Leerac Pty Ltd v Garrick E Fay

[2008] NSWSC 1082

CITATION:	Leerac Pty Ltd v Garrick E Fay [2008] NSWSC 1082
HEARING DATE(S):	18 September 08
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	18 September 2008
DECISION:	Question 1 answered “No”. Question 2 does not arise.
CATCHWORDS:	TRUSTS & TRUSTEES – judicial advice – non-contest clause – whether clause catches suit for removal of trustees – whether clause void as against public policy – impugned provisions should be construed and intent of parties determined before the question of invalidity as against public policy is considered – whether proceedings against directors of trustee are relevantly proceedings against trustee.
LEGISLATION CITED:	(NSW) Trustee Act 1925
CATEGORY:	Principal judgment
CASES CITED:	AN v Barclays Private Bank & Trust (Cayman) Ltd [2007] WTLR 565 Armitage v Nurse [1998] Ch 241 Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 Barns v Barns [2003] HCA 9; (2003) 214 CLR 169 Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538 Coleman v Myers [1977] 2 NZLR 225 Collie v Merlaw Nominees Pty Ltd [1998] VSC 203 Cooke v Turner (1846) 15 M & W 727; (1846) 153 ER 1044 Cope v Butcher (1996) 20 ACSR 37 Evanturel v Evanturel (1874) LR 6 PC 1 Hansen v Young [2003] 1 NZLR 83 Hurley v BGH Nominees Pty Ltd (No 2) (1984) 37 SASR 499 In the will of Gaynor [1960] VR 640 Leiberman v Morris (1944) 69 CLR 69 McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 Midland Bank Trustee (Jersey) Ltd v Federated Pension Services Ltd [1997] 2 LRC 81 Percival v Wright [1902] 2 Ch 421 Permanent Trustee Company v Dougall (1931) 34 SR (NSW) 83 Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 Smith v Smith (1986) 161 CLR 217 Wallace v Wallace (1898) 24 VLR 859 Young v Murphy [1996] 1 VR 279
PARTIES:	4763/08 Leerac Pty Ltd (plaintiff) Garrick E Fay (first defendant) Dallas Fay (second defendant) 3365/07 Garrick E Fay (first plaintiff/first cross defendant) Dallas Fay (second plaintiff) Lisa Fay (second cross defendant) Moramba Services Pty Ltd (defendant/cross claimant) 5032/06 Garrick E Fay (first plaintiff/first cross defendant) Dallas Fay (second plaintiff/second cross defendant) Justinthyme Pty Ltd (third plaintiff/third cross defendant) Henry Kai Tong Au (first defendant/first cross claimant) Hugh Edward Halliday (second defendant/second cross claimant) Allan Ni Kwan Kwok (third defendant/third cross claimant) Stephen Thomas Pollitt (fourth defendant/ fourth cross claimant)
FILE NUMBER(S):	SC 4763/08; 3365/07; 5032/06
COUNSEL:	Mr R M Smith SC w Mr P W Flynn (4763/08 plaintiff) Mr D E Grieve QC w Ms J F Merkel (4763/08 defendants)
SOLICITORS:	Corrs Chambers Westgarth (4763/08 plaintiff) Whittens Lawyers & Consultants (4763/08 defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Thursday, 18 September 2008

4763/08 Leerac Pty Ltd v Garrick E Fay & Anor
5032/06 Garrick E Fay & 2 Ors v Henry Kai Tong Au & 3 Ors
3365/07 Garrick E Fay & Anor v Moramba Services Pty Ltd

JUDGMENT

1 HIS HONOUR: The plaintiff Leerac Pty Ltd is the trustee of eight discretionary trusts, of which the first and second defendants Garrick E Fay and Dallas Fay, and their sisters Sioned and Louisa, are potential beneficiaries. Leerac seeks judicial advice as to whether the defendants are excluded from the class of beneficiaries by operation of a “non-contest” clause contained in each of the relevant trust deeds.

Background

2 The deceased Claude Augustus Fay died on 10 November 1998, leaving substantial assets in New South Wales and four children – the two defendants and their two sisters – his wife having pre-deceased him. By his last Will, made on 21 December 1994 and varied by a codicil of 31 July 1996, he appointed as his executors Stephen Thomas Pollitt, Allan Ni Kwan Kwok, Hugh Edward Halliday and Henry Kai Tong Au. Probate was granted to the executors on 19 March 1999.

