Innes v Attorney-General for the State of Victoria

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2021 01681

PAUL ANTHONY INNES (in his capacity as Trustee for the National Jockeys Trust) & ORS (according to the attached Schedule)	Plaintiffs
v
THE ATTORNEY-GENERAL FOR THE STATE OF VICTORIA & ORS (according to the attached Schedule)	Defendants

---

JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	Written submissions by the plaintiff filed 2 June 2021 and 16 June 2021, further correspondence on 30 September 2021 and 7 October 2021
DATE OF JUDGMENT:	12 October 2021
CASE MAY BE CITED AS:	Innes & Ors v Attorney-General for the State of Victoria & Ors
MEDIUM NEUTRAL CITATION:	[2021] VSC 628

---

PRACTICE AND PROCEDURE – Trusts and Trustees – Charitable Trust - Application for judicial advice - Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 54.02 – Interpretation of trust deed – Whether trust deed should be rectified to reflect common intention as to number of trustees – Where trustees invalidly appointed – Whether grants, donations or gifts to beneficiaries should be approved – Finding that the impugned grants should be approved – Whether the trust deed should be amended in accordance with terms of a supplemental deed – Whether the plaintiffs ought be relieved of personal liability in respect of the impugned grants – Trustee Act 1958 (Vic), ss 63, 67 – No evidence of financial impropriety – Trustees acted honestly and reasonably and in accordance with legal advice - Orders that the impugned grants be approved, the trustees be relieved of any personal liability, and the parties be indemnified for their reasonable legal costs from the assets of the trust.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D G Guidolin with Ms N Lenga of counsel	Maurice Blackburn
For the First Defendant	Mr S Tamburro	Victorian Government Solicitor
For the Second to Fourth Defendants	Mr D Lestal	Santone Lawyers

HER HONOUR:

Introduction and background

The National Jockeys Trust (‘NJT’) was established by a deed executed on 27 February 2004 (‘deed’). The deed was made between the Australian Racing Board Limited (‘ARB’)[1] and seven named individuals, who were defined in the heading of the deed as “the trustees” and listed in the Schedule to the deed, being Ross Inglis, Gregory Sword, Bernard Ryan, Rev. Paul Bayliss, Dr Philip Truskett, Paul Innes OAM and Andrew Harding (‘original trustees’).
[1]Now Racing Australia (‘RA’).

Recital A to the deed stated that the ARB wished to establish a public charitable trust for the purpose of providing funds for the relief of the financial difficulties of jockeys (including apprentice jockeys, and former jockeys and apprentice jockeys) and their families (‘beneficiaries’), where that need arose through the serious injury, illness or death of a jockey or apprentice jockey.[2]
[2]While I have not undertaken an exhaustive analysis of the schedules evidencing the payments made by the NJT, the payments made to individual beneficiaries generally range between $5,000 and $20,000.

By originating motion filed 19 May 2021, the plaintiffs, being Messrs Innes, Ingles and Ryan and Dr Truskett in their capacity as trustees of the NJT, seek judicial advice pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) in relation to the administration of the NJT. The plaintiffs also seek orders pursuant to ss 63 and 67 of the Trustee Act 1958 (Vic) (‘Act’) that the deed be amended in accordance with a supplemental trust deed dated 23 November 2020 (‘supplemental deed’), that such amendments take effect from 7 October 2016,[3] and that the plaintiffs and the second to fourth defendants, being Dr Felicity Hawker AM, the Hon Wayne Haylen QC, and Ms Bernadette Cooper (‘defendants’) be relieved from any personal liability in relation to the making of grants, gifts or donations to beneficiaries, or the exercise of any powers by them as trustees, which were not supported by the terms of the deed.
[3]Being the date of execution of an earlier deed of amendment (‘deed of amendment’).

The application has been made after investigations which took place between 2019 and 2021 regarding a number of issues concerning the appointment of trustees and the administration of the trust (‘irregularities’). In summary, the following irregularities have been identified:

(a) no resolution had been made by the original trustees pursuant to cl 11.1 of the deed to expand the number of trustees to seven;

(b) one of the original trustees, Mr Greg Sword, was not qualified to be a trustee at the time of his appointment;

(c) at least two additional purported trustees had not been validly appointed as trustees;

(d) there was a question mark as to whether the defendants had been validly appointed as trustees;

(e) a deed of amendment dated 17 October 2016 had not been properly executed by the trustees;

(f) some of the grants to beneficiaries had been approved by the trustees via circular emails, inconsistent with the terms of the deed; and

(g) not all of the minutes of meetings of trustees could be located, thus casting doubt upon whether all of the grants to beneficiaries made had been made by a majority of validly appointed trustees with a quorum of validly appointed trustees present and voting.

Importantly, while a number of irregularities have been detected, there is no suggestion that the trustees (who are all volunteers), whether validly appointed or otherwise, have acted in bad faith or for an improper purpose. There is no suggestion of any financial impropriety on the part of the trustees or any of them, and since its inception, the accounts of the NJT have been audited annually by an independent firm of accountants.

The plaintiffs relied upon the affidavits of their solicitor, Ms Bridie Murphy of Maurice Blackburn affirmed on 20 May 2021, and three affidavits of Mr Innes, sworn on 21 May 2021, 1 July 2021 and 7 October 2021. The defendants, along with the first defendant, the Attorney‑General for the State of Victoria, do not oppose the plaintiffs’ application, and have not made any submissions with respect to the plaintiffs’ application.[4]
[4]The Court was provided with copies of emails from the Victorian Government Solicitor’s Office (for the Attorney-General) and Santone Lawyers (solicitors for the defendants) to the plaintiffs’ solicitors on 13 July 2021 and 31 August 2021 respectively, confirming their consent to the plaintiffs’ application, and confirming their intention not to file any submissions.

The terms of the deed

The NJT’s purpose is set out in cl 4 of the deed, which provides, in part, as follows:

4.1 Intention
The Founder desires to establish a public charitable trust in Australia to provide financial assistance to relieve the financial needs of Jockeys and their families, especially where caused through serious injury, illness or death of a Jockey.

4.2 Principal Purpose
The principal purpose of the Trust is to relieve the immediate and ongoing financial needs of Jockeys and their families in Australia who are in necessitous circumstances especially (but not limited to) necessitous circumstances caused by a Jockey being seriously injured or dying, whether on a racetrack or otherwise, or through a Jockey suffering a severe illness.
…

Clause 4.3 provides that the NJT will provide financial assistance to beneficiaries after investigating their financial resources and needs, and sets out in general terms the process by which applications will be assessed.

Clauses 5.1 and 5.2 provide that the trustees hold the income of the NJT upon trust to apply for the purposes set out in cl 4, including the payment of administrative expenses. Clause 6.1 confers upon the trustees an absolute discretion to advance, pay, or apply all or any of the capital of the NJT for the purposes set out in cl 4. The trustees’ powers are enumerated in cl 7 of the deed, and the powers of investment are contained in cl 8.

Clause 9.1 provides that the trustees are to establish and maintain a gift fund in a separate bank account, which must not be mixed with the other funds of the NJT. The gift fund is the fund from which the trustees make payments to beneficiaries in accordance with the purpose of the NJT.

Clauses 3 and 10 govern the appointment of trustees. Clause 3 provides that, in order to ensure that the NJT is controlled and administered by persons who may be expected to have and exercise a high degree of responsibility to the community as a whole:

(a) all trustees must qualify for their first and subsequent appointments pursuant to cl 10 of the deed; and

(b) the power of appointing new trustees is vested in the trustees in office but, if they neglect or refuse to act, the power will vest in the chairmen of the ARB and the Australian Jockeys’ Association (‘AJA’).

Clause 10 provides as follows:

10.1     Qualification of Trustees
Subject to clause 10.2, each Trustee shall be a person who at the time of his or her appointment or re-appointment falls within one of the following categories:
(a)       a member of standing of the ARB nominated by its committee;
(b)       a member of standing of the AJA nominated by its committee;
(c)       a Judge of a Victorian or Commonwealth Court;
(d)      a barrister, solicitor or notary public;
(e)       a medical practitioner;
(f)an accountant who is a member of the Institute of Chartered Accountants in Australia or CPA Australia or any like or successor body;
(g)a Chancellor, Vice Chancellor or member of the council or other governing body of any Australian University or a staff member of an Australian Tertiary Education Institution of the status of lecturer or above;
(h)a Justice of the Peace, Bail Justice or any other person authorised by s 107A of the Evidence Act 1958 (Vic) to witness the signing of statutory declarations;
(i)a mayor, councilor, town, shire or city Chief Executive Officer;

(j)        a principal of any primary or secondary school;
(k)       a member of State or Federal Parliament;
(l)        a member of a religious order;
(m)a person who has received a formal recognition from an Australian Government for his or her service to the community; or
(n)a person whose appointment is approved by the Commissioner of Taxation or by a Judge of the Supreme Court of Victoria.

