Application of NBT Pty Ltd

HIS HONOUR: The application before the Court is an application by two trustees, respectively NBT Pty Ltd (NBT) and Breakfast Creek Station Pty Ltd (BCS), collectively the trustees of the NBT Trust (Trust).

The trustees, by an amended summons filed on 25 May 2023, seek a raft of orders relating to the management and administration of the Trust as follows:

The first series of orders are in the nature of a form of judicial advice, that the trustees are justified in managing and administering the Trust by reference to certain matters. That is the relief sought in seven questions in Order 1.

There is further relief sought in relation to rectification of the Trust Deed which is sought in Order 2 of the amended summons.

Orders 3 and 4 of the amended summons are orders that distributions of income and capital from the Trust are valid distributions and in a sense have a connection with the earlier relief sought and in that respect are effectively consequential upon it.

On the hearing of the matter, Mr Barlin of counsel appeared for the plaintiffs.

The material before the Court included a statement of facts (MFI-1), a number of affidavits of Nicholas Burton Taylor (Mr Burton Taylor) sworn 19 October 2022, 30 May 2023 and 26 July 2023, Exhibit NBT-1 to Mr Burton Taylor’s first affidavit, an affidavit of Julia Helen Burton Taylor (Mrs Burton Taylor) sworn 25 October 2022 and an affidavit of Shane Douglas Oxenham (Mr Oxenham) sworn 10 November 2022.

At the hearing of the matter, there was tendered an opinion by Mr Barlin which was marked as Exhibit P1 and a number of other documents relating to the Burton Taylor Foundation which became Exhibit P2.

Mr Barlin provided submissions dated 28 July 2023 and has also assisted the Court by oral submissions.

I have been considerably assisted by the submissions of Mr Barlin.

Mr Barlin, in his opinion, set out and addressed the law in relation to the giving of judicial advice. In particular, he referred to the decision of the High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, and, amongst other decisions, the decision of Lindsay J in Re Estate of the late Chow Cho-Poon; Application for Judicial Advice [2013] NSWSC 844; (2013) 10 ASTLR 251.

In addition, I refer to my decision in Application of Doolan [2023] NSWSC 320 (Application of Doolan) in which I addressed the power of the Court to give judicial advice and stated as follows (at [287]-[308]):

I am satisfied in the circumstances that the issues raised on the application, leaving aside the question in relation to rectification, constitute questions respecting the management or administration of trust property or questions respecting the interpretation of the trust instrument, and thus are susceptible to be the subject of judicial advice.

In order to address the matters the subject of the application, some basic background is required.

On 8 January 1980, the Trust was established by a deed of settlement between Mr Oxenham as settlor and Mr Burton Taylor and Mrs Burton Taylor as original trustees.

The original Trust Deed has been amended on a number of occasions pursuant to deeds which are in evidence being, relevantly, deeds dated 27 May 1996, 28 June 2002, 3 May 2004 and 13 December 2021.

In addition, Mr and Mrs Burton Taylor as original trustees were, subject to a matter that I will come to, removed as trustees of the Trust and NBT was appointed as new trustee by deed on 30 September 1981 (1981 Deed).

On 13 December 2021, BCS was appointed as trustee with respect to specific assets held subject to the trust estate being the property known as Breakfast Creek Station located in Godfreys Creek, New South Wales.

Thus, whilst both NBT and BCS are trustees of the Trust, they hold different items of trust property solely.

The issue in relation to Question 1 arises from the fact that the original of the Trust Deed has been misplaced, lost or accidently destroyed.

Mr Burton Taylor, in his affidavit dated 26 July 2023, gives evidence that he has conducted searches and made inquiries in an attempt to locate the original Trust Deed. He sets out the inquiries he has made.

He has been unable to locate the deed and considers that it has been misplaced, lost or accidently destroyed.

Generally, in relation to evidence of a document, if a copy is relied upon, it must be shown by other evidence to be a true copy.

