Application of Glenwillow Investments Pty Ltd

This matter has come before me as duty judge on an urgent basis. It involves an application by a trustee for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) as to whether it is justified in the management and administration of the trust estate pursuant to a trust deed which has been executed in a mistaken way.

The plaintiff, Glenwillow Investments Pty Ltd, is the trustee of the Leven Trust and has acted as such since it was incorporated on 17 February 2012.

The application is made by summons filed 1 December 2023. At the hearing before me, Glenwillow only moved on the part of the summons seeking judicial advice pursuant to s 63 of the Trustee Act.

The necessity for urgent judicial advice has arisen because Glenwillow has sought to obtain finance to fund construction works for a strata commercial property development in Dubbo to be undertaken by a company (Dubbo Co Pty Ltd, all of the shares of which are held by the Trust) which must be obtained within the next few days to ensure that construction commences in sufficient time for the development to be completed by a sunset date of 30 September 2024 under existing contracts for sale.

In the course of arranging that finance, the financier has identified inaccuracies recorded on the execution page of the Trust Deed dated 17 February 2012 for the Trust, being:

Since 12 February 2012, Glenwillow has managed and administered the Trust pursuant to the Trust Deed.

The judicial advice which is sought is whether Glenwillow is justified in managing and administering the Trust pursuant to the Trust Deed in light of the problems with the execution of it.

The two issues which must be determined to enable me to give judicial advice are:

At the hearing, Glenwillow relied on the following evidence:

At the hearing, Mr D Barlin appeared as counsel for Glenwillow instructed by Turnbull Hill Lawyers.

Section 63(1) of the Trustee Act is in the following terms:

There is a single jurisdictional bar to obtaining judicial advice pursuant to s 63 of the Trustee Act - the applicant must point to the existence of a question respecting the management or administration of trust property or a question respecting the interpretation of the trust instrument: Macedonian Orthodox Community Church St Petka Incorporated v His Eminance Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, Gummow ACJ, Kirby, Hayne and Heydon JJ at [58].

Section 63 of the Trustee Act operates to provide a private advice to a trustee because it gives personal protection to this trustee by operation of s 63(2): Macedonian at [64]. Section 63(2) of the Trustee Act provides:

An application for judicial advice under s 63 of the Trustee Act is primarily for the purpose of enabling the trustee to be advised as to the nature or extent of their powers and duties of management or administration of the trust property rather than resolving disputed questions of construction, particularly where the respective rights of beneficiaries and creditors are concerned: Re BTA Institutional Services Australia Ltd [2009] NSWSC 1294, Brereton J at [6].

The expression “management or administration of property” in s 63(1) of the Trustee Act refers to both the manner in which trust property is managed, administered, handled, directed or controlled, and the actual carrying out of those functions: Application of Gnitekram Marketing Pty Ltd [2010] NSWSC 1328, Hallen AsJ at [13].

I am satisfied that the application before me is comfortably one which raises a question respecting the management or administration of trust property because it concerns whether the Trust is to be managed or administered in accordance with the Trust Deed.

Having satisfied the jurisdictional issue, the next question is whether I should exercise my discretion to give the judicial advice that is sought. The discretion is wide, and there are no express words, and no implications from the express words used in s 63 of the Trustee Act which make some discretionary factors always more significant or controlling than others, and the discretion is confined only by the subject matter, scope and purpose of the legislation: Macedonian at [59]. The best interests of the trust estate are of primary importance: Macedonian at [105], [107] and [125]. The protection of those interests is the principal purpose for the court exercising the power in s 63 of the Trustee Act, and, incidentally, the protection of a trustee acting in those interests: Re Estate of Chow Cho-Poon [2013] NSWSC 844, Lindsay J at [182].

I am satisfied that addressing the issues that I am to determine in this application would be in the best interests of the Trust.

On the face of the execution clause of the Trust Deed, the Settlor referred to in it (Ms Harris) has placed her signature in the space provided for the witness and the Appointor and a beneficiary of the Trust (Mr Leven) has placed his signature in the space provided for the Settlor.

Mr Leven was physically present with Ms Harris when the Trust Deed was signed by them.

