37 As we view the matter, any consideration received upon a sale of the Sweeps business under clause NN must be held on the trusts, directions and provisions declared and contained of and concerning the Sweeps business; for there are no other applicable provisions. Contrastingly, in the case of the other businesses, the testator conferred an express power of sale and disposition (in clause K) and expressly provided (in clause L) that the trustees should stand possessed of the proceeds of any such "sale and disposition" upon trust to be applied in the first place to pay moneys due in respect of the Sweeps business and thereafter (under clauses M, N and O) in payment of obligations owing in respect of debts outside Tasmania and the purchase of land in Sydney and in carrying on one of the businesses other than the Sweeps business in Sydney and (under clause P) that the trustees should stand possessed of the residue of the net proceeds of "sale and disposition" on trust for the so-called Charities. Consequently, if one of those other businesses had been sold as part of a corporatisation under clause NN, the consideration received upon the sale would have to have been held "on the trusts and in accordance with the directions and provisions which would have applied to the proceeds of a sale and disposition of that [other] business."
Clause DD does not apply
38 That brings us to the second step of the process, which is to turn back to the "trusts directions and provisions hereinbefore declared and contained of and concerning the [Sweeps business] ... so as aforesaid to be sold and transferred." The question is whether that expression requires the trustees to hold any consideration received upon a sale under clause NN on the trusts provided for in clauses Y and T or for distribution in accordance with clause DD.
39 As has been seen, the testator allowed for the possibility of a corporatisation under clause NN which results in the trustees losing control of the Sweeps business. But he also allowed for and indeed would plainly have preferred a corporatisation under which the trustees retain control of the Sweeps business through one or more corporate vehicles. And in the event of a corporatisation under which the trustees so retain control, it cannot be doubted that the testator would have wished the trustees to retain control of the business on the trusts provided for in clauses Y and T. One need only think of the circumstances which have applied since the first corporatisation some years ago. In our view it is not to be supposed that the trustee intended the shares in Tattersalls Pty Ltd to be sold and the proceeds distributed as upon a winding up and realisation. They have been held on the trusts provided for in clauses Y and T. To that extent we think it is plain that clause DD was not intended to apply and hence that the "trusts directions and provisions hereinbefore declared and contained of and concerning the [the Sweeps business] ... so as aforesaid to be sold and transferred" do not include clause DD.
40 The judge below reached a contrary view. His Honour made the assumption that both legs of the clause NN dichotomy apply to the Sweeps business and reasoned from it that because the provisions for winding up and realisation in clause DD are the only thing that come near to the conception of sale and disposition, clause DD must be intended to apply mutatis mutandis to consideration received on a sale of the business as a going concern. It followed, as his Honour saw it, that so much of the consideration as may be income was to be held on the trusts as to net profits contained in clause T (via clauses Z, CC and FF) and in clause Y, and that so much of the consideration as may be capital was to be held mutatis mutandis on the trust for division of the proceeds of sale contained in clause DD.
41 But even putting aside the question of whether the second leg of the clause NN dichotomy does apply to the Sweeps business, it appears to us that his Honour's analysis faces a number of problems. The first is that consideration received upon a sale under clause NN will ordinarily be received on capital account. Clause NN may be drafted in terms broad enough to accommodate an arrangement under which part of the consideration is received in the form of an annuity or other income steam. But it is far from obvious that that is what was contemplated. Even if it were, it is difficult to see that the testator intended the beneficiaries of the proceeds of sale to depend on the way in which the trustees chose to structure the transaction. The indications are that he intended the beneficiaries to be the same regardless of the structure.
42 Secondly, clause EE expressly provides that nothing in clause DD shall authorise or empower the trustees to sell the Sweeps business as a going concern, but the corporatisation which is proposed does contemplate that the business will be sold as a going concern. His Honour sought to avoid that difficulty by construing clause EE as confined to "circumstances other than those in which the Trustees are unable or unwilling to continue the conduct of the Sweeps business" and by treating the proposal for restructure as a decision by the trustees "to discontinue conduct control and ownership of the Sweeps business". But, in our view, that is incorrect. The operation of Clause DD is expressly predicated upon the trustees being unable to continue or deciding to discontinue the carrying on of the Sweeps business. In terms it has no operation in any other circumstances. And since clause EE is on any view of the matter an exception to what is authorised, or at least a stipulation as to what is not authorised by clause DD, it has to be directed to circumstances in which the trustees are unable to continue or decide to discontinue the carrying on of the Sweeps business.
43 Thirdly, it may be doubted that the proposed restructure should be regarded as a decision by the trustees "to discontinue conduct control and ownership of the Sweeps business". Mr Merralls submitted to this Court that his Honour had wrongly characterised the restructure proposal as a discontinuance of the business, thereby appearing to be at odds with the trustees' intention to continue the business albeit in a different legal form. That view was reinforced by the submissions of Mr. O'Bryan, representing the trustees, who informed the Court that the trustees had no intention of being unable to continue the business nor had they decided to discontinue the business.
44 Fourthly, the judge reasoned that it was necessary to give clause EE a limited interpretation in order avoid what he termed "a substantial negation of the Testator's intention expressed in clause DD". It is apparent that his Honour meant by that expression that "it was the essence of realisation that there be a 'commercial turning to account' or sale" and that "clause EE had to be interpreted to harmonise with clause DD and not to negate it". But if we may say so with great respect, that reasoning is also incorrect. The "essence" of clause DD is provision for winding up and realisation in the event of the trustees "being unable to continue or deciding to discontinue the carrying on of [the Sweeps] business". In the absence of any contrary indication, one (but only one) of many ways in which the business might so be wound up and realised would be by way of sale as a going concern. But then there is a contrary indication in clause EE, the evident purpose and effect of which is to except sale as a going concern from the range of methods that may be used under clause DD to wind up and realise the business. Furthermore, as has been seen, the testator's reason for providing for that exception was because he did not want anyone except the trustees running the Sweeps business.
45 Finally, in case what we have said already is not seen as a complete answer in a case where corporatisation results in the trustees losing control of the Sweeps business, we have considered whether it is possible otherwise to construe clause NN as incorporating or excluding clause DD according to the circumstances of the corporatisation. That is akin to the approach adopted by the judge on the basis of the assumption that both legs of the clause NN dichotomy apply to a corporatisation of the Sweeps business, but it is not dependent upon that assumption. According to such an approach, if a corporatisation resulted in the trustees ceding control of the business, clause DD would apply mutatis mutandis (analogously to the way to which it would apply in a winding up and realisation) but if the corporatisation resulted in the trustees retaining control of the business, clause Y would continue to apply, there being nothing in the nature of a winding up and realisation to which clause DD might attach.
46 The difficulties which would be involved with that approach appear to us to be insurmountable. For example, what would be done if the trustees were to sell off part of the Sweeps business under clause NN in order to fund the continued operation of the remainder of the business? Would the trustees be required to distribute the sale consideration under clause DD despite that they needed the funds to carry on the remainder of the business and the funds were realised solely for that purpose? Equally, who is to say what constitutes "control"? For many purposes, control inheres in a significant minority shareholding. If the trustees entered into a corporatisation that resulted in them holding, say, forty-nine per cent of the shares in a company that carried on the business and had control of the board and, because of the spread of other shareholdings, they were likely to retain control of the board, would it be said that they should retain the shares on the trusts of clause Y or distribute them under clause DD on the basis that they were not majority shareholders? What if any difference would it make if their shareholding were diluted by a rights issue in which they could not or chose not to participate? At what if any point would it be said that they had so much lost control that the shares should be distributed under clause DD? In any event, we would postulate, how can one read into a clause the large amount of words or implications needed to make it operate distributively according to a conception as illusive and variable as control or anything else along those lines when there is nothing in the terms of the clause itself on which to base that construction?
47 In the result we conclude that clause DD does not apply to consideration received upon a sale of the Sweeps business or any part of it under clause NN, whether or not the trustees retain control of the business. All things considered, the intention which we attribute to the testator is that in the event of such a sale the consideration is to be held by the trustees on trust in accordance with clauses Y and T.
The rule in Congregational Union of New South Wales v Thistlethwayte
48 It was submitted on behalf of the appellant that the trusts provided for in clauses Y and T would in the circumstances amount to an unlimited absolute gift of income which would carry with it a gift of corpus as explained in Congregational Union of New South Wales v Thistlethwayte[30]. We do not accept that contention. The rule is one of construction and hence as was said in Congregational Union v Thistlethwayte it must yield to sufficiently definite indications of intention to the contrary. Here there are definite indications to the contrary. The testator allowed for the possibility of a corporatisation under which the trustees would retain control of the Sweeps business through one or more corporate vehicles, and in such circumstances it cannot be doubted that the testator intended the trustees to continue to hold and conduct the corporatised business on trust to pay the income in accordance with clause Y. As has been explained, it is not open to conclude that the testator intended a different result if a corporatisation resulted in the trustees losing control of the business.
49 It follows in our opinion that any shares received as consideration under the proposal for sale of the Sweeps business to Tattersalls Ltd would have to be held upon the trusts provided for in clause Y. The only way in which those shares might be distributed to beneficiaries would be pursuant to an order under s.63 of the Trustee Act 1958, or perhaps s.63A, assuming without deciding that the circumstances warranted an order of that kind, or if all beneficiaries were sui juris and agreed, under the rule in Saunders v Vautier[31].
The trusts in clauses Y and T
50 Earlier in these reasons we mentioned that it would be necessary to say something more about clause T. The point was made by the judge below. As his Honour explained, the trusts as to net profits provided for in clause Y mean the trusts as to net profits contained both in clause T (via clauses Z, CC and FF) and in clause Y. That result comes about because the bequest to the so-called Charities in clause Z was held invalid, with the result that the one tenth share of the profits intended for the Charities and such other parts of the profits which for any reason might be unapplied or undisposed of should go as upon an intestacy under clause T.[32] In the view which we take of the operation of clause NN, the shares received by the trustees upon sale of the Sweeps business under the proposed restructure would be held on the trusts as to net profits contained both in clause T (via clauses Z, CC and FF) and in clause Y.
51 Much of the argument before us, and we gather before the judge below, was premised on the assumption that if clause DD were engaged upon a sale under clause NN, the consideration would be distributable among only those beneficiaries specifically named in clause Y, thereby excluding beneficiaries entitled to a share of clause Y profits under clause T via clauses Z, CC and FF. In case it comes to matter, we think that the assumption is unfounded.
52 Evidently, it rests on the words "before named Legatees" in the direction in clause DD to "divide the [proceeds of winding up and realisation] between and amongst the before named Legatees of the net profits of the said business in the same proportions as they are hereinbefore directed to divide between them the said net profits." The only legatees "before named", in the sense of having their name specifically mentioned, are those whose names are listed in clause Y. The thought no doubt is that the words mean what they say. But that appears to us to overlook two things of significance: