Re Rosewood Research Pty Limited [2014] NSWSC 449

Supreme Court of NSW|2013-12-09|Before: Darke J, Mr P

rom 9 December 2013) (plaintiffs) Crown Solicitor (Attorney General for the State of New South Wales) Prolegis Lawyers (objectors) File Number(s): 2013/148053 Publication restriction: Nil

Introduction 1On 16 May 2013, Grain Technology Australia Limited and three others commenced proceedings in this Court against Rosewood Research Pty Limited, Pathway Properties Pty Limited, Asia Pacific Technologies Pty Limited (together referred to as "the Trustees"), and four other defendants (being three directors of the Trustees, and the Attorney General for New South Wales). In those proceedings ("the main proceedings"), relief, including declaratory relief, is sought in respect of certain charitable trusts. It is alleged that the funds and property of the Trustees (which is valued at in excess of $21 million) is held upon those charitable trusts, and has been dealt with by the Trustees in breach of those trusts. Orders for the removal of the Trustees are sought. The directors, but not the Trustees themselves, are alleged to be personally liable in respect of the breaches. The main proceedings had been foreshadowed to the Trustees on 21 March 2013 by the service of a draft Statement of Claim. 2By a Summons filed on 13 May 2013, the Trustees sought the opinion, advice and direction of the Court, pursuant to s 63 of the Trustee Act 1925 (NSW), on certain questions set out in a Statement of Facts. The Statement of Facts has since undergone significant revision. 3Both the main proceedings and these proceedings were commenced with the authority of the Attorney General pursuant to s 6(1)(a) of the Charitable Trusts Act 1993 (NSW). 4These proceedings were managed in the expedition list for a time. The plaintiffs in the main proceedings (referred to here as "the Objectors") and the Attorney General appeared. They have been allowed to participate in these proceedings, although they have not been formally added as parties. 5On 12 July 2013, Pembroke J made various orders, including an order that the Trustees would be justified in procuring the opinion of counsel on certain questions concerning the nature of the relevant trusts, and an order that the Trustees, after receiving counsel's advice, inform the interested parties whether further judicial advice was sought and, if so, what advice was sought. The matter was listed for hearing on 20 September 2013. 6At the hearing on 20 September 2013, the Trustees proffered a revised Statement of Facts (Version 4). Attached to that statement was the non-confidential portion of an opinion of counsel dated 23 August 2013, and a draft Defence for use in relation to parts of the main proceedings. The Trustees also provided the Further Amended Statement of Claim which was filed in the main proceedings on 11 July 2013. All of that material was made available to the Objectors and to the Attorney General, who again appeared and participated in the hearing. 7The Trustees also provided to the Court (but not to the Objectors or the Attorney General) certain material of a confidential nature. This material included confidential schedules 1, 4 and 5 to the Statement of Facts (Version 4). An amended confidential schedule 4 was recently provided to the Court. Confidential schedule 5 consists of the confidential portion of the opinion of counsel. 8The Attorney General and the Objectors also provided some material to the Court. This material largely consisted of correspondence between the parties. 9The Court was assisted by the written and oral submissions of all sides. During part of the hearing, the Court was closed to allow the Trustees to present, and make submissions in relation to, the confidential material. 10The questions in respect of which the further advice of the Court was sought may be distilled from the Statement of Facts (Version 4) as: 1. whether the Trustees were justified in taking certain steps following receipt of a letter of demand dated 7 February 2013 and prior to the commencement of these proceedings, including by corresponding with the solicitors for the Objectors and with the Crown Solicitor as to whether the Trustees are trustees of a charitable trust, the terms of any such trust, and the question of authorisation of the main proceedings pursuant to s 6(1)(a) of the Charitable Trusts Act 1993; 2. whether the Trustees are justified in defending the main proceedings insofar as it is set forth in Parts 1 and 2 of the pleading, and in filing a cross-claim for cy-pres relief in respect of that aspect of the claim; 3. whether the Trustees are justified in obtaining an opinion of counsel as to whether they are justified in defending the main proceedings insofar as it is set forth in Parts 3 and 4 of the pleading to the extent that those Parts contain claims and/or allegations against the Trustees; and 4. whether the Trustees are justified in having recourse to the trust funds to pay certain costs, these costs being: (a) the reasonable costs incurred or to be incurred in undertaking the activities referred to in questions 1, 2 and 3 above; (b) the reasonable costs incurred in seeking judicial advice in the period from 13 July 2013 up to 20 September 2013 (save for costs in relation to confidential schedules 1 and 4 to the Statement of Facts); and (c) the reasonable costs incurred in the main proceedings in the period from 13 July 2013 up to 20 September 2013 (save for costs in relation to Parts 3 and 4 of the pleading). 11The Trustees submitted that the Court should give advice to the effect that each of the questions be answered in the affirmative. The Objectors, and to a lesser extent the Attorney General, advanced various reasons why the Court should not so advise. The issues are best illuminated by reference to the submissions of the Objectors and the Attorney General. However, before dealing with those submissions, it is necessary to note a particular aspect of the matter. 12It became apparent from paragraph 18(f) of the Statement of Facts (Version 4) that an amount of $92,752.01 had already been paid out of the trust funds for the Trustees' legal costs (not being costs falling within order 2 made by Pembroke J on 12 July 2013 which permitted the Trustees to have recourse to the trust funds for certain costs). In the course of submissions made at the hearing on 20 September 2013, senior counsel for the Trustees confirmed that the Trustees would not be seeking judicial advice in respect of that expenditure. The Trustees further agreed to provide details of those costs (which were described as the "past costs"). Following the hearing, consent orders were made for the provision of such information and for written submissions to be made in respect of the past costs (and also in respect of the Trustees' desire to place additional material before the Court, some of which the Trustees wished treated as confidential). The emergence of the past costs issue caused considerable delay and disruption to the proceedings. It will be necessary to make further reference to this matter, but for the moment, it can be put to one side.

Submissions 13The submissions of the Objectors and the Attorney General may be summarised (by reference to the questions set out above) as follows.

Question 1 14It was the primary submission of the Objectors that the Court had no jurisdiction, whether under s 63 of the Trustee Act or otherwise, to give judicial advice as to whether any conduct engaged in by the Trustees before 1 May 2013 (being the date when the Trustees first approached the Court seeking advice) was justified. It was contended that the jurisdiction was restricted to the giving of advice of a prospective character, and that this restriction could be discerned from the terms of s 63(2) of the Trustee Act which only affords protection to trustees who act in accordance with the advice of the Court. The Objectors seemed to accept that there was jurisdiction to give advice that the Trustees were justified in having recourse to the trust funds to pay for costs incurred as a result of conduct which occurred prior to the seeking of judicial advice. 15It was submitted in the alternative that, even if it was open to the Court to give advice in respect of the pre-1 May 2013 conduct, the Court, in the exercise of its discretion, should decline to provide advice as sought. In this regard, the Objectors essentially adopted the separation of the conduct into the 7 categories suggested by the Attorney General (see [19] and [20] below), agreed with the Attorney General insofar as he submitted that the conduct was not justified as proper actions by a trustee, and (save in respect of one matter), disagreed with the Attorney General insofar as he submitted that the conduct was so justified. 16The Objectors submitted that the conduct of the Trustees in responding to the letter of demand of 7 February 2013 was not justified (and was indeed cited as a further instance of breach of trust), and neither was their conduct in obtaining legal advice in relation to the Statement of Claim in the main proceedings and the obtaining of judicial advice. As I understand the submission, it was put that the Trustees should have been able to readily understand their position as Trustees holding property on charitable trust, such that it ought not have been necessary to obtain such legal advice. As far as conduct in relation to the actual obtaining of judicial advice is concerned, it was submitted that some of that conduct would not have been necessary had the Trustees made timely disclosure of certain facts concerning changes made to the first plaintiff's objects. It was suggested that an assessment would need to occur at some stage to ascertain what portion of those costs were properly incurred. 17The Objectors further submitted that the conduct of the Trustees in responding to the matters raised by the Objectors was not justified insofar as it occurred before steps were taken to obtain judicial advice. The Objectors pointed to a two month delay between the 7 February 2013 letter of demand and the commencement of work on the judicial advice application on 2 April 2013. 18The Objectors accepted that the conduct of the Trustees in appearing before the Court on 1 May 2013 was justified. 19The Attorney General accepted that the following activities of the Trustees were justified as proper actions by a trustee, and accordingly it would be appropriate for the Trustees to have recourse to the trust funds to pay the costs of such: (i)responding to the 7 February 2013 letter of demand; (ii)obtaining legal advice in relation to the Statement of Claim in the main proceedings and the obtaining of judicial advice (although not to the extent that defective Statements of Facts were prepared); (iii)responding to the matters raised by the Objectors; and (iv)appearing before the Court on 1 May 2013 and preparing to so appear. 20The Attorney General submitted, however, that the following activities were not justified as proper actions by the Trustees: (v)obtaining legal advice and engaging in correspondence on the question whether the Trustees were indeed trustees of a charitable trust. It was submitted that it was fundamental that a trustee should know the terms of the trust administered by it; (vi)opposing the standing of the Objectors to bring the main proceedings; and (vii)taking steps to oppose the authorisation by the Attorney General of the main proceedings. It was submitted that this conduct and the conduct in (vi) was "an attempt to block the exercise of the Attorney General's supervisory jurisdiction over charities through the authorisation process" and was done to protect the Trustees' own interests. 21The Attorney General submitted that it was clear that the Court had jurisdiction to give advice to the effect that the Trustees were justified in having recourse to the trust funds to pay costs incurred in undertaking activities which occurred prior to the seeking of judicial advice. In relation to the more difficult question whether the Court has jurisdiction to give advice to a trustee that it was justified in undertaking conduct which had already occurred, the Attorney General submitted that as a practical matter it may not be necessary for the Court to decide it.

Question 2 22The Objectors submitted that judicial advice should not be given that the Trustees would be justified in defending Parts 1 and 2 of the pleading (which concern the identification of the parties in Part 1, and the alleged charitable trusts in Part 2). It was put that the Court could not be satisfied that a determination of the precise terms of the trust was vital or necessary in order to decide the substantive issues of breach of trust and consequential relief. It was also submitted that it would be premature to give such advice in circumstances where the opinion of counsel (insofar as it has been disclosed) and the draft Defence failed to grapple with the questions that were the subject of the order made by Pembroke J on 12 July 2013, and the Trustees do not advance any positive case as to the terms upon which the trust property is held. It was submitted that further work would need to be done before the Court could be satisfied that it is appropriate for the Trustees to defend that part of the case. Finally, it was submitted that it was not necessary for any cross-claim for a cy-pres scheme to be filed at this stage of the main proceedings, and the Objectors would make no complaint if such a cross-claim was not filed until after the questions concerning the terms of the trusts have been determined. 23The Attorney General submitted that the Trustees would be justified in defending Parts 1 and 2 of the pleading. It was accepted that the draft Defence could be improved, but it was put that the lack of a clear positive case as to the terms of the trust was not a reason to refuse to give the advice sought. It was also put that a trustee has a duty to establish and clarify the terms of its trust, and the public interest in the maintenance and enforcement of the present trusts will be promoted by the clarification and determination of the issues raised in Part 2 of the pleading. Finally, the Attorney General submitted that in circumstances where the draft Defence raises the possibility that the Court may find that some of the property held by the Trustees is held outside the terms of one or more of the charitable trusts, the Trustees will be obliged to seek the intervention of the Court to determine the fate of such property, and even if a pleading is not put on now, the issue needs to be formally raised in some manner.

Question 3 24The Objectors submitted that judicial advice should not be given that the Trustees would be justified in defending Parts 3 and 4 of the pleading (which plead the alleged breaches of trust in Part 3 and the liability of the directors of the Trustees in Part 4). It was said that a decision to defend allegations of breach of trust concerns the personal interests of the trustees rather than any duties owed as trustees (see Re Australian Pipeline Ltd [2006] NSWSC 1316 at [25] per Barrett J, as his Honour then was). Moreover, it was put that such advice would not be appropriate because the directors of the Trustees are the true contradictors on this aspect of the case in circumstances where all the alleged breaches of trust relate to the conduct of one or more of those directors, and no monetary relief is sought against the Trustees. It was put that the directors, who comprise the entire membership of the Trustees, should be regarded as the alter egos of the Trustees. It was further submitted that in these circumstances there would be no benefit to the trust in expending trust funds on obtaining the opinion of counsel, and there was no unfairness involved if the directors had to personally fund the defence of this part of the case. 25The Attorney General neither consented to nor opposed the giving of the advice sought on question 3.

Question 4 26It followed from the submissions made in relation to questions 1, 2 and 3 that the Objectors did not accept (save in respect of the costs of the appearance on 1 May 2013) that the Trustees were justified in having recourse to the trust funds to pay the costs falling within paragraph (a) of question 4. However, the Objectors accepted that the Trustees were justified in having recourse to the trust funds to pay the costs falling within paragraphs (b) and (c). 27Initially, the Attorney General submitted that the Trustees would be justified in having recourse to the trust funds to pay the costs falling within paragraphs (b) and (c). The position of the Attorney General as to the costs falling within paragraph (a) followed from the submissions he made in respect of questions 1, 2 and 3. The Attorney General later changed his stance and submitted that he no longer supported the Trustees having recourse to the trust funds for their costs, save in respect of Parts 1 and 2 of the pleading.

Advice 28Section 63 of the Trustee Act 1925 relevantly 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. 29A trustee seeking judicial advice must point to the existence of a question respecting the management or administration of the trust property. That is the only jurisdictional bar to relief under the section (see Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [58] (the "Macedonian Church" case). Reference has been made to the submission of the Objectors that there was no jurisdiction to give judicial advice as to whether any conduct engaged in by the Trustees, prior to the commencement of these proceedings, was justified. However, it is not necessary to determine that question. It is open to the Court to give advice to the effect that the Trustees may have recourse to the trust funds to pay for costs incurred in respect of conduct which took place prior to the seeking of judicial advice. The Objectors appeared to accept that position. I do not, of course, overlook the submission of the Objectors that the Court should not, in the exercise of its discretion, give any such advice in this case. 30Once the jurisdictional requirement under s 63 of the Trustee Act is satisfied, the Court has a discretion to provide advice of the kind contemplated by the section. That discretion is confined only by the subject matter, scope and purpose of the legislation (see the Macedonian Church case (supra) at [59] and [196]). It is clear, however, that the interests of the trust estate is of paramount importance (see the Macedonian Church case (supra) at [104], [105], [107], [125], [196] and [197]). 31With those principles in mind, I propose to deal first with questions 2 and 3 as set out above, each of which concerns the role to be played by the Trustees in the main proceedings.

Question 2 32Part 1 of the Further Amended Statement of Claim is essentially of an introductory character. It identifies the parties and their attributes, and asserts the standing of the plaintiffs to bring the proceedings. A draft Defence, prepared for the Trustees (and the other defendants other than the Attorney General) in relation to Parts 1 and 2, admits a great many of the allegations contained within Part 1. There are a number of non-admissions, and only one denial. The draft Defence contains some positive assertions, including in relation to alleged rights held in one or other of the Trustees. 33Part 2 of the Further Amended Statement of Claim contains the detailed allegations in support of the contentions that the Trustees hold their property upon one or more charitable trusts, either as express trustees or as constructive trustees. The allegations cover a period from 1948 to the present, and it is apparent that the property said to have been acquired by the Trustees during that period was derived from a variety of sources. These include a levy placed upon users of flour in the baking industry, and various grants provided by both government and private donors. Part 2 also contains allegations concerning certain changes to the objects of the Trustees which are said to have occurred in 1995, 2008 and 2010. 34The draft Defence clearly raises numerous issues concerning the scope of the activities and objects of the Trustees throughout the relevant period. It also contains affirmative contentions to the effect that property held by the Trustees is held upon trusts which are different from that asserted in the Further Amended Statement of Claim. The trusts which the Trustees propound include trusts on the terms of a particular agreement, trusts on the terms upon which particular funding was provided, or trusts for charitable objects which differ from those alleged in the Further Amended Statement of Claim, including a trust (referred to as the "initial trust") said to have been created in 1944. 35The Objectors criticised the draft Defence as not putting forward a properly framed alternative case. Criticisms were also made of the opinion of counsel obtained by the Trustees consequent upon the orders made by Pembroke J on 12 July 2013. The Objectors contend that due to these deficiencies, advice should not be given to the Trustees that they would be justified in defending Part 2 of the proceedings, and that there was little point advising the Trustees that they could defend Part 1 given that it was largely uncontroversial. 36I have concluded, however, that the Trustees would be justified in defending the proceedings, at least insofar as Parts 1 and 2 are concerned. It seems to me, having regard to the issues which are raised in Part 2 of the Further Amended Statement of Claim, and the issues which are likely to be joined, and raised, by a defence to Part 2, that it would be in the interests of the trusts, and the public more generally, for the Trustees to be present and taking an active role in the litigation of such issues. It is in the interests of the trusts involved that any uncertainty as to their terms is resolved (see the Macedonian Church case (supra) at [197]), and the presence of the Trustees as parties ought facilitate such resolution. As was stated in the Macedonian Church case (supra) at [73]: "The fact that one of the purposes of proceedings for judicial advice is to protect the interests of the trust has particular importance where, as in this case, the trust concerned is a charitable purpose trust. In litigation brought by private persons having a particular view about the terms of the trust, the trustee will ordinarily be joined as a necessary and proper party to the proceedings. Unless some other party will act as contradictor, the burden of defending the suit will fall upon the trustee. If, as will often be the case with a charitable purpose trust, there is no other party that will act as contradictor, the claims made about the terms of the trust will go unanswered unless the trustee can properly resort to the trust funds to meet the costs of defending the litigation. And even if there is another party that will act as contradictor, it is almost always desirable, even necessary, for the trustee to take an active part in the proceedings so that issues are properly ventilated and argued." 37I do not accept the submission made by the Objectors that the Court could not be satisfied that a determination of the precise terms of the trust was vital or necessary in order to determine the substantive issues concerning breach of trust. It may well turn out that a determination of all the terms of the trusts involved will not be necessary. However, as matters currently stand, there is no firm basis to conclude that the terms of the trusts, which are ordinarily of primary importance in cases such as this, will not be significant in this litigation. I also do not accept the criticisms made of the adequacy of counsel's opinion and the draft Defence which is based upon it. It is sufficient to note that I consider that the issues concerning the nature of the trusts, far from being straightforward, involve considerable complexity. It is apparent from the opinion of counsel that strenuous efforts have been made to come to grips with the issues. It is likely that, as the litigation progresses, there will be a refinement of the issues and more precision in the way the respective cases are put. That desirable outcome will be facilitated, in my opinion, if the Trustees play an active role in relation to the issues concerning the terms of the trusts. 38I do not see any reason to exclude the defence of Part 1 of the Further Amended Statement of Claim from this aspect of the judicial advice. In practical terms, the additional costs likely to be incurred in relation to Part 1 are unlikely to be significant. I do think, however, that this aspect of the judicial advice should not extend so far as to advise that the Trustees are presently justified in pursuing a cross-claim for a cy-pres scheme. At this stage, and in the absence of more clarity on the issues concerning the terms of the trust, I do not think that the additional expenditure which would be involved in following that course would be justified. The Objectors have made it clear that they have no objection to the deferral, in the main proceedings, of such a cross-claim. 39Accordingly, the Court will advise the Trustees that they are justified in defending the claim insofar as it is set forth in Parts 1 and 2 of the Further Amended Statement of Claim, but they are not, at this stage, justified in filing a cross-claim for cy-pres relief in respect of that aspect of the claim.

Question 3 40Part 3 of the Further Amended Statement of Claim contains the allegations of breach of trust. Obviously, those allegations are levelled against one or other of the Trustees. Nevertheless, the Trustees are not sought to be made personally liable for any breach of trust. The allegations of personal liability, which are contained in Part 4 of the Further Amended Statement of Claim, are directed only against the three directors who are alleged to have been involved in the breaches of trust. It is true that it is also alleged in Part 4 that a portion of the conduct pleaded in Part 3 against one of the Trustees (the first plaintiff to these proceedings) amounted to a dishonest and fraudulent design. However, that allegation is merely pleaded as a basis for establishing an accessorial liability on the part of the individual directors concerned. 41In these circumstances, there is much to be said for the view advanced by the Objectors that those individuals are the only true contradictors on this aspect of the case. Nevertheless, in circumstances where the Trustees will be playing an active part in the main proceedings in any event, and having regard to the seriousness of the allegations of breach of trust (albeit that no monetary relief is, at least at this stage, sought against the Trustees) and the possibility that there is not a complete identity of interest between the Trustees and the directors, I consider that the Trustees would be justified in obtaining an opinion of counsel on the question whether, and if so, to what extent, they should take any active part in defending the claim insofar as it concerns Parts 3 and 4 of the Further Amended Statement of Claim. The expense involved in obtaining such an opinion ought not be great, and I consider that a trustee facing allegations of the nature which are made here ought ordinarily be entitled to have recourse to trust funds to obtain advice as to whether any steps ought be taken in the interests of the trust. 42Accordingly, the Court will advise the Trustees that they are justified in obtaining an opinion of counsel as to whether any of the Trustees should conduct any defence of the allegations contained in Parts 3 and 4 of the Further Amended Statement of Claim, and, if so, to what extent.

Question 1 43I do not propose to give advice in relation to this question. As noted earlier, a submission was made that the Court lacked jurisdiction (or power) to give advice of a retrospective nature concerning the conduct of trustees. In my view, it is not only unnecessary to determine that question, it is not desirable to do so. The immediate issue facing the Trustees is not so much whether certain conduct undertaken by them in the past may or may not have been "justified", as whether the Trustees may now have recourse to trust funds to meet the costs incurred in undertaking such conduct. That issue is raised squarely by question 4, and ought be dealt with in that context.

Question 4 44The Trustees, by their most recent submission (dated 7 April 2014), have stated that they seek advice in respect of the legal costs they have incurred in relation to the main proceedings, and these proceedings, from 21 March 2013 to date. Presumably, 21 March 2013 has been selected because that was when the first draft of a Statement of Claim was served upon them. In this respect, there is a narrowing of the scope of the advice sought. Previously, advice was sought in respect of costs incurred from 7 February 2013. To the extent that advice is now sought in respect of costs incurred after 20 September 2013, there is a broadening of the scope of the advice sought. 45The costs in respect of which the advice is sought do not include the costs paid out of the trust funds pursuant to the orders made by Pembroke J on 13 July 2013. Neither do they include the past costs (referred to earlier in these reasons at [12]), all of which concern the period prior to 21 March 2013. The Trustees submitted that they had no capacity to fund any activity other than out of trust funds, because they held no other assets. This was not disputed by the Objectors or the Attorney General. 46The Trustees identified eight categories of costs in respect of which advice is sought. These may be summarised as: (a)costs incurred in corresponding with solicitors for the Objectors and the Crown Solicitor regarding the nature and terms of the trust; (b)costs incurred relating to Parts 3 and 4 of the Statements of Claim in the main proceedings (including the preparation of and revision of confidential schedules 1 and 4 to the Statements of Facts in these proceedings); (c)costs incurred in defending Parts 1 and 2 of the Statements of Claim in the main proceedings; (d)costs incurred in filing a cross-claim for cy-pres relief in respect of Parts 1 and 2 of the Statements of Claim in the main proceedings; (e)costs incurred in obtaining the opinion of counsel as to whether, and to what extent, the Trustees are justified in defending Parts 3 and 4 of the Statements of Claim in the main proceedings; (f)costs incurred relating to Parts 3 and 4 of the Statements of Claim in the main proceedings to the extent that those parts contain claims and/or allegations against the Trustees rather than the personal conduct of the directors; (g)costs incurred after September 2013 in engaging new solicitors and counsel, following the withdrawal of senior counsel for the Trustees, and Bartier Perry Solicitors; and (h)costs incurred in responding to the submissions of the Objectors and the Attorney General made pursuant to orders made in these proceedings on 17 October 2013. 47As the recording of the submissions of the Objectors and the Attorney General makes clear, the extent to which the Trustees ought have recourse to trust funds for their costs is controversial. In addition to the points so raised, both the Objectors and the Attorney General filed Notices of Motion which seek to raise further issues in relation to the costs of these proceedings, including as to whether the directors (who are named as respondents to the motions) should pay some of the costs. The Notice of Motion filed by the Objectors also raises a question as to whether the Objectors should be released from implied undertakings in respect of the documents provided to them in these proceedings, to enable them to use the documents in the main proceedings. When the matter was last before the Court, it was decided (with the consent of all participants) that the issues raised by the Notices of Motion would be deferred until after a judgment is given on the application for judicial advice. Accordingly, all questions concerning the costs of these proceedings will be reserved for future consideration. 48I note, further, that when the matter was before the Court on 9 December 2013, a submission was made on behalf of the Attorney General to the effect that, save in respect of Parts 1 and 2 of the claim, the Attorney General no longer supported the Trustees having recourse to the trust funds for their costs. This submission was not elaborated upon and, when the matter was before the Court on 10 March 2014, neither the Attorney General nor the Objectors saw any need to file submissions in reply to the submissions which the Trustees were to make concerning costs. In these circumstances, and bearing in mind that the Trustees do not seek advice in connection with the so-called past costs, I see no reason not to proceed to give advice concerning the costs incurred by the Trustees other than in these proceedings. 49Question 4, as formulated above, is in these terms: 4. Whether the Trustees are justified in having recourse to the trust funds to pay certain costs, these costs being: (a)the costs incurred or to be incurred in undertaking the activities referred to in questions 1, 2 and 3 above; (b)the costs incurred in seeking judicial advice in the period from 13 July 2013 up to 20 September 2013 (save for costs in relation to confidential schedules 1 and 4 to the Statement of Facts); and (c)the costs incurred in the main proceedings in the period from 13 July 2013 up to 20 September 2013 (save for costs in relation to Parts 3 and 4 of the pleading). 50I will deal first with question 4(a). As a consequence of the narrowing of the scope of costs in respect of which advice is sought, question 4(a), insofar as it relates to question 1, must be read as confined to costs of the described character which were incurred after 21 March 2013. If costs referable to these proceedings are ignored, these costs, so far as the material reveals, essentially concern the costs incurred in dealing with the issues raised as to the identification of the trusts and their terms, and as to whether commencement of the main proceedings should be authorised under the Charitable Trusts Act. 51A degree of criticism has been levelled at the conduct of the Trustees in relation to their approach to those matters. The substance of those criticisms is reflected in the submissions of the Objectors and the Attorney General which are summarised above. It is true that, initially, the Trustees did not affirmatively state that they were trustees of certain charitable trusts, and they also questioned the standing of one of the Objectors to bring the foreshadowed proceedings. However, by 19 March 2013, the Trustees (or at least the first-named of the Trustees) had informed the solicitors for the Objectors and the Crown Solicitor that it was accepted that it was the trustee of a charitable trust. At that stage, the Trustees were aware that a draft Statement of Claim had been prepared and a copy provided to the Crown Solicitor, but had not themselves seen the draft pleading. The Trustees received a copy of a draft Statement of Claim on 21 March 2013. 52On 2 April 2013, the Trustees commenced making preparations for an application to the Court for judicial advice. The first approach to the Court occurred on 1 May 2013, although the Summons was not actually filed until 13 May 2013. 53On 5 April 2013, a revised draft Statement of Claim was provided to the Trustees. On the same day, the Crown Solicitor wrote to the Trustees' solicitors seeking clarification of the earlier statement accepting that the first-named of the Trustees was the trustee of a charitable trust. The Crown Solicitor also indicated a willingness to receive submissions in relation to the allegations made in the draft pleading, and in relation to the application being made for authorisation to commence the proceedings. Such submissions were requested to specifically address whether there was any reason why the proceedings should not be authorised by the Attorney General. 54On 9 May 2013, the Crown Solicitor informed the solicitors for the Objectors and the solicitors for the Trustees that the Solicitor General, as the delegate of the Attorney General, had authorised the commencement of the main proceedings pursuant to the Charitable Trusts Act. Those proceedings were commenced on 16 May 2013. In the meantime, the interested parties, through their solicitors, were engaged in correspondence concerning the application for judicial advice, in particular the contents of a Statement of Facts to be provided to the Court. 55In my view, the criticisms of the conduct of the Trustees have not been made out on the material placed before the Court. I do not think that the Trustees' responses to the questions asked of them were, in the circumstances, unreasonable. The fact that the Trustees did not immediately state that they were trustees of charitable trusts for particular identified purposes is not to my mind surprising given the evident complexity of the situation. Neither do I think that there was any inordinate delay from the time the Trustees received the draft Statement of Claim until the commencement of preparations for, and the making of, the application for judicial advice. 56I also do not think that the material placed before the Court establishes that any opposition expressed by the Trustees to the Objectors bringing the main proceedings, or any opposition to the grant of authorisation for the bringing of those proceedings, was unreasonable conduct on the part of the Trustees. The material does not support the submission that such conduct was "an attempt to block the exercise of the Attorney General's supervisory jurisdiction over charities through the authorisation process" and was done to protect the Trustees' own interests. The Trustees were, after all, invited to make submissions on the issue. These were not placed before the Court. 57It seems to me that the Trustees are justified in having recourse to the trust funds to pay reasonable costs incurred after 21 March 2013 in corresponding with the solicitors for the Objectors and with the Crown Solicitor on the issues of whether the Trustees are trustees of a charitable trust, the terms of any such trust, and the question of authorisation of the main proceedings pursuant to s 6(1)(a) of the Charitable Trusts Act. The Court will give advice to that effect. In undertaking that conduct the Trustees were acting in their roles as such, dealing with issues in connection with the trusts and litigation about the trusts, and unless shown to have acted unreasonably, the trustees ought have recourse to trust funds to pay the costs they thereby incurred. 58Insofar as question 4(a) relates to question 2, I have concluded that, consistent with the advice given in relation to question 2, the Trustees are justified in having recourse to the trust funds to pay reasonable costs of defending the main proceedings insofar as the defence concerns Parts 1 and 2 of the claim. Those costs would include costs incurred to date in relation to a possible application for a cy-pres scheme. Even though I have not advised that the Trustees would be justified in proceeding with such a cross-claim at this stage, it is a step which will likely occur if the main proceedings continue, and it seems to me reasonable that costs incurred in undertaking such work be met out of the trust funds. 59Insofar as question 4(a) relates to question 3, I have concluded that, consistent with the advice given in relation to question 3, the Trustees are justified in having recourse to the trust funds to pay reasonable costs of obtaining an opinion of counsel as to whether any of the Trustees should conduct any defence of the allegations contained in Parts 3 and 4 of the Further Amended Statement of Claim, and, if so, to what extent. 60I turn now to consider questions 4(b) and 4(c). Prior to the emergence of the so-called past costs issue, there was no controversy about either of those questions. They must now be read as extending to costs incurred after 20 September 2013. 61Question 4(b), which concerns part of the costs of these proceedings, will be deferred. 62As far as question 4(c) is concerned, I can see no reason why the Trustees should not have recourse to trust funds to pay reasonable costs they incurred in the main proceedings from 13 July 2013 to 20 September 2013 (save for costs in relation to Parts 3 and 4). Those costs presumably concern, in large part if not in whole, Parts 1 and 2 of the Further Amended Statement of Claim. (There is some overlap between the costs the subject of this question and the costs the subject of question 4(a) insofar as it relates to question 2.) It is not clear whether any costs have been incurred by the Trustees in the main proceedings after 20 September 2013. However, save to the extent that any such costs concern Parts 3 and 4 of the pleading, there is no apparent reason why the Trustees should not have recourse to trust funds to pay them. 63I do not consider that any further advice should be given at this stage concerning the Trustees' costs. Any costs concerning the defence of Parts 3 and 4 of the Further Amended Statement of Claim would be more appropriately considered after the Trustees have obtained the opinion of counsel in relation to that aspect of the main proceedings. 64All issues concerned with the costs incurred in these proceedings will be deferred, to be dealt with in conjunction with the Notices of Motion referred to above. Directions will need to be given as to the future conduct of those motions. 65In relation to the costs of these proceedings, I urge all concerned to seek to reach a sensible agreement on those issues so that a further hearing does not become necessary. I also make the observation that the nature of these proceedings differs from traditional adversarial litigation, and different considerations apply in relation to issues concerning costs. 66Pursuant to s 63 of the Trustee Act, the Court advises the Trustees: (1)that the Trustees are justified in defending the claims made in the main proceedings (being proceedings 2013/152562) insofar as they are set forth in Parts 1 and 2 of the pleading (being the Statement of Claim and subsequent amended versions of it), but are not presently justified in filing a cross-claim for cy-pres relief in respect of that aspect of the claim; (2)that the Trustees are justified in obtaining an opinion of counsel as to whether any of the Trustees should conduct any defence of the allegations contained in Parts 3 and 4 of the Further Amended Statement of Claim filed in the main proceedings and, if so, to what extent; (3)that the Trustees are justified in having recourse to the trust funds to pay reasonable costs incurred after 21 March 2013 in corresponding with the solicitors for the Objectors and with the Crown Solicitor on the issues of whether the Trustees are trustees of a charitable trust, the terms of any such trust, and the question of authorisation of the main proceedings pursuant to s 6(1)(a) of the Charitable Trusts Act; (4)that the Trustees are justified in having recourse to the trust funds to pay reasonable costs of defending the main proceedings, save to the extent that any such costs concern Parts 3 and 4 of the pleading (being the Statement of Claim and subsequent amended versions of it); and (5)that the Trustees are justified in having recourse to the trust funds to pay reasonable costs of obtaining an opinion of counsel as to whether any of the Trustees should conduct any defence of the allegations contained in Parts 3 and 4 of the Further Amended Statement of Claim filed in the main proceedings and, if so, to what extent.

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