Campbell v Campbell

[2022] NSWSC 554

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Campbell v Campbell [2022] NSWSC 554

Hearing dates:

10, 22-26, 29-30 March 2021, 15 July 2021, and 10 August 2021

Date of orders:

6 May 2022

Decision date:

09 May 2022

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Declaration made that the property is held beneficially upon the terms of the discretionary trust. Trustee Act, s 86A orders made.

Catchwords:

TRUSTS – trusts and trustees – estate planning in rural family property – as part of the estate planning transactions were entered into purporting to transfer a grazing property into a family discretionary trust – whether the grazing property was successfully beneficially transferred to the discretionary trust or whether it remained with the transferor – whether the vesting of the discretionary trust should be brought forward from 2035 by an application of Trustee Act 1925 s 86A

Legislation Cited:

Conveyancing Act 1919, ss 23C, 54A

Limitation Act 1969, ss 27, 36

Succession Act2006, Chapter 3

Trustee Act 1925, ss 81, 86A

Cases Cited:

Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747

Francis v Francis [1952] VLR 321

Golden Mile Property Investments Pty Ltd v Cudgewong Australia Pty Ltd (2015) 89 NSWLR 237

In Re Plator Nominees [2012] VSC 284

Manks vGolden Mile Property Investments Pty Ltd (In liq) v Cudgegong Australia Pty Ltd (2016) 18 BPR 36

Martin v Martin (1959) 110 CLR 297

Noack v Noack [1959] VR 137, 140

Orr v Ford (1988) 167 CLR 316

Phung v Phung [2019] NSWSC 117

Pipikos v Trayans (2018) 265 CLR 522

Re Dion Investments Pty Ltd (2014) 87 NSWLR 753

Yard v Yardoo Pty Ltd [2007] VSCA

Texts Cited:

RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2014, LexisNexis Butterworths)

PW Young, C Croft, ML Smith, On Equity (2009, Thomson Reuters)

Category:

Principal judgment

Parties:

2018/00184327
Plaintiff: Richard Birrell Campbell
First Defendant: Beth Campbell
Second Defendant: Carolyn Luise Campbell
Alwyn Ian Tonking

2018/00188534
Plaintiff: John Bruce Campbell
First Defendant: Beth Frances Campbell
Second Defendant: Carolyn Luise Campbell

2019/374756
First Plaintiff: Beth Frances Julian Campbell
Second Plaintiff: Carolyn Luise Campbell
First Defendant: John Bruce Campbell
Second Defendant: Bruce Campbell Nominees Pty Ltd
Third Defendant: Richard Birrell Campbell
Fourth Defendant: Alwyn Ian Tonking
Fifth Defendant: John Campbell Nominees Pty Ltd ACN 646545282

Representation:

Counsel:
Beth Frances Campbell/Carolyn Luise Campbell: Mr C Wood SC, Mr C Birtles
John Bruce Campbell/JCN Nominees: Mr T O’Brien
Richard Campbell: Ms M Pringle

Solicitors:
Beth Frances Campbell/Carolyn Luise Campbell: Ms Anthea Kennedy, Bridges Lawyers
Richard Birrell Campbell: Mr Michael Daniel, Resolve Litigation Lawyers
Mr John Campbell: Mr John Stinson, Diamond Conway Lawyers
Alwyn Ian Tonking: Mr J Townsend

File Number(s):

2018/00184327; 2018/00188534; 2019/374756

Publication restriction:

No

Judgment

1. The Campbell family have farmed “Mundooie” via Warren for nearly 100 years. Over three generations the Campbell family enterprise formed a substantial cattle, wheat, and irrigated cotton property. When 43-year-old Bruce Campbell was near death in February 1976, he and his wife Julian feared that State and Federal death duties would compel its sale and disadvantage Julian and their four children.

2. Following a then-familiar path, this rural family restructured, attempting to convey Mundooie into a discretionary trust (“the Discretionary Trust”), appointing to it a corporate trustee, Bruce Campbell Nominees Pty Ltd (“Nominees”). Bruce Campbell died in March 1976 and Julian Campbell survived her husband for over 40 years. She died in June 2017.

3. In these proceedings Bruce and Julian Campbell’s four children, Carolyn, Beth, Richard, and John contest whether their parents’ estate planning objectives were achieved. But after three failed mediations and prior probate proceedings the four siblings have generated substantial legal costs. As a result, they must now sell Mundooie.

4. During the proceedings each of the four Campbell siblings referred to one another by their first names and the Court will do the same, without intending any disrespect to any party. Their parents will be referred to as Bruce Campbell and Julian Campbell.

5. In prior probate proceedings, John applied for a declaration and a grant of letters administration with an alleged informal testamentary document dated 13 March 2017 annexed. In January 2020 those probate proceedings were finally resolved. The Court granted probate of Julian Campbell’s will of 4 July 2016 (“the July 2016 will”) to her two daughters Beth and Carolyn (referred to in these reasons in that role as either “the executors”, or “the plaintiffs”).

6. These proceedings comprise three actions being heard together. The executors, as plaintiffs, bring proceedings (2019/374756) on behalf of Julian Campbell’s estate. They seek declaratory and other relief as to whether certain real estate being part of Mundooie is held by Nominees on bare trust for Julian Campbell’s estate, or whether it is held on the trusts constituted by the Discretionary Trust (“the Equity/Trust proceedings”). John is the first defendant in the Equity/Trust proceedings, Nominees the second defendant, Richard the third defendant, and the executor of Bruce Campbell’s estate, Mr Alwyn Ian Tonking SC is the fourth defendant.

7. The executors contend in their Amended Statement of Claim in the Equity/Trust proceedings that the contested portion of the real estate of Mundooie is held on bare trust for Julian Campbell’s estate. Through their First and Second Cross Claims, John, and a family company he controls, John Campbell Nominees Pty Ltd (‘JCN’), contend for the contrary position: that the contested portion of Mundooie is held on the trusts comprising the Discretionary Trust constituted by the Trust Deed. The resolution of this issue requires examination of documents in events at the time of the creation of the Discretionary Trust.

8. The Equity/Trust proceedings raised other issues that are not determined by this judgment. These included the question of the construction of the July 2016 will, or its possible rectification in relation to the gift of a property in the Sydney suburb of Manly, and whether certain water access licenses associated with Mundooie and transferred to John were held by him on trust for Julian Campbell’s estate and consequential relief transferring them to her estate.

9. Richard (in proceedings 2018/00184327) and John (in proceedings 2018/00188534) also bring claims against the executors for further provision under Succession Act2006, Chapter 3 out of Julian Campbell’s estate (respectively “Richard’s proceedings” and “John’s proceedings”).

10. Mr Wood SC and Mr C. Birtles of counsel appeared for the executors. Mr T. O’Brien of counsel appeared for John. And Ms M. Pringle of counsel appeared for Richard. And Mr Townsend, solicitor, appeared for Mr Tonking SC.

11. The initial hearing in the proceedings took place between 24 and 29 March 2021. In submissions on 29 March at the conclusion of that part of the hearing a consensus began to develop between the parties about a process for resolving parts of the Equity/Trust proceedings. As a result, all the proceedings were adjourned for a period to enable the parties to attempt to make their consensus more concrete.

12. That led to the executors filing a motion on 9 August 2021 seeking relief under the Trustee Act 1925, s 86A (“the section 86A motion”) to bring forward the vesting date of the discretionary trust. All parties supported the bringing forward of the vesting date but the outstanding question is whether the Court should in the circumstances in its discretion make the s 86A order which is sought.

13. This resulted in the parties inviting the Court, if it considered it appropriate, to consider first giving judgment in respect of two issues: (a) the central issue in the Equity/Trust proceedings, namely whether substantial parts of Mundooie were beneficially held by the discretionary trust or remained with Bruce Campbell as result of various conveyancing and other transactions in early 1976; and (b) whether the relief sought on the section 86A motion should be granted.

14. The Court has decided to give judgment in respect of both these issues. Other issues arising in the Equity/Trust proceedings, such as the issues concerning the unit in Manly or the water licenses, do not presently have to be considered. And Richard’s proceedings and John’s proceedings will be deferred for later consideration. The parties are hopeful that they may be able to be resolved by agreement after the Court’s decision on the two present issues and the publication of these reasons for decision.

