Jacobson v Dafna Nominees Pty Ltd [1999] VSC 529

Supreme Court of Victoria|1999-12-17|Before: Ashley J

TRUST - discretionary trust - application by potential beneficiary for inspection of trust documents

Robert Jacobson ("RJ") the plaintiff, and Mervyn Jacobson ("MJ"), the second defendant, are brothers. Dafna Nominees Pty Ltd ("Dafna") is a company of which MJ is a director and the effective controller. That was the situation in 1981 when Dafna was appointed trustee of the Jessie Brodie Family Trust ("the Trust"). Mrs Brodie was the mother of RJ and MJ. Brodie was her surname by a second marriage. Later she married a third time, and became Mrs Simon. It is convenient to refer to her in these reasons as Mrs Brodie, that following the name of the Trust.

The Trust was set up because the brothers feared that their mother's assets were likely to be depleted by Mr Simon - whom she had just married, or was about to marry. Best, it was thought, that the assets be kept safe by being put into the hands of a trustee.

When the Trust was constituted Mrs Brodie was living in a home at 61A Walpole Street, Kew. It appears that she had lived in it for many years. She had title to the property.

As part of the arrangement, Mrs Brodie agreed to sell her home to the Trust; and then to lend the proceeds, together with other cash that she had, to the Trust. The sale price was $85,000. She sold personal effects to the Trust for another $10,000. The amount loaned by Mrs Brodie to the Trust, interest free and over a long period, was $152,894.64. The cash component of that was, of course, much less; about $58,000.

Mrs Brodie continued to live in her home until 1989. Then the Trust sold it to a developer for $276,000. Net of expenses, the Trust received about $270,400.

Just where Mrs Brodie lived thereafter until about 1994 is not clear to me. It is known that Mr Simon left her in 1993, and that she lived at Caulfield House in the last few years of her life. It is also known that she died on 6 March 1997, and that Mr Simon survived her.

Mrs Brodie executed a will on 30 November 1992. By that will she appointed MJ her sole executor. After providing a legacy for her husband, if he survived her, she provided that the net residue of her estate should be equally divided between five named grandchildren. Three were children of MJ. Two were children of RJ.

The Trust was a discretionary trust. It constituted classes of principal and secondary beneficiaries. It suffices to say, for present purposes, that the principal beneficiaries were the grandchildren of Jessie Brodie; and that the secondary beneficiaries included Jessie Brodie, and MJ and RJ and their respective spouses. The Deed did not identify Mrs Brodie's grandchildren by name. The evidence showed that, in addition to the five grandchildren named in the will, RJ had three other children - a boy living in Israel, and two young children living in the USA - at the time of his mother's death. The latter two children are the offspring of RJ and the former Myra Weisfeld, they having married in August 1992.

MJ is a legally qualified medical practitioner. It appears that for many years now he has had an involvement with companies engaged in what may be broadly described as research and development. Some of the companies in which MJ has had and has an involvement carry out their operations in the USA and Europe. At pertinent times MJ had residences, and spent time, in Australia, Switzerland and the USA. The impression created by the evidence is that MJ has been very successful in business.

RJ has for many years lived in the USA. He described himself in evidence as the owner of a building maintenance and management company in San Diego, it currently employing 47 persons. That might be thought to suggest that RJ is also a successful businessman. Perhaps that is the present situation. But it has not been the situation in the past. It is clear from the evidence that RJ has on occasions been unable to raise even modest sums for domestic purposes. It is clear also that, in the past, MJ lent RJ not insubstantial sums of money. RJ suggested in his evidence that lending between the brothers was a two-way street. I formed the clear impression that, if it was a two-way street, the vast majority of the traffic flowed in one direction.

After Mrs Brodies' death, MJ undertook a prolonged reckoning of the situation of her estate and the Trust. He kept members of the family informed of developments by a series of six letters and attachments, the first of them dated 31 March 1997, the last of them dated 8 February 1998. When I say that he kept members of the family informed, I should say that he sent copies of the letters to RJ and the five grandchildren named in Mrs Brodie's will.

By the last of the letters MJ proposed a final distribution in a particular fashion. He asked the recipients to agree to it by signing and returning their copy of the letter. It seems that all the recipients did so. Certainly RJ signed the letter, dating it (in the American way, month before day) "2/11/98". It appears also that a distribution to the five grandchildren (that is, the grandchildren named in the will) was thereafter made in accordance with the proposal.

This proceeding: the competing positions of RJ and MJ

On 19 October 1998 an originating motion was filed in which RJ was plaintiff, and Dafna and MJ were defendants. The originating motion sought this relief:

"1. A declaration that the Defendants produce to the Plaintiff -

(i) a copy of the Trust Deed of the Trust;

(ii) all bank deposit books or slips and cheque butts of the Trust;

(iii) all account records of the Trust recording receipts and payments made by Dafna and Jacobson for or on behalf of Mrs. Brodie;

(iv) all Trust Account Bank Statements;

(v) all Tax Returns of the Trust;

(vi) all Books of Account and other records, relating to and recording transaction of and incidental to the Trust."

RJ says that he is entitled to inspect these documents, as trust documents.

MJ resists the application. His counsel did not contend that there is no right in a discretionary beneficiary to inspect trust documents, even after an apparently final distribution has been made. He did, however, submit that the right is not absolute. There may be circumstances where such a right should be denied. This was such a case. The plaintiff's application was made after all parties had agreed upon a final resolution of matters arising out of both the Trust and the estate; a resolution which followed upon MJ (for Dafna) having conducted the trust for many years without any assistance from, or interest being shown by, other members of the family. Issues of laches, acquiescence and release were raised. Counsel further submitted that the application was not made bona fide, but rather for the collateral purposes of putting improper pressure on MJ to forgive loans made by him to RJ and his wife Myra, and of generally harassing and embarrassing MJ. It constituted what the law characterises as an abuse of process.

Undoubtedly there is a long history of disputation between RJ and MJ. Periods of relative peace there may have been; but they have been the exception. I do not doubt that this history of disputation provides an important background to the present application and MJ's reaction to it. In the course of cross-examination MJ said:

"I would give possibly other beneficiaries access (to records). I would go out of my way not to give my brother access, in the light of how he has misused documents ... ".

According to RJ the inspection of trust documents is necessary in order to see what became of the Trust fund. Although he signed the proposal letter of February 1998, he claims to have had then, and to now have, some concerns about the Trust. He said: "I felt there were additional assets belonging to the Trust. There possibly could be. I don't know ... cash moneys lent by the Trust to Mervyn's companies, interest free ... possibly $380-450,000". This belief was based on "statements made by family members, including my mother when she was alive".

