Jacobs' law of trusts in Australia [8th edition.] 9780409343526, 0409343528

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Jacobs’ Law of Trusts in Australia 8th Edition J D Heydon BA (Syd) MA BCL (Oxon) Queen’s Counsel in the State of New South Wales

M J Leeming BA LLB PhD (Syd) A Judge of Appeal, Supreme Court of New South Wales Challis Lecturer in Equity, University of Sydney

LexisNexis Butterworths Australia 2016

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Heydon, J. D. (John Dyson).

Title: Edition: ISBN: Notes: Subjects: Other Authors/Contributors: Dewey Number:

Jacobs’ law of trusts in Australia. 8th edition. 9780409343519 (hbk). 9780409343502 (pbk). 9780409343526 (ebk). Includes index. Trusts and trustees — Australia. Leeming, M. J. (Mark James). 346.94059

© 2016 Reed International Books Australia Pty Limited trading as LexisNexis. First edition 1958; Second edition 1967; Third edition 1971; Fourth edition 1977; Revised reprint 1979; Fifth edition 1986; Sixth Edition 1997; Seventh Edition 2006 (reprinted 2010 twice). This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Goudy. Printed in China. Visit LexisNexis Butterworths at www.lexisnexis.com.au

Preface Seven editions of this book have been published, under six editors in various combinations, in the last 58 years. The previous edition — the 7th — appeared 10 years ago. Overall, the last decade shows that the law of trusts still plays a central and characteristic role in Australian law, and continues to have great vitality. In that time, while much of the law of trusts has continued its tranquil existence, other parts have exhibited signs of steady curial activity. These have been considered and incorporated in this book. And yet other parts have been the subject of intense examination in and out of court. These have called for a substantial amount of revaluation and rewriting. Among the last group are the topics of charitable trusts, resulting trusts, constructive trusts, some of the duties and rights of trustees, and some of the beneficiary’s rights. An attempt has also been made to revise, improve and on occasion tighten up the text in its totality. A great deal is owed to the following for their intense labours in assembling materials for consideration, checking the text, typing the manuscript, reading the proofs or otherwise facilitating the quite large task of preparing this 8th edition: Tara Kahrovic, Mia Sheldon, Barbara Price, Catherine Young, Elizabeth Daley, Kate Lindeman and Hannah Vieira. The publishers, too, are deserving of much gratitude for their forbearance and cooperation. J D H M J L

The Honourable Sir Kenneth Jacobs KBE1 1917–2015 Kenneth Sydney Jacobs was born and educated in Sydney. He was dux of Knox Grammar School, and obtained an Honours degree in Latin and Greek from the University of Sydney, where he was taught by a youthful Professor Enoch Powell (whom he regarded as pretentious). He joined but strongly disliked the reserve forces, and enlisted with the Australian Army, seeing service at El Alamein and in New Guinea. On discharge, he completed his law degree, with First Class Honours and the University Medal, and in his final year worked as associate to Justice Leslie Herron. He was admitted to the Bar in 1947, was made Queen’s Counsel in 1958, and appointed to the Supreme Court of New South Wales in 1960. He was a founding member of the Court of Appeal in 1966, and was appointed its President in 1972. In 1974 he was appointed to the High Court of Australia, but retired in 1979, aged 61, having been misdiagnosed with a serious illness. He and his British-born wife retired to England, where he was physically and mentally active for the remainder of his life. In his late eighties, he caught a bus from Hammersmith to lectures at University College, London, which awarded him a Masters degree. He said that he struggled with his Classical Greek lecturer’s insistence that footnoted references be given for propositions that were obvious. Jacobs taught at the University of Sydney as Challis Lecturer in Equity from 1953 to 1960. He wrote much of the first edition of this work in the long vacations in the late 1950s, when he was a busy junior barrister. He said that he wanted the work to discuss ‘the practical problems which face those who

undertake the duties of a trustee’. We share the same desire. This book is dedicated to him. J D H M J L

________________________________ 1.

See ‘Remembering Sir Kenneth Jacobs KBE QC’ [2015] (Summer) Bar News 61; ‘Kenneth Jacobs interviewed by Peter Coleman in the Law in Australian society oral history project’ (interview recorded 10 May 1996); Preface to 1st ed (1958); personal communications.

Table of Cases References are to paragraph numbers

A A v A [2007] 2 FLR 467 …. 5-04 A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481 …. 22-07 A M Spicer Pty Ltd v Spicer (1931) 47 CLR 151; 37 ALR 357 …. 17-43 Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409; [2003] 1 All ER 763 …. 16-01, 16-12, 17-04 Abbott, Re [1983] Ch 45 …. 9-39 Abbott v Abbott [2008] 1 FLR 1451 …. 12-18, 13-54 — v Middleton (1858) 7 HLC 68; 11 ER 28 …. 8-01 Abbott Fund, Re Trusts of the [1900] 2 Ch 326 …. 12-08 Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544 …. 1743 Abjornson v Urban Newspapers Pty Ltd [1989] WAR 191 …. 7-03 Aboriginal Development Commission v Treka Aboriginal Arts and Crafts Ltd [1984] 3 NSWLR 502 …. 5-21, 14-12 Aboriginal Hostels Ltd v Darwin City Council (1985) 55 LGRA 414; 75 FLR 197 …. 10-19, 10-84 Abrahams, Re [1908] 2 Ch 69 …. 21-11 Abraham’s Will Trusts, Re [1969] 1 Ch 463; [1967] 2 All ER 1175 …. 9-16, 1612, 20-59 Accident Compensation Tribunal, Registrar of the (Vic) v Federal Commissioner of Taxation (1993) 178 CLR 145; 117 ALR 27 …. 1-01, 102, 5-02, 5-21, 23-09

ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; 110 ACSR 1 …. 1-01, 21-02 Ackroyd v Smithson (1780) 1 Bro CC 503; 28 ER 1262 …. 12-05, 26-17 Adair v Shaw (1803) 1 Sch & Lef 243 …. 22-10 Adam v Newbigging (1888) 13 App Cas 308 …. 2-50 Adams v Alemite [1994] NSWCA 1 …. 22-13 — v Clifton (1826) 1 Russ 297; 38 ER 115 …. 17-23 Adams’ Trusts, Re (1879) 12 Ch D 634 …. 15-49, 15-86 Adamson v Hayes (1973) 130 CLR 276; [1972–73] ALR 1224 …. 7-03, 7-05 — v Melbourne & Metropolitan Board of Works [1929] AC 142; (1928) 34 ALR 353 …. 10-05 Adamson v Reid (1880) 6 VLR (E) 164 …. 18-01 Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504 …. 27-07 ADM Franchise Pty Ltd, Re (1983) 7 ACLR 987 …. 21-14 Adsett v Berlouis (1992) 37 FCR 201; 109 ALR 100 …. 21-07 AG Securities v Vaughan [1990] 1 AC 417 …. 5-04 Agip (Africa) Ltd v Jackson [1990] Ch 265; [1992] 4 All ER 385 …. 13-34, 1336, 13-37, 23-20 — v — [1991] Ch 547; [1992] 4 All ER 451 …. 27-04, 27-05 Agricultural Credit Corpn of Saskatchewan v Pettyjohn (1991) 79 DLR (4th) 22 …. 27-07 Agricultural Land Management Ltd v Jackson (No 2) (2014) 98 ACSR 615 …. 22-04 Agusta Pty Ltd v Provident Capital Ltd (2012) 16 BPR 30,397 …. 21-02 AIB Group (UK) plc v Mark Redler & Co Solicitors [2015] AC 1503; [2015] 2 All ER 747 …. 22-01, 22-04 Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539; 272 ALR 417 …. 10-12, 10-29, 10-51 Ailesbury, Re [1893] 2 Ch 345 …. 15-64 Ainsworth, Re [1915] 2 Ch 96 …. 17-37

Air Canada v M & L Travel Ltd, Re (1993) 108 DLR (4th) 592 …. 2-11, 13-36 Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 …. 3-07, 9-28, 12-01, 12-08, 29-01, 29-07, 29-53, 29-56, 29-57 Aitken and Barron’s Bill, Re (1932) 49 WN (NSW) 224 …. 21-09 Akerman, Re [1891] 3 Ch 212 …. 21-11 Akers v Samba Financial Group [2015] Ch 451 …. 28-09, 28-19 Albazero, The [1977] AC 774; [1976] 3 All ER 129 …. 2-18, 2-20 Albert Road, Norwood, Re [1916] 1 Ch 289 …. 15-51, 25-04 Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 …. 21-18 Albion Park Agricultural Association, Re (1902) 19 WN (NSW) 237 …. 10-78 Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618 …. 2921, 29-55 Alcock v Bilbrough (1900) 25 VLR 360; 6 ALR 12 …. 20-43 — v Public Trustee (1936) 53 WN (NSW) 192 …. 21-10, 21-34 — v Sloper (1833) 2 My & K 699; 39 ER 1111 …. 19-02, 19-04, 19-06 Aldridge, Re (1886) 55 LT 554 …. 20-58 Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45 …. 22-07 Alexander v Mills (1870) LR 6 Ch App 124 …. 15-20 — v Perpetual Trustees WA Ltd (2003) 216 CLR 109; (2004) 204 ALR 417 …. 23-03 Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518; [2000] 4 All ER 97 …. 2-20 Alfred Shaw & Co Ltd, Re (1897) 8 QLJ 93 …. 21-15 Alice Springs Town Council v Mpweteyerre Aboriginal Corporation (1997) 115 NTR 25; 139 FLR 236 …. 10-55, 10-84 Alitalia Linee Aeree Italiane SpA, Re [2011] 1 WLR 2049 …. 5-02 All Benefit Pty Ltd (in liq) v Registrar General (1993) 11 ACLC 1,068 …. 21.14 Allan, Re (1881) 17 Ch D 807 …. 20-63 Allcard v Skinner (1887) 36 Ch D 145; [1886–90] All ER Rep 90 …. 9-36

Allen, Re [1905] 2 Ch 400 …. 10-62 Allen, Re [1953] Ch 810; [1953] 2 All ER 898 …. 9-16 Allen v Distillers Co (Biochemicals) Ltd [1974] QB 384; [1974] 2 All ER 365 …. 17-05, 17-07 — v Jackson (1875) 1 Ch D 399 …. 9-13 — v Kent 136 A (2d) 540 (1957) …. 13-52 — v Rochdale Borough Council [2000] Ch 221; [1999] 3 All ER 443 …. 12-13 — v Snyder [1977] 2 NSWLR 685 …. 7-12, 12-14, 12-15, 12-18, 13-50 Allen-Meyrick’s Will Trusts, Re [1966] 1 All ER 740; [1966] 1 WLR 499 …. 1616 Alleyne v Davey (1854) 4 I Ch R 199 …. 13-34 Allhusen v Whittell (1867) LR 4 Eq 295; [1861–73] All ER Rep 149 …. 19-01, 19-10 Allott, Re [1924] 2 Ch 498; [1924] All ER Rep 810 …. 20-06 Allsop, Re [1914] 1 Ch 1; [1911–13] All ER Rep 1834 …. 22-16 Alsbury, Re (1890) 45 Ch D 237 …. 19-38 Alsop Wilkinson v Neary [1995] 1 All ER 431; [1996] 1 WLR 1220 …. 21-34 Alston, Re [1901] 2 Ch 584 …. 19-09, 19-60 Altson, Re [1955] VLR 281; [1955] ALR 896 …. 5-11, 16-05 Altson v Equity Trustees, Executors and Agency Ltd (1912) 14 CLR 341 …. 2003 Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 2 All ER 552; [1976] 1 WLR 676 …. 2-47, 2-48, 2-49, 2-51 Ambulance Service of New South Wales v Deputy Commissioner of Taxation (2003) 130 FCR 477; 200 ALR 218 …. 10-55 Ames, Re (1883) 25 Ch D 72 …. 17-40 Ames v Parkinson (1844) 7 Beav 379; 49 ER 1111 …. 18-34 Ames’ Settlement, Re [1946] Ch 217; [1946] 1 All ER 689 …. 9-36, 12-05 Amos v Fraser (1906) 4 CLR 78; 12 ALR 481 …. 20-30, 21-10 Anantamul Pty Ltd v Innes-Irons [1984] 2 Qd R 180 …. 20-70 Andco Nominees v Lestato (1995) 17 ACSR 239 …. 25-08

Anderson, Re (1901) 1 SR (NSW) Eq 223; 18 WN (NSW) 285 …. 17-42 Anderson, Re (1927) 27 SR (NSW) 296; 44 WN (NSW) 69 …. 20-44, 21-03 Anderson v McPherson (No 2) (2012) 8 ASTLR 321 …. 12-01, 12-14 Andrabell Ltd (in liq), Re [1984] 3 All ER 407 …. 2-47, 2-48, 2-51 Andrew v Andrew (1845) 1 Coll 686; 63 ER 598 …. 19-41 — v Trinity Hall, Cambridge (1804) 9 Ves 525; 32 ER 706 …. 15-73 — v Zant Pty Ltd (2004) 213 ALR 812 …. 9-40 Andrews v Bousfield (1847) 10 Beav 511; 50 ER 678 …. 13-34 — v Ramsay & Co [1903] 2 KB 635 …. 13-25 Andrew’s Trust, Re [1905] 2 Ch 48; [1904–7] All ER Rep Ext 1595 …. 12-08 Androma Pty Ltd, Re [1987] 2 Qd R 134 …. 24-04 Angas, Re [1906] SALR 140 …. 19-31, 19-50 Angas Law Services Pty Ltd v Carabelas (2005) 226 CLR 507; 215 ALR 110 …. 2-03 Angerstein v Martin (1823) T & R 232; 37 ER 1087 …. 19-10 Angier v Stannard (1834) 3 My & K 566; 40 ER 216 …. 22-03 Annandale, Re [1980] 1 Qd R 353 …. 10-68 Anning v Anning (1907) 4 CLR 1049; 13 ALR 709 …. 6-19, 6-20 Anon (1755) 2 Ves Sen 629; 28 ER 401 …. 22-06 Anscor Pty Ltd v Clout (2004) 135 FCR 469 …. 9-39 Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 …. 8-02, 29-53 Anson v Potter (1879) 13 Ch D 141 …. 23-12, 23-16 Anson’s Settlement, Re [1907] 2 Ch 424 …. 20-52 Aon Trust Corporation Ltd v KPMG [2005] 3 All ER 587 …. 8-02 Apostolou v VA Corporation of Australia Pty Ltd (2010) 77 ACSR 84 …. 2104 Apostolovski v Total Risk Management Pty Ltd (2010) 79 NSWLR 432 …. 2920, 29-37, 29-38 Appah v Monseu [1967] 2 All ER 583; [1967] 1 WLR 893 …. 10-08 Appleby, Re [1903] 1 Ch 565 …. 20-06

Appleby’s Estate, Re (1930) 25 Tas LR 126 …. 5-24 Applegate v Moss [1971] 1 QB 406; [1971] 1 All ER 747 …. 22-30 Application by Klumper, Re (2003) 11 BPR 21,225 …. 25-11 Application by Olrey Pty Ltd, Re [2016] VSCA 8 …. 21-34 Application of Albarran; Harb v Harb (2010) 17 BPR 33,295 …. 17-05 Application of Karla Marie Tate and Hyun Jong Chung [2015] NSWSC 639 …. 8-02 Application of M (2000) 50 NSWLR 401 …. 4-05 Application of Permanent Trustee Co Ltd, Re (1983) 7 ACLR 411 …. 14-05 Arakella v Paton (2004) 60 NSWLR 334 …. 17-06, 17-07 Arber, Re (1919) Times, 13 December …. 10-45 Arbib and Class’ Contract, Re [1891] 1 Ch 601 …. 15-73 Archer, Re [1961] Tas SR 1 …. 19-49 Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581 …. 2-20 Arjon Pty Ltd v Commissioner of State Revenue (2003) 8 VR 502 …. 21-02 Armenian General Benevolent Union v Union Trustee Co of Australia Ltd (1952) 87 CLR 597; [1952] ALR 781 …. 10-20, 10-59 Armitage, Re [1893] 3 Ch 337; [1891–4] All ER Rep Ext 1592 …. 19-40 Armitage v Nurse [1998] Ch 241; [1997] 2 All ER 705 …. 15-43, 16-19, 16-20, 17-04, 17-14, 17-18, 22-06, 22-09, 22-26, 22-29 Armour v Thyssen Edelstahlwerke AG [1991] 2 AC 339; [1990] 3 All ER 481 …. 2-47, 2-49 ARMS (Multiple Sclerosis Research) Ltd, Re [1997] 2 All ER 679; [1997] 1 WLR 877 …. 10-84 Armstrong, Re [1960] VR 202 …. 5-02 Armstrong v A-G (1934) 34 SR (NSW) 454; 51 WN (NSW) 151 …. 10-71 Armstrong DLW GmbH v Winnington Networks Ltd [2013] Ch 156; [2012] 3 All ER 425 …. 13-10, 13-36 Artifakts Design Group Ltd v NP Rigg Ltd [1993] 1 NZLR 196 …. 13-30 Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri

Pty Ltd [1999] 1 VR 144 …. 16-08, 16-12, 29-21, 29-56 Ashby v Blackwell (1765) 2 Eden 302; 27 ER 326 …. 17-35 Ashfield Municipal Council v Joyce [1976] 1 NSWLR 455 …. 10-05, 10-44 Ashton, Re [1897] 2 Ch 574 …. 12-12 Ashton, Re [1898] 1 Ch 142 …. 12-12 Ashton, Re [1938] Ch 482; [1937] 3 All ER 279 …. 10-46 Ashton, Re [1938] 1 All ER 707 …. 10-46 Ashton, Re [1950] NZLR 42 …. 10-65 Ashton v Pratt (2015) 318 ALR 260 …. 5-02 Ashton (decd), Re [1955] NZLR 192 …. 10-46, 10-65 Ashton’s Charity, Re (1859) 27 Beav 115; 54 ER 45 …. 10-69 Askew v Woodhead (1880) 14 Ch D 27; [1874–80] All ER Rep 644 …. 19-03, 19-23 Aspinall, Re [1961] Ch 526; [1961] 2 All ER 751 …. 19-30 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; 171 ALR 568 …. 2-26, 2-28, 2-47, 2-48, 5-01, 5-02, 5-24, 6-25, 17-20 Associated Securities Ltd and the Companies Act, Re [1981] 1 NSWLR 742 …. 2-16 Association of Franciscan Order of Friars Minor v City of Kew [1967] VR 732 …. 10-44 Astbury v Astbury [1898] 2 Ch 111 …. 2-43, 16-14 Aston v Aston (1703) 2 Vern 452; 23 ER 890 …. 9-13 Astor, Re [1952] Ch 534; [1952] 1 All ER 1067 …. 11-05, 11-06 Astill Freeman, Re [1906] QWN 5 …. 20-45 Atkinson, Re [1904] 2 Ch 160; [1904–7] All ER Rep Ext 1545 …. 19-60 Atkinson, Re (1911) 103 LT 860 …. 5-07 Atkinson, Re [1971] VR 612 …. 23-18 Atkinson’s Will Trusts, Re [1957] Ch 117; [1956] 3 All ER 738 …. 12-09 Atkinson’s Will Trusts, Re [1978] 1 All ER 1275; [1978] 1 WLR 586 …. 10-68 Attenborough v Solomon [1913] AC 76; [1911–13] All ER Rep 155 …. 2-40, 243

Attorney-General v Aspinall (1837) 2 My & Cr 613; 40 ER 773 …. 23-04 — v Bedford Corp (1754) 2 Ves Sen 505; 28 ER 323 …. 10-67 — v Bishop of Worcester (1851) 9 Hare 328; 68 ER 530 …. 10-67, 10-78 — v Blake [1998] Ch 439; [1998] 1 All ER 833 …. 5-21 — v Brandreth (1842) 1 Y & CCC 200; 62 ER 854 …. 10-67 — v Brereton (1752) 2 Ves Sen 425; 21 ER 475 …. 10-39 — v Bushby (1857) 24 Beav 299; 53 ER 373 …. 10-54 — v Calvert (1857) 23 Beav 248; 53 ER 97 …. 10-67 — v Cambridge (Margaret and Regius Professors) (1682) Vern 55n; 23 ER 306 …. 10-28 — v Chester (Bishop) (1785) 1 Bro CC 444; 28 ER 1229 …. 10-39 — v Christ’s Hospital (1834) 3 My & K 344; 40 ER 131 …. 10-67 — v Clack (1839) 1 Beav 467; 48 ER 1021 …. 15-86 — v Clarendon [Earl] (1810) 17 Ves 49; 34 ER 190 …. 10-67 — v Clarke (1762) Amb 422; 27 ER 282 …. 10-69 — v Comber (1824) 2 Sm & St 93; 57 ER 281 …. 10-20 — v Compton (1842) 1 Y & CCC 417; 62 ER 951 …. 10-67 — v Corp of Leicester (1844) 7 Beav 176; 49 ER 1031 …. 13-34 — v Corp of Rochester (1854) 5 De GM & G 797; 43 ER 1079 …. 10-67 — v Cuming (1843) 2 Y & C Ch Cas 139; 63 ER 61 …. 15-87 — v Day [1900] 1 Ch 31 …. 10-38 — v Dodd [1894] 2 QB 150 …. 26-10 — v Downing (1767) Wilm 1; 97 ER 1 …. 15-02, 17-04 — v Foundling Hospital (1793) 2 Ves 42; 30 ER 514 …. 10-67 — v Hall [1897] 2 IR 426 …. 10-14 — v Heelis (1824) 2 Sim & St 67; 57 ER 270 …. 10-53 — v Herrick (1772) Amb 712; 27 ER 461 …. 10-63 — v Hickman [1731–32] Kel W 34; 25 ER 482 …. 14-13 — v Holy Apostolic and Catholic Church of the East (Assyrian) Australia NSW Parish Association (1989) 37 NSWLR 293; 98 ALR 327 …. 23-04

— v Ironmongers Co (1841) Cr & Ph 208; 41 ER 469 …. 10-71 — v Jacobs Smith [1895] 2 QB 341 …. 6-26 — v Lady Downing (1766) Amb 550; 27 ER 353 …. 10-28 — v Landerfield (1744) 9 Mod 286; 88 ER 456 …. 14-04 — v Lord Dudley (1815) Coop G 146; 35 ER 510 …. 17-43 — v Madden (1843) 2 Con & Law 519 …. 10-69 — v Magdalen College, Oxford (1854) 18 Beav 223; 52 ER 88 …. 10-67 — v Mansfield [Earl] (1827) 2 Russ 501; 38 ER 423 …. 10-67 — v Mathieson [1907] 2 Ch 383 …. 10-68, 15-12 — v Mayor of Dublin (1827) 1 Bli NS 347; 4 ER 888 …. 10-53 — v Metcalfe (1904) 1 CLR 421 …. 10-63 — v Molland (1832) 1 You 562; 159 ER 1114 …. 10-39 — v Munro (1848) 2 De G & Sm 122; 64 ER 55 …. 17-03 — v Murdoch (1856) 2 K & J 571; 69 ER 910 …. 15-87 — v National Provincial Bank [1924] AC 262; [1923] All ER Rep 123 …. 10-48 — v Oakover (1736) cited 1 Ves Sen 536; 21 ER 1190 …. 10-45 — v Owen (1805) 10 Ves 555; 32 ER 960 …. 20-20 — v Pearson (1817) 3 Mer 353; 36 ER 135 …. 10-33 — v Powell (1890) 11 LR (NSW) Eq 263 …. 10-70 — v Rance …. 10-69 — v Ross [1985] 3 All ER 334; [1986] 1 WLR 252 …. 10-32 — v Schonfeld [1980] 3 All ER 1; [1980] 1 WLR 1182 …. 23-05 — v Scott (1750) 1 Ves Sen 413; 27 ER 1113 …. 17-31 — v Sparks (1753) Amb 201; 27 ER 134 …. 10-39 — v St John’s Hospital, Bedford (1865) 2 De GJ & Sm 621; 46 ER 516 …. 1404 — v Stephens (1834) 3 My & K 347; 40 ER 132 …. 15-02 — v Stepney (1804) 10 Ves 22; 32 ER 751 …. 10-33 — v Trustees of National Art Gallery of NSW (1944) 62 WN (NSW) 212 …. 16-14

— v Trustees of the British Museum [2005] Ch 397 …. 10-78 — v Try (1891) 12 LR (NSW) Eq 23 …. 10-67 — v Vint (1850) 3 De G & Sm 704; 64 ER 669 …. 10-23 — v Walker (1914) 31 WN (NSW) 59 …. 10-71 — v Wright [1987] 3 All ER 579; [1988] 1 WLR 164 …. 10-67 — v Wylde (1948) 48 SR (NSW) 366 …. 13.35 Attorney-General (Bahamas) v Royal Trust Co [1986] 3 All ER 423; [1986] 1 WLR 1001 …. 10-48, 10-63 Attorney-General (Cth) v Breckler (1999) 197 CLR 83; 163 ALR 576 …. 1606, 29-42 Attorney-General (ex rel Nye) v Corporation of the Lesser Chapter of the Cathedral Church of Brisbane (1976) 12 ALR 87 …. 10-55, 10-56 Attorney-General for England and Wales v R [2002] 2 NZLR 91 …. 28-22 Attorney-General for Hong Kong v Reid [1994] 1 AC 324; [1994] 1 All ER 1 …. 13-11, 13-22, 13-24 Attorney-General (NSW) v Adams (1908) 7 CLR 100 …. 10-63 — v Cahill [1969] 1 NSWR 85 …. 10-11 — v Donnelly (1958) 98 CLR 538; [1958] ALR 257 …. 9-30, 10-66 — v Parramatta City Council (1949) 49 SR (NSW) 283 …. 5-21 — v Perpetual Trustee Co Ltd (1940) 63 CLR 209; [1940] ALR 209 …. 10-01, 10-30, 10-61, 10-68, 10-70, 10-71 — v — (1966) 115 CLR 581 …. 10-71 — v Public Trustee (1987) 8 NSWLR 550 …. 10-71 — v Sawtell [1978] 2 NSWLR 200 …. 10-57, 10-58 Attorney-General (NZ) v Brown [1917] AC 393; [1916–17] All ER Rep 245 …. 10-48 Attorney-General of the Cayman Islands v Wahr-Hansen [2001] 1 AC 75; [2000] 3 All ER 642 …. 10-58 Attorney General (SA) v Bray (1964) 111 CLR 402; [1964] ALR 955 …. 1057, 10-71 Attwater v Attwater (1853) 18 Beav 330; 52 ER 131 …. 9-19

Atwell v Roberts (2013) 43 WAR 507 …. 21-02 Audio Visual Copyright Society Ltd v Australian Record Industry Association Ltd (1999) 46 IPR 29 …. 22-16 Augustus v Permanent Trustee Co (Canberra) Ltd (1971) 124 CLR 245; [1971] ALR 661 …. 28-06 Ausintel Investments Australia Pty Ltd v Lam (1990) 19 NSWLR 637 …. 2-15 Austec Wagga Wagga Pty Ltd v Rarebreed Wagga Pty Ltd [2012] NSWSC 343 …. 15-51 Austin v Abigail (1933) 49 CLR 177 …. 20-61 — v Austin (1906) 3 CLR 516; 12 ALR 159 …. 17-18, 17-20, 17-21, 22-09 — v Keele (1987) 10 NSWLR 283; 72 ALR 579 …. 12-14 Austin’s Settlement, Re [1960] VR 532 …. 20-03 Australasian Annuities Pty Ltd v Rowley Super Fund Pty Ltd (2015) 318 ALR 302 …. 13-02 Australia and New Zealand Banking Group Ltd v National Mutual Life Nominees Ltd (1977) 15 ALR 287 …. 17-11 — v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157 …. 27-08, 2714 Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; 185 ALR 1 …. 13-01, 13-10 Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 …. 13-53 Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1; 237 ALR 512 …. 9-02, 9-06 — v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51; 197 ALR 153 …. 9-36 Australian Council of Social Service Incorporated v Commissioner for Pay-roll Tax (1985) 1 NSWLR 567 …. 10-19 Australian Elizabethan Theatre Trust, Re (1991) 30 FCR 491; 102 ALR 681 …. 2-14, 3-06, 5-02, 5-22, 6-24, 13-11 Australian Executor Trustees Ltd v A-G (SA) [2010] SASC 348 …. 10-68, 1085 Australian Home Finance Pty Ltd, Re [1956] VLR 1 …. 27-11

Australian Olympic Committee Inc v The Big Fight Inc (No 2) (2000) 176 ALR 124 …. 23-11 Australian Pipeline Ltd (2006) 60 ACSR 625 …. 21-34 Australian Postal Corp v Lutak (1991) 21 NSWLR 584 …. 13-10, 27-09 Australian Provincial Association v Coroneo (1935) 35 SR (NSW) 391 …. 205 Australian Reward Investment Alliance v Superannuation Complaints Tribunal (2008) 173 FCR 335 …. 20-48 Australian Securities and Investments Commission v Carey (No 6) (2006) 153 FCR 509; 233 ALR 475 …. 23-15 — v Letten (No 17) (2011) 87 ACSR 155 …. 21-03 Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504; 133 ALR 1 …. 13-27, 13-39, 17-18, 18-12 — v Melbourne Asset Management Nominees Pty Ltd (1994) 49 FCR 334; 121 ALR 626 …. 13-11, 27-11 Avanes v Marshall (2007) 68 NSWLR 595 …. 17-16 Aveling v Knipe (1815) 19 Ves 441; 34 ER 80 …. 12-10 Avondale Printers v Haggie [1979] 2 NZLR 124 …. 7-12, 7-13, 13-41 Avtex Air Services Pty Ltd v Bartsch (1992) 107 ALR 539 …. 13-34 Ayles, Re (1875) 1 Ch D 282 …. 9-09 Ayliffe v Murray (1740) 2 Atk 58; 26 ER 433 …. 17-39 Aylwin v Bray (1822) 2 Y & J 519n; 148 ER 1024 …. 22-33 Aylwin’s Trusts, Re (1873) LR 16 Eq 585 …. 9-20

B Bacon, Re (1893) 62 LJ Ch 445 …. 19-53 Bacon v Camphausen (1888) 58 LT 851 …. 21-19 — v O’Dea (1989) 25 FCR 495; 88 ALR 486 …. 9-30, 9-32, 11-04 — v Pianta (1966) 114 CLR 634; [1966] ALR 1044 …. 9-30, 9-31, 9-32, 10-29, 11-04 Baden v Société Générale pour Favoriser le Développement du Commerce et de

l’Industrie en France SA [1992] 4 All ER 161; [1993] 1 WLR 509 …. 13-36, 13-37, 13-38, 13-39 Baden (No 2), Re [1973] Ch 9; [1972] 2 All ER 1304 …. 5-27, 5-28 Badger’s Settlements, Re (1915) 84 LJ Ch 567 …. 15-22 Bagnall v Carlton (1877) 6 Ch D 371 …. 17-42 Bagshaw, Re [1954] 1 All ER 227; [1954] 1 WLR 238 …. 10-85 Bagster v Fackerell (1859) 26 Beav 469; 53 ER 979 …. 26-20 Bahin v Hughes (1886) 31 Ch D 390 …. 21-18, 21-19 Bahr v Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1 …. 5-02, 7-11, 13-47 Bailey, Re (1854) 3 WR 31 …. 15-16 Bailey v Gould (1840) 4 Y & C Ex 221; 160 ER 987 …. 17-19, 20-36 — v Medical Defence Union (1995) 184 CLR 399; 132 ALR 1 …. 3-11 Baillie, Re [1928] VLR 171; (1928) 34 ALR 12 …. 15-67, 19-46 Bain, Re [1930] 1 Ch 224; [1929] 1 All ER Rep 387 …. 10-46 Bainbrigge v Blair (1839) 1 Beav 495; 48 ER 1032 …. 15-49 Baird, Re [1908] 1 Ch 383 …. 9-17, 17-05 Baker, Re [1924] 2 Ch 271 …. 19-14 Baker, Re [1961] VR 641 …. 17-06 Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 …. 16-10 — v Peck (1861) 9 WR 472 …. 17-43 Baker and Selmon’s Contract, Re [1907] 1 Ch 238 …. 20-11 Baker (dec’d), Re [1961] VR 641 …. 18-37 Bakewell v Holme (1943) 44 SR (NSW) 150; 61 WN (NSW) 47 …. 19-38, 2051 Bale v Newton (1687) 1 Vern 464; 23 ER 589 …. 9-35 Balfour v Public Trustee [1916] VLR 397; 22 ALR 284 …. 10-02, 14-04 Balfour’s Settlement, Re [1938] Ch 928; [1938] 3 All ER 259 …. 9-24, 9-26 Balkin v Peck (1998) 43 NSWLR 706 …. 3-13, 17-11, 21-05 Ballard v A-G (Vic) (2010) 30 VR 413 …. 17-06

Ballarat Trustees Executors and Agency Co Ltd v Federal Commissioner of Taxation (1950) 80 CLR 350; [1950] ALR 487 …. 10-17 Balls v Strutt (1841) 1 Hare 146; 66 ER 984 …. 16-03, 23-04 Ball’s Settlement Trusts, Re [1968] 2 All ER 438; [1968] 1 WLR 899 …. 17-07 Baloglow v Konstantindis (2001) 11 BPR 20,721 …. 6-20, 6-23 Banco de Portugal v Waddell (1880) 5 App Cas 161 …. 21-15 Banfield (dec’d), Re [1968] 2 All ER 276; [1968] 1 WLR 846 …. 10-44 Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437; [2000] 4 All ER 221 …. 13-34, 13-36, 13-37 Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664 …. 17-18, 22-04 Bankes v Salisbury Diocesan Council of Eduction Inc [1960] Ch 631; [1960] 2 All ER 372 …. 14-04 Banner Homes plc v Luff Developments Ltd [2000] Ch 372; [2000] 2 All ER 117 …. 13-02, 13-41 Bannister v Bannister [1948] 2 All ER 133 …. 7-11, 7-12, 13-06, 13-47, 13-48 Banque Belge pour L’Etranger v Hambrouck [1921] 1 KB 321 …. 27-04 Barbados Trust Co Ltd v Bank of Zambia [2007] 1 Lloyd’s Rep 495 …. 1-06, 524, 24-03 Barber, Re (1886) 34 Ch D 77 …. 17-40, 17-41 Barber, Re (1888) 39 Ch D 187 …. 15-53 Barber, Re (1902) 21 NZLR 527 …. 20-42 Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316 …. 10-47, 10-71 Barclay, Re [1899] 1 Ch 674 …. 22-08 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; [1968] 3 All ER 651 …. 2-14, 2-15, 2-16, 5-22, 12-06, 27-17 Barclays Bank plc v Holmes [2000] PLR 339 …. 29-56 Barendse v Comptroller-General of Customs (1996) 136 FLR 243 …. 5-04 Baring’s Settlement Trusts, Re [1940] Ch 737; [1940] 3 All ER 20 …. 9-23 Barkeley v Reay (1842) 2 Hare 308; 67 ER 127 …. 23-05 Barker, Re (1898) 77 LT 712 …. 22-13

Barker, Re (1909) 25 TLR 753 …. 10-38, 10-56 Barker v Linklater [2007] QSC 125 …. 12-19 Barker’s Trusts, Re (1875) 1 Ch D 43 …. 15-49, 15-86 Barker’s Will Trusts, Re (1948) 64 TLR 273 …. 10-33 Barkworth v Young (1856) 26 LJ Ch 153 …. 7-08 Barlow Clowes International Ltd (in liq) v Vaughan [1992] 4 All ER 22 …. 2708, 27-11 Barnes, Re [1930] 2 Ch 80 …. 10-33 Barnes v Addy (1874) LR 9 Ch App 244 …. 2-14, 3-08, 13-02, 13-32, 13-33, 13-34, 13-35, 13-36, 13-38, 13-39, 13-40, 27-05 — v Queensland National Bank Ltd (1906) 3 CLR 925 …. 2-05 Barney, Re [1894] 3 Ch 562 …. 20-32 Barns v Barns (2003) 214 CLR 169; 196 ALR 65 …. 13-42 Baron Vestey’s Settlement, Re [1951] Ch 209; [1950] 2 All ER 891 …. 16-12, 20-58, 20-62 Barratt v Wyatt (1862) 30 Beav 442; 54 ER 960 …. 17-35 Barrett v Hartley (1866) LR 2 Eq 789 …. 17-39 Barrington and Associates Pty Ltd (in liq), Re [1989] VR 940 …. 2-16 Barron v Willis [1900] 2 Ch 121 …. 17-49 Barrow v Greenough (1796) 3 Ves 52; 30 ER 943 …. 7-22 Barry & Staines Linoleum Ltd, Re [1934] Ch 227 …. 22-14 Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515; [1980] 1 All ER 139 …. 16-18, 17-18, 22-01, 22-05, 22-30 — v Bartlett (1845) 4 Hare 631; 67 ER 800 …. 23-03 Barton, Re; Tod v Barton [2002] WTLR 469 …. 28-06, 28-07, 28-08, 28-09 Barton v Deputy Commissioner Taxation (1974) 131 CLR 370 …. 9-40 — v Muir (1874) LR 6 PC 134 …. 12-10 — v Official Receiver (1986) 161 CLR 75; 66 ALR 355 …. 9-39 Barton’s Trust, Re (1868) LR 5 Eq 238 …. 19-38 Base Metal Trading Ltd v Shamurin [2005] 1 All ER 17; [2005] 1 WLR 1157 …. 17-18

Basham (decd), Re [1987] 1 All ER 405; [1986] 1 WLR 1498 …. 13-11 Bastion v Gideon Investments (2000) 35 ACSR 466 …. 21-14 Bate v Hooper (1855) 5 De GM & G 338; 43 ER 901 …. 19-10, 19-20 Bateman Television Ltd v Bateman [1971] NZLR 453 …. 12-10, 12-16 Bateman’s Will Trusts, Re [1970] 3 All ER 817; [1970] 1 WLR 1463 …. 7-24 Bates, Re [1928] Ch 682; [1928] All ER Rep 126 …. 19-38 Batho, Re (1888) 39 Ch D 189 …. 25-04 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 …. 1-02 3-06, 3-08, 5-21, 7-04, 10-03, 10-53, 13-02, 13-11 Baumgartner v Baumgartner (1987) 164 CLR 137; 76 ALR 75 …. 12-14, 12-19, 13-11, 13-52, 13-53, 13-54 Bayer v Balkin (1995) 31 ATR 295 …. 21-05 Bayley v Public Trustee (1907) 27 NZLR 659 …. 7-05 Baynard v Woolley (1855) 20 Beav 583; 52 ER 729 …. 21-20 Bayne, Re (1892) 25 SALR 109 …. 17-06 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 …. 22-05 Beale’s Settlement Trusts, Re [1932] 2 Ch 15; [1931] All ER Rep 637 …. 17-06 Beaman v ARTS Ltd [1949] 1 All ER 465; [1949] 1 KB 550 …. 22-30 Beattie v Weine (1908) 9 SR (NSW) 36 …. 5-13 Beatty v Guggenheim Exploration Co 122 NE 378 (1919) …. 13-01 Beaufoy’s Estate, Re (1852) 1 Sm & G 20; 65 ER 9 …. 19-03 Beaumont v Oliveira (1869) LR 4 Ch App 309 …. 10-26, 10-31 Beaven v Beaven (1869) 24 Ch D 649n …. 19-14 Beck v Colonial Staff Super Pty Ltd [2015] NSWSC 723 …. 8-03 — v Henley (2014) 11 ASTLR 457; [2014] NSWCA 201 …. 21-34, 23-08, 2311 Beckbessinger, Re [1993] 2 NZLR 362 …. 5-26, 5-28 Beckett’s Settlement, Re [1940] Ch 279 …. 20-62 Beckford v Beckford (1783) 4 Bro Parl Cas 38; 2 ER 26 …. 5-17, 5-19 — v Wade (1805) 17 Ves 87; 34 ER 34 …. 22-23

Bective v Hodgson (1864) 10 HLC 656; 11 ER 1181; [1861–73] All ER Rep 324 …. 26-17 Beddoe, Re [1893] 1 Ch 547 …. 17-18, 21-07, 21-10, 21-34 Beddoes v Pugh (1859) 26 Beav 407; 53 ER 955 …. 17-03 Bedingheld, Re (1887) 57 LT 332 …. 17-39 Bedingfield and Herring’s Contract, Re [1893] 2 Ch 332 …. 15-20 Beech, Re [1920] 1 Ch 40 …. 19-14 Beggs v Kirkpatrick [1961] VR 764 …. 10-71, 12-08 Belar Pty Ltd (in liq) v Mahaffey [2000] 1 Qd R 477 …. 21-04, 21-12 Belcher, Re [1950] VLR 11; [1950] ALR 138 …. 10-65 Belchier, Ex parte (1754) Amb 218; 27 ER 144 …. 17-23, 17-30, 17-31 Bell, Re [1940] NZLR 15 …. 20-51 Bell v Scott (1922) 30 CLR 387; 28 ALR 238 …. 23-10 — v Keesing (1888) 7 NZLR 155 …. 21-03 Bellamy and Metropolitan Board of Works, Re (1883) 24 Ch D 387 …. 17-23 Belling, Re [1967] Ch 425; [1967] 1 All ER 105 …. 10-69 Bell’s Indenture, Re [1980] 3 All ER 425; [1980] 1 WLR 1217 …. 22-05 Bell’s Settled Estates, Re (1921) 38 WN (NSW) 188 …. 19-03, 19-24 Belmont Finance Corp Ltd v Williams Furniture Ltd [1979] Ch 250; [1979] 1 All ER 118 …. 13-36 — v — (No 2) [1980] 1 All ER 393 …. 13-34, 13-37 Benjamin, Re [1938] VLR 76; [1938] ALR 35 …. 20-45 Benjamin v Leicher (1998) 45 NSWLR 389 …. 6-19 Bennet v Bennet (1879) 10 Ch D 474; [1874–80] All ER Rep Ext 1479 …. 1212 Bennett, Ex parte (1805) 10 Ves 381; 32 ER 893 …. 17-43, 17-48 Bennett, Re [1896] 1 Ch 778 …. 21-07 Bennett, Re (1912) 12 SR (NSW) 695; 29 WN (NSW) 203 …. 20-03 Bennett v Colley (1832) 2 Myl & K 225; 39 ER 930 …. 23-03 — v English, Scottish and Australian Chartered Bank (1888) 9 LR (NSW) L 554 …. 23-03

— v Gaslight and Coke Co (1882) 48 LT 156 …. 17-49 — v Tucker (1882) 8 VLR (E) 20 …. 22-33 — v Wyndham (1862) 4 De G F & J 259; 45 ER 1183 …. 21-04 Bennett (dec’d), Re [1960] Ch 18; [1959] 3 All ER 295 …. 10-61, 10-67 Bennison, Re (1889) 60 LT 859 …. 17-35 Bentley, Re [1955] VLR 33 …. 18-04 Benzija v Adriatic Fisheries Pty Ltd (1984) 37 SASR 545 …. 15-85 Berezovsky v Abramovich [2011] EWCA Civ 153 …. 28-06 Berkley, Re (1874) LR 9 Ch App 720 …. 15-65 Bernard v Josephs [1982] Ch 391; [1982] 3 All ER 162 …. 12-11, 13-50 Berridge, Re (1890) 63 LT 470 …. 10-31 Berry, Re [1961] 1 All ER 529 …. 19-12 Berry v Green [1938] AC 575; [1938] 2 All ER 362 …. 9-34, 20-70, 23-09, 2312 Berry’s Trusts, Re (1893) 7 QLJ 63 …. 21-12 Berton, Re [1939] Ch 200; [1938] 4 All ER 286 …. 19-09 Best, Re [1904] 2 Ch 354 …. 10-63, 10-64 Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 …. 9-36 Beswick v Beswick [1968] AC 58; [1967] 2 All ER 1197 …. 2-20, 6-06 Bethell v Abraham (1873) LR 17 Eq 24; [1861–73] All ER Rep 811 …. 18-35 Betjemann v Betjemann [1895] 2 Ch 474 …. 22-30 Betts, Re (1897) 41 Sol Jo 209 …. 15-86 Betty, Re [1899] 1 Ch 821 …. 17-19, 19-56, 20-31, 20-36 Bevan v Webb [1905] 1 Ch 620 …. 13-19 Beverly, Re [1901] 1 Ch 681 …. 20-72 Bewick, Re [1911] 1 Ch 116 …. 20-06 Bhana v Bhana (2002) 10 BPR 19,545 …. 12-20 BHLSPF Pty Ltd v Brashs Pty Ltd (2001) 8 VR 602 …. 29-56 Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11; 11 ACSR 785 …. 13-28, 13-39

Bick v Motley (1835) 2 My & K 312; 39 ER 962 …. 22-11 Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11 …. 13-42 Biggs, Re; Public Trustee v Schneider [1945] NZLR 303 …. 9-16 Biggs v Peacock (1882) 22 Ch D 284 …. 20-72 Bignell, Re [1892] 1 Ch 59 …. 17-39 Bignold’s Settlement Trusts, Re (1872) LR 7 Ch App 223 …. 15-18, 15-54 Billington, Re [1949] St R Qd 102 …. 16-14 Bindley v Mulloney (1869) LR 7 Eq 343 …. 9-10 Binions v Evans [1972] Ch 359; [1972] 2 All ER 70 …. 13-47, 13-48 Birchall, Re (1889) 40 Ch D 436 …. 15-16 Bird, Re [1892] 1 Ch 279 …. 26-09 Bird, Re [1901] 1 Ch 916 …. 19-09, 19-63 Bird v Harris (1870) LR 9 Eq 204 …. 12-04 — v Philpott [1900] 1 Ch 822; [1900–3] All ER Rep 439 …. 4-07 Birkett, Re (1878) 9 Ch D 576; [1874–80] All ER Rep 242 …. 9-07, 10-61 Birks v Micklethwait (1864) 33 Beav 409; 55 ER 426 …. 21-17 — v — (1864) 34 LJ Ch 362 …. 21-17 Birmingham v Renfrew (1937) 57 CLR 666; [1937] ALR 520 …. 2-22, 7-35, 1342 Biron v Mount (1857) 24 Beav 642; 53 ER 506 …. 5-16 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384; 35 ALR 273 …. 2-07 Biscoe v Jackson (1887) 35 Ch D 460; [1886–90] All ER Ext 1852 …. 10-19 Bishop v Sharp (1704) 2 Vern 469; 23 ER 902 …. 4-05 Bishopsgate Investment Management Ltd (in liq) v Homan [1995] Ch 211; [1995] 1 All ER 347 …. 27-09 Biss, Re [1903] 2 Ch 40; [1900–3] All ER Rep 406 …. 13-12, 13-15, 17-42 Black v S Freedman & Co (1910) 12 CLR 105; 17 ALR 541 …. 13-10, 13-11, 27-07 Black Uhlans Inc v New South Wales Crime Commission (2002) 12 BPR 22,421 …. 9-03, 12-11

Blackburn v Y V Properties Pty Ltd [1980] VR 290 …. 9-08 Blackett v Darcy (2005) 62 NSWLR 392 …. 6-21 Blackham v Haythorpe (1917) 23 CLR 156 …. 17-48 Blacklow v Laws (1842) 2 Hare 40; 67 ER 17 …. 20-12 Blackman v Piper (1889) 10 LR (NSW) Eq 170 …. 12-10 Blackwell v Blackwell [1929] AC 318; [1929] All ER Rep 71 …. 7-04, 7-15, 718, 7-24, 7-32 Bladon, Re [1911] 2 Ch 350 …. 20-36 Blaiberg, Re [1940] Ch 385; [1940] l All ER 632 …. 9-16 Blair v Bromley (1847) 2 Ph 354; 41 ER 979 …. 22-30 — v Duncan [1902] AC 37 …. 10-63 — v Martin [1929] NZLR 225 …. 17-46 Blake, Re (1885) 29 Ch D 913 …. 16-16, 23-06, 23-09 Blake, Re [1917] 1 Ch 18 …. 26-12 Blanchard, Re (1861) 3 De G F & J 131; 45 ER 828 …. 15-56, 15-85, 15-86 Bland, Re [1899] 2 Ch 336 …. 19-07 Blann v Bell (1852) 2 De G M & G 775; 42 ER 1075 …. 19-03, 19-07 Blathwayt v Lord Cawley [1976] AC 397; [1975] 3 All ER 625 …. 9-16 Blausten v IRC [1972] Ch 256; [1972] 1 All ER 41 …. 5-29 BLB Corp v Jacobsen (1974) 48 ALJR 372 …. 2-06 Blinkco v Blinkco [1964–5] NSWR 20; (1964) 81 WN (Pt 1) NSW 109 …. 1212 Bloch v Bloch (1981) 180 CLR 390; 37 ALR 55 …. 7-09, 7-12, 12-11 Blocksidge, Re [1997] 1 Qd R 234 …. 17-07 Blomfield’s Trusts, Re (1918) 35 WN (NSW) 75 …. 15-72 Blomley v Ryan (1956) 99 CLR 362 …. 4-06 Bloye’s Trust, Re [1843–60] All ER Rep 1092; (1849) 1 Mac & G 488; 41 ER 1354 …. 2-04, 17-43 Blundell, Re (1899) 40 Ch D 370 …. 21-04 Blyth, Re [1997] 2 Qd R 567 …. 5-28, 10-51, 10-66

Blyth v Fladgate [1891] 1 Ch 337 …. 21-20, 22-09 Boardman v Phipps [1967] 2 AC 46; [1966] 3 All ER 721 …. 2-06, 13-11, 1321, 13-43, 17-39, 17-42 Boeing Superannuation Pty Ltd v Glanville (2004) 138 FCR 165 …. 29-11 Body Corporate No 12870 v Aldal Pty Ltd (2010) 29 VR 81 …. 13-47 Body Corporate St James Apartments v Renaissance Assets Pty Ltd [2005] V ConvR 54-695 …. 3-15 Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; 260 ALR 71 …. 13-02 Boles and British Land Co’s Contract, Re [1902] 1 Ch 244 …. 17-44 Bolton v Curre [1895] 1 Ch 544 …. 21-24, 21-26 Bona Law Memorial Trust v IRC (1933) 49 TLR 220 …. 10-29 Bond, Re (1876) 4 Ch D 238 …. 5-10, 5-24 Bond, Re [1929] VLR 333; (1929) 35 ALR 300 …. 10-21, 10-65 Bond v Walford (1886) 32 Ch D 238 …. 9-36 Bond Worth Ltd, Re [1980] Ch 223; [1979] 3 All ER 919 …. 2-47, 2-49, 2-51 Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 …. 9-19 Boning, Re [1997] 2 Qd R 12 …. 1-08, 2-31, 11-03, 11-07 Booth v Booth (1838) 1 Beav 125; 48 ER 886 …. 21-23 — v Carter (1867) IR 3 Eq 757 …. 10-35 — v Turle (1873) LR 16 Eq 182 …. 7-09 Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25; [1979] 3 All ER 961 …. 2-47, 2-51, 27-09 Borough of Burwood v Freehill (1906) 23 WN (NSW) 213 …. 25-10 Borough of Drummoyne v Hogarth (1906) 23 WN (NSW) 243 …. 25-10 Borthwick, Re [1933] 1 Ch 637; [1933] All ER Rep 737 …. 9-14 Boscawen v Bajwa [1995] 4 All ER 769; [1996] 1 WLR 328 …. 27-03, 27-09, 27-13, 27-14 Bostock v Blakeney (1789) 2 Bro CC 653; 29 ER 362 …. 19-32 — v Floyer (1865) LR 1 Eq 26 …. 17-30 Bostock’s Settlement, Re [1921] 2 Ch 469; [1921] All ER Rep 125 …. 8-09

Boston Sand & Gravel Co v United States 278 US 41 (1928) …. 8-01 Boston’s Will Trusts, Re [1956] Ch 395; [1956] 1 All ER 593 …. 20-33 Bosun Pty Ltd (in liq), Re (2000) 34 ACSR 597 …. 22-11 Bosworth, Re (1889) 58 LJ (Ch) 432 …. 17-14 Bouch, Re (1885) 29 Ch D 635 …. 19-36 Bouch v Sproule (1887) 12 App Cas 385; [1886–90] All ER Rep 319 …. 19-36 Boucherett, Re [1908] 1 Ch 180 …. 15-10 Boulter, Re [1922] 1 Ch 75 …. 9-15 Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606; [1963] 2 All ER 716 …. 17-39 Bourk, In the Will of [1907] VLR 171 …. 5-29, 5-30 Bourne v Bourne (1842) 2 Hare 35; 67 ER 15 …. 26-11 — v Keane [1919] AC 815; [1918–19] All ER Rep 167 …. 10-02, 10-13, 10-40, 10-44, 11-05 Bowden, Re (1890) 45 Ch D 444 …. 22-28 Bowden v Phillips [1897] 1 Ch 174 …. 23-04 Bowen v McCormack (1895) 12 WN (NSW) 59 …. 8-07 Bower, Re (1980) 25 SASR 161 …. 10-71 Bowes v East London Water Works Co (1820) Jac 324; 37 ER 873 …. 20-20 Bowmakers Ltd v Barnet Industries Ltd [1944] 2 All ER 579; [1945] KB 65 …. 9-08 Bowman, Re [1955] SASR 98 …. 19-46, 19-49 Bowman v Secular Society Ltd [1917] AC 406; [1916–17] All ER Rep 1 …. 930, 10-13, 11-04 Boyagarra Pty Ltd (in liq), Re (1983) 7 ACLR 612 …. 22-07 Boyce v Mouat [1994] 1 AC 428; [1993] 4 All ER 268 …. 13-30 Boyd v Cowell [1952] VLR 288; [1952] ALR 523 …. 17-06, 18-04 Boydell v James (1936) 36 SR (NSW) 620 …. 2-50 Boyes, Re (1884) 26 Ch D 531 …. 7-21 Boys v Boys (1860) 28 Beav 436; 54 ER 434 …. 19-21 Brace, Re [1954] 2 All ER 354; [1954] 1 WLR 955 …. 2-31, 2-35

Brackenbury’s Trusts, Re (1870) LR 10 Eq 45 …. 15-43 Bradbury, Re [1950] 2 All ER 1150 …. 10-20, 10-21 Bradford v Aitken (1900) 26 VLR 314; 6 ALR 191 …. 18-26 — v Brownjohn (1868) LR 3 Ch App 711 …. 13-43 Bradley v Denne (1911) 29 WN (NSW) 2 …. 19-31 Brady v Stapleton (1952) 88 CLR 322; [1952] ALR 989 …. 9-44, 27-02, 27-06 Braithwaite v A-G [1909] 1 Ch 510 …. 12-07 Brambles Security Services Ltd v Bi-Lo Pty Ltd [1992] Aust Torts Rep 81-161 …. 2-02 Brandon v Robinson (1811) 18 Ves 429; 34 ER 379 …. 9-19, 9-20 Brassey’s Settlement, Re [1955] 1 All ER 577; [1955] 1 WLR 192 …. 18-02 Bray v Ford [1896] AC 44; [1895–9] All ER Rep 1009 …. 2-06, 17-39 Breadner v Granville-Grossman [2001] Ch 523; [2000] 4 All ER 705 …. 16-12 Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 …. 16-10, 1716, 17-18, 17-39 Breeds’ Will, Re (1875) 1 Ch D 226 …. 20-58, 20-59 Breen v Williams (1996) 186 CLR 71; 138 ALR 259 …. 16-01, 17-04, 17-16, 17-18 Breskvar v Wall (1971) 126 CLR 376; [1972] ALR 205 …. 13-07 Brett v Hamilton (1900) 21 LR (NSW) Eq 84; 16 WN (NSW) 206 …. 20-43 Brewer’s Settlement, Re [1896] 2 Ch 503 …. 9-20 Brice v Stokes (1805) 11 Ves 319; 32 ER 1111 …. 22-33 Bride v Shire of Katanning [2013] WASCA 154 …. 27-07 Bridgman, Re (1860) 1 Drew & Sm 164; 67 ER 340 …. 15-49, 15-86 Brier, Re (1884) 26 Ch D 238 …. 17-23 Brisbane City Council v A-G (Qld) [1979] AC 411; [1978] 3 All ER 30 …. 1003, 10-53 Bridges v Shepherd (1921) 21 SR (NSW) 220 …. 18-03 Bridgewater v Leahy (1998) 194 CLR 457; 158 ALR 66 …. 4-06, 9-36, 23-03 Briffa v Hay (1997) 75 FCR 428; 147 ALR 226 …. 29-56

Briggs v Penny (1851) 3 Mac & G 546; 42 ER 371 …. 7-23 Bristol and West Building Society v Mothew [1998] Ch 1; [1996] 4 All ER 698 …. 13-34, 16-01, 17-18, 22-04 Bristol’s Settled Estates, Re [1964] 3 All ER 939; [1965] 1 WLR 469 …. 17-07 British America Elevator Co v Bank of British North America [1919] AC 658 …. 27-17 British Celanese Ltd v Moncrieff [1948] Ch 564; [1948] 2 All ER 44 …. 13-26 British Coal Corp v British Coal Staff Superannuation Scheme Trustees Ltd [1995] 1 All ER 912 …. 29-54, 29-58 British Museum v White (1826) 2 Sim & St 594; 57 ER 473 …. 10-53 British Power Traction & Lighting Co Ltd, Re [1910] 2 Ch 470 …. 21-12 British Red Cross Balkan Fund, Re [1914] 2 Ch 419; [1914–15] All ER Rep 459 …. 12-08, 27-11 British Reinforced Concrete Engineering Co Ltd v Lind (1917) 86 LJ Ch 486 …. 13-26 British School of Egyptian Archaeology, Re [1954] 1 All ER 887; [1954] 1 WLR 546 …. 10-26, 10-28, 10-31 British Traders’ Insurance Co Ltd v Monson (1964) 111 CLR 86; [1964] ALR 845 …. 20-36 Brittlebank, Re (1881) 30 WR 99 …. 16-14 Brittlebank v Goodwin (1868) LR 5 Eq 545 …. 17-15 Broad, Ex parte (1884) 13 QBD 740 …. 2-13 Broad, Re [1953] VLR 49; [1953] ALR 128 …. 20-20, 20-33 Broad v Bevan (1823) 1 Russ 517n; 38 ER 198 …. 5-24 Broadwood’s Settlement, Re [1908] 1 Ch 115 …. 19-61 Brockbank, Re [1948] Ch 206; [1948] 1 All ER 287 …. 15-20, 15-76, 15-86, 1705, 23-13 Brocksopp v Barnes (1820) 5 Madd 90; 56 ER 829 …. 17-39 Brodie v Barry (1811) 3 Mer 695; 36 ER 267 …. 23-05 — v Chandos [Duke] (1773) 1 Bro CC 444n; 21 ER 905 …. 10-35 Brogden, Re (1888) 38 Ch D 546; [1886–90] All ER Rep 927 …. 17-18, 17-20, 20-47

Bromley, Re (1886) 55 LT 145 …. 17-42 Brook v Brook (1839) 1 Beav 531; 48 ER 1046 …. 15-65 Brooke Bond & Co Ltd’s Trust Deed, Re [1963] Ch 357; [1963] 1 All ER 454 …. 3-18 Brookes, Re [1914] 1 Ch 558 …. 18-36, 20-70 Brook’s Settlement, Re [1968] 3 All ER 416; [1968] 1 WLR 1661 …. 17-07 Broome v Monck (1805) 10 Ves 597; [1803–13] All ER Rep 631; (1805) 32 ER 976 …. 13-07, 26-07 Brophy v Bellamy (1873) LR 8 Ch App 798 …. 16-06 Brophy v Brophy (1974) 3 ACTR 57 …. 12-12 Brougham v Poulett (1855) 19 Beav 119; 52 ER 294 …. 2-40 Browell v Reed (1842) 1 Hare 434; 66 ER 1102 …. 23-05 Brown, Re (1885) 29 Ch D 889 …. 18-03 Brown, Re [1904] 1 Ch 120 …. 9-13 Brown, Re (1921) 22 SR (NSW) 90 …. 15-12 Brown, Re [1954] Ch 39; [1953] 2 All ER 1342 …. 9-19 Brown v Brown (1993) 31 NSWLR 582 …. 12-12 — v Burdett (1882) 21 Ch D 667 …. 1-08 — v De Tastet (1821) Jac 284; 37 ER 858 …. 13-43, 17-39 — v Gellatly (1867) LR 2 Ch App 751; [1861–73] All ER Rep Ext 2080 …. 1903, 19-10, 19-12, 19-13 — v Heffer (1967) 116 CLR 344; [1968] ALR 89 …. 13-07, 26-07 — v How (1741) Barn 354; 27 ER 676 …. 23-02 — v Litton (1711) 1 P Wms 140; 24 ER 329 …. 13-43, 17-39 — v Pourau [1995] 1 NZLR 352 …. 7-16, 7-33 — v Smith (1878) 10 Ch D 377 …. 17-04 — v Willoughby (2012) 7 ASTLR 453 …. 7-16 — v Wylie (1980) 6 Fam LR 519 …. 7-12 Brown & Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [1996] Ch 51 …. 6-19

— v — [2001] Ch 733 …. 6-19 Browne v Collins (1871) LR 12 Eq 586 …. 19-42 Bruce, Re [1908] 2 Ch 682 …. 21-11 Bruce, Re [1918] NZLR 16 …. 10-53 Bruce v Ailesbury [1892] AC 356 …. 20-16 Brumridge v Brumridge (1858) 27 Beav 5; 54 ER 2 …. 22-02 Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555; [1937] ALR 349 …. 620 Brunninghausen v Glavanics (1999) 46 NSWLR 538 …. 2-03, 13-27 Bryant, Re [1894] 1 Ch 324 …. 16-08, 20-63 Bryant and Barningham’s Contract, Re (1890) 44 Ch D 218 …. 20-11 Bryning, Re [1976] VR 100 …. 10-71 Bryson v Bryant (1992) 29 NSWLR 188 …. 12-13, 12-14, 12-15, 13-48, 13-53 BSH Holdings Pty Ltd v Commissioner of State Revenue (2000) 2 VR 454 …. 10-05 Buchanan v Ayre [1915] 2 Ch 474 …. 21-05 — v Hamilton (1801) 5 Ves 722; 31 ER 824 …. 15-46 Buck (dec’d), Re [1964] VR 284 …. 19-30 Buckby v Speed [1959] Qd R 30 …. 17-23, 17-31 Buckeridge v Glasse (1841) Cr & Ph 126; 41 ER 438 …. 27-06 Buckland v Ibbotson (1902) 28 VLR 688 …. 22-26 Buckley, Re (1883) 22 Ch D 583 …. 20-60 Bucks Constabulary Widows’ & Orphans’ Fund, (No 2), Re [1979] 1 All ER 623; [1979] 1 WLR 936 …. 12-08 Budgett v Budgett [1895] 1 Ch 202 …. 21-08 Buffrey v Buffrey (2006) 12 BPR 23,619 …. 12-11 Bulfin v Bebarfald’s Ltd (1938) 38 SR (NSW) 423; 55 WN (NSW) 136 …. 207, 2-08, 13-27 Bulkeley v Stephens [1896] 2 Ch 241; [1895–9] All ER Rep 196 …. 19-33 Bull v Bull [1955] 1 QB 234; [1955] 1 All ER 253 …. 12-12 — v Wimble (2004) 12 BPR 22,223 …. 25-07

Bullas v Public Trustee [1981] 1 NSWLR 641 …. 21-35 Bulli Coal Mining Co v Osborne [1899] AC 351; [1895–9] All ER Rep 506 …. 22-30 Bullock v Bullock (1886) 55 LT 703 …. 17-30 Bulmer v Hunter (1869) LR 8 Eq 46 …. 9-44 Burdekin, Re (1902) 2 SR (NSW) Eq 76; 19 WN (NSW) 149b …. 20-30, 2032 Burdick v Garrick (1870) LR 5 Ch App 233 …. 2-11, 13-22, 22-08 Burge’s Charity, Re (1905) 22 WN (NSW) 175 …. 10-78 Burgess v Booth [1908] 2 Ch 648 …. 26-06, 26-22 Burke, Re [1908] 2 Ch 248 …. 18-08 Burke v Dawes (1938) 59 CLR 1; [1938] ALR 135 …. 2-40, 20-04 Burley, Re [1910] 1 Ch 215 …. 5-10 Burney v MacDonald (1845) 15 Sim 6; 60 ER 518 …. 7-30 Burney’s Settlement Trusts, Re [1961] 1 All ER 856; [1961] 1 WLR 545 …. 1707 Burns v Burns [1984] Ch 317; [1984] 1 All ER 244 …. 12-14, 12-18 — v Leda Holdings Pty Ltd [1988] 1 Qd R 214 …. 17-37 Burrage, Re (1890) 62 LT 752 …. 16-16 Burrell v Burrell’s Trustees [1915] SC 333 …. 17-44 Burridge v Row (1842) 1 Y & C Ch Cas 183; 62 ER 846 …. 21-11 Burroughs-Fowler, Re [1916] 2 Ch 251 …. 9-20 Burton, Re (1994) 126 ALR 557 …. 15-12 Burton v Mount (1848) 2 De G & Sm 383; 64 ER 171 …. 19-21 Busby v Busby (1893) 14 LR (NSW) Eq 42; 4 WN (NSW) 124 …. 19-03, 19-24 Bushnell (decd), Re [1975] 1 All ER 721; [1975] 1 WLR 1596 …. 10-12, 10-51 Busk v Aldam (1874) 19 LR (NSW) Eq 16 …. 15-05 Butler v Broadhead [1975] Ch 97; [1974] 2 All ER 401 …. 13-27, 27-16 — v Rice [1910] 2 Ch 277 …. 27-13 Butt v Kelson [1952] Ch 197; [1952] 1 All ER 167 …. 17-16, 20-51, 23-13

Buttle v Saunders [1950] 2 All ER 193 …. 20-12 Buxton v Buxton (1835) 1 My & Cr 80; 40 ER 307 …. 20-47 Byng’s Will Trusts, Re [1959] 2 All ER 54; [1959] 1 WLR 375 …. 17-07 Byrne, Re (1902) 19 WN (NSW) 141 …. 20-20 Byrne v Australian Airlines Ltd (1995) 185 CLR 410; 131 ALR 422 …. 29-54 — v Reid [1902] 2 Ch 735 …. 2-22 Byrne Australia Pty Ltd, Re [1981] 1 NSWLR 394 …. 21-14 Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 …. 3-06, 5-02, 5-03, 8-02, 8-03, 17-13, 18-01, 22-33

C C v B [2007] 1 Qd R 212 …. 3-14 — v C (Ancillary Relief: Nuptial Settlement) [2005] Fam 250 …. 28-09 C W Enterprises Pty Ltd v Shaw [1967] 1 NSWR 379; (1966) 85 WN (Pt 1) (NSW) 58 …. 20-10 Caboche v Ramsay (1993) 119 ALR 215 …. 8-02, 9-19, 9-20, 11-04 Caborne, Re [1943] Ch 224; [1943] 2 All ER 7 …. 9-14 Cachia v Westpac Financial Services Ltd (2000) 170 ALR 65 …. 17-04 Cadd v Cadd (1909) 9 CLR 171; 15 ALR 502 …. 7-09, 13-25 Cadell v Palmer (1883) 1 Cl & Fin 372; 6 ER 956 …. 9-28 Cadogan v Earl of Essex (1854) 2 Drew 227; 61 ER 706 …. 18-02, 18-05 — v Kennett (1776) Cowp 432; 98 ER 1171 …. 23-02 Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 …. 2-29 Cafe v Bent (1845) 5 Hare 24; 67 ER 812 …. 15-16, 19-04 Caffoor v Commissioner of Income Tax, Colombo [1961] AC 584; [1961] 2 All ER 436 …. 10-08, 10-30 Caffrey v Darby (1801) 6 Ves 478; 31 ER 1159 …. 2-08, 13-34 Cahill, Re (1862) 1 SCR (NSW) Eq 26 …. 25-04 Cahill, Re (1903) 20 WN (NSW) 192 …. 19-24 Cain, Re [1950] VLR 382 …. 11-08

Caldecott v Caldecott (1842) 1 Y & C Ch Cas 312; 62 ER 903 …. 19-03, 19-06 Caldwell v Fleming [1927] NZLR 145 …. 10-57 Caldy Manor Estate Ltd v Farrell [1974] 3 All ER 753; [1974] 1 WLR 303 …. 919 Callery v Gray [2002] 3 All ER 417 …. 24-05 Calverley v Green (1984) 155 CLR 242; 56 ALR 483 …. 2-29, 5-02, 12-10, 1211, 12-12, 12-13, 12-14, 12-15, 12-17, 13-50 Cameron, Re (1884) 26 Ch D 19 …. 1-08 Cameron v Murdoch (1986) 63 ALR 575; 60 ALJR 280 …. 13-17 — v — (No 2) [1984] WAR 278 …. 22-05 Cameron Brae Pty Ltd v Commissioner of Taxation (2007) 243 ALR 273 …. 29-07 Camille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners [1954] Ch 672; [1954] 2 All ER 466; [1956] AC 39; [1955] 3 All ER 97 …. 10-59 Camoys v Best (1854) 19 Beav 414; 52 ER 410 …. 15-09 Campbell v Albers 39 NE (2d) 672 (1942) …. 28-22 — v Campbell (1917) 17 SR (NSW) 229; 34 WN (NSW) 229 …. 16-11 — v Walker (1800) 5 Ves 678; 31 ER 801 …. 17-44, 17-48 Campbell (dec’d), Re [1973] 2 NSWLR 146 …. 19-30, 19-31, 20-51 Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; 229 ALR 58 …. 24-05 Campbell’s Trust, Re (1862) 31 Beav 176; 54 ER 1105 …. 15-65 Canadian Oil Works Corporation, Re (1875) LR 10 Ch App 593 …. 17-42 Candler v Tillett (1855) 22 Beav 257; 52 ER 1106 …. 17-20, 17-30 Cane v Perpetual Trustees and Executors Association (1900) 26 VLR 243 …. 22-29 Cann v Cann (1884) 51 LT 770 …. 17-30, 18-01 Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; 153 ALR 163 …. 9-40, 9-42 Cannon v Hartley [1949] Ch 213; [1949] 1 All ER 50 …. 6-04, 6-12, 6-13

Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 …. 22-05 Canterbury Orchestra Trust v Smitham [1978] 1 NZLR 787 …. 10-50 Cant’s Estate, Re (1859) 4 De G & J 503; 45 ER 196; [1843–60] All ER Rep 542 …. 26-15 Capita ATL Pension Trustees Ltd v Gellately [2011] Pens LR 153; [2011] EWHC 485 …. 8-03 Carapiet’s Trusts, Re; Manoogian (Armenian Patriarch of Jerusalem) v Sonsino [2002] WTLR 989 …. 10-59, 10-63, 14-03, 28-07 Carbery v Cox (1852) 3 Ir Ch R 231 …. 10-30 Carkeek v Tate-Jones [1971] VR 691 …. 12-10 Carl Zeiss Stiftung v Herbert Smith & Co (No 2) [1969] 2 Ch 276; [1969] 2 All ER 367 …. 13-34 Carlyon v Truscott (1875) LR 20 Eq 348 …. 20-11 Carnell v Harrison [1916] 1 Ch 328; [1916–17] All ER Rep 827 …. 4-03 Carr v Carr (1987) 8 NSWLR 492 …. 20-72, 20-73 Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd [1985] Ch 207; [1985] 1 All ER 155 …. 2-16 Carruthers v Carruthers [1896] AC 659 …. 17-20 Carson v Wood (1994) 34 NSWLR 9 …. 13-41 Carter v Palmer (1842) 8 Cl & F 657; 8 ER 256 …. 17-46 — v Sebright (1859) 26 Beav 374; 53 ER 942 …. 21-10 Cartwright, Re (1889) 41 Ch D 532 …. 20-30 Carville, Re [1937] 4 All ER 464 …. 5-29 Cary v Abbot (1802) 7 Ves 490; 32 ER 198 …. 10-71 — v Cary (1804) 2 Sch and Lef 173 …. 5-06 Casella v Casella [1969] VR 49 …. 25-05 Cassidy, Re [1979] VR 369 …. 21-35 Castlemaine Brewery & Wood Bros Ltd, Re (1921) 38 WN (NSW) 45 …. 2504 Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 …. 29-54

Cater’s Trusts (No 2), Re (1858) 25 Beav 366; 153 ER 676 …. 21-29 Cathels v Commissioner of Stamp Duties [1962] SR (NSW) 455 …. 2-20 Cattanach v Melchior (2003) 215 CLR 1; 199 ALR 131 …. 9-15, 9-16 Cattley v Pollard [2007] Ch 353; [2007] 2 All ER 1086 …. 13-02, 22-25 Caus, Re [1934] Ch 162; [1933] All ER Rep 818 …. 10-14, 10-40, 10-41, 10-44 Cave v Mackenzie (1877) 46 LJ Ch 564 …. 2-10, 13-25 Cave-Brown-Cave, Re [1906] VLR 283 …. 21-34 Cavendish-Browne’s Settlement Trusts, Re (1916) 61 Sol Jo 27 …. 6-06 Cavendish-Browne’s Settlement Trusts, Re [1916] WN 341 …. 2-24 Cavion v Cavion [1970] 2 NSWR 20 …. 12-18 CB Darvall & Darvall v Moloney (2006) 236 ALR 796 …. 21-07 Cecil v Langdon (1884) 28 Ch D 1 …. 15-05 Cenco Holdings Pty Ltd, Re (2005) 53 ACSR 484 …. 25-04 Central Bayside General Practice Association Ltd v Commissioner of State Revenue of the State of Victoria (2006) 228 CLR 168; 229 ALR 1 …. 1055 Central Employment Bureau for Women and Students’ Careers Association, Re [1942] 1 All ER 232 …. 10-20 Centrepoint Community Growth Trust v Commissioner of Inland Revenue [1985] 1 NZLR 673 …. 10-33 Centro Retail Australia Ltd, Re (2012) 35 VR 512 …. 21-34 CGU Insurance Ltd v One.Tel Ltd (in liq) (2010) 242 CLR 174; 268 ALR 439 …. 17-02 Chadwick v Heatley (1845) 2 Coll 137; 63 ER 671 …. 21-29 Chahwan v Euphoric Pty Ltd (2009) 73 ACSR 252 …. 23-03 Chaine-Nickson v Bank of Ireland [1976] IR 393 …. 17-14, 17-16 Chalinder and Henington, Re [1907] 1 Ch 58 …. 17-40 Chambers v Goldwin (1804) 9 Ves 254; 31 ER 883 …. 17-39 — v Jones (1902) 2 SR (NSW) Eq 177; 19 WN (NSW) 248 …. 15-17, 15-85, 15-86 — v Minchin (1802) 7 Ves 186; 32 ER 76 …. 17-23

— v Smith (1878) 3 App Cas 795 …. 16-14 Chan v Zacharia (1984) 154 CLR 178; 53 ALR 417 …. 2-07, 13-11, 13-12, 1317, 17-42 Chancellor, Re (1884) 26 Ch D 42 …. 19-21, 20-43 Chandler v Bradley [1897] 1 Ch 315 …. 17-49 Chang v Registrar of Titles (1976) 137 CLR 177; 8 ALR 285 …. 1-02, 13-07, 25-05 Chaplin and Staffordshire Potteries Waterworks Co Ltd’s Contract, Re [1922] 2 Ch 824 …. 20-04 Chapman, Re [1896] 2 Ch 763; [1895–9] All ER Rep 1104 …. 17-18, 18-34 Chapman, Re [1922] 1 Ch 287 …. 5-29, 12-03 Chapman v Brown (1801) 6 Ves 404; 31 ER 1115 …. 9-07 — v Browne [1902] 1 Ch 785 …. 22-13 — v Chapman [1954] AC 429; [1954] 1 All ER 798 …. 17-05, 17-07 — v Verco (1933) 49 CLR 306; [1936] ALR 308 …. 2-09 Chapple, Re (1884) 27 Ch D 584 …. 17-40 Chardon, Re [1928] Ch 464; [1927] All ER Rep 483 …. 10-37 Charity Commission v Framjee [2015] 1 WLR 16 …. 27-12 Charles v Federal Commissioner of Taxation (1954) 90 CLR 598; [1954] ALR 405 …. 3-12 — v Jones (1887) 35 Ch D 544 …. 13-02 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 …. 5-02, 12-10, 12-12, 12-13, 12-16 Charlesworth, Re (1910) 101 LT 908 …. 10-50 Charleton, Re [1911] WN 54 …. 9-10 Charlton v Baber (2003) 47 ACSR 31 …. 17-18 — v Coombes (1863) 4 Giff 382; 66 ER 754 …. 13-34 — v Murray (1909) 10 SR (NSW) 49 …. 26-24 Charter plc v City Index Ltd [2008] Ch 313; [2008] 3 All ER 126 …. 13-34, 2120 Charteris, Re [1917] 2 Ch 379 …. 17-11

Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105; [1979] 3 All ER 1025 …. 27-05 Chase Manhattan Equities Ltd v Goodman [1991] BCLC 897 …. 5-04 Chase National Bank v Chicago Title & Trust Co 279 NYS 327 (1935) …. 320 — v — 284 NYS 472 (1936); 3 NE 2d 205 (1936) …. 3-20 Chattock v Muller (1878) 8 Ch D 177 …. 13-41 Chaytor, Re [1905] 1 Ch 233; [1904–7] All ER Rep 230 …. 19-10, 19-12, 19-13, 19-22 Chellaram v Chellaram [1985] Ch 409; [1985] 1 All ER 1043 …. 28-07, 28-08, 28-20 — v — (No 2) [2002] 3 All ER 17 …. 28-06, 28-07 Chennell, Re (1878) 8 Ch D 492 …. 21-04 Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171 …. 21-04, 21-11 Chester v Urwick (1856) 23 Bev 404; 53 ER 159 …. 7-22 Chesterfield’s (Earl) Trusts, Re (1883) 24 Ch D 643; [1881–5] All ER Rep 737 …. 19-14, 19-43, 19-51 Chesterman v Federal Commissioner of Taxation (1925) 37 CLR 317; [1926] AC 128; (1925) 32 ALR 9 …. 10-28, 10-63 — v Mitchell (1923) 24 SR (NSW) 108; 41 WN (NSW) 11 …. 10-36, 10-49 Chetham v Hoare (1870) LR 9 Eq 571 …. 22-30 Chetwynd’s Settlement, Re [1902] 1 Ch 692 …. 15-58, 15-83 Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488 …. 20-62 Chichester v Bickerstaff (1693) 2 Vern 295; 23 ER 791 …. 26-21 Chichester Diocesan Fund and Board of Finance v Simpson [1944] AC 341; [1944] 2 All ER 60 …. 10-61, 10-63, 27-12 Chidgey v Harris (1847) 16 M & W 517; 153 ER 1294 …. 15-73 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 …. 1-09, 3-01, 3-14, 6-01, 21-02, 23-15 — v ISPT Pty Ltd (1998) 45 NSWLR 639 …. 3-13 Chillingworth v Chambers [1896] 1 Ch 685 …. 17-42, 21-17, 21-18, 21-25, 2127

Chipman’s Trusts, Re (1899) 20 LR (NSW) Eq 142 …. 25-04 Chipper v Perpetual Executors Trustees and Agency Co (WA) Ltd [1973] WAR 136 …. 17-07 Chirnside, Re [1974] VR 160 …. 20-70 Chirnside v Fay [2007] 1 NZLR 433 …. 17-39 Chittick v Maxwell (1993) 118 ALR 728 …. 22-11 Christ Church School Lands, Re (1904) 21 WN (NSW) 148 …. 10-78 Christensen v Christensen [1954] QWN 37 …. 17-13 Christian, Re (1882) 3 LR (NSW) Eq 13 …. 20-57 Christmas’ Settlement Trusts, Re [1986] 1 Qd R 372 …. 17-07 Christoforides v Terry [1924] AC 566; [1924] All ER Rep 815 …. 17-43 Christ’s Hospital v Grainger (1849) 1 Mac & G 460; 41 ER 1343; [1843–60] All ER Rep 204 …. 10-81 Church v Talbot (1901) 1 SR (NSW) Eq 13; 18 WN (NSW) 33 …. 17-37, 1738 Church Estate Charity Wandsworth, Re (1871) LR 6 Ch App 296 …. 10-38 Church of England Property Trust v Rossi (1893) 14 LR (NSW) Eq 186; 10 WN (NSW) 1 …. 15-10, 15-13 Church of England Property Trust, Diocese of Canberra and Goulburn v Imley Shire Council [1971] 2 NSWLR 216 …. 10-22 Church of England Property Trust, Diocese of Goulburn v Rossi (No 2) (1893) 14 LR (NSW) Eq 66 …. 23-03 Church of the New Faith v Commissioner of Payroll Tax (Vic) (1983) 154 CLR 120; 49 ALR 65 …. 10-33 Churchill v Churchill (1867) LR 5 Eq 44 …. 12-09 Ciaglia v Ciaglia (2010) 269 ALR 175; 14 BPR 27,479 …. 7-09 Ciro Citterio Menswear plc (in admin), Re [2002] 2 All ER 717; [2002] 1 WLR 2217 …. 13-11 Citicorp Australia Ltd v McLaughney (1984) 35 SASR 375 …. 2-05 City Equitable Fire Insurance Co, Re [1925] Ch 407; [1924] All ER Rep 485 …. 13-27, 22-09

City of Hawthorn v Victorian Welfare Association [1970] VR 205 …. 10-08, 10-11, 10-21, 10-22 City of Sydney Real Estate Co Ltd, Re (1928) 29 SR (NSW) 80; 46 WN (NSW) 67 …. 20-04 Civilian War Claimants Association v R [1932] AC 14; [1931] All ER Rep 432 …. 14-12 CL, Re [1969] 1 Ch 587; [1968] 1 All ER 1104 …. 17-07, 20-58 Clack v Carlon (1861) 30 LJ Ch 639; 4 LT 361 …. 17-40 Claims Direct Test Cases, In the Matter of [2003] 4 All ER 528 …. 24-05 Claremont, Re [1923] 2 KB 718 …. 2-44 Clark, Re [1926] Ch 833; [1925] All ER Rep 219 …. 9-24 Clark v Clark (1884) 9 App Cas 733 …. 17-42, 17-43 — v Cutland [2003] 4 All ER 733; [2004] 1 WLR 783 …. 27-13 — v Dillon [1925] GLR 201 …. 17-11 — v Taylor (1853) 1 Drew 642; 61 ER 596 …. 10-84 Clark (decd), Re [1957] VR 171; [1957] ALR 538 …. 10-21 Clarke, Re (1881) 18 Ch D 160; [1881–5] All ER Rep Ext 1607 …. 19-32 Clarke, Re (1887) 36 Ch D 348 …. 24-04 Clarke, Re [1923] 2 Ch 407; [1923] All ER Rep 607 …. 10-17, 10-19, 10-55, 1063, 10-64 Clarke v Franklin (1858) 4 K & J 257; 70 ER 107 …. 26-16 — v Hilton (1866) LR 2 Eq 810 …. 12-05 — v Hoskins (1868) 37 LJ Ch 561 …. 15-84 — v Ormonde (Earl of) (1821) Jac 108; 37 ER 791 …. 17-13 — v Swaile (1762) 2 Eden 134; 28 ER 847 …. 17-46 Clarke and Solomons’ Agreements Trusts, Re (1905) 5 SR (NSW) 498 …. 2503, 25-04 Clarke’s Will Trusts, Re [1961] 3 All ER 1133; [1961] 1 WLR 1471 …. 17-07 Clarkson v Davies [1923] AC 100; [1922] All ER Rep Ext 809 …. 2-03, 13-27, 22-25 — v Robinson [1900] 2 Ch 722 …. 17-40

Clay v Clay (2001) 202 CLR 410; 178 ALR 193 …. 2-02, 2-07, 3-05, 17-43, 2223 — v Rufford (1852) 5 De G & Sm 768; 64 ER 1337 …. 20-11 Clayton v Montgomery (1897) 18 LR (NSW) Eq 171 …. 19-24, 26-16 — v Ramsden [1943] AC 320; [1943] 2 All ER 16 …. 9-16 Clayton’s case (Devaynes v Noble; Baring v Noble [1814–23] All ER Rep 1; (1816) 1 Mer 572; (1816) 35 ER 781) …. 12-08, 27-08, 27-10, 27-11, 27-12 Cleaver (dec’d), Re [1981] 2 All ER 1018; [1981] 1 WLR 939 …. 13-42 Clegg v Edmondson (1857) 8 De GM & G 787; 44 ER 593 …. 13-17 Clephane v Lord Provost of Edinburgh (1869) LR 1 HL 417 …. 10-72 Clergy Society, Re (1856) 2 K & J 615; 69 ER 928 …. 10-69 Cleveland’s Estate, Re [1895] 2 Ch 542 …. 19-14 Clifford, Re (1911) 81 LJ Ch 220 …. 10-49 Clifford, Re [1912] 1 Ch 29 …. 10-32 Clinton, Re (1910) 10 SR (NSW) 465 …. 23-03 Clore’s Settlement Trusts, Re [1966] 2 All ER 272; [1966] 1 WLR 955 …. 2058, 20-59 Clough v Bird (1838) 3 My & Cr 490; 40 ER 1016 …. 2-08, 17-23 Clough Mill Ltd v Martin [1984] 3 All ER 982; [1985] 1 WLR 111 …. 2-47, 249, 2-50, 2-51 Clout and Frewer’s Contract, Re [1924] 2 Ch 230; [1924] All ER Rep 798 …. 15-16, 15-73 Coaks, Re [1911] 1 Ch 171 …. 19-14, 19-59 Coates v McInerney (1992) 7 WAR 537; 6 ACSR 748; 10 ACLC 616 …. 2104, 21-14 Coates to Parsons, Re (1886) 34 Ch D 370 …. 15-09, 15-14 Coats’ Trusts, Re [1948] Ch 340; [1948] 1 All ER 521; [1947] 2 All ER 422 …. 10-10, 10-34, 10-40, 10-41, 10-43 Cochrane v Moore (1890) 25 QBD 57; [1886–90] All ER Rep 731 …. 6-20 Cock v Aitken (1911) 13 CLR 461; 18 ALR 337 …. 19-58 — v — (1912) 15 CLR 373; 18 ALR 576 …. 19-54, 21-27

— v Smith (1909) 9 CLR 773; 15 ALR 526 …. 16-09, 16-14, 19-58 Cockayne v Harrison (1872) LR 13 Eq 432 …. 19-41 Cockburn v Peel (1861) 3 De G F & J 170; 45 ER 843 …. 18-35 Cockburn’s Will Trusts, Re [1957] Ch 438; [1957] 2 All ER 522 …. 2-40 Cocker v Quayle (1830) 1 Russ & M 535; 39 ER 206 …. 21-23 Cockerell’s Settlement Trusts, Re [1956] Ch 372; [1956] 2 All ER 172 …. 1707, 25-11 Cockerill, Re [1929] 2 Ch 131 …. 9-19 Cocks v Manners (1871) LR 12 Eq 574 …. 10-34, 10-41, 10-42, 10-43 Cogan v Stephens (1835) 1 Beav 482n; 48 ER 1027 …. 26-17 Cohen v Cohen (1929) 42 CLR 91; 35 ALR 204 …. 2-13, 13-02 Cohen’s Will Trusts, Re [1959] 3 All ER 523; [1959] 1 WLR 865 …. 17-07 Cole, Re [1958] Ch 877; [1958] 3 All ER 102 …. 10-18 Cole v Muddle (1852) 10 Hare 186; 68 ER 892 …. 23-05 Cole (decd), In the Estate of (1980) 25 SASR 489 …. 10-33, 10-66 Coleman v Bucks and Oxon Union Bank [1897] 2 Ch 243 …. 27-17 — v Druitt (1881) 2 LR (NSW) Eq 74 …. 17-44 — v Myers [1977] NZLR 225 …. 2-03 Coles v Trecothick (1804) 9 Ves 234; 32 ER 592 …. 17-47 Collard’s Will Trusts, Re [1961] Ch 293; [1961] 1 All ER 821 …. 20-58, 20-62 College of Law (Properties) Pty Ltd v Willoughby Municipal Council (1978) 38 LGRA 81 …. 10-31 Collett v Collett (1866) 35 Beav 312; 55 ER 916 …. 17-05 Collie v Merlaw Nominees Pty Ltd (in liq) (2001) 37 ACSR 361 …. 21-14 Collier (decd), Re [1998] 1 NZLR 81 …. 10-51 Collings v Wade [1896] 1 LR 340 …. 22-29 Collins v AMP Superannuation Ltd (1997) 75 FCR 565; 147 ALR 243 …. 8-02 Collinson v Patrick (1838) 2 Keen 123; 48 ER 575 …. 6-22 Collyer v Isaacs (1881) 19 Ch D 342; [1881–5] All ER Rep 828 …. 24-04 Colonial Bishoprics Fund, 1841, Re [1935] Ch 148 …. 10-59

Colville’s Trustees v Colville SC 225 (1914) …. 18-36 Colyear v Countess of Mulgrave (1836) 2 Keen 81; 48 ER 559 …. 2-20, 2-22, 604 Colyton Investments Pty Ltd v McSorley (1962) 107 CLR 177; [1963] ALR 487 …. 2-43 Combs, Re (1884) 51 LT 45 …. 15-85, 15-86 Comiskey v Bowring-Hanbury [1905] AC 84 …. 5-08 Commane, Re [1927] SASR 238 …. 17-39 Commissioner of Australian Federal Police v Cornwell (1990) 98 ALR 677 …. 21-02, 21-04 Commissioner of Inland Revenue v Chester Trustee Services Ltd [2003] 1 NZLR 395 …. 21-02 — v NZ Council of Law Reporting [1981] 1 NZLR 683 …. 10-27 — v Ward [1970] NZLR 1 …. 20-62 Commissioner of Stamp Duties v Bone (1976) 135 CLR 223; [1977] AC 511; 9 ALR 11 …. 22-33 — v Buckle (1995) 38 NSWLR 574 …. 21-02 — v Byrnes [1911] AC 386 …. 12-12 — v Livingston (1960) 107 CLR 411; [1961] ALR 534 …. 2-40 — v Pearse [1954] AC 91; [1954] 1 All ER 19 …. 17-40 Commissioner of Stamp Duties (Qld) v Jolliffe (1920) 28 CLR 178; 26 ALR 210 …. 5-03 — v Livingston (1964) 112 CLR 12; [1965] AC 694; [1965] ALR 803; [1964] 3 All ER 692 …. 2-40, 12-02, 23-10 Commissioner of State Revenue v Lam & Kym Pty Ltd (2004) 10 VR 420 …. 601 — v Viewbank Properties Pty Ltd (2004) 55 ATR 50 …. 5-26 Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2015) 90 ALJR 151 …. 21-02 — v Bargwanna (2012) 244 CLR 655; 286 ALR 206 …. 21-34, 22-12 — v ElecNet (Aust) Pty Ltd [2015] FCAFC 178 …. 3-11, 5-24 — v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592; 215 ALR 1 ….

2-07, 12-02 — v Macquarie Health Corporation Ltd (1998) 88 FCR 451 …. 13-34 Commissioner of Taxation (Cth) v Bargwanna (2012) 286 ALR 206; 86 ALJR 406 …. 10-60 Commonwealth v AE Goodwin Ltd [1961] NSWR 1080 …. 6-21 — v Colonial Combing Co (1922) 31 CLR 421; 29 ALR 138 …. 17-42 — v Cornwell (2007) 229 CLR 519; 234 ALR 148 …. 22-30 Commonwealth Bank of Australia v Nabi [2010] NSWSC 1425 …. 25-04 — v Smith (1991) 42 FCR 390; 102 ALR 453 …. 22-33 Compaq Computer Ltd v Abercorn Group Ltd [1991] BCC 484 …. 2-48 Compass Resources Ltd v Sherman (2010) 42 WAR 1 …. 2-15 Compton, Re [1945] Ch 123; [1945] 1 All ER 198 …. 10-06, 10-08, 10-09, 1024, 10-25, 10-30 Compton, Re [1946] 1 All ER 117 …. 10-30 Comptroller of Stamps v Howard Smith (1936) 54 CLR 614; [1936] ALR 198 …. 1-06, 5-13, 6-01, 6-20, 6-24 Congregation of the Religious Sisters of Charity of Australia v AttorneyGeneral (Qld) (2011) 7 ASTLR 51 …. 22-17 Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375; [1952] ALR 729 …. 9-28, 10-63, 10-83, 12-04 Connolly, Re [1910] 1 Ch 219 …. 5-06 Connolly, Re (1914) 110 LT 688 …. 10-71 Conquest, Re [1929] 2 Ch 353; [1929] All ER Rep 608 …. 19-56, 20-31, 20-33 Conservative and Unionist Central Office v Burrell [1980] 3 All ER 42 …. 9-32 — v — [1982] 2 All ER 1; [1982] 1 WLR 522 …. 9-32 Constable (decd), Re [1971] VR 742 …. 10-21, 10-86 Constantinou (decd), Re [2013] 2 Qd R 219 …. 28-06, 28-07 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; 1 ALR 231 …. 2-06, 13-11, 13-34, 13-36, 13-37, 13-38, 13-39, 13-40 Conybeare’s Settlement, Ex parte (1853) 1 WR 458 …. 15-59 Conyngham v Conyngham (1750) 1 Ves Sen 522; 27 ER 1181 …. 15-73

Coode, Re (1913) 108 LT 94 …. 15-59 Cook, Re [1948] Ch 212; [1948] 1 All ER 231 …. 1-07 Cook v Benson (2003) 214 CLR 370; 198 ALR 218 …. 9-39 — v Fountain (1676) 3 Swan 585; 36 ER 984 …. 12-10 Cooke, Re [1916] 1 Ch 480 …. 19-16 Cooke v Head [1972] 2 All ER 38; [1972] 1 WLR 518 …. 12-18, 13-46 Cook’s Settlement Trust, Re [1965] Ch 902; [1964] 3 All ER 898 …. 6-14 Cookson v Lee (1854) 23 LJ Ch 473 …. 17-43, 17-45 Cooper, Re [1913] 1 Ch 350 …. 20-61 Cooper, Re [1939] Ch 811; [1939] 3 All ER 586 …. 7-25 Cooper v Cooper (1901) 26 VLR 649; 7 ALR 147 …. 19-60 — v — (1902) 8 ALR 212 …. 19-60 Cooper & Allen’s Contract for sale to Harlech, Re (1876) 4 Ch D 802 …. 2011, 20-12 Coppin v Fernyhough (1788) 2 Bro CC 291; 29 ER 159 …. 13-43 Coram, Re (1992) 109 ALR 353 …. 29-49 Corbett’s Settlement, Re (1907) 24 WN (NSW) 30 …. 19-54 Corbun, Re [1941] Ch 400; [1941] 2 All ER 160 …. 10-56 Corelli, Re [1943] Ch 332; [1943] 1 All ER 519 …. 10-50 Corin v Patton (1990) 169 CLR 540; 92 ALR 1 …. 3-15, 6-02, 6-17, 6-19, 6-20, 23-12 Cormack, In the Will of (1909) 26 WN (NSW) 174 …. 15-83 Cormack, Re (1911) 11 SR (NSW) 261; 28 WN (NSW) 80 …. 15-03 Cornick v Pearce (1848) 7 Hare 477; 68 ER 197 …. 20-03 Corozo Pty Ltd v Total Australia Ltd [1987] 2 Qd R 11 …. 21-12 — v — [1988] 2 Qd R 366 …. 23-04 Corrigan v Farrelly (1896) 7 QLJ 105 …. 21-04 Corsellis, Re (1887) 34 Ch D 675 …. 17-39, 17-40, 17-41 Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370 …. 3-15 Coshott v Prentice (2014) 221 FCR 450; 311 ALR 428 …. 5-04

— v Royal Society for the Protection of Cruelty to Animals (1996) 40 NSWLR 446 …. 10-05, 10-61 — v Sakic (1998) 44 NSWLR 667 …. 12-10 Costabadie v Costabadie (1847) 6 Hare 410; 67 ER 1225 …. 16-14, 20-63 Costello v Chief Constable of Derbyshire Constabulary [2001] 3 All ER 150; [2001] 1 WLR 1437 …. 9-03, 27-07 Costin v Costin (1997) 7 BPR 15,167 …. 6-19 Cottam’s Will Trusts, Re [1955] 3 All ER 704; [1955] 1 WLR 1299 …. 10-21 Cotter, Re [1915] 1 Ch 307 …. 15-19, 15-64, 15-86 Cotton’s Trustees & the School Board for London, Re (1882) 19 Ch D 624; [1881–5] All ER Rep 926 …. 20-06, 23-09 Coulls v Bagot’s Executor and Trustee Co Ltd (1966) 119 CLR 460; [1967] ALR 385 …. 2-20, 6-06 Coulthurst (decd), Re [1951] Ch 661; [1951] 1 All ER 774 …. 10-17, 10-23 Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] ALR 362 …. 2-27, 2-31, 5-07 Courage Group’s Pension Schemes, Re [1987] 1 All ER 528; [1987] 1 WLR 495 …. 8-03, 29-53, 29-56 Cousins, Re (1885) 30 Ch D 203 …. 26-15 Cousins v Cousins (1906) 3 CLR 1198 …. 17-05, 20-30 — v Peters (1900) 17 WN (NSW) 61 …. 12-12 Courtenay v Williams (1844) 3 Hare 539; 67 ER 494 …. 21-11 Coventry v Coventry (1837) 1 Keen 758; 48 ER 499 …. 15-83 Cowan v Scargill [1985] Ch 270; [1984] 2 All ER 750 …. 16-06, 16-14, 17-11, 17-18, 18-11, 18-14, 18-17, 20-12, 29-05, 29-19, 29-21, 29-56 Cowan de Groot Properties Ltd v Eagle Trust plc [1992] 4 All ER 700 …. 13-36 Cowcher v Cowcher [1972] 1 All ER 943; [1972] 1 WLR 425 …. 12-11, 12-13, 12-15, 12-18, 13-44 Cowell v Gatcombe (1859) 27 Beav 568; 54 ER 225 …. 17-23 Cowin, Re (1886) 33 Ch D 179 …. 17-16 Cowley v Hartstonge (1813) 1 Dow 361; 3 ER 729 …. 26-09

— v Wellesley (1866) LR 1 Eq 656 …. 19-55 Cox v Archer (1964) 110 CLR 1; [1964] ALR 782 …. 23-09 — v Barnard (1850) 8 Hare 310; 68 ER 379 …. 6-09 Coxen, Re [1948] Ch 747; [1948] 2 All ER 492 …. 5-27, 10-50 Cox’s Trusts, Re (1878) 9 Ch D 159 …. 19-42, 19-43 Cox’s Will, Re (1890) 11 LR (NSW) Eq 124 …. 17-39 Cozens, Re [1913] 2 Ch 478 …. 5-23, 7-07 CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 …. 1-07, 3-12, 23-01, 23-08, 23-12, 23-14, 23-15 CRA Exploration Pty Ltd, Ex parte [1983] 1 Qd R 310 …. 25-05 Crabb v Arun District Council [1976] Ch 179; [1975] 3 All ER 865 …. 13-11 Cradock v Piper (1850) 1 Mac & G 664; 41 ER 1422 …. 17-41 Craig, Re (1952) 52 SR (NSW) 265 …. 17-13 Craig v National Trustees Executors and Agency Co of Australasia Ltd [1920] VLR 569 …. 16-06, 20-63 — v Wheeler (1860) 29 LJ Ch 374 …. 19-03 Crago, Re (1908) 8 SR (NSW) 269; 25 WN (NSW) 91 …. 17-05, 20-45 Crago v Mclntyre [1976] 1 NSWLR 729 …. 4-06 Crawford v Forshaw [1891] 2 Ch 261; [1891–4] All ER Rep Ext 1895 …. 10-62 Crawley v Short (2009) 262 ALR 254 …. 2-03 Craven, Re [1914] 1 Ch 358 …. 19-16, 20-70 Craven v Bady (1869) LR 4 Ch App 296 …. 9-19 Craven’s Estate, Re [1937] Ch 431; [1937] 3 All ER 33 …. 17-06 Craven-Sands v Koch (2000) 34 ACSR 341 …. 15-86, 22-22 Crawley, Re (1885) 28 Ch D 431 …. 20-32 Crawley v Crawley (1835) 7 Sim 427; 58 ER 901 …. 19-15 Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 426; 18 ALR 542 …. 1310, 27-07 Creamoata Ltd v Rice Equalization Association Ltd (1953) 89 CLR 286 …. 221 Crest Realty Pty Ltd (in liq), Re [1977] 1 NSWLR 664 …. 15-51

Crichton v Crichton (1930) 43 CLR 536 …. 12-12 Cripps, Re [1941] Tas SR 19 …. 10-58 Croaker, Re (Unreported, SC(NSW), 13 May 1960) …. 25-05 Crociani v Crociani [2014] UKPC 40 …. 28-08 Croome v Croome (1889) 59 LT 582 …. 12-02 Cross, Re [1943] VLR 38; [1943] ALR 126 …. 19-56 Cross v Lloyd-Greame (1909) 102 LT 163 …. 10-23 Crowhurst Park, Re [1974] 1 All ER 991; [1974] 1 WLR 583 …. 15-10 Crowther, Re [1895] 2 Ch 56; [1895–9] All ER Rep 1208 …. 19-05 Crowther v Brophy [1992] 2 VR 97 …. 10-41 Croxon, Re [1915] 2 Ch 290; [1914–15] All ER Rep 816 …. 19-58 Crozier, Re (1906) 50 Sol J 206 …. 20-58 Crunden and Meux’s Contract, Re [1909] 1 Ch 690 …. 15-75 CSR Ltd v Eddy (2005) 226 CLR 1; 222 ALR 1 …. 13-09 Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949; [1971] 2 All ER 633 …. 2-05 Cullen v A-G for Ireland (1866) LR 1 HL 190 …. 7-15, 7-33 Cumming, Re [1951] NZLR 498 …. 10-65 Cumming v Austin (1903) 28 VLR 622 …. 21-27 Cummins, Re [1972] Ch 62; [1971] 3 All ER 782 …. 12-18 Cunnack v Edwards [1896] 2 Ch 679 …. 12-07 Cunningham v Foot (1878) 3 App Cas 974 …. 2-31 — v Harrison [1973] QB 942; [1973] 3 All ER 464 …. 13-09 Cunningham and Frayling, Re [1891] 2 Ch 567 …. 3-15 Cunningham’s Settled Estates, Re (1909) 27 WN (NSW) 28 …. 15-59 Cunstance’s Settlements, Re [1946] Ch 42; [1945] 2 All ER 441 …. 9-23 Curnick v Tucker (1874) LR 17 Eq 320 …. 5-06 Currie v Goold (1817) 2 Madd 163; 56 ER 295 …. 17-37 — v Hamilton [1984] 1 NSWLR 687 …. 12-11 Curtis v Pulbrook [2011] 1 BCLC 6387 …. 6-19

Curwen v Vanbreck Pty Ltd (2009) 26 VR 335 …. 16-06, 16-10 Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 …. 21-04

D D V Bryant Trust Board v Hamilton City Council [1997] 3 NZLR 342 …. 1022, 10-23 Da Costa v De Pas (1754) Amb 228; 27 ER 150 …. 10-71 Dacre, Re [1916] 1 Ch 344 …. 21-11 D’Adhemar v Bertrand (1865) 35 Beav 19; 55 ER 801 …. 15-02, 15-16 Dale (dec’d), Re [1994] Ch 31; [1993] 4 All ER 129 …. 7-18, 13-42 Dalrymple v Melville (1932) 32 SR (NSW) 596 …. 22-09, 22-13, 22-20 Dalton v Christofis [1978] WAR 42 …. 7-12 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371; 65 ALR 193 …. 1302, 13-11 — v Union Trustee Co of Aust Ltd (1898) 24 VLR 460 …. 21-12 Dalziel, Re [1943] Ch 277; [1943] 2 All ER 656 …. 10-36, 10-37 Damberg v Damberg (2001) 52 NSWLR 492; [2001] NSWCA 87 …. 9-06, 1213, 12-16, 28-21 D’Amico, Re (1974) 42 DLR (3d) 759 …. 7-16 D’Angibau, Re (1880) 15 Ch D 228; [1874–80] All ER Rep 1184 …. 2-21, 6-11, 6-13, 6-26 Dance v Goldingham (1873) LR 8 Ch App 902 …. 20-14, 23-04 Daniels, Re [1970] VR 72 …. 10-68, 10-71, 10-86 Daniels v Anderson (1995) 37 NSWLR 438 …. 2-07, 13-27 Danish Bacon Staff Pension Fund, Re [1971] 1 All ER 486; [1971] 1 WLR 248 …. 7-08 Darby, Re [1939] Ch 905; [1939] 3 All ER 6 …. 19-58 Dargie, Re [1953] 2 All ER 577 …. 21-09 Darke v Williamson (1858) 25 Beav 622; 53 ER 774 …. 21-04 Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council (2006) 203 FLR 396 …. 10-30, 10-47

Darnley, Re [1907] 1 Ch 159 …. 19-09 Dartnall, Re [1895] 1 Ch 474; [1895–9] 1 All ER Rep 890 …. 17-15 Darvill v Terry (1861) 6 H & N 807; 158 ER 333 …. 9-44 Darwin Cyclone Tracy Relief Trust Fund, Re (1979) 39 FLR 260 …. 10-55 Dashwood v Bulkeley (1804) 10 Ves 230; 32 ER 832 …. 9-13 Davenport v Bishopp (1843) 2 Y & C Ch Cas 451; 63 ER 201 …. 6-04, 6-12, 613 — v — (1846) 1 Ph 698; 41 ER 798 …. 6-26 Daveron, Re [1893] 3 Ch 421 …. 20-06, 26-21 Davey v Pein (1884) 10 VLR (E) 306 …. 17-03 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57 …. 9-36, 17-37, 23-20, 27-14 Davidson, Re (1879) 11 Ch D 341 …. 20-06 Davidson v Chirnside (1908) 7 CLR 324 …. 6-01 Davies, Re (1932) 48 TLR 539 …. 10-46 Davies, Re [1915] 1 Ch 543 …. 10-39, 10-81 Davies v Hodgson (1858) 25 Beav 177; 53 ER 604 …. 17-35, 22-33 — v Perpetual Trustee Co Ltd [1959] AC 439; [1959] 2 All ER 128 …. 10-06, 10-08, 10-11, 10-24, 10-30 Davies and Kent’s Contract, Re [1910] 2 Ch 35 …. 20-06 Davis, Re [1902] 1 Ch 876; [1900–3] All ER Rep 336 …. 10-86 Davis, Re [1902] 2 Ch 314 …. 22-08 Davis v Heuber (1923) 31 CLR 583 …. 2-09 — v Hutchings [1907] 1 Ch 356 …. 17-30 — v Richards & Wallington Industries Ltd [1991] 2 All ER 563; [1990] 1 WLR 1511 …. 8-04, 8-06, 8-07, 12-08, 15-76, 29-55, 29-57 — v Samuel (1926) 28 SR (NSW) 1; 44 WN (NSW) 100 …. 20-06 — v Vale [1971] 2 All ER 1021; [1971] 1 WLR 1022 …. 12-11, 12-18 Davis (dec’d), In the Estate of (1898) 19 LR (NSW) B & P 18 …. 15-75 Davis (decd), Re [1953] VLR 639; [1953] ALR 1079 …. 19-09, 19-14, 19-21, 19-26

Davis’ Trusts, Re (1871) LR 12 Eq 214 …. 15-03 Dawes, Re [1954] VLR 76; [1954] ALR 174 …. 19-56, 20-30 Dawson, Re (1888) 39 Ch D 155 …. 9-28 Dawson, Re [1906] 2 Ch 211 …. 19-58 Dawson, Re [1941] 1 DLR 790 …. 23-08 Dawson, Re [1959] NZLR 1360 …. 17-06 Dawson v Clark (1809) 18 Ves 247; 34 ER 311 …. 12-03 — v Dawson [1945] VLR 99; [1945] ALR 64 …. 20-51 — v Hearn (1831) 1 Russ & M 606; 39 ER 232 …. 23-09 — v Small (1874) LR 18 Eq 114 …. 10-61 Dawson (dec’d), Re [1966] 2 NSWR 211; (1966) 84 WN (Pt 1) (NSW) 399 …. 22-04, 22-05, 22-07 Day v Day (1903) 4 SR (NSW) 21; 21 WN (NSW) 1 …. 19-55, 20-54 De Beauvoir v De Beauvoir (1852) 3 HL Cas 524; 10 ER 206 …. 26-09 De Bussche v Alt (1878) 8 Ch D 286; [1874–80] All ER Rep 1247 …. 13-25 De Carteret, Re [1933] 1 Ch 103; [1932] All ER Rep 355 …. 10-17 De Clifford’s (Lord) Estate, Re [1900] 2 Ch 707 …. 17-18, 22-12, 22-16 De Cordova v De Cordova (1879) 4 App Cas 602 …. 20-48 De Little v Byrne (1951) 84 CLR 532 …. 19-22 De Manneville v Crompton (1813) 1 Ves & B 354; 35 ER 138 …. 16-06 De Mestre v West [1891] AC 264 …. 6-26, 9-46 De Santis v Aravanis (2014) 227 FCR 404; 322 ALR 475 …. 5-04 De Tabley, Re (1896) 75 LT 328 …. 19-55 De Teissier’s Settled Estates, Re [1893] 1 Ch 153 …. 20-30 De Vedas (decd), Re [1971] SASR 169 …. 9-31, 10-33, 10-63, 10-83 Dean, Re (1889) 41 Ch D 552 …. 7-27, 10-57, 11-01, 11-02, 11-03, 11-08 Dean v Cole (1921) 30 CLR 1 …. 5-07 Dean’s Will Trusts, Re [1950] 1 All ER 882 …. 10-55 Dehnert, Re [1973] VR 449 …. 10-83, 17-06 Delamare’s Settlement Trusts, Re [1984] 1 All ER 584; [1984] 1 WLR 813 ….

20-62 Delany, Re [1902] 2 Ch 642 …. 10-19, 10-42 Delehunt v Carmody (1986) 161 CLR 464; 68 ALR 253 …. 12-10 Delius, Re [1957] Ch 299; [1957] 1 All ER 84 …. 10-50 Delves v Gray [1902] 2 Ch 606 …. 17-43 Demerara Bauxite Co v Hubbard [1923] AC 678; [1923] All ER Rep Ext 841 …. 17-46 Denham Bros Ltd v W Freestone Leasing Pty Ltd [2004] 1 Qd R 500 …. 6-19 Denley’s Trust Deed, Re [1969] 1 Ch 373; [1968] 3 All ER 65 …. 10-08, 11-04 Dennis’ Settlement Trusts, Re [1942] Ch 283; [1942] 1 All ER 520 …. 9-23 Densham, Re [1975] 3 All ER 726; [1975] 1 WLR 1519 …. 12-11 Dent v Dent [1996] 1 All ER 659; [1996] 1 WLR 683 …. 9-36 Denton v Donner (1856) 23 Beav 285; 53 ER 112 …. 17-43 D’Epinoix’s Settlement, Re [1914] 1 Ch 890 …. 18-35 Deputy Commissioner of Taxation v Brown (1958) 100 CLR 32; [1958] ALR 285 …. 27-16 — v Government Insurance Office of New South Wales (1993) 117 ALR 61 …. 24-04 Detmold, Re (1889) 40 Ch D 585 …. 9-20, 9-26 Deutsch v Deutsch (2012) 6 ASTLR 386 …. 23-03 Devaynes v Noble; Baring v Noble (Clayton’s Case) [1814–23] All ER Rep 1; (1816) 1 Mer 572; (1816) 35 ER 781 …. 12-08, 27-08, 27-10, 27-11, 27-13 Devaynes v Robinson (1857) 24 Beav 86; 53 ER 289 …. 20-12, 20-27 Devey v Thornton (1851) 9 Hare 222; 68 ER 483 …. 17-03, 17-35 Devitt v Kearney (1883) 13 LR Ir 45 …. 20-27 Dewar, Re (1885) 52 LT 489 …. 17-30 Dewhirst’s Trusts, Re (1886) 33 Ch D 416 …. 15-58 Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470 …. 5-02, 7-03, 708, 7-09 Diamond Cutting Works v Trifus [1956] 1 Lloyd’s LR 216 …. 6-12 Dibbens & Sons Ltd, Re [1990] BCLC 577 …. 2-02

Dibbs v Goren (1849) 11 Beav 483; 50 ER 904 …. 17-37 Dick, Re [1940] VLR 166; [1940] ALR 47 …. 20-58 Dickie v Torbay Pharmacy (1986) Ltd [1995] 3 NZLR 429 …. 13-21 Dickenson v Teasdale (1862) 1 De GJ & Sm 52; 46 ER 21 …. 22-23 Dickinson’s Trust, Re [1902] WN 104 …. 15-65 Dickson’s Settlement Trusts, Re (1872) 27 LT 671 …. 15-59 Didds v Tuke (1884) 25 Ch D 300 …. 21-10 Dilworth v Commissioner of Stamps [1899] AC 99 …. 10-17, 10-28, 10-30 Dillwyn v Llewelyn [1861–73] All ER Rep 384; (1862) 4 De GF & J 517; 45 ER 1285 …. 6-21, 12-19 Dimes v Scott (1828) 4 Russ 195; 38 ER 778 …. 19-03, 19-10, 19-20 Dimos v Dikeakos Nominees Pty Ltd (1996) 68 FCR 39; 149 ALR 113 …. 2104 Dingle v Turner [1972] AC 601; [1972] 1 All ER 878 …. 10-09, 10-24, 10-25 Dinsdale v Arthur (2006) 12 BPR 23,509 …. 12-11 Diocesan Trustees of Church of England v Solicitor-General (1909) 9 CLR 757; 16 ALR 70 …. 10-69 Dion Investments Pty Ltd, Re (2014) 87 NSWLR 753 …. 17-06 Diplock, Re [1941] Ch 253; [1941] 1 All ER 193 …. 10-65 Diplock, Re [1948] Ch 465; [1948] 2 All ER 318 …. 12-10, 17-37, 23-18, 27-04, 27-12, 27-13 Directors of Central Railway Co of Venezuela v Kisch (1867) LR 2 HL 99 …. 13-28 Disher v Farnworth [1993] 3 NZLR 390 …. 13-30 Dive, Re [1909] 1 Ch 328 …. 18-27, 22-15, 22-16 Dix v Burford (1854) 19 Beav 409; 52 ER 408 …. 22-02 Dixon, Re (1873) 21 WR 220 …. 15-59 Dixon v Butler (1839) 3 All & C Ex 677; 160 ER 874 …. 10-35 — v Williams (1875) 13 SCR (NSW) Eq 7 …. 21-36 D’Jan of London Ltd, Re [1994] 1 BCLC 561 …. 22-13 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW)

[1980] 1 NSWLR 510 …. 1-10 — v — (1982) 149 CLR 431; 40 ALR 1 …. 3-07, 12-01, 12-02 Docker v Somes (1834) 2 My & K 655; 39 ER 1095 …. 22-06 Docwra, Re (1885) 29 Ch D 693 …. 3-15 Dodkin v Brunt (1868) LR 6 Eq 580 …. 15-02, 25-04 Dodson, Re [1908] 2 Ch 638 …. 26-06 Dodson v Sandhurst and Northern District Trustees Executors and Agency Co Ltd [1955] VLR 100 …. 21-11 Doe d Phillips v Aldridge (1791) 4 Term Rep 264; 100 ER 1010 …. 10-39 Doe d Thompson v Pitcher (1815) 2 M & S 407; 105 ER 663 …. 10-36 Doering v Doering (1889) 42 Ch D 203 …. 21-26, 21-27 Doherty v Doherty [2006] 2 Qd R 259 …. 1-01 Doig, Will of [1916] VLR 698 …. 7-18 Dolbel v Loudoun [1920] NZLR 131 …. 20-11 Dominion Students’ Hall Trust, Re [1947] Ch 183 …. 10-71, 10-72 Dommett v Bedford (1796) 6 TR 684; 101 ER 771 …. 9-19 Don King Inc v Warren [2000] Ch 291; [1998] 2 All ER 608 …. 1-06, 5-24, 2308, 24-03 Donald, Re [1909] 2 Ch 410; [1908–10] All ER Ext 1224 …. 10-56 Donaldson, Re (1912) 12 SR (NSW) 148 …. 23-07 Doneley v Doneley [1998] 1 Qd R 602 …. 13-34, 17-18, 17-42 Donn, Re [1944] Ch 8; [1943] 2 All ER 564 …. 9-16 Donnelly, Re (1901) 1 SR (NSW) Eq 150; 18 WN (NSW) 227 …. 20-32 Doody, Re [1893] 1 Ch 129 …. 17-41 Dorin v Dorin [1874–80] All ER Rep 71; (1875) LR 7 HL 568 …. 9-09 Dornford v Dornford (1806) 12 Ves 127; 33 ER 49 …. 22-11 Dotter v Evans [1969] VR 41 …. 25-05 Dougan v Macpherson [1902] AC 197; [1900–3] All ER Rep Ext 1312 …. 17-47 Doughty, Re [1947] Ch 263; [1947] 1 All ER 207 …. 19-38 Douglas, Re (1887) 35 Ch D 472; [1886–90] All ER Rep 228 …. 10-57, 10-63,

11-08 Douglas, Re (1928) 29 SR (NSW) 48; 45 WN (NSW) 195 …. 17-44 Douglas v Archbutt (1858) 2 De G & J 148; 44 ER 944 …. 17-40 — v Lawler (1916) 16 SR (NSW) 252; 33 WN (NSW) 82 …. 19-39 Douglas’s Will Trusts, Re [1959] 2 All ER 620; [1959] 1 WLR 744 …. 18-04 Dover v Buck (1865) 5 Giff 57; 63 ER 921 …. 17-43 — v Denne (1902) 30 QLR 664 …. 17-18 Dover Coalfield Extension Ltd, Re [1908] 1 Ch 65; [1904–7] All ER Rep 161 …. 17-49 Dowling, Re [1961] VR 615 …. 17-39 Dowling v Blyth (1917) 22 CLR 486 …. 21-10 Downes v Bullock (1858) 25 Beav 54; 53 ER 556 …. 17-37 — v Maddrell (1941) 41 SR (NSW) 268 …. 9-19 Downing v Federal Commissioner of Taxation (1971) 125 CLR 185 …. 10-17, 10-56, 10-65, 10-69 Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295; [1993] 3 All ER 626 …. 2-05 Dowse v Gorton [1891] AC 190 …. 21-04, 21-13 Dowsett v Reid (1912) 15 CLR 695; 19 ALR 15 …. 2-04, 13-22 Doyle v Blake (1804) 2 Sch & Lef 231 …. 15-73, 17-23, 22-02 DPC Estates Pty Ltd v Grey and Consul Development Pty Ltd [1974] 1 NSWLR 443 …. 13-34, 13-37 Drant v Vause (1842) 1 Y & C Ch Cas 580; 62 ER 1026 …. 26-14 Draper v Official Trustee in Bankruptcy (2006) 156 FCR 53; 236 ALR 499 …. 13-02 Drever v Drever [1936] ALR 446 …. 12-12, 12-16 Drew v Martin (1864) 2 Hem & M 130; 71 ER 411 …. 12-12 — v Vickery (1919) 19 SR (NSW) 245; 36 WN (NSW) 100 …. 19-36 Drexel Burnham Lambert UK Pension Plan, Re [1995] 1 WLR 32 …. 17-42, 2958 Driffill, Re [1950] Ch 92; [1949] 2 All ER 933 …. 10-56

Drigden, Re [1938] Ch 205 …. 5-10 Drinan v Drinan (1908) 8 SR (NSW) 109 …. 20-16 Druce’s Settlement Trusts, Re [1962] 1 All ER 563; [1962] 1 WLR 363 …. 1707 Drummond, Re [1914] 2 Ch 90; [1914] All ER Rep 223 …. 10-18, 10-30, 11-04 Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366; [2003] 1 All ER 97 …. 308, 13-02 Dudgeon, Re (1896) 74 LT 613 …. 10-20 Dufour v Pereira (1769) 1 Dick 419; 21 ER 332 …. 13-42 Duffus (M’Caig’s Trustees) v Kirk-Session of the United Free Church of Lismore [1915] SC 426 …. 11-03 Duffy v Duffy [1920] 1 IR 122 …. 2-36 Dugdale, Re (1888) 38 Ch D 176; [1886–90] All ER Rep Ext 1505 …. 9-19 Duggan v Kelly (1847) 10 Ir Eq R 295 …. 9-13 Duke v Robson [1973] 1 All ER 481 …. 2-05 Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64 …. 22-08 Duke of Marlborough, Re; Davis v Whitehead [1894] 2 Ch 133 …. 7-09 Duke of Norfolk’s Settlement Trusts, Re [1979] Ch 37; [1978] 3 All ER 907 …. 17-39 Duke of Norfolk’s Settlement Trusts, Re [1982] Ch 61; [1981] 3 All ER 220 …. 17-39 Dullow v Dullow (1985) 3 NSWLR 531 …. 12-16 Dulson, Re (1929) 140 LT 470 …. 5-07 Dumbel, Re (1802) 6 Ves 617; 31 ER 1223 …. 17-05 Dumper v Dumper (1862) 3 Giff 583; 66 ER 540 …. 12-16 Dunbar v Dunbar [1909] 2 Ch 639; [1908–10] All ER Rep 76 …. 12-12 Duncan v Cathels (1956) 98 CLR 625; [1956] ALR 1072 …. 12-05 — v Dixon (1890) 44 Ch D 211 …. 4-03 — v Equity Trustees Executors & Agency Co Ltd (1958) 99 CLR 513 …. 1205, 12-09 Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896

…. 16-10, 16-14, 22-16 Dundee Harbour Board Trustees v Nichol [1915] AC 550 …. 23-04 Dundee Magistrates v Dundee Presbytery (1861) 4 Macq 228 …. 10-39 Dunlop, Re (1925) 26 SR (NSW) 126 …. 17-32 Dunlop v Selfridge [1915] AC 847; [1914–15] All ER Rep 333 …. 2-17, 2-24 Dunn v Flood (1885) 28 Ch D 586 …. 20-14 Dunn (decd), In the Estate of [1963] VR 165 …. 2-40, 15-55 Dunne v Byrne [1912] AC 407; [1911–13] All ER Rep 1105 …. 10-46, 10-64 Dunstan, Re [1918] 2 Ch 304; [1918–19] All ER Rep 694 …. 5-24 Dunstan v Houison (1901) 1 SR (NSW) Eq 212; 18 WN (NSW) 302 …. 16-14 Dupree’s Deed Trusts, Re [1945] Ch 16; [1944] 2 All ER 443 …. 10-31 Durour v Motteux (1749) 1 Ves Sen 320; 27 ER 1057 …. 10-39 Dutton, Re (1878) 4 Ex D 54 …. 10-81 Dutton v Thompson (1883) 23 Ch D 278 …. 9-35 Dwyer, Re [1916] VLR 114 …. 5-29, 5-30 Dyer v Dyer [1775–1802] All ER Rep 205; (1788) 2 Cox Eq Cas 92; 30 ER 42 …. 12-10, 12-16

E Eades, Re [1920] 2 Ch 353 …. 10-48, 10-63 Eagle Trust plc v SBC Securities Ltd [1992] 4 All ER 488; [1993] 1 WLR 484 …. 13-36 Earl of Portsmouth v Fellows (1820) 5 Madd 450; 56 ER 967 …. 15-87 Earl of Stamford, Re [1896] 1 Ch 288 …. 15-05, 15-19, 15-64 Earl of Strafford, Re [1978] 3 All ER 18 …. 20-48 East, Re (1873) LR 8 Ch App 735 …. 15-18 Eastes, Re [1948] Ch 257; [1948] 1 All ER 536 …. 10-46 Eaton v Watts (1867) LR 4 Eq 151 …. 5-06 Eaves v Hickson (1861) 30 Beav 136; 54 ER 840 …. 13-34, 17-23, 17-35 Ebbett, Re [1974] 1 NZLR 392 …. 17-06

Ebner, Re (2003) 126 FCR 281; 196 ALR 533 …. 12-12 Eccles v The Salvation Army [2013] WASC 142 …. 10-74 Ede v Ede [2007] 2 Qd R 323 …. 22-14, 22-17 Eden Refuge Trust v Hohepa [Remedies] [2011] 3 NZLR 273 …. 22-07 Eden, Re [1957] 2 All ER 430; [1957] 1 WLR 788 …. 5-26 Eden v Ridsdales Railway Lamp and Lighting Co Ltd (1889) 23 QBD 368 …. 13-27 Edgar, Re [1939] 1 All ER 635 …. 9-17 Edgar v IRC [1978] 1 NZLR 590 …. 12-17 Edge v Pensions Ombudsman [1998] Ch 512; [1998] 2 All ER 547 …. 17-11, 2958 — v — [2000] Ch 602; [1999] 4 All ER 546 …. 17-11, 17-39 Edmonds, Re [1943] VLR 97; [1943] ALR 217 …. 17-40 Edmonds v Millett (1855) 20 Beav 54; 52 ER 522 …. 16-14 Edmondson’s Will Trusts, Re [1971] 3 All ER 1121; [1971] 1 WLR 1652 …. 2062 Edmunds v Pickering (1999) 75 SASR 407 …. 17-47 — v — (No 4) (2000) 77 SASR 381 …. 13-02 Edmundsen v Loudoun [1947] NZLR 321 …. 20-42, 22-22 Edwards, Re [1918] 1 Ch 142; [1916–17] All ER Rep 258 …. 19-28 Edwards v Attorney-General (2004) 208 ALR 605; 60 NSWLR 667 …. 21-34, 22-12, 22-21 — v Carter [1893] AC 360; [1891–4] All ER Rep 1259 …. 4-03 — v Hood-Barrs [1905] 1 Ch 20 …. 22-11 — v Lewis (1747) 3 Atk 538; 26 ER 1110 …. 13-16 — v Muyrick (1842) 2 Hare 60; 67 ER 25 …. 17-46 — v West (1878) 7 Ch D 858 …. 26-15 Efstratiou v Glantschnig [1972] NZLR 594 …. 13-34 Egerton v Lord Brownlow (1853) 4 HL Cas 1; 10 ER 359 …. 8-04 Eggleston, Re [1940] VLR 474 …. 15-81, 25-04 Egmont (Earl) v Smith (1877) 6 Ch D 469 …. 20-20

Eighmie, Re [1935] Ch 524 …. 10-37 El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 …. 13-34, 27-04, 28-22 — v — [1994] 2 All ER 685 …. 13-34 — v — (No 2) [1995] 2 All ER 213 …. 27-11 El Sayed v El Hawach (2015) 88 NSWLR 214; 317 ALR 771 …. 1-09, 17-39, 23-03 Elders Forestry Management Ltd, Re (2012) 90 ACSR 573 …. 21-34 Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 …. 3-11, 13-28, 13-36, 21-03 — v Eastoe [1963] WAR 36 …. 20-58 — v Higgins (1963) 113 CLR 426; [1964] ALR 408 …. 14-04, 16-11, 17-18, 2218 Elford, Re [1910] 1 Ch 814 …. 19-05 Elias v Pacanowski (1992) NSW ConvR 55–641 …. 23-10 Ellaway v Lawson [2006] QSC 170 …. 9-14 Ellenborough, Re [1903] 1 Ch 697 …. 6-12, 7-35 Elliot v Secretary, Department of Education, Employment and Workplace Relations (2008) 249 ALR 182 …. 23-03, 23-15 Elliott, Re (1891) 39 WR 297 …. 10-59 Elliott, Re [1896] 2 Ch 353 …. 9-19 Elliott, Re (1910) 102 LT 528 …. 10-21 Elliott v Elliott (1898) 19 LR (NSW) Eq 162 …. 6-20 Ellis v Rowbotham [1900] 1 QB 740; [1900–3] All ER Rep 299 …. 19-30, 19-31 Ellis & Co v Cross [1915] 2 KB 654 …. 5-14 Ellison v Ellison (1802) 6 Ves 656; 31 ER 1243; [1775–1802] All ER Rep 119 …. 6-02, 6-26 Emmet v Clark (1861) 3 Giff 32; 66 ER 310 …. 15-22 Elmore, Re [1968] VR 390 …. 11-05 Eltham Parish v Warreyn (1634) Duke 67 …. 10-53 Elton v Cavill (No 2) (1994) 34 NSWLR 289 …. 9-18, 9-19 Emery’s Investments Trusts, Re [1959] Ch 410; [1959] 1 All ER 577 …. 12-12

Empress Engineering Co, Re (1880) 16 Ch D 125 …. 2-21 Emuss v Smith (1848) 2 De G & Sm 722; 64 ER 323 …. 26-14 Endacott, Re [1960] Ch 232; [1959] 3 All ER 562 …. 11-03, 11-08 England’s Settlement, Re [1918] 1 Ch 24 …. 21-34 Englebach’s Estate, Re [1924] 2 Ch 348 …. 2-22 Englewood Properties Ltd v Patel [2005] 3 All ER 307; [2005] 1 WLR 1961 …. 13-07 English v Dedham Vale Properties Ltd [1978] 1 All ER 382; [1978] 1 WLR 93 …. 13-09, 13-10 English Scottish Mercantile Investment Co v Brunton [1892] 2 QB 700 …. 1336 Enhill Pty Ltd, Re [1983] 1 VR 561 …. 21-14 EO Farley Ltd, Re (1940) 40 SR (NSW) 240 …. 27-16 Equitable Group Ltd v Pendal Nominees Pty Ltd (1984) 3 ACLC 546 …. 15-85 Equitable Life Assurance Society v Hyman [2002] 1 AC 408 …. 5-20 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50; 11 ACSR 642 …. 2-03, 13-37 Equiticorp Industries Group Ltd v The Crown (No 47) [1996] 3 NZLR 586 …. 27-04 Equititrust Ltd, Re (2011) 288 ALR 800 …. 23-05 Equity Trustees Executors and Agency Co Ltd v Fenwick [1905] VLR 154 …. 22-13 — v Macmeikan (1900) 25 VLR 593 …. 19-61 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 472; 211 ALR 101 …. 3-20, 5-04 — v Haxton (2012) 246 CLR 498; 286 ALR 12 …. 9-02, 9-06 Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218; [1874–80] All ER Rep 271 …. 13-28 Erskine v Pettit (1901) 1 SR (NSW) Eq 204 …. 12-19 Erwin v Shannon’s Brick, Tile and Pottery Co Ltd (1938) 38 SR (NSW) 555 …. 2-02, 2-07, 20-48

Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 …. 5-02 Essery v Cowlard (1884) 26 Ch D 191 …. 9-36, 12-05 Esso Australia Ltd v Australian Petroleum Agents’ & Distributors’ Association [1999] 3 VR 642 …. 8-03, 16-08 Ethel Pedley Memorial Travelling Scholarship Trust, Re (1949) 49 SR (NSW) 329; 66 WN (NSW) 163 …. 10-78 Ettelson, Re [1946] VLR 217 …. 17-37 Evans, Re (1884) 26 Ch D 58 …. 20-57 Evans, Re (1887) 34 Ch D 597 …. 21-12 Evans, Re [1913] 1 Ch 23 …. 19-38 Evans, Re [1940] Ch 629 …. 9-16 Evans, Re [1967] 3 All ER 343; [1967] 1 WLR 1294 …. 20-61 Evans, Re [1999] 2 All ER 777 …. 22-13 Evans v Benyon (1887) 37 Ch D 329 …. 21-22, 21-23, 22-33 — v Evans (1910) 10 SR (NSW) 594 …. 23-07 — v Jackson (1836) 8 Sim 217; 59 ER 87 …. 20-12 Evans Will Trusts, Re [1921] 2 Ch 309 …. 19-03, 19-12, 19-13 Eve, Re [1909] 1 Ch 796; [1908–10] All ER Rep 131 …. 9-09 Everingham v Everingham (1911) 12 SR (NSW) 5 …. 2-02 Eves v Eves [1975] 3 All ER 768; [1975] 1 WLR 1338 …. 12-18 EVTR, Re [1987] BCLC 646 …. 2-16 Ewen v Gerofsky 382 NYS (2d) 651 (1976) …. 13-52 Ewing v Orr Ewing (1883) 9 App Cas 34 …. 28-20 Executor Trustee & Agency Co of SA v Warbey [1971] SASR 255 …. 10-55 Exhall Coal Co Ltd, Re (1866) 35 Beav 449; 55 ER 970 …. 21-02, 21-04 Expo International Pty Ltd (in liq) v Chant [1979] 2 NSWLR 820 …. 2-02 Ezekiel’s Settlement Trusts, Re [1942] Ch 230 …. 20-48

F Fairbairn, Re [1967] VR 633 …. 17-14, 17-16

Fairweather v Fairweather (1944) 69 CLR 121; [1944] ALR 190 …. 13-07 Faithfull, Re [1967] 2 NSWR 265; 86 WN (NSW) (Pt 1) 161 …. 10-01 Falconer v Falconer [1970] 3 All ER 449; [1970] 1 WLR 1333 …. 12-11, 12-18 Fales, Re [1974] 3 WWR 84 …. 17-18 Fales v Canada Permanent Trust Co (1975) 55 DLR (3rd) 239 …. 22-01 — v — (1976) 70 DLR (3d) 257; [1977] 2 SCR 302 …. 17-18 Falls’ Will Trusts, Re (1874) 12 SCR (NSW) Eq 89 …. 21-34 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 …. 13-02, 13-11, 13-34, 13-35, 13-39 Faraker, Re [1912] 2 Ch 488; [1911–13] All ER Rep 488 …. 10-84, 10-85 Farewell v Farewell (1892) 22 OR 573 …. 10-12, 10-51 Farley v Westminster Bank [1939] AC 430; [1939] 3 All ER 491 …. 10-46, 1064 Farmer v Chard (1905) 5 SR (NSW) 342; 22 WN (NSW) 1109 …. 19-59 Farmer v Dean (1863) 32 Beav 326; 55 ER 128 …. 17-44 Farnell v Cox (1898) 19 LR (NSW) Eq 103 …. 17-43 Farnell’s Estate, Re (1886) 33 Ch D 599 …. 20-20 Farnham’s Trusts, Re [1904] 2 Ch 561 …. 19-56, 20-30, 20-31, 20-33 Farrant v Blanchford (1863) 1 De GJ & Sm 107; 46 ER 42 …. 22-33 Farrar v Farrar’s Ltd (1888) 40 Ch D 395 …. 17-44 Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) (1997) 26 ACSR 544 …. 13-39 — v Farrow Properties Pty Ltd (in liq) [1999] 1 VR 584 …. 13-34 Farstad Supply AS v Enviroco Ltd [2011] UKSC 16; [2011] 1 WLR 921 …. 2102 Fauntleroy, Re (1839) 10 Sim 252; 59 ER 610 …. 15-46 Favell, (dec’d), Re (1971) 2 SASR 246 …. 5-07 Faversham v Ryder (1854) 5 De GM & G 350; 43 ER 905 …. 10-62 Fawcett, Re [1940] Ch 402 …. 19-10, 19-11 Fawcett v Whitehouse (1829) Russ & M 132; 39 ER 51 …. 17-42 Faye v Faye [1973] WAR 66 …. 17-07, 28-08

Featherstonhaugh v Fenwick (1810) 17 Ves 298; 34 ER 115 …. 13-17 Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246 …. 5-24 — v Coppleson (1981) 39 ALR 30 …. 10-14 — v Vegners (1989) 90 ALR 547 …. 1-09, 3-14 — v Word Investments Ltd (2008) 236 CLR 204; 251 ALR 206 …. 10-55 Fell v Fell (1922) 31 CLR 268; 29 ALR 31 …. 8-01 Fender v St John-Mildmay [1938] AC 1; [1937] 3 All ER 402 …. 9-17 Fentem, Re [1950] 2 All ER 1073 …. 9-13 Fenton v Perpetual Trustee Co Ltd (1940) 64 CLR 52; [1940] ALR 325 …. 2060, 20-61 Fenwicke v Clark (1862) 4 De G F & J 240; 45 ER 1176 …. 17-11 Ferguson, Re [1957] VR 635 …. 5-24 Ferguson v Ferguson (1940) 40 SR (NSW) 595; 57 WN (NSW) 216 …. 19-41, 19-57 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 …. 13-43 FHR European Ventures LLP v Cedar Capital Partners LLC [2015] AC 350; [2014] 4 All ER 79 …. 13-11, 13-22 — v Mankarious [2014] Ch 1; [2013] 3 All ER 29 …. 7-33 Field v Field [1894] 1 Ch 425 …. 17-02, 17-21 — v Moore (1855) 7 De G M & G 691; 44 ER 269 …. 4-02 Filshie, Re [1939] NZLR 91 …. 10-36, 11-03 Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; 271 ALR 236 …. 8-02, 803, 29-01, 29-21, 29-53, 29-55 Finden v Stephens (1846) 2 Ph 142; 41 ER 896 …. 5-17, 5-19 Findlay’s Estate, Re (1995) 5 Tas R 333 …. 10-86 Finger’s Will Trusts, Re [1972] Ch 286; [1971] 3 All ER 1050 …. 10-84 Firth v Centrelink (2002) 55 NSWLR 451 …. 2-29 Firth’s Estate, Re [1938] Ch 517; [1938] 2 All ER 217 …. 19-33 Fischer v Nemeske Pty Ltd [2016] HCA 11 …. 17-02, 20-59, 20-62 Fish, Re [1893] 2 Ch 413 …. 17-40

Fisher, Re [1943] Ch 377; [1943] 2 All ER 615 …. 19-06, 19-15 Fisher v Fisher (1917) 23 CLR 337; 23 ALR 318 …. 19-36, 19-38 Fisk v Attorney-General (1867) LR 4 Eq 521 …. 9-07, 10-36, 10-61 Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 …. 13-10, 13-34, 23-20, 27-07 Fitch v Weber (1848) 6 Hare 145; 67 ER 1117 …. 26-17 Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215; 143 ALR 569 …. 9-06 — v Fitzgerald (1910) 10 SR (NSW) 488 …. 2-13 Fitzgerald’s Settlement, Re (1887) 37 Ch D 18 …. 5-14 Fitzwood v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566 …. 13-28, 15-85, 16-20 Flatman, Re [1953] VLR 33; [1952] ALR 980 …. 10-33 Flavell, Re (1883) 25 Ch D 89; [1881–5] All ER Rep 267 …. 2-19, 2-21, 2-22, 6-12 Flavelle (dec’d), Re [1969] 1 NSWR 361 …. 23-06 Flavel’s Will Trusts, Re [1969] 2 All ER 232; [1969] 1 WLR 444 …. 10-08, 1104 Fleetwood, Re (1880) 15 Ch D 594 …. 7-18, 7-24 Fletcher v Ashburner (1779) 1 Bro CC 497; 28 ER 1259 …. 26-02 — v Collis [1905] 2 Ch 24 …. 21-22, 22-33 — v Eden Refuge Trust [2012] 2 NZLR 227 …. 13-35 — v Fletcher (1844) 4 Hare 67; 67 ER 564 …. 6-09, 6-10, 6-13, 23-03 — v Green (1864) 33 Beav 426; 55 ER 433 …. 22-05, 22-09 Flinn, Re [1948] Ch 241; [1948] 1 All ER 541 …. 10-46 Flood, Re (1912) 12 SR (NSW) 144; 29 WN (NSW) 399 …. 19-43 Flood v Williscroft [1987] 2 Qd R 358 …. 14-10 Flower and Metropolitan Board of Works, Re (1884) 27 Ch D 592 …. 17-23, 20-49 Foord, Re [1922] 2 Ch 519; [1922] All ER Rep 166 …. 2-27 Forbes v Forbes (1854) 18 Beav 552; 52 ER 216 …. 10-53 Forder, Re [1927] 2 Ch 291; [1927] All ER Rep 324 …. 9-23, 9-24

Foreman v Kingstone [2004] 1 NZLR 841 …. 17-14, 17-16 Forest of Dean Coal Mining Co, Re (1878) 10 Ch D 450 …. 17-02 Forrest, In the Will of [1913] VLR 425; [1913] ALR 414 …. 10-65 Forrest v Attorney-General (Vic) [1986] VR 187 …. 10-71, 10-74 — v Commissioner of Taxation [2010] FCAFC 6 …. 2-46 — v Forrest (1865) 11 Jur NS 317 …. 12-16 Forsaith’s Settled Estates, Re (No 3) (1903) 20 WN (NSW) 194 …. 17-06 Forshaw v Higginson (1855) 20 Beav 485; 52 ER 690 …. 15-81, 15-83, 15-84 Forster, Re [1939] Ch 22; [1938] 3 All ER 767 …. 10-39 Forster v Abraham (1874) LR 17 Eq 351 …. 15-57 — v Davies (1861) 4 De GF & J 133; 45 ER 1134 …. 15-85 — v Hale (1798) 3 Ves 696; 30 ER 1226 …. 7-03, 7-06, 7-08 — v Ridley (1864) 4 De GJ & S 452; 46 ER 993 …. 17-39 Forster-Brown, Re [1914] 2 Ch 584 …. 19-16, 20-70 Forster’s Settlement, Re [1942] Ch 199; [1942] 1 All ER 180 …. 9-26 Forster’s Settlement, Re [1954] 3 All ER 714; [1954] 1 WLR 1540 …. 17-06 Forsyth v Blundell (1973) 129 CLR 477; 1 ALR 68 …. 2-05 Foskett v McKeown [2001] 1 AC 102; [2000] 3 All ER 97 …. 23-17, 27-01, 2702, 27-03, 27-09, 27-14 Foster, Re (1890) 45 Ch D 629 …. 19-60 Foster, Re (1916) 17 SR (NSW) 42; 33 WN (NSW) 191 …. 17-05 Foster v Genowlan Shale Co (1895) 16 LR (NSW) Eq 59 …. 2-22 Foster’s Trusts, Re (1886) 55 LT 479 …. 15-49 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; 218 ALR 166 …. 24-05 Fouche v Superannuation Fund Board (1952) 88 CLR 609; 25 ALJR 778 …. 108, 17-18, 18-12, 18-26 Fountaine, Re [1909] 2 Ch 382; [1908–10] All ER Rep 969 …. 22-29 Fountaine v Pellet (1791) 1 Ves Jun 337; 30 ER 374 …. 19-56 Foveaux, Re [1895] 2 Ch 501 …. 10-06, 10-16

Fowkes v Pascoe (1875) LR 10 Ch App 343; [1874–80] All ER Rep 521 …. 1202, 12-10, 12-12, 12-16, 12-20, 12-21 Fowler, Re (1881) 16 Ch D 723 …. 20-31, 23-05 Fox, Re [1904] 1 Ch 480 …. 20-59 Fox v Fox (1870) LR 11 Eq 142 …. 23-04 Foxhall, Re (1847) 2 Ph 281; 41 ER 951 …. 15-46 Francis, Re (1905) 74 LJ Ch 198; [1904–7] All ER Rep 556 …. 17-49 Franklin v Green (1690) 2 Vern 137; 23 ER 696 …. 20-58 Fraser, Re (1883) 22 Ch D 827 …. 10-59 Fraser v Gough [1975] 1 NZLR 138 …. 12-18 — v Murdoch (1881) 6 App Cas 855 …. 16-14, 20-72 — v Power [2001] Aust Contract R 90–127 …. 7-08 Freeman v A-G (NSW) [1973] 1 NSWLR 729 …. 17-06 — v Fairlie (1812) 3 Mer 29; 36 ER 12 …. 17-13, 23-03 — v Pope (1870) LR 5 Ch App 538 …. 9-41, 9-45 — v Whitbread (1865) LR 1 Eq 266 …. 19-32 Freeman’s Settlement Trusts, Re (1887) 37 Ch D 148 …. 15-67, 17-39 Freeston’s Charity, Re [1978] 1 All ER 481; [1978] 1 WLR 120 …. 10-67 French, Re (1902) 19 WN (NSW) 230 …. 25-04 French v Davidson (1818) 3 Madd 396; 56 ER 550 …. 16-06, 16-09 — v French [1902] 1 IR 172 …. 7-18 French Caledonia Travel Service Pty Ltd (in liq), Re (2003) 59 NSWLR 361; 204 ALR 353 …. 17-39, 21-14, 21-15, 27-08, 27-10, 27-11 French Protestant Hospital, Re [1951] Ch 567; [1951] 1 All ER 938 …. 17-39 Friend’s Trusts, Re (1904) 21 WN (NSW) 166 …. 15-59 Frith, Re [1902] 1 Ch 342 …. 20-44, 21-12 Fry v Fry (1859) 27 Beav 144; 54 ER 56 …. 17-04, 17-19 — v Tapson (1884) 28 Ch D 268 …. 17-23 Fuller v Knight (1843) 6 Beav 205; 49 ER 804 …. 21-23 Fullwood v Hurley [1928] 1 KB 498; [1927] All ER Rep 610 …. 13-25

Funnell v Stewart [1996] 1 All ER 715; [1996] 1 WLR 288 …. 10-28, 10-33, 1044 Furs Ltd v Tomkies (1936) 54 CLR 583 …. 13-11, 13-27 Fyffes Group Ltd v Templeman [2000] 2 Lloyds Rep 643 …. 13-34 Fyler v Fyler (1841) 3 Beav 500; 49 ER 216 …. 13-34 Fysh v Page (1956) 96 CLR 233; [1956] ALR 474 …. 17-43, 22-33

G Gadd, Re (1883) 23 Ch D 134 …. 15-20, 15-86 Galligan v Maher (1902) 19 WN (NSW) 299 …. 10-67 Gamble, In the Estate of (1915) 32 WN (NSW) 121 …. 17-43, 20-70 Gamble, Re (1925) 57 OLR 504 …. 17-19 Game, Re [1897] 1 Ch 881 …. 19-10 Gandy v Gandy (1885) 30 Ch D 57 …. 2-21 Gardiner, Re [1971] 2 NSWLR 494 …. 2-32 Gardiner v Chief Commissioner of State Revenue (2004) 59 NSWLR 549 …. 6-17, 6-19 — v Downes (1856) 22 Beav 395; 52 ER 1160 …. 15-83 Gardiner’s Trusts, Re (1886) 33 Ch D 590 …. 15-58 Gardner, Re [1920] 2 Ch 523; [1920] All ER Rep 723 …. 7-19, 7-24 Gardner, Re [1923] 2 Ch 230 …. 7-19, 7-24, 7-33, 7-34, 7-35 Gardner v Rowe (1828) 5 Russ 258; 38 ER 923 …. 7-08 Gardom, Re [1914] 1 Ch 662 …. 10-17 Garnac Grain Co v HMF Fame and Fairclough Ltd and Bunge Corp [1966] 1 QB 650; [1965] 3 All ER 273 …. 2-20 Garnett, Re (1885) 31 Ch D 1 …. 22-33 Garrard, Re [1907] 1 Ch 382; [1904–7] All ER Rep 237 …. 10-46 Garrett, Re (1905) 93 LT 117 …. 9-36 Garrett v Noble (1834) 6 Sim 504; 58 ER 683 …. 16-14, 20-43 Gartside v Inland Revenue Commissioners [1968] AC 553; [1968] 1 All ER 121 …. 17-16, 23-03, 23-15

Gartside’s Estate, Re (1853) 1 WR 196 …. 14-02 Gas and Fuel Corp of Victoria v Fitzmaurice (1990) 22 ATR 10 …. 25-11 Gascoigne v Gascoigne [1916–17] All ER Rep Ext 1143; [1918] 1 KB 223 …. 12-12 Gasquoine, Re [1894] 1 Ch 470 …. 17-20, 17-30, 22-09 Gates, Re [1933] 1 Ch 913; [1931] All ER Rep 546 …. 17-40 Gatsios Holdings Pty Ltd v Nick Kritharas Holdings Pty Ltd (in liq) (2002) ATPR 41-864 …. 21-04, 21-07 Gaudiya Mission v Brahmachary [1998] Ch 341; [1997] 4 All ER 957 …. 10-59 GB Nathan & Co Pty Ltd (in liq), Re (1991) 24 NSWLR 674 …. 21-14 GE Capital Australia v Davis (2002) 11 BPR 20,529 …. 2-05 Geaves, Ex parte; Strahan, Re (1856) 8 De G M & G 291; 44 ER 402 …. 17-02 Geck, Re (1932) 69 LT 819 …. 10-59 Gee, Re [1948] Ch 284; [1948] 1 All ER 498 …. 17-49 Geere’s Will Trusts, Re (No 2) [1954] CLY 388 …. 10-32 Geering, Re [1964] 1 Ch 136; [1962] 3 All ER 1043 …. 20-61 Gellibrand’s Will, Re (1938) 34 Tas LR 1 …. 19-01 General Accident Assurance Corporation Ltd, Re [1904] 1 Ch 147 …. 25-03, 25-04 General Accident Fire & Life Assurance Corp Ltd v IRC [1963] 3 All ER 259; [1963] 1 WLR 1207 …. 9-24 General Communications Ltd v Development Finance Corp of New Zealand Ltd [1990] 3 NZLR 406 …. 2-16 General Credits Limited v Tawilla Pty Ltd [1984] 1 Qd R 388 …. 21-12 General Investment Pty Ltd v Tyson [1967] Tas SR 96 …. 15-77 Geologists’ Association v Inland Revenue Commissioners (1928) 14 Tax Cas 271 …. 10-31 George v Bank of England (1819) 7 Price 646; 146 ER 1089 …. 12-21 — v Fletcher (Trustee) [2010] FCAFC 53 …. 6-22 Gerbich, Re [2002] 2 NZLR 791 …. 20-59 Gerhardy v South Australian Auxiliary to the British and Foreign Bible Society

Inc (1982) 30 SASR 12 …. 10-65 German v Chapman (1877) 7 Ch D 271 …. 10-30 German Mining Co, Re (1854) 4 De G M & G 19; 43 ER 415 …. 21-06 Gertsch v Atsas (1999) 10 BPR 97,855 …. 27-14 Gertsman, Re [1966] VR 45 …. 20-57 Gertzenstein Ltd, Re [1937] Ch 115; [1936] 3 All ER 341 …. 17-41 Gibbins v Taylor (1856) 22 Beav 344; 52 ER 1140 …. 22-10 Gibbon v Mitchell [1990] 3 All ER 338; [1990] 1 WLR 1304 …. 9-36 Gibbons v Moltyard (1592) Poph 6; 79 ER 1129 …. 10-28 — v Wright (1954) 91 CLR 423; [1954] ALR 383 …. 4-06 Gibbons’ Trusts, Re (1882) 30 WR 287 …. 15-19, 15-46 Gibbs v Guild (1882) 9 QBD 59 …. 22-30 Gibson, Re [1922] VLR 715; (1922) 28 ALR 368 …. 18-37 Gibson v Bott (1802) 7 Ves 89; 32 ER 37 …. 19-10, 19-13 — v Jeyes (1801) 6 Ves 266; 31 ER 1044 …. 17-46 — v South American Stores Ltd [1950] Ch 177; [1949] 2 All ER 985 …. 10-06, 10-23, 10-24 Gilbert v Overton (1864) 2 H & M 110; 71 ER 402 …. 24-02 — v Shanahan [1998] 3 NZLR 528 …. 22-05 Gilchrist, Re (1867) 6 SCR (NSW) Eq 74 …. 21-34 Gilchrist Education Trust, Re [1895] 1 Ch 367 …. 10-28 Gill v Gill (1921) 21 SR (NSW) 400; 38 WN (NSW) 130 …. 2-35, 2-36, 13-50 Gillespie, Re [1965] VR 402 …. 10-66 Gillett v Holt [2001] Ch 210; [2000] 2 All ER 289 …. 13-11 Gillies v Keogh [1989] 2 NZLR 327 …. 12-14, 13-50 Gillim v Gillim (No 2) [2014] Fam CA 701 …. 12-10, 12-13, 12-16 Gillingham Bus Disaster Fund, Re [1958] Ch 300; [1958] 1 All ER 37 …. 10-65, 12-08 Gillingham Bus Disaster Fund, Re [1959] Ch 62; [1958] 2 All ER 749 …. 10-65 Gilmore v Uniting Church (1984) 36 SASR 475 …. 10-68

Gilmour v Coats [1949] AC 426; [1949] 1 All ER 848 …. 10-02, 10-06, 10-13, 10-34, 10-40, 10-41, 10-43, 10-44 Gilroy v Stephens (1882) 46 LT 761 …. 22-08 — v — (1882) 51 LJ Ch 834; 30 WR 745 …. 18-01 Girardet v Crease & Co (1987) 11 BCLR (2d) 361 …. 17-18 Gisborne v Gisborne (1877) 2 App Cas 300; [1874–80] All ER Rep Ext 1698 …. 13-11, 13-44, 16-06, 16-14 Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 …. 2-29, 3-08, 13-01, 13-02, 13-11 Gjers, Re [1899] 2 Ch 54 …. 19-56, 20-31 Gladding v Yap (1820) 5 Madd 56; 56 ER 816 …. 12-02 Gladdon v Stoneman (1815) 1 Madd 143; 56 ER 54 …. 23-04 Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543 …. 13-27 Gleeson v Fitzpatrick (1920) 29 CLR 29 …. 21-36 — v Phelan (1914) 15 SR (NSW) 30; 32 WN (NSW) 2 …. 10-34, 10-40 Glegg v Bromley [1911–13] All ER Rep 1138; [1912] 3 KB 474 …. 24-05 Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490; 21 ALR 465 …. 1-02, 1-07, 20-70 Glennon v Federal Commissioner of Taxation (1972) 127 CLR 503 …. 17-44, 21-02 Glenorchy v Bosville (1733) Cases t Talbot 4; 25 ER 628; [1558–1774] All ER Rep 328 …. 8-10 Gliderol v Hall (2001) 80 SASR 541 …. 2-15 Global Finance Group Pty Ltd (in liq), Re (2002) 26 WAR 385 …. 27-02, 2709, 27-15 Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (1990) 3 ACSR 183 …. 15-51, 15-57 Glover, Re (1902) 19 WN (NSW) 228 …. 19-24 Glover v Blumer [2008] ACTCA 1 …. 2-13 Glubb v A-G (1759) Amb 373; 27 ER 248 …. 10-35 Gluckstein v Barnes [1900] AC 240 …. 2-06, 13-28

Glyn’s Will Trusts, Re [1950] 2 All ER 1150 …. 10-20, 10-21 Gnych v Polish Club Ltd (2015) 89 ALJR 658 …. 9-02, 9-06, 9-09 Godden, Re [1893] 1 Ch 292 …. 19-14 Godfree, Re [1914] 2 Ch 110 …. 19-12, 19-21 Godfrey, Re (1883) 23 Ch D 483 …. 17-18 Godfrey v Poole (1888) 13 App Cas 497 …. 5-14 Godfrey’s Trusts, Re (1883) 23 Ch D 205 …. 15-59 Golay’s Will Trusts, Re [1965] 2 All ER 660; [1965] 1 WLR 969 …. 5-24 Gold v Hill [1999] 1 FLR 54 …. 7-24 Goldcorp Exchange Ltd, Re [1995] 1 AC 74; [1994] 2 All ER 806 …. 2-02, 215, 13-10, 13-11 Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 319 ALR 151 …. 13-07 Goley v Cannon (1936) 53 WN (NSW) 223 …. 19-56 Gollin, Re [1969] 3 All ER 1591; [1969] 1 WLR 1858 …. 20-70 Gompertz v Kensit (1872) LR 13 Eq 369 …. 21-10 Good, Re [1905] 2 Ch 60; [1904–7] All ER Rep 476 …. 10-56 Goode, Re [1960] VR 117 …. 9-19, 11-08 Goodchild (decd), Re [1996] 1 All ER 670; [1996] 1 WLR 694 …. 13-42 Goodchild (decd), Re [1997] 3 All ER 63; [1997] 1 WLR 1216 …. 13-42 Goode, Re (1974) 4 ALR 579 …. 27-16 Goodenough, Re [1895] 2 Ch 537 …. 19-14 Goodenough v Tremamondo (1840) 2 Beav 512; 48 ER 1280 …. 19-21 Goodier v Edmunds [1893] 3 Ch 455 …. 20-06 Goodman v Mayor of Saltash (1882) 7 App Cas 633 …. 2-31 Goodson, Re [1971] VR 801 …. 9-32, 10-84, 11-04 Goodwin v Duggan (1996) 41 NSWLR 158 …. 21-20 — v Goodwin (1916) 16 SR (NSW) 503 …. 2-22 Goodwin’s Settlement, Re (1918) 87 LJ Ch 645 …. 22-05 Gordon, Re (1877) 6 Ch D 531 …. 15-16, 15-73

Gordon, Re [1940] 1 Ch 851 …. 2-22 Gordon v Australian & New Zealand Theatres Ltd (1940) 40 SR (NSW) 512; 57 WN (NSW) 126 …. 16-14 — v Campbell (1842) 1 Bell App 428 …. 21-03 — v Commissioner of Stamp Duties [1946] NZLR 625 …. 10-55 — v Gonda [1955] 2 All ER 762 …. 2-08 Gore v Justice Corporation (2002) 119 FCR 429; 189 ALR 712 …. 24-05 Gosling, Re (1900) 16 TLR 152 …. 10-17 Gosling, Re (1900) 48 WR 300 …. 10-23 Gosling v Gosling (1859) John 265; 70 ER 423 …. 23-08, 23-09 Goss v Chilcott [1996] AC 788; [1997] 2 All ER 110 …. 27-14 Gosselin, Re [1906] 1 Ch 120 …. 26-25 Gosset’s Settlement, Re (1854) 19 Beav 529; 52 ER 456 …. 20-58 Gottfried Banking Co, Re 312 F Supp 643 (1970) …. 27-15 Gould v Fleetwood (1732) 2 Eq Ca Abr; 22 ER 386 …. 17-39 — v O’Carroll [1964] NSWR 803; (1963) 81 WN (Pt 1) (NSW) 170 …. 15-84, 17-47 Goulding v James [1997] 2 All ER 239 …. 17-07, 23-08 Gourju’s Will Trusts, Re [1943] Ch 24; [1942] 2 All ER 605 …. 9-23, 9-26, 1616 Government Employees Superannuation Board v Martin (1997) 19 WAR 224 …. 29-20 Government of the Islamic Republic of Iran v The Barakat Galleries Ltd [2009] QB 22 …. 27-07 Gower’s Settlement, Re [1934] Ch 365; [1934] All ER Rep 796 …. 25-11 Graham, Re (1938) 55 WN (NSW) 168 …. 15-18, 15-52, 25-04 Graham, Pitt & Bennett, Re (1891) 9 NZLR 617 …. 21-02 Grange, Re [1907] 2 Ch 20 …. 26-06, 26-11 Grant, Re [1933] VLR 263 …. 19-57 Grant, Re [1979] 3 All ER 359; [1980] 1 WLR 360 …. 11-04 Grant v Edwards [1986] Ch 638; [1986] 2 All ER 426 …. 12-14, 13-50

— v Grant (1914) 14 SR (NSW) 271; 31 WN (NSW) 103 …. 20-03, 20-72 Graves v Dolphin (1826) 1 Sim 66; 57 ER 503 …. 9-19, 9-20 Gray, Re [1925] Ch 362; [1925] All ER Rep 250 …. 10-32, 10-49, 10-56 Gray v BNY Trust Company Australia Ltd (2009) 76 NSWLR 586 …. 17-16 — v Haig (1854) 20 Beav 219; 52 ER 587 …. 17-13 — v Siggers (1880) 15 Ch D 74 …. 19-06 Grayson v Grayson [1922] St R Qd 155 …. 9-19 Greasley v Cooke [1980] 3 All ER 710; [1980] 1 WLR 1306 …. 13-50 Great Eastern Railway Co v Turner (1872) LR 8 Ch App 149 …. 2-07 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 …. 13-02 Greater West Insurance Brokers Pty Ltd, Re (2001) 39 ACSR 301; [2001] NSWSC 825 …. 21-14 Greaves’ Settled Estates, Re [1900] 2 Ch 683 …. 20-57 Green, Re [1951] Ch 148; [1950] 2 All ER 913 …. 13-42 Green, Re [1970] VR 442 …. 10-57, 10-58 Green, Re [1985] 3 All ER 455 …. 9-29, 10-57 Green v Green (1989) 17 NSWLR 343 …. 12-14, 13-50 — v Russell [1959] 2 QB 226; [1959] 2 All ER 525 …. 2-22, 2-23 — v Spicer (1830) 1 Russ & Myl 395; 39 ER 153 …. 9-19 — v Trustees of the Property of the Church of England in Tasmania (Unreported, SC (Tas), Crawford J, 31 August 1992) …. 10-46 Green and Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1; (1982) 1 ACLC 1 …. 2-06, 13-31, 13-34 Greenhouse, Ex parte (1815) 1 Madd 92; 56 ER 36 …. 10-67, 15-86 Greenwood, Re [1901] 1 Ch 887; [1900–3] All ER Rep 97 …. 9-24 Greenwood, Re (1911) 105 LT 509 …. 17-20, 20-47 Greer, Re (1911) 11 SR (NSW) 21; 28 WN (NSW) 17 …. 17-43 Gregg v Coates (1856) 23 Beav 33; 53 ER 13 …. 2-35 Gregory v Williams (1817) 3 Mer 582; 36 ER 224 …. 2-21, 2-22 Grenfell v Deans and Canons of Windsor (1840) 2 Beav 544; 48 ER 1292 ….

24-05 Gresley v Mousley (1859) 4 De G & J 78; 45 ER 31 …. 17-46 Grey v Grey (1677) 2 Swan 594; 36 ER 742 …. 12-10, 12-16 — v Inland Revenue Commissioners [1958] Ch 375; [1958] 2 All ER 246; [1958] 2 All ER 428 …. 23-12 — v — [1958] Ch 690 …. 23-12 — v — [1960] AC 1; [1959] 3 All ER 603 …. 6-24, 7-05 Grieveson v Kirsopp (1838) 2 Keen 653; 48 ER 780 …. 26-09 Griffith, Re (1879) 12 Ch D 655 …. 19-31 Griffith v Owen [1907] 1 Ch 195; [1904–7] All ER Rep 718 …. 13-12, 13-19 — v Ricketts (1849) 7 Hare 299; 68 ER 122 …. 26-16 Griffiths, Re [1926] VLR 212; (1926) 32 ALR 917 …. 10-65 Griffiths v Kerkemeyer (1977) 139 CLR 161; 15 ALR 387 …. 2-18, 13-09 — v Porter (1858) 25 Beav 236; 53 ER 627 …. 17-05 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 …. 13-02, 13-10, 13-11, 13-22, 13-24, 13-34, 13-35, 13-36, 13-37, 13-39, 13-43, 27-05, 27-07 Grime Carter & Co Pty Ltd v Whytes Furniture (Dubbo) Pty Ltd [1983] 1 NSWLR 158; (1983) 7 ACLR 540 …. 21-14 Grindey, Re [1898] 2 Ch 593 …. 21-34, 22-13 Grissel v Money (1869) 33 LJ Ch 312 …. 21-04 Grose, Re [1949] SASR 55 …. 21-34 Grossman v E Katz Manufacturing Jewellers (ACT) Pty Ltd (2005) 213 ALR 373 …. 21-14 Grove v Search (1906) 22 TLR 290 …. 20-12 Grove-Grady, Re [1929] 1 Ch 557; [1929] All ER Rep 158 …. 10-10, 10-16, 1057 Groves v Wright (1856) 2 K & J 347; 69 ER 815 …. 19-41 Grundy, Re (1917) 117 LT 470 …. 19-31 Guazzini v Pateson (1918) 18 SR (NSW) 275; 35 WN (NSW) 106 …. 15-86, 16-14, 17-02, 17-39, 17-49

— v — (1923) 24 SR (NSW) 40; 40 WN (NSW) 142 …. 19-38 Guibert’s Trust, Re (1852) 16 Jur 852 …. 14-03 Guild v Inland Revenue Commissioners [1992] 2 AC 310; [1992] 2 All ER 10 …. 10-49 Guinness plc v Saunders [1990] 2 AC 663; [1990] 1 All ER 652 …. 13-11 Gulbenkian’s Settlement Trusts, Re [1970] AC 508; [1968] 3 All ER 785 …. 526, 5-27, 5-28, 5-29, 8-02, 16-07 Gulbenkian’s Settlements Trusts (No 2), Re [1970] Ch 408; [1969] 2 All ER 1173 …. 1-07 Gully v Cregoe (1857) 24 Beav 185; 53 ER 327 …. 5-06 Gunning v Buckfast Abbey Trustees (The Times, 9 June 1994) …. 10-67 Gunter v Commissioner of Stamp Duties (1932) 33 SR (NSW) 95 …. 5-06 Gurfinkel v Bentley (1966) 116 CLR 98 …. 2-50 Gurney, Re [1893] 1 Ch 590 …. 22-28 Guthrie v Radio Frequency Systems Pty Ltd (2000) 34 ACSR 572 …. 2-47 Gwyon, Re [1930] 1 Ch 255 …. 10-18

H H & W Wallace Ltd (in liq), Re [1994] 1 NZLR 235 …. 2-29 Haberley (decd), Re [1971] NZLR 325 …. 1-07 Habershon v Vardon (1851) 4 De G & Sm 467; 64 ER 916 …. 7-28 Hackett v Hackett [1922] NZLR 242 …. 15-86 Hadden, Re [1932] 1 Ch 133; [1931] All ER Rep 539 …. 10-49, 10-53 Hadley, Re; Ex parte Hadley (1851) 5 De G & Sm 67; 64 ER 1021 …. 15-05, 15-13 Hagan v Waterhouse (1991) 34 NSWLR 308 …. 7-03, 20-42, 22-05, 22-07, 2318, 27-08, 27-09, 27-11, 27-12 Hagger, Re [1930] 2 Ch 190; [1930] All ER Rep 620 …. 13-42 Haigh v Kaye (1872) LR 7 Ch App 469 …. 9-08 Hale v Pew (1858) 25 Beav 335; 53 ER 665 …. 20-06 Haley v Perkins [2010] NSWSC 1091 …. 12-13

Halifax Building Society v Thomas [1996] Ch 217; [1995] 4 All ER 673 …. 1311 Halifax Joint Stock Banking Co v Gledhill [1891] 1 Ch 31 …. 9-44 Hall, Re [1944] Ch 46; [1943] 2 All ER 753 …. 9-23 Hall v Busst (1960) 104 CLR 206; [1961] ALR 508 …. 9-19 — v Guardian Trust and Executors Co of New Zealand Ltd [1938] NZLR 922 …. 12-12 — v Hallet (1784) 1 Cox Eq Case 134; 29 ER 1096 …. 17-48 Hallett v Hallett (1879) 13 Ch D 232 …. 21-11 Hallett’s Estate, Re; Knatchbull v Hallett (1880) 13 Ch D 696; 1874-80 All ER Rep 793 …. 2-02, 21-10, 27-04, 27-06, 27-08, 27-09, 27-12, 27-15 Halley, Re (1959) 43 MPR 79 …. 6-21 Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545; 224 ALR 79 …. 13-07 Hallows v Lloyd (1888) 39 Ch D 686 …. 15-84, 17-01, 17-17 Hamilton, Re [1895] 2 Ch 370 …. 5-06 Hamilton v Al Fayed (No 2) [2003] QB 1175; [2002] 3 All ER 641 …. 24-05 — v Kaljo (1987) 17 NSWLR 381 …. 22-30 — v Wright (1842) 9 Cl & F 111; 8 ER 357 …. 17-47 Hamilton-Grey, Re (1938) 38 SR (NSW) 262; 55 WN (NSW) 45 …. 11-03 Hammat v Chapman (1914) 14 SR (NSW) 416 …. 5-02 Hammond, Re (1903) 3 SR (NSW) 270; 20 WN (NSW) 123 …. 16-16, 20-27, 20-43 Hammond v Hammond [2007] NSWSC 106 …. 2-34, 2-38 Hampden’s Settlement Trusts, Re [2001] WTLR 195 …. 20-58 Hampton, Re (1918) 88 LJ Ch 103 …. 15-42 Hanbey’s Will Trusts, Re [1956] Ch 244; [1955] 3 All ER 874 …. 10-71, 10-81 Hanchett v Briscoe (1856) 22 Beav 496; 52 ER 1199 …. 21-23 Hanchett-Stamford v Attorney-General [2009] Ch 173; [2008] 4 All ER 323 …. 9-32, 10-12, 11-04, 12-08 Hancock v Rinehart (2015) 106 ACSR 207 …. 3-18, 15-11, 15-57, 15-67, 17-

06, 17-13, 17-14 — v Smith (1889) 41 Ch D 456; [1886–90] All ER Rep 306 …. 27-09 — v Watson [1902] AC 14; [1900–3] All ER Rep 87 …. 12-09 Hancock Family Memorial Foundation Ltd v Porteous (1999) 32 ACSR 124 …. 12-10, 13-37, 13-39 — v — (2000) 22 WAR 198 …. 13-02, 13-11 Hann v Linton (1967) 52 LSJS 231 …. 12-16 Hanover v Bank of England (1869) LR 8 Eq 350 …. 15-51 Harari’s Settlement Trusts, Re [1949] 1 All ER 430 …. 18-02, 18-03 Harbin v Darby (1860) 28 Beav 325; 54 ER 391 …. 17-40 — v Masterman [1894] 2 Ch 184 …. 10-82 — v — [1896] 1 Ch 351; [1895–9] All ER Rep 695 …. 10-82, 20-70, 23-09 Hardaker v Moorhouse (1884) 26 Ch D 417 …. 15-07, 15-20 Harding, Re [1923] 1 Ch 182; [1922] All ER Rep 557 …. 15-07 Harding, Re [2008] Ch 235; [2007] 1 All ER 747 …. 5-29 Harding (decd), Re [2008] Ch 235; [2007] 1 All ER 747 …. 10-58 Hardoon v Belilios [1901] AC 118 …. 1-02, 21-02, 21-05, 21-06 Hardwicke v Vernon (1799) 4 Ves 411; 31 ER 209 …. 17-48 Hardy v Shaw [1976] Ch 82; [1975] 2 All ER 1053 …. 20-58 Hargrave v Newton [1971] 3 All ER 866; [1971] 1 WLR 1611 …. 12-18 Hargreaves, Re (1903) 88 LT 100; [1900–3] All ER Rep 80 …. 19-16, 19-17, 19-19 Harmer v Armstrong [1934] Ch 65; [1933] All ER Rep 778 …. 6-06 — v Federal Commissioner of Taxation (1991) 173 CLR 264; 104 ALR 117 …. 1-08, 21-30 Harnett, Re (1907) 7 SR (NSW) 463; 24 WN (NSW) 104 …. 10-40 Harnett v Yielding (1805) 2 Sch & Lef 549; [1803–13] All ER Rep 704 …. 1334 Harpur’s Will Trusts, Re [1962] Ch 78; [1961] 3 All ER 588 …. 10-65 Harrington v Atherton (1864) 2 De G J & S 352; 46 ER 411 …. 19-03 Harris, Re [1945] Ch 316; [1945] 1 All ER 702 …. 9-23

Harris v Ashdown (1985) 3 NSWLR 193 …. 9-09 — v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 …. 13-43 — v Harris (1919) 20 SR (NSW) 61; 37 WN (NSW) 10 …. 17-37, 17-38, 2118 — v — (No 1) (1861) 29 Beav 107; 54 ER 567 …. 18-04 — v King (1936) 56 CLR 177; [1937] ALR 78 …. 20-06 — v Jenkins (1922) 31 CLR 341 …. 17-42, 17-47 — v Rothery [2013] NSWSC 1275 …. 3-20 — v Skevington [1978] 1 NSWLR 176 …. 10-68 — v Tubb (1889) 42 Ch D 79 …. 9-44 Harris’ Settlement, Re (1940) 162 LT 358 …. 20-62 Harrison v Mills [1976] 1 NSWLR 42 …. 21-34 — v Randall (1852) 9 Hare 387; 68 ER 562 …. 17-04 — v Southampton Corp (1854) 2 Sm & G 387; 65 ER 448 …. 10-31 — v Thexton (1858) 4 Jur NS 550 …. 18-09 — v Walker (1792) Peake 150; 170 ER 111 …. 27-04 Harrison Jones & Devlin v Union Bank of Australia Ltd (1909) 10 SR (NSW) 266 …. 21-34 Harrison’s Settlement Trusts, Re [1965] 3 All ER 795; [1965] 1 WLR 1492 …. 15-53 Harrison’s Trusts, Re (1852) 22 LJ Ch 69 …. 14-03, 15-18 Harrods v Stanlon [1923] 1 KB 516; [1923] All ER Rep 592 …. 9-44 Harrop’s Trusts, Re (1883) 24 Ch D 717 …. 15-59 Hart, Re [1954] VLR 239; [1954] ALR 552 …. 17-06 Hart v Brewer (1595) Cro Eliz 449 …. 10-35 — v Denham [1871] WN 2 …. 23-05 Hart (decd), Re (1972) 3 SASR 147 …. 10-21, 10-82 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 …. 16-10, 16-14, 17-15, 17-16, 21-34 Harvard Securities Ltd, Re [1997] 2 BCLC 369 …. 5-24

Harvell v Foster [1954] 1 All ER 851 …. 2-40 — v — [1954] 2 QB 367; [1954] 2 All ER 736 …. 2-40, 15-03 Harvey, Re [1941] 3 All ER 284 …. 17-06 Harvey v Olliver (1887) 57 LT 239 …. 15-43, 17-01 Hasham v Zenab [1960] AC 316 …. 13-07 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 …. 3-08, 13-02, 13-35, 13-39, 22-12 Hassell v Perpetual Executors Trustees & Agency Co (WA) Ltd & Ball (1952) 86 CLR 513; [1953] ALR 77 …. 19-01, 19-22, 19-31, 19-58 Hastie, Re (1887) 35 Ch D 728 …. 9-09 Hastings-Bass, Re [1975] Ch 25; [1974] 2 All ER 193 …. 16-12 Hatch, Re [1919] 1 Ch 351 …. 17-38 Hatton, Re [1917] 1 Ch 357 …. 19-39 Hatton v May (1876) 3 Ch D 148 …. 9-19 Hauxwell v Barton-Upon-Umber Urban District Council [1974] Ch 432; [1973] 2 All ER 1022 …. 10-67 Hawkesley v May [1956] 1 QB 304; [1955] 3 All ER 353 …. 17-15 Hawkins, Re (1906) 22 TLR 521 …. 10-28 Hawkins, Re (1915) 15 SR (NSW) 199; 32 WN (NSW) 47 …. 19-38 Hawkins v Barkley-Brown (No 2) [2010] NSWSC 395 …. 21-11 — v Clayton (1988) 164 CLR 539; 78 ALR 69 …. 17-15 — v Hawkins (1920) 20 SR (NSW) 550; 37 WN (NSW) 177 …. 19-38, 19-40 Hayes’ Will Trusts, Re [1971] 2 All ER 341; [1971] 1 WLR 758 …. 2-40, 17-39 Hayim v Citibank NA [1987] AC 730 …. 1-06, 16-18, 23-03, 23-13 Hayman v Equity Trustees Ltd (2003) 8 VR 557 …. 21-02, 21-04 Hayne’s Will Trusts, Re [1949] Ch 5; [1948] 2 All ER 423 …. 9-23 Hay’s Settlement Trusts, Re [1981] 3 All ER 786; [1982] 1 WLR 202 …. 2-46, 5-29, 16-06, 16-07 Hayward, Re [1934] SASR 364 …. 19-01 Hayward, Re [1957] Ch 528; [1957] 2 All ER 474 …. 20-58 Hazeldine, Re [1918] 1 Ch 433 …. 19-13

Hazeldine’s Trusts, Re [1908] 1 Ch 34; [1900–3] All ER Rep Ext 1134 …. 17-05 Hazell v Hazell [1972] 1 All ER 923; [1972] 1 WLR 301 …. 12-18 Hazlewood v Webber (1934) 52 CLR 268; [1935] ALR 76 …. 20-36 HCK China Investments Ltd v Solar Honest Ltd (1999) 165 ALR 680 …. 1201 He Kaw Teh v R (1985) 157 CLR 523; 60 ALR 449 …. 13-36 Head v Gould [1898] 2 Ch 250 …. 15-84, 18-30, 21-20 Headrick’s Will, Re [1953] QWN 23 …. 1-08 Head’s Trustees and Macdonald, Re (1890) 45 Ch D 310 …. 20-02 Heard v Pilley (1869) LR 4 Ch App 548 …. 12-10, 12-13 Heath v Chapman (1854) 2 Drew 417; 61 ER 781 …. 10-63, 10-64 Heazlewood v Joie de Vivre Canterbury Ltd [2015] NZCA 213 …. 5-04 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; [1963] 2 All ER 575 …. 17-17 Heid v Reliance Finance Corp (1983) 154 CLR 326; 49 ALR 229 …. 13-32 Heitman v Guardian Assurance Co Ltd (1992) 7 ANZ Ins Cases 61-107 …. 2955 Helena Partnerships Ltd v Revenue and Customs Commissioners (AG intervening) [2012] 4 All ER 111 …. 10-58 Helvetic Investment Corp Pty Ltd v Knight (1982) 7 ACLR 225 …. 21-03 — v — (1984) 9 ACLR 773 …. 21-03 Henderson, Re [1940] Ch 368; [1940] 1 All ER 623 …. 19-28, 19-29, 19-33, 1934 Henderson, Re [1940] Ch 764; [1940] 3 All ER 295 …. 15-56, 15-85, 15-86 Henderson v Cross (1861) 29 Beav 216; 54 ER 610 …. 5-24 — v Merrett Syndicates Ltd [1995] 2 AC 145; [1994] 3 All ER 506 …. 13-30, 17-18 — v M’Iver (1818) 3 Mod 275; 56 ER 510 …. 17-13 — v Woodroofe [1921] NZLR 411 …. 17-44 Henderson’s Trusts, Re [1969] 3 All ER 769; [1969] 1 WLR 651 …. 20-62 Hendry v Hendry [1960] NZLR 48 …. 12-11

Hendy Lennox (Industrial Engines) Ltd v Grahame Puttick Ltd [1984] 2 All ER 152; [1984] 1 WLR 485 …. 2-47 Heneker v Heneker [1954] SASR 181 …. 12-10 Hengler, Re [1893] 1 Ch 586 …. 19-45, 19-51 Henry, Re [1907] 1 Ch 30 …. 19-53 Henry v Hammond [1913] 2 KB 515; [1911–13] All ER Rep Ext 1478 …. 13-22 Hepburn v A Tomlinson (Hauliers) Ltd [1966] AC 451; [1966] 1 All ER 418 …. 2-20 Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; 258 ALR 727 …. 13-10, 23-20, 27-07 Hepworth v Hepworth (1963) 110 CLR 309; [1964] ALR 259 …. 12-12 Herbert v Badgery (1894) 15 LR (NSW) Eq 236; 11 WN (NSW) 113 …. 20-72 Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 …. 1-06, 315, 5-24, 5-28, 8-04 Herring, Ex parte (1880) 1 LR (NSW) Eq 12 …. 25-04 Herrod v Johnston [2013] 2 Qd R 102 …. 22-08 Heseltine v Heseltine [1971] 1 All ER 952; [1971] 1 WLR 342 …. 12-18, 13-46 Hespe v Surfers Paradise Forests Ltd (1985) 10 ACLR 182 …. 20-51 Hetherington (decd), Re [1990] Ch 1; [1989] 2 All ER 129 …. 10-10, 10-40 Hetherington’s Trusts, Re (1886) 34 Ch D 211 …. 15-35 Hetley, Re [1902] 2 Ch 866; [1900–3] All ER Rep 292 …. 7-24 Hetling and Merton’s Contract, Re [1893] 3 Ch 269 …. 17-31 Hewett, Re [1918] 1 Ch 458; [1918–19] All ER Rep 530 …. 9-13 Hewett v Court (1983) 149 CLR 639; 46 ALR 87 …. 2-29 Hewitt v Morris (1824) T & R 241; 37 ER 1090 …. 19-10 Hewson v Sydney Stock Exchange Ltd [1968] 2 NSWR 224; (1967) 87 WN (Pt 1) (NSW) 422 …. 17-42 Heydon v Gell (1900) 21 LR NSW (Eq) 265 …. 23-06 — v Perpetual Executors & Agency Co (WA) Ltd (1930) 45 CLR 111; 37 ALR 65 …. 12-10 Hey’s Settlement Trust and Will Trusts, Re [1945] Ch 294; [1945] 1 All ER 618

…. 19-14, 19-15 Heywood v Pryor (1905) 23 WN (NSW) 44 …. 17-44 Heyworth’s Contingent Reversionary Interest, Re [1956] Ch 364; [1956] 2 All ER 21 …. 17-07, 25-11 Hicks v Trustees Executors and Agency Co Ltd (1900) 26 VLR 339 …. 22-01 Higginbottom, Re [1892] 3 Ch 132; [1891–4] All ER Rep 1070 …. 15-19, 23-13 Higgins v Wingfield [1987] VR 689 …. 12-14, 13-50 Higginson, Re [1899] 1 QB 325; [1895–9] All ER Ext 1565 …. 12-07 Higinbotham v Holme (1812) 19 Ves 88; 34 ER 451 …. 9-20 Hilder v Church of England Deaconess’ Institution Sydney Ltd [1973] 1 NSWLR 506 …. 10-22 Hilditch (decd), Re (1985) 39 SASR 469 …. 10-09 Hill, Re [1923] 2 Ch 259 …. 5-07, 5-10 Hill, Re [1934] Ch 623; [1934] All ER Rep 617 …. 17-40 Hill v Crook [1874–80] All ER Rep 62; (1873) LR 6 HL 265 …. 9-09 — v Hill [1897] 1 QB 483 …. 5-08 — v — (1901) 1 SR (NSW) Eq 228; 18 WN (NSW) 298 …. 20-43 — v Permanent Trustee Co of NSW Ltd [1930] AC 720; [1930] All ER Rep 87 …. 19-36, 19-37, 19-38 — v — (1933) 33 SR (NSW) 527; 50 WN (NSW) 209 …. 20-51 Hilliard v Fulford (1876) 4 Ch D 389; [1874–80] All ER Rep 247 …. 17-35 Hillier, Re [1944] 1 All ER 480 …. 10-55 Hillier, Re [1954] 2 All ER 59; [1954] 1 WLR 700 …. 12-07, 12-08 Hill’s Trusts, Re [1874] WN 228 …. 14-03 Hillsdown Holdings plc v Pensions Ombudsman [1997] 1 All ER 862 …. 8-03, 29-55 Hilton, Re [1909] 2 Ch 548 …. 16-16, 18-34 Hilton v Barker Booth & Eastwood [2005] 1 All ER 651; [2005] 1 WLR 567 …. 16-01, 17-18 Hindley v Westmeath (1827) 6 B & C 200; 108 ER 427 …. 9-10 Hinsch, In the Will of (1896) 17 LR (NSW) B & P 21 …. 20-70

Hinton, Ex parte (1808) 14 Ves 598; 33 ER 650 …. 9-19 Hinves v Hinves (1844) 3 Hare 609; 67 ER 523 …. 19-04 Hirst, Re [1954] St R Qd 344 …. 16-14 Hitch v Leworthy (1842) 2 Hare 200; 67 ER 83 …. 16-14 Hixon v Campbell (1924) 24 SR (NSW) 436; 41 WN (NSW) 104 …. 10-71 Hoare v Hoare (1886) 56 LT 147; [1886–90] All ER Rep 553 …. 10-35 — v Osborne (1866) LR 1 Eq 585; [1861–73] All ER Rep 675; 78 ER 688 …. 10-14, 10-35, 10-36, 10-38, 10-63 Hobbs v Wayet (1887) 36 Ch D 256 …. 21-05 Hobday v A-G (NSW) [1982] 1 NSWLR 160 …. 17-39 — v Peters (No 1) (1860) 28 Beav 349; 54 ER 400 …. 17-46 Hobkirk v Ritchie (1934) 29 Tas LR 14 …. 15-57, 15-86 Hobson’s Settlement, Re (1899) 25 VLR 370 …. 17-40 Hobourn Aero Components Ltd’s Air Raid Distress Fund, Re [1946] Ch 194; [1946] 1 All ER 501 …. 10-06, 10-18 Hockin v Bank of British Columbia (1990) 71 DLR (4th) 11 …. 29-56 Hoddel v Pugh (1864) 33 Beav 489; 55 ER 458 …. 26-07 Hodge, Re [1940] Ch 260 …. 2-36 Hodge, Re [1960] SASR 237 …. 10-70 Hodges v Waters (No 7) (2015) 232 FCR 97 …. 21-34 Hodges, Re (1878) 7 Ch D 754 …. 16-14, 20-63 Hodson’s Settlement, Re (1851) 9 Hare 118; 68 ER 439 …. 15-19, 15-85 Hoey, Re [1994] 2 Qd R 510 …. 10-49 Hogarth v Hogarth (1894) 15 LR (NSW) Eq 93 …. 8-07 Hogden v Hogden (1956) 74 WN (NSW) 67 …. 2-31 Hohler v Aston [1920] 2 Ch 420 …. 2-20 Hohol v Hohol [1981] VR 221 …. 12-14 Holder v Holder [1968] Ch 353; [1968] 1 All ER 665 …. 17-44 Holding and Management Ltd v Property Holding and Investment Trust plc [1989] 1 WLR 1313 …. 21-09

Holland, Re [1902] 2 Ch 360 …. 7-08, 9-42 Holland v Administrator of German Property [1937] 2 All ER 807 …. 22-12, 22-16 — v Hughes (1809) 16 Ves 111; 32 ER 926 …. 19-06 Hollebone, Re [1919] 2 Ch 93; [1918–19] All ER Rep 323 …. 19-14 Hollis v Burton [1892] 3 Ch 226 …. 23-03 Hollole, Re [1945] VLR 295; [1946] ALR 78 …. 5-29, 10-65 Holloway v Radcliffe (1857) 23 Beav 163; 53 ER 64 …. 26-22 Holmes v Dring (1788) 2 Cox Eq Cas 1; 30 ER 1 …. 18-05 — v Holmes (1906) 28 ALT 22 …. 19-60 — v Penny (1857) 3 K & J 90; 69 ER 1035 …. 9-42 Holroyd v Marshall (1862) 10 HLC 191; 11 ER 99 …. 24-04 Holt, Re [1897] 2 Ch 525 …. 21-28 Holt v Heatherfield Trust Ltd [1942] 2 KB 1; [1942] 1 All ER 404 …. 6-20 Holt’s Settlement, Re [1969] 1 Ch 100; [1968] 1 All ER 470 …. 17-07 Homemaker Retail Management Ltd, Re (2001) 187 ALR 520 …. 21-34 Homestake Gold of Australia v Peninsular Gold Pty Ltd (1996) 20 ACSR 67 …. 4-02 Homeward Bound Gold Mining Co NL v McPherson (1897) 14 WN (NSW) 99; 17 NSWR 281 …. 13-41 Honeyfield v Honeyfield [1933] NZLR 183 …. 12-12 Honywood v Honywood [1902] 1 Ch 347 …. 19-53 Hood, Re [1931] 1 Ch 240; [1930] All ER Rep 215 …. 10-33, 10-58, 10-63, 1064 Hood, Re (1939) 40 SR (NSW) 449; 57 WN (NSW) 175 …. 19-31, 19-34 Hood v Clapham (1854) 19 Beav 90; 52 ER 282 …. 19-03, 19-20 — v Oglander (1865) 34 Beav 513; 55 ER 733 …. 9-19 Hood’s Will, Re (1899) 16 WN (NSW) 20 …. 15-72 Hooper, Re [1932] 1 Ch 38; [1931] All ER Rep 129 …. 11-03, 11-08 Hope v D’Hedouville [1893] 2 Ch 361 …. 19-09 Hope-Johnstone, Re [1904] 1 Ch 470 …. 9-10

Hope’s Will Trust, Re [1929] 2 Ch 136; [1929] All ER Rep 561 …. 17-06 Hopkins Trusts, Re (1874) LR 18 Eq 696 …. 19-38 Hopkins’ Will Trusts, Re [1965] Ch 669; [1964] 3 All ER 46 …. 10-26, 10-29 Hopkinson, Re [1949] 1 All ER 346 …. 10-29 Horan, Re (1936) 53 WN (NSW) 146 …. 15-03 Horan v James [1982] 2 NSWLR 376 …. 5-28 Hordern v Bull (1905) 5 SR (NSW) 518; 22 WN (NSW) 163 …. 17-44 Hordern v Hordern [1910] AC 465 …. 16-20, 17-39, 17-44 Horn, Re [1924] 2 Ch 222 …. 19-61 Horne, Re [1905] 1 Ch 76 …. 17-37 Horne v Horne (1906) 26 NZLR 1208 …. 20-11 Hornsby v Playoust (2005) 11 VR 522 …. 17-06 Horsley & Weight Ltd, Re [1982] Ch 442; [1982] 3 All ER 1045 …. 13-27 Horsnaill, Re [1909] 1 Ch 631 …. 23-11 Horton v Jones (1935) 53 CLR 475; [1935] ALR 177 …. 13-42, 23-10 — v Public Trustee [1977] 1 NSWLR 182 …. 9-04 Horvath v Commonwealth Bank of Australia [1999] 1 VR 643 …. 4-03 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; 55 ALR 417 …. 1-02, 2-02, 2-06, 2-09, 2-50, 13-01, 13-04, 13-10, 13-11, 1330, 13-31, 13-34, 13-38, 13-43, 17-42, 27-05 Hostick v New Zealand Railway & Locomotive Society Waikata Branch Inc [2006] 3 NZLR 842 …. 12-10 Hotchkys, Re (1886) 32 Ch D 408; [1886–90] All ER Rep 1104 …. 19-56, 2030, 20-31, 20-33 Hotham, Re [1902] 2 Ch 575 …. 20-16 Houghton, Re [1904] 1 Ch 622; [1904–7] All ER Rep 486 …. 2-43, 20-48 Hourigan v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619; [1934] ALR 283 …. 2-27, 2-31, 22-29, 22-33 House v Caffyn [1922] VLR 67; (1921) 28 ALR 3 …. 12-20 Houston, Re [1954] St R Qd 130 …. 12-03 Houston v Burns [1918] AC 337; [1918–19] All ER Rep 817 …. 10-61, 10-63

How v Earl Winterton [1896] 2 Ch 626 …. 22-27, 22-28, 22-29 — v — (1902) 51 WR 262 …. 21-07 Howard v Papera (1815) 1 Madd 142; 56 ER 54 …. 23-05 — v Rhodes (1837) 1 Keen 581; 48 ER 431 …. 15-83 Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821; [1974] 1 All ER 1126 …. 13-27 Howden v Yorkshire Miners’ Association [1903] 1 KB 308 …. 23-03, 23-04 Howe v Lord Dartmouth (1802) 7 Ves 137; 32 ER 56 …. 19-02, 19-03, 19-04, 19-05, 19-07, 19-08, 19-09, 19-10, 19-11, 19-14, 19-21, 20-03 Howell v Hyde (2003) 47 ACSR 230 …. 7-16, 7-18 Howes, Re [1971] 2 NSWLR 387 …. 20-61 Hoyle, Re [1893] 1 Ch 84 …. 7-08 Hoyles, Re [1912] 1 Ch 67; [1908–10] All ER Rep Ext 1107 …. 19-03, 19-25 Hubbuck, Re [1896] 1 Ch 754 …. 19-62 Hudson v Cook (1872) LR 13 Eq 417 …. 26-07 — v Gray (1927) 39 CLR 473 …. 23-07 Huen v Official Receiver (2008) 248 ALR 1 …. 13-11, 13-51 Hughes v Fripp (1922) 30 CLR 508; 28 ALR 278 …. 19-43 — v Howard (1858) 25 Beav 575; 53 ER 756 …. 13-18 — v Key (1855) 20 Beav 395; 52 ER 655 …. 21-10 — v NM Superannuation Pty Ltd (1993) 29 NSWLR 653 …. 21-32, 21-34 Hughs-Hallett v Indian Mammoth Gold Mines Co (1882) 22 Ch D 561 …. 2105 Hulkes, Re (1886) 33 Ch D 552; [1886–90] All ER Rep 659 …. 17-35 Hull v Christian (1874) LR 17 Eq 546 …. 17-39 Hulme v Hulme (1833) 2 My & K 682; 39 ER 1105 …. 15-22 Hummeltenberg, Re [1923] 1 Ch 237; [1923] All ER Rep 49 …. 10-04, 10-10, 10-15, 10-28 Hunt v McLaren [2006] WTLR 1817 …. 11-04 — v Severs [1994] 2 AC 350; [1994] 2 All ER 385 …. 13-09

Hunter v A-G [1899] AC 309; [1895–9] All ER Rep 558 …. 10-63 — v Bullock (1872) LR 14 Eq 45 …. 9-07, 10-61 — v Hunter [1937] NZLR 794 …. 15-86 — v — [1938] NZLR 520 …. 15-85 — v Moss [1994] 3 All ER 215; [1994] 1 WLR 452 …. 5-24 — v Public Trustee [1924] NZLR 882 …. 5-02 Hurley’s Settled Estates, Re (1920) 37 WN (NSW) 88 …. 25-10 Hurst, Re (1892) 67 LT 96 …. 17-11, 17-18, 22-12 Hurst v Bryk [1999] Ch 1; [1997] 2 All ER 283 …. 21-05 Hussey’s Charities, Re (1861) 7 Jur (NS) 325 …. 10-39 Hutchings v Snowden (1897) 23 VLR 118; 3 ALR 1670 …. 18-26 Hutchinson, Re [1953] Ch 387; [1953] 1 All ER 996 …. 10-84, 10-85 Hutter, Re [1965] NZLR 1008 …. 17-07 Huxtable, Re [1902] 2 Ch 793; [1900–3] All ER Rep 799 …. 7-15, 7-33, 10-61 Hyett v Mekin (1884) 25 Ch D 735 …. 26-06 Hyman v Permanent Trustee Co of NSW Ltd (1914) 14 SR (NSW) 348; 31 WN (NSW) 126 …. 20-72

I ICI New Zealand Ltd v Agnew [1998] 2 NZLR 129 …. 2-47, 2-51 Ideal Bedding Co Ltd v Holland [1907] 2 Ch 157 …. 9-45 Ierino v Gutta (2012) 43 WAR 372 …. 13-10, 27-07 Iffla v Beany (1881) 1 W & W (E) 110 …. 15-18 Imobilari Pty Ltd v Opes Price Stockbroking Ltd (in liq, recs and mgrs apptd) (2008) 252 ALR 41 …. 13-39 Imperial Foods Pension Scheme, Re [1986] 2 All ER 802; [1986] 1 WLR 717 …. 29-57 Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597; [1991] 1 WLR 589 …. 8-03, 29-49, 29-53, 29-54, 29-55, 29-57 In de Braekt v Powell (2007) 33 WAR 389 …. 13-02, 22-25 Income Tax Acts (No 1), Re [1930] VLR 211; (1930) 36 ALR 192 …. 10-07

Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531; [1891–4] All ER Rep 28 …. 10-01, 10-02, 10-04, 10-06, 10-12, 10-23, 10-30, 10-57 Incorporated Council of Law Reporting for England & Wales v A-G [1972] Ch 73; [1971] 3 All ER 1029 …. 10-03, 10-27, 10-58 Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation (1924) 34 CLR 580 …. 10-27 — v — (1971) 125 CLR 659; [1972] ALR 127 …. 10-03, 10-27, 10-58 Independent Trustee Services Ltd v G P Noble Trustees Ltd [2013] Ch 91; [2012] 3 All ER 210 …. 13-02, 13-09 Industrial Development Consultants Ltd v Cooley [1972] 2 All ER 162; [1972] 1 WLR 443 …. 2-07, 13-27 Inge v Inge (1990) 3 ACSR 63 …. 13-27 Ingram, Re [1951] VLR 424; [1951] ALR 900 …. 10-57, 10-69 Ingram v Ingram [1941] VLR 95; [1941] ALR 120 …. 12-11, 13-50 Inland Revenue Commissioners v Baddeley [1955] AC 572; [1955] 1 All ER 525 …. 10-11, 10-47, 10-56 — v Bernstein [1961] Ch 399; [1961] 1 All ER 320 …. 20-61, 20-62 — v City of Glasgow Police Athletic Association [1953] AC 380; [1953] 1 All ER 747 …. 10-49 — v Educational Grants Association [1967] Ch 993; [1967] 2 All ER 893 …. 10-08 — v Fisher [1926] AC 395 …. 19-40 — v Glasgow Musical Festival Association SC 920 [1926] …. 10-31 — v Holmden [1968] AC 685; [1968] 1 All ER 148 …. 17-07 — v McMullen [1981] AC 1; [1980] 1 All ER 884 …. 10-32 — v National Anti-Vivisection Society [1946] 1 KB 185; [1946] 1 All ER 205 …. 10-16 — v Peeblesshire Nursing Association SC 215 (1927) …. 10-55 — v Raphael [1935] AC 96 …. 5-02 — v Silverts Ltd [1951] Ch 521; [1951] 1 All ER 703 …. 22-03 — v Temperance Council of Christian Churches of England and Wales (1926) 136 LT 27 …. 10-58

— v Yorkshire Agricultural Society [1928] 1 KB 611 …. 10-03 Inman, Re (1914) 59 Sol Jo 161 …. 19-21 Inman (decd), Re [1965] VR 238 …. 10-16, 10-21, 10-57, 10-66 Institution of Civil Engineers v Inland Revenue Commissioners [1932] 1 KB 149; [1931] All ER Rep 454 …. 10-31 International Art Holdings Pty Ltd (admin apptd), Re (2011) 85 ACSR 1 …. 21-34 International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) 100 CLR 644 …. 2-10 International Sales & Agencies Ltd v Marcus [1982] 3 All ER 551 …. 13-37 International Vending Machines Pty Ltd and the Companies Act 1961, Re [1962] NSWR 1408; (1961) 80 WN (NSW) 465 …. 2-07, 22-14 Interwest Hotels Pty Ltd (in liq), Re (1993) 12 ACSR 78 …. 21-03 Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd (2006) 15 VR 87 …. 29-18, 29-21 Investa Properties Ltd, Re (2001) 187 ALR 462 …. 3-10, 22-12, 22-14 Isaac v Wall (1877) 6 Ch D 706 …. 13-43 Irismay Holdings Pty Ltd, Re [1996] 1 Qd R 172 …. 20-48 Ironmongers’ Co v A-G (1844) 10 Cl & F 908; 8 ER 983 …. 10-69, 10-73 Irons v Smallpiece (1819) 2 B & Ald 551; 106 ER 467 …. 12-21 Irving v Irving (1901) 18 WN (NSW) 63 …. 17-44 Irvine v Sullivan (1869) LR 8 Eq 673 …. 7-32, 12-02 ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 59 NSWLR 196; 53 ATR 527 …. 3-13, 7-09, 7-13, 24-02

J J Leslie Engineers Co Ltd, Re [1976] 2 All ER 85; [1976] 1 WLR 292 …. 27-13 JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691 …. 21-02, 21-06 Jack v Smail (1905) 2 CLR 684; 11 ALR 372 …. 9-39 Jackson v Crosby (No 2) (1979) 21 SASR 280 …. 13-50 — v Dickinson [1903] 1 Ch 947 …. 21-20

— v Horizon Holidays Ltd [1975] 3 All ER 92; [1975] 1 WLR 1468 …. 2-20, 221 Jacob, Re (1897) 16 NZLR 52 …. 5-24 Jaffray v Marshall [1994] 1 All ER 143; [1993] 1 WLR 1285 …. 22-05 James, Ex parte (1803) 8 Ves 337; 32 ER 385 …. 17-44, 17-45 James, Re [1949] SASR 143; [1949] ALR 637 …. 17-43 James v Dean (1805) 11 Ves 383; 32 ER 1135 …. 13-43 — v Gammon (1846) 15 LJ Ch 217 …. 19-03, 19-07 — v Smith [1891] 1 Ch 384 …. 13-25 — v Williams [2000] Ch 1; [1999] 3 All ER 309 …. 13-03 James N Kirby Foundation Ltd v A-G (NSW) (2004) 62 NSWLR 276 …. 1705, 17-06 James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62 …. 27-09, 27-15 Jarvis v Duke (1681) 1 Vern 19; 23 ER 274 …. 9-13 Jarvis (dec’d), Re [1958] 2 All ER 336; [1958] 1 WLR 815 …. 13-11, 13-31 Jasmine Trustees Ltd v Wells & Hind (a firm) [2008] Ch 194; [2007] 1 All ER 1142 …. 13-02, 22-25 Jeffery, Re [1951] SASR 237 …. 7-21 Jeffray v Webster (1895) 17 ALT 72 …. 21-04 Jeffrey Estate v Rowe (1989) 36 ETR 217 …. 17-19 Jeffries, Re [1936] 2 All ER 626 …. 10-82 Jenkins, Re [1915] 1 Ch 46 …. 9-26 Jenkins v Milford (1820) 1 J & W 629; 37 ER 508 …. 23-02 Jenkins v Wynen [1992] 1 Qd R 40 …. 12-10 Jenkins and Randall & Co’s Contract, Re [1903] 2 Ch 362 …. 20-04 Jenkins’ Will Trusts, Re [1966] Ch 249; [1966] 1 All ER 926 …. 10-68 Jenner v Turner (1880) 16 Ch D 188 …. 9-13 Jenner and Keighran’s Contract, Re [1925] VLR 283 …. 17-23 Jennings v Mather [1901] 1 KB 108 …. 21-04 — v — [1902] 1 KB 1 …. 21-02, 21-04

Jenyns v Public Curator (Qld) (1953) 90 CLR 113 …. 17-47 Jesus College Case (1615) Duke ed Bridgman 363 …. 10-28 Jessopp v Watson (1833) 1 My & K 665; 39 ER 832 …. 26-17 Jessup v Queensland Housing Commission [2002] 2 Qd R 270 …. 2-11 Jetivia SA v Bilta (UK) Ltd [2015] 2 All ER 1083; [2015] 2 WLR 1168 …. 2-03, 9-02, 9-08 Jewell’s Settlement, Re [1919] 2 Ch 161; [1918–19] All ER Rep 1161 …. 21-11 Jex-Blake, Re [1939] NZLR 256 …. 19-45 Joaquin v Hall [1976] VR 788 …. 12-10 Job v Job (1877) 6 Ch D 562 …. 17-35 Jobson v Palmer [1893] 1 Ch 71 …. 17-30, 17-35, 22-17 Joel v Mills (1857) 3 K & J 458; 69 ER 1189 …. 9-19 John v Dodwell [1918] AC 563 …. 23-18 John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; 266 ALR 462 …. 13-02, 13-11 John Nitschke Nominees Pty Ltd v Hahndorf Golf Club Inc (2004) 88 SASR 334 …. 9-19 Johns v James (1878) 8 Ch D 744 …. 5-14 Johnson, Re (1880) 15 Ch D 548 …. 21-02, 21-04, 21-12, 21-15 Johnson, Re [1904] 1 KB 134 …. 9-26 Johnson, Re [1939] 2 All ER 458 …. 5-07 Johnson v Baber (1845) 8 Beav 233; 50 ER 91 …. 17-04 — v Ball (1851) 5 De G & Sm 85; 64 ER 1029 …. 7-35 — v Buttress (1936) 56 CLR 113; [1936] ALR 390 …. 9-36 — v Routh (1857) 27 LJ Ch 305 …. 19-03, 19-14 Johnson’s Will Trusts, Re [1967] 1 All ER 553 …. 9-14 Johnston, Re (1906) 25 NZLR 564 …. 13-07 Johnston v Johnston (1884) 52 LT 76 …. 9-36 — v — (1903) 4 SR (NSW) 8; 20 WN (NSW) 271 …. 17-39, 18-02 — v Moore (1858) 27 LJ Ch 453 …. 19-21

Johnstone v Johnstone (1902) 2 SR (NSW) Eq 90 …. 15-59 Jones, Re (1883) 49 LT 91 …. 18-01 Jones, Re [1917] St R Qd 74 …. 21-07 Jones, Re (1929) 45 TLR 259 …. 10-29 Jones, Re (1929) 30 SR (NSW) 26; 46 WN (NSW) 190 …. 19-03, 19-21 Jones, Re [1932] 1 Ch 642; [1932] All ER Rep 804 …. 20-60 Jones, Re [1942] Ch 238; [1942] 1 All ER 642 …. 7-21, 7-24 Jones, Re; Ex parte Mayne (1953) 16 ABC 169 …. 2-11, 27-09 Jones v Bouffier (1911) 12 CLR 579 …. 13-22 — v Davies (1878) 8 Ch D 205 …. 26-11 — v Foxhall (1852) 15 Beav 388; 51 ER 588 …. 22-06, 22-08 — v Gordon (1877) 2 App Cas 616 …. 13-36, 16-08 — v Higgins (1866) LR 2 Eq 538 …. 22-33 — v Julian (1890) 25 LR Ir 54 …. 18-26 — v Kernott [2012] 1 AC 776; [2012] 1 All ER 1265 …. 12-18, 13-54 — v Krawczyk [2011] NSWSC 139 …. 9-14 — v Lewis (1751) 2 Ves Sen 240; 28 ER 155 …. 17-35 — v Lock (1865) 1 Ch App 25 …. 7-05 — v Ogle (1872) LR 8 Ch App 192; [1861–73] All ER Rep 919 …. 19-42 — v Parkinson [1952] NZLR 89 …. 12-10 — v Shipping Federation of British Columbia (1963) 37 DLR (2d) 273 …. 1613 — v T Eaton Co (1973) 35 DLR (3d) 97; [1973] SCR 635 …. 10-09, 10-63 — v Turner (1904) 4 SR (NSW) 368; 21 WN (NSW) 125 …. 20-30, 20-32, 20-33 — v Williams (1767) Amb 651; 27 ER 422 …. 10-53 Jones & Sons (Trustee) v Jones [1997] Ch 159; [1996] 4 All ER 721 …. 27-04 Joscelyne, Re [1963] Tas SR 4 …. 27-09 Joseph Rowntree Memorial Trust Housing Association Ltd v A-G [1983] Ch 159; [1983] 1 All ER 288 …. 10-10, 10-22

Josselyn v Josselyn (1837) 9 Sim 63; 59 ER 281 …. 23-09 Jowitt, Re [1922] 2 Ch 442; [1922] All ER Rep 331 …. 19-31 Joy, Re (1888) 60 LT 175; [1886–90] All ER Rep 1111 …. 10-43, 10-44 Joyce v Ashfield Municipal Council (1959) 4 LGRA 195 …. 10-05 — v — [1975] 1 NSWLR 744 …. 10-44 Jubilee Cotton Mills Ltd v Lewis [1924] AC 958 …. 2-02 Judd’s Contract, Re [1906] 1 Ch 684 …. 20-12 Judkin, Re (1884) 25 Ch D 743; [1881–5] All ER Rep 979 …. 20-60 Jury, Re (1999) 92 FCR 68 …. 9-40 Juul v Northey [2010] NSWCA 211 …. 15-85 J W Broomhead (Vic) Pty Ltd (in liq) v J W Broomhead Pty Ltd [1985] VR 891 …. 3-13, 5-02, 15-73, 21-05 JWH Group Pty Ltd v Kimpura Pty Ltd (2004) 61 IPR 295 …. 2-25

K K & S Corporation Ltd v Sportingbet Australia (2003) 86 SASR 312 …. 13-37, 23-19, 27-14 Kaikoura County Council v Boyd [1949] NZLR 233 …. 10-53 Kane v Radley-Kane [1999] Ch 274; [1998] 3 All ER 753 …. 17-43 KAP Motors Pty Ltd v Commissioner of Taxation (2008) 168 FCR 319; 246 ALR 395 …. 13-01 Karak Rubber Co Ltd v Burden (No 2) [1972] 1 All ER 1210; [1972] 1 WLR 602 …. 13-04, 13-34, 13-40 Karger v Paul [1984] VR 161 …. 16-06, 16-08, 16-10, 29-55 Kars v Kars (1996) 187 CLR 354; 141 ALR 37 …. 2-18, 5-12, 13-09 Karsten (decd), Re [1953] NZLR 456 …. 7-24, 7-33 Katingal Pty Ltd v Amor (1999) 162 ALR 287 …. 13-11 Kation Pty Ltd v Lamru Pty Ltd (2009) 257 ALR 337 …. 13-34 Kauter v Hilton (1953) 90 CLR 86 …. 5-01 Kay, Re [1897] 2 Ch 518 …. 22-12 Kay, Re [1927] VLR 66 …. 15-67

Kay, Re [1939] Ch 329; [1939] 1 All ER 245 …. 6-14 Kaye v Powel (1791) 1 Ves Jun 408; 30 ER 410 …. 23-02 — v Zeital [2010] 2 BCLC 1 …. 6-19 Kayford Ltd (in liq), Re [1975] 1 All ER 604; [1975] 1 WLR 279 …. 2-15, 2-16, 5-02 Kean Memorial Trust Fund, Re Trusts of (2003) 86 SASR 449 …. 10-74 Kearins v Kearins (1956) 57 SR (NSW) 286; 74 WN (NSW) 63 …. 10-32 Kearns v Hill (1990) 21 NSWLR 107 …. 17-04 Keech v Sandford (1726) Sel Cas t King 61; 25 ER 223 …. 13-02, 13-11, 13-12, 13-19, 13-20, 13-30, 17-42 Keefe v Law Society of New South Wales (1998) 44 NSWLR 451 …. 21-15, 27-08, 27-11 Keeler’s Settlement Trusts [1981] Ch 156; [1981] 1 All ER 888 …. 17-39 Keen, Re [1937] Ch 236; [1937] 1 All ER 452 …. 7-24 Keenan, Re (1913) 30 WN (NSW) 214 …. 10-40 Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342 …. 13-11 Kekewick v Manning (1851) 1 De GM & G 176; 42 ER 519 …. 6-20 Kellett v Kellett (1811) 3 Dow 248; 3 ER 1055 …. 12-04 Kells Enterprises Pty Ltd (in liq) v Balaglow (2007) 63 ACSR 557 …. 13-34 Kelly v Perpetual Trustee Co Ltd (1963) 109 CLR 258 …. 19-44, 19-49 Kelly, Re [1932] IR 255 …. 11-08 Kemp v Burn (1863) 4 Giff 348; 66 ER 740 …. 17-13, 17-14 Kemp’s Settled Estates, Re (1883) 24 Ch D 485 …. 15-64 Kempson, Re (1791) 3 Bro CC 197; 29 ER 487 …. 22-06 Kemtron Industries Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] 1 Qd R 576 …. 21-02, 21-04, 21-06 Kendell v Carnegie (2006) 68 NSWLR 193 …. 3-13 Kendall v Granger (1842) 5 Beav 300; 49 ER 593 …. 10-64 Kennedy v De Trafford [1897] AC 180; [1895–9] All ER Rep 408 …. 2-10 Kenning’s Will, Re (1899) 20 LR (NSW) Eq 139; 16 WN (NSW) 31 …. 15-69

Kennon v Spry (2008) 238 CLR 366; 251 ALR 257 …. 3-14, 17-16 Kenny, In the Will of (1889) 6 WN (NSW) 106 …. 10-78 Keren Kayemeth Le Jisroel Ltd v Inland Revenue Commissioners [1931] 2 KB 465 …. 10-33, 10-42 — v — [1932] AC 650; [1932] All ER Rep 971 …. 10-59 Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164; 71 ALR 417 …. 13-07 Kerrigan, Re (1935) 35 SR (NSW) 242; 52 WN (NSW) 79 …. 17-40 Kerrigan, Re (1946) 47 SR (NSW) 76; 63 WN (NSW) 288 …. 12-12, 12-16 Kerrison’s Trusts, Re (1871) LR 12 Eq 422 …. 20-63 Ker’s Settlement Trusts, Re [1963] Ch 553; [1963] 1 All ER 801 …. 17-07, 2808 Kershaw’s Trusts, Re (1868) LR 6 Eq 322 …. 20-58 Kevan v Crawford (1877) 6 Ch D 29 …. 9-44 Khoo Tek Keong v Ch’ng Joo Tuan Neoh [1934] AC 529 …. 16-11, 18-03, 1804, 18-05, 22-13 Khoury v Khouri (2006) 66 NSWLR 241 …. 7-03 Kiang Po Hoh v Frost Hollow Pty Ltd [2014] VSC 77 …. 16-01 Kilbee v Sneyd (1828) 2 Moll 186 …. 17-23 Kilpin v Kilpin (1834) 1 My & K 520; 39 ER 777 …. 7-05 Kilvert’s Trusts, Re (1871) LR 12 Eq 183 …. 10-61 Kinahan’s Trusts, Re [1921] 1 IR 210 …. 17-19 King, Re [1907] 1 Ch 72 …. 20-54 King, Re [1917] 2 Ch 420; [1916–17] All ER Rep 786 …. 10-67 King, Re [1923] 1 Ch 243; [1923] All ER Rep 688 …. 10-14, 10-38 King v Denison (1813) 1 Ves & B 260; 35 ER 102 …. 2-27, 12-05, 12-08 — v Mullins (1852) 1 Drew 308; 61 ER 469 …. 21-29 — v Victor Parsons & Co [1973] 1 All ER 206; [1973] 1 WLR 29 …. 22-30 King Network Group Pty Ltd v Club of the Clubs Pty Ltd (2008) 69 ACSR 172 …. 13-39 Kingham v Kingham [1897] IR 170 …. 17-19

Kingsmill v Lyne (1910) 13 CLR 292 …. 2-02, 2-07 Kingston, Ex parte (1871) LR 6 Ch App 632 …. 27-15 Kingston v Lady E Pierepont (1681) Vern 5; 23 ER 264 …. 9-17 Kinloch v Secretary of State for India in Council (1882) 7 App Cas 619 …. 520, 5-21 Kinsela v Caldwell (1975) 132 CLR 458; 5 ALR 337 …. 5-26 — v Russell Kinsela Pty Ltd (in liq) (1986) 4 NSWLR 722 …. 2-03 Kipping, Re [1914] 1 Ch 62 …. 20-72, 23-11 Kirby v Wilkins [1929] 2 Ch 444; [1929] All ER Rep 356 …. 20-51 Kiriri Cotton Co Ltd v Dewani [1960] AC 192; [1960] 1 All ER 177 …. 9-08 Kirkegaard, Re [1950] St R Qd 144 …. 21-34 Kirkman v Booth (1848) 11 Beav 273; 50 ER 821 …. 19-03, 20-42 Kirwan, Re (1869) 8 SCR Eq 21 …. 20-57 Kirwan v Cresvale Far East Ltd (in liq) (2002) 44 ACSR 21 …. 21-09 Kitchen v Royal Air Forces Assn [1958] 2 All ER 241 …. 22-30 KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) (1984) 155 CLR 288; 56 ALR 337 …. 1-02, 13-08, 25-05 Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; [1998] 4 All ER 513 …. 9-36, 17-37 Klewer v Official Trustee in Bankruptcy (No 2) [2008] FCA 1788 …. 7-06 Klug v Klug [1918] 2 Ch 67 …. 16-01, 16-06, 20-63 Knatchbull v Fearnhead (1837) 3 My & Cr 122; 40 ER 871 …. 22-10 Knight v Biss [1954] NZLR 55 …. 12-12 — v Browne (1861) 7 Jur NS 894 …. 9-20 — v Knight (1840) 3 Beav 148; 49 ER 58 …. 5-24 — v Marjoribanks (1849) 2 Mac & G 10; 42 ER 4 …. 17-47 Knight’s Will, Re (1884) 26 Ch D 82 …. 15-19 Knocker v Youle [1986] 2 All ER 914; [1986] 1 WLR 934 …. 17-07 Knollys’ Trusts, Re [1912] 2 Ch 357 …. 16-10, 16-16 Knott, Re (1887) 56 LJ Ch 318 …. 21-10

Knott, Re [1937] VLR 244; [1937] ALR 456 …. 19-60, 19-61 Knott v Cotte (1852) 16 Beav 77; 51 ER 705 …. 22-08 Knowles v Ballarat Trustees, Executors and Agency Co Ltd (1916) 22 CLR 212; 22 ALR 431 …. 19-36 — v Commissioner of Stamp Duties [1945] NZLR 522 …. 10-58 — v Scott [1891] 1 Ch 717 …. 2-02, 13-27 Knowles’ Settled Estates, Re (1884) 27 Ch D 707 …. 15-61 Knowles’ Will Trusts, Re [1948] 1 All ER 866 …. 13-13 Knox v Gye (1872) LR 5 HL 656 …. 2-07 — v Mackinnon (1888) 13 App Cas 753 …. 16-18, 17-11, 17-18, 18-02 — v Phillips (1918) 19 SR (NSW) 7; 36 WN (NSW) 14 …. 19-60, 19-61 — v Roberts (1900) 21 LR (NSW) Eq 231 …. 19-55, 20-31 Knox’s Trusts, Re [1895] 2 Ch 483 …. 21-09 Koeppler’s Will Trusts, Re [1984] Ch 243; [1984] 2 All ER 111 …. 10-51 Koeppler’s Will Trusts, Re [1986] Ch 423; [1985] 2 All ER 869 …. 10-51 Koettgen’s Will Trusts, Re; Westminster Bank Ltd v Family Welfare Association Trustee Ltd [1954] Ch 252; [1954] 1 All ER 581 …. 10-08, 1030 Kolb’s Will Trusts, Re [1962] Ch 531; [1961] 3 All ER 811 …. 17-07 Koorootang Nominees Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] 3 VR 16 …. 13-36, 13-37 Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; 317 ALR 225 …. 3-06, 5-01, 5-02 Kowalczuk v Kowalczuk [1973] 2 All ER 1042; [1973] 1 WLR 930 …. 12-18 Krendel v Frontwell Investments Ltd (1967) 64 DLR (2d) 471 …. 17-18 Kronheim v Johnson (1877) 7 Ch D 60 …. 7-07 Ku v Song (2007) 63 ACSR 661 …. 3-05 Ku-ring-gai Municipal Council v A-G (1953) 19 LGR (NSW) 105 …. 17-07 — v — (1954) 55 SR (NSW) 65 …. 17-05, 17-07 Kurzmann v McKee (1896) 2 ALR 113 …. 19-55 Kytherian Association of Queensland v Sklavos (1958) 101 CLR 56; [1959]

ALR 5 …. 10-55, 10-59, 10-72

L Labe v Bayliss [1974] 1 All ER 1114 …. 27-06 Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574 …. 13-11, 17-18 Lacey, Ex parte (1802) 6 Ves 625; 31 ER 1228 …. 17-47 Lagunas Nitrate Co v Lagunas Syndicate [1899] 2 Ch 392; [1895–9] All ER Rep 1349 …. 13-28 Laing v Commissioner of Stamp Duties [1948] NZLR 154 …. 10-49 Lake v Bayliss [1974] 2 All ER 1114; [1974] 1 WLR 1073 …. 13-07 Lamb v Vice (1840) 6 M & W 466; 151 ER 495 …. 2-24 Lambe v Eames (1871) LR 6 Ch App 597 …. 5-07 Lambell, Re (1870) 9 SCR (NSW) Eq 94 …. 11-03 Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 …. 23-03 Lancet Pty Ltd v Olholm Developments Pty Ltd [2001] 1 Qd R 22 …. 2-02 Landau, Re [1998] Ch 223; [1997] 3 All ER 322 …. 8-02 Lander v Whitbread [1982] 2 NSWLR 530 …. 10-59 Lands Allotment Co, Re [1894] 1 Ch 616; [1891–4] All ER Rep 1032 …. 13-34, 22-30 Lane v Dighton (1762) Amb 409; 27 ER 274 …. 27-06 Langdon v Korff (1885) 6 LR (NSW) Eq 30 …. 16-05 Langford v Gascoyne (1805) 11 Ves 333; 32 ER 1116 …. 17-23, 17-30 Langham v Peterson (1903) 87 LT 744 …. 10-63 — v Sandford (1811) 17 Ves 442; 34 ER 169 …. 12-02 Langston v Ollivant (1807) Coop G 33; 35 ER 467 …. 18-05 Lanham v Pirie (1857) 3 Jur NS 704 …. 9-35 Lantsbery v Collier (1856) 2 K & J 709; 69 ER 967 …. 20-06 Larkin, Re (1913) 13 SR (NSW) 691 …. 5-18 Lashmar, Re [1891] 1 Ch 258 …. 23-12 Laskar v Laskar [2008] 1 WLR 2695 …. 12-12, 12-16, 12-18

Lassence v Tierney [1843–60] All ER Rep 47; (1849) 1 Mac & G 551; 41 ER 1379 …. 12-05, 12-09 Last v Rosenfeld [1972] 2 NSWLR 923 …. 7-09, 13-41 Lathwell v Lathwell [2008] WASCA 256 …. 21-10 Latimer v Commissioner of Inland Revenue [2004] 3 NZLR; [2004] 4 All ER 558; [2004] 1 WLR 1466 …. 2-15, 10-02, 10-63 Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366 …. 21-18, 22-32 Lawes v Bennett (1785) 1 Cox 167; 29 ER 1111 …. 26-12, 26-15 Lawlor, Re [1934] VLR 22 …. 10-65 Lawrence, Re (1908) 25 WN (NSW) 79 …. 20-57 Lawrence v Maggs (1759) 1 Eden 453; 28 ER 760 …. 13-43 Lawrie v Bankes (1858) 4 K & J 142; 70 ER 59 …. 20-59 Lawson’s Settled Estates, Re (1890) 7 WN (NSW) 71 …. 17-06 Laycock v Registrar-General of New South Wales (2012) 16 BPR 30,367 …. 15-75 Lazarus, Re (1897) 19 ALT 35 …. 20-57 Le Compte v Public Trustee [1983] 2 NSWLR 109 …. 13-09 Le Page v Gardom (1915) 113 LT 475 …. 7-21 Lea, Re (1887) 34 Ch D 528 …. 10-33, 10-61 Leach, Re [1912] 2 Ch 422 …. 9-20 Leahy v A-G (NSW) (1959) 101 CLR 611; [1959] AC 457; [1959] 2 All ER 300 …. 9-30, 9-31, 10-08, 10-41, 10-66, 11-04, 11-06, 11-08 Learoyd v Whiteley (1887) 12 App Cas 727 …. 17-18, 18-12, 18-26 Ledger v Petagna Nominees Pty Ltd (1989) 1 WAR 300 …. 22-08 Ledgerwood v Perpetual Trustee Co Ltd (1997) 41 NSWLR 532 …. 7-24, 7-30, 7-33, 7-36 Lee, In the Estate of (1986) 84 FLR 268 …. 23-12 Lee v Sankey (1873) LR 15 Eq 204 …. 17-30, 20-49 — v Young (1843) 2 Y & C Ch Cas 532; 63 ER 238 …. 15-85, 15-86 Leeds and Hanley Theatres of Varieties, Re [1902] 2 Ch 809 …. 13-28 Leeds City Brewery Ltd’s Trusts, Re [1925] Ch 532 …. 22-09

Lees v Nuttall (1829) 1 Russ & M 53; 39 ER 21 …. 13-25 Lees’ Settlement Trusts, Re [1896] 2 Ch 508 …. 15-53 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; 300 ALR 430 …. 2-15, 5-01, 5-26 Legard v Hodges (1792) 1 Ves Jun 478; 30 ER 447 …. 13-42 Legge v Legge (1904) 23 NZLR 350 …. 6-20 Legh’s Settled Estates, Re [1902] 2 Ch 274 …. 20-30 Legum Furniture Corp v Levine 232 SE (2d) 782 (1977) …. 13-52 Lehman Brothers International (Europe), Re [2012] 3 All ER 1; [2012] 1 BCLC 487 …. 1-02 Leicester, Re [1947] NZLR 420 …. 20-31 Leigh v Burnett (1885) 29 Ch D 231 …. 13-18 — v Pantin [1914] 2 Ch 701 …. 15-69 Leitch, Re [1965] VR 204 …. 10-28 Lemann’s Trusts, Re (1883) 22 Ch D 633 …. 15-18, 15-53 Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550 …. 15-43, 21-04, 21-11 Leon, Re [1892] 1 Ch 348 …. 15-53, 15-58, 15-69 Leong v Lim Beng Chye [1955] 2 All ER 903 …. 9-13 Lepine, Re [1892] 1 Ch 210; [1891–4] All ER Rep 945 …. 17-11, 20-72 Lepton’s Charity, Re [1972] Ch 187; [1971] 1 All ER 799 …. 10-74 Les Affreteurs Reunis SA v Leopold Walford (London) Ltd [1919] AC 801 …. 2-21 Les Laboratoires Servier v Apotex Inc [2015] AC 430 …. 9-02 Leslie’s Hassop Estates, Re [1911] 1 Ch 611 …. 15-69 Lesser, Re [1954] VLR 435; [1954] ALR 951 …. 20-57 Lester, Re [1942] Ch 324; [1942] 1 All ER 646 …. 2-36 Letterstedt v Broers (1884) 9 App Cas 371; [1881–51] All ER Rep 882 …. 1585, 28-20 Leuty v Hillas (1858) 2 De G & J 110; 44 ER 929 …. 13-02 Lever, Re [1897] 1 Ch 32 …. 20-32

Lever Bros Ltd v Bell [1931] 1 KB 557; [1931] All ER Rep 1 …. 2-02 Leverhulme, Re [1943] 2 All ER 274 …. 10-28 Levien, Re [1937] VLR 80; [1937] ALR 39 …. 19-06, 19-22 Levien, Re [1955] 3 All ER 35 …. 10-31 Levin v Ikiua [2010] 1 NZLR 400 …. 3-16 Levy, Re [1960] Ch 346; [1960] 1 All ER 42 …. 10-83, 23-08 Levy, Re (1989) 58 DLR (4th) 375 …. 10-59 Lewin, Re [1961] VR 528 …. 19-14 Lewis, Ex parte (1819) 1 Gl & J 69 …. 20-11 Lewis, Re [1907] 2 Ch 296 …. 19-62 Lewis, Re (1910) 103 LT 495 …. 17-49 Lewis, Re [1910] WN 217; [1908–10] All ER Rep 281 …. 17-42 Lewis, Re [1955] Ch 104; [1954] 3 All ER 257 …. 10-21 Lewis v Allenby (1870) LR 10 Eq 668 …. 10-62 — v Condon (2013) 85 NSWLR 99; 304 ALR 410 …. 1-01, 3-20, 5-04, 21-02 — v Hillman (1852) 3 HL Cas 607; 10 ER 239 …. 9-36, 17-43 — v Nobbs (1878) 8 Ch D 591 …. 17-02, 17-20, 17-22 — v Nortex Pty Ltd (in liq) (2004) 214 ALR 634 …. 9-03 Leyton v Sneyd (1818) 8 Taunt 532; 129 ER 489 …. 16-14 LGSS Pty Ltd v Egan [2002] NSWSC 1171 …. 29-11 Lichfield v Baker (1840) 13 Beav 447; 51 ER 172 …. 19-20 Lidden v Composite Buyers Ltd (1996) 67 FCR 560; 139 ALR 549 …. 23-03 Liddiard, Re (1880) 14 Ch D 310 …. 15-67 Life Association of Scotland v Siddal (1861) 3 De G F & J 58; 45 ER 800; [1861–73] All ER Rep 892 …. 13-03, 22-33 Liebelt, Re (1983) 32 SASR 138 …. 10-70 Lillis v Lillis (1912) 29 WN (NSW) 91 …. 17-05 Lincoln v Windsor (1851) 9 Hare 158; 68 ER 456 …. 17-41 Lind, Re [1915] 2 Ch 345; [1914–15] All ER Rep 527 …. 24-04 Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] AC 85; [1993]

All ER 417 …. 2-20 Lindsay v Miller [1949] VLR 13 …. 28-07 Lingard, Re [1908] WN 107 …. 19-03 Lingard v Bromley (1812) 1 V & B 114; 35 ER 45 …. 21-17 Linsley, Re [1904] 2 Ch 785 …. 21-19 Linter Group Ltd v Goldberg (1992) 7 ACSR 580 …. 13-34 Linton, Re [1944] VLR 118; [1944] ALR 259 …. 20-61 Linton v Telnet Pty Ltd (1999) 30 ACSR 465 …. 2-03 Lion Nathan Brewing Investments Pty Ltd v Commissioner for ACT Revenue (1997) 79 FCR 177; 149 ALR 335 …. 13-07 Lipinski, Re [1976] Ch 235; [1977] 1 All ER 33 …. 9-32, 11-04 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548; [1992] 4 All ER 512 …. 13-10, 27-04, 27-14 — v — [1992] 4 All ER 409; [1989] 1 WLR 1340 …. 13-36 List, Re [1949] NZLR 78 …. 10-86 Lister & Co v Stubbs (1890) 45 Ch D 1; [1886–90] All ER Rep 797 …. 13-23 Litchfield, Re (1961) 2 FLR 454; [1961] ALR 750 …. 10-21 Lithgow, Re (1921) 22 SR (NSW) 150; 38 WN (NSW) 267 …. 10-78 Little v Little (1988) 15 NSWLR 43 …. 12-11 Littlejohn v Davies (1916) 16 SR (NSW) 183; 33 WN (NSW) 33 …. 19-47, 19-57, 20-31 Liverpool and District Hospital for Diseases of the Heart v A-G [1981] Ch 193; [1981] 1 All ER 994 …. 10-84 Livesey v Livesey (1830) 3 Russ 287; 38 ER 583 …. 17-37 Livesey’s Settlement Trusts, Re [1953] 2 All ER 723 …. 20-58 Llewellin’s Will Trusts, Re [1949] Ch 225; [1949] 1 All ER 487 …. 17-49 Llewellyn’s Trust, Re (1861) 29 Beav 171; 54 ER 592 …. 19-10, 19-12 Lloyd, Re (1893) 10 TLR 66 …. 10-63 Lloyd, Re [1958] VR 523; [1958] ALR 1042 …. 10-66 Lloyd v Branton (1817) 3 Mer 108; 36 ER 42 …. 9-13 — v Cocker (1860) 27 Beav 645; 54 ER 256 …. 20-58

— v Lloyd (1852) 2 Sim (NS) 255; 61 ER 338 …. 9-11, 9-13, 11-01 — v Spillet (1740) 2 Atk 148; 26 ER 493 …. 12-04, 12-10 — v Tedesco (2002) 25 WAR 360 …. 13-52 Lloyd-Jones v Clark-Lloyd [1919] 1 Ch 424 …. 2-05, 13-15 Lloyd’s v Harper (1880) 16 Ch D 290 …. 2-20, 2-21, 2-22, 2-24, 6-06, 6-13, 626 Lloyds & Scottish Finance Ltd v Cyril Lord Carpets Sales Ltd [1992] BCLC 609 …. 5-02 Lloyds Bank Ltd v Marcan [1973] 3 All ER 754; [1973] 1 WLR 1387 …. 9-41 Lloyds Bank NZA Ltd v National Safety Council of Australia Victorian Division (in liq) (1993) 115 ALR 93 …. 13-02 Lloyds Bank Plc v Duker [1987] 3 All ER 193; [1987] 1 WLR 1324 …. 23-11 — v Rosset [1991] 1 AC 107; [1990] 1 All ER 1111 …. 12-14, 12-19, 13-54 Lloyd’s Trustees, Re (1888) 57 LJ Ch 246 …. 15-05 Local Government Superannuation Board v Thorne (2002) 76 ALD 569 …. 802 Lock v Westpac Banking Corp (1991) 25 NSWLR 593 …. 8-02, 29-05, 29-53, 29-54, 29-55, 29-56, 29-57, 29-58 Locker’s Settlement, Re [1978] 1 All ER 216; [1977] 1 WLR 1323 …. 16-05 Lockett, In the Will of (1920) 20 SR (NSW) 213; 37 WN (NSW) 50 …. 17-39 Lockhart v Reilly (1856) 25 LJ Ch 697 …. 21-19 Lockie Guardian, Re [1945] NZLR 230 …. 9-16 Lockwood v White (2005) 23 ACLC 379 …. 2-29 Lockyer v Savage (1733) 2 Stra 947; 93 ER 959 …. 9-19 Lodge v Permanent Trustee Co Ltd (1918) 18 SR (NSW) 112 …. 26-24 Lofthouse, Re (1885) 29 Ch D 921 …. 16-08, 20-63 Lofts v MacDonald (1974) 3 ALR 404 …. 27-09, 27-15 Lomax v Ripley (1855) 3 Sm & G 48; 65 ER 558 …. 7-32 Londesborough v Somerville (1854) 19 Beav 295; 52 ER 363 …. 19-33 London Hospital Medical College v Inland Revenue Commissioners [1976] 2 All ER 113; [1976] 1 WLR 613 …. 10-32

Londonderry’s Settlement, Re [1965] Ch 918; [1964] 3 All ER 855 …. 16-08, 16-10, 16-14, 17-16, 21-34 Longfield Parish Council v Robson (1913) 29 TLR 357 …. 13-25 Longhurst v Waite [1920] SALR 407 …. 18-26 Longley v Longley (1871) LR 13 Eq 133 …. 5-02 Longton v Wilsby (1897) 76 LT 770 …. 13-19 Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627; [1981] 2 All ER 456 …. 2-03 Lonrho plc v Fayed (No 2) [1991] 4 All ER 961; [1992] 1 WLR 1 …. 13-02, 1311, 13-41 Lonsdale v Beckett (1850) 4 De G & Sm 73; 64 ER 740 …. 15-22 Lopes, Re [1931] 2 Ch 130; [1930] All ER Rep 45 …. 10-31 Lord and Fullerton’s Contract, Re [1896] 1 Ch 228 …. 15-16, 15-73 Lord Cable (dec’d), Re [1976] 3 All ER 417; [1977] 1 WLR 7 …. 28-06 Lord Grimthorpe, Re [1908] 2 Ch 675 …. 26-19 Lord Nunburnholme, Re [1912] 1 Ch 489 …. 23-08, 23-09 Lord Ranelagh’s Will, Re (1884) 26 Ch D 590 …. 13-12, 13-43 Lord Stratheden and Campbell, Re [1894] 3 Ch 265 …. 10-56 Lord Sudeley and Baines and Co, Re [1894] 1 Ch 334 …. 20-06 Lord Walpole v Lord Orford (1797) 3 Ves 402; 30 ER 1076 …. 13-42 Lorking, Re (1924) 25 SR (NSW) 46 …. 8-09 Louis, Re (1916) 32 TLR 313 …. 7-24 Love, Re (1885) 29 Ch D 348 …. 21-09 Loveland, Re [1906] 1 Ch 542 …. 9-09 Low v Bouverie [1891] 3 Ch 82; [1891–4] All ER Rep 348 …. 17-17 — v Carter (1839) 1 Beav 426; 48 ER 1005 …. 22-10 Lowin, Re [1965] NSWR 1624; [1967] 2 NSWR 140 …. 10-59 Lowry, Re (1872) 15 LR (NSW) Eq 78 …. 25-04 Lowson v Coombes [1999] Ch 373 …. 9-02, 9-03 Lowther v Bentinck (1874) LR 19 Eq 166; [1874–80] All ER Rep 362 …. 20-58, 20-59

Lubavitch Mazal Pty Ltd v Yeshiva Properties (No 1) Pty Ltd (2003) 47 ACSR 179 …. 15-21 Lucas, Re [1922] 2 Ch 52; [1922] All ER Rep 317 …. 10-20, 10-21, 10-23 Lucas, Re [1948] Ch 424; [1948] 2 All ER 22 …. 10-84, 10-85 Lucas v Telegraph Construction and Maintenance Co Ltd [1925] LN 211 …. 928 Lucking’s Will Trusts, Re [1967] 3 All ER 726; [1968] 1 WLR 866 …. 17-18 Luddy’s Trust v Pearl (1886) 33 Ch D 500; [1886–90] All ER Rep 968 …. 17-46 Luke v South Kensington Hotel Co (1879) 11 Ch D 121; [1874–80] All ER Rep 1293 …. 16-14 Lumsden v Buchanan (1865) 4 Macq 950 …. 21-03 Lunham v Blundell (1857) 27 LJ Ch 179 …. 17-20 Lupton v White (1808) 15 Ves 432; 33 ER 817 …. 17-20, 21-10 Lutheran Church of Australia South Australia District Inc v Farmers Cooperative Executors and Trustees Ltd (1970) 121 CLR 628; [1970] ALR 545 …. 2-46, 10-61, 16-08 Lyell, Re [1977] 1 NZLR 713 …. 17-07 Lyon v Baker (1852) 5 De G & Sm 622; 64 ER 1271 …. 17-40 Lysaght, Re [1898] 1 Ch 115 …. 19-31 Lysaght, Re [1966] Ch 191; [1965] 2 All ER 888 …. 10-72 Lysaght v Edwards (1876) 2 Ch D 499 …. 13-07, 26-07

M Macadam, Re [1946] Ch 73; [1945] 2 All ER 664 …. 17-49 Macansh v Fisher (1916) 16 SR (NSW) 636; …. 19-38 Macartney v Macartney [1908] VLR 649 …. 17-30 — v — (1911) 18 ALR 1 …. 19-61 Macedonian Orthodox Community Church St Petka v His Eminence Petar (2008) 237 CLR 66; 249 ALR 250 …. 21-10, 21-34, 22-12 MacCullock v Anderson [1904] AC 55 …. 20-72 Macdonald v Irvine (1878) 8 Ch D 101 …. 19-02, 19-04, 19-07

Macduff, Re [1896] 2 Ch 451; [1895–9] All ER Rep 154 …. 10-15, 10-26, 10-33 Macgregor, Re (1932) 32 SR (NSW) 483; 49 WN (NSW) 179 …. 10-46 Machu, Re (1882) 21 Ch D 838 …. 9-19 Macfadyen, Re [1908] 2 KB 817 …. 22-11 MacFarlane v Brown [1919] NZLR 218 …. 23-06 Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 …. 16-10, 29-55 MacIver’s Settlement, Re [1936] Ch 198; [1935] All ER Rep 889 …. 19-31, 1938 Mackay, Re [1911] 1 Ch 300 …. 22-16, 22-21 Mackay, Re (1951) 16 ABC 18 …. 9-43 Mackay v Douglas (1872) LR 14 Eq 106 …. 9-43 Mackenzie v Mackenzie (1894) 12 NZLR 590 …. 22-28 Mackie v Mackie (1845) 5 Hare 70; 67 ER 831 …. 19-05 MacKinnon v Stewart (1850) 1 Sim NS 76; 61 ER 30 …. 5-15 MacLachlan, Re (1900) 26 VLR 548; 6 ALR 243 …. 19-41 Maclaren’s Settlement Trusts, Re [1951] 2 All ER 414 …. 19-34 Macleay, Re (1875) LR 20 Eq 186 …. 9-19 Macnamara v Macnamara (1929) 30 SR (NSW) 245 …. 15-03 MacPherson, Re [1913] SALR 207 …. 19-31 Macphillamy v Fox (1932) 32 SR (NSW) 427; 49 WN (NSW) 191 …. 17-37, 17-38, 21-18 Maddever, Re (1884) 27 Ch D 523 …. 9-42 Maddock, Re [1902] 2 Ch 220 …. 7-19 Maddock v Registrar of Titles (1915) 19 CLR 681; 21 ALR 122 …. 15-75 Magarley Farlam Lawyers Trust Accountants (No 3), Re (2007) 96 SASR 337 …. 27-11 Magrath v Morehead (1871) LR 12 Eq 491 …. 8-07 Maguire, Re (1870) LR 9 Eq 632 …. 10-86 Maguire v Makaronis (1997) 188 CLR 449; 144 ALR 729 …. 1-02, 2-08, 9-36, 17-18, 22-05 Maharaj v Chand [1986] AC 898; [1986] 3 All ER 107 …. 12-14, 13-50

Mahkutai, The [1996] AC 650; [1996] 3 All ER 502 …. 2-20 Mahony v Commissioner of Taxation (1967) 41 ALJR 232 …. 29-07 Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 310 ALR 113 …. 8-02 Maitland v Bateman (1844) 13 LJ Ch 273 …. 20-47 Malam, Re [1894] 3 Ch 578 …. 19-38 Malcolm v O’Callaghan (1837) 3 My & Cr 52; 40 ER 844 …. 21-10 Malik v Bank of Credit and Commerce International SA (in liq); Mahmud v Bank of Credit and Commerce International SA [1998] AC 20; [1997] 3 All ER 1 …. 29-54 Mallott v Wilson [1903] 2 Ch 494; [1900–3] All ER Rep 326 …. 15-02, 15-73 Malsbury v Malsbury [1982] 1 NSWLR 226 …. 13-06 Manchester and Southport Railway Co, Re (1854) 19 Beav 365; 52 ER 391 …. 26-07 Mandelson’s Will, Re (1894) 15 LR (NSW) Eq 160; 11 WN (NSW) 35 …. 2052 Mandie v Memart Nominees Pty Ltd (2014) 42 VR 325 …. 16-10 Manfred v Maddrell (1950) 51 SR (NSW) 95; 68 WN (NSW) 80 …. 20-72, 2311 Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167 …. 29-20, 29-21 Manistys Settlement, Re [1974] Ch 17; [1973] 2 All ER 1203 …. 2-46, 5-29, 1608, 16-21, 17-15 Mann, Re [1903] 1 Ch 232; [1900–3] All ER Rep 93 …. 10-69 Manning v Commissioner of Taxation (1928) 40 CLR 506; 34 ALR 165 …. 1714 Manor Foundation Ltd v Commissioner of Land Tax (NSW) (1983) 14 ATR 676 …. 10-33 Mansell, Re [1930] 1 Ch 352; [1929] All ER Rep 189 …. 19-17 Manser, Re [1905] 1 Ch 68 …. 10-36 Manson v Public Trustee [1925] GLR 153 …. 17-11 Mansour v Mansour (2009) 24 VR 498 …. 15-86

Mapp v Elcock (1849) 2 Ph 793; 41 ER 1150 …. 12-04 Mara v Browne [1895] 2 Ch 69 …. 22-29 — v — [1896] 1 Ch 199 …. 13-03, 22-29 Marac Finance Ltd v Virtue [1981] 1 NZLR 586 …. 5-04 March v March (1945) 62 WN (NSW) 111 …. 12-12, 12-17 Marcolongo v Chen (2011) 242 CLR 546; 274 ALR 634 …. 9-41 Mariette, Re [1915] 2 Ch 284; [1914–15] All ER Rep 794 …. 10-28, 10-32, 1049 Marjoribanks, Re [1923] 2 Ch 307 …. 19-31 Marks v Marks (1910) 10 SR (NSW) 843 …. 15-05 Marlay, Re [1915] 2 Ch 264 …. 26-12 Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 …. 21-34 — v Rawlings [2015] AC 129; [2014] 1 All ER 807 …. 8-01 Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd (2001) 38 ACSR 404 …. 13-39 Marquess of Abergavenny’s Estate Act Trusts, Re [1981] 2 All ER 643; [1981] 1 WLR 843 …. 20-62 Marquis of Salisbury v Keymer [1909] WN 31; 25 TLR 278 …. 18-27 Marr’s Will Trusts, Re [1936] Ch 671 …. 10-59 Marsden, In the Will of (1926) 43 WN (NSW) 170 …. 17-40 Marsden v Stein (1906) 6 SR (NSW) 368 …. 22-12 Marshall, Re [1914] 1 Ch 192; [1911–13] All ER Rep 671 …. 20-72, 23-11 Marshall, Re [1920] 1 Ch 284; [1920] All ER Rep 190 …. 4-06, 9-23 Marshall v Blew (1741) 2 Atk 217; 26 ER 534 …. 23-02 — v Crowther (1874) 2 Ch D 199 …. 19-53 — v Holloway (1820) 2 Swan 432; 36 ER 681 …. 17-39 — v Williams [1974] VR 592 …. 25-05 Martin v Martin (1903) 3 SR (NSW) 156; 20 WN (NSW) 62 …. 2-40, 15-55 — v — (1959) 110 CLR 297 …. 12-12, 12-13 Martinez’ Trusts, Re (1870) 22 LT 403 …. 15-73

Martyn, Re (1884) 26 Ch D 745 …. 15-53, 15-58, 15-69 Maryon-Wilson’s Estate, Re [1912] 1 Ch 55 …. 18-02 Mascall v Mascall (1984) 50 P & CR 119 …. 6-19 Mason, Re [1928] Ch 385 …. 23-20 Mason, Re [1929] 1 Ch 1 …. 14-12 Mason v Farbrother [1983] 2 All ER 1078 …. 17-05, 17-07 Massingberd’s Settlement, Re (1890) 63 LT 296 …. 18-30, 22-05 Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; 249 ALR 44 …. 9-02, 9-06 Mateo v Official Trustee in Bankruptcy (2002) 117 FCR 179; 188 ALR 667 …. 9-39 Matheson, Re (1994) 49 FCR 454; 121 ALR 605 …. 21-14 Mathew, Re [1951] VLR 226; [1951] ALR 518 …. 10-55 Matthews, Re (1859) 26 Beav 463; 53 ER 976 …. 15-02 Matthews, Re [1993] 2 NZLR 92 …. 12-10 Matthews v Baxter (1873) 8 Exch 132 …. 4-06 — v Ruggles-Brise [1911] 1 Ch 194 …. 21-04, 21-05 — v Trustees Executors and Agency Co Ltd (1898) 24 VLR 58 …. 22-29 — v Tyson (1900) 21 LR (NSW) Eq 268 …. 17-04 Matthison v Clarke (1854) 3 Drew 3; 61 ER 801 …. 17-40 Maurice v Lyons [1969] 1 NSWR 307 …. 9-04 Mavaddat v Lee (2007) 24 WAR 67 …. 27-09 Mavromates, Re [1964] VR 612 …. 9-19 Maxwell v Chittick [1994] NSWCA 196 …. 22-11 Mayhew, Re (1877) 5 Ch D 596 …. 21-10 Mayne, Re (1928) 28 SR (NSW) 157; 45 WN (NSW) 46 …. 15-67, 15-69, 1605 Mayne v Jaques (1960) 101 CLR 169; [1960] ALR 289 …. 17-39 Mayo, Re [1943] Ch 302; 2 All ER 440 …. 16-14 Mayor of Coventry v A-G (1720) 7 Bro CC 235; 3 ER 153 …. 15-86

May’s Will Trusts, Re [1941] Ch 109 …. 15-18, 15-54 McArdle, Re [1951] Ch 669; [1951] 1 All ER 905 …. 6-17 McArdle v Gaughran [1903] 1 IR 106 …. 22-27 McBlain v Cross (1871) 25 LT (NS) 804 …. 7-08 McBride v Hudson (1962) 107 CLR 604; [1963] ALR 226 …. 19-49 McCarter, Re (Unreported, SC(NSW), McLelland CJ, 14 December 1961) …. 25-04 McCarthy v McCarthy (1919) 19 SR (NSW) 122; 36 WN (NSW) 45 …. 1705, 20-45 McCormack v Stevens [1978] 2 NSWLR 517 …. 10-68, 10-71 McCormick v Grogan (1869) LR 4 HL 82 …. 7-09, 7-18, 7-22 McCracken v Attorney-General (Vic) [1995] 1 VR 67 …. 5-28, 10-33, 10-66 McCready, Re (2004) 12 BPR 22,327 …. 25-04, 25-07 McCutcheon (dec’d), In the Will and Estate of [1960] VR 289 …. 19-30 McDonald v Ellis (2007) 72 NSWLR 605 …. 17-16 McDonnel v White (1865) 11 HL Cas 570; 11 ER 1454 …. 22-33 McDougall’s Will Trusts, Re [1956] 3 All ER 867 …. 10-26 McEachern, Re (1911) 103 LT 900 …. 17-19 McEmery, Re [1941] 1 IR 9 …. 10-30 McFadden v Jenkyns (1842) 1 Hare 458; 41 ER 589 …. 7-05 — v Public Trustee for Victoria [1981] 1 NSWLR 15 …. 7-35 McGachen v Dew (1851) 15 Beav 84; 51 ER 468 …. 21-23 McGarvie-Smith Institute v Campbelltown Municipal Council (1965) 83 WN (NSW) 191 …. 10-05 McGeorge, Re [1963] Ch 544; [1963] 1 All ER 519 …. 20-60 McGovern v A-G [1982] Ch 321; [1981] 3 All ER 493 …. 10-51 McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499 …. 1-06, 5-24, 24-03 McGrath v Cohen [1978] 1 NSWLR 621 …. 10-32, 10-59 McGregor v McGregor (No 2) [1919] NZLR 286 …. 17-03, 21-09 McInnes, Re [1925] VLR 496 …. 20-03

McIntosh v Dallwood (No 3) (1930) 30 SR (NSW) 332 …. 21-05 — v — (No 4) (1930) 30 SR (NSW) 415 …. 21-05 — v Pogose [1895] 1 Ch 505 …. 9-20 McIntyre v McIntyre (1914) 15 SR (NSW) 45; 31 WN (NSW) 132 …. 19-46, 19-47, 19-48, 19-49, 19-55 McKay v McKay (1902) 22 NZLR 121 …. 9-19 McKenna v Lowe (1878) 1 SCR(NS) (NSW) Eq 10 …. 15-86 McKenzie v McDonald [1927] VLR 134 …. 22-04 McKeown v Byron (1903) 4 SR (NSW) 13 …. 17-42 McKie v McKie (1898) 23 VLR 489; 4 ALR 98 …. 12-16 McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 …. 16-19, 2106, 23-06 McMahon, Re [1901] 1 IR 489 …. 2-35, 2-36 McMahon v Cooper (1904) 4 SR (NSW) 433 …. 22-16, 22-22 — v Hermann (1893) 14 LR (NSW) Eq 77 …. 20-12, 23-03 — v The Sydney City Council (1940) 40 SR (NSW) 427; 57 WN (NSW) 142 …. 13-08 McManus Re Pty Ltd v Ward (2009) 74 NSWLR 622 …. 12-06 McNally v Harri [2008] NSWSC 659 …. 21-20 McPhail v Doulton [1971] AC 424; [1970] 2 All ER 228 …. 2-46, 5-26, 5-27, 528, 5-29, 16-21 McPhee v Saunders (1940) 57 WN (NSW) 101 …. 5-07 McPhillamy’s Trusts, Re (1909) 10 SR (NSW) 42; 26 WN (NSW) 188 …. 1404, 15-19, 15-68 McQuade v Morgan (1927) 39 CLR 222; 33 ALR 258 …. 9-23 McTiernan, Re [1954] QWN 29 …. 20-51 McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656 …. 13-07 Mead v Watson (2005) 23 ACLC 718 …. 21-09 Mead’s Trust Deed, Re [1961] 2 All ER 836; [1961] 1 WLR 1244 …. 10-06, 1030 Meagher, Re [1910] VLR 407; (1910) 16 ALR 551 …. 18-02

Medforth v Blake [2000] Ch 86; [1999] 3 All ER 97 …. 2-05 Medway’s Will, Re (1897) 14 WN (NSW) 29 …. 15-83 Medworth v Pope (1859) 27 Beav 71; 54 ER 28 …. 7-27 Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146 …. 22-04 Meek v Bennie [1940] NZLR 1 …. 20-11 — v Devenish (1877) 6 Ch D 566 …. 26-22 Mehrtens v Andrews (1839) 3 Beav 72; 49 ER 28 …. 19-10, 19-20 Meinck, Re [1944] SASR 202 …. 19-06, 19-21 Meinertzhagen v Davis (1844) 1 Coll 335; 63 ER 444 …. 14-03, 15-19 Meinhard v Salmon 164 NE 545 (1928) …. 13-29 Melbourne Banking Corp Ltd v Brougham (1884) 7 App Cas 307 …. 2-05 Meldrum v Scorer (1887) 56 LT 471 …. 23-03 Mellick v President of the Asylum (1821) 1 Jac 180; 37 ER 818 …. 10-36 Mellody, Re [1918] 1 Ch 228; [1916–17] All ER Rep 324 …. 10-32, 10-58 Mendelssohn v Centrepoint Community Growth Trust [1999] 2 NZLR 88 …. 15-20, 15-57 Mendes v Guedalle (1862) 2 J & H 259; 70 ER 1054 …. 22-09 Mennard v Welford (1853) 1 Sm & G 426; 65 ER 187 …. 15-18 Mercedes Holdings Pty Ltd v Waters (No 2) (2010) 186 FCR 450; 78 ACSR 118 …. 23-03 Mercer, Ex parte (1886) 17 QBD 290 …. 9-41, 9-42 Mercier v Mercier [1903] 2 Ch 98; [1900–3] All ER Rep 375 …. 12-17 Merchant Taylors’ Co v A-G (1871) LR 6 Ch App 512 …. 2-31 Merriman v Perpetual Trustee Co Ltd (1895) 17 LR (NSW) Eq 325; 13 WN (NSW) 134 …. 17-37, 17-38, 26-20 Messenger v Andrews (1828) 4 Russ 478; 38 ER 885 …. 2-36 Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391; [1989] 3 All ER 14 …. 13-10, 13-11, 13-34 Metcalf v Permanent Building Society (1992) 10 WAR 145 …. 22-12 Methodist Theological College Council v Guardian, Trust, and Executors Co of New Zealand Ltd [1927] GLR 294 …. 10-45

Metlej v Kavanagh [1981] 2 NSWLR 339 …. 13-20 Metropolitan Bank v Heiron (1880) LR 5 Ex D 319 …. 22-30 Metropolitan Fire Brigade v Commissioner of Taxation (1990) 27 FCR 279; 97 ALR 335 …. 10-55 Metropolitan Gas Co v Federal Commissioner of Taxation (1932) 47 CLR 621 …. 16-07 Metropolitan Petar v Mitreski [2012] NSWSC 16 …. 13-35 Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513; [1990] 1 WLR 1587 …. 2-04, 8-02, 16-12, 16-21, 29-53, 29-55 Meux, Re [1958] Ch 154; [1957] 2 All ER 630 …. 25-11 Meyer v Simonsen (1852) 5 De G & Sm 723; 64 ER 1316 …. 19-03, 19-12, 1913 MF Global Australia Ltd (in liq), Re (2012) 267 FLR 27 …. 21-34 MF Global Australia Ltd (in liq) (No 2), Re [2012] NSWSC 1426 …. 21-14 Michael v Callil (1945) 72 CLR 509 …. 19-22 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; 282 ALR 685 …. 13-34, 13-39 Michelham’s Will Trusts, Re [1964] Ch 550; [1963] 2 All ER 188 …. 17-07 Michel’s Trusts, Re (1860) 28 Beav 39; 54 ER 280 …. 10-30, 10-40 Middleton, Ex parte [1983] 1 Qd R 170 …. 23-03 Middleton v Dodswell (1806) 13 Ves 266; 33 ER 294 …. 23-05 — v Pollock (1876) 2 Ch D 104 …. 1-07, 5-23 — v Reay (1849) 7 Hare 106; 68 ER 43 …. 15-20 Midgley v Midgley [1893] 3 Ch 282 …. 13-34 Midland Bank plc v Cooke [1995] 4 All ER 562 …. 12-18 Midland Counties Institution of Engineers v Inland Revenue Commissioners (1928) 14 Tax Cas 285 …. 10-26 Midland Silicones Ltd v Scruttons Ltd [1962] AC 446; [1962] 1 All ER 1 …. 217 Mihalopulos, Re (1956) 5 DLR (2d) 628 …. 7-24 Miles, Re (1988) 20 FCR 194; 85 ALR 216 …. 2-16

Miles v Bull [1969] 1 QB 258 …. 5-04 Miles v Harford (1879) 12 Ch D 691 …. 8-04 Millard, Re (1895) 72 LT 823 …. 21-13 Millard v Eyre (1793) 2 Ves 94; 30 ER 540 …. 15-86 Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301 …. 15-17, 15-46, 1549, 15-51, 15-85, 15-86 — v Miller (1872) LR 13 Eq 263 …. 19-06, 19-21, 26-09 Milligan v Mitchell (1837) 1 My & K 446; 39 ER 750 …. 23-04 Mills, Re (1981) 27 SASR 200 …. 10-06 Mills v Farmer (1815) 1 Mer 55; 35 ER 597 …. 10-61, 10-69 — v IRC [1973] Ch 225; [1972] 3 All ER 977 …. 4-02 — v Mills (1938) 60 CLR 150 …. 2-03, 2-07, 2-08, 13-27 — v Osborne (1834) 7 Sim 30; 58 ER 748 …. 18-04 Mill’s Declaration of Trust, Re [1950] 1 All ER 789 …. 9-07 Mill’s Declaration of Trust, Re [1950] 2 All ER 292 …. 9-07 Milne v Parker (1848) 17 LJ Ch 194 …. 19-02, 19-04 Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185; [1861–73] All ER Rep 783 …. 6-01, 6-15, 6-16, 6-17, 6-18, 6-19, 6-20, 6-21, 6-22 Minehan v AGL Employees Superannuation Pty Ltd (1998) 134 ACTR 1 …. 29-55 Mines Rescue Board (NSW) v Commissioner of Taxation (2000) 101 FCR 91 …. 10-55 Ministry of Health v Simpson [1951] AC 251; [1950] 2 All ER 1137 …. 17-37, 23-18, 23-19, 23-20, 27-12, 27-14 Minors v Battison (1876) 1 App Cas 428; [1874–80] All ER Rep 1069 …. 26-09 Mirrlees Charity, Re [1910] 1 Ch 163 …. 10-59 Mirvac Ltd, Re (1999) 32 ACSR 107 …. 3-10 Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296 …. 6-26 Mitchell, Re (1913) 30 WN (NSW) 137 …. 21-34 Mitchell, Re (1962) 1 W & W (E) 167 …. 19-60 Mitchell, Re [1963] NZLR 934 …. 10-24

Mitchell v Harr (1914) 19 CLR 33; 21 ALR 42 …. 19-38 — v — (1913) 16 SR (NSW) 250 …. 20-52, 20-53 Mitchell’s Trust, Re (1900) 17 WN (NSW) 164 …. 15-67 Mitford v Reynolds (1842) 1 Ph 185; 41 ER 602 …. 9-07 — v — (1848) 16 Sim 105; [1843–60] All ER Rep 118 …. 7-27, 11-02 Moate v Moate [1948] 2 All ER 486 …. 12-11, 12-12 Moffatt, Re (1910) 11 SR (NSW) 202; 28 WN (NSW) 70 …. 18-02 Moggridge v Thackwell (1792) 7 Ves 36; 30 ER 440 …. 10-61 — v — (1803) 7 Ves 36; 32 ER 15 …. 10-69 Moir, Re [1909] 2 Ch 280 …. 9-23 Molyneux v Fletcher [1898] 1 QB 648 …. 17-42 Moncrieff’s Settlement Trusts, Re [1962] 1 WLR 1344; [1962] 3 All ER 838 …. 17-07 Monds v Stackhouse (1948) 77 CLR 232; [1949] ALR 299 …. 10-53 Monk, Re [1927] 2 Ch 197; [1927] All ER Rep 157 …. 10-19, 10-23, 10-68 Montagu’s Settlement Trusts, Re [1987] Ch 264; [1992] 4 All ER 308 …. 13-37 Montford v Cadogan (1816) 19 Ves 635; 34 ER 651 …. 15-73, 21-23 Montgomerie’s Brewery Co Ltd v Blyth (1901) 27 VLR 175 …. 22-13 Monty Financial Services Ltd v Delmo [1996] 1 VR 49 …. 15-17 — v — [1996] 1 VR 65 …. 15-86 Moody v Cox [1917] 2 Ch 71; [1916–17] All ER Rep 548 …. 17-47 Moore, Re (1882) 21 Ch D 778 …. 15-03 Moore, Re (1886) 54 LT 231 …. 5-24 Moore, Re (1888) 39 Ch D 116; [1886–90] All ER Rep Ext 187 …. 9-10 Moore, Re [1907] VLR 639; 13 ALR 507 …. 19-57 Moore, Re [1956] VLR 132; [1956] ALR 483 …. 17-39, 19-42 Moore, Re (1991) 55 SASR 439 …. 10-19 Moore, Re Will of (1896) 17 LR (NSW) B 78 …. 17-39 Moore v Clench (1875) 1 Ch D 447 …. 16-14 — v Curtis (1862) 1 SCR Eq 1 …. 22-33

— v Knight [1891] 1 Ch 547 …. 22-26, 22-28, 22-30 — v McGlynn [1894] 1 IR 74 …. 15-86 — v McKelvey (1906) 23 WN (NSW) 100 …. 15-69 — v Whyte (No 2) (1922) 22 SR (NSW) 570; 39 WN (NSW) 194 …. 12-12, 12-21 Moore’s Will, Re (1901) 1 SR (NSW) Eq 148; 18 WN (NSW) 201 …. 15-58, 15-83, 25-04 Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414; 56 ALR 193 …. 13-30 Mordecai v Mordecai (1988) 12 NSWLR 58 …. 13-13, 17-39 Morgan, Re (1881) 18 Ch D 93 …. 13-14 Morgan, Re [1955] 2 All ER 632 …. 10-49 Morgan v Lariviere (1875) LR 7 HL 423 …. 2-13 — v Morgan (1851) 14 Beav 72; 51 ER 214 …. 19-03, 19-07, 19-10 — v Swansea Urban Sanitary Authority (1878) 9 Ch D 582 …. 3-15 — v Wright [1925] NZLR 689; [1926] AC 788; [1926] All ER Rep 201 …. 2233 Moriarty v Various Customers of BA Peters Plc [2010] 1 BCLC 142; [2011] WTLR 1661 …. 21-27 Morice v Bishop of Durham (1804) 9 Ves 399; 32 ER 656 …. 10-63, 11-06, 1107 — v — (1805) 10 Ves 522; 32 ER 947 …. 7-23, 10-04, 10-15, 10-33, 10-48, 1063, 11-06, 11-07, 12-05 Morish, Re [1939] SASR 305 …. 20-42, 20-43, 23-06 Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 96 FCR 217; 169 ALR 419 …. 17-02, 22-25, 23-03 Morley, Re [1895] 2 Ch 738; [1895–9] All ER Rep Ext 2027 …. 19-14 Morley v Hawke (1801) …. 22-33 — v Rennoldson (1843) 2 Hare 570; 67 ER 235 …. 9-12 Moroney, Re (1939) 39 SR (NSW) 249; 56 WN (NSW) 105 …. 10-33, 10-46 Morrin v Morrin (1886) 19 LR Ir 37 …. 5-02

Morris, Re (1885) 52 LT 462 …. 20-52 Morris v Livie (1842) 1 Y & C Ch Cas 380; 62 ER 934 …. 21-27 — v Morris [1982] 1 NSWLR 61 …. 2-29, 13-50 — v — (1993) 9 WAR 150 …. 17-16 Morrison, In the Will of (1933) 50 WN (NSW) 88 …. 17-39 Morris’s Will Trusts, Re [1960] 3 All ER 548 …. 19-60 Mort, Re (1904) 4 SR (NSW) 760; 21 WN (NSW) 259 …. 18-04 Mortimer v Picton (1864) 41 De G F & J 166; 46 ER 880 …. 18-35 Morton v A-G (1911) 11 SR (NSW) 473; 28 WN (NSW) 131 …. 10-71 — v Tewart (1842) 2 Y & C Ch Cas 67; 63 ER 29 …. 7-08 Morton and Hallett, Re (1880) 15 Ch D 143 …. 15-75 Moss, Re [1949] 1 All ER 495 …. 10-57 Moss v Cooper (1861) 1 John & H 352; 70 ER 782 …. 7-18, 7-30 — v Moss (1898) 19 LR (NSW) Eq 146 …. 22-08 Moss’ Trusts, Re (1888) 37 Ch D 513 …. 15-35, 15-70 Moss’s Trusts, Re [1945] 1 All ER 207 …. 9-16 Motor Auction Pty Ltd v John Bryce Wholesale Cars Pty Ltd (1997) 23 ACSR 647 …. 6-19, 12-10 Mountain, Re [1934] NZLR 399 …. 19-45 Mountain v Stayak [1922] NZLR 131 …. 7-07 Mower v Orr (1849) 7 Hare 473; 68 ER 195 …. 20-03 Moxon’s Will Trusts, Re [1958] 1 All ER 386; [1958] 1 WLR 165 …. 20-58 Moyle v Moyle (1831) 2 Russ & Myl 710; 39 ER 565 …. 18-01 MTM Funds Management Ltd v Cavalone Holdings Pty Ltd (2000) 35 ACSR 440 …. 3-10 Mucklow v Fuller (1821) Jac 198; 37 ER 824 …. 22-02 Mufitt, Re (1888) 39 Ch D 534 …. 19-58 Muir v Archdall (1918) 19 SR (NSW) 10; 36 WN (NSW) 4 …. 7-27, 10-38, 10-61, 10-63, 11-03 — v City of Glasgow Bank (1879) 4 App Cas 337 …. 21-02, 21-03

Muirhead, Re [1916] 2 Ch 181; [1916–17] All ER Rep 771 …. 19-31, 19-33 Mulcahy, Re [1969] VR 545 …. 10-71 Mulholland’s Will Trusts, Re [1949] 1 All ER 460 …. 17-39, 17-44 Mulkana Corp NL (in liq) (1983) 1 ACLC 1143 …. 2-07 Muller, Re [1953] NZLR 879 …. 14-02 Mulligan (decd), Re [1998] 1 NZLR 481 …. 17-11, 17-18, 18-18, 21-19, 22-05, 22-12 Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Ltd [1983] Ch 258; [1983] 2 All ER 563 …. 2-03, 13-27 Mulvenna v Admiralty Commissioners [1926] SC 842 …. 24-05 Mundy, Re [1938] VLR 119; [1938] ALR 277 …. 17-40 Munro’s Settlement Trusts, Re [1963] 1 All ER 209; [1963] 1 WLR 145 …. 1707 Munton, Re [1927] 1 Ch 262 …. 15-84 Murad v Al-Saraj [2005] WTLR 1573 …. 13-34 Murakami v Wiryadi (2010) 268 ALR 377 …. 28-22 Murdoch v Attorney-General (1992) 1 Tas R 117 …. 10-57 Murdock v Aherne (1878) 4 VLR (E) 244 …. 12-12 Murless v Franklin (1818) 1 Swan 13; 36 ER 278 …. 12-12 Murphy v Murphy [1998] 3 All ER 1; [1999] 1 WLR 282 …. 17-16 Murray v Glasse (1854) 23 LJ Ch 126 …. 18-34 Murray v Thomas [1937] 4 All ER 545 …. 10-58 Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429 …. 2-29, 12-10, 12-14, 12-19, 13-01, 13-02, 13-11, 13-32, 13-50, 13-51, 13-52 Musgrave, Re [1916] 2 Ch 417 …. 17-37 Mussett v Bingle [1876] WN 170 …. 11-03 Mussoorie Bank v Raynor (1882) 7 App Cas 321 …. 5-07 Myers, Re [1947] NZLR 828 …. 9-16 Mylne, Re [1941] Ch 204; [1941] 1 All ER 405 …. 10-39

N

Nairn, Re [1935] NZLR 134 …. 19-45 Nant-y-Glo and Blaina Ironworks Co Ltd v Grave (1878) 12 Ch D 738 …. 1327 Napier v Public Trustee (WA) (1980) 32 ALR 153; 55 ALJR 1 …. 12-10, 12-16 Nash, Re (1881) 16 Ch D 503 …. 15-53, 15-58 Nash v Smith (1810) 17 Ves 29; 34 ER 12 …. 12-04 Nathan, Re [1938] VLR 72; [1938] ALR 145 …. 20-61 National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; [1947] 2 All ER 217 …. 10-04, 10-10, 10-12, 10-13, 10-16, 10-57 National Australia Bank Ltd v Maher [1995] 1 VR 318 …. 12-14, 13-52 National Bank of New Zealand Ltd v Development Finance Corp of NZ [1990] 3 NZLR 257 …. 22-07 National Commercial Bank v Wimbourne (1978) 5 BPR 11,958 …. 28-22 National Crime Agency v Robb [2015] Ch 520 …. 27-07 National Grid Co plc v Mayes [2001] 2 All ER 417; [2001] 1 WLR 864 …. 8-02, 29-53, 29-54, 29-57 National Provincial Bank Ltd v Hyam [1942] 2 All ER 224 …. 20-48 National Trustees Co of Australasia Ltd v General Finance of Australasia Ltd [1905] AC 373 …. 16-12, 17-04, 22-02, 22-12, 22-14, 22-17 National Trustees Executors & Agency Co of Australasia Ltd v A-G (Vic) [1973] VR 610 …. 17-06 — v — [1978] VR 374 …. 10-67 — v Barnes (1941) 64 CLR 268; [1941] ALR 58 …. 15-43, 21-09 — v Dwyer (1940) 63 CLR 1; [1940] ALR 86 …. 16-06, 20-48 — v Federal Commissioner of Taxation (1923) 33 CLR 491 …. 16-06 — v Peile [1964] VR 325 …. 21-20 Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 …. 13-34, 13-43 Naylor v Arnitt (1830) 1 Russ & Myl 501; 39 ER 193 …. 20-20 Neazor v Hoyle (1962) 32 DLR (2d) 131 …. 12-20 Neill v Public Trustee [1977] 1 NSWLR 290; [1978] 2 NSWLR 65 …. 20-06 Nelan v Downes (1917) 23 CLR 546; 23 ALR 354 …. 10-10, 10-33, 10-40

Nelson v Larholt [1948] KB 339; [1947] 2 All ER 751 …. 23-18 — v Nelson (1994) 33 NSWLR 740 …. 12-12 — v Nelson (1995) 184 CLR 538; 132 ALR 133 …. 3-07, 9-02, 9-03, 9-05, 908, 12-10, 12-12, 12-15 Nemesis Australia Pty Ltd v Federal Commissioner of Taxation (2005) 61 ATR 119 …. 9-29 Neo v Neo (1875) LR 6 CP 381 …. 5-29 Nesbitt v Tredennick (1808) 1 B & B 29 …. 13-12 Nestlé v National Westminster Bank plc (29 June 1988, Hoffmann J, unreported) …. 17-11, 17-18 — v — [1994] 1 All ER 118; [1993] 1 WLR 1260 …. 16-14, 17-01, 17-11, 1718, 18-36, 22-05 Neville v Matthewman [1894] 3 Ch 345 …. 23-03 Neville Estates Ltd v Madden [1962] Ch 832; [1961] 3 All ER 769 …. 9-32, 1034, 10-44, 11-04 New, Re [1901] 2 Ch 534; [1900–3] All ER Rep 763 …. 17-05, 20-43 New v Bonaker (1867) 36 LJ Ch 846; (1867) LR 4 Eq 655 …. 10-59, 10-86 — v Jones (1833) 1 Mac & G 668 …. 17-39 — v Jones (1833) 47 ER 1562; 1 H & Tw 632 …. 17-39, 17-40 New Brunswick and Canada Railway Co v Muggeridge (1860) 1 Dr & Sm 362; 62 ER 418 …. 13-28 New South Wales v Commonwealth (No 3) (1932) 46 CLR 246 …. 5-20 New South Wales Nursing Service & Welfare Assoc for Christian Scientists v Willoughby Municipal Council (1968) 88 WN (Pt 1) (NSW) 75; [1968] 2 NSWR 791 …. 10-22 New Zealand and Australian Land Co v Watson (1881) 7 QBD 374 …. 27-06 New Zealand Forest Products v Pongakawa Sawmill Ltd (1991) 5 NZCLC 67,085 …. 2-51 New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154; [1974] 1 All ER 1015 …. 2-20 New Zealand Society of Accountants v Commissioner of Inland Revenue [1986] 1 NZLR 147 …. 10-58

Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273 …. 12-20 Newen, Re [1894] 2 Ch 297 …. 15-12 Newey (dec’d), Re [1994] 2 NZLR 590 …. 13-42 Newlon Housing Trust v Alsulaimen [1999] 1 AC 313; [1998] 4 All ER 1 …. 624 News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; 139 ALR 193 …. 13-39 Newsome v Flowers (1861) 30 Beav 461; 54 ER 968 …. 17-03 New South Wales v Commonwealth Bank of Australia (2001) 217 ALR 691 …. 27-04 Newton, Re (1936) 53 WN (NSW) 117 …. 25-11 Newton v Porter 69 NY 133 (1877) …. 27-07 Ngurli Ltd v McCann (1953) 90 CLR 425 …. 13-27 Niak v Macdonald [2001] 3 NZLR 334 …. 17-23 Nicholls v Louisville Investments Pty Ltd (1991) 10 ACSR 723 …. 15-86 — v Michael Wilson and Partners Ltd (2010) 243 FLR 177 …. 28-22 Nicholson, Re [1909] 2 Ch 111; [1908–10] All ER Rep 669 …. 19-06 Nicholson, Re [1974] 2 All ER 386; [1974] 1 WLR 476 …. 12-18 Nicholson v Field [1893] 2 Ch 511 …. 15-10, 15-13 — v Gander (1909) 8 CLR 648 …. 17-44 — v Permakraft (NZ) Ltd [1985] 1 NZLR 242; (1985) 3 ACLC 453 …. 2-03, 13-27 Nick Kritharas Holdings Ltd (in liq) v Gatsios Holdings Pty Ltd (2001) 38 ACSR 57 …. 8-02 Nickels, Re [1898] l Ch 630; [1895–9] All ER Rep 783 …. 20-70 Nicol v Chant (1909) 7 CLR 569 …. 26-12 Nightingale v Goulburn (1848) 2 Ph 594; [1843–60] All ER Rep 420; 41 ER 1072 …. 10-54 Nilant, Re (2004) 204 ALR 674 …. 17-07 Niles v Lake [1947] 2 DLR 248 …. 12-20 Nillant, Ex parte (2003) 28 WAR 81 …. 21-34

Ninety Five Pty Ltd (in liq) v Banque Nationale de Paris [1988] WAR 132 …. 13-36, 13-37, 22-08 Nissan v Attorney-General [1970] AC 179; [1969] 1 All ER 629 …. 14-12 Nissen v Grunden (1912) 14 CLR 297; 18 ALR 254 …. 15-84, 17-04, 17-39, 17-44, 17-49, 21-09, 22-12 Niyazi’s Will Trusts, Re [1978] 3 All ER 785; [1978] 1 WLR 910 …. 10-19, 1020, 10-59 Nixon, Re [1904] 1 Ch 638 …. 20-54 No 9 Bomore Road, Re [1906] 1 Ch 359 …. 15-51, 25-04 Noack v Noack [1959] VR 137; [1959] ALR 389 …. 12-12 Noble v Meymott (1851) 14 Beav 471; 51 ER 367 …. 15-05, 15-73 Nocton v Lord Ashburton [1914] AC 932; [1914] All ER Rep 45 …. 2-08, 2204, 22-26 Nolan v Collie (2003) 7 VR 287 …. 1-02, 13-07, 21-07 — v Nolan [2004] VSCA 109 …. 22-25 Norman, Re [1947] Ch 349; [1947] 1 All ER 400 …. 10-46 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9; [1964] ALR 131 …. 6-20, 24-04 Norrington, Re (1879) 13 Ch D 654 …. 16-06, 17-43 Norris, Re (1884) 27 Ch D 333 …. 15-09, 15-19, 15-61 North, Re [1909] 1 Ch 625 …. 19-21 North Devon and West Somerset Relief Fund Trusts, Re [1953] 2 All ER 1032; [1953] 1 WLR 1260 …. 10-71, 12-08 North Food Catering Pty Ltd, Re [2014] NSWSC 77 …. 21-14 North of England Zoological Society v Chester Rural District Council [1959] 3 All ER 116; [1959] 1 WLR 773 …. 10-31 Northage, Re (1891) 60 LJ Ch 488 …. 19-38 Northcote’s Will Trusts, Re [1949] 1 All ER 442 …. 17-39 Northern v Carnegie (1859) 4 Drew 587; 62 ER 225 …. 12-04 Northwest Capital Management v Westate Capital Ltd (2012) 264 FLR 424 …. 15-46, 15-57

Norton’s Will Trusts, Re [1948] 2 All ER 842 …. 10-37 Nottage, Re [1895] 2 Ch 649; [1895–9] All ER Rep 1203 …. 7-27, 10-02, 10-32, 10-49 Nourse, Re [1899] 1 Ch 63 …. 9-13 Novoship (UK) Ltd v Mikhaylyuk [2015] QB 499 …. 13-02, 13-34 NSW Masonic Youth Property Trust v Attorney-General for NSW (2010) 5 ASTLR 211 …. 22-22 Nugent v Nugent [1908] 1 Ch 546 …. 2-02 Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635; 116 ALR 26 …. 9-19 Num-Hoi v Num Pon Soon Inc (2001) 4 VR 527 …. 10-67

O Oakden’s Trusts, Re (1882) 26 Sol Jo 563 …. 15-19 Oakes’ Settlement Trusts, Re [1959] 2 All ER 58; [1959] 1 WLR 502 …. 17-07 Oatley v Oatley (1898) 19 LR (NSW) Eq 129; 15 WN (NSW) 75 …. 20-72 Oatway, Re [1903] 2 Ch 356 …. 27-09 Occleston v Fullalove (1874) 9 Ch D 147 …. 9-09 Oceanic Steam Navigation Co v Sutherberry (1880) 16 Ch D 236 …. 20-11 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; 27 ALR 129 …. 21-02, 21-04, 21-14, 21-16 Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 …. 13-11 Oesterlin v Sands (1969) 120 CLR 346; [1971] ALR 37 …. 10-08 Officer v Haines (1877) 3 VLR Eq 115 …. 15-86 Official Assignee v Jarvis [1923] NZLR 1009 …. 21-05 — v NZI Life Superannuation Nominees Ltd [1995] 1 NZLR 684 …. 29-49 — v Wilson [2008] 3 NZLR 45 …. 5-04 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; 96 ALR 327 …. 1-09, 2-40, 23-10 Official Trustee in Bankruptcy v Lopatinsky (2003) 129 FCR 234 …. 9-39 Ogden, Re [1933] Ch 678; [1933] All ER Rep 720 …. 9-30, 11-04

Ogilvie, Re (1910) 11 SR (NSW) 11; 27 WN (NSW) 165 …. 19-54, 21-10 O’Grady, Re [1916] 2 AC 231 …. 26-25 O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 …. 22-01, 22-05 O’Hanlon v Logue [1906] 1 IR 247 …. 10-41 O’Keeffe v Calthorpe (1739) 1 Atk 17; 26 ER 12 …. 15-86 — v Hayes Knight GTO Pty Ltd (2005) 218 ALR 604 …. 21-07 O’Kelly v Davies [2015] 1 WLR 2725 …. 9-08, 12-18, 13.54 Oldfield (No 2), Re [1949] 2 DLR 175 …. 10-36, 10-58, 10-59 Oldham, Re [1925] Ch 75 …. 13-42 Oldham v Oldham (1867) LR 3 Eq 404 …. 9-19 Oldham Borough Council v Attorney-General [1993] Ch 210; [1993] 2 All ER 432 …. 10-49 Olins v Walters [2009] Ch 212 …. 13-42 Oliver, Re (1890) 62 LT 533 …. 2-31 Oliver, Re [1908] 2 Ch 74; [1908–10] All ER Rep Ext 1377 …. 19-09 Oliver v Court (1820) 8 Price 127; 146 ER 1152 …. 13-25, 20-12 Oliveri v Oliveri (1993) 38 NSWLR 665 …. 12-12 Olsen v Olsen [1977] 1 NSWLR 189 …. 9-04 Olsson v Dyson (1969) 120 CLR 365; [1969] ALR 443 …. 6-13, 6-17, 6-20, 621 Ommanney v Butcher (1823) Turn & R 260; 37 ER 1098 …. 10-06 Omnium Electric Palaces Ltd v Baines [1914] 1 Ch 332 …. 2-02, 13-28 O’Neill v Coffill (1920) 20 SR (NSW) 264; 37 WN (NSW) 90 …. 20-33 One.Tel Networks Holdings Pty Ltd, Re (2001) 40 ACSR 83 …. 17-44 Ong v Lottwo Pty Ltd (in liq) (2013) 116 SASR 280; 304 ALR 651 …. 12-10 Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297; [1951] 1 All ER 31 …. 10-01, 10-06, 10-08, 10-09, 10-24, 10-30 Oppenheimer, Re [1907] 1 Ch 399; [1904–7] All ER Rep Ext 1172 …. 19-31, 19-33 Ord v Noel (1820) 5 Madd 438; 56 ER 962 …. 20-12, 20-14

Orde, Re (1883) 24 Ch D 271 …. 15-64 O’Reilly v Alderson (1849) 8 Hare 101; 68 ER 289 …. 15-18, 15-86 Organ v Sandwell [1921] VLR 622 …. 7-09 Oriental Inland Steam Co, Re (1874) 30 LT 317 …. 21-15 Oriental Inland Steam Co, Re (1874) LR 9 Ch App 557 …. 21-15 Orloff, In the Will of (2010) 24 VR 603 …. 2-40 O’Rourke v Darbishire [1920] AC 581; [1920] All ER Rep 1 …. 17-16 Orphan Working School and Alexandra Orphanage’s Contract, Re [1912] 2 Ch 167 …. 10-68 Orr v Ford (1989) 167 CLR 316; 84 ALR 146 …. 9-02, 22-33 — v Kaines (1750) 2 Ves Sen 194; 28 ER 125 …. 23-18 Osborn, Re (1989) 25 FCR 547; 91 ALR 135 …. 13-11 Osborne, Re (1863) 2 SCR (NSW) Eq 89 …. 21-34 Osborne v Rowlett (1880) 13 Ch D 774 …. 15-75 Osoba (dec’d), Re [1978] 2 All ER 1099; [1978] 1 WLR 791 …. 12-08 O’Sullivan v Management Agency and Music Ltd [1985] QB 428; [1985] 3 All ER 351 …. 22-07 Ottaway v Norman [1972] Ch 698; [1971] 3 All ER 1325 …. 7-19, 7-32, 13-06 Ottley v Gilby (1845) 8 Beav 602; 50 ER 237 …. 17-14 Oughtred v Inland Revenue Commissioners [1960] AC 206; [1959] 3 All ER 623 …. 7-05, 13-08 Outen’s Will Trusts, Re [1963] Ch 291; [1962] 3 All ER 478 …. 19-38 Overland (decd), Re [1960] QWN 25 …. 17-44 Overmyer Industrial Brokers Pty Ltd v Campbells Cash and Carry Pty Ltd [2003] Aust Contract Rep 90-181 …. 7-13 Ovey, Re (1885) 29 Ch D 560 …. 10-84 Ovey v Ovey [1900] 2 Ch 524 …. 18-02, 18-08 Owen, Re [1912] 1 Ch 519; [1911–13] All ER Rep 261 …. 19-10, 19-12, 19-13, 19-20 Owen v Williams (1773) Amb 734; 27 ER 474 …. 13-12, 13-15 Owens, Re (1882) 47 LT 61 …. 20-47

Owners of Habitat 74 Strata Plan 222 v Western Australian Planning Commission (2004) 137 LGERA 7 …. 26-07, 26-25 Owners of St John’s Court Rivervale Strata Plan 6012 v Western Australian Planning Commission [2004] WASC 196 …. 26-25 Oxley, Re [1914] 1 Ch 604 …. 21-12, 21-13 Oxley v Hiscock [2004] 3 All ER 703; [2005] Fam 211 …. 12-14, 13.54

P P & P & M Quality Smallgoods Pty Ltd v Leap Seng [2013] NSWCA 167 …. 21-02 P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515; 107 ALR 199 …. 940, 9-41, 9-42 Packe, Re [1918] 1 Ch 437 …. 10-86 Paget’s Settlement, Re [1965] 1 All ER 58; [1965] 1 WLR 1046 …. 17-07, 28-08 Pain, Re [1919] 1 Ch 38 …. 21-10 Paine v Countess of Warwick [1914] 2 KB 486 …. 19-41 — v Hall (1812) 18 Ves 475; 34 ER 397 …. 7-32 — v Meller (1801) 6 Ves 349; [1775–1802] All ER Rep 155 …. 13-07 Paine’s Trusts, Re (1885) 28 Ch D 725 …. 15-35, 15-70 Paine’s Trusts, Re (1885) 33 WR 564 …. 15-59 Page v Cox (1851) 10 Hare 163; 68 ER 882 …. 2-22 Pagels v MacDonald (1936) 54 CLR 519; [1936] ALR 224 …. 2-40, 20-03, 2004, 20-76 Paice v Archbishop of Canterbury (1807) 14 Ves 364; 33 ER 560 …. 10-68 Palairet v Carew (1863) 32 Beav 564; 55 ER 222 …. 15-86, 15-87, 21-10 Palatine Estate Charity, Re (1888) 39 Ch D 54 …. 10-38 Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1; [1937] ALR 432 …. 6-25 Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; 215 ALR 253 …. 3-20 Palk, Re (1892) 41 WR 28 …. 22-10 Pallant v Morgan [1953] Ch 43 …. 13-41, 22-25 Palmer, Re (1912) 28 TLR 301 …. 19-38

Palmer v Emerson [1911] 1 Ch 758 …. 18-26, 18-27, 22-15 — v McAllister (1991) 4 WAR 206 …. 17-06 — v Permanent Trustee Co (1915) 16 SR (NSW) 162 …. 9-19, 21-18 Pannell v Hurley (1845) 2 Coll 241; 63 ER 716 …. 27-17 Para Wirra Syndicate v Mather (1934) 51 CLR 582 …. 13-28 Paradise Motor Co Ltd, Re [1968] 2 All ER 625; [1968] 1 WLR 1125 …. 15-73 Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400 …. 3-08, 13-02, 13-11, 22-23, 22-25 Paramasivam v Flynn (1998) 90 FCR 489; 160 ALR 203 …. 28-06, 28-22 Pardoe, Re [1906] 2 Ch 184 …. 10-36, 10-45, 10-62 Park v Dawson [1965] NSWR 298 …. 17-30, 23-04 Parker, Re [1949] VLR 133; [1949] ALR 545 …. 10-71 Parker v Dowling (1916) 16 SR (NSW) 234; 33 WN (NSW) 75 …. 20-57, 2060 — v Higgins [2012] NSWSC 1516 …. 2-11 — v McKenna (1874) LR 10 Ch App 96; [1874–80] All ER Rep 443 …. 17-42 — v Moseley [1965] VR 580 …. 10-71 Parkers, Re (1887) 19 QBD 84 …. 22-11 Parker-Tweedale v Dunbar Bank [1991] Ch 12; [1990] 2 All ER 577 …. 2-05, 23-03 Parkes Management Ltd v Perpetual Trustees Co Ltd (1977) 3 ACLR 303 …. 16-10, 23-03 — v — [1977] ACLC 29,545 …. 16-06 Parkes-Linnegar v Watson [2011] NSWSC 37 …. 2-40 Parkin, Re [1892] 3 Ch 510 …. 2-24 Parnall v Parnall (1878) 9 Ch D 96 …. 5-24 Parry, Re [1947] Ch 23; [1946] 2 All ER 413 …. 19-10, 19-11, 19-12, 19-13 Parry and Hopkins, Re [1900] 1 Ch 160 …. 20-31 Parsons, Re [1940] Ch 973; [1940] 4 All ER 65 …. 15-07, 15-69 Parsons v The Queen (1999) 195 CLR 619; 160 ALR 531 …. 27-04 — v McBain (2001) 109 FCR 120; 192 ALR 772 …. 13-02, 13-11

— v Spooner (1846) 5 Hare 102; 67 ER 845 …. 21-02 Partington, Re (1887) 57 LT 654 …. 21-19 Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149; [1947] ALR 552 …. 16-06, 16-08, 20-47 — v Preddey (1903) 4 SR (NSW) 36; 21 WN (NSW) 11 …. 17-03 Pary v Juxon (1669) 3 Rep Ch 38; 22 ER 1108 …. 7-05 Pascoe v Turner [1979] 2 All ER 945; [1979] 1 WLR 431 …. 13-50 Pass v Mills (1886) 7 LR (NSW) Eq 34 …. 8-07 Passingham v Sherborn (1846) 9 Beav 424; 50 ER 407 …. 15-86, 17-44 Patel v Mirza [2015] Ch 271; [2015] All ER 326 …. 9-08 Pateman v Heyen (1993) 33 NSWLR 188 …. 17-19, 22-07, 22-13, 22-17, 22-22 Patience, Ex parte; Makinson v The Minister (1940) 40 SR (NSW) 96 …. 2-29 Patros v Patros (2007) 16 VR 182 …. 17-44 Patten, Re [1929] 2 Ch 276; [1929] All ER Rep 416 …. 10-32, 10-49 Patten and Edmonton Union Poor Guardians, Re (1883) 52 LJ Ch 787 …. 2004 Patterson, Re [1939] VLR 66 …. 9-19 Patterson, Re [1941] VLR 233; [1941] ALR 307 …. 20-58, 20-61, 20-62 Paul v Constance [1977] 1 All ER195; [1977] 1 WLR 527 …. 5-02 — v Paul (1882) 20 Ch D 742 …. 6-02, 9-35 Paul A Davies (Australia) Pty Ltd (in liq) v Davies [1983] 1 NSWLR 440 …. 17-42, 27-09 Paul Dainty Corp Pty Ltd v National Tennis Centre Trust (1990) 22 FCR 495; 94 ALR 225 …. 13-30 Pauling’s Settlement Trusts, Re [1961] 3 All ER 713; [1962] 1 WLR 86 …. 2122 Pauling’s Settlement Trusts (No 1), Re [1964] Ch 303; [1963] 3 All ER 1 …. 16-08, 16-09, 21-22, 22-13, 22-14, 22-17, 22-33 Pauling’s Settlement Trusts (No 2), Re [1963] Ch 576; [1963] 1 All ER 857 …. 18-16, 21-04 Paylings Will Trusts, Re [1969] 3 All ER 698; [1969] 1 WLR 1595 …. 10-21

Payne, Re [1943] 2 All ER 675 …. 19-03, 19-15 Payne v Evens (1874) LR 18 Eq 356 …. 17-13 Peachdart Ltd, Re [1984] Ch 131; [1983] 2 All ER 204 …. 2-47, 2-50, 2-51 Peacock v Colling (1885) 54 LJ Ch 743 …. 15-22 Peake’s Settled Estate, Re [1894] 3 Ch 520 …. 15-65 Pearce, Re (1887) 56 LT 228 …. 21-10 Pearce, Re [1936] SASR 137 …. 20-12 Pearce v Bulteel [1916] 2 Ch 544 …. 9-44 — v Pearce (1856) 22 Beav 248; 52 ER 1103 …. 13-03, 15-20, 15-84 — v Pearce [1977] 1 NSWLR 170 …. 9-04 — v Wright (1926) 39 CLR 16 …. 2-33 Pearse, Re (1917) 34 WN (NSW) 97 …. 15-15, 15-70, 15-83 Pearse’s Settlement, Re [1909] 1 Ch 304 …. 28-19 Pearson, Re (1877) 3 Ch D 807 …. 9-20 Pearson v Commissioner of Taxation (2002) 116 FCR 357 …. 23-03 — v Pearson [1961] VR 693 …. 12-13 Peatfield v Benn (1853) 17 Beav 522; 51 ER 1137 …. 15-86 Peczenik’s Settlement, Re [1964] 2 All ER 339; [1964] 1 WLR 720 …. 18-04 Pedulla v Nasti (1990) 20 NSWLR 720 …. 10-36, 11-03 Peel, Re [1936] Ch 161 …. 20-58, 25-11 Peel’s Settled Estates, Re [1910] 1 Ch 389; [1908–10] All ER Rep 168 …. 19-31, 19-32 Peffer v Rigg [1978] 3 All ER 745; [1977] 1 WLR 285 …. 13-04 Peggs v Lamb [1994] Ch 172; [1994] 2 All ER 15 …. 10-53, 10-58 Pehrsson’s Trustee in Bankruptcy v von Greyerz (1999–2000) 2 ITELR 230 …. 6-17 Peldan v Anderson (2006) 227 CLR 471; 229 ALR 432 …. 12-02 Pelham v Pelham [1955] SASR 53 …. 16-14 Pember v Knighton (1639) Duke 381 …. 10-39 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676;

18 ALR 124 …. 2-05 Pengelly v Pengelly [2008] Ch 375 …. 8-07 Peninsular and Oriental Steam Navigation Co v Johnson (1938) 60 CLR 189 …. 2-08, 13-27 Pennell, Re [1945] VLR 302; [1946] ALR 75 …. 17-16 Pennell v Deffell (1853) 4 De GM & G 372; 43 ER 551 …. 21-10 Pennington v Buckley (1848) 6 Hare 451; 67 ER 1242 …. 10-39 — v Waine [2002] 1 WLR 2075; [2002] 4 All ER 215 …. 6-19 Penola & District Ratepayers’ & Residents’ Assn Inc v Wattle Range Council [2011] SASCFC 62 …. 8-02 Penton, Re [1924] 2 Ch 192; [1924] All ER Rep 598 …. 23-02 People v North River Sugar Refining Co 24 NE 834 (1890) …. 3-21 Peoples Prudential Assurance Co Ltd v Australian Federal Life and General Assurance Co Ltd (1935) 35 SR (NSW) 253; 52 WN (NSW) 72 …. 17-43 Peppercorn v Wayman (1852) 5 De G & Sm 230; 64 ER 1094 …. 15-73 Percival v Wright [1902] 2 Ch 421 …. 2-03, 13-27 Perkins, Ex parte (1891) 8 WN (NSW) 43 …. 15-69 Perkins, Re [1907] 2 Ch 596; [1904–7] All ER Rep 273 …. 19-53, 19-58 Perkins v Permanent Trustee Company Ltd (1923) 23 SR (NSW) 358; 40 WN (NSW) 62 …. 18-09, 19-03, 19-24 Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 …. 17-18 Permanent Trustee Australia Ltd v Perpetual Trustee Co Ltd (1994) 15 ACSR 722 …. 17-02 Permanent Trustee Co v Scales (1930) 30 SR (NSW) 391 …. 7-03 Permanent Trustee Co (Canberra) Ltd v Permanent Trustee Co of New South Wales Ltd (1969) 14 FLR 246 …. 28-07 Permanent Trustee Co Ltd v Angus (1917) 17 SR (NSW) 364; 34 WN (NSW) 141 …. 20-12, 20-16 — v Fels (1919) 19 SR (NSW) 87 …. 21-10 — v Presbyterian Church (NSW) Property Trust (1946) 64 WN (NSW) 8 …. 10-30

— v Cormack (1920) 21 SR (NSW) 1 …. 9-24 — v University of Sydney [1983] 1 NSWLR 578 …. 9-24 Permanent Trustee Co of NSW Ltd v Fraser (1922) 22 SR (NSW) 606 …. 1961 — v Macphillamy (1938) 38 SR (NSW) 541; 55 WN (NSW) 212 …. 19-60, 19-61 — v Pym (1938) 39 SR (NSW) 1; 56 WN (NSW) 1 …. 20-60 Perpetual Executors and Trustees Association v Simpson (1906) 27 ALT 179 …. 17-37 Perpetual Executors and Trustees Association of Australia Ltd v Wright (1917) 23 CLR 185; 25 ALR 177 …. 7-08 — v Roberts [1970] VR 732 …. 28-08 Perpetual Trustee Co v Watson (No 1) (1927) 28 SR (NSW) 39 …. 23-07 — v — (No 2) (1927) 28 SR (NSW) 43 …. 22-02, 22-09, 22-16 Perpetual Trustee Co Ltd v A-G (1937) 54 WN (NSW) 95 …. 14-05 — v Adams (1923) 24 SR (NSW) 87; 40 WN (NSW) 158b …. 20-36 — v Allen (1921) 38 WN (NSW) 220 …. 19-57 — v Beaton (1903) 20 WN (NSW) 188 …. 19-55, 20-33 — v Champion (1921) 21 SR (NSW) 501; 38 WN (NSW) 162 …. 19-36, 1940 — v — (1923) 23 SR (NSW) 544; 40 WN (NSW) 119 …. 19-39, 19-40 — v Cheyne (2011) 42 WAR 209 …. 18-08, 20-62 — v Cohen (1916) 16 SR (NSW) 242; 33 WN (NSW) 77 …. 19-39 — v Cowan (No 2) (1900) 21 LR (NSW) Eq 278 …. 17-42 — v Dickinson (1936) 53 WN (NSW) 187 …. 14-05 — v Ferguson (1951) 51 SR (NSW) 256; 68 WN (NSW) 236 …. 10-23 — v Godsall [1979] 2 NSWLR 785 …. 2-35, 17-06 — v Griffin (1924) 41 WN (NSW) 150 …. 19-11 — v Groth (1985) 2 NSWLR 278 …. 10-31 — v Holdsworth (1953) [1966] 2 NSWR 755 …. 9-24 — v Holt (1894) 15 LR (NSW) Eq 18 …. 19-24

— v — (1895) 11 WN (NSW) 141 …. 19-54 — v Lassetter (1934) 34 SR (NSW) 172; 51 WN (NSW) 49 …. 19-59 — v Molloy (1923) 23 SR (NSW) 395; 40 WN (NSW) 76 …. 18-02 — v Noyes (1925) 25 SR (NSW) 226; 42 WN (NSW) 56 …. 17-11, 20-52 — v Shelley (1921) 21 SR (NSW) 426; 38 WN (NSW) 132 …. 10-04, 20-57 — v Smith (1906) 6 SR (NSW) 542; 23 WN (NSW) 112 …. 20-58 — v — (1938) 39 SR (NSW) 19 …. 9-24 — v St Luke’s Hospital (1939) 39 SR (NSW) 408; 56 WN (NSW) 181 …. 1055 — v Tasker (1913) 13 SR (NSW) 322; 30 WN (NSW) 82 …. 15-03 — v Thomas (1903) 3 SR (NSW) 277 …. 15-03 — v Willers (1955) 72 WN (NSW) 244 …. 6-14 — v Wittscheibe (1940) 40 SR (NSW) 501; 57 WN (NSW) 166 …. 10-40 Perpetual Trustees Queensland Ltd, Re [2000] 2 Qd R 647 …. 10-31, 10-50 Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387 …. 17-07 Perpetual Trustees WA Ltd v A-G (WA) (1992) 8 WAR 441 …. 17-06 Perrin v Lyon (1807) 9 East 170; 103 ER 538 …. 9-13 Perrins v Bellamy [1899] 1 Ch 797 …. 16-12, 16-20, 17-04 Perry v Commissioner of Stamps (1913) 32 NZLR 1194 …. 7-08 Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association (1999) 161 ALR 105 …. 2-14, 2-15 Peterborough Royal Foxhound Show Society v Inland Revenue Commissioners [1936] 1 All ER 813; [1936] 2 KB 497 …. 10-32, 10-49, 11-05 Petersen, Re [1920] St R Qd 42 …. 21-34 Petit, Re [1988] 2 NZLR 513 …. 10-19 Pettifor’s Will Trusts, Re [1966] Ch 257; [1966] 1 All ER 913 …. 17-07 Pettingall v Pettingall (1842) 11 LJ Ch 176 …. 10-57, 11-02 Pettitt v Pettitt [1970] AC 777; [1969] 2 All ER 385 …. 12-12, 12-13, 12-16, 12-17, 12-18, 13-44 Petty v Petty (1853) 22 LJ Ch 1065 …. 7-05 Peyton v Robinson (1823) 1 LJ Ch (OS) 191 …. 17-42

Phair, In the Will of (1933) 50 WN (NSW) 207 …. 17-40 Phelps, Ex parte (1742) 9 Mod Rep 357; 88 ER 505 …. 15-86 Philips New Zealand Ltd, Re [1997] 1 NZLR 93 …. 17-06 Phillimore, Re [1903] 1 Ch 942 …. 19-60 Phillips, Re [1931] WN 271 …. 14-05 Phillips v Beal (No 1) (1862) 32 Beav 25; 55 ER 10 …. 19-41 — v Mullings (1871) LR 7 Ch App 244 …. 9-35 — v Phillips (1853) Kay 40; 69 ER 18 …. 20-58 — v — (1885) 29 Ch D 673 …. 13-19 — v — [1993] 3 NZLR 159 …. 13-50 — v Roberts [1975] 2 NSWLR 207 …. 10-33, 10-73 Philpott v St George’s Hospital (1859) 27 Beav 107; 54 ER 45 …. 10-69 Phipps v Boardman [1964] 2 All ER 187; [1964] 1 WLR 993 …. 13-11, 13-31, 13-43 — v Lovegrove (1873) LR 16 Eq 80 …. 15-84, 17-17 Piatek v Piatek (2010) 245 FLR 137 …. 28-22 Pickard v Anderson (1872) LR 13 Eq 608 …. 18-04, 18-05 Pickup v Atkinson (1846) 4 Hare 624; 67 ER 797 …. 19-04 Piddocke v Burt [1894] 3 Ch 343 …. 13-22 Pieper (decd), Re [1951] VLR 42; [1951] ALR 64 …. 10-23, 10-59, 10-69 Piercy, Re [1898] 1 Ch 565 …. 10-61, 10-62 Pilkington v IRC [1964] AC 612; [1962] 3 All ER 622 …. 16-08, 20-58, 20-59, 20-62, 23-16, 25-11 Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; 180 ALR 249 …. 22-04 Pinion, Re [1965] Ch 85; [1964] 1 All ER 890 …. 10-26 Piper, Re [1946] 2 All ER 503 …. 9-15 Pirbright v Salwey [1896] WN 86 …. 7-27, 11-03, 11-08 Pitcairn, Re [1896] 2 Ch 199; [1895–9] All ER Rep 1244 …. 19-06 Pitt, Re (1928) 44 TLR 371 …. 15-03 Pitt v Holt [2012] Ch 132; [2011] 2 All ER 450 …. 16-01

— v Holt [2013] 2 AC 108; [2013] 3 All ER 429 …. 16-01, 16-12, 17-04 Pitt (decd), Re Estate of (2002) 84 SASR 109 …. 10-74 Pittari (decd), Re [1967] VR 800 …. 17-07 Piwinski v Corporate Trustee of the Diocese of Armidale [1977] 1 NSWLR 266 …. 22-25 Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266 …. 12-13 Playfair v Cooper (1853) 17 Beav 187; 51 ER 1004 …. 19-53 Pleasants, Re (1923) 39 TLR 675 …. 10-03, 10-32, 10-58 Plimsoll v Drake (1995) 4 Tas R 334 …. 17-05 Plomley v Richardson & Wrench Ltd [1894] AC 632 …. 25-04 — v Shepherd (1896) 17 LR (NSW) Eq 215; 13 WN (NSW) 94 …. 17-39 Plowright v Lambert (1885) 52 LT 646 …. 17-47 Plumptre’s Marriage Settlement, Re [1910] 1 Ch 609 …. 6-26 Pocock v A-G (1876) 3 Ch D 342 …. 10-61 — v Reddington (1801) 5 Ves 794; 31 ER 862 …. 22-06 Polanski v Conde-Nast Publications Ltd [2005] 1 All ER 945; [2005] 1 WLR 637 …. 9-02 Pollexfen v Moore (1745) 3 Atk 272; 26 ER 959 …. 15-73 Polley v Seymour (1837) 2 Y & C Ex 708; 160 ER 578 …. 26-09 Polly Peck International plc v Nadir (No 2) [1992] 4 All ER 769 …. 13-34, 1336 Polly Peck International plc (No 2), Re [1998] 3 All ER 812 …. 13-10, 13-11 Ponder, Re [1921] 2 Ch 59; [1921] All ER Rep 164 …. 2-40, 15-03, 15-55 Poole Bathurst’s Estate, Re (1854) 2 Sm & G 169; 65 ER 351 …. 15-22 Poole’s Settlement Trusts, Re [1959] 2 All ER 340; [1959] 1 WLR 651 …. 17-07 Pooley, Re (1889) 40 Ch D 1; [1886–90] All ER Rep 157 …. 17-40 Pooley v Quilter (1858) 2 De G & J 327; 44 ER 1016 …. 17-48 — v Royal Alexandra Hospital (1932) 32 SR (NSW) 459; 49 WN (NSW) 156 …. 7-27, 10-38, 10-61, 11-03 Pope, Re [1901] 1 Ch 64 …. 19-15 Pope v DRP Nominees Pty Ltd (1999) 74 SASR 78 …. 15-19, 15-46, 23-06

Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (The New York Star) (1980) 144 CLR 300; [1980] 3 All ER 257 …. 2-20 Port of Brisbane Corporation v ANZ Securities Ltd [2003] 2 Qd R 661 …. 1-06 Porteous v Rhinehart (1998) 19 WAR 495 …. 15-86 Porter, Re [1892] 3 Ch 481 …. 9-23 Porter, Re [1925] Ch 746; [1925] All ER Rep 179 …. 9-07 Porter v Baddeley (1877) 5 Ch D 542 …. 19-03 — v Moore [1904] 2 Ch 367 …. 17-17 — v Porter (1930) 31 SR (NSW) 115; 48 WN (NSW) 17 …. 19-47, 19-48, 1949, 19-50 — v Watts (1852) 21 LJ Ch 211 …. 15-83 Postlethwaite, Re (1886) 60 LT 514 …. 17-43 Potter, Re [1970] VR 352 …. 2-32 Powell, Re (1907) 7 SR (NSW) 874; 24 WN (NSW) 217 …. 17-37, 17-38 Powell, Re [1921] 1 Ch 178 …. 19-41 Powell v Powell (1932) 32 SR (NSW) 407 …. 2-07 — v Powell and Thomas v Evan Jones and Co [1905] 1 KB 11 …. 17-42, 17-46 Powell-Cotton’s Re-settlement, Re [1956] 1 All ER 60; [1956] 1 WLR 23 …. 17-06 Powell’s Trusts, Re (1902) 19 WN (NSW) 199 …. 15-72 Power, Re [1947] Ch 572; [1947] 2 All ER 282 …. 18-04 Power v Banks [1901] 2 Ch 487 …. 20-04 Power’s Settlement Trusts, Re [1951] Ch 1074; [1951] 2 All ER 513 …. 15-12 Powerscourt v Powerscourt (1824) 1 Mol 616 …. 10-33 Powlet v Herbert (1791) 1 Ves Jun 297; 30 ER 352 …. 21-20 Powys v Blagrave (1854) Kay 495; 69 ER 210 …. 20-30, 20-43 Poyser, Re [1908] 1 Ch 828; [1908–10] All ER Rep Ext 1381 …. 19-16, 19-17, 19-19 Poyser, Re [1910] 2 Ch 444; [1908–10] All ER Rep 374 …. 19-53, 19-58 Prasad v Parai [2013] 1 NZLR 444 …. 17-39

Pratt’s Will Trusts, Re [1943] Ch 326; [1943] 2 All ER 375 …. 18-08, 20-03 Prentice v Cummins (No 5) (2002) 124 FCR 67 …. 9-40 — v — (No 6) (2003) 134 FCR 449; 203 ALR 449 …. 12-13 Presbyterian Church (NSW) Property Trust v Ryde Municipal Council [1978] 2 NSWLR 387 …. 10-63 Price, Re (1887) 34 Ch D 603 …. 20-58 Price, Re (1902) 19 WN (NSW) 15 …. 25-04 Price, Re (1935) 35 SR (NSW) 444; 52 WN (NSW) 139 …. 10-65, 21-10, 2136 Price, Re [1943] Ch 422; [1943] 2 All ER 505 …. 10-33, 11-04, 11-08 Price v Loaden (1856) 21 Beav 508; 52 ER 955 …. 21-10, 21-11 Primary Producers Finance v Dixon (1938) 40 WALR 34 …. 21-03 Primeau v Granfield 184 F 480 (1911) …. 27-09 Prince v Hine (No 2) (1859) 27 Beav 345; 54 ER 135 …. 21-17 Princess Ann of Hesse v Field [1963] NSWR 998; (1962) 80 WN (NSW) 66 …. 15-86, 17-39, 19-01, 19-58 Printers’ and Transferers’ Society, Re [1899] 2 Ch 184 …. 12-08 Prison Charities, Re (1873) LR 16 Eq 129 …. 10-72 Prodger v Langham (1662) 1 Keb 486; 83 ER 1068 …. 9-46 Producer’s Defence Fund, Re [1954] VLR 246; [1954] ALR 541 …. 11-08, 1207, 12-08 Protheroe v Protheroe [1968] 1 All ER 1111; [1968] 1 WLR 519 …. 13-20 Prudential Staff Pensions Ltd v The Prudential Assurance Company Ltd [2011] Pens LR 239; [2011] EWHC 960 …. 8-03 Prudential Staff Union v Hall [1947] KB 685 …. 2-24 Pryce, Re [1917] 1 Ch 234; [1916–17] All ER Rep 573 …. 6-11, 6-12, 6-13, 6-14 PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241 …. 7-05 Public Curator of Queensland v The Union Trustee Co of Australia Ltd (1922) 31 CLR 66; 28 ALR 438 …. 1-06, 5-19 Public Trustee v Attorney-General for New South Wales (1997) 42 NSWLR 600 …. 10-51, 10-66, 10-70

— v Cerebral Palsy Association of Western Australia Ltd (2004) 28 WAR 496 …. 10-84 — v Clayton (1985) 38 SASR 1 …. 10-57 — v Commissioner of Stamp Duties [1925] NZLR 237 …. 12-12 — v Federal Commissioner of Taxation (1934) 51 CLR 75 …. 10-63 — v Gower [1924] NZLR 1233 …. 9-16 — v Larkman (1999) 21 WAR 295 …. 20-57 — v Nolan (1943) 43 SR (NSW) 169; 60 WN (NSW) 84 …. 7-27, 10-53, 1103, 11-06 — v Optus Capital Ltd (2013) 96 ACSR 493 …. 3-18 — v Smith (1944) 44 SR (NSW) 348; 61 WN (NSW) 206 …. 10-40, 10-63 — v Steven [1921] NZLR 441 …. 12-17 — v Young (1980) 23 SASR 239 …. 10-30 — v — (1980) 24 SASR 407 …. 10-08 Pugh, Re [1887] WN 143 …. 20-53 Pugh v Stringfield (1858) 4 CB (NS) 364; 140 ER 1125 …. 2-24 Pugh’s Will Trusts, Re [1967] 3 All ER 337; [1967] 1 WLR 1262 …. 5-10, 5-29, 12-03 Pullan v Koe [1913] 1 Ch 9; [1911–13] All ER Rep 334 …. 6-26 Pulsford v Devenish [1903] 2 Ch 625 …. 13-27 Pulteney v Darlington (1796) 7 Bro PC 530; 3 ER 344 …. 26-21 Puma Australia Pty Ltd v Sportsmen’s Australia Ltd (No 2) [1994] 2 Qd R 159 …. 17-20 Pumfrey, Re (1882) 22 Ch D 255 …. 21-02, 21-04 Purcell, Re (1895) 21 VLR 249; 1 ALR 57 …. 10-40 Purkiss, Re [1999] 3 VR 223 …. 25-05 Purton, Re (1935) 53 WN (NSW) 148 …. 17-31, 17-40 Purves v Smith [1944] VLR 186 …. 2-22 Pyle v Pyle [1895] 1 Ch 724 …. 26-14 Pyne, Re [1903] 1 Ch 83 …. 10-67

