Yunghanns v Candoora No 19 Pty Ltd [1999] VSC 524

Supreme Court of Victoria|1999-12-15|Before: Gillard J

The application came to the notice of the proposed defendant Candoora and counsel attended on its behalf.

The court treated the application as ex parte and granted a limited interim injunction.

"Until 4.00 p.m. on 4 November 1999 or further order of the court the defendant by itself, its servants or agents be restrained from exercising any power or powers as trustee pursuant to the deed of settlement dated 27 June 1992 to vest the trust, to exclude any beneficiary or class of beneficiaries or amend, vary or alter the deed of settlement."

Although the summons on the originating motion is not expressed to be an application for interlocutory relief, counsel on behalf of the parties informed me that the application was for interlocutory relief.

Plaintiff's counsel sought an order similar in terms to the order the court made on the application for the interim injunction. It is contemplated that the interlocutory injunction should continue until the child is born alive and survives at which time the child can be made a party to the proceeding.

What the plaintiff seeks is to preserve the status quo pending the hearing of the proceeding after the birth of the child, in which he seeks permanent orders restraining the trustee from exercising certain powers under the trust deed or alternatively its removal.

The concern of the plaintiff can be briefly stated.

The trust was established to benefit primarily the children of the plaintiff living at the date of trust deed, namely, 27 June 1992 that is David and Sarah "or born hereafter and prior to the Vesting Day". They are the primary beneficiaries. The deed provides for general beneficiaries which include relatives of the primary beneficiaries.

The vesting day is 80 years from the date of execution.

The plaintiff is concerned that the trustee Candoora may exercise powers it has under the trust deed which would have the effect of excluding the child presently en ventre sa mère so that when born alive and surviving would not be in a position to exercise any of the rights it would attain on birth and survival under the trust deed as it presently provides. Arguably Candoora could prior to birth, dispose of assets, vest the trust, exclude the unborn child from the definition of beneficiaries and amend the trust deed to the prejudice of the unborn child.

The court has an inherent power to grant an interlocutory injunction. The jurisdiction is also the subject of statute. Section 37(1) of the Supreme Court Act 1986 provides -

"The court may by order, whether interlocutory of final, grant an injunction or appoint a receiver if it is just and convenient to do so." (Emphasis Added)

The discretion is a wide one and requires the court to be satisfied that it is both just and convenient to grant an interlocutory injunction.

An interlocutory injunction is merely provisional in its nature and does not conclude any rights. Its main object is to preserve the position which is in dispute in status quo until the hearing and determination of the dispute or further order. The court does not in general seek to anticipate the outcome of the trial but merely gives its opinion as to whether there is a serious question to be decided and that a case has been made out for the preservation of the right which has been or is threatened or has been breached.

On an application for an interlocutory injunction the party claiming the injunction must establish that it has a right which is recognised as a legal or equitable right, that there is an infringement or threatened infringement of that right by some unlawful act, that the balance of convenience favours the granting of the interlocutory injunction and that there are no discretionary factors which preclude the granting of the injunction.

In considering the question of the right and the breach or threatened breach the court must consider and determine whether there is a serious or substantial question to be decided.

But equally important is the question of the balance of convenience between the interests of the contesting parties because the degree of satisfaction that the court must attain on the serious question issue may depend upon the strength of the case on the balance of convenience. This means that if the court was of the view that on the serious question issue the plaintiff's case is not strong, the strength of the case on the balance of convenience may be so overwhelming that it tilts the balance in favour of granting the relief. Conversely, the case may be so strong on the serious question to be decided issue that a weak case on balance of convenience will not deter the court in granting the relief. See Slater Walker Superannuation Pty Ltd v Great Boulder Gold Mines Ltd [1979] VicRp 13; (1979) VR 107 at 110, quoted with approval by the Full Court in Magna Alloys and Research Pty Ltd v Coffey [1981] VicRp 3; (1981) VR 23 at 28.

In considering the material relied upon in support of the application, the court must bear in mind that the material is untested and usually the product of the lawyers' versions of the facts. Accordingly, the court should refrain from attempting to resolve difficult questions of fact or law or express a view as to the strength of the respective cases unless it is apparent from the affidavit evidence and exhibits that the case is all one way. In an appropriate case the court should attempt to make findings if there is no contest in relation to the evidence. See Series Five Software Ltd v Clarke (1996) 1 All ER 853.

