Northgate Park Pty Ltd v Floyd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

S ECI 2022 03576

IN THE MATTER OF AN APPLICATION PURSUANT TO RULE 54.02 OF THE SUPREME COURT (GENERAL CIVIL PROCEDURE) RULES 2015 (VIC)
BETWEEN:
NORTHGATE PARK PTY LTD (ACN 051 201 202) AND OTHERS	Plaintiffs
v
PENELOPE JANE FLOYD AND OTHERS	Defendants

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JUDGE:	Elliott J
WHERE HELD:	Melbourne
DATE OF HEARING:	4, 27 October 2022
FURTHER SUBMISSIONS:	29, 30 November 2022
DATE OF JUDGMENT:	23 December 2022
DATE OF ADDENDUM:	6 March 2023
CASE MAY BE CITED AS:	Northgate Park Pty Ltd v Floyd
MEDIUM NEUTRAL CITATION:	[2022] VSC 783

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TRUSTS – Express trust – Family discretionary trust – Lost trust deed – Evidence of trust – Existence established – Whether trust fails for uncertainty – Secondary evidence – Expert evidence – Powers and duties of trustee confirmed by subsequent trust deed – Whether effective – Whether terms of later trust deed require amendment.

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APPEARANCES:	Counsel	Solicitors
For the plaintiffs	I Percy	King & Collins
J Carney
For the 1^st and 3^rd defendants	D Clough	Macpherson Kelley
For the 2^nd defendant	M Shanker (solicitor)	Norton Rose Fulbright
Interested non-parties	J Barber SC

HIS HONOUR:

A. Introduction

A.1 Background

On 5 September 2022, the trial commenced in a proceeding (“the Main Proceeding”) between Penelope Floyd (“Penny”) and Jason Trompf (“Jason”) as plaintiffs (“the Claimants”), and Merilyn Floyd (“Merilyn”), Robert Floyd (“Robert”) and Northgate Park Pty Ltd (“Northgate”) as defendants (“the Present Owners”).[1] In the Main Proceeding, Merilyn is sued in her own right and as trustee of the FES superannuation fund. More significantly for present purposes, Northgate is sued in its own right and as trustee of the Floyd family trust (“the Family Trust”). On the pleadings, there was no issue that Northgate was the trustee of the Family Trust.
[1]Merilyn and Robert are the directors of Northgate.
Penny is the daughter of Merilyn and Robert. Jason is her husband. Penny’s only sibling is her sister Jodi Floyd (“Jodi”), who is approximately 2 years younger. Jodi is not a party to the Main Proceeding.
In the very broadest of terms, in the Main Proceeding the Claimants allege, amongst other things, a right to farming property held in the name of Northgate in its capacity as trustee of the Family Trust. It is alleged this right arose from, amongst other things, a promise that was said to be made by Merilyn and Robert to the Claimants in 1995 (“the Promise”).[2]
[2]There are many other allegations, including those the subject of a counterclaim filed by the Present Owners.
On the first 2 days of the trial of the Main Proceeding, both the Claimants and the Present Owners opened their respective cases. Towards the end of the second day, counsel for the Present Owners informed the court that it appeared the operative documentation with respect to the Family Trust was not the 2 trust deeds in the court book (“the Later Deeds”),[3] but rather was an earlier deed executed in 1991 (“the Original Deed”). The court was told that the whereabouts of the Original Deed were unknown.
[3]The Later Deeds were executed together on 24 February 2015: see further pars 64-67 below.
Thus, the court was alerted to new issues; namely, (1) whether the existence of the Family Trust could be established and, (2) if so, under what terms (if any could be proven) Northgate was obligated to perform its role as trustee of the Family Trust, or whether the Family Trust would instead fail for uncertainty. These issues included the question of what effect and operation, if any, the Later Deeds had with respect to the Family Trust.
As a result of the Present Owners’ lawyers only recently becoming aware of the new issues, the court was informed that they may need to revisit the admissions made in the Present Owners’ defence in the Main Proceeding concerning Northgate and the Family Trust. In referring to “embryonic thinking”, the Present Owners’ counsel foreshadowed the possibility of the Family Trust failing for uncertainty and a resulting trust being found in favour of Merilyn and Robert. It was contended such a scenario could have significant ramifications for the issues in dispute in the Main Proceeding.
Also as a result of the new issues, the Claimants indicated it was likely they would seek to amend their statement of claim[4] to include a claim for equitable compensation. This foreshadowed amendment was to address the possibility of the court finding that, despite the Promise having been made, there were terms of the relevant deed or deeds governing the Family Trust that resulted in a determination that the trust property itself could not or ought not be transferred to the Claimants. Further, the Claimants contended that the Later Deeds ought to be found to contain the terms governing the Family Trust.
[4]This subsequently occurred, and the applications for leave to amend have been ongoing.
Contrary to the Claimants’ submission that the trial of the Main Proceeding should proceed, I formed the view that it was necessary to adjourn the trial to enable the parties to the Main Proceeding (and others whose rights were affected or potentially affected) to ventilate the issues that arose out of the alleged loss of the Original Deed. More specifically, it was necessary for further investigations to take place, and then to have the relevant parties litigate and have determined the question of whether the Family Trust had been established in 1991 by reason of the execution of the Original Deed; and if so on what basis and pursuant to what terms; and whether it continued to be governed by any such terms or other terms. In short, it was apparent that the equitable relief sought in the Main Proceeding could not be properly considered until the matters pertaining to the existence and terms of the Family Trust were known.

A.2 Issues for determination

By an originating motion filed 12 September 2022, this proceeding was commenced to seek judicial advice in relation to the issues confronting Northgate in its capacity as trustee of the Family Trust (“the Advice Proceeding”). In the Advice Proceeding, the Present Owners are the plaintiffs. The Claimants are the first and third defendants. Jodi is the second defendant. Penny and Jason have 4 dependent children. Jodi has 2 children, the younger born after the commencement of the Advice Proceeding. Although not parties, those children are represented by counsel in the Advice Proceeding.[5]
[5]In recognition of the fact that the grandchildren have an interest in the Family Trust.
In the Advice Proceeding, the Present Owners seek determination of the following primary question: whether Northgate is justified in managing and administering the Family Trust. If the answer is “yes”, the Present Owners seek an order as to the terms on which Northgate is justified in doing so.[6]
[6]Initially, advice was sought in the alternative if the answer to the primary question was “no”. On that scenario, Merilyn and Robert had sought orders as follows: (1) a declaration that the Family Trust had failed for uncertainty due to the loss of the Original Deed; (2) a declaration that Northgate held all of the property, rights and assets acquired by it as trustee of the Family Trust subject to a resulting trust for Merilyn and Robert jointly as equal tenants in common; (3) a declaration that Northgate held any further income arising from the assets of the Family Trust on the same resulting trust or trusts; and (4) an order for the taking of accounts and the payment by Northgate of such amounts as were found to be due to Merilyn and Robert. However, the Present Owners subsequently decided to confine the scope of the advice sought. By leave, the originating motion was amended so that the advice was confined to answering the primary question, and if it was answered in the affirmative, then advice was sought regarding the ancillary question in relation to the terms of the Family Trust. In other words, no ancillary orders were sought in the event that the answer to the first question was negative.
Some time was required before the Advice Proceeding could be heard so that the necessary enquiries could be made and evidence prepared. Further, at the request of the parties, the hearing was adjourned at the conclusion of the lay evidence and related submissions so that the parties could jointly obtain expert evidence on some of the issues raised. An expert was called and further submissions were made. Broadly, all the parties were united in accepting the cogency of the expert’s evidence.
In short, when the new issues were first aired, the main parties were at loggerheads as to the appropriate outcome. However, as the case evolved, the situation developed to a position in which there was significant common ground; namely, that Northgate ought to continue as trustee of the Family Trust on the basis that it was established in 1991, that the Original Deed has been lost and that Northgate in its capacity as trustee ought now be governed by some or all of the terms of the Later Deeds. In other words, the only substantive issue between the parties to the Advice Proceeding was the extent to which the terms of the Later Deeds ought to stand. Of course, in a case such as this it is ultimately a matter for the court as to whether the consequences of the relevant facts are as contended.
For the reasons below, Northgate is justified in managing and administering the Family Trust on the terms set out in annexure A to this judgment.

A.3 Treatment of evidence adduced in the Advice Proceeding

A substantial body of evidence has been filed and then adduced for the purposes of the Advice Proceeding. Before turning to this, it is necessary to say something about how this evidence is to be treated both in the Advice Proceeding and in the Main Proceeding.
It was apparent from the outset that some of the issues to be raised in the Advice Proceeding might overlap with the issues in the Main Proceeding. Accordingly, it was ordered that the evidence in the Advice Proceeding would also be evidence in the Main Proceeding (which has been adjourned part-heard) and that, to the extent issues needed to be determined in the Advice Proceeding, all relevant evidence would be adduced so that any determinations made in the Advice Proceeding would bind the parties for the purposes of the Main Proceeding.
The affidavits relied upon in the Advice Proceeding included evidence from Merilyn and Robert to the effect that loans recorded in the financial statements of Northgate were repayable to them and that every financial benefit either of them had given to the Family Trust would or should have been recorded as a loan. Some aspects of this evidence are in contest in the Main Proceeding. Neither Merilyn nor Robert was cross-examined on this evidence (or any other evidence that was led on behalf of the Present Owners). This approach was adopted on an express arrangement between the parties that, in order to give the advice sought, there was no need for the court to determine whether or not any loans from Merilyn or Robert recorded in Northgate’s financial statements were in fact repayable. Thus, although not contested, it was accepted by all parties that this evidence ought to be treated as evidence of Merilyn’s and Robert’s positions rather than evidence of uncontested facts for the purposes of both the Advice Proceeding and the Main Proceeding.
Save for these introductory remarks, to the extent necessary, it is convenient to identify the remaining evidence in addressing a number of questions that arise.

B. Was the Family Trust established and, if so, is the Original Deed lost?

Although (because of a lack of recollection) there was no direct evidence that a document was duly executed to create the Family Trust, there was clear and convincing proof that the Original Deed was executed in 1991.[7] Each of Merilyn and Robert recall getting professional advice in 1991 shortly before completion of the purchase of a property in Glenrowan (“the Glenrowan Property”). They were advised to establish a family trust and to have a corporate trustee own the Glenrowan Property as trust property.
[7]As for the level of satisfaction that has been held to be required in this regard, see Application by Barry McMahon Nominees Pty Ltd [2021] VSC 351, [12] (McMillan J); DR McKendry Nominees Pty Ltd [2015] VSC 560, [7] (Digby J), citing Maks v Maks (1986) 6 NSWLR 34, 36E (McLelland J). But see also Evidence Act 2008 (Vic), s 48(4)(b).
Further, Robert’s accountant at that time (“the First Accountant”) has recently sworn that he recalled being engaged by Merilyn and Robert in about 1991 to provide “accounting services” and that he gave “structuring advice”. This advice included that all farms purchased should be held in a family trust with a corporate trustee, with Merilyn and Robert as its directors. The First Accountant also recalled that his advice was accepted, which was confirmed by the evidence of Merilyn and Robert.[8]
[8]For completeness, the First Accountant swore 3 affidavits in the Advice Proceeding. Merilyn read the first of these affidavits and stated that she believed it to be correct. The second and third affidavits were sworn after Merilyn’s affidavit. Robert did not depose to reading any of the affidavits of the First Accountant but relevantly his evidence was consistent with what was contained in them.
Furthermore, contemporaneous documents corroborated this evidence. A letter dated 3 April 1991 was sent to the First Accountant by a service company (retained by the First Accountant and which routinely provided him with shelf companies and trust deeds)[9] (“the Service Company”) concerning the “transfer” of Northgate and requiring the incoming officers to sign consent forms. Both Merilyn and Robert became directors of Northgate on the same day. Moreover, although the First Accountant could not recall the specifics, he had no doubt that the Original Deed would have been prepared on his instructions.
[9]See further par 36 below.
In addition, on 13 February 1992 Robert signed the annual return of Northgate for the year ended 30 June 1991 as a director, which was duly filed with the Australian Securities Commission (as it then was). He recorded that Northgate’s principal activities were “trustee company (investor)”. The address recorded as Northgate’s principal business office was that of the Glenrowan Property. With respect to Northgate’s “key financial data”, current assets were recorded as $97,716.00 and current liabilities were recorded as $97,704.00, resulting in shareholders’ equity of $12.00. A section of the annual return was specifically directed to the question of whether Northgate acted as a trustee. In that section, it was recorded that both the amount of liabilities incurred by Northgate as a trustee and the amount of its right to be indemnified out of the trust assets was $97,704.00 (equating to the total amount of current liabilities). Both Merilyn and Robert were recorded as directors and secretaries of Northgate, as well as shareholders with 6 shares each. Later annual returns (all signed by Robert as a director of Northgate) were also tendered, but it is unnecessary to refer to the detail.
Robert’s evidence was that his accountants (they changed over time)[10] prepared financial statements and tax returns each year, and provided secretarial services to Northgate, including the preparation of minutes of meetings for the distribution of trust income each year. Northgate’s balance sheet for 1996[11] recorded the “trust capital” as a settlement sum of $50.00. There was also evidence of Northgate obtaining finance from a bank “as trustee for The Floyd Family Trust”.
[10]See par 26 below.
[11]The Present Owners were unable to locate financial statements for Northgate prior to the trading period ended 30 June 1996.
Thus, there was a substantial body of evidence which put beyond doubt that the Family Trust was established in 1991 with Northgate as trustee, and that Northgate has continued to operate as its trustee since that time.
Accordingly, the only substantive issue on this question is whether, in fact, the Original Deed has been lost.
From the various accounts of the extensive searches completed, it is clear that the Original Deed is lost, and has been for some time. Uncertainty about the location of the Original Deed first arose in 2010. Unsuccessful searches were conducted by Merilyn, Penny and the internal accountant of Floyd Industries Pty Ltd (“Floyd Industries”) at that time (“the Internal Accountant”).[12] Again in 2014, the inability to locate the Original Deed was raised and despite Merilyn searching “everywhere”, the further searches were also fruitless.[13] Yet again, enquiries were made when the issue was addressed in early September of this year, but the whereabouts of the Original Deed remained unknown.[14] In short, the evidence established that all reasonable lines of enquiry had been pursued and the location of the Original Deed remained a mystery.
[12]Floyd Industries was originally established by Robert in 1974 under the name “RF & MR Floyd Partnership” and conducted an electrical services business. The Internal Accountant, who commenced working at Floyd Industries in 2010, gave evidence that she had never seen a copy of the Original Deed.
[13]There was evidence that searches were also conducted by others at various locations. In 2014, legal advice was sought as to what steps should be taken in response to the loss of the Original Deed. This advice, which included that Northgate should seek advice from this court in its capacity as trustee, was not acted upon (and different solicitors to those who gave this advice were subsequently retained): see par 60 below.
[14]A solicitor acting for the Present Owners provided a long list of persons who had been contacted in this regard, together with a description of searches made through a large volume of documents.
In relation to how this eventuated, it is likely the Original Deed was lost upon the Present Owners deciding to change accountants. This first happened in around the middle of 1992 (“the Second Accountant”),[15] and again in 2010 (“the Third Accountant”).[16] For the purpose of changing accountants in 2010, Merilyn gave evidence that she assembled a “box” of documents and taped it up to be transported. It seems this box never arrived at the Third Accountant’s offices and Merilyn could not be certain whether the Original Deed was 1 of the documents that was included in the missing box. Enquiries were made at that time to both the Second Accountant and the Third Accountant, neither of whom could shed any light on the whereabouts of the Original Deed.
[15]Robert explained that, upon the appointment of the Second Accountant in 1992, the First Accountant would have arranged for the Original Deed to be forwarded to the Second Accountant.
[16]For completeness, while the Present Owners retained the same firm between 1992 and 2010, there was a change in the person who looked after their affairs within that firm.
Further, the Present Owners have proceeded for some time on the basis that the Original Deed has been lost. Its loss was recorded in the Later Deeds,[17] which were duly executed by each of the Present Owners. The evidence demonstrated that the Present Owners were acting on reasonable grounds in early 2015 insofar as they decided to proceed on the basis that the Original Deed could and would not be found.
[17]The Later Deeds also referred to the possibility of the Original Deed having been destroyed, but there was no evidence of its actual destruction.

Accordingly, both questions as to the establishment of the Family Trust and the loss of the Original Deed must be answered in the affirmative.

C. Is there secondary evidence that can be relied upon to prove the contents of the Original Deed?

C.1 Lay evidence

Merilyn’s evidence of what the terms of the Original Deed might have been was almost non-existent. In substance, she could only say that she was sure that she and Robert were named as beneficiaries of the Family Trust in the Original Deed.
However, there were various pieces of evidence that, when viewed collectively, paint a picture of what the Original Deed must have contained in numerous material and adequate respects.
Robert gave evidence that, in giving instructions to establish the Family Trust, he would have required that it operate for the benefit of himself and Merilyn in the first instance, and ultimately for Penny and Jodi.[18] He further stated that he would have instructed that a trust be established on terms that were thought to be best for his family circumstances. Furthermore, having no expertise himself, Robert gave evidence that he would have followed the advice he received in relation to establishing the Family Trust. Although he could not recall reading the Original Deed, Robert was able to recollect that the Original Deed “was in Merilyn and my names” and that he had the power to add or take away members of the Family Trust. Moreover, he recollected that the people who were “named in the trust ‘under’ Merilyn and me were Penny and Jodi”.
[18]Obviously, this evidence was not based on any actual recollection. In the circumstances, it was appropriate that an account be given of Robert’s belief as to what had occurred and the basis of that belief.
An email sent by the Internal Accountant to the Third Accountant on 28 March 2014 also touched on this point. That email recorded that the Internal Accountant had spoken with Merilyn and Robert and she understood from the discussion that there were “not any ‘unusual’ or ‘specific‘ clauses in relation to the [Original] Deed”.[19]
[19]While this evidence is of limited probative value in relation to what the terms might have been generally (as neither Merilyn nor Robert have any expertise on what the terms of a discretionary trust deed would usually contain), it does corroborate the evidence that neither Merilyn nor Robert gave specific instructions about particular clauses that needed to be included in the Original Deed.
The First Accountant gave evidence that although he had no specific recollection, based on his usual practice he had no doubt that, in preparing the Original Deed, he would have given instructions to the Service Company that Merilyn and Robert were to be the primary beneficiaries, their children were to fall into the general class of beneficiaries that included persons falling within family lines and Robert alone was to be the appointor (and on his death Merilyn, and on her death her executor or executrix).[20] The First Accountant’s position was that he had an unwavering practice in 1991 of ensuring control of any family trust went only to the client that operated the business (which in this case was Robert), together with a practice of not including children as primary beneficiaries or giving children any powers whatsoever.
[20]Merilyn’s evidence was that she did not have any recollection of who the appointor of the Family Trust might have been under the Original Deed.
The First Accountant gave evidence that he was generally comfortable with putting himself forward as settlor to his clients when they were establishing a family trust, as he knew a settlor received no benefit. Thus, he may have been the settlor of the Family Trust.
The First Accountant also referred to his practice of retaining a particular solicitor at a large Melbourne law firm if a client required a trust deed to contain unusual or unique terms. The fact that he used the Service Company (rather than the Melbourne law firm) to obtain a trustee company and related documentation to establish the Family Trust indicated to him that there was nothing special or customised in the terms of the Original Deed.
Further, the First Accountant’s evidence was that he often dealt with the Service Company. When his clients required a trust to be established, his usual practice was to explain to the director of the Service Company that he needed a trust deed and to provide details specific to the particular clients, including their names and addresses, as well as the names of the primary beneficiaries and the appointor (or appointors) of the relevant trust.
Furthermore, the First Accountant’s evidence was that he would subsequently receive a trust deed from the Service Company that was approximately 25 to 30 pages long. That trust deed would contain a first and second page, which contained a preamble and a declaration of trust; then 10 pages of “conventional trustees’ powers to borrow money, acquire and sell property and shares and other assets”, which the First Accountant typically wanted to be in the broadest possible terms; then the balance of the trust deed, which contained various other powers of the trustee, including a power of variation; and finally the standard vesting date of 80 years from the time of execution of the deed. With respect to what would have been contained in any power of variation, the First Accountant provided no instructions to the Service Company and was never concerned about the wording used, as he generally anticipated any future variations of a trust would be minor (typically to avoid any unforeseen adverse tax consequences). Further, he said he did not have a general awareness that the scope of powers of variation may vary across different trust deeds, and was not concerned about the “nuances of the wording of a power of variation”, and instead only sought to ensure that a power to vary was included in any trust deed.
For the purposes of the Advice Proceeding, contact was made with an individual who was a director of the Service Company in 1991. The director confirmed he was a director up until about 2001, and that he held no documents of the Service Company. Further, he was unable to suggest where an example of a discretionary trust deed customarily used by the Service Company in or about 1991 could be located. Furthermore, the former director indicated that the preparation of trust deeds was subcontracted by the Service Company to lawyers in Melbourne, many of whom had died. He was not able to give any indication as to which lawyer might have prepared the Original Deed.
As part of an attempt to ascertain from the First Accountant the terms that were contained in the Original Deed, the Present Owners’ solicitors provided him with a copy of a family trust deed prepared by the Present Owners’ former solicitors in Wangaratta, Victoria, Stewart Thompson Francis & Purbrick. That trust deed, executed on 24 September 1992, was described on the cover page as a “Victorian Trust Deed” and was entitled “TF & GK Lee Family Trust” (“the Lee Family Trust Deed”). In repeating that he did not know the lawyers used by the Present Owners, the First Accountant stated that this trust deed was unfamiliar to him. Notwithstanding this, there are some observations that need to be made about this deed. There was only 1 appointor, TF Lee, and only 2 primary beneficiaries, TF and GK Lee.[21] Discretionary beneficiaries was defined to mean the primary beneficiaries together with, paraphrasing, their extended family. The deed also contained a variation clause (“the Example Variation Clause”) in the following terms:
The Trustees for the time being may with the consent of the Appointor at any time and from time to time by Deed of Appointment or other Deed revoke, add to or vary all or any of the trusts hereinbefore limited or the trusts limited by any variation or alteration or addition made thereto from time to time and may by the same or any other Deed or Deeds declare any new or other trusts or powers concerning the Trust Fund or any part or parts thereof the trusts whereof shall have been so revoked, added to or varied provided however that nothing in this clause shall authorise the Trustees to extend the Vesting Day later than the trust period as that expression is defined in clause 1(b) and so that such new or other trusts discretions, alterations or variations:–
(a)may relate to the management or control of the Trust Fund or the application or investment thereof or to the Trustees’ powers and discretions in these presents contained;
(b)shall not be in favour of or for the benefit of the Settlor or the Trustee;
(c)shall not affect the beneficial entitlement to any amount set aside for any Beneficiary prior to the date of the variation, alteration or addition.
(Emphasis added.)
[21]As these persons are not parties to the proceeding, their names have not been set out in full.
The solicitor who acted for the Present Owners in 1991 reviewed the Lee Family Trust Deed. After stating he had no recollection of preparing a discretionary trust deed for the Present Owners, he swore that if he had done so then it would not have been any different to this deed, save for the details in the schedule.
Penny gave evidence that she attended meetings with her parents at the First Accountant’s offices in 1991 and was told by the First Accountant, as well as Merilyn and Robert, that she and Jodi were beneficiaries of a discretionary trust. The First Accountant disputed this evidence. He said he had a strict practice of not including children in any discussion about the affairs of his clients, however he did concede it was possible it may have been mentioned that Penny and Jodi were beneficiaries of the Family Trust on 1 of his various visits to the Floyds’ family home. Neither witness was challenged in relation to the affidavit evidence in question and it is unnecessary to make any determination in this regard. The account given by Penny is entirely consistent with the evidence given by the other witnesses as to whom beneficial interests would be given, albeit different interests. Accordingly, the fact that the First Accountant denied such a conversation took place at his offices does not give rise to any controversy concerning the material underlying facts.
Penny also gave evidence of what she was told by Merilyn in 2010 when the issue of the missing Original Deed first arose. During that conversation, Merilyn stated that a lawyer from Wangaratta had prepared the Original Deed.[22] Although not entirely clear, this evidence appeared to conflict with the evidence given by the First Accountant.[23] His position was that, unless there were unusual terms to be included,[24] the Service Company engaged solicitors to prepare a trust deed, rather than the First Accountant or the client (albeit that evidence was based upon his usual practice rather than any specific recollection).[25] Further, the First Accountant had no recollection at all of the lawyers that were actually retained by the Service Company to prepare the Original Deed.
[22]In relation to the legal services provided in 1991, Merilyn’s evidence was that she did not have any recollection of which solicitor provided those services. She deposed that she recalled meeting a solicitor of the firm then known as Stewart Thompson Francis & Purbrick at offices in Wangaratta, but could not say whether it was for the purposes of setting up the Family Trust or for something else. Penny gave evidence that the only law firm in Wangaratta that dealt with “the Floyd family members” of which she was aware was the same firm referred to above (albeit under a different name). Robert’s evidence was simply that he could not recall the solicitor used to draft the Original Deed. The solicitor referred to by Merilyn also gave evidence that he had checked the deed register of the firm and that, although there were other deeds recorded with respect to the Present Owners, there was no reference to the Original Deed.
[23]It also conflicts with Merilyn’s evidence to the effect that she first became aware that the Original Deed was lost in about 2014. However, this evidence must be viewed in light of the fact that counsel for the Present Owners has previously informed the court that Merilyn has material difficulties with her recollection.
[24]See par 35 above.
[25]The Service Company was based in an eastern suburb of Melbourne and there was no evidence upon which to infer that the Service Company would have been likely to retain lawyers in Wangaratta.
C.2 Expert evidence
Frank Levy (“Levy”) is a practicing solicitor who was retained as an independent expert by the Present Owners and the Claimants jointly for the purposes of the Advice Proceeding.[26] Levy was admitted to practice as a solicitor in 1972 and at the time of giving his evidence had been qualified as a certified practising accountant for 51 years. Levy holds both a bachelor of laws and a bachelor of commerce from the University of Melbourne and is the principal at Sackville Wilks Pty Ltd. Throughout his career, Levy has had extensive experience in advising on and documenting a broad range of complex corporate and commercial transactions, acting for purchasers and vendors on all aspects of large-scale commercial property transactions, acting on all aspects of commercial and family transactions (such as drafting and advising on corporate and trust documentation, including discretionary trusts) and advising with respect to estate planning and the drafting of wills.
[26]As an independent expert, Levy agreed to act in accordance with order 44 of the Supreme Court (General Civil Procedure) Rules2015 (Vic) and the independent experts’ code of conduct.
Levy explained that instructions to prepare a discretionary trust deed usually came about either because a client came in with specific instructions and had a view of what was required, or as a result of him giving advice (often in conjunction with the client’s accountant) on how a client or clients might best arrange their affairs.[27] Levy described a family discretionary trust as a trust created by “the head” or “the parents” of a family in order to implement an asset protection strategy or a lawful income tax minimisation strategy. He gave evidence that he had prepared many trust deeds for these purposes over the years. Consistent with what he believed was industry practice at the time, he did not retain custody of these trust deeds, but forwarded them to his clients’ accountants as part of company secretarial files.
[27]Levy gave an extensive account of what he would usually advise his clients in this regard. There was nothing in this evidence to suggest that the advice that had been received by the Present Owners in 1991 was out of the ordinary.
As a result of this practice, Levy made enquiries of various persons and obtained copies of approximately 20 discretionary trust deeds he had prepared that were executed between 26 August 1980 and 1 July 1998. He also obtained a precedent discretionary trust deed published in the Australian Encyclopaedia of Forms and Precedents by Butterworths.[28]
[28]Butterworths, Australian Encyclopaedia of Forms and Precedents, vol 78 (1990) 15 Trusts “15.1 Deed establishing discretionary trust”, [12,201].
Levy gave evidence that in the early 1990s, banks operating in Australia realised that the power of a trustee to guarantee as generally provided in trust deeds did not encompass the power to guarantee and indemnify. As a result, he could recall doing a “raft of variations” to trust deeds to expand the power of trustees to give a guarantee to also include a power to give an indemnity. Further, he stated that the need for variation of trust deeds had become more prevalent because powers that were never contemplated in 1990 were necessary in today’s sophisticated commercial life. As such, over time Levy had been required to address issues concerning variation for a large number of trusts, including family discretionary trusts.
On 21 October 2022, Levy was sent a letter of instructions by the Present Owners’ solicitors. After setting out some background to the issues at hand, the letter of instructions referred to the 3 affidavits of the First Accountant relied upon in the Advice Proceeding.[29] In particular, Levy’s attention was directed to the First Accountant’s evidence concerning the Lee Family Trust Deed, including the Example Variation Clause. The letter of instructions then contained a series of questions. These will be dealt with seriatim, together with the responses provided by Levy based on his experience.[30]
[29]Some aspects of 1 of these affidavits were excluded on the basis that it was not something that had been conveyed back in 1991.
[30]The responses were provided in writing before the further hearing of this matter on 27 October 2022. When Levy was asked during the hearing if he wanted to elaborate on the responses, he stated that he did not believe there was any need to do so.
Question 1:Are you able to say what precedents were commonly used for trust deeds for family discretionary trusts established in Victoria in or about 1991?
Answer:I am unable to say what precedents were commonly used for a trust deed for family discretionary trusts established in Victoria in or about 1991. There has never been a requirement for a standard form family trust deed, as such each firm would use its own precedent for drafting a trust deed. That said, I am of the opinion that there was a very identifiable consistency in the drafting of trust deeds at the time.
Question 2:In relation to express powers of variation found in trust deeds for trusts created in the same or similar circumstances as set out … above:
(a) What purpose might have been served by limiting the power of variation in a trust deed for a family discretionary trust in 1991 to the power to only vary those parts of the deed which related to rights or obligations attaching to property?
Answer:None. Given that a client providing instructions for a discretionary trust most usually nominated himself or herself as the appointor and guardian, it is arguably counterproductive to limit the power of variation of the trustee to vary the trust deed any more than necessary. [For example]: so as not to offend the rule against perpetuities.
(b) What purpose might have been served by having wider powers of variation in a trust deed for a family discretionary trust in 1991 such that the power to vary those parts of the deed:
(i) extended to the power to vary administrative and managerial powers contained in the deed?
Answer:To facilitate variation for circumstances not foreseen at the time of the settlement, but which subsequently became necessary or desirable, particularly in the context of the changing complexity of commercial dealing.
(ii) extended to the right to vary the rights of those with vested interests in the trust, including those with a vested but defeasible interest in the trust by reason of their being takers in default of appointment upon of the vesting of the trust?
Answer:None, given that by definition takers in default would secure vested rights only in the circumstance of a neglect or failure by the trustee to resolve to deal with income or capital meaning that with the powers reserved to an appointor and/or guardian the need for such a power would not arise.
(iii) extended to the power to vary the identity of appointors to the trust?
Answer:None, given the power to nominate a successor is almost invariably reserved in the trust deed to the appointor.
Question 3:Would it have been more likely or not that a trust deed for a family discretionary trust created in 1991 in the circumstances set out … above would contain a power of variation:
(i) which was limited to the powers set out in paragraph 2(b)(i) above [that is, the power to vary administrative and managerial powers]?
Answer:        Most likely if not highly probable.
(ii) extended to include the powers set out in paragraph 2(b)(ii) above [that is, the right to vary the rights of those with vested interests in the trust, including those with a vested but defeasible interest in the trust by reason of their being takers in default of appointment upon the vesting of the trust]?
Answer:        Most unlikely.
(iii) extended to include the power set out in paragraph 2(b)(iii) above [that is, the power to vary the identity of the appointors of the trust]?
Answer:Most unlikely, for the reasons referred to in the response to paragraph 2(b)(iii).
Question 4:Were clauses such as [the Example Variation Clause] commonly found in trust deeds drawn by Victorian solicitors in 1991?
Answer:Yes, subject to the proviso that more often than not, trust deeds of that vintage required that consent to any variation be provided by a guardian and not by the appointor, although I cannot recall an instance where the person or persons named in a schedule to a trust deed as the appointor were not also named as the guardian.
Question 5:Was it likely that a clause such as [the Example Variation Clause] would have been similar to the variation clause in the [O]riginal [D]eed for the [Family Trust] in circumstances set out … above?
Answer:        Yes, most likely.
Question 6:Which precedents did Victorian solicitors commonly use for trusts established in the circumstances set out … above, and were any such precedents used more frequently than others?
Answer:Whilst there is great similarity in content, format and substance in trust deeds drafted at the time, (more so than I observe to be the case today), I am not familiar with any precedent as such then used by practitioners. If one accepts that in the day, the 15 volume set of The Australian Encyclopaedia of Forms of Precedents 3^rd Edition published in 1990 by Butterworths Australia was one of, if not the most commonly used and authoritative reference for precedents for legal documents, I believe that the precedent for a discretionary trust provided by Butterworths is one that is radically different to any I have known to have been used by practitioners.

Both based on his recollection and an examination of the documents he retrieved, Levy confirmed in his oral evidence that the powers referred to in the Example Variation Clause were powers that were typically contained in variation clauses in discretionary family trust deeds created in Victoria in the early 1990s.
Levy was asked some questions about the category of beneficiaries referred to as primary beneficiaries. He gave evidence about having received instructions from time to time to prepare the necessary documentation for a trustee to remove a primary beneficiary from that category. When asked whether the Example Variation Clause would provide the power to add to the class of primary beneficiaries, he declined to express an opinion and said it raised “some nice questions of law”. Not surprisingly, Levy said he would want to look at what the particular variation clause actually said in conjunction with the remainder of the trust deed. Further, when enquiry was made of him on the basis of “a matter of practice in 1991” during this line of questioning, Levy made the general observation that he was not comfortable with the proposition that the power to vary a trust deed extended to varying the schedule to the deed and that he would have to look very closely before coming to a view as to whether it could be done. Earlier in his evidence, he noted that in all his years of practice he had not come across a situation where primary beneficiaries were added to (rather than removed from) a trust deed.
C.3 Matters established by the secondary evidence and related matters
The evidence established that it was highly likely that the First Accountant retained the Service Company to prepare the Original Deed without giving any specific instructions beyond the particulars required for the schedule to the trust deed which became the Original Deed. The only other realistically possible scenario was that the Original Deed was prepared by the Present Owners’ solicitors in Wangaratta. On this alternate but less likely scenario, the evidence also suggested that no particular instructions were given by Merilyn or Robert about the specific terms any trust deed was to contain, beyond providing their personal details and nominating the primary beneficiaries, the general beneficiaries and the appointor. Further, on either scenario it is uncontroversial that Merilyn and Robert were advised, and so determined, to have a company as trustee and that the settlor ought be someone not beneficially interested in the Family Trust (most likely the First Accountant).
Accordingly, on either scenario the following matters have been established on the balance of probabilities in relation to the likely contents of the Original Deed:

(1) Northgate was appointed as trustee.[31]
[31]See pars 19-23 above.

(2) The primary beneficiaries were Merilyn and Robert.[32]
[32]See pars 33, 41 above.

(3) The general beneficiaries were Penny, Jodi and (not by name but by description) the immediate and extended family of descendants of Merilyn and Robert.[33]
[33]Ibid.

(4) The settlor was the First Accountant[34] (or possibly a solicitor) for a settlement sum of $50.00.[35]
[34]See par 34 above.
[35]See par 22 above.

(5) The appointor was Robert.[36]
[36]See pars 33, 47 above.

(6) If there was a guardian (which seems highly unlikely),[37] it was Robert.[38]
[37]See par 36 above; and noting that the Lee Family Trust Deed only made provision for a single appointor and no guardian: see par 39 above.
[38]See par 47 above.

(7) The trustee’s general powers concerned with borrowing, purchasing and selling property, and dealing with the trust property on behalf of the Family Trust were very wide, but the specific detail remained uncertain.[39]

(8) There was a variation clause which, with the consent of the appointor (or if there was a guardian, the guardian), gave the trustee power to make revocations, additions, variations or alterations of the kind and with the limitations set out in the Example Variation Clause, but this power on its face did not include the power to extend the vesting date, or to replace the appointor or appoint a new appointor.[40]

[39]See pars 35, 37 above.

[40]See pars 37, 39-40, 47 above. It is noted that the Example Variation Clause expressly refers to new discretions, alterations or variations in relation to (amongst other things) the “Trustees’ powers and discretions” but that there is no similar or other references to the appointor’s powers and discretions.

A central issue for determination in this case is the likely terms of any variation clause within the Original Deed. In short, the validity or otherwise of the Later Deeds or any part of them must be directly affected by what the variation clause would have permitted. It is uncontroversial that a trustee does not have any generally implied power to vary a trust deed, and is bound to administer a trust on the terms of the relevant deed as they stand.[41]
[41]Mercanti v Mercanti (2016) 50 WAR 495, 517-518 [81] (Buss P), and the cases there cited.
Before considering the evidence, it is instructive to refer to Re Owies Family Trust.[42] In that case, Moore J considered the proper construction of a variation clause in a family discretionary trust deed in order to determine whether it authorised varying the identity of the guardian and appointor.[43] He held that it did not.[44] Interestingly for the purpose of considering the likely content of any variation clause in the Original Deed, the trust in Re Owies Family Trust was settled by deed executed on 30 November 1970 which included a variation clause that was in very similar terms to the Example Variation Clause.[45]
[42][2020] VSC 716.
[43]Ibid, [11(1)].
[44]Ibid, [76], [78]-[80], [82]-[84], [92]. This conclusion was reached after also considering the other provisions of the trust deed (ibid, [29]-[38]) and construing each provision, including the variation clause according to its natural meaning and in such a way to give it its most ample operation in the context of the trust deed read as a whole: ibid, [71], referring to Mercanti v Mercanti (2016) 50 WAR 495, 518 [82] and Kearns v Hill (1990) 21 NSWLR 107, 109F (Meagher JA, with whom Mahoney and Clarke JJA agreed). In relation to the construction of deeds of trust, see also Byrnes v Kendle (2011) 243 CLR 253, 273 [53] (Gummow and Hayne JJ), 289-290 [113]-[114] (Heydon and Crennan JJ).
[45]Ibid, [4], [28]. The material difference being that in the Owies family trust deed, consent of the guardian was required for any variation, rather than the consent of the appointor: see also par 47, answer 4, above. Consistent with the evidence of the First Accountant and Levy concerning the usual position as to the nomination of an appointor, in Re Owies Family Trust the husband (and after his death, the wife) was both the guardian and the appointor of the relevant trust: ibid, [18].
Further, while acknowledging it is a decision of the New South Wales Court of Appeal rather than a Victorian court, observations made by Meagher JA (who wrote extensively in this area of the law ex curia) in Kearns v Hill are of considerable assistance.[46] His Honour (with whom Mahoney and Clarke JJA agreed) recorded the position concerning the common use for many years of trust deeds designed to deal with the disposal of family assets in a manner where the trustees are provided with “the most ample powers of management and disposition of the settled fund coupled with maximum flexibility in the use of those powers, so as to accommodate the settled fund to emerging and ever-changing economic and revenue considerations”.[47] In a concurring judgment, Mahoney JA noted that the precedent books showed that discretionary trusts had “in more recent times” (that is, up to 1990), “been used to provide to the [settlor] or the person having the benefit of the power of variation the power to make fundamental changes in the structure of the trust document and the entitlements under it”.[48]
[46](1990) 21 NSWLR 107.
[47]Ibid, 109D.
[48]Ibid, 108B.
Thus, the evidence in this case and the authorities of the time speak in unison about the prevalence of variation clauses in discretionary trust deeds that were broad in nature so as to provide adaptability for the trustee depending on changing circumstances.[49] Further, on the evidence before the court it appears highly likely that the variation clause in the Original Deed would have been in terms the same or substantially the same as those contained in the Example Variation Clause. I so find.
[49]The very minor exception to this was the First Accountant’s evidence to the effect that he was not concerned about whether a power of variation was wide or otherwise: see par 37 above. However, this evidence was not a comment on the actual terms used within a variation clause (about which he was not familiar), nor did it reflect any actual instructions given by the First Accountant at the time.

D. Does the Family Trust fail for uncertainty?

A trust must be sufficiently certain for a trustee to be able to discharge its obligation to act in strict conformance with the terms of the trust.[50] Accordingly, for this application to succeed, the terms of any deed governing the Family Trust must be ascertained.[51] By the probative secondary evidence adduced, the creation and ongoing existence of the Family Trust and the key terms of the Original Deed have been established. However, insofar as this question requires consideration of the actual terms of the Family Trust, it cannot be properly addressed without considering events that occurred after the Original Deed had been lost, and was accepted as lost and acted upon. In any event, it is not necessary for present purposes to make any determination about whether all necessary terms of the Original Deed have been proven (such that the failure of the Family Trust by reason of uncertainty might have been avoided) because of the execution of the Later Deeds which varied the terms governing the Family Trust.
[50]Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484, 498 [32] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).
[51]Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771, [90] (McMillan J).
In order to address events that occurred after the loss of the Original Deed had become known, it is necessary to consider the meaning and operation of the Example Variation Clause that has been found to form part of the Original Deed.
Breaking the Example Variation Clause down into various components, the power to vary includes: (1) the power to revoke, add to or vary all or any of the trusts, including by varying any variation, alteration or addition; (2) the power to declare other powers concerning the trusts, thus allowing an extension of the powers specified; (3) a proviso regarding the rule against perpetuities; (4) an identification of what the “new or other” trusts, discretions, alterations or variations may relate to, namely (a) management or control of the trust fund, (b) investment of the trust fund, or (c) the powers and discretions of the trustee as contained in the Original Deed; and (5) a further limitation requiring any new trusts, discretions, alterations or variations to (a) not be in favour of or for the benefit of the settlor or the trustee, and (b) not affect the beneficial entitlement to any amount set aside for any beneficiary before the date of the variation, alteration or addition.
As may be seen, the Example Variation Clause expressly contemplates the possibility of a later deed being executed which could make significant changes to the relevant trust deed. Accordingly, provided that any subsequent deed comprising a variation of the Original Deed had the approval of the appointor (being Robert) and fell within the ambit of the matters set out immediately above, then Northgate would be able to continue to function in its capacity as trustee with sufficient certainty so as to be able to discharge its obligations in accordance with the terms of the Family Trust (at least from the time of the adoption and execution of the subsequent deed). The fact that Robert and Northgate did not turn their minds to the precise terms of any power of variation could not undermine the legitimacy of what occurred if the execution of a later deed was within power.[52] Further, to the extent it might be thought that any subsequent deed went beyond what was contemplated by the Example Variation Clause, then in an appropriate case[53] such part or parts of that deed within power might remain and those beyond power might be severed[54] in order to enable the Family Trust to continue to operate.[55]

E. What is the effect of the execution of the Later Deeds?

[52]Orlanski v Spiegel [2015] VSC 662, [62] (Ginnane J).

[53]As to which, see Re Hastings-Bass, decd [1975] Ch 25, 41F (Megaw, Buckley and Roskill LJJ), where the English Court of Appeal held that if a trustee acts in good faith in exercising a discretion provided under a trust deed, the court should not interfere with her or his action unless what is achieved is unauthorised by the power conferred upon the trustee. In the circumstances of that case, the Court of Appeal found that a trustee having a proper understanding of its powers would not have acted as it did in part or at all if it had been acting within power. This was subsequently referred to as “a principle which may be labelled ‘the rule in Hastings-Bass’” in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587, 1624B (Warner J). See also Pitt v Holt [2012] Ch 132, 166-172 [81]-[101], 201-202 [222] (Lloyd LJ), 203 [227] (Longmore LJ), 203-204 [231]-[232] (Mummery LJ); Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409, 415-417 [17]-[20], 417-418 [23]-[24], 421 [33] (Lightman J). There are a number of Australian cases that refer to this “rule”, including a decision of this court where Byrne J queried whether it applied in Victoria: Sinclair v Moss [2006] VSC 130, [17(4)]. It is unnecessary to explore this further for the purposes of this application as there is no doubt on the evidence that Northgate as trustee and Robert as appointor were unequivocal in their desire to execute a new trust deed to replace the Original Deed and there is no suggestion that they would have refrained from executing the Later Deeds (together with Merilyn) substantially in the manner that they did: see pars 60-63, 70-83 below.

[54]For a time, the Claimants sought to base a case on rectification, but after some discussion this was ultimately withdrawn.

[55]Bestrustees v Stuart [2001] EWHC 549 (Ch), 22.8-24.4 (Neuberger J), referred to with approval in Burrell v Burrell [2005] EWHC 245 (Ch), [25] (Mann J) in declaring invalid only those parts of the appointment in question that were beyond power.

E.1 Reasons for the execution of the Later Deeds

As already touched upon, the Later Deeds were prepared and executed as a result of the inability to locate the Original Deed. Despite receiving advice from their solicitors to approach the court,[56] in 2014 and early 2015 the Present Owners acted upon the advice of the Third Accountant to obtain a “replacement trust deed”. Accordingly, the Third Accountant retained new solicitors to prepare the relevant documents.
[56]See fn 13 above.
In June 2014, these new solicitors were asked what details were required to proceed with the replacement trust deed. After some further correspondence, in July 2014 the Third Accountant instructed the solicitors to “go ahead with the replacement trust deed for the following: …”. The email then set out the name of the trust as “Floyd Family Trust”, the trustee as Northgate, the appointors as Merilyn and Robert, and the beneficiaries as Merilyn and Robert.
Merilyn and Robert gave evidence that it was never explained to them that the documents then being created and executed might be construed as bringing about a new trust or that any new trust might have consequences for Northgate with respect to any right to be indemnified from the trust assets for liabilities that had been previously incurred.[57] Put simply, according to their respective understandings in 2015, Merilyn understood the Later Deeds were being executed to “fix the problem” caused by the loss of the Original Deed, while Robert understood it was a “straightforward process” to replace the Original Deed. Further, neither Merilyn nor Robert had any recollection of giving any instructions to a solicitor or accountant with respect to the details contained in the Later Deeds.
[57]This evidence was responsive to legal advice later provided to the Present Owners to the effect that this might have been the consequence of executing the Later Deeds. See Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 268 CLR 524, 542-544 [29]-[32] (Kiefel CJ, Keane and Edelman JJ) in relation to a trustee’s rights of indemnity and exoneration.
Robert’s understanding was also that it was necessary to create a replacement deed to “allow ‘things’ to carry on”. He said, based on discussions he had with the Third Accountant, that he understood the exercise involved was to “reconstitute the document” that had been lost.
E.2 Terms of the Later Deeds
The Later Deeds consisted of a “declaration of trust” (“the 2015 Declaration”) and a trust deed (“the 2015 Trust Deed”), both executed on 24 February 2015.[58] The 2015 Declaration was executed by Northgate as trustee, and Merilyn and Robert purportedly as appointors, and included the following:
[58]Although the words “declaration of trust” might have been thought to indicate an intention to create a new trust, it was plain from the language used that it was intended to facilitate the continued operation of the Family Trust. This intention was also reflected in the fact that the 2015 Trust Deed specifically recorded that the identification of a settlor was “Not Applicable”.
RECITALS
R1In or about 1991 the Floyd Family Trust (“the Trust”) was established by Trust Deed (“the Deed”).
R2       The Trustee [that is, Northgate] is Trustee of the Trust.
R3       The Appointors are the Appointors of the Trust.
R4       The Trust Deed has been lost or destroyed.
R5       The Trustee and the Appointors wish to confirm:
i.the existence of the Trust;
ii.the holding of Trust assets upon trust for the Trust;
iii.the powers and duties of the Trustee and Appointors.
(Emphasis added.)
The operative part of the 2015 Declaration read:
NOW THIS DEED WITNESSETH:
…
3.The Trustee declares that it holds the assets set out in the attached Balance Sheet, which was true and accurate as at 30 June 2013, as Trustee of the Trust.[59]
4.The parties agree that henceforth the Trustee and the Appointor shall be bound by the provisions of the attached Trust Deed, and the Trust assets held by the Trustee upon the terms set out in the Trust Deed.
[59]There was no attempt to identify precisely what assets were the subject of the 2015 Declaration as at 24 February 2015 and there was no evidence as to what precisely the difference in asset holdings might have been at these 2 separate points in time.
The balance sheet for the Family Trust as at 30 June 2013 referred to total assets of $729,354.08 and total liabilities of $729,304.08, leaving net assets of $50.00. As part of the total liabilities, current liabilities totalled $537,767.54, of which the sum of $233,976.50 was recorded as a current liability owed to Robert and $303,791.04 was said to be owed to Merilyn. In addition, non-current liabilities consisted of 3 loans: 1 from Merilyn and Robert for $134,760.00, 1 from “Northgate Park Pastoral” for $48,641.79 and 1 from Floyd Industries for $8,134.75.

The 2015 Trust Deed, also executed on by Northgate as trustee, and, on its face, Merilyn and Robert as appointors, included the following:
DEFINITIONS
1.In this Deed, unless there is something repugnant to or inconsistent with the subject matter:
…
(5)“Appointor” means successively (subject to the provisions of clause 22) the person or persons successively named described or defined as such in Item 12 of the Schedule or determined according to the provisions of this Deed and where two or more persons are specified in Item 12 of the Schedule as acting jointly or contemporaneously means those persons acting jointly provided that the Trustees[60] may at any time (subject to clause 10 and notwithstanding the existence of other powers of removing or changing the Appointor contained in clause 22) by instrument in writing declare that any person who has not yet become Appointor but who would or might but for this proviso at some time become Appointor shall not become Appointor and if such declaration is so made that person shall not become Appointor notwithstanding that he or she is named as such in Item 12 of the Schedule;
[60]“Trustees” was defined to mean “[t]he person(s) named in Item 3 of the Schedule” (and only Northgate was named): see details of the schedule at the end of these extracts from the 2015 Trust Deed.
…
(15)“excluded class” means and include (sic) each of the following:
(a)the Settlor, spouse or de facto partners;
(b)any notional Settlor, spouse or de facto partners;
(c)every person claiming under or in right of the Settlor or of any notional Settlor[,] spouse or de facto partners;
(d)such other persons and corporations (if any) as may be named described or defined in Item 8 of the Schedule as additional members of the excluded class[61] –
[61]No persons were specified in Item 8.
provided that:
(i)a person shall not be a member of the excluded class if their name is expressly included in the Schedule as an additional member of the class of General Beneficiaries;
(ii)subject to clause 10 the Trustees may at any time and from time to time declare in writing that any person shall be a member of the excluded class notwithstanding that he or she is or might but for such declaration become a beneficiary and the class shall as from the date of making any such declaration be modified accordingly but so that this power shall not be capable of being exercised so as to derogate from any interest to which such beneficiary has previously become indefeasibly entitled whether in possession or in reversion or otherwise;
…
(17)“Guardian” means successively (subject to the provisions of clause 21) the person or persons (if any) successively named described or defined as such in Item 11 of the Schedule or determined according to the provisions of this Deed and where two or more persons are therein specified in Item 11 …;[62]
[62]No Guardian was specified in Item 11.
…
(28)“Specified Beneficiary” and “Specified Beneficiaries” means anyone named, described or defined as such in Item 6 of the Schedule and includes anyone who at any time or from time to time until the Vesting Day falls within any of the foregoing definitions or within any description referred to in Item 6 of the Schedule even though that person may not at the date of this Deed be in existence or fall within that definition or description and (in the case of trustees) even though at the date of this Deed the trusts or settlements of which they are trustees have not been established or do not fall within that definition or description;[63]
[63]For completeness, a definition for “General Beneficiaries” was also included. This definition included the Specified Beneficiaries and a large number of other persons or classes of persons, including the children and grandchildren of the Specified Beneficiaries together with the children and grandchildren of those first-mentioned children and grandchildren.
…
TRUSTEES ONLY LIABLE IF FRAUDULENT
9 9.1      A Trustee is not liable for:
(a)any loss or damage occasioned to the Trust Fund or any part thereof or to any person by the exercise of any discretion or power hereby or by law conferred on the Trustees or by any alleged failure to exercise any such discretion or power; or
(b)any breach of duty or trust whatsoever –
unless it is proven to have been committed made or omitted in personal conscious and fraudulent bad faith by the Trustee charged to be so liable.
9.2Anyone claiming any interest in the income or capital of the Trust Fund shall be deemed to take with notice of and subject to the protection hereby conferred on the Trustees.
RESTRICTIONS ON EXERCISE OF POWERS BY TRUSTEES
10Subject always to any express provision to the contrary herein contained every discretion vested in the Trustees shall be an absolute and uncontrolled discretion and the Trustees shall have the like discretion in deciding whether or not to exercise any such power PROVIDED notwithstanding anything contained in this Deed:
10.1the Trustees may before exercising any discretion or power vested in them or making any determination hereunder consult the wishes of the Guardian (if any) but without any obligation being imposed on the Trustees to follow or give effect to any wishes expressed by the Guardian;
10.2the Trustees may subject to this clause by instrument in writing revocably or irrevocably wholly or partially release abandon or restrict any power conferred on them by this Deed;
10.3subject to sub-clause 10.5 the Trustees shall not when there is a Guardian exercise the reserve powers or the restricted powers (as hereinafter defined) except after having given notice to the Guardian in accordance with clause 21;
10.4where a Guardian is named in the Schedule and there ceases to be a Guardian the Trustees shall not:
(a)exercise the reserved powers; or
(b)exercise the restricted powers in such manner as to impair or diminish the expectations of any Specified Beneficiary or of any other person or persons upon whom in the events which happen or pursuant to any appointment validly made under clause 4 the Trust Fund is to devolve on the Vesting Day –
PROVIDED NEVERTHELESS that the Trustees shall have power to make a declaration pursuant to the second provisos to sub-clause 1.2 and 1.3 in respect of any General Beneficiary who is adult and sui juris and who requests them to do so;
10.5the Guardian may at any time by instrument in writing revocably or irrevocably declare that henceforth all or any of the reserved powers or the restricted powers:
10.5.1shall cease to be reserved powers or restricted powers as the case may be and after any such declaration the Trustees shall be entitled to exercise such power or powers as though no Guardian had been named in the Schedule; or
10.5.2 shall be prohibited to the Trustees and after any such declaration the Trustees shall not be entitled to exercise such power or powers;
10.6notwithstanding anything contained in sub-clauses 10.3 or 21.5 the Guardian may in respect of any exercise by the Trustees of any reserved [or] restricted power waive the giving of notice as provided therein.
10.7     in this clause:
“reserved powers” means:
(a)the power under the second provisos to sub-clauses 1(15) and 1(16) to make declarations;
(b)the power under clause 1(15)(d) to nominate a General Beneficiary;
(c)the power under clause 1(34)(b) to appoint a Vesting Day later than the day specified as the Vesting Day in the Schedule;
(d)the power contained in the proviso to sub-clause 1(17);
(e)the power contained in the proviso to sub-clause 1(5);
(f)the power to appoint the Trust Fund under sub-clause 4.1;
(g)the power under clause 4.1 to revoke a revocable appointment validly made;
(h)the power contained in sub-clause 32;
(i)the power contained in sub-clause 10.2 of this clause;
“restricted powers” means:
(a)the power under sub-clause 1(34)(a)(ii) to appoint a Vesting Day earlier than the day specified as the Vesting Day in the Schedule;
(b)the powers contained in sub-clause[s] 6.1, 6.2 and 6.3;
(c)the powers contained in sub-clauses 7.29 and 7.30;
“power” includes authority and discretion.
…
PROFESSIONAL REMUNERATION
12Subject to clause 27, if any of the Trustees is a solicitor or accountant, they, or any firm of which they are a partner, are entitled to make all usual and proper charges for both their professional and other services in the administration of the trusts and for their time and trouble that they would have been entitled to make if they had been a Trustee and so employed.
TRUSTEES’ REMUNERATION
1313.1     Subject to clause 27 any Trustee (other than a company of which any member of the excluded class is a director [or] shareholder) may from time to time charge and retain from the Trust Fund such Trustee’s commission as is reasonable having regard to any charges from time to time being made and paid under clause 12 and as is approved by the Appointor PROVIDED THAT where any Trustee is a corporation which carries on or holds itself out as carrying on as part of its ordinary business the business of acting as a trustee and it publishes a scale or notice of the fees which it charges or on which it is prepared to act as a trustee then the remuneration payable to that corporation as a Trustee of this Settlement shall be in accordance with the scale or notice of fees published by that corporation as in force from time to time or such lesser amount as that Trustee may elect to charge.
13.2No discretion or power conferred by this deed may be exercised, and no provision of this Deed operates, so as to confer any direct or indirect benefit in the Trust Fund to the Settlor or the Trustees (other than remuneration under clauses 12 and 13.1).
13.3If any of the Trustees is a company with a sole member who is also a beneficiary, it is not taken to be in breach of clause 8.1(a) by paying or transferring income or capital to, or by applying income or capital for the benefit of, that sole member. If the sole member is also the sole director of one of the Trustees, then clause 10.9 applies.
13.4If any of the Trustees is a natural person and he or she becomes a director of a company in which any assets of the Trust Fund are invested, then he or she may receive director’s fees or other remuneration as a director of that company without being liable to account for it.
13.5The Trustees may exercise, or concur in exercising, all powers and discretions under this Deed or by-law even though:
(a)it; [or]
(b)a person who is a director or member of any of the Trustees—
has or may have a direct or indirect interest in the mode or result of exercising that power or discretion, or may benefit either directly or indirectly as a result of the exercise of that power or discretion.
13.6Neither the Settlor nor the Settlor’s spouse, if either or both of them is one of the Trustees, shall be entitled to charge or be paid or retain any or any share of any professional or other charges by reason of this clause or be relieved from any liability to account as trustee for any money or assets.
…
TRUSTEES’ RIGHT TO REFUSE DISCLOSURE
19Without prejudice to any right of the Trustees under the general law to refuse disclosure of any document it is hereby declared that the Trustees shall not be bound to disclose to anyone any of the following documents:
(a)any document disclosing any memorandum of the wishes of the Appointor or Guardian or any deliberations of the Trustees (or any of them) as to the manner in which the Trustees should exercise any power or any discretion conferred upon the Trustees by this Deed or disclosing the reasons for any particular exercise or non-exercise of any such power or any such discretion or the material upon which such reasons shall be or might have been based;
(b)any other document relating to the exercise or proposed exercise of any power or any discretion conferred on the Trustees by this Deed (not being legal advice obtained by the Trustees at the cost of the Trust Fund).
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PROVISIONS RELATING TO THE GUARDIAN
2121.1     The Guardian for the time being may by notice in writing to the Trustees under his or her own hand declare that anyone who has not yet become Guardian but who would or might but for this clause at some time become Guardian shall not become Guardian and if such notice is given that person shall not become Guardian notwithstanding any provision of this Deed including any provision in the Schedule to the contrary effect.
21.2The Guardian for the time being may by notice in writing to the Trustees under his or her own hand (being the same notice as is referred to in sub-clause 21.1 or a different notice) nominate one or more persons (whether natural persons or corporations and wherever resident or incorporated) to be his or her successor as Guardian (herein called a “Succeeding Guardian”) and upon the person then entitled to act as a Guardian ceasing for whatever reason to be entitled to act as such the Succeeding Guardian shall become the Guardian to the exclusion of anyone who would otherwise become Guardian under any other provision of this Deed.
21.3ANY notice given by a Guardian under sub-clauses 21.1 and 21.2 may unless the notice was expressed to be irrevocable be withdrawn by the Guardian giving the same.
21.4A Succeeding Guardian (when entitled to act as Guardian) shall have the right to nominate a person to succeed him or her as Guardian in accordance with the foregoing provisions of this clause and each Succeeding Guardian shall thereafter in turn whilst entitled to act as Guardian have the like right to appoint a person to succeed him or her as Guardian.
21.5Fourteen days prior to the exercise of any reserved or restricted power the Trustees shall serve written notice on the Guardian of their intention to exercise such powers setting out the manner in which they propose exercising such power and no reserved or restricted power shall whilst there be a Guardian be exercised by the Trustees otherwise than in the manner specified in such a notice and shall not be exercised prior to the expiration of that period of fourteen days.
21.6Any notice of the kind referred to in sub-clause 21.5 shall lapse and cease to have effect unless the Trustees exercise the power referred to therein within sixty days of the date of service of the notice and no exercise of that power may then take place pursuant to that notice but without prejudice to the right of the Trustees to give a fresh notice under sub-clause 21.5 of this clause in respect thereof.
21.7Where any new trustee is appointed or any Trustee is removed or retires or ceases to act as a Trustee any notice of the kind referred to in sub-clause 21.5 then current shall lapse and the power referred to therein shall not be exercised pursuant to that notice but without prejudice to the right of the Trustees holding office thereafter to give a fresh notice under sub-clause 21.5 in respect thereof.
21.8The giving of a notice under sub-clause 21.5 shall not oblige the Trustees to exercise the power referred to therein.
21.9Any notice to be served under this clause may be served by delivering it to the Guardian personally or personally to any agent nominated for that purpose by the Guardian and in default of any later nomination of agent for the purpose shall be the agent nominated in Item 14 of the Schedule as the Guardian’s Agent (if any).[64]
[64]No Guardian’s Agent was specified in Item 14.
21.10No persons having any dealing with the Trustees shall be obliged to enquire and no person other than the Guardian the Appointor and the Specified Beneficiaries shall be entitled to enquire whether the provisions of this clause have been complied with and all persons other than the Trustees shall be entitled to assume that they have been complied with.
REMOVAL AND APPOINTMENT OF TRUSTEES
2222.1     The Appointor for the time being or in the event of there being no Appointor the legal personal representatives of the last surviving Appointor who was an individual and who died whilst he or she was the Appointor (and if there be different legal personal representatives in respect of different parts of his or her estate then the legal personal representatives nominated for the purpose in any will of such survivor and in default of such nomination the legal personal representatives who obtained first in point of time Probate or other the (sic) legal right to administer any part of the estate of the survivor) shall be entitled by instrument in writing at any time and from time to time:
(a)to remove any Trustee;
(b)to appoint any additional Trustee or Trustees;
(c)to appoint a new Trustee or Trustees in the place of any Trustees who are removed or who resigns their trusteeship or cease to be Trustees by operation of law –
PROVIDED THAT:
(1)if and so long as the Appointor is a beneficiary, he or she shall not be eligible to be appointed as Trustee;
(2)if there is no Appointor named in the Schedule or if at any time there is no one entitled to exercise the power of the Appointor hereinbefore conferred the Statutory and other rights of removing the appointing Trustees may be exercised by the Trustees or by the legal personal representative or, if the Trustee is a corporation, the liquidator of the last surviving Trustee;
22.2Any Appointor who is entitled to act as Appointor for the time being may while he or she is entitled so to act nominate by notice in writing under his or her hand a person (whether an individual or corporation) and whether resident or incorporated to be his or her successor as Appointor (“Succeeding Appointor”) and upon delivery of such notice to the Trustees the Trustees shall be bound to endorse on this Deed a Memorandum of such notice and after service of such notice and upon the person then entitled to act as Appointor ceasing (for whatever reason[)] to be entitled to act as Appointor the Succeeding Appointor shall (unless the notice is expressed to be revocable and is revoked) become the Appointor to the exclusion of any Appointor who would become Appointor under any other provision of this Deed including any provision in the Schedule relating to or defining the Appointor.
22.3The giving of a notice under sub-clause 22.2 shall not have the effect of disentitling the person then entitled to act as Appointor from continuing so to act but (unless such notice is expressed to be revocable) he or she shall not thereafter be entitled to give way further notice under sub-clause 22.2 unless he ceases to be Appointor and is thereafter appointed as a Succeeding Appointor in which case the provisions of the sub-clause 22.5 shall apply to him or her.
22.4Upon the giving of a notice under sub-clause 22.2 the provisions in this Deed (including the Schedule) relating to the persons becoming or becoming entitled to act as Appointor shall cease to operate in so far as they have not by then operated and the provisions of this clause shall then govern the persons entitled to act as Appointor but the foregoing shall not prevent the application of the provisions relating to the personal representatives of the last surviving Appointor contained in sub-clause 22.1.
22.5A Succeeding Appointor (when entitled to act as Appointor) shall have the right to nominate a person to succeed him or her as Appointor in accordance with the foregoing provisions of this clause and each Succeeding Appointor shall thereafter in turn whilst entitled to act as Appointor have the like right to appoint a person to succeed him or her as Appointor.
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RESIGNATION AND APPOINTMENT OF TRUSTEES GUARDIAN OR APPOINTOR
2424.1 Any Trustee Guardian or Appointor and any person who may by succession become Trustee Guardian or Appointor may resign or renounce such position by notice in writing to the Trustees or if the resignation or renunciation is that of the sole remaining Trustee or Trustees by notice in writing to the Appointor and if there then be one and forthwith upon the giving of such notice the person giving the same shall for all purposes hereunder cease to be a Trustee Guardian or Appointor or to be a person who may by succession become a Trustee, Guardian or Appointor (as the case may be) and if by virtue of holding that position he or she was a member of the excluded class he shall cease to be a member of that class provided that if at any time there is no Appointor or person other than the Trustees entitled to exercise the power of appointment provided in clause 22 a sole surviving Trustee or Trustees shall not resign except upon appointing a new Trustee or new Trustees in their place.
24.2If at any time the person then entitled to act as Appointor or Guardian has been declared insane or is a person whose estate or property is being administered under any law relating to persons who become incapable through mental illness such person shall be deemed to have resigned or renounced his or her position as Appointor or Guardian as the case may be and shall be deemed to have given Notice of such resignation or renunciation to the Trustees and the provisions of sub-clauses 24.1 and 24.3 shall operate in respect thereto in like manner as if actual notice thereof had been given to them.
24.3Upon the resignation or renunciation of the position of Appointor or Guardian by any person the provisions of this Deed (including the Schedule) relating to Appointors or Guardians shall operate as if the person who so resigned or renounced were dead but without prejudice to his or her rights if any otherwise under the Deed and he or she may thereafter be nominated and act as a Succeeding Appointor or Succeeding Guardian.
PARTICULARS OF CHANGES TO BE ANNEXED TO TRUST DEED
25 A copy of all instruments effecting a variation in the Vesting Day of all appointments under sub-clause 4.1 of every revocation addition or variation made under clause 32 and of all appointments made under clauses 21 and 22 respectively shall be endorsed on or attached to these presents and every such copy shall be sufficient evidence to anyone having dealings with the Trustees of this Deed as to the facts to which it relates.
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ARBITRATION OF DISPUTES BETWEEN JOINT GUARDIANS OR APPOINTORS
29All disputes which may occur during the continuance of the Trusts hereby created between the persons (if more than one) who may from time to time constitute the Guardian or the Appointor as to the manner in which the powers of the Guardian or the Appointor hereunder as the case may be are to be exercised or as to whether any such power shall be exercised shall be referred to arbitration as follows:
(1)Within two weeks after a party to the dispute gives to any other party notice in writing of the dispute a single Arbitrator shall be appointed by writing signed by all the persons who comprise the Guardian or the Appointor as the case may be.
(2)If no appointment is made within those two weeks then within a further two weeks each party to the dispute shall appoint an Arbitrator and before entering upon the reference the Arbitrators appointed under this sub-clause 29(2) shall select a person who in the event of the Arbitrators not being able within three months after that notice to agree upon an award as to any of the matters referred to them shall act as umpire in regard to the matters in dispute. In such case those matters shall be decided by the umpire and each Arbitrator may appear before the umpire as an advocate for the party by whom he or she was appointed. Provided that if any party does not appoint an Arbitrator within that further person of two weeks then the Arbitrator or Arbitrators appointed by the other party or parties to the dispute shall act on their own.
(3)An award made under this clause 29 is binding on the Trustees and all the beneficiaries.
(4)A document drawn in conformity with and expressed to be made under such an award which is executed by any one or more of the persons who at any time constitute the Guardian or Appointor shall be deemed to have been duly executed by all the persons who at the time of execution thereof constitute the Guardian or Appointor.
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REVOCATION AND AMENDMENT OF TRUST DEED
32 Subject to clause 33, the Trustees may, with written consent of the Appointor, at any time prior to the termination of the Deed:
(a)alter;
(b)vary; or
(c)revoke –
any trust or provision of this Deed other than this clause, clause 33 or clause 22 or which has the effect of allowing any distribution to the Settlor or any of the Trustees.
33       An alteration, variation or revocation under clause 32 must not:
(a)alter or modify any vested interest of a beneficiary in income or capital (or investments [that] represent such income or capital) or income derived from any such investment to which the beneficiary has become absolutely entitled pursuant to this Deed;
(b)infringe any law or rule against perpetuities or relating to remoteness of vesting or the period during which income may be accumulated or otherwise extend the termination date or result in any provision of this deed or trust becoming valid.
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SCHEDULE

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Item 2:

The Settlor:

Not Applicable

Item 3:

The Trustee:

[Northgate]

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Item 6:

The Specified Beneficiaries:

[Robert] and [Merilyn] and any children and future children thereof

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Item 12:

The Appointor:

[Robert] and [Merilyn]

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(Original emphasis.)

F. Severance of parts of the 2015 Declaration and the 2015 Trust Deed

F.1 The 2015 Declaration

The 2015 Declaration will need to be amended so that any reference to Merilyn as an appointor is deleted.
Initially, the Present Owners submitted it was erroneous to limit the assets referred to in the 2015 Declaration to the assets as at 30 June 2013, as to do so would give effect to a retrospective variation. Thus, it was submitted there was no valid reason to exclude any assets that might have become the subject of the Family Trust between 30 June 2013 and 24 February 2015. However, after considering the Claimants’ submissions it was accepted by the Present Owners that as a matter of construction there was an ability to change the assets of the Family Trust in this manner even if it would be a retrospective variation.[65] In my view, it does not matter whether the variation is characterised as retrospective or not, the effect of this variation was to declare a new trust which was plainly within power.[66]
[65]See Mercanti v Mercanti (2016) 50 WAR 495, 518 [82]-[83] (Buss P), referring to Gra-Ham Australia Pty Ltd v Perpetual Trustees WA Ltd (1989) 1 WAR 65, 85.2 (Malcolm CJ, with whom Nicholson J agreed); Global Custodians Ltd v Mesh [2002] NSWSC 47, [122(6)] (Young CJ in Eq).
[66]No advice was sought as to what the position was with respect to any trust assets in existence on 24 February 2015 that were not the subject of the 2015 Declaration because they did not fall within the description of “assets as at 30 June 2013”. Further, there was no evidence to suggest the proviso in subpar (c) of the Example Variation Clause was activated because of any beneficial entitlement being in existence during the relevant period.
F.2 The 2015 Trust Deed
Two general matters in relation to the 2015 Trust Deed may be addressed collectively.
First, similar to the position with the 2015 Declaration, insofar as Merilyn is referred to as an appointor in the 2015 Trust Deed, such references must be severed.
Secondly, any reference to “Guardian” in the 2015 Trust Deed must be severed. In short, there was no probative evidence to suggest that Robert or anyone else was appointed as a guardian of the Family Trust in 1991. Consistent with this general point above, clauses 10.1 and 10.3 to 10.7, 19, 21 and 24 were challenged insofar as they referred to a guardian because there would have been no power to establish a guardian. There was no opposition to this submission and it is accepted.
In relation to specific clauses, they will be dealt with sequentially.
The Present Owners submitted clause 1(28) and item 6 of the schedule were beyond power insofar as item 6 contained the words “and any children and future children thereof”.[67] It was also noted that there was no reference in the Example Variation Clause to an express power to amend the schedule to the relevant trust deed. This was also put on the basis that the addition of these words “may” vary the substratum of the Family Trust. Assuming for the sake of argument that this was the proper query to raise for the question at hand,[68] it is a query that is not possible to meaningfully answer in the absence of the Original Deed.[69] In any event, the inclusion of Penny and Jodi by the words used in item 6 fell within the scope of the language used in the Example Variation Clause and accordingly ought to remain.[70]
[67]Practically speaking, these additional words could only encapsulate Penny and Jodi.
[68]See Mercanti v Mercanti (2016) 50 WAR 495, 520-523 [100]-[112] (Buss P).
[69]Compare the comments in Kearns v Hill (1990) 21 NSWLR 107, 110G-111A (Meagher JA, with whom Mahoney and Clarke JJA agreed).
[70]Orlanski v Spiegel [2015] VSC 662, [62] (Ginnane J), referring to Kearns v Hill (1990) 21 NSWLR 107. See also Mercanti v Mercanti (2016) 50 WAR 495, 546 [264]-[265].
Clause 9 was challenged by the Present Owners on the basis that it is arguable that a limitation of the liability of Northgate as trustee involved neither a variation of the trust or of a trust power. There was no opposition to this submission and it is accepted.
Clauses 12 and 13 were submitted to be beyond power because it is arguable that neither of the clauses dealt with the variation of the trust or of a trust power. With the exception of clause 13.5, there was no opposition to this submission and it is accepted. As for clause 13.5, the Present Owners submitted this clause was for the benefit of Northgate as trustee. They contended that clause 13.5 would have the effect of redefining the relationship between the trustee and the trust and thus went beyond what was contemplated by the Example Variation Clause. As there was no evidence to suggest that a clause in the form of clause 13.5 was contained in the Original Deed, I accept this submission.[71]
[71]Accordingly, it is unnecessary to consider what other issues might arise from the inclusion of such a clause.
The Present Owners took issue with clause 22. It was submitted there was a question as to whether the power referred to (that is, the power to vary the rights of the appointor) could be said to involve a power to vary the trust or a trust power in circumstances where there was no evidence as to what the powers of the appointor were under the Original Deed. The Claimants submitted that the Example Variation Clause ought to be construed broadly, including to make fundamental changes to the Family Trust,[72] which ought to permit clause 22. In my view, the Present Owners’ submissions ought to be preferred. Both the expert and lay evidence strongly suggested that the position of Robert as appointor was something that would have been enshrined in the Original Deed so that he could maintain control over the Family Trust. Thus the surrounding circumstances would not suggest an interpretation of the Example Variation Clause that went beyond the ordinary meaning of the words used. As for the wording itself, it does not refer to any ability to vary or alter the identity or rights of the appointor. To put it more broadly, what is provided for in clause 22 as a whole appears to go beyond the confines of the Example Variation Clause.[73]
[72]See par 54 above.
[73]The removal of clause 22 may leave an issue in relation to the appropriate circumstances in which the trustee might be replaced. If there is any lacuna created by the severance of clause 22 from the 2015 Trust Deed (the Present Owners suggested there was not because of provisions in the Trustee Act 1958 (Vic)), then this may be addressed by a further deed being executed in the near future within the confines of the Example Variation Clause. As to whether this course ought to be adopted, naturally that is a matter for Northgate and Robert.
In relation to clause 24,[74] the parties made submissions which mirrored those made with respect to clause 22. For the same reasons as set out in the previous paragraph, clause 24 will be severed from the 2015 Trust Deed.
[74] Leaving aside the question of “Guardian” which has already been addressed.
Clause 25 contains references to other clauses that are to be severed. Accordingly, consequential changes need to be made.
Clause 29 must be deleted in light of the previous severances. In circumstances where there can be no joint appointors and no joint guardians, it would be nonsensical for the clause to remain.
Clauses 32 and 33, containing powers of amendment or variation which differ from the Example Variation Clause, should be severed. As a matter of principle, powers of amendment cannot be used to amend an amendment power itself insofar as the power of amendment in question contains restrictions and the proposed amendment would be inconsistent with them.[75] Clause 32 is far broader than the terms of the Example Variation Clause, and it would be incorrect to ignore the restrictions inherent in the Example Variation Clause. In any event, in circumstances where the 2015 Trust Deed was entered into without any thought as to what might or might not have been the variation clause under the Original Deed, it is appropriate that the finding that the Example Variation Clause was most likely to form part of the Original Deed be reflected in the instrument governing the continued operation of the Family Trust.
[75]See University of Adelaide v Attorney-General (SA) [2018] SASC 82, [17] (Stanley J) and the cases there cited; but see also Re McGowan & Valentini Trusts (2021) 63 VR 449, 488 [123] (Macaulay J).
The Claimants’ submission that the very existence of clauses 32 and 33 was indicative of the likely powers of variation under the Original Deed must be rejected. Save for clauses 32 and 33 themselves, there was no other evidence to suggest that such clauses were likely to have been included in the Original Deed. As has already been explained,[76] all the other evidence suggested the contrary.
[76]See pars 37,52-55, 59, 81 above.
Finally, consistent with what is stated above, there is a need to sever only the reference to Merilyn as appointor in item 12 of the schedule.
F.3 Further observations on this issue
In making the findings above, a conservative approach has been adopted in relation to whether or not the Example Variation Clause has resulted in the contentious parts of the Later Deeds being within power. This approach has been implemented to provide as much certainty as reasonably possible as to the validity of the Later Deeds and, consequently, the certainty with which Northgate may act as trustee of the Family Trust. This is essential for some of the immediate issues arising in the Main Proceeding. Further, this approach was appropriate in light of the somewhat agnostic attitude taken by the Claimants to some of the issues raised, which was adopted by them, appropriately, to save time and costs.
Self-evidently, if the approach taken is (as a matter of fact and law) too constrained and is so considered by Northgate as trustee and Robert as appointor, then they will be at liberty to make further variations in accordance with the part or parts that have been severed which fall within this category. Naturally, if they were to form this view and act accordingly, and any further variation were subject to challenge, the approach adopted above may be relevant to the determination of any dispute.

G. A further deed

Robert gave evidence of a further deed that was executed on 22 June 2021 “appointing a succeeding appointor of the trust”. His evidence was that he and Merilyn executed this deed on the understanding (as expressly stated in a recital) that the Family Trust was established in or around 1991. Beyond this, evidence was not adduced in relation to this deed.[77] Further, issues concerning provision in the Original Deed for the appointment of a succeeding appointor were not raised with the First Accountant, nor was the topic addressed as part of the expert evidence.
[77]In supplementary submissions, reference was made to further recitals and the operative part of the deed, although the deed had not been tendered.
The parties’ position was that this deed either was ineffective or it was irrelevant and need not be considered for the purpose of the Advice Proceeding. Thus, nothing said in these reasons bears upon the efficacy or otherwise of this further deed.[78]
[78]If a different approach had been taken by the parties it may have been necessary to give notice to another interested person; namely, the succeeding appointor purported to have been appointed by this further deed.

H. Further observations

In light of these findings, it is appropriate to refer to evidence concerning what rights, if any, Northgate has to be indemnified out of the assets of the Family Trust (in particular, in light of the execution of the Later Deeds). It suffices to say that there was some evidence before the court on this issue, but no submissions were made of any substance in this regard. The parties accepted that to the extent that any issue in this regard may exist, it ought to be determined in the Main Proceeding.[79]

[79]See also pars 14-16 above.

Answers and orders

The questions raised in the originating motion are answered as follows:
Is Northgate justified in managing and administering the Family Trust? Yes.
On what terms is Northgate justified in managing and administering the Family Trust? On the terms set out in annexure A to these reasons.
Orders will be made accordingly. In addition, it will be ordered that the parties’ costs of this application, including the costs of representation of William Trompf, Madison Trompf, Sophie Trompf, Samuel Trompf, Georgie Sherlock and Emily Sherlock, be taxed and paid out of the trust estate of the Family Trust on an indemnity basis.

J. Addendum

Following the delivery of these reasons on 23 December 2022, no final orders were made. The parties were given an opportunity to review the trust deed annexed to this judgment. The trust deed was revised in light of these reasons and now appears in an agreed form as shown in annexure A.
In the intervening period between the handing down of judgment in this proceeding and the recommencement of the trial in the Main Proceeding, the parties to the Main Proceeding reached a settlement agreement. However, a dispute arose in the Main Proceeding concerning whether the settlement affected the appropriateness of the proposed order for the costs of this proceeding. The costs dispute in the Main Proceeding was heard and determined on 6 March 2023. For the reasons stated in that judgment,[80] orders will be made in this proceeding substantially in the form set out above.[81]
[80]Floyd v Floyd [2023] VSC 115.
[81]See par 89-90 above.

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Item 2:	The Settlor:	Not Applicable
Item 3:	The Trustee:	[Northgate]
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Item 6:	The Specified Beneficiaries:	[Robert] and [Merilyn] and any children and future children thereof
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Item 12:	The Appointor:	[Robert] and [Merilyn]
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[2022] VSC 783

23 December 2022