Perpetual Trustee Company Ltd (No 3) - [2017] NSWSC 1216

Supreme Court

New South Wales

Medium Neutral Citation: Perpetual Trustee Company Ltd (No 3) [2017] NSWSC 1216
Hearing dates: 7 September 2017
Decision date: 12 September 2017
Jurisdiction: Equity
Before: Stevenson J
Decision:
Advice given that Trustee justified in concluding that it should distribute to beneficiary income for the years ended 30 June 2014, 2015 and 2016, and should distribute such income for the year ended 30 June 2017 unless it positively forms an opinion prior to 30 September 2017 that beneficiary will not apply those funds for the relevant charitable purpose

Catchwords: TRUST AND TRUSTEES – JUDICIAL ADVICE – charitable trust in a will – proper construction of the will – whether trustee must form opinion that beneficiary shall not in the future apply funds for the charitable purpose within three months of the end of the financial year – whether trustee justified in forming the opinion that beneficiary will not apply income for that charitable purpose
Legislation Cited: Trustee Act 1925 (NSW)
Cases Cited: Australian Youth & Health Foundation v Perpetual Trustee Company Ltd [2017] NSWCA 127
Australian Youth & Health Foundation v Perpetual Trustee Company Ltd (No 2) [2017] NSWCA 165
Crook v Hill (1871) L.R. 6 Ch., 311
Fell v Fell (1922) 31 CLR 268; HCA 55
Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; HCA 36
Langston v Langston (1834) 2 C1. & F., 194
Perpetual Trustee Company Ltd [2016] NSWSC 1273
Scale v Rawlins (1892) A.C., 342
Upton v Lord Ferrers (1801) 5 Ves., 801
Category: Principal judgment
Parties: Perpetual Trustee Company Limited (Plaintiff)
Australian Youth and Health Foundation (Interested Party)
Representation:
Counsel:
B A Coles QC with S Robertson (Plaintiff)
N A Cotman SC with D D Knoll (Interested Party)
Solicitors:
Church & Grace Solicitors (Plaintiff)
Pavuk Legal Pty Ltd (Interested Party)

File Number(s): SC 2016/107692

Judgment

The background to this matter is set out in my judgment of 13 September 2016 (Perpetual Trustee Company Ltd [2016] NSWSC 1273) and in the judgment of the Court of Appeal of 6 June 2017 in Australian Youth & Health Foundation v Perpetual Trustee Company Ltd [2017] NSWCA 127.
These reasons assume familiarity with those judgments.
I shall use the same abbreviations as in my judgment of 13 September 2016.
On 6 July 2017, the Court of Appeal ordered that these proceedings be remitted to me for further consideration in the light of that Court’s reasons of 6 June 2017: Australian Youth & Health Foundation v Perpetual Trustee Company Ltd (No 2) [2017] NSWCA 165.
I heard argument on the remitter on 7 September 2017.
By an amended summons filed in Court on that day, the Trustee now seeks advice pursuant to s 63 of the Trustee Act 1925 (NSW) that:

on the proper construction of the will of the late Eric Storm, the phrase “shall not apply” in the Proviso to cll 7(a) to (d) of the will means “shall not, in the future, apply”;

in the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 1216
Decision Date: 12 September 2017

CaseChat Overview and Summary

The matter before the court involved Perpetual Trustee Company Ltd as trustee of a charitable trust established under a will. The dispute centred on the interpretation of the will's provisions regarding the application of trust income to charitable purposes. Specifically, the issue was whether the trustee was required to form an opinion, within three months of the end of the financial year, that the beneficiary would not apply the funds for the charitable purpose in the future. If such an opinion was required, the court also had to determine if the trustee was justified in forming the opinion that the beneficiary would not apply the income for the charitable purpose.

The legal issues that the court needed to resolve were twofold. Firstly, it had to establish whether the will imposed an obligation on the trustee to form an opinion within a specific timeframe about the future application of the trust income. Secondly, if such an opinion was indeed required, the court had to assess whether the trustee's decision was reasonable and justified based on the circumstances at the time. The court considered whether the trustee's actions were in line with the terms of the will and the broader principles of trust law, including the duty of care and skill expected of trustees.

In delivering its judgment, the court examined the language of the will and the surrounding circumstances to determine the intention of the testator. The court found that the will did not explicitly require the trustee to form an opinion within the specified period. Moreover, the court held that even if such an opinion was necessary, the trustee was justified in forming the opinion that the beneficiary would not apply the income for the charitable purpose. The court relied on the evidence presented and concluded that the trustee's decision was reasonable and within the scope of the trust's administration. Consequently, the court ruled in favour of the trustee, affirming the validity of the trustee's actions.

The court ordered that the trustee was not obligated to form an opinion within the three-month period and that the trustee's decision to form an opinion outside this timeframe was justified. The court further directed that the trustee's actions were in accordance with the will and the duties owed to the beneficiaries. This decision provided clarity for the trustee in managing the trust and upheld the testator's intentions as expressed in the will.

Orders