Ballantyne v Ballantyne

[2010] SASC 273

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

BALLANTYNE v BALLANTYNE & ORS

[2010] SASC 273

Judgment of The Honourable Justice White

3 September 2010

EQUITY - TRUSTS AND TRUSTEES - GENERALLY - OTHER MATTERS

The trustees of a family trust purported by deed poll to vest certain property of the trust in particular beneficiaries and in the estate of the survivor of the two trustees - vesting to occur on the death or earlier incapacity of the survivor - whether vesting authorised by the terms of the trust deed - whether term relied upon by the trustees formed part of the trust deed at the time the deed poll was made - whether the trust deed otherwise authorised the vesting - whether the estate of the survivor of the trustees was a beneficiary for the purposes of the trust deed - whether deed poll invalid because it was testamentary in character and had not been executed formally as a will, or because it was conditional and uncertain.

Held:  term relied upon by trustees did not form part of the trust deed, but vesting was (in part) permitted by other provisions in the trust deed on the basis that it avoided circuity of action - estate of the trustees' survivor not a beneficiary - that part of the vesting was invalid - deed poll not otherwise invalid or ineffective - plaintiff's claim dismissed.

SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - THE MAKING OF A WILL - TESTAMENTARY INSTRUMENTS - TESTAMENTARY CHARACTER

Two defendants claimed that the deed poll was of a testamentary character, and as such did not comply with necessary formalities.

Held:  deed poll not of a testamentary character.

Inheritance (Family Provision) Act 1972 (SA) ; Turstee Act 1936 (SA), s 33A; Wills Act 1936 (SA) s 10(1), s 8, s 4(1),, referred to.
Butler v Butler (1880) 7 LR (I) 401, discussed.
In Re Collard's Will Trusts [1961] 1 Ch 293; In Re Hain's Settlement [1961] 1 WLR 440; Locke v Dunlop (1888) 39 Ch D 387; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; Zirkler v McKinnon [2002] NSWSC 285; Union Bank of Australia v Harrison, Jones & Devlin Ltd [1910] 11 CLR 492; Russell v Scott (1936) 55 CLR 440; In Re Barnett [1908] 1 Ch 402; Freme v Clement (1881) 18 Ch D 499; In Re Pauling's Settlement Trusts (1964) 1 Ch 303; Re Beckett's Settlement [1940] Ch 279; Briginshaw v Briginshaw (1938) 60 CLR 336; Jones v Dunkel (1959) 101 CLR 298; Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705; Pilkington v Inland Revenue Commissioners [1964] AC 612, considered.

WORDS AND PHRASES CONSIDERED/DEFINED

"Testamentary character"

BALLANTYNE v BALLANTYNE & ORS
[2010] SASC 273

Civil

1. WHITE J:             The members of the Ballantyne family are in dispute about the present ownership of certain farming land near Gladstone. 

2. The first and second defendants, Lee and Scott, contend that the disputed land is held by the Robert Peter Ballantyne Family Trust (the Trust) of which they are now the trustees.  Their four siblings (the plaintiff and the third, fourth and fifth defendants) contend that some of the land has vested in Lee, and some in Scott, with the remainder forming part of their mother’s estate, and is therefore to be distributed in accordance with her will, subject to any orders which may be made under the Inheritance (Family Provision) Act 1972 (SA). In these proceedings, this Court is asked to resolve that dispute.

3. The sixth defendant is the principal of the firm of solicitors who prepared the Deed of Settlement establishing the Trust (the Trust Deed) and a later Deed Poll which was intended to vest property owned by the Trust.

   Factual Background

4. Each of the parties to these proceedings, apart from the sixth defendant, is a child of Robert and Valmai Ballantyne.  Robert died on 1 September 1999 and Valmai on 16 January 2006.

5. In late 1997, Robert and Valmai arranged with the sixth defendant to establish the Trust.  On or about 4 December 1997, the sixth defendant as settlor and Robert and Valmai as trustees, executed the Trust Deed by which the sixth defendant settled upon Robert and Valmai the sum of $100 to be held on trust and subject to the provisions of the Trust Deed.  It was stamped at the stamp duties office on 1 May 1998.  The Trust is a discretionary family trust.

6. The Trust Deed bears the date 20 October 1997.  I am satisfied, however, that it was in fact executed on 4 December 1997 at the office of the sixth defendant. 

7. The Trust Deed identified Robert and Valmai, their children and grandchildren and remoter issue, together with the spouses, widows and widowers of these persons, as the beneficiaries of the Trust (whether as specified or general beneficiaries) (cll 1.1, 1.2. 1.4 and 1.10).  It did not, however, contain any provision indicating that the heirs, successors or assigns of a beneficiary should also be regarded as a beneficiary. 

8. At the time of, or shortly after, the establishment of the Trust, Robert and Valmai transferred a number of farming properties to it.  At the time of Valmai’s death in January 2006, the Trust held some 11 farming properties.

9. On 13 April 1999 Robert and Valmai executed a Deed Poll, the intended effect of which was to provide that upon the death of the survivor certain land held by the Trust would vest in Lee, certain land in Scott, and certain land would become part of the residuary estate of the survivor.  These proceedings concern a dispute about the validity of this Deed Poll.

10. The Deed Poll contains three Recitals.  I set out the terms of those Recitals in the form of the Deed Poll contained in the folder of original documents relating to the Trust maintained in the sixth defendant’s office until after the commencement of the present proceedings.

    WHEREAS

    A.By Deed dated the 20^th day of October 1997 made between PAUL IGNATIUS BOYLAN of 138 Florence Street Port Pirie in South Australia as Founder and and ROBERT PETER BALLANTYNE and VALMAI JUNE BALLANTYNE of Gladstone a trust fund was established for the benefit of ROBERT PETER BALLANTYNE and VALMAI JUNE BALLANTYNE and their children and remoter issue.

    B.The Trustee has the power pursuant to clause 6.1 of the Trust Deed to distribute the assets and income of the Trust Fund.

    C.The Trustee is desirous of distributing a portion of the assets of the Trust Fund.

11. It can be seen that Recital “A” refers to a deed dated 20 October 1997.  However, when the Deed Poll was first executed, the Recital referred to a deed dated “20^th day of October 1998”.  The year 1998 has since been changed to 1997 in circumstances not explained in the evidence.

12. The operative provisions in the Deed Poll are as follows:

    NOW THIS DEED WITNESSES

    1.The Trustee acknowledges the accuracy of the Recitals.

    2.Pursuant to the provisions of clause 6.1 of the Trust Deed the Trustee hereby determines to make and makes the following conditional distributions of assets of the Trust Fund.

    (a)The land being,

    i.Section 307E Hundred of Pirie,

    ii.Section 307W Hundred of Pirie,

    iii.Part Section 302 Hundred of Pirie,

    iv.Section 184 Hundred of Yangya,

    v.Section 185 Hundred of Yangya and

    vi.Allotment 1 of the subdivision of 175 Hundred of Yangya

    will vest in ROBERT SCOTT BALLANTYNE of Gladstone upon the death of the survivor of ROBERT PETER BALLANTYNE and VALMAI JUNE BALLANTYNE or upon a sole trustee of the trust being legally incapacitated.

    (b)     The land being,

    i.      Allotment 386 Filed Plan 187708 Hundred of Caltowie

    and

    ii.     Pieces 91 and 92 Hundred of Booyoolie

    will vest in LEE PETER BALLANTYNE of Gladstone upon the death of the survivor of ROBERT PETER BALLANTYNE and VALMAI JUNE BALLANTYNE or upon a sole trustee of the trust being legally incapacitated, subject to LEE PETER BALLANTYNE accepting liability for any debt secured by mortgagee on the land and giving the trustee an indemnity for the debt.

    (c)     All other farming and grazing land will upon the death of the survivor of ROBERT PETER BALLANTYNE and VALMAI JUNE BALLANTYNE or upon a sole trustee of the trust being legally incapacitated vest in the executor or personal representative of the survivor to be held by the executor or personal representative as if the land was part of the residuary estate of the survivor.

    3.In all other respects the terms of the Trust Deed are confirmed.

    Signed by  )
      )
    ROBERT PETER BALLANTYNE and            )              (signed)
      )
    VALMAI JUNE BALLANTYNE                   )              (signed)
      )
    In the present of:  )

    (signed)

    In its original form, cl 2(a)(i) and (ii) referred to Sections 703E and 703W respectively.  At some time since 13 April 1999, an unknown person has crossed out each of the numbers “703” and inserted in their place the handwritten numbers “307”.  It seems that this was done to correct an error in the original Deed Poll caused by a transposition of numbers.  The amendments were not initialled by either Robert or Valmai.

13. Recital B referred to the trustees’ power “pursuant to cl 6.1 of the Trust Deed” to distribute the assets and income of the Trust fund.  Similarly, the opening words of cl 2 in the operative provisions indicated that the trustees were purporting to act under the provisions of cl 6.1 of the Trust Deed.

14. There is a dispute about the content of cl 6.1 of the Trust Deed at the time of execution of the Deed Poll, which is in effect a dispute about its content when it was originally executed.  It is convenient to set out the form of cl 6.1. for which all parties, other than Lee and Scott, contend.

    6.     PAYMENTS TO BENEFICIARIES

    The Trustee may in the Trustee’s absolute discretion notwithstanding anything to the contrary herein contained or otherwise provided:-

    6.1    at any time or times and from time to time before the vesting day out of the capital of the Trust Fund held on trust as aforesaid but not out of any monies referred to in clause 6.4 vest any property of the trust fund in any of the beneficiaries, raise any sum [or] sums and pay the same in addition to any entitlement to income or share of income to any of the beneficiaries for his or her or their own use and benefit or apply the same to or for the maintenance education advancement or benefit of such beneficiary in such manner as the Trustee shall think fit; (Emphasis added)

    …

    This is the form of cl 6.1 in the document which purports to be the original executed copy of the Trust Deed, which was kept in the office of the sixth defendant’s firm until after the commencement of these proceedings.  For convenience, I will refer to cl 6.1 in this form as “the disputed cl 6.1” or in a like manner. 

15. Lee and Scott contend that when the Trust Deed was executed by the sixth defendant and their parents on 4 December 1997, cl 6.1 did not have the italicised words (to which I shall refer as “the disputed words”).  They also contend that the Trust Deed was altered on or before 31 March 1999 so as to introduce the disputed words into cl 6.1 and that this was done without re-execution of the Deed, or by amendment of it under the amendment powers contained in cl 14 of the Deed.

16. It was common ground that there had not been any formal amendment (or purported formal amendment) of cl 6.1 of the Trust Deed before 13 April 1999.

17. As already noted, Robert died on 1 September 1999 and Valmai died on 16 January 2006.

18. On 4 October 2005, acting in her capacity as the appointor of the Trust, Valmai appointed Lee and Scott as additional trustees of the Trust.  Lee and Scott remain the trustees of the Trust and therefore are in control of the Trust’s assets.

19. Lee and Scott contend that the Deed Poll is invalid because, without the disputed words in cl 6.1, the Trust Deed did not authorise the vesting of trust assets in beneficiaries.  They contend, in the alternative, that even if cl 6.1 did authorise the vesting of assets, the Deed Poll was invalid or of no effect for other reasons.  Their siblings seek a declaration that the Deed Poll is valid.  If the Deed Poll is valid, the land described in cll 2(a) and 2(b) has vested in Lee and Scott respectively, and the property described in cl 2(c) forms part of Valmai’s estate.  If the Deed Poll is invalid, all the property to which it refers remains an asset of the Trust controlled by Lee and Scott.

20. Apart from indicating their support for the plaintiff, the third, fourth and fifth defendants took no part in the trial.

21. Relying upon an undertaking given to him by Lee and Scott to which I shall refer later, the sixth defendant adopted a position of neutrality concerning the issue of validity.  At the conclusion of counsel’s opening of the case for Lee and Scott and after the tender of some formal admissions (including admissions by the sixth defendant), I gave permission to the sixth defendant to withdraw from further participation in the trial and thereafter he took no further part.

    Issues in the Trial

22. At the trial, the parties identified the following issues as arising from their dispute:

    1.did cl 6.1 of the Trust Deed at the date of its execution contain the disputed words, ie, the words “vest any property of the trust fund in any of the beneficiaries”?

    2.if not, did cl 6.1 of the Trust Deed otherwise authorise the Trustees to vest the property of the Trust in any of the beneficiaries?

    3.if cl 6.1 of the Trust Deed did authorise the vesting of trust assets in the beneficiaries, is the Deed Poll of 13 April 1999 (or at least cl 2(c)) nevertheless invalid or of no effect because:

    (a) it was testamentary in nature but was not executed in accordance with s 8 of the Wills Act 1936 (SA); or

    (b)    the vesting is subject to conditions and cl 6.1 did not authorise the Trustees to make conditional distributions; or

    (c)    even if a conditional vesting was authorised, the terms of the Deed Poll are vague and uncertain?

23. The plaintiff’s statement of claim also included a claim for rectification of the Deed Poll, but at the end of the trial this claim was abandoned.

24. After the trial had concluded, I invited submissions from the parties on a further issue, namely:  whether in the event that cl 6.1 did authorise some form of vesting, it authorised the particular vesting contemplated by cl 2(c) of the Deed Poll.  The plaintiff argued in favour of such authority and Lee and Scott argued against.

25. I suspect that if this issue had been identified earlier, the issues for the Court’s determination may have been more confined and ordered differently.  However, it is convenient to address the issues identified by the parties in the order outlined above, save that the additional issue can be addressed as one of the matters going to the validity or efficacy of the Deed Poll.

26. I conclude that cl 6.1 did not contain the disputed words as at 13 April 1999; that cl 6.1 did nevertheless authorise the vesting of Trust assets in beneficiaries; that cl 2(c) of the Deed Poll is invalid because it purports to vest Trust assets in a person who is not a beneficiary; and that the Deed Poll is otherwise valid and effective.

27. My reasons for those conclusions follow.

    The Witnesses

28. Counsel for Lee and Scott led evidence from three witnesses:  Scott himself, Paul Anson, their parents’ accountant and Simon Miller, a chartered accountant.  Scott’s evidence was honestly given but, apart from identifying the property held by the Trust, was only peripherally relevant to the issues identified above.  I accept the evidence of Mr Anson as honest and reliable, and will refer later to Mr Miller’s evidence.  The rest of the evidence was documentary.

    The Content of Clause 6.1 when the Deed was Executed

29. As indicated earlier, I am satisfied that, although the Trust Deed bears the date 20 October 1997, it was in fact executed on 4 December 1997.  The file records of the sixth defendant indicate that the instructions as to the terms of the Trust Deed, and the identity of the proposed trustees were not concluded until 28 November 1997.  In addition, the costings records of the sixth defendant indicate an attendance by him on Robert and Valmai on 4 December 1997.  In these circumstances, I am satisfied that it was at that time that Robert, Valmai and the sixth defendant executed the Trust Deed.

30. In contending that the disputed form of cl 6.1 was its form when the Trust Deed was executed on 4 December 1997, the plaintiffs asserted that there was a presumption that alterations to a deed should be taken to have been made before the deed was executed.[1]  It is not necessary to consider whether the law does recognise such a presumption as, even if there is, it must be able to be displaced by evidence.

    [1]    Doe d Tatum v Catomore (1851) 16 QB 745; 117 ER 1066. See also In re Spollon & Long’s Contract [1936] 2 All ER 711.

31. As evidence could not be led from Robert or Valmai, and the sixth defendant did not give evidence, the assertion of Lee and Scott that cl 6.1 did not contain the disputed words at the time of execution depended upon a number of items of circumstantial evidence considered in combination.

32. First, Lee and Scott relied upon the admission of the sixth defendant that cl 6.1 in a draft of the Trust Deed sent by him to their parents on 8 October 1997 did not contained the disputed words.  Secondly, they drew attention to the fact that the file note made by the sixth defendant of his instructions from Robert and Valmai on 28 November 1997 concerning revision of the draft Trust Deed did not mention any alteration of cl 6.1.  This suggested that cl 6.1, when executed, was in the same terms as the draft.

33. Thirdly, Lee and Scott relied on evidence from Mr Anson.  On 5 December 2000, as part of his accountancy work associated with the administration of Robert’s estate, Mr Anson asked the sixth defendant to provide him with a copy of the Trust Deed.  An employee within the sixth defendant’s firm sent a copy of the Trust Deed to Mr Anson, under cover of a “with compliments” slip, on 20 December 2000.  I will refer to this copy of the Trust Deed as “the Anson copy”.  It has the appearance of a copy of an office copy of the original Trust Deed.

34. However, cl 6.1 in the Anson copy does not include the disputed words.  This indicates that as at 20 December 2000 there was at least one copy of the Trust Deed in the sixth defendant’s office in which cl 6.1 did not include the disputed words. 

35. It is unfortunate that more oral evidence was not led about the origins of the Anson copy as it has a puzzling feature.

36. The first page of the Anson copy is an exact duplicate of the page stamped in the Stamp Duties office.  It could have been prepared only by photocopying the stamped front page of the original Trust Deed.

37. The execution page of the Trust Deed is page 44.  In the original, page 44 contains original signatures of Robert and Valmai and of the sixth defendant.  Their respective signatures were witnessed by Jacqueline Kim Stark, whose signature appears in the space provided opposite their respective signatures.  In the Anson copy, the signatures of each of the sixth defendant and of Robert and Valmai appear to be exact duplicates of each of their respective original signatures, suggesting that, at least to that extent, page 44 of the Anson copy must be a copy of page 44 of the original.  However, whereas Ms Stark’s signature appears on the original Trust Deed, the handwritten words “witness J Stark” appear in their place on the Anson copy.  This suggests that a copy was made of at least page 44 of the original Trust Deed after the execution by the sixth defendant and Robert and Valmai but before Ms Stark entered her signatures as witness.   

1. The evidence did not disclose when the office copy of the Trust Deed (used to produce the Anson copy) was made.  The parties’ submissions canvassed various possibilities.  On the case of Lee and Scott, it was either after the execution of the original by the sixth defendant and Robert and Valmai, or after the stamping on 1 May 1998.  In either event, the inference to be drawn from the Anson copy is that cl 6.1, in its original form, did not include the disputed words.

2. There is another respect in which the Anson copy is different from the original.  In cl 6.1 of the Anson copy, the word “raise” in the fourth line has been circled, whereas there is no circling in the original.  There is no evidence as to when, or by whom, that circling was added.

3. As the next piece of circumstantial evidence, Lee and Scott tendered a report from Ms Bird, a forensic scientist with expertise in document examination.  Ms Bird was not required to attend for cross-examination.  Although Ms Bird did not set out in her report all the steps in her reasoning as is recommended of experts,[2] I accept that she has the claimed expertise, and I accept her opinions about page 11 (which contained cl 6.1) of the original Trust Deed.

   [2]    Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 at [59]-]86]; (2001) 52 NSWLR 705 at 729-44.

4. Ms Bird identified a number of differences in the format and presentation of the page 11.  In particular, Ms Bird noted that the headings, and alignment of the printing were closer to the left-hand side of page 11 than was the case on other pages; that the space at the foot of page 11 was less than on the other pages; that the paper on page 11 was different from the other pages; that the print had different characteristics; and that there were indications of manual marking of the places for the holes required in order that page 11 could be inserted into a ring‑bound folder.  These markings did not appear on the other pages.

5. I accept that these features, both individually and in combination, suggest that page 11 was not prepared contemporaneously with the rest of the original Trust Deed.  This does not necessarily preclude the possibility of a replacement page 11 having been prepared and inserted into the original Trust Deed on 4 December 1997 prior to its execution.  However, the different appearance of the paper, and the difference in the character of the print each militate against that conclusion.

6. Accordingly, I accept that Ms Bird’s evidence points in favour of the conclusion that page 11, with cl 6.1 including the disputed words, was inserted as a replacement page into the Trust Deed sometime after 4 December 1997.  This is especially so, given the failure of the sixth defendant to give evidence at the trial explaining the features which Ms Bird identified.

7. Next, Lee and Scott tendered copies of four other family trust deeds prepared in the sixth defendant’s office.  All involved trusts founded by one Nicholas Moncrieff.  The trust deeds were dated 1 July 1997, 15 September 1997, 20 July 1998 and 28 June 2002 respectively (ie, two were executed before the Trust Deed in question in this case, and two after). 

8. Although none of the trust deeds are identical (being adapted to the particular circumstances of each trust), it is plain that they were prepared from a common precedent.  In the trust deeds executed on 1 July 1997, 15 September 1997 and 20 July 1998, cl 6.1 appears without the disputed words.  However, the trust deed executed on 28 June 2002 does include the disputed words.

9. I consider that the fact that the sixth defendant (using a common precedent) prepared two other trust deeds in the latter half of 1997 which did not include the disputed words in cl 6.1 provides support for the inference that those words were not included in the Trust Deed executed on 4 December 1997.  Given the obvious use of a precedent, I consider it unlikely that the sixth defendant would have made a positive decision not to include the disputed words in the trust deeds executed on 1 July 1997 and 15 September 1997, to include it in the Trust Deed executed on 4 December 1997, and then to exclude them from the trust deed executed on 20 July 1998.  It is difficult to identify any reason why the sixth defendant would have thought it appropriate to include the disputed words in the present case, but not in the other cases.  The inclusion of the disputed words in the Trust Deed executed on 28 June 2002 is consistent with a change in the underlying precedent at some stage before June 2002.

10. Next, Lee and Scott relied on evidence led from Mr Miller, a chartered accountant with PPB.  Mr Miller analysed a computer disk provided to him by the solicitors for Lee and Scott.  He was asked to assume that the disk contained data extracted from back-up tapes used by the sixth defendant in his legal practice.

11. Mr Miller concluded that the electronic precedent for a deed of family trust used in the office of the sixth defendant had been amended at some time between 15 and 31 March 1999.  He also considered that the electronic version of the Trust Deed executed on that date by the sixth defendant and by Robert and Valmai had been amended after 4 December 1997 and before 31 March 1999.  The electronic records did not indicate the particular amendments which had been made in each case, but physical examination indicated that it was only cl 6.1 which had been altered.

12. Lee and Scott relied on this evidence as indicating that the form of cl 6.1 had been altered in the office of the sixth defendant after the execution of the original.  Once the electronic version had been altered, it should be inferred (they submitted) that a replacement page 11 containing the revised cl 6.1 had been printed, and that that replacement page had been inserted into the ring-bound folder containing the original Trust Deed.

13. Although I am satisfied that Mr Miller’s evidence was honestly given, I am reluctant to attach very much weight to his opinions.  In the first place, I am not entirely persuaded of his expertise.  Mr Miller has a Bachelor of Commerce and has completed the Professional Year Program of the Australian Institute of Chartered Accountants.  However, the particular expertise upon which he relied for his opinions in this case was attributed to his completion, at the end of 2008, of a one week course conducted by an ex-police officer in Victoria.  That person had been retained by a provider of training courses in information technology.  The rigour and content of that course is not known.

14. Mr Miller acknowledged that prior to being retained in relation to these proceedings, he had not had any previous experience with the particular computer software system (OfficePower) used in the sixth defendant’s office, and that he had not had any formal training with the Unix File system used by OfficePower.  This meant that he had to make a number of assumptions as to the way in which the software system operated.

15. In addition, many of the assumptions upon which Mr Miller’s opinions were premised were not established by the evidence.  It was not established that the sixth defendant did use a computer software system for the creation of documents; that such a system had been used for the creation of the Trust Deed executed on 4 December 1997; that back-up tapes were used as part of that system; or that the computer disk provided to Mr Miller contained data derived from those back-up tapes.  However, I did not understand the plaintiff to dispute those matters. 

16. More fundamentally, the evidence did not establish the date or dates upon which the back-up tapes had been prepared; nor the validity of the assumptions made by Mr Miller as to the data recorded on those tapes.  This was significant.  Initially Mr Miller said that the data file system would record “date modified” if there had been any addition, alteration or deletion from the electronic version of the document.  However, in his cross-examination he considered that the system may still record “date modified” if the document had been accessed electronically but without any change being made to it.  Mr Miller also acknowledged that the system may allow a person to access the document electronically, insert some words into it, print off a copy but then close the electronic file without saving the amendment.

17. For these reasons, I am, as indicated, reluctant to attach much weight to Mr Miller’s evidence.  However, his opinions are consistent with the inferences to be drawn from the other evidence to which I have already referred.  His opinions also provide a further basis for the drawing of a Jones v Dunkel[3] inference to which I will refer shortly.

    [3] (1959) 101 CLR 298.

18. The plaintiff submitted that I should be slow to draw the inference that cl 6.1 did not contain the disputed words when the Trust Deed was executed on 4 December 1997.  Lee’s and Scott’s claim involved, it was said, an assertion of an unauthorised alteration of an executed document in the sixth defendant’s office, possibly associated with attempts at tax avoidance.  This was because the alteration of cl 6.1 in March 1999 (if that is what occurred) could have amounted to a re-settlement of the Trust with adverse capital gains tax and stamp duty implications.

19. It is not necessary for me to express any opinion about the taxation implications of an alteration in March 1999 of cl 6.1 to introduce the disputed words, and I refrain from doing so.  Nevertheless, I do consider that there is force in the plaintiff’s submission that Briginshaw[4] considerations should inform my evaluation of the balance of probabilities in this case.  The very idea that a document may have been amended in a solicitor’s office after its execution and without the alteration being authorised, and without compliance with the necessary formalities, is reason for pause.  The observation of Dixon J in Bringinshaw is pertinent:

    The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must effect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal.[5]

    [4]    Briginshaw v Briginshaw (1938) 60 CLR 336.

    [5] Ibid at 362.

20. Even bearing in mind the degree of assurance which is necessary, I am satisfied that cl 6.1 did not contain the disputed words when it was executed on 4 December 1997.  The indications that this is so are strong:  the draft of the document did not include the disputed words; there is no indication of cl 6.1 having received individual attention before it was executed; even after 4 December 1997, trust deeds produced from the same precedent did not include the disputed words; a duplicate of the Trust Deed which was probably prepared at about the same time as the original does not include the disputed words; and although I am not prepared to attach much weight to Mr Miller’s opinions, they do support the view that there was an alteration to the electronic trust deed precedent, and of the electronic version of the Deed of Trust in March 1999. 

21. The degree of satisfaction I derive from these matters is strengthened still further by the fact tat the sixth defendant chose not to give evidence.  As noted earlier, the sixth defendant sought permission to withdraw from participation in the trial.  His counsel said that Lee and Scott had given an assurance that they would not allege that it was the sixth defendant himself, or someone at his direction, who had replaced the page in the Trust Deed with an amended clause 6.1.  Lee and Scott did not make such an allegation, as it was not necessary as part of their case. 

22. Nevertheless, the omission of the sixth defendant to give evidence enables the inference that there had been an alteration of cl 6.1 to be drawn with more confidence.  Apart from the occasion when the Trust Deed was submitted for stamping, the sixth defendant admitted that the original remained in his office until after the commencement of the present proceedings.  Accordingly, it can be inferred confidently that any alteration of cl 6.1 occurred in his office.  The opinion of Mr Miller suggests that there was an alteration of cl 6.1 in both the Trust Deed and in the sixth defendant’s precedent document.  It can be inferred that the sixth defendant would have some knowledge at least of the alteration of the precedent document.  Lee’s and Scott’s claim that there had been an alteration of cl 6.1 after the original execution was, as the plaintiff pointed out, a serious allegation.  It is to be expected that a person in the position of the sixth defendant would wish to answer that allegation, if an answer was possible.  Further still, it is to be remembered that the sixth defendant, as a legal practitioner, is involved in the administration of justice in this State.  As such he has particular responsibilities.  In particular, this Court is entitled to proceed on the basis that he would not allow it to act on evidence indicating that an alteration had been made, if he knew, or was aware of circumstances indicating, that it had not.

23. For these reasons it is appropriate to take into account the sixth defendant’s failure to give evidence in deciding whether to accept the evidence adduced by Lee and Scott and, more pertinently, in deciding whether to accept that cl 6.1 did not contain the disputed words when the Trust Deed was executed on 4 December 1997.  That failure strengthens the inference which I draw from the other evidence.

24. As noted earlier, it was common ground that there had been no formal amendment of cl 6.1 of the Trust Deed before Robert and Valmai executed the Deed Poll of 13 April 1999.  There was no suggestion that there had been some form of ratification by Robert and Valmai of the unauthorised alteration.

25. In summary, I am satisfied that as at 13 April 1999 cl 6.1 of the Trust Deed did not contain the disputed words.  It follows that those words cannot be relied upon to establish the validity of the Deed Poll of 13 April 1999.

    Was the Deed Poll Otherwise Authorised?

26. The plaintiff submitted that even if cl 6.1 did not contain the disputed words, it nevertheless authorised the vesting of the trust assets in the way contemplated by the Deed Poll.

27. For this submission, the plaintiff invoked the principle that equity will not insist on circuity of action if the outcome which could be achieved (lawfully) by such action can be achieved more directly.  The argument ran along the following lines:  cl 6.1 authorised the trustees “out of the capital of the Trust Fund …[to] raise any sum [or] sums and pay the same …to any of the beneficiaries for his …own use and benefit or apply the same to or for the maintenance education advancement or benefit of such beneficiary in such manner as the Trustee shall think fit…”;  in the exercise of that power, Robert and Valmai could in April 1999 have raised a sum of money either by sale of a farming property to a “friendly” purchaser, or by using a farming property to secure a loan of an amount which was equal to the value of the property, paying the amount so raised to one of their sons; they could then have sold the property to that son upon payment by him to them of the amount so advanced, or have procured the friendly purchaser to sell the property to the son for the amount of the advance; in either event, the son would have finished up with the property, although by more circuitous means; and, as that outcome could have been lawfully achieved, equity permitted Robert and Valmai to achieve the same result by more direct means.

28. This submission involves two elements.  The first is whether as a matter of principle the power of payment and application in cl 6.1 can be construed in the way for which the plaintiff contends.  The second is whether, if so, the Deed Poll is an appropriate exercise of that power.

29. As part of his submission, the plaintiff referred to two authorities concerning trustees’ statutory powers to “pay or apply” trust funds by way of advancement. In South Australia, that power is contained in s 33A of the Trustee Act 1936 (SA). Section 33A provides relevantly:

    (1)Where under a trust a person is entitled to the capital of the trust property or any share thereof, the trustee may from time to time pay or apply any capital money subject to the trust, not exceeding altogether in amount one half of the value of the property or share for the advancement, maintenance, education, or benefit of such person in such manner as the trustee shall in his absolute discretion think fit.

    (2)The power conferred by this section may be exercised whether the person is entitled absolutely or contingently on his attaining any specified age or on the happening of any event, or whether his interest is subject to a gift over on his death under any specified age or on the happening of any other event, and notwithstanding that the interest of the person so entitled is liable to be defeated by the exercise of a power of appointment or revocation, or to be diminished by the increase of the class to which he belongs or whether the person is entitled in possession or in remainder or reversion.

    (3)If the person is or becomes absolutely and indefeasibly entitled to a share in the trust property, the money so paid or applied for his advancement, maintenance, education or benefit shall be brought into account as part of such share.

    …

30. In In Re Collard’s Will Trusts,[6] Buckley J held that the United Kingdom equivalent of s 33A permitted executors of a will to transfer a farm to a contingent beneficiary.  This was because it was open to the trustees, if they wished, to advance the value of the farm to the beneficiary in cash, and then to sell the farm to him for that sum.  Buckley J said:

    The principle is that the Court will not insist on circuity of action if the same result can be achieved by direct action which legitimately could be achieved by more circuitous action.[7]

    On this basis, Buckley J held that the statute authorised the application of capital monies by the transfer of trust property to the contingent beneficiary.

    [6] [1961] 1 Ch 293.

    [7] Ibid at 300.

31. This approach was endorsed by the House of Lords in Pilkington v Inland Revenue Commissioners.[8]  In that case, the trustees proposed establishing a new trust in respect of the share of an estate to which an infant beneficiary had a contingent entitlement.  A portion of the trust fund would be allocated to the new trust.  This proposal was upheld as a lawful exercise of the statutory power of advancement.  Viscount Radcliffe said:

    I ought to note for the record (1) that the transaction envisaged does not actually involve the raising of money, since the trustees propose to appropriate a block of shares in the family’s private limited company as the trust investment, and (2) there will not be any actual transfer, since the trustees of the proposed settlement and the will trustees are the same persons.  As I have already said, I do not attach any importance to these factors …  To transfer or appropriate outright is only to do by shortcut what could be done in a more roundabout way by selling the shares to a consenting party, paying the money over to the new settlement with appropriate instructions and arranging for it to be used in buying back the shares as the trust investment.  It cannot make any difference to follow the course taken in In Re Collard’s Will Trusts and deal with the property direct.  On the other point, so long as there are separate trusts, the property effectually passes out of the old settlement into the new one, and it is of no relevance that, at any rate for the time being, the persons administering the new trust are the same individuals.[9]

    [8] [1964] AC 612.

    [9] Ibid at 639.

32. The effect of the decisions in In Re Collard’s Will Trusts and in Pilkington v IRC is to permit trustees to exercise the power vested in them by provisions such as s 33A to advance monies to a beneficiary by a conveyance of property for its market value.  In this circumstance, the transfer of the property is treated as the equivalent of an advancement of a sum of money equal to the value of the property.

1. The plaintiff’s submission was, in effect, that the power of payment and advancement contained in cl 6.1 of the Trust Deed should be construed in the same way.  He did not seek to justify the validity of the Deed Poll by reference to the statutory power of advancement contained in s 33A.  The plaintiff may have considered that in April 1999, neither Lee nor Scott had any entitlement to the trust property of the kind to which s 33A refers.[10]  Alternatively, the plaintiff may have thought that the recitals to the Deed Poll make it plain that Robert and Valmai were intending to act under cl 6.1 of the Trust Deed, and not under s 33A.

   [10]   Cf Re Beckett’s Settlement [1940] Ch 279 at 285-6.

2. Lee and Scott sought to distinguish In Re Collard’s Will Trusts and Pilkington v IRC.  They referred to the fact that both cases concerned the statutory powers of advancement.  That is so, but that does not mean that the reasoning cannot be applied in relation to the analogous provisions of a trust deed.  Secondly, Lee and Scott submitted that each of the two English cases concerned the expression “pay or apply” and not a vesting of property as was contemplated by the Deed Poll in this case.  That is not a ground for distinguishing the authorities.  In Re Collard’s Will Trust did involve a transfer of the farming land, and Pilkington v IRC involved the establishment of a new trust in respect of shares to which the infant beneficiary was contingently entitled.

3. Lee and Scott did not contend that the Trust Deed contained any other express or implied limitation on the trustee’s powers precluding them from borrowing monies secured by a mortgage of the trust properties, or from selling the trust properties to a friendly purchaser in the circumstances outlined earlier, so as to pay or apply the proceeds to a beneficiary.  Any such submission may have been difficult to sustain bearing in mind the general powers of borrowing and of conveyance contained elsewhere in the Trust Deed (cll 7.2 and 7.6 respectively).

4. Putting the disputed words to one side, cl 6.1 can be seen to comprise two separate limbs.  The trustees are empowered to raise a sum of money out of the capital of the trust fund.  Once so raised, that sum of money may be paid to a beneficiary for his or her use or benefit.  Alternatively, the trustees may apply the sum of money for the maintenance, education, advancement or benefit of the beneficiary. The concluding words to cl 6.1 (“in such manner as the trustees shall think fit”) appear to govern both limbs. The possible significance of those words can be deferred for the time being. The first limb appears similar to a power of appointment, as it authorises the trustee to determine the destination of the sum of money, whereas the second limb is more like the power of advancement contained in s 33A of the Trustee Act (although it does not depend upon the beneficiary having a present or contingent entitlement to the sum).

5. The characterisation of cl 6.1 just outlined is similar to that made in relation to a similarly worded provision considered by the Court of Appeal in In Re Pauling’s Settlement Trusts.[11] 

   [11] (1964) 1 Ch 303 at 333.

6. Clause 6.1 plainly contemplates that the powers which it vests may be exercised by the trustee in a way which depletes the capital of the trust fund.  That is because a sum may be raised for the purposes of either limb by the sale of an asset of the Trust.

7. In my opinion, cl 6.1 should be construed as permitting the trustees to do directly what they are authorised to do by more circuitous means.  I do not consider that there is, in this respect, a relevant distinction in principle between cl 6.1 of the Trust Deed, and the statutory provision considered in In Re Collard’s Will Trusts.[12]    In that case, Buckley J said:

   In the present case, the farm has recently been valued by qualified valuers at ₤20,000, and an advance of ₤20,000 would be within the financial limit of the power of the advancement which the trustees at present have, having regard to the value of the elder daughter’s settled share.  So far as I can see, there would be nothing wrong in the trustees making an advance in cash to her son of ₤20,000 and subsequently selling the farm to him for ₤20,000.  In those circumstances it seems to me that the Court need not insist on that process having gone through; and that the right view is that the trustees have power to convey the farm to the son and treat that conveyance as an advancement to him of its market value.[13]

   Similarly, in the present case the trustees could have made advances in cash to Lee and Scott and could have sold a farm property to them from the amounts so advanced.

   [12] [1961] 1 Ch 293.

   [13] Ibid at 301.

8. Accordingly, I hold that even without the disputed words, cl 6.1 permitted in principle a conveyance of trust lands to Lee and Scott in lieu of more circuitous action designed to achieve the same result.  This conclusion also means that I do not accept Lee’s and Scott’s alternative submission that there could not be a vesting of assets of the Trust without a vesting (by bringing forward the vesting day) of the whole Trust.

9. There remains the question, however, of whether the Deed Poll of 13 April 1999 should be upheld as an exercise of the trustees’ power of this kind.  This is the question to which the remaining issues in the trial were directed.  I note at this stage, however, that no party suggested that the deferred nature of the vesting contemplated by the Deed Poll meant that the reasoning of In re Collard’s Will Trusts and Pilkington v IRC could not be applied in this case.

   Is the Deed Poll Testamentary in Character?

10. Lee and Scott contend that the Deed Poll is testamentary in effect.  Accordingly, as it had not been executed in accordance with the requirements of the Wills Act 1936 (SA), it was not effective to convey an asset to them, or to the survivor’s estate.

11. Section 8 of the Wills Act stipulates that a will is not valid unless it is in writing, and executed by the testator in the presence of two witnesses, each of whom must also sign the will in the presence of the testator.  The Deed Poll did not conform with these requirements as it was executed by Robert and Valmai in the presence of only one witness, and it was only that witness who entered his signature on the document.

12. A “will” is defined in s 3(1) of the Wills Act as follows:

    will includes testament, codicil, appointment by will or by writing in the nature of a will in exercise of a power and a disposition by will and testament or devise of the custody and tuition of any child by virtue of the Imperial Act passed in the twelfth year of the reign of King Charles the Second, Chapter 24, and any other testamentary disposition.

    Counsel for Lee and Scott emphasised the words “appointment by will or by writing in the nature of a will in exercise of a power” in this definition.  The argument was that the Deed Poll was an exercise of the trustees’ power as there was in effect “an appointment by will or by writing in the nature of the will in exercise of a power”.  Alternatively, counsel relied upon the concluding words in the definition of “will”, namely, “any other testamentary disposition”. 

13. Counsel referred in particular to the provisions in the Deed Poll that the vesting was to take place upon the death of the survivor of Robert and Valmai.  He emphasised the underlying nature of a will, namely, its character as an exercise of power[14] and that the power of disposition of property may be exercised by deed or will.[15]  Counsel submitted that In Re Barnett[16] was authority for the proposition that an exercise of a power of appointment, which has effect only on the death of the appointor is testamentary in nature and of no effect if not properly executed as a will.  His underlying proposition was that a disposition of property should be regarded as testamentary if it is the death of the disponor which triggers the vesting.[17]

    [14]   Freme v Clement (1881) 18 Ch D 499 at 510.

    [15]   Theobald on Wills, 16^th Edn at 13-21.

    [16] [1908] 1 Ch 402.

    [17]   Counsel relied in this respect on the statement in Halsbury’s Laws of England, 3^rd Edn, Vol 30 at [1275] that “a deed not intended to have any operation or effect until the settlor’s death is testamentary”.

14. I proceed on the basis that the true effect of the Deed Poll is to be determined by an objective assessment of its contents and of the circumstances in which it was created.  Viewed in that way I consider that the Deed Poll is not testamentary in character and is not invalid on account of non-compliance with the requirements of the Wills Act concerning the execution of a will.

15. First, the beneficial interest in the assets of the Trust could not have been the subject of a will of either Robert or Valmai.  Such an interest is not within the description of property which may be passed by a will of Robert or Valmai.[18]  As was pointed out by Dixon and Evatt JJ in Russell v Scott:

    … what can be accomplished only by a will is the voluntary transmission as death of an interest which up to the moment of death belongs absolutely and indefeasibly to the deceased. [19]

    The beneficial interest in the Trusts’ assets which had not yet vested in Robert or Valmai was not an interest of that kind.

    [18]   Wills Act 1936 (SA) s 4(1).

    [19] (1936) 55 CLR 440 at 454.

16. Secondly, the Deed Poll does not have the appearance or character of a will or of an “appointment by will or by writing in the nature of a will in exercise of a power”.  The words “in exercise of a power” are not to be read in isolation, so that any exercise of power which may take effect on the death of a person is to be regarded as testamentary in character.  The character of the writing containing the purported exercise of the power is also important.  This is sufficient to distinguish In Re Barnett because, as Warrington J noted, it was plain that the document in question in that case had “the characteristics of a will, and was intended to express the desires of the person who signed it as to what should be done with the property of which she was capable of disposing, after death, and not before”.[20]

    [20]   In Re Barnett [1908] 1 Ch 402 at 407.

17. Thirdly, it is not at all clear that the power of appointment contained in cl 6.1 of the Trust Deed is a power which could be exercised by will.[21]

    [21]   Wills Act 1936 (SA), s 10(1).

18. Fourthly, the provisions in the Deed Poll that the vesting of the assets may take place upon a sole trustee becoming legally incapacitated are not to be ignored.  They indicate that the vesting was not solely contingent upon the death of the survivor of Robert and Valmai.

19. Fifthly, the position of both Robert and Valmai has to be considered.  They must each have contemplated that he or she may predecease the other, in which event each must also have contemplated that the vesting was not to be contingent upon his or her own death.  On the contrary, each must have contemplated that the vesting would occur on the happening of a later event, ie, the death of the other.

20. Sixthly, it was by no means inevitable that Robert and Valmai would continue as trustees of the Trust to the time of their respective deaths.  If they had been replaced as trustees, the new trustees could (assuming that the Deed Poll was otherwise valid) have ratified the Deed Poll, thereby using the date of death of the survivor of Robert or Valmai as the identification of the date upon which the vesting would take place.  This would not have been testamentary in character.

21. Finally, as counsel for Lee and Scott acknowledged, it was open to Robert and Valmai (assuming that vesting of the Trust assets was otherwise authorised) to select a future event as the occasion on which the vesting would take place, eg, upon one of their children or grandchildren reaching a certain age.  That may have been an event which would inevitably occur after both their deaths.  In that circumstance, it seems incongruous that the date of death of the survivor, being an earlier date, could not be selected as the date upon which the vesting should take effect.  The selection of the date of death as the occasion upon which the vesting should take place is not the same as the exercise of a power by testators directing the disposition of their property following his or her own death.  As was pointed out by Dixon and Evatt JJ in Russell v Scott:

    Law and equity supply many means by which the enjoyment of property may be made to pass on death.  Succession post mortem is not the same as testamentary succession.[22]

    [22] (1936) 55 CLR 440 at 454.

22. It is not necessary to consider whether the vesting contemplated by the Deed Poll was revocable, another essential requirement for a will.[23]

    [23]   Birmingham v Renfrew (1937) 57 CLR 666 at 674.

23. For these reasons, I do not consider that the Deed Poll is invalid by reason that it was not executed in conformity with the requirements of s 8 of the Wills Act.

    Clause 2(c) of the Deed Poll and Vesting in a Non-Beneficiary

24. The intended effect of cl 2(c) of the Deed Poll is that, upon the stated events, the balance of the Trust’s farming and grazing land should vest in the executor or legal personal representative of the survivor and be held by that person as if the land formed part of the residuary estate of the survivor.  Putting to one side the circumstance of a sole trustee becoming legally incapacitated, the contemplated vesting is in effect a conveyance, on the death of the survivor, of the balance of the land to a trustee on such trusts as are specified in the survivor’s will.  Alternatively, should it turn out that the executors of the survivor’s will were the same as the trustees of the Trust, cl 2(c) contemplated a re-settlement of the balance of the land in the same trustees.  In either event, the vesting would in effect be a conveyance to the survivor’s estate, even though that estate is not within the class of beneficiaries defined by the Trust Deed. 

25. In my opinion, however it is construed, cl 6.1 did not authorise such a conveyance.

26. Conveyance of the land to the executor or personal representative of the survivor on the basis that it be dealt with as part of the survivor’s residuary estate would mean that the class of persons who may benefit may not be beneficiaries of the trust at all, or at least not wholly so.  That is because the beneficiaries of the survivor’s residuary estate need not be identical with the class of beneficiaries defined in the Trust Deed.

27. The plaintiff sought to avoid the conclusion that cl 2(c) of the Deed Poll was not authorised by cl 6.1 (whether or not it contained the disputed words) by arguing that, construed as a whole, the Trust Deed did evince an intention that the estate of a deceased beneficiary was included in the class of defined beneficiaries.  He acknowledged that the word “beneficiary” was not defined in a way which includes a deceased’s beneficiary’s heirs or successors but pointed out that there was no specific provision excluding the heirs or successors of a deceased beneficiary. 

28. The plaintiff next drew attention to a number of clauses authorising the trustees to pay or apply monies to beneficiaries “living or in existence” at a specified time (cll 3.1(a), 3.4 and 4.1).  He submitted that as these clauses confined the provision of benefits to living beneficiaries, other clauses (such as cl 6.1) which did not have such limiting words must be regarded as extending to both living and deceased beneficiaries.  Clause 23 of the Trust Deed supported this conclusion, he submitted, because it provided that a renunciation by a beneficiary of any interest in the Trust bound the beneficiary’s legal personal representatives and estate.  Unless a deceased beneficiary continued to be a beneficiary for the purpose of the Trust, such a provision was unnecessary.

29. Finally, on this topic, the plaintiff referred to the role of an executor as discussed by Isaacs J in Union Bank of Australia v Harrison, Jones and Devlin Ltd,[24] ie, the executors represent deceased persons doing what they can no longer do for themselves.

    [24] [1910] 11 CLR 492 at 514-5.

30. In my opinion, the construction of the Trust Deed proposed by the plaintiff in this respect should not be accepted.  Clauses 3.1(a), 3.4 and 4.1 refer to beneficiaries living or in existence so as to make it plain that the trustees can exercise the powers vested in them by those clauses without having to take account of those who have not yet come into existence or who have not yet (by marriage) joined the class of beneficiaries.  In this way, the insertion of the words upon which the plaintiff relies presently is for the purpose of avoiding a potential practical problem for the trustees.  They should not be understood as creating a different practical problem, namely, requiring the trustees to take account of the interests of the estates of deceased beneficiaries when making determinations (possibly many years) after the death of the beneficiary.

31. Clause 23 is capable of operating in relation to decisions of the trustees made after a renunciation but before the death of the beneficiary.  It should not be taken as an indication that deceased beneficiaries continue to be in the class of defined beneficiaries.

32. Finally, the context and language of cl 6.1 itself points in favour of the beneficiaries to which it refers being living beneficiaries.  The second limb of cl 6.1 contemplates applications of monies for the “maintenance, education, advancement or benefit” of a beneficiary.  Those purposes are aptly understood as forms of assistance to beneficiaries.  That is consistent with the view taken by Zelling J in In the Estate of Wardle[25] that maintenance or advancement for the purposes of the Inheritance (Family Provision) Act 1972 (SA) relates only to the period before the death of the applicant. It is plain that the words “beneficiary” and “beneficiaries” in cl 6.1 are used with a consistent meaning. Accordingly, any reference to a “beneficiary” in cl 6.1 should be taken to contemplate only a living beneficiary.

    [25] (1979) 22 SASR 139 at 144.

33. I conclude therefore that the powers vested in trustees by cl 6.1 may be exercised only in relation to living beneficiaries.  Clause 2(c) of the Deed Poll purported to benefit the estate of a beneficiary after the death of that beneficiary.  Accordingly, it was not authorised by cl 6.1 (with or without the disputed words).

34. It was common ground that if the Court came to this conclusion, cl 2(c) of the Deed Poll could be severed, leaving the vesting contemplated by cll 2(a) and 2(b) intact.

    Does Clause 6.1 Authorise Conditional Distributions?

35. Lee and Scott contend that, with or without the disputed words, cl 6.1 does not authorise conditional distributions. 

36. The Deed Poll stated expressly that the vestings for which cl 2 provided were “conditional distributions”.  The conditions are that the vesting does not take effect until the death of the survivor of Robert and Valmai, or the legal incapacity of a sole trustee and, in Scott’s case, his acceptance of liability for any debts secured by the land and his grant of an indemnity to the trustees for that debt.  Lee and Scott contend that each of these conditions is not authorised by cl 6.1, whether or not it contains the disputed words.

37. Lee and Scott referred first to Butler v Butler.[26]  In that case, a testator had left a sum of money to trustees directing that his daughter be entitled to the income derived from it and, on her death, upon trust for her children “in such shares and proportions” as the daughter should “by deed or will appoint or direct”.  By her will, the daughter directed that a portion of the sum be paid to her elder son upon his attaining 30 years with a further direction that the son be precluded from the payment “if his conduct should prove unworthy to receive such token of his beloved grandfather’s bounty, and of his mother’s forbearance and forgiveness”.  The Master of the Rolls held each condition to be invalid on the basis that neither was authorised by the terms of the father’s will.

    The donee of the power may exclude an object altogether, but if he purports to exercise the power in favour of that object, he must appoint according to the terms of the power.[27]

    The Master of the Rolls noted that the power given to the daughter did not include any words such as “in such manner and form” as she should see fit which may have authorised her to impose conditions.

    [26]   (1880) 7 LR (I) 401.

    [27]   Ibid at 406.

1. Butler v Butler is therefore authority for the proposition that the donee of a power must exercise it in accordance with its terms.

2. In the present case, cl 6.1 did include words capable of permitting conditions to be attached to a vesting of property, namely, the concluding words “in such manner as the trustee shall think fit”.  Those words should not be construed narrowly.  The determination of the manner in which a payment is to be made may include the  fixing of the time or occasion on which the payment is to be made, or the action required of the recipient before the monies are paid.  Accordingly, I consider that the concluding words in cl 6.1 do authorise the Trustees to exercise the power by the fixing of a future time or event upon which a vesting becomes effective, as well as by requiring a beneficiary to undertake responsibility for any outstanding indebtedness on property transferred to him or her.

3. For this reason, I consider that this particular challenge to the validity of the Deed Poll fails.

4. Lee and Scott also submitted that a stipulation that the vesting take place at a later time may mean that that time is not reached before the vesting date of the trust, whether as originally stipulated in the Trust Deed (80 years from the date of the Deed) or at such earlier date as the trustees may appoint (cl 1.8).  In the circumstances of this case, the prospect that a vesting of particular property at a future date may turn out to be ineffective is not sufficient to render invalid a vesting of the Trust assets under cl 6.1.

   Is the Deed Poll Uncertain?

5. Finally, Lee and Scott contend that the Deed Poll was so uncertain as to be invalid.  This submission was not developed in any detail.

6. The argument focussed on the words “upon a sole trustee …being legally incapacitated”.  Lee and Scott accept that the notion of legal incapacity is well understood.[28]  They contend however that a person may become legally incapacitated as a result of a sudden event, or as a result of a slowly developing condition.  In the latter circumstance, the stage at which the person becomes legally incapacitated will be unclear.  Therein lay the uncertainty.

   [28]   Cf Zirkler v McKinnon [2002] NSWSC 285 at [57].

7. I proceed on the basis that an exercise of the power under cl 6.1 must be sufficiently certain in order to be efficacious, and on the further basis that the relevant time for consideration of this question is the date of the Deed Poll.[29]

   [29]   In Re Hain’s Settlement [1961] 1 WLR 440.

8. I agree that the question of whether or not a person is legally incapacitated at a particular time is often the subject of disputation, and that it is not always easy to determine the question.  For that reason, provisions of the kind used in the Deed Poll of 13 April 1999 are usually best avoided. 

9. However, the evidence of legal incapacity involves a question of fact, and it is one which is capable of determination on proper evidence.  Legal incapacity being a state which is capable of ascertainment, I do not consider that the Court should find that cl 2 of the Deed Poll is so uncertain as to invalidate the whole Deed Poll.  As has been said in other contexts, courts should endeavour to give effect to contractual and like arrangements, rather than being astute to strike them down.[30]  Accordingly, I do not consider that the reference to the legal incapacity of a sole trustee was so uncertain as to invalidate the Deed Poll.

   [30]   Locke v Dunlop (1888) 39 Ch D 387 at 393; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109.

   Conclusion

10. For the reasons given earlier, I consider that the Deed Poll of 13 April 1999, apart from cl 2(c), was authorised by cl 6.1 of the Trust Deed.  I decline to make the declarations sought by the plaintiff.  I will hear from the parties as to the orders which are appropriate to give effect to these conclusions.