3 Clause 3 of the Will gave the deceased’s shares in Leerac to his trustees upon discretionary trust until a vesting day 80 years from the date of his death (or such earlier date as the trustees may determine) to stand possessed of the shares upon trust for such one or more of his children and their descendents as are living on the vesting day (in such proportions as the trustees may in their absolute discretion determine), and until the vesting day to hold the income from the Leerac shares upon trust to pay it to or for the beneficiaries (in such proportions as they may in their absolute discretion determine).

4 By Deeds dated 3 March 1967 between James Barnes as settlor and Leerac as trustee, four discretionary trusts – respectively known as the Barnes CA Garrick Settlement, the Barnes CA Dallas Settlement, the Barnes CA Louisa Settlement and the Barnes CA Sioned Settlement – were constituted with Leerac as trustee (“the Barnes Settlements”). In each trust deed, the beneficiaries are defined to include “any child or children or grandchild or grandchildren or issue of the said Claude Augustus Fay who are already in being or who shall be borne before the Vesting Day.” The Trust Deeds were amended by Amending Deeds on 1 December 1975 and 6 May 1986. Each of them contained, in clause 13, a provision as follows:

The trustee shall not be liable or answerable or accountable hereunder for any loss not attributable to:
(i) its own dishonesty; or
(ii) the wilful commission by it of on act known to be a breach of a trust that may be suffered or incurred in exercising any of the directions powers authorities or discretions given to or conferred upon the Trustee under this settlement or in investing moneys available for investment.

5 Clause 17 of each Trust Deed (the non-contest clause) provided as follows:

Notwithstanding any other provision of this Deed if any beneficiary should at any time commence any action in any Court whatever or wheresoever situated against the Trustee or any person who shall at any time have been a trustee of a specified trust in respect of any matter arising under or in relation to a specified trust other than for wilful default on the part of the Trustee or any such other person as aforesaid then such beneficiary shall be deemed not to be and never to have been a beneficiary hereunder and shall be incapable of taking any benefit and shall be liable to repay to the Trustee for the time being forthwith upon the commencement of any such action all moneys or other benefits theretofore received by him. The words ‘specified trust’ in this clause mean any trust created by or arising pursuant to any determination by the Trustee or any such other person as aforesaid under clauses 5A or 5 hereof.

6 By four deeds, dated 1 December 1995, between Peter Barnes as settlor and Leaford Nominees Pty Limited as trustee, four trusts – respectively known as the Lorraine Garrick Settlement, the Lorraine Dallas Settlement, the Lorraine Sioned Settlement and the Lorraine Louisa Settlement – were constituted with Leaford as trustee (“the Lorraine Settlements”). By deeds, made on or about 25 July 1988, Leerac became the trustee of each of the Lorraine Settlements. Each of the Lorraine Settlement deeds contains a clause 14, to the following effect:

The Trustee shall not be liable or answerable or accountable hereunder for any liability whatever or for any loss or diminution whatever in respect of the trust funds (or any part thereof) whether arising out of negligence or otherwise (except where attributable to its own dishonesty) and the Trustee shall be indemnified and saved harmless at all times by and out of the trust funds against any such liability or loss as aforesaid.

7 Each of the Lorraine Settlement deeds also contained a clause 17, identical to that in each of the Barnes Settlement deeds.

8 Proceedings 5032/06 in this Court were instituted in 2006 by the defendants Garrick and Dallas Fay against the executors, claiming a declaration that the executors in breach of duty had failed to give real and genuine consideration to winding up the trusts of the Will of the late Claude Fay and each of the Barnes Settlements and Lorraine Settlements, and to the distribution of the capital of the trusts of the Will and each of those inter vivos settlements. Initially – although subsequent amendments have abandoned them – they also sought an order requiring the executors to give real and genuine consideration to the winding up of the trusts, and a declaration that as trustees of the testamentary trusts and as directors of Leerac (the trustee of the inter vivos settlements) they had acted in breach of their duties in various respects. But the principal relief sought – and, in effect the only substantive relief now sought – was and is an order that the executors be removed as trustees of the estate, and that new trustees be appointed in their place.

9 As defendants in proceedings 5032/06, the executors do not admit that Garrick and Dallas retain the status of beneficiaries, setting up clause 17 of each of the settlement deeds for that purpose. While it may be necessary, in the ultimate resolution of those proceedings – which are now part heard before me – to determine whether or not clause 17 has effect in the circumstances, it is also conceivable that those proceedings might be determined without it being necessary to resolve that question.

The application

10 It is against that background that Leerac has filed its summons in the present proceedings, by which it seeks, pursuant to (NSW) Trustee Act 1925, s 63, the opinion, advice and direction of the Court in relation to the following two questions:

(1) Are the defendants by reason of them having commenced proceedings 5032/06 deemed by clause 17 of the trusts not to be and never to have been a beneficiary under each trust and not entitled to take any benefit under the trusts?

(2) If the answer to question 1 is “yes”, are the defendants liable by clause 17 of the trusts to repay to the trustee all money and other benefits received by each of them under any of the trusts?

11 Whether or not it would otherwise have been necessary to resolve this question in proceedings 5032/06, it is obviously a question of considerable significance to the future management of the trusts, regardless of what if any relief is granted in the substantive proceedings. Moreover, its resolution now will remove one of the disputed issues which potentially separates the parties, and may facilitate the reduction of the overall issues between them.

12 As I now apprehend it, with the benefit of the careful argument of Mr R M Smith SC for Leerac, and Mr D E Grieve QC for the defendants, there are three main issues to be resolved. The first is one of construction, which itself has two aspects: namely, just what “actions against the trustee” are caught by clause 17 on its proper construction; and is the operation of clause 17 limited to “specified trusts” or does it extend to the trustee in respect of the head trust? The second main question is that of the validity of clause 17 upon its proper construction, and in particular whether it is void as contrary to public policy for purporting to oust the jurisdiction of the Court. And the third main issue is the application of the clause, properly construed, to the present circumstances: in particular, is proceeding 5032/06, in which the only defendants are the executors, an action against the trustee Leerac?

Construction of clause 17

13 I turn first to the question of the construction of the “non-contest” clause. One must start from the position that it is plainly established that exemption clauses, not only in the field of negligence, but a fortiori in the field of trusts, are to be construed strictly [McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623, 641C (Young J); AN v Barclays Private Bank & Trust (Cayman) Ltd [2007] WTLR 565, [71] (Smellie CJ); Midland Bank Trustee (Jersey) Ltd v Federated Pension Services Ltd [1997] 2 LRC 81 (Jersey CA)].

14 Although it did not initially feature in the argument, as it ultimately transpires a central question is just what is meant in clause 17 by the concept of “any action in any Court whatever or wheresoever situated against the trustee ... other than for wilful default”. Much of the argument in support of the validity of the clause 17 has focused on its relationship with the preceding clause 13, which effectively exonerates the trustee from liability except in respect of dishonesty, a concept substantially equivalent to wilful default [see Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 (Romer J)]. On the other hand, the argument for the invalidity of clause 17 has focused largely on the proposition that conditions against taking proceedings that have the effect of preventing any questions of administration without limit, and that would prevent beneficiaries from securing due administration of the Will by the trustees, are void as contrary to public policy [Permanent Trustee Company v Dougall (1931) 34 SR (NSW) 83, 86-87 (Harvey CJ in Eq)]. Accordingly, a fundamental question to be resolved is whether clause 17, on its proper construction, is limited to actions asserting liabilities against the trustee, or extends to actions to secure the due administration of the trust.

15 If the type of action contemplated by clause 17 includes the latter, then it would have the effect that any action seeking the trustee’s removal and replacement by another – for example, on grounds of bankruptcy, or (in the case of a natural trustee) insanity, or absence from the jurisdiction or other inability to perform the trusts – would nonetheless be an action against the trustee, attracting the consequence that the plaintiff beneficiary’s interest would be forfeited. Prima facie, it seems unlikely that the settlor would have intended to bring about that consequence in the case of an action brought to secure the due administration of the trust in circumstances where the trustee was no longer able or appropriate to administer it. Moreover, while bearing in mind that questions of construction should be resolved before questions of validity, so that whether the clause is valid depends on its proper construction and not vice versa, nonetheless the Court will, in cases of ambiguity, favour a construction which promotes validity over invalidity.

16 The nature of the action contemplated by clause 17 is informed to some extent by the nature of the action specifically excluded – namely, one for wilful default. Wilful default is a well-understood concept in respect of actions asserting liabilities against trustees, in which context trust deeds and even statutory provisions often provide exemptions “other than for wilful default”. But wilful default is neither a necessary nor sufficient material fact in an action for a removal of a trustee – although facts which would amount to wilful default in a suit for breach of trust would be relevant considerations in an application for removal. The exclusion of actions for wilful default from the protective effect of clause 17 suggests that the settlor’s intention was to deter actions asserting liabilities against the trustee, as distinct from actions for administration of the trusts (even if they include actions for removal and replacement of the trustee).

17 For those reasons, the better construction of clause 17 is one to the effect that it is triggered only by actions asserting liability against the trustee for breach of trust, and not by actions to secure the due administration of the trust – including actions for the appointment of a new trustee, notwithstanding that the trustee is a necessary defendant to such actions. On that construction, the present suit – which claims no relief beyond the removal of the trustees and their replacement, and does not assert a liability against them – would not trigger clause 17.

18 The second question of construction is whether clause 17 is limited in its operation to actions “in respect of any matter arising under or in relation to a specified trust”.

19 Each of the trust deeds makes provision for a partial vesting or distribution by the establishment of a sub-trust or separate trust for one or more of the beneficiaries and the transfer of trust assets to such a trust, called “a specified trust”. The evidence is that no specified trust, as defined, has ever been constituted. The defendants submit that the plain wording of clause 17 has the effect that it is only an action against the trustee, or a present or former trustee of a specified trust, “in respect of any matter arising under or in relation to a specified trust”, that is caught.

20 The concept of an action against the (head) trustee in respect of a matter arising under or in relation to specified trusts is at best an improbable one. Moreover, the fact that the clause provides, in effect, for forfeiture of the “right of a beneficiary hereunder” suggests that it is concerned as much with the head trust as with any specified trust. The reference to an action against the (head) trustee would be inapt to a situation in which the clause related only to matters arising under or in relation to a specified trust; as the head trust is not itself a “specified trust”, and liability in respect of any matter arising under or in relation to a specified trust would be incurred by the trustee of that trust, and not by the head trustee.

21 In my view, Mr Smith’s submission is correct: the clause should be read as if it were punctuated as “against the trustee, or any person who shall at any time have been a trustee of a specified trust in respect of any matter arising under or in relation to a specified trust, other than for wilful default ... “.

Validity of clause 17

22 I turn then to the question of validity, lest my conclusion on the first question of construction be incorrect. The defendants submit that clause 17 is void as contrary to public policy, on the ground that it would oust the jurisdiction of the Court.

23 The position on the authorities can, I think, be summarised as follows: First, there is no general rule against the validity of conditions discouraging beneficiaries from taking proceedings to contest a Will, although there are some limits on this [Evanturel v Evanturel (1874) LR 6 PC 1; Cooke v Turner (1846) 15 M & W 727; (1846) 153 ER 1044; AN v Barclays Private Bank & Trust (Cayman) Ltd, [54]]. Secondly, however, where there can be seen in a statute conveying a beneficial right to make applications for provisions out of an estate an intention that such jurisdiction cannot be excluded by private arrangement – as, for example, under the testators family maintenance legislation – conditions which are calculated to deter the invocation of that jurisdiction are contrary to public policy and void [Leiberman v Morris (1944) 69 CLR 69; Barns v Barns [2003] HCA 9; (2003) 214 CLR 169; In the will of Gaynor [1960] VR 640, 642-644 (O’Bryan J)]. This rule is based on discerning an (unexpressed) statutory policy against it being possible to contract out of the rights given by the relevant legislation [Leiberman v Morris; Smith v Smith (1986) 161 CLR 217, 235 (Gibbs CJ, Wilson and Dawson JJ)]. Thirdly, a condition against the taking of any proceedings whatsoever having the effect of preventing any question of administration of a trust or Will, or securing the due administration of the trust or Will by the trustees, is too wide and will be void for ousting the jurisdiction of the Court, although one which merely discourages disputing the validity of the Will or trust will not offend that rule [Permanent Trustee Company v Dougall, 86-87]. Fourthly, a clause in a trust deed may validly exempt the trustee from obligations and liabilities other than those contained in that irreducible core of a trustee’s obligation – namely, to act honestly and in good faith. It is not contrary to public policy to exclude a trustee’s liability even for gross negligence, but it is to exclude liability for dishonesty or bad faith [Armitage v Nurse [1998] Ch 241 (CA)].

24 There is nothing irreconcilable about the observations of Harvey CJ in Eq in Permanent Trustee Company v Dougall and those of Millet LJ in Armitage v Nurse. The observations of Harvey CJ in Eq were to the effect that a condition against taking any proceedings whatever was too wide, as it would have the effect of preventing beneficiaries from securing due administration without limitation. Armitage v Nurse does not suggest that trustees may be exonerated from all obligations whatsoever, recognising that there is a reducible core of obligation to act honestly and in good faith from which they cannot be exempted.

25 Reference was made to the judgment of Madden CJ in the Supreme Court of Victoria in Wallace v Wallace (1898) 24 VLR 859, in which his Honour held that a provision in a Will – to the effect that any person entitled to any benefit under the Will who took any proceedings against the executors or instituted any suit for the administration of the estate should absolutely forfeit all benefit under the Will – was void to the extent that it had no force or effect upon a bona fide and reasonable claim, although it might have been effective against a frivolous or vexatious action. (In New South Wales, Permanent Trustee Company v Dougall would tell against its validity in respect of administration suits). Somewhat similarly, in AN v Barclays Private Bank & Trust (Cayman) Ltd, Smellie CJ held that a non-contest clause was not to be construed as to operate contrary to established principles and must be read by implication as permitting not only contests which were successful but also contests which were justifiable, so that it should be read "whosoever unjustifiably contests the validity of this deed ...". I regret to say that, to my mind, the approach adopted by Madden CJ and Smellie CJ appears to put the question of validity before the question of construction. Construction is a process intended to ascertain the intent of the settlor or testator, and it is only once that intent is ascertained that one can decide whether the clause is valid or not. This principle is often recognised in the field of covenants in restraint of trade, where it is plainly established that one construes the covenant first and then determines whether as so construed it offends public policy. To my mind, nothing is clearer than that the testator in Wallace v Wallace and the settlor in AN v Barclays Private Bank& Trust (Cayman) Ltd intended to deter all suits, justifiable or unjustifiable, and such clauses, it seems to me, cannot be saved by reading them down, contrary to the settlor’s intention, to bring them within the scope of public policy.

26 Ultimately, two things, follow. The first is that if the construction of clause 17 which I have preferred is correct, then it does not offend against public policy. It would not prevent actions to secure due administration. It would only deter actions asserting liability for breach of trust against the trustees, other than those for wilful default. Armitage v Nurse shows that liability for such breaches may permissibly be excluded, and it must follow that a provision which has the effect of deterring a party from approaching the Court to assert such a liability, where that liability has already been permissibly excluded by another clause in the deed, is not contrary to public policy. The second is that if I be incorrect as to the construction of clause 17, and its true purport would be to operate on an application to secure due administration of the trust (including an application for the removal of the existing trustee), it would, in my view, be contrary to public policy. Neither Madden CJ nor Smellie CJ suggested that the clauses which confronted them could be valid if given effect according to their absolute terms. Consistently with what Harvey CJ in Eq said in Permanent Trustee Co v Dougall, to give effect to clause 17 if it operated on actions to secure the due administration of the trust and for the removal and appointment of the trustees would be inconsistent with the rights of the beneficiaries to have the trust duly administered, and would exclude the Court’s inherent jurisdiction in the supervision of trusts to remove and appoint trustees, and the statutory jurisdiction conferred by Trustee Act 1925, s 70.

27 Accordingly, if contrary to my view, clause 17 properly construed has the wider operation that it would be triggered by the present proceedings, then in my opinion it would be void as contrary to public policy.

Application of clause 17 to present case

28 I turn then to the third question, which is the application of the clause in the present case. The trustee Leerac is not a defendant. No relief is sought against Leerac – not even its removal as trustee of the inter vivos trusts. Leerac submits that nonetheless, in substance, the proceedings are against it because they are adverse or hostile to it, or because they are brought against its directors and officers for acts and omissions in their capacity as its directors or officers. Leerac further submits that the purpose of clause 17 is served by giving it a broader construction, encompassing actions brought against the trustee’s directors as well as actions brought against the trustee itself.

29 The Statement of Claim in proceedings 5032/06, originally and as amended, asserts in paragraph 15 that as directors of Leerac, the executors owed certain duties to the plaintiffs and their sisters. Elsewhere, breach of those duties is alleged. But what is alleged is a duty owed by the executors – albeit one in their capacity as directors of Leerac – to the beneficiaries; not a duty owed by Leerac.

30 There is significant authority against the proposition that directors of a trustee company owe fiduciary obligations to the beneficiaries of the trust merely by reason of their position as directors [Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504; Young v Murphy [1996] 1 VR 279, 301-2 (JD Phillips J); Cope v Butcher (1996) 20 ACSR 37; Collie v Merlaw Nominees Pty Ltd [1998] VSC 203, [96] (Byrne J); but cfHurley v BGH Nominees Pty Ltd (No 2) (1984) 37 SASR 499]. On the other hand, there is clear authority that, notwithstanding the legal distinction between a company and its shareholders, the office of a director in a proprietary company may, at least for some purposes, be a fiduciary one in relation to the shareholders, so that a direct duty is owed by the director to the shareholder or shareholders [Coleman v Myers [1977] 2 NZLR 225, 276-280 (Mahon J); Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538, not following Percival v Wright [1902] 2 Ch 421]. Whether such a duty is owed by the executors, by reason of their capacity as directors of Leerac, to the beneficiaries is, and no doubt will remain, a live issue in the proceedings. But if any such duty as that for which the present defendants contend is established, it remains the fact that it will be a duty owed by the executors personally – albeit derived from their position as directors of Leerac – to the beneficiaries, and not a duty owed by Leerac.

31 The relief claimed in proceedings 5032/06 is sought exclusively against the executors, and it is their removal from their position as trustees of the Will that is the ultimate relief sought. Nothing is sought against Leerac. Leerac is not a party. In my view, it cannot be said that this is an action against Leerac.

32 That conclusion is reinforced by two matters. The first is the rule that exclusion clauses of this type are to be construed strictly, to which I have already referred. The second is the decision of Wild J in the High Court of New Zealand in Hansen v Young [2003] 1 NZLR 83. Mr Hansen and Mr Young were co-trustees and co-executors of a deceased estate, Mr Hansen also being the residuary and major beneficiary and Mr Young also being the estate’s solicitor. The Will contained a clause indemnifying the trustees in respect of loss caused by them in the administration of the estate. Mr Hansen brought proceedings against Mr Young, alleging a breach of Mr Young’s duty in his capacity as solicitor to the executor, and of his retainer to manage and administer the estate competently. The main question in the case was the capacity in which Mr Young acted: if he were acting as executor, he was entitled to be indemnified out of the trust estate; if he were acting as solicitor, he was not. The Court held that he was acting as solicitor, illustrating that a narrow operation is to be given to clauses indemnifying or excusing trustees, and that differences in legal personality and in the capacity in which the person concerned is acting are important.

Conclusion

33 Accordingly, I conclude that upon the proper construction of clause 17, the proceedings brought by the defendants in 5032/06 are not proceedings of the type contemplated by clause 17: first, because they are proceedings for the administration of the trust and not proceedings asserting a liability for breach of trust against the trustee; and secondly, because they are not against the trustee at all. Were I wrong in my view that these were not caught by clause 17 because they are not proceedings asserting a liability for breach of trust, then I would hold that clause 17 was void as contrary to public policy.

34 It follows that question 1 in the Summons will be answered in the negative. Question 2 then does not arise. My orders are:

(1) Question 1 – No;

(2) Question 2 – Does not arise.

35 I order that the costs of the plaintiffs on the trustee basis and the defendants on a party-party basis be paid out of each of the eight trusts pro rata.

36 In proceedings 5032/06, upon the plaintiffs by their counsel giving to the Court the usual undertaking as to damages, I note the undertaking of the defendants to the Court by their counsel contained in the document entitled “Undertaking 19 September 08” initialled by me, dated this day and placed with the papers.

37 I adjourn proceedings 5032/06, part heard, provisionally to 22 December 2008, for three days.

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