhold.

12. By a Deed of Amendment and Appointment, also dated 19 July 1991, made between Metals Exploration Limited as "principal employer", Eileen Bond as "retiring trustee", Delores Caboche as "continuing trustee", Peter Gleeson as "new trustee" and Bond as "beneficiary", those parties purported to alter the Deed by amending sub-cl.16(2) thereof by inserting words expanding the events, occurrence of which would forfeit Bond's interest in a benefit payable under the Deed thereby enhancing the interest of a class of potential beneficiaries described as "Dependants". Dependants as defined included the spouse of Bond. Dependancy on Bond was not an element of the definition. The Deed of Amendment and Appointment then proceeded to record and acknowledge that Eileen Bond would retire and be released from her duties as fund trustee from the execution of the Deed of Amendment and Appointment and appointed Gleeson to succeed her as a fund trustee.

13. Bond commenced part-time employment with Metals Exploration Limited on 1 August 1991. At that time he was a Director of that corporation. On 5 December 1991 the employment was terminated and Bond resigned as a Director.

14. The only contributions made to Investors Retirement Fund by an employer were made by BCH which contributed $66,874 by equal monthly instalments between 19 February 1990 and 31 August 1990. No contributions were made to Investors Retirement Fund by Bond or by the "successors" to BCH as "principal employer". At all times after 9 February 1990 Bond was the only member of Investors Retirement Fund.

15. On 14 April 1992 a sequestration order under the Bankruptcy Act 1966 was made against Bond's estate on a creditor's petition and in June 1992 the trustee applied for declaratory orders in respect of the trustee's interest in the monies held by the fund trustees.

16. The principal grounds relied upon by the fund trustees and the Bond family to oppose the orders sought were that -

1. No entitlement to a benefit under Investors Retirement Fund

vested in Bond on 26 September 1990 when Bond ceased to be a

director of BCH.

2. The trustee was estopped from asserting that Bond was

absolutely entitled to a benefit under Investors Retirement

Fund by the terms of the recitals to the Deeds of Succession

and of Succession and Amendment executed by Bond on 8 October

1990 and 19 July 1991.

3. If Bond had become entitled to a benefit under Investors

Retirement Fund, that benefit had been forfeited under the

terms of cl.16 of the Deed.

17. The relevant terms of the Deed were as follows:

"1. DEFINITIONS AND INTERPRETATION

'Benefit'" means any amount paid or payable by

the Trustees out of the Fund pursuant to this

Deed or the Rules to or in respect of a Member;

...

'Normal Retirement Date' in respect of a Member

means his 65th birthday or such other date as

may be agreed upon by the Member and the

Trustees in a particular case (not being earlier

than the Member's fifty-fifth (55th) birthday);

...

'Preserved Benefit' mean (sic) so much of a

Benefit as is required by the Regulations to be preserved;

...

'Regulations' means the regulations made under

the Standards Act as amended from time to time;

...

'Standards Act' means the Occupational

Superannuation Standards Act 1987 (Cth.) as

amended from time to time and any Act in

substitution therefor;

...

16. FORFEITURE OF ENTITLEMENTS

(1) A Benefit payable out of the Fund shall

not be assignable at law or in equity.

(2) If a person to whom a Benefit is or may

be payable under this Deed and the

Rules does or permits to be done any

act or thing or some event happens

whereby the whole or any part of that

Benefit may become payable to or vested

in any other person then that Benefit

shall be forfeited to the Fund.

(3) If a person entitled to a Benefit under

this Deed or the Rules becomes bankrupt

or insane or in the opinion of the

Trustees becomes incapable of managing

his own affairs then that Benefit shall

immediately be forfeited to the Fund.

(4) If a person entitled to Benefit under

this Deed or the Rules cannot be

located by the Trustees after

reasonable enquiries then at any time

after the expiration of two (2) years

from the date on which a payment was

last made to him by an Employer or by

the Trustees that Benefit may at the

absolute discretion of the Trustees be

forfeited to the Fund.

(5) Where a Benefit has been forfeited

pursuant to sub-clauses (2), (3) or (4)

then subject to sub-clauses (6) and (7)

the Trustees in their absolute

discretion may at any time pay out of

the Fund such amount or amounts as they

think fit to or for the benefit or

maintenance of:

(a) the person who but for this

Clause would have been

entitled to the Benefit; or

(b) any one or more of his

Dependants.

(6) Any amounts payable under sub-clause

(5):

(a) shall not exceed in total

the aggregate that would

but for this Clause have

been payable to or in

respect of that person; and

(b) subject to sub-clause (7)

may be paid to such persons

as the Trustees think fit

without being liable to see

to its application.

(7) While the Member to whom the forfeited

Benefit was attributable remains in the

employment of an Employer no amount

payable pursuant to sub-clause (5)

shall be paid to any person other than

for the support and maintenance of that

person in the case of hardship.

(8) Where a Benefit has been forfeited

pursuant to sub-clauses (2), (3) or (4)

and has not been applied in the manner

set forth in sub-clause (5), the

Trustees may apply the forfeited

Benefit to such other purposes as may

be approved by the Commissioner."

As stated earlier in these reasons sub-cl.16(2) was amended on 19 July 1991 by inserting the words "including any act of bankruptcy" before the word "whereby".

"...

9. RETIREMENT BENEFITS

(1) If a Member retires from the employment

of an Employer and from the workforce

on or after his Normal Retirement Date

then, subject to the Deed and these

Rules, the Trustees shall pay to that

Member a lump sum Benefit equal to his

Member Account Balance.

(2) If a Member retires from the employment

of an Employer but not from the

workforce then, subject to the Deed and

these Rules, the Member shall become

entitled to:

(a) a lump sum Benefit equal to

such portion of his Member

Account Balance, as is

permitted under the

Standards Act or the

Regulations; and

(b) a Preserved Benefit equal

to the remaining portion of

his Member Account Balance.

...

14. BENEFITS ON TERMINATION OF EMPLOYMENT

(1) Subject to the Deed and these Rules if

a Member ceases to be in the employment

of an Employer before his Normal

Retirement Date otherwise than as

provided in Rules 9, 11 or 13 or

sub-rule (2) that Member shall become

entitled to:

(a) a lump sum Benefit equal to

the aggregate of:

(i) his Member Account Balance;

(ii) a Preserved Benefit equal to the amount

standing to the credit of his Preserved

Benefit Account;

(iii) the percentage of his General Account

Allocation as may be determined by the

Trustees,

as is permitted under the Standards Act

and the Regulations PROVIDED THAT the

amount payable shall not exceed the

amount permissible in accordance with

the reasonable benefit limits under the

Standards Act and Regulations; and

(2) Subject to the Deed and these Rules if

a Member ceases to be in the employment

of an Employer due to Retrenchment or

Ill Health that Member shall become

entitled to a Benefit determined in

accordance with Rule 9 as if the Member

had retired on the date he ceased

employment. If the Member has attained

the age of fifty five (55) years and

retires from the workforce upon ceasing

to be in the employment of the

Employer, the Benefit shall be

determined in accordance with Rule

9(1); otherwise it shall be determined

in accordance with Rule 9(2).

15. PRESERVED BENEFIT ACCOUNTS

(1) The Trustees shall in respect of each

Member who becomes entitled to a

Preserved Benefit:

(a) establish a Preserved

Benefit Account in the name

of the Member upon his

becoming entitled to that

Benefit; and

(b) in the manner provided in

this Rule and Rule 8

maintain a record of the

Preserved Benefit Account

of the Member.

(2) The amount of the Preserved Benefit to

which the Member becomes entitled shall

be added to his Preserved Benefit

Account Balance.

(3) If the Member:-

(a) retires from the workforce

on or after his fifty-fifth

(55th) birthday; or

(b) retires from the workforce

prior to his fifty-fifth

(55th) birthday as a result

of illness or incapacity

and has furnished to the

Trustees a certificate of

the kind referred to in

Rule 13(4)(a); or

(c) dies; or

(d) departs the Commonwealth to

reside permanently

overseas; or

(e) requests the payment of his

Preserved Benefit Account

Balance in such

circumstances as are

approved from time to time

under the Standards Act,

the Trustees shall pay to the Member or

in the case of his death to his

Dependants or his legal personal

representative in the manner provided

in Rule 12 his Preserved Benefit

Account Balance.

(4) The Trustees shall make no payment of a

Preserved Benefit or any part thereof

other than in accordance with the

Regulations and the Standards Act.

16. PAYMENT OF BENEFITS BY TRANSFER OF ASSETS

(1) The Trustees may with the approval of

the Commissioner (if required) and with

the agreement of the person entitled to

receive a Benefit pursuant to these

Rules pay or satisfy all or any part of

the Benefit by the transfer to the

person of any of the investments held

by the Trustees.

(2) For the purpose of sub-rule (1) the

value placed on any investments to be

so transferred shall be the same as the

value placed on those investments when

the Trustees last valued the assets of

the Fund.

(3) Nothing in this Rule shall entitle any

Member to any specific assets of the

Fund and the Trustees shall have

absolute discretion in determining

which of the investments shall be

transferred to the person entitled to

the Benefit.

...

24. TIME AND MODE OF PAYMENT OF BENEFITS

(1) Notwithstanding anything contained in

the Deed and these Rules (other than

Clause 1(7)) for the purpose of

facilitating the administration of the

Fund the Trustees may:-

(a) postpone the payment of any

lump sum Benefit payable

under these Rules for any

period not exceeding two

(2) months after the

happening of the event upon

which the Benefit became

payable;

(b) with the agreement of a

person to whom a Benefit is

payable postpone the

payment of any Benefit to

that person for any period

agreed upon by the Trustees

and that person; and

(c) make payment of any Benefit

payable under these Rules

themselves or cause or

arrange for such payment to

be made for or on their

behalf.

(2) Where after a Benefit has been paid

from the Fund to a Member under a Rule

it is established that the Member was

eligible for a Benefit under another

Rule then the Trustees may pay to or in

respect of that Member the Benefit

payable under the latter Rule but any

amount previously paid to the Member

shall be deducted from the Benefit

payable under the latter Rule.

(3) Where a person who is or may be

entitled to any Benefit under these

Rules is in the opinion of the Trustees

unable by reason of mental incapacity

to manage his own affairs then the

Trustees may pay that Benefit:

(a) to any other person for or

on behalf of the first

mentioned person; or

(b) to the Dependants of the

first mentioned person.

(4) A payment under the provisions of

sub-rule (3) shall without any thing more

be sufficient discharge to the

Trustees."

19. It was agreed between the parties that by 26 September 1990, when Bond had ceased to be either an employee or a director of BCH, a question arose whether an entitlement to a benefit accrued to Bond under sub-r.9(2) and/or sub-r.14(1). It was said that sub-r.9(2) would be applicable if Bond's resignation as a director were treated as "retirement" from the employment of BCH. Sub-clause 1(1) of the Deed defined an employee as including a director of an employer corporation.

20. The use of the word "retirement" in sub-r.9(2) shows that the sub-rule is concerned with a voluntary event that occurs after the Normal Retirement Date of the employee. Because that event occurs after that date it is a retirement from employment and not a cessation of employment to which r.14 applies, notwithstanding that in the former case an employee may remain "in the workforce" after that retirement.

21. The words "after his Normal Retirement Date" are impliedly carried forward into sub-r.9(2) from sub-r.9(1).

22. If so construed, rr.9 and 14 have symmetry notwithstanding the reference in sub-r.14(1) to r.9 by way of a proviso. A like proviso is made in sub-r.14(1) in respect of r.11, a rule which fixes the benefit payable on the death of a member, not a circumstance to which r.14 applies and the proviso is, therefore, superfluous. So is the proviso in respect of r.9 and no more can be read into the use of the proviso than an unnecessary resort to caution on the part of the draftsperson.

23. The terms of sub-r.14(2) support that construction. Under sub-r.14(2) a person who involuntarily ceases to be in employment before his Normal Retirement Date in circumstances of retrenchment or ill health but has attained the age of 55 years is, in effect, deemed to have "retired" and if, thereafter, that person also "retires" from the workforce the terms of sub-r.9(1) are to apply. If that person does not "retire" from the workforce sub-r.9(2) will apply. If a person who has not attained the age of 55 years involuntarily ceases employment in the circumstances of retrenchment or ill-health, that person is also, in effect, deemed to have "retired" and, therefore, r.9 is to apply. Not having attained the age of 55 years however, that person is to be treated as being unable to "retire" from the workforce and sub-r.9(2) is the relevant provision to be applied.

24. Bond's date of birth was 22 April 1938 and, therefore, Bond's resignation as a director of BCH on 26 September 1990 was a cessation or termination of employment before the Normal Retirement Date and was an event to which sub-r.14(1) applied.

25. It was submitted that whichever sub-rule applied to Bond's circumstances on 26 September 1990 neither sub-rule operated to vest in Bond absolutely an entitlement to a benefit until formal demand for payment of the benefit had been made. It was said that the provisions of other rules which provided for the trustees to pay the amount of a benefit upon the occurrence of qualifying events (e.g. sub-rr.9(1), 10(2) - Pension Option, 11(1) and 12(1) - Death Benefits) suggested that it was intended by the terms of the Deed that a further step by way of demand was required before the entitlement referred to in sub-rr.9(2) and 14(1) became payable.

26. His Honour rejected that submission and it is plain that the construction of the rules applied by his Honour was correct.

27. Pursuant to sub-r.14(1) a member who ceased employment with the employer before the member's Normal Retirement Date became entitled to be paid a benefit to be calculated in accordance with the rule and entitled to have a Preserved Benefit Account established and maintained until such time as the member was entitled to receive payment of that preserved benefit pursuant to sub-rr.15(3), (4).

28. The words "pay", "paid", "payable" and "payment" in sub-rr.9(1), 10(2), 11(1), 12(1) and 15(3), (4) were appropriate for sub-rules which dealt with an entitlement to a benefit payable in its entirety. Sub-rr.9(2) and 14(1) dealt with a benefit that was payable in part only, the unpaid balance to be retained until such time as that sum became payable under sub-rr.15(3), (4). The use of the word "entitled" in sub-ss.9(2) and 14(1) to describe the vesting of those beneficial interests was the appropriate way to refer to both a benefit then payable and a benefit to be held in a Preserved Benefit Account.

29. The stated intention of the Deed that it comply with Occupational Superannuation Standards Act 1987 and the Regulations made thereunder served to reinforce that construction, as his Honour noted. Under the terms of the Deed, upon the happening of the qualifying event, the member became absolutely entitled to be paid so much of the benefit as was not required to be preserved under rr.9(2) and 14(1). It was immaterial to the question of vesting at what point the fund trustees may have been obliged to pay out of the fund the monies which represented the beneficial interest a member had become entitled to receive.

30. The fund trustees and the Bond family submitted that if an entitlement to property in the form of the benefit payable to Bond under Investors Retirement Fund had vested in Bond on 26 September 1990, Bond and, through him his trustee in bankruptcy, was estopped from claiming his entitlement to that benefit. It was said to his Honour that the recitals to the Deed of Succession and Amendment dated 8 October 1990 and the Deed of Succession and Amendment dated 19 July 1991 ("the Succession Deeds") contained a representation by Bond inconsistent with a claim by him to a vested entitlement to a benefit under the Investors Retirement Fund. It was further submitted on appeal that the parties to the Succession Deeds had acted upon assumed facts that were inconsistent with the existence of a vested entitlement in Bond to be paid a benefit under Investors Retirement Fund. (See: Offshore Oil NL v. Southern Cross Exploration NL (1985) 3 NSWLR 337.)

31. His Honour held there was no clear and unambiguous representation in the recitals to, or in, the Succession Deeds that Bond was not then entitled to the payment of any benefit under Investors Retirement Fund and the doctrine of estoppel had no application in the circumstances.

32. Again, his Honour's conclusion was plainly correct. There was nothing on the face of the Succession Deeds that either raised or depended upon a representation by Bond that no entitlement had vested in Bond under the Deed.

33. With regard to the submission that the parties had acted on an assumed state of facts which now governed their transaction, the recitals to, and the terms of, the Succession Deeds were consistent with the intention of the parties that Bond be given the opportunity to obtain further retirement benefits by the subsequent employers assuming like obligations to those undertaken by BCH in the Deed and each establishing a fund thereby making provision for benefits to accrue to Bond upon the occurrence of events related to retirement from or cessation of employment with the subsequent employers. The fact that no funds were established by employers' contributions does not diminish the apparent meaning of the terms of the Succession Deeds.

34. It is equally plain that if that were not the case and Bond purported to revest in the fund trustees the retirement benefits to which he had become entitled, the fund trustees to hold that sum thereafter on the terms of the Deed, the conclusion would be irresistible that such a divesting by Bond would have been a settlement by him within two years of the commencement of his bankruptcy and void against the trustee pursuant to s.120 of the Bankruptcy Act 1966. (See: La Rosa; Exparte Norgard (1990) 93 ALR 571; Re Hyams; Official Receiver v. Hyams (1970) 19 FLR 232.) Alternatively, it may have been argued that if the entitlement that had accrued to Bond under Investors Retirement Fund had been re-settled by Bond upon the fund trustees on the terms of a Deed which provided for any beneficial interest of Bond to cease if that interest otherwise would be held for and made available to creditors, that provision for defeasance would be void. (See: Scott on Trusts (4th Ed.) paras.150.1, 156; In re Burrows-Fowler (1916) 2 Ch 251; In re Johnson Johnson (1904) 1 KB 134; Mackintosh v. Pogose (1895) 1 Ch 505.)

35. The fund trustees and the Bond family submitted, firstly, that cl.16 of the Deed operated to prevent Bond acquiring an entitlement to a benefit under Investors Retirement Fund. It was argued that sub-r.14(1) provided that entitlement to a benefit under the Deed was subject to the Deed and Rules and, therefore, it was said, sub-cl.16(2) of the Deed operated to prevent the vesting of an entitlement under r.14 by forfeiting the unvested benefit to the fund whenever a member "does any act...whereby the whole or any part of the benefit may become payable to or vested in any other person". I agree with his Honour that under the sub-clause as it stood before amendment, an act of bankruptcy would have been included within the terms of sub-cl.16(2) described above.

36. The argument in support of that submission was parallel to the argument addressed to the first submission, namely, that no entitlement could vest in Bond until a demand for payment had been made. In respect of the construction of cl.16 of the Deed it was further submitted that until payment of the benefit had been effected no absolute interest had vested in Bond and as long as the benefit remained unpaid it remained liable to forfeiture under cl.16.

37. For the reasons already stated, an absolute interest in at least part of the benefit vested upon the occurrence of qualifying events without a demand for payment or payment of the benefit first being made. Therefore, no argument was available that defeasance of a contingent interest had been effected by the operation of cl.16.

38. The fund trustees and the Bond family then contended that cl.16 operated to forfeit an entitlement that had vested under sub-rr.9(2) or 14(1). That submission raised the question whether sub-cl.16(2) was void. His Honour held that it was and I agree with his Honour's conclusion.

39. The doctrine of repugnancy and how terms which provide for the defeasance of contingent interests are to be contrasted with terms purporting to forfeit vested absolute interests is well known. (See: Williams, "The Doctrine of Repugnancy" (1943) 59 LQR 343.) His Honou r held that the terms of cl.16 applied to more than contingent interests and purported to make forfeitable absolute entitlements that had vested under the Deed, namely benefits that had become payable under the Deed.

40. I agree that, in its terms, sub-cl.16(2) includes benefits that are then payable and is not limited to the defeasance of contingent or prospective interests. It is intended that the sub-clause have an extended operation to effect the forfeiture of vested absolute interests. Such a provision is repugnant to the absolute entitlement that has accrued under the Deed and equity will not allow it to stand. (See: Re Smith (1916) 1 Ch 369.)

41. I agree that his Honour correctly applied that principle to the Deed in holding sub-cl.16(2) to be void.

42. It was submitted that the doctrine was of narrow application and based upon considerations of public policy. Therefore, it was said, as a result equivalent to forfeiture of a superannuation benefit could have been achieved by the use of words providing for the defeasance of a conditional interest, there was no reason to apply the doctrine of repugnancy to defeat a provision in a superannuation deed which forfeited a vested benefit when the purpose of forfeiture was to preserve the benefit for payment to the dependants of an employee.

43. Counsel was unable to point to any authority in that regard and I am unable to agree that some limited doctrine of public policy has been developed and defined in law to prevent the operation of the ordinary rule of repugnancy in respect of provisions of a superannuation deed which provide for the forfeiture of entitlements to property that have vested under such a deed.

44. After his Honour delivered his reasons for judgment on 30 November 1992 the fund trustees made application to his Honour for leave to amend their defence to the trustee's statement of claim by pleading that at the time of execution of the Succession Deeds there had been an agreement reached between the fund trustees and Bond to the effect that any benefits that might have been payable to Bond under sub-rr.9(2) or 14(1) should be retained by the fund trustees and dealt with by them as if Bond had neither retired from the employment of an employer nor ceased to be in the employment of an employer.

45. His Honour considered the application and provided reasons for his decision not to grant the order sought.

46. It does not appear to me that had the amendment been allowed it could have led to that proceeding being dealt with other than as determined by his Honour in accordance with his reasons delivered on 30 November 1992. However, the reasons given by his Honour for refusing to allow the amendment to be made were that it had come too late in the proceeding and the fund trustees had had ample opportunity to raise the issues now sought to be litigated. His Honour was of the view that it would be unjust to the trustee and contrary to the public interest in finality of litigation to exercise his discretion in the manner sought by the fund trustees.

47. In arguing the appeal against his Honour's refusal to grant leave to amend, the fund trustees were unable to point to the miscarriage of his Honour's discretion by reason of any error in law. Furthermore, it was conceded that no explanation for the delay it making the application to amend had been provided to his Honour by the fund trustees. It follows from the foregoing that no merit has been demonstrated in this ground of appeal.

48. His Honour ordered that the Bond family pay the costs of the trustee and of the fund trustees. The fund trustees sought to have that order set aside, perhaps apprehending that the order forbade indemnification from the trust funds if the Bond family failed to discharge the costs order made against them. There is nothing in his Honour's judgment which indicates that his Honour intended to restrict the fund trustees' right to be indemnified in respect of the costs incurred if the Bond family was found to be without means. Therefore, no foundation was demonstrated for that part of the fund trustees' appeal.

49. In respect of the order that the costs of the trustee and of the fund trustees be paid by the Bond family, the unsuccessful party in the proceeding, his Honour was satisfied that it was not in the interests of justice for the costs of the fund trustees to be borne by the fund.

50. The proceeding was commenced in the Sydney Registry of the Court and in an application which occupied two days of hearing the Bond family, supported by the fund trustees, sought an order that the hearing of the proceeding be held in Perth. The application was opposed by the trustee but his Honour made the order as requested relying upon the grounds put forward by the Bond family. As his Honour noted in his reasons, the transfer of the matter to Perth for hearing proved to be unnecessary and the Bond family made no attempt to conduct their case on the grounds upon which they had relied to make the application. His Honour stated that had he not ordered the Bond family to pay the costs of the trustee and of the fund trustees he would have ordered, in any event, that all additional expenses incurred and fees charged by virtue of the hearing being conducted in Perth be paid by the Bond family.

51. The order for costs was in the discretion of the trial judge and, in that regard, his Honour was particularly well placed to balance the respective interests of the parties. I am not persuaded that any error in principle has been disclosed in his Honour's reasoning to warrant this Court interfering with the discretion exercised by him in the orders he made in respect of costs. I agree with Gummow J, however, that for the purpose of clarification, amendment of the orders is appropriate.

52. Subject to the variation of his Honour's orders as proposed by Gummow J both appeals should be dismissed with costs.

53. On the erroneous assumption that the appeals had been duly commenced the trustee filed cross-appeals on a minor issue. The cross-appeals were not pursued and should be dismissed with no order as to costs.