Furey v Mackne
[1999] NSWSC 1298
•9 December 1999
CITATION: Furey v Mackne [1999] NSWSC 1298 CURRENT JURISDICTION: Equity FILE NUMBER(S): 3980/99 HEARING DATE(S): 9 December 1999 JUDGMENT DATE:
9 December 1999PARTIES :
Dennis George Furey (P)
John Charles Mackne (D)JUDGMENT OF: Austin J
COUNSEL : H R Sorensen (P) SOLICITORS: Cassidy Gibson Howlin (P)
Fred A & John F Newnham (D)CATCHWORDS: Equity - equitable remedies - rectification of trust instrument - evidentiary requirements CASES CITED: Commissioner of Stamp Duties (NSW) v Carlenka Pty. Limited (1995) 4 NSWLR 329
Re Butlins Settlement Trust [1976] Ch 251DECISION: Order for rectification made
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISIONAUSTIN J
THURSDAY 9 DECEMBER 1999
3980/99 - DENNIS FUREY V JOHN MACKNE
JUDGMENT
1 HIS HONOUR: In these proceedings, the plaintiff, who is the founder in a unit trust deed executed on 11 April 1997 and known as the Mackne Investment Unit Trust (the Trust), seeks an order for rectification of the trust. The defendant, Mr Mackne, is the trustee and the beneficial unit holder of the trust.
2 According to the trust deed as originally executed, an initial sum of $770,804.00 was settled and 770,804 units of a par value of $1 were issued. The original unit holders are stated in the trust deed to be Mr Mackne for 514,000 units and J C Mackne Benefit Fund for 256,804 units. Rectification is sought to amend the part of the trust deed containing this information (a schedule), by substituting for those figures the respective figures $100, one hundred units in respect of Mr Mackne and the fifty units in respect of the J C Mackne Benefit Fund. The evidence before me is that Mr Mackne is sole director and shareholder of the trustee of the J C Mackne Benefit Fund, which is a superannuation benefit fund.
3 The application is made on the basis that the trust deed was prepared by Mr Mackne's accountant, Mr Furey, who gave instructions to an employee to prepare a unit trust deed in standard format. The standard unit trust deed used by Mr Furey establishes a trust in which one hundred units are issued at $1 each in respect of a fund of $100 settled by the founder, typically Mr Furey himself.
4 It was intended that the trust would acquire a freehold property for a consideration anticipated to be $770,804. The employee, who had never prepared a trust deed before that time, by mistake incorporated the estimated purchase price as the settled sum of the value of the units issued instead of the sum of $100. Mr Furey did not notice the mistake, nor did Mr Mackne. They executed the trust instrument and it was submitted for stamping in due course. Eventually the mistake was discovered when the Commissioner for Stamp Duties sought to assess the trust deed to a much higher stamp duty than would normally be the case, because of the mistake with respect to consideration and the issue of the units.
5 The application to rectify the trust instrument is consented to by Mr Mackne, who says in his affidavit that he supports the application and does not propose to appear, provided that no obligation to pay costs is imposed upon him.
6 There is evidence of a telephone conversation between the plaintiff's solicitor and an officer of the Office of State Revenue, in which the plaintiff's solicitor was informed by the officer that the Commissioner did not intend to appear at this hearing but would not provide a letter to that effect. However, the original trust deed has been produced today on the Commissioner’s behalf.
7 This Court has jurisdiction to rectify instruments other than contracts, including a trust instrument: Re Butlins Settlement Trust [1976] Ch 251; applied in Commissioner of Stamp Duties (NSW) v Carlenka Pty. Limited (1995) 4 NSWLR 329. As in the case of contracts, the Court will require clear and cogent evidence that the true intention of the parties to the trust instrument was that it should contain provisions which have been mistakenly recorded in the document. Such evidence is present in the affidavits of Mr Furey, Mr Mackne and Mr Furey's employee in this case.
8 Butlins’ case shows that on occasions rectification may be appropriate to correct an instrument to accord with a single intention rather than a common intention of more than one party, and to do so in a case where the instrument is created without valuable consideration. However, where the application is to rectify a trust instrument, great care must be taken to ensure that nothing is done which may prejudice the interests of beneficiaries without their having an opportunity to appear and make submissions.
9 Happily in the present case there is only one beneficiary of the Trust directly and through his superannuation fund, namely Mr Mackne. As his evidence is that he supports the application, a potentially difficult question does not arise in this case.
10 I therefore have no hesitation in making the order sought in paragraph 1 of the summons and I do so.* * * * * * * * *
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