Thynne v Jevny Pty Limited (No 3)

1. [1]

   Jim Thynne died on 22 June 2011. He was survived by his wife, Victoria Sheringham, and by their son, Patrick Thynne. He was also survived by another son, Harry Thynne, who was the child of a previous marriage. Just as the parties did in their submissions, I will without disrespect refer to Jim and the other members of the Thynne family by their first names. At the time Jim died, Patrick was 14 years old and Harry was 27.

2. [2]

   Harry has brought these proceedings in order to resolve three broad areas of dispute with Victoria and Jevny Pty Ltd (Jevny), which is the trustee of the Thynne Family Trust (the Trust) and which, since Jim’s death, has been controlled by Victoria.

3. [3]

   The first broad area of dispute concerns the nature, if any, of Harry’s interest in a property on Mona Road, Darling Point (the Mona Road property), which was the family home to Jim, Victoria and Patrick. Clause 6 of Jim’s will made on 25 March 2011 (the Will) provided that the Mona Road property was to go to Victoria on the following terms:

4. [4]

   The reference to an ‘understanding’ was to a memorandum of wishes (the Memorandum of Wishes) signed by Jim and Victoria on the same day as the execution of the Will. Clause 5 of that document was as follows:

5. [5]

   Harry accepts that Victoria is permitted to sell, rent or replace the Mona Road property. However, he contends that Victoria is under no circumstances permitted to grant a mortgage over the Mona Road property. He says that a mortgage granted in 2020 to secure a loan from Westpac (the Mona Road mortgage) was a breach by Victoria of a fiduciary obligation to preserve the Mona Road property for the benefit of himself and Patrick pursuant to the Memorandum of Wishes. He also contends that Victoria is only permitted to use the proceeds of sale or the rental income from the Mona Road property or any replacement property for the matters acknowledged in the final sentence of clause 5 of the Memorandum of Wishes, such as for her maintenance and upkeep. Harry seeks generally-expressed declarations as to the way the Memorandum of Wishes applies to Victoria. He also seeks orders requiring Victoria to discharge the Mona Road mortgage, as well as other relief.

6. [6]

   The second area of dispute concerns clause 3(c) of Jim’s will. That clause provided:

7. [7]

   There is no suggestion that the artworks referred to in this clause (the Artworks) are in any kind of peril or that there is a risk that the executors of Jim’s estate will not ensure that the gift in clause 3(c) is honoured. Nevertheless, Harry seeks declarations and orders that would allow him to audit Victoria’s possession of the Artworks during her lifetime, such as by allowing for inspection on reasonable notice.

8. [8]

   The third broad area of dispute concerns the administration of the Trust, which is a discretionary trust settled for the benefit of Jim and certain members of his family in late 1980. The major asset of the Trust is a farming property known as ‘Elanora’ near Valla Beach on the mid-north coast of NSW. Jevny, the trustee, acquired Elanora from Jim’s parents in 1980. Jim conducted a cattle and macadamia farming business on Elanora for many years. The Trust was settled in contemplation of him doing so. By his will, Jim gave the farming business, as well as his share in Jevny, to Victoria, who continues to carry on the business. For that purpose, Victoria leases Elanora from Jevny, just as Jim had done. Victoria also now lives at Elanora.

9. [9]

   Jevny has had a general but not exclusive practice of distributing the whole of any net income (essentially, rent paid by Victoria, less expenses) for each year. Between 1998 and 2011, the persons to whom it distributed income included Victoria. Between 2015 and 2020, it distributed income to Elanora Farming Pty Ltd (Elanora Farming), a company which provides services to Victoria in the conduct of her farming business on Elanora and which is wholly owned and controlled by her.

10. [10]

    Harry’s main contention concerning the Trust is that neither Victoria nor Elanora Farming was a ‘Beneficiary’ (as that expression is defined) of the Trust in the years in which income distributions were made to them. Much of the dispute concerning this matter revolved around the efficacy of some steps taken by Jim in 1997 shortly after his marriage to Victoria whereby he seems to have attempted to add Victoria as a Beneficiary. The steps which Jim took in 1997 involved the creation of a three-page document that I will refer to as the Amending Document.

11. [11]

    Harry’s other contentions concerning the administration of the Trust concern matters such as Victoria’s delay in providing him with a copy of the trust deed when asked to do so, and her alleged conflict of interest in defending these proceedings.

12. [12]

    Harry seeks a variety of quite dramatic relief in relation to his claims concerning the Trust, including the taking of an account going back to the 1990s ‘for money paid away in breach of trust together with interest’. He also seeks orders removing Jevny as trustee. He does not however propose a new trustee. Instead, he seeks an order that he and Patrick ‘enter bona fide discussions’ to identify a new trustee within 21 days, failing which he seeks the appointment of a receiver for the sale of Elanora ‘and a distribution in equal shares to the capital beneficiaries’ of the Trust.

13. [13]

    Jevny disputes that it has acted in breach of trust. Further, to the extent that it may have done so, it seeks orders under s 85 of the Trustee Act 1925 (NSW). That section allows the Court to relieve a trustee from the consequences of certain breaches of duty where it has acted ‘honestly and reasonably’. Jevny also seeks certain other relief by way of cross-claim, which I will mention in due course.

The facts

1. [14]

   I will state the basic background facts before identifying the issues in dispute in more detail and before dealing with contested evidentiary matters.

2. [15]

   Jim was born James Bernard Thynne in 1944. He was the only child of Bernard and Leonne Thynne, who were cattle farmers on the mid-north coast of NSW.

3. [16]

   Jim became a lawyer and commenced practice with Allen, Allen and Hemsley (Allens) in about 1974. He became a partner in January 1979. He had a long and very successful career as a solicitor, eventually becoming chairman of partners of Allens in 2005. He was a very able and highly eminent member of the profession.

4. [17]

   Jim was married three times. His first marriage to Jane Gilmour in 1969 was childless and ended in divorce in about 1976. His second marriage, in 1982, was to Catherine Sharp. Harry was the child of this marriage, having been born in November 1983. Jim and Catherine were divorced in August 1991.

5. [18]

   Jim’s third marriage was to Victoria. Victoria was born in 1964. She became a lawyer and was offered a summer clerkship with Allens in 1988. During that clerkship, Victoria spent some time in the finance law team, where Jim was a partner. It was here that they first met. At the conclusion of her clerkship she was offered a graduate position and commenced as a junior solicitor in 1989. Victoria left Allens in 1991 to work for the Australian Film Finance Corporation. In 1994, she joined Southern Star Entertainment Pty Limited and trained as an executive producer. She left Southern Star in 1996 to work as an independent producer and agent.

6. [19]

   Victoria’s relationship with Jim began in 1992. They were married at the Mona Road property in September 1996 and their son, Patrick, was born in December that same year.

7. [20]

   Harry and Victoria enjoyed a warm relationship both before and after Jim’s death. For much of the period between Jim’s death and the commencement of this litigation, Harry was living and working in the United States. His correspondence with Victoria over this period reveals a genuinely loving relationship of step-mother and step-son. When he returned to Australia, which he did reasonably regularly, he sometimes visited Victoria at Elanora. On these occasions, he would take Patrick with him.

8. [21]

   After Jim’s death, Victoria continued to support Harry, both financially and in other ways. She included him in family holidays (which she paid for) and in family celebrations. She purchased flights for him on numerous occasions. She provided him with cash when he needed it between 2014 and 2020, in amounts totalling many thousands of dollars.

9. [22]

   In 2012, Harry engaged lawyers to ensure that his interests in relation to Jim’s estate and the Trust were protected. This led to the execution of a Deed of Release on 29 August 2012 in which Harry confirmed that he did not intend to challenge the Will. The circumstances surrounding the execution of this deed do not seem to have adversely impacted the relationship between Victoria and Harry.

10. [23]

    However, their relationship suffered a serious downturn in 2020 and 2021 when they began to correspond about financial matters, including some of the matters that became the subject of this litigation. I will say more about these events below.

11. [24]

    A historical title search shows that Jim acquired the Mona Road property in late 1990. Jim and Victoria lived at the Mona Road property during the whole of their marriage. It is where Victoria continued to live with Patrick following Jim’s death until moving more permanently to Elanora in about 2014.

12. [25]

    Victoria had owned a home in Greens Road, Paddington which she had acquired in 1990. She sold that property in June 2001 for $582,000. Although there was a faint challenge to her evidence about this, I am satisfied that Victoria contributed over $400,000 of the proceeds of sale of her Paddington house towards the costs of a substantial renovation of the Mona Road property which she and Jim commenced in 2001. Victoria’s parents also contributed about $100,000 to the costs of these renovations.

13. [26]

    There was evidence of at least one mortgage of the Mona Road property during Jim’s lifetime. In 2003, Jevny borrowed $813,000 from Westpac for the purpose of refinancing an existing facility. The security for that borrowing included a mortgage over Elanora, a personal guarantee by Jim, and a mortgage over the Mona Road property. This mortgage had been discharged by the time of Jim’s death in 2011.

14. [27]

    Victoria became the registered proprietor of the Mona Road property on 7 September 2012. On that date, she (as applicant) and the three executors of Jim’s estate (being Victoria and two others, mentioned below) executed and filed a transfer application in respect of the property.

15. [28]

    There was extensive evidence concerning Victoria’s conduct of the farming business at Elanora, none of which was disputed. She has devoted herself to the farm since about 2014. She described numerous significant financial commitments she has made to improve the farm, acquire machinery, build infrastructure and expand operations at Elanora during that time. Although she is confident that the farm will continue to be productive in the longer term, she expects that recent capital commitments will likely result in the business running at a loss over the next several years.

16. [29]

    Several matters concerning the history and settlement of the Trust, the terms of the Trust and the way it has been administered were not in dispute.

17. [30]

    By the late 1970s, Jim had a high personal income from the practice of law, most of which was taxed at the top marginal rate of 60%. His parents owned Elanora, a rural property of about 700 acres near Valla on the mid-north coast of NSW on which they conducted a Bradford cattle stud in partnership with one another. By the late 1970s, the property was valuable but the partnership had accumulated revenue losses. Bernard and Leonne also faced the prospect that their estate would be diminished by death duties if they were to die leaving Elanora to Jim, their only child.

18. [31]

    Happily for Jim, the late 1970s was a time when problems such as these were easily managed.

19. [32]

    The Trust was settled in the context of a proposal by Jim to acquire Elanora from his parents and for him to begin to carry on business as a farmer at the same time as his practice of law. The plan was that he would first establish a discretionary family trust to acquire the land using vendor finance. He would then personally acquire the business assets and commence to carry on the farming business on the land, which he would lease from the trustee. He might also employ his parents in the business.

20. [33]

    The proposal had obvious tax advantages to Jim, chiefly in the form of allowable deductions for rent and for revenue losses from his newfound primary production business. These would be applied against his assessable income from the practice of law. The income of the trust would be defrayed by interest expenses and possibly wages paid to Bernard and Leonne who could apply the income against their existing losses. It being 1979, there would be no capital gains tax on the transfer of Elanora. If the trustee could acquire the land without paying full ad valorem stamp duty, there would be an advantage in it doing so in order to avoid death duty that would otherwise have been payable on Jim’s parents’ estate.