Q Q v Q [2009] 1 FLR 935 …. 9-08 Queensland Mines Ltd v Hudson [1976] CLC 40–258 …. 22-25 Queensland Oil Shale Mining Industry (Superannuation) Ltd, Re [1999] 2 Qd R 524 …. 17-39 Queensland Trustees Ltd v Halse [1949] St R Qd 270 …. 10-46 Quesnel, Re [1959] SASR 106 …. 10-84 Quicke’s Trusts, Re [1908] 1 Ch 887 …. 20-36 Quigley, Re (1906) 6 SR (NSW) 360; 23 WN (NSW) 104 …. 19-24 Quigley, Re (1908) 8 SR (NSW) 124 …. 20-06, 20-20 Quigley’s Will, Re (1895) 16 LR (NSW) Eq 45; 11 WN (NSW) 161 …. 20-43 Quinney, Re (1905) 25 NZLR 593 …. 20-43 Quinton v Proctor [1998] 4 VR 469 …. 15-85 Quistclose Investments Ltd v Rolls Razor Ltd (in liq) [1968] Ch 540; [1968] 1 All ER 613 …. 2-14

R R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; 29 ALR 289 …. 13-07 — v District Auditor; Ex parte West Yorkshire Metropolitan County Council [1986] RVR 24 …. 5-29, 11-04 — v Holl (1881) 7 QBD 575 …. 16-08 — v Hopkins (1915) 20 CLR 464 …. 13-25 — v Mayor of Blenheim (1908) 28 NZLR 249 …. 14-12 — v Special Commissioners of Income Tax; Ex parte University College of North Wales (1909) 78 LJ (KB) 576 …. 10-26 R (Factortame) v Transport Secretary (No 8) [2003] QB 381; [2002] 4 All ER 97 …. 24-05 R Griggs Group Ltd v Evans [2005] Ch 153 …. 28-21 R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 …. 10-04, 10-10, 10-14, 10-30

R W G Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 …. 21-04, 21-06, 21-07 Rabaiotti’s Settlements, Re [2000] WTLR 953 …. 17-16 Raby v Ridehalgh (1855) 7 De GM & G 104; 44 ER 41 …. 17-04, 21-23 Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 …. 10-33, 11-04 Radnor’s (Earl) Will Trusts, Re (1890) 45 Ch D 402 …. 16-06 Rae v Meek (1889) 14 App Cas 558 …. 17-18, 22-02 Raffaele v Raffaele [1962] WAR 29 …. 6-21 Raftland Pty Ltd v Commissioner of Taxation (2006) 227 ALR 598 …. 1-01, 15-02 Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation (2008) 238 CLR 516; 246 ALR 406 …. 5-04, 19-45 Rain v Fullarton (1900) 21 LR (NSW) Eq 311 …. 9-36 Raine, Re [1929] 1 Ch 716 …. 20-60 Raine, Re [1956] Ch 417; [1956] 1 All ER 355 …. 10-71 Rakestraw v Brewer (1728) 2 P Wms 511; 24 ER 839 …. 13-18 Ramage v Waclaw (1988) 12 NSWLR 84 …. 23-03 Ramsay v Gilchrist [1892] AC 412 …. 9-46 — v McElroy [2004] 1 Qd R 667 …. 21-14 — v National Australia Bank Ltd [1989] VR 59 …. 21-14 — v Trustee Executors and Agency Co Ltd (1948) 77 CLR 321; [1949] ALR 105 …. 9-14 Ramsden v Dyson (1866) LR 1 HL 129 …. 13-11 Randall v Errington (1805) 10 Ves 423; 32 ER 909 …. 17-43 — v Lubrano (1975) 72 NSWLR 621 …. 17-16 — v Russell (1817) 3 Mer 190; 36 ER 73 …. 13-19 Rank’s Settlement Trusts, Re [1979] 1 WLR 1242 …. 3-20 Raphael, Re (1903) 3 SR (NSW) 196; 20 WN (NSW) 84 …. 20-06 Raphael v Boehm (1805) 11 Ves 92; 32 ER 1023 …. 22-08 — v — (1807) 13 Ves 407; 33 ER 347 …. 22-08 Rasch Nominees Pty Ltd v Bartholomaeus (2012) 114 SASR 448 …. 13-39

Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407; 90 WN (Pt 2) (NSW) 154 …. 13-10, 13-11 Raulfs v Fishy Bite Pty Ltd [2008] NSWSC 1195 …. 27-13 — v — [2012] NSWCA 135 …. 2-14 Rawcliffe v Johnstone [1921] NZLR 470 …. 20-11, 22-05 Rawe v Chichester (1773) Amb 715; 27 ER 463 …. 13-43 Rawsthorne v Rowley [1909] 1 Ch 409n …. 18-36 Rawstron (Executrices of the Estate of Lucian Freud) v Freud [2014] WTLR 1453 …. 7-15, 7-23 Raybould, Re [1900] 1 Ch 199 …. 21-04, 21-12 Rayner, Re (1920) 89 LJ Ch 369 …. 10-30 Rayner v Preston (1881) 18 Ch D 1 …. 13-07 Read v Chown (1929) 46 WN (NSW) 154 …. 21-10, 21-36 — v Stedman (1859) 26 Beav 495; 53 ER 989 …. 12-04 Reade-Revell, Re [1930] 1 Ch 52 …. 20-60 Reading, Re (1916) 60 Sol Jo 655 …. 17-37 Recher, Re [1972] Ch 526; [1971] 3 All ER 401 …. 9-32, 11-04 Redden v Lillis [1979] WAR 161 …. 7-12 Rede v Oakes (1864) 4 De GJ & Sm 505; 46 ER 1015 …. 20-11 Redgate, Re [1903] 1 Ch 356 …. 15-05 Re-Engine Pty Ltd v Ferguson (2007) 209 FLR 1 …. 13-35 Rees, Re [1950] Ch 204; [1949] 2 All ER 1003 …. 2-27, 5-02, 12-04 Rees v Dominion Insurance Co of Australia Ltd (in liq) (1981) 6 ACLR 71 …. 12-08, 29-57 — v Engelbach (1871) LR 12 Eq 225 …. 2-36 Rees’ Will Trusts, Re [1954] Ch 202; [1954] 1 All ER 7 …. 9-22, 20-62 Reeve v A-G (1843) 3 Hare 191; 67 ER 351 …. 10-23 Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 …. 9-41 Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; [1942] 1 All ER 378 …. 1321, 13-27, 17-42

Regier v Campbell-Stuart [1939] Ch 766; [1939] 3 All ER 235 …. 13-25 Registered Securities Ltd, Re [1991] 1 NZLR 545 …. 27-11, 27-15 Rehden v Wesley (1861) 29 Beav 213; 54 ER 609 …. 17-31 Reid, Re [1943] SASR 254 …. 19-56 Reid v Deane [1906] VLR 138; (1906) 12 ALR 46 …. 17-37, 19-57 — v Fitzgerald (1926) 48 WN (NSW) 25 …. 20-36 — v Reid (1862) 30 Beav 388; 54 ER 939 …. 15-22 Reis, Re [1904] 2 KB 769 …. 9-44 Relfo Ltd (in liq) v Varsani [2015] 1 BCLC 14 …. 27-07 Remnant’s Settlement Trusts, Re [1970] Ch 560; [1970] 2 All ER 554 …. 17-07 Resch’s Will Trusts, Re; Le Cras v Perpetual Trustee Co Ltd [1969] 1 AC 514; (1967) 68 SR (NSW) 89; (1969) 87 WN (Pt 2) (NSW) 53; [1967] 2 NSWR 706; [1967] 3 All ER 915 …. 10-22, 10-55 Revel v Watkinson (1748) 1 Ves Sen 93; 27 ER 912 …. 19-53 Reynard v Arnold (1875) LR 10 Ch App 386 …. 26-15 Reynolds, Ex parte (1800) 5 Ves 707; 31 ER 816 …. 15-86, 17-48 Reynolds, Re [1942] VLR 158; [1942] ALR 251 …. 19-06, 19-45, 19-51 Rhodesia Goldfields Ltd, Re [1910] 1 Ch 239 …. 21-11 Richard Mills & Co (Brierly Hill) Ltd, Re [1905] WN 36 …. 25-03 Richards, Re (1931) 31 SR (NSW) 565; 48 WN (NSW) 172 …. 20-57 Richards, Re [1974] 2 NZLR 60 …. 19-49 Richards v Delbridge (1874) LR 18 Eq 11 …. 6-17 — v Dove [1974] 1 All ER 888 …. 12-18 — v Perkins (1838) 3 Y & C Ex 299; 160 ER 716 …. 23-05 — v Richards [1958] 3 All ER 513; [1958] 1 WLR 1116 …. 12-17 Richardson, Re (1887) 4 TLR 153 …. 10-71 Richardson, Re [1896] 1 Ch 512; [1895–9] All ER Rep Ext 2000 …. 17-43, 2070 Richardson, Re [1911] 2 KB 705 …. 21-05 Richardson v Allen (1870) 10 SCR (NSW) Eq 1 …. 17-39

Richardson’s Will Trusts, Re [1958] Ch 504; [1958] 1 All ER 538 …. 9-24 Ricketson, Ex parte (1873) 12 SCR (NSW) Eq 1 …. 25-04 Riddle v Riddle (1952) 85 CLR 202; [1952] ALR 167 …. 17-06 Rider v Kidder (1806) 12 Ves 202; 33 ER 77 …. 12-12 Ridler, Re (1882) 22 Ch D 74 …. 9-42, 9-44 Ridsdel, Re [1947] Ch 597; [1947] 2 All ER 312 …. 20-48 RIL Aviation HL 7740 and HL 7741 Pty Ltd v Alliance & Leicester plc [2011] NSWCA 423 …. 24-04 Rinehart v Welker [2012] NSWCA 95 …. 16-20 Riordan v Banon (1876) 10 Ir R Eq 469 …. 7-18 Rirratjingu Aboriginal Corporation v Northern Land Council [2015] FCA 36; 324 ALR 240 …. 1-02, 1-07 Rizos v Rizos [1970] VR 150 …. 25-05 Road Australia Pty Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 327 …. 13-07 Roadley, Re [1930] 1 Ch 524 …. 10-23 Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 …. 2-15, 13-10, 13-34, 13-40, 23-03, 27-02, 27-03, 27-07 Robbins, Re [1907] 2 Ch 8 …. 23-09 Robbins, Re [1928] Ch 721 …. 19-55 Roberts, Re [1963] 1 All ER 674; [1963] 1 WLR 406 …. 10-71, 10-84, 10-85 Roberts, Re (1983) 20 NTR 13; 70 FLR 158 …. 15-46, 15-60, 15-66 Roberts v Roberts (1915) 16 SR (NSW) 6 …. 19-56, 20-31 — v Tunstall (1845) 4 Hare 257; 67 ER 645 …. 22-29 — v University of Sydney [1960] NSWR 702; 78 WN (NSW) 541 …. 10-83 Robertson, Re [1930] 2 Ch 71 …. 10-35 Robertson, Re [1953] VLR 685; [1954] ALR 53 …. 17-37, 17-38 Robertson v Allen (2003) 11 BPR 21,213 …. 9-34, 23-12 — v Wait (1853) 8 Ex 299; 155 ER 1360 …. 6-06, 6-13 Robertson’s Will Trusts, Re [1960] 3 All ER 146 …. 17-07 Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286; 45 ACSR

244 …. 13-02, 13-34 Robinson, Re (1931) 100 LJ Ch 321 …. 10-59 Robinson, Re [1897] 1 Ch 85 …. 10-39 Robinson, Re [1911] 1 Ch 502; [1911–13] All ER Rep 296 …. 17-37, 23-20 Robinson, Re [1923] 2 Ch 332 …. 10-72 Robinson, Re [1931] 2 Ch 122 …. 10-59, 10-68, 10-69 Robinson, Re [1951] Ch 198; [1950] 2 All ER 1148 …. 10-20, 10-21 Robinson v Harkin [1896] 2 Ch 415 …. 17-18, 17-20, 17-30, 17-32, 21-18, 2119, 22-32 — v Ommanney (1883) 23 Ch D 285 …. 13-42 — v Pett (1734) 3 P Wms 249; 24 ER 1049 …. 15-73, 17-39 — v Robinson (1848) 11 Beav 371; 50 ER 860 …. 22-05 — v — (1851) 1 De GM & G 247; 42 ER 547 …. 18-34, 22-06 — v — [1961] WAR 56 …. 12-12 — v Waite (1853) 8 Ex 299; 155 ER 1360 …. 2-24 Robinson’s Settlement, Re [1912] 1 Ch 717 …. 21-03 Robinson’s Settlement Trusts, Re [1976] 3 All ER 61; [1976] 1 WLR 806 …. 1707 Robinson’s Trusts, Re [1974] Qd R 243 …. 23-07 Robison v Stuart (1891) 12 LR (NSW) Eq 47 …. 10-04 Robson v Flight (1865) 4 De GJ & Sm 608; 46 ER 1054 …. 15-73, 15-75 Rochefoucauld v Boustead [1897] 1 Ch 196 …. 3-06, 7-03, 7-08, 7-09, 7-12, 1325, 22-25 Rodger v Rodger (1893) 12 NZLR 392 …. 5-24 Rogers v Ingham (1876) 3 Ch D 351; [1874–80] All ER Rep 209 …. 17-37 Rogerson, Re [1901] 1 Ch 715; [1900–3] All ER Rep Ext 1552 …. 10-61 Rolfe v Gregory (1865) 4 De GJ & Sm 576; 46 ER 1042 …. 13-04, 22-30 Rolled Steel Products Ltd v British Steel Corporation [1986] Ch 246; [1985] 3 All ER 52 …. 13-34 Rolls v Miller (1884) 27 Ch D 71; [1881–5] All ER Rep 915 …. 10-19 Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1; [1934]

ALR 202 …. 10-33, 10-65 Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439 …. 21-05, 23-19, 23-21 Ronori Pty Ltd v ACN 101 071 998 Pty Ltd [2008] NSWSC 246 …. 21-04 Roper-Curzon v Roper-Curzon (1871) LR 11 Eq 452 …. 20-58 Roper’s Trusts, Re (1879) 11 Ch D 272 …. 20-63 Ropner’s Settlements Trusts, Re [1956] 3 All ER 332; [1956] 1 WLR 902 …. 1707 Rose, Re [1952] Ch 499; [1952] 1 All ER 1217 …. 6-19 Rose v Rose (1986) 7 NSWLR 679 …. 1-07, 2-15, 5-23 Rosebanner Pty Ltd v EnergyAustralia (2009) 223 FLR 406 …. 26-25 Rostirolla v Fiakos (No 2) [2002] FCA 1562 …. 5-14 Roth, Re (1896) 74 LT 50; [1895–9] All ER Rep 455 …. 16-14 Rouse v IOOF Australia Trustees Ltd (1999) 73 SASR 484 …. 17-16 Rouse’s Will Trusts, Re [1959] 2 All ER 50; [1959] 1 WLR 372 …. 17-07 Rousset v Antunovich [1963] WAR 52 …. 20-11 Routledge’s Trusts, Re [1909] 1 Ch 280 …. 15-07, 15-75 Rowbotham v Dunnett (1878) 8 Ch D 430 …. 7-29, 7-32 Rowe v Rowe (1861) 29 Beav 276; 54 ER 633 …. 19-21 Rowell, Re (1982) 31 SASR 361 …. 10-19 Rowlandson v National Westminster Bank Ltd [1978] 3 All ER 370; [1978] 1 WLR 798 …. 13-34 Rowley v Ginnever [1897] 2 Ch 503 …. 13-43 Rowlls v Bebb [1900] 2 Ch 107; [1900–3] All ER Rep 756 …. 16-11, 19-10, 1914 Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378; [1995] 3 All ER 97 …. 13-34, 13-35, 13-39 Royal Choral Society v Inland Revenue Commissioners [1943] 2 All ER 101 …. 10-31, 10-50 Royal College of Nursing v St Marylebone Corp [1958] 1 All ER 129 …. 10-31 Royal College of Surgeons of England v National Provincial Bank Ltd [1952]

AC 631; [1952] 1 All ER 984 …. 10-02, 10-31, 10-55 Royal Exchange Assurance v Hope [1928] Ch 179; [1927] All ER Rep 67 …. 222 Royal National Agricultural and Industrial Association v Chester (1974) 3 ALR 486; 48 ALJR 304 …. 10-03, 10-47 Royal North Shore Hospital, Re (1904) 21 WN (NSW) 161 …. 10-78 Royal North Shore Hospital of Sydney v A-G (1938) 60 CLR 396; [1938] ALR 434 …. 10-12, 10-29, 10-51, 10-70, 10-71 Royal Society for the Prevention of Cruelty to Animals, NSW v Benevolent Society of New South Wales (1960) 102 CLR 629; [1960] ALR 223 …. 1010, 10-37, 10-57 Royal Society of London v Thompson (1881) 17 Ch D 407 …. 10-31 Royal Society’s Charitable Trusts, Re [1956] Ch 87; [1955] 3 All ER 14 …. 1078, 17-06 Royce, Re [1940] Ch 514; [1940] 2 All ER 291 …. 10-45 Royce’s Will Trusts, Re [1959] Ch 626; [1959] 3 All ER 278 …. 17-40 Rubery v Rubery [2003] WASC 164 …. 25-11 Ruddington Land, Re [1909] Ch 701; [1908–10] All ER Rep 377 …. 15-51 Ruddock, Re (1910) 102 LT 89; [1908–10] All ER Rep 725 …. 20-72 Rugby School, Case of (1627) Duke 80 …. 10-28 Rumball, Re [1955] 3 All ER 71; [1955] 1 WLR 1037 …. 10-46 Russell, Ex parte (1882) 19 Ch D 588 …. 9-43 Russell v Scott (1936) 55 CLR 440; [1936] ALR 375 …. 7-35, 12-12 — v Durie [1920] NZLR 91 …. 13-15, 13-43 — v Jackson (1868) LR 3 Ch App 362 …. 7-30 — v Perpetual Trustee Company (Ltd) (1956) 95 CLR 389; [1956] ALR 952 …. 12-05, 12-09 Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; 313 ALR 367 …. 27-02, 27-03 Russell-Cooke Trust Co v Prentis [2003] 2 All ER 478 …. 27-08, 27-11 Rutherford, Re (1913) 13 SR (NSW) 729; 30 WN (NSW) 213 …. 19-20

Ryall v Ryall (1739) 1 Atk 59; 26 ER 39 …. 12-10 Ryan v Dries [2003] ANZ ConvR 45 …. 12-11 — v Hopkinson (1990) 14 Fam LR 151 …. 12-20 — v The Public Trustee of Queensland [1998] 1 Qd R 679 …. 17-08 Ryder v A-G (NSW) (2004) 62 NSWLR 38 …. 10-01, 10-61 — v Taylor (1935) 36 SR (NSW) 31 …. 2-22, 7-08 Ryland v Federal Commissioner of Taxation (1973) 128 CLR 404; 1 ALR 232 …. 10-60 Rymer, Re [1895] 1 Ch 19; [1891–4] All ER Rep 328 …. 10-71, 10-84, 10-85 Ryrie’s Settled Estates (No 2), Re (1907) 24 WN (NSW) 87 …. 17-44

S S v P (2006) 198 FLR 1 …. 7-08 Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543 …. 8-04, 8-05, 808 Sahal, Re [1958] 3 All ER 428; [1958] 1 WLR 1243 …. 10-18 Sainsbury v IRC [1970] Ch 712; [1969] 3 All ER 919 …. 23-15 Sainsbury’s Settlement, Re [1967] 1 All ER 878; [1967] 1 WLR 476 …. 17-07 Sajan Singh v Sardara Ali [1960] AC 167; [1960] 1 All ER 269 …. 9-08 Sale, Re [1913] 2 Ch 697 …. 19-31 Sale v Moore (1827) 1 Sim 534; 57 ER 678 …. 5-24, 5-30 Salmen, Re (1912) 107 LT 108 …. 17-44 Salmon, Re (1889) 42 Ch D 351 …. 18-30 Salomons, Re [1920] 1 Ch 290; [1920] All ER Rep 768 …. 20-70, 20-76 Salomons v Pender (1865) 3 H & C 639; 159 ER 682 …. 13-25 Salt v Marquess of Northampton [1892] AC 1 …. 2-50 Salting, Re [1932] 2 Ch 57; [1932] All ER Rep 857 …. 17-06 Salusbury v Denton (1857) 3 K & J 529; 69 ER 1219 …. 10-62, 10-63, 10-64, 10-69 Salvo v New Tel Ltd [2005] NSWCA 281 …. 2-15, 2-23 Samford Hall Trust, Re [1995] 1 Qd R 60 …. 10-49

Samuel v Farrah Timber & Wood Paving Corp Ltd [1904] AC 323 …. 2-05 Sandbach, Re [1933] Ch 505; [1932] All ER Rep 801 …. 19-31 Sandbrook, Re [1912] 2 Ch 471; [1911–13] All ER Rep 559 …. 9-15 Sandeman’s Will Trusts, Re [1937] 1 All ER 368 …. 20-51, 20-72, 23-11 Sanders’ Will Trusts, Re [1954] 1 All ER 667; [1954] 1 WLR 1078 …. 10-18 Sanderson v Walker (1807) 13 Ves 601; 33 ER 419 …. 17-48 Sanderson’s Trust, Re (1857) 3 K & J 497; 69 ER 1206 …. 12-08 Sands v Thompson (1883) 22 Ch D 614 …. 22-23 Sanger, Re (1903) 3 SR (NSW) 284 …. 26-09 Sarflax Ltd, Re [1979] Ch 592; [1979] 1 All ER 529 …. 9-42 Sargeant v National Westminster Bank plc (1990) 61 P & CR 518 …. 17-39 SAS Trustee Corporation v Cox (2011) 285 ALR 623 …. 17-15 Satterthwaite’s Will Trusts [1966] 1 All ER 919; [1966] 1 WLR 277 …. 10-84, 10-86 Saul v Lin (No 2) (2004) 60 NSWLR 275 …. 15-57, 15-60 Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 …. 9-34, 10-67, 10-82 — v — (1841) Cr & Ph 240; 41 ER 482 …. 23-08, 23-12, 23-13, 23-14, 23-15, 23-16, 28-08, 28-09 Savage, Re [1918] 2 Ch 146; [1918–19] All ER Rep 700 …. 21-11 Savage v Dunningham [1974] Ch 181; [1973] 3 All ER 429 …. 12-11 — v Union Bank of Australasia Ltd (1906) 3 CLR 1170; 12 ALR 285 …. 21-04 Saxone Shoe Co Ltd’s Trust Deed, Re [1962] 2 All ER 904; [1962] 1 WLR 943 …. 5-26 Sayer v McHugh (1985) 1 NSWLR 440 …. 25-04 Scales, The Will of [1972] 2 NSWLR 108 …. 10-05 Scandrett v Dowling (1992) 27 NSWLR 483 …. 23-04 Scarfe, Re [1923] SASR 459 …. 19-60 Scarisbrick’s Will Trusts, Re [1951] Ch 622; [1951] 1 All ER 822 …. 10-24 Schar, Re [1951] Ch 280; [1950] 2 All ER 1069 …. 15-73 Schebsman, Re [1944] 1 Ch 83; [1943] 2 All ER 768 …. 2-20, 2-21, 2-22, 2-23,

5-02 Schellenberger v Trustees Executors and Agency Co Ltd (1952) 86 CLR 454; [1953] ALR 39 …. 10-53 Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] 3 All ER 76 …. 2-46, 16-21, 17-14, 17-16 Schneider, Re (1906) 22 TLR 223 …. 16-10 Schoales, Re [1930] 2 Ch 75 …. 10-33 Scholefield v Redfern (1863) 2 Dr & Sm 173; 62 ER 587 …. 19-32 Schreuder v Murray (No 2) (2009) 41 WAR 169 …. 17-16 Schubert v Schubert (1949) 66 WN (NSW) 173 …. 12-12 Schweitzer v Schweitzer [2012] VSCA 260 …. 7-12 Scientific Investment Pension Plan Trusts, Re [1999] Ch 53; [1998] 3 All ER 154 …. 8-02, 29-49 Sclanders v Cole (1918) 18 SR (NSW) 216; 35 WN (NSW) 67 …. 20-30, 2043 Scott, Re [1903] Ch 1; [1900–3] All ER Rep 221 …. 20-58 Scott, Re [1919] SALR 74 …. 19-57 Scott v Scott (1963) 109 CLR 649; [1964] ALR 946 …. 27-01, 27-09, 27-13 — v Davis (2000) 204 CLR 333; 175 ALR 717 …. 2-10 — v FCT (No 2) (1966) 40 ALJR 265 …. 29-07 — v Milne (1884) 25 Ch D 710 …. 19-54, 21-04, 21-10 — v Murray (1888) 14 VLR 708 …. 17-44 — v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705 …. 16-01, 16-10, 17-23 — v Pauly (1917) 24 CLR 274; 24 ALR 27 …. 12-12 — v Surman (1742) Willes 400; 125 ER 1235 …. 27-04 — v Tyler (1788) Dick 712; 5 ER 241 …. 9-13 Scottish Burial Reform and Cremation Society v Glasgow Corp [1968] AC 138; [1967] 3 All ER 215 …. 10-03, 10-10, 10-36, 10-58 Scottish Woollen Technical College v Inland Revenue Commissioners SC 934 [1926] …. 10-31

Scowcroft, Re [1898] 2 Ch 638; [1895–9] All ER Rep 274 …. 10-29 Scully v Commissioner of Taxation (1998) 84 FCR 41; 164 ALR 281 …. 8-03 Scurfield v Howes (1790) 3 Bro C 90; 29 ER 425 …. 17-20 Seafarers’ Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 …. 29-11 Seale’s Marriage Settlement, Re [1961] Ch 574; [1961] 3 All ER 136 …. 15-67, 17-07 Sear v Ashwell (1739) 3 Swan 411n; 36 ER 928 …. 9-35 Searle, Re [1900] 2 Ch 829 …. 19-09 Seaton v Seddon [2013] 1 All ER 29; [2012] 1 WLR 3636 …. 22-25 Second East Dulwich, etc, Building Society, Re (1899) 68 LJ Ch 196 …. 22-20 Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs v Elliott (2009) 174 FCR 387; 254 ALR 223 …. 23-15 Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 …. 1302 — v James (1990) 95 ALR 615 …. 7-03 Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350 …. 1-10 Seeley v Jago (1717) 1 P Wms 389; 24 ER 438 …. 26-21, 26-22 Segelman (decd), Re [1996] Ch 171; [1995] 3 All ER 676 …. 10-24 Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431 …. 17-15, 21-29, 22-09 Seidler v Schallhofer [1982] 2 NSWLR 80 …. 9-09 Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 2 All ER 1073; [1968] 1 WLR 1555 …. 3-08, 13-02, 13-11, 13-34, 13-40 Selby’s Will Trusts, Re [1965] 3 All ER 386; [1966] 1 WLR 43 …. 9-16 Seldon v Davidson [1968] 2 All ER 755; [1968] 1 WLR 1083 …. 12-10 Selkirk v McIntyre [2013] 3 NZLR 265 …. 21-18, 21-19 Sellack v Harris (1708) 5 Vin Abr 521; 22 ER 40 …. 7-22 Senior, Re [1936] 3 All ER 196 …. 20-63 Sewell, Re [1909] 1 Ch 806 …. 21-18, 21-27 Sexton v Horton (1926) 38 CLR 240; 32 ALR 373 …. 8-04, 8-09 Shafto’s Trusts, Re (1885) 29 Ch D 247 …. 15-10

Shakespeare Memorial Trust, Re [1923] 2 Ch 389; [1923] All ER Rep 106 …. 10-31 Shalfoon v Potts [1948] NZLR 1214 …. 15-86 Shalson v Russo [2005] Ch 281 …. 13-02, 13-10, 27-02, 27-07 Shanahan v Fitzgerald [1982] 2 NSWLR 513 …. 13-07 Shanklin Pier Ltd v Petel Products Ltd [1951] 2 KB 854; [1951] 2 All ER 471 …. 2-20 Sharman’s Will Trusts, Re [1942] Ch 311; [1942] 2 All ER 74 …. 15-16, 15-73 Sharp, Re [1906] 1 Ch 793 …. 17-37, 22-28 Sharp, Re [1945] VLR 31 …. 17-49 Sharp v Anderson (1994) 6 BPR 13,801 …. 7-11, 7-12 Sharpe, Re [1980] 1 All ER 198; [1980] 1 WLR 219 …. 13-11 Sharpe v Jackson [1899] AC 419; [1895–99] All ER Rep 755 …. 5-14 — v San Paulo Railway Co (1873) LR 8 Ch App 597 …. 21-04, 23-03 Sharp’s Settlement Trusts, Re [1973] Ch 331; [1972] 3 All ER 151 …. 20-61 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449; 82 ALR 530 …. 5-04 Shaw v Cates [1909] 1 Ch 389 …. 18-26, 18-27, 18-28, 22-15 — v Foster (1872) LR 5 HL 321 …. 13-07 — v Halifax Corporation [1915] 2 KB 170 …. 10-02, 10-17, 10-23 — v Holland [1900] 2 Ch 305; [1900–3] All ER Rep Ext 1686 …. 13-27 — v Lawless (1838) 5 Cl & F 129; 7 ER 353 …. 5-17, 5-19 Shaw’s Settlement, Re [1951] Ch 833; [1951] 1 All ER 656 …. 20-62 Shaw’s Trusts, Re (1871) LR 12 Eq 124 …. 20-20 Shaw (decd), Re [1957] 1 All ER 745; [1957] 1 WLR 729 …. 10-12, 10-29, 1105 Sheldon v R H M Outhwaite (Underwriting Agencies) Ltd [1996] AC 102; [1995] 2 All ER 558 …. 22-26, 22-30 Shelley’s case (1581) 1 Co Rep 93; 76 ER 206 …. 8-09 Shelmerdine, Re (1864) 33 LJ Ch 424 …. 14-02 Shepard, Re [1911] 1 Ch 50 …. 17-31

Shephard v Cartwright [1955] AC 431; [1954] 3 All ER 649 …. 5-02, 12-12, 1213, 12-16 Shepherd v Federal Commissioner of Taxation (1965) 113 CLR 385; [1966] ALR 969 …. 6-20 — v Harris [1905] 2 Ch 310 …. 22-09 Sheppard’s Settlement Trusts, Re [1888] WN 234 …. 15-08 Shergill v Khaira [2015] AC 359; [2014] 3 All ER 243 …. 10-33, 10-68, 15-12 Sherrard v Lord Harborough (1753) Amb 165; 27 ER 110 …. 12-04 Sherriff, In the Will of [1971] 2 NSWLR 438 …. 18-04, 18-07 Sherwood, Re (1840) 3 Beav 338; 49 ER 133 …. 17-39 Shields, Re [1912] 1 Ch 591 …. 7-20 Shipwrecked Fishermen & Mariners’ Royal Benevolent Society, Re [1959] Ch 220; [1958] 3 All ER 465 …. 10-78, 17-06 Shirlaw v Taylor (1991) 31 FCR 222; 102 ALR 551 …. 2-29 Shortall v White [2007] NSWCA 372 …. 5-24 Shrewsbury and Hereford Railway, Re (1853) 1 Drew 508; 61 ER 546 …. 26-07 Sichel v O’Shanassy (1877) 3 VLR (E) 208 …. 21-07 Sichel’s Settlements, Re [1916] 1 Ch 358 …. 15-07 Sick & Funeral Society of St John’s Sunday School Golcar, Re [1973] Ch 51; [1972] 2 All ER 439 …. 12-08 Sidey v Huntly (1900) 21 LR (NSW) Eq 104; 17 WN (NSW) 98 …. 18-03, 1806 Sidmouth v Sidmouth (1840) 2 Beav 447; 48 ER 1254; [1835–42] All ER Rep 339 …. 12-16 Sieff v Fox [2005] 3 All ER 693; [2005] 1 WLR 3811 …. 16-01, 16-10, 16-12 Silkstone and Haigh Moor Coal Co v Edey [1900] 1 Ch 167 …. 17-48 Silver v Silver [1958] 1 All ER 523; [1958] 1 WLR 259 …. 12-12, 12-17 Silverwood v Silverwood (1997) 74 P&CR 453 …. 9-02 Simes & Martin Pty Ltd (in liq) v Dupree (1990) 55 SASR 278 …. 29-56, 2957 Simersall, Re (1992) 35 FCR 584; 108 ALR 375 …. 17-16

Simonson Properties Pty Ltd v Hardy [2014] NSWSC 229 …. 23-02 Simpson, Re [1897] 1 Ch 256 …. 15-67 Simpson, Re [1913] 1 Ch 277; [1911–13] All ER Rep 301 …. 19-23 Simpson v Brown (1865) 13 WR 312 …. 20-59 Simpson (dec’d), Re [1961] QWN 50 …. 10-55, 10-69 Simson, Re [1946] Ch 299 …. 10-46 Sinclair v Brougham [1914] AC 398; [1914–15] All ER Rep 622 …. 27-04, 2705, 27-12 Sinclair Investments (UK) Ltd v Versailles Trade Finance plc [2012] Ch 453; [2011] 4 All ER 335 …. 13-11 Singer v Williams [1921] 1 AC 41 …. 18-04 Singlehurst v Tapscott Steamship Co Ltd (No 2) [1899] WN 133 …. 22-22 Sinnett v Herbert (1872) LR 7 Ch App 232 …. 10-35, 10-63 Sinnott v Hockin (1882) 8 VLR (E) 205 …. 14-13 Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406 …. 9-34, 10-67, 10-84, 23-08, 23-15 Sisson v Giles (1863) 3 De GJ & S 614; 46 ER 775 …. 26-22 Sisson’s Settlement, Re [1903] 1 Ch 262 …. 17-20 Sivritas v Sivritas (2008) 23 VR 349 …. 12-11, 13-50 Sjoquist v Rock Eisteddfod Productions Pty Ltd (1996) 19 ACSR 339 …. 15-06 Skeats’ Settlement, Re (1889) 42 Ch D 522; [1886–90] All ER Rep 989 …. 1512 Skett v Whitmore (1705) Freem Ch 280; 22 ER 1211 …. 7-06 Skinner v Trustees Executors and Agency Co Ltd (1901) 27 VLR 218; 7 ALR 199 …. 17-20, 20-47 — v — (1901) 26 VLR 670 …. 18-04 Sky v Body (1970) 92 WN (NSW) 934 …. 16-14, 20-51 Slade v Chaine [1908] 1 Ch 522 …. 19-03, 19-25 Slaney v Watney (1866) LR 2 Eq 418 …. 15-73 Slater v Global Finance Group Pty Ltd (1999) 150 FLR 264 …. 14-10, 17-16 Slatter, Re (1905) 21 TLR 295 …. 10-58

Slatter, Re [1964] Ch 512; [1964] 2 All ER 469 …. 10-71, 10-84, 10-85 Sleeman v Wilson (1871) LR 13 Eq 36 …. 22-33 Sleiman v Alwan [2009] NSWSC 484 …. 17-14 Slevin, Re [1891] 2 Ch 236; [1891–41] All ER Rep 200 …. 10-86 Small v Attwood (1828) 2 Y & J 512; 148 ER 1021 …. 22-33 Smart’s Settlement, Re (1933) 33 SR (NSW) 412 …. 19-59 Smethurst v Hastings (1885) 30 Ch D 490 …. 17-18 Smidmore v Makinson (1908) 6 CLR 243; 14 ALR 442 …. 23-08, 23-09 Smidmore’s Charity, Re (1901) 18 WN (NSW) 146 …. 10-78 Smirthwaite’s Trusts, Re (1871) LR 11 Eq 251 …. 15-02 Smith, Re [1896] 1 Ch 71 …. 17-49, 18-14 Smith, Re [1896] 1 Ch 171; [1895–9] All ER Rep 1175 …. 19-06, 22-09 Smith, Re [1904] 1 Ch 139 …. 15-42 Smith, Re [1914] 1 Ch 397 …. 9-31, 10-40 Smith, Re (1916) 16 (NSW) 422; 33 WN (NSW) 134 …. 17-40 Smith, Re [1916] 1 Ch 369 …. 9-23 Smith, Re [1928] Ch 915 …. 23-09, 23-15 Smith, Re [1930] 1 Ch 88 …. 19-46, 19-55, 20-31, 20-33 Smith, Re [1932] 1 Ch 153; [1931] All ER Rep 617 …. 10-01, 10-54 Smith, Re [1936] 2 All ER 1210 …. 19-31 Smith, Re [1967] VR 341 …. 2-33 Smith, Re [1971] 1 OR 584 …. 16-06, 16-09 Smith, Re [1971] 2 OR 541 …. 16-06, 16-09 Smith v Anderson (1880) 15 Ch D 247; [1874–80] All ER Rep 1121 …. 3-11 — v Claxton (1820) 4 Madd 484; 65 ER 784 …. 26-20 — v Cock [1911] AC 317; (1911) 12 CLR 30 …. 16-06, 20-63 — v Cooke [1891] AC 297 …. 12-07 — v Green (1903) 22 NZLR 976 …. 17-44 — v Hassall (1899) 20 LR (NSW) Eq 165; 16 WN (NSW) 138 …. 17-18, 1731, 18-26, 18-27

— v Hurst (1852) 10 Hare 30; 68 ER 826 …. 5-13, 5-14 — v Kerr [1902] 1 Ch 774 …. 10-67, 10-81, 10-86 — v Longford (1844) 2 Beav 362; 48 ER 1221 …. 17-49 — v Matthews (1861) 3 De GF & J 139; 45 ER 831 …. 7-08 — v Patrick [1901] AC 282 …. 18-05 — v Perpetual Trustee Co Ltd (1910) 11 CLR 148 …. 9-24 — v Smith (1903) 3 SR (NSW) 571 …. 5-08 — v West Australian Trustee Executor & Agency Co Ltd (1950) 81 CLR 320; [1950] ALR 735 …. 10-61 Smith (dec’d), Re [1967] VR 341 …. 10-53 Smith’s Settled Estates, Re [1901] 1 Ch 689 …. 20-30 Smith’s Trusts, Re (1905) 5 SR (NSW) 500; 22 WN (NSW) 161a …. 18-27 Smith’s Will Trusts, Re [1962] 2 All ER 563; [1962] 1 WLR 763 …. 10-55 Smithson v Hamilton [2008] 1 All ER 1216; [2008] 1 WLR 1453 …. 9-35, 1612, 17-01 Smits v Roach (2004) 60 NSWLR 711 …. 9-09 Smyth, Re [1898] 1 Ch 89 …. 28-07 Snelling v John G Snelling [1973] QB 87; [1972] 1 All ER 79 …. 6-06 Snowden (decd), Re [1970] Ch 700; [1969] 3 All ER 208 …. 10-78 Snowden (decd), Re [1979] Ch 528; [1979] 2 All ER 172 …. 5-02, 7-16, 7-22, 7-32 Snowdon v Dales (1834) 6 Sim 524; 58 ER 690 …. 9-19, 9-20 Soar v Ashwell [1893] 2 QB 390; [1891–4] All ER Rep 991 …. 15-03 — v Foster (1858) 4 K & J 152; 70 ER 64 …. 12-12 Solicitor-General v Wylde (1945) 46 SR (NSW) 83 …. 13-35 Solomon, Re [1908] SALR 107 …. 9-20 Solomon, Re [1912] 1 Ch 261 …. 18-26, 18-27 Somerset, Re [1894] 1 Ch 231 …. 18-27, 21-25, 22-29 Somerville v A-G (1920) 21 SR (NSW) 450 …. 10-04 Somes, Re [1896] 1 Ch 250 …. 2-04

Sonenco (No 77) Pty Ltd v Silvia (1989) 24 FCR 105; 89 ALR 437 …. 6-17, 13-07 Songest, Re [1956] 2 All ER 765; [1956] 1 WLR 897 …. 10-86 Sonley v Clockmakers’ Co (1780) 1 Bro CC 81; 28 ER 998 …. 14-13 Sorna Pty Ltd v Flint (2000) 21 WAR 563 …. 12-13, 13-11 Souter v Souter [1923] NZLR 1078 …. 17-43 South Australian Insurance Co v Randell (1869) LR 3 PC 101 …. 2-09 South Australian Perpetual Forests Ltd 1964 Trust Deed, Re (1995) 64 SASR 343 …. 17-19 South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259 …. 7-27, 10-36, 10-37, 11-03 South Place Ethical Society, Re [1980] 3 All ER 918; [1980] 1 WLR 1565 …. 10-31, 10-33 Southern Cross Commodities Pty Ltd (in liq) v Ewing (1987) 11 ACLR 818; 5 ACLC 1,110 …. 22-07, 22-08 Southern Pacific Mortgages Ltd v Scott [2015] AC 385; [2015] 1 All ER 277 …. 1-02 Southhampton’s Estate, Re (1880) 16 Ch D 178 …. 17-35 Southwell v Martin (1901) 1 SR (NSW) Eq 32 …. 20-27, 20-43 Southwood v A-G [2000] TLR 541 …. 10-12 Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 3 All ER 75; [1986] 1 WLR 1072 …. 17-39, 27-06 Sparkes, Re (1911) 56 Sol J 90 …. 20-58 Spedding v Spedding (1913) 30 WN (NSW) 81 …. 13-10, 27-07 Spehr, Re [1965] VR 770 …. 10-58, 10-65 Speight, Re (1883) 22 Ch D 727 …. 17-18, 17-23 Speight v Gaunt (1883) 9 App Cas 1 …. 17-18, 17-23, 17-30, 17-31 Speir, Re [1924] 1 Ch 359; [1923] All ER Rep 640 …. 19-40 Spellson v George (1987) 11 NSWLR 300 …. 17-13, 17-16 — v — (1992) 26 NSWLR 666 …. 22-33 Spence, Re [1938] 1 Ch 96; [1937] 3 All ER 684 …. 10-53

Spencer, Re (1916) 33 TLR 16 …. 15-51 Spencer v Topham (1856) 22 Beav 573; 52 ER 1229 …. 17-46 Spencer’s Settled Estates, Re [1903] 1 Ch 75 …. 15-64 Spensley’s Will Trusts, Re [1954] Ch 233; [1954] 1 All ER 178 …. 10-15, 10-50 Spirett v Willows (1865) 3 De GJ & S 293; 46 ER 649 …. 9-41, 9-45 Sprange v Barnard (1789) 2 Bro CC 585; 29 ER 320 …. 5-24 Spread Trustee Co Ltd v Hutcheson [2012] 2 AC 194; [2012] 1 All ER 281 …. 16-01, 16-20, 17-18 Spring v Pride (1864) 4 De GJ & S 395; 46 ER 971 …. 17-44, 17-47 Sproule v Sproule (2009) 2 ASTLR 80 …. 22-13 Spurling’s Will Trusts, Re [1966] 1 All ER 745; [1966] 1 WLR 920 …. 15-43 St Andrews’ (Cheam) Lord Tennis Club Trust, Re [2012] 3 All ER 746; [2012] 1 WLR 3487 …. 9-32, 10-49 St Vincent de Paul Society Qld v Ozcare Ltd (2009) 74 ACSR 676 …. 1-06 Stacey v Elph (1833) 1 My & K 195; 39 ER 655 …. 15-16, 15-73 Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 …. 12-18, 13-54 Stackpole v Beaumont (1796) 3 Ves 89; 30 ER 909 …. 9-13 Stacpoole v Stacpoole (1816) 4 Dow 209; 3 ER 1140 …. 22-08 Stack’s Settled Estates, Re (1909) 26 WN (NSW) 181 …. 17-06 Staff Benefits Pty Ltd, Re [1979] 1 NSWLR 207 …. 21-04, 21-12 Stafford v Fiddon (1857) 23 Beav 386; 53 ER 151 …. 18-01 — v Kekatos (No 4) [2008] NSWSC 1338 …. 21-07 Stafford Felt Co, Re (1919) 19 SR (NSW) 461; 36 WN (NSW) 147 …. 13-27 Stainton v Carron Co (1857) 24 Beav 346; 53 ER 391 …. 17-13 Stamford and Warrington, Re [1916] 1 Ch 404 …. 19-55 Standard Insurance Co, Re [1968] Qd R 118 …. 21-15 Standing v Bowring (1885) 31 Ch D 282; [1881–5] All ER Rep 702 …. 6-02, 935, 12-21, 15-73 Stanford, Re [1924] 1 Ch 73; [1923] All ER Rep 589 …. 5-02, 12-08 Stapleton, Re [1946] 1 All ER 323 …. 20-60, 20-61

Stapleton-Bretherton, Re [1941] Ch 482; [1941] 3 All ER 5 …. 2-20, 2-22 State v Standard Oil Co 30 NE 279 (1892) …. 3-21 State Bank of New South Wales v Chia (2000) 50 NSWLR 587 …. 2-05 State Trustees Ltd v Attorney-General (2013) 301 ALR 798 …. 10-31, 10-57, 10-58 Statewide Developments Pty Ltd (in liq) v Azure Property Group (Holdings) Pty Ltd (2012) 84 NSWLR 133 …. 15-04, 15-21, 25-02 Staughton, Re [1909] VLR 174 …. 19-55, 19-57 Stead, Re [1900] 1 Ch 237 …. 7-29, 7-30 Stead v Mellor (1877) 5 Ch D 225 …. 5-30 — v Preece (1874) LR 18 Eq 192 …. 26-06 Steed’s Will Trusts, Re [1959] Ch 354; [1959] 1 All ER 609 …. 17-07 Steed’s Will Trusts, Re [1960] Ch 407; [1960] 1 All ER 487 …. 16-06, 17-07 Steel v Wellcome Custodian Trustees Ltd [1988] 1 WLR 167 …. 17-07 Steele’s Will Trusts, Re [1948] Ch 603; [1948] 2 All ER 193 …. 5-08 Stein v Blake [1996] AC 243; [1995] 2 All ER 961 …. 24-05 — v Sybmore Holdings Pty Ltd (2006) 64 ATR 325 …. 17-06 Stephen v Stallworthy (1881) 2 LR (NSW) Eq 55 …. 12-12 Stephen Parbery Nicholas Martin and Mark Robinson as liquidators of Trio Capital Limited (in liq), Re (2012) 88 ACSR 700 …. 21-34 Stephens, Re (1892) 8 TLR 792 …. 10-56 Stephenson v Barclays Bank Trust Co Ltd [1975] 1 All ER 625; [1975] 1 WLR 882 …. 23-11 Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536; 76 ALR 485 …. 12-10, 13-11 Stephenson’s Settled Estates, Re (1906) 6 SR (NSW) 420; 23 WN (NSW) 153 …. 16-14, 20-11 Sterling Engineering Co v Patchett [1955] 1 All ER 369 …. 13-26 Stevens v Bell [2002] PLR 247; [2002] EWCA Civ 672 …. 8-02, 8-03 — v Hince (1914) 110 LT 935 …. 21-12 — v Keogh (1946) 72 CLR 1 …. 9-09

Stevenson v McPhillamy (1949) 23 ALJ 649 …. 17-06 Stewart, Re [2003] 1 NZLR 809 …. 17-11 Stewart v Latec Investments Ltd [1968] 1 NSWR 432 …. 21-11 Stillman and Wilson, Re (1950) 15 ABC 68 …. 27-11, 27-15 Stock v McAvoy (1872) LR 15 Eq 55 …. 12-13, 12-16 Stokes v Churchill [1994] NSW ConvR ¶55–694 …. 20-03, 20-76 Stone, Re (1970) 91 WN (NSW) 704 …. 10-59 Stone v Godfrey (1854) 6 De GM & G 76; 43 ER 798 …. 17-37 — v Hoskins [1905] P 194 …. 13-42 Stoneham’s Settlement Trusts, Re [1952] Ch 59; [1952] 2 All ER 694 …. 15-14 Stones v Rowton (1853) 17 Beav 308; 51 ER 1052 …. 15-09 Store v Ford (1844) 7 Beav 333; 49 ER 1093 …. 23-03 Story v Gape (1856) 2 Jur NS 706 …. 22-33 Straker v Wilson (1871) LR 6 Ch App 503 …. 19-42, 19-43 Strakosch (decd), Re [1949] Ch 529; [1949] 2 All ER 6 …. 10-58, 10-59 Strang, Re (1941) 41 SR (NSW) 114; 58 WN (NSW) 108 …. 17-06 Strang v Owens (1925) 42 WN (NSW) 183 …. 27-13 — v Strang [2009] NSWSC 760 …. 21-07 Strathalbyn Show Jumping Club Inc v Mayes (2001) 79 SASR 54 …. 10-49, 11-04 Stratton, Re Will of [1981] WAR 58 …. 17-39 Stratton v Simpson (1970) 125 CLR 138; [1971] ALR 117 …. 10-05, 10-08, 1066 Stratton’s Deed of Disclaimer, Re [1958] Ch 42; [1957] 2 All ER 594 …. 15-73 Straus v Goldsmid (1837) 8 Sim 614; 59 ER 243 …. 10-33 Stretton, Re [1942] WN 95 …. 25-04 Strickland v Aldridge (1804) 9 Ves 519; 32 ER 703 …. 7-22 — v Strickland (1907) 7 SR (NSW) 657 …. 5-07 — v Weldon (1885) 28 Ch D 426 …. 10-67 Stroud v Gwyer (1860) 28 Beav 130; 54 ER 315 …. 19-03, 19-25

Stroughill v Anstey (1852) 1 De GM & G 635; 42 ER 700 …. 20-27 Stuart, Re [1897] 2 Ch 583 …. 18-27, 22-15, 22-22 Stuart v Armourguard Security Ltd [1996] 1 NZLR 484 …. 16-14 — v Kingston (1924) 34 CLR 394; 31 ALR 45 …. 17-42 — v Norton (1860) 4 Moo PC 17; 15 ER 212 …. 17-32 Struss v Wykes [1916] VLR 200 …. 17-39 Styles v Guy (1849) 1 Mac & G 422; 41 ER 1328 …. 17-20, 18-04 Suco Gold Pty Ltd (in liq), Re (1983) 33 SASR 99; 7 ACLR 873 …. 21-04, 2114, 21-15, 21-16 Suenson-Taylor’s Settlement, Re [1974] 3 All ER 397; [1974] 1 WLR 1280 …. 20-28 Suffert’s Settlement, Re [1961] Ch 1; [1960] 3 All ER 561 …. 17-07 Sugden v Crossland (1856) 3 Sm & G 192; 65 ER 620 …. 15-84 Sumitomo Bank Ltd v Katika Rattna Thahir [1993] 1 SLR 735 …. 13-22 Super 1000 v Pacific General Securities (2008) 221 FLR 427 …. 21-03 Sutcliffe, Re [1982] 2 NZLR 330 …. 9-16 Sutherland, Re (1910) 11 SR (NSW) 5; 27 WN (NSW) 217 …. 19-24 Sutherland, Re (2004) 50 ACSR 297 …. 17-39 Sutherland v Cooke (1844) 1 Coll 498; 63 ER 516 …. 19-10, 19-13 Sutton, Re (1885) 28 Ch D 464 …. 10-63 Sutton, Re [1901] 2 Ch 640 …. 10-19 Sutton v England [2012] 1 WLR 326 …. 17-07, 20-59 Svenson v Payne (1945) 71 CLR 531 …. 20-20 Swale v Swale (1856) 22 Beav 584; 52 ER 1233 …. 23-05 Swan, Re (2014) 120 SASR 149 …. 10-55 Swan v Perpetual Executors and Trustees Association of Australia Ltd (1897) 23 VLR 293; 3 ALR 188 …. 17-31 Swain, Re [1891] 3 Ch 233 …. 22-28 Swain v The Law Society [1983] 1 AC 598; [1982] 2 All ER 827 …. 5-02 Swanson v Emmerton [1909] VLR 387; (1909) 15 ALR 368 …. 17-30, 17-40

Sweetapple v Bindon (1705) 2 Vern 536; 23 ER 947 …. 26-25 Sweeting, Re [1988] 1 All ER 1016 …. 26-12 Swift v Dairywise Farms Ltd [2000] 1 All ER 320; [2000] 1 WLR 1177 …. 1-06, 24-01 Swifte v A-G (Ireland) (No 2) [1912] 1 IR 133 …. 10-57 Swinburne v Federal Commissioner of Taxation (1920) 27 CLR 377; 26 ALR 41 …. 10-05 Swinnock v Crisp (1681) Freem Ch 78; 22 ER 1069 …. 20-58 Swires v Renton [1991] STC 490 …. 6-01 Synergy Concepts Pty Ltd v Rylegrove Pty Ltd (in liq) (1997) 8 BPR 15, 555 …. 15-21 Sydney Homoeopathic Hospital v Turner (19598) 102 CLR 188; [1959] ALR 782 …. 10-83, 10-84 Sydney Markets Credit Services Co-operative Ltd v Taylor [2015] NSWSC 499 …. 25-04 Sykes, Re [1909] 2 Ch 241; [1908–10] All ER Rep Ext 1236 …. 17-49 Sykes v Beadon (1879) 11 Ch D 170 …. 3-11 Sykes (dec’d), Re [1974] 1 NSWLR 597 …. 17-06 Symes v Hughes (1870) LR 9 Eq 475 …. 12-05 Symon, Re [1944] SASR 102 …. 20-27 Synnot v Simpson (1854) 5 HL Cas 121; 10 ER 844 …. 5-14 Sze Tu v Lowe (2014) 89 NSWLR 317 …. 12-13, 12-16, 13-10, 13-11, 13-34, 22-25, 23-20, 27-01, 27-07

T T A Mclntyre & Co, Re 181 F 960 (1910) …. 27-15 T Choithram SA v Pagarini [2001] 2 All ER 492; [2001] 1 WLR 1 …. 6-01, 602, 6-13 Tabone (decd), Re [1968] VR 168 …. 17-44 Tabor v Brooks (1878) 10 Ch D 273 …. 16-14 Tacon, Re [1958] Ch 447; [1958] 1 All ER 163 …. 10-71

Tailby v Official Receiver (1888) 13 App Cas 523; [1886–90] All ER Rep 486 …. 24-04 Tait v Jenkins (1842) 1 Y & C Ch Cas 492; 62 ER 985 …. 23-05 Talbot v Marshfield (1868) LR 3 Ch App 622 …. 20-58 Tancred, Re [1903] 1 Ch 715; [1900–3] All ER Rep 251 …. 9-23 Tanti v Carlson [1948] VLR 401 …. 17-11, 17-44 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; 201 ALR 359 …. 13-07 Target Holdings Ltd v Redferns [1996] 1 AC 421; [1995] 3 All ER 785 …. 1334, 22-01, 22-04, 22-05 Tasmania v Victoria (1935) 52 CLR 157; [1935] ALR 157 …. 10-67 Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation (2005) 142 FCR 371; 219 ALR 647 …. 10-03 Tasmanian Seafoods Pty Ltd v MacQueen (2005) 15 Tas R 1 …. 1-06, 13-34 Tate v Williamson (1866) LR 2 Ch App 55 …. 17-45 Tatham v Drummond (1864) 4 De GJ & Sm 484; 46 ER 1006 …. 10-57 Taylor, Re (1854) 18 Beav 165; 52 ER 65 …. 17-40 Taylor, Re [1894] 1 Ch 671 …. 21-11 Taylor, Re (1900) 81 LT 812 …. 22-29 Taylor, Re [1950] VLR 476; [1950] ALR 984 …. 17-49 Taylor v Clark (1841) 1 Hare 161; 66 ER 990 …. 19-10, 19-20 — v Coenen (1876) 1 Ch D 636 …. 9-45 — v Davies [1920] AC 636 …. 22-25 — v Johnston (1882) 19 Ch D 603 …. 4-03 — v Lewis (1891) 12 LR (NSW) Eq 258 …. 5-18 — v London & County Banking Co [1901] 2 Ch 231 …. 27-15 — v Plumer (1815) 3 M & S 62; 105 ER 721 …. 27-02, 27-04 — v Princess Margaret Hospital for Children Foundation Inc [2012] WASC 83 …. 10-74 — v Tabrum (1833) 6 Sim 281; 58 ER 599 …. 20-12, 22-01, 22-09 — v Taylor (1853) 3 De GM & G 190; 43 ER 76 …. 26-17

— v — (1875) LR 20 Eq 155 …. 20-58 — v — (1875) LR 20 Eq 297 …. 20-20, 23-02 — v — (1910) 10 CLR 218; 16 ALR 129 …. 10-04, 10-13, 10-47, 10-55 Taylor’s Agreement Trusts, Re [1904] 2 Ch 737 …. 25-03 Taylor’s Settlement, Re (1852) 9 Hare 596; 68 ER 650 …. 26-10 Taylor’s Trusts, Re [1905] 1 Ch 734 …. 19-31 Te Huango, Re [1993] 3 NZLR 77 …. 9-09 Tebbs v Carpenter (1816) 1 Madd 290; 56 ER 107 …. 17-20, 22-06 Tedlie, Re (1922) 91 LJ Ch 346 …. 19-38 Tee v Ferris (1856) 2 K & J 357; 69 ER 819 …. 7-18, 7-29, 7-32 Tegg, Re (1866) 15 LT 236 …. 15-16 Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276 …. 29-55 Tempest, Re (1866) LR 1 Ch App 485 …. 15-57, 15-60 Tempest v Lord Camoys (1882) 21 Ch D 571; [1881–5] All ER Rep 836 …. 1614, 16-16 Templeton v Leviathan Pty Ltd (1921) 30 CLR 34; 28 ALR 95 …. 17-05 Tennant, Re (1942) 65 CLR 473 …. 19-17, 19-18, 22-07 Tennant v Trenchard (1869) LR 4 Ch App 537 …. 17-44 Tetley, Re [1923] 1 Ch 258 …. 10-47 Thacker v Key (1869) LR 8 Eq 408 …. 16-14 Thackrah, Re [1939] 2 All ER 4 …. 10-33 Tharp v Tharp [1916] 1 Ch 142 …. 7-22 Thatcher’s Trusts, Re (1884) 26 Ch D 426 …. 20-61 Thellusson v Viscount Valentia [1907] 2 Ch 1 …. 8-03 — v Woodford (1799) 4 Ves 227; 31 ER 117 …. 9-33, 10-54 Themis Holdings Pty Ltd v Canehire Pty Ltd (2014) 17 ITELR 75 …. 22-08 Theodore v Mistford Pty Ltd (2005) 221 CLR 612; 219 ALR 296 …. 7-09 Thetford School Case [1609] 8 Co Rep 130; 77 ER 671 …. 10-28 Thomas, Re [1891] 3 Ch 482; [1891–4] All ER Rep 471 …. 19-12, 19-21, 19-22 Thomas, Re [1916] 2 Ch 331 …. 19-38

Thomas, Re [1930] 1 Ch 194; [1929] All ER Rep 129 …. 17-06 Thomas v Arthur Hughes Pty Ltd (2015) 107 ACSR 443 …. 13-02 — v D’Arcy [2005] 1 Qd R 666 …. 23-03 — v Howell (1874) LR 18 Eq 198 …. 10-31 — v Perpetual Trustee Co Ltd (1955) 94 CLR 537; [1956] ALR 85 …. 9-34, 2309 — v Thomas [1939] St R Qd 301 …. 19-31, 19-57 Thomas & Agnes Carvel Foundation v Carvel [2008] Ch 395 …. 13-42 Thomas Brown & Sons Ltd v Fazal Deen (1962) 108 CLR 391; [1963] ALR 378 …. 9-08 Thomas Hare Investments Ltd v Hare (2012) 34 VR 656 …. 17-06 Thomas’ Will, Re (1884) 10 VLR (E) 25 …. 19-31 Thompson, Re (1909) 28 NZLR 356 …. 15-62 Thompson, Re [1930] 1 Ch 203 …. 13-13 Thompson, Re [1934] Ch 342; [1933] All ER Rep 805 …. 10-32, 11-05 Thompson v Corby (1860) 27 Beav 649; 54 ER 257 …. 10-20 — v Federal Commissioner of Taxation (1959) 102 CLR 315; [1960] ALR 184 …. 10-08, 10-09, 10-10 — v Finch (1856) 22 Beav 316; 8 De GM & G 560; 52 ER 1130 …. 21-19 — v Griffin (1841) Cr & Ph 317; 41 ER 512 …. 20-63 — v Thompson (1844) 1 Coll 381; 63 ER 464 …. 10-23, 10-28 Thompson’s Settlement, Re [1986] Ch 99; [1985] 2 All ER 720 …. 17-44 Thompson’s Settlements, Re [1905] 1 Ch 229 …. 14-04 Thompson’s Trustee v Heaton [1974] 1 All ER 1239; [1974] 1 WLR 605 …. 1317 Thomson, Re [1927] VLR 98 …. 19-03 Thomson v Clydesdale Bank Ltd [1893] AC 282 …. 27-17 — v Eastwood (1877) 2 App Cas 215 …. 17-47 — v Shakespear (1860) 1 De GF & J 399; 45 ER 413 …. 5-30 — v Whittard (1925) 25 SR (NSW) 430; 42 WN (NSW) 132 …. 10-40 Thorley, Re [1891] 2 Ch 613 …. 17-39

Thorne v Heard [1894] 1 Ch 599 …. 22-30 — v Heard & Marsh [1895] AC 495 …. 22-26, 22-27, 22-30 Thornley v Boyd (1925) 36 CLR 526; 31 ALR 425 …. 19-46 Thorner v Major [2009] 3 All ER 945; [2009] 1 WLR 776 …. 13-11 Thornton v Hawley (1804) 10 Ves 129; 32 ER 793 …. 26-10 — v Howe (1862) 31 Beav 14; 54 ER 1042 …. 10-33 Thorpe, Re [1891] 2 Ch 360 …. 17-40 Thorpe v Bristile Ltd (1996) 16 WAR 500 …. 3-15 Thos Franklin & Sons Ltd v Cameron (1935) 36 SR (NSW) 286; 53 WN (NSW) 30 …. 2-02, 2-07, 13-27 Throp v Trustees, Executors and Agency Co of New Zealand Ltd [1945] NZLR 483 …. 17-44 Throsby’s Settlement, Re (1868) 7 SCR (NSW) Eq 10 …. 25-04 Thureau, Re [1948] 2 ALR 487 …. 10-65 Thursby v Thursby (1875) LR 19 Eq 395 …. 19-04 Thwaites v Ryan [1984] VR 65 …. 12-14 Tickle v Tickle (1987) 10 NSWLR 581 …. 25-11 Tickner v Old (1874) LR 18 Eq 422 …. 19-20 Tidd, Re [1893] 3 Ch 154 …. 2-13 Tidex v Trustees Executors & Agency Co Ltd [1971] 2 NSWLR 453 …. 11-04 Tierney v King [1983] 2 Qd R 580 …. 17-16 — v Wood (1854) 19 Beav 330; 52 ER 377 …. 4-01, 7-07, 7-08 Tiger v Barclays Bank Ltd [1951] 2 KB 556; [1951] 2 All ER 262 …. 15-84, 1714, 21-29 — v — [1952] 1 All ER 85 …. 21-29 Tilley’s Will Trusts, Re [1967] Ch 1179; [1967] 2 All ER 303 …. 27-09 Tillott, Re [1892] 1 Ch 86 …. 17-14, 17-15, 17-16 Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 …. 13-11, 13-31, 13-34, 13-43 Timber Top Realty Pty Ltd v Mullens [1974] VR 312 …. 13-47

Timmis, Re [1902] 1 Ch 176 …. 22-27, 22-28 Timpson’s Executors v Yerbury [1936] 1 KB 645; [1936] All ER 186 …. 6-24 Tindal, Re (1933) 34 SR (NSW) 8; 50 WN (NSW) 247 …. 19-03, 19-11, 1913, 19-14, 19-20 Tinsley v Milligan [1992] Ch 310; [1992] 2 All ER 391 …. 9-03 — v — [1994] 1 AC 340; [1993] 3 All ER 65 …. 9-02, 9-03, 9-08 Tito v Waddell (No 2) [1977] Ch 106; [1977] 3 All ER 129 …. 5-02, 5-20, 1412, 17-43 Titterton v Oates (1998) 143 FLR 467 …. 15-85, 15-86 Todd v Moorhouse (1874) LR 19 Eq 69 …. 19-55 Todd (No 2), Re (1910) 10 SR (NSW) 490; 27 WN (NSW) 110 …. 17-20 Tognetti v Tognetti (1905) 5 SR (NSW) 619 …. 20-57 Toksoz v Westpac Banking Corporation (2012) 289 ALR 577 …. 13-10, 27-07 Tollemache, Re [1903] 1 Ch 457 …. 17-05, 22-12, 22-21 Tomkins, Re [1958] VR 310; [1958] ALR 693 …. 10-46, 10-66 Tomlins, Re [1961] VR 552 …. 9-27 Tomlinson v Gill (1756) Amb 330; 27 ER 221 …. 2-21, 2-24 Tong, Re [1907] VLR 338; (1907) 13 ALR 119 …. 20-48 Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397 …. 29-55 Toohey, Re (1906) 6 SR (NSW) 538; 23 WN (NSW) 111 …. 17-05 Toomelah Cooperative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 …. 10-84 Tooth v Power [1891] AC 284; (1891) 8 WN (NSW) 1 …. 12-10 Topham, Re [1938] 1 All ER 181 …. 10-50 Totten, Re 71 NE 748 (1904) …. 5-03 Towley v Unwin (1855) 2 K & J 138; 69 ER 726 …. 19-38 Town Investments Ltd v Department of the Environment [1978] AC 359; [1977] 1 All ER 813 …. 5-20 Towndrow, Re [1911] 1 Ch 602 …. 21-18 Townley v Bedwell (1808) 14 Ves 591; 33 ER 648 …. 26-13

Townson v Tickell (1819) 3 B & Ald 31; 106 ER 575 …. 15-73 Tracy v Mandalay Pty Ltd (1953) 88 CLR 215 …. 13-28 Trafford v Boehm (1746) 3 Atk 440; 26 ER 1054 …. 21-23 Transphere Pty Ltd, Re (1986) 5 NSWLR 309 …. 12-02 Travis, Re [1900] 2 Ch 541; [1900–3] All ER Ext 1660 …. 12-05 Travis v Illingworth (1865) 2 Dr & Sm 344; 62 ER 652 …. 15-09 Tree, Re [1945] Ch 325; [1945] 2 All ER 65 …. 10-06, 10-08, 10-24 Trevelyan v Charter (1835) 4 LJ (NS) Ch 209 …. 22-30 Tribe v Tribe [1996] Ch 107; [1995] 4 All ER 236 …. 9-08 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270 …. 2-25 — v — (1988) 165 CLR 107; 80 ALR 574 …. 2-17, 2-21, 2-23, 5-02, 6-06 Triffitt’s Settlement, Re [1958] Ch 852; [1958] 2 All ER 299 …. 15-05 Trimble v Kirkland (1913) 13 SR (NSW) 417; 30 WN (NSW) 121 …. 15-55, 15-83, 21-36 Trinkler v Beale (2009) 72 NSWLR 365 …. 17-47 Triplex Safety Glass Co v Scorah [1938] Ch 211; [1937] 4 All ER 693 …. 13-26 Trollope’s Will, Re [1927] All ER Rep 365 …. 19-09 Trust Company Fiduciary Services Ltd v Challenger Managed Investments Ltd (2008) 68 ACSR 356 …. 17-06 Trustees Executors and Agency Co Ltd v Jope (1902) 27 VLR 706 …. 20-30 — v Margottini [1960] VR 417 …. 9-27 — v Smith (1903) 28 VLR 707 …. 23-07 Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394; [1961] ALR 339 …. 9-14, 9-16, 9-17 — v Lake Macquarie Shire Council [1975] 1 NSWLR 521 …. 10-22 Trustees of the British Museum v A-G [1984] 1 All ER 337; [1984] 1 WLR 418 …. 17-07 Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; 224 ALR 280 …. 12-13 Trusts of Kean Memorial Trust Fund, Re (2003) 86 SASR 449 …. 17-02, 17-06

Truthful Endeavour Pty Ltd v Condon (Trustee); Re Rayhill (Bankrupt) (2015) 321 ALR 483 …. 2-26 T’s Settlement Trusts, Re [1964] Ch 158; [1963] 3 All ER 759 …. 17-07 Tse Kwong Lam v Wong Chit Sen [1983] 3 All ER 54; [1983] 1 WLR 1349 …. 17-44 Tucker, Re [1894] 1 Ch 724 …. 18-05 Tuck’s Settlement Trusts, Re [1978] Ch 49; [1978] 1 All ER 1047 …. 9-16 Tufnell, Re (1902) 18 TLR 705 …. 22-26 Tufnell v Constable (1838) 7 Ad & E 798; 112 ER 670 …. 14-13 Tulley, Re [1918] VLR 556 …. 7-32 Tunstall, Re [1921] VLR 559 …. 15-46 Tunstall’s Will, Re (1851) 4 De G & Sm 421; 64 ER 896 …. 15-69 Turbo Resources Ltd v Paperny [1982] 2 WWR 372 …. 20-11 Turner, Re [1907] 2 Ch 126 …. 21-10 Turner, Re [1923] VLR 189 …. 15-17 Turner, Re; Barker v Ivimey [1897] 1 Ch 536 …. 18-26, 18-28, 21-19, 22-12, 22-13, 22-19, 22-20 Turner v Bladin (1951) 82 CLR 463 …. 13-07 — v Hancock (1882) 20 Ch D 303 …. 21-09 — v Noyes (1903) 20 WN (NSW) 266 …. 23-02 — v Ogden (1787) 1 Cox 316; 29 ER 1183 …. 10-45 — v Turner [1984] Ch 100; [1983] 2 All ER 745 …. 17-01 Turner’s Will Trusts, Re [1960] Ch 122; [1959] 2 All ER 689 …. 17-07 Turtle, Re (1895) 11 WN (NSW) 153 …. 19-31 Turton v Turton [1988] Ch 542; [1987] 2 All ER 641 …. 12-18 Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762 …. 2-17, 2-24 Tweedie and Miles, Re (1884) 27 Ch D 315 …. 20-06, 26-10 Twigg v Kung (2002) 55 NSWLR 485 …. 2-29 Twining v Powell (1845) 2 Coll 262; 63 ER 726 …. 19-41 Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 …. 2-14, 2-15, 3-06, 3-07, 5-03, 12-01, 12-06, 13-37

Tyler, Re [1891] 3 Ch 252; [1891–4] All ER Rep Ext 1996 …. 10-37, 10-81 Tyler’s Fund Trusts, Re [1967] 3 All ER 389; [1967] 1 WLR 1269 …. 7-08 Tyndall, Re [1913] SALR 39 …. 28-07 Tyrell v Bank of London (1862) 10 HL Cas 26; 11 ER 934 …. 17-49 Tyrie (dec’d), Re [1970] VR 264 …. 10-35, 10-68, 10-71, 20-03 Tyson, Re (1906) 7 SR (NSW) 91; 24 WN (NSW) 6 …. 10-48 Tyson v Tyson (1901) 1 SR (NSW) Eq 18 …. 22-33

U UBAF Ltd v European American Banking Corp [1984] QB 713; [1984] 2 All ER 226 …. 22-30 UEB Industries Ltd Pension Plan, Re [1992] 1 NZLR 294 …. 8-02, 29-53, 29-56 Ulrich v Treasurer Solicitor [2005] 1 All ER 1059; [2006] 1 WLR 33 …. 10-65 Ulverston and District New Hospital Building Fund, Re [1956] Ch 622; [1956] 3 All ER 164 …. 12-08 Umphelby v Grey (1898) 24 VLR 979; 5 ALR 66 …. 20-43 Ungurian v Lesnoff [1990] Ch 206 …. 13-48 Uniacke, Re (1844) 1 Jo & Lat 1 …. 15-73 Union Bank v Harrison Jones and Devlin (1910) 11 CLR 492 …. 2-43 Union Bank of London v Kent (1888) 59 LT 714 …. 9-44 Union of London and Smith’s Bank v Litchfeld [1916] 1 Ch 511; [1916–17] All ER Rep 750 …. 17-11 Union Trustee Co of Australia Ltd v Barlam [1948] AC 495 …. 19-49 — v Church of England Property Trust (1946) 46 SR (NSW) 298; 63 WN (NSW) 153 …. 10-18, 10-46, 10-65 — v Eckford (1930) 31 SR (NSW) 92; 48 WN (NSW) 40 …. 19-49, 19-51, 1957, 20-31 — v Federal Commissioner of Taxation (1962) 108 CLR 451; [1963] ALR 123 …. 10-20 — v Graham (1931) 31 SR (NSW) 528; 48 WN (NSW) 194 …. 19-11, 19-20 — v Watson (1930) 48 WN (NSW) 102 …. 19-40

United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; 60 ALR 741 …. 13-29, 13-30, 13-52 United Nation Bank v Weatherly 75 NYS 3 (1902) …. 27-15 United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 …. 13-31, 22-04 — v — [1983] 2 NSWLR 157 …. 13-04, 13-31, 13-34, 13-36, 13-38, 13-39, 1341, 13-43 Uniting Church in Australia Property Trust (NSW) v Monsen [1978] 1 NSWLR 575 …. 10-67 Universal Distributing Co Ltd (in liq), Re (1933) 48 CLR 171; [1933] ALR 107 …. 2-29 University College of North Wales v Taylor [1908] P 140 …. 10-28 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429; 41 ALJR 348 …. 5-05, 5-24 Upton v Browne (1884) 26 Ch D 588 …. 19-45 UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [1997] 1 VR 667 …. 2405 Uvedale v Ettrick (1682) 2 Cas Ch 130; 22 ER 880 …. 15-86

V Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1946] ALR 50 …. 2044, 21-02, 21-04, 21-13 Vale v Sutherland (2009) 237 CLR 638; 258 ALR 1 …. 9-39 Vallance, Re (1876) 2 Seton’s Judgments 7th ed …. 10-57 Vallance v R (1961) 108 CLR 56; [1963] ALR 461 …. 1-02 Van Gruisen’s Will Trusts, Re [1964] 1 All ER 843; [1964] 1 WLR 449 …. 1707 Van Ingen, Matter of 100 NYS 2d 244 (1950) …. 27-15 Van Rassel v Kroon (1953) 87 CLR 298; [1953] ALR 190 …. 13-21, 17-02 Vandepitte v Preferred Accident Insurance Corp of New York [1933] AC 70; [1932] All ER Rep 527 …. 2-22, 2-23 Vandervell v Inland Revenue Commissioners [1967] 2 AC 291; [1967] 1 All ER

1 …. 7-05, 12-01, 12-02 Vandervell’s Trusts, Re; White v Vandervell Trustees Ltd [1974] Ch 269; [1974] 1 All ER 47 …. 3-07, 12-01 Vandervell’s Trusts (No 2), Re; White v Vandervell Trustees Ltd [1974] Ch 269; [1974] 3 All ER 205 …. 12-01 Vane v Vane (1873) 8 Ch D 383 …. 22-30 Varsani v Jesani [1999] Ch 219; [1998] 3 All ER 273 …. 10-74 Vasenelak v Vasenelak (1921) 57 DLR 370 …. 12-10 Vatcher v Paull [1915] AC 372; [1914–15] All ER Rep 609 …. 2-04, 17-43 Vaughan, Re (1886) 33 Ch D 187 …. 10-36 Vaughn, Re (1893) 14 LR (NSW) Eq 166 …. 25-04 Vedejs v Public Trustee [1985] VR 569 …. 12-10 Venture, The [1908] P 218 …. 12-10 Verge v Somerville [1924] AC 496; [1924] All ER Rep 121 …. 10-01, 10-06, 10-56, 10-69 Verner v General and Commercial Investments Trust [1894] 2 Ch 239; [1891– 4] All ER Rep Ext 1409 …. 19-40 Vernon’s Will Trusts, Re [1972] Ch 300; [1971] 3 All ER 1061 …. 10-84 Verrall, Re [1916] 1 Ch 100; [1914–15] All ER Rep 546 …. 10-58 Verran v Public Trustee [1976] 1 NZLR 518 …. 26-12, 26-14 Vezey v Jamson (1822) 1 S & S 69; 57 ER 27 …. 10-63 Vicat, Re (1886) 33 Ch D 103 …. 15-58 Vickery, Re [1931] 1 Ch 572; [1931] All ER Rep 562 …. 17-31, 22-09 Vickery v Evans (1863) 33 Beav 376; 55 ER 413 …. 18-34 Victoria v Sutton (1998) 195 CLR 291; 156 ALR 579 …. 9-32 Vigliaroni v CPS Investment Holdings Pty Ltd (2009) 74 ACSR 282 …. 3-13 Vinden v Vinden [1982] 1 NSWLR 618 …. 13-50 Vinogradoff, Re [1935] WN 68 …. 12-10, 14-02 Vipont v Butler [1893] WN 64 …. 17-40 Viscount Furness, Re [1943] Ch 415 …. 23-06 Visnic v Sywak (2009) 257 ALR 517 …. 2-02, 2-08

Viveash, Re [1971] WAR 62 …. 17-07 Voges v Monaghan (1954) 94 CLR 231 …. 3-06, 7-04, 7-16, 7-18, 7-19 Von Ernst & Cie SA v IRC [1980] 1 All ER 677; [1980] 1 WLR 468 …. 10-84 Voulis v Kozary (1975) 180 CLR 177; 7 ALR 126 …. 13-21 Vyse v Foster (1874) LR 7 HL 318 …. 17-39

W W & R Holmes and Cosmopolitan Press Ltd’s Contract, Re [1944] Ch 53; [1943] 2 All ER 716 …. 20 W D Fairway (No 3), The [2009] 2 Lloyd’s Rep 420 …. 28-14 Wade v Cox (1835) 4 LJ Ch 105 …. 22-33 — v Wade [2009] WASC 118 …. 3-15, 7-09, 13-06 Wakley, Re [1920] 2 Ch 205; [1920] All ER Rep 749 …. 19-31 Walden, Re (1903) 3 SR (NSW) 375 …. 21-07 Walker, Re (1890) 62 LT 449 …. 18-26, 18-27, 18-35, 20-72 Walker, Re (1901) 1 SR (NSW) Eq 237; 19 WN (NSW) 3 …. 19-22, 19-47, 19-55, 20-31 Walker, Re [1901] 1 Ch 879 …. 21-07 Walker, Re [1905] 1 Ch 160 …. 4-06 Walker, Re [1908] 2 Ch 705 …. 26-09 Walker, Re [1934] WN 104 …. 19-32 Walker, Re [1939] Ch 974; [1939] 3 All ER 902 …. 9-24 Walker, Re; Summers v Barrow [1901] 1 Ch 259 …. 15-05, 15-11, 15-14 Walker v Corboy (1990) 19 NSWLR 382 …. 2-11, 5-02 — v Southall (1887) 56 LT 882 …. 20-12 — v Stones [2001] QB 902; [2000] 4 All ER 412 …. 16-20 — v Symonds (1818) 3 Swan 1; 36 ER 751 …. 22-33 — v Webb (1845) 1 Legge 253 …. 13-41 — v Wimborne (1976) 137 CLR 1 …. 2-03, 13-27 Walker (No 2), Re (1903) 3 SR (NSW) 163; 20 WN (NSW) 86 …. 18-37

Wall, Re (1889) 42 Ch D 510 …. 10-23 Wall, Re (1979) 25 ALR 615 …. 5-22 Wall v Bright (1820) 1 Jac & W 494; 37 ER 456 …. 13-07 Wallace v Love (1922) 31 CLR 156; 28 ALR 405b …. 20-72 Wallace’s Settlements, Re [1968] 2 All ER 209; [1968] 1 WLR 711 …. 17-07 Waller v Barrett (1857) 24 Beav 413; 53 ER 417 …. 22-10 Wallersteiner v Moir (No 2) [1975] QB 373; [1975] 1 All ER 849 …. 22-07, 2208 Wallgrave v Tebbs (1855) 2 K & J 313; 69 ER 800 …. 7-18, 7-20, 7-35 Wallis v Solicitor-General (New Zealand) [1903] AC 173 …. 10-86 Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 …. 2-15, 5-02 Walter J Schmidt & Co, Re 298 F 314 (1923) …. 27-10 Walters v Woodbridge (1878) 7 Ch D 504 …. 21-09 Wambo Coal Pty Ltd v Ariff (2007) 63 ACSR 429 …. 13-10, 27-05 Want v Stallibrass (1873) LR 8 Exch 175 …. 20-02 Ward, Re [1941] Ch 308; [1941] 1 All ER 315 …. 10-65 Ward v Hipwell (1862) 3 Giff 547; 66 ER 525 …. 10-67 — v Van de Loeff [1924] AC 653; [1924] All ER Rep 542 …. 9-28 Ward’s Will Trusts, Re [1936] Ch 704; [1936] 2 All ER 773 …. 19-38, 19-40 Ware v Cann (1830) 10 B & C 433; 109 ER 511 …. 9-19 — v — (1855) 20 Beav 503; 52 ER 697 …. 10-67 — v Polhill (1805) 11 Ves 257; 32 ER 1087 …. 26-22 Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201 …. 1311, 13-34, 17-42 Warner v Sampson [1958] 1 QB 404; [1958] 1 All ER 44 …. 2-43 Warr v Warr (1702) Prec Ch 213; 104 ER 24 …. 20-58 Warren v Gurney [1944] 2 All ER 472 …. 12-12, 12-13 — v Ruddall (1860) 1 John & H 1; 70 ER 637 …. 15-73 Warre’s Will Trust, Re [1953] 2 All ER 99; [1953] 1 WLR 725 …. 10-44

Warter v Anderson (1853) 11 Hare 301; 68 ER 1289 …. 21-29 Warwick v Richardson (1842) 10 M & W 284; 154 ER 477 …. 21-20 Wassell v Leggatt [1896] 1 Ch 554 …. 22-27 Waterhouse v Waterhouse (1998) 46 NSWLR 449 …. 17-13 Waters, Re [1889] WN 39 …. 20-70 Watkins v L’Estrange (1863) 2 SCR (NSW) Eq 85 …. 17-44 Watling v Lewis [1911] 1 Ch 414 …. 21-03 Watson, Re (1881) 19 Ch D 384 …. 15-53 Watson, Re [1896] 1 Ch 925 …. 21-11 Watson, Re (1899) 18 NZLR 368 …. 15-54 Watson v Dolmark Industries Ltd [1992] 3 NZLR 311 …. 13-34 — v Hayes (1839) 5 Myl & Cr 125; 41 ER 319 …. 12-05 — v Holland (Inspector of Taxes) [1985] 1 All ER 290 …. 12-09 — v Little (1921) 38 WN (NSW) 143 …. 19-46, 19-57 — v Royal Insurance Co [1896] 1 QB 41 …. 19-54 Watson (decd), Re [1973] 3 All ER 678; [1973] 1 WLR 1472 …. 10-33, 10-34, 10-44 Watson’s Bay & South Shore Ferry Co Ltd v Whitfeld (1919) 27 CLR 268 …. 16-14 Watt, Re [1932] 2 Ch 243 …. 10-85 Watts v Watts (1873) LR 17 Eq 217 …. 26-07 Watt’s Settlement, Re (1851) 9 Hare 106; 68 ER 434 …. 15-18 Waugh v Wyche (1854) 2 Drew 318; 61 ER 742 …. 17-20 Weall, Re (1889) 42 Ch D 674 …. 17-23 Weatherall v Thornburgh (1878) 8 Ch D 261; [1874–80] All ER Rep 382 …. 23-14 Weaver, Re [1963] VR 257 …. 10-57, 10-83 Webb, In the Estate of (1992) 57 SASR 193 …. 17-13, 28-02, 28-08, 28-20 Webb, Re [1941] Ch 225; [1941] 1 All ER 321 …. 2-22, 2-23 Webb v Ledsam (1855) 1 K & J 385; 69 ER 508 …. 20-16, 20-49

— v Shaftesbury (1802) 7 Ves 480; 32 ER 194 …. 17-39 Webber, Re [1954] 3 All ER 712 …. 10-31 Webster v Christian (1918) 18 SR (NSW) 615; 35 WN (NSW) 183 …. 19-43 Wedgwood, Re [1915] 1 Ch 113; [1914–15] All ER Rep 322 …. 7-19, 10-57 Weeding v Weeding (1861) 1 J & H 424; 70 ER 812 …. 26-13 Weiner’s Will Trusts, Re [1956] 2 All ER 482; [1956] 1 WLR 759 …. 23-11 Weir, Re (1910) 28 WN (NSW) 9 …. 19-47 Weir, Re [1971] Ch 145; [1970] 1 All ER 297 …. 23-15 Weir v Crum-Brown [1908] AC 162 …. 10-31 Weir Hospital, Re [1910] 2 Ch 124; [1908–10] All ER Rep 690 …. 10-72 Welby v Rockcliffe (1830) 1 Russ & My 571; 39 ER 219 …. 2-36 Weldtech Equipment Ltd, Re [1991] BCLC 393 …. 2-48 Wellbeloved v Jones (1822) 1 Sim & St 40; 57 ER 16 …. 10-67, 10-69 Weller v Kerr (1866) LR 1 HL (Sc) 11 …. 16-14 Wells, Re [1962] 2 All ER 826; [1962] 1 WLR 874 …. 17-39 Wells v Wily (2004) 50 ACSR 103 …. 15-51, 15-57 Welsh Hospital (Netley) Fund, Re [1921] 1 Ch 655 …. 10-55 Wentworth, Re (1915) 15 SR (NSW) 384; 32 WN (NSW) 130 …. 19-55 Wentworth v De Montfort (1988) 15 NSWLR 348 …. 17-16 — v Wentworth [1900] AC 163 …. 19-03, 19-09, 19-13 — v — (1903) 4 SR (NSW) 45; 21 WN (NSW) 17 …. 19-13 Wernher v Boehm (1890) 16 VLR 73 …. 15-85 Wernher’s Charitable Trust v Inland Revenue Commissioners [1937] 2 All ER 488 …. 10-53 West, Re [1900] 1 Ch 84 …. 12-08 West v Federal Commissioner of Taxation (1949) 79 CLR 319 …. 5-06 — v Houghton (1879) 4 CPD 197 …. 2-18, 2-20 — v Shuttleworth (1835) 2 My & K 684; 39 ER 1106 …. 10-13, 10-40 — v Weston (1998) 44 NSWLR 657 …. 5-26 West Australian Baptist Hospital & Homes Trust Inc v City of South Perth

[1978] WAR 65 …. 10-21, 10-22 West Mercia Safetywear Ltd (in liq) v Dodd [1988] BCLC 250 …. 2-03 West Sussex Constabulary’s Widows Children & Benevolent (1930) Fund Trusts, Re [1971] Ch 1; [1970] 1 All ER 544 …. 12-08 Westby’s Settlement, Re [1950] Ch 296; [1950] 1 All ER 479 …. 9-23 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; [1996] 2 All ER 961 …. 3-07, 12-01, 12-04, 12-05, 12-10, 12-13, 13-10, 13-11, 27-05 Westfield Holdings Ltd, Re (2004) 49 ACSR 734 …. 3-10 Weth v Attorney-General [1999] 1 WLR 686 …. 23-05 Westdeutsche Landesbank v Islington London Borough Council [1994] 4 All ER 890; [1994] 1 WLR 938 …. 27-05 Westley v Clarke (1759) 1 Eden 357; 28 ER 723 …. 22-09 Westmeath v Westmeath (1830) 1 Dow & Cl 519 …. 9-10 Weston, Re [1900] 2 Ch 164 …. 21-11 Weston v Carling Constructions Pty Ltd (in prov liq) (2000) 35 ACSR 100 …. 2-29 Weston’s Settlements, Re [1969] 1 Ch 223; [1968] 3 All ER 338 …. 17-07 Westpac Banking Corporation v Bell Group (in liq) (No 3) (2012) 44 WAR 1 …. 13-39, 16-01 Westralian Farmers Co-operative Ltd v Southern Meat Packers Ltd [1981] WAR 241 …. 2-25 West’s Will, Re (1896) 17 LR (NSW) Eq 176; 13 WN (NSW) 57 …. 15-58, 15-69, 25-04 Whakatane Paper Mills Ltd v Public Trustee (1939) 39 SR (NSW) 426; 56 WN (NSW) 177 …. 20-72, 23-09 Wharton v Masterman [1895] AC 186; [1895–9] All ER Rep 687 …. 9-34, 1082, 17-05, 18-01, 23-08, 23-09 Wheal Ellen Gold Mining Co v Read (1908) 7 CLR 34 …. 13-28 Wheelwright v Walker (1883) 23 Ch D 75 …. 15-64 Wheldale v Partridge (1800) 5 Ves 388; 31 ER 643 …. 26-25 Wheller and De Rochow, Re [1896] 1 Ch 315 …. 15-07

Whichelow, Re [1953] 2 All ER 1558; [1954] 1 WLR 5 …. 20-51, 23-13 Whicker v Hume (1858) 7 HLC 124; 11 ER 50 …. 10-26 Whitbread v Smith (1854) 3 De GM & G 272; 43 ER 286 …. 19-53 Whitchurch, Re [1990] VR 719 …. 15-52 White, Re [1893] 2 Ch 41; [1891–4] All ER Rep 242 …. 10-43, 10-61 White, Re [1898] 1 Ch 297 …. 17-40 White, Re [1898] 2 Ch 217; [1895–9] All ER Rep 229 …. 17-40 White, Re (1910) 10 SR (NSW) 295; 27 WN (NSW) 88 …. 17-49 White, Re [1913] 1 Ch 231 …. 19-31 White, Re [1959] VR 661 …. 20-62, 25-11 White, Re [1963] NZLR 788 …. 5-29, 10-65 White v Grane (1854) 18 Beav 571; 52 ER 224 …. 20-63 — v Lady Lincoln (1803) 8 Ves 363; 32 ER 395 …. 17-13 — v Shortall (2006) 68 NSWLR 650 …. 5-24, 12-10 — v Thompson [2011] NSWCA 161 …. 22-04 Whitehead, Re [1894] 1 Ch 688; [1891–4] All ER Rep 636 …. 19-15 Whitehead’s Will Trusts, Re [1959] Ch 579; [1959] 2 All ER 497 …. 19-39 Whitehead’s Will Trusts, Re [1971] 2 All ER 1334; [1971] 1 WLR 833 …. 15-19 Whitehouse, Re [1982] Qd R 196 …. 15-20, 15-86, 16-15, 17-14 Whiteley, Re (1886) 33 Ch D 347 …. 17-18, 18-02 Whiteley, Re [1910] 1 Ch 600 …. 16-14 White’s Will Trusts, Re [1955] Ch 188; [1954] 2 All ER 620 …. 10-71 Whitfield, Re (1920) 125 LT 61; [1920] All ER Rep 668 …. 20-53 Whiting’s Settlement, Re [1905] 1 Ch 96 …. 9-13 Whitney v Smith (1869) 4 Ch D 513 …. 17-49 Whittall, Re [1973] 3 All ER 35; [1973] 1 WLR 1027 …. 17-07 Whittingham v Proudfoot [1861–72] Mac 457 …. 21-09 Whitton v ACN 003 266 886 Pty Ltd (1996) 14 ACLC 1799 …. 15-85 Whitworth Art Gallery Trusts, Re [1958] Ch 461; [1958] 1 All ER 176 …. 1071

Whywait Pty Ltd v Davison [1997] 1 Qd R 225 …. 13-29 Wicks v Bennett (1921) 30 CLR 80; 28 ALR 30 …. 2-07, 17-42 Wightwick’s Will Trust, Re [1950] Ch 260; [1950] 1 All ER 689 …. 22-16 Wiglesworth v Wiglesworth (1852) 16 Beav 269; 51 ER 782 …. 23-03 Wigley v Crozier (1909) 9 CLR 425 …. 20-70, 20-72 Wilcox, Re [1940] SASR 217 …. 19-11, 19-12, 19-14, 19-22 Wilcox v Poole [1974] 2 NSWLR 693 …. 9-27 Wilden Pty Ltd v Green (2009) 38 WAR 429 …. 16-20, 17-04 Wilding v Bolder (1855) 21 Beav 222; 52 ER 845 …. 15-60 — v Richards (1845) 1 Coll 655; 63 ER 584 …. 5-15 Wiles v Gresham (1854) 2 Drew 258; 61 ER 718 …. 22-05 — v — (1854) 5 De GM & G 770; 43 ER 1069 …. 17-20 Wilkes (Beloved) Charity, Re (1851) 3 Mac & G 440; 42 ER 330 …. 16-10 Wilkie v Equity Trustees Executors and Agency Co Ltd [1909] VLR 277; (1909) 15 ALR 208 …. 19-56, 20-30, 20-31 Wilkins v Hogg (1861) 31 LJ Ch 41 …. 16-17, 16-18 — v Wilkins [2007] VSC 100 …. 12-13 Wilkinson, Re [1954] VLR 486; [1954] ALR 666 …. 19-39 Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd (1998) 79 FCR 469; 152 ALR 332 …. 29-42 — v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 …. 17-18, 1723, 22-02, 22-05, 22-08, 22-09 — v Parry (1828) 4 Russ 272; 38 ER 808 …. 15-22, 17-05, 22-33, 23-09 — v Wilkinson (1825) 2 Sim & St 237; 57 ER 337 …. 17-23 William Brandt’s Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454; [1904–7] All ER Rep 345 …. 6-20 William Felton & Co Pty Ltd, Re (1998) 145 FLR 211 …. 24-05 William Just (No 1), Estate of (1973) 7 SASR 508 …. 23-05 Williames, Re (1885) 54 LT 105 …. 2-35 Williams, Re (1877) 5 Ch D 735 …. 9-07, 10-61 Williams, Re [1897] 2 Ch 12 …. 1-02, 5-05, 5-08

Williams, Re (1910) 26 TLR 307 …. 10-35 Williams, Re [1912] 1 Ch 399 …. 9-23 Williams, Re (1916) 115 LT 689; [1916–17] All ER Rep 354 …. 6-17 Williams, Re [1927] 2 Ch 283 …. 10-39 Williams, Re [1933] Ch 244; [1932] All ER Rep 724 …. 7-22, 7-32 Williams, Re (1934) 50 CLR 341 …. 9-42 Williams, Re [1955] VLR 65 …. 10-83, 12-04 Williams v A-G (NSW) (1913) 16 CLR 404; 19 ALR 378 …. 14-12 — v Allen (No 2) (1863) 32 Beav 650; 55 ER 255 …. 21-23 — v Barton [1927] 2 Ch 9; [1927] All ER Rep 751 …. 17-49 — v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 …. 3-05, 308, 13-02, 13-11, 13-35, 22-25 — v Commissioner of Inland Revenue [1965] NZLR 395 …. 6-17 — v Commissioner of Stamp Duties [1943] NZLR 88 …. 7-19 — v Lloyd (1933) 50 CLR 341 …. 6-17, 9-43 — v Papworth [1900] AC 563 …. 23-03 — v Powell (1852) 15 Beav 416; 51 ER 616 …. 22-08 — v Scott [1900] AC 499; (1900) 17 WN (NSW) 104 …. 17-43, 17-47 Williams’ Settlement, Re (1858) 4 K & J 87; 70 ER 37 …. 15-16 Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447; [1947] 1 All ER 513 …. 10-10, 10-50, 10-58 Williams-Ashman v Price [1942] Ch 219; [1942] 1 All ER 310 …. 15-03 Williamson v Codrington (1750) 1 Ves Sen 512; 27 ER 1174 …. 6-09 Willis, Re [1902] 1 Ch 15 …. 20-30 Willis v Barron [1902] AC 271; [1900–3] All ER Rep 876 …. 17-49 — v Howe [1893] 2 Ch 545 …. 22-30 — v Kibble (1839)1 Beav 559; 48 ER 1057 …. 17-40 — v Stephens [1934] VLR 19 …. 15-17 Willoughby City Council v Roads and Maritime Services (2014) 201 LGERA 177 …. 10-67

Wills, Re [1939] 2 All ER 775 …. 19-17 Wills v Trustees, Executors and Agency Co Ltd (1900) 25 VLR 391; 6 ALR 37 …. 17-31 Wilson, Re (1885) 28 Ch D 457 …. 23-06 Wilson, Re [1913] 1 Ch 314; [1911–13] All ER Rep 1101 …. 10-68, 10-85 Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43; [1956] ALR 311 …. 2-17, 2-21, 2-22, 2-23, 5-02 — v Dent (1830) 3 Sim 385; 57 ER 1042 …. 7-08 — v Law Debenture Trust Corporation plc [1995] 2 All ER 337 …. 8-02, 16-10, 17-16 — v Metro-Goldwyn-Mayer (1980) 18 NSWLR 730 …. 16-07, 29-56 — v Moore (1834) 1 My & K 126; 39 ER 629 …. 22-09 — v Thomas (1834) 4 LJ Ch 25 …. 20-58 — v Turner (1883) 22 Ch D 521 …. 16-06, 16-09, 20-63 — v Wilson (1848) 1 HL Cas 538; 9 ER 970 …. 9-10 — v — (1854) 5 HL Cas 40; 10 ER 811 …. 9-10 — v — (1950) 51 SR (NSW) 91; 68 WN (NSW) 78 …. 20-72, 23-11 Wilson (dec’d), Re [1923] VLR 277 …. 15-57 Wilson’s Grant, Re [1960] VR 514 …. 10-47 Wilton’s Settled Estates, Re [1907] 1 Ch 50 …. 20-11 Wimbush, Re [1940] Ch 92; [1940] 1 All ER 229 …. 19-31 Winch v Brutton (1844) 14 Sim 379; 60 ER 404 …. 5-24 Windeatt’s Will Trusts, Re [1969] 2 All ER 324; [1969] 1 WLR 692 …. 17-07 Windoval Pty Ltd v Donelly (2014) 314 ALR 622 …. 9-40 Windsor Mortgage Nominees Pty Ltd v Cardwell [1979] ACLC 32,195 …. 2711 Windsor Steam Coal Co, Re [1929] 1 Ch 151 …. 22-14, 22-16, 22-17 Winkfield, The [1902] P 42; [1900–3] All ER Rep 346 …. 2-20, 6-12 Winslow, Re (1890) 45 Ch D 249 …. 17-11 Winter v Grady (1921) 21 SR (NSW) 686 …. 5-24 — v Rudge (1847) 15 Sim 596; 60 ER 751 …. 15-05

Winter Holdings (WA) Pty Ltd [2015] WASC 162 …. 21-04 Winterstroke’s Will Trusts, Re [1938] Ch 158; [1937] 4 All ER 63 …. 19-33 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363 …. 5-02 Wintle, Re [1896] 2 Ch 711 …. 20-03 Wirth v Wirth (1956) 98 CLR 228 …. 12-12, 12-20 Wise, Re [1896] 1 Ch 281 …. 16-14 Wise v Perpetual Trustee Co [1903] AC 139 …. 21-05, 21-06 Withall, Re [1932] 2 Ch 236 …. 10-85 Withington v Withington (1848) 16 Sim 104; 61 ER 812 …. 15-18 Wittke, Re [1944] Ch 166; [1944] 1 All ER 384 …. 9-22, 9-23 Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 …. 9-19 Wolmershausen v Gullick [1893] 2 Ch 514; [1891] All ER Rep 740 …. 21-18, 22-32 Wonall Pty Ltd v Clarence Property Corp Ltd (2003) 58 NSWLR 23 …. 1-06, 24-01 Wong v Burt [2005] 1 NZLR 91 …. 16-19 Wood, Re [1894] 3 Ch 381 …. 9-28, 20-06 Wood, Re [1949] Ch 498; [1949] 1 All ER 1100 …. 11-06 Wood v Weightman (1872) LR 13 Eq 434 …. 17-23, 17-30 Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 All ER 571; [1980] 1 WLR 277 …. 2-17, 2-20 Woodhams, Re [1981] 1 All ER 202; [1981] 1 WLR 493 …. 10-68 Woodhill v Woodhill (1917) 17 SR (NSW) 647; 34 WN (NSW) 245 …. 17-44 Woodhouse, Re [1941] 2 All ER 265 …. 19-14 Woods, Re [1904] 2 Ch 4 …. 19-10, 19-12, 19-13 Wood’s Ship’s Woodite Protection Co, Re (1890) 62 LT 760 …. 13-27 Wood’s Trusts, Re (1870) LR 11 Eq 155 …. 21-10 Woollnough, Re [1953] Tas SR 25 …. 10-71 Worrell v Power and Power (1993) 46 FLR 214; 118 ALR 237 …. 2-29

Wragg, Re [1919] 2 Ch 58; [1918–19] All ER Rep 233 …. 18-03, 18-04 Wratten v Hunter [1978] 2 NSWLR 367 …. 7-09 Wright, Re [1954] Ch 347; [1954] 2 All ER 98 …. 10-71, 10-86 Wright, Re [1971] VLR 127 …. 10-83 Wright v Gater [2012] 1 WLR 802 …. 17-07 — v Morgan [1926] AC 788; [1926] All ER Rep 201 …. 17-44 — v Rose (1825) 2 Sim & St 323; 57 ER 369 …. 26-11 — v Tuckett (1860) 1 John & H 266; 70 ER 747 …. 19-30, 19-31 — v Wilkin (1860) 7 Jur NS 441 …. 2-36 — v Wilkin (1862) 2 B & S 232; 121 ER 1070 …. 2-31 Wright’s Trusts, Re (1857) 3 K & J 419; 69 ER 1173 …. 21-29 Wrightson, Re [1908] 1 Ch 789 …. 15-86, 15-87 Wrightson Ltd v Fletcher Challenge Nominees Ltd [2002] 2 NZLR 1 …. 8-03, 29-49, 29-57 Wroe v Seed (1863) 4 Giff 425; 66 ER 773 …. 17-13, 22-08 WT Ramsay v Inland Revenue Commissioners [1982] AC 300; [1981] 1 All ER 865 …. 5-04 Wykes (decd), Re; Riddington v Spencer [1961] Ch 229; [1961] 1 All ER 470 …. 10-66 Wyld, Re [1912] SALR 190 …. 10-55, 19-06, 19-22 Wylde v A-G (NSW) (1948) 78 CLR 224; [1949] ALR 153 …. 10-39, 10-67, 23-04 Wyman v Paterson [1900] AC 271 …. 17-30 Wynn’s Will Trusts, Re [1952] Ch 271; [1952] 1 All ER 341 …. 16-13 Wyvern Developments Ltd, Re [1974] 2 All ER 535; [1974] 1 WLR 1097 …. 20-12

X X v A [2000] 1 All ER 490 …. 17-11, 17-15, 18-09, 18-16, 21-04 — v — [2006] 1 All ER 952; [2006] 1 WLR 741 …. 20-59 Xebec Pty Ltd (in liq) v Enthe Pty Ltd (1987) 18 ATR 893 …. 15-20

Y Yara Australia Pty Ltd v Oswal (No 2) [2013] WASCA 187 …. 21-02 Yass Pastoral and Agricultural Association, Re (1902) 19 WN (NSW) 249 …. 10-78 Yates v University College London (1875) LR 7 HL 438 …. 10-01, 10-28, 1031, 10-86 — v Yates (1860) 28 Beav 637; 54 ER 511 …. 26-09 Yaxley v Gotts [2000] Ch 162; [2000] 1 All ER 711 …. 13-02, 13-41 Yeap Cheah Neo v Ong Cheng Neo (1875) LR 6 PC 381 …. 10-33 Yeo v Rotton (1865) 4 SCR (NSW) Eq 110 …. 18-26 York v Fraser (1894) 11 WN (NSW) 12 …. 15-69 Yorkshire Miners’ Association v Howden [1904–7] All ER Rep 602; [1905] AC 256 …. 23-03, 23-04 Young, Re (1905) 5 SR (NSW) 394; 22 WN (NSW) 135 …. 19-43 Young, Re [1951] Ch 344; [1950] 2 All ER 1245 …. 7-15, 7-30, 7-33 Young v Murphy (1994) 12 ACLC 558 …. 21-14 — v Murphy [1996] 1 VR 279 …. 17-02 — v Sealey [1949] Ch 278; [1949] 1 All ER 92 …. 12-13 — v Young (2014) 10 ASTLR 292 …. 7-09 Young’s Will Trusts, Re [1955] 3 All ER 689 …. 10-24 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; 196 ALR 482 …. 17-04, 17-18, 22-01, 22-04, 22-05 Yunghanns v Candoora No 19 Pty Ltd (No 2) (2000) 35 ACSR 34 …. 23-05

Z Z v Z (2005) 34 Fam LR 296 …. 12-12 Zamora [No 2], The [1921] 1 AC 801 …. 13-36 Zen Ridgeway Pty Ltd v Adams [2009] 2 Qd R 298 …. 21-12 Ziliani v Sydney City Council (1985) 56 LGRA 58 …. 10-53 Zimpel, Re [1963] WAR 171 …. 19-01 Zinck v Walker (1777) 2 Wm Bl 1154; 96 ER 681 …. 27-04

Zobory v Federal Commissioner of Taxation (1995) 64 FCR 86; 129 ALR 484 …. 13-10

Table of Statutes References are to paragraph numbers

COMMONWEALTH Aboriginal Land Rights (Northern Territory) Act 1976 s 19 …. 9-02

Australian Consumer Law see Competition and Consumer Act 2010 Australian Prudential Regulation Authority Act 1998 s 8(1) …. 29-03

Australian Securities and Investments Commission Act 2001 s 12A(2)–(4) …. 29-03

Bankruptcy Act 1966 …. 9-38, 9-42 s 94 …. 9-26 s 116(2)(a) …. 21-14 s 120 …. 9-38, 9-39, 9-41, 13-11 s 120(2) …. 9-39 s 120(3) …. 9-39 s 120(4) …. 9-39 s 120(5)(c) …. 9-39 s 120(6) …. 9-39 s 121 …. 9-38, 9-40, 9-41 s 121(2) …. 9-40 s 121(4) …. 9-40

s 121(5) …. 9-40 s 122 …. 2-16, 21-16 s 153(2)(b) …. 22-11 s 302A …. 29-49 s 302B …. 9-20

Charities Act 2013 …. 10-87 Pt 3 …. 10-87 s 4 …. 10-87 s 5 …. 10-29, 10-87 s 6 …. 10-87 ss 7–10 …. 10-87 s 11 …. 10-87 s 12(1) …. 10-87 s 14 …. 10-87 s 15 …. 10-87

Commonwealth Inscribed Stock Act 1911 s 52 …. 18-23 Competition and Consumer Act 2010 Sch 2 …. 28-10 s 67 …. 28-10

Constitution …. 10-12 s 51(xx) …. 29-05

Corporations Act 2001 …. 2-28, 2-48, 14-14, 20-54, 21-14 Ch 5C …. 3-10 Ch 5D …. 14-05 Pt 2D.1 …. 29-22 s 124(1) …. 4-08 s 125 …. 4-08 s 241 …. 29-10

s 420A …. 2-05 s 556 …. 21-14, 21-15 s 588FA …. 2-16 s 601AD(2) …. 25-04 s 601FC(2) …. 3-10, 21-34 s 609(2) …. 3-15 s 1017C …. 29-28 s 1017C(2) …. 29-28 s 1017C(3) …. 29-28 s 1017C(4) …. 29-28 ss 1042A–1043O …. 13-27 s 1318 …. 22-12 s 1346 …. 9-28, 10-08

Defence Service Homes Act 1918 s 35 …. 9-04

Defence Service Homes Amendment Act 1988 s 10 …. 9-04

Family Law Act 1975 …. 3-14, 9-10, 9-47, 12-17 Pt VIII …. 9-47 s 74 …. 9-47 s 78 …. 9-47 s 79 …. 9-24, 9-47, 12-12 s 80 …. 12-12 s 85 …. 9-47

Income Tax Assessment Act 1936 …. 8-03, 27-16 s 218 …. 9-24

Income Tax Assessment Act 1997 …. 1-01 Lands Acquisition Act 1989 s 41(4) …. 26-07

Native Title Act 1993 s 56 …. 1-02

Personal Property Securities Act 2009 …. 2-47 Public Governance, Performance and Accountability Act 2013 Pt 2 Div 3 Subdiv A …. 29-22

Racial Discrimination Act 1975 s 8 …. 9-13 s 8(2) …. 10-72 s 9 …. 9-13

Sex Discrimination Act 1984 s 36(a) …. 10-72

Social Security Act 1991 s 66 …. 9-02 s 128 …. 9-02 s 170 …. 9-02 s 220 …. 9-02 s 280 …. 9-02 s 339 …. 9-02 s 387 …. 9-02 s 571 …. 9-02 s 654 …. 9-02 s 724 …. 9-02 s 757 …. 9-02 s 806 …. 9-02 s 870 …. 9-02 s 976 …. 9-02 s 1052 …. 9-02 s 1061W …. 9-02

Superannuation Act 1990

s 41 …. 9-02, 24-06

Superannuation Guarantee (Administration) Charge Act 1992 Pt 3 …. 29-01

Superannuation Industry (Supervision) Act 1993 …. 29-02, 29-03, 29-05, 29-06, 29-07, 29-08, 29-09, 29-13, 29-15, 29-39, 29-41, 29-59 Pt 8 …. 29-06 Pt 16 …. 29-06 s 6 …. 29-03 s 10(1) …. 29-05, 29-07, 29-14 s 16 …. 29-14 s 19(2) …. 29-05 s 19(3) …. 29-05 s 19(4) …. 29-05 s 19(7) …. 29-05 s 29BO …. 29-37 s 29E …. 29-41 s 29VN …. 29-18, 29-37 s 29VO …. 29-18, 29-37 s 31(1) …. 29-12, 29-40, 29-41 ss 34B–34F …. 29-22 s 34C …. 29-39, 29-41 s 34C(4) …. 29-39 s 34C(6) …. 29-39 s 34D …. 29-39 s 34D(2) …. 29-39 s 51A …. 29-18 s 52 …. 29-09, 29-18, 29-21, 29-32 ss 52–53 …. 29-36, 29-37, 29-39 s 52(1) …. 29-18, 29-20, 29-30, 29-31

s 52(2) …. 29-18, 29-29 s 52(2)(a) …. 29-19, 29-32 s 52(2)(a)–(c) …. 29-33 s 52(2)(b) …. 29-20, 29-21, 29-32 s 52(2)(c) …. 29-21, 29-32 s 52(2)(d) …. 29-21, 29-22, 29-32 s 52(2)(e) …. 29-23 s 52(2)(f) …. 29-24, 29-27 s 52(2)(g) …. 29-25 s 52(2)(g)–(j) …. 29-33 s 52(2)(h) …. 29-26, 29-32 s 52(2)(i) …. 29-27 s 52(2)(j) …. 29-28 s 52(3) …. 29-20 s 52(4) …. 29-22 s 52(5) …. 29-26, 29-33 s 52(6) …. 29-27, 29-29, 29-33 s 52(7) …. 29-30 s 52A …. 29-18 s 52A(1) …. 29-32, 29-36 s 52A(2) …. 29-32 s 52A(2)(f) …. 29-32 s 52A(5) …. 29-32 s 52A(6) …. 29-32 s 52B …. 29-18, 29-33, 29-34 s 52B(1) …. 29-33 s 52B(2) …. 29-33 s 52B(2)(h) …. 29-28 s 52B(3) …. 29-33 s 52C …. 29-18

s 52C(1) …. 29-34 s 52C(2) …. 29-34 s 52C(4) …. 29-34 s 53 …. 29-18 s 53(1) …. 29-35 s 53(2) …. 29-35 s 53C(2) …. 29-34 s 54A …. 29-18, 29-37, 29-39 s 54A(1) …. 29-36 s 54A(3) …. 29-36 s 55(1) …. 29-37 s 55(3) …. 29-09, 29-37 s 55(4A) …. 29-37 s 55(5) …. 29-37 s 55(6) …. 29-37 s 56(1) …. 29-10 s 56(2) …. 29-10 s 56(3) …. 29-10 s 57 …. 29-10 s 57(3) …. 29-10 s 58 …. 29-11 s 58(1) …. 29-11 s 58(2) …. 29-11 s 59(1) …. 29-11 s 59(1A) …. 29-11 s 59(2) …. 29-11 s 60(1) …. 29-12 s 60(2) …. 29-12 s 60(3) …. 29-12 s 62(1) …. 29-08

s 65 …. 29-06 s 89 …. 29-58 s 89(1)(a) …. 29-14 s 89(1)(b) …. 29-14 s 101 …. 29-42 s 102(1) …. 29-43 s 103 …. 29-44 s 104 …. 29-44 s 105 …. 29-44 s 106 …. 29-45 s 106(1) …. 29-45 s 106(2) …. 29-45 s 106A(1) …. 29-46 s 107 …. 29-15 s 109(1) …. 29-47 s 109(1A) …. 29-47 s 116 …. 29-29 s 117(3) …. 29-48, 29-57 s 117(5) …. 29-57 s 117(6) …. 29-57 s 118 …. 29-17, 29-44 s 120(1) …. 29-13 s 120(2)(a) …. 29-13 s 120(2)(b)–(e) …. 29-13 s 126A …. 29-13 s 126B …. 29-13 s 133 …. 29-16 s 134 …. 29-16 s 134(1) …. 29-16 s 134(2) …. 29-16

s 134(3) …. 29-16 s 310(1) …. 29-38 s 310(2) …. 29-38 s 341 …. 29-59 s 343 …. 9-28, 10-08, 29-07 s 350 …. 29-20

Superannuation Industry (Supervision) Regulations 1994 …. 2902, 29-03, 29-39, 29-41, 29-50, 29-59 reg 4.1 …. 29-28 regs 5.01–5.08 …. 29-50 reg 13.16 …. 29-12 reg 13.16(1) …. 29-12 reg 13.16(2) …. 29-12

Superannuation (Resolution of Complaints) Act 1993 …. 29-42 Taxation (Unpaid Company Tax) Assessment Act 1982 …. 3-15 Trade Practices Act 1974 …. 21-04 Treasury Bills Act 1914 s 11 …. 18-23

Trusts (Hague Convention) Act 1991 …. 28-02 s 4 …. 28-02 s 5 …. 28-02 s 6 …. 28-02 s 7(1) …. 28-02 Sch …. 28-02

Uniform Companies Act 1961 s 382(1) …. 10-08

Veterans’ Entitlements Act 1986 s 125 …. 9-02

AUSTRALIAN CAPITAL TERRITORY Administration and Probate Act 1929 ss 39–40 …. 15-03 s 41D …. 19-01 s 70 …. 17-39

Age of Majority Act 1974 s 5 …. 4-02

Associations Incorporation Act 1991 …. 14-14 ss 22–25 …. 14-14

Birth (Equality and Status) Act 1988 s 6 …. 9-09

Civil Law (Property) Act 2006 s 201 …. 6-20, 7-02 ss 201–203 …. 13-42 s 205 …. 6-20 s 209 …. 14-04 s 223 …. 12-20 s 233 …. 26-09 s 239 …. 9-41 ss 239–240 …. 9-46 ss 248–253 …. 19-26

Civil Law (Wrongs) Act 2002 Pt 3.1 …. 20-48

Conveyancing Act 1919 s 26 …. 12-10 s 142 …. 19-26 s 144 …. 19-26 s 151A …. 14-02

Domestic Relationship Act 1994 s 15 …. 12-17

Limitation Act 1985 s 8 …. 22-24 s 27 …. 22-24, 22-31 s 28 …. 22-24, 22-31

Mercantile Law Act 1962 s 6 …. 2-09

Parentage Act 2004 Div 2.2 …. 12-12

Perpetuities and Accumulations Act 1985 s 8 …. 9-29 s 9 …. 9-29 s 10 …. 9-29 s 10(3) …. 9-29 s 12 …. 20-07 s 14 …. 10-08 s 15 …. 9-29, 10-81 s 15(3)(a) …. 10-81 s 17(2) …. 11-08 s 18 …. 9-29 s 19 …. 9-33 s 19(2) …. 9-34

Public Trustee Act 1985 …. 14-10 Sale of Goods Act 1954 s 29 …. 2-09

Supreme Court Rules O 58 r 1 …. 23-07

Trustee Act 1925 …. 2-42, 3-10, 14-05, 15-03, 15-06, 15-09, 15-30,

15-43, 15-83, 17-08, 17-20, 17-21, 17-35, 18-06, 18-07, 18-19, 21-30 s 4 …. 15-01 s 5 …. 20-10, 25-04 s 6 …. 15-11, 15-30, 15-35, 25-04 s 6(2) …. 15-30 s 6(2)(d) …. 15-35 s 6(2)(f) …. 14-02 s 6(3) …. 15-12 s 6(4) …. 15-06 s 6(5)–(6) …. 15-35 s 6(6) …. 15-23 s 6(6)(b) …. 14-14 s 6(7) …. 15-20, 15-23 s 6(9) …. 15-42 s 6(10) …. 15-13 s 6(11) …. 15-07 s 6(12)–(13) …. 15-09 s 6(13) …. 15-21 s 6(14) …. 2-41, 15-45 s 6(15) …. 15-22 s 7 …. 15-30, 15-31, 15-35 s 7(7) …. 15-30 s 8 …. 15-79 s 8(7) …. 2-41 s 9 …. 25-02, 25-04 s 9(3) …. 25-04 s 9(3A) …. 25-04 s 9(4) …. 25-04 s 9(5) …. 25-04

s 10 …. 2-40 s 10(2) …. 14-05 s 14 …. 17-18, 18-08 s 14A(1) …. 18-36 s 14A(2) …. 18-09 s 14A(2)(a) …. 17-18 s 14A(3) …. 18-09 s 14A(4) …. 18-36 s 14B(1) …. 18-10 s 14B(2) …. 18-10 s 14B(2)(b) …. 17-18 s 14B(2)(c) …. 17-18 s 14B(3) …. 18-14 s 14B(4) …. 18-14 s 14C …. 18-36 s 14C(1) …. 18-15 s 14C(2) …. 18-18 s 14C(3) …. 18-19 s 14D …. 20-53 s 14E …. 18-22 s 14F …. 18-21 s 17 …. 18-31 s 18 …. 18-26, 22-15 s 19 …. 18-28 s 20 …. 18-32 s 21 …. 20-53 s 22 …. 20-53 s 23 …. 19-55, 20-54 s 24 …. 19-35 s 25 …. 17-20

s 26 …. 20-10 s 27B …. 17-04, 19-10, 20-04, 20-09 s 28 …. 20-18 s 30 …. 20-15 s 32A …. 18-33 s 33 …. 18-33, 20-04 s 35 …. 20-26 s 36 …. 20-21 s 37 …. 20-26 s 39 …. 20-49 s 40 …. 17-20 s 40(3) …. 20-47 s 41 …. 19-56, 20-37 s 42 …. 20-37 s 43 …. 20-58, 20-60 s 44 …. 20-58, 20-62 s 45 …. 9-21 s 46 …. 20-74 s 48 …. 20-49 s 49 …. 16-14, 20-46 s 50 …. 17-21 s 51 …. 17-13, 20-55 s 51(4) …. 14-05 s 52 …. 20-55 s 53 …. 17-25, 17-30 s 53(3) …. 17-31 s 53(4) …. 17-30, 17-31 s 53(5) …. 17-31 s 54 …. 14-05 s 55 …. 17-32

s 57(1) …. 15-75], 20-01 s 58 …. 17-35 s 59 …. 17-20, 17-29, 17-30, 22-09 s 59(4) …. 15-43, 21-02 s 60 …. 17-36 s 61 …. 17-35 s 61A …. 2-42, 17-35, 20-54 s 63 …. 21-34 s 64 …. 17-33 s 65 …. 14-05, 17-34 s 66 …. 17-34 s 67 …. 17-34 s 68 …. 17-34 s 70 …. 15-46 s 70(5) …. 25-04 s 71 …. 25-04, 25-05, 25-06 s 71(1) …. 25-04 s 71(2) …. 25-04 s 72 …. 25-07 s 73 …. 25-11 s 74 …. 25-07 s 75 …. 25-07 s 76 …. 25-07 s 77 …. 25-07 s 78 …. 25-08 s 79 …. 25-10 s 80 …. 25-07 s 81 …. 10-78, 17-06, 17-39 ss 82–83 …. 19-55 s 85 …. 16-04, 18-26, 22-12

s 86(1) …. 21-21 s 89 …. 18-36 s 89A …. 18-37 s 93 …. 21-36 ss 94A–94E …. 10-78 s 95 …. 20-76, 21-30

Trustee (Amendment) Act 1999 …. 18-07 Trustee Companies Act 1947 …. 14-07 s 11(1)(b) …. 14-07 s 11(1)(c) …. 14-07 s 12 …. 14-07

Wills Act 1968 s 9 …. 7-14 s 16 …. 4-05

NEW SOUTH WALES Anti-Discrimination Act 1977 s 55(1) …. 10-72

Associations Incorporation Act 2009 …. 14-14 ss 19–22 …. 14-14 s 40 …. 14-14

Charitable Trusts Act 1993 …. 10-76 Pt 2 …. 10-67, 10-76 Pt 4 …. 10-76 s 6 …. 10-78 ss 9–10 …. 10-74 s 10 …. 10-60, 10-68 s 10(2) …. 10-70 s 12(2) …. 20-27

s 23 …. 10-60, 10-65

Companies (NSW) Code 1981 s 8(8) …. 3-15

Compensation to Relatives Act 1897 …. 20-48 Conveyancing Act 1919 …. 9-46, 14-05, 14-08, 19-26 s 7 …. 14-05, 14-08, 19-09 s 12 …. 6-20 s 17 …. 8-09 s 23B …. 6-20 s 23C …. 7-02, 7-03, 7-05, 7-15, 7-33 s 23C(1) …. 7-04, 7-33 s 23C(1)(a) …. 7-03, 7-04, 7-06, 7-08 s 23C(1)(b) …. 6-23, 7-03, 7-04, 7-06, 7-07, 7-08, 28-04 s 23C(1)(c) …. 6-20, 6-23, 7-03, 7-04, 7-05, 7-06, 7-08 s 23C(2) …. 7-04, 7-33 s 25 …. 14-04 s 26 …. 12-10 s 29C(1) …. 9-22 s 29C(1)(b) …. 9-24 s 31 …. 20-61 s 31A …. 20-61 s 36B …. 20-61, 20-67 s 36B(1) …. 20-61 s 37A …. 9-41 s 37A(3) …. 9-44 s 37D …. 10-46, 10-65 s 44 …. 12-20 s 54A …. 13-42 s 66B …. 14-05, 14-08

s 66B(2) …. 20-49 s 66C …. 20-04, 26-09 s 66D …. 20-08, 20-12, 20-20, 20-33 s 66D(2) …. 19-02, 19-09 s 66E …. 25-09 s 66G …. 14-05, 14-08, 25-09 s 66G(7)(b) …. 26-06 s 106 …. 20-20 s 106(16A) …. 14-05 s 107(11A) …. 14-05 s 111A …. 2-05 s 115(6A) …. 14-05, 19-59 s 115(8) …. 19-59 s 142 …. 19-26, 19-30 s 144 …. 9-26, 19-26, 19-30 s 151A …. 14-02 s 151C …. 20-08, 20-20, 20-33, 25-11 s 151D …. 14-08, 20-75 s 151D(1)(a) …. 14-05 s 151D(1)(b) …. 14-05 s 152 …. 20-04 s 153 …. 2-44, 20-04, 20-28 s 153(4) …. 2-43 s 154(3) …. 2-44 s 157A …. 14-08, 20-04 s 157A(4) …. 14-05 s 526 …. 14-11

Conveyancing (Amendment) Act 1930 …. 9-24, 9-46, 20-61 Conveyancing and Law of Property Act 1898 …. 20-01

Pt IV …. 17-10, 20-62 s 63 …. 18-24, 26-24 s 64 …. 20-62 s 68 …. 20-20

Crown Lands Act 1989 …. 17-42 Crown Lands Consolidation Act 1913 …. 17-42 Dormant Funds Act 1942 …. 10-75 s 1 …. 10-75 s 2 …. 10-75 s 4 …. 10-75 s 5 …. 10-75 s 12 …. 10-75 s 15 …. 10-75 s 17 …. 10-75 s 18 …. 10-75

Factors (Mercantile Agents) Act 1923 s 5 …. 2-09

Imperial Acts Application Act 1969 …. 10-02 s 8 …. 12-20 s 9(2) …. 10-02

Judgment Creditors’ Remedies Act 1901 s 27 …. 9-24

Land Acquisition (Just Terms Compensation) Act 1991 …. 20-04, 26-24 s 20(1) …. 26-07

Limitation Act 1969 …. 22-24, 22-25 s 11 …. 22-25 ss 47–50 …. 22-24 s 50 …. 22-31

s 63 …. 21-11

Local Government Act 1993 s 411 …. 14-11

Mental Health Act 2007 s 4 …. 25-04 s 14 …. 25-04

Minors (Property and Contracts) Act 1970 …. 4-04 s 8 …. 4-02 s 10(1)(b) …. 14-02 s 18 …. 4-02 s 50 …. 25-11

NSW Trustee and Guardian Act 2009 Ch 4 …. 4-06 s 3 …. 14-08 s 5 …. 14-08

Partnership Act 1892 s 22 …. 26-05

Perpetuities Act 1984 …. 20-61 s 7 …. 9-29 s 8 …. 9-29 s 9(1) …. 9-29 s 9(4) …. 9-29 s 11 …. 20-06, 20-07, 20-20 s 13 …. 10-08 s 14 …. 9-29, 10-81 s 14(4) …. 10-81 s 16(2) …. 11-08 s 17 …. 9-29 s 18 …. 9-33

s 18(2) …. 9-34 Sch 1 …. 20-61

Probate Act of 1890 …. 15-03, 25-04 Probate and Administration Act 1898 s 44 …. 15-03 s 46(2) …. 20-28 s 46D …. 19-01 s 47 …. 15-03 s 75A …. 14-05, 14-08 s 75A(1) …. 14-05, 14-08 s 75A(2) …. 14-05, 14-08 s 86 …. 17-39 s 92 …. 22-10 s 93 …. 22-10

Property (Relationships) Act 1984 s 20 …. 12-17

Public Authorities (Financial Arrangements) Act 1987 …. 18-23 s 39 …. 18-09

Public Works Act 1912 s 54(3)(b) …. 26-24

Real Property Act 1900 …. 25-02 s 9(3A) …. 25-02 s 42 …. 13-10

Sale of Goods Act 1923 s 28 …. 2-09

Status of Children Act 1996 s 5 …. 9-09, 12-12 s 6 …. 9-09

Succession Act 2006

s 5 …. 4-05 s 6 …. 7-14 s 16 …. 4-05 s 43 …. 9-32, 11-04 s 66 …. 25-09

Supreme Court Rules Pt 68 r 2 …. 23-07

Trustee Act 1898 s 18 …. 20-60

Trustee Act 1925 …. 2-42, 3-10, 3-18, 14-05, 14-08, 15-03, 15-06, 15-09, 15-22, 15-30, 15-43, 15-58, 15-83, 16-18, 17-08, 17-20, 17-21, 17-35, 18-06, 18-07, 18-19, 20-01, 20-17, 20-20, 20-33, 20-36, 20-59, 20-62, 21-30 Pt III …. 17-34 s 5 …. 2-41, 14-08, 15-01, 20-10, 22-12, 25-04 s 6 …. 14-08, 15-11, 15-30, 15-35, 25-04 s 6(2) …. 15-30 s 6(2)(d) …. 15-35 s 6(2)(e) …. 14-02 s 6(3) …. 15-12 s 6(4) …. 15-06 s 6(5) …. 15-23, 15-35 s 6(5)(b) …. 14-14 s 6(6) …. 15-23, 15-20 s 6(7) …. 25-02 s 6(8) …. 15-42 s 6(9) …. 15-13 s 6(10) …. 15-07 s 6(11) …. 15-09 s 6(12) …. 2-41, 15-45

s 6(13) …. 15-21, 15-22 s 7 …. 14-08, 15-30, 15-31, 15-35 s 7(5) …. 15-82 s 7(7) …. 15-30, 25-02 s 8 …. 14-08, 15-79 s 8(6) …. 25-02 s 8(7) …. 2-41 s 9 …. 25-02, 25-04 s 9(1) …. 15-21 s 9(3) …. 25-04 s 9(3A) …. 25-04 s 9(4) …. 25-04 s 9(5) …. 25-04 s 10 …. 2-40 s 10(2) …. 14-05, 14-08 s 11(1) …. 2-45 s 14 …. 16-18, 17-18, 18-08 s 14A …. 16-18 s 14A(1) …. 18-36 s 14A(2) …. 18-09 s 14A(2)(a) …. 17-18 s 14A(3) …. 18-09 s 14A(4) …. 18-36 s 14B …. 16-18 s 14B(1) …. 18-10 s 14B(2) …. 18-10 s 14B(2)(b) …. 17-18 s 14B(2)(c) …. 17-18 s 14B(3) …. 18-14 s 14B(4) …. 18-14

s 14C …. 16-18, 18-36 s 14C(1) …. 18-15 s 14C(2) …. 18-18 s 14C(3) …. 18-19 s 14D …. 20-53 s 14D(1) …. 20-53 s 14D(2) …. 20-53 s 14D(3) …. 20-53 s 14D(4) …. 20-53 s 14D(5) …. 20-53 s 14DA …. 18-22 s 14DA(2) …. 16-18 s 14F …. 16-18, 18-21 s 17 …. 18-31 s 18 …. 18-26, 22-15 s 19 …. 18-28 s 20 …. 18-32 s 21 …. 16-18, 20-53 s 21A …. 16-18, 20-53 s 22 …. 16-18, 20-53 s 23 …. 16-18, 19-55, 20-54 s 24 …. 19-35 s 25 …. 17-20 s 26 …. 20-10 s 27 …. 20-06, 20-07 s 27A …. 20-06 s 27B …. 17-04, 19-10, 20-04, 20-08, 20-09, 20-20, 20-43 s 27C …. 20-06 s 28 …. 20-17, 20-18 s 30 …. 20-14, 20-15

s 31 …. 20-17 s 32 …. 20-17 s 32A …. 18-33 s 33 …. 18-33, 19-61, 20-04 s 34 …. 20-28, 20-29 s 35 …. 20-24, 20-26 s 36 …. 20-12, 20-20, 20-21, 20-43 s 36(1) …. 20-20 s 36(1)(a) …. 20-20 s 36(1)(b) …. 20-20 s 36(2) …. 20-20 s 36(3) …. 20-20 s 36(4) …. 20-20 s 36(5) …. 20-20 s 36(6) …. 20-20 s 37 …. 20-25, 20-26 s 38 …. 20-05, 20-28, 20-29 s 39 …. 20-49 s 39A …. 19-59 s 39A(3) …. 19-59 s 40 …. 17-20 s 40(2) …. 20-47 s 41 …. 19-56, 20-36, 20-37 s 42 …. 20-36, 20-37 s 43 …. 20-58, 20-60, 20-61, 20-63, 20-64 s 43(4) …. 20-61 s 43(5) …. 20-61 s 43(6) …. 20-61 s 43(6)(b) …. 20-61 s 43(7) …. 20-61

s 43(8) …. 20-61 s 43(10) …. 20-61 s 44 …. 20-58, 20-59, 20-62, 20-63, 20-64 s 44(1) …. 20-61, 20-62 s 44(1A) …. 20-62, 20-64 s 44(5) …. 20-62 s 44(6) …. 20-64 s 45 …. 9-21, 20-62 s 45(5) …. 20-62 s 45(6) …. 9-25 s 46 …. 20-71, 20-72, 20-73 s 46(3) …. 20-73 s 46(5) …. 20-70 s 46(8A) …. 20-72 s 47 …. 14-08, 20-76 s 48 …. 20-49 s 48(1) …. 20-49 s 49 …. 16-14, 20-46 s 49(2) …. 2-42 s 50 …. 17-21 s 51 …. 17-13, 20-55 s 51(4) …. 14-05, 14-08 s 52 …. 20-55, 20-73 s 53 …. 17-25, 17-30 s 53(3) …. 17-31 s 53(4) …. 17-30, 17-31 s 53(5) …. 17-31 s 54 …. 14-05, 14-08 s 55 …. 17-32, 20-34 s 57(1) …. 15-75, 20-01

s 58 …. 17-35 s 59 …. 17-20, 17-29, 17-30, 22-09 s 59(4) …. 15-43, 21-02 s 60(1) …. 17-36 s 60(4)–(7) …. 17-36 s 61 …. 17-35 s 61A …. 2-42, 17-35, 20-54 s 63 …. 21-34 s 63(11) …. 21-34 s 64 …. 14-08, 17-33 s 65 …. 14-05, 14-08, 17-34 s 66 …. 17-34 s 67 …. 17-34 s 68 …. 17-34 s 69 …. 22-24 s 70 …. 15-46 s 70(5) …. 15-58, 15-82, 25-04 s 71 …. 15-82, 25-04, 25-06, 25-08 s 71(1) …. 25-04 s 71(2) …. 25-04 s 71(9) …. 25-04 s 71(6) …. 25-03 s 72 …. 25-07 s 73 …. 25-11 s 74 …. 25-07 s 75 …. 25-07 s 76 …. 25-07 s 77 …. 25-07 s 78 …. 25-08 s 78(5) …. 25-08

s 78(7) …. 25-08 s 79 …. 25-10 s 80 …. 25-07 s 81 …. 10-78, 15-67, 17-06, 17-39, 20-33, 20-34 s 81(2)(c) …. 20-43 s 81(2)(d) …. 20-43 s 82 …. 17-08, 20-28, 20-33, 20-34 ss 82–82A …. 19-55 s 82(4) …. 17-08 s 82(7) …. 20-33 s 82A …. 17-08, 20-28, 20-30, 20-33, 20-34 s 82A(2) …. 20-33 s 83 …. 17-08, 20-34 s 84 …. 17-10 s 85 …. 16-04, 18-26, 21-34, 22-12 s 86(1) …. 21-21, 21-25 s 86(2) …. 21-21, 21-25 s 90 …. 18-36 s 90A …. 18-37 s 93 …. 15-72, 15-83, 21-36 s 95 …. 20-76, 21-30 s 98 …. 21-30

Trustee Act 1958 s 37 …. 20-64

Trustee Act Amendment Act 1902 …. 20-33 s 8 …. 15-58 s 10 …. 20-33

Trustee (Amendment) Act 1929 s 2 …. 20-06

s 27C …. 20-06

Trustee Amendment (Discretionary Investments) Act 1997 …. 18-07 Trustee Companies Act 1964 …. 2-13, 14-05 s 11(1)(b) …. 14-05 s 11(1)(d) …. 14-05 s 13 …. 14-05 s 15B …. 14-05

Wills Probate and Administration Act 1898 s 46D …. 19-58

Workplace Injury Management and Workers Compensation Act 1998 s 235 …. 24-06

NORTHERN TERRITORY Administration and Probate Act 1969 s 58 …. 19-01, 19-58 s 102 …. 17-39

Age of Majority Act s 4 …. 4-02

Anti-Discrimination Act 1992 s 52(1) …. 10-72

Companies (Trustees and Personal Representatives) Act …. 14-07 s 19 …. 14-07 s 20(1)(b) …. 14-07

Compensation (Fatal Injuries) Act 1974 …. 20-48 De Facto Relationships Act s 18 …. 12-17

Law of Property Act 2000 s 6 …. 12-20 s 10 …. 6-20, 7-02 s 28 …. 8-09 s 35 …. 12-10 s 56 …. 6-06 s 62 …. 13-42 s 182 …. 6-20 s 187 …. 9-29 s 190 …. 9-29 s 191 …. 9-29 s 191(4) …. 9-29 s 193 …. 20-07 s 195 …. 10-08 s 196 …. 9-29, 10-81 s 196(5) …. 10-81 s 198 …. 11-08 s 199 …. 9-29 s 202 …. 9-33 s 202(2) …. 9-34 s 208 …. 9-41 ss 208–209 …. 9-46 ss 211–213 …. 19-26 Sch 4 …. 12-20

Limitation Act ss 32–35 …. 22-24, 22-31

Public Trustee Act …. 14-10 Rules of the Supreme Court r 54.02 …. 23-07

Sale of Goods Act 1972 s 28 …. 2-09

Status of Children Act 1978 s 4 …. 12-12 s 6 …. 9-09

Trustee Act 1980 …. 2-42, 3-10, 15-03, 15-06, 15-12, 15-34, 15-41, 15-43, 15-83, 17-08, 17-20, 17-21, 17-35, 18-06, 18-07, 20-37, 20-69, 21-30 s 5 …. 17-18, 18-08 s 6(1) …. 18-09 s 6(1)(a) …. 17-18 s 6(1)(b) …. 17-18 s 6(2) …. 18-09 s 6(3) …. 18-36 s 7(1) …. 18-10 s 7(1)(a) …. 17-18 s 7(1)(b) …. 17-18 s 7(2) …. 18-14 s 7(3) …. 18-14 s 8 …. 18-36 s 8(1) …. 18-15 s 8(2) …. 18-18 s 9 …. 20-53 s 10 …. 19-55, 20-54 s 10A …. 18-22 s 10B …. 17-20, 18-36 s 10C(1) …. 18-26 s 10C(2) …. 18-29 s 10D(1) …. 18-28 s 10E …. 18-36

s 10F …. 18-37 s 11 …. 15-06, 15-11 s 11(1) …. 15-21 s 11(2) …. 14-14 s 11(2)(a) …. 15-29 s 11(2)(c) …. 15-29 s 11(3) …. 15-42 s 11(4) …. 15-13 s 11(5) …. 15-22 s 11(7) …. 2-41, 15-45 s 12 …. 2-41, 15-80 s 13 …. 25-02 s 14 …. 20-13 s 15 …. 20-15 s 17 …. 17-28 s 18(2)–(4) …. 17-08, 19-55, 20-34 s 18A …. 19-56, 20-37 s 19 …. 20-26 s 20 …. 20-49 s 21(2) …. 20-46 s 22 …. 17-36 s 22(2) …. 17-35 s 23(1) …. 15-75, 20-01 s 24 …. 20-69 s 24A …. 20-69 s 25 …. 17-35 s 26 …. 15-43, 17-20, 17-29, 17-31, 21-02, 22-09 s 27 …. 15-46, 15-66 s 28 …. 25-06 s 29 …. 25-07

s 30 …. 25-07 s 31 …. 25-07 s 32 …. 25-07 s 34 …. 25-07 s 35 …. 25-08 s 36 …. 25-10 s 37 …. 25-06, 25-08 s 38 …. 25-07 s 41 …. 15-72, 15-83, 20-37 s 42 …. 25-07 s 44 …. 21-30 s 44(1) …. 20-76 s 49A …. 16-04, 18-26, 22-12 s 50 …. 21-21 s 50AA …. 10-74 s 50A …. 10-78, 17-06 s 78 …. 17-39 s 82 …. 15-01 s 106 …. 22-15

Trustee Amendment Act (No 2) 1995 …. 18-07 Wills Act s 8 …. 7-14 s 42 …. 11-04

QUEENSLAND Acquisition of Land Act 1967 s 12(5) …. 26-07

Anti-Discrimination Act 1991 s 110 …. 10-72

Associations Incorporation Act 1981 …. 14-14 ss 21–28 …. 14-14

Charitable Funds Act 1958 …. 10-77 s 2 …. 10-77 s 5 …. 10-75

Civil Proceedings Act 2011 Pt 10 …. 20-48

Factors Act 1892 s 3 …. 2-09

Land Act 1962 …. 9-02 Law Reform Act 1995 s 17 …. 4-02

Limitation of Actions Act 1974 s 27 …. 22-24, 22-31

Partnership Act 1891 s 25 …. 26-05

Powers of Attorney Act 1998 s 105 …. 22-14

Property Law Act 1974 s 3 …. 12-20 s 7 …. 12-20 s 10 …. 6-20 s 11 …. 7-02 s 28 …. 8-09 s 34 …. 14-04 s 35 …. 12-10 s 38(7)(b) …. 26-06 s 55 …. 2-25, 6-06

s 59 …. 13-42 s 86 …. 6-20 s 200 …. 6-19 s 209 …. 9-29 s 209(1) …. 11-08 s 210 …. 9-29, 11-08 s 213 …. 9-29 s 213(4) …. 9-29 s 215 …. 9-29 s 219 …. 9-29, 10-81 s 219(2) …. 10-81 s 220 …. 10-08, 20-07 s 221 …. 11-08 s 222 …. 9-33 s 222(2) …. 9-34 s 228 …. 9-41 s 229 …. 9-46 ss 231–233 …. 19-26 s 286 …. 12-17

Public Trustee Act 1978 …. 14-10 s 41 …. 3-19 s 60 …. 17-13 s 65(1)(b) …. 14-10

Sale of Goods Act 1896 s 27 …. 2-09

Status of Children Act 1978 s 3 …. 9-09 s 6 …. 12-12

Succession Act 1981

s 9 …. 4-05 s 10 …. 7-14 s 33Q …. 9-32, 11-04 s 68 …. 17-39

Trustee Companies Act 1968 …. 14-07 s 21(1)(b) …. 14-07 s 21(1)(d) …. 14-07 s 21(1)(f) …. 14-07 s 22 …. 14-07

Trusts Act 1972 s 78 …. 19-58

Trusts Act 1973 …. 2-42, 3-10, 15-03, 15-06, 15-09, 15-43, 15-83, 17-08, 17-20, 17-21, 17-35, 18-06, 18-07, 18-14, 20-01, 20-39, 20-65, 20-67, 21-30 Pt 3 …. 18-07 s 4(4) …. 15-04 s 5 …. 2-41, 15-01 s 6 …. 20-01 s 8 …. 17-16, 23-07 s 8(1) …. 16-15 s 10 …. 15-04 s 11 …. 15-22, 15-25, 15-37 s 11(2) …. 14-14 s 11(2)(a) …. 15-25 s 12 …. 15-11 s 12(1) …. 15-06, 15-12, 15-21 s 12(1)(g) …. 14-02 s 12(2)(a) …. 15-25 s 12(2)(b) …. 15-37, 15-38 s 12(2)(c) …. 15-25, 15-26, 15-27, 15-28, 15-29

s 12(5) …. 15-32 s 12(6) …. 15-42 s 12(7) …. 15-09, 15-13 s 12(8) …. 15-07 s 12(9) …. 2-41, 15-45 s 13 …. 15-44 s 14 …. 2-41, 15-80, 25-02 s 15 …. 25-02 s 16(1) …. 15-75, 20-01 s 18 …. 2-40 s 19 …. 3-18 s 20 …. 18-07 s 21 …. 17-18, 18-08 ss 21–28 …. 18-07 s 22(1) …. 18-09 s 22(1)(a) …. 17-18 s 22(1)(b) …. 17-18 s 22(2) …. 18-09 s 22(3) …. 18-36 s 23(1) …. 18-10 s 23(2) …. 18-10 s 23(2)(b) …. 17-18 s 23(2)(c) …. 17-18 s 23(3) …. 18-14 s 23(4) …. 18-14 s 24 …. 18-36 s 24(1) …. 18-15 s 24(2) …. 18-18 s 25 …. 20-53 s 26 …. 18-21

s 27 …. 20-54 s 28 …. 18-22 s 29 …. 17-20, 18-36 ss 29–30C …. 18-07, 18-19, 18-21 s 30 …. 22-15 s 30(1) …. 18-26 s 30(2) …. 18-29 s 30A(1) …. 18-28 s 30B …. 18-36 s 30C …. 18-37 s 32 …. 2-44, 19-10, 20-09, 20-13 s 32(1)(a) …. 20-05 s 32(1)(c) …. 20-43 s 32(1)(d) …. 20-21 s 32(1)(e) …. 20-21 s 32(1)(f) …. 20-21 s 32(3) …. 20-21 s 32(4) …. 17-04 s 33 …. 17-08, 19-55, 20-34 s 33(1) …. 19-56 s 33(1)(i) …. 20-29 s 33(1)(l) …. 20-74 s 33(1)(m) …. 20-74 s 35 …. 20-15 s 37 …. 20-18 s 38 …. 20-26 s 39 …. 20-26 s 40 …. 18-33 s 42 …. 19-59 s 43 …. 20-49

s 44 …. 20-46 s 45 …. 20-05, 20-29 s 46 …. 20-49 s 47 …. 20-39 s 47(3) …. 19-56 s 48 …. 20-39 s 49 …. 17-21 s 50 …. 17-20 s 51 …. 20-55 s 52 …. 17-13, 20-55 s 54 …. 17-27 s 54(2) …. 17-31, 17-32 s 56 …. 17-33 s 56(8) …. 17-34 s 57 …. 20-43 s 58 …. 20-45 s 59 …. 20-56 s 61 …. 20-65, 20-67 s 61(3) …. 20-65, 20-67 s 62 …. 20-65, 20-67 s 63 …. 20-65, 20-67 s 64 …. 9-21 s 65 …. 21-06 s 66 …. 17-35 s 67 …. 17-36 s 68 …. 17-35 s 70 …. 17-35 s 71 …. 17-20, 17-29, 22-09 s 72 …. 15-43, 21-02 s 75 …. 2-42, 17-35, 20-54

s 76 …. 16-04, 18-26, 22-12 s 77 …. 21-21 s 78 …. 19-01 ss 80–81 …. 15-46 s 82 …. 25-06 s 83 …. 25-06 s 84 …. 25-07 s 85 …. 25-07 s 87 …. 25-11 s 88 …. 25-07 s 89 …. 25-07 s 90 …. 25-08 s 92 …. 25-10 s 93 …. 25-07 s 94 …. 10-78, 17-06, 17-39 s 95 …. 17-07 s 96 …. 21-34 s 100 …. 15-72, 15-83, 21-36 s 101 …. 17-39 s 102 …. 20-76, 21-30 s 103 …. 10-02, 10-49 s 104 …. 10-60, 10-65 s 105 …. 10-74 s 106 …. 10-78 s 109 …. 23-21, 27-13, 27-14

Trusts (Investments) Amendment Act 1999 …. 18-07 Uniform Civil Procedure Rules r 11(a) …. 23-07

SOUTH AUSTRALIA Administration and Probate Act 1919 s 70(1) …. 17-39

Age of Majority (Reduction) Act 1971 s 3 …. 4-02

Associations Incorporation Act 1985 …. 14-14 ss 25–28 …. 14-14

Domestic Partners Property Act 1996 ss 9–11 …. 12-17

Equal Opportunity Act 1984 s 45 …. 10-72 s 64 …. 10-72 s 80 …. 10-72 s 85N …. 10-72

Family Relationships Act 1975 s 6 …. 9-09, 12-12

Land Acquisition Act 1969 s 16 …. 26-07

Law of Property Act 1936 Pt 6 Div 3 …. 11-08 s 15 …. 6-20 s 26 …. 13-42 s 28 …. 6-20 s 29 …. 7-02 s 61 …. 9-29, 10-08 s 62 …. 9-29, 10-81 s 62(6)(a) …. 10-81 s 62(6)(i) …. 10-08

s 62A …. 9-34 ss 63–66 …. 19-26 s 86 …. 9-41 s 87 …. 9-46

Limitation of Actions Act 1936 s 31 …. 22-23 s 32 …. 22-23, 22-31

Mercantile Law Act 1936 s 4 …. 2-09

Partnership Act 1891 s 22 …. 26-05

Public Trustee Act 1995 …. 14-10 s 17 …. 3-18

Sale of Goods Act 1895 s 25 …. 2-09

Settled Estates Act 1880 …. 20-01 s 34 …. 18-24

Supreme Court Rules r 63.04 …. 23-07

Trustee Act 1893 s 31 …. 25-07 s 32 …. 25-07 s 34 …. 25-07

Trustee Act 1936 …. 2-42, 3-10, 15-03, 15-06, 15-22, 15-33, 15-43, 15-83, 17-08, 17-20, 17-21, 17-33, 17-35, 18-06, 18-07, 20-43, 21-30 s 4 …. 15-01 s 4(1) …. 2-41 s 6 …. 17-18, 18-08

s 7(1) …. 18-09 s 7(1)(a) …. 17-18 s 7(1)(b) …. 17-18 s 7(2) …. 18-09 s 7(3) …. 18-36 s 8(1) …. 18-10 s 8(1)(b) …. 17-18 s 8(1)(c) …. 17-18 s 8(2) …. 18-14 s 8(3) …. 18-14 s 9 …. 18-36 s 9(1) …. 18-15 s 9(2) …. 18-18 s 9A …. 18-20 s 10 …. 20-53 s 11 …. 19-55, 20-54 s 12 …. 18-22 s 13 …. 17-20, 18-36 s 13A …. 22-15 s 13A(1) …. 18-26 s 13A(2) …. 18-29 s 13B(1) …. 18-28 s 13C …. 18-36 s 13D …. 18-37 ss 14–17 …. 15-11 s 14(1) …. 15-06, 15-21 s 14(1A) …. 15-12 s 14(2) …. 14-14 s 14(2)(a) …. 15-26 s 14(2)(c) …. 15-26

s 14(3) …. 15-42 s 14(4) …. 15-13 s 14(5) …. 15-22 s 14(7) …. 2-41, 15-45 s 14A(1) …. 15-39 s 14B …. 15-33 s 15 …. 2-41, 15-80 s 16 …. 25-02 s 17 …. 17-33 s 17A …. 17-33 s 18 …. 17-34 s 20 …. 20-13 s 21 …. 20-15 s 23A …. 20-18 s 23B …. 18-33, 19-61 s 23B(3) …. 19-61 s 23C …. 18-33 s 24 …. 17-28 s 24(2) …. 17-31 s 25 …. 19-56, 20-37 s 25A …. 17-08, 20-34 ss 25A–25B …. 19-55 s 25B …. 17-08 s 25C …. 20-21 s 26 …. 20-26 s 26A …. 20-26 s 27 …. 20-49 s 28 …. 20-46 s 28(1) …. 2-42 s 28A …. 20-29

s 28B …. 20-05, 20-29, 20-29 s 28C …. 19-59 s 29 …. 17-36 s 29(2) …. 17-35 s 30 …. 17-35 s 31 …. 17-35, 20-54 s 32(1) …. 15-75, 20-01 s 33 …. 20-66 s 33A …. 20-66 s 35 …. 17-20, 17-29, 22-09 s 35(2) …. 15-43, 21-02 s 36 …. 15-46, 15-85, 25-06 s 36(1)(a)(b) …. 20-21 s 37 …. 25-06 s 37(1)(b) …. 25-07 s 37(1)(b)(ii) …. 14-02 s 38 …. 25-07 s 39 …. 25-08 s 40 …. 25-10 s 41 …. 25-06, 25-08 s 43 …. 15-46 s 44 …. 15-72, 15-83 s 45 …. 25-07 s 47 …. 20-76, 21-30 ss 48–55 …. 10-78, 17-06 s 56 …. 16-04, 18-26, 22-12 s 57 …. 21-21 s 59B …. 10-78, 17-06, 17-39 s 59C …. 17-07 ss 60–69 …. 10-78

s 69A …. 10-60, 10-65, 10-66 s 69B …. 10-74 s 69B(3)(b) …. 10-76 s 69C …. 10-49 ss 84A–F …. 17-13 s 84B …. 17-13, 20-55 s 84C …. 17-13 s 91 …. 21-34, 21-36

Trustee Companies Act 1988 …. 14-07 s 5 …. 14-07 s 6(a) …. 14-07

Trustee (Investment Powers) Amendment Act 1995 …. 18-07 Wills Act 1936 s 5(3) …. 4-05 s 8 …. 7-14 s 11 …. 4-05

TASMANIA Administration and Probate Act 1935 s 4 …. 15-03 s 5 …. 15-03 s 39 …. 2-44 s 41 …. 20-76 s 64 …. 17-39

Age of Majority Act 1973 s 3 …. 4-02

Anti-Discrimination Act 1998 s 23(a) …. 10-72

Apportionment Act 1871 s 2 …. 19-26

Associations Incorporation Act 1964 …. 14-14 ss 20–22 …. 14-14

Conveyancing and Law of Property Act 1884 …. 20-36 s 36 …. 13-42 s 40 …. 9-41 s 41 …. 9-46 s 60 …. 6-20 s 60(2) …. 7-02 s 86 …. 6-20 s 90E …. 20-36

Factors Act 1891 s 5 …. 2-09

Fatal Accidents Act 1934 …. 20-48 Lands Acquisition Act 1993 s 19 …. 26-07

Limitation Act 1974 s 24 …. 22-24, 22-31

Mercantile Law Act 1935 s 6 …. 7-05

Partnership Act 1891 s 27 …. 26-05

Perpetuities and Accumulations Act 1992 s 6 …. 9-29, 11-08 s 9 …. 9-29, 11-08 s 11 …. 9-29 s 11(4) …. 9-29

s 12 …. 9-29 s 14 …. 20-07 s 16 …. 9-29, 10-81 s 16(5) …. 10-81 s 17 …. 10-08 s 18 …. 11-08 s 22 …. 9-33 s 22(2) …. 9-34 s 27 …. 9-33

Public Trustee Act 1930 …. 14-10 s 22 …. 3-19 ss 23–24 …. 3-18

Relationships Act 2003 s 40 …. 12-17

Sale of Goods Act 1896 s 30 …. 2-09

Settled Land Act 1884 s 19 …. 18-24

Status of Children Act 1974 s 3 …. 9-09, 12-12

Supreme Court Civil Procedure Act 1932 s 57(2) …. 10-78

Supreme Court Rules r 604 …. 23-07 r 605 …. 23-07

Trustee Act 1898 …. 2-42, 3-10, 15-03, 15-06, 15-12, 15-22, 15-28, 15-34, 15-43, 15-83, 17-08, 17-20, 17-21, 17-35, 18-06, 18-07, 20-26, 20-34, 20-40, 20-43, 21-30 s 4 …. 2-41, 15-01

s 6 …. 17-18, 18-08 s 7(1) …. 18-09 s 7(1)(a) …. 17-18 s 7(1)(b) …. 17-18 s 7(2) …. 18-09 s 7(3) …. 18-36 s 8 …. 18-36 s 8(1) …. 18-15 s 8(2) …. 18-18 s 9(1) …. 18-10 s 9(1)(b) …. 17-18 s 9(1)(d) …. 17-18 s 9(2) …. 18-14 s 9(3) …. 18-14 s 10 …. 20-53 s 11 …. 19-55, 20-54 s 12 …. 18-22 s 12A …. 17-20, 18-36 s 12B …. 22-15 s 12B(1) …. 18-26 s 12B(2) …. 18-29 s 12C(1) …. 18-28 s 12D …. 18-36 s 12E …. 18-37 s 13 …. 15-11 s 13(1) …. 15-06, 15-21 s 13(2) …. 14-14 s 13(2)(a) …. 15-28 s 13(2)(b) …. 15-40 s 13(2)(c) …. 15-28

s 13(3) …. 15-42 s 13(4) …. 15-13 s 13(5) …. 15-22 s 13(6) …. 2-41, 15-45 s 14 …. 2-41, 15-80 s 15 …. 25-02 s 16 …. 20-13 s 17 …. 20-15 s 20 …. 17-29 s 20(1) …. 17-31 s 21 …. 19-56, 20-40 s 22 …. 20-26 s 23 …. 20-49 s 24 …. 20-46 s 24(1) …. 2-42 s 25(1) …. 15-75, 20-01 s 25A …. 17-33, 17-36 s 26 …. 17-35 s 27 …. 17-20, 17-29 s 27(2) …. 15-43, 21-02 s 29 …. 20-68 s 30 …. 9-21 s 32 …. 15-46 s 33 …. 25-06 s 34 …. 25-06, 25-08 s 35 …. 25-07 s 36 …. 25-07 s 37 …. 25-07 s 38 …. 25-07 s 39 …. 25-07

s 40 …. 25-08 s 41 …. 25-10 s 43 …. 15-46 s 44 …. 21-36 s 45 …. 25-07 s 47 …. 17-06, 17-39, 20-34 ss 47–55 …. 10-78 s 48 …. 20-76, 21-30, 22.09 s 50 …. 16-04, 18-26, 22-12 s 53 …. 21-21 s 55 …. 17-06, 17-39 s 58 …. 17-39 s 63 …. 15-72, 15-83

Trustee Amendment (Investment Powers) Act 1997 …. 18-07 Trustee Companies Act 1953 …. 14-07 s 7(1)(b) …. 14-07 s 7(1)(d) …. 14-07 s 7(1)(e) …. 14-07 s 18B …. 3-18 s 30 …. 14-05

Variation of Trusts 1994 s 4(1) …. 10-49 s 4(2) …. 10-60 s 4(2)–(3) …. 10-65 s 5 …. 10-74 s 11 …. 10-75 s 13 …. 17-07 s 14 …. 17-07

Wills Act 2008 …. 4-05

s 7 …. 4-05 s 8 …. 7-14 s 57 …. 11-04

VICTORIA Accident Compensation Act 1985 …. 1-02 Administration and Probate Act 1958 s 5 …. 20-05 s 13 …. 15-03 s 30 …. 22-10 s 34(1) …. 15-52 s 38 …. 20-22 s 38(1) …. 20-05 s 44 …. 2-44, 20-22, 20-29 s 44(1) …. 20-05 s 45 …. 20-22 s 47 …. 20-76 s 65 …. 17-39

Age of Majority Act 1977 s 3 …. 4-02

Associations Incorporation Reform Act 2012 …. 14-14 ss 29–36 …. 14-14

Charities Act 1978 …. 10-67, 10-80 Pt 1 …. 10-80 Pt II …. 10-80 s 2 …. 10-71, 10-74 s 3 …. 10-75 s 4 …. 10-76 s 7M …. 10-65

Equal Opportunity Act 2010 s 80 …. 10-72

Goods Act 1958 s 30 …. 2-09 s 31 …. 2-09 s 67 …. 2-09

Hospitals and Charities Act 1958 …. 10-79 Imperial Acts Application Act 1980 s 5 …. 12-20

Instruments Act 1958 s 126 …. 13-42

Land Acquisition and Compensation Act 1986 s 24 …. 26-07

Limitation of Actions Act 1958 s 21 …. 22-24, 22-31

Partnership Act 1958 s 26 …. 26-05

Payroll Tax Act 1971 s 10 …. 10-33

Perpetuities and Accumulations Act 1968 s 5 …. 9-29, 11-08 s 6 …. 9-29, 11-08 s 9 …. 9-29 s 9(4) …. 9-29 s 11 …. 9-29 s 14 …. 20-07 s 16 …. 9-29, 10-81 s 16(2) …. 10-81

s 17 …. 10-08 s 18 …. 11-08 s 19 …. 9-33 s 19(2) …. 9-34

Property Law Act 1958 …. 12-17 s 18 …. 20-05 s 19A …. 12-20 s 28 …. 14-04 ss 31–39 …. 20-05 s 32 …. 19-10 s 34 …. 2-44 s 35(1) …. 20-22 s 39 …. 26-09 s 40 …. 20-05, 20-22 s 52 …. 6-20 s 53 …. 7-02 s 58 …. 20-34 s 130 …. 8-09 s 131 …. 10-60, 10-65 s 134 …. 6-20 s 172 …. 9-41 ss 173–174 …. 9-46

Public Charitable Trusts Act 1941 …. 10-79 Public Trustee Act 1958 s 24 …. 3-18

Religious and Successory Trusts Act 1958 …. 10-79 s 61 …. 10-78 s 63 …. 10-79

Religious Successory and Charitable Trusts Act 1958 …. 10-79

Rules of the Supreme Court O 54 …. 21-34 O 54.02 …. 23-07

Settled Land Act 1958 …. 20-01, 20-22 s 3 …. 20-22 s 35 …. 20-34 ss 41–43 …. 20-22 s 43 …. 20-22 ss 44–47 …. 20-22 s 52 …. 20-22 s 59 …. 20-22 s 60(1) …. 20-22 s 71 …. 20-29 s 73 …. 18-24 s 94 …. 20-49 s 95 …. 20-49 s 101 …. 20-22

State Trustees (State Owned Company) Act 1994 …. 14-09 s 8 …. 14-09 s 9 …. 3-19, 14-09

Status of Children Act 1974 s 3 …. 9-09, 12-12

Supreme Court Act 1958 s 73 …. 19-30 s 76 …. 19-30

Supreme Court Act 1986 s 53(1) …. 19-26 s 54 …. 19-26

Transfer of Land Act 1958 …. 10-79

Trustee Act 1958 …. 2-42, 3-10, 14-06, 15-03, 15-06, 15-43, 15-83, 17-07, 17-08, 17-20, 17-21, 17-35, 18-06, 18-07, 20-34, 20-38, 20-64, 21-30 s 3 …. 15-01, 20-05 s 3(1) …. 2-41 s 4(3)(a) …. 18-04 s 5 …. 17-18, 18-08 s 6(1) …. 18-09 s 6(1)(a) …. 17-18 s 6(1)(b) …. 17-18 s 6(2) …. 18-09 s 6(3) …. 18-36 s 7(1) …. 18-10 s 7(2) …. 18-10 s 7(2)(b) …. 17-18 s 7(2)(c) …. 17-18 s 7(3) …. 18-14 s 7(4) …. 18-14 s 8 …. 18-36 s 8(1) …. 18-15 s 8(2) …. 18-18 s 9 …. 20-53 s 9A …. 18-21 s 10 …. 19-55, 20-54 s 11 …. 18-22 s 12 …. 17-20, 18-36 s 12A …. 18-26, 22-15 s 12B(1) …. 18-28 s 12C …. 18-36 s 12D …. 18-37

s 12E …. 18-26 s 13 …. 19-10, 20-09 s 13(1) …. 20-13 s 13(5) …. 17-04, 20-43 s 14 …. 20-07 s 15 …. 20-15 s 17 …. 20-18 s 18 …. 20-49 s 18(2) …. 14-06, 15-24, 20-49 s 19 …. 20-46 s 19(1) …. 20-46 s 19(1)(a) …. 20-46 s 19(1)(b) …. 20-46 s 19(1)(c) …. 2-42, 20-46 s 19(1)(d) …. 20-46 s 19(1)(d)–(f) …. 20-46 s 19(1)(e) …. 20-46 s 19(1)(f) …. 20-46 s 19(1)(g) …. 20-46 s 19(1)(h) …. 20-46 s 20 …. 20-05, 20-29 s 21 …. 20-49 s 22(1) …. 15-75, 20-01 s 23 …. 19-56, 20-38 s 24 …. 20-38 s 25 …. 17-21 s 25(3) …. 19-35 s 26 …. 17-20, 20-55 s 26(2) …. 20-47 s 27 …. 17-13, 20-55

s 27(4) …. 14-06 s 28 …. 17-26 s 28(1) …. 17-26 s 28(2) …. 17-31, 17-32 s 28(3) …. 17-26 s 28(4) …. 17-26 s 30 …. 17-33 s 30(1) …. 17-33 s 30(2) …. 17-33 s 30(3) …. 17-33 s 30(8) …. 17-33 s 30(9) …. 17-33, 17-34 s 30(10) …. 17-33 s 31 …. 20-74 s 32 …. 17-35 s 33 …. 17-36 s 34 …. 2-42, 17-35, 20-54 s 35(2) …. 17-35 s 36 …. 17-20, 17-29, 22-09 s 36(2) …. 15-43, 21-02 s 37 …. 20-64, 20-65, 20-66 s 37(3) …. 20-64 s 38 …. 20-65, 20-66 s 39 …. 9-21 s 39(1)(a) …. 17-07 s 39(1)(b) …. 17-07 s 40 …. 15-22, 15-24 s 40(1)–(2) …. 14-14 s 41 …. 14-02, 15-11, 15-22 s 41(1) …. 15-06, 15-12, 15-21

s 41(6) …. 14-06, 15-31 s 41(7) …. 15-42 s 41(8) …. 15-13 s 41(9) …. 15-45 s 41(10) …. 15-07 s 42 …. 14-06, 15-24 s 42(1)(a) …. 15-24 s 42(1)(b) …. 15-36 s 43 …. 15-44 s 44 …. 2-41, 14-06, 15-80 s 45 …. 25-02 s 46 …. 2-40 s 47 …. 14-06 ss 48–50 …. 15-46 s 48(1) …. 15-52 s 48(2) …. 2-41 s 51 …. 25-06 s 52 …. 25-06 s 53 …. 25-07 s 54 …. 25-07 s 55 …. 25-11 s 56 …. 25-07 s 57 …. 25-07 s 58 …. 25-08 s 60 …. 25-10 s 61 …. 25-07 s 63 …. 10-78, 17-06, 17-39 s 63A …. 17-07 s 63A(1) …. 17-07 s 63A(1)(b) …. 17-07

s 63A(1)(d) …. 17-07 s 66 …. 15-72, 15-83 s 67 …. 16-04, 18-26, 22-12 s 68 …. 21-21 s 69 …. 20-76, 21-30 s 71 …. 3-18 s 74 …. 19-01, 19-58 s 77 …. 17-39

Trustee and Trustee Companies (Amendment) Act 1995 …. 18-07 Trustee Companies Act 1984 …. 14-06 s 14(1)(a) …. 14-06 s 14(1)(b) …. 14-06 s 14(1)(c) …. 14-06 s 15 …. 14-06

Wills Act 1997 s 6 …. 4-05 s 7 …. 7-14 s 38 …. 20-64 s 47 …. 9-32, 11-04

Wrongs Act 1958 Pt 3 …. 20-48

WESTERN AUSTRALIA Administration Act 1903 s 8 …. 15-03 s 10 …. 2-44 s 11 …. 15-03 s 17A …. 20-76

Age of Majority Act 1972

s 5 …. 4-02

Associations Incorporation Act 1987 …. 14-14 Associations Incorporation Act 2015 …. 14-14 Charitable Collections Act 1946 s 5 …. 10-75 s 16 …. 10-75

Charitable Trusts Act 1962 s 5 …. 10-49 ss 7–7B …. 10-74 ss 9–10A …. 10-76 s 21 …. 10-78

Equal Opportunity Act 1984 s 70(1) …. 10-72

Factors’ Acts Amendment Act 1878 …. 2-09 Family Court Act 1997 s 205ZG …. 12-17

Fatal Accidents Act 1959 …. 20-48 Law Reform (Property, Perpetuities and Succession) Act 1962 s 24 …. 27-14

Law Reform (Statute of Frauds) Act 1962 s 2 …. 13-42

Limitation Act 1935 s 47 …. 22-23, 22-31

Limitation Act 2005 …. 22-23 Pt 3 …. 22-31

Local Government Act 1995 s 6.9 …. 14-11

Partnership Act 1895

s 32 …. 26-05 s 55 …. 13-17

Property Law Act 1969 Pt XI …. 11-08 s 11 …. 6-06 s 11(2) …. 2-25 s 11(3) …. 2-25 s 20 …. 6-20 s 27 …. 8-09 s 29 …. 14-04 s 31A …. 9-09 s 33 …. 6-20 s 34 …. 7-02 s 38 …. 12-20 s 39 …. 12-20 s 89 …. 9-41 s 90 …. 9-46 s 91 …. 9-46 s 101 …. 9-29 s 103 …. 9-29 s 105 …. 9-29 s 106 …. 9-29 s 109 …. 9-29 s 111 …. 9-29, 10-81 s 111(2) …. 10-81 s 113 …. 9-33 s 113(2) …. 9-34 s 115 …. 10-08 s 118 …. 20-67 s 124 …. 17-37

s 125 …. 17-37 ss 130–134 …. 19-26

Public Trustee Act 1941 …. 14-10 s 21 …. 3-19 s 22 …. 3-18

Public Works Act 1902 s 18 …. 26-07

Rules of the Supreme Court O 58 r 2 …. 23-07

Sale of Goods Act 1895 s 25 …. 2-09

Trustees Act 1962 …. 2-42, 3-10, 15-03, 15-06, 15-43, 15-83, 1708, 17-20, 17-21, 17-35, 18-06, 18-07, 20-01, 20-41, 21-30 s 6 …. 2-41, 15-01 s 7 …. 15-11 s 7(1) …. 15-06, 15-12, 15-21 s 7(1)(g) …. 14-02 s 7(2) …. 14-14 s 7(2)(a) …. 15-27 s 7(2)(b) …. 15-38 s 7(2)(c) …. 15-27 s 7(5) …. 15-31 s 7(6) …. 15-42 s 7(7) …. 15-13 s 7(8) …. 15-07, 15-22 s 7(9) …. 2-41, 15-45 s 8 …. 15-44 s 9 …. 2-41, 15-80, 25-02 s 10 …. 25-02

s 12 …. 2-40 s 14 …. 3-19 s 15 …. 3-18 s 17 …. 17-18, 18-08 s 18(1) …. 18-09 s 18(1)(a) …. 17-18 s 18(1)(b) …. 17-18 s 18(2) …. 18-09 s 18(3) …. 18-36 s 19(1) …. 18-10 s 19(1)(b) …. 17-18 s 19(1)(c) …. 17-18 s 19(2) …. 18-14 s 19(3) …. 18-14 s 20 …. 18-36 s 20(1) …. 18-15 s 20(2) …. 18-18 s 21 …. 20-53 s 22 …. 18-21 s 23 …. 19-55, 20-54 s 24 …. 18-22 s 25 …. 17-20, 18-36 s 26 …. 18-26, 22-15 s 26A(1) …. 18-28 s 26B …. 18-36 s 26C …. 18-37 s 26D …. 18-26 s 27 …. 2-44, 20-09, 20-13, 20-43 s 27(1)(a) …. 20-05 s 27(1)(d) …. 20-21

s 27(1)(e) …. 20-21 s 27(1)(f) …. 20-21 s 27(3) …. 20-21 s 27(5) …. 17-04 s 28 …. 20-07 s 28A …. 20-13 s 29 …. 20-07 s 30 …. 17-08, 19-55, 20-01, 20-34 s 30(1) …. 19-56 s 30(1)(h) …. 20-29 s 30(1)(k) …. 20-74 s 30(1)(l) …. 20-74 s 32 …. 20-15 s 34 …. 20-18 s 35 …. 20-26 s 36 …. 20-26 s 37 …. 18-33 s 40 …. 19-59 s 41 …. 20-49 s 42 …. 20-46 s 43 …. 20-05, 20-29 s 44 …. 20-49 s 45(1) …. 15-75, 20-01 s 46 …. 19-56, 20-41 s 47 …. 20-41 s 48 …. 17-21 s 49 …. 17-20 s 50 …. 20-55 s 51 …. 17-13, 20-55 s 53 …. 17-27

s 53(2) …. 17-31, 17-32 s 54 …. 17-33 s 54(10) …. 17-34 s 55 …. 20-43 s 56 …. 20-45 s 57 …. 20-56 s 58 …. 20-67 s 59 …. 20-67 s 60 …. 20-67 s 61 …. 9-21 s 62 …. 17-35 s 63 …. 17-36 s 64 …. 17-35 s 65 …. 23-21, 27-13 s 65(8) …. 27-14 s 67 …. 17-35 s 69 …. 17-35 s 70 …. 17-20, 17-29, 22-09 s 71 …. 15-43, 21-02 s 74 …. 2-42, 17-35, 20-54 s 75 …. 16-04, 18-26, 22-12 s 76 …. 21-21 s 77 …. 15-46 s 78 …. 25-06 s 79 …. 25-06 s 80 …. 25-07 s 81 …. 25-07 s 82 …. 25-11 s 83 …. 25-07 s 84 …. 25-07

s 85 …. 25-08 s 87 …. 25-10 s 88 …. 25-07 s 89 …. 10-78, 17-06, 17-39 s 90 …. 17-07 s 91 …. 17-07 s 92 …. 21-34 s 94 …. 16-15, 17-16, 23-07 s 97 …. 15-72, 15-83, 21-36 s 98 …. 17-39 s 99 …. 20-76, 21-30 s 102 …. 10-60, 10-65, 10-66 s 103 …. 19-35 s 104 …. 19-01, 19-58 s 109 …. 20-01

Trustee Companies Act 1987 …. 14-07 s 12(1)(b) …. 14-07 s 12(1)(c) …. 14-07 s 12(1)(d) …. 14-07 s 13 …. 14-07 s 27 …. 14-05

Trustees Amendment Act 1997 …. 18-07 Wills Act 1970 Pt IX …. 9-09 s 8 …. 7-14 s 31 …. 12-12

Wills Amendment Act 2007 …. 4-05 INTERNATIONAL

Hague Convention …. 28-01, 28-02, 28-03, 28-04, 28-05, 28-08, 2818, 28-19, 28-20, 28-21 Ch I …. 28-03 Ch II …. 28-03, 28-05 Ch III …. 28-02, 28-03, 28-13 Art 1 …. 28-03 Art 2 …. 28-03, 28-04 Art 2(b) …. 28-03 Art 3 …. 28-04 Art 4 …. 28-05, 28-08, 28-19 Art 5 …. 28-05 Art 6 …. 28-06, 28-08 Art 7 …. 28-06, 28-07, 28-08 Art 7(a) …. 28-07 Art 7(d) …. 28-07 Art 8 …. 28-08 Art 8(a) …. 28-08 Art 8(f) …. 28-08 Art 8(h) …. 28-08 Art 9 …. 28-08 Art 10 …. 28-07 Art 11 …. 28-03, 28-14 Art 11(3)(d) …. 28-14 Art 12 …. 28-15 Art 13 …. 28-16 Art 14 …. 28-17 Art 15 …. 28-06, 28-09 Art 16 …. 28-06, 28-10 Art 17 …. 28-03 Art 18 …. 28-06, 28-11

Art 19 …. 28-12 Art 20 …. 28-04, 28-21 Art 21 …. 28-02 Art 22 …. 28-02 Art 23 …. 28-02 Art 24 …. 28-02

NEW ZEALAND Judicature Act 1908 s 94B …. 27-14

Public Trust Office Act 1957 s 50 …. 3-18

Trustee Act 1956 …. 18-07 Pt II …. 18-07

Trustee Amendment Act 1988 …. 18-07 UNITED KINGDOM Accumulations Act 1800 …. 9-33 Administration of Estates Act 1925 s 42 …. 20-75

Australian Courts Act 1828 (9 Geo IV c 83) …. 10-40 Apportionment Act 1870 …. 19-26, 19-31 Charitable Trusts (Validation) Act 1954 …. 10-65 Charities Act 1993 s 33 …. 10-67

Civil Liability (Contribution) Act 1978 …. 21-20 Common Law Procedure Act 1854

s 78 …. 27-04

Companies Act 1862 …. 3-11 Contracts (Rights of Third Parties) Act 1999 …. 2-20, 6-06 s 6(5) …. 2-20

Enemy Act 1939 …. 9-23 Fire Prevention (Metropolis) Act 1774 …. 20-36 s 83 …. 20-36

Fraudulent Conveyances Act 1571 (13 Eliz I c 5) …. 9-41 Fraudulent Conveyances Act 1584 (27 Eliz 1 c 4) …. 17-03 Insolvency Act 1986 s 239 …. 2-16

Judicature Act 1875 …. 6-13 s 25(2) …. 22-23

Judicial Trustees Act 1896 s 3 …. 22-12

Land Registration Act 2002 s 29(2) …. 1-02

Land Transfer Act 1875 …. 3-15 Law of Property Act 1925 …. 12-20 s 53(1)(c) …. 9-32, 12-01

Limitation Act 1939 …. 22-30 Limitation Act 1980 s 21 …. 22-25 s 32(1)(b) …. 22-30

Lunacy Regulation Act 1862 …. 20-58 Mortmain Act 1736 …. 10-02 Mortmain and Charitable Uses Act 1888 …. 10-02 s 13(2) …. 10-02

Perpetuities and Accumulations Act 2009 s 2(4) …. 9-28

Property Law Act 1925 …. 26-01 Public Health Act 1891 …. 20-32 Public Trustee Act 1906 s 14 …. 3-18

Real Property Limitation Act 1833 s 31 …. 22-23

Real Property Limitation Act 1874 s 31 …. 22-23

Recreational Charities Act 1958 …. 10-49 Roman Catholic Relief Act 1829 …. 10-40 Romilly’s Act 52 Geo III c 101 …. 10-78 Sale of Goods Act 1979 s 19(1) …. 2-49

Settled Land Act 1882 …. 15-65, 19-23 Social Security Act 1973 …. 9-28 Statute of Chantries (1 Edw VI c 14) …. 10-40 Statute of Charitable Uses 1601 (43 Eliz I c 4) …. 10-02, 10-3, 1020, 10-21, 10-22, 10-41, 10-43, 10-44, 10-47, 10-48, 10-51, 10-53, 10-54, 10-59 Statute of Frauds 1677 …. 7-35, 23-12, 26-07 s 4 …. 3-05, 7-08, 13-42 s 7 …. 13-42

Statute of Uses …. 12-20 Trustee Act 1888 …. 22-28 s 8 …. 22-23

Trustee Act 1893

s 8 …. 18-26 s 45 …. 21-24

Trustee Act 1925 …. 20-06, 20-62, 21-26 s 8 …. 18-26 s 23 …. 17-30 s 31 …. 20-60 s 32 …. 20-59 s 33 …. 9-21 s 36(1) …. 15-12 s 52 …. 21-26 s 53 …. 25-11 s 57 …. 17-06, 17-07, 17-08, 17-39 s 61 …. 22-12 s 62 …. 21-24

Trustee Act 2000 …. 18-26 Trustee Investments Act 1961 …. 17-01 Trusts of Land and Appointment of Trustees Act 1996 …. 26-01 Variation of Trusts Act 1958 …. 3-20 s 1(3) …. 20-58

Vendor and Purchaser Act 1874 …. 3-15 Wills Act 1837 …. 7-33, 7-35, 7-36 s 9 …. 9-32

UNITED STATES OF AMERICA Sherman Antitrust Act 1890 …. 3-21

Works Frequently Cited Holdsworth

Holdsworth, A History of English Law, 1903-1972

Lewin on Trusts

Tucker et al, Lewin on Trusts, 19th ed, 2015

Meagher, Gummow and Lehane’s Equity

Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 5th ed, 2014

Pettit

Pettit, Equity and the Law of Trusts, 12th ed, 2012

Scott on Trusts

Scott, Fratcher and Ascher, Scott and Ascher on Trusts, 5th ed, 2006

Snell’s Equity

McGhee et al, Snell’s Equity, 33rd ed, 2015

Theobald on Wills

Ross Martyn et al, Theobald on Wills, 17th ed, 2010

Underhill and Hayton

Hayton, Matthews and Mitchell, Underhill and Hayton Law of Trusts and Trustees, 19th ed, 2016

Waters’ Law of Trusts

Waters, Gillen and Smith, Waters’ Law of Trusts in Canada, 4th ed, 2012

Williams on Wills

Barlow et al, Williams on Wills, 9th ed, 2008

Contents Preface The Honourable Sir Kenneth Jacobs KBE Table of Cases Table of Statutes Works Frequently Cited Chapter 1

The Nature of a Trust

Chapter 2

The Distinction Between a Trust and Certain Other Legal Institutions

Chapter 3

The Classification of Trusts

Chapter 4

Capacity to Create a Trust

Chapter 5

Express Trusts — Certainty of Intention, Subject Matter and Object

Chapter 6

Express Trusts — Complete Constitution or Consideration

Chapter 7

Express Trusts — The Requirement of Writing

Chapter 8

The Interpretation of the Trust

Chapter 9

When an Express Trust may Fail or be Set Aside

Chapter 10

Charitable Trusts

Chapter 11

Purpose Trusts

Chapter 12

Resulting Trusts

Chapter 13

Constructive Trusts

Chapter 14

Capacity to be a Trustee

Chapter 15

The Appointment, Retirement and Removal of Trustees

Chapter 16

Duties, Powers and Discretions of a Trustee

Chapter 17

Duties of a Trustee

Chapter 18

The Duty to Invest Trust Funds

Chapter 19

Duty of Impartiality

Chapter 20

Powers of a Trustee

Chapter 21

Rights of Trustees

Chapter 22

Liability of a Trustee

Chapter 23

The Rights of a Beneficiary

Chapter 24

What may be Trust Property

Chapter 25

Vesting of Trust Property

Chapter 26

Conversion

Chapter 27

Tracing Trust Property

Chapter 28

Trusts in the Conflict of Laws

Chapter 29

The Trust Aspects of Superannuation

Index

[page 1]

CHAPTER 1 The Nature of a Trust Introduction

[1-01]

The Essential Elements of a Trust The Trustee The Trust Property The Beneficiary A Personal Obligation Annexed to the Property

[1-04] [1-05] [1-06] [1-07] [1-10]

Introduction [1-01] A trust is an institution developed by equity and cognisable by a court of equity.1 A trust is not a juristic person with a legal personality distinct from that of the trustee and beneficiary.2 Nor is it merely descriptive of an equitable right or obligation. Instead, a trust is a relation between trustee and beneficiary in respect of certain property. More particularly, a trust exists when the owner of a legal or equitable interest in property is bound by an obligation, recognised by and enforced in equity, to hold that interest for the benefit of others, or for some object or purpose permitted by law.3 That is not a definition of a trust, but a description. Precise definition is elusive, if not impossible, and attempts at such definition vary markedly. Professor Austin Scott maintained, not without force, that a definition would not be of great practical assistance, because it could not be used to deduce rules of conduct: ‘The definition results from the rules, and not the rules from the definition.’4 [1-02] Lindley LJ said that trusts were ‘equitable obligations to deal with property in a particular way’,5 and later declared that all that was necessary to

establish the relation of trustee and beneficiary was ‘to prove that the legal title was in the plaintiff and the equitable title in [page 2] the defendant’.6 Neither of these statements includes the important class of trusts known as public or charitable trusts, nor those trusts described as ‘purpose trusts’ (for example, for the benefit of animals) which may possibly be valid provided they do not infringe the rules against perpetuities.7 Nor do they identify the fiduciary nature of the trust. The trustee is the archetype of a fiduciary.8 Thus, the vendor of land will be under an equitable obligation to deal with property for the benefit of the purchaser, but will not be a true trustee until there is superadded a fiduciary duty owed to the purchaser.9 Accordingly, the American Law Institute’s Restatement of the Law of Trusts has identified the trust as: [A] fiduciary relationship with respect to property, arising from a manifestation of intention to create that relationship and subjecting the person who holds title to the property to duties to deal with it for the benefit of charity or for one or more persons, at least one of whom is not the sole trustee.10

However, there are at least three deficiencies in this formulation. The first is, as the Restatement acknowledges, that it does not allow for resulting and constructive trusts which do not derive from the settlor’s intention. Nor does it allow for the creation of particular trusts by statute.11 Finally, the formulation in the Restatement is directed to the position of the trustee owing duties to the beneficiaries whereas, as Professor Scott pointed out:12 The trust is the whole juridical device: the legal relationship between the parties with respect to the property that is its subject matter, including not merely the duties that the trustee owes to the beneficiary and to the rest of the world, but also the rights, privileges, powers and immunities that the beneficiary has against the trustee and against the rest of the world.

[1-03] The difficulty here, as elsewhere in law, is that legal rules are abstracted from the perceived effect of decided cases, many of which will be borderline decisions involving distinctions of degree which cannot be drawn with concise verbal precision. Perhaps the best that can be done is to state the principal or essential distinguishing characteristics of the trust so as to equip the reader to identify, in a general way, what is involved. If definition is demanded, then the trust may be defined as the whole relationship which arises between

the parties in respect of the property the subject of the trust, and the obligation of the trustee to the beneficiary and the interest of the beneficiary in the property may be regarded as results flowing from the existence of that relationship. [page 3]

The Essential Elements of a Trust [1-04] There are four essential elements present in every form of trust: the trustee, the trust property, the beneficiary or charitable purpose or (exceptionally) non-charitable purpose, and the personal obligation annexed to property.

The Trustee [1-05] First, there must be one or more trustees, individual or corporate, who together hold a legal or equitable interest in the trust property. There must be a person on whom there is an obligation to deal with the trust property in terms of the trust. However, the trust obligation attaches not only to a nominated trustee, as in an express trust, but also to any person in whom the trust property is vested, unless that person is a purchaser for value without notice of the trust. In equity, a trust will not be allowed to fail for want of a trustee. If none has been appointed or if there ceases to be a trustee in office, the person in whom the trust property for the time being is vested will be regarded as trustee thereof until appointment of a trustee or of a new trustee, as the case may be. If necessary, the court will restrain a person in whom the trust property is vested, provided that person is not a purchaser for value without notice, from dealing with that property otherwise than in accordance with the trust. It will then appoint a trustee and cause the trust property to be vested in that person.

The Trust Property [1-06] The second essential element is that there should be property capable

of being held on trust.13 There must be certainty in identification of the property bound by the trust.14 In general, all property may be made the subject of a trust unless the policy of the law or statute forbids it. Even property which is incapable of assignment, such as a contract involving personal skill or confidence, may be held on trust.15 The property may be real or personal. It may be corporeal or incorporeal, tangible or intangible, a chose in possession or a chose in action. The Queensland Court of Appeal has held that the interest of a member of a company limited by guarantee was capable of being held on trust.16 It may be property created by statute.17 Although the trustee usually has the legal title to the property, this is not a necessary condition. That is because there may be a valid trust in respect of an equitable interest in property as well as in respect of a legal interest.18 The interest of a beneficiary under a trust may itself be held on a ‘sub-trust’ for a third party, who will be beneficiary under the sub-trust.19

The Beneficiary [1-07] Thirdly, there must be a cestui que trust or beneficiary. The trustee may be one of the beneficiaries but cannot be the sole beneficiary. If the trustee were the sole beneficiary there would be no trust because there would be no separate equitable interest vested in the [page 4] beneficiary — there is a merger of any such possible interest in the legal or equitable interest to the beneficiary as trustee.20 A trust may be created without communication to the beneficiary,21 although the beneficiary may disclaim on learning of the trust.22 There is no requirement that the beneficiary at the time of the creation of the trust be a person then in existence, for there may be a trust in favour of an unborn person. Further, it is not necessary that the beneficiaries enjoy ‘[the] complex of beneficial relations which may be called ownership’; for example, they may have no present rights in possession.23 Likewise, there may be a valid trust in favour of a class of persons, the exact constitution of which is unknown at the time of the creation of the trust.24 In the case of public or charitable trusts, there will be no individuals as

beneficiaries. There, the beneficiary must be regarded as the charitable purpose to which the trust property is devoted. [1-08] In the case of non-charitable trusts, there must generally be a person or persons who will, either presently or in the future, benefit under the trust. A purported trust which has no beneficiary is void. Accordingly, it has been held that a devise of a house in trust to block it up and keep it unoccupied for 20 years, even though it does not infringe the rule against perpetuities, is inoperative and void.25 However, there is a line of cases in which certain purpose trusts which are not charitable and which have no human beneficiary have been upheld. These are discussed in Chapter 11. Further, the requirement for a beneficiary may, in a particular class of case, be modified or abrogated by statute pursuant to which property is held on a trust for statutory purposes.26 [1-09] In the case of a non-charitable, or private, trust, usually the beneficiaries will have an equitable proprietary interest in the trust assets. However, this is not always so. Thus, while each beneficiary of an unadministered estate has an interest in seeing that the whole of the assets are treated in accordance with the duties of the executor, and, in that sense, as a class the beneficiaries may be said to have an interest in the entire estate, it does not follow that each piece of property which goes to make up the estate is held on a particular trust for the beneficiary named as its intended recipient upon completion of administration.27 Nor is an equitable proprietary interest in the trust assets enjoyed by those who may be, but as yet have not been, appointed under a power contained in a discretionary trust. The expression ‘discretionary trust’ is used to identify a species of express trust where the entitlement of beneficiaries to income, or to corpus, or both, is not immediately ascertainable. Rather, the beneficiaries are selected from a nominated class by the trustee or some other person and this power may be exercisable once or from time to time. The expression is descriptive rather than normative, its meaning being primarily a matter of usage.28 [page 5]

A Personal Obligation Annexed to the Property

[1-10] The fourth essential element is that the trustee must be under a personal obligation to deal with the trust property for the benefit of the beneficiaries. It is an obligation which gives rise to correlative rights in the beneficiaries. The obligation must be annexed to the trust property. This is the equitable obligation proper. It arises from the very nature of a trust and from the origin of the trust in the separation of the common law and equitable jurisdiction in English legal history. The obligation attaches to the trustee in personam, but it also is annexed to the property, so that the equitable interest resembles a right in rem. It is not sufficient that the trustee should be under a personal obligation to hold the property for the benefit of another, unless that obligation is annexed to the property. Conversely, it is not sufficient that an obligation should be annexed to the property unless the trustee is under a personal obligation. The application of this principle will be illustrated when dealing in the next chapter with the distinction between a trust and certain other legal institutions.29 _____________________________ 1.

Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 175; 117 ALR 27 at 46. For what is meant by ‘cognisable by a court of equity’, see M Leeming (2008) 31 Aust Bar Review 211 and P Young (2009) 83 ALJ 181.

2.

The misconception that a trust is a legal person is, however, widespread: see Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [79]; ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; 110 ACSR 1 at [13]–[20]. For the difficulties brought about by the Income Tax Assessment Act 1997 (Cth) regarding a trust as an ‘entity’, see A Slater (2006) 35 A T Review 185. This passage in an earlier edition was cited with approval in Raftland Pty Ltd v Commissioner of Taxation (2006) 227 ALR 598 at [65] and Doherty v Doherty [2006] 2 Qd R 259 at [27].

3. 4. 5. 6. 7. 8. 9.

Scott and Fratcher, The Law of Trusts, 4th ed, Vol 1, §2.3. The current edition states that ‘The definition must derive from the rules, and not vice versa’: Scott on Trusts, §2.1.3. Re Williams [1897] 2 Ch 12 at 18, cited by Isaacs J in Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 503; 21 ALR 465 at 470. Hardoon v Belilios [1901] AC 118 at 123. See also W Cornish et al (eds), Restitution: Past, Present and Future, Hart Publishing, Oxford, 1998, p 204 (Millett). See Chapters 10 and 11. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 68; 55 ALR 417 at 432; Maguire v Makaronis (1997) 188 CLR 449 at 463; 144 ALR 729 at 737. See Chang v Registrar of Titles (1976) 137 CLR 177; 8 ALR 285; KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) (1984) 155 CLR 288 at 296–7, 301; 56 ALR 337 at 343, 346; Nolan v Collie (2003) 7 VR 287 at [28]; P Turner, ‘Understanding the Constructive Trust between Vendor and Purchaser’ (2012) 128 LQR 582. The Supreme Court of the United Kingdom has held that a purchaser under an uncompleted sale of land did not possess a proprietary interest sufficient to engage

statutory provisions relating to unregistered interests in s 29(2) of the Land Registration Act 2002 (UK): Southern Pacific Mortgages Ltd v Scott [2015] AC 385; [2015] 1 All ER 277 at [66], [112], [123]. 10. Restatement on Trusts (3rd) §2. 11. See, for example, the provisions of the Accident Compensation Act 1985 (Vic) relating to the administration by the Registrar of the Victorian Accident Compensation Tribunal of accounts in respect of compensation awards: Registrar, Accident Compensation Tribunal v Commissioner of Taxation (1993) 178 CLR 145 at 161–8; 117 ALR 27 at 35–44. See also the regime established by s 56 of the Native Title Act 1993 (Cth), and Rirratjingu Aboriginal Corporation v Northern Land Council [2015] FCA 36 at [85]–[110]. When the term ‘trust’ is used in a statute, it is normally taken to be used in its legal and technical sense: Vallance v R (1961) 108 CLR 56 at 75; [1963] ALR 461 at 474; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [45], but, as the latter decision shows, it may also be used in a non-technical, governmental sense. As Lord Collins put it, ‘A statutory trust does not necessarily bear all the indicia of a trust as would be recognised by a Court of Chancery’: Re Lehman Brothers International (Europe) [2012] 3 All ER 1; [2012] 1 BCLC 487 at [189]. See [5-20]–[5-21]. 12. Scott on Trusts, §2.1.4. 13. Public Curator of Queensland v Union Trustee Co of Australia Ltd (1922) 31 CLR 66 at 74–5 per Higgins J; 28 ALR 438 at 441; Port of Brisbane Corporation v ANZ Securities Ltd [2003] 2 Qd R 661 at [29]. 14. Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 277–80. 15. Don King Inc v Warren [2000] Ch 291 at 320–1; [1998] 2 All ER 608 at 634; McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499 at [14]; Barbados Trust Co v Bank of Zambia [2007] 1 Lloyd’s Rep 495 and see P Turner, ‘Trusts of Debts of Restricted Assignability’ [2008] CLJ 23; cf Tasmanian Seafoods Pty Ltd v MacQueen (2005) 15 Tas R 1 at [30]–[44]. 16. St Vincent de Paul Society Qld v Ozcare Ltd (2009) 74 ACSR 676. 17. Including, for example, poker machine entitlements allocated in respect of hoteliers’ licences (Wonall Pty Ltd v Clarence Property Corp Ltd (2003) 58 NSWLR 23) and milk quotas attached to euroholdings (Swift v Dairywise Farms Ltd [2000] 1 All ER 320; [2000] 1 WLR 1177). 18. Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 at 621–2; [1936] ALR 198 at 200–1. 19. As in Hayim v Citibank NA [1987] AC 730 at 742–3. 20. Re Cook [1948] Ch 212; [1948] 1 All ER 231; Re Haberley, decd [1971] NZLR 325 at 333–4, 346. 21. Middleton v Pollock (1876) 2 Ch D 104 at 106; Rose v Rose (1986) 7 NSWLR 679 at 686. 22. Re Gulbenkian’s Settlements (No 2) [1970] Ch 408 at 418; [1969] 2 All ER 1173 at 1179. 23. Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 497; 21 ALR 465 at 468; CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [25]. 24. This passage was approved in Rirratjingu Aboriginal Corporation v Northern Land Council [2015] FCA 36; 324 ALR 240 at [79]. 25. Brown v Burdett (1882) 21 Ch D 667. See also Re Cameron (1884) 26 Ch D 19; Re Headrick’s Will [1953] QWN 23, where a direction to demolish a dwelling and improvements on certain land was held not to create a binding trust; Re Boning [1997] 2 Qd R 12. 26. Fouche v Superannuation Fund Board (1952) 88 CLR 609 at 640; 25 ALJR 778 at 782; Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264 at 274; 104 ALR 117 at 123. 27. Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 313–14; 96 ALR 327 at 331. And see generally Meagher, Gummow and Lehane’s Equity, Ch 4. 28. Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547 at 551–2; Chief Commissioner of Stamp

Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [8]; El Sayed v El Hawach (2015) 88 NSWLR 214; 317 ALR 771 at [14], [55]; and see [3-14] below. See generally L Sheridan, ‘Discretionary Trusts’ (1957) 21 Conv 55. 29. This passage as it appeared in an earlier edition was approved in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 518–19 and in Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350 at [99].

[page 6]

CHAPTER 2 The Distinction Between a Trust and Certain Other Legal Institutions The Trust and the Fiduciary Relation

[2-02]

Trust and Bailment

[2-09]

Trust and Agency

[2-10]

Trust and Debt

[2-13]

Trusts and Contracts for the Benefit of Third Parties

[2-17]

Trust, Equitable Charge and Equitable Lien

[2-26]

Trust and Condition

[2-30]

Trust and Equitable Personal Obligation

[2-34]

Trustee and Executor

[2-40]

Trusts and Powers

[2-46]

The Romalpa Clause

[2-47]

[2-01] A number of other legal institutions in certain aspects and in certain contexts appear to resemble the trust. However, when they are examined in the light of the four essential elements of a trust set out above, it will be seen that none contains all those elements, although each may contain one or more of them.

The Trust and the Fiduciary Relation [2-02] The trust is a fiduciary relation, but not every fiduciary relation is a trust.1 As Sir Frederick Jordan said, ‘A person is not necessarily a trustee, whether express, implied or constructive, by reason merely of the fact that he owes fiduciary duties to others.’2 The distinguishing element of a fiduciary relationship is that its purpose, or essence, is to serve exclusively the interests of others or, put negatively, it is a relationship in which the parties are [page 7] not free to pursue their separate interests.3 Certain relationships have always been considered to be fiduciary. It has never been doubted that a trustee stands in a fiduciary relation to a cestui que trust, or that an executor (or administrator) stands in a fiduciary relation to a beneficiary, or that certain kinds of agent stand in a fiduciary relation to a principal. The courts have also held that the following are fiduciaries: court-appointed receivers in relation to the parties to the action,4 privately appointed receivers after receiving money from the sale of mortgaged assets or as income,5 bailees in relation to bailors,6 a trustee’s agent in relation to the cestui que trust,7 the promoter of a company in relation to the company promoted,8 and a liquidator vis-à-vis the company.9 [2-03] In Multinational Gas & Petroleum Co v Multinational Gas & Petrochemical Services Ltd,10 Dillon LJ said that directors ‘owe fiduciary duties to the company though not to the creditors, present or future, or to individual shareholders’. To this there are exceptions arising out of the facts of particular cases, especially in the case of small closely held private companies, which are analogous to partnerships.11 Further, while the director’s duty is to act in the best interests of the company, those best interests, at least in some circumstances, may include those of its creditors.12 This appears to be so where the company is insolvent, or of doubtful solvency, or if a contemplated payment or other course of action would jeopardise its solvency.13 But this duty (save as supplemented by statutory duty enforceable in its terms) is owed to and enforceable by the company.14 Moreover, directors are fiduciaries but not

trustees of the assets of the company, and legislation imposing liability on directors for ‘breach of trust’ has long been understood in that light.15 [2-04] Other relationships do not give rise to a fiduciary relation, but to an analogous relation. Thus, the donee of a special power of appointment owes a duty which is analogous to a fiduciary duty;16 so, too, does any person who has power to dispose of property in which others have interests.17 Relations of influence are another instance of this.18 [2-05] Yet other relationships, while definitely not fiduciary may, nevertheless, in particular respects, involve duties similar to fiduciary duties. Thus, while it is quite clear that in general [page 8] a mortgagee does not stand in a fiduciary relationship to a mortgagor,19 the mortgagee’s right to exercise a power of sale is in some ways treated as if it were held in a fiduciary capacity.20 Similarly, although in general not a fiduciary, a life tenant cannot retain (any more than a fiduciary can) any advantage obtained by virtue of that position.21 [2-06] What is involved in the notion of a fiduciary duty? Broadly speaking, it is a duty not to place the fiduciary’s interest in conflict with his or her duty, and so not to use the fiduciary’s position for the purpose of acquiring an advantage for himself or herself, coupled with an inability to retain any advantage so acquired unless the person to whom the duty is owed freely and with full knowledge consents to both the acquisition and the retention of it. The fiduciary may be in breach of duty even though the principal would not, or could not, have sought the benefit obtained by the fiduciary.22 [2-07] For instance, the director of a company is required in respect of the affairs of the company to act for the benefit of the company and not for the director’s own benefit.23 Likewise, a partner in the affairs of the partnership must act in the interests of the partnership and not in the partner’s own interest.24 A trustee owes that same paramount duty to a beneficiary — to act in the interests of that beneficiary and not in the trustee’s own interests. However,

a fiduciary other than a trustee cannot properly be described as a trustee, although often so referred to. To describe a mere fiduciary as a trustee is to create confusion, because it would widen the concept of the trust so much that it would not be possible to express the principles governing the law of trusts in any concise form. It would be necessary in each instance to have regard not to any general law of trusts, but to the particular law governing the relationship between the fiduciary and the person to whom the fiduciary duty is owed. In the case of a director, it would [page 9] be necessary to have regard to the law governing companies;25 in the case of a partner, to the law of partnership and so on. To describe a mere fiduciary as a trustee is, at best, a metaphor:26 Another source of error in this matter is the looseness with which the word ‘trustee’ is frequently used. The surviving partner is often called a ‘trustee’, but the term is used inaccurately. He is not a trustee, either expressly or by implication. … The application to a man who is improperly, and by metaphor only, called a trustee of all the consequences which would follow if he were a trustee by express declaration — in other words a complete trustee — holding the property exclusively for the benefit of the cestui que trust, well illustrates the remark made by Lord Mansfield that nothing in law is so apt to mislead as a metaphor.

[2-08] Trustees and fiduciaries owe different duties, which are breached in different ways, and breaches give rise to different remedies at the suit of different plaintiffs.27 The High Court has said:28 Whilst the trustee is the archetype of the fiduciary, the trust has distinct characteristics. In particular, where a trust is created by will or settlement in traditional form, the trustee holds title to property on behalf of beneficiaries or for charitable purposes. If the trust be still subsisting, the objective of an action to recover loss upon breach of trust is the restoration of the trust fund. The right of the beneficiaries is to have the trust fund reconstituted and duly administered, rather than to recover a specific sum for the sole use and benefit of any beneficiary. Indeed, no one particular beneficiary may have sustained a present and individual loss. This may be so if the trust is a discretionary trust or no interest vests, either in interest or possession, before the termination of a prior interest. Further, the particular breach of which complaint is made may be consequent upon failure in observance of one or other of the duties which attend trust administration, such as those to make only authorised investments, and to use due diligence and care in the administration of the trust. Nineteenth century authorities such as Caffrey v Darby29 and Clough v Bird30 concerned failure to observe these rules for due administration rather than that disloyalty and conflict between interest and duty which was considered in Nocton v Lord Ashburton.31

As noted above, one reason why a fiduciary is not properly described as a

trustee is that there is generally no property vested in the fiduciary which can be described as trust property. The property of the company is not vested in the director; the director is an agent of the company.32 Partnership property is usually not vested in a partner. If it is, then the partner may be a trustee of that property for the partnership, but it is not necessary that the partnership property should be so vested before a fiduciary duty can rise. However, if a fiduciary makes a profit out of the relationship, then the fiduciary will become a trustee of that profit or of the property so acquired. This is a constructive trust33 and fulfils all the requirements of the trust because at that stage property is vested in the fiduciary which can be the subject of the trust. [page 10]

Trust and Bailment [2-09] A bailment does not create a trust.34 A bailee has possession of the article bailed, but not title to it. When an article is entrusted to another for a special purpose, this may amount either to a bailment or to a trust, depending upon whether property in the article is transferred to the person to whom the article is handed. If property is transferred there will be a trust, but if merely the possession of the article for certain purposes is given, there will be a bailment and the remedy of the bailor lies in an action at law for breach of the terms of the bailment, or for detinue of the article concerned, but not in equity for breach of trust. The distinction is of particular importance where the person to whom the article is handed purports to dispose of it to a third party. If the property has been transferred on trust, a third party who purchases for value without notice can obtain good title. However, a bailee cannot give such a title and a third party taking for value without notice may nevertheless be sued by the true owner for the return of the property.35 It should be noted that a bailment can only exist with respect to tangible personal property; a trust may exist with respect to any property, tangible or intangible, real or personal. Finally, of course, a bailee’s rights are regulated solely by the common law, whereas the rights of a cestui que trust are regulated by equity.

Trust and Agency [2-10] ‘Agent’ is a term with many meanings.36 An agent in the presently relevant sense is a person empowered to effect the legal relations of the agent’s principal.37 Although in early English legal history there was no clear distinction between the notions of trust and agency, there has now developed a recognisable distinction between them. An agent is in a fiduciary relation to the principal, as a trustee is in respect of the cestui que trust; an agent must, in the agency business, act for the principal’s benefit, not the agent’s own interest, just as a trustee must act for the cestui que trust’s benefit and not in the trustee’s own interest; but there is lacking in agency the essential element of a trust that the trust property must be vested in the trustee. An agent usually has only the possession of property on behalf of the principal, not title to that property: It is to be noticed that there is no trust or confidence of the land in the agent … It is not a case of ‘trust or confidence’ of land. … The man was simply what is called a conduit pipe and nothing more, a mere agent, who never had any interest in the lands, and consequently could not have any ‘trust or confidence’ of them.38

However, a trustee is often found to be also an agent, and conversely an agent can often be a trustee of property or money entrusted to the agent by the principal. Where the actual title to property (other than money) is vested by a principal in the agent, the agent will be a trustee [page 11] of that property.39 In such cases, agents may not only bind themselves at law in their dealings with that property, but they may also within the scope of their authority bind their principals. Although the trust property is vested in them, they are agents in so far as they are bound to follow their principals’ directions in regard to that property. They do not have the usual powers and discretions of trustees. [2-11] The position is more complex where money is entrusted to an agent by a principal or received by the agent on behalf of the principal, and particularly where there is no direct evidence as to the intentions of the parties. The courts have stressed the importance of various indicia.40 In other cases, the terms of the agency determine whether the agent is bound to keep the money separate or

is entitled to mix it with the agent’s own money. In the former case, the agent is a trustee of the money and in the latter case, the agent is a debtor to the principal,41 unless there is an intention to create a trust pursuant to which trust moneys and the moneys of the agent may be mixed.42 Ordinarily, an agent who collects money on behalf of a principal is not a trustee of that money, but in the case, for example, of a solicitor who receives the purchase price of land on behalf of a vendor client, the solicitor is not only the agent to receive the money but is also, because bound to keep that money separate and to account for it, a trustee of it for the client.43 Where an agency involves also a trust because the principal has vested property in the agent, the beneficiary under the trust will of course be the agent’s principal.44 [2-12] The importance of distinguishing between trust and agency may be illustrated by considering the respective liabilities of trustees and agents to third parties. An agent will only rarely be personally liable to third parties: the agent will be liable if fraudulent, if a del credere agent or if the agent has been acting for an undisclosed principal, but not otherwise. A trustee, on the other hand, will always be personally liable to third parties, having (at most) mere rights of contribution and indemnity against the cestui que trust and the trust assets.

Trust and Debt [2-13] Generally, a debtor is not a trustee for the creditor since there is no identifiable fund which the latter is entitled to compel the former to apply for the creditor’s benefit.45 It may be difficult to tell whether a trust has been created or merely a debt incurred. The distinction is most important when any question arises of tracing the money into other property upon which it may have been spent. If there is only a debt, the creditor is limited to the common law remedy of action on that debt.46 If the money was paid on trust, the payer may trace the money into any other identifiable property which the payee may have purchased with it. The answer to the question whether a debt or trust was created in any particular case depends upon the intention of the parties. If the parties intended that the one receiving the money should hold that money for the benefit of the other or for the benefit of a third party, then it will be a trust because there is actual trust property. If the payee was entitled to use the money

as his or her own, being under an obligation merely to repay the same amount of money at a future time, [page 12] then the payer is merely a debtor.47 For example, if A agrees to pay to B a sum of money with the common intention that B shall invest the same during a period of a year, and that at the end of the year B should return the money to A together with a half share of any profits earned by the investment, it is not easy to say whether B held the money on trust or whether B should be regarded only as a debtor to A in that sum. Should B use the money for other purposes in purchasing property for himself, then, if there is a trust, A will be able to trace into the property so purchased. The question whether B in such a case is a trustee or a debtor cannot be answered except in the light of the actual expressions used by the parties, and more particularly in the light of the nature of the transaction and the exact circumstances of the case.48 [2-14] It was once thought that the categories of debt and trust were mutually exclusive. This is no longer tenable, as has been made plain by the decision of the House of Lords in Barclays Bank Ltd v Quistclose Investments Ltd,49 which has given rise to the so-called ‘Quistclose trust’. Although it is open to doubt whether the trust identified in that case in fact represents the ‘single most important application of equitable principles in commercial life’50 (in Australia at least, one thinks also of the ubiquitous unit trust, discretionary trust, superannuation trust and Barnes v Addy liabilities of directors and professional advisers), there is no doubting the avalanche of academic commentary the case has engendered51 nor the utility of such a trust for lenders, who may gain, as Twinsectra Ltd v Yardley52 makes very clear, not merely security for their debt, but also the right to invoke Barnes v Addy claims against third parties in the event of a breach of trust. In order to understand the nature of such a trust, it is necessary to examine closely the facts of the case. Rolls Razor Ltd, which was in acute financial difficulties, had declared a dividend on 2 July and had borrowed money from Quistclose to enable its payment, which the directors of Rolls Razor contemplated taking place on 24 July. The declaration of the dividend had given rise to a debt owed by Rolls Razor to its shareholders. The mutual

intention of Quistclose and Rolls Razor and the essence of their bargain was that the sum advanced should not become part of the assets of Rolls Razor but should be used exclusively for payment of a particular class of creditors, namely those entitled to the dividend. However, on 17 July the directors resolved to put Rolls Razor into voluntary liquidation. An effective resolution for liquidation was passed on 27 August. The dividend could not then have been paid since by reason of the liquidation the shareholders had been postponed to the ordinary creditors. The cheque drawn by Quistclose in favour of Rolls Razor which represented the moneys borrowed by Rolls Razor had been paid into a special account with Barclays Bank. Rolls Razor had informed the bank that the account was to be used only to pay the dividend. After Rolls Razor went into liquidation the bank sought to set off the claim in the dividend account against other indebtedness to it of Rolls Razor. Three issues arose. The first was whether the arrangement between Quistclose and [page 13] Rolls Razor rendered Rolls Razor a trustee in respect of the money advanced to it by Quistclose. The second was whether, if so, it now being impossible to pay the dividend, the money was part of the free assets of Rolls Razor so that Quistclose was left merely as a general creditor in respect of the amount lent. The third issue was whether, if Rolls Razor were a trustee and remained such even after the commencement of the liquidation, its right against the bank in respect of a credit in the special account was held on trust for Quistclose, and whether the bank had notice of that trust so that it could not now effect a setoff. At first instance,53 Quistclose was the plaintiff, Rolls Razor, by its liquidator, was the first defendant, and the bank was the second defendant. The shareholders were represented by the third defendant but he played no active part in the proceeding. Plowman J was prepared to assume the first issue in favour of Quistclose, but held against it on the second, so that the third did not arise. His Lordship held that since Rolls Razor had had a contractual obligation to repay the loan to Quistclose, there was no need to find a trust and the borrower’s contractual obligation did not have engrafted upon it an additional equitable obligation. An appeal to the Court of Appeal was allowed.54 The first and second issues were decided in favour of Quistclose, and on the third it was held that the bank had taken the cheque with knowledge of the circumstances

which made the money represented by it trust funds, so that the bank could not effect a set-off. This decision was affirmed by the House of Lords. What was the nature of this trust? Lord Wilberforce said55 that a necessary consequence of the mutual intention of Quistclose and Rolls Razor to create arrangements which gave rise to a ‘primary’ trust in favour of those entitled to the dividend was that, if the dividend could not be paid for any reason, the money, now held on a ‘secondary’ trust, was to be returned to Quistclose. The intention was to create a secondary trust for the benefit of the lender to arise if the primary trust, to pay the dividend, could not be carried out. As Gummow J has pointed out, that characterisation is indicative of an express trust with two limitations, rather than an express trust in favour of the shareholders and a resulting trust in favour of Quistclose arising by reason of an incomplete disposition by Quistclose of the whole of its interest in the moneys lent to Rolls Razor.56 [2-15] What emerges is as follows. First, the outcome is that the lender has not merely the benefit of a promise to repay, but also a beneficial interest in the money it has lent, thus emphasising that the categories of debt and trust are not mutually exclusive. Secondly, the nature of that beneficial interest, and the time when it arises, depend on the facts of the case. In the Quistclose case itself, the beneficial interest was, at first, held by the lender and the members, and subsequently exclusively by the lender. In the Twinsectra case, the beneficial interest was at all times held by the lender, but subject to a power or mandate. An express trust can accommodate a wide range of facts. Thirdly, these outcomes are the result of the application of conventional principles of the law of trusts, rather than a novel category of trust exempted from the ordinary requirements of an express private trust. The use by Lord Wilberforce of the term ‘purpose’, although descriptive of the end sought to be achieved, does not herald a departure from conventional analysis. That is confirmed by the decision of the Privy Council in Re Goldcorp Exchange Ltd:57 [page 14] That a sum of money paid by the purchaser under a contract for the sale of goods is capable in principle of being the subject of a trust in the hands of the vendor is clear. For this purpose it is

necessary to show either a mutual intention that the moneys should not fall within the general fund of the company’s assets but should be applied for a special designated purpose, or that having originally been paid over without restriction the recipient has later constituted himself a trustee of the money: see Barclays Bank Ltd v Quistclose Investments Ltd.58 This requirement was satisfied in Re Kayford Ltd,59 where a company in financial difficulties paid into a separate deposit account money received from customers for goods not yet delivered, with the intention of making withdrawals from the account only as and when delivery was effected, and of refunding the payment to customers if an insolvency made delivery impossible.

Their Lordships went on to find that the facts of the present case were inconsistent with any such trust. In Legal Services Board v Gillespie-Jones, Bell, Gageler and Keane JJ said that ‘[t]he terminology of a “Quistclose trust” is helpful as a reminder that legal and equitable remedies may co-exist. The terminology is not helpful if taken to suggest the possibility apart from statute of a non-express trust for non-charitable purposes.’60 Confusion of thought, comparable to that attending the classification of the Quistclose trust as a new species, is found in treatments of the secret trust as a specific legal institution rather than a series of cases which provide examples of the particular operation of the principle upon the facts as found.61 Fourthly, those who would contend that the principles governing express private trusts have no role to play face a further difficulty. For now that the Quistclose case and its progeny are familiar, well-informed lenders may seek expressly to invoke the principle. If there were a species of Quistclose trust separate and distinct from express private trusts, it would seem not to include those trusts in which the parties have, expressly, sought to achieve the Quistclose outcome. That in turn leads to a regrettable distinction between ‘true’ Quistclose trusts and trusts which are merely analogous to them.62 Fifthly, while there is a terminological difference between the Australian and English authorities, there are indications that it is little more than that. In the Twinsectra case, Lord Millett cited Gummow J’s reasons in Re Australian Elizabethan Theatre Trust with approval, and agreed that ‘orthodox trust law’ was to be applied,63 while in Re Crown Forestry Rental Trust,64 his Lordship referred to a distinction between ‘express’ and ‘implied’ resulting trusts.65 To the extent that there is any substantive difference of approach, it may lie in the greater readiness on the part of Australian courts to discern an intention to create a trust.66 Lastly, as Turner has observed, the decisions can be reconciled with principle by adopting an approach whereby: … a resulting trust can arise where a disponor expresses no intention where beneficial ownership

of surplus assets will be located in the event that the primary purpose of the disposition cannot be carried out, and that express trust takes over where there is intention that the remaining beneficial interest should lie with the disponor. This is an approach which treats the boundaries between express and resulting trusts in the ordinary way, and, with respect, gives appropriate recognition to the role of the inferred express trust.67

[page 15] [2-16] The Quistclose case was concerned with the interaction of the law as to trust and debt, but despite what was said in Re Miles,68 there is no reason why the facts may not establish the existence of a trust where money is lent not to discharge debts but for other purposes such as to buy equipment (as in Re EVTR)69 or to subscribe for shares (as in Re Associated Securities Ltd and the Companies Act).70 The truth is that the facts are capable of very considerable variation and the express trust is a flexible instrument. Thus, the facts might show that the borrower held the moneys borrowed as trustee of an express trust for the lender, but with a mandate to use the fund to pay the creditors, with the result that the creditors had no beneficial interest in the fund. Alternatively, the terms of the trust might oblige the borrower at the suit of the lender to pay the creditors of the borrower, or these rights of the lender might be assigned by the lender to the creditors.71 In the Quistclose case, it appears to have been a condition of the primary trust in favour of the shareholders that they would acquire and retain vested equitable rights in the fund only to the extent to which they had a present right to payment of the dividend in the ordinary course and this condition of their entitlement could not be fulfilled after the company went into liquidation. In Re Kayford Ltd,72 a doubtfully solvent company which conducted a mail order business opened a separate ‘customers’ trust deposit account’ into which it paid moneys received from customers for goods ordered but not yet delivered, with the object that such customers would be fully refunded should a liquidator be appointed. When that occurred, Megarry J found that money never belonged beneficially to the company, by reason of an intention before receipt to subject it to a trust at the time of its receipt. In contrast, in Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd,73 payment was made by a debtor of the doubtfully solvent company on terms that it be used solely to pay nominated creditors. Although Peter Gibson J held that the company never acquired any beneficial interest in the payment, the arrangement, which was plainly of preferential effect, would have been contrary

to the Australian preference provisions,74 and would also be contrary to those later introduced in England.75 On the other hand, in cases such as Re Barrington and Associates Pty Ltd (in liq),76 it was held that beneficial interests did arise in the particular creditors for the payment of whose debts the money was lent.

Trusts and Contracts for the Benefit of Third Parties [2-17] Where one party contracts with another to pay money to or otherwise do something for the benefit of a third party, while the contract is (both at law and in equity) a perfectly valid contract between the promisor and the promisee at law, the third party has no rights under the contract. The reason is the common law doctrine of privity of contract. The third party cannot sue on the contract because no consideration has moved from the third party; or, to state what is either an identical or a related rule, because the third party is not a party to the contract. This has been decided at least four times by authoritative decisions of the House of Lords.77 The High Court of Australia has laid down the law in precisely similar terms in Wilson v Darling Island Stevedoring & Lighterage Co Ltd.78 The whole subject was reconsidered by the [page 16] High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd.79 The significance of the case lies more in the diversity of views in the six judgments delivered by seven members of the court than in what actually was decided. No member of the court was prepared to discard completely the privity doctrine. Mason CJ and Wilson J, with Toohey J, held that a person who is not a party to a public liability insurance policy, but who falls within the class expressed to be insured by it, may enforce the indemnity for which the policy provides. However, Brennan, Deane, Dawson and Gaudron JJ held that the respondent could not enforce the insurance contract because it was not a party to it. Deane J held that the respondent should be afforded an opportunity to establish that the policy created a trust in its favour of the benefit of the promise of the

insurer. Gaudron J held the insurer liable but by reason of restitutionary principles which operated dehors the contract. [2-18] In practice, this means that if A promises B (for valuable consideration) that A will pay money or transfer property to C, C, because not a party to the contract, will not be able to sue A at law for damages for breach of contract and will not be able to sue A in equity for specific performance of the contract. More than that, it will usually mean that if A defaults, B will not be entitled to more than nominal damages in an action at law for damages for breach; B cannot get substantial damages because B personally has suffered no damage.80 These principles apply in all jurisdictions of Australia except Western Australia and Queensland; in those two states, as well as in the United Kingdom, the law has been radically altered by legislation.81 [2-19] It is important to distinguish this class of case from the cases dealing with contracts for valuable consideration between A and B whereby A promises B that A will pay money or transfer property to B on terms that it will be paid by B to, or applied by B for the benefit of, C. True, in this class of case also C is unable to sue either at law or in equity on the contract, but on A’s breach B can always recover substantial, and not merely nominal, damages from A. B will personally have suffered substantial damage, that is, the non-receipt of the money or property, and the fact that B would have been obliged (as between B and A) to pay over such money or property had B received it is at law an entirely irrelevant factor.82 The former class of case is the one principally discussed in this section. [2-20] By way of mitigation of the apparent severity of the common law rule, the following matters should be noted: First, both at law83 and in equity,84 the third party contract is perfectly valid and binding as between promisor and promisee, unlike Roman Law where such a contract was (with some exceptions) simply invalid.85 Indeed, to breach such a contract is an ‘unlawful act’ and a ‘legal wrong’, and concerted action by two or more persons to cause a breach of such a contract probably amounts to the tort of conspiracy. Secondly, a contractual promise by A to B to pay C is often, as a matter of construction, interpreted by the courts as a promise by A to pay B ‘or as B

directs’ in which case B’s damages on A’s breach will be substantial and not nominal.86 [page 17] Thirdly, since a third party contract is valid as between promisor and promisee, any moneys paid or property conveyed to the third party pursuant to it belong to that third party absolutely, are forever beyond recall, and may be dealt with as the third party wishes.87 Fourthly, it may not be that in every case where A promises B for valuable consideration to pay money to C that, on A’s breach, B’s damages will necessarily be nominal rather than substantial, although usually this will be the case. Starke has convincingly argued that in at least two cases the damages obtainable by B under existing law would be more than nominal: (a) where the promisee has actually performed in favour of the third party that (or part of that) which the promisor failed to perform under the contract; and (b) where the promisor contracted to pay to the third party a debt due by the promisee.88 More importantly, this approach, in a somewhat wider form, was adopted by Windeyer J in Coulls v Bagot’s Executor and Trustee Co Ltd:89 The question which presents itself at this point is, what is the measure of damages for breach of a promise to confer a benefit upon a third party? Take the case supposed above — a contract by A with B under which B is to pay $500 to C. A sues B for breach of contract. There are authorities which say that he could recover only nominal damages, because it is C who has suffered not he…. As Else-Mitchell J remarked in Cathels v Commissioner of Stamp Duties,90 the cases on this point are ‘conflicting and unsatisfactory’. No difficulty would arise if a statement of Lush LJ, in Lloyd’s v Harper,91 could be accepted without qualification and regardless of its context. He said: I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B and recover all that B could have recovered if the contract had been made with B himself. But I think we must take it that when the learned Lord Justice spoke of a contract for the benefit of B he was thinking of a contract of which A was a trustee for B — that is to say of one in which A held his legal rights under a contract as a trustee for B. In such a case of course the question disappears: but the case I have supposed, a contract by A with B that B will pay C $500, is a transaction at law devoid of any equity in C. Yet I do not see why, if A sued B for a breach of it, he must get no more than nominal damages. If C were A’s creditor, and the $500 was to be paid to discharge A’s debt, then B’s failure to pay it would cause A more than nominal damage. Or, suppose C was a person whom A felt he had a duty to reward or recompense, or was someone who, with the aid of $500, was to engage in some activity which A wished to promote or from which he might benefit — I can see no reason why in such cases the damages which A would

suffer upon B’s breach of his contract to pay C $500 would be merely nominal: I think that, in accordance with the ordinary rules for the assessment of damages for breach of contract, they could be substantial. They would not necessarily be $500; they could I think be less, or more. That is as I see it. I realize that (as Messrs Goff and Jones mentioned in their work the Law of Restitution and as Mr Treitel has recently emphasised) there are statements in Cleaver v Mutual Reserve Fund Life Association92 which suggest that the promisee could recover not unliquidated damages but the sum which the promisor had agreed he would pay to the third party: but I find difficulty in seeing how this could be so. Suppose that A does recover substantial damages for B’s failure to perform his promise to A to pay C $500 — the next question is does he recover these damages for himself or for C. Notwithstanding the statements in Beswick v Beswick suggesting that he would recover them for C, I do not see why this should be. On the hypothesis of a purely contractual right with no trust attached, why should A hold for C the proceeds of his action? He sued at law for damages he himself suffered, not as the representative of C. C had no right of action. A, not being a trustee of his contractual rights, might, had he wished, have released B from his contract, or declined to sue him for breach of it; or by agreement between A and B the contract could have been varied.

[page 18] C could not have complained. Why then is it said that proceedings brought by A to enforce his legal right give C a right against A when previously he had none? (I leave out of consideration the possibility of a bargain between A and C supported by consideration moving from C.) Of course A, whose purpose had miscarried because of B’s breach of contract, might make over any damages he recovered to C: but that would not be because C had a right to them, but because A still wished to give effect to his plan to confer a benefit on him. In a case in which specific performance was an available remedy, A might choose to seek that form of redress against B, and thus obtain a judgment that B pay C $500. But that would not be because A was enforcing a right of C, but because he was enforcing his own right against B by obtaining an order that B perform his contract with him, A. For this reason — and always on the assumption that there was no trust and that the transaction was as between A and C wholly gratuitous — I am not persuaded that C could force A to seek redress from B, or dictate to him what form of redress, specific performance or damages, he should seek.

The position would now, subject to the Contracts (Rights of Third Parties) Act 1999 (UK), seem to be the same in England, since the House of Lords in Woodar Investment Development Ltd v Wimpey Construction UK Ltd93 has repudiated the reasoning of Jackson v Horizon Holidays Ltd.94 Fifthly, it has always been recognised that, in an appropriate case, the promisee (not the third party) can obtain a decree of specific performance of the agreement.95 In view of the insistence by the House of Lords in Beswick v Beswick96 that the remedy of specific performance in equity is grounded on the inadequacy of the common law remedy of damages, it would seem that specific

performance would be peculiarly appropriate in cases where damages, being nominal, were grossly inadequate. Sixthly, by way of mitigation of the severity of the common law rule, the High Court of Australia has held in Coulls v Bagot’s Executor and Trustee Co Ltd,97 that in the case where A promises B and C for valuable consideration supplied by B (and not by C) to make payments jointly to B and C, C, being a party to the contract, is entitled to enforce it personally notwithstanding that no consideration moved from C. In such a case, C is not a third party to the contract. Seventhly, some commercial contracts, and notably bankers’ commercial letters of credit, are recognised and enforced by the law despite the absence of privity of contract which often occurs between the parties thereto.98 Eighthly, there is a special rule first laid down in the eighteenth century and affirmed by the House of Lords in The Albazero,99 that a consignor can recover from a carrier the value of goods lost by reason of breach of the contract between the consignor and the carrier, notwithstanding that the consignor had at the time of the loss neither the property in nor the right of possession of the goods, and that the consignor does not recover the damages on behalf of any person who did have these rights to the goods. Ninthly, as is instanced by the House of Lords’ decision in Hepburn v A Tomlinson (Hauliers) Ltd,100 it has always been received law that a carrier who takes out insurance on goods may do so for their full value, and recover their full value by way of damages if the risk insured against occurs, although the carrier personally has but a limited interest in the goods. To the extent [page 19] that the damages recovered exceed the value of the carrier’s limited interest, the carrier is a trustee for persons with other interests. Tenthly, a bailee may sue in detinue or trespass for loss or damage to the bailor’s goods and recover the value thereof despite the bailee’s limited interest in the goods; the bailee is accountable to the bailor for the proceeds of judgment in an action for money had and received.101 Eleventhly, in The Albazero, the House of Lords has pronounced a general

common law principle (of which the eighth and ninth propositions are applications) that:102 [I]n a commercial contract concerning goods where it is in the contemplation of the parties that the proprietary interests in the goods may be transferred from one owner to another after the contract has been entered into and before the breach which causes loss or damage to the goods, an original party to the contract, if such be the intention of them both, is to be treated in law as having entered into the contract for the benefit of all persons who have or may acquire an interest in the goods before they are lost or damaged, and is entitled to recover by way of damages for breach of contract the actual loss sustained by those for whose benefit the contract is entered into.

This passage was applied and adapted to contracts for building works on property to be occupied or purchased by third parties, by the House of Lords in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd103 and the English Court of Appeal in Darlington Borough Council v Wiltshier Northern Ltd.104 Twelfthly, the courts may, in particular circumstances, hold that the party with the benefit of the promise has contracted as agent of the third party,105 or that the promisee has entered into a collateral contract with the third party.106 Lastly, at least in the case of ‘Himalaya clauses’ in bills of lading, the courts have held that a contractual immunity may be availed of by stevedores who are third parties to the contract constituted by the bill of lading, although it is unclear quite on what conceptual basis this result proceeds.107 [2-21] While the third party’s rights at law are circumscribed in the manner described above, the situation is different in equity. The benefit of the promisor’s (that is, B’s, in the example given) promise is a chose in action which can, in appropriate circumstances, be held on trust in the same way that any other property is capable of being held on trust. This possibility was suggested as early as 1753 by Lord Hardwicke.108 It was adopted by Sir William Grant MR in Gregory v Williams109 in 1817, and since then it has never been doubted.110 Its validity has been recognised by the House of Lords in Les Affreteurs Reunis SA v Leopold Walford (London) Ltd111 and by the High Court in Wilson v Darling Island Stevedoring & Lighterage Co Ltd.112 In England, [page 20] the notion that the benefit of a contract is capable of constituting trust property has been recognised at least six times since 1880 by the Court of Appeal.113 If in

the contract whereby A promises B to pay money to C, B expressly contracts as trustee for C, or it is made a term of the contract that the benefit of A’s promise to B is to vest in C, it is quite clear that the benefit of the promise is a chose in action which is held in trust for C. In most cases, however, there is no direct expression of intention as to whether the benefit of A’s promise to B is or is not to be held on trust; in these cases, it becomes a question of determining whether the meaning of the words actually used in the contract, construed in the light of all admissible surrounding circumstances, is that the promisee is a trustee with the benefit of the covenant.114 This is sometimes called an ‘objectively manifested’ intention. The trust property is the benefit of the promisor’s promise. That was certainly the view adopted by Fullagar J in Creamoata Ltd v Rice Equalization Association Ltd.115 By ‘the benefit of the promisor’s promise’ is meant the promisee’s right to sue at law for damages or in equity for an injunction or specific performance, should such an occasion arise. When courts of equity recognise such a trust in favour of a third party, that third party still has no rights to sue at law, but may take proceedings in equity to enforce the trust by compelling (in effect) the promisee to sue the promisor either at law or in equity, as may be appropriate; the beneficiary of a trust has always been the person to whom equity has given the remedy for breach of trust even though not a party to the creation of the trust.116 [2-22] Such trusts have often been upheld by the courts. Equally often their existence in particular factual situations has been denied. The numerous decisions on the subject are not made any easier to understand when different conclusions are reached in regard to what are apparently the same facts. To take just one example: a promise to pay a single specific creditor of the promisee was held to be held on trust in Gregory v Williams,117 but not in Foster v Genowlan Shale Co.118 It is often suggested that the test for distinguishing third party contracts in which a trust may properly be found from third party contracts in which a trust may not is whether the contract admits of rescission or variation without the consent of the third party: if it does, so the argument runs, there is no trust; if it does not, there is a trust.119 But this theory must be rejected. It can readily be conceded that a contractual term to the effect that the contract cannot be varied or rescinded without the consent of the third party facilitates making an inference that the promisee intended to create a trust of the benefit of the promise; but, nonetheless,

[page 21] the theory cannot stand. It has been specifically rejected by at least one authority.120 It is contrary to at least five cases in which trusts were recognised where the contracts concerned were revocable without the consent of the third party.121 And, what is more important, it is contrary to principle; as Fullagar J said in Wilson v Darling Island Stevedoring & Lighterage Co Ltd:122 ‘I cannot see why it should be necessary that such a trust should be irrevocable; a revocable trust is always enforceable in equity while it subsists.’ [2-23] What, then, is the distinction? It is a question of (objectively manifested) intention. In various cases there is an insistence on the need for a clear expression of intention to create a trust and a warning that such an intention is not necessarily to be inferred from general words.123 However, in Wilson v Darling Island Stevedoring & Lighterage Co Ltd,124 Fullagar J said that it was difficult to understand the reluctance which courts have sometimes shown to infer a trust in such cases, and that remark was endorsed by Mason CJ and Wilson J and by Deane J in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd.125 Their Honours stressed that the requisite intention to create an express trust should be inferred if it clearly appears that it was the intention of the promisee that the third party should be entitled to insist upon performance of the promise and receipt of the benefit, and that in divining intention from the language employed by the parties the courts may look to the nature of the transaction and the circumstances ‘including commercial necessity’. But, ultimately, it is always important to remember that what is difficult to understand about the cases is not what are the relevant principles to apply, but how the principles which quite clearly should apply and about which there is little (if any) controversy can lead to such bewilderingly multifarious results. [2-24] What is the reason for distinguishing contracts for the benefit of third parties which import a trust from those which do not? Usually it is to ascertain in which cases the third party can, albeit indirectly, enforce the contract. But there may be another reason. If, and only if, a trust be found, the promisee may recover substantial rather than nominal damages for breach of contract: this is the situation to which the dictum by Lush LJ in Lloyd’s v Harper,126 already quoted at [2-20], is directed. Anomalous though such a rule be (since it entails

common law enforcement of purely equitable interests), it is well established.127 Moreover, it in no way depends on the operation of the Judicature legislation. However, as already suggested, if no trust be found, the promisee is relegated to merely nominal damages. [2-25] As stated above, the position is radically different in Western Australia and Queensland where all third parties are given rights at law directly against the promisor and thus are put in an even more favourable position than if they were cestui que trust of the benefit [page 22] of the promisor’s promise. In Western Australia, the position is governed by s 11(2) and (3) of the Property Law Act 1969:128 (2) Except in the case of a conveyance or other instrument to which subsection (1) applies, where a contract expressly in its terms purports to confer a benefit directly on a person who is not named as a party to the contract, the contract is, subject to subsection (3), enforceable by that person in his own name but — (a) all defences that would have been available to the defendant in an action or proceeding in a court of competent jurisdiction to enforce the contract had the plaintiff in the action or proceeding been named as a party to the contract, shall be so available; (b) each person named as a party to the contract shall be joined as a party to the action or proceeding; and (c) such defendant in the action or proceeding shall be entitled to enforce as against such plaintiff, all the obligations that in the terms of the contract are imposed on the plaintiff for the benefit of the defendant. (3) Unless the contract referred to in subsection (2) otherwise provides, the contract may be cancelled or modified by the mutual consent of the persons named as parties thereto at any time before the person referred to in that subsection has adopted it either expressly or by conduct.

In Queensland, the position is governed by s 55 of the Property Law Act 1974: (1) A promisor who, for a valuable consideration moving from the promisee, promises to do or to refrain from doing an act or acts for the benefit of a beneficiary shall, upon acceptance by the beneficiary, be subject to a duty enforceable by the beneficiary to perform that promise. (2) Prior to acceptance the promisor and promisee may, without the consent of the beneficiary, vary or discharge the terms of the promise and any duty arising from it. (3) Upon acceptance — (a) the beneficiary shall be entitled in the beneficiary’s own name to such remedies and relief as may be just and convenient for the enforcement of the duty of the promisor,

and relief by way of specific performance, injunction or otherwise shall not be refused solely on the ground that, as against the promisor, the beneficiary may be a volunteer; and (b) the beneficiary shall be bound by the promise and subject to a duty enforceable against the beneficiary in the beneficiary’s own name to do or refrain from doing such act or acts (if any) as may by the terms of the promise be required of him; (c) the promisor shall be entitled to such remedies and relief as may be just and convenient for the enforcement of the duty of the beneficiary; (d) the terms of the promise and the duty of the promisor or the beneficiary may be varied or discharged with the consent of the promisor, and the beneficiary. (4) Subject to subsection (1), any matter which would in proceedings not brought in reliance on this section render a promise void, voidable or unenforceable, whether wholly or in part, or which in proceedings (not brought in reliance on this section) to enforce a promissory duty arising from a promise is available by way of defence shall, in like manner and to the like extent, render void, voidable or unenforceable or be available by way of defence in proceedings for the enforcement of a duty to which this section gives effect. (5) In so far as a duty to which this section gives effect may be capable of creating and creates an interest in land, such interest shall, subject to section 12, be capable of being created and of subsisting in land under any Act but subject to that Act. (6) In this section — (a) ‘acceptance’ means an assent by words or conduct communicated by or on behalf of the beneficiary to the promisor, or to some person authorised on the promisor’s behalf, in the manner (if any), and within the time, specified in the promise or, if no time is specified, within a reasonable time of the promise coming to the notice of the beneficiary. (b) ‘beneficiary’ means a person other than the promisor or promisee, and includes a person who, at the time of acceptance is identified and in existence, although that person may not have been identified or in existence at the time when the promise was given.

[page 23] (c) ‘promise’ means a promise — (i) which is or appears to be intended to be legally binding; and (ii) which creates or appears to be intended to create a duty enforceable by a beneficiary; and includes a promise whether made by deed, or in writing, or, subject to this Act, orally, or partly in writing and partly orally. (d) ‘promisee’ means a person to whom a promise is made or given. (e) ‘promisor’ means a person by whom a promise is made or given. (7) Nothing in this section affects any right or remedy which exists or is available apart from this section. (8) This section applies only to promises made after the commencement of this Act.

Trust, Equitable Charge and Equitable Lien [2-26] An equitable charge is created when, for example, a testator devises Blackacre to A, and then proceeds to charge Blackacre with the payment of a sum of money, for instance, the testator’s debts or an annuity or a legacy or legacies. In such a case, A is not a trustee of Blackacre. The essential element of a trust which is missing is that A is under no personal obligation to hold Blackacre for the benefit of any other person. The charge creates an equitable interest in the property in the person in whose favour it is charged so that it does to that extent resemble a trust. Such a person, however, has only a security interest in the property and has not the equitable ownership that a beneficiary has under a trust. In Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd,129 the High Court said: In In re Bank of Credit and Commerce International SA (No 8), Lord Hoffmann, with whose speech the other Law Lords agreed, gave a description of an equitable charge in which he emphasised that the proprietary interest created thereby is held by way of security, so that the chargee may resort to the charged asset only for the purpose of satisfying some liability due to the chargee. The charge is subject to the equity of redemption retained by the owner. However, the beneficial interest held under an express trust is not so limited in nature. The remedy of the beneficiary is to proceed in equity for the performance of the trust, not for the sale of trust property to satisfy a secured liability.

The distinction is important in regard to the remedies available to the person to be benefited. In the case of an equitable charge, the remedy of the person in whose favour the property is charged is against the property itself and not against the holder of the property. Where the holder does not meet the charge, the other party may proceed in equity for the sale of the property and for payment out of the proceeds of sale. The remedy of a beneficiary under a trust is to proceed in equity for performance of the trust and not for any sale of the trust property.130 [2-27] Further, when the holder of property subject to an equitable charge pays off that charge, the property is held beneficially for him or her. On the other hand, where property is given to a trustee upon trusts which do not exhaust the fund or the property, the balance thereof is held not for the trustee’s own benefit, but for the benefit of the settlor or the testator’s estate: If I give to A and his heirs all my real estate, charged with my debts, that is devise to him for a particular purpose, but not for that purpose only. If the devise is upon trust to pay my debts, that is a devise for a particular purpose and nothing more; and the effect of those two modes admits just this difference. The former is a devise of an estate of inheritance for the purpose of giving the

devisee the beneficial interest, subject to a particular purpose; the latter is a devise for a particular purpose; with no intention to give him any beneficial interest. Where therefore the whole legal interest is given for the purpose of satisfying trusts expressed, and those trusts do not in their execution exhaust the whole, so much of the beneficial interest as is not exhausted belongs to the heir; but, where the whole legal interest is given for a particular purpose, with an intention to

[page 24] give to the devisee of the legal estate the beneficial interest, if the whole is not exhausted by that particular purpose, the surplus goes to the devisee; as it is intended to be given to him.131

[2-28] It is often a matter of difficulty to determine whether a trust or a charge has been created. Although some have seen the distinctions as sterile and overly conceptualist, as the High Court observed in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd,132 those distinctions serve to identify the various building blocks of the law of property, and have been adopted by statute: thus, an unregistered charge is made, by the Corporations Act 2001 (Cth), void as against a liquidator, but the efficacy of an unregistered trust is unimpaired. It is a question of the intention of the transferor. If a transferor gives property and expressly charges that property with payments to another, or gives it ‘subject to’ payments to another, a charge will be created. If, however, it is clear from the language used that whatever is left after satisfaction of the charge should belong not to the holder of the property but should revert to the transferor, then the language used will more probably be interpreted as creating a trust. [2-29] An equitable lien may be enforced in the same way as an equitable charge, that is to say by sale in pursuance of court order or where the lien is over a fund by an order for payment out of the fund.133 However, unlike an equitable charge, an equitable lien is imposed by operation of law. Well-known examples are the lien of the vendor for unpaid purchase money and the lien of a purchaser for money paid to the vendor on a sale that has gone off. A solicitor has no common law lien for costs over property which has not come into the solicitor’s possession. But if as the result of legal proceedings in which the solicitor has acted for the client a judgment or award or compromise for the payment of money is obtained, the solicitor acquires an equitable right to be paid his or her costs out of it.134 In Hewett v Court,135 Deane J referred with approval to the treatment of the subject in Pomeroy’s Equity Jurisprudence.136 It is there said

that, in addition to equitable liens arising from contractual dealings in property, equity may impose liens based either upon general considerations of justice or upon the principle that a person who seeks the aid of equity in enforcing some claim, for example in an administration of assets, must admit the equitable rights of others directly connected with or arising out of the same subject matter. Accordingly, where a person’s efforts have brought into court a fund in the administration of which various parties are interested, that person’s costs and expenses are a first claim upon the fund.137 Thus, in Shirlaw v Taylor,138 the Full Federal Court decided that a provisional liquidator had an equitable lien for expenses and remuneration over the assets under his administration, [page 25] and that the lien survived the termination of the appointment. A claim to contribution by one co-owner upon the other to recoup expenditure which benefits their joint property is supported by an equitable lien upon the undivided share of the co-owner.139 An equitable lien has also been imposed to support rights arising under the doctrine of equitable estoppel.140 The constructive trust also is imposed by operation of law rather than pursuant to consensual arrangement. In a sense, the equitable lien is an alternative to the imposition of a constructive trust, but it offers a more precise and limited remedy.141

Trust and Condition [2-30] Property may be given to another upon condition that the other pay to a third party a sum of money or undertake some other obligation in relation to that third party. In such a case, no trust is created. There may be a charge of the payment upon the property in the sense referred to in the last paragraph. On the other hand, there may be only a personal obligation imposed upon the holder of the property as a result of his or her accepting that property on the condition. The essential element of a trust which is then lacking is that the personal obligation of the holder of the property is not annexed to that property. The third party cannot exercise any rights against the property itself.

[2-31] A true condition is one which, if a condition precedent, will prevent the transferee from taking the property until fulfilled or one which, if a condition subsequent, would result in the forfeiture of the property if it is not performed. Where the condition is that the transferee of the property should pay a sum of money to a third party, the court is more likely to construe this as either a trust or an equitable charge. The reason is that if it were construed as a condition in the strict sense, then, if the donee refused to perform the condition and refused to take the property on that condition, not only would the donee’s interest be lost, but also the third party would take no benefit. The donee would thus decline the personal obligation and there would be no obligation which was annexed to the property itself:142 If it was held that the devise must be construed as importing a condition and nothing else, the person entitled to receive the payments would lose the payments, because, if the payments were not made within a given time, the heir of the testator would enter and take the estate, and take it free. It was to get over that objection that it has been said that, generally, the right construction is to hold that the devise creates a trust and not a condition. It has been termed a trust without any particular regard to the language, a legal effect being given so as to enable the person entitled to get the payments. It is upon that class of cases, to which I have referred only in general terms, that the argument has been based that here the devise is not a condition, and is therefore a trust. But it is equally plain, for ordinary purposes, that the effect of the devise is to create a charge, and not a trust. Now, I proceed to consider whether it is a trust or a charge. On the face of the will, when the testator intends to create a trust, he knows how to do it … I think that the legacies constitute a charge and only a charge.

[2-32] Hence it is not easy to find modern cases in which dispositions of the kind in question are held by the courts to constitute conditions rather than trusts or charges. Thus, in [page 26] Re Potter,143 a disposition ‘I give devise and bequeath my house property situated at number 12 Valentine Avenue, Horsham, to my daughter Coralie Grace Potter for her own use and benefit absolutely provided that my said son James Athol Potter may reside in the said house as long as he so desires’ was construed by Menhennitt J as constituting a trust of a lifelong right of personal residence in favour of the son. On the other hand, Helsham J’s decision in Re Gardiner144 affords an example of a true condition: there the testamentary provision was ‘I give devise and bequeath all my estate both real and personal

unto my son Ivor … subject to my said son paying the sum of $1000 within two years of my death to my son Albert’; and his Honour held (correctly, it is submitted) that, on non-payment within the two years, Ivor forfeited his interest and the estate vested in the testator’s next-of-kin. [2-33] Pearce v Wright145 illustrates one important respect in which it may be necessary to distinguish between a charge and a condition. In that case, a testator devised property to his son and two daughters in unequal shares, and he declared that the said devise should be ‘subject to the payment’ by his son and daughters to his wife during her life of an annuity. If this was construed as a condition the effect would be that although the devise was to the son and daughters in unequal shares, nevertheless, as joint obligors, they would be required to contribute to the annuity equally. However, if it were construed as a charge, the devisees would contribute in proportion to their interests in the property charged. It was held in that case that the words constituted a charge and not a condition and that, as the shares of the beneficiaries were unequal, it followed that the incidence of the annuity was also unequal in the same proportions.

Trust and Equitable Personal Obligation [2-34] As has been seen, where there is a gift of money to a donee coupled with a direction or condition that a sum of money be provided out of the gift for another person, that direction or condition will be usually construed as an equitable charge, or alternatively as a trust. However, there is also the class of case where the condition relates to the enjoyment of the property by the donee after accepting it. In such cases, the gift may be construed as imposing a personal equitable obligation on the donee to make the necessary payment to such other person, or alternatively as a personal obligation coupled with a charge. In so far as the gift is construed as imposing a personal equitable obligation on the donee, it is directly enforceable in equity by that other person, who, unlike a cestui que trust or chargee, has no rights against the property, but, unlike a mere chargee, has a personal right against the donee; and who, unlike the person who has the ‘benefit’ of a mere condition, is thus not left entirely without remedy in the event of a failure of the condition.146

[2-35] Thus, in Gill v Gill,147 a farm with a homestead was devised to a son ‘on condition that he keep the homestead as a home and provide board and residence for his sisters … and that he shall pay all my funeral, medical and testamentary expenses, as well as all my debts not otherwise provided for’. Harvey J made declarations that these were not mere conditions, the failure of which effected a forfeiture, and that there was no trust in favour of the sisters. It was further declared that the gift amounted to personal obligations enforceable against the son in equity, so that one obligation could be enforced by one unmarried sister by way of compensation in case the son refused or was unable to carry it out provided that in any [page 27] such proceedings the sister joined the estate of the father as a defendant with her brother. Harvey J said:148 In some cases the Court may see that what the testator intended was to attach a charge or trust upon the property, in other cases it may conclude that a personal liability alone is intended. The view taken would depend partly on the language used to describe the obligation, partly on the nature of the property given to the obligee, and partly on the nature of the obligation. In cases where the obligation is merely personal in its nature, calling for the personal activity of the obligee it may the Court could not effectively secure its specific performance; I see no reason why, in such cases, the Court should not mould the remedy so as to give a remedy by way of damages for the breach of the quasi contract.

It will be noted that the course here suggested will, in many cases, come close to giving a third party rights under a contract even though it be held that no trust was created in that party’s favour. Harvey J suggested no firm basis for the award of such ‘damages’ or ‘compensation’, speaking in one passage of quasi-contract (a legal not equitable institution, though his Honour clearly regarded the relief as purely equitable) and elsewhere invoking the principle of equity that the son was not free to take the benefit of his father’s bounty without accepting the burden of his sister (which, while undoubtedly true, does not explain why enforcement of this duty lay in the hands of the sister rather than the father’s estate or why it sounded in monetary compensation). Harvey J, in refusing to hold that a condition of this nature involved a forfeiture of the property in the event of its not being fulfilled by the donee, said:149 In my opinion there is a broad distinction drawn by the Court between conditions which are true

conditions merely operating to divest an estate or to prevent the vesting of an estate and conditions for the benefit of third parties attached to the possession of property. In the first class of conditions the Court requires certainty, so that it is possible at any given moment to say where the estate is vested. The conditions in the present will are not, in my opinion, conditions of forfeiture; if they were the Court might be forced to treat some of them as so undefined that they would be unenforceable. In the other class of conditions where property is given to a beneficiary on condition that he should maintain certain persons or pay certain liabilities, it has been held that a quasi contractual relationship is created; in other words that the person taking the property is treated as being liable in the Court of Equity to carry out the obligation in the same way as if he had contracted to do so; the quasi contract would presumably be made with the testator and be enforceable at the suit of the personal representatives. But I see no reason why it should not also be enforceable at the suit of the individual (if any) for whose benefit the obligation is created, provided the personal representative is joined as a party. The obligation seems to me to flow from the equitable doctrine that a person cannot ‘approbate and reprobate’ under the same instrument. That such an obligation gives rise to a personal liability seems to be established by such cases as Gregg v Coates;150 Re Williames;151 Re McMahon.152

Since Harvey J in Gill v Gill153 held that the condition could be enforced not only by a personal action for compensation against the son but also ‘specifically against the property’, it is submitted that he treated the disposition in the will as creating an equitable personal obligation coupled with a charge. [page 28] [2-36] In Re Lester,154 the testator bequeathed certain shares in a limited liability company to one of his sons on condition, inter alia, that he should pay out of them certain weekly sums to another son. The son who was the legatee of the shares sought the opinion of the court on the question whether the provisions of the will amounted, as it is submitted was the case in Gill v Gill,155 to a personal equitable obligation coupled with a charge or only to a personal equitable obligation. Simonds J (as he then was), said:156 Various authorities have been cited to me and the result of them is, in my judgment, that it must be a question of construction in each case whether an obligation or a charge is created or whether both are created. I find it difficult to construe such words as those in this case as creating both a personal obligation and a charge. There may be words which create both, as in Welby v Rockcliffe157 and Wright v Wilkin,158 where the language does not admit fairly of any other conclusion than that there was both a personal obligation and a charge. In Rees v Engelbach159 the language was such as to create a personal obligation and there are two Irish cases, Re McMahon160 and Duffy v Duffy,161 where language was used which was apt to impose a personal

obligation but not to create a charge. In Rees v Engelbach the testator had devised his business to his trustees on trust to allow his son to carry it on ‘upon the terms and conditions following’, ie, that he should pay certain annuities, and the only question was whether his son, having accepted the legacy, had incurred a personal liability; and the Vice-Chancellor said:162 ‘Now, upon the authority of the case of Messenger v Andrews,163 and even without the authority of that case, upon very plain principles of justice and law, the defendant, who admits that he has enjoyed the benefit given to him by a will upon the conditions expressed in it, is under a personal liability, which can be enforced in this court, of fulfilling those conditions.’ It is true that in the bill the plaintiff had claimed a declaration that the annuities were by the will charged on the business, but that question was not ventilated. In Re Hodge164 a testatrix devised to her husband, who was her executor and sole residuary legatee, certain freehold property in consideration of his paying her sister £2 a week for life. There it will be observed that a condition was introduced by the words ‘in consideration of’, and the judge came to the conclusion that there was a personal obligation on the husband, if he accepted the devise. I think there is very little difference between a bequest ‘in consideration of’ and a bequest ‘subject to’ the payment by the legatee of certain sums. In either case the words are apt to create a personal obligation. On the other hand, where there is no reference to the legatee as the person by whom the payment is to be made, but the property is merely given subject to the payment of a certain sum, it may well be that the effect is to create a charge on the property but not to impose a personal obligation on the legatee. The distinction is a fine, but, I think, a real one. Here where it is rightly, in my view, conceded that a personal obligation is imposed on the legatee to make the payment, I see no ground for saying that in addition a charge is created.

[2-37] The doctrine that a gift of the kind under consideration can amount to a personal equitable obligation directly enforceable against the donee of the property, although there be no trust, and whether or not there be in addition a charge over the property to secure the performance of the obligation, while, as noted above, lacking a firm basis in principle, provides a convenient and efficacious way of avoiding the often disastrous consequences of construing it as a mere condition of forfeiture, without straining the language of such expressions as ‘upon condition that’ in order to find therein an implied intention to create a trust or charge. [2-38] It is submitted that in the case of such a personal equitable obligation the rights of the obligee could, paradoxically, in some circumstances be greater than those of a cestui que trust [page 29] or mere chargee, in that the donee of the property could be required to perform the obligation even if it cost the donee more than the value of the property.165

[2-39] It is to be noted that a person may hold property which is not only charged with a payment to a third party, but also held on a condition creating an equitable personal obligation that A pay that sum to a third party. If a testator gives Blackacre to A on condition that he pay an annuity to B, and if the testator proceeds to make it clear that A is to be under a personal obligation to pay the amount to B irrespective of the value of Blackacre and that the payment is to be charged on Blackacre, then A will hold Blackacre subject both to an equitable personal obligation and to a charge. However, there will still be no trust because the equitable personal obligation and the charge are quite separate and it cannot be said that the personal obligation of A to pay the money is annexed to the property Blackacre.

Trustee and Executor [2-40] The origin of the offices of trustee and executor are quite different, but in modern times, largely as the result of statute, the two offices have a greater similarity than before. An executor, like a trustee, is in a fiduciary relation with the beneficiary and the essential elements of a trust are all present in executorship. However, although there are great similarities between the two offices, it is not possible to identify the position of an executor with that of a trustee. Their respective powers and duties differ in important respects.166 The principal duties of an executor are to get in the assets of the deceased, to pay debts, to pay the legacies given by the will, and to distribute the assets. If a testator appoints the same person as executor and trustee, which is usual nowadays, then that person acts as executor when performing executorial duties, and thereafter while continuing to hold the property is a trustee. However, if called upon at any future time to deal with assets in the estate which may be subsequently discovered, the person, although a trustee in respect of the balance of the property, will take the new assets as executor. Thus, the same person may be both executor and trustee in respect of different assets in the same estate. Further, if the executor carries out an instruction in the will to set aside a fund and hold it on trust for certain beneficiaries, he or she will become a trustee in respect of that property.167 An important result of this is that the subject matter of that fund will thereupon cease to be part of the general estate of the testator, and therefore if there is any loss to the subject matter of the fund, that loss will

fall on the beneficiaries of the fund, and not upon any other beneficiaries in the testator’s estate.168 This is part of the principle that an executor on assenting to a legacy holds the subject matter of the legacy as trustee for the legatee.169 An executor who has performed all executorial functions may become a trustee by merely continuing to hold property. When the executor becomes a trustee of ascertained property, the beneficiaries then become owners of equitable interests in that property. Thus a beneficiary under a will does not, by reason of the will alone, obtain any title, legal or equitable, to any [page 30] asset forming part of the testator’s estate. When a beneficiary does obtain such a title, it is obtained as a result of the administration of the estate of the testator according to law and in accordance with the dispositions of the will.170 It is now provided in some jurisdictions that if a person, who is appointed by will both executor and trustee thereof, renounces probate, or after being duly cited fails to apply for probate, the renunciation or failure shall be deemed to be a disclaimer of the trusts contained in the will.171 [2-41] In regard to the general duties and powers of executors, in all jurisdictions the provisions of the local trustee legislation apply, unless otherwise stated, to executors as well as to trustees. This arises from the definition of ‘trustee’ and ‘trusts’.172 The power contained in the legislation to appoint new trustees does not give power to appoint a person as an executor or administrator.173 So also the provisions permitting the retirement of a trustee from office do not, by express limitation or necessary implication, authorise any retirement from the office of an executor or administrator.174 [2-42] Certain sections of the Trustee Acts deal expressly with the rights of executors and administrators. For instance, an executor or administrator is expressly given power to pay or allow any debt or claim on any evidence thought sufficient.175 [2-43] An important difference which remains between the office of executor and that of trustee is that at common law one executor can bind the estate of the testator in a manner in which one of a number of trustees, who in the case

of a private trust must act unanimously, could not do.176 One executor may therefore in a proper case compromise with a co-executor a claim against the estate made by the latter.177 However, under s 153(4) of the Conveyancing Act 1919 (NSW), the right of one or some of several executors to sell or mortgage without the consent of all is made to depend on the leave of the court being first obtained.178 [2-44] Executors and administrators in most jurisdictions are given special powers in relation to the sale of land for the purposes of administration.179 An executor primarily holds the [page 31] estate of a testator for the purpose of administering it, for example, paying debts, funeral and testamentary expenses, and then holds the balance upon the trusts declared in the will. It is desirable that he or she should have a power of sale both of realty and personalty for that purpose. A trustee does not require such a power to sell the trust property, and therefore cannot sell it unless an express power to that effect is contained in the trust instrument. Since an executor can sell realty for the purposes of administration, but (in all states except Queensland and Western Australia)180 a trustee cannot sell in the absence of express power, it often becomes most important, where the instrument contains no express power of sale, to inquire whether the property the subject of the sale is held in the capacity of executor or of trustee. In practice it is not easy to determine exactly when a person ceases to act as executor and commences to hold the property as trustee. The test is clear — have the person’s executorial duties in respect of that property ended; but the difficulty in practice is to ascertain precisely whether that is the case.181 Fortunately, in respect of realty in New South Wales and Victoria, a purchaser is not bound to inquire whether the statutory power of sale for the purpose of administration is or has been exercised for that purpose.182 [2-45] In New South Wales, it is open to an executor in whom property is vested as executor and who is also appointed trustee of that property, at any time after all of the executorial duties with respect to the property have been duly performed, to declare by registered instrument in writing that he or she has

ceased to hold the property as executor, and that he or she holds the same as trustee.183

Trusts and Powers [2-46] A power is an authority to take a step which affects rights and obligations. The topic of administrative powers, such as powers of sale and powers of investment, is addressed in Chapter 20. Dispositive powers, known also as powers of appointment, are powers held by persons who are not the absolute owners of property whose exercise affects the beneficial ownership of property. The person in whom such a power is vested is the donee of the power, or the appointor. Powers of appointment may be general, special or intermediate.184 A general power of appointment permits the donee to exercise it in favour of any person, including the donee. It is thus virtually indistinguishable from ownership, and there are no parties on whose behalf equity might intervene. A special power of appointment is a power whose potential objects comprise a limited class. In the case of special powers it is often necessary to decide whether the language used in the will or settlement creates on the one hand a mere or bare power (or as it is sometimes called, a power collateral) or, on the other hand, a power in the nature of a trust or coupled with a trust. The former involves merely a power to appoint among a class with (generally) a gift-over in default of any appointment being made. The latter imposes an obligation on the donee to appoint among the class of third parties defined by the testator or settlor, the donee being required to select appointees from within that class. It follows that the doctrine of trust powers applies primarily to special powers of appointment. An intermediate [page 32] power of appointment (a power to appoint to all of the world except for some excluded class)185 would normally be a mere power but could, in special circumstances, be a trust power. The fundamental difference between a trust and a power of appointment is

that a trust is imperative, while a power is permissive. Further, there can be no trust without trust property vested in the trustee; but there is no need for the donee of a power of appointment to have any title to the property — authority to deal with property, such as that conferred by a power of attorney, is sufficient. This emphasises that powers, unlike trusts, may be legal or equitable.186 One aspect of the law on powers of appointment has been directly translated to the law of trusts, for in McPhail v Doulton,187 the House of Lords held that the test for certainty of object of powers was the same as that for trusts. This is addressed in Chapter 5.188

The Romalpa Clause [2-47] Romalpa clauses in contracts for the sale of goods represent attempts to place the sellers in a preferred position to secured creditors of the buyers, in particular to banks holding floating charges, when the buyer goes into receivership or liquidation without having paid the supplier. The clauses take their name from the English Court of Appeal decision in Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd.189 They have come before the High Court in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd;190 the House of Lords in the Scots appeal Armour v Thyssen Edelstahlwerke AG;191 and the English Court of Appeal in Borden (UK) Ltd v Scottish Timber Products Ltd192 and in Clough Mill Ltd v Martin.193 There are numerous decisions at first instance,194 by no means readily reconcilable each with the others. The first point to be noted is that, although it has become customary to speak of ‘Romalpa clauses’, the clauses considered in the decided cases were not uniform in text or in legal effect. Secondly, it is now necessary to analyse the position in light of the Personal Property Securities Act 2009 (Cth).195 Nevertheless, the following features may be identified as being generally present in such provisions: (a) the legal (or in some cases196 merely the beneficial) title in the goods supplied is to remain in the seller until all goods supplied (or in some cases,197 merely the particular goods in question) have been paid for, or all present indebtedness on any account has been paid;198

[page 33] (b) if the goods are resold by the buyer before the seller has been paid, the ‘entitlement’ of the seller will attach to the proceeds of resale or to the debt owed the buyer by the third party on the resale; (c) if payment becomes overdue (and it will be due if there is any act or proceeding involving the buyer’s solvency) the seller may recover and resell the goods; and (d) if the goods, before payment, are incorporated in or used as material for other goods, the property in those other goods will vest in the seller, and the seller’s ‘entitlement’ will attach to the proceeds of sale thereof and to the debt due to the buyer on such sale, but only for so long as the seller’s debt is unpaid. [2-48] This complex of provisions plainly may give rise to a range of legal and equitable relationships. The particular factual context will determine which of them receives attention by the court. Three issues run through the cases: (1) Does the seller have legal title as owner of the subject matter? (2) Does the seller have title as chargee of the subject matter? and (3) Does the seller have a beneficial interest in the subject matter arising from an obligation of the buyer to account as fiduciary? In the original Romalpa case, attention was directed to issue (3) and to para (b) of the clause discussed in the preceding paragraph. Could the sellers trace their title into the proceeds of sale by the buyers? The case was fought on the agreed basis that the buyers had taken custody of the goods as bailees, and the English Court of Appeal held that tracing was available, because in respect of the resold goods the buyer was, as Roskill LJ put it, under ‘an obligation to account in accordance with the normal fiduciary relationship of principal and agent, bailor and bailee’.199 Does this mean that any bailee of goods who sells them does so as fiduciary of the bailor? In Re Andrabell Ltd (in liq)200 and Compaq Computer Ltd v Abercorn Group Ltd,201 Peter Gibson J and Mummery J respectively were at pains to answer this question in the negative. They emphasised that Roskill LJ (and Goff LJ) had construed the clause before them as in terms expressly contemplating that the buyer resold as a fiduciary for and on account of the seller, such that the buyer would not be able to retain the

profit on the resales. In the case before him, Peter Gibson J, in holding that the seller had no equity to trace into the proceeds of sale and that there was no fiduciary relationship, stressed, inter alia, the lack of express acknowledgment of such a relationship, and the lack of an obligation on the buyer to keep proceeds of sale in a separate account.202 The clause considered by the High Court in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd203 did give rise to the buyer holding a specified proportion of the proceeds of sale for the unpaid seller, in accordance with the express language in the clause (and notwithstanding an absence of an obligation to keep those proceeds separate).204 [2-49] In the Romalpa case itself, no issue arose as to whether or not title to the goods remained in the seller, it being conceded that the legal title had been retained. There was therefore no occasion to examine para (a) of the clause described above in [2-47]. In Re Bond Worth Ltd,205 Slade J had to consider a clause which provided not simply for retention of ‘ownership’ by the [page 34] seller but for ‘equitable and beneficial ownership’ to remain with the seller until payment; it was not suggested that the seller retained the legal title. Slade J held that the legal title had passed to the buyer and that the contract in conferring on the seller an equitable interest until payment did so by way of security; this security was ineffective for want of registration under the companies legislation. The opposite result was reached by the English Court of Appeal in Clough Mill Ltd v Martin.206 It pointed to the Sale of Goods Act provisions which permit the parties to provide for the seller to retain property in the goods (that is, the legal title) until conditions imposed by the seller are fulfilled. In the case before the court, the receiver of the buyer was sued for conversion by the seller, he having denied the seller repossession of goods to which the seller asserted a right under a Romalpa clause, on the basis that the clause created a defective charge, as in Re Bond Worth Ltd.207 The Court of Appeal held that the seller had done no more than the sale of goods legislation permitted, and that no question of a charge arose because the legal title had remained throughout in the seller, in contrast to what had happened in Re Bond Worth Ltd. As Oliver LJ put it,208 ‘If in fact [the seller] has retained the legal title to the goods, then by definition the

buyer cannot have charged them back in his favour.’ This reasoning was applied by the House of Lords in Armour v Thyssen Edelstahlwerke AG209 (where the clause applied in respect of payment of all debts owed the seller by the buyer of the goods). Lord Keith said: Counsel … argued that the word ‘conditions’ in section 19(1) [of the Sale of Goods Act 1979 (UK)] must be read as excluding any condition which has the effect of creating a right of security over the goods. I am, however, unable to regard a provision reserving title to the seller until payment of all debts due to him by the buyer as amounting to the creation by the buyer of a right of security in favour of the seller. Such a provision does in a sense give the seller security for the unpaid debts of the buyer. But it does so by way of a legitimate retention of title, not by virtue of any right over his own property conferred by the buyer.

[2-50] The difficulty with this reasoning is that in characterising a transaction as one of security, equity looks beyond the form of words used and to the substance: Salt v Marquess of Northampton;210 Boydell v James;211 Gurfinkel v Bentley.212 Guest has observed213 that Romalpa clauses are not designed for use other than when the buyer becomes financially troubled, and they operate to give the buyer liberty to deal with the goods in the ordinary course of business, subject to security for the unpaid price. In Clough Mill Ltd v Martin,214 both Robert Goff LJ and Oliver LJ were prepared to concede that a purpose, if not the whole purpose, of the condition was to give the seller security for payment of the price.215 And in the same case, Robert Goff LJ and Oliver LJ,216 speaking obiter, were prepared to ‘do violence’ to para (d) of the Romalpa clause set out above in [2-47] (that dealing with the rights of the seller in respect of new goods made with the goods the seller sold the buyer) in order to hold that it conferred a charge thereon in favour of the seller. In so doing, Robert Goff LJ approved the decision of Vinelott J in Re Peachdart Ltd.217 But the English Court of Appeal in Clough Mill Ltd v Martin was not prepared to disregard the reservation of the legal title to the original goods so as to give any scope for treating the seller as only a chargee, still less as the object of fiduciary duties by the buyer. The seller remained the owner. The attraction to the seller (in cases where the seller [page 35] has parted with legal title) in treating the relationship with the buyer as fiduciary rather than one of debtor and secured creditor has been that it both

gives a proprietary remedy and avoids the consequences of non-compliance with the registration requirements of the companies legislation. But although in some aspects, for example the exercise of a power of sale, there is a fiduciary aspect to the relationship between debtor and secured creditor, that is not generally so;218 and the categorisation of a transaction as falling within one category rather than another is a matter of substance not form. No more than an express denial of partnership deters the court from finding a partnership,219 will an assertion that there is a fiduciary relationship foreclose a holding that there is a security. [2-51] Against this background, the following conclusions may be ventured as to the likely true status of the various limbs of the Romalpa clause described in [2-47]. First, the reservation to the seller of the beneficial title to the goods sold (as in Re Bond Worth Ltd),220 pending payment of the price, will in substance confer a charge over those goods. Secondly, the reservation of the legal title or of the ‘property’ in the goods in the sense of ownership will, semble, not confer a security, but will give the seller, on repudiation by the buyer (as on it going into liquidation), the right to retake possession, resell and prove for any shortfall or, as the case may be, keep any excess over the original price. This was something which, as Oliver LJ emphasised in Clough Mill Ltd v Martin,221 the seller could not do if the seller’s only interest in the goods was as chargee. Thirdly, where the issue is not one as to title to or possession of the original goods themselves, but to the proceeds of sale thereof there will be three possibilities, the decision depending on the particular facts: (1) the seller has no proprietary claim in respect of the proceeds;222 (2) the buyer sold the goods for and on behalf of the seller and must account for the proceeds as a fiduciary agent, thus giving the seller a tracing equity;223 or (3) the seller has a charge upon the proceeds of sale, this requiring registration under the companies legislation.224 Fourthly, where the goods have been used in manufacture of another product and the dispute is as to the entitlement to that product or to the proceeds of sale thereof, the Romalpa clause may not be so drawn as to reach what is a new and different product225 but, if it does extend so far, the interest it gives therein to

the seller of the original goods will be, despite any form of words suggesting a reservation of the original title, in substance, a charge for the unpaid price of the original goods.226 _____________________________ 1.

This passage, reformulated in accordance with Campbell JA’s suggestion, was approved in Visnic v Sywak (2009) 257 ALR 517 at [34], [48].

2. 3.

Erwin v Shannon’s Brick, Tile and Pottery Co Ltd (1938) 38 SR (NSW) 555 at 563, approved in Clay v Clay (2001) 202 CLR 410; 178 ALR 193 at [35]. See Meagher, Gummow and Lehane’s Equity, [5-005].

4. 5.

Nugent v Nugent [1908] 1 Ch 546; Lancet Pty Ltd v Olholm Developments Pty Ltd [2001] 1 Qd R 22. Expo International Pty Ltd (in liq) v Chant [1979] 2 NSWLR 820 at 830.

6.

Kingsmill v Lyne (1910) 13 CLR 292; Everingham v Everingham (1911) 12 SR (NSW) 5. See also Re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D 696 at 708–9; [1874–80] All ER Rep 793 at 796; Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 101; 55 ALR 417 at 457–8; Brambles Security Services Ltd v Bi-Lo Pty Ltd [1992] Aust Torts Rep 81-161 at 61,275. But not all contracts of bailment created fiduciary duties, for example, Re Dibbens & Sons Ltd [1990] BCLC 577 at 582; Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 98; [1994] 2 All ER 806 at 821–2. Lever Bros Ltd v Bell [1931] 1 KB 557 at 600; [1931] All ER Rep 1.

7. 8. 9.

Omnium Electric Palaces Ltd v Baines [1914] 1 Ch 332; Jubilee Cotton Mills Ltd v Lewis [1924] AC 958 at 964. Knowles v Scott [1891] 1 Ch 717; Thos Franklin & Sons Ltd v Cameron (1935) 36 SR (NSW) 286.

10. [1983] Ch 258 at 288; [1983] 2 All ER 563 at 585. See also Percival v Wright [1902] Ch 421; Clarkson v Davies [1923] AC 100 at 111; Mills v Mills (1938) 60 CLR 150 at 186–8. 11. Coleman v Myers [1977] NZLR 225; Brunninghausen v Glavanics (1999) 46 NSWLR 538; Crawley v Short (2009) 262 ALR 254 at [100]–[102]. 12. Walker v Wimborne (1976) 137 CLR 1 at 6–7; Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627 at 634; [1981] 2 All ER 456; Jetivia SA v Bilta (UK) Ltd [2015] 2 WLR 1168; [2015] 2 All ER 1083 at [23]. 13. Nicholson v Permakraft (NZ) Ltd (1985) 3 ACLC 453 at 459–60; Kinsela v Russell Kinsela Pty Ltd (in liq) (1986) 4 NSWLR 722 at 730; West Mercia Safetywear Ltd (in liq) v Dodd [1988] BCLC 250; Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 11 ACSR 642 at 725; Linton v Telnet Pty Ltd (1999) 30 ACSR 465 at 471–6; Angas Law Services Pty Ltd v Carabelas (2005) 226 CLR 507; 215 ALR 110 at [67]. 14. See J D Heydon, ‘Director’s Duties and the Company’s Interests’ published as Ch 5 in P Finn (ed), Equity and Commercial Relationships, Law Book Co, Sydney, 1987, p 120. 15. See Angas Law Services Pty Ltd v Carabelas (2005) 226 CLR 507; 215 ALR 110 at [47]. 16. Re Somes [1896] 1 Ch 250 at 255; Vatcher v Paull [1915] AC 372 at 378; [1914–15] All ER Rep 609; Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 545; [1990] 1 WLR 1587 at 1613. 17. Re Bloye’s Trust (1849) 1 Mac & G 488; [1843–60] All ER Rep 1092; 47 ER 1630. 18. Dowsett v Reid (1912) 15 CLR 695; 19 ALR 15. 19. Melbourne Banking Corp Ltd v Brougham (1884) 7 App Cas 307.

20. Samuel v Farrah Timber & Wood Paving Corp Ltd [1904] AC 323; Barnes v Queensland National Bank Ltd (1906) 3 CLR 925; Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676; 18 ALR 124; Australian Provincial Association v Coroneo (1935) 35 SR (NSW) 391; Forsyth v Blundell (1973) 129 CLR 477; 1 ALR 68; cf Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949; [1971] 2 All ER 633; Duke v Robson [1973] 1 All ER 481 and Medforth v Blake [2000] Ch 86; [1999] 3 All ER 97, in which the English Court of Appeal obscured the nature of the mortgagor–mortgagee relationship by treating the latter as bound to the former by a common law duty of care sounding in damages in negligence for breach. Australian decisions (Citicorp Australia Ltd v McLaughney (1984) 35 SASR 375; State Bank of New South Wales v Chia (2000) 50 NSWLR 587 at [878]; GE Capital Australia v Davis (2002) 11 BPR 20,529 at [66]–[72]) and some English decisions (Parker-Tweedale v Dunbar Bank plc [1991] Ch 12; [1990] 2 All ER 588; Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295; [1993] 3 All ER 626) have emphasised that the source of the mortgagee’s obligation is in equity. See Meagher, Gummow and Lehane’s Equity, [2-215]. Australian statutes, including s 420A of the Corporations Act 2001 (Cth) and s 111A of the Conveyancing Act 1919 (NSW), now impose a duty to exercise reasonable care. 21. Lloyd-Jones v Clark-Lloyd [1919] 1 Ch 424. 22. Bray v Ford [1896] AC 44 at 51–2; [1895–9] All ER Rep 1009; Gluckstein v Barnes [1900] AC 240 at 255; Phipps v Boardman [1967] 2 AC 46; [1966] 3 All ER 721; BLB Corp v Jacobsen (1974) 48 ALJR 372; Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; 1 ALR 231; Green and Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1. See also L Sealy, ‘Fiduciary Relationships’ [1962] CLJ 69 and ‘Some Principles of Fiduciary Obligation’ [1963] CLJ 119 and P Finn, Fiduciary Obligations, 1976. The text merely states the general duty common to all fiduciaries. The incidents of this duty vary somewhat from one type of fiduciary to another as Mason J emphasised in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 96–104; 55 ALR 417 at 454–60. 23. Great Eastern Railway Co v Turner (1872) LR 8 Ch App 149 at 152; Bulfin v Bebarfald’s Ltd (1938) 38 SR (NSW) 423; Mills v Mills (1938) 60 CLR 150; Industrial Development Consultants Ltd v Cooley [1972] 2 All ER 162; [1972] 1 WLR 443. 24. Kingsmill v Lyne (1910) 13 CLR 292; Wicks v Bennett (1921) 30 CLR 80; 28 ALR 30; Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384; 35 ALR 273; Powell v Powell (1932) 32 SR (NSW) 407; Chan v Zacharia (1984) 154 CLR 178 at 196–7; 53 ALR 417 at 431–2. 25. Re International Vending Machines Pty Ltd and the Companies Act 1961 [1962] NSWR 1408 at 1419–20; (1961) 80 WN (NSW) 465 at 472; Mulkana Corp NL (in liq) (1983) 1 ACLC 1143; Daniels v Anderson (1995) 37 NSWLR 438 at 493–4; L Sealy [1967] CLJ 83. 26. Knox v Gye (1872) LR 5 HL 656 at 675–6 per Lord Westbury. See also Thos Franklin & Sons Ltd v Cameron (1935) 36 SR (NSW) 286; Erwin v Shannon’s Brick, Tile and Pottery Co Ltd (1938) 38 SR (NSW) 555 at 563; Clay v Clay (2001) 202 CLR 410; 178 ALR 193 at [41]; Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592; 215 ALR 1 at [26]. 27. This sentence was approved in Visnic v Sywak (2009) 257 ALR 517 at [34]. 28. Maguire v Makaronis (1997) 188 CLR 449 at 473; 144 ALR 729 at 744–5 per Brennan CJ, Gaudron, McHugh and Gummow JJ. 29. (1801) 6 Ves Jun 488; 31 ER 1159. 30. (1838) 3 My & Cr 490; 40 ER 1016. 31. [1914] AC 932; [1914–15] All ER Rep 45. 32. See Mills v Mills (1938) 60 CLR 150; Bulfin v Bebarfald’s Ltd (1938) 38 SR (NSW) 423; Peninsular and Oriental Steam Navigation Co v Johnson (1938) 60 CLR 189. 33. See Chapter 13 ‘Constructive Trusts’. A partner who sells partnership assets, and with the proceeds

buys assets in the partner’s own name, is then a trustee of those assets for the partnership: Gordon v Gonda [1955] 2 All ER 762. 34. South Australian Insurance Co v Randell (1869) LR 3 PC 101; Davis v Heuber (1923) 31 CLR 583; Chapman v Verco (1933) 49 CLR 306; [1936] ALR 308; but a bailee may owe a fiduciary duty to the bailor in the terms discussed by Mason J in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 101, 105–6; 55 ALR 417 at 457–8, 460–1. 35. To some extent the defences of a third party for value without notice have been established at law by legislation — cf Sale of Goods Act 1954 (ACT) s 29; Mercantile Law Act 1962 (ACT) s 6; Sale of Goods Act 1923 (NSW) s 28; Factors (Mercantile Agents) Act 1923 (NSW) s 5; Sale of Goods Act 1972 (NT) s 28; Sale of Goods Act 1896 (Qld) s 27; Factors Act 1892 (Qld) s 3; Sale of Goods Act 1895 (SA) s 25; Mercantile Law Act 1936 (SA) s 4; Sale of Goods Act 1896 (Tas) s 30; Factors Act 1891 (Tas) s 5; Goods Act 1958 (Vic) ss 30, 31, 67; Sale of Goods Act 1895 (WA) s 25. In Western Australia, the law as to mercantile agents appears to be contained in adopted imperial legislation, as amended by the Factors’ Acts Amendment Act 1878 (WA). 36. Kennedy v De Trafford [1897] AC 180 at 188; [1895–9] All ER Rep 408 at 412. 37. International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) 100 CLR 644 at 652; Scott v Davis (2000) 204 CLR 333; 175 ALR 717 at [227]. 38. Cave v Mackenzie (1877) 46 LJ Ch 564 at 567 per Sir George Jessel MR. 39. Scott on Trusts, §2.3.4. 40. Burdick v Garrick (1870) LR 5 Ch App 233. 41. Burdick v Garrick (1870) LR 5 Ch App 233 at 243; Walker v Corboy (1990) 19 NSWLR 382 at 386, 389, 397; Jessup v Queensland Housing Commission [2002] 2 Qd R 270 at [12]; Parker v Higgins [2012] NSWSC 1516 at [556] (approving this paragraph). 42. Re Air Canada v M & L Travel Ltd (1993) 108 DLR (4th) 592 at 605. 43. Re Jones; Ex parte Mayne (1953) 16 ABC 169. 44. See also Chapter 13 ‘Constructive Trusts’. 45. Fitzgerald v Fitzgerald (1910) 10 SR (NSW) 488; Cohen v Cohen (1929) 42 CLR 91; 35 ALR 204. 46. Scott on Trusts, §2.3.8. As an example of the difficulty of distinguishing trust from debt, one may instance the ‘common trust fund’ created by the Trustee Companies Act 1964 (NSW). 47. Ex parte Broad (1884) 13 QBD 740. The first eight sentences of this paragraph were approved in Glover v Blumer [2008] ACTCA 1 at [40]. 48. For cases where this question has been considered, see Morgan v Lariviere (1875) LR 7 HL 423; Re Tidd [1893] 3 Ch 154. For a detailed discussion of the nature of the distinctions which have been drawn between trust and debt, see Scott on Trusts, §2.3.8. 49. [1970] AC 567; [1968] 3 All ER 651. 50. Forward to W Swadling (ed), The Quistclose Trust: Critical Essays, Hart Publishing, Oxford, 2004. 51. Including a book of critical essays: W Swadling (ed), The Quistclose Trust: Critical Essays (2004); see also R Chambers, Resulting Trusts, Clarendon Press, Oxford, 1997. Learned writings on the subject include those of L J Priestley, ‘The Romalpa Clause and the Quistclose Trust’ in P Finn (ed), Equity and Commercial Relationships, Law Book Co, Sydney, 1987, Ch 8; P Millett, ‘The Quistclose Trust: Who Can Enforce It?’ (1985) 101 LQR 269; C Rickett, ‘Different Views of the Scope of the Quistclose Analysis: English and Antipodean Insights’ (1991) 107 LQR 608; M Bridge, ‘The Quistclose Trust in a World of Secured Transactions’ (1992) 12 Ox JLS 333; C Rickett, ‘Trusts and Insolvency: The Nature and Place of the Quistclose Trust’ in D Waters (ed), Equity, Fiduciaries and Trusts, Carswell, Toronto, 1993, p 325; L Ho and P Smart, ‘Reinterpreting the Quistclose Trust: A

Critique of Chambers’ Analysis’ (2001) 21 Ox JLS 267; P Parkinson, ‘Reconceptualising the Express Trust’ (2002) 61 CLJ 657; P Turner, ‘Quistclose and Resulting Trusts’ (2005) 33 ABLR 392. 52. [2002] 2 AC 164; [2002] 2 All ER 377. 53. [1967] Ch 910; [1967] 1 All ER 864. 54. [1968] Ch 540; [1968] 1 All ER 613. 55. [1970] AC 567 at 580–2; [1968] 3 All ER 651 at 654–6. 56. Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 502–3; 102 ALR 681 at 691–3; see also Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association (1999) 161 ALR 105 at [32]–[39]; cf Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 at [44]. 57. [1995] 1 AC 74 at 100; [1994] 2 All ER 806 at 823–4; see also Rose v Rose (1986) 7 NSWLR 679 at 685–6; Ausintel Investments Australia Pty Ltd v Lam (1990) 19 NSWLR 637 at 641; Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 at 425; Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association (1999) 161 ALR 105 at [32]–[39]; Gliderol v Hall (2001) 80 SASR 541 at [21]–[31]; Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 at [81]; Salvo v New Tel Ltd [2005] NSWCA 281 at [37]. In Compass Resources Ltd v Sherman (2010) 42 WAR 1 at [72], Beech J said, by reference to this paragraph, that it was clear that a Quistclose trust is not a distinct species of trust. 58. [1970] AC 567 at 581–2; [1968] 3 All ER 651 at 656. 59. [1975] 1 All ER 604; [1975] 1 WLR 279. 60. (2013) 249 CLR 493; 300 ALR 430 at [112]. 61. See [7-32]–[7-36]. 62. See Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 at [99]; and see J Penner, ‘Lord Millett’s Analysis’ in W Swadling (ed), The Quistclose Trust: Critical Essays, Hart Publishing, Oxford, 2004, 41 at 52–3. 63. [2002] 2 AC 164; [2002] 2 All ER 377 at [80]–[81]. 64. [2004] 3 NZLR 157 at [41]. 65. Such labels are apt to confuse: see [3-07]; and see Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [112]–[116]. 66. See [2-23]. 67. P Turner (2005) 33 ABLR 392 at 395. 68. (1988) 20 FCR 194 at 199; 85 ALR 216 at 220. 69. [1987] BCLC 646, discussed by M Bridge (1992) 12 Ox JLS 333 at 353–4. 70. [1981] 1 NSWLR 742. 71. These and other possibilities are canvassed by the New Zealand Court of Appeal in General Communications Ltd v Development Finance Corp of New Zealand Ltd [1990] 3 NZLR 406 at 432–3. 72. [1975] 1 All ER 604; [1975] 1 WLR 279. 73. [1985] Ch 207; [1985] 1 All ER 155. 74. Bankruptcy Act 1966 (Cth) s 122; Corporations Act 2001 (Cth) s 588FA. 75. Insolvency Act 1986 (UK) s 239. 76. [1989] VR 940 at 943–9. 77. Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762; Dunlop v Selfridge [1915] AC 847; [1914–15] All ER Rep 333; Midland Silicones Ltd v Scruttons Ltd [1962] AC 446; [1962] 1 All ER 1; Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 All ER 571; [1980] 1 WLR 277.

78. (1956) 95 CLR 43; [1956] ALR 311. 79. (1988) 165 CLR 107; 80 ALR 574. 80. West v Houghton (1879) 4 CPD 197; The Albazero [1977] AC 774 at 841–6; [1976] 3 All ER 129 at 132–6; and see [2-20]. This should be contrasted with the position in tort, where a plaintiff may recover in damages the value of services provided and to be provided by a third party, although the plaintiff is under no legal obligation to pay for those services: Griffiths v Kerkemeyer (1977) 139 CLR 161; 15 ALR 387; Kars v Kars (1996) 187 CLR 354; 141 ALR 37. 81. See [2-25]. 82. Re Flavell (1883) 25 Ch D 89 at 90; [1881–5] All ER Rep 267 at 268. 83. West v Houghton (1879) 4 CPD 197. 84. Colyear v Mulgrave (1836) 2 Keen 81; 48 ER 559. 85. See Justinian’s Institutes 3.19; R Lee, Elements of Roman Law, 4th ed, Sweet & Maxwell, London, 1956, pp 353–5. 86. See per Simonds J in Re Stapleton-Bretherton [1941] Ch 482; [1941] 3 All ER 5. 87. Re Schebsman [1944] 1 Ch 83 at 102–4; [1943] 2 All ER 768 at 778–9. 88. (1948) 21 ALJ 424. 89. (1966) 119 CLR 460 at 501–2; [1967] ALR 385 at 410–11. 90. [1962] SR (NSW) 455 at 472. 91. (1880) 16 Ch D 290 at 321. 92. [1892] 1 QB 147 at 153, 157–8. 93. [1980] 1 All ER 571; [1980] 1 WLR 277. 94. [1975] 3 All ER 92; [1975] 1 WLR 1468. 95. Hohler v Aston [1920] 2 Ch 420. 96. [1968] AC 58, particularly at 90, 91, 102; [1967] 2 All ER 1197 at 1213, 1214, 1221; and see Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581; Meagher, Gummow and Lehane’s Equity, Ch 20. 97. (1966) 119 CLR 460; [1967] ALR 385. 98. See R King, Gutteridge and Megrah’s Law of Bankers’ Commercial Credits, 8th ed, Routledge, London, 2003; A Davis, The Law Relating to Commercial Letters of Credit, 3rd ed, Butterworths, London, 1963. 99. [1977] AC 774; [1976] 3 All ER 129. 100. [1966] AC 451; [1966] 1 All ER 418. 101. The Winkfield [1902] P 42; [1900–3] All ER Rep 346. 102. [1977] AC 774 at 847; [1976] 3 All ER 129 at 137. 103. [1994] AC 85 at 114–15; [1993] All ER 417 at 436. 104. [1995] 1 WLR 68 at 74, 79–80; [1995] 3 All ER 895 at 901, 907. See N Palmer and G Tolhurst (1997) 12 JCL 1, 97; B Coote (2001) 117 LQR 92; Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518; [2000] 4 All ER 97. 105. See Garnac Grain Co v HMF Fame and Fairclough Ltd and Bunge Corp [1966] 1 QB 650 at 683–4; [1965] 3 All ER 273 at 286 per Diplock LJ, who demonstrated that this alternative rarely works. 106. Shanklin Pier Ltd v Petel Products Ltd [1951] 2 KB 854 at 856; [1951] 2 All ER 471 at 472. 107. New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154; [1974] 1 All ER 1015; Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (The New York

Star) [1980] 3 All ER 257; (1980) 144 CLR 300; The Mahkutai [1996] AC 650; [1996] 3 All ER 502. The result is now supported by s 6(5) of the Contracts (Rights of Third Parties) Act 1999 (UK), to the extent that that legislation is applicable. 108. In Tomlinson v Gill (1756) Amb 330; 27 ER 221. 109. (1817) 3 Mer 582; 36 ER 224. 110. Except perhaps by Lord Denning MR in Jackson v Horizon Holidays Pty Ltd [1975] 3 All ER 92 at 95; [1975] 1 WLR 1468 at 1472–3. 111. [1919] AC 801. 112. (1956) 95 CLR 43; [1956] ALR 311. 113. Re D’Angibau (1880) 15 Ch D 228; Re Empress Engineering Co (1880) 16 Ch D 125; Lloyds v Harper (1880) 16 Ch D 290; Re Flavell (1883) 25 Ch D 89; [1881–5] All ER Rep 267; Gandy v Gandy (1885) 30 Ch D 57; Re Schebsman [1944] 1 Ch 83; [1943] 2 All ER 768. 114. See the tests for intention to create a trust stated in [5-02]. 115. (1953) 89 CLR 286 at 319. In Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; 80 ALR 574, the same view was taken by Mason CJ and Wilson J (at 120; 582), Deane J (at 146; 602) and Dawson J (at 156; 608–9). 116. For a more detailed summary of the procedural aspects of the beneficiary’s rights to enforce such a trust, see J Starke (1948) 21 ALJ 455 at 458–9. 117. (1817) 3 Mer 582; 36 ER 224. 118. (1895) 16 LR (NSW) Eq 59. Examples of cases where the courts have held that a trust under these circumstances has been created are: Lloyd’s v Harper (1880) 16 Ch D 290; Re Flavell (1883) 25 Ch D 89; [1881–5] All ER Rep 267; Royal Exchange Assurance v Hope [1928] Ch 179; [1927] All ER Rep 67; Birmingham v Renfrew (1937) 57 CLR 666; [1937] ALR 520. Cases where the courts have not found a trust are: Colyear v Mulgrave (1836) 2 Keen 81; 48 ER 559; Foster v Genowlan Shale Co (1895) 16 LR (NSW) Eq 59; Goodwin v Goodwin (1916) 16 SR (NSW) 503; Vandepitte v Preferred Accident Insurance Corp of New York [1933] AC 70; [1932] All ER Rep 527; Re Stapleton-Bretherton [1941] Ch 482; [1941] 3 All ER 5; Re Schebsman [1944] 1 Ch 83; [1943] 2 All ER 768; Purves v Smith [1944] VLR 186; Green v Russell [1959] 2 QB 226; [1959] 2 All ER 525. See J Starke, ‘Contracts for the Benefit of Third Parties’ (1948) 21 ALJ 382 at 422, 455; (1949) 22 ALJ 67. 119. This theory is supported by Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 157; [1891–4] All ER Rep 335; Re Englebach’s Estate [1924] 2 Ch 348 at 353; Ryder v Taylor (1935) 36 SR (NSW) 31. It has also gained the adherence of Myers J in ‘Third Party Contracts’ (1953) 27 ALJ 175 at 176–7, and of Jacobs J (as he became) in the 1st edition of this book. 120. Page v Cox (1851) 10 Hare 163; 68 ER 882. 121. Page v Cox (1851) 10 Hare 163; 68 ER 882; Re Flavell (1883) 25 Ch D 89; [1881–5] All ER Rep 267; Byrne v Reid [1902] 2 Ch 735; Re Gordon [1940] 1 Ch 851; Re Webb [1941] Ch 225; [1941] 1 All ER 321. 122. (1956) 95 CLR 43 at 67–8; [1956] ALR 311 at 322. 123. See, for example, Vandepitte v Preferred Accident Insurance Corp of New York [1933] AC 70 at 79–80; [1932] All ER Rep 527 at 533; Re Webb [1941] Ch 225; [1941] 1 All ER 321; Re Schebsman [1944] Ch 83 at 104; [1943] 2 All ER 768 at 779; Green v Russell [1959] 2 QB 226 at 231; [1959] 2 All ER 525 at 531–2. 124. (1956) 95 CLR 43 at 67; [1956] ALR 311 at 322. 125. (1988) 165 CLR 107 at 120–1, 146–7; 80 ALR 574 at 582–3, 602; Salvo v New Tel Ltd [2005] NSWCA 281 at [33]–[36].

126. (1880) 16 Ch D 290. 127. See Tomlinson v Gill (1756) Amb 330; 27 ER 221; Lamb v Vice (1840) 6 M & W 466; 151 ER 495; Robinson v Waite (1853) 8 Ex 299; 155 ER 1360; Pugh v Stringfield (1858) 4 CB (NS) 364; 140 ER 1125; Lloyd’s v Harper (1880) 16 Ch D 290; Re Parkin [1892] 3 Ch 510; Re Cavendish-Browne’s Settlement Trusts [1916] WN 341; Prudential Staff Union v Hall [1947] KB 685; Darlington Borough Council v Wiltshier Northern Ltd [1995] 3 All ER 895; [1995] 1 WLR 68. It is submitted that this is anomalous because, in accordance with ordinary principles, the measure of damages for breach of contract would be the actual damage suffered by B. See also generally Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762; Dunlop v Selfridge [1915] AC 847; [1914–15] All ER Rep 333. 128. The problems which can arise from a provision such as subs 11(2) when the promisee is not joined in the action are illustrated by Westralian Farmers Co-operative Ltd v Southern Meat Packers Ltd [1981] WAR 241. There, as McHugh J pointed out in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270 at 288, the buyer of certain cattle was required to pay twice. See also JWH Group Pty Ltd v Kimpura Pty Ltd (2004) 61 IPR 295 at [110]. 129. (2000) 202 CLR 588; 171 ALR 568 at [6]. 130. This paragraph was approved in Truthful Endeavour Pty Ltd v Condon (Trustee); Re Rayhill (Bankrupt) (2015) 321 ALR 483 at [84]. 131. King v Denison (1813) 1 V & B 260 at 272–3; 35 ER 102 at 106–7 per Lord Eldon. It should be noted, however, that in the special case of a provision (by will or deed) directing a payment to one person and expressing an intention that the payment be applied towards the maintenance, education or the like, of another person, there is considerable authority for the view that, even if the provision be interpreted as a trust, any surplus moneys should belong to the first person. See the discussion of the cases by Dixon J in Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] ALR 362 and Hourigan v Trustees, Executors & Agency Co Ltd (1934) 51 CLR 619; [1934] ALR 283. And see also Re Foord [1922] 2 Ch 519; [1922] All ER Rep 166, where a gift in a home-made will to a person ‘absolutely on trust for’ a purpose which did not exhaust the subject matter was construed as vesting the surplus in that person beneficially. (Cf Re Rees [1950] Ch 204; [1949] 1 All ER 609.) The correctness of the cases which are authority for such a proposition, and the precise nature and extent of the principle which they establish if they are correctly decided, is obscure. Perhaps the matter is best viewed as a question of construction in each particular case, namely, what (if any) are the terms of the trust? 132. (2000) 202 CLR 588; 171 ALR 568 at [5], [51]. 133. Hewett v Court (1983) 149 CLR 639 at 663; 46 ALR 87 at 104–5. See F Burns, ‘The Equitable Lien Rediscovered: A Remedy for the 21st Century’ (2002) 25(1) UNSWLJ 1. 134. Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96; Worrell v Power and Power (1993) 46 FLR 214; 118 ALR 237; Re H & W Wallace Ltd (in liq) [1994] 1 NZLR 235; Firth v Centrelink (2002) 55 NSWLR 451; Twigg v Kung (2002) 55 NSWLR 485. 135. Hewett v Court (1983) 149 CLR 639 at 667–9; 46 ALR 87 at 108–9. 136. 5th ed, Bancroft-Whitney, San Francisco, 1941, p 1239. 137. Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171 at 174–5; [1933] ALR 107 at 108–9. 138. (1991) 31 FCR 222; 102 ALR 551; Lockwood v White (2005) 23 ACLC 379. The same reasoning applies to administrators: Weston v Carling Constructions Pty Ltd (in prov liq) (2000) 35 ACSR 100. 139. Calverley v Green (1984) 155 CLR 242 at 263; 56 ALR 483 at 497; Muschinski v Dodds (1985) 160 CLR 583 at 598; 62 ALR 429 at 438. 140. Morris v Morris [1982] 1 NSWLR 61; Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26.

141. Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 at [10]. 142. Re Oliver (1890) 62 LT 533 at 535. See also Wright v Wilkin (1862) 2 B & S 232; 121 ER 1070; Merchant Taylors’ Co v A-G (1871) LR 6 Ch App 512; Cunningham v Foot (1878) 3 App Cas 974; Goodman v Mayor of Saltash (1882) 7 App Cas 633; Hogden v Hogden (1956) 74 WN (NSW) 67. And see Hourigan v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619; [1934] ALR 283, where the High Court held that a bequest of residue ‘to my wife to be used … at [discretion] in educating and providing for my two sons’ gave to the wife a beneficial interest in the residue subject to a trust or charge to educate and provide for her two sons as in her discretion seemed proper. See also Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] ALR 362; Re Boning [1997] 2 Qd R 12. But cf Re Brace [1954] 2 All ER 354; [1954] 1 WLR 955. 143. [1970] VR 352. 144. [1971] 2 NSWLR 494. 145. (1926) 39 CLR 16. See also Re Smith [1967] VR 341, where the distinction between a charitable trust and a condition subsequent is discussed. 146. This paragraph was approved by Young CJ in Eq in Hammond v Hammond [2007] NSWSC 106 at [13]. 147. (1921) 21 SR (NSW) 400. 148. (1921) 21 SR (NSW) 400 at 407. But in Re Brace [1954] 2 All ER 354; [1954] 1 WLR 955, the words ‘on condition that she will always provide a home for my daughter’ were held to be void for uncertainty, and in any case to be precatory only. 149. (1921) 21 SR (NSW) 400 at 406. 150. (1856) 23 Beav 33; 53 ER 13. 151. (1885) 54 LT 105. Re Williames was followed and applied by Rath J in Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785 at 793. 152. [1901] 1 IR 489. 153. (1921) 21 SR (NSW) 400 at 407. 154. [1942] Ch 324; [1942] 1 All ER 646. 155. (1921) 21 SR (NSW) 400. 156. [1942] Ch 324 at 325–6; [1942] 1 All ER 646 at 646–7. 157. (1830) 1 Russ & My 571; 39 ER 219. 158. (1860) 7 Jur NS 441. 159. (1871) LR 12 Eq 225. 160. [1901] 1 IR 489. 161. [1920] 1 IR 122. 162. Rees v Engelbach (1871) LR 12 Eq 225 at 237. 163. (1828) 4 Russ 478; 38 ER 885. 164. [1940] Ch 260. 165. This proposition was considered and tentatively approved by Young CJ in Eq in Hammond v Hammond [2007] NSWSC 106 at [13]. 166. Thus, for example, it used to be said that, where a person held property either as executor or trustee, in neither event did the person have the beneficial interest in the property, holding it in autre droit for the legatees and devisees under the will (subject to payment of debts, etc) in the former case and in trust for the cestui que trust in the latter. It is now doubtful how far it can accurately be said that

an executor is not the beneficial owner of the assets of the deceased. See Commissioner of Stamp Duties v Livingston (1960) 107 CLR 411; [1961] ALR 534 (HC); (1964) 112 CLR 12; [1964] 3 All ER 692; [1965] AC 644 (PC); Re Hayes’ Will Trusts [1971] 2 All ER 341 at 347; [1971] 1 WLR 758 at 764–5; Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 313–14; 96 ALR 327 at 331–2. 167. See, for an example where it was important to distinguish the offices, In the will of Eva Orloff (2010) 24 VR 603, especially at [27]–[31]. 168. Brougham v Poulett (1855) 19 Beav 119; 52 ER 294. 169. See Burke v Dawes (1938) 59 CLR 1; [1938] ALR 135. These propositions were approved in ParkesLinnegar v Watson [2011] NSWSC 37 at [16]. 170. Pagels v MacDonald (1936) 54 CLR 519 at 526; [1936] ALR 224 at 227. See also Martin v Martin (1903) 3 SR (NSW) 156; Solomon v Attenborough [1913] AC 76; [1911–13] All ER Rep 155. This has some important practical consequences, one of which is that great care must be taken not to apply for the appointment of a new administrator if the estate has been fully administered, the correct course being to apply for the appointment of a new trustee: Re Ponder [1921] 2 Ch 59; [1921] All ER Rep 164; Harvell v Foster [1954] 2 QB 367; [1954] 1 All ER 851; Re Cockburn’s Will Trusts [1957] Ch 438; [1957] 2 All ER 522; Re Dunn [1963] VR 165. 171. ACT s 10; NSW s 10; Qld s 18; Vic s 46; WA s 12. 172. NSW s 5; Qld s 5; SA s 4(1); Tas s 4; Vic s 3(1); WA s 6. 173. ACT s 6(14); NSW s 6(12); NT s 11(7); Qld s 12(9); SA s 14(7); Tas s 13(6); Vic s 48(2); WA s 7(9). 174. ACT s 8(7); NSW s 8(7); NT s 12; Qld s 14; SA s 15; Tas s 14; Vic s 44; WA s 9. 175. NSW s 49(2); SA s 28(1); Tas s 24(1); Vic s 19(1)(c). In some jurisdictions the legal representative of a deceased person who holds shares not fully paid up in any incorporated company may distribute the assets of the estate when he or she has procured the registration of some other person as the holder of the shares, without reserving any portion of the estate for the payment of any calls made after the date of registration of such other person: ACT s 61A; NSW s 61A; Qld s 75; Vic s 34; WA s 74. 176. Astbury v Astbury [1898] 2 Ch 111; Attenborough v Solomon [1913] AC 76; [1911–13] All ER Rep 155. But where one only of a number of executors has purported to deal with estate property a court of equity will not as of course lend its aid for the effectuation of the transaction; it will insist on being satisfied as to the propriety of the terms, and especially the price, before granting relief as against the estate and depriving the beneficiaries of the property; see Colyton Investments Pty Ltd v McSorley (1962) 107 CLR 177; [1963] ALR 487. 177. Re Houghton [1904] 1 Ch 622; [1904–7] All ER Rep 486. And, e converso, in legal proceedings against executors an admission by one executor binds the co-executors; and in an ejectment action a denial of the claimant’s title by one executor defendant binds the co-executors so as to enable the claimant in an appropriate case to forfeit a lease: Warner v Sampson [1958] 1 QB 404; [1958] 1 All ER 44. 178. See Union Bank v Harrison Jones and Devlin (1910) 11 CLR 492. 179. Conveyancing Act 1919 (NSW) s 153; Administration and Probate Act 1935 (Tas) s 39; Administration and Probate Act 1958 (Vic) s 44; Administration Act 1903 (WA) s 10. 180. Sections 32 and 27 respectively of the Queensland and Western Australian Acts give a statutory power of sale of all trust property. 181. Re Claremont [1923] 2 KB 718. 182. Conveyancing Act 1919 (NSW) s 154(3); Administration and Probate Act 1958 (Vic) s 44; Property Law Act 1958 (Vic) s 34.

183. Trustee Act 1925 (NSW) s 11(1). 184. Lutheran Church of Australia South Australia District Inc v Farmers’ Co-operative Executors and Trustees Ltd (1970) 121 CLR 628; [1970] ALR 545. 185. Re Manisty [1974] Ch 17; [1973] 2 All ER 1203; Re Hay’s Settlement Trusts [1981] 3 All ER 786; [1982] 1 WLR 202; Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] 3 All ER 76 at [35]. 186. This paragraph was approved in Forrest v Commissioner of Taxation [2010] FCAFC 6 at [24]. 187. [1971] AC 424; [1970] 2 All ER 228. 188. For other aspects of the law of powers, see Thomas on Powers, 2nd ed, Oxford University Press, 2012. 189. [1976] 2 All ER 552; [1976] 1 WLR 676, discussed by R Goode (1976) 92 LQR 360, 528 at 550–2 and (1983) 8 Canadian Business Law Journal 53 at 73–5 and by G McCormack, ‘Reservation of Title — Past, Present, and Future’ (1994) 58 Conv 129. 190. (2000) 202 CLR 588; 171 ALR 568, noted D Ong (2000) 12 Bond LR 148; J Riley (2001) 15 CLQ 23. 191. [1991] 2 AC 339; [1990] 3 All ER 481. 192. [1981] Ch 25; [1979] 3 All ER 96. 193. [1984] 3 All ER 982; [1985] 1 WLR 111. 194. See, for example, Re Bond Worth Ltd [1980] Ch 223; [1979] 3 All ER 919; Re Peachdart Ltd [1984] Ch 131; [1983] 2 All ER 204; Hendy Lennox (Industrial Engines) Ltd v Grahame Puttick Ltd [1984] 2 All ER 152; [1984] 1 WLR 485; Re Andrabell Ltd (in liq) [1984] 3 All ER 407; ICI New Zealand Ltd v Agnew [1998] 2 NZLR 129; Guthrie v Radio Frequency Systems Pty Ltd (2000) 34 ACSR 572. 195. See A Duggan, ‘Romalpa Agreements Post-PPSA’ (2011) 33 SydLR 645; B Collier, P von Nessen and A Collier, ‘The PPSA: Continuing the Reconceptualisation of Retention of Title (Romalpa) Security’ (2011) 34 UNSWLJ 567. 196. See, for example, Re Bond Worth Ltd [1980] Ch 223; [1979] 3 All ER 919. 197. See, for example, Re Andrabell Ltd (in liq) [1984] 3 All ER 407 at 415. 198. As in Armour v Thyssen Edelstahlwerke AG [1991] 2 AC 339; [1990] 3 All ER 481. 199. [1976] 2 All ER 552 at 563–4; [1976] 1 WLR 676 at 690. 200. [1984] 3 All ER 407. 201. [1991] BCC 484. Re Weldtech Equipment Ltd [1991] BCLC 393, a decision of Hoffmann J, was an even clearer case. There, the clause stated that the assignment to the seller by the buyer of the goods of debts which third parties incurred to the buyer took place ‘only for securing our claims against [the buyer]’. 202. [1984] 3 All ER 407 at 414–15. 203. (2000) 202 CLR 588; 171 ALR 568. 204. Notwithstanding the clause not being struck down by the Corporations Act 2001 (Cth), the seller failed on the facts to establish that any payments made by the third party related to the goods supplied by the seller to the buyer: at [53]–[56]. 205. [1980] Ch 223; [1979] 3 All ER 919. 206. [1984] 3 All ER 982; [1985] 1 WLR 111. 207. [1980] Ch 223; [1979] 3 All ER 919. 208. [1984] 3 All ER 982 at 992; [1985] 1 WLR 111 at 123. 209. [1991] 2 AC 339 at 353; [1990] 3 All ER 481 at 485. 210. [1892] AC 1.

211. (1936) 36 SR (NSW) 620. 212. (1966) 116 CLR 98. 213. (1979) 95 LQR 477 at 481; see also W Goodhart and G Jones, ‘The Infiltration of Equitable Doctrine Into English Commercial Law’ (1980) 43 Mod L Rev 489. 214. [1984] 3 All ER 982; [1985] 1 WLR 111. 215. [1984] 3 All ER 982 at 990, 991–2; [1985] 1 WLR 111 at 121, 122. 216. [1984] 3 All ER 982 at 990, 993; [1985] 1 WLR 111 at 120, 124. 217. [1984] Ch 131; [1983] 3 All ER 204. 218. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 102; 55 ALR 417 at 458. 219. Adam v Newbigging (1888) 13 App Cas 308. 220. [1980] Ch 223; [1979] 3 All ER 919. 221. [1984] 3 All ER 982 at 991–2; [1985] 1 WLR 111 at 122–3. 222. As in Re Andrabell Ltd (in liq) [1984] 3 All ER 407. 223. As in the Romalpa case itself. 224. As in Re Bond Worth Ltd [1980] Ch 223; [1979] 3 All ER 919. That case was concerned both with the original goods sold (fibre), yarn made from the fibre, carpets made from the yarn, and proceeds of sale of the carpets. It was held that in respect of all these assets the Romalpa clause in substance conferred a charge to secure payment of the price of the fibre. See also ICI New Zealand Ltd v Agnew [1998] 2 NZLR 129. 225. As in Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25; [1979] 3 All ER 961. 226. Re Peachdart Ltd [1984] Ch 131; [1983] 3 All ER 204; Clough Mill Ltd v Martin [1984] 3 All ER 982 at 990, 993, 994; [1985] 1 WLR 111 at 120, 124, 125; cf New Zealand Forest Products v Pongakawa Sawmill Ltd (1991) 5 NZCLC 67,085 at 67,089–67,090.

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CHAPTER 3 The Classification of Trusts Express, Resulting and Constructive Trusts Express Trusts Resulting Trusts Constructive Trusts

[3-01] [3-06] [3-07] [3-08]

Some Modern Types of Trust Unit Trusts Discretionary Trusts Bare Trusts Trading Trusts Blind Trusts Custodian Trustees Advisory Trustees Trustees and Protectors The Trustee as Monopolist

[3-09] [3-10] [3-14] [3-15] [3-16] [3-17] [3-18] [3-19] [3-20] [3-21]

Express, Resulting and Constructive Trusts [3-01] Trusts may be classified in various ways according to the aspect on which emphasis is placed, but four methods of classification are generally recognised. First, trusts may be classified according to whether they have arisen by the settlor’s express declaration of intention or by operation of law. The latter category may itself be subdivided into two classes, depending on whether the trust arises because of the settlor’s presumed intention or because the circumstances are such that it would be inequitable to allow the legal owner of

property to hold it beneficially, even though there is no intention to create a trust. Thus this classification depends upon intention and trusts are classified according to whether they have arisen by reason of the settlor’s express intention, or the settlor’s presumed intention, or by imposition of equity despite the fact that there has been no intention, either express or presumed, to create a trust. The nomenclature used to designate these classes has varied in the past, and remains the subject of debate.1 Nevertheless, the first class is usually termed express or declared, [page 37] the second resulting or implied, and the third constructive.2 Something more is said of these three classes below.3 [3-02] Secondly, express or declared trusts may in turn be divided into two classes according to whether their object is to benefit individuals irrespective of any benefit which may be conferred upon the public at large, or to promote the public welfare, although incidentally private individuals may be benefited. Trusts of the first class are termed private and, of the second, public or charitable. Trusts in either class may be created inter vivos or by will. [3-03] Thirdly, express trusts may also be divided into two classes according to the form in which the settlor manifests an intention to create the trust. The settlor may have stated the limitations of the trust in full, so that nothing more is required in order to perfect it, in which case the trust is said to be executed. On the other hand, the settlor may have expressed merely an outline of intention, leaving something still to be done to perfect the trust, in which case the trust is said to be executory. [3-04] Finally, trusts may be classified according to the nature of the duties imposed upon the trustee. A trust may thus be simple or special. A simple trust is one in which the trustee has no active duties to perform beyond the conveyance of the property to the beneficiaries when required to do so. In such a case, the trustee is called a passive or bare trustee. If the trustee has duties prescribed by the settlor in connection with the trust property so that something more is

required than merely to convey the trust property to the beneficiaries, the trust is called a special trust and the trustee an active trustee. [3-05] It is therefore possible to classify trusts in the following ways:4 (1) From the point of view of intent to create a trust. Here, trusts are either: (a) express or declared; or (b) resulting or implied; or (c) constructive. (2) From the point of view of the objects of the trust. Here, trusts are either: (a) private; or (b) public or charitable. (3) From the point of view of the nature of the duties imposed upon the trustee. Here, trusts are either: (a) simple; or (b) special. (4) From the point of view of the form of the declaration of trust. Here, trusts are either: (a) executed; or (b) executory. Those classifications are not of mere academic interest. Some statutes are expressed in terms which depend on the classification.5 Certain formalities are required to evidence express trusts [page 38] which are necessarily inapplicable to trusts which are not express.6 Charitable trusts are more favourably treated than private trusts.7 The terms of executory trusts are interpreted more liberally than executed trusts.8 The division of trusts into express, resulting and constructive trusts requires further consideration.

Express Trusts

[3-06] In the case of an express or declared trust, the creator will ordinarily have used language which expresses an intention to create a trust. The author of the trust has meant to create a trust, and has used language which explicitly or impliedly expresses that intention, either orally or in writing.9 The fact that a trust was intended may even be deduced from the conduct of the parties concerned but if there is any uncertainty as to intention, there will be no trust. References to ‘intention’ in this context are to be understood, no differently than in the law of contract, as references to the intention imputed to the parties by what has been objectively manifested by the words used considered in their context.10 It is not always easy to state with assurance whether a trust is express or constructive.11 For example, the sort of trust involved in cases like Rochefoucauld v Boustead12 and that sort of testamentary trust known as a ‘secret trust’13 both arise out of express words and on one view should be categorised as express trusts, but are often treated as constructive trusts.14 Likewise, the socalled Quistclose trust is described in England as a resulting trust,15 but in Australia as an express trust.16 However, the requirement of an imputed intention marks a conceptual distinction between express and constructive trusts.17

Resulting Trusts [3-07] This class of trusts is best described as resulting trusts, to avoid confusion both with those express trusts where the requisite intention is established not by the settlor’s express words but is implied from the imperfectly expressed words and conduct of the settlor, and also with the usage by those who would classify constructive trusts as a species of implied trust. It reflects the overwhelming contemporary usage in Australia and England.18 They are so called because the trust property reverts or ‘results’ to the settlor, by reason of an intention [page 39] presumed by law in the absence of an intention by the settlor.19 This occurs in two sets of circumstances.20 First, where A pays for the purchase of property

which is vested in another, it is presumed that the property is held on trust for A, although that presumption may be rebutted by the counter-presumption of advancement or by direct evidence that A intended beneficial ownership to pass. Secondly, where A transfers property to another on express trusts, but the trusts declared do not exhaust the whole beneficial interest, in which case the unexhausted residue is held on trust for A. These have been styled ‘presumed’ and ‘automatic’ resulting trusts21 although, in both cases, the resulting trust responds to the whole or partial absence of A’s intention to transfer beneficial interest to another.22

Constructive Trusts [3-08] Most constructive trusts are imposed regardless of actual or presumed intention.23 In a passage approved by the High Court in Giumelli v Giumelli,24 Professor Scott wrote: It is sometimes said that when there are sufficient grounds for imposing a constructive trust, the court ‘constructs a trust’. The expression is, of course, absurd. The word ‘constructive’ is derived from the verb ‘construe’, not from the verb ‘construct’. The court construes the circumstances in the sense that it explains or interprets them; it does not construct them.

The term is used in various senses,25 usually involving both the holding of property by the trustee and a personal liability to account. However, some constructive trusts create or recognise no proprietary interest, but instead merely impose a personal liability to account in the same manner as an express trustee as, for example, a person who dishonestly procures or assists in a breach of trust or fiduciary obligation.26 This was pointed out very clearly by Millett LJ in Paragon Finance plc v DB Thakerar & Co27 and (as Lord Millett) in Dubai Aluminium Co Ltd v Salaam.28 This sense, which is plain from what Lord Selborne said in Barnes v Addy,29 is a large reason for the difficulty in the terminology of ‘constructive trust’.30

Some Modern Types of Trust [3-09] The express trust, naturally, appears in many forms. As Maitland said, ‘It is an “institute” of great elasticity and generality; as elastic, as general, as contract.’31 Some modern uses of trusts are examined below.

[page 40]

Unit Trusts32 [3-10] Unit trusts are an extension into the field of commerce of the typical family trust (where settlors transfer property to a trustee on trust for their children in equal shares). In recent years there has been an enormous growth in Australian investment through unit trusts, accompanied on occasion by spectacular losses, which led in turn to the regulation of managed investment schemes under Ch 5C of the Corporations Act 2001 (Cth).33 Instead of a trustee (ordinarily a professional trustee company) owning the trust property and a separate manager (ordinarily a private company) responsible for making investment decisions, those functions are now combined in a ‘responsible entity’, which is required to be licensed and which operates a ‘managed investment scheme’. Transitional provisions brought this result about in the case of trusts which pre-dated the provisions.34 By statute, the responsible entity holds scheme property on trust for scheme members.35 Judicial advice is available to it under the Trustee Acts.36 In the case of a unit trust, the scheme property is divided into a large number of units, which may, subject to their terms, be issued, redeemed and traded publicly and privately. [3-11] The unit trust is not a modern invention. In the nineteenth century, it was well known under the name of a management trust. Indeed, it was but one type of the old deed of settlement company, differing from other types only in that it did not carry on any business of its own but merely invested in those of other persons.37 After the passing of the Companies Acts it virtually disappeared because of the decision in Sykes v Beadon38 that it was an illegal association of more than 20 persons carrying on business for a profit, contrary to those Acts. However, the English Court of Appeal took a different view in Smith v Anderson.39 It relied on the ground that a unit trust was not a partnership, since the unit holders (unlike partners) had no mutual rights and obligations inter se. It also relied on the ground that the unit trust did not ‘carry on business’ itself but merely invested in the business of others. Shortly before the Second World War the unit trust, by that time well established both on the continent and in the United States, again became popular.40

[3-12] From an investor’s commercial point of view, owning units in a unit trust serves the same function as owning shares in a company. Legally, however, this is not so. As the High Court of Australia pointed out in Charles v Federal Commissioner of Taxation:41 [A] unit held under this trust deed is fundamentally different from a share in a company. A share confers upon the holder no legal or equitable interest in the assets of the company; it is a separate piece of property … But a unit in the trust deed before us confers a proprietary interest in all the property which for the time being is subject to the trusts of the deed.

Under the deed in Charles’ case, the trustee was bound to make half-yearly distributions to unit holders. More commonly these days, the deeds will contain provisions to the effect that [page 41] unit holders have only the rights given under the deed, no interest in any particular scheme property, no power to lodge a caveat, and no right to require a transfer of any trust property; the responsible entity will have discretionary powers to invest, to make provision for future and contingent liabilities, and to distribute net income.42 Those provisions mean that unit holders do not, at least in some statutory contexts, enjoy beneficial ownership of trust property.43 [3-13] What are the advantages of a unit trust? One advantage which formerly existed was that one could offer units to the public without contravening the legislative restrictions which forbade the offering of shares to the public without a registered prospectus; but this advantage has long since been nullified by the legislation referred to above. Another is that there may be taxation advantages from a unit trust.44 A third advantage is that there is no legal obstacle to the manager of a trust repurchasing a unit at a price equal to its market value, whereas in the case of shares this would require a reduction of capital (except in the special case of redeemable preference shares). But there can be disadvantages. In the first place, while legislation is continually moving towards the greater protection of unit holders, many doctrines (such as the doctrine of fraud on a minority) obviously applicable to companies have no counterpart in the law of unit trusts; and many specific provisions imposed by company legislation for the protection of shareholders in a company do not apply to unit trusts.45 In the second place, there can be

problems if the trust assets include assets like mining tenements and Crown lands, where there exist legislative provisions against acquiring such assets or interests in such assets without ministerial consent. Since each unit holder has an interest in each asset, is a sale by a unit holder of a unit to another member of the public invalid unless ministerial consent is obtained? Much will depend, of course, on the precise nature of the transaction involved and the precise terms of the legislation in question; clearly there is a danger, but that is probably avoided by providing that unit holders have no proprietary interest in the underlying assets. Thirdly, while the right to redeem the units is a most attractive feature from the investor’s point of view, it would create obvious practical havoc if a large number of unit holders exercised that right simultaneously. Finally, unless the right be expressly negatived in the trust deed, there is the possibility that a unit holder’s liability extends not only to permitting the trustee to have recourse to the trust assets but also to indemnifying the trustee personally.46 However, if the deed is appropriately worded, unlimited liability in the unit holder may be avoided.

Discretionary Trusts [3-14] The meaning of the expression ‘discretionary trust’ primarily is a matter of usage not doctrine.47 It is used to identify a species of express trust, one where the entitlement of beneficiaries to income, or to corpus, or both, is not immediately ascertainable; rather, the beneficiaries are selected from a nominated class by the trustee or some other person and this power (which may be a special or hybrid power) may be exercisable once or from time to time.48 The person with the right to select the cestui que trust thus holds a special power of appointment.49 Persons entitled in default of appointment might or might not be [page 42] nominated. The chief interest of discretionary trusts is that a member of the class of possible objects of appointment has no proprietary interest in the trust assets (unless there is no other discretionary object),50 although the member does have standing to compel the proper administration of the trust.51

Bare Trusts [3-15] The term ‘bare trust’ is often used to describe a trust in which the trustee has no ‘active duties’ to perform. However, in Corumo Holdings Pty Ltd v C Itoh Ltd,52 it was pointed out that as a matter of strict logic almost no situation could be postulated where a trustee in some circumstances does not have active duties to perform by, for example, being immediately bound to transfer the trust property to the beneficiary who was absolutely entitled. Furthermore, a trustee may be entitled by statutory provision or the terms of a trust instrument or court order to charge fees and may have a lien or charge upon the trust assets for those fees. The trustee may also have a lien upon the assets for costs properly incurred in the performance of an obligation to safeguard the trust property.53 Yet it may still be appropriate to describe this as a ‘bare trust’. Thus a more precise use of the term ‘bare trustee’ is to identify a trustee who has no interest in the trust assets other than that existing by reason of the office of trustee and the holding of the legal title, and who never has had active duties to perform or who has ceased to have those duties with the result that in either case the property awaits transfer to the beneficiaries or at their direction.54 Under the general law, there are two circumstances in which it is relevant to consider whether or not a trust is a ‘bare trust’. The first concerns the question of possession: a beneficiary is entitled to the possession of the trust assets if the trust be a ‘bare trust’, but not otherwise. The second concerns the effect of the creation of a sub-trust. If A holds property on trust for B, and B declares a trust of B’s interest in favour of C then, if the intermediate trust is a ‘bare trust’ but not otherwise, it is arguable (but not certain) that the effect of B’s declaration of trust is to bring A and C into a direct relationship, so that A becomes a trustee for C.55 Both these matters are discussed in Chapter 22. The term ‘bare trust’ is also used in various statutes and in each case, the meaning of the expression will take its colour from the statutory context.56

Trading Trusts [3-16] One power which a trustee may have is to carry on a business. This commonly occurs in testamentary trusts where the deceased was carrying on the

business. The power must be express; it will not be implied. This is discussed in Chapter 20. Nowadays, largely [page 43] because of Australian tax laws, it can be more advantageous for someone wishing to embark on a business enterprise not to do so by operating through a limited liability company, but to establish a trust with extensive powers of carrying on business. This is the ‘trading trust’.57 Conceptually it presents no problem, but it can give rise to practical problems of some magnitude, particularly on insolvency. This is especially so when persons dealing with the trustee of such a trust do not realise that a trust is involved at all, or that the trustee has no beneficial interest in the assets which are ostensibly owned. The problems are exacerbated when the trustee is a company of negligible paid-up capital, and compounded when the company which is a trustee carries on business on its own behalf as well as the trust business. These problems are discussed in Chapter 21.

Blind Trusts [3-17] In normal trusts, the trustee is under a positive duty to provide information to a cestui que trust.58 However, in the United States and Canada, there has arisen an institution called a ‘blind trust’ where, for political reasons, not only is the duty to inform expressly negatived, but an obligation is imposed on the trustee to keep secret from the cestui que trust all (or some) details of the state of the trust’s investments and of their value. It has not yet been imported into Australia, at least on any scale.

Custodian Trustees [3-18] Following English legislation,59 both Queensland60 and Western Australia61 have introduced the concept of custodian trustees, while the legislation of Victoria,62 South Australia63 and Tasmania64 permits the Public Trustee (in Victoria, State Trustees) to be appointed a custodian trustee. New South Wales legislation is innocent of the concept. In custodian trusteeship the

title to trust property is vested in the custodian trustees, but the powers of management remain in the ordinary trustees. The reasons advanced in favour of custodian trustees are twofold: (1) that where trustees are natural persons but by statute a custodian trustee must be a corporation, all problems of devolution and vesting on a change of trustees are avoided; and (2) that the possibility of misappropriation by a trustee is made more difficult if the trustee is deprived of all title to the trust property. Strictly speaking, in such a case, the ordinary trustees are not trustees at all; they lack one of the four elements of a trust, since no trust property is vested in them; but, since they have all the powers of a trustee stricto sensu, they also have all the trustee’s responsibilities and liabilities. Even in jurisdictions where no special legislation exists (for example, New South Wales), the trust instrument itself often establishes custodian trustees, in circumstances where neither of the two suggested reasons for their existence could explain their creation. The fact that a custodian trustee is not concerned with the management of a trust does not make inapplicable the rule that a trustee may not make a profit out of the trust. In Re Brooke Bond & Co Ltd’s Trust Deed,65 Cross J held that an insurance company which was custodian [page 44] trustee of a pension fund could not, without the authority of the court, enter into a contract of insurance with the management trustees to secure the payment of benefits under the fund.

Advisory Trustees [3-19] There is statutory provision in all states except New South Wales and South Australia for the appointment of ‘advisory trustees’ to act with the Public Trustee, and in Western Australia to act with any trustee.66 Just as a ‘custodian trustee’ fulfils no purpose except to be a repository of the legal title, an ‘advisory trustee’ fulfils the opposite purpose: no title can vest in an advisory trustee,

whose only function is to advise the trustees. In truth, an advisory trustee is not a trustee at all. Bearing in mind the ease with which trustees can take advice in any event, it is not easy to see the point of these creatures.

Trustees and Protectors [3-20] The statutory creations of ‘custodian trustee’ and ‘advisory trustee’ are particular examples of division permitted by the general law between the holding of the legal title to the trust property and control of the administration and management of that property. An example is a trust created by John D Rockefeller in which the settlor selected a committee of family and business associates with broad powers of control over the administration of the trust. It was held67 that these included power to treat as capital a dividend which otherwise would have been apportioned between income and capital. The powers so vested in a third party may include that of removal and appointment of trustees, and enlargement of the investment powers of the trustees.68 The investment, by the terms of the trust, of such third parties with significant powers has been a feature of trusts set up in international ‘tax havens’ and in the argot of practitioners in this field such third parties have been styled ‘protectors’.69 One question that may arise is whether, in a given case, the selection of the ‘protector’ by or pursuant to the trust instrument is but a sham, in the true sense of that term,70 so that the ‘protector’ is to be treated as bearing the full measure of the duties and liabilities, if not also the rights, the protector would have if expressly designated as trustee. Another is whether the ‘protector’ holds its powers as a fiduciary (and is liable to control by the court as such) or whether they are bare powers. A third question is whether, in a given case, the trustee bears personal liability to the beneficiaries for complying or failing to comply with directions given by the ‘protector’, particularly where the ‘protector’ has acted in breach of fiduciary duty and the trustee knows or suspects this. The resolution of such issues will be provided by the general principles of trust law as they apply to the particular case.71 [page 45]

The Trustee as Monopolist [3-21] The expression ‘anti-trust’ which is received usage among restrictive trade practices lawyers has its origin in the creation by Mr Rockefeller and his associates of a trust, the trustees of which held the shares in some 40 companies which controlled over 90% of a particular industry. The shares were held on trust for beneficiaries who received ‘trust certificates’ representing an interest in the corporate aggregation. This and like trusts were held unlawful at general law, on the grounds that it was ultra vires the individual corporations to merge their powers of self-control in this way, and that the purpose of the trusts was one in restraint of trade.72 The term ‘trust’ then came to be applied loosely to all forms of monopoly, by whatever device created or enforced, and was used as such in the Sherman Act 1890. _____________________________ 1.

Thus Underhill, Law of Trusts and Trustees, 12th ed, pp 9–10 (cf 19th ed, pp 89–92) denoted all trusts arising by operation of law as ‘constructive’, while P Millett (1998) 114 LQR 399 at 406 would denote all those trusts as ‘implied’. One aspect of the problem is the reference to ‘implied’ trusts in the modern legislation embodying the Statute of Frauds, which was mysterious to Sir Arthur Underhill when he wrote of the subject in 1889 in his Practice and Concise Manual of the Law Relating to Private Trusts and Trustees, 3rd ed, Butterworths, London, p 12. See A Hudson, Equity and Trusts, 8th ed, Routledge, London, 2014, pp 48–9; P Matthews, ‘The Words Which Are Not There: A Partial History of the Constructive Trust’ in C Mitchell (ed), Constructive and Resulting Trusts, Hart Publishing, Oxford, 2010, p 3 at pp 11–17.

2.

See, for example, Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [8]. See [3-06]–[3-08].

3. 4. 5.

A classification applied in Ku v Song (2007) 63 ACSR 661 at [60]. Notably, the modern counterparts of s 4 of the Statute of Frauds 1677 (Eng); see also ‘express trustee’ in limitation statutes, considered in Clay v Clay (2001) 202 CLR 410; 178 ALR 193 and ‘constructive trustee’ considered in Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489.

6. 7.

See Chapter 7. See Chapter 10.

8. 9.

See Chapter 8. This passage in the previous edition was described as usefully succinct in Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; 317 ALR 225 at [5].

10. Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [13]–[18], [46]–[66], [98]–[118]. 11. See P Millett (1998) 114 LQR 399; C Rickett (1999) 18 NZULR 305. 12. [1897] 1 Ch 196, discussed in Chapter 7. 13. Also discussed in Chapter 7; see also Ch 14 in C Mitchell and P Mitchell (eds), Landmark Cases in

Equity, Hart Publishing, Oxford, 2012; W Swadling, ‘The Nature of the Trust in Rochefoucauld v Boustead’ in C Mitchell (ed), Constructive and Resulting Trusts, Hart Publishing, Oxford, 2009, p 95. 14. See Voges v Monaghan (1954) 94 CLR 231 at 233, 235, 237; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [39]. 15. Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377. 16. Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491; 102 ALR 681. See Chapter 2. 17. Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; 317 ALR 225 at [9]. 18. See Nelson v Nelson (1995) 184 CLR 538; 132 ALR 133; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; [1996] 2 All ER 961; Air Jamaica Ltd v Charlton [1999] 1 WLR 1399; Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377. 19. For that reason, the term ‘presumed trust’ has its advocates: see, for example, C Rickett and R Grantham (2000) 116 LQR 15, but this sits ill with the influential classification of Megarry J in Re Vandervell’s Trusts (No 2) [1974] Ch 269; [1974] 1 All ER 47. 20. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708; [1996] 2 All ER 961 at 990. 21. Re Vandervell’s Trusts (No 2) [1974] Ch 269; [1974] 1 All ER 47; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; 40 ALR 1. 22. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at [45]. 23. Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [40]. 24. (1999) 196 CLR 101; 161 ALR 473 at [2]. 25. Indeed, Lord Sumption JSC has said that ‘there are few areas in which the law has been so completely obscured by confused categorisation and terminology as the law relating to constructive trustees’: Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [7]. 26. (1999) 196 CLR 101; 161 ALR 473 at [4]. 27. [1999] 1 All ER 400 at 408–9. 28. [2003] 2 AC 366; [2003] 1 All ER 97 at [140]–[143]; see also Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 2 All ER 1073 at 1095; [1968] 1 WLR 1555 at 1579; Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [9]; Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [69]–[70]. 29. (1874) LR 9 Ch App 244. 30. Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [9]. 31. F Maitland, Equity: A Course of Lectures, Cambridge University Press, Cambridge, 1936, p 23. 32. On unit trusts, see generally L C B Gower, Modern Company Law, 4th ed, pp 266–72; H Ford, ‘Unit Trusts’ (1960) 23 MLR 129; H Ford, ‘Public Unit Trusts’ in R Austin and R Vann (eds), The Law of Public Company Finance, Law Book Co, Sydney, 1986, p 397; K Sin, The Legal Nature of the Unit Trust, Clarendon Press, Oxford, 1998. 33. See ALRC 65, Collective Investments — Other people’s money (1993), Ch 1. 34. See Re Investa Properties Ltd (2001) 187 ALR 462 at [10]–[19]. 35. Corporations Act 2001 (Cth) s 601FC(2). 36. Re Mirvac Ltd (1999) 32 ACSR 107 at [40]–[41]; MTM Funds Management Ltd v Cavalone Holdings Pty Ltd (2000) 35 ACSR 440 at [14]–[22]; Re Westfield Holdings Ltd (2004) 49 ACSR 734 at [3]. 37. Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 at 230–1; Bailey v Medical Defence Union (1995) 184 CLR 399 at 436–7; 132 ALR 1 at 27.

(1879) 11 Ch D 170, dealing with a deed settled by Fry QC (of Specific Performance fame) where one 38. of the trustees had been Lord Westbury. 39. (1880) 15 Ch D 247; [1874–80] All ER Rep 1121. 40. See Commissioner of Taxation v ElecNet (Aust) Pty Ltd (2016) 329 ALR 310 at [73]–[77]; J Markham, A Financial History of the United States, M E Sharpe, New York, 2002, pp 323–5; Pettit, pp 17–18; H Ford (1960) 23 Mod L Rev 129. 41. (1954) 90 CLR 598 at 609; [1954] ALR 405 at 409. 42. See, for example, MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494; 166 ALR 149; CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196. 43. CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [29]– [40]. 44. See, for example, Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639; ISPT Nominees Pty Ltd v Commissioner of State Revenue (NSW) (2003) 59 NSWLR 196; 53 ATR 527. 45. But cf Vigliaroni v CPS Investment Holdings Pty Ltd (2009) 74 ACSR 282 (where the ‘affairs of a company’ were held to extend to the unit trust of which it was a trustee). 46. J W Broomhead (Vic) Pty Ltd v J W Broomhead Pty Ltd [1985] VR 891; Balkin v Peck (1998) 43 NSWLR 706; Kendell v Carnegie (2006) 68 NSWLR 193. 47. Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [8]; see M Leeming (2015) 89 ALJ 371 at 374. 48. Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547 at 551–2. 49. See [2-46]. 50. See [23-15]. 51. C v B [2007] 1 Qd R 212 at [26]. The Family Law Act 1975 (Cth) establishes a regime under which it has been held that rights in relation to a discretionary trust amount to property: see especially Kennon v Spry (2008) 238 CLR 366; 251 ALR 257; J Gleeson (2010) 84 ALJ 177; P Parkinson (2012) 26 AJFL 5. 52. (1991) 24 NSWLR 370 at 398. 53. See Chapter 21. 54. Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 281–2. See also Corin v Patton (1990) 169 CLR 540 at 579; 92 ALR 1 at 28; Body Corporate St James Apartments v Renaissance Assets Pty Ltd [2005] V ConvR 54-695 at [6]; Wade v Wade [2009] WASC 118 at [78]. 55. This paragraph as it appeared in the 5th edition was approved in Thorpe v Bristile Ltd (1996) 16 WAR 500 at 505. 56. Examples are the Vendor and Purchaser Act 1874 (UK) considered in Re Docwra (1885) 29 Ch D 693; the Land Transfer Act 1875 (UK) considered in Morgan v Swansea Urban Sanitary Authority (1878) 9 Ch D 582; the Taxation (Unpaid Company Tax) Assessment Act 1982 (Cth) considered in Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271; and subs 8(8) of the Companies (NSW) Code 1981 (NSW) construed in Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370; see now Corporations Act 2001 (Cth) s 609(2). See also Re Cunningham and Frayling [1891] 2 Ch 567 at 571–2. 57. See K Lindgren, ‘The Birth of the Trading Trust’ (2011) 5 J Eq 1. See also Levin v Ikiua [2010] 1 NZLR 400 at [97]–[127]. 58. See [17-13]–[17-17]. 59. Public Trustee Act 1906 (UK) s 14. See also Public Trust Office Act 1957 (NZ) s 50.

60. Trusts Act 1973 (Qld) s 19. 61. Trustees Act 1962 (WA) s 15; Public Trustee Act 1941 (WA) s 22. 62. Public Trustee Act 1958 (Vic) s 24; see also Trustee Act 1958 (Vic) s 71. 63. Public Trustee Act 1995 (SA) s 17. 64. Public Trustee Act 1930 (Tas) ss 23–24; see also Trustee Companies Act 1953 (Tas) s 18B. 65. [1963] Ch 357; [1963] 1 All ER 454. See generally Public Trustee (Qld) v Optus Capital Ltd (2013) 96 ACSR 493 at [20]; Hancock v Rinehart (2015) 106 ACSR 207 at [171]–[177]. 66. Public Trustee Act 1978 (Qld) s 41; Public Trustee Act 1930 (Tas) s 22; State Trustees (State Owned Company) Act 1994 (Vic) s 9; Trustees Act 1962 (WA) s 14; Public Trustee Act 1941 (WA) s 21. 67. Chase National Bank v Chicago Title & Trust Co 279 NYS 327 at 345–50 (1935), affirmed 284 NYS 472 (1936), affirmed 3 NE 2d 205 (1936). 68. Re Rank’s Settlement Trusts [1979] 1 WLR 1242. The powers in that case had been conferred pursuant to an order made under the Variation of Trusts Act 1958 (UK). 69. See Underhill and Hayton, pp 51–60; P Matthews, ‘Protectors: Two Cases, Twenty Questions’ (1995) 9 Trust Law 108; A Oakley (ed), Parker & Mellows Modern Law of Trusts, 9th ed, Sweet & Maxwell, London, pp 203–7; D Waters, ‘The Protector: New Wine in Old Bottles?’ in A Oakley (ed), Trends in Contemporary Trust Law, Clarendon Press, Oxford, 1996, p 63; Harris v Rothery [2013] NSWSC 1275 at [73]. 70. Steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 472; 211 ALR 101 at [46]; Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; 215 ALR 253 at [26]; Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [54]–[82]. 71. Scott on Trusts, §16.7. 72. People v North River Sugar Refining Co 24 NE 834 (1890); State v Standard Oil Co 30 NE 279 (1892).

[page 46]

CHAPTER 4 Capacity to Create a Trust Minors

[4-02]

Persons of Unsound Mind

[4-06]

Bankrupts

[4-07]

Corporations

[4-08]

[4-01] An express trust may be created by a declaration inter vivos or by will. The person enabled by law to declare a trust of property is its beneficial owner.1 Generally speaking, capacity to create a trust is coextensive with capacity to hold and dispose of any legal or equitable interest in property. The following paragraphs deal with cases where capacity may not be straightforward.

Minors [4-02] In all Australian jurisdictions,2 legislation now provides that persons will have, on attaining the age of 18, full capacity for all purposes of the law of that jurisdiction. At common law, minors who are under the age of discretion are incapable of creating a trust inter vivos, for they are taken as having insufficient understanding of what is involved, or insufficient discretion to exercise sound judgment. There is authority that the age of discretion is 14 for males and 16 for females,3 although the preferable view is that it depends on the understanding of the particular child and the nature of the particular transaction. In New South Wales, where the most elaborate legislative provision has been made, the

statute refers to the ‘age of understanding’,4 which although undefined presumably refers to the common law age of discretion. In contrast with other legal systems, a parent or guardian does not have, at common law, the right to dispose of the minor’s property.5 [4-03] In jurisdictions other than New South Wales, a trust inter vivos created by a minor after having reached the age of discretion is voidable and not void, and, unless repudiated when or within a reasonable time after the minor comes of age, would then be binding.6 [page 47] Where there is consideration for the settlement — and this is usually found to exist because the settlement of a minor is generally a marriage settlement — the contract is of that class of minor’s contract which is valid and binding on the minor until disaffirmed either before or within a reasonable time after attaining majority. It would appear, however, that even in the absence of consideration, a settlement by a minor will be governed by the same rule. A minor may make a valid gift of chattels or personal property and if he or she makes such a gift upon declared trusts and then dies before attaining majority, the trust will stand.7 [4-04] In New South Wales, there are elaborate provisions8 as to dispositions of property (which are defined to include the creation of a trust) by minors above the ‘age of understanding’. If the trust is created ‘for his benefit’ then it is ‘presumptively binding’ upon the minor; if the settlement is voluntary, however, it is presumptively binding only if it was ‘reasonable at the time it was made’. The term ‘presumptively binding’ in effect means as binding as if the actor had been of full age; dispositions not inherently of this character may be made so, during minority — by the court, after majority — by affirmation, and after death — by legal personal representatives. [4-05] The law as to creation of testamentary trusts is less complex. At common law, infant males aged 14 and upward and infant females aged at least 12 could make valid wills of personalty;9 but in all states a higher age is stipulated by statute. In all jurisdictions, the age of testamentary capacity for wills disposing of either realty or personalty is now 18; in all states except

Western Australia, a married minor can make a will, and in New South Wales, South Australia, Tasmania and Victoria, a will made by a minor in contemplation of marriage will be valid upon the solemnisation of the marriage.10 In New South Wales, a court may grant an unmarried minor leave to make a will.11 Additionally, in South Australia and the Australian Capital Territory, a minor who is on military service may make a will;12 in other jurisdictions, these provisions have been superseded by broader provisions governing informal wills.13

Persons of Unsound Mind [4-06] Provision has long been made by statute for the control, custody and power of disposition of persons incapable of managing their own affairs to pass to the Crown, in which case a purported declaration of trust is void.14 The High Court considered in some detail the effect of conveyances and contracts by persons of unsound mind, but whose capacity had not been removed by statute, in Gibbons v Wright.15 The following propositions emerge: (1) A contract or conveyance is void, both at common law and in equity, if the person was unaware and did not intend to sign the document, such that ‘his mind did not go with his pen’ and a plea of non est factum could be made.16 [page 48] (2) Powers of attorney are subject to a special rule. If a person executes a power of attorney while lacking the capacity to understand its general purport, it is void.17 (3) All other contracts and conveyances executed by persons who knew they were signing a document, but lacked the capacity to understand the nature of the transaction (that is, the general purport of the instrument or the effect of a wider transaction which the instrument is a means of carrying out), are not void, but may be voidable by the person or his or her representative, upon proof that the other party did not act in good faith or had knowledge of the person’s lack of capacity.18

The same principles apply to trusts created by settlements made inter vivos for valuable consideration, and no different principles apply in respect of voluntary settlements.19 Similar principles apply to persons temporarily incapacitated by alcohol.20

Bankrupts [4-07] Control of a bankrupt’s property vests in the trustee in bankruptcy; a purported declaration of trust by a bankrupt is therefore void. However, a bankrupt does have a right to the surplus after distribution and can validly constitute a trust in respect of that property.21

Corporations [4-08] A corporation has the legal capacity and powers of an individual.22 Even if the corporation’s constitution or objects restrict or prohibit the exercise of its powers, an exercise of power is not invalid merely because it is contrary to the restriction or prohibition.23 _____________________________ 1.

Tierney v Wood (1854) 19 Beav 330 at 335–6; 52 ER 377 at 379.

2.

Age of Majority Act 1974 (ACT) s 5; Minors (Property and Contracts) Act 1970 (NSW) s 8; Age of Majority Act (NT) s 4; Law Reform Act 1995 (Qld) s 17; Age of Majority (Reduction) Act 1971 (SA) s 3; Age of Majority Act 1973 (Tas) s 3; Age of Majority Act 1977 (Vic) s 3; Age of Majority Act 1972 (WA) s 5. Mills v IRC [1973] Ch 225 at 240; [1972] 3 All ER 977 at 986.

3. 4. 5.

Minors (Property and Contracts) Act 1970 (NSW) s 18. Field v Moore (1855) 7 De G M & G 691 at 706–7; 44 ER 269 at 274–5; Homestake Gold of Australia v Peninsular Gold Pty Ltd (1996) 20 ACSR 67 at 75–6.

6.

Duncan v Dixon (1890) 44 Ch D 211; Edwards v Carter [1893] AC 360; [1891–4] All ER Rep 1259; Carnell v Harrison [1916] 1 Ch 328; [1916–17] All ER Rep 827; and see Horvath v Commonwealth Bank of Australia [1999] 1 VR 643 at [45]–[62]. Taylor v Johnston (1882) 19 Ch D 603. In so far as it was held in this case that the gift was not even voidable within a reasonable time after majority, it would seem that this decision cannot stand: Williams on Vendor & Purchaser, 4th ed, pp 848–9; Halsbury’s Laws of England, 5th ed, Vol 52, 2014, [211].

7.

8.

Minors (Property and Contracts) Act 1970; see D Harland, The Law of Minors, Butterworths, Sydney, 1974.

9. Bishop v Sharp (1704) 2 Vern 469; 23 ER 902. 10. Succession Act 2006 (NSW) s 5; Succession Act 1981 (Qld) s 9; Wills Act 1936 (SA) s 5(3); Wills Act 2008 (Tas) s 7; Wills Act 1997 (Vic) s 6. 11. Succession Act 2006 (NSW) s 16; and see Application of M (2000) 50 NSWLR 401 and P Powell (1993) 67 ALJ 25 at 27. 12. Wills Act 1936 (SA) s 11; Wills Act 1968 (ACT) s 16. 13. See, for example, Wills Act 2008 (Tas); Wills Amendment Act 2007 (WA); and R Croucher and P Vines, Succession: Families, Property and Death, 4th ed, LexisNexis Butterworths, Sydney, 2013, p 318. 14. Re Walker [1905] 1 Ch 160 at 171–3, 179; Re Marshall [1920] 1 Ch 284 at 288–9; [1920] All ER Rep 190 at 191–2; Gibbons v Wright (1954) 91 CLR 423 at 439–40; [1954] ALR 383 at 387. In New South Wales, see NSW Trustee and Guardian Act 2009 (NSW) Ch 4. 15. (1954) 91 CLR 423; [1954] ALR 383. 16. (1954) 91 CLR 423 at 443–4; [1954] ALR 383 at 389–90. Blomley v Ryan (1956) 99 CLR 362 at 401; Bridgewater v Leahy (1998) 194 CLR 457; 158 ALR 66 at [65]. 17. (1954) 91 CLR 423 at 444–5, 448; [1954] ALR 383 at 390–1, 393. 18. (1954) 91 CLR 423 at 438, 441; [1954] ALR 383 at 386, 388. 19. Crago v McIntyre [1976] 1 NSWLR 729 at 742–74. 20. Matthews v Baxter (1873) 8 Exch 132. 21. Bird v Philpott [1900] 1 Ch 822 at 828; [1900–3] All ER Rep 439 at 442–3. 22. Corporations Act 2001 (Cth) s 124(1). For some limitations to, and the approach taken to, this section, see J Campbell, ‘Corporate Law, the Courts and Corporate Personality’ (2015) 33 C&SLJ 227. 23. Corporations Act 2001 (Cth) s 125.

[page 49]

CHAPTER 5 Express Trusts — Certainty of Intention, Subject Matter and Object Certainty of Intention to Create a Trust

[5-02]

Sham Trusts

[5-04]

Precatory Trusts

[5-05]

Illusory Trusts Revocable Mandates Directions as to Management Governmental ‘Trusts’ Commercial Transactions Communication of Intention

[5-12] [5-13] [5-17] [5-20] [5-22] [5-23]

Certainty of Subject Matter

[5-24]

Certainty as to the Object of the Trust

[5-25]

[5-01] In Kauter v Hilton,1 Dixon CJ, Williams and Fullagar JJ referred to ‘the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries’. Each of those requirements is considered below.

Certainty of Intention to Create a Trust

[5-02] A court cannot hold that an express trust exists unless it is satisfied that there was the intention to create such a trust. The question will be whether there is language or conduct which shows a sufficiently clear intention to create such a trust. No formal or technical words are required; any apt expression of intention will do.2 The conclusion that the intention existed may be drawn as an inference from the available evidence. In order to infer intention, the court may look to the nature of the transaction and the whole of the circumstances attending the [page 50] relationship between the parties and known to them,3 including commercial necessity.4 If the inference to be drawn is that the parties intended to create or protect an interest in a third party, and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then an intention to create a trust may be inferred. Such a trust is an express, not a constructive, trust and the earlier reluctance to infer such a trust no longer obtains, at least in Australia.5 The overall question is whether in the circumstances of the case, and on the true construction of what was said and written, a sufficient intention to create a trust has been manifested.6 It is not necessary that the creator of the trust should know that the particular relationship intended to be created is in law a trust. A trust will be created, whether or not the creator is aware of it, provided that in substance the creator’s actions have the legal effect of creating the relationship which is known in law as a trust. If the language manifests an intention to create that legal effect, then a trust will be created whether the words ‘trust’ or ‘trustee’ are used, or not. For example, in Paul v Constance,7 where a man deposited the sum of £950 in a bank account in his own name on terms that both he and his mistress had equal access to it, often saying to her ‘The money is as much yours as mine’, the English Court of Appeal held that he owned all moneys in the account on trust for himself and her equally so that on his death she was entitled to a one-half share of the moneys then in the account. However, in Re Schebsman, du Parcq LJ stated that ‘unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the Court ought not to be astute to

discover indications of such an intention’.8 That passage has been repeatedly approved.9 In commercial documents, there will often be no suggestion that the parties in their written instrument did not mean what they said, or said what they meant. In such cases, where there is no sham or illegality, the use of language expressing a trust in terms will be effective to supply the requisite intention.10 The matter was put thus by Gageler J:11 Where there is no reason to consider that parties entering into a contract have not said what they meant or meant what they said, an express term in the contract that one party is to hold property

[page 51] on ‘trust’ for another party, or for a third party, will be recognised and enforced in equity as a trust. Conversely, where parties to a contract have refrained from contractual use of the terminology of trust, an intention to create a trust will be imputed to them only if, and to the extent that, a trust is the legal mechanism which is appropriate to give legal effect to the relationship, between the parties or between a party and a third party, as established or acknowledged by the express or implied terms of the contract.

Less precise language may be used in wills. If the donor be appointed trustee or the property is given in trust, then there is a strong presumption of an intention to create a trust. In Hammat v Chapman,12 a bequest was made in the following terms: ‘I appoint my brother to collect my personal estate, and dispose in a way he thinks fit.’ It was held that the legatee was absolutely entitled to the personal estate, and Harvey J said:13 The cases of precatory trust generally take the form of a gift to a beneficiary, followed by the expression of a wish, or desire, or request, or demand. In most of these cases the decision depends upon the question whether effect should be given to what is in terms an absolute gift, or whether the words which follow the gift show an intention to create a trust which is binding upon the conscience of the donee.14 The present case is not a case of that kind, but it is sought to bring it within a class of cases in which the beneficiary who takes the gift is expressed to be a trustee, or is described as holding a fiduciary office. In those cases the question generally is whether the nature of the trust has been sufficiently defined. Where an individual takes property as a trustee, or as an executor, prima facie he is not beneficially entitled to the property, but holds it for the persons whom the testator has marked out as the objects of his trust, or, if they are insufficiently defined, for the testator’s next-of-kin. If in this case the will had said ‘I give my personal estate to my brother … as a trustee’ or ‘I appoint him trustee of my personal estate’ and had then gone on to say ‘to dispose of in the way he thinks fit’, it would be clear on the authorities that Mr Hammat could not claim the property himself, but the trust would fail in consequence of the beneficiaries not being sufficiently indicated.

In Re Snowden (dec’d),15 the deceased had told her solicitor that she was leaving her estate to her brother absolutely in order that the brother might split up the estate between her numerous relatives ‘as he thought best’. Sir Robert Megarry VC held that she had merely imposed a moral or family, but not a trust, obligation upon her brother. On the other hand, in Hunter v Public Trustee,16 a bequest ‘upon trust’ to pay all debts, etc, without any further disposition of the property was held to constitute the legatees beneficial owners. [5-03] The view had been taken, based on the majority in Commissioner of Stamp Duties (Qld) v Jolliffe,17 that an intention to create a trust would not be imputed where the settlor did not mean to create one. That view, which is inconsistent with the principles referred to above, was rejected in Byrnes v Kendle.18 Mr Kendle had executed an instrument declaring that he held an undivided half interest in land on trust for his wife. He was permitted to adduce evidence at trial to show that the document was never intended to operate as a binding declaration of trust of the land. He said that his intention was that half of the proceeds of the eventual sale would belong to his wife. It was held on appeal that in the absence of a submission that the instrument was a sham, or that there was some basis for setting it aside, evidence of his intention was inadmissible. The question, as framed by Gummow and Hayne JJ, with whom French CJ agreed, was not ‘What did the parties mean to say?’ but ‘What is the meaning of what the parties have said?’ [page 52] Or, as it was put by Heydon and Crennan JJ, ‘the question is what the settlor or settlors did, not what they intended to do’.19 The Australian position may be compared with what in the United States is known as the ‘Totten trust’, based upon the decision of the New York Court of Appeals in Re Totten,20 which has been followed in a series of cases.21 Under the Totten trust, in the words of the principal judgment:22 A deposit by one person of his own money in his own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust only, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the passbook or notice to the beneficiary. In

case the depositor died before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance at hand at the death of the depositor. What this involves is a presumption (which may be contrasted with that underlying the resulting trust) of an intention to create a trust revocable by the settlor at will during his lifetime or until some earlier unequivocal expression of immediate intention.

Sham Trusts [5-04] The legal notion of sham ‘refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences’.23 Lord Wilberforce said that ‘to say that a document or a transaction is a “sham” means that while professing to be one thing, it is in fact something different’.24 The doctrine of sham is general, and extends to sham trusts.25 In the case of a sham trust, steps will have been taken resulting in the form of a legally effective trust, but an intention that the true transaction be something different.26 This may occur in a number of ways. A transaction with the ostensible appearance of a trust may be wholly or partly a sham. For example, there may be an intention genuinely held and documented to create a trust, but on different terms from that documented; that will be a sham trust.27 Further, a settlor may validly constitute a trust, but a later settlement of property upon the terms of that trust may nonetheless be a sham.28 However, a sham trust arises not merely because it was entered into with an improper motive. A familiar example is a trust to defraud creditors. Such a trust is apt to be set aside pursuant [page 53] to statute, but is different from the case where a settlor never subjectively intends a trust to be created at all.29 Because a necessary element of a sham trust is ‘an objective of deliberate deception of third parties’,30 and because the doctrine is one in which the law has regard to the parties’ subjective intention, it is a ‘strong finding, and one which cannot be made if another inference is at least equally open’.31

Precatory Trusts [5-05] The commonest difficulties are found not in cases where a settlor or testator has used the word ‘trust’ or ‘trustee’ but in cases where other words have been used expressive of a confidence or belief that the person to whom the property is given will use that property or portion thereof for the benefit of a third person. Where words of prayer, entreaty, recommendation, desire or hope are used instead of words of direction, it is always a question of construction whether a trust is intended, or whether there is a beneficial gift to the donee coupled with expressions of desire or hope which are not binding upon that donee. In cases where it is held that the words used do create a trust, such trusts are commonly called ‘precatory trusts’ although, the question of construction having been resolved,32 they are no different from express declared trusts: When a trust is once established, it is equally a trust, and has all the effects and incidents of a trust, where declared in clearly imperative terms by a testator, or deduced upon a consideration of the whole will from language not amounting necessarily and in its prima facie meaning to an imperative trust.33

In Re Williams,34 a testator by his will gave his residuary estate to his wife absolutely, and followed with the words: ‘In the fullest trust and confidence that she will carry out my wishes in the following particulars’. The testator then set out the particulars, namely, that she would pay the premiums due during her life on a policy of insurance on her own life and that she, by her will, would leave the moneys payable under that policy and other moneys to the testator’s daughter. It was held that the wife took the residuary estate of the testator absolutely and was unfettered by any condition or trust. [5-06] In deciding whether or not a trust is created from precatory words, reported decisions are of limited assistance. You must take the will which you have to construe and see what it means, and if you come to the conclusion that no trust was intended, you say so, although previous judges have said the contrary on some wills more or less similar to the one which you have to construe.35

Thus in Gunter v Commissioner of Stamp Duties,36 the words ‘I desire’ were held in their context to create a trust in respect of the testator’s expression of his desire. On the other hand, the [page 54]

words ‘I specially desire’ were held in Re Conolly37 not to create a trust. It is a question of construction of the instrument in each case. Where there is a real difficulty of construction, much will depend upon the initial presumption which is made in the approach to the question of construction. In earlier cases, precatory words tended to be construed ‘as being prima facie euphemistic equivalents for more imperative forms, much as a master might give an order to a servant in the form of a request rather than a command’.38 Thus in Curnick v Tucker,39 where a testator left all his property to his wife for her sole use and benefit ‘in full confidence’ that she would dispose of it among their children during her lifetime and at her decease, it was held that the wife took a life interest only with a power of appointment among the children. So also in the case of Gully v Cregoe,40 where the gift was to the wife forever, but with the addition of the words ‘feeling assured and having every confidence that she would dispose of the same among the two daughters and their children’, it was held that despite the words ‘for ever’, the wife took a life estate only. The older cases appear to proceed on the basis that where there was certainty as to the property and the objects, then any words of wish or desire would be held to raise a trust, but if the objects were not certain, then a trust could not be raised upon the words of desire any more than upon words of express trust.41 [5-07] In the last quarter of the nineteenth century, however, a change occurred in the approach of the courts to the question. The attitude that the use of precatory words was prima facie equivalent to the use of more imperative forms was discarded. The prima facie construction of words of request became that they were meant merely to be a request and not a binding obligation upon the donee. Thus in 1882 the Privy Council, in Mussoorie Bank v Raynor,42 held that where property was left by a testator to his widow ‘feeling confident that she will act justly to our children in dividing the same when no longer required by her’ no trust for the children was created, and the opinion was expressed that for many years prior thereto the decisions had shown that the doctrine of precatory trusts was not to be extended.43 In Dean v Cole,44 the High Court held that where a testator appointed his wife and another person joint executors, and devised and bequeathed to his wife all his real and personal estate subject to the conditions following in the will, and later proceeded: I give all and every portion of my real and personal estate to my wife … trusting to her that she will at some time during her lifetime or at her death divide in fair, just and equal shares between my children … all such part and portion of my estate as she may be in the use and enjoyment of …

no trust was imposed upon the testator’s wife. This decision may be contrasted with the earlier English decisions where on similar words it was held that a life estate only was given to the wife.45 [5-08] It may now be said that precatory words are in themselves neutral.46 If the words are precatory and no more, then even though the objects which a testator hopes will be benefited and the property by which he or she hopes they will be so benefited may be expressed with certainty, no trust will be created. On the other hand, if it appears from the whole document [page 55] that a trust was intended, the fact that precatory words only have been used will not prevent a trust from being so created:47 … in each case the whole will must be looked at; and unless it appears, from the whole will that an obligation was intended to be imposed, no obligation will be held to exist … It would, however, be an entire mistake to suppose that the old doctrine of precatory trusts is abolished. Trusts — ie, equitable obligations to deal with property in a particular way — can be imposed by any language which is clear enough to shew an intention to impose them.

If a testator uses words prior to the precatory words which, standing alone, would create a trust, and then in some respects uses words of request, very strong circumstances would be required to enable the court to say that those words of request cut down the prior express words of trust.48 [5-09] The question whether a trust has been created by the employment of precatory words usually arises in relation to wills. It is prudent when using words other than the usual words of trust or express direction with the intention that no trust should be created to add after the precatory words, further words such as ‘without however imposing any binding trust’ or ‘but so that no binding trust is hereby created’. [5-10] The fact that the gift is contained in a will, and the precatory words in a codicil, will be stronger evidence in favour of a trust than where the precatory words appear in the same instrument.49 As has already been pointed out, no trust, whether couched in precatory language or otherwise, will be valid unless the subject matter and the object of the trust are expressed. The terms used are often very important in deciding not only whether the trust in any case would

be void for uncertainty of subject matter or object, but also whether by the use of the precatory words a trust was intended at all. Thus, if the objects of the trust are expressed in general terms, that expression of the objects may be just sufficiently certain to enable a trust to be created if one was clearly intended. But if a doubt arises whether a trust was in fact intended, those same words may be a strong indication that there was no such intention. For example, if a testator gives property ‘upon trust to be divided among my relations’, the objects are expressed sufficiently to enable a valid trust to be created.50 However, if a testator uses such words as ‘I earnestly desire that provision be made thereout for my relations’ in a gift of property, the general expression of the persons to be benefited, the object of the trust, will be an important factor in construing such an expression of desire as not creating a binding trust.51 However, the absence of a certainly ascertainable object will not of itself prevent a court from construing precatory words as creating a trust. In Re Pugh’s Will Trusts,52 a bequest of residue to the executor of a will ‘absolutely’, followed by the words ‘to dispose of the same in accordance with any letters or memoranda I may leave with this my will and otherwise in such manner as he may in his absolute discretion think fit’ were construed as words of trust but, as the testator left neither letters nor memoranda, the executor held the residue on a resulting trust for the testator’s next-of-kin. [5-11] Furthermore, the form of words chosen may create neither a trust nor a moral obligation but rather a bare power. In Re Altson,53 a statement in the deceased’s will of her ‘express wish’ that certain commercial properties be leased to a named person at a specified rent, was construed as conferring a bare power upon the trustee of her estate; the trustee had a discretion to grant the lease and in the exercise of the discretion it would be proper to take into account the wish of the deceased to benefit the particular named person. [page 56]

Illusory Trusts [5-12] Even more misleading than the term ‘precatory trust’ is the term ‘illusory trust’.54 Whereas a precatory trust is a relationship which upon

examination has been found to be in fact a trust, ‘illusory trusts’ are relationships which upon examination have been found not to be express trusts at all. There will not be a trust if the settlor has not manifested an intention of transferring the beneficial interest in the property to the apparent beneficiaries. The most important classes of such arrangements are revocable mandates, directions for management, governmental ‘trusts’, and certain commercial transactions.

Revocable Mandates [5-13] Even though a person may dispose of property and use language which at first sight appears to intend to create a trust, nevertheless it may be shown that no trust was in fact intended and that the disposition was made exclusively for the disponor’s personal convenience. In that case, no express trust is created, but only a resulting trust in favour of the disponor.55 The commonest example is where a debtor conveys property to trustees on trust for the payment of his or her debts. In such a case, the question of construction arises whether a trust has in fact been created in favour of the creditors. The question always is: was it intended by the debtor that the creditors should be actual beneficiaries and that the trust should not be revocable, or was the arrangement merely for the debtor’s personal convenience and own benefit — a mandate to the named trustee as agent of the debtor principal which was revocable by the debtor and which would be revoked in any event by the debtor’s death or earlier bankruptcy?56 Where a debtor without consideration and without any notice to the creditors conveys property to trustees in this manner, it is presumed that the debtor has done so with the intention that the trustees thereafter should act not exclusively for the benefit of the creditors as beneficiaries, but that they should be trustees of the property for, and at the same time the agent of, the debtor in the sense which has been described in [2-10]–[2-12] in considering the difference between a trustee and an agent. In such a case, the naming of the creditors in the deed does not show an intention to benefit them, but is merely part of the directions given to the trustee as agent concerning the manner in which, at that time, the debtor sees fit that they should act in the disposition of the property which has been transferred to them. The distinction was expressed by Sir George Turner VC in Smith v Hurst:57 [The authorities] appear to me to result in this, that in cases of deeds vesting property in trustees upon trust for the benefit of particular persons, the deed cannot be revoked, altered or modified

by the party who has created the trust; but that in the cases of deeds purporting to be executed for the benefit of creditors the question whether the trusts can be revoked, altered or modified depends upon the circumstances of each particular case. It is difficult, at first sight, to see the distinction between the two classes of cases; for in each of the classes a trust is purported to be created, and the property is vested in the trustees; but I think the distinction lies in this: In cases of trust for the benefit of particular persons the party creating the trust can have no other object than to benefit the persons in whose favour the trust is created, and the trust being well created the property in equity belongs to the cestui que trust as much as it would belong to them at law if the legal interest had been transferred to them; but in cases of deeds purporting to be executed for the benefit of creditors, and to which no creditor is a party, the motive of the party executing the deed may have been either to benefit his creditors or to promote his own convenience; and the Court there has to examine the circumstances, for the purpose of ascertaining what was the true purpose of the deed; and this examination does not stop with the deed itself, but must be carried to what

[page 57] has subsequently occurred, because the party who has created the trust may, by his own conduct, or by the obligations which he has permitted his trustee to contract, have created an equity against himself.

[5-14] The presumption is that no trust was intended in favour of the creditors.58 However, circumstances either in the deed itself or outside the deed may displace the presumption. Thus a conveyance on trust to make good breaches of trust committed by the disponor in respect of certain trust property was held to be irrevocable in Sharpe v Jackson.59 Another indication of an intention to create a true trust is where there is an ultimate gift-over of residue after satisfaction of debts.60 So also if the trust is not to take effect until after the death of the creator of the trust.61 In these three classes of case, the intention to create a trust may be gathered from the terms of the document in light of the circumstances existing at the time. Thus, applying these principles, it has been held that a life assurance policy was held on trust for certain of the creditors of the assured by reason of an informal arrangement of which the creditors were aware, and subject to a gift-over of the balance.62 [5-15] A fourth case is where the creditors are parties to the deed. It was held in MacKinnon v Stewart63 that the deed is irrevocable in favour of such creditors. That decision may be placed on two grounds. First, it may be that the deed is irrevocable because a true trust is created thereby. A second view is that the deed in such circumstances is irrevocable because the arrangement, although

not strictly a trust in favour of the creditors, is contractually binding upon the debtor. [5-16] The distinction in such a case brings no difference in effect. However, there are further cases where the deed may be revocable until the creditors have had notice of its existence and have actually acquiesced in it or acted under its provisions and complied with its terms. In those situations, even though they have not executed the deed, the disposition in their favour will nevertheless become irrevocable.64 In such a case, it is not possible to apply to the creation of the arrangement the tests of intention which are applicable to the creation of a trust. The intention to create a trust must exist at the time of its alleged creation. In the class of case now being considered, it is assumed that such an intention to create a trust did not exist at the time of the making of the deed. Can it then be said that the deed becomes irrevocable in favour of creditors, who with knowledge of it have acted under its provisions, because a trust has been created? The answer is, it seems, that the deed becomes irrevocable because the debtor is estopped from alleging the absence of an intention to create a trust.

Directions as to Management [5-17] It is not uncommon for a testator or settlor, after disposing of property in favour of certain persons, to direct that a certain other person be employed in some capacity connected with that property, for instance, to manage the property at a salary. In such a case, it is presumed that no trust was intended in favour of the manager. The appointment of agents in respect of trust property, where it is permitted to a trustee to employ such agents, is one of a trustee’s discretionary powers. It is not presumed that the creator of the trust has intended to dictate to the trustee how the power is to be exercised. A difficulty in construing such provisions as binding trusts is that of ascertaining what property in favour of such a person appointed as manager or the like, is bound in his or her favour under the trust.65 [page 58]

[5-18] If, however, the presumption against construing such provisions as constituting trusts is overcome by a direct expression by the settlor of an intention to create a trust in that regard, a binding trust to employ may be created. Thus in Taylor v Lewis,66 a testator by a codicil to his will provided: ‘I hereby direct that my son shall manage my trust estates until the final distribution of the same, and shall receive and collect and bank all moneys, and shall be paid a salary of £2 10s weekly.’ It was held that the plaintiff had no right to a continuation of the salary after the whole estate had been converted into money and invested, and the trustees had no further need of his services. In that case, the limitation on the trustee’s duty to employ was implied from the language used by the testator, but it was not held that there was not a duty to employ until the conversion of the trust estates. However, in Re Larkin,67 the words: ‘I direct [my trustee] to employ my son in the care and management of my estate and to pay him £6 a week for his trouble therein’ were held not to create a trust in favour of the son, although it was further held that if the trustee company did employ him it was bound to pay him the sum mentioned while he was so employed. It is to be noted that the obligation to pay the sum mentioned in certain events was recognised so that, to that extent, an equitable interest was created in the son. [5-19] There is some authority for the proposition that under no circumstances can a trust be created by a direction to employ a named person.68 This has been placed on the ground that such a trust would be inconsistent with a gift of the property, or alternatively on the ground that it would fetter the trustee’s discretion. To express this as a rule of law and not as a presumption of the intention of a settlor is, it is suggested, not in accord with Australian authority and would preclude a form of arrangement which can have all the essential elements of a trust.

Governmental ‘Trusts’ [5-20] Although it is beyond question that the Crown can be a trustee of property, in public law the mere use of the word ‘trust’ in relation to Crown or governmental property usually does not denote a trust enforceable in a court of equity. In Kinloch v Secretary of State for India in Council,69 the House of Lords held that when a Royal Warrant recited that the Crown held certain booty captured in the Indian Mutiny ‘in trust for the use of’ certain claimants whose

claims had previously been upheld by Dr Lushington, to whom the matter had been referred by an Order in Council, it did not declare a trust in the legal sense. Lord Selborne LC said:70 Now the words ‘in trust for’ are quite consistent with, and indeed are the proper manner of expressing, every species of trust — a trust not only as regards those matters which are the proper subjects for an equitable jurisdiction to administer, but as respects higher matters, such as might take place between the Crown and public officers discharging, under the directions of the Crown, duties or functions belonging to the prerogative and to the authority of the Crown. In the lower sense they are matters within the jurisdiction of, and to be administered by, the ordinary Courts of Equity; in the higher sense they are not. What their sense is here, is the question to be determined, looking at the whole instrument and at its nature and effect.

The words in the Royal Warrant were held to refer to a trust in ‘the higher sense’. This decision was applied by Sir Robert Megarry VC in Tito v Waddell (No 2), where the following was said of the word ‘trust’:71 The word is in common use in English language, and whatever may be the position in this court, it must be recognised that the word is often used in a sense different from that of an equitable

[page 59] obligation enforceable as such by the courts. Many a man may be in a position of trust without being a trustee in the equitable sense; and terms such as ‘Brains Trust’, ‘Anti-trust’, and ‘Trust Territories’, though commonly used, are not understood as relating to a trust as enforced in a court of equity.

The correctness of Kinloch’s case was reaffirmed by the House of Lords in Town Investments Ltd v Department of the Environment.72 [5-21] In Australia, the High Court has applied those authorities in Registrar, Accident Compensation Tribunal v Federal Commissioner of Taxation,73 emphasising that Kinloch’s case states a rule of construction that clear words are required before a ‘true trust’, as opposed to a trust ‘in the higher sense’, is found — even if the language of trust be used — and that the subject matter and context were important, in some cases ‘more revealing of intention than the actual language used’. There, it was held that the legislation providing for the administration of workers’ compensation payments did constitute the Registrar a trustee in the ordinary sense, there being no governmental interest or function involved in the obligations to invest and hold the money until distribution, and notwithstanding a provision which freed him from ‘any law relating to the administration of trust funds by trustees’. In contrast, there was no trust

enforceable by the court in Aboriginal Development Commission v Treka Aboriginal Arts and Crafts Ltd,74 which concerned the remission of funds from one federal body to another, both held to be mere instruments of government policy, pursuant to a resolution that the funds were ‘for the funding towards operational costs of Treka Aboriginal Arts and Crafts Ltd’. The High Court has reviewed, in Bathurst City Council v PWC Properties Pty Ltd,75 the long history of ‘public trusts’ created by Crown grant.76 Those obligations may be enforceable at the suit of the Attorney-General as a matter of public law,77 but do not give rise to a trust enforceable in equity.

Commercial Transactions [5-22] In many commercial transactions, there can be agreements that property be dealt with in a certain way which falls short of creating a trust with respect to that property. Thus, in Re Wall,78 Lockhart J held that where two creditors agreed with their debtor that the latter should sell certain land owned by him and pay them an agreed sum from the proceeds, there was no intention to create a trust of the proceeds of sale. Likewise, where moneys are advanced for a specific purpose, questions can arise whether a trust arises: see the analysis of Barclays Bank Ltd v Quistclose Investments Ltd79 and Re Australian Elizabethan Theatre Trust80 in Chapter 2.

Communication of Intention [5-23] A trust may be created without communication to the beneficiary.81 Where a trust is created by the appointment of trustees and the conveyance or transfer of property to them, it is almost certain that there will be found some communication of the intention to create a trust. [page 60] However, where a person is alleged to have created a trust by declaration of trust over property, but has not communicated the declaration to any other person, a strong presumption arises that despite the private use of the language of trust, no

firm and irrevocable intention had been formed to create a binding trust by the declaration.82

Certainty of Subject Matter [5-24] The subject matter of the trust must be certain — that is, it must be clear what the property is upon which the trust is to operate.83 There can be no trust without property; that is fundamental. Consequently, if there is no property upon which the trust can take effect, or if it is so described by the settlor that it cannot be identified, there can be no trust. For example, if a testator leaves $1000 to A and requests that if anything of it remains at A’s death, it be left to the Sydney Hospital, ‘what remains of it’ is too vague a description to enable the court to enforce any trust in respect of it.84 Likewise, where the subject matter is an undifferentiated portion of a parcel of shares,85 or of a deposit in a bank account.86 However, in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq),87 the appellant, which sold steel, had the benefit of a Romalpa clause that obliged, inter alia, the respondent purchaser of steel to hold so much of the proceeds of its own manufacturing processes as related to the steel, on trust for the seller. There was no uncertainty in the subject matter of a trust being part of the payments made to the respondent by third parties, the trust arising as those payments were received by the respondent.88 Further, the fact that extensive analysis was required to determine the true construction of the clause did not result in uncertainty.89 In a strongly criticised decision,90 the English Court of Appeal held it was effective for the owner of a parcel of 950 shares in a private company to declare a trust of 5% of those shares without otherwise specifying those of the parcel of shares to which the trust attached.91 Following a careful and comprehensive review of Australian, English and North American authorities, Campbell J decided to follow that decision in a closely comparable case.92 Directions by a testator to a legatee ‘to consider my near relations’93 ‘as I should consider them myself or to reward my old tenants and servants’94 according to their deserts have been held to be void for uncertainty as to the property to be bound by the trust. A direction or request that a donee ‘make ample provisions’ for a third party created no trust in favour of the latter,95 but a direction to receive a ‘reasonable income’ was sufficiently certain.96

[page 61] Even property which is incapable of assignment, such as a contract involving personal skill or confidence, may be held on trust.97

Certainty as to the Object of the Trust [5-25] The objects of a private trust must be identified with sufficient certainty, failing which the trust will be invalid.98 The requisite level of certainty depends on whether the trustees are obliged to distribute to a class of beneficiaries (a fixed trust), or have a discretion to select beneficiaries within a class to whom distributions are to be made (a discretionary trust). [5-26] In the case of a fixed trust, the objects must be defined with sufficient precision to satisfy ‘list certainty’. That will occur if it is possible for the trustees, or the court in their stead, to identify all of the beneficiaries. In Kinsela v Caldwell,99 the High Court said ‘it is sufficient that the provisions of the trust ensure that upon that date the beneficiaries can be ascertained with certainty’.100 Stronger statements, to the effect that complete identification is not merely sufficient but necessary, may be found in the authorities, reasoning that it is a breach of trust in such a case merely to divide the fund up among those present.101 Provided no perpetuity is involved, it is not necessary that the class be known prior to the date of distribution; it is sufficient that on that date they can be ascertained with certainty.102 Indeed, what is required is that the court be satisfied that ‘a complete list of the beneficiaries could probably be compiled’.103 However, in West v Weston, confronted with evidence that it was more probable than not that there were unidentified members of a large class of beneficiaries of a fixed trust in favour of ‘the issue living at my death of my four grandparents’, Young J proposed and applied a modification of the rule, namely, that ‘the rule will be satisfied if, within a reasonable time after the gift comes into effect, the court can be satisfied on the balance of probabilities that the substantial majority of the beneficiaries have been ascertained and that no reasonable inquiries could be made which would improve the situation’.104 That modification is inconsistent with the tenor of what the High Court said in

Kinsela v Caldwell, extracted above, which is to be taken as affirming the conventional test, rather than admitting the possibility that some lesser test might also suffice.105 [5-27] Mere difficulty in ascertaining the identity of the members of the class does not render the trust invalid; courts are accustomed to resolving such evidentiary difficulties.106 However, the position is different if there is conceptual uncertainty. Thus a trust for distribution in equal [page 62] shares to ‘my old friends’ would be uncertain, in the absence of it being admissibly demonstrated that those words had a precisely defined meaning.107 [5-28] In the case of a discretionary trust, the objects must be defined with sufficient certainty to satisfy ‘criterion certainty’, and, perhaps, there may in addition be a ‘loose class’ or ‘administrative workability’ requirement.108 In McPhail v Doulton,109 a majority of the House of Lords discarded the former rule (list certainty) and held that ‘the test for the validity of trust powers ought to be similar to that accepted by this House in Re Gulbenkian’s Settlements for [nontrust] powers, namely, that the trust is valid if it can be said with certainty that any given individual is or is not a member of the class’. Thus it is not necessary to identify every member of the class, and mere evidentiary difficulties in respect of some members do not prevent validity, although conceptual certainty (which can be elusive) is required.110 McPhail v Doulton provoked intense controversy at the time,111 and left open the question of its applicability in Australia. It has now come to be regularly applied in Australia and New Zealand,112 and should be taken to represent the law. [5-29] In McPhail v Doulton, Lord Wilberforce also suggested that trust powers might have to satisfy an additional requirement: that they form a ‘loose class’.113 His Lordship envisaged a case where ‘the meaning of the words used is clear’ (that is, criterion certainty exists) ‘but the definition of beneficiaries is so hopelessly wide as not to form “anything like a class” so that the trust is administratively unworkable or … one that cannot be executed’, suggesting that

a trust power in favour of ‘all the residents of Greater London’ might well fail on this ground. Although his Lordship did not advance any reasons to justify this view, there is much to justify it both on authority and in principle. As far as authority goes, trust powers in favour of anyone, or anyone but the trustees, have always been held bad.114 As far as principle is concerned, unless there is some requirement of class certainty it is not easy to see how any person at all would have sufficient locus standi to enforce the trust; if the chosen class were impossibly wide, it would seem absurd that merely anyone could institute equity proceedings seeking to compel the trustee to exercise the trust power. In Blausten v IRC,115 the English Court of Appeal, dealing with a mere power, not a trust power, held that, in any event, class certainty did exist; and, of the judges who heard that case, Buckley LJ was of the view that Lord Wilberforce’s requirement of ‘class certainty’ applied equally to trust powers and to mere powers. This line of reasoning has been cogently attacked116 as importing into the requirements for the validity of mere powers a test which properly belongs only to trust powers. Then, in Re Manisty’s Settlement,117 Templeman J (correctly, it is submitted) declined to follow the application by Buckley LJ of the requirement of class certainty to mere powers. That case concerned a settlement enabling a trustee to appoint to a class of beneficiaries. It also provided for the exclusion of certain persons from that class and that the trustees were empowered at their absolute discretion to declare that any person, corporation or charity (other than a trustee or a member of the excluded class) be [page 63] included in the class of beneficiaries. His Lordship pointed out that there was, in the case of mere powers (and, manifestly, it was a case of a mere power not a trust power) no authority compelling the importation of the requirement of class certainty; and that on principle such a requirement ought not be imported. In the case of mere powers, no question can ever arise of a member of the class of beneficiaries enforcing any trust, and the duty of the donee of the power to consider and investigate does not require or make necessary that the objects of the power should constitute any sort of class, loose or otherwise. Templeman J’s decision was followed by Sir Robert Megarry VC in Re Hay’s Settlement Trusts.118

But all this leaves undecided the major problem, namely, what did Lord Wilberforce mean by ‘a loose class’? He surely did not mean that all ‘beneficiaries’ of a trust power have to have a common characteristic; partly because that would mean one could never have a hybrid trust power, as opposed to a special trust power, and partly because such a trust would reimport into trust powers the very sort of test which the majority of the House of Lords in McPhail v Doulton119 found unacceptable. It is respectfully suggested that all his Lordship should be taken to have meant is that ‘the range’ (of beneficiaries) ‘constitutes a readily identifiable, numerically and geographically discrete grouping’.120 However, one commentator121 after a review of the authorities and academic writing concludes that the juridical basis for the ‘workability criterion’ remains nebulous but, surprisingly, says that this ‘need not trouble us unduly’ because the concept ‘should not be hedged around with theoretical strictures’ and that because many settlements ‘fulfil important socio-welfare functions’ the court should be left ‘to devote its scarce resources thereto without being sidetracked by the whimsical and unworkable’. [5-30] If a trust fails for want of certainty of object, the property is held on resulting trust for the settlor (or, if dead, the residuary beneficiaries under the settlor’s will). If, however, a trust fails both for uncertainty of intention and for uncertainty of object, then the person to whom the property has been given will retain it unfettered by any trust.122 Thus, where a testator gave property to a donee and expressed a desire, in language leaving it uncertain whether a trust was intended, that the donee would distribute it as he thought would be most agreeable to the testator’s wishes, it was held that the donee was entitled to the property absolutely.123 _____________________________ 1.

(1953) 90 CLR 86 at 97; see also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588; 171 ALR 568 at [29]; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; 300 ALR 430 at [116]; Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; 317 ALR 225 at [7], [109], [204].

2.

Re Armstrong [1960] VR 202; J W Broomhead (Vic) Pty Ltd (in liq) v J W Broomhead Pty Ltd [1985] VR 891; Registrar, Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165–6; 117 ALR 27 at 39. Inland Revenue Commissioners v Raphael [1935] AC 96 at 142–3; Swain v The Law Society [1983] 1 AC 598 at 621–2; [1982] 2 All ER 827 at 840; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 121, 148–9, 156; 80 ALR 574 at 583, 603–4, 609; Walker v Corboy (1990) 19 NSWLR 382 at 395–6; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363

3.

at 370–1; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 503; 102 ALR 681 at 693; Di Pietro v Official Trustee (1995) 59 FCR 470 at 484; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588; 171 ALR 568 at [34]; Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [98], [102]–[114]. Generally, the only admissible subsequent words or conduct of the settlor will be those which are admissions against interest: Shephard v Cartwright [1955] AC 431 at 445; [1954] 3 All ER 649 at 652; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365; Calverley v Green (1984) 155 CLR 242 at 262; 56 ALR 483 at 496. 4. 5.

6.

7. 8. 9.

Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 at 189; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 121; 80 ALR 574 at 583. Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618–19; 78 ALR 1 at 9; and see Starke (1948) 22 ALJ 67 at 69; Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43 at 67; [1956] ALR 311 at 322; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 120–1, 140, 146–9, 156–7, 166; 80 ALR 574 at 582–3, 597, 602–5, 609–10, 616; and [2-23] above. For England, see the Law Commission, Privity of Contract: Contracts for the Benefit of Third Parties (1996), [2.8]–[2.9]. Re Kayford Ltd (in liq) [1975] 1 All ER 604 at 607; [1975] 1 WLR 279 at 281; Tito v Waddell (No 2) [1977] Ch 106 at 111; [1977] 3 All ER 129 at 132; Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 at 422. [1977] 1 WLR 195; [1977] 1 WLR 527. [1944] Ch 83 at 104. See Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618; 78 ALR 1 at 9; Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [49]; Ashton v Pratt (2015) 318 ALR 260 at [186].

10. Lloyds & Scottish Finance Ltd v Cyril Lord Carpets Sales Ltd [1992] BCLC 609 at 613; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588; 171 ALR 568 at [34]–[35]. 11. Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; 317 ALR 225 at [109]. 12. (1914) 14 SR (NSW) 416. 13. (1914) 14 SR (NSW) 416 at 418. 14. See [5-05]. 15. [1979] Ch 528; [1979] 2 All ER 172. For another case where the requisite intention was lacking, see Re Alitalia Linee Aeree Italiane SpA [2011] 1 WLR 2049 at [32]–[36]. 16. [1924] NZLR 882. See also Longley v Longley (1871) LR 13 Eq 133; Re Stanford [1924] 1 Ch 73; [1923] All ER Rep 589; Re Rees [1950] Ch 204; [1949] 2 All ER 1003. Even the naming of a person as a trustee may, if the context so requires, be disregarded: Morrin v Morrin (1886) 19 LR Ir 37. 17. (1920) 28 CLR 178; 26 ALR 210. 18. (2011) 243 CLR 253; 279 ALR 212. 19. Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [53], [113]; see at [13]–[18], [44]–[66], [91]– [118]. See also Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 at [71]. 20. 71 NE 748 (1904). 21. As to which, see Scott on Trusts, §8.3.2. 22. 71 NE 748 at 752 (1904). 23. Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; 211 ALR 101 at [46]. 24. WT Ramsay v Inland Revenue Commissioners [1982] AC 300 at 323; [1981] 1 All ER 865 at 871. See also Coshott v Prentice (2014) 221 FCR 450; 311 ALR 428 at [63]–[64]. 25. See M Conaglen, ‘Sham Trusts’ (2008) 67 CLJ 176.

26. Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [59]. 27. Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [66]. 28. Official Assignee v Wilson [2008] 3 NZLR 45 at [57]; see also AG Securities v Vaughan [1990] 1 AC 417. There is, however, less scope in the law of trusts for what has been called the notion of an ‘emerging sham’, which arises when a validly created legal relationship is by subsequent agreement permitted to allow ‘its shadow to mask their new arrangement’: Marac Finance Ltd v Virtue [1981] 1 NZLR 586 at 588. That is because it will be necessary to establish such an intention on the part of all beneficiaries or discretionary objects of the trust; otherwise conduct by the trustee and some of the beneficiaries will merely be in breach of trust: see A v A [2007] 2 FLR 467 at [42]–[44]; Official Assignee v Wilson [2008] 3 NZLR 45 at [57]; Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [80]–[82]; De Santis v Aravanis (2014) 227 FCR 404; 322 ALR 475 at [57]–[65]; J Palmer, ‘Dealing with the Emerging Popularity of Sham Trusts’ [2007] NZ Law Rev 81 at 106. 29. Miles v Bull [1969] 1 QB 258 at 264; Chase Manhattan Equities Ltd v Goodman [1991] BCLC 897 at 921; Barendse v Comptroller-General of Customs (1996) 136 FLR 243 at 257–8; Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [68]. 30. Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation (2008) 238 CLR 516; 246 ALR 406 at [35]. 31. Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 461; 82 ALR 530 at 544 per Lockhart J. See also Official Assignee v Wilson [2008] 3 NZLR 45 at [52]; Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [62]–[63]; Heazlewood v Joie de Vivre Canterbury Ltd [2015] NZCA 213 at [44]. 32. Cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436–7; 41 ALJR 348 at 350–1. 33. Re Williams [1897] 2 Ch 12 at 27 per Rigby LJ. 34. [1897] 2 Ch 12. 35. Re Hamilton [1895] 2 Ch 370 at 373 per Lindley LJ. 36. (1932) 33 SR (NSW) 95. See also West v Federal Commissioner of Taxation (1949) 79 CLR 319 (‘it is my will and desire’). 37. [1910] 1 Ch 219. 38. Underhill, Law of Trusts and Trustees, 12th ed, p 38. 39. (1874) LR 17 Eq 320. 40. (1857) 24 Beav 185; 53 ER 327. 41. Cary v Cary (1804) 2 Sch & Lef 173. See also Eaton v Watts (1867) LR 4 Eq 151. 42. (1882) 7 App Cas 321. 43. Cf Lambe v Eames (1871) LR 6 Ch App 597. 44. (1921) 30 CLR 1. 45. See also Strickland v Strickland (1907) 7 SR (NSW) 657; Re Atkinson (1911) 103 LT 860; Re Hill [1923] 2 Ch 259; Re Dulson (1929) 140 LT 470; Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] ALR 362; Re Johnson [1939] 2 All ER 458; McPhee v Saunders (1940) 57 WN (NSW) 101; Re Favell (decd) (1971) 2 SASR 246. 46. Comiskey v Bowring-Hanbury [1905] AC 84 at 89. 47. Re Williams [1897] 2 Ch 12 at 18–19. 48. Hill v Hill [1897] 1 QB 483. See also Re Steele’s Will Trusts [1948] Ch 603; [1948] 2 All ER 193. Cf Smith v Smith (1903) 3 SR (NSW) 571.

49. Re Burley [1910] 1 Ch 215. 50. Re Drigden [1938] Ch 205. But see Re Bond (1876) 4 Ch D 238. 51. Re Hill [1923] 2 Ch 259. 52. [1967] 3 All ER 337; [1967] 1 WLR 1262. 53. [1955] VLR 281. 54. See, for example, Kars v Kars (1996) 187 CLR 354 at 371; 141 ALR 37 at 48–9. 55. Beattie v Weine (1908) 9 SR (NSW) 36, where it was held that a voluntary transfer of property to a trustee, to be applied for the benefit of the transferor in the absolute discretion of the trustee, could be revoked by the transferor. 56. See Comptroller of Stamps v Howard-Smith (1936) 54 CLR 614; [1936] ALR 198. 57. (1852) 10 Hare 30 at 47; 68 ER 826 at 833. 58. Smith v Hurst (1852) 10 Hare 30; 68 ER 826; Johns v James (1878) 8 Ch D 744; Ellis & Co v Cross [1915] 2 KB 654. 59. [1899] AC 419; [1895–99] All ER Rep 755. 60. Godfrey v Poole (1888) 13 App Cas 497. 61. Synnot v Simpson (1854) 5 HL Cas 121 at 139; 10 ER 844 at 851; Re Fitzgerald’s Settlement (1887) 37 Ch D 18. 62. Rostirolla v Fiakos (No 2) [2002] FCA 1562. 63. (1850) 1 Sim NS 76; 61 ER 30. See also Wilding v Richards (1845) 1 Coll 655; 63 ER 584. 64. Biron v Mount (1857) 24 Beav 642; 53 ER 506. 65. Beckford v Beckford (1783) 4 Bro Parl Cas 38; 2 ER 26; Shaw v Lawless (1838) 5 Cl & F 129; 7 ER 353; Finden v Stephens (1846) 2 Ph 142; 41 ER 896. 66. (1891) 12 LR (NSW) Eq 258. 67. (1913) 13 SR (NSW) 691. 68. Beckford v Beckford (1783) 4 Bro Parl Cas 38; 2 ER 26; Shaw v Lawless (1838) 5 Cl & F 129; 7 ER 353; Finden v Stephens (1846) 2 Ph 142; 41 ER 896; and see Public Curator of Queensland v Union Trustee Company of Australia Ltd (1922) 31 CLR 66 at 74–5; 28 ALR 438 at 441. 69. (1882) 7 App Cas 619. 70. (1882) 7 App Cas 619 at 625–6. 71. [1977] Ch 106 at 211; [1977] 3 All ER 129 at 216. 72. [1978] AC 359; [1977] 1 All ER 813. See also New South Wales v Commonwealth (No 3) (1932) 46 CLR 246 at 260–1; Equitable Life Assurance Society v Hyman [2002] 1 AC 408 at 416; P Finn, ‘Public Trusts, Public Fiduciaries’ (2010) 38 Fed LR 335. 73. (1993) 178 CLR 145 at 162–3; 117 ALR 27 at 31–7. 74. [1984] 3 NSWLR 502 at 513. 75. (1998) 195 CLR 566; 157 ALR 414 at [44]–[65]. 76. See also J Barratt, ‘Public Trusts’ (2006) 69 MLR 514. 77. Attorney-General (NSW) v Parramatta City Council (1949) 49 SR (NSW) 283 at 290–2; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [65]–[67]; Attorney-General v Blake [1998] Ch 439 at 459–60; [1998] 1 All ER 833 at 847. 78. (1979) 25 ALR 615. 79. [1970] AC 567; [1968] 3 All ER 651.

80. (1991) 30 FCR 491; 102 ALR 681. 81. Middleton v Pollock (1876) 2 Ch D 104 at 106; Rose v Rose (1986) 7 NSWLR 679 at 686. 82. Re Cozens [1913] 2 Ch 478. 83. Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246. 84. Sprange v Barnard (1789) 2 Bro CC 585; 29 ER 320; Henderson v Cross (1861) 29 Beav 216; 54 ER 610; Parnall v Parnall (1878) 9 Ch D 96; Rodger v Rodger (1893) 12 NZLR 392; Re Jacob (1897) 16 NZLR 52; Re Dunstan [1918] 2 Ch 304; [1918–19] All ER Rep 694; Winter v Grady (1921) 21 SR (NSW) 686; Re Ferguson [1957] VR 635. 85. Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271. 86. Re Appleby’s Estate (1930) 25 Tas LR 126. 87. (2000) 202 CLR 588; 171 ALR 568. 88. See Chapter 6 ‘Express Trusts — Complete Constitution or Consideration’. 89. See (2000) 202 CLR 588; 171 ALR 568 at [13]–[25], especially at [15], citing Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436–7; 41 ALJR 348 at 350–1. 90. D Hayton, ‘Uncertainty and Subject-Matter of Trusts’ (1994) 110 LQR 335; and see Re Harvard Securities Ltd [1997] 2 BCLC 369 at 381–5, ultimately holding that English and Australian law diverged in this respect. 91. Hunter v Moss [1994] 3 All ER 215; [1994] 1 WLR 452. 92. White v Shortall (2006) 68 NSWLR 650, appeal dismissed [2007] NSWCA 372, a result which is approved by the Full Federal Court in Commissioner of Taxation v ElecNet (Aust) Pty Ltd [2015] FCAFC 178 at [81]–[84] and Lewin on Trusts, [3-007]. 93. Sale v Moore (1827) 1 Sim 534; 57 ER 678. 94. Knight v Knight (1840) 3 Beav 148 at 177–8; 49 ER 58 at 69–70. 95. Winch v Brutton (1844) 14 Sim 379; 60 ER 404; Re Bond (1876) 4 Ch D 238. See, however, Broad v Bevan (1823) 1 Russ 517n; 38 ER 198; Re Moore (1886) 54 LT 231. 96. Re Golay’s Will Trusts [1965] 2 All ER 660; [1965] 1 WLR 969. 97. Don King Inc v Warren [2000] Ch 291 at 320–1; [1998] 2 All ER 608 at 633–4; McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499 at [14]; Barbados Trust Co Ltd v Bank of Zambia [2007] 1 Lloyd’s Rep 495; and see A Trukhtanov (2007) 70 MLR 848; P Turner [2008] CLJ 23. 98. See C Emery (1982) 98 LQR 551; P Creighton (2000) 22 SydLR 93. 99. (1975) 132 CLR 458 at 461; 5 ALR 337 at 339. 100. Cf P Matthews (1984) 48 Conv 22 but see J Martin (1984) 48 Conv 304; D Hayton (1984) 48 Conv 307. 101. Re Gulbenkian’s Settlement Trusts [1970] AC 508 at 524; [1968] 3 All ER 785 at 792–3; McPhail v Doulton [1971] AC 424 at 453–4; [1970] 2 All ER 228 at 244; Re Beckbessinger [1993] 2 NZLR 362 at 369–70; Commissioner of State Revenue v Viewbank Properties Pty Ltd (2004) 55 ATR 501 at [20]–[21]. 102. Kinsela v Caldwell (1975) 132 CLR 458 at 461; 5 ALR 337 at 339; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; 300 ALR 430 at [117]. 103. Re Saxone Shoe Co Ltd’s Trust Deed [1962] 2 All ER 904 at 913; [1962] 1 WLR 943 at 955, not following Re Eden [1957] 2 All ER 430; [1957] 1 WLR 788. 104. (1998) 44 NSWLR 657 at 664. 105. See P Creighton (2000) 22 SydLR 93 at 97–8; validity might still have been achieved on orthodox

principles had the evidence permitted a finding as to the maximum number of beneficiaries, thereby permitting a partial distribution and paying the balance into court: see Re Gulbenkian’s Settlement Trusts [1970] AC 508 at 524; [1968] 3 All ER 785 at 793. 106. See, for example, Re Coxen [1948] Ch 747 at 759–60; [1948] 2 All ER 492 at 501–2; Re Baden (No 2) [1973] Ch 9 at 29; [1972] 2 All ER 1304 at 1309. 107. Re Gulbenkian’s Settlement Trusts [1970] AC 508 at 524; [1968] 3 All ER 785 at 792; McPhail v Doulton [1971] AC 424 at 457; [1970] 2 All ER 228 at 247. 108. See [5-29]. 109. [1971] AC 424; [1970] 2 All ER 228. 110. See Re Baden (No 2) [1973] Ch 9; [1972] 2 All ER 1304. 111. Thus, for example, Crane (1970) 34 Conv 287 described it as ‘revolutionary’; see also the 6th edition of this work at [252]–[257]. 112. Horan v James [1982] 2 NSWLR 376; Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 277; Re Beckbessinger [1993] 2 NZLR 362 at 369; McCracken v Attorney-General [1995] 1 VR 67 at 71; Re Blyth [1997] 2 Qd R 567. 113. [1971] AC 424 at 457; [1970] 2 All ER 228 at 247. 114. See Neo v Neo (1875) LR 6 CP 381; In the Will of Bourk [1907] VLR 171; Re Dwyer [1916] VLR 114; Re Chapman [1922] 1 Ch 287; Re Carville [1937] 4 All ER 464; Re Hollole [1945] VLR 295; Re White [1963] NZLR 788; Re Pugh’s Will Trusts [1967] 3 All ER 337; [1967] 1 WLR 1262. 115. [1972] Ch 256; [1972] 1 All ER 41. 116. By (among others) I Hardingham in (1972) 46 ALJ 293. 117. [1974] Ch 72; [1973] 2 All ER 1203. 118. [1981] 3 All ER 786; [1982] 1 WLR 202. 119. [1970] AC 508; [1968] 3 All ER 785. 120. I Hardingham (1975) 49 ALJ 7. The requirement was applied in England in R v District Auditor, Ex parte West Yorkshire Metropolitan County Council [1986] RVR 24, noted C Harpum [1986] CLJ 391: a trust for the benefit of ‘any or all or some of the inhabitants of the County of West Yorkshire’ was held invalid for administrative unworkability. See also Re Harding [2008] Ch 235; [2007] 1 All ER 747 at [15]. 121. I Hardcastle, ‘Administrative Unworkability — A Reassessment of an Abiding Problem’ (1990) 54 Conv 24 at 33. 122. Sale v Moore (1827) 1 Sim 534; 57 ER 678. 123. Stead v Mellor (1877) 5 Ch D 225. But see also Thomson v Shakespear (1860) 1 De GF & J 399; 45 ER 413; In the Will of Bourk [1907] VLR 171; Re Dwyer [1916] VLR 114.

[page 64]

CHAPTER 6 Express Trusts — Complete Constitution or Consideration Introduction Specifically Enforceable Agreements to Constitute a Trust Re Pryce

[6-01] [6-03] [6-11]

Constitution of Voluntary Trusts Transfer to a Trustee Declaration of Trust Direction to a Third Party

[6-15] [6-16] [6-22] [6-24]

Consideration

[6-25]

Introduction [6-01] Express trusts are created in two principal ways: by transfer or by declaration. The owner of property may transfer (either by assignment inter vivos, or by will) the property to a third party to be held on the terms of the trust. Alternatively, the owner of property may declare himself or herself a trustee of property for the benefit of a third party. Other methods derive from these. A beneficiary who is sui juris and entitled to the property may cause a new trust to be created directly by a direction to a trustee that the property from then on be held on trust for another, or by authorising the trustee to take steps to hold the property on trust for another.1 Both methods bring about the result that the whole of the beneficiary’s

equitable interest becomes vested in another. The donee of a suitably worded power may also exercise that power to create a new trust.2 As Nettle JA observed, this reflects the fact that the donee, although not the owner of the property, has sufficient dispositive power over the property to subject it to new trusts.3 The Victorian Court of Appeal held that the exercise of a power of appointment was not a distinct mode of creating a trust.4 In T Choithram SA v Pagarini,5 the Privy Council considered an intermediate case. The donor established a charitable foundation of which he was one of seven trustees. He then stated that [page 65] he gave all his wealth to the foundation, but failed to take steps before his death to transfer shares and deposits held by him to the trustees. Lord BrowneWilkinson said that the donor’s words must be construed as a gift to the trustees on trust, and it was no answer to point to the failure to transfer the property to all of the trustees. The donor’s declaration was effective to bind his own conscience, and therefore to preclude him or his estate from resiling from the gift. The distinction between transfer and declaration is important because those modes reflect quite different intentions on the part of the owner of the property in each case, and because of the rule in Milroy v Lord that an ineffective voluntary transfer will not be treated as a declaration of trust.6 Trusts created in any of these ways may be voluntary or for consideration. This chapter deals first with completely constituted trusts and then with incompletely constituted trusts, which, if there is consideration, operate as an agreement to create a trust. [6-02] If a settlor intends to create a voluntary trust, the trust must be completely constituted. It is now well settled that a completely constituted trust will be enforced in equity at the suit of the beneficiaries, even though they may be volunteers.7 The trust is irrevocable, unless the creator of the trust has reserved a power of revocation. The maxim that equity will not aid a volunteer has no application to volunteers who are beneficiaries under a completely constituted trust. Thus in Paul v Paul, there was a marriage settlement with an

ultimate contingent remainder in favour of the next-of-kin of the wife. There being no children of the marriage, and the wife being past the age of childbearing, application was made to the court for the payment of the trust fund to her and her husband on the ground that the next-of-kin were mere volunteers and outside the marriage consideration. The application was refused; ‘… the next-of-kin have an interest as cestui que trust. It is immaterial that they are volunteers. The trust cannot be broken on that account’.8 The maxim that equity will not assist a volunteer only applies to cases where the trust is not completely constituted. The distinction between the effect in equity of a completely constituted trust and an incompletely constituted trust was expressed by Lord Eldon in Ellison v Ellison as follows:9 I take the distinction to be, that if you want the assistance of the Court to constitute you cestui que trust, and the instrument is voluntary, you shall not have that assistance for the purpose of constituting you cestui que trust; as upon a covenant to transfer stock, etc, if it rests in covenant, and is purely voluntary, this Court will not execute that voluntary covenant: but if the party has completely transferred stock, etc, though it is voluntary, yet the legal conveyance being effectually made, the equitable interest will be enforced by this Court.

Cotton LJ in Paul v Paul adverted to the distinction in similar words:10 ‘I assume that the trust would not have been enforced if it were still executory.’

Specifically Enforceable Agreements to Constitute a Trust [6-03] An incompletely constituted trust can only amount to an agreement to constitute a trust. In order to convert an incompletely constituted trust into a completely constituted trust against an unwilling promisor one would need the aid of the equitable remedy of specific performance of such an agreement. But specific performance will not be ordered in the absence of valuable consideration. It follows that where A covenants with B to convey Blackacre [page 66] to B, and B is a volunteer, B can never invoke the aid of a court of equity to compel specific performance of that promise, either in the primary sense of that term, that is, by an order directing A to execute a conveyance of Blackacre, or

in any secondary sense of that term, for example, by an injunction restraining A from conveying Blackacre to some other person.11 In the eye of equity, B is a volunteer and the presence of a seal cannot compensate for the lack of consideration. For this purpose, it matters not whether A’s covenant is to convey Blackacre to B beneficially or to B as a trustee for some other person. [6-04] Of course, where A promises B, a volunteer, to pay money to B for the benefit of C, if equity will not grant specific performance in any way to B as a volunteer, C will not have any higher rights than B.12 But it is to be remembered that the maxim is ‘equity will not aid a volunteer’ not ‘equity will frustrate a volunteer’. Equity has never attempted to prevent the enforcement of such rights as a volunteer may possess independently of equity. Thus in Davenport v Bishopp,13 when he was dealing with a case of an unperformed covenant in a wife’s marriage settlement to settle after-acquired property on her niece, Sir James Knight-Bruce VC said: ‘As far as I am aware, [there is no] equity to restrain the surviving trustee of the settlement … from proceeding at law against the … heiress [of the covenanting wife] for the benefit of [the niece], upon the covenant as long as the covenant remains not fully performed.’ Similarly, in Cannon v Hartley,14 it was held that the defendant father (corresponding to A in the example above) who had covenanted by a deed to which his daughter (corresponding to B in the example above) was a party to settle after-acquired moneys on certain trusts for her was not entitled to restrain her from bringing an action against him at law for damages for breach of the covenant, in which action, of course, the absence of consideration would be irrelevant. Romer J said:15 In the present case the plaintiff, although a volunteer, is not only a party to the deed of separation but is also a direct covenantee under the very covenant upon which she is suing. She does not require the assistance of the court to enforce the covenant for she has a legal right herself to enforce it. She is not asking for equitable relief but for damages at common law for breach of covenant … It was suggested to me in argument that in such a case as the present, where the covenant is to bring in after-acquired property, an action for damages for breach of that covenant is in effect the same as a suit for specific performance of a covenant to settle. I myself think that the short answer to that is that the two things are not the same at all. The plaintiff here is invoking no equitable relief; she is merely asking for monetary compensation for a breach of covenant.

[6-05] The application of these principles has caused considerable confusion in decided cases and is a topic on which there is some diversity of academic opinion. It is submitted that the maxim has a narrower application than is often

thought, and those who have applied the maxim broadly have neglected to appreciate that, in the situation where A promises B that A will pay money or transfer property to B on trust for C, then, so long as the money is unpaid and the property untransferred, while it is true that as between A and B there is no completely constituted trust of the actual money or property concerned, as between B and C there may well be a completely constituted trust of B’s rights in respect of A’s promise. Such a trust as between B and C must exist whenever A’s promise is one for breach of which A would be liable to B. Thus, in the above example, A will clearly be liable in a court of common law in an action by B if the promise is either made for valuable consideration or given under seal. In such cases, it is submitted, B is trustee and C cestui que trust of A’s obligations to B, which chose in action is the trust property. If this be so, and it hardly admits of doubt, a court of equity will assist C to obtain the due administration of the trust of that chose in action, which is necessarily completely constituted, and in that regard will if necessary compel the trustee of the chose, B, [page 67] to sue A at law on A’s promise, even though such a procedure from a practical point of view may amount to giving to a volunteer limited and indirect aid to enforce what is, as between A and B, an incompletely constituted trust. [6-06] Thus, if the facts are that A promises B for valuable consideration (whether under seal or not) to pay money to C, or to furnish some benefit for C16 (see Chapter 2), in many cases B is treated as ‘a trustee’ for C. Thus in Robertson v Wait,17 the plaintiffs were charterers of a vessel and the defendants its owners, and by a clause in the charterparty the defendants promised to consign the vessel to a third party at Calcutta on terms which were financially advantageous to the third party. The Court of Exchequer Chamber considered that the plaintiffs were trustees for the third party. Likewise, in cases like Lloyd’s v Harper,18 where the facts were similar except that A’s promise was to pay money to B as trustee for C rather than to pay to C directly, B was treated as a trustee. If one asks, of what property is B trustee, one can only answer that B must be the trustee of the chose in action which is the right to sue A at law for damages for breach of contract. Such cases are consistent only with the

interpretation that there is a completely constituted trust of this chose in action, B being the trustee and C the cestui que trust. One then has the following situation: B can sue A at law for damages for breach of contract, and in an action at law the damages will not be merely nominal, but will include all damages suffered by C through A’s non-performance of A’s promise;19 and any damages recovered will be held on trust for C.20 At least in some circumstances, B can compel A specifically to perform A’s promise.21 Although C, as a third party to the contract, cannot sue either A or B at law, and although in equity there is no basis for his directly suing A, C can obtain the assistance of a court of equity to compel B to sue A at law.22 That C is a volunteer is completely irrelevant, the trust of the right to sue being completely constituted. [6-07] If A promises B for valuable consideration (whether under seal or not) to transfer Blackacre either to B on terms that it be held on trust by B for C or directly to C in such circumstances that equity will imply a trust, the same analysis holds good with this exception, that B will have against A not only a common law right to sue for breach of contract but also (subject to the normal rules governing the grant of that remedy) an additional right to sue in equity for specific performance of the promise; and C will have the equitable right to compel B to prosecute whichever of B’s legal or equitable rights against A is the more appropriate in the particular circumstances. [6-08] If A’s promise, irrespective of its nature, is neither under seal nor given for valuable consideration, B as a volunteer cannot sue A in equity on the promise; and B has no rights against A at law, where the validity of a gratuitous promise is not recognised unless it be under seal. C cannot have any rights against either A or B at law, both because their agreement does not amount to a contract and because, in any event, C is not a party to that agreement. C has no rights in equity against A directly. Nor has C any rights in equity against B, since there does not in this case exist any chose in action, legal or equitable, which B could hold in trust for C. [page 68] [6-09] Although there can be little doubt in the situations considered so far, confusion commences in the type of case where A covenants with B under seal,

although not for valuable consideration, to pay money or transfer property to B as trustee for C (or to pay money or transfer property directly to C in circumstances where equity will consider B a trustee for C). Clearly, equity’s attitude to volunteers will prevent B from obtaining in a court of equity specific performance (in any sense of that term) of A’s covenant. But it is submitted that it is equally clear on principle that, as the benefit of A’s obligation to B to observe A’s covenant with B is not held by B beneficially, B must therefore be a trustee of it for C. The trust of the covenant in the circumstances envisaged must be completely constituted as soon as the covenant is valid at law, so that there is no reason to prevent C from calling upon the aid of a court of equity to compel B to exercise that right. This is the basis of the celebrated decision in Fletcher v Fletcher,23 and of a number of other cases.24 In Fletcher v Fletcher, a settlor by a voluntary deed covenanted with trustees that, in case A and B (his natural sons) or either of them should survive him, his personal representatives would within 12 months pay £60,000 to the trustees upon trust for A and B or such one of them as should attain the age of 21 years. The settlor died and after his death it was held that, although the covenant was voluntary, it nevertheless created a trust of that covenant for the surviving natural son A. It was held that the refusal of the trustees to sue upon the covenant could not affect his rights because his rights once existing could not, as Sir James Wigram VC expressed it, depend on mere accident and caprice. [6-10] The principle of Fletcher v Fletcher,25 it is submitted, is of particular application in the usual form of a marriage settlement, whereby the wife covenants with the trustees of the settlement to settle after-acquired property on them to be held by them on trust for herself for life, with a remainder to her husband and an ultimate remainder for her children and with a provision for her next-of-kin in default of children. It is submitted that in such cases the correct view is that, by an application of the principle of Fletcher v Fletcher, either the husband, the children, the next-of-kin or any combination of them, can compel the trustees of the settlement to sue the wife (or her representatives) at law.

Re Pryce [6-11] However, in Re Pryce,26 Eve J, misapplying certain dicta of the Court of Appeal in Re D’Angibau,27 and misconceiving the legal effect of the Judicature Act, seems to have decided to the contrary. In that case, there was a

marriage settlement of the usual type described above executed in 1887. In 1904 the wife became entitled to certain interests in reversion under another settlement. The husband died in 1907 and there was no issue of the marriage. In 1916 the wife’s reversionary interests fell into possession and were outstanding in the trustees of the prior settlement. The trustees of the 1887 settlement took out a summons asking whether, having regard to the fact that there had been no issue of the marriage and that the only other persons beneficially interested in the property settled by the wife were her next-of-kin at her death, they were bound to take steps to enforce the payment and transfer to the trustees the property thus acquired by the wife. [page 69] [6-12] It is submitted that Eve J should have held that: (1) Prima facie, the trustee had a good common law right to sue the wife for damages for breach of contract. The existence of such a right can hardly be disputed.28 The fact that the property promised to be settled was, at the date of the settlement, after-acquired property did not render the covenant to convey such property, if and when it came into existence, nugatory. True, future property may neither be assigned nor made the subject of a presently-operative trust29 but the benefit of a covenant to assign such property when it does exist is present property, not future property. As Scott says,30 a covenant to settle after-acquired property is ‘a common illustration’ of the proposition that a chose in action can be property of which a trust can be created. (2) Even if the trustee, as a volunteer, could not obtain equitable relief by way of specific performance of the covenant, that fact would not derogate from the trustee’s right to sue at law for damages. (3) The right to sue at law for damages was a real and substantial right, not a nominal one. It could never be urged that the damages to which the trustee was entitled were merely nominal on the ground that the trustee personally suffered no damage by reason of the breach of covenant. North J said in Re Flavell,31 ‘There is no doubt that the executrix could sue [the covenantor] upon his covenant if he refused to pay; her claim arises under [the agreement], and he would have no answer to an action by her for the

annuity: quite apart from the question what would become of it after she had recovered it, whether it would form part of the testator’s estate or whether it would belong to her beneficially.’32 The fact that a trustee is not personally damnified is never a barrier to that trustee’s right to recover substantial damages. If, for example, the trustee of an estate contracts to sell Blackacre, an estate asset, the purchaser defaults and (for some reason) specific performance is impossible, it is inconceivable that in an action at law for damages for breach of contract the plaintiff is limited to nominal damages only since the trustee, having contracted to sell ‘as trustee’, has not been personally damnified. (4) The right to sue at law for damages was held on trust for, in the circumstances of Re Pryce,33 the next-of-kin of the settlor. It is clear enough that if the trustee had sued for, and successfully recovered, damages for breach, he would have been a trustee of those damages for the next-ofkin. If the fruits of the action were held on trust, it is not easy to see how the right to bring the action would be held by the trustee absolutely and not be held on trust. (5) The trustees, pursuant to their normal obligation to get in the trust property, were bound to sue the settlor for damages at law. [6-13] Unhappily, Eve J thought otherwise. He held that not merely were the trustees not bound to sue, but also that they were bound not to sue. The decision deserves further consideration, and is open to the following criticisms. First, the actual order was clearly made per incuriam: the question which Eve J meant to answer in the negative was ‘ought the trustees to sue’; a true negative answer would have been ‘The trustees are not obliged to sue’, leaving them free to do so if they wished. But the order in fact made was that the trustees ought not to sue, in other words, that they had a positive obligation to refrain from suing; so that, even if Eve J were correct in all other respects, his order does not reflect his reasoning. [page 70] Secondly, it is an unfortunate decision in that the class of person whose rights

were negatived — that is, the next-of-kin — were not represented at the hearing. Thirdly, it is clearly inconsistent with Fletcher v Fletcher,34 and fails to recognise that there can be a completely constituted trust of a voluntary covenant. Fourthly, it endeavours to establish the startling proposition that equity will actively intervene in order to prevent volunteers pursuing their rights at law, a proposition rejected in terms in Davenport v Bishopp35 and Cannon v Hartley.36 In T Choithram SA v Pagarini,37 the Privy Council said, ‘Although equity will not aid a volunteer, it will not strive officiously to defeat a gift.’ Fifthly, it is impossible to reconcile the decision with the reasoning in well established cases such as Lloyd’s v Harper38 and Robertson v Wait.39 On what principle can one say that, where A promises B to pay money to B on trust for C, there is a completely constituted trust of B’s clear legal right against A at law in the case where the promise is made in a simple contract supported by valuable consideration, but not in the case where B’s prima facie equally clear legal right is founded on a voluntary covenant? If there is an enforceable legal right vested in B in both cases, there is no more reason in one case than in the other why such a legal right cannot be the subject of a trust.40 Sixthly, the decision mistakes the nature and effect of the fact that both the trustees and next-of-kin were volunteers. This fact precluded them from obtaining equitable relief by way of specific performance. But it is irrelevant to the existence of the trustees’ rights to sue at law for damages. And it is irrelevant to the right of the next-of-kin in effect to compel the trustees to exercise their right to sue at law for damages, if there was a completely constituted trust of the latter right. Seventhly, it fails to perceive that the circumstance that there was no completely constituted trust of the after-acquired property itself does not entail the consequence that there was no completely constituted trust of the right to sue. Eighthly, it is a most glaring example of the ‘fusion fallacy’.41 The expression of Eve J’s reasoning was as follows:42 ‘[V]olunteers have no right whatever to obtain specific performance of a mere covenant which has remained as a covenant and has never been performed’: see per James LJ In re D’Angibau. Nor could damages be awarded either in this Court, or, I apprehend, at law, where, since the Judicature Act, the same defences would be available to the defendant as would be raised in an

action brought in this Court for specific performance or damages. In these circumstances, seeing that the next of kin could neither maintain an action to enforce the covenant nor for damages for breach of it and that the settlement … is a mere voluntary contract to create a trust, ought the Court now for the sole benefit of these volunteers to direct the trustees to take proceedings to enforce the defendant’s covenant? I think it ought not; to do so would be to give the next of kin by indirect means relief they cannot obtain by any direct procedure …. The circumstances are not unlike those which existed in the case of In re D’Angibau, and I think the position here is covered by the judgments of the Lords Justices in that case. Accordingly, I declare that the trustees ought not to take any steps to compel the transfer or payment to them of the (afteracquired property).

[page 71] But to say that the Judicature Act had the effect of aborting an action for damages at law just because a suit in equity could not be maintained on the same set of facts is clearly a non sequitur. After all, can hardship, for example, be pleaded as a defence to an action for damages at law just because it would succeed as a defence had the plaintiff elected to sue for specific performance in equity?43 [6-14] The defects in Re Pryce44 are obvious enough. But in a subsequent case, Re Kay,45 involving almost identical facts, Simonds J (as he then was) followed it, albeit with reluctance. Moreover, in New South Wales, when a similar question arose before McLelland J in Perpetual Trustee Co (Ltd) v Willers,46 his Honour seemed disposed to follow Re Pryce and Re Kay, although their correctness was not in terms challenged. To make matters worse, Buckley J, in Re Cook’s Settlement Trust,47 has reiterated the heresy. That case involved a fortune of which Sir Herbert Cook was life tenant and his son, Sir Francis Cook, remainderman in fee. In a 1934 resettlement of the fortune, Sir Francis covenanted with Sir Herbert and the trustees that if certain assets (including Rembrandt’s famous painting ‘Titus’) were sold, the proceeds of sale would be settled on the terms of the resettlement trusts. The remaindermen under the resettlement trusts were Sir Francis’s children. When Sir Francis and his current (and sixth) wife proposed to sell ‘Titus’ but not to settle the proceeds in accordance with the covenant, Buckley J held that their children could not compel the trustees of the resettlement to sue Sir Francis for damages for breach of covenant. What his Lordship should have done was to have inquired whether the trustees’ undoubted legal right to sue for damages was held by them

beneficially or on trust for the children, and then decided, if the latter were the case (as it assuredly must have been), that the trustees were obliged, whether requested to do so by the children or not, to sue Sir Francis for damages for breach of covenant. Buckley J, approving Re Pryce and Re Kay, held that as the covenant lay in the area of contract it had nothing to do with the law of trusts. But this, surely, is a non sequitur. Of course, the promise itself was a matter of contract. But the benefit of a contractual promise is a proprietary right. The question before his Lordship was whether or not the legal owner of the benefit of the contractual promise held it on trust, and that question is not answered by the assertion that the promise is ‘merely’ contractual.48

Constitution of Voluntary Trusts [6-15] Since complete constitution of a voluntary trust is essential to its effectiveness, it is necessary now to consider further the two main ways indicated at the beginning of this chapter in which a trust may be constituted. The principles applicable were summarised by Turner LJ in Milroy v Lord as follows:49 In order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may, of course, do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those

[page 72] purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but in order to render the settlement binding, one or the other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift.

Transfer to a Trustee [6-16] A transfer may be made by assignment inter vivos or by will. The

requirements of a valid trust created by will are discussed below.50 In order to create, by assignment inter vivos, a voluntary trust of property capable of being assigned at common law, the transfer must vest the legal title to the property in the trustee. If the assignment is ineffective to do so at law, it will likewise be ineffective in equity, because of the principle in Milroy v Lord.51 In that case, Medley, the owner of a parcel of shares in the Louisiana Bank, wished to assign 50 of those shares to one Lord on trust for the plaintiffs. The shares were transferable only by entry in the books of the bank; but no such transfer was ever made, although Medley did deliver the relevant share certificates to Lord. Lord, pursuant to a power of attorney, received the dividends payable on the shares, which he remitted to the plaintiffs either directly or through Medley. It was held in effect that Medley at all times retained the beneficial ownership of those shares. [6-17] The case is authority for two main propositions. The first is that if an intending settlor chooses to establish a voluntary trust by assignment, but the assignment is ineffective, then a court of equity will not, in order to save the attempted disposition, treat it as a trust constituted by declaration of trust. ‘If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust.’52 By attempting to assign the property the settlor has shown an intention to dispose of it, whereas a declaration of trust shows an intention by the settlor to hold it as trustee. ‘For a man to make himself a trustee, there must be an expression of intention to become a trustee, whereas words of present gift show an intention to give over the property to another, and not to retain it in the donor’s own hands for any purpose, fiduciary or otherwise.’53 [6-18] The second proposition for which Milroy v Lord54 is authority is that there is no equity to perfect an imperfect gift at the suit of a volunteer. For a voluntary assurance to be effective in equity the assignor must have done everything which according to the nature of the property was necessary to be done in order to transfer the property. Just as a volunteer may not specifically enforce an agreement to create a trust which has not been completely constituted,55 so too a volunteer may not claim that an incomplete assurance (in the sense described below) should be treated

in equity as if it were complete. This is so whether the assurance was to have been to the volunteer beneficially, or as a trustee for some other person. [page 73] [6-19] It is for practical purposes established in Australia that the second proposition from Milroy v Lord is satisfied when the settlor has done all those things which the settlor, and only the settlor, could do. That was the view of Griffith CJ in Anning v Anning,56 whose views were approved by Mason CJ, Deane and McHugh JJ in Corin v Patton.57 Although, strictly, their views were obiter dicta, they have been regularly applied.58 The law is probably the same in England, following Re Rose.59 In Corin v Patton, Mason CJ and McHugh J emphasised that although Griffith CJ had not said so in terms, the donee acquires an equitable estate or interest in the subject matter of the gift once the transaction is complete so far as the donor is concerned, and that Re Rose was to the same effect.60 That property will be held by the intended assignee on the trust created by the settlor. [6-20] The application of these principles to particular kinds of legal property, assuming the intending settlor wishes voluntarily to assure the property to the intended assignee as trustee, leads to the following results: (1) In the case of old system land, delivery of a duly executed deed to the intended trustee is necessary in order to complete in equity a voluntary trust by way of assurance of the land.61 (2) Contrary to the views expressed by Dixon J in Brunker v Perpetual Trustee Co Ltd,62 in the case of Torrens system land, there is no personal right derived from statute which mirrors the rule in Milroy v Lord but differs in effect. In Corin v Patton, after reviewing the judgment of Dixon J and various later authorities, Mason CJ and McHugh J concluded:63 All that can be said is that the legislation enables a donee to secure registration of a transfer of the donor’s interest when he is armed with an instrument of transfer in registrable form and he can produce, or arrange for the production of, the appropriate documents (which include the certificate of title). If the donor lacks the power to recall his transfer, that lack of power stems not from statute, but from the principles of equity.

(3) In the case of chattels capable of passing by delivery, the intending settlor must either deliver them to the intended trustee or execute and deliver a

deed of gift in respect of them.64 [page 74] (4) In the case of company shares, all that is necessary for a perfect equitable title is delivery of a duly executed form of transfer to the intended trustee, although no legal title is transferred until registration of the transfer in the books of the company has been effected.65 (5) Legal choses in action were not, when Milroy v Lord was decided, capable of legal assignment and so the principles stated by Turner LJ could not at that time apply. Despite Lord Macnaghten’s contrary view,66 the better view is that the effect of the rule in Milroy v Lord67 and s 12 of the Conveyancing Act 1919 (NSW) and its equivalents68 is that an effective assignment of a legal chose in action requires writing under the hand of the intending settlor.69 The second proposition from Milroy v Lord has no application to legal property incapable of assignment at law, or to equitable property, as Windeyer J demonstrated in Norman v Federal Commissioner of Taxation.70 If the subject matter of a voluntary trust is legal property incapable of assignment at law, then all that is required is a sufficiently clear expression of intention that the trustee from then on hold the property on trust.71 If the subject matter of the proposed settlement is purely equitable, all that is required to constitute the assignee a trustee is whatever assignment is within the power of the settlor to make, provided that the settlor employs the means which equity recognises as sufficient for a transfer of the subject matter.72 The transferor must express an intention to assign the equitable subject matter sufficiently clearly, but consideration, seal or formal language is not necessary.73 Where, however, the property assigned is an existing equitable interest in realty or personalty, writing is necessary by virtue of s 23C(l)(c) of the Conveyancing Act 1919 (NSW) and its equivalents in other jurisdictions. [6-21] The principles set out above may be modified by equitable estoppel. In Dillwyn v Llewelyn,74 a case heard and determined contemporaneously with Milroy v Lord, a donee was told he had been given land into which he had been put into possession, and proceeded to expend money on improving it. The

donee could call on the donor to complete the gift. It would seem that the same principle would apply if the imperfect gift were an imperfect voluntary assurance to the donee as trustee. It is also to be noted that the so-called rule in Strong v Bird permits the perfection of an imperfect gift when the donee is appointed executor or administrator and the donor had a [page 75] continuing non-testamentary donative intention. However, the better view is that that rule does not apply where the donee was not intended to take beneficially, but only as a trustee.75

Declaration of Trust [6-22] The second principal mode by which a trust may be constituted is by declaration.76 What is required is a statement, intended to be final and binding, that property owned by the settlor is thereafter held on trust for another. The requisite intention has earlier been described.77 No consideration is required.78 Because the trust property is already owned by the trustee, the principles in Milroy v Lord do not apply; indeed, that is the force of Milroy v Lord. [6-23] The declaration must be manifested in writing signed by the person making the declaration if the trust property is land or any interest in land.79 In the case of legal interests in personalty, the declaration may be oral or even inferred from conduct.80 The position of declarations of trust of equitable interests in personalty is not entirely free from doubt by reason of conflicting decisions on the construction of s 23C(1)(c) of the Conveyancing Act 1919 (NSW) and its equivalents. However, it is submitted that although the provision is apt to apply to equitable interests in personalty, a declaration of trust which carves out a new and subsidiary equitable interest is not caught by the section, there not being a disposition of an interest subsisting at the time of the disposition.81

Direction to a Third Party

[6-24] A beneficiary may direct a trustee to hold the whole of the equitable interest on trust for another. It is clear that such a direction amounts to a disposition of an existing equitable interest, and so must be in writing.82 As formulated by Wilberforce QC in Grey v Inland Revenue Commissioners,83 a disposition ordinarily includes an act by which someone ceases to be the owner of property in law or in equity. The precise nature of such a direction is problematic. Dixon J and Romer LJ considered it distinct from both a declaration of trust and a transfer.84 In Grey’s case itself, Upjohn J and Lord Radcliffe said that it was a declaration of trust. Ong characterised the direction in Grey’s case as a release subject to the terms of the new trust.85 Moreover, it is difficult to differentiate a direction from an assignment: the effect is identical, and a direction clearly satisfies the formal requirements. Sir Frederick Jordan said that this was ‘simply an illustration of equitable assignment’.86 Little would appear to turn on the point, but given the similarities with both of [page 76] the two principal methods of creating an express trust, there seems no reason to characterise it as a separate mode.87

Consideration [6-25] When a trust has been declared but the settlor has not been divested of the trust property, the trust is said to be incompletely constituted and operates merely as an agreement to create a trust. Such an agreement will not be enforceable unless it is based upon valuable consideration and a party to the consideration requires performance of it. It will not be enforceable by volunteers. If the property that is the subject of the declaration is future property, then a completely constituted trust will arise as and when the property comes into the hands of the settlor.88 [6-26] An agreement to create a trust is not a trust but a contract. It is

accordingly subject to the principles applicable generally to all contracts and will be enforceable only if it can be shown to be a valid and enforceable contract.89 The consideration may move from the trustee or from the intended beneficiary. Where the consideration has moved from a person constituted a trustee of the benefit of the agreement for a beneficiary, the beneficiary may enforce the trust because of the consideration given by the trustee. Likewise where the consideration has moved from a beneficiary, the trustee may enforce the trust on the beneficiary’s behalf.90 Parties to the consideration comprise parties who give valuable consideration, and also parties who are within marriage consideration, namely, the spouses and the issue of the marriage,91 and trustees for them. Beneficiaries who are not parties to the consideration are volunteers and cannot enforce the agreement.92 If, however, the court at the suit of a party to the consideration compels the settlor to constitute the trust, it will compel the settlor to constitute the whole trust — that is, even those provisions for the benefit of volunteers.93 _____________________________ 1.

Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 at 622–3; [1936] ALR 198 at 200–1.

2.

Swires v Renton [1991] STC 490; Lewin on Trusts, [3-054]–[3-064]; and see Davidson v Chirnside (1908) 7 CLR 324 at 339; Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [35]. Commissioner of State Revenue v Lam & Kym Pty Ltd (2004) 10 VR 420 at [31]–[33].

3. 4. 5.

Commissioner of State Revenue v Lam & Kym Pty Ltd (2004) 10 VR 420 at [36]–[46]. [2001] 2 All ER 492; [2001] 1 WLR 1, noted J Hopkins [2001] CLJ 483 and C Rickett [2001] Conv 515. The decision is controversial.

6. 7.

See [6-17]. Paul v Paul (1882) 20 Ch D 742; Standing v Bowring (1885) 31 Ch D 282; [1881–5] All ER Rep 702; Corin v Patton (1990) 169 CLR 540 at 557; 92 ALR 1 at 13; T Choithram SA v Pagarini [2001] 2 All ER 492 at 501; [2001] 1 WLR 1 at 12.

8. 9.

(1882) 20 Ch D 742 at 744. (1802) 6 Ves 656 at 662; 31 ER 1243 at 1246.

10. (1882) 20 Ch D 742 at 744. 11. For the two senses of specific performance, see Meagher, Gummow and Lehane’s Equity, [20-005]. 12. Colyear v Countess of Mulgrave (1836) 2 Keen 81 at 98; 48 ER 559 at 565. 13. (1843) 2 Y & C Ch Cas 451 at 460; 63 ER 201 at 206. 14. [1949] Ch 213; [1949] 1 All ER 50. 15. [1949] Ch 213 at 223–4; [1949] 1 All ER 50 at 59. 16. See [2-17]–[2-25]. 17. (1853) 8 Ex 299; 155 ER 1360.

18. (1880) 16 Ch D 290. 19. See [2-21]. 20. Re Cavendish-Browne’s Settlement Trusts (1916) 61 Sol Jo 27; Coulls v Bagot’s Executor and Trustee Co Ltd (1966) 119 CLR 460 at 501; [1967] ALR 385 at 410–11. 21. Coulls v Bagot’s Executor and Trustee Co Ltd (1966) 119 CLR 460; [1967] ALR 385; Beswick v Beswick [1968] AC 58; [1967] 2 All ER 1197; Snelling v John G Snelling [1973] QB 87; [1972] 1 All ER 79; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 119–20, 138–9; 80 ALR 574 at 582, 596. The position is different in Queensland and the Northern Territory, where statute expressly permits third parties to seek specific performance: Property Law Act 1974 (Qld) s 55; Law of Property Act (NT) s 56. Section 11 of the Property Law Act 1969 (WA) more closely follows the Contracts (Rights of Third Parties) Act 1999 (UK), as to which see Lewin on Trusts, [4013]–[4-016] and Pettit, pp 111–13 (the latter suggests a third party volunteer would not be able to obtain specific performance). 22. Harmer v Armstrong [1934] Ch 65; [1933] All ER Rep 778. 23. (1844) 4 Hare 67; 67 ER 564. 24. See, for example, Williamson v Codrington (1750) 1 Ves Sen 512; 27 ER 1174; Cox v Barnard (1850) 8 Hare 310; 68 ER 379. 25. (1844) 4 Hare 67; 67 ER 564. 26. [1917] 1 Ch 234; [1916–17] All ER Rep 573. 27. (1880) 15 Ch D 228; [1874–80] All ER Rep 1184; for a lucid analysis of this case, see D Elliott (1960) 76 LQR 100 at 103–5. 28. Davenport v Bishopp (1843) 2 Y & C Ch Cas 451; 63 ER 201; Cannon v Hartley [1949] Ch 213; [1949] 1 All ER 50. 29. Re Ellenborough [1903] 1 Ch 697. 30. Scott on Trusts, §10.6. 31. (1883) 25 Ch D 89 at 99. 32. See also The Winkfield [1902] P 42; Diamond Cutting Works v Trifus [1956] 1 Lloyd’s LR 216. 33. [1917] 1 Ch 234; [1916–17] All ER Rep 573. 34. (1844) 4 Hare 67; 67 ER 564, which commended itself to Barwick CJ in Olsson v Dyson (1969) 120 CLR 365 at 373; [1969] ALR 443 at 447, albeit in a dissenting judgment (although not on this point). 35. (1843) 2 Y & C Ch Cas 451 at 460; 63 ER 201 at 206. 36. [1949] Ch 213 at 223–4; [1949] 1 All ER 50 at 58–9. See [6-04]. 37. [2001] 2 All ER 492 at 501; [2001] 1 WLR 1 at 11. 38. (1880) 16 Ch D 290. 39. (1853) 8 Ex 299; 155 ER 1360. 40. See the discussion at [2-17]–[2-25]. 41. See Meagher, Gummow and Lehane’s Equity, [2-130]. 42. [1917] 1 Ch 234 at 241; [1916–17] All ER Rep 573 at 577. 43. See generally D Elliott (1960) 76 LQR 100; J Hornby (1962) 78 LQR 228. 44. [1917] 1 Ch 234; [1916–17] All ER Rep 573. 45. [1939] Ch 329; [1939] 1 All ER 245. 46. (1955) 72 WN (NSW) 244.

47. [1965] Ch 902; [1964] 3 All ER 898. 48. An attempt to support Re Cook’s Settlement was made by W Lee (1969) 85 LQR 213; but see J Barton (1975) 91 LQR 236; R Meagher and J Lehane (1976) 92 LQR 427; M Friend (1982) 46 Conv 280 at 287; D Goddard (1988) 52 Conv 19. See also M Scott (1966) 8 Malaya L Rev 153; J Davies [1967] Annual Survey of Commonwealth Law 376 at 387; C Rickett (1979) 32 Current Legal Problems 1; (1981) 34 Current Legal Problems 189; M Macnair (1988) 8 LS 172; D Goddard (1988) 52 Conv 19; J Crueco, L McCarthy and S Jacks (1998) 14 QUTLJ 214. 49. (1862) 4 De GF & J 264 at 274; 45 ER 1185 at 1189; [1861–73] All ER Rep 783 at 789. 50. See [7-14]. 51. (1862) 4 De GF & J 264; 45 ER 1185. 52. Milroy v Lord (1862) 4 De GF & J 264 at 274; 45 ER 1185 at 1190. 53. Richards v Delbridge (1874) LR 18 Eq 11 at 15. See also Re Williams (1916) 115 LT 689; [1916–17] All ER Rep 354; Williams v Lloyd (1933) 50 CLR 341; Re McArdle [1951] Ch 669 at 676–7; [1951] 1 All ER 905 at 909; Olsson v Dyson (1969) 120 CLR 365 at 386; [1969] ALR 443 at 456–7; Sonenco (No 77) Pty Ltd v Silvia (1989) 24 FCR 105 at 114, 121; Corin v Patton (1990) 169 CLR 540 at 561; 92 ALR 1 at 18; Pehrsson’s Trustee in Bankruptcy v von Greyerz (1999–2000) 2 ITELR 230 (PC). The generality of the statements in the text may be subject to two qualifications: first, there may be some exceptional circumstances in which an attempted assignment may be construed as a declaration of trust (see Williams v Commissioner of Inland Revenue [1965] NZLR 395 at 401); secondly, at least in some cases, where the property is equitable and not legal, there is no distinction between an assignment and a declaration of trust: see ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 59 NSWLR 549 at [243]–[270]; and see Chapter 23 ‘The Rights of a Beneficiary’. 54. (1862) 4 De GF & J 264 at 274; 45 ER 1185 at 1189; [1861–73] All ER Rep 783 at 789. 55. See [6-02]. 56. (1907) 4 CLR 1049; 13 ALR 709. Section 200 of the Property Law Act 1974 (Qld) is a legislative restatement of this test: cf Denham Bros Ltd v W Freestone Leasing Pty Ltd [2004] 1 Qd R 500 at [33]. 57. (1990) 169 CLR 540; 92 ALR 1. The course of authority prior to Corin v Patton is analysed in Meagher, Gummow and Lehane’s Equity, [6-110]–[6-145]. 58. Costin v Costin (1997) 7 BPR 15,167; Motor Auction Pty Ltd v John Bryce Wholesale Cars Pty Ltd (1997) 23 ACSR 647 at 655–8; Benjamin v Leicher (1998) 45 NSWLR 389 at 400; Gardiner v Chief Commissioner of State Revenue (2004) 59 NSWLR 549 at [32]. 59. [1952] Ch 499; [1952] 1 All ER 1217. Mascall v Mascall (1984) 50 P & CR 119; Brown & Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [1996] Ch 51; Kaye v Zeital [2010] 2 BCLC 1; Curtis v Pulbrook [2011] 1 BCLC 6387 at [47]. Cf Pennington v Waine [2002] 1 WLR 2075; [2002] 4 All ER 215, a decision described by W Gummow as ‘bizarre’: ‘Equity and the Torrens System Register’, in D Grinlinton (ed), Torrens in the Twenty-first Century, LexisNexis, Wellington, 2003, but defended by others: Meagher, Gummow and Lehane’s Equity, [6-110]. 60. Corin v Patton (1990) 169 CLR 540 at 559; 92 ALR 1 at 14; and see Brown & Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [2001] Ch 733 at 742. 61. Civil Law (Property) Act 2006 (ACT) s 201; Conveyancing Act 1919 (NSW) s 23B; Law of Property Act (NT) s 10; Property Law Act 1974 (Qld) s 10; Law of Property Act 1936 (SA) s 28; Law of Property Act 1884 (Tas) s 60; Conveyancing and Law of Property Act 1884 (Tas) s 60; Property Law Act 1958 (Vic) s 52; Property Law Act 1969 (WA) s 33. 62. (1937) 57 CLR 555 at 599–602; [1937] ALR 349 at 359–60. 63. (1990) 169 CLR 540 at 556; 92 ALR 1 at 11.

64. Cochrane v Moore (1890) 25 QBD 57; [1886–90] All ER Rep 731; Legge v Legge (1904) 23 NZLR 350; Anning v Anning (1907) 4 CLR 1049; 13 ALR 709. 65. In addition to cases already cited, see Elliott v Elliott (1898) 19 LR (NSW) Eq 162. 66. William Brandt’s Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454; [1904–7] All ER Rep 345. 67. (1862) 4 De GF & J 264; 45 ER 1185. 68. See Civil Law (Property) Act 2006 (ACT) s 205; Law of Property Act (NT) s 182; Property Law Act 1974 (Qld) s 86; Law of Property Act 1936 (SA) s 15; Conveyancing and Property Law Act 1884 (Tas) s 86; Property Law Act 1958 (Vic) s 134; Property Law Act 1969 (WA) s 20. 69. Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 28; [1964] ALR 131 at 148; Olsson v Dyson (1969) 120 CLR 365; [1969] ALR 443; Meagher, Gummow and Lehane’s Equity, [6-155]. The notice required by the section need not be given by the assignor: Holt v Heatherfield Trust Ltd [1942] 2 KB 1 at 4; [1942] 1 All ER 404 at 407; Olsson v Dyson (1969) 120 CLR 365 at 386–7; [1969] ALR 443 at 457. 70. (1963) 109 CLR 9 at 28–32; [1964] ALR 131 at 148–50. 71. See also Shepherd v Federal Commissioner of Taxation (1965) 113 CLR 385; [1966] ALR 969; Meagher, Gummow and Lehane’s Equity, [6-160]–[6-180]. 72. Kekewick v Manning (1851) 1 De GM & G 176; 42 ER 519; Meagher, Gummow and Lehane’s Equity, [6-015]–[6-045]. 73. Anning v Anning (1907) 4 CLR 1049 at 1069; 13 ALR 709 at 716–17; Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 at 622; [1936] ALR 198 at 200; Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 30; [1964] ALR 131 at 149. Writing will be required, by reason of the Statute of Frauds legislation, if the subject matter is an equitable interest in land, or, it is submitted, in personalty: see Chapter 7; and see Baloglow v Konstantindis (2001) 11 BPR 20,721 at [115]–[116]. 74. (1862) 4 De GF & J 517; 45 ER 1285; Commonwealth v AE Goodwin Ltd [1961] NSWR 1080; Raffaele v Raffaele [1962] WAR 29; D E Allan (1963) 79 LQR 238; Olsson v Dyson (1969) 120 CLR 365 at 378–9; [1969] ALR 443 at 451. See Meagher, Gummow and Lehane’s Equity, Ch 17. 75. Re Halley (1959) 43 MPR 79; Blackett v Darcy (2005) 62 NSWLR 392 at [35]–[37]; Meagher, Gummow and Lehane’s Equity, [30-035]. That chapter also urges the larger question of the reconsideration of this area of the law; see also J Jaconelli [2006] Conv 432 at 444–5. 76. This paragraph and the subsequent paragraph were approved in George v Fletcher (Trustee) [2010] FCAFC 53 at [59]. 77. See [5-02]. 78. Collinson v Patrick (1838) 2 Keen 123 at 134; 48 ER 575 at 579. 79. Conveyancing Act 1919 (NSW) s 23C(1)(b) and its equivalents; see Chapter 7. 80. Ibid. 81. See Baloglow v Konstantindis (2001) 11 BPR 20,721 at [113]–[118] and Chapter 7; for a full treatment, see Meagher, Gummow and Lehane’s Equity, Ch 7. 82. Grey v Inland Revenue Commissioners [1960] AC 1; [1959] 3 All ER 603. 83. A formulation adopted by Lord Hoffmann in Newlon Housing Trust v Alsulaimen [1999] 1 AC 313; [1998] 4 All ER 1. 84. Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 at 622; [1936] ALR 198 at 200; Timpson’s Executors v Yerbury [1936] 1 KB 645 at 664; [1936] All ER 186 at 194. 85. D Ong, Trusts Law in Australia, 4th ed, Federation Press, Sydney, 2012, pp 143–9. 86. F Jordan, Chapters on Equity in New South Wales, 6th ed, p 24 footnote m.

87. Cf Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 503; 102 ALR 681 at 694. 88. Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1 at 27; [1937] ALR 432 at 440–1; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; 171 ALR 568 at [28]. 89. This passage was applied in Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296 at [55]. 90. See F Jordan, Chapters on Equity in New South Wales, 6th ed, p 24. 91. De Mestre v West [1891] AC 264; Attorney-General v Jacobs Smith [1895] 2 QB 341; Pullan v Koe [1913] 1 Ch 9; [1911–13] All ER Rep 334. ‘Lawful considerations are either (1) meritorious considerations (sometimes called “good” considerations) being considerations of blood and natural affection, or of generosity and moral duty; or (2) valuable considerations such as money, marriage, and the like, which the law esteems an equivalent for money. A settlement supported by the former kind of consideration only is regarded as voluntary, and of the latter kind it is only marriage that is in practice given as the consideration for the creation of a settlement’. 92. Ellison v Ellison (1802) 6 Ves 656; 31 ER 1243; [1775–1802] All ER Rep 119; Re D’Angibau (1880) 15 Ch D 228; [1874–80] All ER Rep 1184; Re Plumptre’s Marriage Settlement [1910] 1 Ch 609. 93. Davenport v Bishopp (1846) 1 Ph 698; 41 ER 798; Lloyd’s v Harper (1880) 16 Ch D 290.

[page 77]

CHAPTER 7 Express Trusts — The Requirement of Writing Introduction

[7-01]

Trusts Created Inter Vivos Relationship Between Paragraphs (a), (b) and (c) of s 23C(1) Relationship Between (1) and (2) of s 23C Personalty Realty Fraud

[7-03] [7-03] [7-04] [7-05] [7-06] [7-09]

Trusts Created by Will Statutory Requirements Secret Trusts Where there is no trust shown Refraining from making a will Where the will shows that a trust was intended Increase or reduction of legacy Secret trusts of imperfect obligation and unlawful trusts Gift to several donees or legatees The rationale of the secret trust

[7-14] [7-14] [7-15] [7-17] [7-22] [7-23] [7-25] [7-26] [7-29] [7-32]

Introduction [7-01] Even if all the elements necessary to constitute an express private trust

are present and the trust is completely constituted in accordance with the previous three chapters, statute may require that the trust be evidenced by writing and in other cases, additional formalities must be complied with,1 without which the trust may be unenforceable. [7-02] These requirements differ according to whether the trust is intended to come into effect during the lifetime of its creator or is to take effect on his or her death. [page 78] In the case of a trust created inter vivos, if it affects realty or leaseholds, in New South Wales, for example, it will be unenforceable if it does not comply with the provisions of s 23C of the Conveyancing Act 1919. That section is in the following terms: 23C. Instruments required to be in writing — (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol — (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law; (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will; (c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing. (2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.2

In the case of a testamentary trust, it must comply with the provisions of law in the jurisdiction concerned governing the requirements for execution of a valid will. In neither case, however, will the strict requirements of these statutes be insisted upon if, by doing so, the court would in effect be lending its aid to the perpetration of a fraud. This, however, will not necessarily be to the advantage of the intended beneficiary, as the principles upon which the court will proceed are designed merely to ensure that the trustee does not, by pleading the statutes,

abuse the trusteeship by taking beneficially something which the creator of the trust never intended the trustee to enjoy.

Trusts Created Inter Vivos Relationship Between Paragraphs (a), (b) and (c) of s 23C(1) [7-03] The different forms of expression found in the various paragraphs are attributable to the different authorship of the various sections of the Statute of Frauds3 but give rise to a number of threshold questions of construction. It should first be observed that the requirement of writing in s 23C(1)(b) is purely evidential, while those in s 23C(1)(a) and s 23C(1)(c) go to the validity of a trust created by the means in those paragraphs. Thus, the writing by which s 23C(1)(b) requires that the trust be ‘manifested and proved’ need not be contemporaneous with the transaction but may be brought into existence subsequently: ‘the date of the writing is immaterial’,4 although it must not, of course, precede the declaration.5 Secondly, declarations of trust fall outside para (c), because there is no disposition of a subsisting equitable interest. But must every declaration of trust falling within s 23C(1)(b), which must be ‘manifested and proved’ in writing, also be subject to s 23C(1)(a) and thus [page 79] created in writing? The better view is that s 23C(1)(b) is not wholly otiose but instead falls outside the scope of s 23C(1)(a).6 This is consistent with Adamson v Hayes,7 which concerned an oral agreement between mineral claimants that they should pool their claims, and thereafter grant certain options subject to conditions. The appellants declined to grant the options as agreed, and a majority of the High Court agreed that they were entitled so to act by reason of the Western Australian equivalent to s 23C. Menzies J expressed the view that para (a) applied only to legal interests in land, a view with which Walsh, Gibbs and Stephen JJ disagreed. Walsh J based

his decision solely on para (a). Gibbs J proceeded on the view that the pooling agreement fell within para (b), and the agreement to grant an option fell within para (a). Stephen J held that the pooling agreement fell within both paras (a) and (b). Thus, no clear ratio emerges from Adamson v Hayes other than that para (a) is not confined to legal interests in land, but the view that para (b) stands outside the scope of para (a) is inconsistent only with the reasoning of Stephen J, and consistent with the reasoning of all the other members of the court who addressed the statute.

Relationship Between (1) and (2) of s 23C [7-04] In Bathurst City Council v PWC Properties Pty Ltd,8 the court referred to the species of constructive trust which is concerned with cases where the settlor’s or testator’s intent would otherwise fail for want of compliance with the formalities for creation of express trusts, with reference to the formulations of secret trusts in Blackwell v Blackwell and Voges v Monaghan.9 That serves to emphasise that in both testamentary and inter vivos trusts, non-compliance with the statute may not be fatal and may be redressed both by means of the principles relating to constructive trusts (see Chapter 13) to which none of the prohibitions in paras (a)–(c) apply, as well as through the more limited ‘engine of fraud’ doctrine.10

Personalty [7-05] Trusts of legal interests in personalty (excluding leaseholds) may be created orally, whether by means of assignment or by means of declaration of trust.11 Thus, a gift of $10,000 stock has been upheld on the evidence of an oral declaration and an unsigned entry in a memorandum book.12 Similarly, where the reputed parent of an illegitimate child placed a sum of money in a bank in the name of an uncle of the child and stated at the time to a clerk at the bank that he intended the money for the child, it was held that an enforceable trust had been created in favour of the child.13 Despite the location of s 23C in a Division headed ‘Assurances of Land’, the better view is that s 23C(1)(c) applies to personalty as well as realty.14 Accordingly, where the subject matter

of the proposed trust is an existing equitable interest in personalty, and the settlor proposes to transfer that interest to trustees, or to make [page 80] such a declaration of trust as will divest the settlor of all further interest in the property, such transfer or declaration must, under s 23C(1)(c) of the Conveyancing Act 1919 (NSW) and its equivalents in the other jurisdictions, be in writing signed by the settlor or by his or her agent thereunto lawfully authorised in writing. This requirement goes not only to evidence of the trust but, on the wording of the subsection, to the actual creation of the trust. Also, in Tasmania, where an agreement to create the trust is not to be performed within one year or is based upon a marriage consideration, the agreement must be evidenced in writing.15

Realty [7-06] If a trust of any legal interest in lands, freehold or leasehold,16 is to be created by assignment of that interest to trustees, to be valid it must be in writing: s 23C(1)(a). If the trust property is an equitable interest in land, and a trust is to be created by assignment, writing is essential to its validity both under s 23C(1)(a) and under s 23C(1)(c). Where the trust property is either a legal or an equitable interest in land, if it is proposed to make it the subject of a declaration of trust, it must also comply with the evidential requirements of s 23C(1)(b).17 [7-07] The person ‘who is able to declare such trust’ referred to in s 23C(1) (b) is the beneficial owner of the property and not the trustee. It is not possible for a person to create a trust of property which that person does not own beneficially. The trustee has only a legal title and not the beneficial interest. The person to create the trust, and the person who is able to declare the trust, are one and the same, and consequently the beneficial owner is the person by law enabled to declare the trust.18 Of course, any acknowledgment in writing by the trustee will be evidence against the trustee of the existence of the trust19 as, for example, a recital in a deed signed by the trustee stating that the land has

been bought with another’s money, letters acknowledging the trust, a written promise to carry out the trust and the like. [7-08] Other aspects of s 23C(1)(b) are as follows: (1) No particular form is required. Practically any informal writing may be evidence of the existence of a trust. The terms of the trust are not required to be embodied in one writing but may be contained in several documents if such documents are annexed to one another or refer to one another or if, on their face, they can be connected together. Under such circumstances it is sufficient if only one of the documents is signed.20 The writing may consist of correspondence,21 a recital in an instrument,22 an affidavit,23 an answer to interrogatories,24 or a telegram.25 (2) The writing must contain the terms of the trust. ‘I take it therefore, that when this Court is called upon to establish or act upon a trust of lands by declaration or creation, it must not only be manifested and proved by writing, signed by the party by law enabled to declare the trust, that there is a trust, but it must also be manifested and proved by writing, signed as [page 81] required what that trust is.’26 The writing must clearly set out the beneficiaries, the trust property, and the nature of the trust.27 This is to be contrasted with a trust created by way of assignment, in which case neither s 23C(1)(a) nor s 23C(1)(c) requires the ‘writing’ concerned to set out the terms of the trust, or the fact that a trust exists.28 (3) The writing need not be made at the time the trust is declared, but may be made subsequently. The trust nevertheless takes effect from the time when it was declared orally, not from the date when the written record was made. The statute requires not that the trust should be created by writing, but that the trust should be manifested and proved by writing. The date of the writing is immaterial.29 Thus, an oral trust of a lease has been upheld where the only written evidence was that made after the trustee had become bankrupt.30 (4) The signature must be that of the person enabled by law to declare the trust.31 There is no provision for signature by an agent as is the case with

regard to the memorandum required under s 4 of the Statute of Frauds 1677 and its Australian adaptations, which apply where the transaction is not a declaration of trust but a contract for the sale of land, or an interest in land.

Fraud [7-09] Undercutting the statutory requirements is the longstanding principle that equity will not permit the Statute of Frauds to become an instrument of fraud. As Hope J demonstrated in Last v Rosenfeld,32 there remains some uncertainty as to the precise limits of this longstanding jurisdiction. The following propositions may be drawn from the cases. First, the principle does not apply to oral, voluntary declarations of trust of land already held by the declarant; so to do would entirely defeat the statute.33 Secondly, equity considers it a fraud for a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust; in such cases, parol evidence of the trust may be adduced to establish the trust, and a declaration obtained.34 The leading case is Rochefoucauld v Boustead.35 The plaintiff’s land had been sold by the mortgagees to the defendant, who, without the plaintiff’s knowledge, raised money on the security of a mortgage of it. The plaintiff claimed that the defendant purchased the land as trustee for her. The defendant later became bankrupt. His trustee in bankruptcy refused to acknowledge any claim of the plaintiff to the land. The plaintiff’s evidence consisted of letters, which were not sufficient to satisfy the Statute of Frauds, and parol testimony. The court admitted the parol evidence and the defendant was adjudged to hold the land as trustee for the plaintiff, subject to a lien for his expenditure. [page 82] [7-10] Thirdly, the fraud on which equity acts is not confined to cases in which the conveyance was fraudulently obtained; relief is available if at some later stage the absolute character of the conveyance is set up for the purpose of defeating the beneficial interest. [7-11] Fourthly, it is not necessary that the oral contract expressly provide

that the grantee is to hold as a trustee; any sufficiently defined beneficial interest stipulated for will suffice. The last two propositions are illustrated by Bannister v Bannister,36 in which the defendant agreed, by written contract of sale, to sell to the plaintiff a cottage, on a purely oral undertaking by the plaintiff that she would be allowed to live in the cottage rent free for as long as she desired. Subsequently, the plaintiff brought an action for possession against the defendant. The court upheld the defendant’s counter-claim that she was entitled to a declaration that the plaintiff held the trust for her during her life. [7-12] Fifthly, the trust declared in such cases is an express trust, thereby operating in the face of the statute, not a constructive trust, which would fall within its second subsection. The suggestion in Bannister v Bannister to the contrary37 is inconsistent with what was stated in Rouchefoucauld v Boustead and later cases.38 [7-13] Sixthly, the view expressed in the first edition of Equity: Doctrines and Remedies that these cases turn on the fact that but for the conveyee’s acceptance of the trust, the conveyor would never have transferred the land,39 should be taken as representing the limit of the doctrine.40

Trusts Created by Will Statutory Requirements [7-14] If the creator of a trust intends that it shall come into effect upon his or her death then, subject to the exception which will be considered later, the trust will be unenforceable unless it is made by will or codicil in conformity with s 6 of the Succession Act 2006 (NSW). This section relevantly provides:41 (1) A will is not valid unless: (a) it is in writing and signed by the testator or by some other person in the presence of and at the direction of the testator, and (b) the signature is made or acknowledged by the testator in the presence of 2 or more witnesses present at the same time, and (c) at least 2 of those witnesses attest and sign the will in the presence of the testator (but not necessarily in the presence of each other). (2) The signature of the testator or of the other person signing in the presence and at the direction of the testator must be made with the intention of executing the will, but it is not essential that the signature be at the foot of the will.

[page 83]

Secret Trusts [7-15] This section, like s 23C of the Conveyancing Act 1919 (NSW), is designed to prevent fraud, but if it were applied strictly to every case it might itself become ‘an engine of fraud’. A testator’s property may be left to A absolutely without any indication in the will to qualify this bequest. In such a case, the testator may have meant exactly what was written — namely, that A is to take the property for A’s own benefit. On the other hand, the testator may have left the property to A on the secret understanding with A that the latter should carry out some purpose in regard to it which the testator did not wish to disclose publicly. Again, the testator may have left property to A ‘upon trust’, having either orally informed A what this trust is, or having set it out in an unattested memorandum, but without having disclosed the nature of the trust in the will. The purpose which the testator desires to have carried out may be contrary to law, or it may be quite lawful but of a nature that the testator does not wish to be disclosed. A testator may, for example, wish to provide for his mistress and illegitimate children whose existence he has succeeded in concealing from his relatives during his lifetime.42 Possibly the non-disclosure of the precise terms of the trust occurs merely from the testator’s ignorance of the provisions of the wills legislation. The testator may have been reticent as to disclosure of his or her philanthropy and established a secret charitable trust.43 Indeed, as in the case of the half-secret trust established by the will of Lucian Freud, the nature of the trust may not even be disclosed to the court.44 [7-16] The cases which come before the court in these circumstances occur for one of two reasons. The testator’s next-of-kin may claim the property from the nominal beneficiary upon the grounds that he or she is really a trustee and that the trust has not been disclosed or, if disclosed, is either unlawful or cannot be carried out. Or the intended beneficiary may claim the property from the nominal beneficiary who is trying to keep it for his or her own benefit instead of carrying out the testator’s intentions. A trust of this nature is termed a ‘secret trust’ and has been defined as:45 [A] trust which the testator intends to create, but which for some reason or another chooses to suppress on the face of the will; he may have communicated his intention to the legatee before making the will, or he may have communicated it at some time between the making of the will

and his death, or the intention may be revealed by a letter left for the legatee’s perusal after his death.

The legatee may either appear on the face of the will to take beneficially or to take upon trust, but in the latter case the trust has not been set forth. In the opinion of Sir Robert Megarry VC,46 the standard of proof required to establish a secret trust is the ordinary civil standard of proof necessary to establish any express trust, at least where it is not suggested the secret trust springs from fraud in the common law sense of deliberate and conscious wrongdoing. Earlier, in Voges v Monaghan,47 Dixon CJ had said that the elements of a secret trust must be established ‘to the reasonable satisfaction of the court’. Although he was dissenting in the result, there was no disagreement with the statement of principle.48 [page 84] The terms of the trust must be sufficiently certain: ‘the evidence must prove satisfactorily that the trust was ascertained and what it was’.49 The alleged secret trust must not be so vague as to be void for uncertainty.50

Where there is no trust shown [7-17] In the case where a testator has left property to A absolutely, and there is nothing on the face of the will to show anything to the contrary, the testator has disposed of the legal ownership, and apparently of the beneficial ownership. A takes absolutely. [7-18] If, however, the testator informed A, whether before or after the making of the will, but before his or her death, that the gift was upon trust for certain purposes and not for A’s own benefit, and if A agreed to accept the trust, then A will hold the property upon trust — A will be merely a trustee. Whether the purposes can be carried out or not, whether the trust is lawful or unlawful, A cannot keep the property for A’s own benefit. However, the trust must have been communicated to A either orally or in writing in the lifetime of the testator and must have been accepted by A.51 In Voges v Monaghan,52 Dixon CJ said that the chief factual elements of a secret trust were the existence of the relevant definite intention of the testator, the communication of it to the

executor, acceptance either by agreement or acquiescence on the part of the executor, and, on the faith that the executor would carry out the intention, the making of the will or the leaving unrevoked of a presently existing will. Fullagar and Kitto JJ adopted a passage in the judgment of Lord Davey in French v French:53 My Lords, it is said that this jurisdiction is based upon fraud, and so it is, because if you once get to this, that it is a trust which is imposed upon the conscience of the legatee, then if the legatee betrays the confidence in reliance upon which the bequest was made to him, then it is what I should think everybody would consider a fraud, though I take the liberty to say that the moral turpitude of any particular case must vary infinitely according to the circumstances of the particular case. My Lords, the basis of it is of course that the testator has died, leaving the property by his will in a particular manner on the faith and in reliance upon an express or implied promise by the legatee to fulfil his wishes, and your Lordships will at once see that it makes no difference whatever whether the will be made before the communication to the legatee or afterwards, because, as was said, I think, by Vice-Chancellor Turner in one of the cases which were cited, the presumption is that the testator would have revoked his will and made another disposition if he had not relied upon the promise, express or implied, made by the legatee to fulfil his wishes.

In reliance upon such passages,54 it has been said that the fraud lies not in any element of personal gain to the secret trustee but in the betrayal of the confidence of the deceased testator, upon which the testator acted, whether by making or leaving unrevoked his or her will.55 [7-19] In Re Maddock,56 property was left to X absolutely, and subsequent to the making of the will, the testator executed a written memorandum that a specified portion of the gift was for [page 85] certain named persons. Before the death of the testator, the memorandum was communicated to X, who assented to it. It was held that there was a trust for the specified portion in accordance with the memorandum. It has been held, in similar circumstances, that the trust is created from the date of the communication and not merely from the testator’s death, with the result that the share of a beneficiary dying between those dates does not lapse.57 [7-20] Where a testator leaves property to A absolutely, and also leaves written instructions, not disclosed until after his or her death, that the gift is only upon trust, there is no trust at all and the absolute gift takes effect.58

[7-21] Where the fact that A is to hold the property upon trust is communicated to A in the testator’s lifetime but the terms of the trust are not sufficiently communicated to A or are not communicated until after the testator’s death, the trust cannot take effect and there is a resulting trust to the testator’s estate. In order that undisclosed written instructions should take effect after death, it is necessary that they should be in writing executed with all the formalities required for the due execution of a will. To allow anything else would be to permit a testator to make an unattested will or codicil. In Re Boyes,59 the testator left all his property to C, his solicitor, absolutely. After the testator’s death, C admitted that he held the property upon trust and that the testator had promised to inform him of the particulars of the trust after the testator had gone abroad. No particulars were ever furnished by the testator, but after his death two letters were found addressed to C stating that the property was in trust for X. It was held that C was trustee for the next-of-kin. There are several points to note. C was a trustee by his own admission in court. Had the testator not informed C that the latter was to hold the property upon trust, then C would have taken absolutely and consequently could have conveyed the property to X, if he had chosen to do so. On the other hand, if the testator, whether before or after making the will in C’s favour, had informed C that the trust was for X, and C had consented to carry it out, there would have been a valid trust in favour of X. No instructions were given in the testator’s lifetime as to the nature of the trust, and the written instructions which became known only after his death could not be regarded, as the writing was not executed in accordance with the formalities required for a will. A trust had been declared, but the particulars of the trust were not declared; consequently, C could not take for his own benefit, but held the property in trust for those whom the law should designate, in this case, the next-of-kin.60

Refraining from making a will [7-22] The same principle applies where a person refrains from making a will on the undertaking of any of his or her next-of-kin to apply his or her property for a particular purpose. In such a case, the person who gave the undertaking will be compelled to carry it out.61 The same principle also applies where a beneficiary has induced the testator to refrain from altering a provision in his or her will by giving such an undertaking.62 It must be clear, however, that the

deceased’s directions were imperative and that he or she did not intend the person giving the undertaking to have a discretion as to the application of the property.63 The same principle applies where a testator is induced to revoke a will or codicil.64 [page 86]

Where the will shows that a trust was intended [7-23] The wording of the will may be such as to show that a trust was intended, although the precise trust is not stated. Some of the so-called precatory trusts discussed above furnish illustrations. Whether or not this is so is itself a question of construction.65 Where the will shows on its face that a trust was intended, the person taking the gift can take no beneficial interest in it, but must hold it upon the trusts indicated or upon trust for those whom the law designates:66 If he [the testator] says, he gives in trust, and stops there, meaning to make a codicil, or an addition to his Will, or, where he gives upon trusts, which fail, or are ineffectually expressed, in all those cases the Court has said, if upon the face of the Will there is declaration plain, that the person, to whom the property is given, is to take it in trust; and, though the trust is not declared, or is ineffectually declared, or becomes incapable of taking effect, the party taking shall be trustee; if not for those who were to take by the Will, for those, who take under the disposition of the Law.

In Briggs v Penny, Lord Truro LC stated:67 It is not necessary to exclude the legatee from a beneficial interest that there should be a valid or effectual trust; it is only necessary that it should clearly appear that a trust was intended … . Once establish that a trust was intended, and the legatee cannot take beneficially. If a testator gives upon trust, though he never adds a syllable to denote the objects of that trust, or though he declares the trust in such a way as not to exhaust the property, or though he declares it imperfectly, or though the trusts are illegal, still in all these cases, as is well known, the legatee is excluded, and the next-of-kin take.

[7-24] Formerly, the question whether the ‘half-secret’ trust was effective depended on establishing that its terms were communicated to the legatee prior to or contemporaneously with the execution of the will. That remains the position on the state of authorities in England,68 Canada69 and New Zealand,70 but not in Ireland or Australia, although there would seem to be no logical reason for a distinction between cases where no trust appears on the face of the

will, and cases where a trust is indicated. Sir William Holdsworth criticised this distinction as being unreasonable and as working substantial injustice.71 Further, the distinction is difficult to apply,72 and leads to arbitrary results: a trust would fail if it referred to a declaration to be made subsequently73 or if the testator expressly directed that the declaration was not to form part of the will.74 In Australia, Young J surveyed the authorities and academic writings and concluded (in accordance with what had been urged in previous editions of this work) that where a legatee has undertaken to the testator to accept a half-secret trust, albeit after the will had been [page 87] executed, the conscience of the legatee was bound, and the trust was valid: it was contrary to conscience for that trust not to be valid.75

Increase or reduction of legacy [7-25] In Re Cooper,76 a testator bequeathed the sum of £5000 to F and W by will and communicated to them the trusts on which he intended that they should hold this sum. By a later will the testator increased the amount of the legacy to F and W to £10,000, but he did not make any communication to them with regard to this increase. It was held that even though the latter gift was in terms an extension of the earlier gift, no valid trust of the second £5000 had been created. It would seem, however, that if the excess is trifling, the rule of de minimis might apply. Similarly, if the testator, after having communicated trusts relating to a specified sum, inserts a lesser sum in his will, the greater might be held to comprehend the less.77 Where, however, there is a substantial increase in the legacy originally bequeathed, there is no ‘ground … which would justify the court in treating the reference to that specific sum which passed between the testator and the trustees as having significance of so loose and indeterminate a character that it could be expanded at will’.78

Secret trusts of imperfect obligation and unlawful trusts [7-26] If the secret purpose for which the testator bequeathed the legacy becomes known to the residuary legatees or next-of-kin, and it appears that this

purpose is unlawful, the question may arise as to whether the trustees will be allowed to carry it out. In this connection, a distinction must be drawn between trusts that are of imperfect obligation, trusts which are against the policy of the law, and trusts for purposes which the law absolutely forbids to be carried out. [7-27] Trusts of imperfect obligation are trusts for purposes (as distinct from persons), private or public, which are not charitable. Provided the purposes are not unlawful and the gift does not infringe ‘the rule against perpetuities’,79 the trustee will possibly be permitted to carry it out if the trustee chooses to do so and if the subject matter of the trust is not excessive, but the trustee will not be compelled to do so. If the trustee does not carry out the trust, the property will pass to the residuary beneficiaries or next-of-kin, but they cannot succeed in an action to prevent the trustee from carrying out the purpose. Examples of such trusts are trusts for the purpose of erecting a monument to the testator,80 for the support of domestic animals,81 for the promotion of sport,82 or the maintenance of a tomb.83 A traditional example of a trust for a purpose contrary to the policy of the law is a trust for future illegitimate children.84 A trustee is not forbidden to carry out a secret trust for such a purpose, and a trustee who does so will not have committed a criminal act. But a trustee’s performance of the trust can be restrained by the residuary beneficiaries or next-of-kin if they become aware of its purpose. [7-28] Finally, the purpose may be one which the law absolutely prohibits and which the trustee must not carry out even in the absence of action to restrain him or her by the residuary [page 88] beneficiaries or next-of-kin. An example would be a trust for the purpose of supporting a revolt against a friendly government85 or for any criminal purpose.

Gift to several donees or legatees [7-29] Where there is a gift to several donees as tenants in common, but really made upon a secret trust, and where no trust appears on the face of the will, only those donees who were informed of the intended trust, and who

assented to it, are bound by it. It makes no difference whether the information was given before or after the making of the will.86 [7-30] If there are several joint devisees or legatees, and where no trust appears on the face of the will, and the secret trust is communicated to all of them and all agree to carry it out, they are all bound by the trust.87 If the trust has been communicated to some of them and not to others, a further principle applies, namely, as Sir William Page-Wood VC put it: ‘If, on the faith of a promise by A, a gift is made in favour of A and B, the promise is fastened to the gift of both, for B cannot profit by A’s fraud.’88 Thus, if the information is given to any of them before the making of the will, all are bound.89 However, if none of the joint devisees or legatees learn of the trust prior to the making of the will, then only those to whom it was communicated and who assented to it after the will was made are bound by it.90 [7-31] If there is a gift to a number of joint devisees or legatees, and the secret trust appears on the face of the will, all will be bound by it if there has been communication and acceptance by one or more of them prior to the making of the will. If none have accepted prior to the making of the will, then those assenting trustees to whom the trust was communicated before the death of the testator will hold their share on the secret trust, and the others will hold theirs on trust for the residuary beneficiaries or the next-of-kin.

The rationale of the secret trust [7-32] It will be seen from the foregoing that three elements must be present before a secret trust may be enforced. First, it must be clear that the intention of the testator was that the property should be applied in the manner secretly specified, and that the intention of the testator was not merely to impose a moral obligation, as was the case in Re Snowden.91 Secondly, the testator must have communicated this intention to the donee before the testator’s death, in the case of an apparent absolute gift, or before or contemporaneously with his or her will, in the case where a trust appears on the face of the will. Finally, either by an express promise or by the tacit promise which is signified by acquiescence,92 the donee or trustee must have encouraged the testator to bequeath the property in the faith that his or her intentions would

[page 89] be carried out.93 To the extent that the assets subjected to the secret trust are not exhausted by the performance of the trust, they will be held on the terms appearing on the face of the will.94 [7-33] One of the most vexed questions in the law of trusts is the rationale of the doctrine of secret trusts.95 Most of the older authorities, and some distinguished modern writers (for example, Scott)96 regarded them as, in effect, testamentary dispositions exempted on policy grounds from the necessity of complying with the Wills Act. Thus, in a series of cases it was held that a halfsecret trust cannot be upheld if inconsistent with the terms of the will; for example, where a testator bequeathed £4000 to A for the charitable purposes agreed upon between them, evidence was not admissible to show an oral agreement that the legatee would devote only the income from the £4000 to charitable purposes.97 The view which has found favour with most modern authorities is different, namely, that secret trusts are not testamentary in nature and the provisions of the Wills Act are therefore irrelevant: ‘the whole theory of the formation of a secret trust is that the Wills Act has nothing to do with the matter’.98 As Young J said, ‘Because the trust flows from the effect on the conscience of the fiduciary, it matters not that there are problems with the formalities under the Wills Act or delegation of testamentary power or that there is a technical problem such as the beneficiary of the half secret trust witnessing the will.’99 On the latter theory, therefore, it has been held that the fact that the beneficiary of a secret trust predeceased the testator did not cause the disposition to lapse100 and the fact that the beneficiary of a secret trust witnessed the will under which the trust arose, did not invalidate the disposition creating the trust.101 Similarly, where legislation exempts from death duties a legacy for charitable purposes, it has been held that the exemption will not apply to a legacy held on a secret trust for charitable purposes.102 Presumably, different results would have ensued on the older theory. Many important questions depend on which theory is correct, for example, whether a secret trust is affected by revocation of the will under which it arose, or whether the death of the intended trustee before the testator’s death affects the title of the beneficiary. Another question which arises is the extent to which the provisions

of s 23C of the Conveyancing Act 1919 (NSW) and its counterparts in other jurisdictions apply to secret trusts, if the latter theory be correct. If they are really non-testamentary, and are express trusts (not constructive trusts), the provisions of s 23C(1) would apply to them in full, and then they would not fall within the exemption contained in s 23C(2).103 [page 90] [7-34] The difficulties involved with these interpretations are exemplified in Re Gardner.104 The testator gave all her property to her husband ‘knowing that he will carry out my wishes’. Subsequently, she signed a memorandum stating that she wished her husband to hold the property for his life, then to be divided equally between three of her relatives, two nieces and a nephew. The memorandum did not satisfy the requirements for execution of a codicil. The case was argued as raising a fully secret trust. But one would have thought it was partly secret at best, with the results that the memorandum, post-dating the will, should have failed and taken the secret trust with it. But the point was not taken. The contention arose from the death of one of the nieces before that of the testator. Romer J held that one-third of the estate of the testator was held on trust for those claiming under the niece. The report does not disclose whether the estate of the testator included interests in land. Romer J offered no clear basis in principle for his judgment. [7-35] Much academic writing continues to assume that there is a discrete category of ‘secret trust’, comprising the subdivisions of fully secret and partly secret trusts, and that sufficient analysis of the cases will provide the one rationale which will explain all the decisions.105 That is not so. Once it is perceived that so-called secret trusts are enforced to honour the intention of the testator, it will be understood that each alleged secret trust will rest upon the particular circumstances of the case and no one situation will encompass all instances. Bearing that in mind, the following possibilities may be considered: (1) A contract between the wife and her husband that she would not alter the disposition to him if he agreed to follow her wishes as to the division of the property, on subsequent breach by the husband, would have given no rights

at law to the beneficiaries who were not parties to the contract, but would have done so in equity if the husband had been a trustee of his legal rights.106 (2) An express declaration of trust by the wife, effective at the time she executed the will or the memorandum, would have immediately diminished her absolute ownership of her property, fettered her power to recall her property and deal with it otherwise, unless a power of revocation had been reserved, and would have required writing in so far as it settled land. But undoubtedly, the niece would have vested rights at the time of her death. (3) If the wishes of the wife had been put in contractual terms or expressed as an immediately effective declaration of trust, then the husband would have been free in equity to take his interest under the wife’s will only if he assumed the concomitant burden of obeying those wishes. If there had been an express trust this would have governed the situation. If the arrangement had been contractual, the husband would have been rendered a constructive trustee.107 But in whose favour — the surviving relatives only, or also the estate of the deceased niece? The decision in Re Gardner was for the latter solution. How then did the niece have a vested interest at the time of her death, when the trust giving life to that interest arose subsequently, after the wife herself died? The answer may be in the flexible character of the constructive trust. The obligation of the husband was to honour as far as possible the wife’s wishes and she was to be treated as having intended no lapse of a share if [page 91] any relative died prematurely. Thus, the constructive trust would have arisen after the wife’s death, but in favour of the relatives or their then personal representatives. (4) In so far as the arrangements were an immediately effective express trust, but the Statute of Frauds required writing as it was a trust of land, it would have been a fraud upon the statute for the husband to have taken full ownership and denied the trust. This would have been a case not of constructive trust (not requiring writing) but of an express trust against

proof of which equity would not permit the statutory requirements to be raised.108 (5) If there had been no express trust and the arrangement had not been contractual there would not, without some other special circumstances raising a fraud, have been any constructive trust. It may be that such circumstances were provided by the indication to the wife of the husband’s acceptance of the arrangement and his subsequent effort to resile by taking the bequest absolutely, but it is hard not to treat such circumstances other than as raising a contract or an express trust. (6) If there had been no contract and no express trust to take effect immediately, but only an attempt to create, without value and not by will, an express trust to commence at the death of the wife, this would, even if in writing, have failed to operate as such a trust and could not have vested any equitable title in the intended beneficiaries. It would have been an attempt to dispose of property in a manner only permitted by will109 and an attempt to create gratuitously a trust to commence in the future, which could not succeed.110 (7) The attempt to create a trust discussed in (6) would fail, inter alia, because it was an attempt to dispose of property in a testamentary manner and did not comply with the requirements of the Wills Act. But it may be, and the early cases on the subject111 appear to proceed on this basis, that in such a case, by an extension of the doctrine as to ‘engines of fraud’, the husband would not be permitted in equity to take his interest under the will and rely on the Wills Act to deny that the testamentary wishes of his wife had been other than as appeared on the face of the will. One would thus reach the result that the wife had created a testamentary trust although she had not complied with the Wills Act. In Re Gardner, even if this doctrine had been applied, the gift to the niece would have failed because she predeceased the testator and under this doctrine her only hopes of bounty lay in the testamentary arrangements of her aunt. The decision in Re Gardner would have been the same whether the trust was express or constructive. But if a trust of land is involved and the trust is oral, the distinction will be of vital importance as a constructive trust will be exempted from the statutory requirements for writing. The distinction will also be decisive where the testator-settlor endeavours before death to countermand directions given, or this happens by operation of law, for example, by revocation of the will

on the marriage of the testator. There may at that stage be no constructive trust, but an express trust will have arisen and may not be revocable unless a power to that effect was reserved at the outset. [7-36] In the treatment of so-called secret trusts in this chapter and elsewhere, much attention has been paid to the distinction between partly and fully secret trusts. These distinctions arose at a time when secret trusts were understood as exceptions to the Wills Act requirements for testamentary succession, but are not congruent with the proper understanding of secret trusts as trusts which operate outside the will, binding the conscience of the legatee by reason of knowledge and acceptance. It is to be hoped that courts in other jurisdictions will review this aspect of the law and follow the decision of Young J in Ledgerwood v Perpetual Trustee Co Ltd.112 _____________________________ 1.

For a survey of the legislative history which was prompted by inadequacies in Chancery procedure, advances in conveyancing practice and the establishment of assumpsit as an alternative to debt, see T Youdan, ‘Formalities for Trusts of Land, and the Doctrine in Rochefoucauld v Boustead’ (1984) 43 CLJ 306 at 307–15.

2.

The corresponding legislation in other jurisdictions is Civil Law (Property) Act 2006 (ACT) s 201; Law of Property Act (NT) s 10; Property Law Act 1974 (Qld) s 11; Law of Property Act 1936 (SA) s 29; Conveyancing and Law of Property Act 1884 (Tas) s 60(2); Property Law Act 1958 (Vic) s 53; Property Law Act 1969 (WA) s 34. The Queensland provision provides that (b) applies only to land, not interests in land, and that (c) is satisfied merely by writing, manifesting and proving the disposition. A full treatment of the difficult questions of construction under this legislation may be found in Meagher, Gummow and Lehane’s Equity, Ch 7. W Holdsworth, History of English Law, Vol 6, p 379ff; Abjornson v Urban Newspapers Pty Ltd [1989] WAR 191 at 198–9.

3. 4. 5.

Forster v Hale (1798) 3 Ves 696; 30 ER 1226; Rochefoucauld v Boustead [1897] 1 Ch 196. Permanent Trustee Co v Scales (1930) 30 SR (NSW) 391 at 393.

6.

See Secretary, Department of Social Security v James (1990) 95 ALR 615; Hagan v Waterhouse (1992) 34 NSWLR 308 at 385–6; Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470 at 478, 481; Khoury v Khouri (2006) 66 NSWLR 241 at [61]–[63]. (1973) 130 CLR 276; [1972–73] ALR 1224; see R Austin (1974) 48 ALJ 322; D Everett (1987) 17 UWALR 301; N Seddon (1987) 61 ALJ 406.

7. 8. 9.

(1998) 195 CLR 566 at [39]; 157 ALR 414. As to which, see [7-15].

10. See [7-09]. 11. Pary v Juxon (1669) 3 Rep Ch 38; 22 ER 1108; Kilpin v Kilpin (1834) 1 My & K 520; 39 ER 777; McFadden v Jenkyns (1842) 1 Hare 458; 41 ER 589; Jones v Lock (1865) 1 Ch App 25; Bayley v Public Trustee (1907) 27 NZLR 659.

12. Kilpin v Kilpin (1834) 1 My & K 520; 39 ER 777. 13. Petty v Petty (1853) 22 LJ Ch 1065. 14. See PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241 at 249–51 Meagher, Gummow and Lehane’s Equity, [7-045]–[7-050]. As Gibbs J noted in Adamson v Hayes (1973) 130 CLR 276 at 302– 3; [1972–3] ALR 1224 at 1240, the proposition in the text is implicit in Grey v Inland Revenue Commissioners, Oughtred v Inland Revenue Commissioners and Vandervell v Inland Revenue Commissioners. 15. Mercantile Law Act 1935 (Tas) s 6. 16. Skett v Whitmore (1705) Freem Ch 280; 22 ER 1211; Forster v Hale (1798) 3 Ves 696; 30 ER 1226. 17. This passage was applied in Klewer v Official Trustee in Bankruptcy (No 2) [2008] FCA 1788 at [51]. 18. Tierney v Wood (1854) 19 Beav 330 at 336; 52 ER 377 at 379–80; see also Kronheim v Johnson (1877) 7 Ch D 60 at 66; Re Cozens [1913] 2 Ch 478. 19. Mountain v Stayak [1922] NZLR 131 at 137–40. 20. Forster v Hale (1798) 3 Ves 696; 30 ER 1226. 21. Forster v Hale (1798) 3 Ves 696; 30 ER 1226; cf Re Danish Bacon Staff Pension Fund [1971] 1 All ER 486 at 492; [1971] 1 WLR 248 at 255; S v P (2006) 198 FLR 1 at [71]–[77]. 22. Re Hoyle [1893] 1 Ch 84; Perry v Commissioner of Stamps (1913) 32 NZLR 1194. 23. Barkworth v Young (1856) 26 LJ Ch 153. 24. Wilson v Dent (1830) 3 Sim 385; 57 ER 1042. 25. McBlain v Cross (1871) 25 LT (NS) 804. 26. Smith v Matthews (1861) 3 De GF & J 139 at 151; 45 ER 831 at 836 per Sir George Turner LJ. 27. Forster v Hale (1798) 3 Ves 696; 30 ER 1226; Morton v Tewart (1842) 2 Y & C Ch Cas 67 at 80; 63 ER 29 at 35. See also Ryder v Taylor (1935) 36 SR (NSW) 31. 28. Re Tyler’s Fund Trusts [1967] 3 All ER 389; [1967] 1 WLR 1269. 29. Forster v Hale (1798) 3 Ves 696; 30 ER 1226; Rochefoucauld v Boustead [1897] 1 Ch 196 at 206. 30. Gardner v Rowe (1828) 5 Russ 258; 38 ER 923. See also Re Holland [1902] 2 Ch 360; Perpetual Executors & Trustees Association of Australia Ltd v Wright (1917) 23 CLR 185; 25 ALR 177. This paragraph was cited and applied by Simos J in Fraser v Power [2001] Aust Contract R 90–127 at [174]–[180]. 31. Tierney v Wood (1854) 19 Beav 330; 52 ER 377; Ryder v Taylor (1935) 36 SR (NSW) 31 at 51; Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470 at 478, 481. 32. [1972] 2 NSWLR 923; and see Theodore v Mistford Pty Ltd (2005) 221 CLR 612; 219 ALR 296 at [31]. 33. Organ v Sandwell [1921] VLR 622 at 630; Wratten v Hunter [1978] 2 NSWLR 367; ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 59 NSWLR 196 at [329]–[333]. 34. McCormick v Grogan (1869) LR 4 HL 82 at 97; Booth v Turle (1873) LR 16 Eq 182; Re Duke of Marlborough; Davis v Whitehead [1894] 2 Ch 133 at 141; Rochefoucauld v Boustead [1897] 1 Ch 196; Cadd v Cadd (1909) 9 CLR 171; 15 ALR 502; Organ v Sandwell [1921] VLR 622; Last v Rosenfeld [1972] 2 NSWLR 923; Bloch v Bloch (1981) 180 CLR 390 at 403; 37 ALR 55 at 64–5; Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470 at 479, 481–2; ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 59 NSWLR 196 at [329]–[333]; Ciaglia v Ciaglia (2010) 269 ALR 175; 14 BPR 27,479 at [64]–[85]; Young v Young (2014) 10 ASTLR 292. This sentence was quoted with approval in Wade v Wade [2009] WASC 118 at [80]. 35. [1897] 1 Ch 196.

36. [1948] 2 All ER 133; Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 654; 78 ALR 1 at 36; see also Sharp v Anderson (1994) 6 BPR 13,801. 37. [1948] 2 All ER 133 at 136. 38. See Allen v Snyder [1977] 2 NSWLR 685 at 692; Dalton v Christofis [1978] WAR 42; Avondale Printers v Haggie [1979] 2 NZLR 124 at 161–5; Redden v Lillis [1979] WAR 161; Brown v Wylie (1980) 6 Fam LR 519; Bloch v Bloch (1981) 180 CLR 390 at 403; 37 ALR 55 at 64; Sharp v Anderson (1994) 6 BPR 13,801 at 13,813. This paragraph was approved in Schweitzer v Schweitzer [2012] VSCA 260 at [43]. 39. 1st ed, p 308, see now 5th ed, [12-125]. 40. Avondale Printers v Haggie [1979] 2 NZLR 124 at 162–3; ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 59 NSWLR 196 at [336]; Overmyer Industrial Brokers Pty Ltd v Campbells Cash and Carry Pty Ltd [2003] Aust Contract Rep 90-181 at [69]. 41. Provisions in other jurisdictions to like effect are Wills Act 1968 (ACT) s 9; Wills Act (NT) s 8; Succession Act 1981 (Qld) s 10; Wills Act 1936 (SA) s 8; Wills Act 2008 (Tas) s 8; Wills Act 1997 (Vic) s 7; Wills Act 1970 (WA) s 8. 42. Blackwell v Blackwell [1929] AC 318; R Meager [2003] Conv 203 at 207–8. 43. Cullen v A-G for Ireland (1866) LR 1 HL 190; Re Huxtable [1902] 2 Ch 793; Re Young [1951] Ch 344; [1950] 2 All ER 1245. 44. Rawstron (Executrices of the Estate of Lucian Freud) v Freud [2014] WTLR 1453. 45. H Hanbury, Modern Equity, 2nd ed, p 141. See also the historical account in D Yazdani, ‘Secret Trusts: An Ancient Doctrine in Need of Reform?’ (2015) 23 APLJ 196. 46. Re Snowden [1979] Ch 528 at 537; [1979] 2 All ER 172 at 178–9. 47. (1954) 94 CLR 231 at 233. 48. See further Brown v Pourau [1995] 1 NZLR 352 at 369ff; Howell v Hyde (2003) 47 ACSR 230 at [46]– [47]. 49. Voges v Monaghan (1954) 94 CLR 231 at 233; Re D’Amico (1974) 42 DLR (3d) 759; Howell v Hyde (2003) 47 ACSR 230 at [60]; see also Brown v Willoughby (2012) 7 ASTLR 453. 50. Re D’Amico (1974) 42 DLR (3d) 759. 51. Wallgrave v Tebbs (1855) 2 K & J 313; 69 ER 800; Tee v Ferris (1856) 2 K & J 357; 69 ER 819; Moss v Cooper (1861) 1 John & H 352; 70 ER 782; McCormick v Grogan (1869) LR 4 HL 82; French v French [1902] 1 IR 172; Will of Doig [1916] VLR 698. 52. (1954) 94 CLR 231 at 233 and 240–1 respectively. 53. [1902] 1 IR 172 at 230. 54. See also Riordan v Banon (1876) 10 Ir R Eq 469 at 478; Re Fleetwood (1880) 15 Ch D 594 at 606–7; Blackwell v Blackwell [1929] AC 318 at 328–9, 342; [1929] All ER Rep 71 at 74–5, 81; Howell v Hyde (2003) 47 ACSR 230 at [40]–[44]. 55. D Hodge, ‘Secret Trusts: The Fraud Theory Revisited’ (1980) 44 Conv 341 at 345–8; see also Re Dale (dec’d) [1994] Ch 31 at 48; [1993] 4 All ER 129 at 142 (mutual wills). 56. [1902] 2 Ch 220. For discussions of the necessary elements of a secret trust of this type, see Voges v Monaghan (1954) 94 CLR 231 and Ottaway v Norman [1972] Ch 698; [1971] 3 All ER 1325. See also Re Wedgwood [1915] 1 Ch 113; [1914–15] All ER Rep 322; Re Gardner [1920] 2 Ch 523; [1920] All ER Rep 723; Williams v Commissioner of Stamp Duties [1943] NZLR 88. 57. Re Gardner [1923] 2 Ch 230; [1920] All ER Rep 723. 58. Wallgrave v Tebbs (1855) 2 K & J 313; 69 ER 800; Re Shields [1912] 1 Ch 591. 59. (1884) 26 Ch D 531.

60. See also Le Page v Gardom (1915) 113 LT 475; Re Jones [1942] Ch 238; [1942] 1 All ER 642; Re Jeffery [1951] SASR 237. 61. Sellack v Harris (1708) 5 Vin Abr 521; 22 ER 40; Strickland v Aldridge (1804) 9 Ves 519; 32 ER 703; Chester v Urwick (1856) 23 Bev 404; 53 ER 159. 62. Barrow v Greenough (1796) 3 Ves 52; 30 ER 943. Cf Re Williams [1933] Ch 244; [1932] All ER Rep 724. 63. McCormick v Grogan (1869) LR 4 HL 82; Re Snowden [1979] Ch 528; [1979] 2 All ER 172. 64. Tharp v Tharp [1916] 1 Ch 142. 65. See, for example, Rawstron (Executrices of the Estate of Lucian Freud) v Freud [2014] WTLR 1453. 66. Morice v Bishop of Durham (1805) 10 Ves Jun 522 at 537; 32 ER 947 at 953. 67. (1851) 3 Mac & G 546 at 577, 578; 42 ER 371 at 375. 68. Blackwell v Blackwell [1929] AC 318 at 339; [1929] All ER Rep 71; Re Keen [1937] Ch 236; [1937] 1 All ER 452; Re Bateman’s Will Trusts [1970] 3 All ER 817; [1970] 1 WLR 1463, although in Gold v Hill [1999] 1 FLR 54 at 62–3, Carnwath J held that the communication of the terms of a trust to a solicitor nominated as a beneficiary under a life assurance policy might be communicated after the nomination, analogies to secret trusts notwithstanding. 69. Re Mihalopulos (1956) 5 DLR (2d) 628. 70. Re Karsten (dec’d) [1953] NZLR 456. 71. (1937) 53 LQR 501 at 507; see also L Sheridan (1951) 67 LQR 314 at 329; B Perrins (1985) 49 Conv 248; D Yazdani, ‘Secret Trusts: An Ancient Doctrine in Need of Reform?’ (2015) 23 APLJ 196; Waters Law of Trusts in Canada, 4th ed, Carswell, Toronto, 2012, pp 294–302; Scott on Trusts, §7.2.6; Snell’s Equity, p 661. 72. Cf Re Gardner [1920] 2 Ch 523; [1920] All ER Rep 723; [1923] 2 Ch 230 with Re Fleetwood (1880) 15 Ch D 594; Re Hetley [1902] 2 Ch 866; [1900–3] All ER Rep 292. 73. Re Jones [1942] Ch 238; [1942] 1 All ER 642. The bequest referred to an identified declaration of trust and ‘any substitution therefore or modification thereof or addition thereto’. See also Re Keen [1937] Ch 236; [1937] 1 All ER 452; Re Bateman’s Will Trusts [1970] 3 All ER 817; [1970] 1 WLR 1463. 74. Re Louis (1916) 32 TLR 313. 75. Ledgerwood v Perpetual Trustee Co Ltd (1997) 41 NSWLR 532 at 537–40. 76. [1939] Ch 811; [1939] 3 All ER 586. 77. See D Kincaid [2003] Conv 420 at 428–31. 78. [1939] Ch 811 at 818; [1939] 3 All ER 586 at 589 per Lord Greene MR. 79. See Chapter 9. 80. Mitford v Reynolds (1848) 16 Sim 105; [1843–60] All ER Rep 118. 81. Re Dean (1889) 41 Ch D 552. 82. Re Nottage [1895] 2 Ch 649; [1895–9] All ER Rep 1203. 83. Pirbright v Salwey [1896] WN 86. But see also Muir v Archdall (1918) 19 SR (NSW) 10; Pooley v Royal Alexandra Hospital (1932) 32 SR (NSW) 459; Public Trustee v Nolan (1943) 43 SR (NSW) 169. Cf South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259. See Chapter 11. 84. Medworth v Pope (1859) 27 Beav 71; 54 ER 28. 85. Habershon v Vardon (1851) 4 De G & Sm 467; 64 ER 916. 86. Tee v Ferris (1856) 2 K & J 357; 69 ER 819; Rowbotham v Dunnett (1878) 8 Ch D 430; Re Stead [1900] 1 Ch 237 at 241.

87. Moss v Cooper (1861) 1 John & H 352; 70 ER 782. 88. Moss v Cooper (1861) 1 John & H 352 at 367; 70 ER 782 at 789; Re Young [1951] Ch 344 at 349; [1950] 2 All ER 1245 at 1249; Ledgerwood v Perpetual Trustee Co Ltd (1997) 41 NSWLR 532 at 537. 89. Moss v Cooper (1861) 1 John & H 352 at 367; 70 ER 782 at 789; Russell v Jackson (1868) LR 3 Ch App 362 at 364. This classification is criticised and the support of the authorities cited for it is cogently disputed by Perrins (1972) 88 LQR 225. In his view, the only question with both joint tenants and tenants in common, is whether the gift to all of them was induced by the promise by any of them to the testator. If it was, then all are bound. 90. Burney v MacDonald (1845) 15 Sim 6; 60 ER 518; Moss v Cooper (1861) 1 John & H 352; 70 ER 782; Re Stead [1900] 1 Ch 237. 91. [1979] Ch 528; [1979] 2 All ER 172. 92. A person accepts a secret trust if he or she silently acquiesces in it when it is communicated to him or her: Paine v Hall (1812) 18 Ves 475; 34 ER 397; Lomax v Ripley (1855) 3 Sm & G 48 at 79; 65 ER 558 at 571; Tee v Ferris (1856) 2 K & J 357 at 363, 364; 69 ER 819 at 822; Rowbotham v Dunnett (1878) 8 Ch D 430; Re Williams [1933] Ch 244; [1932] All ER Rep 724; Ottaway v Norman [1972] Ch 698; [1971] 3 All ER 1325. 93. Blackwell v Blackwell [1929] AC 318 at 334; [1929] All ER Rep 71 at 77. 94. In Re Tulley [1918] VLR 556, a testator left one-third of his estate to two of his daughters but on secret trust for his remaining daughter for her life. Upon the death of that daughter, her two sisters took the fund absolutely in accordance with the terms appearing on the face of the will. See also Irvine v Sullivan (1869) LR 8 Eq 673. 95. The authorities and academic commentary are analysed in G Allan (2011) 40 Common Law World Review 311. 96. Scott on Trusts, §7.2. 97. Re Huxtable [1902] 2 Ch 793. It also has been held that there may not accrue to the trustee under the secret trust a beneficial interest not given on the face of the will: Re Karsten (dec’d) [1953] NZLR 456 at 477–9, 481. 98. Re Young [1951] Ch 344 at 346; [1950] 2 All ER 1245 at 1250 per Danckwerts J. See C Rickett [1979] CLJ 260 at 263, where the learned author says: ‘Courts do not enforce secret trusts because they are outside the will; they do so because they wish to enforce the testator’s determined intentions. The existence of the trust enables them to by-pass, but not contradict, the statute when dealing with the beneficial interest in the property.’ (Emphasis in original.) 99. Ledgerwood v Perpetual Trustee Co Ltd (1997) 41 NSWLR 532 at 536. 100. Re Gardner [1923] 2 Ch 230. 101. Re Young [1951] Ch 344; [1950] 2 All ER 1245. 102. Cullen v A-G for Ireland (1866) LR 1 HL 190. 103. Professor Sheridan, looking to the face of the document, took the view that fully secret trusts (which will not appear) are constructive and therefore within the exemption of s 23C(2); partly secret trusts, on his view, are express and so not within the exemption. See (1951) 67 LQR 314. Snell’s Equity, p 664 suggests that they are constructive, as did Sir Terence Etherton C in FHR European Ventures LLP v Mankarious [2014] Ch 1; [2013] 3 All ER 29 at [75]. In Brown v Pourau [1995] 1 NZLR 352 at 368, Hammond J suggested, but did not need to decide, that the only question was whether there ought to be a remedial constructive trust, a view cogently criticised by C Rickett in [1996] Conv 302. Another view is that the doctrine of secret trusts is concerned with the admissibility of extrinsic evidence to contradict or explain the terms of the will; see B Perrins, ‘Secret Trusts: The Key to The Dehors?’ (1985) 49 Conv 248.

104. [1923] 2 Ch 230. 105. See, for example, D Hodge, ‘Secret Trusts: the Fraud Theory Revisited’ (1980) 44 Conv 341; D Wilde, ‘Secret and Semi-Secret Trusts: Justifying Distinctions Between the Two’ (1995) 59 Conv 366; G Allan, ‘The Secret is Out There: Searching for the Legal Justification of the Direction of Secret Trusts through Analysis of the Case Law’ (2011) 40 Common Law World Review 311 at 327 (‘It is equally clear that all secret trusts are justified on the same principles’). 106. See [2-21]. 107. Birmingham v Renfrew (1937) 57 CLR 666 at 687–9; [1937] ALR 520 at 527–8. 108. See [7-09]. 109. Russell v Scott (1936) 55 CLR 440; [1936] ALR 375; McFadden v Public Trustee for Victoria [1981] 1 NSWLR 15 at 30. 110. Re Ellenborough [1903] 1 Ch 697. 111. For example, Johnson v Ball (1851) 5 De G & Sm 85; 64 ER 1029; Wallgrave v Tebbs (1855) 2 K & J 313; 69 ER 800. 112. (1997) 41 NSWLR 532.

[page 92]

CHAPTER 8 The Interpretation of the Trust General Canons

[8-01]

Superannuation Trusts

[8-03]

Executed and Executory Trusts

[8-04]

General Canons [8-01] Isaacs J said in Fell v Fell that it was an incontestable principle that it was a necessary consequence of the law that every will be in writing that the meaning of testamentary trusts be discovered from the writing itself, aided only by such extrinsic evidence as is necessary in order to enable comprehension of the words used by the testator.1 These considerations are strengthened by the rule that, apart from statute, ‘it has always been assumed that the courts had no … power to rectify a will’,2 in contrast with voluntary settlements.3 In construing testamentary instruments, the courts have built up, if not rules of law or of construction, what are at least what Holmes J, in a somewhat different context, described as ‘axioms of experience’.4 The consideration of this vast body of authority is beyond the scope of this work.5 In Fell v Fell, Isaacs J said:6 In the judicial construction of instruments, whether wills or deeds or statutes, Courts are not to approach the matter from the standpoint of the hypothetical personage sometimes alluded to as ‘the man in the street’. In earlier times Courts certainly sometimes laid greater stress on rigid rules of construction, and in the dominancy of interpretive tests, than they do today. Actual intention has freer scope in recent years than in many of the early cases. Influences that formerly were thought imperative have in many instances passed away, and the modern tendency of Courts is to give fuller play to the words themselves than was once thought proper. But, on the

other hand, we have to guard ourselves from the opposite extreme. A Court, in my opinion, is not to place itself in the position of a person unaccustomed to the functions of a legal tribunal, and then make the double error of first assuming how he would construe the document, and next adopting as a curial interpretation the construction so assumed.

[page 93] [8-02] In the course of construing a voluntary settlement, in Re Gulbenkian’s Settlement Trusts, Lord Upjohn, speaking of the task of the court as one to ascertain the intention of the settlor, said:7 The court, whose task it is to discover that intention, starts by applying the usual canons of construction; words must be given their usual meaning, the clause should be read literally and in accordance with the ordinary rules of grammar. But very frequently, whether it be in wills, settlements or commercial agreements, the application of such fundamental canons leads nowhere, the draftsman has used words wrongly, his sentences border on the illiterate and his grammar may be appalling. It is then the duty of the court by the exercise of its judicial knowledge and experience in the relevant matter, innate common sense and desire to make sense of the settlor’s and parties’ expressed intentions, however obscure and ambiguous the language that may have been used, to give a reasonable meaning to that language if it can do so without doing complete violence to it.

It has become fashionable to say that in construing settlements, the court should adopt an approach which is ‘practical and purposive, rather than detached and literal’.8 But it may be doubted, as Warner J himself observed in Mettoy Pension Trustees Ltd v Evans, whether this does any more than encapsulate that which was explained by Lord Upjohn, itself well understood and not novel.9 In Finch v Telstra Super Pty Ltd, the High Court said that it was a ‘questionable assumption that in this context that can be different approaches’.10 Very often, the fiscal background — the drafting of provisions in order to comply with, or take advantage of, favourable taxation treatment — is another important consideration in construing the document.11 Another aspect of the fiscal background is to be found in the practice and requirements of the tax authorities at the relevant time.12

Superannuation Trusts [8-03] In recent years, courts have been required to construe complex pension and superannuation schemes for employees.13 In a passage in his

judgment in Re Courage Group’s Pension Schemes,14 which has been approved in a number of later decisions, Millett J began with the undoubted proposition that there were no special rules of construction applicable to pension schemes. However, his Lordship went on to point out that in the case of an institution of long duration and fluctuating membership, like a club or pension scheme, the validity of the exercise of a power of alteration in the rules must be tested by reference [page 94] to the situation at the time of the proposed change, rather than by reference to the original rules.15 This approach may be questioned, reminiscent as it is of the ‘living tree’ approach to constitutional construction. Of course, there can be no general objection to judging validity by reference to the rules as they stand from time to time, after earlier valid amendments. Further, in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd,16 Sir Nicolas Browne-Wilkinson VC described the ‘traditional trust’ as one under which the settlor, by way of bounty, transfers property to trustees to be administered for beneficiaries who are volunteers, in circumstances where there is no legal relationship between the parties apart from the trust. His Lordship continued: Pension benefits are part of the consideration which an employee receives in return for the rendering of his services. In many cases, including the present, membership of the pension scheme is a requirement of employment. In contributory schemes, such as this, the employee is himself bound to pay his or her contributions. Beneficiaries of the scheme, the members, far from being volunteers have given valuable consideration. The company employer is not conferring a bounty. In my judgment, the scheme is established against the background of such employment and falls to be interpreted against that background.

It followed, in the view of the Vice-Chancellor, that the implied obligation of good faith in the contract of employment applied also to the exercise of rights and powers under a pension scheme.17 Thus the context of a superannuation or pension trust can be significant.18 In Finch v Telstra Super Pty Ltd,19 the High Court was required to construe a trust deed which authorised a payment of a benefit to a member who, ‘in the opinion of the Trustee … had ceased to be an Employee and is unlikely ever to engage in any gainful Work for which the Member is for the time being reasonably qualified by education, training or experience’. The court had regard to the

importance of superannuation to individual employees, its public significance, and the character of the regulatory regimes to support the conclusions that the formation of the opinion by the trustee was not a discretionary power but an ingredient in the performance of a trust duty, and that the member was not the object of a discretionary power of appointment, but had a beneficial interest in the trust property, although one which was contingent on particular events. Similar reasoning led the Federal Court to conclude that a payment from a superannuation trust to an injured employee amounted to ‘consideration’ in respect of personal injury within the meaning of the Income Tax Assessment Act 1936 (Cth), and was thus exempt from taxation.20 However, Hayne J was not prepared to extend this reasoning to displace the clearly discretionary language in a trust deed of an industry fidelity fund which permitted payments to be made to oil companies in the event of default by a participating member — notwithstanding that the oil companies were not mere objects of bounty and had dealt with distributors in the knowledge that they were members.21 [page 95]

Executed and Executory Trusts [8-04] Although the beneficiaries of a trust must be identified with certainty, it is not essential that the trust instrument or declaration should precisely delineate the nature of the beneficiaries’ interests. There may be an executory trust, where the settlor has either agreed or covenanted for the subsequent execution of a trust instrument, or (usually in a will) has made a direction or declaration from which the trustee is to prepare a formal written settlement.22 In Davis v Richards & Wallington Industries Ltd,23 Scott J approved a definition of executory trust in the following terms:24 An executory trust is one where the trust property is vested in trustees … or is the subject of an enforceable agreement to create a trust but the interests to be taken by the beneficiaries remain to be delimited in some subsequent instrument pursuant to the settlor’s clear general intention.

Thus, an executory trust ‘is to be executed by the preparation of a complete and formal settlement carrying into effect, through the operation of an apt and detailed legal phraseology, the general intention compendiously indicated by’ the settlor.25 In contrast, in an executed trust, no further document need be

brought into existence. As Lord St Leonards said of the settlor, ‘He has been his own conveyancer.’26 [8-05] Formerly, executory trusts were much more common, particularly where they arose under marriage articles (where the strong presumption that provision was intended to be made for the children of the marriage could displace even clearly expressed intentions).27 More recently, executory trusts arise in wills and in interim pension and superannuation fund schemes. [8-06] The distinction between executed and executory trusts must not be confused with that between completely and incompletely constituted trusts.28 The distinction between the latter depends on whether or not the trust property has been vested in trustees and is of vital importance in considering the rights of volunteers to enforce the trust. An executory trust may be completely constituted, in which case it will be enforceable by volunteers. An executed trust will always be completely constituted. [8-07] In any particular case it may be difficult to determine whether a trust is executed or executory. If it appears that the testator or settlor has not been ‘his own conveyancer’ but has determined to leave it to the court to frame a proper settlement from general indications of intention, then the trust will be executory.29 The intentions of the settlor or testator must, however, be indicated with sufficient certainty, otherwise no trust at all will be created or the primary beneficiary will take free from any settlement.30 Nor, in executing the trust, may the court dispense with some consent or approval required by the executory trust instrument. For example, an executory trust for the bringing into effect by a parent company of rules for a pension scheme required approval of the rules by the subsidiaries in the group.31 [page 96] [8-08] The importance of the distinction between executed and executory trusts lies in the fact that whereas the construction or interpretation of the former is governed by rules of law, the court endeavours to construe the latter so as to carry out the intention of the settlor so far as it can ascertain the same, and in so doing will have regard to the intent rather than the form. ‘In construing

the words creating an executory trust, a court of equity exercises a large authority in subordinating the language to the intent.’32 [8-09] In the case of executed trusts, the settlor’s wishes have been stated in appropriate language, clearly and precisely, and all that the court has to do is to construe the language according to its proper legal meaning. In so construing the language the court, in its equitable jurisdiction, will place the same construction on the words of limitation as a court of law would.33 A frequent source of litigation was the application of the rule in Shelley’s case,34 which has now been repealed in most jurisdictions.35 [8-10] The position is quite different in the case of executory trusts, for here the settlor’s wishes have not been expressed in formal technical legal language, but instead have been expressed in an informal way or in mere outline, or are such that they cannot be carried out as expressed. The problem the court has before it is first to determine exactly what the settlor intended, and then to direct how those intentions can best be carried out. As giving strict legal effect to technical language sometimes defeats a proper understanding of what the settlor has done, the courts, in the case of executory trusts where the language is frequently more or less informal, do not consider themselves necessarily bound by hard and fast rules as to the meaning to be given to particular words or phrases, but endeavour to give effect to the settlor’s intention as they can derive it from the instrument as a whole.36 If, however, no intention is reasonably discernible from the instrument itself or the nature of the case, the court is bound to construe any technical words strictly in accordance with their legal meaning. _____________________________ 1.

(1922) 31 CLR 268 at 273; 29 ALR 31 at 33, citing Abbott v Middleton (1858) 7 HLC 68 at 88, 114; 11 ER 28 at 36.

2. 3.

Marley v Rawlings [2015] AC 129; [2014] 1 All ER 807 at [27]. Meagher, Gummow and Lehane’s Equity, [27-005].

4. 5.

Boston Sand & Gravel Co v United States 278 US 41 at 48 (1928). See Williams on Wills, [49.1]–[100.7]; Theobald on Wills, pp 263ff; A Preece, Lee’s Manual of Queensland Succession Law, 7th ed, Thomson Reuters Australia, 2012.

6. 7.

(1922) 31 CLR 268 at 272–3; 29 ALR 31 at 33. [1970] AC 508 at 522; [1968] 3 All ER 785 at 790–1. This passage was applied in Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 538; [1990] 1 WLR 1587 at 1611; in Penola & District

Ratepayers’ & Residents’ Assn Inc v Wattle Range Council [2011] SASCFC 62 at [37]; in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 310 ALR 113 at [100]; and in Application of Karla Marie Tate and Hyun Jong Chung [2015] NSWSC 639 at [28]. 8.

9.

Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] 1 WLR 1587 at 1610; Lock v Westpac Banking Corp (1991) 25 NSWLR 593 at 602, noted (1993) 67 ALJ 70; Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 297; Collins v AMP Superannuation Ltd (1997) 75 FCR 565 at 580; 147 ALR 243 at 256; Re Scientific Investment Pension Plan Trusts [1999] Ch 53 at 62; [1998] 3 All ER 154 at 161; Nick Kritharas Holdings Ltd (in liq) v Gatsios Holdings Pty Ltd (2001) 38 ACSR 57 at [18]– [19]; Local Government Superannuation Board v Thorne (2002) 76 ALD 569 at [34]. See [29-53]. See Caboche v Ramsay (1993) 119 ALR 215 at 232–3; Wilson v Law Debenture Trust Corporation plc [1995] 2 All ER 337 at 347–8.

10. (2010) 242 CLR 254; 271 ALR 236 at [27]. 11. See, for example, Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] 1 WLR 1587 at 1610; Re Landau [1998] Ch 223 at 233; [1997] 3 All ER 322 at 329; National Grid Co plc v Mayes [2001] 2 All ER 417; [2001] 1 WLR 864 at [18]–[26]; Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [111]. 12. Stevens v Bell [2002] EWCA Civ 672, quoted in Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at [216]; Aon Trust Corporation Ltd v KPMG [2005] 3 All ER 587 at [20]–[22]. 13. See the cases referred to in the preceding two footnotes; and see Wrightson Ltd v Fletcher Challenge Nominees Ltd [2002] 2 NZLR 1; Stevens v Bell [2002] PLR 247; G Moffat (1993) 56 MLR 471. 14. [1987] 1 All ER 528 at 537–8; [1987] 1 WLR 445 at 505–6. 15. Millett J referred, by way of example, to the process by which the Hurlingham Club founded in 1868 for pigeon shooters became, over the next 30 years, a country club at which pigeon shooting had been discontinued, with reference to Thellusson v Viscount Valentia [1907] 2 Ch 1. 16. [1991] 2 All ER 597 at 605–6; [1991] 1 WLR 589 at 597. 17. See also Hillsdown Holdings plc v Pensions Ombudsman [1997] 1 All ER 862 at 889–90; Prudential Staff Pensions Ltd v The Prudential Assurance Company Ltd [2011] Pens LR 239; [2011] EWHC 960 (Ch) at [122]–[150]. 18. See, for example, Beck v Colonial Staff Super Pty Ltd [2015] NSWSC 723 at [207]–[210]. 19. (2010) 242 CLR 254; 271 ALR 236 at [29]–[36]. 20. Scully v Commissioner of Taxation (1998) 84 FCR 41; 164 ALR 281. See also Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [111]; Capita ATL Pension Trustees Ltd v Gellately [2011] Pens LR 153; [2011] EWHC 485 (Ch) at [50]. 21. Esso Australia Ltd v Australian Petroleum Agents’ & Distributors’ Association [1999] 3 VR 642 at [16]. 22. Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 280. 23. [1991] 2 All ER 563 at 588; [1990] 1 WLR 1511 at 1537. 24. From Underhill and Hayton, Law Relating to Trusts and Trustees, 14th ed, p 33. 25. Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543 at 571. See also Miles v Harford (1879) 12 Ch D 691 at 699. 26. Egerton v Lord Brownlow (1853) 4 HL Cas 1 at 210; 10 ER 359 at 443; Sexton v Horton (1926) 38 CLR 240 at 248; 32 ALR 373. 27. Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543. 28. See [6-02]. See also Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 586–7; [1990]

1 WLR 1511 at 1535. 29. Bowen v McCormack (1895) 12 WN (NSW) 59, where Owen CJ in Eq said: ‘If the testator has been his own conveyancer he appears to me to have used apt words for the purpose; if, on the other hand [the trust] is executory, it is still more clear that the restraint on anticipation must be in the settlement.’ 30. Magrath v Morehead (1871) LR 12 Eq 491; Pass v Mills (1886) 7 LR (NSW) Eq 34; Hogarth v Hogarth (1894) 15 LR (NSW) Eq 93; Pengelly v Pengelly [2008] Ch 375 at [10]. 31. Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 588–9; [1990] 1 WLR 1511 at 1537. 32. Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543 at 565 per Lord Westbury. 33. Re Bostock’s Settlement [1921] 2 Ch 469; [1921] All ER Rep 125; Sexton v Horton (1926) 38 CLR 240; 32 ALR 373. Contrast Re Lorking (1924) 25 SR (NSW) 46. 34. (1581) 1 Co Rep 93; 76 ER 206. 35. See Conveyancing Act 1919 (NSW) s 17; Law of Property Act 2000 (NT) s 28; Property Law Act 1974 (Qld) s 28; Property Law Act 1958 (Vic) s 130; Property Law Act 1969 (WA) s 27; and see Scott on Trusts, §12.14.2. 36. Glenorchy v Bosville (1733) Cases t Talbot 4; 25 ER 628; [1558–1774] All ER Rep 328.

[page 97]

CHAPTER 9 When an Express Trust may Fail or be Set Aside Illegality Nelson v Nelson Partial Lawful Purpose

[9-02] [9-05] [9-07]

Trusts Tending to Promote Immorality or to Interfere with the Sanctity of Marriage Trusts for Illegitimate Children Separation Deeds Restraint Upon Marriage Invasion of Sanctity of Marriage Separation of Parent and Child Conditions as to Religious Faith Other Illegal Trusts

[9-09] [9-09] [9-10] [9-11] [9-14] [9-15] [9-16] [9-17]

Restrictions on Alienation and Remoteness of Vesting Restrictions on Alienation Gift-over on Bankruptcy Protective Trusts

[9-18] [9-19] [9-20] [9-21]

The Rule Against Perpetuities

[9-28]

The Rule Against Accumulations The Rule in Saunders v Vautier

[9-33] [9-34]

Avoidance by the Settlor

[9-35]

Avoidance by Third Parties Bankruptcy Act 1966 (Cth)

[9-37] [9-38]



Undervalued Transactions Transfers to Defeat Creditors Fraudulent Conveyances Frauds on Subsequent Purchasers The Family Law Act

[9-39] [9-40] [9-41] [9-46] [9-47]

[9-01] In certain circumstances, an express private trust, otherwise satisfying the matters set out in previous chapters, may fail or be set aside. These circumstances may conveniently be grouped under three heads. First, the trust may have been created for one of several purposes [page 98] which are illegal. Secondly, the trust may be set aside by the settlor where the trust purpose has failed or there is some vitiating element such as fraud or mistake, or where the settlor has reserved a power of revocation. Thirdly, the trust may be avoided by third parties where provision to that effect is contained in legislation.

Illegality [9-02] Illegality may be the result of the operation of statute law or of public policy even though, in the latter category, there is no statutory contravention involved. Public policy is concerned not only with trusts tending to promote immorality or interference with the institution of marriage, but also with restrictions upon alienation and remoteness of vesting. But most of these public policy areas have been the subject of legislation. Obviously, where statute is the source of the alleged illegality, the terms of the law in question will be of first importance. That has been emphasised (though not always applied) in a series of recent decisions of the High Court of Australia.1 However, in certain various decisions, notably that of the House of Lords in Tinsley v Milligan,2 the text of the statute in question does not appear,

nor does any analysis of its nature and scope. Although Tinsley v Milligan continues to represent the law of England, the ensuing controversy has led to Lords Neuberger, Clarke and Carnwath recently stating in the Supreme Court of the United Kingdom that the proper approach to the defence of illegality ‘needs to be addressed by this court as soon as appropriately possible’.3 Upon its true construction a statute itself may prohibit the creation of a trust. It may do so in direct terms or by forbidding the taking of a step necessary for the formation of a trust, such as a transfer of the legal title. The prohibition may be either absolute,4 or subject to a condition or approval.5 Further, while the creation of the trust may not be forbidden in this way by statute, the creation or execution of the trust may be associated with or in furtherance of a purpose rendered illegal by statute. In such a case, as a matter of public policy, the trust will not be enforced. This analysis of the operation of the doctrine of illegality was confirmed by the High Court in Nelson v Nelson.6 Statute may also, as in the case of the Land Act 1962 (Qld), which was considered in Orr v Ford,7 render a proprietary interest liable to forfeiture if a trust be declared by the holder of the interest. [page 99] [9-03] There are suggestions8 that the maxim that those who come to equity must come with clean hands, is but the equitable counterpart of common law doctrines as to illegality. This is not the case. Illegality destroys the legal and equitable rights of the plaintiff. But the maxim merely deprives a plaintiff of the right to equitable relief, leaving the plaintiff to pursue common law rights. The result is that if the doctrine of illegality operates there is no occasion to apply the maxim as to clean hands. Equity in such cases simply follows the law. Hence, Lord Browne-Wilkinson was somewhat wide of the mark when attributing this result not to the operation of basic equitable principle, but to the adoption of a single rule as the consequence of the alleged fusion of law and equity.9 Robert Walker LJ doubted that statement in Lowson v Coombes.10 In any event, the orthodox position applies in Australia.11 [9-04] One class of trusts which were illegal because of a specific statutory prohibition were those forbidden by s 35 of the Defence Service Homes Act

1918 (Cth).12 The statute was designed to provide cheap housing for exservicemen by the Director lending moneys to eligible ex-servicemen (in whose name the property had to be vested) at advantageous rates to enable them to purchase houses. Section 35 provided that no such property, and no interest therein, might be the subject of any ‘transfer’ by the ex-serviceman owner until the loan had been repaid. The term ‘transfer’ was defined in terms which included the creation of a trust. What, then, was the result if an ex-serviceman owner of property on which a loan was outstanding agreed to hold it, in whole or part, upon trust for another party, or accepted financial contributions from a third party in circumstances which would normally give rise to a resulting or constructive trust? The result of a number of decisions was that no trust (express, resulting or constructive) would be recognised in equity in the circumstances described, because to have done so would have been to effectuate a purpose rendered illegal by statute.13 However, the third party might still have a right to an irrevocable equitable licence to occupy the house,14 or be the beneficiary of a trust of the proceeds of sale of the property, although not of the property itself,15 or be a beneficiary of the property itself as from the time when the security for the loan made pursuant to the statute was discharged.16

Nelson v Nelson [9-05] By the time of the facts in Nelson v Nelson,17 the Defence Service homes legislation had been amended to provide for bank loans at interest rates subsidised by the Commonwealth. The title to property A was taken in the name of the children of Mrs Nelson, but with the intention that she be the beneficial owner. The object was to conceal the true state of affairs so that she might later obtain a subsidised loan to assist in the purchase of a second property. She later did so. The High Court held that the ‘policy’ of the statute did not bar Mrs Nelson from recovering the proceeds of the sale of property A, but a majority of the court attached a condition to her relief which required her to account to the Commonwealth for the value of the subsidy she had received for the second property, which she still owned. [page 100]

[9-06] In Fitzgerald v F J Leonhardt Pty Ltd,18 McHugh and Gummow JJ directed attention again to the ‘policy’ of the statute, noting that where the statute required a partial denial of relief, that was readily available in respect of equitable relief by the imposition of terms. In Damberg v Damberg,19 the Court of Appeal favoured the approach of closely analysing the terms of the statute — a difficult task in that case because the evidence of the relevant German law was exiguous. Many examples of the application of these principles to the law of trusts could be given, but to little advantage. What is clear is that modern judicial thinking contends that while a contract associated with or in furtherance of illegal purposes itself may not be directly contrary to the provisions of any express or implied statutory prohibition, the court may act ‘to uphold the policy of the law, which may make the agreement unenforceable’.20 However: … that policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes. The court must discern from the scope and purpose of the relevant statute ‘whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable’.21

However, the better view is that the policy of the law rests on a question of statutory construction.22 And it is to be recalled, as Gageler J has said, that ‘Judicial determination of a statutory consequence left to statutory implication has become more sophisticated as statutory regulation has become more sophisticated and more pervasive.’23

Partial Lawful Purpose [9-07] If a trust is created partly for a lawful purpose and partly for an unlawful purpose, it will wholly fail unless the property to be held for the lawful purpose can definitely be ascertained, either because it has been specifically indicated by the settlor24 or because the court can ascertain the amount which would have been sufficient to satisfy the unlawful purpose, thus leaving a specific residue for the lawful purpose.25 Where only one of the provisions in the terms of a trust is illegal, the balance of the trust may be saved if the illegal provision can be separated without defeating the purpose of the settlor in creating the trust.26 [9-08] It has been held in the field of illegal contracts that a plaintiff’s chattels may be recovered from a defendant who has detained or converted

them, even if they came into the defendant’s possession pursuant to an illegal contract and that fact appears either in the pleadings or on the evidence, provided the plaintiff does not plead the contract, does not seek to lead evidence of it, and is not forced to lead that evidence.27 So also in the field of trusts [page 101] it has been held that a plaintiff seeking to establish a trust may do so if the plaintiff neither pleads nor must by evidence necessarily reveal the illegal purposes of the trust. Thus, in Haigh v Kaye,28 the English Court of Appeal held that the plaintiff could obtain a declaration that the defendant held certain property conveyed by the plaintiff to the defendant on trust for the plaintiff, although the purpose of the conveyance was to defraud the plaintiff’s creditors. In order to prove his case, all the plaintiff had to prove was that he was the beneficial owner of the land and that the conveyance was voluntary — the presumption of a resulting trust would then arise. An essentially similar set of facts before the Victorian Full Court led to the same result in Blackburn v Y V Properties Pty Ltd.29 It will be observed that a different result would have ensued in both cases if the defendant had been the wife or child of the plaintiff, because in such circumstances proof of the voluntary conveyance would have given rise to the presumption of advancement not the presumption of a resulting trust, and in order to reject the presumption of advancement the plaintiff would necessarily have to prove the illegal purpose of the conveyance. The distinction was drawn by the House of Lords in Tinsley v Milligan.30 But this has now been repudiated by the High Court in Nelson v Nelson,31 on the ground that it allows form to triumph over procedure and pays no regard to the nature or seriousness of the illegality. McHugh J said:32 A doctrine of illegality that depends upon the state of the pleadings or the need to rely on a transaction that has an unlawful purpose is neither satisfactory nor soundly based in legal policy. The results produced by such a doctrine are essentially random and produce windfall gains as well as losses, even when the parties are in pari delicto.

English cases have, understandably, continued to apply, and refine, Tinsley v Milligan,33 while the capriciousness of the process has been criticised.34

Trusts Tending to Promote Immorality or to Interfere with the Sanctity of Marriage Trusts for Illegitimate Children [9-09] Formerly, trusts in favour of future illegitimate children were void as contrary to public policy. A rule of construction created a presumption that references to children were confined to legitimate children.35 The effect of those rules could largely and readily be evaded, either by specifying expressly or impliedly living illegitimate children,36 or identifying future children by reference to their maternity.37 But legislation has intervened. The rule of construction has been reversed in all jurisdictions,38 and it must be a necessary implication of the legislation that the [page 102] public policy has likewise changed.39 Considerations of public policy ‘must accommodate not only societal conditions but also statutory context’,40 again, depending on what the statutory context is.

Separation Deeds [9-10] A trust is void if it is to take effect upon the future separation of a husband and wife.41 A trust to take effect immediately upon a separation already agreed upon is valid.42 The reason for this rule is that the law will not countenance an action which shows a contemplation that the marriage and cohabitation of the spouses will not continue; whereas, once the spouses have agreed that cohabitation should cease, there is nothing contrary to the stated policy of the law in the arrangement of their affairs in a satisfactory manner. Where a deed provides for an immediate separation, and it is not acted upon immediately, the deed and trusts contained in it will be void.43 Although a trust to take effect upon future separation is void, a settlement made upon trust for the wife for life, the trust in her favour being determinable upon her ceasing to be the cohabiting wife or the widow of the settlor, with a gift-over, is perfectly

good.44 Similarly, a trust in favour of a deserted wife for as long as she shall be separated from her husband is also valid.45 These rules must be read in connection with the powers under the Family Law Act 1975 (Cth).46

Restraint Upon Marriage [9-11] A trust is void if it tends to a general restraint upon marriage. In Lloyd v Lloyd,47 there was a gift to the testator’s wife and another for their joint lives, remainder to the survivor ‘and in case either L or M should marry … then her share shall pass to the other, the same as if death had taken place; and should L and M both marry’ then over. The gift to M upon the marriage of the testator’s widow was held to be valid; but the condition against M’s marrying was held void. [9-12] Although a gift subject to a condition for forfeiture upon marriage is void, there is nothing to hinder property being given until marriage and then over.48 [9-13] A condition of forfeiture upon marriage is valid where it is to take effect upon marriage under any of the following circumstances: (1) Without specified consents. If there is a gift with a provision for forfeiture in case of the marriage of the donee without the consent of named persons, the provision as to forfeiture [page 103] will be enforced, provided there is a gift-over upon marriage without the specified consents.49 A consent once given cannot be retracted except for just reasons.50 (2) With a person of a particular national background, for example, a Scotsman.51 (3) With a person of a particular religion, for example, a Roman Catholic.52 (4) With a person of a particular occupation, for example, with a person

providing domestic assistance.53 (5) With a named person.54 (6) Remarriage of widow or widower. A gift may be made to a wife by her husband or by a third person subject to forfeiture upon remarriage.55 ‘According to the authorities, such a condition is not void as to the wife, the law recognising in a husband such an interest in his wife’s widowhood as to make it lawful for him to restrain her from making a second marriage, by imposing a condition that on such marriage any provision he may have made for her shall cease.’56 The position is similar in regard to a gift to a husband subject to forfeiture upon remarriage.57 (7) Where the true object of the gift is not to prevent the marriage of the donee but to make provision for the donee’s children.58 Because of this last type of case it may be more correct to say that a condition in general restraint of marriage is prima facie void.59 It should further be noted that in cases of trusts of personalty, conditions in partial restraint of marriage are only good if there is a gift-over in the event of marriage. The fact that the property will go to residuary beneficiaries is not sufficient.60

Invasion of Sanctity of Marriage [9-14] In England, any trust which is calculated to serve as an inducement for a husband to divorce his wife is void.61 Similarly, any trust or condition which is designed to deter a father from performing his parental duties is contrary to public policy and void, as, for example, a condition that his child shall, or shall not, be brought up in a particular religious faith.62 However, in Ramsay v Trustee Executors and Agency Co Ltd,63 the High Court of Australia, by a majority, held the policy of the law to maintain and preserve marriage was not offended by a proviso to a gift of income to a son that the property should be his absolutely should he cease to be married to his wife (that is, by her death or by their divorce). The High Court expressly [page 104] disagreed with the English authorities which reached the opposite conclusion

on similar facts. The High Court was not prepared to adopt a view which saw the condition as an inducement to divorce by promise of material gain.

Separation of Parent and Child [9-15] Any trust or condition which is calculated to bring about the separation of parent and child is void as being against public policy.64 Thus, where there was a bequest to such children ‘as attain the age of 30 years and do not before attaining such age reside with’ their father (the father having been divorced from the mother before the date of the will), the stipulation as to nonresidence with the father was held to be void, the gift taking effect free from it.65

Conditions as to Religious Faith [9-16] Conditions, whether precedent or subsequent, that a gift shall be forfeited if or unless the beneficiary adopts a particular religious faith, are not void as against public policy except in so far as they have a tendency to give rise to discord between spouses by creating opposition between the religious beliefs of one and a serious temporal interest of the other.66 A condition applicable to a child during infancy, effecting a forfeiture should the child adhere to a particular religious faith, does not operate until a reasonable time after attainment of majority; so construed such conditions are not void as calculated malignly to influence the discharge by parents of their duties in rearing their children.67 However, they will be void for uncertainty if it is impossible to ascertain from the will at what time, in what manner, and in what circumstances the forfeiture shall occur.68

Other Illegal Trusts [9-17] There are other dispositions on trusts other than those so far dealt with which may be void as contrary to public policy.69 A trust to procure a peerage has been held to be void.70 Trusts or conditions which tend to deter persons from entering Her Majesty’s Forces or public office are void as contrary to public policy.71 However, as Lord Atkin said in Fender v St John-Mildmay,72 the doctrine should only be invoked in clear cases in which the harm to

[page 105] the public is substantially incontestable and does not depend upon the idiosyncratic inferences of a few judicial minds.

Restrictions on Alienation and Remoteness of Vesting [9-18] The courts have always been active, as a matter of public policy, to prevent property from being unnecessarily tied up, with the result that either the property itself cannot be used or the interests created in it are completely or virtually inalienable. The State and the public have an interest in property not being frozen by the deeds of the dead.73 There are two principal methods by which a settlor may attempt to hinder the free use and enjoyment of property, namely, by imposing conditions restraining the exercise of the ordinary incidents of ownership of the interest granted, or by creating a succession of future contingent interests and so postponing to a remote period the date when the whole interest will vest in someone who has an absolute right to alienate it. The courts have made the first method impossible by the doctrine that any condition divesting the donee of an interest previously given absolutely of the power to deal with it or alienate it is void and have restrained the power to create future contingent interests by providing a rule that such interests must vest within a specified time.

Restrictions on Alienation [9-19] If a settlor gives property absolutely, any proviso or condition prohibiting the donee from alienating it or otherwise restraining the donee from exercising the ordinary incidents of ownership will be void.74 Thus, conditions attached to absolute gifts of property stipulating that the donee must not sell, assign, mortgage or charge the property and that if the donee does so his or her interest is forfeited, are regarded as being repugnant to the nature of the gift and

are void75 and any gift-over will fail. Similar provisions apply where the interest granted is a life interest. Although it is not possible validly to give property ‘to A on condition that A does not sell it and if he attempts to do so then B’,76 the intended result may be achieved by a gift of a determinable interest, for example, ‘to A until A attempts to alienate it and then to B’.77 An absolute interest with a condition subsequent is logically distinct from a limited determinable interest, and the difference is well-settled and fundamental.78 While absolute restraints on alienation are void, partial restraints on alienation will be upheld. In this connection, a ‘partial’ restraint is considered one which leaves the property holder with a considerable measure of freedom to alienate. Some contrasting cases will make the position [page 106] clear. In Re Macleay,79 a devise of property on condition that the devisee ‘never sells it out of the family’ was upheld: the condition struck only at sales and not at other forms of disposition (for example, gifts), and moreover the ‘family’ was very numerous. In Re Brown,80 a condition restraining a devisee from alienating land to any person other than his three brothers was held to be invalid. However, in Bondi Beach Astra Retirement Village Pty Ltd v Gora,81 a condition to resell a unit in a retirement village to the transferor was upheld, and in Wollondilly Shire Council v Picton Power Lines Pty Ltd,82 an absolute restraint until such time as the purchaser built certain structures was upheld as an incident of the right of resale to the vendor. There is a complex area in which restraints may validly be imposed in order to effect a lawful purpose.83 A conveyance or devise of property with complete freedom of alienation but subject to a condition that the property holder must pay away a large proportion of the proceeds of sale may yet be invalid as an undue restraint on alienation.84

Gift-over on Bankruptcy [9-20] If a vested interest has been given either in fee simple or for life, any proviso that it shall not pass to the donee’s creditors on bankruptcy, or that it shall be free from the claims of the donee’s creditors, will be void.85 Such a gift must, however, be distinguished from one where the interest given is defeasible

on bankruptcy and so automatically ceases on the happening of the determining event.86 The former involves an attempt to make an absolute interest defeasible on breach of a condition subsequent. The latter merely involves the creation of a determinable interest. Generally speaking, what cannot be achieved by the former can be achieved by the latter. To this general rule there is one certain, and two possible exceptions. The certain exception concerns a determinable interest where the settlor is also a beneficiary, where a more restrictive rule applies: if a settlor settles property upon himself or herself until bankruptcy or alienation and then over, such settlement will be void as against the general body of creditors87 although it may be good against a single alienee.88 The reason for this exception is said to be a rule of common law that no person can take advantage of his or her own bankruptcy. The first possible exception is that while it is clear that a life estate may be made determinable on bankruptcy, it is not so certain that a fee simple may; in Re Leach,89 it was held that a fee simple could be made so determinable, but that case has not escaped criticism.90 Secondly, it is necessary to consider the effect of s 302B of the Bankruptcy Act 1966 (Cth) which renders void a provision of a trust deed (whenever made), having the effect of ‘cancelling, reducing or qualifying a beneficiary’s interest under the trust or allowing the trustee to exercise a discretion to the detriment of a beneficiary’s interest’ if the beneficiary becomes bankrupt. That provision is expressed only to apply to provisions in trust deeds which have that effect, and so will not affect determinable interests otherwise created. It would appear to be aimed at decisions like [page 107] Re Aylwin’s Trusts,91 where the trust of income was for life ‘until his bankruptcy or insolvency’ and thereafter to the bankrupt’s children.

Protective Trusts [9-21] Legislation in all jurisdictions but South Australia and the Northern Territory92 provides a means whereby a settlor or testator may, by directing that income (which may include an annuity or other periodical income payment) be held ‘on protective trusts’ for a principal beneficiary, incorporate into the

settlement or will, as the case may be, the detailed provisions of the sections designed to make such income inalienable by the principal beneficiary and available, despite attempted alienation, for the maintenance, support and benefit of such principal beneficiary, his or her wife or husband, the children and remoter issue, or in certain circumstances the persons interested in corpus on the death of the principal beneficiary. [9-22] The sections provide that income may be directed to be held ‘on protective trusts’ for the benefit of any person (in the section called ‘the principal beneficiary’) for the period of that person’s life or for any less period, and where there is such a direction the income shall during the period (in the sections called the trust period), and without prejudice to any prior interest, be held upon trust as provided in the sections. The period need not be expressly stated, but may be gathered by implication.93 During the trust period, or until the trust of the income fails or determines during the subsistence of the trust period, the income shall be held on trust for the principal beneficiary. The trust of the income shall fail or determine in any of the following cases, as well as on the termination of the trust period, whichever first happens, that is to say, if the principal beneficiary does or attempts to do or suffers any act or thing or if any event happens whereby, if the income were payable to the principal beneficiary absolutely, he or she would be deprived of the right to receive the same or any part thereof. The trust of the income shall so fail or determine, whether the principal beneficiary does or attempts to do or suffers the act or thing before or after the termination of any prior interest,94 but the trust of the income shall not so fail or determine by reason of an advance under any statutory or express power.95 [9-23] There are many decided cases on what does or does not constitute a forfeiture under such protective trusts. The appointment of a receiver in lunacy, for instance, was held in Re Marshall96 not to bring the discretionary trusts into operation. In Re Baring’s Settlement Trusts,97 it was held on the particular form of the trust in that case that a forfeiture was worked by a sequestration of the property of the life tenant made in order to force her to return within the jurisdiction.98 In the case of protective trusts in the statutory form, if the principal beneficiary becomes an enemy for the purposes of the Trading with the Enemy Act 1939 (UK), a forfeiture will take place.99 In Re Porter,100 an

assignment invalid according to the law of the purporting assignor’s domicile was held, nevertheless, to cause a forfeiture. However, the assignment by [page 108] the principal beneficiary to the trustee of his marriage settlement has been held not to be an attempt to assign.101 A sequestration order may cause a forfeiture.102 A forfeiture may be brought about by a dealing by the beneficiary before his or her interest becomes possessory.103 [9-24] If the principal beneficiary does some act with the intention to create a charge, a forfeiture will be incurred even though he or she did not intend to cause such a forfeiture.104 This is so even though it is always a question of intention whether a charge was in fact intended to be created.105 But the service of a garnishee order on a trustee106 or the wrongful issue of fieri facias107 will not work a forfeiture. It has been held that service of a notice under s 218 of the Income Tax Assessment Act 1936 (Cth) did not effect a forfeiture.108 However, an order under s 27 of the Judgment Creditors’ Remedies Act 1901 (NSW) will effect a forfeiture.109 A principal beneficiary incurred a forfeiture when his trustee, having been induced by him to advance to him capital in breach of trust, exercised his right to make deductions from income in order to recover the amount wrongfully advanced.110 But a voluntary alienation made by the principal beneficiary with the sanction of the equity court will not create a forfeiture.111 If the principal beneficiary’s interest is forfeited through bankruptcy, a subsequent discharge from bankruptcy does not affect the previous forfeiture.112 It is doubtful whether under the section the principal beneficiary’s interest on bankruptcy would be absolutely forfeited where the sequestration order was subsequently annulled.113 [9-25] The destination of the income in the event of a forfeiture by the principal beneficiary is dealt with by various statutes in similar terms. In New South Wales, s 45(6) of the Trustee Act 1925 provides: (6) If the trust of the income fails or determines during the subsistence of the trust period, the income shall during the residue of that period be held upon trust for the application thereof — (a) for the maintenance, support, or otherwise for the benefit of all or any one or more

exclusively of the others of the principal beneficiary and his or her spouse, if any, and his or her children or more remote issue, if any, as the trustee in the trustee’s absolute discretion thinks fit; or (b) if there is no spouse or issue of the principal beneficiary in existence, then for the maintenance, support, or otherwise for the benefit of all or any one or more exclusively of the other or others of the principal beneficiary and the persons who would, if the principal beneficiary were actually dead, be entitled to the trust property or the income thereof or of the annuity fund, if any, or arrears of the annuity, as the case may be, as the trustee in the trustee’s absolute discretion thinks fit.

[page 109] [9-26] Once such a provision is brought into operation, the trustee must apply all income for the benefit of the persons mentioned in the subsection.114 If any income remains in the trustee’s hands at the death of the first beneficiary it must all be applied in this manner.115 There is no apportionment under s 144 of the Conveyancing Act 1919 (NSW).116 The protective trust legislation provides that any trust implied by it may be set aside in any case where an express trust to the same effect might be set aside. This is a very important provision, because it makes it clear that the purpose of the section is not to give validity to trusts which might otherwise be invalid under the law of bankruptcy, but is merely to provide a means whereby the lengthy provisions to govern a protective trust need not be set out at length in every trust instrument. Therefore, where the settlor is also the principal beneficiary, the income on bankruptcy will go, not in accord with the provisions of the section, but to the settlor’s creditors.117 However, if in such a case forfeiture has occurred prior to the bankruptcy, by reason of an earlier alienation or charge, the forfeiture will stand and the gift-over will take effect,118 subject always to the overriding effect of s 94 of the Bankruptcy Act 1966 (Cth). [9-27] Where property is held upon protective trusts for persons in succession and where the principal beneficiary is a woman past the age of child bearing, the principles upon which the court acts where there is an application for payment of the fund are conveniently summarised by Dean J in Trustees Executors and Agency Co Ltd v Margottini as follows:119 The purposes for which such an order will be made and the principles applicable are well settled. An order of the kind sought does not in any way affect the interests of those who may benefit under the trusts declared by the deed. All it does is to authorize the trustees as a matter of administration, to deal with the trust property by paying it to the person who will be entitled to

it if there is ultimately no issue. It protects the trustees if the unexpected event should occur while leaving to the possible future children the right to claim the fund from those to whom, in the event, it has been wrongly paid. Such an order will not be made where its effect would be to deprive existing persons, including next of kin of the testator or settlor, of their rights. It will not be made unless the only persons whose rights can be affected are the possible future children. Such an order will not be made unless the court is satisfied that there is no reasonable likelihood of the woman in question having children. It was formerly the practice to require the recipient of the fund to enter into a recognizance for its repayment if his right to it was subsequently destroyed; later an undertaking to repay it was sufficient, but more recently it is not unusual to require either a recognizance or an undertaking unless there are special circumstances making it desirable to do so. The age of the person in respect of whom the presumption will be made is not precisely fixed but it seems clear that it will be made without hesitation in respect of a woman the age of the second defendant who is a few months short of 60.

In Re Tomlins,120 where the circumstances were similar, the court refused to exercise its jurisdiction because there were possible future persons (other than the unborn children of the woman in question) whose rights would be affected by an order.

The Rule Against Perpetuities [9-28] The rule commonly known as ‘the rule against perpetuities’ is but one of a number of common law rules restricting dispositions of property which might ‘tend to a perpetuity’. [page 110] A detailed study of those rules is beyond the scope of this work.121 In its modern formulation, as stated in Cadell v Palmer,122 it provided that an interest in property if not vested at the time of its creation, must vest no later than 21 years after the termination of a life in being at the date of creation; if there was merely a possibility that this might not occur, the disposition was void.123 It will be observed that the rule is not strictly a rule against perpetuities, but against remoteness of vesting. In most common law jurisdictions, the rule is subject to abrogation or extensive modification by statute; as the Privy Council observed in a Jamaican appeal, where this has not occurred its application continues to be ‘remorseless’.124

Particular classes of trusts (in particular, pension schemes) have been made exempt from the operation of the rule: see Superannuation Industry (Supervision) Act 1993 (Cth) s 343; Corporations Act 2001 (Cth) s 1346, and the state and territory legislation considered below. That legislation applies retrospectively.125 More generally, all Australian jurisdictions have reformed the law, most with prospective force,126 such that common law rules will only now apply to dispositions made decades ago. For the effect of those rules, the reader is referred to the 6th edition of this work.127 The following addresses the current law. [9-29] The main rules are now as follows. First, rather than determining at the outset whether a disposition might possibly vest outside the perpetuity period, the legislation adopts a ‘wait-and-see’ approach, validating everything done until it is certain that a disposition must vest outside the period.128 Secondly, the perpetuity period in New South Wales and the Australian Capital Territory is 80 years from either the time when the settlement takes effect, or (if the interest is appointed under a special power of appointment), the time when the power is created.129 In all other jurisdictions save South Australia, the disponer may specify a period not exceeding 80 years, failing which the perpetuity period is the common law period of a life or lives in being plus 21 years.130 Thirdly, in New South Wales, the Australian Capital Territory and the Northern Territory, if, notwithstanding the foregoing rules, the perpetuity period would be infringed by reason of the vesting of an interest depending upon a person attaining a specified age, then that age is reduced to the extent necessary to avoid a perpetuity.131 [page 111] In Victoria and Tasmania, the same rule applies but an age cannot be reduced below 21 years;132 in Queensland, not below 18 years.133 In Western Australia, if a reduction of age is necessary, then the age is reduced to 21 years.134 Fourthly, class members are excluded from a class if that is necessary to avoid a perpetuity, so long as that does not exhaust the class.135 Fifthly, a disposition of an interest which is dependent upon an ulterior interest which is void is not itself void, but instead its vesting is accelerated.136 Sixthly, a provision which might cause a determinable interest to revert after the perpetuity period will, after the wait-

and-see period, be void, so that the determinable interest will thereafter no longer be determinable.137 In South Australia, the rules against perpetuities and against accumulations have been abolished,138 and replaced by a provision permitting, in most cases, an application to be made to the court to vary the terms of a disposition so that interests which have not vested may vest immediately.139 [9-30] One area of continuing importance in Australia arises in analysing gifts to unincorporated associations. The prima facie rule is that a gift to an unincorporated association operates, prima facie, as a gift to the individual members at the time when the bequest becomes operative.140 The trial judge and the majority of the High Court in Leahy v Attorney-General for New South Wales141 so construed the gift in that case, a view which was overturned on further appeal to the Privy Council.142 Accordingly, the members may sever and claim their interests. That rule may be rebutted. Thus the joint judgment in Bacon v Pianta: However, circumstances may appear which preclude this conclusion; it may appear that the disposition amounts to a trust for the benefit of both present and future members, or, that it is not for the benefit of individuals at all but stands revealed as a trust for some purpose or purposes disclosed by the terms of the bequest. In the former of these two cases the gift may well fail as infringing the rule against perpetuities and, in the latter case, it will fail unless the purpose is, in the legal sense, charitable. Indications sufficient to rebut the prima facie presumption may be found to some extent in the form which the gift takes, in the number and disposition of the members of the association, in the subject matter of the gift and in the capacity of the members to put an end to their association and distribute its assets.143

Commonly, there is found to be no intention to benefit either the present or present and future members of the association individually,144 but rather an intention for the gift to be on trust for the purposes of the association. [page 112] [9-31] In Leahy v A-G (NSW) itself,145 the Privy Council dealt with a devise of a grazing property of about 730 acres with a furnished homestead containing 20 rooms and a number of out-buildings upon trust for ‘such order of nuns of the Catholic Church or the Christian Brothers as my executors and trustees shall select’. It was held that the testator had not created a trust for the benefit of the existing members of the selected Order, nor for the benefit of existing and future

members, but rather a trust for its purposes as a continuing society. The Judicial Committee was repelled by the prospect of the individual members of an Order having been intended by the testator to become the beneficial owners of a grazing property. By way of contrast, in Re Smith,146 Joyce J held that a gift of residue in trust for a named community of Franciscan Friars in a particular locality operated as an absolute immediate gift to the members of the community at the date of the testator’s death. They were six in number. His Lordship held it was not to the point that the application of the fund by the particular Friars was controlled by their monastic vows; in the eye of the law each would be entitled to spend the money as he pleased. In Re De Vedas,147 the testator had given ‘in perpetuity’ the income from his residuary estate to ‘the Adelaide Hebrew Congregation’. Wells J held that this was a gift on trust for the purposes of the congregation. It was not a gift to the present or future members of the congregation because: (1) by the use of the term ‘congregation’ the testator had meant not just a group of persons but a responsible ‘quasi-corporate’ religious body; (2) this body included legal minors; and (3) the subject property was land and there would be considerable difficulty with a large number of joint owners. In Bacon v Pianta,148 the High Court held that a gift of money ‘to The Communist Party of Australia for its sole use and benefit’ failed. Having regard to the language of the gift (expressed to the Party, rather than its members), the geographically dispersed, numerically fluctuating membership from time to time, the likely ignorance on the part of the testator that the Party was unincorporated, and the fact that the Party rules forbad division of property to members, the court held that it was properly a gift to present and future members, in trust for the purposes of the Party, and so void. [9-32] In recent years, decisions in England and Australia have added to the complexity of the law in this field by introducing a new concept by way of addition to those of gifts to individual members (either or both present or future) and gifts for the purposes of the body (which might be charitable and good or non-charitable and bad). The new doctrine was first propounded by Cross J (as he then was) in Neville Estates Ltd v Madden.149 It was applied by Brightman J in Re Recher150 and by Adam J in Re Goodson.151 The passage in which Cross J propounded the doctrine is as follows:152

[I]t may be a gift to the existing members not as joint tenants, but subject to their respective contractual rights and liabilities towards one another as members of the association. In such a case a member cannot sever his share. It will accrue to the other members on his death or resignation, even though such members include persons who became members after the gift took effect. If this

[page 113] is the effect of the gift it will not be open to objection on the score of perpetuity or uncertainty unless there is something in its terms or circumstances or in the rules of the association which precludes members at any given time from dividing the subject of the gift between them on the footing that they are solely entitled to it in equity.

This solution conforms with the likely intention of the donor, but at a heavy price. Cross J seems to be holding that the rules of the association, as the controlling force between the members restraining severance or disposition of the ownership of each member’s share in the fund, operated to curtail the proprietary interest given by that ownership. In other words, one views the contractual obligations not as personal duties, the failure in performance of which will be at hazard of damages or injunction, but rather as a subtraction from proprietary rights. This is a fundamental misconception; one may contract as to the exercise of one’s rights of ownership while retaining those rights, as McHugh J noted in this context in Victoria v Sutton.153 Furthermore, it is also implicit in the statement by Cross J that the endowment thus created may be perpetual in duration, although a trust not for charitable purposes, intended to have perpetual duration, would fail.154 Nor is it explained how the equitable interest of a member passes on the resignation or death of the member without compliance, respectively, with the Australian equivalents of s 53(1)(c) of the Law of Property Act 1925 (UK) or s 9 of the Wills Act 1837 (UK). But the reasoning was nevertheless applied in Victoria. In Re Goodson,155 the testator left a share of residue on trust for the general purposes of the Loyal Orange Institution in Victoria, an unincorporated body. Adam J held that the purposes of that body were not charitable, but that the gift should be construed as ‘in augmentation of the general funds of the Institution to be applied in conformity with its constitution’, in accordance with the principles explained by Cross J. The gift was not to the members of the institution as joint tenants so no member could sever his or her share and claim it. As the Full Federal Court noted in Bacon v O’Dea,156 Bacon v Pianta was directly relevant but ignored.

Legislation in some states now provides that certain testamentary gifts to unincorporated associations are treated as dispositions in augmentation of the general funds of the association.157

The Rule Against Accumulations [9-33] Here, too, legislation has intervened, but in this instance largely restoring the position at common law, where a direction to accumulate income was valid if confined to the perpetuity period. Following Thellusson v Woodford,158 the Accumulations Act 1800 was enacted, establishing four alternative accumulation periods to be selected by the settlor or testator. For the Australian counterparts and their operation, see [952]–[954] of the 6th edition of this work. However, the current law in all states and territories save South Australia is to restore the common law position, but subject to wait-and-see, so that a direction to accumulate will be valid until it is demonstrated that the period of accumulation will go beyond the perpetuity period.159 In South Australia, the rule has been abolished as noted above.160 [page 114]

The Rule in Saunders v Vautier [9-34] Where there is an absolute vested gift with a direction to accumulate the income for a certain time and then to pay the original sum with the accumulations, the beneficiary, if of full age and capable of giving a valid discharge, may require payment without waiting until the appointed time. If the direction is to accumulate the income for a period exceeding that allowed by the statute, the beneficiary will benefit, as the rule makes the direction to accumulate ineffective immediately the beneficiary is capable of giving a valid discharge and claims payment, whereas apart from the rule the excessive accumulations would pass to others.161 The rule, which is a rule of law and not merely of construction, is preserved by statute162 and applies to a gift to a charity.163 If there is a gift to a charity with a direction to accumulate the income for a number of years and then to pay over the whole fund, the charity,

being capable of giving a discharge at any time, may put a stop to the accumulation and have the fund paid over at once.

Avoidance by the Settlor [9-35] The general rule is that a completely constituted trust is irrevocable by the settlor and his or her personal representatives notwithstanding that it is voluntary, unless it contains an express power of revocation.164 The absence of a power of revocation from a voluntary settlement, or the presence in the deed of unusual provisions, is no ground for setting the deed aside, provided the provisions have been brought to the settlor’s attention, and understood.165 It is not the province of a Court of justice to decide on what terms or conditions a man of competent understanding may choose to dispose of his property. If he thoroughly understands what he is about, it is not the duty of a Court of justice to set aside a settlement which he chooses to execute on the ground that it contains clauses which are not proper.166

[9-36] Equity may intervene, at the suit of the settlor, to set aside a trust on various grounds described as ‘unconscionable’,167 such as fraud, undue influence, misrepresentation or mistake. Those doctrines are addressed at length elsewhere.168 It is sufficient here to observe that: (a) Equity had long exercised a jurisdiction to set aside trusts induced by a mistake of law, rather than of fact, well before the distinction was abrogated.169 The question is whether the settlor was mistaken as to the effect of the transaction itself, not merely its consequences. [page 115] (b) The onus of proving the relevant vitiating factor is upon the settlor, except where the beneficiary owed a fiduciary obligation to the settlor or where a presumption of undue influence arose at the time of the settlement. In the former case, it is necessary for the fiduciary to show that the transaction is not merely fair, but ‘open and fair, and free from all objection’.170 In the latter, it is necessary for the beneficiary to show that the settlement was executed as the result of the free exercise of the settlor’s independent will.171

(c) No relief will be ordered if the settlor knowingly acquiesced in the settlement after the circumstances giving rise to the vitiating factor ceased.172 (d) A trust may also be set aside if its purpose has failed, for example, where a marriage settlement has been made, but the marriage has not been solemnised173 or has been annulled.174 (e) The settlement will not be cancelled unless the parties can be placed in their original positions, even where the settlement was induced by serious misrepresentations.175

Avoidance by Third Parties [9-37] In addition to the principles already considered relating to gifts-over on bankruptcy, certain statutes provide that even completely constituted trusts may be avoided in certain circumstances by the official receiver or trustee in bankruptcy or the settlor’s creditors, or subsequent purchasers for value of the trust property.

Bankruptcy Act 1966 (Cth) [9-38] The Bankruptcy Act has long provided that certain dispositions of property are void against the disponor’s trustee in bankruptcy. The current provisions, applicable to bankruptcies occurring on or after 16 December 1996, strike at ‘undervalued transactions’ (s 120) and ‘transactions to defeat creditors’ (s 121).176

Undervalued Transactions [9-39] In contrast to the former s 120 (which was aimed at voluntary settlements), the current provision renders void as against the transferor’s trustee in bankruptcy any transfer for less than market value taking place within five years of the commencement of bankruptcy. The history of the provisions is set out in Barton v Official Receiver;177 their purpose has been said ‘to prevent properties from being put into the hands of relatives to the disadvantage of

creditors’, although they are not confined to dispositions to relatives, and ‘property’ is very broadly defined.178 The amendments were intended to overcome decisions under earlier Australian and English provisions dating back to 1869 which held that valuable consideration, albeit at an undervalue, [page 116] which was not nominal, trivial or colourable, protected a settlement.179 The provision requires the court to be satisfied only that the value of the consideration was less than the market value at the date of transfer; it does not require the court to assign any particular value to the consideration.180 Further, by substituting for the notion of ‘settlement’ the notion of ‘transfer’, it was no longer necessary for the trustee in bankruptcy to establish that it was contemplated that the transferee retain the property for a period. There are exemptions relating to liabilities to pay taxation, maintenance, and under debt agreements.181 The onus is on the trustee in bankruptcy to establish that the transfer is not exempted, and was for less than valuable consideration.182 A promise to marry is now to be regarded as no consideration,183 but unremunerated work in a marriage may amount to consideration.184 A transfer is not void if it was made more than two years before the commencement of the bankruptcy, and the transferee can prove that the bankrupt was at that time solvent.185 Third parties who acquire from the transferee are protected if they took in good faith and provided valuable consideration at least as valuable as market value.186 If a transfer is void under this section, the trustee must repay to the transferee the value of consideration paid by the transferee.187

Transfers to Defeat Creditors [9-40] Section 121 renders void against the transferor’s trustee in bankruptcy a transfer of property which otherwise would probably have been available to creditors if the transferor’s main purpose was to prevent the property from becoming divisible among creditors, or to hinder or delay the process of making property available for division among creditors. The requisite purpose is taken to have been established if at the time of the transfer it can reasonably be inferred

from all the circumstances that the transferor was, or was about to become, insolvent.188 It suffices to establish that the inference of insolvency is reasonably open (notwithstanding that an inference of solvency is likewise reasonably open).189 The purpose may also be established otherwise: by admission, or by inference.190 A relevant intent to defeat creditors may be established even though there are no existing creditors at the date of the disposition.191 A transfer is not void against the trustee if the transferee provided valuable consideration at least as valuable as market value and did not know that the transferor’s main purpose was to defeat creditors, and could not reasonably have inferred that the transferor was, or was about to become, bankrupt.192 Again, the trustee is required to repay to the transferee the value of consideration paid by the tranferee if the transfer is void.193 [page 117]

Fraudulent Conveyances [9-41] In all jurisdictions there is legislation based on the Fraudulent Conveyances Act 1571.194 It provides that every conveyance of property made with intent to defraud creditors shall be voidable at the instance of any person prejudiced; there is protection for purchasers in good faith not having, at the time of the alienation, notice of the intent to defraud creditors. The principal use of these provisions today occurs where the settlor has not been made bankrupt. However, dispositions which are void under these provisions will also be void against trustees in bankruptcy and there is nothing in s 121 of the Bankruptcy Act 1966 (Cth), considered above, which supersedes or is inconsistent with these provisions; indeed, many Australian decisions interpreting the relevant state legislation are decisions of federal courts exercising bankruptcy jurisdiction on applications by trustees in bankruptcy.195 Fraudulent intent will not be presumed from the mere fact that the settlor was in debt at the time of the settlement and it is not sufficient merely to show that the effect of the settlement has been to defeat a creditor.196 However, it is not necessary to show that the debtor wanted creditors to suffer a loss or had the purpose of causing loss. It is necessary to show the existence of an intention to

hinder, delay or defeat creditors and in that sense show that the debtor had acted dishonestly.197 [9-42] The onus of proof of the settlor’s intent to defraud lies on the creditors seeking to set aside the settlement.198 Thus, in Ex parte Mercer,199 an action for breach of promise to marry was commenced against one Wise, three months after he had married. A few days after his marriage he had become entitled to a legacy of £500. Shortly after the writ was served on him he settled this legacy on his wife. Judgment was obtained against him in the following year, and two years later he was adjudicated bankrupt. He was able to show that when he made the settlement, he was able to pay his debt without recourse to the legacy200 and he satisfied the court that he was not, in making the settlement, influenced by the action. The Court of Appeal held that there was not sufficient evidence to show that the settlement was intended to defeat or defraud creditors within the meaning of the statute.201 A creditor need not show that the settlor was insolvent at the time of the settlement, but must show that the settlor was at that time so largely indebted that the intention of the settlement was fraudulent.202 All the settlor’s liabilities due or about to fall due must be considered, including contingent liabilities [page 118] where it is likely they will become debts.203 Only one creditor need be affected.204 However, a transaction could not be impeached on the ground merely that it constituted a preference of a particular creditor by his debtor.205 [9-43] Intent to defraud may be inferred from the circumstances in which the settlement was made. Thus, a settlor about to engage in a hazardous trade bears the burden of proving solvency at the time of the settlement. In Mackay v Douglas,206 a voluntary settlement made by a man on his wife and children shortly before engaging in a speculative business was held fraudulent and void, although no debt was still owing which had been incurred before the date of the settlement. In Ex parte Russell,207 a voluntary settlement made by a baker about to start a grocer’s business of which he knew nothing was held to be void on the grounds that when making the settlement his object had been to put his property out of the reach of his creditors in case the grocery business failed:208

A man is not entitled to go into a hazardous business, and, immediately before doing so, settle all his property voluntarily, the object being this: ‘If I succeed in business I make a fortune for myself. If I fail I leave my creditors unpaid. They will bear the loss.’ That is the very thing which the statute of Elizabeth was meant to prevent.

[9-44] A settlement based on valuable consideration will not be avoided unless parties to the consideration were privy to the fraudulent intent.209 In the case of a marriage settlement it follows that the settlement will not be avoided as against the children of the marriage (as they could not be parties to the fraud), but it will be avoided where both husband and wife have been parties to the fraud, as in Union Bank of London v Kent210 and Bulmer v Hunter.211 In both those cases the wife had been the husband’s mistress, and it was clear that, but for a desire to defraud creditors, the parties would not have married.212 The creditors seeking to set aside a settlement based on valuable consideration must show that it was a collusive arrangement between the parties made with the intention of defrauding creditors, and not merely that the parties knew that the effect of the settlement would be to defeat creditors.213 A bona fide purchaser for value, without notice of any fraud, of any legal or equitable interest created by the settlement is protected.214 [9-45] The avoidance of the settlement is only for the purpose of paying creditors. If there is likely to be a surplus, the settlement will not be ordered to be delivered up but the court will order that it be set aside to the extent necessary to pay the creditors, and the surplus will belong to the beneficiaries.215 If a settlement is set aside at the instance of creditors whose debts existed when it was made, the property will be available for all creditors whenever their debts arose. So long as any debts which existed at the date of the settlement are unpaid, subsequent creditors can themselves apply to have the settlement declared void;216 but if all the existing debts have been paid, it would seem that the settlement will be set aside at the instance of subsequent creditors only if they can show that the intention of the settlor was to defraud them, [page 119] or that their money has been used by the settlor to pay creditors whose debts were in existence at the date of the settlement.217

Frauds on Subsequent Purchasers [9-46] The statute, 27 Eliz I, c 4, was originally interpreted by the court so as to render void any voluntary settlement where the settlor had subsequently conveyed the land for value. Thus, if A made a voluntary settlement of land on B and subsequently sold the land to C, the court held that the conveyance to B was fraudulent and void within the meaning of the statute, as against C, even though no intention to defraud existed at the time of the first conveyance and the subsequent purchaser was aware of the existence of the voluntary settlement at the time he took his conveyance.218 This is no longer law. The presumption of fraudulent intent is removed by legislation in all jurisdictions. In New South Wales, the Conveyancing Act 1919 provides: 37B. (1) Every instrument (other than a will) which operates, or on registration would operate, as a voluntary alienation of land, shall, if made with intent to defraud a subsequent purchaser, be voidable at the instance of a subsequent purchaser. (2) For the purposes of this section no such instrument (whether made before or after the commencement of the Conveyancing (Amendment) Act 1930) shall, if registered before a subsequent purchase, be deemed to have been made with intent to defraud by reason only of that purchase, or that the instrument was not made for valuable consideration.

The section does not apply to personalty nor to any conveyance made bona fide for valuable consideration. The interests of beneficiaries under a trust based on value, but fraudulent in inception, will not be affected, provided they were not parties to the fraud, and the assigns of voluntary beneficiaries are protected.219 The legislation in the other jurisdictions220 does not require that the voluntary disposition be registered before the subsequent purchase in order that it should be freed from the operation of the old rule that the mere existence of the later purchase rendered the voluntary disposition fraudulent.

The Family Law Act [9-47] The Family Court under Pt VIII of the Family Law Act 1975 (Cth) has jurisdiction under s 79 in proceedings relating to the property of parties to a marriage or either of them. It may, in exercise of that jurisdiction, alter existing rights. It may order the parties to make a settlement in lieu of an existing interest; it may extinguish existing interests or order the creation of new ones. By s 78, it may declare the proprietary interests of parties to a marriage. By s 74, it may make orders for the maintenance of either a party to the marriage or a

child of the marriage. By s 85, it may invalidate a disposition by a party made to defeat an existing or anticipated order. The application of those broad provisions is beyond the scope of this work. _____________________________ 1.

Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1; 237 ALR 512 at [46]; Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; 249 ALR 44 at [11]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12 at [23]; Gnych v Polish Club Ltd (2015) 89 ALJR 658 at [35]–[40], [64]–[65].

2. 3.

[1994] 1 AC 340; [1993] 3 All ER 65. Jetivia SA v Bilta (UK) Ltd [2015] 2 WLR 1168; [2015] 2 All ER 1083 at [15]. The same point was made by Lord Toulson in Les Laboratoires Servier v Apotex Inc [2015] AC 430 at [64]. See also Silverwood v Silverwood (1997) 74 P&CR 453; Lowson v Coombes [1999] Ch 373; Polanski v CondeNast Publications Ltd [2005] 1 All ER 945 at [19]; [2005] 1 WLR 637; Law Commission, Consultation Paper No 154, Illegal Transactions (1999).

4.

For example, as provided by Veterans’ Entitlements Act 1986 (Cth) s 125; Superannuation Act 1990 (Cth) s 41; Social Security Act 1991 (Cth) ss 66, 128, 170, 220, 280, 339, 387, 571, 654, 724, 757, 806, 870, 976, 1052, 1061W. For example, as provided by s 19 of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth), which imposes special requirements upon dealings by a Land Trust with any estate or interest in land which is vested in it.

5.

6.

7. 8. 9.

(1995) 184 CLR 538; 132 ALR 133. Noted (1996) 112 LQR 386; (1997) 71 ALJ 185; D Davies, ‘Presumptions and Illegality’ in A Oakley (ed), Trends in Contemporary Trust Law, Oxford University Press, Oxford, 1996, p 33. (1989) 167 CLR 316; 84 ALR 146. See, for example, Tinsley v Milligan [1992] Ch 310 at 323–4, 340–1; [1992] 2 All ER 391 at 401, 415– 16; [1994] 1 AC 340 at 357; [1993] 3 All ER 65 at 74. Tinsley v Milligan [1994] 1 AC 340 at 375; [1993] 3 All ER 65 at 90; see also Costello v Chief Constable of Derbyshire Constabulary [2001] 3 All ER 150; [2001] 1 WLR 1437 at [12], [34].

10. [1999] Ch 373 at 384. 11. Nelson v Nelson (1995) 184 CLR 538 at 550–1, 577, 608–9; 132 ALR 133 at 142–3, 163, 189–90; Black Uhlans Inc v New South Wales Crime Commission (2002) 12 BPR 22,421 at [157]–[186]; Lewis v Nortex Pty Ltd (in liq) (2004) 214 ALR 634 at [135]–[136]. 12. Section 35 was repealed by s 10 of the Defence Service Homes Amendment Act 1988 (Cth). 13. These include Maurice v Lyons [1969] 1 NSWR 307; Pearce v Pearce [1977] 1 NSWLR 170; Horton v Public Trustee [1977] 1 NSWLR 182; Olsen v Olsen [1977] 1 NSWLR 189. 14. Pearce v Pearce [1977] 1 NSWLR 170. 15. Horton v Public Trustee [1977] 1 NSWLR 182. 16. Olsen v Olsen [1977] 1 NSWLR 189. 17. (1995) 184 CLR 538; 132 ALR 133. 18. (1997) 189 CLR 215 at 230–1; 143 ALR 569 at 580. 19. (2001) 52 NSWLR 492 at [109]–[117].

20. Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12 at [23]; Gnych v Polish Club Ltd (2015) 89 ALJR 658 at [35]. 21. Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12 at [23]; Gnych v Polish Club Ltd (2015) 89 ALJR 658 at [35]. 22. Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1; 237 ALR 512 at [46]; Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; 249 ALR 44 at [11]; Gnych v Polish Club Ltd (2015) 89 ALJR 658 at [36]–[40], [64]–[65]. 23. Gnych v Polish Club Ltd (2015) 89 ALJR 658 at [64]. 24. Chapman v Brown (1801) 6 Ves 404; 31 ER 1115; Re Birkett (1878) 9 Ch D 576; [1874–80] All ER Rep 242; Re Porter [1925] Ch 746; [1925] All ER Rep 179; for alternative trusts, one legal and the other illegal, see Re Mill’s Declaration of Trust [1950] 1 All ER 789, affirmed [1950] 2 All ER 292. 25. Mitford v Reynolds (1842) 1 Ph 185; 41 ER 602; Fisk v Attorney-General (1867) LR 4 Eq 521; Hunter v Bullock (1872) LR 14 Eq 45; Re Williams (1877) 5 Ch D 735; Re Birkett (1878) 9 Ch D 576; [1874–80] All ER Rep 242. 26. Scott on Trusts, §9.6.1. 27. Bowmakers Ltd v Barnet Industries Ltd [1945] KB 65; [1944] 2 All ER 579; Sajan Singh v Sardara Ali [1960] AC 167; [1960] 1 All ER 269; Kiriri Cotton Co Ltd v Dewani [1960] AC 192; [1960] 1 All ER 177; Thomas Brown & Sons Ltd v Fazal Deen (1962) 108 CLR 391; [1963] ALR 378. 28. (1872) LR 7 Ch App 469. 29. [1980] VR 290. 30. [1994] 1 AC 340; [1993] 3 All ER 65. 31. (1995) 184 CLR 538; 132 ALR 133. 32. (1995) 184 CLR 538 at 609; 132 ALR 133 at 189. In Tribe v Tribe [1996] Ch 107 at 134; [1995] 4 All ER 236 at 258–9, Millett LJ referred to the rationale of deterrence which is suggested for the illegality rule and said it was artificial to suggest that anyone would be dissuaded thereby from entering into a proposed fraud. 33. See, for example, Q v Q [2009] 1 FLR 935; O’Kelly v Davies [2015] 1 WLR 2725; Patel v Mirza [2015] Ch 271; [2015] All ER 326 at [53]–[63]. 34. See Tribe v Tribe [1996] Ch 107; [1995] 4 All ER 236; Jetivia SA v Bilta (UK) Ltd [2015] 2 WLR 1168 at [69] and the decisions referred to in [9-02] above; and see R Chambers, ‘Is There a Presumption of Resulting Trust’ in C Mitchell (ed), Resulting and Constructive Trusts, Hart Publishing, Oxford, 2010, pp 270–2. The Law Commission has recommended legislative intervention: The Illegality Defence (2010). 35. Hill v Crook (1873) LR 6 HL 265; [1874–80] All ER Rep 62; Re Ayles (1875) 1 Ch D 282. 36. Dorin v Dorin (1875) LR 7 HL 568; [1874–80] All ER Rep 71; Re Eve [1909] 1 Ch 796; [1908–10] All ER Rep 131. 37. Occleston v Fullalove (1874) 9 Ch D 147; Re Hastie (1887) 35 Ch D 728; Re Loveland [1906] 1 Ch 542; Re Te Huango [1993] 3 NZLR 77. 38. Birth (Equality and Status) Act 1988 (ACT) s 6; Status of Children Act 1996 (NSW) ss 5, 6; Status of Children Act 1978 (NT) s 6; Status of Children Act 1978 (Qld) s 3; Family Relationships Act 1975 (SA) s 6; Status of Children Act 1974 (Tas) s 3; Status of Children Act 1974 (Vic) s 3; Property Law Act 1969 (WA) s 31A; Wills Act 1970 (WA) Pt IX. 39. See Harris v Ashdown (1985) 3 NSWLR 193 at 199–200 and cf by analogy Smits v Roach (2004) 60 NSWLR 711 at [69]. Alternatively, it may be that it can no longer be said that such a trust is so contrary to the ideas prevailing in the community as to the conditions necessary to its welfare: see

Stevens v Keogh (1946) 72 CLR 1 at 28; cf Seidler v Schallhofer [1982] 2 NSWLR 80 at 89, 101. 40. Gnych v Polish Club Ltd (2015) 89 ALJR 658 at [72]. 41. Westmeath v Westmeath (1830) 1 Dow & Cl 519; Re Moore (1888) 39 Ch D 116; [1886–90] All ER Rep Ext 187. 42. Wilson v Wilson (1848) 1 HL Cas 538; 9 ER 970; (1854) 5 HL Cas 40; 10 ER 811. 43. Hindley v Westmeath (1827) 6 B & C 200; 108 ER 427; Westmeath v Westmeath (1830) 1 Dow & Cl 519; Bindley v Mulloney (1869) LR 7 Eq 343. 44. Re Hope-Johnstone [1904] 1 Ch 470. 45. Re Charleton [1911] WN 54. 46. See [9-47]. 47. (1852) 2 Sim (NS) 255; 61 ER 338. 48. Morley v Rennoldson (1843) 2 Hare 570 at 579; 67 ER 235 at 239 per Sir James Wigram VC. 49. Re Whiting’s Settlement [1905] 1 Ch 96; Leong v Lim Beng Chye [1955] 2 All ER 903. 50. Re Brown [1904] 1 Ch 120. The rule as to forfeiture upon marriage without consent is one long settled in the law. Earlier cases on the subject are the following: Aston v Aston (1703) 2 Vern 452; 23 ER 890; Scott v Tyler (1788) Dick 712; 5 ER 241; Stackpole v Beaumont (1796) 3 Ves 89; 30 ER 909; Dashwood v Bulkeley (1804) 10 Ves 230; 32 ER 832; Lloyd v Branton (1817) 3 Mer 108; 36 ER 42; Re Nourse [1899] 1 Ch 63. 51. Perrin v Lyon (1807) 9 East 170; 103 ER 538. Such a provision may now fall foul of s 9 of the Racial Discrimination Act 1975 (Cth). Section 8 saves only provisions conferring charitable benefits. 52. Duggan v Kelly (1847) 10 Ir Eq R 295. 53. Jenner v Turner (1880) 16 Ch D 188 at 196–7 per Sir James Bacon VC. 54. See Jarvis v Duke (1681) 1 Vern 19; 23 ER 274; Jenner v Turner (1880) 16 Ch D 188. 55. Lloyd v Lloyd (1852) 2 Sim (NS) 255; 61 ER 338; Leong v Lim Beng Chye [1955] 2 All ER 903. 56. Lloyd v Lloyd (1852) 2 Sim (NS) 255 at 263; 61 ER 338 at 341 per Sir James Kindersley VC. 57. Allen v Jackson (1875) 1 Ch D 399 at 403–4 per James LJ. 58. Re Hewett [1918] 1 Ch 458; [1918–19] All ER Rep 530; see also Re Fentem [1950] 2 All ER 1073, a gift to the testatrix’s brother for life with gift-over on his death, ‘if he shall have married’. 59. See Leong v Lim Beng Chye [1955] 2 All ER 903. 60. Leong v Lim Beng Chye [1955] 2 All ER 903. 61. Re Caborne [1943] Ch 224; [1943] 2 All ER 7. This case concerned a condition. But in Re Johnson’s Will Trusts [1967] 1 All ER 553, the same principle was applied to a trust. 62. Re Borthwick [1933] 1 Ch 637; [1933] All ER Rep 737. 63. (1948) 77 CLR 321; [1949] ALR 105; see also Ellaway v Lawson [2006] QSC 170; Jones v Krawczyk [2011] NSWSC 139. The difficulty in reconciling Ramsay with Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394; [1961] ALR 339 is discussed by D Hodgson (1962) 4 SydLR 131. 64. Re Sandbrook [1912] 2 Ch 471; [1911–13] All ER Rep 559; Re Boulter [1922] 1 Ch 75; Cattanach v Melchior (2003) 215 CLR 1; 199 ALR 131 at [328]–[337]. 65. Re Piper [1946] 2 All ER 503. 66. Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394; [1961] ALR 339; Cattanach v Melchior (2003) 215 CLR 1; 199 ALR 131 at [63]. 67. Blathwayt v Lord Cawley [1976] AC 397; [1975] 3 All ER 625.

68. Public Trustee v Gower [1924] NZLR 1233; Re Blaiberg [1940] Ch 385; [1940] 1 All ER 632; Re Evans [1940] Ch 629; Clayton v Ramsden [1943] AC 320; [1943] 2 All ER 16; Re Donn [1944] Ch 8; [1943] 2 All ER 564; Re Moss’s Trusts [1945] 1 All ER 207; Re Lockie Guardian [1945] NZLR 230; Re Biggs Public Trustee v Schreider [1945] NZLR 303; Re Myers [1947] NZLR 828; Blathwayt v Lord Cawley [1976] AC 397; [1975] 3 All ER 625; Re Tuck’s Settlement Trusts [1978] Ch 49; [1978] 1 All ER 1047; Re Sutcliffe [1982] 2 NZLR 330. See also Re Allen [1953] Ch 810; [1953] 2 All ER 898; Re Selby’s Will Trusts [1965] 3 All ER 386; [1966] 1 WLR 43 and Re Abraham’s Will Trusts [1969] 1 Ch 463; [1967] 2 All ER 1175, where the view is expressed that the tests for ascertaining certainty are less stringent with conditions precedent than conditions subsequent. This distinction was treated (albeit without enthusiasm) as accepted in English law, by the House of Lords in Blathwayt v Lord Cawley [1976] AC 397; [1975] 3 All ER 625; however, the existence of such a distinction was denied by the High Court of Australia in Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394; [1961] ALR 339. 69. See K Mackie, ‘Testamentary Conditions’ (1998) 20 UQLJ 38. 70. Kingston v Lady E Pierepont (1681) Vern 5; 23 ER 264. 71. Re Baird [1908] 1 Ch 383; Re Edgar [1939] 1 All ER 635. 72. [1938] AC 1 at 12; [1937] 3 All ER 402 at 407, quoted by Windeyer J in Trustees of Church Property of the Diocese of Newcastle v Ebbeck (1960) 104 CLR 394 at 415; [1961] ALR 339 at 350–1. 73. Elton v Cavill (No 2) (1994) 34 NSWLR 289 at 299. 74. Hall v Busst (1960) 104 CLR 206 at 217–18, 223–4, 236, 246; [1961] ALR 508 at 512–13, 517–18, 525–6, 532; Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 649– 50; 116 ALR 26 at 33–4; Caboche v Ramsay (1993) 119 ALR 215 at 225–6; Elton v Cavill (No 2) (1994) 34 NSWLR 289; John Nitschke Nominees Pty Ltd v Hahndorf Golf Club Inc (2004) 88 SASR 334 at [99]–[121]. 75. Brandon v Robinson (1811) 18 Ves 429; 34 ER 379; Graves v Dolphin (1826) 1 Sim 66; 57 ER 503; Green v Spicer (1830) 1 Russ & Myl 395; 39 ER 153; Ware v Cann (1830) 10 B & C 433; 109 ER 511; Snowdon v Dales (1834) 6 Sim 524; 58 ER 690; Attwater v Attwater (1853) 18 Beav 330; 52 ER 131; Hood v Oglander (1865) 34 Beav 513; 55 ER 733; Re Dugdale (1888) 38 Ch D 176; [1886–90] All ER Rep Ext 1505; McKay v McKay (1902) 22 NZLR 121; Re Cockerill [1929] 2 Ch 131; Downes v Maddrell (1941) 41 SR (NSW) 268; Re Goode [1960] VR 117; Caldy Manor Estate Ltd v Farrell [1974] 3 All ER 753; [1974] 1 WLR 303. 76. Re Machu (1882) 21 Ch D 838. The condition will be void for repugnancy and the gift construed as an absolute gift to A. Cf Palmer v Permanent Trustee Co (1915) 16 SR (NSW) 162. 77. See Lockyer v Savage (1733) 2 Stra 947; 93 ER 959; Ex parte Hinton (1808) 14 Ves 598; 33 ER 650; Brandon v Robinson (1811) 18 Ves 429 at 433; 34 ER 379 at 381; Joel v Mills (1857) 3 K & J 458; 69 ER 1189; Oldham v Oldham (1867) LR 3 Eq 404; Hatton v May (1876) 3 Ch D 148. A gift-over is not essential: Dommett v Bedford (1796) 6 TR 684; 101 ER 771; Craven v Bady (1869) LR 4 Ch App 296. 78. Caboche v Ramsay (1993) 119 ALR 215 at 226. 79. (1875) LR 20 Eq 186. 80. [1954] Ch 39; [1953] 2 All ER 1342. See also Grayson v Grayson [1922] St R Qd 155; Re Mavromates [1964] VR 612. 81. (2011) 82 NSWLR 665. 82. (1994) 33 NSWLR 551 at 555. 83. Grayson v Grayson [1922] St R Qd 155; Elton v Cavill (No 2) (1994) 34 NSWLR 289. The authorities are considered in detail in Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665.

84. Re Elliott [1896] 2 Ch 353; Re Patterson [1939] VLR 66. 85. Brandon v Robinson (1811) 18 Ves 429; 34 ER 379; Graves v Dolphin (1826) 1 Sim 66; 57 ER 503; Snowdon v Dales (1834) 6 Sim 524; 58 ER 690; Caboche v Ramsay (1993) 119 ALR 215 at 226–8. 86. Brandon v Robinson (1811) 18 Ves 429; 34 ER 379; McIntosh v Pogose [1895] 1 Ch 505. Cf Re Solomon [1908] SALR 107. 87. Higinbotham v Holme (1812) 19 Ves 88; 34 ER 451; Re Pearson (1877) 3 Ch D 807; Re Detmold (1889) 40 Ch D 585; Re Brewer’s Settlement [1896] 2 Ch 503; Re Burroughs-Fowler [1916] 2 Ch 251. 88. See Knight v Browne (1861) 7 Jur NS 894: settlement good as against a mortgagee. 89. [1912] 2 Ch 422. 90. See C Sweet, ‘Restraints on Alienation’ (1917) 33 LQR 236. 91. (1873) LR 16 Eq 585. 92. The provisions in the Trustee Acts and Trusts Acts of the various jurisdictions are as follows: ACT s 45; NSW s 45; Qld s 64; Tas s 30; Vic s 39; WA s 61. These provisions are derived from s 33 of the Trustee Act 1925 (UK). See L Sheridan, ‘Protective Trusts’ (1957) 21 Conv 110. 93. Re Wittke [1944] Ch 166; [1944] 1 All ER 384. 94. This is an expression to the contrary within the meaning of s 29C(1) of the Conveyancing Act 1919 (NSW). 95. Cf Re Rees’ Will Trusts [1954] Ch 202; [1954] 1 All ER 7. 96. [1920] 1 Ch 284; [1920] All ER Rep 190. Re Cunstance’s Settlements [1946] Ch 42; [1945] 2 All ER 441 was overruled by Re Westby’s Settlement [1950] Ch 296; [1950] 1 All ER 479. 97. [1940] Ch 737; [1940] 3 All ER 20. 98. For other examples, see also Re Moir [1909] 2 Ch 280; Re Williams [1912] 1 Ch 399; Re Smith [1916] 1 Ch 369 (on this case, see Re Forder [1927] 2 Ch 291; [1927] All ER Rep 324); Re Dennis’ Settlement Trusts [1942] Ch 283; [1942] 1 All ER 520; Re Hayne’s Will Trusts [1949] Ch 5; [1948] 2 All ER 423. 99. Re Gourju’s Will Trusts [1943] Ch 24; [1942] 2 All ER 605; Re Wittke [1944] Ch 166; [1944] 1 All ER 384. However, in cases where the protective trusts were in other forms, no forfeiture has been incurred. See Re Hall [1944] Ch 46; [1943] 2 All ER 753; Re Harris [1945] Ch 316; [1945] 1 All ER 702. 100. [1892] 3 Ch 481. 101. Re Tancred [1903] 1 Ch 715; [1900–3] All ER Rep 251. 102. Re Baring’s Settlement Trusts [1940] Ch 737. 103. McQuade v Morgan (1927) 39 CLR 222; 33 ALR 258. 104. Perpetual Trustee Co Ltd v Smith (1938) 39 SR (NSW) 19. 105. See earlier and Smith v Perpetual Trustee Co Ltd (1910) 11 CLR 148. In the latter case, it was held that notice to the trustee of a writ of foreign attachment did not work a forfeiture. It is not clear whether an order made under matrimonial causes legislation (for example, Family Law Act 1975 (Cth) s 79) altering a protected interest effects a forfeiture: see Re Richardson’s Will Trusts [1958] Ch 504; [1958] 1 All ER 538; General Accident Fire & Life Assurance Corp Ltd v Inland Revenue Commissioners [1963] 3 All ER 259; [1963] 1 WLR 1207, noted (1963) 27 Conv (NS) 517. 106. Re Greenwood [1901] 1 Ch 887; [1900–3] All ER Rep 97. 107. Permanent Trustee Co Ltd v Cormack (1920) 21 SR (NSW) 1. 108. Permanent Trustee Co Ltd v University of Sydney [1983] 1 NSWLR 578; cf Perpetual Trustee Co (Ltd) v Holdsworth [1966] 2 NSWR 755.

109. Permanent Trustee Co Ltd v University of Sydney [1983] 1 NSWLR 578. 110. Re Balfour’s Settlement [1938] Ch 928; [1938] 3 All ER 259. 111. Conveyancing Act 1919 (NSW) s 29C(1)(b), in cases where the instrument and the sanction of the court take effect after the Conveyancing (Amendment) Act 1930 (NSW). 112. Re Walker [1939] Ch 974; [1939] 3 All ER 902. 113. See Re Clark [1926] Ch 833; [1925] All ER Rep 219; and cf Re Forder [1927] 2 Ch 291; [1927] All ER Rep 324. 114. Re Gourju’s Will Trusts [1943] Ch 24; [1942] 2 All ER 605. 115. Re Forster’s Settlement [1942] Ch 199; [1942] 1 All ER 180. 116. Re Jenkins [1915] 1 Ch 46; Re Gourju’s Will Trusts [1942] Ch 24; [1942] 2 All ER 605. 117. See Re Detmold (1889) 40 Ch D 585, and other cases cited earlier. 118. Re Detmold (1889) 40 Ch D 585; Re Johnson [1904] 1 KB 134; Re Balfour’s Settlement [1938] Ch 928; [1938] 3 All ER 259. 119. [1960] VR 417 at 421. 120. [1961] VR 552. Cf Wilcox v Poole [1974] 2 NSWLR 693. 121. But see J C Gray, The Rule Against Perpetuities, 4th ed, 1942; J Morris and W Leach, The Rule Against Perpetuities, 2nd ed, Stevens, London, 1962. See also C Sappideen and P Butt, The Perpetuities Act 1984, Law Book Co, Sydney, 1986; J Glover (2007) 14 APLJ 225. 122. (1883) 1 Cl & Fin 372; 6 ER 956. 123. Re Dawson (1888) 39 Ch D 155 at 159; Re Wood [1894] 3 Ch 381 at 387; Ward v Van de Loeff [1924] AC 653; [1924] All ER Rep 542; Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375; [1952] ALR 729. 124. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at [29]. 125. In England, retrospective legislation (now found in the Social Security Act 1973) was enacted following the decision in Lucas v Telegraph Construction and Maintenance Co Ltd [1925] LN 211: see Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at [28]; and see now Perpetuities and Accumulations Act 2009 (UK) s 2(4). 126. The statutes apply to dispositions made on or after: Australian Capital Territory: 19 December 1985; New South Wales: 31 October 1984; Queensland: 1 April 1973; Tasmania: 1 December 1992; Victoria: 10 December 1968; Western Australia: 6 December 1962; In South Australia and the Northern Territory, the legislation has retrospective effect. 127. See [931]–[955]. 128. Perpetuities and Accumulations Act 1985 (ACT) s 9; Perpetuities Act 1984 (NSW) s 8; Law of Property Act 2000 (NT) s 190; Property Law Act 1974 (Qld) s 210; Perpetuities and Accumulations Act 1992 (Tas) s 9; Perpetuities and Accumulations Act 1968 (Vic) s 6; Property Law Act 1969 (WA) s 103. See, for example, Nemesis Australia Pty Ltd v Federal Commissioner of Taxation (2005) 61 ATR 119. 129. Perpetuities Act 1984 (NSW) s 7; Perpetuities and Accumulations Act 1985 (ACT) s 8. 130. Law of Property Act 2000 (NT) s 187; Property Law Act 1974 (Qld) s 209; Perpetuities and Accumulations Act 1992 (Tas) s 6; Perpetuities and Accumulations Act 1968 (Vic) s 5; Property Law Act 1969 (WA) s 101. For the rules governing the specification of the lives in being, see the 6th edition of this work at [936]–[937]; and see Re Green [1985] 3 All ER 455. 131. Perpetuities Act 1984 (NSW) s 9(1); Perpetuities and Accumulations Act 1985 (ACT) s 10; Law of Property Act 2000 (NT) s 191.

132. Perpetuities and Accumulations Act 1968 (Vic) s 9; Perpetuities and Accumulations Act 1992 (Tas) s 11. 133. Property Law Act 1974 (Qld) s 213. 134. Property Law Act 1969 (WA) s 105. 135. Perpetuities and Accumulations Act 1985 (ACT) s 10(3); Perpetuities Act 1984 (NSW) s 9(4); Law of Property Act 2000 (NT) s 191(4); Property Law Act 1974 (Qld) s 213(4); Perpetuities and Accumulations Act 1992 (Tas) s 11(4); Perpetuities and Accumulations Act 1968 (Vic) s 9(4); Property Law Act 1969 (WA) s 106. 136. Perpetuities and Accumulations Act 1985 (ACT) s 18; Perpetuities Act 1984 (NSW) s 17; Law of Property Act 2000 (NT) s 199; Property Law Act 1974 (Qld) s 215; Perpetuities and Accumulations Act 1992 (Tas) s 12; Perpetuities and Accumulations Act 1968 (Vic) s 11; Property Law Act 1969 (WA) s 109. 137. Perpetuities and Accumulations Act 1985 (ACT) s 15; Perpetuities Act 1984 (NSW) s 14; Law of Property Act 2000 (NT) s 196; Property Law Act 1974 (Qld) s 219; Perpetuities and Accumulations Act 1992 (Tas) s 16; Perpetuities and Accumulations Act 1968 (Vic) s 16; Property Law Act 1969 (WA) s 111. 138. Law of Property Act 1936 (SA) s 61. 139. Law of Property Act 1936 (SA) s 62. 140. Bowman v Secular Society Ltd [1917] AC 406; [1916–17] All ER Rep 1; Re Ogden [1933] Ch 678; [1933] All ER Rep 720; Bacon v Pianta (1966) 114 CLR 634; [1966] ALR 1044; Bacon v O’Dea (1989) 25 FCR 495 at 503–5; 88 ALR 486 at 492–5. 141. (1958) 98 CLR 538; [1958] ALR 257 sub nom Attorney-General (NSW) v Donnelly. 142. [1959] AC 457; (1959) 101 CLR 611. See H Ford, Unincorporated Non-Profit Associations, pp 1–49. 143. (1966) 114 CLR 634 at 638; [1966] ALR 1044 at 1045. 144. Although formerly such a gift would be void as being capable of vesting outside the perpetuities period, the effect of the legislative wait-and-see and class reduction rules noted above would appear to have the effect of validating such a gift. This possibility has not been taken up in the cases, but see P Matthews, ‘The New Trust: Obligations without Rights’ in A Oakley (ed), Trends in Contemporary Trust Law, Oxford University Press, 1996, 1 at 17–18. 145. [1959] AC 457; (1959) 101 CLR 611. 146. [1914] 1 Ch 937. 147. [1971] SASR 169. 148. (1966) 114 CLR 634; [1966] ALR 1044. 149. [1962] Ch 832; [1961] 3 All ER 769. 150. [1972] Ch 526; [1971] 3 All ER 401. See also Re Lipinski [1976] Ch 235; [1977] 1 All ER 33 (on which, see K Widdows (1977) 41 Conv 179; B Green (1980) 43 MLR 626 at 628); Conservative and Unionist Central Office v Burrell [1980] 3 All ER 42 at 63–4 per Vinelott J, affirmed [1982] 2 All ER 1; [1982] 1 WLR 522; Hanchett-Stamford v Attorney-General [2009] Ch 173; [2008] 4 All ER 323, noted (2009) 21 Denning LJ 107; Re St Andrew’s (Cheam) Lawn Tennis Club Trust [2012] 1 WLR 3487 at [60]–[62]. 151. [1971] VR 801. 152. [1962] Ch 832 at 849; [1961] 3 All ER 769 at 778. 153. (1998) 195 CLR 291; 156 ALR 579 at [80]; see also at [7]–[8]. 154. Unless saved by the modern perpetuity legislation.

155. [1971] VR 801. 156. (1989) 25 FCR 495 at 504; 88 ALR 486 at 494. 157. Succession Act 2006 (NSW) s 43; Succession Act 1981 (Qld) s 33Q; Wills Act 1997 (Vic) s 47. 158. (1799) 4 Ves 227; 31 ER 117. 159. Perpetuities and Accumulations Act 1985 (ACT) s 19; Perpetuities Act 1984 (NSW) s 18; Law of Property Act 2000 (NT) s 202; Property Law Act 1974 (Qld) s 222; Perpetuities and Accumulations Act 1992 (Tas) s 22, 27; Perpetuities and Accumulations Act 1968 (Vic) s 19; Property Law Act 1969 (WA) s 113. 160. See [9-29]. 161. (1841) 4 Beav 115; 49 ER 282; see [23-08]ff. 162. Perpetuities and Accumulations Act 1985 (ACT) s 19(2); Perpetuities Act 1984 (NSW) s 18(2); Law of Property Act 2000 (NT) s 202(2); Property Law Act 1974 (Qld) s 222(2); Law of Property Act 1936 (SA) s 62A; Perpetuities and Accumulations Act 1992 (Tas) s 22(2); Perpetuities and Accumulations Act 1968 (Vic) s 19(2); Property Law Act 1969 (WA) s 113(2). 163. Wharton v Masterman [1895] AC 186; [1895–9] All ER Rep 687. On the limitation of the circumstances in which the rule can be applied, see Berry v Green [1938] AC 575; [1938] 2 All ER 362; Thomas v Perpetual Trustee Co Ltd (1955) 94 CLR 537; [1956] ALR 85; Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406; Robertson v Allen (2003) 11 BPR 21,213 at [23]–[29]. 164. Bale v Newton (1687) 1 Vern 464; 23 ER 589; Sear v Ashwell (1739) 3 Swan 411n; 36 ER 928; Lanham v Pirie (1857) 3 Jur NS 704; Paul v Paul (1882) 20 Ch D 742; Standing v Bowring (1885) 31 Ch D 282; [1881–5] All ER Rep 702. 165. Phillips v Mullings (1871) LR 7 Ch App 244. 166. Dutton v Thompson (1883) 23 Ch D 278 at 281. 167. Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51; 197 ALR 153 at [80]. 168. Meagher, Gummow and Lehane’s Equity, Chs 12–16. 169. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; [1998] 4 All ER 513: see Gibbon v Mitchell [1990] 3 All ER 338 at 343; [1990] 1 WLR 1304 at 1309; Dent v Dent [1996] 1 All ER 659 at 669; [1996] 1 WLR 683 at 693; Smithson v Hamilton [2008] 1 All ER 1216; [2008] 1 WLR 1453 at [106]–[123]; Meagher, Gummow and Lehane’s Equity, [14-015]. 170. Lewis v Hillman (1852) 3 HL Cas 607 at 630; 10 ER 239 at 249; Maguire v Makaronis (1997) 188 CLR 449 at 465; 144 ALR 729 at 738. 171. Johnson v Buttress (1936) 56 CLR 113 at 134; [1936] ALR 390 at 397–8; Bridgewater v Leahy (1998) 194 CLR 457; 158 ALR 66 at [71]. 172. Allcard v Skinner (1887) 36 Ch D 145; [1886–90] All ER Rep 90; Rain v Fullarton (1900) 21 LR (NSW) Eq 311; Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30. 173. Essery v Cowlard (1884) 26 Ch D 191; Bond v Walford (1886) 32 Ch D 238. 174. Re Garrett (1905) 93 LT 117; Re Ames’ Settlement [1946] Ch 217; [1946] 1 All ER 689. 175. Johnston v Johnston (1884) 52 LT 76, where a marriage settlement was induced by fraudulent representations, but it was held that, since the marriage had been solemnised, the settlement could not be cancelled. 176. For the former provisions, see the 6th edition of this work at [960].

177. (1986) 161 CLR 75 at 80–4; 66 ALR 355 at 357–60; Cook v Benson (2003) 214 CLR 370; 198 ALR 218 at [30]. 178. Re Abbott [1983] Ch 45 at 54, 57; Barton v Official Receiver (1986) 161 CLR 75 at 84–5; 66 ALR 355 at 360–1; Official Trustee in Bankruptcy v Lopatinsky (2003) 129 FCR 234 at [86]–[90]. 179. Anscor Pty Ltd v Clout (2004) 135 FCR 469 at [29]–[31]; cf Jack v Smail (1905) 2 CLR 684 at 700–1; 11 ALR 372 at 376–7. 180. Anscor Pty Ltd v Clout (2004) 135 FCR 469 at [33], [36], approved Vale v Sutherland (2009) 237 CLR 638; 258 ALR 1 at [6]. 181. Bankruptcy Act 1966 (Cth) s 120(2). 182. Mateo v Official Trustee in Bankruptcy (2002) 117 FCR 179; 188 ALR 667 at [27]. 183. Bankruptcy Act 1966 (Cth) s 120(5)(c). 184. Mateo v Official Trustee in Bankruptcy (2002) 117 FCR 179; 188 ALR 667 at [30]–[33]. 185. Bankruptcy Act 1966 (Cth) s 120(3). 186. Bankruptcy Act 1966 (Cth) s 120(6). 187. Bankruptcy Act 1966 (Cth) s 120(4). For a detailed analysis of the provision, see Vale v Sutherland (2009) 237 CLR 638; 258 ALR 1 and Anscor Pty Ltd v Clout (2004) 135 FCR 469 at [24]–[43]. 188. Bankruptcy Act 1966 (Cth) s 121(2). Contrast Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; 153 ALR 163, on an earlier form of the legislation. 189. Re Jury (1999) 92 FCR 68. 190. See generally Prentice v Cummins (No 5) (2002) 124 FCR 67; Andrew v Zant Pty Ltd (2004) 213 ALR 812 at [20], [88]–[90]. 191. Barton v Deputy Commissioner of Taxation (1974) 131 CLR 370 at 374; P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 525–6; 107 ALR 199 at 209; Windoval Pty Ltd v Donelly (2014) 314 ALR 622 at [144]. 192. Bankruptcy Act 1966 (Cth) s 121(4). 193. Bankruptcy Act 1966 (Cth) s 121(5). 194. 13 Eliz I, c 5. Civil Law (Property) Act 2006 (ACT) s 239; Conveyancing Act 1919 (NSW) s 37A; Law of Property Act (NT) s 208; Property Law Act 1974 (Qld) s 228; Law of Property Act 1936 (SA) s 86; Conveyancing and Law of Property Act 1884 (Tas) s 40; Property Law Act 1958 (Vic) s 172; Property Law Act 1969 (WA) s 89. The conscious departure from the original statutory language, and its significance, is explained in Marcolongo v Chen (2011) 242 CLR 546; 274 ALR 634 at [17]–[20]. 195. P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 521–2; 107 ALR 199 at 205–6, where the relation between the statutes is discussed. 196. Ex parte Mercer (1886) 17 QBD 290; Lloyds Bank Ltd v Marcan [1973] 3 All ER 754; [1973] 1 WLR 1387, but it might be void under s 120 of the Bankruptcy Act 1966. It has been held in some cases, for example, Freeman v Pope (1870) LR 5 Ch App 538; Spirett v Willows (1865) 3 De GJ & S 293; 46 ER 649, that where the defeating of some creditors has been the necessary consequence of the settlement, intent must be presumed, but this view was strongly dissented from in Ex parte Mercer (1886) 17 QBD 290. 197. Marcolongo v Chen (2011) 242 CLR 546; 274 ALR 634 at [32], approving Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 at 456–7 and Lloyds Bank Ltd v Marcan [1973] 3 All ER 754 at 759–60. In the latter case, Cairns LJ said that ‘at any rate where the conveyance is for consideration’ intention involving ‘actual deceit or dishonesty’ is a necessary element, but this interpretation has been criticised, with reference to earlier authority; B Langstaff, ‘The Cheat’s Charter?’ (1975) 91 LQR 86 at 92–6.

198. Re Williams (1934) 50 CLR 341 at 372; Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; 153 ALR 163. 199. (1886) 17 QBD 290. 200. This point was important in regard to possible proceedings under the Bankruptcy Act, in view of the time which had elapsed from the date of the settlement to the date of his bankruptcy (the time within which the settlement would, under English law, have been void without proof of ability to pay debts was two years). 201. See also Re Holland [1902] 2 Ch 360. 202. Holmes v Penny (1857) 3 K & J 90 at 99; 69 ER 1035 at 1038–9. 203. Re Ridler (1882) 22 Ch D 74. 204. Re Maddever (1884) 27 Ch D 523. Cf Re Sarflax Ltd [1979] Ch 592 at 602–8; [1979] 1 All ER 529 at 537–42. 205. P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 525; 107 ALR 199 at 208. 206. (1872) LR 14 Eq 106. See also Williams v Lloyd (1934) 50 CLR 341. 207. (1882) 19 Ch D 588. 208. (1882) 19 Ch D 588 at 598–9. See also Re Mackay (1951) 16 ABC 18. 209. Conveyancing Act 1919 (NSW) s 37A(3). But the consideration must not be merely technical: Re Ridler (1882) 22 Ch D 74; cf Harris v Tubb (1889) 42 Ch D 79; Pearce v Bulteel [1916] 2 Ch 544. 210. (1888) 59 LT 714. 211. (1869) LR 8 Eq 46. 212. Cf Kevan v Crawford (1877) 6 Ch D 29; Re Reis [1904] 2 KB 769. 213. Darvill v Terry (1861) 6 H & N 807; 158 ER 333. 214. Halifax Joint Stock Banking Co v Gledhill [1891] 1 Ch 31; Harrods v Stanlon [1923] 1 KB 516; [1923] All ER Rep 592; Brady v Stapleton (1952) 88 CLR 322; [1952] ALR 989. 215. Ideal Bedding Co Ltd v Holland [1907] 2 Ch 157. 216. Freeman v Pope (1870) 5 Ch App 538. 217. Spirett v Willows (1865) 3 De GJ & S 293; 46 ER 649; Taylor v Coenen (1876) 1 Ch D 636. 218. De Mestre v West [1891] AC 264. This doctrine did not apply where the voluntary gift was to charity: Ramsay v Gilchrist [1892] AC 412. 219. Prodger v Langham (1662) 1 Keb 486; 83 ER 1068. 220. Civil Law (Property) Act 2006 (ACT) ss 239–240; Law of Property Act (NT) ss 208–209; Property Law Act 1974 (Qld) s 229; Law of Property Act 1936 (SA) s 87; Conveyancing and Law of Property Act 1884 (Tas) s 41; Property Law Act 1958 (Vic) ss 173–174; Property Law Act 1969 (WA) ss 90, 91.

[page 120]

CHAPTER 10 Charitable Trusts General Principles Legal and General Meanings of ‘Charity’ Preamble to Statute of Elizabeth Tests for Application of Preamble The Four Pemsel Classes

[10-01] [10-01] [10-02] [10-03] [10-04]

Charitable Trusts: For Purposes not Persons Charitable ‘Institutions’ Public Purposes Public Benefit Baddeley’s Case Promoting Legislation Changed Circumstances Motive of the Donor Control of the Court

[10-05] [10-05] [10-06] [10-10] [10-11] [10-12] [10-13] [10-14] [10-15]

The Relief of Poverty Absolute Destitution not Necessary Form of Relief Immaterial No Specific Reference to Poverty Necessary Aged Impotent Restrictions to Locality or Class Poor Relations

[10-17] [10-17] [10-19] [10-20] [10-21] [10-23] [10-24]

The Advancement of Education Advancement of Learning Alone not Enough Law Reporting

[10-26] [10-26] [10-27]



Foundation of Institutions Political Education Education of a Class Particular Branches of Study Sporting and Recreational Activities

[10-28] [10-29] [10-30] [10-31] [10-32]

The Advancement of Religion Meaning of ‘Religion’ Public Benefit Building and Maintaining Churches

[10-33] [10-33] [10-34] [10-35] [page 121]



Churchyards and Tombs Church Ornaments The Clergy and Church Workers Masses for the Dead Closed Orders Worship Prayer Choir, etc Non-charitable Objects

[10-36] [10-38] [10-39] [10-40] [10-41] [10-42] [10-43] [10-45] [10-46]

Purposes Beneficial to the Community The Residual Fourth Class Benevolent Purposes Sport Hospitality or Entertainment Political Purposes Other Cases: General Public works Relief of rates or national exchequer The relief of distress Armed forces Animals

[10-47] [10-47] [10-48] [10-49] [10-50] [10-51] [10-52] [10-53] [10-54] [10-55] [10-56] [10-57]





Miscellaneous

[10-58]

General Problems in Charitable Trusts Purpose Outside the State Charitable and Private Trusts Contrasted Certainty as to the Objects and Property Bound Trustee’s Discretion Mixed Charitable and Non-charitable Trusts

[10-59] [10-59] [10-60] [10-61] [10-62] [10-63]

Schemes The Enforcement of Charitable Trusts The Effectuation of Charitable Trusts by Schemes Donor’s Directions Insufficient Variation of the Original Purposes: Cy-près Schemes Legislation Dormant Funds Act 1942 (NSW) Charitable Trusts Act 1993 (NSW) Charitable Funds Act 1958 (Qld) Romilly’s Act 52 Geo III c 101 The Religious Successory and Charitable Trusts Act 1958 (Vic) Charities Act 1978 (Vic)

[10-67] [10-67] [10-68] [10-69] [10-70] [10-74] [10-75] [10-76] [10-77] [10-78] [10-79] [10-80]

Other Charity Problems The Rule Against Perpetuities Accumulations for Charity

[10-81] [10-81] [10-82] [page 122]



Directions to Pay Income Only Lapse Charity in Commonwealth Legislation

General Principles

[10-83] [10-84] [10-87]

Legal and General Meanings of ‘Charity’ [10-01] The charitable trust is a form of express trust. It is often called a ‘public’ trust. But it is important to distinguish clearly between charitable trusts and declared private trusts. That is because important principles of law relating to the former are not applicable to the latter. It will be seen later that there are many ways in which charitable trusts are more favourably treated by law than non-charitable trusts.1 The meaning given by law to the word ‘charitable’ in this connection does not coincide completely with the popular meaning of the word.2 In popular usage ‘charitable’ means ‘eleemosynary’ or ‘benevolent’. ‘[T]he popular conception of a charitable purpose covers the relief of any form of necessity, destitution or helplessness which excites the compassion or sympathy of men, and so appeals to their benevolence for relief.’3 There are many purposes which might be regarded as being charitable in the popular sense of the term which will not bring trusts for those purposes within the category of charitable trusts. An example is a trust for the education of the children of one’s employees.4 Other trusts might be regarded as charitable in law although they are not popularly so regarded. Examples include a trust ‘for my country England’5 or a trust to found chairs of learning at a university.6

Preamble to Statute of Elizabeth [10-02] The general requirements which a trust must fulfil to be classed as charitable are now well settled. But the term ‘charitable trust’ defies satisfactory short definition. Indeed, it has been stated ‘It is probably impossible to define what is a charitable [trust], and it is certainly not advisable to attempt to do so’.7 To determine whether a purpose is charitable or not in law, it has been the practice of the courts to refer to the preamble of the Statute of Charitable Uses 1601, 43 Eliz I, c 4.8 This statute does not define ‘charitable uses or trusts’. However, it contains in its preamble a list of certain uses which are deemed to be charitable. These are: the relief of the aged, [page 123]

impotent, and poor; the maintenance of schools of learning, and free scholars in universities; the repair of bridges, ports, havens, causeways, churches, seabanks, and highways; the education and preferment of orphans; the relief, stock or maintenance of houses of correction; the marriage of poor maids; the support, aid and help of young tradesmen, handicraftsmen, and persons decayed; the relief, or redemption, of prisoners or captives; and the aid or ease of any poor inhabitants concerning payment of fifteens, setting out of soldiers, and other taxes. In addition, any purpose analogous to these uses has been regarded by the courts as charitable. That is because the courts have accepted the principle that the objects mentioned in the preamble are instances and not the only objects of charity. Thus it can be said that the term ‘charitable trust’ includes:9 (1) all trusts for objects which are expressly mentioned in the preamble to the statute 43 Eliz I, c 4; and (2) trusts for objects which by analogy the court has deemed or deems within the ‘spirit and intendment’ of this statute. The object of the Mortmain Act 1736 was to hamper devises of land for charitable purposes and thereby to assist the interests of the heir at law. The broader the definition of charity, the greater the protection to the heir at law. Thus decisions which might be thought to have aided charity by a broad definition in fact had the opposite effect.10 The Act was repealed in England in 1888 and was never in force in Australia11 but decisions given while it was in force must be seen against this background. In Gilmour v Coats, Lord Simonds said:12 When I speak of the law of charity, I mean that law which the Court of Chancery and its successor, the High Court of Justice, has evolved from a consideration of the statute 43 Eliz c 4. It is a commonplace that that statute, as its title implied, was directed not so much to the definition of charity as to the correction of abuses which had grown up in the administration of certain trusts of a charitable nature. But from the beginning it was the practice of the court to refer to the preamble of the statute in order to determine whether or not a purpose was charitable. The objects there enumerated and all other objects which by analogy ‘are deemed within its spirit and intendment’ and no other objects are in law charitable. That is settled and familiar law. I refer to it for two reasons. First, I think that it follows that, however valuable an investigation of the earlier law may be for determining the legality of religious practices (as was shown in Bourne v Keane13), it is of negligible importance for determining whether an object is charitable. Three hundred and fifty years have passed since the statute became law; few, if any, subjects have more frequently occupied the time of the court. The law of mortmain, the law of perpetuity, and in latter days the revenue law, in all these aspects it has over and over again been the vital issue whether or not an object is charitable, and always it is primarily to the Statute of Elizabeth and not behind it that the court has looked for guidance. And this leads me to my second reason. A great body of law has thus grown up. Often it may appear illogical and even capricious. It could

hardly be otherwise when its guiding principle is so vaguely stated and is liable to be so differently interpreted in different ages.

Whether a trust is charitable thus depends on its purpose. A trust with a charitable purpose remains charitable even though the means of effectuating that purpose, or the incidental consequences of carrying the purpose out, are not intrinsically charitable,14 for example, the fees of the trustees15 or the professional protection of members of a college of surgeons.16 [page 124]

Tests for Application of Preamble [10-03] How do the courts determine whether a given purpose is within the ‘spirit and intendment’ of the preamble to the Statute of Elizabeth I? The words are not to be given any ‘narrow or archaic construction’.17 In Scottish Burial Reform and Cremation Society v Glasgow Corp,18 the House of Lords found the promotion of inexpensive and sanitary methods of disposal of the dead, in particular by cremation, to be such a purpose. Lord Wilberforce continued what he called the evolutionary process, which had taken charity from the ‘repair of churches’ specified in the preamble through the maintenance of burial grounds in a churchyard or in a cemetery extended from a churchyard, to embrace cremation of the dead. On the other hand, in Royal National Agricultural and Industrial Association v Chester,19 the High Court could find in the preamble no analogue for the breeding of racing pigeons. It therefore held a trust for such a purpose to fail, even though it might be conceded that in a general way this purpose was beneficial to the community. Further, the High Court in this case in terms rejected the views expressed by Russell LJ and Sachs LJ in Incorporated Council of Law Reporting for England & Wales v A-G,20 that any purpose beneficial to the community was brought within the ambit of the preamble to the statute unless there was some particular reason for excluding it from the concept of legal charity. Analogy must provide but a partial and imperfect guide in this field. An attempt to reason from a stratum of principle was made by Barwick CJ in Incorporated Council of Law Reporting of Queensland v Federal Commissioner of Taxation. He held that the production, not for private gain, of law reports was within the spirit of the preamble:21

Out of certain of the instances given in the preamble to the Act of 1601 a broad concept emerges of the kind of object of public utility which will satisfy the quality of charity. Any notion that that concept is of an eleemosynary nature is seen to be untenable by some of those very instances themselves, eg, the repair of bridges, havens, causeways, seabanks and highways and the setting out of soldiers. Further, these instances seem to regard the provision of some of the indispensables of a settled community as charitable. The ability to move from place to place and to do so without let of rivers and streams, protection of the land from the ravage of the sea, security against enemies, are fundamentals of the society seen to be within the concept of charitable public benefit as much as assistance to the needy and as education of the generations. Consistently with the spirit and width of this concept of charity the promotion of agriculture is seen to be charitable (Inland Revenue Commissioners v Yorkshire Agricultural Society22) and even the promotion of horticulture (Re Pleasants23). Agriculture partakes of that fundamental social quality which can give a charitable nature to a trust or purpose relating thereto which is beneficial to the community. So it would seem does horticulture. On occasions, a benefit of that kind to a section of the public less than the whole community by the trust or purpose may be enough … The sustenance of the law is a benefit of a material kind which enures for the benefit of the whole community. Is not its administration, with regularity, and with as much consistency as a system based on human judgment can attain, as socially fundamental as the instances which I have taken from the preamble? Surely it is.

[page 125]

The Four Pemsel Classes [10-04] Lord Macnaghten, in Income Tax Special Purposes Commissioners v Pemsel,24 divided charitable trusts into the following four classes: (1) trusts for the relief of poverty; (2) trusts for the advancement of education; (3) trusts for the advancement of religion; and (4) trusts for other purposes beneficial to the community not falling under any of the preceding heads. A trust not falling within one of these classes and hence not falling within the preamble or its spirit and intendment is not charitable even if beneficial to the community. And a trust falling within one of the four classes derived from the preamble may not be charitable if not beneficial to the community.25 All charitable trusts must fall within one of these classes. But not every object which might be brought within one of them is ipso facto a charity. That is because whatever class it may come within, it must further be of a public nature, that is, for the benefit of the public, and also capable, if necessary, of being

controlled by the court. Whether it fulfils all these conditions is a question to be decided by the court.26 The concept of legal charity is one which changes and develops in each age.27 The purpose to which the property is devoted is what must be considered in determining whether any particular purpose is charitable. The source of the property or the person of the trustee is not relevant in determining the question.28 And where the trust rests on writing, the characterisation of the trust as charitable depends on construction of the writing, not on subsequent activities.29

Charitable Trusts: For Purposes not Persons Charitable ‘Institutions’ [10-05] All charitable trusts are trusts for purposes not persons.30 It is important to bear this fact firmly in mind owing to the habit of using expressions such as ‘charitable institutions’. The habit has, it is submitted, vitiated some academic writings31 and even judicial dicta32 on the law of charities. To speak of institutions or entities as public charities is to introduce a concept which is not only confusing, but inaccurate. Unless an institution or entity, which is loosely called a charity, is

[page 126] bound as trustee to carry out a public charitable purpose, there is no public charity. If it is bound the public charity is not the institution itself, but the institution as an organisation subject to an established trust for charitable purposes.33

This distinction has led to some practical difficulty in construing statutes which, for example, confer exemptions from rating on ‘charitable institutions’, a topic which, however, is outside the scope of the present work.34

Public Purposes [10-06] All charitable trusts must have some ‘public’, as distinct from ‘private’, purposes.35 Thus, a gift for a ‘private charity’ would not be a charitable trust.36 Of course, it might be valid as a private trust if the object to be benefited

were certain and it otherwise complied with the requirements for private declared trusts. But drawing the distinction between the two types of purpose, though frequently done, can be difficult. It is clear that the fact that a trust purpose is restricted so that only a limited number of persons may benefit from it because of residential or other qualifications37 will not necessarily render that purpose non-charitable.38 But the possible beneficiaries must not be numerically negligible and the quality which distinguishes them from other members of the community, so that they form by themselves a section of it, must be a quality which does not depend upon their personal relationship to a single propositus or to several propositi, as, for example, that they are related by blood to a named person or that they are employees or the relatives of employees of a named firm.39 In Re Compton,40 the court had to determine whether a gift for the education of the descendants in perpetuity of three named persons was charitable. In holding that the gift was to be regarded as a family trust and not as one for the benefit of a section of the community, Lord Greene MR said:41 No definition of what is meant by a section of the public has, so far as I am aware, been laid down, and I certainly do not propose to be the first to make the attempt to define it. In the case of many charitable gifts it is possible to identify the individuals who are to benefit, or who at any given moment constitute the class from which the beneficiaries are to be selected. This circumstance does not, however, deprive the gift of its public character. Thus, if there is a gift to relieve the poor inhabitants of a parish the class to benefit is readily ascertainable. But they do not enjoy the benefit, when they receive it, by virtue of their character as individuals but by virtue of their membership of the specified class. In such a case the common quality which unites the potential beneficiaries into a class is essentially an impersonal one. It is definable by reference to what each has in common with the others, and that is something into which their status as individuals does

[page 127] not enter. Persons claiming to belong to the class do so not because they are AB, CD, and EF but because they are poor inhabitants of the parish. If, in asserting their claim, it were necessary for them to establish the fact that they were the individuals AB, CD, and EF, I cannot help thinking that on principle the gift ought not to be held to be a charitable gift, since the introduction into their qualification of a purely personal element would deprive the gift of its necessary public character. It seems to me that the same principle ought to apply when the claimants, in order to establish their status, have to assert and prove not that they themselves are AB, CD, and EF, but that they stand in some specified relationship to the individuals AB, CD and EF, such as that of children or employees …. The fact that in cases where a personal element forms an essential part of the qualification the numbers involved may be large does not appear to me to make any difference to the principle to be applied. Once that element is present numbers can make no difference. The gift is in such a case a personal gift …. I come to the conclusion, therefore, that

on principle a gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus cannot on principle be a valid charitable gift.

On these principles, in Re Mills42 the South Australian Full Court held that a devise to the Salvation Army of certain real estate ‘for the construction and administration of an eventide settlement thereon, for the use of the descendants of’ certain named persons, failed as a charitable trust. [10-07] In Re Income Tax Acts (No 1),43 Lowe J said: It may not be easy or even possible to enumerate in advance the differentiae of a ‘section of the public’ within this rule, but I illustrate along what lines a conclusion may be arrived at. Having regard to the composition of the public, certain large groups may readily be recognized, the members of which have a common calling or adhere to a particular faith or reside in a particular geographical area. There is no bar which admits some members of the public to those groups and rejects others. Any member of the public may, if he will, follow a particular calling, adhere to a particular faith, or reside within a particular area. Of the members of such a group it may be said in a real sense that they are primarily members of the public, and such a group may well constitute a section of the public. They stand on one side of the line. Each group, it is true, may consist of many individuals, but number alone is not the criterion by which to determine whether the group constitutes a section of the public. A club, a literary society, a trade union may all have numerous members, but I think that none of these could properly be called a section of the public. They stand on the other side of the line. The distinguishing feature of each of these latter bodies is that it is an association which takes power to itself to admit or exclude members of the public according to some arbitrary test which it sets up in its rules or otherwise. Each of them does oppose a bar to admission within it. It is not one of the groups into which the community as a matter of necessary organization or by convention is divided, but it is in a sense an artificial entity which exists for the benefit of its members as members thereof and not as members of the public.

[10-08] This analysis was approved and adopted in Thompson v Federal Commissioner of Taxation.44 The High Court held, in effect, that the purpose of conducting a school for the children of members of the Masonic Order was not a valid charitable purpose. In Stratton v Simpson,45 the High Court reaffirmed its attitude in this regard by adopting and applying Thompson v Federal Commissioner of Taxation. The case involved a testamentary bequest of residue in favour of any bodies which were ‘exempt from duty under’ a particular statute which were selected by the testator’s executors. Those bodies included ‘any school which pursuant to [another statutory provision] is included in the latest list of schools published in the Gazette that have been inspected and found efficient or have been certified to be efficient for the purposes of that Act’. A majority of the court, through Gibbs J, pointed out46 that if any of those schools provided tuition limited to persons selected on the same kind of basis as the

[page 128] persons educated in the Masonic Schools referred to in Thompson v Federal Commissioner of Taxation, those schools would not be charitable in law. The House of Lords in Oppenheim v Tobacco Securities Trust Co Ltd47 dealt with a trust of income to be applied in providing for the education of children of employees and former employees of a specified British company or any of its subsidiary or allied companies. The trust was held not to be charitable although the employees so indicated numbered over 110,000.48 Re Compton49 was distinguished in Re Tree,50 where there was a trust for the purpose of assisting persons who resided in a specified borough in or prior to the year 1880 or their descendants to emigrate to any of the British Dominions. In Re Compton, the ancestors were individually selected by the testator, in Re Tree they were determined by the application of the impersonal test of residence. In Davies v Perpetual Trustee Co (Ltd),51 the Privy Council considered a devise of land to ‘Presbyterians the descendants of those settled in the Colony hailing from or born in the north of Ireland to be held in trust for the purpose of establishing a college for the education and tuition of their youth in the standards of the Westminster Divines as taught in the Holy Scriptures’. This was held not to constitute a valid charitable trust. Applying the test laid down by Lord Greene MR in Re Compton, it was held that there was involved a purely personal element in the selection of the beneficiaries, thus necessarily depriving the trust of the required public element. It was there suggested that Re Tree was incorrectly decided in so far as it had tried to distinguish Re Compton, and that Re Tree could only be supported, if at all, as a trust for the relief of poverty, where, anomalously, the necessity for the element of public purpose perhaps does not apply. [page 129] [10-09] In Dingle v Turner,52 the House of Lords upheld the validity of a trust to apply the income of a fund of £10,000 ‘in paying pensions to poor employees of’ a named company. The ‘public purpose’ tests enunciated in Re Compton53 and Thompson v Federal Commissioner of Taxation,54 were held not to apply to

trusts for the relief of poverty. In this respect the decision is comparatively orthodox. However, the case contains strong dicta that the Re Compton test may not even be the correct test to apply to trusts other than trusts for the relief of poverty, that Lord MacDermott’s dissenting speech in Oppenheim’s case is preferable to the speeches of the majority in that case, and even that the mere fact that the potential beneficiaries are numerous is sufficient to constitute a purpose a ‘public purpose’. If these dicta are followed by future authorities, the law of charitable trusts as hitherto understood will be revolutionised.

Public Benefit [10-10] No trust will be deemed to be charitable unless the carrying out of its object will be of benefit to the public.55 This benefit will be presumed until the contrary is proved in the case of trusts for the relief of poverty and the advancement of education and religion, but must be affirmatively proved in all other cases.56 In order to displace the prima facie assumption of public benefit it is not necessary to show that the trust purpose is detrimental to the public, but only that it is ‘non-beneficial to the public’.57 The mere belief of the donor of the section of the public said to be benefited that the purpose of the trust is charitable is not effectual in itself to make the purpose charitable in the eyes of the law.58 The court will not, therefore, be satisfied with proof of an intention to benefit the public, but must itself decide whether there is any basis for the donor’s views. In other words, the court must determine, first, whether the objects of the trust are such that benefit to the public in general must necessarily result from their execution. If the trust meets that first test, the court must decide whether the trust is beneficial to the community in a way which the law regards as being charitable.59 If the court decides upon the evidence before it that, however well intentioned the donor may have been, the achievement of the donor’s intention will not be to the public benefit, the object of the trust will not be charitable.60 Accordingly, even if a trust appears, prima facie, to be charitable, and even if it has objects which have been held to constitute valid charitable trusts in other cases, it may be wholly void because of some other object which it contains. On the other hand, public benefit does not cease to exist merely because a trust, otherwise charitable, operates by way of bargain rather than purely by way of bounty. Thus, in Joseph

[page 130] Rowntree Memorial Trust Housing Association Ltd v A-G,61 a trust to provide cheap housing for elderly persons in need of housing was not invalidated because the housing was to be sold, not given, to those eligible.

Baddeley’s Case [10-11] In Inland Revenue Commissioners v Baddeley,62 a conveyance of land on trust for the physical and spiritual wellbeing of members or prospective members of the Methodist church living in a defined geographical area was held by a majority of the House of Lords not to constitute a good charitable trust on the ground that the words were too vague to be charitable in a legal sense. Viscount Simonds (with whom Lord Somervell of Harrow agreed) expressed the view that even if the purposes of the trust were charitable in a general sense, the choice of the beneficiaries prevented the trust being charitable. Lord Reid dissented and Lords Porter and Tucker did not express any view on the latter point. Viscount Simonds’s speech is open to the construction that no charitable trust can exist if there is any restriction at all on the beneficiaries entitled under the trust,63 a view which, if correct, would be revolutionary. Alternatively, it means that in order to have a valid charitable trust there must not only be a recognised head of charity and a class of beneficiaries which is a ‘section of the public’ within the meaning of the cases already discussed, but there must also be a logical nexus of relevance between the nature of the gift and the class of beneficiaries chosen to enjoy it, that is, that the beneficiaries should have some special need of a gift of the kind made. Even if either principle exists, it is uncertain whether it is applicable only to trusts in the fourth class or whether it is generally applicable to all charitable trusts.64

Promoting Legislation [10-12] For some time, in both England and Australia, it has been thought that a trust will fail as a charity if one of its objects is to promote legislation to give effect to its main object — that is, if its purpose is to secure a change in the existing law. A trust established to secure a change in the law is political in character even though the particular law which it is designed to change does

not cause acute political controversy. Such a trust cannot be held to be charitable because ‘the law could not stultify itself by holding that it was for the public benefit that the law itself should be changed’.65 The court must proceed on the principle that the law is right as it stands.66 [page 131] Thus Dixon J said:67 A coherent system of law can scarcely admit that objects which are inconsistent with its own provisions are for the public welfare. Thus, when the main purpose of a trust is agitation for legislative or political changes, it is difficult for the law to find the necessary tendency to the public welfare, notwithstanding that the subject of the change may be religion, poor relief, or education. When the subject matter is none of these and the case must fall under the fourth class, viz, that of undefined purposes for the public good, the difficulty becomes even greater.

That state of the law has been criticised, judicially and extra-judicially, for its relatively recent development and its difficulty of application. But it was regarded as well-settled, and many twentieth century cases relied on it and reflected it. However, the High Court has cast considerable doubt on these approaches. It is said that the Constitution ‘informs’ the development of the common law, including equity.68 ‘Any burden which the common law places upon communication respecting matters of government and politics must be reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of [the Constitution system of representative and responsible] government.’69 Thus an implied constitutional provision of which Dixon J knew nothing is invoked, apparently, to invalidate what he said. And the potentially controversial process by which private law is ‘constitutionalised’ — used as a technique to change the rules of private law — proceeds. The High Court decision has thus left open various questions. Is the protected form of free speech limited to debate about the four heads of charity? Or is the protected form of free speech limited to debate about anything political — that being a freestanding aspect of the fourth head? Or is the protected form of free speech debate about anything at all? The High Court also said: ‘It may be that some purposes which otherwise appear to fall within one or more of the four heads in Pemsel nonetheless do not contribute to the public welfare in the sense to which Dixon J referred … But that will be by reason of the particular ends and means involved, not disqualification of the purpose by

application of a broadly expressed “political object” doctrine.’70 These propositions point to a misty future.

Changed Circumstances [10-13] It is, of course, possible that an object held to be charitable in one age may in another be regarded differently. By reason of change in social ideas, habits, or needs of the community, or by change of law, or by the advancement of knowledge, a purpose, once thought to be beneficial and therefore charitable, may become superfluous, detrimental to the community, or even illegal. Conversely, with the passing of time, an object or purpose formerly held not to be charitable may come to be regarded as charitable.71 But it would need a radical change of circumstances, established by sufficient evidence, to compel the court to accept a new view of the matter.72 This is not to say that a charity, once established, may fail. If the purpose should become superfluous or illegal, it would be the duty of the trustees to make application to the court for a cy-près scheme to be established and the nature of the charity thus changed. [page 132]

Motive of the Donor [10-14] In determining whether a gift is charitable, the motive of the donor in making the gift is immaterial.73 Thus a gift to provide a parish church with stained glass windows is a good charitable gift notwithstanding that the motive of the donor is not to beautify the church but to perpetuate the memory of the donor and his relatives.74 Similarly, in a bequest for the saying of masses, it is immaterial that the dominant purpose was the testator’s own spiritual advantage and that any edification of the public is merely incidental to this purpose.75 A gift of which the necessary result is altruistic public benefit does not cease to be charitable because it originates in an egotistic motive. On the other hand, it would seem in accordance with principle that a donor could not render a predominantly selfish purpose charitable by the addition of some merely incidental element of charity.76 It is immaterial that the donor’s motive is to obtain a tax deduction.77

Control of the Court [10-15] Lord Eldon said in Morice v Bishop of Durham:78 As it is a maxim, that the execution of a trust shall be under the controul of the court, it must be of such a nature, that it can be under that controul; so that the administration of it can be reviewed by the Court; or, if the trustee dies, the Court itself can execute the trust: a trust therefore, which, in case of maladministration, could be reformed; and a due administration directed; and then, unless the subject and the objects can be ascertained, upon principles, familiar in other cases, it must be decided that the Court can neither reform maladministration, nor direct a due administration.

