Plaintiff v Defendant

Supreme Court of Victoria|2010-11-18|Before: KYROU J

TRUSTS AND TRUSTEES - Application for approval of amendments to the terms of two large charitable trusts established under a will made in 1954 - Estate fully administered - Trustees continuing to administer the trusts - Provisions of the will are out of date and detract from the efficient administration of the trusts.

TRUSTS AND TRUSTEES - Power of Court to approve amendments to the terms of charitable trusts - Proposed amendments deal with the appointment and qualification of trustees; the term of office of trustees; the quorum, voting power and procedures of the trustees; the retention and accumulation of income; the remuneration of trustees; the incorporation of a custodian company; and the removal of redundant provisions (Vic) , (Vic) - (Vic) r 54.02.

PRIVATE INTERNATIONAL LAW - Jurisdiction - Proper Law - Construction and interpretation - Distributions from charitable trust made to Queensland charities, but trust administered in Victoria by trustees resident in Victoria.

Mr R McInnes, Victorian Government Solicitor's Office

1 This is an application under s 63 of the Trustee Act 1958 (Vic), s 7L of the Charities Act 1978 (Vic) and r 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) ('Rules') for approval of amendments to the terms of two charitable trusts that were established by the will of Sir William Charles Angliss ('Sir William'). The application is made by the trustees of the trusts.

2 Sir William executed his last will in Victoria on 1 November 1954 ('original will'). He subsequently modified the original will by executing six codicils in Victoria. I will refer to the original will as modified by the six codicils as the 'Will'. Sir William died on 15 June 1957 and this Court granted probate of the Will on 20 February 1958.

3 The charitable trusts are The William Angliss (Victoria) Charitable Fund ('Victorian Fund') and The William Angliss (Queensland) Charitable Fund ('Queensland Fund'). I will refer to the Victorian Fund and the Queensland Fund collectively as the 'Funds'. The Funds have common trustees.

4 The proposed amendments relate to the appointment and qualification of trustees; the term of office of trustees; the quorum, voting power and procedures of the trustees; the retention and accumulation of income; the remuneration of trustees; and the incorporation of a custodian company.[1] In addition, the trustees have sought the Court's authority to administer the trusts in accordance with a new instrument which consolidates the terms of the trusts. That instrument incorporates the proposed amendments and omits redundant provisions of the Will.

5 Mr McInnes, who appeared for the Attorney-General, has informed the Court that the Attorney-General does not oppose the relief sought by the trustees. The Attorney-General requested the trustees to seek additional orders relating to the trustees' reporting obligations, and the trustees have done so.

6 For the reasons that follow, I have concluded that the Court should approve the proposed amendments, make the orders sought at the request of the Attorney-General and direct the trustees to administer the Funds in accordance with a consolidated instrument to be attached to the Court's order.

8 The first affidavit was sworn by Graeme Ballard, who is the chairman of the trustees. Mr Ballard swore the affidavit with the authority of his co-trustees and co-plaintiffs, John Norris and Karina Woolrich. The affidavit sets out details about the Will, the administration of Sir William's estate, the key features and activities of the Funds, and the reasons for the proposed amendments.

9 The second affidavit was sworn by Damien Smith, who is the managing director of Enterprise Care Pty Ltd. The affidavit contains an independent expert opinion on governance and remuneration issues.

10 Set out below are brief details of the Will and the Funds, which I have obtained from the affidavit of Mr Ballard.

11 The administration of the personal bequests made by the Will came to an end on 25 April 2008 with the death of the last life tenant. The work of the trustees now relates exclusively to the administration of the Funds. Distributions from the Victorian Fund are made to Victorian charities and distributions from the Queensland Fund are made to Queensland charities.

12 Each of the Funds is administered entirely in Melbourne. Each of the trustees resides in Melbourne and all meetings of the trustees for both Funds are held in Melbourne. Bank accounts and all other accounting and business records are kept in Melbourne. All administrative and deliberative actions are taken by the trustees in Melbourne, save that, every year, the trustees consult by mail with three prominent Queensland residents before finalising a list of distributions to be made to Queensland charities. The recommendations of the prominent Queensland residents are not binding on the trustees.

13 On 14 December 2000, Beach J made an order approving a Cy-prés scheme in relation to the Victorian Fund. A Cy-prés scheme became necessary in relation to the Victorian Fund because the repeal of the Probate Duty Act 1962 (Vic) and the Estate Duty Assessment Act 1914 (Cth) rendered some parts of the Will irrelevant.

14 A similar order was made on 9 February 2001 by Ambrose J of the Supreme Court of Queensland in relation to the Queensland Fund. A Cy-prés scheme became necessary in relation to the Queensland Fund because of the repeal of the Succession and Probate Duties Act 1892 (Qld) and the Estate Duty Assessment Act 1914 (Cth).

15 The capital of the Victorian Fund and the Queensland Fund when they were established under the Will was £900,000 and £100,000, respectively. The capital of the Funds has grown significantly since that time. As at 30 June 2009, the Victorian Fund had net assets of $28,265,088 and net income of $1,816,125, and the Queensland Fund had net assets of $262,298 and net income of $23,316. The assets comprise mainly listed securities, cash at bank and on term deposits and registered first mortgages. The combined assets of the Funds exceed those of many listed public companies.

16 The trustees are required to devote substantial time to the administration of the Funds. They meet monthly, excluding January, for between two and two and a half hours, and usually spend several hours preparing for each meeting. They also confer on an ad hoc basis as required. The trustees are assisted by only one permanent part-time employee.

17 An investment committee makes recommendations to the trustees in relation to the investment of the assets of the Funds. The committee meets 12 times per year and is chaired by Mr Ballard.

18 In recent years, the Funds have made distributions to over 300 charities annually. In selecting recipients of distributions from the Funds, the trustees have given preference to charitable funds which are deserving, but not well-known.

19 The trustees consider some of the provisions of the Will to be out of date and to detract from the efficient administration of the Funds. In the trustees' opinion, it is desirable for the proposed amendments to be made in order to facilitate the operation of the Funds and to 'allow better provision of benefits to the numerous charitable organisations which have received donations from the Funds over so many years.'

The Court's jurisdiction and the governing law of the Funds

20 It was common ground that this Court has jurisdiction to grant the relief sought in relation to both Funds and that the governing law of both Funds is Victorian law.

21 Given that equity acts in personam, jurisdiction to make orders in relation to the administration of a trust at the instigation of the trustees will be established by the presence of the trustees in the Court.[2]

22 The proper law of the trust governs the administration of the trust, as well as its validity, interpretation and effect.[3] In the absence of an express or implied choice of the proper law of the trust by the settlor, the proper law is the law with which the trust has its closest and most real connection.[4] In ascertaining that law, the following considerations are particularly relevant:

(b) the place where the assets of the trust are situated;

(d) the objects or purposes of the trust and the places where they are to be fulfilled.[5]

23 Having regard to the matters set out at [2], [11] and [12] above, the proper law of both Funds is the law of Victoria. In my opinion, the Queensland Fund has its closest and most real connection to Victorian law, even though the distributions from that Fund are made to Queensland charities.

24 It will be recalled from [4] above that the proposed amendments relate to administrative and managerial matters, including the powers of the trustees. They do not alter the objects or charitable purposes of the Funds. There are no beneficiaries whose interests would be prejudiced by the amendments.

25 It will also be recalled from [1] above that the application has been made pursuant to s 63 of the Trustee Act, s 7L of the Charities Act and r 54.02 of the Rules. Each of these provisions is discussed below.

Section 63 of the Trustee Act

26 Section 63 of the Trustee Act provides:

Power of Court to authorize dealings with trust property

(1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as between capital and income.

(2) The Court may from time to time rescind or vary any order made under this section, or may make any new or further order.

(3) An application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.

27 Section 63(1) of the Trustee Act confers upon the Court 'very large and important powers', which are expressed in 'very wide and beneficial terms' and 'must be liberally construed'.[6] The exercise of those powers is not restricted by any implications.[7]

28 The section applies equally to charitable and to non-charitable trusts.[8]

29 In order for the Court to exercise its powers under s 63(1), the 'sale, lease, mortgage, surrender, release or other disposition' or the 'purchase, investment, acquisition, expenditure or other transaction' must be:

(a) 'in the management or administration' of property vested in trustees;

30 Plainly, the third of the conditions set out at [29] above is satisfied in the present proceeding. The first and second conditions are considered below.

'In the management or administration' of property vested in trustees

31 The words 'management or administration' have a limiting effect upon the jurisdiction of the Court under s 63(1) of the Trustee Act. Under that provision, the Court is only empowered to authorise a disposition or transaction that is expedient 'in the management or administration' of trust property.[10]

32 Nonetheless, the words 'management or administration' are 'of wide import and pick up everything that a trustee may need to do in practical or legal terms in respect of trust property.'[11] Although their meanings may largely overlap, the disjunctive use of the words indicates that they are not necessarily synonymous and that an unduly narrow interpretation should be avoided.[12] This Court has held that 'management' refers to 'the management of trust property in the commercial or practical sense', whereas 'administration' encompasses 'all of the legal powers and duties which might be possessed by a trustee in respect of trust property.'[13]

33 In James N Kirby Foundation Ltd v Attorney-General (NSW),[14] White J considered s 81(1) of the Trustee Act 1925 (NSW), which is the equivalent provision in New South Wales to s 63(1) of the Trustee Act. His Honour held that the replacement of the governing trust deed of a charitable trust with a model trust deed that would enable the charitable trust to become a prescribed private fund for taxation purposes was a 'transaction' that was expedient 'in the management or administration' of trust property.[15] Several judges of this Court have referred to Kirby with approval.[16]

34 Expedience is 'a criterion of the widest and most flexible kind.'[17] In s 63(1) of the Trustee Act, the word 'expedient' accords with its ordinary meaning of '"advantageous", "desirable", "suitable to the circumstances of the case"'.[18]

35 In deciding whether a disposition or transaction is expedient, the Court must consider whether it is expedient in the management or administration of the trust property as a whole.[19]

36 In the case of a non-charitable trust, the question of expediency must be determined by reference to the interests of the beneficiaries and in the context of the trust as a whole.[20]

37 In the case of a charitable trust, the question of expediency must be determined by reference to the objects or purposes prescribed in the trust instrument.[21]

Section 7L of the Charities Act

38 Section 7L of the Charities Act relevantly provides:

Leave to apply trust fund for further purposes

(1) On the application of the trustees ... of any charitable trust (whether created before, on or after 1 April 1959) the court may grant leave empowering the trustees ... -

(a) to apply the trust fund for such further purposes as are necessary or desirable in order to carry out the purposes of the trust or to make them fully effective or are incidental to the carrying out of those purposes; and

(b) without affecting the generality of paragraph (a), if the carrying out of the purposes of the trust will impose on a charity an expense that is not adequately met by payments made pursuant to the trust, to apply such portion of the trust fund as is proper to meet those expenses.

(2) If leave is granted, the trustees ... may exercise the power subject to and in accordance with that leave.

(3) Any trustees ... wishing to obtain leave under this section may apply to the court by summons to which the Attorney-General is to be made a party.

...

39 It appears that s 7L of the Charities Act has not been judicially considered. Given that the provision, like s 63(1) of the Trustee Act, confers powers that are expressed in very wide and beneficial terms, it should be construed in a similarly liberal manner. In particular, the words 'necessary or desirable' in s 7L(1) should be construed in substantially the same way as the word 'expedient' has been construed in s 63(1) of the Trustee Act,[22] and by reference to what is necessary or desirable from the perspective of the trust property as a whole.[23]

Relief without general administration

(1) A proceeding may be brought for any relief which could be granted in an administration proceeding and a claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which the relief is sought.

