JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: MERCANTI -v- MERCANTI [2016] WASCA 206
CORAM: BUSS P
NEWNES JA
MURPHY JA
HEARD: 20 APRIL 2016
DELIVERED : 29 NOVEMBER 2016
FILE NO/S: CACV 139 of 2015
BETWEEN: MICHAEL ANGELO MERCANTI
First Appellant
JASON DEAN MERCANTI
Second AppellantAND
TYRONE KANE MERCANTI
First RespondentPARRADELE PTY LTD
Second RespondentSLONDIA NOMINEES PTY LTD
Third RespondentCITYCOURT PTY LTD
Fourth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :LE MIERE J
Citation :MERCANTI -v- MERCANTI [2015] WASC 297
File No :CIV 1262 of 2013, CIV 2186 of 2013, CIV 1276 of 2014
Catchwords:
Trusts - Discretionary family trust - Proper construction of power of variation in the trust deed - Whether the power of variation authorised the removal of the appointor and the appointment of a new appointor
Trusts - Discretionary family trust - Deed of variation of the trust deed - Whether the deed of variation was executed by the corporate trustee pursuant to the lawful authority of the trustee's directors or shareholders - Duomatic principle
Equity - Fraud on a power - Discretionary family trust - Power of variation in the trust deed - Whether the execution of a deed of variation of the trust deed constituted a fraud on the power of variation
Equity - Equitable fraud - Undue influence - Discretionary family trust - Whether trial judge erred in failing to conclude that the agreement of a person who was the guardian and appointor of the trust, and also a director of the corporate trustee, to and the execution by him of a deed of variation was as a result of equitable fraud by or the undue influence of his son
Equity - Fraud on a power - Discretionary family trust - Power conferred on the appointor under the trust deed to remove the trustee of the trust and appoint a new trustee - Whether the exercise by the appointor of the power of removal and appointment constituted a fraud on the power
Legislation:
Corporations Act 2001 (Cth), s 127, s 248A, s 248D
Result:
Appeal dismissed
Category: A
Representation:
Counsel:
First Appellant : Mr S Penglis
Second Appellant : Mr S Penglis
First Respondent : Mr J W K Burnside QC & Mr B G Grubb
Second Respondent : Mr J W K Burnside QC & Mr B G Grubb
Third Respondent : No appearance
Fourth Respondent : No appearance
Solicitors:
First Appellant : Jackson McDonald
Second Appellant : Jackson McDonald
First Respondent : Metaxas & Hager
Second Respondent : Metaxas & Hager
Third Respondent : Metaxas & Hager
Fourth Respondent : Metaxas & Hager
Case(s) referred to in judgment(s):
Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409
Allcard v Skinner (1887) 36 Ch D 145
Antony v Weerasekera [1953] 1 WLR 1007
Atkins v St Barbara Mines Ltd (1996) 135 FLR 119
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- Case
- [2016] WASCA 206
- Decision Date
CaseChat Overview and Summary
The court examined the language of the trust deed and the circumstances surrounding its creation to determine the meaning of the power of variation. The court noted that the interpretation of the trust deed must align with what a reasonable businessperson would understand, considering the language, context, and commercial purpose of the document. The court also considered whether the execution of the deed of variation was in accordance with the lawful authority of the trustee's directors or shareholders, and whether it constituted a fraud on the power of variation. The court further assessed whether the agreement to the deed of variation was influenced by undue influence or equitable fraud.
The court found that the power of variation in the trust deed did not authorise the removal of the appointor and the appointment of a new appointor. The court also concluded that the deed of variation was not executed pursuant to the lawful authority of the corporate trustee's directors or shareholders. Furthermore, the court determined that the execution of the deed of variation did not constitute a fraud on the power of variation. Finally, the court held that there was no evidence of equitable fraud or undue influence in the execution of the deed of variation.
The court's final orders will reflect the determination of the legal issues and the interpretation of the trust deed, as well as any other relevant findings made during the course of the case.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
It is necessary, in determining the meaning of the provisions of a commercial contract, to ask what a reasonable businessperson would have understood those provisions to mean. That inquiry will require consideration of the language of the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. See Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35] (French CJ, Hayne, Crennan & Kiefel JJ); Mount Bruce Mining [47]. A written agreement must be construed as a whole. The words of a clause in the agreement are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the agreement with a view to achieving harmony among them. See Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 ‑ 110 (Gibbs J). In Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, Dixon CJ and Fullagar J said, '[w]ords may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency' (426 ‑ 427). See also Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409 [21] (Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon & Crennan JJ). The rules that apply to the construction of contracts apply to the construction of deeds. See Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 [9] ‑ [10] (Gleeson CJ, Gaudron, McHugh, Gummow & Hayne JJ). The rules applicable to the construction of contracts apply also to trusts. The search for 'intention' in relation to trusts, as with contracts, is for the intention as revealed in the words used by the parties. The expressed intention of the parties is to be found in the answer to the question, 'What is the meaning of what the parties have said?', not to the question, 'What did the parties mean to say?'. See Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [53] (Gummow & Hayne JJ), [102] ‑ [107] (Heydon & Crennan JJ). See also Smith v Lucas (1881) 18 Ch D 531, 542 (Sir George Jessel MR); Commissioners of Inland Revenue v Raphael [1935] AC 96, 142 ‑ 143 (Lord Wright). Similarly, in Scott and Ascher on Trusts (5th ed, vol 1, 2006) § 4.1, it is said that 'it is necessary, when dealing with the creation of a trust and its terms, to speak not of the settlor's intention but of the settlor's manifestation of intention'. See also Byrnes [57] ‑ [58] (Gummow & Hayne JJ). In Conaglen, 'Sham Trusts' (2008) 67 Cambridge Law Journal 176, it is stated:The court's focus when construing the terms of [a] bilateral arrangement [creating a trust] is on the objective meaning that those terms would convey to a reasonable person, just as it is when construing contractual arrangements (181). That passage was cited with approval by Heydon and Crennan JJ in Byrnes [113]. Their Honours added that the question is 'what the settlor or settlors did, not what they intended to do' [113].