Benaroon Pty Ltd v Larmar

Case [2018] QSC 274

SUPREME COURT OF QUEENSLAND

CITATION:

Benaroon Pty Ltd v Larmar & Ors [2018] QSC 274

PARTIES:

BENAROON PTY LTD
ACN 009 990 381

(Applicant)

v
YVONNE MARGARET LARMAR
(first respondent)
THE LARMAR TRUST No. 3
(second respondent)
THE KINGDOM MINISTRIES TRUST
(third respondent)
NARELLE LARMAR
(fourth respondent)
ANNA O’LEARY
(fifth respondent)
ZACHARY O’LEARY
(sixth respondent)
CALEB COULTER
(seventh respondent)
ASHEN O’LEARY
(eighth respondent)
ROWAN HILL

(ninth respondent)

FILE NO/S:

BS No 9647 of 2018

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

23 November 2018

DELIVERED AT:

Brisbane

HEARING DATE:

9 November 2018

JUDGE:

Martin J

ORDER:

1. The Application is dismissed.

CATCHWORDS:

EQUITY – GENERAL PRINCIPLES – MISTAKE – EQUITABLE REMEDIES – RECTIFICATION – WHERE UNILATERAL MISTAKE – where a family trust was caused to be created by a director of the trustee applicant – where the settlor had no independent intention as to how the trust was to operate and acted on the instructions of a director of the trustee – where it is contended that the trust deed does not conform with the actual intention of a director of the trustee at the time of creation of the trust – where the applicant has the settlor’s consent to bring the application for rectification – whether there is clear and convincing evidence that at the time the trust was created the director of the trustee had an actual intention as to the effect of the trust which was different from the practical effect of the instrument

Butlin’s Settlement Trusts [1976] 1 Ch 251
Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329

GE Capital Finance Australasia Pty Ltd v Federal Commissioner of Taxation (2011) 219 FCR 420
Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336
Public Trustee v Smith [2008] NSWSC 397
Sanwick Pty Ltd v Kalyk [2016] NSWSC 100

COUNSEL:

F L Harrison QC and A J Anderson for the applicant

RT Whiteford for the first respondent

SOLICITORS:

Tobin King Lateef Lawyers for the applicant

McCullough Robertson Lawyers for the first respondent

  1. In March 1977 the Larmar Family Trust was created. The applicant (Benaroon) is the trustee. Benaroon was incorporated on 2 March 1977, with Earl Larmar and his former wife, Suzanne Larmar, as the original directors. Since its creation Benaroon has made distributions to, among others, Earl, Suzanne and his current wife – Margaret, the first respondent. After more than four decades of operation the trustee now says that the trust deed does not conform with the actual intention of Mr Larmar when he caused the trust to be created.

  2. The applicant seeks rectification of the trust deed by, among other things, the addition of Earl Larmar’s name to the list of beneficiaries. If the trust deed is not rectified to include Earl Larmar as a beneficiary then any distributions to him and to his spouse will have been made without authority. If it is so rectified, then it will operate to make…

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AGLC
Benaroon Pty Ltd v Larmar [2018] QSC 274
Case
[2018] QSC 274
Decision Date

CaseChat Overview and Summary

The matter before the court in Benaroon Pty Ltd v Larmar was a dispute concerning the rectification of a trust deed. Benaroon Pty Ltd, the trustee of the Larmar Family Trust, sought to have the trust deed rectified to reflect what they claimed to be the actual intention of the settlor, Earl Larmar, at the time of the trust's creation. The dispute arose from a contention that the trust deed did not conform with the actual intention of Earl Larmar regarding the beneficiaries of the trust.

The primary legal issue the court had to decide was whether there was clear and convincing evidence that, at the time the trust was created, Earl Larmar had an actual intention as to the effect of the trust that was different from the practical effect of the instrument. The court had to consider the requirements for rectification, including the need for clear and convincing evidence of the actual intention of the settlor that differed from the trust deed's effect. Additionally, the court needed to determine whether the applicant had the settlor's consent to bring the application and whether the evidence was sufficiently precise to allow the court to determine the details of the rectification.

The court found that the evidence provided by Benaroon Pty Ltd was not clear and convincing. The applicant could not establish a sufficiently precise intention that the court could use to determine the substance and detail of the precise variation to be made to the wording of the trust deed. The court noted that while Earl Larmar had no independent intention regarding the trust's structure, the evidence was uncertain and did not support his assertions about his intention at the time of the trust's creation. Consequently, the court dismissed the application for rectification.

In conclusion, the court dismissed the application for rectification of the trust deed. The evidence provided did not meet the standard required for rectification, and the applicant could not demonstrate a clear and convincing intention that differed from the practical effect of the trust deed.

Orders

Orders of the court

1. The Application is dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Both parties accepted, as do I, that for a trust deed to be rectified:“… there must be clear and convincing evidence that at the time the trust deed was executed the trustee and the settlor had an actual intention as to the effect which the deed was intended to create which was different from the effect which the instrument did have in a clearly identified way … . It must be demonstrated with clarity that the parties had a sufficiently precise intention that the court can determine both the substance and the detail of the precise variation to be made to the wording of the instrument …”[4] (emphasis added)[4] Public Trustee v Smith [2008] NSWSC 397 at [71].Who may seek rectification? It is assumed in a number of authorities that rectification will be sought by the settlor. In Re Butlin’s Settlement[5] Brightman J said that, in the absence of an actual bargain between the settlor and the trustees, “a settlor may seek rectification by proving that the settlement does not express his true intention”.[6] Those words were picked up in Day v Day[7] where Sir Terence Etherton C[8] said:“What is relevant in such a case is the subjective intention of the settlor. It is not a legal requirement for rectification of a voluntary settlement that there is any outward expression or objective communication of the settlor’s intention equivalent to the need to show an outward expression of accord for rectification of a contract for mutual mistake.”[9] (emphasis added)[5] Butlin’s Settlement Trusts [1976] 1 Ch 251. [6] Butlin’s Settlement Trusts [1976] 1 Ch 251 at 262.[7] [2014] Ch 114.[8] With whom Elias and Lewison LJJ agreed.[9] Day v Day [2014] Ch 114 at [22]. The evidence of Earl Reeves – the settlor – is relevant. He was a client of Earl Lamar and, after a conversation with him, the Reeves Family Trust was created – at about the same time as the Larmar Family Trust. Earl Reeves became the settlor of the Larmar Family Trust and Earl Larmar became the settlor of the Reeves Family Trust. In his affidavit, Mr Reeves deposes:“15. Around the time that the two trusts were created I did not know what the role of Settlor entailed, and I do not recall any specific discussions about me being the Settlor for the Larmar Family Trust. However, since Earl was my accountant, I would have signed whatever document I was given by him in relation to the Larmar Family Trust and, as such, I had no separate intentions regarding its structure.” It was not in contest that Mr Reeves’ had no relevant intention as settlor. He simply did what he was asked. I infer that both parties were content to proceed on the basis that, at the relevant time, it should be taken that the settlor’s intention was whatever Mr Larmar wanted. This case falls within the class referred to by Stevenson J in Sanwick. In any event, it appears that the applicant has the settlor’s consent to bring the application.The creation of the trust On 2 March 1977 the applicant was incorporated and, on the following day, the trust was established. At that time Earl Larmar and Suzanne Larmar were married. They divorced in March 2001 and Suzanne Larmar ceased to be a director in October 2006 following the finalisation of property proceedings in the Family Court of Australia.

Decision

Reasons for decision

The applicant submits that an inference should be drawn that, when typing up the trust deed, Margaret Ryan did not realise that she should have included the names of Earl and Suzanne Larmar in the second schedule. Further, it is submitted that she did not realise that she needed to type specifically words to the effect of “any companies and trusts in which they [the beneficiaries] have an interest including the trustee company”.Conclusion The task for an applicant for rectification is not an easy one. The constant refrain in the authorities is that an applicant must provide “clear and convincing” evidence in order to support a successful application. It is not surprising that, after 40 years, Mr Larmar’s recollection is not precise. It may be that a large part of what he says about his intention at the time is derived from a reconstruction of what he can recall. I do not, by that, imply that Mr Larmar has been dishonest. But, in the absence of any contemporaneous writing (apart from the trust deed) there is little to support his assertions. The evidence which is provided by the applicant is not clear. There is uncertainty as to the document which was provided as a draft or a precedent for Ms Ryan. There is uncertainty about the nature of the interest which Mr Larmar says the beneficiaries were to have under the trust. He is not in a position to say with the requisite degree of clarity what it was that he and his then wife agreed upon and put into place. Thus, the evidence does not establish a sufficiently precise intention such that the court can determine both the substance and the detail of the precise variation to be made to the wording of the instrument. The relief originally sought by Mr Larmar was to add as beneficiaries, trusts and companies associated with beneficiaries already mentioned. The amended originating application, though, seeks only to add Mr Larmar’s name to the list of beneficiaries in the various schedules. If the trust deed were to be rectified to accord with the limited evidence available about the discussion between Earl and Suzanne Larmar then it would need to include Suzanne Larmar’s name as a beneficiary. But that is not sought and would be inconsistent with the submissions advanced for the applicant. The available evidence is uncertain in many respects. It cannot be described as either clear or convincing. The application is dismissed.

Ratio Decidendi

Legal Principle Established

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