In that case, a bequest for ‘such objects of benevolence and liberality as my trustee shall most approve’ was held to be void. Lord Eldon’s reasoning is circular. ‘What is charitable?’ ‘What can be controlled by the Court of Chancery.’ ‘What can that court control?’ ‘Only what is charitable, because only that is sufficiently certain.’ More recently a devise and bequest of a house and contents to the National Trust upon an ultimate trust ‘preferably for some purpose in connection with Australia as the National Trust … may decide’ was held not to create a valid charitable trust.79 In Re Hummeltenberg,80 a bequest to establish a college for the training of spiritualistic mediums was held not to be charitable for the same reason. [10-16] All the foregoing principles have received minute consideration by the House of Lords in several cases which will be referred to again under appropriate headings. One in particular requires further consideration here. In National Anti-Vivisection Society v Inland Revenue Commissioners,81 the question was whether a society having as its object the total suppression of vivisection was a charity and therefore exempt from income tax. The society was one of the three concerned in the case of Re Foveaux.82 In that case, Chitty J held that as the predominant purpose of the societies was the suppression of cruelty to animals, and as this was a charitable purpose, the societies were charities notwithstanding the fact that the proponents of the practice of vivisection could show that manifold detriment to mankind would accrue from the prohibition of the practice. He said: ‘The purpose of these societies, whether they [page 133]

are right or wrong in the opinions they hold, is charitable in the legal sense of the term. The intention is to benefit the community; whether, if they achieved their object, the community would, in fact, be benefited is a question on which I think the Court is not required to express an opinion.’83 He also said: ‘[I]n determining this question of charity the court does not enter into or pronounce any opinion on the merits of the controversy which subsists between the supporters and opponents of the practice of vivisection. It stands neutral.’84 For almost 50 years following on from this decision, anti-vivisection societies were regarded as charitable. But several subsequent cases contained dicta difficult to reconcile with the decision or casting grave doubts upon it.85 When the matter came before the court again, Macnaghten J held that he ought not to follow Re Foveaux. His decision was upheld in the Court of Appeal86 and the House of Lords. The importance of the case is that it confirms the principle that the question of public benefit is one of fact that the court must itself determine and, if there is any controversy as to whether the purpose is for the benefit of the public or not, the court must determine the question on the evidence. It cannot remain neutral. The main ground on which the case was decided in the House of Lords was scarcely mentioned in the courts below — namely, that the primary purpose of the society was to obtain a change in the law, and this purpose cannot be held to be charitable. Some doubt now surrounds the perimeter of that ground: see [10-12], [10-29] and [10-51].

The Relief of Poverty Absolute Destitution not Necessary [10-17] A trust may be charitable under this head even though the persons who may benefit may not be completely destitute. ‘Poverty does not mean destitution; it is a word of wide and somewhat indefinite import; it may not unfairly be paraphrased for present purposes as meaning persons who have to “go short” in the ordinary acceptation of that term, due regard being had to their status in life, and so forth.’87 A trust may even be charitable although those who are absolutely destitute are excluded from its benefits. Thus, in Re De Carteret,88 the court upheld as a valid charitable trust a bequest to be used in providing annual allowances of £40 each to widows and spinsters in England whose incomes otherwise ‘shall not be less than £80 or more than £120 per annum’.

Similarly, gifts to ‘ladies of limited means’,89 ‘ladies by birth and education who had become reduced in circumstances but who were possessed in their own right of not less than £20 … per year’,90 ‘old and wornout clerks’,91 and ‘persons of moderate means’92 have been held to be charitable. Eve J stated in Re Gardom:93 ‘It is true that ladies of limited means are not destitute, and that the expression “limited means” may vary in its signification according to the standard by which the means are measured, but these arguments provoke the rejoinder that there are degrees of poverty less acute than abject poverty or destitution but poverty nevertheless ….’ In Re Coulthurst (decd),94 a legacy of £20,000 was bequeathed as a trust fund, the income of which was to be applied for the benefit of the widows and orphans of deceased officers and ex-officers of a bank as the bank should ‘in its absolute [page 134] discretion consider by reason of his or her or their financial circumstances to be most deserving of such assistance’. It was held by the English Court of Appeal that, having regard to all the terms of the gift, it constituted a valid charitable gift for the relief of poverty. In Dilworth v Commissioner of Stamps,95 a gift by will for the maintenance and education of boys who were orphans or the sons of parents in straitened circumstances was held to be charitable. In Ballarat Trustees Executors and Agency Co Ltd v Federal Commissioner of Taxation,96 the High Court of Australia was prepared to treat a trust to apply the income of a fund so as to provide free accommodation to persons who were deserving and who were unable to pay any fees, or such fees as were usually demanded for patients at the hospital, as a valid charitable trust. In Downing v Federal Commissioner of Taxation,97 the same court held that a trust ‘for the amelioration of the condition of the dependants of any member or ex-member of Her Majesty’s naval military or air forces or the naval military or air forces of the Commonwealth’ was a valid charitable trust for the relief of poverty. [10-18] But a trust which is to be exclusively devoted to those who cannot be classed as poor will not be charitable under this heading. In Re Gwyon,98 a testator devised his residuary estate upon trust. The income was to be applied forever in providing knickers for boys who resided in a specified district, who were not supported by any charitable institution and whose parents were not in

receipt of parochial relief. It was held that none of the conditions necessarily imported poverty and the gift accordingly failed as a charity. In Re Drummond,99 it was held that the workpeople of a firm, most of whom earned 15 shillings per week and none more than two pounds per week, could not be classed as poor and that a gift to provide them with contributions towards their holiday expenses could not be classed as being for the relief of poverty. In Re Sanders’ Will Trusts,100 a gift to provide or assist in providing dwellings for the working classes and their families resident in a particular area was held not to be charitable on the ground that no inference could be drawn that the gift was for the relief of poverty, as ‘the working classes’ were not necessarily poor. The last cases also serve to emphasise that no precise test can be adopted to determine what is ‘poverty’. The answer will necessarily depend upon the standard of living and the social conditions of the times. An interesting contrast is provided by the cases of Re Cole101 and Re Sahal.102 Re Cole concerned a devise of lands to the East Sussex County Council ‘upon trust to apply the income therefrom … for the general benefit and general welfare of the children for the time being in Southdown House …’. Southdown House was maintained by the County Council (under statutory power) as a home for the children committed to its care. Those children would at any time in the main comprise delinquent children, children beyond their parents’ control and children who had been exposed to moral danger. The English Court of Appeal held, by majority, that the devise failed as a charitable trust because it would be possible to apply the income of the gift for some purposes which were not charitable, for example, the provision of a television set or a gramophone and records for delinquent children. In Re Sahal, a devise of a home to the Salford Corp on trust to use and maintain it as a children’s home and, in the event of its use being discontinued, on trust to use and maintain it as a hostel for young soldiers, sailors, airmen, or merchant seamen or for poor, aged or infirm people of the neighbourhood, was upheld as a valid charitable trust. [page 135]

Form of Relief Immaterial [10-19] Provided that the object of the trust is to relieve poverty, the method

directed by the donor to achieve this end is immaterial.103 Thus, the following have been held to be charitable: the provision of a soup kitchen and cottage hospital,104 the purchase of land for the building of cottages,105 a nursing home for persons of moderate means,106 a home for working girls,107 religious communities having as their object the relief of poverty,108 a working man’s hostel,109 the supply of coal and the making of loans to ‘poor and deserving’ inhabitants of a town,110 the provision of accommodation for transient Aborigines111 and the support of psychiatric hospitals.112 On the other hand, a trust to provide for doctors’ widows has, perhaps surprisingly, been held not to be charitable.113

No Specific Reference to Poverty Necessary [10-20] It is not necessary to find poverty expressed in the gift in so many words. But the court will look at the whole gift, and, if it comes to the conclusion that the relief of poverty was meant, will give effect to it although the word ‘poverty’ is not to be found in it.114 Thus, where a testator gave the income from certain funds in trust ‘to the oldest respectable inhabitants in Gunville to the amount of 5 shillings per week each’, the court held that the amount of the gift implied poverty and, coupled with the use of the word ‘oldest’, implying age, was sufficient to render the gift a good charitable bequest.115 In Re Central Employment Bureau for Women and Students’ Careers Association,116 a fund established ‘for the purpose of helping educated women and girls to become self-supporting’ and which had no commercial end in view was held to be a valid charitable trust, as being for the advancement of education and the relief of poverty. The expressed purpose of the gift was a sufficient implication that its recipients were poor within the meaning of the Statute of Elizabeth. The requirement of poverty had also been imported into a gift to ‘aged widows and spinsters’117 and to ‘widows and orphans’.118 In Armenian General Benevolent Union v Union Trustee Co of Australia Ltd,119 a gift by a will dated 28 June 1946, of income to the above-mentioned Union ‘for the benefit of the orphans whose fathers fought with the Russian Army against Germany and Japan in the World War which ended last year’ was held to be a valid charitable trust provided the children were under the age of 21 years (that is, orphans within the meaning of the will) at the date of the testator’s death and were in need of assistance or protection. The gift to such

orphans was good so long as they needed assistance, even though that might be after they had attained the age of 21 years. [page 136] In Re Niyazi’s Will Trusts,120 a residuary bequest ‘for the construction of … a working men’s hostel’ was held to constitute a valid charitable trust. The expressions ‘working men’s’ and ‘hostel’, together with certain surrounding evidence, had a sufficient connotation of poverty.

Aged Impotent [10-21] In many of the older cases the requirement of poverty has been imported into gifts for the aged and afflicted. Thus, in Re Lucas,121 the gift to the ‘oldest respectable inhabitants’ was construed as a gift to the aged poor, Russell J stating, ‘Speaking for myself, I am not satisfied that the requirement of old age would of itself be sufficient to constitute the gift a good charitable bequest …. [He knew of no case] where the decision has been based upon age and nothing but age’. Similarly, in Re Elliott,122 a gift for the maintenance of blind persons was construed to mean ‘poor’ blind persons. In Re Glyn’s Will Trusts,123 part of residuary estate was bequeathed ‘on trust … for … building … free cottages for old women of the working classes of the age of sixty years or upwards’. Danckwerts J held that this constituted a good charitable bequest having regard to the fact that the preamble to the Statute of Elizabeth included the relief of the aged, impotent and poor. He pointed out that those words must be read disjunctively, because otherwise those who were poor could not be the objects of charity unless they were also aged and impotent. This case was followed in Re Bradbury,124 where a bequest was made for the maintenance of aged persons in a nursing home. It was also followed in Re Robinson,125 where the gift was for ‘the old people over sixty-five years of Hazel Slade near Hednesford as my trustees think best’: Vaisey J held that the gift was to a group of people ‘who are, within the Charitable Uses Act 1601, qualified not by poverty, sickness or impotence, but by age’.126 Thus the requirement of poverty need not be imported also into gifts to the blind (as in Re Elliott)127 or other persons suffering from physical infirmity. In Re Paylings Will Trusts,128 it was

held that a trust to ‘found a house for aged persons’ was a valid charitable trust. In Re Constable (decd),129 a trust to build a home and a hospital for the aged was held to be charitable by Pape J, although it was not (expressly or implicitly) limited to the aged poor. In Re Hart (decd),130 Mitchell J was of the same view with regard to a trust ‘to build homes for the Aged and Infirm people in Millicent’, a disposition not limited to the aged and infirm poor of Millicent. [10-22] These decisions are confirmed by the Privy Council in Re Resch’s Will Trusts.131 Their Lordships said: A gift for the purposes of a hospital is prima facie a good charitable gift. This is now clearly established both in Australia and in England, not merely because of the use of the word ‘impotent’ in the preamble to 43 Eliz I c 4, though the process of referring to the preamble is one often used for reassurance, but because the provision of medical care for the sick is, in modern times, accepted as a public benefit suitable to attract the privileges given to charitable institutions.

[page 137] Moreover, this was said where it was clear that some, if not many, of the hospital’s patients were far from poor. There are cases holding that the relief of the aged is not of itself a charitable purpose, but only becomes so if the relief is clearly restricted to the aged poor.132 But these cases have been either not followed or overruled.133

Restrictions to Locality or Class [10-23] A trust for the relief of poverty may either be general or be restricted to a locality or class. There are many cases of gifts to the poor of parishes or towns,134 of particular religious denominations,135 of specified institutions,136 and of classes or groups within the community, as, for example, unsuccessful literary men,137 servants,138 victims of a disaster,139 the employees,140 and the widows and orphans of employees,141 of a specified firm and the poor relations of the donor. A gift for ‘the relief of distress in Europe’ has been held to constitute a valid charitable bequest in the relief of poverty.142

Poor Relations

[10-24] No trust will be classed as charitable unless it is of a public nature. The benefits of a trust may be restricted to a class of the community and the trust still be of a public nature, provided that the class is not defined by reference to a purely personal relationship to a named propositus.143 The socalled ‘poor relations’ cases form an exception to this principle. They upheld as charitable gifts for the relief of poverty among relations of the settlor.144 Trusts for the relief of poverty among poor employees of a firm have also been held to be charitable.145 The ‘poor relations’ cases were very severely criticised both in Re Compton146 and in later cases. In those cases the court was asked to extend the rule established by them to educational trusts for members of specified families or the relatives of employees of firms, where no element of poverty has been required by the donor.147 However, the House of Lords set the matter at rest [page 138] by holding in Dingle v Turner148 that trusts for the relief of poverty may be valid charitable trusts even though the objects are confined to ‘poor relations’ of the settlor, or members of a club, or, as in the instant case, employees of a particular company. As Lord Evershed said in Re Scarisbrick’s Will Trusts:149 ‘The “poor relations” cases may be justified on the basis that the relief of poverty is of so altruistic a character that the public element may necessarily be inferred thereby; or they may be accepted as a hallowed, if illogical, exception.’ The rule they establish has not been extended to any other class of charitable trust. In Re Scarisbrick’s Will Trusts,150 the question for determination was whether a gift to poor relations distributable within the period allowed by the rule against remoteness of vesting could be classed as a charitable trust. The English Court of Appeal held that the principle of the ‘poor relations’ cases applied whether the trust is intended to be perpetual or not. ‘The exception … is of “poor relations” cases generally — that is, of cases in which the relief of poverty is to be exercised within a class of persons identified by reference to relationship with particular individuals, and not within a class constituting, in strictness, a class of the community.’151 In Re Young’s Will Trusts,152 the principle of the ‘poor relations’ cases was applied to uphold as charitable a bequest for fellow members of the

testator’s club who might fall on evil days. If the explanation of Re Tree153 (the facts of which have already been noted)154 which was suggested in Davies v Perpetual Trustee Co (Ltd)155 be accepted, the requirement of public purpose is unnecessary in all charitable trusts for the relief of poverty despite the emphatic statements referred to that the ‘poor relations’ cases are an anomaly which will not be extended. [10-25] That the explanation is correct is demonstrated by the decision of the House of Lords in Dingle v Turner,156 which is (at least) authority for the proposition that the normal tests of public purpose do not apply to charitable trusts for the relief of poverty. But it would be impossible to deny that Dingle v Turner157 raises its own difficulties. One would have thought, granted that the Re Compton158 test did not apply to charitable trusts for the relief of poverty, as Dingle v Turner requires, that all trusts in favour of persons who are in fact poor would be supported as valid charitable trusts, no matter in what way the beneficiaries were selected or by what language described. But this, apparently, does not follow. According to Dingle v Turner, notwithstanding the inapplicability of the Re Compton159 test, some ‘poverty’ trusts can still fail as being ‘private’ rather than ‘public’. If, as a matter of construction, a trust is one for the relief of poverty among a particular description of poor people (however described), it is — according to Dingle v Turner — a valid charitable trust; whereas if it is a gift to particular persons (the relief of poverty among them being the motive of the gift) it is non-charitable. This is a difficult distinction. [page 139]

The Advancement of Education Advancement of Learning Alone Not Enough [10-26] The advancement and propagation of education and learning generally are good charitable purposes irrespective of the financial circumstances of the persons for whose benefit trusts for such purposes are created.160 But a trust the object of which is to increase knowledge, without propagating that knowledge, is not charitable.161 Thus, it has often been said

that a trust for the advancement of research is not of itself charitable. This view, however, has not gone entirely unchallenged.162 In Whicker v Hume,163 a gift for the ‘advancement and propagation of education and learning all over the world’, according to the discretion of trustees, was held valid by the House of Lords. The words ‘education and learning’ were treated as meaning education connected with learning. The opinion suggests that if the gift had been for the advancement of learning only, it would have been held invalid. Expert evidence is admissible to support or negative the existence of the educational value of a gift.164

Law Reporting [10-27] Is the preparation and publication of accurate reports of judicial decisions a valid charitable purpose? It has been held in England, by the Court of Appeal in Incorporated Council of Law Reporting for England and Wales v AG,165 and in Australia, by the High Court in Incorporated Council of Law Reporting of Queensland v Commissioner of Taxation,166 that it is. In England, the basis of the decision was that the purpose was both a valid charitable purpose in the fourth class because law reporting makes a significant contribution to the sound development, administration and knowledge of the law, and a valid charitable purpose in the second class, being a purpose for the advancement of education. The Australian decision is founded only on the former ground. But it is submitted that the latter is still open here. This is in no way inconsistent with the previous decision of the High Court in Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation,167 which merely held that the appellant body was not a ‘public educational institution’ within the meaning of a particular statutory provision. It did not hold that the purpose of law reporting was not a valid charitable purpose for the advancement of education.

Foundation of Institutions [10-28] Gifts for the foundation and support of schools, universities and the like168 are charitable whether made generally or in particular,169 provided the principles applicable [page 140]

to charitable trusts generally are complied with. Thus a bequest to trustees of a leasehold house, where a school had been established for religious teaching and elementary education, the expenditure on which exceeded the fees, with a direction to the trustees to carry on the school, was held charitable.170 But a gift for the establishment of a college for training spiritualistic mediums was not.171 In the latter case, the trust was not one which the court could, if necessary, administer and control. Gifts for the erection or maintenance of buildings to be used in connection with schools and colleges are likewise charitable, for example, a house for a school-master.172 So are gifts for the establishment of professorships,173 fellowships,174 lectureships,175 scholarships176 and prizes.177 In Re Leverhulme,178 a gift of property on trust for the benefit of a staff training college of a company was held not to be a charity. The college was run as an educational establishment, with three full-time professional teachers, and attendance for the younger employees of the company during working hours was compulsory.

Political Education [10-29] There is English authority, long thought to be correct, that a trust which is expressed to be educational, but which has as its object the furtherance of the principles of a particular political party, is not charitable.179 On the other hand, a bequest to establish an essay competition with the purpose of popularising and promoting principles which the testator had always advocated in his published works, namely, the adoption of measures to prevent deaths of infants, the improvement of Australian food habits and the extension of the teaching of technical education in state schools was held in Royal North Shore Hospital of Sydney v Attorney-General (NSW)180 not to be void as being a trust for the attainment of a political object. However, in Australia, this line of authority may be open to question since the High Court denial that trusts for ‘political objects’ were invalid on the ground that the constitutional freedom of political communication permitted agitation to change the law.181 Does this mean that since the operation of representative and responsible government depends on the conflict of political parties, particularly in debates politicians have with journalists, the public and each other, a trust in favour of a political party is now charitable? Does it mean

that Bacon v Pianta,182 holding that a gift for the purposes of the Communist Party of Australia was void, must now be seen as wrongly decided? For what it is worth, gifts of this kind are outside the definition of ‘charity’ in s 5 of the Charities Act 2013 (Cth). See [10-87]. [page 141] In Re Shaw (decd),183 the testator (the Irish dramatist, George Bernard Shaw) by his will directed his trustee to hold his residuary trust funds, and the annual income thereof for a period of 21 years from his death, on trust for two purposes. The first was to ascertain by inquiry how much time could be saved by persons who speak and write the English language, by the substitution for the present English alphabet of a proposed British alphabet containing at least 40 letters; to show the extent of the time and labour wasted by the use of the present alphabet; and, if possible, to show the loss of time in terms of loss of money. The second purpose was to transliterate one of his plays, ‘Androcles and the Lion’, into the proposed British alphabet; to advertise and publish the transliteration with the original lettering opposite the transliteration, page by page; and to present copies thereof to public libraries, so as to persuade the government or the public to adopt the proposed alphabet. Harman J held that the trust was not a valid charitable trust in that it was merely a trust for the increase of knowledge, lacking any element of teaching or education. On the other hand, in Re Hopkins Wills Trusts,184 Wilberforce J denied that ‘education’ means ‘teaching’ and asserted that academic research could be educative. It was also held in Re Shaw (decd) that, by analogy with the trusts for political education considered above, it was a trust for the advocacy of a change of the law of the land and therefore invalid, although the new alphabet could have gained currency without legislative intervention. That latter reasoning now stands under a question mark.

Education of a Class [10-30] Trusts for educational purposes, like all other charitable trusts (except the anomalous cases of ‘poor relations’) must be of a public nature. A trust may provide only for the education of a section of the community, such as

the daughters of missionaries,185 persons professing particular religious doctrines,186 or persons residing in a particular locality, or ‘for orphan lads being Australians’,187 and still be of a public nature. But if the nexus between the possible beneficiaries is their relationship to a single propositus or several propositi, then the beneficiaries are neither the community nor a section of the community for charitable purposes188 and a trust for their education cannot be a charity.189 This question arises in regard to two classes of persons, namely (1) the relations of the donor and (2) the employees or relatives of employees of firms. Trusts for the education of the donor’s relatives are not charitable. In Re Compton,190 a will provided that funds were to be invested under a trust forever ‘for the education of Compton and Powell and Montague children … not over the age of twenty six years …. It is not to be used as a pension or income for anyone and it is to be held as scholarships at the pleasure of the trustees. It is to be used to fit the children to be servants of God serving the nation, not as students for research of any kind’. The children were defined as the lawful descendants of three named persons, and when the will took effect there were 28 eligible persons under the age of 26 years. The points at issue were (1) whether a trust for the education of the descendants in perpetuity of three named persons, irrespective of their means, was a charity; (2) if not, whether the present trust was a charity by reason of the kind of education specified; and (3) whether [page 142] the decisions upholding gifts to ‘poor relations’ of the donor should be extended by analogy to cover trusts for the purpose of education of an equally limited class. It was held191 that as the beneficiaries were defined by reference to a personal relationship, the trust was merely a family trust and so lacked the public element necessary to make it charitable, that the direction as to the kind of education to be provided was not sufficient to make the trust charitable, and that the principle of the ‘poor relation’ cases should not be extended to an educational trust without a poverty qualification. In later proceedings192 it was held that the gift also failed as a private trust, because of the direction that it should be carried on forever.

The principles applied in Re Compton were approved by the House of Lords in Oppenheim v Tobacco Securities Trust Co Ltd.193 There the income of real and personal property was settled in trust to be applied ‘in providing for … the education of children of employees or former employees’ of a specified company or any of its subsidiary or allied companies. There were over 110,000 employees. But it was held that although the group of persons indicated was numerous, the nexus between them was employment by particular employers. Accordingly, the trust did not satisfy the test of public benefit requisite to establish it as charitable.194 However, the trust for the education of the donor’s relatives must be distinguished from a primary trust for education which is of a public nature, coupled with a direction or request to prefer as individual beneficiaries thereunder persons who are kin to or of the same name as the founder or persons who are members of some other limited class, which is not a class of the public for charitable purposes. A trust of the latter type is good, because initially it is for the benefit of the public. But in the former type of trust the only possible beneficiaries are members of a class which are not a section of the public. Thus, in a gift for the promotion and furtherance of commercial education, the primary class was defined as British born subjects of either sex with insufficient means. Then followed a direction to give preference to employees of a named company and the families of such employees. Upjohn J held that the gift was valid.195 The same principle was applied in Permanent Trustee Co v Presbyterian Church (NSW) Property Trust.196 But it was received with so little enthusiasm by the Privy Council in Caffoor Trustees v Commissioner of Income Tax, Colombo197 as to place its standing in doubt. The requirement that a trust for charitable purposes must benefit a section of the public has been held to lead to the conclusion that a trust which excludes the poor from benefit cannot be for charitable purposes.198 Thus a trust having the purpose of giving financial support for the education of children whose families can afford to pay substantial fees has been held not to benefit a section of the public.199 However, the ‘poor’ can include persons capable of paying relatively low fees.200

Particular Branches of Study [10-31] Educational purposes include the promotion of education in

particular branches of study as well as education in general. Thus, trusts have been upheld for education in drama,201 [page 143] music,202 science,203 technical training,204 archaeology,205 medicine,206 nursing,207 engineering,208 geology209 and law.210 In Royal Choral Society v Commissioners of Inland Revenue,211 it was argued that nothing could be educational which did not involve teaching. The English Court of Appeal rejected this view. It held that, if the main purpose of a properly established trust is educative, it will not fail as a charity because some element of entertainment inevitably follows. The promotion of the performance of choral works by choral singing and concerts was accordingly held to be a charitable purpose as being educative or, in any event, beneficial to the community under the fourth class. Education in music includes not only the direct training of executants, but also improvement of appreciation of music by the general public,212 and the encouragement of composition, writing and research in matters musical.213 Gifts to learned societies and institutions are also charitable, as, for example, the Royal Society,214 the Royal Geographical Society,215 and the Royal Literary Society.216 A zoological garden has been held to be an educational charity,217 and also museums, botanical gardens, public libraries and observatories.218 A trust to buy land for the purpose of preserving and conserving native Australian flora and fauna is charitable within the second class.219 A trust to establish, endow and maintain an annual prize for portrait painting has been held to be a valid charitable trust for the advancement of education.220 A bequest to trustees of a fund to be applied in promoting an annual chess tournament open to boys and young men under 21 resident in Portsmouth was held to be a valid charitable trust, having regard to the restriction of the gift to a class of the inhabitants of a particular locality, the public and educational quality of the named trustees, and evidence tendered as to the educational value of chess.221 A bequest for the furthering of the Boy Scouts’ movement, the purpose of which was the instruction of ‘boys of all classes in the principles of discipline, loyalty and good citizenship’, has been held to be a valid charitable trust.222 It has been held223 that the objects of a society whose principal object

was ‘the study and dissemination of ethical principles and the cultivation of a rational religious sentiment’ were charitable objects for the advancement of education, as ethics and rational sentiment could only be understood by a course of educational instruction and could only be disseminated by education. [page 144]

Sporting and Recreational Activities [10-32] The promotion of sport either directly or indirectly by means of trophies is not in itself a charitable purpose.224 But the promotion of organised games at a school and the provision of prizes for events in school sports are charitable purposes as being for the advancement of that part of the educational work of the school which has to do with the physical development of the students.225 Thus a trust to provide ‘a proper swimming baths’ for Marlborough School has been held to be charitable.226 A purpose of fostering the sport of Rugby Union at the University of Sydney has been held to be charitable.227 Nor need the trust be one expressed for the benefit of a particular school or university. The House of Lords has held that a trust to promote sport, or a particular sport, among school children or university students generally will be a valid charitable trust.228 A trust of a fund to provide a treat or field day for all the school children of a town has been held to be charitable on two grounds. First, as it tended to the advancement of education by giving the children an opportunity of observing objects of the countryside and nature about which they had been taught at school, and also by affording an incentive to regular attendance and industry in order to be selected as participants. Secondly, as it was for purposes beneficial to a particular section of the community — namely, the schoolchildren resident or being educated at the specified town.229 But a bequest to provide ‘a pennyworth of sweets each for all boys and girls below the age of 14 resident within the parish’ has been held not to be charitable.230 A trust to establish a rose garden at the Hebrew University of Jerusalem has been held to be a valid charitable trust.231 In some jurisdictions, legislation provides that trusts for the promotion of sport simpliciter may be valid charitable trusts if they are within the definition of ‘recreational trusts’.232

The Advancement of Religion Meaning of ‘Religion’ [10-33] As a preliminary matter, it may be noted that the court’s administration of charities for the advancement of religion is an illustration of the principle that a religious dispute is not to be treated as non-justiciable where the determination of the dispute is necessary in order to decide a matter of disputed legal rights.233 [page 145] The term ‘religion’ in connection with charities would appear to embrace all religions which have as their central doctrine the worship of God. Thus gifts to promote the Christian religion are undoubtedly charitable irrespective of denomination; and so also are gifts to promote the Jewish religion.234 Courts have rarely had to decide what constitutes a ‘religion’. But one such case was Church of the New Faith v Commissioner of Payroll Tax (Vic).235 The appellant’s object was the presentation, practice and propagation of scientology. It claimed exemption from payroll tax on the ground that it was a ‘religious institution’ within the meaning of s 10 of the Payroll Tax Act 1971 (Vic). All five of the High Court justices who heard the case decided scientology was a religion. Mason ACJ and Brennan J decided that the criteria of a ‘religion’ were twofold: belief in a supernatural being, thing or principle and acceptance of canons of conduct to effectuate that belief. Wilson and Deane JJ held that a number of indicia of varying importance had to be considered. The most important were: that the collection of beliefs and/or practices involves belief in the supernatural; that the ideas relate to the nature and place of humanity in the universe and its relation to things supernatural; that the ideas are accepted by adherents as requiring or encouraging them to observe particular standards or codes of conduct or to participate in specific practices having supernatural significance; that the adherents constitute an identifiable group or groups; and that the adherents see this collection of ideas and practices as constituting a religion. None of these criteria was in itself determinative of the question, but a body which had them all was certainly a religion and a body lacking all or most

of them was not. Murphy J considered that any body of belief which resembled an earlier ‘cult’, or which believed in a supernatural being, or whose beliefs offered a way to find a meaning or purpose in life, was a religion. In Keren Kayemeth Le Jisroel Ltd v Inland Revenue Commissioners,236 reference was made to Rowlatt J having defined ‘the promotion of religion’ as meaning ‘the promotion of the spiritual teaching of the religious body concerned and the maintenance of the spirit of its doctrines and observances’.237 In the same case, Lord Hanworth MR said: ‘The promotion of religion means the promotion of spiritual teaching in a wide sense, and the maintenance of the doctrines on which it rests, and the observances that serve to promote and manifest it — not merely a foundation or cause to which it can be related.’238 Re Thackrah239 emphasises that a gift cannot be deemed to promote religion unless it advances religious doctrine or teaching. The case concerned a gift to the Oxford Group. The evidence showed that there was no association known as the Oxford Group and the group had no constitution. The gift could not therefore take effect as a gift to a definite body and it could not be construed as a gift for a charitable purpose, as there was no group existing solely for the purpose of promoting religion in the sense in which Rowlatt J defined that expression above. Similarly, the promotion of ‘ethical principles’ and ‘rational religious sentiment’ is not a charitable purpose for the advancement of religion.240 A gift in connection with a religion which has as its central doctrine ancestor worship is not charitable under this head. In Yeap Cheah Neo v Ong Cheng Neo, a gift of a house ‘for performing religious ceremonies to my late husband and myself’ was held to be void. The grounds were that ‘[a]lthough it certainly appears that the performance of these ceremonies is considered by the Chinese to be a pious duty, it is one which does not seem to fall within any definition of a charitable duty or use. The observance of it can lead to no public advantage and can [page 146] benefit and solace only the family itself’.241 However, subject to the overriding requirement of public benefit, which will be considered more fully later, the court does not concern itself with the truth of the religion or of the particular doctrine or belief that the gift is designed to promote. Thus, in Thornton v

Howe,242 a bequest for distributing the works of Joanna Southcott, ‘a foolish, ignorant woman’, was held to be charitable. In Re Price,243 the opinion was expressed that a gift to the Anthroposophical Society in Great Britain ‘for carrying on the teaching of the founder, Dr Rudolf Steiner’, was charitable. Similarly, the following have been held charitable: a trust in favour of the Esoteric School of Theosophy,244 a trust in favour of a new religion founded in New Zealand by Herbert Thomas Potter245 and a trust in favour of a small group of faith healers.246 In Thornton v Howe,247 Sir John Romilly MR stated that the attitude of the court to such gifts was as follows: In this respect, I am of opinion that the Court of Chancery makes no distinction between one sort of religion and another. They are equally bequests which are included in the general term of charitable bequests. Neither does the Court, in this respect, make any distinction between one sect and another. It may be that the tenets of a particular sect inculcate doctrines adverse to the very foundations of all religion, and that they are subversive of all morality. In such a case, if it should arise, the Court will not assist the execution of the bequest, but will declare it to be void …. The general immoral tendency of the bequest would make it void …. But if the tendency were not immoral, and although this Court might consider the opinions sought to be propagated foolish or even devoid of foundation, it would not, on that account, declare it void, or take it out of the class of legacies which are included in the general terms charitable bequests.

The court cannot say that any one religion confers upon the public greater benefit than another.248 A valid charitable trust for the promotion of religion can exist even though the religious beliefs to be promoted do not belong to any recognised religion or sect. Thus a trust ‘for the continuance of the work of God as it has been maintained by [my husband] and myself since 1942 by God’s enabling … in propagating the truth as given in the Holy Bible’ in the will of a nondenominational Christian has been upheld.249 Likewise, a trust to found a new religion may be a valid charitable trust.250 The charitable purpose may be expressed in general terms or may be particularised. Gifts for ‘promoting religion’;251 ‘for the worship of God’;252 ‘for God’s work’;253 ‘for spread of the Gospel’;254 or of ‘Christianity’;255 or to the Church of England;256 to the Church of Rome;257 or to be used ‘in the service of my Lord and Master’258 have all been held to be charitable. [page 147]

A gift for religious purposes will be deemed to be a gift for such religious purposes as are in their nature charitable, unless a contrary intention appears.259 However, more than an incidental connection with religion is necessary. There must be a direct religious purpose. On this ground a trust to establish a ‘Catholic daily newspaper’ was held not to be a good charitable trust.260

Public Benefit [10-34] Previously it was not clear to what extent the requirement of public benefit should be applied to trusts for the advancement of religion. Indeed, it was argued that those trusts are completely exempt from this test.261 The House of Lords, however, held in Gilmour v Coats262 that the element of public benefit is essential to render a purpose charitable in law and this applies equally to religious as to other charities, with the result that a Roman Catholic priory consisting of a community of cloistered nuns engaging in no exterior works cannot be held, in law, to be a charity. In this connection Lord Greene MR stated in the Court of Appeal:263 In deciding whether a gift is for the advancement of religion, the court does not concern itself with the truth of the religion, a matter which is not susceptible of proof. This does not mean that the court will recognize as a religion everything that chooses to call itself a religion. But when once the religion is recognized by the court as a religion, the beneficial character of a gift for its advancement will prima facie be assumed. But this is not enough. The trust, in order to have all the necessary characteristics, must not only be for the advancement of religion, it must not only be of benefit, but it must be of public, not merely private, benefit. Save to the extent which I shall presently mention, [I know of no English authority], in which the existence of a benefit of the necessary public character has, when challenged, been shown to exist otherwise than by proof of works which have a demonstrable impact on the community or a section of it. I use the word ‘impact’ for want of a better word as covering the benefits conferred by teaching and ministration, by the performance of religious services, by the provision or repair of churches and church ornaments, and so forth. I use the word ‘demonstrable’ as meaning that the benefit must be capable of proof in a court of law. In my opinion, the question whether a trust is beneficial to the public is an entirely different one from the question whether a trust is for the advancement of religion. In answering the latter question the court is not concerned with the truth or otherwise of the religious beliefs entertained by particular religions which it recognizes as such. When, however, the question is whether a particular gift for the advancement of religion satisfies the requirement of public benefit, a question of fact arises which must be answered by the court in the same manner as any other question of fact, ie, by means of evidence cognizable by the court. If this be right (and I entertain no doubts about it) religious beliefs, which in their nature are incapable of proof, cannot be accepted as having for this purpose probative force. On the other hand, it is clear that, provided it involves the public generally, any trust for the promotion of religion will be presumed to be for the public benefit until the contrary is proved.264

[page 148]

Building and Maintaining Churches [10-35] Bequests for the building of places of worship are clearly charitable;265 as are, similarly, houses for the clergy.266 Endowments267 for the maintenance and repair of such buildings268 and for the payment of debts269 on them are also charitable. But a gift for the endowment of a private chapel in a country house lacks the necessary element of public benefit and is therefore not charitable.270

Churchyards and Tombs [10-36] Gifts for the maintenance of burial grounds associated with churches have been held to be charitable. But different reasons have been assigned for regarding them as charities. In Re Vaughan,271 North J stated that ‘God’s Acre’ is ruled by the same considerations as ‘God’s House’, and that a trust for the upkeep of a churchyard is charitable because it relieves the parishioners of the duty of keeping it in repair. In Re Manser,272 Warrington J held that a gift of money for the purpose of providing or keeping in good order burial grounds for the Society of Friends was charitable for the reason that a burial ground is as ancillary to a church or chapel as the ornaments, which are clearly charitable. ‘I think one naturally connects the burial of the dead with religion.’ However, a trust for the establishment of a private cemetery is not charitable as for the advancement of religion.273 Gifts for the maintenance or erection of tombs in churches are also charitable.274 Thus in Re Pardoe,275 a gift of money for the erection and maintenance of headstones to the graves of pensioners who should be buried in a specified churchyard was held valid. But gifts for building, maintaining or repairing a monument or tomb not forming part of the fabric or ornament of a church, whether as a memorial to the donor or the donor’s family, are not charitable. In certain circumstances it is possible that they may be valid as private trusts if they are not perpetuities.276 [10-37] Various devices have been adopted in order to secure the maintenance of tombs and graves. In Re Tyler,277 a bequest was made to a

charitable institution subject to a condition that it should keep the testator’s tomb in repair, with a gift-over to another charitable institution on failure to comply with the condition. It was held that the rule against perpetuities had no application and that the condition was valid. The gift, in effect, did not impose any obligation on the first-mentioned charity to maintain the tomb nor was there any stipulation that the income of the fund should be used to maintain the tomb. The presence of such an obligation [page 149] caused a somewhat similar gift to fail in Re Dalziel.278 In that case, £20,000 were bequeathed to a charitable institution on condition that the income should be used as far as necessary for the upkeep and rebuilding of a mausoleum, costing over £20,000, and on failure to do this the whole bequest was to go to other charities. It was held that the gift was void. It was not a gift subject to a void condition subsequent which could be struck off, thus making the gift absolute, but a direction, intended to be binding in law, that the gift should be used in a specified manner, which could conceivably use up all the income and the capital. A different method of securing the upkeep of a tomb succeeded in Re Eighmie.279 A testatrix bequeathed a sum of money to the rector and church wardens or other governing body of a specified church for the purpose of keeping the burial ground and monument therein to her late husband and herself in good and sufficient repair, and for the maintenance of the church and decorations thereof. The testatrix was buried in a cemetery immediately adjoining the church burial ground (which had been closed for a long time) but in the same grave as her husband. It was held that the bequest was valid and that it should be divided equally between the vicar and churchwardens of the church as the controllers of the church and burial ground, and the borough council as managers of the cemetery. This case may be contrasted with Re Norton’s Will Trusts,280 where a testator bequeathed £500 to a church council, and expressed certain preferences or suggestions of a precatory character as to the mode in which he thought the legacy might be applied, among which were that a ‘small provision’ might be applied for keeping his wife’s parents’ graves in repair. It was held that while the gift of £500 was valid, the upkeep of the graves

was not a charitable purpose and the council could not lawfully make any provision for that purpose. A third method of providing for the upkeep of a tomb was adopted in Re Chardon,281 a case which has been the subject of a great deal of controversy. A testator gave £200 to his trustees on trust to invest it and to pay the income thereof to a cemetery company ‘during such period as they shall continue to maintain and keep’ two specified graves ‘in the said cemetery in good order and condition with flowers and plants thereon as same have hitherto been kept by me’. He declared that if the graves should not be kept in such order and condition the trustees were to apply the income for the trust expressed in regard to his residuary estate. Romer J held that the gift was valid on the ground that the rule against remoteness of vesting deals with the commencement of interests, not their duration.282 It is submitted that trusts for the erection and maintenance of tombs may also be upheld to a limited extent as non-charitable purpose trusts.283 With the exception of the scheme adopted in Re Tyler,284 a testator could hardly be comfortably assured that the other schemes which have been held by the courts to succeed would necessarily have the same fortune if again the subject of judicial decision.

Church Ornaments [10-38] The ornaments of a church are governed by the same principles as apply to the church itself. In Hoare v Osborne,285 Sir Richard Kindersley VC said: ‘… it is clearly for the benefit of the parish that not only the fabric, but also that the ornaments … should not be permitted to [page 150] fall into a state of dilapidation and decay.’ Charitable purposes include the provision and repair of a chancel,286 spire or tower,287 gallery,288 clock,289 stained glass window,290 and monuments.291

The Clergy and Church Workers

[10-39] Examples of charitable trusts include the establishment of a bishopric,292 the provision of clergy293 or preachers,294 or the increase of their stipends295 and gifts to a minister and his successors296 or to a minister for the time being,297 but not a gift to a particular minister in office.298 Assistance to candidates studying for Holy Orders is a charitable purpose.299 Gifts to the clergy may be made subject to conditions, such as the preaching of certain doctrines,300 or a sermon commemorating the donor,301 or wearing a black gown in the pulpit,302 or preaching to a particular class of persons, such as prisoners.303 In Re Mylne,304 trustees were directed, inter alia, to apply the residue of an estate ‘for the benefit of persons who are or have been engaged in evangelistic work including retired missionaries or missionaries still engaged as such, or continuing Christian workers of any other description’ as the trustees should in their absolute discretion select, but so that no one should benefit unless he or she should be a Protestant and a wholehearted believer in the Deity of Christ and the full inspiration of the Scriptures. It was held that the direction created a charitable trust, and that the conditions as to eligibility made the specified beliefs essential in beneficiaries. The court distinguished the case from cases of forfeiture clauses in wills operating on the marriage of persons not of a particular faith. In the latter cases the forfeiture clauses must be strictly construed and the court cannot ascertain, for the purpose of construing them, whether persons are or are not ‘of’ a particular faith, which is a matter of state of mind. But in the present case the intended beneficiaries were missionaries and other Christian workers, and the trustees could easily ascertain by inquiry into their records as missionaries and workers whether they complied with the conditions as to eligibility. A gift of income to be applied for the relief of sick and infirm priests is charitable as tending to advance religion.305

Masses for the Dead [10-40] Legislation at the time of the English Reformation rendered the saying of the mass illegal. Any trust for the saying of masses was accordingly void. After the passing of the Roman Catholic Relief Act 1829, it was wrongly still believed that trusts for masses [page 151]

were void as gifts to superstitious uses under the Statute of Chantries 1 Edw VI c 14.306 The question whether masses for the dead are charitable came before the court in Victoria in 1895 in Re Purcell,307 where there was a bequest to a Roman Catholic priest for masses for the repose of the testator’s soul. It was held that the Statute of Chantries, 1 Edw VI c 14, was not reasonably applicable to the colony of New South Wales at the time of the passing of the Act, 9 Geo IV c 83, and that therefore it was not in force in Victoria. As a result such masses were not void as a superstitious use. The view that trusts for masses were void in England by reason of the Statute of Chantries was corrected in 1919 in Bourne v Keane.308 In Re Caus,309 such trusts were held to be charitable as, being for the advancement of religion, they enable a ritual act to be performed which is the central act of the religion of a large proportion of Christian people and that they assist in the endowment of priests whose duty it is to perform the act.310 In Re Michel’s Trusts,311 in 1860, a trust for the recital of Cawdish, a prayer, on the anniversary of the death of a Jewish testator, there being no reference to praying for his soul, was held not to be void as a superstitious use. Presumably such trusts would be held to be charitable today. The Roman Catholic Relief Act 1829, which was adopted in New South Wales by Act 10 Geo IV No 9, apart from the reliefs therein given, contained provisions for the suppression of male religious orders bound by monastic vows of the Church of Rome and forbade persons belonging to such orders to enter the realm. It also forbade the joining of such orders within the realm. Gifts for such monastic orders have therefore only been held to be good in England if capable of being construed as a gift to the members for the time being of such orders.312 When the question came before the courts in New South Wales it was first held that the gift was good if it could be construed as a gift to the order at large, so that it could be applied in countries where the order was legal.313 Later, however, in Perpetual Trustee Co (Ltd) v Wittscheibe,314 it was held that the adoption of the Roman Catholic Relief Act 1829 in New South Wales did not apply the prohibitions of the English statute to gifts to monastic orders in New South Wales. Therefore a gift to such an order in New South Wales for its purposes in New South Wales was not illegal.

Closed Orders

[10-41] In Cocks v Manners,315 in 1871, a question arose as to the charitable nature of gifts to a Dominican convent and a Community of Sisters of Charity. Sir John Wickens VC held that the community was a charitable institution on the ground that, although the primary object of the sisters was selfsanctification, they employed themselves as a means thereto in the exercise of works of piety and charity in teaching the poor and nursing the sick. The gift to [page 152] the Dominican Convent was held not to be charitable, being neither within the letter nor the spirit of the statute, 43 Eliz I c 4. Sir John Wickens VC stated:316 A voluntary association of women for the purpose of working out their own salvation by religious exercises and self-denial seems to me to have none of the requisites of a charitable institution, whether the word ‘charitable’ is used in its popular sense or in its legal sense. It is said, in some of the cases, that religious purposes are charitable, but that can only be true as to religious services tending directly or indirectly towards the instruction or the edification of the public; an annuity to an individual, so long as he spent his time in retirement and constant devotion, would not be charitable, nor would a gift to ten persons, so long as they lived together in retirement and performed acts of devotion, be charitable.

In 1947, in Re Coats’ Trusts,317 a summons was taken out by trustees to determine the effect of a declaration of trust of a sum of money the income of which was to be applied for the purposes of a priory consisting of a community of cloistered nuns, who devoted their lives to contemplation and selfsanctification within their convent and engaged in no exterior works. On the authority of Cocks v Manners,318 the trust was not charitable, but counsel for the convent advanced three reasons why it should be held to be charitable: that the purposes of the convent in interceding for the whole human race were charitable purposes for the advancement of religion among the public; that the edification or good example by the existence of the way of life of the convent and its inmates turns minds to spiritual matters and benefits the public by advancing religion among them; and that the result of the trust was to endow the convent which enabled any woman to enter a fuller religious life, just as an endowment of a scholarship enables students to pursue higher education. The judgments of Jenkins J, the Court of Appeal and the House of Lords (the last point was argued only in the House of Lords) contain many dicta of importance to all trusts for the promotion of religion. All were unanimous in holding that the trust was not charitable because of the absence of public benefit. The

benefit of intercessory prayer to the public is not susceptible to legal proof and the court can only act on such proof. Further, the element of edification by example is too vague and intangible to satisfy the test of public benefit. In Leahy v A-G (NSW),319 the principles stated above were confirmed, the Privy Council holding that a trust for a contemplative order of nuns did not amount to a valid charitable trust.

Worship [10-42] Corporate devotional worship in its many forms is charitable as tending to promote religion,320 but the emphasis is upon the edification or instruction of the public in contradistinction to attempting to improve one’s own mind or save one’s own soul.321 This may best be illustrated under separate headings.

Prayer [10-43] The charitable character of prayer has had to be considered in several cases. In Re Joy,322 a legacy of £1000 was left to a society named the ‘Society for Suppressing Cruelty by United Prayer’. The society had had, at various times, some thousands of members. It had no [page 153] rules, but the members were required to buy a card costing twopence and use a prayer printed on the card. Chitty J held that the gift was not charitable. He said: [T]his is not a gift for the suppression of cruelty to animals generally. The object is to suppress it by united prayer. What I mean by this is, that you cannot cut the sentence into two parts, and say there were two objects. There is one object, and one object only, and that is by united prayer to suppress cruelty to animals. Then I have to inquire what the meaning of ‘united prayer’ here is …. It was not by public prayer. It was by what the lady termed ‘united prayer’ which means prayer of the description I have already stated — private prayer — and it is clear that if the purpose is a mere improvement of the individual by private prayer, that is not a purpose of public or general utility within the statute, or within the analogy of the statute of Elizabeth.

The charitable nature of private prayer received detailed consideration in the

‘closed orders’ cases, Cocks v Manners323 and Gilmour v Coats.324 In the former case, it was held that a gift to a Dominican convent, the inmates of which sought sanctification by prayer and contemplation and engaged in no outside activities, was not charitable. In Re White,325 where a gift was made ‘to the following religious charities’ (the names being left blank), Lindley LJ, in delivering the judgment of the court that the gift constituted a valid charitable bequest in respect of which a scheme should be directed, stated: ‘A society for the promotion of private prayer and devotion by its own members, and which has no wider scope, no public element, no purposes of general utility, would be a “religious” society, but not a charitable one.’ In Re Coats’ Trusts, Jenkins J said:326 Thus, in my judgment, the element of public benefit which a religious trust or purpose must, in order to be charitable, be shown to possess is to be sought, not in the blessings (whether spiritual or temporal) which the prayers of the faithful, according to the tenets of the particular sect, may cause God to bestow on the public at large, but in the instruction, edification, or spiritual comfort which the execution of the trust or purpose may be expected to impart to members of the public by the operation on their minds through the recognized human channels of communication and perception of the religious activities directly or indirectly promoted or maintained by such execution. In a word, I think the law recognizes the spiritual benefit as a product, or potential product, of religious charity which men derive from being taught to pray and from praying as they have been taught to do, but not the benefits whether spiritual or temporal which their prayers may cause God to bestow on other people. This, I think, accords with the view taken by Chitty J in Re Joy,327 of a trust to suppress cruelty to animals by united prayer.

This view was affirmed in the Court of Appeal and the House of Lords. [10-44] Thus the promotion of corporate public prayer is a charitable purpose within the meaning of the Statute of Elizabeth, but the promotion of private intercessory prayer is not. This must be read subject, however, to Re Caus,328 which decided that a gift for the saying of private masses is charitable. But in view of the comments on this decision in Gilmour v Coats,329 it may well be that it would not be sustained if the matter came before the court again. In Neville Estates Ltd v Madden,330 a trust to promote attendance at a synagogue was upheld on the ground that members of the synagogue ‘live in this world and mix with their fellow citizens’.331 Clearly, a different result would have been reached if the members had segregated themselves from the outside world. In Re Warre’s Will Trusts,332 a trust to maintain a diocesan retreat failed as a charitable trust on the curious ground that it lacked the necessary element of public benefit.

[page 154] But this case was not followed in Association of Franciscan Order of Friars Minor v City of Kew,333 precisely on the ground that a retreat house is open to the public. In a later case, Re Banfield (dec’d),334 a trust for the purposes of an unincorporated religious association was upheld as a charitable trust on proof that it was not an enclosed order and that members of the public in need of spiritual help were free to resort to its premises. An important decision along the lines submitted to be correct is that of the New South Wales Court of Appeal in Ashfield Municipal Council v Joyce.335 That case dealt with the religious ceremonies of the sect known as ‘the Exclusive Brethren’, which ceremonies were ‘private’ in the sense that they are not open to members of the public generally. It was nonetheless held that a trust to promote such ceremonies would constitute a valid charitable trust. As Hutley JA put it:336 Even if the ceremonies of the Exclusive Brethren in the hall can be regarded as a temporary withdrawal from the world, those ceremonies are a preparation for the assumption of their place in the world in which they will battle according to their religious views to raise the standards of the world by precept and example. From the fact that they prepare themselves in private nothing can be deduced to deny the conclusion that these religious ceremonies have the same public value in improving the standards of the believer in the world as any public worship. I am, therefore, of the opinion that the doctrine of Gilmour v Coats does not apply to the Exclusive Brethren, and, from the fact that their religious ceremonies cannot be classed as public worship, it cannot be deduced that they are not for the public benefit.

Where the predominant function of a small religious healing movement was public faith healing, a gift for the furtherance of its spiritual work was not prevented from being charitable by the possibility that private services, not themselves charitable, might be held as part of the total activity.337 The situation may, therefore, be summarised as follows: (1) In the case of the usual religious trust involving no ‘private’ element at all, public benefit will be presumed and the trust will, prima facie, be a valid charitable trust for the promotion of religion — that is the rationale of cases like Re Watson338 and Bourne v Keane.339 (2) In the case of a religious trust which is purely private, where the activities in question are not open to the public and the persons who participate in them have excluded themselves from the world at large, public benefit will not be presumed and must be proved if the trust is to be upheld — that is the rationale of Gilmour v Coats340 and Re Joy.341

(3) In the case of religious trusts for the promotion of religious ceremonies which, while themselves ‘private’, are designed to enable their participants to engage in a more spiritually endowed manner in their normal public life, public benefit will be presumed — that is the rationale of the City of Kew case342 and Joyce’s case.343

Choir, etc [10-45] A gift for the benefit of the choir — that is, for the maintenance and improvement of the musical services — is a charitable purpose.344 [page 155] A gift for the purchase and maintenance of an organ and the purchase of music for it is a charity,345 and so also is a gift to maintain an organist at church.346 A gift of sums of money to be paid to the ringers of a church for ringing a peal of bells on the anniversary of the restoration of Charles II in commemoration of that event has been upheld on the ground that it connoted ‘a notion of worship and gratitude to heaven’,347 but a gift of sums to be paid annually to the ringers of the parish church in consideration of their ringing the bells half-muffled on the anniversary of the donor’s death has been held invalid as an endeavour on the part of the donor to commemorate his own memory.348

Non-charitable Objects [10-46] In England and Australia, there have been a number of cases concerning the effect of a gift to an institution or a person which would be charitable but for the addition of words which indicated purposes for which the gift may be applied.349 Thus, in Re Ashton,350 gifts were made to the vicars and churchwardens of two churches ‘for parish work’. It was argued that certain aspects of parish work are not charitable in the legal sense and that the gifts accordingly failed for uncertainty. This view was upheld by Luxmoore J, the Court of Appeal and the House of Lords. Similarly, in Dunne v Byrne,351 a gift ‘to the Roman Catholic Archbishop of Brisbane and his successors to be used

and expended wholly or in part as such Archbishop may judge most conducive to the good of religion in this diocese’ was held to be expressed in terms too wide for the gift to be charitable. In Union Trustee Co of Australia Ltd v Church of England Property Trust,352 Nicholas CJ in Eq held that a gift to apply certain property ‘in such manner and for such purposes relating to the work of’ a certain named church ‘as the rector and churchwardens for the time being of the said church shall in their absolute discretion think fit’ was too wide to be charitable and was only saved by the application of s 37D of the Conveyancing Act 1919 (NSW).353 Similarly, in Re Davies,354 a trust for ‘work connected with the Roman Catholic Church’ was invalidated on the ground that the gift did not relate to any specific church, its fabric and services, but was rather concerned with the work carried on by the religious body known as the Roman Catholic Church, not all of the activities of which were charitable. And in Re Tomkins,355 a gift for, inter alia, ‘church purposes’ was held not to be for exclusively charitable purposes. On the other hand, in Re Macgregor356 it was held by Long Innes J that bequests to the Anglican Bishop for the time being of the Diocese of Grafton and Armidale ‘for diocesan purposes’ and for ‘diocesan purposes generally’ were good charitable bequests because strictly every diocesan purpose proper was a religious purpose and therefore a charitable purpose in the legal sense. The same conclusion was reached by the Court of Appeal in Re Rumball,357 where the words were ‘to the Bishop for the time being of the Diocese of the Windward Islands, to be used by him as he thinks fit in his diocese’. It was held that the addition of the general [page 156] words indicating purpose did not destroy the charitable nature of the gift to the bishop358 but were inserted merely to indicate who should have the discretion in the exact application of the gift. In this way, the result in Re Ashton359 is avoided, but it is not so easy to distinguish Re Macgregor360 from Re Ashton,361 and it may be that Re Macgregor must be taken to have been wrongly decided.362 So in Re Garrard,363 a gift to the vicar and churchwardens ‘to be by them applied in such manner as they shall in their sole discretion think fit’ was upheld as a charitable trust. In Re Norman,364 a bequest ‘to the editors of the

missionary periodical called Echoes of Service to be applied by them for such objects as they may think fit’ was also upheld; although the evidence showed that the editors were the trustees of the churches of the Brethren, and that Echoes of Service was not only the title of a periodical, but also the designation of a charity for distributing gifts for the purposes of the Brethren. In Re Bain,365 a gift ‘in connection with the Church’ was upheld, as was the bequest in Re Eastes366 to the vicar and churchwardens to be used by them ‘for any purposes in connection with the said church which they may select it being my wish that they shall especially bear in mind the requirements of the children in the said parish … And I declare that in no circumstances shall they … use any portion of the said moneys in connexion with the furtherance of overseas missions’. In Re Flinn,367 a bequest to ‘His Eminence the Archbishop of Westminster Cathedral, London, for the time being … to be used by him for such purposes as he shall in his absolute discretion think fit’ was also upheld as a valid charitable trust. In Green v Trustees of the Property of the Church of England in Tasmania,368 a trust for the trustees of the church ‘to be used for the benefit of such Diocese as [they] think fit’ was upheld. The position of such gifts in all jurisdictions is now affected by legislation designed to sever and save the charitable objects from the non-charitable elements mixed with them. The legislation is discussed later.369

Purposes Beneficial to the Community The Residual Fourth Class [10-47] Under this heading are grouped all the purposes which either are specifically mentioned in the preamble to the Statute of Elizabeth or have been held to be within its spirit, but which do not come under the first three heads already considered. The various purposes defy any orderly classification, and the only element they have in common is that they are regarded as being of public benefit. Yet not all purposes which are beneficial to the public are charitable. The trust must be of direct and general benefit to the public, but the mere fact that it is for purposes which may tend to be of general public utility is not sufficient.370 For the trust to be charitable it must be within the spirit or intendment of the

preamble, it must be for the benefit of the public, it must be of a public nature, and it must also be capable, if necessary, of being administered and controlled by the court. With only these broad [page 157] principles as a guide, it is not surprising that the particular distinctions which have been drawn between charitable and non-charitable purposes can appear to be somewhat arbitrary.371 Charitable trusts of this fourth class were considered by the House of Lords in Inland Revenue Commissioners v Baddeley.372 In that case, land and buildings were conveyed to trustees upon trust for the promotion of the religious, social and physical wellbeing of persons resident in West Ham and Leyton by the provision of facilities for religious services and instruction and for the social and physical training and recreation of such of them as, in the opinion of the leaders of the Stratford Newtown Methodist Mission, were members or likely to become members of the Methodist Church, and of insufficient means otherwise to enjoy the advantages provided, and by promoting and encouraging all forms of such activities as were liable to contribute to the health and wellbeing of such persons. Another gift was in similar, though not identical, terms. The trusts were examined in order to see if they fell within any of the first three classes because there was reference in them to poverty, to education and to religion. It was held that they did not fall into any of these classes. There remained then the fourth class in Lord Macnaghten’s classification. It was argued in favour of validity that there was a public element sufficient to support validity because the trusts were for the benefit, not of individuals, but of an appreciable class in the community, the purpose was within the spirit and intendment of the preamble to the Statute of Elizabeth, and it was not necessary that the benefits under the trust be available to all members of the public. But the House of Lords, by majority, held the words of the conveyance too vague to qualify as charitable; further, a minority held that the public element necessary in a trust under the fourth class was different from the public elements sufficient in the other classes of charity. Lord Simonds and Lord Somervell (the other members of the majority standing mute on this point) appear to have stated that for a trust to be good under the fourth class it must be open to enjoyment by all

members of the public who are capable of enjoying it.373 Thus a trust to build a bridge is a good charitable trust under the fourth class, providing the bridge is intended for all members of the public who, having regard to the location of the bridge, are capable of enjoying its use. In fact, those members of the public may be very few. But when the enjoyment of the use of the bridge is limited by the terms of the trust to a section of the public — to give an example quoted by Lord Simonds in his speech, to ‘impecunious Methodists’ — that section of the public, however sufficient to support a trust for the relief of poverty or the advancement of religion, is not sufficient to support a trust to build a bridge, which could only be valid under the fourth class.374 The trusts in the case, being sustainable, if at all, only under the fourth class, were in the same situation as a trust to build a bridge, and, being limited in enjoyment to a class determined by a test other than capacity to enjoy the particular benefit, were therefore invalid. ‘[It is necessary] to observe the distinction … between a form of relief extended to the whole community yet, by its very nature, advantageous only to the few, and a form of relief accorded to a selected few out of a larger number equally willing and able to take advantage of it.’375 Lord Somervell of Harrow said:376 I cannot accept the principle … that a section of the public sufficient to support a valid trust in one category must as a matter of law be sufficient to support a trust in any other category …. There might well be a valid trust for the promotion of religion benefiting a very small class. It would not at all follow that a recreation ground for the exclusive use of the same class would be a valid charity ….

Charitable trusts of the fourth class have also been considered by the High Court of Australia in Royal National Agricultural and Industrial Association v Chester.377 There the testamentary [page 158] gift of a fund to a charitable body to apply the income thereof for the purpose of ‘improving the breeding and racing of homing pigeons’ was held not to constitute a valid charitable trust, although such a trust would have provided recreation for quite a number of pigeon fanciers; would have produced birds which were interesting, beautiful and at times useful as a means of communication; and would have afforded an opportunity for the scientific study of the birds’ remarkable homing instinct. The purpose was neither specifically

mentioned in the preamble to the Elizabethan Statute, nor was it within its spirit and intendment.

Benevolent Purposes [10-48] There have been many cases where trusts have been held not to be charitable under the general law because the purposes have been designated by words of a general import which could include purposes not within the spirit and intendment of the Statute of Elizabeth. Thus gifts for ‘benevolent’ objects,378 ‘for benevolence and liberality’,379 for ‘philanthropic objects’,380 for ‘patriotic purposes’381 and the like have been held not to be charitable. Most gifts of this nature, at least in most jurisdictions of Australia, would now be validated by legislation, the terms of which are discussed below.382

Sport [10-49] Gifts for the encouragement of sport are not charitable. Thus in Re Nottage,383 where a testator bequeathed a sum of money, the interest of which was to be expended in providing a cup to be given for the encouragement of yachting, the gift was held not to be charitable and to be void as a perpetuity. Similarly, in Re Clifford,384 a gift to a society having as its object the preservation and improvement of angling in certain parts of a river was held not to be a good charitable bequest. Gifts to benefit fox-hunting385 and for the teaching of cricket386 have also been held not to be charitable. But the provision of means for public recreation, such as playing fields, parks and gymnasiums, is a charitable object.387 The English Court of Appeal in Oldham Borough Council v Attorney-General388 treated a trust to hold certain playing fields for the benefit of the inhabitants of a defined area as a valid charitable trust. And in Guild v Inland Revenue Commissioners,389 a trust ‘to the town council of North Berwick for the use in connection with the sports centre in North Berwick or some similar purpose in relation to sport’ was also upheld, although in reliance on the Recreational Charities Act 1958 (UK). But for that Act it would have failed. [page 159]

A gift to encourage sport at school is, however, charitable, on the ground that sport is part of a person’s education.390 So also is a gift for the encouragement of sports tending to increase the efficiency of the armed forces391 or of the police force.392 Moreover, in Western Australia, Queensland, South Australia and Tasmania ‘recreational charities’ are recognised. Section 5 of the Charitable Trusts Act 1962 (WA) is modelled to some extent on the Recreational Charities Act 1958 (UK). 5. (1) Subject to the provisions of this Part, it is, and shall be deemed always to have been, charitable to provide, or to assist in the provision of, facilities for recreation or other leisure-time occupation, if the facilities are provided in the interests of social welfare. (2) The requirement of subsection (1) that the facilities be provided in the interests of social welfare is not satisfied unless — (a) the facilities are provided with the object of improving the conditions of life for the persons for whom the facilities are primarily intended; and (b) either — (i) those persons have need of those facilities by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances; or (ii) the facilities are to be available to members, or to male or female members, of the public at large. (3) Subject to the requirement of subsection (1) that the facilities be provided in the interests of social welfare, that subsection applies in particular to the provision of facilities at public halls, community centres, and women’s institutes, and to the provision and maintenance of grounds and buildings to be used for purposes of recreation or leisure-time occupation, and extends to the provision of facilities for those purposes by the organising of any activity. (4) Nothing in this section derogates from the principle that a trust or institution, to be charitable, must be for the public benefit.

It will be seen that the section modifies the general law very considerably. Section 103 of the Trusts Act 1973 (Qld),393 s 69C of the Trustee Act 1936 (SA)394 and s 4(1) of the Variation of Trusts Act 1994 (Tas) are to the same effect.

Hospitality or Entertainment [10-50] A trust which has as its dominant purpose hospitality or entertainment is not charitable. In Re Corelli,395 a woman’s will placed the residue of her estate, including her estate at Masons Croft, in the care of her trustees, to enclose all the land at Masons Croft as a breathing space and air

zone for the health of the town of Stratford-on-Avon, her expressed intention being that the ultimate trusts of the house and grounds at Masons Croft be continued in perpetuity for the benefit and service of distinguished visitors who would otherwise seek their quarters in a hotel. She also directed that the income of the estate and other property should be held for the upkeep of Masons Croft, to be used for the promotion of science, literature and music among the people of Stratford. Cohen J held that this was not a charitable gift and, as the trusts were to continue in perpetuity, the gift was void. Although the directions for the establishment of the air zone and for the promotion of science, literature and music might have constituted a charitable bequest, the dominant motive of the testator was to be found in the trust for the establishment of an hotel for the entertainment of distinguished visitors [page 160] from far countries, which was not a charity. Similarly, a trust under which the trustees were empowered, inter alia, to maintain an institute and meeting-place for the benefit of Welsh people in London, with a view to creating a centre to promote ‘the moral, social, spiritual and educational welfare of Welsh people’, has been held not to be a charity.396 The fact that the social activities are to be carried on as an adjunct to other activities which are clearly charitable, for example, a social club attached to a church, makes no difference.397 It is to be noted, however, that if the object of the trust is charitable, the fact that it will afford entertainment or pleasure to the public will not render it noncharitable.398 Furthermore, a trust to apply the income of a fund in payment of the expenses of dinners consumed by members of a charitable religious society399 or of the trustees of a charitable trust400 when attending meetings has been held to be charitable as increasing the usefulness and efficiency of the society or promoting the efficient management of the trust. A devise of lands on trust ‘for the use of the High Commissioner or other person representing the Government of the Commonwealth of Australia in England for the time being to be used by him as a country residence in a way similar to that in which Chequers is used by the Prime Minister of England’ failed as a charitable trust in Re Spensley’s Will Trusts.401 A trust for the advancement of music is a valid charitable trust.402

Political Purposes [10-51] It has already been mentioned that, according to traditional thinking, if one of the objects of the trust is to secure a change of the law the trust will fail as a charity. On that approach, while the encouragement of temperance is a charitable object, a trust, one of the objects of which is to secure the abolition of the liquor traffic by legislation, is not charitable. Similarly, a trust of residue to be used ‘for the advancement and propagation of the teaching of socialised medicine’ was held for this reason not to constitute a valid charitable trust.403 The decision of Slade J in McGovern v A-G404 concerning the trusts of Amnesty International is an interesting application of these principles. In so far as the trust purpose was attempting to secure the release of prisoners of conscience, it was a trust for political purposes and therefore not charitable, since the means envisaged was the bringing of moral pressure on foreign governments. In so far as the purpose was the abolition of torture and inhuman or degrading punishment, it was likewise political and non-charitable. In so far as its purpose was the promotion of research into the maintenance and observance of human rights, it was a valid charitable trust. As its purposes were thus mixed, it failed entirely. This rather curious result may well indicate reasoning which is on any view — the traditional approach or the High Court’s approach — defective [page 161] particularly as it is clear that a trust for the relief of human suffering is per se charitable, the Elizabethan Statute itself mentioning the relief or redemption of prisoners and captives, and it being difficult to see how such compassionate objects are capable of achievement otherwise than by (at least) the exertion of moral pressures. The impact on these authorities of limitations imposed by the High Court in Aid/Watch Inc v Federal Commissioner of Taxation on the ‘political purposes’ doctrine is as yet unclear.405 However, the High Court has specifically denied the existence of any ‘general doctrine which excludes from charitable purposes “political objects” and has the scope indicated … by McGovern v Attorney-General’.406 A trust for the elimination of war has been held charitable.407

It has been contended that in Australia even before Aid/Watch v Federal Commissioner of Taxation a trust may be charitable even if its object is to introduce new law, so far as the new law ‘is consistent with the way the [existing] law is tending’, for there is ‘then no longer contrariety with an established policy of the law’.408

Other Cases: General [10-52] Trusts which have been held to be charitable under the fourth group in Lord Macnaghten’s classification may conveniently be considered under the following headings.

Public works [10-53] The repair of bridges, ports, havens, causeways, seabanks and highways is specifically mentioned in the Statute of Elizabeth as a charitable purpose. Many cases may be cited as illustrations: the repair of highways and bridges,409 the provision of a water-supply,410 paving and lighting a town,411 afforestation,412 and public amenities in a defined locality such as a public library,413 a public hall,414 and playing fields and parks.415 Others include a trust to provide grazing rights on a defined area of land to the freemen of an ancient borough,416 a trust for the promotion of agriculture and horticulture, and a trust permanently to set aside land ‘for showground, park and recreation purposes’.417 In Schellenberger v Trustees Executors and Agency Co Ltd,418 a bequest for the beautification and advancement of the township of Bunyip was held to be a valid charitable gift. ‘The Preamble refers to “Bridges, Ports, Havens, Causeways … and Highways”. Freely accessible car-parks might be regarded as “Havens” from the “Highways” or as so necessarily incidental to the latter in modern times as to be almost indistinguishable in [page 162] public purpose and utility from them …’.419 On the other hand, a trust to erect a carillon on the foreshores of Sydney Harbour was held not to be charitable.420

Relief of rates or national exchequer [10-54] The aid or ease of any poor inhabitants concerning payment of taxes is also specifically mentioned in the preamble to the Statute of Elizabeth. So gifts ‘to my country England’,421 ‘for the benefit of the country to be applied by the Chancellor of the Exchequer’,422 or for the relief of taxes,423 or in reduction of the National Debt,424 have all been held to be charitable.

The relief of distress [10-55] Various trusts having as their purposes the advancement of medical knowledge or the treatment of sickness or the alleviation of other forms of distress have been held to be charitable. Thus gifts to medical societies,425 to hospitals,426 to cancer research,427 to nursing associations,428 to ‘sick and wounded’,429 to asylums,430 for the benefit of those suffering from particular diseases431 and ‘for the benefit of Australian Aborigines’,432 have all been held to be charitable. A gift to provide accommodation at a hospital for the relatives of patients critically ill has been upheld as a charity as being a purpose of the hospital.433 A gift to the National Lifeboat Institution has been held to be charitable under this head.434 So also has a trust for the relief of victims of a cyclone.435 Many such bodies are partly funded by government. While the fact that a body may be funded by government does not preclude its functions being for charitable purposes,436 if it is merely carrying out a function of government, its functions will not be charitable.437 A gift to erect a hospital supported by fees from patients is a gift for a charitable purpose so long as the poor are not excluded and so far it is not to be operated for commercial profit.438 [page 163] A company can have a charitable purpose even though it does not itself advance charitable purposes directly, but raises funds from commercial activity and gives them to organisations which do advance charitable purposes directly.439

Armed forces [10-56] Gifts tending to increase the efficiency of the armed forces are charitable, as, for example, gifts for the benefit of a volunteer corps,440 to provide prizes for competition among cadets or officers,441 to ameliorate conditions of dependants of members of the armed forces,442 to encourage rifle shooting,443 to train boys to become officers in the Navy or Mercantile Marine,444 for defence against air attack,445 for an officers’ mess,446 to provide plate and a library for the mess,447 and to form a regimental fund for the promotion of sport.448 A bequest ‘for the benefit of New South Wales returned soldiers’ is a good charitable bequest.449

Animals [10-57] In Re Grove-Grady,450 which concerned the validity of a secret trust for the protection and benefit of animals, Russell LJ stated: There can be no doubt that upon the authorities as they stand a trust in perpetuity for the benefit of animals may be a valid charitable trust if in the execution of the trust there is necessarily involved benefit to the public; for if this be a necessary result of the execution of the trust, the trust will fall within Lord Macnaghten’s fourth class in Pemsel’s case …. So far as I know there is no decision which upholds a trust in perpetuity in favour of animals upon any other ground than this, that the execution of the trust in the manner defined by the creator of the trust must produce some benefit to mankind.

The benefit to the public in such trusts lies in the fact that they are calculated to promote public morality by checking the innate tendency to cruelty, or as Swinfen Eady LJ said in Re Wedgwood:451 [A] gift for the benefit and protection of animals tends to promote and encourage kindness towards them, to discourage cruelty, and to ameliorate the condition of the brute creation, and thus to stimulate humane and generous sentiments in man towards the lower animals and by these means promote feelings of humanity and morality generally, repress brutality, and thus elevate the human race.

Thus gifts to societies for the prevention of cruelty to animals,452 to promote prosecutions for cruelty to animals453 and for homes for lost cats and dogs454 have been held to be charitable. [page 164]

But in Re Grove-Grady,455 a trust to establish a refuge for animals and birds of all kinds in a state of nature, with no provision to prevent the stronger preying on the weaker, was held not to be charitable as not affording any advantage to animals useful to mankind or any protection from cruelty to animals generally. However, where there is a benefit to the public in the preservation of the animals for scientific and educational purposes the trust will be valid.456 In Re Green,457 a trust for the ‘rescue, maintenance and benefit of cruelly treated animals’ was held to be valid. A trust for the benefit of individual animals is not charitable, but may be valid as a private trust if it does not infringe the rule against perpetuities,458 even though there is no beneficiary to enforce it. Thus a trust for the maintenance of specified horses and dogs so long as they shall live has been held to be valid.459

Miscellaneous [10-58] Among the public purposes which have been held to be charitable but which do not come under any of the foregoing heads are the furtherance of vegetarianism,460 the preservation of places of historic interest or natural beauty,461 the encouragement of gardening,462 the encouragement of temperance,463 cremation,464 and a war memorial intended not only to commemorate the dead, but also to serve some purpose for the betterment of the living.465 A trust for the encouragement of law reporting is a valid charitable trust within the fourth class (as well as possibly falling within the second class).466 A trust to dedicate a parcel of bush land for the encouragement of native fauna and flora thereon was held not to constitute a valid charitable trust by Anderson J in Re Green.467 But this case was probably wrongly decided. It was not followed in A-G (NSW) v Sawtell,468 where Holland J upheld a trust for the preservation of native wild life (both fauna and flora). A trust for accountants’ and solicitors’ fidelity funds has been held not to be charitable.469 Provided there is no contrary language,470 a gift to a particular class of inhabitants within a locality is construed as being restricted to benefits which are charitable471 and hence is a [page 165]

valid charitable gift.472 A reference in the gift to ‘community’ does not amount to contrary language.473 A reference to the ‘Black community’ does not render the gift uncertain, because the class of inhabitants of a specified area need not be identified with the same degree of certainty as the beneficiaries of a private trust: see [5-29].474 The purpose of providing housing accommodation, otherwise than for those in some relevant charitable need, is not within the spirit and intendment of the preamble.475 While there is a presumption that a beneficial purpose is charitable, there is no presumption which would artificially restrict general words to purposes within the spirit and intendment of the preamble.476

General Problems in Charitable Trusts Purpose Outside the State [10-59] If the objects of a trust are necessarily valid as a charity in New South Wales,477 it is immaterial that the capital or income is to be expended wholly outside New South Wales, provided that the objects are also valid where the funds are to be spent.478 Thus trusts created in England for the poor of a German town,479 for the benefit of German ex-soldiers disabled in the First World War,480 for the relief of distress in Europe,481 and for Armenian orphans482 have been held to be charitable and not contrary to public policy. So an English court has upheld a trust to be performed in Famagusta,483 and New South Wales courts have upheld trusts to establish a rose garden at the Hebrew University in Jerusalem484 and to advance education in Israel.485 But the court will not normally control the administration of such trusts, and if the court has no discretion in selecting objects486 and the objects are wholly situated abroad, it may direct that the funds be transferred to the trustee abroad.487 If the specific trust purpose fails, it would appear that the court will not direct a scheme cyprès, and the trust will fail.488 This law is well established, but has its conceptual difficulties. It is probably true to say these difficulties have only been recognised and formulated after the law became established, and when it was too late to alter it. The first is that, although it is a generally recognised [page 166]

principle that the Attorney-General of New South Wales must be in a position to supervise the management of the charitable trust and that no trust can be recognised as charitable unless the Attorney-General is so placed,489 so that the court will not administer charitable trusts not resident in the jurisdiction,490 it is not easy to see how this principle can be complied with if the whole capital is transferred to alien countries. The second is that when the law requires a trust to be for the benefit of the ‘public’ or for a ‘public’ purpose in order to be a charitable trust, the ‘public’ referred to must be the local public — here, the public of New South Wales not the ‘public’ of Bhutan or Romania. These difficulties have been grappled with to some extent in England in Camille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners,491 and, in Australia, in Re Lowin492 and in Kytherian Association of Queensland v Sklavos.493 So far as the first difficulty is concerned, all that can be done is endeavour to administer the trust whilst retaining the capital in the local jurisdiction, although obviously this will not always be possible. So far as the second difficulty is concerned, it can be met to some extent by a recognition — for ‘no man is an island’ — that a trust to promote, say, music-writing in Romania is a benefit to those music-lovers in New South Wales who hear the result. Similarly, a trust for the relief of poverty in Bhutan fulfils the local sense of obligation to feed the world’s poor. But this type of reasoning does lead to the result that not all activities which would, if local, be charitable, would be charitable if conducted abroad. A trust for the Australian Army, for example, is a valid charitable trust: ‘the setting out of soldiers’ is a purpose specifically mentioned in the preamble to the Elizabethan Act. But a trust for the Iraqi Army would not be held to be a valid charitable trust. Analogous but not identical difficulties arose in Re Levy,494 when there was a bequest of a large estate to ‘the State of Israel for charitable purposes only’. The gift was held to be a valid charitable trust, but subject to the trustees of the estate settling a list of charities which would be charitable according to the law of Ontario and not offensive to public policy.

Charitable and Private Trusts Contrasted [10-60] A gift for charitable purposes is of a general or public nature even if given to a particular charity. Charitable trusts are treated by the law to some extent in exactly the same way as private trusts. For example, certainty as to the intention to declare a binding trust is as strictly insisted upon in charitable as in

private trusts. If there is a gift for legal and illegal purposes, the gift will be sustained in favour of the legal purposes if the purposes can be separated, otherwise not. Trusts for the accumulation of income are disregarded if the capital is vested in a charity, just as such accumulation is disregarded in the case of private trusts. In several ways, however, charitable trusts are specially favoured by the law. (1) Certainty of objects: To sustain a trust for charitable objects it is not essential that the settlor should have set out a specific object to be benefited provided it can be ascertained that the settlor had a general intention of charity. It must, of course, be quite certain that that intention existed (although under s 10 of the Charitable Trusts Act 1993 (NSW) that intention will be presumed). If no object is specified, the court will select one. Similarly, once property is impressed with a charitable trust, that trust is binding upon it in perpetuity. As a consequence of the application of the cy-près doctrine there is no resulting trust on the lapse of the particular charitable objects indicated by the settlor. [page 167] A related difference is that where a charitable trust is originally created in general or vague terms, the trustee may execute a more specific deed limiting the terms of the trust: see [10-68]. (2) Certainty as to property bound: Where a bequest was made for charitable purposes and also for an indefinite purpose which was not charitable and no apportionment was made by the settlor, so that the whole might be applied for either purpose, the legal rule was that the whole gift was void. In New South Wales, Victoria, Queensland, Western Australia, South Australia and Tasmania, legislation saves the charitable elements in some gifts of this nature.495 (3) Rule against perpetuities: As charities are almost invariably intended to be perpetual, the rule forbidding the perpetual duration of trusts has no application to them. The rule against remoteness of vesting is also relaxed in certain important respects. (4) Revenue law: Gifts to many forms of charities were exempt from gift and death and estate duties when they were levied, and the income of certain

charitable organisations is exempt from income tax. However, there is no special rule of construction by which revenue legislation should be construed in favour of the interests of those claiming exemption on the ground that a trust is arguably charitable.496 (5) Absolute gifts with directions as to disposal: In certain cases where there are absolute gifts of capital or income with specific directions as to their disposal, as, for example, a gift of $10,000 to a parish to build a church, and the purpose does not exhaust the amount of the gift, there is no resulting trust of the surplus to the settlor. Much, however, depends upon the form of the gift.

Certainty as to the Objects and Property Bound [10-61] Charitable trusts are not held void for uncertainty of objects if there is a clear indication of a general purpose of charity. In this respect, charitable trusts are treated more favourably by the law than private trusts. For example, a bequest to A upon trust to distribute it among such persons as he pleased would be void for uncertainty, but if the bequest were upon trust to distribute the fund among such charitable institutions as the trustee at his discretion should select, the trust would be good. It is not necessary for creators of trusts to specify the particular mode in which they wish their charitable intentions to be carried out, so long as their intention to give to charity is quite clear. The selection of the charitable objects may be left to the discretion of trustees or executors,497 or may be left to the appointment of a named person,498 or the testator may express an intention to give to charitable purposes to be named subsequently but neglect to specify any such purposes or to name anyone with power to specify them.499 In all these cases the charitable intentions of the testator will be given effect. The testator is said to exhibit a general intention of charity, and the rule to be applied was [page 168] defined by Lord Eldon in Mills v Farmer500 as follows: ‘In all cases in which the testator has expressed an intention to give to charitable purposes if that intention is declared absolutely, and nothing is left uncertain but the mode in

which it is to be carried into effect, the intention will be carried into execution by this court, which will then supply the mode, which alone is left deficient.’501 However, where there is a testamentary gift not by way of trust but direct to a named beneficiary who has ceased to exist and a general charitable intention is disclosed, the court has no jurisdiction and the subject matter must be administered in accordance with directions to be given under the royal prerogative.502 If it is clear from the terms of the will that the testator meant to make a gift for the purposes of charity, the court will give effect to that intention. For example, in Pocock v A-G,503 there was a bequest by codicil for various charitable purposes, and then a direction that the executors should give the residue to charitable institutions named by him in a future codicil, and ‘in default of any such gift’ to be distributed by the executors at their discretion. No subsequent codicil was made. It was held that there was a good charitable gift. Similarly, a bequest for certain charitable purposes mentioned by the testator and ‘other charitable purposes as I do intend to name hereafter’, none being named by the testator, is a good charitable bequest.504 The charitable intention is as clearly expressed by saying, ‘I give my property to charitable purposes’, as by saying, ‘I give my property to A for charitable purposes’.505 In Moggridge v Thackwell,506 there was a gift by will to such charitable purposes as V should appoint. V died before the will took effect but the trust for charity was held good notwithstanding the death of V. In Re Lea,507 a legacy ‘To General William Booth … for the spread of the Gospel’ was held to be a good charitable bequest, distributable at the discretion of General Booth of the Salvation Army. Evidence is admissible to remove the uncertainty where the testator’s description of the particular charitable object is imperfect.508 In Re Huxtable,509 a gift was given to C ‘for the charitable purposes agreed upon between us’. The gift was held to be good, and evidence was admitted as to what the purposes agreed upon were. Where the uncertainty as to the amount to be given arises from a previous gift being void, as a general rule a subsequent gift of the surplus to charity will nevertheless be good. A frequent case of this occurs where there is a gift to a trustee upon trust for the perpetual repair of a tomb, the surplus to be devoted to a charitable purpose. In such cases the whole goes to the charity, the bequest for the perpetual upkeep of a tomb being void.510

[page 169]

Trustee’s Discretion [10-62] Where a gift is given to trustees for charitable purposes at the discretion of the trustees, there is a good charitable trust. In Re Piercy,511 the gift was to ‘such charitable institutions and objects as my said trustees may determine’. In Crawford v Forshaw,512 the gift was in the words ‘the amount to remain at the disposal of my executors for distribution to such charities or charitable institutions as they approve of’. In Salusbury v Denton,513 a testator bequeathed a fund to his widow to apply part for charitable purposes and the remainder ‘to be at her disposal’ among the testator’s relatives as she should direct. She died without making any apportionment. The court held that the bequest was not void for uncertainty, but that half should be appropriated to charitable purposes and half to the testator’s relatives who were capable of taking within the Statutes of Distribution.

Mixed Charitable and Non-charitable Trusts [10-63] While, as has already been stated, a general trust for a charity can never be void for uncertainty (provided always that it be certain that the trust is for charitable purposes) this position does not necessarily obtain where the trust comprises non-charitable objects in addition to those which are charitable. In Hunter v A-G,514 Lord Davey divided cases of mixed charitable and noncharitable trusts into three categories. The first category comprises cases where charitable purposes are mixed up with other purposes of such a shadowy and indefinite nature that the court cannot execute them (such as ‘charitable or benevolent’ purposes, ‘charitable or philanthropic’ purposes or ‘charitable or pious’ purposes), or where the description includes purposes which may or may not be charitable (such as ‘undertakings of public utility’) and no discretion is vested in the trustees. In such cases (subject to certain statutory provisions in New South Wales, Queensland, Victoria, South Australia, Western Australia and Tasmania)515 the whole gift fails for uncertainty. There are a great number of cases which may be cited as illustrations.516 In Vezey v Jamson,517 the trust was to dispose of the

residue for such charitable or public purposes as the laws of the land would admit, or to any persons as the trustees in their discretion should think fit, or as they should think would have been agreeable to him, if living, and as the laws of the land did not prohibit. Sir John Leach VC said: ‘The testator has not fixed upon any part of this property a trust for a charitable use; and I cannot therefore devote any part of it to charity …. The necessary consequence is that the purposes of the trust being so general and undefined that they cannot be executed by this Court, they must fail altogether, and the next of kin become entitled to the property.’518 In Morice v Bishop of Durham,519 where a bequest was made to the bishop upon trust [page 170] for such ‘objects of benevolence and liberality’ as he should approve, Sir William Grant MR said: ‘The question is not whether the trustee may not apply it upon purposes strictly charitable, but whether he is bound so to apply it.’ It was held that the trustee could apply it for non-charitable purposes, and the bequest was held void for uncertainty. This type of case must be distinguished from that where the terms of the gift specify requirements which are intended to be cumulative, so that any object to be benefited must possess all the characteristics mentioned, as, for example, ‘charitable and benevolent institutions’, ‘charitable and pious uses’,520 ‘religious and benevolent purposes’,521 and ‘charitable and deserving objects’.522 Whether the words used create cumulative characteristics or cumulative classes of objects is a matter of construction. The word ‘and’ is not always construed conjunctively.523 For example, in Attorney-General of the Bahamas v Royal Trust Co,524 the Privy Council held that a trust for ‘any purposes conducted for and/or connected with the education and welfare of Bahamian children and young people’ was to be read disjunctively. The second category of cases comprises those in which the trustees have a discretion to apportion between charitable objects and definite and ascertainable non-charitable objects. In such a case the trustees cannot devote the whole of the property to non-charitable objects, and in default of any apportionment by them the court will divide the property between the objects charitable and non-charitable equally.525 For example, in Salusbury v Denton,526

there was a bequest of a fund to be at the disposal of the testator’s widow, by her will, therewith to apply a part to the foundation of a charity school or such other charitable endowment for the benefit of certain poor as she might prefer; and the remainder to be at her disposal among the testator’s relatives as she might direct. It was held that, although the fund was to be applied as to a part, without saying what part, for one set of objects and as to the remainder for another, and the widow died without exercising her power of determining the proportions in which each were to take, the bequest was not void for uncertainty, but the court would divide the fund in equal moieties, and give one moiety to charitable purposes and the other to the testator’s relatives. In extension of this principle it was established that, if the gift was for a charitable purpose and for a purpose indefinite and void, then, provided the gift was not in such a form as would permit the whole amount to be devoted to the indefinite purpose, the court would allocate half of the amount to the charitable purpose and only half the gift would fail. Likewise, if the gift is for several purposes, some valid and some invalid, the court will make an equal division in order to ascertain how much goes to the purposes which do not fail. In Hoare v Osborne,527 a fund was given upon trust out of the income thereof to keep in repair a monument in a church, a vault in the churchyard, and an ornamental window in the church. It was held that the trust for the repair of the vault was not charitable and was void, but that the trusts for the repair of the monument and window were valid as being charitable. The court directed the fund to be equally divided into three parts on the [page 171] ground that the nature of the gift made it impracticable to ascertain the proportions that would be required for the three objects respectively. In Re Clarke,528 Romer J applied this same principle where the non-charitable objects were indefinite, namely, ‘such other funds, charities and institutions as my executors in their absolute discretion shall think fit’, and divided the fund into four equal parts, the part affected by the trust quoted, being void, going to the next-of-kin.529 The third category of cases comprises those in which there is a general overriding trust for charitable purposes, but some of the particular purposes to

which the fund may be applied are not strictly charitable, or one of two alternative modes of application is invalid in law. In such cases the trust is good and the court will give effect to the general charitable trust, but the trustees are restricted from applying the fund to the purposes or in the manner which is objectionable. Re Hood530 is an illustration. In that case, there was a gift of a fund to be applied in spreading Christian principles and ‘in aiding all active steps to minimise and extinguish the drink traffic’. It was held that the terms of the gift showed that its main object was the advancement of Christian principles with a suggestion as to a particular method by which the advancement could be furthered and that method was subsidiary and ancillary. The whole gift was therefore good, being one for the advancement of Christian principles. It would appear that Congregational Union of New South Wales v Thistlethwayte531 is an example of the application of this principle. In that case, although the fundamental purpose of the Congregational Union was the advancement of religion, it had many subsidiary objects which were not charitable in the legal sense when regarded apart from the main object. It was held that gifts to be applied for the benefit of the Union were good, as the subsidiary objects could only validly be carried on in furtherance of the primary charitable object. Similarly, in Re De Vedas (decd),532 Wells J said: A court would, I think, shed its common sense if it were to hold that, just because a congregation, whose central purpose was manifestly the practice and strengthening of its religious rites and beliefs, had effected some transactions and undertaken some activities that were not, strictly speaking, religious, that congregation and its principal works must, ipso facto, be no longer categorized as wholly religious.

[10-64] From the foregoing it will be seen that the following types of trusts are valid: (1) Where the objects which may be benefited, at the discretion of the trustees, are described by two or more words, one of which specifies that the objects must be charitable and the other or others would embrace objects not charitable, but the context shows that the words are intended to be cumulative, as, for example, ‘charitable and benevolent objects’, which would be construed as benevolent objects which are charitable.533 (2) Where one part of a fund is given for charitable purposes and the other for non-charitable purposes of a definite534 or indefinite535 nature, and the trustees are given a power to apportion the fund in their discretion. Here the fund will vest in the objects equally, the portion vesting in the charitable objects being valid, provided the terms of the trust required that

portion be devoted to each object. [page 172] The following classes of trusts for mixed charitable and non-charitable purposes are invalid under the general law apart from statute: (1) Where property is directed to be held upon trust for charitable or noncharitable purposes indiscriminately, so that the trustees could, if they chose, apply the whole to non-charitable objects.536 This may occur in two ways: (a) Where the word ‘charitable’ is used with non-charitable words and the context shows that they are meant to be read disjunctively, for example, ‘charitable or benevolent’. (b) Where one word or phrase is used which could embrace objects both charitable and non-charitable, for example, ‘undertakings of public utility’, ‘good works’.537 (2) Where property is given upon trust to an institution, the primary object of which is charitable, or for an individual associated with charity, and words are added directing the property to be applied for purposes which could be non-charitable, for example, ‘to the vicar and churchwardens for parish work’.538 [10-65] The categories of mixed charitable and non-charitable gifts which are invalid according to the general law must now be considered in the light of the provisions of s 23 of the Charitable Trusts Act 1993 (NSW). This section materially provides as follows: 23. (1) A trust is not invalid merely because some non-charitable and invalid purpose as well as some charitable purpose is or could be taken to be included in any of the purposes to or for which an application of the trust property or of any part of it is directed or allowed by the trust. (2) Any such trust is to be construed and given effect to in the same manner in all respects as if no application of the trust property or of any part of it to or for any such non-charitable and invalid purpose had been or could be taken to have been so directed or allowed.

This section re-enacts s 37D of the Conveyancing Act 1919 (NSW). This was passed after a bequest of £100,000 was held void on the grounds that the gift ‘to such charities hospitals philanthropical institutions or objects free libraries or

mechanics’ institutes churches or any other objects of a like and similar nature in the State of Victoria as they shall in their absolute discretion deem fit’ was void for uncertainty.539 It was enacted in New South Wales following the suggestion of Long Innes CJ in Eq in Re Price.540 Similar suggestions have been made by judges in England.541 Most jurisdictions have similar legislation.542 In some respects a conflict of judicial opinion has developed, but certain points may be regarded as clear. In the first place, the section will not be applied to render charitable and valid a gift in vague and uncertain terms not disclosing any general intention of charity. Thus in Re Hollole,543 a case decided under the Victorian statute, where a testator had given his residuary estate ‘to my trustee and executor to be disposed of by him as he may deem best’, it was held that the section could not be applied, on the ground that the section has no application to ‘a trust [page 173] which is entirely undefined and uncertain as to subject matter’.544 Similarly, in Re White,545 it was held that the section did not save a gift of residue to the testator’s trustee ‘to dispose of the same as my trustee in his absolute discretion shall appoint or think fit’. Secondly, and at the opposite end of the scale, the section will be applied where the donor has stated separate and distinct objects so that by excising those which are non-charitable, definite charitable objects are left. In Re Griffiths,546 there was a gift of residue to trustees to be divided ‘three-fourths among my near relatives and one fourth amongst other persons and/or charitable institutions or organisations’. The gift of the one-fourth share would, under the general law, have been void for uncertainty, but the court applied the section so as to authorise striking out the non-charitable purposes, and the gift was then upheld as a gift to ‘charitable institutions and organisations’. In Re Bond,547 a legacy ‘to the blind and their children’ was construed as two independent gifts in undefined proportions, and the section was applied to strike off the invalid gift ‘to their children’, the whole legacy then being ‘for the blind’. In Re Thureau,548 the section was applied to a gift upon trust ‘for such charitable institutions or other public bodies’ as the trustees should declare. In Re Spehr,549 the section was applied to a trust to build monuments to the

testator’s parents and to beautify a lake (the latter, but not the former, being a charitable purpose). However, there are a large number of cases which do not fall within these two classes. These are trusts which, on the one hand, are not so vague that no purpose at all can be said to be designated but which, on the other hand, do not specify distinct and severable charitable and non-charitable purposes; they are trusts where the creator of the trust has used a composite expression which may comprehend purposes both charitable and non-charitable. One principle governing these cases seems to be clear; namely, that the section will not be applied to convert an invalid trust which the creator of the trust intended into something entirely different which the creator did not intend. This is shown by another Victorian case, Roman Catholic Archbishop of Melbourne v Lawlor.550 The trust was ‘to establish a Catholic daily newspaper … the income … to be used for Catholic education, or any good object the Hierarchy may decide, until sufficient funds are in hand, to found the daily paper’. The gift to found a daily newspaper was held to be void as being non-charitable and the court would not invoke the section to limit the purpose to the founding of a Roman Catholic religious newspaper, which, presumably, would have been charitable. The principal gift having failed, the accessory intermediate charitable gift of income also failed. The decision in this case appears to remain good law. No later decision has thrown any doubt on it. The section cannot convert a predominantly non-charitable gift into a valid charitable gift. This point was made clear by the High Court in Downing v Federal Commissioner of Taxation.551 That case involved the trust of the residue of a deceased estate ‘for the amelioration of the condition of the dependants of any member or ex-member of Her Majesty’s naval, military or air forces of the Commonwealth’. The court held that the trust, properly construed, applied to poor dependants; but that, even if it did not so apply, it would be saved by s 131 of the Property Law Act 1958 (Vic). However, Walsh J, with whom the other members of the court agreed, observed:552 What I have said about s 131 does not mean that every gift for the purpose of providing benefits to members of a specified class of persons may be treated as capable of separation into a gift for

[page 174] the benefit of the poor members of that class and a gift for the benefit of those who are not poor.

It does not mean, as was suggested in argument, that a gift for the benefit of stockbrokers may be remoulded by means of s 131 into a valid charitable gift for the benefit of poor stockbrokers.

One must start with a gift which, while primarily charitable, also includes non-charitable elements. There was formerly a difference of approach between the courts of Victoria, on the one hand, and those of New South Wales and New Zealand, on the other hand. In Re Belcher,553 income from certain property was left to trustees ‘for the Navy League Sea Cadets Geelong Branch or any other youth welfare organisations …’ as the trustees should think fit. The gift to ‘youth welfare organisations’ was held to be invalid, and the court declined to apply the section to this portion of the gift so as to restrict it to those activities of youth welfare organisations which would be charitable in law, on the ground that the section applied ‘only where the testator has indicated a distinct and severable class of charitable objects’. The section was then applied to save the gift to the Sea Cadets. Fullagar J said, following certain dicta in Re Hollole:554 In the case supposed by the statute there is an invalidity which not merely arises from the uncertainty of the objects but can be saved by the possibility of a constructional severance of the charitable from the non-charitable trusts. It will, I think, apply only where the testator has expressly indicated a distinct and severable class of charitable objects as among the possible recipients of his bounty.555

A different view was taken in New South Wales. In Union Trustee Co of Australia Ltd v Church of England Property Trust,556 a gift of income to be applied ‘in such manner and for such purposes relating to the work of St John the Baptist Church of England … as the Rector and Church Wardens … in their absolute discretion think fit’ was upheld for the reason that ‘there does not appear to be any doubt that the mischief which [the section] was intended to remedy was that state of the law in relation to charities which defeated the intentions of testators not merely when there are enumerated charitable and non-charitable objects, but when the powers in one expression might be used for charitable or non-charitable objects at the discretion of the trustee’. Similarly, in Re Ashton,557 where there was a gift of residue ‘to the trustees of the Church of Christ, Wanganui, to help in any good work’, the New Zealand Court of Appeal, preferring the latter view, held that the gift was validated by the section, an application of which required that the gift be construed as a trust for charitable good works. [10-66] After the decision of the Privy Council in Leahy v A-G (NSW),558 the narrower Victorian view must be regarded as wrong. The true principle to be

applied is that suggested by the New South Wales and New Zealand cases, namely that the section will be applied where the gift is for a purpose described by a compendious expression which is apt to include both charitable and noncharitable purposes, provided that the expression used significantly indicates a charitable intention on the part of the testator.559 In Leahy v A-G (NSW),560 the compendious expressions used in the testator’s will were ‘Order of Nuns of the Catholic Church or the Christian Brothers’ in Clause 3 thereof and ‘Convents’ in Clause 5. There was no dispute that the phrase ‘Order of Nuns’ was not used in its strict canonical sense but included also [page 175] congregations of sisters and that some convents included contemplative orders whose members were not engaged in any activity recognised by the law as charitable. The trustees of the testator’s will had a discretion as to which Order of Nuns or Brothers was selected. Their Lordships said:561 Thus whether the gift be to Orders of Nuns, an object so predominantly charitable that a charitable intention on the part of the testator can fairly be assumed, or for (say) benevolent purposes, which connotes charitable as well as non-charitable purposes, the section will apply. Inevitably there will be marginal cases, where an expression is used which does not significantly indicate a charitable intention, and their Lordships do not propose to catalogue the expressions which will or will not attract the section. It may be sufficient to say that in the chequered history of this branch of the law the misuse of the words ‘benevolent’ and ‘philanthropic’ has more than others disappointed the charitable intention of benevolent testators and that the section is clearly designed to save such gifts.

Some examples illustrate the application of the principles of Leahy’s case.562 In Re Tomkins,563 a bequest of a fund ‘for … church purposes’ was construed as comprehending both charitable and non-charitable purposes and was saved by the section. Similarly, in Re Gillespie,564 a gift of a share of residue ‘for the benefit of an ex-member or ex-members of the Australian Army, Naval or Air Forces to be selected by my trustee’ was upheld. The section will be applicable not only where there is an express trust for stated purposes but also where there is a gift simpliciter to a corporation. ‘I am unable to see any distinction for the present purpose between a gift to an institution for stated purposes, some only of which are charitable and a gift simpliciter to an institution having objects some only of which are charitable … a gift to a body is necessarily a gift to it for its permitted objects’, said Dean J, in

Re Lloyd,565 where the income of one share of residuary estate was bequeathed to ‘the Zelman Memorial Symphony Orchestra’. At the date of the testatrix’s death the orchestra had been incorporated. Dean J found that the institution’s objects were partly charitable and partly non-charitable, but that its main objects were wholly charitable. He applied the section to read it down as a trust for the charitable objects of the institution. In Re Inman,566 on the other hand, the court was concerned with a gift of a share of net annual income which was to be ‘paid and/or applied to and/or for the Anti-Vivisection Society’ at a named address. The society was an unincorporated body whose by-laws included the object: ‘to oppose vivisection absolutely and entirely and without attempt at compromise of any kind’. This object was never to be changed or departed from. Gowans J held that the section did not apply. It seems to be implicit in his Honour’s judgment that this was so because the objects of the society were either predominantly or substantially non-charitable. In Stratton v Simpson,567 an attempt was made to argue that s 102 of the Trustees Act 1962 (WA) should be read as applying only to trusts for purposes and not to trusts to distribute property among institutions. It met with no success. In In the Estate of Cole (decd),568 s 69A of the Trustee Act 1936 (SA) was used to confine a trust ‘to support Christian work activity projects or other recognised Welfare Programmes such as those organised under the Methodist Church of Australasia the Australian Council of Churches, the United Nations Organisation or their affiliates’ to such of the described purposes as were charitable.

[page 176]

Schemes The Enforcement of Charitable Trusts [10-67] The court has a general controlling power over all charities.569 It has power, therefore, to enforce the performance of charitable trusts and to redress breaches of trust.570 Thus in Ex parte Greenhouse,571 a corporation which was a trustee of a charity committed a breach of trust by taking down a chapel, selling the materials, and leasing the ground to one of its members at an absurdly low rental. The court ordered the corporation to account for the moneys received and pay them over. It also ordered an inquiry as to the expense of restoring the chapel and burial ground. Where a fund has been given in trust for charitable purposes and devoted to charitable purposes, it cannot be resumed for private purposes, but must remain forever to be used for charitable purposes, even though the particular charitable purposes fail. In the famous Clifford’s Inn case, Smith v Kerr,572 where property had been conveyed for purposes of legal education nearly 300 years before and the educational functions had apparently ceased, those in whom the property was vested had treated it as their private property. Action was brought in 1901 and the trust for legal education was ordered to be carried out. In a claim by one charity against another, lapse of time is not necessarily a bar. In A-G v Christ’s Hospital,573 a charity which had become entitled to land through a devise from a purchaser of land belonging to another charity was ordered to reconvey the land after 150 years had elapsed, the purchaser and the devisee having had full notice that the sale had been made in breach of trust. It is a first principle applicable to charities that the intentions of the founder should be carried into effect so far as they are capable of being carried into effect in accordance with the law. There are numerous instances where the courts have given directions to enforce charitable trusts in accordance with the intentions of the original donor.574 It is the duty of the Crown, as parens patriae, to protect property devoted to

charitable purposes, and that duty is executed by the Attorney-General as the officer who represents the Crown for all forensic purposes.575 The AttorneyGeneral represents the beneficial interest; in other words, the object of the charity.576 As such, the Attorney-General may obtain any injunctive or other remedial relief to prevent any breach of trust by the trustees of a charitable trust.577 There is in Australian jurisdictions no administrative body comparable with the Charity Commissioners in England. Therefore, the Attorney-General is always a necessary party to legal proceedings connected with a gift to charity generally or for undefined charitable purposes, in other words, not to an already established institution.578 However, if the proceedings [page 177] concern a gift to a particular charitable institution, the Attorney-General is not a necessary party, unless, for example, questions are likely to arise as to the internal management of the institution. In that event, even if all the subscribers to a charitable fund are made plaintiffs, an action for the regulation of the charity is defective unless the Attorney-General is also a party.579 The Attorney-General is the proper person to commence proceedings to enforce a charitable trust. The Attorney-General may sue by information, either alone or on relation.580 When no trust is created and property is given to charity generally, that is, where no trustees are nominated and the charitable objects are not defined, it is the duty of the Crown to dispose of the property.581 Similarly, where a gift is given to a named beneficiary directly but that beneficiary has ceased to exist and a general charitable intention is disclosed, the subject matter must be administered by the Crown.582 Where a charitable body (whether incorporated or not) is seeking to recover property to which it claims to be entitled, or to protect property in which it claims an actual or contingent interest, that body is the proper plaintiff and the Attorney-General is not a necessary party.583 A dispute about which of two incorporated associations was the trustee and whether one of them should be removed was one in which only the Attorney-General had standing.584 Where a proposal is made to alter a charitable scheme or the powers of a charitable body, normally the Attorney-General is the proper party to represent the charity concerned and not the charitable institution itself. Where, however,

a question of construction arises, or where the proposal involves the rival rights of more than one charity, the charitable body or bodies concerned are necessary parties.585 While, in general, the only person who may enter a binding agreement for the alteration of a charitable body’s rights is the AttorneyGeneral,586 this proposition appears to have been misapplied by Kearney J in Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd.587 His Honour held that two charitable institutions which were the sole objects of a discretionary trust might not combine without joining the Attorney-General to put an end to the trust under the rule in Saunders v Vautier; but this was not varying or altering the rights of the charities so much as exercising them. An interesting example of the operation of these principles in relation to compromise of a probate suit is provided by Re King.588 The testator had died in confinement as a lunatic, leaving various testamentary instruments, some of which contained gifts, to charitable institutions. A compromise of a probate suit, involving a grant of probate of certain of the testamentary instruments, was agreed to by the Attorney-General in the absence of the charities. They had been cited but had not appeared. They were notified of the result and took no objection. In later proceedings in Chancery instituted by the trustees, Younger J held that the charities were bound by the compromise. However, it was not asserted that the Attorney-General had been a necessary party to the probate proceedings. It was implicit that the compromise would have [page 178] been effective if made by the charities themselves. Younger J589 adopted the following passage from the judgment of Sir John Romilly MR in Ware v Cumberlege:590 The general principle which regulates them I take to be something of this description: the Attorney-General represents all absent charities, and it is sufficient to have him here to represent all absent charities. But absent charities may obviously be of two different characters: they may either be under gifts to specified individual charities, or to charity generally. In case the gift is for charity generally, no one can represent it but the Attorney-General, and he must be here to represent such general charities. When there are specified individual charities, then the Attorney-General’s presence is not universally necessary; but it is required by the Court upon various occasions, as, for instance, where any rules are required for the regulation of the internal conduct of the charity itself, such as the establishment of a scheme and the like; there the Attorney-General is necessary for the purpose of aiding and assisting the Court in directing and sanctioning the general system and principle that ought to govern charities of those descriptions.

But there are other cases where there is no question as to the conduct or management of the charities, but only whether the charity is entitled to a particular legacy or not. In those cases, the Attorney-General is rather in the nature of a trustee for those charities, and the Court prefers having before it the charities beneficially interested, for the purpose of putting their interests before the Court in the light which they consider most favourable to them. In those cases I think it preferable that the charity itself should appear, rather than that the Attorney-General should represent it. This appears to me to be one of that latter class of cases, and therefore it would be better that the charity should appear. Having stated that as my general view of the case, it is very obvious, as counsel will see, that there may be mixed cases in which it is impossible to lay down a rule beforehand, and in which the Court must act on the matter before it in such manner as, according to the best exercise of its discretion and judgment, it may think best calculated to promote justice.

In Australia, an Attorney-General who seeks an interlocutory injunction to restrain the breach of a charitable trust, must give the court an undertaking as to damages. But in England, apparently, this need only be done if the Crown is asserting a contractual or proprietary right of its own.591 In several jurisdictions the position of the Attorney-General has been strengthened by statute. In New South Wales, a variety of powers have been given to the Attorney-General under Pt 2 of the Charitable Trusts Act 1993. These provisions merely spell out the powers which the Attorney-General has in any event. They do not give any powers of inspection and supervision, as does the Charities Act 1978 (Vic).

The Effectuation of Charitable Trusts by Schemes592 [10-68] One respect in which charitable trusts are treated more liberally than others arises where a charitable trust is originally created by donors in general or vague terms. It is open to the trustee to execute a more specific deed which limits the terms of the trust, provided it does not conflict with the terms on which the donors make their donations. The terms of the specific deed may be challenged by the Attorney-General, and possibly the donors.593 Failing that, in many cases it is necessary to effectuate a charitable trust by means of a scheme. Indeed, if it becomes necessary for a court to administer a charitable trust, the court usually does so by means of a scheme. The necessity for the scheme arises in a number of situations where the details of the trust either are not to be discovered by merely interpreting the trust instrument, or, if so discovered, cannot, for some reason, be effectuated.

[page 179] In order to understand this branch of the law of charitable trusts, it is necessary to appreciate three fundamental distinctions. The first, and most important, of these distinctions is the distinction between a general charitable intention and a merely particular charitable intention. In New South Wales, there is now a statutory presumption in favour of a general, rather than a particular, charitable intention.594 A merely particular charitable intention exists when the creator of a charitable trust displays an intention to benefit the particular charitable purpose designated in the trust instrument and none other; where, in other words, if it were not possible to apply the trust property to the designated purpose, the creator of the trust would prefer the trust to fail, so that the property would be held either on a resulting trust for the settlor, where the trust was created by deed, or on trust for the residuary beneficiaries (or the next-of-kin, as the case may be), where the trust was created by will.595 In A-G (NSW) v Perpetual Trustee Co (Ltd),596 the distinction is well expressed in the joint judgment of Dixon and Evatt JJ: The question is often stated to be whether the trust instrument discloses a general intention of charity or a particular intention only. But, in its application to cases where some particular direction or directions have proved impracticable, the doctrine requires no more than a purpose wider than the execution of a specific plan involving the particular direction that has failed. In other words, ‘general intention of charity’ means only an intention which, while not going beyond the bounds of the legal conception of charity, is more general than a bare intention that the impracticable direction be carried into execution as an indispensable part of the trust declared.

Since in every case the relevant question is whether the particular trust instrument involved does or does not display a general charitable intention, and since every case depends on its own particular facts, there is little point in cataloguing those cases in which the court has held either that certain words display a general charitable intention, or that they display a merely particular charitable intention.597 However, by way of illustration, Re Wilson598 may be compared with Paice v Archbishop of Canterbury.599 In the former case, a trust of a sum of money to establish a school was created by will. The will indicated in detail the manner in which the school was to be erected, the geographical locality of the school, the way in which the schoolmaster’s salary was to be computed, the subjects which were to be taught within the school, and the

hours during which they were to be taught. This was held to display a merely particular charitable intention. But, in the latter case, a gift for charitable purposes generally was held to display a general charitable intention.600 [page 180] Gowans J in Re Tyrie601 held that a trust to erect a church in memory of the donor’s relatives displayed a merely particular charitable intention, whereas a residuary trust for establishing and maintaining a farming training school to educate and train orphan and destitute boys displayed a general charitable intention. It is easier to find a general charitable intention if there is a gift to or a trust for a named charitable institution which has never existed.602 A gift to a purpose (for example, anti-vivisection), charitable in the popular but not the legal sense, cannot display a general charitable intention.603 Four conclusions flow from what has been said: (1) In general, the more detailed and precise the express details of the trust, the less likely it is to display a general charitable intention. (2) Conversely, the vaguer and more unspecified the objects of the trust, or the machinery for effecting it, the more it is likely that a general, and not a merely particular, charitable intention has been displayed. (3) Every case must depend on the intention displayed by the particular trust instrument involved, no one case being conclusive of any other. (4) It is possible to display a general charitable intention without displaying an out-and-out intention to benefit charity generally.604 The last point leads to the second fundamental distinction to be appreciated, that is, the distinction between an out-and-out gift to charity and a general charitable intention. The latter exists when the creator of the trust uses words which disclose an intention to benefit some purpose wider than that designated in the trust instrument, even if they do not disclose an intention to benefit all possible charitable purposes. The former exists when the trust instrument displays an intention not only to benefit the particular purpose designated, but also an intention that the trust property is on no account to be held on a resulting trust, but is, in any event, to be applied towards some charitable purpose, no matter what happens.

Suppose the trust be for the building of a school in a specified locality: if, on a correct interpretation of the trust, it be decided that the intention of the creator of the trust was to benefit the advancement of education in that locality, and not merely to build a school there, the creator has displayed a general charitable intention, notwithstanding that the creator might also have displayed an intention that the trust fund should result if it were not possible to apply it towards the advancement of education in that locality. On the other hand, an out-and-out intention to benefit charity would indicate that the fund should be applied towards other charitable purposes in any event, so that, if it were not possible to apply it towards the advancement of education, it should be applied towards (for example) the advancement of religion in that (or any other) area. From this it follows that while an out-and-out intention to devote the property in question to charity is always inconsistent with a merely particular charitable intention, and is always consistent with a general charitable intention; and further, that while every trust which displays an out-and-out intention to benefit charity must of necessity display a general charitable intention; it is nevertheless true that one can have a trust which displays a general charitable intention but does not disclose an out-and-out intention to benefit charity. The third fundamental distinction to be observed is that between two different types of scheme. The first arises where the donor has exhibited a charitable intention, but the directions are indefinite, ambiguous or insufficient. This state of affairs normally, but not necessarily, [page 181] arises where a general charitable intention has been displayed. Here the court will prescribe all the necessary details of administration. These may be called general schemes (not cy-près schemes). The second arises where the donor’s intentions are clear but they cannot be executed in the manner directed, or where the donor’s directions do not exhaust the fund. The court may approve the substitution of another manner of achieving the charitable purpose, or another purpose which will exhaust the fund, as close as possible to the donor’s intentions. The latter involves a cy-près scheme. It is important to distinguish

between these two types of schemes in order to ensure that the court’s jurisdiction to approve them is properly invoked.605

Donor’s Directions Insufficient [10-69] The court has power under its general jurisdiction to approve a scheme where: (1) the mode of executing a charitable gift is originally undefined; (2) the machinery for ascertaining the objects of a charitable intention fails; or (3) the machinery for effectuating a charitable intention does not exist or fails. If the donor has appointed trustees but has merely exhibited a general charitable intention and has omitted to specify any particular purpose, the court will nominate the objects for which the gift is to be applied. In doing so it may have regard to evidence as to the donor’s intentions, such as the donor’s religious opinions,606 the donor’s interest in a particular locality,607 the nature of other charitable bequests in the same will,608 or precatory directions in favour of a certain class.609 Certainly this is so where the evidence appears in the body of the document which creates the trust. It would appear that the court may even go further and have regard to extrinsic evidence. Thus in the lost case of A-G v Rance, referred to in A-G v Clarke,610 the court had regard to the fact that a testator, who left his estate ‘to the poor’, was a French refugee, and it settled a scheme in favour of poor refugees. Similarly, in A-G v Madden,611 Sir Edward Sugden LC had regard to the provisions of an unattested codicil. If the court cannot ascertain the donor’s particular or general intention, then its discretion in the application of the fund in what seems the most expedient manner is unlimited.612 If a trust be involved, the problem of nominating a new purpose is one for the court; if the gift be a straight-out gift not by way of trust, the problem of nominating a new purpose, by way of a scheme, is an administrative one for the Crown in its prerogative and is not a judicial one.613 Similarly, a scheme will be directed where the machinery for ascertaining the intended objects of a charitable trust breaks down, as where the bequest is for charitable and non-charitable purposes in shares to be determined by persons who fail to make the necessary apportionment614 or where objects are intended to be, but are not, named by the donor or others.615 A scheme may also be directed where the donor’s intention was to establish a

continuing trust but the donor has not prescribed all the details of administration even though such details are expressly confided to the discretion of trustees.616 However, where trustees are given an [page 182] absolute discretion as to the charitable purposes for which a bequest or gift is to be applied, the court will not ordinarily interfere with such discretions and will not require a scheme to be settled. In such cases, which must be distinguished from those in which the cy-près doctrine is invoked, the court gives effect by means of a scheme to the expressed intention of the donor as construed by the court.617 Under this head, a scheme may be directed in every case in which there is a general charitable intention but the trust instrument does not contain specific directions as to the manner in which the trust fund is to be applied in the subject circumstances, either because the trustees are unwilling to act, or because they have failed to act, or because they have ceased to exist or because the donor’s objects in detail cannot be sufficiently ascertained from the language which the donor has used.618

Variation of the Original Purposes: Cy-près Schemes [10-70] If the necessity for a scheme arises either because the charitable purpose is insufficiently defined or because the designated objects or the designated machinery elements do not exist (or do not certainly exist) at the relevant time, a scheme is settled in accordance with the principles discussed in the foregoing paragraphs. Such a scheme is not a cy-près scheme. However, if the necessity for a scheme arises either because it is impossible to effectuate the trust in question according to its terms (either because of initial impossibility, that is, because from the outset the designated purpose is uncertain, or does not exist, or is illegal; or because of supervening impossibility, that is, because the purposes of the trust were initially possible but have ceased to be so), or because a surplus remains after the designated purpose has been exhausted, the relevant question is whether or not a cy-près scheme should be ordered. In other words, for the court to order a cy-près scheme, one of the following

has to occur: (1) there is (a) a case of initial impossibility, and (b) either an out-and-out intention to benefit charity or a general charitable intention plus a possible mode of effectuating that intention; or (2) there is a case of supervening impossibility (whether the intention be general or merely particular); or (3) there is a case where a trust has exhausted its original purpose (whether the original purpose be particular or general in intent) and a surplus remains. Each of these situations will be dealt with in turn.619 In the case of initial impossibility, the cy-près doctrine may be invoked by the court in certain cases to carry out as nearly as possible the intentions of the donor where the donor’s intentions cannot be carried out precisely as the donor has expressed them. The rule is that where a donor has shown a general intention of charity or an out-and-out intention to benefit charity, the court will give effect to that intention notwithstanding that the donor may have indicated objects that are uncertain or illegal or non-existent. The general intention of charity either by itself or as part of an out-and-out intention to benefit charity must be clear.620 An example [page 183] of this is Re Liebelt,621 where there was a gift of residue to ‘the Lutheran Mission, New Guinea, for their sole use and benefit absolutely’. Such a church once existed but was gradually wound down, and in 1976 an Act of the Independent State of Papua New Guinea incorporated a new church to cater for all Lutherans in New Guinea. In 1979, the testatrix died. Sangster J held that since a general charitable intention existed the residue belonged to the new church. If there is nothing in the wording of the gift to show that there was a general intention of charity, the cy-près doctrine cannot be applied.622 If there is a gift to certain charitable objects followed by a gift-over to non-charitable objects and the prior gift fails, the gift-over must take effect, as there is clearly not a general intention of charity, but merely an intention to benefit certain

particular charitable objects only. In the future, in New South Wales, it will be increasingly difficult to argue that a merely particular charitable purpose exists, in view of the statutory presumption against such a purpose in s 10(2) of the Charitable Trusts Act 1993 (NSW).623 [10-71] The case of Da Costa v De Pas624 is a remarkable instance of the operation of the cy-près doctrine. A Jew left a fund to establish a Jesuba for the instruction of people in the Jewish religion. As the law then stood this purpose was illegal as being a superstitious use. The intention of the testator was nevertheless charitable in the legal sense, and the bequest was applied to the support of a foundling hospital for the support of poor children and their instruction in the Christian religion. As was said by Sir William Grant MR in Cary v Abbot,625 a somewhat similar case except that the gift was for the bringing up of poor children in the Roman Catholic faith:626 [W]henever a testator is disposed to be charitable in his own way, and upon his own principles, we are not to content ourselves with disappointing his intention, if disapproved by us; but we are to make him charitable in our way and upon our principles. If once we discover in him any charitable intention, that is supposed to be so liberal as to take in objects, not only within his intention, but wholly adverse to it.

Where circumstances have arisen which make it impossible to carry out the intentions of the donor, the court may approve a suitable scheme for the use of the fund for some other charitable purpose. Thus in A-G v Ironmongers Co,627 a bequest in trust for the redemption of British slaves in Turkey or Barbary with accumulations of income was directed to be applied in support of charity schools, there being no British captives then in Turkey or Barbary. Ordinarily, a scheme will not be directed if the effect would be to defeat a gift-over to another charity.628 In applying the rule that a cy-près scheme will be directed when it is impossible to carry out a charitable trust which displays a general charitable intention, it should be borne in mind that ‘impossibility’ means rather less than physical impossibility. This was pointed out by Starke J in Parker v Moseley,629 who, after referring to a number of cases in which cy-près schemes had been ordered,630 said: ‘But I think it is true to say that in each case it was practically possible to carry out the trusts in accordance with the strict letter of the donor’s directions, but in each case the general charitable intention of the testator was ordered to be carried out cy-près.’ The second type of case, that is, supervening impossibility, is less

complicated. Whether the intention of the creator of the trust be charitable out-and-out, or some lesser form of general [page 184] charitable intention, or a merely particular charitable intention, when the trust has once taken effect it can never fail. If the designated purpose becomes impossible, a purpose which is cy-près will be nominated by the court.631 In the third type of case, the case of a surplus, the principle is that if the objects directed by the donor do not exhaust the fund, the surplus will remain impressed with a charitable trust and will be applied cy-près.632 This is so whether the intention of charity is general or particular. Although a gift in which there is a particular intention of charity will fail if, when the gift becomes operative, the particular intention is not precisely ascertainable or cannot be carried into effect, once the particular intention has commenced to be carried into effect, then all the funds will remain impressed with the charitable trust so that, if the purposes do not exhaust the fund, or the fund becomes excessive or the particular trusts become impossible or impracticable, the property will continue to be devoted to charity, the property will be applied cy-près and a scheme will be settled. An example of this application is where a fund is given to a particular charity which, after it has entered into enjoyment of the gift, goes out of existence.633 A gift by will for a charitable purpose becomes operative on the death of the testator, even though enjoyment is postponed and therefore the date of the testator’s death is the proper date for establishing practicability.634 The question to be considered as at death, however, is not limited to the feasibility of an immediate execution of the trusts. The formula used for defining the scope of the relevant inquiry is whether at the date of death of the testator it was practicable to carry out the intentions of the testator and, if not, then whether at that date there was any reasonable prospect that it would be practicable to do so at some future time,635 in which event it is permissible to use hindsight for at least some, if not all, purposes. A supposed rule that it is more difficult to conclude that a testator had a general charitable intention where there is a gift to a named charity which existed at the date of the will but ceased to exist before death than in the case

where the named charity never existed at all636 has been rejected by the New South Wales Court of Appeal.637 [10-72] The court may direct a scheme for the carrying into effect of a charitable trust in a foreign country, provided that both the trustees and the trust fund are within the jurisdiction. In Kytherian Association of Queensland v Sklavos,638 a testator by his will left the residue of his estate to his wife during her life and after her death as to the sum of £1000 for a specified church on the island of Cerigo, and as to the residue then remaining, ‘for the Kytherian Association of Queensland upon trust for the erection and/or benefit of a Sanatorium and/or hospital in the said Island of Cerigo as the said Association in its discretion may think fit’. This island of Cerigo is also named Kythera and is one of the Ionian Islands. The residuary estate consisted largely of freehold land in Queensland. The High Court reached the conclusion that although the time [page 185] had not yet come to decide what was to be done with the fund because the person having a life interest was still living, the Supreme Court of Queensland could, in the circumstances, upon the death of the wife, settle a scheme, if necessary, notwithstanding that the performance of the trust was to take place in the island of Cerigo. An interesting example of how the cy-près doctrine can sometimes be utilised to perform a trust while disregarding features unacceptable to the trustee, if clear to the settlor, is provided by Re Lysaght.639 In this case, £5000 were bequeathed to the Royal College of Surgeons for the purpose of founding medical studentships, one provision of the trust instrument being that any student ‘must be a British-born subject and not of the Jewish or Roman Catholic faith’. The Royal College of Surgeons intimated that they would not accept the gift while the conditions relating to religious discrimination were operative. Buckley J found that the bequest displayed a general charitable intention, that (and this most curiously) the religious discrimination clause was not an essential part of the testamentary intention, and that by the cy-près doctrine the bequest could be held by the College free from the unamiable condition of religious discrimination.640

In considering schemes for the application of funds cy-près the court has regard to two main principles: (1) Where an object is clearly indicated by the donor which is capable of being carried out, the fact that it can be shown that a different method of applying the funds would be more beneficial to the community is no ground for disregarding the express intention of the donor.641 (2) Any new purpose must be in the nature of the particular purpose intended by the settlor, so far as that can be ascertained.642 [10-73] The law as to what evidence the court may take into account in settling a cy-près scheme has not yet been finally established. It is clear enough that the court is not restricted to a consideration of the very disposition in question: it may, for example, have regard to the testator’s religious beliefs if they appear elsewhere in the same instrument.643 A question which has arisen is whether the court may take into account extrinsic evidence to the same effect. It is difficult to see why, in principle, the court may not do so. The only reason for excluding such evidence would be that such evidence is inadmissible for the purpose of construing the will — but the court in settling a cy-près scheme is not construing the will. It is acting in its administrative capacity, and if such evidence be relevant it is difficult to see why it should not be received. Indeed, it would be extraordinary if such evidence were admissible in a general scheme (as it obviously is)644 but inadmissible in a cy-près scheme. In Phillips v Roberts,645 Helsham J held that such evidence was admissible. His decision was, by majority, upheld in the Court of Appeal, but in a somewhat equivocal manner: Hutley JA (correctly, it is submitted) [page 186] concluded that the evidence was properly received, Mahoney JA was of the contrary view, and Samuels JA found it unnecessary to decide the point.

Legislation [10-74] Various jurisdictions have enacted legislation following an English model. Thus s 2 of the Charities Act 1978 (Vic) provides:646

(1) Subject to sub-section (2), the circumstances in which the original purposes of a charitable gift can be altered to allow the property given or part of it to be applied cy près shall be as follows — (a) where the original purposes, in whole or in part — (i) have been as far as may be fulfilled; or (ii) cannot be carried out, or not according to the directions given and to the spirit of the gift; or (b) where the original purposes provide a use for part only of the property available by virtue of the gift; or (c) where the property available by virtue of the gift and other property applicable for similar purposes can be more effectively used in conjunction, and to that end can suitably, regard being had to the spirit of the gift, be made applicable to common purposes; or (d) where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the gift, or to be practical in administering the gift; or (e) where the original purposes, in whole or in part, have, since they were laid down — (i) been adequately provided for by other means; or (ii) ceased, as being useless or harmful to the community or for other reasons, to be in law charitable; or (iii) ceased in any other way to provide a suitable and effective method of using the property available by virtue of the gift, regard being had to the spirit of the gift. (2) Sub-section (1) shall not affect the conditions which must be satisfied in order that property given for charitable purposes may be applied cy près, except in so far as those conditions require a failure of the original purposes. (3) References in this section to the original purposes of a gift shall be construed, where the application of the property given has been altered or regulated by a scheme, by or under an Act or otherwise, as referring to the purposes for which the property is for the time being applicable. (4) It is hereby declared that a trust for charitable purposes places a trustee under a duty, where the case permits and requires the property or some part of it to be applied cy près, to secure its effective use for charity by taking steps to enable it to be so applied.

Rather wider legislation exists in other jurisdictions,647 while narrower legislation exists in another.648 The general law of cy-près has been superseded by ss 7–7B of the Charitable Trusts Act 1962 (WA).649

Dormant Funds Act 1942 (NSW) [10-75] This Act defines a ‘fund’ as any property, real or personal, which has been donated to or collected or otherwise acquired by trustees for any charitable purpose or any purpose of a public character. The terms ‘charitable purpose’ and ‘purpose of a public character’ are also

[page 187] defined. The latter term is given a wide meaning and includes such purposes as the provision of war memorials or other public memorials; the granting of relief, assistance and comforts to persons adversely affected by war or in any other way; the provision of parks, gardens and the like and the establishment and carrying on of Schools of Arts (s 2). The Act provides that in certain circumstances a fund shall be a dormant fund within the meaning of the Act. The Commissioner of Dormant Funds (s 4) and the Charity Referees (s 5) are given certain powers in relation to such funds. The Commissioner may formulate proposals for the utilisation or application of any dormant fund (s 1) which may be approved by the AttorneyGeneral (s 12) where the fund does not exceed $10,000. If the fund exceeds $10,000, the proposal is advertised and on the request of any interested person is referred to the Charity Referees. Section 15 contains provisions as to the effect of an order made by the Attorney-General or by the Referees. The Referees are not bound by the laws of evidence (s 17) nor bound to follow the cy-près principle (s 18). There is legislation in other jurisdictions with similar goals.650

Charitable Trusts Act 1993 (NSW) [10-76] Apart from provisions of the Charitable Trusts Act 1993 (NSW) referred to elsewhere, the following may be noted. Part 2 enables the AttorneyGeneral to bring proceedings to protect charities (a right which the AttorneyGeneral always had), and extends the power of the court to protect charitable property. Part 4, which is also novel, increases the power of the AttorneyGeneral to establish cy-près schemes, including some welcome provisions, such as the amalgamation of trusts; Pt 4 only applies to trusts the corpus of which is under $500,000. There is similar legislation in some other jurisdictions.651

Charitable Funds Act 1958 (Qld) [10-77] This legislation in effect provides that a cy-près scheme can be effected whenever any trust of a ‘fund’ fails, and presumably whether the trust is based on a general, or on a merely particular, charitable intention. It does not apply to all charitable trusts, but only to trusts of ‘funds’ as defined: these are

trusts of funds raised by public collection (see the definition of ‘fund’ in s 2). But it should be noted that the trust of a ‘fund’ as so defined falls within the Act in some cases where the purposes of the fund are not strictly charitable at all: for example, a fund raised by public collection for benevolent or philanthropic purposes is a ‘fund’ within the Act in respect of which a cy-près scheme may be directed.

Romilly’s Act 52 Geo III c 101 [10-78] This legislation, or local Acts substantially reproducing it, applies throughout Australia.652 The legislation enables the court to make any appropriate orders for the administration of a charitable trust. It is particularly appropriate to invoke its provisions when it is desired to amend or vary the powers of the trustees of a charitable trust. The procedures applicable to invoke the jurisdiction vary from jurisdiction to jurisdiction. Although the legislation is very general in its terms, it applies only between the trustees and the objects of the trust.653 Under Romilly’s Act, the court has exercised a variety of powers, but it will not grant leave to vary the trusts unless the trust property will be as well protected [page 188] legally under the new trusts as under the old.654 The court has amended a trust deed by inserting a power to mortgage;655 to sell lands and to dedicate roads;656 to exchange lands;657 and to sell superfluous lands.658 The court has also sanctioned an agreement between trustees of a charity and the Minister of Works on the amount of the compensation to be paid on a resumption,659 and has consolidated funds which have similar purposes where this did not involve any alteration in the fundamental conditions of the trusts.660 An alternative and simpler procedure is usually open, namely, to apply to the court under its ordinary statutory jurisdiction to vary the powers of trustees.661 It is not, however, the case that the court’s jurisdiction under the statutes just quoted is co-terminous with its jurisdiction under Romilly’s Act. Under the former, a trustee’s powers may be enlarged but no cy-près scheme can be

directed; whereas the jurisdiction under Romilly’s Act may be invoked either to enlarge the powers of a charitable trust or to direct a cy-près scheme. Independently of statute, the court acting on the advice of the AttorneyGeneral has power to give authority to charity trustees to make ex gratia payments out of funds held on charitable trusts even though the payments are not authorised by the trust deed where it can be fairly said that if the charity were an individual it would be morally wrong for the individual to refuse to make the payment.662 However, this power cannot be exercised where to do so is prohibited by statute.663

The Religious Successory and Charitable Trusts Act 1958 (Vic) [10-79] This Act contains a number of important provisions for trusts for public religious, educational or charitable purposes. Such trusts may, subject to certain consents, be entered on a separate folio of the Register of Successory Trusts kept by the Registrar of Titles; this register contains the name of the trust, the number and the names of the trustees, their descriptions, dates of registration and the causes and dates of cessation from their office as trustees. There is a prescribed form of application, and the necessary evidentiary original documents or copies must be lodged. Documents of alteration (including changes of names and of trustees) may likewise be lodged. When this is done, documents of title (a term defined by the Act) of trust property and instruments under the Transfer of Land Act 1958 (Vic) may be endorsed or executed to the registered trustees for the time being, and the trust property will thereupon vest in them. Entries are conclusively proved by copies certified by the Registrar; the trusts may be proved by the lodged original documents or certified copies. Legal proceedings with regard to such trusts may be had in the names of the registered trustees for the time being as trustees. The Act contains specialised provisions for heads or representatives of religious denominations. Vesting orders (which both the court and the Registrar may make) and their carrying into effect, inspection of lodged documents, the powers of the Registrar, and the supervision by the Supreme Court are also regulated. Section 63 is of particular interest. It preserves the effect of the Public Charitable Trusts Act 1941 (Vic) and is designed to give to the trustees of a charitable trust the powers necessary

[page 189] to carry out its purposes. The trustees or the administrator (that is, any person other than the trustees administering a trust fund) of any public charitable trust may by summons, to which the Attorney-General shall be made a party, apply to the Supreme Court or a judge thereof for leave to be empowered: (a) to apply the trust fund for such further purposes as are necessary or desirable in order to carry out the purposes of the trust or to make them fully effective or are incidental to the carrying out of such purposes; and (b) where the carrying out of the purposes of the trust will impose on a public charity an expense which is not adequately met by payments made pursuant to the trust, to apply a proper portion of the trust fund to meet such expenses.

‘Trust fund’ is defined as any property subject to any public charitable trust and applicable for the benefit of a public charity. A public charitable trust or a public charity is defined as a trust under which any property is to be applied for the benefit of any institution or benevolent society within the meaning of the Hospitals and Charities Act 1958 (Vic), any public library, the University of Melbourne or any of its affiliated colleges, or any public institution for the promotion of education, science, or arts or for the benefit of inmates, patients, or students thereof.

Charities Act 1978 (Vic) [10-80] This important statute has two Parts. In Pt I, elaborate provision is made for cy-près schemes. Part I includes a section empowering the AttorneyGeneral to sanction schemes. Part II is particularly significant. It provides the Attorney-General with wide powers of inspecting, examining, and furnishing reports relating to the conduct of charities. This is as beneficial as it is novel. In many jurisdictions there are cases where charities are mismanaged but proof of that fact is impossible and the Attorney-General has no power to obtain the necessary proof. It is to this problem that the Charities Act 1978 (Vic) is directed.

Other Charity Problems The Rule Against Perpetuities

[10-81] It has already been mentioned that there are two aspects of the rule commonly referred to as ‘the rule against perpetuities’ which must be considered in relation to trusts. In the first place, there is the rule forbidding the limitation of property in such a way that it is inalienable. It was said in Re Dutton664 that the effect of devising real property upon a charitable trust is that it becomes virtually inalienable. Furthermore, almost all charitable trusts are intended to continue indefinitely. These consequences would be fatal to a private trust. But the law encourages gifts to charities and this aspect of the rule against perpetuities accordingly has no application to charitable trusts. Thus, when property is directed to be applied by trustees for charitable purposes, the fact that no limitation of time is specified does not make the direction bad, and the property will thereafter remain impressed with the charitable trust. So, in Smith v Kerr,665 a charitable trust was enforced after the property had been used for other purposes for over 200 years. The rule against perpetual trusts affected non-charitable purpose trusts at common law. Statutory modification has taken place.666 But the statutes do not affect the immunity of charitable trusts from that rule. [page 190] Express conditions restricting alienation or the mode of alienation may validly be imposed in regard to charitable trusts which would be regarded as void for repugnancy in the case of gifts to individuals. In the second place, there is the rule more accurately termed ‘the rule against remoteness of vesting’, which required that all interests to arise in the future had to vest, if they were to vest at all, within the period of a life in being and 21 years. This rule applied to charitable trusts, subject to one important exception, just as strictly as it did to private trusts. Thus the rule applied both to gifts for charitable purposes coupled with gifts over for non-charitable purposes on fulfilment of a condition, and to gifts for non-charitable purposes with gifts over for charitable purposes on fulfilment of a condition.667 The legislation reforming the rule against perpetuities discussed above668 applies to these dispositions.669 But the rule did not apply where the condition was attached to a gift for charitable purposes with a gift-over for

another charitable purpose. In most jurisdictions the legislation has preserved that rule.670 It operates in the following way. Where there is a gift to one charity followed by a gift-over to another charity, the second gift is good notwithstanding the fact that the bequest in its favour may not vest in the second charity until a period beyond the time allowed by the rule against perpetuities.671 In Re Tyler,672 there was a gift to a charity subject to the condition that the testator’s family vault was to be kept in repair. On breach of the condition the gift was to go over to a second charity. The condition was held good. The same principle was acted upon in Christ’s Hospital v Grainger,673 where there was a gift to one charity with a provision that it was to go over to another charity if the first charity did not conform to the directions of the will. The first charity disregarded the directions of the will, and it was held the gift went to the second charity. In Re Davies,674 there was a gift to the vicar of C and his successors with a gift-over if the vicar and his successors failed to comply with directions as to the care of certain graves and tombstones in the churchyard at C. The destination of the gift-over was not sufficiently described, and in any case the fund into which the gift-over was to be paid was not wholly a charitable fund. The gift to the vicar and his successors was held to be a good charitable gift; but the gift-over on failure to keep the graves in repair was held void. Consequently, the gift became a permanent endowment to the vicar and his successors, free from the condition as to repairing the graves.

Accumulations for Charity [10-82] The rule that a beneficiary absolutely entitled and competent to give a discharge can put an end to the accumulation and claim immediate payment, commonly called the rule in Saunders v Vautier, applies to charities as it does to private individuals.675 [page 191]

Directions to Pay Income Only [10-83] In order to prevent certain gifts from failing under the rules against

the perpetual duration of trusts, a rule of construction was developed by the courts that a gift of income to an individual under a private trust for an indefinite time should be construed as a gift of corpus. This rule is based on the principle that a testator making an indefinite gift of income to an individual is presumed to intend that such individual should have the fullest enjoyment of the income. It follows accordingly that there could be no one else save the specified individual interested in the property; moreover, since the individual is not perpetual, the full enjoyment intended can only be achieved if the individual can call for capital. However, if the true construction of the gift is inconsistent with an intention that the individual can call for capital, then either the gift is avoided and cannot be saved on the broad ground that an indefinite gift of income entitles the donee to call for the corpus and put an end to the trusts of income, or (if the gift be severable) that part of it which disposes of the income is disregarded as being repugnant to the gift of the corpus. Since the receipt by a charity of income in perpetuity would not be liable to be defeated by any rule against the perpetual duration of trusts, the question arises whether the rule of construction which has been developed in relation to private trusts applies also to charitable trusts. In answering this question the High Court of Australia and the English Court of Appeal have arrived at different conclusions. In Congregational Union of NSW v Thistlethwayte,676 the High Court by majority found that no distinction between the two exists:677 In our opinion the rule is the same, whether the gift of income is to an individual or to a charity consisting of a body capable of holding property. The beneficiary is entitled to the capital unless there is a clear intention expressed or implied from the will that the beneficiary is not to take more than the income.

It seems that the majority considered that, in the case of charitable trusts, if such a clear intention existed that the beneficiary was not entitled to more than the income, no question of the invalidity of the trust could arise, unlike the case of a trust in favour of an individual. Kitto J, in dissent on this point, held that the rule in its application to individuals was one of law and that an unlimited gift of income to an individual was in law a gift of the corpus, although it seems that his Honour saw no reason why there could not be a valid unlimited gift of income to charitable purposes.678 Presumably, his Honour thought that in the case of charities it is simply a matter of construing the gift without the aid of any presumption. In Re Levy,679 Lord Evershed MR in his judgment (with which Sellers and

Harman LJJ were in general agreement) said:680 If, on the true construction of his will, the testator intended to give to each of the charities a share of income (and no more) in perpetuity, and if he further intended that the income given to each charity was to be applied for the general purposes of the charity, then … the question whether the charities can call for distribution of the corpus depends on the true interpretation of the scope and extent of the gift which the testator intended to confer.

It appears that the Court of Appeal has attempted to follow more closely the testator’s intentions and has not permitted an extension of a beneficial rule of construction designed [page 192] to avoid failure of a gift of income to an individual in certain eventualities, to similar gifts to charities, where no such danger exists. In Roberts v University of Sydney,681 a residuary estate was given to trustees upon trust to pay the income therefrom to the University of Sydney for charitable purposes. Jacobs J said that he preferred the view of the High Court, by which he was in any event bound. There was nothing to show that the gift was not intended to carry the corpus and a declaration was therefore made that the trustees were entitled to pay the corpus to the University. In Re Williams,682 Dean J held that a gift to a trustee ‘to stand possessed of the residue upon trust to pay the income arising therefrom to the Bendigo Base Hospital for ever’ did not take effect as a gift of the residuary corpus but was a gift to the annual income thereof in perpetuity. In Re Weaver,683 Hudson J gave a similar construction to a disposition ‘I leave the sum of £5000 to the Animal Welfare League of Victoria who shall receive the interest from such amount yearly’, holding that the word ‘yearly’ indicated an intention that the League enjoy only the income and that the bequest did not operate as an immediate gift of corpus. In Re De Vedas (decd),684 Wells J held that a trust to pay the income of a testator’s residuary estate ‘to the Adelaide Hebrew Congregation in perpetuity’ was an indefinite gift of income not a gift of corpus. In Re Dehnert,685 a trust to pay income to three named hospitals ‘in perpetuity’ was similarly construed by Starke J.

Lapse

[10-84] Where there is a gift to a particular named charitable institution which once existed but which has ceased to exist by the date of the testator’s death, tests of considerable refinement have been developed by the courts in order to determine whether the gift will be upheld or not.686 Formerly, there was a simple rule: if the gift displayed a general charitable intention, the disposition was considered valid and a cy-près scheme ordered; whereas if the disposition displayed a merely particular charitable intention, the gift lapsed just as in the case of a gift to an individual who predeceased the testator. Thus, it was held that there was no lapse where it was clear that the testator had a general intention of charity and named the particular charity merely as one of the modes of giving effect to his or her intentions.687 In Re Ovey,688 a bequest to an ophthalmic hospital which had ceased to exist at the date of the will was held to have lapsed and not to be administered cy-près. So, too, in Re Rymer,689 a gift to an institution which had ceased to exist shortly before the testator’s death was held to have lapsed and the cy-près doctrine was held not applicable. In Clark v Taylor,690 there was a gift to a particular charitable institution maintained voluntarily by private means. The institution [page 193] had ceased to exist when the will took effect and it was held that the gift fell into the residue. Sir Richard Kindersley VC stated:691 The question is whether the gift in this will is to be considered as a gift intended for charitable purposes generally, or whether it was simply intended for the benefit of a particular private charity. Now, there is a distinction well settled by the authorities. There is one class of cases in which there is a gift to charity generally, indicative of a general charitable purpose, and pointing out the mode of carrying it into effect; if that mode fails, the Court says the general purpose of charity shall be carried out. There is another class in which the testator shews an intention, not of general charity, but to give to some particular institution: and then if it fails, because there is no such institution, the gift does not go to charity generally; that distinction is clearly recognised; and it cannot be said that, wherever a gift for any charitable purpose fails, it is nevertheless to go to charity.

In Re Finger’s Will Trusts,692 one of the gifts under consideration was a gift to the ‘National Council for Maternity and Child Welfare’, a corporate body which had ceased to exist at the date of the testator’s death. The gift was upheld by Goff J, but only because he was able to discern a general charitable intention. However, modern authorities have introduced some further complications in

the law. While it remains true that where a gift of the kind under consideration displays a general charitable intention it will be upheld and applied cy-près, it is no longer true that if it displays a merely particular charitable intention it will lapse. In the latter case, it is first necessary in every case to construe the gift in order to determine whether it is in truth a gift to a particular named charitable institution or a gift to a particular charitable purpose, and if it can be construed as a gift to a particular charitable purpose it will often, if not always, be upheld if that purpose remains capable of practical fulfilment.693 Thus, in Re Roberts,694 a will made in 1930 bequeathed a share of a residuary estate to a named charitable institution, which went out of existence in 1945. The will took effect in 1960. The gift, being one for the purposes of the institution rather than for the institution itself, and the purposes still being capable of performance despite the non-existence of the institution, did not lapse. A scheme was directed to effect those purposes. Authorities such as Re Roberts pose considerable difficulties both because they do not define any clear criterion for distinguishing a gift to an institution from a gift for its purposes and because it is at least arguable that every gift to a particular charitable institution must of necessity be a gift for its purposes. See [10-05]. But difficult though they be, there is no doubt that these authorities do represent the law. Thus, in Re Vernon’s Will Trusts,695 Buckley J found that a testator’s gift to the ‘Coventry and District Crippled Children’s Guild’ was valid although the corporation by that name had been dissolved leaving the clinic providing orthopaedic services for children formerly operated by it vested in the Minister for Health but continuing to operate much as before. His Lordship held that, notwithstanding the existence of a merely particular charitable intention, the gift was not a gift to the named institution but a gift for the purpose of running its clinic and, therefore, that the gift did not lapse. Likewise, in Re Goodson,696 Adam J held that a gift of residue ‘for the general purposes of the Cat Protection Society’ (which body was an unincorporated institution at the date of the will but had become incorporated before the date of death) was a gift for the purposes of the institution, not a gift to the institution itself. [page 194] In this regard, Buckley J pointed out in Re Vernon’s Will Trusts that a gift to

an unincorporated charitable institution will always be construed as a gift for the purposes of that institution, whereas, prima facie, a gift to an incorporated charitable institution will be construed as an outright gift to the institution, a distinction which has commended itself to Adam J in Re Goodson, and to Goff J in Re Finger’s Will Trusts.697 In the latter case, his Lordship held that a gift to the ‘Radium Commission’, an unincorporated body which had ceased to exist by the date of the testatrix’s gift, was a valid gift for the purposes formerly pursued by that body and should be applied cy-près, despite the existence of a merely particular charitable intention; whereas a gift in the same will to a corporate body which had ceased to exist would have failed unless there was a general charitable intention in respect of that gift, which his Lordship was happy to discern. These authorities are reviewed, together with the judgment of Kitto J in Sydney Homoeopathic Hospital v Turner,698 by Kearney J in Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd.699 His Honour concluded that there was no rule in the terms enunciated in the English cases and that there was no reason to distinguish between unincorporated and incorporated charities as each had altruistic objects to be borne in mind when characterising a disposition as a gift or by way of trust. It followed that even a disposition in favour of a charitable corporation is to be presumed to be taken on trust for its purposes rather than a gift to be applied as it saw fit. Another point of difficulty in applying the doctrine under consideration is occasioned by the question of when a charity ceases to exist. If by ‘charity’ is meant the named charitable institution concerned, it is easy enough to determine whether or not it has ceased to exist; but if by ‘charity’ is meant the purposes for which the institution was formed, then it cannot cease to exist at least ‘until the funds are completely expended or exhausted’,700 or even, perhaps, while those purposes remain unfulfilled, whether or not its funds are expended. In Re Quesnel,701 there was a bequest to a named hostel for aged and destitute men in rented premises. At the testator’s death the premises had been sold by the landlord, the hostel closed and its operations suspended. The funds of the society responsible for managing the hostel were invested and held in trust by the management committee with a view to the hostel being reestablished when an opportunity should occur. It was held that there was no lapse. [10-85] The following principles seem to be those applicable when no general charitable intention is disclosed in testamentary trusts for specified

institutions where there is difficulty in effectuating the dispositions according to their tenor:702 (1) If the gift be construed as a gift to the named institution for its purposes, the gift lapses if the institution has ceased to exist in the testator’s lifetime.703 This is so even if the institution’s funds are, on its closure, devoted to charitable purposes similar to those of the named institution.704 However, modern authority is reluctant to construe a disposition as a gift to a particular charitable institution.705 (2) If the bequest be construed not as a gift to the named institution for its purposes but as a gift for the purposes themselves, the gift lapses if at the testator’s death the purposes of the [page 195] institution cannot be carried out.706 This is so even if the named institution has devoted its funds to another institution with similar but different purposes which can be carried out.707 (3) If the bequest be construed as a gift for the purposes of the named institution, there will be no lapse simply because between the date of the will and the date of death, the institution has lawfully amended its constitution or carries on different work or changes its place of operation, provided always that at the testator’s death the particular purposes contemplated by the testator are, or can be, still carried on by it.708 (4) If the bequest be construed neither as a gift to the named institution for its purposes, nor as a gift for the purposes themselves, but as a gift to augment the funds of the named institution, likewise there is no lapse simply because, between the date of the will and the date of death, the institution has lawfully amended its constitution (whether including its objects or not) or carries on different work or changes its place of operation.709 (5) If the bequest be construed as a gift to augment the funds of a named institution, the principle set out immediately above still applies, even if the institution lawfully changes its objects so radically that it applies its funds to purposes which the testator could never have contemplated.710 [10-86] Where the gift is given to an institution which has never existed or

which is to be established in the future, a general intention of charity will be inferred and the gift will be applied cy-près. In Re Davis,711 numerous legacies were given to charitable objects, among them being a bequest to ‘The Home of the Homeless, 27 Red Lion Square, London’. There was no such institution in existence at the date of the will, nor had there been any such institution in existence prior to that date. The court inferred from the dispositions of the will that there was a general intention of charity, and held that the gift must be administered cy-près. Re Maguire712 was a case of a bequest to a society in existence for the purpose mentioned by the donor and with a somewhat similar name, and the legacy was directed to be paid to this society. In Re Songest,713 a residuary estate was left ‘upon trust for the Disabled Soldiers Sailors and Airmen’s Association absolutely’. There had never been such a body, and the court held that the gift should be applied cy-près by dividing it between two other associations bearing similar names and having similar objects. In Re Constable (decd),714 residue was left to ‘The Methodist Home for the Aged at Cheltenham’. The Methodist Church in Victoria, of which the testatrix was a member, conducted certain Homes for the Aged, but not at Cheltenham. At the date of the will there was an institution at Cheltenham then called ‘The Melbourne Home and Hospital for the Aged’ which, subsequently, before the date of her death, changed its name to ‘Cheltenham Home and Hospital for the Aged’, but which had no connection with the Methodist Church. Pape J held that this was not a case of the misdescription of an existing institution but a gift to an institution which had never existed, that there was a general charitable intention, and that the gift should be divided, by way of a cyprès scheme equally between the Methodist Church for the erection, maintenance and upkeep of any Home for the Aged in Victoria and [page 196] the Cheltenham Home and Hospital for the Aged. Similarly, in Re Daniels,715 one-third of residuary estate was left to the ‘Spastic Children’s Home, Frankston’, an institution which never existed. Gillard J found that a general charitable intention was present. He decreed that the money should be applied cy-près.

If the particular charitable institution is in existence at the date of the testator’s death, but becomes non-existent shortly afterwards before the legacy in its favour is paid over, the legacy is devoted to charitable purposes, not, however, on the ground of being administered cy-près, but as falling to the Crown on the termination of the charitable institution, the Crown succeeding to its assets and administering them for charitable purposes.716 Where a fund has been given in trust for, and devoted to, charitable purposes, the fund cannot be resumed for private purposes, but must remain forever to be used for charitable purposes, even though the particular charitable purposes fail.717 ‘Once money is effectually dedicated to charity, whether in pursuance of a general or a particular charitable intent, the testator’s next-of-kin or residuary legatees are for ever excluded and no question of subsequent lapse, or of anything analogous to lapse, between the date of the testator’s death and the time when the money becomes available for actual application to the testator’s purpose can affect the matter so far as they are concerned.’718 An intention, which is not carried out, to make a gift conditional will not cause the gift to lapse. Thus, in Yates v University College, London,719 there was a bequest to University College to found a professorship in archaeology and the testator stated that he intended to prepare a code of rules and regulations which the college was to accept in writing within 12 months after his decease, otherwise the bequest would be void. The testator died without having made any rules. It was held that the bequest did not lapse, the acceptance of the rule having been made impossible by the testator’s own omission. A disclaimer of the trust by the trustee appointed by the donor will not cause the gift to lapse if there is a general intention of charity.720 But the gift may lapse on disclaimer by the trustee if there is no general intention of charity,721 or the gift is to a charitable institution for its general purposes,722 or for a foreign charity over which the court has no jurisdiction.723

Charity in Commonwealth Legislation [10-87] The Charities Act 2013 (Cth), according to its preamble, provides ‘[m]odern, comprehensive, statutory definitions of charity and charitable purpose, applying for the purposes of all Commonwealth law’. That is, it does not change the substantive law on charity outside federal statutes. Section 5

provides that an entity is ‘charitable’ if the entity is a charity. It also provides that ‘charity’ means an entity which satisfies four conditions. The first is that it is a not-for-profit entity. The second is that all of its purposes are charitable purposes that are for the public benefit. ‘Charitable purpose’ is defined in Pt 3. In particular, s 12(1) provides that ‘charitable purposes’ means purposes of advancing health, advancing education, advancing social or public welfare, advancing religion, advancing culture, promoting reconciliation, mutual respect and tolerance [page 197] between groups of individuals that are in Australia, promoting or protecting human rights, advancing the security or safety of Australia or the Australian public, preventing or relieving the suffering of animals, advancing the natural environment, or any other purpose beneficial to the general public that may reasonably be regarded as analogous to, or within the spirit of, any of the foregoing purposes. A ‘charitable purpose’ is also the purpose of promoting or opposing certain changes to certain matters. Section 14 then describes various instances of the purpose of advancing health. Section 15 describes various instances of the purpose of advancing social or public welfare. The ‘public’ benefit is defined in s 6, read with ss 7–10. The third condition stated in the definition of ‘charity’ in s 5 is that none of the purposes of the charity are disqualifying purposes. These are described in s 11. The fourth condition stated in the definition of ‘charity’ in s 5 is that the entity is not an individual, a political party or a government entity (for the meaning of which, see s 4). The rather limited role of this statute, and its domination by fashion, precludes the need for any further discussion. _____________________________ 1.

Generally on the distinction between charitable and private trusts, see Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209 at 222ff; [1940] ALR 209 at 213. On charity law generally, see P Luxton, The Law of Charities; J Warburton (ed), Tudor on Charities, 9th ed; H Picarda, The Law and Practice Relating to Charities, 4th ed; G Dal Pont, Law of Charity, 2nd ed; G Jones, History

of the Law of Charity 1532-1827; F M Bradshaw, The Law of Charitable Trusts in Australia. 2. 3.

See Verge v Somerville [1924] AC 496 at 502; [1924] All ER Rep 121 at 123. Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 at 572; [1891–4] All ER Rep 28 at 50. In Re Faithfull [1967] 2 NSWR 265; (1967) 86 WN (NSW) (Pt 1) 161, Hardie J held that a trust to distribute a share of residue among ‘Church of England Charities’ used the word ‘charities’ in the popular, not the legal, sense. Cf Ryder v A-G (NSW) (2004) 62 NSWLR 38.

4. 5.

See Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297; [1951] 1 All ER 31. Re Smith [1932] 1 Ch 153; [1931] All ER Rep 617.

6. 7.

Yates v University College London (1875) LR 7 HL 438. Re Nottage [1895] 2 Ch 649 at 656; [1895–9] All ER Rep 1203 at 1205. Cf Shaw v Halifax Corp [1915] 2 KB 170 at 182.

8.

The Statute of Charitable Uses 1601 was repealed in England by the Mortmain and Charitable Uses Act 1888, but the list of charities is repeated in s 13(2) of the latter Act. The Act in its application to New South Wales is repealed by the Imperial Acts Application Act 1969 but such repeal is not to ‘affect the established rules of law relating to charity’: s 9(2). See also Trusts Act 1973 (Qld) s 103. Reference may also be made to G Jones, History of the Law of Charity 1532–1827. See Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 at 543; [1891–4] All ER Rep 28 at 36.

9.

10. See G Jones, History of the Law of Charity 1532–1827, Ch 8. 11. Balfour v Public Trustee [1916] VLR 397 at 404–5. 12. [1949] AC 426 at 442–3; [1949] 1 All ER 848 at 852. 13. [1919] AC 815; [1918–19] All ER Rep 167. 14. Re Crown Forestry Rental Trust; Latimer v Commissioner of Inland Revenue [2004] 4 All ER 558; [2004] 1 WLR 1466 at [34]–[36]. 15. Re Crown Forestry Rental Trust; Latimer v Commissioner of Inland Revenue [2004] 4 All ER 558; [2004] 1 WLR 1466 at [34]. 16. Royal College of Surgeons of England v National Provincial Bank Ltd [1952] AC 631; [1952] 1 All ER 984. 17. Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [34]. 18. [1968] AC 138; [1967] 3 All ER 215. For other analogical reasoning, see Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [35]. 19. (1974) 3 ALR 486; 48 ALJR 304. 20. [1972] Ch 73; [1971] 3 All ER 1029. 21. (1971) 125 CLR 659 at 669; [1972] ALR 127 at 133. 22. [1928] 1 KB 611. See also Brisbane City Council v A-G (Qld) [1979] AC 411; [1978] 3 All ER 30; Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation (2005) 142 FCR 371; 219 ALR 647 (promotion of business). 23. (1923) 39 TLR 675. 24. [1891] AC 531 at 583; [1891–4] All ER Rep 28 at 51; and see also Morice v Bishop of Durham (1805) 10 Ves 522 at 531; 32 ER 947 at 950–1. 25. R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [48]. 26. Re Hummeltenberg [1923] 1 Ch 237; [1923] All ER Rep 49, approved in National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; [1947] 2 All ER 217. See E O Walford, ‘Gifts to

Non-Charitable Bodies’ (1960) 24 Conv (NS) 278. 27. Cf Taylor v Taylor (1910) 10 CLR 218 at 238; 16 ALR 129 at 135; Somerville v A-G (1920) 21 SR (NSW) 450 at 460. 28. Robison v Stuart (1891) 12 LR (NSW) Eq 47 at 49–50; Perpetual Trustee Co Ltd v Shelley (1921) 21 SR (NSW) 426 at 441; 38 WN (NSW) 132 at 134–5. 29. R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [187]. The same must be true where the trust was created orally in whole or in part: cf at [193], requiring ‘the entirety of the evidence to be looked at’, a course perhaps to be limited to trusts created by conduct in whole or in part. 30. BSH Holdings Pty Ltd v Commissioner of State Revenue (2000) 2 VR 454 at [9]. It cannot be said that there is a charitable trust where money is held by a person or institution not itself giving effect to charitable purposes merely on the basis that that person or institution has the power at some indefinite time in the future, as a matter of discretion, to apply it for charitable purposes, or to pay it to another person or institution which is itself actually carrying out charitable purposes: Coshott v Royal Society for the Protection of Cruelty to Animals (1996) 40 NSWLR 446 at 450. 31. E O Walford, ‘Gifts to Non-Charitable Bodies’ (1960) 24 Conv (NS) 278. 32. Adamson v Melbourne & Metropolitan Board of Works [1929] AC 142; (1928) 34 ALR 353. 33. This is part of the argument of K S Jacobs QC in Joyce v Ashfield Municipal Council (1959) 4 LGRA 195 at 196, approved by Else-Mitchell J in McGarvie-Smith Institute v Campbelltown Municipal Council (1965) 83 WN (NSW) 191 at 192. See also The Will of Scales [1972] 2 NSWLR 108. 34. See, for example, the legislation construed by the High Court in Swinburne v Federal Commissioner of Taxation (1920) 27 CLR 377; 26 ALR 41 and Stratton v Simpson (1970) 125 CLR 138; [1971] ALR 117, and by the Privy Council in Ashfield Municipal Council v Joyce [1976] 1 NSWLR 455 at 459–65. 35. Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531 at 580; [1891–4] All ER Rep 28 at 54; Re Foveaux [1895] 2 Ch 501 at 504; Verge v Somerville [1924] AC 496 at 499; [1924] All ER Rep 121 at 123; Re Compton [1945] Ch 123; [1945] 1 All ER 198; Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297; [1951] 1 All ER 31; Davies v Perpetual Trustee Co (Ltd) [1959] AC 439; [1959] 2 All ER 128. 36. Ommanney v Butcher (1823) Turn & R 260 at 273; 37 ER 1098 at 1102. 37. See, for example, Re Tree [1945] Ch 325; [1945] 2 All ER 65. 38. See Davies v Perpetual Trustee Co (Ltd) [1959] AC 439; [1959] 2 All ER 128 where Re Tree [1945] Ch 325; [1945] 2 All ER 65 was distinguished. 39. Davies v Perpetual Trustee Co (Ltd) [1959] AC 439; [1959] 2 All ER 128. This principle is subject to one exception, the ‘poor relations’ cases; see [10-24]. 40. [1945] Ch 123; [1945] 1 All ER 198. 41. [1945] Ch 123 at 129–31; [1945] 1 All ER 198 at [201]–[202]. See also Re Hobourn Aero Components Ltd’s Air Raid Distress Fund [1946] Ch 194; [1946] 1 All ER 501; Gilmour v Coats [1949] AC 426; [1949] 1 All ER 848; Gibson v South American Stores Ltd [1950] Ch 177; [1949] 2 All ER 985; Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297; [1951] 1 All ER 31; Re Mead’s Trust Deed [1961] 2 All ER 836; [1961] 1 WLR 1244. 42. (1981) 27 SASR 200. 43. [1930] VLR 211 at 222–3; (1930) 36 ALR 192 at 196–7. 44. (1959) 102 CLR 315 at 323; [1960] ALR 184 at 188. See also City of Hawthorn v Victorian Welfare Association [1970] VR 205. 45. (1970) 125 CLR 138; [1971] ALR 117.

46. (1970) 125 CLR 138 at 159; [1971] ALR 117 at 129. 47. [1951] AC 297; [1951] 1 All ER 31. 48. It is worth noting the following additional points: (1) The device used in Re Koettgen’s Will Trusts [1954] Ch 252, sub nom, Westminster Bank Ltd v Family Welfare Association Trustee Ltd [1954] 1 All ER 581 illustrates one way of circumventing Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297; [1951] 1 All ER 31. A trust was established for providing commercial education to British born subjects of either sex who could not afford to educate themselves at their own expense; the trustees were directed to give preferential treatment to the employees of a named company, but in no year to spend more than 75% of the available income on such employees. Upjohn J found it was a valid charitable trust. See also Public Trustee v Young (1980) 24 SASR 407. (2) However, this device cannot be pressed too far. The courts will be astute to declare that a trust masquerading as a charitable trust is in truth a private trust. See Caffoor v Commissioner of Income Tax, Colombo [1961] AC 584; [1961] 2 All ER 436; Inland Revenue Commissioners v Educational Grants Association Ltd [1967] Ch 993; [1967] 2 All ER 893. (3) In Re Denley’s Trust Deed [1969] 1 Ch 373; [1968] 3 All ER 65, a trust for employees was upheld as a valid non-charitable purpose trust. But this case seems wrongly decided: see Leahy v A-G (NSW) [1959] AC 457; (1959) 101 CLR 611; [1959] 2 All ER 300 (see 32 MLR 96); Re Flavel’s Will Trusts [1969] 2 All ER 232; [1969] 1 WLR 444. (4) Section 382(1) of the Uniform Companies Acts 1961 (see now s 1346 of the Corporations Act 2001 (Cth)) provided: The rule of law relating to perpetuities shall not apply and shall be deemed never to have applied to the trust of any fund or scheme for the benefit of any employee of a company whether the fund or scheme was established before or after the commencement of this Act. This received a somewhat narrow interpretation by the High Court in Oesterlin v Sands (1969) 120 CLR 346; [1971] ALR 37, so that a trust not within the section and not for a charitable purpose should fail. See also Superannuation Industry (Supervision) Act 1993 (Cth) s 343; Perpetuities and Accumulations Act 1985 (ACT) s 14; Perpetuities Act 1984 (NSW) s 13; Law of Property Act (NT) s 195; Property Law Act 1974 (Qld) s 220; Property Act 1936 (SA) ss 61 and 62(6)(i); Perpetuities and Accumulations Act 1992 (Tas) s 17; Perpetuities and Accumulations Act 1968 (Vic) s 17; Law of Property Law Act 1969 (WA) s 115; and see [928]–[9-29]. 49. [1945] Ch 123; [1945] 1 All ER 198. 50. [1945] Ch 325; [1945] 2 All ER 65. 51. [1959] AC 439; [1959] 2 All ER 128. 52. [1972] AC 601; [1972] 1 All ER 878, on which see D J Hayton (1972) 36 Conv (NS) 209. However, the case has been followed in Canada (Jones v T Eaton Co [1973] SCR 635; (1973) 35 DLR (3d) 97) and South Australia (Re Hilditch (decd) (1985) 39 SASR 469). 53. [1945] Ch 123; [1945] 1 All ER 198. 54. (1959) 102 CLR 315; [1960] ALR 184. 55. The distinction between the elements of ‘public purpose’ and ‘public benefit’ is not always observed: see, for example, the judgment of Dixon CJ in Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315 at 321–4; [1960] ALR 184 at 186–8. See generally J Garton, Public Benefit in Charity Law.

56. Nelan v Downes (1917) 23 CLR 546 at 563; 23 ALR 354 at 361; National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31 at 42, 65; [1947] 2 All ER 217 at 220, 233; Re Hetherington (decd) [1990] Ch 1 at 12; [1989] 2 All ER 129 at 134–5. Cf R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [54]–[71]. 57. Re Coats’ Trusts [1948] Ch 340 at 345; [1948] 1 All ER 521 at 525. 58. National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; [1947] 2 All ER 217; Re Coats’ Trusts [1948] Ch 340; [1948] 1 All ER 521. 59. Re Hummeltenberg [1923] 1 Ch 237 at 242; [1923] All ER Rep 49 at 50; Re Grove-Grady [1929] 1 Ch 557 at 588; [1929] All ER Rep 158 at 160; Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447; [1947] 1 All ER 513; Royal Society for the Prevention of Cruelty to Animals, NSW v Benevolent Society of New South Wales (1960) 102 CLR 629; [1960] ALR 223; R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [42]–[53]. 60. National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; [1947] 2 All ER 217. 61. [1983] Ch 159; [1983] 1 All ER 288. See also Scottish Burial Reform and Cremation Society v Glasgow Corp [1968] AC 138 at 147–8; [1967] 3 All ER 215 at 218. 62. [1955] AC 572; [1955] 1 All ER 525. 63. See P Larcombe (1956–1958) 2 SydLR 179; and [10-47]. 64. As was submitted in Davies v Perpetual Trustee Co (Ltd) [1959] AC 439; [1959] 2 All ER 128. It is arguable that the dicta of the Privy Council in Davies v Perpetual Trustee Co (Ltd) [1959] AC 439 at 456; [1959] 2 All ER 128 at 133 constitute an application of Inland Revenue Commissioners v Baddeley [1955] AC 572; [1955] 1 All ER 525. See also A-G (NSW) v Cahill [1969] 1 NSWR 85; City of Hawthorn v Victorian Welfare Association [1970] VR 205. 65. Tyssen on Charitable Bequests, 1898, 1st ed, p 176, quoted with approval by Lord Simonds in National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; [1947] 2 All ER 217. See also Re Shaw (decd) [1957] 1 All ER 745; [1957] 1 WLR 729; Re Bushnell (decd) [1975] 1 All ER 721; [1975] 1 WLR 1596; Southwood v A-G [2000] TLR 541; Hanchett-Stamford v A-G [2009] Ch 173; [2008] 4 All ER 323 at [22]; and cases discussed at [10-29] and [10-51]. 66. In Farewell v Farewell (1892) 22 OR 573 at 580, Boyd C, after referring to the views of Tyssen cited above, continued ‘[b]ut the judges frequently say that the law is not right as it stands — they suggest amendments of the law and though they are undoubtedly bound to administer the law as they find it, they are not on that account [not] to assist the bequests of one who seeks to procure what he deems a desirable change in the law by constitutional means’. For the United States, see Scott on Trusts, §38.7.9. 67. Royal North Shore Hospital of Sydney v Attorney-General (NSW) (1938) 60 CLR 396 at 426. 68. Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539; 272 ALR 417 at [44] per French CJ, Gummow, Hayne, Crennan and Bell JJ. 69. Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539; 272 ALR 417 at [44] per French CJ, Gummow, Hayne, Crennan and Bell JJ. 70. Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539; 272 ALR 417 at [45], [49]. 71. As, for example, trusts for masses. See Bourne v Keane [1919] AC 815; [1918–19] All ER Rep 167, overruling West v Shuttleworth (1835) 2 My & K 684; 39 ER 1106. See also [10-40]; Taylor v Taylor (1910) 10 CLR 218; 16 ALR 129; Bowman v Secular Society Ltd [1917] AC 406 at 448; [1916–17] All ER Rep 1 at 15; National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31 at 74; [1947] 2 All ER 217 at 238. 72. Gilmour v Coats [1949] AC 426 at 443; [1949] 1 All ER 848 at 852–3.

Hoare v Osborne (1866) LR 1 Eq 585 at 588; [1861–73] All ER Rep 675 at 677; R (Independent Schools 73. Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [116]. 74. Re King [1923] 1 Ch 243; [1923] All ER Rep 688. 75. A-G v Hall [1897] 2 IR 426; Re Caus [1934] Ch 162; [1933] All ER Rep 818. 76. See A-G v Hall [1897] 2 IR 426 at 434. 77. Federal Commissioner of Taxation v Coppleson (1981) 39 ALR 30. 78. (1805) 10 Ves 522 at 539; 32 ER 947 at 954; see also Re Macduff [1896] 2 Ch 451 at 463; [1895–9] All ER Rep 154 at 157; Re Hummeltenberg [1923] 1 Ch 237 at 240; [1923] All ER Rep 49 at 50. 79. Re Spensley’s Will Trusts [1954] Ch 233; [1954] 1 All ER 178. 80. [1923] 1 Ch 237; [1923] All ER Rep 49. 81. [1948] AC 31; [1947] 2 All ER 217. See also Re Inman (decd) [1965] VR 238 at 244. 82. [1895] 2 Ch 501. 83. [1895] 2 Ch 501 at 507. 84. [1895] 2 Ch 501 at 503. 85. See, for example, Re Grove-Grady [1929] 1 Ch 557; [1929] All ER Rep 158. 86. Inland Revenue Commissioners v National Anti-Vivisection Society [1946] 1 KB 185; [1946] 1 All ER 205. See (1946) 62 LQR 111 and (1947) 63 LQR 403. 87. Re Coulthurst (decd) [1951] Ch 661 at 666; [1951] 1 All ER 774 at 776 (gift for the benefit of widows and orphaned children of deceased officers and ex-officers of a bank). 88. [1933] 1 Ch 103; [1932] All ER Rep 355. 89. Re Gardom [1914] 1 Ch 662. 90. Shaw v Halifax Corp [1915] 2 KB 170. 91. Re Gosling (1900) 16 TLR 152. 92. Re Clarke [1923] 2 Ch 407; [1923] All ER Rep 607. 93. [1914] 1 Ch 662 at 667. 94. [1951] Ch 661; [1951] 1 All ER 774. 95. [1899] AC 99. 96. (1950) 80 CLR 350 at 355; [1950] ALR 487 at 491. 97. (1971) 125 CLR 185. This was the principal of a number of holdings. 98. [1930] 1 Ch 255. 99. Re Drummond [1914] 2 Ch 90; [1914] All ER Rep 223. See also Re Hobourn Aero Components Ltd’s Air Raid Distress Fund [1946] Ch 194; [1946] 1 All ER 501 (fund collected by employees of the firm to provide benefits for themselves, without the application of any means test, held not to be charitable). 100. [1954] 1 All ER 667; [1954] 1 WLR 1078. See also Union Trustee Co of Australia Ltd v Church of England Property Trust (1946) 46 SR (NSW) 298; 63 WN (NSW) 153. 101. [1958] Ch 877; [1958] 3 All ER 102. 102. [1958] 3 All ER 428; [1958] 1 WLR 1243. 103. See Halsbury, 5th ed, Vol 8, [15] and [19]. 104. Biscoe v Jackson (1887) 35 Ch D 460; [1886–90] All ER Ext 1852. 105. Re Sutton [1901] 2 Ch 640. 106. Re Clarke [1923] 2 Ch 407; [1923] All ER Rep 607.

107. Rolls v Miller (1884) 27 Ch D 71; [1881–5] All ER Rep 915. 108. Re Delany [1902] 2 Ch 642. 109. Re Niyazi’s Will Trusts [1978] 3 All ER 785; [1978] 1 WLR 910. 110. Re Monk [1927] 2 Ch 197; [1927] All ER Rep 157. 111. Aboriginal Hostels Ltd v Darwin City Council (1985) 75 FLR 197; Re Moore (1991) 55 SASR 439; but see Australian Council of Social Service Incorporated v Commissioner for Pay-roll Tax (1985) 1 NSWLR 567. 112. Re Rowell (1982) 31 SASR 361. 113. Re Petit [1988] 2 NZLR 513. 114. See Re Dudgeon (1896) 74 LT 613. See also Union Trustee Co of Australia Ltd v Federal Commissioner of Taxation (1962) 108 CLR 451 at 456; [1963] ALR 123 at 126. 115. Re Lucas [1922] 2 Ch 52; [1922] All ER Rep 317; but see Re Glyn’s Will Trusts [1950] 2 All ER 1150 (note); Re Bradbury [1950] 2 All ER 1150 (note); Re Robinson [1950] 2 All ER 1148. 116. [1942] 1 All ER 232. 117. Thompson v Corby (1860) 27 Beav 649; 54 ER 257. 118. A-G v Comber (1824) 2 Sm & St 93; 57 ER 281. 119. (1952) 87 CLR 597; [1952] ALR 781. 120. [1978] 3 All ER 785; [1978] 1 WLR 910. 121. [1922] 2 Ch 52 at 55; [1922] All ER Rep 317 at 318. 122. (1910) 102 LT 528. See also Re Lewis [1955] Ch 104; [1954] 3 All ER 257. 123. [1950] 2 All ER 1150 (note). 124. [1950] 2 All ER 1150 (note). 125. [1951] Ch 198; [1950] 2 All ER 1148. See also Re Bond [1929] VLR 333 at 335; Re Lewis [1955] Ch 104; [1954] 3 All ER 257; Re Cottam’s Will Trusts [1955] 3 All ER 704; [1955] 1 WLR 1299; Re Inman (decd) [1965] VR 238 at 241. 126. See the note to the cases cited supra in 67 LQR 164; and see Re Clark (decd) [1957] VR 171; [1957] ALR 538 and City of Hawthorn v Victorian Welfare Association [1970] VR 205 where these cases were applied. 127. (1910) 102 LT 528. 128. [1969] 3 All ER 698; [1969] 1 WLR 1595. 129. [1971] VR 742 at 744–5. 130. (1972) 3 SASR 147. See also Re Litchfield (1961) 2 FLR 454; [1961] ALR 750; West Australian Baptist Hospital & Homes Trust Inc v City of South Perth [1978] WAR 65. 131. [1969] 1 AC 514; (1967) 68 SR (NSW) 89; (1969) 87 WN (Pt 2) (NSW) 53. 132. New South Wales Nursing Service & Welfare Assoc for Christian Scientists v Willoughby Municipal Council (1968) 88 WN (Pt 1) (NSW) 75; [1968] 2 NSWR 791. See also Church of England Property Trust, Diocese of Canberra and Goulburn v Imley Shire Council [1971] 2 NSWLR 216; Trustees of the Church Property for the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521. 133. City of Hawthorn v Victorian Welfare Association [1970] VR 205; Hilder v Church of England Deaconess’ Institution Sydney Ltd [1973] 1 NSWLR 506; Trustees of the Church Property for the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521. See also Joseph Rowntree Memorial Trust Housing Association Ltd v A-G [1983] Ch 159 at 171–6; [1983] 1 All ER 288 at 295–8; D V Bryant Trust Board v Hamilton City Council [1997] 3 NZLR 342 at 349 (charitable status is not precluded by

making a charge to residents of an old people’s home, a point also made in West Australian Baptist Hospital & Homes Trust Inc v City of South Perth [1978] WAR 65). 134. For example, Shaw v Halifax Corp [1915] 2 KB 170; Re Lucas [1922] 2 Ch 52; [1922] All ER Rep 317; Re Monk [1927] 2 Ch 197; [1927] All ER Rep 157; Re Roadley [1930] 1 Ch 524. 135. For example, Re Wall (1889) 42 Ch D 510 (criticised so far as it said that people of 50 are ‘aged’: D V Bryant Trust Board v Hamilton City Council [1997] 3 NZLR 342 at 350); Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531; [1891–4] All ER Rep 28. 136. For example, A-G v Vint (1850) 3 De G & Sm 704; 64 ER 669; Perpetual Trustee Co Ltd v Ferguson (1951) 51 SR (NSW) 256; 68 WN (NSW) 236. 137. Thompson v Thompson (1844) 1 Coll 381; 63 ER 464. 138. Reeve v A-G (1843) 3 Hare 191; 67 ER 351. 139. Cross v Lloyd-Greame (1909) 102 LT 163. 140. Re Gosling (1900) 48 WR 300. 141. Re Coulthurst (decd) [1951] 1 All ER 774; Gibson v South American Stores Ltd [1950] Ch 177; [1949] 2 All ER 985. 142. Re Pieper (decd) [1951] VLR 42; [1951] ALR 64. 143. Re Compton [1945] Ch 123; [1945] 1 All ER 198 at 205; and see [10-06]. 144. The detailed analysis of them in the 7th edition of this work at [1024] is not here repeated. 145. Gibson v South American Stores Ltd [1950] Ch 177; [1949] 2 All ER 985. 146. [1945] Ch 123; [1945] 1 All ER 198. 147. See Oppenheim v Tobacco Securities Trusts Co Ltd [1951] AC 297; [1951] 1 All ER 31. 148. [1972] AC 601; [1972] 1 All ER 878; Re Segelman (decd) [1996] Ch 171; [1995] 3 All ER 676. 149. [1951] Ch 622 at 639; [1951] 1 All ER 822 at 830. 150. [1951] Ch 622; [1951]1 All ER 822. 151. [1951] Ch 622 at 640; [1951] 1 All ER 822 at 830. 152. [1955] 3 All ER 689. 153. [1945] Ch 325; [1945] 2 All ER 65. 154. See [10-08]. 155. [1959] AC 439; [1959] 2 All ER 128. This view gains some support from cases like Re Mitchell [1963] NZLR 934. 156. [1972] AC 601; [1972] 1 All ER 878. 157. [1972] AC 601; [1972] 1 All ER 878. 158. [1945] Ch 123; [1945] 1 All ER 198. 159. [1945] Ch 123; [1945] 1 All ER 198. 160. R v Special Commissioners of Income Tax; Ex parte University College of North Wales (1909) 78 LJ (KB) 576 at 578. 161. Whicker v Hume (1858) 7 HLC 124 at 155; 11 ER 50 at 62–3; Re Macduff [1896] 2 Ch 451 at 473; [1895–9] All ER Rep 154 at 162. 162. Whicker v Hume (1858) 7 HLC 124; 11 ER 50; Beaumont v Oliveira (1869) LR 4 Ch App 309; Re Macduff [1896] 2 Ch 451; [1895–9] All ER Rep 154; Midland Counties Institution of Engineers v Inland Revenue Commissioners (1928) 14 Tax Cas 285; Re British School of Egyptian Archaeology [1954] 1 All ER 887; [1954] 1 WLR 546; Re McDougall’s Will Trusts [1956] 3 All ER 867; Re Hopkins’ Will Trusts

[1965] Ch 669; [1964] 3 All ER 46; M Newark and A Samuels, ‘Research and Charity’ (1965) 29 Conv (NS) 368. 163. (1858) 7 HLC 124; 11 ER 50. 164. Re British School of Egyptian Archaeology [1954] 1 All ER 887; [1954] 1 WLR 546; Re Pinion [1965] Ch 85; [1964] 1 All ER 890. 165. [1972] Ch 73; [1971] 3 All ER 1029. 166. (1971) 125 CLR 659; [1972] ALR 127. 167. (1924) 34 CLR 580. See also Commissioners of Inland Revenue v NZ Council of Law Reporting [1981] 1 NZLR 683. 168. For example, the British School of Egyptian Archaeology. See Re British School of Egyptian Archaeology [1954] 1 All ER 887; [1954] 1 WLR 546. 169. Rugby School, Case of (1627) Duke 80; A-G v Lady Downing (1766) Amb 550; 27 ER 353; Re Gilchrist Education Trust [1895] 1 Ch 367; Dilworth v Commissioner of Stamps [1899] AC 99. 170. Re Hawkins (1906) 22 TLR 521. 171. Re Hummeltenberg [1923] 1 Ch 237; [1923] All ER Rep 49. The correctness of this decision is now in doubt: Funnell v Stewart [1996] 1 All ER 715; [1996] 1 WLR 288. 172. Gibbons v Moltyard (1592) Poph 6; 79 ER 1129; (1609) 8 Co Rep 130b; 77 ER 671. 173. Yates v University College, London (1875) LR 7 HL 438. 174. Jesus College Case (1615) Duke ed Bridgman 363. 175. A-G v Cambridge (Margaret and Regius Professors) (1682) Vern 55n; 23 ER 306. 176. University College of North Wales v Taylor [1908] P 140; Re Leitch [1965] VR 204. 177. Thompson v Thompson (1844) 1 Coll 381 at 398; 63 ER 464 at 472; Re Mariette [1915] 2 Ch 284; [1914–15] All ER Rep 794; Chesterman v Federal Commissioner of Taxation [1926] AC 128; (1925) 32 ALR 9. 178. [1943] 2 All ER 274. 179. Bona Law Memorial Trust v IRC (1933) 49 TLR 220, criticising Re Scowcroft [1898] 2 Ch 638; [1895– 9] All ER Rep 274. See also Re Jones (1929) 45 TLR 259; Re Hopkinson [1949] 1 All ER 346. 180. (1938) 60 CLR 396; [1938] ALR 434. 181. Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539; 272 ALR 417 at [44]. See above at [10-12]. 182. (1966) 114 CLR 634; [1966] ALR 1044. 183. [1957] 1 All ER 745; [1957] 1 WLR 729. 184. [1965] Ch 669; [1964] 3 All ER 46. 185. German v Chapman (1877) 7 Ch D 271. 186. Carbery v Cox (1852) 3 Ir Ch R 231 — Roman Catholics; Re Michel’s Trusts (1860) 28 Beav 39; 54 ER 280 — Jews; Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531; [1891–4] All ER Rep 28; Dilworth v Commissioner of Stamps [1899] AC 99 — Church of England. 187. A-G (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209; [1940] ALR 209. See Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council (2006) 203 FLR 396 at [169]. 188. See Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 at 306; [1951] 1 All ER 31 at 34; Davies v Perpetual Trustee Co (Ltd) [1959] AC 439; [1959] 2 All ER 128. 189. This paragraph was approved in Public Trustee v Young (1980) 23 SASR 239 at 243. 190. [1945] Ch 123; [1945] 1 All ER 198.

191. Re Drummond [1914] 2 Ch 90; [1914] All ER Rep 223 and Re McEmery [1941] 1 IR 9, were applied, and Re Rayner (1920) 89 LJ Ch 369 overruled. 192. Re Compton [1946] 1 All ER 117. 193. [1951] AC 297; [1951] 1 All ER 31. See also Caffoor Trustees v Commissioner of Income Tax, Colombo [1961] AC 584; [1961] 2 All ER 436. 194. See also Davies v Perpetual Trustee Co (Ltd) [1959] AC 439; [1959] 2 All ER 128; Re Mead’s Trust Deed [1961] 2 All ER 836; [1961] 1 WLR 1244. 195. Re Koettgen’s Will Trusts [1954] Ch 252; [1954] 1 All ER 581. 196. (1946) 64 WN (NSW) 8. 197. [1961] AC 584 at 604; [1961] 2 All ER 436 at 445. See [10-08]. 198. R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [178]. See also [10-18]. 199. R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [177]. 200. R (Independent Schools Council) v Charity Commission [2012] Ch 214; [2012] 1 All ER 127 at [179]. 201. See Re Shakespeare Memorial Trust [1923] 2 Ch 389; [1923] All ER Rep 106. 202. Inland Revenue Commissioners v Glasgow Musical Festival Association 1926 SC 920; Re Perpetual Trustees Queensland Ltd [2000] 2 Qd R 647. 203. Re Berridge (1890) 63 LT 470; as to the meaning of ‘science’, see Weir v Crum-Brown [1908] AC 162 at 168–9. 204. Scottish Woollen Technical College v Inland Revenue Commissioners 1926 SC 934. 205. Yates v University College, London (1875) LR 7 HL 438; Re British School of Egyptian Archaeology [1954] 1 All ER 887; [1954] 1 WLR 546. 206. Royal College of Surgeons of England v National Provincial Bank Ltd [1952] AC 631; [1952] 1 All ER 984. 207. Royal College of Nursing v St Marylebone Corp [1958] 1 All ER 129. 208. Institution of Civil Engineers v Inland Revenue Commissioners [1932] 1 KB 149; [1931] All ER Rep 454. 209. Geologists’ Association v Inland Revenue Commissioners (1928) 14 Tax Cas 271. 210. College of Law (Properties) Pty Ltd v Willoughby Municipal Council (1978) 38 LGRA 81. 211. [1943] 2 All ER 101. 212. Royal Choral Society v Commissioners of Inland Revenue [1943] 2 All ER 101. 213. Re Levien [1955] 3 All ER 35. 214. Royal Society of London v Thompson (1881) 17 Ch D 407. 215. Beaumont v Oliveira (1869) LR 4 Ch App 309. 216. Thomas v Howell (1874) LR 18 Eq 198. 217. Re Lopes [1931] 2 Ch 130; [1930] All ER Rep 45. In this case, the testator gave £79,000 to a zoological society for the upkeep of their gardens on certain conditions; the gift was held charitable on the ground that ‘a ride on an elephant may be educational. At any rate it brings the reality of the elephant and its uses to the child’s mind, in lieu of leaving him to mere book learning’. See also North of England Zoological Society v Chester Rural District Council [1959] 3 All ER 116; [1959] 1 WLR 773. 218. Harrison v Southampton Corp (1854) 2 Sm & G 387; 65 ER 448. 219. State Trustees Ltd v Attorney-General (2013) 301 ALR 798. 220. Perpetual Trustee Co Ltd v Groth (1985) 2 NSWLR 278.

221. Re Dupree’s Deed Trusts [1945] Ch 16; [1944] 2 All ER 443. 222. Re Webber [1954] 3 All ER 712. 223. Re South Place Ethical Society [1980] 3 All ER 918; [1980] 1 WLR 1565. 224. Re Nottage [1895] 2 Ch 649; [1895–9] All ER Rep 1203; Re Clifford [1912] 1 Ch 29; Re Patten [1929] 2 Ch 276; [1929] All ER Rep 416; Re Thompson [1934] Ch 342; Peterborough Royal Foxhound Show Society v Inland Revenue Commissioners [1936] 2 KB 497; [1936] 1 All ER 813. 225. Re Mariette [1915] 2 Ch 284; [1914–15] All ER Rep 794; similarly in the army, Re Gray [1925] Ch 362; [1925] All ER Rep 250. In Re Mariette at 288, Eve J said: ‘To leave 200 boys at large and to their own devices during leisure hours would be to court catastrophe; it would not be educating them, but would probably result in their quickly relapsing into something approaching barbarism.’ 226. Re Geere’s Will Trusts (No 2) [1954] CLY 388. 227. Kearins v Kearins (1956) 57 SR (NSW) 286; 74 WN (NSW) 63. In London Hospital Medical College v Inland Revenue Commissioners [1976] 2 All ER 113; [1976] 1 WLR 613, Brightman J held that the funds of a students’ union attached to a teaching hospital were held on charitable trusts. See also A-G v Ross [1985] 3 All ER 334; [1986] 1 WLR 252. 228. Inland Revenue Commissioners v McMullen [1981] AC 1; [1980] 1 All ER 884. 229. Re Mellody [1918] 1 Ch 228; [1916–17] All ER Rep 324. 230. Re Pleasants (1923) 39 TLR 675. 231. McGrath v Cohen [1978] 1 NSWLR 621. 232. See [10-49]. 233. Shergill v Khaira [2015] AC 359; [2014] 3 All ER 243 at [45]–[59]. On trusts for the advancement of religion, see P Ridge, ‘Religious Charitable Status and Public Benefit in Australia’ (2011) 35 MULR 1071; J Chevalier-Watts, ‘Charitable Trusts and Advancement of Religion: On a Whim and a Prayer?’ (2012) 43 VUWLR 403. 234. Straus v Goldsmid (1837) 8 Sim 614; 59 ER 243; Re De Vedas (decd) [1971] SASR 169. 235. (1983) 154 CLR 120; 49 ALR 65. See also Radmanovich v Nedeljkovic (2001) 52 NSWLR 641. 236. [1931] 2 KB 465. 237. [1931] 2 KB 465 at 469. 238. [1931] 2 KB 465 at 477. 239. [1939] 2 All ER 4. 240. Re South Place Ethical Society [1980] 3 All ER 918; [1980] 1 WLR 1565. 241. (1875) LR 6 PC 381 at 396. 242. (1862) 31 Beav 14; 54 ER 1042. 243. [1943] Ch 422; [1943] 2 All ER 505. 244. Manor Foundation Ltd v Commissioner of Land Tax (NSW) (1983) 14 ATR 676. 245. Centrepoint Community Growth Trust v Commissioner of Inland Revenue [1985] 1 NZLR 673. 246. Funnell v Stewart [1996] 1 All ER 715; [1996] 1 WLR 288. 247. (1862) 31 Beav 14 at 19–20; 54 ER 1042 at 1044. 248. Nelan v Downes (1917) 23 CLR 546 at 568; 23 ALR 354 at 363. 249. Re Watson (decd) [1973] 3 All ER 678; [1973] 1 WLR 1472. 250. Phillips v Roberts [1975] 2 NSWLR 207. 251. A-G v Stepney (1804) 10 Ves 22; 32 ER 751; but see Morice v Bishop of Durham (1805) 10 Ves 522 at

539; 32 ER 947 at 953–4; Re Macduff [1896] 2 Ch 451; [1895–9] All ER Rep 154. 252. A-G v Pearson (1817) 3 Mer 353 at 409; 36 ER 135 at 153. 253. Re Barker’s Will Trusts (1948) 64 TLR 273. 254. Re Lea (1887) 34 Ch D 528; Re Flatman [1953] VLR 33; [1952] ALR 980. 255. A-G v Stepney (1804) 10 Ves 22; 32 ER 751; Re Hood [1931] 1 Ch 240; [1930] All ER Rep 215. 256. Re Barnes [1930] 2 Ch 80. 257. Re Schoales [1930] 2 Ch 75. 258. Powerscourt v Powerscourt (1824) 1 Mol 616. 259. See cases cited in McCracken v Attorney-General for Victoria [1995] 1 VR 67 at 75–7 (the same presumption does not apply where the gift is to ‘Christian’ organisations — see also In the Estate of Cole (decd) (1980) 25 SASR 489 at 497). Cf Re Moroney (1939) 39 SR (NSW) 249; 56 WN (NSW) 105. 260. Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1; [1934] ALR 202. 261. See F H Newark, ‘Public Benefit and Religious Trusts’ (1946) 62 LQR 234. See, however, Cocks v Manners (1871) LR 12 Eq 574 at 585; Gleeson v Phelan (1914) 15 SR (NSW) 30; 32 WN (NSW) 2. 262. [1949] AC 426; [1949] 1 All ER 848, applied in Neville Estates Ltd v Madden [1962] 1 Ch 832; [1961] 3 All ER 769. 263. Re Coats’ Trusts [1948] Ch 340 at 346; [1948] 1 All ER 521. 264. Re Watson [1973] 3 All ER 678; [1973] 1 WLR 1472; see [10-44]. 265. Dixon v Butler (1839) 3 All & C Ex 677; 160 ER 874; Booth v Carter (1867) IR 3 Eq 757; Re Tyrie (dec’d) [1970] VR 264. 266. Glubb v A-G (1759) Amb 373; 27 ER 248; Brodie v Chandos [Duke] (1773) 1 Bro CC 444n; 21 ER 905. 267. Sinnett v Herbert (1872) LR 7 Ch App 232 (future church). 268. Hart v Brewer (1595) Cro Eliz 449; Hoare v Osborne (1866) LR 1 Eq 585; [1861–73] All ER Rep 675; 78 ER 688; Re Robertson [1930] 2 Ch 71. 269. Re Williams (1910) 26 TLR 307. 270. Hoare v Hoare (1886) 56 LT 147; [1886–90] All ER Rep 553. 271. Re Vaughan (1886) 33 Ch D 187. 272. [1905] 1 Ch 68. 273. Chesterman v Mitchell (1923) 24 SR (NSW) 108; 41 WN (NSW) 11. As to validity of such trusts under the fourth head, see Scottish Burial Reform and Cremation Society v Glasgow Corp [1968] AC 138; [1967] 3 All ER 215. Maintenance of cemeteries by municipal authorities has been treated in Canada as a charitable purpose: Re Oldfield (No 2) [1949] 2 DLR 175 at 192–4. 274. Re Pardoe [1906] 2 Ch 184. 275. [1906] 2 Ch 184. 276. Doe d Thompson v Pitcher (1815) 2 M & S 407; 105 ER 663; Mellick v President of the Asylum (1821) 1 Jac 180; 37 ER 818; Hoare v Osborne (1866) LR 1 Eq 585; [1861–73] All ER Rep 675; Fisk v A-G (1867) LR 4 Eq 521; Re Filshie [1939] NZLR 91; Re Dalziel [1943] Ch 277; [1943] 2 All ER 656; Pedulla v Nasti (1990) 20 NSWLR 720; South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259. 277. [1891] 3 Ch 252. This case was criticised by Dixon CJ in Royal Society for the Prevention of Cruelty to Animals, NSW v Benevolent Society of New South Wales (1960) 102 CLR 629 at 641; [1960] ALR 223

at 225. 278. [1943] Ch 277; [1943] 2 All ER 656. 279. [1935] Ch 524. 280. [1948] 2 All ER 842; South Eastern Sydney Area Health Service v Wallace (2003) 59 NSWLR 259. 281. [1928] Ch 464; [1927] All ER Rep 483. 282. For comments on this case, see (1928) 44 LQR 414 and 419. 283. See Chapter 11. 284. [1891] 3 Ch 252. 285. (1866) LR 1 Eq 585 at 588. 286. Hoare v Osborne (1866) LR 1 Eq 585; [1861–73] All ER Rep 675. 287. Re Palatine Estate Charity (1888) 39 Ch D 54. 288. A-G v Day [1900] 1 Ch 31. 289. Re Church Estate Charity Wandsworth (1871) LR 6 Ch App 296. 290. Muir v Archdall (1918) 19 SR (NSW) 10; 36 WN (NSW) 4; Re King [1923] 1 Ch 243; [1923] All ER Rep 688; Pooley v Royal Alexandra Hospital (1932) 32 SR (NSW) 459; 49 WN (NSW) 156. 291. Hoare v Osborne (1866) LR 1 Eq 585; [1861–73] All ER Rep 675; Re Barker (1909) 25 TLR 753. 292. A-G v Chester (Bishop) (1785) 1 Bro CC 444; 28 ER 1229. 293. Pennington v Buckley (1848) 6 Hare 451 at 453; 67 ER 1242 at 1243; Dundee Magistrates v Dundee Presbytery (1861) 4 Macq 228; 294. Pember v Knighton (1639) Duke 381. 295. A-G v Brereton (1752) 2 Ves Sen 425; 21 ER 475. 296. Re Davies [1915] 1 Ch 543. 297. A-G v Sparks (1753) Amb 201; 27 ER 134. 298. Doe d Phillips v Aldridge (1791) 4 Term Rep 264; 100 ER 1010. 299. Re Williams [1927] 2 Ch 283. 300. A-G v Molland (1832) 1 You 562; 159 ER 1114. Cf Wylde v A-G (NSW) (1948) 78 CLR 224; [1949] ALR 153. 301. Durour v Motteux (1749) 1 Ves Sen 320; 27 ER 1057. 302. Re Robinson [1897] 1 Ch 85. 303. Re Hussey’s Charities (1861) 7 Jur (NS) 325. 304. [1941] Ch 204; [1941] 1 All ER 405. 305. Re Forster [1939] Ch 22; [1938] 3 All ER 767. 306. See West v Shuttleworth (1835) 2 My & K 684; 39 ER 1106. 307. (1895) 21 VLR 249; 1 ALR 57. To the same effect are Re Harnett (1907) 7 SR (NSW) 463; 24 WN (NSW) 104; Re Keenan (1913) 30 WN (NSW) 214; Neelan v Downes (1917) 23 CLR 546; 23 ALR 354; Thomson v Whittard (1925) 25 SR (NSW) 430; 42 WN (NSW) 132; Public Trustee v Smith (1944) 44 SR (NSW) 348; 61 WN (NSW) 206. 308. [1919] AC 815; [1918–19] All ER Rep 167. 309. [1934] Ch 162; [1933] All ER Rep 818. 310. [1934] Ch 162 at 169; [1933] All ER Rep 818 at 819. The judgment decides that trusts for the saying of private as well as public masses are charitable; for comments on this aspect of the decision, see Re

Coats’ Trusts [1948] Ch 340 at 348–9, 363; [1948] 1 All ER 521 at 525, 534; and Gilmour v Coats [1949] AC 426 at 447, 454; [1949] 1 All ER 848 at 850, 857. See also Re Hetherington (decd) [1990] Ch 1; [1989] 2 All ER 129; Crowther v Brophy [1992] 2 VR 97. 311. (1860) 28 Beav 39; 54 ER 280. 312. Re Smith [1914] 1 Ch 397. 313. Gleeson v Phelan (1914) 15 SR (NSW) 30; 32 WN (NSW) 2. 314. (1940) 40 SR (NSW) 501; 57 WN (NSW) 166. 315. (1871) LR 12 Eq 574. 316. (1871) LR 12 Eq 574 at 585. 317. [1948] Ch 340; [1947] 2 All ER 422; [1948] 1 All ER 521; Gilmour v Coats [1949] AC 426; [1949] 1 All ER 848. The Re Caus approach is preferred to that of Gilmour v Coats in O’Hanlon v Logue [1906] 1 IR 247 and Crowther v Brophy [1992] 2 VR 97. 318. (1871) LR 12 Eq 574. 319. [1959] AC 457; (1959) 101 CLR 611; [1959] 2 All ER 300. 320. Keren Kayemeth Le Jisroel Ltd v Inland Revenue Commissioners [1931] 2 KB 465 at 477. 321. Cocks v Manners (1871) LR 12 Eq 574 at 585; Re Delany [1902] 2 Ch 642 at 647. 322. (1888) 60 LT 175 at 178; [1886–90] All ER Rep 1111 at 1116. 323. (1871) 1 LR 12 Eq 574. 324. [1949] AC 426; [1949] 1 All ER 848. 325. Re White [1893] 2 Ch 41 at 51; [1891–4] All ER Rep 242. 326. [1948] Ch 1 at 23; [1947] 2 All ER 422 at 430. 327. (1888) 60 LT 175; [1886–90] All ER Rep 1111. 328. [1934] Ch 162; [1933] All ER Rep 818. 329. [1949] AC 426; [1949] 1 All ER 848. 330. [1962] Ch 832; [1961] 3 All ER 769. 331. [1962] Ch 832 at 853; [1961] 3 All ER 769 at 781. 332. [1953] 2 All ER 99; [1953] 1 WLR 725. 333. [1967] VR 732. 334. [1968] 2 All ER 276; [1968] 1 WLR 846. 335. [1975] 1 NSWLR 744; an appeal to the Privy Council was dismissed: [1976] 1 NSWLR 455. 336. [1975] 1 NSWLR 744 at 751–2. 337. Re Le Cren Clarke (decd) [1996] 1 All ER 715; [1996] 1 WLR 288. 338. [1973] 3 All ER 678; [1973] 1 WLR 1472. 339. [1919] AC 815; [1918–19] All ER Rep 167. 340. [1949] AC 426; [1949] 1 All ER 848. 341. (1888) 60 LT 175. 342. [1967] VR 732. 343. [1975] 1 NSWLR 744. 344. Turner v Ogden (1787) 1 Cox 316; 29 ER 1183; Re Royce [1940] Ch 514; [1940] 2 All ER 291. 345. Methodist Theological College Council v Guardian, Trust, and Executors Co of New Zealand Ltd [1927] GLR 294.

346. A-G v Oakover (1736) 1 Ves Sen 536; 21 ER 1190. 347. Re Pardoe [1906] 2 Ch 184. 348. Re Arber (1919) Times, 13 December. 349. See V T H Delany, ‘Gifts Virtute Officii to Donees of Charitable Character’ (1960) 24 Conv (NS) 306. 350. [1938] Ch 482; [1937] 3 All ER 279; [1938] 1 All ER 707, affirmed by House of Lords, sub nom Farley v Westminster Bank [1939] AC 430; [1939] 3 All ER 491, distinguished in Re Simson [1946] Ch 299 (gift to vicar of named church ‘to be used for his work in the parish’: valid), and applied in Re Ashton (decd) [1955] NZLR 192 (gift to trustees of named church ‘to help in any good work’: invalid). 351. [1912] AC 407; [1911–13] All ER Rep 1105. 352. (1946) 46 SR (NSW) 298; 63 WN (NSW) 153. 353. See [10-65]. 354. (1932) 48 TLR 539, affirmed (1932) 49 TLR 5. 355. [1958] VR 310; [1958] ALR 693. 356. (1932) 32 SR (NSW) 483; 49 WN (NSW) 179. 357. [1955] 3 All ER 71; [1955] 1 WLR 1037. 358. Cf Re Moroney (1939) 39 SR (NSW) 249; 56 WN (NSW) 105. 359. [1938] Ch 482; [1938] 1 All ER 707. 360. (1932) 32 SR (NSW) 483; 49 WN (NSW) 179. 361. [1938] Ch 482; [1938] 1 All ER 707. 362. See also Queensland Trustees Ltd v Halse [1949] St R Qd 270. 363. [1907] 1 Ch 382; [1904–7] All ER Rep 237. See also Re Ashton (decd) [1955] NZLR 192 at 200. 364. [1947] Ch 349; [1947] 1 All ER 400. 365. [1930] 1 Ch 224; [1929] 1 All ER Rep 387. 366. [1948] Ch 257; [1948] 1 All ER 536. 367. [1948] Ch 241; [1948] 1 All ER 541. 368. Unreported, SC (Tas), Crawford J, 31 August 1992. 369. See [10-65]. 370. Taylor v Taylor (1910) 10 CLR 218 at 237; 16 ALR 129 at 135. Cf Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316 at 324. 371. See Re Tetley [1923] 1 Ch 258. 372. [1955] AC 572; [1955] 1 All ER 525. 373. See [10-11]. 374. These three sentences as they stood in the 7th edition were quoted with approval in Darkinjung v Darkinjung Local Aboriginal Land Council (2006) 203 FLR 396 at [171]. 375. [1955] AC 572 at 592; [1955] 1 All ER 525 at 533. 376. [1955] AC 572 at 615; [1955] 1 All ER 525 at 549. Cf Re Wilson’s Grant [1960] VR 514. 377. (1974) 3 ALR 486; 48 ALJR 304. 378. A-G (NZ) v Brown [1917] AC 393; [1916–17] All ER Rep 245. 379. Morice v Bishop of Durham (1805) 10 Ves 522; 32 ER 947. 380. Re Eades [1920] 2 Ch 353. Similarly, a gift to promote the ‘welfare’ of Bahamian children failed as a

charitable trust: A-G (Bahamas) v Royal Trust Co [1986] 3 All ER 423; [1986] 1 WLR 1001. 381. Re Tyson (1906) 7 SR (NSW) 91; 24 WN (NSW) 6; A-G v National Provincial Bank [1924] AC 262; [1923] All ER Rep 123. 382. See [10-65]. 383. [1895] 2 Ch 649; [1895–9] All ER Rep 1203. See also Re St Andrews’ (Cheam) Lord Tennis Club Trust [2012] 3 All ER 746; [2012] 1 WLR 3487 at [45]. 384. (1911) 81 LJ Ch 220. 385. Peterborough Royal Foxhound Show Society v Inland Revenue Commissioners [1936] 2 KB 497; [1936] 1 All ER 813. 386. Re Patten [1929] 2 Ch 276; [1929] All ER Rep 416; and see Laing v Commissioner of Stamp Duties [1948] NZLR 154. 387. Re Hadden [1932] 1 Ch 133; [1931] All ER Rep 539; Re Morgan [1955] 2 All ER 632. 388. [1993] Ch 210; [1993] 2 All ER 432. 389. [1992] 2 AC 310; [1992] 2 All ER 10. 390. Re Mariette [1915] 2 Ch 284; [1914–15] All ER Rep 794. See also [10-32]. 391. Re Gray [1925] Ch 362; [1925] All ER Rep 250. 392. Chesterman v Mitchell (1923) 24 SR (NSW) 108; 41 WN (NSW) 11. However, see Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] AC 380; [1953] 1 All ER 747. 393. See Re Hoey [1994] 2 Qd R 510; Re Samford Hall Trust [1995] 1 Qd R 60. 394. See Strathalbyn Show Jumping Club Inc v Mayes (2001) 79 SASR 54. 395. [1943] Ch 332; [1943] 1 All ER 519. 396. Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447; [1947] 1 All ER 513. 397. Re Topham [1938] 1 All ER 181. 398. Royal Choral Society v Inland Revenue Commissioners [1943] 2 All ER 101. 399. Re Charlesworth (1910) 101 LT 908. 400. Re Coxen [1948] Ch 747; [1948] 2 All ER 492 — also the payment of a small fee to the trustees attending meetings. 401. [1954] Ch 233; [1954] 1 All ER 178. 402. Royal Choral Society v Inland Revenue Commissioners [1943] 2 All ER 101; Re Delius [1957] Ch 299; [1957] 1 All ER 84; Canterbury Orchestra Trust v Smitham [1978] 1 NZLR 787; Re Perpetual Trustees Queensland Ltd [2000] 2 Qd R 647. 403. Re Bushnell (dec’d) [1975] 1 All ER 721; [1975] 1 WLR 1596; and see [10-12]. Cf Farewell v Farewell (1892) 22 OR 573. 404. [1982] Ch 321; [1981] 3 All ER 493. Equally debatable was the decision of Peter Gibson J in Re Koeppler’s Will Trusts [1984] Ch 243; [1984] 2 All ER 111, where a testamentary gift by Sir Heinz Koeppler to the famous British institution founded by him, Wilton Park, for ‘the formation of an informed international public opinion’ and for ‘the promotion of greater co-operation in Europe and the West in general’ was held to be a trust for political purposes and therefore not charitable. This decision was reversed by the Court of Appeal ([1986] Ch 423; [1985] 2 All ER 869), which upheld the trust as one for educational purposes. The ‘political purposes’ doctrine was criticised in Re Collier (decd) [1998] 1 NZLR 81. 405. See [10-12] and [10-29]. 406. (2010) 241 CLR 539; 272 ALR 417 at [48] per French CJ, Gummow, Hayne, Crennan and Bell JJ.

407. Re Blyth [1997] 2 Qd R 567. 408. Public Trustee v Attorney-General (NSW) (1997) 42 NSWLR 600 at 607–8, discussing Royal North Shore Hospital of Sydney v Attorney-General (NSW) (1938) 60 CLR 396 at 426; [1938] ALR 434 at 443. 409. Eltham Parish v Warreyn (1634) Duke 67; Forbes v Forbes (1854) 18 Beav 552; 52 ER 216; Kaikoura County Council v Boyd [1949] NZLR 233 — improvement of a river. 410. Jones v Williams (1767) Amb 651; 27 ER 422; A-G v Mayor of Dublin (1827) 1 Bli NS 347; 4 ER 888. 411. A-G v Heelis (1824) 2 Sim & St 67; 57 ER 270. 412. Re Bruce [1918] NZLR 16. 413. British Museum v White (1826) 2 Sim & St 594; 57 ER 473. 414. Re Spence [1938] 1 Ch 96; [1937] 3 All ER 684; Monds v Stackhouse (1948) 77 CLR 232; [1949] ALR 299. 415. Re Hadden [1932] 1 Ch 133; [1931] All ER Rep 539; but not a recreation ground for the employees of a firm: Wernher’s Charitable Trust v Inland Revenue Commissioners [1937] 2 All ER 488; Re Smith (dec’d) [1967] VR 341. 416. Peggs v Lamb [1994] Ch 172; [1994] 2 All ER 15. 417. Brisbane City Council v A-G (Qld) [1979] AC 411; [1978] 3 All ER 30, overruling the dictum of Luxmoore J in Re Spence’s Estate [1938] 1 Ch 96; [1937] 3 All ER 684. See also Ziliani v Sydney City Council (1985) 56 LGRA 58. 418. (1952) 86 CLR 454; [1953] ALR 39. 419. Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [35] per Gaudron, McHugh, Gummow, Hayne and Callinan JJ. 420. Public Trustee v Nolan (1943) 43 SR (NSW) 169; 60 WN (NSW) 84. 421. Re Smith [1932] 1 Ch 153; [1931] All ER Rep 617. 422. Nightingale v Goulburn (1848) 2 Ph 594; [1843–60] All ER Rep 420; 41 ER 1072. 423. A-G v Bushby (1857) 24 Beav 299; 53 ER 373. 424. Thellusson v Woodford (1799) 4 Ves 227; 31 ER 117. 425. Royal College of Surgeons of England v National Provincial Bank Ltd [1952] AC 631; [1952] 1 All ER 984. 426. Re Welsh Hospital (Netley) Fund [1921] 1 Ch 655; Gordon v Commissioner of Stamp Duties [1946] NZLR 625; Kytherian Association of Queensland v Sklavos (1958) 101 CLR 56; [1959] ALR 5; Re Smith’s Will Trusts [1962] 2 All ER 563; [1962] 1 WLR 763. Cf Perpetual Trustee Co Ltd v St Luke’s Hospital (1939) 39 SR (NSW) 408; 56 WN (NSW) 181; Le Cras v Perpetual Trustee Co Ltd (1967) 68 SR (NSW) 89; 87 WN (Pt 2) 53; [1967] 2 NSWR 706; Executor Trustee & Agency Co of SA v Warbey [1971] SASR 255 at 262. In Re Wyld [1912] SALR 190, Murray J upheld a gift for a lying-in hospital for young women ‘who have erred for a first time, but under no circumstances for a second occasion if known’. 427. Re Simpson (dec’d) [1961] QWN 50. 428. Inland Revenue Commissioners v Peebleshire Nursing Association 1927 SC 215. 429. Re Hillier [1944] 1 All ER 480. 430. Taylor v Taylor (1910) 10 CLR 218; 16 ALR 129. 431. Re Swan (2014) 120 SASR 149. 432. Re Mathew [1951] VLR 226; [1951] ALR 518.

433. Re Dean’s Will Trusts [1950] 1 All ER 882. 434. Re Clarke [1923] 2 Ch 407; [1923] All ER Rep 607. 435. Re Darwin Cyclone Tracy Relief Trust Fund (1979) 39 FLR 260. 436. Alice Springs Town Council v Mpweteyerre Aboriginal Corporation (1997) 115 NTR 25; Central Bayside General Practice Association Ltd v Commissioner of State Revenue of the State of Victoria (2006) 228 CLR 168; 229 ALR 1. 437. See Metropolitan Fire Brigade v Commissioner of Taxation (1990) 27 FCR 279; 97 ALR 335; Mines Rescue Board (NSW) v Commissioner of Taxation (2000) 101 FCR 91; Ambulance Service of New South Wales v Deputy Commissioner of Taxation (2003) 130 FCR 477; 200 ALR 218. 438. Re Resch’s Will Trusts [1969] 1 AC 514; [1967] 3 All ER 915; Attorney-General (ex rel Nye) v Corporation of the Lesser Chapter of the Cathedral Church of Brisbane (1976) 12 ALR 87. 439. Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204; 251 ALR 206. 440. Re Lord Stratheden and Campbell [1894] 3 Ch 265. 441. Re Barker (1909) 25 TLR 753. 442. Downing v Federal Commissioner of Taxation (1971) 125 CLR 185. 443. Re Stephens (1892) 8 TLR 792. 444. Re Corbun [1941] Ch 400; [1941] 2 All ER 160. 445. Re Driffill [1950] Ch 92; [1949] 2 All ER 933. 446. Re Donald [1909] 2 Ch 410 at 422; [1908–10] All ER Ext 1224. 447. Re Good [1905] 2 Ch 60; [1904–7] All ER Rep 476. 448. Re Gray [1925] Ch 362; [1925] All ER Rep 250. 449. Verge v Somerville [1924] AC 496; [1924] All ER Rep 121. See the discussion of this case in Inland Revenue Commissioners v Baddeley [1955] AC 572; [1955] 1 All ER 525. See further Attorney-General (ex rel Nye) v Corporation of the Lesser Chapter of the Cathedral Church of Brisbane (1976) 12 ALR 87 (hospital making special provision for shell-shocked soldiers). 450. [1929] 1 Ch 557 at 582; [1929] All ER Rep 158. 451. [1915] 1 Ch 113 at 122; [1914–15] All ER Rep 322. See also Caldwell v Fleming [1927] NZLR 145; National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; [1947] 2 All ER 217. 452. Tatham v Drummond (1864) 4 De GJ & Sm 484; 46 ER 1006; Re Inman (decd) [1965] VR 238 at 242 (citing numerous cases). 453. Re Vallance (1876) 2 Seton’s Judgments 7th ed, p 1304. 454. Re Douglas (1887) 35 Ch D 472; [1886–90] All ER Rep 228; Swifte v A-G (Ireland) (No 2) [1912] 1 IR 133. See also Re Moss [1949] 1 All ER 495; Re Weaver [1963] VR 257; A-G (SA) v Bray (1964) 111 CLR 402; [1964] ALR 955. 455. [1929] 1 Ch 557; [1929] All ER Rep 158. See also Murdoch v Attorney-General (1992) 1 Tas R 117. Cf Royal Society for the Prevention of Cruelty to Animals, NSW v Benevolent Society of New South Wales (1960) 102 CLR 629; [1960] ALR 223; Re Green [1970] VR 442. However, Re Grove-Grady and Re Green were not followed in Attorney-General (NSW) v Sawtell [1978] 2 NSWLR 200 and State Trustees Ltd v Attorney-General (Vic) (2013) 301 ALR 798. 456. Re Ingram [1951] VLR 424; [1951] ALR 900. 457. [1985] 3 All ER 455; see also Public Trustee v Clayton (1985) 38 SASR 1. 458. Re Dean (1889) 41 Ch D 552. 459. Re Dean (1889) 41 Ch D 552; see also Pettingall v Pettingall (1842) 11 LJ Ch 176.

460. Re Slatter (1905) 21 TLR 295. 461. Re Verrall [1916] 1 Ch 100; [1914–15] All ER Rep 546; Re Spehr [1965] VR 770. 462. Re Pleasants (1923) 39 TLR 675. 463. Re Hood [1931] 1 Ch 240; [1930] All ER Rep 215. But not if an object of the trust is to secure legislative reform — Inland Revenue Commissioners v Temperance Council of Christian Churches of England and Wales (1926) 136 LT 27; Re Cripps [1941] Tas SR 19; Knowles v Commissioner of Stamp Duties [1945] NZLR 522. A trust to promote teetotalism otherwise than by persuasion would probably not be a valid charitable trust. 464. Scottish Burial Reform and Cremation Society v Glasgow Corp [1968] AC 138; [1967] 3 All ER 215. Maintenance of cemeteries by municipal authorities has been treated in Canada as a charitable purpose: Re Oldfield (No 2) [1949] 2 DLR 175 at 192–4. 465. Murray v Thomas [1937] 4 All ER 545. Quaere whether a fund to erect a cross or similar memorial would be charitable. 466. Incorporated Council of Law Reporting for England & Wales v A-G [1972] Ch 73; [1971] 3 All ER 1029; Incorporated Council of Law Reporting of Queensland v Commissioner of Taxation (1971) 125 CLR 659; [1972] ALR 127. 467. [1970] VR 442. 468. [1978] 2 NSWLR 200. To the same effect is State Trustees Ltd v Attorney-General (Vic) (2013) 301 ALR 798. 469. New Zealand Society of Accountants v Commissioner of Inland Revenue [1986] 1 NZLR 147. 470. Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447 at 459–60; [1947] 1 All ER 53 at 521; Re Strakosch (decd) [1949] Ch 529 at 541; [1949] 2 All ER 6 at 10; Peggs v Lamb [1994] Ch 172 at 195; [1994] 2 All ER 15 at 35. 471. Re Strakosch (decd) [1949] Ch 529 at 539; [1949] 2 All ER 6 at 9–10. 472. Re Mellody [1918] 1 Ch 228; Re Harding (decd) [2008] Ch 235; [2007] 1 All ER 747 at [16]. 473. Re Harding (decd) [2008] Ch 235; [2007] 1 All ER 747 at [19]–[20]. 474. Re Harding (decd) [2008] Ch 235; [2007] 1 All ER 747 at [21]. The reference to ‘Black’ was excised pursuant to statutory power. 475. Helena Partnerships Ltd v Revenue and Customs Commissioners (AG intervening) [2012] 4 All ER 111. 476. Attorney-General of the Cayman Islands v Wahr-Hansen [2001] 1 AC 75 at 82–3; [2000] 3 All ER 642 at 647 (gift to ‘any organisations or institutions operating for the public good’ not charitable). 477. See Keren Kayemeth Le Jisroel Ltd v Inland Revenue Commissioners [1932] AC 650; [1932] All ER Rep 971 for an example of a foreign purpose not necessarily charitable. See also Re Strakosch [1949] Ch 529; [1949] 2 All ER 6. 478. Re Elliott (1891) 39 WR 297. 479. Re Geck (1932) 69 LT 819. 480. Re Robinson [1931] 2 Ch 122. 481. Re Pieper (decd) [1951] VLR 42; [1951] ALR 64. 482. Armenian General Benevolent Union v Union Trustee Co of Australia Ltd (1952) 87 CLR 597; [1952] ALR 781. 483. Re Niyazi’s Will Trusts [1978] 3 All ER 785; [1978] 1 WLR 910. 484. McGrath v Cohen [1978] 1 NSWLR 621. 485. Lander v Whitbread [1982] 2 NSWLR 530. See also Re Oldfield (No 2) [1949] 2 DLR 175.

486. See Re Mirrlees Charity [1910] 1 Ch 163. 487. Re Robinson (1931) 100 LJ Ch 321. 488. See New v Bonaker (1867) 36 LJ Ch 846 — bequest to the President of the United States for the establishment of a college to advocate the rights of negroes until they should be granted equality with white people. See generally the cases discussed in Gaudiya Mission v Brahmachary [1998] Ch 341 at 350–5; [1997] 4 All ER 957 at 963–8. The local court may authorise an application to the appropriate foreign court to frame a scheme: Re Fraser (1883) 22 Ch D 827; Re Marr’s Will Trusts [1936] Ch 671. If foreign objects of local charitable trusts fail, the court will direct an application of the trust funds cy-près: Re The Colonial Bishoprics Fund, 1841 [1935] Ch 148. See D M Emrys Evans, ‘The Law of Charity and the Needs of Underdeveloped Countries’ (1965) 29 Conv (NS) 123. 489. See [10-67]. 490. Gaudiya Mission v Brahmachary [1998] Ch 341; [1997] 4 All ER 957. 491. [1954] Ch 672; [1954] 2 All ER 466; [1956] AC 39; [1955] 3 All ER 97. See also Gaudiya Mission v Brahmachary [1998] Ch 341; [1997] 4 All ER 957; Re Carapiet’s Trusts; Manoogian (Armenian Patriarch of Jerusalem) v Sonsino [2002] WTLR 989 at [29]–[31]. 492. [1965] NSWR 1624; [1967] 2 NSWR 140. 493. (1958) 101 CLR 56; [1959] ALR 5, where a trust of a sum of money to establish a sanatorium on a Greek island was held to be a valid charitable trust. See also Re Stone (1970) 91 WN (NSW) 704. 494. (1989) 58 DLR (4th) 375. 495. Charitable Trusts Act 1993 (NSW) s 23; Property Law Act 1958 (Vic) s 131; Trusts Act 1973 (Qld) s 104; Trustees Act 1962 (WA) s 102; Variation of Trusts Act 1994 (Tas) s 4(2); Trustee Act 1936 (SA) s 69A. Trustees of a charitable trust, unlike trustees of a private trust, need not act unanimously. See [10-65]. 496. Commissioner of Taxation (Cth) v Bargwanna (2012) 286 ALR 206; 86 ALJR 406 at [38]; cf Ryland v Federal Commissioner of Taxation (1973) 128 CLR 404 at 411; 1 ALR 232 at 237. 497. See Re Piercy [1898] 1 Ch 565; Houston v Burns [1918] AC 337; [1918–19] All ER Rep 817; Chichester Diocesan Fund and Board of Finance v Simpson [1944] AC 34; [1944] 2 All ER 60; Smith v West Australian Trustee Executor & Agency Co Ltd (1950) 81 CLR 320; [1950] ALR 735; Lutheran Church of Australia SA District v Farmers Co-operative Executor and Trustees Ltd (1970) 121 CLR 628; [1970] ALR 545. The last-mentioned case involved a discretionary power to appoint to one named charitable institution and the High Court divided equally as to its validity. See also Coshott v Royal Society for the Prevention of Cruelty to Animals (1996) 40 NSWLR 446. 498. As in Moggridge v Thackwell (1803) 7 Ves 36; 30 ER 440; Ryder v Attorney-General (NSW) (2004) 62 NSWLR 38. 499. See Re White [1893] 2 Ch 41; [1891–4] All ER Rep 242. 500. (1815) 1 Mer 55 at 95; 35 ER 597. 501. For comments on the origin of the rule, see Moggridge v Thackwell (1803) 7 Ves 36; 30 ER 440. The survey in A-G (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209 at 223–8; [1940] ALR 209 at 213–15, is particularly useful. In so far as Lord Eldon, in this celebrated dictum, was suggesting that lack of precise details in an admittedly charitable disposition necessarily requires a court-approved scheme, this is not true: see [10-69]. 502. Re Bennett (dec’d) [1960] Ch 18; [1959] 3 All ER 295. As to the duty of the Crown, as parens patriae, to protect property devoted to charitable purposes, see [10-67]. 503. (1876) 3 Ch D 342; see also in Re Lea (1887) 34 Ch D 528. 504. Mills v Farmer (1815) 1 Mer 55; 35 ER 597.

505. (1815) 1 Mer 55 at 99; 33 ER 597 at 612. 506. (1803) 7 Ves 36; 30 ER 440. 507. (1887) 34 Ch D 528. 508. Re Kilvert’s Trusts (1871) LR 12 Eq 183. 509. [1902] 2 Ch 793; [1900–3] All ER Rep 799. 510. Re Williams (1877) 5 Ch D 735. Similarly, Fisk v A-G (1867) LR 4 Eq 52; Hunter v Bullock (1872) LR 14 Eq 45; Dawson v Small (1874) LR 18 Eq 114; Re Birkett (1878) 9 Ch 576; [1874–80] All ER Rep 224; Re Rogerson [1901] 1 Ch 715; [1900–3] All ER Rep Ext 1552; Muir v Archdall (1918) 19 SR (NSW) 10; 36 WN (NSW) 4; Pooley v Royal Alexandra Hospital (1932) 32 SR (NSW) 459; 49 WN (NSW) 156. These cases are generally known as ‘the Tomb cases’. 511. [1898] 1 Ch 565. See also Faversham v Ryder (1854) 5 De GM & G 350; 43 ER 905; Lewis v Allenby (1870) LR 10 Eq 668; Re Allen [1905] 2 Ch 400; Re Pardoe [1906] 2 Ch 184. 512. [1891] 2 Ch 261; [1891–4] All ER Rep Ext 1895. 513. (1857) 3 K & J 529; 69 ER 1219. 514. [1899] AC 309 at 323; [1895–9] All ER Rep 558 at 564. 515. See [10-65]. 516. For example, charitable or public purposes — Blair v Duncan [1902] AC 37; charity or works of public utility — Langham v Peterson (1903) 87 LT 744; public benevolent or charitable purposes — Houston v Burns [1918] AC 337; [1918–19] All ER Rep 817; charitable or benevolent — Chichester Diocesan Fund and Board of Finance v Simpson [1944] AC 341; [1944] 2 All ER 60. See also A-G v Metcalfe (1904) 1 CLR 421; A-G v Adams (1908) 7 CLR 100; Chesterman v Federal Commissioner of Taxation [1926] AC 128 at 132; (1925) 37 CLR 317 at 320; Public Trustee v Federal Commissioner of Taxation (1934) 51 CLR 75 at 99; Re Crown Forestry Rental Trust [2004] 4 All ER 558; [2004] 1 WLR 1466 at [32]. Cf Jones v T Eaton & Co [1973] SCR 635; (1973) 35 DLR (3d) 97 (‘needy or deserving’). 517. (1822) 1 S & S 69; 57 ER 27. See also Hunter v A-G [1899] AC 309 at 323; [1895–9] All ER Rep 558 at 565–6. 518. (1822) 1 S & S 69 at 71; 57 ER 27 at 28. 519. (1804) 9 Ves 399; 32 ER 656; (1805) 10 Ves 522; 32 ER 947. 520. A-G v Herrick (1772) Amb 712; 27 ER 461; Re Best [1904] 2 Ch 354; but pious uses will not be construed as charitable — Heath v Chapman (1854) 2 Drew 417; 61 ER 781. 521. Re Lloyd (1893) 10 TLR 66. 522. Re Sutton (1885) 28 Ch D 464. 523. See Re Eades [1920] 2 Ch 353 — religious, charitable and philanthropic objects. 524. [1986] 3 All ER 423; [1986] 1 WLR 1001, distinguished in Re Carapiet’s Trusts; Manoogian (Armenian Patriarch of Jerusalem) v Sonsino [2002] WTLR 989 at [21]–[26]. 525. Public Trustee v Smith (1944) 44 SR (NSW) 348; 61 WN (NSW) 206. 526. (1857) 3 K & J 529; 69 ER 1219. 527. (1866) LR 1 Eq 585. 528. [1923] 2 Ch 407; [1923] All ER Rep 607. 529. See also Muir v Archdall (1918) 19 SR (NSW) 10; 34 WN (NSW) 4. 530. [1931] 1 Ch 240; [1930] All ER Rep 215; see also Sinnett v Herbert (1872) LR 7 Ch App 232; Re Douglas (1887) 35 Ch D 472; [1886–90] All ER Rep 228; Re Best [1904] 2 Ch 354. 531. (1952) 87 CLR 375; [1952] ALR 729, applied in Presbyterian Church (NSW) Property Trust v Ryde

Municipal Council [1978] 2 NSWLR 387. 532. [1971] SASR 169 at 204. 533. Re Best [1904] 2 Ch 354. 534. Salusbury v Denton (1857) 3 K & J 529; 69 ER 1219. 535. Re Clarke [1923] 2 Ch 407; [1923] All ER Rep 607. 536. Re Hood [1931] 1 Ch 240; [1930] All ER Rep 215. 537. See Kendall v Granger (1842) 5 Beav 300; 49 ER 593; Heath v Chapman (1854) 2 Drew 417; 61 ER 781. 538. Farley v Westminster Bank Ltd [1939] AC 430; [1939] 3 All ER 491; see also Dunne v Byrne [1912] AC 407; [1911–13] All ER Rep 1105. 539. In the Will of Forrest [1913] VLR 425; [1913] ALR 414. 540. (1935) 35 SR (NSW) 444; 52 WN (NSW) 139. 541. For example, Re Ward [1941] Ch 308; [1941] 1 All ER 315; Re Diplock [1941] Ch 253; [1941] 1 All ER 193. See the Charitable Trusts (Validation) Act 1954 (UK), the purpose of which is similar to the New Zealand and Australian legislation, but the language and approach of which is considerably different. See Re Gillingham Bus Disaster Fund [1958] Ch 300; [1958] 1 All ER 37, affirmed [1959] Ch 62; [1958] 2 All ER 749; Re Harpur’s Will Trusts [1962] Ch 78; [1961] 3 All ER 588 and the cases discussed in Ulrich v Treasurer Solicitor [2005] 1 All ER 1059; [2006] 1 WLR 33. 542. Qld s 104; SA s 69A; Variation of Trusts Act 1994 (Tas) s 4(2)–(3); Charities Act 1978 (Vic) s 7M; WA s 102. For a discussion of the legislation and earlier cases, see E H Coghill, ‘Mixed Charitable and Non-Charitable Gifts’ (1940) 14 ALJ 58; E C Adams, ‘Trusts for Charitable and/or NonCharitable Purposes’ (1941) 15 ALJ 134; E H Coghill, ‘Mixed Charitable and Non-Charitable Gifts’ (1950) 24 ALJ 239. 543. [1945] VLR 295; [1946] ALR 78. 544. [1945] VLR 295 at 301; [1946] ALR 78 at 82. 545. [1963] NZLR 788. 546. [1926] VLR 212; (1926) 32 ALR 917. 547. [1929] VLR 333; (1929) 35 ALR 300. 548. [1948] 2 ALR 487. 549. [1965] VR 770. 550. (1934) 51 CLR 1; [1934] ALR 202, affirming the decision of the Full Court of Victoria, [1934] VLR 22, the six judges of the High Court being equally divided. 551. (1971) 125 CLR 185. 552. (1971) 125 CLR 185 at 196. 553. [1950] VLR 11; [1950] ALR 138; see also Re Ashton [1950] NZLR 42 (at first instance). Another example of an uncertain trust is Gerhardy v South Australian Auxiliary to the British and Foreign Bible Society Inc (1982) 30 SASR 12. 554. [1945] VLR 295; [1946] ALR 78. 555. [1950] VLR 11 at 16; [1950] ALR 138. 556. (1946) 46 SR (NSW) 298; 63 WN (NSW) 153. 557. [1955] NZLR 192. See also Re Cumming [1951] NZLR 498n. 558. [1959] AC 457; (1959) 101 CLR 611; [1959] 2 All ER 300. 559. This passage was approved in Public Trustee v Attorney-General of New South Wales (1997) 42

NSWLR 600 at 613–14 and in Re Blyth [1997] 2 Qd R 567 at 583. 560. [1959] AC 457; (1959) 101 CLR 611; [1959] 2 All ER 300; the same principle expressed in different form is to be found in A-G (NSW) v Donnelly (1958) 98 CLR 538 at 560; [1958] ALR 257 at 266–7 (the same case in the High Court). Cf Re Wykes (decd); Riddington v Spencer [1961] Ch 229; [1961] 1 All ER 470. 561. [1959] AC 457 at 476; (1959) 101 CLR 611 at 618; [1959] 2 All ER 300 at 305. 562. [1959] AC 457; (1959) 101 CLR 611; [1959] 2 All ER 300. 563. [1958] VR 310; [1958] ALR 693. 564. [1965] VR 402. 565. [1958] VR 523 at 531; [1958] ALR 1042 at 1050. 566. [1965] VR 238. 567. (1970) 125 CLR 138; [1971] ALR 117. See also McCracken v Attorney-General (Vic) [1995] 1 VR 67 at 78–9. 568. (1980) 25 SASR 489. See also McCracken v Attorney-General (Vic) [1995] 1 VR 67 at 79–82. 569. A-G v Foundling Hospital (1793) 2 Ves 42 at 49; 30 ER 514 at 517. 570. A-G v Bedford Corp (1754) 2 Ves Sen 505; 28 ER 323; A-G v Clarendon [Earl] (1810) 17 Ves 49; 34 ER 190; A-G v Mansfield [Earl] (1827) 2 Russ 501; 38 ER 423. 571. (1815) 1 Madd 92; 56 ER 36. 572. [1902] 1 Ch 774. 573. (1834) 3 My & K 344; 40 ER 131. 574. See, for example, A-G v Brandreth (1842) 1 Y & CCC 200; 62 ER 854; A-G v Corp of Rochester (1854) 5 De GM & G 797; 43 ER 1079; A-G v Calvert (1857) 23 Beav 248; 53 ER 97; Ward v Hipwell (1862) 3 Giff 547; 66 ER 525; but see later, as to variation of the original trust purpose. 575. See A-G v Compton (1842) 1 Y & CCC 417 at 427; 62 ER 951 at 955; A-G v Magdalen College, Oxford (1854) 18 Beav 223 at 241; 52 ER 88 at 95; cf Tasmania v Victoria (1935) 52 CLR 157 at 186– 8; [1935] ALR 157 at 166–7. In England, by s 33 of the Charities Act 1993, a ‘person interested’ may enforce a charity. This would include, inter alios, the parents of a boy attending a charity school: see Gunning v Buckfast Abbey Trustees (The Times, 9 June 1994). 576. A-G v Worcester [Bishop] (1851) 9 Hare 328 at 361; 68 ER 530 at 546–7. 577. Hence the elaborate provisions in New South Wales in the Charitable Trusts Act 1993 to enable the court to do what it could do in any event in its inherent jurisdiction were unnecessary. 578. Wellbeloved v Jones (1822) 1 Sim & St 40; 57 ER 16; Hauxwell v Barton-Upon-Umber Urban District Council [1974] Ch 432 at 450; [1973] 2 All ER 1022 at 1032. 579. Strickland v Weldon (1885) 28 Ch D 426; Galligan v Maher (1902) 19 WN (NSW) 299. See F Jordan, Chapters on Equity in New South Wales, 6th ed, p 47 (reprinted in Select Legal Papers (Legal Books, 1983)) where these propositions are set out. 580. See A-G v Try (1891) 12 LR (NSW) Eq 23; Wylde v A-G (1948) 78 CLR 224; [1949] ALR 153. 581. Re Pyne [1903] 1 Ch 83. See also L L Stevens, ‘Certainty and Charity: Recent Developments in the Law of Trusts’ (1974) 52 Can Bar Rev 372 at 381ff. 582. Re Bennett [1960] Ch 18; [1959] 3 All ER 295. 583. Uniting Church in Australia Property Trust (NSW) v Monsen [1978] 1 NSWLR 575. See also Willoughby City Council v Roads and Maritime Services (2014) 201 LGERA 177 at [30]. 584. Num-Hoi v Num Pon Soon Inc (2001) 4 VR 527.

585. National Trustees Executors & Agency Co of Australasia Ltd v A-G (Vic) [1978] VR 374. 586. Re Freeston’s Charity [1978] 1 All ER 481 at 490; [1978] 1 WLR 120. 587. [1984] 2 NSWLR 406. 588. [1917] 2 Ch 420; [1916–17] All ER Rep 786. 589. [1917] 2 Ch 420 at 427–8; [1916–17] All ER Rep 786 at 790. 590. (1855) 20 Beav 503 at 510; 52 ER 697 at 700–1. 591. Attorney-General v Wright [1987] 3 All ER 579; [1988] 1 WLR 164 (grant of injunction conditional on the receiver of the charity giving an undertaking as to damages limited by the funds of the charity). 592. See Halsbury’s Laws of England, 5th ed, Vol 8, [179]ff; Halsbury’s Laws of Australia, Vol 4, [75-635]ff. 593. Shergill v Khaira [2015] AC 359; [2014] 3 All ER 243 at [26], discussing Attorney-General v Mathieson [1907] 2 Ch 383; Re Orphan Working School and Alexandra Orphanage’s Contract [1912] 2 Ch 167 at 180. 594. Charitable Trusts Act 1993 (NSW) s 10. 595. This passage was quoted with approval in Australian Executor Trustees Ltd v A-G (SA) [2010] SASC 348 at [42]. 596. (1940) 63 CLR 209 at 225; [1940] ALR 209 at 214. In Western Australia, as a consequence of statute the distinction is no longer of importance: see [10-74]. 597. This sentence as it stood in the 4th edition was quoted with approval in Gilmore v Uniting Church (1984) 36 SASR 475 at 479. 598. [1913] 1 Ch 314; [1911–13] All ER Rep 1101. See Re Annandale [1980] 1 Qd R 353. 599. (1807) 14 Ves 364; 33 ER 560. 600. Cases on the distinction include the following: Harris v Skevington [1978] 1 NSWLR 176, a trust of a legacy of $20,000 to renovate a home owned by a charitable body in a particular way, held to have disclosed no general charitable intention; McCormack v Stevens [1978] 2 NSWLR 517, a gift of residue in a will commencing with the words ‘the following charities’ held to show a general charitable intention; Re Atkinson’s Will Trusts [1978] 1 All ER 1275; [1978] 1 WLR 586, a trust for worthy causes, held to display no charitable intention at all, much less a general charitable intention; and Re Woodhams [1981] 1 All ER 202; [1981] 1 WLR 493, a gift to promote music by founding two scholarships for orphans from named institutions, held to display a general charitable intention to promote music generally. A general charitable intention may perhaps be more readily found where the gift is one of residuary estate: Re Monk [1927] 2 Ch 197; [1927] All ER Rep 157. 601. [1970] VR 264, followed in Gilmore v Uniting Church (1984) 36 SASR 475. 602. See, for example, Re Daniels [1970] VR 72. 603. Re Jenkins’ Will Trusts [1966] Ch 249; [1966] 1 All ER 926. 604. This paragraph in the form in which it stood in the 4th edition was quoted with approval in Gilmore v Uniting Church (1984) 36 SASR 475 at 479. 605. See Re Robinson [1931] 2 Ch 122 at 128, as to the distinction between the two types of schemes. 606. Re Ashton’s Charity (1859) 27 Beav 115 at 120; 54 ER 45 at 47. Ironmongers’ Co v A-G (1844) 10 Cl & F 908 at 922, 924–9; 8 ER 983 at 988–91, is often, but incorrectly, cited as authority for this proposition. That case dealt with a cy-près scheme not a general scheme. 607. Re Mann [1903] 1 Ch 232; [1900–3] All ER Rep 93. 608. Mills v Farmer (1815) 1 Mer 55 at 103; 35 ER 597 at 613–14. 609. Moggridge v Thackwell (1803) 7 Ves 36; 32 ER 15; Re Clergy Society (1856) 2 K & J 615; 69 ER 928.

610. (1762) 1 Amb 423; 27 ER 282. 611. (1843) 2 Con & Law 519. 612. Mills v Farmer (1815) 1 Mer 55; 35 ER 597; Philpott v St George’s Hospital (1859) 27 Beav 107; 54 ER 45; Re Ashton’s Charity (1859) 27 Beav 115; 54 ER 45. 613. See L A Sheridan and V T H Delaney, The Cy-près Doctrine, pp 65–73; Re Belling [1967] Ch 425; [1967] 1 All ER 105; Downing v Federal Commissioner of Taxation (1971) 125 CLR 185 at 196. 614. Salusbury v Denton (1857) 3 K & J 529; 69 ER 1219. 615. Mills v Farmer (1815) 1 Mer 55; 35 ER 597. Cf Re Simpson [1961] QWN 50. 616. Wellbeloved v Jones (1822) 1 Sim & St 40; 57 ER 16. 617. See Re Robinson [1931] 2 Ch 122 at 129. Examples of cases where schemes of this class were required to be settled are Diocesan Trustees of Church of England v Solicitor-General (1909) 9 CLR 757; 16 ALR 70; Verge v Somerville [1924] AC 496; [1924] All ER Rep 121. The circumstances in which a scheme should be settled were considered in Re Ingram [1951] VLR 424; Re Pieper (decd) [1951] VLR 42; [1951] ALR 64. 618. See L A Sheridan and V T H Delaney, The Cy-près Doctrine, pp 57–65 for illustrations of cases coming under this head. 619. See generally L A Sheridan and V T H Delaney, The Cy-près Doctrine. 620. Royal North Shore Hospital of Sydney v A-G (NSW) (1938) 60 CLR 396 at 428; [1938] ALR 434 at 444; A-G (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209 at 216–17, 227–8; [1940] ALR 209 at 210, 214–15. 621. (1983) 32 SASR 138. 622. A-G v Powell (1890) 11 LR (NSW) Eq 263. Cf Re Hodge [1960] SASR 237. 623. The presumption is that any charitable intention is general, not that there is a charitable intention: Public Trustee v Attorney-General of New South Wales (1997) 42 NSWLR 600 at 609. 624. (1754) Amb 228; 27 ER 150. 625. (1802) 7 Ves 490; 32 ER 198. 626. (1802) 7 Ves 490 at 495; 32 ER 198 at 199. 627. (1841) Cr & Ph 208; 41 ER 469. 628. Re Hanbey’s Will Trusts [1956] Ch 244; [1955] 3 All ER 874. 629. [1965] VR 580 at 584. 630. Re Richardson (1887) 4 TLR 153; Morton v A-G (1911) 11 SR (NSW) 473; 28 WN (NSW) 131; Re Dominion Students’ Hall Trust [1947] Ch 183; Re Whitworth Art Gallery Trusts [1958] Ch 461; [1958] 1 All ER 176. See also Forrest v Attorney-General (Vic) [1986] VR 187, where this principle has been buttressed by legislation: Charities Act 1978 (Vic) s 2. 631. See L A Sheridan and V T H Delaney, The Cy-près Doctrine, pp 94–103. See also Re Bower (1980) 25 SASR 161. 632. Re Connolly (1914) 110 LT 688; Re Raine [1956] Ch 417; [1956] 1 All ER 355. 633. For examples of cases where the cy-près doctrine has been applied, see Morton v A-G (1911) 11 SR (NSW) 473; A-G v Walker (1914) 31 WN (NSW) 59; Hixon v Campbell (1924) 24 SR (NSW) 436; 41 WN (NSW) 104; Armstrong v A-G (1934) 34 SR (NSW) 454; 51 WN (NSW) 151; Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316; Royal North Shore Hospital of Sydney v A-G (1938) 60 CLR 396; [1938] ALR 434; A-G (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209; [1940] ALR 209; Re Parker [1949] VLR 133; [1949] ALR 545; Re North Devon and West Somerset Relief Fund Trusts [1953] 2 All ER 1032; [1953] 1 WLR 1260; Re Woollnough [1953] Tas SR 25; Re Whitworth Art Gallery

Trusts [1958] Ch 461; [1958] 1 All ER 176; Beggs v Kirkpatrick [1961] VR 764; Re Roberts [1963] 1 All ER 674; [1963] 1 WLR 406; Re Slatter [1964] Ch 512; [1964] 2 All ER 469; Re Mulcahy [1969] VR 545; Re Daniels [1970] VR 72; Re Tyrie [1970] VR 264; Re Bryning [1976] VR 100; McCormack v Stevens [1978] 2 NSWLR 517. 634. Re Wright [1954] Ch 347; [1954] 2 All ER 98. 635. Re White’s Will Trusts [1955] Ch 188; [1954] 2 All ER 620; Re Tacon [1958] Ch 447; [1958] 1 All ER 163; A-G (SA) v Bray (1964) 111 CLR 402; [1964] ALR 955; A-G (NSW) v Perpetual Trustee Co (Ltd) (1966) 115 CLR 581. 636. Usually associated with Re Rymer [1895] 1 Ch 19; [1891–4] All ER Rep 328. 637. Attorney-General for New South Wales v Public Trustee (1987) 8 NSWLR 550. 638. (1958) 101 CLR 56; [1959] ALR 5. 639. [1966] Ch 191; [1965] 2 All ER 888. The difficulties of these discriminatory gifts are to be resolved by the general law, not by anti-discrimination legislation, for that legislation typically provides that it does not affect any discriminatory provision in any instrument providing for charitable benefits, or any act done to give effect to a provision of that kind. Thus s 8(2) of the Racial Discrimination Act 1975 (Cth) exempts from the operation of that legislation instruments that enable charitable benefits to be conferred on persons of a particular race, colour, or national or ethnic origin. See also Racial Discrimination Act 1975 (Cth) s 8(2); Sex Discrimination Act 1984 (Cth) s 36(a); AntiDiscrimination Act 1977 (NSW) s 55(1); Anti-Discrimination Act 1992 (NT) s 52(1); AntiDiscrimination Act 1991 (Qld) s 110; Equal Opportunity Act 1984 (SA) ss 45, 64, 80 and 85N; Anti-Discrimination Act 1998 (Tas) s 23(a); Equal Opportunity Act 2010 (Vic) s 80; Equal Opportunity Act 1984 (WA) s 70(1). 640. See also Re Weir Hospital [1910] 2 Ch 124; [1908–10] All ER Rep 690; Re Robinson [1923] 2 Ch 332; Re Dominion Students Hall Trust [1947] Ch 183. 641. Re Weir Hospital [1910] 2 Ch 124; [1908–10] All ER Rep 690. 642. Clephane v Lord Provost of Edinburgh (1869) LR 1 HL 417 at 421; Re Prison Charities (1873) LR 16 Eq 129. 643. See, for example, Ironmongers Co v A-G (1844) 10 Cl & Fin 908; 8 ER 983. 644. See [10-69]. 645. [1975] 2 NSWLR 207. 646. See also Qld s 105; Variation of Trusts Act 1994 (Tas) s 5. For cases, see Re Lepton’s Charity [1972] Ch 187; [1971] 1 All ER 799; Forrest v Attorney-General [1986] VR 187; Varsani v Jesani [1999] Ch 219; [1998] 3 All ER 273. 647. Charitable Trusts Act 1993 (NSW) ss 9–10; SA s 69B; Charitable Trusts Act 1962 (WA) ss 7–7B. See Re Estate of Pitt (decd) (2002) 84 SASR 109; Re Trusts of Kean Memorial Trust Fund (2003) 86 SASR 449. 648. NT s 50AA. 649. Taylor v Princess Margaret Hospital for Children Foundation Inc [2012] WASC 83 at [56], [59]; Eccles v The Salvation Army [2013] WASC 142 at [10]. 650. For example, Charitable Funds Act 1958 (Qld) s 5 (see [10-77]); Variation of Trusts Act 1994 (Tas) s 11; Charities Act 1978 (Vic) s 3; Charitable Collections Act 1946 (WA) ss 5 and 16. 651. Charities Act 1978 (Vic) s 4; SA s 69B (3)(b); Charitable Trusts Act 1962 (WA) ss 9–10A. 652. ACT ss 94A–94E; Charitable Trusts Act 1993 (NSW) s 6; Qld s 106; SA ss 60–69; Supreme Court Civil Procedure Act 1932 (Tas) s 57(2); Religious Successory Trusts Act 1988 (Vic) s 61; Charitable Trusts Act 1962 (WA) s 21.

653. A-G v Bishop of Worcester (1851) 9 Hare 328; 68 ER 530. This case contains a discussion of the scope of the Act and of the power of the court to sanction alterations in trust instruments. See also Re Burge’s Charity (1905) 22 WN (NSW) 175. 654. Re Lithgow (1921) 22 SR (NSW) 150; 38 WN (NSW) 267. 655. Re Smidmore’s Charity (1901) 18 WN (NSW) 146; Re Albion Park Agricultural Association (1902) 19 WN (NSW) 237; Re Burge’s Charity (1905) 22 WN (NSW) 175. 656. Re Yass Pastoral and Agricultural Association (1902) 19 WN (NSW) 249. 657. In the Will of Kenny (1889) 6 WN (NSW) 106. 658. Re Royal North Shore Hospital (1904) 21 WN (NSW) 161. 659. Re Christ Church School Lands (1904) 21 WN (NSW) 148. 660. Re Ethel Pedley Memorial Travelling Scholarship Trust (1949) 49 SR (NSW) 329; 66 WN (NSW) 163. Cf Re Royal Society’s Charitable Trusts [1956] Ch 87; [1955] 3 All ER 14. 661. ACT s 81; NSW s 81; NT s 50A; Qld s 94; SA ss 48–55 and 59B; Tas ss 47–55; Vic s 63; WA s 89. See Re Shipwrecked Fishermen & Mariners’ Royal Benevolent Society Charity [1959] Ch 220; [1958] 3 All ER 465. 662. Re Snowdon (decd) [1970] Ch 700; [1969] 3 All ER 208. 663. A-G v Trustees of the British Museum [2005] Ch 397. 664. (1878) 4 Ex D 54. 665. [1902] 1 Ch 774. 666. See [11-08]. 667. The discussion of this body of law in the 7th edition at [1081] is not here repeated. 668. See [9-29]. 669. Perpetuities and Accumulations Act 1985 (ACT) s 15; Perpetuities Act 1984 (NSW) s 14; Law of Property Act (NT) s 196; Property Law Act 1974 (Qld) s 219; Law of Property Act 1936 (SA) s 62; Perpetuities and Accumulations Act 1992 (Tas) s 16; Perpetuities and Accumulations Act 1968 (Vic) s 16; Property Law Act 1969 (WA) s 111. 670. Perpetuities and Accumulations Act 1985 (ACT) s 15(3)(a); Perpetuities Act 1984 (NSW) s 14(4); Law of Property Act (NT) s 196(5); Property Law Act 1974 (Qld) s 219(2); Law of Property Act 1936 (SA) s 62(6)(a); Perpetuities and Accumulations Act 1992 (Tas) s 16(5); Perpetuities and Accumulations Act 1968 (Vic) s 16(2); Property Law Act 1969 (WA) s 111(2). 671. Re Tyler [1891] 3 Ch 252; [1891–4] All ER Rep Ext 1996. 672. [1891] 3 Ch 252; [1891–4] All ER Rep Ext 1996. 673. (1849) 1 Mac & G 460; 41 ER 1343; [1843–60] All ER Rep 204. See also Re Hanbey’s Will Trusts [1956] Ch 264; [1955] 3 All ER 874. 674. [1915] 1 Ch 543. 675. Harbin v Masterman [1894] 2 Ch 184; [1895–9] All ER Rep 695; Wharton v Masterman [1895] AC 186; [1895–9] All ER Rep 687; Re Hart (dec’d) (1972) 3 SASR 147; cf Re Jeffries [1936] 2 All ER 626. See Chapter 23. 676. (1952) 87 CLR 375; [1952] ALR 729. See also Re De Vedas (decd) [1971] SASR 169 at 174–5; cf Sydney Homoeopathic Hospital v Turner (1958) 102 CLR 188; [1959] ALR 782. 677. (1952) 87 CLR 375 at 440; [1952] ALR 729 at 737. 678. Although a different interpretation has been placed on his Honour’s judgment: see Jacobs on Trusts, 1st ed, p 147 and H A J Ford, ‘Charitable Corporations Taking Income as Perpetuity’ (1953) 26 ALJ

635. 679. [1960] Ch 346; [1960] 1 All ER 42; see also Re Wright [1971] VLR 127. 680. [1960] Ch 346 at 356; [1960] 1 All ER 42 at 46. It is submitted that Hudson J in Re Weaver [1963] VR 257 at 262 misinterprets this passage. 681. [1960] NSWR 702; 78 WN (NSW) 541. 682. [1955] VR 65. 683. [1963] VR 257. 684. [1971] SASR 169. 685. [1973] VR 449. 686. There is a distinct question: where property is given to a corporation the purposes of which are exclusively charitable, does it hold that property on any trust (express or constructive)? Or are there duties analogous to those of trusteeship? See generally Re Vernon’s Will Trusts (1962) [1972] Ch 300n; [1971] 3 All ER 1061; Von Ernst & Cie SA v IRC [1980] 1 All ER 677; [1980] 1 WLR 468; Liverpool and District Hospital for Diseases of the Heart v A-G [1981] Ch 193; [1981] 1 All ER 994; Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406; Re ARMS (Multiple Sclerosis Research) Ltd [1997] 2 All ER 679; [1997] 1 WLR 877. For the questionable idea that there is a constructive trust, see Aboriginal Hostels Ltd v Darwin City Council (1985) 55 LGRA 414 at 425; Toomelah Cooperative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 at 54; Alice Springs Town Council v Mpweteyerre Aboriginal Corporation (1997) 139 FLR 236 at 251. 687. The preceding three sentences appearing in the 6th edition were approved in Public Trustee v Cerebral Palsy Association of Western Australia Ltd (2004) 28 WAR 496 at [23]. 688. (1885) 29 Ch D 560. See also Satterthwaite’s Will Trusts [1966] 1 All ER 919; [1966] 1 WLR 277. 689. [1895] 1 Ch 19; [1891–4] All ER Rep 328. 690. (1853) 1 Drew 642; 61 ER 596. 691. Clark v Taylor (1853)1 Drew 642 at 644; 61 ER 596 at 597. 692. [1972] Ch 286; [1971] 3 All ER 1050. 693. Re Roberts [1963] 1 All ER 674; [1963] 1 WLR 406; Re Slatter [1964] Ch 512; [1964] 2 All ER 469; Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406. See generally R M B Cotterrell, ‘Gifts to Charitable Institutions: A Note on Recent Developments’ (1972) 36 Conv (NS) 198 and J Martin, ‘The Construction of Charitable Gifts’ (1974) 38 Conv (NS) 187. The sentence in the text as appearing in the 6th edition was approved in Public Trustee v Cerebral Palsy Association of Western Australia (2004) 28 WAR 496 at [25]. 694. [1963] 1 All ER 674; [1963] 1 WLR 406. See Halsbury’s Laws of England, 5th ed, Vol 8, [151] and [171]. 695. [1972] Ch 300; [1971] 3 All ER 1061. 696. [1971] VR 801. 697. [1972] Ch 286; [1971] 3 All ER 1050. 698. (1959) 102 CLR 188 at 220–2; [1959] ALR 782 at 799–801. 699. [1984] 2 NSWLR 406 at 414–16. 700. Re Faraker [1912] 2 Ch 488; [1911–13] All ER Rep 488; Re Lucas [1948] Ch 424; [1948] 2 All ER 22; Re Hutchinson [1953] Ch 387; [1953] 1 All ER 996; Re Quesnel [1959] SASR 106 at 110; Public Trustee v Cerebral Palsy Association of Western Australia (2004) 28 WAR 496. 701. [1959] SASR 106. 702. For this and the preceding paragraphs, see J B E Hutton, ‘The Lapse of Charitable Bequests’ (1969)

32 MLR 283. 703. Re Rymer [1895] 1 Ch 19; [1891–4] All ER Rep 328. 704. Re Lucas [1948] Ch 424; [1948] 2 All ER 22. 705. Re Roberts [1963] All ER 674; [1963] 1 WLR 406; Re Slatter’s Will Trusts [1964] Ch 512; [1964] 2 All ER 469. 706. Re Wilson [1913] 1 Ch 314; [1911–13] All ER Rep 110. 707. Re Lucas [1948] Ch 424; [1948] 2 All ER 22. 708. Re Watt [1932] 2 Ch 243(n); Re Roberts [1963] 1 All ER 674; [1963] 1 WLR 406. 709. Re Faraker [1912] 2 Ch 488; [1911–13] All ER Rep 488; Re Withall [1932] 2 Ch 236; Re Lucas [1948] Ch 424; [1948] 2 All ER 22; Re Hutchinson’s Will Trust [1953] Ch 387; [1953] 1 All ER 996; Re Bagshaw [1954] 1 All ER 227; [1954] 1 WLR 238. 710. Re Faraker [1912] 2 Ch 488; [1911–13] All ER Rep 488. This paragraph was quoted with approval in Australian Executor Trustees Ltd v A-G (SA) [2010] SASC 348 at [76]. 711. [1902] 1 Ch 876; [1900–3] All ER Rep 336. 712. (1870) LR 9 Eq 632. 713. [1956] 2 All ER 765; [1956] 1 WLR 897. See also Re Satterthwaite’s Will Trusts [1966] 1 All ER 919; [1966] 1 WLR 277. 714. [1971] VR 742. 715. [1970] VR 72. 716. Re Slevin [1891] 2 Ch 236; [1891–41] All ER Rep 200, discussed in Re Findlay’s Estate (1995) 5 Tas R 333 at 341–2. 717. Smith v Kerr [1902] 1 Ch 774; Wallis v Solicitor-General (NZ) [1903] AC 173. 718. Re Wright [1954] Ch 347; [1954] 2 All ER 98. 719. (1875) LR 7 HL 438. 720. Re List [1949] NZLR 78. 721. Re Packe [1918] 1 Ch 437. 722. Re Slevin [1891] 2 Ch 236 at 242; [1891–4] All ER Rep 200. 723. New v Bonaker (1867) LR 4 Eq 655.

[page 198]

CHAPTER 11 Purpose Trusts Trusts for the Upkeep of Animals

[11-02]

Trusts for the Erection or Maintenance of Graves or Monuments

[11-03]

Trusts for the Purposes of Unincorporated Non-charitable Organisations

[11-04]

Miscellaneous Cases

[11-05]

The Principle Underlying Non-charitable Purpose Trusts

[11-06]

The Enforcement of Non-charitable Purpose Trusts

[11-08]

[11-01] Superficially similar to, and yet completely distinct from, charitable trusts is a class of trusts of imperfect obligation, sometimes referred to as ‘purpose trusts’, which lack any human beneficiary. Examples are trusts for the erection or repair of tombstones and monuments, for the maintenance of animals, or for furthering some non-charitable cause. The essence of such trusts is that, lacking any beneficiary, there is nobody to enforce them; yet it has been held in some cases that if the trustees choose, they may carry them out, and that, if they do not, they hold the property on a resulting trust for the donor in the case of a settlement, or on behalf of the residuary beneficiary or next-of-kin in the case of a will. As they are not charitable trusts,1 the Attorney-General cannot apply to the court for their enforcement, but if their terms are not observed the donor or someone interested in the residue or remainder following on the gift may apply to the court.2 Many such trusts have been held by the courts to be valid, where they have not infringed a rule analogous to the rule against perpetuities. They fall into four categories, namely:

(1) trusts for the upkeep of animals; (2) trusts for the erection or maintenance of graves or monuments; (3) trusts for the purposes of unincorporated non-charitable associations; and (4) miscellaneous cases.

Trusts for the Upkeep of Animals [11-02] In Pettingall v Pettingall,3 a testator bequeathed £50 a year for the maintenance of a favourite black mare, the executor to be bound in honour to fulfil the request. It was held that £50 a year should be paid to the executor during the life of the mare on his giving an undertaking to maintain her properly. If there was any surplus, then, on the construction of [page 199] the will, it was to be enjoyed by the executor beneficially, and if the mare was not properly attended to, any of the residuary legatees could apply to the court. In Re Dean,4 a testator bequeathed his horses and dogs to his trustees together with an annual sum for the maintenance of the animals for 50 years if any of them should live so long. The trust was held good, although not a charity. North J said:5 The first question is as to the validity of the provision made by the testator in favour of his horses and dogs. It is said that it is not valid; because (for this is the principal ground upon which it is put) neither a horse nor a dog could enforce the trust; and there is no person who could enforce it. It is obviously not a charity, because it is intended for the benefit of the particular animals mentioned and not for the benefit of animals generally, and it is quite distinguishable from the gift made in a subsequent part of the will to the Royal Society for the Prevention of Cruelty to Animals, which may well be a charity … Then it is said, that there is no cestui que trust who can enforce the trust, and that the Court will not recognise a trust unless it is capable of being enforced by someone. I do not assent to that view. There is not the least doubt that a man may if he pleases, give a legacy to trustees, upon trust to apply it in erecting a monument to himself, either in a church or in a church-yard, or even in unconsecrated ground, and I am not aware that such a trust is in any way invalid, although it is difficult to say who would be the cestui que trust of the monument. In the same way I know of nothing to prevent a gift of a sum of money to trustees, upon trust to apply it for the repair of such a monument. In my opinion such a trust would be good, although the testator must be careful to limit the time for which it is to last, because, as it is not a charitable trust, unless it is to come to an end within the limits fixed by the

rule against perpetuities, it would be illegal … Is there then anything illegal or obnoxious to the law in the nature of the provision, that is, in the fact that it is not for human beings, but for horses and dogs? It is clearly settled by authority that a charity may be established for the benefit of horses and dogs and, therefore, the making of a provision for horses and dogs, which is not a charity, cannot of itself be obnoxious to the law, provided, of course, that it is not to last for too long a period.6

Trusts for the Erection or Maintenance of Graves or Monuments [11-03] The second group of cases is concerned with trusts for the erection or maintenance of tombs and other monuments. In Pirbright v Salwey,7 a testator bequeathed £800 to the rector and churchwardens of a parish with a direction that the income should be applied, so long as the law permitted, in keeping up his grave, and decorating it with flowers. The court held that the trust was not charitable but was good for at least 21 years from the testator’s death. Similarly, in Re Hooper,8 a testator directed that his trustees should hold a certain sum to devote the income ‘so far as they can legally do so’ for the care of certain graves and monuments in certain cemeteries, and a tablet and a window in a church, with a gift-over to certain other persons. The court held that, as regards the tablet and window, the trust was a valid charity, and, as regards the graves, the trust was not charitable, but good for a period of 21 years after which it would fall into the residue of the estate. In Re Filshie,9 there was a trust to expend the residue of any estate ‘in erecting, constructing, and keeping in repair suitable kerbing and headstones over the graves’ of named persons. The court held that, to the extent to which the trust related [page 200] to the maintenance of the kerbing and headstones, it was void as offending the rule against perpetuities, but that the trust for their erection and construction could be severed from that of their maintenance and was valid. In Re Endacott,10 the Court of Appeal held that a residuary gift to a parish

council for the purpose of providing some useful memorial for the donor was not absolute, but on trust; that it was not charitable; and that it was invalid. The Australian decisions have tended to hold such trusts invalid, even those which give rise to no perpetuities difficulty. In the early case in New South Wales of Re Lambell,11 a trust to apply income perpetually in the keeping in repair of the testator’s tomb was held to be valid, but in Muir v Archdall12 a similar trust was held invalid as being a ‘perpetuity for a non-charitable object’. In Pooley v Royal Alexandra Hospital for Children,13 a gift to erect a monument in a certain cemetery in memory of the donor’s son was held to fail, although in respect of that portion of the gift no perpetuity was involved. In Public Trustee v Nolan,14 Roper J held that a trust to erect a carillon on the foreshores of Sydney Harbour failed because there was no person who could enforce the trust. In Pedulla v Nasti,15 Needham J applied the foregoing cases to hold that a trust for the erection and maintenance of a vault and chapel to house the testator’s ashes was invalid. In Re Hamilton-Grey,16 there was a trust to apply moneys towards a memorial to perpetuate the memory of the poet Henry Kendall. It was argued by counsel (W J V Windeyer) that, whether or not this was a valid charitable trust, it was nevertheless valid because it involved no perpetuity. The court, however, held that this was not sufficient to save the gift and that it failed because it was not charitable. However, in South Eastern Sydney Area Health Service v Wallace,17 Burchett AJ held that a trust for the erection of a headstone and turf grave was valid and severable from the invalid trust to maintain them. In Re Boning,18 a trust for the preservation of land for wildlife, limited in time, was held invalid, but no party argued for validity.

Trusts for the Purposes of Unincorporated Non-charitable Organisations [11-04] The third group concerns trusts for the purposes of unincorporated non-charitable associations, which are to be carefully distinguished from gifts to, or trusts for, the individual members of such associations.19 In this regard the law is that, prima facie, a disposition in favour of an unincorporated association takes effect as a gift to its individual members, and not as a trust for its purposes.20 However, this prima facie rule may easily be displaced, particularly if the members of the association are numerous. Thus, in Bacon v Pianta,21 the

High Court of Australia held that a residuary bequest ‘to the Communist Party of Australia for its sole use and benefit’ was not a gift to the members of the Party but an attempt to create a trust for its purposes. [page 201] The tendency of the courts has been to hold that, where a disposition must be read as a trust for the purposes of an association, and those purposes are not charitable, it will be invalid. As has been said,22 ‘It would certainly seem strange if a testator could give property to an unincorporated anti-vivisection society to be applied for its purposes, but could not give property to an individual trustee to be applied by him for the purposes of anti-vivisection’. However, trusts for the purposes of unincorporated non-charitable associations have occasionally been upheld as valid purpose trusts. Thus, in Re Drummond,23 a testator gave his residuary estate to his trustees upon trust for sale and conversion and directed them to hold the proceeds upon trust for the Old Bradfordians’ Club, London. By a codicil, he declared that the money given in the will should be used by the club for such purpose as the committee for the time being might determine. Eve J said that he could not treat the disposition as one for the benefit of the members of the club individually but upheld it as a valid trust. A similar type of case is Re Price.24 In that case, a will directed that one-half of the residuary estate should be held in trust for payment to the Anthroposophical Society to be used at the discretion of the chairman and executive council of the society for carrying on the teachings of the founder, Rudolf Steiner. In the result it was held that this was a valid charitable trust, but it was further held that, apart from this charitable element, the trust was good because the object was certain and, since both capital and income could be applied for such purposes, the trust did not offend ‘the rule against perpetuities’.25 In Bacon v Pianta,26 the High Court held invalid a trust for the purposes of the Communist Party of Australia. The reasoning for that conclusion proceeded as follows: (1) a gift to an unincorporated association is valid if it operates as one to the individual members at the time of the bequest; (2) a gift in trust for the benefit of present and future members will fail as not vesting within the perpetuity period;

(3) a gift for a purpose will fail unless charitable; and (4) the present gift was an attempt to create a non-charitable purpose trust. Attempts have been made27 to save gifts to associations by treating as contractual the obligation to apply the property for the purpose of the association. But, as the Full Federal Court pointed out in Bacon v O’Dea,28 in many such cases the rules require the unanimous consent of members to any distribution and in so far as the contractual restraint otherwise is unlimited in its temporal operation upon existing and future assets, the rationale of the rules against perpetual duration of trusts and restraints upon alienation29 would apply. This consideration led Young CJ in Eq to hold in Radmanovich v Nedejkovic30 that the trust could not take effect as a trust for the then members of the association subject to their rules, for the members could never divide up the property between them beneficially, and on dissolution, all property was to be transferred to the Serbian Orthodox Church. [page 202] In Re Denley,31 a trust to provide sporting facilities for the employees of a named company was upheld as a valid non-charitable purpose trust where the identity of the beneficiaries could be determined within the period allowed by the ‘rule against perpetuities’. This case seems contrary to the authorities and difficult to justify in principle. Its weight is further weakened by the fact that a similar trust in Re Flavel32 was held to be invalid. Moreover, in Tidex v Trustees Executors & Agency Co Ltd,33 Street J held that a trust of a share of corpus for the benefit of employees of a named company could not be sustained as a valid purpose trust and in Strathalbyn Show Jumping Club Inc v Mayes34 Bleby J doubted whether, even if the beneficiaries of a trust of land for use by a polo club could be identified, the trust would be valid.

Miscellaneous Cases [11-05] The fourth type of case comprises miscellaneous examples where trusts for non-charitable purposes have been upheld.

In Re Thompson,35 a legacy was bequeathed to be applied in such manner as the legatee in his absolute discretion should think fit towards the promotion and furtherance of fox-hunting. The court ordered that upon the legatee undertaking to apply the legacy towards that object, the executors should pay him the legacy, with liberty to the residuary legatees to apply in case the legacy was not so applied. Similarly, trusts for the saying of masses have been upheld, even when they are not valid as charitable purpose trusts.36 In Re Astor,37 by a settlement, trusts were declared of certain shares whereby the trustees were to apply the income towards a number of purposes during a specified period. There was no dispute that the purposes were non-charitable and that the period specified did not infringe the rule against perpetuities. Roxburgh J held that the trusts were invalid on two grounds: first, because they were not for the benefit of individuals but for a number of non-charitable purposes which no one could enforce, and for this purpose there was no distinction between a settlement and a will; and secondly, because the trusts included objects which were void for uncertainty. In Re Shaw,38 the testator (George Bernard Shaw) directed his trustee to apply the income of his residuary estate for 21 years after his death towards finding out how much time and money would be saved by substituting an English alphabet of 40 letters for the present one, to transliterate one of his plays into the new alphabet, and for various other purposes connected with the propagation of the new alphabet. Harman J held that the direction failed as a charitable trust and could not be sustained as a purpose trust. In Re Elmore,39 Gowans J held that a trust of £200 to be applied in such way ‘as my trustee may determine for the cost of publication of one book written by my wife — such book to be selected by my wife’ was invalid. [page 203]

The Principle Underlying Non-charitable Purpose Trusts [11-06] Where trusts for non-charitable purposes have failed, it has often

been because they are too uncertain,40 because they amount to an attempt to delegate the power of testamentary disposition, or because they infringe the rule against non-charitable trusts of perpetual duration.41 A fourth reason assigned for their failure is that they are contrary to Morice v Bishop of Durham.42 In that case, residuary personal estate was given on trust for ‘such objects of benevolence and liberality as the Bishop of Durham in his own discretion shall most approve of’. It is at least strongly arguable that this celebrated case, in which it was held that the trust was invalid, is authority only for the proposition that every trust for non-charitable purposes ‘must be stated in phrases which embody definite concepts, and the means by which the trustees are to try to attain them must also be prescribed with a sufficient degree of certainty’.43 However, both academic text-writers and judges have often treated the case as authority for a second proposition, namely, that in order to have a valid trust there must always be some person who can enforce it;44 and, even more often, as authority for yet a third proposition, namely, that every non-charitable trust must have a cestui que trust.45 If the second interpretation of Morice’s case be correct, difficulties arise as to whether direct or indirect enforcement is referred to; if the latter, then semble non-charitable trusts can often be enforced indirectly, for example, by the donor or his or her representatives, by the nextof-kin or by the residuary beneficiaries. The question is further complicated by the fact that many courts, even of the highest authority, have not realised that there is a difference between the second and third interpretations.46 [11-07] If the first interpretation be correct, purpose trusts are not anomalous and give rise to few difficulties. However, if either of the other interpretations be correct, and most courts have held that one or the other is, purpose trusts present some difficulties. If the second interpretation of Morice’s case47 be correct, the difficulties are greater in some types of purpose trust than in others. For example, it is easier to justify the club cases than the animal cases — the committee of a club can take steps curially to enforce a trust which are not open to a horse or a hound.48 But if the third interpretation be correct, purpose trusts are entirely anomalous and impossible of justification. [page 204]

The Enforcement of Non-charitable Purpose Trusts [11-08] Because most courts have taken the view that they are anomalous, purpose trusts have been upheld only in a most qualified manner. In the first place, it has been held that the categories will not be extended:49 So to do would be to validate almost limitless heads of non-charitable trusts, even though they were not (strictly speaking) public trusts, so long only as the question of perpetuities did not arise; and, in my judgment, that result would be out of harmony with the principles of our law. No principle perhaps has greater sanction or authority behind it than the general proposition that a trust by English law, not being a charitable trust, in order to be effective, must have ascertained or ascertainable beneficiaries. These cases constitute an exception to that general rule.

In the second place, they must not endure for a period longer than that prescribed by the rule against perpetual trusts. This is not, as is commonly supposed,50 an application of the rule against perpetuities, as no question of remoteness of vesting arises. It is a rule restricting the duration, and not the vesting, of purpose trusts; it is analogous to the rule against perpetuities; and its justification is the public policy of fostering the freedom of circulation of property.51 If trustees are directed to maintain a grave ‘as long as the law allows’52 or ‘so long as they can legally do so’,53 such trusts will be held valid for 80 years in most jurisdictions. Any purpose trust lasting longer is to that extent void.54 Finally, purpose trusts, even when valid, are only upheld to a limited extent. Nobody can insist that they be performed. The trustees may or may not perform them at their option, but they can neither be compelled to perform them nor be prevented from doing so. It had previously been held in Victoria,55 and maintained by a number of academic writers,56 that purpose trusts should be treated as powers. However, this theory was specifically rejected by the Court of Appeal in Re Endacott.57 Nevertheless, it is submitted that there is no reason why a power, expressed as such, to appoint property to non-charitable purposes should not be upheld; indeed, there is English Court of Appeal authority in favour of the view that it is valid.58 _____________________________

1.

See Lloyd v Lloyd (1852) 2 Sim NS 255 at 264; 61 ER 338 at 342; Re Dean (1889) 41 Ch D 552 at 556.

2. 3.

See J Gray (1902) 15 Harv LR 509; C Sweet (1917) 33 LQR 236. (1842) 11 LJ Ch 176; see also Mitford v Reynolds (1848) 16 Sim 105; 60 ER 812; [1843–60] All ER Rep 118.

4. 5.

(1889) 41 Ch D 552. (1889) 41 Ch D 552 at 556–7.

6.

As to trusts where there is no cestui que trust, see Gray on Perpetuities, 4th ed, Appendix H, pp 767– 86. [1896] WN 86.

7. 8.

9.

[1932] 1 Ch 38; [1931] All ER Rep 129. These cases treat 21 years as the maximum period for duration of the trust, and regard this as satisfying ‘the rule against perpetuities’. But this rule is concerned not with duration but commencement of interests: see [9-28]. The concern thus must be with the rule against limitation of alienation of property, and non-charitable trusts of perpetual duration, which is often given the same name: see [10-81] and [11-08]. [1939] NZLR 91; see also Mussett v Bingle [1876] WN 170; Re Dean (1889) 41 Ch D 552 at 557; Duffus (M’Caig’s Trustees) v Kirk-Session of the United Free Church of Lismore 1915 SC 426.

10. [1960] Ch 232; [1959] 3 All ER 562. 11. (1870) 9 SCR (NSW) Eq 94. 12. (1918) 19 SR (NSW) 10. 13. (1932) 32 SR (NSW) 459. 14. (1943) 43 SR (NSW) 169. 15. (1990) 20 NSWLR 720; Re Hamilton-Grey (1938) 38 SR (NSW) 262. 16. (1938) 38 SR (NSW) 262; 55 WN (NSW) 45. 17. (2003) 59 NSWLR 259. 18. [1997] 2 Qd R 12. 19. For further discussion of these cases, see H Ford, Unincorporated Non-Profit Associations and J Morris and W Leach, The Rule Against Perpetuities, 2nd ed, pp 313–18. And see [9-30]. 20. Bowman v Secular Society Ltd [1917] AC 406; [1916–17] All ER Rep 1; Re Ogden [1933] Ch 678; [1933] All ER Rep 720; Leahy v A-G (NSW) [1959] AC 457; (1959) 101 CLR 611; [1959] 2 All ER 300; Re Goodson [1971] VR 801. 21. (1966) 114 CLR 634; [1966] ALR 1044. 22. J Morris and W Leach, The Rule Against Perpetuities, 2nd ed, 1962, p 317; and see Re Recher [1972] Ch 526; [1971] 3 All ER 401. 23. [1914] 2 Ch 90; [1914–15] All ER Rep 223. 24. [1943] 2 All ER 505. 25. As to this expression, see [11-08]. 26. (1966) 114 CLR 634; [1966] ALR 1044. 27. See Neville Estates Ltd v Madden [1962] Ch 832 at 849; [1961] 3 All ER 769 at 778; Re Goodson [1971] VR 801 at 810–14; Hunt v McLaren [2006] WTLR 1817; Hanchett-Stanford v Attorney-General [2009] Ch 173; [2008] 4 All ER 323. See now, for testamentary trusts, Succession Act 2006 (NSW) s 43, and its counterparts in most other jurisdictions: Wills Act (NT) s 42; Succession Act 1981 (Qld) s 33Q; Wills Act 2008 (Tas) s 57; Wills Act 1997 (Vic) s 47.

28. (1989) 25 FCR 495 at 504–5; 88 ALR 486 at 494. See also Re Grant [1979] 3 All ER 359 at 366; [1980] 1 WLR 360 at 368. 29. See Caboche v Ramsay (1993) 119 ALR 215 at 226–8. 30. (2001) 52 NSWLR 641 at [127]–[129]. 31. [1969] 1 Ch 373; [1968] 3 All ER 65; on this case, see J Evans (1969) 32 MLR 96; Re Lipinski [1976] Ch 235; [1977] 1 All ER 33; R v District Auditor; Ex parte West Yorkshire Metropolitan County Council (1986) 26 RVR 24; C Harpum [1986] CLJ 391. 32. [1969] 2 All ER 232; [1969] 1 WLR 444. 33. [1971] 2 NSWLR 453 at 465. 34. (2001) 79 SASR 54 at [49]. 35. [1934] Ch 342; [1933] All ER Rep 805. Cf Peterborough Royal Foxhound Show Society v Inland Revenue Commissioners [1936] 2 KB 492; [1936] 1 All ER 813. 36. See Bourne v Keane [1919] AC 815 at 874–5; [1918–19] All ER Rep 167 at 186. 37. [1952] Ch 534; [1952] 1 All ER 1067. 38. [1957] 1 All ER 745; [1957] 1 WLR 729. See also [10-29]. 39. [1968] VR 390. 40. For example, Morice v Bishop of Durham (1804) 9 Ves 399; 32 ER 656; (1805) 10 Ves 522; 32 ER 947; Re Wood [1949] Ch 498; [1949] 1 All ER 1100. 41. For example, as to the second reason, Leahy v A-G (NSW) [1959] AC 457 at 475–6, 484; (1959) 101 CLR 611 at 617–18, 625–6 and, as to the third, Public Trustee v Nolan (1943) 43 SR (NSW) 169, and [11-08]. 42. (1804) 9 Ves 399; 32 ER 656; (1805) 10 Ves 522; 32 ER 947. 43. Re Astor [1952] Ch 534 at 547; 1 All ER 1067 at 1074–5. See L Leigh, 18 MLR 120. 44. H Ford, Unincorporated Non-Profit Associations, pp 23–5. 45. Leahy v A-G (NSW) [1959] AC 457; (1959) 101 CLR 611. 46. On this question generally, see J Gray, The Rule Against Perpetuities, 4th ed, Appendix H, [894]–[909]; Scott on Trusts, [12.6], [12.10]–[12.11]; Jarman on Wills, 8th ed, pp 284–90, 898–9; Theobald on Wills, 17th ed, [12-003]–[12-007], [12-029]–[12-031] and [31-072]; J Ames (1892) 5 HLR 389; J Gray (1902) 15 HLR 509; G Clark (1911) 10 Michigan LR 31; C Sweet (1917) 33 LQR 236, 342; B Smith (1930) 30 Columbia LR 60; W Hart (1937) 53 LQR 24; R Eggleston (1941) 2 Res Judicatae 118; A Scott (1945) 58 HLR 548; D Potter (1949) 13 Conv (NS) 418; A Kiralfy (1950) 14 Conv (NS) 374; L Sheridan (1953) 17 Conv (NS) 46; O Marshall (1953) 6 Current Legal Problems 151; L Leigh (1955) 18 MLR 120; L Sheridan (1959) 4 UWALR 235; E Walford (1960) 24 Conv (NS) 278; H Ford, Unincorporated Non-Profit Associations, pp 12–49; J Morris and W Leach, The Rule Against Perpetuities, 2nd ed, pp 307–27; P Lovell (1970) 34 Conv (NS) 77; J Harris (1971) 87 LQR 31; K Widdows (1977) 41 Conv 179; A Everton (1982) 46 Conv 118. No theory can satisfactorily reconcile all the decided cases. 47. (1804) 9 Ves 399; 32 ER 656; (1805) 10 Ves 522; 32 ER 947. 48. See H Ford, Unincorporated Non-Profit Associations, pp 23–5; this was evident in Re Boning [1997] 2 Qd R 12. 49. Re Endacott [1960] Ch 232 at 246; [1959] 3 All ER 562 at 568. See also Re Goode [1960] VR 117; Leahy v A-G (NSW) [1959] AC 457; (1959) 101 CLR 611. 50. See, for example, the judgment in Re Price [1943] Ch 422; [1943] 2 All ER 505. 51. See J Morris and W Leach, The Rule Against Perpetuities, 2nd ed, pp 321–7; Re Cain [1950] VLR 382

at 391 per Dean J; and [9-28] and [10-81]. 52. Pirbright v Salwey [1896] WN 86. 53. Re Hooper [1932] 1 Ch 38. 54. NSW: Perpetuities Act 1984 s 16(2); ACT: Perpetuities and Accumulations Act 1985 s 17(2); Qld: Property Law Act 1974 ss 209(1), 210 and 221; Vic: Perpetuities and Accumulations Act 1968 ss 5, 6 and 18; Tas: Perpetuities and Accumulations Act 1992 ss 6, 9 and 18; NT: Law of Property Act 2000 s 198. In WA (Property Law Act 1969 Pt XI) and SA (Law of Property Act 1936 Pt 6 Div 3) the legislation has not gone this far and the common law position continues — 21 years unless a life in being can be found (Pirbright v Salwey [1896] WN 86; Re Hooper [1932] 1 Ch 38; Re Kelly [1932] IR 255; cf Re Dean (1889) 41 Ch D 552). 55. Re Producer’s Defence Fund [1954] VLR 246. 56. For example, L Sheridan (1953) 17 Conv (NS) 46. 57. [1960] Ch 232; [1959] 3 All ER 562. 58. Re Douglas (1887) 35 Ch D 472.

[page 205]

CHAPTER 12 Resulting Trusts Introduction ‘Automatic Resulting Trusts’ and ‘Presumed Resulting Trusts’ ‘Automatic Resulting Trusts’ — Non-Disposal of Beneficial Interest Introduction No Trusts Stated Trusts Declared as to Part of Property Failure of Express Trust Failure of Purpose of Loan Unexhausted Residue Surplus Subscriptions The Failure of Engrafted Trusts: To Whom Does the Property Result?

[12-01] [12-01] [12-02] [12-02] [12-03] [12-04] [12-05] [12-06] [12-07] [12-08] [12-09]

Presumed Resulting Trusts Purchase in Another’s Name Purchase Price Presumption of Advancement Rebuttal of Presumption Cohabitating Couples Australian Law Summarised Fiduciary Duty Husband and Wife English Law: Divergence from Australian Improvement of Property

[12-10] [12-10] [12-11] [12-12] [12-13] [12-14] [12-15] [12-16] [12-17] [12-18] [12-19]

Voluntary Transfers

[12-20]



Voluntary Transfers of Land Voluntary Transfers of Personalty

[12-20] [12-21]

Introduction ‘Automatic Resulting Trusts’ and ‘Presumed Resulting Trusts’ [12-01] A resulting or implied trust is a trust which arises in favour of the settlor or those taking through the settlor. The circumstances in which such trusts may arise can be grouped under two main headings. The first is where the settlor has transferred property to trustees but [page 206] has not disposed of, or not wholly disposed of, the beneficial interest. The second is where a purchaser of property directs that it be transferred into the name of a third person and there is nothing to indicate an intention that that person should take the property beneficially. In these circumstances, the settlor or purchaser, as the case may be, retains the beneficial interest which has not been disposed of. The term ‘resulting’ applied to these trusts suggests that the property comes back to the settlor or purchaser after it has been given away. This is misleading. It is also misleading to imagine that a separately identified equitable interest is at all times in the hands of the beneficiary of the resulting trust. In truth, that separately identified equitable interest only springs up as a separate interest as a result of the events giving rise to the resulting trust.1 Resulting or implied trusts do not need to be in, or evidenced by, writing. The statutory provisions requiring formalities in relation to the declaration of trusts and the disposition of equitable interests do not affect the creation or operation of resulting, implied or constructive trusts.2 In Re Vandervell’s Trusts (No 2),3 Megarry J discussed the distinction between the two classes of resulting or implied trust. He described the first as ‘automatic resulting trusts’ and the second as ‘presumed resulting trusts’. In the former, the

resulting trust takes effect by operation of law: what the settlor has failed effectively to dispose of remains automatically vested in the settlor. There is no presumption arising capable of being rebutted by evidence. In the latter, an effective disposition of some kind has taken place, and the rebuttable presumption of a resulting trust suffices, in the absence of a manifest intention, to indicate the wishes of the settlor as to the effect of that disposition. The litigation concerning the affairs of Vandervell illustrates both aspects of the resulting or implied trust. Vandervell caused his trustee to vest the legal and beneficial title to a parcel of shares in the Royal College of Surgeons in a manner that did not require writing within s 53(1)(c) of the Law of Property Act 1925 (UK).4 The College then granted to the trustee an option to purchase the shares. The option was held by the trustee on trusts which a majority of the House of Lords held to be undefined. The result was that the beneficial interest resulted to Vandervell as settlor.5 This is an example of an ‘automatic’ resulting trust. However, in the meantime, the trustee had exercised the option and paid the purchase price to the College with funds held by it on trust for Vandervell’s children. In the next stage of the litigation, the Court of Appeal held,6 on appeal from Megarry J, that the shares so acquired were held by the trustee on the trusts for the children. This is an example of a ‘presumed’ resulting trust. [page 207]

‘Automatic Resulting Trusts’ — Non-Disposal of Beneficial Interest Introduction [12-02] A resulting trust arises upon a disposition of the legal estate without any disposition of the beneficial interest. It arises by reason of a mistake or an oversight in the drafting of a document evidencing an express trust or a failure to make provision for the particular contingency which has later occurred. The language of presumption is commonly used, but it is misleading. It suggests that an absolute owner of property is to be viewed as having at all times two

interests, the legal title and the equitable interest. Yet the equitable interest does not arise until the title is conveyed to the disponee: it is a new interest which arises, not something which existed before the disposition and was unaffected by it.7 The usage under discussion is an example of a common and mistaken assumption that ‘for all purposes and at every moment of time the law requires the separate existence of two different kinds of estate or interest in property, the legal and the equitable’.8 The new equitable interest arising from the resulting trust is ‘engrafted upon’ the legal interest.9 The use of language like ‘presumed’ is also misleading in that presumptions operate where there is a failure to tender all the evidence, while resulting trusts often arise in circumstances where all possible evidence has been called and there is no presumption which any evidence could rebut.10 Save in the case of secret and half-secret trusts,11 evidence cannot be adduced to prove what the settlor or testator intended,12 and the law treats the settlor or testator as retaining the beneficial interest. But a presumption of a resulting trust arising under a document inter vivos may be strengthened or rebutted by parol evidence.13

No Trusts Stated [12-03] If a settlor conveys land to X ‘upon trust’ without stating what the trust is, the trustee cannot keep the property for that trustee’s personal benefit but must hold it in trust for the settlor. Similarly, where a testator leaves property to Z ‘upon trust’ and does not set out the trust, the trustee holds the property upon trust for the residuary beneficiaries, if any, and, if not, for those taking on intestacy. X and Z are clearly only trustees, taking no beneficial interest. Similarly, where a testator devised real estate to ‘my trustees’ but declared no trust in regard to such real estate, the trustees held in trust for the person taking on intestacy, the heir.14 [page 208]

Trusts Declared as to Part of Property [12-04] Similarly, a resulting trust may arise upon a conveyance of property to trustees,15 or under a devise,16 or bequest,17 with failure to dispose of the

whole beneficial interest. If a testator leaves property to trustees upon certain trusts which are not sufficient to exhaust the estate, that is, a portion of the property is undisposed of, the trustees will hold the property in trust for the residuary beneficiaries, if any, and if not, for those taking on intestacy. For example, a testator gives all his property to trustees upon trust to pay the rents and profits to his wife for life. He makes no further disposition. Here the trustees will hold the absolute interest in remainder for those taking on intestacy.18 Similarly, if he disposed of a specific part of his property to A, and another to B, and another to C, and inserted no residuary clause, then if there was a surplus after providing for the gifts to A, B and C, his trustees would hold for those taking on intestacy.

Failure of Express Trust [12-05] The same rule applies where express trusts fail because of the death of the beneficiary before the death of the testator,19 or because of uncertainty,20 or because of the trust’s illegality,21 or because of total failure of the purposes for which the trust was constituted,22 or because of the trust’s unenforceability through non-compliance with the provisions of the Statute of Frauds or its modern equivalents. In such cases, the property that is the subject of the trust that fails is held by the trustees in trust for the residuary beneficiaries or for the next-of-kin of the testator according to the circumstances of the case. For example, if a testator directs an accumulation of income of a specific fund beyond the period allowed by law, any income arising after the statutory period would be held by the trustees for the persons entitled under the will to property not specifically disposed of, or for those entitled on intestacy if residue is directed to be accumulated.23 [page 209]

Failure of Purpose of Loan [12-06] It has now been established that if a person lends money to another on terms that it will be applied towards a specified purpose, and it becomes impossible so to apply the money, it will be held by the latter on a trust for the

former. Thus, in Barclays Bank Ltd v Quistclose Investments Ltd,24 the House of Lords held that money advanced by a creditor to a company for the purposes of enabling the latter to pay a dividend was held on trust for the creditor when the liquidation of the company frustrated any possibility of paying a dividend. Whether the trust is express or resulting has been a matter of debate. Another analysis of this ‘Quistclose trust’ is that the trust is a resulting trust from the outset, but it is defeasible by the carrying out of a duty or exercise of a power in the borrower to apply the money for the stated purpose: if the duty is not carried out or the power is not exercised, the resulting trust operates because the resulting trust is no longer defeasible by the borrower.25

Unexhausted Residue [12-07] A resulting trust may arise where property has been conveyed to trustees for certain purposes and the property conveyed has been found more than sufficient for the purposes, leaving a surplus after those purposes have been fulfilled. For example, a testator leaves $100,000 to trustees to be employed by them in paying off his son’s creditors at the date of the testator’s death. The debts amount only to $70,000. The balance of $30,000 ‘results’ to the testator’s estate. The trustees hold it in trust either for the residuary legatees or those entitled on the testator’s intestacy, as the case may be. Similarly, if a sum had been given to trustees to purchase an annuity of a certain amount, any surplus would result as above. It is sometimes difficult to determine whether the instrument creating the trust has absolutely disposed of the beneficial interest of the settlor in the particular property or whether it has disposed of the beneficial interest only so far as is necessary to carry out the trust. In Smith v Cooke,26 the partners in an apparently insolvent firm assigned everything to trustees to carry on the business and dispose of it, after paying all expenses, to ‘pay and divide the clear residue of the said profits and moneys’ among the creditors ‘in rateable proportions, according to the amount of their several and respective debts’. In consideration of the assignment, the creditors released their claims. Upon realisation, there was a surplus. It was held by the House of Lords that upon the construction of the deed there had been an absolute assignment of everything to the creditors in consideration of the release and that any profit made belonged to the creditors. It would have been otherwise had the assignment been upon

trust to pay the debts or to divide the proceeds rateably in payment of the debts.27 [page 210]

Surplus Subscriptions [12-08] Cases of this kind sometimes arise where moneys are raised by subscription for some particular purpose and more is obtained than is required. The possibilities as to the destination of the surplus are: (1) upon a resulting trust to the donors; (2) if the purpose was charitable and there was a general charitable intention, then upon a scheme cy-près;28 (3) if the purpose was charitable but there was no general charitable intention, then upon a resulting trust as in (1); (4) to the Crown as bona vacantia if the donor intended to part with the money once and for all and to relinquish any further claim upon it. The cases naturally turn upon the particular circumstances involved. In Re Trusts of the Abbott Fund,29 a fund had been raised by subscription for the maintenance and support of two ladies left in poor circumstances. At the death of the survivor there was a portion of the fund unused. It was held that there was a resulting trust of the balance in favour of the subscribers. In Re Andrew’s Trust,30 a fund had been raised for the education of the children of a deceased clergyman. When all the children had reached their majority, a portion of the fund was unexpended. In this case, it was held there was no resulting trust, and the surplus was divided among the children equally.31 This case was applied by Sir Robert Megarry VC in Re Osoba (dec’d).32 He distinguished Re Trusts of the Abbott Fund on the basis that there it was not possible (as in Re Osaba (dec’d)) to treat the gift as an absolute gift with the expression of purpose merely as an indication of motive. In Re British Red Cross Balkan Fund,33 there was a surplus unexpended at the close of the First Balkan War. It was held that this belonged to the subscribers in proportion to their subscriptions. Although the subscriptions had been paid at various times and moneys had been spent while the subscriptions were coming in, the rule in Clayton’s case34 was not applied.35

There will, however, be no resulting trust where the original purpose was charitable and a general intention of charity is found by the court.36 Where it is not possible to presume that the donor intended the gift to result back then, if the trust fails, the property will go to the Crown as bona vacantia.37 Particular difficulty arises where the donors are unascertainable. In Re Gillingham Bus Disaster Fund,38 Harman J ordered that the surplus should not be paid [page 211] to the Crown as bona vacantia merely because the donors were unascertainable; the donors were not to be taken to have parted with their money out-and-out and the trustees held the fund on resulting trust; they had to pay the fund into court like any other trustee who cannot find the beneficiary. On the other hand, in Re West Sussex Constabulary’s Widows Children & Benevolent (1930) Fund Trusts,39 Goff J took the view that anonymous donors to a collection box in aid of disaster victims did intend an out-and-out gift, such that the surplus did go as bona vacantia. His Lordship also held that persons who buy tickets for an entertainment or raffle part with their money out-and-out. Waddell J applied this case to the rather different problem of distributing the surplus of a superannuation fund in Rees v Dominion Insurance Co of Australia Ltd (in liq).40 Special considerations apply if the moneys were subscribed not gratuitously but pursuant to club rules. The matter was considered by Megarry J in Re Sick & Funeral Society of St John’s Sunday School Golcar.41 Where subscriptions are made to an unincorporated club which is then dissolved, the destination of any surplus on hand will be dictated by any applicable club rules which have the force of contract between members rather than by principles of resulting trust, which after all only apply in the absence of contrary intention. The matter was taken further in Re Bucks Constabulary Widows’ & Orphans’ Fund (No 2).42 The rules of the society in question made no provision for distribution of surplus assets on winding-up, but Walton J held there was a term to be implied into the contracts subsisting between the members that surplus funds should be distributed in equal shares among members at the date of dissolution. In contrast, in Rees v Dominion Insurance Co of Australia Ltd (in liq),43 Waddell J held that as neither employer nor employees had any right to the residue of a superannuation fund expressly conferred by the constituent documents thereof,

it went to the Crown as bona vacantia. A resulting trust over so much of the employees’ contributions to a pension fund as were attributable to the creation of a surplus has also been recognised.44 There is a dispute in relation to what happens when the second-last member of an unincorporated association dies. One view is that in the absence of an express provision in the rules, the surviving member is not entitled to the fund and that it passes to the Crown as bona vacantia.45 Another is that whether or not there was any intention of providing benefits to the survivor, the effect of holding property in ‘collective ownership’ as a subspecies of ‘joint tenancy’ is that the survivor is entitled to the fund, subject to anything to the contrary in the rules.46 The former view has the unattractive feature that the death of the penultimate member works a distribution of the interest of the surviving member.

The Failure of Engrafted Trusts: To Whom Does the Property Result? [12-09] In every case considered so far, when there is a resulting trust, the property results to the settlor in the case of a deed and to either the next-of-kin or the residuary beneficiaries in the case of a will. But there are some cases, all involving trusts created by will, which demonstrate that property can result on the failure of an express trust, to persons other than [page 212] the residuary beneficiaries or next-of-kin. This situation is occasioned by the rule in Lassence v Tierney,47 the classic statement of which is that of Lord Davey in Hancock v Watson:48 [I]t is settled law that if you find an absolute gift to a legatee in the first instance, and trusts are engrafted or imposed on that absolute interest which fail, either from lapse or invalidity or any other reason, then the absolute gift takes effect so far as the trusts have failed to the exclusion of the residuary legatee or next-of-kin as the case may be.

The rule applies to appointments made under a power as well as to bequests and devises.49 The rule is essentially one of construction, and therefore is one which yields to a contrary intention.50 While the rule is easy to state and the

principle behind it easy enough to understand, it has given rise to considerable difficulty in practice largely because, as a matter of construction, it is not easy in many cases to determine whether the initial gift is truly absolute.51

Presumed Resulting Trusts Purchase in Another’s Name [12-10] A resulting trust will be presumed where, on a purchase, the legal title to real52 or personal53 property is vested in someone other than the person who is proved (by parol54 or other evidence55) to have provided the purchase money.56 Thus, where A purchases land from X and directs X to make the transfer to B, which X does, there is a presumption of a resulting trust in favour of A except, as will be seen later, where A is the husband or parent of, or stands in loco parentis to, B.57 The presumption in question is a ‘legal presumption’ — a ‘presumption of law’. It can be rebutted by evidence, but only by evidence establishing the contrary of the fact presumed on the balance of probabilities. If this is not done, the court is obliged to make a finding of fact to the effect of the presumption.58 Thus Deane J said that the ‘presumption [of resulting trust] performs much the same function as a civil onus of proof. … [T]he presumption [of resulting trust] cannot prevail over the actual intention of that party as established by the overall evidence. …’59 It has been argued that actually the fact presumed is not that there is a ‘resulting trust’, but rather that there has been a declaration of trust by the person who provided the purchase money in his, her or its own favour: the label ‘resulting trust’ merely states a [page 213] conclusion of law from that state of affairs.60 As explained below, on the whole that view is, strictly speaking, supported by the authorities.61 The classic authority is Dyer v Dyer,62 in which Eyre LCB said: The clear result of all the cases, without a single exception, is, that the trust of a legal estate, whether freehold, copyhold, or leasehold; whether taken in the names of the purchasers and

others jointly, or in the name of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the purchase money. This is a general proposition supported by all the cases, and there is nothing to contradict it; and it goes on a strict analogy to the rule of the common law, that where a feoffment is made without consideration, the use results to the feoffor.

The ‘rule of the common law’ to which Eyre LCB referred arose from the standard practice of the fifteenth to seventeenth centuries ‘for those with fee simple estates in land to put them in use for themselves’.63 This had various advantages — permitting wills to be made, avoiding feudal incidents like reliefs, wardship, dower and curtesy, allowing the title to be used for the payment of debts on death, creating complex settlements and avoiding escheat and forfeiture for treason.64 So common did feoffments to uses become that St Germain said that ‘few men be sole seised on their land’.65 ‘[B]ecause it was not usual to include words of trust on the face of the conveyance, and because such transfers were gratuitous, [the court supplied] a presumption of declarations to uses.’66 Lord Nottingham LC said in Cook v Fountain:67 All trusts are either, first, express trusts, which are raised and created by act of the parties, or implied trusts, which are raised or created by Act or construction of law; again, express trusts are declared either by word or writing; and these declarations appear either by direct and manifest proof, or violent and necessary presumption. These last are commonly called presumptive trusts; and that is, when the Court, upon consideration of all circumstances presumes there was a declaration, either by word or writing, though the plain and direct proof thereof be not extant.

Lord Nottingham explained the following year that to this there was a qualification where the feoffment was to the feoffor’s son.68 [A] feoffment to a stranger, without consideration, raised a use to the feoffer; but a feoffment to the son, without other consideration, raised no use by implication to the feoffor, for consideration of blood settled the use in the son, and made it an advancement.

It follows from what Lord Nottingham LC said in Cook v Fountain that the fact which the courts presumed was an actual declaration of trust, not a mere intention to do so.69 That Eyre LCB’s statement in Dyer v Dyer represents the law today in Australia was confirmed by Aickin J (with the concurrence of Stephen, Mason and Murphy JJ) in Napier v Public Trustee (WA), where his Honour said:70 Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be.

[page 214] This proposition is subject to the exception that in the case of transfers to a wife or a child (including someone with respect to whom the transferor or purchaser stands in loco parentis) there is a presumption of advancement so that the beneficial as well as the legal interest will pass. Each of the presumptions may be rebutted by evidence.

In Calverley v Green,71 Deane J repeated the large proposition asserted by Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ in Charles Marshall Pty Ltd v Grimsley72 that these principles are so well entrenched that in the High Court of Australia they can no longer be the subject of argument. Where two or more persons have contributed the purchase money in unequal shares and the property is purchased in the joint names, there is, in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money.73 Difficulty in evaluating the proportions does not in itself justify any application of the maxim ‘equality is equity’ so as to divide the beneficial ownership equally. Suggestions that this was so, at least where the parties were spouses, were rejected by the House of Lords in Gissing v Gissing.74 Where the purchase price of property is contributed by two people but the property is conveyed into the name of only one, there will be a rebuttable presumption of a resulting trust on an equitable joint tenancy,75 unless statute has made contrary provision.76 These principles will not apply if A lends or gives money to B and B uses the money to buy property from X, or if A lends or gives money to B and at the direction of B pays it to X; B is not an implied trustee of the land for A because A has not acted as a purchaser. Unless A can show an express trust of the land by B in favour of A, the relationship between A and B will be limited to donor and donee or lender and borrower.77 Difficulty may then arise as to the onus of proof, there being apparent conflict between English and Australian decisions. In Heydon v Perpetual Executors & Agency Co (WA) Ltd,78 the High Court held that the plaintiff executor, in an action for recovery of money lent by the deceased, had the onus of proving the transaction amounted to a loan, not a gift, and that this onus was not met merely by proof of payment of the money to the defendant. On the other hand, in Seldon v Davidson,79 another action for recovery of money lent, the English Court of Appeal held that the payments (receipt of which was not denied) imported prima facie an obligation to repay,

in the absence of circumstances tending to show a presumption of advancement or that the payment had been made to settle an existing obligation, and that the burden of proof to disprove an obligation to repay lay on the defendant. In Joaquin v Hall,80 Jenkinson J held that in an action to recover a loan, the assertion that the money was a gift is not, as the English Court of Appeal assumed, a plea by [page 215] the defendant by way of confession and avoidance of the plaintiff’s case (in which event the onus would be on the defendant) but a denial of an essential ingredient in the plaintiff’s case (namely, the making of a loan) which puts the onus on the plaintiff to prove that case, as the High Court held in Heydon’s case. It has been said that a person does not become a trustee under a resulting trust until that person is aware of the circumstances which gave rise to it.81

Purchase Price [12-11] What is meant by provision of the purchase price? First, it is not sufficient that the alleged beneficiary has paid a periodic outgoing for which the alleged trustee was liable in respect of the asset in question. Thus, in Savage v Dunningham,82 Plowman J held that a tenancy for a term of one year was not held by the defendant on an implied trust for the plaintiffs who had shared equally with him payments of rent. Rent, unlike purchase money, is not paid for the acquisition of a capital asset, but for the use of property during the term. However, his Lordship saw no reason why payment of a premium for a lease might not give rise to an implied trust. Secondly, the concept of ‘purchase price’ includes aggregate cost to the purchaser, elements of which are incidental costs, fees and disbursements; the underlying principle is concerned with the cost to the purchasers of the conveyance rather than the benefit to the vendor. This was the view of McLelland J in Currie v Hamilton;83 it should be preferred to the contrary decision of Bryson J in Little v Little.84 The High Court of Australia in Bloch v Bloch85 decided that where the relevant property the parties intended to acquire was not the title to land

subject to mortgage but the land freed from the mortgage, the price paid to pay off the mortgage as well as the price paid to the vendor must be taken into account in determining the beneficial interest of the parties. As Mason and Brennan JJ observed in Calverley v Green:86 Mortgage payments may quantify the parties’ interests under a resulting trust of a property acquired as a mortgage-free investment, but they would rarely quantify the interests of parties under a resulting trust of a house property acquired as a home to live in.

In that case, the parties (who were unmarried) had bought for $27,250 (in their joint names) a property as a house to live in. Of that sum, some $9000 was provided by the appellant and the balance was raised by them on mortgage which they were jointly liable to repay. It followed that in the absence of a contrary arrangement between them (and none was shown) the borrowed moneys applied to buy the property belonged to the parties jointly and the payments made later under the mortgage by the appellant alone worked no change in the equitable interests established by acquisition of the title because they were not payments of the purchase price but payments made towards securing the release of the charge the parties had created over the property purchased. The result was that the legal title was held on trust for the parties in proportions representing a $9000 contribution by the appellant and equal contributions as to the balance. As Gibbs CJ emphasised,87 the extent of the beneficial interests of the [page 216] respective parties must (in the absence of a further arrangement) be determined at the time when the property was purchased and the trust created, so that the circumstance that the joint mortgage debt had been repaid by the appellant alone was not relevant in determining the extent of the interests of the parties. It might, however, be relevant in determining accounts between the parties.88 While the position in Australia has been settled by the High Court, it is apparently not so in England where since Moate v Moate89 it has been persistently urged, though without reasoning in support, that in the absence of an arrangement between the parties, payments of principal and interest on mortgages may be treated as payments of the purchase price. In Gissing v Gissing,90 Lord Pearson said: Contributions [to the purchase price] are not limited to those made directly in part payment of

the price of the property or to those made at the time when the property is conveyed into the name of one of the spouses. For instance there can be a contribution if by arrangement between the spouses one of them by payment of the household expenses enables the other to pay the mortgage instalments.

Presumption of Advancement [12-12] A resulting trust is raised in the foregoing circumstances because the court presumes, in the absence of evidence to the contrary, that the person paying the purchase money declared a trust over the property. But where the legal title is, on a purchase, vested in someone whom the person providing the purchase money is under an obligation to support, namely, a wife, child91 (whether legitimate or illegitimate)92 or someone to whom the person stands in loco parentis,93 there is no resulting trust in favour of the purchaser. There is, on the contrary, a presumption that the property was vested as an absolute gift or as an advancement.94 In Nelson v Nelson,95 the New South Wales Court of Appeal held that the presumption applied between mother and adult child. The further appeal to the High Court was decided on other grounds. However, all five members of the court supported the extension of the presumption to mother [page 217] and adult child.96 In Wirth v Wirth,97 Dixon CJ, in a passage which Gibbs CJ approved in Calverley v Green,98 said: While the presumption of advancement doubtless in its inception was concerned with relationships affording ‘good’ consideration, it has in the course of its growth obtained a foundation or justification in the greater prima facie probability of a beneficial interest being intended in the situations to which the presumption has been applied.

Also in Calverley v Green,99 Deane J preferred to state the rule as not strictly a presumption but as one that in certain relationships equity infers that any benefit has been provided by way of advancement with the result that the prima facie position remains that the equitable interest is at home with the legal interest.100 And in Martin v Martin, it was said that there is no presumption of resulting trust when a husband bought land in his wife’s name, because ‘as she was his wife the fact that he found the purchase money for the land raised no presumption in his favour of a resulting trust as it would or might have done had she been a stranger … [The presumption] is called a presumption of

advancement but it is rather the absence of any reason for assuming that a trust arose’.101 It is not clear that any practical consequence flows from these different formulations. The presumption does not arise in the case of a gift by a wife to her husband.102 A transfer of property to an intended wife in contemplation of marriage for which she and the transferor had contracted perhaps raises a presumption of advancement.103 Unless the purchaser is in loco parentis to the nominee, the presumption does not arise where the purchase is taken in the name of a sister,104 nephew,105 son-in-law,106 daughter-in-law,107 or grandchild.108 The presumption of a gift by the purchaser to his wife will not be affected by the fact that the marriage is afterwards dissolved, provided the marriage was not void ab initio.109 The presumption may arise between a man and a woman whom the man had bigamously married and who knew it.110 It has now been settled that no presumption of advancement arises from a man purchasing property in the name of a woman not his wife or daughter.111 In particular, Mason and Brennan JJ, after declaring the term ‘de facto husband and wife’ to [page 218] be ‘obfuscatory of any legal principle except in distinguishing the relationship from that of husband and wife’, continued:112 Where the contributors to the purchase price are not husband and wife, the taking of a conveyance in their joint names is less likely to support an inference that they intend the right of survivorship to govern their beneficial interests. In a case where a man and woman are cohabiting though unmarried there is no presumption, either of equity or human experience, that they intend their relationship to have the same consequences upon their individual property rights as marriage has upon the property rights of spouses. An assumption that the parties to such an arrangement intend to maintain independent control of money and property and to retain a testamentary power to dispose of assets in which they have an interest is more likely to coincide with reality than an assumption of joint ownership. The provisions of ss 79 and 80 of the Family Law Act 1975 (Cth) now furnish a further ground for not applying the special rules governing the title to property in the case of spouses in order to resolve property disputes between parties who have cohabited but who have not married. On dissolution of a marriage, ss 79 and 80 confer a discretionary power upon the Family Court of Australia to alter the property interests of the parties to the marriage if it is just and equitable to do so. On the termination of an association between a man and a woman who are not married to each other, no discretionary power may be exercised and the jurisdiction of the courts of equity is simply to declare the proprietary rights of the parties — a jurisdiction which a court of equity is not at liberty to exceed either in the case

of husband and wife or in the case of a man and woman who are not married. …113 Therefore, special rules affecting the title to property of husband and wife can have no application in the present case.

Moreover, where a case does fall within one of the categories of presumption of advancement, the strength of the presumption varies from case to case.114 In particular, where both spouses contribute to the purchase of assets during marriage, it may be the usual inference that they would wish those assets to be held jointly and pass to the survivor, and in the view of Lord Upjohn (in Pettitt v Pettitt115) even if the wife held the legal title, it would be against the probabilities of the case to claim an advancement to her, unless the husband’s contribution was very small. In Hepworth v Hepworth,116 where the purchase money for land and the matrimonial home erected thereon was provided partly by the husband and partly by his wife and she procured the transfer of the land solely into her name, without his consent, the High Court held that no presumption of advancement arose. If two persons (being either husband and wife or parent and child) advance the purchase money and the transfer is taken by one only of them (being the wife or child as the case may be), there will be a presumption of advancement. That will not be so if the transferee be husband or parent, for he or she will hold the title on trust for himself or herself and the other party in proportion to the sums advanced by them.117 The presumption of advancement and, it would seem, that of a resulting trust, arise prior to actual conveyance if the conveyance is preceded by a specifically enforceable contract.118 A presumption of advancement was held not to arise where the only basis put forward for it was that the purchase price was paid out of a credit card account established by a husband which his wife was authorised to use.119 [page 219]

Rebuttal of Presumption [12-13] The presumption in favour of a resulting trust in the case of a voluntary transfer of realty or a transfer to a person other than the purchaser may be rebutted. So may the presumption against a resulting trust in the case of

a transfer to the wife or child of, or person in loco filii to, the purchaser. That is, where the presumption of a resulting trust arises, evidence is admissible to prove that no trust was intended, and where there is a presumption against a resulting trust, as in the case of a transfer to the wife or child of the purchaser, evidence will be admitted to show that the wife or child was intended to be merely the nominee of the purchaser.120 Further, in either class of case, evidence will be admitted to show that the transferee of the property holds it not beneficially (in rebuttal of a resulting trust) nor for the purchaser (in rebuttal of a presumption of advancement) but on express trust for a third party. In other words, the law endeavours always to give effect to the intentions of the parties, but in the absence of any evidence of such intention except the bare fact of the transfer to someone other than the purchaser, it presumes, until the contrary is proved, in the first case, in favour of the person providing the purchase money121 and, in the other, in favour of the wife or child or person in loco filii.122 In order to ascertain the true intention of the person who has paid the purchase money,123 the court, apart from receiving testimony from that person as to that person’s intention,124 will admit evidence (written or parol)125 of the circumstances surrounding the transfer: for example, the relationship of the parties, and statements made by the parties.126 Evidence of acts and declarations of the parties before or at the time of the purchase or so immediately after it as to constitute a part of the transaction will be admissible either for or against the actor or declarant. But for subsequent acts and declarations this is not so. In regard to the latter, the non-statutory rules of evidence relating to declarations against interest will apply in jurisdictions not affected by the ‘uniform’ Evidence Acts to permit only admissions to be received.127 The ‘uniform’ Evidence Acts do not appear to lead to any different conclusion. In rebutting either the presumption of a resulting trust or the presumption of advancement, subsequent acts are inadmissible in favour of the person doing those acts but are admissible against that person.128 A resulting trust will be rebutted if the transaction is found to be one of gift or loan or to raise an express trust. But it should be noted that if the express trust is one to which statutory requirements of writing129 apply these must be satisfied. It is no ground for disregarding them that the proof of an express trust will negative a resulting trust otherwise presumed. Furthermore, any subsequent variation of the terms of a resulting trust which involves the disposition of a subsisting equitable interest itself will require writing.130 These basic principles have not always been observed by the courts. Much of Lord Diplock’s speech in

Gissing v Gissing131 ignores them. Later authority openly rejects resulting trusts reasoning.132 [page 220] It should be emphasised that the task is to ascertain property rights at the time of acquisition or purchase of the property concerned, and that the rights so ascertained cannot be altered by subsequent events without an enforceable agreement or a conveyance.133 Hence the relevant intention is the intention at the time of the acquisition or purchase.134 The time of creation of a resulting trust is important, since once it is established, from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, enforceable against any later claimant except a bona fide purchaser for value of a legal estate without notice.135 It has been said that the presumption of a resulting trust may be rebutted by relatively slight evidence where the parties to a marriage have made substantial, albeit unequal, contributions to the acquisition of a property intended to be used as the matrimonial home, and the property is placed in the joint names of the parties.136

Cohabitating Couples [12-14] In Australia, whatever may be the situation in England and jurisdictions governed by decisions of the Privy Council,137 the courts do not feel obliged to fashion ‘phantoms of common intention’ in order to resolve the property relations of disaffected parties.138 The intention that is being searched for is ‘the actual intention of the purchaser at the time of the purchase’, as Gibbs CJ put it in Calverley v Green.139 The relevant intention of one party is that which would reasonably be understood as manifested by that party’s words or conduct, even if that party did not consciously formulate that intention or acted with some different, uncommunicated, intention.140 Where unequal contributions have been made to the purchase price by persons who took a conveyance to themselves as joint tenants then, as Mason and Brennan JJ observed in the same case,141 the equitable presumption can be rebutted or qualified by evidence of a contrary intention common to the contributor. That

common intention is to be inferred from what they do or say rather than gleaned from an uncommunicated state of mind. It may be, as the Victorian Full Court would have it,142 that the English courts have been inclined to be satisfied by slight evidence that in matrimonial and de facto spouse cases the equitable presumption that otherwise would govern the case has been rebutted. And in some cases143 the courts have run together proprietary estoppel and resulting trusts. [page 221] In Gissing v Gissing, particularly in the speech of Lord Diplock,144 and in the English decisions145 which sought to apply it, there was much emphasis upon ‘common intention’ — but not as something which was actually shared by a plurality of contributors to the purchase price and which had the effect of wholly rebutting what otherwise would be the prevailing equitable presumption. Rather, this ‘intention’ appeared to be imputed by the court, seemingly by operation of law. That, as is apparent from the Australian authorities referred to earlier in this chapter,146 is alien to basic notions of the implied or resulting trust. This has been recognised and consciously embraced in England.147

Australian Law Summarised [12-15] The following basic principles, applicable in Australia, may now be stated: (1) Where only one party supplies the purchase money that party’s intention is the only relevant intention in deciding whether a resulting trust is rebutted (in favour of co-incidence of legal and equitable title), a presumption of advancement is rebutted (in favour of a resulting trust in that party’s favour) or there is no resulting trust, no presumption of advancement, but an express trust in favour of a third party. (2) Where the subject matter is land, any express trust must satisfy the formal requirements as to writing, or otherwise be excused therefrom.148 (3) The same will be true of any displacement of a resulting trust by later creation of an express trust.149

However, where a presumption of advancement is rebutted, the trust which (4) is enforced is a resulting not an express trust; oral evidence is admissible to rebut the presumption of gift and thus affirm the resulting trust.150 (5) Where two or more persons take the legal title in shares which do not correspond with their contributions to the price, then evidence of a contrary common intention will be relevant in rebutting the equitable presumption that would otherwise apply.151 (6) This may show that there was an arrangement between them for a gift or loan of some or all of the contributions to the purchase price, such that the legal and equitable ownership of the asset acquired by them correspond. (7) On the other hand, they may have agreed that they were to hold as express trustees on terms that differ from the resulting trust, or they may subsequently so agree; in either case the express trust must satisfy formal requirements unless excused from them.

Fiduciary Duty [12-16] The court will be slow to find evidence sufficient to rebut the presumption of resulting trust and establish a gift where the alleged donor was one to whom the alleged donee owed a fiduciary duty which would appear to be broken by the transaction. Thus, in Bateman Television Ltd v Bateman,152 two company directors who used company moneys to purchase two [page 222] cars were held to hold them as trustees for the company; attempts to show that the money had been furnished as a gift were unsuccessful. It is often said, although on doubtful reasoning, that the presumption of a resulting trust is weak and easily rebuttable but the presumption of advancement is strong and difficult to rebut.153 In a case in which it was argued that the presumption of advancement could be rebutted on relatively slight evidence, the ascription of labels like ‘weak’ to presumptions was criticised as distracting from the inquiry whether there was a definite intention to retain beneficial title so as to rebut the presumption of advancement.154

In relation to either presumption, it once appeared to be the law that either the presumption stood unaffected or it was entirely rebutted, that there was no middle course and that it was impossible for a presumption to be rebutted merely partially.155 However, later authorities favour the view that either presumption can be partially rebutted.156 In Napier v Public Trustee (WA),157 the appellant bought a house in the name of a female friend who had not contributed to the purchase price. On her death, he claimed that it was held on resulting trust in his favour. The High Court agreed and held that the evidence supported a rebuttal of the resulting trust during the lifetime of the friend but no more. That is to say, the conjunction between the legal and equitable estate was disrupted only after her death. Thus no express trust was set up.

Husband and Wife [12-17] There is a presumption of advancement by husbands to wives. But there is no presumption of advancement where a wife makes a purchase in the name of her husband.158 There are clear statements by three of the Law Lords in Pettitt v Pettitt159 that what appeared to them to be the changing conditions of society had much diminished the presumptions of resulting trust and advancement, at least in property disputes between husband and wife. On the one hand, in the same case Lord Upjohn insisted (correctly, it is submitted) that people today give their minds to the technical law of advancements and resulting trusts no more than in times past. [I]t is only because they did not do so then that these presumptions were invented, because that represented the common sense of the matter and what the parties, had they thought about it, would have intended. In my opinion, today the doctrine of resulting trusts still represents the common sense of the matter and what the parties would have agreed had they thought about it.160

[page 223] On the other hand, Lord Upjohn also said161 that (1) where both spouses contribute to the acquisition of property, then the better inference (in the absence of evidence) is that they intended to be joint beneficial owners; (2) this is so whether the legal title be in the names of both or of one only; (3) even if

the legal title is in the wife, it is against the probabilities that the husband intended to advance her, unless his contribution is small.162 There is judicial support for these views in New Zealand,163 and in Calverley v Green,164 Mason, Brennan and Deane JJ indicated some measure of readiness to reconsider the traditional presumption of advancement by husbands to wives. The wide powers of the Family Court under the Family Law Act 1975 (Cth) clearly authorise it to act in disregard of legal and equitable property rights of spouses. The Act is outside the scope of this book but does make the equitable principles regulating matrimonial property ownership of diminished daily importance, though they remain in full force in disputes arising outside the matrimonial relationship as on succession and bankruptcy. Under United Kingdom legislation, comparable results flow. Another body of Australian legislation having a similar impact is that relating to de facto relationships.165

English Law: Divergence from Australian [12-18] The real difficulty with the myriad of English cases which succeeded Pettitt v Pettitt166 and Gissing v Gissing167 is in knowing what effect they have upon principle not only in respect of spouses (and both Pettitt v Pettitt and Gissing v Gissing concerned husband and wife) but at large.168 The confusion that in England now surrounds issues as to evidentiary means of rebuttal of presumptions has been already noted.169 But as the following comments indicate, the rot seems to run much deeper.170 First, neither of the House of Lords decisions, Pettitt v Pettitt171 and Gissing v Gissing,172 would have produced a different result if decided entirely by application of orthodox principle. The first case decided that a husband’s work in effecting minor improvements to his wife’s property did not give him a beneficial interest in it. In the second case, the House decided that a wife’s expenditure on furniture and equipment for her husband’s house, on improvement of the lawn and on clothes for herself and her son did not give her a beneficial interest in the house. Secondly, the mischief arises from observations made in disposing of these two very clearly hopeless cases. In particular, there are in the speeches of Lord Diplock in both Pettitt v Pettitt173 and Gissing v Gissing174 extraordinary passages where his Lordship treats as ejusdem generis the

[page 224] processes used by the courts in deciding whether a contractual term is to be implied and the ‘imputation of a constructive common intention which is that which in the court’s opinion would have been formed by reasonable spouses’ had they given their minds to it at the time of acquiring or improving a ‘family asset’; this constructive common intention is to be discovered by an examination of all the ‘relevant’ circumstances. But equity is concerned with the raising of an implied trust by provision of the purchase price, subject always to rebuttal by evidence of the contrary intention of the party providing the money. It is not a question of ‘common intention’. The ascription of intention rests upon the significance attached to the source of the price. With this the common law principles as to implication of contractual terms have nothing to do. Thirdly, a beneficial interest revealed by the exploration encouraged by Lord Diplock cannot be a resulting or implied trust as traditionally understood. Nor can it be an express trust, for it is of the essence of Lord Diplock’s system that there be no express intention. In any event, an express trust of an interest in land will require writing if statutory requirements are to be met, and this usually will be lacking. Fourthly, the only other possibility is that the trust thus created is a constructive trust, brought in to do justice in the eyes of the judge concerned. In a series of judgments in the English Court of Appeal, Lord Denning MR seized upon Lord Diplock’s remarks in the House of Lords as the basis for granting relief that would not have been available under the orthodox rules.175 Further, in Cooke v Head176 and Eves v Eves,177 the English Court of Appeal held that the new trust is not confined to husband and wife but applies to all other relationships.178 These possibilities will be referred to in Chapter 13. There will be no further treatment here of the modern English authorities on de facto relationships (or on married couples). There is no statutory regime in England equivalent to the Australian regimes for de facto couples, though one was recommended by the Law Commission in 2007. The modern English authorities have created confusion, have aroused controversy and depart from orthodox analysis. At least where property is placed in the joint names of the couple, the presumption of a resulting trust created by unequal contributions to the purchase price is not applied; instead there will be a ‘default option’ of

equality in ownership, subject to any contrary ‘common intentions [of the parties] as to what their shares in the property would be, in the light of their whole course of conduct in relation to it’. The possibility of changes in the parties’ common intentions over time may produce an ‘“ambulatory” constructive trust’.179 These doctrines differ so radically from the position stated by High Court authority in Australia, and do so in a field so completely covered by Australian statutes for both married and unmarried couples, that there is nothing to be gained by analysing them. The Supreme Court of the United Kingdom was moved by various social and other policy considerations. In theory, it is open to the High Court to reconsider its position in the light of those factors, though, as noted earlier, it has been said the underlying principles are so entrenched that in the High Court of Australia they can no longer be the subject of argument.180 [page 225] The modern English approach is said to be limited to cases where the property purchased is to be occupied by the parties as a home, and not to extend to property primarily intended as an investment.181

Improvement of Property [12-19] Questions of whether a trust arises or not can also exist in circumstances where one person expends time and money in improving another person’s property. The orthodox and correct view is that in the absence of circumstances calling for the application of the principle applied in Dillwyn v Llewelyn,182 the former acquires no proprietary interest by so acting. There is some suggestion in cases such as Muschinski v Dodds,183 Baumgartner v Baumgartner184 and Lloyds Bank plc v Rosset185 that conduct of this type nevertheless may be relevant to the question whether a constructive trust may be imposed.186 This matter is considered further in Chapter 13.

Voluntary Transfers

Voluntary Transfers of Land [12-20] The question whether a resulting trust is presumed in the case of a voluntary transfer of land or personalty to a stranger alone is one which cannot be answered with any assurance. It is necessary to treat the position in regard to realty separately from the position in regard to personalty. In regard to realty, at common law, a conveyance of old system land without consideration and without the expression of use to the conveyee raised a resulting use for the conveyor, which the Statute of Uses executed so that the legal estate reverted forthwith to the conveyor. However, if a use were expressed in such a conveyance, not only the legal but also the equitable estate passed to the conveyee, or so it was most commonly thought. But Maitland187 thought otherwise, although his editor in the second edition raises the doubt. Underhill188 expressed the view that no resulting trust arose, as does Lewin.189 Cussen J considered that: (a) a conveyance of non-Torrens system land, without consideration, did not raise a presumption of resulting trust;190 (b) a conveyance of Torrens system land, without consideration, did raise a presumption of resulting trust.191

Dixon J agreed with both propositions.192 With the repeal of the Statute of Uses and the enactment of the Law of Property Act 1925, in England a further controversy has arisen [page 226] whether a direct conveyance without consideration and without the expression of a use now gives rise to the presumption of a resulting trust.193 In New South Wales, Queensland, Victoria, Western Australia and the Northern Territory, legislation provides that no use shall be held to result merely from the absence of consideration in a conveyance of land as to which no uses or trusts are therein declared and that every limitation which may be made by way of use operating under the Statute of Uses or the Act may be made by direct conveyance without the intervention of uses.194 The question is whether these provisions prevent the implication of a resulting trust as well as a

resulting use. It has been answered, somewhat controversially, in the affirmative.195

Voluntary Transfers of Personalty [12-21] The position in regard to a voluntary transfer of personalty is uncertain. The point was not discussed in Irons v Smallpiece,196 which is the leading authority for the proposition that a gift of personalty is complete at common law if it is accompanied by delivery or is evidenced by deed. Usually, of course, there is direct evidence of intention but if the transferor and transferee are both dead, the question whether the presumption of a resulting trust arises would be of vital importance. In Fowkes v Pascoe,197 Sir George Jessel MR expressed a decided view that the presumption did arise but James LJ, on appeal, was only prepared to assume it.198 In Moore v Whyte (No 2),199 Harvey J expressed an equally decided view that no presumption arose and relied on the clear statement to this effect in George v Bank of England200 but the Full Court on appeal did not directly decide the point. There are dicta of Cotton LJ in Standing v Bowring201 referring particularly to a transfer into the joint names of the transferor and the transferee, which favour the presumption. It may be that such a position is different from the position of a transfer into the name of another alone, but there appears to be no real distinction in principle. _____________________________ 1.

See [12-02].

2. 3.

See [7-02]. [1974] Ch 269 at 289; [1974] 1 All ER 47 at 64. See also HCK China Investments Ltd v Solar Honest Ltd (1999) 165 ALR 680 at [260]. The decision of Megarry J was reversed by the Court of Appeal [1974] Ch 269 at 308; [1974] 3 All ER 205 at 213, on grounds not here material. In Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708; [1996] 2 All ER 961 at 991, Lord Browne-Wilkinson said he was not convinced that in the former category the resulting trust did not depend upon presumed intentions. Lord Millett spoke to similar effect in Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1412. This approach is criticised by W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 94–6. An attempt in the Westdeutsche case to create a third category — where money is paid for a consideration which wholly fails — did not succeed. See also DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 459–60; 40 ALR 1 at 23. See generally R Chambers, Resulting Trusts, a work both praised and criticised in Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 at [91]–[100]; P Birks and F Rose (eds), Restitution and Equity, Vol 1, Resulting Trusts and Equitable Compensation, Chs 1–7 and 9; and the relevant chapters in C Mitchell (ed), Constructive and Resulting Trusts. See also Anderson v McPherson (No 2) (2012) 8 ASTLR 321 at [91]–[95].

4.

See Meagher, Gummow and Lehane’s Equity, [7-090]–[7-140].

5.

[1967] 2 AC 291; [1967] 1 All ER 1. See W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 96–9. [1974] Ch 269 at 308; [1974] 3 All ER 205 at 213.

6. 7.

8.

DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 463; 40 ALR 1 at [26]; Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592; 215 ALR 1 at [30]; Peldan v Anderson (2006) 227 CLR 471; 229 ALR 432 at [37]. Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694 at 712; [1964] 3 All ER 692 at 699.

9. Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311 per McLelland J. 10. Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 at 329; [1967] 1 All ER 1 at 18. 11. See [7-15]–[7-36]. 12. Langham v Sandford (1811) 17 Ves 442; 34 ER 169; Gladding v Yapp (1820) 5 Madd 56; 56 ER 816; Irvine v Sullivan (1869) LR 8 Eq 673; Croome v Croome (1889) 59 LT 582 at 584. 13. Fowkes v Pascoe (1875) LR 10 Ch App 343 at 349; [1874–80] All ER Rep 521; and see [12-13]. 14. Dawson v Clark (1809) 18 Ves 247; 34 ER 311. See also Re Chapman [1922] 1 Ch 287; Re Houston [1954] St R Qd 130; Re Pugh’s Will Trusts [1967] 3 All ER 337; [1967] 1 WLR 1262. 15. Lloyd v Spillet (1740) 2 Atk 148 at 150; 26 ER 493 at 494; Northern v Carnegie (1859) 4 Drew 587; 62 ER 225. 16. Sherrard v Lord Harborough (1753) Amb 165; 27 ER 110; Nash v Smith (1810) 17 Ves 29; 34 ER 12; Kellett v Kellett (1811) 3 Dow 248; 3 ER 1055; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708; [1996] 2 All ER 961 at 990. 17. Mapp v Elcock (1849) 2 Ph 793; 41 ER 1150; Read v Stedman (1859) 26 Beav 495; 53 ER 989; Bird v Harris (1870) LR 9 Eq 204; Re Rees [1950] Ch 204; [1949] 2 All ER 1003. 18. It would be otherwise if the gift were not limited for life. An unlimited gift of income is, in the absence of evidence to the contrary, a gift of the corpus: Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375; [1952] ALR 729; Re Williams [1955] VLR 65. See [10-83]. 19. Ackroyd v Smithson (1780) 1 Bro CC 503; 28 ER 1262. 20. Morice v Bishop of Durham (1805) 10 Ves 522 at 537, 543; 32 ER 947 at 953, 955; Clarke v Hilton (1866) LR 2 Eq 810 at 815. 21. Symes v Hughes (1870) LR 9 Eq 475; Scott on Trusts, §41.12. But a settlor cannot, under a resulting trust, recover trust property settled under a trust created for an illegal purpose or consideration unless the illegal purpose is not carried into execution, or the effect of allowing the trustee to retain the trust property might be to effectuate an unlawful object, to defeat a legal prohibition, or to protect a fraud: see [9-02]. 22. Essery v Cowlard (1884) 26 Ch D 191; Re Ames’ Settlement [1946] Ch 217; [1946] 1 All ER 689. The latter case was criticised in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 715; [1996] 2 All ER 961 at 998. But as to the failure of trusts engrafted on to absolute gifts, see Lassence v Tierney (1849) 1 Mac & G 551; [1843–60] All ER Rep 47; 41 ER 1379; Russell v Perpetual Trustee Co (Ltd) (1956) 95 CLR 389; Duncan v Cathels (1956) 98 CLR 625; [1956] ALR 1072; Duncan v Equity Trustees Executors & Agency Co Ltd (1958) 99 CLR 513. 23. See, for example, King v Denison (1813) 1 Ves & B 260; 35 ER 102; Watson v Hayes (1839) 5 Myl & Cr 125; 41 ER 319; Re Travis [1900] 2 Ch 541; [1900–3] All ER Ext 1660. 24. [1970] AC 567; [1968] 3 All ER 651. See also [2-14]–[2-16]. 25. Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 at [100] per Lord Millett (Lord Hutton

concurring). On the circumstances in which part payment by a purchaser directly to a vendor on account of the purchase price give rise to an express or resulting trust, see McManus Re Pty Ltd v Ward (2009) 74 NSWLR 622. 26. [1891] AC 297. As D J Hayton (ed), Underhill and Hayton Law of Trusts and Trustees, 19th ed, p 452 points out, this decision was founded entirely on the construction of the particular deed and it must not therefore be rashly assumed that the same decision would be arrived at if, on the language of another creditor’s deed, it should appear that the object was to pay debts (or a dividend on debts) and not to assign the property for better or for worse by way of accord and satisfaction. 27. See also Cunnack v Edwards [1896] 2 Ch 679 and Braithwaite v A-G [1909] 1 Ch 510, both friendly society cases where a surplus fell to the Crown as bona vacantia; and Re Higginson [1899] 1 QB 325; [1895–9] All ER Ext 1565, where assets that would have devolved to a corporation had it not been dissolved were held to belong to the Crown as bona vacantia. See also Re Hillier [1954] 2 All ER 59; [1954] 1 WLR 700; Re Producers’ Defence Fund [1954] VLR 246. 28. See [10-68]ff. 29. [1900] 2 Ch 326. It has been argued that the correct analysis should have been that the gift in favour of the daughters was a trust for a private non-charitable purpose and therefore void, and hence that the money should have been held on resulting trust for the contributors from the start: W Swadling, ‘A New Role for Resulting Trusts?’ (1996) 16 Legal Stud 110 at 119–20. 30. [1905] 2 Ch 48; [1904–7] All ER Rep Ext 1595. 31. See Re Sanderson’s Trust (1857) 3 K & J 497; 69 ER 1206 and Re West [1900] 1 Ch 84 as to the difference between a gift for a particular purpose and a gift subject to the performance of a particular purpose. In the former case there is a resulting trust; in the latter no resulting trust. See also King v Denison (1813) 1 Ves & B 260; 35 ER 102. 32. [1978] 2 All ER 1099; [1978] 1 WLR 791. 33. [1914] 2 Ch 419; [1914–15] All ER Rep 459. 34. See [27-06]–[27-09]. 35. See also Re Printers’ and Transferrers’ Society [1899] 2 Ch 184; Re Ulverston and District New Hospital Building Fund [1956] Ch 622; [1956] 3 All ER 164; Re Gillingham Bus Disaster Fund [1958] Ch 300; [1958] 1 All ER 37; and [27-06]ff. 36. See [10-68] and Re Stanford [1924] 1 Ch 73; [1923] All ER Rep 589; Re North Devon and West Somerset Relief Fund Trusts [1953] 2 All ER 1032; [1953] 1 WLR 1260; Re Hillier [1954] 2 All ER 59; [1954] 1 WLR 700. But note the comments upon the latter case in Re Ulverston and District New Hospital Building Fund [1956] Ch 622 at 641; [1956] 3 All ER 164 at 175. And see also Beggs v Kirkpatrick [1961] VR 764. 37. Re Producers’ Defence Fund [1954] VLR 246; [1954] ALR 541. 38. [1958] Ch 300; [1958] 1 All ER 37. 39. [1971] Ch 1; [1970] 1 All ER 544. 40. (1981) 6 ACLR 71. 41. [1973] Ch 51; [1972] 2 All ER 439. 42. [1979] 1 All ER 623; [1979] 1 WLR 936. 43. (1981) 6 ACLR 71. 44. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399; cf Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563; [1990] 1 WLR 1511(strongly criticised in D J Hayton (ed), Underhill and Hayton, Law Relating to Trusts and Trustees, 19th ed, pp 445–6, [23.22]–[23.26]). See [29-57]. 45. Re Bucks Constabulary Widows’ and Orphans’ Fund Friendly Society (No 2) [1979] 1 All ER 623 at 629;

[1979] 1 WLR 936 at 943. 46. Hanchett-Stamford v A-G [2009] Ch 173; [2008] 4 All ER 323 at [37]–[49], citing various authorities. 47. (1849) 1 Mac & G 551; 41 ER 1379; [1843–60] All ER Rep 47. 48. [1902] AC 14 at 22; [1900–3] All ER Rep 87. 49. Churchill v Churchill (1867) LR 5 Eq 44; Russell v Perpetual Trustee Co (Ltd) (1956) 95 CLR 389; [1956] ALR 952. 50. Re Atkinson’s Will Trusts [1957] Ch 117; [1956] 3 All ER 738; Duncan v Equity Trustees Executors & Agency Co Ltd (1958) 99 CLR 513; Watson v Holland (Inspector of Taxes) [1985] 1 All ER 290 at 300. 51. See Russell v Perpetual Trustee Co (Ltd) (1956) 95 CLR 389; [1956] ALR 952. 52. Ryall v Ryall (1739) 1 Atk 59; 26 ER 39; and see Jones v Parkinson [1952] NZLR 89; Heneker v Heneker [1954] SASR 181; Hostick v The New Zealand Railway & Locomotive Society Waikata Branch Inc [2006] 3 NZLR 842 at [59]. 53. The Venture [1908] P 218; Bateman Television Ltd v Bateman [1971] NZLR 453. 54. Heard v Pilley (1869) LR 4 Ch App 548. 55. Thus in Vasenelak v Vasenelak (1921) 57 DLR 370, the poverty of the transferee at the time of the acquisition by him of his title assisted the claimant in raising a resulting trust on the ground that he had supplied the purchase money. 56. This has been called a ‘purchase money resulting trust’ (as distinct from a ‘voluntary transfer resulting trust’): Hancock Family Memorial Foundation Ltd v Porteous (2000) 32 ACSR 124 at [68]. 57. The preceding words as they appeared in the 7th edition were quoted with approval in Ong v Lottwo Pty Ltd (in liq) (2013) 304 ALR 651; 116 SASR 280 at [26] and Gillim v Gillim (No 2) [2014] Fam CA 701 at [81]. 58. W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 74 and 74–8. See also Fowkes v Pascoe (1875) LR 10 Ch App 343 at 353; [1874–80] All ER Rep 521 at 527–8. 59. Muschinski v Dodds (1985) 160 CLR 583 at 612; 62 ALR 429 at 449. 60. W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 79–94. 61. For example, Cook v Fountain (1676) 3 Swan 585 at 591; 36 ER 984 at 987; Dyer v Dyer (1788) 2 Cox Eq Cas 92 at 93; 30 ER 42 at 43; Fowkes v Pascoe (1875) LR 10 Ch App 343 at 348–9, 353; [1874–80] All ER Rep 521 at 524, 527–8. 62. (1788) 2 Cox Eq Cas 92 at 93; 30 ER 42 at 43. For examples, see Barton v Muir (1874) LR 6 PC 134; Blackman v Piper (1889) 10 LR (NSW) Eq 170 (note). Contrast Tooth v Power [1891] AC 284; (1891) 8 WN (NSW) 1. 63. W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 79. 64. See Lloyd v Spillet (1740) 2 Atk 148 at 150; 26 ER 493 at 494. 65. T F T Plunkett and J L Barton (eds), Doctor and Student, 2nd Dialogue, c 22, Selden Society, Vol 91, 1974. 66. W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 80. 67. (1672) 3 Swan 585 at 591; 36 ER 984 at 987. 68. Grey v Grey (1677) 2 Swan 594 at 598; 36 ER 742 at 743. 69. W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 80. 70. (1980) 32 ALR 153 at 158; 55 ALJR 1 at 3. 71. (1984) 155 CLR 242 at 266; 56 ALR 483 at 499–500. 72. (1956) 95 CLR 353 at 364.

73. Calverley v Green (1984) 155 CLR 242 at 246–7, 266–7; 56 ALR 483 at 485–6, 499–500. See Carkeek v Tate-Jones [1971] VR 691; Nelson v Nelson (1995) 184 CLR 538 at 548, 602; 132 ALR 133 at 140– 1, 184. 74. [1971] AC 886; [1970] 2 All ER 780. 75. Delehunt v Carmody (1986) 161 CLR 464 at 472–3; 68 ALR 253 at 257. See also Vedejs v Public Trustee [1985] VR 569. 76. As it has in some jurisdictions: Conveyancing Act 1919 (ACT) s 26; Conveyancing Act 1919 (NSW) s 26; Law of Property Act (NT) s 35; Property Law Act 1974 (Qld) s 35. 77. Aveling v Knipe (1815) 19 Ves 441; 34 ER 80; Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 at 551; 76 ALR 485 at 501. The two sentences above as they appeared in the 7th edition were quoted with approval in Ong v Lottwo Pty Ltd (in liq) (2013) 304 ALR 651; 116 SASR 280 at [26]. However, it is sufficient for the claimant to plead that it provided moneys which were used by the recipient as part of the price for the purchase of the relevant property in the recipient’s name: there is no obligation on the claimant to plead that it provided the moneys as purchaser: at [28]–[30], [40], [45]–[47]. 78. (1930) 45 CLR 111; 37 ALR 65. See also Jenkins v Wynen [1992] 1 Qd R 40 at 43–4; Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 23 ACSR 647 at 660; Coshott v Sakic (1998) 44 NSWLR 667 at 671; White v Shortall (2006) 68 NSWLR 650 at [16]. 79. [1968] 2 All ER 755; [1968] 1 WLR 1083. See also Re Matthews [1993] 2 NZLR 91 at 94. 80. [1976] VR 788. 81. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 705–6; [1996] 2 All ER 961 at 998. Cf Re Vinogradoff [1935] WN 68; Re Diplock [1948] Ch 465; [1948] 2 All ER 318. 82. [1974] Ch 181; [1973] 3 All ER 429. 83. [1984] 1 NSWLR 687 at 691; followed in Ryan v Dries [2003] ANZ ConvR 45 at 52. See also Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22, 421 at [144]; Dinsdale v Arthur (2006) 12 BPR 23,509 at [11]; Buffrey v Buffrey (2006) 12 BPR 23,619; Sivritas v Sivritas (2008) 23 VR 349 at [160] (dictum that ‘only costs necessarily incurred prior to and as a condition of obtaining registration of the interest which is to be held on trusts should be included in the purchase price. On this basis, stamp duty and registration fees would be included but legal fees and bank fees would not be’). 84. (1988) 15 NSWLR 43. 85. (1981) 180 CLR 390; 37 ALR 55. 86. (1984) 155 CLR 242 at 263; 56 ALR 483 at 497. 87. (1984) 155 CLR 242 at 252–3; 56 ALR 483 at 490. 88. Ingram v Ingram [1941] VLR 95 at 102; [1941] ALR 120 at 125; Cowcher v Cowcher [1972] 1 All ER 943 at 959; [1972] 1 WLR 425 at 441; Bernard v Josephs [1982] Ch 391 at 401, 405, 409; [1982] 3 All ER 162 at 168, 171–2, 174. 89. [1948] 2 All ER 486. 90. [1971] AC 886 at 903; [1970] 2 All ER 780 at 788. See also Hendry v Hendry [1960] NZLR 48; Falconer v Falconer [1970] 3 All ER 449; [1970] 1 WLR 1333; Davis v Vale [1971] 2 All ER 1021; [1971] 1 WLR 1022; Re Densham [1975] 3 All ER 726; [1975] 1 WLR 1519. 91. Laskar v Laskar [2008] 1 WLR 2695 at [20]. 92. Soar v Foster (1858) 4 K & J 152 at 160; 70 ER 64 at 67. This is confirmed by modern legislation relating to ex-nuptial children: Parentage Act 2004 (ACT) Div 2.2; Status of Children Act 1996 (NSW) s 5; Status of Children Act (NT) s 4; Status of Children Act 1978 (Qld) s 6; Family

Relationships Act 1975 (SA) s 6; Status of Children Act 1974 (Tas) s 3; Status of Children Act 1974 (Vic) s 3; Wills Act 1970 (WA) s 31. 93. For example, a step-child: Oliveri v Oliveri (1993) 38 NSWLR 665 at 678–9. 94. Bennet v Bennet (1879) 10 Ch D 474; [1874–80] All ER Rep Ext 1479; Stephen v Stallworthy (1881) 2 LR (NSW) Eq 55; Re Ashton [1897] 2 Ch 574; [1898] 1 Ch 142; Cousins v Peters (1900) 17 WN (NSW) 61; Commissioner of Stamp Duties v Byrnes [1911] AC 386; Public Trustee v Commissioner of Stamp Duties [1925] NZLR 237; Crichton v Crichton (1930) 43 CLR 536; Honeyfield v Honeyfield [1933] NZLR 183 (widowed mother in loco parentis); Hall v Guardian Trust and Executors Co of New Zealand Ltd [1938] NZLR 922; Re Kerrigan (1946) 47 SR (NSW) 76; 63 WN (NSW) 288; Schubert v Schubert (1949) 66 WN (NSW) 173; Silver v Silver [1958] 1 All ER 523; [1958] 1 WLR 259; Re Emery’s Investments Trusts [1959] Ch 410; [1959] 1 All ER 577. As to rebuttal of presumption of gift, see Gascoigne v Gascoigne [1918] 1 KB 223; [1916–17] All ER Rep Ext 1143; Drever v Drever [1936] ALR 446; Warren v Gurney [1944] 2 All ER 472; Shephard v Cartwright [1955] AC 431; [1954] 3 All ER 649; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353; Martin v Martin (1959) 110 CLR 297. See generally J Glister, ‘The Presumption of Advancement’ in C Mitchell (ed), Constructive and Resulting Trusts, p 289. 95. (1994) 33 NSWLR 740. See also Brown v Brown (1993) 31 NSWLR 582 at 591, 598–9, 605. 96. (1995) 184 CLR 538 at 548–9, 576, 585–6, 601; 132 ALR 133 at 141, 163, 171, 183. 97. (1956) 98 CLR 228 at 237. 98. (1984) 155 CLR 242 at 249–50; 56 ALR 483 at 487. By ‘relationships affording “good” consideration’, Dixon CJ was referring to relationships creating an obligation on one party to provide for another. That idea is mentioned earlier in the text. See Murless v Franklin (1818) 1 Swan 13 at 17; 36 ER 278 at 280; Bennet v Bennet (1879) 10 Ch D 474 at 478. Dixon CJ’s view has not yet been accepted: Nelson v Nelson (1995) 184 CLR 538 at 548–9, 576, 586; 132 ALR 133 at 141–63, 171. 99. (1984) 155 CLR 242 at 267; 56 ALR 483 at 500; see also Mason and Brennan JJ at 255–6, 492 and Murphy J at 265, 498. 100. Bennet v Bennet (1879) 10 Ch D 474; Re Ashton [1897] 2 Ch 574; [1898] 1 Ch 142; Scott v Pauly (1917) 24 CLR 274; 24 ALR 27; Brophy v Brophy (1974) 3 ACTR 57. 101. (1959) 110 CLR 297 at 303 per Dixon CJ, McTiernan, Fullagar and Windeyer JJ, quoted with approval by W Swadling, ‘Explaining Resulting Trusts’ (2008) 124 LQR 72 at 73. 102. Moore v Whyte (No 2) (1922) 22 SR (NSW) 570; 39 WN (NSW) 194; March v March (1945) 62 WN (NSW) 111. Cf Robinson v Robinson [1961] WAR 56. 103. The view has been taken in England that a presumption does arise in such circumstances: see Moate v Moate [1948] 2 All ER 486; differing views were expressed on the matter in Wirth v Wirth (1956) 98 CLR 228. 104. Noack v Noack [1959] VR 137 at 140; [1959] ALR 389 at 391. 105. Russell v Scott (1936) 55 CLR 440; [1936] ALR 375. 106. Knight v Biss [1954] NZLR 55. 107. Z v Z (2005) 34 Fam LR 296 at [145]. 108. Soar v Foster (1858) 4 K & J 152 at 157; 70 ER 64 at 66. 109. Rider v Kidder (1806) 12 Ves 202; 33 ER 77; Soar v Foster (1858) 4 K & J 152; 70 ER 64; Dunbar v Dunbar [1909] 2 Ch 639; [1908–10] All ER Rep 76. 110. Murdock v Aherne (1878) 4 VLR (E) 244 at 249; Wirth v Wirth (1956) 98 CLR 228 at 237–8. 111. Calverley v Green (1984) 155 CLR 242; 56 ALR 483. 112. (1984) 155 CLR 242 at 260–1; 56 ALR 483 at 495–6. The penultimate sentence of the passage has

become less true since 1984, in view of the enactment of legislation relating to the termination of de facto relationships: see n [170]. See also Scott on Trusts, §43.11. 113. Wirth v Wirth (1956) 98 CLR 228 at 231–2; Hepworth v Hepworth (1963) 110 CLR 309 at 317; [1964] ALR 259 at 264. 114. Fowkes v Pascoe (1875) LR 10 Ch App 343 at 352; Bennet v Bennet (1879) 10 Ch D 474 at 479–80. 115. [1970] AC 777 at 815; [1969] 2 All ER 385 at 407; and see Calverley v Green (1984) 155 CLR 242 at 259, 268; 56 ALR 483 at 494, 501. 116. (1963) 110 CLR 309; [1964] ALR 259. See also Silver v Silver [1958] 1 All ER 523; [1958] 1 WLR 259; Re Ebner (2003) 126 FCR 281; 196 ALR 533 at [20]. 117. Bull v Bull [1955] 1 QB 234; [1955] 1 All ER 253. 118. Drew v Martin (1864) 2 Hem & M 130; 71 ER 411; Blinkco v Blinkco [1964–5] NSWR 20; (1964) 81 WN (Pt 1) NSW 109. 119. Re Ebner (2003) 126 FCR 281; 196 ALR 533 at [21]. 120. Heard v Pilley (1869) LR 4 Ch App 548. See Sorna Pty Ltd v Flint (2000) 21 WAR 563 at [51]–[55]. 121. The sentence to this point as appearing in the 7th edition was quoted with approval in Haley v Perkins [2010] NSWSC 1091 at [80]. 122. See generally Martin v Martin (1959) 110 CLR 297. 123. It is the intention of that person which is relevant: Pearson v Pearson [1961] VR 693 at 697. 124. Martin v Martin (1959) 110 CLR 297 at 304–5. See also Damberg v Damberg [2001] NSWCA 87 at [45]; Wilkins v Wilkins [2007] VSC 100 at [12]–[22]; Sze Tu v Lowe (2014) 89 NSWLR 317 at [183]. 125. See Young v Sealey [1949] Ch 278; [1949] 1 All ER 92. 126. Shephard v Cartwright [1955] AC 431; [1954] 3 All ER 649; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353. 127. See Stock v McAvoy (1872) LR 15 Eq 55; Warren v Gurney [1944] 2 All ER 472 at 473. 128. Shephard v Cartwright [1955] AC 431; [1954] 3 All ER 649; Calverley v Green (1984) 155 CLR 242 at 251, 262, 269; 56 ALR 483 at 488–9, 496, 502. See also Bryson v Bryant (1992) 29 NSWLR 188 at 215; Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278; 224 ALR 280 at [65]. The preceding two paragraphs as they stood in the 7th edition were quoted with approval in Gillim v Gillim (No 2) [2014] Fam CA 701 at [82]. 129. See [7-02]. 130. Cowcher v Cowcher [1972] 1 All ER 943; [1972] 1 WLR 425. 131. [1971] AC 886; [1970] 2 All ER 780. 132. See [12-18]. 133. Martin v Martin (1959) 110 CLR 297 at 304; Pettitt v Pettitt [1970] AC 777 at 803, 813; [1969] 2 All ER 385 at 397, 405. 134. Allen v Rochdale Borough Council [2000] Ch 221 at 223; [1999] 3 All ER 443 at 450. 135. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 705; [1996] 2 All ER 961 at 988; Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266. The preceding paragraph as it stood in the 7th edition was quoted with approval in Gillim v Gillim (No 2) [2014] Fam CA 701 at [83]. 136. Prentice v Cummins (No 6) (2003) 134 FCR 449; 194 ALR 94 at [61]. 137. Maharaj v Chand [1986] AC 898 at 907; [1986] 3 All ER 107 at 112; Grant v Edwards [1986] Ch 638 at 646–7, 651, 654; [1986] 2 All ER 426 at 431, 435, 437; Gillies v Keogh [1989] 2 NZLR 327 at 333;

Lloyds Bank plc v Rosset [1991] 1 AC 107 at 132–3; [1990] 1 All ER 1111 at 1119. 138. K Gray, ‘The Law of Trusts and the Quasi-Matrimonial Home’ (1983) 42 CLJ 30 at 33, quoted by Sheller JA in Bryson v Bryant (1992) 29 NSWLR 188 at 217. 139. (1984) 155 CLR 242 at 251; 56 ALR 483 at 492; see also Muschinski v Dodds (1985) 160 CLR 583 at 598–9, 613–14, 624; 62 ALR 429 at 439, 450–1, 458–9; Baumgartner v Baumgartner (1987) 164 CLR 137 at 145–6, 157; 76 ALR 75 at 81–2, 90. 140. Gissing v Gissing [1971] AC 886 at 906; [1970] 2 All ER 780 at 790–1, approved in Calverley v Green (1984) 155 CLR 242 at 261; 56 ALR 483 at 496; Anderson v McPherson (No 2) (2012) 8 ASTLR 321 at [156]. 141. (1984) 155 CLR 242 at 258; 56 ALR 483 at 493–4; see also Muschinski v Dodds (1985) 160 CLR 583 at 590; 62 ALR 429 at 432–3. 142. Thwaites v Ryan [1984] VR 65 at 92. See also Allen v Snyder [1977] 2 NSWLR 685 at 690–1, 701. 143. For example, Hohol v Hohol [1981] VR 221 at 225; Grant v Edwards [1986] Ch 638 at 657; [1986] 2 All ER 426 at 439; Austin v Keele (1987) 10 NSWLR 283 at 290; 72 ALR 579 at 586–7; Higgins v Wingfield [1987] VR 689. See also Maharaj v Chand [1986] AC 898 at 907–8; [1986] 3 All ER 107 at 112; Green v Green (1989) 17 NSWLR 343 at 370. 144. [1971] AC 886 at 906; [1970] 2 All ER 780 at 790. 145. Including Burns v Burns [1984] Ch 317; [1984] 1 All ER 244; Grant v Edwards [1986] Ch 638; [1986] 2 All ER 426. 146. See also National Australia Bank Ltd v Maher [1995] 1 VR 318 at 321. 147. Lloyds Bank plc v Rosset [1991] 1 AC 107 at 132–3; [1990] 1 All ER 1111 at 1119. See also Oxley v Hiscock [2005] Fam 211; [2004] 3 All ER 703 at [71] and the cases referred to in [12-18]. 148. Allen v Snyder [1977] 2 NSWLR 685 at 698; Bryson v Bryant (1992) 29 NSWLR 188 at 219. 149. Cowcher v Cowcher [1972] 1 All ER 943; [1972] 1 WLR 425. 150. Nelson v Nelson (1995) 184 CLR 538 at 547–9; 132 ALR 133 at 140–1; Scott on Trusts, §43.4. 151. Calverley v Green (1984) 155 CLR 242 at 258; 56 ALR 483 at 493–4. 152. [1971] NZLR 453. 153. Grey v Grey (1677) 2 Swan 594; 36 ER 742; Dyer v Dyer (1788) 2 Cox Eq Cas 92; 30 ER 42; [1775– 1802] All ER Rep 205; Sidmouth v Sidmouth (1840) 2 Beav 447; 48 ER 1254; [1835–42] All ER Rep 339; Shephard v Cartwright [1955] AC 431; [1954] 3 All ER 649. 154. Sze Tu v Lowe (2014) 89 NSWLR 317 at [3], [190]–[194], criticising Pettitt v Pettitt [1970] AC 777 at 814; [1969] 2 All ER 385 at 406 and Laskar v Laskar [2008] 1 WLR 2695 at [20], and preferring Drever v Drever [1936] ALR 446 at 450; Shepherd v Cartwright [1955] AC 431 at 445; [1954] 3 All ER 649 at 652; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365 and Damberg v Damberg [2001] NSWCA 87 at [43]–[44]. See also Gillim v Gillim (No 2) [2014] Fam CA 701 at [88]. It may, however, be accepted that the quantum of evidence necessary as a practical matter to rebut a presumption may differ according to the circumstances: Fowkes v Pascoe (1875) LR 10 Ch App 343 at 353. 155. Dumper v Dumper (1862) 3 Giff 583; 66 ER 540; Forrest v Forrest (1865) 11 Jur NS 317; Stock v McAvoy (1872) LR 15 Eq 55; McVie v McVie (1898) 23 VLR 489; 4 ALR 98. 156. Re Kerrigan (1946) 47 SR (NSW) 76; 63 WN (NSW) 288; Hann v Linton (1967) 52 LSJS 231; Dullow v Dullow (1985) 3 NSWLR 531 at 540–1. 157. (1980) 32 ALR 153; 55 ALJR 1. 158. Mercier v Mercier [1903] 2 Ch 98; [1900–3] All ER Rep 375; March v March (1945) 62 WN (NSW) 111; Richards v Richards [1958] 3 All ER 513; [1958] 1 WLR 1116.

159. [1970] AC 777 at 793, 811, 824; [1969] 2 All ER 385 at 389, 404, 414; cf at 817; 408. 160. [1970] AC 777 at 816; [1969] 2 All ER 385 at 408. 161. [1970] AC 777 at 815; [1969] 2 All ER 385 at 407. 162. The speech of Lord Upjohn is fully discussed in J G Miller, ‘Family Assets’ (1970) 86 LQR 98. 163. Public Trustee v Steven [1921] NZLR 441 at 447; Edgar v IRC [1978] 1 NZLR 590. 164. (1984) 155 CLR 242 at 259–60, 268; 56 ALR 483 at 495. See also Silver v Silver [1958] 1 All ER 523 at 525; [1958] 1 WLR 259 at 261. 165. Domestic Relationship Act 1994 (ACT) s 15; Property (Relationships) Act 1984 (NSW) s 20; De Facto Relationships Act (NT) s 18; Property Law Act 1974 (Qld) s 286; Domestic Partners Property Act 1996 (SA) ss 9–11; Relationships Act 2003 (Tas) s 40; Property Law Act 1958 (Vic); Family Court Act 1997 (WA) s 205ZG. 166. [1970] AC 777; [1969] 2 All ER 385. 167. [1971] AC 886; [1970] 2 All ER 780. 168. For a collection of English cases up to 1984, see Burns v Burns [1984] Ch 317; [1984] 1 All ER 244. Since then, see [13-54]. As Glass JA observed in Allen v Snyder [1977] 2 NSWLR 685 at 691, the matter is not assisted by the loose use of technical expressions in the English cases — ‘resulting trust’, ‘resulting implied or constructive trust’, ‘resulting or implied’, ‘breach of faith’ are all used as if synonymous. This necessitates further treatment of these cases when dealing with constructive trusts in Chapter 13. 169. See [12-13]–[12-16]. 170. Cowcher v Cowcher [1972] 1 All ER 943; [1972] 1 WLR 425 is an honourable exception. Cf Re Nicholson [1974] 2 All ER 386; [1974] 1 WLR 476. 171. [1970] AC 777; [1969] 2 All ER 385. 172. [1971] AC 886; [1970] 2 All ER 780. 173. [1970] AC 777 at 820–3; [1969] 2 All ER 385 at 412–14. 174. [1971] AC 886 at 904–7; [1970] 2 All ER 780 at 789–91; see also Midland Bank plc v Cooke [1995] 4 All ER 562 at 574. 175. Falconer v Falconer [1970] 3 All ER 449; [1970] 1 WLR 1333; Heseltine v Heseltine [1971] 1 All ER 952; [1971] 1 WLR 342; Davis v Vale [1971] 2 All ER 1021; [1971] 1 WLR 1022; Hargrave v Newton [1971] 3 All ER 866; [1971] 1 WLR 1611; Re Cummins [1972] Ch 62; [1971] 3 All ER 782; Hazell v Hazell [1972] 1 All ER 923; [1972] 1 WLR 301; Kowalczuk v Kowalczuk [1973] 2 All ER 1042; [1973] 1 WLR 930; cf Cavion v Cavion [1970] 2 NSWR 20. See also [13-45]–[13-46]; Turton v Turton [1988] Ch 542 at 552–3; [1987] 2 All ER 641 at 648. 176. [1972] 2 All ER 38; [1972] 1 WLR 518. 177. [1975] 3 All ER 768; [1975] 1 WLR 1338. 178. Cf Richards v Dove [1974] 1 All ER 888; Fraser v Gough [1975] 1 NZLR 138. 179. Jones v Kernott [2012] 1 AC 776; [2012] 1 All ER 1265 at [13]–[15] per Lord Walker of Gestingthorpe and Baroness Hale of Richmond. See also at [25]. See further Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929; Abbott v Abbott [2008] 1 FLR 1451; Davies v O’Kelly [2015] 1 WLR 2725. 180. See [12-10]. 181. Laskar v Laskar [2008] 1 WLR 2695 at [17]. 182. (1862) 4 De GF & J 517; 45 ER 1285; [1861–73] All ER Rep 384. Cf Erskine v Pettit (1901) 1 SR (NSW) Eq 204. 183. (1985) 160 CLR 583 at 599, 620; 62 ALR 429 at 439, 455.

184. (1987) 164 CLR 137 at 148–9; 76 ALR 75 at 83–4. 185. [1991] 1 AC 107 at 133; [1990] 1 All ER 1111 at 1119. 186. The previous three sentences as they stood in the 7th edition were quoted with approval in Barker v Linklater [2007] QSC 125 at [139]. 187. Lectures on Equity, 2nd ed, p 77, adopted in Canada in Niles v Lake [1947] 2 DLR 248 at 253, 256; Neazor v Hoyle (1962) 32 DLR (2d) 131. 188. D J Hayton (ed), Underhill and Hayton Law Relating to Trusts and Trustees, 19th ed, pp 496–7, [25.57]– [25.60] (dealing with post 1925 position). 189. L Tucker et al (ed), Lewin on Trusts, 19th ed, [9-12]. 190. House v Caffyn [1922] VLR 67 at 76; (1921) 28 ALR 3 at 6, citing James LJ in Fowkes v Pascoe (1875) LR 10 Ch App 343 at 348; [1874–80] All ER Rep 521 at 524. 191. House v Caffyn [1922] VLR 67 at 78–9; (1921) 28 ALR 3 at 7–8. 192. Wirth v Wirth (1956) 98 CLR 228 at 236–7. 193. For a discussion on this controversy, see H G Hanbury, Modern Equity, 3rd ed, pp 180–2. 194. See Conveyancing Act 1919 (NSW) s 44; Property Law Act 1974 (Qld) s 7; Property Law Act 1958 (Vic) s 19A; Property Law Act 1969 (WA) ss 38, 39; Law of Property Act (NT) s 6. The latter provision is made by the Civil Law (Property) Act 2006 (ACT) s 223. The Statute of Uses itself has been repealed in its application to New South Wales, Queensland, Victoria and the Northern Territory by Imperial Acts Application Act 1969 (NSW) s 8; Property Law Act 1974 (Qld) s 3; Imperial Acts Application Act 1980 (Vic) s 5; and Law of Property Act (NT) Sch 4. 195. Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273 at 280–1; Bhana v Bhana (2002) 10 BPR 19,545 at [15]–[27]; cf Ryan v Hopkinson (1990) 14 Fam LR 151 at 155. See generally D Ong, Trusts Law in Australia, 4th ed, pp 444–7. 196. (1819) 2 B & Ald 551; 106 ER 467. 197. (1875) LR 10 Ch App 343 at 345n. 198. Fowkes v Pascoe (1875) LR 10 Ch App 343 at 348; [1874–80] All ER Rep 521 at 524. 199. (1922) 22 SR (NSW) 570; 39 WN (NSW) 194. 200. (1819) 7 Price 646; 146 ER 1089. 201. (1885) 31 Ch D 282 at 287; [1881–5] All ER Rep 702 at 704.

[page 227]

CHAPTER 13 Constructive Trusts Introduction Contrast with Express and Implied/Resulting Trusts

[13-01] [13-01]

Conventional Categories of Constructive Trust General Borderline Categories: Trustee de Son Tort Borderline Categories: Recipients of Trust Property Borderline Categories: Tracing Borderline Categories: Non-compliance with Formalities Borderline Categories: Vendor-purchaser Trust before Completion List not Closed

[13-02] [13-02] [13-03] [13-04] [13-05] [13-06]

Remedial Character of Constructive Trust Remedial and Institutional Constructive Trusts Defined Are there Remedial Constructive Trusts?

[13-10] [13-10] [13-11]

The Rule in Keech v Sandford Renewal of Lease Trustees Executors Tenants for Life Agents Partners Mortgagors and Mortgagees Purchase of Reversions

[13-12] [13-12] [13-13] [13-14] [13-15] [13-16] [13-17] [13-18] [13-19]

Fiduciary Agents

[13-21]

[13-07] [13-09]



General Bribes: The Controversy Bribes: The Resolution Bribes: A Fresh Start Estate Agents Employees Directors Promoters Joint Venturers

[13-21] [13-22] [13-23] [13-24] [13-25] [13-26] [13-27] [13-28] [13-29] [page 228]

Breach of Fiduciary Duty Problems Other than Remedy The Constructive Trust Remedy Difficulties with Third Parties

[13-30] [13-30] [13-31] [13-32]

Third Party Accessory Liability for Breach of Trust The Rule in Barnes v Addy The Non-exhaustive Nature of Barnes v Addy Liability Five Categories of Accessory Liability Notice The Notice Test under the First Limb in Australia The Reach of the Second Limb in Barnes v Addy The Elements in the Second Category of Barnes v Addy The Position of Bankers

[13-33] [13-33] [13-34] [13-35] [13-36] [13-37] [13-38] [13-39] [13-40]

Other Categories of Constructive Trust Constructive Trusts Arising from Transactions Voidable in Equity Mutual Wills

[13-41]

Constructive Trustee’s Remuneration General

Right

to

Reimbursement

[13-41] [13-42]

or [13-43] [13-43]

The Constructive Trust and Domestic Arrangements The Orthodox Approach The ‘New Model’ Constructive Trust Examples of the ‘New Model’ Constructive Trust Binions v Evans Bannister v Bannister Criticisms of the ‘New Model’ Constructive Trust Other Remedies Australian Rejection of the English Position Baumgartner v Baumgartner Expounded Baumgartner v Baumgartner Criticised The Current English Position

[13-44] [13-44] [13-45] [13-46] [13-47] [13-48] [13-49] [13-50] [13-51] [13-52] [13-53] [13-54]

Introduction Contrast with Express and Implied/Resulting Trusts [13-01] The constructive trust differs in essential respects both from the express and the resulting or implied trust.1 It differs from the express trust in that it is raised by operation of law often without reference to the intentions of the parties concerned2 and indeed largely [page 229] contrary to the desires and intentions of the constructive trustee. Further, a constructive trust arises without satisfaction of the requirements as to writing which statute imposes in respect of express trusts, both testamentary and inter vivos.3 The constructive trust differs from the resulting or implied trust in that, although a resulting or implied trust also arises by operation of law in the case of presumed resulting trusts as distinct from automatic resulting trusts, the courts presume that a trust was actually intended and in the face of evidence to the contrary, may conclude that the presumption has been rebutted. In the case of a constructive trust, the inquiry is not solely as to the actual or presumed

intentions4 of the parties, but as to whether, according to the principles of equity, it would be a fraud for the party in question to deny the trust. As Cardozo CJ put it, ‘When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee’.5 It has been said that the trust is constructive in the sense that equity construes the circumstances by explaining or interpreting them; equity does not construct the trust, rather it attaches legal consequences to the circumstances.6 Moreover, the constructive trust demands the staple ingredients of express and resulting or implied trusts: subject matter, trustee, beneficiary and personal obligation attaching to the trust property.7

Conventional Categories of Constructive Trust General [13-02] The difficulty is in isolating or defining those circumstances in which equity will treat it as unconscionable for a party to deny the trust. Up to a point, the difficulty is diminished by the existence of well-recognised categories of cases in which a constructive trust arises. These categories are not uniform in the sense that the incidents of the trusts involved vary; in one category the obligation is to account for a profit, in another to hand over specific assets, in another to effect restitution for a loss. The categories may all reflect equity’s concern with fraud, but they have distinct characteristics. They include the following: (1) Cases (more fully discussed later in this chapter) in which a profit is made improperly by a fiduciary, who may but need not be already a trustee under an express trust. The leading case is Keech v Sandford.8 The lease of a market was held in trust for an infant and before the lease expired the lessor refused to renew to the infant. The trustee then took the renewal for himself, but Lord King LC held that the trustee was trustee for the infant of the renewed lease and must assign it to him and account for the profits received in the meantime; the trustee was ‘the only person of all mankind who might not have the lease’. (2) Cases in which the defendant holds the legal title to property on trust for

the plaintiff because it was acquired under a transaction liable to be set aside in equity, for example, for [page 230] fraud, mistake, undue influence or as a catching bargain.9 In the eyes of equity, the plaintiff retained an equitable interest in the subject asset which was transmissible and assignable as an estate, not a bare cause of action.10 In general, where there is a contract for the sale of property by A to B made in breach of a fiduciary duty owed to A by B (or by C in whose breach B knowingly participated), pursuant to which the legal title to the property has been transferred from A to B, the transaction is in equity voidable at the instance of A, who may (if necessary) obtain an order for rescission setting it aside. Unless and until A effectively avoids the transaction and (if necessary) obtains an order for rescission, B’s property rights as a result of the transaction remain unaffected. However if A does effectively avoid the transaction and (if necessary) obtains an order for rescission, the parties will be treated in equity as if the transaction had never been effected; in other words equity will treat B as if he had held the property in trust for A, that is, as a constructive trustee, ab initio. A constructive trust arises in such circumstances as a consequence of the effective avoidance or rescission of the transaction. Where, for whatever reason, the transaction has not been and cannot be effectively avoided and rescission is unavailable, it remains effective and no constructive trust can arise. …11

It has been said that requiring rescission protects the rights of third parties before equity grants a proprietary remedy (for example, a constructive trust), and prevents recovery under the contract of loan as well as having the proprietary remedy.12 Related to the instances discussed earlier in this subparagraph are cases of proprietary estoppel, in which one remedy may be the conferral of some proprietary right in the plaintiff over the defendant’s property.13 These in turn are related to the more defensible aspects of the process by which rights on the break up of cohabiting couples are protected, discussed below.14 (3) Cases in which equity gives effect to its principles of conversion and performance and to the maxim that equity regards as done that which ought to be done; instances are provided by agreements for value to assign future property for value, absolutely or by way of charge,15 by mutual wills, and by the relationship between vendor and purchaser under uncompleted contracts for sale of land.16 Mutual wills and vendor-purchaser trusts are further described in this chapter. A related instance is the trust of the purchase money held by a mortgagee who has exercised a power of sale.17

(4) Cases in which, with or without receipt of trust property, a third party instigates or participates in a breach of trust or other fiduciary duty with the requisite degree of knowledge. [page 231] The leading authority is Barnes v Addy,18 where Lord Selborne LC made a general statement of principle in the course of holding solicitors not liable to make good the loss to a trust estate effected by a sole trustee appointed against their advice but with their assistance in the necessary conveyancing. Another method of analysing constructive trusts was put thus by Millett LJ, following in the footsteps of Ungoed-Thomas J:19 … [T]he expressions ‘constructive trust’ and ‘constructive trustee’ have been used by equity lawyers to describe two entirely different situations. The first covers those cases already mentioned, where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff. The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff. A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another. In the first class of case, however, the constructive trustee really is a trustee. He does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and which is not impugned by the plaintiff. His possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust.

He instanced secret trusts,20 imperfectly recorded transactions, and cases where the defendant tried ‘to keep for himself property which the plaintiff trusted him to buy for both parties’.21 Other examples would include the vendor-purchaser constructive trust, the mortgagee constructive trust, constructive trusts arising under mutual wills, and constructive trusts arising after the collapse of a joint venture.22 He continued: The second class of case is different. It arises when the defendant is implicated in a fraud. Equity has always given relief against fraud by making any person sufficiently implicated in the fraud accountable in equity. In such a case he is traditionally though I think unfortunately described as a constructive trustee and said to be ‘liable to account as constructive trustee’. Such a person is not in fact a trustee at all, even though he may be liable to account as if he were. He never assumes the position of a trustee, and if he receives the trust property at all it is adversely to the

plaintiff by an unlawful transaction which is impugned by the plaintiff. In such a case the expressions ‘constructive trust’ and ‘constructive trustee’ are misleading, for there is no trust and usually no possibility of a proprietary remedy; they are ‘nothing more than a formula for equitable relief’…23

An example of ‘constructive trusts’ in the second class are those ‘where the equity is fastened upon the trustee not because he intended to become the fiduciary of property but because of the character of his dealings and in spite of his intention to take the property for himself’.24 That use of language refers to various types of personal liability imposed on a defendant of [page 232] the same kinds as would be imposed on an express trustee. The defendant is a ‘constructive trustee’ in the sense that he is ‘liable to account as a trustee’. But since the defendant is not in fact a trustee, Lord Millett has urged instead the formula ‘accountable in equity’.25 Examples of Lord Millett’s second class are those liable under either limb of Barnes v Addy.26 Lord Millett viewed the first category as containing institutional constructive trusts and the second as ‘merely a remedial mechanism by which equity gave relief for fraud’.27 He seemed to see the distinction as being ‘between an institutional trust and a remedial formula — between a trust and a catch-phrase’.28 Some forms of constructive trust do not create or recognise any proprietary interest.29 Even where it is open to the court to impose a constructive trust of a kind which does, the court will first seek to decide whether there is an appropriate equitable remedy falling short of imposing the trust.30 One reason, for example, for not imposing the trust may be the unfair priority it gives the plaintiff over other creditors.31

Borderline Categories: Trustee de Son Tort [13-03] There are borderline categories. The first is that of the trustee de son tort. In Mara v Browne,32 Smith LJ said: [W]hat constitutes a trustee de son tort? It appears to me if one, not being a trustee and not having authority from a trustee, takes upon himself to intermeddle with trust matters or to do acts characteristic of the office of trustee, he may thereby make himself what is called in law a trustee of his own wrong — ie, a trustee de son tort, or, as it is also termed, a constructive trustee.

It may be accurate to treat trusteeship de son tort as a species of constructive trust, but it is a constructive trust of a special kind. In Life Association of Scotland v Siddall,33 Turner LJ, in the course of holding accountable as a trustee a woman who had taken it upon herself to sell the trust property and receive the purchase money, held that her conduct was the ‘equivalent’ of a written declaration of express trust. The result was that rules as to limitation of actions applied to her as if she were an express, not a constructive, trustee.34 The alleged trustee may have acted honestly; the alleged trustee may have believed that he or she was validly appointed an express trustee, ignorant of a fatal defect therein,35 and the breach of trust may have been a technical one. But the alleged trustee is liable by reason of the de facto assumption of office and can be in no better position in respect of a breach than an express trustee would be. [page 233]

Borderline Categories: Recipients of Trust Property [13-04] The second borderline category concerns third parties who have received trust property in such circumstances that equity will hold them bound by the trust. While the third parties are often called constructive trustees,36 they are more properly treated as persons against whom the beneficial interest under the primary trust persists because they cannot set up a title as bona fide purchaser of the legal title without notice.37 The third party will be subjected to the prior beneficial interest not so much by dint of the imposition of a fresh trust as by the operation against the third party of the rules as to priority between legal and equitable titles. But while these may be a sufficient basis for equity to compel the third party to hand back the property, what if the third party has dissipated it? The notion of constructive trust then provides a basis not for proprietary relief but for personal accountability.

Borderline Categories: Tracing [13-05] A third, and related, category concerns the rules as to tracing. They permit the earmarking of mixed funds and the identification of assets despite transmogrification thereof, and, where they apply, they do so in aid of equitable

rules as to priority by lengthening the arm of equity. The relationship between the doctrine of constructive trust and the remedy of tracing is still unclear. On one view, tracing can only be used against persons who occupy and abuse a fiduciary position (not limited to that of trustee) and constructive trusts apply to property thus acquired by such persons, so that the remedy of tracing and the institution of the constructive trust are coextensive and applicable only to fiduciaries (and those claiming through them). On another view, the two institutions are coextensive but not limited in their application to fiduciaries. On yet another view, there is no necessary relationship between tracing, a remedy which may be employed against a range of persons in a variety of situations, and the doctrine of constructive trusts which is not, on this approach, seen as a remedy but a specific institution. This last characterisation of constructive trusts is commoner in England than Australia.38

Borderline Categories: Non-compliance with Formalities [13-06] A fourth borderline category concerns what appear to be express trusts which fail to comply with formalities as to writing but which are nevertheless enforced on the footing that it would be fraudulent for the alleged trustee to set up the statute.39 Secret trusts may fall into this category.40 In some cases, for example Bannister v Bannister,41 the trusts are described as constructive. But the better view is that the removal of fraudulent reliance on the statute clears the way to show an express trust as what was intended.42 There are also cases where, although there is no real doubt as to the placement of the borderline, trusts are consigned to the wrong category. In Malsbury v Malsbury,43 the plaintiff and his wife contributed funds to the purchase of a house by their son and daughter-in-law on terms that they might live there and be taken care of by the younger couple. Needham J held there to be an express trust [page 234] to that effect enforceable under the above principles despite the lack of writing. The trust did not specify what would happen if the son and daughter-in-law

ceased to cohabit. But it was held that the estranged couple held the legal title upon constructive trust for themselves and the plaintiff (his wife had died) in shares proportionate to their respective contributions towards the purchase. A more precise analysis may have been that the contributions raised a presumption of resulting trust, rebutted for the period in respect of which the express trust operated, but thereafter arising.

Borderline Categories: Vendor-purchaser Trust before Completion [13-07] The fifth borderline category contains the trust said variously to arise between vendor and purchaser on or after exchange and on or before completion. There is general agreement that the treatment of the purchaser as having a beneficial interest in the land before completion depends upon the availability of specific performance against the vendor. It follows that if under Crown lands legislation no transfer may be made without the consent of the responsible Minister, then no beneficial interest in the purchaser arises before the consent is obtained.44 There has been much debate as to the stage at which the beneficial interest arises. The debate assumes that the mere availability of specific performance will not necessarily suffice for specific performance is a remedy in the face of repudiation by the defendant before due date for completion.45 The authorities were surveyed by Mason J in Chang v The Registrar of Titles46 in the following terms: Lord Eldon considered that a trust arose on execution of the contract.47 Plumer MR thought that until it is known whether the agreement will be performed the vendor ‘is not even in the situation of a constructive trustee; he is only a trustee sub modo, and providing nothing happens to prevent it, it may turn out that the title is not good, or the purchaser may be unable to pay’.48 Lord Hatherley said that the vendor becomes a trustee for the purchaser when the contract is completed, as by payment of the purchase money.49 Jessel MR held that a trust sub modo arises on execution of the contract but that the constructive trust comes into existence when title is made out by the vendor or is accepted by the purchaser.50 Sir George Jessel’s view was accepted by the Court of Appeal in Rayner v Preston.51

In Chang’s case, Jacobs J52 warned against the transposition into the law of vendor and purchaser of the law governing the rights and duties of trustees; where there were rights outstanding on both sides the description of the vendor as trustee tended to conceal the essentially contractual relationship which governed the rights and duties of the parties. Jacobs J

[page 235] doubted whether a vendor could be described as a trustee ‘within the meaning of the Trustee Act’ unless settlement had taken place and all that remained to be done was to transfer the outstanding legal estate. Finally, in Kern Corp Ltd v Walter Reid Trading Pty Ltd,53 Deane J said it was wrong to characterise as that of a trustee the position of an unpaid vendor of land under an uncompleted contract of sale, notwithstanding that pending payment of the purchase price the purchaser has an equitable interest in the land which reflects the extent to which equitable remedies are available to protect the contractual rights of the purchaser. Nevertheless, for some purposes, equity does regard the purchaser as having, before completion, a beneficial interest in the property if specific performance would be available against the vendor. Thus, the purchaser has an insurable interest;54 the executors of a deceased vendor are bound to treat the proceeds of sale when received as passing under the will as personalty not realty, although the legal title had still been in the vendor at the time of death;55 and it may be that pending completion the vendor would not be entitled to create a mortgage or charge otherwise than subject to the purchaser’s rights.56 An extreme example is provided by Lake v Bayliss.57 There the vendor resold and conveyed the land to a third party who took free from any interest therein of the plaintiff who was the purchaser under an uncompleted prior contract. However, Walton J treated the proceeds of sale received by the vendor on completion of the second sale as representing trust property (the land), and held that the plaintiff had a right to those moneys in exchange for performance of the plaintiff’s obligations under the first contract. Finally, it will be recalled that in Breskvar v Wall58 the High Court, in deciding a dispute between holders of unregistered interests as to priority, treated the interest of a purchaser under an uncompleted contract with the registered proprietor as an equitable interest to which the claim of the former registered proprietor to be restored to the register was, on the facts, postponed. Reference should be made to a further analysis of the problem elsewhere.59 It concludes that using the language of trusts to describe the relationship between vendor and purchaser in the interval that separates contract and conveyance is out of favour. But so long as the limited and specific purposes served by calling a particular aspect of the relationship a ‘trust’ relationship are remembered, the nomenclature is not incorrect, though there

are certainly disadvantages as well as advantages in its use. The disadvantages include confusion. The advantages include highlighting relevant similarities with express trusts. However, when the contract of sale is made, it can be said that a trust has been created, because, subject to defences, any later purchaser will be bound by the first purchaser’s interest. When the agreed time for conveyance arises, the purchaser’s ‘trust’ becomes stronger as the vendor’s rights before that day terminate. The payment of the full purchase price causes the purchaser’s ‘trust’ to strengthen further, because it increases the likelihood that a suit for a decree of specific performance will succeed. At each of these stages the purchaser is a beneficiary under a ‘constructive trust’ for the purposes of exceptions created to the Statute of Frauds by such doctrines as the doctrine of part performance. [13-08] Further, as a matter of statutory construction, in particular situations the interest of a purchaser under an uncompleted contract may be treated as a property right. Examples are [page 236] provided by cases dealing with resumption of land60 and stamp duty.61 And Oughtred v Inland Revenue Commissioners62 decided that, even conceding the doctrine as to constructive trust, the vendor retained after contract and up to conveyance a sufficient beneficial interest for the conveyance to be treated as ‘a conveyance or transfer on sale’ within the meaning of the stamp duty legislation under consideration.

List not Closed [13-09] Plainly, the list of constructive trusts is not closed. Slade J said so in terms in English v Dedham Vale Properties Ltd.63 The decision of Rath J in Le Compte v Public Trustee64 provides a debatable addition. It was there held that as against the executors of the deceased donor there was no equity to resist the claim of the donee under a gift which otherwise would fail because the subject property was not owned by the donor at the date of the purported gift. Rath J extended a line of United States cases65 holding that if the donor dies believing

he or she has made an effective gift to a donee who is the natural object of his or her bounty, his or her estate is not permitted to profit by the circumstance that the earlier purported gift was ineffective, even though the donor could not have been compelled in his or her lifetime to complete the gift. In the case before Rath J, the donee was not the natural object of the donor’s bounty, but his Honour held that ‘the doctrine of constructive trust’ was applicable. The use of the constructive trust in matrimonial and other disputes between cohabitees, long championed by Lord Denning, is a more celebrated example of an attempt to add to the categories of constructive trust.66 In Cunningham v Harrison,67 Lord Denning MR took a further tack; it was said that a plaintiff should hold on trust for his wife damages awarded to him for personal injuries but calculated by reference to the care to be bestowed upon him by her. In Griffiths v Kerkemeyer,68 Stephen and Mason JJ held that such a trust did not exist in Australian law. In contrast, the House of Lords preferred the views of Lord Denning so that the injured plaintiff who recovers damages under this head would hold them on trust for the ‘voluntary carer’.69 The Court of Appeal of England and Wales has reasoned to the following effect. A transferee of the legal title to property under a disposition made in breach of trust, or the successor in title to that transferee, does not have the beneficial title to property, which remains held on the original trusts, unless either the transferee, or a successor in title, was a bona fide purchaser for value without notice. The trustee acting in breach of trust can transfer the legal title, but cannot vest the beneficial interest in property in a bona fide purchaser for value without notice: the trustee does not own that title and is not acting in a way which enables the trustee, under the trust, to overreach the beneficiary’s equitable interest. Despite that inability, the availability of a bona fide purchaser defence means that a transaction in favour of a bona fide purchaser for value without notice is as effective as it would be if the trustee could vest the beneficial title in the purchaser. Thereafter the purchaser can deal with the asset free from any prior claim of the beneficiaries.70 However, a person who at the time of receipt of trust property is a bona fide purchaser for value without notice of the beneficiaries’ equitable interests is not immune from a claim by or on behalf of the beneficiaries once the transaction under which notice had been given had been set aside or rescinded. The equitable title of the beneficiaries [page 237]

continues to subsist and is no longer capable of being defeated by the bona fide purchaser defence, any more than it would be if the property were again in the hands of the person guilty of the original breach of trust.71 The language of constructive trusts was not used, but the person who has lost the bona fide purchase defence might be described as a constructive trustee pending reconveyance.

Remedial Character of Constructive Trust Remedial and Institutional Constructive Trusts Defined [13-10] There is considerable resistance in England to going beyond ‘institutional constructive trusts’, which arise by operation of law as from the date of the circumstances giving rise to them, to ‘remedial constructive trusts’, which are remedies ‘giving rise to an enforceable equitable obligation: the extent to which [they operate] retrospectively to the prejudice of third parties lies in the discretion of the court’.72 That apart, English and Australian judges have spoken of the constructive trust in terms suggesting that it is simply remedial in character.73 It is true that there is about various constructive trusts a remedial character. Particularly is this so where the trust arises not so much from breach of antecedent duty under an established relationship, as from a particular, perhaps isolated, act which at once founds the duty and the breach. Thus, in Black v Freedman, O’Connor J held that ‘where money has been stolen it is trust money in the hands of the thief and he cannot divest it of that character’.74 In Westdeutsche Landesbank Girozentrale v Islington London Borough Council, Lord Browne-Wilkinson said: ‘when property is obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity.’75 Likewise, in Rasmanis v Jurewitsch,76 it was held that [page 238] the interest by survivorship otherwise taken by one joint tenant on murdering

the other was in equity held on trust for the estate of the victim. Further, the objective of a constructive trust is often remedial in that it seeks to bring to an end a situation where the defendant unconscionably refused to hand over property or effect restitution for some equitable delinquency, rather than institutional by being concerned with the investment and administration of property held, for a time that may be bounded only by the perpetuity period, on behalf of beneficiaries pursuant to an express trust. In England, the constructive trust has been seen as something which can be imposed ‘de novo as a foundation for the grant of equitable relief by way of account or otherwise’.77 Finally, in some instances the term ‘constructive trust’ is used in respect of persons whose liability is purely personal and not proprietary in character. For example, as noted in [13-02], a defendant who instigates, or participates, with the requisite degree of knowledge in a breach by trustees of an express trust has long been treated as personally liable as a constructive trustee for the loss of the trust estate, although the defendant has received no trust property and made no profit personally to which a trust might attach.

Are there Remedial Constructive Trusts? [13-11] But it does not follow that a constructive trust is necessarily ‘remedial’ in the sense that it first has existence and effect only upon the court making its decree. Even in the United States, where the term ‘constructive trust’ is more loosely used than has been the case in England and Australia, the better view is that the decree recognises and enforces the trust, but does not create it; the trust arises immediately the circumstances exist in respect of which equity would construe a trust.78 Thus, in Rasmanis v Jurewitsch, the court did not suggest that in the interim before the decree there was in the murderer a beneficial estate as to the whole of the property, and O’Connor J in Black v Freedman meant that the thief became a trustee forthwith. These authorities are consistent with the proposition that there does not need to have been a curial declaration or order before equity will recognise the prior existence of a constructive trust. That this is so, and that the trust attaches upon the acquisition of the relevant property, has now been affirmed by the Privy Council in Attorney-General for Hong Kong v Reid.79 Nevertheless, in Muschinski v Dodds,80 Deane J, with whom Mason J agreed, said that the constructive trust was ‘predominantly remedial’ and an ‘in personam remedy attaching to property’ and continued:

In particular, where competing common law or equitable claims are or may be involved a declaration of constructive trust by way of remedy can properly be so framed that the consequences of its imposition are operative only from the date of judgment or formal court order or from some other specified date.

Such a declaration, speaking of ownership at the date of judgment, appears to have been made in Baumgartner v Baumgartner.81 It should be noted that both of these cases arose out of a series of dealings between the parties over a period of time and, unlike Reid’s case, were outside any recognised category of fiduciary relationship such as trust or agency. The ‘remedy’ of constructive trust was a regime imposed to disentangle the property of the parties when their relationship had ended. The imposition of a ‘remedial’ constructive trust with effect from a specified time may have adverse effects for the legitimate claims and interests of third parties who have dealt with the parties during the currency of their relationships, but who are not joined and who have lacked notice of the litigation. In Re Osborn,82 Pincus J declared the transfer of certain property [page 239] to be void against the trustee of the property of the transferor who was not bankrupt. This declaration was made pursuant to s 120 of the Bankruptcy Act 1966 (Cth). His Honour rejected a submission for the bankrupt’s wife that the court declare a constructive trust of the property in her favour and with effect before the transfer so as to deny the full entitlement under the bankruptcy law of her husband’s creditors and require an evaluation on loose criteria concerned with the matrimonial history and business affairs of the spouses of the extent of the beneficial interest under the constructive trust. However, Re Osborn was not followed in Parsons v McBain on the ground that a ‘common intention constructive trust’ can be recognised independently and in advance of any court order, and there was no good reason not to do so.83 In any development of the remedial constructive trust of the kind espoused in the Australian cases, care is required to avoid undercutting the principles of pari passu distributions which underlie the insolvency law,84 and the proprietary rights of secured creditors.85 Further, in such a case it will be important to consider whether the interests of the claimant are adequately protected by some other, non-proprietary remedy which does not attach to particular assets.86 A

constructive trust will not be imposed automatically upon money lent in circumstances involving a breach of fiduciary duty where the loan has not been avoided.87 In England, a more absolute approach has been asserted: the plaintiff ‘cannot short circuit an unrescinded contract simply by alleging a constructive trust’.88 In England, Lord Scott of Foscote has said that where representations about future property interests have been made and relied on, proprietary estoppel should be the relevant remedy when the representation on which the claimant has acted is unconditional, and that cases where the representations were of future benefits, and subject to qualification on account of unforeseen future events, reflect the principles of remedial constructive trusts.89 He gave examples of both the former90 and the latter91 categories. Examples of the ‘unforeseen future events’ to which Lord Scott referred include the possibility that a farmer who makes representations about what will happen to his farm on his death may alter its size by sale or purchase and the possibility that the vicissitudes of life may cause the representor to part with the farm in order to fund medical care. This is yet another instance falsifying the universality of the proposition: ‘English law does not know the remedial constructive trust.’ Indeed, in England, the whole ‘“common intention” constructive trust’ as a solution to property disputes between cohabiting couples may be a further instance: for the assessment of the common intention takes place only after the relationship has ended and in the light of all that has happened.92 [page 240] The position may be summed up as follows. In Westdeutsche Landesbank Girozentrale v Islington London Borough Council,93 Lord Browne-Wilkinson said that English law has ‘for the most part only recognised an institutional constructive trust’ and that whether the remedial constructive trust should be adopted was a matter for the future. In contrast, the Supreme Court of the United Kingdom said in FHR European Ventures LLP v Mankarious94 that ‘the Australian courts recognise the remedial constructive trust’. Certainly English judges have often denied the existence of or recognised only limited scope in remedial constructive trusts.95 The English cases see the institutional constructive trust as arising automatically at the moment of the wrong. They see

the remedial constructive trust as discretionary and imposed only at the time of the court’s order with retroactive effect. In Australia, some constructive trusts have the following features. First, they are only to be applied as the last resort. A plaintiff seeking a remedial constructive trust may have to exclude the possibility that there is some other effective remedy which is non-proprietary — that is, which does not attach to specific assets.96 Thus in that sense, in Australia constructive trusts are discretionary and exceptional. It does not necessarily follow from the fact that a remedy is used only as an exceptional last resort that it does not or should not exist.97 Secondly, from the discretionary character of Australian constructive trusts flow particular outcomes as to timing. Lord Browne-Wilkinson has said:98 ‘Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which gave rise to it: the function of the court is merely to declare that such a trust has arisen in the past.’ Sometimes this is true of remedial constructive trusts in Australia, but not always. As stated earlier, O’Connor J said: ‘where money has been stolen it is trust money in the hands of the thief and he cannot divest it of that character’.99 And where one joint tenant murdered another, the former’s interest arising by way of survivorship was held in trust for the estate of the victim.100 As also stated earlier, in neither case did the court suggest that the trust character only arose when the court’s order was made. In Muschinski v Dodds,101 Deane J said (Mason J concurring) that ‘there does not need to have been a curial declaration or order before equity will recognise the prior existence of a constructive trust’. But Deane J then said: ‘Where competing common law or equitable claims are or may be involved a declaration of constructive trust by way of remedy can properly be so framed that the consequences of its imposition are operative only from the date of judgment or formal court order or from some other specified date.’ This assists [page 241] in the protection of innocent third parties whose claims compete with the constructive trust, like the general creditors. Thirdly, an account of profits, rather than a declaration of a constructive trust

over part of a business, may be ordered if the latter would ‘thrust the parties into a continuing business relationship where it was clear that there was no confidence or comity between them’.102 The same applies where a constructive trust might involve an innocent third party being in an unwanted relationship with the plaintiff.103 Fourthly, constructive trusts will not be ordered where this would be disproportionate to the defendant’s degree of wrongdoing or the extent to which the benefit derived was attributable to the wrongdoing.104 Fifthly, the form of any constructive trust or other equitable remedy ordered can vary. In Boardman v Phipps,105 the remedies granted by Wilberforce J included a constructive trust over 5/18 of the shares acquired by Boardman (solicitor) and Tom Phipps (a beneficiary) and an order for an account of profits derived from the transaction. In the Supreme Court of Canada, there has been debate, with the majority favouring and the minority opposing a constructive trust on the facts of Lac Minerals Ltd v International Corona Resources Ltd.106 In Australia, too, the cases exhibit diversity in the relief granted. There are certainly additional instances in Australian law of what appear to be institutional constructive trusts, creating new proprietary interests at the moment of breach. Thus Furs Ltd v Tomkies107 concerned a managing director who procured the sale of part of his employer’s business to a new company for £4000 and £1000 worth of shares in that new company. The company asked for a declaration that the shares belonged to it and an order that they be transferred to it. These orders assume the existence of a constructive trust. The company also asked for an order that the defendant pay over the £4000. The High Court of Australia (Rich, Dixon and Evatt JJ) made those orders. They said:108 ‘An undisclosed profit which a director so derives from the execution of his fiduciary duties belongs in equity to the company.’ A similar apparently non-discretionary quality appears in Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd,109 where it was said that ‘any property acquired, or profit made, by [the defendant] in breach of [the rule in Keech v Sandford] is held by him in trust for his cestui que trust’. These cases seem to treat the imposition of a constructive trust as being automatic. They were favourably referred to by Mason J in the Hospital Products case.110 But, as will be seen, Mason J’s judgment also favours less rigid remedial approaches. One earlier example of that lack of rigidity is Consul Development Pty Ltd v DPC Estates Pty Ltd,111 in which Gibbs J said: ‘The question whether the remedy which the person to whom the duty is owed may

obtain against the person who has violated a duty is proprietary or personal may sometimes be one of some difficulty. In some cases the fiduciary has been declared a trustee of the property which he has gained by his breach; in others he has been called upon to account for his profits and sometimes the distinction between the two remedies has not, it appears, been kept clearly in mind.’ An extreme form of constructive trust was ordered by Kearney J in Timber Engineering Co Pty Ltd v Anderson.112 His Honour held that two employees of a business operated by TECO had sold products in competition with that business in breach of fiduciary duty because their [page 242] personal interests conflicted with that duty. The two employees conducted their competing business principally through a company called ‘Mallory Trading’. The judge held that the relief available was not limited to an account of the profits which the employees had made. It extended to a constructive trust over the successful business which the employees had set up as a result of their breaches. This approach was taken by Kearney J on two grounds. He put the first thus:113 Every opportunity which Mallory Trading has received is directly traceable to resources and benefits provided by TECO, even to the extent of time and efforts expended by Anderson and Toy for which TECO was paying. Every advance made by Mallory Trading was also due to the advantages of the tangible and intangible resources and facilities provided from TECO. In truth, the business of Mallory Trading was carved out of the business of TECO, and thus ought to be treated as being … held on trust for TECO.

He also based the constructive trust on a second theory:114 The substance and worth of Mallory Trading were rooted in fraud and were nourished and sustained in fraud of TECO. For Mallory Trading to maintain that it is beneficially entitled to the produce of such deceit, so as to deny TECO any benefit therein, would, in my opinion, constitute fraud calling for the imposition of a constructive trust in favour of TECO.

The defendant argued that Kearney J should grant only one remedy — an account of profits limited to profits made on orders to Mallory Trading from customers who once were TECO customers. He referred to a discussion by Upjohn J in Re Jarvis (dec’d).115 In that case, counsel for the defendant submitted to Upjohn J that the remedy should be limited to the benefits actually flowing to the defendant executrix-trustee of a tobacconist business which she

had run for her own benefit, not that of the beneficiaries. Counsel for the plaintiff submitted that it would be impossible to separate those benefits out, and the defendant should be made accountable for the whole business. Subject to a laches point, Upjohn J accepted the latter argument because the success of the tobacconist business depended much more on its origins in the business bequeathed than on the independent activity of the defendant. That latter approach was adopted by Kearney J as well. He favoured granting a constructive trust over the defendant’s business, and granting an equitable lien over the shares of companies which carried it on. The reasoning of Upjohn J in Re Jarvis and Kearney J in the Timber Engineering case does not seem compatible with the notion of an institutional constructive trust arising automatically. Instead it rests on a close examination of the particular circumstances and on matters which are in some sense discretionary, or at least matters of judgment. In particular, Re Jarvis casts doubt on whether constructive trusts in England are in truth institutional only. In the Hospital Products case, Mason J approved Upjohn J’s reasoning. He said:116 In In re Jarvis, Upjohn J observed, correctly in my opinion, that it is not possible to say that one approach is universally to be preferred to the other, for each case depends on its own facts and the form of inquiry which ought to be directed must vary according to the circumstances. In each case the form of inquiry to be directed is that which will reflect as accurately as possible the true measure of the profit or benefit obtained by the fiduciary in breach of his duty.

The Hospital Products case illustrates how the remedy varies depending on the nature of the duty broken, the extent of the breach and the need to achieve justice and avoid injustice in the particular circumstances. It also illustrates how different minds can react to identical facts. The case concerned the misconduct of an American distributor who was appointed Australian distributor of an American principal’s products. The American principal claimed a declaration that the distributor’s assets were held on constructive trust. The trial judge, McLelland J, found [page 243] that a fiduciary duty existed, but ordered only an account of profits made by the distributor in getting a head start in the Australian market in breach of duty. The New South Wales Court of Appeal reacted very sharply to the distributor’s undoubtedly shameful perfidy. The court declared a constructive trust over the

whole of the distributor’s assets. A majority of the High Court held that there was no fiduciary duty and left the principal to a claim for breach of contract. However, Mason J, though finding a fiduciary duty narrower than the Court of Appeal’s, like McLelland J, would have ordered only an account of profits. He did not consider it necessary to impose a constructive trust because that would extend far beyond the profits made in breach of duty and would fail to make any allowance for the contribution in time, effort and finance made by the distributor.117 Deane J, who unlike McLelland J and Mason J did not find any fiduciary duty, would nonetheless have ordered a constructive trust obliging the distributor to account for profits made in breach of contract. Since constructive trusts are normally conceived of as arising in the exclusive jurisdiction of equity, not the auxiliary, this was revolutionary thinking.118 Another English authority which recognises the power to grant a constructive trust of a remedial character, but only after examining various factors which point in different directions, is Ocular Sciences Ltd v Aspect Vision Care Ltd. It concerned abuse of confidential information. There Laddie J said:119 In determining whether to grant a proprietary remedy, the court should consider whether it is the appropriate remedy in the circumstances of the case. In considering this, the court must bear in mind the possible effects of imposing a constructive trust. Not only will the plaintiff obtain priority over general creditors, he may recover profits made by the defendant, limitation periods may be different and the plaintiff may be able to obtain compound interest.

He then discussed the detailed analysis in the Lac Minerals case.120 He continued:121 What the plaintiffs are asking for is the imposition of a constructive trust over a part of the defendants’ business and assets. Unlike Lac Minerals, there is no question here of the defendants having diverted their business or assets, or any part of them, from the plaintiffs. Furthermore even if it is said that part of the defendants’ business and assets have been contaminated by breaches of confidence, that contamination is small and technically inconsequential. In my view it would be quite wrong to impose a constructive trust over such a minor fraction. It was not clear to me how a constructive trust imposed on such a fraction would work. Who would decide what repairs or modifications should be carried out to equipment, who should pay for them, who should decide what to do with obsolete equipment and if AVCL was to be floated on the stock exchange, who would decide at what price and on what terms? I can see attractions in a suitable case of imposing a constructive trust over a complete discrete item of property but imposing such a trust over a part only raises additional problems.

Another inquiry relevant to the distinction between institutional and remedial constructive trusts is whether it is open to a court to refuse to declare a constructive trust on grounds like laches, unclean hands, hardship, the plaintiff’s failure to do equity, or unconscionable conduct. If so, the constructive trust is more likely to be a remedy than an institution. A claim to enforce a beneficial

interest under an express trust is not usually seen as defeasible for these reasons. It seems likelier that a claim for a constructive trust is defeasible on those grounds. Laches defeated the claimant in Re Jarvis (dec’d).122 In Chan v Zacharia,123 Deane J said it may still be arguable in the High Court of Australia that ‘the liability to account for a personal benefit [page 244] of gain obtained … by reason of fiduciary position … will not arise in circumstances where it would be unconscionable to assert it’. Admittedly it is not clear whether he was saying the liability to account will not arise at all in those circumstances, or that, though it may arise prima facie, those circumstances afford grounds for refusing the remedy. Another pointer against any rigid distinction between institutional constructive trusts (permissible) and remedial constructive trusts (said to be impermissible in England) is the difficulty of distinguishing between them. That is illustrated by Boardman v Phipps.124 Seven judges supported the view that a constructive trust over the relevant shares should be declared. But their reasons for concluding that the defendants had committed the breaches of equitable duty which led to that remedy varied.125 Lord Denning MR and Lord Cohen thought that the constructive trust was triggered automatically on the basis that the solicitor Boardman was a fiduciary who had acquired a gain. Four others (Lord Hodson, Lord Guest, Pearson LJ and Russell LJ) thought that the information from which Boardman perceived the opportunity to improve the position of the relevant company by acquiring the shares personally and improving its administration was to be seen as trust property. On those two approaches, the constructive trust would fall within Millett LJ’s and UngoedThomas J’s second category described above.126 Wilberforce J, on the other hand, treated each of Boardman and Tom Phipps as an agent de son tort or a trustee de son tort. If so, they fell into Millett LJ’s and Ungoed-Thomas J’s first category, and are to be viewed as constructive trustees under an institutional constructive trust. Is there any point in the remedial constructive trust? It might be said that there is no point in it when the defendant is solvent, and able to pay moneys by way of equitable compensation or an account of profits. And if it is tailored to

protect third party rights on insolvency it does not give any advantage over money remedies. However, one useful aspect of a constructive trust is to be found in its operation against defendants who, though solvent, are unwilling to pay. Proprietary orders against particular assets can be valuable against errant fiduciaries and those who participate in their breaches of duty. The immoral disposition which causes many of them to commit equitable wrongs also tends to cause them to conceal as many assets as possible in order to evade the conventional remedial consequences of those wrongs. Another useful aspect is illustrated by Boardman v Phipps. The plaintiff never attempted to enforce Wilberforce J’s order that there be a constructive trust over the shares. They had halved in value since they were acquired. If they were to be recovered by the plaintiff, he would have had to account to Boardman and Phipps for the money spent in buying them. The purchase price was not in terms caught by Wilberforce J’s just allowances order relating to work and skill. But Wilberforce J did specifically say ‘account must naturally be taken of the expenditure which was necessary to enable the profit to be realised’127 — namely, what the defendants had had to pay to get the shares. Boardman in fact retained all his shares. What was valuable about the shares was the dividends which had been declared on them in consequence of Boardman’s efforts in improving the position of the company: the dividends received on the shares exceeded the decline in their value. Wilberforce J may have been concerned to ensure that all profits were captured by his account of profits order, and the creation of a continuing constructive trust was a useful and perhaps necessary way of avoiding any restriction on the period for which profits were recoverable.128 The account of profits order standing alone might run into the future, after the proceedings had ended, but equity dislikes orders in the nature of a mandatory injunction running for an unpredictable time into the future. The declaration of a constructive [page 245] trust ensured that if he chose to, the plaintiff could avoid difficulties arising from the account of profits order by linking the account of profits to his continuing beneficial interest in the shares under the constructive trust.

There is a third advantage of constructive trusts even where the defendant is solvent. Monetary relief, whether it is equitable compensation or an account of profits, can be hard to calculate. In particular, it can be difficult to assess how far profits were the result of the defendant’s wrong as distinct from other conduct of the defendant. Where the behaviour of the defendant attracts the maxim that everything is to be presumed against a wrongdoer, it is simpler to impose a constructive trust on the whole of the relevant assets of the relevant business, and it is not unjust even if this may exceed the actual profits. Thus it may be that the distinction between the English and the Australian position has been exaggerated. Though most English judges seem to deny the remedial constructive trust, there are at least two modern cases supporting its existence. Further, Ungoed-Thomas J said in the Selangor case that cases in the second category of constructive trusteeship rested on ‘nothing more than a formula for equitable relief’. And in the Central Bank of Nigeria case, Lord Sumption called them ‘purely remedial’.129 Do these hallowed usages render constructive trusts in the second category ‘remedial’, not ‘institutional’? If so, and if constructive trusts in England are never remedial, there can be no proprietary relief for cases in Millett LJ’s and Ungoed-Thomas J’s second category.130 That would be an extreme result. On the other hand, there are several Australian cases in which what appear to have been institutional constructive trusts have been imposed, though there are others where the order is in the nature of a remedial constructive trust. There is a certain logic and purity of principle in the contention which must underlie the English institutional constructive trust — that once a wrong has been committed to the plaintiff, any proprietary rights in the plaintiff that flow from that wrong should operate from the moment of the wrong. On the other hand, if remedial flexibility is sought, the price will sometimes be the creation of a nonretrospective constructive trust, that is, a remedial constructive trust. It does not seem that the Australian solution has caused much harm. Finally, it may be said that the debate about whether a particular constructive trust is institutional or remedial is beside the point. What matters is not what it is called, but what its substantive incidents are.131

The Rule in Keech v Sandford

Renewal of Lease [13-12] The rule laid down in Keech v Sandford132 applies to renewals of leases by trustees, executors, directors, mortgagees, mortgagors, partners, tenants for life, joint owners, agents, and persons who have an ultimate interest along with others. It also applies to purchasers for value with notice from trustees and tenants for life133 and any purchase money received will be subject to the trusts of the settlement.134 In the case of trustees, personal representatives and tenants for life, the presumption of personal incapacity to retain the benefit of the renewed lease is one of law and cannot be rebutted. The basis of the presumption is said to be public policy.135 In regard to the other classes of persons, there is no presumption of law, but at the [page 246] most a rebuttable presumption of fact arising from the relation of the parties to one another.136 In Chan v Zacharia,137 Deane J expressed the view that the ‘rule’ in Keech v Sandford should not be seen either as an independent principle of equity or as a mere manifestation of the general principle governing the liability of a beneficiary to account for personal gain or benefit, but rather as a rule concerned with the operation of presumptions in the application of that general principle to particular types of property. Thus, the principle in Keech v Sandford138 is strictly applied to trustees, personal representatives, and tenants for life, and is extended as a general principle of equity to others on whose part there is some fiduciary duty in matters affecting the interests of those towards whom the fiduciary duty exists. However, this must be read subject to the qualification laid down in Re Biss139 that where a person occupies no such fiduciary position but has merely a partial interest in the old lease, if that person obtains a renewal, that person holds it beneficially, unless: (1) the lease was renewable by covenant or custom; or (2) that person surrendered a remainder of the old lease when that person obtained the new one; or (3) that person used some fraud or concealment in obtaining the new one. The facts in Re Biss140 were that A, having a shop held from year to year, died

intestate. B, his widow, took out administration. There were three children, one being an infant. C, an adult child, continued with B to carry on the business. B applied to the landlord for a new lease on behalf of A’s estate. The landlord refused. C then applied on his own behalf, and the landlord granted the lease. B then claimed that C should be declared a trustee of the new lease for her as administratrix of A’s estate. The court rejected the claim.141 The position of the various classes of persons may now be considered in greater detail.

Trustees [13-13] In Re Knowles’ Will Trusts,142 Cohen LJ stated that the rule that a trustee who obtains a renewal of lease is presumed to have acted in the interests of all persons interested in the old lease appears to apply wherever a testator bequeaths his leasehold interest in property on trust and, on its true construction, the will is silent as to what is to be done in the event of a renewal of the lease. In that case, there was no right of renewal under the old lease and the trustee obtained, in his own name, a renewal which the court directed he could not retain for his own benefit. Since trustees are bound to preserve trust assets, it is a breach of their duties to compete with a business conducted on behalf of a trust even if, had they been only employees, they might have been entitled to compete.143 Similarly, trustees cannot take over the trust business for themselves, and must take all reasonably available steps for its continuance.144 As stated above,145 the presumption of personal incapacity to retain the benefit of the renewed term is one of law and cannot be rebutted. [page 247]

Executors [13-14] The same principles apply to executors. In Re Morgan,146 where an executor, who under the circumstances was practically a trustee, surrendered a lease forming part of the testator’s estate, took in his own name a new lease including additional property, and borrowed money on the security of the new

lease, it was held that the new lease was in equity part of the testator’s estate and that the equity of the estate took priority over the equity of the mortgagee.

Tenants for Life [13-15] A tenant for life, while not necessarily a trustee for the remaindermen, does owe them certain duties in special circumstances. If the tenant for life’s position enables the obtaining of certain advantages which should really belong to the estate as a whole, equity will hold the tenant for life a constructive trustee for all interested parties.147 The foundation for the fiduciary position of tenants for life in relation to the renewal of a lease is that ‘they can take only what the will or settlement under which they make title gives them and that a renewal must be looked on as an accretion to or accrued upon the original term arising out of the goodwill or quasi-tenant right annexed thereto, and that their rights to such accretion are those which they have in the term, and no greater, and terminate with their own life’.148

Agents [13-16] Agents acting under the authority of a trustee, executor, or tenant for life cannot take a renewal of the lease for their own benefit.149

Partners [13-17] As pointed out earlier,150 there is no irrebuttable presumption of law that a partner taking a renewed lease is a constructive trustee of it for the partnership, but rather a presumption of fact which may be rebutted. In Featherstonhaugh v Fenwick,151 Sir William Grant MR stated:152 It is clear, that one partner cannot treat privately, and behind the backs of his co-partners, for a lease of the premises, where the joint trade is carried on, for his own individual benefit: if he does so treat, and obtains a lease in his own name, it is a trust for the partnership; and this renewal must be held to have been so obtained. Consider, what an unreasonable advantage one partner would upon a different principle obtain over the rest. In this respect there can be no distinction whether the partnership is for a definite, or indefinite, period. If one partner might so act in the latter case, he might equally in the former. Supposing the lease and the partnership to have different terms of duration, he might, having clandestinely obtained a renewal of the lease, say to

the other partners, ‘the premises, on which we carried on our trade, have become mine exclusively; and I am entitled to demand from you whatever terms I think fit, as the condition for permitting you to carry on that trade here’.

[page 248] But, notwithstanding these dicta, it does not follow that in all cases a partner will be held to be a trustee of the renewed lease. This was made clear by Turner LJ in Clegg v Edmondson:153 I am not prepared to say that in no case can a partner during the continuance of the partnership contract for a new lease to be granted to himself of property which is in lease to the partnership without the new lease being held to be subject to trusts for the benefit of the partnership. The authorities, I think, do not warrant that position; but this, I think, is plain upon all the authorities, that it is very difficult for any partner to secure to himself to the exclusion of his copartners the benefit of a lease so contracted for, and the difficulty is certainly greater where the contracting partners, are, as in this instance they were, the managing partners.

In Chan v Zacharia,154 the High Court of Australia (Murphy J dissenting) held that these principles may apply even after the dissolution of a partnership and even though the transaction does not arise in any immediate sense out of the partnership while it was on foot and is not concerned with the more effective or convenient winding-up of the partnership. In Chan v Zacharia, a receiver was appointed in August to wind up the partnership. An option to extend a lease of the partnership premises was not exercised by the due date in September because the erstwhile partners could not reach agreement to do so. In November, the lessor agreed on payment of a fresh premium of $10,000 to enter into a new lease with one of those partners. The High Court held that any interest of the former partner as the new lessee was held on constructive trust for the former partnership. The majority emphasised that in November the partnership had not been fully wound up and that it was not equitable that one party be permitted to retain for himself the new lease which could not have been granted if the option had been exercised within time. Murphy J pointed out, with some cogency, that the new lease was obtained after the expiry of the option period, after the winding-up had commenced, and not on the option terms. How then had the new lessee ‘dealt with’ any ‘partnership asset’? How had he placed his ‘duty’ to the partnership in conflict with his personal interests? The answer seems to be that even during winding-up it was the duty of each partner to join in exercising the option and so produce a new asset then

to be promptly disposed of in the course of that winding-up. Equity will not encourage the stultification of that process by permitting one partner to decline to cooperate and then obtain a fresh lease for himself. In Cameron v Murdoch,155 a Western Australian appeal, the Privy Council accepted that it followed from Chan v Zacharia that the relationship between a surviving partner and the estate of a deceased former partner is fiduciary in nature. But their Lordships held that this did not mean that, as an incident of that category of fiduciary relationship, the surviving partners who carried on the partnership business after the dissolution of the partnership by reason of the death of their colleague became trustees for the estate of that part of the business profits which was attributable to the use of the estate’s share of the original partnership’s assets. Moreover, s 55 of the Partnership Act 1895 (WA) was consistent with the general law as so stated. It gave the estate not a trust remedy of a proprietary kind, but either an account of profits attributable to the use of the share or interest at 6% of the value of that share. Cameron v Murdoch thus is an illustration of a particular fiduciary duty, breach of which cannot, or does not, call for the imposition of a constructive trust.

Mortgagors and Mortgagees [13-18] The mortgagor of a renewable lease can hold the renewed lease only subject to the mortgage. In Leigh v Burnett,156 the assignee of a mortgaged lease bought the reversion, [page 249] borrowing part of the purchase money on a memorandum that the borrowed money would be secured by a mortgage of the property when purchased. The lender was held not entitled to priority over the original mortgagee. Similarly, if a mortgagee of a renewable lease obtained a renewal from the lessor, the new lease would be held subject to the old equity of redemption.157 The same rule was applied in Hughes v Howard,158 where a lessee fraudulently incurred a forfeiture of a mortgaged lease, obtained a new lease, and sold the new lease.

Purchase of Reversions [13-19] The principle of Keech v Sandford159 has been extended by analogy to cases of purchase of the reversion by trustees and tenants for life where the lease has been renewable by custom or by covenant,160 but has been held not to apply when there has been no right or custom of renewal.161 It is difficult to say, however, whether this can be taken as a definite statement of the law. In Griffith v Owen, a tenant for life in possession of mortgaged houses purchased the houses from the mortgagee, the mortgagee selling under a power of sale contained in the mortgage. The tenant for life was held to be constructive trustee of the houses for the remaindermen. Parker J said:162 Though the decision in Phillips v Phillips163 is stated to be an extension of the principle of Keech v Sandford164 the analogy between the two cases is somewhat imperfect. It cannot be said that a person buying the reversion on a lease prima facie does so by virtue of any interest in the leaseholds. Otherwise the extension of the doctrine of Keech v Sandford would cover purchases of reversions in every case, whether the lease was renewable by custom or otherwise, for the fact that there is a custom to renew cannot, I think, make any difference in this respect. It seems to me that the real ground of the extension is that stated by Sir William Grant in Randall v Russell.165 ‘If’, he said, ‘Mrs Russell had purchased from the college, it might be said, that she thereby intercepted and cut off the chance of future renewals and, consequently, made use of her situation to prejudice the interests of those who stood behind her; and there might be some sort of equity in their claim to have the reversion considered as a substitution for those interests’, an equity which was established in Phillips v Phillips.166 If this be so, the principle would not be applicable to purchases of reversions on leases renewable of right, as distinguished from custom, because, there being no merger, the persons interested in the leaseholds could not be prejudiced. On the other hand, if it were proved affirmatively that the purchase of a reversion had only been obtained by virtue of the purchaser being interested in the leaseholds, eg, because the landlord was giving all his leaseholders an opportunity to enfranchise their holdings — I see no reason why, if there existed on the part of the purchaser the necessary fiduciary relationship or duty, the principle of Keech v Sandford167 should not be applied whether the lease were renewable of right or not renewable at all. From this standpoint both the decisions as to the renewal of leaseholds and those as to the purchase of reversions may be looked upon as instances of that more general equity which governs the personal capacity of persons on whose part there is some fiduciary relationship or duty in matters affecting the interests of those towards whom the fiduciary relationship or duty exists.

[page 250] [13-20] This branch of the law has been thrown into confusion by the decision of the English Court of Appeal in Protheroe v Protheroe.168 A husband and his wife were both beneficially entitled to interests in the lease of their

matrimonial home; the parties having separated, the husband purchased the freehold of the property by borrowing money on mortgage from a building society. It was held that the wife was entitled equally with her husband in the net proceeds of sale of the freehold of the property (subject to prior repayment to the husband of his payments under the mortgage and legal expenses in connection therewith). No cases were cited in argument and no cases (other than Keech v Sandford)169 were mentioned in their Lordships’ judgments. Nevertheless, their Lordships seemed to commit themselves to the following unqualified statement:170 There is a long established rule of equity from Keech v Sandford downwards that if a trustee, who owns the leasehold, gets in the freehold, that freehold belongs to the trust and he cannot take the property for himself. On that principle when the husband got in the freehold, it attached to and became part of the trust property.

Stated in such a broad way the proposition is indefensible. In Metlej v Kavanagh,171 Waddell J said that this ‘long established rule of equity’ was stated by Lord Denning MR in terms which in fact were inconsistent with previous authority.

Fiduciary Agents General [13-21] The doctrine of constructive trusts probably finds its fullest development in cases dealing with what are called fiduciary agents such as bankers, solicitors, agents for the purchase or sale of land, and the like, who are not in the strict sense trustees for their clients, but who, nevertheless, standing in a fiduciary relation to their clients, are in certain circumstances held liable as though they were ordinary trustees. Where a principal instructs an estate agent to buy particular land, and the estate agent disobeys and buys it personally, the estate agent will hold the land as constructive trustee for the principal.172 No property of the principal was entrusted to the estate agent in the first instance. Nor does the agent hold any property actually owned by the principal. But because the estate agent has taken advantage of a fiduciary position to obtain a personal advantage, the estate agent must hold that advantage for the benefit of the principal. The general principle is that if, through the fiduciary character of an agent, that agent gains

a personal advantage from third parties with whom the agent has dealings on account of the principal, the agent must account as a trustee to the principal for any profits made in this way. In Boardman v Phipps,173 the House of Lords held, inter alia, that a solicitor employed by the trustees of an estate was liable to account for profits made as a result of purchasing shares in a company in which the trust had a substantial holding. The solicitor had not made full disclosure of his activities to the beneficiaries. Lord Cohen emphasised that there is no general principle that an agent is accountable for profits derived by the use of information and opportunity acquired while acting in a fiduciary capacity. The liability must depend upon the particular facts and the strength of the nexus between the fiduciary relationship, the opportunity and the profit. In the instant case, the nexus was sufficiently [page 251] strong to render the solicitor liable.174 The information that the shares would be a good investment and the opportunity of bidding for the shares came to the solicitor because he had purported (for all purposes except the making of the actual bid) to be dealing with the third parties involved as agent of the trust. The position of corporate trustees acquiring information from a number of trusts in the ordinary course of their businesses is apparently less stringently controlled. The liability of the fiduciary agent to account will arise even though the advantage taken by the agent is one which would not have been exercised by the principal because of disability in a commercial or legal sense.175 It seems that it is on this basis that the ‘lottery cases’ like Van Rassel v Kroon176 really rest. An agent who, on behalf of a syndicate, buys a lottery ticket (even with the agent’s own money), and puts it in the agent’s name only, will be compelled to hold the ticket on trust for the syndicate.

Bribes: The Controversy [13-22] There has been uncertainty as to how far the principle that an agent is a constructive trustee of profits made illicitly in the course of the agency extends. There are some statements to be found which tend to suggest that it

applies only to ‘fiduciary’ agents and not to ‘non-fiduciary’ agents (whatever that distinction means in this context). There are other statements which tend to suggest that even in the case of ‘fiduciary’ agents, the principle is sometimes applicable, and sometimes not.177 The present editors submit that the principle ought to be applicable in every case of agency. Order has been brought to the subject by the reversal of the New Zealand Court of Appeal’s decision in Attorney-General for Hong Kong v Reid on appeal to the Privy Council,178 together with decisions accepting it in the Supreme Court of the United Kingdom179 and the Full Court of the Federal Court of Australia.180

Bribes: The Resolution [13-23] In outline, the position is that where a fiduciary, whether a trustee, employee, agent or otherwise, accepts a bribe, the principal is not limited to an action in debt to recover it. Hence the so-called Lister & Co v Stubbs cases181 are not good law, at least to the extent that they may be thought to exclude proprietary remedies. A proprietary remedy is available by way of constructive trust over the bribe or property acquired with it, including any increase in its value. If the value of the bribe or property into which it has been converted declines, the defendant must not only return what is left but pay the difference. The constructive trust is not limited to instances where claimants could show that they have been deprived of property which would have been obtained but for the breach of fiduciary duty. [page 252]

Bribes: A Fresh Start [13-24] In previous editions182 there were extensive criticisms of authorities now regarded as wrong in the modern cases. They will not be repeated here, in view of the recent developments in the case law. Reference should be made instead to a full analysis of the present position elsewhere.183 It is only necessary here to stress that non-Australian cases should be read in light of the fact that in Australia a more flexible approach appears to be taken to questions of remedy than in England.184 Hence the suggestion in Attorney-General for Hong Kong v

Reid185 that as soon as a bribe is received it is held on constructive trust for the person injured is not accepted in Australia, where it has been said that ‘the constructive trust in this setting is a discretionary remedy’.186

Estate Agents [13-25] There have been numerous cases where agents employed to purchase or sell land have been declared constructive trustees.187 An agent who has been employed by the principal to purchase land cannot purchase it personally; an agent who does will be a constructive trustee of the land for the principal.188 In Cave v Mackenzie,189 an agent entered into a contract with a vendor for the purchase of land which he should have bought for his principal, and the agent assigned the benefit of the contract to another person. It was held, nevertheless, that the principal was entitled to the benefit of the contract, as the legal estate was still in the original vendor and the equity of the principal took priority over the equity of the assignee. The same rule applies to a sale by an auctioneer, who cannot purchase personally property which a vendor had instructed that auctioneer to sell without the consent of the vendor.190

Employees [13-26] An employee may in certain circumstances be declared a constructive trustee. Thus, in British Reinforced Concrete Engineering Co v Lind,191 L was employed by the company to design the best form and method of lining for certain gallery-headings. In his report to the company he set out four essential points, each of which had to be provided for. He submitted several schemes, all of which, however, omitted one of these essential points. Subsequently, he discovered or invented a method of supplying the missing essential, and immediately patented it. He was held to be a trustee of the patent for the benefit of the company. [page 253]

The case, however, does not decide that every employee is a trustee for the employers of any invention or discovery that the employee makes in the course of the employment. In many cases the terms of the contract of service may in themselves be sufficient to determine whether or not the patent belongs to the employee or to the employer. For example, the mere fact that in Lind’s case the employee was engaged as an assistant engineer or as a draftsman in the office of the plaintiff company would not have entitled the plaintiff company to claim for its benefit the advantages of any invention which the defendant might have made, although the invention may have been the result of knowledge and experience gained in that office, and might even have been suggested by difficulties which had arisen in the office, and which had come to the employee’s knowledge by reasons only of having been employed there.192 It is necessary to consider the terms of the contract of employment and the relationship between the parties under the contract. In Lind’s case, L was employed to produce a given result in accordance with the report, furnished by him and, accordingly, as was said in the judgment:193 [F]rom that moment the terms of his employment imposed upon him an obligation to place at the disposal of, and treat as the property of, the Company the best design which he could, by the exercise of his industry, skill, ingenuity, and inventive ability, produce for the purpose of complying with the essential conditions of the work on which he was employed.

The duty of an employee in respect of inventions was placed somewhat higher in Sterling Engineering Co v Patchett,194 where Lord Simonds said: It is elementary that, where the employee in the course of his employment (ie, in his employer’s time and with his materials) makes an invention which it falls within his duty to make … he holds his interest in the invention and in any resulting patent as trustee for the employer, unless he can show that he has a beneficial interest which the law recognises … [T]he rule … is sometimes spoken of as an implied term of the contract of service.

Directors [13-27] Directors of a limited company are officers of a creature of statute. They occupy a position peculiar to themselves. In New South Wales, it has been held that they owe a duty of care to the company which is actionable in the tort of negligence.195 In some respects they resemble trustees, in others they do not.196 In some respects they resemble agents, in others they do not. In some respects they resemble managing partners, in others they do not. Although

directors are not as such in all circumstances trustees for the company of which they are directors, like agents they may be called to account for secret profits made by them in their character as directors of the company. For example, if a director takes bribes or commissions from persons dealing with the company or if a director deals with the company’s property in such a way as to make a personal profit, the moneys paid by way of bribe or commission and the profits made out of the use of the company’s property can be recovered by the company.197 In Shaw v Holland,198 directors who improperly allotted shares to themselves at an undervalue were held liable to account to the company for the profit so made. In Industrial Development Consultants Ltd v Cooley,199 Roskill J held a company director liable to account to his company [page 254] for all profits made or to be made by him under a contract with another body which was entered into owing to the director’s conduct, while director, in failing to pass on to his company information received from that other body and guarding it for his own personal purposes and profit. Although directors are in a fiduciary relationship to the company200 and may be made to account as stated above, they are not generally in a fiduciary relationship to the individual shareholders of the company.201 In Percival v Wright,202 directors bought shares from a shareholder while negotiations were pending for the sale of the company’s undertaking. They did not disclose to the vendor the fact of such negotiations. It was held they were not under any duty to do so. However, so far as this case denies that directors ever owe fiduciary duties to shareholders, it has been overruled. It was held that directors owed a duty to shareholders in circumstances where there were negotiations for a takeover or an acquisition of the company’s undertaking, requiring the directors loyally to promote the interests of all shareholders.203 Directors are not in a fiduciary relationship to the creditors of the company.204 Nor does the liquidator of a company owe a fiduciary duty either to the creditors or to the contributories.205 But the liquidator may be liable in damages for negligence in the performance of statutory duties.206

Promoters

[13-28] The term ‘promoter’ includes those who undertake to form a corporation and to procure for it the capital and the rights for its establishment in business.207 The promoters of a company stand in a fiduciary relation to the company which they promote, and to those persons whom they induce to become shareholders in it, and cannot in equity bind the company by any contract with themselves without full disclosure to the company of all material facts which the company ought to know.208 That is a positive, prescriptive duty.209 Where promoters make [page 255] profits by charging the company a higher price than they themselves have paid for the property ultimately sold to the company, they may be made to account to the company for such profits, the ordinary rule as to agents selling their own property to their principals applying in such cases.210

Joint Venturers [13-29] In United Dominions Corp Ltd v Brian Pty Ltd,211 the High Court of Australia did not accept the views of Cardozo CJ (in Meinhard v Salmon212) that joint venturers were subjected to fiduciary duties akin to those of partners. It said that the term ‘joint venture’ is too imprecise as a matter of ordinary language to support such a general proposition. It argued that the most that can be said is that whether or not the relationship between joint venturers is fiduciary, will depend upon the form which the particular joint venture takes and upon the content of the obligations undertaken by the parties to it.

Breach of Fiduciary Duty Problems Other than Remedy [13-30] There is in respect of breaches of fiduciary duty in general vast scope for the constructive trust. The threshold question is whether there is any fiduciary duty presented by the circumstances. The second question concerns

the scope of that duty in the particular case. The third is whether there has been a breach thereof. The fourth concerns the appropriate remedy. The issues that arise with the first, second and third questions are considered elsewhere,213 but several points should be noted briefly: (1) No great difficulty arises with these questions where the relationship is a recognised one with fairly settled incidents, such as trusteeship, partnership and company directorship. (2) Keech v Sandford214 and the cases treating it are examples of a specific duty in relation to a particular subject matter. (3) There is difficulty in formulating the criteria for the isolation of a fiduciary duty in an ad hoc relationship, particularly where the parties have a concurrent contractual relationship. (4) The criteria that can be formulated for isolating a fiduciary duty in an ad hoc relationship are confined to general propositions, for example, as that one party has come under or assumed an obligation to act in the interests of another, and, on the other hand, that the mere fact of ‘proximity’ is not sufficient to create a fiduciary relationship.215 (5) There is no doctrinal reason why the existence of a concurrent contractual relationship necessarily should militate against the existence of a fiduciary relationship. The history of agency and partnership law suggests the contrary. The real point is that where there is a concurrent contractual relationship and no established category of fiduciary relationship applies, trust or reliance might be expected to be tempered by caution and selfinterest and to be placed in the particular mutual accommodation of respective self-interest reached in the contract itself. And, in any event, ‘subjective’ trust by one party in another is neither necessary nor conclusive of fiduciary relationship, for a beneficiary may never have met the trustee, while a vendor who defrauds a trusting purchaser is not a fiduciary.216 [page 256] (6) It will be unusual to find a fiduciary relationship where the parties are in an ‘arm’s length’ commercial relationship manifested by contract.217 But

surely the Privy Council put the matter too broadly in Clark Boyce v Mouat218 when it said that fiduciary duty ‘cannot be prayed in aid to enlarge the scope of contractual duties’. The dictum is even more remarkable because the relationship was that of solicitor and client. More to the point is the statement by Lord Browne-Wilkinson in Henderson v Merrett Syndicates Ltd:219 ‘The existence of a contract does not exclude the co-existence of concurrent fiduciary duties (indeed, the contract may well be their source); but the contract can and does modify the extent and nature of the general duty that would otherwise arise.’

The Constructive Trust Remedy [13-31] ‘[A] fiduciary is liable to account for a profit or benefit if it was obtained (1) in circumstances where there was a conflict or possible conflict of interest and duty or (2) by reason of the fiduciary position or by reason of the fiduciary taking advantage of opportunity or knowledge which he derived in consequence of his occupation of the fiduciary position.’220 Any profit or benefit obtained by a fiduciary in either of these two situations is held by the fiduciary as a constructive trustee.221 Contrary to the holding of McLelland J at first instance in United States Surgical Corporation v Hospital Products International Pty Ltd,222 both the Court of Appeal223 and Mason J on further appeal to the High Court,224 were at pains to point out that it was no objection to the imposition of a constructive trust that it was not the duty of the defendant to obtain for the plaintiff the profit or benefit in question; the only issue was whether the profit or benefit had accrued to the defendant in breach of duty, that duty having two limbs as described in the first sentence of this paragraph. What then are the incidents of the constructive trust vindicated by orders for equitable damages or an account of profits? Breach of trust by an express trustee results in a personal liability for breach as well as proprietary remedies being available in respect of the trust property. Similarly, the constructive trustee is liable personally to account for the value of a profit or benefit which in the constructive trustee’s hands cannot be isolated and attributed to any particular asset. Thus, in Phipps v Boardman,225 Wilberforce J declared the defendants to be trustees of shares acquired in breach of duty and obliged them to account for the amount in dividends declared and received by them in the meantime. The profits for which the fiduciary is liable are not necessarily limited to those made

within the geographical ambit of the fiduciary relationship. The geographical limitation to one state of the responsibilities of a manager of a company’s business would not excuse the manager from liability to account for profits made in another state in competition with the employer and in breach of fiduciary duty.226 Where the gain is an asset to which the defendant has personally contributed, the court may by charge or [page 257] severance distinguish the respective interests therein, but where the court is unable to make the distinction, the trust will extend to the whole asset lest the fiduciary take advantage of the wrong and the plaintiff lose all.227 It may be that the true measure of the profit or benefit gained by the errant fiduciary lies in a business established and carried on in breach of duty. In Timber Engineering Co Pty Ltd v Anderson,228 an employee fraudulently and in breach of fiduciary duty diverted business from his employer and others who participated in the fraudulent breach of duty. Kearney J held that (a) every opportunity which the company received was directly attributable to resources and benefits provided by the employer; and (b) every advance made by the company was due to resources and facilities provided by the employer. It followed that the business of the company was held on constructive trust for the employer because it represented the measure of the profit or benefit obtained in breach of duty. On the other hand, in Hospital Products Ltd v United States Surgical Corp,229 Mason J (the only member of the High Court who held that there was a fiduciary duty owed by an Australian exclusive distributor to its United States supplier) differed from the Court of Appeal in declining to treat the whole of the business activities in question as representing the gain from the breach of duty by the distributor. This was largely because he took a narrower view than it had of the ambit of the duty and thus of the quantum of the gain in breach of it.

Difficulties with Third Parties [13-32] Where a trust of a business undertaking is held to be the appropriate remedy, a question arises concerning third parties who have dealt innocently with the defendants while the business was being established in breach of duty.

If they purchased the legal title to assets without notice, then no difficulty arises. But what, for example, of a financier who has lent money on equitable security over the assets of the business? A financier who does so with knowledge, or dishonestly, may not only lose any priority but become personally accountable on the second (if not the first) limb of Barnes v Addy.230 But what if the financier is innocent? When does the trust arise in favour of the plaintiff? Does the first equitable interest in time prevail? These are questions as yet unanswered by authority. One answer would be that as the money lent went into building up the business, the whole undertaking cannot represent the gain from the breach of duty to the plaintiff. The response might be that but for the breach, there would have been no business to offer as security for the borrowing. A further answer may be that in such a case, the merits are unequal so that the equity first in time (that of the fiduciary’s principal) need not prevail231 or that it should prevail only upon the principal accepting conditions which make allowance for the later equity. After all, the financier may have participated in a continuing breach of duty by the borrower, but if the financier did so without knowledge and was not dishonest within the second limb of Barnes v Addy232 the financier is not chargeable as trustee for the plaintiff. Another possibility is to treat the constructive trust not as an institution which arises when the facts calling for it take place, but as an available remedy only, which may operate from the date of judgment or formal court order or from some other specified date as suggested by Deane J in Muschinski v Dodds.233 A decree might then be drawn so as to accommodate the equity of the equitable charge. [page 258]

Third Party Accessory Liability for Breach of Trust The Rule in Barnes v Addy [13-33] The liability of third parties who become involved in a breach of trust, whether by receiving the trust property, or actively procuring or inducing the breach of trust, or merely assisting in the breach of trust, or otherwise, can be divided into several categories. The decision cited most often is Barnes v

Addy.234 It was not a case where the third party had received trust property, nor had he made any profit for which it was sought to make him accountable. A trustee, acting under a power in the trust deed, appointed K sole trustee of part of the trust property (held on trust for the wife and children of X) against the warnings of his solicitor and of the solicitor of X. The respective solicitors nevertheless prepared the necessary documents. The trust funds entrusted to K were lost. In a suit against the solicitors it was held that they could not be made liable for the loss. No funds had passed through their hands and there was nothing fraudulent or dishonest in their involvement in the matter. Lord Selborne LC said:235 Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees. … If those principles were disregarded, I know not how anyone could, in transactions admitting of doubt as to the view which a Court of Equity might take of them, safely discharge the office of solicitor, of banker, or of agent of any sort to trustees.

The Non-exhaustive Nature of Barnes v Addy Liability [13-34] Later cases have spoken of the first and second limb in Lord Selborne’s propositions. The first is concerned with agents who receive and become chargeable with some part of the trust property. The second is concerned with agents assisting with knowledge in a dishonest and fraudulent design on the part of trustees. It has become common to refer to the first limb as ‘knowing receipt or dealing’, and the second limb as ‘knowing assistance’.236 It is an essential element of accessorial liability under the first limb that the transfer of the property237 be in breach of a fiduciary obligation.238 After later cases, notably Consul Development Pty Ltd v DPC [page 259]

Estates Pty Ltd239 and United States Surgical Corporation v Hospital Products International Pty Ltd,240 it is clear that the reference to trustees in the second limb is to be read as extending to involvement of the third party in misconduct by fiduciaries who were not trustees. The later cases (notably the bank cases241) also extend the role of the stranger beyond that of agents in any strict sense. Thus while the relationship between banker and customer will ordinarily be one of debtor and creditor, the roles depending upon whether the account is in debit or credit, and while it is not readily apparent how the bank is simply an agent of the customer, the bank cases treat the bank as an agent, probably for the application of both limbs of Barnes v Addy, in respect of dealings by directors of a corporate customer with its bank account. This has led to a tendency to treat the two limbs of Barnes v Addy as an exhaustive statement of the circumstances in which a third party may become accountable as a trustee. Plainly this is not so. First, Lord Selborne was directing his remarks to the accountability of agents who act in particular transactions. He was not speaking of those who act as principals (for example, as trustees de son tort) or of third parties who purport to take property as purchasers or donees, not as agents. This is readily apparent if his remarks are read as a whole. Secondly, Lord Selborne also treated as clearly liable as trustees third persons ‘actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust’. While the second limb may be seen as a species of this genus, there was well established authority at the time Lord Selborne spoke holding that third parties who had not received trust property as agents, who had not as agents participated in a fraudulent design within the second limb and who had not acted as trustees de son tort, were held accountable as trustees. That is, whatever the required mental state for a third party who participates in a fiduciary’s breach, it is not necessary to establish that the fiduciary was behaving dishonestly. This has now been affirmed by the Privy Council in Royal Brunei Airlines Sdn Bhd v Tan.242 Among the pre-Barnes v Addy authorities to which their Lordships refer is Eaves v Hickson,243 in which the trustees had been guilty of breach of trust by paying over trust funds to the illegitimate children of one Knibb upon the faith of a marriage certificate which Knibb had produced to them knowing it was forged; Knibb was made responsible, with the trustees, for the moneys lost. The fraudulent design was that of Knibb, not the trustees he duped. On neither limb of Barnes v Addy would he have been liable.244 In the Royal Brunei Airlines case, the Privy Council abandoned the received tests for liability under the second limb of Barnes v Addy, and substituted the key

requirement of this old line of cases — that the third party behave dishonestly rather than the fiduciary. The present Australian position, however, is that both the second limb of Barnes v Addy, understood in the traditional sense, and the kind of liability recognised in the line of authorities relied on in the Royal Brunei Airlines case, each continue to exist.245 [page 260] Apart from the first limb of the rule in Barnes v Addy, there is another form of liability facing the recipient of trust property. ‘A person who receives trust property, otherwise than as a bona fide purchaser for value without notice, but innocently, and thereafter acquires notice of the trust and deals with it in a manner inconsistent with the trust, will also be liable as a constructive trustee. Although this is similar to first limb Barnes v Addy liability, it is conceptually distinct, because it is the subsequent dealing, rather than the receipt of property that founds liability.’246 What does it mean to ‘receive’ trust property? The expression goes beyond obtaining physical possession of, or an absolute interest in, trust property. It includes obtaining an interest,247 including a security interest, in it.248 It applies to defendants into whose hands the trust property is traceable.249 It is not necessary to establish that the transfer of the trust property stemmed from dishonest conduct by the transferor, but only that the transferee had notice that the property was trust property and that it was being misapplied.250 It is convenient briefly to mention the relief available where the plaintiff establishes Barnes v Addy liability against a third party under either limb. A defendant who retains property or its traceable proceeds will be subject to a constructive trust of a proprietary kind, and will be liable to restore what is retained.251 The defendant is also liable to pay equitable compensation252 or to an account of profits,253 subject to questions of election. Interest may be payable at mercantile rates on a compound basis.254 The defendant may be jointly and severally liable with the fiduciary in relation to money remedies, and may be jointly and severally liable to account for profits made by the fiduciary.255 [page 261]

Five Categories of Accessory Liability [13-35] At this point, after that introduction to three forms of accessorial liability, it is desirable to summarise the overall position for accessorial liability. At the present stage of development in Australia, accessorial liability for breach of fiduciary duty (including breach of trust) may be divided into at least the following categories: (a) The first limb of Barnes v Addy: receipt of trust property with particular types of notice. (b) The second limb of Barnes v Addy: assisting in (that is, participating, without inducing or procuring) a dishonest and fraudulent design on the part of the fiduciary with particular types of notice.256 (c) Procuring or inducing a breach of fiduciary duty (whether that breach be a dishonest or fraudulent design or not) with a particular mental state.257 An example may be found in the liability of a solicitor who persuades a trustee to apply trust property in a way the trustee honestly believes is permissible but which the solicitor knows to be a breach of trust, a fact which the solicitor deliberately conceals from the trustee. This is the category with which the Privy Council was dealing in Royal Brunei Airlines Sdn Bhd v Tan.258 The High Court kept the rules of this category distinct from those applying to the second limb of Barnes v Addy in Farah Constructions Pty Ltd v Say-Dee Pty Ltd.259 English law, following the Privy Council decision in the Royal Brunei Airlines case, treats this category as a remodelling of the second: there is no need for a dishonest and fraudulent design, but the accessory must have behaved dishonestly. (d) A company which is the ‘corporate creature, vehicle, or alter ego’ of the fiduciary who uses it to secure the profits of, or to inflict the losses by, the fiduciary’s breach of fiduciary duty is fully liable for the profits made from, and the losses inflicted by, the fiduciary’s wrong.260 (e) A person who presumes to act as a trustee though not so appointed and then commits a breach of trust or makes a profit from the position may be liable as a trustee de son tort.261 The succeeding analysis concentrates on the two limbs of Barnes v Addy.

Notice

[13-36] The whole topic of the liabilities of third parties involved in breach of fiduciary duty is notable for close refinement of distinctions between degrees of knowledge and notice. [page 262] The Supreme Court of Canada has held that where a trust is created by statute, any third party will be deemed to have known of it.262 Most attention has been concentrated on Baden v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA.263 There, acting on an agreement between counsel,264 Peter Gibson J isolated five categories: (1) ‘actual’ knowledge; (2) the wilful shutting of eyes to the obvious (called by his Lordship ‘Nelsonian’ knowledge); (3) wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make; (4) knowledge of circumstances which would indicate the facts to an honest and reasonable person; and (5) knowledge of circumstances which would put a reasonable person on inquiry (that is, constructive notice as traditionally understood). By constructive ‘notice’ is meant the knowledge one would have gained if one had inquired in circumstances raising the duty to inquire. Constructive notice ‘will attribute notice of a fact to a person who, while lacking knowledge of it, had knowledge of facts which would put a reasonable person on inquiry’.265 These five Baden categories have sometimes been criticised as overrefined. On the other hand, the Baden classification has been seen as useful in distinguishing different kinds of knowledge for the purpose of determining what kind of knowledge makes it unconscionable for the defendant to retain the trust property (that being a test sometimes employed in England).266 And Australian authorities continue to rely on the categories. The first and second categories are notice for the purposes both of law and equity. While the common law (as Lord Esher MR was at pains to explain in English Scottish Mercantile Investment Co v Brunton)267 did not know of

constructive notice, if the facts showed a calculated abstention from inquiry then a jury might properly infer actual knowledge. The third of Peter Gibson J’s categories is based on what was said by Buckley LJ in Belmont Finance Ltd v Williams Furniture (No 1):268 The knowledge of that design on the part of the parties sought to be made liable may be actual knowledge. If he wilfully shuts his eyes to dishonesty, or wilfully or recklessly fails to make, such

[page 263] inquiries as an honest or reasonable man would make, he may be found to have involved himself in the fraudulent character of the design, or at any rate to be disentitled to rely on lack of actual knowledge of the design as a defence. But otherwise … he should not be held to be affected by constructive notice.

As is apparent, Buckley LJ was inclined to treat wilful and reckless failure as actual notice. And in United States Surgical Corporation v Hospital Products International Pty Ltd,269 the Court of Appeal treated a calculated omission to inquire for fear of unearthing fraud or breach of duty as probably equivalent to actual knowledge. The fourth of Gibson J’s categories is based upon observations by Gibbs J and Stephen J (with whose judgment Barwick CJ agreed) in Consul Development Pty Ltd v DPC Estates Pty Ltd.270 Plainly, it is a species not of actual notice but of constructive notice. The last of Gibson J’s categories is constructive notice in the full sense. It is a purely equitable concept. It evolved to govern the position of a third party seeking to set up a title as bona fide purchaser of a legal estate without notice of the equitable estate.271 The point with both limbs of Barnes v Addy is that neither of them is concerned with the position of an alleged bona fide purchaser of a legal title to trust property. The issue is whether the third party will incur liability as a trustee only with somewhat more than constructive notice. Plainly actual notice will suffice. But what, if anything, between actual notice and constructive notice will render the third party accountable?

The Notice Test under the First Limb in Australia [13-37] There is some authority272 that actual or constructive notice will

suffice for the first limb, where even though the third party does not seek to set up a title as purchaser, the third party has ‘received and become chargeable’ with trust property. But in Grimaldi v Chameleon Mining NL (No 2),273 it was held that while on the Australian authorities categories (1)–(4) described in Baden’s case sufficed for liability, category (5) did not. [page 264]

The Reach of the Second Limb in Barnes v Addy [13-38] The second limb renders third parties accountable in a variety of settings. They include the following: (1) As part of the fraudulent design, the third party may receive or gain control of property already impressed with a trust (express, resulting or constructive) and, in that event, there may be, as Peter Gibson J pointed out in the Baden case,274 an overlap between the first and second limbs of Barnes v Addy. Further, in so far as the receipt of property involved a conveyance of the legal title, it may be more accurate to see the third party not merely as a constructive trustee under either or both limbs of Barnes v Addy but as one against whom the primary trust applies. (2) The third party may not acquire or deal with any property already impressed in a trust but may in the course of, or as a result of participation in the fraudulent design: (a) acquire or deal with property of the fiduciary; or (b) acquire or deal with property of a party other than the fiduciary; or (c) acquire or deal with property which the third party personally generates, being property to which the plaintiff alleges a constructive trust attaches. The facts in Consul Development Pty Ltd v DPC Estates Pty Ltd275 were presented as falling within category (b). In breach of his fiduciary duty as investment manager of a company, G located and recommended to another company the purchase of certain properties in return for a share of the profits on resale. The issue was whether the managing director of that other company had the requisite knowledge of G’s impropriety to satisfy

the second limb of Barnes v Addy. It was resolved in favour of that third party. In United States Surgical Corporation v Hospital Products International Pty Ltd,276 after HPL acquired the business of HPI, it had further developed that business. HPI had been the exclusive distributor in Australia of the plaintiff’s products. On the basis (destroyed on further appeal to the High Court)277 that HPI had built up its business in breach of duty to the plaintiff, the issue before the Court of Appeal was whether a constructive trust should attach to the business of HPL. The Court of Appeal held that it should. At that stage of the litigation the case was an example of categories (a) and (c). The court did not decide whether the business was to be treated as already impressed with a constructive trust when acquired from HPI. If it had been, then the case would have fallen within category (1). (3) It may be alleged, as it was in Barnes v Addy itself, that the third party has participated in the infliction of loss upon the beneficiary. In such cases it is not a question of accounting for a profit or holding assets on constructive trust. The plaintiff seeks the making good of a loss.

The Elements in the Second Category of Barnes v Addy [13-39] There are four elements in the second limb of Barnes v Addy. First, there must be a fiduciary duty (as trustee or otherwise).278 [page 265] Secondly, there must be a dishonest and fraudulent design by the fiduciary. It is not necessary to show that the accessory, as distinct from the fiduciary acted dishonestly.279 The expression ‘dishonest and fraudulent design’ is not limited to a breach of trust, but extends to other breaches of fiduciary duty.280 The Western Australian Court of Appeal has said that ‘dishonest and fraudulent design’ refers to any breach which was more than trivial and was not excusable as being a breach which was honest, was reasonable and ought fairly to be excused.281 This view has been rejected by the New South Wales Court of

Appeal282 — in view of what was said in Farah Constructions Pty Ltd v Say-Dee Pty Ltd.283 Dishonesty is a transgression of ordinary standards of honest behaviour. It is not necessary to demonstrate that the fiduciary thought about what those standards were.284 Thirdly, there must be assistance by the third party in the fiduciary’s dishonest and fraudulent design. What constitutes ‘assistance’? There is certainly assistance, if in the absence of steps being taken by the third party, the breach of duty by the fiduciary could not have occurred or been implemented. The role of the banks in the bank cases affords an example. At the other extreme are the parts played by the solicitors in Barnes v Addy itself. They had no grounds to suppose that the new trustee would act improperly. One solicitor had prepared the instrument of appointment of the sole trustee and the other had perused it. One of them had advised against the appointment of a sole trustee. In the Baden case,285 Peter Gibson J held that there might be ‘assistance’ even though loss was not its inevitable consequence. The directors of trust companies are peculiarly vulnerable to the second limb of Barnes v Addy.286 Fourthly, the third party must have notice of the fiduciary’s dishonest and fraudulent design. Any of the first four categories of knowledge identified in Baden’s case will suffice.287 It is not the law that the plaintiff must establish an absence of fully informed consent to the breach of fiduciary duty in order to fix a third party accessory will knowledge of the breach. It is for the defendant accessory to do that. And once the defendant accessory has knowledge of what would otherwise amount to a dishonest and fraudulent design in breach of fiduciary duty, it is for an honest and reasonable person in the defendant accessory’s position to make inquiries about informed consent.288 A defendant who proceeds without inquiring about the principal’s informed consent takes the risk that it has not been obtained.289 Upon whom rests the burden of establishing the presence or absence of notice for the purposes of the second limb in Barnes v Addy? In United States Surgical Corporation v Hospital Products International Pty Ltd,290 the New South Wales Court of Appeal decided that the burden lay on the third party to negative the existence of the requisite knowledge once the plaintiff [page 266]

established facts which, to a reasonable person, would demand inquiry: that cast an evidentiary onus on the defendant to prove inquiry. Reliance was placed by the court upon the position of a third party asserting a defence of bona fide purchaser of the legal estate in a suit to vindicate the earlier equitable estate. The third party in a Barnes v Addy second limb case will by no means always have received property of the plaintiff. Where the plaintiff seeks to make out a case of constructive trust which has not sprung from a previously subsisting trust, the court’s view may require qualification. The question is: in such cases, should not the plaintiff bear the burden of making out his, her or its case?

The Position of Bankers [13-40] Do cases where bank accounts are utilised to furnish financial assistance by a corporate customer for acquisition of its own shares fall within the first, second or both limbs of Barnes v Addy? The authorities were discussed by Gibbs J and Stephen J in Consul Development Pty Ltd v DPC Estates Pty Ltd.291 On their reading of Selangor United Rubber Estates Ltd v Craddock (No 3)292 and Karak Rubber Co Ltd v Burden (No 2),293 it was vital to the decisions that the bankers who were held liable had dealt with the property of the companies in question. But if that were so, indubitably the first limb would have applied: constructive notice would have been sufficient and the possibly more restrictive requirements of the second limb would not have applied. Yet it is by no means clear that the English courts did so treat the cases before them. They are perhaps best seen as instances falling within both limbs. The essential point is that the bank may be liable on the first limb without any attempt on its part to acquire title to the funds of the customer. It is sufficient for a party to receive and become chargeable with the moneys, and this the banks certainly did in the cases in question. The real issue, and upon it depends the application of the first limb, is whether they acted as agents for their customers. It is hard, for example, to see how a banker acts as agent for a customer when it collects proceeds of a cheque deposited by the customer, for the credit of an overdrawn account of that customer.294

Other Categories of Constructive Trust

Constructive Trusts Arising from Transactions Voidable in Equity [13-41] Where an express trust is void under the general law, there is an implied or resulting trust of the beneficial interest in favour of the settlor or of the testator’s estate. This type of implied trust must be distinguished from the constructive trust which arises where A holds property received from B as a result of the fraud, misrepresentation or undue influence of A or any other person. In that type of case, A is a constructive trustee for B of the property and a declaration to that effect, with or without orders for reconveyance or retransfer of the property to B, may be made against A in equity. This situation in cases where the property has been transferred pursuant to an intention to create an express trust has already been considered.295 However, the jurisdiction of the court is not limited to cases where it was intended to create a trust. It extends to cases where an absolute transfer was intended. It is not proposed to discuss the law relating to actual fraud, to innocent misrepresentation, to undue influence or to other types of what is described as ‘equitable fraud’. It is proposed merely to indicate the type of trust [page 267] which arises where such ‘equitable fraud’ exists.296 Most of the cases concern the operation of fraud in the equitable sense (which on one view embraces undue influence, catching bargains and some species of mistake) upon the plaintiff’s disposition of property. But the effect of fraud in this area is not limited in this way. The cases involve: (1) fraud in the performance or failure in the performance of arrangements respecting the disposition of the plaintiff’s rights, rather than in their formation; (2) the relinquishment by the plaintiff, as a result of fraud practised upon the plaintiff by the defendant, of rights, or the prospect of acquiring rights, in relation to the property of a third party which is then acquired by the defendant from the third party; and (3) the acquisition by the defendant from a third party, by purchase or grant, of

property which but for fraud practised by the defendant upon the third party would have been acquired by or remained in the ownership of the plaintiff. An illustration of category (1) is Last v Rosenfeld.297 The plaintiffs transferred to their co-owners their share in certain land for $8500, with the oral agreement of the defendants to transfer that interest back to the plaintiffs for $8500 if the defendants did not go into occupation within one year. Hope J held the defendants to be constructive trustees for the plaintiffs of a share of the proceeds of sale by the defendants of the land to a third party, on the footing that they had become constructive trustees of the land when, before the sale, the year had expired. In Carson v Wood,298 the appellants transferred to the respondent their shares in a company which was the proprietor of registered trade marks on the understanding that both parties would continue to share beneficial ownership of the marks. It would have been fraudulent for the company to assert absolute ownership. So it was declared constructive trustee of the marks for both parties in equal shares. Avondale Printers & Stationers Ltd v Haggie299 is an illustration of both categories (1) and (2). The plaintiff relinquished its contractual rights to purchase premises from a third party in reliance upon assurances by the defendants that they would buy them, invest substantial sums in development thereof and grant the plaintiff an option to purchase. Mahon J held that as constructive trustees the recalcitrant defendants were bound to transfer the property to the plaintiff upon reimbursement of the purchase price and incidental expenses. The conduct of the plaintiffs in reliance upon the defendant’s dishonoured promises was of the same character as that which in other cases has founded a proprietary estoppel.300 In Chattock v Muller301 and Pallant v Morgan,302 two persons proposed to bid at an auction of the land of a third but arranged that one only should bid and that the other be entitled to a portion on the land if the bid were successful. The defendant was not allowed in equity to set up an absolute title to the whole. In the second case Harman J went so far, in the absence of clear identification of the plaintiff’s portion, as to order equal division. These cases do not depend upon the existence of a specifically enforceable contract, nor indeed perhaps upon contract at all. They depend upon the fraud of the defendant in setting up an absolute title.303 But, as Mahon J recognised in Avondale Printers & Stationers Ltd v Haggie,304 the mere breach of an oral arrangement respecting property will not necessarily raise a

constructive trust. The assertion of title by the defendant must be fraudulent. The difficulty is to isolate what suffices for the fraud. An illustration of [page 268] category (3) is provided by the decision of the New South Wales Full Court in The Homeward Bound Gold Mining Co NL v McPherson.305 The mining title of the plaintiff was forfeited by the Minister by reason of fraudulent representations to him by the defendants. The defendants then obtained a new grant to themselves. They were declared to be trustees of the interest for the plaintiff. In so far as the above cases involved one party parting with property or forgoing rights in respect of property on the faith of an undertaking of the other to deal with it as arranged between them, they have an affinity with the species of fraud encountered in secret trusts and mutual wills. In the case of ‘secret trusts’, equity, on the grounds of fraud, refuses to recognise the strict legal effect of words used by a settlor or testator.306 So also, where two persons execute mutual wills.

Mutual Wills307 [13-42] Two parties, usually, but not necessarily,308 husband and wife, may make a contract309 as to the disposal of their property whereby each executes a will containing, mutatis mutandis, the same provisions as the other. If both wills are left unrevoked during the joint lives of the parties, and the contract is adhered to by reason of the survivor’s will not being revoked, no particular difficulty arises. Clearly, during their joint lives the parties may release each other from their bargain. Also in that period a will may be revoked separately by one party if notice of this is given to the other party. Why? For although the will of the innocent party can then be altered,310 normally it is no answer to a claim for breach of contract to say that notice of the conduct in breach was given in advance. If the will of the party first to die has been altered otherwise than by revocation upon marriage then the survivor may sue the estate of the deceased for damages at law for breach of contract.311 The occasion for the intervention of equity arises when the first party performs the agreement by dying without

having revoked the will. The problems involved appear from Birmingham v Renfrew.312 In that case, a wife had bequeathed her residuary estate to her husband if he should survive her, and, if he did not, to four of her relatives. Her husband, a day before the wife made her will, executed a will by which his estate was bequeathed to his wife should she survive him, and, failing that, to the same relatives selected in the wife’s will.313 The wife predeceased the husband; both wills then were still in force. The husband thus took under his wife’s will. But when he died three years later, it was found that he had revoked his first will and left a will with different provisions. The High Court (Latham CJ, Dixon and Evatt JJ) held that the distribution of the husband’s estate was governed not by the second will, but by the first will. That first will was made in performance of an agreement with his spouse, that, in consideration of her making her will, he agreed to make a corresponding will, and, if he should be the survivor, to leave it unrevoked. This will would operate upon all the estate of the survivor, including [page 269] what remained of his benefits under the will of his wife. Of course, the ultimate beneficiaries of such an arrangement were the designated relatives of the wife, and they were third parties to the contract and without standing at law against the husband’s executors. Yet the High Court ordered distribution of the husband’s estate in their favour. The basis upon which the High Court did so is explained by Dixon J:314 I think the legal result was a contract between husband and wife. The contract bound him, I think, during her lifetime not to revoke his will without notice to her. If she died without altering her will, then he was bound after her death not to revoke his will at all. She on her part afforded the consideration for his promise by making her will. His obligation not to revoke his will during her life without notice to her is to be implied. For I think the express promise should be understood as meaning that if she died leaving her will unrevoked then he would not revoke his. But the agreement really assumes that neither party will alter his or her will without the knowledge of the other. It has long been established that a contract between persons to make corresponding wills gives rise to equitable obligations when one acts on the faith of such an agreement and dies leaving his will unrevoked so that the other takes property under its dispositions. It operates to impose upon the survivor an obligation regarded as specifically enforceable. It is true that he cannot be compelled to make and leave unrevoked a testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement

it is nevertheless valid as a testamentary act. But the doctrines of equity attach the obligation to the property. The effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will which he undertook would be his last will. … [T]he equitable obligation to fulfil the contract attaches to the property the subject of the contract and converts the party into a trustee for the objects to be benefited. It must not be forgotten that Lord Thurlow was able to say (Legard v Hodges315) that it was a maxim which he took to be universal that ‘wherever persons agree concerning any particular subject, that in a court of equity as against the party himself, and any claiming under him voluntarily or with notice, raises a trust’. The application of this view to contracts for ‘mutual’ or corresponding wills is affected by the second of the considerations … combining to give rise to the equities in question. That consideration consists in the death of one of the parties leaving a will in the form agreed. The result is a disposition of property made upon the faith of the survivor’s carrying out the obligations of his contract. It is an element which brings such a case under the equitable jurisdiction for the prevention of fraud.

The preferred construction of Dixon J’s words, applying them to the facts of Birmingham v Renfrew, is that the trust arises automatically on the death of the first to die because she made her will in reliance upon the promise of the survivor and by her death that will has become irrevocable.316 The other view is that the survivor is put to his election; he may disclaim the benefits coming to him under the first will and escape the obligation to leave his will unrevoked in respect of property owned by him at his death, because the constructive trust does not arise until he elects to accept the dispositions in his favour under the first will.317 But the fraud upon the party who dies first is practised when she dies with her will unrevoked, on the strength of the survivor’s promise, thus depriving herself of the opportunity to make alternative testamentary arrangements; it is no satisfaction that the survivor may disclaim and [page 270] then revoke his will for this diverts the devolution of the property of the deceased away from the beneficiaries she selected and to her next-of-kin.318 The former view is supported by authority holding that the doctrine of mutual wills is not confined to cases where the survivor has benefited under the will of the first to die, but applies also to cases where the two testators leave their property to beneficiaries other than themselves.319 It follows from the establishment of the constructive trust with the death of the first testator to die that the interest of a beneficiary designated under the arrangement to take on the death of the survivor, is vested from that time and

throughout the life of the survivor and will not lapse if the beneficiary predeceases the survivor but will pass to the beneficiary’s personal representatives as part of the beneficiary’s estate.320 The trust is not destroyed by the remarriage of the second testator after the death of the first.321 The constructive trust will apply only to the property taken by the survivor under the will of the first to die, if the agreement to the parties was to this effect.322 This would free from the trust the separate estate of the survivor. But the general scheme of mutual wills attaches the trust to all the property of the survivor owned at the date of death of the first to die or after acquired by the survivor.323 The result is to reduce the survivor to something less than an absolute owner but more than a life tenant.324 In Birmingham v Renfrew,325 Dixon J put his position as follows: The purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner with the property passing under the will of the party first dying. That is to say, the object of the transaction is to put the survivor in a position to enjoy for his own benefit the full ownership so that, for instance, he may convert it and expend the proceeds if he choose. But when he dies he is to bequeath what is left in the manner agreed upon. It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallize into a trust. No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is therefore, not unqualified. But, substantially, the purpose of the arrangement will often be to allow full enjoyment for the survivor’s own benefit and advantage upon condition that at his death the residue shall pass as arranged.

Finally, it should be observed that as the trust is constructive, the duties imposed upon the survivor do not fall within the writing requirements of s 7 of the Statute of Frauds and its Australian counterparts.326 But what of the contract between the parties out of which the trust has grown? If it has or includes as its subject matter an interest in land, is it unenforceable without writing to satisfy s 4 of the Statute of Frauds and its Australian adaptations?327 In Birmingham v Renfrew,328 the High Court held the statute inapplicable because although [page 271] at the time of the promise the subject property included land, the contract was to make a will which would operate not only on any specific property or fund, but simply on whatever assets the parties had at death. Horton v Jones,329 where

the statute did apply, was distinguished on the bewildering ground that there ‘the contract related to a share in a specific trust fund the then present form of which included land’. At all events, if the contract would otherwise fall within the statute, this should not bar the enforcement of the constructive trust. The survivor who takes the assets of the first to die but denies any obligation in respect of them is using the statute as a cloak to conceal a lack of absolute ownership. This is a well recognised head of equitable relief against the statute,330 and was relied upon as an alternative ground in Birmingham v Renfrew itself.331 Where the first party to take had, without notice to the survivor, revoked the will, and the survivor acted to his detriment on the footing that the mutual will still existed, a constructive trust was found over the deceased’s property in favour of the survivor.332 The promise of a deceased person to make a particular testamentary disposition which would otherwise generate the constructive trust under discussion is subject to the potential operation of an order under appropriately framed testator’s family maintenance (or family provision) legislation.333 The promise did not operate as an immediate declaration of trust binding the assets of its maker.334 Nor did it amount to unconscientious conduct: that would have arisen only when and if the promisor revoked the will.335

Constructive Trustee’s Right to Reimbursement or Remuneration General [13-43] A person who is declared by the court to be a constructive trustee of property will, in certain circumstances, be entitled to reimbursement of his or her expenses or to remuneration for his or her time and trouble.336 Thus, where a person who has renewed a lease or purchased the reversion in his or her own name is held to be a constructive trustee, he or she has a lien on the property for the costs and expenses of the renewal with interest.337 If he or she has expended money in permanent improvements, he or she is, prima facie, entitled to recoup his or her expenditure to the extent of the improved value,

and the fact that he or she is entitled as tenant for life under the constructive trust does not displace his or her right to recoupment.338 [page 272] Secondly, a person who has bona fide traded with another’s property and in consequence made a profit, which he or she is held bound to account for to that other, may claim remuneration for his or her time and trouble. Thus in Brown v Litton,339 where a ship’s mate traded with his deceased captain’s money and made a profit and was declared a constructive trustee thereof, he was held entitled to an allowance for his care, and management of the money. Similarly, in Brown v De Tastet,340 where on the death of one partner the surviving partner retained his capital in the business and made a profit with it of which he was held to be a constructive trustee, he was declared entitled to a proper allowance for the management of the business. But as the Court of Appeal pointed out in United States Surgical Corporation v Hospital Products International Pty Ltd341 in a passage not affected by the reversal of the decision on further appeal,342 a fiduciary who has made an honest error343 will be more generously treated than one who has been a cheat and trickster. The latter may be left in the toils of his or her fraud and denied any just allowances for none could be ‘just’.

The Constructive Trust and Domestic Arrangements The Orthodox Approach [13-44] Problems involving the ownership of property owned by persons who are or have been married or cohabiting are, like other issues concerning rights of property, to be determined by the application of principles of law and equity, and not according to subjective judicial notions of what is fair and reasonable. Much of the field is covered by legislation referred to above,344 but judges are not legislators. This was affirmed by the House of Lords in Pettitt v Pettitt345 and

Gissing v Gissing.346 The consequences were explained by Bagnall J in Cowcher v Cowcher347 as follows: I am convinced that in determining rights, particularly property rights, the only justice that can be attained by mortals, who are fallible and are not omniscient, is justice according to law; the justice which flows from the application of sure and settled principles to proved or admitted facts. So in the field of equity the length of the Chancellor’s foot has been measured or is capable of measurement. This does not mean that equity is past childbearing; simply that its progeny must be legitimate — by precedent out of principle. It is well that this should be so; otherwise no lawyer could safely advise on his client’s title and every quarrel would lead to a law suit.

The ‘New Model’ Constructive Trust [13-45] However, in a series of decisions, the English Court of Appeal, led by Lord Denning MR, and under a misapprehension as to what is meant in the United States by classification of the constructive trust as ‘remedial’, rearranged the property rights of persons who had formerly been living together, by reference to what result would be ‘fair’. It then dignified the results as constructive trusts. As has been explained,348 when Americans describe the constructive trust as a remedy to prevent unjust enrichment, they do not mean that it provides a cause of action where there was none, but rather that it provides a proprietary remedy where, although the law provided a personal remedy, it is adjudged inadequate. ‘Unfairness’ per se no more provides a [page 273] cause of action for alteration of proprietary rights in the United States than it did in England before the Court of Appeal began to develop its ‘new model’ constructive trust.

Examples of the ‘New Model’ Constructive Trust [13-46] The first Court of Appeal decision of note is Heseltine v Heseltine.349 It concerned the disentangling of the matrimonial affairs of a rich wife and her less affluent husband. She had contributed (among other things) four-fifths of the purchase price of the matrimonial home (which was held in the husband’s name) and had given her husband sums totalling £40,000 on the (perhaps

curious) ground that such gifts would diminish death duties in the event of her predeceasing him. The marriage failing, the court, as to these two assets, held that the husband was trustee of the house as to a three-quarter share for his wife, and was a trustee of the entire £40,000 for his wife. Both trusts were said to be constructive; the court’s view of the conventional American wisdom was relied on. But the results seem indefensible. If the ordinary principles of equity had been applied, the law of resulting trusts would have required a finding that the wife was beneficially entitled to a four-fifths share of the matrimonial home, not a three-quarters share; and it is not easy to see why the law of constructive trusts was said to be applicable rather than the law of resulting trusts. If the ordinary principles of equity had been applied, the husband might have been made to account for the £40,000 on some principle analogous to undue influence.350 But the Court of Appeal, led by Lord Denning MR, simply imposed the two constructive trusts referred to because it thought the result ‘fair’. Heseltine v Heseltine demonstrates that the important question is not — is the constructive trust institutional or remedial — but rather, what does it mean to say that the constructive trust is remedial? In a sense it obviously is. Nobody would deny that a plaintiff seeking a decree that the defendant be declared to hold property on a constructive trust is looking for a remedy. But if what is meant by the assertion that the constructive trust is remedial is that any judge is at liberty to impose a constructive trust on any defendant whenever caprice suggests that it is ‘fair’ to do so, the assertion must be firmly repudiated. In Cooke v Head,351 Lord Denning MR, Karminski and Orr LJJ applied this doctrine in a dispute between a man and his female friend. She had supplied one-twelfth of the purchase price of what would have been the matrimonial home had the parties been married, and therefore on the application of the ordinary principles of resulting trusts should have been entitled to one-twelfth of the proceeds of sale. But the Court of Appeal held that the man was a constructive trustee of onethird of the proceeds of sale for his her. This, it seems, was ‘fair’.

Binions v Evans [13-47] Binions v Evans352 stands in a different position. Mrs Evans’s husband, during his lifetime, had always been permitted to live rent-free in a cottage situated on the estate on which he was working. After his death the estate agreed with his widow to permit her to remain there for the balance of her life. Then the estate sold the land to a purchaser, drawing the latter’s

attention to the agreement with Mrs Evans and accepting an abatement of the purchase price on that account. The Court of Appeal decided that the purchaser held the land on the same sort of constructive trust as did the purchaser in Bannister v Bannister.353 [page 274]

Bannister v Bannister [13-48] In Bannister v Bannister, the defendant sold two cottages to the plaintiff on the understanding that the defendant had the right to reside for life in one of them. The Court of Appeal upheld the defendant’s cross-claim (to the plaintiff’s claim to eject her) that the plaintiff held the property on trust for the defendant for an equitable life estate. The plaintiff unsuccessfully asserted that the Statute of Frauds defeated the defendant’s claim because the understanding she relied on was oral. To rely on the statute would be to use it as an engine of fraud.354 The correctness of the decision is plain. The only question is why the trust was described as constructive when it arose from an express arrangement. Bannister v Bannister was treated as decisive by Megaw and Stephenson LJJ in Binions v Evans. Vinelott J did likewise in Ungurian v Lesnoff,355 so that neither this case nor Binions v Evans involves a constructive trust of the new English model.

Criticisms of the ‘New Model’ Constructive Trust [13-49] In previous editions, substantial criticisms were made of the ‘new model’ constructive trust cases in England. These criticisms are not repeated. There is little continuing point in doing so, because the ‘new model’ constructive trust was never law in Australia and, at least in name, has ceased to be law in England.

Other Remedies [13-50] It should be said that even if the law abstains from granting relief in relation to ‘new model’ constructive trusts, there remain other remedies. Thus,

where two parties are jointly liable for a mortgage debt on property they own and one makes the repayments not intending the other party to have the benefit thereof, the first may be entitled to an equitable charge to secure a right of contribution.356 When the property is sold there will have to be an equitable accounting between the parties.357 Again, the circumstances may disclose that A provided B with a beneficial interest or a condition (for example, that B would pay for improvements to the property) which if not fulfilled did not give rise to a forfeiture of B’s interest but entitled A to equitable compensation. An example is Gill v Gill.358 In their dissenting judgments in Muschinski v Dodds,359 Brennan J and Dawson J would have decided the appeal on that footing. And, in appropriate cases, representations by the defendant concerning the subject property may, if acted upon, found a proprietary estoppel in favour of the plaintiff.360 Thus, in Morris v Morris,361 the plaintiff, a widower, sold his apartment and paid $28,000 towards an extension to the house of his son and daughter-in-law, in response to representations [page 275] that he might live there with them. McLelland J applied Allen v Snyder.362 He held there was no constructive trust but there was a proprietary estoppel in favour of the plaintiff which would be satisfied by an equitable charge over the property to secure his investment.

Australian Rejection of the English Position [13-51] The English decisions discussed and referred to above363 do not represent the law in Australia. That this is so was decided by the High Court in Muschinski v Dodds.364 Deane J365 rejected the English decisions and held that there is no place in Australian law for the notion of a constructive trust imposed by law whenever justice and good conscience require it. Rather, proprietary rights fall to be determined by principles of law and not by some mixture of judicial discretion, subjective views about which party ought to succeed, or the formless void of individual moral opinion.

Baumgartner v Baumgartner Expounded [13-52] But that has not been the end of the matter. The prevailing principle in Australia is a result of the adoption and adaptation in Baumgartner v Baumgartner366 by Mason CJ, Wilson and Deane JJ of what had been said by Deane J in Muschinski v Dodds.367 His Honour identified a general equitable principle which restores to any party contributions which that party has made in a joint endeavour which fails, the contributions having been made in circumstances that it was not intended the other party should enjoy them. Examples were given of premature partnership dissolution and collapse of joint ventures. In the latter regard, reference was made to United States decisions. However, those cases are examples of the fiduciary characterisation given in the United States to joint ventures generally,368 contrary to the position established in Australia by United Dominions Corp Ltd v Brian Pty Ltd.369 Deane J saw the examples he gave as instances of the basic concern of equity to interpose and prevent the assertion or exercise of a legal right in circumstances where this would constitute unconscientious conduct. His Honour summed up the position as follows:370 Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do. …

Baumgartner v Baumgartner Criticised [13-53] The reasoning in Baumgartner v Baumgartner, while purporting to be rooted in basic equity, may give no more predictability or consistency in result than that which follows from the English decisions espousing the ‘new model’ constructive trust. It remains unclear as to [page 276] when and why the interposition of equity to prevent unconscientious reliance

on legal rights in the Australian cases will give rise in equity to a proprietary rather than a personal right, and a proprietary right which is a constructive trust ‘fashioned’ by the court.371 In Baumgartner v Baumgartner itself, the parties had pooled their income for living expenses and fixed commitments. They had lived in a property owned by the man. This was sold and a house was purchased in his name with the aid of a mortgage and the net proceeds of sale of the first property. The parties pooled their aggregate earnings in the proportions roughly of 55% by the man and 45% by the woman. After they had separated, the man asserted that the land was his sole property. However, it was held that he held the house on trust for himself and his former partner in the proportions to which they had contributed their earnings to its acquisition, subject to a charge in his favour for the net proceeds of sale of the first property. A different result was reached by the New South Wales Court of Appeal in Bryson v Bryan.372 There, the parties had been married but both were dead. The dispute was between the charity which was devisee of the former matrimonial home under the will of the husband and the sole beneficiary under the will of his wife, who claimed that the wife had been entitled to an equitable half-share in the matrimonial home. This had been purchased with the husband’s money more than 50 years earlier and had been held in his name alone. The wife may have been the sold bread-winner for a few years in the Depression. She had worked on the site when the house was under construction. She may have spent some of her own money on furnishing the dwelling. The majority of the Court of Appeal373 held that the efforts of the wife did not give her an equitable share which it would be unconscionable for the executor of the husband’s estate and the beneficiary thereunder to deny. Sheller JA made the point that, even if there had been a pooling of resources so that in their lifetime each party had had an equitable interest in the property, partners who contribute to the purchase of assets during their cohabitation may nevertheless wish those assets to be enjoyed by the survivor when separated by death. That, it would appear, is another way of saying that on the facts there had been no premature termination of the ‘joint enterprise’ but that it had, in fact, achieved its purpose in providing a matrimonial home during the joint lives of the parties and, as it happened, for the short remaining life of the survivor.

The Current English Position [13-54] It was seen earlier374 that English law has rejected resulting trust

analysis as the correct resolution of disputes between cohabiting couples about their property. Instead, it has been said in the Privy Council, ‘the constructive trust is generally the more appropriate tool of analysis’.375 Resulting trust analysis is assumed to rest too much on direct financial contributions and too little on other contributions like work on the property, home-making and childcare, leading to results that discriminate against women.376 Instead, it has been said to be necessary ‘to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it’. This is called a ‘“common intention” constructive trust’.377 This regime purports to be more rigorous than Lord Denning MR’s ‘new model’ constructive trust. But is it? The regime eschews reliance on resulting trusts. Its criteria do not correspond with those of express trusts or the [page 277] law of contract. The ‘“common intention” constructive trusts’ criteria are extremely vague. Expressions like ‘actual, inferred or imputed’,378 ‘fair’,379 ‘holistic’,380 and ‘what the parties must, in the light of their conduct, be taken to have intended’381 suggest that in truth the ‘“common intention” constructive trust’ may not differ much from Lord Denning MR’s. The modern cases have come under powerful criticism.382 At all events, the present English position will not be discussed further. In Australia, the problem has been dealt with to a substantial extent by legislation dealing with the consequences of a break up both of a marriage and, unlike England, of a relationship between non-married couples. Australian law independently of statute is settled by the Baumgartner v Baumgartner line of cases. It is more desirable to attempt to understand Australian law, difficult though that may be, than to survey the rise and fall of different bodies of English doctrine. The reasons for adopting this position are similar to those for adopting the like position in relation to resulting trusts.383

_____________________________ 1.

See M Cope, Constructive Trusts; A J Oakley, Constructive Trusts, 3rd ed; D Wright, The Remedial Constructive Trust.

2. 3.

Muschinski v Dodds (1985) 160 CLR 583 at 613; 62 ALR 429 at 450. See [7-02].

4.

Intention does play a significant role, however, in relation to constructive trusts over property used in the course of a relationship between cohabiting couples after that relationship is terminated: see [1344]–[13-54]. Beatty v Guggenheim Exploration Co 122 NE 378 at 380 (1919), applied in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 108; 55 ALR 417 at 462–3; KAP Motors Pty Ltd v Commissioner of Taxation (2008) 168 FCR 319; 246 ALR 395 at [41]–[42] (discussing receipt by dealer of money from distributor on the footing it would apply the money in payment of a tax which dealer was obliged to pay).

5.

6.

7.

8.

9.

Scott and Fratcher, The Law of Trusts, 4th ed, Vol 5, §462.4, approved in Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 at [2]. See also J Edelman, ‘Two Fundamental Questions for the Law of Trusts’ (2013) 129 LQR 66 at 76–86. Muschinski v Dodds (1985) 160 CLR 583 at 613–14; 62 ALR 429 at 450–1. The preceding four sentences in the text as they stood in the 6th edition were quoted with approval in Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; 185 ALR 1 at [297]. (1726) Sel Cas t King 61; 25 ER 223. See S M Cretney, ‘The Rationale of Keech v Sandford’ (1969) 33 Conv (NS) 161; D R Paling, ‘The Pleadings in Keech v Sandford’ (1972) 36 Conv (NS) 159; J Getzler, ‘Rumford Market and the Genesis of Fiduciary Obligations’ in A Burrows and Lord Rodger of Earlsferry (eds), Mapping the Law: Essays in Memory of Peter Birks, p 577. See Meagher, Gummow and Lehane’s Equity, Chs 12–16. And as to conveyances by mistake, see Leuty v Hillas (1858) 2 De G & J 110; 44 ER 929.

10. Pomeroy, Equity Jurisprudence, 5th ed, Vol IV, [1053]; Meagher, Gummow and Lehane’s Equity, [4165]–[4-180]. 11. Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153. See also Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 387–90; 65 ALR 193 at 204–6; Lonrho plc v Fayed (No 2) [1991] 4 All ER 961 at 971–2; [1992] 1 WLR 1 at 11–12; cf Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 45 ACSR 244 at [74]–[79]. The need for an order for rescission would arise where a party to the proceedings disputes the effectiveness of the avoidance or the interests of third parties are involved: Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198 at [197]. For similar reasoning in relation to tracing, see Shalson v Russo [2005] Ch 281 at [111]–[127]. See also Independent Trustee Services Ltd v G P Noble Trustees Ltd [2013] Ch 91; [2012] 3 All ER 210. The law as stated in the Greater Pacific Investments case was questioned but not changed in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [254], [277]–[281]. See further Australasian Annuities Pty Ltd v Rowley Super Fund Pty Ltd (2015) 318 ALR 302 at [124]–[129], [309]–[312]; Thomas v Arthur Hughes Pty Ltd (2015) 107 ACSR 443 at [66]–[73]. 12. Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 45 ACSR 244 at [82]. 13. See Meagher, Gummow and Lehane’s Equity, [12-055] and [17-065]–[17-130]; Yaxley v Gotts [2000] Ch 162 at 176–7; [2000] 1 All ER 711 at 721–2; Banner Homes plc v Luff Developments Ltd [2000] Ch 372 at 383–5; [2000] 2 All ER 117 at 125–7.

14. See [13-44]–[13-54]. 15. Meagher, Gummow and Lehane’s Equity, [6-190]–[6-415]. 16. Meagher, Gummow and Lehane’s Equity, [6-050]–[6-055]. 17. Charles v Jones (1887) 35 Ch D 544 at 549–50; Lloyds Bank NZA Ltd v National Safety Council of Australia Victorian Division (in liq) (1993) 115 ALR 93; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; 260 ALR 71 at [35]. 18. (1874) LR 9 Ch App 244 at 251–2, discussed further at [13-33]–[13-40]. 19. Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400 at 408–9. He made a similar point in Lonrho plc v Fayed (No 2) [1991] 4 All ER 961 at 969–70; [1992] 1 WLR 1 at 9–10. See also Cattley v Pollard [2007] Ch 353; [2007] 2 All ER 1086 at [60]–[64]; Jasmine Trustees Ltd v Wells & Hind (a firm) [2008] Ch 194; [2007] 1 All ER 1142 at [39]–[44]. The genesis of this idea seems to lie in Selangor United Rubber Estates Ltd v Craddock (No 3) [1968] 2 All ER 1073 at 1095, 1097; [1968] 1 WLR 1555 at 1579, 1582. The statements in that case were approved by Millett LJ in the Paragon Finance case and by Lord Sumption JSC in Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [9]–[10]. 20. See [7-15]–[7-36]. 21. Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400 at 409. 22. See [13-52]. 23. The quotation is from Ungoed-Thomas J’s reasons for judgment in Selangor United Rubber Estates Ltd v Craddock (No 3) [1968] 2 All ER 1073 at 1097; [1968] 1 WLR 1555 at 1582. An exposition of the ambiguities in the expression ‘constructive trust’ is given in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [667]. 24. Cohen v Cohen (1929) 42 CLR 91 at 100; 35 ALR 204 at 207 per Dixon J. 25. Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366; [2003] 1 All ER 97 at [141]–[142]. The expression ‘accountable in equity’ includes liability to pay equitable compensation and liability to account for profits: Novoship (UK) Ltd v Mikhaylyuk [2015] QB 499 at [74]–[84]. 26. (1874) LR 9 Ch App 244 at 251–2. See Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [9]; Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 at [70]. 27. Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400 at 409. 28. Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400 at 413. 29. Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 at [4]. 30. Muschinski v Dodds (1985) 160 CLR 583 at 623; 62 ALR 429 at 458; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [40]–[43]; Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 at [10] (constructive trust not imposed for reasons specific to the case: see [49]). See also Edmunds v Pickering (No 4) (2000) 77 SASR 381 at [189]–[191]; Draper v Official Trustee in Bankruptcy (2006) 156 FCR 53; 236 ALR 499 at [99], [105]; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [200]; John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; 266 ALR 462 at [126]. Cf Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 at [11]; Parsons v McBain (2001) 109 FCR 120 at [11]–[16]; In de Braekt v Powell (2007) 33 WAR 389 at [26]. 31. Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [42]. 32. [1896] 1 Ch 199 at 209. See also James v Williams [2000] Ch 1; [1999] 3 All ER 309. 33. (1861) 3 De G F & J 60 at 72; 45 ER 800 at 805. 34. See Meagher, Gummow and Lehane’s Equity, Ch 36; R P Austin, ‘Constructive Trusts’, in P D Finn (ed), Essays in Equity, 1985, p 169.

35. As in Pearce v Pearce (1856) 22 Beav 248; 52 ER 1103. 36. Karak Rubber Co Ltd v Burden (No 2) [1972] 1 All ER 1210 at 1234–5; [1972] 1 WLR 602 at 631–3; Peffer v Rigg [1978] 3 All ER 745 at 752; [1977] 1 WLR 285 at 294. 37. Rolfe v Gregory (1864) 4 De G J & S 576; 46 ER 1042; United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 247 (reversed on other grounds (1984) 156 CLR 41; 55 ALR 417). 38. Lord Neuberger, ‘The Remedial Constructive Trust — Fact or Fiction’, Lecture delivered on 10 August 2014 to the Banking Services and Finances Law Association Conference, New Zealand. . See [13-10]. 39. See [7-09]–[7-13]. 40. Ottoway v Norman [1972] Ch 698; [1971] 3 All ER 1325. 41. [1948] 2 All ER 133. 42. The last 24 words as they appeared in the 7th edition were quoted with approval in Wade v Wade [2009] WASC 188 at [84]. 43. [1982] 1 NSWLR 226. 44. McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656 at 660–1. 45. Turner v Bladin (1951) 82 CLR 463; Hasham v Zenab [1960] AC 316. 46. (1976) 137 CLR 177 at 184; 8 ALR 285 at 290–1. Cf Re Johnston (1906) 25 NZLR 564. See also Sonenco (No 77) Pty Ltd v Silvia (1989) 24 FCR 105 at 125; 89 ALR 437 at 457; Road Australia Pty Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 327 at [14]–[22]; Nolan v Collie (2003) 7 VR 287 (discussing whether the trustee of this kind of constructive trust has a right of indemnity); Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; 201 ALR 359 at [47]–[53]; Meagher, Gummow and Lehane’s Equity, [6-050]–[6-055]. As to contracts to buy shares, see R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 31; 29 ALR 289 at 302; Lion Nathan Brewing Investments Pty Ltd v Commissioner for ACT Revenue (1997) 79 FCR 177 at 185; 149 ALR 335 at 342. The vendor as trustee is under a duty to preserve the property in its state at the time of the contract, but was held not obliged to impose covenants on the purchasers of nearby land: Englewood Properties Pty Ltd v Patel [2005] 3 All ER 307; [2005] 1 WLR 1961. That case also shows that among the trustee’s duties are the duty to keep the property in a proper state of cultivation and preservation, to prevent removal of soil by a trespasser, not to abandon rubbish on the property and not to let a business sold with the premises to lapse: at [48]. 47. Paine v Meller (1801) 6 Ves 349; [1775–1802] All ER Rep 155; Broome v Monck (1805) 10 Ves 597 at 606; [1803–13] All ER Rep 631; (1805) 32 ER 976. 48. Wall v Bright (1820) 1 Jac & W 494 at 501; 37 ER 456. 49. Shaw v Foster (1872) LR 5 HL 321. 50. Lysaght v Edwards (1876) 2 Ch D 499. 51. (1881) 18 Ch D 1. 52. (1976) 137 CLR 177 at 189–90; 8 ALR 285 at 295. 53. (1987) 163 CLR 164 at 191; 71 ALR 417 at 434. See further Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; 201 ALR 359 at [47], [53]; Englewood Properties Ltd v Patel [2005] 3 All ER 307; [2005] 1 WLR 1961 at [40]–[43]; Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545; 224 ALR 79 at [72], [93]. 54. Rayner v Preston (1881) 18 Ch D 1 at 15. 55. Brown v Heffer (1967) 116 CLR 344; [1968] ALR 89; see also Fairweather v Fairweather (1944) 69

CLR 121 at 154; [1944] ALR 190 at 204–5. 56. Shanahan v Fitzgerald [1982] 2 NSWLR 513 at 515. 57. [1974] 2 All ER 1114; [1974] 1 WLR 1073. 58. (1971) 126 CLR 376; [1972] ALR 205; see Meagher, Gummow and Lehane’s Equity, [4-240]–[4-265]. 59. Meagher, Gummow and Lehane’s Equity, [6-050]–[6-055]. The substance of that analysis was applied in Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 319 ALR 151 at [104]–[105]. 60. McMahon v The Sydney City Council (1940) 40 SR (NSW) 427; 57 WN (NSW) 142. 61. KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) (1984) 155 CLR 288; 56 ALR 337. 62. [1960] AC 206; [1959] 3 All ER 623; see Meagher, Gummow and Lehane’s Equity, [7-145]–[7-195]. 63. [1978] 1 All ER 382 at 398; [1978] 1 WLR 93 at 110. 64. [1983] 2 NSWLR 109. 65. Described in Scott and Fratcher, The Law of Trusts, 4th ed, §466.2 as ‘divided’. 66. See [13-44]–[13-54]. 67. [1973] QB 942; [1973] 3 All ER 464. 68. (1977) 139 CLR 161 at 177, 193–4; 15 ALR 387 at 400, 413; Kars v Kars (1996) 187 CLR 354 at 371–2; 141 ALR 37 at 48–9; CSR Ltd v Eddy (2005) 226 CLR 1; 222 ALR 1 at [43], [58]. 69. Hunt v Severs [1994] 2 AC 350 at 363; [1994] 2 All ER 385 at 394. 70. Independent Trustee Services Ltd v G P Noble Trustees Ltd [2013] Ch 91; [2012] 3 All ER 210 at [106]. 71. Independent Trustee Services Ltd v G P Noble Trustees Ltd [2013] Ch 91; [2012] 3 All ER 210 at [60], [96], [113], [126]. 72. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714–15; [1996] 2 All ER 961 at 997. See also Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at 478–80; [1989] 3 All ER 14 at 56–8; Re Goldcorp Exchange Ltd (in receivership) [1995] 1 AC 74 at 104; [1994] 2 All ER 806 at 826–7; Re Polly Peck International plc (in admin) (No 2) [1998] 3 All ER 812 at 823–6, 832. 73. English v Dedham Vale Properties Ltd [1978] 1 All ER 382 at 398; [1978] 1 WLR 93 at 110; Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 124; 55 ALR 417 at 474–5. 74. (1910) 12 CLR 105 at 110; 17 ALR 541 at 543; Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 426; 18 ALR 542; Spedding v Spedding (1913) 30 WN (NSW) 81; Australian Postal Corp v Lutak (1991) 21 NSWLR 584 at 589; Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 565–6, 572; [1992] 4 All ER 512 at 522, 527–8; Zobory v Federal Commissioner of Taxation (1995) 64 FCR 86 at 89; 129 ALR 484 at 487; Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; 185 ALR 1 at [299]–[301]; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [111]; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [93]; Toksoz v Westpac Banking Corporation (2012) 289 ALR at [5], [11]; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [255]; Ierino v Gutta (2012) 43 WAR 372 at [20]; Sze Tu v Lowe (2014) 89 NSWLR 317 at [141]–[149]; Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [36]–[39]. Usually this type of trust is seen as constructive: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716; [1996] 2 All ER 961 at 998. But it has been argued that it should be seen as a resulting trust: Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [111]–[116]. It has been said that there is a difficulty in identifying a trust of any kind, on the ground that the thief supposedly acquires no title in what is stolen: Shalson v Russo [2005] Ch 281 at [110]. But the thief does have possessory legal title capable of being held on trust: Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [37]. In

Wambo Coal Pty Ltd v Ariff (2007) 63 ACSR 429 at [40]–[42], White J treated the trust of stolen property as institutional, and reached the same conclusion in relation to property acquired by fraud where there was a complete failure of consideration. The latter step is criticised in Meagher, Gummow and Lehane’s Equity, [14-010]. The trust of stolen property was also characterised as institutional in Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [163]; Sze Tu v Lowe (2014) 89 NSWLR 317 at [147]. For the impact of the indefeasibility provisions of the Torrens legislation (for example, s 42 of the Real Property Act 1900 (NSW)) on the rights of the true owner, see Sze Tu v Lowe (2014) 89 NSWLR 317 at [215]ff. 75. [1996] AC 669 at 716; [1996] 2 All ER 961 at 998. This was followed in Armstrong DLW GmbH v Winnington Networks Ltd [2013] Ch 156; [2012] 3 All ER 425 at [127]–[129], [275]. 76. (1969) 70 SR (NSW) 407; 90 WN (Pt 2) (NSW) 154. See also Scott and Fratcher, The Law of Trusts, 4th ed, Vol 5, §493.2; Palmer, The Law of Restitution, [20.13]. 77. Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at 479; [1989] 3 All ER 14 at 57. 78. Scott and Fratcher, The Law of Trusts, 4th ed, Vol 5, §462.4. 79. [1994] 1 AC 324 at 331; [1994] 1 All ER 1 at 4–5. 80. (1985) 160 CLR 583 at 615; 62 ALR 429 at 451. 81. (1987) 164 CLR 137; 76 ALR 75. 82. (1989) 25 FCR 547 at 553–4; 91 ALR 135 at 142. 83. (2001) 109 FCR 120; 192 ALR 772. 84. Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 379; 65 ALR 193 at 198; Re Stephenson Nominees (1987) 16 FCR 536 at 555; 76 ALR 485 at 505; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 507–10; 102 ALR 681 at 698–700; Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (1994) 49 FCR 334 at 358–9; 121 ALR 626 at 649– 50; Re Polly Peck International plc (in admin) (No 2) [1998] 3 All ER 812 at 823–6, 831; Sorna Pty Ltd v Flint (2000) 21 WAR 563 at [13]; A J Oakley, ‘Proprietary Claims and Their Priority in Insolvency’ (1995) 54 CLJ 377 at 401. 85. Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 103–5; [1994] 2 All ER 806 at 826–7. 86. Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 379; 65 ALR 193 at 198; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 508; 102 ALR 681 at 698; Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 at [10]. 87. Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 387–90; 65 ALR 193 at 204–6; Lonrho plc v Fayed (No 2) [1991] 4 All ER 961 at 971–2; [1992] 1 WLR 1 at 11–12; Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198 at [178]–[192], [206]. 88. Guinness plc v Saunders [1990] 2 AC 663 at 698; [1990] 1 All ER 652 at 665; Re Ciro Citterio Menswear plc (in admin) [2002] 2 All ER 717; [2002] 1 WLR 2217 at [33]–[34]. 89. Thorner v Major [2009] 3 All ER 945 at 955; [2009] 1 WLR 776 at 785. 90. Ramsden v Dyson (1866) LR 1 HL 129; Crabb v Arun District Council [1976] Ch 179; [1975] 3 All ER 865. 91. Gissing v Gissing [1971] AC 886 at 905; [1970] 2 All ER 780 at 790; Re Basham (decd) [1987] 1 All ER 405 at 410; [1986] 1 WLR 1498 at 1503; Gillett v Holt [2001] Ch 210; [2000] 2 All ER 289. 92. See [13-54]. 93. [1996] AC 669 at 714; [1996] 2 All ER 961 at 997. 94. [2014] 4 All ER 79 at [45].

For example, Re Sharpe [1980] 1 All ER 198 at 203; [1980] 1 WLR 219 at 225; Metall und Rohstoff AG 95. v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at 479; [1989] 3 All ER 14 at 57; Halifax Building Society v Thomas [1996] Ch 217 at 229; [1995] 4 All ER 673 at 682; Re Polly Peck International plc (in admin) (No 2) [1998] 3 All ER 812 at 823; Sinclair Investments (UK) Ltd v Versailles Trade Finance plc [2012] Ch 453; [2011] 4 All ER 335 at [37]. For arguments in favour of that position, see Lord Neuberger, ‘Remedial Constructive Trust — Fact or Fiction’, Lecture delivered on 10 August 2014 to the Banking Services and Finance Law Association Conference, New Zealand: . See also M Bryan, ‘What Exactly is a Remedial Constructive Trust?’ in J McKenna and H Jeffcoat (eds), Queensland Legal Year Book 2013, p 313. 96. Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 379; 65 ALR 193 at 198; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 507–10; 102 ALR 681 at 698–700; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414 at [40]–[43]; Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473 at [10], [49]–[50]; Katingal Pty Ltd v Amor (1999) 162 ALR 287; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [200]; Huen v Official Receiver (2008) 248 ALR 1 at [78]; John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; 266 ALR 462 at [126], [128]–[129]. 97. An illustration of the complex factors which can go to the discretion is Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [672]–[681]. 98. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714; [1996] 2 All ER 968 at 997. 99. Black v S Freedman & Co (1910) 12 CLR 105 at 110; 17 ALR 541 at 543. 100. Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407. 101. (1985) 160 CLR 583 at 615; 62 ALR 429 at 451. 102. Warman International Ltd v Dwyer (1995) 182 CLR 544 at 554 (and 564); 128 ALR 201 at 206 (and 213). 103. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [510]. 104. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [510]. 105. [1967] 2 AC 46; [1966] 3 All ER 721. See [13-21] for the facts. 106. [1989] 2 SCR 574. 107. (1936) 54 CLR 583. 108. (1936) 54 CLR 583 at 592. 109. (1958) 100 CLR 342 at 350. 110. (1984) 156 CLR 41 at 107–10; 55 ALR 417 at 462–4. 111. (1975) 132 CLR 373 at 395; 5 ALR 231 at 249 (emphasis added). 112. [1980] 2 NSWLR 488. 113. [1980] 2 NSWLR 488 at 496 (17). 114. [1980] 2 NSWLR 488 at 497 (17). 115. [1958] 2 All ER 336 at 340–1; [1958] 1 WLR 815 at 820. 116. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 110; 55 ALR 417 at 464. 117. (1984) 156 CLR 41 at 114; 55 ALR 417 at 467. 118. (1984) 156 CLR 41 at 114; 55 ALR 417 at 467. 119. [1997] RPC 289 at 414–15.

120. Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574. 121. [1997] RPC 289 at 416. 122. [1958] 2 All ER 336; [1958] 1 WLR 915. See also Attorney-General for Hong Kong v Reid [1994] 1 AC 324 at 335; [1994] 1 All ER 1 at 8 (assuming that a claim for a constructive trust over a bribe can be defeated by delay). 123. (1984) 154 CLR 178 at 204–5; 53 ALR 417 at 438. 124. [1967] 2 AC 46; [1966] 3 All ER 721. 125. See the valuable analysis of A D Hicks, ‘Proprietary Relief and the Order in Boardman v Phipps’ [2013] Conv 232. 126. See [13-02]. 127. Phipps v Boardman [1964] 2 All ER 187 at 208; [1964] 1 WLR 993 at 1019. 128. A D Hicks, ‘Proprietary Relief and the Order in Boardman v Phipps’ [2013] Conv 232 at 237–8. 129. Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [9]. 130. See [13-02]. 131. In Sze Tu v Lowe (2014) 89 NSWLR 317 at [153]–[155], it was suggested that in England the distinction has been said to matter for limitation purposes. See Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400 at 413. 132. (1726) Sel Cas t King 61; 25 ER 223. See [13-02]. 133. See Re Lord Ranelagh’s Will (1884) 26 Ch D 590. 134. Owen v Williams (1773) Amb 734; 27 ER 474. 135. Re Biss [1903] 2 Ch 40 at 56ff; [1900–3] All ER Rep 406; Griffith v Owen [1907] 1 Ch 195 at 204; [1904–7] All ER Rep 718. 136. Nesbitt v Tredennick (1808) 1 B & B 29. 137. (1984) 154 CLR 178 at 200–1; 53 ALR 417 at 434–5. 138. (1726) Sel Cas t King 61; 25 ER 223. 139. [1903] 2 Ch 40; [1900–3] All ER Rep 406. See Meagher, Gummow and Lehane’s Equity, [5-060]. 140. [1903] 2 Ch 40; [1900–3] All ER Rep 406. 141. On this case, see D Waters, The Constructive Trust, pp 31–3. 142. [1948] 1 All ER 866. 143. Re Thompson [1930] 1 Ch 203. The duty of a trustee not to make a profit from the trust is dealt with further in [17-39]–[17-49]. 144. Mordecai v Mordecai (1988) 12 NSWLR 58 at 66. 145. At [13-12]. 146. (1881) 18 Ch D 93. 147. Owen v Williams (1773) Amb 734; 27 ER 474; Lloyd-Jones v Clark-Lloyd [1919] 1 Ch 424; Russell v Durie [1920] NZLR 91. 148. Re Biss [1903] 2 Ch 40 at 56; [1900–3] All ER Rep 406 at 408. 149. Edwards v Lewis (1747) 3 Atk 538; 26 ER 1110. 150. At [13-12]. 151. (1810) 17 Ves 298; 34 ER 115. 152. (1810) 17 Ves 298 at 311; 34 ER 115 at 120.

(1857) 8 De GM & G 787 at 807; 44 ER 593 at 601; Thompson’s Trustee v Heaton [1974] 1 All ER 153. 1239; [1974] 1 WLR 605. 154. (1984) 154 CLR 178; 53 ALR 417. See J G Starke, ‘The Durability of the Rule in Keech v Sandford’ (1984) 58 ALJ 660. 155. (1986) 63 ALR 575; 60 ALJR 280. 156. (1885) 29 Ch D 231. 157. Rakestraw v Brewer (1728) 2 P Wms 511; 24 ER 839. 158. (1858) 25 Beav 575; 53 ER 756. 159. (1726) Sel Cas t King 61; 25 ER 223. 160. Phillips v Phillips (1885) 29 Ch D 673. 161. Randall v Russell (1817) 3 Mer 190; 36 ER 73; Longton v Wilsby (1897) 76 LT 770; Bevan v Webb [1905] 1 Ch 620. 162. [1907] 1 Ch 195 at 204; [1904–7] All ER Rep 718 at 720. 163. (1885) 29 Ch D 673. 164. (1726) Sel Cas t King 61; 25 ER 123. 165. (1817) 3 Mer 190; 36 ER 73. 166. (1885) 29 Ch D 673. 167. (1726) Sel Cas t King 61; 25 ER 223. 168. [1968] 1 All ER 1111; [1968] 1 WLR 519; and see P Jackson, ‘Trustees Purchasing Reversions’ (1969) 31 MLR 707; S Cretney, ‘The Rationale of Keech v Sandford’ (1969) 33 Conv (NS) 161 at 171. 169. (1726) Sel Cas t King 61; 25 ER 223. 170. [1968] 1 All ER 1111 at 1112; [1968] 1 WLR 519 at 521. 171. [1981] 2 NSWLR 339 at 347. 172. Dickie v Torbay Pharmacy (1986) Ltd [1995] 3 NZLR 429 at 439. 173. [1967] 2 AC 46; [1966] 3 All ER 721. 174. Cf the dissenting speech of Lord Upjohn [1967] 2 AC 46 at 128–9; [1966] 3 All ER 721 at 759–60. See Meagher, Gummow and Lehane’s Equity, [5-070]–[5-090]. 175. Boardman v Phipps [1967] 2 AC 46; [1966] 3 All ER 721; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n; [1942] 1 All ER 378. 176. (1953) 87 CLR 298; [1953] ALR 190; cf Voulis v Kozary (1975) 180 CLR 177; 7 ALR 126. 177. See Burdick v Garrick (1870) LR 5 Ch App 233; Piddocke v Burt [1894] 3 Ch 343; Henry v Hammond [1913] 2 KB 515; [1911–13] All ER Rep Ext 1478. Two High Court decisions, Dowsett v Reid (1912) 15 CLR 695 at 701–2; 19 ALR 15 at 17 and Jones v Bouffier (1911) 12 CLR 579, are analysed in Meagher, Gummow and Lehane’s Equity, [5-250]. 178. [1994] 1 AC 324; [1994] 1 All ER 1. See also Sumitomo Bank Ltd v Katika Rattna Thahir [1993] 1 SLR 735; P Millett, ‘Bribes and Secret Commissions’ [1993] Rest LR 7; Meagher, Gummow and Lehane’s Equity, [5-210]–[5-250]. 179. FHR European Ventures LLP v Cedar Capital Partners LLC [2015] AC 350; [2014] 4 All ER 79. 180. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [569]–[584]. 181. (1890) 45 Ch D 1; [1886–90] All ER Rep 797. 182. For example, the 7th edition, [1322]–[1324]. 183. Meagher, Gummow and Lehane’s Equity, [5-215]–[5-260].

184. See [13-10]–[13-11]. 185. [1994] 1 AC 324; [1994] 1 All ER 1. 186. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [582]. This view is criticised in M Bryan, ‘What Exactly is a Remedial Constructive Trust?’ in J McKenna and H Jeffcoat (eds), Queensland Legal Year Book 2013, p 313 at p 327. 187. For example, De Bussche v Alt (1878) 8 Ch D 286 at 310; [1874–80] All ER Rep 1247; Andrews v Ramsay & Co [1903] 2 KB 635; Fullwood v Hurley [1928] 1 KB 498; [1927] All ER Rep 610; Regier v Campbell-Stuart [1939] Ch 766; [1939] 3 All ER 235. 188. Longfield Parish Council v Robson (1913) 29 TLR 357. Contrast Lees v Nuttall (1829) 1 Russ & M 53; 39 ER 21; James v Smith [1891] 1 Ch 384 (criticised in Rochefoucauld v Boustead [1897] 1 Ch 196); R v Hopkins (1915) 20 CLR 464 at 476–7. For the view that the trust in Rochefoucauld v Boustead was express, not constructive, see W Swadling, ‘The Nature of the Trust in Rochefoucauld v Boustead’ in C Mitchell (ed), Constructive and Resulting Trusts, p 95. 189. (1877) 46 LJ Ch 564. Contrast Cadd v Cadd (1909) 9 CLR 171; 15 ALR 502 where there was no actual relation of agent and principal. 190. Oliver v Court (1820) 8 Price 127; 146 ER 1152; Salomons v Pender (1865) 3 H & C 639; 159 ER 682. 191. (1917) 86 LJ Ch 486. 192. British Reinforced Concrete Engineering Co Ltd v Lind (1917) 86 LJ Ch 486 at 487. 193. British Reinforced Concrete Engineering Co Ltd v Lind (1917) 86 LJ Ch 486 at 488. See also Triplex Safety Glass Co v Scorah [1938] Ch 211; [1937] 4 All ER 693; British Celanese Ltd v Moncrieff [1948] Ch 564; [1948] 2 All ER 44. 194. [1955] 1 All ER 369 at 373. 195. Daniels v Anderson (1995) 37 NSWLR 438 at 488–505. 196. See also [2-03]. 197. Nant-y-Glo and Blaina Ironworks Co Ltd v Grave (1878) 12 Ch D 738; Eden v Ridsdales Railway Lamp and Lighting Co Ltd (1889) 23 QBD 368. 198. [1900] 2 Ch 305; [1900–3] All ER Rep Ext 1686. 199. [1972] 2 All ER 162; [1972] 1 WLR 443. 200. Re Stafford Felt Co (1919) 19 SR (NSW) 461; 36 WN (NSW) 147; Furs Ltd v Tomkies (1936) 54 CLR 583; Bulfin v Bebarfald’s Ltd (1938) 38 SR (NSW) 423; 55 WN (NSW) 136; Mills v Mills (1938) 60 CLR 150; P & O Steam Navigation Co v Johnson (1938) 60 CLR 189 at 218; Ngurli Ltd v McCann (1953) 90 CLR 425; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n at 137; [1942] 1 All ER 378 at 381; Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821; [1974] 1 All ER 1126. 201. Percival v Wright [1902] 2 Ch 421; Clarkson v Davies [1923] AC 100; [1922] All ER Rep Ext 809; Re City Equitable Fire Insurance Co [1925] 1 Ch 407; [1924] All ER Rep 485; P & O Steam Navigation Co v Johnson (1938) 60 CLR 189; Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821; [1974] 1 All ER 1126; Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543. However, the effect of the rule in Percival v Wright has been modified by the ‘insider trading’ provisions of ss 1042A–1043O of the Corporations Act 2001 (Cth). 202. [1902] 2 Ch 421. 203. Brunninghausen v Glavanics (1999) 46 NSWLR 538. 204. Re Wood’s Ship’s Woodite Protection Co (1890) 62 LT 760; Re Horsley & Weight Ltd [1982] Ch 442 at 453–4; [1982] 3 All ER 1045 at 1054–5; Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Ltd [1983] Ch 258 at 288; [1983] 2 All ER 563 at 585. However, the duties of the directors to the company may require the directors to consider the interests of third parties:

Walker v Wimborne (1976) 137 CLR 1 at 6–7; Nicholson v Permakraft (NZ) Ltd [1985] 1 NZLR 242 at 249–50. These may include beneficiaries of a trust where the trustee is the company of which they are directors: Inge v Inge (1990) 3 ACSR 63 at 69–70, but cf Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 522–3; 133 ALR 1 at 17–18. See generally P L Davies, ‘Directors’ Fiduciary Duties and Individual Shareholders’ in E McKendrick, Commercial Aspects of Trusts and Fiduciary Obligations, pp 83, 103–13. 205. Knowles v Scott [1891] 1 Ch 717; Thos Franklin & Sons Ltd v Cameron (1935) 36 SR (NSW) 286; 53 WN (NSW) 30. Cf Butler v Broadhead [1974] 2 All ER 401. 206. Pulsford v Devenish [1903] 2 Ch 625. 207. Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 at 228–34. 208. Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218; [1874–80] All ER Rep 271; Lagunas Nitrate Co v Lagunas Syndicate [1899] 2 Ch 392; [1895–9] All ER Rep 1349; Wheal Ellen Gold Mining Co v Read (1908) 7 CLR 34; Omnium Electric Palaces v Baines [1914] 1 Ch 332; cf Para Wirra Syndicate v Mather (1934) 51 CLR 582. 209. Fitzwood v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566 at 576. See also New Brunswick and Canada Railway Co v Muggeridge (1860) 1 Dr & Sm 362 at 381–2; 62 ER 418 at 425; Directors of Central Railway Co of Venezuela v Kisch (1867) LR 2 HL 99 at 113; Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11 at 58. 210. Gluckstein v Barnes [1900] AC 240; Re Leeds and Hanley Theatres of Varieties [1902] 2 Ch 809; Tracy v Mandalay Pty Ltd (1953) 88 CLR 215. 211. (1985) 157 CLR 1; 60 ALR 741. See also Whywait Pty Ltd v Davison [1997] 1 Qd R 225 at 231. 212. 164 NE 545 (1928). 213. Meagher, Gummow and Lehane’s Equity, Ch 5. 214. (1726) Sel Cas t King 61; 25 ER 223. 215. Disher v Farnworth [1993] 3 NZLR 390 at 399. 216. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 69; 55 ALR 417 at 432–3. See also Meagher, Gummow and Lehane’s Equity, [5-010]. 217. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; 55 ALR 417; Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414; 56 ALR 193. However, in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; 60 ALR 741, it was held that a fiduciary relationship with its attendant obligations may, and ordinarily will, exist between prospective partners before its express definition by formal agreement. 218. [1994] 1 AC 428 at 437; [1993] 4 All ER 268 at 275. See also Paul Dainty Corp Pty Ltd v National Tennis Centre Trust (1990) 22 FCR 495 at 515–16; 94 ALR 225 at 244–5; Artifakts Design Group Ltd v NP Rigg Ltd [1993] 1 NZLR 196 at 230–2. 219. [1995] 2 AC 145 at 206; [1994] 3 All ER 506 at 544. 220. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 107; 55 ALR 417 at 462. 221. Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 107; 55 ALR 417 at 462; see also the same case in the Court of Appeal, [1983] 2 NSWLR 157 at 212. 222. [1982] 2 NSWLR 766 at 813–14. 223. [1983] 2 NSWLR 157 at 233–43. 224. (1984) 156 CLR 41 at 102–10; 55 ALR 417 at 458–62. 225. [1964] 2 All ER 187; [1964] 1 WLR 993. 226. Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1. See also Hospital Products Ltd v

United States Surgical Corp (1984) 156 CLR 41 at 112–13; 55 ALR 417 at 466. 227. United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 238–42. See also Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 at 499. 228. [1980] 2 NSWLR 488; see also Re Jarvis (dec’d) [1958] 2 All ER 336; [1958] 1 WLR 815. 229. (1984) 156 CLR 41 at 110–15; 55 ALR 417 at 464–8. 230. (1874) LR 9 Ch App 244. See [13-33]–[13-40]. 231. Heid v Reliance Finance Corp (1983) 154 CLR 326 at 341–2; 49 ALR 229 at 239. 232. See [13-38]–[13-39]. 233. (1985) 160 CLR 583 at 615; 62 ALR 429 at 451–2. 234. (1874) LR 9 Ch App 244. Among the host of writing on this subject, see C Mitchell, ‘Assistance’ in P Birks and A Pretto (eds), Breach of Trust, p 139; Lord Walker, ‘Dishonest and Unconscionable Conduct in Commercial Life — Some Reflections on Accessory Liability and Knowing Receipt’ (2005) 27 Syd LR 187; Justice Gummow, ‘Knowing Assistance (2013) 87 ALJ 311 and J Dietrich and P Ridge, Accessories in Private Law, Cambridge University Press, 2015, Chs 7 and 8. 235. (1874) LR 9 Ch App 244 at 251. 236. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [112], which traces the history. 237. On ‘information’ as property, see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [117]–[120]. In Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [254], the court said that ‘property’ includes not only trust property but property held or controlled subject to a fiduciary obligation, including corporate property under the control of directors. 238. Re Lands Allotment Co [1894] 1 Ch 616 at 638; DPC Estates Pty Ltd v Grey [1974] 1 NSWLR 443 at 459–60; Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 at 405, 406, 413 (company directors); United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 252–3; Rolled Steel Products Ltd v British Steel Corporation [1986] Ch 246 at 298, 307, 309; [1985] 3 All ER 52 at 88, 94, 95 (company directors); Linter Group Ltd v Goldberg (1992) 7 ACSR 580 at 623 (company directors); El Ajou v Dollar Land Holdings plc [1994] 2 All ER 658 at 700; Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) [1999] 1 VR 584 at [143]– [147] (company directors); Bank of Credit & Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 at 448; [2000] 4 All ER 221 at 229; Robins v Incentive Dynamics Pty Ltd (2003) 175 FLR 286 at [60]–[64] (company directors); Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [160]–[161]; Kells Enterprises Pty Ltd (in liq) v Balaglow (2007) 63 ACSR 557 at [152]–[159] (company directors). The High Court refused to abolish the first limb of the rule in Barnes v Addy and substitute for it a doctrine of unjust enrichment: Farah Constructions Pty Ltd v SayDee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [130]–[158]. 239. (1975) 132 CLR 373 at 397; 5 ALR 231 at 251. 240. [1983] 2 NSWLR 157, reversed (on other grounds) (1984) 156 CLR 41; 55 ALR 417. 241. Selangor United Rubber Estates Ltd v Craddock (No 3) [1968] 2 All ER 1073; [1968] 1 WLR 1555; Karak Rubber Co Ltd v Burden (No 2) [1972] 1 All ER 1210; [1972] 1 WLR 602; Rowlandson v National Westminster Bank Ltd [1978] 3 All ER 370; [1978] 1 WLR 798. 242. [1995] 2 AC 378 at 384–385; [1995] 3 All ER 97 at 101–2. 243. (1861) 30 Beav 136; 54 ER 840. 244. The previous sentences were quoted with approval by Basten JA in Kation Pty Ltd v Lamru Pty Ltd (2009) 257 ALR 337 at [115]. See also Harnett v Yielding (1805) 2 Sch & Lef 549 at 559; [1803–13]

All ER Rep 704 at 708; Fyler v Fyler (1841) 3 Beav 500; 49 ER 216; Attorney-General v Corp of Leicester (1844) 7 Beav 176; 49 ER 1031; Andrews v Bousfield (1847) 10 Beav 511; 50 ER 678; Alleyne v Davey (1854) 4 I Ch R 199 at 209; Charlton v Coombes (1863) 4 Giff 382; 66 ER 754; Midgley v Midgley [1893] 3 Ch 282 at 290, 301, 304, 307; Efstratiou v Glantschnig [1972] NZLR 594 at 599. For the United States, see Annotation, 123 ALR 107. 245. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [161], [163]. See also J Dietrich and P Ridge, Accessories in Private Law, Cambridge University Press, 2015, pp 223–6. 246. Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [47], citing J Dietrich and P Ridge, Accessories in Private Law, Cambridge University Press, 2015, p 203 (emphasis added). See also Agip (Africa) Ltd v Jackson (1990) Ch 265 at 291; [1992] 4 ER 385 at 404; Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at 474; [1989] 3 ER 14 at 53; Sze Tu v Lowe (2014) 89 NSWLR 317 at [143]. 247. Carl Zeiss Stiftung v Herbert Smith & Co (No 2) [1969] 2 Ch 276 at 290; [1969] 2 All ER 367 at 372. 248. Doneley v Doneley [1998] 1 Qd R 602 at 611–12. 249. El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 733ff. 250. Polly Peck International plc v Nadir (No 2) [1992] 4 All ER 769 at 777. 251. Sometimes the constructive trust is described as automatic: for example, Commissioner of Taxation v Macquarie Health Corporation Ltd (1998) 88 FCR 451 at 497. Sometimes it is said not to be automatic: Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286 at [75]. 252. See, for example, Charter plc v City Index Ltd [2008] Ch 313; [2008] 3 All ER 126 at [64]. In the case of breaches of fiduciary duty by a fiduciary, common law principles of remoteness, causation and onus of proof are not applicable: Caffrey v Derby (1801) 6 Ves 488; 31 ER 1159; Target Holdings Ltd v Redferns [1996] 1 AC 421 at 436; [1995] 3 All ER 785 at 795–6; Murad v Al-Saraj [2005] WTLR 1573 at [59], [72]–[73]; Charter plc v City Index Ltd [2008] Ch 313; [2008] 3 All ER 126 at [74]. But it has been said that in cases of equitable wrongs by non-fiduciaries, common law rules of causation, remoteness and measure of damages apply by analogy: Novoship (UK) Ltd v Mikhaylyuh [2015] QB 499 at [105]. In relation to breaches of allegedly non-fiduciary duties by fiduciaries there is a controversy arising from Millett LJ’s narrow definition of ‘fiduciary duties’ under which not all duties owed by fiduciaries are fiduciary duties: Bristol and West Building Society v Mothew [1998] Ch 1 at 16; [1996] 4 All ER 698 at 710. See Meagher, Gummow and Lehane’s Equity, [5-325]–[5-375]. 253. The remedy of account of profits is available against one who gives dishonest assistance to a fiduciary to breach a fiduciary duty, even if no misapplication of trust property is involved: DPC Estates Pty Ltd v Grey and Consul Development Pty Ltd [1974] 1 NSWLR 443 at 471; Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397; 5 ALR 231 at 251; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 at 507; Green v Bestobell Industries Pty Ltd (1982) 1 ACLC 1 at 2, 16; Avtex Air Services Pty Ltd v Bartsch (1992) 107 ALR 539 at 562; Watson v Dolmark Industries Ltd [1992] 3 NZLR 311 at 316, 319; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 564–5; 128 ALR 201 at 214; Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 at 138; Novoship (UK) Ltd v Mikhaylyuk [2015] QB 499 at [87]–[93]. A causal connection must be established: at [94]–[115]. Where the defendant is not a fiduciary, the court has a discretion to grant or withhold the remedy: at [119], relying on Fyffes Group Ltd v Templeman [2000] 2 Lloyds Rep 643 at 672. See generally Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [513]–[546]. 254. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [547]–[552]. No rule requires the calculation of compound interest to be made with yearly rests: Tasmanian Seafoods Pty Ltd v MacQueen (2005) 15 Tas R 1 at [92]. 255. See generally Meagher, Gummow and Lehane’s Equity, [5-255]–[5-320] and Ch 23. See also S Elliott and C Mitchell, ‘Remedies for Dishonest Assistance’ (2004) 67 MLR 16. The following propositions

were stated in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [556]: ‘where the advantage of a fiduciary’s … wrongdoing accrues to a third party (whether a knowing recipient or an assistant) and the third party is the alter ego/“nominee” (usually corporate) of the fiduciary, its liabilities will be joint and several with the fiduciary’s.’ At [557], citing Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; 282 ALR 685 at [106], the court said: ‘where the third party is not the fiduciary’s alter ego, the fiduciary and the third party will ordinarily be only severally liable for the profits each makes in consequence of the breach of fiduciary duty … in which it participated/was a recipient.’ The court also said at [558]: ‘if the fiduciary and the third party act in concert to secure a mutual benefit, be this to misappropriate trust property or for a particular mutually beneficial purpose or to participate in a breach of fiduciary duty to secure a mutual advantage …, they are jointly and severally liable to the wronged beneficiary/principal to restore the trust or account for the profits made.’ (emphasis in original) 256. Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [78]. 257. Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [77], [106]. 258. [1995] 2 AC 378; [1995] 3 All ER 97. 259. (2007) 230 CLR 89; 236 ALR 209 at [161], [163]. Cf the New Zealand position: Fletcher v Eden Refuge Trust [2012] 2 NZLR 227 (CA). Pre-2007 cases to the contrary of the Farah Constructions case must now be treated as wrong on this point, for example, Re-Engine Pty Ltd v Ferguson (2007) 209 FLR 1 at [111]–[116]. 260. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [243], [556]. 261. Williams v Central Bank of Nigeria [2014] AC 1189; [2014] 2 All ER 489 at [54]; Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [69]. In addition to these five categories, attracting a liability to account or pay equitable compensation, an injunction may be granted against any person who causes a breach of trust whether or not that person knew of the trust: Metropolitan Petar v Mitreski [2012] NSWSC 16 at [158]–[161], discussing Solicitor-General v Wylde (1945) 46 SR (NSW) 83 at 97 and Attorney-General v Wylde (1948) 48 SR (NSW) 366 at 388. See [23-04]. 262. Re Air Canada v M & L Travel Ltd (1993) 108 DLR (4th) 592 at 608. 263. [1992] 4 All ER 161; [1993] 1 WLR 509. See also Cowan de Groot Properties Ltd v Eagle Trust plc [1992] 4 All ER 700. 264. See Baden v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1992] 4 All ER 161 at 242; [1993] 1 WLR 509 at 582; Agip (Africa) Ltd v Jackson [1990] Ch 265; [1992] 4 All ER 385; Lipkin Gorman (a firm) v Karpnale Ltd [1992] 4 All ER 409 at 416–21; [1989] 1 WLR 1340 at 1350–5; Eagle Trust plc v SBC Securities Ltd [1992] 4 All ER 488; [1993] 1 WLR 484; Polly Peck International plc v Nadir (No 2) [1992] 4 All ER 769; Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 at 454; [2000] 4 All ER 221 at 235. See also Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 at 238–9; Ninety Five Pty Ltd (in liq) v Banque Nationale de Paris [1988] WAR 132; Kooroontang Nominees Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] 3 VR 16 at 78–108. 265. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [251]. A third party who has any of the five Baden forms of notice cannot rely on the defence of bona fide purchaser of a legal estate for value without notice. But a third party who has only the fifth form of notice, while liable to restore the property or its traceable proceeds to the true owner, has no personal obligations under Barnes v Addy: Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [251]–[253]. 266. Armstrong DLW GmbH v Winnington Networks Ltd [2013] Ch 156; [2012] 3 All ER 425 at [131]. At [132] it was said that types 1–3 rendered receipt of trust property unconscionable and that types 4–5 did so only if, on the facts only known to the defendant, a reasonable person would either have

appreciated that the transfer was probably in breach of trust or would have made inquiries or sought advice which would have revealed the probability of a breach of trust. This thinking has no counterpart in Australia so far. 267. [1892] 2 QB 700 at 707–8; see also Jones v Gordon (1877) 2 App Cas 616 at 625; The Zamora [No 2] [1921] 1 AC 801 at 812–13; He Kaw Teh v R (1985) 157 CLR 523 at 531; 60 ALR 449 at 454–5. 268. [1979] Ch 250 at 267; [1979] 1 All ER 118 at 130. 269. [1983] 2 NSWLR 157 at 254. 270. (1975) 132 CLR 373 at 398, 412; 5 ALR 231 at 252, 263. 271. White and Tudor’s Leading Cases in Equity, 9th ed, Vol 2, pp 136–211; Story, Equity Jurisprudence, 3rd Eng ed, [399]–[408]; Pomeroy, Equity Jurisprudence, 1st ed, [593]–[609]. 272. Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 410; 5 ALR 231 at 262–3 and [1974] 1 NSWLR 443 at 459; Belmont Finance Ltd v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 at 412; International Sales & Agencies Ltd v Marcus [1982] 3 All ER 551 at 557–8; Ninety Five Pty Ltd (in liq) v Banque Nationale de Paris [1988] WAR 132 at 174. But in Re Montagu’s Settlement Trusts [1987] Ch 264 at 285; [1992] 4 All ER 308 at 329–30, Sir Robert Megarry VC doubted whether personal liability in this class of case might be founded on constructive notice. In Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 at 105, Kirby P said that the recipient of trust funds should be liable to account if it had ‘reason to know’ that a wrong was being committed by the trustee. In Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] 2 All ER 377 at [105], Lord Millett said of the first limb: ‘Constructive notice is sufficient, and may not even be necessary.’ This proposition is questionable in view of the suggestion in the next sentence that ‘the liability of the recipient is the same as in other cases of restitution, that is to say strict but subject to a change of position defence’. In Baden v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1992] 4 All ER 161 at 235; [1993] 1 WLR 509 at 575, there are passages which have been read as suggesting that the five classes apply to knowing receipt as well as knowing assistance. The weight of authority is against employing the Baden classes for knowing receipt, whatever their status elsewhere: Agip (Africa) Ltd v Jackson [1990] Ch 265 at 292; [1992] 4 All ER 385 at 404; Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 at 455; [2000] 4 All ER 221 at 235 (‘all that is necessary is that the recipient’s state of knowledge should be such as to make it unconscionable for him to retain the benefit of the receipt’). In Koorootang Nominees Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] 3 VR 16 at 85, 105 and K & S Corporation Ltd v Sportingbet Australia (2003) 86 SASR 312 at [26], the first four, but not the fifth, of the Baden classes were supported. See also Hancock Family Memorial Foundation Ltd v Porteous (2000) 32 ACSR 124 at [79]. 273. (2012) 200 FCR 296; 287 ALR 22 at [263]–[270]. 274. [1992] 4 All ER 161; [1993] 1 WLR 509. 275. (1975) 132 CLR 373; 5 ALR 231. 276. [1983] 2 NSWLR 157. See [13-37]. 277. (1984) 156 CLR 41; 55 ALR 417. 278. Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397; 5 ALR 231 at 251; Biala Pty Ltd v Mallina Holdings Pty Ltd (No 2) (1993) 11 ACSR 785 at 832; Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 523; 133 ALR 1 at 19; News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; 139 ALR 193; Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) (1997) 26 ACSR 544; Hancock Family Memorial Foundation v Porteous (1999) 32 ACSR 124; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [160]; Imobilari Pty Ltd v Opes Price Stockbroking Ltd (in liq, recs and mgrs apptd) (2008) 252 ALR 41; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; 282 ALR 685 at [106]–[107]; Grimaldi v

Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [245], [254]. 279. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [163], not adopting Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 at 385, 390–1; [1995] 3 All ER 97 at 101, 106, 197. See King Network Group Pty Ltd v Club of the Clubs Pty Ltd (2008) 69 ACSR 172 at [48]–[58]. 280. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [179]. 281. Westpac Banking Corporation v Bell Group Ltd (No 3) (2012) 44 WAR 1 at [2112], [2113]. 282. Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [104]. 283. (2007) 230 CLR 89; 236 ALR 209 at [183]–[184]. 284. Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [124]. 285. [1992] 4 All ER 161 at 234, 261; [1993] 1 WLR 509 at 574–5, 599. 286. Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 523; 133 ALR 1 at 19. 287. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209 at [171]–[177]. See also Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [262]; Rasch Nominees Pty Ltd v Bartholomaeus (2012) 114 SASR 448 at [222]; Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [130]. For confusion among English authorities, see the 7th edition, [1335]. And for discussion of the possible difference between notice of ‘circumstances’ and notice of a ‘claim’, see the 7th edition, [1337]. 288. Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [136]–[140]. 289. Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [193], [246]. 290. [1983] 2 NSWLR 157 at 258. See Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd (2001) 38 ACSR 404 at [469]–[472]. 291. (1975) 132 CLR 373 at 396, 411; 5 ALR 231 at 264. 292. [1968] 2 All ER 1073; [1968] 1 WLR 1555. 293. [1972] 1 All ER 1210; [1972] 1 WLR 602. 294. The difficulties in, and the possible tests for, determining when a bank has received something for the purposes of the ‘knowing receipt’ limb of Barnes v Addy are discussed in Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [164]–[175]. 295. See [9-04]. 296. See generally Meagher, Gummow and Lehane’s Equity, Chs 12–16. 297. [1972] 2 NSWLR 923. 298. (1994) 34 NSWLR 9. 299. [1979] 2 NZLR 124. 300. Meagher, Gummow and Lehane’s Equity, [17-065]–[17-130]. 301. (1878) 8 Ch D 177. 302. [1953] Ch 43. See also Yaxley v Gotts [2000] Ch 162; [2000] 1 All ER 711; Banner Homes plc v Luff Developments Ltd [2000] Ch 372; [2000] 2 All ER 117. 303. These cases were approved by the Court of Appeal in United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 237–8. 304. [1979] 2 NZLR 124 at 163. 305. (1897) 14 WN (NSW) 99; 17 NSWR 281 (E). See also Walker v Webb (1845) 1 Legge 253; Lonrho plc v Fayed (No 2) [1991] 4 All ER 961 at 969–71; [1992] 1 WLR 1 at 8–11. 306. See [7-15]–[7-36].

307. See J Cassidy, Mutual Wills; R Croucher, ‘Mutual Wills: Contemporary Reflections on an Old Doctrine’ (2005) 29 MULR 390. 308. Lord Walpole v Lord Orford (1797) 3 Ves 402; 30 ER 1076. 309. This is essential: Re Dale (decd) [1994] Ch 31; [1993] 4 All ER 129; Re Goodchild (decd) [1997] 3 All ER 63; [1997] 1 WLR 1216. It must be certain: Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [75]. 310. Stone v Hoskins [1905] P 194. 311. Robinson v Ommanney (1883) 23 Ch D 285. 312. (1937) 57 CLR 666; [1937] ALR 520. 313. The parties may, rather than give each other an absolute interest with a substitutional gift in the event of the other’s prior death, give each other a life interest with remainders over: Dufour v Pereira (1769) 1 Dick 419; 21 ER 332; Re Hagger [1930] 2 Ch 190; [1930] All ER Rep 620. 314. (1937) 57 CLR 666 at 682–3, 687–9; [1937] ALR 520 at 525, 527. In Re Cleaver (dec’d) [1981] 2 All ER 1018 at 1023–4; [1981] 1 WLR 939 at 945–7, Nourse J set out the above passage, and others, and said that they stated ‘with all the clarity and learning for which the judgments of that most eminent judge are renowned, what I believe to be a correct analysis of the principles on which a case of enforceable mutual wills depends’. It is unfortunate that in Re Newey (dec’d) [1994] 2 NZLR 590 at 596–7, Hammond J did not take the same course as Nourse J, preferring instead the enticements and obscurities of ‘restitutionary theory’. 315. (1792) 1 Ves Jun 478; 30 ER 447. 316. Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [85]–[86]; Thomas & Agnes Carvel Foundation v Carvel [2008] Ch 395 at [27]; Olins v Walters [2009] Ch 212. This view seems to have been taken in Dufour v Pereira (1769) 1 Dick 419; 21 ER 332, and in Re Hagger [1930] 2 Ch 190; [1930] All ER Rep 620. See also J D B Mitchell, ‘Some Aspects of Mutual Wills’ (1951) 14 MLR 136; A R Everton, ‘Betrayal of Faith and Prejudicial Reliance’ (1974) 38 Conv (NSW) 27. 317. Stone v Hoskins [1905] P 194; Re Oldham [1925] Ch 75. 318. This paragraph as it stood in the 6th edition was quoted with approval by Callinan J in Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [163]. 319. Re Dale (decd) [1974] Ch 31; [1993] 4 All ER 129. 320. Re Hagger [1930] 2 Ch 190; [1930] All ER Rep 620. 321. Re Goodchild (decd) [1996] 1 All ER 670; [1996] 1 WLR 694. 322. Re Green [1951] Ch 148; [1950] 2 All ER 913. 323. In Re Oldham [1925] Ch 75 at 87, 88, Astbury J suggested that the trust attaches only to property held by the survivor at his death, but this would enable him to defeat the trust by inter vivos dispositions. 324. The previous nine sentences as they stood in the 6th edition were quoted by Callinan J in Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [163]. 325. (1937) 57 CLR 666 at 689; [1937] ALR 520 at 528. 326. Birmingham v Renfrew (1937) 57 CLR 666 at 680; [1937] ALR 520 at 524, and see the legislation discussed in [7-02]. 327. Civil Law (Property) Act 2006 (ACT) ss 201–203; Conveyancing Act 1919 (NSW) s 54A; Law of Property Act (NT) s 62; Property Law Act 1974 (Qld) s 59; Law of Property Act 1936 (SA) s 26; Conveyancing and Law of Property Act 1884 (Tas) s 36; Instruments Act 1958 (Vic) s 126; Law Reform (Statute of Frauds) Act 1962 (WA) s 2. 328. (1937) 57 CLR 666; [1937] ALR 520.

329. (1935) 53 CLR 475; [1935] ALR 177. 330. Discussed in [7-09]–[7-10]. 331. (1937) 57 CLR 666 at 690; [1937] ALR 520 at 528. 332. Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11, discussed in Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [86]. 333. Barns v Barns (2003) 214 CLR 169; 196 ALR 65. 334. Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [79]–[80]. 335. Barns v Barns (2003) 214 CLR 169; 196 ALR 65 at [80]–[82]. 336. Many of the leading cases are discussed in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at [311]–[336]. See also Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 at 498–9; Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 at 140, 142; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 at 744–6; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [529]–[531]. This question of ‘just allowances’ is discussed at length in Meagher, Gummow and Lehane’s Equity, [5-280]. 337. Lawrence v Maggs (1759) 1 Eden 453; 28 ER 760; Rawe v Chichester (1773) Amb 715 at 720; 27 ER 463 at 466; Coppin v Fernyhough (1788) 2 Bro CC 291; 29 ER 159; James v Dean (1805) 11 Ves 383; 32 ER 1135; Bradford v Brownjohn (1868) LR 3 Ch App 711; Isaac v Wall (1877) 6 Ch D 706; Re Lord Ranelagh’s Will (1884) 26 Ch D 590. 338. Rowley v Ginnever [1897] 2 Ch 503; Russell v Durie [1920] NZLR 91. 339. (1711) 1 P Wms 140; 24 ER 329. 340. (1821) Jac 284; 37 ER 858. See also Boardman v Phipps [1967] 2 AC 46; [1966] 3 All ER 721. 341. [1983] 2 NSWLR 157 at 241–3. 342. (1984) 156 CLR 41; 55 ALR 417. 343. As, for example, in Phipps v Boardman [1964] 2 All ER 187; [1964] 1 WLR 993. 344. See [12-17]. 345. [1970] AC 777; [1969] 2 All ER 385. 346. [1971] AC 886; [1970] 2 All ER 780. 347. [1972] 1 All ER 943 at 948. 348. See R H Maudsley, ‘Constructive Trusts’ (1977) 28 NILQ 123. 349. [1971] 1 All ER 952; [1971] 1 WLR 342. 350. See Meagher, Gummow and Lehane’s Equity, Ch 15. 351. [1972] 2 All ER 38; [1972] 1 WLR 518. 352. [1972] Ch 359; [1972] 2 All ER 70. 353. [1948] 2 All ER 133. See also Timber Top Realty Pty Ltd v Mullens [1974] VR 312; Bahr v Nicolay (No 2) (1988) 164 CLR 604; 78 ALR 1; Body Corporate No 12870 v Aldal Pty Ltd (2010) 29 VR 81 at [112]–[121]. For the role of estoppel doctrines, see Meagher, Gummow and Lehane’s Equity, [17-105]– [17-115]. 354. See [7-09]–[7-10]. 355. [1990] Ch 206. See also Bryson v Bryant (1992) 29 NSWLR 188 at 219. 356. Ingram v Ingram [1941] VLR 95 at 102; [1941] ALR 120 at 123, applied in Calverley v Green (1984) 155 CLR 242 at 247, 263; 56 ALR 483 at 485, 497; and Muschinski v Dodds (1985) 160 CLR 583 at 598; 62 ALR 429 at 438–9. See also Sivritas v Sivritas (2008) 23 VR 349 at [135]. 357. Bernard v Josephs [1982] Ch 391 at 405; [1982] 3 All ER 162 at 171–2; E Cooke, ‘Equitable

Accounting’ (1995) 59 Conv 391. 358. (1921) 21 SR (NSW) 400; 38 WN (NSW) 130. See [2-35]–[2-36]. 359. (1985) 160 CLR 583 at 605–7, 624–5; 62 ALR 429 at 444–6, 458–9. 360. Pascoe v Turner [1979] 2 All ER 945; [1979] 1 WLR 431; Jackson v Crosby (No 2) (1979) 21 SASR 280. See also Greasley v Cooke [1980] 3 All ER 710; [1980] 1 WLR 1306; Vinden v Vinden [1982] 1 NSWLR 618; Grant v Edwards [1986] Ch 638 at 656; [1986] 2 All ER 426 at 438–9; Maharaj v Chand [1986] AC 898 at 907–8; [1986] 3 All ER 107 at 111–12; Higgins v Wingfield [1987] VR 689; Green v Green (1989) 17 NSWLR 343 at 357–8; Gillies v Keogh [1989] 2 NZLR 327 at 330, 346–7; Phillips v Phillips [1993] 3 NZLR 159 at 168; and articles by J D Davies (1979) 8 Syd LR 578; (1980) 7 Adel LR 200 and Meagher, Gummow and Lehane, Equity: Doctrines & Remedies, 5th ed, Ch 17. 361. [1982] 1 NSWLR 61. 362. [1977] 2 NSWLR 685. 363. See [13-45]–[13-46]. 364. (1985) 160 CLR 583; 62 ALR 429. See also Huen v Official Receiver (2008) 248 ALR 1. 365. (1985) 160 CLR 583 at 615–6; 62 ALR 429 at 451–3. 366. (1987) 164 CLR 137 at 147–8; 76 ALR 75 at 83. 367. (1985) 160 CLR 583 at 618–20; 62 ALR 429 at 454–5. 368. Allen v Kent 136 A (2d) 540 at 541–2 (1957); Ewen v Gerofsky 382 NYS (2d) 651 at 654 (1976); Legum Furniture Corp v Levine 232 SE (2d) 782 at 786 (1977). 369. (1985) 157 CLR 1; 60 ALR 741. 370. (1985) 160 CLR 583 at 620; 62 ALR 429 at 455. For later discussion, see National Australia Bank Ltd v Maher [1995] 1 VR 318; Lloyd v Tedesco (2002) 25 WAR 360. 371. Baumgartner v Baumgartner (1987) 164 CLR 137 at 157; 76 ALR 75 at 90. These two sentences as they stood in the 7th edition were quoted with approval in Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 at [48]. 372. (1992) 29 NSWLR 188. 373. Sheller JA and Samuels AJA, Kirby P dissenting. 374. At [12-18]. 375. Abbott v Abbott [2008] 1 FLR1 1451 at [4]. 376. Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 at [60]. See also Lloyds Bank plc v Rosset [1991] 1 AC 107; [1990] 1 All ER 1111; Oxley v Hiscock [2005] Fam 211; [2004] 3 All ER 703; Jones v Kernott [2012] 1 AC 776; [2012] 1 All ER 1265; Davies v O’Kelly [2015] 1 WLR 2725. 377. Jones v Kernott [2012] 1 AC 776; [2012] 1 All ER 1265 at [24]. 378. Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 at [60] (as though an inferred intention was not ‘actual’, and as though ‘imputed’ had any useful meaning). 379. Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 at [61]. 380. Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 at [61]. 381. Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 at [61]. 382. See Lord Neuberger of Abbotsbury’s dissent in Stack v Dowden [2007] 2 AC 432; [2007] 2 All ER 929 at [98]–[157]; W Swadling, ‘The Common Intention Constructive Trust in the House of Lords: An Opportunity Missed’ (2007) 123 LQR 511. 383. See [12-18].

[page 278]

CHAPTER 14 Capacity to be a Trustee Introduction

[14-01]

Infants

[14-02]

Aliens

[14-03]

Corporations General Trustee Companies — New South Wales Trustee Companies — Victoria Trustee Companies — Other Jurisdictions NSW Trustee — New South Wales State Trust Corporation — Victoria Public Trustee — Other Jurisdictions Municipal Corporations

[14-04] [14-04] [14-05] [14-06] [14-07] [14-08] [14-09] [14-10] [14-11]

The Crown

[14-12]

Generally

[14-13]

Unincorporated Associations

[14-14]

Introduction [14-01] In general, with one exception, found only in New South Wales and the Australian Capital Territory, any persons who are capable at law of holding property in their own right may hold the office of trustee. A person’s capacity to be a trustee coincides with the capacity to hold a legal estate. The appointment,

when made, may appear undesirable by reason of old age, infirmity, or absence of capacity for reasoned judgment, and these factors may afford grounds for removal and the appointment of someone better qualified to act in that person’s place, but the appointment itself will be valid.

Infants [14-02] The exception in New South Wales and the Australian Capital Territory is that, since the introduction of s 151A of the Conveyancing Act 1919 in each jurisdiction, the appointment of an infant to be a trustee of any trust is void but this is without prejudice to [page 279] the power to appoint a new trustee to fill the vacancy.1 Before then, an original appointment of an infant as an express trustee was valid although the infant could not as trustee do any act which involved the exercise of a discretion. The court would appoint a new trustee in the place of the infant trustee, but such appointment would be made without prejudice to any application by the infant to be restored to the trusteeship on coming of age.2 Now, no such right is reserved to the infant where the appointment is void. An infant can, of course, be a constructive trustee. Further, s 6(2)(e) of the Trustee Act 1925 (NSW) provides that where a trustee, whether original or substituted, and whether appointed by the court or otherwise, is an infant, then a trustee may be appointed in the infant’s place by the person nominated in that behalf by the trust instrument (if any) or, in lieu thereof, by the continuing trustee or trustees, or by the personal representative of the last surviving trustee. The Australian Capital Territory, Victoria, Western Australia and Queensland have counterparts of s 6(2)(e) of the New South Wales Act.3 South Australia, Tasmania and the Northern Territory do not, but s 37(1)(b)(ii) of the Trustee Act 1936 (SA) authorises the Supreme Court to make a vesting order in respect of land where a trustee is an infant. But in no jurisdiction other than New South Wales is the appointment of an infant as trustee ipso facto

void; in this respect the law in other states is the same as it was in New South Wales before the enactment of s 151A of the Conveyancing Act. Finally, in New South Wales itself, as a consequence of s 10(1)(b) of the Minors (Property and Contracts) Act 1970, some of the rigours of s 151A are mollified; for s 151A is limited in operation to appointments of persons under 18 years by the provision in the later statute that persons aged 18 years or above may become trustees. Infants in whose names money has been deposited at banks have been treated by the courts as trustees of those sums for the depositors.4

Aliens [14-03] Aliens are able to take, acquire, hold and dispose of real and personal property in Australia in the same manner as Australian citizens. This enables aliens to be trustees of land or personalty in Australia. There is authority that aliens resident out of Australia might not be permitted to carry out the office of trustee in view of the fact that they would be outside the jurisdiction of the court,5 unless there appeared to be good reason for their undertaking the office.6 However, it is not essential to the validity of a trust, even of a trust for charitable purposes, that there be a trustee within the jurisdiction.7

Corporations General [14-04] A corporation, aggregate or sole,8 may be a trustee. The capacity of corporations to act as trustees was stated by Lord Hardwicke LC to be quite clear as early as 1744,9 and the jurisdiction of the Court of Chancery in such cases was affirmed in A-G v St John’s Hospital, [page 280] Bedford, in 1865.10 Any company may act as a trustee without being specifically

authorised by statute or otherwise, provided that it has power so to do under its memorandum of association.11 This applies to foreign corporations as well as to local corporations.12 However, a company cannot be appointed an executor in New South Wales and obtain probate of the will unless it is a trustee company which is given this power by statute. Therefore, if a testator desires that a company, other than a trustee company, should administer the trusts of the will, it is not uncommon for the testator to appoint a person as executor and to provide that, as soon as the executorial duties have been completed, the property should be transferred to the company to be held by it on the declared trusts. In New South Wales, the Australian Capital Territory, Victoria, Western Australia and Queensland, a corporation can now be appointed as co-trustee with an individual.13 The directors of a trust company are not obliged to supervise all aspects of the administration of the trusts. ‘A trustee company, like any other company, acts by its officers. It discharges its duty if its officers are competent to perform, and to properly perform, the trusts it undertakes.’14 A trading trust is a discretionary trust which has a corporate trustee. The real owners of the company enjoy limited liability, and the additional benefit of being able to make secured or unsecured loans to the business. Other lenders, however, are likely to require personal guarantees.

Trustee Companies — New South Wales [14-05] There are in New South Wales a number of companies which have by statute15 been given the right to act in this state not only as trustees, but also as executors and administrators; provision is also made that they may charge regulated commissions for their services.16 These are ‘trustee companies’. A trustee company is a licensed trustee company within the meaning of Ch 5D of the Corporations Act 2001 (Cth). In the Trustee Act 1925 (NSW) and the Trustee Act 1925 (ACT), a trustee company is distinguished from an individual trustee in the following respects: (1) In their provision for the appointment of a new or additional trustee or the retirement of a trustee, a trustee company is treated as equivalent to more than one individual. (2) If a company is appointed executor, administrator, or administrator c.t.a. in

place of an executor who is also a trustee, it will by virtue of the grant and without further appointment be deemed to have been appointed a trustee: s 10(2). (3) A trustee company must itself pay the expense of an audit of the trust accounts unless the audit is of a business carried on by the trust estate: s 51(4). (4) The right to consent to the exercise of any right or power may be delegated to a trustee company but not to an individual: s 65. Under all these sections, a trustee company is in the same position as the Public Trustee, and by s 54, a trustee company is equivalent to more than one trustee in dealing with banks. The Conveyancing Act 1919, also, in certain sections treats a trust corporation as equivalent to more than one individual. By s 66B, proceeds of sale are not to be paid to a single trustee [page 281] (not being a sole trustee originally appointed) except where it is a trust corporation; by s 66G, a trust corporation or two or more individuals may be appointed on the statutory trusts for sale or partition; by s 151D(1)(a), a trust corporation or two or more individuals may be appointed trustees of infants’ property by the personal representatives of the deceased; by s 151D(1)(b), a trust corporation may appoint itself trustee where it is the personal representative; and by s 157A(4), a sole trustee other than a trust corporation is not entitled except in certain circumstances to agree upon and receive compensation money in respect of resumption of land. By s 115(6A) of the Conveyancing Act 1919, additional powers have been given to trust corporations, as defined by s 7 of that Act. Section 115(6A) enables a trust corporation to appoint itself receiver where it is a mortgagee entitled to appoint a receiver or in possession. A trust corporation may also be so appointed where it is one of two or more co-mortgagees. When appointed, the trust corporation is entitled to remuneration but is not to be deemed the agent of the mortgagor. See also s 106(16A) and s 107(11A), whereby it is provided that the decision of a trust corporation appointed receiver pursuant to

s 115(6A) to exercise the powers conferred by those subsections shall be sufficiently evidenced by a statement in the appropriate instrument of that decision. By s 75A of the Probate and Administration Act 1898 (NSW), further facilities are given for the appointment of trustee companies. By s 75A(1), a person appointed executor of a will who has not renounced or taken out probate may, subject to certain conditions, by deed appoint the Public Trustee or a trustee company in that person’s place; and by s 75A(2), an executor who has obtained probate or an administrator who has obtained letters of administration may, subject to certain conditions, by deed appoint the Public Trustee or a trustee company in that executor’s place. The Trustee Companies Act 1964 (NSW) allows a trustee company to act as receiver (s 11(1)(b)), attorney (s 13), and guardian of the estate of a minor (ss 11(1)(d), 15B), but, unlike the Acts of some other jurisdictions, not as surety or guarantor. In all jurisdictions, a trustee company may administer a common trust fund and is bound to keep accounts.17 The corporations legislation applies to trustee companies where it is not inconsistent with the legislation expressly governing them.18 A trustee company may not be both plaintiff and defendant in the same suit or proceeding.19 If the company is legal representative of more than one of the estates which are parties to a suit or proceeding, a beneficiary should be appointed to represent the estate which is defendant;20 if no beneficiary is available, the manager or assistant manager of the company should be appointed.

Trustee Companies — Victoria [14-06] There are in Victoria a number of companies which have by statute been given a special right to act not only as trustees, but also as executors and administrators. The Trustee Companies Act 1984 (Vic) allows a trustee company to act as trustee (s 14(1)(a)), attorney (s 15), guardian of the estate of a minor (s 14(1) (b)), and surety or guarantor: s 14(1)(c). In the Trustee Act 1958, a trustee company is distinguished from an individual trustee in the following respects:

(1) In providing for the appointment of an additional trustee or the retirement of a trustee, a trustee company is treated as equivalent to more than one individual: ss 41(6), 42, 44. [page 282] (2) If a company is appointed executor, administrator, or administrator c.t.a., in place of an executor who is also a trustee, it will by virtue of the grant and without appointment be deemed to have been appointed a trustee: s 47. (3) A trustee company must itself pay the expenses of an audit of the trust accounts unless the audit is of a business carried on by the trust estate, or unless the court approves the payment of such expenses out of the trust property: s 27(4). (4) A trustee company acting as sole trustee is able to give a valid receipt for capital money arising under the Settled Land Act 1958: s 18(2). Under all these sections a trustee company is in the same position as the Public Trustee.

Trustee Companies — Other Jurisdictions [14-07] All jurisdictions now have legislation which follows the general pattern of the statutes of New South Wales and Victoria.21 As well as conferring the capacity to act as trustee, executor and administrator, the legislation of various jurisdictions may allow a trustee company to act as receiver,22 attorney,23 guardian of a minor,24 and surety and guarantor.25

NSW Trustee — New South Wales [14-08] The NSW Trustee is created a corporation by statute26 and is authorised to be appointed an executor or administrator as well as a trustee. The NSW Trustee is included in the definition of ‘trustee’ in s 5 of the Trustee Act 1925, and in the definition of ‘trust corporation’ in s 7 of the Conveyancing Act

1919. These Acts also refer to the NSW Trustee as distinct from individual trustees, and s 75A of the Probate and Administration Act 1898 makes special provision for the appointment of the Public Trustee as executor or administrator when not so appointed by the trust instrument. In the Trustee Act 1925 (NSW), the NSW Trustee is distinguished from an individual trustee in the following respects: (1) In providing for the appointment of a new or additional trustee or the retirement of a trustee, the NSW Trustee is treated as equivalent to more than one individual trustee: ss 6, 7, 8. The NSW Trustee is similarly treated in s 54 and in s 64. (2) If the NSW Trustee is appointed executor, administrator or administrator c.t.a. in place of an executor who is by the will also a trustee, the NSW Trustee will by virtue thereof and without further appointment be deemed to have been appointed trustee: s 10(2). (3) The NSW Trustee must pay the expense of an audit of the trust accounts unless the audit is of a business carried on by the trust estate: s 51(4). (4) The right to consent to the exercise of a trust or power may be delegated to the NSW Trustee but not to an individual: s 65. By s 47 of the Trustee Act, it is provided that money held in trust for an infant or for a person who cannot be found or cannot give a good discharge may be paid to the NSW Trustee. [page 283] The NSW Trustee is treated as the equivalent of more than one individual trustee in ss 66B, 66G, 151D and 157A of the Conveyancing Act 1919. Additional means of obtaining representation are given to the NSW Trustee by s 75A of the Probate and Administration Act 1898, which provides that an executor who has not renounced or taken out probate (s 75A(1)) and an executor or administrator who has obtained a grant (s 75A(2)) may in certain circumstances by deed appoint the NSW Trustee or a trustee company to be executor or administrator in place of the executor or administrator appointed by the trust instrument.

State Trust Corporation — Victoria [14-09] By virtue of the State Trustees (State Owned Company) Act 1994, the former State Trust, which succeeded the Public Trustee, was itself succeeded by ‘State Trustees’. State Trustees may act as sole trustee or co-trustee (s 8), and may act with an advisory trustee in whom property does not vest: s 9. State Trustees may consent to act as custodian trustee of any trust, whether or not the number of trustees has fallen below the original number.

Public Trustee — Other Jurisdictions [14-10] Legislation27 in all other jurisdictions provides for a Public Trustee with capacities similar to those of their counterparts in New South Wales and Victoria.28

Municipal Corporations [14-11] A municipal corporation in Western Australia may be a trustee under s 6.9 of the Local Government Act 1995. Further, s 411 of the Local Government Act 1993 (NSW) seems to assume that the power to accept trust property formerly contained in s 526 of the 1919 Act is maintained.

The Crown [14-12] The Crown may be a trustee. But the Crown cannot be compelled to accept a trust.29 Although the Crown cannot be compelled to accept a trust, the Crown may sustain the character of a trustee by accepting the trust, and the Crown has undoubtedly the capacity to take the estate and execute the trust. Where a statute vests public property in the Crown for particular purposes, then the Crown, being named in the statute, and having assented to the statute, and having the power to sustain the character of a trustee, and the capacity to take the estate and to execute the trust, holds the property on the trusts created by the statute. There may be difficulty in finding and enforcing a remedy in a court

of law if the trust is not carried into effect, but that difficulty does not affect the capacity of the Crown to take the estate as a trustee.30 [page 284] Where statutory corporations or governmental bodies are carrying out the functions of the Crown there is generally no place between them for one being the settlor and the other the trustee of a private trust; the relationship as between them is governed by administrative arrangements enforceable by the executive and not by the courts.31 The principles which are applicable in determining whether in fact the Crown is a trustee are discussed in Chapter 5.32

Generally [14-13] The assurance of property to a trustee who cannot legally hold it does not invalidate the trust.33 If the trust is otherwise valid, it will not fail by reason only of the incapacity or failure of the trustees.34 The trust property will still be impressed with the trust and new trustees will be appointed by the court.35 There is obviously a difference between incapacity to be a trustee, on the one hand, and incapacity to exercise the discretions of a trustee (for example, through infancy or mental incapacity) on the other. There is no legislation in Australia preventing a bankrupt from being a trustee, although at common law a bankrupt is unfit to act as a trustee and bankruptcy constitutes a ground for removal.36

Unincorporated Associations [14-14] At common law, an unincorporated association has no separate identity and no legal persona, being no more than a combination of its members.37 At least in New South Wales there is no theoretical reason why all members cannot constitute themselves trustees,38 but this course has enormous practical difficulties.39

In most jurisdictions this position has been modified by statute, allowing associations to be registered as incorporated associations with the same capacity as natural persons.40 In New South Wales, for example, the main requirement for registration is a prohibition on the profits of an association being returned to members.41 Incorporated associations enjoy the benefits of limited liability, have perpetual succession, can sue or be sued, can acquire and dispose of property, and can perform the functions of a body corporate.42 _____________________________ 1.

Re Vinogradoff [1935] WN 68.

2. 3.

Re Gartside’s Estate (1853) 1 WR 196; Re Shelmerdine (1864) 33 LJ Ch 424. ACT s 6(2)(f); Qld s 12(1)(g); Vic s 41; WA s 7(1)(g).

4. 5.

Re Vinogradoff [1935] WN 68; Re Muller [1953] NZLR 879. Meinertzhagen v Davis (1844) 1 Coll 335; 63 ER 444; Re Guibert’s Trust (1852) 16 Jur 852; Re Harrison’s Trusts (1852) 22 LJ Ch 69.

6. 7.

Re Hill’s Trusts [1874] WN 228. Re Carapiet’s Trusts; Manoogian (Armenian Patriarch of Jerusalem) v Sonsino [2002] WTLR 989 at [34]. See also [15-11], [15-14], [15-54], [15-67] and [15-86].

8.

Bankes v Salisbury Diocesan Council of Education Inc [1960] Ch 631 at 648–9; [1960] 2 All ER 372 at 378–9. ‘Undoubtedly corporations may be trustees’: A-G v Landerfield (1744) 9 Mod 286; 88 ER 456.

9.

10. (1865) 2 De GJ & Sm 621 at 635; 46 ER 516 at 522. See, in New South Wales, Re McPhillamy’s Trusts (1909) 10 SR (NSW) 42, where a foreign corporation was appointed. 11. Re Thompson’s Settlements [1905] 1 Ch 229. 12. Re Balfour [1916] VLR 397; 22 ALR 284. 13. Since the Conveyancing Act 1919 s 25 (NSW); Civil Law (Property) Act 2006 (ACT) s 209; Property Law Act 1958 s 28 (Vic); Property Law Act 1969 s 29 (WA); Property Law Act 1974 s 34 (Qld), a corporation can hold property in joint tenancy with individuals and this has made such cotrusteeship possible. 14. Elders Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426 at 453; [1964] ALR 408 at 425–6. 15. Trustee Companies Act 1964 (NSW). 16. See K Thompson, ‘Trustee Companies in Australia’ (1988) 62 LIJ 305. 17. The duty proceeds from the general law. However, see also Trustee Companies Act 1953 (Tas) s 30; Trustee Companies Act 1987 (WA) s 27. 18. Re Application of Permanent Trustee Co Ltd (1983) 7 ACLR 411. 19. Re Phillips [1931] WN 271. 20. Perpetual Trustee Co Ltd v Dickinson (1936) 53 WN (NSW) 187; Perpetual Trustee Co Ltd v A-G (1937) 54 WN (NSW) 95. 21. Trustee Companies Act 1947 (ACT); Companies (Trustees and Personal Representatives) Act (NT); Trustee Companies Act 1968 (Qld); Trustee Companies Act 1988 (SA); Trustee Companies

Act 1953 (Tas); Trustee Companies Act 1987 (WA). 22. ACT s 11(1)(b); NT s 20(1)(b); Qld s 21(1)(b); SA s 5; Tas s 7(1)(b); WA s 12(1)(b). 23. ACT s 12; NT s 19; Qld s 22; SA s 5; Tas s 7(1)(e); WA s 13. 24. ACT s 11(1)(c); Qld s 21(1)(d); SA s 6(a); Tas s 7(1)(d); WA s 12(1)(c). 25. Qld s 21(1)(f); WA s 12(1)(d). 26. NSW Trustee and Guardian Act 2009 s 5. It is known as NSW Trustee: see s 3. See the ancient but comprehensive H Nicholas, Trustee Acts of New South Wales, 2nd ed, p 251. 27. Public Trustee Act 1985 (ACT); Public Trustee Act (NT); Public Trustee Act 1978 (Qld); Public Trustee Act 1995 (SA); Public Trustee Act 1930 (Tas); Public Trustee Act 1941 (WA). 28. In Flood v Williscroft [1987] 2 Qd R 358, it was held that s 65(1)(b) of the Queensland Act gives a broad jurisdiction to commit estates to the Public Trustee, beyond the enumerated circumstances of age, disease, illness or physical or mental infirmity. Senior Master Lee also held, sed quaere, that cogent reasons are required before a private trustee would be preferred. There is no power to appoint the Public Trustee of Western Australia receiver of a corporation: Slater v Global Finance Group Pty Ltd (1999) 150 FLR 264 at 269. 29. Williams v A-G (NSW) (1913) 16 CLR 404; 19 ALR 378; Re Mason [1929] 1 Ch 1; Civilian War Claimants Association v R [1932] AC 14 at 27; [1931] All ER Rep 432; A-G v Nissan [1970] AC 179 at 223; [1969] 1 All ER 629 at 647; Tito v Waddell (No 2) [1977] Ch 106; [1977] 3 All ER 129. 30. R v Mayor of Blenheim (1908) 28 NZLR 249. 31. Aboriginal Development Commission v Treka Aboriginal Arts and Crafts Ltd [1984] 3 NSWLR 502. 32. See [5-20]–[5-21]. 33. A-G v Hickman [1731–2] Kel W 34; 25 ER 482; Sonley v Clockmakers’ Co (1780) 1 Bro CC 81; 28 ER 998; Tufnell v Constable (1838) 7 Ad & E 798; 112 ER 670. 34. Sinnott v Hockin (1882) 8 VLR (E) 205 at 210. 35. See Chapter 15. 36. See [15-17]. 37. See Lloyds, Law of Unincorporated Associations, pp 97ff. 38. In New South Wales and the Australian Capital Territory, it is not possible to appoint more than four additional trustees (not original trustees): NSW s 6(5)(b); ACT s 6(6)(b). In Victoria, it is not possible to appoint new trustees of a settlement of land so as to make the total number more than four: Vic s 40(1)–(2). The same applies in Queensland for all non-charitable trusts: Qld s 11(2). In Western Australia, new trustees may not be appointed so as to produce a total of more than four: WA s 7(2). In South Australia (s 14(2)), Tasmania (s 13(2)) and the Northern Territory (s 11(2)) there is no maximum number. See [15-23]–[15-29]. 39. See J Warburton, ‘The Holding of Property by Unincorporated Associations’ (1985) 49 Conv 318. 40. See Associations Incorporation Act 1991 (ACT); Associations Incorporation Act 2009 (NSW); Associations Incorporation Act 1981 (Qld); Associations Incorporation Act 1985 (SA); Associations Incorporation Act 1964 (Tas); Associations Incorporation Reform Act 2012 (Vic); Associations Incorporation Act 1987 (WA) (repealed and replaced by Associations Incorporation Act 2015, to come into force on a day to be fixed). More cumbersome avenues are available under the Corporations Act 2001 (Cth). 41. Associations Incorporation Act 2009 (NSW) s 40. 42. For example, Associations Incorporation Act 1991 (ACT) ss 22–25; Associations Incorporation Act 2009 (NSW) ss 19–22; Associations Incorporation Act 1981 (Qld) ss 21–28; Associations

Incorporation Act 1985 (SA) ss 25–28; Associations Incorporation Act 1964 (Tas) ss 20–22; Associations Incorporation Reform Act 2012 (Vic) ss 29–36.

[page 285]

CHAPTER 15 The Appointment, Retirement and Removal of Trustees The Appointment of Trustees The Original Trustees No trustee Trust Appointment of New Trustees Appointment Under Power Given by Trust Instrument Appointment Under Statutory Power Persons authorised to appoint Persons nominated Able and willing Continuing trustee Personal representatives Circumstances in which appointment may be made Another person Trustee is dead Trustee abroad Desires to be discharged Refuses to act Unfit to act Incapable of acting Exercise of power Mode of exercise of power Number of Trustees A survey

[15-01] [15-01] [15-02] [15-03] [15-04] [15-05] [15-06] [15-06] [15-07] [15-08] [15-09] [15-10] [15-11] [15-12] [15-13] [15-14] [15-15] [15-16] [15-17] [15-18] [15-19] [15-21] [15-22] [15-22]



New South Wales and the Australian Capital Territory Victoria Queensland South Australia Western Australia Tasmania Northern Territory Additional Trustees New South Wales and the Australian Capital Territory Victoria and Western Australia

[15-23] [15-24] [15-25] [15-26] [15-27] [15-28] [15-29] [15-30] [15-30] [15-31] [page 286]



Queensland South Australia Tasmania and the Northern Territory Separate Sets of Trustees New South Wales and the Australian Capital Territory Victoria Queensland Western Australia South Australia Tasmania Northern Territory Powers of New Trustees Costs Evidentiary Miscellaneous Appointment by the Court Inherent and statutory power Infant trustees Bankrupt trustee Convict trustee

[15-32] [15-33] [15-34] [15-35] [15-35] [15-36] [15-37] [15-38] [15-39] [15-40] [15-41] [15-42] [15-43] [15-44] [15-45] [15-46] [15-46] [15-48] [15-49] [15-50]





Incorporated body dissolved Trustee missing Mental or physical incapacity Trustee outside jurisdiction Constructive trustees Breach of trust Persons appointed by the court Continuing trustees Beneficiary Near relative of beneficiary Near relative of trustee Partner Bankrupt Solicitor for beneficiary Feme-sole Spouse of intestate deceased Persons out of the jurisdiction Corporations Number of trustees Separate sets of trustees Vesting of property in new trustees Practice

[15-51] [15-52] [15-53] [15-54] [15-55] [15-56] [15-57] [15-58] [15-59] [15-60] [15-61] [15-62] [15-63] [15-64] [15-65] [15-66] [15-67] [15-68] [15-69] [15-70] [15-71] [15-72]

Acceptance and Disclaimer of Trust

[15-73]

Ceasing to be a Trustee

[15-74] [page 287]



Death of a Trustee Retirement of Trustees Conditions for retirement Trust instrument provides for retirement Retirement on the appointment of a new trustee out of court Retirement Out of Court without the Appointment of New

[15-75] [15-76] [15-76] [15-77] [15-78]



Trustees New South Wales and the Australian Capital Territory Victoria Retirement by the Court Summary jurisdiction In a suit Duty of Retiring Trustee Removal of Trustees

[15-79] [15-79] [15-80] [15-81] [15-82] [15-83] [15-84] [15-85]

The Appointment of Trustees The Original Trustees [15-01] One may become a trustee either by being specifically appointed as such by the instrument creating the trust, in which case one is said to be an original trustee, or by being appointed a new trustee either pursuant to a power contained in the trust instrument or pursuant to statutory power exercisable by some person or the court. A person may also become a constructive trustee of property in the circumstances already considered relating to constructive trusts,1 and thereafter a new trustee may be appointed as in the case of an express trustee.2

No trustee [15-02] It is a principle of equity that a trust will not be allowed to fail for want of a trustee.3 Consequently, if the creator of the trust has omitted to appoint trustees to carry out the trust or if the trustees whom the creator has chosen are dead or refuse to act,4 the court will appoint trustees to carry out the trust.5 The court has even taken this action in order to protect the property concerned where it was contended that the deed of settlement was void.6 If a trustee disclaims the trust so that the trust property revests in the settlor, the trust will not be at an end; rather, the settlor will be a trustee to carry out the trusts.7

[page 288]

Trust [15-03] The term ‘trust’ is defined in the Trustee Acts of the various jurisdictions as including implied and constructive trusts and also the duties incident to the office of legal representatives of a deceased person. The court has appointed trustees in the place of executors who had become constructive trustees of a legacy8 and in the place of a deceased life tenant who had been sole executor for the purpose of paying legacies.9 An administrator functus officio as administrator becomes a trustee and the court can appoint a new trustee to act with the old.10 Similarly, an administrator functus officio may appoint new trustees in his or her place.11 But an administrator who has not completely administered the intestate’s estate is not functus officio, and if the administrator dies before completing the administration, the administrator’s executor does not succeed to the administration, but an administrator de bonis must be appointed to complete the administration.12 If a person who has never been appointed trustee takes on the custody and administration of trust property, that person becomes an actual trustee in the sense that he or she is, with respect to such property, subject to all the liabilities of an express trustee.13 Difficult problems in New South Wales arose on the wording of wills of testators who died prior to the Probate Act of 1890 on the question whether the legal estate in realty had been devised to the trustees of the will.14 Now by s 44 of the Probate and Administration Act 1898, upon the grant of probate all real and personal estate of the testator in New South Wales vests in the executor, and by s 47 of that Act the real estate of the testator is directed to be held by the executor according to the trusts and dispositions of the will. It is conceived that in New South Wales these provisions are sufficient to make the executor in respect of the real estate trustee of the will by implication in all cases where no express trustee is appointed. The position is conceived to be the same in the Australian Capital Territory: Administration and Probate Act 1929 ss 39–40. That is also true in Western Australia where ss 8 and 11 of the Administration Act 1903 are, respectively, the same as the two New South Wales sections. In Victoria and Tasmania, the situation is different; these states seem to have no equivalent of the latter New

South Wales section, but have an equivalent of the former.15 However, in these two states, it is submitted that the same result obtains as in New South Wales. In South Australia, the position is different again: in that state there is no equivalent of either section, and it is therefore submitted that in South Australia the position is as obscure as it was in New South Wales prior to 1890.

Appointment of New Trustees [15-04] New trustees may be appointed in accordance with the provisions made in the trust instrument or statutory enactment conferring a power to appoint. In most jurisdictions the trust instrument is of primary importance, with statutory powers relevant only if the instrument is silent or if the provisions of the trust instrument do not apply.16 The statute then designates [page 289] persons who shall have the power to appoint new trustees. Not only may private persons appoint under powers conferred whether by the settlor or by the statute, but the court in certain circumstances may also appoint. In Queensland, the reverse applies, and powers conferred by the trust instrument can only operate to broaden statutory powers, not diminish them.17 Where no provision has been made by the trust instrument, and where the provisions of the trust instrument do not apply, the statute designates persons who shall have the power of appointing new trustees. Not only may private persons appoint under powers conferred either by the settlor or by the statute, but the court in certain circumstances may also appoint.

Appointment Under Power Given by Trust Instrument [15-05] In the first place then, the creator of the trust may make provisions in the deed of settlement or in the will, as the case may be, to meet such cases as the creator considers likely to arise, and to give certain named or described persons the right to appoint new trustees where circumstances require such

appointment. The instrument may give a perfectly general power of appointing new trustees in all circumstances or may limit the power by stating the precise circumstances in which the power is to be exercised. The power given by the trust instrument may be wider or narrower than the statutory powers in respect of the circumstances under which the appointment may be made. For example, under the statute, the power to appoint is exercisable by certain persons in certain circumstances set out in the statute, among them being the absence of a trustee abroad for more than 12 months, without having properly delegated the execution of the trust. In Re Earl of Stamford,18 the power of appointing new trustees was given to a tenant for life, to be exercised, among other circumstances, if a trustee should ‘be abroad’. One of the trustees went to live in France for a time on account of his wife’s health, and used to attend regularly in England at stated intervals to take part in the necessary business of the trust. He could always reach England within a day. The tenant for life, acting under the power given by the instrument of trust, appointed a new trustee in place of the trustee ‘abroad’ and the appointment was upheld. Here the express power was wider than that given by the statute.19 In Cecil v Langdon,20 the power given by the settlement was to be exercised by the persons designated, subject to the consent of the tenant for life. In the course of time, the original trustees and the others mentioned in the trust instrument had all died or retired from the trust and the existing trustees had all been appointed by the court. The continuing trustee of these was allowed to appoint new trustees, subject to the court’s approval, but without regard to the dissent of the tenant for life, the fetter not applying to the new trustees under the circumstances of the case.21 A power of appointment is not limited to appointing trustees to replace those who have acted in the trust unless the power specifically states that this is to be so.22 Thus it may be exercised to appoint a trustee in place of someone who has been named as such but who has disclaimed23 or died before assuming office.24 The donee of a general power of appointment who creates new trusts is at liberty to nominate new trustees to carry them out and the old trustees must transfer the trust property to the new trustees. Where the power is a special power and there are existing trustees of the property subject to the power, the donee cannot confide the [page 290]

whole administration of the trust to new trustees unless the instrument creating the power expressly or impliedly authorises the donee so to do.25

Appointment Under Statutory Power Persons authorised to appoint [15-06] Under the Trustee Acts of the various jurisdictions26 the persons authorised to appoint new trustees are: (1) the persons nominated by the instrument (if any) creating the trust, for the purpose of appointing new trustees; or (2) the surviving or continuing trustees or trustee for the time being, if there is no person nominated to appoint new trustees, or if there is no such person able and willing to act; or (3) the personal representatives (‘or legal representatives’) of the last surviving or continuing trustee.27 In addition, under the general law and in Queensland and Victoria by statute, the court may appoint new trustees.

Persons nominated [15-07] According to old decisions,28 if a power of appointing new trustees is expressly given by the trust instrument with a statement of the circumstances under which the power is to be exercised, the power is limited to the case mentioned in the instrument and, in other circumstances, the statutory power is exercisable by the persons mentioned in the statute. In such a case, the persons nominated in the trust instrument would not have been ‘persons nominated’ within the meaning of the statute. These decisions would seem still to be applicable in South Australia and Tasmania. However, in the other jurisdictions they are excluded by statute. For example, in New South Wales, s 6(10) of the Trustee Act 1925 provides:29 The provisions of this section relative to a person nominated for the purpose of appointing new trustees apply, whether the appointment is to be made in a case specified in this section or in a case specified in the instrument, if any, creating the trust, but where a new trustee is appointed under this section in a case specified in that instrument, the appointment shall be subject to the terms applicable to an appointment in that case under the provisions of that instrument.

Persons who are not themselves trustees may be nominated to appoint new trustees and different persons may be nominated to appoint according to the specified sets of circumstances.30 If a beneficiary is specifically named as the person having power to appoint, even though that beneficiary’s interest in the trust has been charged or alienated, that beneficiary may exercise the power.31 The effect of the section is that the persons nominated to appoint new trustees should be the persons with power to fill up any vacancy occurring under the provisions of the section. Even if the power of nomination is limited by the mention of particular events upon which the power [page 291] is to be exercised, it may still be exercised when any event occurs upon which, by the statute, a new trustee may be appointed, except in South Australia and Tasmania. Even where the legal title to the trust property has devolved upon the executors of a sole surviving trustee, the person having, under the trust instrument, the power to appoint new trustees may exercise the power and thus oust the executors from the position of trustees under the instrument.32 Where the person nominated is an infant it would appear that the infant is, at all events after the infant has reached years of some discretion, capable of exercising the power, but any appointment by the infant which the court regards as prejudicial to the infant’s benefit and as being one which it would not itself make, may be set aside. Where, therefore, an infant having an express power to appoint new trustees and being himself beneficially entitled to the property on attaining 25, appointed his mother, to whom the income was payable for his benefit until he attained 25, as sole trustee, the court held the appointment to be invalid.33

Able and willing [15-08] Two or more persons having the power to appoint but being unable to agree as to who should be appointed are not ‘able and willing’ to act. Thus where a husband and wife were the persons who had the power to appoint new

trustees, but they lived apart and could not agree as to the selection of a new trustee, it was held that the personal representatives of the last surviving trustee were entitled to appoint a new trustee, as the persons nominated for the purpose, the husband and wife, were not ‘willing and able’ to act.34

Continuing trustee [15-09] In its strict sense, ‘continuing trustee’ means one who is continuing to act in the trust after the appointment of new trustees and not one who will not continue to be a trustee after the new trustees are appointed, but who will cease to be a trustee immediately they are appointed.35 Section 6(11) of the New South Wales Act provides, however, that a ‘continuing trustee’ includes a refusing or retiring trustee: … if willing to act in the execution of the provisions of this section, provided that: (a) where there is in fact a continuing trustee, nothing in this section shall authorise a refusing or retiring trustee to act apart from the continuing trustee, (b) if a refusing or retiring trustee does not act in the execution of the provisions of this section, the fact that the refusing or retiring trustee was willing to act shall not affect the validity of an appointment made by any other person.

The Australian Capital Territory (s 6(12)–(13)) and Queensland (s 12(7)) have a similar provision. A retiring trustee may, therefore, if a sole trustee, appoint a new trustee in substitution for himself or herself, and if he or she is the survivor of several trustees, may appoint new trustees in substitution for himself or herself and the others. But where there are two or more trustees and only one is retiring, the retiring trustee is not a necessary party to the appointment of new trustees.36 The onus of proving that the refusing or retiring trustee is willing to act lies upon the party calling in question the appointment made without that party’s concurrence.37 [page 292] In other jurisdictions there is no equivalent to the above provisions in the New South Wales, Australian Capital Territory and Queensland Acts, so that the words ‘continuing trustee’ still presumably bear their primary meaning.

Personal representatives

[15-10] The words ‘personal representatives of the last surviving or continuing trustee’ include the case of an executor of a sole trustee.38 They also include the surviving trustee.39 But a person who has never acted in the trust is not reckoned as a trustee and, therefore, where all the trustees named in a will predecease the testator, the executor of the last survivor of them cannot appoint new trustees.40 The decision in Re Crowhurst Park41 has held that an executor who has not proved is nonetheless entitled to exercise the power to appoint a new trustee, but that no trustee appointed by that executor will be able to prove title while the executor appointing that trustee does not prove the will.

Circumstances in which appointment may be made [15-11] A new trustee may, according to the law of all jurisdictions,42 be appointed in place of a trustee either original or substituted and whether appointed by the court or otherwise, in certain circumstances, which vary slightly from jurisdiction to jurisdiction. In all jurisdictions, a new trustee may be appointed to replace a trustee: (1) who is dead; (2) who desires to be discharged; (3) who refuses to act; (4) who is unfit to act; or (5) who is incapable of acting. Absence from the jurisdiction is also a ground for appointing a new trustee. However, the legislation differs somewhat in detail. In New South Wales, each of two circumstances permits the statutory power to be exercised: (1) that the trustee has remained outside the state for more than one year without having duly delegated the execution of the trusts; and (2) that the trustee has remained outside the state for more than two years. The same applies in the Australian Capital Territory. In Victoria, Western Australia and Queensland, absence from the state for more than one year without duly delegating the execution of the trusts is the relevant circumstance.43 In South Australia, Tasmania and the Northern Territory, mere absence from the state for more than one year will suffice. In all jurisdictions except South Australia, Tasmania and the Northern

Territory: (1) the fact that the trustee is an infant is a circumstance giving rise to the statutory power; (2) as is the fact that the trustee has been removed under a power contained in the trust instrument; and [page 293] (3) if the trustee being a corporation is dissolved, that likewise furnishes a statutory ground for the appointment of a new trustee. However, as to (3), the ground is more widely expressed in the Queensland legislation in that it provides that a new trustee can be appointed not merely when the corporation in question is dissolved, but also when it has ceased to carry on business, when it is under official management and when it is in liquidation.

Another person [15-12] The person to be appointed a trustee shall not be the person, or one of the persons, by whom or with whose consent the appointment is or may be made, unless the appointment is made with the consent of the court or of a majority of the beneficiaries. Under the general law, if the appointment was made pursuant to a power contained in the trust instrument which referred to the appointment of some ‘other’ person, it would seem that an objection to self-appointment would apply. In Re Newen44 and in Re Skeats’ Settlement,45 there was a strong expression of opinion that the position of the appointor is a fiduciary one and that it would be an improper exercise of the power for the appointor to appoint himself or herself. However, whether the statutory power can be exercised in favour of the appointor varies from state to state: (a) in the Australian Capital Territory, such an appointment is specifically forbidden unless the appointment is made with the consent of the Supreme Court or of a majority of the beneficiaries (s 6(3)); (b) in New South Wales (s 6(3)), Queensland (s 12(1)), Victoria (s 41(1)),

South Australia (s 14(1A)) and Western Australia (s 7(1)), such an appointment is specifically permitted; and (c) in Tasmania and the Northern Territory, the statutes are silent, thereby presumably forbidding such an appointment by implication.46

Trustee is dead [15-13] The provisions relating to a trustee who ‘is dead’ include the case of a person nominated trustee in a will who dies before the testator.47 This means that if there are two or more trustees named in a will and one of them dies before the testator, the persons having the right to appoint may appoint a new trustee in place of the trustee who has died before the testator. But the personal representatives of a sole trustee who has died before the testator are not able to appoint new trustees. So where all the trustees named in the will die before the testator, the personal representatives of the last survivor of the named trustees are not able to appoint new trustees.48 [page 294]

Trustee abroad [15-14] In Re Walker; Summers v Barrow,49 a trustee was appointed a substitute for his co-trustee who had been abroad for over 12 months except for a visit of about a week when he attended to trust matters, the visit taking place about eight months before the appointment of the substitute. It was held that the trustee had not been abroad for 12 months within the meaning of the statute. Where an appointment is made in the place of a trustee abroad for more than two years or for more than one year without having properly delegated the execution of the trust, it is not necessary that that trustee should join in the appointment.50

Desires to be discharged [15-15] Although the power of appointment may be exercised when a trustee

desires to be discharged from a portion only of the trusts, the court has declined to make an order appointing a new trustee as to part of the estate against the will of the retiring trustees.51

Refuses to act [15-16] The trustee may refuse or decline to act by disclaiming by deed, and this will give jurisdiction for the exercise of a power of appointment of new trustees by the persons authorised under the trust instrument or under the statutory power to appoint new trustees.52 This is also the case where the conduct of the trustee amounts to disclaimer.53 In Re Birchall,54 the court appointed new trustees, where the trustee who had not acted for nine years was held to have disclaimed by conduct and consequently was unable to appoint new trustees.55 A trustee who disclaims must disclaim in toto or remain a trustee as to all. It is not possible to effect a partial disclaimer of the office of executor or of trustee, or of the property devised.56 In Re Williams’ Settlement,57 it was held that a trustee who had paid the trust funds into court had ‘refused or declined to act’. In Re Bailey,58 where a trustee had paid moneys into court, it was held that he had shown himself ‘desirous to be discharged’ from the trust within the terms of a power of nomination in a will, so that the appointors named were entitled to appoint new trustees. In Re Tegg,59 payment into court was held to have put an end, in the circumstances of that particular case, to a discretionary power vested in the trustees.

Unfit to act [15-17] A bankrupt is unfit to act as a trustee.60 It has been held in Victoria that breach of trust or neglect of duty can constitute unfitness to act,61 but in such a case the usual course is to apply to the court for removal of the trustee. [page 295]

Incapable of acting

[15-18] Where a power of appointing new trustees is made exercisable upon any trustee becoming ‘incapable of acting’ the incapacity referred to is probably personal incapacity only, as, for example, old age and infirmity.62 Residence abroad does not in the strict sense make a trustee ‘incapable of acting’ although it will be a good reason for asking the court to appoint a new trustee in that trustee’s place.63 A surviving trustee resident abroad may exercise a power of appointment given by the trust instrument to appoint a new trustee in place of a deceased trustee.64

Exercise of power [15-19] Where the statutory power can be exercised, it should be exercised and application should not be made to the court.65 If acting bona fide, the person who is the donee of a power of appointment of new trustees may appoint persons whom the court would not appoint in similar circumstances. In Meinertzhagen v Davis,66 under a power to appoint given by the trust instrument, American trustees were appointed and the appointment was held valid although such an appointment was not expressly authorised by the settlement. In Re Earl of Stamford,67 a tenant for life who had the power of appointment, appointed his own solicitor and the court would not declare the appointment invalid. In Re Norris,68 the continuing trustee, who was solicitor to the trustees, appointed his son, who was his partner, to be a new trustee. The trusts of the will were being administered by the court, and the court refused approval of the appointment. It might have been otherwise had the court not been administering the trusts. The court will not necessarily remove a new trustee because it would not itself have appointed that trustee.69 If there is an existing sole trustee who wishes to exercise the statutory power of appointing new trustees, the court has no general jurisdiction to appoint against that person’s wishes even if the application is made by a majority of the beneficiaries and the trustee personally has no beneficial interest,70 unless there exist circumstances (for example, serious and ongoing breaches of trust71) rendering it expedient to do so. The representatives of a deceased trustee cannot be compelled to exercise the statutory power to appoint new trustees.72 Their refusal to appoint does not render them liable to pay the costs of a petition for the appointment of new trustees.73

[15-20] Where a decree is made for administration and for the appointment of ‘some proper person’ as trustee, this will not destroy the power of appointment of new trustees by one to whom such power has been given by the will, but the choice of a trustee is subject to the approval of the court.74 If in such a case the person having the power of appointment repeatedly [page 296] nominated improper persons, that would be equivalent to a refusal to exercise the power and the court could then appoint.75 The power, however, would be gone if the decree were framed in language inconsistent with its preservation.76 In Hardaker v Moorhouse,77 it was held that a person who had an express power of appointing new trustees ‘during his life’ and who had an interest in the settled property, could exercise the power after parting with his or her interest. Although the beneficiaries are together absolutely entitled to the trust property, they are not entitled to control the exercise by the trustees of the power of appointing new trustees.78 Beneficiaries have been held unable to prevent a trustee validly exercising a power of appointment while an application by them to remove the trustee was pending.79 There is no rule that the trustees of a charitable trust for religious purposes must be adherents of the religion in question.80 If the appointment of a new trustee is invalid and the old trustees transfer the trust property to the new trustees and later on the new trustees so deal with the trust property that it is lost, the old trustees will be liable for the loss as well as the new trustees.81 If, however, in New South Wales and the Australian Capital Territory, a valid appointment has been made, the trustee, in place of whom the new trustee is appointed, shall be discharged from the trust, provided that except where only one trustee was originally appointed, there will be left after the discharge at least two trustees, or the public trustee company, to perform the trust.82 No other jurisdiction has a like provision enabling the appointment of a new trustee to act as a discharge. An interesting problem can arise when a provision in a statute requires trust property to vest in the newly appointed trustees, who then should theoretically have rights of lien, where the property is in fact purely equitable and not subject to either physical possession or lien.83

Mode of exercise of power [15-21] In all jurisdictions other than New South Wales and the Australian Capital Territory, the only requirement as to form is that the appointment be in writing.84 In New South Wales and the Australian Capital Territory, the appointment must be by registered deed if the statute is relied on, rather than a power in the trust instrument s (1).85 This is subject to the terms of the trust instrument (s 6(13)).

Number of Trustees A survey [15-22] If new trustees are appointed under a power given by the trust instrument, it will usually depend upon the terms of the instrument whether the number of trustees may be increased or diminished. In Queensland, by s 11, the instrument is subordinated to a statutory [page 297] provision limiting the number of trustees to four (in the case of a trust created after the date of assent of the Act), and the number of trustees can be increased or decreased within this limit regardless of the expressed intentions of the settlor although there can be more than four where the Minister certifies approval of the greater number in writing. In Victoria, the effect of ss 40 and 41 is similar. However, at least in New South Wales, South Australia and Tasmania, statute does not interfere with the expressed intentions of the creator of the trust, but applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and has effect subject to the terms of that instrument and to the provisions therein contained. The Acts of the other jurisdictions contain a similar provision.86 Therefore, at least in the latter jurisdictions, if the trust deed expressly requires that the number of trustees be kept up to the original number, this will have to be done.87 Where, however, the trust instrument does not express any intention as to the number of trustees beyond the fact of naming a certain

number in the instrument, the position will be governed by the provisions of the statute and a smaller number may be appointed so long as more than one remains.88 But a sole surviving trustee will not be obliged to appoint someone to act as co-trustee with the surviving trustee if the trust instrument is so worded as to contemplate the possibility of there being a sole trustee.89 Where a settlor appoints a sole trustee, there is no right in the beneficiaries to the appointment of an additional trustee.90 The position may be summarised as follows:

New South Wales and the Australian Capital Territory [15-23] In New South Wales and the Australian Capital Territory: (a) If one trustee was appointed originally, then one trustee is sufficient to replace that trustee. (b) If two or more trustees were appointed originally, then two at least must continue in office. No exception is specifically stated in the case of the appointment of the Public Trustee or a trustee company, but a retiring trustee shall not be discharged from the trusts unless there will be left at least two trustees, or the Public Trustee or a trustee company, to perform the trust. This does not apply where a sole trustee was originally appointed. Provision is made by the Acts constituting the Public Trustee and the respective trustee companies whereby the Public Trustee or any of those companies may be appointed sole trustee in spite of any provision in the trust instrument against a reduction in the number of trustees. (c) More than the minimum number may be appointed in each case unless the trust instrument stipulates that there must be a specified number, but the number must not be increased beyond four.91 [page 298]

Victoria [15-24] By s 40, it is provided that trustees of land (with immaterial exceptions) shall not exceed four in number, that no new trustee shall be appointed until the number falls below four, and that thereafter the number

shall not be increased beyond four. No similar provisions exist in relation to trusts of property other than lands. By s 42, it is provided that it is not obligatory to appoint more than one trustee where only one trustee was originally appointed (although, it is, of course, permissible to do so); that it is not obligatory to fill up the original number of trustees where more than two were originally appointed; but that, except where only one trustee was originally appointed, and a sole trustee when appointed will be able to give valid receipts for all capital money (see s 18(2)), a trustee shall not be discharged from his or her trust unless there will be either the Public Trustee or a trustee company or at least two individuals to act as trustees to perform the trusts. Section 42(1)(a) provides that, subject to the above restrictions, the number of trustees may be increased.

Queensland [15-25] By s 11, no trustees of any property (not merely land) may be appointed if, as a result of the appointment, the number of the trustees would be increased beyond four. Section 11(2)(a) provides that trusts created after the date of assent shall have no more than four trustees, and it should be noted that this applies to original as well as to appointed trustees. Section 12(2)(a) provides that the number of trustees may, by appointment, be increased, but not beyond four in number. Section 12(2)(c) provides that it is not obligatory to fill up the original number of trustees where two or more trustees were originally appointed, but that a trustee is not discharged under the section unless after the appointment there will remain either a trustee corporation, or at least two individuals to act as trustees of the trust, or, in the case of certain trusts, ‘a local government’.

South Australia [15-26] The position in South Australia is much the same as in New South Wales. Unlike Victoria and Queensland, there is no maximum number of trustees beyond which no appointment is permitted; s 14(2)(a) provides that the number of trustees may be increased; and s 14(2)(c) is a provision in all material respects identical with s 12(2)(c) of the Queensland Act noted above.

Western Australia

[15-27] Section 7(2)(a) provides for increase in trustees by appointment, but not in excess of four in number; and s 7(2)(c) is in almost identical terms with s 12(2)(c) of the Queensland Act.

Tasmania [15-28] The Tasmanian Act produces the same result as that obtaining in New South Wales, the Australian Capital Territory and South Australia. There is no maximum number of trustees beyond which no appointment is permissible; s 13(2)(a) enables the number of trustees to be increased; s 13(2)(c) is, mutatis mutandis, in the same terms as s 12(2)(c) of the Queensland Act.

Northern Territory [15-29] There is again no maximum number of trustees, and s 11(2)(a) enables the number to be increased. Section 11(2)(c) is again identical with s 12(2)(c) of the Queensland Act.

Additional Trustees New South Wales and the Australian Capital Territory [15-30] It will be noted that the power to increase the number of trustees is to be exercised on the appointment of a new trustee for the whole or any part of the trust property and is therefore exercisable only where an appointment is being made to fill a vacancy occurring in some or one of the ways mentioned in the section. [page 299] If it is considered desirable to appoint additional trustees, but there is no vacancy which has occurred in one of the ways mentioned in s 6(2), recourse may be had to s 7 of the Trustee Act 1925 in each jurisdiction. The NSW Act is in the following terms and the ACT Act is substantially similar: 7. (1) A new trustee may by registered deed be appointed in addition to any existing trustee or trustees.

(2) A new trustee may be so appointed in any of the following cases, namely — (a) where a sole trustee other than the NSW Trustee or a trustee company is or has been originally appointed to act in a trust, or (b) where, in the case of any trust, there are not more than three trustees, either original or substituted, and whether appointed by the Court or otherwise, and none of the trustees is the NSW Trustee or a trustee company. (3) The person to be appointed a trustee may be the person, or one of the persons, by whom or with whose consent the appointment is or may be made. (4) The appointment may be made by the following persons, namely — (a) by the person or persons nominated for the purposes of appointing new trustees by the instrument, if any, creating the trust, or (b) if there is no such person, or no such person able and willing to act, then by the trustee or trustees for the time being. (5) The appointment may be made for the whole or any part of the trust property, and on the appointment — (a) two or more trustees may be appointed concurrently, (b) the number of trustees shall not be increased beyond four. (6) Except as provided by the instrument, if any, creating the trust, or by any statutory enactment to the contrary, it shall not be obligatory to appoint any additional trustee. (7) Subsections (7), (8), (10), (12), (13), and (14) of section 6 shall apply to the appointment of an additional trustee.

It will be noted that certain of the subsections are in terms similar to s 6, and that by s 7(7) a number of the subsections of s 6 are made directly to apply to the appointment of additional trustees.

Victoria and Western Australia [15-31] The equivalent provisions to those contained in s 7 of the New South Wales and Australian Capital Territory Acts are contained in s 41(6) of the Victorian Act, which is in the following terms: 41. (6) Where in the case of any trust, there are not more than three trustees (none of them being a trustee company) — (a) the person or persons nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust; or (b) if there is no such person, or no such person able and willing to act, the trustee or trustees for the time being — may, by writing, appoint another person or other persons to be an additional trustee or additional trustees, but it shall not be obligatory to appoint any additional trustee, unless the instrument (if any) creating the trust, or any statutory enactment provides to the contrary, nor shall the number of trustees be increased beyond four by virtue of any such appointment.

Section 7(5) of the Western Australian Act is to the same effect.

Queensland [15-32] In s 12(5) of the Queensland Act, the provisions of the Victorian subsection are repeated, save that the number of trustees may be increased beyond four with ministerial approval.

South Australia [15-33] Different provisions appear in the South Australian Act from those of the other jurisdictions. They are contained in s 14B, which is in the following terms: 14B. (1) The person or persons nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust, or if there is no such person, or no such person able and

[page 300] willing to act, then the trustees for the time being or the representatives of the last surviving or continuing trustee, may by writing appoint one or more additional trustees. (2) Every additional trustee so appointed, as well before as after all the trust property becomes by law or by assurance or otherwise vested in him, shall have the same powers authorities and discretions, and may in all respects act as if he had been originally appointed a trustee by the instrument (if any) creating the trust. (3) On the appointment of an additional trustee any assurance or thing requisite for the vesting of the trust property or any part thereof jointly in the trustees shall be executed or done. (4) This section shall apply unless the instrument (if any) creating the trust expressly provides that it shall not apply, or expressly forbids the appointment of additional trustees. …

Tasmania and the Northern Territory [15-34] The Tasmanian and Northern Territory Acts contain no provisions for the appointment of additional trustees.

Separate Sets of Trustees New South Wales and the Australian Capital Territory [15-35] There is now statutory provision for the appointment of separate sets

of trustees for separate portions of the trust property that are to be held upon trusts distinct from those to which other portions of the trust property are subject; these provisions appear in s 6(5) of the Trustee Act 1925 (NSW), the terms of which are as follows: 6. (5) The appointment may be made for the whole or any part of the trust property, and on the appointment: (a) two or more trustees may be appointed concurrently, (b) the number of trustees may be increased, but not beyond four, (c) a separate set of trustees may be appointed for any distinct part of the trust property, that is to say, for any part for the time being held on trusts distinct from those relating to any other part or parts, notwithstanding that no new trustees or trustee are or is to be appointed for other parts, provided that the number of trustees in any separate set shall not exceed four, (d) any existing trustee may be appointed or remain one of the separate set of trustees, (e) if only one trustee was originally appointed, then one separate trustee may be appointed for the distinct part, (f) it shall not be obligatory to appoint more than one new trustee where only one trustee was originally appointed, or to fill up the original number of trustees where more than two trustees were originally appointed.

In the Australian Capital Territory, the same effect is achieved by s 6(5)–(6). It appears that the power of appointing separate sets of trustees is exercisable only on the appointment of a new trustee for the whole or any part of trust property in circumstances to which s 6 of the Trustee Act 1925 is applicable, but that the power is not exercisable when additional trustees are appointed under s 7 alone. However, it will usually be found that on the appointment of the separate trustees, one of the old trustees desires to be discharged from some of the trusts or powers reposed in or conferred on that trustee (s 6(2)(d)) and that s 6 will therefore be applicable. The result is that trustees may retire as to part of the trust property held upon trusts distinct from those under which the residue is held and a separate set of trustees may be appointed for that part. In other words, if A and B are trustees of trust property which contains separate trusts of distinct properties or funds, A and B may retire so far as one of the trusts is concerned and new trustees, C and D, can be appointed for that trust, leaving A and B trustees of the residue,92 [page 301]

or if A and B are trustees of two separate trusts of distinct parts of a trust property and B dies, A, C and D may be appointed trustees of one part, leaving A still trustee of the residue.93 It is sufficient that the trusts should be distinct at the time of appointment. Whether the trusts were originally partly identical with those of other parts of the trust property or may subsequently upon a certain event coalesce with them, separate sets of trustees may be appointed, provided they are distinct when the appointment is made.94 If any vacancy should occur in a set of the trustees, the person having the power of appointment to fill the vacancy would be in the first instance the person nominated in the trust instrument. If there were no such person, it is submitted that the surviving trustees or trustee of that set in which the vacancy occurs would be the persons or person to exercise the power of appointment to fill the vacancy. That is to say, after a separate set of trustees has been appointed, that trust thereafter stands on its own, independently of the original trustees, and ss 6 and 7 of the Trustee Act 1925 apply to that set of trustees just as they apply to any other body of trustees.

Victoria [15-36] Separate trustees are provided for in s 42(1)(b), which is in the following terms: 42. (1) On the appointment of a trustee for the whole or any part of trust property — … (b) a separate set of trustees, not exceeding four, may be appointed for any part of the trust property held on trusts distinct from those relating to any other part or parts of the trust property, notwithstanding that no new trustees or trustee are or is to be appointed for other parts of the trust property, and any existing trustee may be appointed or remain one of such separate set of trustees, or, if only one trustee was originally appointed, then, save as hereinafter provided, one separate trustee may be so appointed; …

Queensland [15-37] Separate trustees are provided for by s 12(2)(b), which is in the following terms: 12. (2) On the appointment of a trustee or trustees for the whole or any part of the trust property — …

(b) a separate set of trustees may be appointed for any part of the trust property held on trusts distinct from those relating to any other part, and whether or not new trustees are or are to be appointed for any other part of the trust property; and any existing trustee may be appointed or remain 1 of the separate set of trustees; or if only 1 trustee were originally appointed, then 1 separate trustee may be so appointed for the part of the trust first in this paragraph mentioned; …

It should be noted that the Queensland provision is identical with the Victorian provision, except that the words ‘not exceeding four’ are omitted. However, having regard to s 11 of the Queensland Act, it is conceived that the result is the same in both states, save for the ministerial power in Queensland to approve a number greater than four.

Western Australia [15-38] Separate trustees are provided for in s 7(2)(b), which is identical with Queensland’s s 12(2)(b).

South Australia [15-39] Separate trustees are provided for in s 14A(1) of the Act which provides that a separate set of trustees may, if it be deemed expedient, be appointed for any part of the trust property held on trusts distinct from those relating to any other part or parts of the trust property. [page 302] In South Australia, there is no limit on the number of trustees who may be appointed separate trustees.

Tasmania [15-40] Separate trustees are provided for in s 13(2)(b), which is in the following terms: 13. (2) On the appointment of a new trustee for the whole or any part of trust property — … (b) a separate set of trustees may be appointed for any part of the trust property, whether held on trusts distinct from those relating to any other part of the trust property or not, and notwithstanding that no new trustees are to be appointed for other parts of the trust

property; and any existing trustee may be appointed or remain one of such separate set of trustees, or, if only one trustee was originally appointed, then one separate trustee may be so appointed for the first-mentioned part; …

It should be noted that in Tasmania, alone of the jurisdictions, separate trustees may be appointed over property even if that property is not held on distinct trusts. It should also be noted there is no restriction to four in the number of trustees that may be appointed.

Northern Territory [15-41] The Northern Territory Act contains no provisions of the kind discussed in [15-35]–[15-40].

Powers of New Trustees [15-42] New trustees appointed under the foregoing provisions are invested with the same powers as if they had been appointed originally by the trust instrument. In each jurisdiction there is legislation substantially providing that every new trustee appointed under this section, before as well as after all the trust property becomes by law vested in the new trustee, shall have the same powers, authorities and discretions, and may in all respects act as if the new trustee had been originally appointed a trustee by the instrument, if any, creating the trust.95 Powers of trustees, unless otherwise expressly stated by a settlor, are annexed to the office of trustee as incident to that office and are exercisable by the holders of the office for the time being: Every power given to trustees which enables them to deal with or affect the trust property is prima facie given to them ex officio as an incident of their office and passes with the office to the holders or holder thereof for the time being. Whether a power is so given ex officio or not depends in each case on the construction of the document giving it, but the mere fact that the power is one requiring the exercise of a very wide personal discretion is not enough to exclude the prima facie presumption …. The testator’s reliance on the individuals to the exclusion of the holders of the office for the time being must be expressed in clear and apt language.96

Costs [15-43] It is provided by all the Trustee Acts97 that trustees may reimburse themselves, or pay or discharge out of the trust property all expenses incurred in

or about the execution of their trusts or powers. Where new trustees are appointed under a power in an instrument, the costs of making the change, including the cost of the donee of the power of appointment, are paid out of the estate. [page 303] In Harvey v Olliver,98 the following were allowed: (1) Costs paid by the new trustees to the previous trustees to settle the costs of the previous trustees before the transfer was made. (2) Costs of obtaining a transfer of the trust property. (3) Costs of an examination by the new trustees as to what the trust property consisted of. (4) Costs of the donee of the power of appointment in connection with the appointment. In Re Brackenbury’s Trusts,99 reversioners had to pay the costs of a petition by them for the appointment of an additional trustee of a legacy bequeathed to a sole trustee. It is not enough to deprive trustees of their right to recoup their costs out of the trust fund that the claim is a claim to recover money from them for the benefit of the trust. If the trustees succeed, then the claim was not well-founded, and they cannot be denied their right of recoupment. Even if the claim fails, or particular arguments fail, in either case leading to an adverse costs order against the trustees, they may be able to obtain recoupment in relation to it.100 The right of indemnity accrues at the time the obligation is incurred and is not subsequently lost by cessation of office, whether by retirement or removal.101

Evidentiary [15-44] In Victoria, Queensland and Western Australia, but not in the other jurisdictions, there are convenient evidentiary provisions relating to the appointment of new trustees. Thus, in Victoria, it is provided by s 43 as follows: 43. (1) A statement contained in any instrument by which a new trustee is appointed, to the effect that a trustee —

(a) is dead; or (b) has remained out of Victoria for more than one year without having properly delegated the execution of the trust; or (c) desires to be discharged from all or any of the trusts or powers reposed in or conferred upon him; or (d) refuses or is unfit to act, or is incapable of acting in all or any of the trusts or powers reposed in or conferred on him; or (e) is a minor; or (f) is not entitled to a beneficial interest in the trust property in possession — shall in favour of a subsequent purchaser in good faith, be conclusive evidence of the matter stated. (2) In favour of any subsequent purchaser in good faith any appointment of a new trustee depending on that statement, and any vesting declaration, express or implied, depending on the appointment, shall be valid. (3) The protection afforded to a purchaser by this section shall extend to the Registrar-General, Registrar of Titles, or other person registering or certifying title.

The equivalent provisions in Queensland and Western Australia are contained in ss 13 and 8 of the respective Acts of those states. [page 304]

Miscellaneous [15-45] In all jurisdictions except Victoria it is provided that the power to appoint a new trustee does not authorise the appointment of a new executor or administrator.102 In Victoria, it would seem that this limitation must be implied. In Victoria, alone of the jurisdictions, by s 41(9) there is the following provision dealing with the appointment of a new trustee in place of a trustee of unsound mind. 41. (9) If a person who is a patient within the meaning of the Mental Health Act 1986 is a trustee of property and is entitled in possession to some beneficial interest in the property no appointment of a new trustee in his or her place can be made by the continuing trustee or trustees under this section unless leave has been given — (a) in the case of a represented person within the meaning of the Guardianship and Administration Board Act 1986, by the guardian or administrator; or (b) in any other case, by the Court.

The vesting of property in the new or additional trustees consequent upon

their appointment is discussed below.103 So is the appointment of a new trustee by way of temporary delegation of the trusts.104

Appointment by the Court Inherent and statutory power [15-46] The court has a general jurisdiction in regard to the appointment of new trustees where the court considers it expedient to appoint.105 This jurisdiction was originally part of the inherent jurisdiction of the Court of Chancery in England which was conferred in due course on the various Supreme Courts in Australia. In New South Wales, s 70 of the Trustee Act 1925 is in the following terms: 70. (1) The Court may make an order for the appointment of a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. (2) The appointment may be made whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient difficult or impracticable so to do without the assistance of the Court. (3) In particular and without prejudice to the generality of any other provision of this section, the Court may make an order for the appointment of a new trustee in substitution for a trustee who is convicted of a serious indictable offence, or is a bankrupt, or being a corporation is in liquidation or is dissolved. (4) In the case of any trust for a charity the Court may make an order for the appointment of a new trustee on such evidence of the trust as the Court deems sufficient. (5) This section shall be deemed to authorise the Court to make an order for the reappointment of the continuing trustees alone as new trustees. (6) An order under this section, and any consequential vesting order or conveyance, shall not operate further or otherwise as a discharge to any former or continuing trustee than an appointment of new trustees under any power for that purpose contained in any instrument would have operated.

[page 305] (7) Repealed. (8) Every trustee appointed under this section shall, as well before as after the trust property becomes vested in the trustee, have the same powers authorities and discretions, and may in all respects act as if the trustee had been originally appointed a trustee by the instrument, if any, creating the trust.

(9) Nothing in this section shall give power to appoint an executor or administrator.

All other jurisdictions have similar provisions.106 Among the conclusions reached in the authorities on these provisions are the following.107 ‘Expedient’ means ‘advantageous or appropriate or suitable to the circumstances of the case’. It is expedient to appoint a new trustee if it is conducive to, or fit or proper or suitable, having regard to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred on the trustees. The dominant consideration is the welfare of the beneficiaries, not the imposition of a sanction or punishment upon the trustee as a consequence of misconduct. The principal element in considering the welfare of the beneficiaries is the safety of the trust estate. A lack of confidence in the trustee’s further administration of the trust is sufficient to justify removal. It is not necessary to establish misconduct. ‘Misconduct’ extends beyond deliberate misconduct. It applies to a trustee who has failed to understand the obligations applying in the administration of the trust. The general jurisdiction of the court is not affected either by a power in the instrument creating the trust or by the statutory power to make appointments out of court already discussed. In a proper case the court may act notwithstanding these powers.108 Where a vacancy occurred in a body of trustees appointed under a private Act of Parliament, the Act making no provision for the appointment of new trustees, the court filled the vacancy.109 Nevertheless, the court generally will not act where it is possible for an appointment to be made pursuant to the statutory powers to make appointments out of court110 except perhaps where the applicant has to apply to the court for other purposes.111 [15-47] If it is important (and it is not easy to imagine circumstances where it is) it is submitted that the inherent jurisdiction to appoint new trustees is not ousted by the creation of the statutory jurisdiction.

Infant trustees [15-48] If the settlor has made a void appointment of an infant as trustee, the court will appoint a trustee in place of the infant.

Bankrupt trustee [15-49] If a trustee becomes bankrupt, a new trustee may be appointed on the application of a co-trustee or a beneficiary.112 Although the bankrupt trustee may be removed, the trust property does not become vested in the bankrupt’s trustee in bankruptcy. Rather, it remains vested in the bankrupt until vested in a newly appointed trustee under the will or settlement.113 [page 306] It has been held that a bankrupt trustee is unfit to act and therefore an appointment can be made out of court.114

Convict trustee [15-50] If a trustee is convicted of a felony, the court will appoint a trustee in the place of that trustee.

Incorporated body dissolved [15-51] Where an incorporated body has been dissolved or an unincorporated body has ceased to exist, the court will appoint new trustees of the property.115 The position of a company trustee which was in liquidation, although not dissolved, was considered by Needham J in Re Crest Realty Pty Ltd (in liq).116 His Honour held that since the trust property was not affected by the liquidation, nor the operations of the trust terminated by the cessation of the company’s business, the company remained trustee until new trustees were appointed by the court, the liquidator in the company’s name having all the powers and duties in the interim which the Trustee Act (and presumably any trust instrument) invested the trustee with. What his Honour did not have to deal with was the question whether the company should be removed from the trusteeship and new trustees appointed. Bearing in mind that the law is that ‘a trustee who becomes bankrupt is removed almost as of course’, as Latham CJ said in Miller v Cameron,117 it would seem that an application to appoint new trustees would be almost certainly assured of success.118 It has been held

expedient to appoint a new trustee to replace a trustee which had entered provisional liquidation and which had been removed from other trusts.119

Trustee missing [15-52] The court will appoint a trustee in place of one who cannot be found.120 An ex parte application by residuary beneficiaries to have themselves appointed as substitute executors, in circumstances where the executor was missing, was held not to be open under s 34(1) of the Administration and Probate Act 1958 (Vic). However, as administration of the estate was complete, the missing executor was held to have become a trustee, and was therefore capable of replacement by the residuary beneficiaries under s 48(1) of the Trustee Act 1958 (Vic).121

Mental or physical incapacity [15-53] The court itself may appoint a new trustee in the place of one who is of unsound mind. The court has jurisdiction to appoint a new trustee in place of one who has become incapable, as for instance, through age and infirmity, of acting in the trusts.122 [page 307]

Trustee outside jurisdiction [15-54] The court may, without their consent, remove trustees who are residing permanently out of the state and appoint new trustees in their place.123 But the court will not do so if the only ground is that the trustee has left the state and the date of return is uncertain.124 The appointment may be made out of court, if the absence meets the description set out in [15-11].

Constructive trustees [15-55] The court’s jurisdiction extends to appointing new trustees of constructive trusts.125 When executors have completed their executorial duties

and they hold the estate as trustees, the court may appoint new trustees.126 None of the Acts permits the several courts to appoint an executor or administrator, under cover of appointing a new trustee.

Breach of trust [15-56] In jurisdictions where the court’s statutory power to appoint new trustees is invoked summarily, and the court’s inherent power to remove trustees is invoked by more formal procedure, the court will not, on a summary application, try a disputed question of fact; nor will it remove a trustee against his or her will.127 Nor, on an application made summarily, will it try charges against a trustee. To effect these purposes, the more formal procedures must be instituted.128

Persons appointed by the court [15-57] The court will not necessarily appoint any person who is suggested as a trustee. In cases where the power of appointing new trustees is in donees of the power under the trust instrument or under the statute, the court cannot interfere unless an action has been instituted, and even in that case the court does not appoint but, by requiring all appointments in such a case to be submitted for its approval, takes care to see that proper persons are appointed. In Re Tempest,129 the following were laid down by Turner LJ as general rules upon which the courts acted in the appointment of new trustees: (1) The court will have regard to the wishes of the persons by whom the trust has been created, if expressed in the instrument creating the trust or clearly to be collected from it. (2) The court will not appoint a person to be trustee with a view to the interest of some of the persons interested under the trust, in opposition either to the wishes of the testator or to the interests of others of the beneficiaries. (3) The court will have regard to the question whether the appointment of a particular person will promote or impede the execution of the trust. In this case, the court refused to appoint as a new trustee a person nominated by a member of the testator’s family who had been specially excluded from the management of the trust property and who had been nominated in the interests of a particular beneficiary.130

[page 308] A discussion of criteria for appointment by the court appears in Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (in prov liq).131 In that case, it was held that Re Tempest provided general guidelines only, and did not prevent the court, at the suit of the unsecured creditors, from appointing a natural person (a receiver) despite a provision in the trust instrument calling for a corporate trustee. No corporate trustee was willing to act in the circumstances. It was held that the deed contained no express prohibition, and that even if it did so, that would not, of itself, lead to the result that a trustee falling within the prohibited class would not be appointed.132 Circumstances of which the court can take notice in removing a trustee were said to be the financial stability of the current trustee, whether the trustee has been removed as trustee from other trusts formerly administered by it, or whether the current appointment gives rise to potential conflicts of interest.133 The court will require undertakings to ensure that the previous trustee is not deprived of its right of indemnity by the appointment of a new trustee. Although the court will have regard to the settlor’s wishes, it is not bound by them, and it is entitled to depart from them for good cause.134 The general principle is that the court has the task of appointing the person best suited to administer the trust in the circumstances prevailing.135

Continuing trustees [15-58] In New South Wales under the statutes prior to the enactment of s 8 of the Trustee Act Amendment Act 1902 (now repealed and replaced by the Trustee Act 1925), the court would not appoint continuing trustees in place of themselves and a trustee who could not or would not act.136 Where there is any reasonable question whether trustees appointed under a power have been duly appointed, it may be quite right for the court in a proper case to appoint them. But when they have unquestionably been duly appointed, the reappointment of them by the court is a nullity, and it is, in my opinion, wrong for the court to profess to appoint them trustees for the purpose of making a vesting-order in a form in which it can only be made upon an appointment of new trustees.137

However, this difficulty was removed by the 1902 Act and by s 70(5) of the Trustee Act 1925, and now the court can make an order for the reappointment of the continuing trustees alone as new trustees.

Although the Acts of the other jurisdictions contain no equivalent to s 70(5), their language is not incompatible with the retention of the continuing trustees in office.

Beneficiary [15-59] The court will not appoint a beneficiary138 or the spouse of a beneficiary139 unless no other suitable person can be found to undertake the office or there are other special [page 309] circumstances.140 In Re Dixon,141 the sole beneficiary under a trust was appointed because the trustees were dead and there was no personal representative of the last surviving trustee, who had died intestate. As the simplest method of vesting the trust property in him the court appointed the beneficiary trustee for himself. In Re Godfrey’s Trusts,142 a vesting order was made vesting the trust property (copyholds) in the person absolutely entitled, the trustee having died intestate without an heir.143

Near relative of beneficiary [15-60] As a general rule, the court will not appoint a near relative of the cestui que trust to be a trustee. In Wilding v Bolder,144 Sir John Romilly MR stated that he would not appoint a near relative to be a trustee unless he found it absolutely impossible to get someone unconnected with the family to undertake that office.145

Near relative of trustee [15-61] Where there is more than one trustee the trustees should be independent persons. Relatives will not, in general, be appointed trustees together. In Re Knowles’ Settled Estates,146 two brothers were proposed as trustees, but the court objected and insisted on two independent trustees. In Re Norris,147 the surviving trustee, who was solicitor to the trust, appointed his son to be his co-trustee, the son being also a partner in his father’s business as

solicitor. The trust was being administered by the court, and the court, acting upon the principle that trustees should be independent persons, refused to sanction the appointment.

Partner [15-62] The partner of a surviving or continuing trustee will not be appointed by the court in place of a retiring or deceased trustee. In the present case the trustees will exercise their functions untrammelled by the supervision of the Court, and the safety of the fund will depend entirely upon the ability and honesty of the trustees of the settlement. It is plain to me that this Court ought to see that the cestuis que trust shall have the benefit of the solvency as well as the assistance of two independent persons. If I sanctioned the appointment of two partners as trustees, it is plain that the cestuis que trust would practically have but one trustee to rely upon both as to solvency, and with respect to every question connected with the administration of the trust.148

Bankrupt [15-63] A bankrupt is, in ordinary circumstances, undoubtedly an unsuitable person to be appointed a new trustee. The temptations to misuse trust funds are greater in the case of persons in necessitous circumstances than in the case of persons of means. Furthermore, persons who may not have shown skill and prudence in the management of their own affairs cannot be regarded as suitable persons to manage the affairs of other people. [page 310]

Solicitor for beneficiary [15-64] Although the court may appoint the solicitor to a beneficiary or tenant for life to be a trustee,149 as a rule it will not do so.150 The gentleman is no doubt a most fit person to be a trustee, and the only objection to him is that he acts as solicitor for the tenant for life. Now the appointment of trustees is required to impose a check upon the extensive powers conferred by the [Settled] Land Act, upon the tenant for life, and the 44th section contemplates the probability of there being differences between the trustees and the tenant for life. I have no doubt that Mr Wood, as solicitor of the tenant for life, would advise him to the best of his ability, and recommend him to exercise his powers with a proper regard to the interests of the remaindermen. But solicitors, like judges, are fallible, and how could Mr Wood, as one of the trustees, exercise a proper judgment on their behalf upon questions on

which he had advised the tenant for life? It would be Mr Wood as trustee putting a check on Mr Wood as solicitor to the tenant for life, and he would be placed in a false position.151

In Re Orde,152 the court refused to sanction the appointment of the solicitor to the beneficiaries who were petitioning for the appointment of new trustees. Although, as a rule, the court will not appoint the solicitor to the tenant for life to be a trustee, this does not prevent a donee of the power of appointing new trustees from making such an appointment.153 In Re Cotter,154 the donee of a power to appoint appointed his own solicitor. The court, although expressing the opinion that the appointment was undesirable, refused to interfere.

Feme-sole [15-65] At one time, the court would refuse to appoint a feme-sole to be a trustee.155 But changes in the legal position of women have meant that now a feme-sole may be appointed by the court provided, as is the case in all appointments made by the court, the court is satisfied that she is perfectly capable of acting in the trust.156

Spouse of intestate deceased [15-66] The widow of a man who died intestate has been held not to be entitled to succeed in an application to have herself substituted for the Public Trustee under s 27 of the Trustee Act (NT).157 It is submitted that the success of such an application should depend on the particular facts.

Persons out of the jurisdiction [15-67] The court may appoint persons out of the jurisdiction to be trustees, but will do so only in exceptional circumstances. Such persons were appointed in Re Freeman’s Settlement Trusts,158 where all the beneficiaries were resident either in Canada or in the United States. One English trustee and two Canadian trustees were appointed, subject to an undertaking by the Canadian trustees that they should not, on a vacancy occurring, appoint any new trustee resident out of the jurisdiction without the consent of the court. In Re Simpson,159 where an infant beneficiary in Australia was entitled to a share in realty in England and the infant’s

[page 311] consent was necessary to a proposed sale by the co-owners, two persons domiciled in Australia were appointed trustees. In Re Liddiard,160 two persons resident in Australia were appointed trustees of property in England, all the beneficiaries being resident in Australia.

Corporations [15-68] Formerly the court would not appoint a corporation, other than a trustee company whose powers were regulated by statute, as a trustee because a corporation could not hold trust property in joint tenancy with any cotrustee.161 Now, in all jurisdictions, a corporation can hold property in joint tenancy with individuals so that this objection is removed. However, the court might still be disinclined to appoint in the ordinary case a corporation, not being a natural person under the direct control of the court.

Number of trustees [15-69] The court, in making appointments of new trustees, is not bound to maintain the number of trustees nominated by the settlor or testator and will not always appoint a new trustee to fill a vacancy where several trustees remain.162 A reduction in number from four to three will be readily permitted,163 and so also a reduction from three to two if the estate is to be distributed immediately.164 Since the legislature now recognises two trustees as a sufficient number, it may well be that the court will regard two as sufficient without the proviso of immediate distribution which was formerly necessary. In any case, the court usually requires two trustees at least — it will not allow the property to be in the hands of a sole trustee, unless in very special cases, and this even though there was only one trustee appointed originally.165 Ordinarily, the court will not allow funds in court to be paid to a sole trustee unless all beneficiaries are sui juris and consent.166 However, a sole trustee has been appointed in the case of a small estate where the court was satisfied that the estate would not be endangered167 and, of course, the court does not hesitate to appoint a trustee company or the Public Trustee as a sole trustee.168

Separate sets of trustees [15-70] Apart from the statutory power to appoint new trustees out of court, the court has jurisdiction to appoint separate sets of trustees where part of the trust property is held on trusts distinct from the remainder and to permit the existing trustees or some of them to retire from those trusts.169 However, this jurisdiction will not be exercised against the will of the trustees.170

Vesting of property in new trustees [15-71] On appointment by the court, trust property is not automatically vested in a new trustee. A vesting order is necessary.171 This should be contrasted with the position as to the [page 312] statutory appointment of trustees out of court, where, generally speaking, the trust property vests on execution and registration of the deed of appointment.

Practice [15-72] The statutory jurisdiction of the court (as opposed to its inherent jurisdiction) to appoint new trustees is usually involved by way of summons supported by affidavit evidence. Any beneficiary or any person duly appointed as trustee may make the application. All beneficiaries reasonably accessible should be served, although the court can dispense with notice under certain circumstances.172 In applications for the appointment of trustee companies, only persons entitled to the immediate receipt of corpus or income have been required to be served.173 The court has wide powers to provide for the costs of the application.174

Acceptance and Disclaimer of Trust [15-73] Before any property can indefeasibly vest in a transferee, that person

must assent.175 If property is transferred to a transferee without the transferee’s knowledge, then that property will vest in the transferee subject to the transferee’s right, when informed, to disclaim it.176 These principles govern the law relating to the acceptance and disclaimer of trusts. A person who has been appointed a trustee does not assume that office until that person has accepted the trust, which that person may do expressly, as by executing the trust instrument or expressly accepting the trust, or impliedly.177 Acceptance will be implied from acts which are inconsistent with disclaimer, such as interference with the trust property;178 or allowing actions to be instituted in the trustee’s name;179 or exercising any other acts of ownership; or acting in the trusts or part of them; or having been appointed executor and trustee, taking out probate.180 A person cannot, however, be compelled to accept appointment as trustee181 even if that person has promised to act as such,182 but that person must disclaim the trust before having done anything which indicates an intention to accept it. One cannot, after accepting appointment as trustee and acting in the trust, disclaim the office of trustee and the trust property.183 The usual method of effecting a disclaimer is by deed, but a trustee may impliedly disclaim to act as trustee by refusing orally or by conduct.184 Merely remaining quiescent is equivocal and may, according to circumstances, be evidence of disclaimer or acceptance.185 But it would appear, although the position is by no means clear, that a presumption of disclaimer is strengthened by every year of inaction.186 [page 313] A person appointed trustee must accept or disclaim the whole trust and trust property. A disclaimer of part, even though separate and distinct from the rest, will be ineffective.187 A disclaimer by a trustee, even if that trustee is the sole trustee, does not put an end to the trust.188 But it takes effect, ab initio, to vest the property in the trustees who consent to act,189 or, if none consents to act, in the settlor, or, if the settlor is dead, the settlor’s personal representatives, who hold, until a new

trustee is appointed, upon the trusts specified in the settlement or will.190 The disclaimer of the trust operates also as a disclaimer of the trust property191 and of any benefit attached to the office of trustee,192 but not of independent benefits conferred by the trust instrument.193

Ceasing to be a Trustee [15-74] A trustee may cease to be a trustee by death, by retirement, by removal by the court or by completely executing the trusts and handing the trust property over to the beneficiaries. It is proposed now to deal with the first three cases, in all of which a trust continues in respect of the property.

Death of a Trustee [15-75] Any trustee is clothed with the office of trustee and an estate in the trust property. Upon the death of a trustee, whether a sole trustee or one of a number of trustees, the office does not devolve on the trustee’s legal representatives. No one can legally execute a trust unless nominated so to do by the settlor or testator or appointed so to do by or by direction of such settlor or testator, by Act of Parliament or by the court.194 Therefore, if the deceased trustee was the sole or last surviving trustee, the office, where the trust is an active trust, becomes vacant. The legal representative of such a deceased trustee has no power to act in the execution of the trust although, where there are no active duties to perform, the legal representative has power to transmit the property to persons absolutely entitled.195 However, the legal representative of a deceased trustee, if indicated by the trust instrument as a person capable of executing the trusts, will have power so to do.196 If the deceased trustee leaves surviving a co-trustee or co-trustees, the office of trustee remains in the survivors who can exercise all the powers vested in all the trustees, unless a contrary intention is expressed in the trust instrument. In New South Wales, s 57(1) of the Trustee Act 1925 provides:197 57. (1) Where a power or trust is given to or vested in two or more trustees jointly, then, unless the contrary is expressed in the instrument, if any, creating the power or trust, the same may be exercised or performed by the survivor or survivors of them for the time being.