10.2 Majority
The Trustees at any time shall comprise persons who are Australian residents and the majority of them at any time must fall within at least one of the categories in paragraphs (c) to (n) of clause 10.1.

Clause 11 governs the proceedings of the trustees. Clause 11.1 provides as follows:

11.1 Number
The number of Trustees for the time being in office shall be not less than five nor more than seven. Until otherwise resolved by the Trustees, the number of Trustees for the time being in office shall be five.

The balance of cl 11 provides as follows:

(a) clause 11.2 provides that, subject to cll 10 and 11.1, the trustees may at any time, with the joint prior approval of the chairs of the ARB and the AJA, by resolution, appoint any person as trustee, either as an additional trustee or to fill a vacancy, or remove any trustee;

(b) clause 11.3 provides that the quorum for a meeting of the trustees shall be the next whole number greater than half of the number of trustees who are personally present, and at least one of whom must be the nominee of the ARB or AJA;

(c) clause 11.4 provides that all decisions of the trustees must be made by majority, and in the case of a tie in the votes, the chairman shall have the casting vote;

(d) clause 11.5 provides that the trustees present at a meeting shall appoint a trustee to chair that meeting; and

(e) clause 11.7 provides that the trustees must keep minutes of all meetings, which shall record all resolutions put to a vote and the result of any vote.

Clause 15.1 confers an express power for the variation of the deed, and provides as follows:

15.1 Manner of Variation
The Trustees may at any time and from time to time by supplemental deed vary, delete or add to any of the trusts, powers and provisions of this document in any manner but so that:
(a)no part of the Trust Fund shall become subject to any trusts other than trusts for public charitable purposes in the Commonwealth of Australia; and
(b)the prohibition contained in clause 8.2 of this document[5] is not abrogated or relaxed.
[5]Being a prohibition against self-dealing.

The statutory framework

The plaintiffs seek relief under the Rules and the Act. Rule 54.02 of the Rules provides as follows:

Relief without general administration
(1)A proceeding may be brought for any relief which could be granted in an administration proceeding and a claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which the relief is sought.

(2) Without limiting paragraph (1), a proceeding may be brought for—
(a)the determination of any question which could be determined in an administration proceeding, including any question—
(i)arising in the administration of an estate or in the execution of a trust;
(ii)as to the composition of any class of persons having a claim against an estate or a beneficial interest in an estate or in property subject to a trust; or
(iii)as to the rights or interests of a person claiming to be a creditor of an estate or to be entitled under the will or on the intestacy of a deceased person or to be beneficially entitled under a trust;

(b)an order directing an executor, administrator or trustee to—
(i)furnish and, if necessary, verify accounts;
(ii)pay funds of the estate or trust into court; or
(iii)do or abstain from doing any act;

(c)an order—
(i)approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee; or
(ii)directing any act to be done in the administration of an estate or in the execution of a trust which the Court could order to be done if the estate or trust were being administered or executed under the direction of the Court.[6]

[6]Rules, r 54.02.

Section 63 of the Act provides as follows:

Power of Court to authorize dealings with trust property
(1)Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as between capital and income.
(2)The Court may from time to time rescind or vary any order made under this section, or may make any new or further order.
(3)An application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.

Section 67 of the Act provides as follows:

Power to relieve trustee from personal liability
If it appears to the Court that a trustee, whether appointed by the Court or otherwise, is or may be personally liable for any breach of trust, whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Act, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed such breach, then the Court may relieve him either wholly or partly from personal liability for the same.[7]
[7]The Act, s 63, s 67.

The originating motion

The originating motion was filed on 19 May 2021, seeking relief under the following headings:

(a) rectification of the trust instrument;

(b) approving grants, gifts and donations;

(c) amendments to the trust instrument; and

(d) appointment of new trustees.

The originating motion also sought that the Court indemnify the plaintiffs and the defendants for their costs of this proceeding, and orders to protect the confidentiality of the personal information of the beneficiaries and legal advice obtained by the NJT regarding the irregularities which are the subject matter of the current application.

The plaintiffs sought declarations in the following terms:

1The [Defendants] were validly appointed on 19 November 2020 as Trustees of the National Jockeys Trust (the Trust) as established by the deed of trust made 27 February 2004 (the Trust Deed) pursuant to the power contained in s 41(1)(b) of the Trustee Act 1958 (Vic) (the Act).
2In respect of the making of each of the grants, donations or gifts conferred on or paid to those persons on those dates identified and set out in the Annexure to these orders, the Plaintiffs, and the [Defendants] on and from 19 November 2020, acted honestly and reasonably and pursuant to s 67 of the Act ought to be relieved from personal liability, if any, in relation to the making of each of the said grants, donations or gifts.
3In respect of the exercise of any powers contained in the Trust Deed by the Plaintiffs and the [Defendants] on and from 19 November 2020, as trustees of the Trust as were sought to be, but which were not validly, amended by the terms of the Deed of Amendment dated 7 October 2016 as set out as exhibit “PAI-15” to the affidavit of Paul Anthony Innes sworn 21 May 2021 (the Deed of Amendment) and the Supplemental Deed dated 23 November 2020 as set out in exhibit “PAI-40” to the affidavit of Paul Anthony Innes sworn 21 May 2021 (the Supplemental Deed) the Plaintiffs and the [Defendants] on and from 19 November 2020, acted honestly and reasonably and pursuant to s 67 of the Act ought to be relieved from personal liability, if any, in relation to the exercise of any such powers.

The orders sought by the plaintiffs are as follows:

1The Trust Deed be rectified by deleting the entire second sentence of clause 11.1 of the Trust Deed.
2Pursuant to order 54 rule 02(2)(c)(i) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), each of the grants, donations or gifts conferred on or paid to those persons on those dates identified and set out in the Annexure to these orders be approved.
3Pursuant to s 63 of the Act, the Trust Deed be amended in accordance with the terms of the Supplemental Deed and that such amendments take effect from 7 October 2016.
4Pursuant to s 67 of the Act, the Plaintiffs and the [Defendants] on and from 19 November 2020, be relieved from personal liability, if any, in relation to:
(a)the making of each of the grants, donations or gifts conferred on or paid to those persons on those dates identified and set out in the Annexure to these orders; and
(b)the exercise of any powers by them as trustees of the Trust as were sought to be, but which were not validly, amended by the terms of the Deed of Amendment and the Supplemental Deed.

5The Plaintiffs and the [Defendants] be indemnified out of the assets of the Trust in payment of their reasonable costs, including fees and disbursements charged by legal practitioners, of and incidental to this proceeding.

6The costs of the First Named Defendant of and incidental to this proceeding be paid from the Trust on the standard basis, to be taxed in default of agreement.

As noted earlier, the originating motion also sought orders pursuant to s 17 of the Open Courts Act 2013 (Vic) and/or r 28.05(2) of the Rules that specified exhibits to the affidavit of Mr Innes sworn 21 May 2021 be sealed, and orders to that effect were made by Keith JR on 4 June 2021.

