Colin Douglas Cameron v Eileen Miriam Jeffress

[2013] NSWSC 1754

Supreme Court

New South Wales

Medium Neutral Citation:	Colin Douglas Cameron v Eileen Miriam Jeffress [2013] NSWSC 1754
Hearing dates:	15 November 2013
Decision date:	15 November 2013
Jurisdiction:	Equity Division
Before:	Kunc J
Decision:	Direction to allow expert evidence refused
Catchwords:	TRUSTS AND TRUSTEES - Application for advice as to proper construction of will - Whether direction should be given to permit expert evidence of taxation consequences of different constructions EVIDENCE - Expert opinion - Application for direction to allow plaintiffs to adduce expert evidence of Australian taxation law
Legislation Cited:	Civil Procedure Act 2005 (NSW) Trustee Act 1925 (NSW) Uniform Civil Procedure Rules 2005
Cases Cited:	Attard & Others v James Legal Pty Limited & Another (2010) 80 ACSR 585
Category:	Procedural and other rulings
Parties:	Colin Douglas Cameron (First Plaintiff), Godfrey James Martin (Second Plaintiff), John Francis O'Connor (Third Plaintiff), Eileen Miriam Jeffress (First Defendant), Lesley Ann Davidson (Second Defendant), Robert Ian Jeffress (Third Defendant), Gabrielle Davidson (Fourth Defendant), Dylan Robert Langton Collins (Fifth Defendant), Michael James Cormack Davidson (Sixth Defendant), Clare Hazel Rose Davidson (Seventh Defendant), Jack E Jeffress (Eighth Defendant)
Representation:	Counsel: Mr M. Heraghty (Plaintiffs) Mr M. Boyd (First Defendant), Mr C.M. Harris SC (Second Defendant), Mr D.K.L. Raphael (Third, Fourth, Fifth, Sixth and Eighth Defendants) Solicitors: Schurgott Noolan Pty Limited (Plaintiffs) Wight & Strickland (First Defendant) Diamond Conway (Second Defendant) Penhall & Co (Third, Fourth, Fifth, Sixth and Eighth Defendants)
File Number(s):	2013/167453
Publication restriction:	No

EX TEMPORE Judgment

1. HIS HONOUR: These proceedings concern the last will and testament of Neville Jeffress, late of Mosman, who died on 13 September 2007. On 22 November 2007 probate of Mr Jeffress' estate was granted to the plaintiffs. I was informed by counsel from the bar table, and accept, that the value of the estate is of the order of $88 million.

1. By further amended summons which I granted leave to the plaintiffs to file in court today, the plaintiffs seek judicial advice under s 63 of the Trustee Act 1925 (NSW) in relation to a number of questions concerning the administration of the estate. In particular, questions are asked concerning whether amounts to which certain beneficiaries are entitled are entitlements to income or capital. The questions are:

4A A DETERMINATION whether, on the true construction of sub-clauses (a), (c) and (e) of clause 7 of the said Will, and in the events that have happened, the amounts to which Mrs Jeffress is entitled in accordance with those sub-clauses are entitlements to income or capital?

4B A DETERMINATION whether, on the true construction of sub-clauses (b) and (c) of clause 7 of the said Will, and in the events that have happened, the amounts to which the second defendant, Lesley Ann Davidson, is entitled are entitlements to income or capital?

1. By notice of motion filed 30 October 2013 the plaintiff trustees seek relief in accordance with UCPR r 31.19 for leave to rely upon the expert report of Professor GS Cooper AM, a recognised expert in taxation law. Professor Cooper's report is directed to the taxation consequences which follow, in Professor Cooper's opinion, from the determination of whether the entitlements, the subject of questions 4A and 4B, were entitlements to income or capital. There was general acceptance at the bar table that if the Court is to answer questions 4A and 4B, then those answers will inform certain conclusions as to the taxation treatment of payments which have been made to beneficiaries, both as far as the estate is concerned and the beneficiaries.

1. However, during the course of argument the plaintiffs accepted what must be the case, namely that Professor Cooper's report can say nothing about the interpretation of the clauses in Mr Jeffress' will that are the subject of questions 4A and 4B. The interpretation will have tax consequences. The tax consequences cannot govern the interpretation. This point was made in answer to the application by counsel appearing for the second, third, fourth, fifth, sixth and eighth defendants, all of whom oppose the notice of motion. Counsel for the first defendant supported the notice of motion.

1. In those circumstances, if the Court is to grant leave to the plaintiffs to rely upon Professor Cooper's report, some other bases for its relevance must be established.

1. It was submitted by the plaintiffs that there were two other bases on which the report was relevant. First, it was said to go to the question of the utility of whether or not questions 4A and 4B should be answered at all. The Court retains a discretion whether or not to give judicial advice and the opposing defendants frankly conceded that at the hearing of the judicial advice application they would be contending that there was no utility in answering those questions. It is not necessary for me now to rehearse the arguments that were summarised for me by those parties as to why they say there is no utility in the Court giving advice in answer to questions 4A and 4B.

1. The other reason advanced by the plaintiffs was a concern that allegations have been raised on behalf of the third, fourth, fifth, sixth and eighth defendants that payments which had been made by the trustees were in breach of trust. It was submitted by the plaintiffs that answers to questions 4A and 4B could quell the suggestion that there had been a breach of trust.

1. The plaintiffs submitted that as trustees seeking judicial advice they have an obligation to put before the Court all relevant material and that it was really for the Court's assistance that they were proffering the material in Professor Cooper's report. That is undoubtedly, at the level of principle, the correct approach for trustees to take in an application of this kind. Nevertheless, the Court must be satisfied that the material helpfully being proffered by the trustees is in fact going to be relevant to the issues upon which the Court is going to have to give advice.

1. In exercising the discretion to allow the plaintiffs to rely on Professor Cooper's report, the Court is required to take into account the overriding purpose and matters relating to the overriding purpose set out in ss 56 to 58 of the Civil Procedure Act 2005 (NSW). Those are the well known provisions directed towards ensuring the just, cheap and quick resolution of proceedings by reference to the matters truly in issue.

1. In circumstances where Professor Cooper's report cannot have anything to say on the principal issue that will be before the Court, namely the proper construction of the relevant clauses of Mr Jeffress' will, the considerations under ss 56 to 58 become particularly important. To allow Professor Cooper's report to be relied upon will give it a particular status as evidence in the proceedings which will entitle the defendants, if they wish to do so, to present expert evidence of their own on those questions. This runs the very real risk of setting a hare running which will in fact not be a question that the Court necessarily needs to determine.

1. Even in relation to the question of utility I do not think the Court would have to come to a definitive view as to the correctness of the views expressed by Professor Cooper. The Court may well have to come to a view as to how realistic the views postulated by Professor Cooper are, but in order to do so I do not think the Court will need to have before it Professor Cooper's report bearing the character of evidence in the proceedings. In other words, having regard to the issues that the Court will really need to grapple with for the purposes of providing the judicial advice, it seems to me that the matters of tax law raised in Professor Cooper's report, while undoubtedly important to the trustees and the relevant beneficiaries, are really peripheral to the determination of the ultimate questions which will confront the Court.

1. As to the second ground of potential relevance, I accept the submission of the defendants that judicial advice proceedings are not an appropriate vehicle to seek to resolve a contested allegation of breach of trust.

1. For these reasons I do not propose to grant leave for the report to be relied upon as evidence. Having said that, I should not be taken as excluding or preventing the plaintiffs from putting the arguments and conclusions expressed in Professor Cooper's report to the Court by way of submissions as to the proper construction and effect of the relevant taxation laws, to the extent it may be necessary to do so to meet any suggestion by the defendants that questions 4A and 4B have no utility. In reaching this conclusion, I bear in mind what was said by Tobias JA (Beazley and Giles JJA agreeing) in Attard & Others v James Legal Pty Limited & Another (2010) 80 ACSR 585 at 611 (citations omitted):

[131] In this context it may be noted that it is now well-established that on the questions of professional legal practice, particularly in professional negligence cases, and except possibly, but not necessarily, in specialist legal areas, a court does not need expert evidence to be advanced as to the appropriate professional standards from which it is alleged a defendant has departed. The court can resort to its own knowledge of such practices...

[132] The position would, in any view, be a fortiori where, as in the present case, the issue is whether a Supreme Court judge would, on the facts as proved and applying the law thereto, as a matter of probability refused leave to proceed pursuant to s 444E(3) of the Corporations Act. After all, such a judge is presumed to be an expert in all relevant areas of the law within the court's jurisdiction.

1. The Court, amongst other things, has revenue matters within its jurisdiction. To the extent it may be necessary for the judge called upon to provide the judicial advice to consider questions of the tax consequences of various constructions in relation to the utility of answering questions 4A and 4B, that is a matter which classically falls within an area where the Court does not require evidence but is able to receive submissions as to the effect of the relevant legislation and make up its own mind. This should especially be the case where no one at the bar table has suggested that the Court would in fact, for the purposes of giving the judicial advice, have to reach a definitive answer as to what the relevant tax consequences are.

1. Subject of course to the particular issues before the Court at the time of the hearing and the way in which they are argued, at this early interlocutory stage it seems to me that there is no reason why the plaintiffs would not be able to deploy the matters raised in Professor Cooper's report by way of submission if necessary. The practical reality is that all other parties have been supplied with a copy of Professor Cooper's report and they can take their own course in relation to the matters raised by Professor Cooper to the extent they wish to do so to be ready to meet any submission made to the effect of the matters set out in his report.

1. In due course I will therefore dismiss the plaintiffs' notice of motion.

1. The second, third, fourth, fifth, sixth and eighth defendants apply for their costs of the motion and seek an order the plaintiffs not be entitled to indemnity for their costs of the motion out of the estate. They point to UCPR Pt 42 r 42.25 which provides:

(1) Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be.

(2) The court may order that the person's costs not be so paid if:

(a) the trustee or mortgagee has acted unreasonably, or

(b) in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund.

1. They submit that, in the events which have happened, the plaintiffs have acted unreasonably or, insofar as they proposed to call Professor Cooper's report in aid to meet an allegation of breach of trust, have been acting in substance for their own benefit rather than for the benefit of the estate.

1. I do not accept those submissions. This matter is obviously one of some complexity and I have already indicated my view that insofar as the trustees sought to adduce Professor Cooper's report into evidence, they were acting, at least at the level of principle, in accordance with the way in which the Court would expect trustees to act on an application of this kind.

1. In those circumstances I will allow all parties to have their costs of the motion out of the estate, with the defendants to have those costs on the ordinary basis and the plaintiffs to have their costs on the indemnity basis.

1. However, I do accept the submissions for those defendants that the costs incurred in relation to the preparation of Professor Cooper's report fall into a different class by reason of the conclusions which I have reached. They submit that those costs should not be included in any order I make today in favour of the plaintiffs. For the reasons which I have already given, it remains entirely possible that the substance of Professor Cooper's report may well be deployed in the course of the hearing to answer the submissions which the defendants have foreshadowed that there is no utility in answering questions 4A and 4B. However, that is a matter that will only be known at the end of the hearing. For this reason, I will excise from the costs order which I propose to make the costs incurred by the plaintiffs in obtaining Professor Cooper's report and will expressly reserve those costs at this stage.

1. The orders of the Court are:

(1)   The plaintiffs' notice of motion filed 30 October 2013 is dismissed.

(2)   The defendants are to have their costs of the motion on the ordinary basis out of the estate.

(3)   The plaintiffs are to have their costs of the motion out of the estate on the indemnity basis subject to paragraph 4.

(4)   The costs of the plaintiffs of and incidental to the preparation of Professor Cooper's report which include, for the avoidance of doubt, the legal costs incurred in relation thereto as well as Professor Cooper's costs charged to the estate, are reserved.

Decision last updated: 27 November 2013