Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocescan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand

Supreme Court of NSW|2014-03-17|Before: Kunc J

Summary 1By an Amended Summons filed in Court on 2 April 2014 the plaintiff ("NSW T&G") seeks: An order pursuant to s63 of the Trustee Act 1925 ("the Act") that the Plaintiff would be justified in continuing to administer the estate of the late Monica Mary Layton Davis ("the Deceased") in accordance with the grant of probate in common form issued to the Plaintiff in respect of the Will of the Deceased dated 31 August 2010 ("the Will") without seeking a grant of probate in solemn form of the Will. 2NSW T&G has demonstrated an entitlement to an order in those terms and to consequential relief. I will first deal with that aspect of the matter. However, the course of these proceedings also provides an opportunity for the Court to summarise and restate some important aspects of practice and procedure in relation to applications for judicial advice, in particular the role of the trustee prior to the making of such an application and the function of counsel's opinion that almost inevitably must accompany such an application. 3The trustee (to which I shall refer for convenience alternatively in the neuter gender), with the assistance of such advice as it may think appropriate, must first decide what it is going to do in a given situation and then, if it wishes, seek judicial advice as to whether it is justified in acting in accordance with that decision. In almost all circumstances any application for judicial advice should be accompanied by counsel's opinion fully dealing with all the facts known to the trustee, all of the relevant legal issues and expressing a reasoned opinion in support of the particular decision which the trustee has made. It is inappropriate and arguably in dereliction of the trustee's duties to make an application for judicial advice where the trustee's consideration of the issue (whether or not reflected in counsel's opinion), has gone no further than identifying the problem, observing that it is difficult and then asking the Court what the trustee should do.

The present application 4NSW T&G is the executor and trustee named in the Will of the late Monica Mary Layton-Davis (the "Deceased") made on 31 August 2010 (the "Will"). The Deceased died on 13 November 2012. Probate of the Will in common form was granted to NSW T&G on 12 February 2013. 5The Deceased had three children: Sandra Fuller, Kim Strachan and Anne-Marie Layton (to each of whom I shall refer, without disrespect, by their first names). 6The Deceased made no provision for any of her daughters in the Will. 7Both Sandra and Anne-Marie have commenced proceedings for family provision orders to be made in their favour out of the Deceased's estate. 8In her affidavit in support of her family provision claim, Sandra deposes in relation to the Will: I am not convinced the deceased had testamentary capacity. I am accordingly, making inquiries and seeking advice concerning the grant of probate and the efficacy of the deceased's last will and testament. I may therefore seek further relief, concerning the grant of probate, to the Defendant. 9Sandra's solicitor has also written to NSW T&G raising their client's concern as to whether the Deceased had testamentary capacity when she made the Will. The starting point for that concern was the Deceased having been diagnosed with dementia in July 2006. A number of other matters (which it is unnecessary to detail in this judgment) also appear to be relied upon by Sandra to support her concern about the Deceased's testamentary capacity when she made the Will on 31 August 2010. 10NSW T&G has obtained medical, guardianship and other records concerning the Deceased for the period 2006-2010. Those records included NSW T&G's own instruction sheets and questionnaires completed by Mr North, an officer of NSW T&G. Mr North took instructions from the Deceased, prepared, further attended upon and witnessed the execution by the Deceased of each of four wills which the Deceased made between 2006 and 2010, culminating in the Will. 11NSW T&G briefed the materials to which I have referred in the previous paragraph to junior counsel experienced in probate matters. The Court has been provided with an original and supplementary opinion of counsel (I shall refer to the latter as the "Opinion"). The circumstances which gave rise to the Amended Summons and the Opinion are set out in paragraphs [18]-[19] below. 12The Opinion carefully reviews the material briefed by NSW T&G and considers the relevant principles of law applying to the question of whether or not the Deceased had testamentary capacity as at 31 August 2010. The Opinion provides a carefully reasoned factual and legal basis to support its ultimate conclusions that NSW T&G would be justified in continuing to administer the estate of the Deceased in accordance with the grant of probate in common form of the Will and would not be justified at this time in seeking a grant of probate in solemn form of the Will. 13In considering the present application, I have also reviewed all of the material that was briefed to counsel. That review has satisfied me of the cogency of counsel's analysis as set out in the Opinion. While by no means the totality of the matters relied upon, it is appropriate that I record one significant matter which the Opinion (correctly) deploys in support of its ultimate conclusions. That matter is the questionnaire completed by Mr North and signed by the Deceased at the time she executed the Will acknowledging the advice and explanations given to her by Mr North concerning the Will, including the possible impact of family provision proceedings. The questionnaire records the reasons for the exclusion of her daughters from the Will as "not on good terms with her children". The answers given in the questionnaire and the Deceased's signed acknowledgement are clear, contemporaneous evidence supporting the conclusions expressed in the Opinion. 14Having received the Opinion and independently considered the material on which it is based, the Court is satisfied that NSW T&G is entitled to orders in the terms of the Amended Summons.