In the present case Mr Yunghanns has sworn three affidavits which exhibit a substantial number of exhibits. He was not cross-examined. The defendant Candoora did not adduce any evidence.

At the outset Mr Murdoch QC who appeared with Mr D. Collins of counsel for the defendant submitted that Mr Yunghanns had no right to bring the proceeding and that the child en ventre sa mère had no right to bring the proceeding and had no rights which could be enforced.

Mr Yunghanns sought an order pursuant to Rule 16.01 of the Rules of Court that he be appointed to represent the unborn child.

Mr Murdoch QC submitted that Rule 16.01 did not apply and in the alternative if it did it was not a case where a representative order should be made because the unborn child was not a legal person and had no rights to preserve.

(a) ...

(b) property subject to a trust; or

(c) ... "

Mr Murdoch submits that the proceeding does not relate to property subject to a trust.

The complaint made by the plaintiff is that the defendant Candoora is in a situation where there is a potential conflict of interest concerning its administration of the trust estate and the powers which it may exercise in relation to the trust. In my opinion Rule 16.01(1) should not be strictly construed and the phrase "relating to" requires a liberal application of the Rule. In my opinion the present proceeding is relating to "property subject to a trust".

"(2) The court may appoint one or more persons to represent any person (including an unborn person) who or class which is or may be interested (whether presently or for any future, contingent or unascertained interest) in or affected by the proceeding where -

(a) the person, the class or some members of the class cannot be ascertained or cannot readily be ascertained;

(b) ...

(c) though the person or the class and the members thereof can be ascertained and found, it appears to the court expedient, regard being had to all the circumstances, including the amount at stake and the degree of difficulty of the point to be determined, to make the order for the purpose of saving expense."

The person whose rights are potentially threatened is the unborn child of Mr Yunghanns. Although one can identify the unborn person by reference to the mother, the fact is that the person cannot at this stage be ascertained. In my view the court does have power to appoint the plaintiff to represent the unborn child.

If rule 16.01(2) does not apply the Court has power under rule 1.15 to mould its procedure in a justifiable case. The Court should not deny its jurisdiction in a deserving case because of a lack of an appropriate procedure in the rules.

In Villar v Gilbey (1907) A.C 139, Lord Loreburn LC when considering the fictional rule of deemed life said this at page 144:

"It is certain that a child en ventre sa mère is protected by the law, and may even be a party to an action."

For the purposes of this application Mr Yunghanns should be permitted to represent the interests of his unborn child.

Accordingly, in my opinion the court should make an order appointing the plaintiff Peter Nicholas Yunghanns to represent the unborn child presently carried by his wife, Patricia Yunghanns.

The real issue between the parties in respect of locus standi is whether the representative of the unborn child has the right to obtain an interlocutory injunction at this time to protect its future interests if it is born alive and survives?

It is necessary to state the issue and the facts.

It is clear that the children David and Sarah control the defendant which means that they, through the defendant as trustee, control the trust.

In accordance with well drawn family trust deeds the original deed gave control to the appointor.

The trust deed was executed on 27 June 1992, the settlor was one Norman Massey Taylor, a solicitor and friend of Mr Yunghanns, and the appointor was a company called Dariway Pty Ltd controlled by Mr Yunghanns.

The trust was named the "The Yunghanns Children's Trust".

By reason of clause 20.0 of the trust deed the appointor had the power to appoint and remove a trustee. As a result of the consent orders made in the Family Court in the proceeding involving Mr and Mrs Yunghanns, Dariway Pty Ltd resigned as appointor of the trust. It was also the guardian of the trust and it also resigned that position. As a result there is now no appointor or guardian of the trust.

"All the children of Peter Nicholas Yunghanns living at the date of making this deed or born hereafter and prior to the vesting day as tenants in common in equal shares." (Emphasis added.)

The vesting day is defined by clause 1.1.17 and realistically appears to be 80 years from the date of execution of the deed but there is power, where there is no guardian, in the trustees in their absolute discretion to appoint any time as the vesting day.

Hence, there is power in the trustee to bring forward the vesting day to a date prior to the birth of the unborn child. This is one of the matters which concerns Mr Peter Yunghanns.

By clause 1.1.12 the general beneficiaries are defined as meaning the primary beneficiaries and including relatives and others.

