Wright v Stevens

HIS HONOUR: By Summons, filed on 7 July 2016 (and amended on 7 April 2017), the Plaintiff, Nicholas Delpratt Wright, sought orders that the first Defendant, Beryl Joan Stevens, as the Trustee of the George and Annie Cork Memorial Trust (“the Trust”), provide to him information and documents about the Trust. In addition, he sought an order for the passing of the accounts of the estate of Cyril David Cork (“the deceased”), pursuant to whose Will the Trust was created.

On 4 April 2017, by consent, the second Defendant, the Attorney-General of New South Wales, was joined as a party to the proceedings. By Cross-Summons, filed on 12 May 2017, the second Defendant sought, amongst other relief, a declaration that the purpose of benefiting any one, or more, of the persons identified in Schedule 2, Item 2 of the Will of the deceased was a charitable purpose; a declaration that, on the true construction of the Will and in the events that happened, all of the property of the Trust was the subject of a valid charitable trust; and an order that the second Defendant prepare an administrative scheme to give effect to the charitable trust. In the alternative, the second Defendant sought a declaration that the circumstances in which the original purposes of the charitable trust had failed, or had ceased to provide a suitable and effective method of using the Trust property, having regard to the spirit of the Trust; and an order that the Trust be applied cy-près with a scheme to be settled for that purpose.

The first Defendant opposed all of the claims made by the Plaintiff and by the second Defendant respectively. She submitted that each of the Amended Summons and the Cross-Summons should be dismissed. She asserted that either the Plaintiff was no more than a person eligible to be appointed to the category of “Beneficiaries” of the Trust, and, thus, had no standing to obtain any of the relief sought; or that the relief sought, in the circumstances, should be denied in the event the Court considered that it had a discretion to permit the Plaintiff to seek the documents and other information.

In relation to the issues raised by the second Defendant, the first Defendant submitted that the Trust was a valid private discretionary trust, and did not need to be saved by resort to a finding that it was a charitable trust. She asserted that there was no uncertainty as to the Trust’s objects; that the evidence in the proceeding did not support the contention that the Trust was incapable of enforcement; and that the terms of the Trust contradicted any suggestion that its purpose was a charitable one.

In reply, the Plaintiff asserted, amongst other things, that the inherent jurisdiction of the Court enabled the Court to grant the relief sought; in other words, that disclosure was part of the arsenal of tools that the Court could deploy, in exercising its equitable jurisdiction, to ensure that a trust is properly administered.

Alternatively, the Plaintiff relied upon Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”), rule 31.54(1), which enables the Court to “obtain the assistance of any person specially qualified to advise on any matter arising in the proceedings and may act on the adviser's opinion”. How this was to be achieved, who “the person who was specially qualified”, and what “opinion” should be acted upon, was not the subject of evidence or submissions.

Although the first Defendant made some submissions on costs, it was common ground, at the hearing, that the question of costs should be dealt with after the determination of the proceedings.

From the above, it can be seen that this is not a case where the first Defendant, as Trustee, has surrendered her discretion to the Court. Nor is it a case in which, without surrendering her discretion, she has invited the Court, in effect, to confirm, as valid, her refusal to produce the documents sought, because, for example, documents contain legal advice about the due administration of the Trust on the ground of legal professional privilege. In addition, it is not a case in which an application for discovery before suit, either under the Rules, or under the Court’s inherent jurisdiction has been made, or where the disclosure of documents after the commencement of proceedings, is sought.

Rather, this is a case, brought by a disappointed Plaintiff, by way of a challenge to a trustee’s negative exercise of discretion to disclose documents and provide accounts, and one in which he seeks to invoke, amongst other things, an original discretion in the Court, to grant an order for production, inventory, account and inquiry, as part of its jurisdiction in the administration of trusts.

There was no reference, by any party, to the UCPR Part 54, which applies to “administration proceedings”, those being relevantly defined, in the UCPR, as “proceedings for … the execution of a trust, under the direction of the Supreme Court”.

Because I considered that UCPR Part 54 may be relevant to the issues in dispute, I requested my Associate to forward an email, on 22 January 2018, to all counsel, drawing attention to that Part of the UCPR. I directed that any further submissions should be made, in writing, by 1 February 2018.

Submissions were received from the Plaintiff and from the first Defendant. Counsel responded that the second Defendant did not wish to make any further submissions on this aspect.

The documents sought in the Plaintiff’s Amended Summons are:

It was agreed that the first Defendant had not provided the documents that are set out in paragraphs 1, 2 and 3 of the Amended Summons: T3.23 – T3.27. The basis for non-production is that she says she is under no obligation to do so as a matter of law.

In Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405, Sheller JA, at 443, wrote that “[T]he expression ‘trust document’ can have little more precise meaning than a document relating to the trust or its administration”. Earlier, Salmon LJ in Re Londonderry’s Settlement [1965] Ch 918, at 938, described “trust documents” as containing “information about the trust which the beneficiaries are entitled to know”, and as documents in which “the beneficiaries have a proprietary interest ... and, accordingly, are entitled to see”.

(There has been criticism of Lord Salmon’s description as assuming “the answer to the question it is directed to solve" and is accordingly "of no assistance": Hartigan Nominees Pty Ltd v Rydge, Sheller JA, at 443. Kirby P, in dissent, at 413, regarded the term as one defined with “unilluminating circularity” and one that “states, rather than solves, the problem of the documents to which access might be had by beneficiaries, as of right, against reluctant trustees”.)

In this case, however, no party argued that the documents sought by the Plaintiff were not “trust documents”.

As is apparent from the Amended Summons, the disclosure sought by the Plaintiff is not very extensive. However, it will involve the inevitable disclosure, at least to the Plaintiff, of some documents that may contain information about the operation of the Trust, the transactions into which the first Defendant, as Trustee, has entered, the identity of “the Beneficiaries” who have been appointed in writing, what each “Beneficiary” has received by way of distributions from the Trust, and, perhaps, the basis upon which the first Defendant, as Trustee, has made the decisions that she has made.

Clearly what is being sought by the Plaintiff is to be used to determine the nature and value of the Trust estate, to investigate the financial dealings and transactions concerning the Trust assets, and to ascertain to whom, or to which entities, distributions have been made in the administration of the Trust estate.

There is nothing in the Amended Summons to suggest that the Plaintiff is prepared to accept some lesser disclosure, or that he is prepared to provide undertakings of confidentiality, including an undertaking to provide access to the documents solely to his professional advisors. This is understandable because if the Plaintiff obtains the relief he seeks, others, falling within the description of the class in the Will of the deceased, would be able to seek the same, or similar, relief.

Shortly prior to the hearing, and in accordance with the directions of the Court, the parties agreed upon the issues that the Court was asked to decide (Ex. A):

The second Defendant, without the agreement of the other parties, also raised the following issues for the Court’s consideration:

An additional issue, following it being raised by the Court, will be whether UCPR Part 54, provides a basis for the relief sought by the Plaintiff.

Some of the issues to be decided will turn on the construction of the deceased’s Will. Others may require the Court to determine whether to exercise its inherent jurisdiction to supervise, and if necessary to intervene in, the administration of the Trust.

In the Plaintiff’s case, an affidavit from the Plaintiff, and one from Mr William Hinchcliffe, was each read. Neither of the deponents was cross-examined.

An affidavit of Ms C E Drummy, a solicitor in the Office of the Crown Solicitor, was read in the second Defendant’s case, which affidavit was a formal affidavit. The circumstances in which the second Defendant came to be a party to the proceedings were set out. The deponent, also, was not cross-examined.

An affidavit by the first Defendant, affirmed on 10 August 2016, that had been filed, and served, was not read at the hearing. The Court was informed, without objection, and without contradiction, by counsel for the second Defendant, that until the day before the commencement of the hearing, the affidavit was to be read; that the legal representatives of the second Defendant had given notice for the first Defendant to attend for cross-examination; and that late on the day before the hearing commenced, the first Defendant’s legal representatives informed the other parties, that the affidavit of the first Defendant that had been served was not to be read: T121.36 – T121.45.

Thus, at the hearing, there was no affidavit read, or evidence tendered by, the first Defendant, going to the issues to which reference has been made. The failure by the first Defendant to disclose information to the Court led to some criticism of her. Counsel for each of the Plaintiff, and of the second Defendant, emphasised that the first Defendant, as the trustee of the Trust, was the only person who could “tell this Court … basic things about the operation of the Trust and, to be clear, that is whether a Beneficiary has been appointed, whether the distributions made to those 13 organisations, to the persons who built, or had built for them, the medical centre and the retirement village, whether those people are recipients of grants or Beneficiaries. Nowhere in the first Defendant's submissions is it asserted that those persons are Beneficiaries”: T57.05 – T57.13.

Another matter about which the first Defendant may have been able to give evidence would have been whether the information sought by the Plaintiff would be difficult or expensive to generate, or collate, which matter may be a factor against requiring its disclosure. There may be other features of the administration of the Trust, also, that could prompt questions to which the first Defendant could provide answers, but these have not been the subject of submissions.

During the first day of the hearing, during the submissions being made on behalf of the second Defendant, the first Defendant was given the opportunity to consider, overnight, whether she wished to make an application to re-open her case and provide further evidence: T68.14 – T70.45.

The next day, the Court was informed, from the bar Table, by senior Counsel, that the first Defendant did not wish to re-open her case: T71.29 – T71.30; T75.05 – T75.12.

Senior counsel for the first Defendant argued, T62.08 – T62.14, that:

Despite making the above submission, senior Counsel for the first Defendant accepted that if the first Defendant did not have a legal justification for not providing documents, then “apart from wanting an opportunity to consider what has to be supplied, she will supply it”: T11.20 – T11.36. She would want an opportunity to provide, “or enter into appropriate negotiations with the Plaintiff and others, to deal with that”: T17.08 – T17.12; T26.06 – T26.11.

In Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53, Gleeson CJ wrote, at [11]:

In Newell; Muriniti v De Costi [2018] NSWCA 49, Beazley P (with whom Gleeson and White JJA agreed), wrote, at [78]:

In Re Fairbairn [1967] VR 633, at 639, Gillard J wrote:

Whilst senior Counsel for the first Defendant did attempt to explain the reasons for not providing documents, he did not provide any explanation for her not giving evidence.

Whether to draw any inference, and also, if there is a discretion to be exercised by the Court in relation to the Plaintiff’s application for disclosure of documents relating to the Trust, the approach of the first Defendant in failing to give any evidence, and the explanation for that approach, must be evaluated.

It is next necessary to say something about the background to this litigation and earlier proceedings in which the Court was involved.

In proceedings 2016/286033, heard by Stevenson J, on 26 October 2016, the first Defendant (as the Plaintiff in those proceedings), sought the Court’s advice, under s 63 of the Trustee Act 1925 (NSW), on the question whether or not she was justified in (a) defending proceedings brought by the Plaintiff (in these proceedings); (b) pursuing a notice of motion that she had filed on 15 August 2016, in the proceedings, seeking to have them dismissed under UCPR rule 13.4; and (c) drawing on funds of the Trust to pay her legal costs of defending the proceedings and pursuing the notice of motion. She also sought an order that she be indemnified from the Trust for the costs of the application for judicial advice. (Neither the Plaintiff, nor the second Defendant, in the current proceedings, was a party to the judicial advice proceedings.)

In an ex tempore judgment, which bears the medium neutral citation Application by Stevens [2016] NSWSC 1523, Stevenson J concluded, at [10] – [14]:

It is unnecessary to refer to what are said to be “criticisms”, made by counsel for the second Defendant, regarding the failure to involve the second Defendant in the prior proceedings. In my view those criticisms, valid or otherwise, are not relevant to the proceedings with which this Court is now concerned.

An analysis of the legal issues, to be more meaningful, requires a general overview of the surrounding facts and the events giving rise to the Plaintiff’s claim. The following facts are not the subject of any dispute (to the extent that they are identified in Ex. B), or are clearly established, otherwise, by the uncontested evidence of the Plaintiff and/or of Mr Hinchcliffe.

