Brougham v Edwards

Case [2024] SASCA 59

SUPREME COURT OF SOUTH AUSTRALIA

(Court of Appeal: Civil)

BROUGHAM v EDWARDS

[2024] SASCA 59

Judgment of the Court of Appeal  

(The Honourable Justice Livesey, the Honourable Justice Doyle and the Honourable Auxiliary Justice Buss)

10 May 2024

EQUITY - TRUSTS AND TRUSTEES - APPOINTMENT, REMOVAL AND ESTATE OF TRUSTEES

DEEDS - DEED POLL

The appellant and his father, Peter Brougham, operated the Brougham farm before 2016.  The farm had been in the Brougham family for some generations.  In 2016 the Brougham Farm Trust Deed was settled, under which Peter Brougham and his wife Pamela Brougham were the appointors and their son, the appellant, was trustee.  They and other family members were beneficiaries.  The appellant assumed operation of the farm and the associated debts.  Pamela Brougham died in 2018. 

After the appellant and Peter Brougham fell into dispute, in October 2020 Peter Brougham, exercising his power as appointor under the Brougham Farm Trust Deed, removed the appellant as trustee and appointed himself and the respondent as joint trustees.  At around the same time, the appellant as trustee of the Brougham Farm Trust, purportedly transferred the farm to himself, which he effected as a distribution of the capital of the trust in specie.  Caveats were lodged.

The matter came on urgently in November 2020 on Originating Application supported by affidavits as it was known that Peter Brougham was gravely ill.  The appellant filed a Response and a supporting affidavit.  The issues raised by the parties concerned the validity of the removal and replacement of the appellant as trustee, and the validity of the transfer of the farm to the appellant.  These were bound up in three essential issues or contentions:

1. Whether the respondent had standing to seek relief.

2. Whether the Deed of Appointment dated 15 October 2020, by which the respondent was appointed, was valid and effective (and the date from which it was valid and effective).

3. Whether the appellant’s Deed Poll purporting to transfer the capital of the trust in specie to himself in his personal capacity was null and void. 

These issues were argued at hearings on 10 December 2020 and 2 July 2021, after Peter Brougham had died.  The appellant did not raise any new or different issues and only hived off an argument about whether he had a claim under a constructive trust.

After a trial held between late 2020 and early 2022, during which the parties awaited the grant of probate on the deceased estate of Peter Brougham, the primary judge found in favour of the respondent and against the appellant: the Deed of Appointment was valid and the Deed of Transfer was ineffectual because the appellant was no longer trustee when he purported to make the transfer.  Declarations and consequential orders were made in the terms reflected in the revised Originating Application.

By this appeal the appellant challenged the basis on which the primary judge exercised jurisdiction as well as the terms of the declarations which were said to be too broad.…

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Brougham v Edwards [2024] SASCA 59
Case
[2024] SASCA 59
Decision Date

CaseChat Overview and Summary

The appeal concerned the Brougham Farm Trust, established by Peter Brougham and his wife, who were the appointors, and their son, the appellant, who was the initial trustee. The dispute arose when Peter Brougham, facing financial difficulties, sought to remove his son as trustee. This led to a series of actions in October 2020, including the appellant lodging a caveat, Peter Brougham executing a deed appointing himself and the respondent as new trustees, the appellant executing a deed poll distributing the farm to himself personally, and the appellant lodging a further transfer and caveat. The Supreme Court of South Australia was required to determine the validity of these actions.

The central legal issues before the court were whether the respondent had the standing to seek relief under the Trustee Act, whether the deed appointing the respondent and Peter Brougham as new trustees was valid and effective, and whether the appellant's deed poll purporting to transfer the trust's capital to himself in his personal capacity was null and void. The appellant also contended that the power of appointment could only be exercised during the lifetimes of Peter and Pamela Brougham.

The court reasoned that the respondent had standing to seek relief under the Trustee Act, citing provisions that permit beneficiaries or any person with a proper interest in the trust to apply for orders. The court found that the parties had conducted the proceedings in the court below on the basis that the issues argued were dispositive of the matter. Consequently, the court rejected the attempt to raise new points on appeal regarding the breadth of the relief ordered. The court concluded that no error in the exercise of jurisdiction had been made and that the declarations made by the primary judge were appropriate given how the proceedings were framed and conducted.

The appeal was dismissed, with the parties to be heard as to consequential orders, including any stay and costs.

Orders

Orders of the court

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Background

Background to the litigation

The appointors of that trust were Peter Brougham and his wife, Pamela Brougham. The trustee was their son, the appellant. They and all persons who are relatives of them for the purposes of s 71CC of the Stamp Duties Act 1923 (SA) are beneficiaries.[2][2] Exhibit JRME 3 to the affidavit of James Robert Murray Edwards dated 5 November 2020 (Brougham Farm Trust) clause 7.Factual background Although affidavits were filed in the court below, the parties proceeded on the basis of an agreed chronology, supplemented by agreed facts. Most of the affidavits were not received, although most of the exhibits were tendered.[3] What follows is largely taken from what was agreed.[3] Transcript of Proceedings, Edwards & Ors v Brougham (Supreme Court of South Australia, SCCIV‑20‑004859, Kourakis CJ) (Transcript book (10 December 2021), 27.1-28.30). The Brougham farm comprises 864 hectares of farming land located between Port Neill and Tumby Bay, 70 km north of Port Lincoln. The farm has apparently been valued at a sum in the order of $4 million. In May 2016, the registered proprietor of Brougham farm was Mr Peter Brougham. The farm had been owned by the Brougham family for several generations. It was an agreed fact at trial that Mr Peter Brougham and the appellant were in a business relationship concerning the use of the Brougham farm for the business of primary production for 12 months immediately preceding May 2016. At that stage, Peter was in his early 70s and the appellant in his mid-40s. The retirement of Peter Brougham was in prospect. On 17 May 2016, Mr Peter Brougham transferred the Brougham farm to the Brougham Farm Trust. The Memorandum of Transfer which was executed between Peter Brougham and the appellant as trustee recorded that the consideration was “no consideration” (the transfer). At the time, the appellant agreed in his capacity as trustee to accept the transfer on the bases that he agreed to take over responsibility for all debt secured under an existing registered mortgage with the National Australia Bank, and that he would “do all that is required to ensure that Peter [Brougham] is released from all personal guarantees given to any lender and agrees to forever indemnify Peter” in relation to those guarantees and all other debts associated with the farm. Later that month, on 25 May 2016, the mortgage to the National Australia Bank was discharged and, in addition to the lodgement of the Memorandum of Transfer, a new mortgage with the Australia and New Zealand Bank was registered. Later still in 2019, that mortgage was discharged, and a new mortgage was registered with Westpac Banking Corporation (Bank SA). October 2020: purported removal of appellant as trustee and the transfer When the appellant and his father later “fell into dispute”, Mr Peter Brougham was by then in straitened financial circumstances and the appellant had refused his request for money. There was then a great deal of activity during October 2020, which may be summarised as follows:1.On 2 October 2020, the appellant saw his solicitor and executed a Client Authorisation for transactions concerning the Brougham farm under the Real Property Act 1886 (SA). He instructed that a caveat be lodged on the Brougham farm title. It is not necessary to address the detail of the caveat save to observe that it referred to the appellant’s interest in the farm pursuant to a constructive trust. 2.Peter Brougham saw his solicitor, and on 15 October 2020 he executed a Deed of Appointment in his capacity as appointor under the trust. By that deed, the appellant was removed as trustee and Peter Brougham and his accountant, the respondent, were appointed as the new trustees. 3.On 16 October 2020, the appellant executed a Deed Poll by which, in his purported capacity as trustee of the Brougham Farm Trust, he distributed the Brougham farm in specie to himself in his personal capacity. The Deed Poll was backdated to 2 October 2020.4.The appellant was notified of his removal as trustee by a letter from Peter Brougham’s solicitors. The primary judge found that the appellant was apprised of his removal by 21 October 2020.[4]5.On 30 October 2020, the appellant lodged a Memorandum of Transfer by which he transferred the Brougham Farm from himself in his capacity as trustee, to himself in his personal capacity, for no consideration and, in addition, he lodged a second caveat.6.On 9 November 2020, Peter Brougham and the respondent executed a deed, pursuant to clause 29.1 of the Brougham Farm Trust Deed, to vary clause 18 so that, on and from the death of Peter Brougham, the respondent would take the office of appointor. [4] Reasons, [7].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Where there is no issue about jurisdiction and, where what was argued at trial was intended by the parties to be dispositive, the attempt to raise these new points as demonstrating error in the breadth of relief ordered by the primary judge must be rejected. Conclusion In circumstances where no error in the exercise of jurisdiction was made, and the breadth of the declarations was not inappropriate having regard to the way in which the proceedings below were framed and conducted, the appeal should be dismissed. The parties should be heard as to consequential orders, including as to the stay, and as to costs.

Ratio Decidendi

Legal Principle Established

The respondent relied on, amongst other statutory provisions, ss 36 and 91 of the Trustee Act and s 69 of the Administration and Probate Act 1919 (SA) (the Administration and Probate Act). Section 36(1) provides:36—Power of the Court to appoint new trustee(1)The Supreme Court may, on the application of a person referred to in subsection (1c), make—(a) an order removing one or more of the trustees of a trust; or(b) an order replacing one or more of the trustees of a trust; or(c) an order appointing a trustee or trustees, or an additional trustee or trustees, of a trust; or(d) any other order that in its opinion is necessary or desirable. The appellant’s Response filed on 4 December 2020 pursuant to r 83.1 of the Uniform Civil Rules, together with a supporting affidavit, did not raise any new or different issues.[15] The Response put into issue whether the respondent had standing to seek relief under s 36 of the Trustee Act, as well as whether orders could relevantly be made under that Act. The Response asserted that the deed of removal and replacement dated 15 October 2020 (otherwise referred to as the Deed of Appointment) was “ineffective” as the power of appointment could only be exercised by Peter and Pamela Brougham “during their lifetimes”.[16][15] Brougham v Edwards & Ors (Pleadings book) page 20. [16] Transcript book (10 December 2020), 16.36-19.30. By 10 December 2020, after Peter Brougham had died, the respondent’s written outline and oral submissions to the primary judge made it clear that he sought the determination of three issues:[17]1.Whether he had standing to seek relief.2.Whether the Deed of Appointment dated 15 October 2020, by which he was appointed, was valid and effective (and the date from which it was valid and effective).3.Whether the appellant’s Deed Poll purporting to transfer the capital of the trust in specie to himself in his personal capacity was null and void. [17] Applicant Outline of Submissions 10 December 2020, [20]. Transcript book (10 December 2020), 14.7‑15.36). Reflected in the relief claimed and ruled on by the primary judge, Reasons, [12]. These issues were argued at hearings on 10 December 2020 and 2 July 2021. The respondent’s written materials and oral submissions on 10 December 2020 addressed the issue of his standing to seek relief pursuant to ss 36(1c)(b) and (1c)(e) of the Trustee Act, which are in the following terms:(1c)The following persons may apply for an order under this section:(a) the Attorney-General; or(b) a trustee of the trust; or(c) a beneficiary of the trust; or(d) in the case of a trust established wholly or partly for charitable purposes the following persons may apply for an order in addition to those referred to in the other paragraphs of this subsection:(i)a person who is named in the instrument establishing the trust as a person who is entitled to, or may, receive money or other property for the purposes of the trust; or(ii)a person who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustees before distributing or applying money or other property for the purposes of the trust; or(iii)a person who in the past has received money or other property from the trustees for the purposes of the trust; or(iv)a person of a class that the trust is intended to benefit; or(e) any other person who satisfies the Court that he or she has a proper interest in the trust.