Statutory provisions may bear upon admissibility of evidence. In some contexts, it is said that there are no degrees of secondary evidence, and any admissible evidence may be received as evidence of the contents of the document: e.g. Grain Sorghum Marketing Board v J Jackson & Co Pty Ltd; Ex parte Grain Sorghum Marketing Board [1962] Qd R 427 at 443-444 per Stanley J. What is involved by way of proof also depends upon how the evidence is recorded: e.g. Butera v Director of Public Prosecutions (Vic) (1987) 164 CLR 180; [1987] HCA 58 including at 185-186 per Mason CJ, Brennan and Deane JJ.

What is required to establish whether a document is an accurate copy of an original trust deed is the subject of discussion in much caselaw. In Re Cleeve Group Pty Ltd [2022] VSC 342 (Re Cleeve Group Pty Ltd), Gorton J noted that some authorities have suggested that the terms of a lost trust deed must be proved by “clear and convincing” evidence: at [34] citing Maks v Maks (1986) 6 NSWLR 34 at 36 per McLelland J (as his Honour then was).

However, a survey of the caselaw shows the type and cogency of proof will vary in any given case. There is a difference between a case where the terms of the lost deed are sought to be proved from the testimony of those who claim to have seen a lost deed and to remember its terms and a case where the terms themselves still exist, and are in writing, if it is first accepted that one of the documents available is a copy of the deed that was executed: Re Cleeve Group Pty Ltd at [34].

Thus, the terms of a lost trust deed may sometimes be proved by secondary evidence, including by the tendering of an unexecuted copy and by the drawing of an inference as to the form that the executed copy of the trust deed took: Evidence Act 1995 (NSW) s 48(4); Re Cleeve Group Pty Ltd at [33] per Gorton J.

Sometimes, the presumption of regularity might be invoked: e.g. Re Thomson [2015] VSC 370 at [24] per McMillan J.

In other cases, there may be no particular need to prove by inference that any formality has been complied with where a photocopy of the lost (or misplaced or destroyed) trust deed is signed and the evidence establishes directly that the parties concerned have always acted on the basis that it sets out the terms of the presumed trust: Sutton v NRS(J) Pty Ltd [2020] NSWSC 826 at [16]-[18] per Parker J.

On the facts of this case, what was adduced in evidence is a copy apparently of the original Trust Deed. It bears on the execution page signatures of each of Mr Burton Taylor, Mrs Burton Taylor and Mr Oxenham with those signatures having been witnessed.

The version in evidence has also been stamped with what at the time was a stamp duty imprint indicating $1.50 duty had been paid.

For such a copy to have been stamped, it seems to me highly likely that by reason of its presentation to the Commissioner of Stamp Duties that the document represents a true copy of the original document.

By reason of its presentation, I would be prepared to accept and am prepared to accept that the copy in evidence is a true copy of the original document.

The only other issue in relation to it is that there is handwriting on page 9 of the document which handwriting adds words to cl 25(d). Clause 25(d) is one of 23 powers which the Trust Deed provides the trustees are to have in addition to powers conferred by law.

There is no particular indication as to how that handwriting has come to be on the document.

Were the handwriting to be regarded as significant, I would likely require some additional evidence addressing how the handwriting came to be on the document and whether it was part of the original or not.

However, further debate on that point is moot, because by an amending deed on 27 May 1996 (New Trust Deed) made as between NBT and Mr Burton Taylor, all the provisions of the initial Trust Deed were revoked except those produced on the first schedule of the New Trust Deed.

One of those provisions revoked included cl 25.

Questions 2 and 3 address whether NBT was effectively appointed as a trustee of the Trust and whether Mr and Mrs Burton Taylor were validly removed. It focusses upon two issues.

The first issue is whether the 1981 Deed has been properly executed. The second issue is whether Mr Burton Taylor has signed in his capacity only as trustee of the Trust or in both his capacities as trustee of the Trust and as principal.

In relation to the first question as to whether the 1981 Deed has been validly or properly executed, the copy of the 1981 Deed that is in evidence does not on the execution page at least contain the signatures of Mr Burton Taylor and Mrs Burton Taylor either by reference to the section where they are to sign or, in the case of NBT, by reference to their witnessing the fixing of the seal of NBT. Rather, the 1981 Deed contains the typed words, in effect, “Signed”.

