Norman v Australasian Conference Association Ltd

[2007] VSC 334

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 7612 of 2007

ROSS JEFFREY NORMAN	Plaintiff
v
AUSTRALASIAN CONFERENCE ASSOCIATION LTD	Defendant

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JUDGE:	Robson J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 August 2007
DATE OF JUDGMENT:	22 August 2007
CASE MAY BE CITED AS:	Norman v Australasian Conference Association Ltd
MEDIUM NEUTRAL CITATION:	[2007] VSC 334

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PROPERTY – Property Law Act 1958, s.163 – Application for early winding up of trust established under will – Abolition of the rule in Saunders v Vautier – Whether Court should exercise discretion to allow application despite abolition of rule.

CPT Custodian Pty Ltd v Commissioner of State Revenue
Saunders v Vautier

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms S Gaden
For the Defendant	No appearance

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HIS HONOUR:

1. I have before me an application by Ross Jeffrey Norman, the executor and trustee of the estate of Wallace Ross Conley, for the Court to give directions in relation to the variation of the trust established under the will dated 16 November 1994 of Wallace Ross Conley deceased.  In substance the plaintiff seeks a direction from the Court that the trust be wound up and all income and capital be distributed to the defendant forthwith.  The defendant is the Australasian Conference Association Limited (also known as the Seventh Day Adventist Church) (“the church”). 

1. Mr Norman deposes that the will contains only one substantive clause, under which the capital of the deceased’s entire estate is to be held in trust for 20 years, with the income divided into two equal parts.  Both parts of the income are to be distributed to the same beneficiary, the church.  Both parts of the income are to be applied under direction of the church’s executive committee, in consultation with the committee, as follows:

(a)One part to be applied for education purposes with the Seventh Day Adventist Church; and

(b)One part to be applied for evangelism

both within the South-Pacific region and the Southern Asian division.  At the conclusion of twenty years, the balance of both capital and income is to be distributed to the church for the same two purposes.

1. Mr Norman further deposes that since obtaining the grant of probate, the assets of the estate have been called in, the last asset being a property in Gore Street, Fitzroy on which settlement took place on the 25^th of January 2007.  He says that a sum of approximately $526,539.66 now remains in residue and constitutes the trust capital.

1. Mr Norman further deposes that the church, which is the sole beneficiary under the will and of the trust, has raised with him the possibility of winding up the trust so that it may benefit from both the capital and income as soon as possible.

1. Mr Norman has no objection to the early winding up of the trust by distribution of all the capital and income as soon as possible.

1. Ms Sarah Gaden of counsel appears for Mr Norman.  There is no appearance for the church; however, Mr Rob Allison the secretary of the defendant company is present in Court. 

1. Ms Gaden submits that normally, in the circumstances here pertaining, where the beneficiary is entitled to the income and the capital the rule in Saunders v Vautier[1] would allow the beneficiary to call for the capital forthwith.

   [1](1841) 4 BEAV 115 [49 ER 282]; Aff D (1841) Cr and Ph 240 [41 ER 482].

1. Recently, the High Court in CPT Custodian Pty Ltd v Commissioner of State Revenue[2] has set out the modern formulation of the rule in Saunders v Vautier as stated in Thomas on Powers[3] as follows:

“Under the rule in Saunders v Vautier, an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of the property may at any time require the transfer of the property to him (or them) and may terminate any accumulation.”

[2](2005) 224 CLR 98, para 47.

[3](1998) 176.

1. Although probably not relevant for the purpose of this application, the High Court noted a limitation on the rule in Saunders v Vautier where others may have a right to or over the trust fund.

1. Nevertheless, Ms Gaden points out that section 163 of the Property Law Act 1958 (re-enacting part of the Property Law (Charitable Bequests) Act 1934) purports to abolish the rule in Saunders v Vautier to a specific class of testamentary charitable trusts, including the trust in this case.

1. Section 163 provides as follows:

“Where the will of any person who dies after the commencement of the Property Law (Charitable Bequests) Act 1934 contains a bequest to or a trust for the benefit of a charity or a number of charities or a class of charities and directs or purports to direct that the time of payment of the corpus bequeathed to or to be held in trust for the benefit of such charity charities or class of charities be postponed and that in the meantime the income arising from such corpus be paid to or distributed among such charity or charities or class of charities, such bequest trust and direction shall notwithstanding any rule of law or equity or any rule of construction be construed and take effect according to the tenor thereof.”

1. That Parliament intended to abolish the rule in Saunders v Vautier in the limited circumstances set out in s.163 is borne out by the brief discussion recorded in Hansard on the reading of the Property Law (Charitable Bequests) Bill.[4]   

   [4]1429 of Hansard of the 29^th of August 1934

1. Ms Gaden submits and accepts that the bequest that her client holds on trust is caught by s.163 of the Property Law Act, but nevertheless, seeks the Court to exercise its power to alter the terms of trust to collapse the trust and allow the beneficiary to take the corpus.

1. Ms Gaden informs me and I accept that she has done extensive research and has been unable to find any authority on s.163 of the Property Law Act, save a passing reference in Re Kagan[5] where it was given no substantive consideration.

   [5][1966] VR 538 at 545.

1. In the circumstances where I am faced with s.163 of the Property Law Act and its clear terms and where there is little authority to guide me, I feel it is appropriate that the Attorney-General, who is the proper officer who acts for the benefit of charitable trusts, should be informed of this application.

1. This Court would be assisted if the Attorney did make submissions to the Court on whether or not the Court should accede to the request to collapse the trust despite s.163 of the Property Law Act.

1. I note in passing that in the CPT Custodian Pty Ltd v Commissioner of State Revenue[6] the High Court consisting of Gleeson CJ, McHugh, Gummow, Callinan and Heydon JJ referred to the history of Saunders v Vautier and in particular to the different views taken by the United States Supreme Court, than in the English Courts, where the intent of the testator was upheld.[7]

   [6](2005) 224 CLR 98.

   [7]Para 44.

1. I therefore propose to adjourn this application to a date to be fixed but with liberty for the parties to apply.  I reserve the costs of the day.  I further enter as part of this order, that notice of this application be given to the Attorney-General and I also indicate that the Attorney should be given a copy of my reasons for judgment.

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