Allan and Allan and Ors

[2015] FamCA 985

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN AND ORS [2015] FamCA 985

FAMILY LAW – PROPERTY – Where declarations are sought that the husband validly revoked the appointment of the 7^th respondent as Appointor of two trusts and validly appointed a new Appointor of both trusts – Where in 2004 the husband had resigned as Appointor of the trusts – Whether that resignation was revocable – Where it was found on the ordinary construction of the Deed it was not revocable – Where in the alternative the applicants bore an onus of proving that the husband had reserved the power to revoke his resignation – Where the applicants had not satisfied the required onus of establishing that the husband intended to reserve his right to revoke his resignation – The applications for declarations and consequential orders are dismissed

Family Law Act 1975 (Cth)

Elder’s Trustee & Executor Co Ltd v Symon [1934] SASR 435
ING Funds Management Ltd v ANZ Nominees Ltd; ING Funds Management Ltd v Professional Associations Superannuation Ltd (2009) NSWSC 243
Kennon v Spry [2008] 238 CLR 366
Lewis v Condon (2013) 85 NSW LR 99 at 119-120
Re Beesty’s Will Trusts [1966] CH 223
Re Manifold Settlements Dean J [1965) VR 197
Segboer and AJ Richardson Properties Pty Limited & Anor (2012) NSW SC 253
Stevens & Stevens & Ors [2007] 38 Fam LR 149

APPLICANT: Ms Allan

7^th RESPONDENT: F Nominees

8^th RESPONDENT: Ms G

9^th RESPONDENT: Mr H

10^th RESPONDENT: Mr J

11^th RESPONDENT: Mr K

INTERVENORS  : EE Pty Ltd, as trustee of EE Trust and joint trustee of M Trust with FF nominees AND FF Nominees Pty Ltd, as trustee of FF Trust and joint trustee of M Trust

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 10 November 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 6 November 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT WIFE: Mills Oakley Lawyers

COUNSEL FOR THE 7^TH TO 11^TH RESPONDENTS: Mr Sirtes, SC with Mr Harper, counsel

SOLICITOR FOR THE 7^TH TO 11^TH RESPONDENTS Kott Gunning Lawyers

COUNSEL FOR INTERVENORS: Mr Dubler, SC

SOLICITOR FOR INTERVENORS: Matthew’s Solicitors

Orders

1. The Application in a Case filed on behalf of the EE Pty Ltd and FF Trust Pty Ltd on 23 October 2015 be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Allan & Allan and Ors (No 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3842 of 2008

Ms Allan

Applicant

And

F Nominees

7^th Respondent

And

Ms G

8^th Respondent

And

Mr H

9^th Respondent

And

Mr J

10^th Respondent

And

Mr K

11^th Respondent

And

EE Pty Ltd, as trustee of EE Trust and joint trustee of M Trust with FF nominees AND FF Nominees Pty Ltd, as trustee of FF Trust and joint trustee of M Trust

Intervenors

REASONS FOR JUDGMENT

INTRODUCTION

1. Applications for declarations are brought by two companies who purport to replace the 7^th respondent as the new Trustees of two trusts. Whether or not the applicants are entitled to the declarations that they seek depends upon whether or not the husband had the power to revoke the appointment of the 7^th respondent as the Appointor of each trust and to appoint new Appointors who then removed the 7^th respondent as Trustee of each trust.

APPLICATIONS

1. By way of Application in a Case filed 23 October 2015, EE Pty Ltd “(EE N”) seeks in [5], inter alia, a declaration that on or about 28 August 2015 the husband validly revoked the appointment of F Nominees Pty Ltd (“F”) as Appointor of the EE Trust (“EE”).

2. EE N also, in [6], inter alia, seeks a declaration that on or about 23 October 2015 the husband validly appointed the new Appointors as Appointors of EE (those Appointors being the wife and the 3^rd to 6^th respondents).

3. Similarly, FF Nominees Pty Ltd (“FF N”) seeks in [14] of that Application in a Case, inter alia, a declaration that on or about 28 August 2015 the husband validly revoked F’s appointment as Appointor of the FF Trust (“FF”).

4. FF N also seeks a declaration in [15], inter alia that on or about 28 August 2015 the husband validly appointed new Appointors of the FF, (those Appointors being the wife and the 3^rd to 6^th respondents).

5. Paragraphs 5, 6, 14 and 15 of the Application in a Case filed 23 October 2015 also sought similar declarations in respect of the office of Guardian in both Trusts.

EVIDENCE

1. The evidence relied upon by the applicants is contained in the affidavit of Neil Cunningham filed 13 October 2015. Mr Cunningham annexes to that affidavit the documents that are relevant to the present applications. They are:

   7.1.Deed of settlement dated 4 May 1989 between Alfred Mellor & GG Pty Ltd (annexure A, pages 14 – 38, particularly 37);

   7.2.Deed of settlement dated 4 May 1989 between David Powell &  HH Pty Ltd (annexure F, pages 39-64, particularly 63);

   7.3.Deed dated 9 June 2004 between Mr Allan, F Pty Ltd & GG Pty Ltd (annexure G, pages 65-71, particularly 70);

   7.4.Deed dated 9 June 2004 between Mr Allan, F Nominees Pty Ltd & HH Pty Ltd (annexure H, pages 72-78, particularly 77);

   7.5.Deed Sole dated 25 August 2015 made by Mr Allan (annexure I, pages 79-81, particularly 80);

   7.6.Deed Sole dated 25 August 2015 made by Mr Allan (annexure J, pages 82-84, particularly 83).

BACKGROUND

1. EE and FF were each created by a separate Deed of Settlement dated 4 May 1989. The original Trustee of EE was GG Pty Ltd and the original Trustee of the FF was HH Pty Ltd.

2. EE and FF are each a discretionary trust. Each Deed of Settlement provides, in addition to the office of Trustee, for the offices of “Guardian” and “Appointor” who are given particular powers. The Appointor is given, in particular, power to remove a Trustee and to appoint replacement or additional Trustees.

3. On 9 June 2004 two deeds were executed by the husband, F Nominees Pty Ltd (“F Nominees”) and the respective Trustees of the two trusts. Each deed provided, subject to the fulfilment of certain conditions (and the fulfilment of those conditions are not in issue), for the husband to remove the existing Trustee and to appoint F Nominees in his place and for the husband to resign as Appointor and Guardian and appoint F Nominees in his place to both offices.

4. On 25 August 2015 the husband by way of Deed Sole, purported to revoke the appointment of F Nominees as Appointor and Guardian of each trust and appoint new Appointors and a new Guardian. The 7^th to 11^th respondents challenge the power of the husband to do these things.

5. On 9 September 2015 the majority of the new appointors purported to remove the previous trustees and to respectively appoint the applicants as the new Trustees of each of the trusts.

THE 1989 DEEDS

1. For the purposes of the applications before me, the two 1989 Deeds contain identical clauses and I will refer only to those clauses in EE. The EE was executed by the Settlor and the original Trustee. The Trust Deed relevantly contains the following:

   1.1 Definitions:

   “Appointor” means successively the person or persons names or described as such in the Schedule

   SCHEDULE

   APPOINTOR: The said [the husband] or any person or corporation which he may by instrument in writing revocable or irrevocable and whether taking effect in future or at present or whether subject to contingency or not appoint but failing any such appointment then his legal personal representative

   The definition of Guardian under the Trust Deed is in identical terms to the definition of Appointor.

2. Section 8.1(i) of the Deed provides in respect of the office of Appointor:

   (i)  if there shall be no person for the time being holding the office of appointor the power of appointing additional or new trustees shall be exercisable by the trustee or if there is none by the personal representative or (in the case of a corporation) by the liquidator of the last surviving trustee

THE 2004 DEEDS

1. For the purposes of the applications before me, the two 2004 Deeds contain identical clauses and I will refer only to the deed relating to EE. This deed was executed by the husband as Appointor of both trusts, the original Trustee of the trusts and F Nominees as the new Trustee of the trusts.

2. Recital C of the deed refers to the definition of Appointor and Guardian in the original trust deed.

3. Clauses 3, 4 and 5 of the 2004 Deed are in the following terms:

   3.APPOINTMENT

   Subject to clause, 2, [Allan], with effect on and from the Effective Date, hereby:

   3.1    removes [GG] as trustee of the [EE Trust] and appoints [F] to be the trustee of the EE Trust;

   3.2    resigns as the appointor of the [EE Trust] and appoints [F], in his place, as the appointor of the [EE Trust];

   3.3    resigns as the guardian of the [EE Trust] and appoints [F], in his place, as the guardian of the [EE Trust].

   4.NO OTHER CHANGES

   Save and except as set out in clause 3 above, the provisions of the [EE Trust] and the [II Trust Deed] remain unaltered and in full force and effect.

   5.INDEMNITY

   F agrees with effect from and including the Effective Date to indemnify and keep indemnified [GG] against all and any liability which may be incurred by [GG] under or in any way related to the Bill of Sale and/or the [GG] Charge.

CONSTRUCTION OF THE DEEDS

1. Senior counsel for the applicants argues that the 1989 Deeds expressly provide that the husband had a power to appoint a new Appointor of the Trusts which was “revocable or irrevocable”. Next, he draws attention to the fact that clause 4 of the 2004 Deed provides that the provisions of the original deed “remain unaltered and in full force and effect”. He consequently argues that the two deeds read together sufficiently make clear that they preserve the power of revocation of the appointment of the Appointor vested in the husband by the original deeds.

2. Senior counsel for the applicants relies upon statements by Napier J in Elder’s Trustee & Executor Co Ltd v Symon [1934] SASR 435 at p.439:

   .... whether any particular deed is a final or a conditional exercise of the power, must be determined upon the intention of the donee, at the time of executing the deed, as that intention appears on the face of the instrument; but the onus of establishing the intention to reserve the power of revocation is upon those who allege that the deed is revocable.

3. In Re Manifold Settlements Dean J [1965) VR 197 at p.201 said:

   The principle is thus established that no matter how broadly the power is expressed and how clearly a power to provide for revocation is given to the donee of the power, unless the donee when he exercises his power to revoke and appoint to new uses reserves a power to revoke his appointment it is final and irrevocable. But the question remains whether upon the proper construction of the deed exercising the power it does reserve a power to revoke and alter. This depends upon the intention of the donee ascertained from the deed upon ordinary principles of construction. In the case of Elder’s Trustee and Executor Co. Ltd. V. Symon [1934] S.A.S.R. 435, Napier J, found an intention to reserve a power of revocation in the deed exercising the power. In Re Gadsden’s Settlements [1962] V.R. 522, at p.526, Pape J, found a sufficient intention to reserve the power of revocation in the original deed to be shown by the use by the donee of the power in the words: “Now these presents witness that the settlor revocably declares”. He quoted from Napier J: “Whether any particular deed is a final or a conditional exercise of the power, must be determined upon the intention of the donee, at the time of executing the deed, as that intention appears on the face of the instrument.”

4. In Elder’s Trustee there was an express power of variation and revocation in the original deed. The settlements under the trust were subsequently varied by multiple deeds. The deed which was challenged contained no express power of revocation but contained the words “in all other respects I confirm [the previous deed]”.

5. Similarly, in Manifold Settlements an original deed had been revoked under an express power but the new deeds did not expressly reserve the power to revoke the new settlements. It was held that upon the proper construction of the new deeds the express power to revoke, contained in the original deeds, remained and there was sufficient in the facts of that case to find the power of revocation was preserved.

6. In written submissions, senior counsel for the applicants argued:

   15.Viewed objectively the better view is that the intention which appears on the face of the instruments is that the appointments of [F Nominees] as Guardian and Appointor was revocable, principally for three reasons:

   a)    Each of the Deeds made on 9 June 2004 recites the relevant portion of the definition of Appointor and Guardian in the Schedule to the Deed of Settlement (Recital C), including that the husband may appoint a person to those offices “by instrument in writing revocable or irrevocable”;

   b)    Each of the Deeds provides (at clause 4) that, save and except for the appointments of [F Nominees], “the provisions of the [relevant trust] and [relevant trust deed] remain unaltered and in full force and effect”; and

   c)    no statement appears in the Deed that the power of revocation has been exhausted or altered or that the appointment is irrevocable.

