NSW Masonic Youth Property Trust v Her Majesty's Attorney-General in and for the State of NSW

[2010] NSWSC 333

CITATION:	NSW MASONIC YOUTH PROPERTY TRUST & ANOR v HER MAJESTY'S ATTORNEY-GENERAL IN AND FOR THE STATE OF NSW & ANOR [2010] NSWSC 333
HEARING DATE(S):	Thursday 18 February 2010
JUDGMENT DATE :	28 April 2010
JURISDICTION:	Equity
JUDGMENT OF:	Hall J at 1
DECISION:	(1) A declaration that the present members of the Executive of the Fund known as “the Masonic Youth Welfare Fund of NSW & ACT” that is to say:- (a) Oliver Bergstrom; (b) Kevin Foster OAM; (c) Allan Elliott (d) Alan Pretyman; (e) Kenneth Mobbs; (f) John Sunman; (g) Hugh Davies; (h) Michael Morris; (i) Dale Berrier; (j) John Carroll, are the trustees of the said Fund. (2) A declaration that the plaintiffs hold the property consisting of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” as trustees de son tort. (3) A declaration that the objects of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” are those set out under the heading “Objects” contained in a document described as “Minutes of a General Meeting of the Representatives held at the Masonic Hall Castlereagh Street on Wednesday 28 March 1923”, a copy of which is annexed as Schedule 1 to these declarations and orders. (4) A declaration that the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” is held for charitable purposes for the relief of poverty. (5) A declaration that it is not practicable to apply any of the capital or income, including accrued surplus income, of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” for the charitable purposes declared in (3) above. (6) A declaration that the Fund known as “Masonic Youth Welfare Fund of NSW & ACT” be administered cy pres. (7) That from the date of the making of these orders, the whole of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” be applied in accordance with the scheme set forth in Schedule 2 to these orders. (8) That the plaintiffs be appointed as trustees of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” in substitution for:- (a) Oliver Bergstrom; (b) Kevin Foster OAM; (c) Allan Elliott (d) Alan Pretyman; (e) Kenneth Mobbs; (f) John Sunman; (g) Hugh Davies; (h) Michael Morris; (i) Dale Berrier; (j) John Carroll, as and from the date of the making of these orders. (9) That all property of the “Masonic Youth Welfare Fund of NSW & ACT” of whatsoever kind be vested in the plaintiffs as and from the date of the making of these orders. (10) Pursuant to s.81 of the Trustee Act 1925 (NSW), that the plaintiffs be granted power to sell, convert, transfer or otherwise dispose of any of their assets at any time for the general purposes of the fund known as the “Masonic Youth Welfare Fund of NSW & ACT”, including the payment of any costs properly incurred or ordered to be paid by them in these proceedings or any appeals therefrom. (11) A declaration that on or about 27 November 1972, the plaintiffs were validly appointed as trustees of the Fund known as the “Edith Boyd Memorial Trust Fund”.
CATCHWORDS:	TRUSTS – Trust (Masonic Youth Welfare Fund of NSW & ACT) a charitable trust for relief of poverty – plaintiffs executors de son tort – objects of the Fund are as set out in Minutes of a General Meeting held on 28 March 1923 and not as set out in purported amendments of the objects of the Fund – no longer practical to apply capital or income of the Fund for the charitable purposes of the Fund – Fund to be administered cy pres – the power under s.70(2), Trustee Act 1925 to appoint new trustees cannot be exercised so as to operate retrospectively – order sought pursuant to s.85, Trustee Act to excuse trustees in respect of any breach of trust in permitting the corporate plaintiffs to hold the assets of the Fund in accordance with the constitution of the Fund as purportedly in force from time to time – the power under s.85 is to be exercised with caution – relief under s.85, Trustee Act sought late in the proceedings which were primarily concerned with orders for the future management of the Fund and clarifying its charitable objects – evidence insufficient to permit a conclusion on reasonableness and the issue of "ought fairly to be excused ..." in terms of s.85(2) with respect to any particular breaches notwithstanding evidence from which inferences could be drawn as to the honesty of the trustees – leave to the trustees to apply with respect to the application under s.85
LEGISLATION CITED:	Charitable Trusts Act 1993 Judicial Trustees Act 1896 (UK) Limitation Act 1969 Trustee Act 1925 Trustee Act 1915 (Vic)
CASES CITED:	Butterworth v Purnell [1919] VLR 375 In re Allsop [1914] 1 Ch 1 NSW Masonic Youth Property Trust & Anor v Her Majesty’s Attorney-General in and for the State of NSW [2009] NSWSC 181 NSW Masonic Youth Property Trust & Anor v Her Majesty’s Attorney-General in and for the State of NSW [2009] NSWSC 1301 Ray McKay [1911] 1 Ch 300 Youyang Pty Limited v Minter Ellison (2003) 212 CL 484
TEXTS CITED:	Ford & Lee - Principles of the Law of Trust, paragraph 18.410 Jacobs - Law of Trust in Australia, 7th ed, paragraph 2223
PARTIES:	NSW MASONIC YOUTH PROPERTY TRUST & ANOR v HER MAJESTY'S ATTORNEY-GENERAL IN AND FOR THE STATE OF NSW & ANOR
FILE NUMBER(S):	SC 257703 of 2007
COUNSEL:	P: J B Whittle SC 1D: S Free 4D: G R Waugh
SOLICITORS:	P: Home Wilkinson Lowry 1D: Crown Solicitors Officer 4D: Peter Kennedy Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HALL J

WEDNESDAY 28 APRIL 2010

07/257703

NEW SOUTH WALES MASONIC YOUTH PROPERTY TRUST & ANOR v HER MAJESTY’S ATTORNEY-GENERAL IN AND FOR THE STATE OF NEW SOUTH WALES & ANOR

JUDGMENT

1 HIS HONOUR: These proceedings commenced by summons filed on 15 November 2007 have proceeded in stages involving the determination of a number of issues as follows:-

(1) By way of separate determination, the question as to who the trustees were under the trust (the New South Wales Masonic Schools Welfare Fund) established in 1923. The answer to that question (formulated in terms of an order made on 27 August 2008) was that the members from time to time of the Executive of the of the Fund were the trustees of the Trust on and from 28 March 1923. The answer was made upon the assumption that the Trust was a valid trust: NSW Masonic Youth Property Trust & Anor v Her Majesty’s Attorney-General in and for the State of NSW [2009] NSWSC 181.

(2) On the Amended Summons filed on 14 January 2008 that ( NSW Masonic Youth Property Trust & Anor v Her Majesty’s Attorney-General in and for the State of NSW [2009] NSWSC 1301 at [161] that:-

“…
(1) A valid express trust was created on 28 March 1923, the constitution of which was set out in the minutes of the General Meeting held on that date.

(2) The purported amendments to the 1923 Trust, in accordance with the law of trusts, were legally ineffective and, accordingly, did not vary the terms of the 1923 Trust operated by the Fund.

(3) The purported appointments of five “new” trustees under the Deed of 14 January 1927 were not valid appointments.

(4) The purported appointment of the plaintiffs as trustees on 21 November 1972 proceeded upon an incorrect legal premise, namely, that the Deed executed on 14 January 1927 had been a legally effective instrument in supporting the appointment when, on the analysis to which I have referred, that Deed did not, in law, have that effect.

(5) The trustees of the Welfare Fund since 1923 were the members from time to time of the Executive of the Fund.

(6) The plaintiffs, accordingly, are trustees de son tort and have acted as such since their appointment in 1972.

(7) The money and property settled upon the Fund in and after 1923 was impressed with the trust created in 1923, the trust in that respect, as I have stated, not having been validly amended.”

2 In the latter judgment, I set out the orders I proposed to make consequential upon the above findings and conclusions.

3 The present hearing has, in large part, been concerned with the plaintiffs’ application for orders for the settling of a scheme for the execution of the trusts in respect of the Masonic Youth Welfare Fund of NSW & ACT having regard to the conclusions that the Fund is held on trust for charitable purposes but that it is no longer practicable for the property to be applied to those purposes. In those circumstances, it is appropriate that orders be made for the application of the trust property cy pres.

4 Leave was granted on 15 February 2010 for the plaintiffs to file the Third Amended Summons which sought the following additional relief:-

“…
3B. An order that the plaintiffs be appointed as Trustees of the ‘Masonic Youth Welfare Fund of NSW and ACT’ in substitution for:
(a) Oliver Bergstrom;

(c) Allan Elliott
(d) Alan Pretyman;
(e) Kenneth Mobbs;
(f) John Sunman;
(g) Hugh Davies;
(h) Michael Morris;
(i) Dale Berrier;
(j) John Carroll.
as and from such date as the Court may appoint.
3C. An order that all property of the ‘Masonic Youth Welfare Fund of NSW and ACT’ of whatsoever kind be vested in the plaintiffs as and from such date as the Court may appoint.
3D. An order pursuant to Section 81 of the Trustee Act 1925 (NSW) that the plaintiffs be granted power to sell, convert, transfer or otherwise dispose of any of their assets at any time for the general purposes of the fund known as the ‘Masonic Youth Welfare Fund of NSW and ACT’, including the payment of any costs properly incurred or ordered to be paid by them in these proceedings or any appeals therefrom.
3E. An order pursuant to Section 85 of the Trustee Act 1925 (NSW) that the plaintiffs be relieved from any personal liability they have or may have incurred for any breach of trust when they distributed any asset of the Masonic Youth Welfare Fund of NSW and ACT other than in accordance with the objects of the said Fund as declared by the Court, but in accordance with the constitution of the said Fund as purportedly in force from time to time, and such act was not otherwise a breach of trust.
… ”

5 The proceedings were listed for further hearing on 18 February 2010. On that date, Mr J B Whittle SC appeared for the plaintiffs, Mr S Free of counsel appeared for the first defendant (the Attorney-General) and Mr G R Waugh appeared for the fourth defendant, Mr Oliver Robin Bergstrom.

6 The plaintiffs were granted leave to file the following affidavits, each of which they relied upon in the present phase of proceedings:-

(1) Affidavits of Oliver Robert Bergstrom sworn 8 and 12 February 2010.

(2) Affidavit of Alan Charles Pretyman sworn 8 February 2010.

(3) Affidavits of Damian Gregory Ward sworn 10 and 16 February 2010.

(4) Affidavit of Susan May Williams sworn 12 February 2010.

7 Mr Whittle also relied upon the affidavit of Mr Pretyman sworn 22 April 2009 filed on 27 April 2009. That affidavit went to the question of the Court granting leave to sell certain assets. It had originally been relied upon in support of an application for interlocutory relief. That application did not proceeded as final relief has now been sought in terms of paragraph 3D of the Third Amended Summons.

8 Mr Waugh, on behalf of the fourth defendant, sought and was granted leave on 18 February 2010 to file a Cross-Summons together with the affidavit sworn on that date by Mr Oliver Robin Bergstrom.

9 In the Cross-Summons, the following relief was claimed:-

“1. An order pursuant to s.85 of the Trustee Act 1925 (NSW) that all past and present members of the Executive of the Masonic Schools Welfare Fund (also known as the Masonic Youth Welfare Fund of NSW & ACT) be relieved from any personal liability they may have or may have incurred for any breach of trust in permitting the plaintiffs to hold the assets of the said Fund in accordance with the constitution of the Fund as purportedly in force from time to time.
2. An order that the costs of the Fourth/First Cross-Claimant on an indemnity basis be paid by the said Fund.”

Evidence

10 In his affidavit sworn 8 February 2010, Mr Pretyman, a director of the plaintiff companies, stated that he was elected as a Member of the Executive Committee of the Masonic Youth Welfare Fund of NSW & ACT at the Annual General Meeting of the Fund held on 21 September 2009. He stated that the other persons elected as Members of the Executive Committee at that time were:-

“(a) Oliver Bergstrom;

(b) Kevin Foster OAM;

(c) Allan Elliott;
…
(e) Kenneth Mobbs;
(f) John Sunman;
(g) Hugh Davies;
(h) Michael Morris;
Ii) Dale Berrier;
(j) John Carroll.”

11 Annexed to his affidavit and marked “A” were copies of applications made by Members of the Executive of the Masonic Youth Welfare Fund of NSW & ACT who applied to become members of each of the plaintiff companies.

12 In his affidavit sworn 8 February 2010, Mr Bergstrom, the fourth defendant to the proceedings, stated that he was the President of the Executive Committee of the Masonic Youth Welfare Fund of NSW & ACT. He has been President since 2007 and has been a member of the Executive Committee since 2001. He confirmed the election of the Members of the Executive Committee which took place on 21 September 2009. Provided that there are no causal vacancies, the Members of the Executive Committee will hold office until the next Annual General Meeting of the Masonic Youth Welfare Fund of NSW & ACT which Mr Bergstrom anticipates will be held in about September 2010.

13 The affidavit of Mr Ward, solicitor, sworn 10 February 2010, annexes copies of written consents signed by the current members of the Executive Committee (marked as Annexure “A”) in which the Members consented to the New South Wales Masonic Youth Property Trust (ACN 000 956 614) and the New South Wales Masonic Welfare Property Trust (ACN 000 956 623) being appointed by the Court as trustees of the Masonic Youth Welfare Fund of NSW & ACT in substitution for the Members of the Executive Committee.

14 Mr Bergstrom, in his affidavit sworn 12 February 2010, stated that he is also currently a Director of the plaintiffs to the present proceedings and is the Chairman of the Board of Directors of each of the two companies.

15 He has been a director of the plaintiffs since 24 September 2007. He said that, so far as he is aware, neither plaintiff has ever received any financial or other benefit or any distribution as a result of any breach of trust it may have committed when acting in accordance with the Constitution of the Masonic Youth Welfare Fund of NSW & ACT as purportedly enforced from time to time.

16 He also deposed that, so far as he is aware, no director of either plaintiff has ever had any notice that the purported changes to the purposes of the above Fund, as were adopted from time to time, were invalid until that fact was suggested to him and other directors as a result of advice given by Mr Whittle.

17 Mr Bergstrom stated that, prior to receiving written advice by Mr Whittle, Mr R Titterton of counsel dated 15 February 2005 to his knowledge the possibility of any breach of trust had never been raised by any counsel or solicitors who had advised either the plaintiffs or the Executive of the Fund, or any member of the Fund who had legal qualifications.

18 Following consideration of the joint opinion, the Summons was filed in the present proceedings. The plaintiffs continued to distribute funds to persons who fell within the purported terms of the Trust by reason of the need in the community for the type of assistance provided by the Fund being considerable and by reason of the fact that the plaintiffs took the view that to end the support suddenly to those already in receipt of it would potentially cause great hardship.

19 Since the judgment delivered on 1 December 2009, the plaintiffs have continued to provide direct assistance to Youth within the purported terms of the Fund. Mr Bergstrom stated (paragraph [11]) that this was because:-

“(a) … the Court indicated that a cy pres scheme would be ordered and in the Plaintiff’s view such a scheme was likely to permit such payment; and
(b) …, it would be very difficult to cease payments suddenly without potentially causing great hardship.”

20 The affidavit of Susan May Williams annexed a copy of a consent signed by Michael Morris, a current member of the Executive Committee of the Fund on 11 February 2010 consenting to the New South Wales Masonic Youth Property Trust and the New South Wales Masonic Welfare Property Trust being appointed by the Court as Trustees of the Masonic Youth Welfare Fund of NSW & ACT in substitution for the members of the Executive Committee.

21 Paragraph [1(2)] of this judgment reproduces the conclusions set out in paragraph [161] of the judgment delivered on 1 December 2009.

22 A conclusion having been reached that all of the property constituting the Fund is held on trust for the objects set out in the original terms of settlement as contained in the minutes of the first meeting of the Fund on 28 March 1923, the further conclusion was that, having regard to those objects, the Trust was one for the relief of poverty and was therefore a charitable trust: judgment, 1 December 2009 at [166] and [192].

23 On the evidence, a finding was made that the Masonic Schools and Hostels no longer exist: judgment, 1 December 2009 at [120]. Accordingly, it followed that it was not practicable to apply the Trust property to the charitable purposes of the Trust: judgment, 1 December 2009 at [224].

Application of the property of the Masonic Youth Fund cy pres

24 The determination having been made that the property of the Masonic Youth Fund is held on trust for charitable purposes but that it is no longer practicable for the property to be applied to those purposes in accordance with the terms of the Trust, it is appropriate that orders be made for the application of the Trust property cy pres.

25 Pursuant to directions given, the plaintiffs prepared a draft form of amended objects of the Fund with a view to clarifying any issues as to the appropriate orders for a cy pres scheme. A copy of the draft amended objects was attached to written submissions prepared by Mr Whittle SC dated 17 February 2010 which I reproduce below.

Draft objects of the Fund
The whole of the assets of the Fund known as the ‘Masonic Youth Welfare Fund of NSW & ACT’ shall be applied to the objects set forth below by the Trustees thereof in their absolute discretion.
1. Definition
‘Youth’ shall mean any male or female members of the community, 25 years of age or under, irrespective of Masonic background or affiliation, race or religion, recommended to the Fund by a Masonic Lodge or identified by the Fund as a suitable person to receive assistance.
2. Objects
To assist Youth in necessitous circumstances by any one or more of the following:-
(a) ensuring the provision of adequate early, primary, secondary, tertiary or other education;
(b) by encouraging scholastic attainments and vocational or professional ambitions or aptitudes;
(c) assisting those showing promise or talent to proceed to a University or engage in any other course of study or special course of training, provided that where such University or other course has been commenced when a person is no more than 25 years of age such assistance under any of the objects contained herein may be continued irrespective of age until that course is completed;
(d) providing financial aid and medical, hospital and dental treatment and obtaining suitable accommodation or residence.
(e) providing necessary clothes, text books, tools-of-trade, professional equipment or any other requisite for the furtherance of a career of any Youth; and
(f) recognising and giving prizes in whatever form to Youth assisted by the Fund in consequence of their educational, sporting, cultural, community or like achievements.”

26 In his written submissions dated 18 February 2010 on behalf of the Attorney General, Mr Stephen Free of counsel referred to the “guiding principle” in the determination of a cy pres scheme, namely, that there “should be fidelity to the spirit and general charitable intent of the original purposes, while bearing in mind that it is no longer practicable to apply the Trust property for the exact purposes” (paragraph [5]).

27 In his submissions, Mr Free referred to the identification of the spirit of the charitable trust settled in 1923 as recorded in the judgment of 1 December 2009 (at [157], [158], and [160]). Reference was made to the observation in the judgment at [148] wherein it was found that “the spirit of the Trust was directed towards providing benefits that would assist in the education and training of needy students and ex-pupils of the Schools”. Mr Free stated that the Attorney General respectfully agreed with the Court’s description of the spirit of the Trust, as distilled from the objects of the Masonic Youth Fund upon settlement in 1923.

28 The submission on behalf of the Attorney General was that the proposed objects in Schedule 2 to the Plaintiffs’ Outline Submissions (subject to a question as to the need for proposed 2(f) and, if it is to be included, the terms of the proposed provision), consistent with the spirit of the Trust. In particular, it was observed that the restriction of the benefits of the Fund to persons under the age of 25 is consistent with the original application of the Fund to school pupils and ex-pupils making a start in their post-school lives and vocations. Mr Free noted that objects 2(a) to 2(e) bore an appropriate connection with educational and vocational matters.

Submissions for the plaintiffs

29 Mr Whittle, in the Plaintiffs’ Written Submissions, observed that in the reasons for judgment of 1 December 2009 at [60], reference was made to the fact that the original objects of the Fund contained an object “to provide prizes for scholastic attainments”. Mr Whittle submitted that this was appropriate for a charity which is primarily directed towards assisting students at a particular school.

30 Mr Whittle further noted that it was now agreed by the plaintiffs and the Attorney General that the objects of the Fund should be amended to assist “youth in necessitous circumstances” in relation to educational training, thereby preserving the idea of a trust for the relief of poverty by assisting with the education of needy, young people.

31 Mr Whittle also submitted:-

“10. The breadth of the help Youth may receive under the proposed agreed objects will be sufficient to allow the Fund to assist them in relation to sports they may wish to play as part of their education. Further, given that such Youth are, by definition, in necessitous circumstances, it is seen as highly desirable to encourage them to take part in ‘cultural, community or like’ activities.”

32 Accordingly, it was for these reasons that the plaintiffs submitted that recognition of achievements of the comparatively broad kind mentioned in draft object 2(f) should be able to be given by way of “prizes of whatever form” as contemplated in the object.

33 Mr Whittle submitted in the alternative that if proposed object 2(f) is seen to be too wide, then the giving of prizes for “educational and sporting achievements” ought to be a permitted object.

34 In relation to the question of possible ambiguity in the proposed draft object, Mr Whittle submitted:-

“13. With respect to the views of the Attorney-General, it is arguable that prizes for educational or sporting achievements might, or might not, fall within the wording of draft object 2(b). The broader categories of prizes contemplated by draft object 2(f) do not. It is therefore submitted that whatever form the power to award prizes finally takes, if it is to be included in a cy pres scheme, the power ought to be explicit rather than left to conjectural interpretation under draft object 2(b).”

35 Subject to these matters, Mr Whittle noted that the plaintiffs, the Attorney General (and it was understood the fourth defendant) joined in seeking a cy pres scheme containing the draft objects set out in paragraph [25] above.

36 The Minutes of the Meeting of the then proposed permanent committee to represent all Lodges in New South Wales held on 28 March 1923 recorded, as noted above, the objects of the “NSW Masonic Schools Welfare Fund” as including:-

“(c) to provide prizes for scholastic attainments.”

37 As Mr Whittle observed in his oral submissions, whilst the objects that were then stated applied to the Masonic Schools, there is no doubt that, if the scheme continues, it is simply a matter of altering the class of persons who can receive prizes for academic endeavour. He submitted that some object for the giving of prizes, however wide the object was expressed, should be included in the scheme. The question was, how wide that objects should be expressed.

38 Mr Whittle further contended, in his oral submissions, that as the Trust was one to help necessitous youth in education, not only should there be prizes for academic achievement permitted, but prizes should also be allowed for in respect of sporting achievements. He acknowledged that the balance of proposed object 2(f) involved a widening of the concept in the suggested provision for recognition and prizes for “cultural, community and like achievements”.

39 In relation to the latter description, Mr Whittle emphasised that, in respect of the proposed object 2(f), the youth to be assisted are, by definition, in “necessitous circumstances”. Mr Whittle then submitted (transcript, 18 February 2010, p.5):-

“… There are highly desirable social reasons, probably too many to state, why youth in those circumstances who otherwise might come from what might be described as under-privileged backgrounds of various kinds, should be encouraged in all possible ways to take part in cultural and community activities so that they become useful and profitable members of society.
… We would submit, bearing in mind the objects of this Trust are to assist youth in necessitous circumstances, in just about every way concerning their eduction and in being set up in life in a trade or whatever it might be, providing accommodation, books, clothes etc, encouraging them also and rewarding them or recognising them when they take part and do well in cultural, community or like achievements, to use the wording in 2(f) is a desirable form of object to go with the other objects set out in cy pres scheme.”

40 Alternatively, Mr Whittle submitted that if proposed object 2(f) was not accepted by the Court in the form proposed prizes recognising educational and sporting achievements was within the spirit and intent of the original Trust and ought be allowed. He acknowledged that these could be covered by proposed object 2(b) “… by encouraging scholastic attainments and vocational or professional ambitions or aptitudes” but that minds could differ on that point.

41 Accordingly, it was submitted for the plaintiffs that a clear and express power, however wide it was to be framed, should be given to put beyond doubt that, if there was to be an object for the giving and recognition of achievements and the giving of prizes, that that be expressly stated in the objects of the scheme.

42 Finally, Mr Whittle drew attention to the fact that the minutes of the meeting of 28 March 1923 evidenced an intention to provide for the children of the Masonic Schools of NSW benefits that were expressed to be out of the “domain” of the schools and that clauses (a) to (i) set out in those minutes were but examples of the type of benefits to be provided, those particular sub-clauses being prefaced or introduced by the phrase “such as”. In other words, the sub-clauses were expressed as instances of the benefits to be provided and were not intended as exhaustive statements.

43 Accordingly, the submission was that, making provision in the objects for a broader category of prizes including sporting prizes would not be stepping outside the general overall intention lying behind the instances stated in the Minutes.

44 Mr Whittle, with respect, properly, in my opinion, acknowledged that concepts of “cultural and community achievements” might only, with a somewhat greater level of difficulty, be seen as lying behind the original document by which the trust was established, the expression “cultural and community” involving a broader concept than those involved in scholastic and sporting attainments.

Decision on the proposed objects

45 In relation to draft clause 2(f), I have concluded as follows:-

(1) That it is desirable for the purposes of removing any doubt of possible ambiguity for there to be included in the objects a particular provision for the recognition and giving of prizes in respect of educational and sporting achievements, these being within the spirit and intent of the original trust.

(2) That the inclusion of the terms “cultural, community” , as contained within draft clause 2(f), are of such width as to be beyond the spirit and general charitable intention of the original purposes of the Trust bearing in mind that the spirit of the Trust was, as earlier determined, directed towards “… providing benefits that would assist in the education and training of needy students and ex-pupils of the Schools” : judgment, 1 December 2009 at [148].

46 In so concluding, I have taken into account the scope or ambit of the concept of “educational … achievements …”. The word “educational” carries the meaning of “due to or arising from education” or “of pertaining to or concern with education”: Shorter Oxford English Dictionary. The word “education” is defined as:-

“The systematic instruction, schooling or training of children and young people; or by extension, instruction obtained in adult life the whole course of such instruction received by a person and the development of mental or physical powers, moulding (some aspect) or character.”

47 The concept of “educational achievements” would, in my opinion, embrace the systematic instructional schooling or training of children or young people in artistic endeavours such as music and art.

48 Accordingly, I consider that the appropriate formulation of clause 2(f) is as follows:-

“2(f) Recognising and giving prizes in whatever form to Youth assisted by the Fund in consequence of their educational, sporting or like achievements.”

Appointment of plaintiffs’ as trustees in substitution for members of the Executive

49 Paragraph 3B of the Third Amended Summons seeks an order that the plaintiffs be appointed as trustees of the Masonic Youth Welfare Fund of NSW & ACT is substitution for the persons specified in paragraph 3B(a) to (j). The appointment sought is as and from such date as the Court may appoint.

50 By reason of the conclusion made in the judgment of 1 December 2009 that the plaintiffs were never validly appointed as trustees of the Fund in place of the members of the Executive, the plaintiffs now seek the making of an order that they be substituted for the present members of the Executive who are represented by the fourth defendant.

51 On 27 August 1971, Street J gave judicial advice to the effect that it would be appropriate for the then trustees of the Fund to expend trust funds to incorporate the plaintiffs with a view to them becoming the trustees of the Fund. As observed in the plaintiffs’ written submissions at [17], that advice was given on an incorrect premise: see judgment, 1 December 2009, paragraph [103].

52 In his written submissions, Mr Whittle referred to the proceedings before Street J and related matters as follows:-

“18. The considerations which impelled the then supposed trustees to seek his Honour’s advice are given in detail in paragraphs 9 – 12 of the Statement of Facts read before his Honour (see Exhibit AP-1(1), Tab 32). Those reasons have only grown stronger with the passage of time as the assets of the Fund have increased in number and value.
19. It is therefore submitted that, despite the miscarriage of the original application for judicial advice, it is still appropriate for (the) corporate trustees to be appointed as trustees of the Fund in lieu of the members of the Executive of the Fund or any other natural person.
20. The plaintiffs are the obvious candidates to be appointed to that role, and all the present members of the Executive have consented in writing to that course … In addition, all the current members of the Executive have applied to become members of each of the plaintiffs so that they can continue to be actively involved in the administration of the Fund and have been recorded in the plaintiffs’ records as members …”

53 The power in the Court to appoint new trustees is conferred by the provisions of s.70 of the Trustee Act 1925 (as amended) and s.7 of the Charitable Trusts Act 1993 (as amended).

54 The power under s.70(2) is available to the Court whenever an appointment of a new trustee is “expedient” and it is “inexpedient, difficult or impracticable to do so without the assistance of the Court”.

55 In the plaintiffs’ submissions, the members of the Executive hold office as trustees of the Fund, ex officio, and it would therefore be difficult for them to retire as trustees without also ceasing to be members of the Executive. In those circumstances it was submitted the assistance of the Court is needed and the requirements of sub-section (4) are satisfied by the evidence before the Court: Plaintiffs’ Written Submissions, paragraph 22.

56 Whilst a finding has been made in the present proceedings that the original minutes of the meeting of 28 March 1923 contemplated that the members of the Executive would be trustees of the Fund it was submitted by Mr Whittle that the Court’s general power to appoint new trustees is wide enough to effect a substitution when all members of the current Executive consent to that course.

57 A further submission was made in relation to s.7 of the Charitable Trusts Act, it being noted that the Court’s power under that section is enlivened on a finding of misconduct or mismanagement. In the present proceedings, there is absolutely no evidence of the present members of the Executive Committee having been guilty of either misconduct or mismanagement of the Fund. This is especially so, as noted in the plaintiffs’ written submissions, in circumstances in which there has been no loss to any fund at any time and the plaintiffs were appointed after judicial advice had been given, albeit on an incorrect factual premise.

58 The plaintiffs submit that the order sought in paragraph 3B of the Third Amended Summons should be made to operate retrospectively, that is, as and from 21 November 1972 so that all the steps taken since that time in the administration of the trust will be taken to have been done in the character of lawfully appointed trustees.

59 Subject to two matters, the Attorney General agreed with and adopted the submissions of the plaintiffs concerning the removal of the members of the Executive as trustees and the appointment of the plaintiffs as trustees.

60 In particular, the Attorney General submitted that the pre-conditions for the exercise of the Court’s powers under s.70 of the Trustee Act are satisfied.

61 The first qualification raised on behalf of the Attorney General concerned the proposal to appoint both plaintiffs as trustees. In this respect, it was stated:-

“… The historical reasons for creating and purportedly appointing two corporate trustees at the time of the attempted re-organisation of the trust in 1972 are not clear from documentary record. In any event, the question for present purposes is whether there is any utility in appointing both plaintiffs as trustees. Such an arrangement would appear to create unnecessary complexity and duplication of administrative costs. The object of securing the orderly future management of the trust would appear to be well served by appointing only one of the plaintiffs as trustee.”

62 The second qualification raised on behalf of the Attorney General concerned the appointment of the new trustee or trustees with retrospective effect from 21 November 1972.

63 The application for the appointment of the plaintiffs as trustees is supported by all members of the Executive. All of the current members of the Executive have on their application been accepted as members of the companies that are the trustees. They will participate in the management of the companies.

64 On the evidence, I consider that it is “inexpedient or difficult” to appoint the plaintiffs as trustees of the Trust as specified in s.70(2) of the Trustee Act and that it is expedient that they be appointed by an exercise of the broad power to do so under s.70 of that Act.

65 The question remains as to whether the power can and should be exercised retrospectively. The section is silent on the issue of the retrospective operation of orders made under the section.

66 In relation to the appointment of the two plaintiffs as trustees, as noted above, Mr Free submitted that the history of the Trust does not explain why two trustees were considered necessary given that they are corporate trustees. This was not, he observed, a situation where the two corporations represented different interests and served different objects. Additionally, there were costs associated with running two corporate trustees whose costs would be indemnified by the Fund.

67 Unless good reason existed for the appointment of two trustees, Mr Free submitted only one should be appointed. He said he made no submission as to which of the two corporate entitles should be appointed.

68 Mr Whittle, on the other hand, submitted strongly that the two corporate plaintiffs should be appointed. The evidence, consistent with his instructions, he contended indicated that there is a large number of assets worth in excess of $10 million which are vested in both plaintiffs as trustees de son tort and have been for many years. These assets, he observed, included real property and shares. If only one of the two trustees were appointed, much time and expense would be involved in having one of the trustees removed from the title or the entitlement to such assets charged.

69 Mr Whittle stated that whilst the application for judicial advice from Street J made in 1970 proposed the appointment of one trustee, two were appointed. There is no transcript or other document on the court file to explain how and why this came about.

70 I am of the opinion that, for reasons stated by Mr Whittle which I have recorded above, both plaintiffs should be appointed trustees. To do otherwise carries the potential for unnecessarily creating the need to review and adjust the title and entitlement to assets within particular classes of assets of the Fund with the attendant expenditure that would be incurred by it. Further, there is no evidence or suggestion that the two plaintiffs operating as trustees has involved excessive or unacceptable expense.

71 I note in respect of the appointment of the plaintiffs under the order to be made that compliance with the provisions of Part 55 of Division 2 UCPR is dispensed with.

The date of operation of the order appointing the plaintiff as trustee of the fund

72 Mr Free, on behalf of the Attorney-General, submitted that the order for appointment of the plaintiffs should be made with prospective effect only and not with retrospective effect from 21 November 1972, the date favoured by the plaintiffs.

73 Mr Free observed that s.70 does not, in terms, confer a power to make appointments of new trustees with retrospective effect. Additionally, there does not appear to be any power in any other section of the Trustee Act or the Charitable Trusts Act to make such an order.

74 Mr Free submitted:-

“… There does not appear to be any power in any other section of the Trustee Act 1925 or the Charitable Trusts Act 1993 to make such an order. The provisions of the Trustee Act 1925 dealing with the vesting of trust property coinciding with the appointment of a new trustee assume that an appointment will take effect prospectively: ss.71 and 78. The order for appointment and substitution should be made with prospective effect only.”

75 In his oral submissions, Mr Free also noted (transcript, 18 February 2010, p.32):-

“… It needs to be borne in mind that the order is intended to achieve two purposes; it is to appoint the plaintiffs, or one of them, as trustee or trustees, and therefore regularise their status, but also to remove the members of the executive who have been the true trustees.

So it has implicit in it a sense of absolution, or it could potentially be construed that way, if one is to say retrospectively the corporate trustees shall be taken to have been the trustees, from 1972 for instance, and the individuals shall be taken not to have been the trustees from that date; that seems to have the effect of absolving the individual executive members from any obligations of law which they may have had over that time. So that then brings up all the issues with section 85 orders …

So that's a substantive complication with an order of that kind, but simply as a matter of statutory power in my submission the court can't make a retrospective appointment and substitution of this kind.”

76 Accordingly, Mr Free contended (Written submissions, paragraph [11]):-

“The provisions of the Trustee Act 1925 dealing with the vesting of trust property coinciding with the appointment of a new trustee assume that an appointment will take effect prospectively: see ss.71 and 78. The order for appointment and substitution should be made with prospective effect only.”

Decision on the question of the operative date of the orders appointing the plaintiffs’ trustees

77 In the absence of any express statutory power authorising the Court to make an order under s.70(2) of the Trustee Act and there being no case law on the matter of which I am aware, I consider that an order made under the legislative provisions in question should operate on a prospective basis. Firstly, the fact that s.70 does not itself authorise the making of an order to operate in a retrospective manner is significant. Secondly, there is nothing as a matter of principle which would support a construction of s.70 that would indicate that an order may be made to have a retrospective operation. Thirdly, as Mr Free has submitted, an order made under s.70 should not be used impliedly or implicitly as a means of absolving or discharging individual Executive members. Section 85 of the Trustee Act contains express provisions for the grant of relief to a trustee from personal liability for breach of trust. Any application for such relief should be made directly to the Court. Orders made under s.70(2) should not be so designed to grant relief for the purpose of indirectly achieving a similar outcome.

78 I accept Mr Free’s submissions and, therefore, propose to make the order under .70 operative from the date of this judgment.

Application for an order pursuant to s.81 of the Trustee Act 1925: power in the trustees to sell etc assets

79 Section 81 of the Trustee Act is to be found in Division 2, Dealings and Improvements of Part 3, Powers of the Court. The section, subtitled, Advantageous dealings, provides, inter alia, that where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or disposition, or any purchase, investment, acquisition, expenditure or transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the instrument, if any, creating the trust, or by law, then the Court may, by order, confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms and subject to such provisions and conditions as the Court may think fit.

80 The Court may, under s.81(1)b) direct in what manner any money authorised to be expended, and the cost of any transaction, are to be paid or borne as between capital and income.

81 In the Plaintiffs’ Submissions, paragraph [28], Mr Whittle observed that the trustees of the Fund do not have power, either under the minutes of the meeting of 28 March 1923, or under statute, to sell assets for the purposes of the trust. He referred to the legal opinion setting out the reasoning leading to that conclusion in Exhibit E “AP-6(4)” to the affidavit of Mr Pretyman sworn 22 April 2009.

82 As earlier noted, the plaintiffs had sought such a power on an interlocutory basis by motion dated 21 April 2009. In the written submissions (paragraph [29]) on behalf of the plaintiffs, it was submitted that it seemed more expedient to seek such a power on a permanent basis, especially since the Trust has assets well in excess of $10 million and there could reasonably be expected to be occasions on which a need to sell assets for the purposes of the Fund could arise. Reference was also made to the evidence of Mr Pretyman to the effect that some assets would need to be sold to pay the costs of the present proceedings.

83 It was submitted the power should be conferred generally on the trustees. It was also contended that it would not be advantageous to limit the power to sell simply for purposes of administration, as the occasion might arise where, due to a fall in income or donations, the ready assets of the Fund may not be sufficient to honour the commitments previously entered into with respect to Youth falling within the terms of the Trust. It was said that this could be productive of unnecessary embarrassment to the Fund and hardship to the Youth involved (Plaintiffs’ Submissions, paragraph [31]).

84 In the submissions on behalf of the Attorney-General, it is stated that proposed order 10 sought under s.81 of the Trustee Act should be made.

85 On the basis of the evidence in support of the application and the submissions made, I am of the opinion that it is expedient to vest power in the trustees in accordance with proposed order 10 in the short minutes of order.

Application for orders excusing the plaintiffs and the present and past trustees

86 The plaintiffs seek an order pursuant to s.85 of the Trustee Act that they be relieved from any liability for “any breach of trust when dealing with any assets of the [Masonic Youth Fund] in accordance with the constitution of the said Fund as purportedly in force from time to time”.

87 Section 85 is in the following terms:-

“85. Excusable breaches of trust
(1) Where a trustee is or may be personally liable for any breach of trust, the Court may relieve the trustee either wholly or partly from personal liability for the breach.
(2) The relief may not be given unless it appears to the Court that the trustee has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the direction of the Court in the matter in which the trustee committed the breach.
(3) Repealed.
(4) This section applies whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Act.”

88 On 17 February 2010, the fourth defendant to the proceedings that he intended to seek a similar order under s.85 in the following terms:-

“(1) An order pursuant to section 85 of the Trustee Act 1925 (NSW) that all past and present Members of the Executive of the NSW Masonic Schools Welfare Fund (also known as the Masonic Youth Welfare Fund of NSW & ACT) be relieved from any personal liability they may have or may have incurred for any breach of trust in permitting the plaintiffs to hold the assets of the said Fund in accordance with the constitution of the Fund as purportedly in force from time to time.”

89 In his written submissions (paragraph [33]), Mr Whittle observed:-

“33. While a trust deed son tort is not liable for breach of trust if he, she or it stays within the terms of the trust, it is plain on the whole of the evidence that the Fund has been dealt with for many years in accordance with supposed objects adopted from time to time which were markedly different from the true terms of the trust. It follows that in so dealing with the Fund:-
(a) the individual trustees prior to 21 November, 1972 were in breach of trust;
and
(b) the plaintiffs, as their successors, have administered the Fund in breach of its true objects.”

90 Mr Whittle submitted that the relief sought by the plaintiffs under s.85 is required even if orders are made that they be appointed trustees of the Fund and the trust property is vested in them and the orders are made to take effect from 21 November 1972. It was noted that any cy pres order varying the objects of the trust could only take effect from the day the order was made and not operate retrospectively so as to validate actions already taken by the plaintiffs.

91 It was submitted that a trustee de son tort is always a constructive trustee for the true trustee and, therefore, falls within the definition of “trustee” as contained in s.5 of the Act. As a consequence, a trustee de son tort has standing to seek relief under s.85.

92 In the present case, Mr Whittle emphasised that the plaintiffs only sought partial relief from liability for their actions whilst they had been administering the Fund. It was submitted:-

“37. Put shortly, they seek relief where they have acted in accordance with the constitution of the Fund as purportedly in force from time to time, but not when they have stepped outside the constitution.
38. There is no dispute that the plaintiffs have acted honestly in dealing with the assets of the Fund. It is also submitted they have acted reasonably. They have, from time to time, taken the advice of senior and experienced practitioners as to aspects of the trust, but were never alerted until recently to the problems which had been before the Court in the present proceedings. When they became aware of those problems, they sought the Attorney-General’s leave to bring the proceedings. In the interim, they continued to administer the Fund as set out in the affidavit of Mr Bergstrom made on 12 February, 2010.
39. Further, the plaintiffs had no reason to think that the successive objects of the Fund had not been validly adopted until the original constituting document was submitted to legal scrutiny and the absence of a power to amend objects identified as a potential problem. So also, it was not appreciated by any party, including the Attorney-General, that the plaintiffs might not be the true trustees of the Fund until the Attorney-General’s submissions were filed just before the hearing began.
40. If the Court accepts the plaintiffs have acted honestly and reasonably, then it is submitted that the partial relief ought to be granted. The effect of such relief will be that the trustees will be protected wherever they acted within the supposed objects of the Fund from time to time, but if and where they acted in a way which stepped outside those objects, they will remain liable for breach of trust. If they wish to seek further relief where they have acted outside the terms of the constitution of the Fund as from time to time supposedly in force, they will need to show in the specific case why it should be granted.”

93 In his oral submissions, Mr Whittle identified the three elements to be satisfied before an order can be made under s.85. The first is the requirement that the trustee(s) have acted honestly. The second is that they have acted reasonably. The third is that they ought fairly be excused for the breach of trust and for omitting to obtain a direction of the Court in the matter in which the trustee committed a breach.

94 In the present case, it was said there was no evidence to suggest other than that the plaintiffs genuinely acted on what they considered was the constitution of the Fund from time to time and nothing in the case has been put forward which in any way impugns their honesty.

95 The legal advice received by the trustees as referred to in Mr Whittle’s submissions was said to be evidence that went a long way in showing that they also acted “reasonably”.

96 Mr Whittle acknowledged that if an order were made in terms of the partial relief referred to in paragraph [92], it could absolve the trustees who acted within the constitution but were in breach of trust for other reasons. Accordingly, the relief sought in terms of paragraph 3E was framed so as to provide absolution from breach of trust but only insofar as acts undertaken in relation to the constitution - not so as to absolve for breaches otherwise committed during the period as, for example, wrongful investment.

97 Mr Free, in his written submissions (paragraph [14]), observed that the desire of the plaintiffs and the members of the Executive for some type of formal excuse is understandable, given the history of the Fund and the long undiscovered miscarriage of the various amendments.

98 However, it was submitted that it was not appropriate for the Court to make “excusing orders” of the kind sought by the plaintiffs and the fourth defendant. In this respect, it was stated (Written submissions, paragraph [14]):-

“… The present proceedings were instituted for the purpose of regularising the future management of the Masonic Youth Fund, primarily with a view to clarifying and, if necessary, varying the charitable objects of the Fund. The proceedings have not been concerned with the question of any past breaches of trust. The evidence and submissions before the Court have not been directed towards questions of breach. While the historical material before the Court may permit some inferences to be drawn about past management of the Trust, that has not been the subject of close attention and appropriately directed evidence.”

99 Accordingly, Mr Free submitted that there was an insufficient basis for the Court to make the orders sought which were effectively in the nature of “blanket orders” (albeit, directed to a particular class of breach) without the circumstances of any particular alleged breach being the subject of evidence and scrutiny.

100 Mr Free contended that an application for relief under s.85 needs to be considered in the context of the particular breach or breaches of trust sought to be excused. In this respect, it was observed that s.85(2) provides that an order under s.85(1) may not be made unless it appears to the Court that “the trustee has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the direction of the Court in the matter in which the trustee committed a breach”. Satisfaction of these pre-conditions, Mr Free argued, requires close consideration of the circumstances of the particular breach or breaches sought to be covered by the order.

101 In particular, it was observed that, in the unlikely event (having regard to the facts presently known to the Court and the Attorney-General), that proceedings are brought involving allegations of past breaches of trust in respect of the Masonic Youth Fund, the circumstances would then be ripe for any application for relief under s.85. The relief under that provision presently being sought ought not be granted in what was described as “relatively abstract terms sought by the plaintiffs and the fourth defendant”: Written Submissions, paragraph [15].

102 Finally, Mr Free recorded that the Attorney-General’s opposition to the orders sought under s.85 should not be construed as suggesting any past or present impropriety on the part of either the plaintiffs or the past and present members of the Executive: Written submissions, paragraph [16].

103 In reply, Mr Whittle on the question of what Mr Free termed “blanket approval”, acknowledged that the present application was an unusual one. He drew attention to the commentary from Ford & Lee on the Principles of the Law of Trust, paragraph 18.410.

104 Unlike a number of the cases referred to by the learned authors in the passage to which attention was drawn where actual losses had occurred, the present case was distinguishable. Indeed, it was observed that the trustees had increased funds to a marked degree.

105 A further point of distinction was said to be that many of the other cases have concerned private trusts whereas the present case is concerned with a charitable trust. Mr Whittle observed that s.85 had not commonly been applied in the case of charitable trusts.

106 He also emphasised that the whole of the evidence, including the principal affidavits in the proceedings, establish honesty and it was contended they also show “reasonableness”.

107 Mr Whittle additionally relied upon the fact that the trustee plaintiffs have acted gratuitously. In accordance with the approach taken by the courts in the past, such trustees are looked upon more leniently than a trustee who has been remunerated. Further, there was no question involved in the present case of a profit making company.

108 Mr Whittle submitted that Mr Free’s submissions, in effect, attributed a width of operation to the orders sought under s.85, which the plaintiff had sought to avoid by formulating proposed orders in precise terms, emphasising that the relief was only sought in respect of the trustees’ actions within the constitution as purportedly in force and not otherwise amounting to a breach of trust.

109 Finally, Mr Whittle stated that if I were inclined to refuse or decline relief under s.85, then that should be done without prejudice to any further applications that may be made (t.44).

110 Mr Waugh adopted Mr Whittle’s submissions made in paragraph [32] of the plaintiffs’ written submissions concerning the relief sought in paragraph 3E of the Third Amended Summons.

111 The relief sought in the Cross-Summons, Mr Waugh submitted, was framed in a limited form. The limiting words restricted the relief sought from about 27 November 1972 and not earlier. Accordingly, a general release was not sought but specific relief only as sought in the Cross-Summons.

112 Mr Waugh drew attention to the discussion in relation to the power to grant relief to trustees from liability as discussed in Jacobs, Law of Trust in Australia, 7th ed, paragraph 2223. There, reference was made to the decision in Ray McKay [1911] 1 Ch 300. As that case illustrated, it is not necessary for a court to find that there has, in fact, been a breach of trust. It is enough that there are circumstances which constitute a suspicion of breach.

113 Mr Waugh submitted that, though relief was sought back to 1972, the reality is that the provisions of the Limitation Act 1969 would restrict the right of persons to sue for breach of contract (s.47 to s.50). Accordingly, the provisions of that Act would operate so as to prevent claims being made going as far back as 1972.

Consideration

114 Section 85 confers a power of curial relief in respect of breach of trust where the trustee has acted “honestly and reasonably and ought fairly to be excused”. The legislative provision finds its origins in s.3 of the Judicial Trustees Act 1896 (UK).

115 The latter provision, it has been noted, was enacted to alleviate the rigour of the rule as it was once expressed that it is the duty of a trustee “to adhere to the terms of his trust in all things great and small, important and seemingly unimportant”: see discussion in Youyang Pty Limited v Minter Ellison (2003) 212 CL 484 at 493, [33] per Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ.

116 In re Allsop [1914] 1 Ch 1 at 21, Swinfen Eady LJ pointed out in relation to the provisions in s.3 of the Judicial Trustees Act:-

• The language of s.3 was in wide terms and a narrow interpretation ought not be placed on it.

• The words “is or may be liable” appear to point to doubtful questions of construction (the same would apply to the similar phrase in s.85 “is or may be personally liable” ):-

“… A trustee committing a breach of trust by paying the wrong person in consequence of acting upon an erroneous construction is within the section and the Court has jurisdiction to relieve against the personal liability” .

• The jurisdiction, however, requires great care and caution in its exercise.

117 In Butterworth v Purnell [1919] VLR 375, the defendants were the executors of the will in question in that case. A question arose concerning the liability of a legatee under the will to pay the cost of remitting two legacies from Victoria to England. The executors charged the estate with the cost.

118 Relief was sought under s.67 of the Trustee Act 1915 (Vic). Cussen J stated that he did not have facts before him as to the circumstances in which the defendants acted. It was not suggested that they acted dishonestly but, his Honour observed (at 382):-

“I have to be satisfied that they ought fairly to be excused and I cannot come to the conclusion that they should.”

119 Cussen J referred to In re Allsop (supra), in particular, the dicta that emphasised that the jurisdiction under the section was, in that case, to be exercised with caution. His Honour concluded (at 382-383):-

“I realise that the amount involved in this matter is very small, but in the absence of any facts showing the circumstances in which the defendants acted and having regard to the fact that the rule as to costs of remittance is, in my opinion, plain, I think I cannot exercise my discretion by excusing the defendants under this section. I will, however, reserve liberty for them to raise the matter again at the hearing.”

120 The relief sought in paragraph 3E (and in the Cross-Summons) was sought at a late stage of the proceedings. The issues for determination have not been focussed directly upon the questions of reasonableness of the conduct of the plaintiffs or the Members of the Executive prior or subsequent to 1972 or the circumstances in which distribution of monies from the Fund has occurred. It is, of course, true that some issues relating to those questions have arisen in the proceedings.

121 Accordingly, the questions for determination in the present proceedings have not required an examination of the processes or practice implemented over the years leading to decisions being made for the distribution of funds in accordance with the purported objects of the Trust.

122 Mr Whittle has, with respect, correctly observed that cases under s.85 have generally concerned private trusts, not charitable trusts. The Attorney-General, representing the public interest, is, of course, the appropriate party with respect to issues concerning such trusts.

123 The Attorney-General’s opposition to the making of orders under s.85 in this case is consistent with the cautious approach that is required to be taken with application under that section. The present proceedings, as submitted on behalf of the Attorney-General, were instituted with a view to orders being made that would regularise the factual management of the Masonic Youth Fund essentially with a view to clarifying and/or varying the charitable objects of the Fund, not with respect to past breaches.

124 There is no suggestion in the present proceedings other than that the plaintiffs have at al times acted honestly and bona fide in the best interests of the Fund. A review of the authorities in relation to similar provisions to those constituting s.85 of the Trustee Act indicates that courts have consistently approached applications under such provisions with caution, in particular, as to the questions of reasonableness (“… the trustee has aacted honestly and reasonably”).

125 In a number of cases, observations have been made as to the lack of evidence as to the circumstances of the case from which the court can make the required evaluation, eg, In re Turner v Ivimey [1897] 536 at 542. On the question of reasonableness, there is, of course, some evidence that, at particular times, the trustees have taken legal advice on particular aspects of the trust but that they were not alerted to the problems that have emerged in the present proceedings. The need to rely upon lawyers for legal advice and appropriate reliance upon the advice of lawyers of repute is clearly relevant to the issue of reasonableness, eg, In re Lord De Clifford’s Estate [1901] 2 CR 707, 713.

126 As Mr Free, with respect, fairly acknowledged, the evidence in the proceedings thus far may permit some inferences to be drawn about the past management of the trust.

127 I have concluded that the applications under s.85 which have more recently emerged on behalf of the plaintiffs and the cross-claimants should only be considered in light of specific evidence that provides a sound foundation for the exercise of the jurisdiction conferred by s.85. In particular, on the issues of “reasonableness” and “ought fairly to be excused for the breach of trust …” as specified in that section.

128 Whilst evidence as to the management of the Fund reaching back to 1972 may be attended with difficulties, an analysis of records pertaining to legal advice and to management and administration practices and processes may, in some cases, permit a reconstruction of the relevant factual matrix from which inferences and conclusions concerning the prudential management and other issues relevant to a s.85 application may be drawn or established.

129 Whether such evidence would, in fact, provide a sufficient basis for making orders under s.85 for the benefit of a class or classes of persons referrable to a particular species of breach of trust (referred to in the submissions for the Attorney-General as “blanket orders”) as distinct from orders referrable to particular transactions, is a matter upon which I here express no opinion.

130 Mr Whittle, in his submissions in reply, submitted that, if I were to decline the relief sought under s.85, I should do so without prejudice to any further application. He indicated that the same approach should, in that event, also be taken with the application made by the fourth defendant, Mr Waugh.

131 I propose, at this stage, to defer any final disposition of the s.85 applications made on behalf of the plaintiffs and the fourth defendant/cross-claimant so as to provide an opportunity for further consideration. Leave will be granted to permit the applications to be restored to the list for directions and/or further hearing as necessary. Alternatively, I propose to reserve to the plaintiffs and to the fourth defendant leave to withdraw the present applications without prejudice to their respective positions and right to institute further proceedings for relief under s.85 of the Trustee Act.

Declarations and orders

132 I make the following declarations and orders:-

(1) A declaration that the present members of the Executive of the Fund known as “the Masonic Youth Welfare Fund of NSW & ACT” that is to say:-

(a) Oliver Bergstrom;
(b) Kevin Foster OAM;
(c) Allan Elliott
(d) Alan Pretyman;
(e) Kenneth Mobbs;
(f) John Sunman;
(g) Hugh Davies;
(h) Michael Morris;
(i) Dale Berrier;
(j) John Carroll,
are the trustees of the said Fund.


(2) A declaration that the plaintiffs hold the property consisting of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” as trustees de son tort.

(3) A declaration that the objects of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” are those set out under the heading “Objects” contained in a document described as “Minutes of a General Meeting of the Representatives held at the Masonic Hall Castlereagh Street on Wednesday 28 March 1923” , a copy of which is annexed as Schedule 1 to these declarations and orders.

(4) A declaration that the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” is held for charitable purposes for the relief of poverty.

(5) A declaration that it is not practicable to apply any of the capital or income, including accrued surplus income, of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” for the charitable purposes declared in (3) above.

(6) A declaration that the Fund known as “Masonic Youth Welfare Fund of NSW & ACT” be administered cy pres.

(7) That from the date of the making of these orders, the whole of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” be applied in accordance with the scheme set forth in Schedule 2 to these orders.

(8) That the plaintiffs be appointed as trustees of the fund known as the “Masonic Youth Welfare Fund of NSW & ACT” in substitution for:-

(a) Oliver Bergstrom;
(b) Kevin Foster OAM;
(c) Allan Elliott
(d) Alan Pretyman;
(e) Kenneth Mobbs;
(f) John Sunman;
(g) Hugh Davies;
(h) Michael Morris;
(i) Dale Berrier;
(j) John Carroll,
as and from the date of the making of these orders.


(9) That all property of the “Masonic Youth Welfare Fund of NSW & ACT” of whatsoever kind be vested in the plaintiffs as and from the date of the making of these orders.

(10) Pursuant to s.81 of the Trustee Act 1925 (NSW), that the plaintiffs be granted power to sell, convert, transfer or otherwise dispose of any of their assets at any time for the general purposes of the Fund known as the “Masonic Youth Welfare Fund of NSW & ACT” , including the payment of any costs properly incurred or ordered to be paid by them in these proceedings or any appeals therefrom.

(11) A declaration that on or about 27 November 1972, the plaintiffs were validly appointed as trustees of the Fund known as the “Edith Boyd Memorial Trust Fund” .

Costs

133 In relation to the costs of the proceedings, I have considered the matters raised by Mr Whittle in his written and oral submissions and the submissions made on behalf of the Attorney-General by Mr Waugh. Having done so, I make the following orders:-

(1) The first and second plaintiffs are entitled to be paid their costs and disbursements of and incidental to the proceedings from Masonic Youth Welfare Fund of NSW & ACT and the Edith Boyd Memorial Trust Fund in the following proportions: as to two-third against the first-named Fund and as to one-third from the second-named Fund on an indemnity basis and I so order.

(2) The first defendant is entitled to be paid his costs and disbursements of and incidental to the proceedings from the Masonic Youth Welfare Fund of NSW & ACT on the ordinary basis, and I so order.

(3) The second, third and fourth defendants are entitled to be paid their respective costs and disbursements of and incidental to the proceedings as against the Masonic Youth Welfare Fund of NSW & ACT on the ordinary basis, and I so order.

(4) I reserve the question of costs of the Cross-Summons. I grant liberty to apply in that respect.

134 In relation to the declarations and orders set out above, I grant liberty to any party to apply in relation to the form of such declarations and orders.

SCHEDULE 1

NSW MASONIC SCHOOLS WELFARE FUND
OBJECTS To relieve the Honorary Superintendent of responsibility in matters outside the School functions and render him any assistance he may find necessary to seek.
To provide for the children of the Masonic Schools of N.S.W. such benefits as shall be deemed, by agreement with the Hon. Supt. and the Trustees, to be outside of their domain such as:
(a) The supply and renewal of Sports Material also to provide honorary qualified instructors in the various branches of sport.
(b) The supply and renewal of books for the Library.
(c) To provide prizes for scholastic attainments.
(d) To arrange or organise entertainments
(e) To arrange an annual picnic for the whole school.
(f) To arrange for those children, who have no suitable homes to go to during vacation to secure the desired change.
(g) To provide railway fares and make all necessary arrangements for Mothers or Guardians to be with their child in cases of serious sickness.
(h) To place the children in suitable positions on their leaving the Schools, to secure homes for them, assist them financially untill [sic] they are in a position to support themselves, take a personal interest in their welfare, and maintain their interest in the Schools.
(i) To assist any who show the necessary qualifications to obtain their degrees at the University.
To co-ordinate the work of the various Lodges, desiring to assist in helping our Children
To maintain the individual interest of the Brethren of N.S.W. in the Masonic Schools.

SCHEDULE 2
MASONIC YOUTH WELFARE FUND OF NSW & ACT
Objects of the Fund
The whole of the assets of the Fund known as the ‘Masonic Youth Welfare Fund of NSW & ACT’ shall be applied to the objects set forth below by the Trustees thereof in their absolute discretion.
1. Definition
‘Youth’ shall mean any male or female members of the community, 25 years of age or under, irrespective of Masonic background or affiliation, race or religion, recommended to the Fund by a Masonic Lodge or identified by the Fund as a suitable person to receive assistance.
2. Objects
To assist Youth in necessitous circumstances by any one or more of the following:-
(a) ensuring the provision of adequate early, primary, secondary, tertiary or other education;
(b) by encouraging scholastic attainments and vocational or professional ambitions or aptitudes;
(c) assisting those showing promise or talent to proceed to a University or engage in any other course of study or special course of training, provided that where such University or other course has been commenced when a person is no more than 25 years of age such assistance under any of the objects contained herein may be continued irrespective of age until that course is completed;
(d) providing financial aid and medical, hospital and dental treatment and obtaining suitable accommodation or residence.
(e) providing necessary clothes, text books, tools-of-trade, professional equipment or any other requisite for the furtherance of a career of any Youth; and
(f) recognising and giving prizes in whatever form to Youth assisted by the Fund in consequence of their educational, sporting or like achievements.
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