(2) Without limiting paragraph (1), a proceeding may be brought for -

(a) the determination of any question which could be determined in an administration proceeding, including any question -

(i) arising in the administration of an estate or in the execution of a trust;

...

(b) an order directing an executor, administrator or trustee to -

...

(iii) do or abstain from doing any act;

(c) an order -

(i) approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee; or

(ii) directing any act to be done in the administration of an estate or in the execution of a trust which the Court could order to be done if the estate or trust were being administered or executed under the direction of the Court.

41 Rule 54.02 of the Rules confers on the Court very broad powers. It enables a trustee to seek an order of the Court either to approve a transaction or to direct that an act be done in the execution of the trust. If the trustee enters into a transaction approved by the Court or performs an act in accordance with the Court's direction, he or she is protected from any claim by a beneficiary or creditor arising from that transaction or act.[24]

42 In my opinion, r 54.02(2)(b)(iii) and r 54.02(2)(c)(ii) of the Rules empower the Court, in an appropriate case, to direct a trustee to administer a trust in accordance with a Court-approved trust instrument that omits redundant provisions that were set out in the original trust instrument.

First amendment: appointment and qualification of trustees

43 The Will requires that at least three trustees of the Funds be descendants of Sir William's father ('lineage requirement'), while there are at least three descendants who are capable of acting as trustees and who are willing to do so. If there are fewer than three such descendants, then each of them must be a trustee. Further, the Will provides that a trustee must be a Protestant ('religious requirement').

44 Each of the current trustees satisfies the lineage and religious requirements, and lives in Melbourne. Mr Ballard is 66 years old, Mr Norris is 70 years old and Ms Woolrich is 42 years old. In the light of the ages of Mr Ballard and Mr Norris, two new trustees may be required in the reasonably foreseeable future.

45 The descendants of Sir William's father are now numerous, but they are not well-known personally to the current trustees. The descendants may not possess the skills and attributes required to discharge the responsibilities of the trustees of the Funds.

46 The proposed amendments would remove the religious requirement and would alter the lineage requirement by reducing the number of required descendants of Sir William's father from three to two. In addition, the number of trustees that may be appointed by the trustees would be increased to four. The result would be that at least two trustees would have to satisfy the lineage requirement and up to two independent trustees could be appointed.

47 As the Funds have substantial assets and the responsibilities of managing them are extensive, it would be in the long-term interest of the Funds for the trustees to have power to appoint new trustees with commercial and financial acumen which is commensurate with those responsibilities.

48 Under the proposed amendments, persons who satisfy the lineage requirement would continue to be involved in the administration of the Funds and would constitute at least one half of the trustees at any one time.

49 I agree with the trustees' opinion that the religious requirement is inappropriate to modern conditions. Religion ought not to be a relevant criterion in the appointment of a trustee of the Funds.

50 Having regard to the principles set out at [27] to [37] above, I am of the opinion that the proposed amendments relating to the appointment and qualification of trustees satisfy the requirements of s 63(1) of the Trustee Act and ought to be approved pur[25]ant to that provision.25

Second amendment: term of office of new trustees

51 The Will does not impose any limit on the term of office of a trustee. A trustee remains in office until he or she retires or dies.

52 The proposed amendments would restrict the terms of office of trustees as follows:

(a) there would be a mandatory retirement age of 72 years for the current trustees, subject to the other trustees having a discretion to extend, by unanimous resolution, the term of a trustee who reaches this retirement age; and

(b) a new trustee could be appointed for a fixed term of five years, with the following provisos:

(i) the other trustees could, by unanimous resolution, extend the term of a trustee who is required to retire at the expiration of his or her fixed term; and

(ii) no person could be appointed a trustee unless he or she were considered by the existing trustees to have qualifications and experience to the extent likely to be substantially beneficial to the Funds.