[page 314] In regard to the estate vested in a trustee, where the deceased trustee was the sole or last surviving trustee, the estate passes to the trustee’s legal representative in the same way as the deceased’s beneficial property and the legal representative will be obliged to hold the property until new trustees are appointed and the trust property is vested in them. Where the deceased trustee is survived by a co-trustee or co-trustees, the trust estate will usually vest in the survivor or survivors, because trustees usually hold trust property as joint tenants. Executors and administrators are in a different position from trustees in regard to devolution of the testator’s or intestate’s estate on death. The executor of a sole or last surviving executor receives not only the unadministered estate but also the office previously held by the deceased executor. The executor of an administrator, however, receives neither the office nor the estate previously held by the deceased as administrator. This is so even though the deceased may have been administrator c.t.a.198

Retirement of Trustees Conditions for retirement [15-76] A trustee who has not disclaimed the trusts cannot retire from the trusteeship unless: (a) the trust instrument expressly or impliedly199 authorises the trustee so to do; or (b) the trustee retires as a consequence of the appointment of a new trustee out of court under the statutory power already considered; or (c) without any appointment of a new trustee, the trustee exercises a statutory right to retire; or (d) the trustee is permitted to retire by the court. It had been thought that a trustee could retire with the consent of all beneficiaries being sui juris.200 But in view of Re Brockbank,201 it would appear

that this is not correct except to the extent that a trust can be brought to an end entirely.

Trust instrument provides for retirement [15-77] Since the provisions of the trust instrument primarily govern not only appointment but also retirement of trustees, a trustee, without the consent of any person or of the court, can retire when that trustee is by clear words given the right so to do by the trust instrument. The words of the instrument will be strictly construed.202

Retirement on the appointment of a new trustee out of court [15-78] Where one of several trustees desires to retire, the donee of the power of appointing new trustees or, if there is no such person or no such person able and willing to act, then the continuing trustees or trustee may, if they are willing to do so, appoint a new trustee in place of the trustee desiring to retire.203 If the donee of the power is not able and willing to appoint a new trustee, and if the continuing trustees or trustee are likewise unwilling, the only course open to the trustee who desires to retire is to make application to the court, because the lack of consent would also prevent retirement out of court under the statutory provision. However, in contrast to the provisions relating to retirement out of court, a trustee may retire under the [page 315] provisions relating to appointment of a new trustee out of court by the appointment of a new trustee in the place of the retiring trustee without the consent of the co-trustee or co-trustees, provided the retiring trustee obtains the nomination of a new trustee from the donee of the power of appointing new trustees. Also under the retirement provisions, the trustees or trustee for the time being might all retire and themselves appoint new trustees in their place. Even though there may be a person nominated by the trust instrument to appoint new trustees and that person is not willing that the trustees should retire, it would appear that the trustees themselves could then appoint new trustees on the basis

that the person nominated is not able and willing to make the appointment. However, it has been suggested that, under these circumstances, the only safe course is to apply to the court.204

Retirement Out of Court without the Appointment of New Trustees New South Wales and the Australian Capital Territory [15-79] Section 8 of the Trustee Act 1925 (NSW) provides as follows: 8. (1) A trustee may by registered deed retire from the trust without any new trustee being appointed in the trustee’s place. (2) A trustee may not so retire, unless the trustee’s co-trustees and such other person, if any, as is empowered to appoint trustees, consent by the same or other registered deed to the retirement, and there will be left after the retirement at least two continuing trustees, or the NSW Trustee, or a trustee company, to perform the trust. (3) Two or more trustees may retire concurrently. (4) By the retirement the trustee shall be discharged from the trust provided that, if in order to vest any part of the trust property in the continuing trustees alone, it is necessary that it should be duly transferred, the retiring trustee shall not be discharged in respect of that part until it is duly transferred. (5) At any time after the registration of the deed or deeds of consent and retirement the continuing trustees shall have the same powers authorities and discretions, and may in all respects act as if the retiring trustee were wholly discharged from the trust. (6) Any conveyance or thing required for vesting the trust property in the continuing trustees alone shall be executed or done. (7) Nothing in this section shall authorise any retirement from the office of an executor or administrator. (8) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained. …

Section 8 of the Australian Capital Territory Act is to the same effect. Under this section, trustees may retire without a new trustee being appointed, provided that the minimum prescribed number of trustees remain. The consent of any donee of the power of appointing new trustees is necessary, as well as the consent of continuing trustees.

Victoria

[15-80] The equivalent section is s 44, which is in the following terms: 44. (1) This section applies where a trustee declares by writing that he is desirous of being discharged from all or any of the trusts reposed in him, and after his discharge there will be either a trustee company or at least two individuals to act as trustees to perform the trusts from which that trustee desires to be discharged.

[page 316] (2) In any case to which this section applies if the co-trustees and such other person (if any) as is empowered to appoint trustees consent by writing to the discharge of the trustee, and to the vesting in the co-trustees alone of the trust property, the trustee desirous of being discharged — (a) shall be deemed to have retired from the trusts from which he has declared he desires to be discharged; and (b) subject to subsection (3) of this section, shall, by the writing by which consent is given to his discharge, be discharged from the trusts under this Act — without any new trustee being appointed in his place. (3) Any conveyance requisite for vesting in the continuing trustees alone the property subject to the trusts from which the retiring trustee is to be discharged shall be executed or done; and in respect of any part of the trust property for the vesting of which in the continuing trustees a conveyance is necessary, the retiring trustee shall not be discharged until that part is duly conveyed.

The following provisions are all, except for one matter, the same as the Victorian section: Queensland s 14; South Australia s 15; Western Australia s 9; Tasmania s 14; and the Northern Territory s 12. That one matter relates to form: in South Australia, Tasmania and the Northern Territory, a deed is necessary, whereas in Victoria, Queensland and Western Australia, any writing will do. New South Wales and the Australian Capital Territory are different again: there, a registered deed is required.

Retirement by the Court205 [15-81] A trustee who desires to retire and is unable otherwise to do so may apply to the court of equity. The court has inherent jurisdiction to permit a trustee to retire, and will in practice do so, although it may put the trustee on terms as to costs.206

Summary jurisdiction

[15-82] The court may, in a summary way, permit a trustee to retire upon an application made under the various state Acts, pursuant to which the court may: (1) permit a trustee to retire where it appoints a new trustee in place of the retiring trustee;207 or (2) in New South Wales permit a trustee to retire, and make an order vesting the trust property in the continuing trustees alone;208 or (3) in New South Wales permit the trustees to retire from the trusts of part of the trust property held upon distinct trusts, and appoint a separate set of trustees of such part.209

In a suit [15-83] If a trustee desires to retire, and for any reason the summary procedure provided by the various Trustee Acts is not available, the court has inherent jurisdiction, in a suit to administer the trusts instituted by statement of claim or originating summons, to permit such retirement, whether a new trustee be appointed or not.210 Although the court will, in general, permit a trustee to retire if that trustee so wishes, the trustee is not entitled to do so at the expense of the trust estate unless there is some sufficient [page 317] ground for wishing to retire. If the trustee’s desire is capricious, the trustee will be ordered to pay the costs occasioned by the retirement, or be deprived of costs.211 A trustee has been allowed costs where the trustee was old and in declining health;212 where the trustee reasonably wished to retire but was prevented from doing so by the person who had power to appoint new trustees;213 where a co-trustee insisted on retiring;214 and where the estate has been embarrassed by the conduct of the beneficiaries.215 In all jurisdictions, the court has acted liberally in allowing costs where the retirement has been with a view to the appointment of a trustee company.216 The court has full discretion to make such order as it thinks fit as to costs, charges and expenses of parties to any such application under the Trustee Acts.217

Duty of Retiring Trustee [15-84] If a trustee retires in order to facilitate a breach of trust or knowing that the continuing or new trustees contemplate a breach of trust, the retiring trustee will be held liable for the consequences directly attributable to that breach.218 But it must be shown that the actual breach of trust which occurred was not merely the outcome of or rendered easy by the retirement, but was contemplated by the retiring trustee.219 The retiring trustee will, accordingly, not be liable for an entirely different breach from that which was contemplated when the trustee retired.220 A trustee will not be allowed to retire from a trust in order to effect a transaction between the trustee and the trust.221 A trustee should not pay over the trust fund until a valid appointment of a new trustee has been made. If the trustee pays over the trust funds to a new trustee invalidly appointed, the trustee may be held liable along with the new trustee for the subsequent loss of the trust funds.222 It is the duty of new trustees to inquire from the retiring trustees of what the property consists that is being handed over to them and what are the trusts. It is also their duty to look into the trust documents and papers to acquire a proper knowledge of the trust and of all matters affecting the trust. But having done this, they are not fixed with notice of encumbrances affecting the trust estate of which no notice appears among the trust documents and of which they have not been informed by the retiring trustees.223 Apparently they are not bound to inquire of the retiring trustees whether they have received notice of any encumbrance.224 Former trustees are not entitled to a release from new trustees, since the only person who can give, or is called on to give, a formal release is the beneficiary when the whole trust is brought to an end. A release under seal cannot usually be required.225 [page 318]

Removal of Trustees [15-85] A trustee may be removed from office in the following circumstances: (1) Pursuant to an express power contained in the trust instrument. Such a

power is unusual today, as the statutory powers of appointing a new trustee in the place of another are generally adequate, but an express power might be inserted in the trust instrument to meet exceptional circumstances, such as the possibility of the trustee engaging in a business which competes with that carried on by the trust. A modern example is the power of unit holders to remove the trustee of a unit trust: depending on the terms of the trust deed, a power of this kind may not be fiduciary, although it could not be exercised fraudulently.226 (2) Pursuant to the statutory powers already considered for appointing new trustees out of court,227 on the appointment of a new trustee in place of one who remains out of the state for more than the period permitted by the relevant legislation or remains out of New South Wales for more than two years, or who desires to be discharged, or who refuses or is unfit to act, or is incapable of acting. (3) By the court pursuant to the statutory power already considered, whenever it is expedient to appoint a new trustee and it is inexpedient, difficult or impracticable to do so without the assistance of the court.228 This legislation does not, however, give the court power to remove a trustee who desires to continue in office,229 unless, it has been said, there is no dispute as to the facts.230 That appears to be an unsatisfactory test: it is for the court to resolve any disputes of fact,231 and in fact a trustee who desires to continue may be removed if there are circumstances (for example, serious and ongoing breaches of trust) justifying this course.232 In a case233 in which the principles for removal of a trustee by the court under s 36 of the South Australian Act were discussed, an analogy was drawn with the revocation of a trust, which was said to involve similar considerations (interests of beneficiaries, security of the trust property, efficient and satisfactory execution of the trust and a faithful and sound exercise of the powers conferred upon the trustee)234 but a weightier decision. (4) By the court, pursuant to the court’s inherent jurisdiction.235 In the foregoing three instances, the removal of the trustee is connected with the appointment of a new trustee in the former trustee’s place, and the principles applicable are accordingly dealt with under the heading of ‘Appointment of New Trustees’.236 Where it is desired to remove a trustee without appointing a new trustee in the former trustee’s place, or where the statutory powers are not applicable as, for example, where the trustee is

able to continue and opposes being removed, recourse must be had to the inherent jurisdiction of the court. Generally speaking, the court has inherent jurisdiction to remove a trustee where the welfare of the beneficiaries and of the trust estate requires such a remedy — that is, where the court considers that the continuance of the trustee in the trust would prevent the proper execution of the trust.237 Such a power will be strictly construed.238 [page 319] In cases of positive misconduct, courts of equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce courts of equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to show a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.239 Thus the court will usually remove a trustee who has become bankrupt.240 Friction or hostility between the trustee and the beneficiaries is not of itself a reason for the removal of the trustee.241 But where the hostility is grounded on the mode in which the trust has been administered, or where it has been caused wholly or partially by substantial overcharges against the trust estate,242 it is certainly not to be disregarded. There are few reported cases on this topic, the reason no doubt being that if it appears clear that the continuance of the trustee would be detrimental to the execution of the trust, the trustee is advised by counsel to resign and usually does so.243 [15-86] Trustees have been removed from office in the following circumstances: for breach of trust;244 where the trustee has purchased part of the trust estate;245 where the trustee has commenced a rival business;246 where the trustee has absconded under a charge of committing forgeries;247 where one trustee refuses to act reasonably with the co-trustees;248 where the trustee has been residing abroad permanently;249 where the trustee has become bankrupt, and in the administration of the trust the trustee has to receive or deal with funds;250 where the trustee has refused to execute the trust;251 where a trustee impedes the co-trustees;252 where a trustee is not impartial;253 where the trustee

has preferred his or her private interest to that of the beneficiaries;254 and generally where the court has been satisfied that the trust property would not be safe in the trustee’s hands and the trust executed in the interests of the beneficiaries.255 The court will not, however, order the removal of a trustee for the mere caprice of a beneficiary or without reasonable cause being shown.256 Thus a refusal by trustees for no corrupt motive [page 320] to exercise a purely discretionary power is no reason for removing them.257 The court will not necessarily remove a trustee because it never would have made the appointment in the first place,258 nor because the trustee has agreed to retire.259 Likewise, a trustee will not necessarily be removed because of having been in a position of conflict between duty and interest.260 This is particularly so where the settlor appreciated the conflict.261 Similarly, removal is not inevitable just because some,262 or even all263 of the beneficiaries wish it. But if the trustee is antagonistic to the trust, the trustee may be removed.264 In each case, it is a matter of what is best ‘for the welfare of the trust estate as a whole’.265 A trustee who has been appointed pending litigation for the removal of that trustee’s predecessor occupies a position which calls for careful scrutiny, and that trustee will be removed more easily than a normal trustee.266 The removal of a trustee, in the case of misconduct, should be asked for in a suit, and not by a summons to appoint new trustees.267 However, where no facts are in dispute and the application is on a ground set forth in the statutory provisions for appointment out of court, it appears that the summary procedure is capable of use. [15-87] The action should be commenced within a reasonable time.268 But in an administration action, the court has jurisdiction at any time during the proceedings to remove trustees if it considers such removal necessary for the preservation of the trust estate or the welfare of the beneficiaries, notwithstanding that removal has not been asked for in the pleadings.269 It would seem that in an action to remove a trustee, the trustee cannot object, on

the general ground of vexatiousness and abuse of court process, to the beneficiary challenging every act of the trustee as misconduct, or the imputation of corrupt and improper motives in the execution of the trust, or the allegation that the trustee’s conduct is the vindictive consequence of some act of the beneficiary’s; but this might not apply to allegations of facts as evidence of general malice or personal hostility.270 When a trustee is removed from the trust, that trustee is not allowed his or her costs out of the trust estate, and may be ordered to pay all the costs involved in the action.271 _____________________________ 1.

See Chapter 13.

2.

See the various Trustee Act definition sections, by which it is made clear that ‘trust’ includes constructive trusts — sometimes in the definition of ‘trust’, sometimes in the definition of ‘trustee’, sometimes in both: NSW s 5; ACT s 4; Qld s 5; Vic s 3; SA s 4; WA s 6; Tas s 4; NT s 82. Raftland Pty Ltd v Commissioner of Taxation (2006) 227 ALR 598 at [66].

3. 4. 5.

For example, by disclaimer: D’Adhemar v Bertrand (1865) 35 Beav 19; 55 ER 801. A-G v Downing (1767) Wilm 1; 97 ER 1; A-G v Stephens (1834) 3 My & K 347 at 352; 40 ER 132 at 134; Dodkin v Brunt (1868) LR 6 Eq 580 at 581; Re Smirthwaite’s Trusts (1871) LR 11 Eq 251.

6. 7.

Re Matthews (1859) 26 Beav 463; 53 ER 976. Mallot v Wilson [1903] 2 Ch 494; [1900–3] All ER Rep 326. It has been held in America that the trust can fail by disclaimer of the trustee where the settlor has manifested a clear intention that the existence of the trust should be dependent upon its administration by the particular person named as trustee. See Scott on Trusts, §5.5.2 and §11.4.1.

8. 9.

Re Davis’ Trusts (1871) LR 12 Eq 214. Re Moore (1882) 21 Ch D 778.

10. Re Ponder [1921] 2 Ch 59; [1921] All ER Rep 164. However, see the comments on this case in Harvell v Foster [1954] 2 QB 367; [1954] 2 All ER 736. Despite this, it is thought that the case still stands on the point stated. 11. Re Pitt (1928) 44 TLR 371 12. Re Horan (1936) 53 WN (NSW) 146. 13. Soar v Ashwell [1893] 2 QB 390; [1891–4] All ER Rep 991; Perpetual Trustee Co Ltd v Thomas (1903) 3 SR (NSW) 277; Williams-Ashman v Price [1942] Ch 219; [1942] 1 All ER 310. 14. For examples, see Re Cormack (1911) 11 SR (NSW) 261; 28 WN (NSW) 80; Perpetual Trustee Co Ltd v Tasker (1913) 13 SR (NSW) 322; 30 WN (NSW) 82; Macnamara v Macnamara (1929) 30 SR (NSW) 245. 15. Administration and Probate Act 1958 (Vic) s 13; Administration and Probate Act 1935 (Tas) ss 4 and 5. 16. These two sentences as they stood in the 7th edition were quoted with approval in Statewide Developments Pty Ltd (in liq) v Azure Property Group (Holdings) Pty Ltd (2012) 84 NSWLR 133 at [15].

17. Trusts Act 1973 ss 4(4) and 10. 18. [1896] 1 Ch 288. 19. See also Re Walker; Summers v Barrow [1901] 1 Ch 259. 20. (1884) 28 Ch D 1. 21. See also Re Lloyd’s Trustees (1888) 57 LJ Ch 246. In view of legislation noted in [15-07], this decision may remain good law only in South Australia and Tasmania. 22. Winter v Rudge (1847) 15 Sim 596; 60 ER 751. 23. Noble v Meymott (1851) 14 Beav 471 at 477; 51 ER 367 at 370. 24. Re Hadley; Ex parte Hadley (1851) 5 De G & Sm 67; 64 ER 1021. 25. Busk v Aldam (1874) 19 LR (NSW) Eq 16. Contrast Re Redgate [1903] 1 Ch 356. See Marks v Marks (1910) 10 SR (NSW) 843, and Re Triffitt’s Settlement [1958] Ch 852; [1958] 2 All ER 299 for a general discussion of general and special powers in this regard. 26. NSW s 6(4); ACT s 6(4); Qld s 12(1); Vic s 41(1); SA s 14(1); WA s 7(1); Tas s 13(1); NT s 11. 27. For one conveyancing complication to which these provisions give rise, see M Prichard, ‘A Trap for Conveyancers: Conveyance by One Trust to Another’ (1972) 36 Conv (NS) 192. The expression ‘personal representative’ of the last trustee does not include a liquidator: Sjoquist v Rock Eisteddfod Productions Pty Ltd (1996) 19 ACSR 339. 28. Re Wheller and De Rochow [1896] 1 Ch 315; this case was followed, but doubted, in Re Sichel’s Settlements [1916] 1 Ch 358. 29. See also ACT s 6(11); Qld s 12(8); Vic s 41(10); WA s 7(8). 30. Re Harding [1923] 1 Ch 182; [1922] All ER Rep 557. 31. Hardaker v Moorhouse (1884) 26 Ch D 417: sed quaere whether the consent of the assignee is not necessary. 32. Re Routledge’s Trusts [1909] 1 Ch 280. 33. Re Parsons [1940] Ch 973; [1940] 4 All ER 65. 34. Re Sheppard’s Settlement Trusts [1888] WN 234. 35. Travis v Illingworth (1865) 2 Dr & Sm 344; 62 ER 652; Re Coates to Parsons (1886) 34 Ch D 370 at 377. Where a power was given by the trust instrument to ‘the surviving or continuing trustees or trustee’ to appoint new trustees, it was held that there was no authority under the power to permit the two original trustees to retire together and appoint new trustees: Stones v Rowton (1853) 17 Beav 308; 51 ER 1052. But where the power was given to ‘the surviving or continuing or other trustee or trustees’ to appoint new trustees, it was held that the survivor of four trustees could appoint four new trustees in his stead: Camoys v Best (1854) 19 Beav 414; 52 ER 410. 36. Re Norris (1884) 27 Ch D 333; Re Coates to Parsons (1886) 34 Ch D 370. 37. Re Coates to Parsons (1886) 34 Ch D 370. 38. Re Shafto’s Trusts (1885) 29 Ch D 247. 39. Re Boucherett [1908] 1 Ch 180. 40. Nicholson v Field [1893] 2 Ch 511; Church of England Property Trust v Rossi (1893) 14 LR (NSW) Eq 186; 10 WN (NSW) 1. 41. [1974] 1 All ER 991; [1974] 1 WLR 583. 42. NSW s 6; ACT s 6; Qld s 12; Vic s 41; SA ss 14–17; WA s 7; Tas s 13; NT s 11. 43. Only a short presence within the jurisdiction will prevent the 12-month period from running: Re Walker; Summers v Barrow [1901] 1 Ch 259; Hancock v Rinehart (2015) 106 ACSR 207 at [307].

44. [1894] 2 Ch 297 at 308. 45. (1889) 42 Ch D 522; [1886–90] All ER Rep 989. See also Re Burton (1994) 126 ALR 557 at 559–60. 46. The position in England is the same as in Victoria, Queensland, South Australia and Western Australia, as special provision has been made for the appointor to appoint himself or herself by adding the words ‘whether or not being the persons exercising the power’: Trustee Act 1925 (UK) s 36(1); but see Re Power’s Settlement Trusts [1951] Ch 1074; [1951] 2 All ER 513: person nominated cannot appoint himself or herself as an additional trustee. The s 36(1) power cannot be delegated unless the principle in Attorney-General v Matheson [1907] 2 Ch 383 applies: Shergill v Khaira [2015] AC 359; [2014] 3 All ER 243 at [333] (see [10-68]). In New South Wales prior to 1925, a person in such circumstances was held entitled to appoint himself or herself: Re Christina Brown (1921) 22 SR (NSW) 90. 47. NSW s 6(9); ACT s 6(10); Vic s 41(8); Qld s 12(7); SA s 14(4); WA s 7(7); Tas s 13(4); NT s 11(4). 48. Nicholson v Field [1893] 2 Ch 511 at 512; see also Re Hadley; Ex parte Hadley (1851) 5 De G & Sm 67; 64 ER 1021, where one trustee died before the will took effect and the other disclaimed by deed but reserved the power to appoint new trustees and by the same deed appointed two new trustees. It was held that the appointment was valid. See also Church of England Property Trust v Rossi (1893) 14 LR (NSW) Eq 186; 10 WN (NSW) 1; and [15-10]. 49. [1901] 1 Ch 259. 50. Re Coates to Parsons (1886) 34 Ch D 370; Re Stoneham’s Settlement Trusts [1952] Ch 59; [1952] 2 All ER 694. 51. Re Pearse (1917) 34 WN (NSW) 97. 52. Cafe v Bent (1845) 5 Hare 24; 67 ER 812; D’Adhemar v Bertrand (1865) 35 Beav 19; 55 ER 801; Re Gordon (1877) 6 Ch D 531; Cf Re Sharman’s Will Trusts [1942] Ch 311; [1942] 2 All ER 74. 53. Stacey v Elph (1833) 1 My & K 195; 39 ER 655. 54. (1889) 40 Ch D 436. 55. See also Re Clout and Frewer’s Contract [1924] 2 Ch 230; [1924] All ER Rep 798, where nearly 30 years passed without any act by the trustee in relation to the trust. 56. Re Lord and Fullerton’s Contract [1896] 1 Ch 228. 57. (1858) 4 K & J 87; 70 ER 37. 58. (1854) 3 WR 31. 59. (1866) 15 LT 236. 60. Chambers v Jones (1902) 2 SR (NSW) Eq 177; 19 WN (NSW) 248; Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301. 61. Willis v Stephens [1934] VLR 19. But see Re Turner [1923] VLR 189 (which was not followed in Monty Financial Services Ltd v Delmo [1996] 1 VR 49, which, at 81–2, approved the passage in the text). 62. Re Watt’s Settlement (1851) 9 Hare 106; 68 ER 434; Re East (1873) LR 8 Ch App 735; Re Lemann’s Trusts (1883) 22 Ch D 633. 63. Withington v Withington (1848) 16 Sim 104; 61 ER 812; O’Reilly v Alderson (1849) 8 Hare 101; 68 ER 289; Re Harrison’s Trusts (1852) 22 LJ Ch 69; Re Bignold’s Settlement Trusts (1872) LR 7 Ch App 223; Iffla v Beany (1881) 1 W & W (E) 110; Re May’s Will Trusts [1941] Ch 109. But see Mennard v Welford (1853) 1 Sm & G 426; 65 ER 187, where a trustee resident abroad for 20 years was held incapable of acting. In Re Graham (1938) 55 WN (NSW) 168, the court appointed a new trustee in place of a trustee who had disappeared. 64. O’Reilly v Alderson (1849) 8 Hare 101; 68 ER 289.

65. Re Gibbons’ Trusts (1882) 30 WR 287; Re Oakden’s Trusts (1882) 26 Sol Jo 563. 66. (1844) 1 Coll 335; 63 ER 444; Re Whitehead’s Will Trusts [1971] 2 All ER 1334; [1971] 1 WLR 833. 67. [1896] 1 Ch 288. 68. (1884) 27 Ch D 333. 69. Re Earl of Stamford [1896] 1 Ch 288; Re McPhillamy’s Trusts (1909) 10 SR (NSW) 42; 26 WN (NSW) 188; Re Cotter [1915] 1 Ch 307. 70. Re Hodson’s Settlement (1851) 9 Hare 118; 68 ER 439; Re Higginbottom [1892] 3 Ch 132; [1891–4] All ER Rep 1070. 71. Pope v DRP Nominees Pty Ltd (1999) 74 SASR 78 at [37]. See also [15-46]. 72. Re Knight’s Will (1884) 26 Ch D 82. 73. Re Knight’s Will (1884) 26 Ch D 82. 74. Re Gadd (1883) 23 Ch D 134. 75. Re Gadd (1883) 23 Ch D 134. 76. Middleton v Reay (1849) 7 Hare 106; 68 ER 43. 77. (1884) 26 Ch D 417. For similar decisions in analogous circumstances, see Alexander v Mills (1870) LR 6 Ch App 124 and Re Bedingfield and Herring’s Contract [1893] 2 Ch 332 as to the consent of a tenant for life to the exercise of a power of sale by trustees. In the first case, the tenant for life had alienated his interest and in the second case, he had become bankrupt. In both cases, the power of consent was held to be good. 78. Re Brockbank [1948] Ch 206; [1948] 1 All ER 28. 79. Re Whitehouse [1982] Qd R 196. 80. Mendelssohn v Centrepoint Community Growth Trust [1999] 2 NZLR 88. 81. Pearce v Pearce (1856) 22 Beav 248; 52 ER 1103. 82. NSW s 6(6); ACT s 6(7). 83. Xebec Pty Ltd (in liq) v Enthe Pty Ltd (1987) 18 ATR 893. 84. Qld s 12(1); Vic s 41(1); SA s 14(1); WA s 7(1); Tas s 13(1); NT s 11(1). 85. Statewide Developments Pty Ltd (in liq) v Azure Property Group (Holdings) Pty Ltd (2012) 84 NSWLR 133, disagreeing with other authorities including Lubavitch Mazal Pty Ltd v Yeshiva Properties (No 1) Pty Ltd (2003) 47 ACSR 179 at [40], and approving Synergy Concepts Pty Ltd v Rylegrove Pty Ltd (in liq) (1997) 8 BPR 15, 555. 86. NSW s 6(13); ACT s 6(15); SA s 14(5); WA s 7(8); Tas s 13(5); NT s 11(5). See [15-21]. 87. See Hulme v Hulme (1833) 2 My & K 682; 39 ER 1105, where two trustees who transferred the trust property to a single trustee were held to have committed a breach of trust and to be responsible for the loss thereby caused; and Wilkinson v Parry (1828) 4 Russ 272; 38 ER 808, where a retiring trustee assigned the trust property to the continuing trustee alone and was held liable for a subsequent loss by breach of trust on the part of the continuing trustee. 88. In Emmet v Clark (1861) 3 Giff 32; 66 ER 310, four trustees were appointed originally and three were appointed in their stead and the appointment was held valid; and in Reid v Reid (1862) 30 Beav 388; 54 ER 939, an appointment of three in place of five was held valid. In Re Poole Bathurst’s Estate (1854) 2 Sm & G 169; 65 ER 351, two were appointed in place of three. In Lonsdale v Beckett (1850) 4 De G & Sm 73; 64 ER 740, the survivor of three trustees wishing to retire, appointed one trustee in place of himself. The court declared the appointment invalid and directed an inquiry as to whether it would be for the benefit of the persons interested to appoint only two trustees, instead of the three originally appointed.

89. Peacock v Colling (1885) 54 LJ Ch 743. 90. Re Badger’s Settlements (1915) 84 LJ Ch 567. 91. NSW s (5) and (6); ACT s 6(6) and (7). 92. As in Re Moss’ Trusts (1888) 37 Ch D 513. 93. As in Re Paine’s Trusts (1885) 28 Ch D 725. 94. See Re Hetherington’s Trusts (1886) 34 Ch D 211. 95. NSW s 6(8); ACT s 6(9); Qld s 12(6); Vic s 41(7); SA s 14(3); WA s 7(6); Tas s 13(3); NT s 11(3). 96. Re Smith [1904] 1 Ch 139 at 144. See also Re Hampton (1918) 88 LJ Ch 103. 97. NSW s 59(4); ACT s 59(4); Qld s 72; Vic s 36(2); SA s 35(2); WA s 71; Tas s 27(2); NT s 26. 98. (1887) 57 LT 239. 99. (1870) LR 10 Eq 45. 100. Armitage v Nurse [1998] Ch 241 at 262–3; [1997] 2 All ER 705 at 721, discussing Re Spurling’s Will Trusts [1966] 1 All ER 745 at 758–9; [1966] 1 WLR 920 at 935–6. See also National Trustees Executors & Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 261 at 78–9; 48 ALR 58 at 62–3. 101. Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550 at [19]. 102. NSW s 6(12); ACT s 6(14); Qld s 12(9); SA s 14(7); WA s 7(9); Tas s 13(6); NT s 11(7). 103. See Chapter 25. 104. See Chapter 17. 105. ‘Expedient’ has been considered to mean ‘conducive to, or fit or proper or suitable’ having regard to ‘the interests of the beneficiaries, to the security of the trust property and to a sufficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee’: Re Estate of Roberts (1983) 20 NTR 13 at 17; 70 FLR 158 at 162, applying Miller v Cameron (1936) 54 CLR 572 at 580–1; [1936] ALR 301 at 304–5. The words ‘expedient’ and ‘inexpedient’ are words of wide meaning. ‘Expedient’ may mean ‘advantageous’, or ‘appropriate or suitable to the circumstances of the case’. ‘Inexpedient’ has the opposite meaning: Pope v DRP Nominees Pty Ltd (1999) 74 SASR 78 at [33]. Instances when it is expedient to appoint new trustees are discussed in the following paragraphs. 106. ACT s 70; Qld ss 80–81; Vic ss 48–50; SA ss 36, 43; WA s 77; Tas ss 32 and 43; NT s 27. 107. Northwest Capital Management v Westate Capital Ltd (2012) 264 FLR 424 at [232]. 108. See Re Fauntleroy (1839) 10 Sim 252; 59 ER 610; Re Foxhall (1847) 2 Ph 281; 41 ER 951. 109. Buchanan v Hamilton (1801) 5 Ves 722; 31 ER 824. 110. Re Gibbons’ Trusts (1882) 30 WR 287. 111. Re Tunstall [1921] VLR 559. 112. Re Barker’s Trusts (1875) 1 Ch D 43; Re Adams’ Trust (1879) 12 Ch D 634 at 636. 113. Although the bankruptcy of a trustee is not of itself necessarily a sufficient ground for removal from office — Re Bridgman (1860) 1 Drew & Sm 164; 67 ER 340 — courts will almost invariably remove a bankrupt trustee on application by the beneficiaries or by a co-trustee: Bainbrigge v Blair (1839) 1 Beav 495; 48 ER 1032; Re Barker’s Trusts (1875) 1 Ch D 43; Re Adams’ Trust (1879) 12 Ch D 634 at 636; Re Foster’s Trusts (1886) 55 LT 479. But see Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301. 114. See Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301. 115. Hanover v Bank of England (1869) LR 8 Eq 350; Re No 9 Bomore Road [1906] 1 Ch 359; Re Ruddington Land [1909] Ch 701; [1908–10] All ER Rep 377; Re Albert Road, Norwood [1916] 1 Ch 289; Re

Spencer (1916) 33 TLR 16. 116. [1977] 1 NSWLR 664. 117. (1936) 54 CLR 572 at 575; [1936] ALR 301 at 302. 118. The last three sentences in the 6th edition were not accepted in a case where the liquidation of the corporate trustee had just commenced and it seemed likely that it would be necessary to restore the trust assets to repay the trust creditors: Wells v Wily (2004) 50 ACSR 103 at [26]. Cf Austec Wagga Wagga Pty Ltd v Rarebreed Wagga Pty Ltd [2012] NSWSC 343 at [90]–[98]. 119. Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (in prov liq) (1990) 3 ACSR 183. 120. Re Graham (1938) 55 WN (NSW) 168. 121. Re Whitchurch [1990] VR 719. 122. Re Lemann’s Trusts (1883) 22 Ch D 633; see also Re Barber (1888) 39 Ch D 187. It is also to be noted that in such a case the court can, without removing the trustee, vest the trust property in the remaining trustees; see Re Nash (1881) 16 Ch D 503; Re Watson (1881) 19 Ch D 384; Re Martyn (1884) 26 Ch D 745; Re Leon [1892] 1 Ch 348; Re Lees’ Settlement Trusts [1896] 2 Ch 508; Re Harrison’s Settlement Trusts [1965] 3 All ER 795; [1965] 1 WLR 1492. 123. Re Bignold’s Settlement Trusts (1872) LR 7 Ch App 223; Re May’s Will Trust [1941] Ch 109. 124. Re Watson (1899) 18 NZLR 368. 125. See [15-03]. 126. Martin v Martin (1903) 3 SR (NSW) 156; 20 WN (NSW) 62; Trimble v Kirkland (1913) 13 SR (NSW) 417 at 420–1; 30 WN (NSW) 121 at 122–3; Re Ponder [1921] 2 Ch 59; [1921] All ER Rep 164; In the Estate of Dunn (decd) [1963] VR 165. 127. Re Henderson [1940] Ch 764; [1940] 3 All ER 295. 128. Re Blanchard (1861) 3 De G F & J 131; 45 ER 828. 129. (1866) LR 1 Ch App 485. They are not ‘hard and fast rules’, but ‘rules of practice which guide’ the court: Hobkirk v Ritchie (1934) 29 Tas LR 14 at 46 per Clark J. They are ‘general guidelines’: Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (in prov liq) (1990) 3 ACSR 183 at 185 per Rolfe J. 130. These rules were approved in Forster v Abraham (1874) LR 17 Eq 351 at 355. See also Saul v Lin (No 2) (2004) 60 NSWLR 275 at [48]; Wells v Wily (2004) 50 ACSR 103 at [21]; Northwest Capital Management v Westate Capital Ltd (2012) 264 FLR 424 at [283]; Hancock v Rinehart (2015) 106 ACSR 207 at [120]. 131. (1990) 3 ACSR 183. 132. Re Wilson (dec’d) [1923] VLR 277. 133. (1990) 3 ACSR 183 at 185–6. 134. Mendelssohn v Centrepoint Community Growth Trust [1999] 2 NZLR 88 at 97. 135. Mendelssohn v Centrepoint Community Growth Trust [1999] 2 NZLR 88 at 97; Hancock v Rinehart (2015) 106 ACSR 207 at [120]. 136. See Re Dewhirst’s Trusts (1886) 33 Ch D 416; Re Gardiner’s Trusts (1886) 33 Ch D 590; Re Chetwynd’s Settlement [1902] 1 Ch 692. 137. Re Vicat (1886) 33 Ch D 103 at 104. See also Re Nash (1881) 16 Ch D 503; Re Martyn (1884) 26 Ch D 745, where a vesting order was made in favour of the continuing trustees where the fund was immediately divisible; Re Leon [1892] 1 Ch 348 where a vesting order was made in favour of three trustees, the other trustee having been lunatic by inquisition; Re West’s Will (1896) 17 LR (NSW) Eq 176; 13 WN (NSW) 57, where a vesting order was made under the same circumstances as in Re Leon;

Re Moore’s Will (1901) 1 SR (NSW) Eq 148; 18 WN (NSW) 201; where one of four trustees was desirous of retiring and the court vested the estate in the continuing trustees. 138. Johnstone v Johnstone (1902) 2 SR (NSW) Eq 90; Re Cunningham’s Settled Estates (1909) 27 WN (NSW) 28. 139. Re Friend’s Trusts (1904) 21 WN (NSW) 166. 140. Ex parte Conybeare’s Settlement (1853) 1 WR 458. 141. (1873) 21 WR 220; sub nom Re Dickson’s Settlement Trusts (1872) 27 LT 671. 142. (1883) 23 Ch D 205. 143. See Re Coode (1913) 108 LT 94 for an instance of the appointment of the husband of a tenant for life by the donee of a power of appointment under a will. The court held that the appointment, although undesirable, was valid. See also Re Harrop’s Trusts (1883) 24 Ch D 717 (tenant for life); Re Paine’s Trusts (1885) 33 WR 564 (remainderman). 144. (1855) 21 Beav 222; 52 ER 845. 145. See also Re Tempest (1866) LR 1 Ch App 485; Re Roberts (1983) 70 FLR 158; 20 NTR 13; Saul v Lin (No 2) (2004) 60 NSWLR 275. 146. (1884) 27 Ch D 707. 147. (1884) 27 Ch D 333. 148. Re Thompson (1909) 28 NZLR 356 at 357–8. 149. See Re Ailesbury [1893] 2 Ch 345 at 360. 150. Wheelwright v Walker (1883) 23 Ch D 75; Re Kemp’s Settled Estates (1883) 24 Ch D 485; Re Spencer’s Settled Estates [1903] 1 Ch 75. 151. Re Kemp’s Settled Estates (1883) 24 Ch D 485 at 487–8 per Cotton LJ. 152. (1883) 24 Ch D 271. 153. Re Earl of Stamford [1896] 1 Ch 288. 154. [1915] 1 Ch 307. 155. Brook v Brook (1839) 1 Beav 531; 48 ER 1046. 156. Re Campbell’s Trust (1862) 31 Beav 176; 54 ER 1105; Re Berkley (1874) LR 9 Ch App 720; Re Peake’s Settled Estate [1894] 3 Ch 520; Re Dickinson’s Trust [1902] WN 104. 157. Re Estate of Roberts (1983) 20 NTR 13; 70 FLR 158. 158. (1887) 37 Ch D 148. 159. [1897] 1 Ch 256. 160. (1880) 14 Ch D 310. See also Re Mitchell’s Trust (1900) 17 WN (NSW) 164. In Re Mayne (1928) 28 SR (NSW) 157; 45 WN (NSW) 46, Harvey CJ in Eq was prepared to vary a power of appointment of new trustees under s 81 of the Trustee Act 1925, and then held that the surviving trustees might retire and appoint persons resident in Queensland in their place. See also Re Kay [1927] VLR 66; Re Baillie [1928] VLR 171; Re Seale’s Marriage Settlement [1961] Ch 574; [1961] 3 All ER 136; Hancock v Rinehart (2015) 106 ACSR 207 at [307]. 161. Re McPhillamy’s Trusts (1909) 10 SR (NSW) 42 at 46–7; 26 WN (NSW) 188 at 189. 162. Re Martyn (1884) 26 Ch D 745; Re Leon [1892] 1 Ch 348; Re West’s Will (1896) 17 LR (NSW) Eq 176; 13 WN (NSW) 57; Re Kenning’s Will (1899) 20 LR (NSW) Eq 139; 16 WN (NSW) 31; Re Leslie’s Hassop Estates [1911] 1 Ch 611. 163. Re Leon [1892] 1 Ch 348; Re Kenning’s Will (1899) 20 LR (NSW) Eq 139 at 141; 16 WN (NSW) 31. 164. Re Martyn (1884) 26 Ch D 745; York v Fraser (1894) 11 WN (NSW) 12.

165. Re Tunstall’s Will (1851) 4 De G & Sm 421; 64 ER 896; Moore v McKelvey (1906) 23 WN (NSW) 100. 166. Ex parte Perkins (1891) 8 WN (NSW) 43; Re Parsons [1940] Ch 973 at 983; [1940] 4 All ER 65 at 71. 167. Leigh v Pantin [1914] 2 Ch 701. 168. For the position where a minimum number of trustees is directed by the instrument, see Re Mayne (1928) 28 SR (NSW) 157; 45 WN (NSW) 46. 169. Re Paine’s Trusts (1885) 28 Ch D 725; Re Moss’ Trusts (1888) 37 Ch D 513. 170. Re Pearse (1917) 34 WN (NSW) 97. 171. See [25-03]–[25-09]. 172. Re Hood’s Will (1899) 16 WN (NSW) 20. 173. Re Powell’s Trusts (1902) 19 WN (NSW) 199; Re Blomfield’s Trusts (1918) 35 WN (NSW) 75. 174. NSW s 93; Qld s 100; Vic s 66; SA s 44; WA s 97; Tas s 63; NT s 41. 175. Townson v Tickell (1819) 3 B & Ald 31 at 39; 106 ER 575 at 578. 176. Doe d. Chidgey v Harris (1847) 16 M & W 517 at 520; 153 ER 1294 at 1296; Standing v Bowring (1885) 31 Ch D 282; [1881–5] All ER Rep 702; Re Stratton’s Deed of Disclaimer [1958] Ch 42; [1957] 2 All ER 594; Re Paradise Motor Co Ltd [1968] 2 All ER 625; [1968] 1 WLR 1125; J W Broomhead (Vic) Pty Ltd (in liq) v J W Broomhead Pty Ltd [1985] VR 891. 177. Montford v Cadogan (1816) 19 Ves 635 at 638; 34 ER 651 at 652. 178. Conyngham v Conyngham (1750) 1 Ves Sen 522; 27 ER 1181. 179. Montford v Cadogan (1816) 19 Ves 635; 34 ER 651. 180. Cf Re Sharman’s Will Trusts [1942] Ch 311; [1942] 2 All ER 74. 181. Robinson v Pett (1734) 3 P Wms 249; 24 ER 1049. This refers, of course, only to express trusts. 182. Doyle v Blake (1804) 2 Sch & Lef 231. 183. Noble v Meymott (1851) 14 Beav 471; 51 ER 367. 184. Re Clout and Frewer’s Contract [1924] 2 Ch 230; [1924] All ER Rep 798; Stacey v Elph (1833) 1 My & K 195; 39 ER 655; see Re Schar [1951] Ch 280; [1950] 2 All ER 1069. 185. Cf Re Clout and Frewer’s Contract [1924] 2 Ch 230; [1924] All ER Rep 798; Re Arbib and Class’ Contract [1891] 1 Ch 601. 186. Re Clout and Frewer’s Contract [1924] 2 Ch 230; [1924] All ER Rep 798; Re Gordon (1877) 6 Ch D 531; contra, Re Uniacke (1844) 1 Jo & Lat 1. 187. Re Lord and Fullerton’s Contract [1896] 1 Ch 228. 188. Robson v Flight (1865) 4 De GJ & Sm 608 at 613; 46 ER 1054; Mallott v Wilson [1903] 2 Ch 494; [1900–3] All ER Rep 326. 189. Peppercorn v Wayman (1852) 5 De G & Sm 230; 64 ER 1094. 190. Mallott v Wilson [1903] 2 Ch 494; [1900–3] All ER Rep 326. 191. Re Martinez’ Trusts (1870) 22 LT 403. 192. Slaney v Watney (1866) LR 2 Eq 418. 193. Pollexfen v Moore (1745) 3 Atk 272; 26 ER 959; Andrew v Trinity Hall, Cambridge (1804) 9 Ves 525; 32 ER 706; Warren v Ruddall (1860) 1 John & H 1; 70 ER 637. 194. Re Crunden and Meux’s Contract [1909] 1 Ch 690. 195. Robson v Flight (1865) 4 De GJ & S 608; 46 ER 1054. 196. Osborne v Rowlett (1880) 13 Ch D 774; Re Morton and Hallett (1880) 15 Ch D 143 at 144; Re

Routledge’s Trusts [1909] 1 Ch 280; Re Crunden and Meux’s Contract [1909] 1 Ch 690 at 695. The preceding two paragraphs were quoted with approval by Rein J in Laycock v Registrar-General of New South Wales (2012) 16 BPR 30,367 at [16]. 197. See also ACT s 57(1); Qld s 16(1); Vic s 22(1); SA s 32(1); WA s 45(1); Tas s 25(1); NT s 23(1). 198. Maddock v Registrar of Titles (1915) 19 CLR 681; 21 ALR 122; but see In the Estate of Davis (dec’d) (1898) 19 LR (NSW) B & P 18, which seems to have been wrongly decided. 199. Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 581; [1990] 1 WLR 1511 at 1528– 9. 200. Lewin on Trusts, [13-004]. 201. [1948] Ch 206; [1948] 1 All ER 287. 202. See General Investment Pty Ltd v Tyson [1967] Tas SR 96, where a trust instrument that empowered the sole trustee to retire at any time without assigning any reason and without cost to himself was held merely to confer a right to demand of his beneficiaries that they make arrangements for a new trustee and that they transfer to him the retiring trustee’s proprietary rights. 203. See [15-06]. 204. See Sir Frederick Jordan, Chapters on Equity in New South Wales, 6th ed, p 95 (reprinted in Select Legal Papers, 1983). 205. See Sir Frederick Jordan, Chapters on Equity in New South Wales, 6th ed, p 96, from which this paragraph is substantially taken. 206. Forshaw v Higginson (1855) 20 Beav 485 at 487; 52 ER 690 at 691; Re Eggleston [1940] VLR 474. 207. See [15-78]–[15-79]. 208. In New South Wales in such a case it may expressly appoint the continuing trustees alone as new trustees: Trustee Act 1925 ss 70(5) and 71. Other jurisdictions have no equivalent to s 70(5). 209. Trustee Act 1925 (NSW) s 7(5), to which the other jurisdictions have no equivalent. 210. Re Moore’s Will (1901) 1 SR (NSW) Eq 148; Re Chetwynd’s Settlement [1902] 1 Ch 692. 211. Howard v Rhodes (1837) 1 Keen 581; 48 ER 431; Porter v Watts (1852) 21 LJ Ch 211; Forshaw v Higginson (1855) 20 Beav 485; 52 ER 690; cf Trimble v Kirkland (1913) 13 SR (NSW) 417 at 421. 212. Gardiner v Downes (1856) 22 Beav 395; 52 ER 1160; cf Re Chetwynd’s Settlement [1902] 1 Ch 692. 213. Forshaw v Higginson (1855) 20 Beav 485; 52 ER 690. 214. Porter v Watts (1852) 21 LJ Ch 211. 215. Coventry v Coventry (1837) 1 Keen 758; 48 ER 499. 216. Re Medway’s Will (1897) 14 WN (NSW) 29; Re Pearse (1917) 34 WN (NSW) 97, though cf In the Will of Cormack (1909) 26 WN (NSW) 174. 217. NSW s 93; Qld s 100; Vic s 66; SA s 44; WA s 97; Tas s 63; NT s 41. 218. Forshaw v Higginson (1855) 20 Beav 485; 52 ER 690; Sugden v Crossland (1856) 3 Sm & G 192; 65 ER 620; Head v Gould [1898] 2 Ch 250 at 268; Nissen v Grunden (1912) 14 CLR 297 at 317; 18 ALR 254 at 261. 219. Head v Gould [1898] 2 Ch 250; Re Munton [1927] 1 Ch 262. 220. Clarke v Hoskins (1868) 37 LJ Ch 561 at 567. 221. See Gould v O’Carroll [1964] NSWR 803 at 805. 222. Pearce v Pearce (1856) 22 Beav 248; 52 ER 1103. 223. Hallows v Lloyd (1888) 39 Ch D 686. 224. Phipps v Lovegrove (1873) LR 16 Eq 80.

225. Tiger v Barclays Bank Ltd [1951] 2 KB 556; [1951] 2 All ER 262. 226. Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566 at [98]–[99]. 227. See [15-04]. 228. See [15-46]. 229. Re Hodson’s Settlement (1851) 9 Hare 118; 68 ER 439; Re Blanchard (1861) 3 De G F & J 131; 45 ER 828; Re Combs (1884) 51 LT 45. 230. Re Henderson [1940] Ch 764; [1940] 3 All ER 295. 231. Titterton v Oates (1998) 143 FLR 467 at 475–6. 232. See [15-19]. 233. Benzija v Adriatic Fisheries Pty Ltd (1984) 37 SASR 545. 234. Following Miller v Cameron (1936) 54 CLR 572 at 580–1; [1936] ALR 301 at 304. 235. Approved in Juul v Northey [2010] NSWCA 211 at [239]. 236. See [15-04]. 237. Letterstedt v Broers (1884) 9 App Cas 371; [1881–5] All ER Rep 882; Hunter v Hunter [1938] NZLR 520. 238. Wernher v Boehm (1890) 16 VLR 73; Equitable Group Ltd v Pendal Nominees Pty Ltd (1984) 3 ACLC 546. 239. Letterstedt v Broers (1884) 9 App Cas 371 at 385; [1881–5] All ER Rep 882 at 886, quoting Story’s Equity Jurisprudence, section 1287; Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301. 240. Chambers v Jones (1902) 2 SR (NSW) Eq 177; 19 WN (NSW) 248; Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301. See also Whitton v ACN 003266886 Pty Ltd (1996) 14 ACLC 1799 at 1,824–6 (trustee in liquidation). 241. Lee v Young (1843) 2 Y & C Ch Cas 532; 63 ER 238; Forster v Davies (1861) 4 De GF & J 133; 45 ER 1134; Re Henderson [1940] Ch 764; [1940] 3 All ER 295; Quinton v Proctor [1998] 4 VR 469 at 475–6 (particularly where the point of view of the impugned trustee was honestly held, arguable and tenable). 242. Letterstedt v Broers (1884) 9 App Cas 371 at 389; [1881–5] All ER Rep 882 at 888. 243. See the remarks of Lord Blackburn in Letterstedt v Broers (1884) 9 App Cas 371 at 386; [1881–5] All ER Rep 882 at 886. 244. Mayor of Coventry v A-G (1720) 7 Bro CC 235; 3 ER 153; Ex parte Greenhouse (1815) 1 Madd 92; 56 ER 36; Peatfield v Benn (1853) 17 Beav 522; 51 ER 1137; but the mere fact that a trustee has committed some breach of trust is not of itself sufficient; Re Wrightson [1908] 1 Ch 789; Princess Ann of Hesse v Field [1963] NSWR 998; (1962) 80 WN (NSW) 66. 245. Ex parte Phelps (1742) 9 Mod Rep 357; 88 ER 505; Ex parte Reynolds (1800) 5 Ves 707; 31 ER 816. 246. Moore v McGlynn [1894] 1 IR 74. 247. Millard v Eyre (1793) 2 Ves 94; 30 ER 540. 248. Uvedale v Ettrick (1682) 2 Cas 130; 22 ER 880. (‘I like not that a man should be ambitious of a trust, when he can get nothing but trouble by it.’) 249. O’Reilly v Alderson (1849) 8 Hare 101; 68 ER 289. 250. Re Barker’s Trusts (1875) 1 Ch D 43; Re Adams’ Trusts (1879) 12 Ch D 634; Re Betts (1897) 41 Sol Jo 209; Chambers v Jones (1902) 2 SR (NSW) Eq 177; Miller v Cameron (1936) 54 CLR 572; [1936] ALR 301; but see Re Bridgman (1860) 1 Dr & Sm 164; 62 ER 340. 251. Palairet v Carew (1863) 32 Beav 564; 55 ER 222.

252. Uvedale v Ettrick (1682) 2 Ch Cas 130; 22 ER 880. 253. Re Whitehouse [1982] Qd R 196; Nicholls v Louisville Investments Pty Ltd (1991) 10 ACSR 723. 254. Mansour v Mansour (2009) 24 VR 498 at [49]. 255. Hackett v Hackett [1922] NZLR 242. 256. O’Keffee v Calthorpe (1739) 1 Atk 17; 26 ER 12. 257. Lee v Young (1843) 2 Y & C Ch Cas 532; 63 ER 238. 258. Hobkirk v Ritchie (1934) 29 Tas LR 14. 259. Shalfoon v Potts [1948] NZLR 1214. 260. McKenna v Lowe (1878) 1 SCR(NS)(NSW) Eq 10; Porteous v Rhinehart (1998) 19 WAR 495. However, orders for removal on that ground were made in Passingham v Sherborn (1846) 9 Beav 424; 50 ER 407; Hunter v Hunter [1937] NZLR 794; Monty Financial Services Ltd v Delmo [1996] 1 VR 65. 261. Titterton v Oates (1998) 143 FLR 467 at 480. 262. Guazzini v Pateson (1918) 18 SR (NSW) 275 at 294; Titterton v Oates (1998) 143 FLR 467 at 480. 263. Re Brockbank [1948] Ch 206; [1948] 1 All ER 287. 264. Officer v Haines (1877) 3 VLR Eq 115. 265. Guazzini v Paterson (1918) 18 SR (NSW) 275 at 294; Craven-Sands v Koch (2000) 34 ACSR 341 at [204]. 266. A-G v Clack (1839) 1 Beav 467; 48 ER 1021; Re Gadd (1883) 23 Ch D 134; Re Cotter [1915] 1 Ch 307; Re Whitehouse [1982] Qd R 196. 267. Re Bridgman (1860) 1 Drew & Sm 164; 62 ER 340; Re Blanchard (1861) 3 De G F & J 131; 45 ER 828; Re Combs (1884) 51 LT 45; Re Henderson [1940] Ch 764; [1940] 3 All ER 295;. 268. A-G v Cuming (1843) 2 Y & C Ch Cas 139 at 150; 63 ER 61 at 66. 269. Re Wrightson [1908] 1 Ch 789. 270. Earl of Portsmouth v Fellows (1820) 5 Madd 450; 56 ER 967. 271. A-G v Murdoch (1856) 2 K & J 571 at 573; 69 ER 910 at 911; Palairet v Carew (1863) 32 Beav 564; 55 ER 222.

[page 321]

CHAPTER 16 Duties, Powers and Discretions of a Trustee Preliminary Classification Two Controversies

[16-01] [16-01]

Duties General Injunction Statutory Jurisdiction to Relieve Trustees Constructional Problems

[16-02] [16-02] [16-03] [16-04] [16-05]

Powers The Nature of Trustee Powers Fiduciary Character of Trustee Powers Duties of Trustees Possessing a Discretionary Power Mala Fides Reasons Ambit of Discretion The Abolition of the Hastings-Bass ‘Rule’ Ouster Clauses General Considerations Court’s Power to Order Reasons

[16-06] [16-06] [16-07] [16-08] [16-09] [16-10] [16-11] [16-12] [16-13] [16-14] [16-15]

Duty Coupled with a Power

[16-16]

The Amendment of Powers, Duties and Discretions Significance of Trust Instrument Interrelation of Trust Instrument and Statute

[16-17] [16-17] [16-18]



Exemption Clauses Irreducible Core of Obligations

Controlling Trustees in the Exercise of their Powers

[16-19] [16-20] [16-21]

[page 322]

Preliminary Classification Two Controversies [16-01] In the administration of a trust, trustees have powers and are under duties, some of which are coupled with powers. That is, there are some things which trustees are under an obligation to do or refrain from doing, there are some things which they may do if they think fit, provided the correct, and only the correct, considerations are borne in mind, and there are some things which they must do but as to which they may exercise a discretion as to when and how they will do them. There is a controversy about whether it is correct to say, as was said in Bristol & West Building Society v Mothew,1 that the equitable duties of trustees and other fiduciaries to exercise care and skill are not fiduciary, and that the remedy for breach of them is the same for the remedy for the breach of common law duties. There is a related controversy about whether it is correct to say, as was said in Breen v Williams,2 that only the proscriptive duties of trustees and other fiduciaries to avoid a conflict between fiduciary duty and interest or duty and the duty not to make a profit from a fiduciary position are fiduciary. The bulk of modern authority favours these interrelated propositions. Indeed pleadings resting on a denial of the second group of propositions have been struck out as unarguable.3 Yet there has been some explicit4 and more silent5 questioning of the propositions. These issues are discussed in detail elsewhere.6 Here attention will be directed only to a decision of the Supreme Court of the United Kingdom in Pitt v Holt on fiduciary powers. In that case, the Supreme Court held that discretionary decisions taken by trustees, even if they were within the scope of the trustee’s powers, were

voidable if the trustees were in breach of their duty to take into account all relevant matters, including fiscal considerations.7 It is true that the Supreme Court did not mention in terms either Mothew’s case or Breen v Williams. Since Pitt v Holt, Lord Walker has said several times in seminars that the parties supplied detailed submissions in writing about Mothew’s case but did not deal with it in oral argument. It proved unnecessary for the Supreme Court to deal with the Mothew submissions in order to decide the appeal. But the fact is that the reasoning in Pitt v Holt is quite inconsistent with both the Mothew and the Breen v Williams theses. This is significant for the following reason. The highest court which can be said to have approved Mothew’s case is the House of Lords in Hilton v Barker Booth & Eastwood. There Lord Walker (Lords Hoffmann, Hope of Craighead, Scott of Foscote and Brown of Eaton-Under-Heywood agreeing) said:8 ‘Not every breach of duty by a fiduciary is a breach of fiduciary duty.’ For that they cited Mothew’s case.9 Of this Getzler said:10 With respect, this was an obiter dictum quite unrelated to the case, since breach of duty of care was not put in issue and was not seemingly tested by counsel. The Mothew theory ought to be debated in a proper way before attracting ratification in the House of Lords. …

But the status of both Mothew’s case and Breen v Williams has now been much weakened by Pitt v Holt. So, for that matter, has the dictum in Hilton v Barker Booth & Eastwood. [page 323] Lord Walker said that Pitt v Holt concerned a ‘[technique] by which trust law controls the exercise of fiduciary powers’.11 He then said that the technique in question is ‘concerned with trustees who make decisions without having given proper consideration to relevant matters which they ought to have taken into consideration’.12 And he also said that the technique applied to other fiduciaries.13 Indeed, in the very appeal under consideration Mrs Pitt was acting as a receiver appointed by the Court of Protection. In these passages, Lord Walker is treating the problem as one involving breach of a positive duty — to give proper consideration to relevant matters. And he is not treating the problem as breach of a non-fiduciary duty owed by a person occupying a fiduciary position. He is treating a ‘fiduciary power’ as one

which creates a positive duty to be performed in connection with its exercise — that is, a positive fiduciary duty. One aspect of that positive fiduciary duty is ‘a duty to consider’. In words approved by Lord Walker,14 it is a duty to ‘[identify] the relevant considerations and [use] all proper care and diligence in obtaining the relevant information and advice relating to those considerations’.15 Then Lord Walker spoke of ‘the entirely familiar proposition that trustees, in the exercise of their fiduciary discretions, are under constraints which do not apply to adult individuals disposing of their own property’.16 Lord Walker referred to an earlier statement of his that trustees ‘must act in good faith, responsibility and reasonably. They must inform themselves, before making a decision, of matters which are relevant to the decision’.17 Lord Walker stressed that if the relevant decision of a fiduciary in exercising a fiduciary power were to be set aside, it had ‘to amount to a breach of trust’.18 A little later Lord Walker treated ‘fiduciary discretions’ as being an instance of ‘trust powers’. He defined a trust power as ‘a discretion which it is [the trustee’s] duty to exercise in some way’. He saw a fiduciary discretion as a discretion which creates a duty in that it can only be exercised with adequate deliberation. He said trustees can be ‘in breach of duty by exercising a discretion with inadequate deliberation’.19 Next, Lord Walker approved20 the view of Lloyd J that ‘fiscal consequences may be relevant considerations which the trustees ought to take into account’.21 Lord Walker then approved22 Lloyd J’s statement23 that the ‘trustee’s duty to take relevant matters into account is a fiduciary duty’. Lord Walker referred to that duty as a ‘fiduciary duty’, or adopted references by other judges to that phrase, several times.24 That language is the language of positive duties. The positive duties in question are duties which are wider than those which the Mothew thesis sees as fiduciary, namely, the no profit and no conflict duties. The same is true of other language Lord Walker employed or approved, such as ‘failing to give proper consideration to the exercise of [trustees’] discretionary powers’, ‘failure to take professional advice’, ‘exercise of discretions’, ‘duty to take account of relevant considerations’, [page 324]

‘failure of trustees to perform their decision-making function’ and ‘failed to take relevant considerations into account’.25 Lord Walker also referred to an old example of the relevant duty. In Klug v Klug,26 the refusal of a trustee to exercise a power of advancement in favour of a beneficiary who was her daughter was overridden because ‘she had not considered whether or not it would be for her daughter’s welfare that the advance should be made’.27 It may be that duties of care and skill owed by those holding trusteeships or other fiduciary positions do not form one homogenous group. It may be that the choice is not between treating duties of care and skill as either all non-fiduciary or all fiduciary. It may be that some are not fiduciary, while others, like the duty of adequate deliberation in exercising certain powers, are so close to the core of the central fiduciary function that they are to be characterised as fiduciary. Pitt v Holt goes at least as far as that. In that respect it is inconsistent with the Mothew and Breen v Williams theses.

Duties General [16-02] Under the heading of duties may be grouped all the acts which the trustee must do or refrain from doing; acts, the commission or omission of which constitutes a breach of trust irrespective of whether the trustee has been careful or negligent, honest or dishonest, in doing or refraining from doing them. Besides the duties expressly imposed by the terms of the trust instrument, a trustee is subject to many general duties which are implied by law and which have for the most part been established by case law. These are discussed in Chapter 17. A trustee’s duties are sometimes classified as positive and negative, signifying that trustees are obliged to do certain things and refrain from others, but this classification is not important in itself, as duties may often be regarded as being in either category, depending on the viewpoint adopted. Thus, the positive duty to act gratuitously implies the negative duty to refrain from making a profit out of the trust and to abstain from purchasing the trust property.

Injunction [16-03] Any beneficiary who has reason to suppose that the trustees are about to do an act not authorised by the trust instrument may apply for an injunction to restrain them.28

Statutory Jurisdiction to Relieve Trustees [16-04] The court has statutory jurisdiction to relieve trustees, wholly or partly, from the consequences of a breach of trust where they have acted honestly, reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the direction of the court.29 See [22-12]–[22-14].

Constructional Problems [16-05] In any particular case, the question whether trustees have a duty to perform an act or merely a power to perform it or not to perform it as they think fit must be determined by the provisions of the trust instrument, but in many cases it is not easy to determine whether a duty [page 325] has been created or not. Language which appears to give the trustee a power may be construed as creating an imperative duty. The problem is similar to that which arises in cases of precatory trusts.30 Thus, where a deed of trust gave to the trustees a power of sale which was in terms discretionary only, but the purposes of the deed obviously required that a sale should be made, the court construed the power as being imperative.31

Powers The Nature of Trustee Powers

[16-06] Under the heading of pure powers32 may be grouped those acts which trustees may do if they think fit — namely, those acts in respect of which they have a discretion whether they will do them or not.33 These include all acts which the trustee may do in the administration and management of the trust, whether the authority to do them derives expressly from the trust instrument or is implied by statute. In the case of duties, the trustees are bound to do the thing prescribed, whether in their view it is wise to do it or not. If they fail to perform the duty, the court will compel them to do so, or will do so for them. In the case of powers, they are bound to exercise their judgment actively and honestly, as to whether they should do or refrain from doing something and then act accordingly. The powers of trustees must be exercised fairly and honestly for the purposes for which they are given and not so as to accomplish any ulterior purpose, whether for the benefit of the trustees or otherwise.34 The court will not control trustees in the exercise of their purely discretionary powers unless they are acting mala fide,35 or have misconceived the nature of their discretion and acted on that misconception. In the case of a duty, the trustees commit a breach of trust if they fail to do or refrain from doing the thing prescribed or proscribed. In the case of powers, they commit a breach of trust if they fail honestly to exercise their judgment as to whether they should do the particular act or not.36 Trustees may exercise their discretion by deciding not to perform a discretionary act,37 but they must in fact exercise their discretion before doing a discretionary act, and if they decide that the discretionary act should be done, then they are bound to do it.38 Powers or discretions, therefore, imply an obligation which is as real and binding as the obligation inherent in a duty properly so-called, and from this viewpoint there is no difference between them. The essential difference between powers or discretions and duties properly so-called, lies not in the nature of the trustee’s obligation but in the nature of the act the trustee is obliged to do. Thus, if a trustee is directed by the trust instrument to pay the income from the trust fund to A, the direction is a duty. The trustee’s failure to make [page 326] the payment constitutes a breach of trust and is actionable by A. But if the trustee has a mere power to apply the income for A’s maintenance and honestly

decides, after taking into account only material considerations, to make no payment to A, the court will not interfere.39 Trustees commit a breach of trust if they neglect to give any consideration to the question whether they should make a payment to A,40 if they refrain from making a payment because of some improper motive,41 or if they make the payment to A as of course, without considering whether they should do so or not.42

Fiduciary Character of Trustee Powers [16-07] It follows from what has been said, and from the very fact that trustees are fiduciaries, that all the powers of a trustee are fiduciary. Two consequences of importance flow from this. The first is that although a power is a ‘mere power’, if it is vested in trustees, those trustees have a duty to consider whether it should be exercised or not and to put themselves in a position where they can make a rational judgment on the matter, whereas a non-fiduciary repository of a ‘mere power’ is under no such duty.43 The second is that unless there are clear words to the contrary, the power cannot be exercised by the trustees in their own favour, a consequence so elementary that it would scarcely be worthy of mention were it not so often disregarded. For example, it is all too common for the trustee of a family discretionary trust, very popular in Australia for fiscal reasons, to exercise a power ‘in his or her absolute discretion’ to invest trust moneys by lending them to any person without security or by advancing trust moneys to himself or herself.44

Duties of Trustees Possessing a Discretionary Power [16-08] What, then, are the duties of trustees with a discretionary power? Their first duty is to act honestly and in good faith. There is no distinction between ‘honestly’ and ‘in good faith’.45 Moreover, mere carelessness or honest blundering will not negative ‘good faith’.46 Nor need they observe the rules of natural justice: they may exercise a power to the disadvantage of a beneficiary without seeking that beneficiary’s views.47 Their second duty is to act ‘upon genuine consideration’,48 that is, to take an informed view of whether or not to exercise their discretion, and not to act irresponsibly, capriciously or wantonly.49 Their third duty is to

[page 327] exercise their power with due consideration for the purpose for which it was conferred, and not for some ulterior purpose.50 While it is irrelevant whether or not their decision proves beneficial or prudent,51 and equally irrelevant whether the court would exercise the power in the same way,52 a grotesquely unreasonable result may be evidence of a miscarriage of duty.53

Mala Fides [16-09] Conversely, it may be asked what is meant by mala fides in this context? It obviously includes fraud, but is much wider than that. It also includes a refusal to recognise that the discretion exists,54 and a refusal to make an informed decision.55 It also includes making a decision for an ulterior motive or purpose; for example, where a trustee exercised a power of advancement with the real object of benefiting the cestui que trust’s father.56 It includes the taking into account of irrelevant considerations, as where the trustees’ discretion was not to pay an annuity if it was ‘unnecessary, inexpedient and impracticable’ but they had declined to pay it for reasons which had nothing to do with those criteria.57 It also includes a refusal to take relevant considerations into account.58

Reasons [16-10] Where trustees are appointed to exercise a trust according to discretion, they are not bound to state reasons for any conclusion at which they may have arrived and on which they have acted. But their discretion must be exercised with an absence of indirect motive, with honesty of intention, and with a fair consideration of the issues.59 The duty of the court generally is to see that the discretion of the trustees has been exercised in this manner and not to deal with the accuracy of the conclusion at which the trustees may have arrived.60 It was for this reason that beneficiaries were held disentitled to discovery or inspection of documents, private to the trustees, which contained or evidenced the reasons which led to their conclusions;61 and in New South Wales, interrogatories directed to a disclosure of their reasons are disallowed. If, however, the trustees state reasons for their decision, the court may

[page 328] consider the validity of such reasons and, if it feels that the reasons do not justify the decisions, may correct the decisions accordingly.62 This principle only applies to reasons stated by trustees of their own volition, not to statements of reasons made by them in court which they are virtually obliged to make.63

Ambit of Discretion [16-11] It is important to realise that the principles considered above apply to acts done within the scope of the relevant discretion. But in each case it is necessary to examine carefully just what is the precise ambit or scope of the discretion. Thus, a discretionary power to postpone conversion ‘for such period as to the trustees shall seem expedient’ has been held not to authorise them to prefer the interests of the remaindermen to those of the life tenants; in other words, the scope of the discretion conferred did not displace the trustees’ traditional duty of even-handedness.64 Similarly, a discretionary power to invest in such manner as the trustee thinks fit will usually not be interpreted as including a power to make an unsecured personal loan.65 The High Court of Australia held66 that a trustee carrying on a pastoral business on whom had been conferred ‘the fullest powers and discretions as to the mode of conducting my said business … and otherwise in relation thereto as if the trustee were the absolute owner thereof’ was not, as a matter of construction, thereby relieved of his ordinary duty to exercise due diligence, care and prudence, which called on him to exercise an option to purchase neighbouring land. In each case a different result could ensue if the discretion were conferred in different words: it is always a matter of construction. This is what is meant when it is said that where the manner in which trustees should exercise a particular discretion, for example, a discretion to sell property in such manner and at such price as they think fit, has been the subject of judicial decision in other cases, the trustees should, it seems, follow the principles settled by those decisions, otherwise their act may be set aside by the court.67

The Abolition of the Hastings-Bass ‘Rule’ [16-12] Contrary to what was thought in England for nearly four decades

after 1975,68 in 2013 the Supreme Court of the United Kingdom in Pitt v Holt69 made it clear that the exercise of a trustee’s discretion will not be set aside simply because it has not been as fully effective as the trustee wished, as for example where part of an advancement was invalid because it infringed the rule against perpetuities or a decision by the trustee turned out to have adverse tax consequences. That regime created a perverse ‘wait and see’ system under which trustees tried to rely on their own failings when things turned out badly.70 [page 329] Instead, assuming the trustee is not acting beyond power,71 or contrary to the general law,72 and assuming no relevant mistake, the relevant principle turns on whether there was a breach of fiduciary duty rendering the trustee’s decision voidable at the instance of the beneficiaries. The relevant fiduciary duty requires the trustee to take into account considerations that should be taken into account, and not to take into account considerations which should not be taken into account. The duty involves identifying the relevant considerations and using all proper care and diligence in obtaining the information and advice which is relevant to those considerations. The considerations that should be taken into account can include tax consequences. The decision may be set aside if the trustee would not, or might not, have acted as he, she or it did but for the breach of duty. If the trustee obtains and follows advice from apparently competent advisers, then without more there is no breach of duty in failing to have regard to relevant matters if the failure flows from errors in the advice. (In contrast, acting on advice is no defence to a claim based on acting beyond power or against the law.)73 By ‘mistake’ the court in Pitt v Holt meant a causative mistake which was so grave that it would be unconscionable to refuse relief — normally, that is, a mistake as to the legal character or nature of the transaction, or a mistake as to a matter of fact or law which was basic to the transaction.74

Ouster Clauses [16-13] An attempt to oust the jurisdiction of the court in its supervision of the exercise of a trustee’s discretionary powers is contrary to public policy.75 In

Canada, it has been held that a provision that trustees would be sued only by the settlor and not by the beneficiaries was likewise invalid.76

General Considerations [16-14] The bona fide exercise of a discretion by a trustee will be protection to him or her whether the result be good or bad.77 The court will presume that the trustee has acted bona fide; that is, the onus of proving that he or she acted mala fide lies on those impeaching his or her actions.78 Unreasonableness of the exercise of the discretion may be either evidence of mala fides or evidence that the discretion was never really exercised at all but, of itself, it is not a ground for interference by the court.79 It is one thing to say that ‘the trustees must honestly discharge their trust and keep within the bounds of the powers and duties entrusted to them’ and quite another to say that they ‘must not fall into errors which other persons, including a [page 330] court of law, might consider unreasonable’.80 This is particularly so if the discretionary power is expressed to be ‘absolute’ or ‘uncontrolled’.81 Trustees may freely discuss with the beneficiaries the reasons for and against their exercising their discretion in a particular way, and may act in a way to which they have previously expressed objections without running the risk of being held to act against their judgment.82 They may also, for the purpose of the government of their own discretion, have regard to the wishes of the testator expressed in papers and documents not forming part of the trust instrument, for example, an unattested codicil, so far as they are not restrained by the terms of the trust instrument.83 But, as stated in [16-10], trustees need give no reasons for their decisions.84 Trustees must exercise powers according to circumstances as they exist at the time. They must not abandon or fetter their exercise of a power by anticipating the arrival of the proper period in purporting to release the power or by undertaking beforehand as to the mode in which the power will be exercised in futuro.85 All trustees must concur in the exercise of powers conferred on them with

reference to the trust estate. The act of the majority of the trustees cannot bind a dissenting minority or the trust estate.86

Court’s Power to Order Reasons [16-15] In Queensland and in Western Australia, much of the law stated in the previous paragraphs has been considerably modified by the statutory adoption of a curial process which can compel trustees both to state and to justify their reasons for exercising, or for failing to exercise, a power and which, further, can lead to a reversal of the trustees’ decision, however bona fide.87 In Queensland, s 8(1) of the Trusts Act 1973 is in the following terms: 8 (1) Any person who has, directly or indirectly, an interest, whether vested or contingent, in any trust property or who has a right of due administration in respect of any trust, and who is aggrieved by any act, omission or decision of a trustee or other person in the exercise of any power conferred by this Act or by law by the instrument (if any) creating the trust, or who has reasonable grounds to apprehend any such act, omission or decision by which the person will be aggrieved, may apply to the court to review the act, omission or decision, or to give directions in respect of the apprehended act, omission or decision; and the court may require the trustee or other person to

[page 331] appear before it and to substantiate and uphold the grounds of the act, omission or decision which is being reviewed and may make such order in the premises (including such order as to costs) as the circumstances require.

Duty Coupled with a Power [16-16] Sometimes an imperative duty is coupled with a discretionary power. Usually the discretionary power in such a case is limited to the time or manner of doing an act which the trustee has an imperative duty to do at some time or in some manner. This is distinct from a mere power where the trustees have an initial discretion whether they will do the act or not. In the case of an imperative duty coupled with a discretionary power, the court will compel the trustees to perform the duty, as any refusal to perform the duty is regarded as a repudiation of the power or discretion coupled with it. But if the trustees are

willing to perform the duty, the court will not interfere with their decision as to how the power coupled with it is to be executed.88 Thus, where the trust instrument imposes a duty upon trustees to sell realty but also gives them a discretionary power to postpone the sale, the court will not interfere with a bona fide exercise of their discretion as to the time and mode of sale.89 If there are two or more trustees and they cannot agree as to the exercise of the power, then the duty prevails. Thus, where a will contains a trust for conversion with a power to retain investments existing at the date of the will and the trustees are not unanimous as to the retention of some of the investments made by the testator, the trust for sale prevails and the investments must be sold, although they are within the investment clauses of the will.90 By parity of reasoning, it was held that where the trustees of a will had a discretion to pay the annual income to the testator’s husband, but subject thereto to hold it on trust for two named beneficiaries, and the trustees could not agree whether or not to pay accumulated income to the husband, they were bound to pay it to the named beneficiaries.91

The Amendment of Powers, Duties and Discretions Significance of Trust Instrument [16-17] In general, it is often possible to ascertain the powers, duties and discretions of a trustee by a consideration of the general law together with the relevant provisions of the trustee legislation of the various states or territories. But the combinations of general law and legislation do not of themselves necessarily determine in any given case what trustees can or may do, what they must do, or what are the consequences of their committing an apparent breach of trust. It must never be forgotten that a third source of law is the trust instrument. To a large extent a settlor or testator can amend, alter or modify any of the powers, duties and discretions which would otherwise apply; and can also determine what consequences flow from the breach of a duty. Just as the law of contract permits the parties to a contract to determine its terms, subject to any

relevant legislation, the law of trusts permits the settlor or testator to determine the incidents of a trust, at least to a large extent. The primacy of the trust instrument is not the subject of much express judicial exposition, although it is clearly implied both in judicial decisions and in the applicable legislation. [page 332] Lord Westbury LC said:92 ‘The testatrix was at liberty to say “Your duty shall require no more of you than this”. The Court could not extend the office, or invest it with greater obligation.’ Subject to any legislation to the contrary, or the rules of illegality, that is still an accurate general statement of the law. Because the trust instrument has primacy, its terms can be drafted in such a way as to prevent beneficiaries complaining of what would otherwise be a breach of trust. This can arise in three ways. The trust instrument can prevent particular conduct from being a breach of trust at all, either because the trustees are given wider powers than the general law would give them, or because the trustees are subjected to narrower duties than those which the general law would impose. Further, the trust instrument can prevent particular conduct which is a breach of trust from giving the beneficiaries some or all of the remedies which they would otherwise have. Additionally, the trust instrument may enlarge the rights of indemnity against the trust funds which the trustees would otherwise have in claims by third parties.

Interrelation of Trust Instrument and Statute [16-18] The importance of the provisions of the trust instrument is recognised in the trustee legislation itself. Thus, ‘unless expressly forbidden’ by the trust instrument, in New South Wales the trustee has power to invest trust funds in any form of investment (s 14), has a duty to take specified matters into account when exercising a power of investment (s 14C), and may, by holding or acquiring a chose in action arising under the RITS system, invest in the underlying security (s 14F). Other powers are to apply only if a contrary intention is not expressed in the trust instrument, for example, the power to make company arrangements (s 21), the power to concur in a transfer of the

engagements of, or a merger of, a building society or credit union (s 21A), the power to take up new shares in a company (s 22), and the power to apply capital money in payment of calls (s 23). Other provisions are subject to the trust instrument, for example, s 14A (duty to exercise care, diligence and skill) and s 14B (preserving rules and principles of law or equity imposing duties on trustees exercising a power of investment). And other provisions are expressed to operate despite the trust instrument, for example, the power to retain as part of the trust property a dwelling house for a beneficiary to use as a residence (s 14DA(2)). It is thus clear that the trust instrument could, if suitably worded, authorise the investment of trust moneys in hazardous, speculative, wasting or mining investments, which would otherwise be a breach of trust. What is true of the power to invest is also true of the other powers, duties and discretions contained in the Trustee Act; and what is true of the New South Wales legislation is true of all the other comparable Australian legislation. However, clauses conferring wider powers are treated as conferring on the trustees power to engage in transactions which might otherwise be outside the scope of their authority, not as indemnities protecting the trustees from liability for a transaction which is a breach of trust because it is one which prudent business persons would have eschewed.93 Thus, a power to lend money unsecured may not justify a particular loan where a secured loan was available.94 Hence, the settlor can modify what would otherwise be the obligations of trustees by broadening their powers, thus precluding beneficiaries from alleging a breach of trust by reason of the mere exercise of the broadened powers. Moreover, what is true of powers is also true of duties. The express words of a trust instrument may absolve trustees from performance of what would otherwise be their duty. For example, two trustees were held to be under no obligation to prevent the trust assets from falling into the sole possession of a third trustee, because of the [page 333] wording of the trust instrument.95 Occasionally, legislation imposes a duty on trustees which is incapable of amendment, but this is rare. Again, it is also true of rights. As is pointed out in Chapter 21, the right of trustees to recoup themselves from the trust funds, and their right to be

indemnified by the beneficiaries, can both be negatived or modified by the express language of the trust instrument.

Exemption Clauses [16-19] The essential freedom to mould the terms of a trust has been employed on many occasions to excuse trustees from the consequences of their own breaches of trust. It is a melancholy fact that such clauses are usually insisted on by highly paid professional trustees (like trustee companies), who hope to gain immunity from the consequences of departing from their own advertised standards of expertise. It should also go without saying that any ambiguities in such clauses should be construed against the trustee relying on them. Apart from that, there is little of general principle which can be said of such exempting clauses, as each one must depend on a precise consideration of its own terms. One curiosity about them is the extent to which they are necessary in the light of legislation discussed in [22-09] which variously absolves a trustee from liability for ‘wilful neglect or default’, ‘wilful default’ or ‘default’. However, the legislation should be read as exculpating trustees from the defaults of co-trustees, not from their own independent defaults. Hence, if further exemption is desired, an exempting clause in the trust instrument is necessary. It has been said that the courts construe clauses purporting to exempt trustees from liability carefully and ‘as strictly as possible’,96 and that if liability for negligence is to be excluded ‘clear and unambiguous words’ must be employed.97

Irreducible Core of Obligations [16-20] A question arises as to whether an exemption clause can extend to excusing trustees from performing some or all of their fiduciary duties. It is clear that appropriate language will permit trustees to act despite a conflict of duty and interest.98 A clause permitting trustees to make loans of trust funds to themselves is valid. These conclusions flow from the principle that the persons to whom a fiduciary duty is owed may excuse their fiduciaries from any breach of their duty which they have committed, if they make full disclosure to them;99 and it is difficult to see why, by an inversion of the usual role, that which can afterwards be excused cannot previously be authorised. It should be realised that even when the trust instrument permits a power to be exercised in

circumstances which would otherwise constitute a breach of a fiduciary duty, the trustee cannot necessarily always exercise that power with impunity. For example, if a trust instrument permitted trustees to make a loan to themselves, they would still be committing a breach of trust if the exercise of the power imperilled the safety of the trust assets. One fiduciary duty may have been dispensed with, but the ordinary duty to exercise care and skill would not, in that example, have been qualified. Can an exemption clause divest trustees of all their fiduciary obligations? If an instrument gave property ‘to X for the benefit of Y, but so that X owes no fiduciary obligation to Y’, and this were construed as creating a trust, the exonerating words would have to be disregarded as repugnant to the trust or read down; if the instrument were construed so as to give the exonerating words the meaning they have on their face, there would be no trust. [page 334] It has been held that there is an irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by the beneficiaries which is fundamental to the concept of a trust. If these do not exist, or if the beneficiaries have no rights to enforce them, there is no trust. The minimum duty is the duty to perform the trusts ‘honestly and in good faith’ for the benefit of the beneficiaries; it does not include the trustee’s duties of skill, care and diligence.100 It follows that a trust instrument cannot exonerate a trustee from the consequences of fraud in the sense of conduct carried out either in the knowledge that it is contrary to the interests of the beneficiaries or with reckless indifference to whether it is contrary to their interests. Hence, trustees who rely on the presence of a trustee exemption clause to justify what they propose to do would lose the protection of that clause since they would be acting fraudulently in the sense of recklessly.101 A trustee-solicitor who deliberately commits a breach of trust which no reasonable trustee-solicitor could have thought to be in the interests of the beneficiaries, was found to be acting dishonestly.102 On the other hand, trustees who deliberately commit a breach of trust in good faith and in the honest belief that they are acting in the interests of the beneficiaries — that is, trustees who commit ‘judicious breaches of trust’103 —

are not dishonest.104 There is authority that it is possible to exclude liability for gross negligence.105 But it has been questioned.106 The precise construction of particular exemption clauses will vary from case to case. In a clause excluding liability for loss or damage to the capital or income of the trust property caused otherwise than by the trustee’s ‘own actual fraud’, the quoted expression was held to require a dishonest intention, and to exclude ‘constructive fraud’ and ‘equitable fraud’.107

Controlling Trustees in the Exercise of their Powers [16-21] Among the remedies for controlling trustees in the exercise of their powers are removal or an order requiring the trustees to consider the exercise of the power properly.108 But there are suggestions that the court may go further, and exercise for itself a power which the trustees will not.109 _____________________________ 1.

[1998] Ch 1; [1996] 4 All ER 698.

2. 3.

(1996) 186 CLR 71; 138 ALR 259. For example, Kiang Po Hoh v Frost Hollow Pty Ltd [2014] VSC 77 at [41]–[71] (an erroneous decision, because the Associate Justice was not bound to apply the view he did apply).

4. 5.

Westpac Banking Corporation v The Bell Group (in liq) (No 3) (2012) 44 WAR 1. Pitt v Holt [2013] 2 AC 108; [2013] 3 All ER 429.

6. 7.

Meagher, Gummow and Lehane’s Equity, [5-325]–[5-440]. [2013] AC 108; [2013] 3 All ER 429 at [60].

8.

[2005] 1 All ER 651; [2005] 1 WLR 567 at [30]. See also Spread Trustee Co Ltd v Hutcheson [2012] 2 AC 194; [2012] 1 All ER 281. [1998] Ch 1 at 16–17; [1996] 4 All ER 698 at 710–11.

9.

10. J Getzler, ‘Inconsistent Fiduciary Duties and Implied Consent’ (2006) 122 LQR 1 at 7. 11. [2013] 2 AC 108; [2013] 3 All ER 429 at [1]. 12. [2013] 2 AC 108; [2013] 3 All ER 429 at [2] (emphasis added). 13. [2013] 2 AC 108; [2013] 3 All ER 429 at [10]. 14. [2013] 2 AC 108; [2013] 3 All ER 429 at [40]–[41]. 15. Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409; [2003] 1 All ER 763 at [23]. 16. [2013] 2 AC 108; [2013] 3 All ER 429 at [10].

17. Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705 at 717. 18. [2013] 2 AC 108; [2013] 3 All ER 429 at [46], [56], [60], [68], [70]. 19. [2013] 2 AC 108; [2013] 3 All ER 429 at [63]. 20. [2013] 2 AC 108; [2013] 3 All ER 429 at [65]. 21. Sieff v Fox [2005] 3 All ER 693; [2005] 1 WLR 3811 at [86]; Pitt v Holt [2012] Ch 132; [2011] 2 All ER 450 at [115]. 22. [2013] 2 AC 108; [2013] 3 All ER 429 at [70]. 23. Pitt v Holt [2012] Ch 132; [2011] 2 All ER 450 at [127]. 24. See, for example, [2013] 2 AC 108; [2013] 3 All ER 429 at [71]–[73] (four times), [79], [84], [86], [96]. 25. [2013] 2 AC 108; [2013] 3 All ER 429 at [80], [81], [88], [91], [95]. See also at [2], [40], [60], [63], [68]. 26. [1918] 2 Ch 67. 27. [2013] 2 AC 108; [2013] 3 All ER 429 at [64] (emphasis added). 28. Balls v Strutt (1841) 1 Hare 146; 66 ER 984. 29. See ACT s 85; NSW s 85; NT s 49A; Qld s 76; SA s 56; Tas s 50; Vic s 67; WA s 75. 30. Re Mayne (1928) 28 SR (NSW) 157; 45 WN (NSW) 46 (‘desire’ was held to be imperative). Cf Re Altson [1955] VLR 281; [1955] ALR 896, where the words ‘it is my express wish’ were held not to be imperative. 31. Langdon v Korff (1885) 6 LR (NSW) Eq 30. A tendency to refer to a duty as an ‘obligatory power’ (for example, in Locker’s Settlement [1978] 1 All ER 216 at 219; [1977] 1 WLR 1323 at 1326) is unnecessarily confusing. 32. See M Cullity, ‘Judicial Control of Trustees’ Discretions’ (1975) 25 Uni of Toronto LJ 99; A J Hawkins, ‘The Exercise by Trustees of a Discretion’ (1967) 31 Conv (NS) 117. 33. ‘In the course of this discussion the word “discretion” has been very frequently used … . What does it mean? In honest plain language it means “do as you like”’: Re Norrington (1879) 13 Ch D 654 at 659 per Sir James Bacon VC. This is witty but misleading. 34. Cowan v Scargill [1985] Ch 270 at 288; [1984] 2 All ER 750 at 761. 35. De Manneville v Crompton (1813) 1 Ves & B 354; 35 ER 138 (‘mischievously and ruinously exercised’); French v Davidson (1818) 3 Madd 396; 56 ER 550; Gisborne v Gisborne (1877) 2 App Cas 300; Craig v National Trustees Executors and Agency Co of Australasia Ltd [1920] VLR 569; Re Steed’s Will Trusts [1960] Ch 407; [1960] 1 All ER 487 (CA). 36. Klug v Klug [1918] 2 Ch 67 at 71; National Trustees Executors and Agency Co of Australasia Ltd v Federal Commissioner of Taxation (1923) 33 CLR 491 at 504; Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149; [1947] ALR 552. 37. National Trustees Executors and Agency Co of Australasia Ltd v Dwyer (1940) 63 CLR 1; [1940] ALR 86. 38. Smith v Cock [1911] AC 317 at 326; (1911) 12 CLR 30 at 37. 39. Brophy v Bellamy (1873) LR 8 Ch App 798; Gisborne v Gisborne (1877) 2 App Cas 300. 40. See National Trustees Executors and Agency Co of Australasia Ltd v Federal Commissioner of Taxation (1923) 33 CLR 491 at 504; Re Smith [1971] 1 OR 584, affirmed [1971] 2 OR 541; Re Hay’s Settlement Trusts [1981] 3 All ER 786; [1982] 1 WLR 202. 41. Re Radnor’s (Earl) Will Trusts (1890) 45 Ch D 402 at 413. 42. Wilson v Turner (1883) 22 Ch D 521, where repayment was ordered. The law as stated in this paragraph was approved and applied in Parkes Management Ltd v Perpetual Trustee Co Ltd [1977]

ACLC 29,545 and Karger v Paul [1984] VR 181. A useful summary appears in A-G (Cth) v Breckler (1999) 197 CLR 83; 163 ALR 576 at [7]. See also Curwen v Vanbreck Pty Ltd (2009) 26 VR 335. 43. Re Gulbenkian’s Settlement Trusts [1970] AC 508 at 518; [1968] 3 All ER 785 at 787; Re Hay’s Settlement Trusts [1981] 3 All ER 786 at 792; [1982] 1 WLR 202 at 208. 44. Metropolitan Gas Co v Federal Commissioner of Taxation (1932) 47 CLR 621 at 633; Wilson v MetroGoldwyn-Mayer (1980) 18 NSWLR 730. 45. R v Holl (1881) 7 QBD 575 at 580–1. 46. Jones v Gordon (1877) 2 App Cas 616 at 628–9. 47. Karger v Paul [1984] VR 161 at 166. 48. Partridge v The Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149 at 164; [1947] ALR 552; Karger v Paul [1984] VR 161 at 164–5. The court examines the inquiries made by the trustees, the information they had, and the reasons for, and manner of, exercising their discretion, not to see whether the discretion was unwisely exercised, but to see whether it was exercised: at 164. 49. Pilkington v IRC [1964] AC 612 at 641; [1962] 3 All ER 622 at 631; Lutheran Church of Australia (South Australia District) Inc v Farmers’ Co-operative Executors and Trustees Ltd (1970) 121 CLR 628 at 639; [1970] ALR 545 at 551–2. Trustees act ‘capriciously’ when they act for ‘reasons which … could be said to be irrational, perverse or irrelevant to any sensible expectation of the settlor; for example, if they chose a beneficiary by height or complexion or by the irrelevant fact that he was a resident of Greater London’: Re Manisty’s Settlement [1974] Ch 17 at 26; [1973] 2 All ER 1203 at 1210. 50. Re Pauling’s Settlement Trusts (No 1) [1964] Ch 303; [1963] 3 All ER 1; Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [33]–[39]; Esso Australia Ltd v Australian Petroleum Agents & Distributors’ Association [1999] 3 VR 642 at [38]–[43]. 51. Re Bryant [1894] 1 Ch 324. 52. Re Londonderry’s Settlement [1965] Ch 918 at 936–7; [1964] 3 All ER 855 at 862. 53. ‘Perverseness is dishonesty for this purpose’: Re Lofthouse (1885) 29 Ch D 921 at 930. 54. Re Smith [1971] 1 OR 584, affirmed [1971] 2 OR 541. 55. Wilson v Turner (1883) 22 Ch D 52. 56. Re Pauling’s Settlement Trusts (No 1) [1964] Ch 303; [1963] 3 All ER 1. 57. French v Davidson (1818) 3 Madd 396; 56 ER 550. 58. Cock v Smith (1909) 9 CLR 773; 15 ALR 526. 59. This sentence was quoted with approval by Hope JA in Parkes Management Ltd v Perpetual Trustees Co Ltd (1977) 3 ACLR 303 at 311. On the absence of a duty to give reasons, see Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896 at 900; Wilson v Law Debenture Trust Corporation plc [1995] 2 All ER 337; Sieff v Fox [2005] 3 All ER 693; [2005] 1 WLR 3811 at [37]; Curwen v Vanbreck Pty Ltd (2009) 26 VR 335 at [25]; Mandie v Memart Nominees Pty Ltd (2014) 42 VR 325 at [94], [97]–[111] (the immunity from giving reasons extends to the source information used in arriving at those reasons). The desirability of there being no duty to give reasons is controversial: see T Kaldor, ‘Competing Approaches to Beneficiary Access to Trust Information: Perhaps not so much of “a fork in the road”’ (2012) 86 ALJ 775 at 787. However, some classes of documents may be produced on subpoena or discovery revealing reasons, and there may be practical pressure to give reasons in order to avoid adverse inferences being drawn: Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705 at 719; Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 at 604. See further [17-13]–[17-17]. 60. Re Wilkes (Beloved) Charity (1851) 3 Mac & G 440, 42 ER 330; Re Schneider (1906) 22 TLR 223; Re Knollys’ Trusts [1912] 2 Ch 357.

61. Re Londonderry’s Settlement [1965] Ch 918; [1964] 3 All ER 855. 62. Re Wilkes (Beloved) Charity (1851) 3 Mac & G 440; 42 ER 330; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 441–2; Sieff v Fox [2005] 3 All ER 693; [2005] 1 WLR 3811 at [37]; Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [15], [67], [71], [72], [87], [96]. See also D Maclean, ‘Beneficiary’s Right to See Confidential Trust Documents’ (1993) 67 ALJ 703. 63. Karger v Paul [1984] VR 161 at 166; Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 at [17]–[18] (approving the proposition in the text). 64. Rowlls v Bebb [1900] 2 Ch 107; [1900–3] All ER Rep 756. 65. Khoo Tek Keong v Ch’ng Joo Tuan Neoh [1934] AC 529. 66. Elders Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426; [1964] ALR 408. 67. Cf Campbell v Campbell (1917) 17 SR (NSW) 229 at 232–3; 34 WN (NSW) 229 at 235. 68. Re Hastings-Bass [1975] Ch 25 at 41; [1974] 2 All ER 193 at 203, preceded by Re Baron Vestey’s Settlement [1951] Ch 209; [1950] 2 All ER 891; Re Abrahams’ Will Trusts [1969] 1 Ch 463; [1967] 2 All ER 1175. See also Mettoy Pension Trustees Ltd v Evans [1991] 2 ER 513; [1990] 1 WLR 1587; Breadner v Granville-Grossman [2001] Ch 523; [2000] 4 All ER 705; Smithson v Hamilton [2008] 1 All ER 1216; [2008] 1 WLR 1453. Cf Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [40]. 69. Pitt v Holt [2013] 2 AC 108; [2013] 3 All ER 429. 70. Re Hastings-Bass [1975] Ch 25 at 41; [1974] 2 All ER 193 at 203. 71. For example, Perrins v Bellamy [1899] 1 Ch 797. 72. For example, National Trustees Co of Australasia Ltd v General Finance of Australasia Ltd [1905] AC 373. 73. Pitt v Holt [2013] 2 AC 108; [2013] 3 All ER 429 at [24], [40]–[41], [68], [70], [73], [78]–[80], [88], [91]–[92]. See also Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409; [2003] 1 All ER 763; Sieff v Fox [2005] 3 All ER 693; [2005] 1 WLR 3811. See further Lord Walker, ‘The Limits of the Principle in Re Hastings-Bass’ (2002) 13 KSLJ 173; C Mitchell, ‘Reining in the Rule in Re Hastings-Bass’ (2006) 122 LQR 35. 74. Pitt v Holt [2013] 2 AC 108; [2013] 3 All ER 429 at [101], [122], [124]–[126]. 75. Re Wynn’s Will Trusts [1952] Ch 271; [1952] 1 All ER 341. 76. Jones v Shipping Federation of British Columbia (1963) 37 DLR (2d) 273. 77. Garrett v Noble (1834) 6 Sim 504; 58 ER 683. 78. Edmonds v Millett (1855) 20 Beav 54; 52 ER 522; Re Brittlebank (1881) 30 WR 99; Gordon v Australian & New Zealand Theatres Ltd (1940) 40 SR (NSW) 512 at 517; 57 WN (NSW) 126 at 128. ‘If trustees make a decision upon wholly wrong grounds, and yet it subsequently appears, from matters which they did not express or refer to, that there are in fact good and sufficient reasons for supporting their decision, then I do not think that they would incur any liability for having decided the matter upon erroneous grounds; for the decision itself was right’: Cowan v Scargill [1985] Ch 270 at 294; [1984] 2 All ER 750 at 766 per Sir Robert Megarry VC. See also Nestlé v National Westminster Bank plc [1994] 1 All ER 118 at 128; [1993] 1 WLR 1260 at 1270. 79. Cock v Smith (1909) 9 CLR 773 at 844; 15 ALR 526. But see Costabadie v Costabadie (1847) 6 Hare 410; 67 ER 1225; Re Hodges (1878) 7 Ch D 754 at 761; Tabor v Brooks (1878) 10 Ch D 273 at 277–8; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 428. 80. Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896 at 901 per Lord Normand. 81. Gisborne v Gisborne (1877) 2 App Cas 300; [1874–80] All ER Rep Ext 1698; Tempest v Lord Camoys

(1882) 21 Ch D 571; [1881–5] All ER Rep 836. See also Attorney-General v Trustees of National Art Gallery of NSW (1944) 62 WN (NSW) 212. 82. Fraser v Murdoch (1881) 6 App Cas 855. Trustees are not obliged to give natural justice: Stuart v Armourguard Security Ltd [1996] 1 NZLR 484 at 506. 83. Hitch v Leworthy (1842) 2 Hare 200; 67 ER 83. Another example is a memorandum of wishes: Hartigan Nominees Pty Ltd v Ryde (1992) 29 NSWLR 405. Another is an agreement by the settlor that the trustees would not charge a full rate of interest on a loan: Guazzini v Pateson (1918) 18 SR (NSW) 275 at 287–8. 84. Re Londonderry’s Settlement [1965] Ch 918; [1964] 3 All ER 855. 85. Weller v Kerr (1866) LR 1 HL (Sc) 11; Thacker v Key (1869) LR 8 Eq 408; Moore v Clench (1875) 1 Ch D 447; Chambers v Smith (1878) 3 App Cas 795 at 815; Re Wise [1896] 1 Ch 281; Dunstan v Houison (1901) 1 SR (NSW) Eq 212; 18 WN (NSW) 302; Re Stephenson’s Settled Estates (1906) 6 SR (NSW) 420; 23 WN (NSW) 153; Watson’s Bay & South Shore Ferry Co Ltd v Whitfeld (1919) 27 CLR 268; Re Hirst [1954] St R Qd 344. 86. Leyton v Sneyd (1818) 8 Taunt 532; 129 ER 489; Luke v South Kensington Hotel Co (1879) 11 Ch D 121; [1874–80] All ER Rep 1293; Re Roth (1896) 74 LT 50; [1895–9] All ER Rep 455; Astbury v Astbury [1898] 2 Ch 111; Re Mayo [1943] Ch 302; 2 All ER 440; Re Billington [1949] St R Qd 102; Pelham v Pelham [1955] SASR 53; Sky v Body (1970) 92 WN (NSW) 934; Cowan v Scargill [1985] Ch 270 at 297; [1984] 2 All ER 750 at 768. The principle does not apply to trustees of a charity who may act by majority: Re Whiteley [1910] 1 Ch 600. Also in some jurisdictions the majority of a number of co-trustees may compromise, etc: NSW s 49; ACT s 49. 87. See Re Whitehouse [1982] Qd R 196. See Qld s 8(1); WA s 94. 88. Tempest v Lord Camoys (1882) 21 Ch D 571; [1881–5] All ER Rep 836; Re Blake (1885) 29 Ch D 913; Re Burrage (1890) 62 LT 752; Re Knollys’ Trusts [1912] 2 Ch 357. 89. See Re Blake (1885) 29 Ch D 913; Re Hammond (1903) 3 SR (NSW) 270; 20 WN (NSW) 123. 90. Re Hilton [1909] 2 Ch 548. 91. Re Allen-Meyrick’s Will Trusts [1966] 1 All ER 740; [1966] 1 WLR 499; see also Re Gourju’s Will Trusts [1943] Ch 24; [1942] 2 All ER 605. 92. Wilkins v Hogg (1861) 31 LJ Ch 41 at 43. 93. Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515 at 536–7; [1980] 1 All ER 139 at 154. 94. Knox v Mackinnon (1888) 13 App Cas 753 at 765. 95. Wilkins v Hogg (1861) 31 LJ Ch 41 at 43; Hayim v Citibank NA [1987] AC 730. 96. McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 641. 97. Armitage v Nurse [1998] Ch 241 at 255; [1997] 2 All ER 705 at 715; Wong v Burt [2005] 1 NZLR 91 at [51]. 98. Hordern v Hordern [1910] AC 465. 99. See Meagher, Gummow and Lehane’s Equity, [5-130]. 100. Armitage v Nurse [1998] Ch 241 at 253–4; [1997] 2 All ER 705 at 713 (fully analysing the authorities); Wilden Pty Ltd v Green (2009) 38 WAR 429 at [157]–[164]; Rinehart v Welker [2012] NSWCA 95 at [139]–[140]. See also P Matthews, ‘The Efficacy of Trustee Exemption Clauses in English Law’ [1989] Conv 42; T Cockburn, ‘Trustee Exculpation Clauses Furnished by the Settlor’ (1993) 11 Aust Bar Rev 163; M Bryan, ‘Contractual Modification of the Duties of a Trustee’ in S Worthington (ed), Commercial Law and Commercial Practice, pp 513–28. 101. Armitage v Nurse [1998] Ch 241 at 250–1, 254; [1997] 2 All ER 705 at 711, 713; Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566 at [152].

102. Walker v Stones [2001] QB 902; [2000] 4 All ER 412. 103. Perrins v Bellamy [1899] 1 Ch 797 at 798: see [17-04]. 104. Walker v Stones [2001] QB 902 at 941; [2000] 4 All ER 412 at 445. 105. Armitage v Nurse [1998] Ch 241 at 253–6; [1997] 2 All ER 705 at 713–5; Spread Trustee Co Ltd v Hutcheson [2012] 2 AC 194; [2012] 1 All ER 281 at [52], [81], [114]. 106. Spread Trustee Co Ltd v Hutcheson [2012] 2 AC 194; [2012] 1 All ER 281 at [135]–[137], [141]–[180]. See also the Law Commission, Consultation Paper No 171, Trustee Exemption Clauses (2002), [2.54]. It proposed the banning of clauses which excluded liability for breach of trust arising from negligence. Its later Report on Trustee Exemption Clauses (2006, Law Com 301), however, recommended only that paid trustees take reasonable steps to draw the clauses to the attention of the settlor. This feeble recommendation was rendered the feebler by the fact that the law probably already requires this: Meagher, Gummow and Lehane’s Equity, [5-010] and [5-130]. 107. Armitage v Nurse [1998] Ch 241 at 250; [1997] 2 All ER 705 at 710. 108. In Re Manisty’s Settlement [1974] Ch 17 at 27–8; [1973] 2 All ER 1203 at 1211–12, Templeman J said these were the only remedies, but others would be injunctions and equitable compensation. 109. Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 548–9; [1990] 1 WLR 1587 at 1617–18, pointing to various techniques described by Lord Wilberforce in McPhail v Doulton [1971] AC 424 at 456–7; [1970] 2 All ER 228 at 247; and Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] 3 All ER 76 at [42].

[page 335]

CHAPTER 17 Duties of a Trustee Duties To Become Acquainted with the Terms of the Trust To Get in the Trust Property Not to Impeach the Validity of the Trust Instrument or the Title of the Beneficiary To Adhere to and Carry Out the Terms of the Trust General rule Non-statutory qualifications to general rule Statutory qualifications re management or administration Variation of beneficial interests Repairs Buying dwelling houses Sale of infant’s property To Act Impartially Between the Beneficiaries Properly to Invest the Trust Funds To Keep and Render Proper Accounts and to Give Full Information when Required Keeping accounts Rendering accounts Giving information to beneficiaries Beneficiaries’ right of access to documents Giving information to strangers To Exercise Reasonable Care Standard of care Insurance Trust funds

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Custody of title deeds Custody of bearer securities Not to Delegate Duties or Powers Non-statutory rules Statutory rules New South Wales and the Australian Capital Territory Victoria Queensland and Western Australia South Australia and Northern Territory Tasmania

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Statutory provisions compared Impact of statutory provisions Foreign property Trustee abroad Delegation of power to consent To Pay and Transfer the Trust Property and Its Income to the Right Persons Non-statutory background Statute Overpayments: Analysis Overpayments: Conclusion Acting Gratuitously Trustee’s Right to Remuneration Solicitor-trustee Rule in Cradock v Piper Not to Deal with the Trust Property for Personal Benefit, or Otherwise to Profit by the Trust General Purchase of trust property by trustee Purchase of trust property by ex-trustee and trustee’s

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relatives Solicitors Solicitor and client; barrister Purchase from beneficiary Position where purchase is set aside Profits

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Duties To Become Acquainted with the Terms of the Trust [17-01] The first duty of trustees is to become thoroughly acquainted with the terms of the trust and all documents, papers and deeds relating to or affecting the trust property as come into their possession and control.1 It is necessary that trustees should know precisely the nature and circumstances of the trust property, and that they should know exactly what they are required to do with that property.2 The consequences of breach of this duty vary with the circumstances, but they can be horrendous. In Turner v Turner,3 for example, the trustees never acquainted themselves with the terms of the trust instrument. Yet, over a period of 10 years, they purported to make three major exercises of a power of appointment by executing whatever documents the settlor’s solicitor proffered to them; all three transactions were set aside and declared invalid. [page 337] The decision of the English Court of Appeal in Nestlé v National Westminster Bank plc4 is of considerable interest. In that case, the defendant Bank was alleged to have been for nearly 50 years in default of the duty now under consideration. The allegation was well founded. During the whole of that time the trustee never understood the meaning of the investment clause in the will which set up the trust. Further, it falsely assumed that after the Trustee Investments Act 1961 (UK) came into existence, its powers of investment were

governed solely by that Act and not at all by the will. To make matters worse, it never took legal advice about any of these matters. To compound things, it never conducted any review, let alone periodic reviews, of its portfolio of investments. Thus, the trustee had committed multiple breaches of trust for over half a century. Yet, the plaintiff beneficiary failed to obtain the only relief she really sought, viz an order that the trustee repay to the trust any losses which its breaches had occasioned. This was because she was unable to prove that any loss at all had been occasioned. Apparently, by happy accident, at the end of the day the trust was as well off as it would have been if no breaches of trust had been committed.

To Get in the Trust Property [17-02] The trustees, by virtue of their very office, have an ‘obligation to get the trust property in, protect it, and vindicate the rights attaching to it’.5 Thus, on assuming office, the trustees should get in all trust property, so the title to it is, if not in their names, at least in their control. This applies to all trustees, original or new. If the trust property consists in whole or in part of shares, they should procure the registration of the shares in their names. If notice is required to be given in order to perfect an imperfectly assigned debt, that notice should be given. If there be more than one trustee, the title to property should be vested in all of them as joint tenants.6 Thus, in Field v Field,7 Kekewich J stated: ‘The general principle, in my opinion, is that trustees must have their muniments of title, as well as their securities, under their own control.’ However, in relation to covenants to settle after-acquired property, it is not a breach of trust simply to fail to make inquiries where there is nothing to give rise to a suspicion that property had been acquired which was subject to the settlement.8 And new trustees under a settlement containing covenants of that kind are entitled to assume that everything has been attended to before they became trustees.9 Statutory powers to authorise departures from the terms of trusts have not been exercised to overcome the difficulties of the rule that trust property must be in the names of all the trustees by vesting it in some unchanging authority.10 The trustee also has a positive duty ‘to distinguish the piece of property he … acquires from other similar things which he may obtain for himself or in which he may be interested’.11 A new trustee may take proceedings to have redressed a breach of trust by a

former trustee, and failure to do so itself may be a breach of trust.12 And defaulting trustees remain obliged, [page 338] despite their own wrongdoing, to make good the trust property and, if necessary, institute proceedings against those who participated in the wrongdoing to make good the loss.13

Not to Impeach the Validity of the Trust Instrument or the Title of the Beneficiary [17-03] An express trustee who has not disclaimed the trusts is not permitted thereafter to impeach the validity of the trust instrument or the title of the beneficiary.14 Thus in a suit against a trustee and beneficiary to set aside the trust settlement, the trustee will not be permitted to take a course opposed to the beneficiary.15 Nor can the trustee assert ownership of the trust property by a title paramount to that of the settlor,16 although it has been held in New South Wales17 that a trustee of a voluntary settlement of land could defeat the trust by purchasing from the settlor under 27 Eliz 1 c 4. A trustee of an express trust cannot challenge the validity of the title of, or an assignment, by the cestui que trust.18 The trustee must assume the validity of the title until it is negatived.19

To Adhere to and Carry Out the Terms of the Trust General rule [17-04] It is the duty — ‘[p]erhaps the most important duty’20 — of a trustee to adhere rigidly to the terms of the trust.21 This is a positive, prescriptive duty, not a negative, proscriptive duty.22 It has been described, rightly, as a ‘fiduciary’ duty.23 A trustee undertakes a certain trust, that is, undertakes to carry out the wishes of the settlor as expressed in a deed or a will, and having undertaken to do this, is bound by the undertaking. The rule that the trustee must strictly conform to and carry out the terms of

the trust modifies all other rules because these other rules are applied subject to any provisions contained in the trust instrument itself.24 However, where a statute or an order of the court warrants a departure from the terms of the trust instrument, the trustee may, of course, act in accordance with the statute or the order as the case may be. Subject to this, trustees who depart from the strict terms of the trust do so at their peril. Thus if trustees are directed to realise certain assets and invest the proceeds but fail to do so with consequent loss to the trust, they will be liable to make good the loss.25 Similarly, they are liable if the trust property depreciates in value after the date when they should have sold it but failed to do so.26 They must not sell if they have no power of sale, [page 339] or if such a power exists but is subject to certain conditions which do not then apply, no matter how beneficial such sale may appear.27 A trustee is not, in all cases, to be made liable upon the mere ground of his having deviated from the strict letter of his trust. The deviation may be necessary, or may be [beneficial]; but, when a trustee ventures to deviate from the strict letter of his trust, he does so under the obligation and at the peril of afterwards satisfying the Court that the deviation was necessary or beneficial …28

If the act turns out not to have been beneficial, the trustees may not be liable if they can show that, although the act was not within their powers, it would have been directed or permitted to be done if the trustees had at the time made application to the court.29 The risk of not being able to prove this in the light of subsequent events is obvious.30

Non-statutory qualifications to general rule [17-05] The foregoing rule is, however, a general rule, and is subject to the following qualifications: (1) The beneficiaries, if they are all sui juris, absolutely entitled and unanimous, may direct the trustee to depart from the strict terms of the trust or even put an end to the trust, and the trustee will incur no liability if their directions are followed;31 although the trustee is not bound to follow their directions, unless the trustee is agent for the beneficiaries as well as their trustee.32 (2) A trustee will not, of course, incur any liability for departing from the strict

terms of the trust where those terms are incapable of being carried out as, for example, where the trust directs an immediate sale of property but a purchaser cannot be found. The trustee should, however, in such circumstances, to ensure complete protection, apply to the court for directions.33 The position is the same where the terms of the trust are illegal.34 (3) Trustees will of necessity be justified in departing from the strict terms of the trust when compliance therewith is affected by a statute or by delegated legislation. Thus many statutes impose or confer powers on trustees ‘notwithstanding anything contained in the trust instrument to the contrary’. (4) The court has always had inherent jurisdiction to sanction deviations from the terms of the trust where circumstances have arisen of an exceptional and urgent nature. In the leading case, Re New,35 Romer LJ stated: In a case of this kind, which may reasonably be supposed to be one not foreseen or anticipated by the author of the trust, where the trustees are embarrassed by the emergency that has arisen

[page 340] and the duty cast upon them to do what is best for the estate …, then it may be right for the Court, and the Court in a proper case would have jurisdiction, to sanction on behalf of all concerned such acts on behalf of the trustees as we have above referred to.

In addition to the court’s inherent power under this head, it also had inherent power to authorise deviations from the terms of the trust in three other cases: (a) it could sometimes effect changes in the nature of infants’ property, for example, by directing the investment of their personalty in the purchase of freeholds; (b) it could sometimes allow maintenance out of income to beneficiaries although the testator or settlor had directed income to be accumulated; and (c) it had power to approve a compromise on behalf of infants and possible after-born beneficiaries.36 However, prior to the enactment of the statutory provisions, which will be considered presently, this inherent jurisdiction of the court was of an

exceptional nature, the primary rule being that the court, as much as the trustee, was bound to act within the terms of the trust as constituted by the settlor or testator; that the business of the court was to execute trusts, not to alter them.37 The same is true of charitable trusts: the court has no inherent jurisdiction to vary charitable trusts unless there exists a failure, impossibility or impracticability of a kind entitling the court to direct a scheme. 38 In view of the statutory provisions next to be considered, it is unnecessary to consider in any detail the principles applied on the exercise of the inherent jurisdiction of the court.39

Statutory qualifications re management or administration [17-06] Australian jurisdictions have followed s 57 of the Trustee Act 1925 (UK), which confers wider powers on the courts to authorise departures from the terms of a trust. Thus s 81 of the Trustee Act 1925 (NSW) provides:40 81. (1) 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, the Court: (a) 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, including adjustment of the respective rights of the beneficiaries, as the Court may think fit, and (b) may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.

[page 341] (2) The provisions of subsection (1) shall be deemed to empower the Court, where it is satisfied that an alteration whether by extension or otherwise of the trusts or powers conferred on the trustees by the trust instrument, if any, creating the trust, or by law is expedient, to authorise the trustees to do or abstain from doing any act or thing which if done or omitted by them without the authorisation of the Court or the consent of the beneficiaries would be a breach of trust, and in particular the Court may authorise the trustees: (a) to sell trust property, notwithstanding that the terms or consideration for the sale may not be within any statutory powers of the trustees, or within the terms of the instrument, if any, creating the trust, or may be forbidden by that instrument, (b) to postpone the sale of the trust property, (c) to carry on any business forming part of the trust property during any period for which a sale

may be postponed, (d) to employ capital money subject to the trust in any business which the trustees are authorised by the instrument, if any, creating the trust or by law to carry on. (3) The Court may from time to time rescind or vary any order made under this section, or may make any new or further order. (4) The powers of the Court under this section shall be in addition to the powers of the Court under its general administrative jurisdiction and under this or any other Act.

This statutory jurisdiction is so much more extensive than the court’s inherent jurisdiction as to render the latter virtually obsolete.41 It need not be shown, for example, that the case is one of emergency and that action is needed to prevent injury to the trust property or the interest of the beneficiaries.42 The test prescribed is expediency and the section is not subject to any expression of contrary intention contained in the trust instrument. Orders have been made approving a wide variety of transactions.43 Sales have been approved notwithstanding the refusal of consent by a person whose consent was requisite to a sale.44 Sales to trustees or children of trustees have been approved notwithstanding the absence of any power of sale in the trust instrument.45 Advances have been authorised out of capital moneys to meet a life tenant’s debts, subject to recoupment.46 Authority has been given to blend two separate trust funds having identical objects.47 Investment in shares of companies has been permitted, even though no power to invest in unauthorised securities was contained in the trust instrument.48 Alteration of a trading unit trust into a company has been approved.49 So has amendment of the trust deed.50 But before making an order the court must be satisfied that the transaction in question is expedient for the trust as a whole, and not merely in the interests of one beneficiary.51 However, there is no need for the transaction to be advantageous [page 342] to every beneficiary or possible beneficiary.52 The section is equally applicable to charitable and to non-charitable trusts.53 It may be invoked notwithstanding that the sole reason for which additional power is sought is the avoidance of taxation.54 It may be used to sanction a transaction which will, or may, involve the trustee making a personal profit.55 The expression ‘absence of power’

includes cases where there is an express prohibition against the exercise of a power.56 It has been said that the court’s opinion of what is expedient is a criterion of the widest and most flexible kind and that the powers given by s 81 are not restricted by any implications.57 An interesting example of the flexible manner in which it may be used is provided by Perpetual Trustee Co Ltd v Godsall,58 concerning a testamentary devise of a large house to a tenant for life, she ‘at her expense to keep it in good repair’, and then to remaindermen. The tenant for life wished to move into a smaller and cheaper house, but there was no power of sale; she had also let the house fall into disrepair. Rath J granted a power of sale but, since the house was being sold in a depreciated condition, ordered that the proceeds of sale be invested first in the purchase of real property to be held upon the same trusts as the property sold, the balance being set aside and invested, to the intent that the capital and income of the fund should be allowed to accumulate for the benefit of the remaindermen until the amount expended on the alternative accommodation, together with the accumulated fund, should equal the market value at the date of sale which the house would have had if it had been kept in good repair. Usually, however, the court is not inclined to confer on trustees generally, rather than in a particular instance, the power to carry out some purpose otherwise in breach of trust, although there is jurisdiction under the section so to do, and this jurisdiction will be exercised in a proper case.59 The provision does not authorise the court to do that which would alter the substantive nature of the trust or determine the trust; nor can it be used as a substitute for an application to apply the property cy-près.60 Apart from making adjustments to the terms of the trust or the rights of the beneficiaries which are incidental to or consequential on the advantageous dealing, the court has no power to vary the trust.61

Variation of beneficial interests [17-07] In Chapman v Chapman,62 the House of Lords held that under s 57 of the Trustee Act 1925 (UK), the court has no power to alter or rearrange the beneficial interests under a trust instrument even though every person who is sui juris consents and the change is shown to be for the benefit of infants and unborn beneficiaries. In that case, sanction was sought to the variation of the trusts of the settlement in order to reduce the liability of the settled property

[page 343] to death duties in the future.63 A similar result was reached in New Zealand in Re Lyell64 when an application was made for leave to sell a property held in trust for successive life interests, there being no power of sale. Counsel appearing for the remaindermen suggested that one-third of the income of the proceeds of sale be capitalised to counteract inflation, but Beattie J held there was no jurisdiction to make such an order, as it would vary the beneficial interests in the trust. The English section does not contain the words ‘including adjustment of the respective rights of the beneficiaries’ which appear in the New South Wales section. Although these words standing by themselves might suggest that Chapman v Chapman would not be precisely applicable in New South Wales, it has been held by Myers J in Ku-ring-gai Municipal Council v A-G65 that the words in question do not permit the alteration of the objects of the trust as the sole purpose of the application, but only as a necessary incident of dealing with some question of management or administration. In five Australian jurisdictions legislation has been enacted nullifying Chapman v Chapman.66 Section 63A of the Trustee Act 1958 (Vic) provides:67 63A. (1) Where property, whether real or personal, is held on trusts arising, whether before or after the commencement of this Act, under any will settlement or other disposition, the court may if it thinks fit by order approve on behalf of — (a) any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of minority or other incapacity is incapable of assenting; or (b) any person (whether ascertained or not) who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of any specified description or a member of any specified class of persons, so however that this paragraph shall not include any person who would be of that description, or a member of that class (as the case may be) if the said date had fallen or the said event happened at the date of the application to the Court; or (c) any person unborn; or (d) any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined — any arrangement (by whomsoever proposed and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts, or enlarging the powers of the trustees or managing or administering any of the property subject to the trusts: Provided that except by virtue of paragraph (d) of this subsection the Court shall not approve an arrangement on behalf of any person unless the carrying out thereof would be for the benefit of that person.

Section 63A may overlap with the earlier legislation already considered. Applications under s 63A should in general be heard in open court.68 In general, it should be left to beneficiaries to make applications under s 63A, unless the trustees are satisfied that such [page 344] applications are likely to produce beneficial results, and that no beneficiary is able or willing to make any such application.69 Jurisdiction under s 63A will not be exercised so as to override the proper exercise by trustees of a discretion vested in them by the trust instrument.70 The power given to the court by s 63A is a discretionary power, so that the court will usually insist on an affidavit being filed, stating the reasons for the proposed variation.71 The court’s duty in the exercise of the discretion vested in it by s 63A is not confined to inquiring into the effect of a proposed scheme on those on whose behalf approval is sought, but extends to a consideration of whether the arrangement as a whole ought to be approved.72 The proviso to s 63A(1) — requiring proof of benefit in relation to paras (a), (b) and (c) — is satisfied if the arrangement will probably operate for the benefit of the affected beneficiaries, even though it is possible, if certain unlikely events materialise, that the arrangement will not be advantageous to such beneficiaries. If the risk of such events occurring is one which an adult would be prepared to take, then the court will be prepared to take it on behalf of infants.73 As it has been said, the jurisdiction under s 63A ‘in effect enables the court to contract on behalf of certain beneficiaries’.74 The wishes of the settlor do not matter.75 Where the settlor has imposed restrictions on the power of investment (such as quantitative limitations and requirements concerning dividend history) which are detrimental to the most profitable management of the trust property, so that the removal or variation of such restrictions would be beneficial for all concerned, the court will approve arrangements effecting such removal or variation.76 Under the section, a compromise can be approved in circumstances where no such approval would be possible under the court’s inherent jurisdiction.77 The necessary benefit has been found in providing for the maintenance of a beneficiary of unsound mind.78 The most substantial limitation on the section stems from the doctrine that it

does not confer jurisdiction to create an entirely new trust, as distinct from varying an existing one. Thus in Allen v Distillers Co (Biochemicals) Ltd,79 Eveleigh J refused to use the English equivalent of the section to postpone beyond the age of majority the entitlement of an infant injured by thalidomide to his damages at law, saying: ‘I do not think that the so-called variation would be a variation at all. It would be a new trust made on behalf of an absolute owner.’ (Nevertheless, the proposed scheme was sanctioned under the court’s inherent jurisdiction to approve compromises.) [page 345] Restrictions relating to race or religion may be deleted from trusts under the section.80 Where a husband and wife, who had been domiciled in England at the date of a marriage settlement, subsequently emigrated to Canada so that the retention of English trustees would involve disadvantages due to double taxation, it was held that the court could, under the legislation, approve an arrangement revoking all the trusts of the English settlement in the event of the trust property becoming subject to the trusts of a Canadian settlement.81 The exception in s 63A(1)(b) of ‘any person who would be of that description [that is, a contingent beneficiary], or a member of that class, … if the said date had fallen or the said event had happened at the date of the application to the court’ requires the hypothesis that the future date had fallen on the day on which the originating summons was issued.82 In other words, one should ask who, on the assumption that the future date had fallen or the future event had occurred on the date of the issue of the originating summons, would have become entitled to an interest under the trusts. The exception to the clause then operates to prevent the court from being able to bind the interest of such persons.83 The words ‘any person’ in s 63A(1)(d) include unborn persons, so that it is not essential for the court to be satisfied that the proposed arrangement is for the benefit of unborn persons who may acquire discretionary interests under protective trusts.84 But although the statute does not require that the court should be so satisfied, it would appear that the application of equitable principles and the fact that the court is invested with a discretion will, in practice, render the court reluctant to approve arrangements unless the

arrangements make adequate provision for such persons.85 Approval will not be given automatically to the conversion of a protected life interest into an absolute life interest despite the exception to the proviso to s 63A(1).86 The court may approve a variation of trust involving an infant in the absence of representation of the infant;87 and the court need not consider the interests of potential beneficiaries under a power of appointment.88 The words in s 63A(1) (b) ‘who may become entitled’ preclude the court’s jurisdiction to consent on behalf of those having actual interests, as distinct from expectations, under the settlement.89 The words ‘protective trusts’ in s 63A(1)(d) are defined as meaning trusts specified in s 39(1)(a) and (b) or any ‘like trusts’ — an expression which does not require identity.90 It is not an objection (except in South Australia) to an arrangement that its purpose is to reduce tax.91 The court will not consent under s 63A where the matter can be dealt with under some other jurisdiction.92 [page 346] The court will not approve an arrangement containing provisions contrary to public policy,93 nor one making an appointment in fraud on a power.94 In Western Australia, s 91 of the Trustees Act 1962 also confers on the court power to vary periodical payments to any beneficiary if it is just and equitable to do so.95 The court’s jurisdiction depends on supervening events having caused the disposition to cease to represent the settlor’s intention.96 It is important to realise that the court’s powers under the Victorian Act extend to trusts which at their inception have no connection with Victoria at all.97 This opens obvious opportunities for ‘forum-shopping’ in states which have no comparable legislation.

Repairs [17-08] In addition to the wide powers conferred on the court by the legislation of all jurisdictions along the lines of s 57 of the Trustee Act 1925 (UK) considered in [17-06], and in addition to the further variation of trust powers contained in the Victorian, Queensland, South Australian, Western Australian and Tasmanian legislation, also considered in [17-07], the legislation

of New South Wales, the Australian Capital Territory, the Northern Territory, Queensland, South Australia and Western Australia (but not of the other jurisdictions) contains provisions permitting deviation from the strict terms of a trust in the case of repairs to trust property. In New South Wales, for example, s 82 empowers the court to authorise a trustee who holds land in trust for an infant or for persons in succession to pay or apply capital money subject to the trust for the repair and improvement of the land in the cases set out in the section. The jurisdiction is not limited to ‘salvage’ cases. The section contains machinery provisions. Section 82A of the Act permits a trustee without the consent of the court to expend capital moneys not exceeding $50,000 or 30% of the value of the land (whichever is the greater), in repairs and improvements of the kind specified in s 82, and the trustee is permitted to pay or raise the necessary money in any of the ways set out in s 82(4). The provisions are set out at [20-33]. In the Australian Capital Territory, the corresponding provisions are ss 82 and 83 of the Trustee Act 1925; in the Northern Territory they are s 18(2)–(4) of the Trustee Act. In Queensland, the trustee is given much more generous powers by s 33;98 in particular, the trustee is empowered, without limit, and without the authority of the court, to expend moneys (including capital moneys) in effecting repairs to trust property (and not merely trust property which is land), and is also empowered to expend moneys (including capital moneys) in effecting improvements to trust property up to a limit of $10,000 without the approval of the court. In South Australia, the matter is dealt with in ss 25A and 25B (set out at [20-34]), which confer on trustees powers of repair wider than the New South Wales ones but less extensive than the Queensland ones, some exercisable only with the permission of the court and some exercisable without its permission but subject to review by the court. In Western Australia, the matter is dealt with in s 30, which approximates to the Queensland s 33. The question of repairs and improvements and the incidence of their cost on life tenant and remainderman is dealt with in Chapters 19 and 20.

Buying dwelling houses [17-09] In each jurisdiction trustees have powers to buy dwelling houses for the use of beneficiaries. See [18-22].

[page 347]

Sale of infant’s property [17-10] In New South Wales, under s 84 the court may authorise a trustee of infant’s property to sell the whole or any part of that property. The section applies whether the interest of the infant is or is not in possession and whether the trustee is for the infant solely or jointly with another person. The section is only applicable where the land is held on trust for the infant and in that case avoids the more complicated method provided by Pt IV of the Conveyancing and Law of Property Act 1898.

To Act Impartially Between the Beneficiaries [17-11] It is the duty of trustees to act fairly by all the beneficiaries. ‘Impartiality of a trustee towards a stranger … is no virtue.’99 Their primary duty is to the beneficiaries as a whole, even where fulfilment of a duty disadvantages one beneficiary and favours another, for example, where the exercise of a power to postpone a sale of trust property on the ground that prices are low reduces the income of the tenant for life.100 But that duty is subject to another fiduciary duty.101 ‘Any system of trusts which did not require trustees to act with perfect impartiality as between their cestuis que trust and to bring to the management of trust affairs the same care and diligence which a man of ordinary prudence may be expected to use in his own concerns, would be illusory and mischievous.’102 At a general level, the duty to act impartially merely reflects the duty of trustees to exercise their powers for the purposes for which they are conferred, giving proper consideration to relevant matters and excluding irrelevant matters.103 The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests.104

Hoffmann J preferred a test of fairness to the ‘scales’ test for two reasons:105 The first is that the image of scales suggests a weighing of known quantities whereas investment

decisions are concerned with predictions of the future. Investments will carry current expectations of their future market yield and capital appreciation and these expectations will be reflected in their current market price, but there is always a greater or lesser risk that the outcome will deviate from those expectations. A judgment on the fairness of the choices made by trustees must have regard to these imponderables. The second reason is that the image of the scales suggests a more mechanistic process than I believe the law requires. The trustees have in my judgment a wide discretion. They are for example entitled to take into account the income needs of the tenant for life or the fact that the tenant for life was a person known to the [settlor] and the primary object of the trust whereas the [remainderman] is a remoter relative or a stranger. Of course these cannot be allowed to become the overriding considerations but the concept of fairness between classes of beneficiaries does not require them to be excluded. It would be an inhuman law which required trustees to adhere to some mechanical rule for preserving the real value of capital when the tenant

[page 348] for life was the testator’s widow who had fallen upon hard times and the remainderman was young and well off.

The observance of the duty of impartiality involves the proper disposition and employment of the trust property so as to avoid benefiting one beneficiary or set of beneficiaries at the expense of another. Examples include: (1) the realisation of wasting property or of reversionary property; (2) distinguishing between capital and income both as to expenditure and income;106 (3) the selection of investments with a view not only to the income produced but also to the safety of the capital;107 and (4) exercising powers to restructure a settlement.108 The question whether a trustee has discharged the duty to act impartially must be considered in the light of circumstances existing at the time when the trustee has done a particular act. Thus if there are certain beneficiaries whose shares are vested in possession and others whose shares have not yet vested, and the trustee exercises a power to pay out the shares of those having vested interests, the trustee will not be liable if through subsequent depreciation in the value of the assets retained there is insufficient left to pay the others in full, provided that at the time the first payment was made the trustee retained assets which on a fair valuation made at that time should have been sufficient to pay the beneficiaries whose shares were not then vested.109 An agreement by trustees to breach their duty of impartiality is not enforceable by a decree of specific performance, since the court will not lend its aid to the commission of a breach of trust.110 The duty to act impartially is not breached where the trustees postpone a sale

with a view to increasing the amount of money ultimately available for distribution.111 The duty of trustees to act impartially as between beneficiaries arises only in relation to their rights and duties as beneficiaries; not, for example, in relation to their duties as debtors to the trust.112

Properly to Invest the Trust Funds [17-12] It is the duty of trustees to invest the trust funds in accordance with the instructions contained in the instrument of trust or as the law provides. The proper investment of the trust funds is so important a part of the duties of a trustee that it is treated separately in Chapter 18, although some of the principles applicable in cases of breach of trust arising from negligent or wrongful dealings with the trust funds are considered under other headings.

To Keep and Render Proper Accounts and to Give Full Information when Required Keeping accounts [17-13] It is the duty of trustees to keep proper accounts.113 It is also the duty of trustees to report to the beneficiaries or to the court concerning the administration of the trust.114 Hence it is the duty of trustees to be ready to render accounts when called upon to do so.115 [page 349] Trustees should gain no advantage by the failure to keep and produce proper records, and the court will resolve doubts against trustees guilty of this failure.116 Except where an account is requested on the basis of wilful default, a beneficiary’s entitlement to an account does not depend on alleging or establishing any default or breach of trust.117 For these purposes, they may employ accountants where it is necessary from the circumstances of the case, that is, if the accounts are complicated or the trustee is not from training and

experience capable of keeping the accounts required.118 In New South Wales, by s 51 of the Trustee Act 1925, trustees may, in their absolute discretion, from time to time cause the accounts of the trust property to be examined or audited by a person who publicly carries on the business of an accountant. The cost is borne out of the trust property in such manner as the trustees in their absolute discretion think fit, except in the case of the Public Trustee or a trustee company, unless the accounts are of a business forming part of the trust property. All jurisdictions, other than South Australia, Tasmania and the Northern Territory, have provisions similar to s 51 of the New South Wales Act.119 In South Australia, by s 84B, the duty is to keep such records ‘as may be prescribed’. The duty to keep proper accounts extends to keeping evidence of payments.120 It obviously includes a duty to correct errors. The accounts should be kept after a trustee’s retirement, even a retirement upon a release.121 In some states there is legislation (rarely used) to permit public officers to require production, audit and investigation of accounts.122 The duty may be dispensed with by the court in the case of small estates. Adverse inferences may be drawn against trustees who destroy records relating to recent transactions in relation to which final adjustments and payments have not yet been made,123 or who fail to create appropriate vouchers for payments.124

Rendering accounts [17-14] Not only must trustees keep proper accounts, but they must also be ready to render accounts where required by the beneficiaries or by persons authorised by the beneficiaries.125 Failure to render accounts when requested to do so will make the trustees liable to pay the cost of proceedings instituted to obtain them.126 But if a beneficiary asks for accounts or for information, the trustees are entitled to be paid by the beneficiary the cost of supplying the accounts or information and if they choose, may require payment in advance.127 If a beneficiary inquires about the trust investments, the trustees’ duty is not only to provide details of the investments but also verification of the fact of investment.128 If they have invested in the shares of a private company, they must on request produce the balance sheet and accounts of that [page 350]

company.129 When they retire from the trust they must hand their accounts to the new and continuing trustees.130 If a trustee has acquired accounts preceding the commencement of the trust, the beneficiary is entitled to inspect them as well.131 The duty of the trustee is always to make ‘a full rather than a reluctant response’.132

Giving information to beneficiaries [17-15] There is no general duty on trustees to volunteer documents or information to beneficiaries or possible beneficiaries,133 nor to consult their wishes.134 In addition to keeping and furnishing accounts, trustees must, when asked to do so, give the beneficiaries full information as to the amount of the trust property and as to its investments even if the beneficiary’s interest is only contingent.135 A trustee is bound to inform a beneficiary, who on attaining majority is entitled to share in a trust fund, of that interest.136

Beneficiaries’ right of access to documents [17-16] The traditional law was that in the case of strict as distinct from discretionary trusts, where beneficiaries have vested or contingent interests, beneficiaries have a prima facie right — a right subject to exceptions — at reasonable times to inspect any property forming part of the trust estate in which they are beneficially interested, including trust documents used by trustees in the administration of the trust.137 Although the trustees have the legal title, and are not obliged to hand the documents over permanently to any beneficiary until the trust comes to an end (since the beneficiary’s rights fall short of a full beneficial interest with a right to call for the immediate delivery of the records into their personal possession), the rights of the beneficiaries are nonetheless proprietary in nature.138 The beneficiary’s right of access is ‘proprietary’ since it arises because of the beneficial interest of the beneficiary in the trust property.139 This approach entails a distinction between documents which may be used by the trustee in relation to trust business but which are the property of the trustee, not the [page 351]

trust.140 By reason of the fiduciary nature of a trustee’s obligations, the right extends beyond documents to information of a non-documentary kind.141 One of the exceptions referred to arises where a document is the subject of a duty of confidence owed by the trustees to a third party.142 Another of the exceptions referred to has the result that beneficiaries have no right to see documents private to the trustees which may evidence the reasons why the trustees have made their decisions in circumstances where their disclosure is not required and it has not been made by the trustees.143 Another of the exceptions referred to arises where the documents bear on the motives and reasons for the exercise of the trustee’s discretion (unless a lack of bona fides is alleged), for in family trusts, for example, disclosure ‘would be productive only of family strife and also odium for the trustees and embarrassment in the performance of their duties’.144 Another exception can arise from the terms of the trust.145 A further attempt to state the law was made by Salmon LJ. He said that the beneficiaries were only entitled to see ‘trust documents’. Salmon LJ, while eschewing any attempt at a comprehensive definition, said in Re Londonderry’s Settlement:146 Trust documents do, however, have these characteristics in common: (i) they are documents in the possession of the trustee as trustee; (ii) they contain information about the trust which the beneficiaries are entitled to know; (iii) the beneficiaries have a proprietary interest in the documents and, accordingly, are entitled to see them.

These remarks were dicta, since in Re Londonderry’s Settlement the beneficiaries lacked proprietary rights, being only the objects of a bare power of appointment with gifts-over in default of appointment. This reasoning has been found helpful147 but is, with respect, quite circular. It is of little assistance in seeking to elucidate the principle that every beneficiary has a proprietary right to inspect trust documents to be told that trust documents are those documents that every beneficiary has a proprietary right to inspect. This approach merges the rule and the exceptions: if a document falls within any exception it is not a trust document because it does not have characteristic (ii). [page 352] Where the beneficiaries wanting information are not beneficiaries of a strict trust, but are merely potential objects of the exercise of a discretionary power of appointment over a trust fund, whether it be a bare power or a trust power,148

appeals to proprietary rights cannot assist, because they have none.149 It has been held, however, that they have more than the right to ensure that due consideration is given to the exercise of a power and to complain of mala fide exercises of it. Since the trustees are obliged to hold and deal with the trust property for the benefit of the class of potential beneficiaries, and to account to the class for their stewardship, they must allow inspection of trust accounts and give information about the trustees’ management of the trust funds, whether or not breach of trust is alleged.150 Here too there may be a distinction between documents which are used by the trustees in administering the trust, but which are their property and not that of the trust.151 And here too the exceptions based on confidentiality apply.152 On occasion, lists of documents are compiled as examples of what are, or are not, disclosable by trustees. The utility of these lists may be questioned, because a document of a particular type will fall to be disclosed or withheld not because it is of that type but because of what its contents are. While documents not otherwise available for inspection pursuant to the above principles may be discovered in litigation, the procedure of discovery depends on the beneficiary having material appropriate to institute the litigation. ‘A beneficiary may support a case by discovery but may not use the process to ascertain whether a case exists.’153 That proposition, of course, is subject to any special regime created in relation to discovery before action. In Schmidt v Rosewood Trust Ltd,154 the Privy Council said that the existence of a proprietary right — entitlement to a fixed and transmissible beneficial interest — was neither a necessary nor a sufficient condition of the beneficiary’s right to information. For the Privy Council, the better approach was to see the beneficiary’s right as one aspect of the court’s inherent jurisdiction to supervise, and if necessary to intervene in, the administration of trusts. It was held that there was no ‘bright dividing line either between transmissible and nontransmissible (that is, discretionary) interests, or between the rights of an object of a discretionary trust and those of the object of a mere power (of a fiduciary character)’, and that ‘no beneficiary (and least of all a discretionary object) has any entitlement as of right to disclosure of anything which can plausibly be described as a trust document’. They continued: Especially when there are issues as to personal or commercial confidentiality, the court may have to balance the competing interests of the different beneficiaries, the trustees themselves, and third parties. Disclosure may have to be limited and safeguards may have to be put in place. Evaluation of the claims of a beneficiary (and especially of a discretionary object) may be an

important part of the balancing exercise which the court has to perform on the materials placed before it. In many

[page 353] cases the court may have no difficulty in concluding that an applicant with no more than a theoretical possibility of benefit ought not to be granted any relief.

Does this represent Australian law?155 Whatever the merits of these remarks in relation to discretionary trusts, they were only dicta in relation to strict trusts, since the case concerned a discretionary trust. They have an unsatisfactory unsettling effect on received principles in relation to strict trusts. They are said to be based on the views of Kirby P and Sheller JA in Hartigan Nominees Pty Ltd v Rydge,156 but that was a case in part on discretionary trusts, and Kirby P’s judgment was in most respects a dissenting one. They exaggerated the extent to which Mahoney JA and Sheller JA criticised Re Londonderry’s Settlement.157 They read Re Cowin158 wrongly: in that case North J did not say that beneficiaries had no right to disclosure of trust documents; instead he said that they had a prime facie right subject to exceptions. At least for strict trusts, the Privy Council has unsettled the law.159 For all trusts, it has opened up a spectre of a world in which solicitors will be unable to advise trustees whether they should accede to the requests of beneficiaries, because a beneficiary who applies to the court will be able to appeal to a very broad discretion. A decision apparently directed to widening the rights of beneficiaries may have made them less secure.160 Thus there are undoubtedly difficulties in both the proprietary approach and more modern approaches offered in substitution for it. A wish letter has been held to be prima facie confidential, and its confidentiality is only to be overridden in the trustee’s or the court’s discretion where disclosure is in the interests of the sound administration of the trusts.161 The discretion is not to be fettered by the inclusion of special terms as to confidentiality in the wish letter or subsequently.162 The court has jurisdiction to order a settlor to tell beneficiaries who the trustees are, with a view to those beneficiaries enforcing their rights under the trust.163 The principles discussed above are modified in practice in Queensland and Western Australia, where the court can call on trustees to substantiate and uphold their conduct.164

Where substantially all the shares of a private company were held upon trust and the trustees were directors of the company, it has been held that the beneficiaries were subject to the restrictions imposed by the articles of the company which provided that no member, not being a director, should have any right to inspect any account, book or document of the company except as conferred by statute or authorised by the directors or by the company in general meeting.165 The same restrictions could not exist where the business was not conducted by a limited company, but by the trustees personally.166 Can the settlor, by inserting a term in the trust instrument, validly restrict what would otherwise be the beneficiaries’ rights to inspect trust documents and obtain other information? Does a term of this kind oust the jurisdiction of [page 354] the court? Is it repugnant to the irreducible core content of trusteeship, on the ground that a fundamental right of the beneficiaries is to hold the trustee to account so as to ensure a proper administration of the trust, and that right cannot be exercised unless the beneficiaries possess pertinent information? There is authority seemingly upholding a term of this kind.167 But the opinion of writers is generally hostile, save where the beneficiaries are parties to the trust instrument.168

Giving information to strangers [17-17] Trustees are under no obligation to give information to strangers as to the rights of a beneficiary or as to encumbrances on the interest of a beneficiary. They are not even under an obligation to give information to the beneficiary as to what encumbrances the beneficiary has created or as to what encumbrancers have given notice of their charges. If trustees do answer inquiries from persons proposing to have dealings with a beneficiary, they are not bound to do more than to answer honestly to the best of their knowledge and are not bound to make inquiries. They can be made liable only if they make statements which amount to a warranty or in such a manner as to be estopped from afterwards denying the truth of what they have said.169 New trustees, when appointed, are under no duty to inquire of the retiring trustees whether they

have received notice of any encumbrance or other dealings with the trust property,170 but any written notices should be handed to the new trustees.

To Exercise Reasonable Care Standard of care [17-18] ‘It is a rule of equity that, in the management of the business of the trust, a trustee should exercise the same care and skill as an ordinary prudent man of business would exercise in conducting that business as if it were his own …’.171 ‘[A] trustee is not a surety, nor is he an insurer; he is only liable for some wrong done by himself, and loss of trust money is not per se proof of such wrong.’172 It should be noted that the standard is not the diligence and care which particular trustees would exercise in the management of their own affairs, but the diligence and care which ‘an ordinary prudent man of business’ would exercise. The standard is an external one, and is independent of the special skill and prudence of the trustee personally.173 If the test were the skill and prudence which the trustees concerned exercised in the conduct of their own businesses, persons who were careless in their own business would be excused for a breach of trust where a careful person would be penalised on that account. The law asks what a reasonably prudent and careful person would have done in like circumstances, and tests the conduct of the trustee by this standard. Were it otherwise, grave inconvenience would result. [page 355] As Lord Watson observed in Knox v Mackinnon:174 In every case where neglect of duty is imputed to a body of trustees, it would necessitate an exhaustive inquiry into the private transactions of each individual member, — the interest of the trustee being to show that he was a stupid fellow, careless in money matters: and that of his opponents to prove that he was a man of superior intelligence and exceptional shrewdness.

What has been, perhaps questionably, called this ‘undemanding standard of prudence’175 is qualified in six ways. First, ‘[p]rudent businessmen in their dealings incur risk’176 and hence ‘an

ordinary prudent man’ may incur ‘a prudent degree of risk’, but must use ‘caution’ in the sense of avoiding ‘hazard’.177 Secondly, ‘an ordinary prudent man’ may commit errors of judgment without being liable.178 Thirdly, the duty of a trustee in making an investment is to ‘take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide’.179 This test has been modified slightly by statute: if the trustee’s profession, business or employment is not, or does not include, acting as a trustee or investing money for other persons, the duty is to exercise the care, diligence and skill a prudent person of business (or in some instances prudent person) would exercise in managing the affairs of other persons.180 Fourthly, the trustee cannot invest in all investments which ‘an ordinary prudent man’ might if the trust deed or a statute confines the permissible class.181 Fifthly, the trustee must act impartially towards beneficiaries and between different classes of beneficiaries. Hence the interests of those presently entitled to the income must be weighed with the interests of those entitled in future. Thus a power of investment must be exercised so as to yield the best return for the beneficiaries, judged in relation to the risks of the investment in question, and the prospects of the yield of income and capital appreciation both have to be considered in judging the return from the investment.182 Finally, there was some authority that a higher test applies to persons (like trust corporations) carrying on a specialised business of trust management: they were to be liable if they neglected to exercise the special care and skill which they professed to have.183 There is now a slightly different statutory test: if the trustee’s profession, business or employment is, or includes, acting as a trustee or investing [page 356] money for other persons, the duty is to exercise the care, diligence and skill that a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons.184 Examples of breach of this duty include leasing the trust property at a very low rent185 and mortgaging the trust property to secure a debt unlikely to be repayable.186 The standard of prudence is flexible. It changes with economic conditions

and contemporary thinking. In judging the past performance of trustees one must apply the standards of the relevant period.187 In evaluating whether a trustee was in breach of the duty to exercise reasonable care in a particular case, the court is ‘not to judge what the trustee then did or failed to do by the light of later events that could not then have been surely foreseen. They are relevant in determining what loss resulted from the breach if there were one. They do not help to determine whether or not there was one.’188 In particular circumstances of difficulty the trustees should apply to the court for directions.189 More particular rules affecting the trustee’s duty to invest are discussed in Chapter 18. Although exercises by trustees of discretions specifically given by the trust instrument are difficult to challenge, trustees cannot rely on the principles just stated to escape breaches of their duty to exercise care and skill. A trustee undoubtedly has a discretion as to the mode and manner, and very often as to the time in which and at which he shall carry his duty into effect. But his discretion is never an absolute one; it is always limited by the duty — the dominant duty, the guiding duty — of recovering, securing, and duly applying the trust fund. And no trustee can claim any right of discretion which does not agree with that paramount obligation.190

In recent years it has been asserted that the trustee’s duty to exercise reasonable care and skill, although it is an equitable duty owed by a fiduciary, is not a fiduciary duty. In this it is said to be like the duty of a company director. Most of the cases stating that the trustee’s duty is not fiduciary have concerned solicitors,191 company directors,192 joint venturers193 or other persons who were not trustees.194 Indeed, only one of the cases concerned a trustee and it, like the others, was decided on grounds other than the non-fiduciary nature of the trustee’s duty.195 Although the issue could be important from the point of view of causation and remoteness tests, limitation and proprietary remedies, no case has turned on it. The cases have not explained why a trustee’s duty is not fiduciary. They contain statements that equitable compensation for breach of the duty is to follow common law analogies196 which have been criticised by the [page 357] High Court.197 There are other statements in the High Court which are hard to

reconcile with them.198 The correctness of the proposition that trustees’ duties to exercise reasonable care are not fiduciary has been cast in doubt because it has been relied on to justify the view that a settlor can exempt trustees from liability for gross negligence — a questionable conclusion.199 Although they have enjoyed wide acceptance by textbook and other writers, they have been tellingly criticised.200 There is also some authority against them.201

Insurance [17-19] The trustee legislation confers power on trustees to insure trust property: see [20-35]–[20-41]. Does the trustees’ duty of care and skill entail a duty to exercise that power? There are English cases which have been taken to suggest the negative.202 There are, however, Irish,203 United States,204 Canadian,205 English,206 New South Wales207 and South Australian208 cases suggesting an affirmative answer. These cases are very likely to be followed in future, at least where the cost of insurance is not prohibitive.

Trust funds [17-20] In dealing with the trust funds, trustees must show diligence and prudence in various ways according to the circumstances of the case. For example: (1) Trustees must not leave funds unnecessarily long in the hands or under the control of a third person or persons, for example, in the hands of any agent acting on their behalf such as their solicitor, an auctioneer, a broker or a rent collector.209 This duty remains despite the protection given to trustees under the various Trustee Acts, whereby they are answerable and accountable only for their own acts, receipts, neglects and defaults and not for those of any other trustee, nor of any banker, broker or other person with whom any trust moneys or securities may be deposited, because that protection is only given if any resulting loss is not through the trustee’s own wilful neglect or default.210 [page 358] (2) They must not leave the trust funds in the hands or under the sole control

of a co-trustee,211 but deeds and documents may when convenient be held by one trustee.212 (3) They must not lend the trust funds to a co-trustee. (4) They must not mix trust funds with their own or with other funds.213 (5) They may employ agents where it is necessary in the ordinary course of business to do so; but they must employ suitable agents and must not leave the trust moneys in the hands of such agents longer than is necessary.214 (6) Where any portion of the trust estate is outstanding either as debts due to the estate or as investments that are hazardous or not authorised by law, the trustees must be prompt and diligent in obtaining possession of the outstanding property, in converting the unauthorised investment, and in enforcing payment of the debts. If trustees or executors are lax in this, they will be liable for any loss caused by their want of diligence. Even if the debtors are their co-executors or co-trustees, the other executors or trustees must see that the debts are paid promptly.215 However, it is provided by the Trustee Acts in all jurisdictions that trustees are not liable for breach of trust by reason only of their continuing to hold an investment which has ceased to be an investment authorised by the trust instrument or by law.216 Further, in some jurisdictions where the trust property consists of a chose in action or other property not vested in the trustee, then, when it falls into possession or becomes payable, the trustees may agree upon or ascertain its value in such manner as they think fit, may accept authorised securities in satisfaction and may execute releases without being liable for loss.217

Custody of title deeds [17-21] The general rule is that trustees must keep their title deeds as well as their securities under their own control. Trustees are under an obligation to see that their deeds are kept in a safe place and under their control.218 Therefore, when there is no necessity for the use of the title deeds, they should be deposited in some safe place, as in a locked box in a bank or in a safe deposit. But the necessities of business sometimes require constant reference to the deeds. Thus, where the mortgaged property was a building estate in the course of development, it was held that the trustees were not acting unreasonably in allowing their solicitors the custody of the deeds for the dispatch of business.219

Under certain of the Trustee Acts,220 trustees may deposit any documents held by them relating to the trust, or to the trust property, with any bank or with any incorporated company [page 359] whose business it is to undertake the safe custody of documents. Any costs incurred in so doing may be paid out of income.

Custody of bearer securities [17-22] Where a trustee is authorised to invest in bearer securities the securities should be deposited in the bank in the joint names of the trustees so that it would not be in the power of one of the trustees to deal with them without the knowledge of the others. What is permitted by the sections on the part of the trustees is simply the deposit for safe custody and the authority to collect the interest. If trustees deal with bearer securities in such a manner as to allow opportunities for one of their number to commit a fraud on the trust, they are not acting reasonably and prudently. In Lewis v Nobbs,221 two trustees, who held bearer securities as part of the trust estate, agreed that each should hold half of the securities. One of the trustees appropriated the half in his charge to his own use, became insolvent, and absconded. The other trustee was held liable, as it was the duty of the trustees to make an investment in the names of both and this was not done; and as bearer securities were obtained, care should have been taken that there could not be any improper disposition of them.

Not to Delegate Duties or Powers Non-statutory rules [17-23] In view of the amendments made to the previous law by statute, it is arguable whether delegation by trustees should not be treated as a power which they possess rather than an exception to the duty not to delegate. However, despite statutory changes, the duties of a trustee on the delegation of the trust

remain onerous, so the old classification has been retained. The general rule has been that, however much advice trustees take before reaching a decision,222 trustees must not delegate their duties or powers,223 not even to their cotrustee.224 Delegatus non potest delegare is a maxim which has been applied emphatically to trustees. Now the delegation is allowed where: (1) the delegation is specifically permitted by the trust instrument;225 (2) the delegation is specifically permitted by statute;226 or (3) in the cases (if any) not covered by the provisions of the trust instrument or by statute, the delegation is to do a ministerial act involving no exercise of discretion or where the trustees ex necessitate rei are bound to employ an agent, provided that the trustees in so doing act in conformity with common usage and as prudently as if acting for themselves and provided further that the agent is employed in a matter which it is within the ordinary scope of the agent’s business to perform. The first and third classes of delegation set out above were permitted under the general law and it is convenient to consider the previously existing rules and exceptions relating to the [page 360] trustee’s duty not to delegate and then to consider the powers conferred on the trustee in this regard by statute. On the general question of the employment of agents, apart from statutory provision, the leading case is Speight v Gaunt,227 which followed the earlier case of Ex parte Belchier.228 In Belchier’s case, the assignee of the bankrupt employed a broker to sell a quantity of tobacco. The proceeds of the sale were received by the broker, who failed very shortly afterwards before he had paid over the money. Lord Hardwicke LC held that the assignee was not liable to make good the loss:229 If Mrs Parsons is chargeable in this case, no man in his senses would act as assignee under commissions of bankrupt. This Court has laid down a rule with regard to the transactions of assignees, and more so of trustees, so as not to strike a terror into mankind acting for the benefit of others, and not for their own. Courts of law, and equity, too, are more strict as to executors and administrators; but where

trustees act by other hands, either from necessity, or conformable to the common usage of mankind, they are not answerable for losses.

On the law thus laid down so long ago in Belchier’s case, the following points must be noted: (1) The employment of an agent must have been from the very nature of the acts required to be done virtually necessary according to the ordinary usage of mankind. Trustees could not employ an agent where they could quite easily do the work themselves. In Re Brier,230 where part of the trust estate consisted of book debts, the trustees were held to be prima facie justified in employing a debt collector instead of calling themselves upon each debtor individually. (2) Trustees had to ensure that a suitable agent was employed.231 To appoint an agent with a conflict of duty and interest or duty and duty is not to appoint a suitable agent.232 (3) The agent employed had to be employed within the scope of the agent’s business. ‘If a trustee employs an agent to do that which is not the ordinary business of such an agent and he performs that unusual duty improperly, and loss is thereby occasioned, the trustee would not be exonerated.’233 (4) In all questions requiring the exercise of the trustees’ discretion the trustees had to exercise their own discretion, even if in doing so they were guided by the advice tendered by others. The final decision had to be theirs.234 (5) Where the delegation involved the receiving of money, the money could not be left for an unnecessarily long time out of the control of the trustees. (6) Trustees had to be diligent in seeing that the duty delegated to the agent had been duly performed.

Statutory rules [17-24] The statutory rights to delegate a trustee’s powers and duties vary somewhat from jurisdiction to jurisdiction, and it will be necessary to consider the various sections in turn. [page 361]

New South Wales and the Australian Capital Territory [17-25] Section 53 of the Trustee Act 1925 (NSW) provides as follows: 53. (1) A trustee may, instead of acting personally, employ and pay an agent, whether being a bank, building society or credit union, or an Australian legal practitioner, stockbroker or any other person, to transact any business or do any act required to be transacted or done in the execution of the trust or in the administration of the estate. (2) The trustee shall be entitled to be allowed and paid all charges and expenses so incurred. (3) The trustee shall not be responsible for the default of any such agent if employed in good faith. (4) This section extends, in the case of a bank, building society, credit union, Australian legal practitioner, stockbroker or real estate agent, or in the case of a prescribed person or a person of a prescribed class, to the receipt and payment of moneys. (5) Nothing in this section shall authorise a trustee to employ an agent in any case where a person acting with prudence would not employ the agent to transact the business or do the act, if the business or act was required to be transacted or done in such person’s own affairs. (6) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust and shall have effect subject to the terms of that instrument and to the provisions therein contained.

Section 53 of the Trustee Act 1925 (ACT) is to the same effect. Victoria [17-26] The corresponding section is s 28 of the Trustee Act 1958 (Vic), subss (1), (3) and (4) of which provide as follows: 28. (1) Trustees or personal representatives may instead of acting personally, employ and pay an agent, whether a legal practitioner, banker, financial services licensee, regulated principal, or other person, to transact any business or to do any act required to be transacted or done in the execution of the trust, or the administration of the testator’s or intestate’s estate, including the receipt and payment of money, and shall be entitled to be allowed and paid all charges and expenses so incurred, and shall not be responsible for the default of any such agent if employed in good faith. (3) Without prejudice to such general power of appointing agents as aforesaid — (a) a trustee may appoint a legal practitioner or a banker to be his agent to receive and give a discharge for any money or valuable consideration or property receivable by the trustee under the trust, by permitting the legal practitioner or banker to have the custody of, and to produce, a deed or instrument under the Transfer of Land Act 1958, having in the body thereof or endorsed thereon a receipt for such money or valuable consideration or property, the deed or instrument being executed, or the endorsed receipt being signed, by the person entitled to give a receipt for that consideration; (b) a trustee shall not be chargeable with breach of trust by reason only of his having made or concurred in making any such appointment; and the production of any such deed or instrument by the legal practitioner or banker shall have the same statutory validity and effect as if the person appointing the legal practitioner or banker had not been a

trustee; (c) a trustee may appoint a legal practitioner or a banker to be his agent to receive and give a discharge for any money payable to the trustee under or by virtue of a policy of insurance, by permitting the legal practitioner or banker to have the custody of and to produce the policy of insurance with a receipt signed by the trustee, and a trustee shall not be chargeable with a breach of trust by reason only of his having made or concurred in making any such appointment. In this subsection ‘instrument’ includes a discharge of mortgage and ‘banker’ means a person acting in his official capacity as general manager or manager of any company solely or chiefly engaged in the ordinary business of banking or as the manager conducting for such company the business of any branch of an authorised deposittaking institution. (4) Nothing in the last preceding subsection shall exempt a trustee from any liability which he would have incurred if this Act or any corresponding previous enactment had not been passed, in case he permits any such money, valuable consideration or property to remain in the hands or under the control of the legal practitioner or banker for a period longer than is reasonably necessary to enable the legal practitioner or banker (as the case may be) to pay or transfer the same to the trustee.

[page 362] Queensland and Western Australia [17-27] In Queensland, the matter is dealt with in s 54 of the Trusts Act 1973 (Qld), and in Western Australia, by s 53 of the Trustees Act 1962 (WA), both of which are in substantially the same terms as the Victorian section. South Australia and Northern Territory [17-28] The corresponding provisions are s 24 of the Trustee Act 1936 (SA) and s 17 of the Trustee Act (NT). They are in much narrower terms than the legislation previously considered: 24. (1) A trustee may appoint a solicitor to be his agent to receive and give a discharge for any money or valuable consideration or property receivable by the trustee under the trust, by permitting the solicitor to have the custody of, and to produce, a deed having in the body thereof or endorsed thereon a receipt for such money, consideration, or property, the deed being executed or the endorsed receipt signed by the trustee. (2) A trustee shall not be chargeable with breach of trust by reason only of his having made or concurred in making any such appointment. The producing of any such deed by the solicitor shall be sufficient authority to the person liable to pay or give the consideration, or transfer or deliver the property, for his paying, giving, transferring, or delivering the same to the solicitor, without the solicitor producing any separate or other direction or authority from

the trustee. (3) A trustee may appoint an ADI or a solicitor to be his agent to receive and give a discharge for any money payable to the trustee under or by virtue of a policy of assurance, by permitting the ADI or solicitor to have the custody of and to produce the policy of assurance with a receipt signed by the trustee, and a trustee shall not be chargeable with a breach of trust by reason only of his having made or concurred in making any such appointment. (4) If a trustee permits any such money, valuable consideration, or property to remain in the hands or under the control of the ADI or solicitor for a period longer than is reasonably necessary to enable the ADIor solicitor (as the case may be) to pay or transfer the same to the trustee, nothing in this section shall exempt him from any liability which he would have incurred if this Act had not been passed …. (6) Nothing in this section shall authorise a trustee to do anything which he is in express terms forbidden to do, or to omit anything which he is in express terms directed to do, by the instrument creating the trust.

Tasmania [17-29] The power is equally circumscribed. Section 20 of the Trustee Act 1898 (Tas) reads as follows: 20. (1) A trustee may appoint a financial institution or Australian legal practitioner to be his agent to receive and give a discharge for any money or valuable consideration or property receivable by the trustee under the trust, by permitting the financial institution or Australian legal practitioner to have the custody of, and to produce a deed or instrument, having in the body thereof, or endorsed thereon, a receipt for such money, valuable consideration, or property, such deed or instrument being executed, or such endorsed receipt being signed by the trustee; and a trustee is not chargeable with breach of trust by reason only of his having made, or concurred in making, any such appointment; and the producing of any such deed or instrument by the financial institution or Australian legal practitioner has the same validity and effect as if the person appointing the financial institution or Australian legal practitioner had not been a trustee. (2) A trustee may appoint a financial institution or Australian legal practitioner to be his agent to receive and give a discharge for any money payable to the trustee under or by virtue of a policy of assurance, by permitting the financial institution or Australian legal practitioner to have the custody of, and to produce, the policy of assurance, with a receipt signed by the trustee; and a trustee is not chargeable with a breach of trust by reason only of his having made or concurred in making any such appointment. (3) Nothing in this section shall exempt a trustee from any liability which he would have incurred if this Act had not been passed in case he permits any such money, valuable consideration, or property to remain in the hands or under the control of the financial institution or Australian legal practitioner for a period longer than is reasonably necessary to enable the financial

[page 363]

institution or Australian legal practitioner, as the case may be, to pay or transfer the same to the trustee. (4) Nothing in this section shall authorize a trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust.

In order to supplement this power, it is provided by the Acts of all jurisdictions that a trustee shall not be answerable and accountable for the acts, receipts, neglects or defaults of any co-trustee or banker, broker or other person with whom any trust moneys or securities may be deposited nor for any loss, unless the same happens through the wilful neglect or default of the trustee.235

Statutory provisions compared [17-30] The various sections in the different jurisdictions differ rather widely. The Victorian, Queensland and Western Australian sections, which are by far the most satisfactory, confer on trustees a general power to delegate any of their powers or duties (including the receipt and payment of money) to any person. The New South Wales and Australian Capital Territory sections, very oddly, enable trustees to delegate to any person all their powers and duties other than the receipt and payment of money. The South Australian, Northern Territory and Tasmanian sections enable the trustee to delegate nothing but the power to pay or receive moneys, and then only to solicitors (or Australian legal practitioners) and bankers. In Victoria, Queensland and Western Australia, the old principle that a trustee may not delegate has virtually disappeared; in New South Wales and the Australian Capital Territory, as will be seen, in one respect it remains (and perhaps in an even stricter form), although it is otherwise abolished; but in South Australia, the Northern Territory and Tasmania it still all but retains its ancient importance. The New South Wales and Australian Capital Territory provisions deserve special mention. Section 53 alters the previous law by extending in some ways and by restricting in other ways the power of a trustee to delegate. The restriction is in the power of a trustee to permit an agent, other than a bank, to receive or pay trust moneys. Ex parte Belchier236 and Speight v Gaunt237 are examples of cases where the trustees under the previous law were entitled to employ agents and in the course of so doing to permit the agents to receive or pay moneys belonging to the trust.238

[page 364] The similar English section239 (like those of Victoria, Queensland and Western Australia) extends the principle laid down in these cases to those occasions where the employment of an agent does not arise out of virtual necessity, because it gives to trustees power to employ agents to transact any business including the receipt and payment of money. The express words of s 53(4) must be taken to apply to all agents other than banks, whether the employment of an agent is permissible under the old rule of virtual necessity or under the extended permission given by the section. Thus, a trustee could always employ a broker to buy or sell produce, or stock and shares, or to collect rents. If the properties were very numerous,240 because of the virtual impossibility of the trustee doing the acts personally, in the course of such employment the agent might be permitted to pay or receive trust moneys. Now a trustee can employ an agent not only in cases where there is a virtual impossibility of doing the acts personally, but in cases where there is no such impossibility,241 yet in no case at all can the trustee permit the agent (other than a bank) to receive or pay trust moneys. The rigour of this requirement is not, it would seem, mitigated by s 59, because a trustee who, in the face of the express prohibition in s 53(4), permits an agent to receive or pay money, would surely be guilty of wilful neglect and default.

Impact of statutory provisions [17-31] The various sections extend the power of a trustee to delegate, by the employment and payment of agents, to cases where there is no virtual necessity of such delegation. Therefore it may be said that the first of the six points set out at [17-23] no longer represents the law. However, the trustee is still obliged to ensure the employment of a suitable agent acting within the scope of that agent’s business. A trustee who employed a legal practitioner to value property or to buy or sell property or employed a stockbroker to collect rents, would be personally responsible, as in such cases the agent employed would not be employed within the scope of the agent’s ordinary work or business. A trustee may employ a broker to do broker’s work, a legal practitioner to do legal business, an auctioneer to sell property, a valuer to value property, an accountant to do accountant’s work, and so on. This follows from the requirement in the legislation of employment ‘in good

faith’242 and in New South Wales and the Australian Capital Territory from the terms of s 53(5).243 But, provided the agent was appointed in good faith and was acting within the scope of that agent’s business, the trustee would be protected now, even if the agent turned out to be unsuitable. Can the trustee’s discretion be delegated? The discretions of a trustee range over a great number of matters of varying importance. Trustees would not be justified in delegating discretionary powers expressly given to them under the trust instrument, although they would be so justified if the delegation was under the legislation relating to foreign property or to trustees abroad. However, in minor matters of administration, the very appointment of an agent, except to perform some purely ministerial act, involves the delegation in some degree of the discretion. It does not seem that the legislation just considered was ever intended to be limited to the delegation of purely ministerial acts, a form of delegation which was always permitted.244 [page 365] The power of trustees to delegate the right to receive or pay money (which differs as between jurisdictions) has already been considered. However, an agent may have possession of trust moneys for purposes other than payment thereof and in such cases the duty of the trustee still remains that the moneys should not be left with the agent for an unnecessarily long time out of the control of the trustees.245 Trustees must also still see to it that the sixth point mentioned above is observed, namely, that the duty delegated to the agent has been duly performed, but they would only be responsible for loss in such circumstances if it occurred through their wilful default and neglect.246 The provisions exempting trustees from liability for the defaults of agents247 were discussed in Re Vickery.248 An executor appointed a solicitor to collect money belonging to an estate. The solicitor was apparently respectable, but — unbeknown to the executors — he had been suspended from practice. He absconded and the estate money was lost. Maugham J held that the executor was not liable to make good the loss. The case warrants several comments. First, the facts are virtually identical with those in Ex parte Belchier249 and Speight v Gaunt,250 and both were decided before any statutory exemption clause existed. It was common usage amongst prudent people to permit a solicitor to collect

estate debts. Secondly, in these circumstances it is a matter of some obscurity why Maugham J said in that case, speaking of the statutory provision, ‘It is hardly too much to say that it revolutionises the position of a trustee or an executor so far as regards the appointment of agents’. Thirdly, that case is also authority for the proposition that ‘wilful default’ meant what it said, and excluded everything except deliberate or reckless misconduct; although, on the facts, it is hard to see how such a problem arose. Fourthly, having regard to the oddity of s 53(4) in both New South Wales and Australian Capital Territory, it is just possible that the principle of Re Vickery would not apply there.

Foreign property [17-32] In Stuart v Norton,251 it was held that a trustee in England could appoint an attorney in British Guiana to act for the trustee in regard to trust property in that country. This power arises from the principle that a trustee can delegate in cases where it is virtually impossible for the trustee to act personally. In Re Dunlop,252 Long Innes J held that trustees in Ireland had power to delegate to an attorney the power of carrying out trusts in respect of property situated in New South Wales. In all jurisdictions other than South Australia, Tasmania and the Northern Territory, where trust property is situated abroad, the trustees have power to delegate their discretions to an attorney, and the attorney can appoint substitutes. Section 55 of the New South Wales Act provides:253 55. (1) Where any property subject to a trust or forming part of the estate of a testator or intestate is in any place outside New South Wales, the trustee may appoint any person to act as the trustee’s agent or attorney for any of the following purposes: (a) selling, converting, collecting, getting in, and executing and perfecting assurances of, or managing, or cultivating, or otherwise administering the property, (b) executing or exercising any discretion trust or power vested in the trustee in relation to the property.

[page 366] (2) The agent or attorney may be so appointed with such ancillary powers, and with and subject to such provisions and restrictions as the trustee may think fit, including a power to appoint substitutes. (3) The trustee shall not by reason only of having made the appointment, be responsible for any loss arising thereby.

(4) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust and shall have effect subject to the terms of that instrument and to the provisions therein contained.

Although the trustees are absolved from loss arising from such an appointment, they may still be liable, under their general duty to act carefully, if they choose an unsuitable person as their delegate.254

Trustee abroad [17-33] Since the enactment of the various provisions now to be considered, a new form of delegation by a trustee has been available in circumstances where the trustee is out of the jurisdiction, which is really in the nature of a temporary appointment of a new trustee. In New South Wales and the Australian Capital Territory, the relevant section is s 64. The New South Wales provision is as follows: 64. (1) Where a trustee is absent from New South Wales or is about to depart therefrom, the trustee may by registered deed delegate the execution of the trust. (2) A trustee may not so delegate, unless the trustee’s co-trustees or co-trustee, and such other person, if any, as is empowered to appoint trustees, consent by the same or other registered deed to the delegation, and the delegation is to the NSW Trustee or to a trustee company or to a person residing in New South Wales who is either a co-trustee or is capable of being appointed a trustee of the trust. (3) The delegation may be made in respect of the whole or any part of the trust. (3A) A delegation given under the authority of this section by a trustee who is the legal representative of a deceased person shall, unless the contrary is expressed in the deed of delegation, operate to delegate not only the execution of the duties incident to the office of legal representative of such deceased person (including the exercise and discharge of all the powers, authorities, duties and functions of the trustee as such legal representative) but also the execution of the trusts which devolve upon such trustee when the administration of the estate of such deceased person is completed…. (4) The delegation shall not operate beyond two years from the date of the deed and shall be made on one occasion only, unless after the delegation the trustee has returned to New South Wales and is again absent or about to depart there-from, provided that in the event of the delegate dying or the delegation being revoked, another delegation may be made for the balance of the period of two years. (5) The delegation shall not be made, whether to a co-trustee or to any other person, unless there will be remaining in New South Wales to perform the trust the NSW Trustee or a trustee company or two persons whether as trustee or as delegate. (6) Two or more trustees may delegate concurrently. (7) A trustee who delegates his trust shall remain answerable for all acts and omissions of the delegate within the scope of the delegation as if they were the acts and omissions of the trustee, and the delegate shall be subject to the jurisdiction and powers of any Court so far as respects the execution of the trust in the same manner as if the delegate were the trustee.

(8) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained, provided that nothing in this subsection shall affect the jurisdiction or powers of any Court.

The Victorian section is rather different. It is s 30 of the Trustee Act 1958, and subss (1), (2), (3), (8), (9) and (10) thereof are in the following terms: [page 367] 30. (1) Where a trustee has never resided in Victoria, or is absent from Victoria, or is about to depart from Victoria, he may, notwithstanding any rule of law or equity to the contrary, by power of attorney delegate to any person (including a trustee company) the execution or exercise while he is out of Victoria of all or any trusts, powers and discretions vested in him as trustee, either alone or jointly with any other person or persons: Provided that a person being the only other co-trustee and not being a trustee company shall not be appointed to be an attorney under this subsection. (2) The donor of a power of attorney given under this section shall be liable for the acts and defaults of the donee in the same manner as if they were the acts or defaults of the donor; and the donee shall be subject to the jurisdiction and powers of any court so far as respects the execution of the trusts powers and discretions delegated to him in the same manner as if he were the trustee. (3) A power of attorney given pursuant to this section — (a) if the donor is out of Victoria when he executes it — shall, subject to this section, come into operation forthwith after its receipt in Victoria; (b) if the donor is in Victoria, when he executes it — shall, subject to this section, come into operation when the donor leaves Victoria; and (c) if the donor comes into Victoria after it has come into operation — shall cease to operate while the donor remains in Victoria, but from time to time shall, unless the instrument otherwise provides, come into operation again whenever the donor is out of Victoria. … (8) For the purpose of executing or exercising the trusts or powers delegated to him, the donee may exercise any of the powers conferred on the donor as trustee by statute or by the instrument creating the trust, including power, for the purpose of the transfer of any inscribed stock, himself to delegate to an attorney power to transfer but not including the power of delegation conferred by this section. (9) The fact that it appears from any power of attorney given under this section, or from any evidence required for the purposes of any such power of attorney or otherwise, that in dealing with any stock the donee of the power is acting in the execution of a trust shall not be deemed for any purpose to affect any person in whose books the stock is inscribed or registered with any notice of the trust. (10) In this section trustee includes a tenant for life and a statutory owner.

It will be noted that the Victorian section is framed in much wider terms than the New South Wales section. It applies not only to situations where trustees absent themselves temporarily from the state, but also to situations where the absence is permanent. Moreover, whereas in New South Wales the delegation cannot be for a period of more than two years (and there can only be made on one occasion), in Victoria there is no limit to the time it can endure or the number of occasions it can be made. The corresponding Queensland section, s 56 of the Trusts Act 1973, is similar to the Victorian section, but is even wider in its ambit. It comprehends, in addition to trustees who are (temporarily or permanently) absent from the state, trustees (residing in or out of the state) who are or about to become, by reason of physical infirmity, temporarily incapable of performing all their duties as trustees. Section 54 of the Trustee Act 1962 (WA) is almost identical with s 56 of the Queensland Act. The Trustee Act 1936 (SA) provides for a general power of delegation. This is provided in ss 17 and 17A of the Trustee Act 1936, by which the duration of any permissible delegation is limited to 12 months unless the trustee is ‘a member of any naval, military or air force of any part of the British Dominions’, in which case the trustee may delegate for the whole of the period of service. In Tasmania, the power is, by s 25A of the Trustee Act 1898, still more limited. In that state, there is no general power to delegate in a trustee living abroad. Such trustees may only delegate if there are other trustees, if the cotrustees consent, and if the trust instrument does not expressly prohibit delegation. [page 368]

Delegation of power to consent [17-34] In New South Wales and the Australian Capital Territory, s 65 enables any person whose consent is required to the exercise of any trust or power, if absent or about to become absent from the state, by registered deed to delegate the power of consent to the NSW Trustee (or Public Trustee) or to a trustee company. No other jurisdiction has an equivalent provision.

Section 66 of the New South Wales Act provides that no person dealing in good faith with a delegate under any deed of delegation authorised by Pt III of the Act is, by reason only that by the delegation or any evidence or document in connection therewith it appears that the delegate is acting in the execution of any trust, affected for any purpose with notice of the trust. Provisions which are, in all relevant respects, similar appear in the legislation of the Australian Capital Territory (s 66), Queensland (s 56(8)) and Western Australia (s 54(10)). The equivalent Victorian provision, however, is limited to dealings with stock (s 30(9)). Section 67 of the New South Wales and Australian Capital Territory legislation provides that every delegation under the relevant part of the Trustee Act is taken to be a power of attorney within the meaning of the local power of attorney legislation, and specified provisions of that legislation apply to the delegation. Section 68 of the New South Wales and Australian Capital Territory legislation provides for the registration of instruments of delegation of trusts or the right to consent. The effect of registration is that any person dealing in good faith with such a delegate is protected against notice of nonrevocation of the delegation. In South Australia, s 18 protects third parties dealing in good faith with delegates in ignorance of revocation of the delegation.

To Pay and Transfer the Trust Property and Its Income to the Right Persons Non-statutory background [17-35] Prior to the introduction of certain statutory provisions, which will shortly be considered, it was the absolute duty of the trustee to pay and transfer the trust property to the persons entitled thereto where such persons were the beneficiaries named in the trust instrument. The fact that the trustee made an honest and non-negligent mistake was no excuse.255 Nor was it any excuse if the trustee was induced to transfer the trust property to other persons as a result of forgery or fraud.256 However, if the trust property was destroyed or stolen, the trustee had no absolute liability. A trustee who had taken care of it was not liable.257 And if the person rightly entitled were not the person named in the instrument, but

another claiming by derivative title, the trustee who had paid the original beneficiary without notice of the assignment could not be compelled to pay over again.258 But a trustee who once had notice of the derivative title could not challenge its validity but had to pay unless it was clearly on its face a bad title.259 Now, however, the Trustee Acts of the various jurisdictions contain provisions which lighten the heavy burden which was thrown on trustees by the above rules. These provisions give the following forms of relief: (1) protection when paying under powers of attorney;260 (2) protection when paying after advertisement for claims;261 [page 369] (3) protection upon distribution without reserving funds to meet claims for breach of covenants in leases held by the trustee;262 (4) protection upon distribution without reserving funds to meet possible liability for calls on partly paid up shares;263 (5) protection against claims which a trustee has challenged;264 and (6) protection to trustees where, though mistaken, they have acted honestly and reasonably and ought fairly to be excused.265

Statute [17-36] In New South Wales, s 60(1) and (4)–(7) of the Trustee Act 1925 provide as follows:266 60. (1) Where a trustee intends to convey or distribute any property to or among the persons entitled thereto, the trustee may give notice in the manner and form prescribed by rules of the Court of the intention so to convey or distribute the property. (4) At the expiration of the time fixed by the notice the trustee may convey or distribute the property or any part thereof to or among the persons entitled thereto, having regard only to the claims, formal or otherwise, of which the trustee then had notice. (5) If the notice has been given the trustee shall not, as respects the property conveyed or distributed, be liable to any person of whose claim the trustee has not had notice at the time of the conveyance or distribution. (6) Nothing in this section shall prejudice the right of any person to follow the property, or any property representing the same, into the hands of any person who may have received the same. (7) In relation to a conveyance or distribution of property after the commencement of the Children (Equality of Status) Act 1976, a trustee referred to in subsection (5) shall be deemed to

have notice of the claim of any person whose entitlement to the property or to any part of it would have become apparent if the trustee had applied for and obtained a certificate under section 50 of the Births, Deaths and Marriages Act 1995.

It was one of the misfortunes of the trustees of the Diplock estate that they never availed themselves of the procedures in the English equivalent of these provisions: see [27-11].

Overpayments: Analysis [17-37] The law governing the circumstances in which trustees may recover overpayments made to beneficiaries is by no means clear. The broad principle would appear to be that a trustee may recover an overpayment out of any interest the beneficiary still has under the trust,267 or out of future payments of income due to that beneficiary.268 There is old but unduly broadly expressed authority that the court will not generally order a beneficiary personally to refund an overpayment. The authority is unduly broad because it is necessary to take into account the possibility of trustees recovering moneys paid under a mistake by using the common law remedy of money had and received.269 [page 370] In Dibbs v Goren,270 where trustees, under an erroneous view of the effect of a will, paid money to beneficiaries to which they were not entitled, it was held that the court, in administering the estate, would compel a restitution and repayment and would give a lien on the other interests of such beneficiaries under the will, even as against an assignee for valuable consideration. This principle has been followed in other cases. Thus, in Re Musgrave,271 Neville J stated that the rule that money paid under a mistake of law cannot be recovered has to yield to the general rule of equity that, in the administration of an estate, errors of account between trustees and beneficiaries will, as far as possible, be corrected.272 In that case, trustees who had omitted to deduct income tax from annuities were held entitled to recover the overpayments out of future payments of the annuities.273 Any arbitrary recoupment by a trustee might occasion the beneficiary who has been overpaid considerable embarrassment, and it would appear reasonable

that there should be some restriction on this power.274 In Re Horne,275 where a trustee who was himself a beneficiary had inadvertently overpaid the other beneficiaries and had died before any adjustment had been made, it was held that his executors were not entitled to recover from the other beneficiaries the amounts overpaid or to have accrued or future income impounded until the shares were equalised, on the ground that their testator himself was responsible for the mistake which had been made. But this decision has been criticised in later cases,276 and was said by Sargent J in Re Reading277 not to be of general application. It appears, however, to be consonant with Merriman v Perpetual Trustee Co Ltd278 in so far as the decision held that trustees who had made a mistake in the general law in distributing corpus whereby they underpaid themselves as beneficiaries and overpaid their sisters, could not recover the amount of the overpayments in a suit against their sisters. The latter decision recognised the right of trustees to adjust out of future payments, but declined to recognise a right in the trustees to bring proceedings for recovery.279 The equitable right to recover against recipients who have been paid more than they were entitled to receive, or who were in fact not entitled to any payment, has been exhaustively considered in England by the Court of Appeal in Re Diplock’s Estate.280 It was suggested that the distinction between a mistake of fact and a mistake of law as determining the right of recovery is not applicable to such cases. In David Securities Pty Ltd v Commonwealth Bank of Australia,281 the High Court of Australia decided that the supposed distinction between mistakes of fact and mistakes of law is no part of the law of Australia, so that there is no rule precluding recovery of moneys paid under a mistake of law. Accordingly, whatever some of the old cases may say, [page 371] a trustee’s right to recover mistakenly paid moneys is not barred by the circumstance that the mistake was one of law. In Western Australia by virtue of ss 124 and 125 of the Property Law Act 1969, relief shall not be denied in any proceedings in respect of payments made under mistake by reason only that the mistake is one of law rather than of fact; however, the court may deny relief in relation to recipients who took the money

in good faith and have so altered their position as to make a grant of relief inequitable to them or to those claiming through them.

Overpayments: Conclusion [17-38] Although the position is far from clear, it is suggested that the following principles apply: (1) Where a trustee has overpaid a beneficiary as a result either of a mistake of law or of a mistake of fact, the trustee is entitled to recoup the payments out of other funds due or to become due to the beneficiary under the same trusts, whether capital or income.282 (2) The trustee cannot so recoup if the income of a beneficiary is subject to a restraint on anticipation.283 (3) It makes no difference that the underpaid beneficiary in such circumstances is the trustee.284 (4) A trustee who has mistakenly paid a beneficiary may usually recover against that beneficiary by utilising the common law remedy of money had and received.285 (5) Overpayments made in respect of one trust cannot be recouped out of payments due to that beneficiary from the same trustee under another trust.286 The reason for the last principle shows the basis of all the rules. The trustee of a trust can regard all the sums, both capital and income, due to any one beneficiary as one fund for payment to that beneficiary.287 If, therefore, the trustee is sued by an overpaid beneficiary for a future payment, which has been used to recoup the earlier overpayment, the trustee can advance the following defence: ‘In all $X was due to this beneficiary and $X he has received.’ That is a good defence. However, if the overpayments are recouped out of a different trust fund, the trustee, when sued by the beneficiary for payment of the full amount due under the different trust will only have a defence if a set-off or cross-action can be raised. This the trustee cannot do, since the trustee has no cause of action under the principles previously stated, unless an action for money had and received is available.

Acting Gratuitously Trustee’s Right to Remuneration [17-39] In accordance with the rule of equity that trustees must not profit by their trust, trustees are not, as a general rule, entitled to remuneration for their labours in the trust; they are entitled to no compensation either for their personal trouble or for loss of time.288 Equity ‘looks upon trusts as honorary and a burden upon the honour and conscience of the trustee’; [page 372] trusts are not considered to be undertaken from mercenary views.289 The reason underlying the rule is that the interest and duty of the trustee must not be put in conflict.290 The rule is really an illustration of the more general principle that no persons who have fiduciary duties to perform shall place themselves in such a position that their interests will, or even may, conflict with that duty and that if interest and duty do conflict, interest must give way. There is an exception to the principle: where a testator or settlor, with knowledge of the facts, imposes on a trustee a duty which is inconsistent with a pre-existing interest or duty which that trustee has in another capacity, the trustee is not debarred from accepting the trust or performing the duties imposed under it.291 The rule against self-dealing prevents trustees from placing themselves in a position where they owe conflicting duties, or their duty as trustees conflicts with their self-interest. It has only limited operation where it is the settlor who has done this, not the trustees. Thus it has been accepted that trustees who appoint themselves as beneficiaries of the trust, or who, separately or together with other trustees, exercise dispositive powers in their own favour, commit a breach of the self-dealing rule unless either the rule is disapplied by the trust deed or the trustees are placed by the settlor in a position of necessary conflict, by being given a power which is expressed to be capable of being exercised in their own favour.292 Thus a trustee can take advantage of an express provision permitting trustees to charge and deduct from trust money remuneration for the trustee’s services.293 A trustee can take advantage of an express provision permitting the

trustee to purchase the trust property.294 The tenant of a farm who was made a trustee of the reversion in his father’s will was in a position of conflict between his self-interest in remaining tenant and his duty to get the best price for the land free of the tenancy, but was held to be at liberty to sell the land subject to the tenancy.295 A trustee who not only has a life interest in the trust income but is an object of a power of appointment is not subject to the self-dealing rule.296 A provision conferring on trustees the power to enter any transaction concerning the trust fund notwithstanding that any of the trustees is interested in the transaction other than as one of the trustees has been construed to permit the addition of one of the trustees to a class of beneficiaries under a power of addition and a subsequent appointment to that trustee under a power of appointment in favour of the beneficiaries.297 However, since these exceptions operate in derogation of the self-dealing rule, a fundamental principle of trusteeship, they are to be narrowly construed.298 Where these principles apply, the trustee is excused also from any onus of supporting the transaction.299 However, it is not open to trustees with a power to change the terms of the trust to do so by introducing provisions to their own personal advantage.300 [page 373] Trustees may receive remuneration in the following cases: (1) Where remuneration is expressly or impliedly provided for in the instrument of trust.301 (2) Where there is a special agreement between the trustees and the beneficiaries (the latter being sui juris) that the trustees shall be paid for their services.302 The courts scrutinise such agreements very closely, are ‘extremely cautious and wary’ in upholding them, and will refuse to enforce them where there appears the slightest sign of unfairness or undue pressure.303 If the trustee should die before performing the trust, the trustee’s estate will not be able to recover even a quantum meruit.304 There must be a clear agreement, not merely an indefinite understanding. Although the practice is well settled of allowing a trustee to make a contract for the remuneration in relation to services, the contract must look forward to further services and not be an attempt to get payment for past services.305

(3) Where the court expressly allows remuneration to the trustees. Although the court adheres to the general rule unless a special case is made out for remuneration,306 the court has inherent jurisdiction to allow remuneration in a proper case. Where the work of the trust takes up a great deal of the trustee’s time, so that, in order to obtain proper services from the trustee, it is in the interests of the trust that the trustee should be remunerated, the court will exercise its inherent jurisdiction.307 The application for remuneration in such a case, where the trust instrument makes no provision for remuneration, may be made: (a) under the court’s inherent jurisdiction;308 (b) under the statutory jurisdiction conferred by the equivalent of s 57 of the Trustee Act 1925 (UK);309 or (c) under provisions in the legislation of various jurisdictions which specifically authorise the court to remunerate a trustee.310 [page 374] The application need not be made before the trust is accepted, but it should be made promptly.311 Remuneration may be allowed in respect of past services.312 The jurisdiction extends to awarding remuneration to constructive trustees.313 In Re Keeler’s Settlement Trusts,314 Goulding J was confronted with the trusts of a settlement where the trust owned almost all the issued shares in a group of companies, of which the trustees became directors. They had over many years retained the remuneration they received by way of directors’ fees, although they were accountable to the trust in respect of them.315 On an application for remuneration in respect of past services, his Lordship was prepared to award them by way of remuneration such sum as would compensate them for every effort and skill over and above that ordinarily required of a similar director of a company appointed to represent the interests of a substantial shareholder. This emphasises that the court will normally only grant such remuneration, not authorised by the trust instrument, when the services for which remuneration is sought are in some way exceptional. In addition, as far as future remuneration was concerned, his Lordship felt disinclined to make any award, holding there

was no jurisdiction to do so; in this regard, he followed Re Duke of Norfolk’s Settlement Trusts,316 as decided by Walton J at first instance. In Re Duke of Norfolk’s Settlement Trusts,317 trustees were appointed in 1958 and the trust deed provided that they were to be remunerated in accordance with a 1958 scale of fees. In 1966 and 1968, certain properties were transferred to the settlement enabling a major redevelopment to take place, which involved exceptional additional work which had not been foreseen when the trustees assumed office. The introduction of a capital transfer tax in 1975 involved further work. In 1977, the trustees sought additional remuneration both for past and future work because by this time the old 1958 scale had become wholly inadequate. At first instance, Walton J was prepared to grant additional remuneration in respect of the redevelopment work, but in all other respects rejected the trustees’ application. In particular, his Lordship seemed to hold: (i) that there was no jurisdiction to award remuneration for future services; and (ii) that there was no jurisdiction to alter an agreed rate, unconditionally accepted, as opposed to granting some remuneration where none was allowed by the trust settlement. On both points he was reversed by the Court of Appeal. Although the authorities relied on by the Court of Appeal were decidedly thin,318 its decision is to be welcomed, if for no other reason than that if the trustees had elected to retire no other trustee would have assumed office except on the terms as to future remuneration which were sought. The decision of the Court of Appeal throws doubt on the decision of Goulding J as to future remuneration in Re Keeler’s Settlement Trusts.319 Where the trust is that of a will or an intestate estate, there is no necessity to invoke the inherent equitable jurisdiction of the court because, under the Wills Acts of the various jurisdictions, the court in its probate jurisdiction may allow a trustee of a deceased person’s estate out of the assets, on passing his or her accounts, such commission for his or her pains and trouble as is just and reasonable. This jurisdiction is not limited to cases where the [page 375]

executor, administrator or trustee devotes an unusual amount of time to the affairs of the estate. The trusts must be those of the will or the intestate estate, and, if the trusts have been varied by a family settlement, the legislation does not permit the court in its probate jurisdiction to allow commission on the execution of the fresh trusts.320 It is not proposed to deal in detail with this jurisdiction of the court sitting in probate, as it is a more appropriate subject for works dealing specifically with executors and administrators. It might, however, be noted that these probate rules apply only in Australia, and have no equivalent in England.321 (4) Where the trustee is a corporate body and is entitled to charge for its services by virtue of some specific statutory authority, as in the case of those corporations (sole or aggregate) which are severally established and recognised by the statutes of the various jurisdictions. (5) In cases of constructive trusts, where one has improperly but honestly employed the money of another in business.322 (6) Where the trust property is situated abroad in a country where remuneration of trustees is allowed.323

Solicitor-trustee [17-40] The question of remuneration to trustees expressly allowed to charge for their services to the trust has arisen most frequently in connection with solicitors appointed trustees. The rule on the subject is that a solicitor-trustee is allowed to charge professional costs only if authority to do so is expressly given by the instrument of trust.324 Of course, this does not prevent a solicitor being paid costs out of pocket in relation to the trust. The rule applies both to charges for non-contentious business and to charges for contentious business, and it applies to charges for work done by the firm of which the solicitor-trustee is a member as well as to charges for work done by the solicitor-trustee personally.325 In Clack v Carlon,326 where there was an express bona fide agreement between a solicitor-trustee and his partner that the solicitor-trustee was to take none of the costs for work done by the firm for the trust, the firm’s charges for work done were allowed. Attention was, however, drawn to the danger of collusion in such cases. The rule includes ‘agency costs’.327

The rule, of course, applies not only to solicitors acting as trustees, but also to other business people who act as trustees, for example, to bankers, auctioneers, agents of various kinds, surveyors and others. If they are acting as trustees, they are not allowed to charge for work done by them for the trust in the course of their business.328 [page 376] As it is frequently very convenient and advantageous to appoint a solicitor as a trustee or as one of several trustees, provision is usually made in the instrument of trust that the solicitor may charge ordinary professional profit costs for work done for the trust. The cases show many forms of clauses giving a solicitor-trustee power to charge professional costs or professional and other costs and they show also that such clauses are strictly construed.329 In cases where solicitor-trustees are allowed to charge costs, the clauses used may allow other trustees to be paid their professional costs if they act for the trust and they are then allowed their strictly professional costs,330 or it may authorise payment of both professional costs and costs for work done in the ordinary course of the solicitor’s profession,331 or it may go further332 and allow the solicitor-trustee to receive payment for all work done for the trust even if such work performed by a trustee not a solicitor would have been necessarily performed without payment. Where in a will provision is made that a solicitortrustee may make charges for work in connection with the trust, such a provision is in the nature of a gift to the solicitor and is treated as a legacy from the testator to the trustee. This view has important results. If the solicitortrustee happens to be one of the attesting witnesses to the will, the same rule, if it exists, will apply to such a gift as in the case of any other gift to an attesting witness, that is, that a gift to an attesting witness is void. The solicitor-trustee will not be able to take the benefit of the clause giving a right to charge.333 However, a solicitor who witnesses a will, is not appointed a trustee or executor by it, but becomes a new trustee on the death of one of the existing trustees, is entitled to any rights conferred by the rule to remuneration, at least if the appointment as new trustee was not predictable.334 If the estate is not sufficient to pay debts and testamentary expenses, the solicitor will not be able to obtain profit costs.335 The principle is applicable to

trustees generally, not merely to solicitor-trustees, for example, to accountants, auctioneers, surveyors, and others acting as trustees. Further, gratuities thus given to trustees conditional on their acting in the trust were subject to death duty.336 Again, as a result of the view that the solicitor-executor’s right to profit costs is a legacy, the solicitor will be treated as having been granted that right in lieu of any right to commission under any statute enabling a court exercising probate jurisdiction to grant commission to executors and administrators. The solicitor, therefore, must elect whether to charge the costs or apply for commission. Such an election, once made, has been held to be irrevocable.337 [page 377]

Rule in Cradock v Piper [17-41] There is one exception to the rule that a solicitor-trustee cannot charge professional costs for services rendered to the trust unless expressly authorised by the trust instrument. This exception was settled in Cradock v Piper.338 Where work is done by a solicitor-trustee in proceedings on behalf of the solicitor-trustee and a co-trustee or on behalf of the solicitor-trustee and cestuis que trust, the solicitor-trustee or the solicitor-trustee’s firm will be allowed to receive the usual costs, provided the cost of appearing and acting for the solicitor-trustee and the co-trustee has not added to the expense.339 But the exception is limited expressly to costs incurred in respect of the proceedings and does not apply to work done out of court.340 The principle of this exception will not be extended.341

Not to Deal with the Trust Property for Personal Benefit, or Otherwise to Profit by the Trust General [17-42] A trustee must not abuse his or her position by making it a means of profit or benefit personally or to any third party.342 Two elements in the reasoning support this fundamental rule. The first is the preclusion from effect upon the trustee of considerations of personal interest and is expressed by saying

that the trustee must account for benefits or gains obtained in circumstances where there was an actual or significant possibility of a conflict between personal interest and fiduciary duty. The second is the preclusion of the trustee from actual misuse of position and is expressed by saying that the trustee must account for any benefit or gain obtained or received by reason of or by use of the fiduciary position or of opportunity or knowledge resulting from it.343 The two elements may overlap. Thus, a trustee who takes a secret commission for an (authorised) investment of trust funds with a particular institution or who mortgages trust property to secure debt owed by a trustee344 offends on both counts, but the conduct of a trustee who acquires a benefit, of a character which it was not the trustee’s task to pursue for the trust and which the beneficiaries did not or could not wish for themselves, displays the second rather than the first element. Regal (Hastings) Ltd v Gulliver345 and Boardman v Phipps,346 both of which are discussed below, are two examples. In Chan v Zacharia,347 Deane J expressed the obligation as one to account as constructive trustee for any benefit or gain which: (1) has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between fiduciary duty and personal interest in the pursuit or possible receipt of such a benefit or gain; or (2) has been obtained or received by use or by reason of fiduciary position or of opportunity or knowledge resulting from it. [page 378] Mason J turned to the same topic in Hospital Products Ltd v United States Surgical Corp348 and he likewise expressed the view that liability in respect of profits was not limited to profits arising from actual use of fiduciary position but included gains derived in circumstances in which there was a conflict or a real or substantial possibility of a conflict of personal interest and the interests of the beneficiary. Trustees abuse their position within these principles not only when they favour themselves, but also when they direct the benefit to a third party. In Molyneux v Fletcher,349 trustees had a power of advancement in favour of the testator’s children and, after the share of a married daughter had vested, they

advanced a sum to her, knowing that the advance would be used to pay a debt which her husband owed to one of the trustees. It was held that the trustees in making the advance had committed a breach of trust. Peyton v Robinson350 was a somewhat similar case in which the trustees had to repay to the trust estate moneys advanced by way of loan to a beneficiary to enable the beneficiary to pay off a debt due to one of the trustees. These cases are applications of the rule in Keech v Sandford,351 which, in its primary operation upon trustees in respect of renewal of leases, was said by Deane J in Chan v Zacharia352 to present an irrebutable presumption of law that the renewal was obtained by the trustee in breach of duty. Trustees cannot hold for their own benefit a lease of premises obtained by them on the expiration of a lease held by them on behalf of the trust.353 Trustees cannot take up on their own behalf new shares issued as a result of holding trust shares.354 Nor can a trustee of lands held on conditional purchase under the Crown Lands Consolidation Act 1913 (NSW) take up additional holdings for personal benefit where the latter land only became available to the trustee as trustee of the original holding.355 A trustee cannot make a profit by buying up an encumbrance of the trust estate,356 nor a reversion upon an interest held by the trust.357 The cases already considered358 as to profits made by fiduciary agents, also illustrate the rule, which is not confined to trustees.359 In Parker v McKenna,360 James LJ stated: … in this Court no agent in the course of his agency, and in the matter of his agency, can be allowed to make any profit without the knowledge and consent of his principal; … the rule is an inflexible rule, and must be applied inexorably by this Court, which is not entitled, in my judgment, to receive evidence, or suggestion, or argument as to whether the principal did or did not suffer an injury in fact by reason of the dealing of the agent; for the safety of mankind requires that no agent shall be able to put his principal to the danger of such an inquiry as that.

This duty of the trustee only continues while the fiduciary relationship exists between the trustee and the beneficiaries. It does not exist, for instance, in the case of an executor who has been appointed by the will, but has not proved or acted in the estate,361 nor where an employee [page 379] of a partnership is appointed a trustee of a deceased partner so that the dealing

was completed before the fiduciary relationship arose.362 Indeed, so stringent are the rules of equity against permitting a trustee to retain benefits gained by the trustee in the administration of a trust that they can be carried to an almost inequitable conclusion.363 In Regal (Hastings) Ltd v Gulliver,364 the directors of a company which owned a cinema formed a subsidiary company and subscribed personally for 3000 of its 5000 shares, the subsidiary company taking a lease of two other cinemas. All shares in each company were sold at a considerable profit. The company then recovered from the directors all profits made by them, even though the result was a windfall to the purchasers of the shares as the new controllers of the company. This case, itself a decision of the House of Lords, was again followed and applied by the House of Lords in Boardman v Phipps,365 a case involving a trust of shares in a private company. In this case a beneficiary and a solicitor who together acquired all shares in the company which were not held by the trustees and subsequently disposed of them at a large profit, were held liable to account for the profit they had made, apparently on the ground that they, while not being themselves trustees, represented themselves as the agents of the trustees in some of the negotiations for the acquisition of outstanding shares. There are indications that the extreme view which those cases indicate obtains in England might well not obtain in Australia. This is the view, for example, of Deane J in Chan v Zacharia.366 It has been held not to be a bar to the court giving directions as to the surplus of a pension scheme that the applicant trustees, who are also employee-beneficiaries, would benefit under the proposed scheme.367

Purchase of trust property by trustee [17-43] The purchase of trust property by the trustee requires particular attention. Except with the consent of the court, or pursuant to an express power contained in the trust instrument or with the assent of all beneficiaries, a trustee must not purchase the trust property (as distinct from purchasing a beneficiary’s interest) either directly or from the co-trustee or co-trustees. If this happens, the transaction may be set aside by the court without any evidence being adduced that the transaction was unfair or that the trustee took any improper advantage of his or her position as trustee, even if the terms were fair and generous.368 These are rules about ‘self-dealing’; the purchase of a beneficiary’s interest is dealt with by rules about ‘fair-dealing’.369 The court will not permit a trustee to have an interest adverse to and inconsistent with the duty to the beneficiaries,

unless, of course, authorised by the trust instrument. Trustees for sale are bound to get the best possible price for the property and, if they purchase for themselves, their interest as buyer is to get the property at the lowest possible price, that is, their interest as purchaser is inconsistent with their duties as trustees, and it is this conflict of interest and duty which gives the court grounds for exercising its equitable jurisdiction to protect the beneficiaries.370 [page 380] If trustees purport to sell the trust property to themselves, the sale is nugatory and meaningless because the property remains in the hands of the trustees still impressed with the trust. It is otherwise if the trustee seeks to purchase a beneficiary’s interest, because in that case the subject matter of the sale is the equitable interest itself. In Denton v Donner,371 it was said: ‘No doubt where a person is a trustee for sale, and he sells the estate to himself, the transaction is absolutely and ipso facto void; but if a trustee purchases from his cestuis que trust … I do not assert it is absolutely void.’ Now, however, in most jurisdictions a covenant or agreement made by a person with that person and another or others shall be construed and be capable of being enforced in like manner as if the covenant or agreement had been made with the other or others; and a person may assure property to himself or herself, or to that person and others. The result is that a sale by co-trustees to one of themselves is usually good at law but is absolutely voidable in equity.372 The purchase will equally be set aside if it is made in the name of a third person but really for the trustee,373 or if the sale is bona fide to a third person but, before it is completed, such person resells to the trustee.374 But a bona fide repurchase by a trustee from a stranger who bought the property and completed the sale will not be set aside even if the trustee subsequently makes a profit out of the transaction.375 Resales by the trustee to purchasers with notice will also be affected.376 The rule forbidding trustees to purchase the trust property applies also to executors,377 but not to an executor who has not proved the will or a person named as trustee who has never acted in the administration of the trust.378

However, an executor may appropriate specific assets personally in satisfaction of a share in residue.379 The director of a trustee company cannot purchase property of which the company is trustee.380

Purchase of trust property by ex-trustee and trustee’s relatives [17-44] If, however, the trustee has retired before agreeing to purchase, the transaction will not be voidable ipso facto, but its validity will depend on whether the court is of the opinion that the trustee acted improperly, as, for example, where it appears that the trustee has retired in order to qualify to purchase the property or the trustee has gained an unfair advantage by reason of the former position of trustee. In Re Boles and British Land Co’s Contract,381 it was held that, apart from circumstances of doubt or suspicion, there was no rule that a person ceasing to be a trustee cannot become a purchaser of trust property and in that case a purchase by a former trustee 12 years after his retirement was upheld. [page 381] It would seem that there is no absolute rule placing a purchase by the wife of a trustee in the same category as a sale to the trustee,382 but such a purchase would give rise to the strongest grounds of suspicion which, if not dispelled, would be sufficient cause for the court to set aside the purchase.383 Where the son of a trustee purchased trust property from his father and subsequently sold it at a profit, both father and son were held liable to account to the trust estate for such profit.384 A trustee is not precluded by a subsequent fiduciary relationship from exercising a right of pre-emption contained in a pre-existing contract,385 but such a right is not assignable to a co-trustee.386 The court has power to approve a sale to a trustee where, from the circumstances of the case, such sale appears advantageous to the beneficiaries as, for example, where no other purchaser can be found.387 The court would be reluctant to approve a sale in the face of objections from any of the beneficiaries.388 The court may exercise the jurisdiction as part of its inherent jurisdiction or, alternatively, under the statutory powers of the court to sanction

deviations from the terms of a trust, which were considered earlier in this chapter. The latter type of application by summons is simpler. Strong evidence of value is required. Usually the trustee who proposes to purchase is joined as a respondent389 and, if the application is granted, the trustee must in any case pay the cost.390 As already stated, the rules which prevent trustees from dealing with the trust property to their own advantage do not apply when permission so to do is given to them by the trust instrument. Thus, a trustee may, if the instrument so provides, purchase part of the trust property, but any conditions attaching to that permission must be strictly complied with.391 The above rules proceed on the assumption, which until recently was regarded as immutable, that any purchase by trustees from themselves, or themselves and their co-trustees, could be set aside as of right by any beneficiary unless the purchase was either authorised by the trust instrument or sanctioned by the court. In England, the Court of Appeal has, however, stated that such an assumption is incorrect and that the court has a discretion not to set aside an impugned transaction if in all the circumstances the transaction seems fair: Holder v Holder.392 It would seem that this decision seeks to reverse centuries of established law and must be regarded as wrongly decided.393 In Re Thompson’s Settlement,394 Vinelott J came as near as he [page 382] could to saying that Holder v Holder was wrong. It has, however, been viewed with some favour in the different context of sales by mortgagees to themselves.395

Solicitors [17-45] The rule forbidding the purchase of trust property is extended to solicitors of the trustees as well as to trustees themselves. In Ex parte James,396 a bankrupt estate was sold at auction and part was purchased by the solicitor to the assignees. The sale was set aside, notwithstanding it was perfectly fair and the price was reasonable. This solicitor and the assignee in the bankrupt’s estate also purchased some of the debts due to the estate. It was held that the estate

must get the benefit of this purchase. In Cookson v Lee,397 trustees had to sell certain properties suitable for building purposes and the properties were put up in lots. The solicitors to the trustees bought a number of the lots, resold some of them, and mortgaged others. Upon application being made to the court, the sales of the lots still in the solicitors’ hands unsold and the sales of the mortgaged lots were set aside, and the solicitors had to account for the profits made on the lots that were resold. The mortgagees were allowed to stand in the place of the solicitors in regard to the refund of the purchase moneys. The rule is also applied in many cases where a fiduciary relationship exists between the parties; as, for example, in Tate v Williamson,398 where a young man of 23 years of age who was pressed for payment of debts asked advice from his uncle and was referred by him to another nephew. The nephew bought from the debtor his share of an estate, in which he was interested to the extent of onehalf, for £7000, the purchaser having previously had a valuation made of the property, from which it appeared that the value of the whole property was over £30,000 and of the debtor’s undivided moiety at least £14,000. This valuation was not communicated to the debtor. The transaction was set aside.

Solicitor and client; barrister [17-46] A purchase by a solicitor from the client, where the client has no independent advice, will not stand unless it is proved that the transaction was a fair one. The onus of proof of this is on the solicitor. The solicitor must show that the solicitor gave full value and did not in any way take advantage of information or knowledge which the solicitor has withheld from the client.399 The test is ‘that the solicitor must establish that the sale was as advantageous to the client as it could have been if the solicitor had used his utmost endeavours to sell the property to a stranger, and that the burden of proving this lies on the solicitor, or any persons claiming through him’.400 Solicitors who deal with their clients must take care not only that the transaction is fair but that they are in a condition to prove that it was fair.401 The considerations which apply to a purchase by a solicitor from the client apply also to a sale by a solicitor to the client. The obligations of a clerk in the employ of a solicitor to whom the solicitor has delegated a matter, or to whom the client goes direct, are no less in the matter upon which the clerk proceeds than are the obligations of the solicitor personally.402

[page 383] A barrister cannot purchase charges on the estate of a client to whom the barrister has been acting as confidential adviser, unless the purchase is with the client’s express permission; and the disability continues even if the employment ceases.403

Purchase from beneficiary [17-47] In applying the rule that a trustee is not allowed to purchase the trust property, it is necessary to distinguish between the case where the trustees purchase the trust property from themselves and the case where the trustee purchases from a beneficiary the beneficiary’s interest in the trust property. In the former case the purchase, even if made at public auction, is always void or voidable, however honest and fair it may be. But there is no rule of law forbidding a trustee to purchase trust property from a beneficiary. Yet if a trustee does effect such a purchase, the transaction is open to review by the court and the onus will be on the trustee to show the following: (1) that the trustee gave full value for the interest, unless it is proved that the beneficiary intended to make a gift to the trustee, in which case it must be shown that the beneficiary knew the value of the gift; (2) that the trustee, before purchasing, disclosed all information which could affect the judgment of the beneficiary; (3) that, if the trustee held a position in relation to the beneficiary which resulted in the beneficiary reposing confidence in the trustee’s judgment, the trustee gave to the beneficiary the full benefit of the trustee’s judgment; and (4) that the beneficiary, although not necessarily having independent advice, was ‘at arm’s length’ from the trustee. These four requirements appear to be borne out by the cases.404 It was said in Coles v Trecothick:405 As to the objection to a purchase by the trustee, the answer is, that a trustee may buy from the cestui que trust, provided there is a distinct and clear contract, ascertained to be such after a jealous and scrupulous examination of all the circumstances, proving, that the cestui que trust intended, the trustee should buy; and there is no fraud, no concealment, no advantage taken, by

the trustee of information acquired by him in the character of trustee. I admit, it is a difficult case to make out, wherever it is contended that the exception prevails.

The fact that the trustee retires from the trust at the time of the purchase will not make the transaction stand any whit the stronger. In Spring v Pride,406 a trustee retired from the trust and purchased reversionary interests from a reversioner, the deeds of sale and of retirement being executed on the same date. The transaction was set aside, full information and explanation of her rights not having been given to the reversioner. It is almost needless to say that transactions between persons standing in the relation of trustee and cestui que trust on any matters entirely unconnected with the trust are not subject to the rules just mentioned. If a trustee purchases from a beneficiary property that has nothing to do with the trust, the court will not inquire into or set aside the transaction unless, of course, [page 384] for fraud or something similar. In such a case the fiduciary relation does not exist in regard to the property that is the subject matter of the transaction.407 In any event, the extent of the duty in a fiduciary relationship depends on the particular relationship.408

Position where purchase is set aside [17-48] Where a trustee purchases trust property and the transaction is set aside by the court on the application of a beneficiary, the latter may elect either to have the property reconveyed at the price for which the trustee purchased, with interest added and the trustee accounting for profits, or an occupation rent, or to have the property resold, the upset price in the latter case being the price paid by the trustee plus the value of any improvements made by the trustee.409 In the case of sale, if less than the price just mentioned is offered, the trustee is held to his or her purchase.410 If, on the other hand, the property is taken back at the price paid, with interest, an allowance is made to the trustee for money spent in effecting permanent improvements, while the trustee is charged with any loss in value due to the trustee.411

Where the court sets aside a purchase of trust property by trustees from themselves and orders a reconveyance to the beneficiaries, it is not the practice to charge the trustees with interest on the rents and profits received by them since the date of the sale.412 Where trustees or executors who have purchased trust property have resold at a profit to a bona fide purchaser for value with notice, they must account for the profit with interest.413 In Hardwicke v Vernon,414 a valuation of the properties concerned as at the time of the sale was ordered and the decree was that the plaintiff might elect either to abide by the valuation and thus hold the defendant to account for the difference between the price paid and the real value, or to hold the defendant to account for the difference between the price paid by the trustee and the price received by him on selling to the purchasers.

Profits [17-49] Trustees are not only debarred from dealing with the trust property for their own benefit in the cases already mentioned, but are also debarred from making a profit directly or indirectly out of the trust estate. Where one of two trustees received a bribe of £300 for making a particular investment of trust moneys, he was held liable not only to make good the resulting loss, but also to account for the £300 he had received.415 In Willis v Barron,416 a beneficiary was held not bound by a deed by which she conferred a benefit upon the son of her solicitor-trustee whose duty it was to explain the deed to her and to advise her in the circumstances not to execute it without independent advice. In Tyrell v Bank of London,417 a solicitor acted for the bank in purchasing a property, the owner of which had a private arrangement with the solicitor that the latter was to receive a share in [page 385] the profit on the sale. The solicitor was ordered to pay to his clients the full amount of this profit and interest at 5%.418 If trustees hold shares in a company as part of a trust estate and by virtue of

that holding become directors of the company, they must account to the trust for fees earned as directors, such fees being treated as capital of the trust.419 Where, however, the trust shares are not capable of being used either by voting or not voting therewith to procure the appointment of a trustee as a director,420 or where a testator’s trustees have been empowered to procure their appointment as directors of a company in place of the testator,421 the trustee will be entitled to retain the remuneration. Just as trustee directors are not required to account for directors’ fees where they were appointed directors before they became trustees and, it would seem, even though they may be from time to time thereafter reappointed as directors,422 so it is possible on one view of the authorities that where testators have dealt in businesses during their lifetimes with one who subsequently is appointed by them as their executor or trustee with power to carry on that business, there is nothing to prevent the trustee from continuing to deal in the ordinary course of the trust business and thereby to make a profit.423 These cases rest on the assumption that the testator or settlor intended that the profit could be made by the trustee and that being so, it does not matter that the amount of the director’s fees in one class of case, or the exact nature of the profit in the other class, may thereafter vary from time to time. On this view the true limit to the amount of the profit retainable by the trustee is that it should be reasonably proportionate to that earned by the trustee, to the knowledge of the testator or settlor prior to the trustee’s appointment. Where a solicitor-trustee invested trust funds on mortgage and acted for the mortgagor as well as for the trust estate, it was held that he could not be made to account for the costs received from the mortgagor.424 The reason for this decision was that the gain of the trustee was indirect and did not arise out of his position as trustee.

_____________________________ 1.

Hallows v Lloyd (1888) 39 Ch D 686 at 691.

2. 3.

Harvey v Olliver (1887) 57 LT 239 at 241. [1984] Ch 100; [1983] 2 All ER 745. In Smithson v Hamilton [2008] 1 All ER 126; [2008] 1 WLR 1453 at [127], Sir Andrew Park said of Turner v Turner that ‘the settlement and everything to do with it were a shambles’.

4. 5.

[1994] 1 All ER 118; [1993] 1 WLR 1260. CGU Insurance Ltd v One.Tel Ltd (in liq) (2010) 242 CLR 174; 268 ALR 439 at [36]; Fischer v Nemeske Pty Ltd [2016] HCA 11 at [111].

6. 7.

Lewis v Nobbs (1878) 8 Ch D 591 at 594; Guazzini v Pateson (1918) 18 SR (NSW) 275 at 282; 35 WN (NSW) 106 at 107. [1894] 1 Ch 425 at 429.

8. 9.

Ex parte Geaves; In Re Strahan (1856) 8 De G M & G 291 at 309; 44 ER 402 at 409. Ex parte Geaves; In Re Strahan (1856) 8 De G M & G 291 at 309; 44 ER 402 at 409.

10. Re Trusts of Kean Memorial Trust Fund (2003) 86 SASR 449 at 471 [94]. 11. Van Rassel v Kroon (1953) 87 CLR 298 at 302–3; [1953] ALR 190 at 193. 12. Re Forest of Dean Coal Mining Co (1878) 10 Ch D 450; Permanent Trustee Australia Ltd v Perpetual Trustee Co Ltd (1994) 15 ACSR 722 at 728; Young v Murphy [1996] 1 VR 279; Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 96 FCR 217; 169 ALR 419 at [53]–[55]. 13. Young v Murphy [1996] 1 VR 279. 14. McGregor v McGregor (No 2) [1919] NZLR 286. 15. Davey v Pein (1884) 10 VLR (E) 306 at 312. 16. A-G v Munro (1848) 2 De G & Sm 122 at 163; 64 ER 55 at 73. 17. Partridge v Preddey (1903) 4 SR (NSW) 36; 21 WN (NSW) 11. 18. Devey v Thornton (1851) 9 Hare 222; 68 ER 483; Newsome v Flowers (1861) 30 Beav 461; 54 ER 968. 19. Beddoes v Pugh (1859) 26 Beav 407; 53 ER 955. 20. Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; 196 ALR 482 at [32]. 21. A-G v Downing (1767) Wilm 1 at 23; 97 ER 1 at 9; Raby v Ridehalgh (1855) 7 De G M & G 104 at 108; 44 ER 41 at 43. 22. Wilden Pty Ltd v Green (2009) 38 WAR 429 at [166]. 23. Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409; [2003] 1 All ER 763 at [27] per Lightman J, quoted with approval in Pitt v Holt [2013] 2 AC 108; [2013] 3 All ER 429 at [84]. Cf Breen v Williams (1996) 186 CLR 71 at 137; 138 ALR 259 at 308 per Gummow J (the trustee’s duty to observe the terms of the trust arises from a ‘particular characteristic, not of fiduciary obligations generally, but of the trust’); M Conaglen, Fiduciary Loyalty: Protecting the Due Performance of Non-Fiduciary Duties, p 33. 24. The trust may contain powers of variation. These powers may not be used for a foreign purpose. For this and other principles relating to powers of variation, see Kearns v Hill (1990) 21 NSWLR 107; Cachia v Westpac Financial Services Ltd (2000) 170 ALR 65 at [68]–[76]. 25. See, however, the following sections in the Trustee Acts: ACT s 27B; NSW s 27B; Qld s 32(4); Vic s 13(5); WA s 27(5); South Australia, Tasmania and the Northern Territory having no equivalent

provisions. For convenience, the duties as well as the powers of a trustee in relation to the sale of the trust property are dealt with in [20-02]ff. 26. Fry v Fry (1859) 27 Beav 144; 54 ER 56. 27. Johnson v Baber (1845) 8 Beav 233; 50 ER 91. 28. Harrison v Randall (1852) 9 Hare 387 at 467; 68 ER 562 at 567. 29. Brown v Smith (1878) 10 Ch D 377; Matthews v Tyson (1900) 21 LR (NSW) Eq 268. 30. It is in this context that the celebrated (Nissen v Grunden (1912) 14 CLR 297 at 317; 18 ALR 254 at 261) remark of Sir Nathaniel Lindley MR in Perrins v Bellamy [1899] 1 Ch 797 at 798, ‘The main duty of a trustee is to commit judicious breaches of trust’ (which he later modified to read ‘The great use of a trustee is to commit judicious breaches of trust’ in National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373 at 375–6) must be understood. Another construction of it was given in Armitage v Nurse [1998] Ch 241 at 251; [1997] 2 All ER 705 at 710: a deliberate breach of trust is not necessarily fraudulent. 31. Re Dumbel (1802) 6 Ves 617 at 622–3; 31 ER 1223 at 1226; Wilkinson v Parry (1828) 4 Russ 272 at 276; 38 ER 808 at 809; Griffiths v Porter (1858) 25 Beav 236 at 241; 53 ER 627 at 629; Wharton v Masterman [1895] AC 186; [1895–9] All ER Rep 687. 32. Re Brockbank [1948] Ch 206; [1948] 1 All ER 287; Plimsoll v Drake (1995) 4 Tas R 334; Application of Richard Albarran; Harb v Harb (2010) 17 BPR 33,295 at [13] (citing and applying this paragraph). 33. Collett v Collett (1866) 35 Beav 312; 55 ER 916; Re New [1901] 2 Ch 534; [1900–3] All ER Rep 763. 34. Re Beard [1908] 1 Ch 383. 35. [1901] 2 Ch 534 at 545; [1900–3] All ER Rep 763 at 768. 36. See Chapman v Chapman [1954] AC 429 at 451; [1954] 1 All ER 798 at 807–8. See also O R Marshall, ‘Deviations from the Terms of a Trust’ (1954) 17 MLR 420. For other cases on the court’s inherent jurisdiction to sanction compromises, see Allen v Distillers Co (Biochemicals) Ltd [1974] QB 384; [1974] 2 All ER 365 and Mason v Farbrother [1983] 2 All ER 1078. 37. Re Tollemache [1903] 1 Ch 457 at 955; Re Hazeldine’s Trusts [1908] 1 Ch 34 at 41; [1900–3] All ER Rep Ext 1134; Templeton v Leviathan Pty Ltd (1921) 30 CLR 34; 28 ALR 95. 38. Ku-ring-gai Municipal Council v A-G (1954) 55 SR (NSW) 65 at 74; James N Kirby Foundation Ltd v AG (NSW) (2004) 62 NSWLR 276 at [10]. 39. For examples of the exercise of the jurisdiction, see Cousins v Cousins (1906) 3 CLR 1198; Re Toohey (1906) 6 SR (NSW) 538; 23 WN (NSW) 111; Re Crago (1908) 8 SR (NSW) 269; 25 WN (NSW) 91; Lillis v Lillis (1912) 29 WN (NSW) 91; Re Foster (1916) 17 SR (NSW) 42; 33 WN (NSW) 191; McCarthy v McCarthy (1919) 19 SR (NSW) 122; 36 WN (NSW) 45. For a general discussion of the inherent jurisdiction of the court, see Chapman v Chapman [1954] AC 429; [1954] 1 All ER 798. 40. See also ACT s 81; NT s 50A; Qld s 94; SA s 59B (see also ss 48–55); Tas ss 47 and 55; Vic s 63; WA s 89. See Ballard v A-G (Vic) (2010) 30 VR 413; Thomas Hare Investments Ltd v Hare (2012) 34 VR 656. 41. See, as an instance of the exercise of the statutory jurisdiction after a finding that there was no inherent jurisdiction, Re Forster’s Settlement [1954] 3 All ER 714; [1954] 1 WLR 1540. 42. See Re Harvey [1941] 3 All ER 284. 43. Re Hope’s Will Trust [1929] 2 Ch 136; [1929] All ER Rep 561; Re Thomas [1930] 1 Ch 194; [1929] All ER Rep 129; Re Salting [1932] 2 Ch 57; [1932] All ER Rep 857; Riddle v Riddle (1952) 85 CLR 202; [1952] ALR 167; Hornsby v Playoust (2005) 11 VR 522; Trust Company Fiduciary Services Ltd v Challenger Managed Investments Ltd (2008) 68 ACSR 356. 44. Re Beale’s Settlement Trusts [1932] 2 Ch 15; [1931] All ER Rep 637.

45. Stevenson v McPhillamy (1949) 23 ALJ 649. 46. Re Bayne (1892) 25 SALR 109; Re Salting [1932] 2 Ch 57; [1932] All ER Rep 857; and to purchase a life tenant’s interest: Re Forster’s Settlement [1954] 3 All ER 714; [1954] 1 WLR 1450. 47. Re Harvey [1941] 3 All ER 284. But see Re Royal Society’s Charitable Trusts [1956] Ch 87; [1955] 3 All ER 14. 48. Riddle v Riddle (1952) 85 CLR 202; [1952] ALR 167. Cf Re Strang (1941) 41 SR (NSW) 114; 58 WN (NSW) 108; Boyd v Cowell [1952] VLR 288; [1952] ALR 523; Re Hart [1954] VLR 239; [1954] ALR 552. See, however, Re Powell-Cotton’s Re-settlement [1956] 1 All ER 60; [1956] 1 WLR 23. For cases dealing with powers to invest in real estate in times of inflation, see Re Baker [1961] VR 641 at 648– 55; Re Dehnert [1973] VR 449 at 452 and National Trustees Executors and Agency Co of Australasia Ltd v A-G (Vic) [1973] VR 610. 49. Arakella Pty Ltd v Paton (2004) 60 NSWLR 334. 50. Re Philips New Zealand Ltd [1997] 1 NZLR 93 at 101; James N Kirby Foundation Ltd v A-G (NSW) (2004) 62 NSWLR 276 at [16]. 51. Re Craven’s Estate [1937] Ch 431; [1937] 3 All ER 33. Cf Re Strang (1941) 41 SR (NSW) 114; 58 WN (NSW) 108; Riddle v Riddle (1952) 85 CLR 202; [1952] ALR 167. See also Re Baker [1961] VR 641. 52. Re Dawson [1959] NZLR 1360. 53. See Re Shipwrecked Fishermen & Mariners’ Royal Benevolent Society [1959] Ch 220; [1958] 3 All ER 465; Freeman v A-G (NSW) [1973] 1 NSWLR 729. 54. Re Sykes (dec’d) [1974] 1 NSWLR 597; Re Trusts of Kean Memorial Trust Fund (2003) 86 SASR 449 at [45]. 55. Re Ebbett [1974] 1 NZLR 392. 56. Perpetual Trustees WA Ltd v A-G (WA) (1992) 8 WAR 441; cf Palmer v McAllister (1991) 4 WAR 206. 57. Riddle v Riddle (1952) 85 CLR 202 at 214; [1952] ALR 167 at 169. 58. [1979] 2 NSWLR 785. 59. Riddle v Riddle (1952) 85 CLR 202; [1952] ALR 167. Cf Re Lawson’s Settled Estates (1890) 7 WN (NSW) 71; Re Forsaith’s Settled Estates (No 3) (1903) 20 WN (NSW) 194; Re Stack’s Settled Estates (1909) 26 WN (NSW) 181; Re Shipwrecked Fishermen & Mariners’ Royal Benevolent Society Charity [1959] Ch 220; [1958] 3 All ER 465; Re Baker [1961] VR 641. 60. Re Trusts of Kean Memorial Trust Fund (2003) 86 SASR 449 at [46]. 61. Re Dion Investments Pty Ltd (2014) 87 NSWLR 753, disapproving Re Phillips New Zealand Ltd [1997] 1 NZLR 93 and Australian cases following it (for example, Stein v Sybmore Holdings Pty Ltd (2006) 64 ATR 325 at [45]–[46]); Hancock v Rinehart (2015) 106 ACSR 207 at [186]–[193]. 62. [1954] AC 429; [1954] 1 All ER 798. See also Re Heyworth’s Contingent Reversionary Interest [1956] Ch 364; [1956] 2 All ER 21; Re Cockerell’s Settlement Trusts [1956] Ch 372; [1956] 2 All ER 172; Sutton v England [2012] 1 WLR 326. 63. Although the court will not act merely in order to reduce the liability to future duties, it can act if there are other good reasons for so doing. See cases last cited and Re Ropner’s Settlements Trusts [1956] 3 All ER 332; [1956] 1 WLR 902. 64. [1977] 1 NZLR 713. 65. (1953) 19 LGR (NSW) 105, affirmed on appeal (1954) 55 SR (NSW) 65; and followed in Arakella v Paton (2004) 60 NSWLR 334.

On the English legislation generally, see REM (1959) 75 LQR 449; F A Mann, ‘The Variation of 66. Trusts Act, and the Conflict of Laws’ (1964) 80 LQR 29; PVB (1968) 84 LQR 162; PVB (1969) 85 LQR 15; J Harris, Variation of Trusts; Lewin on Trusts, 19th ed, [45-038] and [45-117]. 67. Vic s 63A; Qld s 95; SA s 59C; Tas: Variation of Trusts Act 1994 ss 13 and 14; WA s 90. On the meaning of ‘disposition’, see Re Nilant (2004) 204 ALR 674. See generally Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387. 68. Re Rouse’s Will Trusts [1959] 2 All ER 50; [1959] 1 WLR 372; Re Byng’s Will Trusts [1959] 2 All ER 54; [1959] 1 WLR 375. 69. Re Druce’s Settlement Trusts [1962] 1 All ER 563; [1962] 1 WLR 363. 70. Re Steed’s Will Trusts [1959] Ch 354; [1959] 1 All ER 609, affirmed on appeal [1960] Ch 407; [1960] 1 All ER 487. But it will be exercised to modify the trustees’ powers: Trustees of the British Museum v AG [1984] 1 All ER 337; [1984] 1 WLR 418 (not following Re Kolb’s Will Trusts [1962] Ch 531; [1961] 3 All ER 811); Steel v Wellcome Custodian Trustees Ltd [1988] 1 WLR 167. 71. Re Oakes’ Settlement Trusts [1959] 2 All ER 58; [1959] 1 WLR 502. 72. Re Steed’s Will Trusts [1960] Ch 407; [1960] 1 All ER 487 (on appeal). Cf Re Burney’s Settlement Trusts [1961] 1 All ER 856; [1961] 1 WLR 545. 73. Re Cohen’s Will Trusts [1959] 3 All ER 523; [1959] 1 WLR 865; Re Druce’s Settlement Trusts [1962] 1 All ER 563; [1962] 1 WLR 363; Re Van Gruisen’s Will Trusts [1964] 1 All ER 843n; [1964] 1 WLR 449. It may be desirable to insure against adverse risks: Re Robinson’s Settlement Trusts [1976] 3 All ER 61; [1976] 1 WLR 806. ‘Benefit’ is not limited to financial advantage: Re CL [1969] 1 Ch 587; [1968] 1 All ER 1104; cf Re Christmas’ Settlement Trusts [1986] 1 Qd R 372. 74. Re Druce’s Settlement Trusts [1962] 1 All ER 563 at 567; [1962] 1 WLR 363 at 369; IRC v Holmden [1968] AC 685 at 701, 710–11, 713; [1968] 1 All ER 148 at 151, 156–7, 159; Goulding v James [1997] 2 All ER 239; Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387 at [18]. 75. Goulding v James [1997] 2 All ER 239. 76. Re Clarke’s Will Trusts [1961] 3 All ER 1133; [1961] 1 WLR 1471. 77. Mason v Farbrother [1983] 2 All ER 1078. 78. Re Pittari (decd) [1967] VR 800. 79. [1974] QB 384 at 394; [1974] 2 All ER 365 at 374. See also Re T’s Settlement Trusts [1964] Ch 158; [1963] 3 All ER 759; Re Ball’s Settlement Trusts [1968] 2 All ER 438; [1968] 1 WLR 899; Re Holt’s Settlement [1969] 1 Ch 100; [1968] 1 All ER 470; Re Blocksidge [1997] 1 Qd R 234; Wright v Gater [2012] 1 WLR 802. 80. Re Remnant’s Settlement Trusts [1970] Ch 560; [1970] 2 All ER 554. 81. Re Seale’s Marriage Settlement [1961] Ch 574; [1961] 3 All ER 136. See also Re Weston’s Settlements [1969] 1 Ch 223; [1968] 3 All ER 338; Re Windeatt’s Will Trusts [1969] 2 All ER 324; [1969] 1 WLR 692. 82. Re Suffert’s Settlement [1961] Ch 1; [1960] 3 All ER 561. 83. Re Suffert’s Settlement [1961] Ch 1; [1960] 3 All ER 561. 84. Re Turner’s Will Trusts [1960] Ch 122; [1959] 2 All ER 689. 85. Re Poole’s Settlement Trusts [1959] 2 All ER 340; [1959] 1 WLR 651. 86. Re Burney’s Settlement Trusts [1961] 1 All ER 856; [1961] 1 WLR 545. 87. Re Munro’s Settlement Trusts [1963] 1 All ER 209; [1963] 1 WLR 145; Re Whittall [1973] 3 All ER 35; [1973] 1 WLR 1027. 88. Re Suffert’s Settlement [1961] Ch 1; [1960] 3 All ER 561; Re Moncrieff’s Settlement Trusts [1962] 1

WLR 1344; [1962] 3 All ER 838; Re Hutter [1965] NZLR 1008; Re Ball’s Settlement Trusts [1968] 1 WLR 899; [1968] 2 All ER 438. 89. Knocker v Youle [1986] 2 All ER 914; [1986] 1 WLR 934. 90. Re Wallace’s Settlements [1968] 2 All ER 209; [1968] 1 WLR 711. See also Re Bristol’s Settled Estates [1964] 3 All ER 939; [1965] 1 WLR 469. 91. Re Sainsbury’s Settlement [1967] 1 All ER 878; [1967] 1 WLR 476; Re Weston’s Settlements [1969] 1 Ch 223; [1968] 3 All ER 338. 92. Re Pettifor’s Will Trusts [1966] Ch 257; [1966] 1 All ER 913. 93. Re Michelham’s Will Trusts [1964] Ch 550; [1963] 2 All ER 188 (general restraint of marriage). 94. Re Robertson’s Will Trusts [1960] 3 All ER 146n; Re Wallace’s Settlements [1968] 2 All ER 209; [1968] 1 WLR 711; Re Brook’s Settlement [1968] 3 All ER 416; [1968] 1 WLR 1661. 95. Re Viveash [1971] WAR 62. 96. Chipper v Perpetual Executors Trustees and Agency Co (WA) Ltd [1973] WAR 136. 97. Re Ker’s Settlement Trusts [1963] Ch 553; [1963] 1 All ER 801; Re Paget’s Settlement [1965] 1 All ER 58; [1965] 1 WLR 1046; Faye v Faye [1973] WAR 66. 98. See Ryan v The Public Trustee of Queensland [1998] 1 Qd R 679 (expenditure on rezoning). 99. Australia and New Zealand Banking Group Ltd v National Mutual Life Nominees Ltd (1977) 15 ALR 287 at 301 per Jacobs J. 100. Re Charteris [1917] 2 Ch 379 at 393–4, 397–8, 399. 101. Re Stewart [2003] 1 NZLR 809 at [25]. 102. Knox v Mackinnon (1888) 13 App Cas 753 at 768; see also Sandy’s Union of London and Smith’s Bank v Litchfeld [1916] 1 Ch 511; [1916–17] All ER Rep 750; Tanti v Carlson [1948] VLR 401 at 405. 103. Edge v Pensions Ombudsman [2000] Ch 602 at 607; [1999] 4 All ER 546 at 567. In relation to a discretionary power to choose which beneficiaries or classes of beneficiaries should be the recipients of trust benefits, it is ‘meaningless to speak of a duty on the trustees to act impartially’: Edge v Pensions Ombudsman [1998] Ch 512 at 533; [1998] 2 All ER 547 at 567. 104. Cowan v Scargill [1985] Ch 270 at 286–7; [1984] 2 All ER 750 at 760. 105. Nestlé v National Westminster Bank plc (unrep), quoted in Re Mulligan (decd) [1998] 1 NZLR 481 at 501. See also Nestlé v National Westminster Bank plc [1994] 1 All ER 118 at 137; [1993] 1 WLR 1260 at 1279; X v A [2000] 1 All ER 490 at 494. 106. See Chapter 19. 107. See Chapter 18. 108. Balkin v Peck (1998) 43 NSWLR 706 at 715. 109. Fenwicke v Clark (1862) 4 De GF & J 240; 45 ER 1176; Re Winslow (1890) 45 Ch D 249; Re Lepine [1892] 1 Ch 210; [1891–4] All ER Rep 945; Re Hurst (1892) 67 LT 96 at 99. 110. Clark v Dillon [1925] GLR 201 at 204–5. 111. Re Charteris [1917] 2 Ch 379 at 399; Perpetual Trustee Co Ltd v Noyes (1925) 25 SR (NSW) 226 at 248–9. 112. Manson v Public Trustee [1925] GLR 153. 113. Freeman v Fairlie (1817) 3 Mer 27 at 42; 36 ER 12 at 17; Kemp v Burn (1863) 4 Giff 348 at 349; 66 ER 740; Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [42]. As to framing accounts, see [19-50]. 114. Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [42]. 115. Re Craig (1952) 52 SR (NSW) 265 at 267. See also Clarke v Ormonde (Earl of) (1821) Jac 108 at 120;

37 ER 791 at 795; Waterhouse v Waterhouse (1998) 46 NSWLR 449 at 494; Hancock v Rinehart (2015) 106 ACSR 207 at [339]. 116. Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [43]. 117. Spellson v George (1987) 11 NSWLR 300 at 315–6; Hancock v Rinehart (2015) 106 ACSR 207 at [340]. See [22-04]. 118. Henderson v M’Iver (1818) 3 Mod 275; 56 ER 510; Wroe v Seed (1863) 4 Giff 425; 66 ER 773. 119. ACT s 51; Qld s 52; Vic s 27; WA s 51. 120. White v Lady Lincoln (1803) 8 Ves 363 at 369; 32 ER 395 at 397; oral evidence may be allowed in lieu: Christensen v Christensen [1954] QWN 37. 121. Payne v Evens (1874) LR 18 Eq 356. 122. Public Trustee Act 1978 (Qld) s 60; Trustee Act (SA) ss 84A–F. By s 84C, the South Australian Supreme Court may appoint an inspector to investigate the affairs of a trust: In the Estate of Webb (1992) 57 SASR 193 at 195. 123. Gray v Haig (1854) 20 Beav 219 at 226; 52 ER 587 at 590. 124. Stainton v Carron Co (1857) 24 Beav 346 at 352; 53 ER 391 at 394. 125. Kemp v Burn (1863) 4 Giff 348; 66 ER 740; Manning v Commissioner of Taxation (1928) 40 CLR 506; 34 ALR 165; Armitage v Nurse [1998] Ch 241 at 261; [1997] 2 All ER 705 at 719 (beneficiary whose interest was not vested in possession). This duty has not been qualified by Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] 3 All ER 76: Foreman v Kingstone [2004] 1 NZLR 841. See [17-16]. 126. Kemp v Burn (1863) 4 Giff 348; 66 ER 740. 127. Ottley v Gilby (1845) 8 Beav 602 at 604; 50 ER 237 at 238; Re Bosworth (1889) 58 LJ (Ch) 432 at 433; Sleiman v Alwan [2009] NSWSC 484 at [19] (applying this passage). 128. Re Tillott [1892] 1 Ch 86. 129. Chaine-Nickson v Bank of Ireland [1976] IR 393. 130. Tiger v Barclays Bank [1951] 2 KB 556; [1951] 2 All ER 262; Hancock v Rinehart (2015) 106 ACSR 207 at [358]. 131. Re Fairbairn [1967] VR 633. 132. Re Whitehouse [1982] Qd R 196 at 201. 133. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 431; SAS Trustee Corporation v Cox (2011) 285 ALR 623 at [148]–[149]; Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431 at [130]. 134. X v A [2000] 1 All ER 490 at 496. 135. Re Tillott [1892] 1 Ch 86; Re Dartnall [1895] 1 Ch 474; [1895–9] 1 All ER Rep 890. 136. Brittlebank v Goodwin (1868) LR 5 Eq 545 at 550; Hawkesley v May [1956] 1 QB 304; [1955] 3 All ER 353. This was approved in Hawkins v Clayton (1988) 164 CLR 539 at 553–4; 78 ALR 69 at 78. The extent of the obligation was said to be in doubt in Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 432, and said not to create a ‘duty … to inform all persons who may possibly take under a discretionary power of the nature and extent of that possibility’; a similar view appears in Re Manisty’s Settlement [1974] Ch 17 at 25; [1973] 2 All ER 1203 at 1210. 137. Re Cowin (1886) 33 Ch D 179 at 186; Re Tillott [1892] 1 Ch 86 at 89; O’Rourke v Darbishire [1920] AC 581 at 626; [1920] All ER Rep 1 at 17 (dicta); Re Londonderry’s Settlement [1965] Ch 918 at 937; [1964] 3 ER 855 at 862 (dicta); Re Fairbairn [1967] VR 633 at 635–40; Randall v Lubrano (1975) 72 NSWLR 621. See generally D J Hayton, ‘The Irreducible Core Content of Trusteeship’ in A J Oakley (ed), Trends in Contemporary Trust Law, p 47; G Dawson, ‘A Fork in the Road for Access to Trust

Documents’ (2009) 3 J Eq 39; J C Campbell, ‘Access by Trust Beneficiaries to Trustees’ Documents Information and Reasons’ (2009) 3 J Eq 97 at 116–18; T Kaldor, ‘Competing Approaches to Beneficiary Access to Trust Information: Perhaps not so much of “a fork in the road”’ (2012) 86 ALJ 775; G E Dal Pont, ‘I Want Information! Beneficiaries’ Basic Right or Court Controlled Discretionary?’ (2013) 32 U Tas LRev 52; E Bishop, ‘Limiting the Nature and Scope of a Beneficiary’s Entitlement to Receive Trust Information’ (2014) 88 ALJ 416; G E Dal Pont, ‘Beneficiaries and Trust Information’ (2014) 39 Aust Bar Rev 46. 138. Re Simersall (1992) 35 FCR 584 at 589–90; 108 ALR 375 at 380–1, discussing Wentworth v De Montfort (1988) 15 NSWLR 348 at 356. 139. Breen v Williams (1996) 186 CLR 71 at 89; 138 ALR 259 at 271. See Meagher, Gummow and Lehane’s Equity, Ch 4. 140. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 432–3, 435 (giving examples relevant only to discretionary trusts). At 437 Mahoney JA saw a settlor’s memorandum of wishes as being in this category; cf Kirby P at 419 and Sheller JA at 445. On whether documents created by the trustee in the course of litigation brought by a beneficiary are ‘trust documents’, see Gray v BNY Trust Company Australia Ltd (2009) 76 NSWLR 586. 141. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 435. 142. For example, a confidential communication by the settlor about beneficiaries giving reasons for not exercising a discretionary power in their favour, or a confidential communication by beneficiaries about their assets: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 433. Another example is a memorandum of wishes by the instigator of the trust supplied confidentially: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 446; Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62. Another is commercial confidentiality: Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] 3 All ER 76 at [67]. A related example is Morris v Morris (1993) 9 WAR 150, holding that a trustee carrying on business as a partner with other persons is entitled to refuse to disclose to the beneficiaries information about day-to-day discretionary decisions concerning the running of the business. Another is where the trustee is carrying on a business and release of the information sought by one beneficiary would damage the interests of the beneficiaries as a whole: Rouse v IOOF Australia Trustees Ltd (1999) 73 SASR 484. Another concerns privacy: Slater v Global Finance Group Pty Ltd (1999) 150 FLR 264 at 273–4. 143. Tierney v King [1983] 2 Qd R 580; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 434, 442, 445. At 445 Sheller JA did not see the instigator of the trust’s memorandum of wishes as falling within this category. 144. Re Londonderry’s Settlement [1965] Ch 918 at 931; [1964] 3 All ER 855 at 858–9; see also at 933, 935– 6, 936–7; and 860, 861–2; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 433, 442; Wilson v Law Debenture Trust Corp plc [1995] 2 All ER 337; Re Rabaiotti’s Settlements [2000] WTLR 953 at 967–8; Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [24], [41], [53]–[57]. This was criticised by Kirby P in Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 415, and contrasted with Australian cases which do not in fact contradict it. 145. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 446. 146. [1965] Ch 918 at 938; [1964] 3 All ER 855 at 863. 147. Re Fairbairn [1967] VR 633 at 639. 148. In Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 426–7, 436, Mahoney JA saw a trust power as arguably creating an interest vested in interest. 149. Gartside v Inland Revenue Commissioners [1968] AC 553; [1968] 1 All ER 121; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 443; Kennon v Spry (2008) 238 CLR 366; 251 ALR 257 at [160]–[162]; cf [74] (‘rights to consideration and to due administration are in the nature of equitable

choses in action’). 150. Chaine-Nickson v Bank of Ireland [1976] IR 393; Spellson v George (1987) 11 NSWLR 300 at 315–16; Murphy v Murphy [1998] 3 All ER 1 at 9; [1999] 1 WLR 282 at 290. This was questioned by Mahoney JA in Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 431–2 where large numbers of possible beneficiaries are involved. 151. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 432–3 (for example, a letter disclosing the circumstances of a beneficiary from that beneficiary to the trustees; or notes of discussions between trustees and beneficiaries to assist the trustees in deciding how to exercise a discretionary power). 152. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 436. 153. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 437. 154. [2003] 2 AC 709; [2003] 3 All ER 76 at [50]–[51], [66]–[67]. This case was strongly attacked in McDonald v Ellis (2007) 72 NSWLR 605; cf Avanes v Marshall (2007) 68 NSWLR 595 and J Campbell, ‘Access by Trust Beneficiaries to Trustees’ Document — Information and Reasons’ (2009) 3 J Eq 39. 155. It has been followed in New Zealand in a case decided when the Privy Council was the ultimate appellate court: Foreman v Kingstone [2004] 1 NZLR 841. See L Ho, ‘Trustee’s Duties to Provide Information’ in E Bant and M Harding (eds), Exploring Private Law, pp 343–59. The point was not decided in Schreuder v Murray (No 2) (2009) 41 WAR 169. 156. (1992) 29 NSWLR 405 at 421–2, 444. 157. [1965] Ch 918; [1964] 3 All ER 855. 158. (1886) 33 Ch D 179. 159. There are Australian precursors apart from Hartigan Nominees Pty Ltd v Rydge, for example, Morris v Morris (1993) 9 WAR 150 at 153. 160. These considerations troubled Briggs J in Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [9]–[10]. 161. Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [62]–[73] (disclosure ordered because, though disclosure was needed in relation to the past administration of the trust, the trustees intended to seek the court’s sanction for a scheme of distribution of the entirety of the trust fund: at [88]–[101]). 162. Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [63]. 163. Murphy v Murphy [1998] 3 All ER 1 at 11–12; [1999] 1 WLR 282 at 291–2. 164. Qld s 8; WA s 94. 165. Butt v Kelson [1952] Ch 197; [1952] 1 All ER 167. 166. Re Pennell [1945] VLR 302; [1946] ALR 75. 167. Tierney v King [1983] 2 QD R 580. 168. For example, D J Hayton, ‘The Irreducible Core Content of Trusteeship’ in A J Oakley (ed), Trends in Contemporary Trust Law, p 54; Lewin on Trusts, [23-090]–[23-091]; E Bishop, ‘Limiting the Nature and Scope of a Beneficiary’s Entitlement to Receive Trust Information’ (2014) 88 ALJ 416. 169. Low v Bouverie [1891] 3 Ch 82 at 99; [1891–4] All ER Rep 348 at 352; Porter v Moore [1904] 2 Ch 367. This is subject to Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; [1963] 2 All ER 575. 170. Phipps v Lovegrove (1873) LR 16 Eq 80 at 90; Hallows v Lloyd (1888) 39 Ch D 686 at 691. 171. Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 at 235. See also Re Speight (1883) 22

Ch D 727 at 739–58, 762 (‘prudent and reasonable man’ approved at 754) and, in the House of Lords, sub nom Speight v Gaunt (1883) 9 App Cas 1 at 19; Smethurst v Hastings (1885) 30 Ch D 490; Knox v Mackinnon (1888) 13 App Cas 753 at 768 (‘care and diligence’). The test was referred to in Robinson v Harkin [1896] 2 Ch 415 at 424; Smith v Hassall (1899) 20 LR (NSW) Eq 165 at 169–70; Austin v Austin (1906) 3 CLR 516 at 525; Fouche v The Superannuation Fund Board (1952) 88 CLR 609 at 641; Re Lucking’s Will Trusts [1967] 3 All ER 726; [1968] 1 WLR 866; Breen v Williams (1996) 186 CLR 71 at 137; 138 ALR 259 at 308. 172. Re Hurst (1892) 67 LT 96 at 99; Re Chapman [1896] 2 Ch 763 at 775; [1895–9] All ER Rep 1104 at 1109; 173. Rae v Meek (1889) 14 App Cas 558 at 569; Re De Clifford’s (Lord) Estate [1900] 2 Ch 707 at 716. 174. (1888) 13 App Cas 753 at 766–7. 175. Nestlé v National Westminster Bank plc [1994] 1 All ER 118 at 142; [1993] 1 WLR 1260 at 1285. 176. Re Godfrey (1883) 23 Ch D 483 at 493. 177. Learoyd v Whiteley (1887) 12 App Cas 727 at 733; Bartlett v Barclays Trust Co Ltd (No 1) [1980] Ch 515 at 534; [1980] 1 All ER 139 at 152; ASC v AS Nominees Ltd (1995) 62 FCR 504 at 516; 133 ALR 1 at 12. This is preserved by the uniform legislation: ACT s 14B(2)(b); NSW s 14B(2)(b); NT s 7(1) (b); Qld s 23(2)(b); SA s 8(1)(b); Tas s 9(1)(d); Vic s 7(2)(b); WA s 19(1)(b). 178. Re Chapman [1896] 2 Ch 763 at 776, 778; Bartlett v Barclays Trust Co Ltd (No 1) [1980] Ch 515 at 531; [1980] 1 All ER 139 at 150. 179. Re Whiteley (1886) 33 Ch D 347 at 355; see also at 350, 358. This was described by Scott and Fratcher, The Law of Trusts, 4th ed, Vol III, §227.3 as perhaps ‘as good a statement of the rule as any’. 180. ACT s 14A(2)(b); NSW s 14A(2)(b); NT s 6(1)(b); Qld s 22(1)(b); SA s 7(1)(b); Tas s 7(1)(b); Vic s 6(1)(b); WA s 18(1)(b). 181. Learoyd v Whiteley (1887) 12 App Cas 727 at 733. This is preserved by the uniform legislation: ACT s 14; NSW s 14; NT s 5; Qld s 21; SA s 6; Tas s 6; Vic s 5; WA s 17. 182. Re Whiteley (1886) 36 Ch D 347 at 350; Elder’s Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426 at 449; [1964] ALR 408 at 422; Cowan v Scargill [1985] Ch 270 at 287; [1984] 2 All ER 750 at 760; Nestlé v National Westminster Bank plc [1993] 1 WLR 1260 at 1282; [1994] 1 All ER 118 at 140; Re Mulligan (decd) [1998] 1 NZLR 481 at 500 (with useful quotation from the unreported judgment of Hoffmann J at trial in the Nestlé case). This is preserved by the uniform legislation: ACT s 14B(2)(c); NSW s 14B(2)(c); NT s 7(1)(a); Qld s 23(2)(c); SA s 8(1)(c); Tas s 9(1)(b); Vic s 7(2)(c); WA s 19(1)(c). 183. Bartlett v Barclays Trust Co Ltd (No 1) [1980] Ch 515 at 534; [1980] 1 All ER 139 at 152; ASC v AS Nominees Ltd (1995) 62 FCR 504 at 518; 133 ALR 1 at 14; Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 693. That is the position in the United States: Scott and Fratcher, The Law of Trusts, 4th ed, Vol IIA, §174.1. There is some authority to that effect in Canada: Dover v Denne (1902) 30 QLR 664; Krendel v Frontwell Investments Ltd (1967) 64 DLR (2d) 471; Re Fales [1974] 3 WWR 84 at 93 (point left open in Supreme Court of Canada: Fales v Canada Permanent Trust Co [1977] 2 SCR 302 at 317; (1976) 70 DLR (3d) 257 at 269). 184. ACT s 14A(2)(a); NSW s 14A(2)(a); NT s 6(1)(a); Qld s 22(1)(a); SA s 7(1)(a); Tas s 7(1)(a); Vic s 6(1)(a); WA s 18(1)(a). 185. Doneley v Doneley [1998] 1 Qd R 602 at 603. 186. Doneley v Doneley [1998] 1 Qd R 602 at 605–8. 187. Re Mulligan (decd) [1998] 1 NZLR 481 at 500–1 (citing Hoffmann J’s remarks in Nestlé v National Westminster Bank plc (29 June 1998, unreported)).

188. Elder’s Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426 at 448; [1964] ALR 408 at 422. 189. Re Beddoe [1893] 1 Ch 547 at 566. However, in Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [10], Briggs J said that the assumption in Re Beddoe that trustees can always obtain the court’s advice at modest expense ‘is, I am afraid, simply wrong in modern times’. 190. Re Brogden (1888) 38 Ch D 546 at 571; [1886–90] All ER Rep 927 at 935; Elder’s Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426 at 449; [1964] ALR 408 at 422. 191. Girardet v Crease & Co (1987) 11 BCLR (2d) 361 at 362; Bristol and West Building Society v Mothew [1998] Ch 1 at 17; [1996] 4 All ER 698 at 711; Hilton v Barker Booth and Eastwood (a firm) [2005] 1 All ER 651; [2005] 1 WLR 567 at [29]. 192. Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 at 237; Base Metal Trading Ltd v Shamurin [2005] 1 All ER 17; [2005] 1 WLR 1157 at [19]. 193. Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574 at 597–8, 647. 194. Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 205; [1994] 3 All ER 506 at 543. 195. Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664. 196. For example, Bristol and West Building Society v Mothew [1998] Ch 1 at 17; [1996] 4 All ER 698 at 711. 197. Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; 196 ALR 482 at [39]. 198. Maguire v Makaronis (1997) 188 CLR 449 at 468, 470, 474; 144 ALR 729 at 740–1, 742, 745. 199. Armitage v Nurse [1998] Ch 241 at 253; [1997] 2 All ER 705 at 713 (contrasting the ‘duty of the trustees to perform the trusts honestly and in good faith’ (which Millett LJ saw as a fiduciary duty) with ‘the duties of skill and care, prudence and diligence’ (which he did not see as fiduciary duties)). In Spread Trustee Co Ltd v Hutcheson [2012] 2 AC 194; [2012] 1 All ER 281 at [117], Lord Kerr of Tonaghmore JSC relied on Millett LJ’s distinction to justify concluding that English law on exemption clauses was different from Guernsey law, which treated the relevant trustee duties as fiduciary. See [16-20]. 200. See J Getzler, ‘Equitable Compensation and the Regulation of Fiduciary Relationships’ in P Birks and F Rose (eds), Restitution and Equity: Vol 1, Resulting Trusts and Equitable Compensation, 235 at 254–7 and ‘Duty of Care’ in P Birks and A Pretto (eds), Breach of Trust, 41 at 71–2; D Ong, Trusts Law in Australia, 2nd ed, 2003, pp 209–11. See also A Goldfinch, ‘Trustee’s Duty to Exercise Reasonable Care: Fiduciary Duty?’ (2004) 78 ALJ 678; J D Heydon, ‘Are the Duties of Company Directors to Exercise Care and Skill Fiduciary?’ in S Degeling and J Edelman (eds), Equity in Commercial Law, Lawbook Co, 2005, pp 185–237. Meagher, Gummow and Lehane’s Equity, [5-325]–[5-375]. 201. See, for example, Charlton v Baber (2003) 47 ACSR 31 at [49]. In Cowan v Scargill [1985] Ch 270 at 272, 276, 286, 296–7, 299; [1984] 2 All ER 750 at 752, 760, 767, 769, declarations were made that the defendants were in breach of fiduciary duty. 202. Bailey v Gould (1840) 4 Y & C Ex 221; 160 ER 987; Fry v Fry (1859) 27 Beav 144; 54 ER 56; Re McEachern (1911) 103 LT 900. 203. Kingham v Kingham [1897] IR 170; Re Kinahan’s Trusts [1921] 1 IR 210. 204. Scott and Fratcher, The Law of Trusts, 4th ed, Vol IIA, §176, p 484. 205. Re Gamble (1925) 57 OLR 504; Jeffrey Estate v Rowe (1989) 36 ETR 217. 206. Re Betty [1899] 1 Ch 821 at 829. 207. Pateman v Heyen (1993) 33 NSWLR 188. 208. Re South Australian Perpetual Forests Ltd 1964 Trust Deed (1995) 64 SASR 343. 209. Waugh v Wyche (1854) 2 Drew 318 at 326; 61 ER 742 at 745; Re Gasquoine [1894] 1 Ch 470; Robinson v Harkin [1896] 2 Ch 415; Carruthers v Carruthers [1896] AC 659; Austin v Austin (1906) 3 CLR 516.

210. ACT s 59; NSW s 59; NT s 26; Qld s 71; SA s 35; Tas s 27; Vic s 36; WA s 70. 211. Scurfield v Howes (1790) 3 Bro C 90; 29 ER 425; Candler v Tillett (1855) 22 Beav 257; 52 ER 1106; Lewis v Nobbs (1878) 8 Ch D 591. 212. Re Sisson’s Settlement [1903] 1 Ch 262. 213. Lupton v White (1808) 15 Ves 432; 33 ER 817; Lunham v Blundell (1857) 27 LJ Ch 179; Re Todd (No 2) (1910) 10 SR (NSW) 490; 27 WN (NSW) 110; Puma Australia Pty Ltd v Sportsmen’s Australia Ltd (No 2) [1994] 2 Qd R 159 at 162; Associated Alloys Pty Ltd v ACN 001452106 Pty Ltd (in liq) (2000) 202 CLR 588; 171 ALR 568 at [34]. 214. See Styles v Guy (1718) 1 Mac & G 422; 41 ER 1328. 215. Styles v Guy (1849) 1 Mac & G 422; see also Tebbs v Carpenter (1816) 1 Madd 290; 56 ER 107; Wiles v Gresham (1854) 5 De GM & G 770; 43 ER 1069; Re Brogden (1888) 38 Ch D 546; [1886–90] All ER Rep 927; Re Greenwood (1911) 105 LT 509. 216. ACT s 25; NSW s 25; NT s 10B; Qld s 29; SA s 13; Tas s 12A; Vic s 12; WA s 25. 217. See ACT s 40; NSW s 40; Qld s 50; Vic s 26; WA s 49; the other jurisdictions having no equivalent provisions. Also under the section the trustee is not bound to take legal proceedings to get in such property unless requested in writing by a beneficiary. Cf Skinner v Trustees Executors and Agency Co Ltd (1901) 27 VLR 218; 7 ALR 199. 218. Field v Field [1894] 1 Ch 425 at 429. 219. As in Field v Field [1894] 1 Ch 425. It should be observed that in Australia a practice has grown up (with the approval of Griffith CJ in Austin v Austin (1906) 3 CLR 516 at 526) of depositing title deeds and trust documents with the solicitor for the trust. 220. ACT s 50; NSW s 50; Qld s 49; Vic s 25; WA s 48. 221. (1878) 8 Ch D 591. 222. Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705 at 717. 223. Chambers v Minchin (1802) 7 Ves 186; 32 ER 76; Adams v Clifton (1826) 1 Russ 297; 38 ER 115; Wood v Weightman (1872) LR 13 Eq 434; Re Bellamy and Metropolitan Board of Works (1883) 24 Ch D 387; Buckby v Speed [1959] Qld R 30 at 35. And see G Jones, ‘Delegation by Trustees: A Reappraisal’ (1959) 22 MLR 381. 224. Langford v Gascoyne (1805) 11 Ves 333; 32 ER 1116; Clough v Bond (1838) 3 My & Cr 490; 40 ER 1016; Cowell v Gatcombe (1859) 27 Beav 568; 54 ER 225; Eaves v Hickson (1861) 30 Beav 136; 54 ER 840; Re Flower and Metropolitan Board of Works (1884) 27 Ch D 592; Re Jenner and Keighran’s Contract [1925] VLR 283; Niak v Macdonald [2001] 3 NZLR 334. 225. Doyle v Blake (1804) 2 Sch & Lef 231; Kilbee v Sneyd (1828) 2 Moll 186. 226. See [17-25]–[17-31]. 227. (1883) 9 App Cas 1. 228. (1754) Amb 218; 27 ER 144. 229. (1754) Amb 218 at 219; 27 ER 144 at 145. 230. (1884) 26 Ch D 238. See also Wilkinson v Wilkinson (1825) 2 Sim & St 237; 57 ER 337. 231. Fry v Tapson (1884) 28 Ch D 268 at 279. 232. Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 694. 233. Fry v Tapson (1884) 28 Ch D 268 at 280; Re Weall (1889) 42 Ch D 674. 234. See Re Speight (1883) 22 Ch D 727 at 756. 235. ACT s 59; NSW s 59; NT s 26; Qld s 71; SA s 35; Tas s 27; Vic s 36; WA s 70. See [22-09].

236. Ex parte Belchier (1754) Amb 218; 27 ER 144. 237. Speight v Gaunt (1883) 9 App Cas 1. 238. The following are further examples of the principle applied: (1) Speight v Gaunt (1883) 9 App Cas 1: A trustee, being desirous of investing a portion of the trust funds in municipal securities, employed a broker to buy the securities. The broker, representing that he had purchased the stock required, obtained the purchase money from the trustee, misleading the trustee by a fictitious ‘bought note’. The broker had not bought the securities but appropriated the money to his own use, later on becoming insolvent. It was held that the trustee was not liable to the beneficiaries for the loss thus caused. (2) Wyman v Paterson [1900] AC 271: Trustees allowed their solicitor to receive payment of certain moneys forming part of the trust estate and left the money, uninvested, in the hands of the solicitor for over six months. At the end of that time the solicitor became bankrupt and the greater part was lost. The trustees were held liable for the loss. In Wood v Weightman (1872) LR 13 Eq 434, the estate of a deceased trustee was held liable for loss of trust funds caused by his leaving them in the hands of his solicitor for two years. See also Re Dewar (1885) 52 LT 489. (3) Lee v Sankey (1873) LR 15 Eq 204: Solicitors employed by trustees to receive trust funds duly received the money and paid them over to one of the trustees without the receipt or authority of the other. The trustee to whom the money was paid became insolvent and died and the money was lost to the estate. The solicitors were held liable to make good the loss. (4) Bostock v Floyer (1865) LR 1 Eq 26: A trustee was held liable for loss caused by the fraud of the solicitor employed by him in the trust business, the solicitor having forged some of the documents on which the trust money was advanced. (5) Jobson v Palmer [1893] 1 Ch 71: The trustee of an assigned estate was held not to be liable for the loss of trust property, such loss being caused by thefts committed by a servant properly employed by the trustee in the management of the business. See also Langford v Gascoyne (1805) 11 Ves 333; 32 ER 1116 (coexecutors); Candler v Tillett (1855) 22 Beav 257; 52 ER 1106 (co-executors, discussed in Re Gasquoine [1894] 1 Ch 470); Cann v Cann (1884) 51 LT 770; Bullock v Bullock (1886) 55 LT 703; Robinson v Harkin [1896] 2 Ch 415; Davis v Hutchings [1907] 1 Ch 356; Park v Dawson [1965] NSWR 298. 239. Trustee Act 1925 (UK) s 23. 240. For example, Macartney v Macartney [1908] VLR 649; Swanson v Emmerton [1909] VLR 387; (1909) 15 ALR 368. 241. Section 53(4). 242. See Re Shepard [1911] 1 Ch 50; Re Vickery [1931] 1 Ch 572; [1931] All ER Rep 562. 243. Cf Smith v Hassall (1899) 20 LR (NSW) Eq 165; Re Purton (1935) 53 WN (NSW) 148. 244. See A-G v Scott (1750) 1 Ves Sen 413; 27 ER 1113; Re Hetling and Merton’s Contract [1893] 3 Ch 269 at 280; Buckby v Speed [1959] Qd R 30. 245. Rehden v Wesley (1861) 29 Beav 213; 54 ER 609; Swan v Perpetual Executors and Trustees Association of Australia Ltd (1897) 23 VLR 293; 3 ALR 188; Wills v Trustees, Executors and Agency Co Ltd (1900) 25 VLR 391; 6 ALR 37. 246. See Re Vickery [1931] 1 Ch 572; [1931] All ER Rep 562. See Chapter 22. 247. ACT s 53(3); NSW s 53(3); NT s 26; Qld s 54(2); SA s 24(2); Tas s 20(1); Vic s 28(2); WA s 53(2). 248. [1931] 1 Ch 572; [1931] All ER Rep 562. 249. (1754) Amb 218; 27 ER 144. 250. (1883) 9 App Cas 1. 251. (1860) 4 Moo PC 17; 15 ER 212. 252. (1925) 26 SR (NSW) 126. 253. See also ACT s 55; Qld s 54(2); Vic s 28(2); WA s 53(2).

254. Cf Robinson v Harkin [1896] 2 Ch 415. 255. Davies v Hodgson (1858) 25 Beav 177; 53 ER 604; Barratt v Wyatt (1862) 30 Beav 442; 54 ER 960; Hilliard v Fulford (1876) 4 Ch D 389; [1874–80] All ER Rep 247; Re Hulkes (1886) 33 Ch D 552; [1886–90] All ER Rep 659. 256. Ashby v Blackwell (1765) 2 Eden 302; 27 ER 326; Eaves v Hickson (1861) 301 Beav 136; 54 ER 840; Re Bennison (1889) 60 LT 859. 257. Jones v Lewis (1751) 2 Ves Sen 240; 28 ER 155; Job v Job (1877) 6 Ch D 562; Jobson v Palmer [1893] 1 Ch 71. 258. Re Southhampton’s Estate (1880) 16 Ch D 178. 259. Devey v Thornton (1851) 9 Hare 222 at 231; 68 ER 483 at 487. 260. ACT s 58; NSW s 58; NT s 25; Qld s 70; Tas s 26; Vic s 35(2); WA s 69. South Australia has no equivalent. 261. See [17-36]. 262. ACT s 61; NSW s 61; Qld s 66; SA s 30; Vic s 32; WA s 62. Tasmania and the Northern Territory have no equivalent. 263. ACT s 61A; NSW s 61A; Qld s 75; SA s 31; Vic s 34; WA s 74. Tasmania and the Northern Territory have no equivalent. 264. NT s 22(2); Qld s 68; SA s 29(2); WA ss 64, 67. The other jurisdictions have no equivalent. 265. See Chapter 22. 266. ACT s 60; NT s 22; Qld s 67; SA s 29; Tas s 25A; Vic s 33; WA s 63. 267. Livesey v Livesey (1830) 3 Russ 287; 38 ER 583; Dibbs v Goren (1849) 11 Beav 483; 50 ER 904; Re Powell (1907) 7 SR (NSW) 874; 24 WN (NSW) 217; Re Musgrave [1916] 2 Ch 417; Burns v Leda Holdings Pty Ltd [1988] 1 Qd R 214 at 227. 268. Church v Talbot (1901) 1 SR (NSW) Eq 13; 18 WN (NSW) 33; Re Musgrave [1916] 2 Ch 417; Macphillamy v Fox (1932) 32 SR (NSW) 427; 49 WN (NSW) 191; Re Ettelson [1946] VLR 217 at 220; Re Robertson [1953] VLR 685; [1954] ALR 53. 269. Downes v Bullock (1858) 25 Beav 54; 53 ER 556. 270. (1849) 11 Beav 433; 50 ER 904. 271. [1916] 2 Ch 417. 272. See the remarks of Warrington J in Re Robinson [1911] 1 Ch 502; [1911–13] All ER Rep 296, to similar effect; see also Re Ainsworth [1915] 2 Ch 96; Re Reading (1916) 60 Sol Jo 655; Ministry of Health v Simpson [1951] AC 251; [1950] 2 All ER 1137. 273. Cf Currie v Goold (1817) 2 Madd 163; 56 ER 295; Re Sharp [1906] 1 Ch 793. 274. In Rogers v Ingham (1876) 3 Ch D 351 at 357; [1874–80] All ER Rep 209 at 212, Mellish LJ said that while the Court of Chancery had power to relieve against mistakes of law as well as mistakes of fact, for this there must be some equitable ground which makes it, under the particular facts of the case, inequitable that the party who received the money should retain it; see Stone v Godfrey (1854) 6 De GM & G 76 at 90; 43 ER 798 at 805 per Turner LJ; as regards Rogers v Ingham, see the remarks of Lord Simonds in Ministry of Health v Simpson [1951] AC 251 at 270ff; [1950] 2 All ER 1137 at 1139ff. It has been held in Victoria that the right of trustees to recoup themselves is subject to the control of the court and that the sanction of the court is required to any adjustments: Reid v Deane [1906] VLR 138; (1906) 12 ALR 46; Perpetual Executors and Trustees Association v Simpson (1906) 27 ALT 179. 275. [1905] 1 Ch 76. 276. Re Ainsworth [1915] 2 Ch 96 and Re Reading (1916) 60 Sol Jo 655.

277. (1916) 60 Sol Jo 655. 278. (1895) 17 LR (NSW) Eq 325. 279. See also Harris v Harris (1919) 20 SR (NSW) 61; 37 WN (NSW) 10, where Harvey J refused to order refund of moneys. 280. [1948] Ch 465; [1948] 2 All ER 318. 281. (1992) 175 CLR 353; 109 ALR 57; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; [1998] 4 All ER 513. 282. Church v Talbot (1901) 1 SR (NSW) Eq 13; 18 WN (NSW) 33; Re Powell (1907) 7 SR (NSW) 874; Harris v Harris (1919) 20 SR (NSW) 61; 37 WN (NSW) 10; Macphillamy v Fox (1932) 32 SR (NSW) 427; 49 WN (NSW) 191. 283. Church v Talbot (1901) 1 SR (NSW) Eq 13; 18 WN (NSW) 33; Re Robertson [1953] VLR 685; [1954] ALR 53. 284. Merriman v Perpetual Trustee Co Ltd (1895) 17 LR (NSW) Eq 325; 13 WN (NSW) 134. 285. Lewin on Trusts, [42-004]–[42-008]. 286. Re Hatch [1919] 1 Ch 351. 287. Macphillamy v Fox (1932) 32 SR (NSW) 427; 49 WN (NSW) 191. 288. Robinson v Pett (1734) 3 P Wms 249; 24 ER 1049; Barrett v Hartley (1866) LR 2 Eq 789. 289. Ayliffe v Murray (1740) 2 Atk 58; 26 ER 433. 290. New v Jones (1833) 1 Mac & G 668n; 47 ER 1562; Re Corsellis (1887) 34 Ch D 675 at 681; Bray v Ford [1896] AC 44 at 51; [1895] All ER Rep 1009 at 1011. There must be ‘a real conflict of duty and interest’, not ‘some theoretical or rhetorical conflict’: Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606 at 638; [1963] 2 All ER 716 at 730 per Upjohn LJ, approved in EL Sayed v El Hawach (2015) 88 NSWLR 214 at [66]. 291. Vyse v Foster (1874) LR 7 HL 318; Hordern v Hordern [1910] AC 465; Re Mulholland’s Will Trusts [1949] 1 All ER 460; Princess Ann of Hesse v Field (1962) 86 WN (NSW) 66; [1963] NSWR 998; Mordecai v Mordecai (1988) 12 NSWLR 58 at 66–7. See also [17-42]. 292. Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [114]. 293. Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 3 All ER 75 at 76–7; [1986] 1 WLR 1072 at 1073–5. 294. Re Hayes Will Trusts; Pattinson v Hayes [1971] 2 All ER 341; [1971] 1 WLR 758; Sargeant v National Westminster Bank plc (1990) 61 P & CR 518 at 519, 521–2. 295. Sargeant v National Westminster Bank plc (1990) 61 P & CR 518. 296. Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [122]. 297. Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [114], [117]–[125]. 298. Breakspear v Ackland [2009] Ch 32; [2008] 2 All ER (Comm) 62 at [121]. 299. Edge v Pensions Ombudsman [2000] Ch 602 at 630–3; [1999] 4 All ER 546 at 570–2. 300. Re the French Protestant Hospital [1951] Ch 567; [1951] 1 All ER 938. 301. As, for example, in Re Thorley [1891] 2 Ch 613. Re Bedingheld (1887) 57 LT 332 was a case where two trustees were given a legacy of £100 each, but in addition they paid themselves £100 a year each during a period of 15 years for managing certain of the trust estates during that period. Upon application being made to the court by the beneficiaries, these payments were disallowed. See also Webb v Shaftesbury (1802) 7 Ves 480; 32 ER 194; Richardson v Allen (1870) 10 SCR (NSW) Eq 1; Hull v Christian (1874) LR 17 Eq 546; Re Bignell [1892] 1 Ch 59; Re Dowling [1961] VR 615; Re Wells [1962] 2 All ER 826; [1962] 1 WLR 874.

302. For example, Re Will of Moore (1896) 17 LR (NSW) B 78. See Mayne v Jaques (1960) 101 CLR 169 at 181; [1960] ALR 289 at 297. 303. Ayliffe v Murray (1740) 2 Atk 38; 26 ER 433; Re Sherwood (1840) 3 Beav 338; 49 ER 133; see also Barrett v Hartley (1866) LR 2 Eq 789. 304. See Gould v Fleetwood (1732) 2 Eq Ca Abr; 22 ER 386, quoted in Robinson v Pett (1734) 3 P Wms 249; 24 ER 1049 at 1050. 305. In the Will of Morrison (1933) 50 WN (NSW) 88. Cf Re Commane [1927] SASR 238. 306. Brocksopp v Barnes (1820) 5 Madd 90; 56 ER 829. See also Re Freeman’s Settlement Trusts (1887) 37 Ch D 148. 307. Marshall v Holloway (1820) 2 Swan 432 at 435–6; 36 ER 681 at 683; Forster v Ridley (1864) 4 De GJ & S 452; 46 ER 993; Richardson v Allen (1870) 10 SCR Eq l; Re Freeman’s Settlement (1887) 37 Ch D 148; Re Will of Cox (1890) 11 LR (NSW) Eq 124; Plomley v Shepherd (1896) 17 LR (NSW) Eq 215; 13 WN (NSW) 94; Johnston v Johnston (1903) 4 SR (NSW) 8; Nissen v Grunden (1912) 14 CLR 297; 18 ALR 254; Re Moore [1956] VLR 132; [1956] ALR 483 (where Nissen v Grunden was applied and a sum of £7500 per annum was allowed to a trustee who devoted his whole time to a profitable business of the estate); Re Sutherland (2004) 50 ACSR 297. The application may be made after the trustee’s death: Mayne v Jaques (1960) 101 CLR 169 at 181; [1960] ALR 289 at 297. In New Zealand it has been said that there is a distinction between trustees who have accepted obligations of trusteeship and those who have fiduciary obligations forced on them by operation of law: persons in the former category are less likely to obtain an allowance for skill: Chirnside v Fay [2007] 1 NZLR 433. It has also been said that when a trustee of a charitable trust acts dishonestly and obtains a personal benefit in breach of trust, it is contrary to public policy to allow the trustee to retain any of the gains; a charitable trust has no beneficiaries to police the conduct of the trustees, and it is important the trustee should have no incentive to act dishonestly in breach of trust for personal gain: Prasad v Parai [2013] 1 NZLR 444 at [26]. 308. The position is the same as applies to liquidators: Re French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; 204 ALR 353. 309. ACT s 81; NSW s 81; Qld s 94; SA s 59B; Tas ss 47 and 55; Vic s 63; WA s 89. 310. NT s 78; Qld s 101; SA Administration and Probate Act 1919 s 70(1); Tas s 58; Vic s 77; WA s 98. See Re Will of Stratton [1981] WAR 58. The statutory power does not limit the inherent jurisdiction: Re Queensland Oil Shale Mining Industry (Superannuation) Ltd [1999] 2 Qd R 524 at 527. 311. Plomley v Shepherd (1896)17 LR (NSW) Eq 215; 13 WN (NSW) 94. However, in modern cases, this requirement is not strictly enforced; see, for example, Re Keeler’s Settlement Trusts [1981] Ch 156; [1981] 1 All ER 888. 312. Guazzini v Pateson (1918) 18 SR (NSW) 275; 35 WN (NSW) 106; Hobday v A-G (NSW) [1982] 1 NSWLR 160. 313. See, for example, Boardman v Phipps [1966] 2 AC 46; [1963] 3 All ER 721; and [17-42]. 314. [1981] Ch 156; [1981] 1 All ER 888. 315. See [17-49]. 316. [1979] Ch 37; [1978] 3 All ER 907. 317. At first instance: [1979] Ch 37; [1978] 3 All ER 907; on appeal [1982] Ch 61; [1981] 3 All ER 220. 318. See K Hodkinson (1982) 46 Conv 231. 319. [1981] Ch 156; [1981] 1 All ER 888. 320. Strauss v Wykes [1916] VLR 200; In the Will of Lockett (1920) 20 SR (NSW) 213; 37 WN (NSW) 50. 321. See, for example, Administration and Probate Act 1929 (ACT) s 70; Probate and Administration

Act 1898 (NSW) s 86; Administration and Probate Act (NT) s 102; Succession Act 1981 (Qld) s 68; Administration and Probate Act 1935 (Tas) s 64; Administration and Probate Act 1958 (Vic) s 65. 322. Brown v Litton (1711) 1 P Wms 140; 24 ER 329; Brown v De Tastet (1819) Jac 284; 37 ER 858; Boardman v Phipps [1967] 2 AC 46; [1966] 3 All ER 721; and see [13-43]. 323. Chambers v Goldwin (1804) 9 Ves 254; 31 ER 883; Re Northcote’s Will Trusts [1949] 1 All ER 442. 324. Re Gates [1933] 1 Ch 913; [1931] All ER Rep 546; Re Hill [1934] Ch 623; [1934] All ER Rep 617; Re Edmonds [1943] VLR 97; [1943] ALR 217. 325. See New v Jones (1833) 1 H & Tw 632; 47 ER 1562; Lyon v Baker (1852) 5 De G & Sm 622; 64 ER 1271; Re Barber (1886) 34 Ch D 77; Re Corsellis (1887) 34 Ch D 675. 326. (1861) 30 LJ Ch 639; 4 LT 361. See also Re Mundy [1938] VLR 119; [1938] ALR 277. 327. See Re Taylor (1854) 18 Beav 165; 52 ER 65, where a solicitor-mortgagee arranged with another solicitor to act as his agent on agency terms. When the mortgagee’s bill was paid to the agent-solicitor he allowed the solicitor-mortgagee £100 as his share of the profit costs. On taxation, at the instance of the persons interested, it was held that the agreement between the solicitor enured for the benefit of the mortgagors concerned. Similarly, in Vipont v Butler [1893] WN 64, where a solicitor-trustee received a commission on profit costs from his ‘London agent’, he was ordered to account to the trust estate for the commission. See also Re Thorpe [1891] 2 Ch 360. 328. See, for example, Matthison v Clarke (1854) 3 Drew 3; 61 ER 801, where an auctioneer was one of several mortgagees and his firm acted for the mortgagees in selling under a power of sale. The firm was held not to be entitled to commission on the sale. In Douglas v Archbutt (1858) 2 De G & J 148; 44 ER 944, an auctioneer-trustee was allowed his commission, but this was provided for in the trust deed; and similarly in Willis v Kibble (1839)1 Beav 559; 48 ER 1057, as to the charges of a surveyortrustee. 329. See, for illustration, Harbin v Darby (1860) 28 Beav 325; 54 ER 391; Re Fish [1893] 2 Ch 413; Clarkson v Robinson [1900] 2 Ch 722; Re Chalinder and Henington [1907] 1 Ch 58. 330. As in Re Chapple (1884) 27 Ch D 584. 331. As in Re Hobson’s Settlement (1899) 25 VLR 370; Clarkson v Robinson [1900] 2 Ch 722; Swanson v Emmerton [1909] VLR 387; (1909) 15 ALR 368; Re Smith (1916) 16 (NSW) 422; 33 WN (NSW) 134; Re Purton (1935) 53 WN (NSW) 148; Re Kerrigan (1935) 35 SR (NSW) 242; 52 WN (NSW) 79. 332. As in Re Fish [1893] 2 Ch 413. The full form used in this case contained the words ‘Including all business of whatever kind not strictly professional, but which might have been performed, or would necessarily have been performed in person by a trustee not being a solicitor’, thus enabling the solicitor to charge for practically all the work done in connection with the trust. In Re Chapple (1884) 27 Ch D 584 at 587, Kay J said that a solicitor should not put such a form in its entirety into a will drawn by himself unless the testator expressly instructed him to insert those very words. See also the remarks of Kay LJ on the same subject in Re Fish [1893] 2 Ch 413 at 426. Re Ames (1883) 25 Ch D 72 was a case where charges not strictly professional were allowed. 333. Re Barber (1886) 34 Ch D 77; Re Pooley (1889) 40 Ch D 1; [1886–90] All ER Rep 157. 334. Re Royce’s Will Trusts [1959] Ch 626; [1959] 3 All ER 278. 335. Re White [1898] 1 Ch 297, affirmed [1898] 2 Ch 217; [1895–9] All ER Rep 229. 336. Commissioner of Stamp Duties v Pearse [1954] AC 91; [1954] 1 All ER 19. 337. In the Will of Marsden (1926) 43 WN (NSW) 170; In the Will of Phair (1933) 50 WN (NSW) 207. 338. (1850) 1 Mac & G 664; 41 ER 1422. 339. Re Barber (1886) 34 Ch D 77 at 81.

340. Lincoln v Windsor (1851) 9 Hare 158; 68 ER 456; Re Barber (1886) 34 Ch D 77 at 81; Re Corsellis (1887) 34 Ch D 675 at 681. 341. Re Doody [1893] 1 Ch 129; Re Gertzenstein Ltd [1937] Ch 115; [1936] 3 All ER 341. 342. Commonwealth v Colonial Combing Co (1922) 31 CLR 421 at 470; 29 ALR 138 at 155; Stuart v Kingston (1924) 34 CLR 394 at 401; 31 ALR 45 at 48. 343. Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557; 128 ALR 201 at 209. 344. Doneley v Doneley [1998] 1 Qd R 602 at 608. 345. [1967] 2 AC 134 (n); [1942] 1 All ER 378. 346. [1967] 2 AC 46; [1966] 3 All ER 721. Further examples are given by Mason J in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 108; 55 ALR 417 at 462–3. 347. (1984) 154 CLR 178 at 199; 53 ALR 417 at 433–4. 348. (1984) 156 CLR 41 at 102–4; 55 ALR 417 at 458–60. 349. [1898] 1 QB 648. 350. (1823) 1 LJ Ch (OS) 191; see, however, Chillingworth v Chambers [1896] 1 Ch 685. 351. (1726) 2 Eq Cas Abr 741; 25 ER 223; see Meagher, Gummow and Lehane’s Equity, [5-055]–[5-060]. 352. (1984) 154 CLR 178 at 203; 53 ALR 417 at 436–7. 353. Re Biss [1903] 2 Ch 40; [1900–3] All ER Rep 406, where, however, it was held that an employee of a trustee could so renew. 354. Re Bromley (1886) 55 LT 145. 355. Re Anderson (1901) 1 SR (NSW) Eq 223; 18 WN (NSW) 285; McKeown v Byron (1903) 4 SR (NSW) 13 at 14. The 1913 Act has been repealed and replaced by the Crown Lands Act 1989 (NSW). 356. Perpetual Trustee Co Ltd v Cowan (No 2) (1900) 21 LR (NSW) Eq 278. 357. Wicks v Bennett (1921) 30 CLR 80; 28 ALR 30. 358. See [13-21]–[13-32]. 359. See also Fawcett v Whitehouse (1829) Russ & M 132; 39 ER 51; Parker v McKenna (1874) LR 10 Ch App 96; [1874–80] All ER Rep 443; Re Canadian Oil Works Corporation (1875) LR 10 Ch App 593; Bagnall v Carlton (1877) 6 Ch D 371; Powell and Thomas v Evan Jones and Co [1905] 1 KB 11; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n; [1942] 1 All ER 378. 360. (1874) LR 10 Ch App 96 at 124; [1874–80] All ER Rep 443 at 456. See also Hewson v Sydney Stock Exchange Ltd [1968] 2 NSWR 224 at 231; (1967) 87 WN (Pt 1) (NSW) 422 at 425. 361. Harris v Jenkins (1922) 31 CLR 341. Cf Clark v Clark (1884) 9 App Cas 733. 362. Re Lewis [1910] WN 217; [1908–10] All ER Rep 281. 363. See [13-43]; and see also Meagher, Gummow and Lehane’s Equity, [5-280]. 364. [1967] 2 AC 134n; [1942] 1 All ER 378. See the discussion of this case in Paul A Davies (Australia) Pty Ltd (in liq) v Davies [1983] 1 NSWLR 440. See also R Nolan, ‘Regal (Hastings) Ltd v Gulliver (1944)’ in C Mitchell and P Mitchell (eds), Landmark Cases in Equity, p 199. 365. [1967] 2 AC 46; [1966] 3 All ER 721; see Meagher, Gummow and Lehane’s Equity, [5-070]–[5-090]. See also M Bryan, ‘Boardman v Phipps (1967)’ in C Mitchell and P Mitchell (eds), Landmark Cases in Equity, p 580. 366. (1984) 154 CLR 178 at 204–5; 53 ALR 417 at 438. 367. Re Drexel Burnham Lambert UK Pension Plan [1995] 1 WLR 32. 368. Randall v Errington (1805) 10 Ves 423; 32 ER 909; A-G v Lord Dudley (1815) Coop G 146; 35 ER

510; Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544; Farnell v Cox (1898) 19 LR (NSW) Eq 103; Williams v Scott [1900] AC 499; (1900) 17 WN (NSW) 104; Souter v Souter [1923] NZLR 1078. 369. Tito v Waddell (No 2) [1977] Ch 106 at 240–1; [1977] 3 All ER 129 at 241; Clay v Clay (2001) 202 CLR 410; 178 ALR 193 at [50]–[53]. See B McPherson, ‘Self-Dealing Trustees’ in A J Oakley (ed), Trends in Contemporary Trust Law, p 134. The self-dealing rule applies to personal representatives: Kane v Radley-Kane [1999] Ch 274; [1998] 3 All ER 753. 370. See Re Bloye’s Trust (1849) 1 Mac & G 488; [1843–60] All ER Rep 1092; 41 ER 1354. 371. (1856) 23 Beav 285 at 290; 53 ER 112 at 114. 372. Peoples Prudential Assurance Co Ltd v Australian Federal Life and General Assurance Co Ltd (1935) 35 SR (NSW) 253; 52 WN (NSW) 72. Cf A M Spicer Pty Ltd v Spicer (1931) 47 CLR 151; 37 ALR 357. 373. Ex parte Bennett (1805) 10 Ves 381; 32 ER 893; Lewis v Hillman (1852) 3 HL Cas 607; 10 ER 239. 374. (1900) 17 WN (NSW) 104; Williams v Scott [1900] AC 499; Delves v Gray [1902] 2 Ch 606. 375. Baker v Peck (1861) 9 WR 472; Dover v Buck (1865) 5 Giff 57; 63 ER 921; Re Postlethwaite (1886) 60 LT 514; Vatcher v Paull [1915] AC 372; [1914–15] All ER Rep 609; Christoforides v Terry [1924] AC 566 at 578–9; [1924] All ER Rep 815 at 820. 376. Cookson v Lee (1854) 23 LJ Ch 473; Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544. 377. Re Norrington (1879) 13 Ch D 654; Re Greer (1911) 11 SR (NSW) 21; 28 WN (NSW) 17. 378. Clark v Clark (1884) 9 App Cas 733; Fysh v Page (1956) 96 CLR 233; [1956] ALR 474. 379. Re Richardson [1896] 1 Ch 512; [1895–9] All ER Rep Ext 2000. Cf in the case of an administrator, In the Estate of Gamble (1915) 32 WN (NSW) 121. 380. Re James [1949] SASR 143; [1949] ALR 637. 381. [1902] 1 Ch 244. Cf Ex parte James (1803) 8 Ves 337; 32 ER 385; Spring v Pride (1864) 4 De GJ & S 395; 46 ER 971; Nicholson v Gander (1909) 8 CLR 648 at 669; Nissen v Grunden (1912) 14 CLR 297; 18 ALR 254. 382. Burrell v Burrell’s Trustees 1915 SC 333. 383. Watkins v L’Estrange (1863) 2 SCR (NSW) Eq 85; Heywood v Pryor (1905) 23 WN (NSW) 44; Re Douglas (1928) 29 SR (NSW) 48; 45 WN (NSW) 195; Tanti v Carlson [1948] VLR 401. Cf Coleman v Druitt (1881) 2 LR (NSW) Eq 74. 384. Henderson v Woodroofe [1921] NZLR 411. 385. Hordern v Hordern [1910] AC 465; Re Mulholland’s Will Trusts [1949] 1 All ER 460. 386. Wright v Morgan [1926] AC 788; [1926] All ER Rep 201. 387. Campbell v Walker (1800) 5 Ves 678; 31 ER 801; Farmer v Dean (1863) 32 Beav 326; 55 ER 128; Tennant v Trenchard (1869) LR 4 Ch App 537; Irving v Irving (1901) 18 WN (NSW) 63; Smith v Green (1903) 22 NZLR 976 at 986; Heywood v Pryor (1905) 23 WN (NSW) 44; Hordern v Bull (1905) 5 SR (NSW) 518; 22 WN (NSW) 163; Re Ryrie’s Settled Estates (No 2) (1907) 24 WN (NSW) 87. See also G Hinde (1961) 3 MULR 15. 388. Tennant v Trenchard (1869) LR 4 Ch App 537; Scott v Murray (1888) 14 VLR 708; Throp v Trustees, Executors and Agency Co of New Zealand Ltd [1945] NZLR 483; Re Overland (decd) [1960] QWN 25; Re Tabone (decd) [1968] VR 168; Patros v Patros (2007) 16 VR 182. 389. Woodhill v Woodhill (1917) 17 SR (NSW) 647; 34 WN (NSW) 245. 390. Hordern v Bull (1905) 5 SR (NSW) 518; 22 WN (NSW) 163; Re Ryrie’s Settled Estates (No 2) (1907) 24 WN (NSW) 87.

391. Passingham v Sherborn (1846) 9 Beav 424; 50 ER 407; Re Salmen (1912) 107 LT 108. 392. [1968] Ch 353; [1968] 1 All ER 665. 393. This passage in the 3rd edition of this work was commented upon by Walsh J in Glennon v Federal Commissioner of Taxation (1972) 127 CLR 503 at 511. 394. [1986] Ch 99; [1985] 2 All ER 720. 395. Traditionally they were void: Farrar v Farrar’s Ltd (1888) 40 Ch D 395 at 409. But see now Tse Kwong Lam v Wong Chit Sen [1983] 3 All ER 54; [1983] 1 WLR 1349 and Re One.Tel Networks Holdings Pty Ltd (Hall as rec and mgr) (2001) 40 ACSR 83 at [48]–[63]. 396. (1803) 8 Ves 337; 32 ER 385. 397. (1854) 23 LJ Ch 473. 398. (1866) LR 2 Ch App 55. 399. Gibson v Jeyes (1801) 6 Ves 266; 31 ER 1044; Gresley v Mousley (1859) 4 De G & J 78; 45 ER 31; Demerara Bauxite Co v Hubbard [1923] AC 678; [1923] All ER Rep Ext 841. 400. Spencer v Topham (1856) 22 Beav 573 at 577; 52 ER 1229 at 1230. 401. Gresley v Mousley (1859) 45 ER 31 at 39; 4 De G & J 78 at 99. See also Clarke v Swaile (1762) 2 Eden 134; 28 ER 847 (purchase by solicitor from client upheld); Edwards v Muyrick (1842) 2 Hare 60; 67 ER 25; Luddy’s Trust v Pearl (1886) 33 Ch D 500; [1886–90] All ER Rep 968 (purchase by bankrupt’s solicitor from the trustee in bankruptcy of an interest at an undervalue set aside). 402. Hobday v Peters (No 1) (1860) 54 ER 400; 28 Beav 349; Powell and Thomas v James (Evan) & Co [1905] 1 KB 11; Blair v Martin [1929] NZLR 225. 403. Carter v Palmer (1842) 8 Cl & F 657; 8 ER 256. 404. Ex parte Lacey (1802) 6 Ves 625 at 627; 31 ER 1228 at 1228–9; Coles v Trecothick (1804) 9 Ves 234 at 246–7; 32 ER 592 at 597; Hamilton v Wright (1842) 9 Cl & F 111; 8 ER 357; Thomson v Eastwood (1877) 2 App Cas 215 at 236; Plowright v Lambert (1885) 52 LT 646; Williams v Scott [1900] AC 499 at 508; (1900) 17 WN (NSW) 104 at 108; Dougan v Macpherson [1902] AC 197; [1900–3] All ER Rep Ext 1312; Moody v Cox [1917] 2 Ch 71 at 89; [1916–17] All ER Rep 548 at 556–7; Harris v Jenkins (1922) 31 CLR 341; Edmunds v Pickering (1999) 75 SASR 407 at [1287]–[1289]. The requirements were cited with approval in Trinkler v Beale (2009) 72 NSWLR 365 at [20]. 405. (1804) 9 Ves 234 at 247; 32 ER 592 at 597. 406. (1864) 4 De GJ & Sm 395; 46 ER 971; Gould v O’Carroll [1964] NSWR 803; (1963) 81 WN (Pt 1) (NSW) 170. 407. See Knight v Marjoribanks (1849) 2 Mac & G 10; 42 ER 4. It is particularly in this feature that a fiduciary relationship is to be distinguished from a relationship of influence. 408. Harris v Jenkins (1922) 31 CLR 341 at 367; Jenyns v Public Curator (Qld) (1953) 90 CLR 113. 409. Campbell v Walker (1800) 5 Ves 678; 31 ER 801; (1807) 13 Ves 601; 33 ER 419; Silkstone and Haigh Moor Coal Co v Edey [1900] 1 Ch 167. 410. See, for example, Ex parte Reynolds (1800) 5 Ves 707; 31 ER 816; Pooley v Quilter (1858) 2 De G & J 327; 44 ER 1016. 411. Ex parte Bennett (1805) 10 Ves 381; 32 ER 893. 412. Silkstone and Haigh Moor Coal Co v Edey [1900] 1 Ch 167. 413. Hall v Hallet (1784) 1 Cox Eq Case 134 at 138; 29 ER 1096. This case is interesting as illustrating several points as to the liability of trustees. See also Blackham v Haythorpe (1917) 23 CLR 156. 414. (1799) 4 Ves 411; 31 ER 209. 415. Re Smith [1896] 1 Ch 71.

416. [1902] AC 271; [1900–3] All ER Rep 876; sub nom Barron v Willis [1900] 2 Ch 121. 417. (1862) 10 HL Cas 26; 11 ER 934. 418. See also Bennett v Gaslight and Coke Co (1882) 48 LT 156; Chandler v Bradley [1897] 1 Ch 315; Williams v Barton [1927] 2 Ch 9; [1927] All ER Rep 751; for further illustrations as to profits by fiduciary agents, see [13-21]–[13-29]. 419. Re Francis (1905) 74 LJ Ch 198; [1904–7] All ER Rep 556; Guazzini v Paterson (1918) 18 SR (NSW) 275; 35 WN (NSW) 106; Re Macadam [1946] Ch 73; [1945] 2 All ER 664; Re Taylor [1950] VLR 476; [1950] ALR 984. Cf Williams v Barton [1927] 2 Ch 9; [1927] All ER Rep 751; Re Sharp [1945] VLR 31. 420. Re Gee [1948] Ch 284; [1948] 1 All ER 498; see also Re Dover Coalfield Extension Ltd [1908] 1 Ch 65; [1904–7] All ER Rep 161; Re Lewis (1910) 103 LT 495. 421. Re Llewellin’s Will Trusts [1949] Ch 225; [1949] 1 All ER 487. Cf Re Taylor [1950] VLR 476; [1950] ALR 984. 422. Re Dover Coalfield Extension Ltd [1908] 1 Ch 65; [1904–7] All ER Rep 161. 423. Smith v Longford (1844) 2 Beav 362; 48 ER 1221, approved in Nissen v Grunden (1912) 14 CLR 297 at 303; 18 ALR 254 at 255, where the dictum in Re Sykes [1909] 2 Ch 241; [1908–10] All ER Rep Ext 1236 was doubted. See also Re White (1910) 10 SR (NSW) 295; 27 WN (NSW) 88. 424. Whitney v Smith (1869) 4 Ch D 513.

[page 386]

CHAPTER 18 The Duty to Invest Trust Funds Introduction

[18-01]

Investments Authorised by the Trust Instrument General Absolute Discretion ‘Investment’ and ‘Security’ Personal Security Speculation

[18-02] [18-02] [18-03] [18-04] [18-05] [18-06]

Investments Authorised by the Trustee Acts Introduction General Power to Invest and to Vary Investments Duty to Exercise the Care, Diligence and Skill of a Prudent Person Preservation of Existing Rules and Principles of Law and Equity Duty to Act in the Best Interests of Beneficiaries Duty to Avoid Speculative or Hazardous Investments Duty to Act Impartially Duty to Obtain Advice Matters to which Trustees Must Have Regard Purposes of Trust and Needs and Circumstances of Beneficiaries Desirability of Diversifying Trust Investments Likelihood of Inflation Exclusionary Role of Trust Instrument Charitable Trustees in South Australia Investment in Company Shares and Securities under RITS

[18-07] [18-07] [18-08] [18-09] [18-10] [18-11] [18-12] [18-13] [18-14] [18-15] [18-16] [18-17] [18-18] [18-19] [18-20]



System Dwelling Houses

[18-21] [18-22]

Investments Authorised by Other Statutes

[18-23]

Investments Authorised by the Court Pursuant to Statutory Power

[18-24]

Mortgage Investment Generally Precautions to be Observed on Making a Loan Terms of the legislation Particular conditions Loss on authorised security Loan on leasehold security

[18-25] [18-25] [18-26] [18-26] [18-27] [18-28] [18-29] [page 387]





Imprudent investments in authorised securities compared with unauthorised securities Security of shorter title Release of part of security Realising the security Retention, Changing and Investigation of Securities Retention Changing investments Investigation

Some Aspects of Trustees’ Statutory Investment Powers

[18-30] [18-31] [18-32] [18-33] [18-34] [18-34] [18-35] [18-36] [18-37]

Introduction [18-01] ‘[T]he general rule of equity … imposes upon trustees the duty of investing trust funds in their hands, of which the testator has not directed an

immediate disposition.’1 If they fail to do so, they will be charged interest2 and, if the fund be lost, they will be liable to make it good3 and if trust property is leased to a tenant, the trustee has a duty to recover rent which is unpaid but due.4 It would appear that a fund uninvested is not safely preserved; it has been said that six months is the maximum period that a trustee could safely leave moneys uninvested.5 The trustee may lawfully invest trust funds in the manner and upon the securities authorised by: (1) (2) (3) (4)

the trust instrument; the appropriate Trustee Act; any other statute giving trustees authority to invest trust funds; or the court, where the power so to authorise is given to the court by statute.

Investments Authorised by the Trust Instrument General [18-02] In regard to the duty and power of investment, as in regard to all other duties and powers, the trustee’s first duty is to obey the directions of the trust instrument. The trust instrument may, of course, contain no such directions, in which case the statutory powers will apply, or it may specifically direct or forbid or merely authorise investment in specified classes of securities. It will be a breach of trust for the trustee to disregard such specific directions, although they may, in the one case, direct investments in securities not otherwise permissible for trustees or, in another case, may forbid investments in securities otherwise allowed by law.6 [page 388] If trustees felt any doubts as to the prudence of obeying instructions to invest in particular securities, they could certainly apply to the court for directions but it would seem that they would be under no obligation to do so.7 If, however, the

trust instrument merely authorises investments of a class not authorised by statute, the trustee is required to exercise a high degree of prudence before making a particular investment. In Re Whiteley, trustees who had power to invest in real property were held liable to make good loss resulting from an investment of trust funds in a brickyard. Lindley LJ stated: ‘The duty of the trustee is not to take such care only as a prudent man would take if he had only himself to consider, the duty is rather to take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide.’ Traditionally, special investment clauses were reconstrued strictly, and it was for those who alleged that a particular investment was within the clause to prove it.8 Powers of sale could be implied into trust instruments. Thus, where a will contained a power to invest personalty on the purchase of freehold property or mortgages of freehold property, but contained no power to sell real estate or to vary or transpose investments, it was held that the trustees had power to sell both freehold property purchased under the power to invest, and freehold property gained by foreclosing on mortgages in which the personalty had been invested.9 Clauses enlarging the powers of trustees to invest beyond the classes of investment authorised by the general law were also construed strictly, and the onus of establishing that a particular investment was within the clause lay on those who alleged it.10 The width of power granted by the uniform legislation discussed at [18-07] makes this approach of little significance today.

Absolute Discretion [18-03] If an investment clause in a trust deed allowed the trustees a ‘discretion’ or an ‘absolute discretion’ as to investment, the question arises whether this would mean that they could invest in anything they liked whether authorised by law or not, or that they should exercise their discretion within the limits of investments authorised by law. In Bridges v Shepherd,11 Harvey J held that trustees who were empowered to invest trust funds in ‘such securities as they think best’ were bound to invest in authorised securities. On the other hand, in Sidey v Huntly,12 Simpson CJ in Eq held that trustees, who were empowered to invest trust funds in such manner from time to time as they should deem advisable, were thereby empowered to invest in investments other

than those authorised by law. The Privy Council in Khoo Tek Keong v Ch’ng Joo Tuan Neoh13 held that a power to ‘invest trust moneys in such investments as they in their absolute discretion think fit’ empowered trustees to invest in other than authorised securities, and it is submitted that the modern tendency is to give a more liberal construction to such words. Although in the case last mentioned the words ‘absolute discretion’ were used, it does not appear that the word ‘absolute’ places the case in a different category from one where a ‘discretion’ is given to the trustees.

‘Investment’ and ‘Security’ [18-04] However, it is necessary to consider in each case what is an ‘investment’. ‘Invest’ as used in an investment clause has been defined to include as one of its meanings, and it would [page 389] seem as its normal meaning, ‘to apply money in the purchase of some property from which profit or interest is expected and which property is purchased in order to be held for the sake of the income which it will yield’.14 Upon this principle it has been held that a clause giving powers to invest in freehold property did not authorise the purchase of a freehold home, not as an investment, but with vacant possession in order to permit beneficiaries to live in it.15 It would also follow that to use trust moneys for purchasing items of property like vacant land or works of art, with a view to obtaining a capital appreciation (but no income) would not normally be considered as ‘investing’ those moneys. It was held in Khoo Tek Keong v Ch’ng Joo Tuan Neoh16 that a loan upon an unsecured promise to repay is not an investment at all. Although a power to invest, if sufficiently widely expressed, may not always require that a security be taken for the funds, if the trustee is empowered to ‘invest upon any security’, the very words require that he or she should have a right to resort to some fund or property in the event of default in payment.17 There is authority for the view that an investment without security is not an investment at all, and it is upon this basis that trustees, even though they have wide powers of investment, have been held to have no power to invest in the

shares of a public company.18 If a trustee is intended to have power to invest without security in the strict sense, this should be clearly expressed in the trust instrument. The position of the trustee shareholder will be considered more fully later.19 Obviously enough, where a trustee is merely empowered to invest in ‘securities’, he or she is authorised to invest only in ‘a debt or claim the payment of which is in some way secured’.20 Thus, company shares21 and moneys on deposit with a bank22 are not ‘securities’. But in a particular context the word may have a wider meaning,23 which in a given case may include stocks and shares.24

Personal Security [18-05] If the trust instrument authorised investment of the trust funds upon the security of personal property, the trustees could so invest them, but trustees had to exercise great care in such cases and had to act strictly with a view to the benefit of the trust estate, not with a view to the accommodation or benefit of the borrower. If they were not authorised to lend on personal security, it was a breach of trust to invest trust funds in that fashion and they were liable to replace any moneys lost by such an investment. In Holmes v Dring, two executors lent moneys in their charge on a bond in which a surety joined. The persons bound by the bond were in good circumstances at the time of the loan, but subsequently became insolvent and the money was lost. The executors were held liable. ‘It was never heard of that a trustee could lend an infant’s money on private security. This is a rule that should be rung in the ears [page 390] of every person who acts in the character of trustee.’25 Of course, if a testator expressly directed such an investment, there was no more to be said. The directions had to be carried out; but they could not be exceeded.26

Speculation [18-06] A discretion to invest, however wide, will not permit speculation by a trustee.27 Even if the investment is authorised, the trustee must still act

prudently and must be satisfied that the particular security is one which will protect the trust assets. In this respect, various provisions of the Trustee Acts assist the trustee in the carrying out of this general duty. These sections will be mentioned further after investments authorised by the Trustee Acts have been considered.

Investments Authorised by the Trustee Acts Introduction [18-07] Until recently, the legislation limited the investment powers of trustees. They have now been rendered much broader by legislation which is substantially, although not completely, uniform in the six states and two mainland territories (‘the uniform legislation’). The uniform legislation is derived from the Trustee Amendment Act 1988 (NZ), introducing Pt II into the Trustee Act 1956 (NZ).28 The legislation generally indicates which of its provisions are subject to the trust instrument and which operate notwithstanding what is in the trust instrument. Queensland presents a special case. Section 20 of the Trusts Act 1973, which is the opening section in ‘Part 3 — Investments’, provides that ss 29–30C ‘apply despite anything contained in the instrument creating the trust’. Those sections are the last sections in Pt 3. It follows that, except where otherwise specifically indicated, ss 21–28 are subject to the trust instrument. In part, the legislation is a reaction to relatively conservative approaches to the meanings given to the words ‘invest’ and ‘security’ in trust instrument investment clauses discussed at [18-04]. For that reason it is improbable that in the uniform legislation, unlike what preceded it,29 the expressions ‘invest’ and ‘investment’ will be construed as narrowly as they were in the investment clauses discussed at [18-04]. These provisions replace now repealed provisions in some jurisdictions containing long lists of particular permitted investments. That legislation was discussed in the sixth edition of this work at [1807], [1809] and [1811]–[1812]. [page 391]

General Power to Invest and to Vary Investments [18-08] The uniform legislation provides that a trustee may, unless expressly forbidden by the instrument (if any) creating the trust, invest trust funds in any form of investment. It also provides, in New South Wales, the Australian Capital Territory and Victoria, that a trustee may at any time vary any investment. In other jurisdictions it provides that a trustee may at any time vary an investment or realise an investment of trust funds and reinvest an amount resulting from the realisation in any form of investment. There appears to be no significant difference between these formulations.30 A transaction which is not expected to give the trustee or return or profit is not an investment.31 Under former legislation it has been held that the power to ‘vary’ investments includes a power to sell them before reinvesting them.32 It has also been held that a direction to keep trust funds and invest them in one particular way did not ‘expressly forbid’ investment in securities authorised by earlier legislation conferring limited powers of investment.33

Duty to Exercise the Care, Diligence and Skill of a Prudent Person [18-09] The general law duties of trustees in relation to the exercise of powers of investment referred to at [17-18] have been modified and restated as follows. A trustee must, in exercising a power of investment, if the trustee’s profession, business or employment is, or includes, acting as a trustee or investing money for other persons, exercise the care, diligence and skill a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons. A trustee must, in exercising a power of investment, if the trustee’s profession, business or employment is not, or does not include, acting as a trustee or investing money for other persons, exercise the care, diligence and skill a prudent person of business would exercise in managing the affairs of other persons.34 Some Acts deem investments made under them to be investments satisfying the legislation, including these prudent person tests.35 Somewhat superfluously, the uniform legislation provides that a trustee must,

in exercising a power of investment, comply with the provision of the instrument creating the trust that is binding on the trustee and requires the obtaining of a consent or approval or compliance with a direction for trust investments.36 Under the general law, the court could dispense with the requirement of consent if the refusal of consent by a tenant for life was impeding the performance by the trustees of their duty to protect the trust fund for the benefit of those entitled in remainder.37 It was permissible for subsequent consent to be given, unless the nature and object of the power, in the circumstances of the case, indicated that previous consent was necessary.38 [page 392]

Preservation of Existing Rules and Principles of Law and Equity [18-10] The uniform legislation provides that a rule or principle of law or equity imposing a duty on a trustee exercising a power of investment continues to apply except so far as it is inconsistent with the Act or another Act or the instrument creating the trust. Without limiting those rules or principles, they include a rule or principle imposing: (a) a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust; (b) a duty to invest trust funds in investments that are not speculative or hazardous; (c) a duty to act impartially towards beneficiaries and between different classes of beneficiaries; and (d) a duty to obtain advice.39

Duty to Act in the Best Interests of Beneficiaries [18-11] The duty of trustees is to exercise their powers of investment in the best interests of the present and future beneficiaries, holding the scales

impartially.40 It is not enough merely to avoid harming them.41 This is a positive ‘fiduciary’ duty.42 When the purpose of the trust is to provide financial benefits to beneficiaries, the best interests of beneficiaries are normally their best financial interests.43 To that there may be ‘rare’ exceptions where if all the beneficiaries condemn particular types of investment, it may not be for their benefit for the trustees to make them.44 In considering what investments to make, trustees must put aside their own personal interests and views. If, under the trust instrument, investments in particular countries (for example, South Africa under apartheid) or in companies conducting particular businesses (for example, tobacco selling or gambling) would be more beneficial than other investments, the trustees must not refrain from making them by reason of their personal opposition to the countries or businesses in question.45

Duty to Avoid Speculative or Hazardous Investments [18-12] For the duty to invest trust funds in investments that are not speculative or hazardous, see [18-06].46

Duty to Act Impartially [18-13] As to the duty to act impartially towards beneficiaries and between different classes of beneficiaries, see [17-11]. [page 393]

Duty to Obtain Advice [18-14] Apart from the Queensland legislation, which speaks of obtaining advice, the legislation uses the phrase ‘take advice’. That contrasts with a later provision (see fn 57 below) which refers to a power to ‘obtain and consider’ advice. Under the general law, trustees had a duty to seek advice on matters which they did not understand, such as making some types of investment. They were not entitled to reject that advice merely because they sincerely disagreed with it, but they were not bound to accept and act on it.47 Against that background, it is probable that despite the contrast between ‘take’ in one

provision and ‘obtain’ in another, the legislatures were using the word ‘take’ to mean ‘get’ or ‘obtain’. Among the duties preserved by this part of the uniform legislation is the duty of honesty. ‘It would be futile for a trustee to say that he thought fit to make an investment which he knew to be wrong. The Court would say that he ought not to think fit so to do, and would come to the conclusion that he did not in fact think fit.’48 The uniform legislation also provides for the continued application of a rule or principle of law or equity relating to a provision in an instrument creating a trust that purports to exempt, limit the liability of 49 or indemnify50 a trustee in relation to a breach of trust.51 The uniform legislation also provides that if a trustee is under a duty to take advice, the reasonable costs of obtaining it are payable out of trust funds.52

Matters to which Trustees Must Have Regard [18-15] The uniform legislation provides that, without limiting the matters that a trustee may take into account when exercising a power of investment, the trustee must take account of certain listed matters so far as they are appropriate to the circumstances of the trust. They are as follows: (a) the purposes of the trust and the needs and circumstances of the beneficiaries; (b) the desirability of diversifying trust investments; (c) the nature of and risk associated with existing trust investments and other trust property; (d) the need to maintain the real value of the capital or income of the trust; (e) the risk of capital or income loss or appreciation; (f) the potential for capital appreciation; (g) the likely income return and the timing of income return; (h) the length of the term of the proposed investment; (i) the probable duration of the trust; (j) the liquidity and marketability of the proposed investment during, and at the end of, the term of the proposed investment;

(k) the total value of the trust estate; (l) the effect of the proposed investment for the tax liability of the trust; (m) the likelihood of inflation affecting the value of the proposed investment or other trust property; [page 394] (n) the cost (including commissions, fees, charges and duties payable) of making the proposed investment; and (o) the results of a review of existing trust investments.53

Purposes of Trust and Needs and Circumstances of Beneficiaries [18-16] While under the general law there is, unless statute or the trust instrument provides to the contrary, no express obligation on the trustees to consult the beneficiaries, it has been seen as a reasonable course.54 Under this provision it may not be possible to consider the needs and circumstances of the beneficiaries without inquiring what they are, so that the provision has the indirect effect of creating a duty to consult.

Desirability of Diversifying Trust Investments [18-17] Under the general law, the degree of diversification that is practicable and desirable for a large fund may be impracticable or undesirable for a small fund.55 The size of the fund is also one of the relevant matters to be taken into account.

Likelihood of Inflation [18-18] In modern conditions under the general law, prudence required recognition of the risks of inflation and of the need to take constructive steps to protect capital from it.56

The uniform legislation also provides that a trustee may obtain, and if it is obtained must consider, independent and impartial advice reasonably required for the investment of trust funds or the management of the investment from a person whom the trustee reasonably believes to be competent to give the advice, and may pay out of trust funds the reasonable costs of obtaining the advice.57

Exclusionary Role of Trust Instrument [18-19] Under the New South Wales and Australian Capital Territory legislation, a trustee is to comply with the provisions just set out unless expressly forbidden by the instrument (if any) creating the trust.58 As noted above at [1807], under the Queensland Trusts Act 1973, ss 29–30C above are expressed to apply despite anything in the instrument creating the trust. Hence it seems that the relevant duties just discussed may be excluded by the instrument. The silence of the legislation in other jurisdictions suggests that in them the duties are not excludable.

Charitable Trustees in South Australia [18-20] In South Australia, the trustees of a trust established wholly or partly for charitable purposes must, in the administration of the trust estate, have regard to matters of information, representations or advice that are relevant and are given or made to the trustees in writing by: (a) a person who is named in the instrument establishing the trust as a person who is entitled to, or may, receive money or other property for the purposes of the trust; or [page 395] (b) a person who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustees before distributing or applying money or other property for the purposes of the trust; or (c) a person who in the past has received money or other property from the trustees for the purposes of the trust; or

(d) a person of a class that the trust is intended to benefit.59

Investment in Company Shares and Securities under RITS System [18-21] Those parts of the uniform legislation dealing with investments in company shares are dealt with at [20-52]–[20-54]. In all jurisdictions except South Australia, Tasmania and the Northern Territory, the uniform legislation deals with choses in action arising under the Reserve Bank Information and Transfer System operated by the Reserve Bank of Australia (‘the RITS system’). A chose in action arising under the RITS system that entitles its holder to a security of a particular description (the ‘underlying security’) is, for the purposes of the legislation and the instrument creating the trust, taken to be the same in all respects as the underlying security. Accordingly, the holding or acquisition by a trustee of such a chose in action is to be regarded as an investment by the trustee in the underlying security. It does not matter that the right conferred by the chose in action is a chose in relation to securities of a particular description and not in relation to particular securities.60 In jurisdictions other than Queensland, this provision only applies to the extent that the trust instrument creating the trust does not expressly forbid its application. In Queensland, it appears, by reason of the fact that ss 29–30C above are expressed to apply despite anything contained in the trust instrument, to operate subject to the trust instrument.

Dwelling Houses [18-22] The uniform legislation provides, subject to the instrument (if any) creating the trust, that a trustee may purchase a dwelling house for a beneficiary to use as a residence, or enter into any other agreement or arrangement to secure for a beneficiary a right to use a dwelling house as a residence. Despite the terms of the instrument (if any) creating the trust, a trustee may, if to do so would not unfairly prejudice the interests of other beneficiaries, retain as part of the trust property a dwelling house for a beneficiary to use as a residence. A dwelling house purchased, retained or otherwise secured for use by the beneficiary as a residence may be made available to the beneficiary for that purpose on such terms and conditions consistent with the trust and the extent

of the beneficiary’s interest as the trustee thinks fit. The trustee may retain a dwelling house or any interest or right in respect of a dwelling house acquired under these provisions after the use of the dwelling house by the beneficiary has ceased.61 In this respect, the legislation represents a more expansive approach than that revealed in decisions on investment clauses in trust instruments discussed at [18-04].

Investments Authorised by Other Statutes [18-23] A number of statutes, both state and federal, contain sections expressly empowering trustees to invest trust funds in investments of the type created by the particular statutes. Such provisions are contained in s 52 of the Commonwealth Inscribed Stock Act 1911 (Cth) and s 11 of the Treasury Bills Act 1914 (Cth). In New South Wales, the Public Authorities (Financial Arrangements) Act 1987 empowers a trustee, subject to the instrument creating the trust, to invest trust funds in a range of specified public authorities. [page 396]

Investments Authorised by the Court Pursuant to Statutory Power [18-24] Section 63 of the Conveyancing and Law of Property Act 1898 (NSW) provides as follows:62 63. All money to be received on any sale effected under the authority of this part, or to be set aside out of the rent or payments reserved on any lease of earth, coal, stone, or minerals as aforesaid may, if the Court thinks fit, be paid to any trustees of whom it shall approve, or otherwise the same shall be paid into Court as prescribed by rules of the Court, and such money shall be invested, deposited, or otherwise applied as the Court shall from time to time direct in some one or more of the following modes, namely: (a) In investment in Government securities, or on other securities on which trustees are by law authorised to invest trust moneys, or on which the trustees of the settlement are by the settlement authorised so to invest: Provided that in case of investment in terminable securities provision shall be made by way of sinking fund or otherwise in respect of any premiums or discount so as to secure the full capital for persons having

remoter interests. (b) By deposit at interest in the Colonial Treasury or in any bank, building society or credit union as authorised by the present or any future rules of Court. (c) In discharge, purchase, or redemption of incumbrances affecting the inheritance of the settled land or other the whole estate the subject of the settlement, or affecting any other hereditaments subject to the same uses or trusts. (d) In purchase of the reversion in fee of any part of the settled land being leasehold land for years or life or years determinable on life. (e) In purchase of land in fee simple, or of leasehold land held for sixty years or more unexpired at the time of purchase, to be settled in the same manner as the hereditaments in respect of which the money was paid, or as near thereto as the different nature of the property purchased may admit. (f) In payment to any person becoming absolutely entitled or empowered to give an absolute discharge. (g) In payment of costs, charges, and expenses of or incidental to the exercise of any of the powers, or the execution of any of the provisions of this part. (h) In any other mode in which money produced by the exercise of a power of sale in the settlement is applicable thereunder.

Mortgage Investment Generally [18-25] There were formerly legislative provisions restricting investments in secondary mortgages and contributory mortgages: see the sixth edition of this work at [1817]. The broad investment powers now found in the uniform legislation have removed these restrictions, although the decision to enter particular mortgages must be carried out with care, diligence and skill, with attention to the matters which are relevant, and in accordance with the general duties of a trustee.

Precautions to be Observed on Making a Loan Terms of the legislation [18-26] In all jurisdictions, if a trustee lends money on the security of a property, the trustee is not liable for breach of trust by reason only of the proportion borne by the amount of the loan to the value of the property at the time when the loan was made, if in making the loan, the trustee acted on a

report as to the value of the property made by a valuer of land instructed and employed [page 397] by the trustee independently of any owner of the property. The amount of the loan is not to exceed two-thirds of the value of the property as stated in the report.63 In New South Wales, it is permissible to lend up to 95% of the value of a property as stated in the report if the repayment of the loan is insured under a contract of insurance issued by a prescribed insurer, and the mortgagee is the assignee of the benefit of that contract of insurance. In Queensland, South Australia, Tasmania and the Northern Territory, there is an additional excusing circumstance: if the trustee is insured by an entity prescribed under a regulation carrying on a business of insurance against all loss that may arise because of the default of the borrower.64 In Victoria and Western Australia, if a trustee lends money on a real security in accordance with the provisions of the legislation, the trustee is not chargeable with breach of trust by reason only of the proportion borne by the amount of the loan to the value of the property on which it is secured if the trust instrument did not forbid lending on real security, the loan was a housing loan, and the loan was secured by a contract of insurance in the prescribed form entered into with an authorised borrower. A housing loan is a loan made for the purpose of financing the acquisition of interests in land on which there is, or is to be built, a dwelling house.65 The corresponding section in the former English statute66 (and it seems that the same is true of the Australian legislation) has been held to be a relieving section and does not impose a statutory obligation upon trustees to take a valuation. Even if they do not take a valuation, they may be relieved by the court on the grounds of having acted honestly and reasonably.67 But although trustees are not laid under a statutory obligation to rely on a report or to have a report made, a trustee would be extremely foolish to run an unnecessary risk when such a risk could be avoided by taking steps to obtain the protection afforded by the statutory procedures considered above. The section applies standards formerly recognised by the courts as prudent.68 The effect of the section is practically to place upon the valuer the onus of deciding upon the

amount to be lent. If a trustee relies upon a report or employs and instructs a competent independent valuer and is thus advised that the security is sufficient for a given amount, not being more than two-thirds of the value as stated by him or her, the trustee is not chargeable with loss if the security should prove to be insufficient for the amount advised. Thus the trustee is apparently freed from all responsibility so far as that arises from the amount advanced, provided that it is within the statutory limit and that he or she has acted upon the advice of a competent independent valuer. The use of the word ‘only’ would seem to indicate that if there are factors in the case apart from the mere value, the trustees will not be able to cast the responsibility upon the valuer but will have their action tested by the ordinary prudent person test.69 Thus in Fouche v Superannuation Fund Board,70 the High Court held that an agreement by which the Board advanced £3500 to Fouche on the security of a country property worth £5500, and by a [page 398] further deed covenanted to advance £41,500 to him upon him carrying out work to convert the homestead into a modern tourist hotel, was in itself and by reason of its inherent nature, and not merely because of the investment of an excessive amount, in breach of trust.

Particular conditions [18-27] (1) A valuer instructed and employed independently of any owner of the property. This means that the relation of principal and independent contractor must exist as between the trustees and the valuer and between them only; that the valuer must look to the trustees alone for his or her remuneration and be responsible to them alone for the performance of his or her duty. It is not necessary that the trustees should make inquiry into the previous business transactions of the valuer to see whether he or she has at any previous period acted for the mortgagor. The statute requires merely that in this transaction he or she must be employed independently of the mortgagor.71 In Marquis of Salisbury v Keymer,72 Warrington J commented on the practice of valuers taking no fee, or only a preliminary fee, if the transaction did not go through, and stated that this seemed a reprehensible practice, as in such a case it

was in the valuer’s interest to make such report as would enable the loan to be made, whereas it was his or her duty to advise the trustees independently and without reference to his fees. He pointed out that the practice was one which might get trustees into difficulties.73 The choice of the valuer is a matter for the trustee personally and it should not be left to the trustee’s solicitor.74 (2) Two-thirds rule. The loan is not to exceed two-thirds of the value of the property as stated in the certificate or valuer’s report: it does not follow from this that valuers should, as a matter of course, advise the advancement of two-thirds of the valuation in every case. ‘It is the duty of the valuer to consider not only the value of the property, but the proportion which, in his opinion, as an expert and practical man, the trustees would, in each particular case, be justified in advancing.’75 Parker J stated:76 The principle involved seems to be that within the limits of what is often called the ‘two thirds’ rule a prudent man may, as to the amount which can properly be advanced on any proposed security, whether the property be agricultural land or houses or buildings used for trade purposes, rely on expert advice obtained with certain precautions, it being of course assumed that in giving advice the expert will consider all the circumstances of the case, including the nature of the property, and will not advise a larger advance than under all the circumstances can be prudently made. I dissent entirely from the position taken up by some of the defendants’ expert witnesses, that when once they have ascertained the value of the property they are, whatever its nature and whatever method of valuation they have adopted, at least prima facie justified in advising an advance of two thirds of its value. Such a position in my opinion defeats the object of the section by making what the Legislature has recognized as the standard of the minimum protection which a prudent man will require into a standard of the normal risk which, whatever the nature of the property, a prudent man will be prepared to run; and it deprives the expert advice on which the trustee is to rely as to

[page 399] the margin of protection to be required of all its value. It is as true now as it was before the Act that the maximum sum which a prudent man can be advised to lend upon a mortgage depends on the nature of the property and upon all the circumstances of the case. If the property is liable to deteriorate or is specially subject to fluctuations in value, or depends for its value on circumstances the continual existence of which is precarious, a prudent man will now, as much as before the Act, require a larger margin for his protection than he would in the case of property attended by no such disadvantages, and an expert who does his duty will take this into consideration. … As well since the Act as before it, it is therefore necessary to consider not only the value of the property proposed to be mortgaged, but also the margin of protection which a prudent man

would require remembering that the margin of protection to be required must depend on the nature of the property and all the circumstances of the case.

(3) Advice of the valuer expressed in the report. If the trustee employs an independent valuer whom he or she reasonably believes to be competent, and the valuer advises an advance not exceeding two-thirds of the valuation he or she places on the property, the trustee cannot be held liable for breach of trust merely on account of the amount advanced if the security proves insufficient. The trustee is entitled to rely upon the advice of the valuer in regard to the amount that may safely be advanced. Under the old law, the trustee had to judge for himself or herself as to the amount to be advanced.77 If the valuer states in his or her report what he or she considers to be the value of the property, and that it forms a sufficient security for the sum named in the report, that is sufficient ‘advice’ if the valuer has been informed of the purpose for which the valuation was required.78

Loss on authorised security [18-28] In all jurisdictions, if a trustee improperly lends trust money on a security that would have been a proper investment if the amount lent had been less than the actual amount lent, the security is to be taken to be a proper investment in relation to the lesser amount, and the trustee is only liable to make good the difference between the amount advanced and the smaller amount, with interest.79 This alters the rule formerly applied by which, in cases of improper investment, trustees were disallowed the whole amount of the investment if they were held liable for breach of trust. In such a case, the trustee took over the investment and paid to the trust estate the amount represented by the investment. Now, where a trustee makes an investment which is improper only as regards the amount lent, the trustee will be held liable merely for the difference between the amount advanced and the amount for which the investment would have been a proper security, and not for the whole deficiency, if that should be greater than the difference just mentioned. For example, a trustee lends $5000 on a security which is of an authorised nature and which would have been a perfectly good security at the time of the loan for $4200. Upon realisation, the security produces only $3500. The trustee is liable only for the difference

between $5000 and $4200, that is, $800. The loss of the other $700 has to be borne by the trust estate.

Loan on leasehold security [18-29] In Queensland, South Australia, Tasmania and the Northern Territory, if a trustee lends an amount on the security of leasehold property, the trustee is not in breach of trust only [page 400] because the trustee dispensed, either completely or in part, with the production or investigation of the lessee’s title when making the loan.80

Imprudent investments in authorised securities compared with unauthorised securities [18-30] There is a difference between an investment in an authorised security made negligently or imprudently and an unauthorised security. In the case of the authorised security, the security necessarily forms part of the trust estate, and if there is a deficiency the trustee has to make good the loss caused to the trust estate by his or her negligence or imprudence, subject to the possibility of being relieved on the grounds of having acted honestly and reasonably. But in the case of an unauthorised security, the position is different. Here the beneficiaries under the trust can demand the replacement of the original fund. If the trustee has sold out trust funds in an authorised security in order to invest in an unauthorised security, the beneficiaries are entitled at their option to demand that the trustee refund to the trust the proceeds of the sale of the authorised security or replace the authorised security. For example, if the trust funds were invested in government stock and were sold out by the trustee and invested in company shares not authorised as a security, the beneficiaries could demand that the trustee account to the trust for the proceeds of sale or that he or she replace the stock. If the stock has risen in the interval they can say, ‘If it had not been for your selling the stock we should have had the benefit of the rise’; and, on the other hand, if the stock has fallen, they can say, ‘You sold the stock for so much and we require you to account for that sum.’81

Security of shorter title [18-31] In New South Wales and the Australian Capital Territory, trustees are not chargeable with breach of trust on the ground only that in effecting the purchase of or lending money upon the security of any property they have accepted a shorter title than the title which a purchaser is, in the absence of a special condition, entitled to require, if in the opinion of the court the title accepted is such as a person acting with prudence and caution would have accepted.82

Release of part of security [18-32] Where trustees hold a mortgage over various pieces of land to secure a single debt owing to the trust estate, they may desire to release part of the security because, for instance, the amount of the debt has been reduced to a figure which will be properly covered by the remaining security or securities. In some jurisdictions legislation permits this. Further, in New South Wales and the Australian Capital Territory, s 20 of the legislation provides: (1) Where any property is held by a trustee by way of security and the trustee has power under this Act or otherwise to invest on mortgage and to vary investments, the trustee — (a) may release part of the property from the mortgage, whether any part of the mortgage debt is repaid or not, provided that the unreleased part of the property would, at the time, be a proper investment in all respects for the amount remaining unpaid; (b) may, on a sale by the mortgagor of part of the mortgaged property and on the receipt by the trustee of the whole of the purchase money thereof after deduction of the expenses of the sale, release such part from the mortgage. (2) A subsequent purchaser of the released part of the property, or the Registrar-General, Crown Solicitor or other person registering or certifying title, shall not be concerned to inquire whether the release was authorised by this section.

Realising the security [18-33] At general law there is, without express provision, no power in a trustee to purchase an equity of redemption as an investment. A trustee now has power, in New South Wales, the [page 401]

Australian Capital Territory, Queensland, South Australia and Western Australia, unless expressly forbidden by the trust instrument, to purchase the equity of redemption of land in respect of which a mortgage exists as an asset of the trust, in lieu of foreclosure under the mortgage. The purchase price must not exceed 5% of the amount due under the mortgage.83 In New South Wales, the Australian Capital Territory and South Australia, a trustee, after such a purchase or after decree absolute for foreclosure or the operation of the statutes of limitation, holds the property on trust for sale with power to postpone sale.84 The net proceeds are applied in like manner as the mortgage debt was applicable, but this power does not affect any rule of law relating to apportionment between life tenant and remainderman. This question and the question of the application of income by a trustee-mortgagee in possession is dealt with in Chapter 19.

Retention, Changing and Investigation of Securities Retention [18-34] Where there is a trust for conversion with power of retention of existing investments and the trustees are not unanimous as to the retention of some of the testator’s investments, these investments must be realised.85 The fact that trustees have a power to retain securities at their discretion does not give the tenant for life any right to insist that they must retain such securities if they consider it advisable to realise and invest in other securities.86 As to the calling in of mortgages, there is no rule that trustees and executors must call in authorised securities within 12 months of the death of the testator except where realisation is required for payment of debts and legacies, provided they act with honesty and prudence.87

Changing investments [18-35] Although the uniform statutes provide that a trustee may from time to time vary any investment, this does not mean that trustees may vary investments arbitrarily without any good reason. In all that they do, trustees have to act reasonably, and there is no exception in this case.88 Where there are successive interests to be considered the trustees must hold the balance evenly

and not favour either the tenant for life or the remainderman at the expense of the other. It would not be proper for the trustees to make a change to increase the income of a tenant for life if by so doing they were in any way to lessen the security of the capital moneys or if they were thus to diminish the capital fund. Their duty extends beyond merely preserving the capital intact or merely providing an income for a tenant for life. They have to invest the funds so that a proper income may be obtained for the tenant for life and at the same time the capital may be preserved for the remainderman.89 Although the court will not as a general rule intervene where trustees are given a discretion as to investment, it may nevertheless intervene if called upon by a beneficiary and may direct an inquiry as to whether it is for the benefit of the persons interested that a particular authorised investment should be continued or called in.90 [page 402]

Investigation [18-36] Under the general law in the case of an authorised security and in the absence of circumstances suggesting to a reasonable person that the security is in jeopardy, there is no rule requiring trustees to make periodical or further investigations as to either the title of the security or the solvency of the mortgagor.91 However, more recently it has been said that there is a duty to review investments ‘regularly (if not necessarily strictly annually)’.92 And now the uniform legislation provides that subject to the instrument creating the trust a trustee must, at least once in each year, review the performance, individually and as a whole, of trust investments.93 In Queensland, Victoria, South Australia, Western Australia, Tasmania and the Northern Territory, the legislation provides that a trustee is not liable for breach of trust only because the trustee continues to hold an investment that has stopped being an investment authorised by the instrument creating the trust, or properly made by the trustee exercising a power of investment, or made under the relevant part as previously enforced from time to time, or authorised by another Act or the general law.94 In New South Wales and the Australian Capital Territory, the legislation more briefly provides that trustees shall not be

liable for breach of trust by reason only of the trustee’s continuing to hold an investment which has ceased to be an investment authorised by the instrument, if any, creating the trust or by law. Further circumstances may make it the duty of trustees to satisfy themselves as to the value of a security. For example, if they are distributing a portion of the estate and retain certain portions to represent the interests of some of the beneficiaries, it would be their duty to see that the portions retained really did fully represent those interests. Re Brookes95 is an illustration of where a trustee was held liable in such circumstances for a breach of trust. The trustee had distributed a portion of the estate and retained a mortgage to answer a settled share. The property mortgaged had greatly depreciated in value and when realised was found practically worthless. The breach of trust consisted not in retaining the mortgage, but in so dividing the assets that worthless securities were appropriated to some beneficiaries while others were given practically the whole estate.96 Statute offered no protection because the breach was not by reason only of the trustee continuing to hold the investment. The uniform legislation provides that in a proceeding against a trustee in relation to a duty under the relevant part relating to the trustee’s power of investment, the court may, when considering the question of the trustee’s liability, take into account the following matters: (a) the nature and purpose of the trust; (b) whether the trustee had regard to the matters to which he or she is statutorily required to have regard97 so far as they are appropriate to the circumstances of the trust; (c) whether the trust investments have been made under an investment strategy formulated in accordance with the duty of a trustee under the relevant part; and (d) the extent to which the trustee acted on the independent and impartial advice of a person competent, or apparently competent, to give the advice.98 [page 403]

Some Aspects of Trustees’ Statutory Investment Powers [18-37] In the sixth edition at [1828], several points were made which have to some degree been met by the uniform legislation on trustee investment powers described above. The first point was that the statutory powers of investment were too narrow to enable trustees to preserve the value of capital and income against inflation. That is not true of the much broader powers of investment now enacted. The second point was that while the former statutory powers sometimes had geographical limitations, where no limitation was expressed, none should be implied:99 ‘the considerations governing the propriety of investments out of the jurisdiction are precisely the same considerations as those which govern the propriety of investments within the jurisdiction.’ The earlier New South Wales decision of Re Walker (No 2),100 which seems to decide that a New South Wales trustee empowered to purchase shares could not purchase shares in any company having a head office out of the state, is obviously no longer to be regarded as correct, if it ever was. Thirdly, there was a complaint that the statutes were not uniform. There is now considerable, although not complete, uniformity. Fourthly, in recent years there has been great stress on the necessity for diversification of investments. As Adam J said in Re Baker (dec’d):101 [I]t is obviously prudent that the investment should be spread over a number of companies and over a variety of enterprises…. the trustees shall have regard to the need for securing that investments of the trust in company shares or securities are widely spread and no undue proportion confined to any one company or group of companies operating in a particular field of industry or commerce.

This is correct. A more extreme step is to appeal to the ‘modern portfolio’ approach to trust investment. Some aver that the uniform legislation adopts that approach. Apart from its broadening of investment powers, it does so clearly only in relation to the statutory duty to take account of the desirability of diversifying trust investments and the power of the court to set off gains and losses. In that regard the legislation provides that in considering an action for breach of trust arising out of or in relation to an investment by a trustee where a loss has been or is expected to be sustained by the trust, the court may set off all

or part of the loss resulting from the investment against all or part of the gain resulting from any other investment whether in breach of trust or not. This power of set-off is in addition to any other power or entitlement to set off all or any part of any loss against any property.102 Finally, attention was drawn to the huge sums now invested in superannuation. The law relating to superannuation trusts is discussed in Chapter 29. _____________________________ 1.

Wharton v Masterman [1895] AC 186 at 197; [1895–9] All ER Rep 687 at 692; Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [22], [119].

2. 3.

Stafford v Fiddon (1857) 23 Beav 386; 53 ER 151; Adamson v Reid (1880) 6 VLR (E) 164; Gilroy v Stephens (1882) 51 LJ Ch 834; 30 WR 745; Re Jones (1883) 49 LT 91. Moyle v Moyle (1831) 2 Russ & Myl 710; 39 ER 565.

4. 5.

Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [22]–[23], [73], [125]. Cann v Cann (1884) 51 LT 770.

6.

Cadogan v Earl of Essex (1854) 2 Drew 227; 61 ER 706; Ovey v Ovey [1900] 2 Ch 524; Johnston v Johnston (1903) 4 SR (NSW) 8; 20 WN (NSW) 271; Re Meagher [1910] VLR 407; (1910) 16 ALR 551; Perpetual Trustee Co Ltd v Molloy (1923) 23 SR (NSW) 395; 40 WN (NSW) 76. But see Knox v Mackinnon (1888) 13 App Cas 753.

7. 8. 9.

Re Maryon-Wilson’s Estate [1912] 1 Ch 55; Re Harari’s Settlement Trusts [1949] 1 All ER 430; Re Brassey’s Settlement [1955] 1 All ER 577; [1955] 1 WLR 192. Re Moffatt (1910) 11 SR (NSW) 202; 28 WN (NSW) 70.

10. (1886) 33 Ch D 347. 11. (1921) 21 SR (NSW) 220. 12. (1900) 21 LR (NSW) Eq 104; 17 WN (NSW) 98. See also Re Wragg [1919] 2 Ch 58 at 64–5; [1918– 19] All ER Rep 233 at 237; Re Harari’s Settlement Trusts [1949] 1 All ER 430. Re Brown (1885) 29 Ch D 889 is obscure. 13. [1934] AC 529. 14. Re Wragg [1919] 2 Ch 58 at 65; [1918–19] All ER Rep 233 at 237 per Lawrence J, where trustees were given power to invest at their absolute discretion and it was held that under that power they could purchase real estate as an investment. 15. Re Power [1947] Ch 572; [1947] 2 All ER 282; In the Will of Sherriff [1971] 2 NSWLR 438. Contrast Re Bentley [1955] VLR 33, where, however, the word ‘invest’ in s 4(3)(a) of the Trustee Act 1953 (Vic) was given a very special meaning. See also Re Peczenik’s Settlement [1964] 2 All ER 339; [1964] 1 WLR 720; R E Megarry (1947) 63 LQR at 421–3. 16. [1934] AC 529. See also Mills v Osborne (1834) 7 Sim 30; 58 ER 748; Styles v Guy (1849) 1 Mac & G 422; 41 ER 1328; Re Peczenik’s Settlement [1964] 2 All ER 339; [1964] 1 WLR 720. Cf Pickard v Anderson (1872) LR 13 Eq 608. 17. Boyd v Cowell [1952] VLR 288; [1952] ALR 523. Contrast Re Mort (1904) 4 SR (NSW) 760; 21 WN (NSW) 259 where extrinsic evidence was admitted as to the use of the word ‘security’ to describe

company shares. 18. Harris v Harris (No 1) (1861) 29 Beav 107; 54 ER 567. 19. See Chapter 20. 20. Singer v Williams [1921] 1 AC 41 at 49. 21. Boyd v Cowell [1952] VLR 288; [1952] ALR 523. 22. Skinner v Trustees Executors and Agency Co Ltd (1901) 26 VLR 670. 23. Boyd v Cowell [1952] VLR 288; [1952] ALR 523. 24. Re Douglas’s Will Trusts [1959] 2 All ER 620; [1959] 1 WLR 744. 25. Holmes v Dring (1788) 2 Cox Eq Cas 1; 30 ER 1. 26. See, for example, Cadogan v Earl of Essex (1854) 2 Drew 227; 61 ER 706 where a testator directed an investment in leaseholds upon the request of the tenant for life. See Langston v Ollivant (1807) Coop G 33; 35 ER 467 for an instance of trustees exceeding the powers given to them of lending upon personal security. See also Pickard v Anderson (1872) LR 13 Eq 608. In Re Tucker [1894] 1 Ch 724, a testator authorised his trustees to place a portion of the trust funds in the hands of a certain firm if it was willing to take it at interest. The loan was duly made, and the money was allowed to remain with the firm after there had been a change in its membership. This was held to be a breach of trust. See also Smith v Patrick [1901] AC 282. In Khoo Tek Keong v Ch’ng Joo Tuan Neoh [1934] AC 529, trustees were held entitled to lend on the security of jewellery, but it is conceived that this was only permitted because of the wide terms of the investment clause, and that the case cannot be regarded as overruling the line of earlier authority. 27. Sidey v Huntly (1900) 21 LR (NSW) Eq 104. 28. It was introduced by the following Acts: ACT: Trustee (Amendment) Act 1999; NSW: Trustee Amendment (Discretionary Investments) Act 1997; NT: Trustee Amendment Act (No 2) 1995; Qld: Trusts (Investments) Amendment Act 1999; SA: Trustee (Investment Powers) Amendment Act 1995; Tas: Trustee Amendment (Investment Powers) Act 1997; Vic: Trustee and Trustee Companies (Amendment) Act 1995; WA: Trustees Amendment Act 1997. 29. In the Will of Sherriff [1971] 2 NSWLR 438 at 442. 30. ACT s 14; NSW s 14; NT s 5; Qld s 21; SA s 6; Tas s 6; Vic s 5; WA s 17. 31. Perpetual Trustee Co Ltd v Cheyne (2011) 42 WAR 209 at [51]–[56]. 32. Re Pratt’s Will Trusts [1943] Ch 326; [1943] 2 All ER 375. 33. Re Burke [1908] 2 Ch 248. For an example of express prohibition, see Ovey v Ovey [1900] 2 Ch 424. 34. ACT s 14A(2); NSW s 14A(2); NT s 6(1); Qld s 22(1); SA s 7(1); Tas s 7(1); Vic s 6(1); WA s 18(1). Where trustees have a lien over the trust fund for their proper costs and expenses, in deciding what investments to make they can take into account their own interests under the lien, provided they act impartially as between themselves and the beneficiaries: X v A [2000] 1 All ER 490 at 494–5. 35. NSW: Public Authorities (Financial Arrangements) Act 1987 s 39 (debentures, bonds, inscribed stock, registered stock, discounted securities, promissory notes and other securities or instruments issued by an authority under that Act). 36. ACT s 14A(3); NSW s 14A(3); NT s 6(2); Qld s 22(2); SA s 7(2); Tas s 7(2); Vic s 6(2); WA s 18(2). 37. Harrison v Thexton (1858) 4 Jur NS 550. 38. Perkins v Permanent Trustee Company Ltd (1923) 23 SR (NSW) 358; 40 WN (NSW) 62. 39. ACT s 14B(1) and (2); NSW s 14B(1) and (2); NT s 7(1); Qld s 23(1) and (2); SA s 8(1); Tas s 9(1); Vic s 7(1) and (2); WA s 19(1).

40. See [17-11]. 41. Cowan v Scargill [1985] Ch 270 at 295; [1984] 2 All ER 750 at 766. 42. Cowan v Scargill [1985] Ch 270 at 276, 287–9; [1984] 2 All ER 750 at 752, 760–2. See also R Lee, ‘In Search of the Nature and Function of Fiduciary Loyalty: Some Observations on Conaglen’s Analysis’ (2007) 27 OJLS 327 at 337–8; G W Thomas, ‘The Duty of Trustees to Act in the “Best Interests” of Their Beneficiaries’ (2008) 2 J Eq 19 (‘The duty is a fiduciary duty …’). 43. Cowan v Scargill [1985] Ch 270 at 286–7; [1984] 2 All ER 750 at 760. 44. Cowan v Scargill [1985] Ch 270 at 288; [1984] 2 All ER 750 at 761–2. 45. Cowan v Scargill [1985] Ch 270 at 287–8; [1984] 2 All ER 750 at 761. 46. Learoyd v Whiteley (1887) 12 App Cas 727 at 733; Fouche v Superannuation Fund Board (1952) 88 CLR 609 at 637, 641; Bartlett v Barclays Trust Co Ltd (No 1) [1980] Ch 515 at 534; [1980] 1 All ER 139 at 152; Australian Securities Commission v AS Nominees (1995) 62 FCR 504 at 516; 133 ALR 1 at 12. 47. Cowan v Scargill [1985] Ch 270 at 289; [1984] 2 All ER 750 at 762. 48. Re Smith [1896] 1 Ch 71 at 76. One of the trustees received a commission or bribe for £300 for making a wrongful investment. He was held liable not only to make good the loss caused by the breach of trust but also to refund the £300 as money received by him on behalf of the trust estate. 49. See [16-19]–[16-20]. 50. See [21-04]–[21-10]. 51. ACT s 14B(3); NSW s 14B(3); NT s 7(2); Qld s 23(3); SA s 8(2); Tas s 9(2); Vic s 7(3); WA s 19(2). 52. ACT s 14B(4); NSW s 14B(4); NT s 7(3); Qld s 23(4); SA s 8(3); Tas s 9(3); Vic s 7(4); WA s 19(3). 53. ACT s 14C(1); NSW s 14C(1); NT s 8(1) (with different paragraphing); Qld s 24(1); SA s 9(1); Tas s 8(1); Vic s 8(1); WA s 20(1). 54. Re Pauling’s Settlement (No 2) [1963] Ch 576 at 586; [1963] 1 All ER 857 at 863; X v A [2000] 1 All ER 490 at 496. 55. Cowan v Scargill [1985] Ch 270 at 289; [1984] 2 All ER 750 at 762. 56. Re Mulligan (decd) [1998] 1 NZLR 481 at 504. 57. ACT s 14C(2); NSW s 14C(2); NT s 8(2); Qld s 24(2); SA s 9(2); Tas s 8(2); Vic s 8(2); WA s 20(2). 58. NSW s 14C(3); ACT s 14C(3). 59. SA s 9A. 60. ACT s 14F; NSW s 14F; Qld s 26; Vic s 9A; WA s 22. 61. ACT s 14E; NSW s 14DA; NT s 10A; Qld s 28; SA s 12; Tas s 12; Vic s 11; WA s 24. 62. Provisions to like effect are found in the Settled Estates Act 1880 (SA) s 34; Settled Land Act 1884 (Tas) s 19; Settled Land Act 1958 (Vic) s 73. 63. ACT s 18; NSW s 18 (requiring that the valuer be registered); Vic s 12A; WA s 26. 64. Qld s 30(1); SA s 13A(1); Tas s 12B(1); NT s 10C(1). 65. Vic s 12E; WA s 26D. 66. Trustee Act 1893 s 8; Trustee Act 1925 s 8 (now repealed by Trustee Act 2000). 67. ACT s 85; NSW s 85; NT s 49A; Qld s 76; SA s 56; Tas s 50; Vic s 67; WA s 75. See Palmer v Emerson [1911] 1 Ch 758 at 769; Re Solomon [1912] 1 Ch 261 at 278. And see [22-14]–[22-22].

68. Cf Yeo v Rotton (1865) 4 SCR (NSW) Eq 110; Hutchings v Snowden (1897) 23 VLR 118; 3 ALR 1670; Smith v Hassall (1899) 20 LR (NSW) Eq 165; 16 WN (NSW) 138; Bradford v Aitken (1900) 26 VLR 314; 6 ALR 191; Longhurst v Waite [1920] SALR 407. 69. Underhill stated: ‘Therefore it has been thought that a trustee would still be liable for advancing the money on property of a speculative character (such as a factory) and a fortiori on property of a wasting character (such as a brickfield, Learoyd v Whiteley (1887) 12 App Cas 727; or a china-clay field, Re Turner; Barker v Ivimey [1897] 1 Ch 536), not on the ground that he advanced too large a sum, Palmer v Emerson [1911] 1 Ch 758, but that he ought not to have advanced trust money on such security at all, Jones v Julian (1890) 25 LR Ir 54; Re Walker (1890) 62 LT 449; Shaw v Cates [1909] 1 Ch 389; cf Re Solomon [1912] 1 Ch 261. But the dicta of Parker J in Shaw v Cates [1909] 1 Ch 389, and the decision of Warrington J in Re Solomon [1912] 1 Ch 261, certainly appear to be inconsistent with this view as to property of a merely speculative character’: Underhill, Law of Trusts and Trustees, 12th ed, p 419. The passage survived up to and including the 15th ed, p 607. 70. (1952) 88 CLR 609. 71. Re Solomon [1912] 1 Ch 261 at 281. See also Re Stuart [1897] 2 Ch 583; Smith v Hassall (1899) 20 LR (NSW) Eq 165; 16 WN (NSW) 138; Re Dive [1909] 1 Ch 328. 72. [1909] WN 31; 25 TLR 278. 73. In Re Somerset [1894] 1 Ch 231 at 253, it was held by Kekewich J that the words ‘believed to be’ did not govern the words ‘instructed and employed independently of any owner of the property’, so that the valuer must be proved to have been so instructed and employed in fact. See, however, Re Stuart [1897] 2 Ch 583 at 592; Shaw v Cates [1909] 1 Ch 389 at 403; Re Solomon [1912] 1 Ch 261 at 281–2. 74. Re Walker (1890) 62 LT 449. 75. Re Solomon [1912] 1 Ch 261 at 282. See also Shaw v Cates [1909] 1 Ch 389; Re Dive [1909] 1 Ch 328. 76. Shaw v Cates [1909] 1 Ch 389 at 398–9, 406. See also Palmer v Emerson [1911] 1 Ch 758. In Shaw v Cates [1909] 1 Ch 389 at 408, it was held that in ordinary cases a trustee is not guilty of negligence merely because he does not insist upon a clause in the mortgage excluding the mortgagor’s statutory power of leasing. It is otherwise if the trustee does not insist on a personal covenant: Re Smith’s Trusts (1905) 5 SR (NSW) 500; 22 WN (NSW) 161a. 77. See Shaw v Cates [1909] 1 Ch 389 at 396. 78. See Re Solomon [1912] 1 Ch 261 at 283; but see the views expressed by Underhill in fn 69. 79. ACT s 19; NSW s 19; NT s 10D(1); Qld s 30A(1); SA s 13B(1); Tas s 12C(1); Vic s 12B(1); WA s 26A(1). For illustration, see Shaw v Cates [1909] 1 Ch 389 at 407–8, where trustees had advanced £4400 and the court held that an advance of £3400 would have been proper and required the trustees to make up the balance. In Re Turner [1897] 1 Ch 536, the particular investment was held improper both as to value and otherwise and consequently was not deemed authorised for a smaller sum. 80. Qld s 30(2); SA s 13A(2); Tas s 12B(2); NT s 10C(2). 81. See Re Salmon (1889) 42 Ch D 351; Re Massingberd’s Settlement (1890) 63 LT 296; Head v Gould [1898] 2 Ch 250. 82. NSW s 17; ACT s 17. 83. NSW s 32A; ACT s 32A; Qld s 40; SA s 23C; WA s 37. 84. NSW s 33; ACT s 33; SA s 23B. 85. Re Hilton [1909] 2 Ch 548. 86. Murray v Glasse (1854) 23 LJ Ch 126. 87. Re Chapman [1896] 2 Ch 763; [1895–9] All ER Rep 1104. See also as to calling in mortgages, Ames v Parkinson (1844) 7 Beav 379; 49 ER 1111; Robinson v Robinson (1851) 1 De GM & G 247; 42 ER 547

(second mortgage); Vickery v Evans (1863) 33 Beav 376; 55 ER 413. 88. See Re Walker (1890) 62 LT 449 at 452. 89. See Cockburn v Peel (1861) 3 De G F & J 170; 45 ER 843; Mortimer v Picton (1864) 41 De G F & J 166; 46 ER 880; Bethell v Abraham (1873) LR 17 Eq 24 at 27; [1861–73] All ER Rep 811. 90. Re D’Epinoix’s Settlement [1914] 1 Ch 890. 91. Rawsthorne v Rowley [1909] 1 Ch 409n. 92. Nestlé v National Westminster Bank plc [1994] 1 All ER 118 at 125, 133, 141; [1993] 1 WLR 1260 at 1266, 1275, 1283. 93. ACT s 14A(1) and (4); NSW s 14A(1) and (4); NT s 6(3); Qld s 22(3); SA s 7(3); Tas s 7(3); Vic s 6(3); WA s 18(3). 94. Qld s 29; Vic s 12; SA s 13; WA s 25; Tas s 12A; NT s 10B. 95. [1914] 1 Ch 558. 96. See also Colville’s Trustees v Colville 1914 SC 255, where trustees, who having no power of appropriation, had appropriated investments to legacies, the investments subsequently depreciating, were held liable to pay the full amount of the legacies. 97. That is, by ACT s 14C; NSW s 14C; NT s 8; Qld s 24; SA s 9; Tas s 8; Vic s 8; WA s 20. 98. ACT s 89; NSW s 90; NT s 10E; Qld s 30B; SA s 13C; Tas s 12D; Vic s 12C; WA s 26B. 99. Re Gibson [1922] VLR 715 at 718; (1922) 28 ALR 368 at 369. 100. (1903) 3 SR (NSW) 163; 20 WN (NSW) 86. 101. [1961] VR 641 at 651. 102. ACT s 89A; NSW s 90A; NT s 10F; Qld s 30C; SA s 13D; Tas s 12E; Vic s 12D; WA s 26C.

[page 404]

CHAPTER 19 Duty of Impartiality Introduction

[19-01]

Duty to Sell Wasting and Reversionary Property The Rule in Howe v Lord Dartmouth The Conditions of the Rule Intention Establishing Intention Power to Retain Investments Executory Limitations

[19-02] [19-02] [19-03] [19-04] [19-05] [19-06] [19-07]

Destination of Income of Settled Property Pending Conversion General Position Specific Categories Date of Conversion Mode of Apportionment Unauthorised investments improperly retained Securities retained under a power to postpone conversion General Illustration Reversionary interests and debts Terminable annuities not immediately convertible Where advancements have been made Two methods The authorities Dixon J’s statement Illustration Income Payable Only out of Amounts Actually Received

[19-08] [19-08] [19-09] [19-10] [19-11] [19-11] [19-12] [19-12] [19-13] [19-14] [19-15] [19-16] [19-16] [19-17] [19-18] [19-19] [19-20]



Enjoyment in Specie Breach of Trust

Apportionment Generally The Legislation Effect of the Legislation Role of Testator’s Death Apportionment on Tenant for Life’s Death Re Aspinall No Apportionment

[19-21] [19-25] [19-26] [19-26] [19-27] [19-28] [19-29] [19-30] [19-31] [page 405]

Augmentation of Capital General Principle Departures from General Principle The Authorities Considered Legislation Bonus Dividends Pre-1930 position Post-1930 position Cash or specie/shares or debentures Dividend set off against price Distributions on winding-up

[19-32] [19-32] [19-33] [19-34] [19-35] [19-36] [19-36] [19-37] [19-38] [19-39] [19-40]

Distribution of Business Profits Life Tenant/Remainderman Trustees Empowered to Manage Business Principle Authorities Effect of life tenant’s death Losses Changes in stock Station Properties General principles

[19-41] [19-41] [19-42] [19-42] [19-43] [19-44] [19-45] [19-46] [19-47] [19-47]



Some authorities High Court approach Books of Account Business Carried on Temporarily until it can be Sold Profitably

Apportionment of Outgoings and Losses Introduction Charges and Encumbrances Costs of Administration and Protection of the Trust Property Capital Improvements Current Annual Charges and Current Repairs Non-permanent Improvements and Abnormal Losses Annuities Outgoings of a Trustee-mortgagee in Possession Loss on Realisation of Insufficient Security

[19-48] [19-49] [19-50] [19-51] [19-52] [19-52] [19-53] [19-54] [19-55] [19-56] [19-57] [19-58] [19-59] [19-60]

[page 406]

Introduction [19-01] As was seen in [17-11], trustees have a duty to act impartially between the beneficiaries in order to avoid benefiting one set of beneficiaries at the expense of another set. An example has been given1 from the law relating to the appropriation of specific assets to satisfy the share of a particular beneficiary and this example will be considered further when dealing with the trustee’s statutory power to make such an appropriation. The duty of impartiality finds its most fertile expression in the rules which apply, in the case of interests settled for persons in succession, in order to prevent the life tenant benefiting unduly at the expense of the remainderman and vice versa. One example of this general rule applicable to settled interests was mentioned earlier,2 where it was seen that investments must not be chosen by a trustee which unduly benefit either life tenant or remainderman. In most jurisdictions, income earned during the period of administration on amounts which have yet to be expended in payment of the

testator’s debts, legacies and expenses may be retained by the life tenant, although reductions will be made in future years to reimburse the capital account.3 In South Australia and Tasmania, a complex procedure is required whereby any excessive income so received must be adjusted by crediting the capital account, and a reimbursement made by the life tenant of the appropriate proportion of the income.4 In addition to the rule just stated, the general principles may be considered under the following heads: (1) (2) (3) (4) (5) (6)

The duty to sell wasting and reversionary property. The destination of income of settled property pending conversion. Apportionment generally. Augmentation of capital. Distribution of business profits. Apportionment of outgoings and losses.

Duty to Sell Wasting and Reversionary Property The Rule in Howe v Lord Dartmouth [19-02] If a testator makes a general disposition of personal property to persons in succession without any further indication of intention as to the enjoyment of the property, the rule acted upon is that generally known as the rule in Howe v Lord Dartmouth,5 which is as follows: Where a testator settles residuary personal estate, giving life interests followed by interests in remainder, and the will contains no directions by the testator as to the conversion of such estate, there is, in the absence of evidence of a contrary intention, a presumption that the testator intended the beneficiaries to enjoy the property in succession, and, to give effect to that intention, the law requires the conversion into permanent investments of a recognised character of all such parts of the estate as are of a wasting or reversionary character and of all such other investments as are not of the recognised character.

[page 407] This is the first part of the rule in Howe v Lord Dartmouth6 and the one properly to be dealt with under the present heading. The second part of the rule is that if property should have been converted but has not been converted, the law determines the rights of successive beneficiaries inter se as if the property had been converted at the proper time.7 That is so except in New South Wales where, since 1 January 1931 in the case of leaseholds, the net income, under s 66D(2) of the Conveyancing Act 1919, goes to the life tenant as though it were the income of authorised investments.8 Although there is this exception to the rule in relation to the disposition of the income of leaseholds, it would appear that the first part of the rule continues to apply and that the trustee should convert the leaseholds and invest the proceeds in authorised investments. The second part of the rule, namely, the disposition of income as between life tenant and remainderman, will be considered in more detail later when dealing with the destination of the income of settled property pending conversion.9

The Conditions of the Rule [19-03] For the rule to be applicable, the following conditions must exist: (1) The gift must be by will. Settlements of existing property by deed are necessarily specific and therefore outside the rule. (2) It must be of personalty. (3) It must be general, not specific.10 If the gift is specific, it is presumed that the testator intended the actual property to be enjoyed in succession even though the property may be wasted away during the life of the life tenant.11 (4) The property concerned must be: (a) property of a wasting nature; or (b) reversionary property; or (c) other property represented by investments not authorised by law or by the will for the investment of trust funds.12 [page 408]

(5) There must be no evidence of a contrary intention on the part of the testator. (6) The property given must be settled in succession. The rule, of course, applies to investments existing at the date of the testator’s death, and not to investments of trust moneys subsequently made by the trustees. If trustees, after getting in the trust property, invest any part of it in unauthorised securities, they are liable for any loss of capital caused by their wrongful act, but the rights of the tenant for life and the remainderman inter se are not affected. The tenant for life will be entitled to the whole income produced by the unauthorised investment, the remainderman not being entitled to the excess income over what would have been produced by investment in authorised securities.13 This is so even if the tenant for life is one of the trustees, provided there has been no loss of capital.14

Intention [19-04] The rule in Howe v Lord Dartmouth15 applies only where the testator has not expressed a contrary intention or where a contrary intention may not be inferred from the wording of the will. If there is no expression or indication of the testator’s intentions as to conversion, the rule clearly is the only rule consistent with common sense and justice. Where a life interest is given to one with remainder to another, it is to be presumed the donor intended to benefit both donees. In such a case, the law proceeds upon the general intention expressed by the testator that the donees are to enjoy certain property in succession. Where the property is of a wasting nature, this intention can be effectuated only by changing the property into property of a permanent character and similarly where the property is of a reversionary character or falls in the future, the only way it may be made available for enjoyment by all the beneficiaries in succession is by changing it into property immediately available, that is, converting the future interest into a present income-producing interest. In other words, if the testator has expressed the general intention by giving property to be enjoyed in succession and has in addition given any indication of the way in which it is desired that the intention be effectuated, the law gives effect to those wishes so far as they are expressed. But if while the testator has expressed a general intention that certain property shall be enjoyed in succession, the testator has given no indication of any particular wishes as to the

mode of enjoyment by the several beneficiaries, the law applies the rule in order that justice may be done to all the beneficiaries and full effect given to the general intention of the testator. If the testator gives mining shares specifically to A for life with remainder to B, then the testator has clearly stated an intention that A is to have the dividends of such shares while A lives and that B can have only what remains in their value after A’s death, if there should be anything then remaining. Where, however, there is a general gift of residue to one for life with remainder to another, and the residue includes, inter alia, shares in a mining company which has only a short life left and the testator does not refer specifically to the shares, and gives no indication that the tenant for life is to enjoy the income from the different parts of the residue in specie, there is no fair course except to convert the wasting and reversionary property to protect the interests of the remainderman and the tenant for life respectively.16

Establishing Intention [19-05] The intention of the testator that the first part of the rule should not apply and that the executor should not be obliged to sell the reversionary or wasting property is usually to be [page 409] discovered in the directions of the testator as to the income which the tenant for life should be entitled to enjoy. The testator’s intention may be expressed clearly by directions that the tenant for life is to enjoy the income arising from the investments in the state in which they are at the testator’s death, or the testator’s will may be so worded that the court will infer that the testator meant the tenant for life to enjoy the actual income. In such a case, the rule as to conversion has no application. For example, a testator may give mining shares to trustees directing them to pay the dividends to A for life and after A’s death to sell the shares and pay the proceeds to B. Here, no question arises as to the respective rights of tenant for life and remainderman as the testator has directed precisely what is to be done in the way of conversion and payment of income. Where the will contains express provisions dealing with conversion by creating a trust or a power of sale, there is strictly no room for the application of the first

part of the rule in Howe v Lord Dartmouth.17 The duty is then to be found in the language of the will, where there is a trust for sale and, as will be seen presently, the expression of a power of sale negatives an implication of a duty to convert. The same is true where there is a direction to convert and the testator directs that until that property is converted the tenant for life is to enjoy the income actually produced by the property.18 So, too, where a testator directs that the income, pending conversion, is to be paid to the persons who would be entitled to the income produced by conversion, and trustees postpone conversion pursuant to a power to do so, the tenant for life will be entitled to the whole income. In Re Crowther,19 the testator gave his trustees power to postpone conversion and sale of his property which included a business, and he directed that until sale and conversion the income arising from the property ‘shall from the time of my decease belong to and be received by the person or persons who would be entitled under the trusts hereinbefore contained to the moneys arising from such sale and conversion or the income arising therefrom (as the case may require) if such sale and conversion had actually taken place’. The trustees carried on the business for 20 years and paid the whole income to the tenant for life. It was held that the income had been properly so paid.

Power to Retain Investments [19-06] In Re Nicholson,20 there was no trust for conversion. But the trustees were given a power of retaining investments and the whole income of the residue was given to the tenant for life. It was held that the tenant for life was entitled to the income from the ‘unauthorised’ investments retained by the trustees under the power of retainer. No distinction was made between wasting securities and those which were merely unauthorised but not wasting securities. It thus appears that an express power to retain existing investments will take the case out of the general rule.21 Likewise, a bequest to trustees upon trust to sell ‘when in their discretion they should deem it advisable’ negatives any duty to convert immediately.22 But a mere power to postpone conversion, as distinct from a power to retain existing investments, does not necessarily give a power to postpone conversion indefinitely.23 It will be seen presently that the mere fact of a direction to convert coupled with a power to postpone conversion, as distinct from a power to retain existing investments, does not affect the rights of the tenant for life or remainderman as fixed by the will and given effect to by the application of the second branch of the rule.24

[page 410] There may be an implied direction to the contrary, as where there is a direction to sell at some later time,25 or even where an express power of as distinct from a trust for sale is given.26 In both such cases, it has been held that the provisions of the will showed that no immediate sale was intended by the testator. So also if the instrument expressly directs conversion after the death of the life tenant.27 In Holland v Hughes,28 a testator died in India, where he had made his will, and his executor invested a portion of the estate in securities there. At a later date, all parties concerned came to England and application was made on behalf of the person entitled in remainder, a child of the testator, for an account on the basis of conversion of the property in India into three-per-cents within one year from the testator’s death. While invested in India, it had brought in 12.5% and 10%, which was paid to the tenant for life. The court held that it was not the duty of the executor to send the property to England to be invested when the testator died. Neither the property nor the parties were at that time within the jurisdiction of the court. But it was also held that, the parties having come within the jurisdiction, the property should then be converted.

Executory Limitations [19-07] The rule in Howe v Lord Dartmouth29 is applicable to gifts of residue settled upon persons in succession as tenants for life and remaindermen, but does not apply to absolute gifts subject to executory limitations.30 Since in the absence of any indication of the testator’s intentions the rule must apply, the burden of proof is on those who contest the application of the rule. It is for them to show from the will that the testator intended to exclude the application of the rule.31

Destination of Income of Settled Property Pending Conversion

General Position [19-08] So far the analysis has considered the implied duty to convert residuary personalty of a wasting or hazardous nature. It has indicated generally the effect of this rule upon the calculation of income as between life tenant and remainderman. It remains to consider in detail the rules upon which the law proceeds in settling the rights of the tenant for life and the remainderman as regards capital and income, not only in cases where there is in a will an implied trust for sale of residuary personalty, but also in all cases where there is a trust for conversion of property settled upon persons in succession. Thus the second part of the rule in Howe v Lord Dartmouth32 as to the calculation of income is part of a larger rule which applies to wills and settlements where there is an express or implied direction to convert. A testator leaves residue to A for life, then to B in remainder. The residue comprises wasting property, reversionary property, and investments not recognised by the law as proper for the investment of trust funds. Until conversion, some of the property is producing income. When conversion is effected, how are the rights of the various beneficiaries to be determined? This at once raises the question of distribution between capital and income, the tenant for life being entitled to the income [page 411] of the ‘residue’, and the remainderman to the corpus or capital forming the ‘residue’. In this example the implied trust for conversion arises under the first part of the rule in Howe v Lord Dartmouth, but in other cases there may be an express trust for sale with or without an express power to postpone conversion, and such cases may arise in wills or in settlements inter vivos. Then equity regards that as done which ought to be done and, if there is no power to postpone conversion, there is in equity a notional conversion at the time expressly or impliedly indicated by the author of the trust. If there is an express power to postpone conversion it is necessary to consider whether the power to postpone is inserted in order to enable the trustees to sell to the best advantage or in order to benefit life tenant or remainderman as the case may be. It is necessary to consider these various positions that may arise, as the precise result on distribution between capital and income varies in different circumstances.

Specific Categories [19-09] In the first place: (1) a will may contain no direction for calling in and converting the testator’s estate; or (2) a will or settlement inter vivos may direct the conversion of the trust property with or without a power of postponement of such conversion. In the second place, the trust property may comprise any or all of the following kinds of property: (1) Real property: As regards realty, where real estate is devised or settled on trust for sale, the proceeds to be held for several in succession, the tenant for life is entitled to the rents and profits until sale unless there is express direction to the contrary.33 In New South Wales, the same rule applies to leaseholds.34 However, royalties on minerals are regarded as wasting personalty and the tenant for life is not entitled to the actual royalties pending sale.35 Where real estate and personal estate are devised and bequeathed together as a residue with direction for sale and conversion, the proceeds to form one fund settled upon persons in succession, the tenant for life of the proceeds is also, as in the preceding instance, entitled to the rents and profits of the real property until sale where the sale is properly postponed either under a power of postponement or in the ordinary course of administration.36 Where there is no express trust for sale of realty, no question of adjustment between life tenant and remainderman can arise, even though the interest in realty is reversionary, because it is only under the rule in Howe v Lord Dartmouth37 that any reversionary interest under a will can be regarded as convertible, and the latter rule does not apply to realty.38 If the failure of the trustee to convert the realty is in breach of trust and the life tenant receives the actual income produced, the trustees are liable to the remainderman for any capital loss resulting from the failure to convert. However, although the life tenant cannot, in a case where the life tenant is not a party to the breach, be ordered to refund the income actually received, the life tenant cannot claim out of the eventual proceeds of sale for any arrears of income without bringing into account all the income received over the entire period of the life tenancy and accepting a computation of income based upon the amount which the life tenant would have been entitled to if the property had in fact been converted at

the proper time.39 [page 412] (2) Property represented by investments which are recognised by law as proper for the investment of trust funds: Except in special circumstances which require realisation, these investments will be allowed to remain unconverted and the tenant for life will receive the actual income derived from them. (3) Wasting property, such as terminable annuities. (4) Reversionary property. (5) Property practically inconvertible and only falling in after the lapse of some considerable time, such as an outstanding debt, arrears of an annuity or such like, that are paid long after the testator’s death. (6) Property represented by securities which are regarded by the law as hazardous and are not recognised as proper for the investment of trust funds. It is with regard to the last four of the above-mentioned classes of property that questions as to conversion and apportionment usually arise.

Date of Conversion [19-10] When should conversion take place? If the testator or settlor fixes a date at which it is to take place, that will be the time for conversion. If the trustees are given a mere discretion to postpone conversion, they may postpone conversion accordingly, but the law will not allow the rights of the beneficiaries inter se to be affected by such postponement. The rights of the respective beneficiaries are determined by the trust instrument and the subsequent action of trustees or third parties is not allowed to make any difference to the beneficiaries. (1) Where the rule in Howe v Lord Dartmouth40 applies, that is, where in the case of a will there is no direction as to conversion and conversion therefore becomes necessary by law, conversion must take place within one year from the date of the testator’s death, and if conversion has not been effected by the end of the year immediately succeeding the death, the law,

for the purpose of determining the rights of the tenant for life and the remaindermen, assumes that conversion has taken place at the end of that year. In such cases, capital and income are determined on the basis of this ‘notional conversion’.41 (2) The rule is the same where there is a direction in a will to convert and no authority given to postpone conversion. If conversion is not effected within one year from the testator’s death, the property which should have been converted is deemed to have been converted at the end of one year from the death of the testator and the calculation of income is made and the value of the assets estimated as if conversion had then taken place.42 It is conceived that the statutory implied power of postponement in New South Wales, the Australian Capital Territory, Victoria, Queensland and Western Australia does not alter this rule.43 If there is in a settlement inter vivos a trust for immediate conversion with no express power of postponement, it would appear that there is no scope for the application of any doctrine analogous to ‘the executor’s year’ and that the notional conversion, with its results on the [page 413] respective rights of life tenant and remainderman, would take place upon the coming into operation of the instrument. (3) Where there is a direction in a will or settlement to convert but a power of postponing conversion is added, and there is no provision as to the disposal of the income until conversion, the value of the securities to be converted is taken as at the coming into operation of the trust instrument.44 (4) The date of the coming into operation of the trust instrument is the appropriate point of time to take where the property is then unrealisable and the calculation of income has to be made when it falls in, as in the case of a debt which may not be got in for a long time after a testator’s death, unpaid arrears of an annuity, a life policy not yet payable, and a reversionary interest which has not been converted and which has subsequently fallen in.45 In all these cases, whether the date at which the property is deemed to be converted is one year from the death of the testator or is the date of the coming

into operation of the trust instrument, the tenant for life receives income from the date when the instrument comes into operation. However, the tenant for life will not, where the property is personal estate, other than leaseholds or authorised investments, be entitled to the actual income earned in the period between notional conversion and actual conversion, but only to a fair equivalent for the income which the tenant for life would have received if conversion had actually taken place at the appointed time. It is now necessary to consider how this ‘fair equivalent’ is calculated, that is to say, the mode of apportionment in various cases.

Mode of Apportionment46 Unauthorised investments improperly retained [19-11] Where in a will there is no direction to convert and consequently the rule in Howe v Lord Dartmouth47 applies, or where there is a direction to convert with no express power of postponing conversion, and the property that should have been converted is not converted at the proper time, the rule is to value the property as at one year from the testator’s death and to allow the tenant for life the income that would have been produced by the investment of this sum at the end of one year from the testator’s death. The rate of interest allowed is a matter of judicial practice, but dependent upon the current rate obtainable from trust investments. In England, it has been customary to allow 4%.48 In New South Wales, the practice was formerly to allow 4%. Then the rate was increased to 5%49 but later reduced to 4.5%.50 The cases on this topic are of some antiquity and were decided in days when, inflation being particularly low, the current rate obtainable from authorised investments was also low. Where there are [page 414] circumstances of high inflation, an interest rate which reflects those conditions ought to obtain for the purpose of the rule in Howe v Lord Dartmouth. In the case of a settlement inter vivos, the rule in Howe v Lord Dartmouth51 cannot apply so as to create an implied trust for conversion. In such a case

where there is an express trust for conversion but no express power of postponement, the property will be valued at the date of the coming into operation of the trust instrument and the notional income will be allowed to the tenant for life from that date.

Securities retained under a power to postpone conversion General [19-12] Where trustees are given a power to postpone conversion at their discretion, and there is no provision providing for the disposal of the income from the unconverted property pending conversion, the property is valued as at the coming into operation of the trust instrument and the tenant for life is allowed interest from that date.52 That is the position where there is a mere power to postpone conversion, that is to say, a power to continue the investment pending a favourable opportunity for selling. The position is different where the trustee has power to continue existing investments indefinitely. In the latter case, it is presumed that such power was given to the trustee for the benefit of the life tenant or remainderman, as the case may be, and it is construed as an indication that the life tenant is to take the income in specie. There is thus the expression of an intention to the contrary which prevents the general rule from applying.53 Illustration [19-13] Suppose the value of a partnership share were $24,000 on which 5% was payable until the remaining partners paid off the capital. The tenant for life would receive annually, say 4% on $24,000, that is, $960 per annum. The balance of the annual interest, $240, would be invested in authorised securities and the interest on this would also be paid to the tenant for life. If the $24,000 were paid off in one sum at the end of five years, the tenant for life would have received the annual income of $960, plus the interest on the successive annual surpluses of $240. If the various surpluses had been invested at 5%, the tenant for life would receive in addition to the $960 annually the interest on $240 at 5% at the end of the second year, that is, $12; the interest on $480 at 5% at the end of the third year, that is, $24, and so on until the end of the five years, when the $24,000 would be paid to the trustees and invested by them in recognised securities. It is to be remembered that where moneys are already

invested in recognised securities, the tenant for life receives the income actually realised. In Brown v Gellatly,54 a testator died possessed of several ships and he gave his executors power to sail his ships for the benefit of the estate until they could be sold. It was held that [page 415] the tenant for life of the residue (which included the ships) was not entitled to the income earned by the ships but only to interest at 4% on their value. Similarly, in Gibson v Bott,55 where leaseholds, then subject to the rule, were unsaleable for a long time owing to a defective title, the property was valued and interest at the rate of 4% per annum allowed to the tenant for life from the death of the testator. The same rule was followed by the court in Sutherland v Cooke,56 where property, by an innocent mistake, was left secured upon a wasting security, and the tenant for life was held entitled merely to interest at the rate of 4% upon the value of the property as taken at the expiration of a year from the death of the testator. In Wentworth v Wentworth,57 residue was devised upon trust to convert with a power to postpone conversion for 21 years. The testator directed that the surplus income of the unconverted property should be accumulated until conversion and should go in augmentation of capital. The trustees, under powers given in the will, granted a mining lease for 40 years. The leased property was retained unconverted for more than 21 years. It was held that the rents and royalties received until 21 years after the testator’s death should be accumulated as directed and form part of the capital; but that as the whole estate should have been converted not later than 21 years after the testator’s death, for the purpose of determining the respective rights of the tenants for life and the remaindermen, it must be deemed to have been converted at the end of the 21 years and the tenant for life should receive such income as would be equivalent to what would have been received if the sale had been made at the proper time and invested as directed by the testator. The Judicial Committee followed the rule acted upon in Meyer v Simonsen58 and in Brown v Gellatly,59 but at the same time did not say that the interest allowed should be limited to 4%. The judgment stated that it was not thought expedient ‘to hamper the court by

laying down any fixed rule as to the rate of interest to be allowed to the tenants for life on the estimated value of the capital of the property’. Simpson CJ in Eq, when later dealing with matters arising in the same estate, allowed interest at the rate of 4% on the estimated capital value of the whole of the property as at the date at which it should have been converted.60

Reversionary interests and debts [19-14] In the cases previously considered, the rules have usually operated to reduce the income of the life tenant to a ‘fair equivalent’ of the income which the trust property would have produced if it had been converted at the appointed time. But the rules may also be applied in favour of the tenant for life in order to augment the tenant for life’s income and bring it to the level of that which would have been received if conversion had actually taken place. Thus, where residuary personalty settled upon persons in succession comprises, inter alia, reversionary interests, these, as has already been stated, come within the rule in Howe v Lord Dartmouth if there is no direction to convert, and must be treated as notionally converted if they are not converted within one year after the testator’s death.61 This is known as the rule in Re Chesterfield’s (Earl) Trusts.62 In modern practice, in such cases the amount ultimately realised is ascertained. The present worth of this sum at the date of the death, reckoning compound interest, is capital, and the difference between the present worth and the total is income. In other words, the amount is found which, if invested at the death of the [page 416] testator at compound interest, would have amounted to the sum ultimately realised. Interest at the rate of 4% per annum was for a long time the rule in such cases,63 but in times of increased inflation it appears that in Australia the rate, after increases to 4.5% and 5%,64 may be higher.65 The same rule is applied where the outstanding interest is merely a debt that is unrealisable for some considerable time but is ultimately paid.66 The rule in Re Chesterfield’s (Earl) Trusts does not apply to realty,67 nor, it has been held, to shares in a pastoral company.68

Terminable annuities not immediately convertible [19-15] Where a terminable annuity is not immediately convertible a different method is followed. In Crawley v Crawley,69 the residue of a testator’s estate included a terminable annuity. It was held that until it could be sold the successive payments should be invested and the income from the investments paid to the tenant for life. Similarly, where there was a direction for the accumulation of rents for a period more than 21 years from the testator’s death, the surplus rents were directed to be invested and only the interest on the investments paid to the tenant for life.70 In Re Whitehead,71 the same principle was applied to the interest on the fund set apart to answer a future liability. The interim income of the fund was invested and only the interest on the investments paid to the tenant for life. In Re Hey’s Settlement Trusts,72 the income of a settled fund reverting, by way of resulting trust, to a testator’s estate was held to be capital upon which interest only was payable to the tenant for life.

Where advancements have been made Two methods [19-16] As a result of the application of the doctrine of ademption, or the inclusion of an express ‘hotchpot clause’ in a will, beneficiaries between whom a fund of capital is distributable may have to be treated as having received something on account of their shares, and this will require adjustment when there is a final distribution of capital. There is the further problem of intermediate income. The final distribution may be delayed because, for example, the trustees have a power of postponing conversion and distribution so long as they think fit, or the interest of the beneficiaries concerned is preceded by a life interest. Therefore, pending final distribution of capital, there should be adjustment in entitlement to intermediate income to reflect an allowance for income derived from the prior advancements which are to be set off [page 417] against capital. The problems thus posed principally concern, in relation both to

corpus and income, the methods of valuation to be used and the times at which valuations are to be made. It appeared that two distinct lines of authority had evolved as to the correct procedures. One is exemplified by Re Poyser73 and the other by Re Hargreaves.74 Both cases accepted that, in the absence of a contrary intention in the will, the advancement inter vivos was valued at the date of the gift, but differed as the correct approach to the valuation of corpus. In Re Poyser,75 the testator’s residuary estate was given to trustees for sale and conversion, the proceeds to be divided in certain proportions among his children. Half of the sons’ shares and the whole of the daughters’ shares were to be settled upon them for life with remainders to their spouses and families as they should appoint. Advancements had been made to some of the children in the testator’s lifetime and other payments were directed to be made by the trustees. The will directed that for the purpose of ascertaining the respective shares these advancements should be taken into account and interest at 4% should be made debited on them as from his death or, in the case of payments made subsequently, from the date of payment. Owing to the nature of the estate, conversion had to be postponed and the question was as to the distribution of the intermediate income. It was held that interest at 4% should be charged on the advancements as directed and this interest added to the actual income for the time being. The total was divided into shares and distributed. In the case of anyone who had received advancements, the interest on the advancement was deducted from his or her share of the income. The same method of apportionment was adopted in somewhat similar circumstances in Re Craven,76 except that there was no direction as to interest. The trustees debited interest at 4% on advancements, added this to the income actually received and divided the total into shares, deducting from the shares of those advanced the amount of interest on their advancement. The court held that this method was the correct one in the circumstances.77 In Re Hargreaves,78 a different method was adopted. The residuary estate was valued as at the date of the death and the shares were determined as from that moment, the advances made being taken into hotchpot. The capital and income were then divided as from that time in the shares so ascertained. The authorities [19-17] The two methods are well stated in the questions set out in the

summons in Poyser’s case.79 1.

Whether for the purpose of the division of the actual income of the testator’s residuary real and personal estate pending the division thereof interest at 4 per cent per annum from the testator’s death or from the date of payment thereof (as the case may be) on the sums by cl 12 of the will directed to be accounted for and debited (a) with interest and (b) without any mention of interest ought to be added for computation to the actual income of the estate for the time being and the aggregate amount of income so arrived at ought to be divided into equal one-fifteenth shares and paid to the beneficiaries subject as to the intcome of the shares against which any sums are directed to be debited to the deduction of that interest on such sums respectively.

2.

Or, whether the principal sums directed to be accounted for and debited as aforesaid together with interest at the rate aforesaid (a) from the testator’s death on such of the sums as are directed to be accounted for and debited with interest, (b) on the other sums from the date of payment thereof respectively down to the date of such division as aforesaid (or alternatively, without interest on such other sums) ought to be added for computation to the capital of

[page 418] the estate, and deducted from the shares against which the same respectively are directed to be debited in the aggregate amount of capital so arrived at and the annual income ought to be divided as from the testator’s death between the persons for the time being entitled to income in the proportions of the respective shares of capital so arrived at.

The method adopted in Re Hargreaves80 was followed in Re Mansell81 but in the later case of Re Wills82 Simonds J took the view that the former case should only be applied where the will, on its true construction, so directs. Then in Re Tennant,83 the High Court of Australia in dealing with a hotchpot clause examined the decisions closely and concluded that the cases did not represent alternative methods of calculation. Rather, the question is always one of the intention of the testator as appearing from the provisions of the will and, in the absence of a contrary indication, a proper interpretation may be to apply Re Poyser84 to the distribution of income, until Re Hargreaves can be applied to ascertain the final shares of beneficiaries in corpus. Dixon J’s statement [19-18] Dixon J in Re Tennant85 put the position as follows: It would seem therefore in point of reason that the two modes of calculating the shares of income are not alternatives; one applies until the other is made possible by the complete ascertainment of the fractional shares of corpus. They are, however, generally regarded as rival methods for

doing the same thing, for solving the same difficulty. Each appears to have its supporters, who represent them as being in opposition; one is condemned on the mistaken ground that it is an innovation, the other as a departure from principle. To apply one or the other seems sometimes to be treated as an act of faith rather than of reason. Each has suffered the misfortune of being labelled by the name of a case. No doubt it is often very difficult to say which method of distributing income should be applied under the provisions of trust instruments. But I cannot help thinking that the difficulty arises not from the rival claims of the two methods to perform the same office, but from the inadequacy, obscurity or complexity of the dispositions which, by introducing a hotchpot clause, necessarily raise the question whether the fractional shares are or are not to be defined as ascertained before realization for final distribution, and, if so, when. To my mind it is on the answer to this question that the choice of methods depends, and not on grounds of doctrine, of traditional practice or of preference for one chain of cases to another.

Illustration [19-19] The difference between the two methods may be shown by an example. Take the case of two brothers to whom their father by his will has left his residuary estate to be equally divided between them. His trustees have a power of postponing conversion and if the estate consists of shares that cannot be readily realised, conversion is not effected until five years after the testator’s death. One of the sons has received from the testator by way of advancement $20,000, and this is directed to be taken into hotchpot. At the date of the death the residuary estate is valued at $60,000. The annual income from the residuary estate during the five years is $6000. After the death of the testator the trustees are faced with the problem of dividing the $6000 income between the two brothers as, of course (in the supposed circumstances), at that time they have no idea when they will be able to convert the residuary estate. What is done is this: Interest on $20,000 at 4% is $800. The total income to be divided is therefore $6800. This is divided into two equal shares of $3400 each. $3400 is paid to one son A, and $2600 (that is, $3400 – $800) to the other son B. Year by year the same principle of division is followed, the actual amounts, of course, depending on the total income for the [page 419] year in question; but the son who received the advancement always receives

$800 less than his brother. At the end of five years the estate is realised and produces $100,000. The $20,000 advanced to B is added to this, making $120,000, which is then divided into two equal sums of $60,000 each: $60,000 is paid to A, and $40,000 (that is, $60,000 – $20,000) to B. By this method the sons are treated alike both as to capital and income in accordance with the wishes of the testator. If the other method had been followed, the shares would have been fixed once for all at the death thus:

Estimated value of the estate Advancement to B Total Each share A’s share of residuary estate B’ share

$60,000 $20,000 $80,000 $40,000 $40,000 $20,000

All capital and income would henceforth be divided between A and B in the proportion of 2 to 1. If this method of division had been applied to the supposed case, A would have received two-thirds of $6000, that is, $4000 per annum, during the five years until realisation, and B would have received $2000 per annum. Similarly, in the final division A would have received two-thirds of $100,000, that is, $66,666.67. B would have received one-third, that is, $33,333.33, which with the $20,000 already advanced would have made the total received by him only $53,333.33, as against his brother’s $66,666.67. The difference lies in this, that in Re Poyser86 the shares were worked out so as to produce a division of capital and income in actual accordance with the proportions prescribed by the testator. The method adopted in Re Hargreaves87 will not effect this unless the division takes place immediately after the testator’s death, and the results of realisation are in accordance with the estimate. Advancements in cash are put in the scale against values on paper and the division is made on the results so obtained. In the method adopted in Poyser’s case88 and followed in the subsequent cases there is no valuation of the estate for ascertaining the shares of capital until the time for final division and appropriation arrives. In the method adopted in Hargreaves’ case89 the estate was valued as at the death of the testator, and the amount so ascertained was with the advancements taken as the capital of the estate for determining the proportions of capital and income from that time onwards.

Income Payable Only out of Amounts Actually Received [19-20] Although the respective rights of the tenant for life and remainderman are determined in the manner just explained, it is to be understood that the rule furnishes only the measure of the income to which the tenant for life is entitled. It does not necessarily follow that the tenant for life will get this income. The tenant for life cannot necessarily demand payment of an income to the amount determined according to the rules already stated until the property in respect of which it is payable is actually got in.90 Where the conversion has been rightly deferred either according to the instructions of the testator or by the trustees acting upon a discretion given by the testator or because of special circumstances, in all these cases the income due to the tenant for life will be determined according to the rules and where income is actually received sufficient [page 420] to pay the apportioned income to the tenant for life, the latter will be paid to the tenant for life.91 Where the conversion has been postponed because the security was not convertible at the time, when it does become convertible the resulting proceeds of conversion are then apportioned just as if it had been converted at the proper time and invested so as to produce the sum actually realised. In this case, the tenant for life may not obtain anything until realisation. The tenant for life is entitled to a charge on capital in order to make up the tenant for life’s income to the amount allowed by the rules but, pending conversion, it does not appear that the tenant for life is entitled to require the amount of any deficiency in income to be raised by enforcement of the charge.92 On the other hand, where the executors have not converted when they should have done so and thereby suffered a loss, they are liable for the loss. The rule determines both capital and income and any loss of capital or income will have to be made good by the executors or trustees who have been negligent. If the trustees have paid too much to the tenant for life, they will have to make the overpayment good to the remainderman and if by wrongful non-conversion the fund is reduced, the loss will have to be made up to the remainderman. The

tenant for life and the remainderman are to be placed in the same position as if the executors and trustees had performed their duty. For example, in Bate v Hooper,93 a testator gave the residue of his estate to trustees upon trust for conversion immediately after his death and to pay the income to his daughter for life and, after her death, to transfer the property to her children. The executors neglected to sell some long annuities comprised in the estate and allowed the tenant for life to enjoy them in specie. A bill was filed by the children against the executors of the surviving executor and their mother and it was held that the non-conversion was a breach of trust. The executors were required to account for the difference between the value of the long annuities at the end of one year from the testator’s death and their value when paid into court. In the particular circumstances of this case it was held that the tenant for life was not liable to refund the overpayments made to her. In Dimes v Scott,94 trustees, notwithstanding a direction for conversion, allowed an unauthorised investment producing 10% to remain and paid the tenant for life the whole income produced by this investment. Subsequently, they converted and invested the proceeds in consols at a time when they were so low that a much larger number of consols was obtained than would have been obtained if they had converted the fund and invested it at the proper time. It was held that the tenant for life was not entitled to the actual income produced by the unconverted investments but only to the income that would have been produced if the conversion had been made at the proper time and the proceeds invested in consols. The trustees were allowed in their accounts as payments to the tenant for life only the dividends that would have been so produced and were charged with the surplus; that is, they were allowed to charge as payments to the tenant for life only the dividends that would have been so received from the fund when converted into consols and the difference between this and the 10% actually produced by the unconverted fund had to be accounted for to the remainderman. The executors, of course, were not allowed any advantage accruing by reason of their neglect to convert at the proper time, although they would have been held liable if there had been a loss. In Tickner v Old,95 trustees were held liable to make up to the testator’s estate the value of annuities the proceeds of which had been paid by them to the tenant for life until the annuities ran out. [page 421]

Enjoyment in Specie [19-21] Where in a will the first part of the rule in Howe v Lord Dartmouth is excluded so that it is not incumbent upon the trustee to convert wasting or reversionary property, it follows that the second part of the rule cannot be applied.96 When in a will there is a direction that pending conversion the tenant for life shall enjoy the actual income of the estate, the second part of the rule, and quite probably the first part also, is excluded, and the tenant for life will be allowed to enjoy the income of wasting property in specie. Even if the testator has not in express words stated that the tenant for life shall enjoy the income from the property as existing at the testator’s death, still if it can be gathered from the will that it was the intention that the property should remain in its then existing state or if it is clear that the testator intended the tenant for life to have the actual income received, the tenant for life will receive the actual proceeds until conversion. If long annuities were part of the residue and the trustees were directed to sell the annuities after the death of the tenant for life and give the proceeds to the remainderman, or if there were a direction to ‘apply the rents, etc …’ for the maintenance of the tenant for life and after the death of the tenant for life to convert the property and divide it among the remaindermen, in such cases there would be a clear intention that the property was not to be converted. The dispositions made by the testator or the language used would be sufficient to show the relevant intention. There are numerous cases in which upon the construction of the will the tenant for life has been held entitled to enjoy the property in specie or to be entitled to the actual income produced until conversion.97 [19-22] In the case of trusts for sale and conversion, whether contained in a will or settlement, the usual rule that the tenant for life will be entitled to interest on the value of the property as on a notional conversion may be displaced by an expression of contrary intention in the trust instrument. There is, of course, such a contrary intention where it is directed that actual income shall be applied as though it were income of the proceeds of conversion. In many cases, however, a less clear indication of intention has been held sufficient to displace the general rule. Where sale and conversion are dependent upon the consent of the tenant for life, this is an indication that the author of the trust intended postponement of conversion for the benefit of the tenant for life and not merely in order to secure an advantageous sale for the benefit of the trust

generally.98 A mere power to postpone sale in order to secure an advantageous sale for the benefit of the estate will not of itself displace the general rule,99 but where the postponement of sale, and more particularly the retention of existing securities, is permitted, the courts are inclined to find some indication of an intention that the tenant for life should, pending conversion, enjoy the actual income. In a frequently quoted passage from Re Thomas100 it was said: ‘I have no doubt that one looks out with an expectant eye for a direction that the tenant for life shall receive the income, when there is an express direction to the trustees to retain securities, or any indication [page 422] of the testator’s intention that they shall retain indefinitely for so long as they may think fit.’ The general rule has no application where a power of sale only is given.101 [19-23] Where property is specifically bequeathed to persons in succession so that the rules as to conversion do not apply, the tenant for life, or the first tenant for life, will of course take the actual income and, if the specific property is resumed, is entitled to have the income made up to the income from the original property. In Askew v Woodhead,102 a tenant for life was entitled to a life interest in a lease which still had eight years to run. The trustees had a power of sale, subject to the consent of the tenant for life, which consent the tenant for life refused to give. The land was taken compulsorily under statutory powers. The tenant for life was held entitled to such an annuity as would be sufficient to exhaust the principal and interest of the proceeds of sale in the period for which the lease had still to run. Thus if the tenant for life survived for the period of the lease, the annuity would be exhausted just as the lease would have run out, so that in either case the tenant for life would have received the whole proceeds of the lease in the one case or the equivalent in the other case in the shape of the annuity payments. If the tenant for life had died at an earlier period while the lease was still running, the remainderman would have had the lease for the remaining period during which it had to run, and when an equivalent annuity was substituted for the lease the same thing would happen, that is, the remainderman would receive the annuity for the period still to run at the death of the tenant for life.103

[19-24] The principle is similar to that applied in Re Quigley,104 where coalbearing land, which was under lease, was settled on persons in succession. The land was resumed and compensation was paid for the loss of royalties which would have continued for 10 years. It was held by Owen J that this compensation was income and should be paid as such over the period of 10 years together with the income from time to time accruing on the undistributed balance of the compensation moneys. In that case, compensation was specifically allowed for the loss of royalties, and it is for that reason to be distinguished from cases where settled freeholds are resumed with no specific compensation allowed for loss of rents. In such cases it has been held that, if the income from the compensation money is less than the rents which would have been received from the settled land, the tenant for life is not entitled to have the deficiency made up out of corpus.105 If the income is greater than the rents which would have been received, it has been held that the tenant for life is only entitled to receive during the period for which the lease would have continued so much of the income as equals the amount of the rents which would have been received.106 However, if under such circumstances the trustee had a power of sale and reinvestment, the tenant for life would be entitled to the whole of the rents.107 Where settled lands subject to a lease are sold, the proceeds should be invested and, if the income is less than the rent, then, during the years for which the rents would have continued, the tenant for life is entitled to the actual income together with a sum equal to half of the quotient obtained by dividing the principal moneys by the number of years that the lease may have had to run at each division.108 [page 423]

Breach of Trust [19-25] If trustees make investments in breach of trust, the position is different from allowing trust property to remain invested in an unauthorised security in which it had been placed by the testator. In the latter case, if the trustees neglect to convert, they allow an existing state of affairs to continue when they should have put an end to it, whereas in the former case they have the trust property in their hands in proper form and deliberately invest it in

securities not authorised. In regard to non-conversion, the rights of the parties concerned are ascertained just as if the trustees had converted, and the trustees are then responsible to the beneficiaries as though they had fulfilled their duty of conversion. The trustees therefore have to account to the life tenant for income based on a notional conversion and to the remainderman for the capital which would have been received if conversion had taken place together with any income above that to which the life tenant is entitled. In the case of trustees having trust funds in their hands and investing them in unauthorised securities the position is different. Here the trustees, if they cause no loss of capital in the improper investment, are not liable to the remainderman for any addition to capital from the income of the unauthorised investment because in such a case the remainderman has not suffered loss and is not permitted to benefit by the breach of trust.109

Apportionment Generally The Legislation [19-26] A testator may die having devised or bequeathed property to persons in succession and at the date of death rents, dividends or other periodical payments may be accruing on the property but may not become payable until after the testator’s death. The question arises whether the rent or dividend or other payment, when it is received after the testator’s death, is income of the estate to which the life tenant is entitled, or capital which goes to the remainderman, or partly income and partly capital. Likewise, on the death of the life tenant, rents or dividends or other periodical payments may be accruing but not actually payable. It must be considered whether the rent or dividend, when it is received, is apportionable between the estate of the life tenant, on the one hand, and the remainderman on the other. The answer to the problems thus raised and to other problems where liability for rents, dividends and the like arises is now largely to be found in statutory provision. The intentions of the settlor must be taken into account before a court turns to statutory enactments or equitable principles. However, a clause in a will which purports to make every determination of trustees as to whether moneys coming into their hands are corpus or income, and their apportionment of such moneys accordingly, final and binding on all persons beneficially interested

under the will, is void and of no effect as being repugnant to the gifts made by the will, and as being an attempt to oust the jurisdiction of the court to deal with rights of property.110 In all jurisdictions, statutory provision has been made which closely follows the terms of the English Apportionment Act 1870.111 In New South Wales, the Conveyancing Act 1919 makes the following provisions as to apportionment generally: 144. (1) All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.

[page 424] (2) The apportioned part of any such rent, annuity, dividend, or other payment, shall be payable or recoverable in the case of a continuing rent annuity, or other such payment when the entire portion of which such apportioned part forms part becomes due and payable, and not before; and in the case of a rent, annuity or other such payment determined by re-entry, death, or otherwise, when the next entire portion of the same would have been payable if the same had not so determined, and not before. (3) All persons and their respective executors, administrators, and assigns, and also the executors, administrators, and assigns respectively of persons whose interests determine with their own deaths, shall have such or the same remedies, at law and in equity, for recovering such apportioned parts as aforesaid when payable (allowing proportionate parts of all just allowances) as they respectively would have had for recovering such entire portions as aforesaid if entitled thereto respectively: Provided that where any person is liable to pay rent reserved out of or charged on lands, that person and the said lands shall not be resorted to for any such apportioned part forming part of an entire or continuing rent as aforesaid specifically; but the entire or continuing rent, including such apportioned part, shall be recovered and received by the person who, if the rent had not been apportionable under this section or otherwise, would have been entitled to such entire or continuing rent; and such apportioned part shall be recoverable from such lastmentioned person by the executors, administrators, or other parties entitled thereto under this section by action or suit. (4) Nothing in this section shall render apportionable any annual sums payable under policies of assurance of any description. (5) This section shall not extend to any case in which it is expressly stipulated that no apportionment shall take place.

By s 142 of the Act, the words annuities, dividends and rents are defined: 142. For the purposes of this Part — Annuities include salaries and pensions.

Dividends include (besides dividends strictly so called) all payments made by the name of dividend, bonus, or otherwise out of the revenue of trading or other public companies or companies within the meaning of the Corporations Act 2001 of the Commonwealth, divisible between all, or any, of the members of such respective companies, whether such payments shall be usually made or declared at any fixed times or otherwise; and all such divisible revenue shall, for the purposes of this Part be deemed to have accrued by equal daily increment during, and within, the period for or in respect of which the payment of the same revenue shall be declared, or expressed to be made; but the said word ‘dividend’ does not include payments in the nature of a return or reimbursement of capital. Rents include rent-service, rent-charge, and rent-seck, and all periodical payments or renderings in lieu of or in the nature of rent.

Effect of the Legislation [19-27] The effect of the provision, and its counterparts in the other jurisdictions, is that every periodical payment in the nature of income must be apportioned where any change of ownership of the property from which the income is derived occurs in the interval between one payment and the next succeeding payment. Conveyancers are familiar with the application of this principle as between vendors and purchasers. The principle is likewise applied almost invariably in regard to the change of ownership that occurs on the death of a property owner. Where a testator leaves property to a life tenant with a remainder over, the principle has to be applied both at the death of the testator and also at the death of the life tenant. Where a testator has left residuary personalty settled on persons in succession, this apportionment is necessary to ascertain what sums should be credited or debited to capital or to income, as the case may be, and likewise, on the death of the tenant for life, to determine what belongs to the representatives of the tenant for life and what to the remainderman. Apportionment must be made not only in connection with periodical payments to the testator or the testator’s estate, such, for example, as interest on mortgages due to the testator, rents due to the testator, dividends on shares held by the testator, or annuities payable to the testator, but also in connection with periodical payments made or to be made by the testator or by the estate, such [page 425] as rates, rents payable by the testator, or interest payable on mortgages owing by

the testator. Time is the basis on which the apportionment is made. The operation of the principle of apportionment may be illustrated by one or two simple examples. A testator dies on 13 June leaving all his property in trust for his wife for life with remainder to his children absolutely. One of the assets of the estate is a sum of $1000 which was out on mortgage of real estate at 6% per annum, the interest being payable half-yearly on 10 April and 10 October in each year. The interest for the half-year ending 10 October is apportioned between capital and income, allowing to capital that portion of the interest which had accrued due from 10 April to 13 June and allotting to income that portion which accrued due from 13 June to 10 October. From 10 April to 13 June is 64 days, and from 13 June to 10 October is 119 days. The apportionment therefore is as under:

Similarly, if the life tenant in the foregoing example had died on the following 30 January, the interest accrued from the last interest day preceding the life tenant’s death, in this case 10 October, to the date of the life tenant’s death, 30 January, would belong to the representatives of the tenant for life, while the interest accruing between 30 January and 10 April would be capital falling to the remaindermen. In a year (other than a leap year), the computation of days would be:

The apportionment therefore would be:

In calculating the number of days from one date to another, it is necessary to note that the first day is not counted, that is, the day from which the calculation is to be made, but that the last day is included.

Role of Testator’s Death [19-28] In the case of a settled interest arising under a will, the testator’s death marks a starting point for both life tenant and remainderman. A life tenant is not entitled to income earned or accrued prior to the testator’s death. Thus if a testator dies on 3 June possessed of shares in a limited company which declares a dividend for the financial year ending at a date subsequent to the date of the testator’s death, the whole of that dividend will not be income. The portion earned or accrued due before the testator’s death will be the testator’s property and therefore will form part of the capital of the estate.112 The same reasoning [page 426] applies at the death of a life tenant and the next succeeding life tenant or between them and the remaindermen.113

Apportionment on Tenant for Life’s Death [19-29] In Re Henderson,114 Morton J laid down the following rules as to the apportionment of dividends accruing at the date of the death of the tenant for life under a settlement by will of a trust fund consisting of investments: (a) Where the investment is still held by the trustees of the will at the date when the dividend is payable, they must in all cases pay an apportioned part thereof to the personal representatives of the tenant for life. The trusts of the fund after the determination of the life interest are immaterial. (b) Where the investment is transferred to persons absolutely entitled hereto before the dividend becomes due and payable, the trustees ought to make some arrangement to ensure that the personal representatives of the tenant for life receive payment of a proper apportioned part of the dividend, but even if the trustees fail to do this the rights of the personal representatives are not defeated. (c) Where the investment is sold cum dividend the general rule is that there is no apportionment of the purchase price in favour of the legal personal

representatives of the tenant for life.115

Re Aspinall [19-30] In Re Aspinall,116 the court had to consider the question of apportionment between life tenant and remainderman in relation to rents which fell due on 25 December 1954. The testator died in the morning of that day. Buckley J formulated the proper test in the circumstances as follows:117 It seems to me that the test which I have to use for the purpose of deciding whether or not these rents ought to be regarded as capital assets of the testator’s estate is whether at the time of his death a cause of action to recover the rent had then accrued. If it had, that cause of action was an asset of the testator’s estate at his death, and the fruits of that asset would constitute part of the corpus of his estate. If on the other hand, the cause of action in respect of these rents did not accrue until after his death, then there is no asset that one can identify comprised in his estate at his death. The cause of action is a right which arises after his death, and is as much income as, for instance, a dividend declared on shares after his death would be an income of the estate.

After a consideration of the relevant cases his Lordship held that the rights of action in respect of the rents did not accrue until midnight on 25/26 December 1954, and the court should have regard to the actual moment of the testator’s death, and should not treat it as having occurred at the last moment of 25 December 1954, so that the rights of action to recover the rents had not accrued at his death and accordingly: (a) the current quarter’s rent (where it was payable in advance) due on the day of the testator’s death was income of his estate subject to apportionment (by consent) of one day’s rent to capital; and (b) the current quarter’s rent (where it was payable in arrear) due on the day of the testator’s death was capital subject to apportionment (by consent) of one day’s rent to income. If the whole income, interest or dividend, has accrued due before the death of the testator or before the death of the tenant for life, as the case may be, there will be apportionment, as [page 427] in the first case the sum so accrued will be part of the testator’s estate and capital,118 and in the second case it will be income payable to the tenant for life

and therefore to the tenant for life’s representatives. In Wright v Tuckett,119 where dividends were declared before the death of a tenant for life but were not payable till after that event, it was held that they belonged to his estate. The rule as to non-apportionment in the case of what is accrued due before the happening of an event ordinarily giving rise to apportionment is well illustrated by Ellis v Rowbotham,120 a case between landlord and tenant. The landlord let a house to a tenant, rent to be paid quarterly in advance on dates mentioned. The landlord was to be entitled to re-enter after notice if the rent should be in arrear for 14 days. A quarter’s rent being in arrear, the landlord gave notice and reentered. It was held that the landlord was entitled to recover the whole rent then due, as the rent was payable in advance and had accrued due before the landlord re-entered. Therefore there could be no apportionment.

No Apportionment [19-31] (1) Policies of assurance: There is no apportionment of annual sums payable under policies of assurance of any description.121 (2) Express stipulation: There is no apportionment if it is expressly stipulated that apportionment shall not take place. That is to say, if a testator gives shares to A for life with remainder to B, the testator may expressly state that there is to be no apportionment of dividends on the shares on his death or the testator may say the same thing by stating that the tenant for life is to take all the income from the shares, including any income accrued at the testator’s death. If the testator clearly shows an intention that the tenant for life was to take the first dividend after the testator’s death in full, it will go to the tenant for life as income.122 In Re Oppenheimer,123 it was held that a provision in the articles of a company in which the testator held shares, that dividends for all purposes were to be deemed to fall due on the day they were declared, did not as between his estate and his widow (the tenant for life) amount to a stipulation against apportionment. (3) Potential profit: There is no apportionment of the income from a source of potential profit only. Thus, if a testator dies owning sheep which are in wool124 or ewes in an advanced stage of gestation,125 there is no apportionment if, after the testator’s death, the potential profit is in fact realised. (4) Income accrued: There is no apportionment in the case of income accrued due at the death of the testator or tenant for life as the case may be. For

example, there is no apportionment where dividends are declared before the death of the testator or the tenant for life, or where rent payable in advance has accrued due before the event on which apportionment would otherwise arise.126 [page 428] Apparently this would be the case also if the income or dividend was for a period ending before the testator’s death although the dividend was declared after his death.127 So, too, where capital is invested in the purchase of shares on which, at the time of purchase, a dividend has been declared but not paid, the dividend is not apportioned but belongs to capital.128 In Re White,129 a testator who was a shareholder in a private company left a certain number of his shares to his son, but with a provision in his will that if the articles of the company should prevent the bequest taking effect he bequeathed a sum equal to the purchase money of the shares bequeathed. It was held that the Apportionment Act did not apply to the accruing dividend on the shares, as the father’s gift was not a specific gift of the shares, but merely a gift of money to buy the shares. (5) Other exceptions: It has been held that there is no apportionment of a dividend from shares where the dividend has not been declared in respect of a definite period.130 Also, where a dividend is declared to pay off arrears of dividend on cumulative preference shares, there is no apportionment of the dividend over the period covered by the arrears.131 There is no apportionment where arrears of dividend are cleared off by the issue of ordinary shares to the cumulative preference shareholders132 or by the issue of ‘funded dividend certificates’.133 Where a beneficiary is given by the will the right to purchase, there is no apportionment of accruing dividends, as the beneficiary is entitled to the same rights as any other purchaser and is entitled thus to all the fruits of his or her purchase.134

Augmentation of Capital

General Principle [19-32] As a general principle, where there is any augmentation of the trust fund as originally constituted, the augmentation accrues to the capital of the fund and belongs to the remainderman, so that the life tenant is entitled only to the income arising from the augmentation. The simplest example of this is to be found in the case where, on a change in investment, trust investments are sold at a price greater than that originally paid for them. Just as a capital loss would have to be borne by the life tenant as well as remainderman, and not by the life tenant alone, so a capital increment accrues for the benefit not only of the life tenant but also of the remainderman. This principle is a simple one in cases where the increase in the value of the investment is not attributable to the accrual of rents or dividends on the investments; but, even though the increase in price may properly be attributed to the accrual between dividend days of dividends upon the investment, there is not, in the absence of special circumstances, any apportionment between life tenant and remainderman upon a change of investment during the continuance of a trust.135 The reason given for the rule in the cases is the expense that would be caused to [page 429] the trust estate by an investigation to make the necessary adjustments in a complicated case. The position may be made clear by the following illustration given in Scholefield v Redfern136 by Sir Richard Kindersley VC: Suppose part of the testator’s property to consist of certain American stock, bearing interest or dividends payable at half-yearly periods, say January and July, and the trustees sell it in order to invest the proceeds in consols, if they sell it at any other time than precisely the period at which a dividend has just accrued, the money realised by the sale is so much more in proportion to the time which has elapsed since the last dividend day. Therefore the amount realised by the sale is compounded partly of the value of the stock itself, and partly of the value of that proportionate part of the current halfyear’s dividend, which may be considered to have accrued since the last dividend day. It is contended that the tenant for life ought to have this latter portion as income. Now it is certain that in the multitude of cases of administration of estates in modern times, where similar directions have been given by testators, the Court has never been in the habit of administering any such equity. When we consider a little further, it is obvious that, if the tenant for life is to have something out of the sale money, as representing income, then when the trustees invest the money, unless they invest it on the very day on which the dividend has just

accrued due, the same equity ought to be administered the other way, and we ought to take from the tenant for life something of his next dividend on the consols, and add that to the capital, in order to make things equal as between him and the remainder-man. It is clear that if there is an equity one way there is an equity the other way.

In Bostock v Blakeney,137 a sale of trust stock was made a few days before the dividend became due and it was held the tenant for life could not receive the dividend. In Re Clarke,138 the rule as to no apportionment worked the other way, in favour of the tenant for life. A testator bequeathed a sum of money to his trustees with interest at 4.5%, this sum to be invested and the income paid to his wife for life with remainder over. Investment was duly made in authorised securities on which, as it happened, five months’ dividends had accrued. Interest at 4.5% had been paid to the wife up to the date of the purchase. It was held that there was no apportionment of the dividends from the authorised securities purchased, the tenant for life taking the whole dividend when it was paid.

Departures from General Principle [19-33] The rule has been departed from in some cases where there have been special circumstances, for example in Londesborough v Somerville139 and in Bulkeley v Stephens.140 In Londesborough v Somerville,141 half a million consols were sold cum dividend about a month before dividend day. The trustees had entered into a contract for the purchase of land, the purchase to be completed immediately after dividend day. The consols were sold at the earlier date because the bank’s transfer books were closed at the time fixed for completion of the purchase of land. Under the circumstances it was held that the tenant for life should receive the difference between the proceeds of sale and the price of the consols ex dividend, as the date of sale had been advanced purely for the convenience of the administration of the estate. In Bulkeley v Stephens,142 the sale was by order of the court for the purposes of distribution of the estate. Certain stock was sold ‘cum div’ on 29 January 1895. An interim dividend up to 31 December 1894 was declared in June 1895. The tenant for life had died on 2 September 1894. There was no question as to the right of her personal representatives to an apportioned part of the interim

dividend. The question was whether they were entitled to an apportioned part of [page 430] the final dividend, to be taken out of the proceeds of the sale in January. The purchaser had bought cum div and therefore the proceeds of sale were really composed of the value of the stock ex dividend plus the final dividend. The representatives of the tenant for life claimed that they were entitled to have the amount of the final dividend apportioned and the part accrued before 2 September 1894 paid to them out of the proceeds of the sale of the stock. It was held that the general rule was applicable even though the sale was made at the death of the tenant for life for purposes of distribution, but that in the special circumstances of the case the representatives of the tenant for life would be allowed an apportioned part of the dividend out of the proceeds of the sale. The special circumstances were found in the fact that the stock was directed to be transferred in specie to the class of remaindermen and that the sale was only for convenience of distribution and was not strictly in accordance with the terms of the trust. The personal representatives of the life tenant would have been entitled to an apportionment under the statute in respect of income up to the death of the life tenant if the trust had been strictly carried out and therefore it was directed that a similar apportionment should be made in respect of the proceeds of sale.143 In Re Winterstroke’s Will Trusts,144 trustees sold securities cum dividend after the death of the tenant for life. The trustees were directed to apportion the sum which represented the accrued dividend between the personal representatives of the deceased tenant for life and the remaindermen, Clauson J remarking that there would be no difficulty in ascertaining the amount payable. There were no special circumstances apart from the fact that the amount involved was large. Almost immediately afterwards, however, Farwell J, in Re Firth’s Estate,145 refused direct apportionment, stating that in his opinion nothing had altered the practice which had obtained for many years.

The Authorities Considered

[19-34] The last three cases and a number of the earlier cases were considered by Nicholas CJ in Eq in Re Hood146 and by Morton J in Re Henderson.147 In Re Hood,148 shares were sold by trustees on the death of the life tenant and other shares were transferred to the remaindermen in specie under a power of appropriation in the will. Dividends on certain of the shares were subsequently declared in respect of periods complete at the date of the life tenant’s death and on other shares in respect of the period current at the date of death. In respect of the former dividends it was held that they belonged wholly to the estate of the life tenant. It was further held that there should be no apportionment of dividends in respect of the period current at the date of death where the shares were sold prior to the declaration of the dividend, but where the shares were transferred in specie there should be an apportionment. It was on this ground that the estate of the life tenant was held entitled to the dividends declared in respect of the periods complete at the death of the life tenant. The question was further considered by Harman J in Re Maclaren’s Settlement Trusts,149 where it was stated that the rule of no apportionment on sale of shares cum dividend is based on convenience. The result may be that capital sometimes gets what on a more exact scrutiny would be income or vice versa. The convenience arises from the great difficulty of estimation and calculation to which an attempt to apportion could in many cases give rise. However, it was held by Harman J that where the non-apportionment produces a glaring injustice, it is open to the court to cause a more exact calculation to be made. [page 431] The exceptions to the general rule (which are referred to above) are thus treated as the exercise by the courts of a right to make a more exact distinction of income from capital.

Legislation [19-35] The injustice which could be caused to a tenant for life or remainderman by a strict adherence to the foregoing rules has now been remedied by statute in New South Wales, the Australian Capital Territory,

Victoria and Western Australia.150 In New South Wales, the legislation requires a trustee on the sale or purchase of ‘debentures or inscribed stock’ to make an apportionment between capital and income. The Victorian and Western Australian provisions deal with ‘securities’, which term is defined. In all these states (except Victoria whose section is silent on the matter) the statute may be ousted by the presence of a contrary intention. The scheme of the legislation appears from s 24 of the New South Wales Act, which is in the following terms: 24. (1) Where any payment received by a trustee in respect of a sale of debentures or inscribed stock bearing interest at a fixed rate shall be or include payment for the right to receive any interest accrued from the debentures or stock at the time of the sale, though the interest may not then be due, the amount of the accrued interest shall for the purposes of the trust be deemed to have been received as interest in respect of the period during which the interest so accrued. (2) Where any payment made by a trustee in respect of a purchase of any debentures or inscribed stock bearing interest at a fixed rate shall be or include payment for the right to receive any interest accrued from the debentures or stock at the time of the purchase, though the interest may not then be due, the amount of the accrued interest when received shall for the purposes of the trust be deemed to have been received as purchase money repaid…. (4) Anything done by a trustee before the commencement of this Act which would have been authorised by this section if then in force shall be deemed to have been and is hereby authorised by this Act. (5) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained….

Bonus Dividends Pre-1930 position [19-36] Where a company declares a bonus dividend out of accumulated profits and at the same time issues new shares with a proviso that shareholders may allow the dividend to go as payment either wholly or in part for the new shares, it is difficult in some cases to decide whether the new shares given in payment of the bonus dividends are capital or income. The general principle is stated in Bouch v Sproule:151 When a testator or settlor directs or permits the subject of his disposition to remain as shares or stocks in a company which has the power either of distributing its profits as dividend or of converting them into capital, and the company validly exercises this power, such exercise of its power is binding on all persons interested under the testator or settlor in the shares, and consequently what is paid by the company as dividend goes to the tenant for life, and what is paid by the company to the shareholder as capital, or appropriated as an increase of the capital stock in the concern, enures to the benefit of all who are interested in the capital.

In Bouch v Sproule, the directors proposed to distribute certain accumulated profits (temporarily capitalised) as a bonus dividend, to allot new shares, partly paid, to each shareholder in proportion to his holding, and to apply the bonus dividends in part payment of the new shares. The proposals of the directors were sanctioned by special resolution authorising [page 432] them to carry out the scheme. The House of Lords came to the conclusion on the facts of the case that the company did not pay, or intend to pay, any sum as dividend, but intended to and did appropriate the undivided profits dealt with as an increase of the capital stock of the concern. The substance of the whole transaction was and was intended to be to convert the undivided profits into paid-up capital upon newly created shares. As was said by Lord Watson: ‘The substantial bonus which was meant to be given to each shareholder was not a money payment but a proportional share of the increase capital of the company.’ After Bouch v Sproule and until the decision of the Privy Council in Hill v Permanent Trustee Co of NSW Ltd152 it was commonly conceived that the statement of intention of a company when making a distribution was in all cases the governing factor. Thus, where a company made a distribution of cash out of its accumulated profits equal in amount to the amount paid up on its shares, and described the payment as a ‘distribution of assets’, it was held that the cash so received by a trustee was capital and not income.153 In order to discover such intention of a company it was not uncommon to receive evidence in the form of directors’ reports or speeches by company chairpersons.154

Post-1930 position [19-37] However, the decision in Hill v Permanent Trustee Co of NSW Ltd established that a company cannot determine the destination of distributed profits as between life tenant and remainderman except by the manner in which it treats those profits. If the profits are turned directly into a permanent addition to the capital structure of the company, they will become capital in the hands of a trustee, but, if they are in fact distributed by the company, they will be income no matter how the distribution is described by the company.

The principles were thus stated by Lord Russell of Killowen in Hill’s case:155 (1) A limited company when it parts with moneys available for distribution among its shareholders is not concerned with the fate of those moneys in the hands of any shareholder. The company does not know and does not care whether a shareholder is a trustee of the shares or not. It is of no concern to a company which is parting with moneys to a shareholder whether that shareholder (if a trustee) will hold them as trustee for A absolutely or as trustee for A for life only. (2) A limited company not in liquidation can make no payment by way of return of capital to its shareholders except as a step in an authorised reduction of capital. Any other payment made by it by means of which it parts with moneys to its shareholders must and can only be made by way of dividing profits. Whether the payment is called ‘dividend’ or ‘bonus’, or any other name, it still must remain a payment on division of profits. (3) Moneys so paid to a shareholder will (if he be a trustee) prima facie belong to the person beneficially entitled to the income of the trust estate. If such moneys or any part thereof are to be treated as part of the corpus of the trust estate there must be some provision in the trust deed which brings about that result. No statement by the company or its officers that moneys which are being paid away to shareholders out of profits are capital, or are to be treated as capital, can have any effect upon the rights of the beneficiaries under a trust instrument which comprises shares in the company. (4) Other considerations arise when a limited company with power to increase its capital and possessing a fund of undivided profits, so deals with it that no part of it leaves the possession of the company, but the whole is applied in paying up new shares which are issued and allotted proportionately to the shareholders, who would have been entitled to receive the fund had it been, in fact, divided and paid away as dividend.

[page 433] (5) The result of such a dealing is obviously wholly different from the result of paying away the profits to the shareholders. In the latter case the amount of cash distributed disappears on both sides of the company’s balance sheet. It is lost to the company. The fund of undistributed profits which has been divided ceases to figure among the company’s liabilities; the cash necessary to provide the dividend is raised and paid away, the company’s assets being reduced by that amount. In the former case the assets of the company remain undiminished, but on the liabilities side of the balance sheet (although the total remains unchanged) the item representing undivided profits disappears, its place being taken by a corresponding increase of liability in respect of issued share capital. In other words, moneys which had been capable of division by the company as profits among its shareholders have ceased for all time to be so divisible, and can never be paid to the shareholders except upon a reduction of capital or in a winding up. The fully paid shares representing them and received by the trustees are therefore received by them as corpus and not as income.

But where the resolution as to the bonus dividends is not connected in any way with the issue of the new shares, so that the two operations are practically distinct, then the dividend is income to which the tenant for life is entitled and

if the trustees take up the shares, there will be a charge on the shares in favour of the life tenant for the amount of the dividend.

Cash or specie/shares or debentures [19-38] A distinction must thus be made between the case where a company grants the bonus in cash or in specie156 and where the bonus takes the form of a new issue of shares or debentures. In the former case, no matter how the bonus is described by the company, it belongs to the life tenant157 unless the terms of the trust instrument require it to be treated as capital. In the latter case, as the transaction effects an increase of the company’s capital, and the amount involved ceases thereafter to be available for distribution by way of dividend (except by way of reduction of capital or on winding-up), any fully paid-up shares allotted become part of the capital of the estate.158 Re Malam159 was a case where a dividend was declared, and half of it paid in cash. In respect of the balance, an allotment of new shares was offered to the shareholders, but those who did not accept the offer received payment in cash. Trustees who held shares agreed to take the new shares and they were allotted to the tenant for life. The court held that the company intended to distribute the profits as dividend and not to capitalise them. The tenant for life was held entitled only to so much of the value of the new shares as represented dividend, the balance belonging to capital.160 [page 434]

Dividend set off against price [19-39] Where there is no option to take the bonus in cash instead of shares, it would appear that this is still to be regarded as a positive indication that the company intended an addition to its capital structure.161 This occurs most commonly when the amount of the dividend is to be set off against the price of the shares.162 In Re Whitehead’s Will Trusts,163 the court had to determine the question whether sums of money included in periodical distributions from time to time received by trustees of a will in respect of sub-units in fixed investment trusts for

the time being comprised in the residuary estate which sums were described as capital in the counterfoils attached to the relevant warrants for payment, ought to be treated by the trustees as capital or as income or ought to be apportioned between capital and income. Harman LJ, in giving the judgment of the court, said:164 [I]t seems to me that the managers are not concerned, except from the fiscal point of view, with the character in which the sub-unit holders receive the cash produce twice yearly and have no intention of dictating to them, even if they could do so, whether, from any other point of view, the distribution be capital or income. Similar reasons appear to me to negative the argument that the decision of the trust to call some part of the yield capital impresses that part with a capital nature…. The will trustees must, in my judgment, notwithstanding the provisions of the trust deeds, which do not affect anything beyond the absolute rights of the registered holders, inquire in any case of doubt into the source of each distribution which is labelled a capital distribution and treat it as income or capital just as if they were the direct holders of the shares included in the portfolio.

Distributions on winding-up [19-40] The principles applicable to the case of a distribution of profits by a company as a going concern do not apply to distributions made on the windingup of a company. The excess (if any) of assets over the face value of issued capital of the company is received by a trustee as capital and not income. Re Armitage165 was a case where a company was wound up and reconstructed some years after the testator’s death. The shareholders in the old company received a higher price for their shares than was paid up on them, the excess arising from profits retained to meet contingencies and to equalise dividends. It was held that the excess of the enhanced value of the shares was capital and not receivable by the tenant for life. ‘What does a man mean when he leaves shares to a tenant for life? He means that the tenant for life … shall have the income arising from the shares in the shape of dividends or bonuses declared during the lifetime of the tenant for life. He does not mean him to have such profits, for example, as arise by a realisation of shares; he never dreamed of such profits going to the tenant for life.’166 The rule that all actual distributions of profits will go to the tenant for life is subject to any contrary direction in the trust instrument. There is not a contrary direction merely because the testator or settlor directs that ‘dividends’167 or ‘dividends, bonuses and income’168 are to be paid to the tenant for life. [page 435]

Distribution of Business Profits Life Tenant/Remainderman [19-41] Where trustees carry on a business, under a power so to do in the trust instrument for the benefit of life tenant and remainderman and not merely under an express or implied power so to do for the purpose of realisation, the rights of life tenant and remainderman to income and capital respectively will depend primarily upon the terms of the trust instrument. Receipts which, in the absence of any express terms of the trust instrument, would ordinarily be treated as income may by such express terms be carried to capital account and outgoings which would ordinarily be payable out of income may thereby be made payable out of capital. However, if the trust instrument contains no such express provisions, the trustees have to determine what receipts should be treated as income and whether particular outgoings are payable out of income or out of capital. The problems with which a trustee may be faced in so carrying on a business are numerous and may be difficult. Before dealing with some of them, it is desirable to examine the rights of life tenant and remainderman respectively where a business is bequeathed to them in succession without the interposition of trustees. It has been established that in these circumstances the life tenant cannot regard the stock of the business as an absolute gift capable of being used up in carrying on the business. While ordinarily a gift of consumable chattels for life gives to the donee an absolute interest,169 a distinction is drawn where such chattels are part of the stock of a business.170 In the latter case, it is the duty of the life tenant to maintain the stock in the quantity received and after the life tenant’s death the executor must hand over or account for the value of stock to the same quantity as that received. However, if at the death of the life tenant there is on hand in the business stock of a greater quantity, the surplus does not pass with the business to the remainderman, but is part of the estate of the life tenant.171

Trustees Empowered to Manage Business Principle

[19-42] The position is not the same where the trustees are empowered to manage the business and to pay the income or the profits to the life tenant. In that case, subject to any directions in the trust instrument, the trustee should carry on the business in a prudent manner and should pay to the life tenant the net profits thereof in the amount which may properly be distributed in accordance with such principles of management. But the life tenant is only entitled to profits so distributable in cash. The life tenant is not entitled from day to day or over any other period to be credited with the excess of the net assets of the business over the net assets existing at the commencement of the life tenancy. In other words, whereas a life tenant of a business, who has power to manage it, is entitled to any excess over the assets committed in the business at the commencement of the life tenancy and on death the surplus (if any) goes to the life tenant’s estate, the life tenant of the income of a business managed by trustees is entitled only to receive profits distributable in cash and is not entitled to the book profit which the business may be showing. If the life tenant dies after a book profit has been earned but before it is distributed, the life tenant’s estate is not entitled to receive any part of that profit [page 436] when the time comes for its distribution in cash. Even though it is in fact all earned during the lifetime of the life tenant, it will in such circumstances go to the remainderman.172

Authorities [19-43] In Re Cox’s Trusts,173 a newspaper business was left by will to trustees to continue the business at their discretion and to pay one-fourth of the net profits to X for life and after his death to his widow for life. The mode of ascertaining the profits was left absolutely to the discretion of the trustees, subject to their drawing up a balance sheet every January showing the net profits for the year ending on the immediately preceding 31 December. The trustees resolved to pay the net profits half-yearly up to 30 June and 31 December in each year. X died on 23 December 1877, and his widow claimed the one-fourth of the profits that would have accrued due to him on 31 December 1877, and it was held she was entitled to this. Here the question was between the life tenant

in remainder and the personal representatives of the previous life tenant. In Straker v Wilson,174 the question was between the executor of the tenant for life and the remaindermen. The testator gave his wife a life interest in his oneseventh of a colliery of which he was a partner. The partnership deed provided that the majority in value of the partners could dispose of the profits by dividing them between the partners or carrying them to the separate accounts of the partners. Profits of several years were retained to the credit of a profit and loss account. At the death of the widow a large sum was so retained and had mostly been used in the works of the colliery. It was held that the share in the sum standing to credit of the profit and loss account belonged to the remaindermen and not to the executors of the life tenant. However, where partners have sold the business without estimating the accrued profits, a tenant for life of a share in the business is entitled to a share in profits even if they have not been declared,175 and where the profits are those accrued during the life of the testator and the partnership determines at the testator’s death so that accounts have then to be taken, the profits so accrued to the death of the testator are part of corpus and are not distributable to the life tenant as income.176 While the partnership business is a going concern, the trustees of a settled share therein ought not to bring into the income account of the trust any sum standing to the debit or credit of the partnership profit and loss account until it is ascertained whether such sum has been treated by the partners as an amount presently payable by, or as income presently distributable among, the partners in the partnership.177

Effect of life tenant’s death [19-44] Once trustees have, in carrying on a business, carried a profit to the income account of a life tenant, the life tenant’s estate will be entitled to receive it even if the life tenant dies before it is actually distributed.178 Thus, in Kelly v Perpetual Trustee Co Ltd,179 a tin smelting business was carried on by trustees, pursuant to the will of the testator. Surplus tin, representing profits otherwise distributable to life tenants, was set aside and accumulated over many years. The business was eventually sold, including the accumulated stocks of surplus tin and it was held that the sales of the stock of [page 437]

surplus tin as part of the realisation of the assets of the business could not give the proceeds the character of capital and they therefore belonged to the life tenants as profits. [A]n item of profit does not lose its character merely because it is sold otherwise than in the course of a business. Furthermore, in a particular case it may be an important circumstance whether the closing sale is a sale of the business or merely of specified assets of a business, as was the case here…. [The trustees could] have resorted to the stocks of surplus tin for the purpose of carrying on business. Had this happened the proceeds would have been carried to revenue account and would have been reflected in what the life tenants received. When, however, at the end of the road it is found that there is tin on hand which was put by year after year out of current production after all revenue expenses have been met for no purpose connected with the conduct of the business and the accumulated stocks are not required to meet liabilities at the close of business, then as between life tenant and remainderman that tin belongs in equity to the life tenant as profits, so that its sale as part of the realization of the assets of the business cannot give the proceeds the character of capital.180

Losses [19-45] If, instead of profits, losses are incurred, then the losses in one year must, in the absence of any contrary direction in the trust instrument, be made up out of profits of subsequent years and not out of capital.181 There can be no profits properly distributable in cash until all past losses are paid. But if the life tenant dies at a time when the business is showing a loss, the life tenant’s estate is not liable for that loss any more than it would be entitled to an accrued profit.

Changes in stock [19-46] It follows from these principles that it is not material that the stock of the business is from time to time, or at the time of the life tenant’s death, greater or less than that existing at the commencement of the life tenancy. The trustees, in their prudent management of the business, may have increased the stock and may have expended for that purpose money which might otherwise have been distributed as profit. In that way there may be a book profit. However, the life tenant cannot claim it. Nor can the life tenant object to the expenditure of the money in that way by the trustees unless their action cannot be justified as a prudent management of the business, but can only be regarded as an undue preference of the remainderman to the life tenant.182 If their action can be proved to be in the latter category, it is a breach of their duty to hold the scales evenly between life tenant and remainderman and they are accountable.

The accounts may then be adjusted and the life tenant or the life tenant’s estate may be compensated on the adjustment of accounts. However, if the business is badly understocked at the commencement of the trust and it is necessary that it be stocked up at the outset, the necessary stock should be purchased out of capital, because the stock is then a capital increment and is purchased not in the course of prudent management, but before the business can be properly conducted at all.183 Conversely, if trustees sell the business during the continuance of the life tenancy under a power or trust so to do, any profit from the sale of the stock on the sale or winding-up of the business is treated as capital because such profit is not earned in conducting the business, but is a capital increment on its sale.184 [page 438]

Station Properties General principles [19-47] There is some uncertainty in the application of the principles previously stated to the business of a station property committed to the management of trustees for life tenant and remainderman. Such businesses involve special considerations, with profits arising not only from buying and selling but also from natural increment, and trustees having to cope with unexpected privations of drought, fire and flood. In the decided cases, particular attention has been given both to the propriety of the use by trustees of profits to buy further stock and of their retention of natural increment, to the detriment of life tenants, and also to the proper accounting method for the determination of the entitlement of life tenants. The decisions of and observations by the Supreme Court of New South Wales in Re Walker,185 Re Weir,186 McIntyre v McIntyre,187 Littlejohn v Davies188 and Porter v Porter189 appear to support the following propositions: (1) Beneficiaries must take the business as found at the death of the testator, whether understocked or overstocked, with the consequence that an increase of stock at that stage must be procured at the expense of capital. (2) The trustees may increase stock from time to time if carrying capacity and

seasonal expectations or price of stock renders this prudent, the provision being made out of income; as a corollary, if the trustees, for good reason, reduce stock, the proceeds should be treated as capital. (3) In computing income payable to the life tenant the trustees should treat each year on its own basis. (4) The life tenant is entitled only to what in the course of prudent management is properly distributable in cash. (5) The life tenant cannot require of the trustees an accounting system which gives an interest in differences between stock in hand at either end of the accounting period, in contradistinction to distributable cash. (6) Nevertheless, surplus stock, beyond the numbers the property will carry under ordinary prudent management, ought to be sold for the life tenant as soon as prudence permits. (7) Each of these rules will yield to contrary provisions in the trust instrument.

Some authorities [19-48] In McIntyre v McIntyre,190 the trustees had increased stock by purchase and retention of the natural increase. They had sold one station in 1912 and Rich J had declared that they had absolute discretion to decide what proportion of the proceeds was distributable to the life tenant as income. Two further properties had been sold and the matter came back before Harvey J. His Honour came to the same conclusion as Rich J whose decision he interpreted as meaning that the will contained special provisions sufficient to overcome the general principle that any increase in stock should be procured out of capital. Hence the life tenant had no interest in the proceeds of sale of such augmented stock. In Porter v Porter,191 the trustees had in some six years increased the sheep from 1040 to 3006, cattle from 111 to 181 and horses from two to eight. There was no suggestion of understocking at the death of the testator and no allegation of displacement of general rules by specific [page 439]

provision in the will. The life tenant had been paid cash representing sales less purchases and sought a declaration that regard should also have been paid to the differences between stock on hand at the beginning and end of each period. Street CJ, Harvey CJ in Eq and Long Innes J refused the declaration, asserting the interest of the life tenant in cash profit only, save where the trustees had failed to sell surplus stock as soon as possible and prudent. There was no evidence before them to sustain such an allegation.

High Court approach [19-49] The New South Wales decisions and the principles deduced from them were followed,192 but fell for critical examination by the High Court in McBride v Hudson,193 an appeal from South Australia. The leading judgment was given by Taylor J. In ascertaining the distributable profits of the business during each accounting period the trustees had taken into account (in the livestock trading account) the stock in hand at the beginning and end of the year. Thus the credit side of the livestock trading account in each year contained an element of unrealised gross profit. The High Court approved this procedure, although it was contrary to principles which had been accepted as supported by the earlier cases. In particular, Taylor J found himself:194 … unable to subscribe to the proposition that a livestock trading account constructed only by a comparison of the amounts expended in the purchase of livestock during the same period, can, with any reality, reflect the profit or loss in the activity with which the account is concerned. Is it possible to say that a loss has been incurred if all we know is that in a particular year one thousand sheep have been purchased at £1 per head and five hundred sheep, being either some of those purchased or others, have been sold at £1/10/- per head? Or can it be said that a profit has resulted if all we know is that one thousand pounds have been expended in the purchase of sheep and one thousand and five hundred pounds realised by the sale of natural increase? And, in such a case, is the answer to remain unaffected if we are allowed to know that during the course of the year five hundred sheep valued at £1 per head have died?

It followed that the ascertainment of the rights of a life tenant was not permitted by reference to a cash basis, as might have been thought to be established by the earlier cases. In Porter v Porter,195 reliance had been placed upon statements in McIntyre v McIntyre196 but, as Taylor J pointed out in McBride v Hudson,197 there was no precise information in the report of the earlier case as to the manner in which the accounts had been made up. What then was a correct accounting basis? The High Court stated that no exception could be taken if the trustees adopted ‘an amount of profit to which a life tenant becomes entitled during any accounting period. The testator, as a person

conversant with the manner in which pastoral businesses are generally carried on, must be taken to have intended the profits of the business after his death to be ascertained by a process of accounting conventional and appropriate in that type of business’.198 The method adopted in the present case satisfied that criterion, while that espoused in the earlier cases presumably did not. The impact of McBride v Hudson upon the principles previously referred to as supported by the earlier cases remains a matter for speculation. Certainly, propositions (4) and (5) were disapproved; the High Court also confirmed that any general principles would yield to the terms of the trust instrument. But it is not clear what credit is to be given to propositions (1) and (2), concerned with the building up [page 440] of stock, and it may be doubted that surplus stock should, as directed by proposition (6), always be sold when first both prudent and possible rather than retained as augmentation to corpus.

Books of Account [19-50] It is to be noted that nowhere in the statement of these principles had any mention been made of the value at which stock should be kept in the trustee’s books of account, and the reason is that the value of stock, whether it be value at the commencement of the trust, or market value from year to year, is, as such, irrelevant. Trustees in general should maintain the amount and quality of stock, but not its value.199 That being so, it would not be correct to increase or decrease values each year on a valuation and to regard the rise and fall of values as profit or loss. However, it has been stated that, in application of this principle, the value of stock in the books of a deceased’s estate should be kept the same as the capital value at which they were estimated for probate.200 As regards the entitlement of the life tenant, it does not matter if this course is adopted, because the book entries do not govern the life tenant’s entitlement. However, it does not appear that there is any requirement that a trustee should bring freshly purchased stock into the books at probate values.

Business Carried on Temporarily until it can be Sold Profitably [19-51] Where a business is not carried on under a direction so to do in the trust instrument, but is merely carried on until it can be sold profitably, the tenant for life is not, in the absence of any provision in the trust instrument to the contrary, entitled to the profits as such. The annual loss or profit should be apportioned in the manner laid down in Re Hengler.201 In Re Hengler, part of the settled residue consisted of a lease of a circus in London which the trustees had been compelled to retain because it could not be advantageously sold. The rent and outgoings greatly exceeded the income. It was held that, as it would not be for the benefit of the estate to sacrifice the property, the losses until realisation must be apportioned between capital and income on the principle applied in Re Chesterfield’s (Earl) Trusts.202 An inquiry was directed by the court: … what sum put out at interest at 4 per centum per annum on 1 March 1892, and, as regards such succeeding years, accumulating at compound interest calculated at the like rate with yearly rests, would, together with such interest and accumulations, after deducting income tax, have been equivalent on such last day of February to the amount of such profit or loss; And this Court doth declare that the sum ascertained by the last foregoing inquiry ought to be credited to or charged against the capital of the testator’s estates and that the rest of such profit or loss ought to be credited to or charged against the income thereof.203

Where the trust instrument directs sale, but provides that pending conversion the income shall be treated as if it were the income of the proceeds of conversion, the principles earlier stated will apply and not those stated in Re Hengler. However, in such a case, where sale is only postponed in order to enable a profitable sale to be made, the whole period during which the business is carried on must be regarded as one period and the tenant for life is only entitled to the profit remaining after all losses have been deducted.204 [page 441]

Apportionment of Outgoings and Losses Introduction [19-52] As in all questions regarding the apportionment of moneys between

capital and income, so also in relation to outgoings and losses questions arising between life tenant and remainderman are governed primarily by the provisions of the trust instrument. But in the absence of specific provisions in the trust instrument, the apportionment of outgoings and losses is governed by certain principles designed to throw the burden upon the interest of life tenant or remainderman in accordance with a determination whether the loss or outgoing is of a revenue or capital nature.

Charges and Encumbrances [19-53] Thus a capital charge or encumbrance upon the trust property must be borne by corpus; the interest thereon is payable out of income.205 It follows that, if the charge or encumbrance is paid off, the corpus will be reduced and the life tenant will be entitled only to the income of the corpus so reduced.206 Arrears of interest are payable out of subsequent income when it is received.207 However, if the arrears of interest have accrued prior to the commencement of the trust, they are payable out of corpus.208

Costs of Administration and Protection of the Trust Property [19-54] These costs are, in the absence of any provision to the contrary, payable out of corpus since they benefit both life tenant and remainderman. The costs of taking out probate or letters of administration, of the appointment of new trustees, of general or limited administration by the court, of obtaining legal advice or the direction of the court, and of investment or change of investment of trust funds are all payable out of corpus.209 The contribution of the life tenant in such cases is the forgoing of the income from the corpus thus expended. So also, if a trustee engages in litigation for the benefit of the trust generally, whether as plaintiff or defendant, any costs or damages awarded against the trustee will be charged against corpus.210

Capital Improvements

[19-55] The cost of capital improvements, as distinct from current annual charges and current repairs, should be borne by corpus.211 A trustee may, by the terms of the trust instrument or by virtue of provisions in the trustee legislation,212 have power to make improvements out of capital or income, or to determine the proportion in which the cost of improvements should be borne between capital and income, but the trustee must, in exercising that power, exercise also a fair discretion and, if the improvement is of a permanent capital nature, should throw the cost of the improvement on to corpus alone213 or, if it is of the nature of a current repair, [page 442] should provide for its cost out of income.214 Thus the cost of erecting a house upon vacant land215 would be a capital outgoing, and so also the cost of stocking up a grazing property where it was seriously understocked at the commencement of the trust.216 Other examples are the cost of fencing unfenced land217 or the payment of calls on shares.218 The cost of putting into repair property received in a dilapidated condition may be charged solely against capital.219

Current Annual Charges and Current Repairs [19-56] Annual charges, other than those to secure capital sums such as annuities not charged on income, are payable out of income alone. Thus the rent of a leasehold is to be met out of income and likewise the expenses incurred in the performance or observance of the covenants in a lease.220 So also are rates and taxes,221 insurance premiums222 and similar recurring expenses. Current repairs are ordinarily payable out of income.223 However, special provision in this behalf is made in Queensland and Western Australia. In Queensland, s 33(1) of the Trusts Act 1973 empowers trustees to expend capital in such disbursements; s 30(1) of the Western Australian Trustees Act 1962 limits this power to application for repair, maintenance and upkeep of the trust property.

Non-permanent Improvements and Abnormal Losses [19-57] So far it has been seen that ordinary losses in conducting a business or ordinary outgoings in recurring repairs are payable out of income, while permanent improvements or capital losses are payable out of corpus. There is, however, an intermediate class of outgoing or loss in which it would not be equitable to throw the whole burden of the loss or outgoing either on capital or on income. In such a case the principle which has been adopted by the court, and which should be followed by trustees when exercising powers conferred on them by statute or by the trust instrument, is that the expense should be met in the first place out of capital and that a sinking fund should be established in order to recoup capital out of income. The time over which payments out of income into the sinking fund should extend is the estimated life of the nonpermanent improvement or the estimated period before which a similar abnormal loss is unlikely to recur. Thus in Watson v Little,224 where the trust property consisted of an hotel leasehold, and the trustees, in carrying on the hotel business, had expended a large sum in alterations and renovations, it was held that these alterations and renovations were intended to be improvements of a lasting character. The court found that the cost should be borne by annual contributions ascertained by dividing the cost by the number of years which the lease had to run at the time when the expenditure was made. In the case of grazing businesses carried on by trustees, if it is necessary for them to make initial expenditure [page 443] or substantial expenditure not of an annually recurring nature, such expenditure should be met in the first instance out of capital with recoupments to capital out of income by instalments. The amount of the instalments where the land is on secure tenure should be determined by the estimated life of the improvements or the expectation of the period of recurrence of the abnormal loss. In the case of leasehold lands, the amount should be determined in the same way or by the currency of the lease, whichever is the shorter period.225 If the life tenant dies within the period over which payments to the sinking fund extend, the balance of cost then outstanding must be borne by the

remainderman.226 Conversely, if the improvements do not depreciate at the expected rate or if the abnormal loss does not recur within the time estimated, the life tenant is not entitled to be paid any part of the moneys accumulated in the sinking fund.227

Annuities [19-58] Very often, one asset of a testator’s estate is an interest in a prior estate which is itself subject to the payment of an annuity to a person who survives the testator. Alternatively, a testator’s estate may be burdened with the liability to pay an annuity to some person who survives the testator because the testator has entered into a covenant to pay such an annuity. In either event, if the testator’s estate is limited to different persons in succession, difficult questions can arise as to how the liability to pay the annuity is to be borne as between the life tenant and the remainderman in the estate. In these circumstances, if the testator was under no personal liability to pay the annuities, they are payable primarily out of income, and only out of capital to the extent to which income is insufficient.228 If, on the other hand, the testator was under a personal obligation to meet the annuities, they should be fairly apportioned between life tenant and remainderman in the testator’s estate in the absence of some express or implied direction.229 In any case, if an annuity be payable primarily out of income and secondarily out of capital, whether the annuity be created by some third party or by the testator, and in the latter event whether inter vivos during the testator’s lifetime or by will, if a deficiency has been made out of capital in any year, there is no right to recoup capital out of future income.230

Outgoings of a Trustee-mortgagee in Possession [19-59] Prior to the enactment in 1938 of s 39A of the Trustee Act 1925 (NSW) it was held,231 after some conflict of judicial authority,232 that the trustee of a mortgage held for persons in succession, if the trustee went into possession of the mortgaged property, was bound to pay the interest intact to the tenant for life and that any amounts paid by the trustee for rates, repairs or otherwise in protection of the security should be met out of capital. A trustee

[page 444] was thus placed in quite a different situation from a receiver, who would have been entitled to pay such outgoings out of income and to pay the balance only of income to the life tenant in accordance with the provisions of s 115(8) of the Conveyancing Act 1919 (NSW). After 1932, by virtue of the introduction of subs (6A) into the last-mentioned section, a trustee company could appoint itself receiver of the mortgaged property and thus avoid the difficulties of a private trustee.233 The effect of s 39A of the Trustee Act 1925 (NSW) is to assimilate the position of a trustee who goes into possession to that of a receiver so far as the application of the income from the secured property is concerned. However, it preserves the right of the life tenant to whole or partial recoupment of the income lost to the life tenant by the trustee making the payments of rates and other outgoings out of the income, for the amounts so expended are, by subs (3), to be regarded as arrears of interest. The section has been adopted in South Australia, Western Australia and Queensland.234 It provides as follows: 39A. (1) In any case in which a trustee is entitled whether severally or as a co-mortgagee to a debt secured by a mortgage of land in trust as to the whole or part of such debt for persons by way of succession, and such trustee is at the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938, or at any time after such commencement becomes mortgagee in possession of the mortgaged land, the trustee shall apply the net income of the mortgaged land received by the trustee after such commencement or after the trustee becomes mortgagee in possession, as the case may be, as follows, namely: (a) in discharge of all rents, taxes, rates and outgoings affecting the mortgaged land, (b) in payment of the premiums on any insurances properly payable under the mortgage instrument or under the Conveyancing Act 1919 and the costs of executing necessary repairs, (c) in keeping down all annual sums or other payments and the interest on all principal sums having priority to the mortgage in right whereof the trustee is in possession. Subject to the rights of the mortgagor such trustee shall hold the residue of the income so received by the trustee upon the trusts to which such mortgage debt is subject. (2) The rents, taxes, rates, outgoings, premiums, costs, annual sums, payments and interest so to be discharged, kept down and paid shall be those accruing due: (a) after the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938, where the trustee is in possession of the mortgaged land at such commencement, (b) after the date of possession by the trustee, where the entry into possession is after the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938: Provided that if at the commencement of the Conveyancing, Trustee and Probate

(Amendment) Act 1938, or on the date of possession by the trustee, as the case may be, any rents, taxes, rates, outgoings, annual sums, payments, interest or premiums mentioned in paragraphs (a), (b) or (c) of subsection (1) were or are due and unpaid, and such of those rents, taxes, rates, outgoings, annual sums, payments and premiums as are periodical payments, were payable wholly or in part in respect of any period subsequent to such commencement or to such date of possession, as the case may be, then such last-mentioned rents, taxes, rates, outgoings, annual sums, payments and premiums shall, for the purpose of this section, be considered as accruing from day to day and shall be apportionable in respect of time accordingly. (3) On the recovery of the moneys secured by the mortgage whether in whole or in part, and whether by repayment or on realisation of the security or otherwise, such part of the income applied by the trustee in the payments specified in paragraphs (a), (b) and (c) of subsection (1) as would otherwise have been payable as interest to the person entitled to the interest of the mortgage debt shall as between the persons respectively entitled to the income and corpus of the mortgage debt be deemed to be arrears of interest and the amount received by the trustee shall be apportioned accordingly. (4) Notwithstanding anything in this section contained, the trustee may, if in the administration of the trust the trustee deems it necessary so to do, apply income of the mortgaged property

[page 445] received by the trustee after the commencement of the Conveyancing, Trustee and Probate (Amendment) Act 1938 in payment of any rents, taxes, rates, outgoings, premiums, costs, annual sums, payments and interest affecting the mortgaged land other than those specified in subsection (2) but the person entitled to the interest on the mortgage debt shall be entitled to recoupment out of the capital of the mortgage debt of all payments made by the trustee under the authority conferred by this subsection.

Loss on Realisation of Insufficient Security [19-60] Until the decision of the English Court of Appeal in Re Atkinson235 there was some conflict of judicial authority on the method of apportionment between life tenant and remainderman of the proceeds of realisation of an insufficient security where interest is in arrears. It was agreed that the sum realised should be divided in some proportion so that the life tenant would receive a portion of the arrears of interest, and the remainderman a portion of the original capital value. It was on the working out of these respective portions that the conflict occurred. In Re Foster,236 it was held that the proportion should be found by taking into account the whole of the income which should have been received by the life tenant from the beginning of the life tenancy or of the security, as the case might be. Thus, if the original capital was $10,000

and the total income received by the life tenant was $2000 with the arrears of interest $1000, and the security realised $6500, the latter sum would be divisible between capital and income in the proportion that $10,000 bore to $3000. That is to say, the life tenant would receive $1500 and the remainderman would receive $5000. When the life tenant gave credit for income actually received, it would result in the life tenant having been overpaid $500.237 This anomalous result caused the principle applied in Re Foster238 to be viewed with disfavour and in Re Alston239 Kekewich J held that the proportion should be that between the actual arrears of interest and the original capital sum, without bringing into account the interest actually received by the life tenant. Applying this rule in the example given above, the life tenant would receive $590.91 against arrears in interest and the remainderman would receive $5909.09. In this way, the actual loss would be borne proportionately by both life tenant and remainderman. This principle was accepted by the English Court of Appeal in Re Atkinson,240 which followed Re Alston and overruled Re Foster. The result therefore is that the amount realised is simply divided between the respective beneficiaries in proportion to the amounts due to them. The same principle was applied in Victoria241 prior to the decision in Re Atkinson242 and has since that decision been consistently applied in the Australian courts.243 [19-61] Where the trustee-mortgagee has foreclosed the mortgage and thereafter sells, the question arises whether the tenant for life is entitled to the actual income of the property, whether it be greater or less than the interest on the mortgage, during the period between foreclosure and sale, or whether the tenant for life is entitled to be credited with an amount equal to the interest which would have been payable, even though not paid, under the mortgage. It has been established that the tenant for life is entitled to the actual income, whether it be more or less than would have been payable as interest on the mortgage, and that during the [page 446] period between foreclosure and sale the tenant for life is not entitled to be recouped for any deficiency.244 The apportionment should thus be made as from the date when the character of the investment was changed, whether it be by foreclosure or sale.245 The rule only applies when the insufficient security has

been realised. Until then, the tenant for life is entitled to keep all the interest actually paid, or which is in hand ready to be paid.246 Where moneys have been expended out of capital by the trustee-mortgagee in order to protect the security, such amounts should be added to the amount of the mortgage and treated as capital in order to calculate the proportion between capital and income in accordance with the rule.247 [19-62] The sum realised is apportionable even though the testator has provided that no property not actually producing income should be treated as producing income or as entitling any person to the receipt of income. In Re Hubbuck,248 and Re Lewis,249 a clause had been inserted in the will that no property ‘not actually producing income which shall form part of my estate shall under the doctrine of constructive conversion or otherwise be treated as producing income or as entitling any party to the receipt of income’. The words in italics were omitted in the former case but otherwise the provisions were the same. In both cases there was a mortgage debt due to the estate. In the first case, the trustees took a third mortgage of life assurance policies on the debtor’s life as security, a security which was realised by the trustees when the debtor died. The proceeds were not sufficient to pay the principal, not to speak of the arrears of interest. The debt was nevertheless treated as producing income and the proceeds apportioned. In the second case, in Re Lewis, the mortgage debt with arrears of interest was not payable until the death of the mortgagor and was then to be capitalised and interest was to be payable on the whole amount at stated times. The testator died in 1901, the mortgagor died in 1906, and the life tenant died subsequently to the mortgagor. The question was whether the interest, which was by the deed expressly made payable, with the principal, only upon the death of the mortgagor, was income actually produced and payable to the life tenant, or whether the principal and interest up to the death of the mortgagor should be regarded as one capital sum. It was held that the interest was income and, as such, payable to the life tenant. Interest is regarded as accruing from day to day. ‘Applying that principle to the present case, although the interest was not payable until, and could not have been sued for before 2 January 1906, it was accruing from day to day, and then, when it was paid, the security, in respect of which it was paid, had produced income which has been accruing from 13 January 1906, and as such the income was payable to the tenant for life.’250

[19-63] The position is somewhat different where there is a breach of trust. In Re Bird,251 a trustee sold out £10,000 invested in consols and invested it on an equitable mortgage on his own property at 4%, thus returning the income of £400 a year which was regularly paid to the tenant for life till about nine months after the trustee’s death. Shortly afterwards, the breach of trust was discovered and action taken by the remainderman. The security was realised and there was considerable loss, the estate of the trustee being worth little. The amount actually realised was upwards of £6000 instead of the £10,000 originally invested. The tenant for life had received altogether eight years’ interest at £400 a year, making £3400, and further [page 447] payments of £666 before her death, the total received as income being £4066. The problem was the apportionment of the £6000-odd between the life tenant and the remainderman. In the first place, a calculation was made of the income that would have been received by the life tenant if the trustee had not committed the breach of trust, that is, if the £10,000 had remained invested in consols. Then an inquiry was made as to the value of the consols if they had been sold at the death of the tenant for life. These two sums would give the amounts the respective parties would have received if there had been no breach of trust. The total sum made up of the income actually received by the tenant for life and the proceeds of realisation was directed to be divided in the proportion of the two sums ascertained in the manner described. If the tenant for life had received more than the proportion so ascertained, she or her executor could not be ordered to make a refund, as she was not responsible for nor cognisant of the breach of trust. If she had received less than the proportion so ascertained, then the surplus could be paid out to the funds available. _____________________________ 1.

For another example, see Re Zimpel [1963] WAR 171.

2. 3.

See [18-35]. Administration and Probate Act 1929 (ACT) s 41D; Probate and Administration Act 1898 (NSW) s 46D; Administration and Probate Act 1969 (NT) s 58; Trusts Act 1973 (Qld) s 78; Trustee Act 1958 (Vic) s 74; Trustees Act 1962 (WA) s 104; Princess Anne of Hesse v Field [1963] NSWR 998; (1962) 80 WN (NSW) 66.

4.

Allhusen v Whittell (1867) LR 4 Eq 295; [1861–73] All ER Rep 149; Re Hayward [1934] SASR 364; Re Gellibrand’s Will (1938) 34 Tas LR 1; Hassell v Perpetual Executors Trustees & Agency Co (WA) Ltd & Ball (1952) 86 CLR 513; [1953] ALR 77.

5. 6.

(1802) 7 Ves 137; 32 ER 56. (1802) 7 Ves 137; 32 ER 56.

7.

Howe v Lord Darmouth (1802) 7 Ves 137 at 148; 32 ER 56 at 60; Alcock v Sloper (1833) 2 My & K 699 at 702; 39 ER 1111 at 1113; Milne v Parker (1848) 17 LJ Ch 194 at 196; Macdonald v Irvine (1878) 8 Ch D 101 at 112. See [19-09].

8.

9. See [19-08]–[19-25]. 10. The question almost invariably arises in connection with gifts of residuary personalty, but it may arise otherwise, for example, where one general gift of the whole of a testator’s property is given to trustees upon trust for persons in succession, as in Craig v Wheeler (1860) 29 LJ Ch 374. 11. Re Beaufoy’s Estate (1852) 1 Sm & G 20; 65 ER 9. If specific settled property of a wasting nature is in fact sold, the tenant for life is entitled to receive out of the proceeds not the interest thereon only but an income equivalent to that which would have been received from the wasting property: Askew v Woodhead (1880) 14 Ch D 27; [1874–80] All ER Rep 644; Re Lingard [1908] WN 107. For the position where there is a power of sale, see Busby v Busby (1893) 14 LR (NSW) Eq 42; 4 WN (NSW) 124; Re Bell’s Settled Estates (1921) 38 WN (NSW) 188; Perkins v Permanent Trustee Co Ltd (1923) 23 SR (NSW) 358; 40 WN (NSW) 62. See [19-24]. 12. Illustrations: (1) Annuities. Howe v Lord Dartmouth (1802) 7 Ves 137; 32 ER 56; James v Gammon (1846) 15 LJ Ch 217; Morgan v Morgan (1851) 14 Beav 72; 51 ER 214; Porter v Baddeley (1877) 5 Ch D 542. (2) Furniture. Hood v Clapham (1854) 19 Beav 90; 52 ER 282. (3) Reversionary Interest. Howe v Lord Dartmouth (1802) 7 Ves 137; 32 ER 56; Johnson v Routh (1857) 27 LJ Ch 305, reversionary interest in an annuity. See also Harrington v Atherton (1864) 2 De GJ & S 352; 46 ER 411. (4) Unauthorised Securities. Dimes v Scott (1828) 4 Russ 195; 38 ER 778, share in an Indian loan paying 10%; Meyer v Simonsen (1852) 5 De G & Sm 723; 64 ER 1316, partnership property; Brown v Gellatly (1867) LR 2 Ch App 751; Wentworth v Wentworth [1900] AC 163, leasehold. See also Caldecott v Caldecott (1842) 1 Y & C Ch Cas 312; 62 ER 903; Kirkman v Booth (1848) 11 Beav 273; 50 ER 821, a business; Blann v Bell (1852) 2 De G M & G 775; 42 ER 1075, shares; Re Tindal (1933) 34 SR (NSW) 8; 50 WN (NSW) 247, partnership and chattels; Re Thomson [1927] VLR 98, grazing business. (5) Copyright. Re Evans’ Will Trusts [1921] 2 Ch 309. (6) Personal Contract. Re Jones (1929) 30 SR (NSW) 26; 46 WN (NSW) 190; Re Payne [1943] 2 All ER 675. 13. Stroud v Gwyer (1860) 28 Beav 130; 54 ER 315; Slade v Chaine [1908] 1 Ch 522. 14. Re Hoyles [1912] 1 Ch 67. 15. (1802) 7 Ves 137; 32 ER 56. 16. Alcock v Sloper (1833) 2 My & K 699 at 702; 39 ER 1111 at 1113; Hinves v Hinves (1844) 3 Hare 609 at 611; 67 ER 523 at 524; Cafe v Bent (1845) 5 Hare 24 at 35; 67 ER 812 at 817; Pickup v Atkinson (1846) 4 Hare 624 at 628; 67 ER 797 at 799; Thursby v Thursby (1875) LR 19 Eq 395; Macdonald v Irvine (1878) 8 Ch D 101 at 112. See also Milne v Parker (1848) 17 LJ Ch 194 at 196 for remarks on the history of the rule by Sir James Wigram VC. 17. (1802) 7 Ves 137; 32 ER 56. 18. As, for example, in Mackie v Mackie (1845) 5 Hare 70; 67 ER 831. 19. [1895] 2 Ch 56; [1895–9] All ER Rep 1208; see also Re Elford [1910] 1 Ch 814. 20. [1909] 2 Ch 111; [1908–10] All ER Rep 669.

21. Gray v Siggers (1880) 15 Ch D 74; Re Fisher [1943] Ch 377; [1943] 2 All ER 615. 22. Miller v Miller (1872) LR 13 Eq 263. 23. Re Smith [1896] 1 Ch 171; [1895–9] All ER Rep 1175. 24. See Caldecott v Caldecott (1842) 1 Y & C Ch Cas 312; 62 ER 903. See [19-12]. 25. Alcock v Sloper (1833) 2 Myl & K 699; 39 ER 1111. 26. Re Pitcairn [1896] 2 Ch 199; [1895–9] All ER Rep 1244. Cf Re Wyld [1912] SALR 190; Re Levien [1937] VLR 80; [1937] ALR 39; Re Reynolds [1942] VLR 158; [1942] ALR 251. 27. Re Meinck [1944] SASR 202. 28. (1809) 16 Ves 111; 32 ER 926. 29. (1802) 7 Ves 137; 32 ER 56. 30. Re Bland [1899] 2 Ch 336. 31. James v Gammon (1846) 15 LJ Ch 217; Blann v Bell (1852) 2 De G M & G 775 at 779; 42 ER 1075 at 1077; Macdonald v Irvine (1878) 8 Ch D 101 at 112–13, 121; and see also Morgan v Morgan (1851) 14 Beav 72; 51 ER 214. 32. (1802) 7 Ves 137; 32 ER 56. 33. Hope v D’Hedouville [1893] 2 Ch 361; Re Darnley [1907] 1 Ch 159. 34. Conveyancing Act 1919, ss 7, 66D(2). See Re Trollope’s Will [1927] All ER Rep 365; Re Berton [1939] Ch 200; [1938] 4 All ER 286. 35. Wentworth v Wentworth [1900] AC 163. 36. Re Searle [1900] 2 Ch 829; Re Darnley [1907] 1 Ch 159; Re Oliver [1908] 2 Ch 74; [1908–10] All ER Rep Ext 1377. 37. (1802) 7 Ves 137; 32 ER 56. 38. Re Davis (decd) [1953] VLR 639; [1953] ALR 1079. 39. Re Bird [1901] 1 Ch 916; Re Alston [1901] 2 Ch 584 at 587. 40. (1802) 7 Ves 137; 32 ER 56. 41. See Morgan v Morgan (1851) 14 Beav 72; 51 ER 214; Re Game [1897] 1 Ch 881. 42. Dimes v Scott (1828) 4 Russ 195; 38 ER 778; Brown v Gellatly (1867) LR 2 Ch App 751; [1861–73] All ER Rep Ext 2080. Similarly, in Sutherland v Cooke (1844) 1 Coll 498; 63 ER 516, where there was an implied direction to convert and by mistake no conversion had taken place, the value was taken at one year from the death of the testator. So, too, in Mehrtens v Andrews (1839) 3 Beav 72; 49 ER 28, where there was non-conversion in breach of trust for conversion and it was stated in the judgment that the value should have been taken as at one year from the testator’s death; but apparently (under the particular circumstances of the case) it was actually taken as at the testator’s death. See also Bate v Hooper (1855) 5 De GM & G 338; 43 ER 901, where executors were held liable for the difference between the value of long annuities as at one year after the death and their value as at the date when they were paid into court. See also Re Fawcett [1940] Ch 402. 43. See NSW s 27B; ACT s 27B; Qld s 32; Vic s 13; and also Property Law Act 1958 (Vic) s 32. See also Re Fawcett [1940] Ch 402. 44. Brown v Gellatly (1867) LR 2 Ch App 751; [1861–73] All ER Rep Ext 2080; Rowlls v Bebb [1900] 2 Ch 107; [1900–3] All ER Rep 756 (reversionary interest concerning which the trustees failed to exercise their discretion); Re Woods [1904] 2 Ch 4; Re Chaytor [1905] 1 Ch 233; [1904–7] All ER Rep 230; Re Owen [1912] 1 Ch 519; [1911–13] All ER Rep 261; Re Parry [1947] Ch 23; [1946] 2 All ER 413. 45. See Gibson v Bott (1802) 7 Ves 89; 32 ER 37; Angerstein v Martin (1823) T & R 232; 37 ER 1087;

Hewitt v Morris (1824) T & R 241; 37 ER 1090; Dimes v Scott (1828) 4 Russ 195; 38 ER 778; Taylor v Clark (1841) 1 Hare 161; 66 ER 990; Re Llewellyn’s Trust (1861) 29 Beav 171; 54 ER 592. In all these cases, interest from the date of the testator’s death was allowed to the tenant for life in regard to various classes of property converted and unconverted and in accordance with the rules for apportionment between capital and income. See also Allhusen v Whittell (1867) LR 4 Eq 295 at 302; [1861–73] All ER Rep 149 at 152 and numerous later cases. In one or two earlier cases, interest was allowed only after one year from the death of a testator but these have not been followed. 46. See the judgment of Farwell J in Re Fawcett [1940] Ch 402. 47. (1802) 7 Ves 137; 32 ER 56. 48. Re Fawcett [1940] Ch 402; Re Parry [1947] Ch 23; [1946] 2 All ER 413. Cf Re Wilcox [1940] SASR 217. 49. Perpetual Trustee Co Ltd v Griffin (1924) 41 WN (NSW) 150. 50. Union Trustee Co of Australia Ltd v Graham (1931) 31 SR (NSW) 528; 48 WN (NSW) 194; Re Tindal (1933) 34 SR (NSW) 8; 50 WN (NSW) 247. 51. (1802) 7 Ves 137; 32 ER 56. 52. Brown v Gellatly (1867) LR 2 Ch App 751; [1861–73] All ER Rep Ext 2080; Re Woods [1904] 2 Ch 4, 3%; Re Chaytor [1905] 1 Ch 233; [1904–7] All ER Rep 230, 3%; Re Owen [1912] 1 Ch 519 at 523–4; [1911–13] All ER Rep 261 at 263–4, 4%; Re Wilcox [1940] SASR 217; Re Parry [1947] Ch 23; [1946] 2 All ER 413; Re Berry [1961] 1 All ER 529, 4%. In Meyer v Simonsen (1852) 5 De G & Sm 723; 64 ER 1316 and Re Llewellyn’s Trust (1861) 29 Beav 171; 54 ER 592, part of the testator’s property consisted of a partnership interest, where 5% was returned upon the moneys in question. The tenant for life was allowed only 4%, the surplus being invested as capital. The interest on the surplus so invested was directed to be paid to the tenant for life as income. Meyer v Simonsen was followed in Re Evans’ Will Trusts [1921] 2 Ch 309, where the residue included copyrights held in partnership with publishers. The court directed that the copyrights should be valued as at the expiration of one year from the death of the testator and that interest at the rate of 4% be paid to the tenant for life, any surplus income being invested and the income thereof also paid to the tenant for life. 53. Re Thomas [1891] 3 Ch 482; [1891–4] All ER Rep 471; Re Godfree [1914] 2 Ch 110. See [19-21]. 54. (1867) LR 2 Ch App 751; [1861–73] All ER Rep Ext 2080; in many English cases coming within the principle of this case, the rate of interest has been fixed at 3%, instead of 4% as in the foregoing cases. See Re Woods [1904] 2 Ch 4; Re Chaytor [1905] 1 Ch 233; [1904–7] All ER Rep 230. In the former case the property in question consisted of an interest in mining property and in the latter it consisted of ordinary shares in a coal-mining company. But see also Re Owen [1912] 1 Ch 519 at 521; [1911–13] All ER Rep 261 at 263, where 4% was allowed; Re Hazeldine [1918] 1 Ch 433; Re Evans’ Will Trusts [1921] 2 Ch 309; Re Parry [1947] Ch 23 at 46; [1946] 2 All ER 413 at 423. The rate of interest in Australia was 4.5% at the time of Re Tindal (1933) 34 SR (NSW) 8; 50 WN (NSW) 247. 55. (1802) 7 Ves 89; 32 ER 37. 56. (1844) 1 Coll 498; 63 ER 516. 57. [1900] AC 163. 58. (1852) 5 De G & Sm 723; 64 ER 1316. 59. (1867) LR 2 Ch App 751; [1861–73] All ER Rep Ext 2080. 60. Wentworth v Wentworth (1903) 4 SR (NSW) 45; 21 WN (NSW) 17. 61. See Johnson v Routh (1857) 27 LJ Ch 305. 62. (1883) 24 Ch D 643; [1881–5] All ER Rep 737. 63. Beaven v Beaven (1869) 24 Ch D 649n; Re Chesterfield’s (Earl) Trusts (1883) 24 Ch D 643; [1881–5]

All ER Rep 737; Re Goodenough [1895] 2 Ch 537; Re Morley [1895] 2 Ch 738; [1895–9] All ER Rep Ext 2027; Rowlls v Bebb [1900] 2 Ch 107; [1900–3] All ER Rep 756; Re Hollebone [1919] 2 Ch 93; [1918–19] All ER Rep 323; Re Beech [1920] 1 Ch 40; Re Baker [1924] 2 Ch 271; Re Hey’s Settlement Trust and Will Trusts [1945] Ch 294; [1945] 1 All ER 618. 64. Re Tindal (1933) 34 SR (NSW) 8, and cases cited, see [19-13]. 65. For a case in Victoria in which interest at 5% was applied, see Re Lewin [1961] VR 528. And see [1911]. 66. Re Godden [1893] 1 Ch 292. In this case the particular interest was a debt secured by a mortgage on a colliery, interest being in arrear. In Re Cleveland’s Estate [1895] 2 Ch 542, a sum of money was paid away under an erroneous order of the court and had been subsequently recovered but without interest. It was held that although this was originally a portion of the capital of the residuary estate, nevertheless it should be apportioned between the tenant for life and the remainderman. Interest was calculated at 3%. See Re Coaks [1911] 1 Ch 171, for an instance of a mortgage debt on which there were arrears at the testator’s death, the testator having entered into receipt of the rents prior to his death. His trustees continued in receipt of the rents. It was held that the rents received by the trustees must first be applied in paying the arrears accrued prior to the death of the testator, that the surplus should be paid to the tenant for life as income, but only up to the amount accrued as interest since the testator’s death. Any surplus after these payments was to be treated as capital. 67. Re Woodhouse [1941] 2 All ER 265; Re Davis (decd) [1953] VLR 639; [1953] ALR 1079. 68. Re Wilcox [1940] SASR 217. 69. (1835) 7 Sim 427; 58 ER 901. 70. Re Pope [1901] 1 Ch 64. 71. [1894] 1 Ch 688; [1891–4] All ER Rep 636. 72. [1945] Ch 294; [1945] 1 All ER 618. Cf Re Fisher [1943] 2 All ER 615; Re Payne [1943] 2 All ER 675. 73. [1908] 1 Ch 828; [1908–10] All ER Rep Ext 1381. 74. (1903) 88 LT 100; [1900–3] All ER Rep 80. 75. [1908] 1 Ch 828; [1908–10] All ER Rep Ext 1381. 76. [1914] 1 Ch 358. 77. Similarly, in Re Forster-Brown [1914] 2 Ch 584, and Re Cooke [1916] 1 Ch 480. 78. (1903) 88 LT 100; [1900–3] All ER Rep 80. 79. [1908] 1 Ch 828 at 832–3; [1908–10] All ER Rep Ext 1381. 80. (1903) 88 LT 100; [1900–3] All ER Rep 80. 81. [1930] 1 Ch 352; [1929] All ER Rep 189. 82. [1939] 2 All ER 775. 83. (1941) 65 CLR 473. 84. [1908] 1 Ch 828; [1908–10] All ER Rep Ext 1381. 85. (1941) 65 CLR 473 at 490–1. 86. [1908] 1 Ch 828; [1908–10] All ER Rep Ext 1381. 87. (1903) 88 LT 100; [1900–3] All ER Rep 80. 88. [1908] 1 Ch 828; [1908–10] All ER Rep Ext 1381. 89. (1903) 88 LT 100; [1900–3] All ER Rep 80. 90. See Taylor v Clark (1841) 1 Hare 161 at 170; 66 ER 990 at 994. 91. See Re Owen [1912] 1 Ch 519 at 523, 524; [1911–13] All ER Rep 261 at 263, 264; Re Rutherford

(1913) 13 SR (NSW) 729; 30 WN (NSW) 213. 92. Union Trustee Co of Australia Ltd v Graham (1931) 31 SR (NSW) 528; 48 WN (NSW) 194. Cf Re Tindal (1933) 34 SR (NSW) 8; 50 WN (NSW) 247. 93. (1855) 5 De GM & G 338; 43 ER 901. 94. (1828) 4 Russ 195; 38 ER 788. 95. (1874) LR 18 Eq 422. See also Lichfield v Baker (1840) 13 Beav 447; 51 ER 172, where a tenant for life was held not liable to refund overpayments made by the executor, but was held liable to refund surplus income received by her after she herself became the executor. In Hood v Clapham (1854) 19 Beav 90; 52 ER 282, trustees who were held liable for allowing perishable property to be enjoyed in specie by a tenant for life were allowed to recover the overpayments from the estate of the tenant for life. In Mehrtens v Andrews (1839) 3 Beav 72; 49 ER 28, executors were held liable for the value of a lease which they had improperly allowed the tenant for life to enjoy in specie. 96. Re Davis (decd) [1953] VLR 639; [1953] ALR 1079. 97. For example, Goodenough v Tremamondo (1840) 2 Beav 512; 48 ER 1280, directions as to ‘rents’ after the death of the tenant for life; Burton v Mount (1848) 2 De G & Sm 383; 64 ER 171, provision that notwithstanding the gift of leaseholds the trustees ‘might’ sell them; Boys v Boys (1860) 28 Beav 436; 54 ER 434, property ‘to be divided’ at the death of the tenant for life; Johnston v Moore (1858) 27 LJ Ch 453; Rowe v Rowe (1861) 29 Beav 276; 54 ER 633, direction to trustees to ‘convert and divide’ the property after the death of the tenant for life; cf Re Meinck [1944] SASR 202; Miller v Miller (1872) LR 13 Eq 263, ‘rents and profits’; Re Chancellor (1884) 26 Ch D 42, express direction for the payment of income; Re Thomas [1891] 3 Ch 482; [1891–4] All ER Rep 471, power of retention given to trustees with direction as to income; cf Re Jones (1929) 30 SR (NSW) 26; 46 WN (NSW) 190; Re North [1909] 1 Ch 625, trust for sale after the death of the last surviving tenant for life, and a direction that until sale the trustees should keep the real estate in good and tenantable order and repair; Re Godfree [1914] 2 Ch 110; Re Inman (1914) 59 Sol Jo 161. 98. Re Walker (1901) 1 SR (NSW) Eq 237; 19 WN (NSW) 3. 99. Re Chaytor [1905] 1 Ch 233; [1904–7] All ER Rep 230; Re Wilcox [1940] SASR 217, and other cases cited; and see [19-10] when dealing with the application of the rule. 100. [1891] 3 Ch 482 at 486; [1891–4] All ER Rep at 473 per Kekewich J. See also Michael v Callil (1945) 72 CLR 509; De Little v Byrne (1951) 84 CLR 532; Hassell v Perpetual Trustees Executors and Agency Co (WA) Ltd & Ball (1952) 86 CLR 513; [1953] ALR 77. 101. Re Chaytor [1905] 1 Ch 233; [1904–7] All ER Rep 230; Re Wyld [1912] SALR 190; Re Levien [1937] VLR 80; [1937] ALR 39. 102. (1880) 14 Ch D 27; [1874–80] All ER Rep 644. 103. See also Re Simpson [1913] 1 Ch 277; [1911–13] All ER Rep 301, where a life tenant, acting under the power given by the Settled Land Act 1882, sold a leasehold (with 11 years still to run), which she was entitled to enjoy for her life. The trustees were directed to apply the proceeds in paying the life tenant such an annuity as would exhaust both capital and income in 11 years. 104. (1906) 6 SR (NSW) 360; 23 WN (NSW) 104. 105. Clayton v Montgomery (1897) 18 LR (NSW) Eq 171; Re Glover (1902) 19 WN (NSW) 228; Re Sutherland (1910) 11 SR (NSW) 5; 27 WN (NSW) 217; cf Re Cahill (1903) 20 WN (NSW) 192. 106. Re Sutherland (1910) 11 SR (NSW) 5; 27 WN (NSW) 217. 107. Perpetual Trustee Co Ltd v Holt (1894) 15 LR (NSW) Eq 18. 108. Busby v Busby (1893) 14 LR (NSW) Eq 42; Perkins v Permanent Trustee Co Ltd (1923) 23 SR (NSW) 358; 40 WN (NSW) 62. Cf Re Bell’s Settled Estates (1921) 38 WN (NSW) 188, where the income

exceeded the rents which would have been obtained, and it was held by Harvey J that the tenant for life was entitled to some, but not to the whole, benefit from the higher income received. 109. See, for example, Stroud v Gwyer (1860) 28 Beav 130; 54 ER 315; Slade v Chaine [1908] 1 Ch 522; Re Hoyles [1912] 1 Ch 67; [1908–10] All ER Rep Ext 1107. 110. Re Davis (decd) [1953] VLR 639 per Herring CJ. 111. Civil Law (Property) Act 2006 (ACT) ss 248–253; Conveyancing Act 1919 (ACT) ss 142 and 144; Law of Property Act (NT) ss 211–213; Property Law Act 1974 (Qld) ss 231–233; Law of Property Act 1936 (SA) ss 63–66; Apportionment Act 1871 (Tas) s 2; Supreme Court Act 1986 (Vic) ss 53(1) and 54; Property Law Act 1969 (WA) ss 130–134. 112. The insertion of a clause allowing postponement of conversion and providing that pending calling in and conversion all the income shall be applied as from the testator’s death as income and on the falling in of reversionary property no part of it shall be applied as income does not prevent apportionment of dividends declared after the testator’s death and partly accrued before his death: Re Edwards [1918] 1 Ch 142; [1916–17] All ER Rep 258. 113. Re Henderson [1940] Ch 368; [1940] 1 All ER 623. 114. [1940] Ch 368; [1940] 1 All ER 623. 115. See [19-32]. 116. [1961] Ch 526; [1961] 2 All ER 751. 117. [1961] Ch 526 at 532; [1961] 2 All ER 751 at 754. 118. Re Campbell (dec’d) [1973] 2 NSWLR 146. Helsham J held that, where ss 142 and 144 of the Conveyancing Act apply, the terms in which the dividend is declared to be payable must be properly construed to ascertain the period for or in respect of which the payment is declared or expressed to be made. Quaere the position in Victoria, where in two cases decided by Hudson J dividends declared after the end of an accounting year but referable to the previous period were held not to be dividends of the previous year for the purposes of ss 73 and 76 of the Supreme Court Act 1958: In the Will and Estate of McCutcheon (dec’d) [1960] VR 289 at 292, 293; Re Buck (dec’d) [1964] VR 284 at 286, 287, 289, 290. 119. (1860) 1 John & H 266; 70 ER 747. 120. [1900] 1 QB 740; [1900–3] All ER Rep 299. 121. The legislation referred to in fn 111 specifically excludes such policies. 122. See, for example, Re Lysaght [1898] 1 Ch 115. 123. Re Oppenheimer [1907] 1 Ch 399; [1904–7] All ER Rep Ext 1172; Re Campbell (dec’d) [1973] 2 NSWLR 146. 124. Bradley v Denne (1911) 29 WN (NSW) 2; Re MacPherson [1913] SALR 207; Thomas v Thomas [1939] St R Qd 301; Hassell v Perpetual Executors Trustees and Agency Co (WA) Ltd & Ball (1952) 86 CLR 513; [1953] ALR 77. 125. Re Angas [1906] SALR 140. 126. Wright v Tuckett (1860) 1 John & H 266; 70 ER 747; Ellis v Rowbotham [1900] 1 QB 740; [1900–3] All ER Rep 299. 127. See Re Thomas’ Will (1884) 10 VLR (E) 25; Re Turtle (1895) 11 WN (NSW) 153; Re Oppenheimer [1907] 1 Ch 399; [1904–7] All ER Rep Ext 1172; Re Muirhead [1916] 2 Ch 181; [1916–17] All ER Rep 771; Re Hood (1939) 40 SR (NSW) 449; 57 WN (NSW) 175. 128. Re Peel’s Settled Estates [1910] 1 Ch 389; [1908–10] All ER Rep 168. 129. [1913] 1 Ch 231.

130. Re Jowitt [1922] 2 Ch 442; [1922] All ER Rep 331. 131. Re Taylor’s Trusts [1905] 1 Ch 734; Re Sale [1913] 2 Ch 697; Re Grundy (1917) 117 LT 470; Re Wakley [1920] 2 Ch 205; [1920] All ER Rep 749; cf Re Griffith (1879) 12 Ch D 655. See also Re Marjoribanks [1923] 2 Ch 307. 132. Re MacIver’s Settlement [1936] Ch 198; [1935] All ER Rep 889; Re Smith [1936] 2 All ER 1210. 133. Re Sandbach [1933] Ch 505; [1932] All ER Rep 801. 134. Re Wimbush [1940] Ch 92; [1940] 1 All ER 229. 135. Scholefield v Redfern (1863) 2 Dr & Sm 173; 62 ER 587; Freman v Whitbread (1865) LR 1 Eq 266; Re Peel’s Settled Estates [1910] 1 Ch 389; [1908–10] All ER Rep 168; Re Walker [1934] WN 104, but, as to debentures and stock, see [19-36]. 136. (1863) 2 Dr & Sm 173 at 182–3; 62 ER 587 at 590–1. 137. (1789) 2 Bro CC 653; 29 ER 362. 138. (1881) 18 Ch D 160; [1881–5] All ER Rep Ext 1607. 139. (1854) 19 Beav 295; 52 ER 363. 140. [1896] 2 Ch 241; [1895–9] All ER Rep 196. 141. (1854) 19 Beav 295; 52 ER 363. 142. [1896] 2 Ch 241; [1895–9] All ER Rep 196. 143. See also Re Oppenheimer [1907] 1 Ch 399; Re Muirhead [1916] 2 Ch 181; [1916–17] All ER Rep 771; Re Henderson [1940] Ch 368; [1940] 1 All ER 623. 144. [1938] Ch 158; [1937] 4 All ER 63. 145. [1938] Ch 517; [1938] 2 All ER 217. 146. (1939) 40 SR (NSW) 449; 57 WN (NSW) 175. 147. [1940] Ch 368; [1940] 1 All ER 623. 148. (1939) 40 SR (NSW) 449; 57 WN (NSW) 175. 149. [1951] 2 All ER 414. 150. NSW s 24; ACT s 24; Vic s 25(3); WA s 103. 151. (1887) 12 App Cas 385 at 397; [1886–90] All ER Rep 319 at 327. This is an almost exact quotation from Fry LJ in the court below: Re Bouch (1885) 29 Ch D 635 at 653. 152. [1930] AC 720; [1930] All ER Rep 87. 153. Knowles v Ballarat Trustees, Executors and Agency Co Ltd (1916) 22 CLR 212; 22 ALR 431; Fisher v Fisher (1917) 23 CLR 337; 23 ALR 318. 154. Drew v Vickery (1919) 19 SR (NSW) 245; 36 WN (NSW) 100; Perpetual Trustee Co Ltd v Champion (1921) 21 SR (NSW) 501; 38 WN (NSW) 162. 155. [1930] AC 720 at 730–2; [1930] All ER Rep 87 at 92–3. 156. See, for example, Re Palmer (1912) 28 TLR 301; Re Thomas [1916] 2 Ch 331; cf Fisher v Fisher (1917) 23 CLR 337; 23 ALR 318. 157. Re Bates [1928] Ch 682; [1928] All ER Rep 126; Hill v Permanent Trustee Co of NSW Ltd [1930] AC 720; [1930] All ER Rep 87; Re Doughty [1947] Ch 263; [1947] 1 All ER 207; not following Re Ward’s Will Trusts [1936] Ch 704; [1936] 2 All ER 773. See also Bakewell v Holme (1943) 44 SR (NSW) 150; 61 WN (NSW) 47. 158. Re Outen’s Will Trusts [1963] Ch 291; [1962] 3 All ER 478. 159. [1894] 3 Ch 578. Cf Mitchell v Harr (1914) 19 CLR 33; 21 ALR 42; Re Hawkins (1915) 15 SR

(NSW) 199; 32 WN (NSW) 47; Guazzini v Pateson (1923) 24 SR (NSW) 40; 40 WN (NSW) 142. Where there is a practical compulsion to take up the shares as a result of the terms of the offer, it was held that the shares so received were capital: Re Evans [1913] 1 Ch 23; Macansh v Fisher (1916) 16 SR (NSW) 636; Hawkins v Hawkins (1920) 20 SR (NSW) 550; 37 WN (NSW) 177. 160. Other cases of a similar nature are Towley v Unwin (1855) 2 K & J 138; 69 ER 726, where ‘extra shares’ were held to be subject to the trusts of a settlement as corpus; Re Barton’s Trust (1868) LR 5 Eq 238, new shares held to be capital; Re Hopkins Trusts (1874) LR 18 Eq 696, an extraordinary dividend paid on shares in a life assurance company for a five-year period held to be income payable to the tenant for life distributed as income shares in another company; Re Alsbury (1890) 45 Ch D 237, bonus and ‘special bonus’ dividends declared out of a reserve fund held to be income and payable to the tenant for life; Re Northage (1891) 60 LJ Ch 488, dividend held to be income; Re Palmer (1912) 28 TLR 301. See Re Tedlie (1922) 91 LJ Ch 346; Re MacIver’s Settlement [1936] Ch 198; [1935] All ER Rep 889. Many of the cases prior to 1930, although correct in result, do not apply the distinctions drawn in Hill’s case and therefore must be treated as of doubtful authority. 161. Re Wilkinson [1954] VLR 486; [1954] ALR 666. Cf Douglas v Lawler (1916) 16 SR (NSW) 252; 33 WN (NSW) 82; Perpetual Trustee Co Ltd v Cohen (1916) 16 SR (NSW) 242; 33 WN (NSW) 77. 162. Re Hatton [1917] 1 Ch 357; Perpetual Trustee Co Ltd v Champion (1923) 23 SR (NSW) 544; 40 WN (NSW) 119. 163. [1959] Ch 579; [1959] 2 All ER 497; discussed NRMM, ‘Trustees — Capital Income — Limits in Fixed Trusts’ (1959) 33 ALJ 99. 164. [1959] Ch 579 at 591; [1959] 2 All ER 497 at 502. 165. [1893] 3 Ch 337; [1891–4] All ER Rep Ext 1592. 166. [1893] 3 Ch 337 at 346; [1891–4] All ER Rep Ext 1592 at 1596 per Lindley LJ. See also Verner v General and Commercial Investments Trust [1894] 2 Ch 239 at 258; [1891–4] All ER Rep Ext 1409 at 1414; Union Trustee Co of Australia Ltd v Watson (1930) 48 WN (NSW) 102. Cf Perpetual Trustee Co Ltd v Champion (1921) 21 SR (NSW) 501; 40 WN (NSW) 119; Inland Revenue Commissioners v Fisher [1926] AC 395. 167. Hawkins v Hawkins (1920) 20 SR (NSW) 550; 37 WN (NSW) 177. 168. Re Speir [1924] 1 Ch 359; [1923] All ER Rep 640. Cf Re Ward’s Will Trusts [1936] Ch 704; [1936] 2 All ER 773. 169. Andrew v Andrew (1845) 1 Coll 686; 63 ER 598; Twining v Powell (1845) 2 Coll 262; 63 ER 726; Phillips v Beal (No 1) (1862) 32 Beav 25; 55 ER 10. 170. Groves v Wright (1856) 2 K & J 347; 69 ER 815; Phillips v Beal (No 1) (1862) 32 Beav 25; 55 ER 10; Cockayne v Harrison (1872) LR 13 Eq 432; Paine v Countess of Warwick [1914] 2 KB 486. 171. Re Maclachlan (1900) 26 VLR 548; 6 ALR 243; Re Powell [1921] 1 Ch 178. There appears to be an exception where the loss of stock has occurred as a result of an abnormal cause and it seems that the quantity of stock has not been replenished at the termination of the life tenancy. See Ferguson v Ferguson (1940) 40 SR (NSW) 595; 57 WN (NSW) 216. 172. Browne v Collins (1871) LR 12 Eq 586; Straker v Wilson (1871) LR 6 Ch App 503; Jones v Ogle (1872) LR 8 Ch App 192; [1861–73] All ER Rep 919; Re Cox’s Trusts (1878) 9 Ch D 159; Re Moore [1956] VLR 132; [1956] ALR 483. 173. (1878) 9 Ch D 159. 174. (1871) LR 6 Ch App 503. 175. Re Flood (1912) 12 SR (NSW) 144; 29 WN (NSW) 399. Sed quaere, unless the case is one to which the rule in Re Chesterfield’s (Earl) Trusts (1883) 24 Ch D 643; [1881–5] All ER Rep 737 is applicable. Cf Webster v Christian (1918) 18 SR (NSW) 615; 35 WN (NSW) 183.

176. Hughes v Fripp (1922) 30 CLR 508; 28 ALR 278. 177. Re Young (1905) 5 SR (NSW) 394; 22 WN (NSW) 135. 178. Re Conolly (1903) 3 SR (NSW) 57; 20 WN (NSW) 25. 179. (1963) 109 CLR 258. 180. (1963) 109 CLR 258 at 272 per Dixon CJ, Taylor and Menzies JJ. 181. Upton v Browne (1884) 26 Ch D 588; Re Jex-Blake [1939] NZLR 256; Re Reynolds [1942] VLR 158; [1942] ALR 251. However, for the position where losses are incurred in a business being carried on temporarily until it can be sold profitably, see Underhill and Hayton, Law Relating to Trusts and Trustees, 16th ed, p 570; Re Hengler [1893] 1 Ch 586. In any case the trust instrument may disclose an intention that subsequent profits should not be used to recoup past losses: Re Mountain [1934] NZLR 399; Re Nairn [1935] NZLR 134. See also Raftland Pty Ltd v Commissioner of Taxation (2008) 238 CLR 516; 246 ALR 401 at [66]–[69]. 182. Re Bowman [1955] SASR 98. 183. McIntyre v McIntyre (1914) 15 SR (NSW) 45; 31 WN (NSW) 132; Re Smith [1930] 1 Ch 88. Cf, however, Re Bowman [1955] SASR 98. 184. Thornley v Boyd (1925) 36 CLR 526; 31 ALR 425; Re Baillie [1928] VLR 171; (1928) 34 ALR 12; Re Bowman [1955] SASR 98. Contrast Watson v Little (1921) 38 WN (NSW) 143. 185. (1901) 1 SR (NSW) Eq 237; 19 WN (NSW) 3. 186. (1910) 28 WN (NSW) 9. 187. (1914) 15 SR (NSW) 45; 31 WN (NSW) 132. 188. (1916) 16 SR (NSW) 183; 33 WN (NSW) 33. 189. (1930) 31 SR (NSW) 115; 48 WN (NSW) 17. 190. (1914) 15 SR (NSW) 45; 31 WN (NSW) 132. 191. (1930) 31 SR (NSW) 115; 48 WN (NSW) 17. 192. Union Trustee Co of Australia Ltd v Eckford (1930) 31 SR (NSW) 92; 48 WN (NSW) 40; Re Archer [1961] Tas LR 1. Cf Re Bowman [1955] SASR 98, which appears to go further and place no limitation beyond the principles of prudent management upon the power of trustees to purchase stock out of income. 193. (1962) 107 CLR 604; [1963] ALR 226, followed in Re Richards [1974] 2 NZLR 60. See also Union Trustee Co of Australia Ltd v Barlam [1948] AC 495; Re Archer [1961] Tas SR 1. 194. (1962) 107 CLR 604 at 623; [1963] ALR 226 at 235–6. 195. (1930) 31 SR (NSW) 115; 48 WN (NSW) 17. 196. (1914) 15 SR (NSW) 45; 31 WN (NSW) 132. 197. (1962) 107 CLR 604; [1963] ALR 226. 198. (1962) 107 CLR 604 at 623; [1963] ALR 226 at 236. Cf the statement by Dixon CJ, Taylor and Menzies JJ in Kelly v Perpetual Trustee Co Ltd (1963) 109 CLR 258 at 269–70 of what was decided in McBride v Hudson. 199. Re Angas [1906] SALR 140 at 151–2. 200. Re Angas [1906] SALR 140 at 152. See, however, Porter v Porter (1930) 31 SR (NSW) 115; 48 WN (NSW) 17, where the court was supplied with accounts drawn up with stock kept at probate value and other accounts with stock brought in at ‘average cost’. Evidence was given that in the long run the two methods substantially produced the same result (at 117 and 18). However, steep fluctuations in stock values may make this no longer true.

201. [1893] 1 Ch 586. 202. (1883) 24 Ch D 643; [1881–5] All ER Rep 737. 203. Re Hengler [1893] 1 Ch 586 at 589. 204. Union Trustee Co of Australia Ltd v Eckford (1930) 31 SR (NSW) 92; 48 WN (NSW) 40, where it was held that losses in a later year must in such circumstances be set off against profits in earlier years. Cf Re Reynolds [1942] VLR 158; [1942] ALR 251. 205. Whitbread v Smith (1854) 3 De GM & G 272; 43 ER 286; Marshall v Crowther (1874) 2 Ch D 199. 206. Re Bacon (1893) 62 LJ Ch 445; Re Henry [1907] 1 Ch 30; Re Perkins [1907] 2 Ch 596; [1904–7] All ER Rep 273; Re Poyser [1910] 2 Ch 444; [1908–10] All ER Rep 374. 207. Honywood v Honywood [1902] 1 Ch 347. 208. Revel v Watkinson (1748) 1 Ves Sen 93; 27 ER 912; Playfair v Cooper (1853) 17 Beav 187; 51 ER 1004. 209. See, for example, Perpetual Trustee Co Ltd v Holt (1895) 11 WN (NSW) 141; Re Corbett’s Settlement (1907) 24 WN (NSW) 30; See also Underhill and Hayton, [47.35], pp 755–6. 210. Stott v Milne (1884) 25 Ch D 710; Watson v Royal Insurance Co [1896] 1 QB 41; Re Ogilvie (1910) 11 SR (NSW) 11; 27 WN (NSW) 165; Cock v Aitken (1912) 15 CLR 373 at 381; 18 ALR 576 at 578. 211. Knox v Roberts (1900) 21 LR (NSW) Eq 231; Re Walker (1901) 1 SR (NSW) Eq 237; 19 WN (NSW) 3. 212. ACT ss 82–83; NSW ss 82–82A; NT s 18(2)–(4); Qld s 33; SA ss 25A–25B; WA s 30. 213. Re Stamford and Warrington [1916] 1 Ch 404. 214. Re De Tabley (1896) 75 LT 328. 215. Kurzmann v McKee (1896) 2 ALR 113. But see Perpetual Trustee Co Ltd v Beaton (1903) 20 WN (NSW) 188. 216. McIntyre v McIntyre (1914) 15 SR (NSW) 45; 31 WN (NSW) 132. 217. Cowley v Wellesley (1866) LR 1 Eq 656; Re Wentworth (1915) 15 SR (NSW) 384; 32 WN (NSW) 130. But see Re Staughton [1909] VLR 174. 218. Todd v Moorhouse (1874) LR 19 Eq 69; Day v Day (1903) 4 SR (NSW) 21. See now ACT s 23; NSW s 23; NT s 10; Qld s 33; SA s 11; Tas s 11; Vic s 10; WA s 23. 219. Re Robbins [1928] Ch 721; Re Smith [1930] 1 Ch 88. 220. Re Betty [1899] 1 Ch 821; Re Gjers [1899] 2 Ch 54. 221. Fountaine v Pellet (1791) 1 Ves Jun 337 at 342; 30 ER 374 at 376; Goley v Cannon (1936) 53 WN (NSW) 223; Re Cross [1943] VLR 38; [1943] ALR 126; Re Reid [1943] SASR 254; Re Dawes [1954] VLR 76; [1954] ALR 174. 222. ACT s 41; NSW s 41; NT s 18A; SA s 25; Tas s 21; Vic s 23; WA s 46. In Queensland, the trustee may apportion between capital and income as he or she considers equitable: s 47(3). 223. Re Hotchkys (1886) 32 Ch D 408; [1886–90] All ER Rep 1104; Re Farnham’s Settlement [1904] 2 Ch 561; Wilkie v Equity Trustees Executors and Agency Co Ltd [1909] VLR 277; (1909) 15 ALR 208; Roberts v Roberts (1915) 16 SR (NSW) 6; Re Conquest [1929] 2 Ch 353; [1929] All ER Rep 608. 224. (1921) 38 WN (NSW) 143. 225. Reid v Deane [1906] VLR 138; 12 ALR 46; Re Staughton [1909] VLR 174; Littlejohn v Davies (1916) 16 SR (NSW) 183; 33 WN (NSW) 33; Re Scott [1919] SALR 74; Re Grant [1933] VLR 263; Thomas v Thomas [1939] St R Qd 301; Ferguson v Ferguson (1940) 40 SR (NSW) 595; 57 WN (NSW) 216. 226. Re Moore [1907] VLR 639; 13 ALR 507; Union Trustee Co of Australia Ltd v Eckford (1930) 31 SR

(NSW) 92; 48 WN (NSW) 40. 227. Perpetual Trustee Co Ltd v Allen (1921) 38 WN (NSW) 220. 228. Re Darby [1939] Ch 905; [1939] 3 All ER 6; Hassell v Perpetual Executors Trustees & Agency Co (WA) Ltd & Ball (1952) 86 CLR 513; [1953] ALR 77. 229. Re Mufitt (1888) 39 Ch D 534; Re Dawson [1906] 2 Ch 211; Re Perkins [1907] 2 Ch 596; Cock v Smith (1909) 9 CLR 773; 15 ALR 526; Re Poyser [1910] 2 Ch 444; Cock v Aitken (1911) 13 CLR 461; 18 ALR 337. See also Princess Ann of Hesse v Field [1963] NSWR 998; (1962) 80 WN (NSW) 55 and the mysterious provisions of s 46D of the Wills Probate and Administration Act 1898 (NSW), s 78 of the Trusts Act 1972 (Qld), s 74 of the Trustee Act 1958 (Vic), s 104 of the Trustees Act 1962 (WA) (which does not apply to any annuity payable out of the estate of a deceased) and s 58 of the Administration and Probate Act 1969 (NT). 230. Re Croxon [1915] 2 Ch 290; [1914–15] All ER Rep 816. 231. Re Coaks [1911] 1 Ch 171; Re Smart’s Settlement (1933) 33 SR (NSW) 412. 232. Farmer v Chard (1905) 5 SR (NSW) 342; 22 WN (NSW) 1109. 233. Perpetual Trustee Co Ltd v Lassetter (1934) 34 SR (NSW) 172; 51 WN (NSW) 49. 234. Qld s 42; SA s 28C; WA s 40. 235. [1904] 2 Ch 160; [1904–7] All ER Rep Ext 1545. 236. (1890) 45 Ch D 629. 237. See also for a variation of the principle, which could still result in a life tenant being held to be overpaid, Re Phillimore [1903] 1 Ch 942. 238. (1890) 45 Ch D 629. 239. [1901] 2 Ch 584. 240. [1904] 2 Ch 160; [1904–7] All ER Rep Ext 1545. 241. Cooper v Cooper (1901) 26 VLR 649; 7 ALR 147. See also Cooper v Cooper (1902) 8 ALR 212; Re Mitchell (1962) 1 W & W (E) 167. 242. [1904] 2 Ch 160. 243. See Holmes v Holmes (1906) 28 ALT 22; Knox v Phillips (1918) 19 SR (NSW) 7; 36 WN (NSW) 14; Re Scarfe [1923] SASR 459; Re Knott [1937] VLR 244; [1937] ALR 456; Permanent Trustee Co of NSW Ltd v Macphillamy (1938) 38 SR (NSW) 541; 55 WN (NSW) 212; Re Morris’s Will Trusts [1960] 3 All ER 548. 244. Knox v Phillips (1918) 19 SR (NSW) 7; 36 WN (NSW) 14; Re Horn [1924] 2 Ch 222. 245. Re Knott [1937] VLR 244; [1937] ALR 456; Permanent Trustee Co of NSW Ltd v Macphillamy (1938) 38 SR (NSW) 541; 55 WN (NSW) 212. 246. Re Broadwood’s Settlement [1908] 1 Ch 115. 247. Permanent Trustee Co of NSW Ltd v Macphillamy (1938) 38 SR (NSW) 541; 55 WN (NSW) 212. See, however, Re Knott [1937] VLR 244, where it was held that such amount should be deducted from the sum realised before the apportionment is made. See also Equity Trustees Executors and Agency Co Ltd v Macmeikan (1900) 25 VLR 593; Macartney v Macartney (1911) 18 ALR 1; Permanent Trustee Co of NSW Ltd v Fraser (1922) 22 SR (NSW) 606. Note also s 33 of the Trustee Act 1925 (NSW) and s 23B of the Trustee Act 1936 (SA), which by subs (3) do not affect any rule of apportionment of capital and income. 248. [1896] 1 Ch 754. 249. [1907] 2 Ch 296. 250. [1907] 2 Ch 296 at 303.

251. [1901] 1 Ch 916.

[page 448]

CHAPTER 20 Powers of a Trustee Introduction

[20-01]

Powers in Relation to the Trust Property Power of Sale Rule Implied power of sale Statutory power of sale New South Wales and the Australian Capital Territory Other jurisdictions Duration of power New South Wales Other jurisdictions Postponement of sale New South Wales Other jurisdictions Exercise of power New South Wales and the Australian Capital Territory Other jurisdictions Depreciatory conditions New South Wales Other jurisdictions Sale on terms Non-monetary consideration New South Wales Other jurisdictions

[20-02] [20-02] [20-02] [20-03] [20-04] [20-04] [20-05] [20-06] [20-06] [20-07] [20-08] [20-08] [20-09] [20-10] [20-10] [20-13] [20-14] [20-14] [20-15] [20-16] [20-16] [20-17] [20-18]



Power to Lease Rule New South Wales Other jurisdictions Surrender of Onerous Leases and Renewal of Leaseholds Surrender of onerous leases — New South Wales Renewal of leaseholds — New South Wales Other jurisdictions Power to Mortgage Rule New South Wales Other jurisdictions

[20-19] [20-19] [20-20] [20-21] [20-23] [20-24] [20-25] [20-26] [20-27] [20-27] [20-28] [20-29] [page 449]



Power to Repair and Improve General problems Trustees with power of management Compulsory works Statutory provision New South Wales Other jurisdictions Power to Insure New South Wales Other jurisdictions Australian Capital Territory, Northern Territory, South Australia Victoria Queensland Tasmania Western Australia Power to Carry on Business Terms of trust

[20-30] [20-30] [20-31] [20-32] [20-33] [20-33] [20-34] [20-35] [20-35] [20-37] [20-37] [20-38] [20-39] [20-40] [20-41] [20-42] [20-42]



Statutory intervention Creditors Sale of business to a company Power to Compound Debts Legislation Role of court Compromising claims Power to Give Receipts Powers of a Trustee-shareholder General Exercise of voting power Company reconstruction New issues of shares Payment of calls Powers to Obtain Audits and Valuations Power to Sue and be Sued

Powers in Relation to the Beneficiaries Maintenance and Advancement Inherent jurisdiction New South Wales and the Australian Capital Territory Maintenance Advancement Discretion Victoria Queensland South Australia Western Australia

[20-43] [20-44] [20-45] [20-46] [20-46] [20-47] [20-48] [20-49] [20-50] [20-50] [20-51] [20-52] [20-53] [20-54] [20-55] [20-56] [20-57] [20-57] [20-57] [20-58] [20-60] [20-62] [20-63] [20-64] [20-65] [20-66] [20-67] [page 450]



Tasmania Northern Territory Appropriation of Assets in Satisfaction of Shares

[20-68] [20-69] [20-70]



Inherent jurisdiction New South Wales The statute General Valuation Other jurisdictions Powers to Appoint Trustees of Infants’ Property

[20-70] [20-71] [20-71] [20-72] [20-73] [20-74] [20-75]

Introduction [20-01] The general nature of the powers has already been considered.1 It is now the time to consider various particular powers of trustees, always bearing in mind, in relation to the exercise of any such particular power, the general principles previously discussed. Trustees, in the execution of their trusts, have all the powers which are conferred upon them: (a) by the trust instrument; (b) by statute; and (c) by the court. The powers which may be conferred by the court under its inherent jurisdiction and in exercise of its statutory jurisdiction have already been dealt with.2 In New South Wales, powers of sale and lease may also be conferred on trustees of settled estates under the Conveyancing and Law of Property Act 1898, but the jurisdiction under that Act in the cases where there are trustees of the settled estates, may now be regarded as obsolete in view of the wider powers conferred by the Trustee Act 1925. However, it should be remembered that the Conveyancing and Law of Property Act 1898 is still the governing Act where there are legal estates settled upon persons in succession. Corresponding legislation in Victoria and South Australia is found in the Settled Land Act 1958 (Vic) and the Settled Estates Act 1880 (SA). Such legal settled estates are not within the scope of this book. In Queensland and Western Australia, the settled land legislation has been repealed by their respective Trustee Acts and settled estates must now be dealt with under those statutes.3 Before dealing with the particular powers of trustees, it is convenient to recall

that previous doubts as to the vesting in the surviving trustees or trustee of the powers conferred by a trust instrument on a number of co-trustees have been removed in all jurisdictions4 by express provision that where a power (or trust) is given to or vested in, two or more trustees jointly, then, unless the contrary is expressed in the instrument, if any, creating the power (or trust), the same may be exercised or performed by the survivor or survivors of them for the time being. [page 451]

Powers in Relation to the Trust Property Power of Sale Rule [20-02] A trustee has no power to sell the trust property except under an authority expressly or impliedly conferred by the trust instrument or under the authority of some statute, or under the order of the court. The primary duty of the trustee is to preserve the trust property in specie for the benefit of the beneficiaries.5

Implied power of sale [20-03] However, it is not always necessary that the duty or power of sale should be expressly stated in the trust instrument. It frequently happens that the nature of the dispositions made by the testator or settlor, either together with or independently of the nature of the trust property, result in the implication of a power of sale. Where there is contained in a will a bequest of residuary personal estate settled upon persons in succession, the trustee, unless a contrary intention otherwise appears from the will, has an implied power to sell such part of the personal estate as does not consist of authorised securities, and to invest the proceeds in authorised securities. This is the rule in Howe v Lord Dartmouth.6 It is otherwise, of course, if the personalty is the subject of a specific gift. Difficulty occurs in determining whether a trust to ‘divide’ or to ‘distribute’

the trust property implies a power to sell it for the purpose of such division or distribution. It has been held7 that an ultimate direction in the instrument to divide the trust property among individuals or a class does not, of itself, imply a power to sell for convenience of division. A trust to divide real estate was held in Grant v Grant8 to confer an implied power of sale, but in that case, the nature of the property and the number of shares into which it was to be divided, led to the implication that a sale was intended. Mower v Orr9 is the same type of case. There, the testator directed his executors to get his property together and to divide it ‘into 20 aliquot shares for his grandchildren’ with a further direction to invest infants’ shares. This was held to imply a power of sale. On the other hand, it was suggested by the High Court of Australia in Altson v Equity Trustees, Executors and Agency Ltd10 that a direction to distribute always confers a power of sale although, upon the facts of that case, as there was a specific reference in the will to division of ‘proceeds’ even though the word ‘sale’ was not mentioned, there was no necessity for the application of so wide a principle. In a subsequent case, Pagels v MacDonald,11 the High Court of Australia seems to have assumed that a direction to distribute does always confer a power of sale. A power of sale, it seems, may be implied in respect of personal estate by a power to vary investments.12

Statutory power of sale New South Wales and the Australian Capital Territory [20-04] Although the legislation confers various powers upon trustees in relation to sales, and confers a power to postpone sale,13 it does not confer any general power of sale upon trustees. However, in one instance it does confer a power of sale by the following provision: [page 452] 38. (1) Where a trustee is authorised by the instrument, if any, creating the trust or by law to pay or apply capital money for any purpose or in any manner, the trustee shall have and shall be deemed always to have had power to raise the money required by sale, conversion, calling in, or mortgage of all or any part of the trust property for the time being in possession held upon the same trusts as the capital money. (1A) Where a trustee holds land in respect of which moneys are due and payable for rates or

taxes or in respect of which the trustee is under a statutory obligation to expend moneys and the trustee has no moneys subject to the same trusts as such land wherewith to pay such rates or taxes or discharge such statutory obligation the trustee shall have and shall be deemed always to have had power to raise the money required to make such payment or discharge such obligation by sale or mortgage of the whole or part of such land or by sale, conversion, calling in or mortgage of all or any part of the trust property for the time being in possession held upon the same trusts as such land. (2) This section shall not apply to a trustee of property held for charitable purposes.

Another instance in the legislation is found in s 33 whereby trustee mortgagees, who hold property discharged from a mortgagor’s rights of redemption, hold the property on trust for sale with power to postpone sale. Executors and administrators have certain special powers of sale conferred by s 153 of the Conveyancing Act 1919 (NSW) as follows:14 153. (1) Subject as hereinafter mentioned executors and administrators may without the consent of any person or the order of a court: (a) sell or mortgage the real estate of the deceased person for purposes of administration, (b) sell the real estate of the deceased person as to which the deceased person died intestate for purposes of distribution or division amongst the persons entitled, (c) lease the real estate of the deceased person in possession for any term not exceeding three years. (2) Any conditions may be imposed on the exercise of any such power of sale, mortgage, or lease by an administrator, and either generally or in the case of a particular sale, mortgage, or lease, by rules of court, or by the court in the grant of administration (if any) or by other order. (2A) No conditions imposed on the exercise by an executor of any such power of sale, mortgage, or lease shall operate after the commencement of the Conveyancing (Amendment) Act 1930. (2B) The court shall cause to be embodied in or endorsed on every certificate of the grant of administration a copy or record of any such conditions imposed by the order of the court. (2C) No purchaser nor the Registrar-General, Crown Solicitor, or other person registering or certifying title under any sale, mortgage, or lease under this section shall be affected by any such conditions imposed by order of which the purchaser, Registrar-General, Crown Solicitor or person has not actual notice unless a copy or record of the order is registered. (3) No purchaser, nor the Registrar-General, Crown Solicitor, or other person registering or certifying title under any sale, mortgage, or lease under this section, shall be bound to inquire whether the powers abovementioned or any of them are being or have been exercised for the purposes abovementioned, and the receipt of the executor or administrator shall be sufficient discharge, and shall exonerate the persons paying the same from any responsibility for the application of the moneys expressed to have been so received. (4) Some or one only of several executors or administrators shall be entitled to exercise such powers with the leave of the court and not otherwise, and the court may make such orders as it thinks fit for the purpose of carrying out any such sale, mortgage, or lease.

By s 152, ‘purposes of administration’ is defined to include the payment in due course of administration of the debts, funeral and testamentary expenses,

duties and commission, and the costs, charges and expenses of the executor or administrator, and any costs which may be ordered to be paid out of the estate. [page 453] By the same Act, s 157A, where land is acquired by resumption (under the Land Acquisition (Just Terms Compensation) Act 1991, or any other Act authorising the compulsory acquisition of land) from a trustee or personal representative, the trustee or personal representative or his or her successor in office is entitled to sell and convey the land resumed, and to agree upon and receive compensation money in respect of the resumption. By s 66C of the Conveyancing Act 1919, a trust is implied for sale of land purchased by trustees where the trust instrument contains a power to invest money in the purchase of land and the trustees have purchased the land under that power. If trustees purchase land with trust moneys when they have no power to do so under the trust instrument, they have power to resell the land so purchased provided all the beneficiaries are sui juris and absolutely entitled and desirous of taking the land in specie.15 Other jurisdictions [20-05] Western Australia (s 43) and Queensland (s 45) are similar to s 38 of New South Wales. However, Western Australia and Queensland have gone much further than New South Wales, by giving to trustees a general power to sell the trust property: s 27(1)(a) and s 32(1)(a) respectively. Tasmania lacks both a general power and an equivalent to the New South Wales s 38. South Australia has, in s 28B, followed the New South Wales provision. In Victoria, s 20 follows the New South Wales s 38. Section 44(1) of the Administration and Probate Act 1958 (Vic) provides: 44. (1) In dealing with the real and personal estate of the deceased his personal representatives shall for purposes of administration have — (a) the same powers and discretions including power to raise money by mortgage with or without power of sale or charge (whether or not by deposit of documents) as a personal representative had before the first day of January One thousand eight hundred and seventy-three with respect to personal estate vested in him; and (b) all the powers discretions and duties conferred or imposed by law on trustees holding

land upon an effectual trust for sale; and (c) all the powers conferred by statute on trustees for sale and so that every contract entered into by a personal representative shall be binding on and be enforceable against and by the personal representative for the time being of the deceased, and may be carried into effect or be varied or rescinded by him and in the case of a contract entered into by a predecessor as if it had been entered into by himself.

This provision is of course limited to ‘the purposes of administration’. Section 38(1) of the Administration and Probate Act 1958 (Vic) provides as follows: 38. (1) On the death of a person intestate as to any real or personal estate, such estate shall be held by his personal representatives — (a) as to the real estate (including chattels real) upon trust to sell the same; and (b) as to the personal estate upon trust to call in sell and convert into money such part thereof as may not consist of money — with power to postpone such sale and conversion for such a period as the personal representatives, without being liable to account, think proper, and so that any [reversionary] interest shall not be sold until it falls into possession, unless the personal representatives see special reason for sale, and so also that, unless required for purposes of administration owing to want of other assets, personal chattels shall not be sold except for special reason.

Section 40 of the Property Law Act 1958 (Vic) makes the provisions of that Act (ss 31–39) relating to trustees for sale of land applicable to personal representatives holding on trust for sale, but without prejudice to their rights and powers for purposes of administration. [page 454] ‘Personal representative’ is defined as meaning the executor (original or by representation) or the administrator for the time being of a deceased person.16

Duration of power New South Wales [20-06] The Trustee Act 1925, by ss 27 and 27C, introduced considerable amendment to the law governing the duration of a power of sale and the effect of the rule against perpetuities. In order to understand the effect of these amendments it is necessary to consider the law as it previously stood.

Where property was given to trustees upon trust for sale at a future time or with an unlimited power of sale, the power or trust for sale might be void as infringing the rule against perpetuities, as in Re Wood,17 where a testator directed his trustees to carry on his business of a gravel contractor until his freehold gravel-pits were exhausted and then to sell the gravel-pits and divide the proceeds among his children then living. Both the trust for sale and the trust for division of the proceeds were held to be void for remoteness.18 Although the trust for sale might be void, it did not follow that the gift of the proceeds was necessarily void. The trust for sale might be void as being too remote and yet the intended beneficiaries might obtain their gifts.19 In Re Daveron,20 there was a devise of a freehold to trustees, subject to an unexpired lease, which had 40 years to run, upon trust to pay the rent during the currency of the lease to certain named persons, and ‘upon expiration of the lease’ upon trust for sale and division among other named persons ascertainable within the limits of the rule against perpetuities. Although the trust for sale was void, the beneficiaries were held entitled to the intended gifts since, in equity, they could take the property as realty. Where there was simply a general power without limit, the power had to be determined in its duration by the nature of the limitations in the trust instrument and, of course, had to be exercised within the limits imposed by the rule against perpetuities; and only while the purposes of the settlement or will remained unexhausted.21 Since the rule against perpetuities applied to powers of sale, a power of sale unlimited in point of time was in danger of being void under the rules. If the testator or settlor showed no clear intention that the power should be exercised outside the time allowed by the rule, the court presumed an intention that the power should only be exercisable until the time when all beneficiaries were sui juris and absolutely entitled in possession or at the latest within a reasonable time thereafter, allowed for realisation of the property.22 If the instrument were read as showing such an intention, the rule was infringed. However, if such an intention could not be presumed, as it clearly could not be in Re Daveron,23 then the power of sale was void. Although this presumption was convenient in preventing powers of sale being void as offending the rule against perpetuities, it caused considerable conveyancing difficulties.24 Where the beneficiaries were sui juris and absolutely entitled, the purchaser had to inquire

[page 455] whether they had elected to take the property in specie.25 Further, there was the possibility that the power had determined by application of the presumption of intention. Section 27 of the Trustee Act 1925 (NSW) (as amended by s 2 of the Trustee (Amendment) Act 1929 (NSW)) now provides: 27. (1) Where the instrument creating a trust or power to sell property does not expressly limit the duration of the trust or power, the trustee may, if so requested in writing by any beneficiary, sell the property under the authority conferred by this section and shall be deemed to be a trustee for sale accordingly, notwithstanding any lapse of time or that all the beneficiaries are absolutely entitled to the property in fee simple or full ownership in possession and are free of any incapacity, but in all other respects the authority conferred by this section shall be subject to any restrictions to which the power or trust created by the instrument is subject. (2) Nothing in this section shall affect any trust or power to sell which is for the time being in existence under the instrument creating the trust or power. (3) This section applies only if and as far as a contrary intention is not expressed in the instrument creating the trust or power and shall have effect subject to the terms of that instrument and to the provisions therein contained.

In 1929, there was also introduced s 27C, which was taken from the Trustee Act 1925 (UK), and which may be regarded as being by way of further assurance to purchasers in New South Wales: 27C. (1) A trust for sale shall, so far as regards the safety and protection of any purchaser, be deemed to subsist notwithstanding any lapse of time until the property is conveyed to or under the direction of the persons interested in the proceeds of sale, and in the case of land until the conveyance is duly registered. (2) Nothing in this section shall prevent any court from making an order restraining a sale.

Section 27 of the Trustee Act 1925 (NSW) did not, however, solve all the difficulties. If the trust instrument, as in Re Daveron,26 showed a clear intention that the power should or need27 not be exercised within the time allowed by the rule against perpetuities, the power of sale would still be void. By s 11 of the Perpetuities Act 1984 (NSW),28 the rule against perpetuities does not invalidate an ‘administrative power’ in relation to trust property during the subsistence of a beneficial interest in the trust property. The definition of ‘administrative power’ includes a power of sale. Other jurisdictions [20-07] Section 27 of the Trustee Act 1925 (NSW) and s 11 of the

Perpetuities Act 1984 (NSW) have their counterparts in the Australian Capital Territory,29 Victoria,30 Western Australia,31 Queensland,32 Tasmania33 and the Northern Territory,34 but not in South Australia.

Postponement of sale New South Wales [20-08] It was common to insert in wills or settlements, which created a trust for sale, a power to postpone the sale. Now, however, the power to postpone sale is implied in a trust for sale, unless a contrary intention appears. Section 27B of the Trustee Act 1925 provides: [page 456] 27B. (1) A power to postpone sale shall be implied in every trust for sale, unless a contrary intention appears. (2) Where there is a power to postpone sale, then (subject to any express direction to the contrary in the instrument, if any, creating the trust for sale) the trustee for sale shall not be liable in any way for postponing the sale, in the exercise of the trustee’s discretion, for any indefinite period; nor shall a purchaser be concerned in any case with any directions respecting the postponement of sale. (3) The provisions of subsections (1) and (2) apply to trusts created either before or after the commencement of this Act. (4) Where a disposition or settlement coming into operation after the commencement of the Trustee (Amendment) Act 1929 contains a trust either to retain or sell any property, the same shall be construed as a trust to sell the property with power to postpone the sale.

With this power to postpone sale must now be read the provisions of s 66D of the Conveyancing Act 1919 as to the powers of management conferred on trustees for sale during such postponement and as to the disposition of income during such postponement: 66D. (1) Subject to any direction to the contrary in the disposition on trust for sale, trustees for sale shall, in relation to land during postponement of sale, have the powers of management conferred by s 151C during a minority, but without the restriction relating to waste and the cutting of timber. (2) Subject to any direction to the contrary in the disposition on trust for sale or in the settlement of the proceeds of sale, the net rents and profits of the land until sale, after keeping down costs of repairs properly payable out of income, insurance, and other outgoings, shall be

paid or applied in like manner as the income of investments representing the purchase money would be payable or applicable if a sale has been made and the proceeds had been duly invested. (3) Where the net proceeds of sale have under the trusts affecting the same become absolutely vested in possession in two or more persons as joint tenants or tenants in common, the trustees for sale may, with the consent of the persons, if any, of the age of eighteen years or upwards, not being annuitants, interested in possession in the net rents and profits of the land until sale: (a) partition the land remaining unsold or any part thereof, and (b) provide (by way of mortgage or otherwise) for the payment of any equality money, and, upon such partition being arranged, the trustees for sale shall give effect thereto by conveying the land so partitioned in severalty (subject or not to any mortgage created for raising equality money) to the persons entitled under the partition, but a purchaser shall not be concerned to see or inquire whether any such consent as aforesaid has been given. (4) (a) If a share in the net proceeds belongs to a person under mental disability, the consent of the person charged by law with the management and care of the property of the person under mental disability or, if there is no person so charged, of the court, shall be sufficient to protect the trustees for sale. (b) If a share in the net proceeds is affected by an incumbrance, the trustees for sale may either give effect thereto or provide for the discharge thereof by means of the property allotted in respect of such share, as they may consider expedient. (5) If a share in the net proceeds is absolutely vested in a minor, or in a person who cannot be found or ascertained, or as to whom it is uncertain whether the person is living or dead, the trustees for sale may act on behalf of the minor or person, and retain land or other property to represent the minor or person’s share.

Section 151C of the Conveyancing Act 1919, which is thus incorporated in s 66D by reference, is as follows: 151C. (1) If and as long as any person who is entitled to a beneficial interest in possession affecting land is a minor, the trustees appointed for this purpose by the settlement, or if there are none so appointed, then the trustees of the settlement, unless the settlement or the order of the court whereby they or their predecessors in office were appointed to be such trustees expressly provides

[page 457] to the contrary, or if there are none, then any persons appointed as trustees for this purpose by the court on the application of a guardian or next friend of the minor may enter into and continue in possession of the land on behalf of the minor, and in every such case the subsequent provisions of this section shall apply. (2) The trustees shall manage or superintend the management of the land, with full power: (a) to fell timber from time to time in the usual course for sale, or for repairs or otherwise, and (b) to erect, alter, pull down, rebuild, and repair houses, and other buildings, dams, fences, and other erections, and

(c)

to continue the working of mines, minerals, and quarries which have usually been worked, and

(d) to drain or otherwise improve the land or any part thereof, and (e) to insure against any insurable risk, and (f) to grant leases for any term not exceeding three years, and (g) to make allowances to and arrangements with tenants and others, and (h) to determine tenancies, and to accept surrenders of leases and tenancies, and (i) generally to deal with the land in a proper and due course of management, but so that, where the minor is impeachable for waste, the trustees shall not commit waste, and shall cut timber on the same terms only, and subject to the same restrictions, on and subject to which the minor could, if of the age of eighteen years or upwards, cut the same. (3) The trustees may from time to time, out of the income of the land, including the produce of the sale of timber, pay the expenses (including any commission to which they are entitled) incurred in the management or in the exercise of any power conferred by this section or otherwise in relation to the land, and all outgoings not payable by any tenant or other person, and shall keep down any annual sum and the interest of any principal sum charged on the land. (4) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, under which the interest of the minor arises, and has effect subject to the terms of that instrument and to the provisions therein contained.

This power of management only exists when there is a binding trust for sale and does not exist when there is a power of sale only. Other jurisdictions [20-09] Section 27B of the New South Wales Trustee Act 1925 has been adopted in the Australian Capital Territory (s 27B), Victoria (s 13), Western Australia (s 27) and Queensland (s 32), but has provoked no response in Tasmania, South Australia or the Northern Territory.

Exercise of power New South Wales and the Australian Capital Territory [20-10] By s 26 of the legislation, the trustee for sale, which by the definition in s 5 includes a trustee having power of sale,35 may exercise the powers set out as follows: 26. (1) A trustee for sale may: (a) sell all or any part of the trust property, (b) sever and sell fixtures apart from the balance of the property, (c) grant and sell any easement right or privilege of any kind over or in relation to the property,

(d) do anything that a mortgagee may do under subsection (1) of section 110 of the Conveyancing Act 1919 to the like extent as if the powers conferred by that subsection on a mortgagee in relation to the mortgaged property or any part thereof were in terms conferred by this subsection on the trustee in relation to the trust property or any part thereof,

[page 458] (e) join with any other person in doing anything under any of the preceding paragraphs of this subsection, (f) pay or apply capital money subject to the trust for any of the purposes mentioned in this subsection. (2) The sale may be subject to any such conditions respecting title or evidence of title or other matter as the trustee thinks fit, and may be: (a) either subject to prior charges or not, (b) either together or in lots, in subdivision or otherwise, (c) by public auction or by private contract. (3) The trustee may vary any contract for sale, buy in at any auction, rescind any contract for sale and re-sell, without being answerable for any loss. (4) If the trustee joins with any other person in selling, the purchase money shall be apportioned in or before the contract of sale, and a separate receipt shall be given by the trustee for the apportioned share. (4A) A contravention of subsection (4) of this section shall not invalidate or be deemed to have invalidated any instrument intended to affect or evidence the title to any land. (5) This section applies only if and as far as a contrary intention is not expressed in the instrument creating the trust or power, and shall have effect subject to the terms of that instrument and to the provisions therein contained. …

[20-11] Apart from the foregoing statutory provisions and subject to any directions in the instrument of trust, trustees having a power of sale could not join in selling other property along with trust property except where the total purchase money could be apportioned accurately and the sale was for the benefit of the trust estate. Such a transaction was one that required to be justified by reason of the resulting advantage to the trust.36 Formerly, it was doubtful whether, even in a proper case for a joint sale, the apportionment should necessarily appear in the contract of sale or whether it was sufficient if the apportionment was made before the completion of the transaction. Apart from statute, trustees can exercise their power of sale only in

accordance with the provisions of the trust instrument. If they enter into a contract of sale where they have no authority to sell or under circumstances under which they cannot sell, they cannot give a purchaser a good title. If, for example, a power of sale is to arise upon the death of a tenant for life, the trustees cannot sell prior to the termination of the life tenant’s estate.37 Where all the beneficiaries, including the tenant for life, concur in a binding manner, the trustees can give a good title.38 Where trustees have a power of sale, this does not authorise them to enter into a contract to sell at a future time at a price fixed at the present time without regard to the value of the property at the future time.39 ‘The ground on which the grant of an option to purchase at some [page 459] time in the future is treated as improper on the part of the trustees is that it precludes them in advance from exercising their judgment according to the circumstances as they exist at the time of the sale.’40 But the giving by a trustee of an option to purchase the trust estate is not bad in every case, as where an option is given for such time as would enable a purchaser to conclude that it would be profitable to acquire the property, and to arrange finances. Thus trustees, who were careful not to tie up the trust property for long periods, though from time to time they extended the options and received consideration for the giving of them, have been held not to have departed from their duty as trustees.41 Similarly, for trustees to agree to sell at a price to be fixed by someone else would be such a delegation of their powers as would amount to a breach of trust.42 [20-12] A power of sale does not prima facie imply a general power of leasing.43 But in Re Judd’s Contract,44 trustees of leasehold property disposed of one lease in lots by way of underlease and this was held a valid exercise of a trust for sale. Now, in the case of a trust for sale, the trustee has the power of management conferred by s 66D of the Conveyancing Act 1919 (NSW) and of leasing conferred by s 36 of the Trustee Act 1925 (NSW). Nor does a power of sale imply a power to mortgage,45 though such a power to mortgage may be implied if the purpose of the sale is in order to raise a particular charge.46

It is a breach of trust to disregard the directions given in the trust instrument and to sell in a manner or under circumstances not authorised by the settlor or to sell in such a manner as not to obtain the best price for the property; and in such cases the trustees will be held liable for any loss sustained by the trust estate.47 Thus trustees should ordinarily invite competition and, even though they do so, they should fix a reserve price after properly informing themselves of the value of the property through a competent valuer.48 However, if they perform these duties, the trustees are not responsible if the beneficiaries seek to impeach the sale as improvident.49 The duty of a trustee to obtain the best price is one which overrides any questions of commercial morality. Therefore, where trustees had negotiated with A to sell at one price and had virtually arrived at the stage of signing a contract when they were offered a higher price by B, it was held that they could not proceed to sign the contract without at least investigating the other offer.50 But where trustees put a property up to auction with a reserve price of $16,000 and the bidding did not go beyond $12,000, it was held that they were justified in concluding a contract for the [page 460] sale of the property for $16,000 a few days later, although there was no advertisement that the property was for private sale.51 Other jurisdictions [20-13] Section 13(1) of the Victorian Trustee Act 1958 provides as follows: Where a trust for sale or a power of sale of property is vested in a trustee, he may sell or concur with any other person in selling all or any part of the property, either subject to prior charges or not, and either together in lots, by public auction or by private contract, subject to any conditions respecting title or evidence of title or other matter as the trustee thinks fit, with power to vary any contract for sale, and to buy in at any auction, or to rescind any contract for sale and to re-sell, without being answerable for any loss.

Corresponding legislation exists in South Australia (s 20), Tasmania (s 16) and the Northern Territory (s 14); the same effect obtains in Queensland and Western Australia by virtue of the great scope of the powers of sale in ss 32 and 27 respectively of their Acts. By s 28A of the Western Australian Act, specific provision is made for a trustee who has a power of sale to grant to a person an option to purchase land, provided that the trustee has received advice from an

independent valuer to the effect that the purchase price and the fee payable for the option are reasonable.

Depreciatory conditions New South Wales [20-14] These are conditions which injuriously affect the title of the vendor and therefore tend to make purchasers less ready to buy and tend to make them bid less for the property. It is an elementary rule in equity that when selling trust property under a power of sale, trustees must obtain the highest possible price and must not do anything that would prejudice the sale or tend unnecessarily to depreciate the value of the property in the eyes of possible purchasers. Hence, the rule against the insertion in conditions of sale of unnecessary depreciatory conditions.52 Formerly, a purchaser could refuse to complete if the contract contained unnecessarily depreciatory conditions, because that purchaser would be taking with notice of the breach of trust arising from their insertion in the contract.53 Now, by virtue of s 30 of the Trustee Act 1925 (NSW) a beneficiary cannot impeach a sale by a trustee on the ground of unnecessarily depreciatory conditions unless the consideration for the sale has been thereby rendered inadequate. If the sale is completed by conveyance, it cannot be impeached as against the purchaser upon the ground of unnecessarily depreciatory conditions unless it appears that the purchaser acted in collusion with the trustees when the contract for sale was made. The purchaser cannot object to the title on the ground of such conditions. Other jurisdictions [20-15] All other jurisdictions have legislation corresponding to s 30 of the New South Wales Act.54

Sale on terms Non-monetary consideration [20-16] Trustees selling under a power of sale or under a trust for sale were

previously not authorised, except in special circumstances, to accept any other consideration than the [page 461] payment of money. But if they had a power of investment in the particular class of property that is being dealt with, they might take part of the purchase money in cash and leave the rest on mortgage as an investment. In so doing, they were held to be simply carrying out the directions given by the will.55 New South Wales [20-17] Now s 28 of the Trustee Act 1925 (NSW) gives trustees power to sell on terms and contains detailed provisions relating to such deferred sales. The section provides: 28. (1) A trustee for sale may sell land on terms of deferred payment or otherwise. (2) The terms of deferred payment may provide either for the purchase money being paid by instalments, or for the unpaid purchase money being secured by mortgage. (3) If the purchase money is to be paid by instalments, the terms upon which the land is sold shall, in addition to such other provisions as the trustee may deem proper, include provisions for giving effect to the following: (a) that part of the purchase money shall be paid on the execution of the contract of sale, (b) that the balance of the purchase money shall be payable in instalments, the first not later than three years from the date of the contract of sale and the others at intervals of not more than a year beginning from the date on which the first instalment is payable, and shall bear interest payable half-yearly or oftener on the amount from time to time unpaid. No instalment which is made payable during the first three years from the date of the contract of sale shall be of an amount less than five per centum of the purchase money, and all instalments which are made payable after the third year from the date of the contract of sale shall be equal in amount, (c) that the whole of the purchase money and interest shall be payable within a period not exceeding ten years from the date of the contract of sale, (d) that if any instalment or interest or part thereof is in arrear and unpaid for six months or for such less period as may be specified, the whole of the purchase money shall become due and payable. (4) If the unpaid purchase money is to be secured by mortgage, the terms upon which the land is sold shall, in addition to such other provisions as the trustee may deem proper, include provisions for giving effect to the following: (a) that part of the purchase money shall be paid on the execution of the contract of sale, (b) that the unpaid purchase money shall be secured by a registered mortgage of the land

sold, with or without the security of any other property, and shall bear interest payable half-yearly or oftener on the amount from time to time unpaid, (c) that the mortgage shall contain covenants by the mortgagor to pay the principal money secured and the interest thereon, to maintain and protect the property, and to keep all buildings, if any, thereon insured against loss or damage by fire to the full insurable value thereof, (d) that notwithstanding section 106 of the Conveyancing Act 1919 the mortgagor shall not have power to make any lease of the property, unless the trustee consents in writing. (5) Whether the purchase money is to be paid by instalments or the unpaid purchase money is to be secured by mortgage, the trustee shall not be deemed to be lending money within the meaning of section 18 so as to be bound to act in accordance with the provisions of that section, and shall not be liable for any loss which may be incurred by reason only of the security being insufficient at the date of the mortgage. (6) The part of the purchase money to be paid on the execution of the contract of sale shall not be less than the sum which a person acting with prudence would, if the land were the person’s own, have accepted in the circumstances in order to sell the land to the best advantage.

[page 462] (7) The trustee shall not be bound to require payment of any greater part of the purchase money before letting the purchaser into possession, or before conveying the land and taking a mortgage back, than a person acting with prudence would, if the land were the person’s own, have considered as sufficient, provided that the trustee shall not convey the land and take a mortgage back until at least one-tenth part of the purchase money has been paid. (8) Notwithstanding that the purchase money is to be paid by instalments, the trustee may at any time after one-tenth of the purchase money has been paid convey the land and take a mortgage back in any case where a person acting with prudence would, if the land were the person’s own, have been willing in the circumstances so to do, and in any such case the mortgage shall be in accordance with paragraphs (b) (c) and (d) of subsection (4), and the provisions of subsection (5) shall apply. (9) Any mortgage under this section may be for any period not exceeding ten years from the date of the contract of sale. (10) The trustee may, on such terms, if any, as the trustee deems proper, by writing waive or vary any right arising from failure to comply with any term of the contract of sale or of any mortgage under this section within the proper time. (11) Where the sale is made under the order of the Court, the provisions of this section shall apply, unless the Court shall otherwise direct. (12) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

In two other respects the Trustee Act 1925 (NSW) gives to trustees powers respecting the mode of sale of property. By s 31 a trust or power to sell or dispose

of land includes a trust or power to sell or dispose of part thereof whether the division is horizontal, vertical or otherwise, and by s 32 a trustee under a trust for or power of sale of land may sell with or without an exception or reservation of mines and minerals and may sell the mines and minerals separately. Other jurisdictions [20-18] All jurisdictions, except Tasmania and the Northern Territory, have legislation to the same effect as s 28 of the New South Wales Act.56 However, there are differences in matters of detail; thus while in New South Wales, the Australian Capital Territory and South Australia the trustee may, in an instalment sale, convey title and take a mortgage back after one-tenth of the purchase money has been paid, in Victoria the fraction is two-fifths; in Western Australia and Queensland, it is one-third.

Power to Lease Rule [20-19] Where powers of leasing are given by the trust instrument, the powers will be exercised in accordance with the terms of the instrument; but these powers are, in all jurisdictions but Tasmania and the Northern Territory, supplemented by implied powers given by statute.

New South Wales [20-20] Trustees having a power of sale are not thereby necessarily given a power to grant leases.57 However, trustees under a binding trust for sale have the power of leasing conferred by s 66D of the Conveyancing Act 1919 (NSW).58 Subject to any restrictions contained in the trust instrument, and to the provisions of any statute, a trustee with power to manage the trust property may do all reasonable and necessary [page 463]

acts for the efficient management of the trust property. Thus in the absence of any express or implied restriction in the trust instrument a trustee who has the management of property may lease it for short terms.59 Prior to s 36 of the Trustee Act 1925 (NSW), a trustee could not safely lease for longer than from year to year.60 The lease had to be a reasonable one and the onus was upon the trustee and the lessee to show that it was.61 Trustees could not grant a lease with an option of renewal on payment of a fixed fine.62 They could not, and still cannot, grant a lease containing an option to purchase.63 A lease granted for a term in excess of express, implied or statutory power is void in equity.64 Limited powers of leasing are now given to trustees under s 36 of the Trustee Act 1925 (NSW). The length of time for which a trustee may grant a lease depends upon whether the trustee has or has not a power of management and upon whether the trustee holds the land upon trust for sale with express power to postpone sale, or upon trust for sale with implied power to postpone sale. It will be recalled that s 27B of the Trustee Act 1925 gives trustees, holding property on trust for or with power of sale, a power to postpone sale. But in s 36 a distinction is drawn between the powers of a trustee to lease when the power to postpone is express and when it is implied. For a trustee, who holds land with power to manage the same or upon trust for sale with express power to postpone sale, may lease the land for any term not exceeding five years (s 36(1)(a)); but where the trustee holds the land without power to manage or upon trust for sale without an express power to postpone sale, the trustee may only lease for a term not exceeding three years: s 36(1)(b). With this power of leasing should be compared the power of leasing conferred on a trustee for sale by s 66D and s 151C of the Conveyancing Act 1919 (NSW). Under these sections, the trustee for sale has, among his or her powers of management, a power to lease for a term not exceeding three years. The two sets of statutory provisions result in some degree of duplication and, it would seem, some degree of confusion. Although a trustee for sale is given certain powers of management under s 66D, the trustee is not thereby given ‘power to manage’ under s 36(1)(a) of the Trustee Act 1925 (NSW) because if the trustee were, the trustee could lease for five years, whereas under s 66D and s 151C of the Conveyancing Act 1919 (NSW) the trustee can only lease for three years. Again, it would appear that s 66D, although it expresses no such limitation, does not apply to the power of leasing of a trustee for sale with express power to postpone sale, because, if it did, it would be inconsistent with s 36(1)(a) of the Trustee Act 1925, which gives such a trustee a power to lease for five years. It is

necessary therefore, in respect of the power to lease, to read s 66D of the Conveyancing Act 1919 in conjunction with s 36 of the Trustee Act 1925 and, in this respect, to distinguish the powers of management referred to in each section and to extend the power of leasing by trustees for sale with express power to postpone from the period of three years suggested by s 66D to the period of five years provided for in s 36. The question then arises — what is meant by ‘power to manage’ in s 36(1)? At most, a negative answer is given by the statute itself, as s 36(2) provides that a trustee shall not be deemed to hold land with power to manage the same within the meaning of the section by reason only of the fact that it is proper to postpone sale in order to sell to the best advantage and in the meantime to manage the land. The words also cannot be taken to refer to the powers of management under s 66D and s 151C of the Conveyancing Act 1919 (NSW). It would appear that the ‘power to manage’ in s 36 is an express power to manage conferred on [page 464] the trustee in the instrument creating the trust or one arising by necessary implication. Thus, if trustees of a grazing property, even though they were given no power to sell, were given power to manage the property for the beneficiaries, they could grant a lease of the property for a term not exceeding five years. Conversely, where a trust for sale was created but there was a direction to postpone sale, but no direction for management in the meantime, a power of management was implied.65 A lease under s 36 and a lease under power contained in the trust instrument may provide for an increasing rent and may give an option of renewal, provided the total term under the lease and the option does not exceed the term for which the trustee is authorised to lease.66 Section 36(4) provides: 36. (4) If the land is the subject of a settlement within the meaning of Pt 4 of the Conveyancing and Law of Property Act 1898, and there is any other person authorised by the settlement or by that Act to demise the land or any part thereof, this section shall not apply unless that person in writing authorises the trustee to make the lease.

The purpose of this subsection is to preserve the powers of leasing given by

the Act mentioned to tenants for life and holders of life interests in land. Such a person, if entitled to the possession or to receive the rents and profits of land, may lease for a term not exceeding 10 years.67 However, where there are trustees who are not bare trustees, it is the trustees and not the equitable life tenant and holders of similar equitable interests who are entitled to possession and to receive the rents and profits,68 with the result that s 36(4) does not in the majority of cases curtail the trustee’s power of leasing given by s 36. For it is expressly provided by s 36(6) that the section shall not apply to a bare trustee for persons all of whom are entitled in possession and are free of any incapacity. Section 36(3) introduces the limitation upon the duration of a power to lease which was formerly implied in a power of leasing conferred by the trust instrument.69 Formerly the implication prevented a power of leasing not expressly limited in duration from offending against the rule against perpetuities. Now, however, there is not the same danger of such a power of leasing being void under the rule. This is because of s 11 of the Perpetuities Act 1984 (NSW), which provides that the rule against perpetuities shall not render void any trust or power to lease in any case where the lease directed or authorised is ancillary to the performance of a valid trust: see [20-06]. The type of lease which may be granted under s 36 is provided for in s 36(5). 36. (5) Subsections (4), (5), (6), (7), (8), and (10) of section 106 of the Conveyancing Act 1919 shall apply to any lease under this section: Provided that if the land includes premises licensed under the Liquor Act 2007 a bonus or fine may be taken in respect of the lease, and the trustee shall apportion the same over the period of the lease as if it were rent, but no person paying any such bonus or fine shall be concerned to see that any such apportionment is made.

The subsections of s 106 of the Conveyancing Act 1919 referred to in s 36(5) are as follows: 106. (4) Every person making a lease under this section may execute and do all assurances and things necessary or proper in that behalf. (5) Every such lease shall be made to take effect in possession not later than three months after its date. (6) Every such lease shall reserve the best rent that can reasonably be obtained, regard being had to the circumstances of the case, but without any fine being taken or the rent made payable in

[page 465]

advance except as to the last payment which may be made payable on a day not more than one month before the expiration of the term. (7) Every such lease shall contain a condition of re-entry on the rent not being paid within a time therein specified not exceeding thirty days, and the covenants implied by section 84 shall not be excluded therefrom. (8) Where the land comprised in any such lease is under the provisions of the Real Property Act 1900, the lease shall be registered in accordance with the provisions of that Act. … (10) A contract to make or accept a lease under this section may be enforced by or against every person on whom the lease if granted would be binding if: (a) in so far as the lease, if granted, would comprise land under the provisions of the Real Property Act 1900 — a caveat has been lodged pursuant to section 74F of that Act is respect of the contract, and (b) in so far as the lease, if granted, would comprise land not under the provisions of the Real Property Act 1900 — the contract has been registered pursuant to Division 1 of Part 23.

Other jurisdictions [20-21] Section 36 of the New South Wales Act was adopted in the Australian Capital Territory: s 36. It was adopted in South Australia by s 25C of the Trustee Act 1936 (SA), but with the alteration of the maximum terms appearing in s 36(1)(a)(b) to 10 and five years respectively. Tasmania and the Northern Territory have made no statutory provision in this behalf. Western Australia (s 27(1)(d)) empowers trustees to let or sublet any property for any terms not exceeding one year, or from year to year, or for a weekly, monthly or other like tenancy or at will. The Queensland Act (s 32(1)(d)) reproduces the Western Australian provision but goes on to add sharefarming agreements on reasonable terms for any period not exceeding one year and to permit renewal of leases, tenancies and sharefarming agreements. The Queensland and Western Australian Acts also contain provisions in identical form (s 32(1)(e), (f), (3), and s 27(1)(e), (f), (3) respectively). The former are as follows: (1) Subject to the provisions of this section, every trustee, in respect of any trust property, may — (e) grant a lease or sublease of the property for any term not exceeding — (i) in the case of a building lease — 30 years; or (ii) in the case of any other lease (including a mining lease) — 21 years; to take effect in possession within 1 year next after the date of the grant of the lease or sublease at a reasonable rent, with or without a fine, premium or foregift, any of which if taken shall be deemed to be part of and an accretion to the rental, and shall, as

between the persons beneficially entitled to the rental, be considered as accruing from day to day and be apportioned over the term of the lease or sub-lease; (f) at any time during the currency of a lease of the property, reduce the rent or otherwise vary or modify the terms thereof, or accept, or concur or join with any other person in accepting, the surrender of any lease. (3) In exercising any power of leasing or subleasing conferred by this section or by the instrument (if any) creating the trust, a trustee may — (a) grant to the lessee or sublessee a right of renewal for 1 or more terms, at a rent to be fixed or made ascertainable in a manner specified in the original lease or the original sublease, but so that the aggregate duration of the original and of the renewal terms shall not exceed the maximum single term that could be granted in the exercise of the power; or (b) grant a lease with an optional or compulsory purchasing clause; or (c) grant to the lessee or sublessee a right to claim compensation for improvements made or to be made by the lessee or sublessee in, upon or about the property which is leased or subleased.

[20-22] In Victoria, there is a complex of statutory provisions. It is as follows. Section 35(1) of the Property Law Act 1958 (Vic) confers on trustees for sale, in relation to land, all the powers of a tenant for life and the trustees of a settlement under the Settled Land Act 1958 (Vic). Sections 38 and 44 of the Administration and Probate Act 1958 (Vic) in turn confer [page 466] the power of a trustee for sale upon the personal representative of a deceased person ‘for the purposes of administration’, which will somewhat restrict the power of leasing in most cases. Without prejudice to their rights and powers for purposes of administration, s 40 of the Property Law Act 1958 confers the same powers on personal representatives holding on trust for sale. Section 45 of the Administration and Probate Act 1958 confers a special power on a personal representative to demise land for a term of years absolute (as defined by s 3 of the Settled Land Act 1958) ‘for giving effect to beneficial interests’. The Settled Land Act 1958 (Vic) confers extensive powers of leasing upon the tenant for life, partly on himself or herself alone, partly on himself or herself with the consent of the trustees of the settlement or order of the court (ss 41– 43); it is given with regard to the whole or any part of the settled land or any easement, right or privilege of any kind over or in relation to it, for any purpose.

Tenants for life by themselves may grant leases for terms not exceeding 21 years, without any previous notice to the trustees and their solicitors,70 and without the consent of the trustees of the settlement or order of the court, even where there are no trustees, provided that: (1) the lease is at the best rent that can be reasonably obtained without fine; and (2) the lease is not exempted from punishment for waste. Where the term does not extend beyond three years, the lease must be in writing with an agreement by the lessee for payment of rent and a condition of re-entry on the rent not being paid within a specified time not more than 30 days. Where the lease extends beyond three years, it must be made by deed, take effect in possession within one year or in reversion within three years, and it must contain a covenant by the lessee for payment of the rent, and a condition of re-entry on the rent not being paid within a specified time not more than 30 days. In all other cases, the consent of the trustees of the settlement or an order of the court must be obtained; the terms must not exceed: (1) in case of a building lease, 50 years; (2) in case of a mining lease, 60 years; (3) in case of any other lease, 21 years. The lease may be made ‘without impeachment of waste’; it must reserve the best rent reasonably obtainable, but here — in contrast to the power given without consent of the trustees or the court — regard may be given to any fine taken, and to any money laid out or to be laid out for the benefit of the land, and generally to the circumstances of the case. The lease must be made by deed which must contain the above-mentioned covenant. The express provision of s 43 empowers the tenant for life to confirm an otherwise void or voidable lease (if it was within the relevant powers); it further empowers the tenant for life to include a covenant for renewal (in such manner and so far as the law permits), which could be enforced against the owner for the time being of the land; it should be noted that there is no power to grant an option to purchase. The Act contains special provisions for building and mining leases in ss 44– 47. There are also special provisions with respect to the variation, release, waiver or modification of the terms of a lease and with respect to giving any consent required to assignment, subletting or parting with the possession of the

land comprised in a lease (s 59); and with respect to the apportionment of any rent reserved by a lease to various parts of the property comprised in the lease, together with the necessary incidental powers: s 60(1). It also empowers a tenant for life, with the consent of the trustees of the settlement or order of the court, to accept with or without consideration a surrender of any lease of the whole or a part of the settled land [page 467] (including a power of apportionment in the latter case) and to make new or other leases over the whole or parts of such land: s 52.

Surrender of Onerous Leases and Renewal of Leaseholds [20-23] It is convenient here to refer to particular statutory provisions which deal with situations where the trustee is not lessor but lessee.

Surrender of onerous leases — New South Wales [20-24] Section 35 of the Trustee Act 1925 provides as follows: 35. (1) Where a leasehold is vested in a trustee and the property is subject to onerous covenants of such a nature that it would not be in the interests of the beneficiaries to retain the property, the trustee may surrender or concur in surrendering the lease. (2) The trustee shall not be chargeable with breach of trust nor shall the surrender be impeached by any beneficiary upon the ground only that the covenants were not of such a nature, provided that the trustee has acted bona fide and on the advice of a person whom the trustee reasonably believed to be a competent valuer instructed and employed independently of the lessor, whether the valuer carried on business in the locality where the property is situate or elsewhere. (3) A subsequent purchaser or the Registrar-General Crown Solicitor or other person registering or certifying title shall not be concerned to inquire whether the surrender was authorised by this section.

Renewal of leaseholds — New South Wales [20-25] Section 37 of the Trustee Act 1925 provides: 37. (1) Where a leasehold for lives or for years is vested in a trustee and the lease is renewable

from time to time, either under any covenant or contract, or by custom or usual practice, the trustee may obtain from time to time the renewal on the accustomed and reasonable terms. (2) If required in writing by any person having any beneficial interest present future or contingent in the leasehold, the trustee shall use his or her best endeavours to obtain from time to time the renewal on such terms. (3) The trustee may from time to time make or concur in making a surrender of the lease for the time being subsisting, and may do all such other acts as are requisite for the renewal. (4) If by the terms of the instrument, if any, creating the trust the person in possession for the person’s life or other limited interest is entitled to enjoy the same without any obligation to renew or to contribute to the expense of renewal, this section shall not apply unless the consent in writing of that person is obtained to the renewal. (5) The trustee may pay or apply capital money subject to the trust for the purpose of obtaining the renewal. (6) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

Other jurisdictions [20-26] The Australian Capital Territory (s 35) has followed s 35 of the New South Wales Act. In South Australia, the surrender of onerous leases is provided for by s 26A, which reproduces s 35 of the New South Wales Act, but with the express authorisation of the exercise of the power where the reversion of the lease is vested in the trustee under a different trust. Again, Western Australia and Queensland have struck out on their own; s 38 of the Queensland Act reproduces s 35 of the Western Australian Act, as follows: 38. (1) Where a leasehold is vested in a trustee and the property is subject to onerous covenants of such a nature that it would not be in the interests of the beneficiaries to retain the property, the

[page 468] trustee may surrender, or concur in surrendering, the lease; and the trustee shall not be chargeable with breach of trust nor shall the surrender be impeached by any beneficiary upon the ground only that the covenants were not of such a nature, if the trustee has acted bona fide and on the advice of a registered valuer, whom the trustee reasonably believed to be competent, instructed and employed independently of the lessor, whether the valuer carried on business in the locality where the property is situate or elsewhere. (2) Where a freehold is vested in a trustee and the property is of so onerous a nature that it would not be in the interests of the beneficiaries to retain the property, if the Crown agrees to accept the surrender of the freehold, the trustee may surrender, or concur in surrendering, it to

the Crown; and the trustee shall not be chargeable with breach of trust nor shall the surrender be impeached by any beneficiary upon the ground only that the property was not of such a nature, if the trustee has acted bona fide and on the advice of a registered valuer, whom he reasonably believed to be competent, whether that valuer carried on business in the locality where the property is situate or elsewhere. (3) A subsequent purchaser or the Registrar or other person registering or certifying title shall not be concerned to inquire whether a surrender was authorised by this section.

The Trustee Act of Tasmania does not deal with the topic. The position in Victoria has been dealt with above.71 As regards renewal, the Australian Capital Territory (s 37) has followed s 37 of the New South Wales Act. Tasmania (s 22), South Australia (s 26) and the Northern Territory (s 19) have legislation that is in virtually identical terms. Section 22 of the Tasmanian Act is as follows: 22. (1) A trustee of any leaseholds for lives or years which are renewable from time to time, either under any covenant or contract, or by custom or usual practice, may, if he thinks fit, and shall if thereto required by any person having any beneficial interest, present or future or contingent, in the leaseholds, use his best endeavours to obtain a renewed lease of the same lands on the accustomed and reasonable terms, and for that purpose may make or concur in making a surrender of the lease for the time being subsisting, and do all such other acts as are requisite: Provided that, when by the terms of the settlement or will the person in possession for his life or other limited interest is entitled to enjoy the trust property without any obligation to renew or to contribute to the expense of renewal, the consent in writing of that person must be obtained to the renewal on the part of the trustee. (2) If money is required to pay for the renewal, the trustee effecting the renewal may pay the same out of any money then in his hands in trust for the persons beneficially interested in the lands to be comprised in the renewed lease, and if he has not in his hands sufficient money for the purpose, he may raise the money required by mortgage of the lands to be comprised in the renewed lease, or of any other lands for the time being subject to the uses or trusts to which those lands are subject; and any person advancing money upon a mortgage purporting to be given under this power is not bound to see that the money is wanted, or that no more is raised than is wanted for the purpose. (3) Nothing in this section shall authorize a trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust.

Further, Queensland (s 39) and Western Australia (s 36) again travel hand in hand, their legislation providing: (1) A trustee of any leasehold for life or lives or years which is renewable under any covenant or contract or by custom or usual practice may, if the trustee thinks fit, and shall, if thereto required by any person having any beneficial interest, present or future or contingent, in the leasehold, use the trustee’s best endeavours to obtain from time to time a renewed lease of the same hereditaments on the agreed on reasonable terms, and for that purpose may from time to time make or concur in making a surrender of the lease for the time being subsisting, and do all such

other acts as are requisite; but where, by the terms of the instrument (if any) creating the trust, the person in possession for the person’s life or other limited interest is entitled to enjoy the

[page 469] same without any obligation to renew, or to contribute to the expense of renewal, this section does not apply unless the consent in writing of that person is obtained to the renewal. (2) A trustee obtaining a renewal of a lease under the powers conferred by this section or otherwise may pay or apply capital money subject to the trust, for the purpose of obtaining the renewal.

The position in Victoria has already been dealt with.72

Power to Mortgage Rule [20-27] Apart from special authorisation in the trust instrument or by statute, trustees have no power to mortgage the trust property.73 There is an exception to the general rule, however, where trustees have power to carry on a business.74 A power of sale, as already explained, does not imply a power to mortgage, except where the power to sell is merely for the purpose of raising a sum of money charged on the property.

New South Wales [20-28] Section 82A of the Trustee Act 1925 (NSW) provides that without the leave of the court, trustees of freehold or leasehold land for infants or persons in succession may borrow moneys on the security of trust property and expend up to one-third of the value of the land or the sum of one thousand dollars, whichever is the less, for the purpose of improving or developing the land in the ways set out in s 82. Trustees also have power to mortgage the trust property for the time being in possession in order to raise the money required where the trustees are authorised by the trust instrument or by law to pay and apply capital money for any purpose or in any manner, provided that the property intended to be mortgaged is held upon the same trusts as the capital money. This power does not extend to

charitable trusts.75 Nevertheless, s 12(2) of the Charitable Trusts Act 1993 (NSW) allows the Attorney-General to vest in any trustees of a charitable trust power to mortgage the trust property, where those trustees cannot do so for lack of power vested in them by the trust instrument or by law. An executor or administrator is authorised by s 153 of the Conveyancing Act 1919 (NSW) to sell or mortgage the real estate of the deceased person for purposes of administration. ‘Purposes of administration’ are defined.76 Where the trust property is mortgaged under an express or statutory power, the situation may arise that the trustee desires to release the equity of redemption to the mortgagee in discharge of the whole or part of the mortgage debt. It was previously doubtful whether the trustee had power to do so. Now, by s 34 of the Trustee Act 1925, it is provided as follows: 34. (1) Where an equity of redemption is vested in a trustee and the mortgaged property is not of greater value than the amount of the mortgage debt, the trustee may release the equity of redemption to the mortgagee in discharge of the mortgage debt or part thereof. (2) The trustee shall not be chargeable with breach of trust nor shall the release be impeached by any beneficiary upon the ground only that the mortgaged property was of greater value than the

[page 470] amount of the mortgage debt or of the part thereof discharged, provided that the trustee has acted bona fide and on the advice of a person whom the trustee reasonably believed to be a competent valuer instructed and employed independently of the mortgagee, whether the valuer carried on business in the locality where the property is situate or elsewhere. (3) A subsequent purchaser or the Registrar-General Crown Solicitor or other person registering or certifying title shall not be concerned to inquire whether the release was authorised by this section. (4) This section applies whether the equity of redemption vested in the trustee before or after the commencement of this Act.

Other jurisdictions [20-29] The Australian Capital Territory has adopted both s 34 and s 38 of the New South Wales Act. So has South Australia, in s 28A and s 28B respectively; however, the provisions of s 28B are expressly, first, not to apply to charitable trusts and, secondly, (and unlike s 38) as to other trusts, to apply notwithstanding anything to the contrary contained in the trust instrument.

Tasmania has no corresponding provision. But both Western Australia and Queensland make detailed provision on the subject, and in like form (ss 30(1) (h), 43 and ss 33(1)(i), 45 respectively). The effect of these provisions is that trustees authorised by the trust instrument or by statute or by law to expend, pay or apply capital money for any purpose shall have power to raise the same by sale conversion calling in or mortgage of all or any part of the trust property for the time being in possession, and they may agree to the renewal extension or variation of any such mortgage for such period and on such terms and conditions as they shall think fit. In Victoria, s 20 of the Trustee Act is in similar form to s 28B of the South Australian Act. It confers a non-excludable power to raise, by mortgage of all or any part of the trust property for the time being in possession, the capital money which the trustees are (by the trust instrument or by law) authorised to pay. It confers a power on trustees to raise by mortgage of the trust property money in specified proportions for the maintenance, education, advancement or benefit of beneficiaries who are entitled to the whole or a share of the corpus. Section 71 of the Settled Land Act 1958 (Vic) — which is applicable to trustees for sale — confers a power on the tenant for life to raise, with the consent of the trustees of the settlement or order of the court, by mortgage or otherwise on the security of the whole or part of the settled land money for the following purposes: (1) to discharge an incumbrance on the whole or part of the settled land; (2) to equalise an exchange or partition of such land; (3) to pay the costs of certain specified transactions. Personal representatives of a deceased person have for purposes of administration, in addition to the powers conferred on trustees for sale, the same wide power to raise money by mortgage with or without a power of sale or charge (whether or not by deposit of documents) with respect to real and personal estate of the deceased as a personal representative had before 1 January 1873 with respect to personal estate vested in him or her: Administration and Probate Act 1958 s 44.

Power to Repair and Improve General problems

[20-30] It will usually be found that a will or settlement creating successive interests in real property imposes liability on the person presently entitled to possession to effect repairs or else directs the trustees to keep the property in repair and stipulates whether the cost of such repairs is to be borne out of capital or income. In such cases, no great difficulty in regard to the question of liability for repairs can arise. [page 471] Where such express provisions are omitted, very difficult questions may arise. In the first place, a legal tenant for life, that is, one in whom the legal title to the property is vested, is not liable for permissive waste,77 and may accordingly allow the property to deteriorate. The court will have no jurisdiction to interfere or to make an order charging the cost of the repairs against capital.78 The position of an equitable life tenant where the legal estate is vested in bare trustees who have no active duties to perform is similar. A tenant for life in these circumstances is not under any implied obligation to keep the property in repair.79 The trustees cannot interfere with the possession of a life tenant merely because of failure to keep the property in repair unless the life tenant is committing voluntary waste — that is, the state of disrepair arises from acts of commission by the life tenant, not acts of omission. The trustees will not be liable to the remaindermen for deterioration to the property occasioned by the mere neglect of the life tenant80 but in the case of an equitable life tenancy the court has jurisdiction, formerly only under the principle of salvage,81 but now under certain statutory authority, which will presently be considered, to make an order empowering the trustees to raise money for necessary repairs and to apportion the cost equitably between capital and income,82 and, within certain limits as to amount, the trustees in New South Wales may now act under s 82A of the Trustee Act 1925, without application to the court. If it is a clear case where repairs are necessary for the preservation of the trust property from destruction or forfeiture, it would appear to be the duty of the trustees to apply to the court83 or in New South Wales to act under the powers conferred by s 82A of the Trustee Act 1925. Where expenditure on permanent improvement is incurred for the benefit of the estate generally, and there is no provision or direction in the trust

instrument for payment out of income, the expenditure is usually made out of capital, as in this way both tenant for life and remaindermen contribute according to their respective interests.

Trustees with power of management [20-31] But in cases where life estates and remainders are created and the legal estate is vested in trustees who have active powers of management, whilst the life tenant is not obliged to repair, the trustees have, in the course of good management, full authority to see that repairs are made for the purpose of preserving the property for the remaindermen. If it is necessary to spend money for that purpose, the trustees have authority to do so to an extent necessary to pay for repairs and to charge the cost of certain repairs against the rents coming to the life tenant and of others against the remaindermen.84 Generally speaking, all initial expenditure or substantial expenditure which results in permanent improvement should be made out of capital, expenditure on recurring repairs should be paid out of income, and expenditure on non-permanent improvements not of an annually recurring nature should be paid out of capital [page 472] in the first instance, and recouped out of income by annual instalments determined by the anticipated life of the improvements or expectation of the period of recurrence.85 For this purpose the trustee should establish a sinking fund.86 A tenant for life of leaseholds is bound to observe the covenant to repair contained in the lease, and must indemnify the settlor’s estate against liability under the covenant.87 But it would seem that the remaindermen will have no right of action against the life tenant’s personal representatives for breaches of this obligation committed by the life tenant.88 If the lease is likely to be forfeited for breach of covenant, the trustees should see that the covenants are carried out.89

Compulsory works [20-32] Where a public body acting under statutory powers requires work to

be done upon settled property, that work is not ‘repairs’ — for example, drainage work, street formation, alterations to houses in accordance with city by-laws and to licensed premises in accordance with the requirements of a licensing authority.90 Therefore the cost of that work is not, in the absence of some provision in the trust instrument to the contrary, payable out of income, but the court would sanction such expenditure out of capital.91 The expenditure on such compulsory works will not, however, be made payable out of capital if the trust instrument shows a contrary intention. In Re Crawley,92 for example, a tenant for life had to bear the cost of drainage work done in connection with leasehold houses under statutory compulsion and the cost of the work was not allowed to be recouped at the expense of the estate.

Statutory provision New South Wales [20-33] Although the power of a trustee who had active duties of management to repair was clear, the state of the law prior to the Trustee Act Amendment Act 1902 (NSW) and the Trustee Act 1925 (NSW) was unsatisfactory for two main reasons. First, it was not clear how far an active trustee could carry out improvements which could not strictly be classed as ‘repairs’.93 Secondly, as explained above, the trustee without active duties to perform could not repair or improve without the authority of the court, which could only give such authority where the repairs were in the nature of salvage of the trust property. Particular difficulty arose as a result of the latter position because deterioration of the trust property during a life tenancy could not really be arrested. That situation is now covered by s 82 of the Trustee Act 1925, which is in the following terms: 82. (1) Where any leasehold or freehold land is vested in a trustee, the Court may authorise the trustee to pay or apply capital money subject to the trust for any one or more of the following purposes, as to the Court seems fit, that is to say: (a) to effect repairs to any existing buildings, dams, fences or other erections upon the land,

[page 473] (b) to effect improvements of or upon the land, or to reconstruct enlarge or improve any

existing buildings, dams, fences or other erections thereon, (c) to erect any new buildings, dams, fences or other erections upon the land, (d) to erect or join in erecting any give and take fence, that is to say, a fence part of which is on the land and part on adjoining land, (e) to restock the land with sheep, cattle, or horses, (f) to replace machinery or implements required for the land. (2) The trustee may be so authorised where the Court, having due regard to the interest of all persons beneficially interested in the land, thinks that the proposed expenditure is expedient, although it may not be necessary for the purpose of the salvage of the property. (3) The amount of capital money that may be so expended shall be stated in the order authorising the proposed expenditure. (4) The Court may authorise the trustee, as to the Court seems fit: (a) to raise the amount by mortgage of the land, or by sale of a part thereof, (b) to raise the amount by mortgage or sale of any other real or personal property held upon the same trusts, (c) to pay the amount out of any moneys under the control of the trustee and held by him upon the same trusts, (d) to provide the amount partly in one and partly in another of those modes, (e) to provide a sinking fund out of income. (5) Where the amount is authorised to be raised by mortgage the Court may give directions to the trustee how the principal and interest are to be paid. (6) The Court may require such provision for a sinking fund as the Court thinks proper. (7) The Court shall give such directions as appear necessary and proper, so as to throw upon the respective interests of the persons beneficially interested their proper proportion of the moneys to be expended. (8) No purchaser or mortgagee paying or advancing money upon any sale or mortgage authorised by the court under this section shall be required to see to the application of the purchase money or mortgage money, and the protection given by this subsection shall extend to the RegistrarGeneral Crown Solicitor or other person registering or certifying title.

A further section, s 82A, was added in 1938 in order to enable trustees to expend a limited sum for the same purposes without application to the court. Section 82A provides: 82A. (1) Where any leasehold or freehold land is vested in a trustee and in the opinion of the trustee it is expedient in the interest of all persons beneficially interested in the land to expend capital moneys subject to the trust for any one or more of the purposes specified in paragraphs (a) to (f) both inclusive of subsection (1) of section 82 of this Act the trustee may, without the authority of the Court, expend on all or any of such purposes capital moneys subject to the trust not exceeding in all the prescribed amount. (1A) For the purposes of subsection (1), the prescribed amount is: (a) in the case of a trustee other than the NSW Trustee or a trustee company — $50,000 or 30% of the value of the land whichever is the greater, or

(b) in the case of the NSW Trustee or a trustee company: (i) $50,000 (or such other amount as may be prescribed by the regulations) or 30% of the value of the land, whichever is the greater, or (ii) if all the persons beneficially interested in the land are able to give a good discharge, an amount agreed upon between the NSW Trustee or the trustee company and all those persons, whichever is the greater. (2) Where in the opinion of the trustee it is expedient to exercise the power conferred by subsection (1) the trustee may without the authority of the Court exercise any of the power specified in subsection (4) of section 82, and the trustee shall throw upon the respective interests of the persons beneficially interested a proper proportion of the moneys so expended.

[page 474] (3) Subsection (8) of section 82 shall apply mutatis mutandis to any sale or mortgage made by a trustee in exercise of the powers conferred by this section.

The court in applying s 82(7) and the trustees in exercising their power under s 82A(2) will and should act upon the principles stated in the cases on the apportionment of the cost to which reference has been made above.94 On ss 82 and 82A, see [17-08]. Both s 82 and s 82A are applicable where land is vested in a trustee for an infant. In addition to these sections, there is statutory provision in s 151C of the Conveyancing Act 1919 (NSW) for trustees of infant’s land to repair and improve as part of their power of management of such land. By s 66D of the same Act, trustees for sale may, quite apart from the provisions of s 82 and s 82A of the Trustee Act 1925 (NSW), exercise the powers set out in s 151C. Under the powers conferred by s 10 of the Trustee Act Amendment Act 1902 (NSW) (the predecessor to s 82 of the Trustee Act 1925 (NSW)), the court has approved a scheme for improving land by pulling down existing buildings and erecting others in their stead,95 whereas previously it was doubtful whether such expenditure was permitted under the doctrine of salvage.96 In addition to the above powers of the court to sanction repairs and improvements, the court also has power to do so under s 81 of the Trustee Act 1925 (NSW), in any case where it is in the opinion of the court expedient so to do, but there is no power conferred in the trust instrument or by law to carry out such improvements or repairs. See [17-06].

Other jurisdictions [20-34] In the Australian Capital Territory, ss 82 and 82A of the New South Wales Act have been enacted as ss 82 and 83, and in the Northern Territory as s 18(2)–(4). The Tasmanian and Victorian Trustee Acts contain no equivalent to the New South Wales ss 82 and 82A. However, these states are not entirely without legislation in this area. In Victoria, by virtue of s 58 of the Property Law Act 1958, trustees for sale have the powers of improvement accorded to a life tenant under s 35 of the Settled Land Act 1958 (Vic). In Tasmania, trustees may rely on s 47 of the Trustee Act 1898 (Tas) (the equivalent of s 81 of the New South Wales Act), or they may, with the consent of the court, raise money for the preservation or improvement of the property under s 55 of that Act. On the other hand, all other states make ample, but diverse, provision on the subject. In Western Australia and Queensland, trustees may expend money (including capital) on repair, maintenance, upkeep or renovation of the property (whether or not this is necessary for salvage of the property), and on improvement or development of the property.97 In Western Australia, such latter expenditure may not be out of capital, and may not, without the permission of the court, exceed $20,000 for any one purpose, or $50,000 for any one purpose where the expenditure is made on the advice of a person whom the trustee reasonably believes to be competent to give prudent advice concerning the proposed improvement or development. In Queensland, expenditure on the improvement or development of the property may be made out of capital, but may not, without the court’s permission, exceed $10,000. The relevant provisions in South Australia are as follows: 25A. (1) Unless prohibited by the terms of the trust the trustee at his discretion may — (a) execute or cause to be executed all repairs to any buildings erections or fixtures being part of the trust property which repairs in the opinion of the trustee are necessary or proper for the preservation of the buildings erections or fixtures or to render them tenantable;

[page 475] (b) pay and satisfy all rates taxes charges assessments or impositions (including arrears) assessed or imposed on or in respect of the trust property or any part thereof whether payable by the landlord or tenant or owner or occupier in respect thereof; (c) pay the moneys required for the purposes mentioned in paragraphs (a) and (b) out of any moneys whether capital or income which are subject to the same trusts as the

property repaired or in respect whereof the said rates taxes charges assessments or impositions are paid; (d) debit the moneys so paid to capital or income or adjust the same between capital and income in such manner as to the trustee shall seem equitable. (2) Upon the application of an interested party of which application notice shall be given to the trustee and to such other parties as the Supreme Court may think to have a sufficient interest in the subject matter of the application, the Supreme Court in its discretion may review any such debit or adjustment and may direct how the payments made as aforesaid shall be borne between the parties interested in the trust property. On any such application there shall be no presumption that the trustee has exercised his discretion under paragraph (d) of subsection (1) of this section properly. (3) On the application of the trustee, of which notice shall be given to the person intended to be affected, the Supreme Court may in its discretion order that the whole or any portion of the moneys paid by the trustee under this section shall be paid by any beneficiary under the trust who the court in its discretion thinks should be made personally liable therefor. (4) Nothing in this section shall relieve a trustee from any liability in respect of any breach of trust: Provided that a trustee shall not be liable for any breach of trust because of an honest although erroneous exercise of discretion under paragraph (d) of subsection (1) of this section. 25B. (1) The Supreme Court may on the application of a trustee or of a beneficiary interested in the trust property authorise or direct the expenditure by the trustee of such sum or sums as the court thinks fit out of the capital or income of the trust property or both or out of any part or parts thereof in and for building or rebuilding or repairing, reinstating, altering, adding to or in any way improving the trust property or any part thereof. (2) If there is no ready money available for the said purposes or to the extent that the ready money is insufficient, the Supreme Court may authorise or direct the trustee to sell any part of the trust property or to raise money upon loan by mortgage of the whole or any part or parts of the trust property for the purpose of securing such loans or otherwise and in either case upon or subject to such terms and conditions as the Court may by order authorise or direct. (3) The Supreme Court may give directions for the debiting of the expenditure (including the costs of the application to the court) incurred for the purposes of this section to capital or income or for the adjustment of the same between capital and income in such manner as the Court in its discretion thinks just. (4) This section does not apply to any building or property which a trustee is bound forthwith to convey absolutely to any beneficiary upon being requested to do so. (5) This section applies to trusts created either before or after the commencement of the Trustee Act Amendment Act 1941; but nothing in this section shall authorise the trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust.

Power to Insure New South Wales

[20-35] One view is that trustees are not bound to insure against damage by fire or otherwise but that they may if they choose to do so, paying the premiums out of income. [20-36] The Trustee Act 1925 (NSW) provides: 41. (1) A trustee may insure against loss or damage, whether by fire or otherwise, any insurable property, and against any risk or liability against which it would be prudent for a person to insure if the person were acting on the person’s own behalf.

[page 476] (2) The insurance may be for any amount, provided that, together with the amount of any insurance already on foot, the total shall not exceed the insurable value or liability. (3) The premiums may be paid by the trustee out of the income of the property concerned or out of the income of any other property subject to the same trusts, without obtaining the consent of any person who may be entitled wholly or partly to the income. (4) This section applies if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

Whether there is a duty to insure is discussed at [17-19]; it was concluded that there is. According to the view referred to in [20-35], not only was there no duty to insure but it was a disputed question whether a power to insure existed in cases where the trustee held the trust property on trust for persons in succession, unless the life tenant consented.98 Section 41 dispenses with any requirement of a life tenant’s consent. Where a tenant for life is bound to insure and does so, the insurance is for the benefit of the estate generally, that is, for the benefit of persons successively entitled and not for any one of them in particular. In such cases, the insurance moneys would be treated as capital.99 Section 42 of the Trustee Act 1925 (NSW) provides: 42. (1) Where a policy of insurance against the loss or damage of any property subject to a trust, whether by fire or otherwise, has been kept up under any trust in that behalf, or under any power statutory or otherwise, or in performance of any obligation statutory or otherwise, the money receivable by a trustee under the policy shall be capital money for the purpose of the trust. (2) If the money is receivable in respect of property held upon trust for sale, the same shall be held upon the trusts and subject to the powers and provisions applicable to money arising by a sale under the trust.

(3) In any other case the money shall be held upon trusts corresponding as nearly as may be with the trusts affecting the property in respect of which it was payable. (4) The money or any part thereof may also be applied by the trustee or, if in court, under the direction of the Court, in rebuilding, reinstating, replacing, or repairing the property lost or damaged. (5) Any such application by the trustees shall be subject to the consent of any person whose consent is required by the instrument, if any, creating the trust to the investment of money subject to the trust. (6) Nothing in this section shall prejudice or affect the right of any person to require the money or any part thereof to be applied in rebuilding, reinstating or repairing the property lost or damaged. (7) Nothing in this section shall prejudice or affect the rights of any mortgagee lessor or lessee, whether under any statute or otherwise. (8) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

The Fire Prevention (Metropolis) Act 1774 (UK), under s 83 of which any person interested in any house or buildings which are burnt down may require insurance officers to cause insurance money to be laid out in rebuilding the burnt-down house or building, is not in force in New South Wales, having been replaced by local legislation. However, the High Court has assumed that before the position was made clear in Tasmania (by s 90E inserted in 1962 into [page 477] the Conveyancing and Law of Property Act 1884 (Tas)) that the Act did apply by paramount force and without, as is now the case there, the need of local legislation.100

Other jurisdictions Australian Capital Territory, Northern Territory, South Australia [20-37] The position in the Australian Capital Territory is the same as New South Wales: ss 41 and 42. The Northern Territory Act is to the same effect as s 41 of the New South Wales Act: s 18A. Section 25 of the South Australian Act largely reproduces ss 41 and 42 of the New South Wales Act, but does specify that to the extent income is deficient for the purpose, the trustee may borrow

the necessary money for paying premiums and give security over trust property for this purpose. Victoria, Queensland, Western Australia and Tasmania display such disparity in their legislation that it must be set out in full. Victoria [20-38] The Victorian Act provides: 23. (1) A trustee may insure against loss or damage, whether by fire or otherwise, any insurable property, and against any risk or liability against which it would be prudent for a person to insure if he were acting for himself. (2) The insurance may be for any amount: Provided that together with the amount of any insurance already on foot the total shall not exceed the insurable value or liability. (3) The premiums may be paid by the trustees out of any moneys subject to the trust but in the accounts of the trustee shall be charged first against the income of the property concerned and secondly against the income of any other property subject to the same trusts, to the extent of the income available without obtaining the consent of any person who may be entitled wholly or partly to the income. 24. (1) Money receivable by trustees or any beneficiary under a policy of insurance against the loss or damage of any property subject to a trust or to a settlement within the meaning of the Settled Land Act 1958, whether by fire or otherwise, shall, where the policy has been kept up under any trust in that behalf or under any power statutory or otherwise, or in performance of any covenant or of any obligation statutory or otherwise, or by a tenant for life impeachable for waste, be capital money for the purposes of the trust or settlement, as the case may be. (2) If any such money is receivable by any person, other than the trustees of the trust or settlement, that person shall use his best endeavours to recover and receive the money, and shall pay the net residue thereof, after discharging any costs of recovering and receiving it, to the trustees of the trust or settlement, or, if there are no trustees capable of giving a discharge therefor, into court. (3) Any such money — (a) if it was receivable in respect of settled land within the meaning of the Settled Land Act 1958, or any building or works thereon, shall be deemed to be capital money arising under that Act from the settled land, and shall be invested or applied by the trustees, or, if in court, under the direction of the Court, accordingly; (b) if it was receivable in respect of personal chattels settled so as to devolve with or as nearly as may be with settled land shall be deemed to be capital money arising under the Settled Land Act 1958 and shall be applicable by the trustees, or, if in court, under the direction of the Court, in like manner as provided by that Act with respect to money arising by a sale of chattels settled as aforesaid; (c) if it was receivable in respect of property held upon trust for sale, shall be held upon the trusts and subject to the powers and provisions applicable to money arising by sale under such trust;

[page 478] (d) in any other case, shall be held upon trusts corresponding as nearly as may be with the trusts affecting the property in respect of which it was payable. (4) Such money, or any part thereof, may also be applied by the trustees, or, if in court, under the direction of the Court, in rebuilding, reinstating, replacing, or repairing the property lost or damaged, but any such application by the trustees shall be subject to the consent of any person whose consent is required by the instrument (if any) creating the trust to the investment of money subject to the trust, and, in the case of money which is deemed to be capital arising under the Settled Land Act 1958, be subject to the provisions of that Act with respect to the application of capital money by the trustees of the settlement. (5) Nothing contained in this section shall prejudice or affect the right of any person to require any such money or any part thereof to be applied in rebuilding, reinstating, or repairing the property lost or damaged, or the rights of any mortgagee, lessor, or lessee, whether under any statute or otherwise.

Queensland [20-39] The Queensland Act provides: 47. (1) A trustee may insure against loss or damage, whether by fire or otherwise, any insurable property, and against any risk or liability against which it would be prudent for a person to insure if the person were acting for himself or herself. (2) The insurance may be for any amount, provided that, together with the amount of any insurance already on foot, the total shall not exceed the insurable value or liability. (3) Subject to any direction expressed in the instrument (if any) creating the trust or to any direction of the Court, the trustee may, as the trustee thinks fit, pay the premiums out of — (a) the income of the property concerned; or (b) the income of any other property subject to the same trusts; or (c) any capital money subject to the same trusts; or (d) any one or more of (a), to (c) in such proportions as the trustee considers equitable. 48. (1) Where a policy of insurance against the loss or damage of any property subject to a trust, whether by fire or otherwise, has been kept up under any trust in that behalf, or under any power statutory or otherwise, or in performance of any obligation statutory or otherwise, the money receivable by a trustee under the policy shall be capital money for the purposes of the trust. (2) The money receivable shall be held upon trusts corresponding as nearly as may be with the trusts affecting the property in respect of which it was payable. (3) The money receivable or any part thereof may also be applied by the trustee or, if in court, under the direction of the court, in rebuilding, reinstating, replacing, or repairing the property lost or damaged. (4) Any application by the trustees under subsection (3) shall be subject to the consent of any person whose consent is required by the instrument (if any) creating the trust to the investment of money subject to the trust.

(5) Nothing in this section shall prejudice or affect the right of any person to require the money or any part thereof to be applied in rebuilding, reinstating or repairing the property lost or damaged. (6) Nothing in this section shall prejudice or affect the rights of any mortgagee lessor or lessee, whether under any statute or otherwise. (7) This section applies only if and as far as a contrary intention is not expressed in the instrument (if any) creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

Tasmania [20-40] The Tasmanian Act provides: 21. (1) A trustee may insure against loss or damage by fire any building or other insurable property to any amount, including the amount of any insurance already on foot, not exceeding 3 equal

[page 479] fourth parts of the full value of such building or property, and may pay the premiums for such insurance out of the income thereof or out of the income of any other property subject to the same trusts, without obtaining the consent of any person who may be entitled wholly or partly to such income. (2) This section does not apply to any building or property which a trustee is bound forthwith to convey absolutely to any beneficiary upon being requested to do so. (3) Nothing in this section shall authorize a trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust.

Western Australia [20-41] The Western Australian Act provides: 46. (1) A trustee may insure against loss or damage, whether by fire or otherwise, any insurable property to any amount, including the amount of any insurance already on foot, not exceeding the full replacement value of the property; and may also insure against any risk or liability against which it would be prudent for a person to insure, if he were acting for himself; and may pay the premiums for the insurance out of the income of the property concerned or out of the income of any other property subject to the same trusts, without obtaining the consent of any person who may be entitled wholly or partly to that income. (2) A trustee may recover the amounts of any premiums paid in respect of any insurance properly effected from the life tenant or other person entitled to or in receipt of the rents and profits of the property concerned.

(3) Nothing in this section imposes any obligation on a trustee to insure or to insure for any particular value or sum. 47. (1) Money receivable by a trustee or any beneficiary under a policy of insurance against the loss of, or damage to, any property subject to a trust, whether by fire or otherwise, (in this section called insurance money) shall, where the policy has been kept up under any trust in that behalf or under any power (statutory or otherwise) or in performance of any covenant or of any obligation (statutory or otherwise) or by a tenant for life impeachable for waste, be capital for the purposes of the trust, except so far as it would be regarded as income under any rule of law. (2) If any insurance money is receivable by any person other than the trustee of the trust, that person shall use his best endeavours to recover and receive the money, and shall pay the net residue thereof, after discharging any costs of recovering and receiving it, to the trustee of the trust, or, if there is no trustee capable of giving a discharge therefor, into Court. (3) Any insurance money, receivable in respect of property held upon trust for sale, shall be held upon the trusts and subject to the powers and provisions applicable to money arising by a sale under the trust; and, in any other case, shall be held upon trusts corresponding as nearly as may be with the trusts affecting the property in respect of which it was payable. (4) Any insurance money, or any part thereof, may be applied by the trustee, or, if in Court, under the direction of the Court, in rebuilding, reinstating, replacing or repairing the property lost or damaged; but any such application by the trustee shall be subject to the consent of any person whose consent is required by the instrument (if any) creating the trust to the investment of money subject to the trust. (5) Nothing in this section affects the right of any person to require any insurance money or any part thereof to be applied in rebuilding, reinstating or repairing the property lost or damaged, or the rights of any mortgagee, lessor or lessee, whether under any statute or otherwise.

Power to Carry on Business Terms of trust [20-42] Under the general law, if a trustee is not expressly authorised by the terms of the trust to carry on a business, the trustee must not carry on such business without the sanction of the court. ‘I think it is, and it has been admitted to be, a rule without exception that, to authorise [page 480] executors to carry on a trade, or to permit it to be carried on with the property of a testator held by them in trust, there ought to be the most distinct and positive authority and direction given by the will itself for that purpose.’101 It will accordingly be a breach of trust to carry on a business in the absence of

express directions in the trust instrument or of the court, and the trustee will be liable for any consequent loss or deterioration which their act or omission causes to the trust estate.102 Authority to carry on a business may sometimes be deduced from the terms of a will, where the testator has not explicitly conferred the power. In Re Barber,103 the will of a deceased sheep-farmer, who was in partnership with his two brothers, provided, inter alia, as follows: ‘I direct the said trustees to hold and work the said estate to the best possible advantage with full power to sell lease and mortgage and in every other way deal with the said estate to the best of their judgment.’ It was held that this gave the executors sufficient authority to carry on the business of sheep farming in partnership with the brothers of the deceased and, when one of the brothers died, the executors were allowed to carry on the partnership with the remaining brother.

Statutory intervention [20-43] Power to postpone the sale of a business necessarily includes power to carry on the business to sell it as a going concern, as otherwise the goodwill would be lost. But Re Chancellor held that this does not justify the trustees in continuing the business as a profit-making concern.104 There is, however, some authority in New South Wales for the view that the effect of a power to postpone sale is to imply a power to carry on the business until sale, even though this would involve carrying on the business for longer than was necessary to sell it as a going concern. Thus, in Re Hammond,105 the testator had a station business which he devised and bequeathed to trustees ‘on trust to sell and dispose of the same at such times and in such manner … as to them in their discretion shall seem best’. The trustees carried on the business for a number of years and it was held that they had power to do so until all the beneficiaries were sui juris. This clearly involved carrying on the business for longer than was necessary in order to sell it profitably as a going concern, so that it is difficult to reconcile this case with those above referred to. But it does seem reasonable to suppose that a testator, who had a business and expressly gave the executors complete discretion to postpone sale of that asset, intended that the executors should be able to exercise that power to the full and that they should not be limited to the time which it might take to find a purchaser, for they would have that period of time whether there was express power to postpone or not.106 It would therefore appear that Re Hammond107 is logical in principle. Since this is so, in Western Australia and Queensland, where a trustee has in

every case an almost unlimited power to postpone sale,108 it would follow that a power to carry on business is almost always necessarily implied. However, in New South Wales and Victoria, where a power to postpone sale is implied only if there is an express power of sale,109 a question arises whether the same principle applies. Can a trustee under such circumstances postpone for any longer period than is necessary in order to effect the best sale of the business? The question is not an easy one. On the one hand, that case appears to be very different from the case where there is an express power of postponement because in the latter case it may well be said that the [page 481] testator intended and desired an indefinite carrying on of the business while no such intention is expressed in the former case. On the other hand, it may be said that a testator is not bound to express the power of postponement when it is implied by law and that it would be a most misleading state of the law if a different result flowed when the same provision was expressed from that which flowed when it was implied. No testator or draftsman could then safely rely on the implied term. Yet this distinction between express and implied power to postpone sale is exactly the distinction drawn in s 36 of the New South Wales Act in respect of a trustee’s power of leasing and the questions that arise on that section, which have already been discussed at [20-20], are not unassociated with the present question — that is, when is there a power of management given to trustees? These considerations do not arise in South Australia or Tasmania, whose Acts do not confer any implied power to postpone sale, either in a general or a limited sense. In Queensland and Western Australia, where there is always a power to carry on business, there are special sections regulating that power. They are contained in s 57 of the Queensland Act and s 55 of the Western Australian Act. They are in substantially similar terms. The former section provides as follows: 57. (1) Subject to the provisions of any other Act and of the instrument (if any) creating the trust, where at the commencement of the trust the trust property or any part of it was being used by the settlor in carrying on any business, whether alone or in partnership, the trustee may continue to carry on that business for any 1 or more of the following periods, namely — (a) 2 years from the commencement of the trust;

(b) such period as may be necessary for the winding up of the business; (c) such further period or periods as the Court may approve. (2) In the exercise of the powers conferred by this section or by the instrument (if any) creating the trust, a trustee may — (a) employ any part of the trust property which is subject to the same trusts; and (b) from time to time increase or diminish the part of the trust property employed as provided by paragraph (a); and (c) purchase stock, machinery, implements, and chattels for the purpose of the business referred to in subsection (1); and (d) employ such managers, agents, servants, clerks, workers and others as the trustee thinks fit; and (e) at any time enter into a partnership agreement to take the place of any partnership agreement subsisting immediately before the commencement of the trust or at any time thereafter and notwithstanding that the trustee was a partner of the settlor in the trustee’s own right; and (f) enter into share-farming agreements. (3) Application to the Court for leave to carry on a business may be made by the trustee or any person beneficially interested in the estate at any time, whether the business has been carried on before or after the commencement of this Act and whether or not any previous authority to carry on the business has expired; and the Court may make such an order, and may make such order retrospective to any particular date, or may order that the business be not carried on, or be carried on subject to conditions, or may make such other order as, in the circumstances, it thinks fit. (4) Nothing in this section affects any other authority to do the acts thereby authorised to be done. (5) Where a trustee is in any manner interested or concerned in a trade or business, the trustee may make such subscriptions as it would be prudent for the trustee to make if the trustee were acting for himself or herself, out of the income of the assets affected, to any fund created for objects or purposes in support of any trade or business of a like nature and subscribed to by other persons engaged in a like trade or business.

It would appear that, if no express power to postpone is given, the principle stated in Re Chancellor110 and the other cases cited therewith may well apply, but that where there is an [page 482] express power to postpone, there is a necessary implication of a power to carry on the business for a period longer than is required in order to sell it as a going concern. The general conclusion, however, is that it is quite clearly the wisest course to insert in any will or settlement an express power to manage and to

carry on the business. This not only overcomes the difficulty just dealt with, but also makes it clear that the trustees are to be active trustees who are thus entitled themselves to possession of the business and not bare trustees in which case the life tenant would be entitled to possession and to carry on the business.111 Especially in the case of a grazing business, the method of carrying on the business and even the amount of the interest taken by life tenant and remaindermen respectively may be considerably different in each case.112 In the absence of express or implied power to carry on the business, the trustee, as already stated, can carry on only for the purpose of realisation and must sell at the first opportunity. However, the court may authorise the carrying on of the business either by virtue of its inherent jurisdiction113 or, as is now more common, under the powers conferred on the court by the court’s power to sanction deviations from the trust, already considered in Chapter 17. In s 81(2) (c) and (d) of the New South Wales Act and its equivalents listed in [17-06] there is express conferring of jurisdiction to permit trustees to carry on a business for any time during which sale may be postponed and in addition to employ capital money subject to the trust in any business which the trustees are permitted under the trust instrument or by law to carry on. Apart from this last provision, a trustee is only justified in employing the moneys and assets in the business which were previously so employed,114 unless a contrary intention is expressed or implied.115

Creditors [20-44] If a trustee carries on a business in breach of trust, the creditors can look for payment to the trustee only. If the trustee carries on under a power so to do, then, although at law the trustee is the debtor, the creditors in equity are subrogated to the trustee’s right of indemnity out of the trust property.116

Sale of business to a company [20-45] Trustees, unless they have power to invest in shares of a limited liability company, cannot sell the business carried on by the trust to a company formed for the purposes of taking over the business. However, in the circumstances of modern commerce and taxation provisions, it is often most convenient and desirable to conduct the business through the medium of a limited liability company. Under these circumstances, in jurisdictions whose

Acts do not deal specifically with the problem (that is, New South Wales, Victoria, South Australia, Tasmania and the Territories), the court has very frequently exercised jurisdiction, formerly under its inherent jurisdiction, and now under the court’s statutory power to sanction deviations from a trust, to authorise the sale and to authorise the receipt of the proceeds of sale in the form of shares, and the continued holding of such shares as an investment.117 Where the capital available is insufficient to carry on the business efficiently, the court has authorised a sale to a [page 483] company.118 No limit is now usually placed upon the time during which the trustees may hold the shares after their acquisition.119 In Queensland, this matter is specifically covered by the Trusts Act, s 58 of which provides: 58. (1) Subject to the provisions of the instrument (if any) creating the trust, a trustee may at any time, at the expense of the trust property, convert or join in converting any business into a company limited by shares in such manner, as the trustee thinks fit; and may, at the like expense, promote and assist in promoting a company for taking over the business; and may sell or transfer the business and the capital and assets and goodwill thereof, or any part thereof to the company, or to any company having for its objects the purchase of such a business, in consideration, in either case, wholly or in part of ordinary or preference shares wholly or partially paid up of any such company, or wholly or in part of debentures, debenture stock, or bonds of any such company, and as to the balance (if any) in cash payable immediately, or by any instalments with or without security. (2) A trustee may retain as an authorised investment of the trust any shares, debentures, debenture stock or bonds received by the trustee in consequence of the exercise by the trustee of any power conferred by subsection (1).

In Western Australia, the same section appears as s 56 of the Trustees Act, where, however, the power is not subject to any contrary intention.

Power to Compound Debts Legislation [20-46] Trustee legislation of each jurisdiction provides trustees with a power to compound debts. However, there is some discrepancy in the language of the

Acts. The most elaborate section is the Victorian s 19, which is in the following terms: 19. (1) A personal representative, or two or more trustees acting together, or, subject to the restrictions imposed in regard to receipts by a sole trustee, not being a trustee company, a sole acting trustee where by the instrument (if any) creating the trust, or by statute a sole trustee is authorized to execute the trusts and powers reposed in him, may, if and as he or they think fit — (a) accept any property, real or personal, before the time at which it is made transferable or payable; or (b) sever and apportion any blended trust funds or property; or (c) pay or allow any debt or claim on any evidence that he or they think sufficient; or (d) accept any composition or any security, real or personal, for any debt or for any property, real or personal, claimed; or (e) allow any time for payment of any debt; or (f) compromise, compound, abandon, submit to arbitration, or otherwise settle any debt, account, claim, or thing whatever relating to the testator’s or intestate’s estate or to the trust; or (g) by writing waive or vary any right exercisable by him or them which arises from a failure to comply at or within the proper time with any term of any agreement for sale mortgage lease or other contract; or (h) without prejudice to the generality of the foregoing powers, where a leasehold is vested in him, or them, and the property is subject to onerous covenants of such a nature that it would not be in the interests of the beneficiaries to retain the property, may surrender or concur in surrendering the lease — and for any of those purposes may enter into, give, execute, and do such agreements, instruments of composition or arrangement, releases, and other things as to him or them seem expedient, without being responsible for any loss occasioned by any act or thing so done by him or them in good faith.

[page 484] (2) The powers conferred by this section shall apply both to property of whatever description that belonged to or was vested in a deceased person in succession to whom the property is held by a personal representative or trustee or trustees, and also to property of whatever description that becomes vested in a personal representative or trustee or trustees in the course of the administration of an estate or trust.

The South Australian provision (s 28) and the Tasmanian provision (s 24) give a trustee the powers set out in paras (c), (d), (e) and (f) of the Victorian s 19(1), but not the powers in paras (a), (b), (g) and (h). The Queensland provision (s 44) and the Western Australian provision (s 42) are in substantially similar terms: a trustee has the powers conferred by paras (a)–(f) (both inclusive) of the Victorian s 19(1), but not the powers conferred by paras (g)

and (h). The New South Wales and the Australian Capital Territory s 49 is different again, omitting the Victorian paras (c), (g) and (h) but containing equivalents to the other paragraphs; on the other hand, the New South Wales section is wider than the other sections in that it confers the power to compound on ‘trustees or the majority acting together’ (italics supplied). The Northern Territory s 21(2) gives the trustee the Victorian powers in paras (d)– (f), but not the others.

Role of court [20-47] It will be observed that a trustee does not need to seek the approval of the court to the doing of any of the foregoing acts. If, however, as a matter of precaution, the trustee desires the approval of the court, the trustee may in some jurisdictions make application for judicial advice in that regard under the relevant Trustee Act.120 The effect of the sections conferring a right to compound debts would appear to be that an active exercise of the trustee’s discretion121 in regard to any of the matters mentioned therein will mean that the trustee is not liable to the beneficiaries unless the trustee has acted mala fide.122 The matter is one of good faith, not of prudence. It is a trustee’s duty to obtain payment of debts owing to the trust as quickly as possible123 and where they are not paid promptly to commence legal proceedings.124 Formerly, the only excuse for not taking proceedings was a well-founded belief that such proceedings would be fruitless,125 and the burden of proof of such belief lay upon the trustees.126 Under some of the Trustee Acts,127 a trustee is not now bound to commence proceedings unless and until required in writing to do so by a beneficiary and he or she receives an indemnity as to costs. In such cases, the section compelling a trustee to sue in certain circumstances requires to be read in conjunction with the section conferring a power to compound debts.

Compromising claims [20-48] The legislation gives power to compromise a dispute with a beneficiary relating to the beneficiary’s entitlement to trust property.128 An executor may in a proper case compromise a claim made by a co-executor against the estate of a deceased person, but a trustee cannot compromise a claim made by a co-trustee.129

[page 485] Under a previous Victorian section, trustees have been held to be authorised to settle a dispute with a tenant for life as to the amount to be spent on repairs by the life tenant.130 Where executors allowed a debtor time to pay, it was held that by virtue of the section they were entitled so to do.131 However, a plaintiff who sued under any of the local derivatives of Lord Campbell’s Act132 as the representative of herself and her children was held not to have power to compromise as a trustee under this section.133 The trustee should, as will the court if the discretion is surrendered to the court, act ‘on the balance of possibilities and the balance of apparent advantages’.134 Before there can be a compromise there must have been a claim, but it is not necessary to show, if the exercise of the power is challenged, that the claim would have succeeded.135 The general nature of a trustee’s power to compromise was considered in England by the Court of Appeal in Re Earl of Strafford.136 That case establishes that the power is not to be construed narrowly, nor restricted by considerations which do not clearly emerge from the statute conferring the power. In particular, it was held that, in compromising a claim adverse to the trust, the consent of the beneficiaries is not required.137 The court also held that a power to compromise may extend to a compromise one term of which is that limited estates be surrendered.

Power to Give Receipts [20-49] In the course of their administration of the trust, trustees have to give receipts. If receipts are given, all the trustees must join. Where money is paid by a debtor to one only of the trustees, the debtor may be made to pay over again if the moneys are misapplied by that trustee.138 In New South Wales, s 48(1) of the Trustee Act 1925 provides: 48. (1) The receipt in writing of trustees or of a sole trustee for any money, securities, or other personal property or effects payable, transferable, or deliverable to the trustees or the sole trustee under any trust or power shall be a sufficient discharge for the same, and shall effectually exonerate the person paying, transferring, or delivering the same from seeing to the application or being answerable for any loss or misapplication thereof.

All jurisdictions have similar provision in their trustee legislation.139

However, in some jurisdictions there are complications. In New South Wales, s 66B(2) of the Conveyancing Act 1919 provides: 66B. (2) Notwithstanding anything to the contrary in the instrument (if any) creating a trust for sale or power of sale of property or in the settlement of the net proceeds, the proceeds of sale or other capital money shall not be paid to or applied by the direction of fewer than two persons as trustees, except where the trustee is a trust corporation, or the trustee was appointed as a sole

[page 486] trustee by the instrument creating the trust or power, but this subsection does not affect the right of a sole personal representative as such to give valid receipts for, or direct the application of, the proceeds of sale or other capital money; nor, except where capital money arises on the transaction, render it necessary to have more than one trustee.

In Victoria, s 18(2) of the Trustee Act 1958 is in the following terms: (2) This section shall not, except where the trustee is a trustee company, or except so far as is otherwise enacted, enable a sole trustee to give a valid receipt for capital money arising under the Settled Land Act 1958.

The relevant sections are ss 94 and 95 of the Settled Land Act 1958, and these are in the following terms: 94. (1) Notwithstanding anything in this Act capital money arising under this Act shall not be paid to fewer than two persons as trustees of a settlement, unless the trustee is a trustee company or unless the settlement authorizes the receipt of such money by one such trustee. (2) … 95. The receipt or direction in writing of or by the trustees of the settlement, or where one trustee is empowered to act or is a trustee company, of or by that trustee, or of or by the personal representatives of the last surviving or continuing trustee, for or relating to any money or securities, paid or transferred to or by the direction of the trustees, trustee or representatives (as the case may be) shall effectually discharge the payer or transferor therefrom, and from being bound to see to the application or being answerable for any loss or misapplication thereof, and, in case of a mortgagee or other person advancing money, from being concerned to see that any money advanced by him is wanted for any purpose of this Act, or that no more than is wanted is raised.

Therefore, in New South Wales and Victoria from a combination of the relevant legislation, it will be seen that, although in all cases all trustees must join in the receipt and although a sole trustee may give a good receipt for money other than capital money, a purchaser, in order to be protected against the necessity of seeing to the application of capital moneys, must pay them to not less than two trustees, unless the sole trustee is a trust corporation, or the sole trustee appointed by the trust instrument. It should be noted that it is not

sufficient that a sole trustee should have been appointed by the trust instrument — it must in such a case still be the same sole trustee to whom the capital money is paid. In most states, further protection is afforded a person paying a trustee. In New South Wales, s 39 of the Trustee Act 1925 provides: 39. No purchaser or mortgagee, paying or advancing money on a sale or mortgage purporting to be made under any trust or power vested in a trustee, shall be concerned to see that the money is wanted, or that no more than is wanted is raised, or to see to the application thereof.

Similar provisions exist in the Australian Capital Territory (s 39), Victoria (s 21), Queensland (s 46) and Western Australia (s 44), but not in South Australia, Tasmania or the Northern Territory.

Powers of a Trustee-shareholder General [20-50] It is desirable to treat separately the various powers, statutory and as determined by the cases, of a trustee who holds company shares as trust property.140

Exercise of voting power [20-51] It is the duty of trustee-shareholders to use their voting power in the interests of the beneficiaries and, if all the beneficiaries are sui juris and absolutely entitled and are agreed upon [page 487] the way in which the voting power should be exercised, the trustee usually will vote as the beneficiaries wish although not obliged to do so.141 A trustee should not exercise voting power so as to benefit one class of beneficiary at the expense of another class.142 Where not all the beneficiaries are sui juris, as where the class of beneficiaries is not necessarily closed, the discretion of the trustees as to the manner in which voting power should be exercised will not be interfered with.143 Where there were a number of trustees and the articles of a company

provided that the first named of joint holders should have the power to vote, the court in Dawson v Dawson144 ordered that the shares should be split up so that each trustee was named first in an equal parcel of shares with a view to the trustees exercising the voting power equally. However, it would appear that unless the trustees were unanimous the voting power could not be exercised at all.

Company reconstruction [20-52] Before the modern Trustee Acts, considerable difficulties arose in cases where trustees held company shares as an authorised investment or under a power to retain existing investments, and the company proposed a reconstruction or amalgamation or some other scheme or arrangement which would require a variation in the trustee’s shareholdings. The right to hold shares in the reconstructed company depended upon the powers of the trustee under the trust instrument and on the nature of the reconstruction.145 In some cases, it was held that the trustee had no power to participate in the reconstruction.146

New issues of shares [20-53] Again, under the old law, difficulties often arose where trustees held trust shares in a company which proposed to issue new shares either as bonus shares or with a preferential right to existing shareholders to subscribe to the new issue. It was at one time thought that trustees, on being allotted bonus shares without cost, were bound forthwith to sell them.147 But the true position appears to have been that the trustees could retain such bonus shares provided that their proportionate holding in the company was not increased.148 If, however, the shares were issued at par with a preferential right to subscribe, the trustees could purchase if their market price after issue would be above par, but were then bound to sell and realise the profit.149 It is no longer necessary to consider these complexities. The uniform legislation makes provision, subject to the instrument creating the trust, for various powers of trustees in relation to securities subject to the trust.150 Thus, s 14D(1) of the New South Wales legislation provides that the trustee may concur, in the same manner as if the trustee were beneficially entitled to the securities, in any scheme or arrangement: (a) for or arising out of the reconstruction, reduction of capital or liquidation of, or the issue of

shares by, the body corporate, or

[page 488] (b) for the sale of all or any part of the property and undertaking of the body corporate to another body corporate, or (c) for the acquisition of securities of the body corporate, or of control of the body corporate, by another body corporate, or (d) for the amalgamation of the body corporate with another body corporate, or (e) for the release, modification or variation of rights, privileges or liabilities attached to the securities, or any of them.

Section 14D(2) provides that the trustee may accept instead of, or in exchange for, the securities subject to the trust securities of any denomination or description of another body corporate party to the scheme or arrangement. Section 14D(3) provides that if a conditional or preferential right to subscribe for securities in a body corporate is offered to a trustee in respect of a holding in that body corporate or another body corporate, the trustee may, as to all or any of the securities: (a) exercise the right and apply capital money subject to the trust in payment of the consideration, or (b) assign to any person, including a beneficiary under the trust, the benefit of the right, or the title to the right, for the best consideration that can be reasonably obtained, or (c) renounce the right.

Section 14D(4) provides that a trustee accepting or subscribing for securities under the section is, for the purposes of any provision of the relevant Division, exercising a power of investment. Section 14D(5) provides that a trustee may retain securities accepted or subscribed for under s 14D for any period for which the trustee could properly have retained the original securities.

Payment of calls [20-54] A trustee may apply capital money subject to a trust in payment of the calls on any shares subject to the trust. In all jurisdictions other than New South Wales and the Australian Capital Territory, if the trustee is a trust corporation, that power can be exercised despite the fact that the shares on which the calls are made are shares in the trustee corporation. The power exists subject to any contrary intention of the trust instrument.151

Where shares are partly paid up, the liability of former members after they have transferred their shares continues in the manner and for the period provided for in the Corporations Act 2001 (Cth). Trustees, therefore, who transferred shares either on sale thereof or on distribution of trust assets would formerly be liable to pay the calls themselves if they did not reserve part of the trust property for the purpose. It was formerly the practice for the trustee to apply to the court for protection against such liability152 or to require an indemnity upon distribution.153 This has been altered by statute. In New South Wales, s 61A of the Trustee Act 1925 provides: 61A. The legal representative or trustee of the will of a deceased person who was registered as the holder of shares not fully paid up in any incorporated company may distribute the assets of the estate of such deceased person as soon as such legal representative or trustee has procured the registration of some other person as the holder of the shares without reserving any portion of the estate for the payment of any calls made after the date of such registration whether made by the company or its directors or by its liquidators in a winding up, but nothing herein contained shall affect any right which the company or its liquidator may have to follow the assets of such deceased person into the hands of any persons amongst whom the same have been distributed or who have received the same.

There are corresponding provisions in some of the jurisdictions.154 [page 489]

Powers to Obtain Audits and Valuations [20-55] Powers to obtain audits and valuations are conferred on trustees by the Acts of some jurisdictions. As far as audits are concerned, s 51 of the New South Wales Act provides:155 51. (1) A trustee may, in his or her absolute discretion, from time to time cause the accounts of the trust property to be examined or audited by a person who publicly carries on the business of an accountant, and shall for that purpose produce such vouchers and give such information to the person as the person shall require. (2) The costs of the examination or audit, including the fee of the person making the examination, or audit, shall be paid out of the capital or income of the trust property, or partly in one way and partly in the other, as the trustee shall in his or her absolute discretion think fit. (3) In default of any direction, in any special case, by the trustee to the contrary, costs attributable to capital shall be borne by capital and those attributable to income by income. (4) Where the trustee is the NSW Trusteeor an incorporated company, nothing in this section

shall, except in the case of a business forming part of the trust property, authorise any costs or fee to be paid out of or borne by the capital or income of the trust property. (5) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

As far as valuations are concerned, s 52 of the New South Wales Act provides:156 52. (1) A trustee may, for the purpose of giving effect to the trust or any of the provisions of the instrument, if any, creating the trust or of any statute, from time to time, by duly qualified agents, ascertain and fix the value of any trust property in such manner as the trustee thinks proper. (2) Any valuation so made in good faith shall be binding upon all persons interested under the trust. (3) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

In South Australia, s 84B requires a trustee to keep such records of the administration of the trust ‘as may be prescribed’, and presumably, depending on what is in fact prescribed, this might involve a power to audit and obtain valuations.

Power to Sue and be Sued [20-56] The obvious disadvantages which accrue from the rule of the general law that no person may be on both sides of the record in litigation have been obviated by legislation in Queensland, where s 59 provides: 59. Notwithstanding any rule of law or practice to the contrary, a trustee of any property in that capacity may sue, and be sued by, himself or herself in any other capacity whatsoever, including the trustee’s personal capacity; but in every such case the trustee shall obtain the directions of the court in which the proceedings are taken as to the manner in which differing interests are to be represented.

Western Australia is the only other state which has an equivalent provision (s 57), which is in identical terms. [page 490]

Powers in Relation to the Beneficiaries

Maintenance and Advancement Inherent jurisdiction [20-57] In cases where testators and settlers have bequeathed legacies or have settled sums which are vested but not immediately payable, or are contingent upon the happening of some event, it frequently happens that questions arise whether the capital or intermediate income of the legacy or sum may be used for the maintenance, advancement or benefit of the beneficiary. Where express provision is made in the trust instrument for the maintenance or advancement of the beneficiary out of the capital or income of the legacy, the trustees may, of course, exercise the power so conferred upon them, according to its terms. But there is in addition statutory provision conferring upon trustees extensive powers in all jurisdictions but Tasmania. Before examining the provisions of these sections, it is desirable to consider very shortly the trustee’s power of maintenance and advancement apart from statute. The trustee may, first, and as already stated, exercise any express power of maintenance or advancement that is contained in the trust instrument, and it was formerly the practice to insert in wills and settlements most detailed provisions regarding the maintenance of beneficiaries, particularly infant beneficiaries, out of income and often out of capital, and often out of moneys to which the infant was only contingently entitled. A testator might wish that the interests of the testator’s children under the will should not vest until they attained the age of 21, but the testator would then desire that the children should be able to be maintained out of the share to which they were contingently entitled at 21, or out of the income of that share. If the testator or settlor omitted to make the necessary provision for maintenance in the instrument, or provision for advancement, the trustee had to apply to the court, which had inherent jurisdiction to allow maintenance, education or advancement of beneficiaries out of the income or corpus of the trust estate. It was held that, even without an order of the court, a trustee was justified in expending money for the maintenance of the beneficiary, and even to make an advancement to the beneficiary out of corpus, in cases where the court, if it had been approached, would have sanctioned the expenditure.157 However, this course subjected the trustee to the liability of showing that the expenditure of corpus or income on maintenance education and advancement

was proper, and therefore the safe course was to apply to the court in the first instance. The court could apply the income of an infant’s share in property for maintenance even though the interest of the infant was subject to defeasance,158 but not where the interest was contingent159 unless the interest of the infant was a portion charged on land.160 The court was generally unwilling that corpus should be applied for maintenance and education of an infant unless there were exceptional circumstances.161 However, the court could do so in proper cases and could order maintenance in excess of the provision made by the trust instrument.162 It also could in proper cases, and still can, make orders allowing amounts for the past maintenance of infants out of income or corpus.163 Apart from statute, a trustee’s power of advancement was limited. The trustee had such a power when it was expressly conferred by the trust instrument, and also an implied power of [page 491] advancement, subject to the approval of the court, out of any capital in which an infant had an absolute interest or (with the consent of other persons interested) out of capital in which the infant had less than an absolute interest.164

New South Wales and the Australian Capital Territory [20-58] Section 43 of the Trustee Act 1925 deals with the powers of a trustee to apply income for the maintenance, education and benefit of an infant and to accumulate the balance of the income. Section 44 deals mainly with the power of a trustee to apply capital money for the advancement or benefit of any beneficiary, adult or infant, but it also provides for the payment of capital money for the maintenance and education of an infant in certain circumstances. It is convenient now, considering the exact terms of ss 43 and 44, to consider the meaning of the words ‘maintenance’, ‘advancement’ and ‘benefit’ used in those sections. The essential difference between ‘maintenance’ and ‘advancement’ is that

‘maintenance’ denotes a periodical payment or a payment which could validly be made periodically, whereas ‘advancement’ denotes a definite unique outlay for a specific purpose. Recipients of maintenance must, practically speaking, be infants, but adults may be recipients of an advancement. An advancement can never be made of a sum of money which the person to whom it is made can immediately pocket, but it must be made with a view to the establishment of that person in a business or profession, or otherwise in some definite way for that person’s benefit, the whole essence of an advancement being the immediate payment of a tolerably large sum for an immediate benefit to one beneficiary. Section 44 of the Trustee Act 1925 does not state the objects for which capital may be advanced, and it is therefore necessary to look to the older authorities. The meaning of the term ‘advancement’ has been often under discussion, especially in connection with questions as to the satisfaction of children’s portions by payments during their parent’s lifetime. In this connection an advancement by way of portion is something given by the parent to establish the child in life, or to make what is called a provision for the child.165 In Re Aldridge,166 an advancement was defined by Cotton LJ as ‘a payment to persons who are presumably entitled to, or have a vested or contingent interest in, an estate or legacy, before the time fixed by the will for their obtaining the absolute interest in a portion or the whole of that to which they would be entitled’.167 ‘It means that a certain portion of the fund is actually taken out of the settlement, and paid over to the object of the power.’168 [page 492] ‘Benefit’ covers expenditure not strictly under ‘maintenance’ or ‘education’.169 [20-59] The dictionary meaning of ‘advance’ is to pay money before it is due. It has been ‘generalised’ to refer to the creation, in advance of any entitlement under the terms of the trust, of equitable and legal rights binding on the trustee and depending for their enforceability on the trustee’s ability to resort to trust capital or income.170

In Pilkington v Inland Revenue Commissioners,171 the House of Lords considered the meaning of the expression ‘advancement and benefit’ used in s 44 of the Trustee Act 1925 (NSW), and its English equivalent, s 32 of the Trustee Act 1925. In that case, the trustees of a settlement proposed to exercise their statutory power of advancement by resettling upon new trusts the interest of an infant beneficiary. In the Court of Appeal, it was held that this did not amount to a proper exercise of the statutory power, which could not be exercised unless the benefit to be conferred was ‘personal to the person concerned in the sense of being related to his or her own real or personal needs’. This view was rejected in the House of Lords, where Viscount Radcliffe said of it: ‘I do not find it possible to import such restrictions into the words of the statutory power which itself does not contain them.’ Dealing generally with the scope of the words ‘advancement and benefit’, Viscount Radcliffe (with whom Lords Reid, Jenkins, Hodson and Devlin concurred) said: Advancement had, however, to some extent a limited range of meaning since it was thought to convey the idea of some step in life of permanent significance, and accordingly, to prevent uncertainties about the permitted range of object for which moneys could be raised and made available, such words as ‘or otherwise for his or her benefit’ were often added to the word ‘advancement’. It was always recognised that these added words were ‘large words’ (see Jessel MR, in Re Breeds’ Will172 and indeed in another case, Lowther v Bentinck,173 the same judge spoke of preferment or advancement as being ‘both large words’ but of ‘benefit’ as being the ‘largest … of all’. … This wide construction of the range of the power, which evidently did not stand on niceties of distinction provided that the proposed application could fairly be regarded as for the benefit

[page 493] of the beneficiary who was the object of the power, must have been carried into the statutory power created by s 32, since it adopts without qualification the accustomed wording ‘for the advancement or benefit, in such manner as they may, in their absolute discretion, think fit …’. So much for ‘advancement’, which I now use for brevity to cover the combined phrase ‘advancement or benefit’. It means any use of the money which will improve the material situation of the beneficiary. It is important, however, not to confuse the idea of ‘advancement’ with the idea of advancing the money out of the beneficiary’s expectant interest. The two things have only a casual connexion with each other. The one refers to the operation of finding money by way of anticipation of an interest not yet absolutely vested in possession or, if so vested, belonging to an infant: the other refers to the status of the beneficiary and the improvement of his situation. The power to carry out the operation of anticipating an interest is not conferred by the word ‘advancement’ but by those other words of the section which expressly authorise the payment or application of capital money for the benefit of a person entitled.174

This reasoning was applied and extended in Re Clore’s Settlement Trusts,175 where it was held that trustees were justified in employing the statutory power by advancing money by way of donation to charity to which the beneficiary concerned had a moral obligation to contribute. Where advances are properly made, trustees are not liable if the advance fails of its purpose without any negligence or wrongdoing on their part. In Lawrie v Bankes,176 trustees for an infant had power to make advances out of money to which the infant was only contingently entitled. They advanced money to purchase him a commission in the army, and he sold out almost immediately afterwards. It was held that the trustees had acted quite properly and that, in the absence of fraud, the proceeds of the sale belong to the infant. The provision of assistance with housing can be an advancement.177 Since an advancement is a payment to a beneficiary of part of the capital before the capital falls into that beneficiary’s hands, a loan to be repaid was not an advancement.178 Where a trustee had power under a power of advancement to benefit a beneficiary in a number of ways, and chose to confer benefit by making a settlement on him for life with remainders to his issue, and the rule against perpetuities invalidated the remainders, the exercise of the power of advancement was held invalid because the operation of the perpetuity role wholly altered the character of the settlement.179 If the purpose of the advance fails owing to the negligence or default of the trustees in making the advance, they will be liable to account for it. In Simpson v Brown,180 a trustee made an advancement to bind the beneficiary apprentice to an apothecary. As the particular apothecary was not licensed, the deed of apprenticeship was made out in the name of a licensed apothecary who nominally took the apprentice and the premium but allowed the apprentice to work for the first-mentioned apothecary, half of the premium being paid to the unlicensed apothecary and the other half to the boy’s father, who did not pay it over. The whole transaction being void, the trustee was held liable to the estate for the advancement. [page 494] Maintenance

[20-60] It is now convenient to consider the statutory power of maintenance which has been conferred on trustees by s 43 of the Trustee Act 1925 in New South Wales and the Australian Capital Territory: 43. (1) Where any property is held in trust for a person who is for the time being an infant for any interest whatsoever, whether vested or contingent, and whether absolute or liable to be divested, the trustee may at the trustee’s sole discretion pay to the parent or guardian, if any, of the infant, or to the person with whom the infant is for the time being residing, or otherwise apply the whole or any part of the income of the property, for or towards the maintenance education or benefit of the infant. (1a) The power conferred by subsection (1) extends to the payment, after the commencement of the Minors (Property and Contracts) Act 1970, of income to an infant who has reached the age of eighteen years, but this subsection does not limit the generality of subsection (1). (2) The power conferred by subsection (1) may be exercised whether there is any other fund applicable to the same purpose, or any person bound by law to provide for the maintenance or education of the infant, or not. (3) The power conferred by subsection (1) of this section shall not prejudice or affect any prior interest in or charge over the property: Provided that where the interest for which the property is held in trust for the infant is future or contingent, and the trust for the infant would not, apart from the provisions of this section, carry the intermediate income, and the same is not expressly or specifically disposed of but would pass to some other person in virtue only of an interest to which that other person is entitled under a residuary or a general gift in the instrument, if any, creating the trust, or in the absence of such a gift then as upon intestacy or as upon a resulting trust, the trust for the infant shall, during the infancy, if the interest of the infant so long continues, be deemed to carry the intermediate income, and the interest of such person shall not be deemed to be a prior interest within the meaning of this subsection.

The effect of these subsections is to permit the maintenance, education and benefit of an infant out of the income of any trust property held in trust for the infant, whether the interest of the infant is vested or contingent, and whether or not the contingent interest of the infant carries with it the intermediate income, provided that this intermediate income is not expressly disposed of by the trust instrument. This was not so under the previous statutory power of a trustee to provide for the maintenance of an infant, which was contained in s 18 of the Trustee Act 1898 (NSW).181 Nor is it so under the English legislation, where the power to apply income for maintenance is limited to cases where the infant’s interest, even though contingent, does carry the intermediate income182 and there is no express direction for accumulation.183 This distinction was explained and applied by Long Innes J in Permanent Trustee Co of NSW Ltd v Pym.184 [20-61] In view of this very wide power to apply the income for

maintenance, provided it is not expressly disposed of, it becomes less important than it was formerly to consider when the interest of the infant carries the intermediate income. Further, the terms of s 36B of the Conveyancing Act 1919, passed five years after s 43 of the Trustee Act 1925, are now so [page 495] wide that there are few, if any, cases where a future, contingent or executory interest in real or personal property does not carry intermediate income unless the intermediate income is otherwise expressly disposed of.185 Where under an instrument other than a will coming into operation after the commencement of the Conveyancing (Amendment) Act 1930 property stands limited to a person for a contingent future interest, or stands limited to trustees upon a trust for a person whose interest is contingent or executory, such interest shall, subject to statutory provisions relating to accumulations, carry the intermediate income of that property from the time when the instrument comes into operation, except so far as such income or any part thereof may be otherwise expressly disposed of. However, the wide terms of s 43 were formerly important in a case where the intermediate income would cease to accrue to the contingent interest as a result of the statutory provisions against excessive accumulations.186 In such a case, s 43 gave power to use the income for maintenance after the accumulation period otherwise allowed by law would have expired, even though, if not used, it would have gone to other persons, that is, next-of-kin or residuary beneficiaries.187 Now that the old rules against excessive accumulations have been virtually abolished by the Perpetuities Act 1984, this consideration does not apply to instruments executed after that Act came into power. The powers given to trustees by s 43(4), (5), (6), (7) and (8) enable them to accumulate surplus intermediate income and apply any part of the accumulations for maintenance in subsequent years. The balance of the accumulations would go to the person who subsequently became absolutely entitled to the property — either the infant, or another person if the infant’s interest was contingent and failed to vest — with the exception stated in subs (6)(b). Such a destination of the income might be different from what it would

have been under the law apart from s 43.188 These remaining subsections of s 43 are as follows: 43. (4) During the infancy, if the interest of the infant so long continues, the trustee shall accumulate all the residue of the income in the way of compound interest by investing the same, and the resulting income thereof from time to time on securities on which the trustee is by the instrument, if any, creating the trust, or by law authorised to invest the trust money. (5) During the infancy, if the interest of the infant so long continues, the trustee may at any time, if he or she thinks fit, apply the accumulations or any part thereof as if the same were income arising in the then current year. (6) In the following cases the trustee shall hold the accumulations absolutely for the infant, that is to say: (a) if otherwise than by virtue of this section the infant is entitled to the income which has been accumulated, or

[page 496] (b) if under the provisions of the instrument, if any, creating the trust, the infant is entitled on attaining the age of twenty-one years or on the occurrence of some prior event to a vested interest, whether absolute or liable to be divested, in fee-simple or in full ownership in the property from which the income arose, and the infant in fact becomes entitled to such vested interest. (7) Any accumulations held in trust in accordance with subsection (6) shall be so held without prejudice to any provision with respect thereto contained in any settlement made by the infant under any statute during the infant’s infancy. (8) Except in the cases mentioned in subsection (6), and notwithstanding that the person for whom the property is held in trust had a vested interest in the income by virtue of this section, the trustee shall hold the accumulations as an accretion to the capital of the property from which the accumulations arose, and as one fund with such capital for all purposes, and so that if such property is a settled estate within the meaning of Part 4 of the Conveyancing and Law of Property Act 1898, the accumulations shall be held on the same trusts as if the same were capital money arising therefrom. (9) This section extends to a vested annuity in like manner as if the annuity were the income of property held by a trustee in trust to pay the income thereof to the annuitant for the same period for which the annuity is payable, save that in any case accumulations made during the infancy of the annuitant shall be held in trust for the annuitant absolutely. (9A) This section does not affect such right as an infant may have in consequence of the Minors (Property and Contracts) Act 1970, upon reaching the age of eighteen years or otherwise, to call for payment or transfer or property to which the infant is absolutely entitled. (10) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument, and to the provisions therein contained.

The section, it will be seen, does not apply where there is a contrary

intention expressed in the trust instrument. In England, in Re Stapleton, a direction to accumulate income was held to prevent the application of the section, not, apparently, because it is of itself an expression of a contrary intention, but because it prevents the gift carrying the intermediate income and the English section cannot then be applied.189 However, under earlier legislation, it has been held that a direction to accumulate does not indicate a contrary intention. The reasoning in Re Stapleton cannot apply in New South Wales,190 so the question remains whether a direction to accumulate is a contrary intention within the meaning of s 43(10). It would appear that it is not.191 It would seem that the term ‘absolute’ in s 43(6)(b) means not merely vested, but vested free from any power of revocation or condition subsequent.192 An express power to maintain does not exclude the statutory power except to the extent of any inconsistency.193 A limited power to maintain and educate infants is conferred on trustees by s 44(1) of the Trustee Act 1925. Advancement [20-62] The meaning of ‘advancement’ and ‘benefit’ has already been considered. Prior to the Trustee Act 1925, a trustee could virtually only make an advancement if there was power [page 497] so to do in the trust instrument.194 Section 44 of the Trustee Act 1925 (NSW) and the Trustee Act 1925 (ACT) is in terms similar to clauses previously inserted in trust instruments, so that now it is not necessary to insert the power in the instrument where the trust property is personalty or notional personalty, but it is still necessary to insert a specific provision where the trust property is realty, notional realty, or moneys applicable as capital money for the purposes of Pt 4 of the Conveyancing and Law of Property Act 1898.195 Section 44 is in the following terms: 44. (1) Where under a trust a person is entitled to the capital of the trust property or any share thereof, the trustee may from time to time pay or apply any capital money subject to the trust, not exceeding altogether in amount one-half of the value of the property or share, for the advancement or benefit of such person or where such person is an infant, for the maintenance,

education, advancement or benefit of such person in such manner as the trustee shall in the trustee’s absolute discretion think fit. (1A) The power conferred by this section to pay or apply any capital money subject to the trust for the maintenance or education of a person who is an infant shall not be exercised in any case where the trust property or the share thereof to which the infant is entitled exceeds four thousand dollars. (2) The power conferred by this section may be exercised whether the person is entitled absolutely or contingently on the person’s attaining any specified age or on the occurrence of any other event, or subject to a gift over on the person’s death under any specified age or on the occurrence of any other event, and, notwithstanding that the interest of the person so entitled is liable to be defeated by the exercise of a power of appointment or revocation, or to be diminished by the increase of the class to which the person belongs. (3) The power conferred by this section may be exercised whether the person is so entitled in possession or in remainder or reversion. (4) If the person is or becomes absolutely and indefeasibly entitled to a share in the trust property, the money so paid or applied shall be brought into account as part of such share. (5) No such payment or application shall be made so as to prejudice any person entitled to any prior life or other interest, whether vested or contingent, in the money paid or applied unless such person is in existence and of the age of eighteen years or upwards and consents in writing to the payment or application. (6) This section applies only where the trust property consists of money or securities or property held upon trust for sale calling in and conversion, and the money or securities or the proceeds of the sale calling in and conversion are not by statute or in equity considered as land, or applicable as capital money for the purposes of Part 4 of the Conveyancing and Law of Property Act 1898. (7) This section applies only and if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.196

‘Apply’ (and ‘application’) are to be widely construed as meaning a ‘diverting to’ or ‘and employing for the purpose of’.197 Although s 44(1) in terms merely gives power to ‘pay or apply capital money’ for the advancement or benefit of a beneficiary in certain circumstances, it has been held under the equivalent section of the English Trustee Act that where trustees can [page 498] properly advance money to a beneficiary contingently entitled, they may exercise such power by the conveyance of land for its market value, treating the conveyance as an advancement of the amount of that value, on the principle that a court of equity will not insist on circuity of action if the same result as can

legitimately be achieved by circuitous action can be achieved by direct action.198 It will be noted that under s 44(5) the consent in writing of persons having prior life or other prior199 interests is necessary, but it is not necessary to obtain the consent of any person who may subsequently take the property in the event of the interest of the person advanced failing to vest or being subsequently divested by the operation of a condition of defeasance. A subsequent taker under such circumstances has no redress. The holder of a prior life interest protected under s 45 or under the trust instrument200 will not forfeit such interest by consent to an advance under s 44.201 The consent of persons interested under a discretionary trust is not required,202 nor is the consent necessary of persons who take on the discretionary trusts which arise out of a protective trust under s 45.203 It will be noted that the power of advancement conferred by s 44(1) is expressed in terms of a power ‘to pay or apply’. It has been held that a trustee’s resolution to set aside money on behalf of a beneficiary deliberately arrived at and recorded in the trustee’s books as such is an ‘application’ of trust moneys within the meaning of that expression.204 That transaction is an unconditional and irrevocable allocation of trust property. An unconditional and irreversible allocation of trust property can also take place even though there is not stated to be an alteration of the beneficial ownership of one or more specific trust assests.205 An example arose where the conduct of the trustees amounted to an admission of an unconditional obligation to pay a specified sum of money to a beneficiary, thereby rendering themselves liable to an action at law for the recovery of that amount as money had and received to the benefit of the beneficiary, so as to overlay the equitable relationship of trustee and beneficiary with the legal relationship of debtor and creditor.206 It is not necessary for this outcome that the trustees hold the relevant assets on a bare trust.207 Where a trustee has a power to make advances to a beneficiary up to a specified portion of a trust fund, a payment up to that limit exhausts the exercise of the power and it ceases to be exercisable in the future even though the retained assets subsequently increase in value.208 Finally, it should be noted that there is no sensible explanation for the provisions of s 44(1A), to which there is no equivalent in the Australian Capital Territory.

