Equity Trustees Wealth Services Limited in Its Capacity as trustee for the Noongar Charitable Trust v The Attorney General of Western Australia
[2024] WASC 324
•5 SEPTEMBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EQUITY TRUSTEES WEALTH SERVICES LIMITED IN ITS CAPACITY AS TRUSTEE FOR THE NOONGAR CHARITABLE TRUST -v- THE ATTORNEY GENERAL OF WESTERN AUSTRALIA [2024] WASC 324
CORAM: SEAWARD J
HEARD: 3 SEPTEMBER 2024
DELIVERED : 3 SEPTEMBER 2024
PUBLISHED : 5 SEPTEMBER 2024
FILE NO/S: CIV 1597 of 2023
BETWEEN: EQUITY TRUSTEES WEALTH SERVICES LIMITED IN ITS CAPACITY AS TRUSTEE FOR THE NOONGAR CHARITABLE TRUST
Plaintiff
AND
THE ATTORNEY GENERAL OF WESTERN AUSTRALIA
Defendant
Catchwords:
Trusts - Charitable Trust - Trustee application for directions pursuant to s 92(1) of the Trustees Act 1962 (WA) - Whether trustee justified in entering deed of settlement - Direction given - Turns on own facts
Legislation:
Charitable Trusts Act 2022 (WA)
Trustees Act 1962 (WA) s 92
Result:
Direction that plaintiff trustee is justified in settling the claims on the terms of the deed of settlement and release.
Representation:
Counsel:
| Plaintiff | : | S C M Wong |
| Defendant | : | S J K Teoh |
Solicitors:
| Plaintiff | : | Lavan |
| Defendant | : | State Solicitor's Office |
Case(s) referred to in decision(s):
Australian Executor Trustees Ltd v Attorney General (WA) [2015] WASC 439
Jeffrey Laurence Herbert as trustee for the Blenkinsop Family Trust as trustee for the Blenkinsop Family Trust No 2 v Blenkinsop [2018] WASC 369
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of
Plan B Trustees Ltd v Maitland Parker [2012] WASC 392
SEAWARD J:
(This judgment was delivered extemporaneously and has been edited from the transcript to correct matters of grammar and formatting, and to add headings and full citations.)
Overview
Equity Trustees is the trustee of the Noongar Charitable Trust (Trust), and in January 2020 became the registered proprietor of two properties in Wundowie that are collectively described as El Caballo.
By writ of summons dated 16 March 2023, the Aboriginal Housing Recovery Centre Limited (AHRCL), commenced proceedings in the Supreme Court of Western Australia against Equity Trustees seeking a declaration to the effect that the AHRCL holds an equitable estate or interest in El Caballo to the extent of contributions it made to a joint endeavour that has now failed.
By originating summons dated 6 June 2023, Equity Trustees commenced an application under s 92 of the Trustees Act 1962 (WA) (Trustees Act), s 44 of the Charitable Trusts Act 2022 (WA), and O 58 r 2 of the Rules of the Supreme Court 1971 (WA) for judicial advice that:
(1)Equity Trustees is justified in defending the proceedings commenced by the AHRCL or in commencing counterclaims against the AHRCL (or both); and
(2)Equity Trustees is justified in settling the claims the subject of the substantive proceedings on terms which Equity Trustees' solicitors advise are reasonable having regard to counsel's opinion and advice as to the merits of those claims and the estimated costs, delay and risks associated with proceeding to and conducting a trial of those claims.
On 28 November 2023, the application was heard by Forrester J who gave a direction under s92 of the Trustees Act that Equity Trustees was justified in the defending the proceedings. However, Forrester J considered it to be premature to grant the compromise direction sought by Equity Trustees and instead granted liberty to apply to renew the application for the compromise direction.
On 11 January 2024, Equity Trustees and the AHRCL settled the dispute on terms recorded in a confidential deed of settlement and release. That settlement is subject to Equity Trustees obtaining a compromise direction from the Court.
By amended Originating Summons dated 24 June 2024, Equity Trustees now seeks the following substantive order:
The plaintiff is justified in settling the claims the subject of the proceedings on the terms of the deed of settlement and release entered into between the plaintiff and AHRCL on 11 January 2024.
In support of its application for directions, Equity Trustees relies on:
(1)the open affidavit of Benieka Louise Lythgo, affirmed 6 June 2023; and
(2)the Second Sensitive affidavit of Benieka Louise Lythgo, affirmed 16 July 2024.
Ms Lythgo is the National Manager of Community & Native Title Trusts for Equity Trustees. Ms Lythgo is responsible for managing Aboriginal Native Title Trusts for Equity Trustees across Western Australia, South Australia and Queensland. Ms Lythgo also manages Equity Trustee's Community & Native Title Trusts team.
As this application involves a charitable trust, the Attorney General of Western Australia is a proper defendant in the application. The Attorney General's position in relation to the application is that having now received a copy of the legal advice provided to Equity Trustees, the Attorney General accepts that it is appropriate for the orders to be made. The Attorney General seeks payment of his costs from the trust fixed at $1,000. That cost order is not opposed.
For the reasons set out below, I am satisfied that it is appropriate to make the directions sought.
Background Facts
Equity Trustees is the trustee of the Trust and the South West Aboriginal Land and Sea Council is the founder of the Trust.[1]
[1] First Lythgo affidavit [7], [9] and BL-1.
In January 2020, Equity Trustees became the registered proprietor of two properties that are collectively described as El Caballo, being:[2]
(1) 51 Jocoso Rise, Wundowie, being Lot 90 on Deposited Plan 72807 and the whole of land in Certificate of Title Volume 2799 Folio 947 (the El Caballo Lifestyle Village); and
(2) 29/3349 Great Eastern Highway, Wundowie, being Lot 29 on Strata Plan 49035 and the whole of the land in Certificate of Title Volume 2637 Folio 329 (the El Caballo Resort).
[2] First Lythgo affidavit [10].
The purchase price was $12 million.[3]
[3] First Lythgo affidavit [10].
In around March 2020, Equity Trustees appointed the AHRCL to manage and operate El Caballo.[4] Both Equity Trustees and AHRCL are charities and share similar purposes.
[4] First Lythgo affidavit [11] and BL-3.
In April and May 2020, Equity Trustees transferred $1.5 million to the AHRCL described as a 'working capital contribution for El Caballo acquisition as per agreement'.[5]
[5] First Lythgo affidavit [12], BL-4 and BL-5.
From January 2021 to June 2021, Equity Trustees reviewed the financial feasibility of El Caballo and, after consultation with the South West Aboriginal Land and Sea Council, decided to divest El Caballo.[6]
[6] First Lythgo affidavit [13] - [14].
In around January 2023, following a formal public sale process, Equity Trustees entered into a confidential sale agreement with a buyer with respect to, ultimately, only the El Caballo Lifestyle Village.[7] Since 3 August 2023, Equity Trustees is no longer the registered proprietor of the El Caballo Lifestyle Village.[8] As at the date of Ms Lythgo's affidavit, the El Caballo Resort is still for sale.[9]
[7] First Lythgo affidavit [15] - [18].
[8] Second Sensitive Lythgo affidavit [8].
[9] Second Sensitive Lythgo affidavit [10].
On 24 January 2023, the AHRCL lodged caveats over the El Caballo Lifestyle Village and lot 29 of the El Caballo Resort. The caveats were supported by statutory declarations which asserted the AHRCL held an equitable interest in the El Caballo Lifestyle Village and lot 29 of the El Caballo Resort for financial and non-financial contributions which it made to a joint endeavour with Equity Trustees which had now failed.[10]
[10] First Lythgo affidavit [20] - [21], BL-6 and BL-7.
By chamber summons filed on 16 March 2023, the AHRCL applied to extend the operation of the caveats. This chamber summons was opposed by Equity Trustees.[11]
[11] First Lythgo affidavit [23] and [25].
Also on 16 March 2023, the AHRCL filed a writ with an indorsement of claim seeking a declaration that the AHRCL:[12]
… holds an equitable estate or interest in [El Caballo] to the extent of the contributions it made to an endeavour that has now failed.
[12] First Lythgo affidavit [27] and BL-8.
On 1 May 2023, Equity Trustees and the AHRCL settled the caveat extension application by way of a confidential deed of settlement and release.[13]
[13] First Lythgo affidavit [26].