15. The following is a narrative of the relevant history. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded in these reasons. For reasons of economy this narrative does not include reference to versions of the facts that have been rejected. The narrative of findings deals as concisely as possible with the specific facts that are relevant to the issues the subject of this judgment, and not the facts that are relevant to the wider issues first canvassed among these parties. It may be necessary to make findings of fact in relation to those wider issues at a later date.

Credibility of the Parties

16. Although the questions which the Court is presently deciding in the proceedings do not call for much assessment of the credibility of the parties, four witnesses gave evidence and some comments upon their credibility are nevertheless apposite at this stage before the factual narrative commences.

17. John Campbell and his brother, Richard, came across to the Court as quite different people. Those differences, and their different personal histories, go some way towards explaining why the contest in these proceedings has been so protracted.

18. Both John and Richard were capable in business and had a good sense of the main springs of agricultural commerce. Both were essentially credible and honest witnesses, although each had his own biases and tended, in a mild way, to distort the perspectives of his evidence, especially in relation to the conduct of the other.

19. Richard Campbell. Richard appeared to the Court to be very heavily burdened by the difficult experience of this legal contest and by the loss of the family property, which has become the inevitable outcome of the proceedings. He presented with a degree of resentment and resignation at the relentless and exhausting cost and detail of these proceedings. The sheer size of this contest had financially and emotionally overborne him. Upon completing his evidence, he left the Courtroom, wanting to get space between himself and this regrettable family conflict.

20. A degree of resentment on his part is understandable as the contest between him, and John has essentially destroyed his life choice of being on the family property. The sadness and resentment at what had happened was not overtly blamed upon others except to the extent that he said that both he and his mother had trusted that all would be well. He stayed close to his mother, worked the property, and felt that he should have some consideration for that.

21. John Campbell. John is an astute businessman who takes pride in his commercial acumen in building businesses. He is strongly motivated by achieving financial success in business and is self-conscious of having achieved some success. He has a natural intuitive appreciation of the strategic opportunities that arise for him in any commercial context.

22. But John’s evidence was distorted at times by his focus on attaining his own financial advantage. He carefully listened to questions and scrutinised them to ensure his answers did not disadvantage him in the proceedings. He was capable of carefully qualifying and crafting his answers to occasion himself the least prejudice in his answers. His evidence needed to be approached cautiously at times.

Carolyn Campbell

23. Carolyn Campbell was an excellent witness. Her recollection was good, her testimony reliable and her outlook on the litigation and estate issues was wholly focused upon giving a faithful account of family history as best she recalled it. Her overall motivation in this litigation was serving the best interests of the family. And in a family as divided as this one her perspective was remarkably free of distortion, and it became an important platform of clarity for the Court in several areas.

Alwyn Ian Tonking

24. Alwyn Ian Tonking was an excellent and most reliable witness. He had gone out of his way over many years as a solicitor and family friend generously to the benefit of his expertise to assist the Campbell family, especially when Bruce Campbell was ailing and near death. He kept meticulously detailed file notes and entries of his relevant dealings with family members. The manner and method of his recording those notes bespeaks their rigour and the Court wholly accepts them as a concisely accurate record of the events they describe. All his oral testimony is accepted.

The Campbell Family, Mundooie, and their Family Trusts

Mundooie

25. Alexander Campbell originally purchased a subdivision of grazing land from Buttabone Station, north-west of Warren, in 1924. In the late 1930s Bruce Campbell’s father, Norman John Campbell, acquired most of that subdivision from Alexander Campbell and named it “Mundooie”. Bruce Campbell inherited Mundooie from his father in the late 1950s and set about building it into a larger farming and grazing enterprise. He soon acquired adjacent land known as “Grahway”. Parts of these lands were the subject of the November 1975 transactions.

26. After Bruce’s death in 1975 the Campbell family added parcels to Mundooie yet again, in parcels that are not involved in these proceedings. In 1983 they acquired land known as “Back Mackenzies” and in the mid-2000s the land known as “Paddo’s” and made them part of Mundooie.

27. Mundooie was initially a livestock grazing property. But the family developed it to take advantage of its soil and position to include dryland farming and irrigated cotton farming. By all accounts received by the Court, Bruce Campbell was a master of agricultural practices and had a farsighted and enterprising vision for the future of Mundooie, when he died early at the early age of 42.

28. The 4,894 hectares of land comprising Mundooie are owned by different persons and entities. Most of the land in Mundooie (3978.19 hectares) is legally owned by Nominees. That is the land the subject of the present contest between nominees and the estate of Julian Campbell. For convenience in these reasons that original contested part of Mundooie is referred to as “the Mundooie lands” or “the contested Mundooie lands”. Other land comprising Mundooie is owned by Mundooie Pty Ltd (290.9 hectares). The remainder of the Mundooie was owned by Julian Campbell (441.5 hectares), or by Richard (193.6 hectares). The land comprising Paddo’s was acquired in Richard’s name.

29. Various partnerships have conducted farming and grazing enterprises on Mundooie over the years. The details of these partnerships are not material to the issues to be determined in these reasons. But after Bruce’s death the two principal partnerships conducting operations on Mundooie were Cardenu Pty Ltd trading as the Campbell partnership until about the time John left Mundooie. After that Julian Campbell and Richard formed another Campbell Partnership which took over the operations at Mundooie from Cardenu Pty Ltd. The partnership accounts and obligations were contested in the proceedings and may need to be examined later in John’s and Richard’s deferred family provision proceedings.

A Concise Family History

30. An account of the family history of John Campbell and Julian Campbell prior to the 24 November 1975 transactions is relatively uncontentious. Greater differences arise in the evidence of John, Carolyn, Beth and Richard arise after 1975. Other than is relevant to the November 1975 transactions, it is not necessary for the Court to make findings in relation to contentious factual disputes after 1975. Resolving those disputes can await the hearing of John’s and Richard’s proceedings. But a brief overview follows.

31. Bruce and Julian Campbell’s four children were born between 1961 in 1966, John (1961), Carolyn (1962), Beth (1964) and Richard (1966). All the children grew up on Mundooie. Most of them were homeschooled by Julian Campbell under distance education schemes. John went to boarding school in Sydney between 1973 and 1978. All the children worked in varying degrees from a young age on Mundooie to assist their parents either on the weekend or during the week. They contributed as children to mustering, yardwork, moving equipment and general outside work as well as work within the household.

32. After Bruce Campbell died in February 1976 the family continued to live at Mundooie. John stayed on at boarding school. Julian Campbell was assisted by local families and the local stock and station agent with advice about operating Mundooie. A full-time employee was taken on to assist, Mr Jack Beatson. An insurance policy had been taken out on Bruce Campbell’s life and Julian Campbell received a life insurance payout from which she purchased two investment properties, apartments in Sydney. Despite the difficulties of a widow operating a farming enterprise the size of Mundooie, Julian Campbell seems to have valued the continuity, predictability, and strong personal associations with Mundooie for herself and her children after their lives had suffered such upheaval.

33. The children all pitched in to assist their mother. There are disputes among them about their relative contributions to assist her, which can await another time. The local people of the district were immensely supportive in upskilling the children in all aspects of farming and grazing life.

34. In 1978 and 1979 Carolyn Beth and Richard all went to boarding school in Sydney for varying periods. Like John had done between 1973 and 1978, they came home on school holidays. Much of the major work on Mundooie that the children could do was planned to coincide with school holidays. They worked long days, from about 7:30 am until 5 pm. But the affidavit evidence about this early period speaks with one voice: all the children either say or imply they had a uniquely rich and fulfilling childhood on Mundooie with their mother and one another.

35. And they affirmed the truth of that with their subsequent vocational choices. Each of them chose a career related to farming. Beth completed year 12 and studied and obtained a veterinary science degree in 1986. On university holidays and by phone she gave the benefit of her veterinary skills to assist her mother and siblings back on Mundooie. The property Mundooie is about a nine-hour drive from Sydney and visiting regularly in person was not easy. Beth left Australia in 1997, married her husband Timothy and lives in New Zealand. At the time of these proceedings due to Covid 19 travel restrictions she was unable to travel to Australia from New Zealand and she listened to the proceedings by audio link.

36. Carolyn studied agricultural economics in Sydney in 1981 and in 1982, returned full-time helping the family at Mundooie in 1983 and 1984 and then went back to university in 1985. She ultimately gained a degree in arts with a graduate diploma in marketing. She took a special interest in the care of Mundooie’s farm horses. She also worked as a marketing manager in Melbourne in the early 1990s and for local politician during the mid-1990s. She moved away from Mundooie to Dubbo at the end of 1998 and married her husband Bruce in 1999.

37. Richard finished school in 1984 and returned to Mundooie to pursue a career as a farmer. Throughout the 1980s and early 1990s family tensions arose generated by several points of conflict. Mundooie was generating insufficient income to support all the family members, who wanted to stay in the property. John married and issues arose as to where family members would live on Mundooie. Resentments arose about the relative contribution of different family members to the enterprise at Mundooie and the accounting for benefits derived from using its assets.

30. John and his wife, Kerry, left Mundooie in 1992. Richard married his wife Alison the same year. John has pursued business interests away from Mundooie ever since. This left Julian Campbell and Richard back on Mundooie in the longer term.

31. Julian Campbell became a community leader in Warren district, serving on the Warren Shire Council, Women in Agriculture, the local Country Women’s Association and the Floodplains Committee. She chaired the Warren Racecourse Showground committee as well as many other rural health, educational and recreational clubs, and activities in the Warren district and across New South Wales.

32. But at home the difficult conundrums of succession planning within the Campbell family bedeviled family discussions for the following decades. Julian Campbell attempted to convene meetings over the years to resolve this issue. But her attempts were unsuccessful, and the discussions remained inconclusive. In part because of the structure of the assets of Mundooie, seasonal variations in its income, its debt levels, contributed to in part by non-family members, and the expectations of some of the siblings.

33. Following Julian Campbell’s death on 19 June 2017 the lack of family consensus led to the asset-destroying contest that is now before the Court. But all four children remained close to their mother until her death and visited her or stayed in telephone contact with her as much as circumstances permitted.

34. In her July 2016 will Julian Campbell left the Lane Cove property to her daughter-in-law, Richard’s wife, Kerry Louise Henville Campbell. She also left her interest in the estate of her late mother Gladys Lilian Brewer, all her jewellery and personal effects and a legacy of $350,000 each to her daughters, the executors. She also left a legacy of $350,000 to John. She left the residue of her estate to Richard.

35. Julian Campbell’s estate is estimated to total approximately $12.5 million. That depends in part on the Mundooie land contested in these proceedings being owned beneficially by her estate rather than the Discretionary Trust. In addition to Mundooie its other most valuable assets were (a) a rental property in the Sydney suburb of Lane Cove valued at approximately $775,000, and (b) a 50 per cent share in the estate of the Julian Campbell’s late mother, Gladys Lillian Brewer, which includes a property in Manly, valued at approximately $1,525,000.

Mr Tonking Keeps a Diary

44. The Court has a detailed contemporaneous diary of events leading up to and including Bruce Campbell’s execution of the transaction documents on 24 November 1975. The diary is that of Mr Tonking, then a young solicitor at a city law firm, Allen Allen and Hemsley. Mr Tonking went to the Bar in 1995, was appointed senior counsel in 2007. He retired from the bar in 2013 and now undertakes farming activity at Robertson in the Southern Highlands.

45. Mr Tonking provides illuminating real-time context to the November 1975 transactions from the perspective of a family member. Mr Tonking’s mother was a first cousin of Bruce Campbell. As Bruce Campbell and Julian Campbell are now deceased and their four children were too young at the time to appreciate the transactions that were occurring, Mr Tonking’s perspective becomes more significant.

46. The Court has found his account of those November 1975 transactions within the Campbell family household especially valuable for three main reasons. The high quality, detail, and reliability of his daily diary record of the period speaks for itself. His professional legal training gave him heightened understanding into the transactions. And though independent of the family and objective, he was clearly very familiar with the nuances of Campbell family relationships, being an oft visiting cousin of Bruce Campbell. The Court’s findings about this period are based heavily on upon his account events together with such inferences as may be drawn from other contemporaneous documents.

Mr Tonking’s Account of the November 1974 Transactions

47. Bruce Campbell was aware by early July 1974 that he was seriously ill with a potentially terminal illness. Having trouble with his eyesight he was referred to Royal Prince Alfred Hospital for tests, which show that he had a large cyst or tumour situated in his cranium near the optic nerve. Bruce Campbell told Mr Tonking that month that he had commenced to undertake “some estate planning”, as Mr Tonking described it, in case anything went wrong with his treatment.

48. Bruce Campbell’s last will is dated 20 July 1974. Mr Tonking is one of Bruce Campbell’s executors and one of the witnesses to that will. Bruce Campbell underwent a major operation to remove the cyst on 23 July 1974.

49. By August – September 1974 Bruce Campbell had been discharged from hospital and had undergone radiation treatment after his operation. He stayed with Mr Tonking’s mother’s household where Mr Tonking observed that his sight was still blurred, and he did not know whether it would improve. It was later confirmed to Mr Tonking that Bruce Campbell had a brain tumour.

50. In the first half of 1975 Bruce Campbell told Mr Tonking, without going into detail, that he had been referred to the legal firm Simons & Baffsky for estate planning advice. Bruce Campbell had decided to consult the legal expertise of Simons & Baffsky for estate planning advice rather than to go to his long-standing legal advisers in Dubbo.

51. The mid-1970s was an era of high State death duties and when applicable, Commonwealth estate duties. At this time rural families commonly faced death and estate duties at confiscatory levels upon the transmission of property from one generation to the next. These duties far exceeded equivalent levels of stamp duty on such transactions, and not uncommonly resulted in the sale of rural grazing and farming properties, until their abolition in about 1983. In this environment seeking and securing the best legal advice was clearly important to Bruce Campbell.

52. Various schemes were advised upon to avoid death and estate duties. A mechanism to achieve such schemes involves the transfer of beneficial ownership and land from a rural property owner to a trustee or trustee company. But that attracted the incidence of ad valorem stamp duty. Some more sophisticated schemes were designed not only to avoid death and estate duties but also to avoid or reduce the incurring of stamp duty.

53. By September 1975 Mr Tonking and the family knew that Bruce Campbell’s condition was terminal and on 15 November 1975 Julian Campbell informed Mr Tonking that Bruce Campbell had little hope of recovery. MR Tonking visited Bruce Campbell at Royal Prince Alfred Hospital on 16 November 1975. By then Bruce Campbell was virtually blind and was not conversant with current events. He returned to Warren Hospital in December that year.

54. Mr Tonking was not present when the transaction documents were executed on 24 November 1975. But given Mr Tonking does not believe that Bruce Campbell’s state of health would have allowed him capacity to execute the transaction documents himself. Julian Campbell signed the documents on his behalf.

55. Bruce Campbell died on 20 February 1976, two days after his 45^th birthday.

56. Mr Tonking, Julian Campbell and Mr Richard Rutledge were Bruce Campbell’s executors. Mr Tonking is the sole survivor of these three executors. Bruce Campbell’s estate was administered by Ms Joan Richardson, a partner in the firm of solicitors in Dubbo that Bruce Campbell had consulted throughout his life, Booth, Brown Samuels & Olney. Mr Tonking met Ms Richardson in June 1976 in the course of executing his duties as executor of Bruce Campbell’s estate and made the following note in his diary on 11 June 1976:

“As a result of a last-minute estate plan that Julian had arranged, it looks as though, provided the scheme goes unchallenged, she will avoid death duty.”

57. Mr Tonking signed the affidavit of assets for Bruce Campbell’s estate, known at that time as an “Affidavit D” on 21 September 1976. He recalls that the affidavit of assets was consistent with what Bruce Campbell had told him about his estate planning intentions and what Julian Campbell had told him in June of that year. None of the real estate of Mundooie was included in Mr Tonking’s Affidavit D for Bruce Campbell’s estate. Mr Tonking has always believed that the 24 November 1975 transactions were effective to transfer both the legal and beneficial title to Mundooie away from Bruce Campbell and he swore the Affidavit D on that basis.

58. Probate of Bruce Campbell’s will was granted on 15 November 1976. Mr Tonking does not recall any challenge to the Affidavit D he had executed to achieve the grant of probate. Thereafter Mr Tonking did not see any of the 24 November 1975 transaction documents until after Julian Campbell’s death in 2017.

59. Mr Tonking showed surprise at the contention that the 24 November 1975 transactions were ineffective and that the contested Mundooie lands were still part of Bruce Campbell’s estate and therefore should have been included in his Affidavit D. He deposed to it never having been suggested to him in the over 40 years since Bruce Campbell’s death that the 24 November 1975 transactions were ineffective in that his Affidavit D was incorrect. And he was not cross-examined to suggest that his understanding was incorrect at the time of his execution of his Affidavit D. And it was not put to him in cross-examination that he had ever been asked to recover the contested Mundooie lands that are now claimed to form part of Bruce Campbell’s estate.

60. The central instrument created on 24 November 1975 was the trust deed setting up the Discretionary Trust. It is discussed first in these reasons followed by the minutes, deeds and other documents executed the same day. Then these reasons analyse several documents in events postdating November 1975.

The Trust Deed and the Discretionary Trust

61. The Discretionary Trust was created by a deed made on 24 November 1975 (“the Trust Deed”) between David Zalmon Baffsky, as settlor and Keita No 83 Pty Ltd as the Trustee of the various trusts constituted by the Trust Deed. Shortly after execution of the Trust Deed, Keita No 83 Pty Ltd changed its name to become Nominees. These reasons use the expression “the Trustee” to refer to Nominees in its role as the original trustee of the Trust Deed.

62. Some later amendments to the Trust Deed are to be noted. On 10 November 1988 the Trust Deed was amended in respects that are not material to these proceedings. And by deed made on 14 December 2020 John Campbell Nominees Pty Ltd (“John Campbell Nominees”) was appointed as a co-trustee of the Discretionary Trust with Nominees. In respect of events and matters after 14 December 2020 the expression “the Trustee” should also be taken in these reasons to refer to both Nominees and John Campbell Nominees.

63. In most respects it is not necessary to set out the provisions of the Trust Deed in detail. It is mostly sufficient for the purposes of these reasons to set out the effect of those provisions, by which it is apparent that Bruce Campbell sought to create trusts for the benefit of various classes of family members.

64. Clause 1 of the Trust Deed defined various terms used within the deed. Bruce Campbell was described in the Trust Deed as “the Parent”. By clause 1(b) the “Eligible Beneficiaries” were Julian Campbell, the spouse of Bruce Campbell (who was defined as “the Parent”), the children of Bruce Campbell and Julian Campbell, the children's spouses, the grandchildren and great-grandchildren of Bruce and Julian Campbell, any future spouse of the Parent, any spouse of any child of the Parent and any other persons or entities appointed by the Parent or his legal personal representative. No other persons or entities were appointed by Bruce Campbell or his legal personal representative to be members of this extended class.

65. By clause 1(d) the “Scheduled Property” was defined as the sum of $20 paid by the Settlor to the Trustee and by clause 1(e) the “Trust Fund” was defined as follows:

(e)   “The Trust Fund” means

(i)   the Scheduled Property;

(ii)   and further or additional property which any person or company may donate to or vest or cause to be vested in the Trustee to be held upon the trusts and with and subject to the powers and provisions thereof;

(iii)   any accumulations of income other than those held upon trust by the Trustee under the provisions of Clause 4 (2) (b) hereof –

and

(iv)   the property for the time being and from time to time representing the Schedule Property the further or additional property (if any) aforesaid and the accumulations covered by paragraph (iii) above.

66. The Trust Deed, clause 1(f) defines the “Perpetuity Date” as follows:

(f)   “The Perpetuity Date” means the date being sixty years from the date of execution of this Deed or the date of death of the last survivor of all the lineal descendants male and female of His late Majesty King George the Sixth of England living at the date hereof (whichever shall first occur) or such earlier date as the Trustee shall in his absolute discretion appoint to be the Perpetuity Date for the purpose of this Deed;

67. The Trust Deed, clause 2 provided as follows:

2.   (a)   The Settlor hereby declares and directs that the Trustee shall and the Trustee hereby declares that he will hold the Scheduled Property upon the trusts and with and subject to the powers and provisions hereinafter contained.

(b)   The Trustee shall have the right in his absolute discretion at any time during the continuance of the Trust hereby created to accept such additional property as may be donated to the Trust hereby constituted by any person either personally or by testamentary act or disposition or by any company.

68. The Trust Deed, clause 3 provides that the Trustee has the power up until the Perpetuity Date to appoint one or more of the Eligible Beneficiaries as the beneficiary or beneficiaries for whose benefit to the exclusion of other Eligible Beneficiaries the capital and income of the Discretionary Trust is held. The trustee has not made an appointment of any of the Eligible Beneficiaries under clause 3 to date.

69. By Trust Deed, clause 4(1)(a) the Trustee has the power up until the Perpetuity Date in its “absolute discretion” in any year the power to do the following:

“to pay or apply the whole or such part as the trustee shall think fit of the income of the trust fund for that year to or for the advancement maintenance education or benefit of all or such one or more of to the exclusion of the others or other of the eligible beneficiaries and in such proportions or manner as the trustee shall in his absolute discretion from time to time think fit…”

70. No distributions of income from the Discretionary Trust have been made under clause 4 to any eligible beneficiary.

71. By Trust Deed clause 6 the Trustee has the power in its discretion to pay or apply the whole or any part of the capital of the Discretionary Trust to or for the advancement, maintenance, education or benefit of any one or more of the Eligible Beneficiaries as follows:

6.   The Trustee shall have and may exercise in his absolute discretion at any time or times and from time-to-tme power to pay or apply the whole or any part or parts of the Trust Fund to or for the advancement maintenance education or benefit of all or such one or more exclusively of the others or other of the Eligible Beneficiaries and in such proportion or manner as the Trustee shall in his absolute discretion from time to time think fit. The Trustee shall not be bound as such trustee to see to the application of any moneys paid or applied pursuant to this clause.

72. No distributions of capital have been made from the Discretionary Trust to any Eligible Beneficiary.

73. The Trust Deed, clause 5, subject to any appointment under clause 3, or any payment or application of income or capital under clauses 4 or 6, provides that on the Perpetuity Date as defined under the Trust Deed, the whole of the capital and income of the Discretionary Trust is to be held upon trust “for the children of the Parent who attain or have attained the age of 21 years in equal shares”. Clause 6 then provides cascading provisions for the disposition of the share of any of the children who die before the Perpetuity Date, including provisions for the benefit of the children or grandchildren of the deceased child. And other relatives and their spouses are provided for in clause 5 in provisions which are not material to the issues in these proceedings. Each of the children, Beth, Carolyn, John and Richard, the children of the Parent, has attained the age of 21 years.

74. As will be seen, the section 86A motion seeks an order of this Court to bring forward the Perpetuity Date. It is clear from Trust Deed, clause 1(f) that the trustee has that power in any event. The executors submit that their section 86A motion is being advanced for more abundant caution.

75. The effect of clauses 2(b), 3, 4, 5 and 6 of the Trust Deed is that if the Perpetuity Date is brought forward the whole of the capital and income of the Discretionary Trust will be held upon trust for the children of the Parent who are living on that date in equal shares. And if any of the children die before the date the amended Perpetuity Date then the share of that child will pass to his/her children who are living then and who attain or have attained the age of 21 years in equal shares.

76. Bruce Campbell did not create any separate document recording his wishes as the Parent in relation to the Trustees, the administration of the Discretionary Trust, and the ultimate distribution of its assets. But the terms of the Trust Deed, clause 5 at least indicate that upon the Discretionary Trust vesting that the benefit of its assets would pass to the children, and to the descendants of any child who had died in equal shares.

Overview of the Effect of the November 1975 Transactions

77. In addition to the Trust Deed, the parties executed a series of other documents which, considering the parties’ careful submissions, the Court discusses here with commentary in relation to the significance of each document as the Court has analysed it. The Court has concluded that the transactions were effective, and it accepts John’s and Mr Tonking’s submissions in relation to them. The executors’ submissions to the contrary are dealt with later in these reasons. Given the complexity of the transactions it is simpler for the reader to see the discussion of their significance while the transactions are identified.

78. Based on Mr Tonking’s evidence and the objective circumstances there cannot be any doubt that Bruce Campbell’s objective in entering these transactions was primarily to avoid death or estate duty. Successful estate planning for Bruce Campbell at least meant transferring beneficial ownership of the Mundooie lands out of his name and into a company such as Nominees before his death. This was a recognised method of avoiding death and estate duty, and a precondition of avoidance was the transfer of the beneficial interest to the company: cf Yard v Yardoo Pty Ltd [2007] VSCA [43] (“Yardoo”).

79. But unlike Yardoo, a supplementary objective of the structure created on 24 November 1975 for Bruce Campbell was also to avoid stamp duty. Stamp duty could be avoided if no instrument of transfer to Nominees which would attract ad valorem stamp duty was brought into existence. To achieve this objective the structure needed to be effective without any instrument being required to give effect to the transfer of the equitable interest.

80. So, a method needed to be devised for oral agreement for the transfer of the equitable interest, for funds to be made available by an entity to Nominees for the purchase and for that entity then to receive those funds back. The means used to achieve that appear to have been the creation of an option to acquire shares which was exercisable only by Bruce Campbell. Such an exercise was unlikely after the option fee was paid. Moreover, the parties knew the funds were available because a bank had agreed to make an overdraft facility available to Nominees.

77. With this structural overview in mind the company resolutions and documents executed to constitute the transactions can be approached.

The 24 November 1975 Transactions

82. Preliminary Transactions. On 18 June 1975 Simons & Baffsky caused the registration of the two new companies that would participate in the transactions. The first was Kieta No 83 Pty Ltd, which, as earlier indicated, changed its name to that of Nominees and will generally be referred to by that name in these reasons. The other company was then known as Kieta No 82 Pty Ltd but its name subsequently changed to Bruce Campbell Holdings Pty Ltd and to distinguish it from “Nominees” it is referred to in these reasons as “Holdings”.

83. And on 21 November 1975, Bruce Campbell appointed the Julian Campbell Deceased as his attorney to execute the documents. The power of attorney was registered on 25 November 1975, being the day after the relevant transactions but subsequent registration is effective: Powers of Attorney Act 2003, s 52(2). The timing of her appointment is consistent with Mr Tonking’s evidence of Bruce Campbell’s deterioration in early to mid-November 1975.

84. Then on 24 November 1975, Julian Campbell participated in a series of back-to-back meetings of Nominees and Holdings and transactions at the offices of Simons & Baffsky in Macquarie Street, Sydney. In this she was assisted by her mother, Mrs Gladys Brewer. The precise order of these transactions is difficult to discern at this distance in time.

85. First meetings of Nominees and Holdings were held. Julian Campbell and Gladys Brewer were appointed directors of each of Nominees and Holdings. Each of the companies had an issued share capital of two $1.00 shares. The meetings of the two companies also approved the following share transfers. At the meeting of Holdings, the transfer of one share each in Holdings from Simons and Baffsky was approved to Julian Campbell and Mr James Edward Aitkins, who was probably the family accountant. And at the meeting of Nominees, the transfer of one share in Nominees was approved for transfer to Julian Campbell and the other share to Holdings. At this point through her nominee directors and shareholders, Julian Campbell effectively controlled Holdings, and Nominees through Holdings.

86. Nominees then held a meeting that linked it for the first time with the Discretionary Trust. In the meeting minutes Nominees, by its directors Julian Campbell and Gladys Brewer resolved: to accept an appointment as the trustee of the Discretionary Trust (to be referred to as “the Campbell Family Trust”); to affix its common seal to the Trust Deed, and as Trustee of the Discretionary Trust, to acquire certain real estate and life insurances “as detailed to the meeting” from Bruce Campbell for the sum of $252,250.

87. To fund this transaction Nominees also resolved at this meeting to acquire beneficially all the issued capital of Holdings and to borrow from it the sum of $252,250 interest free and repayable at call. The minutes of that Nominees meeting signed by Julian Campbell as chairman were following.

88. The resolutions under the heading “Trust Business”, were as follows:

RESOLVED that the Company acquire certain real estate and life insurances as detailed to the meeting from Mr B Campbell as trustee of the trust to the sum of two hundred and fifty-two thousand two hundred and fifty dollars ($252,250).

RESOLVED that the Company acquire beneficially the whole of the issued capital of Kieta No. 82 Pty Ltd [Holdings] and that the Company execute call necessary documents in respect thereto.

RESOLVED that the Company borrow from [Holdings] interest free at call the sum of two hundred and fifty-two thousand two hundred and fifty dollars ($252,250).

89. The first of these resolutions was an important fulcrum of the structure and records an oral agreement for the sale of “certain real estate and life insurances” being detailed to the meeting by Bruce Campbell (through his attorney Julian Campbell). The other contemporaneous minutes, including that in the next paragraph of these reasons identifies that land as the Mundooie lands the subject of the present contest.

90. Nominees’ directors, Julian Campbell and Gladys Brewer at a separate meeting then resolved that Nominees would as Trustee of the Discretionary Trust issue an undertaking to the Bank of New South Wales that it would execute a first mortgage in registrable form over the contested Mundooie lands in these proceedings, the title details of which are not published in these reasons. The minutes of this meeting were as follows:

“KIETA NO. 83 PTY. LIMITED

Minutes of Meeting of Directors held at the Company’s Registered Office, 139 Macquarie Street, Sydney, on 24th November, 1975.

PRESENT:

      Mrs. Julian L. Campbell

         Mrs. Gladys Brewer

OVERDRAFT
FACILITIES

B & D CAMPBELL:   Resolved that the Company as trustee for Campbell Family Trust issues an undertaking to the Bank of New South Wales, Warren, that it will execute a first mortgage in registrable form over property to be required by the Company identified as follows:-

[Certificate of Title references for the Mundooie lands not published]

This mortgage will secure overdraft facilities to be granted to the partnership known as B. & J. Campbell.

Resolved further that the Company issue this under-taking under the Common Seal of the Company in the form of the copy included with these Minutes.”

91. The directors of Holdings, Julian Campbell and Gladys Brewer then held a meeting of Holdings to assist in the funding of the oral agreement for the purchase of the Mundooie lands. They did so by resolutions to do the following: to grant an option to Bruce Campbell to take up 504,500 shares in Holdings for an option fee of $252,250 (the Option”); to lend Nominees, qua trustee, the sum of $252,250 interest free at call in its capacity as Trustee of the Discretionary Trust; and then to create the share capital to be the subject matter of the option, by increasing its share capital from $10,000 to $505,000 by the creation of 495,000 new shares, thereby providing for the capital the subject of the Option. The resolutions were in the following terms, as recorded in the minutes

“OPTION

The chairman informed the meeting that Mr B Campbell was prepared to acquire an option to take up certain shares in the capital of the company.

RESOLVED that the company adopt such option as to the terms and conditions set out in the Agreement produced to the meeting and that the seal of the company be affixed to the said Agreement.

RESOLVED that the company lend to Kieta No.83 Pty Ltd [Nominees] as trustee for the Campbell family trust to the sum of two hundred and fifty-two thousand two hundred and fifty dollars ($252,250) interest free at call.”

92. Thus, Holdings had now provided a matching resolution to lend Nominees the same sum Nominees had resolved to borrow, corresponding with the consideration payable by Nominees under the proposed oral agreement for the purchase of the Mundooie lands.

93. The resolutions having been passed, Julian Campbell as Bruce Campbell’s attorney, Holdings and Nominees executed the following further instruments.

94. First, Julian Campbell as Bruce Campbell’s attorney, Holdings and Nominees entered into a deed (“the Bare Trust Deed”) which contemplated that Nominees (described in the Bare Trust Deed as “the Trustee”) would hold the subject Mundooie lands on bare trust for Bruce Campbell (described in the Bare Trust Deed as “the Beneficiary”). The recital and operative parts of the bare trustee provided as follows:

“WHEREAS:

1.   The Beneficiary is the registered proprietor and beneficial owner of the properties described in the Schedule hereto (hereinafter called “the said properties”).

2.   The Beneficiary has requested the Trustee to hold the said properties upon trust for the Beneficiary absolutely which the Trustee has agreed to do.

3.   All moneys paid or payable in respect of the acquisition of the said properties have been paid or will be paid and provided by the Beneficiary.

NOW THIS DEED WITNESSETH:-

1.   The Trustee hereby declares that it will hold all the said properties as are vested in or transferred to the Trustee pursuant to the above recited circumstances upon trust for the Beneficiary its administrators and assigns absolutely.

2.   The Trustee covenants with the Beneficiary that the Trustee will transfer pay and deal with all the said properties and all benefits in respect thereof and all proceeds of sale in respect thereof in such a manner as the Beneficiary may from time to time direct.

3.   The Trustee acknowledges that it will not have any beneficial interest in respect of the said properties and covenants that it will not deal in any manner with the said properties except upon the express direction or with the consent of the Beneficiary its administrators and assigns.

4.   The Trustee shall either cause the deeds or other documents of title of any of the said properties held by it on the trusts hereof to be lodged with a firm of Solicitors or a bank for safe custody or the Beneficiary shall permit the Trustee to retain the same in its possession.

5.   In consideration of the Trustee entering into the provisions of this Deed the Beneficiary hereby agrees to indemnify the Trustee from all actions claims costs demands taxes duties and liabilities whatsoever in any way relating to the said properties.”

95. The properties in the Schedule of the Bare Trust Deed are the subject Mundooie lands.

96. Next on the same date, 24 November 1975, Julian Campbell as Bruce Campbell’s attorney signed a Memorandum of Transfer of the Mundooie lands in favour of Nominees (“the Transfer”). Part of the wording of the Transfer became a significant point of contention between the parties. In the standard form Memorandum of Transfer after the reference to the vendor and the land, the words “in consideration of” had been crossed out and the words “pursuant to a Deed of Trust dated the 24^th day of November 1975” were added, mainly in typescript but with the date in handwriting. The words “Deed of Trust dated the 24^th day of November 1975, on their face are ambiguous and could refer to either the Trust Deed or the Bare Trust Deed which were both trust deeds executed on that date. The Memorandum of Transfer was not registered until 3 July 1981. The delay was occasioned by caveats on the title which needed to be removed. Stamp duty in the nominal amount of one dollar was stamped as paid on the Memorandum of Transfer to permit registration.

97. Next, on the same day in accordance with the resolution of Nominees to enter the Trust Deed, Nominees executed the form of Trust Deed with Mr Baffsky as the settlor.

98. Next, on the same day Bruce Campbell and Holdings entered into the Option agreement pursuant to the resolution of Holdings to this effect. The Option required Bruce Campbell to pay Holdings $252,250. The recital and relevant terms of the option as follows:

BETWEEN: KIETA NO. 82 PTY. LIMITED a company duly incorporated in this State of New South Wales (hereinafter called “the Grantor”)

AND: BRUCE NORMAL JOHN CAMPBELL of “Mundooie”, Warren in the said State (hereinafter called “the Grantee”)

WHEREAS

1.   The nominal capital of the company is $505,000.00 divided into 505,000 shares of $1.00 each.

2.   The Grantee desires to acquire an option to take up 504,500 shares in the capital of the company and is prepared to pay the sum of $252,250.00 being at the rate of 50 [cents] per share for the said option.

NOW THIS AGREEMENT WITNESSETH: -

1.   In consideration of the sum of $252,250.00 paid by the Grantee to the Grantor the receipt whereof is hereby acknowledged the Grantor does hereby grant to the Grantee an option to take up in the manner and upon the conditions set out below up to 504,500 shares of $1.00 each in the capital of the company.

99. The Option, clause 1 is evidence of the payment of the $252,250.00 by Bruce Campbell to Holdings. This is also confirmed by later documents. Some 12 years later, in a letter dated 13 January 1987 Booth Brown Samuels and Olney, Julian Campbell’s solicitors in Dubbo, gave a description of the transaction and the balance sheet of Holdings at that time. Their letter to their client first stated the source of their information, “we have had a conference with your accountant and also perused various company documents”. The solicitors then said of Holdings:

“The only asset of this company is the debt of $252,250 which was lent to Bruce Campbell Nominees Pty Ltd for the purchase of the land referred to above. Prior to his death Bruce paid $252,250 to this company for the grant of an option to purchase shares which said option was never exercised. Mrs JL Campbell has control of this company as all the shares are owned by Bruce Campbell Nominees Pty Ltd”

100. If Bruce Campbell had not paid the sum of $252,250.00 to Holdings, the sum should have been recorded as a debt owing to it in its balance sheet. The absence of a debt being recorded as such an asset in Holdings’ balance sheet is a basis to infer, consistently with Option, clause 1, that the debt was paid at the time.

101. Next, it can be inferred that in accordance with the resolutions of Holdings and Nominees, that Holdings loaned Nominees, qua trustee of the Discretionary Trust the sum of $252,250. Holdings recorded the loan in its balance sheet that day. A combination of Simons & Baffsky and Julian Campbell’s Dubbo chartered accountants, Thos. Robinson, Aikins and Co caused the balance sheet of Holdings to be prepared on 17 October 1977 recording the affairs of the company as at 24 November 1975, and as at Bruce Campbell’s death on 20 February 1976 (as the accountants explained) “from the books of account and records” of Holdings. On both dates the balance sheet records as an asset a “Loan Account – Campbell Family Trust” in the sum of $252,250. Although the financial accounts of Nominees for these dates are not available, one side of the transaction is sufficient to draw the inference of this sum was paid to Nominees.

102. The Nominees resolution of that date recorded that Nominees “would acquire certain real estate and life insurances as detailed to the meeting from Mr B Campbell”. Bruce Campbell had a life insurance policy with AMP at that time. The sum assured was $10,000 and the gross surrender value was $3,363.20. Bruce Campbell by his attorney Julian Campbell assigned this AMP policy to Nominees on 24 November 1975.

103. Finally, there is no direct evidence on the materials now available that Nominees paid Bruce Campbell $252,250 at the same time on 24 November 1975. John submits that it is to be inferred that Nominees did so as Trustee of the Discretionary Trust. The Court accepts that submission. Nominees had borrowed that exact sum from Holdings and the only purpose for Nominees borrowing the funds from Holdings was to pay it as Trustee of the Discretionary Trust to Bruce Campbell. And subsequent records do not show the debt as unpaid.

Subsequent Events Relevant to the 24 November 1975 Transactions

104. Several events in the years after the 24 November 1975 transactions are relevant to the analysis of the transactions.

105. The first of these was the Affidavit D sworn on 21 September 1976 by Bruce Campbell’s three executors, Julian Campbell, Mr Tonking and Mr Rutledge. The standard form affidavit required by the Court at that time provided for an “Inventory referred to in the preceding affidavit”. The inventory of assets includes two relevant line items. The line-item for “Real Estate possessed by the deceased at death and real estate liable to duty under section 102 of the Stamp Duties Act 1920” has an entry against that of “nil”. Within Annex D was a line item for “Debts due to Estate” and a cross reference to Schedule 8 against an amount of $13,645. Schedule 8, which appears later in the document, shows some care being taken to ascertain and describe the nature of the debts due to the estate. It provides as follows:

“SCHEDULE 8      

Debts Due to the Estate

In November 1973 the Deceased lent the Sum of
$13,645 to Mundooie Pty Limited for the purchase of
a property. The loan was unsecured, interest free and
repayable on demand and was not evidenced in writing.

   Amount due to the Estate   $13, 645”

106. On several occasions after 1975, Julian Campbell, Nominees and Richard all executed documents for valuable consideration with financial institutions on the basis that the 24 November 1975 transactions were effective.

107. On 9 June 1984 Nominees executed a mortgage over the Mundooie lands with Westpac, as first mortgagee, expressly in its capacity as trustee of the Discretionary Trust expressly referring to the Trust Deed. In 1994 Westpac raised a concern about the capacity in which Nominees had executed the mortgage and on 24 February 1995, Nominees was required by Westpac to provide mortgages and other instruments both as Trustee of the Discretionary Trust and trustee of the Bare Trust. But this documentation seems to been executed for more abundant caution and are consistent with the original 1984 mortgage.

108. On 13 January 1987 Julian Campbell’s Dubbo solicitors advised her as follows:

“[Nominees] is the Trustee for the Campbell Family Trust. On 24th November, 1975 the company as trustee purchased the freehold land then owned by Bruce for the sum of $252,250.00. This money was borrowed from [Holdings]. The Campbell Family Trust is a discretionary trust and the income and the property of the Trust can be applied in the discretion of the Trustee.”

109. The balance sheet for the Discretionary Trust as at 30 June 1994 records the Mundooie lands by their title details as assets together with improvements to the land, which were valued at $470,640.16. This figure appears in Discretionary Trust balance sheets from 1994 to 2020.

110. Julian Campbell convened a family succession planning meeting on Sunday 16 February 1997. She prepared a document to assist in the discussion on that day. It is a well-crafted, thoughtful, and detailed letter addressed to the four children praising each of them for their unique qualities and mentions some of their individual contributions to the family and the development Mundooie. It then proposes a division of assets. It appears to be mindful of practicalities in the debt position of Mundooie. In this letter Julian Campbell says one point:

“[s]ince your father’s death, it has been my desire to give you all a happy childhood, followed by an opportunity to live your own lives. The Trust was setup to enable this to happen and distribution of its assets is not always easily possible. Requests for a share of assets in time of difficult debt is perhaps less than reasonable”.

111. This letter is another basis to infer that Julian Campbell thought that a beneficial interest in the Mundooie lands had been transferred into the Discretionary Trust. It makes little sense to speak about having “assets” without the estate planning at Bruce Campbell’s death having been successful.

112. In August 1998 it was necessary for Nominees to amend the Trust Deed in 1988, to enable Nominees as trustee of the Discretionary Trust to execute a bill facility for $490,000 with Westpac, a bank. It is to be inferred that the facility was secured by Nominees existing mortgages over the Mundooie lands.

113. In 2000 Nominees gave guarantees to support borrowings from the Primary Industries Bank of Australia (“PIBA”). In the same transaction with PIBA Julian Campbell and Richard swore statutory declarations in 2000 that Nominees is the trustee of the Discretionary Trust and no other trusts, which is not consistent with the continuing existence of the Bare Trust. Richard agreed in cross-examination that he believed the matters declared to be true when he made these declarations and had no reason to doubt them.

114. Nominees also gave commercial guarantees in 2014 supporting its borrowings from Rabobank Australia Limited, which it can be inferred would only have been advanced upon the assumption that Nominees was beneficially entitled to the Mundooie lands.

171. The parties provide the court with a summary of the various classes of Eligible Beneficiaries. Several groups of family members are entitled to consideration as potential objects of the exercise of the discretion in Trust Deed, clauses 3 and 6. The first group are related to John. These include his wife, Kerry Henville. John’s children and grandchildren are identified here with their ages at the time of the trial: Charles Campbell, 25, and Briony Campbell, 29, and Briony Campbell’s child, Matilda Ley aged 8 months.

172. The next group are related to Beth Campbell. Her husband is Timothy Hudson. Her children are Ned Hudson, 18 and Erica Hudson, 14.

173. The next group are related to Richard. These include his wife, Alison Campbell. Richard’s children are identified here with their ages at the time of the trial: Georgia Campbell, 27, Paige Campbell, 24, Holly Campbell, 24, and Alexis Campbell, 21.

174. Finally, the last group is related to Carolyn. It comprises her husband, Bruce White.

175. But the position of the minor beneficiaries, Erica Hudson and Matilda Ley, needed separate consideration.

176. The Minor Eligible Beneficiaries. If the Perpetuity Date is brought forward as is being proposed, in the absence of the appointment of any Eligible Beneficiary other than the children of the Parent as a beneficiary under clause 3, no Eligible Beneficiary who is a minor will receive any part of that capital and income of the Discretionary Trust on the Perpetuity Date.

177. To deal with the position of the minor Eligible Beneficiaries, the plaintiffs sought from an experienced trusts and estate solicitor, Mr Jeremy Glass, a report on how their interests would be affected by the relief sought on the s 86A motion. Mr Glass was admitted to practice in March 1977, was accredited as a specialist in wills and estates law by the Law Society of New South Wales in September 1995 and is a well-known and well-respected practitioner in that field, carrying on practice as part of the firm Glass Goodwin Solicitors.

178. Mr Glass reported on 30 July 2021. He noted he did not have information about the financial and other circumstances of the minor beneficiaries, and he indicated that he had not sought that information. But the Court may infer that both minor beneficiaries are living with their parents. Mr Glass indicated that in the absence of information about the financial and other circumstances of the minor beneficiaries it was not possible for him to say whether any distribution of capital or income from the Discretionary Trust to them on the Perpetuity Date is warranted. But Mr Glass points out in his report that the application is not about the distribution of the capital and income of the Discretionary Trust but about whether the Perpetuity Date should be brought forward.

179. Mr Glass then lists eleven factors which in his view are relevant to the question of the bringing forward of the Perpetuity Date for the Discretionary Trust as follows:

“26.   The following factors appear to me to support the view that the bringing forward of the Perpetuity Date for the Discretionary Trust is in the best interests of the minor beneficiaries:

(a)   upon the sale of the Property, which the Trustee cannot prevent, the need to preserve the Discretionary Trust so as to hold an interest in the Property will come to an end and it will hold only a cash fund, being its share of the proceeds of sale;

(b)   it is apparent that there is a degree of contention among the Children in relation to the estate of the deceased and the Discretionary Trust;

(c)   if the Perpetuity Date is not brought forward then the ongoing administration of the Discretionary Trust and the ultimate distribution of its capital and income are likely to continue to be subject to that contention until 24 November 2035;

(d)   until the Discretionary Trust vests, the share of its capital and income to be received by the Children, or any of the eligible beneficiaries (including the minor beneficiaries), will be uncertain;

(e)   that uncertainty will have an impact upon the determination of the family provision claims and may result in the diminution of gifts made to the Children and Kerry Henville (the wife of John Campbell) under the will of the deceased, which indirectly may adversely affect the future inheritance of the minor beneficiaries descended from them;

(f)   the earlier vesting of the Discretionary Trust may assist the resolution or determination of other issues in the Proceedings, in particular the family provision claims, because it will result in certainty as to the respective entitlements of the Children in its capital and income, and may lessen the impact upon the gifts made under the will of the deceased;

(g)   the interests of the minor beneficiaries are not impacted by the bringing forward of the Perpetuity Date itself but by the Trustee's determination whether to distribute the capital and income of the Discretionary Trust otherwise than equally among the Children;

(h)   whether the Trustee determines to distribute any of the capital or income to the minor beneficiaries will be a matter for it to decide prior to the Perpetuity Date (brought forward);

(i)   even accepting that the distribution is to be equally to the Children only, the minor beneficiaries, being the children or grandchildren of the Children stand to benefit, at least indirectly, from the assets derived from the Discretionary Trust by their parent or grandparent who is one of the Children;

j)   further, distribution of the capital and income equally among the Children, to the exclusion of the minor, and other eligible, beneficiaries, preserves equality among the branches of the family descended from the Parent and the deceased, consistently with the expectation evident from the Trust Deed;

(k)   the Children, having control of the Trustee and each being the head of their respective branches of the descendants of the Parent and the deceased, should be permitted to bring the Discretionary Trust to an end, which the Trustee has power to do in any event under clauses 1 (f) and 5 of the Trust Deed, and to determine how to distribute its capital and income in the best interests of all of the eligible beneficiaries.”

193. The parties made submissions on the s 86A motion as follows.

194. The Executors Submissions. The executors point to the last consideration in the report of Mr Glass that each of the four children being the head of their respective branches of the descendants of the Parent and the Julian Campbell, should be permitted to bring the Discretionary Trust to an end, which the Trustee has power to do in any event

195. The executors submit that a grant of relief to them on the s 86A motion would cause the Trust Fund to vest in Bruce and Julian Campbell’s four children, which reflects intention of Trust Deed, clause 5(a), that the children receive the capital of the Discretionary Trust on the vesting date. All that the motion does is to accelerate the receipt of that capital to assist in bringing the present litigious disputes between these family members to an end. That in turn it is submitted will assist the advancement in life of the four children and indirectly other Eligible Beneficiaries.

196. The executors submit that they have approached this application cautiously and appropriately. They propound it on the following basis. All parties potentially adversely affected by the application have been given a thorough description of the proposal and invited to take it an independent position concerning it if they wish. As a result, all parties who can give consent to the application, have consented to it, recognising that the bringing forward of the vesting date will result in each of Bruce and Julian Campbell’s four children receiving a quarter of the Trust Fund to the exclusion of other Eligible Beneficiaries in the class of discretionary beneficiaries.

197. The executors have prepared for several potential risks, even if the s 86A orders are made. They seek supplementary orders to eliminate these risks, remote though they may be. They regard it as conceivable, although not presently threatened, that one of the corporate bodies constituting the Trustee, Nominees or John Campbell Nominees, may be deregistered or otherwise become incapable of acting before any amended vesting date so that the present balance within the Trustee of the discretionary trust might be broken. It is suggested this may allow the other corporate trustee to act unilaterally before any amended vesting date to produce a result different from that intended by the executors in pursuing the s 86A motion.

198. They also recognise at least the theoretical (though unlikely) possibility that the power of appointment under the Trust Deed could be used to change the composition of the corporate trustees, with the effect of defeating the objective of the present application.

199. To mitigate these risks, the executors’ s 86A motion seeks orders (a) amending the Trust Deed to remove the power to appoint the Trustee of the Discretionary Trust and (b) to restrain the present corporate trustees from exercising the power to vest capital or income of the Trust on any beneficiary prior to the vesting date.

200. Relevant parts of the executors’ legal analysis are referred to in the Court’s consideration below.

201. Submissions of the Other Parties. All other parties lodged written submissions in support of the principal prayer for relief in the s 86A motion. Richard’s and John’s submissions entered upon the issue of the subsequent impact of relief on the s 86A motion on the respective family provision cases. This is not necessary to consider such issues in these reasons as the determination of their family provision cases have been deferred.

202. Richard submits that if relief on the s 86A motion is granted that the vesting date should be brought forward to 30 June 2022, in part to facilitate the sale of the whole of Mundooie, not merely the lots held by the Discretionary Trust. He also puts submissions that the sale of the land held by the discretionary trust should be undertaken by the Trustees in consultation with the beneficiaries. He also submits that some mechanism needs to be adopted to prevent the Court being forced to deal with minor disputes about sale of Mundooie.

203. John’s submissions support the early vesting application in the s 86A motion.

Consideration

204. The Court will make the orders sought under Trustee Act, s 86A. The provision clearly confers power on the Court to do so. The four children qualify to bring an application under s 86A(2)(b).

205. The Court’s s 86A power is unconfined by the section. The Court “may” exercise its discretion “vary or revoke all or any of the trust”. This provision clearly extends to varying the Perpetuity Date defined under the Trust Deed.

206. The provision is plainly remedial and should be construed beneficially. As the second reading speech in the Parliament pointed out the provision is aimed at aligning New South Wales legislation with that of other States and remedying an existing limitation in the operation Trustee Act, s 81 which were identified in recent New South Wales authorities, Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367 and Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286 (“Cisera”). The legislation takes up Bathurst CJ’s suggestion in Cisera for legislative reform to cure this deficiency.

207. And the cognate Victorian legislation has been used to vary the vesting date of a trust: In Re Plator Nominees [2012] VSC 284.

208. Some of the considerations which persuade the Court to make the orders sought on the s 86A motion are the following.

209. First, making of the orders will enable the parties to these proceedings to move past their present costly and paralysing legal disputes. Whatever be the financial benefits from accelerating the vesting date, they all equally benefit from this reduction in conflict. The regrettable alternative is further litigation about the administration of the Discretionary Trust. And further litigation is almost inevitable, as the Trustee is controlled by the two corporate entities, Nominees and John Campbell Nominees, makes likely a deadlock in the future conduct of the Discretionary Trust.

210. Second, making s 86A orders is consistent with the clearly identifiable objectives behind the creation of the Discretionary Trust, which may readily be inferred from clause 5: that Bruce Campbell and Julian Campbell primarily wanted their children to share in the capital of the trust equally at a vesting date, which was left within the power of the trustee to alter and bring forward so they could enjoy it before the Perpetuity Date set under the Trust Deed. All the present application does is to pray in aid the Court’s powers to prevent such provisions of the Trust Deed from misfiring.

211. Third, as Mr Glass has pointed out, the main issue here is not so much how other potential class members might be disadvantaged by making the orderssought but whether an order to bring forward the Perpetuity Date is properly justified in the exercise of the Court’s discretion. The interests of the minor beneficiaries are not impacted by the bringing forward of the Perpetuity Date itself but by the Trustee's determinations whether to distribute the capital and income of the Discretionary Trust and when.

212. Fourth, the answer to any contention that some Eligible Beneficiaries may be disadvantaged by this exercise of discretion is the long-standing structure of the Trust Deed. It has always been evident that all eligible beneficiaries other than the four Children, as defined under the Trust Deed, only ever had a right of the proper administration of the Trust and did not have a right to income or capital. In contrast the four children of the Parent always had an equal right to a share in the capital of the Trust upon vesting of the Trust.

213. Fifth, the Children with the benefit of the expert legal advice gained through these proceedings, and the other eligible beneficiaries well-informed about the nature of the s 86A motion have all consented to the orders sought. This also gives further assurance that the interests of the minor beneficiaries are well protected by bringing forward the Perpetuity Date.

214. Sixth, Mundooie will be sold whatever happens in this litigation. The assets of the trust will be converted to cash. The Discretionary Trust was not established for the purpose of holding or investing cash, so advancing the Perpetuity Date is a prudent response to this change in circumstances, particularly having regard to Richard’s and John’s extant family provision claims which both assert a present need for capital.

215. Seventh, the fact the Trust Deed already contains the power to vary the Perpetuity Date is not a reason for the Court not to exercise its power under s 86A, as the Trustee is deadlocked, and the amended perpetuity date is still a matter of contest and may lead to further paralysis in the exercise of that power by the Trustee.

216. The Court will also make the orders sought to restrain the present corporate trustees constituting the Trustee from exercising the power to vest capital or income of the Discretionary Trust on any Eligible Beneficiary prior to the vesting date.

Conclusions and Orders

217. For these reasons the Court will make the following orders and directions:

1. In these orders and directions, the following expressions shall have the following meanings

1. “the Trust Deed” means the deed made between David Baffsky and Kieta No. 83 Pty Ltd (which company was later named Bruce Campbell Nominees Pty Ltd) made on 24 November 1975 and being the discretionary trust deed of the Campbell Property Settlement;

2. “the Discretionary Trust” means the discretionary trust constituted by the Trust Deed;

3. “the Trustee” means the trustee of the Discretionary Trust, which office is presently jointly held by Nominees and JCN;

4. “the Children” means the four children of the late Bruce Campbell and the late Julian Campbell, namely John Bruce Campbell, Carolyn Luise Campbell, Beth Frances Julian Campbell, and Richard Birrell Campbell, who are defined as “the children of the Parent” in the Trust Deed;

5. “Nominees” means Bruce Campbell Nominees Pty Ltd, formerly called Kieta No. 83 Pty Ltd, the second defendant;

6. “JCN” means John Campbell Nominees Pty Ltd, the present co-trustee of the Trust with Nominees; and

7. “the contested part of Mundooie” means the land contained in Folio Identifier 1/651447, Auto Consul 7296–37 and Auto Consul 7296–38 being part of the property known as “Mundooie”, Warren in the State of New South Wales; and

8. “the fourth defendant” means Alwyn Ian Tonking, the executor of the estate of the late Bruce Campbell and the fourth defendant in proceedings 2019/374756;

2. Note that at the request of the parties but without making orders for separate determination of a question under Uniform Civil Procedure Rules 2005 r 28.2, the Court has decided first to determine the questions (a) whether or not the contested part of Mundooie is held on the trusts constituted in the Trust Deed comprising the Discretionary Trust the Discretionary Trust constituted by the Trust Deed and forms part of the Trust Property defined in the Trust Deed asked for the estate and (b) whether the Perpetuity Date as defined in the Trust Deed, clause 1(f) should be brought forward to a date earlier than 24 November 2035;

3. Declare that Nominees holds the contested portion of Mundooie on the trusts constituted in the Trust Deed comprising the Discretionary Trust and that the contested portion of Mundooie forms part of the Trust Property defined in the Trust Deed;

4. Order pursuant to Trustee Act 1925, s.86A that the Trust Deed be varied so that the Perpetuity Date as defined in the Trust Deed, clause 1(f) is brought forward from 24 November 2035 to a date to be settled by the Court, which date will be fixed to facilitate the early distribution of the capital of the Discretionary Trust to the Children whilst maximising the market value of the Trust Fund;

5. Note that as no exercise by the fourth defendant to appoint a new Trustee of the Discretionary Trust under clause 17(a) of the Trust Deed is in prospect, the Court declines to vary the Trust Deed by removing clause 17(a);

6. Each of Nominees and JCN in its role as Trustee of the Discretionary Trust is by its servants and agents restrained until further order from exercising any of the powers contained in the Trust Deed, clauses 3, 4, or 6;

7. Direct that the parties exchange any evidence by Friday, 13 May 2022 and written submissions by Monday 16, May 2022 in relation to the Perpetuity Date that each party proposes to be substituted for the Perpetuity Date set under the Trust Deed, clause 1(f) (“the amended Perpetuity Date”);

8. List the proceedings for a further hearing of no more than two hours in relation to the contest concerning the amended Perpetuity Date at a date and time convenient to the parties to be arranged with the Associate to Slattery J between Tuesday 17 May and Friday 20 May 2022;

9. Grant liberty to the parties until Friday, 20 May 2022 to apply to vary these orders on incidental matters or to promote their more efficient implementation;

10. Grant liberty to apply; and

11. Costs are reserved.

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Amendments

27 June 2022 - [5], amended as agreed by the parties.

28 June 2022 - Formatting issues corrected.

28 June 2022 - formatting amended

Decision last updated: 28 June 2022