The evidence

In his affidavit sworn 21 May 2021, Mr Innes deposed, in summary, as follows:

(a) most jockeys in Australia have modest incomes and modest wealth, and injuries suffered by jockeys can greatly affect their ability to obtain work as a jockey or to be meaningfully employed in other occupations;

(b) the NJT regularly receives applications for assistance from potential beneficiaries. In his experience, the NJT receives on average four applications per month;

(c) to date, the NJT has made 348 grants of assistance totalling $4,635,371.96 to beneficiaries and, as at the time of swearing his affidavit, there were seventeen current applications on foot;

(d) in 2003, when he was the Secretary of the New South Wales Jockeys’ Association and the Chief Executive Officer of the Australian Jockeys’ Association, he approached Mr Andrew Harding, who was then the Chief Executive Officer of the ARB, to assist in setting up a national charitable trust to provide financial assistance to jockeys and their families where there had been serious injury, illness or death of a jockey;

(e) in early 2004, the ARB engaged Corrs Chambers Westgarth (‘Corrs’) to advise upon the establishment of the NJT. The ARB paid the legal fees charged by Corrs, and he and Mr Harding provided instructions in relation to several draft deeds prepared by Corrs;

(f) on 19 January 2004, he sent a letter to Mr John Wardle, then a special counsel with Corrs, in which he stated, among other things, that he thought five to seven trustees would be appropriate;

(g) on 10 February 2004, Mr Wardle provided a letter enclosing a draft trust deed to Mr Innes. The letter stated in part:

Clause 11 deals with the proceedings of the Trustees. Clause 11.1 provides for a minimum of five and a maximum of seven Trustees, with five Trustees to begin with. You could make clause 11.2 subject to joint approval of the ARB and AJA. The quorum is three Trustees, where the total number is five, and four Trustees of [sic] the total number is seven, refer clause 11.3(b)…

(h) to the best of his recollection, there was a conversation following this letter, in which he said to Mr Wardle words to the effect that he and Mr Harding had identified seven people who were willing to be trustees, that there should be seven trustees to begin with, that Mr Harding agreed, and that the draft deed needed to be changed so that seven trustees could execute the deed;

(i) on 18 February 2004, Mr Wardle sent to Mr Harding and Mr Innes an email attaching a draft deed, which identified the seven named people proposed by Mr Harding and Mr Innes as the original trustees;

(j) on 27 February2004, the deed was executed by the original trustees;

(k) at the time of signing the deed, he did not turn his mind to the second sentence in cl 11.1, and assumed, based on the instructions he had provided to Corrs, the fact that there was provision for seven trustees to sign the deed in the final document and that seven trustees were listed in the Schedule to the deed that the clear and express intention was to have seven trustees of the NJT from the date of establishment;

(l) at the time the original trustees were appointed, he was not aware of the process adopted by Corrs to validate the qualifications of the original trustees;

(m) Mr Harding resigned as a trustee on 4 July 2012. On 19 July 2012, the Hon. Peter McGauran attended his first meeting of the trustees, and it was intended that Mr McGauran be Mr Harding’s replacement. Mr McGauran was a solicitor and a nominee of the ARB at the time of his appointment, and on that basis, Mr Innes presumed that the ARB approved of his appointment. To the best of his recollection there was no formal resolution of the trustees appointing Mr McGauran as a trustee, and he has searched the records of the NJT but could not find such a resolution;

(n) Mr McGauran resigned as a trustee on 13 January 2014. On 14 April 2014, Mr Robert Whyburn attended his first meeting of the trustees, and it was intended that he be Mr McGauran’s replacement. To the best of Mr Innes’ recollection, the approval of the ARB was not sought for Mr Whyburn’s appointment, and he does not recall whether there was a formal resolution appointing Mr Whyburn as a trustee;

(o) in early 2015, he and Mr Inglis met with Mr Philip Gardner, a partner of Ryan Carlisle Thomas (‘RCT’), to discuss proposed amendments to the deed;

(p) on 7 October 2016, RCT provided a final copy of the deed of amendment to him for execution;

(q) the minutes from the annual general meeting on 8 October 2016 indicate that the trustees unanimously adopted the deed of amendment;

(r) he believes that, based on the fact that there were no execution clauses referring to other trustees, and the execution clause specifically stated that, as chairman, he was signing on behalf of the NJT, he was the only trustee required to sign the deed of amendment;

(s) Rev. Bayliss announced that he would be resigning as a trustee in late 2017, and on 31 December 2017, Mr Whyburn resigned as a trustee;

(t) during an NJT planning meeting on 15 December 2017, it was decided that the defendants should be appointed as trustees;

(u) to the best of his recollection, there was no formal resolution appointing the defendants as trustees;

(v) on or about 22 November 2019, he received from Mr O’Keeffe of the AJA a copy of a letter from Mr Phil Dwyer of Dwyer & Co Legal addressed to Mr O’Keeffe, which among other things, raised concerns about the validity of the appointment of the trustees generally;

(w) on 24 January 2020, Mr Dwyer sent a letter to him which advised that Mr Dwyer acted for the AJA, referred to the letter above, and raised concerns about the appointments of the defendants;

(x) on 28 March 2020, Ms Cooper was appointed as a justice of the peace (thus qualifying her to be appointed as a trustee);

(y) on 1 April 2020, the defendants advised Mr Innes that they would not continue to act as trustees until the matters raised by Mr Dwyer and the AJA were resolved;

(z) on 17 April 2020, Mr Greg Nichols, the chairman of Racing Australia, wrote to Mr Innes and approved the appointment of the defendants as trustees;

(aa) by letter dated 15 October 2020, Mr O’Keeffe of the AJA approved the appointment of the defendants;

(bb) on 19 November 2020, the trustees, by an unanimous resolution, resolved to appoint the defendants as trustees;

(cc) on 23 November 2020, Dr Truskett, Mr Sword, Mr Inglis and Mr Innes executed the supplemental deed;

(dd) on 3 December 2020, Mr Sword notified Mr Innes by email that he did not believe that, at the time of his appointment in 2004, he qualified as a trustee, as he was not awarded the Order of Australia until 2005;

(ee) at a meeting of the trustees on 4 December 2020, a resolution was passed to appoint Mr Russell Balding AO and Mr Kevin Ring as trustees;

(ff) on 9 December 2020, Mr Innes wrote to Mr Sword advising, among other things, that, as Mr Sword was not eligible for appointment in 2004, he could no longer hold the position of trustee; and

(gg) he deposed as to the extensive searches he has made of the NJT’s records for the purposes of instructing the plaintiffs’ solicitors and preparing his affidavit.

Mr Innes also gave evidence that the accounts of the NJT have been independently audited since its inception in 2004. Further, since 2013, the NJT has been required to lodge returns with the Australian Charities and Not-for-profits Commission.

Mr Innes deposed that, in light of the irregularities and advice received since 2019, on 1 April 2020 the NJT retained Marsh & Maher Richmond Bennison Lawyers, a firm with considerable experience in advising and representing for charities and not‑for‑profit organisations, to provide ongoing advice to the trustees concerning the proper administration of the affairs of the NJT. Matters upon which advice and assistance have been, and will be, sought from the solicitors include proper compliance with the terms of the deed, a review of recordkeeping systems, the process for the appointment of trustees, and any variations to the deed.

Mr Innes’ affidavit exhibited a considerable number of documents, including, among other things:

(a) the minutes of meetings of the trustees since 2004;

(b) the financial reports of the NJT since 2004;

(c) correspondence between him and Mr Harding and Corrs in 2004 regarding the drafting and execution of the deed;

(d) correspondence between the NJT and RCT regarding the drafting and execution of the amendment deed;

(e) schedules identifying all of the beneficiaries since 2004, and the amounts paid by the NJT to each beneficiary;

(f) correspondence between him and the defendants regarding their purported appointments as trustees;

(g) correspondence between him and the solicitors for the AJA regarding the appointment of the defendants as trustees, and the concerns of the AJA regarding the lack of AJA representation and involvement in the affairs of the NJT, and the governance of the NJT generally; and

(h) confidential memoranda of advice from Mr Dean Guidolin of counsel regarding the irregularities, and the steps to be taken by the NJT to address and rectify the irregularities.

Mr Innes also swore a supplementary affidavit on 1 July 2021, in which he deposed, in summary, as follows:

(a) he made some minor corrections to some of the matters deposed to in his first affidavit;

(b) he deposed that he had corresponded with Mr Harding between 10 March and 15 March 2021 as to whether Mr Harding had any recollection about the appointment of seven trustees in 2004 in the context of the second sentence of cl 11.1 of the deed;

(c) Mr Harding advised that he recalled engaging Corrs, but could not recall his intentions as to whether there should be five or seven trustees at the time the deed was executed.

The plaintiffs also relied upon the affidavit of Ms Bridie Murphy of Maurice Blackburn affirmed on 20 May 2021, which exhibited a number of documents from the Corrs file in relation to the establishment of the NJT, and the drafting of the deed.

Further, on 30 September 2021, following my review of the evidence relied upon by the plaintiffs, in particular the correspondence between Mr Innes and the AJA concerning the purported appointment of the defendants, my chambers posed the following questions to the solicitors for the NJT:

(a) has the AJA been notified of the plaintiffs’ application in this proceeding;

(b) if yes to (a), is there any record of the AJA’s attitude to this appointment; and

(c) if no to (a), should the AJA be notified of the application, and be provided with the opportunity to make submissions concerning the application?

These questions followed my review of the correspondence between Mr Innes and the AJA and its solicitors in 2019 and 2020. While the AJA ultimately approved the appointment of the defendants as trustees in October 2020, some of the correspondence prior to that approval was quite adversarial, and suggested that the AJA, which could be described as a significant stakeholder in the NJT, had concerns about the governance of the NJT, including the apparent lack of representation of jockeys among the trustees.

In his affidavit of 7 October 2021, Mr Innes deposed as follows:

On 1 December 2020 I attended the Annual General Meeting of the board of the AJA and, amongst other things, said to the board at this meeting words to the effect that it was recently discovered that Mr Greg Sword had invalidly been appointed as Trustee of the NJT and that it was likely that the Trustees would have to apply to the Court for orders regularising the affairs of the NJT and that the Trustees were obtaining advice from solicitors and counsel as to what can be done in light of this recent discovery.
I have spoken with Mr Staples on several occasions recently concerning this proceeding. Mr Staples has said to me on each occasion words to the effect that the AJA saw no need to be involved and did not want to be involved.
On 4 October 2021, I had a conversation over the telephone with Mr Staples, during which I said to Mr Staples words to the effect that the Supreme Court of Victoria wished to know whether the AJA had been notified of the application and if the AJA wished to be provided with an opportunity to make submissions, and that I would be grateful if he could confirm the AJA’s position in writing. During the course of this conversation, I said to Mr Staples words to the effect that since we spoke last I had filed an additional affidavit and the trustees had also filed with the Court a proposed draft form of the orders they sought in respect of the application and that for convenience I would send him everything so that he could see all relevant material before he confirmed the AJA's position in writing.
On 4 October 2021, I sent to Mr Staples an email attaching the originating motion, the summons, each affidavit filed in the proceeding, a copy of the suppression orders made in June 2021 and a copy of the draft form of orders submitted to the Court by the Trustees.

Mr Innes exhibited to his affidavit, among other things, an email from Mr Staples to him dated 5 October 2021, in which Mr Staples said as follows:

Regarding the matter currently before the Court involving notification of decisions made when Mr Greg Sword was on the Board of Trustees for the National Jockeys Trust, and subsequently deemed ineligible, the Australian Jockeys Association (AJA) has no interest in this matter.
Further, the AJA does not wish to make a submission in this application.

It is not necessary for present purposes to canvass the evidence and the issues raised by the evidence in any great detail, save to make the following observations:

(a) the minutes of the meetings of the trustees showed that the attention of the trustees was largely occupied by assessing and determining applications by potential beneficiaries, which they did thoroughly and sensitively, and to a lesser extent fundraising and sponsorship;

(b) the somewhat limited evidence available regarding the drafting and the execution of the deed showed that the correspondence between Mr Innes and Corrs largely focussed on the NJT’s status as a tax‑exempt charitable trust, and supports the plaintiffs’ contention that the drafting of cl 11.1 was an error in transcribing the instructions of the founders of the NJT (or, perhaps more likely, a failure to amend cl 11.1 to be consistent with the amended execution clauses);

(c) the evidence also supports a conclusion that in drafting and executing the amended deed in 2016, the trustees relied upon the advice and assistance of RCT;

(d) since the trustees were first alerted to the irregularities concerning the appointment of the defendants, the trustees have sought legal advice, and have taken steps to address the irregularities (and others which have emerged during the course of their investigations);

(e) as previously noted, there is no evidence to suggest any financial impropriety or serious maladministration on the part of the trustees;

(f) the AJA, a key stakeholder in the NJT, consents to the relief sought by the plaintiffs in this proceeding; and

(g) the NJT has taken some steps to limit the risk of any further irregularities occurring, in particular, through the appointment of experienced solicitors to provide ongoing advice as to the proper administration of the affairs of the NJT.

The plaintiffs’ submissions

The plaintiffs filed comprehensive submissions in support of their application regarding the irregularities and their consequences, and as to why the Court should grant the relief sought by the plaintiffs in the originating motion. Those submissions are summarised in the following sections of these reasons, noting that, for the sake of brevity, I have not referred to the authorities relied upon by the plaintiffs in their submissions at any great length.

Clause 11.1 of the deed

The plaintiffs submitted that the words of cl 11.1 appear on their face to be clear and unambiguous. That is, upon the establishment of the NJT, there were to be five trustees, and if the original trustees wished to appoint more than five (but not more than seven) trustees, they must resolve to do so. The plaintiffs submitted that the clear and unambiguous language in cl 11.1 directly contradicts the definition of “trustees” in the deed, which identifies the seven people who executed the deed.

The plaintiffs submitted that the evidence of the circumstances surrounding the execution of the deed suggests that there was an error in the drafting of cl 11.1. The plaintiffs submitted that there is no evidence to prove that, after the establishment of the NJT, five trustees resolved to appoint two more trustees, and that it is plain that, upon the establishment of the NJT, there were seven persons acting as trustees. Accordingly, if cl 11.1 is allowed to stand, then immediately upon the establishment of the NJT, there was a breach of that clause.

The plaintiffs submitted that the background facts and circumstances demonstrate that there was a common mistake which merits rectification of the deed. The plaintiffs acknowledged that in order to obtain the relief by way of rectification, they must demonstrate that:

(a) at the time of execution of the deed, the relevant parties held a common intention and that the deed was to reflect that intention; and

(b) the deed does not reflect that intention by reason of a common mistake.

The plaintiffs submitted that the relevant intentions are those of Mr Innes and Mr Harding, who were both signatories to the deed and two of the original trustees. In the alternative, the plaintiffs submitted that the relevant intention was that of Mr Harding, but ultimately the result is the same.

The plaintiffs submitted that the evidence of Mr Innes established that, at the time of execution of the deed, it was intended that there be seven original trustees. The plaintiffs submitted that it was significant that the execution page in the first draft of the deed provided for execution by only five trustees. Following the circulation of the first draft of the deed, there were discussions between Mr Innes, Mr Harding and Corrs, in which Mr Innes and Mr Harding said words to the effect that there had to be seven original trustees and the draft deed had to be changed to reflect this. Accordingly, the plaintiffs submitted that it must be the case that Mr Harding and Mr Innes instructed Corrs to provide for the appointment of seven original trustees upon the establishment of the NJT.

The plaintiffs submitted that proof of these instructions can be found in the email sent by Mr Wardle to Mr Harding and Mr Innes on 18 February 2004, which attached a draft deed which identified the seven named people that Mr Harding and Mr Innes nominated as the original trustees, and from further correspondence between Mr Wardle and Mr Harding and Mr Innes regarding the tax file numbers and dates of birth for the seven nominated trustees.

The plaintiffs submitted that the fact that Mr Harding cannot give evidence as to his state of mind at the time of execution of the deed is not fatal to the plaintiffs’ claim for rectification, as the evidence before the Court contains numerous contemporaneous documents which support a finding that Mr Harding and Mr Innes intended there to be seven original trustees, and that those instructions were not only communicated to Mr Wardle, but were also acknowledged by him. The plaintiffs submitted that they have satisfied the evidentiary onus upon them to establish a common intention and common mistake so as to enliven the remedy of rectification.

Approval of grants, gifts and donations

The plaintiffs submitted that the deed required a minimum of five trustees to transact the business of the NJT and, unless all trustees were present, a valid quorum. Any decisions made in circumstances which do not satisfy these requirements will be made in breach of trust.

The plaintiffs submitted that it is apparent that, during the history of the NJT, several trustees-de-son-tort[8] have participated in decisions to make grants, gifts and donations to the beneficiaries. The plaintiffs submitted that the evidence establishes that they all believed that they had been validly appointed, and that none of them knew that they were trustees-de-son-tort until further investigations were carried out in 2020.
[8]See the decision of McMillan J in Waites v Brown [2021] VSC 509, in which her Honour stated at [30] (citations omitted): “A trustee de son tort may be described as a person who, not being a trustee, and not having authority from a trustee, takes it upon himself or herself, to intermeddle with trust matters or to do acts characteristic of the office of trustee thereby making himself a trustee of his own wrong, that is, a form of constructive trustee. As a constructive trustee, the person erroneously asserting themselves as trustee may be liable to account to the beneficiaries for breaches of trust or breaches of fiduciary obligations.”.

The plaintiffs have identified 28 grants, gifts and donations that are invalid by reason of a trustees-de-son-tort participating in the decision to make the grant, and there are an additional 132 grants, gifts and donations for which minutes of the meetings concerned cannot be found. Accordingly, the trustees are not able to say whether these grants were invalid by reason of the participation of a trustee-de-son-tort. [9]
[9]Each of the impugned grants is set out in Annexure A to the originating motion, but this annexure will not be reproduced in these reasons so as to protect the personal information of the beneficiaries.

In addition, the trustees have made 54 grants without either personally attending a meeting, or by executing a circular resolution, but rather did so via a series of circular emails.

The plaintiffs submitted that, as these grants may have been made in breach of trust, the beneficiaries received such funds as volunteers, and prima facie may be obliged to return the funds. Further, the trustees and trustees-de-son-tort who authorised the grants would also be personally liable to make whole the NJT, notwithstanding that it is plain that each grant was made to advance the objects and purposes of the NJT, and that such an outcome would be unjust to both the beneficiaries and the trustees-de-son-tort.

Invalid appointments – Mr Greg Sword

In relation to the appointment of Mr Sword, the plaintiffs submitted that, prior to the execution of the deed, the persons nominated to be the original trustees and their personal details were provided to Corrs. Further, Corrs requested further information about the nominees, in particular Mr Inglis and Mr Sword. The plaintiffs submitted that it appears that Corrs did not consider those details against the qualifications referred to in cl 10 of the deed. The plaintiffs submitted that, if there was a problem concerning one or more of the nominees, it was reasonable for Mr Harding and/or Mr Innes to expect that Corrs would bring that to their attention.

The plaintiffs submitted that it is clear that Mr Sword did not fall into one of the categories set out in cl 10.1 as at 27 February 2004, and should not have been appointed as a trustee at that time.[10] The plaintiffs referred to the decision of the Full Court of the Supreme Court of New South Wales in The Church of England Property Trust, Diocese of Goulburn v Rossi[11] as authority for a proposition that, if the conditions to the appointment of a trustee were not satisfied, the appointment is invalid. The plaintiffs submitted further that it is plain from the terms of the deed that it was the express intention of the ARB that a trustee must fall into one of the categories enumerated in cl 10.1 at the time of their appointment, and this is also made clear from the plain, ordinary meaning of cl 10.2.
[10]Mr Sword received an Order of Australia on 26 January 2010, but his subsequent award did not operate to cure the invalidity of his original appointment.
[11][1893] 14 LR (NSW) Eq. 186.

The plaintiffs submitted that, accordingly, Mr Sword was never validly appointed and could not lawfully exercise any powers as a trustee under the terms of the NJT. As a result, at the time of the establishment of the NJT, setting aside the difficulties caused by the terms of cl 11.1 of the deed, there were only six validly appointed trustees.

Invalid appointment – Mr Peter McGauran

The plaintiffs submitted that in or about November 2012, Mr McGauran was purportedly appointed as a trustee. While it appears that the ARB and AJA approved of his appointment, there was no formal resolution as required by cl 11.2 of the deed. The plaintiffs submitted that the language in cl 11.2 is mandatory, not permissive, and, accordingly, anything less than a resolution will not be sufficient for the purpose of complying with the deed. Accordingly, Mr McGauran’s appointment was invalid, and therefore from November 2012 to his resignation in January 2014, there were five validly appointed trustees and two trustees-de-son-tort, being Mr Sword and Mr McGauran.

Invalid appointment – Mr Robert Whyburn

The plaintiffs submitted that the minutes of the meeting of the trustees on 19 February 2014 show that Mr Whyburn was nominated as a trustee, and that all trustees agreed with his nomination. However, it appears that the prior consent of the ARB to Mr Whyburn’s appointment was not obtained. It also appears that no formal resolution was made by the trustees appointing Mr Whyburn.

The plaintiffs submitted that, at the time of his purported appointment there were five validly appointed trustees of the NJT, who, pursuant to cl 11.2 were empowered to resolve to appoint Mr Whyburn provided they satisfied the conditions upon the exercise of that power. However, as the prior approval of the ARB was not obtained for Mr Whyburn’s appointment, the trustees did not properly exercise the power to appoint Mr Whyburn, and therefore his appointment as trustee was invalid.

Invalid appointments – Dr Hawker AM, the Hon. Mr Haylen QC, and Ms Cooper

On 14 December 2017, Rev. Bayliss resigned as a trustee, with the result that, at that time, there were only four validly appointed trustees of the NJT.

The plaintiffs submitted that, at this point in time, the trustees were operating under the misapprehension that the amendments to the deed made on 7 October 2016 by the deed of amendment were effective to permit them to appoint more than seven trustees. However, the original terms of the deed continued to apply, such that only a maximum of seven trustees could be appointed pursuant to the deed as amended.

The plaintiffs submitted that between 12 and 19 December 2017, the defendants were invited to become trustees, and each accepted that invitation. The respective chairs of the AJA and RA appear to have been informed that the defendants had accepted the invitations, but did not in turn provide any written approval of their appointments. However, that was not sufficient for the appointments to be valid, as the mere provision of notice did not satisfy the requirements of cl 11.2, being the prior joint approval of the chairs of the AJA and RA.

The plaintiffs submitted further that, as there were not five validly appointed trustees at the relevant time, they could not exercise the power under cl 11.2 to make the new appointments. The plaintiffs submitted that s 41 of the Act will confer a power of appointment of new trustees in the circumstances where the power of appointment under the deed does not apply. Section 41 of the Act provides as follows:

(1)Where a trustee…desires to be discharged from all or any of the trusts of powers reposed in or conferred on him…then:
(a)the person or persons nominated for the purposes of appointing new trustees by the instrument (if any) creating the trust; or
(b)if there is no such person able or willing to act, then the surviving or continuing trustees…

…may by writing appoint one or more persons…to be a trustee in the place of the trustee…desiring to be discharged.

The plaintiffs submitted that, as there were only four validly appointed trustees at the relevant time, the circumstances in s 41(1)(a) could not apply, but the circumstances in s 41(1)(b) would apply, as the surviving four trustees could appoint new trustees, provided the appointments were contained in an instrument in writing. The plaintiffs submitted that, accordingly, while the four trustees could have validly exercised the power to appoint the defendants as trustees, there was no instrument in writing appointing the defendants as trustees, and therefore they were not validly appointed as trustees in 2017.

The consequences of the invalid appointments

The plaintiffs submitted that invalidly appointed trustees have no right to have the legal estate of a trust vested in them, and if they purport to act as trustees they will be trustees-de-son-tort, and regarded as intermeddlers in the affairs of the trust without authority.

However, the plaintiffs submitted that in the present case, each of the trustees-de-son-tort believed that they were validly appointed, and there was no evidence of any wrongdoing by them or any loss incurred by the NJT by reason of their purported exercise of powers under the deed.

The plaintiffs submitted further that the existence of trustees-de-son-tort as members of a board of trustees does not necessarily mean that every decision or resolution of the trustees is invalid. There would only be an invalid exercise of power if:

(a) the number of validly appointed trustees dropped below five;

(b) a resolution carried because the majority voting in favour included trustees-de-son-tort and their votes carried the motion; and

(c) otherwise at a meeting purportedly constituted by a quorum where there one or more trustees-de-son-tort, such that there was not a quorum of validly appointed trustees.

The plaintiffs submitted that, following an extensive review of the NJT records, they have identified 28 grants of assistance made in circumstances where there was an insufficient number of validly appointed trustees, or where the vote was carried by reason of a trustee-de-son-tort carrying the motion, or where the meeting was constituted without a valid quorum.

Grants made via circular emails and missing minutes

The plaintiffs submitted that, under the terms of the deed there are two ways in which the trustees may make decisions. The first is at a meeting of the trustees in accordance with cl 11.4(a). The second is by a circular resolution signed by each trustee in accordance with cl 11.4(b). Further, it is an obligation of the trustees pursuant to cl 11.7 to cause minutes to be made of all proceedings and the results of all resolutions to be recorded, although failure to keep minutes will not of itself render any decisions made at a meeting invalid.

The plaintiffs submitted that, accordingly, insofar as the trustees have made grants of assistance by indicating their agreement through a system of replying to circular emails, such decisions are inconsistent with the formal requirements of the deed, and as such are not valid. The plaintiffs have identified 54 decisions which were made in this manner, and which accordingly are not valid decisions within the terms of the deed.

The plaintiffs have further identified 132 grants of assistance made which are not evidenced in a minute of meeting or contained in a circular resolution signed by the trustees pursuant to cl 11.4(b). Accordingly, the plaintiffs are unable to identify whether all of the resolutions to make these grants were validly made or not.

Relief under r 54.02

The plaintiffs submitted that r 54.02 confers broad powers upon the Court to give private advice to trustees in respect of matters arising out of a question in respect of the management or administration of trust property, or in relation to questions concerning the interpretation of the trust instrument. There is no limitation on the Court’s power to grant the advice sought, nor any limits on the discretionary factors which the Court may consider when exercising the power.

The plaintiffs submitted that the context within which the application is made is significant, and that the application of the power will be different where it is applied to a charitable, as opposed to a private, trust, because of the public purpose of charitable trusts. A crucial question in this proceeding is the management and administration of a charity and, as such, there is an enlarged administration on the part of the Court. The plaintiffs submitted that, accordingly, the Court can and should give the advice sought in the originating motion.

With respect to the invalidly appointed trustees, the plaintiffs submitted that the appointments were honest but mistaken. The plaintiffs submitted that there is no doubt that the invalidly appointed trustees were acting in furtherance of the charitable purpose of the NJT in considering applications from potential beneficiaries and granting assistance to beneficiaries. There is also no suggestion that any loss or damage was caused to the NJT by reasons of their purported appointment and their conduct as trustees-de-son-tort. The plaintiffs do not seek advice to the effect that they were justified in appointing the invalidly appointed trustees, but rather seek advice to the effect that the decisions that the invalidly appointed trustees were involved in to grant assistance to beneficiaries be approved.

The plaintiffs submitted that it is within the power conferred by r 54.02 for the Court to approve the 28 grants of assistance made in the absence of a quorum, and, there having been no identified wilful misapplication or corrupt purpose on the part of the trustees in making these grants, the Court ought regularise them. The plaintiffs referred to decision of Almond J in Re Centro Retail Australia Ltd[12] as authority for the proposition that the application of r 54.02 is not confined to prospective conduct, but also enables the Court to approve a sale, purchase, compromise, or other transaction which has already occurred. The plaintiffs submitted further that the trustees have taken the necessary steps to avoid a recurrence of the irregularities, having appointed a firm of solicitors experienced in the administration of charitable trusts estates to assist the trustees in managing the affairs of the NJT.
[12][2012] VSC 240.

The plaintiffs also submitted that for the reasons set out above, the Court should also regularise the 54 grants made by means of circular email and the 132 grants for which no minutes have been located.

The plaintiffs submitted in the alternative that if the Court does not accept that the r 54.02 power is as broad as the plaintiffs contend, the Court ought make an order pursuant to r 54.02 that the plaintiffs may execute a deed ratifying, adopting or otherwise approving of each of the grants identified in Annexure A to the originating motion.

The plaintiffs submitted that there is no principle which prevents trustees from ratifying earlier invalid exercises of power, save that ratification will not be permitted where it destroys, or seeks to have the effect of destroying, rights that have accrued to others under the trust. The plaintiffs submitted that the execution of a deed ratifying the impugned grants would not destroy the beneficiaries’ rights to those grants; rather, it would have the opposite effect and put beyond question the validity of those grants.

Section 67 of the Act

In relation to the plaintiffs’ application for relief under s 67 of the Act, the plaintiffs referred to the decision of McMillan J in Re Sir Colin and Lady MacKenzie Trust (No 2)[13] as follows (citations omitted):

The Court’s discretion is enlivened in circumstances where ‘it appears to the Court that a trustee...is or may be personally liable for any breach of trust’. It is not necessary for the exercise of the jurisdiction that the Court has made a positive finding of breach, it is enough that the Court is of the opinion that the trustee may be under some personal liability. This does not, however, allow the Court to relieve a trustee from liability associated with some anticipated future breach.
The requirements of s 67 are cumulative — an applicant must satisfy the Court that they acted honestly and reasonably, and ought fairly be excused for the breach in all of the circumstances of the case. It is not sufficient for an applicant to show compliance with just one of the elements prescribed in the Act.
The Court must exercise its discretion by reference to the facts that were known or ought to have been known to the trustee at the time of the breach of trust. Each case must turn upon its own facts and the provision ought to be freely acted upon in the exercise of the Court’s discretion. To that end, the Courts have not propounded any guiding principles or criteria which must be considered in all cases. The jurisdiction is remedial in nature, and the Court must strike a balance in an effort to avoid unfairly punishing a trustee who has acted honestly and reasonably, whilst not encouraging laxity or complacency in a trustee’s dealings.
Honesty and reasonableness are to be viewed objectively, by reference to the welfare and interests of the trust. The Court must consider whether the trustee’s actions were in good faith, and whether they acted with a degree of prudence that a person of ordinary intelligence and diligence would be expected to exhibit in the conduct of his or her own affairs. That standard does not, however, require that the trustee engage in best practice in all respects. As the requirements are cumulative, honesty on the part of the trustee will not excuse actions that are nonetheless unreasonable. Unreasonableness may be identified by reference to several factors, including a failure to seek legal advice, or undue reliance upon another person. Although negligence on the part of a trustee may be indicative of a want of honesty or reasonableness in a trustee’s actions, mere negligence is not in itself disentitling.[14]

[13][2020] VSC 335.

[14]Ibid [23]-[26].

The plaintiffs submitted that in order to enliven the discretion of the Court pursuant to s 67, both honesty and reasonableness must be proved. Honesty is viewed objectively, and the trustee must have acted in good faith for the welfare of the trust. “Reasonably” means reasonably in the interests of the trust, not the trustee. The Court must then consider all the circumstances to determine whether the trustee ought fairly be excused for the breach. “Fairly” means, relevantly, fairness to the trustees and other persons who may be affected by the breach in question.

In relation to the appointment of Mr Sword, the plaintiffs submitted that the trustees had no reason to go behind Corrs’ assessment that Mr Sword was eligible to be appointed as a trustee, and that it was reasonable for the trustees to have relied upon Corrs’ advice as to the establishment of the NJT and the eligibility of the original trustees. Upon discovering that Mr Sword was not validly appointed, the trustees acted swiftly to address the issue and to ensure that Mr Sword no longer acted as trustee. This issue also prompted the trustees to obtain legal advice and conduct a thorough review of the affairs of the NJT, which revealed the other irregularities.

In regard to the missing minutes, the plaintiffs submitted that it was the usual practice of the trustees to table the minutes of every previous meeting at subsequent meetings and vote to adopt the previous minutes, whereafter they would be signed. The evidence of Mr Innes is that this process was adopted at every meeting, and that a signed copy would be retained in the minute book. The plaintiffs submitted that there is no reason to doubt that the minutes were kept in the minutes folder, and that the trustees acted honestly and reasonable by ensuring that a system was in place to maintain the minutes.

In regard to the purported appointments of Mr McGauran, Mr Whyburn and the defendants, the plaintiffs submitted that the trustees believed that they had the prior approval of the AJA and RA at the time of their appointments, no objections having been received from the AJA or RA, and that the trustees were unanimously in favour of the appointments. It appears that the failure in regard to Mr McGauran and Mr Whyburn’s appointments was a failure to formally make resolutions concerning the appointments pursuant to cl 11.2 of the deed.

In regard to the purported appointment of the defendants, the apparent failure was again failing to make a formal resolution to make the appointments and purporting to appoint them pursuant to the terms of the deed as amended by the deed of amendment. Accordingly, the plaintiffs submitted that by purporting to appoint the defendants in the mistaken belief that they could be validly appointed, the trustees acted honestly and reasonably.

The plaintiffs submitted further that it is not the case that the trustees have refused or failed to obtain advice as to the exercise of their powers. The trustees obtained legal advice in respect of the deed of amendment, in 2015 and 2016, and in respect of the matters raised in correspondence from the solicitors of the AJA in 2019 and 2020. They have obtained further advice in respect of the issues arising from the invalid appointment of Mr Sword and the other irregularities.

The plaintiffs submitted that the appointments of Mr McGauran, Mr Whyburn and the defendants did not cause any loss to the NJT, and any decisions they were involved in to grant assistance to the beneficiaries were in furtherance of the objects and purpose of the NJT. The plaintiffs submitted that, accordingly, the Court should find that in making the impugned grants, the trustees ought be exonerated from any personal liability pursuant to s 67 of the Act.

Amendments to the deed

The plaintiffs submitted that the plain and ordinary meaning of cl 15.1 of the deed is that all the trustees, not just one of them, must execute any supplemental deed that varies, deletes or adds to the terms of the deed.

Accordingly, the deed of amendment executed by Mr Innes on 7 October 2016 was insufficient to bring into effect the purported variations to the deed as intended by the deed of amendment. However the plaintiffs submitted that it was nevertheless plain that the trustees intended for those variations to be made, and after obtaining legal advice, they executed the supplemental deed to ratify the amendments sought to be made by the deed of amendment. At the time of the execution of the supplemental deed there were only four validly appointed trustees, with the result that the execution of the supplemental deed was also ineffective.

The plaintiffs submitted that the Court can exercise the power under s 63(1) of the Act where the relevant transaction is:

(a) in the management or administration of property vested in the trustees;

(b) expedient; and

(c) not otherwise able to be effected because of an absence of power.

The plaintiffs submitted that the power conferred by cl 15.1 of the deed is broad, with two express limits on its exercise, and a further condition which requires that the trustees must execute a supplemental deed in order to vary the terms of the deed. The plaintiffs submitted further that, pursuant to cl 11.1, a minimum of five trustees are required to transact any business, which means that the trustees do not presently have the power to effect any amendments to the deed.

The plaintiffs submitted that the phrase “management and administration” is of broad application, and includes everything that a trustee may need to do in practical or legal terms in respect of the trust property, and a deed of amendment is a “transaction” for the purpose of s 63 of the Act.

An examination of the deed of amendment for which the order under s 63 is sought reveals that it is for the management or administration of the NJT, in that the proposed amendments seek to:

(a) vary the definition of jockey to remove reference to the “ARB”;

(b) omit words from cl 4.2 to more clearly express the purpose of the NJT;

(c) substitute new cll 4.3(a) and (b) to streamline the process of applying for a grant of assistance;

(d) alter the administration of the gift fund, so that it is administered by all trustees, not just three of them;

(e) vary the categories of cl 10.1 to omit the nomination of a trustee by the ARB as one category and to substitute a “member of standing of the AJA nominated by its committee with “a Director of the AJA nominated by resolution of the Directors”;

(f) increase the maximum number of trustees from seven to ten; and

(g) change the appointment of a chair from meeting-to-meeting to a fixed term of one calendar year.

The plaintiffs submitted that the trustees wish these proposed amendments to be given effect, and that there has been no dispute between the trustees regarding the terms of the proposed amendments from the time they were formulated in 2015 and 2016.

The plaintiffs submitted that, accordingly, the only matter of which the Court needs to be satisfied is that making an order pursuant to s 63 that the deed be amended in accordance with the deed of amendment would be “expedient” in the management and administration by reference to the charitable objects and purpose of the NJT. For the purposes of s 63, “expedient” has its ordinary meaning, and should be given the widest and most flexible application. The plaintiffs submitted further that the terms of the deed of amendment are expedient and in furtherance of the charitable purposes of the NJT. The amendments are intended, among other things, to streamline the process of applying for financial assistance, to remove clumsy language from cl 4.2, and to increase the number of trustees from seven to ten to expedite the time it takes for applications to be processed and to reduce the workload of individual trustees. The plaintiffs submitted that these matters are plainly expedient as they assist the NJT to carry out its charitable purpose.

In the alternative, the plaintiffs submitted that if the Court is not satisfied that the requirements of s 63 have been met, then the power under r 54.02 ought be used to approve the supplemental deed even though only four validly appointed trustees executed the document. The supplemental deed is a transaction for the purposes of r 54.02, and the amendments relate to the management and administration of the NJT, and facilitate the interests and objects of the NJT. The plaintiffs submitted further that, given the decision to amend the deed was within the power of the trustees, and there is no suggestion the trustees have not acted reasonably and honestly in their efforts to try to give effect to the proposed amendments, the Court ought be satisfied of the propriety of the application and ought approve the execution of the supplemental deed pursuant to r 54.02.

Declaratory relief pursuant to r 23.05

In regard to the purported appointments of the defendants, the plaintiffs referred to the minutes of the meeting of the trustees on 19 November 2020 as follows:

It is hereby resolved to appoint the Hon Justice Wayne Haylen QC, Dr Felicity Hawker AM and Ms Bernadette Cooper as Trustees of the National Jockeys Trust, in accordance with and pursuant to the [sic] cl 11.2 of the Trust Deed made 27 February 2004 (as amended) establishing the National Jockeys Trust.

The plaintiffs submitted that the minute was unanimous and that the persons who voted on the resolution were Mr Innes, Mr Inglis, Mr Sword, Dr Truskett and Mr Ryan. The plaintiffs submitted that the deed is governed by the laws of Victoria, and therefore s 41 of the Act will confer a power of appointment of new trustees in the event that the deed does not contain a power, or the circumstances for the exercise of the power do not arise.

The plaintiffs submitted that each of the defendants was qualified within the categories enumerated in cl 10 of the deed at the time of their purported appointment. The plaintiffs submitted further that if a power of appointment is expressly given by the trust instrument which prescribes the circumstances in which the power must be exercised, the power is limited by those circumstances. Clause 11.2(a) is limited by several prescriptions. First, there must be joint prior approval of the chairs of the RA and AJA. Secondly, the appointment must be made by a resolution of the trustees. Thirdly, a person may be appointed as an additional trustee subject to cl 11.1.

The plaintiffs submitted that the first requirement was satisfied as the chairman of the RA provided his approval to the appointments on 17 April 2020, and the chair of the AJA provided his approval on 15 October 2020. As to the second requirement, the plaintiffs submitted that the appointments could not be made by resolution by reason that at the relevant time there were only four validly appointed trustees.

The plaintiffs submitted that, accordingly, the circumstances referred to in s 41(1)(b) of the Act apply, and that the surviving trustees could appoint new trustees provided the appointment was made in an instrument in writing. The plaintiffs submitted that the requirement that the appointment be in writing under s 41(1)(b) does not prescribe any particular type of formality or document. The plaintiffs referred to the decision of Robson J in In the Will of Eva Orloff (‘dec’d)[15] in which his Honour held that a written instrument in the form of a letter by the sole existing trustee renouncing his office and appointing a new trustee was sufficient for the purpose of s 41(5) of the Act.
[15][2010] VSC 48.

The plaintiffs also referred to the decision in Poulson v Wellington[16] as authority for the proposition that a mere recital in a deed that showed an intention to appoint another trustee where there was no strict form of appointment prescribed was sufficient to constitute an appointment of that person as trustee.
[16](1729) 2 P. Wms 533.

The plaintiffs submitted that s 41(1)(b) does not prescribe the form of writing, and applying the above principle, the minutes of the meeting on 19 November 2020 plainly demonstrates an intention of the surviving trustees to appoint the defendants as trustees. As no particular form of writing is required by s 41(1)(b), the plaintiffs submitted that the minute is sufficient to make the appointments. The plaintiffs submitted that it is immaterial the minute does not record that the appointment is made pursuant to s 41(1)(b), as nothing in that section requires that the trustees identify it as the source of the trustees’ power to make the appointments.

As there remains a question as to the validity of the appointments of the defendants, the plaintiffs seek a declaration that the appointments were valid. As the appointment involves the application of a statutory provision and whether its conditions have been met, the plaintiffs submit that it is not a proper matter for judicial advice. The plaintiffs submitted further that, pursuant to r 23.05 and its inherent jurisdiction, the Court have the power to grant declaratory relief even though no consequential remedy is sought.

The plaintiffs observed that the factors relevant to the grant of declaratory relief are as follows:

(a)the declaration must be directed to the determination of a legal controversy, and not some hypothetical or abstract question;
(b)the person seeking the declaration must have a real interest in seeking the relief;
(c)there must be a proper contradictor in the sense that there is a person who has a true interest to oppose the declaration (this does not mean that they will or must oppose it, just that there is a person who might have an interest to oppose it, whether or not they ultimately do); and
(d)the relief must produce some foreseeable consequence for a party.

The plaintiffs submitted that each of the above requirements are met in the current application. First, the declaration is directed to the particular controversy as to whether the requirements of s 41(1)(b) have been satisfied. Secondly, it is plain that the trustees have a real interest in seeking declaratory relief, given that it may be the case that there are only four validly appointed trustees, which means that the trustees cannot properly conduct the business of the NJT. Thirdly, the Attorney-General has been joined to the proceeding and could have elected to take on the role of contradictor, but has elected not to do so, and further, the defendants have been joined as persons who would be bound by any declaration. Fourthly, the declaration sought would provide certainty regarding the validity of the appointments of the defendants, which will in turn affect whether the business of the NJT is able to be conducted in accordance with the deed. The plaintiffs submitted that, accordingly, the Court’s discretion to grant a declaration is enlivened, and the Court should make the declaration sought.

The position of the trustees

The plaintiffs also submitted that the trustees ought be relieved under s 67 of the Act from any personal liability to the extent they purported to exercise the powers of trustees purportedly amended, but not validly amended by the deed of amendment and the supplemental deed.

Finally, the plaintiffs submitted that the evidence establishes that the trustees and the defendants at all relevant times have acted honestly, reasonably and in good faith in furtherance of the objects and purposes of the NJT. The trustees have also acted honestly and reasonably in commencing this proceeding to obtain relief, which is directed at regularising the affairs of the NJT and in furthering the objects of the NJT. The plaintiffs submitted that, in those circumstances, the Court should order pursuant to s 63 of the Act that the plaintiffs and the defendants be indemnified out of the assets held by them as trustees of the NJT in payment of their reasonable costs of and incidental to this application.

Discussion

I agree that it is necessary and appropriate to make the orders sought by the plaintiffs, as enumerated in paragraph 22 of these reasons and below. Necessary, in that I agree with the plaintiffs that the irregularities identified by the plaintiffs more likely than not mean that the trustees (including the trustees-de-son-tort) acted in breach of the terms of the deed concerning the number, qualifications and process of appointment of trustees. Those irregularities, along with the failure in some instances to follow the correct process for making decisions concerning grants to beneficiaries mean that the validity of a material number of grants to beneficiaries is questionable at best. It is also appropriate to make the orders sought by the plaintiffs, as the evidence shows that the irregularities were inadvertent, arose in circumstances where the trustees (and the trustees-de-son-tort) acted in good faith and for the proper purposes of the NJT, and accordingly, neither the trustees or the beneficiaries (many of whom were in great need at the time they received assistance from the NJT) should be exposed to the potential adverse financial consequences of these inadvertent breaches of trust.

I will now turn to the individual orders sought by the plaintiffs.

1.The Trust Deed be rectified by deleting the entire second sentence of cl 11.1 of the Trust Deed.

As observed by the author of Rectification of Documents:[17]

... when considering a claim for rectification in circumstances where it is alleged that there is a mistake in the recording of an agreement, a court must identify what the parties have agreed on an objective basis including examination of their outward acts.[18]

[17]J Tarrant Rectification of Documents (2020, The Federation Press).

[18]Ibid, 121.

The evidence available is overwhelmingly consistent with the plaintiffs’ contention that the original intention of Mr Innes and Mr Harding (who I agree held the relevant intentions) was that there would be seven original trustees, not five. Mr Innes’ recollection of the relevant discussions is quite clear, and the contemporaneous documents, including, but not limited to the execution clause of the deed, where provision was made for the execution of the deed by the seven nominated original trustees, are consistent with that intention. I can infer from these documents that when Mr Wardle of Corrs received instructions regarding the number and identity of the original trustees, he (or someone instructed by him) made the necessary changes to the execution pages, but overlooked the need to make the corresponding alteration to cl 11.1 of the deed. Accordingly, I am satisfied that the Court’s jurisdiction to order rectification is enlivened, and that in all of the circumstances, that jurisdiction should be exercised.

2.Pursuant to order 54 rule 02(2)(c)(i) of the [Rules], each of the grants, donations or gifts conferred on or paid to those persons on those dates identified and set out in the [confidential] Annexure to these orders be approved.

Given the breadth of the Court’s jurisdiction under order 54 of the Rules, including the ability of the Court to provide advice with retrospective effect, the fact that the impugned grants were made in good faith and for the proper purposes of the NJT, those grants should be approved.

3.Pursuant to s 63 of the Act, the Trust Deed be amended in accordance with the terms of the Supplemental Deed and that such amendments take effect from 7 October 2016.

I agree with the plaintiffs’ submissions to the effect that it is both necessary and appropriate to make this order. Necessary, because I agree that the deed of amendment was not executed in accordance with the terms of the deed, and appropriate, because the amendments contained in the deed of amendment are uncontroversial, are concerned with the management and administration of the trust, and it is expedient for the amendments to be made and given their full effect.

4.Pursuant to s 67 of the Act, the Plaintiffs and the Second, Third and Fourth Named Defendants on and from 19 November 2020, be relieved from personal liability, if any, in relation to:
(a)the making of each of the grants, donations or gifts conferred on or paid to those persons on those dates identified and set out in the Annexure to these orders; and
(b)the exercise of any powers by them as trustees of the Trust as were sought to be, but which were not validly, amended by the terms of the Deed of Amendment and the Supplemental Deed.

I am satisfied that the plaintiffs and the defendants ought to be absolved from any personal liability with respect to the making of grants to beneficiaries and any other exercise of powers as trustees. I am satisfied that the plaintiffs and the defendants have acted honestly and reasonably in the conduct of the affairs of the NJT. They are volunteers who have acted in what they considered to be the best interests of the trust and the beneficiaries, and there is no whiff of any impropriety on their part. They acted on legal advice at the critical times, and have worked diligently (with the benefit of further legal advice) to identify and now to address and remedy the irregularities.

5The Plaintiffs and the Second to Fourth Named Defendants be indemnified out of the assets of the Trust in payment of their reasonable costs, including fees and disbursements charged by legal practitioners, of and incidental to this proceeding.

For substantially the same reasons given with respect to order 4, I agree that the plaintiffs and the defendants should be indemnified for their reasonable legal costs from the assets of the NJT. I make this order conscious of the fact that providing such an indemnity will deplete the funds available for distribution to beneficiaries. However, while I do not have any evidence of the likely quantum of the costs involved, I have reviewed the financial reports exhibited to Mr Innes’ first affidavit, and it appears that, while the NJT, like many, has been adversely affected by the COVID‑19 pandemic, it appears to be in a healthy financial position, and as such will be able to absorb those costs without severely reducing the funds available to make grants to beneficiaries.

Further, while the number of and nature of the irregularities, including some apparent gaps in the NJT’s records, suggests some degree of inattention on the part of the trustees and/or employees of the NJT to the terms and requirements of the deed, I accept that the trustees, including the plaintiffs and defendants, and the trustees-de-son-tort, have acted honestly, and in the best interests of the NJT and the beneficiaries, and the current trustees have responsibly taken steps (including the issue of this proceeding) to remedy the irregularities, and to put in place processes to limit the likelihood of future irregularities. In those circumstances, noting that the trustees are volunteers, it is appropriate that the plaintiffs and the defendants should be indemnified for their legal costs. Further, paragraph 6 of the proposed orders, which provides for the costs incurred by the Attorney-General to be paid by the NJT, is an appropriate order to be made.

I also agree that it is appropriate to make the declarations sought by the plaintiffs (see paragraph 21 of these reasons). I agree that the trustees were empowered by the terms of s 41(1)(b) of the Act to appoint the defendants as trustees in November 2020, notwithstanding that, at the time of the appointment, there were only four validly appointed trustees of the NJT. While, strictly speaking, it is not critical that I make a declaration to the effect that the defendants were validly appointed, I agree that both the NJT and the defendants have a genuine interest in putting the validity of the appointment of the defendants beyond doubt.

Similarly, given the recent history of the NJT, and the identification of the irregularities, including the ineffective execution of the deed of amendment, and the number and quantum of the grants made to the beneficiaries since the inception of the NJT, while strictly speaking it is not essential to make declarations that the plaintiffs and defendants acted honestly and reasonably, there is material and practical benefit in doing so. Further, for the reasons set out in the preceding section of these reasons, I am positively satisfied that the plaintiffs and the defendants acted honestly, reasonably, and for the purposes of the NJT.

SCHEDULE OF PARTIES

S ECI 2021 01681
BETWEEN:
PAUL ANTHONY INNES (in his capacity as Trustee of the National Jockeys Trust)	First Plaintiff
ROSS HEDLEY INGLIS (in his capacity as Trustee of the National Jockeys Trust)	Second Plaintiff
BERNARD ALLAN RYAN (in his capacity as Trustee of the National Jockeys Trust)	Third Plaintiff
PHILLIP GREGORY TRUSKETT (in his capacity as Trustee of the National Jockeys Trust)	Fourth Plaintiff
- v -
THE ATTORNEY-GENERAL FOR THE STATE OF VICTORIA	First Defendant
FELICITY HELEN HAWKER	Second Defendant
WAYNE ROGER HAYLEN	Third Defendant
BERNADETTE JUSTINE ANNE COOPER	Fourth Defendant

Actions

Download as PDF Download as Word Document

Citations

Innes v Attorney-General for the State of Victoria [2021] VSC 628

Most Recent Citation

The Uniting Church in Australia Property Trust (Vic) v Attorney-General (Vic) (No 2) [2022] VSC 764

Cases Citing This Decision

1

The Uniting Church in Australia Property Trust (Vic) v Attorney-General (Vic) (No 2) [2022] VSC 764

Cases Cited

3

Statutory Material Cited

0

Waites v Brown [2021] VSC 509

Re Centro Retail Australia Ltd [2012] VSC 240

In the will of [2010] VSC 48

[2021] VSC 628

12 October 2021