It can be seen that when born alive the child becomes one of the primary beneficiaries under the trust deed. This of course could not take place prior to his or her birth.

Candoora as trustee has wide powers of amendment.

"The trustee for the time being may at any time and from time to time prior to the vesting day by deed (whether revocable or irrevocable) appoint that a person who would otherwise be a beneficiary for the purposes of this deed shall be excluded from the class of beneficiaries."

It is arguable that Candoora as trustee could exclude the unborn child from a class of beneficiaries from the time when it is born alive and survives.

In addition, the trustee has very wide power to change the trust and by reason of clause 21.3 it may at any time prior to the vesting day by deed "amend revoke add to or vary any of the provisions of this deed or of any of the provisions contained in any other deed executed in pursuance of this clause 21.3 but so that any rule of the applicable law against perpetuities is not thereby infringed."

By reason of clause 8 the trustee has very wide powers to deal with the trust estate.

The width of its powers and the protection accorded to it is exemplified by clause 11.1 which provides -

"SUBJECT always to any express provision to the contrary herein contained every discretion vested in the trustees shall be absolute and uncontrolled and every power vested in them shall be exercisable at their absolute and uncontrolled discretion and the trustee shall have the like discretion in deciding whether or not to exercise such power."

Mr Yunghanns is concerned that because of the acrimony and bitterness that exists between he and his children David and Sarah, that there is an ever present risk that they as controlling the trustee Candoora will take steps to exclude the rights of the unborn child prior to birth. He is concerned after the birth they will prefer their interests which will result in conflict between duty and interest.

The trust is a discretionary trust which means that no primary beneficiary has the right to any distribution of capital or income. However, in the event that the trustee does not exercise its power to distribute capital and income, the trust deed provides that in default the capital and income are to be distributed amongst the primary beneficiaries. Hence by default the child after birth could share in a distribution as of right.

Mr Yunghanns whose evidence is in affidavit form and which is not disputed deposes to the fact that he and his first wife separated in December 1991. The marriage was dissolved by an order of the Family Court on 14 February 1995. On 25 July 1996 he married his present wife, Patricia, who is aged 36 years and who is now pregnant.

He states that following separation from Mrs Yunghanns he established the trust by a deed dated 27 June 1992.

The settlor was a solicitor and friend Norman Massey Taylor. The settled sum was $10. A proceeding was instituted in the Family Court concerning division of property and the proceeding was compromised and consent orders were made on 26 June 1996. Pursuant to paragraph 8 of the orders, the issued capital in Candoora was transferred to David and Sarah and Dariway Pty Ltd resigned as appointor and guardian of the trust. David and Sarah effectively control the trust. Mr Yunghanns has no power to influence the trust or the trustee.

The son David was appointed chief executive of the Wingara Group in 1994 and in 1997 Mr Yunghanns told his son David that he wished him to resign as chief executive of the group. It appears that David was prepared to do so but had a change of mind and on 3 February 1998 effectively took control of the group and thereafter excluded his father. As a result much litigation has ensued and I accept the evidence of Mr Yunghanns which is uncontradicted that there is acrimony between he and his children David and Sarah and much animosity.

The litigation in this court can be summarised as a battle between Mr Yunghanns and his children for control of the business empire. It is an understatement to say that there is "no love lost" between the warring parties.

Mr Yunghanns is concerned that his children controlling Candoora will take steps to ensure his unborn child is denied rights under the trust or the trust estate is distributed prior to the birth.

The final relief sought by Mr Yunghanns on behalf of the unborn child is in the alternative, namely, the removal of the trustee or an injunction restraining the trustee from exercising certain powers.

As a general proposition a foetus is not a legal person and hence cannot sue and according to the English courts cannot even be made a Ward of Court.

In Paton v B.P.A.S. Trustees (1979) 1 QB 276, the court was concerned with the issue of the right of a father of a foetus to obtain an order restraining the mother from having an abortion.

"The first question is whether this plaintiff has a right at all. The foetus cannot, in English law, in my view, have a right of its own at least until it is born and has a separate existence from its mother. That permeates the whole of the civil law of this country (I except the criminal law, which is now irrelevant), and is, indeed, the basis of the decisions in those countries where law is founded on the common law, that is to say, in America, Canada, Australia and, I have no doubt in others."