The deceased lived in Dorrigo, New South Wales. He was a well-known Dorrigo identity. He died on 6 November 2007. He was never married, and, so far as is known, he had no children. He had no other next of kin (entitled to his estate by operation of the intestacy rules that applied at the date of the deceased’s death).

The deceased left a duly executed Will that he made on 29 October 2007 (shortly before his death). It appointed "the solicitors at the date of my death of the firm Barwick Stevens Lawyers to be one of my joint executors and direct[ed] that only one of them need prove the will and act initially in respect of its Trusts" and "my accountant Timothy John Christiansen": Clause 2 of the Will.

On 17 April 2008, this Court granted Probate of the deceased’s Will to the first Defendant, who is a solicitor at the firm Barwick Stevens Lawyers, and to Timothy John Christiansen. I shall return to the other relevant terms of the Will later in these reasons.

Mr Christiansen retired as a trustee of the Trust on about 14 August 2013. (Any document that related to his retirement is not in evidence.) Since then, and currently, the first Defendant has remained the sole trustee of the Trust.

In the Inventory of Property, a copy of which was attached to, and placed inside, the Probate document, the deceased’s estate was disclosed as having an estimated, or known, value of $5,540,921 (which appears to be incorrect). The estate was said to consist of real property ($4,790,000), as well as cash at bank, and personalty (in total $475,921). (When calculating the total of the estimates or known values of the property disclosed in the Inventory of Property, the actual estimated total value of the estate was $5,265,921.)

The nature, or value, of the deceased’s estate, at the date of hearing, was not disclosed in the evidence. There is no evidence about whether the estate has been fully administered. (The Court was informed by senior counsel for the first Defendant, from the bar Table, that the estate of the deceased has been fully administered However, that is not an agreed, or an otherwise established, fact: T2.17 – T2.23.) There is also no evidence that the first Defendant has verified, filed, and passed, any accounts, relating to the estate: T20.00 – T20.05.

No party disputed that the deceased’s Will was, at least in part, a badly drafted document. A reference to a “Trust Deed”, several times, demonstrates that it is unnecessary to say more. There was, of course, no Trust Deed. However, the First Schedule to the Will, comprising some 22 pages, set out the terms of the testamentary Trust.

Clause 4 of the Will provided a gift of “the whole of my estate of whatsoever kind and wheresoever situate, after payment of all due debts and testamentary expenses, to my trustees UPON TRUST, as set out in the Schedules to this my Will”.

Clause 5 of the Will directed that “the said trust be a discretionary trust in memory of my parents, George and Annie Cork”.

Clause 6 of the Will gave the Trustees powers “in addition to those powers as set out in the Trust Deed”:

Before referring to the terms of the First Schedule, I shall refer to the Second Schedule of the Will because it is short and what follows, thereafter, will be more comprehensible.

Item 1 of the Second Schedule to the Will, identified “Barwick Stevens Lawyers” and Timothy John Christiansen as the first Trustee.

Item 2 of Schedule 2 provided that:

(The use of the term “beneficiaries” is inapt in so far as it suggests the existence of any vested beneficial interest in the assets held on the Trust.)

Clause 1 of the First Schedule defined several concepts:

(It is the identification of the “Beneficiary/ies” and how each is to be identified that lies at the centre of at least one of the questions of construction agitated by the parties.)

The primary trust obligation, with respect to income of the Trust Fund, until the vesting date, was dealt with in Clause 2. It is "subject to the provisions of paragraph 4.3” (which gives the Trustee power to appropriate capital for any Beneficiary and so remove that capital amount from the Trust Fund).

Under Clause 2.1, the Trustee may, prior to the expiration of any year, pay, or apply, the whole, or any part, of the income of the Trust Fund for the year, to, or for the benefit of, all, or such one or more, of the Beneficiaries, living or in existence at any time during the year of income, in his absolute discretion may, from time to time during the year, determine. The manner of exercise of discretions conferred on the Trustee is not set out.

Clause 2.2 provides that in default of that exercise of discretion, and subject to any application pursuant to Clause 2.1, on, or before, the last day of the year of income, the Trustee shall "subject as hereinafter provides", hold the income, to pay or to apply it for the benefit of the Beneficiaries that are “living on the last day of that year".

Clause 3 deals, primarily, with the manner in which the Trustee may apply any income for the benefit of a Beneficiary, namely, by expending the income for the "maintenance education, advancement in life, benefit or support" of the Beneficiary, or otherwise expending the income in such manner as the Trustee may in his "absolute discretion"' decide (Clause 3.1.1); or by determining that the Beneficiary has an immediate vested indefeasible interest in such income, whereupon the Beneficiary shall have an immediate vested indefeasible interest thereto (Clause 3.1.2). Again, the manner of exercise of discretions conferred on the Trustee is not set out.

Clauses 3.2 and 3.3, respectively, deal with the manner of applying income to an infant Beneficiary under Clause 3.1.1, or the way in which a determination of a vested interest works under Clause 3.1.2. That includes, in the case of an infant Beneficiary, the payment of income to the parent, or guardian, of the Beneficiary, or the person with whom the Beneficiary is, for the time being, residing. If the Trustee applies the income of the Trust Fund for the benefit of a Beneficiary who is an infant, then, the income shall be invested, and the Trustee holds the income that accrues for that infant Beneficiary. The Trustee may use the income accrued for the maintenance, education advancement in life, benefit or support, of the infant Beneficiary. The Trustee must pay over the income (and any income accrued thereon not expended) “immediately upon the Beneficiary ceasing to be an infant or upon the Beneficiary’s prior death” to such Beneficiary or to his legal personal representative.

Clause 3.4 gives the Trustee power “[I]n lieu of paying or expending income in cash … to transfer any property of like value forming part of the Trust Fund … to the person entitled to that income in whole or in part satisfaction thereof…”.

The capital of the Trust Fund is held under Clause 4.1 and Clause 4.2, subject to Clause 4.3 (which gives the Trustee power to appropriate capital for any Beneficiary and so remove that capital amount from the Trust Fund).

Clause 4 of the First Schedule should be set out verbatim:

Clause 5 provides that the Trustee may, in his absolute discretion, apply any capital of the Trust Fund, for the benefit of an infant Beneficiary, by expending the Trust Fund for the maintenance, education, advancement in life, benefit or support of that infant Beneficiary, and the provisions of Clauses 3.2 and 3.4 (concerning the application of income) apply to that application. The manner of exercise of discretions conferred on the Trustee is not set out.

Clause 6 provides that any "determination, appropriation or appointment" by the Trustee shall be "oral, or in writing, as the trustee may determine" but if the Trustee makes an oral determination, “a record of such determination in a minute [not necessarily signed by the Trustee] shall be kept with the accounts and records of the fund and such minutes shall be deemed good and sufficient evidence of the determinations, appropriations and appointments which they purport to record”.

Clause 7 deals with the Trustee's ability to deduct any tax payable on a distribution of capital out of that capital, or pay it from other trust moneys or property as the Trustee may decide.

Clause 8 deals with the manner in which the Trustee may structure the books of account and records of the Trust. The Trustee may identify, and separately record, identified categories of income received into the Trust Fund (Clause 8.1); may identify and separately record income or capital, having individual or unique characteristics, other than those identified in the categories of income earlier referred to, as by resolution, the Trustee shall determine (Clause 8.2); if a resolution, or determination, of the Trustee, by which income of the Trust Fund is distributed, or accumulated pursuant to Clause 2, the Trustee may separately deal with the whole, or part of the income, so that the same, or any part thereof, may be specifically paid, applied or set aside, for the benefit of any one or more of the Beneficiaries (Clause 8.3); has a discretion to distribute all, or any part of capital in accordance with Clause 4 (Clause 8.4); allocate expenses and outgoings of the Trust Fund against, and deduct those expenses and outgoings from, income or capital of any one or more categories "in such manner as the trustee sees fit" (Clause 8.5); if the Trustee does not exercise the discretion in relation to expenses and outgoings of the Trust Fund in respect of a financial year, those expenses and outgoings are to be allocated and deducted firstly, from income which is not income from a category, and if that income is not sufficient, then the expenses and outgoings not so absorbed, shall be allocated in such a manner as the Trustee may decide against income of a category or categories, to which a tax credit or rebate does not attach, and thereafter against the remaining income of the Trust Fund (Clause 8.6); income or capital of the Trust Fund to which a "default beneficiary" (a term which is not defined) becomes entitled, and which can be identified from the books and records of the Trust as being of a category, retains its separate identity when it passes to, or is received by, the default beneficiary, or when the default beneficiary otherwise become entitled thereto (Clause 8.7).

Clause 9 specifies the Trustee’s powers. It is not necessary to refer to this Clause in detail, but it includes powers of investment, reinvestment, or remaining as invested for as long as the Trustee thinks fit, whether or not such investment is authorised by law for the investment of trust funds, including selling, transposing, or varying, investments, and re-investing moneys, of any nature authorised by the terms of the Trust Instrument (Clause 9.2 and Clause 9.4); and employing moneys for the time forming part of the Trust Fund in carrying on any business, or businesses, as the Trustee may in his discretion deem to be fit and desirable (Clause 9.3). Clause 9 also includes powers to apply the Trust Fund to the benefit of Beneficiaries and other powers of management. Clause 9.27 provides that “[G]enerally the Trustee may manage or deal with the Trust Fund as fully as if the Trustee legally and beneficially owned the same”. Clause 9.39 permits the Trustee to divide assets, in specie, between the Trust Fund and other trust funds in such manner as the Trustee thinks fit.

Clause 10 prohibits the Trustee from doing anything that would be rendered void or ineffective by any rule or law against remoteness of vesting, or any rule or law restricting the right or power to accumulate income, and requires the powers to be read so as not to authorise any such actions, including to ensure that the Trust Fund vests in interest not later than the vesting date described in Clause 1.2.2.

Clause 11 provides for protection to persons dealing with the Trustee that “except in the case of fraud” no person dealing with the Trustee needs to ascertain whether the Trustee is acting in accordance with the Will or whether the transaction is for the benefit of Beneficiaries, and that no person shall be affected by knowledge, or notice, that any contract has not been authorised, or that any transaction is not for the benefit of Beneficiaries, and all such contracts will be valid and effectual.

Under Clause 12, the Trustee has power, in his absolute discretion, to pay or transfer the whole, or any part, of the Trust Fund, or income from it, to the Trustee/s, for the time being, of any settlement, “whereunder all or any of the Beneficiaries are beneficiaries whether absolutely contingently presumptively or prospectively, to be held by such Trustee/s as an addition to” that settlement. If that payment, or transfer, is made, the property so paid, or transferred, is discharged from the trusts of the Trust created by the Will. However, the payment or transfer “shall not be made unless the persons entitled to the capital of the other settlement must become entitled to a vested interest therein prior to" the vesting date in Clause 1.2.2.

Under Clause 13, the Trustee is entitled to release any power, including the power to make an appointment under Clause 4.1.

Under Clause 14, the Trustee may (with the consent of the person entitled to exercise the powers under Clause 15) revoke, or add to, or vary, the trusts and may declare any "new or other" trusts or powers, but so as not to infringe the rule against perpetuities, and so that such new trusts may relate to the management or control of the Trust Fund or the investment thereof, or the Trustee's powers and discretions, but such new trusts, powers, discretions, alterations or variations, “shall not be in favour, or for the benefit of, the Trustee, or result in any benefit to the Trustee, but shall be for the benefit of one or more of the Beneficiaries”, and “shall not affect the beneficial entitlement to any amounts set aside for any Beneficiary prior to the date of the variation, alteration or addition”.

In addition, the Trustee has power, before the vesting date, by deed or deeds, revocable or irrevocable, to revoke all or any of the trusts or powers other than this power of variation "to such ends intents and purposes as the Trustee may in his absolute discretion … think fit", but not so that “the Trustee shall require or be enabled to acquire any benefit out of or connected with the Trust Fund or its income or have any possession enjoyment or benefit … whatsoever enforceable at law or equity … of or from the Trust Fund or its income", or so as to extend the vesting date, and not so as to exercise any such power in respect of income derived earlier than the date of variation.