Once again, the 1981 Deed bears the hallmarks of a document which is a true copy of the original.

The 1981 Deed also bears an imprint indicating that it has been stamped with stamp duty.

Further, at the end of the 1981 Deed, after the execution clause, there is an additional page which contains a form of certification by Chrisanthe Celestia Kruit, a clerk of a firm of chartered accountants, who certifies that the writing contained on the previous three pages has been compared by her with the original instrument and is a true copy thereof.

I accept that the 1981 Deed has been properly executed.

The second question as to whether Mr Burton Taylor has signed in his capacity only as trustee of the Trust or both as a trustee and principal involves considering some legal principles regarding how the Court should approach the question of whether a person who has signed a document has signed it in one or more different capacities.

The principles regarding this are set out in a number of cases but, in particular, they were addressed by Edelman J (as his Honour then was) in Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168.

In that case, one of the defendants claimed that a guarantee was not enforceable against her personally and that she had only signed a document as a director of the principal debtor and not in her personal capacity.

Edelman J addressed the question of that defendant’s intention to be legally bound and indicated that it was not to be answered by reference to her subjective thoughts or intentions. The relevant intention is an intention objectively manifested.

His Honour set out the relevant principles at [47]-[53] as follows (footnotes omitted):

Ultimately, each case depends upon its own circumstances.

When one looks at the 1981 Deed, in recital C, there is reference to the fact that the principal of the Trust desires, pursuant to the provisions of cl 22 of the 1981 Deed, to appoint the new trustee (NBT) as trustee in place of the retiring trustee for the further implementation of the settlement.

Clause 22 of the Trust Deed, which was in existence, at least at that time, provided the principal may at any time, by notice in writing to the trustee, remove from office any or all of the trustees or trustee for the time being of the deed and may by deed appoint a new trustee in their place.

Thus, the person whose act was important for the appointment of a new trustee and removal of retiring or other trustees is the principal.

The 1981 Deed itself indicates that it is a deed between Mr Burton Taylor and Mrs Burton Taylor, described as retiring trustees, and NBT as the new trustee.

When one looks at the execution page, the execution page indicates that the parties have thereunder set their hands and affixed their seals. It contains provision for signing by Mr Burton Taylor and Mrs Burton Taylor, evidently as the retiring trustees and also by NBT as the new trustee.

However, beyond that, the signing by Mr Burton Taylor is not expressly qualified or limited.

Although the document might have taken a slightly better form and contained particular provision for Mr Burton Taylor to sign as principal, the document really could only have been effective had the power under cl 22 been exercised.

The fact that recital C refers to that suggests to me that on the whole the document should be construed as Mr Burton Taylor having signed in all relevant capacities and not simply as retiring trustee.

The fourth question relates to whether the Burton Taylor Foundation was validly appointed as a beneficiary of the Trust on 28 June 2022.

The evidence before the Court in relation to the Burton Taylor Foundation indicates that the Burton Taylor Foundation is a charity and the provisions relating to the foundation are set out in a deed created on 26 June 2002.

The Australian Charities and Not-for-profits Commission extract for the trustee for the Burton Taylor Foundation indicates under the heading, “Summary of activities” that it is a charity which made donations for a certain purpose [detail not reproduced]. More particularly, the charity programs described in the document are medical research and services and health and medical research.

Under the heading “Responsible People”, Mr Burton Taylor is described as trustee of the foundation. (I note a “responsible person” refers to someone responsible for governing a charity: ACNC Governance Standards).

The details regarding the charity’s subtype indicate that the purposes include “purposes beneficial to the general public that may be reasonably regarded as analogous to, or within the spirit of, any of the other charitable purposes” and with a further additional purpose added in 2012 “Another purpose beneficial to the community”.

The ABN Lookup details for the trustee for the Burton Taylor Foundation indicate that it has charity tax concession status including GST concession, FBT rebate and income tax exemption. However, it is not entitled to receive tax deductible gifts.

The answer to the question as to whether the foundation was validly appointed as a beneficiary involves analysis of the various deeds to that point.

Clause 19 of the original Trust Deed contains a power to vary and provides as follows:

The power to vary is self-evidently wide and calls to mind the type of trust deeds referred to and dealt with in Kearns v Hill (1990) 21 NSWLR 107 and Mercanti v Mercanti (2016) 50 WAR 495; [2016] WASCA 206 (special leave to appeal to the High Court refused: see Mercanti v Mercanti [2017] HCASL 59).

By the New Trust Deed made as between NBT and Mr Burton Taylor, who, it will be recalled from the original Trust Deed, is the principal, the trustee and Mr Burton Taylor pursuant to cl 19 of the original Trust Deed revoked all the provisions of the deed except those reproduced in the first schedule of the New Trust Deed and in addition added clauses in the second schedule of the New Trust Deed.

It may be noted that cl 19 of the Trust Deed (the power to vary) was retained in the New Trust Deed document.

On 28 June 2002, in a deed between NBT and Mr Burton Taylor as appointor, the deed added to the category of primary beneficiaries the Burton Taylor Foundation.

Although at the time of Mr Barlin’s initial opinion the precise nature of the foundation was a little unclear, the documents tendered on the application (as I have outlined above) make its nature clear.

Clause 1(d) of the first schedule of the New Trust Deed defines the term “Primary Beneficiaries”. Paragraph 1(d)(iii) provides that the term means and includes:

Further, paragraph 1(d)(iv) of the first schedule of the New Trust Deed provides that:

Further, cl 19 of the first schedule of the New Trust Deed gives the trustee (with the consent of Mr Burton Taylor as principal) the power to vary the provisions of the Trust Deed to add trustees of trusts as a beneficiary.

In the circumstances, I consider that Mr Barlin’s opinion is correct, and that the foundation was validly appointed as a beneficiary of the Trust.

The issue in relation to Question 5 relates to whether Mr and Mrs Burton Taylor are excluded as beneficiaries of the Trust or not.

The reason why it perhaps might be thought that they are excluded focusses upon a provision in the deed.

When one looks at cl 1(d)(bb), the effect of it is to indicate that “Primary Beneficiaries” means and includes certain persons but with the proviso that primary beneficiaries shall not include “Any person being the settlor or the Trustee hereof”.

In clause 1(a) “Trustee” is defined to mean “the Company, person or persons named as such in the Schedule or any other Trustee or Trustees for the time being of the Trust Fund”.

Further, cl 24 which deals with exclusion from benefits, provides as follows:

There is a question as to whether the expression “Trustee” includes or means the persons named in the schedule being Mr Burton Taylor and Mrs Burton Taylor irrespective of whether there is a change of trustee or not.

Whilst on one construction one might possibly think that the definition “Trustee” includes those persons irrespective of whether they have been replaced or not, I do not think that is the proper construction.

If one pauses for a moment to reflect on the consequences of such a construction, if it were to be interpreted as including persons who had been replaced by trustees then potentially a practical effect would mean that there could at any given time be multiple different trustees operating in relation to the Trust. I do not think that is the intent of the words properly construed. Rather, I consider that the proper construction of cl 1(a) is that the term “Trustee” only applies to the trustee or trustees for the time being of the trust fund. The naming of Mr and Mrs Burton Taylor in the initial schedule is in my opinion simply limited for the purpose of identifying the initial trustee or the trustee for the time being of the trust fund initially until such time as they were replaced, which occurred.

For those reasons, I consider that the New Trust Deed properly construed does not apply to exclude Mr Burton Taylor and Mrs Burton Taylor or any corporation in or under which they have any contingent beneficial interest from being beneficiaries under the Trust.

Question 6 addresses the issue of whether cl 19 of the Trust Deed is wide enough to vary the definition of “Vesting Day” contained in cl 1(c) of the first schedule of the New Trust Deed so as to permit the deletion of paragraph (i) of that clause which paragraph is: “The day specified in the Schedule as the Vesting day.”

The day specified in the schedule as the vesting day is “31st December, 2074”.

The definition of vesting day in cl 1(c) is in full as follows:

Mr Barlin, in his opinion, considered whether the provisions of paragraph 19(i) of the Trust Deed can be used to delete paragraph 1(c)(i) so that the vesting date of 31 December 2074 is excluded. Clause 19(i) is in the following terms:

The provisions of cl 19(i) are, as I have noted, extremely broad. However, there is express reference to the fact that the power of variation does not extend to the “Vesting day”.

Mr Barlin is of the opinion, and I agree, that para 19(i) does not give power to delete the provisions relating to the vesting day.

The issue in relation to Question 7 is effectively an issue as to whether on the appointment of BCS as a trustee of the Trust the perpetuities period in respect of the Breakfast Creek Station is reset and to be reckoned from the date on which BCS became the registered legal owner of Breakfast Creek Station.

There is evidence consisting of a form pursuant to s 46C of the Real Property Act 1900 (NSW) recording that as having occurred on 13 December 2021.

In substance, the question is posed or based upon the proposition that potentially a change of trusteeship might amount to a new settlement.

Mr Barlin notes, and it is clear, that the Trust was established on 8 January 1980, prior to the introduction of the Perpetuities Act 1984 (NSW) (Perpetuities Act).

Mr Barlin’s opinion addresses the operation of the Perpetuities Act. In substance, he concludes that it does not apply to a settlement taking effect before the appointed day. His reasoning includes the following:

Mr Barlin is of the opinion, and I agree, that there is no, in effect, resetting of the perpetuities period and the consequence is that potentially, subject to the matter I will come to, the vesting day may arrive on 31 December 2074, notwithstanding who the trustee or trustees may be at that time or earlier.

In light of my advice in respect of the earlier questions, it is no longer necessary to address the relief sought in the amended summons under paragraphs 2(a) and (b).

The remaining question in Order 2 relates to whether the Trust Deed ought to be rectified by deleting the date “31 December 2074” from the schedule of the Trust Deed.

Mr Barlin, in his submissions, set out the principles regarding rectification.

In particular, he stated as follows:

There are a number of cases which deal very specifically with a question of whether a trust deed may be rectified focussing attention upon the question of who is the person whose intention is relevant for the purposes of rectification.

In Application of Walker Corporation Pty Ltd [2022] NSWSC 1609 (Application of Walker), Parker J addressed that question and stated as follows:

Ultimately, the identification of the party or parties whose intention is relevant depends upon the particular circumstances of each case.

In Sanwick Pty Ltd v Kalyk [2016] NSWSC 100 (Sanwick), Stevenson J dealt with an application for rectification of a trust deed in circumstances where the settlor had no active and operative intention as to the terms of the trust and had merely acted on the instructions of the trustee. The evidence established that the trustee intended that, to the fullest extent permitted by law, the trust would have indefinite duration (by reference to what is known as the “Royal Lives” clause in the relevant definition): at [13].

Stevenson J addressed the tests in relation to rectification and, in particular, referred to an example of what is described as the “special class” of case to which Mason J (as his Honour then was) in Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336; [1973] HCA 23 at 350 had referred to, being a voluntary settlement creating a trust where the settlor has no independent intention as to how the trust is to operate and who acts on the instruction of, or at the request of the proposed trustee, or, as was the case in Sanwick, the person who in substance stood behind the trustee (in Sanwick, a certain Mr Saric was the controlling director of, and held all the shares in, the trustee). Stevenson J referred, in particular, to the comments of White J (as his Honour then was) in Public Trustee v Smith [2008] NSWSC 397 at [71]:

On the facts, Stevenson J was satisfied that the deed did not reflect Mr Saric’s (and, accordingly, the trustee’s) actual intention as to how the duration of the trust should be expressed and considered that it ought to be rectified.

In Benaroon Pty Ltd v Larmar [2020] QCA 62, the Queensland Court of Appeal dealt with an appeal in relation to a similar question. Philippides JA gave the main decision, with whom Fraser and Morrison JJA agreed.