21. [34]

    A memorandum dated 21 December 1979 from one of Jim’s colleagues at Allens, Gordon Fisher, was in evidence. It explained the plan I have just described and the associated tax and duty benefits in a way that leaves nothing to the imagination. Before describing the proposal in full, Mr Fisher said:

22. [35]

    Although it took some time to come to fruition, the basic plan laid out in Mr Fisher’s advice was executed by Jim and his parents in 1980 and 1981. However, the loss of the original trust deed makes any description of precisely what occurred somewhat uncertain.

23. [36]

    There is no dispute that a deed of settlement establishing the Trust was executed in December 1980 and that Jevny, which had been incorporated as a shelf company on 13 June 1979, became the trustee. However, the original deed of settlement was lost at some point prior to 1990. There have been various attempts to locate it over the years, none of which have been successful.

24. [37]

    On 27 June 1996, Jim made a declaration under the Oaths Act 1900 (NSW) concerning the settlement of the Trust and the loss of the original deed. As to the settlement of the Trust, he said:

25. [38]

    He then described his unsuccessful attempts to locate the original deed. Paragraphs 5 and 6 continued:

26. [39]

    Annexure A was in evidence and was sometimes referred to by the parties as the ‘Recording Deed’. It is a deed of settlement of a discretionary trust to be known as the Thynne Family Trust. The settlor is Christine Holland and Jevny is named as trustee. Although there is no dispute about this issue, I approach the question of whether the Recording Deed accurately records the terms of the Trust on the basis of the balance of probabilities: Vanta Pty Ltd v Mantovani (2023) 72 VR 19; [2023] VSCA 53 at [83]. I am satisfied that it does so, at least as at the date of Jim’s statutory declaration.

27. [40]

    With one important qualification, the parties agree that the Recording Deed accurately records the terms of the original deed of settlement of the Trust. The important qualification concerns the question of whether there was ever an Appointor. The significance of this issue is that neither Victoria nor Elanora Farming was a Beneficiary as defined in the Recording Deed and they could only be made so by the exercise of powers that required the consent of ‘the Appointor’. Harry’s basic argument is that the Recording Deed did not identify an Appointor; that there was therefore no Appointor; and that Victoria and Elanora Farming therefore cannot validly have been made Beneficiaries; and that even if there was an Appointor, the steps taken by Jim to alter the Trust in 1997 by way of the Amending Document were ineffective. The result, in his submission, is that distributions to Victoria and Elanora Farming over the years have all been in breach of trust.

28. [41]

    So far as the absence of an Appointor is concerned, it is important to note the following matters. Clause 1 of the Recording Deed was headed ‘Definitions and Interpretation’. It defined ‘Appointor’ to mean:

29. [42]

    However, the Thirteenth Schedule was blank.

30. [43]

    Clause 12 made elaborate provision for the replacement of the Appointor and for the appointment of new Appointors, but only in such a way as to create a line of succession from the original Appointor named in the Thirteenth Schedule. So, for example, if the original Appointor was a natural person, he or she could appoint any person or corporation to be an additional or substitute Appointor, either by deed inter vivos or by will. If he or she died without exercising the power to appoint an additional or substitute Appointor, his or her legal personal representative would become Appointor, ensuring that the line did not die out. The clause made similar provisions for the survival of the line through corporate Appointors. But there was no provision allowing the trustee or anyone else to appoint an Appointor if none had been identified originally.

31. [44]

    So far as the 1997 Amending Document is concerned, the position is more controversial. I will describe that document and deal with the evidence about Jim’s attempt to amend the Trust to add Victoria as a Beneficiary later in these reasons.

32. [45]

    Other aspects of the Recording Deed are uncontroversial. The Trust is entirely discretionary both as to capital and income. Unless brought forward by the trustee with the approval of the Appointor, the Vesting Date is the earlier of a date 80 years from execution and a date worked out under a royal lives clause.

33. [46]

    The trustee has extremely wide powers, including the power to lease its real property on such terms as it thinks fit, the power to allow any real property to be occupied by any Beneficiary rent-free, and the power to give its property as security for the debts of any person whatsoever, regardless of whether or not they are a trustee or Beneficiary and, at the trustee’s discretion, to do so with or without securing an indemnity from such person. In the light of Mr Fisher’s letter outlining the role of the Trust, it is unsurprising that the trustee’s powers are such as to enable it to deploy its main asset, being Elanora, for the benefit of Jim or Victoria in the conduct of the farming business and to do so on any terms it considers appropriate.

34. [47]

    The means by which Jevny came to acquire Elanora were contrived. Jevny lent Bernard and Leonne $15,000, who granted a mortgage over Elanora to secure repayment. Jevny then required Bernard and Leonne to deliver a signed transfer to secure the obligations under the mortgage, which they duly did on 2 December 1980. This transfer was supposedly not dutiable because it was made pursuant to obligations under the existing mortgage and so was not made absolutely. Bernard and Leonne subsequently executed a Deed of Release of Equity of Redemption, whereby they agreed that in return for a further payment of $802,000, they would release their equity of redemption, thus relinquishing to the mortgagee their entire interest in the property. Of these dealings, only the mortgage was executed in NSW. The rest of the dealings were executed in Hong Kong by Mr Fisher pursuant to powers of attorney.

35. [48]

    The upshot of all this was that Jevny became the owner of Elanora for total consideration of $817,000. The only duty paid was $5 on the mortgage on the basis that it only secured repayment of $15,000.

36. [49]

    From early 1981 Jim started to carry on the farming business. In the course of that business, he generally paid rent to Jevny. For at least some of the period and probably most of it, a written lease was in place.

37. [50]

    The evidence included trust accounts and tax returns for most years. The following table shows the distributions of net income made by Jevny from 30 June 1991 to 30 June 2021.

38. [51]

    I was informed that there was no net income to distribute in the years ending 30 June 1991, 2012 and 2013. In the 2014 year, Jevny had net income of $41,510.51 but there was no distribution. As such, it was liable to pay tax on the whole of that amount pursuant to s 99 of the Income Tax Assessment Act 1936 (Cth).

39. [52]

    Jevny does not have a bank account and I was informed that Jevny has never made payment of any amount distributed. Instead, distributed income is recorded as a debt to the relevant Beneficiary in the Trust’s loan accounts.

40. [53]

    By clause 2 of the Will, Jim appointed three executors and trustees, being Victoria, his friend Martin Braden and solicitor Andrew Aitken. Clause 3 contained gifts to his sons, Harry and Patrick. It read as follows:

41. [54]

    He gave personal items to Victoria by clause 4. Clause 5 provided as follows:

42. [55]

    I have already set out clause 6 at paragraph [4] above. Clause 7 contained a gift of residue to the trustees under the Will to hold on trust for such of Harry and Patrick as should survive to 25 years and, should they both do so, in equal shares.

43. [56]

    The Memorandum of Wishes was addressed ‘TO: My executors, Trustees, children and the Trustees of the Thynne Family Trust and of any Trusts created under my Will’. It stated ‘My wishes are:’ and then enumerated six specific wishes. Paragraph 7 stated, ‘The terms of this letter are agreed and acknowledged by Victoria Sheringham by her signing below’. The document was signed by Victoria in the presence of two witnesses on 25 March 2011. It was also signed by Jim.

44. [57]

    I have already set out clause 5 of the Memorandum of Wishes at paragraph [5] above. Clauses 2 and 6 dealt with matters that are not presently relevant. The balance of the document, being clauses 1, 3 and 4, were as follows:

45. [58]

    Victoria made a will on the same day. Relevantly, it provides:

46. [59]

    The residue of Victoria’s estate is to be left to Patrick.

The pleadings and the course of this litigation

1. [60]

   By July 2022, Harry’s concerns were threefold. First, he wanted to see any relevant trust deed and other documents relating to the administration of the Trust. In the leadup to this litigation, Harry’s solicitor had asked Victoria’s solicitor for these documents on numerous occasions but, exasperatingly, did not receive any sensible response. I will deal with the evidence about this correspondence below.

2. [61]

   Harry’s second concern related to the existence of the Mona Road mortgage. At this point, he was aware of the existence of the mortgage but knew nothing about the circumstances in which it had been granted or what the borrowed funds had been used for.

3. [62]

   His third concern related to the Artworks.

4. [63]

   These three concerns prompted Harry to commence these proceedings, which he did by way of summons on 27 July 2022. The orders sought in the summons were essentially for the production of documents, for a declaration as to the terms on which the Mona Road property was held, for the production of documents relating to the Mona Road mortgage, and for details about the Artworks.

5. [64]

   As can be seen, the dispute has ballooned since the summons was filed, primarily because documents produced by the defendants have prompted Harry to take additional points of which he could not have been aware of previously.

6. [65]

   A further amended statement of claim was filed on 19 March 2024. That document seeks relief under various headings. Under the heading ‘Thynne Family Trust’, Harry seeks:

   1. (1)

      A declaration that the terms of the Trust are set out in the Recording Deed and that Jevny has at all times been the trustee.

   2. (2)

      A declaration that Jevny made ‘payments in breach of trust’ to Victoria and Elanora Farming and that it breached several other of its duties as trustee in relation to the administration of the Trust.

   3. (3)

      Orders for the taking of accounts and consequential orders.

   4. (4)

      Orders for Patrick and Harry to confer to identify a new trustee and then for orders pursuant to s 70 of the Trustee Act removing Jevny and appointing the new trustee.

   5. (5)

      Failing agreement on a new trustee, Harry seeks the appointment of a receiver for the sale of the Trust’s assets and the distribution of the proceeds to him and Patrick in equal shares.

7. [66]

   Under the heading ‘[XX] Mona Road Darling Point’, Harry seeks:

   1. (1)

      A declaration that Victoria holds the Mona Road property subject to fiduciary obligations in favour of Harry and Patrick.

   2. (2)

      A declaration that, under the terms of the Memorandum of Wishes, Victoria will leave the Mona Road property or any proceeds of the sale thereof to Harry and Patrick; that Victoria is entitled to live at or rent out said property; and that Victoria is entitled to an account of expenditure for her maintenance.

   3. (3)

      A declaration that Victoria breached the said fiduciary obligations by granting a mortgage over the Mona Road property and using the proceeds of the loan on her farming business and on the purchase of another property.

   4. (4)

      A range of consequential orders concerning the mortgage and related matters, including orders for ‘equitable compensation in the nature of an account of profits’ and an order preventing Victoria from amending or revoking her will other than with Harry’s written consent.

8. [67]

   Under the heading ‘Art Works in Possession of second defendant’, Harry seeks:

   1. (1)

      A declaration that Victoria holds the Artworks under licence from him and Patrick.

   2. (2)

      A declaration that the implied obligations of said licence are that Victoria must do all things reasonably necessary to maintain in good condition and protect the Artworks for the possession of their owners.

   3. (3)

      A variety of orders giving Harry a broad power to audit Victoria’s possession of the Artworks.

9. [68]

   The defendants join issue with the claims in the further amended statement of claim. Additionally, they plead the existence of an estoppel by convention whereby Jevny is bound to recognise both Victoria and Elanora Farming as Beneficiaries and whereby Harry, as a third party, is also bound ‘as a third party beneficiary’.

10. [69]

    By their cross-claim, Jevny and Victoria seek a range of relief concerning the Trust. This includes:

    1. (1)

       A declaration that the terms of the Trust are as recorded in the Recording Deed as modified by the Amending Document.

    2. (2)

       A declaration that either Jevny or Jim was the Appointor.

    3. (3)

       A declaration that Victoria and Elanora Farming are Beneficiaries of the Trust.

    4. (4)

       Orders pursuant to s 85 of the Trustee Act relieving Jevny from any liability in respect of any breach of duty established by Harry.

11. [70]

    Harry caused a caveat to be lodged on the title of the Mona Road property on 27 October 2022. The interest claimed was an ‘estate in remainder’ that was said to arise by virtue of a ‘beneficial interest in trust’. A lapsing notice was served on 15 November 2022. Harry brought an application for the caveat to be extended which was heard by Hammerschlag CJ in Eq on 13 and 14 December 2022. On 22 December 2022, his Honour found that the Memorandum of Wishes did not give rise to a caveatable interest in the Mona Road property and ordered Harry to withdraw the caveat: Thynne v Jevny Pty Ltd [2022] NSWSC 1774 (‘Caveat judgment’).

12. [71]

    An appeal to the Court of Appeal was heard on 4 July 2023. The appeal was dismissed on 9 August 2023: Thynne v Sheringham (2023) 111 NSWLR 617; [2023] NSWCA 181 (‘Caveat appeal’).

Issues for determination

1. [72]

   The specific issues for determination are as follows.

   1. (1)

      In relation to the Mona Road mortgage, it will first be necessary to identify the nature of the relationship between the parties concerning the property and the nature and extent of Victoria’s duty to abide by the Memorandum of Wishes. It will then be necessary to determine whether the grant of the Mona Road mortgage and the use by Victoria of the funds secured by that mortgage amount to a breach of any such duty.

   2. (2)

      In relation to the Artworks, it will be necessary to determine the basis on which Victoria has possession of those items. It will also be necessary to determine whether the facts disclose a basis to make the orders sought by Harry in relation to the Artworks.

   3. (3)

      In relation to the Trust, there are several matters that must be resolved. The first group of issues concerns Harry’s contention that distributions of trust income to Victoria and Elanora Farming were in breach of trust. Specifically:

   4. (4)

      If it is found that Jevny did breach the terms of the Trust by making distributions to Victoria or Elanora Farming, the Court must determine whether it should relieve Jevny of liability for those breaches pursuant to s 85 of the Trustee Act.

   5. (5)

      As to the other breaches of trust referred to in the pleading, it will be necessary to determine whether Jevny has failed to avoid a conflict of interest and whether its failure to supply documents recording the terms of the Trust amounts to a breach of trust.

   6. (6)

      Finally, it will be necessary to determine whether, in the light of my conclusions as to the various breaches for which Harry contends, it is appropriate for the Court to remove Jevny as trustee of the Trust and, if so, on what terms.

2. [73]

   I will deal with these issues in turn.

The mortgage over the Mona Road property

1. [74]

   The mortgage about which Harry complains was registered in favour of Westpac in 2020. It was first granted to secure a business overdraft facility up to $500,000 taken out by Victoria to assist with cashflow for the farming business. That facility was approved in May 2020. The mortgage was executed on 25 May 2020.

2. [75]

   Later that year, Victoria sought and obtained a further loan approval from Westpac, this time for a Rocket Investment Loan in the amount of $461,900. The purpose of this loan was acquire a house on Azalea Street, Wauchope (the Wauchope property). The Wauchope property had been in Victoria’s family since being built by her late grandfather, Leslie Perks, in 1978. Victoria gave evidence, which I accept, of a very longstanding connection to the house and to the area in which it is located. Her father, who had inherited the house from Leslie, had promised Victoria that she would eventually inherit it, however in 2020 he found himself in the position of needing to sell it. Victoria purchased the Wauchope property in December 2020 for the sum of $400,000. She used the balance of the Westpac loan to pay stamp duty and other costs, to do some basic renovations to the property, and to meet some maintenance costs of the Mona Road property.

3. [76]

   The Westpac offer was conditional on the following security being available.

   1. (1)

      First, a mortgage over the Wauchope property.

   2. (2)

      Second, ‘an existing mortgage over’ the Mona Road property.

4. [77]

   Victoria accepted Westpac’s offer in December 2020. Settlement of the purchase of the Wauchope property occurred early the following year. The loan was drawn down on 19 February 2021.

5. [78]

   Because it has some relevance to other areas of dispute, it is appropriate to note the way in which this mortgage was described in Victoria’s evidence. As already mentioned, the existence of the Mona Road mortgage was the subject of evidence and submissions in the context of the caveat dispute determined by Hammerschlag CJ in Eq and by the Court of Appeal. In the context of that dispute, Victoria swore an affidavit on 5 December 2022 in which she described the Mona Road mortgage as being ‘security for an overdraft facility that I utilise for maintenance of the farm I operate’. She stated that she used the Mona Road property as security for this facility because she was unable to finance using Elanora as security.

6. [79]

   It likely is not relevant, but it is not obvious why Victoria would have been unable to use Elanora as security. There would have been no difficulty under the Recording Deed about Jevny offering Elanora as security for such a loan or, indeed, a loan for any other purpose including to purchase the Wauchope property: see paragraph [47] above.

7. [80]

   Be that as it may, Harry’s point is that Victoria did not in this affidavit also mention the other facility that came to be secured by the Mona Road property, being the loan to acquire the Wauchope property. It was only in a later affidavit that she did so. I will comment on this issue below.

8. [81]

   Harry’s case is that the Memorandum of Wishes imposes a fiduciary obligation on Victoria which prevents her from dealing with the Mona Road property other than as permitted by that memorandum. He contends that the scope of the fiduciary duty is coextensive with the scope of the agreement in clause 5 of the Memorandum of Wishes. In his contention, clause 5 permits only certain specified dealings with the property, being sale or rental, and that the proceeds of any such sale or rental may be used only for the limited purposes identified in the final sentence of clause 5, namely (a) the maintenance and upkeep of Victoria; (b) the maintenance and education of Patrick; (c) the maintenance of the Mona Road property; and (d) the maintenance of the Farm, as defined in the Memorandum of Wishes. As to (d), the plaintiff contends that where the Memorandum of Wishes refers to the Farm it is a reference to the realty, Elanora, and not to the farming business.

9. [82]

   On Harry’s argument, Victoria is not permitted to use Mona Road as security for any purpose whatsoever. Even if he is wrong about this contention, Harry argues that Victoria is not permitted to use any loan secured by a mortgage over the property other than for the limited purposes permitted in the final sentence of clause 5.

10. [83]

    Thus, he contends that Victoria breached her fiduciary obligation by doing the following things:

    1. (1)

       Granting the Mona Road mortgage to Westpac.

    2. (2)

       Using the proceeds of the loan secured by the Mona Road mortgage for the purpose of her farming business, as opposed to the property owned by the Trustee.

    3. (3)

       Using the proceeds of the loan secured by the Mona Road mortgage for the purchase of the Wauchope property.

11. [84]

    The mechanism of leaving property to a survivor on the understanding that the survivor will in turn leave the property to another is well known. In Birmingham v Renfrew (1937) 57 CLR 666; [1937] HCA 52, Dixon J said at 689:

12. [85]

    Consistently with what was said in Birmingham v Renfrew, the Court of Appeal in the Caveat appeal rejected Harry’s contention that he had a caveatable interest in the property: [12]. Instead, he was found to have a mere equity. His claim was said to be, at best, ‘a claim to have an equitable interest’, being one which might, in future, ‘crystallize’ if and to the extent he is able to establish a claim for relief.

13. [86]

    To the extent the Court of Appeal commented on the nature and scope of the mere equity enjoyed by Harry, their Honours did so entirely consistently (if I may respectfully say so) with what had been said by Dixon J at 690 of Birmingham v Renfrew, which was to this effect:

14. [87]

    Thus, Ward P and Kirk JA referred at [9] of the Caveat appeal to the survivor’s ‘rights of full enjoyment’ displacing any ‘fiduciary duties of self-abnegation’. Their Honours in this respect approved what had been said by Mr Reynolds in ‘What are the Duties of Constructive Trustees’ (2018) 41 UNSW Law Journal 1297 at 1326. In the same passage, the learned author said:

15. [88]

    It is impossible in these circumstances to accept the plaintiff’s primary submission, which is that by reason of the Memorandum of Wishes Victoria ‘is recognised…in equity as having a responsibility to act in the interest of the boys to the exclusion of her own interests’, at least without an important qualification. Such a statement may be true of fiduciaries generally: Naaman v Jaken Properties Australia Pty Ltd [2025] HCA 1; (2025) 99 ALJR 295 at [31]. However, in the case of a person who has inherited property on the faith of mutual wills, he or she is, as Dixon J explained, ordinarily entitled to enjoy the property as an absolute owner notwithstanding the existence of the constructive trust to which he referred. He or she may even, as the majority in the Caveat appeal said at paragraph [9], entirely use up the property for their own benefit without transgressing his or her obligations in equity. It is therefore inappropriate to approach the issues in dispute on the basis that Victoria holds the Mona Road property as a fiduciary with a general duty to prefer Harry and Patrick’s interests over her own.

16. [89]

    On the facts of this case, Victoria’s obligations are better expressed as being to make a mutual will (which she has done) and thereafter not to engage in conduct ‘calculated to defeat the intention of the compact’. Critically, the compact concerns what will be left to Harry and Patrick when she dies. It is not a compact that prevents her from dealing with the property as an absolute owner during her lifetime. In other words, provided she ensures that on her death, Harry and Patrick inherit the property which Jim intended them to inherit, she will not have failed to comply with her obligations.

17. [90]

    Harry’s primary submission is that the Memorandum of Wishes altogether prevents Victoria from granting a mortgage over the Mona Road property. He submits that the document, properly construed, allows her to either sell or rent the property but not to grant a security interest in it.

18. [91]

    I am unable to accept this submission. The starting point is that the gift in clause 6 of the Will is of the whole of Jim’s interest in the Mona Road property and is expressed in absolute terms, albeit subject to the understanding in the Memorandum of Wishes. Clause 5 of the Memorandum of Wishes recognises a gift to Victoria in equally absolute terms. Further, in recognising that Victoria might sell the property, a prospect mentioned in both documents, Jim must have intended that Victoria should have the rights of an absolute owner.

19. [92]

    Once it is accepted that Jim intended Victoria to have the rights of an absolute owner with power to sell, it is very difficult to see a basis to conclude that she could not make a ‘lesser disposition’ of an interest in the property (as Hammerschlag CJ in Eq put it in Caveat judgment at [42]) provided she can do so without materially prejudicing her ability to comply with her principal obligation under the Memorandum of Wishes, which is to leave the Mona Road property or the proceeds of its sale to Harry and Patrick in her own will. In fact, the grant of a mortgage may be entirely consistent with this obligation. Depending on the circumstances, the grant of a mortgage may well be a means of ensuring that the compact is kept.

20. [93]

    Counsel for Harry submitted that Jim would have had good reason to allow Victoria to sell or rent the property but not to allow her to mortgage it. He hypothesised that Jim would have considered the grant of a mortgage to secure a borrowing as an imprudent means of raising funds for maintenance. The reason, so it was submitted, was that if Victoria got to the stage where she needed funds for maintenance, she would likely be unable to service a mortgage and would therefore be putting herself at risk of losing the property, which is what Jim did not want to happen.

21. [94]

    I do not accept this submission. I do not accept that Jim would have considered it better to sell the Mona Road property than to borrow against it, should the need arise. For example, if Victoria were to find herself in need of funds to put a new roof on the property, why should she not borrow if she can afford to do so? Assuming she can service the loan, a mortgage would seem to be a far preferable way to meet the expenditure – and to ensure the eventual gift to Harry and Patrick – rather than selling the property. I see nothing in the Will or the Memorandum of Wishes to suggest that Jim intended that Victoria should meet such a challenge only by either selling the property (at a necessary discount to reflect the needed repairs) or renting the property in a state of dilapidation.

22. [95]

    Counsel for Harry focused attention on the fact that a mortgage stands apart from other dealings because it may not be discharged by the time of Victoria’s death. He pointed out that if this occurs, then she will have failed to honour the Memorandum of Wishes.

23. [96]

    There are several things to be said about this submission. The first is that it does tend to make the defendants’ point, which is that Victoria’s obligation is primarily to ensure that Harry and Patrick receive the Mona Road property, its replacement or the proceeds as at Victoria’s death and not before. The second is that the executors of Victoria’s estate will in all likelihood be able to discharge the mortgage from the residue of her estate. Victoria used the proceeds to acquire the Wauchope Property, which she still owns and, I infer, she intends to keep. On the evidence, it is impossible to conclude that the existence of the Mona Road mortgage will have any material bearing on the likelihood of Harry and Patrick inheriting the Mona Road property. The third is that even if Victoria does get to the point where she is entirely unable to service the loan on the Wauchope property and if she has lost all of her other assets including that property and so cannot discharge the mortgage, then Harry and Patrick are not in any different position than if the borrowings were unsecured or if they were only ever secured by the Wauchope property. If this were to occur and if Harry and Patrick were unwilling to put the estate in funds to meet Victoria’s liabilities, the executors would be required to sell the Mona Road property to discharge the debts and only the balance would be paid to the sons.

24. [97]

    It is only in the third possible outcome that it could be said that Victoria may have failed to comply with her obligations in the Memorandum of Wishes, but even in that instance it would be difficult to say that the mere fact of the mortgage was the reason why Jim’s sons did not inherit the property he wished them to inherit. It would be necessary to determine how and why Victoria found herself in the position of being unable to leave the property or its proceeds of sale to Harry and Patrick. If she strikes contingencies that leave her in the position of being unable to comply with the Memorandum of Wishes, such as illness or natural disaster, then it could probably not be said that she has failed to comply.

25. [98]

    On the other hand, it is easy to imagine dealings that would cause the rights of Harry and Patrick to ‘crystallize’. If Victoria were to give the property away, or sell it at an undervalue, or mortgage it for some wasteful purpose that materially diminished her ability to repay the borrowing, then Harry and Patrick may well have cause to complain. This, however, is not such a case.

26. [99]

    In my view, the Memorandum of Wishes does not absolutely prevent Victoria from granting a mortgage over the Mona Road property.

27. [100]

    Harry’s next submission was that Victoria breached her obligations under the Memorandum of Wishes by using borrowed funds for a purpose other than a purpose mentioned in the final sentence of clause 5.

28. [101]

    Victoria submitted that the final sentence of clause 5 of the Memorandum of Wishes imposes no obligation or limitation on her, because that sentence is expressed as an acknowledgement by Jim and not as a promise by Victoria. She submitted that the only part of clause 5 that can fairly be construed as giving rise to any obligation on her part is the second sentence, in which she ‘agrees’ to leave the Mona Road property or its proceeds of sale, or the proceeds of sale of any replacement property, to Harry and Patrick after taking account of any advances to them.

29. [102]

    I do not agree with that construction of clause 5. The extent of Victoria’s obligation needs to be understood in the light of the Will and the Memorandum of Wishes as a whole. The gift of the Mona Road property was expressed in the Will to be subject to ‘the understanding’ described in the second sentence of clause 6, which the parties correctly accept to be a paraphrase of clause 5 of the Memorandum of Wishes. It is important to note that clause 6 paraphrases the whole of clause 5, not just the second sentence. That is, the gift in the Will is made on the understanding that Victoria will abide by the whole of clause 5, not just the second sentence.

30. [103]

    However, it does not follow from this that Victoria is only entitled to use the proceeds of sale, rental or mortgage (or any other dealing) for the purposes mentioned in the final sentence. Consistently with what I said at paragraphs [92]-[93] above concerning the grant of the mortgage, Victoria’s obligation is relevantly to ensure that on her death Harry and Patrick’s inheritance is not diminished except in the ways contemplated in the final sentence. Provided she ensures that outcome, which for the reasons at paragraphs [97]-[98] above I do not think is seriously imperilled by the purchase of the Wauchope property, she will not have failed to honour the Memorandum of Wishes.

31. [104]

    I therefore do not accept that Victoria breached her fiduciary obligations by using funds borrowed against the Mona Road property in order to acquire the Wauchope property.

32. [105]

    It follows from what I have already said that I do not accept that the use of borrowed funds for a purpose other than that mentioned in the final sentence of clause 5 of the Memorandum of Wishes necessarily amounts to a breach of duty. However, insofar as Harry’s case depends on the proposition that the reference to the ‘Farm’ in that sentence is to the realty as distinct from the farming business, I do not accept it.

33. [106]

    The expression ‘the Farm’ is defined in clause 3 of the Memorandum of Wishes in a way that, in my view, makes clear that Jim did not intend to draw a distinction between Elanora and the business being conducted on it. He wished for Victoria to have unfettered discretion to make ‘ultimate decisions in respect of all matters pertaining to the Farm including but not limited to the management, maintenance and sale of the Farm’. He also wished for her to ensure that ‘the Farm is operated on a financially stable and profitable basis from year to year and not to sell the farm [sic] unless financially obliged to do so’.

34. [107]

    These references must be understood as including the business being conducted on Elanora. This makes sense in the context of the Memorandum of Wishes as a whole, which otherwise expresses his wishes concerning the Thynne Family Trust – the major asset of which was the Elanora realty – and the Mona Road property, being the other main asset being disposed of under his Will. It would be strange in this context if he saw a need to express his wishes in relation to the realty in two places and in two different ways, namely in clauses 3 and 4, and to express no wish in relation to the farming business. The more natural way to read these clauses is that clause 3 refers to the farm generally, including the business, and that clause 4 concerns control of the trustee, Jevny, which owns the realty.

35. [108]

    I find that Victoria did not breach any fiduciary obligation to Harry and Patrick by borrowing against the Mona Road property in order to maintain her farming business at Elanora.

The Artworks

1. [109]

   The uncontested evidence is that the Artworks are all located at the Mona Road property and at Elanora. They are in the same locations as they were on the last occasions Harry visited those properties. They are all insured. Victoria is fully aware of the terms on which the Artworks were given to Harry and Patrick in Jim’s Will.

2. [110]

   Harry’s claim is that Victoria holds the Artworks under licence from him and Patrick. He claims that it is an implied term of that licence that she has obligations to:

   1. (1)

      Maintain and protect the Artworks.

   2. (2)

      Keep the licensors informed of the whereabouts of the Artworks.

   3. (3)

      Allow the licensors to inspect and photograph the Artworks at those locations.

   4. (4)

      Not to move the Artworks without first informing the licensors.

   5. (5)

      Comply with all reasonable requests from the licensors regarding the maintenance and protection of the Artworks.

3. [111]

   All of these obligations are said to be implied ‘by operation of general law’, although there was no authority cited for any of them.

4. [112]

   Victoria contends that she has a usufructuary right to possess the Artworks during her lifetime: Randall v Russell (1817) 36 ER 73 at 75. She submits that, as such, she has no proprietary interest in the Artworks but that she is not otherwise appropriately seen as a ‘licensee’ of the Artworks from Harry and Patrick. I agree.

5. [113]

   As the holder of a usufructuary right given to her in Jim’s Will, her position is at least in some respects analogous to the holder of a life estate in realty. She accepts that she is obliged to refrain from voluntary waste but says that she is not otherwise obliged to account for permissive waste: Re Jose [1941] SASR 26 at 29. I need not decide whether this latter proposition is correct, because there is no occasion to do so. There is no suggestion that the Artworks are in any kind of peril whatsoever.

6. [114]

   Even if I were to accept that Victoria holds the works as licensee, I would not find that the terms of that licence are as pleaded by Harry. The only term that could sensibly be implied would be an obligation to maintain and protect the Artworks, which Victoria has done and which I am confident she will continue to do. It is only that term that could be said to be necessary to ensure that Jim’s gift of the Artworks to his sons takes effect on Victoria’s death. None of the other implied terms for which Harry contends is necessary for that purpose: cf Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 at 103.

7. [115]

   I therefore decline to make any of the orders sought by Harry in relation to the Artworks.

Additional facts relevant to the breach of trust case

1. [116]

   It is necessary to approach the issues concerning Jevny’s alleged breaches of trust with an appreciation of several additional facts.

2. [117]

   I have already described the way in which the Recording Deed came into being in 1996 at paragraphs [37]-[40] above. As noted, Victoria is not a Beneficiary within the meaning of that document. However, at about the time Jim and Victoria were married, the evidence shows that Jim took steps to amend the terms of the Trust to add Victoria as a Beneficiary. Although the evidence as to what occurred is rather sketchy, the following facts emerge from the limited contemporaneous documents and from Amanda Rogers’ and Victoria’s recollections of things said to them by Jim in later years.

3. [118]

   The starting point is that in March 1997, Jim’s then accountant, Ian Huthnance of Lomax Financial Group wrote to Jim seeking details of Victoria’s 1996 taxable income and stating ‘we may be able to allocate some of the [1996] income of the [Allens] Trust and the Thynne Family Trust to her’.

4. [119]

   There is no record of Jim’s response to this letter. However, what happened next can be gleaned from certain things that occurred in 2010.

5. [120]

   In November 2010, Jim attended several meetings with Greg Lomax and Ms Rogers of Lomax Financial Group. At this point, Ms Rogers was assisting Mr Lomax in relation to Jim’s affairs. At one of these meetings, Ms Rogers asked Jim whether the Recording Deed had ever been amended to add Victoria as a Beneficiary. Jim said that he had caused the deed to be amended to add her as a Beneficiary after Mr Huthnance had recommended that he do so. Jim said to Mr Rogers that he had previously provided Mr Huthnance with a document ‘setting out the basis of the amendment’. Jim subsequently attended Ms Rogers’ office in person to deliver a hard copy of the document to which he had referred. At the time he did so, he said that it was the document ‘setting out the amendment to the Thynne Family Trust’ which he had previously given to Mr Huthnance.

6. [121]

   When Ms Rogers received this document, she showed it to her supervisor, Mr Lomax, who said he had seen the document in the past.

7. [122]

   The document to which Ms Rogers was referring was in evidence. I accept that the document to which she was referring was a copy of the same document provided by Jim to Mr Huthnance in 1997, because a search of the Lomax file revealed a copy of the document together with one of Jim’s ‘with compliments’ slips from Allens that can be dated to the 1997 year.

8. [123]

   The document itself is however rather cryptic. It is not in the form of a deed or agreement and is not signed by Jim or anyone else. It simply consists of three pages, the first of which is a copy of the page of the Recording Deed that includes clause 9, being the power to add Beneficiaries. The second and third pages are an extract of some definitions from another deed, including a definition of the expressions ‘Beneficiary’ and ‘Beneficiaries’ at clause 1.1. That definition includes:

9. [124]

   The third page also includes some other definitions, but they are of expressions not used in the Recording Deed.

10. [125]

    Curiously, the document shows what looks like an Office of State Revenue duty stamp bearing the date 17 July 1997.

11. [126]

    I note that Jevny subsequently made distributions of trust income to Victoria, starting in the year ending 30 June 1998 and continuing until 2011.

12. [127]

    At the time of the purported amendment in 1997, Jim was not recorded as a director of Jevny, having previously resigned from his office in 1990. He was only appointed again as a director in 2003.

13. [128]

    The position as at the time of the purported amendment was as follows:

    1. (1)

       Ruth McColl was the secretary and a director of Jevny. Ms McColl worked at Allens at the relevant time and her role was to oversee the creation, management and compliance of corporate entities created for various clients and partners of Allens.

    2. (2)

       In addition to Ms McColl, the other directors of Jevny were David Allan Wilson Maloney, appointed in 1990, and Ian Brian Hopkins, appointed in 1994.

    3. (3)

       Of the two shares issued in Jevny, Jim held one fully paid share, and the other was held by Ms McColl.

14. [129]

    By their cross-claim, Victoria and Jevny seek a declaration that Jim was a director of Jevny within the meaning of s 9AC of the Corporations Act 2001 (Cth) between 1 November 1990 and 6 March 2003. Harry, by way of his defence to the cross-claim, admits that Victoria and Jevny are entitled to this relief. He did not advance any evidence or make any submissions to the contrary at the final hearing. For the reasons set out at paragraphs [171]-[175] below, I find that Jim was a director within the meaning of s 9AC of the Corporations Act at the time the Amending Document was prepared.

15. [130]

    Jim had a further meeting with Mr Lomax and Ms Rogers on 16 February 2011. On this occasion, Victoria was also in attendance. This was the first time she met Ms Rogers. Victoria was wholly unfamiliar with the issues discussed at this meeting. Her evidence, which I accept, is that she was aware of the existence of the Trust prior to this time but had no involvement in it because she left these matters to Jim. She rightly regarded Jim as an eminent lawyer who was vastly more qualified than her to look after the affairs of the Trust and she trusted him to do so.

16. [131]

    Minutes of this meeting were in evidence, although it is not clear who prepared them. It is apparent that the question of the lack of an Appointor in the Recording Deed was raised at the meeting. The minutes include the following:

17. [132]

    Jim did not make the statutory declaration contemplated in these minutes, although I note that he was already extremely unwell at this point. In fact, he died only about four months later. Nor did Harry and Patrick consent to the addition of Victoria to the class of ‘Income Beneficiaries’ and ‘Capital Beneficiaries’, as those terms are defined in the Recording Deed.

18. [133]

    Ms Rogers was cross-examined about the absence of a statutory declaration by Jim concerning his status as Appointor. She said that she was not concerned about this issue because she spoke to Mr Aitken, a solicitor, about it at the time and he advised that ‘you don’t need an appointor’.

19. [134]

    On 15 December 2014, Ms Rogers sought Victoria’s permission to send an email to a financial planner who had some involvement in looking after Victoria’s affairs. The email included three attachments, one of which was a draft Deed of Settlement containing numerous handwritten amendments. The document identified Ms Holland as settlor and Jevny as trustee. The principal beneficiary was said to be Victoria. The document had the date ‘2.3.2010’ in the footer.

20. [135]

    The existence of this document suggests that someone took steps in early 2010 to recreate a deed settling the Thynne Family Trust, although no one suggested that the document had ever been finalised. Neither Ms Rogers nor Victoria nor anyone else (so far as the evidence discloses) ever seems to have acted on the basis that this document correctly records the terms of the Trust.

21. [136]

    In late 2019, Ms Rogers advised Victoria that the terms of the Trust needed to be reviewed to deal with ‘changes in the law potentially creating a liability in the [Trust] for foreign surcharge land tax and duty if the [Trust] allowed any foreign beneficiaries’. This was a reference to what eventually became s 5D of the Land Tax Act 1956 (NSW). It was prudent advice.

22. [137]

    Ms Rogers had at this point moved to WLM Financial. One of her colleagues, Charley Tarchichi, wrote to Victoria to inform her that in light of the impending change in the law, ‘all discretionary trusts may be deemed to be foreign trusts’ but that surcharge duty ‘will not apply if the trust deed is amended prior to 31 December 2019’. This was a reference to certain concessions that were introduced to Schedule 2 to the Land Tax Management Act 1956 (NSW) at the same time as s 5D of the Land Tax Act.

23. [138]

    Mr Tarchichi recommended that Victoria retain Greg McDonald of O’Neill McDonald Lawyers to review the deed, which she did. It seems that Ms Rogers dealt with Mr McDonald on the trustee’s behalf in relation to this issue. In the course of looking at the issue, Mr McDonald pointed out to Ms Rogers that the Recording Deed did not say who the Appointor was and so he could not ‘finalise the amendment you have requested’. This prompted Ms Rogers to contact Victoria, who undertook very extensive searches for original documentation, to no avail. Victoria recalls Ms Rogers telling her at the time:

24. [139]

    In cross-examination, Victoria said that it was at about this point that she instructed Ms Rogers that she should stop all distributions to herself and Elanora Farming out of the Trust. The records show that the Trust has not distributed any income to Victoria or Elanora Farming subsequent to the year ending 30 June 2020.

25. [140]

    The question of when and why relations between Victoria and Harry soured has some relevance to the issues in dispute, because part of Harry’s case is that Victoria’s failure to provide him with a copy of the Recording Deed, her conduct in responding to his demands and her conduct in defending these proceedings has been such as to justify an order removing Jevny as trustee.

26. [141]

    Harry’s affidavit evidence suggests that animosity crept into their relationship as early as 2018. He particularly describes a conversation at about this time in which he floated the prospect of spending some time living at Elanora, during which Victoria rudely rebuffed him. However, in cross-examination it was quite clear that his affidavit painted a distinctly unreliable picture of these exchanges. In fact, their discussions over this period were perfectly civil.

27. [142]

    Harry and Victoria agree that they have not spoken since 15 February 2020. Victoria’s evidence was that during their conversation on that day, Harry became quite agitated about Elanora and whether it was truly a ‘family business’, suggesting a sense of entitlement to one or both of Elanora or the farming business being conducted by Victoria. I accept that evidence.

28. [143]

    However, the real schism in their relationship did not occur until the second half of 2021. They had cause to correspond about several matters during the 2021 year, including about what was to happen with the proceeds of sale of some land that had been in Jim’s estate and which Victoria seems to have developed. In the course of this correspondence, Harry pressed Victoria for numerous details about Jim’s estate, about his superannuation and about Jevny. In an email dated 14 August 2021 he asked, among many other things, for a copy of the trust deed for the Trust and financial statements for the Trust for the previous 10 years.

29. [144]

    Victoria appears to have made a genuine effort to placate him, but she did not answer all of his questions, nor did she provide him with a copy of the Recording Deed. Harry was not content with her response. On 12 September 2021, he wrote a long reply by email in which he accused her of dishonesty and repeated a long list of grievances and demands. At least from Victoria’s point of view, this correspondence marked an abrupt end to their hitherto cordial attempts to communicate about the issues that became the subject of this litigation.

30. [145]

    It was after this exchange that they started to communicate through lawyers, although Harry had in fact already been speaking with a solicitor, Ivan Haege. Victoria passed Harry’s 12 September 2021 email to Mr Aitken’s firm. On 28 September, one of Mr Aitken’s colleagues wrote to Harry by way of response to his 12 September email. Again, no copy of the trust deed was provided. In relation to the Trust, the email said only that:

31. [146]

    This was of course true, but it was hardly a sufficient response to Harry’s request to see the trust deed. Mr Haege responded on Harry’s behalf on 20 October in some detail. In relation to the Trust, Mr Haege said:

32. [147]

    There followed a discussion between Mr Aitken and Mr Haege on 1 November. Mr Haege wrote the following day confirming their discussion and adding:

33. [148]

    Mr Aitken did not reply until 14 December. Even then, he did not provide the Recording Deed, nor did he forward the financial statements of the Trust. He did not even mention these matters.

34. [149]

    Mr Haege responded the following day. He repeated his request for a copy of the trust deed. There was no response to this request. Nor did Mr Aitken respond to numerous further requests. Mr Haege tried several times over several months to secure Mr Aitken’s response to his requests but received no answer. He wrote a long letter repeating his requests on 20 May 2022. This letter prompted a response, which was sent on 3 June 2022, but it entirely avoided the topic of the Trust.

35. [150]

    Unsurprisingly, Mr Haege’s next step was to commence these proceedings. The summons was filed on 27 July 2022. Among other things, it sought orders for the production of the trust deed and various documents such as trust resolutions and financial statements for the period 2011 to 2021.

36. [151]

    Victoria had already been considering changing solicitors even before the proceedings were commenced. By 10 August 2022, she had instructed Mr McDonald to represent her in the litigation. This was the same Mr McDonald who had been engaged through Ms Rogers in 2019 and 2020 concerning the surcharge land tax issue. Mr McDonald sought some particulars of the summons on 10 August 2022, which Mr Haege promptly supplied. There was then a discussion between the two of them at some point, following which Mr McDonald wrote a long letter addressing the various matters raised in the litigation and more broadly in correspondence. Mr McDonald’s letter was dated 9 September 2022. The letter was lengthy and was an earnest attempt to place as much relevant material before Mr Haege as could be done with what was available. Mr McDonald’s approach to dealing with Mr Haege’s requests for information were in stark contrast to Mr Aitken’s.

37. [152]

    Mr McDonald said:

38. [153]

    The letter contained a comprehensive timeline. It referred to Jim’s 1996 statutory declaration and to the Recording Deed, both of which were attached. It also referred to the Amending Document as follows:

39. [154]

    The letter pointed out that Jim was not a director of Jevny at the time of the creation of the Recording Deed or its ‘apparent amendment’ in 1997, although it does say that the amendment was duly stamped. The letter drew attention to the fact that Victoria was not a Beneficiary within the meaning of the Recording Deed and that no Appointor was named. In response to the more particular requests in Mr Haege’s 20 May letter, Mr McDonald included the following:

40. [155]

    I have described this correspondence in detail because Harry submitted that the 22 September letter, especially the passage just referred to, exposes a deep conflict of interest by Jevny. He submitted that this passage involved a positive assertion by Jevny of full beneficial ownership of Elanora, which placed Jevny in a position of irresolvable conflict as trustee of that property.

41. [156]

    As foreshadowed in the 22 September letter, Jevny filed a notice of motion seeking judicial advice on 30 November 2022. That application was determined by Lindsay J on 20 April 2023. On that occasion, his Honour advised that Jevny would be justified in defending Harry’s claims for relief in so far as, in the statement of claim, they relate to administration of the Trust.

42. [157]

    Lindsay J also advised Jevny that it would be justified in making no distribution to any person without the written consent of all persons who may be objects of the Trust or with leave of the Court until the final determination of the proceedings.

43. [158]

    The defendants subsequently filed and served the cross-claim. I note that the cross-claimants do not contend in the alternative that Jevny is the beneficial owner of Elanora.

Has Jevny breached its duties as trustee?

1. [159]

   Grouped under this heading are my reasons in relation to Harry’s various claims touching on the administration of the Thynne Family Trust. All of these claims are directed towards Harry’s ultimate goal of removing Jevny as trustee and, unless he and Patrick agree on a replacement trustee, securing the appointment of a receiver to sell Elanora and distribute the proceeds to him and Patrick.

2. [160]

   The relevant powers to amend the Trust and to add a Beneficiary are contained in clauses 6 and 9, which are as follows:

3. [161]

   Given that any exercise of these powers is said to require the consent of the Appointor, it is necessary to determine at the outset what the consequences are of there being no Appointor named in the Recording Deed.

4. [162]

   In this respect, I note that where the Recording Deed refers to an appointor, it does so in definitive terms. It refers to ‘the Appointor’ as defined. At no point does it refer, for example, to ‘the Appointor, if any’ or to ‘any Appointor’. Furthermore, the powers given to the Appointor under the Recording Deed are of fundamental importance to the administration of the Trust. As drafted, there is no ability to alter the trusts, to add Beneficiaries, to bring forward the vesting date or to appoint or remove the trustee other than by the exercise of a power given to the Appointor.

5. [163]

   In many cases, the Recording Deed does not grant a power to the Appointor in the body of the document. Rather, such as in relation to the power in clause 7 to appoint and remove the trustee, the power is given to ‘the relevant person or persons as provided in the Tenth Schedule hereto’. That schedule, in turn, has been completed to include a reference to ‘the Appointor’. In many instances, it is clear that the draftsperson has added a reference to ‘the Appointor’ to an otherwise blank schedule. It cannot be said that all references to ‘the Appointor’ are ‘boilerplate’ references. I here also note that in several instances, schedules that have no application have been struck through. That is not however the case in Schedule 13. It is simply blank.

6. [164]

   These matters make it very difficult to accept the defendants’ argument that clauses 6 and 9 may be constructed as though the consent of the Appointor is required only if an Appointor has been named. The role of the Appointor in the deed is drawn too emphatically for me to accept that the settlor intended these references to be contingent on whether an Appointor happened to be named. In my view, the power to amend in clause 6 and the power to add Beneficiaries in clause 9 are only capable of being exercised with the consent of ‘the Appointor’. If it be the case that there is no Appointor, then there is no mechanism to either amend the trusts or to add a Beneficiary.

7. [165]

   However, these same considerations are a powerful reason to conclude that when the Trust was originally settled, the original trust deed did name an Appointor. It would be strange, given the centrality of the Appointor’s role, for there to be no Appointor named.

8. [166]

   It is important to keep in mind that the Recording Deed is evidence of the terms of the Trust, but that is all. It is not the original deed. It is quite possible that the Recording Deed mistakenly failed to name the Appointor. That, in fact, was the view taken by Jim when this issue was raised with him in 2011. The minutes of the February meeting which I set out at paragraph [132] show that Jim believed that he had been the Appointor all along and that the Recording Deed mistakenly failed to name him.

9. [167]

   It is also relevant to recall the care which was taken to establish the Trust in 1980. As Mr Fisher said in his 21 December 1979 memorandum:

10. [168]

    The matters to which I have referred in the preceding paragraphs cause me to conclude that there was an Appointor when the Trust was first settled. It would have been far too significant a loose end to leave untied.

11. [169]

    I further conclude that the Appointor was, in all likelihood, Jim. I reach that conclusion for three reasons. First, he believed he was the Appointor. Secondly, he acted as if he were the Appointor, because it was he who purported to exercise the powers of the Appointor by attempting to amend the Trust in 1997. Thirdly, it is inherently likely that it would have been Jim given the close relationship which the settlor intended the Trust to have with the business which Jim proposed to conduct on the trust property.

12. [170]

    Victoria and Jevny, by way of cross-claim, assert and seek a declaration that Jim was a shadow director at the time that the purported amendment to the Trust was effected. This claim was not disputed by Harry in these proceedings.

13. [171]

    It is clear from the evidence that Jim was a shadow director of Jevny at the relevant time. Ms McColl, who was a director and the secretary of Jevny between 1987 to 2003, says that she was often asked by Jim to execute documents as Jevny’s director or secretary. Jim prepared most of these documents which he provided to Ms McColl. Ms McColl’s role as secretary of Jevny was limited to ensuring its compliance with the Australian Securities Commission and she otherwise relied on Jim’s instructions for all matters concerning Jevny and its role as the trustee of the Trust.

14. [172]

    This is consistent with the evidence of Ms Rogers, who stated that she only ever received instructions in relation to the Trust or Jevny from Jim during his lifetime, and relied on Jim’s expertise as an experienced lawyer himself.

15. [173]

    On various occasions between 1996 to 2001, Jim was also asked to review and sign annual returns for Jevny and income tax returns for the Trust. These requests were made through correspondence between Jim and Huthnance Lomax (as Lomax Financial Group was called at the time) which addressed Jim as ‘The Trustee’ of the Trust or ‘The Secretary’ of Jevny.

16. [174]

    In my view, Jim was at all relevant times either a director or shadow director of Jevny. It will be appropriate to declare that he was a director of Jevny within the meaning of s 9AC of the Corporations Act between 1 November 1990 and 6 March 2003.

17. [175]

    Despite my conclusions that Jim was both the Appointor and a shadow director of Jevny in 1997, I am unable to conclude that he amended the terms of the Trust by the creation of the Amending Document described at paragraphs [124]-[126].

18. [176]

    The starting point is that the powers in clauses 6 and 9 of the Recording Deed are expressly conditioned on the making of a deed. In each case, the power is to be exercised ‘by deed or deeds revocable or irrevocable’.

19. [177]

    The defendants do not submit that the Amending Document was a deed. It plainly was not. However, they submit that a deed such as the Recording Deed may be varied by agreement even if that agreement is not incorporated in a deed: Sara Stockham Pty Ltd v WLD Practice Holdings Pty Ltd [2021] NSWCA 51 at [15]; Elias v Forsyth [2004] QSC 338 at [48]. This is so even where the deed itself purports to stipulate that amendment may only be made by way of deed: Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91 at [35]. As the author of Seddon on Deeds (2nd ed, Federation Press, 2022) says at 215, the law’s ‘emphasis on form in making a deed is in stark contrast to the rules that apply to variation of a deed which can occur in the most casual manner’.

20. [178]

    Be that as it may, the question here is not whether the Recording Deed was amended; it is whether a trust power was validly exercised in such a way as to alter the terms of the Trust. The distinction between the variation of a trust and a variation of the deed by which it was settled was explained by Barrett JA in Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367 at [39]-[48]. As his Honour said, the variation of a deed of trust does not of itself cause a variation of the trust itself. Furthermore, as also explained by Barrett JA, a trust may be amended only by the means identified at [45]-[47] of those reasons.

21. [179]

    While I accept the proposition that a deed may be varied in the casual manner described in Seddon on Deeds and in the authorities to which the defendants referred me, I am unable to accept that a trust power that is conditioned on the making of a deed may be exercised in some other way: see [29-070] of Lewin on Trusts (20th ed, 2020, Sweet & Maxwell).

22. [180]

    Even if I were to accept that proposition, it would not follow that the Amending Document has the effect for which the defendants contend. It does not purport to amend anything. It contains no agreement and expresses no intention at all. It is not signed or executed by anybody. There is nothing in it to indicate that it was intended to vary the Trust by substituting the definition of ‘Beneficiary’ or ‘Beneficiaries’.

23. [181]

    In my view, the three-page Amending Document was not effective to alter the terms of the Trust.

24. [182]

    The defendants next relied on the presumption of regularity. They drew attention to the fact that the Trust was administered by Jim in the years following 1997 as if the Trust had been amended to make Victoria a Beneficiary. This is undoubtedly true. Victoria began to receive Trust distributions in the same financial year in which Jim purported to amend the Trust. It is also true that when Jim executed the Memorandum of Wishes, he did so on the express understanding that Victoria was a Beneficiary of the Trust. In particular, he expressed his wish that, should Elanora need to be sold, the Trust be wound up and the proceeds be ‘distributed as to 50% to my son Harry, per stirpes and the remaining 50% to my wife Victoria and/or my son Patrick as she wishes’.

25. [183]

    These are all matters that point strongly to the existence of a belief by Jim that he had succeeded in altering the Trust, at least in such a way as to add Victoria as a Beneficiary. Circumstances such as these may sometimes found an inference that a trust has been validly varied to add a beneficiary, such as in Application by Gainer Associates Pty Ltd [2024] NSWSC 1437, where Kunc J said:

26. [184]

    The difficulty here, however, is that the document by which the variation was supposedly achieved was in evidence. The regularity or otherwise of what Jim did is not a matter for presumption or inference. Ms Rogers confirmed that the document handed to her by Jim was the Amending Document and that Jim told her that it was an amendment to the Recording Deed. What she said about Mr Lomax recognising the document tends to reinforce this conclusion. I am not left to wonder whether Victoria might have been made a Beneficiary by some other regular means about which I am unaware.

27. [185]

    Finally, the defendants submitted that Jevny and any Appointor are estopped from denying that Victoria and Elanora Farming are Beneficiaries of the Trust. They further submitted that Harry, as a discretionary Beneficiary, is also bound by this estoppel.

28. [186]

    The basis of this further contention is that Harry is, in substance, seeking to assert the rights of the trustee as against Victoria and Elanora Farming and that he is therefore liable as a privy to be bound by any estoppel that binds the trustee: Ramsay v Pigram (1968) 118 CLR 271; [1968] HCA 34 at 279.

29. [187]

    The difficulty with this submission is the same difficulty as identified by Gordon J in Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11 at [195], namely that ‘in relation to both estoppel by deed and estoppel by convention, an estoppel by a trustee in relation to a beneficiary cannot bind other beneficiaries unless the other beneficiaries participate in the conduct giving rise to the estoppel’.

30. [188]

    That being the case, Harry is entitled to the benefit (if it can be called that) of a finding that distributions to Victoria and Elanora Farming were not authorised by the terms of the Trust.

31. [189]

    My above conclusions may be summarised as follows:

    1. (1)

       Jim was the Appointor of the Trust, despite the fact that the Recording Deed did not name an ‘Appointor’.

    2. (2)

       Jim was also a shadow director of Jevny in 1996 and 1997.

    3. (3)

       However, the Amending Document created in 1997 was not effective to vary the Trust to substitute the definition of ‘Beneficiary’ or ‘Beneficiaries’.

    4. (4)

       I am unable to rely on the presumption of regularity to reach any different conclusion.

    5. (5)

       Harry is not estopped from contending that Victoria and Elanora Farming are not Beneficiaries.

32. [190]

    It follows that, in my view, Victoria and Elanora Farming were not Income Beneficiaries within the meaning of the Recording Deed when distributions of trust income were made to them.

33. [191]

    It is next necessary to consider the application of s 85 of the Trustee Act. That section is relevantly as follows:

34. [192]

    Jevny contends that any breach of trust involved in making distributions of trust income to Victoria or Jevny should be relieved pursuant to s 85.

35. [193]

    In my view, any liability which Jevny may have by reason of distributions to Elanora Farming should be relieved pursuant to s 85. So too should the distribution made to Victoria for the year ending 30 June 2011. However, I am unable to reach the same conclusion in relation to any liability which Jevny may have by reason of distributions to Victoria in previous years. My reasons for reaching these conclusions are as follows.

36. [194]

    First, up until his death in June 2011, the evidence strongly suggests that any decision made by Jevny about how to distribute trust income was made by Jim in his capacity as director (or shadow director) of Jevny and as Appointor of the Trust. I note that a resolution for the year ending 30 June 2010 was signed by him. The evidence did not include a resolution for the year ending 30 June 2011, but I note that Jim died prior to that date.

37. [195]

    I am only able to relieve a trustee’s liability where the trustee acted both honestly and reasonably. Although the evidence does not allow me to form a view as to why, exactly, Jim felt that the steps he had taken in 1997 to vary the Trust had been effective, I do not doubt that he believed they had been. I am confident that he had an honest belief that he had successfully varied the Trust to make Victoria an Income Beneficiary within the meaning of the Recording Deed. The other evidence about Jim, his career as a lawyer and the high regard in which he was held by those around him allows me to be confident that he would not have caused distributions to be made to any person who he did not honestly believe to be a Beneficiary of the Trust.

38. [196]

    However, I cannot be confident that Jevny’s actions in distributing income to Victoria were reasonable in all of the circumstances. The evidence does not allow me to form a conclusion as to whether Jim’s undoubted belief that he had caused Victoria to become a Beneficiary was a reasonable one. I therefore am unable to conclude that whatever liability Jevny may have in relation to these distributions should be relieved under s 85.

39. [197]

    The situation is different for distributions made after Jim’s death. From that point, ultimate decision-making responsibility lay with Victoria. Her position was altogether different to that of Jim. Whereas Jim was a highly experienced commercial lawyer who had managed the Trust for decades, Victoria was entirely new to the role. She had trained and worked briefly as a lawyer but had no experience in managing a trust of any kind. Moreover, she found herself taking over the administration of the Trust from Jim, whom she justifiably regarded as someone who was vastly more qualified to administer a family trust than she was. She knew that he considered her to be a Beneficiary of the Trust and had no reason to doubt that he was correct in doing so.

40. [198]

    Victoria also relied – and continues to rely – on Ms Rogers in administering the Trust. She is justified in doing so. Ms Rogers in turn had been handed the Amending Document by Jim and had been told by him personally that the document showed an amendment to the Recording Deed. She also was justified in acting accordingly, both before and after Jim’s death.

41. [199]

    When it became apparent in the 2020 year as a result of Mr McDonald’s advice that the failure of the Recording Deed to name an Appointor may cast doubt on the purported amendment, Victoria prudently decided to make no further distributions to Elanora Farming and herself, until the issue was resolved. She eventually obtained judicial advice that she was justified in making no income distributions pending the final determination of these proceedings.

42. [200]

    If, as both Victoria and Ms Rogers quite reasonably believed, the Amending Document correctly stated who the Beneficiaries of the Trust were, they were entitled to proceed on the basis that Elanora Farming was also a Beneficiary. The fact that the document defined the class of Beneficiaries by reference to the expression ‘Parent’ would not have been a reason for a non-lawyer (or a former lawyer in Victoria’s position) to suppose that the document was unreliable, particularly when both Ms Rogers and Victoria knew that Jim had acted on the basis of it. They may have been uncertain as to whether the expression ‘Parent’ referred to Jim or to his parents, but nothing would have turned on this distinction because, either way, both Victoria and Elanora Farming would be ‘Beneficiaries’.

43. [201]

    None of the events of 2011, 2014 or later years cause me to doubt these conclusions. Although the lack of an Appointor was raised in 2011, Jim said he believed he was the Appointor. In any event, Mr Aitken told Ms Rogers that the lack of an Appointor was not a concern. I do not think that was necessarily the soundest advice at the time, but it is the advice Ms Rogers received.

44. [202]

    I also do not see the existence of the alternative draft trust deed which came to light during 2014 as bearing on the question of whether Jevny acted honestly and reasonably. One can only speculate as to why someone may have thought it appropriate to prepare an alternative draft deed in 2010. The existence of that draft does not cause me to conclude that Jim or anyone else in 2010 doubted that the Recording Deed was accurate or that the Amending Document was effective.

45. [203]

    So far as the correspondence in 2019 and 2020 is concerned, it is true that Mr McDonald pointed out that there was no Appointor named in the Recording Deed and that the Trust could therefore not be amended to deal with the surcharge land tax amendments. But neither Victoria nor Ms Rogers ignored this advice or its ramifications for the effectiveness of the 1997 ‘amendment’. In fact, this advice was the catalyst for Victoria to undertake a comprehensive search for the original deed, which was in my view a reasonable course for her to take. I also note that 2020 was the last year in which Jevny made any distribution to Victoria or Elanora Farming. It was the uncertainty around the effectiveness of the Amending Document that caused Victoria to halt such distributions.

46. [204]

    Next, Harry submitted that Victoria’s conduct following receipt of Harry’s 3 September 2021 letter amounted to a ‘wrongful concealment’ of both the Recording Deed and of the ‘impropriety’ with which she knew (so it was submitted) she had acted in causing Jevny to make distributions to Elanora Farming. He submitted that the Court could not find that Jevny’s conduct in making distributions to Elanora Farming was honest and reasonable in circumstances where it wrongfully concealed that conduct in later years.

47. [205]

    Before dealing with this submission on its merits, I note that the suggestion that Victoria wrongfully concealed her knowledge of the effectiveness of the Amending Document was made for the first time during the hearing. The question raised by the pleading is confined to the question of whether Jevny failed to inform Harry of the terms of the Trust, which is a matter I will deal with shortly. The defendants understandably objected to this issue being raised in this way. Their objection was well founded. If it is to be alleged that a party acted wrongfully as trustee by acting to conceal material which the trustee had a duty to disclose, it is incumbent on the party alleging that conduct to ensure that it is raised on the pleadings or otherwise in such a way as to ensure that the trustee has an opportunity to meet the case.

48. [206]

    In any event, the submission is impossible to accept even if Harry’s case is taken at its highest. By 3 September 2021, Victoria held concerns as to whether she and Elanora Farming had been effectively appointed as Beneficiaries in 1997. But Jevny was under no obligation to divulge those concerns to Harry. He has not pointed me to any authority for the proposition that a trustee with knowledge of the possibility of an earlier breach is under a duty to disclose that knowledge to a discretionary object of the trust.

49. [207]

    Finally, Harry pointed out that Victoria had failed to mention the Mona Road mortgage in her 5 December 2022 affidavit (as to which, see paragraphs [79]-[81] above). This, he submitted, was a circumstance which tended against a finding that Jevny had acted honestly and reasonably in making distributions. It is also relied on as a circumstance which should lead me to conclude that Jevny should be removed as trustee.

50. [208]

    Ms Sheringham was asked about this issue in cross-examination. She said that she considered the Wauchope property to be within the description in her affidavit, in the sense that she had acquired the Wauchope property in connection with the farming business. Although she was challenged on that proposition, I am left with the distinct impression that Victoria believed this to be the case. She also said that she only considered there to have been one mortgage of the Mona Road property, being the mortgage granted to secure her earlier borrowing for farm working capital. This is true in the sense that when she borrowed to acquire the Wauchope property, the bank did not require her to grant a new mortgage over Mona Road; it required that the ‘existing’ mortgage over Mona Road would also serve as security for the later borrowing. I accept that this reflects a rather loose understanding of what occurred. Nevertheless, it is not unreasonable. In these circumstances, I am not prepared to attach significance to the fact that Victoria’s 5 December 2022 affidavit made no mention of the separate borrowing to acquire the Wauchope property.

51. [209]

    In my view, Jevny has acted honestly and reasonably in making distributions since Jim’s death. It is entitled to an order under s 85 relieving it of any personal liability in relation to the making of distributions of trust income to Victoria in the 2011 year and to Elanora Farming in the 2015 to 2020 years of income.

52. [210]

    The next basis on which it is said that Jevny has breached its duty is that it has a conflict of interest in conducting this litigation. Harry submitted that even if Jevny were correct in its contention that Victoria and Elanora Farming were validly made Beneficiaries of the Trust in 1997, it would still be necessary for Jevny to be removed as trustee by reason of this conflict.

53. [211]

    The conduct enlivening a real possibility of conflict of interest is identified in Harry’s closing submissions as follows:

54. [212]

    I will deal with these contentions in turn.

55. [213]

    Harry’s first proposition is that Jevny has already decided not to seek to recover distributions made to Victoria and Elanora Farming. However, I can see no evidence of such a decision having been made. In fact, it is hard to see how it could have been made because the correctness of distributions to those entities is one of the very matters I have been required to determine in these proceedings. Whether or not it seeks to ‘recover’ distributions will be a matter about which the trustee will need to take further legal advice in the light of my conclusions. I do not consider that its failure to do so prior to me rendering my decision can be characterised as conduct enlivening the possibility of a conflict of interest.

56. [214]

    Harry’s second and third propositions relate to the conventional estoppel argument, which I have rejected. Inherent in these submissions is the notion that any argument that favours Victoria is one that the trustee should not be putting because to do so is inconsistent with its duty to avoid conflicts.

57. [215]

    There are two good answers to this. The first is that the Trust contains no bar to Victoria or Elanora Farming becoming Beneficiaries. That being so, the due administration of the Trust may well involve the making of distributions to persons associated with the trustee. It could be said that in defending the making of distributions to Victoria, the trustee was also defending the interests of Victoria. But given the terms of the Trust, that coincidence of interests is unavoidable. It is not a circumstance that renders the trustee unable to defend its actions. Just as there was no unauthorised conflict involved in asserting that Victoria and Elanora Farming became Beneficiaries through the exercise of a Trust power (which was Jevny’s primary case), there was equally no unauthorised conflict involved in asserting that they became Beneficiaries by operation of a conventional estoppel (which was its alternative case). In both cases, Jevny was doing no more than defending its administration of the Trust.

58. [216]

    The second answer is that Jevny did not file a defence raising the conventional estoppel argument until after it had first sought judicial advice as to its defence of the proceedings. The application for judicial advice was filed on 30 November 2022. I note that when the judicial application was filed, Victoria had already filed her defence in which she herself raised the conventional estoppel argument.

59. [217]

    The application for judicial advice was in an unusual form. As may be expected, Jevny sought advice pursuant to s 63 of the Trustee Act that it would be justified in defending the proceedings. However, it also sought advice as to the correctness of its position on substantive issues, including as to whether the Trust exists and, relevantly, whether ‘by reason of conventional estoppel principles or otherwise’ the potential discretionary objects of the Trust include Victoria. Unsurprisingly, Lindsay J was not prepared to give advice on the substantive issues. His Honour’s advice was confined to the defence of the proceedings. But it is clear from the transcript of the hearing before his Honour (which was in evidence before me) that his Honour saw the estoppel question as forming part of Jevny’s defence. His Honour said, for example:

60. [218]

    His Honour also made other references to the estoppel case forming part of the defence. In these circumstances, I have no doubt that in giving advice, his Honour was aware that Jevny’s defence of the proceedings would include the ‘estoppel by convention’ argument.

61. [219]

    I am unable in these circumstances to accept the argument that the running of the estoppel defence involved a breach of a fiduciary duty by Jevny.

62. [220]

    The chronology of events which I summarised at paragraphs [144]-[152] above shows that it took about 13 months from Harry’s first request for him to be provided with the Recording Deed and the Amending Document. During most of this period, Mr Aitken adopted what might not unfairly be called a head-in-the-sand approach to the issue: he simply ignored Mr Haege’s reasonable requests to see the documents.

63. [221]

    In fairness to Victoria, however, there was slightly more to it. For a start, she believed that Harry already had these documents because she thought they had been provided to his solicitor in 2012 in the context of him obtaining advice about whether to challenge his father’s will and about the execution of the Deed of Release. In fact, during the whole time Harry was pressing Victoria to provide the trust deed in 2021 and 2022, it never occurred to him to contact that solicitor to see if he already had the documents.

64. [222]

    It is also important to appreciate that this is a case in which a request to see the trust deed has not been a particularly easy question to answer. Given the way the Trust had been administered since Jim’s death (which, so far as distributions are concerned, I have found to be both honest and reasonable) it was not really possible to supply documents without also providing a fairly extensive explanation. The difficulty was in knowing quite how to frame the explanation. Victoria’s delay in responding can be attributed, at least to some extent, to the need to work out exactly how to explain the position.

65. [223]

    Lastly, Harry’s initial requests to see the trust documents were bundled with a range of other grievances and demands. Victoria’s failure to provide the documents can to some extent be attributed to the fact that she was digging her heels in for a fight with someone who had become obstreperous about a range of issues, some more significant than others.

66. [224]

    In the end, however, there is a limit to what can be said in defence of the strategy of simply not answering Mr Haege’s requests. Although it is impossible to state categorically what is a reasonable time in which to respond to a request by a discretionary object to see a trust deed, it is fairly clear to me that 13 months was too long.

67. [225]

    This conclusion does not however take matters very far. It would be a reason to conclude that Harry was justified in commencing proceedings when he did, at least so far as he was seeking orders for the production of the trust deed. But beyond that, it is difficult to see what flows from the failure to provide the deed and related documents in a timely way. Harry’s interest, after all, is in the due administration of the trust, which was not materially affected by the failure to supply the deed sooner.

68. [226]

    Harry sought to parlay the delay into a broader proposition about Victoria’s failure to administer the Trust and about her doing so for her own benefit. However, I am not at all willing to impute such malign motives to her. After all, once proceedings were commenced, she promptly engaged a new solicitor who took an altogether different and more communicative approach, which Victoria was obviously happy to embrace. I think the vastly more likely explanation for the 13-month delay is that it was her solicitor’s strategy, not her own.

69. [227]

    In the course of the hearing, Harry advanced several claims which were either not included in his pleadings at all, or the basis of which had not been expounded in the pleadings. The defendants understandably objected to the Court dealing with these claims.

70. [228]

    In the defence to the cross-claim and in oral submissions, Harry submitted that the Amending Document was ineffective to make Victoria a Beneficiary because, amongst other reasons, she was an ‘Excluded Person’ as defined by the Recording Deed. The definition of an Excluded Person requires the existence of certain facts including that a person who was not a Beneficiary of the Trust made a ‘disposition of property’ for which he or she did not receive full consideration. The reasons for why Victoria satisfied the definition of an Excluded Person were not elaborated in the pleadings nor were they the subject of evidence in these proceedings.

71. [229]

    There were some generally-expressed allegations of breaches of trust by Jevny that were pleaded by Harry without providing the basis for the alleged default sufficient to allow the defendants to respond to the case pleaded. I have noted above at paragraph [205]. the contention raised during the hearing that Victoria deliberately concealed wrongdoing by herself and Jevny as trustee, as well as my reasons for rejecting that submission.

72. [230]

    Similarly, Harry’s further amended statement of claim seeks a declaration the trustee failed to ‘properly consider all beneficiaries when exercising its discretion’, without pointing to any particular distribution by the Trust that involved such a failure of consideration. On this issue, there is no basis upon which to make the declaration which Harry seeks.

73. [231]

    Victoria was cross-examined on the issue of whether Jevny failed to obtain rent during certain years under its lease with her for her use of Elanora. This was not one of the breaches of trust pleaded by Harry.

74. [232]

    Victoria was also cross-examined on the funds that she received from the Allens pension plan and Jim’s superannuation death benefits, both of which she became entitled to following Jim’s death. The defendants objected to this evidence in so far as it invites inquiry into whether Victoria should have used other sources of funds to acquire the Wauchope property or whether the purchase of the property was necessary for her maintenance and upkeep, as this is beyond the scope of the case pleaded by Harry in relation to the Memorandum of Wishes.

75. [233]

    Finally, there was some cross-examination of Ms Rogers on an unsecured debt supposedly owed to Victoria by the Trust with reference to the Trust’s accounts for the years 2008 to 2010. This was not tied back to any of the pleaded breaches of trust nor any other issue in dispute for that matter.

76. [234]

    I am not prepared to make any findings about any of these matters. They are all matters that were either not pleaded at all or else only raised obliquely, and are matters about which the defendants were not given an appropriate opportunity to respond.

Should Jevny be removed as trustee?

1. [235]

   There is no good reason to remove Jevny as trustee of the Trust. The breaches of trust which have occurred since Jim’s death in 2011 have all been honest and reasonable. This is not a case in which there has been a wrongful misappropriation of trust assets for the benefit of persons who are not beneficiaries in circumstances where either the trustee or the purported beneficiaries had any actual knowledge of the true state of affairs.

2. [236]

   So far as concerns distributions to Victoria during Jim’s lifetime, I have been unable on the evidence to be satisfied that it is appropriate to make an order under s 85. However, the distributions were made between 1998 and 2010 at a time when Victoria had no practical involvement in the administration of the Trust at all. I see no reason to remove Jevny as trustee on the basis of conduct of a director who died 14 years ago.

3. [237]

   The 13-month delay in providing the Recording Deed is also not a reason to remove Jevny as trustee. That delay, although regrettable, was not such as to amount to a failure in the due administration of the trust. Counsel for Harry did not refer me to any authority that would support the removal of Jevny as trustee by reason of the delay in providing the Recording Deed. Furthermore, as I noted above, the delay occurred in circumstances where Victoria believed Harry or his solicitor already had the deed.

4. [238]

   There are also good reasons for Jevny to remain the trustee. As explained at paragraphs [31]-[36], the whole point of the Trust as originally conceived by Jim and his advisers was to own the land on which the business of farming Elanora was conducted. That is the essential function the trustee has performed for the past 45 years. It was Jim’s wish that his farming business would be carried on by Victoria on Elanora after his death. In doing so, she has invested heavily in the farming business, which will inevitably have enhanced the value of Elanora. Any order removing Jevny as trustee would of course, as Harry intends, remove Victoria from having any say whatsoever in the administration of the trust that owns Elanora. I would not be willing to make an order having that effect unless there were clear proof of serious breaches of trust by Jevny (which there is not) or a clear basis to conclude that the Trust may not be duly administered in the future (which there is not).

5. [239]

   The application to remove Jevny as trustee will be dismissed.

6. [240]

   Finally, it is appropriate to consider what other relief may be appropriate given my conclusions. Harry seeks an order for an accounting going back to 1998, which is when a distribution was first made to Victoria.

7. [241]

   It is not appropriate to order an accounting here, notwithstanding my conclusion that distributions to Victoria prior to 2011 were not authorised. All of these distributions are already recorded in loan accounts. There is no need for those accounts to be recreated. It will be a matter for the trustee to determine what action is required in order to remedy the breaches of trust identified in these reasons.

Orders

1. [242]

   Harry’s case has been largely unsuccessful. He has had limited success on certain issues concerning the terms of the Trust, but he is entitled to almost none of the substantive final relief he seeks in relation to that issue and he is entitled to none at all on the other issues. Jevny has had a substantial measure of success on its cross-claim on the s 85 issue.

2. [243]

   The orders of the Court will therefore be as follows:

   1. (1)

      Declare that the terms of the Thynne Family Trust are as contained in the document entitled ‘Discretionary Trust Deed’ annexed to the statutory declaration made by James Bernard Thynne on 27 June 1996 (the Deed).

   2. (2)

      Declare that James Bernard Thynne was the Appointor of the Thynne Family Trust from the date of settlement until his death.

   3. (3)

      Declare that James Bernard Thynne was a director of Jevny Pty Ltd within the meaning of s 9AC of the Corporations Act 2001 (Cth) between 1 November 1990 and 6 March 2003.

   4. (4)

      Declare that neither Victoria Sheringham nor Elanora Farming Pty Ltd is a ‘Beneficiary’ of the Thynne Family Trust within the meaning of the Deed.

   5. (5)

      Declare that Jevny Pty Ltd was not authorised by the terms of the Thynne Family Trust to distribute trust income to Victoria Sheringham or Elanora Farming Pty Ltd.

   6. (6)

      Order pursuant to s 85 of the Trustee Act 1925 (NSW) that Jevny Pty Ltd be relieved of personal liability for any breach of trust involved in making distributions of the income of the Thynne Family Trust to Victoria Sheringham and Elanora Farming Pty Ltd subsequent to 22 June 2011.

   7. (7)

      The proceedings are otherwise dismissed.

   8. (8)

      Direct the parties to file and serve evidence and short submissions on costs by 4:00PM on 11 September 2025.

   9. (9)

      Direct the parties to file and serve any evidence and short submissions in reply on costs by 4:00PM on 18 September 2025.