There is no doubt that the first time RJ ever articulated the suggestion that there could be a missing amount of $380-450,000 was in the witness box. He said that he had arrived at that range of figures in the few weeks preceding trial. On the other hand, this was not the first occasion upon which RJ has alleged that there were missing moneys. In late May 1998 he faxed MJ a calculation (Exhibit D) in which it was asserted that $1.3M was unaccounted for. The calculation assumed that the initial trust fund of $152,895 had been received in cash (which it was not) and thereafter invested at 12%, compounding month by month, until Mrs Brodie's death. It also assumed that Mrs Brodie had received a pension from July 1986 which had been added to the Trust fund, also earning compound interest month by month of 12%. It assumed that the pension was paid at its 1995/96 level from 1986. It assumed that not one dollar was paid out of the Trust fund over the 16 years between 1981 and Mrs Brodie's death in March 1997. It was, in short, a nonsense document. Counsel for MJ relied upon it as evidencing the harassment which he claimed was a rationale of the present application. He pointed out that the document was created months after RJ had signed the proposal letter, he (RJ) having consulted his solicitor son before signing that document.

The calculation made in the document of 28 May 1998 was adjusted in a document dated 10 June 1998 (Exhibit E) faxed by RJ to MJ. There the sum of $1.3M was reduced by $170,000 ("expenses per letter of Mervyn Jacobson") and increased by $80,000 ("taken by Mervyn Jacobson"). The money not accounted for was said to be $1.2M. The document was as flawed as its predecessor. RJ said that he sent the fax because of his concern that his brother "may have taken all the trust money and lent it to his own company". MJ relied upon the document as further evidence of the harassment to which he claimed to have been subjected by RJ.

This is a convenient point at which to say a little about the way in which, the evidence revealed, the Trust was operated. According to the evidence of MJ, the Trust Fund was used, as had been intended from the outset, to protect Mrs Brodie's assets from depredation by Mr Simon, and to meet Mrs Brodie's expenses as and when necessary. She, Mrs Brodie, managed her own affairs until the last three years of her life. She still had her own bank accounts and her own funds. That is not to say, and it was not the case, that she had not required Trust moneys over the years. In the last years of her life he, MJ, had conducted his mother's affairs. She had been incapable of doing so.

Further according to MJ, although the Trust Deed gave the Trustee power to invest all or part of the Trust fund, that never happened. The Trust fund was used as a bank account to meet expenses incurred by Mrs Brodie. When the money ran out, as it did, MJ provided necessary moneys from his own resources.

Because no part of the fund was invested, MJ said, no income was earned. So no tax returns were filed. No annual accounts were kept. There were bank deposit books or slips, cheque butts and bank statements. These were now either in Victoria or in Switzerland; or perhaps there were some in both places. They had been the documents used in the compilation of the report letters sent to the members of the family. There had been two relevant bank accounts. At the outset an account had been kept specifically for the Trust. Later the general account of Dafna had been used. I add that Dafna had been, at different times, trustee of three or four family trusts.

In addition to the two accounts to which I have referred, MJ said that he had set up an account entitled "Dr Mervyn Jacobson in Trust for Jessie Simon". Mrs Brodie's pension moneys were paid into that account; and were drawn upon by MJ as necessary.

Whilst, according to the evidence of MJ, no part of the Trust fund had been invested, the Trustee had "possibly" lent moneys, interest free, to corporate entitles associated with MJ. That had been authorised by the Trust Deed (see the definition of "beneficiary" in clause 1 and the power to lend money to a beneficiary interest free conferred by clause 7(b)).

He said that this had led to moneys being earned by other trusts, this in turn leading to distributions to "many people in the family, including people in the court today". He gave an explanation why no interest had been charged.

I do not doubt that loans were made by Dafna to entitles associated with MJ. His use of the word "possibly" suggested a doubt which did not exist. The balance of his evidence showed clearly his recognition that such loans had been made.

I have mentioned the way in which, according to the evidence, the Trust was run because, first, it explains the way in which MJ communicated about the Trust with his family after his mother's death; second, because the nature of the communications may provide some explanation for RJ's conduct in bringing this application - particularly against the background of longstanding discord between the brothers; and third, because it may, by providing such an explanation, tend against acceptance of MJ's contentions about his brother's motivation in bringing the application.

That takes me to the six letters written by MJ between 31 March 1997 and 8 February 1998.

The first letter, dated 31 March 1997, raised the question whether there had been a will made, or an earlier will revived, after the will made on 30 November 1992. MJ asked family members to bring forward any later will, if such a will was said to exist.

MJ advised his belief that his mother had died with very few assets. He noted that all family members had now received some keepsake. He noted that his mother and Mr Simon had "lived primarily on the pension and on money I provided - covering all the basics of life". In the last three years of her life Mrs Brodie had resided at Caulfield House, where "all expenses were covered by me".

By his second letter, dated 6 April 1997, MJ advised the terms of the November 1992 will, but said he was not sure that any significant assets were left. He pointed out that under the will, if there were assets, the first $10,000 was to go to John Simon. He also pointed out that any assets "within any discretionary family trust (he) had set up" were "outside the terms of the will". In the absence of any assets there was no point in proving the will. Concerning his mother's last few years, MJ reported setting up a bank account in the name of "Dr Mervyn Jacobson in Trust for Jessie Simon". Into that account had been paid pension cheques. All cheques on the account had been signed by him. He had topped up the account as necessary.

This letter mentioned the sale of the home in Kew and personal assets to Dafna in 1981. It also mentioned loans made over the years by his mother to RJ and himself. He raised the question whether these had been repaid.

MJ's third letter was dated 4 May 1997. It adverted to a recent allegation made by RJ's solicitor that Mrs Brodie had republished an October 1992 will in May 1994. He, in substance, challenged the allegation. His letter referred to a recent letter from RJ. "Many events (were) covered". MJ said that he "would disagree with much of Robert's recollections". He poured scorn on RJ's suggestion that matters regarding the estate be resolved amicably between the brothers. That did not sit well with the allegation that an earlier will had been revived and with allegations raised by RJ in his then recent letter. MJ also said that he had looked through all his old records and had "assembled a lot of original documents which spell out the true circumstance re the house in Walpole Street and also other relevant matters". He said that he "also intend(ed) to reconcile past payments made for Nana to see what balances might be owed to the estate". He was particularly referring to loans said to have been made by his mother to RJ.

MJ's fourth letter was dated 9 August 1997. It consisted of six pages. Appended were attachments of 37 pages. Amongst the attachments were documents and bank slips relating to the 1981 sale of the Kew property to Dafna.

Having referred to the Trust, the letter said this: "A copy of that 23 page Trust Deed is available to anyone wishing to examine it".

Under the heading "Loans and payments made for Nana", the letter said the following:

"Over recent months, Karen has worked with great dedication to reconcile and summarise all payments made for Nana over the years. The law requires that books and records be kept for 7 years, but she tried to go back some 20 years - to review whatever we could find in old cheque books, pay-in books, bank statements, diary notes and corporate records. Although this work is still not complete, a clear pattern is already emerging, and I wish to share it with you now.

The old records clearly show that on November 5th, 1981, Nana signed a written offer to lend Dafna the sum of $152,894.64, on certain conditions (attachment 5).

Dafna formally accepted that offer on November 6th, 1981 (attachment 6).

On December 15th, 1981, the sale of the Walpole Street property was settled, and the buyer duly paid Nana $85,000 & $10,000 (per Item 2 above). Nana then loaned Dafna $152,894.64 in accordance with attachments 5 & 6. These funds appear to have come from the funds she received from the sale of Walpole Street and chattels ($95,000) plus another $57,894.64 which Nana had accumulated in her account from the estate of Harry Brodie plus other funds she had saved.

From then on, we began making all sorts of payments for Nana. It seems three bank accounts in particular made most of these payments for Nana:

(i) Account 123-3445 at NAB, in name 'Dafna #3' - was opened 1981, specifically to process payments for the Jessie Brodie Family Trust. A review of transactions through this account shows that overall, it received a total of $173,028.62 from Nana - made up by the $152,894.64 loan to Dafna mentioned already, plus another $20,133.62 which came in from National Nominees, and although its origin is unclear, we are here regarding it as Nana's money. We have also tried to reconcile all expenses/payments made for Nana over the years. An initial estimate of payments for Nana through this account totalled $265,236.98, but after deleting all payments about which we are now unsure, the identifiable payments for Nana still total not less than $169,370.06. Karen has grouped all outgoing expenses for Nana under the headings Automobile, Bank Charges, Clothing, Healthcare, Housing, Insurance, Legal Fees, Loans to Others, Miscellaneous, Telephone, Utilities, Vacation. Full details are here provided (attachment 8). As can be seen from attachment 8, this bank account also paid out $13,410.22 as loans to Robert Jacobson, and $127,000 cash back to Nana. In summary, it is possible this account could have a net $3,658.56 surplus owed to the Estate.

(ii) Account 700076460 at St George Bank, in name 'Dafna Nominees Pty Ltd'. This is the main Dafna cheque account, and on accounting advice, we started to use this account for the Jessie Brodie Family Trust from January 1993 (instead of operating the separate account above). This account paid out a total of $49,427.41 for Nana in the period 1993-1997, but allowing for the insurance recovery re the stolen Ford Escort, etc, the net payments made from this account for Nana totalled $38,808.35 (attachment 9). All these payments for Nana were covered by loans from MJ sources.

(iii) Account 'Dr. Mervyn Jacobson in Trust for Jessie Simon' at St. George Bank. This is the same account I described in my second update, when I directed Nana's pension into this account from April 1994, after I realised John Simon had been draining her personal accounts. All up, this account received $32,411.10 in pensions, $217.54 in bank interest and $22.85 in Telecom refund, but it paid out a total of $66,751.90 for Nana. The deficiency of $34,099.41 was covered by loans from MJ sources (attachment 10).

Discussion: A reconciliation of these three bank accounts suggests the following:

This deficiency of $69,29.20 (sic) is perhaps the best possible scenario for the Estate. So far, we have deliberately given the Estate the benefit of doubt where we were unsure. However, these balances are not yet final, and it is also possible that with further checking, the small credit in the JBFT account could still become a deficiency. It should also be noted that in addition to this combined $69,249.20 shortfall over three bank accounts which I personally covered at the time to provide for Nana's living expenses, etc, there were also many other expenses we never bothered to record - all the cash given to her over the years whenever she needed it, the time and cost of Karen in managing her expenses, and paying her bills over the years, rent-free living in Walpole Street for some 8 years after she sold it, expenses paid for Nana from our private accounts, etc. There is no way to correctly reconcile these additional expenses now, and we do not intend to try.

It is also noted that apart from the loans to Robert from the JBFT (see attachment 8), we also came across some earlier payments I made for Nana to Robert in 1980 and 1981 totalling another $8,905.36 (see attachment 11)."

Under the heading "overview", the letter said this:

"I hope it is finally clear that, as best we can now track from past records, Nana entrusted me with some $173,000 of her money, plus a further $32,000 (approx) in pension instalments. Therefore, overall, $205,000 (approx) came in from Nana sources altogether in cash over this entire period - including money she received from sale of her house and chattels in 1981, from the Estate of Harry Brodie etc. Further, it is now clear the money she entrusted to my care was to be interest-free and also not repayable for 25 years, at my discretion. A key reason for this was precisely to protect me in case any other family member later wanted to argue that in return for my assisting my Mother, I should be exposed to retrospective burdens not originally intended (eg interest at exorbitant rates). Obviously, the real purpose of the whole exercise in 1981 was simply to put Nana's modest remaining funds into safe hands, so they could be wisely preserved and applied over the years to provide for her future needs - and to ensure she could not be left without financial support in her final years. In fact, as the record now shows, although she provided some $205,000 for this purpose, I actually disbursed considerably more than this to cover her basic needs during her final years. It should also now be clear that the house & chattels in Walpole Street were indeed sold by her to the new Trust for $85,000 + $10,000) in 1981, and these proceeds were then included in what she entrusted to my future care. The purpose of that exercise was to convert the asset into cash at that time (1981), but to keep the house in friendly hands, so she could continue to live in it rent-free until her circumstances required other living arrangements to be made on her behalf at some future time."

Speaking of the later sale of the Kew home the letter said:

"For those who lost sleep worrying that Mervyn 'is keeping the house for himself' - it should now be apparent that the house is gone and the money from the house is also gone, having been spent on Nana over the years. But, I then hear the question from certain quarters - what about the profit made by the Trust on its investment in Walpole Street, bought in 1981 and sold some 8 years later? Legally, of course, the Trust is outside the Estate, and deliberately so. However, if it turns out the above payments are correct, it is possible that the true net profit made by the Trust in the house (after all expenses) may indeed exceed any shortfall owed by the Estate. All I can say at this time is that I have no intention of personally benefiting from my past assistance to my Mother."

At a number of points, apart from in the passage last referred to, the letter adverted to disputation between RJ and his son Andrew on the one hand, and MJ on the other.

MJ's fifth letter, dated 27 October 1997, reported that the fourth letter and its attachments "seem to have satisfied all the concerns and questions that had been raised until that time". MJ said that he planned to go overseas forthwith. On his return he "hope(d) to have all the material needed to permit the Estate to be finalised and any net proceeds distributed". Once again he invited "everyone to assist in identifying and recovering any assets which might correctly form part of Nana's Estate".

I come to MJ's letter dated 8 February 1998. In part, MJ said this:

"I have put enormous effort into researching, reconstructing and reporting on a number of past events to the best of my ability. My task was made more difficult because: (1) of the length of time I tried to go back (some 20 years), (2) I did not have full access to all the information I would have hoped to review, (3) what I did have access to was itself partly in Melbourne, partly in USA and partly in archives in Switzerland, and (4) less than total support and assistance from certain family members. It is a cause of great sadness to me that during this last year, while I tried to do what I regarded as a solemn duty (a 'Mitzvah') out of respect to the memory of my mother, and with no real help from anybody, I found myself at times insulted, threatened and obstructed by various family members, simply because I sought or presented the truth re certain past events. However, despite all obstacles, I seem to have achieved my mission. I believe I am now at the point where what can be clarified has been clarified - and so the time has come to put all these findings together, to make some decisions and take some action, and then - hopefully, to put this whole saga to rest - so we can all get on with our lives."

Under the heading "The Estate of Jessie Simon versus the Jessie Brodie Family Trust (JBFT)" MJ reported as follows:

"As previously explained, the Will can only be applied or legally enforced against those assets surviving within the Estate. On the other hand, what assets might now exist within the Family Trust I personally established in 1981 have at all times remained under my total discretionary control and continue to remain so. It is my current belief that Nana's Estate comprises solely nicknacks and keep-sakes - but in financial terms, there are no longer any net assets of material value - and only net debts. Therefore, there is nothing to distribute from the Estate - whereas there may still be net assets of value within the Trust. Let us now examine these more closely: (c) The Estate. This includes whatever Nana might have owned at the time of her passing. Several assets need to be carefully considered to see if they form part of the Estate or not: *The house at 61A Walpole Street, Kew. In my fourth report, I have already described the factual events surrounding this asset. This house was legally sold to the 'Jessie Brodie Family Trust' in 1981, and the documents I have located and circularised within the family show this transaction was indeed carefully and correctly crafted in order to change the ownership at that time and to secure the house under my control and discretion. *Loans and Payments I Handled for Nana. My fourth report also detailed all past loans & payments I handled for Nana and all intra-family transactions we were able to reconcile, going back all the way to the late 1970's. As I explained, there were three main bank accounts over this 20 year period that I managed - 'Dafna #3', which we opened specifically to manage the affairs of the Jessie Brodie Family Trust from 1981 till 1993, the main 'Dafna' account, which was used to help Nana during 1993/1994, and 'Dr. Mervyn Jacobson in Trust for Jessie Simon', which I opened in April 1994, when I realised John was then pilfering whatever cash Nana got from me or from her pension, etc. The full details of all relevant transactions through these three accounts have already been circulated. Obviously, I do not have details of all other accounts which Nana managed herself, nor have I ever seen John's own accounts to fully appreciate just how much he took. As previously explained in my fourth report, looking overall at what I received from Nana (as loans or as cash to mind for her), and comparing this with what I paid out for her, it turns out that overall, I paid out $69,249.20 more than I received. This shortfall was covered by me putting funds into the various accounts, as needed over the years, to cover cheques that had to be paid out on Nana's behalf. Also, as previously explained, this is a best case scenario, because Karen and I excluded from these summaries any payment when we were not sure it was for Nana, and on the other hand, we deliberately included all deposits of uncertain origin, giving Nana the benefit of the doubt. It is also noted that Karen's reconciliations were current as at July 1997, and did include $4,485 to the Chevra Kadisha for the funeral, but did not yet include: - payment to Dr. Glenn Sutcliffe - medical report, J Simon - $65 - legal fees to Strongman & Crouch - Raboy matter - $1,641.50 - Jakob Binstock - erection of Tombstone per quote - $9,200 Assuming I now pay all these expenses as well, it seems the Estate will then owe me a total of: $69,240.20 + $65 + $1,641.50 + $9,200 = $80,155.70, (rounded to say, $80,000). *Loans made by Nana to Robert. Over recent days, Robert has confirmed to me he now agrees he did borrow various funds from Nana. It is simply not possible for me to properly reconstruct all these details, given the relevant files are outside my control and probably no longer exist. Therefore, I have elected to compromise this situation by solely looking at years 1980, 1981 & 1982 - because such loans were handled by me at the time at Nana's specific request. Robert now agrees that in those 3 years, and supported by old files and copies I sent him, he received A$16,703.17 from Nana (letter from Robert dated February 4th, 1998 confirms). Again, I am here only looking at the three years 80, 81 & 82, and I am also not here considering any other sums Robert may have borrowed from anyone else, myself included. This (rounded) $16,000 would still appear to be owed by Robert to the Estate."

Dealing, then, with the sale of the Kew property in 1989, MJ said that there had been a net profit of about $175,430. That had been earned by the Trust. It was his intention to make a distribution to the five grandchildren mentioned in the will. The sum to be distributed was the net profit on the sale of the property less $72,500 owed to MJ. If and when RJ repaid loans, that amount would be distributed also.

"And that will then be the end of it. I believe that under the circumstances, this is a fair and proper outcome re Nana's Estate, the JBFT, all related transactions and clean-ups within the family. Should Nana have been here to witness it, I believe she would have been pleased with such an outcome. That is my only interest. Assuming everyone agrees with this proposal, I would like to complete the distributions soonest. If you agree, please confirm by completing the agreement at the bottom of this page and fax back to me by return."

RJ signed the short acknowledgment appended to the document. Thus:

"I, Robert Jacobson, hereby accept and agree with the above proposals."

I have no reason to doubt that MJ's letters were well-intentioned. It might be thought that in the end a practical finalisation of the Trust and the estate was proposed. But the letters disclosed circumstances that were apt to raise questions. Such questions included the following: Had the Trust come under any obligation to repay to the estate the loan of $152,000-odd made by Mrs Brodie in 1981? Had the Trust repaid all or part of the loan by the payments which it made to Mrs Brodie for her support over the years? What were the implications for both the estate and the Trust if there was such an obligation and it was wholly or partly undischarged when Mrs Brodie died? Insofar as MJ had paid accounts for his mother beyond funds available to the Trust, were such payments gifts, or loans to his mother (and, if so, on what terms), or loans to the Trust (and, if so, on what terms)? If they were loans to the Trust, how could the Trust obtain reimbursement? In such a situation, would not MJ have a claim on the Trust? Were the proceeds of the sale of the Kew property in 1989 netted (as it appears) against the purchase price in 1981? If so, why? Was it not evident from the letters that ascertaining the circumstances of the Trust fund had been an exercise in reconstruction; and that MJ had less than complete information to assist him in his task? What mention was there in the documents of the interest-free loans made by Dafna to corporate entitles associated with MJ? Had any or all such loans been repaid? Why had the power of investment of the Trust fund, so far as the letters revealed the situation, not been exercised?

Simply to articulate those questions is not to suggest any impropriety on the part of MJ. It is to suggest, however, that against the background of discord between the brothers - a matter that repeatedly boiled to the surface in the six letters - it is not difficult to see why RJ might have come to believe that MJ had not fully disclosed the situation, and that examination of available trust documents might cast light on the matter. That is not necessarily denied because RJ did not take up the opportunity to inspect the Trust Deed which was offered by the letter dated 9 August 1997; nor because RJ later made and communicated to MJ the silly calculations of moneys not accounted for to which I earlier referred.

Counsel for MJ contended, however, that his client had made very substantial disclosure, and thereafter a proposal which RJ (and the other members of the family) had accepted. That acceptance had occurred in circumstances where over the life of the Trust RJ had made no relevant enquiries about it; nor, indeed, had made relevant enquiries between March 1997 and February 1998. Counsel submitted that, viewed in that context, RJ's belated request for inspection was only explicable by there being the collateral purposes to which I earlier referred; and that the circumstances revealed laches, acquiescence, and release.

What enquiries did RJ make about the Trust in his mother's lifetime?

Let me deal first of all with whether RJ had made any enquiries about the Trust, and, more specifically, whether he had ever asked for an accounting, or had asked to see Trust documents, between 1981 and March 1997.

RJ gave evidence that he had made certain enquiries concerning the Trust in 1987, 1989, 1990; and on odd occasions thereafter. His evidence about this matter was unimpressive.

MJ gave evidence that his brother had never asked for an accounting. He had asked MJ if he had the assets secured; and did MJ intend keeping them for himself rather than for the benefit of the family.

In cross-examination MJ said that he did not recall that in 1987 RJ "wanted to know about the moneys in the Trust" or "asked ... to see the accounts of the Trust". He contrasted his lack of recollection that either of those matters had been raised with his positive recollection of what had been raised. I consider that he was saying, in substance, that RJ had not raised those matters.

Generally speaking, I prefer the evidence of MJ upon the matter. RJ gave, as I have said, unimpressive evidence about it. Moreover, he asked me to accept that he raised the matter orally with is brother on a number of occasions, but that he never put in writing until well after his mother's death, despite getting no satisfaction. In view of the nature of the relationship between the brothers, one often marked by vitriolic correspondence, that seems an improbable situation.

In the event, the evidence leads to a conclusion that between 1981 and March 1997 MJ conducted the affairs of the Trust (that was in substance the situation, despite the first defendant being trustee) with minimal enquiry by RJ, and no enquiry by the other potential beneficiaries. In particular, no accounting or access to Trust documents was sought.

I turn to the question of collateral purpose. MJ first contended that the proceeding had as its sole, or at least its pre-dominant, purpose the placing of pressure upon him to forgive moneys that he had loaned to RJ and Myra Weisfeld (not then RJ's wife) in early 1992. That was so even though, properly, it was Dafna as trustee which would be liable to give inspection of documents in an appropriate case.

There is, in the first place, no doubt that MJ lent RJ and his future wife two amounts in early 1992 in order that they could purchase a residence in San Diego. The first amount was US$65,000. The second amount was US$14,000. The first loan was the subject of a written agreement, said to be governed by Californian law. The loan was repayable by 15 January 1993. The second loan was not documented at the time. The loan was made to cover a shortfall. Repayment was to be made within three months.

It is quite clear, in my opinion, that, subject to the effect of a crediting agreement made in October 1996, the loans have never been repaid. RJ gave evidence that the first loan had been expunged in a set-off agreed between he and his brother some time in late 1992. MJ, he said, was indebted to him at the time.

That evidence, I am satisfied, was untruthful. There have been opportunities in the intervening years for RJ to have raised the alleged set-off agreement. Only very belatedly was a pertinent allegation made. The issue concerning the loans was, for instance, raised by MJ in a fax to RJ dated 30 September 1996 (Exhibit MJ28). RJ's response by letter of 30 September 1996 (Exhibit MJ29) did not squarely suggest that the first loan had been repaid. When, in July 1998 MJ raised the question of the loans with RJ's wife, Myra, he provoked, ultimately a solicitor's response which for the first time asserted Myra Jacobson's belief that there had been set-offs in "around 1992". But if that was wrong, then, it was said, MJ's claim was statute barred. The solicitor went further, asserting that MJ was making the claim for repayment for an improper nature - that is, to stifle RJ's (legitimate) proceeding in Australia. RJ himself, in a letter to MJ dated 6 May 1998 (Exhibit M26), whilst referring to MJ having "now introduced the so-called home loan" proposed that as part of an overall settlement " ... I would receive a release from the home loan which, although it is uncollectable could be a problem if I die".

The loans - not specifically the second loan - were intendedly addressed in the course of negotiations between the brothers which arose out of RJ's 1996 negotiations with an Australian television company to provide information or documents pertaining to the estate of the late Jack Hills. Mr Hills, who died in 1985, was the father of Marion Jacobson, RJ's first wife. After Mr Hills' death, proceedings were brought in this court concerning his estate. They apparently raised an issue or issues concerning the activities of one or more professional people. The interests of RJ's sons Andrew and Antony were said to have been involved. The proceedings were eventually settled.

However it came about, an investigative programme - "Witness" - became interested in events concerning the late Mr Hills' estate. RJ became involved. Agreement was reached that, in return for RJ providing information the television company (or the programme) was to pay him $45,000.

When MJ became aware of what RJ was doing, he tried to put a stop to it. He was, he said, concerned at the impact that raising old issues might have on the family. So he entered into negotiations with RJ. Eventually, a settlement was agreed - RJ was to cease his dealings with the television company and to hand all relevant documents to MJ. MJ, in return, was to pay RJ $20,000; and to give a credit against the home loans of $20,000. (? A$ or US$. I will not repeat this query.) MJ claims that the payment and credit were extorted from him. RJ says that MJ offered, in effect, to make good the amount which he, RJ, was to forego by not pursuing his dealings with the television company. Whichever be the case, I consider that it was certainly intended that $20,000 be credited against the home loans; not simply the second loan.

Subject to the accuracy and significance of MJ's assertion that RJ did not fully comply with undertakings which he gave on 3 October 1996 (Exhibit 4), it can be said that the amount of the loans outstanding was reduced by $20,000 by the agreement of October 1996. I reject any suggestion that the credit of $20,000 was intended by either of the brothers to fully expunge the loans. Whilst it is true that there was reference to an "overall settlement" (see, for instance, p.2 of MJ's fax to RJ dated 30 September 1996 - MJ 28) there is no doubt that MJ was then asserting that loans totalling US$79,000 remained outstanding. Why would the brothers agree that there be a credit of $20,000 if the loans were to be wholly forgiven?

In the event, and as I said a little earlier, in my opinion it is clear that at no time have the loans been repaid, save for such effect as the re-crediting agreement of October 1996 might have. Clear also it is that, save for two small payments, no interest has been paid. Clear again it is, I consider, that the belief of RJ and MJ concerning the loans at relevant times has coincided with the situation as I have described it.

The question, as the defendants argued the matter, then becomes this: have they shown that RJ brings the present application for the predominant collateral purpose either of putting improper pressure on MJ to forgive the loans, or of generally harassing and intimidating MJ. In the latter connection reliance was placed, particularly, on an implicit threat by RJ to revive the Jack Hills matter - doing so in a way that would seek to involve MJ; and also on the general sniping in which RJ has engaged over the years.

I was not at all impressed by RJ as a witness. Neither was I impressed by some of his past conduct - particularly concerning the home loans affair and the "Witness" programme. The evidence was also persuasive that at times RJ harassed his brother - for example, by provocative correspondence faxed to a variety of MJ's addresses around the world; correspondence likely to be seen by others.

But whilst there was much about RJ's conduct and evidence about which I am critical, I am not persuaded that the defendants have made out any aspect of their collateral purpose submission.

It is true that in early August 1997, at a time when his solicitor had already raised questions concerning the estate and the Trust, RJ wrote to MJ saying that he wished MJ "to handle all matters ... regarding out mother's estate, knowing that as always you will do the correct thing when dealing with matters that are of importance to myself and Antony and Andrew".

It is also true that RJ signed off on the proposals made by MJ's letter of 8 February 1998. I do not accept RJ's evidence that he assumed it was an "interim arrangement".