53 These proposed provisions would require that a periodical review be undertaken as to whether a trustee should continue in office.

54 I agree with the trustees' opinion that 'a reasonable turnover in the office of the trustees' serves the interests of the Funds as a whole and advances the charitable purposes of the Funds. The proposed amendments would facilitate 'regeneration' through a periodical review of whether a trustee should continue in office.

55 Having regard to the principles set out at [27] to [37] above, I am of the opinion that the proposed amendments relating to the terms of office of trustees satisfy the requirements of s 63(1) of the Trustee Act and ought to be approved pursuant to that provision.

Third amendment: quorum, voting power and procedures of trustees

56 The Will is silent on what constitutes a quorum for meetings of trustees and does not make clear whether the trustees must act unanimously.

57 The proposed amendments would introduce new provisions for proceedings and deliberations of the trustees, including:

(a) a power to regulate proceedings and deliberations as the trustees see fit, but with an obligation to endeavour to meet at least once a month, excluding January;

(b) a requirement to appoint and replace a chairman, who would have to satisfy the lineage requirement if a person that satisfies that requirement was a trustee and willing to act in that office;

(c) a quorum of three for meetings of trustees when there are four trustees in office, and a quorum of two when there are three trustees in office;

(d) a provision authorising the trustees to act by a majority vote, with no power to exercise a casting vote being reposed in the chairman; and

(e) a provision authorising the trustees to meet by telephone or any other means and to vote by circulating resolution.

58 These proposed amendments are merely procedural in nature and accord with modern commercial practice.

59 Having regard to the principles set out at [27] to [37] above, I am of the opinion that the proposed amendments relating to the quorum, voting power and procedures of the trustees satisfy the requirements of s 63(1) of the Trustee Act and ought to be approved pursuant to that provision.

Fourth amendment: retention and accumulation of income

60 The Will requires that the entire net income of the Funds be distributed annually, preferably in December. In accordance with the Will, the income for each year is determined as at 30 June and the whole of that sum is distributed in the following December.

61 The nature of the investments of each Fund is such that fluctuations in income from year to year have been common.

62 The proposed amendments would empower the trustees to retain income in a 'smoothing reserve'. The accumulation in any one year would not exceed 10 per cent of the net income of each Fund in that year. Half of the accumulation would be added to the capital of the Fund and the other half would be held in a smoothing reserve. If any amount that was credited to the smoothing reserve was not distributed within 10 years, it would either be credited to the Fund's capital or be distributed. The maximum period for which an amount could remain unappropriated in the smoothing reserve would be 10 years.

63 The proposed amendments reflect advice that the trustees received on 14 September 2009 from Lachlan Partners, chartered accountants, and business and financial advisers.

64 The proposed amendments would also allow the trustees to add to the capital of the Funds in a marginal way, as they consider appropriate. Further accretions to the capital of both Funds over time would be beneficial in an era of fluctuating share prices.

65 The power to retain income would enable the trustees to smooth out the otherwise fluctuating income of the Funds from year to year and to deal with the income of the Funds on a more predictable basis. The trustees - and the charities which receive distributions from the Funds - would be able to budget more effectively.

66 I am of the opinion that the proposal to authorise (but not require) accumulation of up to 10 per cent of income in any one year, and to require half of the amount accumulated to be added to capital and the other half to be credited to a smoothing reserve to be distributed within a period of not more than 10 years, is reasonable and prudent.

67 It follows that, having regard to the principles set out at [27] to [37] above, the proposed amendments relating to the retention and accumulation of income satisfy the requirements of s 63(1) of the Trustee Act and ought to be approved purs[26]nt to that provision.26

68 In my opinion, the proposed amendments are also 'desirable' within the meaning of s 7L of the Charities Act. Accordingly, the Court has power under that section to grant leave to the trustees to exercise a power to retain and accumulate income in accordance with the proposed amendments.

69 The Will empowers the trustees to determine an annual payment for their services. It acknowledges the need to offer sufficient remuneration to attract 'experienced and competent persons to act as Trustees'. However, the remuneration of the chairman cannot exceed £500 ($1,000) per annum and the remuneration of each other trustee cannot exceed £250 ($500). The Will does not make any provision for these maximum amounts to be adjusted on the basis of inflation or for any other reason.

70 Given the increases in the cost of living since Sir William's death and the significant growth in the net assets of the Funds since their establishment, the maximum rates of remuneration that are set out in the Will afford a very low level of remuneration for persons exercising the care and skill required to administer the Funds.

71 The proposed amendments would provide for the remuneration of the trustees at the following rates:

(a) for the chairman, an amount of $39,357 per annum inclusive of superannuation, government levies or taxes (if applicable), indexed every year in accordance with the Consumer Price Index - All Groups Melbourne ('CPI'); and

(b) for each other trustee, an amount of $20,412 per annum inclusive of superannuation, government levies or taxes (if applicable), indexed every year in accordance with the CPI.

72 The remuneration would be funded pro rata out of the income of each Fund, unless the trustees determine that a greater proportion should be paid out of the Victorian Fund.

73 The trustees submit that the Court should approve the proposed changes, taking into account the following factors:

(a) the increased legal and commercial responsibilities of trustees since 1957;

(b) the time commitment required of the trustees to manage and administer the Funds;

(d) the work involved in deciding upon distributions from the Funds; and

(e) the remuneration which is necessary to attract appropriate candidates to serve as trustees of the Funds.

74 The trustees have acknowledged that they have a conflict of interest and duty in seeking approval for an increase in their remuneration. In my opinion, that conflict has been managed satisfactorily by the trustees obtaining an independent expert opinion from Mr Smith and by consulting the Attorney-General.

75 Mr Smith's affidavit provides details of the responsibilities and accountabilities to which trustees are currently subject; the skills, attributes and time commitment required of trustees to discharge their responsibilities and accountabilities; and the levels of remuneration that are necessary to attract persons having the requisite skills and attributes. In his opinion, the time commitment, involvement and engagement of the trustees on governance matters are becoming more significant and will continue to expand. He refers to the need for trustees to have 'an increasing level of sophistication [in order to keep] abreast of the growing regulatory and compliance complexity' in the management of large trust funds.

76 On the basis of the remuneration that is currently being paid to office-holders of comparable not-for-profit organisations, Mr Smith has recommended that the chairman's remuneration be in the range $36,460 to $49,340 (inclusive of superannuation contributions) and that the remuneration of the other trustees be in the range $18,950 to $25,600 (inclusive of superannuation contributions). The Attorney-General suggested to the trustees that they adopt the mid-point of the ranges recommended by Mr Smith. The trustees have adopted the Attorney-General's suggestion. The amounts set out at [71] are just below the mid-points of the two ranges.

77 Sir William's concerns, expressed over half a century ago in the Will, to set a rate of remuneration which would attract 'experienced and competent persons' remain valid. The original trustees were close associates of Sir William who could be expected to undertake the responsibilities of trustees of the Funds for reasons of friendship, admiration and respect. This is no longer the case.

78 The remuneration proposed by the trustees is modest and has regard to the nature of their responsibilities and the need to ensure that the Funds are managed and administered on a sound commercial basis in the future. It is appropriate, therefore, for the Court to authorise the proposed changes, even though the Court will thereby override the limitations on the remuneration of the trustees prescribed by Sir William in the Will.[27]

79 Having regard to the principles set out at [27] to [37] above, I am of the opinion that the proposed amendments relating to the remuneration of the trustees satisfy the requirements of s 63(1) of the Trustee Act and ought to be approved pursu[28]t to that provision.28

Sixth amendment: incorporation of custodian company

80 At present, all assets of the Funds are registered in the names of the individual trustees. This complicates the administration of the Funds, particularly when a trustee ceases to hold office or a new trustee is appointed. Numerous documents need to be executed and various administrative procedures need to be undertaken to transfer assets from a retired or deceased trustee to the continuing trustees or to a new trustee.

