First Plaintiff v Fourth Plaintiff

For Ian and Stephen Mandie (for the Harman application)

1 This proceeding concerns a family dispute between the beneficiaries and Trustee of the David Mandie Family Trust ('The Trust') established in 1978.

2 The issues that the plaintiffs sought to be determined are:

(a) Whether the purported declaration made by the defendant on 27 May 2014 ('the May Declaration ') was invalid and ineffective because the defendant, as Trustee of the Trust, did not have power to make it.

(b) Whether the defendant was actuated by an improper purpose in making the May Declaration .

(c) Whether the purported declaration made by the defendant on 18 September 2014 ('the September Declaration') was invalid and ineffective because the defendant, as Trustee of the Trust:

(i) did not have power to make it, and or

(ii) acted improperly in making it.

(d) Whether by reason of the defendant's conduct in, and in connection with:

(i) making distributions of income of the Trust for the financial years ending in 30 June 2012, 30 June 2013 and or 30 June 2014;

(ii) making the May Declaration; and or

the defendant should be removed and replaced as Trustee of the Trust.

3 During the hearing, it was agreed that the determination of issue (d) should be left until the other issues had been decided.

4 On or about 24 April 1978, Mr Barry Bloom, as settlor, established the Trust, the terms of which are recorded in a Deed of Settlement ('Trust Deed'). The Trust was a discretionary trust for the family of David and Minnie Mandie. David and Minnie had three children:

(a) Ian Robert Mandie;

(b) Stephen Wayne Mandie; and

(c) Evelyn Danos (nee Mandie).

5 Ian Mandie and his wife, Jane Elizabeth Mandie (second plaintiff), had two children:

(a) Edward Nicholas Mandie (first plaintiff); and

(b) Isabella Mandie (third plaintiff).

6 Stephen Mandie and his wife, Amanda Mandie (fourth plaintiff) had two children:

(a) Nicholas Elliott Mandie (fifth plaintiff); and

(b) Daniella Mandie (sixth plaintiff).

(a) Edward became a General Beneficiary of the Trust at the time of his birth on 5 April 1992;

(b) Jane became a General Beneficiary of the Trust at the time of her marriage to Ian Mandie on 21 June 1990;

(c) Isabella became a General Beneficiary of the Trust at the time of her birth on 29 August 1994;

(d) Amanda became a General Beneficiary of the Trust at the time of her marriage to Stephen Mandie on 31 October 1982;

(e) Nicholas became a General Beneficiary of the Trust at the time of his birth on 19 August 1992; and

(f) Daniella became a General Beneficiary of the Trust at the time of her birth on 2 October 1997.

8 As this is a dispute within a family, I will often refer to parties by their first names.

9 On 24 April 1978, the Trustee, Memart Nominees Pty Ltd ('Memart') became and remains the Trustee of the Trust. Four days later, the members of the Trustee resolved that the quorum necessary for the transaction of business of the directors of the Trustee would be two.

10 From 19 August 1976, David and Minnie Mandie were directors of the Trustee until their respective deaths on 17 August 2011 and 26 April 1999.

(a) Evelyn Danos, who was a director of the Trustee from 13 June 1980 to 18 August 1994 and was reappointed as a director of the Trustee on 4 May 1999, eight days after the death of Minnie Mandie;

(b) Milton Bernard Lasnitzki, who was appointed as a director of the Trustee on 18 August 2011, one day after the death of David Mandie; and

(c) Garry Stock, who was appointed as a director of the Trustee on 23 May 2014.

12 Since David Mandie's death on 17 August 2011, the power to appoint or remove a person as a director of the Trustee has been exercisable by the executors of David Mandie's Will and trustees of his estate, namely, Evelyn Danos, Mark Nicholas Cerché and Garry Stock.

13 The shares in Memart have passed to the executors of the estate and the trustees of the estate of David Mandie, and hence, they are controlled by Evelyn Danos, Mr Cerché and Mr Stock.

14 The Specified Beneficiaries of the Trust were, and are, expressed to be 'the children of David and Minnie Mandie'. The General Beneficiaries of the Trust were, and are, expressed to include:

(a) David Mandie and Minnie Mandie;

(b) the Specified Beneficiaries (i.e. Ian and Stephen Mandie and Evelyn Danos);

(c) The brothers, sisters, spouses, widows, widowers, children and grandchildren of the Specified Beneficiaries and the spouses, widows, widowers children and grandchildren of such brothers and sisters, spouses, children and grandchildren;

(d) Any corporation in which any General Beneficiary beneficially owned more than 10% of the issued shares or in which any combination of General Beneficiaries owned more than 10% of the issued shares;

(e) The trustee or trustees of any trust or settlement which the Trustee may nominate in writing as a General Beneficiary; and

(f) Such additional beneficiaries if any as were described or named in the schedule to the Deed as a member of the class of General Beneficiaries.

15 The second proviso to cl 1(2), following cl 1(2)(iv), provided:

the Trustee at any time and from time to time may (subject to Clause 10 hereof) declare in writing that any person shall thereafter be excluded from the class of General Beneficiaries notwithstanding that but for such exclusion he would by reason of one or more of the matters or circumstances hereinbefore referred to have been a General Beneficiary and the class of General Beneficiary shall as from the date of the making of any such declaration be modified accordingly.

16 Clause 4(1) empowered the Trustee to make annual distributions of income to General Beneficiaries 'in such proportions and manner and subject to such limitations and provisions as the Trustee in its absolute discretion shall think fit' and for charitable purposes. Clause 4(2)(d) states that, in making such a determination to distribute, the Trustee could 'pay apply or set aside any amount to or in favour of one or more of the beneficiaries in such proportions in such manner and upon such terms as it shall in its absolute discretion think fit.'

17 Clause 11 provided that '[t]he Trustee may exercise or concur in exercising all powers and discretions hereby or by law given notwithstanding that it or any person being ... a Director or Shareholder of the Trustee has or may have a direct or personal interest in the mode or result of exercising such power or discretion or may benefit either directly or indirectly as a result of the exercise of any such power or discretion'.

18 Clause 19 provided that, subject to any express provision to the contrary, 'every discretion vested in the Trustee shall be absolute and uncontrolled and every power vested in it (including the making of any determination hereunder) shall be exercisable in its absolute and uncontrolled discretion'.

19 Clause 5 describes what is to happen on the Vesting Day, which is to occur 'one year less than 80 years of the making of the deed'. Subject to possible earlier vesting which it is unnecessary to consider, this will be 24 April 2057. Clause 5(1) provides that, on the Vesting Day, the Trustee shall stand possessed of the Trust Fund and income:

In trust for such of the beneficiaries and for such charitable purposes for such interests and in such proportions and for one to the exclusion of the other or others as the Trustee may with the consent of the Guardian by instrument in writing before the Vesting Day appoint PROVIDED THAT any such appointment shall be revocable by the Trustee with the consent of the Guardian until the end of the day preceding the Vesting Day when it shall become irrevocable

Clause 5(2) provides that, in default of such appointment in respect of any part of the Trust Fund:

the Trustee shall stand possessed of such part and income thereof in the trust for the Specified Beneficiary absolutely (and if more than one as tenants in common in equal shares) provided always that the children of any Specified Beneficiary who shall have died before the Vesting Day shall take (and if more than one as tenants in common in equal shares) the share which such deceased Specified Beneficiary would have taken had he survived to the Vesting Day and attained a vested interest ...

20 By reason of clause 5(2) of the Trust Deed, from the creation of the Trust on 24 April 1978 Ian Mandie and Stephen Mandie were each a taker in default of appointment with a vested, although defeasible, interest in the Trust.

21 By the mid-1990s, David had built up a substantial business, known as the James Richardson Group, which included operating duty free businesses in airports. The three children had worked in the business. However, in about 1994 a dispute arose between the sons and their parents regarding the sons' roles in the business and their degree of financial independence. The dispute lasted many months, during which written offers were made by both sides in an attempt to resolve the issues.

22 Those disputes were settled following a mediation, which resulted in an immediately binding 'Initial Agreement' signed on 14 September 1995.

23 Two weeks later, on 28 September 1995, David and Minnie signed a Statement of Wishes indicating to their executors and the directors of corporations which were trustees of the various family trusts and of companies owned or controlled by them 'how we wish our affairs and those of the various trusts and companies managed after our deaths'.

24 The Statement of Wishes recorded David and Minnie's 'utter disappointment' with their sons and that they had 'reached an agreement with Ian and Stephen which satisfies what we consider to be our moral obligations to them and their families.' It stated:

Accordingly, it is our wish that our sons and their families be excluded from any interest in our estates or in the companies and other entities controlled by us except to the extent that it is necessary to satisfy our obligations under the agreement which we have reached with them.

We have appointed Mark Cerché and Trevor Brown our legal and accounting advisers respectively to be executors and trustees along with our daughter.

...

It is our wish that our trustees take steps to see that any amounts due to our sons under our agreement with them are paid in accordance with the terms of that agreement. Subject to those obligations, our wish is that our trustees exercise their powers to ensure that the benefit of the wealth controlled by us passes to our daughter Evelyn and her children.

Our trustees are to take such steps as they consider necessary to protect our estates and companies and entities controlled by us from any claim which may be made by Ian or Stephen or their respective families.

25 On 19 December 1995, a written settlement agreement was executed between David, Minnie, Ian, Stephen, Memart, Mandie Investments Pty Ltd and each of the entities within the James Richardson Group ('the Settlement Agreement'). The most important features of the Settlement Agreement were as follows. The parties agreed that, by the Settlement Agreement, Ian and Stephen disclaimed their interests in the Trust;[2] the Trustee agreed to pay Ian and Stephen the sum of $10 million, plus a further $2.5 million each; David and Minnie transferred to Ian and Stephen control of assets held pursuant to the Holtby Trust, the value of which was estimated by the Trustee to be at least $16 million; David and Minnie transferred to trusts associated with Ian and Stephen their homes (which were owned by Trustee) and their cars (which were owned by the James Richardson Group). In total, the Trustee estimated that Ian and Stephen each received well over $20 million in value in the Settlement Agreement.