True again it is that by his letter to MJ dated 6 May 1998 (Exhibit MJ26) RJ said this (referring to MJ's allegation that he had not carried out the undertakings he had given in early October 1996 concerning the proposed "Witness" programme):

"If you are telling me that it is canseled (sic), then I am free to resell the story to Witness or Dateline."; and that in the same letter he said this, in a passage much relied upon for the defendants: "If you are really serious in wanting to resolve all matters I suggest the following: What you need is a full and complete release in all matters regarding the Jessie Brody (sic) family trust, the estate, etc. I would be prepared to sign such an agreement releasing you from all matters and the matter would be completely settled. I would send an appropriate handwritten letter of apology to Gail, (which you would first read and hand to her). I would cooperate with you in any future matters that you may want me so to do. In return, I would receive a release from the home loan which, although, it is uncollectible could be a problem if I die. I would be given one gold sovereign coin when I am next in Australia. Both of us agree to stop taking pot shots at each other and try to spend our remaining years in a peaceful relationship. I think this proposal is fair and equitable. No one has to pay out any money and everyone gets something, especially peace of mind. Naturally, I would immediately terminate completely Barry Raboy's and counsel's involvement."

But, as against those matters, and despite the lack of enquiry by RJ about the affairs of the Trust during his mother's lifetime, there were matters which emerged in the course of MJ's communication with family members between March 1997 and February 1998 which were apt to excite enquiry - the more so when the relationship between the brothers had been so disturbed over the years. I have earlier mentioned some of the issues which, not unreasonably, might have been discerned out of the information which was provided.

It cannot be said that the first request for documentation was not made until months after RJ had signed the letter of 8 February 1998. RJ's present solicitor had raised the particular issue (as well as other issues) in his letters of 13 June 1997 and 1 July 1997. Andrew Jacobson also wrote to MJ, apparently in late July or early August 1997, raising certain issues. According to MJ, Andrew Jacobson had then misrepresented his past comments and pre-judged material that he, Andrew, had not yet seen.

It was contended by, and for, MJ that in mid 1997 RJ's solicitors were saying one thing, whilst RJ was saying something else; for which reason the solicitor's letters seeking documentation should, in effect, be put to one side.

I am not prepared to put the letters to one side. I consider that they revealed RJ's real disquiet about the affairs of the Trust, and his genuine desire to see Trust documents. It must be agreed that it does not sit readily with such disquiet and desire that the matter was next raised by RJ's solicitor in mid April 1998 (see Exhibit MJ18); and that in the interim MJ's letter of 8 February 1998 had been sent and agreed to. On the other hand, some issues raised by Andrew Jacobson in his letter to MJ dated 17 June 1998 were not necessarily inconsequential. Andrew Jacobson is, as I have said, RJ's son. That letter helps to explain, I think, why RJ could have harboured (and in my opinion did harbour) a genuine desire to see the Trust documents, a desire which was present at least from June 1997, and which persisted even after 11 February 1998.

It is not then to the point that nonsense calculations were made of what should have been in the Trust - calculations set out in the Exhibits (D and E) to which I earlier referred. Counsel for MJ sought to characterise those calculations, faxed to MJ, as part of a pattern of harassment. They were silly, and provocative. They were apt to stir up trouble. But I do not attach any greater significance to them.

Then, as to RJ's letter to MJ dated 6 May 1998, it should be noted that whilst it made a settlement proposal which incorporated the loans issue, it was apparently written in response to a letter from MJ which had raised that issue (see para 1). Moreover, MJ had raised the issue not long after RJ's solicitors had first written to him concerning Mrs Brodie's estate (see his letter dated 13 April 1997, Exhibit MJ4). As to the settlement proposal itself, its opening, that is, "what you need is a full and complete release ... ", and its reference to what RJ would get "in return", conveyed hard bargaining. Again, the proposal was apt to stir up trouble. But that does not mean that RJ had set upon a course of action which began with his solicitor's letters of June 1997, and which culminated in the commencement of this proceeding, for the predominant collateral purpose of inducing MJ to forgive the loans. Nor does the reference in the letter of 6 May 1998 to possible revival of the Hills' estate matter stand as evidence of a pattern of harassment of MJ which was the predominant motivation for commencement and prosecution of this proceeding.

Counsel for the defendants submitted, in effect, that the various threads of RJ's conduct must be considered overall in determining whether this proceeding was commenced and prosecuted predominantly for a collateral purpose. I accept that submission. I have, therefore, considered the combined impact of the matters to which I have so far referred, though I have discussed them singly. I have also considered other conduct to which counsel for MJ directed my attention. I must now refer to that conduct, say whether I attribute it to RJ, and discuss its impact upon the defendants' submissions.

By paragraph 34 of his affidavit sworn 4 June 1999 MJ deposed that a copy summons alleging an offence against the taxation laws by "Jacobson" of Cascade Street, North Balwyn had been affixed to his car, together with a copy of one of the opinions of counsel he had obtained when the Hills matter had been extant many years previously. In viva voce evidence, MJ said that copies of those documents and also a document headed "Re conversion of assets HG, HR and Mervyn Jacobson (the names of the first two men appeared in full on the document; I have reduced them to initials) " had been faxed to his Melbourne address in July 1998; and that copies of the documents had been received by him at different places over several months.

MJ implicated RJ in the activities to which I have just referred. Counsel submitted that this was part of RJ's campaign of harassment. The only purpose of the activities could have been mischief-making.

Let me deal first with the windscreen incident. RJ denied any involvement in it. He had not been in Australia at the relevant time, he said.

Evidence was given by RJ's former wife, Marion Jacobson, that the summons said by MJ to have been affixed to his car had been addressed to her; and that she had kept a copy, and had returned the original to MJ or his wife. Coincidentally, she had given a copy to RJ in mid May 1998. She could cast no light on deletions and amendments made to the copy document which, according to MJ, had been "plastered" on his car.

The second document which MJ alleged had been affixed to his car was not in fact an opinion of counsel. It was part of an agreement between RJ and the producer of "Witness". No doubt it had originally been in RJ's hands. But it could have been handed over to MJ in October 1996.

The incident should rightly be described as very curious. I very much doubt that MJ manufactured it. True it is that he did not raise the matter with RJ promptly. But the evidence showed that he did not always respond to the provocative conduct of RJ.

Looking then to the position of RJ, he was given a copy of the Summons by Marion Jacobson in mid May 1998, and it was in mid 1998 that the incident is said to have occurred. Moreover, at one stage he would certainly have had a copy of his agreement with the producer of "Witness".

I am unable to reach a clear conclusion as to the truth of the matter. I am able to say that if MJ's account was to be accepted it would not lead me to conclude, placing this incident in the balance, that the commencement and prosecution of this proceeding had as its predominant purpose the continuation of a campaign of harassment of MJ by RJ.

I am satisfied that RJ was the author of the faxes which MJ said were faxed to him at various Australian and overseas addresses in mid 1998. I am also satisfied that the conduct was quite mischievous. The inclusion of MJ's name amongst persons who, in effect, were accused of conversion of assets belonging to the late Mr Hills was very objectionable. A previous version of the document which MJ had seen had not included his name.

Considering the conduct to which I have just referred together with other conduct engaged in by RJ towards his brother both before and after their mother's death - conduct to which I have referred in these reasons - I consider that it can fairly be said that he engaged over a long period in conduct that was silly, provocative and mischievous. Even so, I am not prepared to conclude that the predominant purpose for bringing and prosecuting this proceeding was continuation of a campaign of harassment.

When considering the collateral purpose argument advanced for the defendants I have assumed, but not decided, that a beneficiary might be denied access to trust documents if a proceeding brought to enforce the alleged right of inspection should be characterised as an abuse of process - being brought for a collateral purpose.

Counsel for RJ submitted that right of inspection should not be denied even in such a case. No exception to the general rule that inspection may be obtained had been expressed in a way that would make such a circumstance relevant. He cited Re Fairbairn [1967] VicRp 72; [1967] VR 633 at 638 where Gillard J referred to Re Londonderry's Settlement [1965] Ch 918 as disclosing the type of special circumstances in which inspection of trust documents should be refused.

The issue thus raised need not be decided, for the defendants have not made out their collateral purpose argument on the facts. I only add that even if the exceptions to the general rule are confined - see not only Fairbairn and Londonderry but Rouse v IOOF Australia Trustees Ltd [1999] SASC 181 per the Chief Justice at BC9902313 pp.13 and 14, and the cases there cited - it would not follow that relief should be granted in a proceeding commenced and continued for a collateral purpose. On general principles, relief in such circumstances should be denied.

In the event, having assumed that a beneficiary might be denied access to trust documents if a proceeding brought to enforce the alleged right to inspection was brought for a collateral purpose, I have applied the predominant purpose test; see Williams & Ors v Spautz [1992] HCA 34; (1992) 174 CLR 509 at 529 per Mason CJ, Dawson, Toohey and McHugh JJ. I have, consistently with the majority judgment in that case, also approached the matter on the footing that there may be an abuse of process even though the moving party has a prima face case; see at 522.

I have assumed that, in the present connection, collateral purpose might be demonstrated at trial - rather than on a pre-trial application. Although the matter was not addressed by counsel I have also assumed, favourably for the defendants, that the burden of satisfying the court that a proceeding is an abuse of process is not as onerous where the issue is raised and debated at trial than it is where a party seeks to obtain before trial the summary arrest of a plaintiff's proceedings: Goldsmith v Sperrings Ltd [1977] 1 WLR 478 at 498 per Scarman LJ; Williams at 529.

I have on a number of occasions referred to the fact that the hearing before me was conducted for the defendants on the footing that a beneficiary of a trust - even a potential beneficiary under a discretionary trust in respect of which a final distribution has been made (and not to that potential beneficiary) - has a prima face right to inspect trust documents.

If the concession thus made was evidently insupportable there would be a difficulty in my taking the concession as a proper starting point for resolving this matter. But having examined the authorities, and texts, I am satisfied that the concession is not evidently insupportable. That is so for two reasons.

First, there is authority that at least some potential beneficiaries of discretionary trusts have the right, generally, to be informed, at their own expense, of the accounts and contents of trust documents: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 per Kirby P at 409; compare the judgment of Mahoney JA at 425 and 431-432. See also Randall v Lubrano (Holland J, Supreme Court of New South Wales, 31 October 1975, unreported) and Spellson v Janango Pty Ltd (Hodgson J, Supreme Court of New South Wales, 8 December 1987, unreported), cited by Kirby P in Hartigan Nominees; and Spellson v George (1987) 11 NSWLR 300 - the competing arguments are at 311-312, and the relevant passages in the judgment of Powell J are at 315-316. To slightly different effect, there is authority that such beneficiares are entitled to be furnished with copies of Trust documents: Chaine-Nickson v The Bank of Ireland & Ors [1976] IR 393 at 396-397.

Second, one suggested rationale for of the right of a beneficiary to inspect trust documents is that it is founded not on any equitable proprietary right or interest in trust documents (as to which see O'Rourke v Darbyshire [1920] AC 581 at 626 per Lord Wrenbury; and see also Breen v Williams (1996) 186 CLR 71 at 89 per Dawson and Toohey JJ), but rather upon the fiduciary duty of a trustee to keep beneficiaries informed, and to render accounts: Hartigan Nominees at 421-422 per Kirby P (the learned President dissented in the result, but that is not presently pertinent) and at 442-445 per Sheller JA; Morris v Morris (1993) 9 WAR 150 at 153. That approach has the support of text writers; see, for instance, Ford and Lee, Principles of the Law of Trusts, 3rd edition, paragraph 9290, and MacLean, Trusts and Powers, pp.30-31. It cannot be said to lack force. It provides a conceptual basis for explaining why a potential beneficiary of a discretionary trust has a prima facie right of inspection of trust documents even though it cannot be said that such a beneficiary has any equitable proprietary right in the documents.

Beyond this brief excursus, having regard to the way in which the proceeding was conducted before me, I need not go.

In the course of considering the defendants' contention that this proceeding was brought for a collateral purpose I have adverted to the lack of enquiry made by any of the potential beneficiaries, most particularly RJ, between 1981 and Mrs Brodie's death in March 1997; and upon the fact that the potential beneficiaries, most particularly RJ, "signed off" on the proposals of 8 February 1998 - which proposals were thereafter effectuated. Counsel for the defendants addressed these matters discretely. He relied upon laches, acquiescence and release. He submitted also that special circumstances in which inspection might be refused included a situation in which the parties - trustee and beneficiaries - had changed their positions decisively in apparent finalisation of a trust. Here there had been such a charge of position. The available assets had been distributed, and some documents held by MJ had been returned overseas. No argument was pursued for the defendants that if laches, acquiescence or release did not avail them, then a statutory limitation period was pertinent to the period in respect of which an inspection of documents might be ordered.

Whether the prima face right of inspection of trust documents arises in some cases because the beneficiary has an equitable proprietary right or interest in trust documents, or whether it rests upon the fiduciary duty of a trustee to keep beneficiaries informed and to render accounts, a proceeding in which an order for inspection is sought appears to be a claim in which equitable relief is sought. In such cases the equitable defence of laches is available. The essence of the defence is described by Meagher, Gummow and Lehane JJ in Equity - Doctrines and Remedies, 3rd edition, paragraph 3601; see also the discussion at paragraphs 3610-3611.

I do not consider that the conduct of RJ in failing to commence this proceeding until October 1998 could be characterised as laches in the sense of delay with acquiescence in the trustee's conduct.

In this context, acquiescence is, according to the learned authors of Equity - Doctrines and Remedies, at paragraph 3602, a refraining from seeking redress once one knows that his or her rights have been violated. RJ could not be said to known of such a violation at any relevant time. The inspection which is sought is in essence a mechanism for investigating whether there has been any violation. So, even if there was delay, it was not accompanied by relevant knowledge.