Under Clause 15, the Trustee may appoint a new Trustee (Clause 15.1) and on appointment the Trust Fund vests in the new Trustee (Clause 15.2). The power to appoint must not be exercised in favour of the Settlor, a person who is solely entitled to exercise the power of appointment for the time being, or any person who settles money on the Trust (Clause 15.3).

The appointment of a new Trustee may be exercised by memorandum under hand, or by deed, and the new Trustee may be a corporation or a resident outside Australia (Clause 15.4). On the resignation, or retirement, of the Trustee, the retiring Trustee must promptly hand to the new Trustee all books, records, documents and other property of or pertaining to the Trust, do all things necessary to transfer the legal title in the assets of the Trust Fund to the new Trustee, sign all necessary authorities, and give the new Trustee such assistance as is reasonably required to put the new Trustee into full knowledge of the affairs of the Trust (Clause 15.5).

(The Second Schedule, Item 3, provides that the person or persons with the power of removal and appointment under Clause 15 are “Barwick Stevens Lawyers” and Mr Christiansen.)

Clause 16 provides that in respect of future payments, transfers, gifts, devises and bequests to the Trustee, the money, securities, or other property, real or personal to which the Trustee has assented, the Trustee is to hold the property paid, transferred or conveyed, “as if the same had been paid, transferred, or conveyed, to the Trustee at the time of execution of” the Will, and it is “to be included in the meaning of the term ‘the Trust Fund’”.

Clause 17, relevantly, permits the Trustee, if temporarily out of, or if intending to be temporarily out of, Australia, or if the Trustee deems it for any reason to be desirable in the administration of the Trust, to delegate, or revoke any such delegation, the trusts, in whole or in part, or subject to limitations or restrictions, to such person or persons as he thinks fit. The Trustee may execute such instruments or powers of attorney to effect the delegation as he shall think proper, and the person receiving the delegation is not bound to enquire whether the delegation is valid.

Clause 18 deals with exemptions from liability and the indemnity of the Trustee. Under it, the Trustee is not liable for any loss that may be suffered from investing in any of the modes of investment authorised by the Trust instrument (Clause 18.1); the consequences of any error of judgment or any forgetfulness, whether of law or fact, on the part of the Trustee or his legal or other advisers, or any servants or agent generally, "for any breach of duty or trust committed, given or omitted, by the Trustee charged to be so liable", or for "any loss arising out of any act or omission in the execution or management and administration of this trust, so long as the Trustee … has acted in good faith”. The Trustee is also not personally liable for the acts of any officer or agent, servant, employee, or nominee, and "all persons claiming any beneficial interest in, over, or under, the property for the time being subject to the trusts hereby created shall be deemed to take notice of and subject to the protection hereby conferred on the Trustee" (Clause 18.3).

The Trustee is entitled to be indemnified from the Trust Fund in respect of "costs, charges and expenses and any personal liability incurred in the administration of or intended or purported administration of this trust except such liability as may be proved affirmatively to have been incurred in personal conscious bad faith by the Trustee seeking or claiming to be so indemnified." (Clause 18.2). The Trustee is entitled to protection if the Trustee acts upon a document he believes to be genuine and to be signed by the proper party (Clause18.4). The Trustee is not required to interfere or exercise rights in respect of any company in which the Trust Fund is invested if the Trustee has no notice of any mismanagement of the company, and “no Beneficiary shall be entitled to require the distribution of any dividend” by any company, or require the Trustee to exercise any powers he may have to compel any distribution of dividends, unless there is proved affirmatively to have been an act of dishonesty in the management of the company (Clause 18.5).

Under Clause 19, there may be only one, and no more than three, Trustees (Clause 19.1). The Trustee is entitled to reimbursement “of all moneys properly expended by him and chargeable against the Trust Fund” (Clause 19.2); if the Trustee is a solicitor, the Trustee may charge professional fees (Clause 19.3); the Trustees may act by majority if there are more than two Trustees (Clause 19.4); the Trust is to be interpreted in accordance with the law of New South Wales, but where a new Trustee resides outside Australia, the appointor may direct that the law of the place of residence of the Trustee, or one of the Trustees if more than one, to be the proper law for the administration of the trust (Clause 19.5); the Trustee is not disqualified from acting in a fiduciary position in a company in which the Trust Fund is invested, and may retain remuneration received for so acting (Clause 19.7); and "[a]ll the Trustee’s powers may be exercised notwithstanding that there may be a conflict between his duty as a Trustee and any personal interest which he may have." (Clause 19.8).

Clause 20 deals with the Trustee's remuneration. Relevantly, it provided that the Trustee “may charge and be paid out of the Trust Fund and the income thereof such remuneration as the Trustee in his absolute discretion shall consider reasonable”. One added proviso was that, in any financial year, the total remuneration paid to the Trustee was not to exceed “the aggregate of five per centum of the gross income of the Trust Fund during that year and two per centum of the value of any portion of the Trust Fund that the Trustee may during the year have transferred or paid to or applied to or for any of the Beneficiaries or …towards satisfaction of a share in the Trust Fund”.

Clause 21 prohibits the Trustee from satisfying any deficiency, or loss, arising in any annual accounting period from the corpus of the Trust Fund, and must have resort only to any profits arising out of a subsequent accounting period out of such activity carried on in such subsequent accounting period.

Clause 22 is not relevant.

Clause 23 refers to the title of the Trust, to which reference has earlier been made.

Clause 24 deals with the name of the Trust by reference to Schedule 2, Item 4, to which reference has earlier been made.

There is nothing in the deceased’s Will that imposes a duty upon the Trustee to provide information to a discretionary object or to a “Beneficiary”. However, the Court was not directed to any condition of confidentiality in the Will, or that identifies any level of secrecy with regard to the affairs of the Trust, or any Clause that requires aspects of the Trust’s administration to be dealt with in confidence. Nor is there anything in the Will that limits a discretionary object, or a “Beneficiary”, seeking to obtain information from the Trustee.

Thus, there is nothing in the Will that suggests that the deceased wanted to impose limitations of disclosure upon the first Defendant, as Trustee, although, of course, she was given an absolute discretion which, in the events that have happened, she can exercise alone.

The Plaintiff is not a specifically named beneficiary of the Trust. However, he is a person who is a resident living within the Dorrigo postcode area 2453. He has lived within the Dorrigo postcode area since 1999. Before that, he was a farmer engaged in business within the postcode area for about 40 years. He is a retired Fellow of the Securities Institute of Australia and a former member of the Sydney Stock Exchange and the Australian Stock Exchange. He has been a member of the Grafton Rural Lands Protection Board.

In the circumstances, the Plaintiff is a person with a genuine legitimate expectation of benefitting from the Trust as one of the “persons” whom the first Defendant, as Trustee, is bound to have in mind when exercising the discretion to appoint “a person” in writing to be a Beneficiary for the purposes of the Trust.

A person who is also not a named beneficiary of the Trust, but who has been living within the Dorrigo post code area since 1994, is Mr Hinchcliffe, a retired accountant and business analyst (and formerly a management accountant): T2.45 – T3.04. He is not a party, but, as stated, a witness in the proceedings.

The Plaintiff met with the first Defendant and Mr Christiansen at the first Defendant’s office, on 15 April 2014 where they had a conversation about the administration of the Trust.

The Plaintiff called a public meeting in Dorrigo on 28 May 2014 at which about 80 people, including the Plaintiff and Mr Hinchcliffe, attended. Subsequently, the Plaintiff wrote a letter, dated 29 May 2014, to the first Defendant referring to the public meeting and what, he said, had occurred thereat. He requested a response to the letter from the first Defendant but he received no reply.

The Plaintiff sent an open letter, addressed to the first Defendant, which was published in the Don Dorrigo Gazette of 4 June 2014. Also published in the same edition of the newspaper, was a letter to the Editor, from Mr Christiansen, and a series of questions about the Trust that had been posed to, and the answers said to have been given by the first Defendant.

Mr Christiansen’s letter prompted a lengthy letter from the Plaintiff to the editor of the newspaper and an “open letter” to the editor from Mr Hinchcliffe, both of which letters were published on 18 June 2014. A further letter to the editor, from the Plaintiff, was published on 6 August 2014.

Mr Hinchcliffe communicated with the first Defendant, by telephone, on 26 September 2014, seeking to obtain access to the financial information of the Trust. He also made similar requests to her by email.

Mr Hinchcliffe was permitted to inspect some financial documents relating to the Trust on 26 November 2014, for a limited amount of time. These documents were the Profit & Loss Statements and Balance Sheets for the Trust for each of the financial years ending 30 June 2009, 2010, 2011, 2012 and 2013. He was not permitted to take a copy of any of these documents but was permitted to make notes about their contents.

The Plaintiff was also given an opportunity to inspect some of the financial information, provided by the first Defendant: T9.49 – T10.00. He did so on, or about, 3 December 2014: T14.25 – T15.03. He stated that these included “what appeared to be” balance sheets and profit and loss statements apparently relating to the Trust for the five financial years from the year ending June 2009 to the year ending June 2013. He, also, was not provided with a copy of any documents, but was permitted to take notes of their contents.

A second public meeting concerning the Trust was held on 11 December 2014, at which meeting 30 to 40 people attended.

A response, dated 15 December 2014, to other correspondence sent by Mr Hinchcliffe to the first Defendant, or her solicitors, from the first Defendant’s solicitors, simply stated: “We do not intend to enter into any further correspondence with you.”

On 3 December 2015, the Plaintiff’s solicitors wrote to the first Defendant and to Mr Christiansen, seeking information about the nature and condition of the Trust assets and details concerning the nomination of Beneficiaries under the Trust. Mr Christiansen sent a written reply, dated 9 December 2015. (Although a reply dated 9 February 2016, from the first Defendant, was identified, a copy of that document was not annexed as suggested.)

The first Defendant has not provided, to the Plaintiff, a statement of the assets and liabilities of the estate, in a complete form, or provided to him the documents, or the accounts, that he has sought: T3.18 – T3.25. It is said that this has caused him to have a real concern as to the administration of the Trust assets.

The involvement of the second Defendant in relation to the estate of the deceased commenced in about November 2014, when information, from the Plaintiff, was received, raising, what were said to be, concerns that the Trust was not properly being administered by the first Defendant.

In a letter dated 16 February 2016 to the Crown Solicitor’s Office, the Plaintiff’s solicitors stated that “at no time has our client asserted that the …[T]rust is a charitable trust” and that “[O]ur client’s foreshadowed proceedings are predicated on the basis that the [T]rust is a private trust.”

On 29 February 2016, a legal representative of the second Defendant sought further information about the Trust from the first Defendant, which information was provided on 20 May 2016.

Following the commencement of the proceedings, the second Defendant sought to be joined as a party and that order was made, consensually, by this Court on 4 April 2017.

There are about 2,600 people who reside within the Dorrigo post code area. (The number of Trustees of Trusts, companies that conduct business, or the charities, in the Dorrigo area, was not the subject of any evidence.)

The first Defendant has invited “submissions for grants for local projects which can demonstrate a net benefit to the community with an emphasis on creating local employment/training and/or providing community facilities and services”. A copy of a document headed “The George and Annie Cork Memorial Trust – Grant Guidelines and Conditions 2011” is in evidence.

The Trust has made grants from the Trust to the following entities:

Evidence, in the form of searches, revealed the following entities are, or were at some point, registered as an association:

Searches have not revealed whether the Dorrigo Rotary Club, the Dorrigo Youth Clinic, the Dorrigo Recreation Ground Committee, the Dorrigo Men’s Shed, the RSL Sub-Branch, the Dorrigo Chamber of Commerce, and the Dorrigo Girl Guides, is each registered with the Australian Securities & Investments Commission as an association (whether incorporated or unincorporated), or that any of those entities is a proprietor of a business name, or company: Ex. C.

(It was submitted that this raises a question whether funds from the Trust have been paid to entities that do not fall within the class of “Beneficiary/ies”.)

Funds from the Trust have also been expended for the construction, in Dorrigo, of a medical centre, as a memorial to George and Annie Cork (the deceased’s parents), and for the construction of retirement accommodation.

There is no evidence of an appointment, in writing, by the first Defendant, of any person, Trustees of Trusts, companies, or charities, residing in, or otherwise carrying on business, in Dorrigo, or surrounding area as defined by post code 2453, to be beneficiaries.

In fact, senior counsel for the first Defendant conceded, at T105.40 – 105.42:

He added, at T106.00 – T106.08:

By way of introduction, it was pointed out, in the Plaintiff’s written Submissions, that the Plaintiff does not challenge the validity of the Trust; that he “does not (nor could he) say anything about whether the Trust instrument is valid as a private trust”; that he brings the proceedings upon the basis that the Will establishes a private discretionary trust; and that he “neither supports nor opposes the position taken by” the second Defendant.

In Submissions in reply, counsel for the Plaintiff wrote:

Whilst the submissions go on to point out the concerns of the Plaintiff regarding the administration of the Trust, it is not necessary to repeat all of these concerns, since there is no person seeking to remove the first Defendant as the trustee of the Trust. The Amended Summons does not seek any relief consequent upon establishing the validity of those concerns. In addition, that was not an issue for consideration identified by the parties. It is sufficient to say that there are concerns, which, on proper investigation, may, or may not, be real.

I shall quote, verbatim, the thrust of the Plaintiff’s written submissions:

The Plaintiff also submitted that he is a discretionary object of the Trust because he is a “person” who resides within the surrounding area of Dorrigo as defined by postcode 2453. Therefore, he is within the class of persons identified in the Second Schedule, Item 2, who may be appointed, in writing, by the first Defendant, as Trustee, to be “a Beneficiary” for the purposes of exercising the powers under the Trust. He accepted that he has no greater, or lesser, right than any one of the other persons who fall, or entity which falls, within the description of “the Beneficiary” in the Second Schedule, Item 2, to exercise rights under the First Schedule to the Will.

The Plaintiff asserted that one of the rights that he seeks to compel is the due administration of the Trust by requiring the first Defendant, as the Trustee, to provide an accounting of the nature and value of the assets of the Trust Fund. He contended that the First Schedule to the Will provides that the Trustee must keep proper accounts, and that the extensive powers of the Trustee cannot be interpreted so as to render the Trustee free of the fundamental obligations of a trustee to hold the assets of the Trust for the objects of the Trust on the terms of the Will, or to prevent the Court exercising jurisdiction to supervise the due administration of the Trust, and/or of the estate of the deceased. Other rights that the Plaintiff seeks to compel are the right to have the first Defendant considers whether to appoint him as a “Beneficiary”, and if appointed, to consider him in respect of the distribution of the income and/or capital of the Trust Fund.

It was put, in oral submissions that:

It seems to have been accepted then, that if there were no discretion in the Court to have documents provided by the Trustee to the Plaintiff as a person entitled to be considered to be appointed in writing by the Trustee to be a “Beneficiary”, or if there was no evidence of him having been appointed in writing to be a Beneficiary, then his claim for relief would fail.

The Plaintiff also submitted that the first Defendant’s exercise of discretion to pay out, or to apply, income and/or capital from the Trust Fund, depended upon the existence of a Beneficiary, or Beneficiaries, as defined. The Trustee was not constrained by the need to identify any particular characteristics of the proposed recipient of the income, or capital, of the Trust Fund, other than that the person to whom, or the entity to which, income or capital was to be paid out, or in respect of who, or which, it was to be applied, fell within the definition of "Beneficiary/ies" under the Second Schedule, Item 2. It followed, so it was submitted, that the Trustee, first, must have appointed, in writing, the person, or entity, residing in, or otherwise carrying on business, in Dorrigo in New South Wales or its surrounding area as defined by postcode 2453.

The submission, in other words, was that the Schedules to the deceased’s Will drew a clear distinction between the first Defendant’s power with respect to the appointment of a Beneficiary or Beneficiaries (Second Schedule, Item 2 and First Schedule, Clause 6), the power to apply income and/or capital of the Trust Fund for the benefit or provision of the Beneficiary or Beneficiaries (First Schedule, Clauses 2, 3, 4 and 5), and her powers to administer the Trust Fund (First Schedule, Clause 9).

The matters that suggest that the first Defendant was required to exercise the power to appoint a Beneficiary or Beneficiaries were:

Upon the construction advanced by the Plaintiff:

The Plaintiff also submitted that the Court does not know whether there is any “Beneficiary or Beneficiaries” appointed by the Trustee, under the Trust instrument, only because the first Defendant, as Trustee, had not identified any such person, or entity. If there is, are, or were, any such persons, or entities, he, she or it, may have a vested interest in the Trust Fund, and so would be in a better position than the Plaintiff to seek the relief.

In reply, the Plaintiff also submitted that the most basic investigation of the identity of the persons to whom the first Defendant had provided “grants”, revealed questions about whether some of those recipients satisfied the Schedule 2, Item 2, definition of “Beneficiaries”, particularly, any entity not registered as an association (whether incorporated or unincorporated), as a proprietor of a business name, or a company. If any were unincorporated associations, investigation of the residence of all members would be required to demonstrate that the unincorporated association comprised "persons residing" in the Dorrigo post code area.

It was put that the evidence showed that the first Defendant may have made a grant to organisations that were either not registered, or that did not exist as a registered business entity, at the time distributions were made. Further, if any recipient was a “Beneficiary”, the accounts of the Trust should show how the income or capital of the Trust was applied to the Beneficiaries under Clause 2 or Clause 4 of the First Schedule, once nominated under the Second Schedule, Item 2 of the Will.

(In relation to unincorporated associations, the Plaintiff pointed to the Associations Incorporation Act 2009 (NSW), s 19 of which refers to the legal capacity and powers of an “association”, which means “an association registered under this Act”: s 4.)

In relation to the dispute whether the appointment of a “Beneficiary” must be in writing, the Plaintiff submitted that the Second Schedule, Item 2, required that to be done by the use of the words “shall … appoint in writing”. He disputed that the first Defendant could rely upon the First Schedule, Clause 6, to appoint a Beneficiary or Beneficiaries orally, stating that the Second Schedule, Item 2, specifically required the appointment to be in writing.

Also, it was put that there was a temporal obligation on the first Defendant to distribute income to a Beneficiary or Beneficiaries in default of any decision to favour one, or more, Beneficiaries under Clause 2.1. Accordingly, in order for the Trustee to exercise any power under Clause 2.1, there must have been a sufficient record of the appointed Beneficiary or Beneficiaries to enable that decision to be made.

The Plaintiff also submitted that in order for any incoming Trustee, under Clause 15, to account for the distribution of income or capital to any “Beneficiary” or “Beneficiaries”, the incoming Trustee would need to know the identity of the Beneficiary or Beneficiaries in respect of any given year of income. It would be difficult, if not impossible, to ensure that the Trust was properly administered without a contemporaneous written nomination of a “Beneficiary”.

Accordingly, the Plaintiff submitted, if the contention of the first Defendant that the Plaintiff had no standing to seek relief as he is not a “Beneficiary” within the definition of that term in Schedule 2, Item 2, there being no evidence that he had been appointed to be a “Beneficiary” for the purposes of the Trust instrument, then, for the same reason, there was no other person who, or entity which, had a better right than the Plaintiff to enforce the terms of the Trust. The consequence was that the first Defendant, as the Trustee, effectively, was immune from the scrutiny of the Court in administering the Trust.

In this regard, the Plaintiff pointed to the fundamental aspect of the jurisdiction of a Court of equity to supervise, and, in appropriate circumstances, to intervene in, the administration of a trust: Morice v Bishop of Durham (1804) 9 Ves Jun 399, at 404-405; 32 ER 656 at [658]; Palmer v Ayres (2017) 259 CLR 478; [2017] HCA 5, Gageler J, at [84].

He also submitted that the proper administration of trusts is a matter of public interest, the proper conduct of trustees warranting close public scrutiny: Rinehart v Welker (2011) 93 NSWLR 311; [2011] NSWCA 403, at [52], with the result that the question whether the first Defendant, as Trustee, should provide the information sought, must be answered in the affirmative.

The Plaintiff pointed to the following matters:

The Plaintiff also submitted that whether or not he is a “Beneficiary” appointed by the first Defendant, as a person residing in Dorrigo or the surrounding area as defined by postcode 2453, he was a “potential Beneficiary”, and, as such, was entitled access to trust documents, or to trust information. He placed reliance on, amongst other cases, Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] UKPC 26, as well as AIT Investment Group Pty Ltd v Markham Property Fund (No 2) Pty Ltd [2015] NSWSC 216. He also relied upon Kafataris v Deputy Commissioner of Taxation [2008] 172 FCR 242; [2008] FCA 1454, Lindgren J, at [44], in which it was stated that:

The Plaintiff submitted that the minimum obligations imposed upon the Trustee, by the terms of the Trust, would include the obligation to keep accounts and records, a duty to report to the Beneficiary or Beneficiaries and/or to the Court, and a duty to pay amounts that the Trustee was obliged to pay to any Beneficiary or Beneficiaries appointed. Merely keeping annual financial statements, albeit audited, was not enough.

In relation to the claim to pass accounts, the Plaintiff relied upon s 85 of the Probate and Administration Act 1898 (NSW). It was put that s 85(2) permitted a "person interested" to apply to the Court for accounts and that as a person entitled to be appointed as a Beneficiary, he was “a person interested”.

Finally, the Plaintiff submitted that once a “person, trustees of a Trust, companies or charities residing in or otherwise carrying on business in Dorrigo in New South Wales or surrounding area as defined by post code 2453” was appointed, in writing, to be a Beneficiary, the first Defendant had no power to remove that Beneficiary, other than by variation or alteration of the Trust. He, she or it, would continue to be entitled, in default, to income or capital as well as to income or capital that the Trustee had “set aside” for that Beneficiary: T46.39 – T47.19.

In relation to the UCPR Part 54, the Plaintiff submitted that the rule operates “as an independent source of power to enable the Court to make orders in a range of matters, including applications by beneficiaries and applications by trustees for advice”. Yet, it was accepted that the Plaintiff was not relieved “from demonstrating standing” and that “the same issues concerning standing arise in respect of the plaintiff’s application as in the inherent jurisdiction”.

I shall deal next with the submissions of the second Defendant before turning to the first Defendant’s submissions in response to the submissions.

It was pointed out that the Plaintiff and the first Defendant had conducted the case on the shared premise that the Trust was a private discretionary trust. The second Defendant, who, it was said, “rarely files a pleading in such matters”, had filed the Cross Summons, at the request of the Court, so that the private discretionary trust analysis could be contradicted, and a “third way” could appear on the pleadings.

In oral submissions, counsel for the second Defendant accepted that if the Court came to the conclusion that the Trust was not a charitable trust, then the claim advanced in the Cross-Claim failed: T55.00 – T55.08.

The second Defendant joined with the Plaintiff in raising concerns surrounding the administration of the Trust. Counsel pointed to:

Counsel raised the possibility that the potential objects of the Trust, as expressed in Second Schedule, Item 2, may be subject to “criterion uncertainty” or may fail the “loose class” or “administrative workability” criterion in McPhail v Doulton [1971] AC 424; T75.14 – T75.32.

Counsel then submitted that if the Plaintiff, as a person residing within the Dorrigo 2453 postcode, cannot enforce the Trust, then nobody could, with the result that the Trust would then fail, since one test of the validity of a trust is that it must be of such a nature that it can be administered by a court.

Then it was contended that, rather than permitting the Trust to fail, the Court should construe it as “a charitable trust for the benefit of the people of the Dorrigo postcode 2453 — the locality stated in Schedule 2, Item 2 of the Trust Deed” and by making adjustments to the Trust Deed to achieve this simpler expression of purpose by an administrative, or cy–près, scheme. In this way, the rule regarding certainty of objects would be relaxed as the trust purpose would be a charitable one, and as a charitable trust, it could be enforced by the second Defendant, or by any person authorised to bring “charitable trust proceedings” pursuant to s 6 of the Charitable Trusts Act 1993 (NSW).

By way of example, it was pointed out that the first Defendant may face a number of difficulties, including:

Yet, the second Defendant did not submit that the Trust, if a discretionary non–charitable trust, would fail. Rather, counsel stated that the question posed was whether the better characterisation of the Trust was one for a charitable purpose, being a trust to confer a public benefit on the people of Dorrigo postcode 2453. (If this were done, some of the issues, to which he had referred, would effectively disappear.)

The second Defendant reserved his position on the recommendation of a scheme until he had an opportunity to consider the first Defendant’s position.

The first Defendant began by dealing with the arguments of the second Defendant.

It was submitted that it was not necessary to descend into the issue of whether there was a charitable trust (or general charitable purpose) because when one considered when the Trust first became operative, it would not have been considered to be invalid. In particular, it was submitted that there was no uncertainty as to the Trust’s objects and that uncertainty did not arise merely because in advance of distribution the beneficiaries were not identified: Kinsela v Caldwell (1975) 132 CLR 458, at 461; [1975] HCA 10.

Nor could there be uncertainty about whether a person was, or was not, a member of the class of persons who may be appointed to be a Beneficiary because the definition of “Beneficiary” in the Second Schedule, Item 2, looked to the eligibility of a particular person or entity by reference to objectively applicable criteria. It was put that, in other areas of law, the place of residence, or the place of business, is each a readily understood concept to apply. If the Plaintiff (or any other potential object) had an appropriate residence, or place of business, there was no administrative unworkability in relation to the application of that criterion.

Alternatively, the first Defendant submitted that there was no charitable trust (or general charitable purpose) in the Schedules to the Will of the deceased because the objects of the Trust, gleaned from the terms of the Schedules to the Will and, in particular, the Second Schedule, Item 2, made it clear that, regardless of how beneficial the exercise of powers in appointing, and then exercising the discretion to provide funds to charities in Dorrigo, such objects were not peculiarly within one, or more, of the four categories, described in the Statute of Charitable Uses 1601 (43 Eliz 1 c 4): namely, the relief of poverty; the advancement of education; the advancement of religion; and other purposes beneficial to the community not falling under any of the preceding headings.

Importantly, the first three categories could have no application because the objects are persons, trustees of trusts, companies or charities “residing in or otherwise carrying on business in Dorrigo”, which implies a private or business purpose. There was no necessary requirement of general public utility of the Trust to satisfy the fourth category of “other purposes beneficial to the community”.

Also, notwithstanding the reference to charities, the first Defendant submitted there cannot be a general charitable intention where its promotion is not the direct and necessary object of the Trust, but one side effect only.

Furthermore, the deceased did not make a gift, collectively, to the people of the Dorrigo area. Rather, consistent with its nature as a private discretionary trust, the Trust provisions permitted a gift, or gifts, to be made to one, or more, persons, or entities (including charities), from the Dorrigo area, including to a person who, or entity which, carries on business in that area. Importantly, so it was submitted:

As a general submission, it was put that there was no discernible general charitable purpose. On that basis, the Cross-Summons should be dismissed.

In relation to the Plaintiff’s claims, the first Defendant submitted that persons and entities in the position of the Plaintiff were merely objects of a discretionary power of appointment to the category of “Beneficiary”. When appointed, the person or entity became entitled to be considered by the Trustee as the recipient of income, or capital, or both, in such amount and proportions, and at such times, as she in her complete discretion, decided. Following appointment, each Beneficiary would also be entitled, on default of the first Defendant’s exercise of discretion, in relation to capital or income. However, it was put that Clause 8.3, read with Clause 2, and the reference to “or any part” enabled the Trustee to accumulate income and not distribute it. (Counsel for the second Defendant identified as relevant Clause 10.)

It was submitted by the first Defendant that once a “Beneficiary” had been appointed by the Trustee, he, she, or it, became immediately capable of enforcing the terms of the Trust. Hence, there was no requirement for the Trust to be identified as one of the anomalous purpose trusts which can exist without a beneficiary to enforce it.

Having conceded that “there is no document in existence which records the appointment of any Beneficiary” (T109.35 – T109.36), the first Defendant contended that so long as a person, Trustee of a trust, a company, or a charity, residing in or otherwise carrying on business in Dorrigo in New South Wales or the surrounding area as defined by post code 2453, was appointed, before the vesting date, then that person was capable of enforcing the Trust: T67.32 – T67.35.

Even if the requirement to be appointed, in writing, as a Beneficiary was mandatory, it was not mandatory to have the writing available contemporaneously with the appointment, or the relevant payment or application of income or capital to such Beneficiary, as long as the writing was created before the vesting date: T106.00 – T106.31; T109.38 – T106.39.

The first Defendant submitted, in writing, at [75], that the “proprietary approach [to inspection of trust documents] remains the law in Australia and should be applied in this case”. She also contended that if the so-called “proprietary approach” to the entitlement to access trust documents were to be applied, the Plaintiff, was merely the potential object of a power of appointment as a “Beneficiary” under the Trust, and that status did not assist him to obtain the information sought. There was no evidence of him having been appointed by the first Defendant as a Beneficiary.

Alternatively, if the so-called “discretionary approach” to the entitlement to trust documents were to be applied, the Court, in the circumstances, should deny the relief which the Plaintiff sought because:

The first Defendant submitted that none of the discretionary matters relied upon by the Plaintiff compelled the exercise of the Court’s discretion. Nor was it relevant for the Court to conclude that if the Summons and the Cross-Claim were to be dismissed, the Court had no course available to supervise the Trust: T119 – T120.

In relation to the Plaintiff’s claim for the verifying, filing and passing accounts, the first Defendant submitted that the Plaintiff was not a “person interested”. As such, he was not entitled to the relief sought. Alternatively, it was submitted, that if the Plaintiff was such a person, the Court should not, as a matter of discretion, make such an order, for similar reasons to those set out above, but also because:

I shall next deal with the issues identified by the parties and express the answers to the questions posed.

This question involves some basic questions as to whether a trust of any kind was validly constituted and, if so, on what terms. In determining the answer, it is necessary to construe the terms of the deceased’s Will and the First and Second Schedules to the Will. (None of the parties suggested that there was evidence extrinsic to the Will that should be admitted to assist in interpretation of the language used in the Will.) There was no dispute that the principles for construction of a testamentary trust are those for the construction of a will.

In Towns v Wentworth [1858] 11 Moo PC 526, at 542-543; (1858) 14 ER 794, at 800:

The principles were also conveniently set out by Isaacs J in Fell v Fell (1922) 31 CLR 268, at 273-276; [1922] HCA 55. Relevantly, they included the following:

In Re Hodgson; Nowell v Flannery [1936] 1 Ch 203, at 206, Farwell J described the approach the Court should take in this way:

The principles of construction have been expounded by the Supreme Court of the United Kingdom in Marley v Rawlings [2015] AC 129 in which (per Lord Neuberger) the court unanimously held, at [19] – [23], as follows:

Similar principles apply in relation to the construction of the First and the Second Schedule to the Will. As was stated in Trust Co (Nominees) Ltd v Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2016] VSCA 324, by the Court of Appeal in Victoria, at [35]-[37]:

The search for “intention” in relation to a testamentary trust is also for the intention as revealed in the words used by the deceased. The expressed intention of the deceased is to be found in the answer to the question, “[w]hat is the meaning of what he, or she, has written?”, and not to the question, “[w]hat did the deceased mean to write?”: Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26, Gummow and Hayne JJ, at [53] (also, see Heydon and Crennan JJ, at [102]–[107]).

Thus, ultimately, then, “one’s task is, first, if it be possible, to ascertain, what was the basic scheme which the deceased had conceived for dealing with his estate, and, then, so to construe the will as, if it be possible, to give effect to the scheme so revealed”: Coorey v George (Supreme Court (NSW), Powell J, 27 February 1986, unrep, at 14); Perpetual Trustee Co Ltd v Wright (1987) 9 NSWLR 18, at 33; Fairbairn v Varvaressos (2010) 78 NSWLR 577, at 581-582 [19].

Finally, it is to be remembered that in construing the words of a Will, it is permissible to take into account all the surrounding circumstances known to the testator or testatrix: King v Perpetual Trustee Company Limited (1955) 94 CLR 70, at 78-9; [1955] HCA 70.

None of the parties asserted that a gift of residue to the trustee for the time being of the Trust set up under the First Schedule to the deceased’s Will was not a valid gift. There was a dispute about whether the Schedule was effective to declare a trust, the second Defendant contending that unless a charitable purpose was identified, there was no certainty of beneficiaries, such that the Trust could be administered, with the result that the Trust would fail.

The debate on this issue necessitates remembering that an express trust requires certainty of intention on the part of the settlor to create the trust; certainty of subject matter, so that the trust property is clearly defined; and certainty of object, that is certainty as to who are the beneficiaries of the trust: Kauter v Hilton (1953) 90 CLR 86, at 98; [1953] HCA 95; Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62, at 69 [3], 71 [7]; [2015] HCA 6. These crucial elements are to be established objectively, by reference to the document relied on as creating the trust.

In the present case, the only argument, raised by the second Defendant related to “certainty of object”. There was no complaint that the geographical ambit of “in Dorrigo in New South Wales or the surrounding area as defined by post code 2453” was impossible to ascertain.

The objects of the Trust created in the Will must be determined by looking at the whole of the Will: Re Williams; Williams v Williams [1897] 2 Ch 12, per Lindley LJ, at 18. It must be possible to determine, with certainty, the limits of the class, i.e. whether a particular person or body is or is not within the class.

“Certainty of object” requires that there be a beneficiary to enforce the trust and, in the case of a discretionary trust, that the trustee is able to identify, who, or which, persons exhibit the criteria specified by the testator in the trust instrument. Yet, a trust can be created in favour of beneficiaries not specifically named in the trust instrument and not ascertainable from facts existing at the time of the creation of the trust, if they are ascertainable at some future time, as identified in the trust instrument. A trust can also be created in favour of the members of a class where the class is defined enough so that its membership can be ascertained.

As stated in Kinsela v Caldwell, at 461, by McTiernan, Stephen and Mason JJ:

The trust will fail, of course, if the membership of the class cannot be ascertained within the period of the rule against perpetuities. But if the membership can be ascertained within that period, the trust is valid although the members of the class are not individually named in the instrument but are designated by description of the class. Of course, the trustee or someone else must be given the power to make a selection among the members of the class.

In Re Lauer; Corby v Lyttleton [2017] VSC 728, at [100], McMillan J wrote:

In this case, the Second Schedule, Item 2 of the deceased’s Will identifies members of a definite class to be ascertained, those members being “[S]uch persons, Trustees of Trusts (but excluding any Trusts which would result in a breach of the rule against perpetuities or the rule against accumulations) companies or charities, residing in or otherwise carrying on business in Dorrigo in New South Wales or surrounding area as defined by post code 2453”. In addition, the Will gave the Trustees the power to make the selection – “as the Trustees shall before the vesting date appoint in writing to be beneficiaries”.

In addition, even though, at the date of the establishment of the Trust, a member of the defined class of discretionary objects could only become a “Beneficiary” upon the occurrence of a future event (the appointment in writing), the Trust is still valid: Spotlight Stores Pty Ltd v Federal Commissioner of Taxation (2004) 55 ATR 745; [2004] FCA 650, Merkel J, at 762, [48]. His Honour gave, as an example, a trust for the unborn children of a particular marriage did not fail merely because the beneficiaries are not in existence when the trust is established.

I am satisfied that there is certainty of object as described in the Second Schedule of the deceased’s Will. The deceased designated, with sufficient certainty, the class who, or which, may be included by appointment, but left it to the Trustees to select one, or more, objects, from whom, or from which, they may appoint income, or capital, even though it may not have been possible to list all members of the class of discretionary objects. Clearly, it was possible to say, with certainty, in a particular case, whether a person, Trustees of Trusts (excluding any Trusts which would result in a breach of the rule against perpetuities or the rule against accumulations) companies, or charities, were residing in, or otherwise carrying on business, in Dorrigo in New South Wales, or surrounding area as defined by post code 2453 was, or was not, a member of the class.

(If the trust is a charitable trust, certainty of objects is not required but certainty that all potential objects are charitable is required.)

Once a trust is created, there are significant, and generally irreversible, consequences. For example, the trustee holds the legal title to the trust property for the benefit of the beneficiaries of the trust and becomes subject to exacting duties, usually fiduciary, owed to them in relation to that trust property.

As has recently been reiterated in Jones (Liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40, by Allsop CJ, at [31]:

The Trust created was labelled, in Clause 5 of the deceased’s Will, “a discretionary trust”. That label does not dictate any particular conclusion about the nature of the Trust, the obligations it imposed on the first Defendant as the Trustee, and the entitlement it conferred on “Beneficiaries”. However, the use of that term, by the deceased, may reveal the deceased’s intention as it is considered to be a descriptive term.

The term, “discretionary trust”, however, does not have a constant, fixed, normative meaning: CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53, at [15].

The label “discretionary trust” was described as bearing a meaning “disclosed by a consideration of usage rather than doctrine” and to be used in a way that is “descriptive rather than normative”. It was said to have “no fixed meaning and is used to describe particular features of certain express trusts”: Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4, at [8]; Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11, at [118] (per Gordon J).

Brereton J, in Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301, at [41], described such a trust in this way:

The description was adopted by Pembroke J, in Brady Street Developments Pty Ltd v M E Asset Investments Pty Ltd [2013] NSWSC 1755 at [53]. At [54], his Honour wrote:

Brereton J, in a paper delivered extra-judicially headed, "A Trustee's Lot Is Not a Happy One", published in [2010] NSWJSchol 23, wrote:

Thus, with a discretionary trust there is a class, usually described in wide terms, who, or which, are the objects of a power to appoint either income, or capital, or both, to selected members of the class. The members of the class are objects of a power, rather than beneficiaries in the strict sense.

The first Defendant submitted, and the Plaintiff did not dispute, that the Trust was of a character which may, conveniently, be described as a private discretionary trust, that is to say, “another species of express trust, one where the entitlement of beneficiaries to income, or to corpus, or both, is not immediately ascertainable. Rather, the beneficiaries are selected from a nominated class by the Trustee or some other person and this power may be exercisable once or from time to time”: Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547, at 552; [1989] 89 ATC 5274 (Gummow J); affirmed on appeal in Vegners v Federal Commissioner of Taxation (1991) 21 ATR 1347; (1991) 91 ATC 4213.

The position of an individual discretionary object under a discretionary trust was considered in ASIC v Carey (No 6) (2006) 153 FCR 509; [2006] FCA 814, by French J (as the former Chief Justice then was). His Honour, first, at [21], distinguished between “exhaustive” and “non-exhaustive” discretionary trusts. He stated that the first category includes trust deeds in which the trustee is given a discretion to distribute income among a class of beneficiaries, but requires the trustee to distribute the entire income of the trust at specified intervals. The second category includes trust deeds that confer a discretion on the trustee to distribute any part, or perhaps none, of the income of the trust as he or she thinks fit.

At [26] – [27]; [29] – [30], his Honour wrote:

A discretionary object, prior to any appointment to him, her or it, under a power contained in the trust instrument, has no entitlement to any fixed beneficial interest, or proprietary interest, in the assets held on trust: Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56. He, she or it, does not have a legal, or equitable, interest in any of the trust’s assets unless the provisions of the trust instrument create that result: see, CPT Custodian Pty Ltd v Commissioner of State Revenue. Any given discretionary object has no more than the equal right, with any other discretionary object, to be considered, by the trustee of the relevant trust, as a potential recipient of distributions from the relevant trust.

In this case, any person, “Trustees of Trusts (excluding any Trusts which would result in a breach of the rule against perpetuities or the rule against accumulations) companies, or charities, [that was or] were residing in, or otherwise carrying on business, in Dorrigo in New South Wales, or surrounding area as defined by post code 2453”, had, at least, an expectancy or mere possibility of appointment as a “Beneficiary”, and after that appointment, an expectancy or mere possibility of a distribution. (I shall return to the right of a Beneficiary appointed in writing where the Trustee did not appoint income or capital i.e. as a default Beneficiary, later in these reasons.)

But as a discretionary object, there is a right to enforce the Trustee’s obligation properly to exercise her, his or its, discretionary powers, and to compel proper administration of the trust, including the right to compel the trustee to act in good faith and to give due consideration to the exercise of her discretionary powers: Gartside v Inland Revenue Commissioners [1968] AC 553, at 617–618; Spellson v George (1987) 11 NSWLR 300; Schmidt v Rosewood Trust Ltd; Avanes v Marshall (2007) 68 NSWLR 595; Lea v Mo-Mont Pacific [2016] NSWSC 809, at [20].

French CJ, at [60] and [62], in Kennon v Spry, accepted that it was the trust assets, coupled with the trustee's power to appoint them to her, that founded Mrs Spry’s “equitable right to due consideration that [was to be] be regarded as the relevant property” of the parties to the marriage.

Because the second Defendant submitted that the Trust should be regarded as a charitable trust, it is next necessary to deal with that submission.

In Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531, at 583, Lord Macnaghten wrote:

In order for a trust to be a valid charitable trust, (a) the trust must be “of a public nature, that is, for the benefit of the public” (or a section of it) as distinct from having a “private” purpose: J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis, 8th ed, 2016) at [10–04] and [10–06]; and (b) the carrying out of its objects must be of benefit to the public: Jacobs’ Law of Trusts in Australia at [10-10]. That is to say, a purpose must, in order to be charitable, be directed to the benefit of the community or a section of the community.

In Commissioner of Taxation (Cth) v Bargwanna (2012) 244 CLR 655, at 661; [2012] HCA 11, at [8], the High Court adopted the observations of the Privy Council in Latimer v Commissioner of Inland Revenue [2004] 3 NZLR 157, at 168, [24], as to the identification of the nature of charitable trusts and how a trust instrument is interpreted to ascertain whether the charitable nature exists:

All charitable trusts are trusts for purposes not persons. This is a fundamental difference between charitable trusts and conventional private trusts: Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209, at 222. In the case of a conventional private trust, the persons entitled to benefit either have a fixed interest in the corpus of the trust, or rights as discretionary objects of a discretionary trust.

There is a very real difference between a trust for a charitable institution and a trust for a charitable purpose: see McGarvie Smith Institute v Campbelltown MC (1965) 11 LGRA 321, at 323, referred to in Radmanovich v Nedeljkovic [2001] NSWSC 492 at [110].

The second Defendant referred to the Trust as one for the purposes of the community of Dorrigo, and submitted that it should be classified as a trust for a public purpose within the fourth class of the categories listed by Lord Macnaghten in Commissioners for Special Purposes of Income Tax v Pemsel. As stated above, the fourth class is "trusts for other purposes beneficial to the community", being trusts not for the relief of poverty or the advancement of religion or education.

However, it is to be noted that in Verge v Somerville [1924] AC 496, Lord Wrenbury wrote, at 499, on behalf of the Privy Council:

I have also borne in mind Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315, in which Dixon CJ wrote, at 321:

Furthermore, it is not enough that the trustee of the trust may apply the trust property for purposes charitable, but whether she is bound so to apply it for charitable purposes. If the gift is such that the trustee is not bound to apply it to purposes strictly charitable, it is not a charitable gift.

In this case, the purpose of the Trust can be ascertained by considering the terms of the deceased’s Will, and how the Trust property is required to be held by the Will. Other than including “charities” as one of the discretionary objects in Schedule 2 Item 2, there is very little, if anything, in the deceased’s Will to suggest a charitable purpose.

Even if the first Defendant had, or was to, exercise her discretion by appointing, in writing, a charity, the trust would not, on that basis alone, be a charitable trust, since she was not obliged to do so. As was written by Hall VC in Re Jarman; In re; Leavers v Clayton (1878) 8 Ch D 584, at 587:

Furthermore, the objects of the Trust clearly include a fluctuating body of private individuals (“persons”). Thus, it would be in the power of the first Defendant, as Trustee, to appoint an object, as a “Beneficiary” that is not a charity. Furthermore, she could exercise her discretion completely by not appointing a charity as a “Beneficiary” to which income or capital may be distributed.

As stated, and in my view, importantly, the use of income for the “benefit” of the Beneficiary, which “benefit” includes expending the income for the maintenance, education or advancement in life, or support, of the Beneficiary, which might be other than a charity, and in lieu of paying or expending income in cash, by transferring property of like value, including securities in any company and policies of life and/or casualty assurance to the Beneficiary, is incongruous with a disposition of substantially the whole of the deceased’s estate to charity and leads me to the view that the Trust created by the Will of the deceased was not a charitable trust.

Similarly, the holding of capital for the maintenance, advancement, education, and benefit of a Beneficiary or Beneficiaries suggests extension beyond solely charitable objects and purposes other than charitable ones. Clearly, the deceased contemplated that the Trustee might advance distributions to individuals, amongst others.

This conclusion is also reached by reference to the terms of the Second Schedule, Item 2, which, whilst including “charities” as an object, connects them to “residing in, or otherwise carrying on business, in Dorrigo”, which implies a private, or business, purpose in Dorrigo. (That the institution conducts business, and commercial activities, does not, necessarily, deprive it of its charitable character, so long as those activities are associated with or ancillary to the charitable purpose: College of Law Pty Ltd v Attorney General of NSW [2009] NSWSC 1474, per Brereton J at [4].) There is nothing in the Second Schedule Item 2, which requires the permissible objects of appointment to undertaking operations that are charitable, for example, for the primary benefit of the community, to the exclusion of non-incidental benefit for individuals.

I have considered the principle that “a gift subject to …a trust for the benefit of the inhabitants of a parish or town, or any particular class of such inhabitants” has been construed as being limited in its scope to charitable objects: Goodman v Mayor of Saltash (1882) 7 App Cas 633, at 642. This principle does not apply, it seems to me, in circumstances where there is no gift, but merely, one of the classes of discretionary objects falls within the class within a locality, and where the gift is not to the locality but, includes discretionary objects within the locality.

Section 10 of the Charitable Trusts Act 1993 (NSW) provides that a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust. Even assuming the Charitable Trusts Act applies, I am satisfied that there is sufficient evidence against the presumption of charitable intention and I find that there is no charitable trust.

In all the circumstances, I am of the view that the Trust is a private discretionary trust and not a charitable trust.

It is not necessary to determine this question in light of the conclusion that the Trust is not a charitable trust.

It is not necessary to determine this question in light of the conclusion that the Trust is not a charitable trust.

As there is no dispute that the Plaintiff is a “person…residing in Dorrigo in New South Wales or surrounding area as defined by post code 2453”, he is eligible to be appointed in writing as a Beneficiary within the terms of the Second Schedule Item 2.

This conclusion, however, does not mean any more than that the Plaintiff is a discretionary object, who, before the vesting date, has the right to be considered by the Trustee to be appointed, in writing, by her, as a “Beneficiary” for the purposes of the Trust. In other words, he is an object of a bare power of appointment.

Importantly, the conclusion also does not mean that he is a “Beneficiary” (or a beneficiary in the traditional sense of that word) of the Trust. Having a mere hope, or expectation, that an appointment as a Beneficiary would be made in his favour, does not mean that the Plaintiff has any interest in the Trust. Indeed, it is clear that “the object of a bare power of appointment out of assets has no proprietary interest in those assets, but only has a mere expectancy or hope that one day the power will be exercised in that object's favour”: Jacobs’ Law of Trusts in Australia at 41 [3-14] and 569 [23-15]; and see, Gartside v Inland Revenue Commissioners at 607. In this regard, he may be called “an eligible object” of the Trust.

Only after the appointment in writing by the first Defendant, as a Beneficiary, would the Plaintiff become a discretionary object, with no more than an equal right, with any other discretionary object so appointed, to be considered by the Trustee, as a potential recipient of distributions from the Trust, or be entitled to annual income (or capital on the vesting date) in default of application or payment.

There is no evidence that the Plaintiff has, in fact, been so appointed. It is when he is so appointed, in writing, that the Plaintiff becomes a member of a class (“the Beneficiaries”) and is then the object of a trust power in the Trustee to appoint either, or both, income or capital, and to do so, periodically, between those members who are selected from the designated class on each such occasion, but reserving in the Trustee a discretion as to the quantum of income, or capital, appointed or paid to any particular Beneficiary and a discretion to declare the exercise of the power on any occasion.

Yet, under the terms of the deceased’s Will, the members of the class (“the Beneficiaries”) are also takers in default of the exercise of the power by the Trustee. In this regard, the Beneficiaries will take a share in the corpus or a share in the income of a year if the trustee does not exercise a power to appoint or pay elsewhere.

It seems to have been accepted by all of the parties in this case that no member of the nominated class of objects referred to in the Second Schedule Item 2, before being appointed in writing by the first Defendant, has a beneficial, or proprietary, interest in any of the capital or income of the Trust and could not be regarded as a taker on default. What an object referred to had, was a mere expectancy; an expectation or hope that the first Defendant, as Trustee, may exercise her discretion in his, her, or its favour, appointing him, her or it, in writing, before the vesting date, to be a beneficiary for the purposes of the Will. Then, the discretionary object could be described as a “Beneficiary” and taker in default of appointment of income and capital.

When so appointed as a Beneficiary, Clauses 3 and 4 of the First Schedule set out the manner in which the first Defendant, as Trustee, may apply income or capital. If the first Defendant exercised the discretion prior to the end of a given income year, she could expend the income for the maintenance, education, advancement in life, benefit or support of the Beneficiary, or otherwise expend the income in such manner as she decided, or the first Defendant could determine that the Beneficiary had an immediate vested indefeasible interest in the income, whereupon that Beneficiary would have that immediate vested indefeasible interest in such income.

Similarly, if the first Defendant exercised the discretion as to capital, she could appropriate that part of the capital of the Trust Fund, and hold the same absolutely for the Beneficiary then living, or in existence, at the date of such appropriation, following which the capital so appropriated would cease to be part of the Trust Fund.

In addition, once appointed in writing as a Beneficiary, if there were default by the first Defendant not exercising her discretion as to the payment, or application, of the whole, or any part, of the income of the Trust Fund for the relevant year, then the first Defendant, as Trustee was to hold and stand possessed of the income of the Trust Fund for that year, for the Beneficiary, or Beneficiaries, if living, or in existence, on the last day of that year, and was entitled to pay, or apply, it to the benefit of the Beneficiary, or Beneficiaries, living on the last day of that year.

Similarly, once appointed in writing as a Beneficiary, if there was default by the first Defendant in exercising her discretion as to appropriating any part of the capital at any time, and from time to time, prior to the vesting date, then if living, or in existence, at the vesting date, the Beneficiary was entitled to the capital, or an equal share of the capital (if more than one Beneficiary).

Despite the above, the Plaintiff does have a right to take legal proceedings to prevent the appointment as a Beneficiary, “persons, Trustees of Trusts…companies or charities” who, or which, do not fall within the definition of Beneficiary or Beneficiaries referred to in Clause 1.3 of the First Schedule, and, in this way seek to prevent the disposal of income, or capital, by the Trustee, “to persons, Trustees of Trusts…companies or charities” outside the class of designated objects. That is a chose in action which a court of equity will protect.

The question, then, is whether the right includes, or implies, a right to inspect trust documents. In my view, it does include a right to inspect trust documents so long as what is sought to be produced relates to those matters to which reference has been made above. The right is not an absolute one.

In Spellson v George, Powell J had written, at 315–16:

In Spellson v Janango Pty Ltd (Supreme Court (NSW), Hodgson J, 8 December 1987, unrep at 11-12) in dealing with the right of a potential object of a power of appointment to information:

Hodgson J, by way of example, at 13, considered the right could be exercised “by the plaintiff to find out if there has in the past been an exercise of discretion in his favour in relation to property which he has not received”.

Hammerschlag J, also, in McNeill v Hearing & Balance [2007] NSWSC 942, at [35], thought that there was such a right in the potential object when he wrote:

The Australian position on whether a discretionary object has an entitlement to access documents remains unsettled.

In AIT Investment Group Pty Ltd v Markham Property Fund No 2 Pty Limited, at [66], Bergin CJ in Eq noted that there are “two streams of authority”. The first stream has been called the “proprietary approach”: Deutsch v Trumble [2016] VSC 263, at [46]. The proprietary approach was adopted by Lord Wrenbury in O’Rourke v Darbishire [1920] AC 581, who wrote, at 626-627:

In the subsequent case of Re Londonderry’s Settlement, a decision of the Court of Appeal of England and Wales, Salmon LJ found, at 937, that beneficiaries have a proprietary interest in, and right to see, all trust documents. He went on to write, at 938:

The other stream that has been considered is the “discretionary approach”, which has been adopted by the Privy Council in Schmidt v Rosewood Trust Ltd. The discretionary approach considers that an order to disclose trust documents is one aspect of the Court’s inherent jurisdiction to supervise, and if necessary intervene in, the administration of trusts, however, such an order for access to documents will depend on the Court’s discretion: at [51].

Whether the right of inspection of trust documents arises in some cases because the discretionary object has an equitable proprietary right or interest in trust documents, or whether it rests upon the exercise of a discretion based upon the fiduciary duty of a trustee to keep the discretionary object informed when requested to do so, and to render accounts, was the subject of dispute by the parties, and so it would seem, not entirely clear from the authorities.

The first Defendant contended that the ability to invoke the court's supervision depended on the nature of the interest the applicant enjoyed. A differentiation between a fixed and discretionary beneficiary, on the one hand, and the object of powers of appointment on the other was made. The former enjoyed rights enabling him, her or it, to seek an accounting, whilst the latter did not, unless those rights were specifically conferred by the trust instrument. This view conforms with the “proprietary approach”. As stated, the Plaintiff contended that the Court should follow Schmidt v Rosewood Trust Ltd, in what is described as the “discretionary approach”.

It is necessary to consider the answer to this question from the conclusion that the Plaintiff is no more than an eligible object who, before the vesting date, has the right to be considered by the first Defendant, as Trustee, to be appointed, in writing, by her as a “Beneficiary” for the purposes of the Trust. He does not have any fixed, or contingent, proprietary interest, or even any expectation in relation to the assets of the Trust.

Schmidt v Rosewood Trust Ltd was an appeal from the Staff of Government Division of the High Court of Justice of the Isle of Man. It was in this case that Lord Walker of Gestingthorpe, who delivered the advice of the Board, concluded, at [51]:

Remembering that it is the duty, “[p]erhaps, the most important duty”, of a trustee to adhere to and carry out the terms of the trust: Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15, at [32]–[33] (Gleeson CJ, McHugh, Gummow, Kirby & Hayne JJ), and that a trustee’s function is “to take the trusts as it finds them and to administer them as they stand”: Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367 at [94] (Barrett JA; Beazley P and Gleeson JA agreeing), it is a cardinal principle of trust law that the Court has an inherent jurisdiction to supervise the administration of trusts.

In Schmidt v Rosewood Trust Ltd, Lord Walker wrote at [36]:

However, this “is not to suggest that a court has some freewheeling unfettered discretion to do whatever seems fair when it comes to trusts”: Crociani & Ors v Crociani & Ors (Jersey) [2015] WTLR 975; [2014] UKPC 40, at [36].

In Schmidt v Rosewood Trust Ltd, the applicant’s status, as a beneficiary was questionable. At [54], Lord Walker continued:

At [66] - [67], Lord Walker concluded:

It follows that Lord Walker’s view was that disclosure was not mandatory. Other considerations, including confidentiality (particularly commercial or personal confidentiality), would also play a part in answering the questions that his Lordship posed and, ultimately, the Court may have to balance competing interests.

In the 2003 Withers Lecture, delivered at King’s College in London, Mr Justice Lightman, formerly of the High Court of England and Wales, delivered a speech entitled “The Trustees’ Duty to Provide Information to Beneficiaries” in which he summarised the effect of Schmidt v Rosewood Trust Ltd as follows:

Dawson and Toohey JJ in Breen v Williams (1996) 186 CLR 71, at 89; [1996] HCA 57, stated:

In Dura (Australia) Constructions Pty Ltd v SC Land Richmond Pty Ltd [2007] VSC 272, at [10], it was said that determining the question of the beneficiary’s entitlement by “reference to a proprietary interest of the beneficiary in the trust documents”, was “generally viewed as an oversimplified analysis”.

In Avanes v Marshall (2007) 68 NSWLR 595; [2007] NSWSC 191 at [15], Gzell J followed Schmidt v Rosewood Trust Ltd, subject to one qualification, which was:

In McDonald v Ellis (2007) 72 NSWLR 605; [2007] NSWSC 1068, at [51], Bryson AJ considered that it was better to have a rule, rather than leaving it to judicial discretion, because it “promotes resistance and debate in substitution for a rule which is relatively concrete”. His Honour also considered that the views expressed in Schmidt v Rosewood Trust Ltd were not a binding source of law in New South Wales.

His Honour wrote, at [47] – [49], and [51]:

Bryson AJ disagreed with Avanes v Marshall, although he conceded, at [52]:

In Fay v Moramba Services Pty Ltd [2009] NSWSC 1428, at [99], Brereton J wrote:

In Rauch v Maguire [2010] 2 NZLR 845, at [24] – [30], there was a useful summary of the competing positions (one calling for the exercise of discretion by the Court rather than the adjudication upon a proprietary right). Whilst lengthy, I shall quote the passages:

Hammerschlag J in Silkman v Shakespeare Haney Securities Ltd [2011] NSWSC 148, at [27], proffered reasons why Schmidt v Rosewood Trust Ltd should be followed:

In AIT Investment Group Pty Ltd v Markham Property Fund No 2 Pty Limited, at [66], Bergin CJ in Eq was “not convinced that a single judge of this Division is bound to follow Londonderry’s Settlement”. Her Honour, at [90], then applied the Schmidt v Rosewood Trust Ltd approach.

Subsequent authority, from the Supreme Court of Victoria, has rejected the Schmidt v Rosewood Trust Ltd discretionary approach. In Deutsch v Trumble [2016] VSC 263. Hargrave J, at [66], considered himself “bound to apply the proprietary approach”.

274 Recently, Gageler J cited Schmidt v Rosewood Trust Ltd in Palmer v Ayres (2017) 259 CLR 478; [2017] HCA 5. That case involved whether the power of a court to summon a person for examination under s 596A of the Corporations Act 2001 (Cth) (“the s 596A power”) was invalid as contrary to Ch III of the Constitution.

Although his Honour did not consider the issue of document access in particular detail, at [84], he cited Schmidt v Rosewood Trust Limited as authority for the jurisdiction of the Court “to compel the provision of information by a trustee”. Relevantly, his Honour also noted that "fundamental to the law of trusts is that the court has jurisdiction to supervise, and in appropriate circumstances, to intervene in, the administration of a trust”.

In Erceg v Erceg [2017] 1 NZLR 320; [2017] NZSC 28, the Supreme Court of New Zealand, constituted by Elias CJ, William Young, Glazebrook, Arnold and OʼRegan JJ, authoritatively re-examined the issue, and after a consideration of various authorities in New Zealand, and overseas, concluded, at [18], that “the Court’s jurisdiction on an application for the exercise of the supervisory jurisdiction is not limited to the grounds of review of a discretionary decision by the trustees”. Rather, “the Court must exercise its jurisdiction as a court of equity, exercising its own judgement as to whether disclosure ought to be made at all and, if so, to what extent and on what conditions”. In exercising the discretion, there was no presumptive response either in favour of, or against, it and “the starting point … being the obligation of a trustee to administer the trust in accordance with the trust deed and the duty to account to beneficiaries”.

Yet, the Court also stated at [68]:

Then, it is necessary to consider what the inherent supervisory jurisdiction entails.

In Randall v Lubrano (Supreme Court (NSW), Holland J, 31 October 1975, unrep), which concerned the right of a potential beneficiary to information about the trust under which the trustee had discretions “in the widest of terms and in the case of a number of important clauses the discretion expressed as equivalent to that of an absolute owner of the trust property”. In circumstances where all potential beneficiaries consented to the information being provided, his Honour considered, and rejected, an argument that the extraordinarily wide discretions of the trustee excused him from accounting. His Honour wrote, at 1:

At 2, his Honour considered an argument that the plaintiffs had no relevant interest in the trust entitling them to an account because they were merely potential objects of a power, but rejected it, writing:

At 3, his Honour considered the argument that the extraordinarily wide discretion of the trustee excused him from accounting, but rejected the argument, concluding:

I also am of the view that the jurisdictional basis to decide whether the Plaintiff is entitled to access the documents sought is not whether the Plaintiff has a proprietary interest in the Trust. One commences with the obligation of the Trustee to administer the Trust in accordance with the terms of the Will. The right to seek disclosure of trust documents “is one aspect of the Court’s inherent jurisdiction to supervise, and if necessary to intervene in, the administration of the Trust”. The power to order inspection is discretionary in the sense that it involves assessment and judgment. The Court exercises its jurisdiction as a court of equity, exercising its own judgement as to whether disclosure ought to be made at all and, if so, to what extent and on what conditions.

In the present case, the first Defendant should not be entitled to carry on the administration of the Trust in secret, in the sense of without any supervision and without accountability. The presentation of her case was pregnant with the suggestion that she should be allowed to do so. Her failure to disclose, in any affidavit, in the proceedings, matters of significance, which could not be confidential, concerning the Trust, and to not read such an affidavit, thereby exposing herself to cross-examination, is also a relevant consideration. There are circumstances where distributions have been made, but how, and when, each of the recipients was “appointed” as a “Beneficiary” is not disclosed.

In my view, conducting the Trust in this way should not be allowed to continue. Submitting, somewhat disingenuously, bearing in mind the way the case has proceeded, that the only questions for determination are whether the Plaintiff has the standing to bring the application that is brought, not whether the Trust is going to stand or fail on a question of the presence or absence of a beneficiary to enforce it, is not an answer to the issues to be determined.

I do not consider that the Court must be satisfied the Plaintiff has a proprietary interest in the Trust assets. It is accordingly, unnecessary to answer this question.

In Rouse v IOOF Australia Trustees Limited (1999) 73 SASR 484; [1999] SASC 181, at [100] – [101], the Court of Appeal wrote about the discretionary considerations:

Mahoney JA, in Hartigan Nominees v Rydge, at 436, wrote that it was important in resolving that case to have regard to "the essential nature of ... discretionary trust[s] [which] ... is not a mere commercial document in which the public may have an interest [but] ... is a private transaction, a disposition by the settlor of his own property, ordinarily voluntarily, in the manner which he is entitled to choose [and] [s]pecial cases apart, it is proper that his wishes and his privacy be respected." Sheller JA, at 442, expressed similar concerns.

Whether or not the discretion of the Court should be exercised is said to involve a “balancing of competing interests”: Avanes v Marshall, at [14]. It is the Court’s role to determine what extent information should be disclosed through this “balancing process”: at [15], [26].

In AIT Investment Group Pty Ltd v Markham Property Fund No 2 Pty Limited, at [85], Bergin CJ in Eq formulated the following principles:

The line of authority suggests that the Court, in exercising its discretion, has an obligation to balance the interests of the applicant and the Trustee.

In Erceg v Erceg, at [56], the Court identified the factors that may be considered in the balancing exercise, stating:

The Supreme Court, in that case, was sceptical of applications which are not based on a particular concern about the administration of the Trust, but which instead seek to try to find a basis for challenging the actions of a trustee which the applicant considers not in his, or her, favour.

In Lewis v Tamplin [2018] EWHC 777 (Ch), Matthews J, when considering whether a beneficiary was entitled to document disclosure on the basis of the Court’s inherent jurisdiction to supervise the activities of trustees, wrote at [43]:

Having considered the authorities, I am of the view, the general trend of the more recent authorities suggests that the question of disclosure of documents being treated as an issue of enforcement of the trust, thereby ensuring the is trustee’s accountability, albeit limited by the type of concerns raised in Erceg v Erceg. The Court appears to be determining the issue based on the trustee’s obligation and the power of enforcement.

In the present case, there is no suggestion that the Plaintiff wishes to challenge the actions of the first Defendant that are not in his favour. He has made it clear that he is concerned about the administration of the Trust and that he wants the information “for precisely the right reasons, namely, to hold the trustees to account, and thus to vindicate their own beneficial interests, by way of an action for breach of trust if need be”. The documents that are sought seem to corroborate that he has such concerns.

I am satisfied that factors that warrant the disclosure of documents outweigh any competing concerns as raised by the first Defendant, and, accordingly, the Court’s discretion should be exercised in favour of the Plaintiff.

In answering this question, I cannot do better than refer to what was written by J C Campbell, whilst a judge of the Court of Appeal of the Supreme Court of New South Wales and a Visiting Fellow of Wolfson College, Cambridge, in an article headed “Access by trust beneficiaries to trustees’ documents information and reasons”, in (2009) 3 J Eq 97, at 108 – 110:

His Honour went on to write, at 145:

Yet, the Plaintiff, as a discretionary object, is not entitled to see everything. For example, he has not sought, nor would he be entitled to see, documents private to the first Defendant which may evidence the reasons why she has made her decisions.

As requested, I shall allow the parties to consider the documents that should be provided, failing agreement in respect of which I shall specify the documents.

I am prepared to hear the parties on the conditions, if any, that should be imposed on the Plaintiff’s access to or use of the documents. If the documents are limited to those sought in the Amended Summons, it is difficult to see why conditions should be imposed, but, as sought by the first Defendant, I shall allow the parties to discuss this aspect and try to reach agreement.

I shall stand the matter over to a date convenient to the Court and to the parties following the delivery of these reasons.

Had I found that the Trust was a charitable trust, at general law, the second Defendant, the Attorney-General of New South Wales, is “the proper and ... the only competent party to protect the charitable trusts and to seek to enforce them and to look after the interests of the public in those trusts": Ku‑ring‑gai Municipal Council v The Attorney‑General (1954) 55 SR (NSW) 65, at 69‑70.

Since I have not made that finding, nothing else need be said about it.

The question, then, is answered, in part, by what was written by the High Court in CPT Custodian Pty Ltd v Commissioner of State Revenue at [17], approving the statement in Schmidt v Rosewood Trust Ltd, that:

In the circumstances, any of the discretionary objects could seek the intervention of the Court, assuming that there was a proper basis for that application.

In my view, for the reasons expressed earlier, the class of objects identified in the Will, can be identified as such persons, Trustees of Trusts (but excluding any Trusts which would result in a breach of the rule against perpetuities or the rule against accumulations) companies or charities, residing in or otherwise carrying on business in Dorrigo in New South Wales or surrounding areas as defined by the postcode 2453 as the Trustees shall before the vesting date appoint in writing to be beneficiaries for the purposes of the Will.

However, as also stated earlier, none of the class becomes a “Beneficiary” until the first Defendant appoints in writing any member of the class to be a “Beneficiary” for the purposes of the Will.

In Chaine-Nickson v Bank of Ireland [1976] IR 393, the trustees of a discretionary trust refused to render accounts of the trust property to the plaintiff who was a potential beneficiary. The trustees were ordered by the High Court to render such accounts but no question was ever raised that they might be removed as such trustees by reason of their unwarranted refusal to render accounts.

In Hancock v Rinehart [2015] NSWSC 646, it was said, at [338] – [340]:

Until Schmidt v Rosewood Trust Ltd, the accepted view had been that the ability to invoke the court's supervision depended on the nature of the interest the applicant enjoyed. A differentiation between a fixed and discretionary beneficiary, on the one hand, and the object of powers of appointment on the other, was made. The former enjoyed rights enabling him, her or it, to seek an accounting, whilst the latter did not, unless those rights were specifically conferred by the trust instrument.

However, as stated previously, at [51], the following passage appeared in Schmidt v Rosewood Trust Ltd:

It is to be noted that some accounts have already been provided to the Plaintiff. In addition, the first Defendant stated, in relation to the question of UCPR rule 54, that “the Trustee indicated that if the Court finds that the Plaintiff has such standing, she will provide an accounting and other information to which a beneficiary is ordinarily entitled”.

I shall leave it to the parties, at least initially, to work out whether the documents to be provided will include the accounts of the Trust.

UCPR rule 54 is instructive in providing an answer to the question. The rule allows for proceedings to be brought for “any relief which could be granted in administration proceedings”: UCPR r 54.3(1). The term “administration proceedings” is defined to mean “proceedings for the administration of an estate, or for the execution of a trust, under the direction of the Supreme Court”: UCPR rule 54.1.

Relevantly, the rule also provides that proceedings may be brought for “the determination of any question which could be determined in administration proceedings”: rule 54.3(2). (The rule then provides a list of questions that the Court may determine, although, this list is not exhaustive.)

Also relevant, UCPR r 54.3(3) provides:

UCPR rule 54.3(4)(c) includes proceedings that could be brought for “directing any act to be done in the execution of a trust that the Supreme Court could order to be done if the trust were being executed under the direction of the Court”.

This sub-rule does not expressly limit who may bring the application for an order directing the executor, administrator or trustee. One can also see that the language of the rule, referring as it does to “any relief” and “any question”, is extremely broad.

In Re Estate Schwartz, Deceased; Application of Gellert; Gellert v Bentwood and Schwartz [2015] NSWSC 1484, at [12], Lindsay J described UCPR rule 54 as a “procedural expedient” that is “designed to provide [a] summary, cost-effective alternative to an application for general administration of a trust by the Court”.

In Stamoulos v Constantinidis; Constantinidis v Constantinidis [2017] NSWSC 1808, at [50] – [52], Parker J in discussing the rule, stated:

In Viljoen v Hayes [2017] NSWSC 801, at [16], Parker J described the ambit of UCPR rule 54, which description is also instructive:

The Plaintiff has sought to rely on UCPR rule 54.3 as an independent source of power, either in the event that the Court found that the provision of the Trust documents required him to have a proprietary interest, or, alternatively, in the event that the Court had the power to grant access to the Trust documents through its inherent jurisdiction, but did not exercise its discretion in granting these documents to him. Whilst accepting that he must have standing, it was submitted that he had the necessary standing to enable him to rely on the rule.

I consider the power conferred by UCPR rule 54.3 is wide enough to be capable of compelling the provision of documents sought by the first Plaintiff in the Amended Summons.

As will be remembered, the Plaintiff has sought a schedule of Trust assets showing the nature, documentation, status and value of all assets of the trust estate, as well as certain profit and loss balance sheets for the Trust, and such other accounting records as are necessary to understand the financial position of the Trust and its asset. Such documents would, at the very least, fall within the scope of requiring the Trustee to “verify accounts” (UCPR rule 54.3(3)(b)), but also could fall within the Court’s power to order a Trustee “to do … any act” (UCPR rule 54.3(3)(d).

The Plaintiff also sought each nomination, or written record of nomination, as a person or entity as a Beneficiary of the trust as the same is defined in the Trust, which falls within the scope of “relief which could be granted in administration proceedings”: UCPR rule 54.3(1).

In respect to the additional order sought by the Plaintiff to verify, file and pass accounts relating to the estate, I am also satisfied that this order is within the scope of UCPR r 54.3(3).

The relevant question is whether an order made pursuant to the rule would be confined to the proper administration of the trust or estate in question. Put another way, the question is whether the proceedings brought by the Plaintiff concerned the proper administration of the Trust. If answered in the affirmative, the Plaintiff has met the question of standing required for relief in respect of UCPR rule 54.3.

In my opinion, the Plaintiff has established a proper basis for the relief he has sought from the Court. Interpreting the rule broadly and flexibly, I am satisfied that a person such as the Plaintiff, who is a “person” who could be appointed as a “Beneficiary”, has a sufficient interest in ensuring the proper administration of the Trust to provide the necessary standing to seek relief and an order requiring the first Defendant (the trustee) to provide documents.

I also consider, as a matter of practicality, the documents sought are not in nature onerous to produce. (Such documents, being necessary for the proper administration of the Trust, should already be in existence). Finally, the production of the specified documents does not unduly interfere with the rights of third parties.

In summary then, the following answers are given to the questions posed as issues:

The Court stands the matter over to a date to be appointed to make final orders and to determine any outstanding issues, including the issue of how the costs of the proceedings should be borne.