Aljaro Pty Ltd v Weidmann

[2001] NSWSC 206

CITATION:	Aljaro Pty Ltd v Weidmann [2001] NSWSC 206 revised - 28/03/2001
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 3162/99
HEARING DATE(S):	17 August, 4 & 6 October and 3 November 2000
JUDGMENT DATE:	27 March 2001
PARTIES :	Aljaro Pty Limited (P) Ronda Beatrice Weidmann (D)
JUDGMENT OF:	Hamilton J

COUNSEL :	J A Waters (P) P Hallen SC (D)
SOLICITORS:	C A Keay & Co (P) Bolster & Co (D)
CATCHWORDS:	EQUITY [104] - Trusts and trustees generally - Classification of trusts in general - Secret trusts - Absolute bequest of whole estate to legatee - Secret trust imposed on legatee in favour of other persons - Whether testator’s expressed wish created only hope or expectation or was intended to create legally binding obligation.
CASES CITED:	Brown v Pourau [1995] 1 NZLR 352 French v French [1902] 1 IR 172 In Re Tilley. Mackie v Jackson (1918) 25 Argus LR 6 In re Young. Fraser v Young [1913] 1 Ch 272 Lawson v Lawson SCNSW Bryson J 17 October 1997 unreported Ledgerwood v Perpetual Trustee Co Ltd (1997) 41 NSWLR 532 Voges v Monahan (1954) 94 CLR 231
DECISION:	Secret trust imposed on legatee.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

TUESDAY, 27 MARCH 2001

3162/99 ALJARO PTY LIMITED v RONDA BEATRICE WEIDMANN

JUDGMENT

1    HIS HONOUR: The principal question for determination in these proceedings is whether a gift, unusually made to the plaintiff, a proprietary company, by the will of Leila Romona Salmond (“the testator”) was made subject to the terms of a secret trust and, if so, what the terms of that secret trust were. The testator died on 11 March 1997 aged 84 years leaving a will made by her on 5 January 1994 by which she appointed Jag Jit Singh (“Jack Singh”) and the defendant, Ronda Beatrice Weidmann, as her executors and gave the whole of her estate to the plaintiff. Rather strangely for a will the only beneficiary under which is a proprietary company, the will specifically conferred upon the trustees power to apply any part of the income or capital of the share of any beneficiary “towards his or her maintenance education benefit or advancement in life”.

BACKGROUND

2    Jack Singh is said to have been a barrister in London. The defendant worked for him as his personal assistant for some years from some time in the 1970s on. In the 1980s he was associated with a company referred to as Bribie Brick Works and was a director of that company. She worked for him there and was an administrative manager for that company and a director of an associated company referred to as Development Coordination. In 1991 those companies were in financial difficulties. In that year the National Australia Bank appointed a receiver to the companies and by 1993 it was apparent that the companies’ difficulties were terminal. Furthermore, as a result of a report made by the receiver a number of people associated with the companies were charged with criminal offences. Those people included Jack Singh and the defendant. It is not clear when the charges were laid against them, but they were under a cloud from 1991 onwards. They were committed for trial it would seem in 1996. There was a trial of the charges in the Queensland District Court. At that trial Jack Singh was convicted and on 5 March 1998 sentenced to a prison term which he is still serving. He was brought from prison to give evidence in these proceedings. The defendant, however, was during the course of the trial acquitted by direction of the Judge. The charges of which Jack Singh was convicted were of crimes of dishonesty involving at least $2 million.

3    Jack Singh had known the testator and her husband, Frank Salmond, from the 1960s. They had had business associations. It is said that Jack Singh had done work for Frank Salmond for which he was to be paid, but was not paid because of lack of money. The families had also been personally friendly and the testator had known since childhood Jack Singh’s three sons, Rohan, Alexander and James. This was attested to by Rohan Singh, who described the relationship between the Salmonds and Jack Singh as a relationship that had lasted decades and combined business dealings with an affectionate personal relationship; that warm relationship extended to the whole family including the three brothers. Rohan Singh I accept as a witness of truth. The brothers are now grown up. Two are solicitors and one is a barrister. It seems that the circumstances surrounding the father’s conviction have caused a rift between him and his sons. The plaintiff appears to be what could be described as a $2 company (subject to the destination of the beneficial ownership of the testator’s estate). It was incorporated by Jack Singh with his three sons, each holding one share, as the only shareholders. They never played any part in the management or affairs of the company. It would seem that they were keen after their father’s imprisonment to divest themselves of the shares and to have no further part in the company. There is no doubt that the testator’s husband, Frank, was by the early 1990s himself in severe financial difficulties as a result of unsuccessful operations of his building business. Albert Charles Kirby, who had and has an unsatisfied judgment against Frank Salmond, has given evidence in these proceedings. That judgment dates back to 1989.

FACTS

4    It was against this background that the testator made her will in 1994. The will was prepared by Jack Singh. The problem in this case is that the circumstances in which the will was made and the terms of any secret trust imposed by the testator were a matter that was discussed between her and Jack Singh alone. As she is dead, only Jack Singh can speak of it. He is not a witness of great credit. His conviction for dishonesty has already been mentioned. Since the testator’s death he has given a number of inconsistent accounts of what the terms were on which the gift was made to the plaintiff. One of his sons has expressed doubts as to the reliability of his word. The case for a secret trust must stand or fall by my assessment of his word, coupled with close examination of what light outside circumstances or evidence from inherently more credible witnesses may throw upon it. The defendant is now so ill that she was not able to be cross examined upon her affidavit. Evidence was given by affidavit by her doctor that she has an anxiety depression related to previous problems which has been exacerbated by these proceedings and by her anxiety about how these problems are affecting her sick mother, with whom the defendant lives and for whom she is the official carer; anxiety caused by this case and the way it affects her daughter has aggravated the mother’s symptoms. The defendant did not become well enough to come to Sydney to give evidence.

5    The circumstances in which instructions were taken by Jack Singh to prepare the will were given by him in oral evidence in chief at the trial. He said that the relevant meeting occurred between the testator and himself face to face in her home at Tweed Heads. He continued as follows:

“HALLEN: Q. Please go on Mr Singh?
A. She knew my company had collapsed in the brickworks and so forth, and she wanted to leave something to my family because I had done quite a lot of work for Mr Salmond earlier on at Banora Point for nearly four years, and sand mining and all that sort of thing, and his company's folded and they couldn't pay me, so she -

HIS HONOUR: Q. What did she say?
A. She said: ‘I would like to leave something for all the work you've done for us’. So I said: ‘Well, I'm sort of getting on, my children would be benefitting [sic] from this’. And they knew my children very well, from a very young age. So I said: ‘Instead of putting it into three names, I've got a company which is already owned by my sons, and we'll use that company’.

HALLEN: Q. Did she say anything else?
A. Basically she outlined the - I think she wanted to put in the will -

Q. What did she say about that?
A. Well she said that I'd like Mr Salmond to be looked after, after her death, and a sister she had in Western Australia to be looked after, and that a donation be made to the Seventh Day Adventist Church. She didn't name which church, where it was, and all that sort of thing.

Q. Did you come to a view as to the amount that she wished to be left to the Seventh Day Adventist Church?
A. Yes I had some idea, because she mentioned roundabout $10,000 to $20,000, that sort of figure.

Q. That donation was to be made when, immediately after her death or after the death of someone else?
A. Well when the property was sold after Frank's death. Frank Salmond's death.

Q. After looking after her husband, after making a donation to the church, and after looking after her sister in Western Australia, what was to be done with the balance of the estate, if any?
A. The balance of the estate would go to my three sons' company, Aljaro.

Q. Did you have any conversation with her in regard to the beneficial ownership by the company of the surplus of the estate?
A. I am not quite with you.

Q. For example if Aljaro had a debt which it was required to pay?
A. Yes.

Q. Would it have been entitled to use Mr Salmond's balance of the estate?
A. Oh yes.

Q. To pay its debt?
A. Not really, because Aljaro was not - that question didn't arise. Aljaro had no debts, the money would have just gone to the boys.

Q. Did you have a subsequent conversation with her after the will was executed?
A. Yes.

Q. And first of all do you remember when that conversation was?
A. It was regarding this matter. I have spoken to her many times, but regarding this matter, when I lost my farm and I became bankrupt, and I said that I cannot be a director of the company any longer, so she asked me to prepare another will because she didn't like anybody else to be a director of the company, and whether she - I would name my three sons in that will, but it took me - I was very busy at that time, it took me several weeks to prepare it. But when I sent that will by post to her, she died I think two or three days of [sic] receiving the will.”

In cross examination he said:


“Q. And it was your purpose in suggesting that, in mentioning Aljaro to Mrs Salmond, that there was no benefit to be served in you being a beneficiary of the estate?
A. Not quite. I think we - the attitude of Mrs Salmond was really to leave something for the boys. That was her - she has used that constantly. So I used Aljaro as a company, which the boys had, to put it in that.

HIS HONOUR: Q. When you say the boys had, of which the boys were the owner?
A. Yes that's right.”

6    There is material to cast doubt on this version given by Jack Singh, including that he did not give a version of the arrangements approximating to this version until it was incorporated in a letter in 1999, but gave other versions in the meantime. However, there is one piece of corroboration of his story that is of particular importance. That is that the subsequent will of which he spoke making his three sons themselves the direct beneficiaries has come to light so that it does appear that he did prepare and send her that will before her death as he has deposed. In coming to this conclusion I rely on the fact that he was not cross examined to suggest that that unexecuted draft will was a false document which he had concocted at a later stage to support his story rather than it being just what he said, a document he had prepared in consultation with the testator and sent to her before her death but too late for it to have been executed.

7    The defendant’s evidence is as follows. She says that in the 1980s she, Jack Singh and the testator had a discussion in Jack Singh’s office concerning the testator’s will and the problems created by Frank Salmond’s debts. She understood that a will was made at that time in which she and Jack Singh were named as beneficiaries. She did not see the will but recalls Jack Singh saying:

“I’ll manage this estate with Ronda helping me and we will do everything that you want us to do. Later on at the appropriate time we’ll discuss what arrangements need to be made in relation to who gets what.”

She did not, however, at that time see the will. She says that in December 1993 she telephoned Jack Singh and told him that she did not think she could continue to “act” in relation to the testator’s estate because of her mother’s illness. At that time Jack Singh said to her:

“Don’t worry about that. I’ll re-do the Will and we will put the boys in the position that you and I had occupied. They’re old enough now and it would be a good way to start them off and a good learning experience for them. I’ll simply prepare another Will to put the boys in the position you and I were in and that will solve any problems.”

She did at some stage discuss with the testator and with Frank Salmond their intentions about leaving money to the Seventh Day Adventist Church.

8    Documented events after the testator’s death are also of significance. She died, as mentioned above, on 11 March 1997. On 12 March 1997 Jack Singh sent a fax to his son Alexander, a solicitor then working at Everinghams in Tamworth, forwarding the will and asking Alexander to commence urgently to seek probate. The fax continues:

“For your information, Frank will remain in the house at 3 Sandpiper Ave, Tweed Heads and Leila had 2 small a/cs which after probate will be place [sic] in a/c for Frank to operate I have more details when I return from the funeral.”

Thus there was recorded only the day after the testator’s death a recognition of her husband’s right to remain in the house, which would accord with the terms of the trust alleged. On 18 March 1997 Jack Singh again faxed Alexander referring to the bank accounts and adding, “Of Course [sic], it would have to be transferred to Aljaro as the beneficiary and we can open an account with St george [sic] for the transfer of the fund”. The same letter refers to the transfer of a motor car worth $10,000 to Frank. On the same day a solicitor’s file note reveals that Alexander telephoned Jack Singh informing him that he did not do probate work and would prefer it if Everinghams were not involved “as this estate is a delicate one and so far as he is aware Frank has financial problems that prevent him from owning any assets which is why Leila left all to the company.” As I understand it the file note is from a file of Bamford Marcellos O’Connor, the solicitors (for whom Alexander’s wife worked) to whom conduct of the probate application was subsequently given. A similar file note reveals that on 21 March 1997 the maker of the note had a conversation with Alexander in which:

“He said that so far as he knows house is to be transferred to himself and James and Rohan with a life estate to Frank.”

Whilst this information is at more than one remove from Jack Singh, it seems that it was abroad within days after the testator’s death that the ultimate beneficiaries were the three Singh boys. From the facts set out above the source of this information realistically can only be Jack Singh.

9    By April 1997 the defendant was expressing reluctance to take up duties as an executor, very likely as a result of anxiety concerning her impending trial. By this time Frank Salmond had taken up residence in the Tweed Heads house. By 8 May 1997 Bamford Marcellos O’Connor had prepared a deed for execution by Frank Salmond which assured his life tenancy and provided that “upon the death of the said FES the property in remainder shall go to Alexander Edward Singh, James Arthur Singh and Rohan Charles Singh.” A copy of this deed was also sent to Jack Singh on 13 May 1997. He sent a response on 16 May 1997 which did not make any comment on this proposal. By the end of May 1997 Frank Salmond was becoming unhappy or uneasy about the situation and seeking independent advice and the progress of the matter seems thereafter to have stalled. It was from Bolster & Co, solicitors, of Tweed Heads, that Frank Salmond obtained advice and to that firm Bamford Marcellos O’Connor sent their file in July or August 1997 with the ¶agreement of all the players. It seemed to be assumed by everyone at the time that all involved would execute the draft deed of settlement circulated in May 1997 whereby the entire estate would be ceded to Frank Salmond. However, this is unlikely to have been the arrangement struck between the testator and Jack Singh. A significant part of the point of the testator making the dispositions she did was so that assets were not the absolute property of Frank Salmond, from whom it seemed they would then immediately be taken by creditors. It seems likely that that is what would have ensued if the property had become solely his beneficially pursuant to a deed of arrangement.

10    It was about 1 July 1997 that Jack Singh ceased to be a director of the plaintiff, although he claimed in evidence to have continued as its controlling mind for some time thereafter. He had been adjudged bankrupt on 14 July 1995. A fax addressed to Bamford Marcellos O’Connor signed by Jack Singh on the letterhead of the plaintiff dated 10 July 1997 stated:

“The writer as executor and the above company as beneficiary have no objection to the estate being transferred to Frank Salmond and Bolster & Co can act. This will mean that you and us can dispose of the matter forthwith and obviate managing the estate etc.”

In August 1997 he indicated that he did not wish to act as an executor and on 27 August 1997 Bolster & Co forwarded him a form of renunciation of probate which he signed and returned on 1 September 1997 under cover of a letter on the plaintiff ‘s letterhead which included the following:

“Please ensure that there are no costs or expenses incurred by Aljaro Pty Ltd as Aljaro,s [sic] directors have requested that this company now does not wish to be involved in any administration of the estate whatsoever. This also applies to the position of the writer.
However, we will do anything to assist in the smooth transfer of the estate to Mr Salmond.”

On 24 November 1997, probate of the testator’s will was granted to the defendant, who, despite her earlier hesitation, applied for it after Jack Singh’s renunciation.

11    In 1998 Frank Salmond died. After Jack Singh was imprisoned in March 1998 he attempted to conduct his financial affairs from prison through John Salm who was his accountant. He wrote a number of letters concerning or mentioning the testator’s will. Some of these contain statements not entirely consistent with the terms of the secret trust upon which he said the gift was made by the testator to the plaintiff. Jack Singh also wrote on 15 August 1998 to John Salm a letter which included the following:

“As the boys want to be free from any shareholding etc of the 3 companies, because of their professional firms etc as solicitors, could you transfer the shares in the name of Mrs Constance Salter of my Sydney address, Nettie’s mother, temporarily. My bankruptcy should be cleared in 3 years, in Sept 98. So when and if I am free, I shall hold all the shares.”

Nettie is Jack Singh’s wife. To John Salm on 24 October 1998 he wrote, “There was some talk of property being given to Seventh Day Adventists … If the will is not challenged, then it legally would be Aljaro’s property.” On 29 October 1998 he wrote indicating a desire that the plaintiff be used in relation to some dealing with persons named Paul and Doz about which he was corresponding with John Salm.

12    From at latest November 1998 John Salm was writing to the defendant claiming that the plaintiff was beneficially entitled to the estate. In September 1999 the defendant’s solicitor interviewed Jack Singh, who then wrote to Bolster & Co as follows on 26 September 1999:

“Re: L Salmond’s Will


Further to our recent discussion I have instructed John Salm to get into touch with you to resolve the matter as follows, in order to avoid further court action and any inconvenience to Ronda. Aljaro was trustee and all others are dead, re Frank and Leila’s sister, the fund should be dealt with as follows:-

(1): Pay legal costs for both parties.

(2): Pay $20,000 to Ronda, as discussed with you.

(3): Pay $10,000 to Seventh Day Adventist Church as a donation.

(4): Balance due to my three boys and my outstanding fees etc; should be paid to my nominee, ie, my wife’s account in Sydney or alternatively to John Salm’s trust account for express purpose of distribution to me and my three sons and not to Aljaro, as discussed.

Hope this meets with your thoughts, following our discussion held recently. Such action will resolve the whole problem and ensure that the intention of the Will is fully complied with, with least difficulty.”

While this diverges in some ways from what he said in oral evidence, part of the divergence is explained by the intervening deaths of the testator’s sister and Frank Salmond, and it reflects the current gifts to the Seventh Day Adventist Church and to the Singh boys beneficially.

13    In 1999 James Cirulis, an associate of John Salm, procured the transfer to him from each of the three Singh boys of his share in the plaintiff company. Mr Cirulis is now a director of the plaintiff. At the time of the transfer Rohan has given evidence that he did not have any knowledge that there was a gift to the plaintiff in the testator’s will. James has stated that he was equally ignorant. Alexander wrote a letter in which he indicated that he knew of the terms of a secret trust by hearsay but did not in the letter set out its terms. He stated that to any extent he had an interest under the will he would demand that it be paid to his mother. The estate has been reduced to cash in a sum in excess of $240,000.

THE LAW

14    The locus classicus as to secret trusts is the statement of Lord Davey in the House of Lords in French v French [1902] 1 IR 172 set out in the passage from Brown v Pourau [1995] 1 NZLR 352 quoted below. Lord Davey’s formulation was approved in the High Court in Voges v Monahan (1954) 94 CLR 231 at 240 - 241. The modern law was usefully stated by Hammond J in the High Court of New Zealand in Brown v Pourau supra at 366 - 367, where his Honour said:

“The jurisdiction classically appealed to to address this problem was clearly expounded by Lord Davey in French v French [1902] 1 IR 172, 230:
‘It is now well established, and has been settled since the time of Lord Hardwicke, that if a testator communicates in his lifetime to a proposed devisee or legatee that he has left him his property, and expresses a wish that the property should be disposed of in a particular manner, and the legatee or devisee by acquiescence, or even by silence, accepts that communication, and the testator dies without any repudiation, a trust is fastened upon his conscience, as it is said, and he cannot afterwards either appropriate the property to his own use or dispose of it otherwise than in accordance with the wishes which were thus communicated to him, and which he has accepted.
My Lords, it is said that this jurisdiction is based upon fraud, and so it is, because if you once get to this, that it is a trust which is imposed upon the conscience of the legatee, then if the legatee betrays the confidence in reliance upon which the bequest was made to him, then it is what I should think everybody would consider a fraud, though I take the liberty to say that the moral turpitude of any particular case must vary infinitely according to the circumstances of the particular case. My Lords, the basis of it is of course that the testator has died, leaving the property by his will in a particular manner on the faith and in reliance upon an express or implied promise by the legatee to fulfil his wishes, and your Lordships will at once see that it makes no difference whatever whether the will be made before the communication to the legatee or afterwards, because, as was said, I think, by Vice-Chancellor Turner in one of the cases which was cited, the presumption is that the testator would have revoked his will and made another disposition if he had not relied upon the promise, express or implied, made by the legatee to fulfil his wishes.’
Secret trusts are said to be fully secret, or half secret. The former give us no hint of a trust on their face; the latter indicate a trust, but not its terms.
The elements required to establish a fully secret trust were concisely stated by Viscount Sumner in Blackwell v Blackwell [1929] AC 318, 334:
'The necessary elements, on which the question turns, are intention, communication, and acquiescence. The testator intends his absolute gift to be employed as he and not as the donee desires; he tells the proposed donee of this intention and, either by express promise or by the tacit promise, which is signified by acquiescence, the proposed donee encourages him to bequeath the money in the faith that his intentions will be carried out.’
I emphasise that these requirements are conjunctive. What has to be shown is that there was a communication to the devisee (or intestatee) of the deceased's intentions, and an acceptance by that person of the request that she hold the property on trust for the enumerated purposes or persons. As to the intention, a binding obligation must be intended. What must be intended is a trust in the legal sense of that term, which signifies a positive obligation. But the communication of that intention is an essential factor - if not the most essential - because otherwise the devisee can, completely reasonably, be heard to say, 'I took the will to mean precisely what it says on its face’. But once the communication is established, acceptance, though of course a necessary element can, in an appropriate case, be spelled out of the silence of the devisee. The view evolved through the Chancery Courts was that if any person has received a request of this nature that .person would be bound to say something if she or he rejected the notion that she or he should not enjoy the property beneficially.”