The course of this application 15These proceedings first came before me in the Applications List on 21 February 2014. The Summons sought this relief: 1. The Plaintiff seeks the opinion, advice and direction of the Court in respect of the questions set out in the Statement of Facts filed herein. 16The Statement of Facts, after briefly reciting some background facts, concluded [sic]: 8. The Plaintiffs seeks the opinion, advice and direction of the Court in respect of the following questions: a) Whether the Plaintiff would be justified in seeking a grant of probate in solemn form of the Will? b) Whether the Plaintiff would be justified in undertaking further enquiries into the validity of the Will? c) Whether the Plaintiff would be justified in not undertaking further enquiries into the validity of the Will? d) Whether the Plaintiff would be justified in continuing to administer the estate of the deceased on the assumption that the Will is valid and that no proceedings are likely to be commenced for revocation of the grant of probate of the Will, unless and until it receives notices to the contrary? 17Among the material provided to the Court was an opinion of counsel which, while most thorough in its discussion of the facts and applicable law, ultimately concluded by recommending that judicial advice be sought as to the questions set out in the preceding paragraph, but expressed no view as to how those questions should be answered. 18On reviewing the papers it became apparent to the Court that NSW T&G was, in effect, asking the Court to tell it what to do. As I shall discuss further below, that is the not the function of the Court in a judicial advice application. 19The application was the subject of a further hearing on 17 March 2014. On that occasion I drew to NSW T&G's attention the difficulties with both the terms of the Summons and the thorough, but ultimately inconclusive, opinion of counsel which accompanied it. Further time was allowed for those issues to be rectified, resulting in the Amended Summons, an Amended Statement of Facts and the Opinion. 20This history and the recent experience of the Court in other applications suggest that it may be of assistance briefly to restate some of the fundamentals concerning applications for judicial advice which, since the decision of the High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocescan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 (the "Macedonian Church case"), seem to have experienced something of a renaissance. That case, and the many which have invoked it, concern applications by trustees for advice about commencing or defending litigation, sometimes called a "Beddoe application" after In re Beddoe [1893] 1 Ch 547. However, that is only one type of matter about which a trustee can approach the Court. What follows is intended to deal with applications for judicial advice generally.

Applications for judicial advice - general 21Section 63 of the Trustee Act 1925 (NSW) (the "Act") provides: 1) A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. (2) If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee's own responsibility, to have discharged the trustee's duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction. (3) Rules of court may provide for the use, on an application under this section, of a written statement signed by the trustee or the trustee's Australian legal practitioner, or for the use of other material, instead of evidence. (4) Unless the rules of court otherwise provide, or the Court otherwise directs, it shall not be necessary to serve notice of the application on any person, or to adduce evidence by affidavit or otherwise in support of the application. (5)-(7) repealed (8) Where the question is who are the beneficiaries or what are their rights as between themselves, the trustee before conveying or distributing any property in accordance with the opinion advice or direction shall, unless the Court otherwise directs, give notice to any person whose rights as beneficiary may be prejudiced by the conveyance or distribution. (9) The notice shall state shortly the opinion advice or direction, and the intention of the trustee to convey or distribute in accordance therewith. (10) Any person who claims that the person's rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution. (11) Subject to subsection (10), and subject to any appeal, any person on whom notice of any application under this section is served, or to whom notice is given in accordance with subsection (8), shall be bound by any opinion advice direction or order given or made under this section as if the opinion advice direction or order had been given or made in proceedings to which the person was a party. 22It follows from s 63(1) that the subject matter of such applications is only confined by the requirement that the opinion, advice or directions sought must be "respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument". The rules of court referred to in s 63(3) are now to be found in UCPR Part 55 r 55. As a practical matter, where the facts relied upon are complex (as seems to be increasingly the case in many applications) it is permissible for the statement of facts referred to in UCPR Part 55 r 55.1 to cross-refer to an affidavit where those facts are set out. 23In terms of the preparation of an application for judicial advice, the passage of time has not dimmed the utility of two texts. The first are the annotations to s 63 found G.P. Stuckey K.C. and C.D. Irwin, Parker's Practice in Equity, 2nd edition, Law Book Co of Australia Pty Ltd, 1949 at pp 754-758. The second is the discussion of such applications in A.G. Nevill and A.W. Ashe, Equity Proceedings with Precedents (NSW), Butterworths, 1981 at [1203]-[1207] and the precedents relating to those paragraphs. Finally, what I respectfully adopt as a convenient updating and summary of the relevant principles may be found in these decisions of Hallen J: Application of Gnitekram Marketing Ltd [2010] NSWSC 1328 at [8]-[17] and Application by Marilyn Joy Cottee; Estate of Gwenyth Shirley Smith [2013] NSWSC 47 at [29]-[44].

Applications for judicial advice - the role of the trustee 24Although UCPR Part 55 r 55.2 provides that "an opinion, advice or direction under section 63 of the Trustee Act 1925 must be given by order", it is not the function of the Court to order, or even just to tell, the trustee what to do. The order is permissive and not mandatory, hence it is usually in the form that the trustee "is justified" in acting in a particular way. 25In applying to the Court for judicial advice, the trustee is not abrogating or delegating its obligation to apply its own judgment in deciding whether to do (or not do) something in execution of the trust. The trustee must actively and honestly bring its mind to bear on any particular problem confronting it. Where necessary, it is entitled to do so with the benefit of such legal or other advice (for example, accounting, actuarial or valuation) as the trustee thinks appropriate. The trustee should then determine a course of action subject, again if it thinks appropriate, to obtaining judicial advice about that course of action. While I express no concluded view (because it was not the subject of argument before me), in my opinion there is much to be said for the proposition that a trustee has failed in its duty if it does no more than identify a problem as difficult and then approach the Court without having formed its own view as to how it will resolve the problem. For a general discussion of the execution of a trustee's duties and powers see J.D. Heydon and M.J. Leeming, Jacob's Law of Trusts in Australia, LexisNexis Butterworths, 2006 at [1602]-[1614]. 26The analysis in the preceding paragraph is reflected in the basic principle that, in the exercise of its undoubted discretion as to whether or not to give the advice, the Court will not give advice about hypothetical matters. Because trustees generally apply for judicial advice to obtain the benefit or protection of s 63(2) of the Act, it is implicit in a judicial advice application that the trustee intends to act in the way the application identifies, assuming favourable advice is given. To put the matter beyond doubt, it is good practice for the trustee, in its affidavit accompanying the application, to depose that that is what it has in fact resolved to do.

Applications for judicial advice - counsel's opinion 27While not referred to in either the Act or the Uniform Rules of Civil Procedure, in almost all cases an application for judicial advice should be accompanied by counsel's opinion. The content of that opinion will be a significant matter which the Court will take into account in determining whether or not to give the advice sought. 28The advice can be the opinion relied upon by the trustee in deciding upon its provisional course of action (referred to in paragraph [25] above) or an opinion especially prepared for the purposes of the application. The description of "counsel's opinion" recalls a professional barrier that today is more permeable. The opinion can be prepared by any suitably qualified and experienced member of the legal profession. That being said, the traditional independence of counsel (as opposed to a solicitor who may have a longstanding, professional relationship with a particular client) is itself a factor which, in a particular case, may be taken into account by the Court in considering the weight to be given to an opinion proffered in support of the application. 29If I may respectfully say so, the role of counsel's opinion in a judicial advice application was compendiously, but nonetheless concisely, explained by Lindsay J (who appeared as counsel in the Macedonian Church case) in Re Estate Late Chow Cho-Poon [2013] NSWSC 844, an application concerning the construction of a will (emphasis added): 108. Ordinarily, a summons for judicial advice should be accompanied by an opinion of counsel, directed to the substance of each question identified for the Court's consideration, and going beyond a mere statement about the availability of protection for a trustee from a court order. 109. Neither s 63 nor rules of court referable to s 63 mandate a requirement that a memorandum of opinion be provided in support of a s 63 application. Nor can it be said that every application must be accompanied by such a memorandum, whether provided by counsel or by a lawyer practising otherwise than at the Bar. Quite possibly, the Court could not compel counsel to express an opinion of this type: Cf, Application of Forsyth [1984] 2 NSWLR 327 at 334F-335F and 227A. Nevertheless, in practice importance may attach to such an opinion for a variety of reasons. 110. First, in practice the speed and efficiency with which an application for judicial advice can be dealt with derives from a combination of the efforts of both the legal profession and the Court. Although, in many cases, a trustee can obtain effective protection as well as guidance by acting upon the opinion or advice of a lawyer, the intervention of a lawyer is no guarantee of protection if a court subsequently perceives that: (a) the lawyer's opinion or advice was wrong; and (b) it was unreasonable for the trustee to have acted on it: JD Heydon and MJ Leeming (ed), Jacobs' Law of Trusts in Australia (LexisNexis Butterworths, Australia, 7th ed, 2006), para [2202] on p 504, and para [2216]; Scott and Ascher on Trusts (5th ed, USA, 2007), vol 4, pp 1677-1681. ... 113. The procedural objectives of speed and efficiency served by judicial advice proceedings cannot, in many cases, be achieved unless the Court is presented with the assistance of a memorandum of opinion by an independently-minded lawyer who, out of court, has studied the problem to be solved, examined the factual context critically, analysed competing contentions in a comprehensive legal context, and worked out a solution that commends itself to his or her professional judgement, a judgement upon which the Court can responsibly be invited to rely. 114. Secondly, a well drafted memorandum of opinion provides comfort to the Court upon a consideration whether questions identified for the opinion, advice and direction of the Court are ripe for consideration. Counsel will ordinarily have greater means at his or her disposal than has the Court to ensure: (a) that each identified question is, in the light of a trust instrument and extrinsic circumstances, the right question to be considered in order to meet the objectives served by s 63; and (b) that the facts upon which an answer is to be predicated are stated fairly and in terms appropriate to due consideration of each question. 115. Thirdly, the professional independence required of counsel in the analysis of a question stated for opinion, advice or direction adds value to a statement by counsel in a memorandum of opinion for which he or she is professionally responsible more than does a statement in the form of a mere submission. 116. Fourthly, an expression of opinion by counsel in a formal memorandum of opinion may, if not the subject of legal professional privilege, provide a firm foundation upon which persons interested in the due administration of a trust may decide whether (and, if so, how) they should seek to participate in proceedings commenced as an application for judicial advice. 117. Fifthly, an efficient administration of the "summary" jurisdiction exercised by the Court by reference to s 63 is aided by the availability of a considered opinion, by competent counsel upon whose judgement the Court is entitled to rely, whether or not (upon due consideration) it decides to agree with, or differ from, counsel's conclusions. 118. The availability of a formal memorandum of opinion from counsel, prepared in anticipation of a s 63 application, may, at least in some cases, either forestall any need for an application to Court being pressed or establish parameters within which a dispute about the due administration of a trust may be litigated. 119. In some cases it might result in a consensus. In others, it might crystallise questions in dispute. In yet others, it might fall short of establishing a consensus but, with an intimation that a trustee proposes to act upon it absent any application by an interested party for curial relief, it could provide a foundation for the trustee to "build an estoppel" against interested parties who acquiesce in the trustee's action. 120. In any event, by a fair engagement with beneficiaries, a trustee lays a foundation for an application to the Court, under s 85 of the Trustee Act, to be granted relief against liability for a breach of trust (National Trustees Company of Australasia Limited v General Finance Company of Australasia Limited [1905] AC 373; Re Investa Properties Limited [2001] NSWSC 1089; 187 ALR 462 at [39]- [43]) or as evidence persuasive of an absence of any "wilful default" on the part of the trustee personally that, if present, could expose the trustee to liability (Perpetual Trustee Co v Watson (No 2) [1927] NSWStRp 87; (1927) 28 SR (NSW) 43 at 46-47; Ah Toy v Registrar of Companies (Northern Territory) (1986) 10 ACLR 630 at 646). 30Insofar as the contents of counsel's opinion are concerned, those will be determined by the nature of the problem and the facts which give rise to it. The only general comment that can be made is that all relevant facts should be identified and considered, along with the application of the relevant legal principles and authorities to those facts. A reasoned conclusion as to the course to be followed by the trustee must be expressed. 31However, because Beddoe applications, in particular, seem now to be so common, it is appropriate that I conclude this discussion of the general principles by recording what the Court expects of counsel's opinion in an application of that kind. In the Macedonian Church case at [162], the High Court approved the approach of Palmer J at first instance in that litigation (Re application of Macedonian Orthodox Community Church St Petka Inc [No 3] [2006] NSWSC 1247 at [80]): 80 In a judicial advice application in which the trustee asks whether it is justified in prosecuting or defending litigation, all the Court does is to reach a view as to whether the Opinion of Counsel satisfies it that there are sufficient prospects of success to warrant the trustee in proceeding with the litigation. Counsel's Opinion must address the facts necessary to support the legal conclusions reached and must demonstrate that the propositions of law relied upon for those conclusions are properly arguable. Whether, in the light of Counsel's Opinion, there are "sufficient" prospects of success calls for another judgment, founded upon such considerations as: - the nature of the case and the issues raised; - the amounts involved, including likely costs - whether the likely costs to be incurred by the trustee are proportionate to the issues and the significance of the case; - the consequences of the litigation to the parties concerned; - in the case of a charitable trust, any relevant public interest factors: see e.g. In re Brogden (1888) 38 Ch D 546; In re Kay's Settlement [1939] Ch 329.

Orders 32The orders of the Court are: (1)The plaintiff is justified in continuing to administer the estate of the late Monica Mary Layton-Davis (the "Deceased") in accordance with the grant of probate in common form issued to the plaintiff in respect of the Will of the Deceased dated 31 August 2010 (the "Will") without seeking a grant of probate in solemn form of the Will. (2)The plaintiff's costs of and incidental to the proceedings be paid out of the estate of the Deceased on the indemnity basis. (3)The copies of the Memorandum of Advice of R. Kako of Counsel dated 5 December 2013 provided to the Court and the affidavit of Joanna Christine Brouwer sworn on 27 March 2014 be retained on the Court's file in a sealed envelope marked "Confidential - Not to be opened or inspected without the approval of a Judge". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 April 2014

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