Perpetual Trustee Company Ltd (No 3)

1. [1]

   The background to this matter is set out in my judgment of 13 September 2016 (Perpetual Trustee Company Ltd [2016] NSWSC 1273) and in the judgment of the Court of Appeal of 6 June 2017 in Australian Youth & Health Foundation v Perpetual Trustee Company Ltd [2017] NSWCA 127.

2. [2]

   These reasons assume familiarity with those judgments.

3. [3]

   I shall use the same abbreviations as in my judgment of 13 September 2016.

4. [4]

   On 6 July 2017, the Court of Appeal ordered that these proceedings be remitted to me for further consideration in the light of that Court’s reasons of 6 June 2017: Australian Youth & Health Foundation v Perpetual Trustee Company Ltd (No 2) [2017] NSWCA 165.

5. [5]

   I heard argument on the remitter on 7 September 2017.

6. [6]

   By an amended summons filed in Court on that day, the Trustee now seeks advice pursuant to s 63 of the Trustee Act 1925 (NSW) that:

7. [7]

   It is common ground that, in view of the decision of the Court of Appeal, I should give advice to the Trustee in accordance with [6(a)].

8. [8]

   Otherwise, the conclusion to which I have come is that I should give the Trustee advice that it would be justified in reaching the conclusion that it is obliged to act as set out at [6(b) and (c)]; but not the advice sought by the Trustee in the alternative, as set out at [6(d) or (e)].

The will as construed by the Court of Appeal

1. [9]

   The relevant parts of cl 7 of Mr Storm’s will are (with “[in the future]” added to reflect the reasons of the Court of Appeal):

Application in the future of the income from the Trust for the relevant charitable purpose

1. [10]

   The will obliges the Trustee to apply 44 per cent of the net income arising from the investments of the Trust to the Foundation unless the Trustee forms one of the opinions referred to in the proviso that appears at cl 7 (d).

2. [11]

   The opinion relevant to the debate before me is that concerning the application by the Foundation in the future of the relevant funds for the charitable purpose (“the Purpose”) set out in the will. The parties referred to this as “the Proviso Opinion”.

3. [12]

   In order to form the Proviso Opinion, the Trustee must form the opinion that the Foundation shall (in the sense of will) not in the future apply the trust funds for the Purpose.

4. [13]

   As Mr Cotman SC, who appeared with Mr Knoll for the Foundation, submitted:

5. [14]

   Mr Coles QC, who appeared with Mr Robertson for the Trustee, informed me that the Trustee has not formed the Proviso Opinion.

6. [15]

   Thus, the Trustee’s written submissions stated:

7. [16]

   The Trustee’s written submissions suggested that the Trustee has “concerns (unanswered by [the Foundation]) as to whether the Trust Funds will be applied as [Mr Storm] intended”.

8. [17]

   The Trustee’s lack of satisfaction arises from the following circumstances.

9. [18]

   On 27 June 2017, shortly after the Court of Appeal delivered its judgment, the Trustee wrote to the Foundation in the following terms:

10. [19]

    On 9 August 2017, the Foundation (by its solicitor) responded as follows:

11. [20]

    Further, as I recorded in my judgment of 13 September 2016 at [43], the accommodation centre at Wallacia ceased operating in 2015 (evidently in June of that year). The centre is now on the market for sale.

The construction question

1. [21]

   There was debate before me as to whether, on the proper construction of cl 7 of Mr Storm’s will, the Trustee was obliged to form the Proviso Opinion within the period referred to in cl 7(f) (within three months of 30 June each year: that is, by 30 September each year).

2. [22]

   Mr Coles submitted that Mr Storm must be assumed to have intended that his will have the effect found by the Court of Appeal.

3. [23]

   Mr Coles also submitted that Mr Storm must be assumed to have:

4. [24]

   Accordingly, Mr Coles submitted when read together, cll 7(d) and (f) should be construed so as to permit the Trustee to defer consideration of whether to form the Proviso Opinion if it considered it did not have sufficient information to do so.

5. [25]

   I considered this question at [105] to [114] of my judgment of 13 September 2016 and expressed the tentative view (in obiter) that cl 7 should not be so construed.

6. [26]

   More importantly, the Court of Appeal has expressed views that are inconsistent with Mr Coles’s propositions.

7. [27]

   Thus, at [35] the Chief Justice said:

8. [28]

   And at [40]:

9. [29]

   Further, Meagher JA said, at [52]:

10. [30]

    Further, as Mr Cotman pointed out, the provision made by Mr Storm in cl 7(e) of the will (that the 10 per cent of net income not allocated to the particular beneficiaries accumulate to capital) suggests that Mr Storm did apply his mind to the circumstances in which income might not be distributed in accordance with the earlier provisions of cl 7; and yet made the unqualified direction in cl 7(f).

11. [31]

    Acceptance of Mr Coles’s submission involves reading into cl 7(f) of the will words of qualification which do not appear in terms.

12. [32]

    In the judgment of 6 June 2017, the Chief Justice set out two of the principles referred to by Isaacs J in Fell v Fell (1922) 31 CLR 268; HCA 55 at 273-276.

13. [33]

    Two further principles set out by Isaacs J (at 274) were that, when construing a will:

14. [34]

    I see nothing in the “four corners” of Mr Storm’s will which is “only consistent with the implication” for which Mr Coles contended. Nor do I see that the will “can hardly stand, if at all” without the implication for which Mr Coles contended.

15. [35]

    I see the language that Mr Storm has used in cl 7 to be clear, and to compel the conclusion that, no matter what information the Trustee has, unless it is able to form the Proviso Opinion by 30 September in each year, it must apply the funds to the Foundation in accordance with cl 7(a) of the will.

16. [36]

    For those reasons I propose to advise the Trustee that it would be justified in concluding that it is obliged to act as set out at [6(b)] and [6(c)] above, and am not prepared to give the Trustee the advice referred to at [6(d)] above.

The 9 August 2017 letter

1. [37]

   Mr Coles submitted that the 9 August 2017 letter was capable of justifying the Trustee coming to the positive conclusion that the Foundation would not in the future apply the trust funds for the Purpose and that, accordingly, the Trustee should be given the advice set out in [6(e)] above.

2. [38]

   Mr Coles submitted that the letter showed that, except in minor respects, the Foundation was not proposing to apply the funds to be paid to it under the will for the Purpose and that the Foundation had no coherent plan to do so in the future.

3. [39]

   I do not agree.

4. [40]

   What the letter reveals is that in addition to maintaining the Hopewood website, publishing and promoting the cook book identified, and employing a staff member to attend to those activities, the Foundation proposed to seek advice as to how to apply the trust funds for the Purpose, and as to how it should operate non-residential (or day) facilities in lieu of the Wallacia premises.

5. [41]

   Mr Coles directed particular criticism to the Foundation’s stated intention to fund other not-for-profit organisations that had programs that promoted the Purpose and to separate, hold and invest monies received from the trust under the Foundation until it had decided how best to apply those funds for the Purpose.

6. [42]

   However, even if the letter can be read to bespeak the Foundation’s intention not immediately to apply the trust funds for the Purpose, I do not think it is a fair conclusion from the letter that the Foundation “shall not in the future” (after receiving advice and giving that advice consideration) apply the funds for the Purpose.

7. [43]

   Accordingly, I decline to give the Trustee the advice set forth at [6(e)] above.