See also per Young J in Ledgerwood v Perpetual Trustee Co Ltd (1997) 41 NSWLR 532 at 535.

THE QUESTIONS AS TO THE SECRET TRUST

15    The plaintiff’s contentions are, first, that there was no secret trust; secondly, if there was a secret trust, the intention was that the corpus of the estate upon the death of Frank Salmond (and possibly the death of the testator’s sister) should vest in the plaintiff beneficially (and a reference is made to In Re Tilley. Mackie v Jackson (1918) 25 Argus LR 6); thirdly, that if there were a secret trust and no intention as to the disposal of the corpus the interest in remainder should vest beneficially in the plaintiff which has received an unambiguous gift of the legal interest in the property, or alternatively, that the plaintiff would hold the estate on trust for those who would take the testator’s estate on intestacy. The plaintiff does not say that this is a case where there was a gift with no moral strings attached, however, it does say that it falls into the category of cases where the deceased expressed a wish or held a hope or expectation that a named beneficiary would have regard to the interests of her husband and possibly to the interests of others, but that any such hope or expectation was not underpinned by a binding legal obligation. The plaintiff further says that if there were a binding legal obligation in respect of Frank Salmond’s life estate, then the intention was thereafter to benefit the plaintiff or, alternatively, that the wishes expressed as to disposition after his death were hopes or expectations only and did not create binding legal obligations, so that the plaintiff would take the remainder beneficially. Questions also arise as to whether there was a disclaimer or renunciation by the plaintiff of the gift to it of the property, either on the basis that it was to hold the property on trust or in respect of any beneficial interest in the property. This is said to arise from one other or both of the documents dated respectively 10 July 1997 and 1 September 1997 and set out in [10] above. The issues as to the secret trust that arise therefore are (1) whether there was an effective secret trust in the first place; (2) what the ambit of that trust was; (3) whether the trust has subsequently failed in whole or in part; and (4) whether the plaintiff renounced the gift with the trust imposed on it.

CONCLUSIONS AS TO THE SECRET TRUST

16    The questions as to the existence of the trust and its ambit turn on whether one accepts Jack Singh’s account of his relevant conversation with the testator and, accepting that conversation, the interpretation one puts on it in the light of surrounding events. I have already expressed the reservations that there must be to Jack Singh’s credit generally. Further doubts are raised by some of his subsequent actions and statements which cast doubt on whether he regarded himself as subject to a binding obligation along the lines that he deposed to in the witness box and as reflected in his letter of 26 September 1999. If one accepts Jack Singh’s word as to the conversation, one of the greatest problems of interpretation is whether the gift was intended to be a gift to the plaintiff company itself (made on the basis that the three shareholders were the three Singh boys) or whether the gift was intended in favour of the boys themselves. Despite the doubts about Jack Singh’s credit, I generally accept his word that a conversation with the testator took place along the lines that he has deposed to. I also accept that he prepared and sent to the testator a further draft will as he said he did. It is also significant that there was at large in the days immediately after the testator’s death the version that the beneficiaries were Jack Singh’s three sons, a version which most probably came from Jack Singh himself at a time closer to the events than either the September 1999 letter or his evidence in the witness box. The evidence of the defendant herself also lends some corroboration and credibility to Jack Singh’s story. Frank Salmond’s financial position would make it likely that his wife, wishing to make provision for him after her death, would not leave her estate to him absolutely but would leave it upon a trust which gave him the use of the assets but gave them elsewhere after his death.

17    I conclude that the testator did express to Jack Singh an intention that the estate be held after her death so as to give her husband a life estate which would provide for him in his lifetime; that some provision should be made for her sister; and that a gift be made in a sum between $10,000 and $20,000 to be determined by the trustee to her church to which she was attached. So far as the balance is concerned, I find that the testator expressed the intention that after Frank Salmond’s death it was to go to Jack Singh’s three sons. This was in recognition of Jack Singh’s friendship towards the Salmonds (combined, perhaps, with a sense of financial obligation towards him) and an affection she had for his sons. I find that the suggestion that the gift be made to the plaintiff did not emanate from her, but from Jack Singh as the way of carrying out her intention and she accepted it on that basis. The suggestion appears to be that it would provide useful experience to the boys, that is, their involvement in a company which held the estate on the foregoing trusts. I find that on the evidence the gift was accepted by the plaintiff company through Jack Singh who was undoubtedly its controller at the time. Not only was there no demur to the proposition that the plaintiff should hold on this basis but, as I have already found, it was Jack Singh who proposed that the gift should be to the plaintiff company on the foregoing basis. The conclusion that I reach from the terms of the conversation as I have accepted it in the surrounding circumstances is that it was intended and accepted that the obligations on the plaintiff in respect of the gift were to be legally binding and were not made simply as a matter of hope or expectation (cf the analysis by Fullagar and Kitto JJ in Voges v Monaghan supra at 252). In those circumstances it is my view that a secret trust was imposed upon the plaintiff in the light of what occurred.

18    Bearing in mind that the sister predeceased the testator (removing any question of the quantum of provision for her) and that Frank Salmond is now dead the operative terms of the trust are that the trustee should give a sum in its discretion between $10,000 and $20,000 to the Seventh Day Adventist Church and should hold the balance on trust for the three Singh boys as tenants in common in equal shares. Insofar as any of Jack Singh’s subsequent statements appears to evince an intention to act otherwise, I have formed the view that these deviations were caused by circumstances at the time and do not lead to the conclusion that the obligation originally imposed was other than as I have just stated. If the plaintiff through Jack Singh accepted the obligation at the time it was imposed by the testator, Jack Singh’s subsequent changes of mind could not affect the substance of the obligation. His reasons for appearing to deviate may include (as at mid 1997) a desire to be rid of the obligations and problems arising at a time when he himself was beset by a sea of troubles or, after his imprisonment, perhaps at times at least, a desire to keep the proceeds for himself or his wife, if his sons were no longer interested because of their wishing to be distanced from him or his affairs by reason of their professional positions and the disgrace that had come upon him. Those matters do not prevent me from accepting, as I have already indicated, that he was telling the truth to this Court in his sworn oral evidence or that that truth was substantially though not completely reflected in the letter of 26 September 1999.

19    Equally, I do not accept that the letter of 10 July 1997 or 1 September 1997 effected a disclaimer of the gift under the will subject to the imposition of a trust. Neither letter is sufficiently clear in its terms to be immediately effective, rather than a statement of then held intention. They appear to me to reflect provisional agreements to deal with the matter along certain lines (whether it was right or wrong for him so to have agreed) provided that a particular scheme was carried out. That scheme was in the event not carried out, so that there was no occasion for the disclaimer to come into operation. Neither document was sufficiently clear or unequivocal to constitute an immediate disclaimer in itself: see In re Young. Fraser v Young [1913] 1 Ch 272; Lawson v Lawson SCNSW Bryson J 17 October 1997 unreported. I should add that there is also a question whether, bearing in mind Jack Singh’s bankruptcy and resignation from the office of director of the company, whatever claims he makes about being its controlling mind, he had sufficient authority for either of those letters to operate as a disclaimer by the company, but it is not in the circumstances necessary to say any more about this.

OTHER MATTERS

20    The question as to whether the plaintiff renounced a gift made to it beneficially does not arise, since on my findings there was no such gift. It would probably follow from what I have said in [19] that there was no such renunciation, but it is unnecessary to proceed to that conclusion.

21    I shall leave the parties to bring in short minutes as to the declarations or orders which they contend should be made as a result of these findings on my part. At the same time submissions can be made as to costs. A question also arises as to whether the plaintiff should remain the trustee of the trust. After the plaintiff was out of Jack Singh’s control and fully under the control of the present directors it denied the existence of the trust and conducted these proceedings to vindicate that stand. Whilst counsel has put to the Court that the plaintiff will be willing to carry out the terms of the trust if it be declared by the Court to exist, it seems to me that there is a very substantial argument that it ought not continue as trustee. If its replacement cannot be agreed on, then I shall hear further submissions on this matter when the minutes are brought in or at a time then appointed.

…oOo…

Last Modified: 03/28/2001