The capacity in which a person has signed a document is to be determined by what were the intentions of the parties as objectively demonstrated, not by their subjective intentions or beliefs: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168, Edelman J at [53].

Based on the express terms of the Trust Deed:

To my mind, each of these signatures is obviously mistaken.

On an objective consideration, in the execution clause Ms Harris incorrectly signed her name in the space provided for the witness and her signature on the Trust Deed should be taken to have been written in her capacity as Settlor.

Further, on an objective consideration, in the execution clause, Mr Leven incorrectly signed his name in the space provided for the Settlor and his signature of the Trust Deed should be taken to have been written in his capacity as a witness to the signature of Ms Harris.

As I have determined that Mr Leven signed the Trust Deed in his capacity as a witness, the next question that arises is whether the Trust Deed has been invalidly executed because a witness cannot be a “party to the deed” in accordance with the requirements of s 38(1) of the Conveyancing Act, which is in the following terms (emphasis added):

The issue is whether Mr Leven cannot witness the signature of Ms Harris because he is to be regarded as a “party to the deed”.

This involves a question of statutory construction of s 38 of the Conveyancing Act, a matter which was dealt with in Reliance Financial Services Pty Ltd v Pineiro [2017] NSWSC 1739 by Darke J. In that case, a corporate trustee of a discretionary trust lent money to the borrower defendant, during the course of which a deed was executed. The director of the corporate trustee (Mr Cassiniti) signed the deed as director and also signed the deed to confirm that he had witnessed the borrower having signed the deed in his presence. Mr Cassiniti was also a beneficiary under the terms of the trust. The borrower defendant raised the issue of Mr Cassiniti having executed the deed and being a beneficiary under the trust in circumstances where Mr Cassiniti was not listed as a party to the deed but the corporate trustee for whom he signed was listed as a party.

In Reliance, Darke J undertook the task of determining the meaning of “a party to the deed”, stating at [35]-[36]:

After considering that no assistance was provided in that task by the Second Reading Speech to the Conveyancing (Amendment) Bill (which ultimately became the Conveyancing Amendment Act 1976 (NSW) by which ss 38(1A) and (1B) were added to s 38 of the Conveyancing Act), in Reliance Darke J summarised the arguments made and resolved them at [44]-[46]:

I agree with Darke J’s construction of the expression “a party to the deed” in s 38 of the Conveyancing Act. To extend that expression to encompass those persons who are not independent from or closely associated with the signatories to a deed would not promote certainty. It would also fall foul of the imperative of the courts not to apply an unwarranted gloss to the plain words of an Act: Ritossa v Ritossa [2023] NSWCA 14, Bell CJ (with whom Gleeson and White JJA agreed) at [40].

Accordingly, the parties to the Trust Deed are Ms Harris as Settlor and Glenwillow as Trustee. The fact that Mr Leven signed the execution clause of the Trust Deed as the sole director and secretary of Glenwillow does not make him personally a party to the Trust Deed.

Nor does Mr Leven being a Beneficiary or the Appointor under the Trust Deed make him a party to it.

By being defined as a Beneficiary in cl 1(a) of the Trust Deed, Mr Leven is merely the object of the power to appoint income and capital respectively contained in cll 2 and 3 of the Trust Deed. There are no default or residuary beneficiaries under the terms of the Trust Deed. As a Beneficiary, Mr Leven has a right to be considered and a right to due administration of the Trust, but he has no proprietary interest in the trust property: Gartside v Inland Revenue Commissioners [1968] AC 553 at 617-618.

Beneficiaries are not parties to a trust deed. In Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367, Barrett JA (with whom Beazley P and Gleeson JA agreed) said at [41]:

Mr Leven is also defined as the Appointor in cl 1(a) of the Trust Deed. In that capacity, under cl 15.1 of the Trust Deed he has the power to remove any trustee of the Trust and appoint new or additional trustees of the Trust. This does not make Mr Leven a party to the Trust Deed.

The result is that by Mr Leven signing the Trust Deed as a witness to the signature of Ms Harris, it did not contravene s 38(1) of the Conveyancing Act. The Trust Deed was, therefore, validly executed.

For these reasons, I make the following orders: