ANZ Trustees Ltd v The Attorney-General for Victoria
[2010] VSC 544
•3 December 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. SCI 05572 of 2010
IN THE MATTER of s 63 of the Trustee Act 1958 and of an application pursuant to Rule 54.02 of the General Rules of Civil Procedure
BETWEEN
| ANZ TRUSTEES LIMITED (ACN 006 132 332) (in its capacity as Trustee of the Victorian Community Foundation) | Plaintiff |
| and | |
| THE ATTORNEY-GENERAL FOR THE STATE OF VICTORIA | Defendant |
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JUDGE: | SIFRIS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 November 2010 | |
DATE OF JUDGMENT: | 3 December 2010 | |
CASE MAY BE CITED AS: | ANZ Trustees Ltd v The Attorney-General for Victoria | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 544 | |
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TRUSTS AND TRUSTEES – Application by trustee for approval to execute deed affecting operation of charitable trust – Proposed deed would transfer title to trust property from trustee to unrelated association – Association would become trustee of new trust – Association already managing trust property under agreement with trustee – Uncertainty about trustee’s power to transfer the trust property – Trustee Act 1958 (Vic) s 63, Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 54.02.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Brett QC | Aitken Partners Pty Ltd |
| For the Defendant | - | Mr J Ruddle, Victorian Government Solicitor’s Office |
HIS HONOUR:
The Victorian Community Foundation (“VCF or the Trust”) was established by a Declaration of Trust made on 29 November 1983. The trust deed has been amended a number of times. The plaintiff, ANZ Trustees Limited (“ANZ Trustees”) is trustee of the Trust. The Trust was established as a perpetual charitable trust for the relief of poverty, for the advancement of education and for other charitable purposes beneficial to the Victorian community.
In 1985 an application was made on behalf of VCF to this Court for power to purchase the building now known as “Ross House” at 241 Flinders Lane, Melbourne. The application was supported by two affidavits of Vincent Kierin Kiss sworn on 7 and 15 March 1985 respectively.
An appropriate order was made by O’Bryan J on 26 March 1985. His Honour authorised the purchase of Ross House and made further orders to the effect that it be:
(a) held “as an asset of the trust fund” (ie of the VCF); and
(b) used in the same manner described in paragraphs 6 and 8 of the affidavit of Mr Kiss sworn on 7 March 1985 (“first Kiss affidavit”).
From those paragraphs of the first Kiss affidavit, it is apparent that Ross House was intended to be used to provide accommodation and services to community based organisations. These organisations were described as including small self-help organisations active in the welfare sector. The services which were intended to be provided by Ross House, included meeting rooms and general secretarial and communication facilities. It was envisaged that many of the organisations granted occupation rights in Ross House would enjoy them only for a limited period of years and also that many would not pay rent or a licence fee.
As is deposed to in the affidavit of Teresa Krystyna Zolnierkiewicz sworn 4 October 2010 (“Zolnierkiewicz’s affidavit”), Ross House was purchased with funds that included moneys donated to the Trust by various people and organisations for the purpose of acquiring the building, with the intention of using it for the purposes described.
Thus, the trusts on which Ross House is held are to some extent different from and narrower than those on which the trust fund of the VCF as a whole is held. In particular, the trust deed of the VCF does not accurately describe the relevant purposes for which Ross House is held. However, the powers and duties of ANZ Trustees as trustee are to be found in that deed.
ANZ Trustees is desirous of executing a deed the effect of which will be to transfer the title to Ross House (and a fund derived from rental payments in the sum of about $100,000) to the Ross House Association Inc (“the Association”). ANZ Trustees proposes that the Association will become trustee of a new trust. The new trust fund will, in effect, be the same trust fund (Ross House) but with a new trustee.
The reasons for the transfer of Ross House from VCF to the Association are set out in Zolnierkiewicz’s affidavit. In summary, Ross House has for many years been successfully managed by the Association. In fact, the plaintiff and the Association entered into a Management Agreement for a term of 5 years (commencing 1 October 2004) for the purposes of the management of Ross House. Under the Management Agreement, the Association attends to all aspects associated with the operation of Ross House. Amongst other things, it collects fees, pays outgoings and attends to repairs and maintenance.
The range of activities undertaken by VCF extends well beyond Ross House and the Association has taken specific responsibility in relation to Ross House, including its hands on management. Consequently, the plaintiff submits (and the Association agrees) that it is desirable that the Association, in effect, act as trustee of the asset on the basis that the asset is held on the same trusts. I am told that the activities of VCF are broad and it does not have the resources to manage the day to day operations of Ross House. Further, although the plaintiff does not manage Ross House, it receives all reports and attends meetings. This involves a disproportionately high cost to the Trust in relation to but one of its assets. Other reasons are set out in Zolnierkiewicz’s affidavit.
The Plaintiff seeks the Court’s authority under s 63 of the Trustee Act 1958 and/or Rule 54.02 of the Supreme Court Rules for ANZ Trustees to execute a deed by which:
(a)it transfers the premises known as Ross House, of which it is trustee, to the Association; and
(b)the Association becomes the trustee of the trusts on which Ross House is held. A new trust deed is contemplated (“proposed deed”).
Section 63(1) of the Trustee Act is available to be used where, in the management or administration of any property vested in trustees, any sale or other transaction is in the opinion of the Court expedient, but cannot be effected by reason of the absence of power vested in the trustees. It authorises the Court to confer the necessary power on the trustees, on such terms and conditions as the Court considers appropriate. It is in the following terms:
“Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct in what manner any money authorised to be expended, and the costs of any transaction are to be paid or borne as between capital and income.”
Rule 54.02(1) provides that a proceeding may be brought for any relief that may be granted in an administration proceeding, without actually seeking an order for general administration of the trust estate. Rule 54.02(2) then sets out a number of specific types of relief that may be sought. These include, in paragraph 54.02(2)(c)(i), “an order approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee”.
The order of O’Bryan J required Ross House to be held on the trusts set out in paragraphs 6 and 8 of the first Kiss affidavit. Upon execution of the proposed deed, Ross House will be held on the trusts set out in the Trust Terms in Schedule 1 to the proposed deed. These are set out in clause 4 of the Trust Terms. They are intended to, and substantively do, reflect the purposes described in the first Kiss affidavit, despite different wording. To the extent that the trusts are different, it is desirable for the trustee to have the authority of the Court to deal with trust fund, Ross House, in accordance with the Trust Terms, rather than the relevant paragraphs of the first Kiss affidavit.
The Attorney-General, as the guardian of charitable trusts in Victoria, has been named as the defendant to this application and does not oppose the relief sought by ANZ Trustees.
The affidavit of Ms Zolnierkiewicz shows that extensive efforts have been made by ANZ Trustees to contact the persons who donated funds for the acquisition of Ross House and to ascertain their attitude to the transfer of Ross House to the Association. None expressed opposition, although Mr Hutchinson of the H M Smith Trust expressed some reservations. These were addressed by ANZ Trustees, after which nothing further was heard from the H M Smith Trust.
The extent of the Court’s power under s 63 of the Trustee Act and Rule 54.02 of the Supreme Court Rules has recently been considered by Kyrou J in Ballad v Attorney-General for Victoria.[1] I gratefully adopt the careful and comprehensive analysis undertaken by his Honour. At paragraph 27 and by reference to authority, his Honour refers to the very large and important powers conferred on the Court by s 63 of the Trustee Act. His Honour points out that the powers are expressed in very wide and beneficial terms and are to be liberally construed.
[1][2010] VSC 525.
In all of the circumstances, I am of the opinion that it is desirable to permit the arrangements to proceed in the manner contemplated. The trust assets will remain and be held according to virtually the same trusts. The trustee will change, but this is for the benefit of all parties as set out in the affidavit filed in support. Further, I am satisfied on the evidence before me that the Association is the appropriate entity to manage the operations of Ross House. I have examined its constitution and the 2009 Annual Report. Those documents, together with the personnel behind the Association, make it a suitable entity to act as trustee and manage Ross House.
The disposition or proposed transaction is “in the management or administration” of the Trust. Further, it is, for the reasons deposed to in Zolnierkiewicz’s affidavit (as identified in summary above), expedient.
Although there is power in the trust deed for the plaintiff as trustee to sell or dispose of real property in its absolute discretion, the matter is complicated by the process (including funding) by which Ross House was acquired and renovated. The trustee is concerned that Ross House might be held on trusts other than those set out in the trust deed. The concern is not without substance and the application under s 63 of the Trustee Act is entirely appropriate.
Further, the new arrangements are desirable. The assets of the trust the subject of this proceeding are protected adequately and to the same extent as under the old arrangements. In addition, the new Trust Deed appropriately resolves any ambiguity arising out of the position heretofore.
In the circumstances, orders were made on 16 November 2010. The relevant documents were attached to the order and initialled by me.
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