Philippides JA noted in the case that there was no contest at trial that the settlor in that case had no relevant intention, and the primary judge inferred that the parties were content to proceed on the basis that it should be taken that the settlor’s intention was whatever Mr Larmar (sole director and secretary of the trustee) wanted: at [13].

In In the matter of George Hardi Family Trust [2021] NSWSC 1584, Sackar J also dealt with an application to rectify a trust deed, which was another case involving a similar situation concerning whether regard should be had to the subjective intention of a party behind the trust deed.

His Honour referred to Stevenson J’s decision in Sanwick and noted that his Honour had rectified an inter vivos voluntary inter-party trust deed, where the evidence indicated that the intent of the “real” settlor (and not the nominal settlor) differed from the express terms of the trust deed.

The decision of Parker J in Application of Walker is an instance of a circumstance in which his Honour was not satisfied that the claim for rectification was made out.

As I have noted, ultimately, it is a question of looking at the circumstances of the specific case at hand.

The evidence in the present case reveals the following.

In or around January 1980, Mr Burton Taylor asked Mr Oxenham to settle a family discretionary trust which was the Trust the subject of these proceedings.

Mr Oxenham, at the time, was a practising commercial lawyer in Sydney and agreed to be the settlor of the Trust. Mr Burton Taylor had previously been a chartered accountant. Mr Oxenham indicates that Mr Burton Taylor provided him with a copy of the Trust Deed and, after reviewing it briefly, he agreed to sign the deed as settlor to establish the trust.

Mr Burton Taylor, for his part, indicates that when establishing the Trust, it was his intention and understanding that there was no set date that the Trust needed to terminate or otherwise be limited or restricted. He did not instruct anyone to insert a vesting date of 31 December 2074 into the Trust Deed.

Mrs Burton Taylor, in her affidavit, did not provide any specific detail other than to indicate that she had read Mr Burton Taylor’s affidavit that I have just referred to (the first affidavit sworn on 19 October 2022) and agreed with its contents.

The evidence does not indicate how the Trust Deed was prepared. However, what is clear is that Mr Burton Taylor provided Mr Oxenham with the document. Further, Mr Burton Taylor’s evidence establishes that he did not, in establishing the trust, have any intention that the trust have a set date for termination or otherwise be limited or restricted and did not instruct anyone to insert the vesting day of 31 December 2074 into the Trust Deed.

On the evidence, I am satisfied that in this case rectification is appropriate.

Orders 3 and 4, as I have noted above, are sought in terms so as to order that all income and capital distributions from the Trust distributed on the one hand to Mr and Mrs Burton Taylor (or any corporation in or under which they have any actual or contingent beneficial interest) are valid distributions and on the other hand distributions in respect of the Burton Taylor Foundation are valid distributions. Mr Barlin clarified that the Order 3 and 4 relief was sought by way of judicial advice rather than order.

There are two aspects to this. The first aspect is dependent and consequential upon what I have addressed earlier, which is whether Mr and Mrs Burton Taylor were excluded as beneficiaries. I have found that they are not excluded.

The second relates to whether the Burton Taylor Foundation was validly appointed as a beneficiary. I have found that it was.

The further aspect of the matter relates to the actual distributions that were made.

The evidence on the application included details of all the income and capital distributions from the Trust.

This is set out in Exhibit NBT-1 (CB 87-147).

There are clearly provisions in relation to distributions made to Mr and Mrs Burton Taylor and I am satisfied of those.

On the hearing of the application, I expressly addressed with Mr Barlin the distributions made to the Burton Taylor Foundation and he directed my attention to specific parts of Exhibit NBT-1 which included CB 120, 122, 123, 124, 125, 128 and 129.

In the circumstances, I advise that the trustees are justified in proceeding on the basis that those distributions are valid distributions.

The questions in Order 1 are answered as follows:

In relation to Order 2, I grant rectification relief as below.

In relation to Orders 3 and 4, I advise that the trustees are so justified.

The orders of the Court (slightly reordered from the numbering of the relief sought) are: