The Uniting Church in Australia Property Trust (Vic) v Attorney General for the State of Victoria
[2022] VSC 769
•13 December 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2022 03666
BETWEEN:
| THE UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (VICTORIA) | Plaintiff |
| v | |
| ATTORNEY-GENERAL FOR THE STATE OF VICTORIA | Defendant |
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JUDGE: | Irving AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 December 2022 |
DATE OF JUDGMENT: | 13 December 2022 |
CASE MAY BE CITED AS: | The Uniting Church in Australia Property Trust (Vic) v Attorney General for the State of Victoria |
MEDIUM NEUTRAL CITATION: | [2022] VSC 769 |
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TRUSTS – Supreme Court (General Civil Procedure) Rules 2015 (Vic), Rule 54.02 – Determination of questions arising in the execution of a trust – Whether it is proper for the trustee to defend related proceeding – Whether the trustee is entitled to indemnity from the trust property for its reasonable costs of defending the related proceeding – Charitable purpose trust – Application allowed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Moore KC Mr P Reynolds | KCL Law |
| For the Defendant | Dr P Bender | Victorian Government Solicitor’s Office |
HIS HONOUR:
The plaintiff is a corporation constituted by the Uniting Church in Australia Act 1977 (Vic) to hold trust property on trust for the Uniting Church of Australia and upon any other trust affecting the property. The plaintiff applies for judicial advice under Order 54 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the Rules).
On 22 April 1963, by operation of the Queen’s College Land Act 1962 (Vic) (the Act), a trust for the purposes of St Hilda’s College (the St Hilda’s College Trust) was declared over the land on which St Hilda’s College, a residential college at the University of Melbourne, sits (the Land).
On 20 December 1993, the plaintiff became the registered proprietor of the Land and trustee of the St Hilda’s College Trust.
On 15 September 2021, the Council of St Hilda’s College (the Council) directed the plaintiff, pursuant to clauses 2 and 3 of a deed of trust executed by the plaintiff and the Council on 11 December 1992 (the 1992 Deed), to transfer the Land to St Hilda’s College Ltd for no consideration. The plaintiff refused that direction.
On 6 September 2022, the Council issued proceedings S ECI 2022 03477 (the Main Proceeding) seeking a declaration that the plaintiff is bound by the Council’s direction, and an order that the plaintiff transfer the Land to St Hilda’s College Ltd.
The plaintiff seeks judicial advice on whether it would be proper to defend the Main Proceeding and whether it would be entitled to indemnity from the trust property for its reasonable costs of defending the Main Proceeding. Additionally, the plaintiff seeks an order under rr 28.05(4) and 28A.06(1) of the Rules that exhibit RS-2 to the affidavit of Rodney Skilbeck (Skilbeck) sworn 15 September 2022 remain confidential.[1]
[1]The plaintiff’s originating motion filed 15 September 2022 sought an order that the affidavit of Rodney Skilbeck dated 15 September 2022 and the exhibits thereto remain confidential. By the plaintiff’s written submissions in reply, the plaintiff accepted that it is appropriate to seek an order that only exhibit RS-2 to the affidavit of Rodney Skilbeck dated 15 September 2022 remain confidential.
The Attorney-General for the State of Victoria (the Attorney-General) is named as the defendant to this proceeding. The Attorney-General accepted that the St Hilda’s College Trust over the Land is prima facie a charitable trust such that it was appropriate for the Attorney-General to be the defendant to the proceeding to look after the interests of the public in such a trust. The Attorney-General accepts that the Court has jurisdiction to give the opinion sought by the plaintiff.
For the reasons that follow I have decided that the plaintiff is justified in defending the Main Proceeding and that the plaintiff is entitled to be indemnified for its costs of doing so, capped at $300,000.00 for the trial or $410,000.00 in the event of an appeal, from the assets of the St Hilda’s College Trust.
Background
The following background is drawn from information contained in the plaintiff’s written submissions and was not the subject of dispute between the parties.
In the late 1950s, the Presbyterian Church of Victoria and the Methodist Church of Australasia established a residential college for women at the University of Melbourne by the name of ‘St Hilda’s’, to be situated on the Land which was then owned by Queen’s College.
On 3 April 1962, the then trustees of Queen’s College executed an instrument of transfer of the Land from Queen’s College to 10 persons (the Original Trustees).
On 11 December 1962, the Act commenced. Section 2(1) of that Act granted the registered proprietors of the Land the power, from 3 April 1962, to transfer the Land to trustees upon trust ‘for the purposes of … St. Hilda’s College’. Section 2(2) of the Act provided:
Upon registration of a transfer of [the Land] pursuant to sub-section (1) of this section the trustees to whom it is transferred shall hold the land upon trust for the purposes of the said St. Hilda’s College.
On 18 March 1963, the Original Trustees became the registered proprietors of the Land. By operation of s 2(2) of the Act, they then also became trustees of the Land, holding it ‘for the purposes of … St. Hilda’s College’.
On 22 April 1963, the Council passed a resolution directing the Original Trustees to declare a trust over the Land in the form of a draft deed.
On 1 November 1963, the Original Trustees and Lady Paton, acting for and on behalf of the Council, executed the trust deed (the 1963 Deed).
On 14 February 1964, the trust was registered in folium 570 of the Register of Successory Trusts.
On 11 December 1992, the plaintiff and Barbara Jean Green, for and on behalf of the Council, executed the 1992 Deed.
The recitals to the 1992 Deed state:
A.The [Property Trust] is a corporation constituted under The Uniting Church in Australia Act 1977 of Victoria (as amended) and by the said Act is empowered to hold property in trust for The Uniting Church in Australia and upon any other trusts affecting the property.
B.The land described in the Second Schedule hereto having previously been vested in certain persons as [Property Trust] for the said College (pursuant to a Trust Deed dated 1 November 1963 of which a photocopy is annexed hereto) is presently vested in the [Property Trust] by virtue of the provisions of the abovementioned Act upon certain trusts which are special trusts within the meaning of Section 20(7) of the said Act.
C.The [Property Trust] wishes by this Deed to acknowledge the special trusts upon which it now holds the said land and will in future hold any other lands hereafter acquired for the said College.
The 1992 Deed relevantly provides:
1.The [Property Trust] declares that as from the date of the vesting in it of the land described in the Second Schedule hereto and any lands acquired for St. Hilda’s College in the future (all of which lands are hereinafter referred to as “the trust property”) it holds the trust property UPON TRUST for use and occupation by and for the general purposes of St. Hilda’s College, University of Melbourne (“the College”).
2.That the [Property Trust] will not except by authority of a resolution of the Council sell, transfer, lease, mortgage or otherwise deal with or encumber the trust property or any part thereof.
3.That the [Property Trust] will whenever directed by resolution of the Council deal with the trust property or any part thereof and with all money raised from sale, mortgage or other dealings with the trust property or any part thereof as directed or authorised by the Council for the lawful purposes of the College and not otherwise.
On 20 December 1993, the plaintiff became the registered proprietor of the Land and began to hold the Land on trust.
On 21 June 2017, St Hilda’s College Ltd was incorporated.
On 12 October 2017 and again on 26 August 2021, the Council passed resolutions to direct the plaintiff to transfer the legal and beneficial title to the Land to St Hilda’s College Ltd pursuant to clauses 2 and 3 of the 1992 Deed.
On 15 September 2021, the Council wrote to the plaintiff, referring to clauses 2 and 3 of the 1992 Deed and the 12 October 2017 and 26 August 2021 resolutions, and directed the plaintiff to transfer the legal title to the Land to St Hilda’s College Ltd. The Council’s letter stated:
The Council hereby directs the [Property Trust] to deal with the Land by transferring legal title in it to St Hilda’s College Limited ABN 25 619 898 672 and to take all necessary steps for St Hilda’s College Limited ABN 25 619 898 672 to become registered as proprietor of the Land within 60 days of the date of this letter.
On 8 October 2021, the plaintiff refused to comply with the direction, stating that clauses 2 and 3 of the 1992 Deed did not empower the Council to compel the plaintiff to transfer the Land.
On 6 September 2022, the Council issued the Main Proceeding, naming the plaintiff as the first defendant and St Hilda’s College Ltd as the second defendant.
By the originating motion, the Council seeks the following relief:
1.A declaration that, pursuant to clauses 2 and 3 of the Trust Deed dated 11 December 1992, the first defendant is bound by the direction of the plaintiff dated 15 September 2021 directing the first defendant to deal with the land situated at 19-27 College Crescent, Parkville, Victoria described as Lot 1 on Plan of Subdivision 058348 (being the whole of the land comprised in Certificate of Title Volume 8452 Folio 513) (“the Land”).
2.An order that, pursuant to the direction referred to in paragraph 1, the first defendant:
(a) transfer legal title in the Land to the second defendant; and
(b)take all necessary steps for the second defendant to become registered as proprietor of the Land.
3. Costs.
4. Such further or other order as the Court considers appropriate.
On 21 October 2022, the plaintiff wrote to the solicitors for the Council requesting the Main Proceeding be discontinued as the Council had failed to obtain a fiat from the Attorney-General and foreshadowing that if the Main Proceeding was not discontinued, the plaintiff would seek summary judgment.
On 8 November 2022, the Council filed a summons in the Main Proceeding seeking to substitute members of the Council for the Council as plaintiff; to remove St Hilda’s College Ltd as the second defendant and add it as a plaintiff; and to add the Attorney-General as a defendant.
On 11 November 2022, the plaintiff filed a summons in the Main Proceeding seeking summary judgment, or alternatively, that the originating motion be struck out.
At the time of the hearing of the plaintiff’s originating motion in this proceeding, the two summonses filed in the Main Proceeding had not yet been heard and determined.
The plaintiff’s material
The plaintiff’s application was supported by two affidavits sworn by Rodney Skilbeck on 15 September 2022 and 24 November 2022 respectively. The plaintiff also relied on its written submissions dated 17 October 2022 and written submissions in reply dated 24 November 2022.
Skilbeck’s affidavit sworn 15 September 2022 sets out the background to the proceeding in terms similar to those outlined above, and also exhibits a copy of a memorandum of legal advice provided to the plaintiff by its counsel, Mr Moore KC and Mr Reynolds. The plaintiff maintains client legal privilege in the memorandum of advice. It is sufficient to note that counsel has advised the plaintiff that it has a proper basis to defend and reasonable prospects of success in defending the Main Proceeding.
Skilbeck’s affidavit sworn 24 November 2022 addresses the plaintiff’s financial resources; the plaintiff’s estimate of its costs of the Main Proceeding; and the value of the Land.
In relation to the plaintiff’s financial resources, Skilbeck deposed that the plaintiff holds both general and special trust property. General trust property is held by the plaintiff for religious, social, educational or charitable purposes. In contrast, special trust property is held by the plaintiff for the purposes articulated in the documents that create that special trust. According to Skilbeck, while the amount of assets held by the plaintiff on general trust is sizeable, many of those assets are illiquid and are to be applied to activities that further the general charitable purposes of the Uniting Church. Skilbeck deposed that if the plaintiff applied general trust property to defending an action concerning assets held on trust for special purposes, charitable monies would be diverted from general to special trust.
In relation to the plaintiff’s costs of the Main Proceeding, Skilbeck deposed that the plaintiff’s solicitors estimate those costs, including extensive attendances pre-litigation, interlocutory applications, directions hearings and a final hearing of up to two days to be:
(a) between approximately $200,000 - $300,000; and
(b) between approximately $390,000 - $410,000, if there is an appeal (one day estimate).
In relation to the value of the Land, Skilbeck deposed that St Hilda’s College Ltd’s consolidated financial statement for the 2021 financial year showed the land and buildings the subject of the Main Proceeding are valued at $43,396,429.00, excluding plant and equipment.
The Attorney-General’s submissions
The Attorney-General relied upon its written submissions dated 3 November 2022.
The Attorney-General did not oppose the plaintiff’s request for judicial advice that it is justified in defending the Main Proceeding. The Attorney-General submitted that there appeared, prima facie, to be a legitimate legal question to be answered concerning the correct interpretation of the powers and restrictions in the Act, the 1963 Deed and the 1992 Deed.
The Attorney-General submitted that it was limited in the submissions it could make about the merits of the plaintiff’s defending the Main Proceeding as she did not have access to the advice of counsel to the plaintiff.
The Attorney-General noted that the St Hilda’s College Trust appeared to be governed by the Act, the 1963 Deed and the 1992 Deed. The legal issue in the Main Proceeding appears to the Attorney-General to be whether the plaintiff, as trustee of the St Hilda’s College Trust, is obliged to transfer the Land as directed by the Council pursuant to the following provision in the 1992 Deed (and in light of the Act and the 1963 Deed):
That the [plaintiff] will whenever directed by resolution of the Council deal with the trust property or any part thereof and with all money raised from sale, mortgage or other dealings with the trust property or any part thereof as directed or authorised by the Council for the lawful purposes of the College and not otherwise.
The Attorney-General noted the plaintiff’s legal position appeared to be:
(a) the St Hilda’s College Trust is a perpetual trust for charitable purposes because, among other things, s 2(2) of the Act provides for the trustees to hold the Land on trust “for the purposes of….St Hilda’s College”;
(b) section 3(2) of the Act supports the proposition that the St Hilda’s College Trust is a trust for charitable purpose;
(c) section 3(1) contains a power to, among other things, mortgage, sell, transfer or dispose of the Land but s 3(2) restricts the use of the money arising from such a transaction to the purposes of St Hilda’s College or some other college affiliated with the University of Melbourne or for some other educational purposes of a like nature;
(d) this restriction suggests that:
(i) the St Hilda’s College Trust is a trust for general charitable purposes because it restricts usage not just to the purposes of a specific entity, but to general purposes, ie. education, which would be charitable in nature;
(ii) this type of restriction on the use of funds from the disposal of the Land suggests the St Hilda’s College Trust is intended to exist in perpetuity; and
(iii) the 1963 Deed and the 1992 Deed contain a similar power of disposal to that contained in s 3(1) of the Act, which suggests that a similar restriction on the power should be implied into those deeds, particularly because the Act facilitated the creation of the St Hilda’s College Trust over the Land in the first place. Clause 4 of the 1963 Deed also specifically refers to holding and dealing with the money thereby raised “as directed or authorised by the Council for the purposes of the College and not otherwise”. Similarly clause 3 of the 1992 Deed also refers to the trustee dealing with the trust property and will all money raised from sale “as directed or authorised by the Council for the lawful purpose of the College and not otherwise”;
(e) the powers in the 1992 Deed (and in the 1963 Deed) do not extend to directing the plaintiff to make a wholesale gift of the Land, or removing the plaintiff as trustee; and
(f) even if St Hilda’s College Ltd became the legal owner of the Land, it could not take beneficial ownership of the Land as that would be in breach of the charitable trusts upon which the Land is held. St Hilda’s College Ltd, on becoming legal owner, would hold the Land subject to the restrictions in the Act.
The Attorney-General opposed the plaintiff’s request for judicial advice that the plaintiff’s reasonable costs of the Main Proceeding should be paid out of the assets of the St Hilda’s College Trust. The Attorney-General submitted that question should be deferred for determination by the trial judge in the Main Proceeding.
In support of this aspect of her submissions, the Attorney-General referred to the relevant factors identified by McDonald J in Re Frosthollow Pty Ltd,[2] discussed below at [59]. In particular the Attorney-General submitted that:
[2][2015] VSC 512, [11].
(a) if deferred, the plaintiff would not be forced to draw on general charitable purpose trust funds as it appeared to have no immediate need to meet the costs of the Main Proceeding out of those funds;
(b) the Council has applied to join the Attorney-General as a defendant to the Main Proceeding and so it is unlikely the plaintiff will be the sole contradictor in the Main Proceeding;
(c) the plaintiff has chosen not to provide the confidential advice of counsel to the Attorney-General such that the Attorney-General is not able to make an informed view of the merits of the plaintiff’s position in the Main Proceeding;
(d) the plaintiff’s costs estimate appears slightly high given that the Main Proceeding is likely to principally involve legal submissions on the proper construction of three instruments, with little additional evidence or cross-examination;
(e) the Main Proceeding, to the extent the Council is arguing that the plaintiff failed to comply with a lawful direction, can be construed as involving an allegation that the plaintiff has committed a breach of trust; and
(f) in all the circumstances, the prudent course for the Court to follow would be to defer providing judicial advice on whether the plaintiff would be entitled to indemnity from trust property for its reasonable costs of defending the Main Proceeding and refer that question to the trial judge.
The Attorney-General did not oppose the plaintiff’s request for orders that exhibit RS-2 of the Skilbeck affidavit sworn 15 September 2022 remain confidential.
The Attorney-General did not oppose the plaintiff’s application that the costs of the current proceeding be paid out of the assets of the St Hilda’s College Trust.
Finally, the Attorney-General submitted that the Court should provide written reasons in respect of the determination of the plaintiff’s application.
The plaintiff’s submissions on indemnity of its costs of the Main Proceeding
The plaintiff submitted that it should have the protection of advice as to whether it would be entitled to indemnity from the trust property for its reasonable costs of defending the Main Proceeding now, and that the question should not be deferred for consideration of the trial judge.
In support of the plaintiff’s position, counsel referred the Court to the following statements of the plurality in Macedonian Orthodox Community Church St Petka Inc v His Eminence Metropolitan Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (Macedonian):
Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee’s fear of personal liability for costs.[3]
…
The fact that one of the purposes of proceedings for judicial advice is to protect the interest of the trust has particular importance where, as in this case, the trust concerned is a charitable purpose trust. In litigation brought by private persons having a particular view about the terms of a trust, the trustee will ordinarily be joined as a necessary and proper party to the proceedings. Unless some other party will act as contradictor, the burden of defending the suit will fall upon the trustee. If, as will often be the case with a charitable purpose trust, there is no other party that will act as contradictor, the claims made about the terms of the trust will go unanswered unless the trustee can property resort to the trust funds to meet the costs of defending the litigation. And even if there is another party that will act as contradictor, it is almost always desirable, even necessary, for the trustee to take an active part in the proceedings so that issues are properly ventilated and argued.[4]
[3](2008) 237 CLR 66, 93-94 [71] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
[4]Ibid, 94 [73].
The plaintiff submitted that:
(a) if the question was deferred to the trial judge in the Main Proceeding, the plaintiff would be exposed to the risk that the plaintiff’s costs of acting in accordance with the Court’s advice that it is justified in defending the Main Proceeding might have to be met by the plaintiff itself;
(b) such a course would expose the interests of the St Hilda’s College Trust to subordination to the trustee’s fear of personal liability for costs;
(c) the fact that the plaintiff has access to resources to fund its defence in the Main Proceeding is not relevant. The central question is whether the trustee has a fear of personal liability for costs;
(d) even if the Attorney-General is added as a defendant to the Main Proceeding and can act as a contradictor, it is desirable the plaintiff take an active part in that proceeding;
(e) it did not accept the Attorney-General’s characterisation of the plaintiff’s costs estimate as high, given the absence of contrary evidence and the likely steps involved in the Main Proceeding; and
(f) the factors that led the Court in Hopkins v Edwards (Hopkins)[5] to defer the question of costs to the trial judge can be distinguished from the circumstances of this case.
[5][2020] VSC 456.
Applicable principles
The parties were in agreement about the principles relevant to an application for judicial advice under r 54.02 of the Rules and that these were as summarised by the plurality in Macedonian.[6]
[6](2008) 237 CLR 66, 89-90 [58] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
Under r 54.02 of the Rules, the Court has jurisdiction to give judicial advice on any question respecting the management or administration of trust property, or respecting the interpretation of a trust instrument.
Other than the subject matter, scope and purpose of the rule, there is no other limitation to the Court’s discretion to exercise its power to give judicial advice.[7] The principle purpose is the protection of the interests of the trust. A further purpose is the protection of a trustee acting upon advice.[8]
[7]Ibid, [59]. The reference to ‘legislation’ is to s 63 of the Trustee Act 1925 (NSW), which has no statutory equivalent in the Trustee Act 1958 (Vic) but is functionally equivalent to r 54.02.
[8]Ibid, [72].
The function of advice proceedings is to give private personal advice and protection to the trustee.[9] The procedure protects the trustee from complaint that it should have acted otherwise.[10]
[9]Ibid, [64].
[10]Ibid, [45].
A trustee who is sued should take no step in defence of the suit without first obtaining judicial advice about whether it is proper to defend the proceedings.[11]
[11]Ibid, [74].
The question for the Court on a Beddoe application[12] is whether it would be proper for the trustee to bring or defend the proceeding on the material then available.[13] The Court’s task is to determine whether, on the material presently available, it would be appropriate for an applicant to defend the main proceeding. The Court is not bound to investigate the evidence to make a finding about whether the main proceeding would be successful or to determine the issues in that proceeding. The Court is, instead, determining whether a defence is justifiable. The defence must not be fruitless. Generally, the issue is whether the applicant has a legitimate interest in defending the main proceeding and that will depend on the nature of the proceeding and the circumstances of that particular case. [14]
[12]A Beddoe application is an application brought by a trustee for judicial advice on whether it would be justified in bringing or defending, or continuing to bring or to defend, proceedings concerning the trust or trust property: Re Beddoe [1893] 1 CH 547.
[13]Macedonian, 94 [74] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
[14]Application by G.A.V. (Vic) Pty Ltd [2022] VSC 516, [12]-[14].
The fact that a trust is a charitable purpose trust, as opposed to a non-charitable private trust, is a matter that inclines toward the giving of judicial advice, since the public interest is necessarily involved.[15]
[15]Macedonian, 92 [67] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
The extent of the information available to the Court and its apparent reliability are factors going to the exercise of the discretion to give the advice.[16]
[16]Ibid, 128-129 [199] (Kiefel J).
An opinion of counsel is usually important in judicial advice proceedings for the reasons summarised by Derham AsJ in Avery v Manno.[17] The Court must reach a view whether the advice of counsel satisfies it that there are sufficient prospects to warrant the trustee proceeding with the litigation. The advice must address the facts necessary to support the legal conclusions reached and that the propositions of law relied upon for those conclusions are properly arguable.
[17][2020] VSC 605, [28].
In Re Frosthollow Pty Ltd,[18] McDonald J noted that ‘whether it is appropriate for a trustee to have access to trust funds to defend its defence will depend on what is in the best interests of the trust, having regard to the particular circumstances of the case. Relevantly, such circumstances will include:
[18][2015] VSC 512, [11].
(a) the nature of the trust;
(b) whether the trustee has a pecuniary interest in the outcome of the litigation;
(c) the nature of the allegations against the trustee including whether there is an allegation of breach of trust;
(d) whether the beneficiaries … have a substantial financial interest in defending claims, including claims which are made against the trustee;
(e) the financial means of the beneficiaries to fund their defence;
(f) the merits and strengths of the claim against the trustee;
(g) the extent to which recourse to the trust’s estate for defence costs would deprive the successful claimant of the fruits of litigation; and
(h) whether the costs likely to be incurred in defending the claims, including potential exposure to a costs order in favour of the plaintiff’s, are proportionate.’
[citations omitted].
In Hopkins the active defendants had made a Beddoe application for advice that they, as trustees, were justified in defending the main proceeding and were entitled to indemnity from the trust property for their costs of the main proceeding. The judge on the Beddoe application provided advice that the trustees were justified in defending the main proceeding but deferred the question of indemnity for costs to the trial judge. On the question of costs at trial, the Attorney-General submitted that it was not appropriate for the defendants to be reimbursed from trust assets for their costs of the proceeding (which were significantly higher than the costs estimates that had been provided to the judge deciding the Beddoe application). The Attorney-General submitted that the Court had to be satisfied that the costs were properly incurred to give rise to any immunity, and that the Court could not be so satisfied as:
(a) the proceeding involved personal interest and were of an adversarial nature;
(b) the proceeding resulted in no real benefit to the trust; and
(c) the conduct of the defendants in defending the proceeding was inconsistent with the trustees’ obligation to exercise the care and diligence that a person of ordinary prudence would exercise.[19]
[19]Hopkins, [10].
In considering the principles relevant to applications for judicial advice, Lyons J noted even if a justification order is made, it may not be appropriate to make an indemnity order. His Honour referred to McDonald J’s summary of the relevant factors in Re Frosthollow Pty Ltd outlined at [59] above.
Consideration
The issue in the Main Proceeding concerns whether clauses 2 and 3 of the 1992 Deed empower the Council to compel the plaintiff to transfer the Land. That is a question respecting both ‘the management or administration …of trust property’ and ‘the interpretation of the trust instrument’.[20]
[20]Macedonian, 89-90 [58] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
The Main Proceeding does not, in terms, involve an allegation of breach of trust by the plaintiff. Nor is the Court in this application being asked to determine any issues in the Main Proceeding.
The plaintiff has acted properly in seeking the advice of the Court promptly. The Main Proceeding was commenced on 6 September 2022. The plaintiff filed its originating motion in this proceeding on 15 September 2022, before the first return of the Main Proceeding.
The plaintiff’s application is supported by counsel’s advice to the plaintiff setting out the facts of the dispute, the relevant legal basis for the opinion and counsel’s opinion that the plaintiff has a proper basis to defend, and reasonable prospects of success in defending, the Main Proceeding.
The Attorney-General does not oppose the plaintiff’s application for judicial advice on whether the plaintiff is justified in defending the Main Proceeding. The Attorney-General concedes that prima facie the St Hilda’s College Trust is a charitable trust and, based on the information available to her, the Main Proceeding appeared to raise the legitimate legal question about the correct interpretation of the powers and restrictions in the Act, the 1963 Deed and the 1992 Deed.
The Attorney-General submitted she could not assist the Court by providing her view on the merits of the plaintiff’s position in the Main Proceeding, not having access to the plaintiff’s advice from counsel. I accept that. While the Attorney-General noted that the plaintiff’s counsel in this proceeding was the same counsel who gave the confidential opinion, she did not suggest that this fact impugned the independence of the opinion.
I am satisfied that it is appropriate that the Court provide the advice sought about whether the plaintiff is justified in defending the Main Proceeding. The advice of the Court is that the plaintiff is justified in defending the Main Proceeding.
I am satisfied that the plaintiff is entitled to indemnity from the trust property for its reasonable costs of defending the Main Proceeding, but that those reasonable costs should be capped at $300,000.00 for the trial, or $410,000.00 if there is an appeal. This does not prevent the plaintiff from making a further application to increase the cap should there be a change of circumstances in the future.
I have reached this position because the nature of the trust involved in this case is a charitable trust. The issue to be determined in the Main Proceeding involves the correct interpretation of the instruments governing the St Hilda’s College Trust in circumstances where a possible interpretation of the Council’s resolutions the subject of the Main Proceeding is the removal of the trust property or the removal of the plaintiff as trustee. It is, in my view, in the public interest that the Court in the Main Proceeding, relating to land held for public benefit, have the benefit of the plaintiff as contradictor. This remains the case even if the Attorney-General is added as a party to the Main Proceeding.
I also agree with the plaintiff that the circumstances that led to the judge deferring the question of indemnity for costs to the trial judge in Hopkins can be distinguished from the circumstances of this case. This proceeding does not involve personal interest and, on the material before the Court, is not marked by an adversarial nature. There is no suggestion that the plaintiff is or intends to conduct itself in the Main Proceeding in a manner inconsistent with its obligation to exercise the care and diligence that a person of ordinary prudence would exercise.
Having regard to the value of the Land, the plaintiff’s costs estimate appears to me to be proportionate and the trust assets are appropriately protected by capping the indemnity.
Finally, I note the comments of Lyons J in Hopkins[21] which apply equally to this case:
[T]he making of an order that a trustee is justified in relevantly defending a proceeding is not a ‘carte blanche’ for the trustee to incur legal costs he or she sees fit. There is a continuing duty on the trustee to exercise the care and diligence that a person of ordinary prudence would exercise. This is quite apart from the obligation on a trustee who is a party to civil proceedings imposed under s 24 of the [Civil Procedure Act 2010 (Vic)].
[21][2020] VSC 456, [200].
The plaintiff also sought procedural orders which were not opposed by the Attorney-General. I am satisfied it is appropriate to make orders that compliance with rr 5.03(1) and 8.02 of the Rules be dispensed with and that the plaintiff is authorised, nunc pro tunc, to commence this proceeding by originating motion in From 5C.
I will also order that exhibit RS-2 to the affidavit of Rodney Skilbeck sworn 15 September 2022 remain confidential.
SCHEDULE OF PARTIES
| S ECI 2022 03666 | |
| BETWEEN: | |
| THE UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (VICTORIA) | Plaintiff |
| - v - | |
| ATTORNEY-GENERAL FOR THE STATE OF VICTORIA | Defendant |
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