The second category of laches described in the text to which I have been referring is delay in commencing or presenting a case which has caused the defendants to alter their position in reasonable reliance on the plaintiff's acceptance of the status quo, or which has otherwise permitted a situation to arise which it would be unjust to disturb.

I cannot discern any pertinent delay in the period up to Mrs Brodie's death. The trustee had a certain obligation to maintain accounts. RJ had no obligation, I think, to make enquiry so as to ensure that this obligation was being abided by the trustee. Nothing suggested, I think, that there was any such failure.

It would seem odd, on general principles, that the trustee could in such circumstances successfully defend a proceeding brought by a beneficiary, designed to ascertain what accounts had been kept, by a contention that there had been delay in bringing the proceeding; and that the beneficiary's failure to bring that proceeding earlier had caused it to continue to keep accounts as it had previously done. That should be not the less so if it was the case that the accounts were in fact deficient.

Then there needs to be considered the period between Mrs Brodie's death and the commencement of this proceeding.

In the period up to 8 February 1998 the trustee was progressively disclosing the circumstances of the operation of the Trust over the years. The situation was complicated by MJ's role as executor of his mother's estate under the November 1992 will, and by his practical but non-legal attempts to resolve the net asset position of both the Trust and the estate, and to fix upon a mode of distribution.

I do not consider that there was any delay by RJ in commencing proceedings in this period which led to a change in the defendants' position in reasonable reliance on the plaintiff's acceptance of the status quo, or which permitted a situation to arise which it would be unjust to disturb. RJ was entitled to see where the disclosures led, he having raised certain issues through his solicitors during 1997.

Then focus upon 8 February 1998. MJ, in effect speaking for the trustee, and as executor, made proposals for settling everything to do with the Trust and the estate. The recipients of the letter accepted the proposals; and before this proceeding was commenced they were effectuated. Was there relevant delay?

No doubt, had RJ commenced this proceeding straightway after 8 February 1998 the distribution would not have been made by MJ; and MJ would not have had the peace of mind that came with his reasonable belief that the affairs of the Trust and the estate had been concluded. It can be said that the trustee - for any distribution must have been made by the trustee rather than MJ - was given to believe by the consent of the beneficiaries that they had accepted the accounts; and that the Trust was at an end.

The trustee did alter its position in reasonable reliance on the beneficiaries' acceptance of the 8 February 1998 proposals. It made the distributions. It also returned overseas certain trust records kept by MJ.

Nonetheless, I do not consider that the delay in commencing this proceeding after 8 February 1998, together with the distribution which was effected thereafter, and the transport of trust documents overseas, enable the trustee to make out the defence. The delay itself, was not great. If the distribution was correct in amount (this depends upon a number of matters), no harm is done by there being an inspection of trust documents. If the distribution, for some reason, was in fact too small, signification of acceptance of MJ's proposals should not - in what was presented by MJ as a somewhat complicated matter - stand in the way of the matter being got right. If the distribution was in fact too large, the principle of laches, called in aid by the trustee, if applied would advantage the beneficiaries, and disadvantage of the trustee. That would be anomalous. If on proper analysis the estate had assets to the exclusion of, or together with, the Trust, then whilst the objects of the distribution may have received a distribution in any event, that would have depended (in part) upon the size of the estate; for Mr Simon was entitled to receive the first $10,000 under Mrs Brodie's will of November 1992. Mr Simon played no part in, nor agreed to the accounting provided by MJ, nor the decision which MJ made concerning distribution. The court should, I think, be concerned that if the defence succeeded Mr Simon might continue to be wrongly disenfranchised. Speaking generally, I cannot say that the plaintiff's delay, such as it was, makes it unjust to grant him relief against the trustee.

The word "acquiescence" is, according to Meagher and his co-authors at paragraph 3618, confusingly used in different senses. In substantial part it has an interrelationship with the principle of laches. In the present case I do not consider that acquiescence can be successfully invoked by the trustee. What I have said in discussing the defence of laches is in point.

There was some reference by defendants' counsel to "release" in the course of the trial. That reference was another way of characterising the circumstance that RJ "signed off" on the 8 February 1998 proposals, which were thereafter effectuated. Meagher and his co-authors, at paragraphs 3601-3602, 3610-3611 and 3618 make the point that there is a close relationship between laches, acquiescence and "waiver, affirmation, release". I should refer also to Ford and Lee, supra, at paragraph 18110, where the learned authors deal with release of a trustee from liability for a breach of trust. Considering the present case in the light of those texts, it could not be said that RJ's signature to the proposals was made when he knew that his rights had been violated; that there had been a breach of trust. Indeed, he does not know now whether there was any violation. He seeks access to trust documents to ascertain whether there was or was not.

In considering the defences of laches, acquiescence and release I have not so far adverted to a contention raised for RJ that the effect of his signing off on the 8 February 1998 proposals was at most personal to MJ; and could not assist the trustee. The point was not without some force, although MJ in substance spoke for Dafna as well as for himself; and, I think, RJ would have so understood the situation. But it is unnecessary for me to decide the point.

The plaintiff should have an order against the trustee for production of certain Trust documents for inspection by the plaintiff; but not an order against MJ. It may be that, physically, some or all of such records are in MJ's possession. But that does not mean that they are not Trust documents, and so amenable to production.

I do not intend to make an order for production of the Trust Deed for inspection. The document was an exhibit to MJ's affidavit in this proceeding; and has been seen by RJ.

The unequivocal evidence of MJ was that the Trust, having had no income, filed no tax returns. It is however, the case that RJ had no means of challenging that evidence. Whilst there may be no point in making an order for production of tax returns for inspection, I think it is right to make such an order having regard to the inequality of information available to the parties at trial concerning the existence of otherwise of such documents.

There must be a time within which the documents must be produced and inspection had. I bear in mind the circumstance that some documents now appear to be overseas, and that the documents address a long period. Although they have been previously collated (that is, for the reports provided by MJ), I bear in mind also the possibility that MJ will conclude, by reference to matters raised at trial or in correspondence, that other documents are trust documents, and will need to be searched out. All in all, I consider that the documents should be provided for inspection by 19 April 2000 - that is, about four months hence.

I do not intend to set a date by which inspection must be completed. It must, however, be understood that the plaintiff should not be tardy in his inspection.

The reasonable cost of production and inspection of documents must be met by the plaintiff.

Subject to anything that counsel may wish to say only as to form I shall make orders in accordance with the following minutes:

1. Order that by 19 April 2000 the first defendant produce for inspection by the plaintiff the following trust documents -

(i) all bank deposit books or slips and cheque butts of the Trust;

(ii) all accounts records of the Trust evidencing the receipt or disposition of trust property, including records of all payments made by the first or second defendant for or on behalf of Mrs Brodie;

(v) Other records of the Trust relating to and recording transactions of the Trust.

(2) The reasonable costs of and incidental to production and inspection of the documents referred to in paragraph 1 be met by the plaintiff.

(3) On the plaintiff's claim against the second defendant there be judgment for the second defendant.

I shall hear the parties upon the question of costs.

At a glance

Court

Decision date

Before

Source

Judgment (151 paragraphs)

Parties

Cases Cited (5)