81 The proposed amendments would empower the trustees to incorporate a company to act as a custodian for the assets of both Funds. That company, instead of the individual trustees, would hold the assets of the Funds. Each trustee would be a director of the company and hold one share in the company. The sole function of the company would be to hold assets of the Funds.

82 The proposed amendments are sensible because they would avoid the administration and expense of re-vesting trust assets every time there is a change of trustee.

83 The proposed restrictions relating to the shareholding in the custodian company and the limited role of that company would ensure that the assets of the Funds remain, at all times, under the direct control of the trustees, notwithstanding the custodial arrangement.

84 Having regard to the principles set out at [27] to [37] above, I am of the opinion that the proposed amendments relating to the incorporation of a custodian company satisfy the requirements of s 63(1) of the Trustee Act and ought to be approved pursuant to that provision.

Consolidation of the terms of the trusts established by the Will

85 As discussed at [2] above, the Will comprises the original will and six codicils. The documentation extends to 83 pages, more than half of which are redundant because they relate to personal bequests and the administration of Sir William's estate. The redundant provisions are interspersed among operative provisions relating to the Funds and render the Will cumbersome and difficult to comprehend.

86 At present, the trustees are required to refer to the original will and the six codicils, as affected by the order of Beach J made on 14 December 2000 and the order of Ambrose J made on 9 February 2001,[29] to determine any questions that arise in the course of the management and administration of the Funds regarding their powers and duties. In the opinion of the trustees, this is a time-consuming and inefficient process.

87 The trustees have sought the Court's approval for a consolidation of the terms of the trusts established by the Will, so that only operative provisions relating to the Funds are retained. It is said that the consolidated instrument would accurately specify the trustees' powers and duties, and would simplify the management and administration of the Funds.

88 The proposed changes fall into three categories:

(b) the changes resulting from the order of Beach J made on 14 December 2000 and the order of Ambrose J made on 9 February 2001; and

89 In my opinion, the Court has power to authorise the trustees to administer the Funds in accordance with the proposed consolidation.[30] Approval of the consolidation will avoid uncertainty about how the Will is to be read in relation to the operation of the Funds. Such uncertainty exists at present because much of the text in the Will is no longer of operative effect. The approval of the consolidation is expedient to avoid such uncertainty and to facilitate the administration of the Funds.

90 At the hearing on 20 October 2010, I suggested to Mr Garratt QC, who appeared with Mr Rimmer for the trustees, that, instead of amending the provisions of the Will, the trustees could seek from the Court a direction that they administer the Funds in accordance with an instrument - which would be attached to an order of the Court - containing the operative provisions of the Fund. The trustees adopted this suggestion.

91 As I am of the opinion that the relief sought by the trustees should be granted, I will hear further from the parties on the precise terms of the order to be made by the Court.

[1] The proposed amendments are discussed in detail below.

[2] Chellaram v Chellaram [1985] Ch 409, 426-7 ('Chellaram'); Re Webb; Webb v Rogers (1992) 57 SASR 193, 199-201 ('Webb').

[3] Chellaram [1985] Ch 409, 432; Webb (1992) 57 SASR 193, 203.

[4] Perpetual Executors & Trustees Association of Australia Ltd v Roberts [1970] VR 732, 741 ('Roberts'); Chellaram [1985] Ch 409, 425.

[5] See Roberts [1970] VR 732, 741-2; Convention on the Law Applicable to Trusts and on Their Recognition, opened for signature 1 July 1985, 1664 UNTS 311 (entered into force 1 January 1992) art 7 ('Convention'). Although the provisions of the Convention have the force of law in Australia, they do not apply in relation to conflicts arising solely between laws of different States or Territories: Trusts (Hague Convention) Act 1991 (Cth) ss 6, 7(1). Nonetheless, art 7 of the Convention states the considerations that are relevant at common law: M Davies, A Bell and P L G Brereton, Nygh's Conflict of Laws in Australia (LexisNexis Butterworths, 8th ed, 2010) 695.