His Lordship went on to say, "In my view in England and Wales the foetus has no right of action, no right at all, until birth."

The statements made by Sir George Baker P have been quoted with approval by Heilbron J in C v S (1988) 1 QB 135 at 140, by May LJ in In Re F (in utero) (1988) Fam. 122 at 138, by Potts J in B v Islington (1991) 1 QB 638, by Phillips J in De Martell v Merton [1992] EWCA Civ 2; (1993) QB 204 at 213 and by Dillon LJ in Burton v Islington [1992] EWCA Civ 2; (1993) QB 204 at 226.

His Lordship's views were followed in Australia by Williams J in K v T (1983) 1 Qd. R 396 at 400, on appeal by the Full Court of Queensland in the same case, supra at p.406 and by Gibbs CJ on further application to the High Court, (1983) 57 ALJR 285 at 287.

Hence the general rule at common law is that the foetus has no right to bring an action until born alive and survives. It has also been held that a foetus not only has no capacity to sue but it cannot be made a Ward of Court. See In Re F (in utero), supra.

Legal personality begins at birth and ends with death.

"In the case of birth most systems require complete extrusion from the mother's body - the child in the womb is not a legal personality and can have no rights" - Paton, Jurisprudence, 4th Ed. at p.394.

Whether it is correct to assert that the foetus has no rights may be doubted.

In his work Jurisprudence, the learned author Sir John Salmon writing in 1924 (7th Ed.) stated at p.334 -

"Though the dead possess no legal personality, it is otherwise with the unborn. There is nothing in law to prevent a man from owning property before he is born. His ownership is necessarily contingent, indeed, for he may never be born at all; but it is nonetheless a real and present ownership. A man may settle property upon his wife and the children to be born of her."

"The rights of an unborn person, whether proprietary or personal, are all contingent on his birth as a living human being. The legal personality attributed to him by way of anticipation falls away ab initio if he never takes his place among the living. ... A posthumous child may inherit; but if he dies in the womb, or is stillborn, his inheritance fails to take effect, and no-one can claim through him, though it would be otherwise if he lived for an hour after his birth."

In summary, an unborn child has no capacity to bring a proceeding and whether the foetus has any rights is a moot question.

The foetus when born is a child of Mr Peter Yunghanns. Upon birth and survival the child falls within the class of primary beneficiaries in the Yunghanns Children Trust.

The trust is a typical discretionary family trust and whether a beneficiary does in fact ever obtain any financial benefit will depend upon the exercise of discretion by the trustee in his or her favour although in the event of a failure to exercise certain discretions the beneficiaries may take by default. The beneficiaries who would take by default are the primary beneficiaries, namely, the children of Mr Peter Yunghanns as tenants in common in equal shares.

The trust was established by a Deed of Settlement dated 27 June 1992. As I have stated it is called the Yunghanns Children Trust and it is clear from the name of the trust, the provisions of the trust deed and evidence from Mr Yunghanns that its principal purpose is to benefit the children of Peter Yunghanns.

On birth the child acquires those bundle of rights which are accorded to the beneficiaries under the trust.

On any view the rights of a beneficiary are not extensive but nevertheless the beneficiary under a discretionary trust does have some rights.

As a general proposition a beneficiary has no interest vested or contingent in the trust estate although as in the present trust a beneficiary can obtain a right in default of the exercise of the discretion. But it is clear that the beneficiary has the right to ensure that the trust is duly administered and also the right to have the trustee consider whether it should or should not exercise its fiduciary powers and if it does to exercise them in good faith and taking into account all relevant matters.

McGarvey J in Karger v Paul [1984] VicRp 13; (1984) VR 161 exhaustively considered the grounds upon which a court would question the exercise of a power by a discretionary trustee.

It is unnecessary for me to further consider the nature or extent of the rights of any child of Peter Yunghanns under this trust deed because in my opinion it is clear that the beneficiary does enjoy some rights which the law would protect.

The defendant says that before a party can obtain an injunction it is necessary to show that the party has a legal right enforceable in law or in equity and further that a foetus has no right at all and cannot bring the proceeding.

The defendant's counsel refer to and rely upon the decision of Paton v BPAS Trustees, supra. Counsel further rely upon the decisions in the Queensland courts of K v T and more particularly what the Chief Justice of the High Court said on the application for special leave to appeal from the Full Court's decision.

The litigation in England and Australia involved similar facts, namely an attempt by a father to prevent the abortion of his child. Sir George Baker P held that before one could obtain an injunction the party had to have a right enforceable in law or in equity. Having stated that the foetus did not have any right of its own His Lordship held that the father could not bring a proceeding on its behalf to restrain the mother from having an abortion.

In K v T in the High Court Supra Sir Harry Gibbs said this at p.286 -

"The second argument is that an unborn child is to be regarded as a person whose existence can be protected by the courts. As at present advised, I would agree with the judgment of Sir George Baker P in Paton v BPAS Trustees (1979) 1 QB 276 at 279 that a foetus has no right of its own until it is born and has a separate existence from its mother."

His Honour went on to say that the issue before him did not concern "those cases in which a will is given a fictional construction, to give effect to the reasons and motives of the disposition of the testator."

The issue before Sir George Baker P involved an application for a permanent injunction. Although the Queensland case is referred to as an application for an interlocutory injunction the reality is that it was not an application for an interlocutory injunction because what was sought was an injunction restraining an abortion.

Here I am dealing with an application for an interlocutory injunction which is sought to preserve a situation until the birth of the child which at that point in time would have rights which it had the capacity to enforce if endangered. Once born alive and surviving, the child will then be made a party to the proceeding which at that point will be an application to remove the trustee.

In Paton the foetus had no status to enforce any right but more importantly, it was never expected or intended that it should ever acquire the status to enforce any right. It was alleged that any right it had did not depend upon its birth.

The law does not recognise the right to life outside the criminal law. Therefore what was being sought in that case was the prevention of the destruction of the foetus which at that stage had no status to bring the proceeding, nor did it have any right to enforce and upon its birth it would not acquire any right which it wished to enforce.

The issue here is different. At the moment the foetus does not have the status to bring a proceeding to protect rights it will attain upon birth. But upon birth it will seek an order removing the defendant from its office as trustee and other orders necessary to protect its interest in the trust estate. If the trust deed is amended in the meantime to close the class of beneficiaries or vest the trust, the foetus shall be deprived of the right before birth. This in my opinion will defeat the intention of the settlor, Mr Yunghanns and the objects of the trust.

The injunction sought is interlocutory to preserve the status quo pending the attainment of the rights and the status in law to enforce them.

In my opinion Paton's case and those which follow it were dealing with a different issue and do not foreclose the entitlement to an interlocutory injunction to preserve the status quo. In that case the fact was that the foetus had no status and had no right which it could enforce because it was never intended or contemplated that it would be born .

Further, the Courts in Paton's case and K v T noted the principle based upon the fiction of deemed birth but it had no application to the decision. I have referred to what Sir Harry Gibbs CJ said and for completeness I state what Sir George Baker P said, supra, at p.279 -

" ... the foetus has no right of action, no right at all, until birth. The succession cases have been mentioned. There is no difference. From conception the child may have succession rights by what has been called 'fictional construction' but the child must be subsequently born alive."

109 Paton's case and the K v T series of cases did not address the issue in the present matter.

The issue here is whether the court has the power to grant an interlocutory injunction to protect a right an unborn child will attain upon his or her birth?

From time immemorial provision has been made giving an interest in property in wills, settlements and trusts for children born, and unborn and not conceived.

The temptation of the living to interfere with such rights has been ever present. The law has jealously guarded the rights of the child who has the necessary legal personality to enforce them through an adult acting as a next friend.

A foetus and those not conceived not surprisingly have no legal personality and therefore cannot be parties to litigation. Their rights are contingent on their birth and usually their survival.

No civilised legal system which is fair and just could permit the destruction or interference with the rights of the unborn to acquire an interest in property upon birth and survival, prior to the child becoming a legal person to protect its own rights.

The courts of equity have over many years responded to the need and often interfere to protect contingent rights before birth.

The law has from very early times treated the foetus as a child in some circumstances. This has been in the area of protecting the unborn child's right to property. The foetus is treated by a legal fiction as having already been born.

Sir Edward Coke during the reign of Elizabeth I reported -

"And although filius in utero matris, est pars viscerum matris, yet the law in many cases hath consideration of him in respect of the apparent expectation of his birth."

See 7 Co. Rep. 8(b): 77 ER 424 (see also the references in the footnote to 77 ER at p.424).

Lord Hardwick in Wallis v Hodson [1740] EngR 28; (1724) 2 Atk. 117: 26 ER 472 stated the rule as follows -

"The plaintiff was en ventre sa mère at the time of her brother's death, and is consequently a person in rerum natura so that both by the rules of the common law and civil law she was to all intents and purposes a child."

I also refer to the judgment of Buller J in Thelluson v Woodford (1798) 4 Ves. 227 at p.321: 31 ER 117 at p.163.

In Blasson v Blasson (1864) 2 De GJ and S 665: 46 ER 534 Lord Westbury LC was concerned with a clause in a will which directed that a fund should be accumulated and paid out.

At the date of death of the testatrix there were two children en ventre sa mère who were born subsequently to her death. The Lord Chancellor held that the children whether born before or after the death of the testatrix were entitled.

The issue before His Lordship concerned construing the clause in the will.

"In Trower v Butts a case determined by Sir John Leach in 1823, it was decided that a bequest of personalty in trust for all the children of the testatrix's nephew born in the lifetime of the testatrix, included a child of which the wife of the nephew was enceinte at the decease of the testatrix, although not born until several months after such deceased. ... in my opinion, the judgment of Sir John Leach was right and well warranted by antecedent decisions in our law."

His Lordship then stated the general principle as follows -

"It is, however, material to observe that the fiction or indulgence of the law which treats the unborn child as actually born applies only for the purpose of enabling the unborn child to take a benefit which, if born, it would be entitled to, and that it is limited to cases where 'de commodis epsius partus quaeritur'." (Emphasis Added)

The principle was closely examined by the House of Lords in the case of Villar v Gilbey (1907) AC 139.

That case was concerned with a clause in the will which provided for "children born in my lifetime" and the question arose whether this covered unborn children.

Counsel for the appellant referred to all the cases on the principle and identified four categories where the rule had been applied.

"It is certain that a child en ventre sa mère is protected by the law, and may even be a party to an action. Again, in computing lives for the purpose of the rule against perpetuities, the child en ventre sa mère was taken as if it were actually living. And under the old law, which treated a will made before marriage is revoked by marriage and the subsequent birth of the child, it made no difference whether the child was actually born before the father's death or was still en ventre sa mère at that time. ... " Another series of decisions was cited under which the courts held that children en ventre sa mère at the father's death must be included in the description in a will of children 'living' at the father's death. From beginning this construction was acknowledged by the courts to be in some sense a straining of the language, but was justified on the ground that such children came within the motive and reason of the gift and should therefore be included by fiction or indulgence, on the ground that it was for their benefit. The civil law was invoked, which authorises the treatment of posthumous children as though they were living at their father's death when it is for their advantage." (Emphases added.)

The members of the House of Lords all approved the quotation from Lord Westbury LC in Blasson v Blasson, supra, namely, that the rule is limited "to cases where such construction of the word 'born' is necessary for the benefit of the unborn child." Lords MacNaughten, James and Robertson agreed with Lord Loreburn L.C..

In categorising the authorities which had applied the principle Lord Atkinson described the third category at p.148 as follows -

"Thirdly, those in which the question turned on the construction to be put upon the words 'leaving children living' at a particular time, or at the happening of a particular event, and other forms of words of like import." (Emphasis added.)

It is significant to note that their Lordships recognised its application in cases concerned with the rights of a child under a will or a trust deed, that in certain circumstances the child en ventre sa mère may even be a party to the action and that the guiding principle was that the court should protect the unborn child if the construction of the particular clause was for his or her benefit and was justified on the ground that the motive and reason for the gift was to benefit the child.

The House of Lords further considered the principle in Elliot v Lord Joicey [1935] UKHL 3; (1935) AC 209 which was concerned with the construction of a will and a power of appointment.

Lord Russell of Killowen at p.227 summarised the decision of Villar v Gilbey as follows -

"A result of the decision in Villar v Gilbey in your Lordship's House seems to me to be threefold: (1) the authority of Trower v Butts and of Blasson v Blasson is established beyond attack. As Moulton LJ said in the subsequent case of In re Salaman: 'In my view the House of Lords in Villar v Gilbey authoritatively supported the decision of Lord Westbury in Blasson v Blasson and of Leach V-C in Trower v Butts'. (2) Such words as 'living' at a particular time or 'born' or at or during a particular time or period do not according to their ordinary and natural meaning include a child who is en ventre sa mère at the particular time or during the particular period; and (3) they can only include such a child by a fictional construction, which however must not be resorted to except in the circumstances to which I refer in my summary in what I concede to be the law as settled by Villar v Gilbey."

