Re John Eric Middleton Am KC in his capacity as trustee of the BF McLaren Family Trust
[2023] VSC 370
•28 June 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2023 02687
IN THE MATTER OF AN APPLICATION BY JOHN ERIC MIDDLETON AM KC IN HIS CAPACITY AS TRUSTEE OF THE BF MCLAREN FAMILY TRUST
| JOHN ERIC MIDDLETON AM KC IN HIS CAPACITY AS TRUSTEE OF THE BF MCLAREN FAMILY TRUST | Plaintiff |
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JUDGE: | Delany J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 June 2023 |
DATE OF JUDGMENT: | 28 June 2023 |
CASE MAY BE CITED AS: | Re John Eric Middleton AM KC in his capacity as trustee of the BF McLaren Family Trust |
MEDIUM NEUTRAL CITATION: | [2023] VSC 370 |
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EQUITY — Judicial advice — Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 54.02 — Interpretation of trust deed — Advice sought as to whether trustee justified in not considering making distribution to widow of specified beneficiary and her children as general beneficiaries — Not all affected persons represented at hearing — Question more appropriate for construction summons — Not an appropriate occasion for judicial advice — Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | T M Dowling | DLA Piper |
HIS HONOUR:
Background
This proceeding was issued by John Eric Middleton AM KC in his capacity as trustee of the BF McLaren Family Trust on 21 June 2023 seeking urgent judicial advice prior to 30 June 2023 in relation to two questions:
(a) Is Maria McLaren presently a General Beneficiary of the BF McLaren Family Trust (‘Trust’) under the terms of the deed of settlement of the Trust dated 1 February 1978 (‘Trust Deed’), by reason of her marriage to (including on or after the date of death of) a Specified Beneficiary of the Trust, Stuart Farquarharson McLaren?
(b) Is each of the children of Maria McLaren presently a General Beneficiary of the Trust under the terms of the Trust Deed, by reason of their mother's marriage to (including as at the date of death of) a Specified Beneficiary of the Trust, Stuart Farquarharson McLaren?
Under cl 3(b) of the Trust Deed:
The Trustee may at any time prior to the expiration of each Accounting Period until the Vesting Day determine with respect to all or any part or parts of the net income of the Trust Fund for such Accounting Period to do all or any of the following:
(i)to pay apply or set aside the same for any one or more of the General Beneficiaries living or in existence at the time of the determination;
(ii) to accumulate the same;
(iii)to pay apply or set aside the same for such charitable purposes as Trustee may think fit.
The ‘Accounting Period’ applicable to the Trust is 1 July to 30 June each year.
The evidence in support of the application is that the net income of the Trust for the financial year ending 30 June 2023 is estimated to be approximately $1,773,928. The plaintiff trustee wishes to make a determination about the distribution of that income to eligible beneficiaries of the Trust prior to 30 June 2023.
The Originating Motion was supported by an affidavit of Gerard Michael Dee Bean dated 21 June 2023 and submissions.
The proceeding was mentioned on 22 June 2023.
Prior to the mention, the solicitors for the plaintiff were invited by email to give consideration to the following matters:
(a) The usual application for judicial advice involves a question about whether the trustee, having taken proper legal advice, is justified in proceeding in a particular manner. See, for example, the discussion in Hopkins v Edwards.[1]
[1][2020] VSC 456, [195]–[196].
(b) The application does not appear to engage with that exercise of the Court’s power. The application is not framed in the usual way, that is, where the trustee puts forward a proposed course of action and seeks judicial advice in relation to that course of action, supported by an opinion from counsel. Rather, the submissions state that ‘[t]he Trustee does not seek to advance a particular position’.
(c) There is therefore a question as to whether the application is an appropriate application for judicial advice. That is, in circumstances where no position has been taken or is proposed to be taken by the trustee. This would appear directly contrary to the observations of Kunc J In the application of NSW Trustee and Guardian.[2]
(d) The issues that are raised appear to involve questions of construction of the Trust Deed better suited to a construction summons heard and determined in the usual way.
(e) The submissions state that Maria McLaren has already indicated that she wishes to be heard on the application but it appears that the trustee considers the matter should be dealt with in the absence of submissions by that party. That is, in circumstances where the trustee does not advance a particular position and there is no contradictor.
[2][2014] NSWSC 423, [3].
During the course of the mention, I raised an additional issue of concern with senior counsel then appearing. Namely, the likelihood of the subject matter of the application for judicial advice later becoming the subject of contested proceedings between affected beneficiaries or persons excluded as beneficiaries based on the advice.
Following discussion of these and other issues during the course of the mention, the plaintiff sought and was granted leave to amend his Originating Motion so as to be in the usual form of an application seeking judicial advice. The plaintiff was given leave to file and serve further evidence, including, if so minded, advice of counsel in relation to the construction questions identified in the Originating Motion as filed.
The Amended Originating Motion filed on 23 June 2023 deleted the two questions in the original application and substituted a new question:
Is the plaintiff justified in not considering making a determination, with respect to all or any part or parts of the net income of the Trust Fund, to pay apply or set aside the same for Maria McLaren or her children (Aaron Cianci, Omar Cianci, and Rohan Cianci) as General Beneficiaries under the terms of the deed of settlement of the BF McLaren Family Trust (Trust) dated 1 February 1978?
On 23 June 2023, the plaintiff filed an affidavit of Mark John William Beaver dated 23 June 2023. Mr Beaver’s affidavit exhibits as a confidential exhibit written advice obtained by the plaintiff from Dr Michael Rush KC dated 23 June 2023. The advice of Dr Rush is to the effect that, in his opinion, Maria McLaren and her children are not currently ‘General Beneficiaries’ under the Trust Deed.
The affidavit of Mr Beaver includes evidence that, in the circumstances of the advice, the trustee will not consider making a distribution of income to Maria McLaren or her children.
What is now sought in the current application is whether the Court considers that the trustee is justified in proceeding on the basis of the advice.
The Amended Originating Motion seeks an order that Dr Rush’s advice be kept confidential and be placed in a sealed envelope on the court file and marked ‘not to be opened except by order of the Court’. It is appropriate to make such an order.
The plaintiff trustee has not joined any other parties to the proceeding. However, while that is so, written submissions have been filed on behalf of Maria McLaren and her children concerning the proper construction of the Trust Deed and correspondence has been received from solicitors acting on behalf of Campbell and Pamela McLaren who confirm that their clients consider that the matters are appropriate for judicial advice and advising that they agree with the opinion of Dr Rush.
Is this an appropriate case for the provision of judicial advice?
Rule 54.02(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) provides that a proceeding may be brought for any relief which could be granted in an administration proceeding. Rule 54.02(2) relevantly provides that:
Without limiting paragraph (1), a proceeding may be brought for –
(a)the determination of any question which could be determined in an administration proceeding, including any question –
(i) arising … in the execution of a trust;
(ii)as to the composition of any class of persons having … a beneficial interest … in property subject to a trust; or
(iii)as to the rights or interests of a person claiming … to be beneficially entitled under a trust; …
Rule 54.03(c) provides that all persons having a beneficial interest under the trust need not be parties to the proceeding and the plaintiff may make such of those persons parties as it thinks fit. In written submissions filed prior to the mention, the Court was informed as follows:
The Trustee’s application is made on an ex parte basis, for personal advice. The Trustee has notified Maria McLaren, and other general beneficiaries of the Trust, of the application, but the Trustee does not seek to join them as parties pursuant to r 54.03(c).
(citations omitted)
Under Order 54 of the Rules,[3] a trustee may approach the Court for judicial advice. The private nature of such advice was discussed by the High Court in Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand:[4]
64Private and personal advice. A fifth matter, closely related to the fourth, is that s 63 operates as “an exception to the Court’s ordinary function of deciding disputes between competing litigants”; it affords a facility for giving “private advice”. It is private advice because its function is to give personal protection to the trustee.
65Section 63(2) precludes any trustee, who acts in accordance with the private advice, from being held liable for breach of trust in the event that in conventional proceedings it is later held that the legal position does not correspond with the advice given, so long as the proviso to s 63(2) is satisfied. The possibility that the rights of beneficiaries under private trusts could be affected by judicial advice led the New South Wales Parliament in 1925 to introduce the protections given by s 63(8)‑(11) and in that sense to strike a compromise. However, those protections did not alter the primary function of s 63 as creating a procedure for private advice to trustees. Even if notice of the application for private advice is given to other persons (by reason of rules of court, or a court direction under s 63(4), or by reason of s 63(8)), those persons are not strictly speaking “parties” to “proceedings” by reason of the closing words of s 63(11), although they are able to participate in the proceedings to some extent. Section 63 reflects a compromise between a procedure for affording private advice to trustees and the need for affected persons to be given a hearing in some cases.
[3]Also under s 63 of the Trustee Act 1958 (Vic).
[4][2008] HCA 42; (2008) 237 CLR 66, [64]–[65] (Gummow ACJ, Kirby, Hayne and Heydon JJ, with whom Kiefel J agreed) (citations omitted).
In Re Care Super Pty Ltd,[5] Lyons J identified the principles to be applied on such an application, including that:[6]
(1)there is no implied limitation on the power to give advice;
(2)the procedure is summary in character, intended to enable questions relevantly arising in the administration of a trust to be resolved cheaply and simply; and
(3)the advice is private advice to the trustee because its function is to give personal protection to the trustee in respect of the course of action which is the subject of the application.
[5][2021] VSC 805.
[6]Ibid [23] (citations omitted).
There is no doubt that the subject matter of the judicial advice that is now sought falls within r 54.02. There is also no doubt that the advice that is now sought concerns substantive issues involving the proper construction of the Trust Deed and whether the trustee is justified in proceeding on a particular basis concerning that construction. Whatever advice is given on this application concerning the construction of the Trust Deed is not determinative of the eligibility of Maria McLaren and her children as ‘General Beneficiaries’ of the Trust.
Clause 1(b)(1) of the Trust Deed defines ‘General Beneficiaries’ to include, amongst others:
(i)the Specified Beneficiary and the Specified Beneficiaries;
(ii)the brothers and sisters, spouses, children and grandchildren of the Specified Beneficiary or the Specified Beneficiaries and the spouses, children and grandchildren of such brothers and sisters spouses children and grandchildren; …
There is no definition of ‘spouse’ in the Trust Deed.
On 5 June 2023, the plaintiff wrote to Maria McLaren following a meeting with her on 24 May 2023. In that letter, he said:
I am writing to you, and to your legal counsel, because you are a Beneficiary of the Trust and I need to have a real and genuine consideration of your position and whether to give you the whole or some part of the net income, or whether I should accumulate it.
To assist me in making such a decision, I would like you to let me know:
·your circumstances,
·your needs,
·your desires, and
·the resources available to you to meet your needs and desires.
Please include the above information for any children you may have.
…
If you have a spouse, then your spouse is also a beneficiary of the Trust…
The views conveyed by the plaintiff to Maria McLaren on 5 June 2023 are directly contrary to the opinion of Dr Rush dated 23 June 2023. If the plaintiff had advice prior to 5 June 2023 as to the proper construction of the Trust Deed, then that advice did not accord with Dr Rush’s advice.
On 14 June 2023, the solicitors for Maria McLaren informed the plaintiff that their client had only recently become aware she was a beneficiary of the Trust. They informed the trustee that it is over 10 years since Maria McLaren’s former husband, Stuart McLaren, died and that Ms McLaren has never been contacted by the former trustee of the Trust in relation to any entitlements under the Trust.
On the evening of Monday, 19 June 2023, the solicitors acting on behalf of the plaintiff wrote to members of the McLaren family and their advisors stating that:
Mr Middleton intends to apply the Supreme Court this Wednesday for judicial advice on whether Maria McLaren alone is a General Beneficiary, or together with her children are General Beneficiaries, of the Trust asking for the matter to be heard… this Friday.
The tone of that correspondence suggests that, as at 19 June 2023, the plaintiff or his legal advisors his were of the opinion that, on the proper construction of the Trust Deed, Maria McLaren is a ‘General Beneficiary’ of the Trust, but that her children, not being children of a Specified Beneficiary, are not.
On 20 June 2023, the solicitors acting on behalf of Campbell McLaren and Pamela McLaren wrote to the trustee’s solicitors. In that correspondence, they asserted that neither Maria McLaren nor her children fall within the definition of General Beneficiaries of the Trust.
The questions posed by the Originating Motion as filed, and the correspondence to which I have referred, point up the construction questions that arise. First, whether, upon a proper construction of the Trust Deed, ‘spouse’ includes a widow of a Specified Beneficiary. Secondly, if so, whether the ‘spouse’s children’ includes children of the widow who are not children of the Specified Beneficiary.
The construction issues that are raised are not without difficulty or controversy. In submissions filed prior to the mention on behalf of the plaintiff, in which no particular construction of the Trust Deed was advocated, it was submitted:
23Research has not revealed any cases in which the expression ‘spouse’ has been considered in circumstances of a trust deed or other instrument which is either identical or closely analogous to the present proceeding.
24In Re Rouse, McMillan J considered the meaning of the word ‘spouse’ in the context of a trust deed, but in that case, the word ‘spouse’ was defined in the deed itself, and included a person “who is or was the legally married spouse, Widow, Widower or Social Partner of the Beneficiary”. McMillan J observed that the ordinary and natural meaning of the word ‘spouse’ was narrower than the definition of ‘spouse’ in the deed.
25In Clay v Clay, the Full Court of the Supreme Court of Western Australia also considered the meaning of the word ‘spouse’ in a trust deed. However, the question in that case was whether ‘spouse’ referred to a particular person at the time the deed of settlement was executed or, alternatively, was a descriptive word which might apply to a person at a point in time other than the date when the deed was executed (eg. the spouse at the time of the death of the testator).
(citations omitted)
As foreshadowed in the email from the Court to the solicitors for the plaintiff, one way to deal in a definitive manner with the contested construction issues would be on the hearing of a construction summons, with all interested parties who wish to be heard able to make submissions and to arrange for an orderly hearing at which all of those persons who wish to appear are able to do so.
When that issue was mentioned on 21 June 2023, senior counsel informed the Court that the plaintiff was mindful of trying to minimise costs to the Trust. It was submitted that, if the matter were to be dealt with as a conventional construction summons, it could be anticipated that there might be numbers of parties represented by senior and junior counsel wanting to appear.
I accept the accuracy of that submission. I am aware of other related litigation in this Court between some of the beneficiaries, also involving the former trustee. That litigation provided the context for the retirement of the former trustee and the appointment of the present trustee, the plaintiff in this case, as trustee of the Trust on 18 April 2023. It is also the case, based on the estimated net income available for distribution in the 2023 financial year, that this is not a small trust fund.
What is being sought on this application is advice and could not, in any circumstances, be determinative of the proper construction of the Trust Deed.
As submitted on behalf of the plaintiff, there will be occasions when judicial advice is provided even when it may affect the rights of persons not before the Court. However, it is also the case that it is not generally appropriate to provide judicial advice in relation to substantive issues concerning the rights of beneficiaries.
In Re Care Super Pty Ltd,[7] Lyons J observed:[8]
[7][2021] VSC 805.
[8]Ibid [30]–[33] (citations omitted).
30Second, generally advice has not been given on matters which determine substantive issues, on the rights of beneficiaries or on matters in controversy between parties to a trust. However, as noted by Austin J in MTM Funds Management Ltd v Cavalane Holdings Pty Ltd, in the exercise of its discretion, the court may provide judicial advice even in controversial circumstances, for example, if confined to an issue of law. Further, his Honour considered that there are occasions where, in the exercise of the court’s discretion, the court may provide advice even though the advice affects the rights of persons who are not represented at the hearing of the application or their enjoyment:
In many cases, the crucial issue for the court will be whether the giving of advice might operate unfairly as regards a person not before it. That, in turn, requires an assessment of whether the court might fail to take into account some relevant submission in the absence of representation by the affected person. But these matters fall within the ambit of the court’s discretion, and the absence of representation of an affected party is not a jurisdictional bar.
31In that case, the trustee was the responsible entity of a managed investment fund. It sought advice as to whether unitholders were entitled to exercise their contractual rights under the constitution to remove the responsible entity by ordinary resolution and to requisition a meeting for that purpose. One of the unitholders who opposed the application was joined as a defendant. ASIC appeared as amicus curiae. Austin J determined to give judicial advice given that:
(1)all issues had been ventilated, with the result that he was confident that his decision would not be affected even if he were to hear submissions from another interested person; and
(2)the advice would clarify the position before the relevant meeting which would serve the interests of the unitholders.
32With respect, I endorse these comments of Austin J which I consider are consistent with the comments of the plurality of the High Court in Macedonian Orthodox Community Church.
33Further, these comments of Austin J are of particular relevance to the determination of this proceeding given that the plaintiff determined not to join any member of the Fund as a party to this proceeding and limited information was provided to Employer Organisations and Fund Member Organisations named in the constitution of the plaintiff in respect of the third application. As noted above, it was in these circumstances that I determined to appoint Ms Harris QC as amicus curiae in this proceeding.
In the present case, unlike MTM Funds Management Ltd v Cavalane Holdings Pty Ltd,[9] none of the beneficiaries of the Trust, whether persons whose status as General Beneficiaries is not in issue, or Maria McLaren and her children, whose status as General Beneficiaries is very much in issue, have been joined as defendants to the proceeding. There is no contradictor.
[9][2000] NSWSC 922; (2000) 158 FLR 121.
The urgency with which the application has been brought on, combined with the demands placed on the Court by other litigants, the nature of the application, and the asserted need for the Court to give advice about whether the trustee is justified in proceeding on the basis of senior counsel’s advice as to the contested construction issues prior to 30 June 2023, means that an orderly hearing in which all interested parties could file submissions and be heard, and the Court to deliver its decision prior to 30 June 2023, is not feasible.
Having now had the opportunity to review the advice of senior counsel, and being aware of at least some of the competing construction arguments, I do not consider that this is an appropriate case for the Court to provide judicial advice. That is the case first, because the construction issues that arise are complex. Secondly, I am not convinced that the need for urgent judicial advice, the effect of which would be to provide protection to the trustee, outweighs the desirability of an orderly hearing of issues of construction of the Trust Deed, with all interested persons being afforded a proper opportunity to be heard. For a period of 10 years since the death of Maria McLaren’s husband, the former trustee made no distributions to Maria McLaren and, it appears, treated she and her children as persons who were not eligible beneficiaries of the Trust. Although short written submissions dated 27 June 2023 have been received on behalf of Maria McLaren and her children, and those submissions contend that the word ‘spouse’ extends to widow and that Maria McLaren’s children’s status is ‘derivative’ upon her status, and that they too are ‘General Beneficiaries’, other parties who may be interested, including the former trustee should the proper construction of the Trust Deed not be in accordance with senior counsel’s confidential advice, have not had the opportunity to file submissions. As the matter is proceeding as an urgent ex parte application, there is neither the time nor the opportunity for such persons to address the Court. Thirdly, because whatever judicial advice might be given may be followed by litigation between interested persons that traverses the same subject matter as the proposed advice, accepting that the role of the advice is different, problems may arise in future if the advice is given now.
To proceed to give judicial advice in those circumstances, where there later may be a decision of the Court on a definitive construction summons, may be contrary to the Civil Procedure Act 2010 (Vic) (‘CPA’). The overarching purpose identified in s 7 of the CPA is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. Section 8(1) provides that, in the exercise of any of its powers, or in the interpretation of those powers, the Court must seek to give effect to the overarching purpose. For the Court to give urgent judicial advice to the trustee in circumstances where a separate contested construction hearing where the issues are determined may follow, particularly in light of already existing proceedings, is not consistent with the overarching purpose.
The submissions on behalf of Maria McLaren include that, if the Court is minded to give the judicial advice sought, that it should be expressly limited so as to meet the urgency of the situation and should be confined to the current financial year. The advice that is sought, understandably, is not confined to the present year and the course that is proposed is not feasible.
There is a further reason why I consider that it is not appropriate to give the judicial advice sought. That is because the urgency behind the application appears driven by concerns about tax consequences, whether for the Trust itself or for others. The plaintiff can make a determination, if he considers it appropriate to do so, to distribute the income of the Trust for the 2023 financial year before 30 June 2023. He can also determine to accumulate all or part of that fund, as I understand from the provisions of the Trust Deed. If the trustee considers it appropriate to determine to make a distribution, he can do so consistent with the advice from Dr Rush dated 23 June 2023. The trustee can do so irrespective of whether or not judicial advice is provided. That the Court might state that the trustee is justified in proceeding in a particular manner cannot be determinative of the rights of the persons who claim to be beneficiaries, and the fact of judicial advice, if provided, or the absence of such advice, is most unlikely to impact on the tax position of any party.
Recently, in another context in Vanta Pty Ltd (as trustee of the Mantovani Family Trust) v Mantovani,[10] the Court of Appeal referred to earlier observations by Finkelstein J in Sons of Gwalia Ltd (subject to a Deed of Company Arrangement) v Margaretic (‘Sons of Gwalia’).[11] Those observations were described by Finkelstein J as ‘some basic rules’ in relation to the principles upon which costs are awarded in cases involving trustees.[12] While the present issues do not involve costs, the ‘basic rules’ discussed by Finkelstein J include the identification of four different classes of trust dispute.
[10][2023] VSCA 74, [29].
[11][2006] FCAFC 92; (2006) 232 ALR 119.
[12]Ibid 121 [5].
The passage from Sons of Gwalia to which the Court of Appeal referred includes the following:[13]
[13]Sons of Gwalia Ltd (subject to a Deed of Company Arrangement) v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119, 121–122 [5]–[10].
5The best place to begin is with some basic rules. Re Buckton [1907] 2 Ch 406 contains a classic statement of the principles upon which costs are awarded in cases involving trustees. There Kekewich J (who was a master of Chancery procedure) said that, broadly speaking, there are three kinds of disputes involving trustees. The first is an action brought by trustees relating to the construction of the trust instrument or some other question arising in the course of an administration. In Alsop Wilkinson (a firm) v Neary [1996 1 WLR 1220, 1223, [1995] 1 All ER 431 at 434 (Alsop Wilkinson) Lightman J broadened this category by including within it “[every] dispute as to the trusts upon which [the trustees] hold the subject matter of the settlement.” For convenience he labelled those cases as “trust disputes”.
6When a “trust dispute” has come about because there is a dispute between two beneficiaries concerning the construction of the trust instrument or their respective rights in the trust estate, the duty of the trustee as the trustee for all beneficiaries is to treat the beneficiaries impartially and remain neutral: Australia and New Zealand Banking Group Limited v National Mutual Life Nominees Limited (1977) 137 CLR 252, at 264-265, 270; …Alsop Wilkins at 1225; Re Patton (1971) 19 DLR (3d) 497; Jones v Heritage Pullman Bank Co, 518 NE 2d 178 (1987) at 182‑184; Northern Trust Co v Heuer, 560 NE 2d 961 (1990) at 964. Thus, unless the trust instrument itself provides otherwise, the trustees should bring the dispute into court for resolution but in the proceeding they are not entitled to favour one party over another by advocating a party’s cause: Re Hughes’ Will, 5 NW 2d 791 (1942); Re James’ Estate, 86 NYS 2d 78 (1948) at 89; Re Duke, 702 A 2d 1008 (1995); A W Scott and W F Fratcher, Scott on Trusts 4th ed, Little, Brown, Boston, 1987, § 183; Restatement (Second) of Trusts, American Law Institute, Philadelphia, 1959,§ 183. To do otherwise would be a breach of the trustees’ duty to deal impartially with all beneficiaries and to protect their interests. Of course, if the case is not properly presented by the beneficiaries the trustees may, indeed probably should, provide the court with their views.
7In a trust dispute the costs of all parties are treated as necessarily incurred for the benefit of the estate and are ordered to be paid out of the fund either on a solicitor and client or indemnity basis. …
8The second kind of dispute is a trust dispute in which the application is made by someone other than the trustee (usually a beneficiary) but raises the same kind of issue as in the first class and would have justified an application by the trustees. Here the same rule in relation to costs applies because, as in the first class, the application is for the benefit of the estate.
9The third class identified by Kekewich J (which Lightman J refers to as a ‘beneficiaries dispute’) is where a beneficiary brings a hostile claim against the trustees (for example as to the propriety of any action taken or omitted to be taken) or another beneficiary. ...
10Lightman J has identified a fourth class, which he labels ‘a third party dispute’. This is a dispute between the trustees and persons, otherwise than in their capacity as beneficiaries, in respect of rights and obligations assumed or incurred by the trustees in the course of administering the trust. Examples are actions in contract or tort. …
The ‘basic rule’ is that disputes involving beneficiaries concerning the construction of the trust instrument or their respective rights in the trust estate are matters where the trustee should treat the beneficiaries impartially and should remain neutral. That is the position which the plaintiff trustee adopted initially on the present application. It is understandable why he took that course. However, the problem with that approach is that to frame an application for judicial advice in a neutral manner does not sit comfortably with the fundamental nature of the judicial advice sought in this case, namely, for the Court to advise whether the trustee is justified in proceeding on a particular basis.
For the reasons stated, I do not consider that the present application is one appropriate for judicial advice. I propose to dismiss the Amended Originating Motion. I will, however, make the order for confidentiality substantially in the form provided in the draft form of order handed up by counsel. I will also make an order that the plaintiff be indemnified from the assets of the Trust for the costs of and incidental to the proceeding.
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