   16.In particular, the provisions of clause 4 are similar to the provisions of the relevant deed in Elder’s Trustee, which Napier J found (at p 441) demonstrated the “absence of any intention to interfere with the operation of the previous instrument”.

   17.Based on the above clauses, the better view must be that there was no intention to give up the power to revoke the appointment of [F Nominees] to both trusts. In other words:

   a)    the husband had the power to revoke his ‘writing’ and this power is expressly referred to in the recital to his ‘writing’;

   b)    he does not say that his writing is ‘irrevocable’, but

   c)    rather, he says that his powers under the Deed ‘remain unaltered and in full force and effect’ which must, construed objectively, include his power to revoke his written appointments.

   18.The new Trustees, [EE Pty Ltd] & [FF Nominees Pty Ltd], have been unable to find any cases directly dealing with the situation of whether the exercise of a power to appoint to an office should be construed as revocable or irrevocable where there is a power to do either.

   19.Approached as a matter of first principle, where there is a power of appointment, including the power to replace oneself as appointor, which comes with an express power to revoke the appointment, it should generally be construed as being a revocable appointment unless it is expressed to be irrevocable.

   20.For example, the power to appoint new trustees (including of oneself or by replacing oneself, which power exists in the Deeds at clause 8.1 provided the Appointor is not a Beneficiary) will generally be construed as being a non-exhaustive exercise of the power. This also find expression in most of the Acts Interpretations Acts, such as s33A [senior counsel during submissions corrected the reference to s33AA] of the Acts Interpretation Act 1901 (Cth) where it is presumed that whenever there is a power of appointment, it comes with a power of re-appointment, unless the contrary intention appears. Similarly, in the field of contract, a person can make an offer which is revocable or irrevocable (such as in a “put or call” option). The power to revoke an offer will be presumed to exist unless the offeror expresses the offer to be revocable.

   21.The courts have had, in different contexts, the occasion to consider whether revoking one trust by Deed in favour of another trust exhausts the power of revocation. Even in that context, cases such as Elder’s Trustee and Re Manifold readily accepted that the power of revocation continued to apply to the original trusts declared as well as the new trusts declared by later settlement, even though that later settlement did  not expressly include a power of revocation. In other words, the revocation of the trusts created by one sub-clause of the original settlement, did not revoke the general power of revocation itself. In those cases the power was the power to dispose of property, whereas in this case, the power is merely the power of appointment.

7. Senior counsel for the applicants suggested that had the 2004 Deed used the words in [3.2] “renounce for all time” rather than “resigns”, then it could be clearly said that in those circumstances that there was no intention by the husband of reserving a power to revoke the appointment of the Appointor. Whilst I accept that the words suggested by senior counsel for the applicants contain more absolute terms, does not take away from the fact that the ordinary meaning of the word “resigns” imports finality. The Oxford Dictionary of English, 2^nd Edition, defines the word “resign” when used with an object such as an office or a privilege, as meaning to “give up”. In chess, a resignation ends the game as finally as a checkmate.

8. I do not accept that a reading of the ordinary words of clause 4 of the 2004 Deeds would lead to the conclusion that the husband, whilst resigning as Appointor and resigning as Guardian of the Trusts, intended nonetheless to reserve to himself the power to revoke the appointment of the Appointor. It is important to note that the husband did not need to resign as Appointor in order to change the Trustees of EE and FF. I find that that step demonstrates that in 2004 it was the husband’s intention to disempower himself, as extensively as he could, from any role in the further governance of those trusts. Also, the opening words of clause 4, “Save and except as set out in clause 3 above”, in my view, on balance, demonstrate the husband’s intention on the face of the document to disempower himself, as extensively as he could, from any role in the further governance of those trusts.

9. I next consider the submission by senior counsel for the 7^th to 11^th respondents that upon a proper construction:

   26.1.the 1989 Deeds empowered the husband to appoint a different Guardian and/or Appointor to the two Trusts, either revocably or irrevocably by “an instrument”;

   26.2.the husband had a choice of the instrument which he used;

   26.3.what he did armed with his power was to use a deed as the “instrument”.

10. Senior counsel for the 7^th to 11^th respondents argues that a deed is inherently irrevocable unless the deed itself reserves a power to revoke. The 2004 Deeds did not assert that the appointments of the Appointors were revocable nor that the husband reserved that right.

11. In Re Beesty’s Will Trusts [1966] CH 223 at pages 232 – 233, Wilberforce J said:

    There is a familiar rule which is stated in a number of cases that a power, once executed, whether it is a joint power, or any other power, cannot be revoked unless the exercise of that power is reserved by the instrument.

    That is the view stated in Farwell on Powers, 3^rd ed. (1916), p.306, and there are similar statements in Sugden on Powers, 8^th ed. (1861), pp.138, 140, and the latest edition of Halsbury, 3^rd ed., Vol. 30 (1959), p, 267, par. 507, endorses those statements.... It is clear from the statement in Farwell, and from the reference to the authorities which I find under it, that it is derived from and based on the principle that a deed is by its nature an irrevocable instrument, and the consequence is that an appointment by deed is irrevocable unless in the deed there is contained power to revoke it.

12. In Stevens & Stevens & Ors [2007] 38 Fam LR 149, Warnick J accepted that this passage supports the proposition that “a deed by its nature is an irrevocable instrument” and Bryant CJ agreed at [18]. Senior Counsel for the 7^th to 11^th respondents tells me there was no discussion about these statements when this case was considered by the High Court (see Kennon v Spry [2008] CLR 366) and I am unable to find any.

1. Although “an appointment by deed is irrevocable unless there is contained power to revoke it”, Napier J in Elder’s Trust said:

   ...the law draws no distinction between conditions that are stated in unambiguous terms and those that are necessarily or properly implied from the language of the document, when applied to the circumstances in which the words are used. (see Chorlton v Lings, (1868) L.R. 4 C.P. 374 at p.387).

2. I am unable to properly imply from the language of the documents that the husband’s intended his resignation as Appointor to be revocable.

3. Another argument made by the lawyer for the wife has some merit. To reframe what I think has been put, there is nothing in the Deeds which provides that the husband’s resignation as Appointor is revocable or irrevocable. It is the power to appoint a new Appointor under the deeds which may be either revocable or irrevocable. The definition of Appointor says nothing about whether or not the husband can resign as Appointor revocably or irrevocably. Accordingly, once the husband has given up his office as Appointor then there is no coming back in the role of appointor, unless of course a subsequent Appointor reappoints him as Trustee and resigns as Appointor (see clause 8 of the 1989 Deeds).

4. Relevant to the last comment, senior counsel for the applicants argued that if the husband’s resignation was seen as irrevocable, a lacuna could be created under the trust if the Appointee nominated by the husband ceased to be able to fulfil that role. Senior counsel for the applicants however conceded that clause 8 of the 1989 Deeds (the relevant part of which is set out above) removes any lacuna in regard to the appointment of new Trustees (which is the Appointor’s essential function). Senior counsel for the applicants did not point to any other function carried out by the Appointor under the Deed in respect of which there would be a lacuna.

5. For each of the reasons discussed above, upon a proper construction of the deeds, the husband’s appointment of the 7^th respondent as Appointor is not revocable by him.

THE APPLICANT’S ONUS OF PROOF

1. As set out above, Napier J in Elder’s Trustee said the onus of establishing the intention to reserve the power of revocation is upon those who allege the reservation of that power.

2. Senior counsel for the applicants argued that there was no reason to regard that statement as being applicable to the situation in this case where what is asserted is a reservation of the husband’s power to revoke his decision to appoint the Appointor and not, as in the earlier cases, the power to reverse a use, settlement or disposition of property. I can see no logical reason why in principle, such a distinction should be drawn and I find that there is an onus on the applicants to establish the husband’s intention in 2004 upon the face of the 2004 document.

3. I agree with senior counsel for the 7^th to 11^th respondents that what occurred was:

   37.1.The husband instructed lawyers to use, as “the instrument”, a Deed which is inherently irrevocable;

   37.2.The husband did not merely replace the existing Trustees of the two trusts, but also relinquished his role as Guardian and Appointor so that in the future the parties solely empowered to appoint a new or different Trustee was F Nominees. The husband did not need to take such a step but elected to do so. I find that that action demonstrated an intention to act with permanency and finality;

   37.3.The husband made no express provision in the 2004 Deeds empowering him to revoke the 2004 Deeds;

   37.4.The 2004 Deeds were stated to be conditional upon three things occurring and there is no issue that those conditions were satisfied by the husband on 9 August 2004.

4. If I am wrong about my construction of the words in the documents as earlier discussed, there is at best on the applicant’s case, an ambiguity on the face of the documents in relation to the husband’s intention in 2004. In those circumstances, the issue of onus of proof arises and I find the applicants have not satisfied that requisite onus of establishing what the husband’s intention was in 2004 when he resigned as Appointor.

OTHER ARGUMENTS

1. Three other arguments were advanced, which are mentioned for completeness.

2. Firstly, the wife and the 13^th respondent argued that the husband, who is an undischarged bankrupt, did not have the capacity to exercise any power of appointment.

3. Both the wife and the 13^th respondent however ultimately abandoned that argument. The power of appointment is a power, and not property which vests in the Trustee in bankruptcy (see Lewis v Condon (2013) 85 NSW LR 99 at 119-120 [91] – [ 95]).

4. Secondly, the 7^th to 11^th respondents argue that the 2015 Deed Sole, by which the husband purported to revoke the old appointments and make new ones, was ineffectual as there was a failure to deliver the Deed Sole. I am unable to accept that argument. Delivery in the context of the law relating to deeds means whether the party executing the deed has evinced an intention to be bound immediately and it does not necessarily mean physical delivery (see Segboer and AJ Richardson Properties Pty Limited & Anor (2012) NSW SC 253 at 51 – 58).

5. Thirdly, senior counsel for the 7^th to 11^th respondents also argues that the husband cannot, by way of a unilateral deed, bring the 2004 Deeds which were multi-party deeds, to an end. Any such step would require the consent of all parties (see Warnick J in Stevens (supra) at [220-225]; Barrett J (as his Honour then was) in ING Funds Management Ltd v ANZ Nominees Ltd; ING Funds Management Ltd v Professional Associations Superannuation Ltd (2009) NSWSC 243; all of which go to the proposition that a contract should be dissolved by the means which render it binding).

6. Senior counsel for the applicants argued that whilst they do not disagree with the proposition that a multi-party deed would need to be revoked by all parties to the deed, that is not what happened in this case. It is asserted that what the husband did in the 2015 Deed was merely revoke the position of Appointor by exercising his power to remove the Appointor and that otherwise the 2004 Deed remained effective as a deed and hence did not require all the previous parties, including the previous Appointor, to concur. I accept that the applicants are correct. Had the husband reserved the power to revoke his appointment of the 7^th respondent as Appointor (which I have found he had not or alternatively the applicants have not satisfied the onus of establishing that he had), then the husband could have exercised the power of revocation without obtaining the consent of the 7^th respondent.

CONCLUSION

1. In conclusion, I find that the husband had no power to revoke his appointment of the 7^th respondent as Appointor or in the alternative, the applicants have not satisfied the onus of establishing he had reserved the power to do so.

2. Accordingly, the applications by the applicants for orders as set out in paragraphs 5, 6, 14 and 15 of the Application in a Case filed 23 October 2015, so far as they relate to declarations about the office of Appointor under the two trusts, are dismissed.

3. Senior counsel for EE N and FF N conceded that if that order was made then similarly the declarations sought in relation to the validity of the revocation of the Guardian of the Trusts and the appointment of a new Guardian for the Trusts would also be dismissed.

4. Further it was conceded that if the applicants were unsuccessful in obtaining the relief they sought under paragraphs 5, 6, 14 and 15 of the Application in a Case filed 23 October 2015, then the balance of that application, which sought consequential orders, would also be dismissed.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 10 November 2015.

Associate:

Date: 10.11.2015