His Lordship summarised the law as settled by Villar v Gilbey at page 233 as follows -

" The law as settled by Villar v. Gilbey may (but subject to any special context in the document to be construed) be summed up as thus: First, words referring to children or issue 'born' before, or 'living' at, or (as I think we must add) ;'surviving', a particular point of time or event, will not in their ordinary or natural meaning include a child en ventre sa mère at the relevant date. Secondly, the ordinary or natural meaning of the words may be departed from, and a fictional construction applied to them so as to include therein a child en ventre sa mère at the relevant date and subsequently born alive if, but only if, that fictional construction will secure to the child a benefit to which it would have been entitled if it had been actually born at the relevant date. Thirdly, the only reason and the only justification for applying such a fictional construction is that where a person makes a gift to a class of children or issue described as 'born' before or 'living' at or 'surviving' a particular point of time or event, a child en ventre sa mère must necessarily be within the reason and motive of the gift. Fourthly, that being the only reason and the only justification for applying the fictional construction, it follows that, if the person who uses the words under consideration confers no gift on the children or issue described as above mentioned, but confers the gift on someone else, it is impossible (except in the light of subsequent events) to affirm either that the fictional construction will secure to the child en ventre sa mère benefit to which if born it would be entitled, or that the child en ventre sa mère must necessarily be within the reason and motive of the gift made. In these circumstances the words used must bear their ordinary or natural meaning." [Emphases added]

In Watt v Rama [1972] VicRp 40; (1972) VR 353 the Full Court was concerned with the issue of the right of a child to sue for damages suffered whilst a foetus. The court held that once the child was born alive and survived it was entitled to recover damages for injury suffered as the result of a negligent act whilst the child was in the womb. The court held that the cause of action was complete when injury was suffered and injury was suffered when the child was born alive suffering injury.

Gillard J considered the rights of an unborn child and after considering a number of decisions in various areas of the law which included the fictional rule, stated at p.376 -

"From these cases it must be accepted that there is a rule of law which recognises that an unborn child may possess rights. This implies there are correlative duties imposed on others in favour of the unborn child. It also implies that an unborn child is deemed to be a 'person' where the right is for his benefit, so that if he survives his birth and obtains the requisite capacity to institute proceedings for an infringement of his rights, he may do so and obtain a remedy for the infringement when he was en ventre sa mère." (Emphasis added.)

Mr Yunghanns relies upon that statement of principle. In considering that statement of principle one must bear in mind that the cases which his Honour referred to support a limited right in unborn children. What his Honour said has to be considered in context.

His Honour had referred to the line of authority concerning the protection and devolution of property of unborn children. These were concerned with wills and passing of estates.

The authorities establish that in certain circumstances a child en ventre sa mère is protected by the law and as Lord Loreburn said "may even be a party to an action." The principle is not only described as a fiction but has been described as an indulgence. The important criteria for the application of the principle are that the construction benefits the unborn child and where the "motive and reason of the gift" was to benefit the child.

The Trustee Act of this State also recognises the court's ability to deal with the interests of an unborn child. Section 53 provides -

"Where any property is subject to a contingent right in an unborn person or class of unborn persons who, on coming into existence would, in respect thereof, become entitled to or possessed of the property of any trust, the court may make an order releasing the property from the contingent right or may make an order vesting in any person the estate or interest to or of which the unborn person or class of unborn persons would on coming into existence be entitled or possessed in the property."

In addition, s.63A gives the power in this court to vary trusts and the court may approve a variation even in respect of "any person unborn".

There is no doubt that the Yunghanns Children Trust was established to benefit primarily all the children of Mr Peter Yunghanns. It is clear from the definition of primary beneficiaries that that includes children not only living at the date of the making of the deed which was 27 June 1992 but also in relation to children born thereafter.

That was the expectation of the settlor and Mr Peter Yunghanns who caused the trust to be established. The unborn child comes within the "motive and reason of" the trust and clearly the trust was to benefit a child who was unborn.