26 Clause 9 of the Settlement Agreement is titled 'Release'. It defines a 'claim' under the Agreement to include 'all manner of claims, suits, causes of action, demands, interest, costs, verdicts and judgments whatsoever' in both law, equity and under statute. It further states that Ian and Stephen acknowledge that the payments to them pursuant to the Settlement Agreement meant that they had no further rights against David or Minnie or their respective estates, or any company in the James Richardson Group, or any trust or entity owned or controlled by them. Pursuant to clause 9.2, Ian and Stephen acknowledged that, following completion:

neither Ian nor Stephen have any further rights against David or Minnie or their respective estates or any company in the James Richardson Group or any other company trusts or entity owned or controlled by them or any of them and save as set out in this Agreement, Ian and Stephen, for themselves, their legal personal representatives and issue agree to release:

(a) each and every company, trust or other entity owned or controlled by David and Minnie, or either of them, from any Claim that they or any of them might have against any such company, trust or other entity;

(b) the Trustee of the David Mandie Family Trust and any other trustee of a trust which is controlled directly or indirectly by David or Minnie Mandie from any Claim that they or any of them may have against such trustee or the assets of any such trust and agree irrevocably to disclaim any entitlement in relation to any such trust and not to assert any rights as beneficiaries of any such trust;

(c) David and Minnie and their respective legal representatives from any Claim they or any of them may have against them or any of them on any basis whatsoever,

and Ian and Stephen agree to indemnify each of the parties referred to in this clause 9.2 against any loss, cost (including legal costs on a full indemnity basis), charge, liability or expense which may be sustained or incurred by them or any of them as a result (directly or indirectly) of any such Claim.

27 Minnie died on 26 April 1999 leaving most of her estate to David. David died on 17 August 2011. In his will of 14 October 2004, he bequeathed $500,000 to each of his grandchildren and, otherwise, devised and bequeathed his real estate and the residue of his personal estate to Evelyn or, in the event of her death, her children. On 18 April 2012, this Court granted probate in respect of his will.

28 Until around April 2012, when Edward and Nicholas learned of the existence of the Trust, none of the plaintiffs had any knowledge of its existence. The other plaintiffs became aware of it around this time, but some not until 2013.

29 In July 2012, Edward and Nicholas began to seek information about the Trust from the Trustee. On 31 July 2012, solicitor Mr Mark Cerché of Allens Linklaters ('Allens') - the lawyers representing the Trustee - wrote to Edward's and Nicholas' solicitors as follows:

We refer to your letter of 18 July 2012 in which you requested that our client, as trustee of the David Mandie Family Trust, provide you with certain information and documents regarding the affairs of the Trust.

Before we commence our consideration of the issues raised by your request, could you please confirm whether you have been provided a copy of the Settlement Agreement ... If you do not already have a copy, we suggest you seek to obtain a copy from Ian and Stephen Mandie or their legal advisers.

We should also note that Evelyn Danos, Director of Memart Nominees Pty Ltd, is currently overseas and if, following consideration of the Settlement Agreement, you still require our client to consider the provision of the documents and information referred to in your letter, Mrs Danos' absence will affect our client's ability to properly consider the matter and to provide to you the documents you requested.

30 For the remainder of 2012 and the first half of 2013, discussions continued between the solicitors acting for Edward and Nicholas and the Trustee. Allens contended that the Trustee was not obliged to provide the information sought by Edward and Nicholas and refused to provide it to them.

31 On 14 August 2013, Edward and Nicholas commenced proceeding S CI 2013 04203 in this Court (the 'information proceeding'). They sought orders to compel the Trustee to provide them with information about its decision-making on whether or not to distribute any income to them under the Trust from the years 2007 to 2013. By judgment and orders made on 20 June 2014, Macaulay J refused the relief sought.[3]

32 Edward and Nicholas applied for an extension of time to appeal Macaulay J's order. On 22 August 2014, that application was refused by orders of Osborn and Beach JJA sitting in the Court of Appeal.

33 On 12 September 2013, following enquiries made by the plaintiffs' solicitors about the Trust, Allens sought advice from counsel, Mr J Merralls QC and Dr M Rush ('Counsel').

34 On 25 September 2013, Counsel provided Allens with a memorandum of advice in which they described their brief as follows:

[W]e are instructed to provide advice about the obligations of the Trustee in respect of two aspects of the Trust: the power to make distributions of income and the power to exclude beneficiaries. Specifically, we have been asked to address the following three questions: (1) Does the Trustee have any obligation to consider the personal or other circumstances of Nicholas and Edward, or any other of the general beneficiaries, when making income distribution from the Trust? (2) If so, what must the Trustee do in practice to fulfil that obligation? (3) Can the Trustee exercise properly (i.e. lawfully) the power to exclude Ian, Stephen, their spouses and descendants from the class of general beneficiaries under the Trust, particularly in light of the dispute and settlement with Ian and Stephen (in 1994-1995), and the two proceedings which have now been commenced?

35 Counsels' advice included, in substance, the following matters:

(a) The circumstances of Stephen and Ian Mandie need not be considered by the Trustee as they had disclaimed any entitlement and agreed not to assert any rights as beneficiaries under the Trust by the Settlement Agreement of 1995;

(b) Although the Trustee was not obliged to consider the personal circumstances of the relevant beneficiaries (in this instance, the plaintiffs), it made 'practical sense' for the Trustee to invite beneficiaries, toward the end of each financial year, to provide a statement or information setting out their needs and ability to meet those needs and to consider information provided. Evidence of inquiries made and information obtained may assist a trustee in defeating any allegation that 'real and genuine consideration' has not been given to the exercise of the discretionary power; and

(c) The Trustee could lawfully exercise the discretion to exclude the plaintiffs on the basis of the broad discretion contained in clause 19, but the exercise of the discretion may become impugned as an improper exercise of discretion. This was because the exercise of a discretion to exclude beneficiaries would be subject to the same constrains as other exercises of power by trustees and fiduciaries and could not, for instance, be exercised capriciously.

36 On 2 October 2013, Dr Rush emailed Allens confirming his instructions that the reasons given for the Trustee's desire to exercise its discretion to exclude the plaintiffs were:

1. the fact of settlement in 1995 with Ian and Stephen (including the consideration paid);
2. David Mandie's desire to exclude Ian, Stephen, their spouses and children from the Trust (as conveyed to others).

37 In a further email to Allens on 3 October 2013, Dr Rush stated:

As you know, there is a reasonable likelihood that any decision to exclude Stephen and Ian's spouses and children will [be] sought to be impugned on the basis that the discretion was not exercised in conformity with the requirements set out in Karger v Paul. In particular, it might be expected that the excluded beneficiaries would contend that the trustee decided to exclude them only after the two proceedings were commenced. Even if the directors of the trustee company were to deny this, the coincidence in timing is difficult to escape, and the Court will likely be asked to infer that there were improper considerations motivating the trustee.

38 Further emails between the Allens and Counsel make clear that the solicitors understood that David and Minnie did not make the changes to the Trust Deed at the time of the Settlement Agreement because they were 'simply too upset to deal with [the varying of the Deed]' and, after that, David 'never got around to making the changes and just did not want to know about dealing with this aspect'. These instructions were also given to Counsel in a conference held on 9 October 2013 in which they were asked whether those in control of the Trust could consider the position of beneficiaries and not give them anything, noting that the grandchildren were not independent. They were also asked whether it was proper for the Trustee to exclude Ian and Stephen and their families. Senior counsel replied that the most that could be said was that if the Court was asked for advice by the Trustee, the Court would say that the exclusion was not improper. Risks would be reduced if there was an independent director.

39 In this email chain, the solicitors outlined to Counsel, at their request, the distributions made by the Trustee prior to and since 1995. Prior to 1995, no distributions were made to the plaintiffs or Evelyn. The only distributions were minimal and were to James Richardson to pay mortgage debts, to David for charitable donations and payments to David to cover personal drawings.

40 After 1995, the Trustee made no distributions to the plaintiffs. Small notional donations may have been made to Evelyn's three children, around $2000 each, in 1998, 1999 and 2000. However, it is unclear whether these sums were ever distributed. Since 1995 the Trustee made distributions to Evelyn to enable her to honour David's charitable pledges, to pay the same mortgage debts and to meet the mortgage obligations of a property David purchased shortly before his death.

41 Following this email, on 13 October 2013, Counsel prepared a document titled 'assumptions for David Mandie Family Trust' which included the following statements regarding their understanding of the Trustee's failure to exclude Ian and Stephen and the plaintiffs from the Trust during David and Minnie's lifetime:

1. On 19 December 1995, a formalised settlement agreement was executed by the parties.
2. Following the settlement, David Mandie was advised to take [irrevocable[4]] steps to exclude Ian and Stephen and their families from, among other things, the David Mandie Family Trust.
3. David did not exclude Ian and Stephen and their families from the Trust because:
   1. he and Minnie were too upset to deal with this matter at around the time of the settlement;

b. he preferred to keep his options open; and

c. he hoped there may be a reconciliation with his sons.

...

1. The passing of David, and the institution of the TFM proceeding and the information proceeding, have provided the occasion but not the reason for the Trustee to consider excluding Ian, Stephen, their spouses and children from the Trust.

42 Allens again briefed Counsel to advise on 17 October 2013. The first paragraph of the brief stated:

You are asked to advise Memart, as trustee of the David Mandie Family Trust [the Trust], on the prospects of obtaining a direction from the Court to the effect that it would be a proper exercise of the trustee's power to exclude Ian and Stephen Mandie, and their spouses and children, as beneficiaries under the Trust.

43 Under the heading 'Exercising power to exclude beneficiaries' Counsel's instructions stated:

The passing of David, and the institution of the Part IV proceeding and the provision of information proceeding, have provided the occasion but not a reason for Memart to consider excluding Ian, Stephen, their spouses and children from the Trust.

It is intended that a further director or directors will be appointed to Memart before any decision is made to exclude Stephen and Ian, or their spouses and children, from the Trust. No new director will be a named beneficiary, or is entitled to a distribution, under the Trust.

44 The 'Part IV proceeding' was initiated after David's death. The plaintiffs were Ian and Stephen and their claims were under Pt IV of the Administration and Probate Act 1958 against David's executors seeking further provision from David's estate. The claim was ultimately abandoned, and costs were awarded against the plaintiffs on an indemnity basis.[5]

45 By return memorandum of advice dated 30 October 2013, Mr Merralls QC and Dr Rush expressed their opinion as to the likely advice or direction that might be given by a Court on the understanding that the death of David and the commencement of proceedings by Ian and Stephen, and separately by their sons against the Trustee, had provided the occasion but not a reason for the Trustee to consider exercising the power of exclusion under the Trust. On that understanding, Counsel advised that the Trustee's exercise of power to exclude Ian and Stephen, and their spouses and children, would not be invalid as an exercise of power in bad faith or for an improper purpose, subject to the Trustee giving real and genuine consideration to relevant matters and on the assumption that any decision of the Trustee was made in good faith.

Information sought by the Western Australian Government

46 By application dated 21 January 2014 to the Department of Racing, Gaming and Liquor of the Government of Western Australia, James Richardson Pty Ltd or associated entities sought approval for the transfer of a liquor licence pursuant to the Liquor Control Act 1998 (WA) to permit it to sell liquor at Perth International Airport. By letter dated 10 March 2014, the Department responded requesting the full name, date of birth and current residential address of each Specified Beneficiary, and foreshadowed the need for a police report for each.

47 James Richardson's Western Australian solicitors advised that the Department may require a Personal Particulars form to be filed by each beneficiary. On 11 April 2014, Mr M Cerché, of Allens, advised the Western Australia solicitors that Ian and Stephen had disclaimed their interests in the Trust and, for practical purposes, were therefore excluded as beneficiaries.

48 In emails involving Evelyn and Mr Lasnitzki on 12 April 2014, it was agreed that the Western Australian solicitors should make submissions to the Department as to why the details of Ian and Stephen were not required. That occurred by letter dated 15 April 2014.

49 On 23 April 2014, the Department sought evidence of the formal removal of Ian and Stephen as 'primary beneficiaries'. This request was forwarded by the Western Australian solicitors to Evelyn and Mr Lasnitzki, prompting Memart to again seek the advice of Mr Merralls QC and Dr Rush on 28 April 2014. That same day, Mr Merralls and Dr Rush advised Ms Jenkins and Mr Cerché of Allens in conference that exclusion of Ian and Stephen was 'the least risky course' and that, in view of the Settlement Agreement, there was no obligation to tell Ian and Stephen of this decision. Ms Jenkins explained that advice to Evelyn.

50 Jane Mandie and Amanda Mandie made affidavits and gave evidence as did four of David and Minnie's grandchildren: Ian and Jane's two children Edward and Isabella and Stephen and Amanda's two children, Nicholas and Daniella. These six witnesses were cross-examined about their financial position and lifestyle on the basis that this evidence might have relevance to the Trustee's duty to consider their circumstances before distributing Trust income.

51 The four grandchildren had each received or were entitled to receive a bequest of $500,000 under David's will when they turn 25. They first learned of the David and Mandie Family Trust in 2012 or 2013.

52 They all gave evidence of their close relationship with David and Minnie over many years. David and Minnie appeared to have a great affection for all their grandchildren, spent time with them, gave them money on their birthdays and were proud of them.

53 Minnie died in 1999 and David on 17 August 2011. After Minnie's death, David lived with Evelyn and her family. The plaintiff grandchildren spoke of an estrangement with their aunt Evelyn after David's death.

54 Jane Mandie, who is married to Ian, spoke of an estrangement in David and Minnie's relationship with Ian and Stephen in about 1994, but said that they had been reconciled in about 1998. But Jane said that following David's death Evelyn had become distant and her family had not been to Evelyn's home for dinner on a Friday night or to visit since then. Jane Mandie agreed that she understood the family principle that 'children of parents look after their children'. She also agreed that she and her husband always looked after both their children very well. She and her husband had met all of their needs from family resources. Jane Mandie agreed that she divided her time between her Toorak house, a house at Portsea, the Corowa farm, skiing in Europe in winter and travelling to Europe in the European summer. Jane has never received any payment or distribution from the Trust.

55 Amanda Mandie also gave evidence. She is married to Stephen Mandie. She said that in about 1994 relations between Stephen and his parents became strained because of a disagreement about the family business in which Stephen and Ian had worked until about 1994. She said that in May 1998 she and Stephen were reconciled with David and Minnie and began to see them again. She said that although she had been very close to Evelyn from the time their son, Nicholas, was born in 1992, she became more distant and they were less close. Nicholas had been involved in starting a children's charity called Koala Kids, which assists children with cancer. She and Nicholas have spent much time working in connection with that charity and she is now a full time volunteer as the program director. Daniella has also been involved in the work of that charity.

56 The four plaintiff grandchildren, who are all now in their twenties, were cross-examined about their financial position. In 2014 they had each told the Trustee's solicitors following its enquiry that they had no independent means of support. They resided with their parents.

57 The grandchildren gave evidence of a life of great abundance in which they have been well provided for and many of their expenses paid by their parents. They appeared to often travel overseas to Europe and to resorts in Australia and participate in expensive recreations such as skiing and polo. They lived in their parents' substantial homes in Toorak. They had access to a house in Portsea and a farm at Corowa. Their parents provided them with motor vehicles and also were paying for the costs of this litigation.

58 Ian and Jane and Stephen and Amanda appeared to own directly or indirectly substantial real estate, both in the Melbourne CBD including a multi storey building, and in the inner eastern suburbs.[6]

59 On 27 May 2014, Mr Cerché emailed Ms Jenkins a draft 'Declaration by Memart Nominees Pty Ltd in relation to the [Trust]' that purported to exclude Ian and Stephen. Mr Cerché told Ms Jenkins that:

I have referred specifically to Specified Beneficiary at Evie's request as the WA liquor people have noted the brothers as Specified Beneficiaries.

Under the Deed Specified Beneficiaries are a subset of General Beneficiaries and the addition does no harm.

Comments before I send to directors for adoption. There is no power to exclude them as Specified Beneficiaries.

60 This Declaration was executed on 27 May 2014 and the exercise of power was stated to be pursuant to the proviso in sub-clause (iv) to clause 1(2). Minutes of a meeting of directors of the Trustee on 27 May 2014 recorded that:

The Chairman tabled a declaration, the effect of which was to exclude Ian Mandie and Stephen Mandie as named beneficiaries of the David Mandie Family Trust.

The Directors noted that under the terms of the Settlement Deed entered into on 19 December 1995 Ian Mandie and Stephen Mandie had given up their rights as beneficiaries.

It was Resolved that the Declaration be made and the Directors were authorised to sign the Declaration on behalf of the Company.

61 The full terms of the Declaration were as follows:

In pursuance of the power vested in the Trustee by the proviso in sub-clause (iv) to clause 1(2) of the Deed of Settlement dated 24 April 1978 relating to the David Mandie Family Trust and of all other powers enabling it so to do, the Trustee declares that Ian Mandie and Stephen Mandie, being two of the children of David and Minnie Mandie, are excluded for all purposes from the class of General Beneficiaries from the date of this Declaration and neither Ian Mandie nor Stephen Mandie shall have any interest whether as a General Beneficiary, Specified Beneficiary or otherwise under the Deed of Settlement.

62 Those present at the meeting were Milton Lasnitzki as Chairman and Garry Stock, via the telephone. The Declaration was sent to the James Richardson Group.

63 By letter dated 24 June 2014, several days after the dismissal of the information proceeding, which has been described previously, Edward received a letter from Ms Danos stating:

We refer to the David Mandie Family Trust (the Trust), under which the Trustee, Memart Nominees Pty Ltd, may exercise its discretion as to the making of distributions.

The Trustee will shortly consider whether to make distributions from the Trust with respect to financial year 2013/2014, and to whom any such distributions should be made. If you would like to provide information to the Trustee regarding your circumstances, such that the Trustee can take that information into account in exercising its discretion, please provide that information in writing by no later than 30 June 2014.

64 Isabella and Nicholas received identical letters as did Daniella's parents, Stephen and Amanda, as Daniella was a minor.[7] No letter was sent to Jane or Amanda.[8]

65 Shortly before 5.00 pm on Friday 27 June 2014, Donaldson Whiting + Grindal solicitors for Edward, Nicholas, Isabella and Daniella responded by letter to the Trustee's request for information. They stated that, owing to the short period of time allowed for a response, they would only be able to provide 'high level information'. That information was provided by statements of each grandchild, which were forwarded with the letter. Edward's and Nicholas' statements were substantially similar and said:

Completing final stages of University course with no independent means of support. Seeking business opportunities and would like to move out of the parental home but with no independent financial means of doing so or to fund any opportunities.

Is in her second year at University with no independent means of support.

Still at school with no independent means of support.

68 In that same letter, the solicitors welcomed the suggestion that the Trustees would give proper consideration to the exercise of its discretion having regard to the circumstances of their clients and suggested a meeting occur between their clients and the Trustee to enable it to give real and genuine consideration to the exercise of its discretion. The letter was faxed to Allens at 4.47 pm on Friday 27 June 2014 and a copy also sent by post.

69 At 8.00 pm on Friday 27 June 2014, Evelyn Danos as Chairperson and Mr Lasnitzki, together with Mr Stock, via teleconference, met in their capacity as directors of the Trustee and resolved to appoint the income of the Trust for the year ending 30 June 2014 pursuant to clause 4(1)(b) of the Trust Deed. This resolution was made despite Evelyn's letter to Ian and Stephen's children telling them that they had until 30 June 2014 to respond. The sum of $640,000 was appointed to Evelyn Danos. Other income was distributed between four other trust funds that were associated with the James Richardson Group in amounts ranging between $160,0000 and $580,0000. The trustee of the Grilly Investments Property Trust, held for the benefit of David Mandie's estate, received the balance of the Trust income of $1,860,000 and was the largest recipient.

70 Mr Cerché responded by letter dated 30 June 2014 stating that Allens had passed on to the Trustee the information concerning the circumstances of each of their clients, and was seeking instructions about a possible meeting, although it was understood that some of the plaintiffs were overseas, and he enquired when they would be available for a meeting. Donaldson Whiting + Grindal responded the same day stating that their clients would be available for a meeting after 24 July 2014.

71 It is not clear on the evidence whether or not Allens had passed on to the Trustee's directors the grandchildren's statements prior to the resolution on the Friday evening. The plaintiffs say that the 30 June 2014 letter by Mr Cerché implies that the Trustee did not receive the statements in advance of passing the resolution. No evidence was led to attempt to prove the knowledge of the Trustee at the time the resolution was made.

72 Some of the documents admitted into evidence concerned information of Ian's and Stephen's financial circumstances that it appeared the Trustee's directors had received.[9] But there was also no evidence that the Trustee's considered that material.

73 On 1 September 2014, Ms Jenkins received a letter of advice from Dr I Hardingham QC concerning Edward's and Nicholas' information proceeding. He said that, having read the Court of Appeal decision in that proceeding, he did not believe that the case had merit and did not believe the plaintiffs would be granted special leave to appeal to the High Court, should they seek it. He stated that 'the views expressed by the Court of Appeal are simply not attended by sufficient doubt to warrant further review'. Ms Jenkins forwarded this letter of advice to the directors of the Trustee.

74 Soon afterwards, at 8.00 pm on 1 September 2014, minutes of a meeting of directors of the Trustee record that two of the Trustee's directors, Mr Lasnitzki and Mr Stock met and resolved that:

... pursuant to subclause (iv) to clause 1(2) of the Deed of Settlement relating to the David Mandie Family Trust to declare that:

(a) the spouses, the children and grandchildren of Ian Mandie and Stephen Mandie, being two of the children of David and Minnie Mandie, and the spouses, widows and widowers of such children and grandchildren; and

(b) any corporation in which any of Ian Mandie, Stephen Mandie or any of the persons specified in paragraph (a) hold more than ten per centum of the issued shares,

are excluded as General Beneficiaries from the date hereof and that Mr Lasnitzki be authorised to sign a declaration to that effect on behalf of the Company as Trustee of the David Mandie Family Trust.

75 On 5 September and 12 September 2014, Edward's and Nicholas' solicitors, Donaldson Whiting + Grindal, wrote to Allens requesting information and documents about the administration of the Trust, including 'the information available to the Trustee regarding the circumstances of each of our clients'. The first letter requested access to legal advice obtained by the Trustee concerning the effect of the 1995 Settlement Agreement on the administration of the Trust. The second letter stated that Edward and Nicholas did not share the view that the Court had no capacity or jurisdiction to supervise the Trustee in the exercise of its discretionary powers under the Trust Deed other than when breaches of the Trustee's obligations were alleged. This letter further stated that Allens' failure to provide documents to Edward and Nicholas caused them to believe that they had or may have grounds upon which to obtain relief against the Trustee for breaching its duties and therefore may be liable to be removed from office.

76 On 18 September 2014, Mr Lasnitzki, on behalf of the Trustee, made the following declaration excluding the plaintiffs from the Trust:

In pursuance of the power vested in the Trustee by the proviso in sub-clause (iv) to Clause 1(2) of the Deed of Settlement dated 24 April 1978 relating to the David Mandie Trust and of all other powers enabling it so to do, the Trustee declares that:

the spouses, the children and grandchildren of Ian Mandie and Stephen Mandie, being two of the children of David and Minnie Mandie, and the spouses, widows or widowers of such children and grandchildren; and

any corporation in which any of Ian Mandie, Stephen Mandie or any of the persons specified in paragraph (a) hold more than 10 per centum of the issued shares

are excluded for all purposes from the class of General Beneficiaries and from the date of this Declaration none of them shall have any interest as a General Beneficiary, or otherwise, under the Deed of Settlement.

77 By letter dated 19 September 2014, Allens responded to Donaldson Whiting + Grindal stating that it would provide Edward and Nicholas with some of the documents requested, including records of all legal advice obtained by it concerning the administration of the Trust from the time of David Mandie's death to 30 June 2014. The letter also informed Donaldson Whiting + Grindal of the resolution of 1 September 2014, stating that 'we are instructed to inform you that, pursuant to cl 1(2) of the Trust Deed, on 1 September 2014 our client resolved to exclude a number of beneficiaries, including your clients, from the class of general beneficiaries of the David Mandie Family Trust'. The letter enclosed a copy of the September Declaration of exclusion.

78 By letter of 26 September 2014, Donaldson Whiting + Grindal invited the Trustee to reconsider its position, and confirm that each of the declarations were withdrawn. They contended that the substantive effect of the declarations was to ensure Trust benefits enured for the exclusive benefit of the close members of Evelyn's family. The letter further contended that:

The Trustee does not have the authority to make the Declarations on the basis suggested in those notices, or at all. The action by the Trustee in purporting to vary the Trust by the purported exclusion of each of our clients and other General Beneficiaries, to the obvious personal advantage of a Director of the Trustee and members of her family, is not authorised by the Trust Deed and constitutes a breach of the Trustee's obligations to our clients.

79 By writ filed 15 December 2014, a few weeks after they learned of the September Declaration, the plaintiffs commenced this proceeding.

Submissions on the validity of the declarations

80 While the parties agreed that Ian and Stephen Mandie irrevocably disclaimed their interests in the Trust by the Settlement Agreement, they disputed the effect of the disclaimers on the interests of their children and of other members of their families.

81 The May Declaration states that the Trustee made it under the proviso to subclause (iv) to clause 1(2) of the Deed and 'all other powers enabling it so to do'. It excluded Ian and Stephen from the class of General Beneficiaries and stated that neither of them 'shall have any interest as a General Beneficiary, Specified Beneficiary or otherwise under the Deed of Settlement'.

82 The September Declaration stated that the spouses, children and grandchildren of Ian and Stephen and the spouses, widows or widowers of their children and grandchildren:

are excluded for all purposes from the class of General Beneficiaries and from the date of this Declaration none of them shall have any interest as a General Beneficiary, or otherwise, under the Deed of Settlement.

83 The plaintiffs seek orders that the Trustee's declarations are invalid and of no legal effect. They contend that as discretionary beneficiaries they are entitled to orders for the due administration of the Trust.

84 The two grounds upon which the plaintiffs seek to invalidate the first declaration are that:

(a) subclause 1(2) of the Trust Deed did not empower the Trustee to exclude the interests of any person as a Specified Beneficiary and was thereby in breach of trust;

(b) the purpose of excluding Ian and Stephen as Specified Beneficiaries under the Trust Deed was to ensure that their children would not be children of a Specified Beneficiary within the meaning of sub-clause 5(2) of the Trust Deed.

85 An issue that can be conveniently discussed at this point is whether the plaintiff grandchildren continue to hold any interest under the Trust following their fathers' disclaimers. They submitted that following their fathers' disclaimers, by reason of clause 5(2) of the Trust Deed and the doctrine of acceleration, they, as Ian and Stephen's children, had a vested, although defeasible, interest in the Trust as takers in default of appointment. This interest was additional to their interest as General Beneficiaries.

86 There is no dispute that the Trustee had power to exclude the plaintiff grandchildren from the class of General Beneficiaries provided that the power was exercised for a proper purpose. The Trustee sought to achieve this exclusion by the September Declaration. But the plaintiff grandchildren contend that the Trustee had no power to exclude their interest as takers in default of appointment. I did not consider that the plaintiffs' pleading attacking the September declaration raised any issue of lack of power, but rather argued that the power possessed by the Trustee had been exercised for an improper purpose. On 19 March 2018, I ruled in substance, that the plaintiffs' pleadings did not permit submissions that the Trustee lacked power to make the September declaration. However, as the parties argued the question of the nature and extent of any interest that the plaintiff grandchildren had in the Trust following their fathers' disclaimers, I should express my conclusion on that issue.

87 The Trustee accepted that it could not exclude Ian and Stephen from the class of Specified Beneficiaries and that the plaintiff grandchildren were children of a Specified Beneficiary. The Trustee also accepted that the plaintiff grandchildren were not bound by the Settlement Agreement which contained the disclaimer.[10]

88 But the Trustee contended that the plaintiff grandchildren's interests under clause 5(2) were as substituted donees of their fathers' interests and that upon their fathers' disclaimers there was nothing for them to receive, and nothing that might flow through to them, in default of appointment upon the vesting day. They therefore had no interest under the Trust.

89 The proposition that the plaintiff grandchildren have vested, although defeasible, interests in the Trust as takers in default of appointment depends on the construction of clause 5(2) of the Trust Deed, which for ease of reference I will restate in relevant parts:

provided always that the children of any Specified Beneficiary who shall have died before the Vesting Day shall take (and if more than one as tenants in common in equal shares) the share which such deceased Specified Beneficiary would have taken had he survived to the Vesting Day and attained a vested interest...

90 The plaintiff grandchildren contend that their fathers, Ian and Stephen, were Specified Beneficiaries who had a vested defeasible interest in the corpus of the Trust, as takers in default of appointment on the vesting day in 2057.

91 In Queensland Trustees Ltd v Commissioner of Stamp Duties (Qld),[11] the High Court considered the objects of a discretionary trust of income to be takers in default of appointment. The objects amongst whom distribution of trust property would be made in the event of failure of the trustees to make a selection took equal vested interests in the subject-matter of the power, which interests were liable to be divested by an exercise of the trustees' power of selection. In Commissioner of Taxation of the Commonwealth of Australia v Ramsden,[12] the Full Federal Court described a Specified Beneficiary under a discretionary trust as one of the general beneficiaries in whose favour the net income of the trust may be applied and as a taker in default of appointment. The Court stated that:

A taker in default of appointment is ordinarily regarded as having a vested interest in the property to be taken, though liable to be divested by an exercise of the trustee's power to appoint elsewhere...The interest although vested, is defeasible. As takers of the trust fund on the vesting day in default of any appointment by the trustee, the specified beneficiaries also have a vested defeasible interest in the corpus of the trust...[13]

92 In addition to relying on the effect of clause 5(2), the plaintiff grandchildren contended that they had attained their fathers' interest following the 1995 disclaimers pursuant to the doctrine of acceleration. That doctrine most commonly applies upon the determination of a life interest,[14] but it can also apply when a prior interest is determined by disclaimer. It applies to interests under wills as well as under trusts or other settlements. It can apply to the interest of takers in default of appointment.

93 The plaintiff grandchildren referred to the judgment in Re Flower's Settlements Trusts; Flower v Inland Revenue Commissioners[15] in which Jenkins LJ said of the doctrine of acceleration that:

The principle I think is well settled... where there is a gift to some person for life, and a vested gift in remainder expressed to take effect on the death of the first taker the gift in remainder is construed as a gift taking effect on the death of the first taker or on any earlier failure or determination of his interest, with the result that if the gift, to the first taker fails - as, for example, because... he is disclaimed, then the person entitled in remainder will take immediately upon the failure or determination of the prior interest, and will not be kept waiting until the death of the first takers.[16]

94 McGarvie J described the effect of a disclaimer as follows:

The consequence of the disclaimer by [W] is that in law she is treated as retrospectively disentitled to the interest declared for her benefit in the trust deed. However, in the working out of legal rights the law does not disregard the fact that until she disclaimed she had a right to the beneficial interest. It has been described as a right 'defeasible by the beneficiary's own act of disclaimer': Re Stratton's Disclaimer. See also Re Parsons.[17]

95 The plaintiff grandchildren relied on the decision of this Court in Re Dougharty; National Trustees Executors and Agency Co Australasia Ltd v Bretnall[18] but I do not consider that decision is of present assistance as the bequest in that case was an original gift and not a gift by way of substitution.

96 The Trustee disagreed with the plaintiff grandchildren's submissions and contended that clause 5(2) bestowed a substitutionary gift upon them, the donor of which was the parent Specified Beneficiary. It followed, in the Trustee's submission, that clause 5(2) only permitted the donee to take what the donor would have taken were they not deceased. In support of this proposition, the Trustee relied on the statement of Long Innes J in Re Wells; Wells v Begley[19] that:

Where a testator directs that a substitutional donee should, in the event of the death of one of his children, take the share which that child would have taken had he or she survived the testator, the substitutional donee would take the same share, no more and no less, but the same in all respects, as the original donee would have taken had he or she survived the testator.[20]

97 The Trustee therefore submitted that the plaintiffs could take under clause 5(2) if their father was dead at the vesting day only 'the share which such deceased Specified Beneficiary would have taken had he survived to the vesting day and attained a vested interest'. Due to their disclaimers, Ian and Stephen could not take a share of any Trust property remaining on the vesting day. It followed, so the Trustee contended, that the plaintiffs would also take nothing on the vesting day in 2057, even if there was undistributed Trust property.

98 It is important to focus on the terms of the Trust Deed to determine the nature and extent of any interest that Ian and Stephen's children have under the Trust following the disclaimers. Trust deeds are to be interpreted and construed in the same manner as contracts or any other instruments.[21] I consider that, at least in the first instance, the effect of the Trust Deed should be interpreted without reference to the operation of the disclaimers.

99 I accept that the September Declaration validly excluded the plaintiff grandchildren's interests as General Beneficiaries - later in these reasons I reject the plaintiff grandchildren's improper purpose attack on that declaration. The parties, however, differed as to whether the plaintiff grandchildren possessed any other interest under the Trust.

100 It is significant that clause 5(2) of the Trust Deed operates on the event that a Specified Beneficiary, in this case either Ian or Stephen, has died before the vesting day. If that has occurred, the subclause confers on their children the share in the Trust Fund that their fathers would have taken had they survived to the vesting day and attained a vested interest. Those last four words are significant, because they assume that the fathers would have attained a vested interest.

101 The operation of the Trust Deed upon those assumed facts may result in the plaintiff grandchildren taking the share of a taker in default of appointment, which their fathers would have taken had they survived. Under the terms of the Trust Deed, the plaintiff grandchildren's interests under clause 5(2) as takers in default of appointment exist despite Ian's and Stephen's disclaimers. This is because the provision operates on the assumption that the deceased father would have attained a vested interest. Under the Trust Deed, as distinct from under the disclaimers, had the fathers not died before the vesting day, they would have attained a vested interest in any share of the Trust property that had not been otherwise appointed. Ian and Stephen did not cease to be Specified Beneficiaries under the Trust Deed because of their disclaimers, but their disclaimers meant that they were prevented from taking any share or interest that otherwise would have been distributed to them. Although Ian and Stephen signed the disclaimer on behalf of their children, it was not suggested that their children were thereby bound.

102 In my opinion, the potential interest of the plaintiff grandchildren arises under clause 5(2) if their fathers 'shall have died'. The content of that potential interest is the share that their fathers would have taken had they survived to the vesting day in 2057 and attained a vested interest. If the circumstances described in clause 5(2) occurred, the plaintiff grandchildren did not have to be Specified Beneficiaries to assume their fathers' interests as takers in default of appointment. Of course, the identification of any interest that the plaintiff grandchildren may hold as takers in default of appointment may well be academic, because the Trust Fund or Trust income may have been distributed or otherwise appointed before the vesting day in 2057.

103 There is however another matter to consider. The relevant part of clause 5(2) directs attention to the state of affairs on the vesting day in 2057 in the case of the children of a Specified Beneficiary who has died. The provision cannot be applied until the vesting day, because the Trust property may all have been appointed to persons other than Specified Beneficiaries before then. However clause 5(2) is interpreted, I therefore do not accept that nothing can flow to the Specified Beneficiaries' children because of the disclaimers. That question cannot be answered until 2057. To take one possible scenario, the disclaimers may be varied before the vesting day.

104 The decision of In re Wells[22], previously mentioned, upon which the Trustee relied, is not precisely on point because it primarily concerned the operation of the doctrine of ademption under a will. More particularly, it concerned the application of that doctrine in favour of a substitutional donee, who was directed to take the share which the original donee would have taken had he survived the testator. The will contained bequests to children and then stated:

And I further direct that in case any child of mine shall predecease me but leaving him or her a child or children him or her surviving then such child or if more than one then such children shall take in equal shares the share which his her or their parent as the case may be would have taken under this my will in case such child so predeceasing me had survived me.[23]

105 Long Innes J decided that the gift was substitutional and not original and the substitutional donee on the death of one of the testator's children took the same share, in all respects, as the original donee would have taken had he or she survived the testator.[24] But that decision did not concern whether the original beneficiary had a vested interest subject to divestment.

106 In addition to my conclusion based on the text of clause 5(2), it is appropriate to consider the application of the doctrine of acceleration, which formed part of the basis on which the plaintiffs contended that they maintained an interest under the Trust that could not be excluded.

107 Halsbury describes the doctrine of acceleration in the following terms:

The effect of failure of a prior life interest or other particular interest through the donee of that interest being dead or prevented by law from taking the gift, for example owing to the attestation of the will by him or his spouse or his civil partner, or through revocation by codicil, disclaimer, forfeiture or lapse, is ordinarily to accelerate the subsequent interests which are limited to take effect on the regular determination of that prior interest, but the will may expressly or impliedly indicate contrary intention.[25]

108 Theobald states that the acceleration doctrine applies to vested interests that are subject to divestment:

The rule is not confined to absolutely vested remainders but applies to a remainder which is vested subject to being divested: under the doctrine of acceleration the remainder is accelerated and takes effect in possession immediately but remains liable to be divested in accordance with the terms of the will.[26]

However, Theobald states the position in the case of powers of appointment as follows:

In the absence of a contrary intention, an appointment to a non-object for life with remainder to an object is a valid appointment in favour of the object in remainder; but the interest of the object in remainder is not accelerated. Thus, where the testator had a special power of appointment among the children of his first marriage, and appointed a life interest to his second wife and from and after her decease to one child, it was held that during the wife's life the income went as in default of appointment.[27]

109 In my opinion, the doctrine of acceleration did not operate following Ian and Stephen's disclaimers in 1995 so as to advance to their children their interests as takers in default of appointment. While the acceleration doctrine applies upon a disclaimer, in the same way as it does upon the prior interest holder's death, its operation is subject to any contrary intention apparent in the will or settlement deed. In this case, the plaintiffs grandchildren had to survive until 2057 to the vesting day to learn whether there remained any Trust property for them to take. There was nothing to accelerate until 2057 and then only if there was some Trust property remaining and not otherwise appointed. The present circumstances differ from the disclaimer of a life interest in property where the person holding the remainder can accelerate to possession of the property.

110 I will next describe the plaintiffs' challenges to the Trustee's two declarations which in essence are based on allegations of improper purpose.

111 At trial, particularly in closing submissions, issues arose regarding the particulars provided by the plaintiffs of the alleged improper purpose. In separate rulings, I determined that various submissions could not be put or supported on the terms of the plaintiffs' pleadings and the particulars. I refused the plaintiffs leave to further amend their statement of claim.

112 The plaintiffs sought to impugn the May Declaration on the ground that it was made for an improper purpose and sought to exclude Ian and Stephen as Specified Beneficiaries. They argued that the exclusion of Ian and Stephen as Specified Beneficiaries was in breach of the Trust and occurred in an attempt to ensure that their children would not be children of a Specified Beneficiary within the meaning of 5(2) of the Trust Deed. The Trustee knew at the time of making the May Declaration that it did not have power to exclude Specified Beneficiaries.

113 The plaintiffs claim that the exclusion of Ian and Stephen was 'entirely unnecessary and ineffective' in light of the Settlement Agreement and Ian and Stephen's disclaimers. They contend that the Trustee had no power to exclude any Specified Beneficiary. They argued that the term 'Specified Beneficiary' is significant to the architecture of the Trust, extending beyond designating a class of beneficiaries who are a subset of General Beneficiaries. In particular, they highlighted the significance of the class of Specified Beneficiaries to the operation of clause 5(2), under which they take a share in default of appointment of the Trust Fund on vesting day.

114 The plaintiffs submitted that the May Declaration, specifically the purported removal of Ian's and Stephen's interests as Specified Beneficiaries by the words 'or otherwise', was an improper way of limiting the rights of their children as takers in default of appointment under clause 5(2).

115 The Trustee disputed the plaintiffs' allegations of improper purpose. It contended that they had produced no evidence to support their allegations. The Trustee contended that it was inherently absurd to suggest that its declarations were directed at preventing the plaintiffs sharing in the Trust Fund, as that event could only occur at the vesting date in 2057, and only then if the Trustee had not previously exercised its power of appointment under clause 5(1) to distribute the Trust Fund to other persons or excluded the plaintiffs as General Beneficiaries.

116 The Trustee said that the May Declaration had two proper purposes. The first was to give effect to the Settlement Agreement of 1995, as a result of which Ian and Stephen no longer had an interest in the Trust, a purpose which also gave effect to David and Minnie Mandie's Statement of Wishes.

117 The second purpose relied on by the Trustee was that the May declaration was designed to give required information about the primary beneficiaries to the Western Australian Department of Racing, Gaming and Liquor in connection with the grant of a liquor licence to James Richardson at Perth Airport. The second part of the declaration acted as a formal statement that, by reason of their disclaimers, Ian and Stephen were no longer involved in the Trust as Specified Beneficiaries. The Trustee contended that the Trustee was not obliged to inform Ian and Stephen of the May Declaration.

118 The Trustee submitted that the Court should adopt a construction of the declaration that gave it validity rather than one that rendered it invalid,[28] and accordingly contended that the May Declaration should not be read as excluding Ian and Stephen as Specified Beneficiaries. Rather, the operative part of the declaration stated that Ian and Stephen were 'excluded for all purposes from the class of General Beneficiaries from the date of this Declaration...'. The words that followed were a declaration of the consequences of their exclusion as General Beneficiaries. The Trustee argued that the category of Specified Beneficiaries was a sub-set of the category General Beneficiaries, a construction supported by the architecture of clause 1(2), which lists 'the Specified Beneficiaries' as the first category of 'General Beneficiaries'. Ian and Stephen were considered General Beneficiaries because of their status as Specified Beneficiaries. The Trustee's exercise of the power of exclusion was to exclude Ian and Stephen from the class of General Beneficiaries for all purposes.

119 The final words of the declaration, 'or otherwise' accurately stated the consequence of Ian's and Stephen's 1995 disclaimers, which was that they no longer had any interest in the Trust, whether as a General Beneficiary, Specified Beneficiary or otherwise.

120 The plaintiffs' pleaded attack on the September Declaration is that:

On or about 18 September 2014, Memart (by its directors Mr Lasnitzki and Mr Stock):

(i) in bad faith, arbitrarily, capriciously, and

(ii) without any real or genuine consideration, and

(iii) otherwise than for the purpose for which the power in sub-clause 1(2)(iv) of the Trust Deed was conferred

purportedly declared, in pursuance of the power vested in it by the proviso in sub-clause (iv) to clause 1(2) of the Trust Deed and of all other powers enabling it to do so, that:

(a) the spouses, the children and grandchildren of Ian and Stephen, and the spouses, widows or widowers of such children and grandchildren; and

(b) any corporation in which Ian, Stephen or any of the persons specified in paragraph (a) above held more than 10% of the issued shares.

were excluded for all purposes from the class of General Beneficiaries of the Trust and from the date of the declaration none of them would have any interest as a General Beneficiary or otherwise, under the Trust Deed.'

The Second Declaration is in writing, signed by Lasnitzki for and on behalf of Memart...

Memart's purpose in making the Second Declaration was to ensure that the assets of the Trust enure for the exclusive benefit of Evelyn and the close members of her family, to the exclusion of the plaintiffs.

The Second Declaration was made in circumstances where:

(i) Edward and Nicholas had, since July 2012, been requesting information from Memart; and

(ii) In the context of such requests, Edward and Nicholas had, by letter from their solicitors to Memart's solicitors dated 12 September 2014, put Memart on notice of matters which caused them to believe that they had or may have had grounds on which to obtain relief against Memart on the basis that it had acted, or was acting, in breach of its duties and was therefore liable to be removed from office.

122 The plaintiffs submitted that, as evidenced by the memorandum to Counsel, from at least 12 September 2013, the Trustee's expressly stated object, purpose and intention was to exclude Ian and Stephen Mandie, and their spouses and descendants from the class of General Beneficiaries under the Trust Deed.

123 The plaintiffs therefore submitted that, in making the September Declaration, the Trustee did not exercise the exclusion power 'with an entire and single view to the real purpose and object of the power'. Rather, the power was exercised for an ulterior and improper purpose, namely, to sequester all of the assets and income of the Trust for the sole benefit of Evelyn Danos, her spouse, family and descendants. The September declaration was therefore a fraudulent use of the Trustee's exclusion power and wholly void.

124 The plaintiffs relied on the following facts as establishing that the Trustee had acted for an improper purpose in making the September Declaration.

125 The Trustee knew that by the time of David Mandie's death in August 2011 he had no wish or intention to exclude Ian's and Stephen's spouses or children from the Trust. Thus at no point between 1995 and David's death, although he controlled the Trustee and the Trust, did he take steps to exclude them from the Trust. He did not want to exclude them and on the uncontradicted evidence he got on well with them. In his will of 14 October 2004, he made an identical bequest of $500,000 to each of his grandchildren living at the date of his death.

126 Although the plaintiffs were not parties to or bound by the Settlement Agreement, the Trustee apparently considered that they did not respect its terms. However, that view was baseless, because they were not parties to the Settlement Agreement and were either still children or not yet born when it was made.

127 Evelyn Danos was estranged from her brothers and their children. All of the distributions made from the Trust since the death of David Mandie had been made directly or indirectly for her or her family's benefit.

128 Within weeks of Edward and Nicholas Mandie commencing the information proceeding in mid-August 2013, the Trustee sought advice from Counsel about the Trustee's object, purpose and intention, which was stated to exclude, among others, all of the plaintiffs as General Beneficiaries of the Trust.

129 Following the Trustee's request, it received information in writing from Edward, Isabella, Nicholas and from Daniella's parents in respect of Daniella, by 30 June 2014 as to their needs and circumstances. But, on 27 June 2014, the Trustee resolved to distribute to Evelyn Danos, and other entities in which she and her family had interests all of the distributable income of the Trust for the year ended 30 June 2014.

130 On 1 September 2014, after Edward's and Nicholas's application for an extension of time in which to appeal from the dismissal of the information proceeding, the Trustee by its directors, Milton Lasnitzki and Garry Stock took steps to exclude all of the plaintiffs as General Beneficiaries of the Trust and passed a resolution in the terms set out previously.

131 However, on 18 September 2014, the Trustee made a declaration in broader terms. The timing of that declaration was caused by a desire to avoid an inference 'that there were improper considerations motivating the Trustee' following or in accordance with Counsel's advice of 3 October 2013'. The declaration was made without any further enquiry of the needs of the plaintiffs needs or of any other objects of the Trust. The declaration added the critical words 'or otherwise', which were not contained in the resolution.

132 The plaintiffs also contended that the Trustee's power of exclusion could only be used to exclude beneficiaries based on conduct which justified their exclusion and no such conduct had been alleged or established.

133 The Trustee submitted that under the Trust Deed it had an 'absolute' or 'uncontrolled' discretion to exercise the powers of exclusion and to distribute trust income.[29] Accordingly, all the beneficiaries had a 'fragility of enjoyment' from the commencement of the Trust. No General Beneficiary had any right to be provided for under the Trust. Clause 1(2), the exclusion clause, also confers an unfettered discretion. Further, clause 11 allows interested persons under the Trust to also be directors of the Trustee and to participate in decision-making without those decisions being infected with impropriety.[30]

134 As mentioned, the Trustee relied on two reasons for the exclusion of beneficiaries in the declarations. The first was the settlement in 1995 with Ian and Stephen, including the large consideration paid to them, and David Mandie's desire to exclude Ian, Stephen, their spouses and children from the Trust. The second was the requirement to provide the Western Australian Department with information about the beneficiaries under the Trust.

135 The Trustee was entitled to consider David and Minnie's Statement of Wishes and take it as remaining operative. The exclusion conformed with that statement and the purpose of the Settlement Agreement, under which payments to Ian and Stephen amounting to over $20 million each in 1995 had been made and real and personal property transferred to them, the value of which was said, by applying commercial rates of return, to be the equivalent of about $130 million by 2014, and those payments were intended to satisfy their families' claims on the Trust. The Mandie family tradition was that parents looked after their children and the plaintiffs' evidence showed that their parents had done so lavishly.

136 The commencement of proceedings, first by Ian and Stephen, and later by their children, provided the occasion but not the reason for the Trustee to exercise the power of exclusion. Before exercising that power, the Trustee had obtained careful and detailed legal advice from leading counsel. That advice was that the Trustee could, if it thought it appropriate to do so, act in accordance with the Statement of Wishes and exclude Ian and Stephen and their families as beneficiaries. The Trustee submitted that it had not made the September Declaration to head off the threat of litigation by the plaintiffs and, that if anything, the declaration might have been considered likely to provoke a further court challenge. In fact, the decision to exclude beneficiaries was made only after the conclusion of Edward's and Nicholas' information proceeding.

137 Excluding Ian and Stephen and their children as General Beneficiaries under the Trust necessarily advantaged Evelyn, but that consequence was not the purpose of the declaration. The exercise of the exclusion power was always likely to benefit the remaining beneficiaries, to the detriment of those who were excluded, and therefore could always be described as discriminatory. But that did not render the declaration invalid.

138 Evelyn Danos was not one of the directors who made the declaration.

139 The plaintiffs' submission that a beneficiary could only be excluded under clause 1(2) of the Trust Deed for conduct was not supported by the proper interpretation of that provision. Such a limitation upon the power of exclusion could not sit with the terms of the exclusion power itself. It was also inconsistent with the judgments in Curwen v Van Breck Pty Ltd.[31]

Analysis of the submissions concerning the validity of the declarations

140 The initial issue which arises concerning the May Declaration is the identification of its purported effect.

141 The Trustee did have power to exclude Ian and Stephen as General Beneficiaries under proviso (iv) of clause 1(2). I will deal later with the allegation that the Trustee exercised that power for improper purposes.

142 However, the second part of the May Declaration raises the additional issue of whether the Trustee purported to exercise powers that it did not possess by attempting to exclude Ian and Stephen as Specified Beneficiaries. If it did, then the May Declaration would be, to that extent, invalid.

143 I reject the Trustee's argument that the category of Specified Beneficiary is a 'mere sub-set of General Beneficiary', because the Trust Deed, considered as a whole, gives significance to the position of Specified Beneficiaries. They have an interest additional to those of General Beneficiaries, albeit a defeasible one, as takers in default of appointment on the vesting day. Furthermore, the application of the term 'Specified Beneficiary' determines the identity of General Beneficiaries as evidenced in clause 1(2)(b). For instance, the plaintiffs in this proceeding were only deemed to be General Beneficiaries, by virtue of them being the spouses and children of Specified Beneficiaries.

144 The remaining issue concerning the validity of the May Declaration is whether it purported to affect the additional interest of a Specified Beneficiary as a taker in default of appointment. From one perspective, the May Declaration purported to do so. However, the declaration must be considered in light of the Settlement Agreement, a consequence of which was that Ian and Stephen were no longer eligible to take a share of Trust property remaining as takers in default of appointment.

145 The May Declaration relied on clause (iv) to clause 1(2) of the Trust Deed and excluded Ian and Stephen 'for all purposes from the class of General Beneficiaries from the date of this Declaration'. That part of the declaration is within the Trustee's power if it was not exercised for an improper purpose. The remainder of the May Declaration stated that 'and neither Ian Mandie nor Stephen Mandie shall have any interest whether as a General Beneficiary, Specified Beneficiary or otherwise under the Deed of Settlement'. There was no power to exclude Ian and Stephen as Specified Beneficiaries under clause 1(2) or otherwise under the Trust Deed.

146 However, in my opinion, the May Declaration did not purport to exclude Ian and Stephen as Specified Beneficiaries, but rather as General Beneficiaries. The part of the declaration in which the verb 'excluded' occurs has as a predicate 'for all purposes from the class of General Beneficiaries'. The verb 'excluded' is not part of the final section of the declaration beginning with the words 'and neither'. That final section of the declaration is either a statement of mixed fact and law or a statement of the Trustee's understanding that Ian and Stephen no longer had interests under the Trust. It is not a statement of exclusion of any such interests, but a statement that they do not have such interests. The context for the declaration was the need to provide an authoritative statement to the Western Australian Department concerning the identity of the Specified Beneficiaries of the Trust. That purpose explains the presence of the final section of the declaration, which was an accurate statement of the effect of the 1995 disclaimers.

147 If the first part of the May Declaration excluding Ian and Stephen as General Beneficiaries had been followed by words along the lines of 'and Ian and Stephen have no interest under the Trust Deed because of the Disclaimer', the plaintiffs' challenge would have been clearly without basis. However, the wording that was used in the final section of the declaration, when viewed in context, appears to have been directed to the same end and achieves the same purpose as words of the kind I have mentioned.

148 The May Declaration said nothing about the interests of Ian and Stephen's children and I do not consider that it had any effect on their interests. The improper purpose ground of challenge to the May Declaration is therefore not established. Ian and Stephen had disclaimed any interest they might otherwise have taken as General Beneficiaries. The declaration did not purport to, and could not exclude their interest as Specified Beneficiaries.

149 I have earlier concluded that, despite their fathers' disclaimers, the plaintiff grandchildren retained the possibility of taking an interest in default of appointment under clause 5(2). I do not consider that the fact that the Trustee submitted, during this hearing, that they had no such interest has relevance to the construction of the May Declaration or establishes any improper purpose associated with it.

150 The plaintiffs' attack on the September Declaration is based on the argument that it was made to ensure that the assets of the Trust enured for the exclusive benefit of Evelyn Danos and the close members of her family, to the exclusion of the plaintiffs. The plaintiffs relied on circumstances preceding the making of the September Declaration, especially that, since July 2012, Edward and Nicholas had been requesting information from the Trustee and suggested that they believed or had grounds to believe that the Trustee had breached its duties and was liable to be removed. I have previously set out propositions of fact upon which the plaintiffs relied to establish an improper purpose concerning the May Declaration .

151 In Karger v Paul,[32] McGarvie J described the duties of a trustee of a discretionary trust in the following terms:

...with one exception, the exercise of a discretion in these terms will not be examined or reviewed by the courts so long as the essential component parts of the exercise of the particular discretion are present. Those essential component parts are present if the discretion is exercised by the trustees in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. The exception is that the validity of the trustees' reasons will be examined and reviewed if the trustees choose to state their reasons for their exercise of discretion.[33]

152 The plaintiffs bore the onus of establishing a failure by the Trustee to act in the required manner and not for a proper purpose. However, if there is a combination of proper and improper purposes, then the improper purpose could be a fraud on the power if it was an operative or actuating purpose, being one without which it could not be said that the exercise of power would have occurred. A subjective intention or purpose could be inferred from objective or circumstantial matters involving the exercise of a power of exclusion. The purpose to be identified is the subjective purpose of the Trustee. The Trustee must exercise the power 'with an entire and single view to the real purpose and object of the power'.[34]

153 But the fact that an exclusion was consistent with an improper purpose does not necessarily lead to the drawing of such an inference.[35] No inference can be drawn unless evidence is given of facts requiring an answer. There must be some fact found which positively suggests, or provides a reason in the circumstances particular to the case, that a specific event happened or a specific state of affairs existed.[36]

154 It is not the Court's role to determine the weight that the Trustee should have attributed to relevant matters in exercising its discretion or to decide how the power should have been exercised or the wisdom of its exercise. In the absence of a statement of reasons, it will not usually be possible to conclude merely from the outcome of the exercise of power that it was affected by some vitiating matter.

155 No adverse inference of any improper purpose could be drawn from the non-disclosure in evidence of the Trustee's reasons. The plaintiffs relied on decisions suggesting that in particular circumstances a trustee might be expected to give evidence as to the reasons for the exercise of his discretion.[37] However, a failure to give evidence cannot be employed to fill gaps in the evidence, not least when the allegations are of fraud on a power, which by reason of s 140(2)(c) of the Evidence Act 2008, must be proved taking into account the gravity of the allegations.[38] The Trustee was not required to give reasons for making the declarations.

156 Hayne J stated in Esso Australia Ltd v Australian Petroleum Agents' and Distributors' Association[39] that, once it was accepted that the discretion of the Trustee was at large, the fact that the discretion was exercised in a particular way did not permit the drawing of a conclusion that the exercise of the discretion had miscarried.

157 The judgments in Curwen v Vanbreck Pty Ltd,[40] both at first instance and on appeal, provide an example of the application of the principles to somewhat analogous facts arising from the exclusion of family members as beneficiaries under a family trust. The plaintiffs alleged that the trustee had exercised the exclusion power in bad faith or for an ulterior motive or power, to resist proper requests by beneficiaries to inspect the Trust accounts and other Trust documents and to exclude the younger daughter's children contrary to the intentions of the Settlor and Guardian.

158 Mandie J at first instance dismissed the proceeding and suggested that a trustee's decision to exclude two children as beneficiaries would not be invalid, where there was no evidence that the trustee had failed to give genuine and reasonable consideration to the exercise of the exclusion power. His Honour accepted that it was a proper exercise of the exclusion power to exclude two beneficiaries because of, inter alia, the settlement of earlier proceedings under which the younger daughter had disclaimed her interest in the family trust.[41]

159 The Court of Appeal dismissed an appeal from Mandie J's judgment and stated that:

Where the discretion is unconfined by any restriction contained in the trust document a court will not intervene, even where it seems that the discretion has been exercised for a poor or questionable reason, so long as it is in pursuit of the purpose of the grant. Hence, even where the power of exclusion is unfettered, it is still necessary to exercise that power for the purpose for which it has been conferred. The purpose must be inferred from the trust deed. A power of exclusion is conferred to determine whether each of the listed beneficiaries ought to be entitled to a possible distribution of trust property. The power is not conferred for the purpose of determining whether one or more of the beneficiaries ought to be entitled to trust documents. The trial judge rightly concluded that such a purpose would be improper.

Application of principles to September Declaration

160 I do not accept that the purpose of the September declaration can be identified without considering its effect. I accept that its effect was to make it likely that the Trust would continue only for the benefit of Evelyn Danos and her family members. However, that effect does not by itself invalidate the declaration. The Trustee had an unfettered discretion to exclude persons as General Beneficiaries without providing reasons for doing so.

161 In the case of a family trust, the exercise of the discretion to exclude persons as beneficiaries will necessarily prejudice some family members.[42] The necessary consequence of excluding persons as General Beneficiaries was that they lost the possibility of receiving distributions of Trust income or Trust property on the vesting day in 2057. Here the family members are estranged, but that circumstance does not by itself make the exercise of discretion invalid.

162 I do not consider that the plaintiffs have established the improper purpose that they allege.

163 There is no evidence that the Trustee did not give genuine consideration to the circumstances of the plaintiffs or that they were unaware of Ian and Jane and Stephen's and Amanda's circumstances and those of their children. Nicholas' and Edward's information proceedings had come to an end and it is likely that the Trustee knew that the four grandchildren had been well provided for by their parents. They had provided statements of their circumstances to the Trustee on 27 June 2014, but that information did not require the Trustee to maintain them as beneficiaries.

164 The Trustee had an unfettered discretion and was entitled to take into account the effect of the Settlement Agreement and the benefits that Ian and Stephen received from it and David's and Minnie's Statement of Wishes. The Trustee was entitled to conclude that the exclusion of Ian and Stephen's family members was in accordance with David and Minnie's Statement of Wishes despite the bequests that he made under his will. The Trustee received legal advice to that effect. There was no conclusive evidence that David and Minnie's wishes had changed prior to their deaths from those expressed in that Statement and the bequests made by David were equivocal.

165 I do not consider that the Trustee was required to identify conduct of General Beneficiaries that justified their exclusion as that would be to fetter the unfettered exclusion power.

166 The Trustee did not give evidence by its directors of why it made the September Declaration. But if it did not have to give reasons for the exercise of discretion, it therefore did not have to lead evidence unless there was evidence that, in the absence of an explanation, would establish an improper purpose. That is not this case. There is no Jones v Dunkel[43] point because of the failure of the directors of the Trustee to give evidence.

167 As with the May Declaration, I do not consider that the September Declaration is invalidated by any view that the Trustee may have held that the four grandchildren had no interest under the Trust because of their fathers' disclaimers.

168 On the first day of the trial, 15 March 2018, the Trustee and the defendants in the Part IV proceeding (No S CI 2012 05769 - Mandie & Anor v Danos & Ors), to whom I shall refer as the applicants, applied to the extent necessary to be relived from the Harman[44] implied undertaking not to use specified documents and information derived from that proceeding to enable them to be used in this proceeding. Their application was opposed by the plaintiffs and by Ian and Stephen Mandie, who were plaintiffs in the Part IV proceeding and who were separately represented on the application.

169 At the conclusion of submissions on 16 March 2018, I announced that I would exercise my discretion to relieve the defendants in the Part IV proceeding from the Harman undertaking in respect of affidavits made in that proceeding by the two executors: Ms Danos and Mr Cerché; and Ms S Bernhardt, a solicitor at Allens, but with the exception in the case of Ms Danos' and Mr Cerché's affidavits of material that responded to the affidavits filed in the Part IV proceeding by Ian and Stephen Mandie. I otherwise did not grant the application. I said that I would give my reasons for that decision as part of the reasons for judgment published after the conclusion of the hearing.

170 Later during the hearing on 16 March 2018, senior counsel for the Trustee stated that it no longer wished to rely on Ms Danos' affidavit and in the case of Mr Cerché's affidavit only on Exhibit 2 thereto which was the probate of Minnie Mandie's will.[45]

171 The reasons for my decision and orders of 16 March 2018 are as follows.

172 The Part IV proceeding was discontinued before it came to hearing, but after the parties had exchanged and filed affidavits including those that were the subject of application for release from the Harman undertaking.

173 During the course of submissions in support of the application, the applicants detailed with greater specificity the documents that were the subject of the Harman application and which were contained in a folder with 14 groups of documents identified with separate tab numbers.[46] The applicants emphasised documents in tab numbers 2 and 6, which contained affidavits from the Part IV proceedings, and 14, which was a report on documents received as part of Ian and Stephen Mandie's discovery including financial analyses. Then there were documents which incorporated information from the documents in relation to which a release from the implied undertaking was required. They were under tabs 1 (an updated table of financial benefits received by Ian and Stephen), 7, 9, 10, 11, 12 and 13 (which concerned properties registered to Ian and Stephen and their families) and 14 (which as stated was a report prepared on the basis of discovered documents).[47]

174 There were then documents for which it was said no release from the implied undertaking was required and which did not incorporate information from documents that were subject to the Harman undertaking. These were the two executors' affidavits of Mr Cerché and Ms Danos and the affidavit of Ms Bernhardt, which were under tabs 3, 4 and 5, although it was said that Ms Danos' affidavit might in some respects reply to parts of the affidavits filed by Ian and Stephen in the Part IV proceeding.[48]

175 The applicants submitted that these documents were directly relevant. They would not be used by the Trustee in this proceeding as evidence of proof of their contents but rather as proof of what was present in its directors' minds when it made the May and September Declarations. The Court would be asked to infer that they had received them, had read them and had them present in their minds, when the declarations were made.[49] Ian and Stephen Mandie would not be prejudiced by their use. In any event, the affidavits could be obtained by subpoena. The fact that the affidavits were voluntary was a factor in favour of their release from the implied undertaking as they must have been prepared on the basis that they would be read in court. This proceeding and the Part IV proceeding were closely related.

176 The plaintiffs in opposing the application submitted that the Trustee required release from the Harman undertaking to use all the documents in issue, including the executor affidavits, but had not satisfied the onus of justifying a release. They disputed that there was an identity between the parties and the claims and submitted that, although the documents contained hearsay, they would in effect be used to attempt to prove the extent of Ian and Stephen Mandie's family assets. The plaintiffs would suffer an injustice in not being able to cross-examine the Trustee's directors about what information they had taken into account in reaching their decisions. Moreover, it appeared that the documents had been used by the Trustee to prepare its case in this proceeding, which may well have been in breach of the Harman undertaking.

177 Ian and Stephen Mandie in resisting the applications stressed that the purpose of the implied undertaking was to limit the prejudice to litigants by the abuse of the Court's compulsory processes to that strictly required to secure justice. The affidavits were confidential and had come into existence in a proceeding that was discontinued. The Trustee had failed to establish the use to which the affidavits would be put. The proceedings were not closely related and the release sought would not contribute to achieving justice in the proceeding as the Trustee had chosen not to call evidence.

178 I considered that I should only exercise the discretion to release the applicants from the implied undertaking if they established special circumstances existed and where to do so would not occasion injustice.[50]

179 I decided that the application should be refused save in respect of the affidavits of Ms Danos, Mr Cerché and Ms Bernhardt and in the case of Ms Danos' and Ms Cerché's affidavits excluding parts that were responsive to the affidavits of Ian and Stephen Mandie filed in the Part IV proceeding. I considered that those affidavits, to that extent, should not be subject to the Harman undertaking because, save from the parts that were excluded from the release, they contained material that was within the knowledge of the deponents regardless of their access to the affidavits of Ian and Stephen Mandie.

180 I did not consider that there were special circumstances in respect of the remaining documents, because the Trustee had had the opportunity to file affidavits as to the matters that its directors had taken into account and had not done so. In my opinion it would have been unfairly prejudicial within the meaning of s 135(a) of the Evidence Act 2008 to allow the application for the release from the Harman undertaking in respect of the remaining documents.

181 I specifically reserved the question of Ian and Stephen Mandie's costs of resisting the applicants' summons. They sought them and the applicants opposed their grant. I consider that the Trustee should pay Ian's and Stephen's costs of the summons on a standard basis. They were served with the summons and were substantially successful in resisting the orders sought. I will deal with the other costs associated with the summons as part of a consideration of the costs of the proceeding.

182 In summary of my conclusions, the plaintiffs' challenge to the May and September Declarations has not been established on the grounds pleaded.

183 I would therefore answer issues (a), (b) and (c) set out in paragraph 2 above as follows:

(i) This ground was not pleaded and therefore is not decided.

(ii) No.

184 I have not yet heard argument on issue (d) which concerns the plaintiffs' claim for the replacement of the Trustee. I will discuss with the parties the necessary directions for the determination of any remaining issues in this proceeding.

[1] The statement of the facts that were not disputed are taken from the parties' submissions.

[2] Transcript of Proceedings, Mandie v Memart Nominees (Supreme Court of Victoria, S CI 2014 06635, Ginnane J, 15, 16, 19, 20 March 2018), 15 ('T').

[3] Mandie & Anor v Memart Nominees Pty Ltd [2014] VSC 290.

[4] The plaintiff conceded that this should read 'irrevocable' (T 29.21).

[5] Re Mandie; Mandie v Danos [2015] VSC 55 (McMillan J).

[8] This was conceded by the defendant (T 81.16-20).

[11] [1952] HCA 52; (1952) 88 CLR 54 at 61-2, and see I J Hardingham and R Baxt, Discretionary Trusts (Butterworths, 2nd ed, 1984), 124-5.

[12] [2005] FCAFC 39; (2005) 58 ATR 485 [33]-[37] (Lee, Merkel and Hely JJ).

[14] Tompkins v Simmons [1931] HCA 8; (1931) 44 CLR 546 at 558-9 (Dixon J).

[15] [1957] 1 WLR 401.

[17] JW Broomhead (Vic) Pty Ltd (in liquidation) v JW Broomhead Pty Ltd [1985] VicRp 88; [1985] VR 891 at 934 (citations omitted).

[18] [1935] VicLawRp 60; [1935] VLR 333 (Mann J).

[19] [1930] NSWStRp 19; (1930) 30 SR (NSW) 150 ('In re Wells').

[21] J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (Lexis Nexis, 8th ed, 2016) 92 -93 citing Fell v Fell [1922] HCA 55; (1921) 31 CLR 268 at 273 (Isaacs J ) and Re Gulbenkian's Settlement Trusts [1970] AC 508 at 522 (Lord Upjohn). See also Lewski v Commissioner of Taxation (2017) 254 FCR 14 at [119] citing Byrnes v Kendall [2011] HCA 26; (2011) 243 CLR 253 at [59] (Gummow and Hayne JJ) and at [102]-[105] (Heydon and Crennan JJ) and Segelov v Ernst & Young Services Pty Ltd [2015] NSWCA 156; (2015) 89 NSWLR 431 at 447 (Gleeson JA; Meagher and Leeming JJA agreeing).

[22] [1930] NSWStRp 19; (1930) 30 SR (NSW) 150.

[25] Halsbury's Laws of England (LexisNexis, 5th ed, 2016) vol 102, 166 [181] (citations omitted) and cf, Re Syme [1980] VicRp 13; [1980] VR 109.

[26] John G Ross Martyn et al, Theobald on Wills (Thomas Reuters, 18th ed, 2016) 456 ('Theobald') and Re Taylor [1957] 1 WLR at 1047.

[28] Lewski v Commissioner of Taxation (2017) 254 FCR 14 at [151].

[31] [2008] 26 VR 335.

[32] [1984] VicRp 13; [1984] 1 VR 161.

[34] Duke of Portland v Topham [1864] EngR 339; (1864) 11 HLC 32, 54; [1864] EngR 339; 11 ER 1242, 1251 (Lord Westbury LC).

[35] Curwen v Vanbreck Pty Ltd [2009] VSCA 284; (2009) 26 VR 335.

[36] Re Day [2017] HCA 2; (2017) 91 ALJR 262 at 268 [18] (Gordon J).

[37] See Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] EWHC 318; [1998] 2 All ER 705 at 719 (Robert Walker J) and Taylor v Midland Bank Trust Co. Ltd (1999) 2 ITELR 439 at 458-9 (Buxton LJ).

[38] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.

[39] [1999] 3 VR 642, 655-656.

[40] [2008] VSC 338 (Mandie J) and [2009] VSCA 284; (2009) 26 VR 335 (Redlich and Bongiorno JJA and Hansen AJA).

[41] [2008] VSC 338 [82].

[42] Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405.

[43] [1959] HCA 8; (1959) 101 CLR 298.

[44] Harman v Secretary of State for the Home Department [1983] 1 AC 280.

[50] Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 at 159-160 (Hayne, Heydon and Crennan J).