Hassan El-Jamal

[2021] NSWSC 114

Supreme Court

New South Wales

Medium Neutral Citation:

Hassan El-Jamal [2021] NSWSC 114

Hearing dates:

12 February 2021

Decision date:

12 February 2021

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1. Order pursuant to s 63 of the Trustee Act 1925 (NSW) that the plaintiff be advised it is appropriate that he make an application seeking an order for judicial sale of the property at Casula the subject of the declaration of trust dated 15 December 2017.

2.   Order that the costs of the application be paid out of the trust’s assets.

Catchwords:

EQUITY – Trusts and trustees – Judicial advice – Matters about which advice can be given – Powers, duties, rights and liabilities – Application for judicial sale

Legislation Cited:

Trustee Act 1925 (NSW), s 63

Cases Cited:

Calverley v Green (1984) 155 CLR 242

Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 368 ALR 390; [2019] HCA 20

Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42

Rinehart t/as Trustee of Hope Margaret Hancock Trust v N/A [2017] NSWSC 282

Category:

Principal judgment

Parties:

Hassan El-Jamal (Plaintiff)

Representation:

Counsel:
T Cleary (Plaintiff)

Solicitors:
Shad Partners (Plaintiff)

File Number(s):

2021/00019828

Publication restriction:

Nil

EX TEMPORE Judgment

1. HER HONOUR: This is an application by summons filed on 22 January 2021 by the plaintiff seeking an order for the Court’s opinion, advice and direction pursuant to either s 63 of the Trustee Act 1925 (NSW) or the court’s inherent jurisdiction on certain questions set out in the statement of facts dated 16 December 2020 and which I have marked as Exhibit A in the proceedings. Consistently with the practice in relation to applications for judicial advice of this kind, a confidential advice dated 11 December 2020 has been provided by Counsel and tendered as confidential Exhibit B.

2. In the statement of facts, the Court’s opinion, advice and direction is sought on the following questions: (a) whether the plaintiff would be justified in treating the property (which is a property held in his name at Casula and which he has deposed he owns in his capacity as trustee for one of his older brothers, to whom I will refer, intending no disrespect, as Chadi) as a trust property vested in the plaintiff, (b) whether the plaintiff is entitled to refuse Chadi’s demands that the property be transferred to him pending the resolution of the payment of any indemnity to which the plaintiff is entitled in his capacity as trustee, and (c) whether the plaintiff would be justified in seeking orders for judicial sale of the property and retaining the proceeds of sale until all contingent liabilities he incurs as trustee of the trust are finalised. The application for judicial advice in relation to the second of the questions was not ultimately pressed.

3. Briefly, the jurisdiction that is here being invoked is the jurisdiction under the Trustee Act by a trustee to obtain judicial advice in relation to the administration or exercise of the office of trustee. Reference is made to, and reliance is placed on, what was said by the High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [67]‑[74], with particular reference to [71] and [72], and what was said by Rein J in Rinehartt/as Trustee of Hope Margaret Hancock Trust v N/A [2017] NSWSC 282 at [14].

4. Annexed to the statement of facts is a signed declaration of trust dated 15 December 2017. It purports to be signed by both the plaintiff and by Chadi and it acknowledges that the property was purchased by the plaintiff as trustee for Chadi. It is acknowledged that there is some infelicity in the drafting of the deed, not least insofar as it refers to beneficiaries in the plural whereas the stated beneficiary is simply Chadi; but in any event on its face the document amounts to a declaration of trust pursuant to which it is acknowledged that the plaintiff holds his interest in the property at Casula as trustee.

5. There may be an issue as to the date from which that trust came into existence. It is contended by the plaintiff that he has at all times held the property on trust for Chadi. In the statement of facts he has deposed to the circumstances in which that occurred, and in relation to the source of the funds for the purchase of the property, which, if that be the case, would certainly support the presumption that as from the time of purchase of the property there was a resulting trust in favour of the beneficiary, being what is commonly referred to as a purchase price resulting trust (Calverley v Green (1984) 155 CLR 242 per Gibbs CJ at 246).

6. On the basis of the material that is before me I am satisfied that the jurisdiction to seek judicial advice has been properly invoked. I do not consider it necessary for that purpose to answer the first of the questions posed in the statement of facts, but simply to proceed to deal with the application for judicial advice as to whether or not the plaintiff would be justified in making an application seeking orders for judicial sale of the property.

7. The context in which the trustee wishes to bring an application for judicial sale is made is that the beneficiary, Chadi, has sought to have the trust property transferred to him (as he wishes to sell the property). It is asserted by Chadi that the property is held on a bare trust and that the trustee is obliged to accede to that request. The trustee’s concern relates to the tax position in respect of a potential sale. Without in these reasons exploring in detail Counsel’s confidential advice, in the statement of facts the plaintiff has deposed that he has received advice that, in completing his obligations as trustee, including completing any trust tax returns, he is likely to incur liability for which he is entitled to be indemnified, including significant taxation liabilities that may arise, and that he is concerned that if he transfers the property to the beneficiary he will be unable to use the trust assets to be indemnified for liabilities that have been incurred.

8. In Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 368 ALR 390; [2019] HCA 20 (at [83]), Bell, Gageler and Nettle JJ dealt with the trustee’s right to be indemnified as follows.

[83]   The trustee also has a right to be indemnified out of the trust assets in respect of liabilities properly incurred in the execution of the trust, which takes priority over the beneficiaries’ claim on the trust assets. Until that right has been satisfied, the beneficiaries cannot compel the trustee to exercise the trustee’s powers as legal owner of the trust assets for their benefit. A court of equity will assist the trustee to realise trust assets to satisfy the trustee’s right of indemnity, in priority to the beneficiaries’ interests, and thus it is said that the trustee has an equitable charge or lien over the trust assets. It is not, however, a charge or lien comparable to a synallagmatic security interest over property of another. It arises endogenously as an incident of the office of trustee in respect of the trust assets. [footnotes omitted]

9. I am of the opinion that the plaintiff, who under the declaration of trust is the trustee in respect of the property (and who I am satisfied the evidence suggests has been the trustee of the property pursuant to a resulting trust from the time of its purchase, albeit that I am not making a final determination on that, because the beneficiary is not here to make any submissions in relation to that) has properly invoked the jurisdiction to seek judicial advice; and I am of the view that the plaintiff would be justified in bringing an application seeking orders for judicial sale of the property. (In light of the potential tax implications of a sale and Chadi’s refusal to indemnify the plaintiff for any such liability.)

Orders

10. For those reasons, I make the following orders:

1. Order pursuant to s 63 of the Trustee Act 1925 (NSW) that the plaintiff be advised it is appropriate that he make an application seeking an order for judicial sale of the property at Casula the subject of the declaration of trust dated 15 December 2017.

2. Order that the costs of the application be paid out of the trust’s assets.

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Decision last updated: 19 February 2021