On 4 May 2023, the AHRCL filed its statement of claim, the key parts of which are:[14]
(1)in or around March 2019 to November 2019, the AHRCL and Equity Trustees had discussions about their mutual concern about homelessness among Noongar people and formed a common desire to address homelessness and to benefit the Aboriginal community generally, and thereby pursued a joint endeavour to acquire private land that would be Aboriginal-owned, used to provide services to the Aboriginal community, and be capable of later subdivision and development by Aboriginal builders to create affordable housing for Aboriginal people;
(2)in pursuant of this joint endeavour, El Caballo would be acquired with funds from the Noongar Charitable Trust, with legal title to be held by the AHRCL and Equity Trustees as co-trustees;
(3)the El Caballo Resort and the El Caballo Village would each be developed in furtherance of this joint endeavour;
(4)Equity Trustees became the registered proprietor of El Caballo;
(5)the AHRCL went on to make financial and non-financial contributions to the advancement of the joint endeavour. Those contributions are then pleaded. To the extent figures are particularised, the total particularised contribution by the AHRCL is in excess of $5 million;[15]
(6)Equity Trustees has informed the AHRCL that it no longer wishes to commit to the joint endeavour and the joint endeavour has come to an end; and
(7)Equity Trustees does not propose to share the proceeds from the sale of El Caballo with the AHRCL, and it would be unconscionable for Equity Trustees to retain the benefit of the AHRCL's contributions to the joint endeavour.
[14] First Lythgo affidavit [28] and BL-9.
[15] First Lythgo affidavit [30], BL-9 and BL-10.
Although a defence has not been filed, Ms Lythgo deposes that Equity Trustees denies the existence of the alleged joint endeavour; denies that the AHRCL made the contributions alleged; and denies that the AHRCL is entitled to the relief sought.[16]
[16] First Lythgo affidavit [31].
Legal Principles
Four possible sources of jurisdiction which potentially apply in the present case:
(1)section 92(1) of the Trustees Act;
(2)section 44 of the Charitable Trusts Act 2022 (WA);
(3)Order 58 r 2 of the Rules of the Supreme Court 1971 (WA); and
(4)section 16(1)(d) of the Supreme Court Act 1935 (WA)
In this case nothing turns upon the specific source of jurisdiction, as the circumstances of the case are such that the general principles would be the same whatever the source of the jurisdiction invoked and utilised. I have therefore considered the direction sought in the context of s 92 of Trustees Act.
Section 92(1) of the Trustees Act provides as follows:
Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.
The only jurisdictional bar to relief under s 92 is that the applicant trustee must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument.[17]
[17] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of
Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008); 237 CLR 66 [58].
A trustee has the power under s 42 of the Trustees Act to compromise litigation. The decision whether to compromise a claim relating to the trust property raises questions respecting the management or administration of the trust property and is within the scope of s 92 of the Trustees Act.[18]
[18] Jeffrey Laurence Herbert as trustee for the Blenkinsop Family Trust as trustee for the Blenkinsop Family Trust No 2 v Blenkinsop [2018] WASC 369 [33].
The scope of the court's jurisdiction under s 92 of the Trustees Act was outlined by Martin CJ in Australian Executor Trustees Ltd v Attorney General (WA) as follows:[19]
32…the powers conferred by provisions like s 92 of the Act should generally be exercised for the purposes for which they are conferred, which are the protection of the property of the trust and the protection of a trustee acting properly and in accordance with the directions of the court. Subject to conformity with those overarching purposes, the exercise of the powers conferred by such provisions is discretionary and will depend upon the particular facts and circumstances of each case, unconstrained by inflexible rules or prescriptive standards.
33Nevertheless, the cases do provide some guidance with respect to the exercise of the discretion conferred upon the court. In exercising its powers, the court will generally endeavour to act in the best interests of the beneficiaries of the relevant trust and, where appropriate, will take account of the views of those beneficiaries. Further, ordinarily the court will not exercise its jurisdiction in such a way as to usurp the roles and responsibilities of trustees in relation to the making of commercial decisions or with respect to the conduct of litigation. Rather, the court will be concerned to ensure that the trustee has taken proper advice and given full consideration to all relevant matters before arriving at a reasoned and appropriate decision. If satisfied of those matters, in appropriate cases the court will give the directions sought and thereby confer protection upon a trustee taking action in accordance with those directions.
[19] Australian Executor Trustees Ltd v Attorney General (WA) [2015] WASC 439 [32] - [33]. See also Plan B Trustees Ltd v Maitland Parker [2012] WASC 392 [45] - [47].
Factors which are relevant to the exercise of the discretion include:[20]
(1)the nature of the case and the issues raised;
(2)the amounts involved, including likely costs;
(3)whether the likely costs to be incurred by the trustee are proportionate to the issues and the significance of the case;
(4)the consequences of the litigation to the parties concerned; and
(5)in the case of a charitable trust, any relevant public interest factors.
[20] Jeffrey Laurence Herbert as trustee for the Blenkinsop Family Trust as trustee for the Blenkinsop Family Trust No 2 v Blenkinsop [2018] WASC 369 [76] - [77].
In exercising the power under s 92, the court should not determine disputed issues of fact:[21]
The application for judicial advice is, 'founded upon facts stated to the Court by the trustee, untested by adversarial procedure, and assumed by the Court to be true' - although 'only for the purpose of the application'. The advice is given on that basis. The trustee must fully and fairly disclose the facts known to him to the court. The protection afforded to the trustee is lost should he have been guilty of any fraud or wilful concealment or misrepresentation in obtaining the direction. (citations omitted)
[21] Jeffrey Laurence Herbert as trustee for the Blenkinsop Family Trust as trustee for the Blenkinsop Family Trust No 2 v Blenkinsop [2018] WASC 369 [75].
Has Equity Trustees considered all relevant matters?
I have reviewed the affidavit material provided in support of this application. As much of the relevant material is confidential and contained in the Second Sensitive affidavit of Ms Lythgo - over which orders under O 67B of the RSC have been made - I am limited in terms of the matters and detail to which I can refer in these reasons.
In the Second Sensitive affidavit, Ms Lythgo deposes that she considers it to be in Equity Trustee's best interests to settle the proceedings on the terms of the confidential settlement deed in order to preserve the assets of the Trust in furtherance of its charitable objects. In her affidavit, Ms Lythgo goes on to detail the matters to which she has had regard in reaching this decision. These matters include:
(1)legal advice which Equity Trustees has obtained, which comprises an opinion by senior counsel and advice from Equity Trustee's solicitors;
(2)the scope of the current claim as pleaded and the potential for any future amendments;
(3)the terms of settlement contained in the confidential settlement deed;
(4)information regarding the AHRCL's financial position;
(5)information regarding the estimated costs of conducting a trial of the proceedings, including information as to Equity Trustee's estimated recoverable and unrecoverable legal costs; and
(6)any continuation of the proceedings would divert resources away from the pursuit of the charitable objects of the Trust.
The attachments to the two affidavits include (amongst other documents):
(1)the legal advice Equity Trustees has obtained from senior counsel and their solicitors;
(2)the confidential settlement deed;
(3)documents supporting the information regarding the AHRCL's financial position;
(4)information regarding the estimated costs of conducting a trial of the proceedings, including information as to Equity Trustee's estimated recoverable and unrecoverable legal costs.
I have therefore been able to review the legal advice received by Equity Trustees. I have also been able to review the confidential settlement deed which details the settlement sum proposed to be paid by Equity Trustees to the AHRCL, and I am able to compare that amount to the amount claimed by the AHRCL in their statement of claim. I have also been able to review the scope of the release and indemnities contained in the confidential settlement deed.
I have also been able to review the financial information regarding the AHRCL; the amounts and calculations regarding the estimated costs of conducting a trial; and the amounts and calculations regarding Equity Trustee's estimated recoverable and unrecoverable legal costs.
As a result of my review of the affidavit evidence, I am satisfied that Equity Trustees has taken proper advice and given full consideration to all relevant matters, including those referred to earlier in my reasons, before arriving at a reasoned and appropriate decision in relation to settlement. I am therefore satisfied that Equity Trustees is justified in entering into the proposed settlement.
In reaching this conclusion, I am not usurping the role and responsibility of Equity Trustees as the trustee to decide whether it should enter into the proposed settlement, and if so the precise terms, but rather I am making a decision as to whether it is appropriate, in the exercise of my discretion, to order that Equity Trustees is justified in entering into the settlement so as to grant Equity Trustees the protection conferred by s 92 of the Trustees Act.
In reaching this decision I have also had regard to the relevant public interest factors and information concerning an investigation by the Ombudsman and the steps that have been taken in that regard.
I will accordingly make the following the orders:
(1)The plaintiff is justified in settling the claims the subject of the proceedings on the terms of the deed of settlement and release entered into between the plaintiff and Aboriginal Housing Recovery Centre Limited on 11 January 2024.
(2)The plaintiff's costs of this application be paid from the assets of the trust.
(3)The defendant's costs of this application be paid from the assets of the trust fixed in the sum of $1,000.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AA
Associate to the Honourable Justice Seaward
5 SEPTEMBER 2024
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