Application of Bristrol Custodians Limited

[2012] NSWSC 1412

Supreme Court

New South Wales

Medium Neutral Citation:	Application of Bristrol Custodians Limited [2012] NSWSC 1412
Hearing dates:	13 November 2012
Decision date:	13 November 2012
Jurisdiction:	Equity Division - Duty List
Before:	White J
Decision:	Summons dismissed. No order as to costs.
Catchwords:	TRUSTS AND TRUSTEES - judicial advice - omission from original trust deed - deed of rectification sought to supply omission with retrospective effect
Legislation Cited:	Trustee Act 1925 (NSW) Duties Act 1997 (NSW)
Cases Cited:	Commissioner of Stamp Duties v Carlenka Pty Limited (1995) 41 NSWLR 329 Colquhoun v Dronpane Pty Limited [2011] NSWSC 1500
Category:	Principal judgment
Parties:	Bristrol Custodians Ltd (Plaintiff)
Representation:	Counsel: Dr C Rankine (Plaintiff) Solicitors: Donaldson Walsh Lawyers (Plaintiff)
File Number(s):	2012/320186

Judgment

1. HIS HONOUR: This is an application by the plaintiff for judicial advice or direction under s 63 of the Trustee Act 1925 (NSW).

1. The application concerns a trust known as the LSW Group Property Trust. That trust was established by a trust deed made on 30 October 2000. The original trustee was a company called LSW Group Pty Limited.

1. The present plaintiff was appointed as trustee in place of LSW Group Pty Limited by a deed dated 30 September 2005. Pursuant to s 54 of the Duties Act 1997 (NSW), duty of $50 would be chargeable on the transfer of dutiable property as a consequence of the retirement of the trustee and the appointment of the new trustee if the Chief Commissioner of Stamp Duties was satisfied that the new trustee was not and could not become a beneficiary of the trust (s 54(3)(b)). If the Chief Commissioner were not so satisfied, the transfer of dutiable property would be chargeable with the same duty as a transfer to a beneficiary in conformity with the trust, subject to an immaterial exception.

1. I am told (although this is not referred to in the statement of facts) that there are proceedings pending in the Administrative Decisions Tribunal in relation to an assessment by the Chief Commissioner of duty in respect of the transaction.

1. The statement of facts states that it was intended by the original trustee and the settlor that a term be included in the trust deed that included a definition of an "Excluded Entity". Clause 2.7 of the trust deed, which contains the definition of "Associate" in relation to a member, excludes from that definition an "Excluded Entity", but the trust deed includes no definition of the term "Excluded Entity" (although there is a definition of "Excluded Member").

1. The statement of facts states that the trust deed appears to have been copy typed from a "Progenitor Trust Deed" and that, in copying the words of the Progenitor Trust Deed, the draftsman omitted the definition of "Excluded Entity".

1. Clause 19 of the trust deed confers power on the trustee by a supplemental deed to revoke, resettle, add to or vary any of the provisions of the trust deed, subject to certain presently immaterial qualifications.

1. The statement of facts records that the plaintiff has prepared a document described as a "Deed of Rectification" to give effect to what is called the "rectification" of the trust deed. It is said that the proposal is to restore the original intention of the settlor and of the original trustee.

1. The statement of facts states:

"10 The Plaintiff applies to this Honourable Court for an opinion advice or direction as to whether the Plaintiff in its capacity as Trustee of the Property Trust is either:

(a) -:

i. acting within its power as trustee when executing the Deed of Rectification; and

ii. bound by the rectification effected by the Deed of Rectification once executed;

(b) immune from any liability resulting from the execution the Deed of Rectification; or

(c) any one or more of the questions stated in sub-clauses 10(a) and 10(b) apply."

1. The Deed of Rectification, which it is proposed would be executed by the plaintiff, would provide that on the original settlement of the trust on 30 October 2000 it was intended by the original trustee that the term "Excluded Entity" be defined. The proposed deed would provide that the trustee:

"3.1 DECLARES to rectify the Trust Deed so that the Trustee [sic] correctly records the terms of the Trust Deed in accordance with the intention of the Settlor and the Original Trustee by:

3.1.1 renumbering Sub-clauses 2.24 to 2.66 and the Sub-clauses thereof of the Trust Deed to sub-[clauses] 2.25 to 2.67; and

3.1.2 inserting the following clause after Sub-clause 2.23 of the Trust Deed:

'2.24 'Excluded Entity' at any time means:

2.24.1 the Settlor;

2.24.2 any person;

2.24.2.1 whom the Trustee has determined to be absolutely partially conditionally or unconditionally excluded from the class of Associates to a Member or Members; and

2.24.2.2 who would otherwise be an Associate of a Member but who is the subject of a determination by the Trustee in accordance with sub-clause 2.24.2.1;

2.24.2 the persons comprising:

2.24.2.1 the Trustee;

2.24.2.2 upon the split of this Trust - the Trustee;

2.24.2.3 as a consequence of a change of trustee - a former trustee;

2.24.3 in the case of a Person:

2.24.3.1 excluded partially - to the extent of the exclusion; and

2.24.3.2 excluded conditionally - for the duration of the:

2.24.3.2.1 period of time;

2.24.3.2.2 the existence of the circumstances; or

2.24.3.2.3 other condition

of the exclusion of that Person;

Subject to the power of the Trustee or Member to amend or revoke any such determination or notice at any time;'

3.2 ACKNOWLEDGES that it was always intended that the Trust Deed included the provision to the effect referred to in Sub-clause 3.1.2 notwithstanding any failure to expressly or satisfactorily include that provision in the Trust Deed on the Settlement Date."

1. I am told by Dr Rankine, to whom I gave leave to appear for the plaintiff on this application, that it was hoped that if the deed of rectification were executed pursuant to a direction given by the Court under s 63, that that would be of assistance to the trustee in the proceedings in the Administrative Decisions Tribunal concerning the assessment of duty on the deed providing for the change of trustees.

1. In my view the present application for judicial advice is misconceived. The only power that the trustee has to amend the terms of the trust deed is in accordance with clause 19 of the trust deed. No such amendment would have retrospective effect. It would not be given retrospective effect by being called a deed of rectification.

1. The Court has power to rectify a trust deed if there is clear and convincing evidence that, by mistake, the deed does not accord with the intention of the settlor and the original trustee (see for example, Commissioner of Stamp Duties v Carlenka Pty Limited (1995) 41 NSWLR 329.) But this is not an application for an order from the Court for rectification. If such a proceeding were brought, the Chief Commissioner of Stamp Duties would be a necessary party to those proceedings.

1. I do not doubt that the plaintiff would have power under clause 19 of the trust deed to amend the trust deed in the way it proposed. I do not doubt that it would be bound by the trust deed as so amended. But there is no material before me which would justify the giving of judicial advice that the plaintiff would be justified in varying the trust deed in that way.

1. What is proposed is for the apparent purpose of such a variation having retrospective effect. That would not be the effect of the amendment. I do not know, and there is nothing before me to show, whether the amendment would otherwise have a beneficial operation in the interests of the beneficiaries of the trust, or whether it might adversely affect the interests of beneficiaries. If, as I was told, it was hoped that the new deed would advantage the trustee in proceedings before the Administrative Decisions Tribunal against the Chief Commissioner of Stamp Duties, then the Chief Commissioner of Stamp Duties should have been notified of this application so that he could be heard on it.

1. Nor would it be appropriate to give a direction that the plaintiff be immune from any liability resulting from the execution of the deed of rectification. That would not be the effect of advice under s 63.

1. The position is in some ways is similar to the circumstances in Colquhoun v Dronpane Pty Limited [2011] NSWSC 1500. I do not suggest that the same issues concerning rectification as arose in that case would arise in a rectification suit concerning the present trust deed. I have no view about that one way or the other. But that was also a case in which parties had sought by way of amendment of a trust deed to achieve a result that could only be achieved by an order for rectification. The attempted retrospective cure by amendment was not possible. Nor is it so in this case.

1. I am not satisfied that it would be a proper exercise of the plaintiff's powers as trustee for it to enter into the proposed deed of rectification. In any event, entering into such a deed would not achieve the result which is apparently sought. That position would not be improved by giving judicial advice, or a direction, under s 63 of the Trustee Act that the plaintiff execute such a deed.

1. For these reasons I order that the summons be dismissed.

1. No order for costs is sought in the summons and no such order is made.

Decision last updated: 22 November 2012