In my opinion the trust was to benefit the children of Peter Yunghanns and the definition of primary beneficiary should be construed to include by a fiction the child en ventre sa mère which if born alive and survives has that bundle of rights which every potential beneficiary has under a contingent trust. In my opinion the court does have the jurisdiction and power to grant an interlocutory injunction restraining a trustee from taking any step to deprive the unborn child of the rights it will attain upon birth and survival. The unborn child is deemed to be a child and as such has the rights of a beneficiary under the trust. The child's rights can be protected and should be where the circumstances warrant it.

The affidavit material in support of the application has not been contested either by any answering material or cross-examination and no reason has been advanced why I should not accept the evidence. I do so. Any findings I make are on untested material and solely for the purpose of this application.

There is no love lost between Mr Yunghanns and his two adult children David and Sarah. There are many proceedings between them and the companies controlled by them with each side seeking to gain control of a substantial business empire to the exclusion of the other. In the absence of any evidence from the two children I find that there is a risk they may exercise their power as directors of the trustee to prejudice the interests of the unborn child so that upon its birth it no longer has any right to enforce. Its rights would in those circumstances be taken away before it acquired any legal personality to enforce it. In addition to any right to property once born the child would have the right to bring a proceeding to remove the trustee. On determining whether or not it is proper to remove a trustee, the Court will regard the welfare of the beneficiaries as the dominant consideration - see Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572.

The removal of a trustee does not depend upon proof of misconduct: a conflict of duty and interest may be a basis for removal - see Monty Financial Services Ltd v Dezmo (1996) IVR 65.

The second finding I make is that on the balance of convenience the unborn child will suffer a greater wrong if the injunction is refused than the trustee will suffer if the injunction is granted. Indeed, no evidence was placed before the court with respect to this issue by the trustee.

In my opinion justice demands that the injunction be granted.

It is to be granted because in my opinion the status quo should be preserved until birth, there is a serious question to be decided, namely, whether or not Candoora should be replaced as trustee and the balance of convenience favours the granting of the interlocutory injunction.

The proposed order is limited as follows - "Until the trial of the proceeding or further order the defendant by itself its servants or agents be restrained from exercising any power or powers as trustee pursuant to the deed of settlement dated 27 June 1992 establishing the Yunghanns Children's Trust so as to vest the trust, to exclude any beneficiary or class of beneficiaries or amend, vary or alter the said deed of settlement."

Such an order would preserve the status quo with respect to the rights of the unborn child and Mr Murdoch QC when asked the question was unable to point to any prejudice to the trustee or the trust if an order was made to that effect.

In my opinion the trial of the issues could not possibly take place until the birth and survival of the child and accordingly the date for the hearing should be after April 2000. I propose to grant an interlocutory order in the terms set out.

It is appropriate that an order be made that the plaintiff deliver a statement of claim in this proceeding.

Subject to any submission of counsel and the usual undertaking as to damages being given by the plaintiff I propose the following orders -

1. The requirements of Rules 5.03(1) and 8.02 be dispensed with.

2. That the plaintiff be authorised to commence the proceeding by originating motion in 5C of the Rules of Court.

3. The plaintiff have leave nunc pro tunc to commence the proceeding on behalf of his unborn child and that he represent the unborn child of Mrs Patricia Gay Yunghanns.

4. Until the trial of the proceeding or further order the defendant by itself its servants or agents be restrained from exercising any power or powers as trustee pursuant to the deed of settlement dated 27 June 1992 establishing the Yunghanns Children's Trust so as to vest the trust, to exclude any beneficiary or class of beneficiaries or amend vary or alter the said deed of settlement.

5. That the plaintiff file and serve a statement of claim by 4.00 p.m. on 22 December 1999.

6. That the defendant file and serve its defence by 4.00 p.m. on 15 February 2000.

7. That the plaintiff file and serve any reply by 4.00 p.m. on 22 February 2000.

8. That there be mutual discovery by 4.00 p.m. on 29 February 2000.

9. That the proceeding be referred for directions to the judge in the Commercial List on 3 March 2000.

11. The costs of the plaintiff's application for interlocutory relief be reserved.

12. That the order be drawn up by the plaintiff's solicitors and signed by a judge pursuant to Rule 60.04(1) of the Rules of Court.

At a glance

Court

Decision date

Before

Source

Judgment (165 paragraphs)

Parties

Cases Cited (3)