[6] Riddle v Riddle [1952] HCA 12; (1952) 85 CLR 202, 214, 220 ('Riddle'); Royal Melbourne Hospital v Equity Trustees Ltd [2007] VSCA 162; (2007) 18 VR 469, 476 [12], 500 [148] ('Royal Melbourne Hospital'); Norman v Australasian Conference Association Ltd [2008] VSC 573 (18 December 2008) [16] ('Norman').

[7] Riddle [1952] HCA 12; (1952) 85 CLR 202, 214; Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 500 [148].

[8] Freeman v A-G (NSW) [1973] 1 NSWLR 729, 735 ('Freeman'). In Victoria, see, eg, Norman [2008] VSC 573 (18 December 2008) [8]; Hutchinson v A-G (Vic) [2009] VSC 551 (19 November 2009) [2] ('Hutchinson').

[9] See Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 500 [149].

[10] Municipal & General Securities Co Ltd v Lloyds Bank Ltd [1950] Ch 212, 223; Boyd v Cowell [1952] VicLawRp 38; [1952] VLR 288, 295-6; Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 501 [151].

[11] Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 500 [150].

[12] Hornsby v Playoust [2005] VSC 107; (2005) 11 VR 522, 526 [17], 527 [19] ('Hornsby'); Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 500 [150].

[13] Hornsby [2005] VSC 107; (2005) 11 VR 522, 527 [18], [19]; Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 500 [150].

[15] Kirby [2004] NSWSC 1153; (2004) 62 NSWLR 276, 280 [14]-[17]. See also Re Bowmil Nominees Pty Ltd [2004] NSWSC 161 (12 March 2004) [15], [16].

[16] Hornsby [2005] VSC 107; (2005) 11 VR 522, 526 [16] n 15 (Mandie J); Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 501 [151] n 62 (Bell AJA); Hutchinson [2009] VSC 551 (19 November 2009) [7]-[9] (Habersberger J).

[19] Riddle [1952] HCA 12; (1952) 85 CLR 202, 220; Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 502 [154]-[157].

[20] Riddle [1952] HCA 12; (1952) 85 CLR 202, 214, 220, 222; Hornsby [2005] VSC 107; (2005) 11 VR 522, 527 [22]; Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 502 [155]-[157].

[21] Freeman [1973] 1 NSWLR 729, 735; Norman [2008] VSC 573 (18 December 2008) [27].

[22] As noted at [34] above, 'expedient' has been interpreted as including 'desirable'.

[23] See above [35]-[37].

[24] Re Atkinson [1971] VicRp 73; [1971] VR 612, 615.

[25] Cf Kirby [2004] NSWSC 1153; (2004) 62 NSWLR 276, 280-2 [18]-[22].

[26] An accumulation proposal similar to the proposal under consideration in this proceeding was approved by Habersberger J in Hutchinson [2009] VSC 551 (19 November 2009) [21], [22].

[27] Riddle [1952] HCA 12; (1952) 85 CLR 202, 223-4; Royal Melbourne Hospital [2007] VSCA 162; (2007) 18 VR 469, 493 [115].

[28] Cf Re Queensland Coal & Oil Shale Mining Industry (Superannuation) Ltd [1999] 2 Qd R 524, 526; Re Cuesuper Pty Ltd [2009] NSWSC 981 (18 September 2009) [14]-[23].

[29] See above [13] and [14].

[30] Cf Kirby [2004] NSWSC 1153; (2004) 62 NSWLR 276, 277 [2], 280 [17], 282 [23].

Estate Duty Assessment Act 1914(Cth)

Succession and Probate Duties Act 1892(Qld)

Court (General Civil Procedure) Rules 2005

(Hague Convention) Act 1991

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