Discretion [20-63] The discretion under ss 43 and 44 is given to the trustee. In Wilson v Turner,209 where under a clause in the will the trustees were authorised to apply the whole or part of the annual income of the expectant share of any child for or towards the maintenance of such child and [page 499] the trustees paid over the whole income to the child’s father without exercising any discretion whatever as to its application for the child’s maintenance, the court held that the estate of the father must repay the whole amount of the income received. Trustees should therefore, before paying over moneys for maintenance or advancement, consider the circumstances and see so far as possible that the moneys are applied in the proper manner and not for other purposes. If they exercise their discretion in a bona fide manner the court does not interfere.210 However, the trustees are given the discretion, and they must genuinely exercise this discretion. Maintenance is allowed for the express purpose of providing for the maintenance, education, or benefit of the child, and is not allowed for the benefit of the parent or guardian, except, of course, so far as it is for the benefit of the children that parents should be properly provided for so as to enable them to carry out in a proper manner the maintenance and education of their children.211 If the trustees decline to exercise their discretion the court will exercise it for them, treating the power as a trust.212

Victoria [20-64] The Victorian provision empowering the trustee to pay maintenance out of income (corresponding to s 43 of the NSW Act) is s 37 of the Trustee Act 1958. However, it is couched in language sufficiently dissimilar to require quotation in full: 37. (1) Where any property is held by trustees in trust for any person for any interest whatsoever, whether vested or contingent, then, subject to any prior interests or charges affecting that property — (a) during the minority of any such person, if his interest so long continues, the trustees may, at

their sole discretion, pay to his parent or guardian (if any) or otherwise apply for or towards his maintenance, education, advancement, or benefit, the whole or such part (if any) of the income of that property as may in all the circumstances be reasonable, whether or not there is — (i) any other fund applicable to the same purpose; or (ii) any person bound by law to provide for his maintenance or education; and (b) if such person on attaining the age of eighteen years has not a vested interest in such income, the trustees shall thenceforth pay the income of that property and of any accretion thereto under subsection (2) of this section to him, until he either attains a vested interest therein or dies, or until failure of his interest: Provided that, in deciding whether the whole or any part of the income of the property is during a minority to be paid or applied for the purposes aforesaid, the trustees shall have regard to the age of the minor and his requirements and generally to the circumstances of the case, and in particular to what other income (if any) is applicable for the same purposes; and where trustees have notice that the income of more than one fund is applicable for those purposes, then, so far as practicable, unless the entire income of the funds is paid or applied as aforesaid or the Court otherwise directs, a proportionate part only of the income of each fund shall be so paid or applied.

[page 500] (2) During the minority of any such person, if his interest so long continues, the trustees shall accumulate all the residue of that income in the way of compound interest by investing the same and the resulting income thereof from time to time in authorized investments, and shall hold those accumulations as follows: (a) If any such person — (i) attains the age of eighteen years, or marries under that age, and his interest in such income during his minority or until his marriage is a vested interest; or (ii) on attaining the age of eighteen years or on marriage under that age becomes entitled to the property from which such income arose in fee-simple, absolute or determinable, or absolutely, or for an entailed interest — the trustees shall hold the accumulations in trust for such person absolutely, but without prejudice to any provision with respect thereto contained in any settlement by him made under any statutory powers during his minority, and so that the receipt of such person after marriage, and though still a minor, shall be a good discharge; and (b) In any other case the trustees shall, notwithstanding that such person had a vested interest in such income, hold the accumulations as an accretion to the capital of the property from which such accumulations arose, and as one fund with such capital for all purposes, and so that if such property is settled land, such accumulations shall be held upon the same trusts as if the same were capital money arising therefrom — but the trustees may, at any time during the minority of such person if his interest so long continues, apply those accumulations, or any part thereof, as if they were income arising in the then current year. (3) This section shall apply in the case of a contingent interest only if the limitation or trust

carries the intermediate income of the property, but it applies to a future or contingent legacy by the parent of, or a person standing in loco parentis to, the legatee, if and for such period as, under the general law, the legacy carries interest for the maintenance of the legatee, and in any such case as last aforesaid the rate of interest shall (if the income available is sufficient, and subject to any rules of court to the contrary) be five per centum per annum. Where in the case of a contingent interest the limitation or trust would, but for the operation of a protective trust (whether created or statutory) carry the intermediate income of the property, that limitation or trust shall for the purposes of this subsection be deemed notwithstanding the protective trust to carry the intermediate income. (4) This section shall apply to a vested annuity in like manner as if the annuity were the income of property held by trustees in trust to pay the income thereof to the annuitant for the same period for which the annuity is payable, save that in any case accumulations made during the minority of the annuitant shall be held in trust for the annuitant or his personal representatives absolutely.

In order to understand s 37(3), it will be necessary to recall s 38 of the Wills Act 1997 (Vic), which provides: 38. A contingent, future or deferred disposition of property, whether specific or residuary, includes any intermediate income of the property which has not been disposed of by the will.

It will be clear from a comparison of s 43 of the New South Wales Act and s 37 of the Victorian Act, that most of the comments on the former will be equally applicable to the latter. But the following significant differences should be noted: (1) whereas the former permits the application of income to the ‘maintenance’ or ‘education’ or ‘benefit’ of a beneficiary, its Victorian counterpart more generously permits the income to be applied not only to those purposes but also to a beneficiary’s ‘advancement’; (2) the Victorian section does not suffer from the restriction contained in the New South Wales section which limits the exercise of the power to infant beneficiaries; (3) the provisions as to the destination of accumulated surplus income are very different in each state; and (4) (as would appear from s 37(3)) the Victorian Act is limited (with slight exceptions) in its application to contingent interests to those contingent interests which carry the intermediate income. [page 501] The Victorian section dealing with a trustee’s power to apply capital moneys towards a beneficiary’s advancement is s 38, which corresponds with the New South Wales s 44, except that the former is superior to the latter in two respects: whereas s 44(6) of the New South Wales Act, in effect, limits the trustee’s

power to make advancements out of capital to trust assets other than land, there is no such limitation in the Victorian Act; and Victoria has no equivalent of the inexplicable and unnecessary subs (1A) of the New South Wales s 44.

Queensland [20-65] The principal section dealing with a trustee’s power to apply trust income towards the maintenance of a beneficiary is contained in s 61 of the Trusts Act 1973. This section is essentially the same as s 37 of the Victorian Act just considered. The Queensland section differs, however, from the Victorian section in two respects. First, it contains a novel s 61(3), which provides as follows: 61. (3) Where any property is held by a trustee in trust for a beneficiary of full age who has a contingent interest in that property, the trustee may, at the trustee’s sole discretion, pay to such beneficiary or otherwise apply for or towards the beneficiary’s maintenance, education (including past maintenance or education) advancement or benefit, the income of that property or any part thereof.

Secondly, the subsections other than s 61(3) apply only to infant beneficiaries. The result, apparently, is that in Queensland a trustee has statutory power to apply trust income towards the maintenance of an adult beneficiary where the latter’s interest is contingent but not where it is vested. That result could hardly be intended. The trustee’s powers to apply capital moneys towards a beneficiary’s advancement are set out in s 62 of the Trusts Act 1973, which corresponds substantially with s 38 of the Victorian Act, which has been considered above. The Queensland Act contains an interesting section, which is without parallel in the trustee legislation of the other states, except Western Australia, empowering a trustee to impose conditions when applying trust property (either capital or income) towards the maintenance, education, advancement or benefit of a beneficiary. This is contained in s 63 of the Act, which is in the following terms: 63. (1) Where a power to pay or apply any property for the maintenance, education, advancement, or benefit of any person, or for any 1 or more of those purposes, is vested in a trustee, the trustee when exercising the power shall have authority to impose on the person any condition, whether as to repayment, payment of interest, giving security, or otherwise; and at any time after imposing any such condition, the trustee may, either wholly or in part, waive the condition or release any obligation undertaken or any security given by reason of the condition. (2) In determining the amount or value of the property that a trustee who has imposed a

condition pursuant to subsection (1), may pay or apply in exercise of the power, any money repaid to the trustee or recovered by the trustee shall be deemed not to have been so paid or applied by the trustee. (3) Nothing in this section shall impose upon a trustee any obligation to impose any condition pursuant to subsection (1); and a trustee, when imposing any condition as to giving security, shall not be affected by any restrictions upon the investment of trust funds, whether imposed by this Act or by any rule of law or by the trust instrument (if any). (4) A trustee shall not be liable for any loss which may be incurred in respect of any money that is paid or applied under this section, whether the loss arises through failure to take security, or through the security being insufficient, or through failure to take action for its protection, or through the release or abandonment of the security without payment, or from any other cause.

South Australia [20-66] The section empowering a trustee to apply trust income towards a beneficiary’s maintenance is s 33 of the Trustee Act 1936. Fundamentally, it is the same as s 37 of the [page 502] Victorian Act. Section 33 applies to adult, as well as to infant, beneficiaries. However, like the New South Wales section and unlike the Victorian one, its application to contingent gifts is not limited to those which carry the intermediate income. Moreover, its provisions as to the distribution of accumulated surplus funds are less complex than the corresponding Victorian provisions, such accumulations always being treated as accretions to corpus. The section empowering a trustee to apply trust capital towards a beneficiary’s advancement is s 33A of the Trustee Act 1936. It is, in all relevant respects, the same as s 38 of the Victorian Act considered above.

Western Australia [20-67] The position in Western Australia is almost, but not quite, the same as that in Queensland. It is covered by ss 58, 59 and 60 of the Trustees Act 1962, which correspond to ss 61, 62 and 63 of the Queensland Act considered above. A trustee’s power to apply income towards a beneficiary’s maintenance is contained in s 58. It differs from the Queensland Act in that the whole of s 58 applies in respect of all beneficiaries, infant and adult; it is not restricted to

infant beneficiaries, as is the bulk of Queensland’s s 61. It also differs from the Queensland Act in having no equivalent of Queensland’s curious s 61(3), commented on above. Sections 59 and 60 of the Western Australian Act correspond precisely with ss 62 and 63 of the Queensland Act, and deal (respectively) with a trustee’s power to apply capital towards a beneficiary’s advancement and with a trustee’s power to impose conditions on, any application of trust moneys (whether capital or income) to the maintenance, education, advancement or benefit of any beneficiary. It should also be noted that (apparently alone of the other states) Western Australia has an equivalent of s 36B of the Conveyancing Act (NSW) noted above; it is s 118 of the Property Law Act 1969 (WA).

Tasmania [20-68] There is no implied statutory power in Tasmania for a trustee to apply income of trust funds to the maintenance, education, advancement or benefit of any beneficiary in any circumstances. A trustee’s powers in this regard are still, therefore, regulated by the general law. There is, however, the usual implied statutory power to apply capital to a beneficiary’s advancement or benefit: it is contained in s 29 of the Trustee Act 1898.

Northern Territory [20-69] The relevant provisions in the Trustee Act (NT) are as follows: 24. (1) Where any property is held by trustees in trust for an infant, either for life or for any greater interest, and whether absolutely or contingently on his attaining the age of 21 years, or on the occurrence of any event before his attaining that age, the trustees may, at their sole discretion, pay to the infant’s parent or guardian (if any) or otherwise apply for or towards the infant’s maintenance, education, or benefit, the income of that property, or any part thereof, whether there is or not any other fund applicable to the same purpose, or any person bound by law to provide for the infant’s maintenance. (2) The trustees shall accumulate all the residue of that income in the way of compound interest by investing the same, and the resulting income thereof, from time to time on securities in which they are by the instrument of trust (if any), or by law, authorized to invest trust money, and shall hold those accumulations for the benefit of the person who ultimately becomes entitled to the property from which the same arose, but so that the trustees may at any time, if they think fit, apply those accumulations, or any part thereof, as if the same were income arising in the then current year. (3) This section applies only if and as far as a contrary intention is not expressed in the

instrument under which the interest of the infant arises, and shall have effect subject to the terms of that instrument and to the provisions therein contained. (4) This section applies whether the instrument of trust comes into operation before or after the commencement of this Act.

[page 503] 24A. (1) Where, under a trust, a person is entitled to the capital of the trust property or any share thereof, the trustee may, from time to time out of that capital, pay or apply for the maintenance, education, advancement or benefit of that person in such manner as the trustee shall in his absolute discretion think fit an amount not exceeding in all $2,000 or half the capital, whichever is the greater, or, with the consent of the Court, an amount greater than that amount. (2) This section applies only where, and in so far as, a contrary intent is not expressed in the instrument, if any, under which the interest of the person entitled to the capital or any share of the trust property arises, and shall have effect subject to the terms of that instrument. (3) This section applies only where the trust property consists of money or securities or property held upon trust for sale, calling in and conversion, and the money or securities or the proceeds of the sale, calling in and conversion are not by statute or in equity considered as land. (4) The power conferred by this section may be exercised whether a person is entitled absolutely or contingently on his attaining any specified age or on the happening of any event, or whether his interest is subject to a gift over on his death under any specified age or on the happening of any other event, and notwithstanding that the interest of the person so entitled is liable to be defeated by the exercise of a power of appointment or revocation, or to be diminished by the increase of the class to which he belongs or whether the person is entitled in possession or in remainder or reversion. (5) If a person is or becomes absolutely and indefeasibly entitled to a share in the trust property, money paid or applied under subsection (1) shall be brought into account as part of that share. (6) No action shall be taken under subsection (1) so as to prejudice a person entitled to any prior life or other interest, whether vested or contingent, in the money paid or applied, unless such person is in existence, is under no disability and consents in writing to the action.

Appropriation of Assets in Satisfaction of Shares Inherent jurisdiction [20-70] Where a trustee held property upon trust or with power to sell and to divide the proceeds, it was always open to the trustee to appropriate to a beneficiary assets in specie at a valuation in complete or partial satisfaction of his or her interest.213 The trustee could only do so with the consent of the

beneficiary,214 and before doing so the trustee had to consider the interests of other beneficiaries.215 However, the consent of other beneficiaries was not necessary.216 As long as there was no unfairness, a trustee could appropriate assets in specie to the share of one beneficiary without making a corresponding appropriation to the share of others.217 Where an appropriation in specie is made to a beneficiary of an asset which does not exhaust that beneficiary’s entitlement, that appropriation is treated as being the payment of the cash equivalent of the asset at the date of the appropriation.218 A trustee could not set aside a fund to meet an annuity unless the annuitant consented or with the permission of the court, which would in a proper case grant such an application, provided it was satisfied that the fund set aside would be virtually certain to be always sufficient to meet the annuity.219 [page 504] Previously, an appropriation of securities was only valid if the appropriated securities were both authorised and sufficient at the date of the appropriation.220 It appears that, given s 46(5) of the Trustee Act 1925 (NSW) (set out in [2070]), there may now be a valid appropriation of unauthorised securities to a beneficiary who is sui juris. Where appropriation is necessary to constitute a fractional share of a fund and a partial appropriation has been made, when the balance of the share comes to be appropriated, property which was the subject of the partial appropriation is brought in at the valuation it bore at the time it was made not at the value it currently had.221

New South Wales The statute [20-71] The law in relation to appropriations is now contained in s 46 of the Trustee Act 1925, which provides: 46. (1) A trustee may appropriate any part of the property subject to the trust or of the real or personal estate of a testator or intestate in the actual condition or state of investment thereof in or towards satisfaction of a legacy or of any share or interest in the property or estate, whether

settled or not, as to the trustee may seem just and reasonable, according to the respective rights of the persons interested in the property or estate, provided that — (a) the appropriation shall not be made so as to affect prejudicially any specific gift devise or bequest; (b) the appropriation shall be made with the consent, if any, required by this section; (c) in making the appropriation the trustee shall have regard to the rights of any person who may thereafter come into existence or who cannot be found or ascertained at the time of the appropriation or as to whom it is uncertain at that time whether he or she is living or dead, and of any other person whose consent is not required by this section. (2) The power of appropriation conferred by this section shall extend and apply to — (a) property over which a testator exercises a general power of appointment; (b) setting apart a fund to answer an annuity by means of the income of the fund or otherwise, provided that at the time of appropriation the fund would be sufficient, if it were invested in Government securities of the Commonwealth of Australia at par, to provide an income exceeding the annuity by at least fifteen per centum thereof; (c) setting apart a sum of money in or towards the satisfaction of a legacy share or interest. (3) For the purpose of an appropriation under this section the trustee may ascertain and fix the value of the respective parts of the property or estate and the liabilities to which the property or estate is subject as the trustee may think fit, and shall for that purpose employ a duly qualified valuer in any case where such employment may be necessary. (4) An appropriation made pursuant to this section shall bind all persons interested in the property or estate, including the persons whose consent is not required, and to the extent to which the appropriation is made in or towards satisfaction of the legacy share or interest, the rights to which any person is entitled in virtue of the legacy share or interest shall be restricted to the part of the property or estate so appropriated and shall not extend to any other part thereof which may be dealt with or disposed of freed from any such rights.

[page 505] (5) An appropriation of property whether it is or is not an investment authorised by law or by the instrument, if any, creating the trust for the investment of money subject thereto, shall not, except as otherwise provided by this section, be made thereunder for the benefit of a person absolutely and beneficially entitled in possession, unless the person is of the age of eighteen years or upwards and of full capacity and he consents in writing. (6) An appropriation shall not, except as otherwise provided in this section, be made thereunder in respect of any settled legacy share or interest, unless either the trustee thereof, if any, not being also the trustee making the appropriation, or the person who may for the time being be entitled to the income, consents in writing. (7) If the person whose consent is required under subsection (5) or subsection (6) of this section, not being the trustee of a settled legacy share or interest: (a) is a minor, the consent may be given on the person’s behalf by the person’s parents or parent with whom the person resides or in whose custody the person is, as the case may be, or by the person’s testamentary or other guardian, or if there is no such parent or

guardian, by the Court, (b) is an insane or incapable person, the consent may be given on the person’s behalf by the person’s committee or manager, of if there is no such committee or manager, by the Court, (c) is an insane patient, the consent may be given on the person’s behalf either by the Master in Lunacy or by the Court, (d) is a person who cannot be found or ascertained, or as to whom it is uncertain whether he or she is living or dead, the consent may be given on the person’s behalf by the court. (8) If the appropriation is of an investment authorised by law or by the instrument, if any, creating the trust for the investment of money subject thereto no consent save of the trustee, if any, of a settled legacy share or interest shall be required on behalf of: (a) a minor, where there is no parent or guardian, (b) an insane or incapable person or an insane patient, where there is no committee or manager, (c) a person who may come into existence after the time of appropriation, or who cannot be found or ascertained at that time, or as to whom it is uncertain at that time whether he or she is living or dead. (8A) Notwithstanding anything contained in paragraph (b) of subsection (1) or in subsection (5) or subsection (7) the consent of the annuitant shall not be necessary in any case in which the trustee, after having set apart a fund to answer the annuity, which fund at the time of appropriation would be sufficient, if it were invested in Government securities of the Commonwealth of Australia at par, to provide an income exceeding the annuity by at least twenty per centum thereof, has actually invested the fund in such securities. (9) Where an appropriation is made under this section in respect of a settled legacy share or interest, the property appropriated shall be subject to all trusts for sale and powers of leasing disposition management and varying interests which would have been applicable thereto or to the legacy share or interest in respect of which the appropriation is made, if no such appropriation had been made, provided that nothing in this section shall relieve the trustee of the settled legacy share or interest, where the trustee is not the trustee making the appropriation, from the obligation to obtain payment or transfer of the property appropriated, if or when the same is so payable or transferable. (10) Where the exercise of any power of sale conferred on a legal representative by section 153 of the Conveyancing Act 1919 is subject to any condition or to the leave of the Court being obtained, the legal representative shall not be entitled to appropriate any part of the real estate under the powers conferred by this section, except with the leave of the court. (11) The trustee may make any conveyance or assent which may be necessary for giving effect to an appropriation under this section.

[page 506] (12) Any appropriation or disposition of property made in purported exercise of the powers conferred by this section shall, in favour of a purchaser in good faith, be deemed to have been

made in accordance with the requirements of this section, and after all requisite consents, if any, have been given. The protection afforded by this subsection shall extend to the Registrar General Crown Solicitor or other person registering or certifying title. (13) In this section a settled legacy share or interest means a legacy share or interest settled by the trust instrument, if any, or by any other instrument, and includes any legacy share or interest to which a person is not absolutely entitled in possession at the date of the appropriation. (14) In this section a manager means the person appointed under the Lunacy Act 1898 to undertake the care and management of the property of an incapable person, and an insane patient means an insane patient within the meaning of that Act. (15) This section shall not prejudice any other power of appropriation conferred by law or by the instrument, if any, creating the trust, and the powers conferred by this section shall be in addition to any such power. (16) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.

General [20-72] This section may be regarded as a codification of the previous law, with some alterations, such as the power to appropriate to satisfy a settled share and the power to appropriate a fund to meet an annuity.222 The effect of an appropriation is still the same, namely, that any property so appropriated may be retained by the beneficiary even though the remainder of the estate may be reduced by losses223 and although the value of the property appropriated to the beneficiary may have increased. The converse also applies and the beneficiary must suffer any loss which may occur to the property previously appropriated to him or her. Section 46 only applies where the trust instrument shows no contrary intention. Thus, in the case of a will, there is no power to make an appropriation where the will shows an intention that the fund be kept together until the time specified for division.224 The section gives power to trustees, but, generally speaking, they have no duty, to appropriate assets in satisfaction of the shares of beneficiaries. However, where the trust is in the form of a trust of various specific sums, it is the duty of the trustees to make the appropriation.225 Thus, in the case of a share of residue, a residuary beneficiary, who is sui juris and absolutely and immediately entitled, may require that an appropriation of personalty be made to the residuary beneficiary and the executor is bound to make the appropriation if there is no

particular reason why it should not be made.226 In the case of realty, where there is a trust to convert and divide, the trustees of a will may appropriate a separate parcel of the realty in satisfaction of the share of a beneficiary,227 but not an undivided share, because that would make the disposition of the [page 507] remaining undivided shares more difficult.228 If the law be that a trust to divide necessarily implies a power of sale, such a trust must also give a trustee power to appropriate realty; aliter if a power of sale cannot be implied from a mere power to divide.229 Valuation [20-73] In fixing the value of property intended to be appropriated to the share of a beneficiary under s 46, the trustee under s 46(3) must where necessary employ a duly qualified valuer.230 Apart from this particular provision, there is also the general power of a trustee, conferred by s 52 of the Trustee Act 1925, to employ duly qualified agents to ascertain and fix the value of any trust property. Section 52 would be the section applicable in any case where the trustee was exercising a power of appropriation conferred by the trust instrument as distinct from the power under s 46. Other jurisdictions [20-74] Section 46 of the Trustee Act 1925 (ACT) is very similar to the New South Wales section, as is the Victorian section (s 31 of the Trustee Act 1958). Queensland (s 33(1)(l) and (m) of the Trusts Act 1973) and Western Australia (s 30(1)(k) and (l) of the Trustees Act 1962) have identical provisions, both being truncated versions of the New South Wales and Victorian provisions. South Australia, Tasmania and the Northern Territory have no equivalent provisions.

Powers to Appoint Trustees of Infants’ Property [20-75] Where an infant is entitled to a share in a trust fund (whether arising

out of a will, an intestacy, or an inter vivos trust), a number of possibilities arise as to the course a trustee can adopt. In the first place, if the trust arises out of a will or an intestacy, the trustee may in some states appoint new trustees of the infant’s property. This has its origin in s 42 of the Administration of Estates Act 1925 (Eng). Thus in New South Wales, s 151D of the Conveyancing Act 1919 provides: 151D. (1) (a) Where a minor is absolutely entitled under the will or on the intestacy of a person dying before or after the commencement of the Conveyancing (Amendment) Act 1930 (in this section called ‘the deceased’), to a devise or legacy, or to the residue of the estate of the deceased, or any share therein, and such devise, legacy, residue, or share is not under the will, if any, of the deceased, devised or bequeathed to trustees for the minor, the personal representatives of the deceased may by registered deed appoint a trust corporation or two or more individuals not exceeding four (whether or not including the personal representatives of one or more of the personal representatives) to be the trustee or trustees of such devise, legacy, residue, or share for the minor, and to be trustees of any land devised or any land being or forming part of such residue or share for the purposes of s 151C. (b) Where a trust corporation, or a trust corporation and one or more individuals are the personal representatives of the deceased, the personal representatives may by registered deed appoint the trust corporation either alone or with one or two individuals (whether or not including one or both the individual personal representatives) to be such trustees for the minor. (c) On such appointment the provisions of section 9 of the Trustee Act 1925 shall apply to the vesting in the trustees of such devise, legacy, residue, or share. (d) On such appointment:

[page 508] (i) the personal representatives, as such, shall be discharged from all further liability in respect of such devise, legacy, residue or share, (ii) the rights to which the minor is entitled in virtue of such devise, legacy, residue or share shall be restricted to the property which, by the operation of this section and section 9 of the Trustee Act 1925 is vested in the trustees for the minor and shall not extend to any other property, (iii) the devise, legacy, residue or share may be retained in its existing condition or state of investment or may be converted into money and such money may be invested in any authorised investment.

[20-76] There are similar provisions in Victoria (s 47 of the Administration and Probate Act 1958), Western Australia (s 17A of the Administration Act 1903) and Tasmania (s 41 of the Administration and Probate Act 1935).

These sections are based upon the view that the executors as such do not, after completing their executorial duties, hold the property upon trust for the minor unless they are appointed trustees by the will. This does not appear to accord with the view expressed, for instance, in Pagels v MacDonald231 that the executor becomes a trustee by merely continuing to hold property after his functions as executor have been performed. Perhaps it may justifiably be thought that the infrequency of appointments under these sections is an indication that the view expressed in Pagels v MacDonald is that most widely acted upon. A second course which would be open to the trustee would be to utilise the procedures for retiring from the trust and appointing new trustees already considered in Chapter 15. These would be applicable where the trusts arose under a will, an intestacy or an instrument inter vivos. A third course which would be open to the trustee in New South Wales (but not elsewhere) would be that outlined in s 47 of the Trustee Act 1925, which again would be available whether the trusts arose by will or on an intestacy or under an inter vivos transaction, which section is in the following terms: 47. (1) Where any money is held in trust for a minor, or for a person who is unable to give a good discharge or cannot be found, the trustee may pay the money to the NSW Trusteeor, except where the money is held in trust for a person who cannot be found, a trustee company, and on such payment shall furnish the NSW Trustee or trustee company, as the case may be, with a copy of the trust instrument, or where there is no such instrument, then with a statutory declaration setting forth the trusts on which the money is held and shall also furnish such information as to the disability or identity of the person for whom such money is held in trust as the public trustee or trustee company, as the case may be, may require. (2) The NSW Trustee or trustee company shall hold the money in trust for the minor or for such other person in accordance with the trusts affecting the same. (3) Where the money is held in trust for a minor or an insane or incapable person, the NSW Trustee or trustee company may at the NSW Trustee’s or the trustee company’s discretion exercise in respect of such money the powers conferred upon the NSW Trustee or trustee company, as the case may be, by this or any other Act in respect of money held in trust for a minor.

A fourth course open (and, again, one available in the case of all trusts, howsoever arising) is to pay the money (if the trust fund consists of money) into court. This was, anciently, a trustee’s only remedy,232 and it was only available when the trust fund consisted of money. It is specifically preserved in the Trustee Acts of all jurisdictions.233 A fifth possibility, open in all jurisdictions except South Australia and

Tasmania, and where available applicable in respect of all trusts, is to utilise a trustee’s right of appropriation.234

_____________________________ 1.

See Chapter 16.

2. 3.

See Chapter 17. Qld s 6; WA ss 30 and 109.

4.

NSW s 57(1); ACT s 57(1); Qld s 16(1); Vic s 22(1); SA s 32(1); WA s 45(1); Tas s 25(1); NT s 23(1). Want v Stallibrass (1873) LR 8 Exch 175; Re Head’s Trustees and Macdonald (1890) 45 Ch D 310.

5. 6. 7.

(1802) 7 Ves 137; 32 ER 56. See [19-02]–[19-14]. Cornick v Pearce (1848) 7 Hare 477; 68 ER 197; Re Wintle [1896] 2 Ch 711; Re McInnes [1925] VLR 496.

8. 9.

(1914) 14 SR (NSW) 271; 31 WN (NSW) 103. (1849) 7 Hare 473; 68 ER 195; Re Bennett (1912) 12 SR (NSW) 695; 29 WN (NSW) 203; Re Austin’s Settlement [1960] VR 532; note 34 ALJ 150; Re Tyrie (dec’d) [1970] VR 264.

10. (1912) 14 CLR 341. 11. (1936) 54 CLR 519. See also Stokes v Churchill [1994] NSW ConvR ¶55–694 at 59,969–70. 12. Re Pratt’s Will Trusts [1943] Ch 326; [1943] 2 All ER 375. 13. Section 27B. 14. Cf Re Chaplin and Staffordshire Potteries Waterworks Co Ltd’s Contract [1922] 2 Ch 824; Pagels v Macdonald (1936) 54 CLR 519; [1936] ALR 224; Burke v Dawes (1938) 59 CLR 1; [1938] ALR 135. 15. Re Patten and Edmonton Union Poor Guardians (1883) 52 LJ Ch 787; Power v Banks [1901] 2 Ch 487 at 496; Re Jenkins and Randall & Co’s Contract [1903] 2 Ch 362; Re City of Sydney Real Estate Co Ltd (1928) 29 SR (NSW) 80; 46 WN (NSW) 67. 16. Administration and Probate Act 1958 (Vic) s 5; Trustee Act 1958 (Vic) s 3; Property Law Act 1958 (Vic) s 18. 17. [1894] 3 Ch 381. 18. See also Hale v Pew (1858) 25 Beav 335; 53 ER 665; Re Davies and Kent’s Contract [1910] 2 Ch 35; Re Bewick [1911] 1 Ch 116; Davis v Samuel (1926) 28 SR (NSW) 1; 44 WN (NSW) 100. 19. Re Daveron [1893] 3 Ch 421; Goodier v Edmunds [1893] 3 Ch 455; Re Appleby [1903] 1 Ch 565. 20. [1893] 3 Ch 421. 21. Lantsbery v Collier (1856) 2 K & J 709; 69 ER 967; Re Lord Sudeley and Baines and Co [1894] 1 Ch 334; Re W & R Holmes and Cosmopolitan Press Ltd’s Contract [1944] Ch 53; [1943] 2 All ER 716. For the situation where there is a power of appointment, see Neill v Public Trustee [1977] 1 NSWLR 290; [1978] 2 NSWLR 65. 22. Re Quigley (1908) 8 SR (NSW) 124; Re W & R Holmes and Cosmopolitan Press Ltd’s Contract [1944] Ch 53; [1943] 2 All ER 716. 23. [1893] 3 Ch 421. Cf Re Raphael (1903) 3 SR (NSW) 196; 20 WN (NSW) 84. 24. See Re Davidson (1879) 11 Ch D 341. 25. See Re Cotton’s Trustees (1882) 19 Ch D 624; [1881–5] All ER Rep 926; Re Tweedie and Miles (1884) 27 Ch D 315. 26. [1893] 3 Ch 421.

27. Re Allott [1924] 2 Ch 498; [1924] All ER Rep 810; Davis v Samuel (1926) 28 SR (NSW) 1; 44 WN (NSW) 100. 28. Replacing Trustee Act 1925 (NSW) s 27A: see Harris v King (1936) 56 CLR 177; [1937] ALR 78. 29. Trustee Act 1925 s 27; Perpetuities and Accumulations Act 1985 s 12. 30. Trustee Act 1958 (Vic) s 14; Perpetuities and Accumulations Act 1968 (Vic) s 14. 31. Trustees Act 1962 (WA) ss 28 and 29. 32. Property Law Act 1974 (Qld) s 220. 33. Perpetuities and Accumulations Act 1992 (Tas) s 14. 34. Law of Property Act (NT) s 193. 35. But see, as to the consequences of this definition, the judgment of Hardie J in C W Enterprises Pty Ltd v Shaw [1967] 1 NSWR 379; (1966) 85 WN (Pt 1) (NSW) 58. 36. See Rede v Oakes (1864) 4 De GJ & Sm 505 at 513; 46 ER 1015 at 1018; Re Cooper & Allen’s Sale (1876) 4 Ch D 802 at 815. The stringency of the old law as to the liability of trustees who bought in at a sale is well illustrated by Ex parte Lewis (1819) 1 Gl & J 69. In this case, real estate of a bankrupt was put up for sale by auction in two lots on different days. Both lots were bought in by the bankrupt’s assignee without the authority of the creditors. The property was subsequently resold, one of the lots bringing a higher price and the other a lower price than the buying-in prices. On the whole there was a balance in favour of the estate. The assignee was held personally liable for the loss on the lot sold at the lower price without being allowed the benefit of the gain on the other lot. 37. Carlyon v Truscott (1875) LR 20 Eq 348; Re Bryant and Barningham’s Contract (1890) 44 Ch D 218. In Dolbel v Loudoun [1920] NZLR 131, trustees were directed to carry on a brickfield for 21 years after the death of the survivor of certain persons and then to sell, and the court held they had no power to sell before that time. 38. As in Re Baker and Selmon’s Contract [1907] 1 Ch 238. But a title cannot be forced on an unwilling purchaser in a case where the beneficiaries simply concur subsequently to the premature sale: Re Bryant and Barningham’s Contract (1890) 44 Ch D 218. 39. Clay v Rufford (1852) 5 De G & Sm 768; 64 ER 1337; Oceanic Steam Navigation Co v Sutherberry (1880) 16 Ch D 236; Re Stephenson’s Settled Estates (1906) 6 SR (NSW) 420. In the latter case it was also decided that an executor or administrator, in disposing of the leaseholds of a testator, could grant an underlease. Power to trustees to sell combined with a power to postpone the sale and to lease does not imply a power to grant an option to purchase: Horne v Horne (1906) 26 NZLR 1208. In Turbo Resources Ltd v Paperny [1982] 2 WWR 372, it was held that such an option was void, and the party seeking to exercise it was denied specific performance. 40. Rawcliffe v Johnstone [1921] NZLR 470 at 473. 41. Meek v Bennie [1940] NZLR 1. See also Rousset v Antunovich [1963] WAR 52, where it was held that a power of sale would authorise the granting of an option to purchase ‘where it appeared to be a proper and reasonable method of effecting a prompt sale at the best price’. 42. Re Wilton’s Settled Estates [1907] 1 Ch 50. 43. Evans v Jackson (1836) 8 Sim 217; 59 ER 87. 44. [1906] 1 Ch 684. 45. Devaynes v Robinson (1857) 24 Beav 86; 53 ER 289; Walker v Southall (1887) 56 LT 882; Re Pearce [1936] SASR 137. 46. Permanent Trustee Co Ltd v Angus (1917) 17 SR (NSW) 364; 34 WN (NSW) 141. 47. Oliver v Court (1820) 8 Price 127 at 165; 146 ER 1152 at 1166–7 (negligence of trustees as to price

and as to obtaining payment of purchase money); Ord v Noel (1820) 5 Madd 438 at 440; 56 ER 962 at 963 (disadvantageous mode of sale); Taylor v Tabrum (1833) 6 Sim 281; 58 ER 599 (neglect of trustees to sell ‘as soon as conveniently might be’ after the testator’s death, and loss caused thereby); Blacklow v Laws (1842) 2 Hare 40; 67 ER 17 (sale by trustees before the power of sale had arisen). 48. Oliver v Court (1820) 8 Price 127; 146 ER 1152; Re Cooper & Allen’s Sale (1876) 4 Ch D 802 at 816. 49. Grove v Search (1906) 22 TLR 290. See Underhill and Hayton, [48.21], p 764. 50. Buttle v Saunders [1950] 2 All ER 193; Re Wyvern Developments Ltd [1974] 2 All ER 535 at 544; [1974] 1 WLR 1097 at 1106; Cowan v Scargill [1985] Ch 270 at 288; [1984] 2 All ER 750 at 761. But see P Luxton, ‘Ethical Investment in Hard Times’ (1992) 55 MLR 587. 51. McMahon v Hermann (1893) 14 LR (NSW) Eq 77. 52. Dance v Goldingham (1873) LR 8 Ch App 902; Dunn v Flood (1885) 28 Ch D 586; and see also Ord v Noel (1820) 5 Madd 438 at 440; 56 ER 962 at 963. 53. Dance v Goldingham (1873) LR 8 Ch App 902. 54. ACT s 30; Qld s 35; Vic s 15; SA s 21; WA s 32; Tas s 17; NT s 15. 55. See Webb v Ledsam (1855) 1 K & J 385 at 387–8; 69 ER 508 at 509–10; Bruce v Ailesbury [1892] AC 356; Re Hotham [1902] 2 Ch 575. Cf Drinan v Drinan (1908) 8 SR (NSW) 109; Permanent Trustee Co Ltd v Angus (1917) 17 SR (NSW) 364; 34 WN (NSW) 141. 56. ACT s 28; Qld s 37; Vic s 17; SA s 23A; WA s 34. 57. See [20-12]. 58. See [20-20]. 59. A-G v Owen (1805) 10 Ves 555; 32 ER 960; Bowes v East London Water Works Co (1820) Jac 324; 37 ER 873; Naylor v Arnitt (1830) 1 Russ & Myl 501; 39 ER 193; Egmont (Earl) v Smith (1877) 6 Ch D 469. 60. Re Shaw’s Trusts (1871) LR 12 Eq 124; Re Byrne (1902) 19 WN (NSW) 141. Cf Egmont (Earl) v Smith (1877) 6 Ch D 469. 61. A-G v Owen (1805) 10 Ves 555 at 560; 32 ER 960 at 962. 62. Re Farnell’s Estate (1886) 33 Ch D 599. 63. See [20-11]. 64. Svenson v Payne (1945) 71 CLR 531. 65. Re Broad [1953] VLR 49; [1953] ALR 128, noted 27 ALJ 329. 66. Section 36(3). 67. For the exact persons entitled, see Conveyancing and Law of Property Act 1898 s 68. 68. Taylor v Taylor (1875) LR 20 Eq 297. 69. Re Quigley (1908) 8 SR (NSW) 124. 70. Settled Land Act 1958 s 101. 71. See [20-22]. 72. See [20-22]. 73. Stroughill v Anstey (1852) 1 De GM & G 635; 42 ER 700; Devaynes v Robinson (1857) 24 Beav 86; 53 ER 289. Cf Re Symon [1944] SASR 102. 74. Devitt v Kearney (1883) 13 LR Ir 45; Southwell v Martin (1901) 1 SR (NSW) Eq 32; Re Hammond (1903) 3 SR (NSW) 270; 20 WN (NSW) 123. 75. Trustee Act 1925 s 38. Where trustees have an express power under a settlement to acquire investments in substitution only for investments or capital moneys already held by them they do not

thereby have power to acquire further assets or investments and so cannot rely on s 38 to raise money for that purpose on security of the trust property: Re Suenson-Taylor’s Settlement [1974] 3 All ER 397; [1974] 1 WLR 1280. 76. See also Probate and Administration Act 1898 s 46(2). 77. Re Cartwright (1889) 41 Ch D 532. 78. Re De Teissier’s Settled Estates [1893] 1 Ch 153; Jones v Turner (1904) 4 SR (NSW) 368; 21 WN (NSW) 125; Wilkie v Equity Trustees Executors and Agency Co Ltd [1909] VLR 277 at 280. 79. Powys v Blagrave (1854) Kay 495; 69 ER 210; Sclanders v Cole (1918) 18 SR (NSW) 216; 35 WN (NSW) 67. 80. Powys v Blagrave (1854) Kay 495; 69 ER 210. 81. Re Willis [1902] 1 Ch 15; Re Legh’s Settled Estates [1902] 2 Ch 274. 82. Re Hotchkys (1886) 32 Ch D 408; [1886–90] All ER Rep 1104; Re Farnham’s Settlement [1904] 2 Ch 561. 83. Re Hotchkys (1886) 32 Ch D 408; Trustees Executors and Agency Co Ltd v Jope (1902) 27 VLR 706; Re Burdekin (1902) 2 SR (NSW) Eq 76; 19 WN (NSW) 149; Amos v Fraser (1906) 4 CLR 78; 12 ALR 481; Cousins v Cousins (1906) 3 CLR 1198; Re Dawes [1954] VLR 76. Cases on the same point are Re Smith’s Settled Estates [1901] 1 Ch 689 (expenditure in street formation paid by tenant for life charged to capital); Re Farnham’s Settlement [1904] 2 Ch 561 (compulsory expenditure on freehold by tenant for life charged to capital). 84. For the principles upon which the cost of various types of repairs should be apportioned, see Re Hotchkys (1886) 32 Ch D 408; [1886–90] All ER Rep 1104; Re Farnham’s Settlement [1904] 2 Ch 561; Re Conquest [1929] 2 Ch 353; [1929] All ER Rep 608; Re Smith [1930] 1 Ch 88; and see also Knox v Roberts (1900) 21 LR (NSW) Eq 231; Walker v Walker (1901) 1 SR (NSW) (Eq) 237; 19 WN (NSW) 3; Wilkie v Equity Trustees Executors and Agency Co Ltd [1909] VLR 277 at 280; Roberts v Roberts (1915) 16 SR (NSW) 6; Littlejohn v Davies (1916) 16 SR (NSW) 183; Re Leicester [1947] NZLR 420. 85. Littlejohn v Davies (1916) 16 SR (NSW) 183; 33 WN (NSW) 33; Union Trustee Co of Australia Ltd v Eckford (1930) 31 SR (NSW) 92; 48 WN (NSW) 40. 86. Union Trustee Co of Australia Ltd v Eckford (1930) 31 SR (NSW) 92; 48 WN (NSW) 40. 87. Re Betty [1899] 1 Ch 821; Re Gjers [1899] 2 Ch 54. 88. Re Parry and Hopkins [1900] 1 Ch 160. 89. Re Fowler (1881) 16 Ch D 723. 90. See Re Barney [1894] 3 Ch 562 (drainage expenses made a charge upon the property concerned); Re Lever [1897] 1 Ch 32 (costs of sanitary work done upon leasehold houses under the Public Health Act 1891 (UK) held payable out of capital). 91. Re Donnelly (1901) 1 SR (NSW) Eq 150; 18 WN (NSW) 227; Re Burdekin (1902) 2 SR (NSW) Eq 76; 19 WN (NSW) 149. Contrast Jones v Turner (1904) 4 SR (NSW) 368; 21 WN (NSW) 125. 92. (1885) 28 Ch D 431. 93. Cf O’Neill v Coffill (1920) 20 SR (NSW) 264; 37 WN (NSW) 90; Re Broad [1953] VLR 49; [1953] ALR 128. 94. Re Hotchkys (1886) 32 Ch D 408; [1886–90] All ER Rep 1104; Re Farnham’s Settlement [1904] 2 Ch 561; Re Conquest [1929] 2 Ch 353; [1929] All ER Rep 608; Re Smith [1930] 1 Ch 88; Re Boston’s Will Trusts [1956] Ch 395; [1956] 1 All ER 593. 95. Perpetual Trustee Co Ltd v Beaton (1903) 20 WN (NSW) 188.

96. Jones v Turner (1904) 4 SR (NSW) 368; 21 WN (NSW) 125. 97. WA s 30; Qld s 33. 98. Bailey v Gould (1840) 4 Y & C 221; 160 ER 987. But see Perpetual Trustee Co Ltd v Adams (1923) 24 SR (NSW) 87; 40 WN (NSW) 158. 99. Re Betty [1899] 1 Ch 821 at 829; Re Quicke’s Trusts [1908] 1 Ch 887; Re Bladon [1911] 2 Ch 350 at 354. 100. Reid v Fitzgerald (1926) 48 WN (NSW) 25; Hazlewood v Webber (1934) 52 CLR 268; [1935] ALR 76; as to Tasmania, British Traders Insurance Co Ltd v Monson (1964) 111 CLR 86; [1964] ALR 845. 101. Kirkman v Booth (1848) 11 Beav 273 at 280; 50 ER 821 at 824; see also Hagan v Waterhouse (1991) 34 NSWLR 308 at 339. 102. Re Morish [1939] SASR 305; Edmundsen v Loudon [1947] NZLR 231. 103. (1902) 21 NZLR 527. 104. Garrett v Noble (1834) 6 Sim 504; 58 ER 683; Re Chancellor (1884) 26 Ch D 42; Alcock v Bilbrough (1900) 25 VLR 360; 6 ALR 12. See also Re Morish [1939] SASR 305. 105. (1903) 3 SR (NSW) 270; 20 WN (NSW) 123. See also Souththwell v Martin (1901) 1 SR (NSW) Eq 32. 106. See Re Quigley’s Will (1895) 16 LR (NSW) Eq 45; 11 WN (NSW) 161. 107. (1903) 3 SR (NSW) 270; 20 WN (NSW) 123. 108. WA s 27; Qld s 32(1)(c). See [20-09]. 109. NSW s 27B; Vic s 13(5). See [20-08]–[20-09]. 110. (1884) 26 Ch D 42. 111. Powys v Blagrave (1854) Kay 495; 69 ER 210; Re Quinney (1905) 25 NZLR 593; Sclanders v Cole (1918) 18 SR (NSW) 216; 35 WN (NSW) 67. 112. See [19-47]. 113. Re New [1901] 2 Ch 534; [1900–3] All ER Rep 763. 114. Brett v Hamilton (1900) 21 LR (NSW) Eq 84; 16 WN (NSW) 206. 115. As, for instance, in Southwell v Martin (1901) 1 SR (NSW) Eq 32, and Re Hammond (1903) 3 SR (NSW) 270; 20 WN (NSW) 123. See also Umphelby v Grey (1898) 24 VLR 979; 5 ALR 66; Hill v Hill (1901) 1 SR (NSW) Eq 228; 18 WN (NSW) 298. 116. Re Frith [1902] 1 Ch 342; Re Anderson (1927) 27 SR (NSW) 296; 44 WN (NSW) 69; Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1946] ALR 50. See [21-02]. 117. Re Benjamin [1938] VLR 76; [1938] ALR 35. 118. McCarthy v McCarthy (1919) 19 SR (NSW) 122; 36 WN (NSW) 45. See also Re Crago (1908) 8 SR (NSW) 269; 25 WN (NSW) 91. 119. Cf Re Astill Freeman [1906] QWN 5. 120. See [21-34]. 121. Re Greenwood (1911) 105 LT 509; Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149; [1947] ALR 552. 122. Re Owens (1882) 47 LT 61. 123. Buxton v Buxton (1835) 1 Myl & Cr 80; 40 ER 307. 124. Re Brogden (1888) 38 Ch D 546; [1886–90] All ER Rep 927. 125. Maitland v Bateman (1844) 13 LJ Ch 273. Cf Skinner v Trustees Executors and Agency Co Ltd (1901)

27 VLR 218; 7 ALR 199. 126. Re Brogden (1888) 38 Ch D 546; [1886–90] All ER Rep 927. 127. See, for example, NSW s 40(2); ACT s 40(3); Vic s 26(2). 128. Re Irismay Holdings Pty Ltd [1996] 1 Qd R 172, criticising statements to the contrary in Re Earl of Strafford [1980] Ch 28 at 32–3; [1978] 3 All ER 18 at 20–21 and [1980] Ch 28 at 46–8; [1979] 1 All ER 513 at 519–21. 129. Re Houghton [1904] 1 Ch 622; [1904–7] All ER Rep 486. But see De Cordova v De Cordova (1879) 4 App Cas 602. 130. Re Tong [1907] VLR 338; (1907) 13 ALR 119. 131. National Trustees Executors and Agency Co of Australasia Ltd v Dwyer (1940) 63 CLR 1; [1940] ALR 86. 132. NSW: Compensation to Relatives Act 1897; ACT: Civil Law (Wrongs) Act 2002 Pt 3.1; Qld: Civil Proceedings Act 2011 Pt 10; Vic: Wrongs Act 1958 Pt 3; WA: Fatal Accidents Act 1959; Tas: Fatal Accidents Act 1934; NT: Compensation (Fatal Injuries) Act 1974. 133. Erwin v Shannon’s Brick, Tile and Pottery Co Ltd (1938) 38 SR (NSW) 555. 134. Re Ezekiel’s Settlement Trusts [1942] Ch 230; sub nom National Provincial Bank Ltd v Hyam [1942] 2 All ER 224. 135. Re Ridsdel [1947] Ch 597; [1947] 2 All ER 312. 136. [1980] Ch 28; [1979] 1 All ER 513; Re Irismay Holdings Pty Ltd [1996] 1 Qd R 172 at 174. 137. This passage was cited with approval in Australian Reward Investment Alliance v Superannuation Complaints Tribunal (2008) 173 FCR 335 at [88]. 138. Webb v Ledsam (1855) 1 K & J 385; 69 ER 508; Lee v Sankey (1873) LR 15 Eq 204; Re Flower and Metropolitan Board of Works (1884) 27 Ch D 592. Section 48 makes it clear that all trustees must join in the receipt. For a discussion of the English position, see J F Garner, ‘A Single Trustee for Sale’ (1969) 33 Conv (NS) 240. 139. ACT s 48; Qld s 43; Vic s 18; SA s 27; WA s 41; Tas s 23; NT s 20. 140. See Chapter 18. 141. Kirby v Wilkins [1929] 2 Ch 444; [1929] All ER Rep 356; Re Sandeman’s Will Trusts [1937] 1 All ER 368. See also Butt v Kelson [1952] Ch 197; [1952] 1 All ER 167; Re Whichelow (decd) [1953] 2 All ER 1558; Hespe v Surfers Paradise Forests Ltd (1985) 10 ACLR 182 and [23-13]. 142. Hill v Permanent Trustee Co of NSW Ltd (1933) 33 SR (NSW) 527; 50 WN (NSW) 209. But on the facts in this case, see Re Bell [1940] NZLR 15; Bakewell v Holme (1943) 44 SR (NSW) 150; 61 WN (NSW) 47; Re Campbell [1973] 2 NSWLR 146. 143. Re Whichelow (decd) [1953] 2 All ER 1558. Contrast Re McTiernan [1954] QWN 29. 144. [1945] VLR 99; [1945] ALR 64. But see Sky v Body (1970) 92 WN (NSW) 934. 145. Re Mandelson’s Will (1894) 15 LR (NSW) Eq 160; 11 WN (NSW) 35; Mitchell v Hart (1913) 16 SR (NSW) 250; Perpetual Trustee Co Ltd v Noyes (1925) 25 SR (NSW) 226; 42 WN (NSW) 56. 146. Re Morris (1885) 52 LT 462. Cf Re Anson’s Settlement [1907] 2 Ch 424. 147. Re Pugh [1887] WN 143. 148. Mitchell v Hart (1913) 16 SR (NSW) 250; Re Whitfield (1920) 125 LT 61; [1920] All ER Rep 668. 149. Re Pugh [1887] WN 143; Re Whitfield (1920) 125 LT 61; [1920] All ER Rep 668. 150. NSW s 14D; ACT s 14D; Qld s 25; Vic s 9; SA s 10; WA s 21; Tas s 10; NT s 9. NSW ss 21 and 22 and ACT ss 21 and 22 contain overlapping powers. NSW s 21A also provides for trustees who have

invested trust funds in a building society or credit union to concur in transfers of engagements of a building society or credit union to another building society or credit union, or a merger. 151. NSW s 23; ACT s 23; Qld s 27; Vic s 10; SA s 11; WA s 23; Tas s 11; NT s 10. 152. Re Nixon [1904] 1 Ch 638; Re King [1907] 1 Ch 72. 153. Day v Day (1903) 4 SR (NSW) 21; 21 WN (NSW) 1. 154. ACT s 61A; Qld s 75; Vic s 34; SA s 31; WA s 74. 155. See also ACT s 51; Qld s 52; Vic s 27; WA s 51. 156. See also ACT s 52; Qld s 51; Vic s 26; WA s 50. 157. Cf Re Evans (1884) 26 Ch D 58; Perpetual Trustee Co Ltd v Shelley (1921) 21 SR (NSW) 426; 38 WN (NSW) 132 (past maintenance). 158. Parker v Dowling (1916) 16 SR (NSW) 234; 33 WN (NSW) 75. 159. Cf Re Lesser [1954] VLR 435; [1954] ALR 951; see also Re Gertsman [1966] VR 45. 160. Re Greaves’ Settled Estates [1900] 2 Ch 683; see, however, Tognetti v Tognetti (1905) 5 SR (NSW) 619, where the interests of others were safeguarded by a policy of insurance on the life of the infant. 161. Re Lazarus (1897) 19 ALT 35. 162. Re Christian (1882) 3 LR (NSW) Eq 13. 163. Re Kirwan (1869) 8 SCR Eq 21; Tognetti v Tognetti (1905) 5 SR (NSW) 619; Re Lawrence (1908) 25 WN (NSW) 79; Re Richards (1931) 31 SR (NSW) 565; 48 WN (NSW) 172. 164. See Halsbury’s Laws of England, 4th ed, Vol 24, [472]ff, pp 203ff. The preceding three paragraphs were approved in Public Trustee v Larkman (1999) 21 WAR 295 at 297–8. 165. Taylor v Taylor (1875) LR 20 Eq 155. See also Re Scott [1903] Ch 1; [1900–3] All ER Rep 221; Re Crozier (1906) 50 Sol J 206; Re Hayward [1957] Ch 528; [1957] 2 All ER 474; Elders Trustee & Executor Co Ltd v Eastoe [1963] WAR 36; Hardy v Shaw [1976] Ch 82; [1975] 2 All ER 1053. 166. (1886) 55 LT 554. 167. (1886) 55 LT 554 at 556. See also Re Sparkes (1911) 56 Sol J 90. The breadth of the expression is also illustrated by Re CL [1969] 1 Ch 587; [1968] 1 All ER 1104 (stating that ‘benefit’ had the same width as in s 1(3) of the Variation of Trusts Act 1958 (UK)). 168. Re Gosset’s Settlement (1854) 19 Beav 529 at 535; 52 ER 456 at 458. Under advancement clauses of various forms the following have been held to be allowable: An advance to pay the debts of the beneficiary who had a life interest: Lowther v Bentinck (1874) LR 19 Eq 166; [1874–80] All ER Rep 362. See also Perpetual Trustee Co Ltd v Smith (1906) 6 SR (NSW) 542; 23 WN (NSW) 112; Re Livesey’s Settlement Trusts [1953] 2 All ER 723. An advance to bind an infant apprentice: Swinnock v Crisp (1681) Freem Ch 78; 22 ER 1069. Similarly, in Franklin v Green (1690) 2 Vern 137; 23 ER 696; Warr v Warr (1702) Prec Ch 213; 104 ER 24; Wilson v Thomas (1834) 4 LJ Ch 25. An advance to the trustees of the marriage settlement of the beneficiary, as he had no immediate income and was studying for the legal profession: Roper-Curzon v Roper-Curzon (1871) LR 11 Eq 452. Cf Re Dick [1940] VLR 166; [1940] ALR 47 (advancement found in payment of cost of sea cruise to enable infant beneficiary to recuperate from breakdown in health). An advance to provide for the maintenance of beneficiaries in the interval between their attaining 21 and their attaining 25, when their shares were to vest, there being no power of maintenance during that interval: Re Breeds’ Will (1875) 1 Ch D 226. But see Re Patterson [1941] VLR 233; [1941] ALR 307. An advance to a husband to set him up in business, the advance being made out of a fund settled on a married woman for life with remainder to her children: Re Kershaw’s Trusts (1868) LR 6 Eq 322.

An advance to a wife to enable her to join with her husband in purchasing a partnership security being taken from the husband: Phillips v Phillips (1853) Kay 40; 69 ER 18. An advance to a daughter on her marriage: Lloyd v Cocker (1860) 27 Beav 645; 54 ER 256. In all the instances quoted the advances were made under powers given in the trust instrument, and in most of the cases only after application to the court. In some of these cases the advancement was made for benefits to adults; but this was, of course, under the express term of the trust instrument. In Re Price (1887) 34 Ch D 603, an application under the Lunacy Regulation Act 1862, for an order making some property of the lunatic available for the payment of his debts, was refused by the court as not being for the lunatic’s benefit in the circumstances of the case. An advance to a daughter to pay her husband’s debts was not allowed, but an advance to set her up in a farm to be managed for her separate use was allowed: Talbot v Marshfield (1868) LR 3 Ch App 622. An advance, the purpose of which is to prevent the diminution of the trust estate by the impost of estate duty or taxation: Re Collard’s Will Trusts [1961] Ch 293; [1961] 1 All ER 821. An advance by way of resettlement upon new trusts of the interest of an infant beneficiary: Pilkington v Inland Revenue Commissioners [1964] AC 612; [1962] 3 All ER 622. An advance by way of donation to a charity to which the beneficiary has a moral obligation to contribute: Re Clore’s Settlement Trusts [1966] 2 All ER 272; [1966] 1 WLR 955. See also Re Hampden’s Settlement Trusts (1977) [2001] WTLR 195 (settlement on beneficiary’s children relieving him of the ‘considerable obligation in respect making provision for their future’ which he would otherwise have owed). 169. Re Peel [1936] Ch 161; Re Vestey’s Settlement [1951] Ch 209; [1950] 2 All ER 891. Cf Lowther v Bentinck (1874) LR 19 Eq 166; [1874–80] All ER Rep 362; Re Breeds’ Will (1875) 1 Ch D 226 (not followed in Re Patterson [1941] VLR 233; [1941] ALR 307); see also Perpetual Trustee Co Ltd v Smith (1906) 6 SR (NSW) 542; 23 WN (NSW) 112; Re Moxon’s Will Trusts [1958] 1 All ER 386; [1958] 1 WLR 165. 170. Fischer v Nemeske Pty Ltd [2016] HCA 11 at [21]. 171. [1964] AC 612; [1962] 3 All ER 622; Sutton v England [2012] 1 WLR 326. 172. (1875) 1 Ch D 226 at 228. 173. (1874) LR 19 Eq 166 at 169. 174. [1964] AC 612 at 634–5; [1962] 3 All ER 622 at 627–8. Many parts of this passage were quoted with approval in Fischer v Nemeske Pty Ltd [2016] HCA 11 at [22]. 175. [1966] 2 All ER 272; [1966] 1 WLR 955. See also X v A [2006] 1 All ER 952; [2006] 1 WLR 741 at [43]: resort must be had to ‘generally accepted norms applicable in the context of dealings with settled wealth’ (per Hart J). 176. (1858) 4 K & J 142; 70 ER 59. See also Re Fox [1904] 1 Ch 480. Where trustees have exercised a power of advancement in good faith but not so as to achieve the full effect they intended, the court will not interfere with their action unless the principles set out in [16-12] are satisfied. 177. Re Gerbich [2002] 2 NZLR 791 at [25]–[32]. 178. Re Gerbich [2002] 2 NZLR 791 at [24]. 179. Re Abraham’s Will Trusts [1969] 1 Ch 463 at 485; [1967] 2 All ER 1175 at 1191. This reasoning would not be accepted now. See [16-12]. 180. (1865) 13 WR 312. 181. See Parker v Dowling (1916) 16 SR (NSW) 234; 33 WN (NSW) 75. Cf Re Buckley (1883) 22 Ch D 583; Re Judkin (1884) 25 Ch D 743; [1881–5] All ER Rep 979. Although s 18 of the 1898 Act continued to apply to all instruments coming into operation before the Trustee Act 1925, it is not felt that sufficient occasions now remain for its application to warrant a close examination of its

provisions, for which reference may be made to Nicholas and Harrington, Law of Trusts and Trustees, p 78. 182. Trustee Act 1925 (UK) s 31. See Re Raine [1929] 1 Ch 716; Re Jones [1932] 1 Ch 642; [1932] All ER Rep 804; Re McGeorge [1963] Ch 544; [1963] 1 All ER 519. 183. Re Reade-Revell [1930] 1 Ch 52; Re Stapleton [1946] 1 All ER 323. However, these limitations do not apply in the case of a contingent legacy by the parent of, or a person standing in loco parentis to, the legatee. 184. (1938) 39 SR (NSW) 1; 56 WN (NSW) 1. Cf Fenton v Perpetual Trustee Co Ltd (1940) 64 CLR 52; [1940] ALR 325, where, however, there was an express power of maintenance in the will. 185. See Austin v Abigail (1933) 49 CLR 177. However, s 36B(1) does not include contingent or future pecuniary legacies, so these will not carry income unless the will expressly so provides or s 43 of the Trustee Act applies. Further, a distinction has been drawn between gifts contingent or vested subject to defeasance, and, on the other hand, gifts expressly deferred to a future date. In Re Geering [1964] 1 Ch 136; [1962] 3 All ER 1043, Cross J held that gifts expressly deferred to a future date do not carry intermediate income unless the will indicates the income is to go with the capital, and that this is so whether the gift is vested or contingent. But see Re Howes [1971] 2 NSWLR 387 at 413, where it was held, obiter, that Austin v Abigail was binding authority in Australia for the proposition that a gift of residue expressly deferred to a future date, whether it is vested, vested subject to being divested or contingent, prima facie carries the intermediate income 186. Conveyancing Act 1919 s 31(repealed by Perpetuities Act 1984 (NSW) Sch 1). 187. Cf Fenton v Perpetual Trustee Co Ltd (1940) 64 CLR 52; [1940] ALR 325. See also Conveyancing Act 1919 s 31A. 188. As intermediate income will now follow the destination of the capital in almost all cases, the problems raised by subs (8) are not of the same importance as they would otherwise have been. But in a case where, apart from s 43, intermediate income would be undisposed of, the effect of the subsection appears to be to cause such income to accrue to the capital of the fund in all cases and not to pass as income undisposed of. 189. Re Stapleton [1946] 1 All ER 323. However, under earlier legislation, it has been held not only that a direction to accumulate does not indicate a contrary intention, but that it does not prevent the trustee from applying the income of the trust property: Re Thatcher’s Trusts (1884) 26 Ch D 426; Re Cooper [1913] 1 Ch 350. 190. Cf Re Sharp’s Settlement Trusts [1973] Ch 331; [1972] 3 All ER 151. 191. See [20-60]. 192. However, see, in Victoria, Re Linton [1944] VLR 118; [1944] ALR 259; and cf Re Nathan [1938] VLR 72; [1938] ALR 145 and Inland Revenue Commissioners v Bernstein [1961] Ch 399; [1961] 1 All ER 320. 193. Re Cooper [1913] 1 Ch 350; Re Patterson [1941] VLR 233; [1941] ALR 307; Re Evans [1967] 3 All ER 343; [1967] 1 WLR 1294. 194. See [20-57]. 195. See s 64 of the Conveyancing and Law of Property Act 1898 (NSW), by which capital money awaiting investment is to be considered as land. 196. Inland Revenue Commissioners v Bernstein [1961] Ch 399; [1961] 1 All ER 320 has prompted the suggestion that it may be useful to insert a short clause in a will or settlement saying expressly whether powers under s 44 of the Trustee Act 1925 are to apply or not: 34 ALJ 357. Cf Re Henderson’s Trusts [1969] 3 All ER 769; [1969] 1 WLR 651; Re Edmondson’s Will Trusts [1971] 3 All ER 1121; [1971] 1 WLR 1652; Re Delamare’s Settlement Trusts [1984] 1 All ER 584; [1984] 1 WLR

813. 197. Re White [1959] VR 661 at 665. See also Re Baron Vestey’s Settlement [1951] Ch 209; Perpetual Trustee Co Ltd v Cheyne (2011) 42 WAR 209 at [41] (payment of trust funds to a superannuation fund court). 198. Re Collard’s Will Trusts [1961] Ch 293; [1961] 1 All ER 821. See also Pilkington v Inland Revenue Commissioners [1964] AC 612 at 639; [1962] 3 ER 622 at 624; Fischer v Nemeske Pty Ltd [2016] HCA 11 at [29]. 199. Re Patterson [1941] VLR 233; [1941] ALR 307. 200. Re Rees’ Will Trusts [1954] Ch 202; [1954] 1 All ER 7. 201. See Trustee Act 1925 s 45(5). Similarly, where the advance is under an express power: Re Shaw’s Settlement [1951] Ch 833; [1951] 1 All ER 656. 202. Re Beckett’s Settlement [1940] Ch 279. 203. Re Harris’ Settlement (1940) 162 LT 358. 204. Re Baron Vestey’s Settlement [1951] Ch 209; Commissioner of Inland Revenue v Ward [1970] NZLR 1. 205. Fischer v Nemeske Pty Ltd [2016] HCA 11 at [96]–[100]. 206. Fischer v Nemeske Pty Ltd [2016] HCA 11 at [105]. See also at [21]. This conclusion, reached by bare majority, may be controversial: the two dissenting judgments were certainly strongly worded. 207. Fischer v Nemeske Pty Ltd [2016] HCA 11 at [33], [106]–[111], following Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488. 208. Re Marquess of Abergavenny’s Estate Act Trusts [1981] 2 All ER 643; [1981] 1 WLR 843. 209. (1883) 22 Ch D 521. 210. Re Bryant [1894] 1 Ch 324, in which case the court declined to interfere where the trustees had, in their discretion, refusal to make any allowance for maintenance and Re Lofthouse (1885) 29 Ch D 921 at 932. Costabadie v Costabadie (1847) 6 Hare 410 at 414; 67 ER 1225 at 1227; Re Hodges (1878) 7 Ch D 754; and Re Roper’s Trusts (1879) 11 Ch D 272 are cases in which the court interfered to control the discretion of trustees where the court considered the trustees were not exercising a sound and reasonable discretion. In Re Kerrison’s Trusts (1871) LR 12 Eq 422, the trustee in bankruptcy of a father claimed to receive accumulations of income that might have been applied in maintenance where there was a discretionary trust for maintenance but it was held that he was not entitled to them. See also Thompson v Griffin (1841) Cr & Ph 317; 41 ER 512; Smith v Cock [1911] AC 317; Klug v Klug [1918] 2 Ch 67; Craig v National Trustees Executors and Agency Co of Australasia Ltd [1920] VLR 569; Re Senior [1936] 3 All ER 196. 211. Re Allan (1881) 17 Ch D 807. 212. White v Grane (1854) 18 Beav 571; 52 ER 224; Klug v Klug [1918] 2 Ch 67. 213. It was regarded as a sale (pursuant to the trust or power) to the beneficiary and a set-off of the price against the interest: Wigley v Crozier (1909) 9 CLR 425. Cf Anantamul Pty Ltd v Innes-Irons [1984] 2 Qd R 180 at 189. 214. Re Salomons [1920] 1 Ch 290; [1920] All ER Rep 768. 215. Re Brookes [1914] 1 Ch 558. 216. In the Will of Hinsch (1896) 17 LR (NSW) B & P 21. 217. Re Richardson [1896] 1 Ch 512; Re Nickels [1898] l Ch 630; [1895–9] All ER Rep 783; In the Estate of Gamble (1915) 32 WN (NSW) 121. 218. Re Gollin [1969] 3 All ER 1591; [1969] 1 WLR 1858. 219. Harbin v Masterman [1896] 1 Ch 351; [1895–9] All ER Rep 695; Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490; 21 ALR 465; see Berry v Geen [1938] AC 575; [1938] 2 All ER 362.

220. Re Waters [1889] WN 39; Re Forster-Brown [1914] 2 Ch 584; sed quaere. See Re Craven [1914] 1 Ch 358. 221. Re Richardson [1896] 1 Ch 512; Re Gollin [1969] 3 All ER 1591; [1969] 1 WLR 1858; Re Chirnside [1974] VR 160. 222. Section 46(8A). 223. Re Lepine [1892] 1 Ch 210; [1891–4] All ER Rep 945; Herbert v Badgery (1894) 15 LR (NSW) Eq 236; 11 WN (NSW) 113. 224. MacCullock v Anderson [1904] AC 55. See also Wigley v Crozier (1909) 9 CLR 425; Wallace v Love (1922) 31 CLR 156; 28 ALR 405; Carr v Carr (1987) 8 NSWLR 492 at 495–6. 225. Fraser v Murdoch (1881) 6 App Cas 855; Re Walker (1890) 62 LT 449. 226. Re Ruddock (1910) 102 LT 89; [1908–10] All ER Rep 725; cf Re Marshall [1914] 1 Ch 192; [1911–13] All ER Rep 671; Hyman v Permanent Trustee Co of NSW Ltd (1914) 14 SR (NSW) 348; 31 WN (NSW) 126. For a discussion of the principles applicable, see Manfred v Maddrell (1950) 51 SR (NSW) 95; 68 WN (NSW) 80; Wilson v Wilson (1950) 51 SR (NSW) 91; 68 WN (NSW) 78. Cf also Re Kipping [1914] 1 Ch 62; Re Sandeman’s Will Trusts [1937] 1 All ER 368; Whakatane Paper Mills Ltd v Public Trustee (1939) 39 SR (NSW) 426; 56 WN (NSW) 177. 227. Re Beverly [1901] 1 Ch 681 at 685. 228. Biggs v Peacock (1882) 22 Ch D 284. 229. Oatley v Oatley (1898) 19 LR (NSW) Eq 122 at 128; 15 WN (NSW) 73 at 75; Grant v Grant (1914) 14 SR (NSW) 271; 31 WN (NSW) 103. 230. See Carr v Carr (1987) 8 NSWLR 492 at 496–7. 231. (1936) 54 CLR 519 at 526; see also Stokes v Churchill [1994] NSW ConvR §55–694. 232. Re Salomons [1920] 1 Ch 290; [1920] All ER Rep 768. 233. NSW s 95; ACT s 95; Qld s 102; Vic s 69; SA s 47; WA s 99; Tas s 48; NT s 44(1). 234. See [20-69]–[20-73].

[page 509]

CHAPTER 21 Rights of Trustees The Right of Reimbursement and Indemnity Personal Liability of Trustee Exclusion of Personal Liability Indemnity out of Trust Assets The Trustee’s Right of Personal Indemnity Exclusion of Trustee’s Rights Expenses Properly Incurred Statute-barred Debt Costs Set-off and Retainer The Creditor’s Right of Subrogation Testamentary Creditors Bankruptcy or Winding-up of the Trustee Priorities upon Administration of an Insolvent Trust Recovery of Preferential Payments

[21-02] [21-02] [21-03] [21-04] [21-05] [21-06] [21-07] [21-08] [21-09] [21-11] [21-12] [21-13] [21-14] [21-15] [21-16]

The Right of Contribution and Recoupment

[21-17]

The Right to Impound Beneficiary’s Interest Assigned Interest Trustee-beneficiary Procedure

[21-21] [21-26] [21-27] [21-28]

The Right to a Discharge

[21-29]

The Right to Pay Money into Court

[21-30]

The Right to Approach the Court Construction of the Trust Instrument

[21-31] [21-32]



Authority to Commit a Breach of Trust Opinion, Advice and Direction of the Court Costs

[21-33] [21-34] [21-36]

[21-01] This chapter concerns rights which are closely connected with the protection of a trustee from personal loss in the discharge of the office. These particular rights are: (1) the right of reimbursement and indemnity; (2) the right of contribution and recoupment; [page 510] (3) the right to impound the interest of a beneficiary who has concurred in a breach of trust; (4) the right to a discharge on performance; (5) the right to pay money into court; and (6) the right to approach the court for advice.

The Right of Reimbursement and Indemnity Personal Liability of Trustee [21-02] The common law does not recognise a trustee as having assumed an additional or qualified legal personality.1 As Sir George Jessel MR bluntly put it in 1880, the creditor ‘has a personal right to sue [the trustee] and to get judgment and to make him a bankrupt’.2 That judgment was delivered shortly after the liquidation of the City of Glasgow Bank in 1878, which, as Lord Rodger said much more recently, ‘brought ruin on many people who had merely held shares as trustees’ and indicated with ‘remorseless clarity’ that a person entered on a company register in any capacity was a member with all relevant rights and liabilities.3 Latham CJ said in Vacuum Oil Company Pty Ltd v

Wiltshire:4 ‘In respect of debts incurred by him in so carrying on the business he is personally liable to the trading creditors — the debts are his debts.’ The result is that if the debt is not paid or tort liability not satisfied, the individual trustee may be bankrupted and the corporate trustee wound up. A corollary of this is that at law, the creditor or tort victim has a remedy by action against the trustee personally, not by personal action against the beneficiaries, and still less by action against the settlor (if any) of the trust. It has become a common (and bad) practice to speak of a trust as if it had a distinct legal personality, and of the creditors ‘of a trust’. But, as was recently said, ‘the prevalence of an erroneous view does not make it right’.5 Sometimes legislation proceeds on the assumption that a trust is a distinct legal entity, giving rise to novel questions of construction.6 It follows also that a creditor has no direct proprietary claim at law against the trust assets and, in general, they cannot be reached by any process of execution.7 The law does, however, permit a trustee to contract and otherwise deal with third parties on the basis that his or her personal liability is limited or excluded; such arrangements are not contrary to public policy,8 but clear words are necessary,9 and of course third parties may not be prepared to deal on such a basis. Equity itself dealt with the trustee’s predicament; it took the view that a trustee should be saved harmless from the obligations attaching to the performance of the office as trustee and that this indemnity should be the price paid by the beneficiaries for the gratuitous and onerous [page 511] services of trustees.10 The High Court in Chief Commissioner of Stamp Duties (NSW) v Buckle11 approved the following passage from Scott on Trusts: Where the trustee acting within his powers makes a contract with a third person in the course of the administration of the trust, although the trustee is ordinarily personally liable to the third person on the contract, he is entitled to indemnity out of the trust estate. If he has discharged the liability out of his individual property, he is entitled to reimbursement; if he has not discharged it, he is entitled to apply the trust property in discharging it, that is, he is entitled to exoneration.

Accordingly, the property is no longer held solely in the interests of the beneficiaries of the trust.12

In all jurisdictions, the trustee legislation13 provides that a trustee may be reimbursed, or pay or discharge out of the trust property, all expenses incurred in or about the execution of the office. Further, the purely equitable right goes beyond the statutes by making the right of reimbursement and indemnity a first charge on the trust property.14 A trustee is entitled to retain trust property against a beneficiary pending the determination of contingent liabilities of the trust for which the trustee is liable.15 In addition, in some cases the trustee’s right is not confined to one against the trust property but extends to a personal right against the beneficiary.16 Equity also alleviates the position of creditors of the trustee at common law. It does this by subrogating the creditors to the rights of the trustee against the trust property.17 Finally, it should be observed that while there is a history of trading activities by trustees, and executors, which pre-dates the rise of the modern limited liability corporation, that rise served to eclipse the use of trusts as a medium for the conduct of trading enterprises, until Australian income tax law produced an Antipodean mutation which has brought much complexity in its train.18 This is the so-called ‘trading trust’ established by a settlement which confers ample powers for conduct of a business coupled with a class of discretionary beneficiaries and a corporate trustee with a nominal paid-up capital.19

Exclusion of Personal Liability [21-03] As has been noted, a trustee’s prima facie personal liability for all contracts entered into can be varied such that it is limited to the trust assets. In the United States of America, the words ‘as trustee’ are usually held sufficient to justify the limitation.20 But in England and [page 512] in Australia different principles apply, and the mere description of a party to a contract as a ‘trustee’ or the use of the expression ‘as trustee’ is insufficient. They will be read as merely descriptive.21 Those principles were authoritatively expounded in three nineteenth-century House of Lords decisions, in Scottish appeals: Gordon v Campbell,22 Lumsden v Buchanan23 and Muir v City of Glasgow Bank.24 Moreover, in the third of those cases it was held that the law of England

in this regard was the same as the law of Scotland.25 In both the second and third of those cases, the mere description of a contracting party as ‘trustee’ was held insufficient to achieve a limitation of liability; and in Lumsden v Buchanan, Lord Westbury LC went so far as to suggest that such a limitation ‘must be the result of express stipulation’.26 But this is going too far; it is sufficient if the circumstances, including the construction and nature of the contract, demonstrate the intention that payment should be made not personally by the trustee, but only from the assets of the trust.27 Thus in Gordon v Campbell, a covenant by the provision ‘as trustee only’ was held sufficient to limit the liability to the assets of the trust fund: otherwise the words would have no meaning. Moreover, any inconsistency in language used in different parts of the one document will be read against the trustee.28 In Watling v Lewis,29 where no relevant authorities were cited, it was suggested that no limitation of liability could ever be effective, as it would be repugnant to the promise. However, this suggestion, which is, on the face of it, illogical, was repudiated in Re Robinson’s Settlement.30 That was a case where the trustee covenanted ‘as trustee but not otherwise’. In Helvetic Investment Corp Pty Ltd v Knight,31 the party to a guarantee was described as ‘the John Knight Family Trust’, and the document was executed purportedly by ‘the John Knight Family Trust. J Knight Trustee’. Yeldham J at first instance held that the trustee’s liability had effectively been limited, but he was reversed on appeal.

Indemnity out of Trust Assets [21-04] A trustee has a right to resort to and apply trust funds for the discharge of liabilities incurred in the authorised conduct of the trust.32 Re Raybould33 and Bennett v Wyndham34 furnish striking examples of this. In Re Raybould, the trustee was carrying on a colliery business as part of the trust estate and caused the subsidence of a neighbour’s land and consequent injury to the buildings. It was held that the trustee’s personal liability in damages could be recovered from the trust assets. In Bennett v Wyndham, the trustees of a settled estate employed woodcutters to cut down some trees on the settled estate and during the carrying out of the work, a bough fell and injured a passer-by who recovered damages against the trustee. It was held that the trustee was entitled to indemnity out of the trust estate.

[page 513] In Gatsios Holdings Pty Ltd v Nick Kritharas Holdings Pty Ltd (in liq),35 the New South Wales Court of Appeal held that the trustee of a trading trust, found to have contravened the Trade Practices Act 1974 (Cth) in the course of the trust business, was entitled to be indemnified, statutory damages being equated for this purpose with damages for common law torts. The trustee is not bound to pay out of his or her own funds and then recoup; instead, the trustee may recoup to put himself or herself in funds to discharge the liability in question.36 By ‘trust funds’ is meant the whole of the assets of the trust, both corpus and income, including assets acquired by trading.37 The right of the trustee is given effect to by an equitable lien in favour of the trustee and over the property in question.38 This security is sometimes described as a first charge on the assets and certainly is transmissible in bankruptcy.39 In Custom Credit Corp Ltd v Ravi Nominees Pty Ltd,40 it was held that since the interest of the trustee in the trust assets which arises from the equitable lien is a proprietary chose in action, a trustee which is not under any form of insolvent administration may charge or assign its right of indemnity to a creditor of the trust to the extent necessary to discharge the liability to that creditor in respect of which the right of indemnity arose. The lien is enforceable by a court order for sale of the trust property.41 In Darke v Williamson,42 an order for sale was refused apparently on the basis that a sale would defeat the trust; however, the better view must be that the trustee is not bound to wait until the property is being sold for some other purpose or the trust is coming to an end in its ordinary course. Further, the lien carries with it the right to retain possession of the trust property pending satisfaction of the trustee’s rights; even the right to possession of beneficiaries who are sui juris and absolutely entitled may be suspended until the true state of account is established.43 The right of indemnity survives the trustee’s loss of office.44 The better view is that the former trustee does not have the right to retain, as against the new trustee, possession of trust assets as security for an accrued right of indemnity, although the former trustee is entitled to ensure that the new trustee does not take steps which will destroy, diminish or jeopardise the former trustee’s right of security.45 It is suggested that this is because the right entails a beneficial interest in the property but is not in the nature of a possessory security.46 Further, as Brereton J has observed, in a careful review of the conflicting authorities on this issue, if the right gave a right

to possession of all of the trust assets, then the former trustee would be entitled to retain the whole, and not just a portion, pending the resolution of the claim to indemnity.47 Where there has been a change of trustee and the assets are no longer in the former trustee’s possession, the claim may be made against the new trustee, and if [page 514] necessary orders can be made whose effect would be to permit the former trustee to exercise the new trustee’s power to recover the property in the hands of beneficiaries.48 The trustee does not always have a right of indemnity. In the first place, it is submitted that where the trustee is a debtor to the trust (which can occur without any breach of trust), the indemnity cannot be exercised without the debt first being repaid by the trustee (unless the trust instrument provides to the contrary): this flows from the rule in Cherry v Boultbee.49 Hence, if there is any doubt about the matter, both the indemnity and the lien protecting it may be suspended pending investigation of the trustee’s accounts. In the second place, the question of authorisation is crucial. If the trustee’s activities were not authorised by the trust instrument, prima facie no right of indemnity can arise; if they were, prima facie a right of indemnity does arise.50 However, even where the trust instrument does not authorise the activities, the right to indemnity may be exercised against the trust assets if all cestuis que trust, being unanimous, sui juris and together absolutely entitled, in fact authorise the trustee to conduct those activities, and where some only of the cestuis que trust so authorise them the right to an indemnity subsists against the shares of those cestuis que trust.51 But what of defaults by the trustee dehors the transaction in respect of which the indemnity is claimed? The better view is that the right is not lost by any such breach of trust for so to deprive the trustee, is, as Sir George Jessel MR put it, ‘a violent exercise’.52

The Trustee’s Right of Personal Indemnity [21-05] A sole beneficiary who is sui juris is personally bound to indemnify a

trustee for liabilities properly incurred; the obligation of the beneficiary rests upon the principle that the cestui que trust who gets all the benefit of the property should bear its burden: Hardoon v Belilios.53 It is now established that where there are multiple beneficiaries, all sui juris and absolutely entitled, they will also be personally liable.54 In Balkin v Peck,55 the New South Wales Court of Appeal left open the position where a beneficiary was not sui juris, or was only entitled to a limited interest in the trust property, such as a life estate; it would appear that the former case depends upon the law governing legal capacity (and in particular, when an infant attains capacity, the rules governing disclaimer and affirmation). In the latter case, it is probably necessary to show that the beneficiary requested, expressly or impliedly, the trustee to incur the liability although, as Dr Hughes has observed of the early decisions Buchanan v Ayre56 and Matthews v Ruggles-Brise,57 such request may be inferred from the circumstances of the establishment of the trust.58 There is no right of personal indemnity from the objects of a standard discretionary trust. Matthews v RugglesBrise is also authority that where there has [page 515] been an assignment by a beneficiary, both the assignee and the original beneficiary are bound to indemnify the trustee; as between themselves, the original beneficiary is presumably bound to indemnify the assignee if the liability was incurred prior to the assignment.59 In J W Broomhead (Vic) Pty Ltd v J W Broomhead Pty Ltd,60 it was held that where one of the beneficiaries is insolvent, the loss falls upon the trustee and not upon the solvent beneficiaries. The suggested basis for this rule was that a trustee who accepts a trust knowing that the right to personal indemnity from a beneficiary or beneficiaries is only as good as the ability of the beneficiary to pay it, is not to be regarded as suffering injustice if the beneficiary is unable to do so. In Balkin v Peck, the trustees incurred capital transfer tax on the sale of trust property in London, which liability by their carelessness they had overlooked; they had also distributed the trust assets to the settlor’s three adult daughters who were the sole surviving beneficiaries. Their request for indemnity was refused by the daughters, but their right to it was upheld by the court. It was no answer that there were multiple beneficiaries who had not requested the trustees to incur the liability, nor that the trustees should have recouped the liability out of trust property when it was

in their hands, nor that the trustees should have sought to ‘take the trust offshore’ prior to the tax being incurred; the question was whether the liability was a proper trust expense. However, the indemnity did not extend to interest imposed on the late payment of tax, which was not a liability properly incurred.61 Wise v Perpetual Trustee Co62 indicates that clubs, and other unincorporated associations, are in a special position. In that case, trustees of a club were held entitled to an indemnity out of the property of the club in respect of liabilities under a lease accepted by them on behalf of the club, but it was held that there was no personal liability on the part of the members; the courts recognise that ordinary clubs are formed on the tacit understanding that no member becomes liable to pay moneys to the club funds, beyond subscription and other moneys required by the club rules. The trustee is entitled in equity to an order for indemnity as soon as the liability to the creditor has crystallised. The usual order will be one requiring the beneficiary to pay the creditor or otherwise to procure the release or discharge of the trustee.63 If the trustee has already paid the creditor then the appropriate order will be for payment to the trustee; it may be possible to obtain an order for payment to the trustees in advance of payment to the creditor by the trustee.64 The Court of Appeal in Re Richardson65 dealt with a case where the creditor recovered the indemnity from the indemnitor, but at a time when the trustee had become bankrupt, so that the question was whether the sum in question could be retained by the creditor or was part of the estate of the trustee and as such distributable among his general creditors. The Court of Appeal held that the creditor had the right to retain the money.

Exclusion of Trustee’s Rights [21-06] A question arises as to whether a trustee’s rights (a) to personal indemnity against cestuis que trust; and (b) to indemnity out of the trust assets, may be excluded by an express provision in the trust instrument. As to the former, there is no doubt that the right can be excluded. The Privy Council in Wise v Perpetual Trustee Co66 held that it could be excluded by implication, and surely what can

[page 516] be excluded by implication can a fortiori be excluded by express words. Moreover, in Hardoon v Belilios,67 the Privy Council again accepted that there can exist ‘special trusts limiting’ (and, semble, wholly excluding) ‘the right to indemnity’. As to the latter, the statutory position varies from jurisdiction to jurisdiction, and different views about the position at general law have been expressed. On the one hand, Turner LJ in Re German Mining Co68 certainly expressed the view that the right to indemnity out of trust assets might be modified or negatived by express provision in the trust instrument. Brooking J was of the same view in R W G Management Ltd v Commissioner for Corporate Affairs,69 although influenced by the fact that the statutory right was capable of exclusion. On the other hand, McPherson J was of the opposite view in Kemtron Industries Pty Ltd v Commissioner of Stamp Duties (Qld);70 however, in Queensland, the statutory right cannot be excluded.71 It is submitted that, save for statutory intervention, the right at general law may be excluded. Admittedly, the rights of creditors can thereby be gravely prejudiced, particularly if the trustee be impecunious and the cestuis que trust were discretionary beneficiaries. In such cases, a creditor’s rights of subrogation are rendered valueless. But two comments are called for: (a) there are many other circumstances in which the rights of a creditor of a trading trust are equally gravely prejudiced; for example, where the creditor does not realise that the other party is in fact a trustee and the transaction is unauthorised, or where the trustee is a net debtor of the trust estate in any event; and (b) if such a provision is inserted for the purpose of defrauding creditors, appropriate remedies might otherwise be available. The notion, sometimes expressed, that the right of indemnity from the trust assets is an essential integer in the institution of a trust and hence cannot be excluded, lacks a foundation in logic.

Expenses Properly Incurred [21-07] The scope of the indemnity, at general law and under statute, is confined to expenses which are ‘properly’ or ‘reasonably’ incurred. What do

those words mean? The ordinary form of order was for expenses ‘properly incurred’.72 This was held to be equivalent to ‘not improperly incurred’ by Lindley LJ in Re Beddoe.73 Bowen LJ introduced a common law notion of ‘reasonably as well as honestly incurred’, insisting that ‘mere bona fides is not the test’, which led Brooking J in R W G Management Ltd v Commissioner for Corporate Affairs to speak of ‘reasonable diligence and care’.74 In Nolan v Collie, after a careful review of the authorities, Ormiston JA said that insistence on a test of unreasonableness went beyond what equity would demand.75 Ormiston JA said:76 In my opinion the use of the negative is intended to show that what is ‘proper’ and ‘improper’ must be answered by reference to the circumstances and in particular by reference to the duty with which a trustee was obliged to comply or the power which a trustee is intending to exercise. The content of trustees’ duties vary considerably, as do the obligations taken on when a power is exercised. A significant number of trustees’ duties requires strict compliance so that failure to

[page 517] comply with that duty will necessarily lead to the conclusion that a particular cost, expense or liability has not been properly incurred. On the other hand, the more day-to-day functions of a trustee in the management of a trust require only that the trustee ‘exercise the same care as an ordinary, prudent person of business will exercise in the conduct of that business were it his or her own’.

Thus, expenses properly incurred include expenditure by the trustee to improve the trust estate77 and the cost of employing accountants and valuers for audit and stocktaking of a business undertaken by the trustee.78 In How v Earl Winterton,79 a trustee was allowed a sum which he had contributed out of the rents and profits of real estate towards the support of a local school not entitled to be so supported. This was allowed on the ground that although it was in the nature of a mere subscription, it was really a payment made to avoid having to make a much larger payment out of the trust property.80 Ordinarily, where a trustee’s own money is advanced to the trust, the trustee is not entitled to interest.81 Separate considerations arise in relation to the trustee’s liability in tort. In Gatsios Holdings Pty Ltd v Nick Kritharas Holdings Pty Ltd (in liq),82 Spigelman CJ, Mason P and Meagher JA doubted the utility of a test expressed in terms of liabilities which were ‘proper’ or ‘reasonable’, in strong language: ‘Such terminology generally records a conclusion which has been reached on other

grounds’;83 ‘the terms are notoriously open-ended’.84 Meagher JA found it difficult to formulate any limitation other than conduct which was fraudulent.85 In Gatsios, the court was addressing the question of indemnity for liabilities in tort (including contravention of statute), an area with its own particular difficulties, largely turning on the question of authorisation. Ormiston JA for his part would confine the application of the Gatsios case to such cases, preserving the traditional test to be applied for costs and expenses.86 It has been said that in such cases it is a matter of assessing the gravity of the trustee’s misconduct and whether the trustee, acting in good faith, benefited the trust estate by incurring the liability.87

Statute-barred Debt [21-08] Trustees are entitled to be indemnified even against statute-barred debts owing by the trust estate, whether such debt has been already paid by them or they desire to pay it.88 In this respect, there is a distinction between the case of an executor and that of a trustee. Although an executor can pay a statute-barred debt which is owing by the testator’s estate, the trustee cannot pay such a debt once the beneficiaries intervene and insist on the statute being set up in answer to the claim. In the case of the trustee who wishes to pay a statute-barred debt for expenses incurred by him or her on behalf of the estate, it is the trustee’s own debt, although indirectly. It is a debt due from the trust estate, and consequently the beneficiaries cannot intervene to prevent payment. [page 518]

Costs [21-09] Ordinarily, in litigation relating to the administration of the trust estate, unless a trustee has been guilty of some misconduct, the trustee is entitled as of right to costs out of the estate, at least as between solicitor and client.89 In National Trustees Executors and Agency Co of Australasia Ltd v Barnes,90 executors were sued by members of a class of residuary beneficiaries who alleged breaches of trusts and claimed repayment of moneys lost, a decree for administration of the estate, and removal of the trustees. The executors

successfully defended the action and obtained a decree for their costs against the plaintiff beneficiaries. The latter, however, were unable to pay the costs and it was held that, the costs having been properly incurred, the executors were entitled to be indemnified in respect of their costs out of the estate, the shares of the unsuccessful beneficiaries to be used first in satisfying the executors’ right to indemnity. In Nissen v Grunden,91 trustees were admittedly guilty of some breaches of trust but in respect of other alleged breaches succeeded on appeal in establishing that they were blameless. It was held that they were entitled to be indemnified out of the trust property for their costs of appeal. In certain circumstances, mere obstinacy in pursuing a claim, even though the trustee honestly believes the claim to be well founded, may amount to misconduct.92 In Holding and Management Ltd v Property Holding and Investment Trust plc,93 the plaintiff was the ‘management trustee’ of a large residential block of flats. It brought proceedings against the tenants to determine whether certain proposals it had made in relation to a maintenance fund were within its power. At the trial, both parties were successful to some extent, and the trial judge declined to award costs inter partes. The Court of Appeal dismissed the plaintiff’s appeal. Nicholls LJ held that the costs were not properly incurred by the trustee, in that they were incurred not only without regard to the wishes of the beneficiaries, but directly contrary to such wishes. The fact that the defence of a suit for the benefit of the trust estate also involves the defence of the trustee’s own character and actions, does not disentitle the trustee to an indemnity for costs.94 But a trustee who incurs costs purely for his or her own benefit, even if there is a remote benefit to the trust estate, is not entitled to costs out of the trust estate. See, for example, Whittingham v Proudfoot,95 where a trustee by legal proceedings obtained a fund for the trust estate but had previously taken proceedings entirely for his own benefit and the court expressly stated that he was not entitled to the costs he had incurred in the proceedings taken merely on his own behalf, although possibly his efforts in those proceedings had remotely conduced to his success in the subsequent proceedings. [21-10] Not only obstinacy in pursuing a claim but also a lack of reasonableness in defending a claim may disentitle a trustee to costs. For example, in Re Beddoe,96 a trustee was not allowed to retain out of the trust funds the costs of defending an action, where there was no reasonable cause for defending it and he had neglected to ask leave to defend it.97

[page 519] In Palairet v Carew,98 a trustee who acted unreasonably in the trust was removed and was made to pay all the costs of the suit. Similarly, in Price v Loaden,99 a trustee who unreasonably resisted the claims of his cestui que trust was ordered to pay costs. Subject to circumstances of this type, which are exceptional, a trustee will be allowed costs, even though the trustee is unsuccessful. In Re Ogilvie,100 for instance, trustees were allowed the cost of an unsuccessful defence to an ejectment action, but the safe course for a trustee is to seek the advice of the court before prosecuting or defending litigation.101 Where there are co-trustees, they should, as a general rule, sue or defend jointly and will be allowed only one set of costs between them.102 As a general rule, the costs of trustees are payable out of capital.103 In the case of a deficiency of assets, the costs of trustees take priority over the costs of all other parties and of the claims of beneficiaries.104 Although trustees have a first charge on the trust property for their costs and expenses, trustees who are in default cannot enforce their rights in this respect until they have made good the breach.105 Similarly, where trustees mix trust funds with their own, the claims of the cestui que trust upon the mixed fund take priority to the claims of the trustee.106

Set-off and Retainer [21-11] If a beneficiary owes money to the trustees as such, the trustees have a right to retain trust property, whether capital or income, coming to such beneficiary.107 It is otherwise, however, if the property in the hands of the trustees is not in their hands as such trustees.108 The general principle is that laid down in Re Akerman:109 A person who owes an estate money, that is to say, who is bound to increase the general mass of the estate by a contribution of his own, cannot claim an aliquot share given to him out of that mass without first making the contribution which completes it. Nothing is retained by the representative of the estate; nothing is in strict language set off; but the contributor is paid by holding in his own hand a part of the mass, which, if the mass were completed, he would receive back.

[page 520] The beneficiary is treated as already having a portion of the assets and therefore is satisfied pro tanto.110 It was on this basis that the right of retainer has been reconciled with the fact that the trustee’s equitable lien did not confer a right of possession.111 The rule is applied in the case where a trust fund is being administered by the court and proceedings are pending against a trustee-beneficiary for moneys alleged to belong to the trust fund. No share can be taken until the amount due, if any, is ascertained and made good.112 The rule applies also as against persons claiming through a beneficiary.113 Although the remedy for the debt is barred by the Statutes of Limitation, yet, if the debt itself still subsists, the executor may deduct the amount from the legacy.114 But the principle does not apply to freehold and leasehold properties specifically given to beneficiaries,115 or to sums of stock specifically bequeathed.116 If there are two funds in the hands of the same trustee upon trusts for the same beneficiary, the trustee cannot refuse to pay over one of the funds until a claim against the beneficiary in respect of the other fund is settled.117 In Re Bruce,118 a beneficiary under his father’s will was also executor and residuary legatee of his aunt, from whose estate there was a debt due to his father’s estate. This debt was not brought into account against his share in his father’s estate. An executor is not entitled to retain a sum immediately given by will as against a debt payable by the legatee by instalments coming due in the future. If the executor could retain in such a case it would amount to making a debtor pay a debt before it was due.119 Where a trustee is in default, any benefit coming under the trust may be retained to make good the default, even if the benefit comes by a derivative title.120

The Creditor’s Right of Subrogation [21-12] On a judgment at law against a trustee, the creditor ordinarily could not levy execution against the trust property; this is so even though the debt was founded upon a debt incurred in the course of trading by the trustee, because the

execution does not extend to equitable assets where the whole beneficial interest is not in the judgment debtor.121 Where on a final account between trustee and beneficiary, the balance would be in favour of the trustee, the execution would reach the trust assets.122 However, the creditors may have an indirect claim against the assets by way of subrogation to the lien or right of indemnity of the trustee. The subrogation is wholly derivative so that the creditor can be no better off than the trustee vis-avis the beneficiary so that, for example, if the balance of account between trustee and beneficiary turns out to be not in favour of the trustee, the creditor will have no right.123 Moreover, for this right of subrogation to be of any [page 521] value to the creditors, the trustee’s right of indemnity on which it relies must be soundly based. Hence, for example, the debt in question must have been incurred in the proper performance of the trustee’s duties.124 A direct payment to the creditor out of the trust fund will be allowed where the fund is subject to administration by the court125 and where the trustee consents to such an order and other trust creditors are not thereby prejudiced.126 Where there is a plurality of trust creditors, direct enforcement of the trustee’s lien by one rather than another creditor may give an advantage; again, direct access may be impossible without first settling the state of the account between trustee and beneficiary because if the balance favours the beneficiary there will be no right of subrogation. The better view then is that the subrogation should be enforced only in proceedings to which creditor, trustee and beneficiary are parties and that it is not appropriate to allow the creditor to proceed directly against the trust assets without joining the trustee. Where there are several trustees and one of them is in default and thus has no right to indemnity, creditors may nevertheless be subrogated to the rights of the other trustees; creditors are not necessarily deprived of their right to subrogation merely by default of one trustee.127 But the other trustees will not have clear accounts where, albeit they acted innocently, they are liable for default by the co-trustee and have not made the loss good; and if they do not have clear accounts they will have no right of indemnity to which the creditor may be subrogated.

Testamentary Creditors [21-13] In the case of a non-testamentary trading trust, all unsecured creditors rank pari passu. Moreover, no unsecured creditor can compel the winding-up of the trust. Neither proposition is necessarily true of all creditors of a trading trust arising under a will in circumstances where before death the testator carried on the trading activity involved. In these circumstances, a distinction must be drawn between those creditors whose debt arose during the testator’s lifetime and those creditors whose claims arose after death. This is so even if the will authorises the carrying on of business. A testator cannot by will prejudice the rights of the testator’s own creditors. They may insist on payment of their debts and immediate realisation of the assets, no matter what the will says, and they may insist on payment of their debts from any of the assets (including after-acquired assets) in priority to any of the trust creditors. Their rights might, however, be lost as against trust creditors if they actively assent to the trustee carrying on business.128

Bankruptcy or Winding-up of the Trustee [21-14] The Bankruptcy Act 1966 (Cth) by s 116(2)(a) excepts from the property divisible among the creditors the property held by the bankrupt in trust for another person.129 Nevertheless, from a series of authorities considered by the High Court in Octavo Investments Pty Ltd v Knight,130 it appears that, to the extent that the bankrupt has, in respect of property held in trust, a right of indemnity for liabilities incurred as trustee, that right is a beneficial interest [page 522] in the assets in question and it follows that the legal title to it vests in the trustee in bankruptcy. Section 116(2)(a) has no application to insolvent corporate trustees. While the Corporations Act 2001 (Cth) does not expressly except trust assets from those divisible amongst creditors, s 556 thereof has the effect of excluding such assets from those to be applied in discharge of the liabilities of the company. A real question arises as to the effect of winding-up upon the trustee’s right of indemnity; in particular, the question is whether the

liquidator may apply the proceeds of the right of indemnity to meet private debts of the trustee or debts incurred in relation to another trust? The answer to this question has been the subject of conflicting decisions of the Supreme Courts of New South Wales, South Australia and Victoria. The question has arisen in two contexts. The first context concerns the rights of a non-trust creditor to share in the benefit of the trustee’s rights of indemnity. This may best be illustrated by way of example. Suppose a corporate trustee acting as such incurs a liability to a trust creditor in the amount of $40,000, with a right of indemnity out of the assets in that amount; suppose, further, that the company goes into liquidation without exercising that right of indemnity; and suppose, further, that at the time of liquidation the company has many general creditors, whose debts do not arise out of any trust dealing. Needham J in Re Byrne Australia Pty Ltd131 held that as trust assets can only be applied to meet trust liabilities, the corporate trustee’s right of indemnity thus does not extend to make the $40,000 available to any of the general creditors of the company. The Victorian Full Court in Re Enhill Pty Ltd132 came to the opposite conclusion, holding that as a trustee’s right of indemnity can be exercised before payment, so a trustee company in liquidation can transfer to the company assets equal to the value of the indemnity, which on transfer, in the case of liquidation, cease to be trust property and become available for distribution to creditors generally; so that, in the example given, the $40,000 would become payable pro rata to all creditors, whether trust creditors or general creditors. This decision is obviously wrong. Writing extra-judicially, Sir Anthony Mason has described the case as looking ‘distinctly fragile’.133 Its vice is the assumption that trust property transferred to the trustee to meet a trust liability somehow ceases to be trust property. In Re Suco Gold Pty Ltd,134 the South Australian Full Court repudiated the Victorian decision, categorising it as ‘in conflict with the fundamental principles of the law of trusts’. Where the trustee of a trading trust is in liquidation, the liquidator’s costs, expenses and remuneration may be paid out of trust assets. The power to allow costs, expenses and remuneration extends to a liquidator who, for practical purposes, is controlling the trustee. Where the company has sufficient beneficial assets and the work done may properly be treated as done for the purpose of winding up the company’s affairs, the court may and usually will decline to exercise the power, so that the costs fall on the company’s non-trust assets.135 Alternatively, the costs can be apportioned so that the costs attributable to administering trust property fall on trust assets, and costs attributable to

statutory liquidator work fall on assets beneficiailly owned by the company.136 However, where the company has no assets other than trust assets, then those assets may be used to pay the liquidator.137 [page 523]

Priorities upon Administration of an Insolvent Trust [21-15] The decision of the South Australian Full Court in Re Suco Gold Pty Ltd138 is not unblemished. Granted the trust creditors, and none other, are entitled to be paid out of the trust assets, what order of priority is to apply when those assets are insufficient to meet the claims of all of those trust creditors? Re Suco Gold Pty Ltd holds that, in respect of each trust of which the company in question was trustee, liabilities are to be paid from the trust property in the order laid down in the predecessor section to s 556 of the Corporations Act 2001 (Cth). This cannot be correct. That section is addressed only to distribution of assets beneficially owned by the company and available for division between general creditors. What is the correct order of priority between trust creditors after payment of administration costs? One suggestion is that where the equities are equal the trust creditors be accorded that priority which reflects the order in which the claims arose, on the basis that as each claim arose it brought with it an interest, via subrogation, in the lien of the trustee over the trust assets.139 Mr Justice McPherson, writing extra-judicially,140 has suggested that the claim be ranked pari passu by analogy with the general principle of equity that requires a distribution of company property in a winding-up to proceed on the footing of equality among the creditors of equal degree. It is submitted first, that the analogy with company liquidations is a wide one and, in any event, not only corporate but individual trustees may be involved and there may be a shortfall in trust assets where the trustee, in its own right, is quite solvent and neither bankrupt nor in winding-up; second, that it is more accurate to see the lien as one which at best attaches only potentially as the liability of the trustee arises, and crystallises only upon proceedings for its enforcement and upon it being clear that there is a balance on the account between trustee and beneficiary in favour of the former; and third, that an appropriate analogy is that favoured in

cases of competing claims by beneficiaries of different trusts to trace into a mixed fund, and this produces a ranking pari passu.141 This leaves only one question, namely the priorities of trust creditors and general creditors inter se, when the liquidation of the corporate trustee and the realisation of the trust fund proceed simultaneously. Suppose there are trust assets worth $10,000 and trust creditors whose debts total $20,000; and also that there are general assets worth $30,000 and general creditors whose debts total $40,000. The first step would be to distribute the trust assets among the trust creditors, who would thus obtain 50 cents in the dollar. But the trust creditors are also entitled to share in the general assets, being creditors of the trustee personally. On the other hand, because of the general principle of equity which requires that all creditors of equal degree should be treated on a footing of equality,142 the trust creditors are entitled to no further dividend from the general assets until the general creditors are each paid an amount equal to that paid to the trust creditors. The second step, therefore, is to pay the general creditors each 50 cents in the dollar from the general assets. The remaining general assets (that is, $10,000) would then be shared rateably among both the trust creditors and general creditors. [page 524]

Recovery of Preferential Payments [21-16] In Octavo Investments Pty Ltd v Knight,143 a liquidator sought to avoid as a preference a payment by the company to a creditor of a debt incurred by it in the course of trading as a trustee. The High Court held that the payment was recoverable as made by a person unable to pay his debts ‘from his own money’, within the meaning of s 122 of the Bankruptcy Act, and that the trustee’s lien gave it a beneficial interest in the trust assets. What the court did not have to address was the issue, similar to that addressed above, of whether the money recovered was to be applied in reduction purely of trust liabilities, or as part of the general estate of the insolvent trustee, as would ordinarily be the case. It is submitted that, consistently with the reasoning in Re Suco Gold Pty Ltd,144 the liquidator should be entitled to apply the moneys only for the relief of trust

creditors, thereby, of course, leaving more in the general estate for the creditors at large.

The Right of Contribution and Recoupment [21-17] Where a breach of trust is committed, the trustees are jointly and severally liable to the beneficiaries for any loss caused by the breach of trust. If one of them makes good the loss to the trust estate, that trustee is generally entitled to call upon the other trustees to bear their share of the loss.145 A trustee who pays the whole amount due to the trust estate is practically placed in the shoes of the beneficiaries and is entitled to the rights they would have had against the trustees. In Birks v Micklethwait,146 two trustees were in default and the loss was made good by the survivor, the estate of the other trustee being unable to contribute. Costs were given to the trustees upon payment of the moneys due, and the trustee who made good the share of the deceased trustee was held entitled to a lien on the costs awarded to the representatives of the other trustee. It may be mentioned that on appeal the trustees were not allowed their costs.147 But had their costs been allowed, the principle of contribution would have applied and the lien would have been good. In Prince v Hine (No 2),148 one of two trustees paid into court a sum of money under an order made against both. The trustees were allowed costs, and it was ordered that the trustee who had paid was entitled to the whole of such costs, taking his co-trustee’s share as contribution in respect of his share of the money paid into court. There appears to be no authority as to whether the principles considered in this paragraph apply as between third parties who participate in breaches of trust such as to make them accountable as constructive trustees, but it is submitted that they do apply, subject to the same qualifications. [21-18] The rule of contribution as between co-trustees is similar to that in the case of co-sureties. It is based on the principle of natural justice that persons who are under co-ordinate liabilities to make good the one loss must share the burden pro rata.149 Where a trustee makes a claim against a co-trustee for contribution in respect of a liability incurred from loss occasioned to the trust estate by the trustee’s

default, time does not begin to run as between the co-trustees until the beneficiaries’ claim has been established against one of the trustees.150 This applies to co-trustees the same rule that was laid down in Wolmershausen [page 525] v Gullick151 in regard to contribution between co-sureties, namely, that in a case of contribution between two co-sureties time did not begin to run under the Statutes of Limitation until the liability of one of the sureties was ascertained, that is, until the claim of the particular creditor was established against that surety. In some cases, a trustee who has had to make good a loss to the trust estate is entitled to call upon a co-trustee to bear not a part of the loss but the whole loss, and to indemnify the trustee who has already made it good. Thus, in the cases of contribution just considered, one trustee has borne the loss and calls upon the co-trustees to pay over their quota; in the case of recoupment the trustee who has borne the loss calls upon the co-trustee or trustees to pay over the whole amount that the trustee has had to pay. In the case of contribution, the trustees bear the loss equally among them. In the case of recoupment or indemnity, one may have to bear the whole loss. In Bahin v Hughes,152 Cotton LJ said: Now I think it wrong to lay down any limitation of the circumstances under which one trustee would be held liable to the other for indemnity, both having been held liable to the cestui que trust; but, so far as cases have gone at present, relief has only been granted against a trustee who has himself got the benefit of the breach of trust, or between whom and his co-trustee there has existed a relation, which will justify the Court in treating him as solely liable for the breach of trust.

In regard to the first class of case mentioned by Cotton LJ, the leading case is Chillingworth v Chambers,153 which lays down the general rule that a trusteebeneficiary who concurs in a breach of trust is not entitled to contribution from a co-trustee unless the loss exceeds the whole amount of the beneficial interest, and then only as regards the excess. If the co-trustee makes good the loss, the trustee-beneficiary must indemnify the co-trustee to the full amount of the beneficial interest. But the loss must occur in connection with the same trust under which the trustee is also a beneficiary,154 and the liability of the trusteebeneficiary is confined to cases where he or she was privy to the breach of trust

when it was committed.155 If the trustee guilty of the breach of trust becomes bankrupt and the new trustees appointed accept a composition along with the other creditors in full discharge of the trust debt, their right to retain the guilty trustee’s share of the trust funds is lost.156 [21-19] In regard to the second class of case mentioned by Cotton LJ, in Bahin v Hughes,157 the general rule is that a trustee who has undertaken the active management of the trust and, acting honestly but erroneously, committed a breach of trust occasioning loss, is not bound to indemnify co-trustees who were passive in the matter, and who, by doing nothing, neglected their duty more than the active trustee. An active trustee is not under any implied liability to indemnify a passive trustee, for as Fry LJ said in Bahin v Hughes:158 In my judgment the Courts ought to be very jealous of raising any such implied liability as is insisted on, because if such existed it would act as an opiate upon the consciences of the trustees, so that instead of the cestui que trust having the benefit of several acting trustees, each trustee would be looking to the other or others for a right of indemnity, and so neglect the performance of his duties.

[page 526] Thus in Bacon v Camphausen,159 a passive trustee was held liable to contribution although there had been an arrangement between the trustees that the passive trustee, who resided abroad, should not be troubled with the affairs of the trust. The acting trustees had invested moneys on a mortgage security which proved insufficient, and the loss was made good by the representatives of one of them. The absent trustee was held liable to contribute. This general rule has been held not to apply in certain cases where one of the trustees on whose advice the other trustees were entitled to rely has caused the loss by improper advice. The cases in which a trustee has been held liable to indemnify a co-trustee are mostly cases in which the trustee in fault was a solicitor.160 A solicitor-trustee owes a duty not only to the cestuis que trust, but also to his or her co-trustee, who is entitled to place confidence in the solicitor managing the affairs of the trust. Consequently, if the solicitor-trustee commits a breach of trust without the knowledge of the co-trustee and is enabled to do so by the confidence placed in him or her as a professional by the co-trustee, he or she may be held liable to indemnify the co-trustee against any loss caused by the

breach of trust. The first case in which this was laid down was Lockhart v Reilly,161 and there have been several cases since in which a solicitor-trustee has been ordered to indemnify the co-trustee against the loss caused by his or her default.162 [21-20] Although several cases have been quoted above as to a solicitortrustee being held liable to indemnify a co-trustee against loss occasioned by breach of trust, it must not be imagined that in all cases a solicitor-trustee, merely because he or she is a solicitor, will be held liable to indemnify a cotrustee. If the co-trustee took part in the breach of trust and fails to show that his or her participation was caused by the advice or information supplied by the solicitor-trustee, he or she cannot claim indemnity from the solicitor-trustee. In Head v Gould,163 the court refused to hold the solicitor-trustee liable to indemnify his co-trustee against loss caused by breaches of trust in which the cotrustees had participated. A negligent solicitor-trustee cannot claim indemnity from his or her cotrustee.164 In Jackson v Dickinson,165 two trustees improperly invested trust funds in contributing shares in a company. One of the trustees died. The surviving trustee was subsequently compelled to pay a large sum in calls as a contributory in the liquidation of the company. It was held that the representatives of the deceased trustee were liable to the surviving trustee for contribution. But a solicitor acting for a deceased estate has been held not liable to indemnify the estate where his managing clerk, acting in the dual capacity of executor of the estate and employee, misappropriated estate funds.166 If a trustee commits a breach of trust, the co-trustees may take action to have the breach made good. In Powlet v Herbert,167 action was taken against a cotrustee to have stock replaced which had been sold without authority and a decree was made for its immediate replacement. In Warwick v Richardson,168 D and R were trustees of a sum of £10,000. D allowed his co-trustee, R, [page 527] to have control of his sum and to use it in his private trade, taking from R a bond conditioned to keep him harmless and indemnified against all actions, suits, claims, costs, damages and expenses on account of the £10,000.

Subsequently, a decree was obtained declaring that the trustees were jointly and severally liable to pay the £10,000. The representatives of D were held to be entitled to recover on the bond not only the £10,000 and interest but also the costs they had incurred. Where there has been a fraudulent breach of trust to which all the trustees have been parties, there is no right of contribution between them.169 But a trustee who has caused loss by his or her personal fraud, for example by converting trust property to his or her own use, may be held liable to indemnify a co-trustee.170

The Right to Impound Beneficiary’s Interest [21-21] The trustee legislation in all jurisdictions171 provides that where a trustee has committed a breach of trust at the instigation or request or with the written consent of a beneficiary, the court may, if it thinks fit, make such order as the court deems just for impounding all or any part of the interest of the beneficiary in the trust estate by way of indemnity to the trustee or person claiming through the trustee. In New South Wales, the provision (in s 86(1)) is deemed (by s 86(2)) to empower the court to impound all or any part of the interest of any beneficiary who receives any pecuniary benefit from the breach of trust. [21-22] In order to understand the present law it is necessary to examine a trustee’s rights against a beneficiary who has requested, instigated or consented to a breach of trust under the general law apart from statute. These are: (1) In an action by a beneficiary against a trustee for breach of trust, the latter may successfully plead as a defence that the breach was committed with the consent of the plaintiff. Thus, if the trustee holds $6000 of trust property on trust for A for life and after A’s death for B absolutely, and A consents to the commission by the trustee of a breach of trust which results in a loss to the trust estate of $2000, A cannot force the trustee to replace the $2000; moreover, if B, a beneficiary who has not consented, does force the trustee to replace the $2000, the trustee is entitled to the income of the $2000 during A’s life.172 Other illustrations of the rule are: (a) If a trustee holding a fund of $4800 for the benefit of three cestuis que trust

in equal shares at the request of one of them commits a breach of trust whereby there is a loss of $600, on distributing the fund the trustee need pay the beneficiary who consented to the breach of trust only $1000. The beneficiary would not succeed in an action against the trustee for the balance, as the beneficiary cannot be heard to complain of a loss from a breach of trust to which he or she consented. (b) If in the above illustration the loss had been $2000 instead of $600, the beneficiary would have lost all his or her interest, as the trustee, after making good the loss of $2000, would retain the beneficiary’s interest, namely, $1600. (c) Suppose there is a trust fund for $4000 invested at 4% the income being payable to A for life, and the capital going to B upon A’s death. In breach of trust the trustee, and with the consent of A, reinvests the trust fund in a hazardous security whereby A for a time receives [page 528] a much higher income, but as a result the whole trust fund is lost. B takes action against the trustee, who has to make good the $4000. The income of the $4000 will go to the trustee during the life of A, and A will receive for the future nothing from the $4000. The rule that beneficiaries consenting to a breach of trust cannot, as against the trustee, complain of any loss occasioned by that breach applies even though they only become beneficiaries after giving consent. In Evans v Benyon,173 A held a fund in trust for B for life, then for B’s wife for life, then, if she died in B’s lifetime, as she should by will appoint and in default of appointment for her next-of-kin. At the request of B and his wife, A raised £5000 out of the fund and paid £1000 to each of the four adult daughters of C and £1000 to C himself in trust for an infant daughter. B gave A a covenant of indemnity against all consequences of this distribution. B’s wife died in B’s lifetime without appointing, and A and C were her next-of-kin. In an action by the representative of A against the representative of B for replacement of the £5000, it was held that neither A nor C could claim against B’s estate. Fletcher v Collis174 furnishes a good illustration of the rule that the consenting cestui que trust cannot bring a claim against the trustee. In this case, a trustee, with the

consent of the tenant for life, sold out the trust fund and handed it over to the wife of the tenant for life, who spent it. Subsequently, the trustee was compelled to make good to the trust estate the moneys thus wrongfully dealt with, the trust moneys being paid into court. At the time of the death of the trustee, there was in court a sum representing not only the capital of the trust fund but also interest for a considerable period. This interest was claimed by the representatives of the deceased trustee and also by the trustee in bankruptcy for the tenant for life. It was held that the representatives of the deceased trustee were entitled to it. The fact that the tenant for life had received no personal benefit from the breach of trust did not affect his liability to have his interest impounded. In order for this rule to apply, the beneficiary’s consent must be an informed consent and one which was not to the knowledge of the trustee procured by undue influence, and the beneficiary must be sui juris. Subject to this, it is not necessary that the beneficiary should know that what is being consented to is in breach of trust, provided that it is fully understood. Nor is it necessary that he or she should personally have benefited from the breach of trust.175 It will also be noted that the trustee’s rights are defensive. The beneficiary having consented provides the trustee with a good defence against any action by the beneficiary complaining of a loss caused by the breach of trust; it does not enable the trustee to recoup by impounding the beneficiary’s interest. Thus, in the first example given above, where the breach of trust resulted in a loss of $2000 to the capital of the trust, the trustee, if forced by B to replace the $2000, could not recoup out of the income of the remaining $4000 payable to A.176 [21-23] (2) However, if the beneficiary either (a) requested or instigated the commission of the breach of trust with a view to personal profit,177 or (b) consented to the breach of trust and actually profited thereby,178 the trustee’s rights would not be so limited, but would include the right, with the sanction of the court, to impound the beneficiary’s interest. So that, in the example just referred to, the trustee could, in either of the situations now envisaged, not only resist any claim by A, but also, with the permission of the court, impound A’s income from the £2000. In addition, the trustee could compel A to account for any profit actually realised by A. [page 529]

[21-24] In England, the courts have held that the statutory provisions corresponding to the Australian legislation listed above179 in no way restrict the principles of the general law referred to above but have widened them by extending the trustee’s power to impound (subject to the court’s consent) to the following additional situations: (1) against the interest of a beneficiary who instigates or requests the commission of a breach of trust, whether with or without a view to personal profit therefrom; (2) against the interest of a beneficiary who consents in writing to a breach of trust, whether any profit was in fact derived from the breach or not; and (3) against any such property even if it be the property of a married woman subject to a restraint upon anticipation.180 [21-25] However, the position in New South Wales is not at all clear, because of the provisions of s 86(2), to which the corresponding English section has no equivalent. If subs (1) is to be given the extended interpretation suggested by the English authorities, subs (2) would be entirely otiose. On the other hand, it is difficult to give it any meaning at all other than that a trustee’s right of impounding is restricted to situations where the beneficiary has derived a benefit from the breach of trust. Such a drastically restrictive interpretation should not, it is submitted, be implied from so ambiguous a provision. In the interpretation of the section, it has been held that to make a beneficiary liable under the section in respect of an improper investment, it must be shown not only that the beneficiary instigated, requested, or consented in writing to the investment, but that he or she knew the fact which would make it a breach of trust to make the investment. The section is not to be read as though the word ‘investment’ had been inserted instead of ‘breach of trust’.181 In Re Somerset, Lindley LJ stated:182 In order to bring a case within this section the cestui que trust must instigate, or request, or consent in writing to some act or omission which is itself a breach of trust, and not to some act or omission which only becomes a breach of trust by reason of want of care on the part of the trustees. If a cestui que trust instigates, requests, or consents in writing to an investment not in terms authorized by the power of investment, he clearly falls within the section; and in such a case his ignorance or forgetfulness of the terms of the power would not, I think, protect him — at all events, not unless he could give some good reason why it should, eg, that it was caused by the trustee. But if all that a cestui que trust does is to instigate, request, or consent in writing to an investment which is authorized by the terms of the power, the case is, I think, very different. He has a right to expect that the trustees will act with proper care in making the investment, and, if they do not they cannot throw the consequences on him unless they can show that he instigated, requested, or consented in writing to their non-performance of their duty in this respect.

The court’s discretion is a judicial discretion, and it will exercise that discretion in the same manner as it would have exercised it before the statute.183

Assigned Interest [21-26] The equivalent section in the English Trustee Act applies not only to the interest of a beneficiary who is entitled to it; it applies also even if the beneficiary’s interest has been assigned — the assignee, in accordance with the well-known rule that the assignee of an equitable chose in action takes it subject to all equities affecting the assignor, taking it subject to the equity of the trustee under that section.184 This is so even if the breach of trust should be committed after the assignment has been made.185 It seems that the position would be the same under the Australian legislation listed above. [page 530]

Trustee-beneficiary [21-27] A trustee who has committed a breach of trust cannot claim, as against the other cestuis que trust, any beneficial interest in the trust estate until the default has been made good. This applies to an assignee from the trusteebeneficiary even if the breach should be committed after the assignment, and it applies not only to assigned interests but also to derivative interests, that is, to interests that the trustee acquires in the trust estate through other persons.186 It has been said that the principle is of general application and could apply in commercial trusts.187 There is no reason to doubt that the position would be the same under the Australian legislation considered above. As between co-trustees, a trustee who is also beneficiary and has concurred in a breach of trust must indemnify the co-trustees to the extent of the trustee’s interest in the trust estate.188 A defaulting trustee-beneficiary who makes good a breach of trust will then be entitled to his or her beneficiary interest. This is well illustrated in Re Sewell,189 where two trustees misappropriated trust funds and became bankrupt. Under a composition approved by the court, they paid their creditors a dividend

of 6s in the pound, which was accepted by the new trustees who had been appointed in their place. When the trust funds became divisible, the new trustees claimed to retain a share to which one of the defaulting trustees was entitled, so as to make good the loss caused by his default. It was held that the trustees, by accepting the dividend, had accepted the composition and thus discharged the debt due by the trustees. The debt being no longer in existence, the trustee-beneficiary was held entitled to his share of the estate.

Procedure [21-28] As to the mode of bringing the matter before the court so as to enforce the right where an action is brought against trustees for a breach of trust, see Re Holt.190

The Right to a Discharge [21-29] When a trustee has completed his or her trusteeship and has caused the trust estate to be vested in beneficiaries absolutely entitled, or, in the case of infants, shares to be vested in trustees for the infants, or to be paid into court or to the Public Trustee, as the case may be,191 he or she is entitled to have the accounts examined and settled by the beneficiaries, if all sui juris, and a formal discharge on settled account given or, if the beneficiaries are not all sui juris or if they will not give a formal discharge on settled account signed by them, then the trustee is entitled to have his or her account taken by the court.192 However, a trustee cannot usually require a release under seal,193 although the trustee aparently may do so under particular circumstances, as where the trust funds have been resettled and the original trustees are entitled to a release under seal from their original beneficiaries194 and, it seems, where the [page 531] trustees had previously committed breaches of trust at the instigation of the beneficiaries195 and possibly where the trust instrument itself was under seal.196

Modern trust deeds may contain a clause deeming payment in the manner advised by a beneficiary as a full and final discharge; such clauses operate in accordance with their ordinary construction.197

The Right to Pay Money into Court [21-30] The right of a trustee to pay trust money into court is now provided for in the Trustee Acts of all jurisdictions.198 The legislation in the other jurisdictions follows s 95 of the New South Wales Act, which provides: 95. (1) Where trustees, or the majority of trustees, have in their hands or under their control money or securities belonging to a trust, they may pay the same into court. (2) Where any money or securities are vested in any persons as trustees, and the majority are desirous of paying the same into court, but the concurrence of the other or others cannot be obtained, the court may order the payment into court to be made by the majority without the concurrence of the other or others. (3) Where any such money or securities are deposited with any banker broker or other depositary, the court may order transfer payment or delivery of the money or securities to the majority of the trustees for the purpose of payment into court. (4) Every transfer payment and delivery made in pursuance of any such order shall be valid and take effect as if the same had been made on the authority or by the act of all the persons entitled to the money or securities so transferred paid or delivered.

By s 98 of the New South Wales Act, the payment of money or securities into court is subject to Rules of Court, and the legislation in other states makes like provision; in each case, the receipt or certificate of the proper officer is a sufficient discharge to any trustee for money or securities paid into court and the money or securities paid into court are dealt with under Rules of Court and in accordance with orders of the court. In Harmer v Federal Commissioner of Taxation,199 the High Court stressed that the payment of trust money into court will not, of itself, affect the rights and duties attached to the pre-existing trust, in the sense that the funds will still remain subject to the trust. Thus where the entitlement to the corpus or income is disputed, the function of the court will be to identify existing interests in the money paid into court rather than to create new ones. Formerly, the only way in which an executor could obtain a discharge for an infant’s share in the estate was by payment into court, but now there are other courses open.200 It would appear, however, that in such cases the executor would still be justified in paying the share into court.

There are cases where formerly a trustee was justified in paying money into court (for example, when there was difficulty in ascertaining the persons entitled), but where, now that there are simpler procedures for ascertaining the respective rights of beneficiaries, a trustee would run the risk, by paying into court, of having to pay the costs of payment out. But where distinct claims of substantial merit are made by different persons and the matter does not arise out of the construction of the trust instrument, a trustee would still be justified in paying into court. [page 532]

The Right to Approach the Court [21-31] A trustee is not obliged to take any risks by deciding in a doubtful case what are the respective rights of the beneficiaries, or by performing any act which, however advantageous, is strictly a breach of trust, or even by exercising a power or discretion where there is a possibility that the propriety of such exercise might afterwards be called in question by the beneficiaries. In all these cases, the trustee is entitled to approach the court and to ask it to determine the beneficiaries’ rights, or for authority to perform the necessary act, or for advice upon the exercise of the power or discretion. In all these cases, there are appropriate procedures which now avoid the necessity for a suit for general administration of the trust estate, as once was necessary.

Construction of the Trust Instrument [21-32] Where the trustee is in doubt as to the rights or interests of any person claiming to be a creditor, devisee, legatee, next-of-kin or cestui que trust, the trustee may take out process in the nature of an originating summons in the equitable jurisdiction of the Supreme Court of the state concerned for the determination of the question or questions. The originating summons is served upon all persons whose rights or interests are sought to be affected. At the hearing the matter is determined after all such persons have been heard or have had the right to be heard, with the result that the question becomes a res

judicata and all persons interested are estopped from litigating the question again.201 The trustee may then safely deal with the estate upon the basis of the court’s decision and is completely protected.

Authority to Commit a Breach of Trust [21-33] The statutory powers of the court in each jurisdiction to confer power on trustees to do and perform things and acts which the trustees could not otherwise do or perform by reason of their lack of power have already been dealt with.202

Opinion, Advice and Direction of the Court [21-34] In all jurisdictions save Tasmania and the Northern Territory, legislation gives the right to a trustee to apply to the court for its opinion, advice or direction.203 The New South Wales provision, s 63 of the Trustee Act 1925, is in the following terms: 63. (1) A trustee may apply to the Court for its opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. (2) If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee’s own responsibility, to have discharged the trustee’s duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction. (3) Rules of court may provide for the use, on an application under this section, of a written statement signed by the trustee or the trustee’s Australian legal practitioner or for the use of other material instead of evidence.

[page 533] (4) Unless the rules of court otherwise provide, or the Court otherwise directs, it shall not be necessary to serve notice of the application on any person or to adduce evidence by affidavit or otherwise in support of the application. … (8) Where the question is who are the beneficiaries or what are their rights as between themselves, the trustee before conveying or distributing any property in accordance with the opinion advice or direction shall, unless the Court otherwise directs, give notice to any person whose rights as beneficiary may be prejudiced by the conveyance or distribution.

(9)The notice shall state shortly the opinion advice or direction, and the intention of the trustee to convey or distribute in accordance therewith. (10) Any person who claims that the person’s rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution. (11) Subject to subsection (10) and subject to any appeal any person on whom notice of any application under this section is served or to whom notice is given in accordance with subsection (8) shall be bound by the opinion advice or direction or order given or made under this section as if the opinion advice direction or order had been given or made in proceedings to which the person was a party.

It will be observed that, although all persons interested are not required to be served and do not usually appear, they will be bound by the opinion, advice or direction if the procedure laid down by the section is followed. Where notice is given, the effect of s 63(11) appears to be that persons to whom notice is given are bound as if they were parties, and will be entitled to take a meaningful part in the proceedings.204 The High Court reviewed the provision of judicial advice in detail in Macedonian Orthodox Community Church St Petka v His Eminence Petar,205 an important decision of which it has been said that it dismantled the impediments that lower courts had, over time, imposed on the curial discretion to give a trustee advice and directions.206 The effect is to expand the jurisdiction. The joint judgment in the Macedonian Orthodox Community Church case confirmed the important interrelationship between seeking judicial advice and seeking to be relieved of liability where a trustee has acted honestly and reasonably and ought fairly to be excused. Because one of the matters the delinquent trustee will have to explain is the failure to obtain the court’s direction, a trustee should seek s 63 advice first, rather than seeking relief under s 85 afterwards.207 The court observed that where advice is sought in connection with contested litigation, advice will not only protect against a later complaint that the trustee should have behaved otherwise, but also protect the trustee from personal liability for costs.208 Importantly, the court confirmed that there was nothing to limit the application for judicial advice to ‘non-adversarial’ proceedings.209 [page 534]

A necessary consequence of the provisions of s 63 of the Act is that 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.210

The court also confirmed the utility of decisions under the English procedure, which could be helpful because the statutory provisions, although different, were functionally equivalent.211 The judge will not, as a general rule, give a trustee opinion or advice under this legislation on a question involving the construction of the trust instrument where the question concerns the respective rights of beneficiaries or their identity; in such a case, the proper procedure is by way of originating summons where all parties are served and have the opportunity to be heard.212 Even less will advice be given on matters in controversy between parties to a trust.213 However, where the question of construction does not involve the respective rights of beneficiaries but only the nature or extent of the trustee’s powers or duties of management or administration under the trust instrument, a summons under this legislation is an appropriate procedure, although it may be found that an application by way of originating summons would be more suitable. In addition to cases where a trustee is faced with litigation either as plaintiff or defendant and desires advice whether to sue or defend,214 typical cases for judicial advice are where a trustee is in doubt as to the extent of a power of sale and the manner in which it should be exercised,215 or as to whether next-of-kin inquiries should be further pursued.216 Where a beneficiary in dispute with the trustee applies to the court for declarations, the fact that relief is given in the form of advice to the trustees under s 63 will not preclude an appeal by the trustees against the orders encompassing that advice.217 Where there has been a material change of facts after advice has been obtained, the proper course is for the trustee to make a fresh application, rather than to appeal.218 The court has no jurisdiction under this section to confer a power upon the trustee which is not possessed under the trust instrument,219 and it has been said that the court has no jurisdiction to advise a trustee as to the exercise of a discretion clearly conferred on the trustee by the settlor or testator.220 But the court will advise whether a trustee would be justified in exercising powers or discretions in particular ways even though it does not advise the trustee to do so. The principles upon which the judge should act in advising trustees are discussed by Harvey J in Re Mitchell.221

[page 535] The trustee is only protected if all material and relevant facts have been submitted to the court in the application for advice.222 [21-35] One situation in which it is useful to approach the court for advice is where it is sought to distribute an estate earlier than the law would strictly permit. Suppose, for example, a trust fund limited to A, a female, for life and after her death to her children; that she has two adult children, B and C; and that she is 60 years old. Technically, the law is that a woman is never incapable of childbirth: this is the fiction of the fertile octogenarian; and, therefore, technically, the corpus cannot be distributed until A’s death. From a practical point of view, however, it is absurd that the trustee cannot distribute immediately at the joint direction of A, B and C, as in reality A is incapable of childbirth. Hence, trustees in this situation often approach the court for directions to distribute. So automatic was the judicial approval for such applications that in England it was at one time suggested that a trustee should assume that a woman over 60 years of age was incapable of further childbirth and act accordingly, without even troubling the court; indeed, that a trustee might not receive costs if judicial advice were sought. However, this situation has in turn been overtaken by the provisions of adoption legislation which equate the rights of adopted children with those of natural children and advances in medical science. Accordingly, in such cases it is now essential to seek judicial advice before early distribution. In Re Cassidy,223 Lush J held that permission to distribute will still be granted if the evidence discloses a strong probability that there will in fact be no adoption. In Bullas v Public Trustee,224 Kearney J held that if leave to distribute was granted, the beneficiaries must undertake to the court to account in the event of the arrival of a new candidate to share in the distribution.

Costs [21-36] Provided the trustees adopt the appropriate procedure in any of the applications above referred to, they are entitled to their costs as a complete indemnity. In the Australian Capital Territory, New South Wales, Queensland, South Australia, Tasmania and Western Australia where the applications are

made under the trustee legislation there is express provision enabling the court to make such order as it thinks fit respecting the costs, charges and expenses of all or any of the parties to the applications.225 The court may also provide for the raising of the necessary moneys by sale or mortgage of the property in respect of which the court’s order is made, and may order that the costs be paid out of such part of the property as is in the opinion of the court the real subject matter of the suit or proceeding. Apart from this section, trustees are generally entitled to their costs of any application to the court as part of the general right to indemnity226 and will only lose that right by misconduct. If, by their conduct, trustees cause unnecessary applications to be made to the court227 or have caused litigation through unreasonable conduct228 or have failed in the proceedings before the court to prevent unnecessary expense,229 they may lose their right to costs, and may even be ordered to pay the costs of the other parties. _____________________________ 1.

Re Graham, Pitt & Bennett (1891) 9 NZLR 617 at 619; Glennon v Federal Commissioner of Taxation (1972) 127 CLR 503 at 511–3; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367–8; 27 ALR 129 at 134–5. This passage was cited with approval in Atwell v Roberts (2013) 43 WAR 507 at [292] and Yara Australia Pty Ltd v Oswal (No 2) [2013] WASCA 187 at [259].

2. 3.

Re Johnson (1880) 15 Ch D 548 at 552. Farstad Supply AS v Enviroco Ltd [2011] 1 WLR 921 at [69].

4. 5.

(1945) 72 CLR 319 at 324; [1946] ALR 50 at 53. ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; 110 ACSR 1 at [15]; see also P & P & M Quality Smallgoods Pty Ltd v Leap Seng [2013] NSWCA 167 at [6]; Lewis v Condon (2013) 85 NSWLR 99; 304 ALR 410 at [79].

6.

See, for example, Commissioner of Inland Revenue v Chester Trustee Services Ltd [2003] 1 NZLR 395 at [37]. Vacuum Oil Pty Ltd v Wiltshire (1945) 72 CLR 319 at 335; [1946] ALR 50 at 57; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 371; 27 ALR 129 at 138.

7. 8. 9.

Parsons v Spooner (1846) 5 Hare 102; 67 ER 845; Muir v City of Glasgow Bank (1879) 4 App Cas 337 at 355. See [21-03].

10. Hardoon v Belilios [1901] AC 118 at 125. 11. (1998) 192 CLR 226; 151 ALR 1 at [47]. See also Agusta Pty Ltd v Provident Capital Ltd (2012) 16 BPR 30,397 at [37]–[42]. 12. Kemtron Industries Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] 1 Qd R 576 at 589; Commissioner of Stamp Duties v Buckle (1995) 38 NSWLR 574 at 585–7; Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [48]–[51]; JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691 at [50]; Arjon Pty Ltd v Commissioner of State Revenue (2003) 8 VR 502 at [45]–

[62]. 13. ACT s 59(4); NSW s 59(4); NT s 26; Qld s 72; SA s 35(2); Tas s 27(2); Vic s 36(2); WA s 71. See [15-43]. 14. Re Exhall Coal Co Ltd (1866) 35 Beav 449 at 453; 55 ER 970 at 971; Re Pumfrey (1882) 22 Ch D 255 at 262; Jennings v Mather [1902] 1 KB 1 at 6, 9; Commissioner of Australian Federal Police v Cornwell (1990) 98 ALR 677 at 681; Hayman v Equity Trustees Ltd (2003) 8 VR 557. 15. See Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [47]– [51]; Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2015) 90 ALJR 151 at [199]. 16. See [21-05]. 17. See [21-12]. 18. The topic is discussed by: R Meagher, ‘Insolvency of Trustees’ (1979) 53 ALJ 648; H Ford, ‘Trading Trusts and Creditors’ Rights’ (1981) 13 MULR 1; D Williams, ‘Winding up Trading Trusts: Rights of Creditors and Beneficiaries (1983) 57 ALJ 273; J Merralls, ‘Unsecured Borrowings by Trustees of Commercial Trusts’ (1993) 10 Aust Bar Rev 248; R Hay, ‘Trading Trusts and Creditors’ Rights’ (1993) 67 LIJ 510; B Taylor, ‘The Enforceability of Debt Securities Issued by Trustees in Securitisation Programs’ (1998) 9 JBFLP 261. See also A Scott, ‘Liabilities Incurred in the Administration of Trusts’ (1915) 28 Harv L Rev 725; H Stone (1922) 22 Col L Rev 527. 19. See [21-13]–[21-16]. 20. Scott on Trusts, §26.2. 21. See, for example, Super 1000 v Pacific General Securities (2008) 221 FLR 427 at [80] (citing this passage in a previous edition); and see J Allsop, ‘The Nature of the Trustee’s Right of Indemnity and Its Implications for Equitable Principle’, paper, delivered 18 July 2012, Sydney. 22. (1842) 1 Bell App 428. 23. (1865) 4 Macq 950. 24. (1879) 4 App Cas 337; followed in Re Anderson (1927) 27 SR (NSW) 296. In so far as Bell v Keesing (1888) 7 NZLR 155 is to the contrary, it should be regarded as wrongly decided. 25. (1879) 4 App Cas 337 at 355. 26. (1865) 4 Macq 950 at 955. 27. Muir v City of Glasgow Bank (1879) 4 App Cas 337 at 355; Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 at 253; Re Interwest Hotels Pty Ltd (in liq) (1993) 12 ACSR 78 at 83–5. 28. Primary Producers Finance v Dixon (1938) 40 WALR 34. 29. [1911] 1 Ch 414. 30. [1912] 1 Ch 717. See also Re Anderson (1927) 27 SR (NSW) 296 at 300. 31. (1982) 7 ACLR 225 (Yeldham J); Helvetic Investment Corp Pty Ltd v Knight (1984) 9 ACLR 773. See generally Australian Securities and Investments Commission v Letten (No 17) (2011) 87 ACSR 155. 32. Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 371; 27 ALR 129 at 137–8. 33. [1900] 1 Ch 199. 34. (1862) 4 De G F & J 259; 45 ER 1183. 35. [2002] ATPR 41-864. 36. Re Blundell (1899) 40 Ch D 370 at 376–7; Savage v Union Bank of Australasia Ltd (1906) 3 CLR 1170 at 1197; 12 ALR 285 at 294; Re Suco Gold Pty Ltd (in liq) (1983) 7 ACLR 873 at 878.

Stott v Milne (1884) 25 Ch D 710 at 715; Dowse v Gorton [1891] AC 190; Jeffray v Webster (1895) 17 37. ALT 72. 38. Jennings v Mather [1902] 1 KB 1 at 6, 9; Re Pauling’s Settlement (No 2) [1963] Ch 576; [1963] 1 All ER 857; X v A [2000] 1 All ER 490 at 493–4; Hayman v Equity Trustees (2003) 8 VR 557. 39. Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; 27 ALR 129; Coates v McInerney (1992) 10 ACLC 616; see also Re Exhall Coal Co Ltd (1866) 35 Beav 449 at 453; 55 ER 970 at 971; Re Pumfrey (1882) 22 Ch D 255 at 262; Jennings v Mather [1902] 1 KB 1 at 6, 9; Commissioner of Australian Federal Police v Cornwell (1990) 98 ALR 677 at 681. 40. (1992) 8 WAR 42. 41. Grissel v Money (1869) 33 LJ Ch 312. Semble, the appointment of a receiver would be a remedy equally available. 42. (1858) 25 Beav 622; 53 ER 774. 43. Jennings v Mather [1901] 1 KB 108 at 113–44. 44. Coates v McInerney (1992) 6 ACSR 748; Dimos v Dikeakos Nominees Pty Ltd (1996) 68 FCR 39; 149 ALR 113. 45. Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550 at [50]; cf Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 at 109; Apostolou v VA Corporation of Australia Pty Ltd (2010) 77 ACSR 84. The various decisions on the issue are summarised in Winter Holdings (WA) Pty Ltd [2015] WASC 162 at [41]ff. 46. Ronori Pty Ltd v ACN 101 071 998 Pty Ltd [2008] NSWSC 246 at [15]. 47. Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550 at [40], citing Kemtron Industries Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] 1 Qd R 576 at 587. 48. Sharpe v San Paulo Railway Co (1873) LR 8 Ch App 597 at 609–10; Re Johnson (1880) 15 Ch D 548; Belar Pty Ltd (in liq) v Mahaffey [2000] 1 Qd R 477 at [19]–[20]. 49. (1839) 4 My & Cr 442; 41 ER 171, on which see Meagher, Gummow and Lehane’s Equity, [39-110]– [39-155] and Derham, Law of Set-off, 3rd ed, [14.67]–[14.78]. It was stressed in R W G Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 at 397–9 that the true position is not that a trustee who does not have a clear account is not entitled to be indemnified. Rather, the amount owing to the estate must be set off against the amount due by way of indemnity. 50. R W G Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 at 396–7. 51. Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at 325; [1946] ALR 50 at 52. 52. Re Chennell (1878) 8 Ch D 492 at 502; Corrigan v Farrelly (1896) 7 QLJ 105 at 111–12; Re Staff Benefits Pty Ltd [1979] 1 NSWLR 207 at 215; Gatsios Holdings Pty Ltd v Nick Kritharas Holdings Pty Ltd (in liq) [2002] ATPR 41-864 at [10] (citing this paragraph in a previous edition). See [21-07]. 53. [1901] AC 118; Balkin v Peck (1998) 43 NSWLR 706 at 712; Hurst v Bryk [1999] Ch 1 at 26–28; [1997] 2 All ER 283 at 305–6; Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439 at 442. 54. Balkin v Peck (1998) 43 NSWLR 706; R Hughes (1990) 64 ALJ 567. 55. (1998) 43 NSWLR 706. 56. [1915] 2 Ch 474. 57. [1911] 1 Ch 194. 58. R Hughes (1990) 64 ALJ 567 at 573. 59. [1911] 1 Ch 194. 60. [1985] VR 891 at 939. 61. Bayer v Balkin (1995) 31 ATR 295; Balkin v Peck (1998) 43 NSWLR 706.

62. [1903] AC 139. 63. Hobbs v Wayet (1887) 36 Ch D 256; Re Richardson [1911] 2 KB 705 at 709–10; McIntosh v Dallwood (No 3) (1930) 30 SR (NSW) 332; McIntosh v Dallwood (No 4) (1930) 30 SR (NSW) 415. 64. Official Assignee v Jarvis [1923] NZLR 1009 at 1017; cf Hughs-Hallett v Indian Mammoth Gold Mines Co (1882) 22 Ch D 561; Hobbs v Wayet (1887) 36 Ch D 256. 65. [1911] 2 KB 705 at 711. 66. [1903] AC 139. 67. [1901] AC 118; followed by Young J in McLean v Burns Philp Trustee Co (1985) 2 NSWLR 623. 68. (1854) 4 De GM & G 19; 43 ER 415. 69. [1985] VR 385 at 394–5. 70. [1984] 1 Qd R 576. In New South Wales, Santow J has expressed the same view: JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691 at [50], [87]. 71. See s 65. 72. See Seton’s Forms of Judgments and Orders, 7th ed, Vol II, p 1126 and pp 1131–2. 73. [1893] 1 Ch 547. 74. [1985] VR 385 at 396. 75. (2003) 7 VR 287 at [49], [53]. 76. (2003) 7 VR 287 at [51]. Cf Adsett v Berlouis (1992) 37 FCR 201 at 211–12; 109 ALR 100 at 111; O’Keefe v Hayes Knight GTO Pty Ltd (2005) 218 ALR 604 at [14]. 77. Re Walden (1903) 3 SR (NSW) 375. 78. Re Bennett [1896] 1 Ch 778. 79. (1902) 51 WR 262. 80. As trustees have to carry out the instructions of the settlor as expressed in the instrument of trust, it follows as a matter of course that they cannot give away the trust funds by way of gifts as subscriptions unless they are expressly authorised either by the settlor or the court to do so. For a case where the court authorised the payment of subscriptions, see Re Walker [1901] 1 Ch 879 at 887. 81. Sichel v O’Shanassy (1877) 3 VLR (E) 208; Re Jones [1917] St R Qd 74; Stafford v Kekatos (No 4) [2008] NSWSC 1338 at [19]; Strang v Strang [2009] NSWSC 760 at [151] (the latter decisions citing the previous edition of this text). 82. [2002] ATPR 41-864. 83. [2002] ATPR 41-864 at [8]. 84. [2002] ATPR 41-864 at [42]. 85. [2002] ATPR 41-864 at [47]. 86. Nolan v Collie (2003) 7 VR 287 at [50], [57]. 87. CB Darvall & Darvall v Moloney (2006) 236 ALR 796 at [47]. 88. Budgett v Budgett [1895] 1 Ch 202. 89. Turner v Hancock (1882) 20 Ch D 303; Re Love (1885) 29 Ch D 348; Re Aitken and Barron’s Bill (1932) 49 WN (NSW) 224. 90. (1941) 64 CLR 268; [1941] ALR 58. 91. (1912) 14 CLR 297; 18 ALR 254. 92. Re Knox’s Trusts [1895] 2 Ch 483; McGregor v McGregor (No 2) [1919] NZLR 286; Mead v Watson (2005) 23 ACLC 718.

93. [1989] 1 WLR 1313. 94. Walters v Woodbridge (1878) 7 Ch D 504 at 509; Kirwan v Cresvale Far East Ltd (in liq) (2002) 44 ACSR 21 at [259]. 95. [1861–72] Mac 457. See also Re Dargie [1953] 2 All ER 577. 96. [1893] 1 Ch 547. 97. In Malcolm v O’Callaghan (1837) 3 My & Cr 52; 40 ER 844, a receiver was disallowed expenses incurred by him in unnecessary journeys to Paris in regard to a suit there affecting the trust property. 98. (1863) 32 Beav 564; 55 ER 222; and see Macedonian Orthodox Community Church St Petka v His Eminence Petar (2008) 237 CLR 66; 249 ALR 250 at [151]. 99. (1856) 21 Beav 508; 52 ER 955. An order disallowing a trustee’s costs may be the subject of an appeal to the High Court: Amos v Fraser (1906) 4 CLR 78; 12 ALR 481; Dowling v Blyth (1917) 22 CLR 486. 100. (1910) 11 SR (NSW) 11. 101. Alcock v Public Trustee (1936) 53 WN (NSW) 192. This passage in the previous edition was approved in Lathwell v Lathwell [2008] WASCA 256 at [4]. 102. Hughes v Key (1855) 20 Beav 395; 52 ER 655; Gompertz v Kensit (1872) LR 13 Eq 369, but see Permanent Trustee Co Ltd v Fels (1919) 19 SR (NSW) 87. For details regarding the trustees’ costs, see Quick on Costs, [4.4120]ff. 103. Carter v Sebright (1859) 26 Beav 374; 53 ER 942; Re Wood’s Trusts (1870) LR 11 Eq 155. However, they are a charge upon income and capital: Stott v Milne (1884) 25 Ch D 710. 104. In Didds v Tuke (1884) 25 Ch D 300, an executor was held entitled to set off against legacies costs in an unsuccessful suit by legatees for a revocation of probate, and this notwithstanding assignments and mortgages of the legacies. See also Re Mayhew (1877) 5 Ch D 596; Re Pearce (1887) 56 LT 228; Re Turner [1907] 2 Ch 126; Re Pain [1919] 1 Ch 38. 105. Re Knott (1887) 56 LJ Ch 318. Where the procedure adopted by the trustee has resulted in additional expenses to the trust, the trustee will lose the right to indemnity: Read v Chown (1929) 46 WN (NSW) 154; Re Price (1935) 35 SR (NSW) 444. 106. Re Hallett’s Estate (1880) 13 Ch D 696; [1874–80] All ER Rep 793. See also Lupton v White (1808) 15 Ves 432; 33 ER 817; Pennell v Deffell (1853) 4 De GM & G 372; 43 ER 551. 107. Re Weston [1900] 2 Ch 164; Dodson v Sandhurst and Northern District Trustees Executors and Agency Co Ltd [1955] VLR 100. This passage in the previous edition of this work was applied in Hawkins v Barkley-Brown (No 2) [2010] NSWSC 395 at [18]. 108. Hallett v Hallett (1879) 13 Ch D 232. 109. [1891] 3 Ch 212 at 219 per Kekewich J. 110. See also Cherry v Boultbee (1839) 4 My & Cr 442 at 447; 41 ER 171 at 173; Courtenay v Williams (1844) 3 Hare 539 at 553; 67 ER 494 at 500; Re Savage [1918] 2 Ch 146; [1918–19] All ER Rep 700; Re Jewell’s Settlement [1919] 2 Ch 161; [1918–19] All ER Rep 1161; Meagher, Gummow and Lehane’s Equity, [39-115]. 111. Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550 at [47]. 112. Re Rhodesia Goldfields Ltd [1910] 1 Ch 239. See Stewart v Latec Investments Ltd [1968] 1 NSWR 432. 113. Burridge v Row (1842) 1 Y & C Ch Cas 183; 62 ER 846. 114. Re Watson [1896] 1 Ch 925; cf Limitation Act 1969 (NSW) s 63. 115. Re Akerman [1891] 3 Ch 212; and see Re Taylor [1894] 1 Ch 671. 116. Re Savage [1918] 2 Ch 146; [1918–19] All ER Rep 700.

117. Price v Loaden (1856) 21 Beav 508; 52 ER 955. 118. [1908] 2 Ch 682. 119. Re Abrahams [1908] 2 Ch 69 at 72. 120. Re Dacre [1916] 1 Ch 344; and see [21-21]–[21-25]. 121. Stevens v Hince (1914) 110 LT 935; General Credits Limited v Tawilla Pty Ltd [1984] 1 Qd R 388 at 389. 122. Daly v Union Trustee Co of Aust Ltd (1898) 24 VLR 460 at 468; Re Staff Benefits Pty Ltd [1979] 1 NSWLR 207; Zen Ridgeway Pty Ltd v Adams [2009] 2 Qd R 298 at [11]. 123. Re Johnson (1880) 15 Ch D 548; Re Frith [1902] 1 Ch 342 at 346; Re British Power Traction & Lighting Co Ltd [1910] 2 Ch 470; Corozo Pty Ltd v Total Australia Ltd [1987] 2 Qd R 11. For the alternative approach in the United States of America, as well as for an exposition of principle in this area, see J Merralls, ‘Unsecured Borrowings by Trustees of Commercial Trusts’ (1993) 10 Aust Bar Rev 248 at 256–7; see also Belar Pty Ltd (in liq) v Mahaffey [2000] 1 Qd R 477 at [23]. 124. Corozo Pty Ltd v Total Australia Ltd [1987] 2 Qd R 11 at 20. 125. Re Evans (1887) 34 Ch D 597. 126. See, for example, Re Raybould [1900] 1 Ch 199. Cf Re Berry’s Trusts (1893) 7 QLJ 63. 127. Re Frith [1902] 1 Ch 342 at 356. Cf Re Oxley [1914] 1 Ch 604. 128. Dowse v Gorton [1891] AC 190; Re Millard (1895) 72 LT 823; Re Oxley [1914] 1 Ch 604. On the nature and degree of assent required, see Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1946] ALR 50. 129. The bankruptcy and insolvency legislation do not effect automatic removal of trustees upon sequestration or winding-up, but this may be a ground for removal by the equity court: see [15-49]. 130. (1979) 144 CLR 360; 27 ALR 129. See also Coates v McInerney (1992) 7 WAR 537; 10 ACLC 616; Re Matheson (1994) 49 FCR 454; 121 ALR 605; Ramsay v McElroy [2004] 1 Qd R 667 at [9]; Grossman v E Katz Manufacturing Jewellers (ACT) Pty Ltd (2005) 213 ALR 373. 131. [1981] 1 NSWLR 394. 132. [1983] 1 VR 561. See also Ramsay v National Australia Bank Ltd [1989] VR 59; Young v Murphy (1994) 12 ACLC 558 at 574; Collie v Merlaw Nominees Pty Ltd (in liq) (2001) 37 ACSR 361. 133. P Finn (ed), Essays in Equity, 1985, pp 249–50. 134. (1983) 33 SASR 99. This decision was followed in Re Matheson (1994) 49 FCR 454; 121 ALR 605 and All Benefit Pty Ltd (in liq) v Registrar General (1993) 11 ACLC 1,068. McLelland J in Grime Carter & Co Pty Ltd v Whyte’s Furniture (Dubbo) Pty Ltd [1983] 1 NSWLR 158 decided to follow Re Enhill Pty Ltd, but in Re ADM Franchise Pty Ltd (1983) 7 ACLR 987 decided he would follow Re Suco Gold Pty Ltd instead. 135. Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 685–9; Re Greater West Insurance Brokers Pty Ltd [2001] NSWSC 825; (2001) 39 ACSR 301. 136. Re Sutherland and French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; 204 ALR 353 at [212]; Re MF Global Limited (in liq) (No 2) [2012] NSWSC 1426 at [55]. 137. Grime Carter & Co Pty Ltd v Whytes Furniture (Dubbo) Pty Ltd (1983) 7 ACLR 540; Bastion v Gideon Investments (2000) 35 ACSR 466; Re North Food Catering Pty Ltd [2014] NSWSC 77. 138. (1983) 33 SASR 99. 139. By D Williams QC in (1983) 57 ALJ 273 at 276–7. 140. See B McPherson, ‘The Insolvent Trading Trust’ in P Finn (ed), Essays in Equity, 1985. 141. See Keefe v Law Society of New South Wales (1999) 44 NSWLR 451; Re Sutherland and French

Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; 204 ALR 353. Where the trust property was subject to a security created by the trustee and within its powers, then the mortgagee or chargee enjoys a claim which has priority both to the interest of the beneficiaries in the trust fund and to the right of the trustee to indemnity for its costs and expenses. The description of that right of the trustee as a ‘first charge’ has to be understood with this qualification. 142. Re Oriental Inland Steam Co (1874) 30 LT 317, affirmed (1874) LR 9 Ch App 557; Banco de Portugal v Waddell (1880) 5 App Cas 161; Re Johnson (1880) 15 Ch D 548; Re Alfred Shaw & Co Ltd (1897) 8 QLJ 93; Re Standard Insurance Co [1968] Qd R 118. 143. (1979) 144 CLR 360; 27 ALR 129. 144. (1983) 33 SASR 99. 145. Lingard v Bromley (1812) 1 V & B 114; 35 ER 45; Chillingworth v Chambers [1896] 1 Ch 685 at 698, 707. 146. (1864) 33 Beav 409; 55 ER 426. 147. Birks v Micklethwait, on appeal, (1864) 34 LJ Ch 362. 148. (1859) 27 Beav 345; 54 ER 135. 149. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366 at [32]–[34]; and see generally Meagher, Gummow and Lehane’s Equity, Ch 10. 150. Robinson v Harkin [1896] 2 Ch 415. 151. [1893] 2 Ch 514; [1891–4] All ER Rep 740. 152. (1886) 31 Ch D 390 at 395. The (mostly nineteenth-century) authorities are reviewed in Selkirk v McIntyre [2013] 3 NZLR 265 at [22]–[25]. 153. [1896] 1 Ch 685. Cf Palmer v Permanent Trustee Co (1915) 16 SR (NSW) 162. 154. Re Towndrow [1911] 1 Ch 602; Harris v Harris (1919) 20 SR (NSW) 61; Macphillamy v Fox (1932) 32 SR (NSW) 427. 155. See Underhill and Hayton, art 97.14, p 1263. 156. Re Sewell [1909] 1 Ch 806. 157. (1886) 31 Ch D 390. 158. (1886) 31 Ch D 390 at 398. See also Selkirk v McIntyre [2013] 3 NZLR 265. 159. (1888) 58 LT 851; see also Robinson v Harkin [1896] 2 Ch 415 at 425. 160. For contribution between lay and professional trustees, see Re Mulligan [1998] 1 NZLR 481. 161. (1856) 25 LJ Ch 697. 162. See Thompson v Finch (1856) 22 Beav 316; 8 De GM & G 560; 52 ER 1130; Re Partington (1887) 57 LT 654; Re Turner [1897] 1 Ch 536. The indemnity extends to cover the costs of the innocent trustee in an action by the beneficiaries against the trustees: Re Turner [1897] 1 Ch 536; Re Linsley [1904] 2 Ch 785. In the latter case there was no loss to the trust estate as matters turned out, but the solicitortrustee, although he had acted quite honestly, was ordered to pay the costs of his co-trustee and to indemnify him against any costs he should have to pay to the beneficiaries who had brought the action against the trustees. 163. [1898] 2 Ch 250. 164. Blyth v Fladgate [1891] 1 Ch 337 at 365. 165. [1903] 1 Ch 947. 166. National Trustees Executors and Agency Co of Australasia Ltd v Peile [1964] VR 325.

167. (1791) 1 Ves Jun 297; 30 ER 352; see also Baynard v Woolley (1855) 20 Beav 583 at 585–6; 52 ER 729 at 729–30. 168. (1842) 10 M & W 284; 154 ER 477. 169. This passage in an earlier edition was approved in McNally v Harri [2008] NSWSC 659. 170. See Baynard v Woolley (1855) 20 Beav 583; 52 ER 729; Goodwin v Duggan (1996) 41 NSWLR 158. The discretion to order contribution in the United Kingdom under the Civil Liability (Contribution) Act 1978 appears to be broader, extending to cases where a trustee who knowingly received trust property had paid it away: see City Index Ltd v Gawler [2008] Ch 313; [2008] 3 All ER 126. 171. ACT s 86(1); NSW s 86(1); NT s 50; Qld s 77; SA s 57; Tas s 53; Vic s 68; WA s 76. 172. Fletcher v Collis [1905] 2 Ch 24. See also Re Pauling’s Settlement Trusts (No 1) [1964] Ch 303 at 357–8; [1963] 3 All ER 1 at 23. 173. (1887) 37 Ch D 329. 174. [1905] 2 Ch 24. 175. Re Pauling’s Settlement Trusts [1961] 3 All ER 713 at 730; [1962] 1 WLR 86 at 108. 176. Fletcher v Collis [1905] 2 Ch 24. 177. Trafford v Boehm (1746) 3 Atk 440 at 442; 26 ER 1054 at 1055; Fuller v Knight (1843) 6 Beav 205; 49 ER 804; McGachen v Dew (1851) 15 Beav 84; 51 ER 468; Raby v Ridehalgh (1855) 7 De GM & G 104; 44 ER 41; Hanchett v Briscoe (1856) 22 Beav 496; 52 ER 1199. 178. Montford v Cadogan (1816) 19 Ves Jr 635; 34 ER 651; Cocker v Quayle (1830) 1 Russ & M 535 at 538; 39 ER 206 at 207; Booth v Booth (1838) 1 Beav 125; 48 ER 886; Williams v Allen (No 2) (1863) 32 Beav 650; 55 ER 255; Evans v Benyon (1887) 37 Ch D 329 at 344. 179. Formerly Trustee Act 1893 s 45, now Trustee Act 1925 s 62. 180. Bolton v Curre [1895] 1 Ch 544 at 549. 181. Re Somerset [1894] 1 Ch 231. 182. Re Somerset [1894] 1 Ch 231 at 265. 183. Chillingworth v Chambers [1896] 1 Ch 685. 184. See Trustee Act 1925 (UK) s 52. 185. Doering v Doering (1889) 42 Ch D 203; Bolton v Curre [1895] 1 Ch 544. 186. Doering v Doering (1889) 42 Ch D 203; Chillingworth v Chambers [1896] 1 Ch 685. See also Morris v Livie (1842) 1 Y & C Ch Cas 380; 62 ER 934; Cumming v Austin (1903) 28 VLR 622; Cock v Aitken (1912) 15 CLR 373 at 384; 18 ALR 576 at 579. 187. See Moriarty v Various Customers of BA Peters Plc [2010] 1 BCLC 142; [2011] WTLR 1661 at [17]. 188. Chillingworth v Chambers [1896] 1 Ch 685. See [21-18]. 189. [1909] 1 Ch 806. 190. [1897] 2 Ch 525. 191. See [20-74]–[20-75]. 192. Chadwick v Heatley (1845) 2 Coll 137; 63 ER 671. 193. Tiger v Barclays Bank Ltd [1951] 2 KB 556; [1951] 2 All ER 262, affirmed [1952] 1 All ER 85. See also Chadwick v Heatley (1845) 2 Coll 137; 63 ER 671; King v Mullins (1852) 1 Drew 308; 61 ER 469; Warter v Anderson (1853) 11 Hare 301; 68 ER 1289; Re Wright’s Trusts (1857) 3 K & J 419; 69 ER 1173. 194. Re Cater’s Trusts (No 2) (1858) 25 Beav 366; 153 ER 676. 195. King v Mullins (1852) 1 Drew 308; 61 ER 469.

196. Re Wright’s Trusts (1857) 3 K & J 419; 69 ER 1173. 197. See, for example, Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431. 198. ACT s 95; NSW s 95; NT s 44; Qld s 102; SA s 47; Tas s 48; Vic s 69; WA s 99. 199. (1991) 173 CLR 264 at 272; 104 ALR 117 at 121. 200. See [20-74]–[20-75]. 201. Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653. 202. See [17-06]–[17-10]. 203. ACT s 63; NSW s 63; Qld s 96; SA s 91; Vic RSC O 54; WA s 92. It is open to the responsible entity of a managed investment scheme holding the scheme property on trust for the scheme members pursuant to s 601FC(2) of the Corporations Act 2001 (Cth) to apply: Re Homemaker Retail Management Ltd (2001) 187 ALR 520 at [5]; and such applications are common where there is a reconstruction of the scheme by amendment: see Re Elders Forestry Management Ltd (2012) 90 ACSR 573 at [7]. On whether the director of a trustee company can apply, see Edwards v A-G (NSW) (2004) 208 ALR 605 at [104]–[107]. 204. Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653. 205. (2008) 237 CLR 66; 249 ALR 250. The principles stated apply in jurisdictions other than New South Wales as well: Re Centro Retail Australia Ltd (2012) 35 VR 512. See also Beck v Henley [2014] NSWCA 201. The Federal Court of Australia can have jurisdiction: Hodges v Waters (No 7) (2015) 232 FCR 97. 206. G Dal Pont, ‘1984-2014 The Life of the (Non-Constructive) Trust in the High Court’ (2015) 36 Adel L Rev 179 at 190. 207. (2008) 237 CLR 66; 249 ALR 250 at [35]–[36] (Gummow ACJ, Kirby, Hayne and Heydon JJ). The point was repeated in Commissioner of Taxation v Bargwanna (2012) 244 CLR 655; 286 ALR 206 at [14]. 208. (2008) 237 CLR 66; 249 ALR 250 at [45]. 209. (2008) 237 CLR 66; 249 ALR 250 at [56], [112]–[116]. 210. (2008) 237 CLR 66; 249 ALR 250 at [74]. 211. (2008) 237 CLR 66; 249 ALR 250 at [49]. For a review of the English position, see E Campbell, ‘Protecting Trustees Who Engage in Litigation’ (2013) 19 Trusts and Trustees 442 and Lewin on Trusts, pp 1210–29. 212. Re Petersen [1920] St R Qd 42; Re Kirkegaard [1950] St R Qd 144; Re MF Global Australia Ltd (in liq) (2012) 267 FLR 27 at [9]. 213. Re Mitchell (1913) 30 WN (NSW) 137; Alcock v Public Trustee (1936) 53 WN (NSW) 192; Harrison v Mills [1976] 1 NSWLR 42; Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 at 201; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405; Re International Art Holdings Pty Ltd (admin apptd) (2011) 85 ACSR 1 at [38]; Re Stephen Parbery Nicholas Martin and Mark Robinson as liquidators of Trio Capital Limited (in liq) (2012) 88 ACSR 700 at [10]. 214. Re Beddoe [1893] 1 Ch 547; Re England’s Settlement [1918] 1 Ch 24; Alcock v Public Trustee (1936) 53 WN (NSW) 192. Secus where the amount involved is very small: Re Grindey [1898] 2 Ch 593; Alsop Wilkinson v Neary [1995] 1 All ER 431; [1996] 1 WLR 1220. See Australian Pipeline Ltd (2006) 60 ACSR 625 at [19]–[21], dealing with the dilemma of a trustee confronted by beneficiaries urging the trustee to sue. 215. Re Falls’ Will Trusts (1874) 12 SCR (NSW) Eq 89. 216. Re Cave-Brown-Cave [1906] VLR 283.

217. Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405. Cf Re Londonderry’s Settlement [1965] Ch 918 at 930; [1964] 3 All ER 855 at 858. 218. Re an Application by Olrey Pty Ltd [2016] VSCA 8. 219. Harrison Jones & Devlin v Union Bank of Australia Ltd (1909) 10 SR (NSW) 266. The section does not permit an order directing that the trust property be disposed of so that the trust is terminated: Ex parte Nillant (2003) 28 WAR 81 at [40]–[55]. 220. Re Osborne (1863) 2 SCR (NSW) Eq 89. Cf Re Gilchrist (1867) 6 SCR (NSW) Eq 74. 221. (1913) 30 WN (NSW) 137. 222. Re Grose [1949] SASR 55; Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 at 201. 223. [1979] VR 369. 224. [1981] 1 NSWLR 641. 225. ACT s 93; NSW s 93; Qld s 100; SA s 91; Tas s 44; WA s 97. 226. Gleeson v Fitzpatrick (1920) 29 CLR 29. 227. Trimble v Kirkland (1913) 13 SR (NSW) 417. 228. Dixon v Williams (1875) 13 SCR (NSW) Eq 7. 229. Read v Chown (1929) 46 WN (NSW) 154; Re Price (1935) 35 SR (NSW) 444.

[page 536]

CHAPTER 22 Liability of a Trustee Liability in General Remedies for Breach of Trust Examples Interest The Liability of Co-trustees

[22-01] [22-03] [22-05] [22-07] [22-09]

Effect of Trustee’s Death or Bankruptcy Death Bankruptcy

[22-10] [22-10] [22-11]

Relief of Trustees from Liability Relief Generally Honestly and Reasonably Ought Fairly to be Excused Mortgage Investments Mistake of Law Remunerated Trustee Professional Trustee Degree of Education of Trustee Reliance on Co-trustee Probable Liability Onus of Proof

[22-12] [22-12] [22-13] [22-14] [22-15] [22-16] [22-17] [22-18] [22-19] [22-20] [22-21] [22-22]

Lapse of Time Effect of the Legislation Fraud Property ‘Still Retained By’

[22-23] [22-25] [22-26] [22-27]



Conversion When Time Begins to Run Concealed Fraud Disability, etc Contribution Consent, Release and Acquiescence

[22-28] [22-29] [22-30] [22-31] [22-32] [22-33]

[page 537]

Liability in General [22-01] This chapter concerns the liability of trustees for breaches of trust.1 Perhaps the most important duty of a trustee is to obey the terms of the trust.2 From this it follows naturally that any departure from the terms of the trust and any negligence, whether of act or omission in the performance of the duties of the trust, will be a breach of trust. A trustee will also be liable for breach of trust if his or her co-trustee or co-trustees act in contravention of the terms of the trust instrument or if they neglect their duties and loss falls upon the trust estate if the loss may be said to have occurred through the trustee’s own wilful default and neglect. For example, it is a breach of trust to keep trust moneys uninvested for an unnecessarily long time, or to leave them longer than is necessary in the hands or under the control of a co-trustee or a third party, to be dilatory in calling in moneys owing to the trust estate, to invest trust funds in securities not authorised by law or by the terms of the trust instrument as proper investments or to lend trust moneys to a co-trustee. In all such cases where loss occurs, and in cases in which the act or omission is that of an agent or co-trustee, and the trustee has been guilty of wilful default and neglect, the trustee is bound to make good to the trust estate any loss that may be suffered by the estate in consequence of the breach of trust:3 A trustee commits a breach of trust by violating any duty owed as trustee to the beneficiaries. Ordinarily a trustee commits no breach of trust unless the trustee, either intentionally or negligently, does something the trustee ought not to do or fails to do something the trustee ought to do. Ordinarily, a trustee does not commit a breach of trust unless the trustee is in some way personally at fault. … A trustee who does the best it can, does, however, commit a breach of trust

if the trustee’s best is not good enough. … [A] trustee is under a duty to exercise the care and skill of a person of ordinary prudence and is liable for a loss resulting from the failure to comply with this standard, even if the trustee does his or her best.

It is sufficient to show that the loss would not have occurred but for the breach of trust.4 Some examples will illustrate the principles. In Taylor v Tabrum,5 two trustees were directed to sell an estate as soon as might be convenient after their testator’s death. They were offered £6600 for it, but refused the offer. It was subsequently sold for £3600. The trustees were held liable for the difference. Similarly, in the Canadian case of Fales v Canada Permanent Trust Co,6 where trustees held property on trust for sale coupled with a power to retain the property until an advantageous sale could be effected, and retained the property in specie for a long time, they were held liable to account for the price which they would have obtained if they had effected an advantageous sale with reasonable promptitude. In Hicks v Trustees Executors and Agency Co Ltd,7 a testator devised certain vacant and unproductive land to a trustee and directed that, should the residue of his personal estate be insufficient to pay his debts etc, the land should be charged with payment of the balance owing and should be sold in a certain order. In the events which happened, it became necessary to pay debts out of the land but, although the land might have been sold for a period after the testator’s death at a price sufficient to pay the debts and leave a surplus, [page 538] the trustee made no attempt to sell for 21 months. It was held that the trustee, in delaying any attempt to sell until the opportunity was lost, was guilty of a breach of trust. In Bartlett v Barclays Bank Trust Co Ltd,8 the trustees held nearly all the shares in a company, although at all relevant times they had no representative on the board. The company entered into some disastrous property speculations. The company had at all times sent its (totally inadequate) annual reports to the trustees, who never sought any further information. The trustees were held liable to account to the trust for their failure adequately to monitor the company’s activities. [22-02] The advice of a solicitor as to the interpretation of the trust

instrument does not of itself excuse a trustee if the advice should turn out to be erroneous.9 The reason for this is that trustees are considered to be bound to know of their right to have such a question determined by the court. However, it has been held that where trustees act upon the erroneous advice of counsel as to their power and duty of investment apart from the trust instrument they are not guilty of wilful neglect and default so as to make them liable for loss arising from a failure to invest.10 Where a company makes a business of acting as trustee, it would appear that its responsibilities may be greater than in the case of ordinary trustees.11 Trust instruments sometimes contain a clause providing that in certain circumstances, the trustees shall not be liable for breach of trust. For example, a clause may declare that the trustees shall not be liable ‘for any omission of any kind, or for not doing exact diligence’. The ordinary immunity clause, however, does not excuse trustees from liability for the consequences of their own wilfully wrongful acts or omissions in breach of trust.12

Remedies for Breach of Trust [22-03] Beneficiaries can hold their trustees liable to restore the trust funds and to make good any loss caused by a breach of trust. The obligation extends not only to express trustees but also to constructive trustees, to trustees de son tort, and to executors and administrators. Even a bare trustee may become liable for a breach of trust. As Sir John Leach MR said:13 If he, who has the mere legal estate, so deals with it as to sanction any act done by the equitable trustee to the prejudice of the cestuis que trust, he thereby becomes a party to the breach of trust, and is answerable accordingly; where the equitable trust is for the purpose of sale, he who has the legal estate is, for the benefit of the cestuis que trust, bound, when required, to convey it to the equitable trustee to enable him to execute his trust. If, in parting with the legal estate, he goes beyond the mere purpose of conveying it to the equitable trustee, and so deals with it as to facilitate a breach of trust by the trustee, and a breach of trust be in consequence committed, he is deemed a party to such breach of trust, and is responsible for it.

[page 539] [22-04] The traditional remedy against a trustee in breach of duty was

account. An account could be conducted in two ways. The simpler was known as the ‘general account’, ‘common account’ or ‘account in common form’, and was available as of right. Alternatively, if the beneficiary could establish at least one instance of ‘wilful default’, then an account could be conducted on that basis. The result of the account might be to reveal a deficit in what ought to have been in the trust estate. This then could found a judgment in the nature of an equitable debt to redress the loss suffered by the trust estate. However, in the nineteenth century, it became possible to sue to recover a loss arising from a particular breach of trust, without resorting to the accounting procedures available in Chancery at all. This has become known, relatively recently, as equitable compensation. It is by far the most common pecuniary remedy sought where there is a breach of trust.14 Its roots lie in the old principles and procedures of trust accounting.15 For example, it was because the trustee’s obligation to account was ongoing that Street J famously held in Re Dawson (dec’d) that the trustee was charged with the value of the asset at the date of judgment, and that ‘[c]onsiderations of causation, foreseeability and remoteness [did] not readily enter into’ the calculation of the amount.16 The principles of assessment of equitable compensation do not necessarily coincide with those applicable to common law damages.17 It has been suggested in England and New Zealand that, in a case where equitable compensation is for a breach of trust constituted by maladministration by reason of a failure to employ the care and diligence which equity requires, then the common law rules of causation, remoteness and measure of damage ought to be applied by analogy.18 That has been doubted, with respect correctly, by the High Court of Australia in Youyang Pty Ltd v Minter Ellison Morris Fletcher:19 … there must be a real question whether the unique foundation and goals of equity, which has the institution of the trust at its heart, warrant any assimilation even in this limited way with the measure of compensatory damages in tort and contract. It may be thought strange to decide that the precept that trustees are to be kept by courts of equity up to their duty has an application limited to the observance by trustees of some only of their duties to beneficiaries in dealing with trust funds.

Examples [22-05] The remedy of equitable compensation is fully treated in Chapter 23 of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies,20 to which the reader is referred. The following practical examples illustrate the principles.

A trustee who is held liable for a breach of trust has usually to make good to the trust estate the loss that has been caused by his or her wrongful act. The basic rule is that a trustee in breach of trust must restore or pay to the trust estate either the assets which have been lost to [page 540] the estate by reason of the breach or compensation for such loss.21 The relevant causation test is whether the loss would have happened if there had been no breach.22 In calculating the loss to the trust estate the law does not allow the trustee to set a profit made on one investment or transaction against a loss made on another. If a trustee, in breach of trust, invests half of the trust estate in security A and the other half in security B, with the result that there is a profit on the first investment but a loss on the second, the beneficiaries are entitled to the profit arising from investment A and can nevertheless compel the trustee to make good the loss on investment B. Each transaction stands by itself.23 However, there is authority which indicates that in certain circumstances profits and losses from different transactions may be set off against each other. In Bartlett v Barclays Bank Trust Co Ltd,24 Brightman J, without explaining his reasons, permitted a trustee to set off a profit made on one unauthorised investment against a loss made on another. This decision has been interpreted as holding that profits and losses may be set off against each other when they arise from the same wrongful course of conduct.25 In Cameron v Murdoch (No 2),26 the two surviving partners of a farming partnership continued trading for many years after the death of a partner, utilising the deceased partner’s share but not accounting to his estate. It was held that although generally losses and gains from transactions which involve distinct breaches of trust cannot be set off against one another, the losses incurred during this period could be taken into account in determining the amount due to the deceased partner’s estate since the breach of trust was constituted by a course of conduct in pursuance of a common policy and thus could be treated as one transaction. In Hagan v Waterhouse,27 Kearney J stated that it would be ‘quite unreal’ to amalgamate the profits and losses made over a long period by the business in question. He held that in the case of a continuing business, the just and equitable conflating of profits and losses on individual transactions was achieved

by the conventional annual accounting. Accordingly, he allowed the plaintiffs to recover an amount equal to the total of each of the annual profits made by the business, unaffected by losses suffered in other years. Of course, if there is no loss there is no liability.28 Thus, where solicitors breached their obligation of undivided loyalty to a company in relation to a corporate restructuring, but it was found that their conduct played no part in causing the resultant loss to the company, whose directors would have perpetrated a fraud in any event, there was no liability.29 Similarly, where a solicitor acting for two parties breached a fiduciary obligation to advise one to obtain independent legal advice, but it was found that had there been full disclosure, the transaction [page 541] would still have proceeded, there was no liability.30 However, where the solicitors disbursed, in breach of trust, an investor’s funds in a trust account without obtaining the requisite security, it was no answer to their liability to say that the investor subsequently agreed to release the funds, nor was it an answer that the funds were lost by subsequent dishonest and discreditable acts of third parties — for the disbursement of the funds and the failure to provide security were both breaches of trust.31 A trustee who improperly sells a trust asset which should have been retained, is liable to account for that asset at its value assessed at the date of judgment. The losses are to be assessed as at the time of trial, using the full benefit of hindsight.32 In Re Massingberd’s Settlement,33 the Court of Appeal in England seems to have decided that the appropriate date was the date of the writ not the date of judgment; however, the point was not argued and the decision in this respect is contrary to principle and should be regarded as having been given per incuriam. In Jaffray v Marshall,34 the trustees participated in the sale of trust property in breach of trust. It was held that in an action for restitution in respect of trust property lost in consequence of a continuing breach of trust, the trustees were liable to pay compensation assessed on the basis of the highest intermediate value of the property between the date of breach and the date of judgment, provided that there was an opportunity to realise the property during the period of the continuing breach. The justification for this approach was that

the breach of trust had deprived the party who ought to have had the assets throughout the relevant period of the opportunity of realising them at any point that party chose. By way of a gloss on this principle, Vinelott J in Re Bell’s Indenture35 held that where an asset was sold in breach of trust at an earlier date but should properly have been sold at a later date, the trustee should account for the value which the asset bore at that later date. [22-06] Where a trustee has made a profit from a breach of trust, the beneficiary may recover the profit. The right to do so derives from the precept that the trustee, as a fiduciary, must not make an unauthorised profit from the trust. The link with an account in Chancery may be seen in what was said by Sir John Romilly MR:36 Generally, it may be stated that if an executor has retained balances in his hands which he ought to have invested, the Court will charge him with simple interest at four per cent on these balances; if, in addition to such retention, he has committed a direct breach of trust, or if the fund had been taken by him from a proper state of investment in which it was producing five per cent, he will be charged with interest after the rate of five per cent per annum; if, in addition to this, he has employed the money so obtained by him in trade or speculation, for his own benefit or advantage, he will be charged either with the profits actually so obtained by him from the use of the money, or with interest at five per cent per annum, and also with yearly rests, that is, with compound interest.

[page 542]

Interest [22-07] Interest is normally allowed against trustees, either at the ‘trustee rate’ or the ‘mercantile rate’.37 Traditionally, those rates were 4% and 5% respectively; the former reflected rates of return on government stock; the latter reflected commercial rates of obtaining finance.38 In Wallersteiner v Moir (No 2),39 the Court of Appeal adopted a flexible rate as the mercantile rate, by reference to the official bank rate or minimum lending rate in operation from time to time, which approach is now widely followed.40 In Hagan v Waterhouse,41 Kearney J applied a trustee rate of 8%, by reference to the prescribed rate of interest on legacies, and the same rate was applied in the Court of Appeal in Alemite Lubrequip Pty Ltd v Adams.42 Simple interest at the trustee rate will be applied where trustees have acted

honestly and in good faith but have made a mistake or error of judgment, and have not profited from the breach, have not used trust moneys for their own purposes, have not been guilty of fraud or serious misconduct, and have not themselves received a greater rate of interest.43 [22-08] In certain circumstances, trustees may be charged with compound interest instead of simple interest.44 It is a matter entirely in the discretion of the court.45 (1) Compound interest is allowed where there is a direction to accumulate or where, from the circumstances, it was the duty of the trustee to reinvest the interest.46 (2) Compound interest is also allowed against a trustee who has employed the trust funds in trade or speculation for the trustee’s own benefit.47 (3) Compound interest may be allowed in other cases where the court considers the circumstances justify such interest.48 [page 543]

The Liability of Co-trustees [22-09] The liability of trustees is joint and several, and the persons entitled to sue in respect of loss to the trust estate caused by a breach of trust may sue any or all of the trustees. There is no primary liability of any particular trustee49 where they are all guilty of a breach of trust or of different breaches of trust resulting in the same loss. However, the fact that the liability of co-trustees is joint and several does not now mean, and probably never has meant, that a cotrustee is always responsible if another co-trustee commits a breach of trust — it simply means that, if both commit breaches of trust, they are jointly and severally liable. Quite apart from statute, which is considered below, it appears always to have been the rule of equity that a trustee is liable only for the trustee’s own acts and defaults, for the trustee’s own breach of duty to a beneficiary.50 Where there are two trustees and one of them commits a breach of trust, the other trustee will be liable if he or she is personally in breach of duty to the beneficiaries, for example, by participating in the breach, or improperly delegating the administration of the trust to a co-trustee, or failing to

exercise reasonable care to prevent a co-trustee committing a breach of trust or subsequently approving or acquiescing in or concealing his or her co-trustee’s breach of trust or failing to take proper action to compel his or her co-trustee to redress the breach of trust.51 It will be seen that, when the duties of trustees to act jointly and to take an active part in trust affairs are remembered, a breach of trust by one trustee will in the majority of cases result in a breach of trust by the co-trustee in one of the manners indicated. These rules have been given statutory form in the trustee legislation of all jurisdictions,52 but now the co-trustee is not liable for mere neglect in any of the ways indicated above which may permit a co-trustee to commit or to conceal a breach of trust. As a result of the legislation, a trustee will only be liable if in such circumstances the loss occurs through the trustee’s own default; the New South Wales and Australian Capital Territory sections speak of ‘wilful neglect or default’, those of Victoria, Western Australia, Tasmania and the Northern Territory of ‘wilful default’ and that of Queensland merely of ‘default’. The South Australian legislation is framed in different terms from that of the other jurisdictions, and provides that a trustee will be liable where a loss of trust property occurs as a result of his or her own wrongful or negligent act or omission, or as a result of circumstances that the trustee could reasonably be expected to have foreseen and to have avoided. The provisions are otherwise to the same effect; that is, the New South Wales provision is as follows: 59. (1) A trustee shall be chargeable only for money and securities actually received by the trustee, notwithstanding the trustee’s signing any receipt for the sake of conformity. (2) A trustee shall be answerable and accountable only for the trustee’s own acts, receipts, neglects, or defaults, and not for those of any other trustee, nor for any banker, broker, or other person with whom any trust moneys or securities may be deposited, nor for the insufficiency or deficiency of any securities, nor for any other loss, unless the same happens through the trustee’s own wilful neglect or default. (3) Nothing in subsections (1) and (2) shall prejudice the provisions of the instrument, if any, creating the trust.

[page 544] Subsection (2) leaves the trustee responsible for the trustee’s own acts, receipts, neglects and defaults without making the criterion of liability in such cases the ‘wilful neglect and default’ of the trustee. The words ‘any other loss’

refer to other losses of the type dealt with in the same clause of the sentence, namely, those resulting from the acts or neglects of others — that is, losses other than those arising from the acts, receipts, neglects or defaults of the trustee.53 However, when the trustee has not committed what may be called the primary breach of trust, the criterion of his or her liability for a secondary breach of trust, for example, by lack of proper supervision, is ‘wilful neglect and default’. The meaning of these words has been discussed in a number of cases.54 ‘[A] person is not guilty of wilful neglect or default unless he is conscious that in doing the act which is complained of, or in omitting to do the act which he ought to have done, he is committing a breach of his duty or is recklessly careless whether it is a breach of his duty or not.’55

Effect of Trustee’s Death or Bankruptcy Death [22-10] If a trustee dies after having committed a breach of trust, but before restitution is made, the trustee’s personal representatives must make good the loss out of the trustee’s estate.56 If the trustee’s personal representatives distribute the estate, they will be personally liable, even though they had no notice of the breach, unless the distribution was made under the sanction of the court,57 or under statutory provisions such as ss 92 and 93 of the Probate and Administration Act 1898 (NSW) and s 30 of the Administration and Probate Act 1958 (Vic). But the estate of a deceased trustee is not liable for a breach of trust committed after the trustee’s death where the trust funds have been left in a proper state of investment at the trustee’s death.58

Bankruptcy [22-11] If a trustee is adjudicated bankrupt, the loss may be proved in his or her estate together with interest if interest would be chargeable against a solvent trustee.59 The person suing has also the privilege, given by the bankruptcy law in certain cases, of proving in the estate of the bankrupt trustee for the full amount

of the loss, although a portion of the loss may be made good by a co-trustee. In Edwards v Hood-Barrs,60 an action [page 545] for breach of trust, three trustees were held liable for £10,004. With the sanction of the court the plaintiff compromised with one of the trustees for £1900. Another of the trustees died insolvent, and the plaintiff was allowed to prove in the bankruptcy for the full sum instead of for the balance after the deduction of £1900. A personal claim against a trustee founded on a fraudulent breach of trust is not extinguished by the discharge of such trustee in bankruptcy.61 Fraud in this context is given a broad interpretation, extending beyond deceit.62

Relief of Trustees from Liability Relief Generally [22-12] Despite the well-known aphorism that the great use of a trustee was to commit judicious breaches of trust,63 the old law as to the liability of trustees was exceedingly strict. It was not until 1896 that the law was relaxed in England by s 3 of the Judicial Trustees Act 1896,64 a provision now embodied in the trustee legislation in all jurisdictions.65 Section 85 of the New South Wales Act (which is to the same effect as the legislation in other states) provides as follows: 85. (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 Act No 41 of 1972). (4) This section applies whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Act.

This enactment gave the court power to relieve trustees in cases where they had acted with all good faith and in a reasonable manner and yet had

committed some breach of trust for which they would be liable if the law were applied strictly. By the definition of ‘trust’ in s 5 of the Trustee Act 1925 (NSW), the term includes ‘the duties incident to the office of legal representative of a deceased person’; consequently, an executor who has committed a devastavit but who has acted ‘honestly and reasonably’ may claim relief under this section.66 The requirements are: (1) that the trustee has acted honestly; and [page 546] (2) that the trustee has acted reasonably; and (3) that the trustee ought fairly to be excused for the breach of trust and for omitting to obtain the direction of the court in the particular matter.67 These requirements are cumulative. It is not enough for trustees to show that they have acted honestly and reasonably; they must also show that under all the circumstances of the case they ought fairly to be excused.68 The provision does not extend to relieving trustees for future breaches of trust.69 No special rules have been laid down to be acted upon in applying the section to the cases that arise. The court is guided by the circumstances and facts existing at the time when the trustees had to act and which were known or ought to have been known by them at that time,70 but it has been said that the section is meant to be acted upon freely and fairly in the exercise of judicial discretion.71 As the granting of relief in any particular case is a matter for the discretion of the court, a detailed examination of the cases where relief has been granted or refused is of little use and may even mislead, but the following general principles may be mentioned as being some of the factors which may influence the court in the exercise of its discretion. But the court will not formulate a list of conditions under which relief will be granted.72

Honestly and Reasonably

[22-13] To be entitled to relief a trustee must act both honestly and reasonably; the mere fact of acting honestly is not enough.73 Thus, in Dalrymple v Melville,74 a trustee allowed his co-trustee, who was a solicitor, to put himself in a position where he was able to misappropriate the proceeds of sale of certain trust shares. Throughout he acted honestly but, although he did not suspect that the solicitor-trustee was dishonest, he admitted that he felt some suspicion that his conduct involved risk. He also knew that it was his duty to protect the beneficiaries against possible loss and that he was not performing that duty but taking a risk. It was held that by such conduct, although he had acted honestly, he had not acted reasonably and therefore was not entitled to relief. ‘Reasonably’ means reasonably as trustees.75 The court will consider whether prudent trustees would have disposed of the trust property in the manner complained [page 547] of if it had been their own.76 But a trustee of a small estate, who took the advice of solicitors and at all times was willing to abide by that advice, was given partial relief; she was one of two next-of-kin, and had not seen her brother for 30 years, and took out a missing beneficiary policy, which answered the brother’s claim for principal but not interest. His claim against her for interest was limited to what could be realised from the sale of property still in her hands derived from the estate.77 In regard to investments, trustees cannot be considered to have acted reasonably if they have never really considered the question whether the security was one which in its nature was prudent and right for them as trustees to take.78 A trustee who has been grossly negligent79 and, of course, one who has misappropriated trust funds80 cannot be excused. But mere negligence is not necessarily disentitling.81 The court will be ‘very slow’ to relieve trustees who place themselves in a position of conflict between duty and interest.82

Ought Fairly to be Excused [22-14] A trustee, in order to obtain relief, must not only have acted honestly and reasonably, but must also have acted in such a way that the trustee

ought fairly to be excused. Thus, where trustees, on the erroneous advice of their solicitors, wrongly distributed the trust fund, it was held that although, in the circumstances, they had acted honestly and reasonably, they had shown no title to be excused because they had made no attempt to replace the fund in whole or in part nor explained the reason for their abstention and, further, they were not gratuitous trustees.83 Where a benefit was wrongly conferred upon the attorney’s daughter, relief was refused even though he was found to have acted both honestly and reasonably, as well as gratuitously and in accordance with legal advice.84 However, commonly, reliance on legal advice is a passport to relief.85

Mortgage Investments [22-15] In the case of mortgage investments, the trustee legislation sets a standard of reasonable conduct, but non-compliance with it does not, of itself, disentitle a trustee to relief.86

Mistake of Law [22-16] A mistake of law does not, of itself, disentitle a trustee to relief.87 Trustees who had acted in accordance with a generally held view of the law, which was supported by judicial authority until that authority was overruled by the House of Lords, were held to have acted [page 548] honestly and reasonably.88 The power to relieve under the section is not confined to cases where the breach of trust arises from some executive or administrative blunder, and in proper cases relief may be granted where payment has been made to the wrong person.89 But a trustee does not act reasonably when he or she acts in plain breach of the trust instrument even though the trustee’s solicitor advises such a course.90 However, if a trustee acts on the advice of counsel on a matter not arising directly out of the interpretation of the trust instrument, the trustee will be entitled to relief.91

Remunerated Trustee [22-17] It is not clear to what extent the fact that a trustee is receiving remuneration disentitles him or her to relief, but it is clear that a trustee must, in these circumstances, make out a much stronger case.92 In Pateman v Heyen,93 it was suggested that the absence of remuneration is a factor to be taken into account in considering whether the trustee ought fairly to be excused from the breach.

Professional Trustee [22-18] It is equally clear that a trustee who is a professional trustee has a particularly heavy task to make out a title to relief.94

Degree of Education of Trustee [22-19] Although there is some doubt whether the degree of education or ability of trustees could ever govern the question whether they have or have not been guilty of a breach of trust, it is an important factor in determining whether or not they should be granted relief under the statutory provisions.95

Reliance on Co-trustee [22-20] Where one of the trustees is a solicitor and the other is not, the nonprofessional trustee who concurs in an improper investment in reliance upon the superior knowledge of the co-trustee is not excused, although he or she may be entitled to be indemnified by the co-trustee against the resulting loss.96 A trustee who relies entirely on a co-trustee and accepts his or her statements without inquiry cannot be regarded as acting reasonably within the meaning of the section.97 [page 549]

Probable Liability

[22-21] It is not necessary for the court to decide that the trustee is under any personal liability for breach of trust. It is enough that in the opinion of the court, the trustee may be under some personal liability.98 The court’s power to relieve trustees who have acted honestly and reasonably does not extend, however, to exercising that authority by anticipation to excuse a trustee from liability for a breach of trust contemplated, although the court has the jurisdiction to go beyond the mere administration of a trust according to the terms of the instrument creating it.99

Onus of Proof [22-22] Where a trustee claims relief under the section, the onus of proof is on the trustee to show that he or she acted honestly and reasonably and ought fairly to be excused.100 It is not necessary for a trustee to plead the section, although it is desirable that this be done, and the trustee may rely on its provisions when the action for breach of trust comes to trial.101 The relief granted may be in respect of part only of the total loss caused by the breach of trust.102

Lapse of Time [22-23] Apart from statutory provisions, the general rule was that as between beneficiaries and express trustees lapse of time was not a bar.103 The position in Chancery, confirmed by s 25(2) of the Judicature Act, was that express trusts were not within the Statutes of Limitation. An express trust in this connection meant a trust which had been expressed by writing or by word of mouth and did not include a trust arising from an act of the parties or by operation of law.104 Now each jurisdiction has provisions which approximate to the provisions of s 8 of the Imperial Trustee Act 1888, although there are considerable variations among the states. Sections 31 and 32 of the Limitation of Actions Act 1936 (SA) are in the following form: 31. Subject to the next following section: (a) where any land or rent is vested in a trustee on any express trust, the right of the beneficiary or any person claiming through him, to bring an action against the trustee or

any person claiming through him, to recover the land or rent, shall be deemed to have first accrued at, and not before, the time at which the land or rent has been conveyed to a purchaser for a valuable consideration, and shall then be deemed to have accrued only as against that purchaser and any person claiming through him; (b) no claim of a beneficiary against his trustee, in respect of any property held on an express trust, or in respect of any breach of an express trust, shall, subject to the next following subsection, be barred by any statute of limitations; (c) no action or other proceedings shall be brought to recover any sum of money or legacy charged upon or payable out of any land or rent and secured by an express trust, or to recover any arrears of rent or of interest in respect of any sum of money or legacy so

[page 550] charged or payable and so secured, or any damages in respect of such arrears, except within the time within which the money, legacy or arrears would be recoverable if there were not any such trust. 32. (1) In any action or other proceedings against a trustee or any person claiming through him, except where the claim is founded on any fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property, or the proceeds thereof still retained by the trustee, or previously received by the trustee and converted to his use, the following provisions shall apply: (a) All rights and privileges conferred by this Act shall be enjoyed in the like manner and to the like extent as they would have been enjoyed in the action or other proceeding if the trustee or person claiming through him had not been a trustee or person claiming through him. (b) If the action or other proceeding is brought to recover money or other property, and is one to which no other provision of this Act applies, the trustee or person claiming through him shall be entitled to the benefit of and be at liberty to plead lapse of time as a bar to the action or other proceeding, in the like manner and to the like extent as if the action or other proceeding had been an action for money had and received; and that so this Act shall run against a married woman entitled in possession for her separate use, whether with or without a restraint upon anticipation, but shall not begin to run against any beneficiary unless and until the interest of such beneficiary is an interest in possession. (2) No beneficiary, as against whom there would be a good defence by virtue of this section, shall derive any greater or other benefit from a judgment or order obtained by another beneficiary than he could have obtained if he had brought the action or other proceedings in which the judgment or order was obtained and this section had been pleaded.

Section 31 re-enacts various provisions of the Imperial Real Property Limitation Acts of 1833 and 1874, s 32 the provisions of s 8 of the Imperial Trustee Act 1888. All jurisdictions have provisions equivalent to s 31 of the South Australian Act except for Western Australia.105

[22-24] Section 21 of the Victorian Limitation of Actions Act 1958 is in somewhat different terms: 21. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action: (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use. (2) Subject as aforesaid, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued: Provided that the right of action shall not be deemed to have accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession. (3) No beneficiary as against whom there would be a good defence under this Act shall derive any greater or other benefit from a judgment or order obtained by any other beneficiary than he could have obtained if he had brought the action and this Act had been pleaded in defence.

Section 27 of the Queensland Limitation of Actions Act 1974 is in the same form as s 21 of the Victorian Act, as is s 24 of Tasmania’s Limitation Act 1974. The new provisions of the New South Wales Limitation Act 1969 (replacing s 69 of the Trustee Act 1925) are ss 47–50, which read as follows: 47. (1) An action on a cause of action: (a) in respect of fraud or a fraudulent breach of trust, against a person who is, while a trustee, a party or privy to the fraud or the breach of trust or against the person’s successor;

[page 551] (b) for a remedy for the conversion to a person’s own use of trust property received by the person while a trustee, against that person or against the person’s successor; (c) to recover trust property, or property into which trust property can be traced, against a trustee or against any other person; or (d) to recover money on account of a wrongful distribution of trust property, against the person to whom the property is distributed or against the person’s successor, is not maintainable by a trustee of the trust or by a beneficiary under the trust or by a person claiming through a beneficiary under the trust if brought after the expiration of the only or later to expire of such of the following limitation periods as are applicable: (e) a limitation period of twelve years running from the date on which the plaintiff or a person through whom the plaintiff claims first discovers or may with reasonable diligence discover the facts giving rise to the cause of action and that the cause of

action has accrued; and (f) the limitation period for the cause of action fixed by or under any provision of this Act other than this section. (2) Except in the case of fraud or a fraudulent breach of trust, and except so far as concerns income converted by a trustee to his or her own use or income retained and still held by the trustee or his or her successor at the time when the action is brought, this section does not apply to an action on a cause of action to recover arrears of income. 48. An action on a cause of action in respect of a breach of trust is not maintainable if brought after the expiration of the only or later to expire of such of the following periods of limitation as are applicable: (a) a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims; and (b) the limitation period for the cause of action fixed by or under any provision of this Act other than this section. 49. For the purposes of this Division, a cause of action of a beneficiary in respect of a future estate or interest accrues on the date on which the estate or interest becomes a present estate or interest or on the date on which the cause of action would, but for this section, accrue, whichever date is the later. 50. Where a beneficiary under a trust brings an action in respect of the trust, another beneficiary under the trust is not entitled to derive from the action any benefit for which, by reason of this Act, an action by that other beneficiary is not maintainable if brought on the date on which the first mentioned action is brought.

Sections 27 and 28 of the Limitation Act 1985 (ACT) are to similar effect. With these sections should be read the definition of ‘trust’ contained in s 8: ‘Trust’ includes express implied and constructive trusts, whether or not the trustee has a beneficial interest in the trust property, and whether or not the trust arises only by reason of a transaction impeached, and includes the duties incident to the office of personal representative but does not include the duties incident to the estate or interests of a mortgagee in mortgaged property.

Sections 32–35 of the Limitation Act (NT) are to the same effect.

Effect of the Legislation [22-25] The Victorian provision closely follows what is now s 21 of the English Limitation Act 1980 which, as Millett LJ demonstrated in Paragon Finance plc v D B Thakerar & Co,106 did not abrograte the distinction long observed between constructive trusts arising where the legal owner of property has assumed the duties of a trustee although not expressly appointed as such,107 and constructive trusts imposed remedially following breach of an equitable

duty. Only the former fall within the provision; any limitation defence available to the latter will [page 552] depend on the limitation period applicable to the primary claim. That analysis was adopted by the Victorian Court of Appeal in Nolan v Nolan,108 a proceeding based on the claim by Sir Sidney Nolan’s daughter that three paintings which had been treated as forming part of the artist’s estate had in fact been given in his lifetime to his first wife. Since the artist merely had possession of, but not title to, the paintings, his estate was not disentitled by the provision from relying upon a limitation defence. More recently, the analysis was upheld by Lords Neuberger and Sumption in Williams v Central Bank of Nigeria.109 The New South Wales provisions take a different course. The Law Reform Commission report leading to the 1969 Act sought to abrogate the distinction between the two categories of constructive trust,110 and the definition of ‘trustee’ in s 11 in the Act included the sidenote ‘cf Taylor v Davies [1920] AC 636 at 653’. Accordingly, in New South Wales, the position is quite different, in that a broader class of cases will fall within the exceptions but be subject to the further limitation period of 12 years, running from the time when the facts giving rise to the cause of action were discovered or might with reasonable diligence have been discovered.111 Although there are some variations in the statutory language, there remain three areas where either the original Chancery position (no limitation period) applies, or (in the case of New South Wales) there is an extended limitation period: (a) cases of fraud or fraudulent breach of trust to which the trustee was a party or privy; (b) cases where the claim is to recover trust property still retained by the trustee; (c) cases where a trustee has received trust property and converted it to the trustee’s own use.

Fraud

[22-26] Fraud in this sense refers not to the meaning given to the term in Nocton v Lord Ashburton of any ‘breach of duty to which equity had attached its sanction’,112 but to cases of dishonesty.113 Moreover, this means that if the trustee is to be made liable, he or she or someone for whom he or she is responsible must have taken part in the fraud. If an agent of a trustee acting within the scope of his or her employment commits a fraud, the trustee will not have the benefit of the section, but the trustee is not affected by the fraud of an agent who was not acting within the scope of his or her employment. In the language of, respectively, Lord Davey and Lord Herschell LC in Thorne v Heard & Marsh:114 [I]f fraud, or a non-discovery of fraud, is to be relied on to take a case out of the Statute of Limitations, it must be the fraud of or in some way imputable to the person who invokes the aid of the Statute of Limitations. It appears to me perfectly clear that in order to charge any person with a fraud which has not been personally committed by him the agent who has committed the fraud must have committed it while acting within the scope of his authority, while doing something and purporting to do something on behalf of the principal. If the person is doing something within the scope of his authority and purporting to do it for his principal, although in doing it he commits a wrong which his principal neither sanctioned nor intended, the principal may be

[page 553] liable. But if the person, although he has been employed as agent, is not, in the transaction which is the wrongful act, acting for or purporting to be acting for the principal, it seems to me impossible to treat that as the fraud of the principal.

An innocent trustee is not brought within this exception by the fraud of a cotrustee115 unless the co-trustee is the trustee’s partner, in which case the ordinary agency rule as between partners would apply. Where the trustee was aware of the fraud or, having become aware of it, concealed it from the beneficiaries,116 the trustee will be within the exception, but where one trustee is innocent, time runs in the trustee’s favour in a case of misappropriation of funds by a co-trustee from the time when the beneficiaries have a right of action to compel investment.117

Property ‘Still Retained By’ [22-27] These words (which appear in the South Australian statute) have

been construed to mean ‘retained at the date of the writ’.118

Conversion [22-28] Where a trustee has received trust property and converted it to his or her own use, the trustee does not (except in New South Wales where a 12-year limitation period is imposed) come within the provisions of the legislation and is not protected by a limitation period. In Re Sharp,119 trustees who were also beneficiaries had for over 20 years overpaid annuities, including annuities to themselves, by failing to deduct income tax. They were ordered to refund to the trust estate all amounts overpaid to themselves without regard to any statutory limitation period: The intention of the statute was to give a trustee the benefit of the lapse of time when, although he had done something legally or technically wrong, he had done nothing morally wrong or dishonest, but it was not intended to protect him where, if he pleaded the statute, he would come off with something he ought not to have, that is, money of the trust received by him and converted to his own use.120

When Time Begins to Run [22-29] In the case of a breach of trust, the cestui que trust’s right of action accrues upon the commission of the breach of trust and time runs from the date of the breach.121 In all jurisdictions, time does not begin to run against a beneficiary until the interest of the beneficiary is an interest in possession. Time does not run against the object of a discretionary [page 554] trust or power which may never be exercised in his or her favour.122 Thus the claim of a tenant for life may be barred, while that of a remainderman against trustees for the same breach of trust may be successful. In Re Somerset,123 trustees were held protected by lapse of time in regard to an action by a tenant for life, but they were held liable to infant remaindermen. In regard to the money paid by the trustees to make up the loss of capital, they were held entitled to the interest until the death of the tenant for life. Similarly, in Re

Fountaine,124 lapse of time provided a successful defence against a tenant for life although not as against a remainderman. In the latter case, the trustee made up the lost capital, and it was held that until the death of the tenant for life he was entitled to the interest on the amount so made up. But the section does not prevent the trustee from setting up the doctrine of laches against a claimant even though the period of limitation has not expired and even though the trustee comes within one of the exceptions set out above.125 In Re Taylor,126 a remainderman, although not barred by the English section adopted in South Australia and Western Australia, was held barred by his own laches as he had the right in this case to take action at any time during a period of eight or nine years for the transfer of the securities in question to the proper trustee and neglected to do so. Where an annuitant is entitled to an annuity at the end of a term — that is, a deferred annuity — time runs from the date of the expiration of the term, not from the date of the testator’s death nor from the date when the first payment became due.127 Where one beneficiary is entitled to a succession of interests, there may be successive causes of action arising.128

Concealed Fraud [22-30] Although the general rule is that time runs from the date when the cause of action accrues, and this general rule applies to breach of trust, there is an exception to the rule in the case of concealed fraud, in which case time runs from the date of the discovery of the fraud. A trustee may have been guilty of no fraud, and consequently so far as the trustee’s own acts are concerned may be able to claim the benefit of the protection given by statute, but nevertheless may be held liable owing to the fraud of someone for whom he or she is responsible. If a trustee negligently and without fraud leaves trust moneys or securities in the hands of an agent without inquiry and the moneys or securities are misappropriated by the agent, the fraud being concealed for many years, the trustee can plead lapse of time as a bar to an action for breach of trust, but the time will not begin to run until the date of the discovery of the agent’s fraud.129 It is important to remember that the doctrine of ‘concealed fraud’ was originally developed by the old Court of Chancery.130 It arose in circumstances when existing statutes of limitation applied in terms only to legal causes of

action. Chancery would apply them in most cases by analogy. But, being a court of conscience, it applied the statutes by analogy only when it was [page 555] conscionable to do so. This is what Sir Charles Pepys MR meant when he said in Trevelyan v Charter:131 ‘Time is no bar, except the party, having full information of his injuries and rights, allows time to elapse without seeking relief.’ There were two main classes of case to which the doctrine of concealed fraud applied: (1) when the action is one alleging fraud, or when fraud is an element in the cause of action, in which case time does not run until the discovery of the fraud; and (2) where the cause of action is one which does not involve fraud, but the existence of the cause of action is fraudulently concealed by the defendant, in which case time does not begin to run until both the concealment is discovered and the cause of action ascertained. The former category includes not only actions involving the common law notion of deceit, and equitable doctrines such as the purchase by an agent for sale of property without the principal’s knowledge, but also the commission of underground trespasses in circumstances where active measures are taken to prevent detection.132 The latter category comprises such causes of action as wrongful entry upon land, unauthorised investments by company directors, and drawings by a partner in excess of his or her share of profits — in all of which cases, active concealment by the defendant must be shown.133 In either case, the doctrine of constructive knowledge applied only to a limited extent. For a plaintiff to ‘discover’ his or her action of ‘fraud’, there must be either actual knowledge that a ‘fraud’ has been committed or actual knowledge of facts which give rise to such an action. The possessing of means of knowledge is not enough. The defendant is not allowed to say that the plaintiff ought diligently to have discovered the fraud, unless he or she can prove that the plaintiff had his or her suspicions aroused but deliberately refrained from inquiry.134 However, the doctrine of imputed notice does apply; knowledge by an agent derived in the course of the agency is knowledge of the principal.135 Moreover, if the plaintiff’s cause of action against the defendant was failure to fulfil a duty to inform the

plaintiff, there is always ‘concealed fraud’ until actual discovery of the truth by the plaintiff or until the plaintiff could with reasonable diligence have discovered the truth.136 In Sheldon v R H M Outhwaite (Underwriting Agencies) Ltd,137 the House of Lords had to consider whether the running of time could be postponed where the defendants were guilty of deliberate concealment of facts relevant to the plaintiffs’ cause of action subsequent to the accrual of the plaintiffs’ cause of action. Their Lordships held, by majority, that the words of s 32(1)(b) of the Limitation Act 1980 (UK), the section which deals with the postponement of time in the case of concealed fraud, were wide enough to encompass the situation in which the concealment of the relevant facts occurred subsequent to the accrual of the cause of action and there was no reason to restrict their generality to a contemporaneous concealment. Thus time did not begin to run until after the discovery or imputed discovery of the relevant facts by the plaintiffs. The cases referred to make it plain that the courts are astute not to find ‘knowledge’ in a plaintiff sufficient to disbar reliance on the doctrine of ‘concealed fraud’. But what if (a) there is admitted ignorance on the part of the plaintiff, and (b) no attempt at concealment on the part of the defendant? The answer would seem to be that in such circumstances no case of ‘concealed fraud’ can be made out, and the limitation period applies. One case in which the problem arose was Bartlett v Barclays Bank Trust Co Ltd,138 where beneficiaries under a trust were seeking to make the trustee liable for loss of the trust funds in circumstances where the trust property consisted of a majority holding of shares in a company which made a series of quite [page 556] extraordinary and improvident property deals. The trustee did not seek board representation and never attended company meetings; nor did it even seek precise information from the company, being content merely to rely on the company reports which were issued from time to time. But on the other hand, the trustee took no steps to hide from the beneficiaries the calamities which were befalling them. Brightman J held that while ‘fraud’ in this context did not mean deceit, it did envisage conduct which was unconscionable as between the

parties bearing in mind their relationship, citing Kitchen v Royal Air Forces Assn.139 He applied the formulation of the doctrine of Lord Denning MR in Applegate v Moss:140 ‘The section applies whenever the conduct of the defendant or his agent has been such as to hide from the plaintiff the existence of his right of action, in such circumstances that it would be inequitable to allow the defendant to rely on the lapse of time as a bar to the claim.’ The same judge has also said to the same effect in King v Victor Parsons & Co:141 ‘If the defendant was, however, quite unaware that he was committing a wrong or a breach of contract, it would be different.’ Applying this test in Bartlett’s case, Brightman J held that the trustee was not disentitled from relying on the Limitation Act 1939 (UK) by any doctrine of concealed fraud, since at no stage did it have any inkling that it was acting in breach of trust.

Disability, etc [22-31] The period of limitation is likewise postponed in the other circumstances in which it would be postponed in any action by one individual against another, no trust being involved. These other circumstances are set out in the legislation listed above,142 in regard to simple contract debts and to land and moneys charged on land respectively. However, when the period is postponed in favour of one beneficiary so that proceedings can be brought against the trustee at a time when other beneficiaries, who had not been under any disability, could not do so, the beneficiaries whose claims are barred can obtain no advantage from the proceedings taken by the first beneficiary, even if those proceedings call for a replacement of the fund. The beneficiary whose claim is not barred can obtain replacement of his or her portion of the trust fund, but only that portion.143

Contribution [22-32] Where a trustee claims contribution from a co-trustee in respect of the loss to the trust estate caused by their joint default, time does not begin to run against the co-trustee who claims contribution until the beneficiary’s claim has been established against one of them. In Robinson v Harkin,144 one of two co-trustees had the trust funds in his hands for investment and by reason of his negligence in the selection of an agent some of the trust moneys were lost. In an

action by the other trustee and the beneficiaries against this trustee the defendant claimed contribution as against the plaintiff trustee. It was held that as the plaintiff trustee was in pari delicto he was liable and the defendant was entitled to contribution; it was also held that time did not begin to run as between the trustees until the date of judgment. This is in accordance with the principle acted upon in Wolmershausen v Gullick145 in regard to contribution between two co-sureties. [page 557]

Consent, Release and Acquiescence [22-33] Even though the statutory period of limitation applicable may not have expired, a beneficiary may be barred from taking proceedings against a trustee as a result of a consent to, acquiescence in or release of the breach of trust. It has already been seen146 that the trustee legislation in all jurisdictions enables the court to impound the interest of a beneficiary in the trust estate by way of indemnity to the trustee where a trustee commits a breach of trust at the instigation or request or with the written consent of the beneficiary. Further, ‘[t]here is no reason for a court of Equity to enforce an equitable obligation in favour of a party who consented to its breach against a party who acted with knowledge of that consent’.147 The distinction between consent as opposed to acquiescence is that the former takes place in advance of the breach of trust.148 A beneficiary who has assented to, or concurred in, or who has subsequently released or acquiesced in a breach of trust, cannot charge the trustee afterwards with the breach of trust, provided that at the time of the assent, concurrence, release or acquiescence, as the case may be, the beneficiary was sui juris, and did the act with full knowledge of the facts and of what exactly he or she was doing and the legal effect thereof, and that the act was not the result of any undue influence.149 Lord Westbury LC said:150 The duty of proving an effectual discharge lies on the trustee. Where a breach of trust has been committed, from which a trustee alleges that he has been released, it is incumbent upon him to show that such release was given by the cestui que trust deliberately and advisedly, with full knowledge of all the circumstances, and of his own rights and claims against the trustee; for it is impossible to allow a trustee who has incurred personal liability to deal with his cestui que trust for his own discharge upon any other ground than the obligation of giving the fullest information,

and of showing that the cestui que trust was well acquainted with his own legal rights and claims, and gave the release freely and without pressure or undue influence of any description.

Thus, in Re Garnett,151 a release to a trustee was set aside more than 20 years after the execution of the deed of release, on the ground that the release had been executed in error, the beneficiaries not having had knowledge of their rights and of what they were giving up. The onus of proof is on the trustee to show that the beneficiary had such full knowledge of all the circumstances and of his or her rights.152 Purely equitable rights may be released under seal, for consideration and (unlike legal rights) even under hand or orally and without consideration. Indeed, an equitable release may be inferred from conduct. What is required is a fixed, deliberate and unbiased determination to effect a release.153 In Spellson v George,154 Handley JA said that a trustee cannot avoid liability simply by putting the beneficiary to an election either to object or acquiesce in the breach of trust. [page 558] Where the beneficiaries are infants, as they are not sui juris, they are incapable of consenting so as to release a trustee for breach of trust.155 Just as in other cases coming under the head of undue influence, the courts view ‘with considerable jealousy’ a release made by beneficiaries who have just reached the age of majority.156 Where there are several trustees it will depend upon the circumstances whether the release of one is or is not a release of the other; but where there are several beneficiaries a release given by some does not bar the others from enforcing their claims against a defaulting trustee.157 Acquiescence is best understood, in this context, as deliberate and informed standing by.158 But mere non-interference by a reversioner or remainderman is not necessarily acquiescence in a breach of trust.159 Where beneficiaries, with full knowledge of a breach of trust, take no steps for many years to obtain relief, their mere delay may be a bar.160 However, if the delay can be explained and if the trustees have not suffered prejudice thereby, delay is not of itself sufficient to bar a beneficiary’s claim.161 The reason why long delay is a bar is that acquiescence is thereby presumed and it is regarded as evidence that a

beneficiary has elected not to insist on the beneficiary’s rights. If the delay can be explained otherwise, there is no ground for the presumption. An action by a beneficiary to set aside a sale to a fiduciary may be defeated by delay if the delay means that no grant of relief would place the party whose title might otherwise be voidable on equitable grounds in an unreasonable situation, or if, because of change of circumstances, it would give the party claiming relief an unjust advantage.162 In Orr v Ford,163 the plaintiff contributed one-half of the purchase price of a property in 1968, in circumstances which were held to give rise to an express trust in his favour. The co-contributor improved the property, and came to regard it as his own. He purported to dispose of it in 1978. A majority of the High Court considered that the plaintiff’s inactivity fell short of acquiescence in the breach of trust, and that, while the prejudice which had arisen by reason of the loss of evidence over time was a proper consideration to take into account, in relation to laches, in the circumstances of the case the loss of evidence was suppositional and thus was not prejudice of a character to defeat the claim. _____________________________ 1.

Trustees are also fiduciaries, and may be held liable for breaches of fiduciary obligations. The reader is referred to the full treatment of this topic in Meagher, Gummow and Lehane’s Equity, Ch 5.

2.

3.

Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; 196 ALR 482 at [32]. In Target Holdings Ltd v Redferns [1996] 1 AC 421 at 434; [1995] 3 All ER 785 at 793, Lord Browne-Wilkinson emphasised that ‘the basic right of a beneficiary is to have the trust duty administered in accordance with the provisions of the trust instrument, if any, and the general law’; see also AIB Group (UK) plc v Mark Redler & Co Solicitors [2015] AC 1503; [2015] 1 All ER 747 at [64]. Scott on Trusts, §24.5.

4. 5.

O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 276–7. (1833) 6 Sim 281; 58 ER 599.

6. 7.

(1975) 55 DLR (3rd) 239. (1900) 26 VLR 339.

8. 9.

[1980] Ch 515; [1980] 1 All ER 139. Doyle v Blake (1804) 2 Sch & Lef 231; National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373.

10. Perpetual Trustee Co v Watson (No 2) (1927) 28 SR (NSW) 43. 11. In National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373, a company carrying on business as trustee was held liable for trust moneys paid away erroneously in the course of its business. 12. This has been frequently decided from Mucklow v Fuller (1821) Jac 198; 37 ER 824 to Rae v Meek (1889) 14 App Cas 558. See also Dix v Burford (1854) 19 Beav 409; 52 ER 408; Brumridge v Brumridge (1858) 27 Beav 5; 54 ER 2. See P Matthews, ‘The Efficacy of Trustee Exemption Clauses in English Law’ (1989) 53 Conv 42; and see [16-20]. Further, equity may prevent trustees from relying

on exemption clauses where it is unconscientious to do so: Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 745–6. 13. Angier v Stannard (1834) 3 My & K 566 at 571; 40 ER 216 at 218. See also Inland Revenue Commissioners v Silverts Ltd [1951] Ch 521; [1951] 1 All ER 703. 14. The accounting procedure survives: see Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; White v Thompson [2011] NSWCA 161 at [44]ff. 15. See Meagher, Gummow and Lehane’s Equity, Ch 23, especially at [23-020]–[23-080]; Agricultural Land Management Ltd v Jackson (No 2) (2014) 98 ACSR 615 at [334]–[349]. 16. (1966) 84 WN (Pt 1) (NSW) 399 at 406–7; [1966] 2 NSWR 211 at 214–15. 17. Nocton v Lord Ashburton [1914] AC 932 at 946, 956, 957; [1914–15] All ER Rep 45 at 49, 53, 54; McKenzie v McDonald [1927] VLR 134 at 146; Re Dawson (dec’d) [1966] 2 NSWR 211 at 214–15; United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 at 816; Target Holdings Ltd v Redferns [1996] 1 AC 421 at 434; [1995] 3 All ER 786 at 793–4; AIB Group (UK) plc v Mark Redler & Co Solicitors [2015] AC 1503; [2015] 1 All ER 747. See also Meagher, Gummow and Lehane’s Equity, Ch 23. 18. Bristol and West Building Society v Mothew [1998] Ch 1 at 17; [1996] 4 All ER 698 at 711; Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664 at 681. 19. (2003) 212 CLR 484; 196 ALR 482 at [39]. See also Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; 180 ALR 249 at [85]; S Elliott and J Edelman (2003) 119 LQR 545 at 550; J Getzler, ‘Am I My Beneficiary’s Keeper? Fusion and Loss-based Fiduciary Remedies’ in S Degeling and J Edelman (eds), Equity in Commercial Law, 239 at 254–6. 20. 5th ed, LexisNexis Butterworths, 2015, especially at [23-020]–[23-090]. 21. Target Holdings Ltd v Redferns [1996] 1 AC 421 at 434; [1995] 3 All ER 785 at 794; Maguire v Makaronis (1997) 188 CLR 449 at 469; 144 ALR 729 at 741–2. 22. Re Dawson (dec’d) [1966] 2 NSWR 211; Re Mulligan (dec’d) [1998] 1 NZLR 481 at 508; Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 754. See Meagher, Gummow and Lehane’s Equity, [23-170]–[23-180]. 23. Wiles v Gresham (1854) 2 Drew 258 at 271; 61 ER 718 at 723. See also Robinson v Robinson (1848) 11 Beav 371 at 375; 50 ER 860 at 861. In Fletcher v Green (1864) 33 Beav 426; 55 ER 433, an improper investment resulted in a loss, but a subsequent sale of the securities in which the proceeds had been invested resulted in a profit and the trustees were allowed the benefit of the profit in their accounts towards the discharge of their liabilities. The circumstances were special. This decision has been interpreted on the basis that profits and losses may be set off against one another where they arise from the same transaction. See Halsbury’s Laws of England, 4th ed, Vol 48, [945]; Snell’s Equity, [30019]; Underhill and Hayton, art 89, pp 1187–9. See also Re Goodwin’s Settlement (1918) 87 LJ Ch 645; Rawcliffe v Johnstone [1921] NZLR 470. 24. [1980] Ch 515 at 538; [1980] 1 All ER 139 at 155. 25. Snell’s Equity, [30-019]. 26. [1984] WAR 278. 27. (1991) 34 NSWLR 308 at 356–7. 28. Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 543; Nestlé v National Westminster Bank plc [1994] 1 All ER 118; [1993] 1 WLR 1268; Target Holdings Ltd v Redferns [1996] AC 421 at 439; [1995] 3 All ER 785 at 798; O’Halloran v T R Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272–3; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at [429]–[433]; Scott on Trusts, §24.8. 29. Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at [429]–[451].

30. Gilbert v Shanahan [1998] 3 NZLR 528. 31. Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; 196 ALR 482. 32. Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 555; Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; 196 ALR 482 at [35]. 33. (1890) 63 LT 296. 34. [1994] 1 All ER 143; [1993] 1 WLR 1285. 35. [1980] 3 All ER 425; [1980] 1 WLR 1217. 36. Jones v Foxhall (1852) 15 Beav 388 at 392; 51 ER 588 at 589. See also Tebbs v Carpenter (1816) 1 Madd 290; 56 ER 107 and the cases there quoted; Docker v Somes (1834) 2 My & K 655 at 673; 39 ER 1095 at 1101; Robinson v Robinson (1851) 1 De GM & G 247 at 256ff; 42 ER 547 at 550ff; and the earlier cases Anon (1755) 2 Ves Sen 629; 28 ER 401; Re Kempson (1791) 3 Bro CC 197 at 198; 29 ER 487 at 487–8. In Pocock v Reddington (1801) 5 Ves 794; 31 ER 862, stock was sold out in breach of trust and the proceeds were used improperly by the trustee. It was held that the beneficiaries had the option of making him replace the stock or of taking the proceeds with 5% interest or more if he had made more. See generally P Devonshire, Account of Profits, 2013. 37. Re Dawson [1966] 2 NSWR 211 at 218. 38. Hagan v Waterhouse (1991) 34 NSWLR 308 at 391–2. Paragraph [2208] of the 6th edition of this work contains references to the early cases which trace what Dixon J referred to as ‘judicial movements’, first to reduce, then to raise, the rate: Re Tennant (1942) 65 CLR 473 at 507–8. 39. [1975] QB 373; [1975] 1 All ER 849. 40. O’Sullivan v Management Agency and Music Ltd [1985] QB 428; [1985] 3 All ER 351; Southern Cross Commodities Pty Ltd (in liq) v Ewing (1987) 11 ACLR 818; 5 ACLC 1,110. See also National Bank of New Zealand Ltd v Development Finance Corp of NZ [1990] 3 NZLR 257; Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45. 41. (1991) 34 NSWLR 308 at 392; see also A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481 at 493; Re Boyagarra Pty Ltd (in liq) (1983) 7 ACLR 612. 42. (1997) 41 NSWLR 45. 43. Pateman v Heyen (1993) 33 NSWLR 188 at 200; Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45. 44. See S Elliott, ‘Rethinking Interest’ [2001] Conv 313; P Ridge, ‘Pre-Judgment Compound Interest’ (2010) 126 LQR 279 at 297–300. 45. For the width of the discretion, and a review of the authorities on compound interest, see Herrod v Johnston [2013] 2 Qd R 102. 46. Knott v Cotte (1852) 16 Beav 77; 51 ER 705, where 4% was allowed; Re Barclay [1899] 1 Ch 674, where 3% was allowed. In Raphael v Boehm (1805) 11 Ves 92; 32 ER 1023, 5% compound interest with half-yearly rests was decreed against an executor, but this was an exceptional case. See Raphael v Boehm (1807) 13 Ves 407; 33 ER 347. Gilroy v Stephens (1882) 46 LT 761 was another case where compound interest with half-yearly rests was allowed, but at 3%. See also Moss v Moss (1898) 19 LR (NSW) Eq 146. 47. Jones v Foxhall (1852) 15 Beav 388; 51 ER 588; Re Davis [1902] 2 Ch 314. See also Williams v Powell (1852) 15 Beav 416; 51 ER 616; Burdick v Garrick (1870) 5 LR Ch App 233; Wallersteiner v Moir (No 2) [1975] QB 373; [1975] 1 All ER 849; Southern Cross Commodities Pty Ltd (in liq) v Ewing (1987) 11 ACLR 818; 5 ACLC 1,110; Ninety Five Pty Ltd v Banque Nationale de Paris [1988] WAR 132; Ledger v Petagna Nominees Pty Ltd (1989) 1 WAR 300. 48. As in Wroe v Seed (1863) 4 Giff 425; 66 ER 773; Stacpoole v Stacpoole (1816) 4 Dow 209; 3 ER 1140;

and Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 706–8, cases of gross breach of trust. In Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64 at 237, it was said that compound interest was awarded ‘where the trustee has been fraudulent or has been involved in a gross breach of trust, where the trustee is under a direction to accumulate income, or where it can be established that the trustee has used the money in a trade or business’; see also Eden Refuge Trust v Hohepa [Remedies] [2011] 3 NZLR 273; Themis Holdings Pty Ltd v Canehire Pty Ltd (2014) 17 ITELR 75 at [243]–[246]. 49. Wilson v Moore (1834) 1 My & K 126 at 142; 39 ER 629 at 635; Fletcher v Green (1864) 33 Beav 426 at 429; 55 ER 433 at 434; Blyth v Fladgate [1891] 1 Ch 337. See also Taylor v Tabrum (1833) 6 Sim 281; 58 ER 599. As to rights of contribution and indemnity between the trustees themselves, see [2117]–[21-20]. 50. Westley v Clarke (1759) 1 Eden 357; 28 ER 723; Mendes v Guedalle (1862) 2 J & H 259; 70 ER 1054; Re Gasquoine [1894] 1 Ch 470; Re Smith [1896] 1 Ch 171; [1895–9] All ER Rep 1175; Shepherd v Harris [1905] 2 Ch 310; Austin v Austin (1906) 3 CLR 516; 12 ALR 159. In the last-mentioned case, an executor whose co-executor was a solicitor was held not negligent or guilty of a breach of trust by permitting the solicitor to receive mortgage repayments on behalf of the estate, as the solicitor was nominated by the will, and (as trustee of another estate) was one of the mortgagors. 51. Scott on Trusts, §24.29. 52. ACT s 59; NSW s 59; NT s 26; Qld s 71; SA s 35; Tas s 48; Vic s 36; WA s 70. 53. Re Vickery [1931] 1 Ch 572; [1931] All ER Rep 562. Cf Perpetual Trustee Co v Watson (No 2) (1927) 28 SR (NSW) 43; Dalrymple v Melville (1932) 32 SR (NSW) 596. 54. See Westley v Clarke (1759) 1 Eden 357; 28 ER 723; Mendes v Guedalle (1862) 2 J & H 259; 70 ER 1054; Re Gasquoine [1894] 1 Ch 470; Re Smith [1896] 1 Ch 171; [1895–9] All ER Rep 1175; Shepherd v Harris [1905] 2 Ch 310; Austin v Austin (1906) 3 CLR 516; 12 ALR 159. 55. Re Vickery [1931] 1 Ch 572 at 583; [1931] All ER Rep 562 at 567 per Maugham J, summarising Re Leeds City Brewery Ltd’s Trusts [1925] Ch 532 and Re City Equitable Fire lnsurance Co [1925] Ch 407; [1924] All ER Rep 485. See also Armitage v Nurse [1998] Ch 241 at 252; [1997] 2 All ER 705 at 711; Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 696–704; Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431 at [150]. 56. Adair v Shaw (1803) 1 Sch & Lef 243; Gibbins v Taylor (1856) 22 Beav 344; 52 ER 1140. Contrast the position at law, before statute largely abolished the rule that rights of action in tort die with the tortfeasor: see Meagher, Gummow and Lehane’s Equity, [23-390]. 57. See Knatchbull v Fearnhead (1837) 3 My & Cr 122; 40 ER 871; Low v Carter (1839) 1 Beav 426; 48 ER 1005; Waller v Barrett (1857) 24 Beav 413; 53 ER 417. 58. Re Palk (1892) 41 WR 28. 59. Dornford v Dornford (1806) 12 Ves 127; 33 ER 49; Bick v Motley (1835) 2 My & K 312; 39 ER 962. 60. [1905] 1 Ch 20; [1904–7] All ER Rep 483; see also Re Parkers (1887) 19 QBD 84. P was one of several trustees. £15,000 was paid to the firm of P and Q solicitors, for investment in a particular mortgage. P and Q misappropriated the money and became bankrupt. New trustees were appointed, who proved in the bankruptcy of the firm for £15,000 and received two dividends. P became bankrupt and the trustees were allowed to prove in his bankruptcy also as for a debt of £15,000. In Re Macfadyen [1908] 2 KB 817, proof was allowed against the separate estate of a trustee and also against his firm for moneys misapplied by him and used by the firm. 61. Bankruptcy Act 1966 (Cth) s 153(2)(b). 62. Chittick v Maxwell (1993) 118 ALR 728, appeal dismissed Maxwell v Chittick [1994] NSWCA 196 (23 August 1994); Re Bosun Pty Ltd (in liq) (2000) 34 ACSR 597 at [18]. Cf [22-26] below.

63. National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373 at 375– 6; Nissen v Grunden (1912) 14 CLR 297 at 317; 18 ALR 254 at 261. 64. Now Trustee Act 1925 (UK) s 61. Lord St Leonards had tried to introduce a similar provision in 1857: see Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar (2008) 237 CLR 66; 249 ALR 250 at [35]; see also J Lowry and R Edmunds, ‘Excuses’ in P Birks and A Pretto, Breach of Trust, Ch 9. 65. ACT s 85; NSW s 85; NT s 49A; Qld s 76; SA s 56; Tas s 50; Vic s 67; WA s 75. 66. See Re Kay [1897] 2 Ch 518; cf Marsden v Stein (1906) 6 SR (NSW) 368. They apply to the responsible entity of a registered managed investment scheme under the Corporations Act 2001 (Cth): Re Investa Properties Ltd (2001) 187 ALR 462 at [40]. In Metcalf v Permanent Building Society (1992) 10 WAR 145, it was held that the provisions cannot be relied upon by directors merely because they are fiduciaries. A modified form of the provision, s 1318 of the Corporations Act, applies to certain company officers: see Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 311 ALR 494 at [113]. 67. Re Mulligan (dec’d) [1998] 1 NZLR 481 at 506–7; Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar (2008) 237 CLR 66; 249 ALR 250 at [36]; Commissioner of Taxation v Bargwanna (2012) 244 CLR 655; 286 ALR 206 at [14]. 68. Re Turner [1897] 1 Ch 536; National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373. 69. Re Tollemache [1903] 1 Ch 457 at 466; Edwards v Attorney-General (2004) 60 NSWLR 667 (where the same was held of the more expansively worded s 1318 of the Corporations Act 2001 (Cth)). 70. See Re Hurst (1892) 62 LT 96; Re Kay [1897] 2 Ch 518 at 524. 71. See Re Turner [1897] 1 Ch 536. ‘The Courts of equity have established certain rules imposing liability on a trustee, although honest, and the Legislature has now given the same Courts power to grant relief against the consequences of a breach of those rules. There is nothing analogous in this to the principle underlying the relief against forfeiture at common law, and there is in fact no principle which can serve as a guide. I have merely to find as a fact that the trustee has acted honestly and reasonably, and ought fairly to be excused; and then I have power to grant relief. It is obvious that the exercise of such a jurisdiction is beset with great difficulty and requires great caution. I must bear in mind on the one hand that this relief is granted at the expense of the cestui que trust, and on the other that the trustee assumes an onerous post without reward, and the real difficulty is to say what is fair and right as between the beneficiary who entrusts his money to the trustee and the trustee who acts gratuitously on his behalf’: Re De Clifford [1900] 2 Ch 707 at 713 per Farwell J. 72. Holland v Administrator of German Property [1937] 2 All ER 807. 73. Re Turner [1897] 1 Ch 536; Re Barker (1898) 77 LT 712; Dalrymple v Melville (1932) 32 SR (NSW) 596; Pateman v Heyen (1993) 33 NSWLR 188 at 200; Adams v Alemite [1994] NSWCA 1. 74. (1932) 32 SR (NSW) 596. 75. Re Grindey [1898] 2 Ch 593; Khoo Tek Keong v Ch’ng Joo Tuan Neoh [1934] AC 529. 76. Re Turner [1897] 1 Ch 536; Re Grindey [1898] 2 Ch 593. 77. Re Evans [1999] 2 All ER 777. 78. Chapman v Browne [1902] 1 Ch 785. 79. Equity Trustees Executors and Agency Co Ltd v Fenwick [1905] VLR 154. 80. Montgomerie’s Brewery Co Ltd v Blyth (1901) 27 VLR 175. 81. Re D’Jan of London Ltd [1994] 1 BCLC 561 (a decision on the (cognate) provisions to relieve company directors’ liabilities); Sproule v Sproule (2009) 2 ASTLR 80 at [43] (approving this passage).

82. Re Pauling’s Settlement Trusts [1964] Ch 303 at 339; [1963] 3 All ER 1 at 11. 83. National Trustee Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373; see also Re Windsor Steam Coal Co [1929] 1 Ch 151. Being a professional trustee is not a bar to relief, but it is a relevant factor: Re Pauling’s Settlement Trusts [1964] Ch 303 at 338–9; [1963] 3 All ER 1 at 11. 84. Ede v Ede [2007] 2 Qd R 323 (decision on s 105 of the Powers of Attorney Act 1998 (Qld)); see also Re Barry & Staines Linoleum Ltd [1934] Ch 227; Re International Vending Machines Pty Ltd & Companies Act [1962] NSWR 1408 at 1424. 85. Re Investa Properties Ltd (2001) 187 ALR 462 at [41]–[43]. Cf Re Pauling’s Settlement Trusts [1964] Ch 303 at 358–9; [1963] 3 All ER 1 at 24. 86. ACT s 18; NSW s 18; NT s 106; Qld s 30; SA s 13A; Tas s 12B; Vic s 12A; WA s 26. And see Re Stuart [1897] 2 Ch 583; Re Dive [1909] 1 Ch 328; Shaw v Cates [1909] 1 Ch 389; Palmer v Emerson [1911] 1 Ch 758. 87. Re Clifford [1900] 2 Ch 707; Re Allsop [1914] 1 Ch 1; [1911–13] All ER Rep 1834; Holland v Administrator of German Property [1937] 2 All ER 807. 88. Re Wightwick’s Will Trust [1950] Ch 260; [1950] 1 All ER 689; see also Audio Visual Copyright Society Ltd v Australian Record Industry Association Ltd (1999) 46 IPR 29. 89. Re Mackay [1911] 1 Ch 300; Re Allsop [1914] 1 Ch 1; [1911–13] All ER Rep 834; Re Windsor Steam Coal Co [1929] 1 Ch 151. 90. Re Dive [1909] 1 Ch 328. Contrast McMahon v Cooper (1904) 4 SR (NSW) 433. 91. Perpetual Trustee Co v Watson (No 2) (1927) 28 SR (NSW) 43; Dundee General Hospitals Board v Walker [1952] 1 All ER 896. 92. National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373; Re Windsor Steam Coal Co [1929] 1 Ch 151 at 164–5; Re Pauling’s Settlement Trusts [1964] Ch 303 at 338–9; [1963] 3 All ER 1 at 11; Ede v Ede [2007] 2 Qd R 323 at [41]; Congregation of the Religious Sisters of Charity of Australia v Attorney-General (Qld) (2011) 7 ASTLR 51 at [39]–[40]; cf Jobson v Palmer [1893] 1 Ch 71. See also Mervyn Davies (1969) 33 Conv (NS) 179. 93. (1993) 33 NSWLR 188 at 199. 94. Elder’s Trustee and Executor Co Ltd v Higgins (1963) 113 CLR 426 at 452; [1964] ALR 408 at 425. 95. Re Turner [1897] 1 Ch 536. 96. Re Turner [1897] 1 Ch 536. 97. Re Second East Dulwich, etc, Building Society (1899) 68 LJ Ch 196; cf Dalrymple v Melville (1932) 32 SR (NSW) 596. 98. Re Mackay [1911] 1 Ch 300. 99. Re Tollemache [1903] 1 Ch 457; and see Edwards v Attorney-General (2004) 60 NSWLR 667. As to the jurisdiction of the court to sanction a departure from the terms of the trust instrument, see [1706]–[17-08]. 100. Re Stuart [1897] 2 Ch 583; McMahon v Cooper (1904) 4 SR (NSW) 433 at 439; Pateman v Heyen (1993) 33 NSWLR 188 at 199; Craven-Sands v Koch (2000) 34 ACSR 341 at [187]. 101. Re Stuart [1897] 2 Ch 583; Singlehurst v Tapscott Steamship Co Ltd (No 2) [1899] WN 133. See also NSW Masonic Youth Property Trust v Attorney-General for NSW (2010) 5 ASTLR 211 at [113]–[131], where in a case of a charitable trust administered over many decades, the court deferred ruling on the trustee’s defence pending the provision of better evidence. 102. See McMahon v Cooper (1904) 4 SR (NSW) 433; Edmundsen v Loudoun [1947] NZLR 321. 103. See Beckford v Wade (1805) 17 Ves 87 at 97; 34 ER 34 at 38; Dickenson v Teasdale (1862) 1 De GJ &

Sm 52; 46 ER 21; Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400 at 408; Clay v Clay (2001) 202 CLR 410; 178 ALR 193 at [23]–[24]. 104. Sands v Thompson (1883) 22 Ch D 614. 105. Unlike s 47 of the Limitation Act 1935 (WA), the Limitation Act 2005 (WA) contains an equivalent provision. 106. [1999] 1 All ER 400; see also Taylor v Davies [1920] AC 636; Clarkson v Davies [1923] AC 100; Cattley v Pollard [2007] Ch 353; [2007] 2 All ER 1086; Jasmine Trustees Ltd v Wells and Hind (a firm) [2008] Ch 194; [2007] 1 All ER 1147; Seaton v Seddon [2013] 1 All ER 29; [2012] 1 WLR 3636. 107. For example, Rochefoucauld v Boustead [1897] 1 Ch 196; Pallant v Morgan [1953] Ch 43; [1952] 2 All ER 951. 108. [2004] VSCA 109. 109. [2014] AC 1189; [2014] 2 All ER 489. 110. New South Wales Law Reform Commission, The First Report of the Limitation of Actions October 1967, [80]. 111. Queensland Mines Ltd v Hudson [1976] CLC 40–258; Piwinski v Corporate Trustee of the Diocese of Armidale [1977] 1 NSWLR 266; Sze Tu v Lowe (2014) 89 NSWLR 317 at [335]–[338]; In De Braekt v Powell (2007) 33 WAR 389 at [24]. In New South Wales, an action by a trustee to recover trust property may be barred while an action by a beneficiary against a third party recipient of trust property is not if the latter does not have the requisite knowledge from the time the former did: Morlea Professional Services Pty Ltd v Richard Waller Pty Ltd (in liq) (1999) 96 FCR 217; 169 ALR 419 at [57]–[60]. 112. [1914] AC 932 at 953; [1914] All ER Rep 45 at 52. 113. Armitage v Nurse [1998] Ch 241; [1997] 2 All ER 705. 114. [1895] AC 495 at 506, 502. 115. Re Tufnell (1902) 18 TLR 705; Buckland v Ibbotson (1902) 28 VLR 688. 116. Moore v Knight [1891] 1 Ch 547; and see Sheldon v R H M Outhwaite (Underwriting Agencies) Ltd [1996] AC 102; [1995] 2 All ER 558. 117. Buckland v Ibbotson (1902) 28 VLR 688. 118. Thorne v Heard & Marsh [1895] AC 495; see the remarks of Lindley LJ [1894] 1 Ch 599 at 605; and see Re Timmis [1902] 1 Ch 176 at 185. See also Wassell v Leggatt [1896] 1 Ch 554; How v Earl Winterton [1896] 2 Ch 626; McArdle v Gaughran [1903] 1 IR 106. 119. [1906] 1 Ch 793; see also Re Bowden (1890) 45 Ch D 444; Re Swain [1891] 3 Ch 233; How v Earl Winterton [1896] 2 Ch 626. 120. Re Timmis [1902] 1 Ch 176 at 186 per Kekewich J, referring to the Trustee Act 1888 (UK); see Moore v Knight [1891] 1 Ch 547 at 553, where a member of a firm of solicitors receiving money for investment was held liable for losses caused by the embezzlement of the trust funds by a clerk of the firm. In Re Gurney [1893] 1 Ch 590, trustees invested trust moneys on a mortgage of freehold. The mortgage moneys were, by the direction of the mortgagor, paid by the trustees to a bank in which one of the trustees was a partner, to pay off a debt due to the bank. The security proved insufficient and the beneficiary claimed to make the trustee liable for the loss. No fraud was alleged. The trustee pleaded lapse of time as a bar, and the court held that the payment to the bank was not, in the circumstances of the case, a conversion of the trust funds to his own use. See also Mackenzie v Mackenzie (1894) 12 NZLR 590. 121. Re Somerset [1894] 1 Ch 231. 122. Armitage v Nurse [1998] Ch 241; [1997] 2 All ER 705.

123. [1894] 1 Ch 231. 124. [1909] 2 Ch 382; [1908–10] All ER Rep 969; see also Collings v Wade [1896] 1 LR 340; Cane v Perpetual Trustees and Executors Association (1900) 26 VLR 243; cf Matthews v Trustees Executors and Agency Co Ltd (1898) 24 VLR 58. 125. Roberts v Tunstall (1845) 4 Hare 257; 67 ER 645; Re Taylor (1900) 81 LT 812; Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619; [1934] ALR 283. 126. (1900) 81 LT 812. 127. How v Earl Winterton [1896] 2 Ch 626. 128. Mara v Browne [1895] 2 Ch 69 (reversed on other points: [1896] 1 Ch 199). 129. See Thorne v Heard [1894] 1 Ch 599 at 603–5 (judgment of Lindley LJ) and [1895] AC 495. See generally on the equitable doctrine of concealed fraud, Meagher, Gummow and Lehane’s Equity, [36095]–[36-115]. For cases on concealed fraud, see Blair v Bromley (1847) 2 Ph 354; 41 ER 979; Rolfe v Gregory (1865) 4 De GJ & Sm 576; 46 ER 1042; Chetham v Hoare (1870) LR 9 Eq 571; Vane v Vane (1873) 8 Ch D 383; Metropolitan Bank v Heiron (1880) LR 5 Ex D 319; Gibbs v Guild (1882) 9 QBD 59; Moore v Knight [1891] 1 Ch 547; Willis v Howe [1893] 2 Ch 545; Betjemann v Betjemann [1895] 2 Ch 474; Bulli Coal Mining Co v Osborne [1899] AC 351; [1895–9] All ER Rep 506; Beaman v ARTS Ltd [1949] 1 KB 550; [1948] 2 All ER 89. 130. See Commonwealth v Cornwell (2007) 229 CLR 519; 234 ALR 148 at [9]. 131. (1835) 4 LJ (NS) Ch 209 at 214. 132. See Bulli Coal Mining Co v Osborne [1899] AC 351; [1895–9] All ER Rep 506. 133. Re Lands Allotment Co [1894] 1 Ch 616 at 639; [1891–4] All ER Rep 1032 at 1038–9. 134. Betjemann v Betjemann [1895] 2 Ch 474. 135. Thorne v Heard [1894] 1 Ch 599; [1895] AC 495. 136. UBAF Ltd v European American Banking Corp [1984] QB 713; [1984] 2 All ER 226. 137. [1996] AC 102; [1995] 2 All ER 558. 138. [1980] Ch 515; [1980] 1 All ER 139. 139. [1958] 2 All ER 241. Cf Hamilton v Kaljo (1987) 17 NSWLR 381. 140. [1971] 1 QB 406 at 413; [1971] 1 All ER 747 at 750. 141. [1973] 1 All ER 206; [1973] 1 WLR 29. 142. See [22-23]–[22-24]. 143. ACT ss 27 and 28; NSW s 50; NT ss 32–35; Qld s 27; SA s 32; Vic s 21; Tas s 24. In Western Australia, see s 47 of the 1935 Act, and Pt 3 of the 2005 Act (for causes of action accruing after 15 November 2005). 144. [1896] 2 Ch 415. 145. [1893] 2 Ch 514; [1891–4] All ER Rep 740. See generally as to the doctrine of contribution, Meagher, Gummow and Lehane’s Equity, Ch 10 and Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366. 146. See [21-21]. 147. Spellson v George (1992) 26 NSWLR 666 at 669, approved Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [25], [77]. 148. Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [25], [77], [131]. 149. Brice v Stokes (1805) 11 Ves 319; 32 ER 1111; Walker v Symonds (1818) 3 Swan 1; 36 ER 751; McDonnel v White (1865) 11 HL Cas 570; 11 ER 1454; Evans v Benyon (1887) 37 Ch D 329; Tyson v Tyson (1901) 1 SR (NSW) Eq 18; Fletcher v Collis [1905] 2 Ch 24; Re Pauling’s Settlement Trusts

[1964] Ch 303 at 353; [1963] 3 All ER 1 at 20; Spellson v George (1992) 26 NSWLR 666. See generally on laches, acquiescence, delay and release, Meagher, Gummow and Lehane’s Equity, Chs 37 and 38. 150. Farrant v Blanchford (1863) 1 De GJ & Sm 107 at 119–20; 46 ER 42 at 46–7. 151. (1885) 31 Ch D 1. 152. Farrant v Blanchford (1863) 1 De GJ & S 107; 46 ER 42; Tyson v Tyson (1901) 1 SR (NSW) Eq 18; Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [131]. In Commonwealth Bank of Australia v Smith (1991) 42 FCR 390; 102 ALR 453, it was held that the circumstances of the case may include the importance of obtaining independent and skilled advice from other parties. 153. Meagher, Gummow and Lehane’s Equity, [37-030]–[37-040]. It would seem that this principle is untouched by remarks in Commissioner of Stamp Duties v Bone (1976) 135 CLR 223 at 229; [1977] AC 511 at 519; (1976) 9 ALR 11 at 16, which are directed only to release of legal rights. 154. (1992) 26 NSWLR 666. 155. Wilkinson v Parry (1828) 4 Russ 272; 38 ER 808. 156. In Wade v Cox (1835) 4 LJ Ch 105, a release executed by a young man of 23 years of age in favour of his trustee was set aside 18 years afterwards. Cf Moore v Curtis (1862) 1 SCR Eq 1 at 57; Bennett v Tucker (1882) 8 VLR (E) 20. 157. See Aylwin v Bray (1822) 2 Y & J 519n; 148 ER 1024 and Morley v Hawke (1801), quoted in Small v Attwood (1828) 2 Y & J 512; 148 ER 1021. 158. Byrnes v Kendle (2011) 243 CLR 253; 279 ALR 212 at [27], [79]. 159. Life Association of Scotland v Siddal (1861) 3 De G F & J 58; 45 ER 800; [1861–73] All ER Rep 892; and see Morgan v Wright [1925] NZLR 689; [1926] AC 788; [1926] All ER Rep 201. 160. Davies v Hodgson (1858) 25 Beav 177; 53 ER 604; Jones v Higgins (1866) LR 2 Eq 538; Sleeman v Wilson (1871) LR 13 Eq 36; Hourigan v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619; [1934] ALR 283. 161. Story v Gape (1856) 2 Jur NS 706. 162. Fysh v Page (1956) 96 CLR 233; [1956] ALR 474. 163. (1989) 167 CLR 316; 84 ALR 146.

[page 559]

CHAPTER 23 The Rights of a Beneficiary To Possession of the Trust Property

[23-02]

To Compel Performance of the Trust

[23-03]

To Restrain a Breach of Trust Receivers

[23-04] [23-05]

To Approach the Court for Determination of Questions of Construction and Administration

[23-06]

To Extinguish the Trust Modification of the Trust Basis of the Rule Discretionary Trusts Powers of Advancement

[23-08] [23-13] [23-14] [23-15] [23-16]

To Follow the Trust Property

[23-17]

To Claim In Personam Against a Third Party who has Received Trust Property Change of Position Trusts other than Estates of Deceased Persons Queensland and Western Australia

[23-18] [23-19] [23-20] [23-21]

[23-01] In large measure, the rights and powers of beneficiaries are correlatives of the duties and liabilities of trustees,1 and have been considered in other chapters.2 This chapter deals with certain rights of beneficiaries which require special consideration.

To Possession of the Trust Property [23-02] Where a trustee has no active duties to perform and the beneficiary is sui juris and absolutely entitled, the beneficiary is entitled to possession of the trust property and to the indicia of title to the trust property.3 On the other hand, where a trustee has active duties to perform, such as being the manager of land held on trust for the benefit of persons in succession, the beneficiary life tenant has no right to the possession of the land, but may be let [page 560] into possession by the court upon giving security by way of undertaking or otherwise that what is to be done for the benefit of other persons entitled, for example repairs, shall be duly done.4 In some cases, the words of the will may make it clear that the beneficiary of the limited interest is to have possession. There remains, however, the case where the trust instrument is silent, conferring no powers of management on trustees but giving no direction that the beneficiary should have possession. It is suggested that in such a case the beneficiary can compel the trustee to give possession5 and that if ejected by the trustee, the court could compel the trustee to account for the rents which the beneficiary could have recovered from the tenants.6 It is not thought that the enactment of the statutory provisions considered in Chapter 20,7 whereby trustees of land held in trust for persons in succession may or are authorised to expend trust moneys on repairs and improvements, has altered this position. Commonly, a testator, after appointing executors, directly devises realty to persons in succession without the express interposition of trusts. Under the old law, the devise would have operated as a legal devise but the legal estate now vests in the executors. However, it is not clear whether this alters the incidents of the devise. The tenant for life is, it is suggested, entitled in the same way as a legal tenant for life to possession but cannot insist on the conveyance of a legal life interest.8 Where a bare trust is interposed, the tenant for life cannot insist upon a conveyance of the legal interest but is, under the older authorities,

entitled to possession. The same principle applies to chattels settled upon persons in succession.9

To Compel Performance of the Trust [23-03] The beneficiaries, or any one of them, may institute proceedings to compel the performance of the trustee’s duty or to protect their beneficial interest in the trust property even though that interest is only contingent.10 A failure by the trustee to carry out any particular duty will, of course, be a breach of trust,11 giving rise to a right of action by a beneficiary and, if sufficiently serious, will afford grounds for the removal of the trustee and the appointment of a new trustee.12 Normally this remedy will provide adequate protection to a beneficiary. The general rule is, ‘As long as the trustee is ready and willing to take the proper proceedings against the third person, the beneficiaries cannot maintain a suit against him’,13 a rule which applies to constructive as well as express trustees.14 But where a trustee refuses to institute proceedings against a debtor or to recover trust property, the beneficiary may wish to institute proceedings, either in the beneficiary’s own name or in the name of the trustee. The rule here is that [page 561] where relief is sought in the equitable jurisdiction of the Supreme Court against a third party, a beneficiary may sue in his or her own name, joining as defendants the trustee and any other beneficiaries, but only where there are ‘special circumstances’.15 Finn J has persuasively reasoned that, provided the ‘exceptional’ or ‘special’ circumstances requirement is met, the same holds for claims at common law, in a judicature system designed to avoid multiplicity of suits.16 The right extends to a discretionary object, but again only where there are special or exceptional circumstances.17 If the circumstances are not exceptional or special, the beneficiary’s remedy is to sue the trustee for the execution of the trust and then apply for the appointment of a receiver, and for leave to sue in the name of the trustee or of the receiver. In this connection, James LJ stated in Sharpe v San Paulo Railway Co:18

I came to the conclusion, very clearly, that a person interested in an estate or a trust fund, could not sue a debtor to that trust fund, or sue for that trust fund merely on the allegation that the trustee would not sue; but that if there was any difficulty of that kind, if the trustee would not take proper steps to enforce the claim, the remedy of the cestui que trust was to file his bill against the trustee for the execution of the trust, or for the realization of the trust fund, and then to obtain the proper order for using the trustee’s name, or for obtaining a receiver for using the trustee’s name, who would, on behalf of the whole estate, institute the proper action, or the proper suit in this court.

Thus, where the trustees of a union refused to take legal proceedings to restrain the union from a proposed misapplication of its funds, a single member of the union was held entitled to sue in his own name, the trustees being added as defendants.19 Likewise, a beneficiary was permitted to sue personally when the trustees were entitled to possession of trust property, were unwilling, and said they were unable, to sue for mesne profits, and had subsequently been discharged from the trusts.20 Where the trustee or life tenant, by threats or acts, manifests an intention not to renew an expiring lease, a beneficiary may take proceedings to have the lease renewed.21 In Ramage v Waclaw,22 where an aged and infirm testator transferred a joint interest to her children who held power of attorney, the universal legatee under the will was held to have locus standi to bring proceedings on behalf of the estate in order to challenge the validity of the transfer where the executor had failed to do so. Where a trustee has admitted to having possession of trust money and the court is of the opinion that the trust property is endangered, it may, on the application of any person interested, order the money to be paid into court.23 This practice, however, is apparently not [page 562] favoured and will, in any event, be adopted only where there is no real dispute as to the trustee’s liability,24 and where the applicant’s title is beyond any real dispute.25

To Restrain a Breach of Trust

[23-04] Where trustees are intending to perform an act which would constitute a breach of trust, the court will, on the application of a beneficiary, grant an injunction restraining them, even though the consequences of the proposed act may not be irremediable, and perhaps even if they are beneficial.26 This remedy is sought in the exclusive jurisdiction of equity and so unattended by the requirement to show the inadequacy of damages. It follows that the right to an injunction can only be defeated if the defendant can show one of the traditional equitable defences such as laches or unclean hands. Thus, in Milligan v Mitchell,27 the trustees of a chapel held on trust for religious services according to the doctrines and discipline of the Church of Scotland were enjoined on the application of two members of the congregation from introducing preachers into the pulpit who were not members of that Church. In Wylde v A-G,28 an injunction was granted restraining the Anglican Bishop of Bathurst from using, or authorising or encouraging the use of certain forms of service not in accordance with the forms contained in the Book of Common Prayer and the performance of certain ceremonies illegal in the Church of England, the basis for the jurisdiction to grant such injunctions being that the property of the Church of England was required to be administered on trust for the purpose of the Church of England in New South Wales and not otherwise.29 In Fox v Fox,30 an injunction was granted restraining trustees from dividing an estate contrary to the terms of the will. Injunctions have also been granted to restrain sales in breach of trust, or at an under-value, notwithstanding that the interest of the beneficiary was small or contingent,31 and to restrain insolvent trustees from obtaining possession of the trust property.32

Receivers [23-05] The court also has jurisdiction to appoint a receiver of the trust property.33 Although the case law predominantly is concerned with private trusts, the court may, on the application of the Attorney-General, in appropriate circumstances appoint a receiver to a charitable trust.34 If the occasion for an appointment to the assets of a private trust is refusal by one or [page 563]

more of the trustees to act, the court will move if there is before it the consent of those trustees who are acting as such, and of the beneficiaries; but, it seems, the court will otherwise not intervene.35 A receiver may be appointed on the application of one of the trustees36 or of any beneficiary37 where the appointment is required for the safety of the trust property, the basis of the jurisdiction being the jeopardy of that property.38 Thus, an appointment may be made if the trustees fail to get in the trust property,39 and if they cannot agree, in circumstances which endanger the trust property,40 for example, as to engagement of a manager to carry on a business they themselves are not qualified to conduct,41 or as to performance of a covenant for repair of a leasehold property, such that the lessor threatens forfeiture of the lease.42 On the other hand, the mere circumstance that the trustees are persons of limited personal means does not provide a ground for appointment.43 The court may exercise its jurisdiction by a perpetual decree but the usual remedy is by interlocutory order, and a strong case needs to be made out.44

To Approach the Court for Determination of Questions of Construction and Administration [23-06] Under the old Chancery practice, any trustee or beneficiary and also, in the case of testamentary trusts, any personal representative or creditor, was entitled as of right to have the trust or estate administered by the Court of Chancery and to that end to obtain a decree for general administration.45 Further, in order to obtain the direction of the court upon any issue of construction or administration, it was necessary first to obtain a general order for administration of the whole of the estate, the general attitude of the court being that the taking of administration accounts had to precede the giving of any such direction.46 The effect of an order for general administration was completely to suspend for the duration of the order the powers of the trustees to manage and deal with the trust assets, and to require the sanction of the court for every subsequent dealing by them with the estate.47 The right to general administration was procedural rather than substantive in the sense that it existed only for lack of a more efficacious means of dealing with matters of administration and construction. The introduction of modern equity procedures discussed below has largely supplanted it.48

The history and demise of the general administration action is helpfully summarised by Young J in McLean v Burns Philp Trustee Co Pty Ltd.49 That action has now virtually been superseded by

[page 564] actions of the type the subject of this appeal, where nominated and specific relief is claimed rather than by way of the cumbersome process of general administration by the Court.50

Exceptional cases may arise where there have been sustained breaches of trust over very many years;51 in most cases the issues arising can be determined without the need for such an order. [23-07] In all jurisdictions there is available to a beneficiary a simple procedure by way of originating summons whereby specific questions of construction of the trust instrument may be determined by the court, and specific questions of administration of the trust may be dealt with without the necessity for any decree for general administration.52 Questions that could be decided in an administration suit can be decided in a suit commenced by originating summons,53 but the court will not try disputed questions of fact in proceedings instituted in this way because of the absence of pleadings defining those issues of fact,54 and because of an unwillingness to try such questions otherwise than on oral evidence.55 However, the mere fact that the beneficiary alleges a breach of trust against the trustee under circumstances which do not involve disputed facts, does not prevent the use of the summary proceeding by way of originating summons.56 Under this procedure a beneficiary may take out an originating summons for the determination, without an administration of the trust, of any question affecting the beneficiary’s rights and interests, the ascertainment of any class of creditors, legatees, devisees, next-of-kin or others, the furnishing of accounts by the trustees (but not accounts on the basis of wilful default or neglect of the trustee)57 and the payment into court of moneys in the hands of the trustees. The beneficiary may also obtain an order directing the trustees to do or abstain from doing any particular act in their capacity as trustees and, generally, the determination of any question arising in the administration of the trust. It is, of course, open to the trustees themselves to make application to the court for the same purposes. In Queensland and Western Australia, there is special provision whereby an aggrieved person with a vested or contingent interest in any trust

property may apply to the Supreme Court to review any act, omission or decision or give directions in respect of apprehended conduct.58

To Extinguish the Trust [23-08] The celebrated rule in Saunders v Vautier,59 in its modern formulation as enunciated by the High Court, is:60 Under the rule in Saunders v Vautier, an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest

[page 565] in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation.

In the same case, the High Court endorsed a principle (the ‘consent principle’) expressed by Mummery LJ in Goulding v James61 as follows:62 The principle recognises the rights of beneficiaries, who are sui juris and together absolutely entitled to the trust property, to exercise their proprietary rights to overbear and defeat the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a will or trust instrument.

Thus it does not matter that there are multiple beneficiaries, or whether their interests are immediate or successive, provided they are unanimous and all are sui juris. The rule also applies to funds, any interest in which is held by an institution for its charitable purposes.63 Probably the most common instance of a restriction imposed on a vested interest is a direction to accumulate the income until the beneficiary attains an age greater than 21 years. The rule in such a case was thus stated by Lord Langdale MR in Saunders v Vautier: ‘Where a legacy is directed to accumulate for a certain period, or where the payment is postponed, the legatee, if he has an absolute indefeasible interest in the legacy, is not bound to wait until the expiration of that period, but may require payment the moment he is competent to give a valid discharge.’64 So, too, Lord Davey stated in Wharton v Masterman: ‘[W]here there is an absolute vested gift made payable at a future event, with direction to accumulate the income in the meantime, and pay it with the

principal, the Court will not enforce the trust for accumulation in which no person has any interest but the legatee, or (in other words) the Court holds that a legatee may put an end to an accumulation which is exclusively for his benefit.’65 In regard to directions postponing the payment of vested interests, Sir William Page Wood VC stated in Gosling v Gosling:66 The principle of this Court has always been to recognise the right of all persons who attain the age of twenty-one to enter upon the absolute use and enjoyment of the property given to them by a will, notwithstanding any directions by a testator to the effect that they are not to enjoy it until a later age — unless, during the interval, the property is given for the benefit of another. If the property is once theirs, it is useless for the testator to attempt to impose any fetter upon their enjoyment of it in full so soon as they attain twenty-one. And upon that principle, unless there is in the will or in some codicil to it a clear indication of an intention on the part of the testator not only that his devisees are not to have the enjoyment of the property he has devised to them until they attain twenty-five, but that some other person is to have that enjoyment — or unless the property is so clearly taken away from the devisees up to the time of their attaining twentyfive as to induce the Court to hold that, as to the previous rents and profits, there has been an intestacy — the Court does not hesitate to strike out of the will any direction that the devisees shall not enjoy it in full until they attain the age of twenty-five years.

[23-09] Similarly, where a sum of money is bequeathed for the purchase of an annuity for a beneficiary, the beneficiary may demand the money instead of taking the annuity.67 Where, however, there is any outstanding charge upon the income of trust property as, for example, a charge of annuities upon the whole income, past and future, of a trust fund, the beneficiaries, although absolutely entitled subject only to that charge, cannot demand the transfer of the corpus subject to the setting aside of a fund to meet the annuity if this would [page 566] have the effect of defeating the interests of other persons entitled to income directed to be accumulated in excess of the period allowed by law.68 But where the annuitant has no recourse to past or future income to satisfy the annuity, it appears that the beneficiary can determine the trust for accumulation in respect of the trust fund subject only to the setting aside of a sufficient fund to meet the annuity, or subject only to the right of the annuitant to be paid out of the yearly

income.69 In that case, it does not matter that persons entitled to excess accumulations of income are defeated. Upon the same principles, whereby the trust instrument property is directed to be sold and the proceeds paid to one beneficiary who is sui juris and absolutely entitled, or where money is directed to be invested in a particular way and the investment to be held for the beneficiary absolutely, the beneficiary may elect to take the property or the money unconverted and thereby determine the trust.70 Where there are a number of beneficiaries all sui juris and absolutely entitled, they may collectively extinguish the trust and take the property unconverted.71 The position will be the same whether the beneficiaries are entitled concurrently or successively, and is not affected by directions of the settlor that the trustees must retain control of the trust property,72 provided that none of the interests is contingent.73 Where pursuant to similar provisions of a will the interest of a beneficiary had vested in possession, but under the will the trustees were directed to offer the property to the testator’s son at a fixed sum before selling, it was held that the beneficiary was not entitled to the property in its unconverted state, thus preventing the offer of the property to the son.74 [23-10] A specific devisee or legatee has, until the administration is completed, no specific proprietary interest in any asset.75 However, this does not prevent the beneficiary from requiring a transfer of the specific asset. It was established by the High Court in Bell v Scott76 that an executor could not resist the claim of a devisee to a conveyance to him or at his direction, even if debts, funeral and testamentary expenses have not all been paid, provided that the beneficiary was prepared to furnish the executor with sufficient funds to provide for payment of these liabilities. [23-11] If the trust property consists of land held upon trust for sale and the beneficiaries do not collectively elect to take the land in its unconverted state, a single beneficiary cannot insist upon having an undivided share in the land transferred to him or her77 nor, where the trustees have power to postpone sale, can a beneficiary insist upon the sale of that share and the transfer of the proceeds to him or her.78 The reason is that the transfer or sale of such an undivided share [page 567]

could prejudice the ultimate sale of the balance of the land. The rule is not limited to land but can apply to all assets where a similar prejudicial effect would follow.79 However, where the direction in the trust instrument is for the conversion of money into land or other property, a single beneficiary may ordinarily insist upon the transfer of the share of the money unconverted because the other beneficiaries would not thereby be prejudiced. Likewise, in the case of personalty, a beneficiary absolutely entitled to an aliquot share thereof is, in the absence of special circumstances, entitled to a transfer of the share.80 In Manfred v Maddrell,81 Sugerman J, in discussing the principles applicable in such a case, stated that the right of the beneficiary is governed by practical considerations, and in particular by considerations of convenience of division and of the risk of prejudice to other beneficiaries. Usually personalty can be thus conveniently divided. In Re Weiner’s Will Trusts,82 it was held that a beneficiary was entitled to his aliquot share of shares in a private company and it could be no objection to his demand that by acceding thereto the trustees would lose control of the company. The position will be different if it can be shown, by evidence, that the splitting of a parcel of shares will reduce their value.83 Further, the impracticality of dealing with separate two-thirds and one-third interests in rights of reprint and sale in film of the 1956 Olympic Games prevented the application of the rule at the instance of not all of the beneficiaries in Australian Olympic Committee Inc v The Big Fight Inc (No 2).84 [23-12] However, it must be remembered that the rule in Saunders v Vautier85 has no operation unless all the persons who have any present or contingent interest in the property are ascertained, sui juris and consent. In Berry v Green,86 the House of Lords refused in the absence of the next-of-kin to sanction distribution of a fund held on trust for accumulation and payment of certain annuities where it was possible that the accumulation might fail in part as being for an excessive period; in that case, the surplus income would be undisposed of and pass on as an intestacy and this contingent interest of the next-of-kin could not be dealt with without their consent. The same considerations prevented Miles CJ in In the Estate of Lee87 from allowing a residual estate to pass to the son of the testator where it was found that the testator’s intention was to make provision for ‘gifts over’ in favour of unborn children and in favour of a charitable organisation. He stated that the rule in Saunders v Vautier ‘may be

avoided either by the creation of an intervening discretionary trust or by provision for gift-over in the event of a contingency taking place’.88 Similar difficulties may arise with sub-trusts. A sub-trust will arise if A, a beneficiary under a trust, is declared trustee of his or her interest for B under a trust imposing active duties on A; the head trustee will owe duties to A who will continue to hold a beneficial interest and [page 568] A will owe distinct duties to B who will also acquire a beneficial interest.89 Even if B’s interest be vested absolutely and B be sui juris, there will not be between B and the head trustee the precise co-incidence of right and duty necessary for B to invoke the rule in Saunders v Vautier and require a conveyance of the legal title. On the other hand, if a beneficiary A makes an absolute declaration of trust for B, leaving no active duties for A to perform, then it would seem that B can invoke the rule in Saunders v Vautier against the head trustee independently of A. The authorities touching on the question consider whether, in those circumstances, A has made a disposition of a subsisting equitable interest, for the purposes of the modern equivalents of the Statute of Frauds.90 But even if, contrary to statements in some of the authorities,91 there has not been a ‘disposition’, B should be able to invoke the rule directly against the head trustee independently of A, for A has the right, through a double invocation of the rule, unilaterally to extinguish both trusts, and the trusts are, seen together, exclusively for the benefit of B.92

Modification of the Trust [23-13] The rule in Saunders v Vautier does not authorise beneficiaries to force upon trustees modifications of the trust which would impose new duties or to abrogate discretions or powers already held, or to direct the exercise of such discretions or powers. The rule authorises a direction as to conveyance of the legal title in the manner indicated earlier in this chapter, no more. Thus in Re Brockbank,93 Vaisey J held that beneficiaries who were together absolutely entitled to trust property were not entitled to direct remaining trustees as to the exercise of their power to appoint a new trustee. The beneficiaries must either

put an end to the trust or permit it to continue and so bear the exercise by the trustees of their powers. The situation may be otherwise if the terms of the trust are that the trustee is to act as the agent and upon the direction of the beneficiaries; for the powers and authorities of the trustee will here be circumscribed in their nature and upon their creation. In Butt v Kelson,94 the Court of Appeal suggested that where shares in a company were held on trust, the beneficiaries could compel the trustees to use their votes as the beneficiaries wished and that, if the beneficiaries were not in agreement, the court could compel the trustee to vote as it directed. Unsurprisingly, Upjohn J discounted Butt v Kelson as difficult to reconcile with basic principle.95

Basis of the Rule [23-14] It has been said that the principle upon which the rule is based is that any restriction on the enjoyment by a beneficiary who is sui juris of a vested interest is inconsistent with the nature of that interest and must be disregarded.96 Thus understood, the principle often will [page 569] involve the denial of the intentions of the settlor or testator, and in the United States the rule in Saunders v Vautier has met with a mixed reception and in many states has been rejected.97

Discretionary Trusts [23-15] In any event, the rationale formerly offered for the rule does not accommodate the modern so-called ‘discretionary’ trust, although the term is imprecise.98 There, in the place of ‘beneficiaries’ in the traditional sense who between them aggregate beneficial ownership of the trust property, there is a class of persons described in wide terms. This class is, in essence, the object of a trust power in the trustee to appoint either or both income or corpus and to do so periodically between members selected from the designated class on each such occasion, but reserving in the trustee a discretion as to the quantum of income or corpus appointed to any particular individual and a discretion to

declare the exercise of the power on any occasion. In such cases, it is difficult to maintain that any particular object of the power has an interest in the trust fund and, indeed, the widespread use of discretionary trusts as a means of avoiding death duties assumed that there would be no such interest for the purposes of revenue legislation. Further, to say that as between all of them the objects enjoy beneficial ownership and therefore may, if all sui juris, invoke the rule in Saunders v Vautier, is to envisage a group interest greater than the aggregate of individual interests by attribution to the whole of a character not possessed in any degree by any of its parts.99 However, clearly the objects have the right to due administration of the trust, so that the trust is entirely in their interest.100 Is this sufficient to enfranchise the objects of the power, if all sui juris, to join and terminate the trust? The better view is that the rule in Saunders v Vautier is not limited as indicated above,101 and that the objects may call for the trust fund in this way.102 In Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd,103 Kearney J held that the objects of a discretionary trust can join in terminating the trust, at least in a case where the class of objects is closed and all the income must be paid each year to one or more of the objects. French J reached the same conclusion in Australian Securities and Investments Commission v Carey (No 6).104 However, in practice such a result may often be impossible to achieve because the class of objects will be so widely described as to prevent identification and, further, because it will be rare for the class, even if the present members are identified, to be closed against future adherents who will on joining the class acquire corresponding contingent interests. Further, at least in cases where the class of discretionary objects remains open and, perhaps, also if the trustee has a power to accumulate income, it is suggested that the rule in Saunders v Vautier is unavailable.105 [page 570]

Powers of Advancement [23-16] Pilkington v IRC106 decides that a power of advancement authorises the settlement of the funds concerned on a further trust the terms of which differ from those of the original trust. Pilkington’s case itself concerned the

expectant share of an infant in a trust fund, one-half of which the trustees proposed to settle upon trusts, interests under which would be taken by other relatives as well as by the infant; the House of Lords held such an arrangement to be an advancement. The power of advancement was likened to a special power of appointment; but whereas the objects of a special power will be described in the trust instrument, those taking under an appointment by way of advancement cannot be so foreseen. It follows that while the rule in Saunders v Vautier may be invoked with the consent of objects of a special power of appointment, the amplitude of a power of advancement will usually not permit the same procedure. The matter is of some importance; in all jurisdictions there is implied a statutory power of advancement.107 However, the better view is that the prospect of attracting the exercise of a power of advancement usually will not, except in the case of persons already beneficiaries under the original trust, be of sufficient substance to warrant the elevation of strangers to the trust to the status of beneficiaries upon whose consent the rule in Saunders v Vautier turns. Such prospective involvement in the affairs of the trust may thus usually be ignored.108

To Follow the Trust Property [23-17] ‘A beneficiary of a trust is entitled to a continuing beneficial interest not merely in the trust property but in its traceable proceeds also.’109 The right of a beneficiary to follow the trust property into other property into which it may have been converted in the hands of the trustee and to follow the actual trust property in the hands of third parties will be considered in Chapter 27.

To Claim In Personam Against a Third Party who has Received Trust Property [23-18] The circumstances in which a trustee who has overpaid the correct beneficiary, or has paid the wrong beneficiary, may recover the amount of repayment have already been considered in Chapter 17. In Ministry of Health v Simpson,110 it was definitively established that a beneficiary in a deceased estate

has a personal right of action to recover from an overpaid beneficiary or a stranger volunteer. This claim is not liable to be defeated merely: (1) because of the absence of administration by the court; or (2) because the mistake under which the original payment was made was one of law rather than fact (the equitable claim in this respect anticipating the abrogation of the distinction more generally);111 or (3) because the original recipient turns out to have no title at all and is a stranger to the estate.112 [page 571] Thus, a disposition which according to the general law is invalid does not confer on those who, ex hypothesi, have improperly participated thereunder some moral or equitable right to retain what they have received against those whom the law declares to be properly entitled. As regards the conscience of the recipient on which equity acts, it may be sufficient that something has been received to which the recipient is not entitled.113 In Re Diplock’s Estate,114 the Court of Appeal expressed the view that in such circumstances the unpaid beneficiaries should exhaust their remedies against the defaulting trustee first. Lord Denning, in commenting on this extra-judicially, has stated:115 … but that must be confined to circumstances such as were present in that case. The observations in any event seem to have been unnecessary for the decision, which can be satisfied by the simple rule that if the beneficiary does choose to proceed against the trustee first and then sues the recipient, he must, of course give credit for the amount already received, as was done in John v Dodwell.116

But it would appear that the opinion of the House of Lords in Ministry of Health v Simpson117 does not support the views of Lord Denning. Lord Simonds stated: … but I should in passing mention Orr v Kaines118 in which it was clearly established that the right of the unpaid legatee to claim directly against the overpaid legatee is subject to this qualification, that he must first exhaust his remedy against the executor who has made the wrong payment. It was for this reason that I mentioned at an earlier stage of this opinion that the nextof-kin must be deemed to have recovered from the executors all they could recover.

A beneficiary may also recover from a stranger who has taken for value but with notice.119

Change of Position [23-19] Difficult questions may arise where the defendant has changed his or her position before the claim is made. In this connection, Lord Simonds said:120 Finally, my Lords, I must say some words on an argument of a more general character put forward on behalf of the appellant. The Court of Chancery, it was said, acted on the conscience, and, unless the defendant had behaved in an unconscientious manner, would make no decree against him. The appellant or those through whom he claimed, having received a legacy in good faith and having spent it without knowledge of any flaw in their title, ought not in conscience to be ordered to refund. My Lords, I find little help in such generalities. On the propriety of a legatee refusing to repay to the true owner the money that he has wrongly received, I do not think it necessary to express any judgment. It is a matter on which opinions may well differ. The broad fact remains that the Court of Chancery, in order to mitigate the rigour of the common law or to supply its deficiencies, established the rule of equity which I have described, and this rule did not excuse the wrongly paid legatee from repayment because he had spent what he had been wrongly paid. No doubt, the plaintiff might by his conduct and particularly by laches have raised some equity against himself; but, if he had not done so, he was entitled to be repaid.

The unavailability of this defence has led to statutory intervention in Queensland and Western Australia.121 Elsewhere,122 the position reflects the high level of protection afforded by equity to beneficiaries. [page 572]

Trusts other than Estates of Deceased Persons [23-20] The speech of Lord Simonds in Ministry of Health v Simpson123 makes it clear that the principles there enunciated apply only to claims by beneficiaries in the estates of deceased persons. The case does not deal generally with the right of an underpaid beneficiary to recover in personam against an overpaid beneficiary or against a third party. Usually the claim by a beneficiary against a third party will be a claim in rem to follow the trust property into the hands of the third party. In such a claim, there is no distinction between the beneficiary in a deceased’s estate and any other beneficiary. However, where the trust is not in respect of a deceased’s estate and where a claim in rem is not available because, for example, the property has been dissipated, the questions remain whether and, if so, under what circumstances the underpaid beneficiary can claim in personam against the overpaid beneficiary or the third party. Much of the complexity in this area of the law was occasioned by the fact that,

traditionally, a mistake of law was insufficient to found the trustee’s common law action to recover money paid by mistake, notwithstanding which the beneficiary had a claim in equity analogous to the legal claim and irrespective of the quality of the mistake, to which the statute of limitations would be applied by analogy.124 It is now established throughout the Commonwealth that the common law claim is available for mistake of law.125 It would seem to follow that there is no good reason for the beneficiary to have a distinct personal claim, with different attributes from that of the trustee, against a mistakenly paid recipient who has dissipated the property and who lacked knowledge of the breach of trust. For if the right applied more generally, then its different incidents (such as the obligation to proceed against the trustee first, and the unavailability of a defence of change of position) would conflict with the rights of the trustee at law, on which in special or exceptional circumstances the beneficiary may sue in his or her own name, joining the trustee.126 None of the foregoing is to deny that a third party volunteer who innocently receives trust property but who learns of the breach of trust while still possessed of it or its traceable proceeds is accountable as a constructive trustee.127

Queensland and Western Australia [23-21] In these states, legislation has modified substantially the principles stated above.128 First, the personal remedy of the beneficiary against the third party is extended to embrace not only testamentary trusts and distributions by personal representatives but also trusts inter vivos. Secondly, the recipient of the property wrongly distributed may plead that he or she received it in good faith and has so altered his or her position in reliance upon the propriety of the distribution that it would be inequitable to enforce the remedy; it is then for the court to make such order as it considers just in the circumstances. On the other hand, in Queensland the personal remedy is not to be exercised (unless the court grants leave) until the beneficiary has exhausted his or her rights against the trustee or personal representative. In Western Australia, the legislation directs action in the first instance not towards but away from the trustee or personal representative; other remedies must first be exhausted, this being the opposite of the Queensland position. _____________________________

1.

Cf CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [44].

2. 3.

See especially Chapters 16–22. Turner v Noyes (1903) 20 WN (NSW) 266; Simonson Properties Pty Ltd v Hardy [2014] NSWSC 229. The beneficiaries’ right is subject to the trustee’s right of indemnity: see [21-04].

4. 5.

Jenkins v Milford (1820) 1 J & W 629; 37 ER 508; Taylor v Taylor (1875) LR 20 Eq 297. Brown v How (1741) Barn 354; 27 ER 676.

6. 7.

Keeton, Law of Trusts, 10th ed, p 331; Kaye v Powel (1791) 1 Ves Jun 408; 30 ER 410. See [20-33].

8. 9.

Cf Turner v Noyes (1903) 20 WN (NSW) 266. Marshall v Blew (1741) 2 Atk 217; 26 ER 534; Cadogen v Kennett (1776) Cowp 432; 98 ER 1171; Re Penton [1924] 2 Ch 192; [1924] All ER Rep 598.

10. Bartlett v Bartlett (1845) 4 Hare 631; 67 ER 800; Store v Ford (1844) 7 Beav 333; 49 ER 1093; Gartside v Inland Revenue Commissioners [1968] AC 553 at 617–8; [1968] 1 All ER 121 at 134; Parkes Management Ltd v Perpetual Trustee Co Ltd (1977) 3 ACLR 303 at 313; Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (in liq) (1999) 96 FCR 217; 169 ALR 419 at [53]–[55]; Elliot v Secretary, Department of Education, Employment and Workplace Relations (2008) 249 ALR 182 at [39]. 11. For the distinction between duties and discretionary powers, see Chapter 16. 12. See [15-85]–[15-87]. 13. Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109; 204 ALR 417 at [55], approving Scott and Fratcher, The Law of Trusts, 4th ed, Vol 4, p 282. See also Ex parte Middleton [1983] 1 Qd R 170 at 173–4; Thomas v D’Arcy [2005] 1 Qd R 666 at [10]. 14. Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [110]. 15. Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109; 204 ALR 417 at [55], approving Ramage v Waclaw (1988) 12 NSWLR 84; see also Bridgewater v Leahy (1998) 194 CLR 457; 158 ALR 66 at [80]; Pearson v Commissioner of Taxation (2002) 116 FCR 357 at [13]–[15]; Chahwan v Euphoric Pty Ltd (2009) 73 ACSR 252 at [16]–[17]; Deutsch v Deutsch (2012) 6 ASTLR 386 at [40]. 16. Lidden v Composite Buyers Ltd (1996) 67 FCR 560 at 563–4; 139 ALR 549 at 552–3, followed by Cohen J in Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 at 436–7 and by Brereton J in Chahwan v Euphoric Pty Ltd (2009) 73 ACSR 252 at [18]. This passage in the previous edition was approved and applied in Mercedes Holdings Pty Ltd v Waters (No 2) (2010) 186 FCR 450; 78 ACSR 118 at [105]–[106]. 17. The authorities were reviewed and applied in El Sayed v El Hawach (2015) 88 NSWLR 214; 317 ALR 771. 18. (1873) LR 8 Ch App 597 at 609–10. See also Fletcher v Fletcher (1844) 4 Hare 67 at 78; 67 ER 564 at 568 per Sir James Wigram VC; Hayim v Citibank NA [1987] AC 730 at 747–8; Parker-Tweedale v Dunbar Bank Plc (No 1) [1991] Ch 12; [1990] 2 All ER 577. 19. Howden v Yorkshire Miners’ Association [1903] 1 KB 308, affirmed [1905] AC 256; [1904–7] All ER Rep 602. See also Meldrum v Scorer (1887) 56 LT 471; Bennett v English, Scottish and Australian Chartered Bank (1888) 9 LR (NSW) L 554; Williams v Papworth [1900] AC 563. 20. Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432. 21. Bennett v Colley (1832) 2 Myl & K 225; 39 ER 930. 22. (1988) 12 NSWLR 84. 23. Freeman v Fairlie (1812) 3 Mer 29; 26 ER 12; Wiglesworth v Wiglesworth (1852) 16 Beav 269; 51 ER 782; Church of England Property Trust, Diocese of Goulburn v Rossi (No 2) (1893) 14 LR (NSW) Eq

66; McMahon v Hermann (1893) 14 LR (NSW) Eq 77; Re Clinton (1910) 10 SR (NSW) 465. 24. Neville v Matthewman [1894] 3 Ch 345; see the remarks of Lindley LJ at 353. 25. Hollis v Burton [1892] 3 Ch 226. 26. Attorney-General v Aspinall (1837) 2 My & Cr 613; 40 ER 773; Milligan v Mitchell (1837) 1 My & K 446; 39 ER 750; Balls v Strutt (1841) 1 Hare 146; 66 ER 984; Howden v Yorkshire Miners’ Association [1903] 1 KB 308, affirmed [1905] AC 256; [1904–7] All ER Rep 602; Dundee Harbour Board Trustees v Nichol [1915] AC 550; Corozo Pty Ltd v Total Australia Ltd [1988] 2 Qd R 366. See also Meagher, Gummow and Lehane’s Equity, [21-015]. 27. (1837) 1 My & K 446; 39 ER 750. 28. (1948) 78 CLR 224; [1948] ALR 153. 29. See also Attorney-General v Holy Apostolic and Catholic Church of the East (Assyrian) Australia NSW Parish Association (1989) 37 NSWLR 293; 98 ALR 327. Wylde’s case was considered in the decision of the New South Wales Court of Appeal in Scandrett v Dowling (1992) 27 NSWLR 483 at 508–10 and 559–62, where certain members of the Anglican Church failed to obtain an injunction to restrain a bishop from ordaining women as priests without the authorisation of the General Synod. 30. (1870) LR 11 Eq 142. 31. See Milligan v Mitchell (1837) 1 My & K 446; 39 ER 750; Dance v Goldingham (1873) LR 8 Ch App 902. 32. Gladdon v Stoneman (1815) 1 Madd 143; 56 ER 54; Bowden v Phillips [1897] 1 Ch 174. See also Park v Dawson [1965] NSWR 298. 33. The following sentences as they appeared in the 6th edition were approved in Yunghanns v Candoora No 19 Pty Ltd (No 2) (2000) 35 ACSR 34 at [66]. See also Re Equititrust Ltd (2011) 288 ALR 800 at [53]. 34. This was done to an educational charity in Attorney-General v Schonfeld [1980] 3 All ER 1; [1980] 1 WLR 1182, where, however, Sir Robert Megarry VC pointed out one limitation to the remedy. The trustees had the power to appoint governors of a school, who in turn had the power to appoint the headmaster; his Lordship held that the court could not empower the receiver to appoint a headmaster directly, but could empower him to appoint governors who would do so. See further Weth v AttorneyGeneral [1999] 1 WLR 686. 35. Brodie v Barry (1811) 3 Mer 695; 36 ER 267; Browell v Reed (1842) 1 Hare 434; 66 ER 1102; Tait v Jenkins (1842) 1 Y and CCC; 62 ER 985; Cole v Muddle (1852) 10 Hare 186 at 190; 68 ER 892. 36. Re Fowler (1881) 16 Ch D 723. 37. Middleton v Dodswell (1806) 13 Ves 266; 33 ER 294; Richards v Perkins (1838) 3 Y & C Ex 299; 160 ER 716; Swale v Swale (1856) 22 Beav 584; 52 ER 1233. 38. Middleton v Dodswell (1806) 13 Ves 266; 33 ER 294; Barkeley v Reay (1842) 2 Hare 308; 67 ER 127. 39. Richards v Perkins (1838) 3 Y & C Ex 299; 160 ER 716. 40. Swale v Swale (1856) 22 Beav 584; 52 ER 1233; Estate of William Just (No 1) (1973) 7 SASR 508. 41. Hart v Denham [1871] WN 2. 42. Re Fowler (1881) 16 Ch D 723. 43. Howard v Papera (1815) 1 Madd 142; 56 ER 54. 44. Yunghanns v Candoora No 19 Pty Ltd (No 2) (2000) 35 ACSR 34 at [70], [84], [92]. 45. Re Blake (1885) 29 Ch D 913 at 916. In McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 633–8, Young J expressed the view that the entitlement to an administration order at the suit of creditors existed not only in respect of deceased estates, but also in respect of trusts inter vivos.

46. Re Wilson (1885) 28 Ch D 457 at 460; Seton, Judgments, 7th ed, p 1419; F Jordan, Select Legal Papers, Legal Books 1983 (reprint), ‘Administration of the Estates of Deceased Persons’, pp 42–4, to which the reader is referred for a full discussion of the subject. 47. Re Viscount Furness [1943] Ch 415. 48. Heydon v Gell (1900) 21 LR NSW (Eq) 265; MacFarlane v Brown [1919] NZLR 218 at 232–6. 49. (1985) 2 NSWLR 623 at 633ff. 50. Pope v DRP Nominees Pty Ltd (1999) 74 SASR 78 at [41]. 51. See Re Morish [1939] SASR 305; Re Flavelle (dec’d) [1969] 1 NSWR 361. 52. ACT SCR O 58 r 1; NSW SCR Pt 68 r 2; NT RSC 54.02; Qld UCPR r 11(a); SA SCR 63.04; Tas SCR rr 604, 605; Vic RSC O 54.02; WA O 58 r 2. 53. Evans v Evans (1910) 10 SR (NSW) 594; Hudson v Gray (1927) 39 CLR 473 at 502. 54. Perpetual Trustee Co v Watson (No 1) (1927) 28 SR (NSW) 39. 55. Re Donaldson (1912) 12 SR (NSW) 148. 56. Trustees Executors and Agency Co Ltd v Smith (1903) 28 VLR 707; Perpetual Trustee Co v Watson (No 1) (1927) 28 SR (NSW) 39. 57. Perpetual Trustee Co v Watson (No 1) (1927) 28 SR (NSW) 39. 58. Trusts Act 1973 (Qld) s 8; Trustees Act 1962 (WA) s 94. See Re Robinson’s Trusts [1974] Qd R 243; and see [16-15]. 59. (1841) Cr & Ph 240; 49 ER 282. 60. CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [47], citing Thomas, Powers (1998) at 176. See also Sir Moses Montefiori Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406 at 410–11; Don King Productions Inc v Warren [2000] Ch 291 at 321; [1998] 2 All ER 608 at 634; Beck v Henley (2014) 11 ASTLR 457. 61. [1997] 2 All ER 239 at 247. 62. CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [43]. 63. Wharton v Masterman [1895] AC 186; [1895–9] All ER Rep 687. Aliter where the charity is entitled only to the income in perpetuity but not to the capital: Re Levy [1960] Ch 346; [1960] 1 All ER 42. 64. (1841) Cr & Ph 240; 49 ER 282. 65. [1895] AC 186 at 198; [1895–9] All ER Rep 687 at 691. 66. (1859) John 265 at 272; 70 ER 423 at 426. See also Smidmore v Makinson (1908) 6 CLR 243; 14 ALR 442; Re Nunburnholme [1912] 1 Ch 489. 67. Dawson v Hearn (1831) 1 Russ & M 606; 39 ER 232; Re Robbins [1907] 2 Ch 8; Re Dawson [1941] 1 DLR 790. 68. Berry v Green [1938] AC 575; [1938] 2 All ER 362; Thomas v Perpetual Trustee Co Ltd (1955) 94 CLR 537; [1956] ALR 85. 69. Wharton v Masterman [1895] AC 186; [1895–9] All ER Rep 687; Harbin v Masterman [1896] 1 Ch 351; Re Blake, Berry v Green [1938] AC 575; [1938] 2 All ER 362. 70. Whakatane Paper Mills Ltd v Public Trustee (1939) 39 SR (NSW) 426. 71. Wilkinson v Parry (1828) 4 Russ 272; 38 ER 808; Re Cotton’s Trustees and London School Board (1882) 19 Ch D 624; [1881–5] All ER Rep 926. 72. Josselyn v Josselyn (1837) 9 Sim 63; 59 ER 281; Gosling v Gosling (1859) John 265; 70 ER 423; Smidmore v Makinson (1908) 6 CLR 243; 14 ALR 442; Re Smith [1928] Ch 915; Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 182; 117

ALR 27 at 51–2. 73. Re Lord Nunburnholme [1912] 1 Ch 489. 74. Cox v Archer (1964) 110 CLR 1; [1964] ALR 782. 75. Horton v Jones (1935) 53 CLR 475 at 486; [1935] ALR 179 at 180–1; Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 312; 96 ALR 327 at 330; the observations in Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; [1965] AC 694; [1965] ALR 803 apply with equal force in the case of a specific bequest or devise. 76. (1922) 30 CLR 387 at 392–3; 28 ALR 238 at 239–40. But see Elias v Pacanowski [1992] NSW ConvR 55–641 at 59,666. 77. Re Horsnaill [1909] 1 Ch 631. 78. Re Kipping [1914] 1 Ch 62. 79. Wilson v Wilson (1950) 51 SR (NSW) 91. See, however, Re Weiner’s Will Trusts [1956] 2 All ER 482; [1956] 1 WLR 759. 80. Re Marshall [1914] 1 Ch 192; [1911–13] All ER Rep 671; Re Sandeman’s Will Trusts [1937] 1 All ER 368; Manfred v Maddrell (1950) 51 SR (NSW) 95; Re Weiner’s Will Trust [1956] 2 All ER 482; [1956] 1 WLR 759; Stephenson v Barclays Bank Trust Co Ltd [1975] 1 All ER 625 at 637; [1975] 1 WLR 882 at 889. See, however, Lloyds Bank v Duker [1987] 3 All ER 193; [1987] 1 WLR 1324, where John Mowbray QC distinguished Re Sandeman’s Will Trusts and Re Weiner’s Will Trusts by applying the principle that trustees are bound to hold an even hand among their beneficiaries and not favour one as against the other. He found that a trustee was under a duty to sell an entire residuary estate, 999 shares in a company, on the open market. All these authorities were considered and followed in Beck v Henley (2014) 11 ASTLR 457. 81. (1950) 51 SR (NSW) 95. 82. [1956] 2 All ER 482; [1956] 1 WLR 759. 83. See Lloyds Bank v Duker [1987] 3 All ER 193; [1987] 1 WLR 1324 at 1328–9; Beck v Henley (2014) 11 ASTLR 457 at [63]–[64]. 84. (2000) 176 ALR 124 at [35]–[38]. 85. (1841) Cr & Ph 240; 49 ER 282. 86. [1938] AC 575; [1938] 2 All ER 362. 87. (1986) 84 FLR 268. 88. (1986) 84 FLR 268 at 271. 89. Re Lashmar [1891] 1 Ch 258. Cf Anson v Potter (1879) 13 Ch D 141, where Sir James Bacon VC held that where a fund is vested by a settlement in trustees for A for life with gifts over, and the reversion has subsequently been settled, the life tenant and the trustees of the reversionary settlement are entitled to call for a transfer of the trust fund, semble without joinder of the beneficiaries under the sub-settlement. Where a trustee of a discretionary trust was the only party with a present or contingent interest in other trust property, it was entitled to extinguish that trust: Robertson v Allen (2003) 11 BPR 21,213. 90. See [6-23] and Chapter 7 and Meagher, Gummow and Lehane’s Equity, Ch 7, especially [7-200]–[7215] for a full treatment of this issue. 91. See Grey v IRC [1958] Ch 375 at 385; [1958] 2 All ER 246 at 250 per Upjohn J; [1958] Ch 690 at 715; [1958] 2 All ER 428 at 436–7 per Lord Evershed; Corin v Patton (1990) 169 CLR 540 at 579; 92 ALR 1 at 28. 92. Cf CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [48].

93. [1948] Ch 206; [1948] 1 All ER 287. See also Re Higginbottom [1892] 3 Ch 132. 94. [1952] Ch 197. 95. Re George Whichelow Ltd [1953] 2 All ER 1558; [1954] 1 WLR 5. See also Hayim v Citibank NA [1987] AC 730. 96. Weatherall v Thornburgh (1878) 8 Ch D 261 at 270; [1874–80] All ER Rep 382 at 386. 97. Scott on Trusts, 34.1.3; see CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [44]. 98. Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; 151 ALR 1 at [8]; D Barnett (2004) 10 APLJ 169 at 189–214. See also [3-14]. 99. Gartside v IRC [1968] AC 553 at 605–6; [1968] 1 All ER 121 at 127; Sainsbury v IRC [1970] Ch 712 at 725; [1969] 3 All ER 919 at 927; Re Weir [1971] Ch 145; [1970] 1 All ER 297. 100. Re Smith [1928] Ch 915; Sainsbury v IRC [1970] Ch 712 at 725; [1969] 3 All ER 919 at 927. See also [2-46]. 101. See [23-08]. 102. Sainsbury v IRC [1970] Ch 712 at 725; [1969] 3 All ER 919 at 927. 103. [1984] 2 NSWLR 406 at 410–41, referred to with approval in CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; 221 ALR 196 at [48]. 104. (2006) 153 FCR 509; 233 ALR 475. 105. See the careful analysis by Kenny J in Elliot v Secretary, Department of Education, Employment and Workplace Relations (2008) 249 ALR 182 at [23]–[39]. The Full Court, dismissing an appeal, observed that in such cases ‘it will not be possible to measure the collective interests of all existing members of the class for the reason that the power to accumulate might be exercised’: Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Elliott (2009) 174 FCR 387; 254 ALR 223 at [24]. 106. [1964] AC 612; [1962] 3 All ER 622. See also [20-57]. 107. See Chapter 20. 108. It is to be noted that in Anson v Potter (1879) 13 Ch D 141, Sir James Bacon VC held that where a fund was vested by a settlement in trustees for A for life and over, and the reversion had subsequently been settled, the life tenant and the trustees of the reversionary settlement were entitled to call for a transfer of the trust fund, semble without joinder of the beneficiaries under the sub-settlement. 109. Foskett v McKeown [2001] 1 AC 102 at 127; [2000] 3 All ER 97 at 120. 110. [1951] AC 251; [1950] 2 All ER 1137, affirming Re Diplock’s Estate [1948] Ch 465; [1948] 2 All ER 318. See also Re Atkinson [1971] VR 612. 111. See Meagher, Gummow and Lehane’s Equity, [14-010]–[14-025]. 112. See (1949) 65 LQR 37. 113. See Re Diplock’s Estate [1948] Ch 465 at 503; [1948] 2 All ER 318 at 337. 114. [1948] Ch 465; [1948] 2 All ER 318. See also Hagan v Waterhouse (1991) 34 NSWLR 308 at 369–70. 115. (1949) 65 LQR 37 at 44. 116. [1918] AC 563. 117. [1951] AC 251 at 267; [1950] 2 All ER 1137 at 1141. 118. (1750) 2 Ves Sen 194; 28 ER 125. 119. Nelson v Larholt [1948] KB 339; [1947] 2 All ER 751 (constructive notice). 120. Ministry of Health v Simpson [1951] AC 251 at 276; [1950] 2 All ER 1137 at 1147; see also (1949) 65

LQR 37 at 49. 121. Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439. 122. See, for example, K & S Corp Ltd v Sportingbet Australia Pty Ltd (2003) 86 SASR 312 at [156]–[162]. 123. [1951] AC 251; [1950] 2 All ER 1137. 124. Re Robinson [1911] 1 Ch 502 at 513; [1911–13] All ER Rep 296 at 300–1; Re Mason [1928] Ch 385 at 391–2. 125. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57; and see Meagher, Gummow and Lehane’s Equity, [14-015]. 126. See [23-03]. 127. See Agip (Africa) Ltd v Jackson [1990] Ch 265 at 291; [1992] 4 All ER 385 at 403–4; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; 258 ALR 727 at [92], [154]–[155]; Sze Tu v Lowe (2014) 89 NSWLR 317 at [142]–[145]; Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [45]. 128. Qld s 109; WA s 65. See Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439.

[page 573]

CHAPTER 24 What May be Trust Property Equitable Interests

[24-02]

Choses in Action

[24-03]

Expectancies or Possibilities

[24-04]

Property Inalienable Because of Public Policy

[24-05]

Property Inalienable by Statute

[24-06]

[24-01] ‘All assets, real or personal, legal or equitable, at home or abroad, and whether in possession or action, remainder or reversion, and whether vested or contingent, defeasible or nondefeasible, may be made the subject of a trust, unless (a) the policy of the law or some statutory enactment or a contract has made it inalienable; or (b) where the property is land abroad, the trusts sought to be created are inconsistent with the lex loci situs.’1 The property the subject of the trust must be certain, but, provided it is capable of being disposed of inter vivos or by will, it may be the subject of a valid trust. Even such unlikely statutory creatures as poker machine entitlements allocated in respect of hoteliers’ licences2 and milk quotas attached to euroholdings,3 have been found to be property capable of being held on trust. Various types of property which may or may not be so disposed of will be shortly considered.

Equitable Interests [24-02] An equitable interest in realty or personalty may be trust property and the beneficiary under the existing trust may declare himself or herself a trustee of the equitable interest, or may transfer it to trustees upon trust for

another. The existing trust continues, at least where the trustee, thus interposed between the ‘head trustee’ and the beneficiary under the new or ‘sub’ trust, has active duties to perform.4 The position is the same where the settlor is not the holder of the equitable interest under any trust as where there is, for instance, an equitable interest under a contract of sale or lease. Thus where A was the holder of an agreement for lease and assigned all A’s interest under the agreement to trustees upon trust for B, it was held to be a good trust, because A had conveyed A’s equitable interest in the property.5 [page 574]

Choses in Action [24-03] Choses in action may be assigned at law under statute in all jurisdictions, but even prior to those enactments they could be the subject of a trust, since equity had long recognised assignments of legal choses in action.6 In the case of choses in action to benefit third parties, an intention that they be held on trust may readily be inferred.7 Moreover, choses in action incapable of assignment, such as a contract involving personal skill or confidence, may be held on trust.8

Expectancies or Possibilities [24-04] Although at law the purported assignment of a possibility of acquiring property in the future was meaningless and void, equity regarded such an assignment, if supported by valuable consideration, as an agreement to assign the property when it came into existence.9 However, since there was no property in existence at the time of the purported creation of the trust, there could not be an immediately existing trust either by transfer of the property to trustees or by declaration of trust. Yet because the property is capable of identification when it does come into existence, equity does not permit the matter at that stage to rest in contract only. Provided that there is consideration (which is necessary, as no completely constituted trust can be created of

property not in existence), equity will seize upon the property as soon as it does come into existence and a completely constituted trust will then arise.10 ‘A man cannot in equity, any more than at law, assign what has no existence. A man can contract to assign property which is to come into existence in the future, and when it has come into existence, equity, treating as done that which ought to be done, fastens upon that property, and the contract to assign thus becomes a complete assignment.’11 The matter does not rest merely in contract; since equity, in a case where equity would grant specific performance of that contract when the property is acquired, binds the property itself once it is acquired, a discharge from bankruptcy of the debtor, although it discharges the debtor from previous contracts, does not destroy the validity of an earlier assignment of property not actually acquired until after the debtor’s bankruptcy.12 In such a case, an earlier agreement to create a trust in respect of such property could be enforced after discharge from bankruptcy when the property came into existence.

Property Inalienable Because of Public Policy [24-05] Such property cannot be the subject matter of a valid trust. Salaries or pensions granted by the Crown to enable persons to perform public duties or services are inalienable because public policy requires that such persons should enjoy the salary or pension granted to [page 575] them so that they may be the better fitted to perform such public duties and services.13 A more difficult question is whether bare rights of action may be held on trust; this would once have ‘savoured of’ maintenance.14 But statute has long authorised liquidators to assign bare rights of action,15 while litigation funding by third parties not otherwise connected with the litigation has, in recent times, flourished.16 If, and to the extent that, the underlying policy of the law has altered, there would appear to be no reason to prevent the right of action being held on trust.

Property Inalienable by Statute [24-06] Many statutes provide that moneys payable thereunder shall be inalienable and, in respect of those moneys, trusts cannot be created. See, for example, s 41 of the Superannuation Act 1990 (Cth) and s 235 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW), which provide that moneys are not capable of being assigned. _____________________________ 1.

Hayton, Matthews and Mitchell, Underhill and Hayton: Law of Trusts and Trustees, 19th ed, art 10.1, pp 261–2.

2. 3.

See [5-24]; Wonall Pty Ltd v Clarence Property Corp Ltd (2003) 58 NSWLR 23. Swift v Dairywise Farms Ltd [2000] 1 All ER 320; [2000] 1 WLR 1177.

4.

5.

Barrett J, after a careful analysis, has analysed the position of an intermediate bare trustee in ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 53 ATR 527 at [243]–[270], concluding that the intermediate trustee disappears in those circumstances. Gilbert v Overton (1864) 2 H & M 110; 71 ER 402.

6. 7.

See Meagher, Gummow and Lehane’s Equity, Ch 6. See [5-02].

8.

Don King Productions Inc v Warren [2000] Ch 291 at 320–1; [1998] 2 All ER 608 at 633; McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499 at [14]; Barbados Trust Co Ltd v Bank of Zambia [2007] 1 Lloyd’s Rep 495; and see A Trukhtanov (2007) 70 MLR 848; P Turner [2008] CLJ 23. Holroyd v Marshall (1862) 10 HLC 191; 11 ER 99; Collyer v Isaacs (1881) 19 Ch D 342 at 351; [1881– 5] All ER Rep 828 at 829; Tailby v Official Receiver (1888) 13 App Cas 523; [1886–90] All ER Rep 486; Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 24–5; [1964] ALR 131 at 145.

9.

10. Re Clarke (1887) 36 Ch D 348; Tailby v Official Receiver (1888) 13 App Cas 523; [1886–90] All ER Rep 486. This passage, in the 7th edition of this work, was cited and applied in RIL Aviation HL 7740 and HL 7741 Pty Ltd v Alliance & Leicester plc [2011] NSWCA 423 at [203]–[209]. 11. Collyer v Isaacs (1881) 19 Ch D 342 at 351; [1881–5] All ER Rep 828 at 829. 12. Re Lind [1915] 2 Ch 345; [1914–15] All ER Rep 527; Deputy Commissioner of Taxation v Government Insurance Office of New South Wales (1993) 117 ALR 61; Re Androma Pty Ltd [1987] 2 Qd R 134. See Meagher, Gummow and Lehane’s Equity, [6-275]–[6-330]. 13. See Grenfell v Deans and Canons of Windsor (1840) 2 Beav 544; 48 ER 1292; Mulvenna v Admiralty Commissioners 1926 SC 842. The second named case makes it clear that the principle (i) applies to all public servants, not merely to high officers of State; (ii) applies not merely to servicemen but to civilians as well; (iii) applies to past wages which have accrued due as well as to future wages; it also emphasises that statutory prohibitions are merely declaratory of the common law. 14. Glegg v Bromley [1912] 3 KB 474 at 490; [1911–13] All ER Rep 1138 at 1146. 15. Stein v Blake [1996] 1 AC 243 at 258; [1995] 2 All ER 961 at 970; UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [1997] 1 VR 667 at 682; see Meagher, Gummow and Lehane’s Equity, [6-470]. 16. See Re William Felton & Co Pty Ltd (1998) 145 FLR 211 at 220; Gore v Justice Corporation (2002) 119

FCR 429 at [59]; 189 ALR 712; Callery v Gray [2002] 3 All ER 417 at [48]–[49]; In the Matter of Claims Direct Test Cases [2003] 4 All ER 528; Hamilton v Al Fayed (No 2) [2003] QB 1175 at [45]– [47], [63]–[67], [81]–[83]; [2003] 3 All ER 641; R (Factortame) v Transport Secretary (No 8) [2003] QB 381 at [44], [79]–[82]; [2002] 4 All ER 97; Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; 218 ALR 166 at [88]–[123]; Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; 229 ALR 58.

[page 576]

CHAPTER 25 Vesting of Trust Property Introduction

[25-01]

Vesting on Appointment or Retirement of Trustees out of Court

[25-02]

Vesting Orders Vesting Orders Under the Trustee Acts: The General Power New South Wales and the Australian Capital Territory Other jurisdictions Vesting Orders Under the Trustee Acts: Particular Provisions Effect of a Vesting Order Made Under the Trustee Acts Vesting Orders Under Other Statutes

[25-03] [25-04] [25-04] [25-06] [25-07] [25-08] [25-09]

Appointment of Persons to Convey Appointment of Person to Convey Minor’s Property

[25-10] [25-11]

Introduction [25-01] Trust property, in the case of a completely constituted trust, is vested in the trustee. Where the trust is created by assurance inter vivos, the vesting must generally be contemporaneous with the creation of the trust if the trust is a voluntary one. When the trust is created by declaration, the property is ex hypothesi vested in the trustee. These aspects of vesting have already been considered.1 Where a trustee retires leaving the remaining trustees to carry on the trust, or where new trustees are appointed on the retirement of a former trustee or in any other circumstances, it is necessary that the trust property should be vested in

the trustees who are now carrying on the trust, whether it be the continuing trustees, the newly appointed trustees, or the continuing trustees along with the newly appointed trustees.

Vesting on Appointment or Retirement of Trustees out of Court [25-02] The ways in which new or additional trustees may be appointed and in which trustees may retire without application to the court have already been dealt with.2 It is now necessary to consider how, in such circumstances, the trust property is divested from a retiring or removed trustee and vested in continuing, new or additional trustees, as the case may be. All the jurisdictions have legislation, which is in almost identical terms, dealing with the [page 577] situation. In New South Wales, the matter is covered by s 9 of the Trustee Act 1925 which is in the following terms: 9. (1) Where a new trustee is appointed, the execution and registration of the deed of appointment shall without any conveyance, except as otherwise provided in this section, vest in the persons who become and are the trustees for performing the trust, as joint tenants and for the purposes of the trust, the trust property for which the new trustee is appointed. (2) Where a trustee retires, the execution and registration of the deed or deeds of consent and retirement shall without any conveyance, except as otherwise provided in this section, vest in the continuing trustees alone as joint tenants and for the purposes of the trust, all the trust property which is jointly vested in the continuing trustees and the retiring trustee. (3) In the case of land subject to the provisions of the Real Property Act 1900 the property shall not vest until either: (a) the appropriate transfer is executed and registered, so that the property is duly transferred, or (b) an entry of the vesting is made by the Registrar-General. Any such entry shall have the same effect as if the property were duly transferred. (3A) In the case of any property subject to the provisions of the Closer Settlement Acts, the Crown Lands Act 1989, the Mining Act 1992, the Offshore Minerals Act 1999, or any other Act relating to Crown lands, the property shall not vest until either:

(a) the appropriate transfer is executed and registered so that the property is duly transferred, or (b) an entry of the vesting is made in the appropriate register kept under the provisions of the Act to which such property is subject. Any such entry shall have the same effect as if the property were duly transferred. (4) In the following cases the property shall not vest until the appropriate transfer is executed and registered so that the property is duly transferred, that is to say, in the case of: (a) any property comprised in a mortgage for securing money subject to the trust, where the property is not either land subject to the provisions of the Real Property Act 1900 or land conveyed on trust for securing debentures or debenture stock, (b) (Repealed) (c) any property a conveyance of which is required to be registered by or under any Act, whether of this State or otherwise, other than the Acts mentioned in subsections (3) and (3A). (5) In the case of any property that is only transferable in books kept by a corporation company or other body, or in manner directed by or under any Act, whether of this State or otherwise, the property shall not vest until it is duly transferred. (6) In the case of land held under a lease which contains any covenant condition or agreement against assignment or disposing of the land without licence or consent, the land shall not vest until it is duly transferred, unless: (a) before the execution of the deed of appointment, or the deed or deeds of consent and retirement, as the case may be, the requisite licence or consent to the assignment or disposition has been obtained, or (b) by virtue of any statute or rule of law the vesting would not operate as a breach of covenant or give rise to a forfeiture. In this subsection ‘lease’ includes an underlease and an agreement for a lease or underlease. (7) If any property does not vest under this section until transfer or registration, the execution and registration of the deed of appointment, or of the deed or deeds of consent and retirement, as the case may be, shall nevertheless vest the right to call for a transfer of the property, and to sue for or recover the property. (8) This section extends to an appointment by deed, or a retirement by deed, under the provisions of the instrument, if any, creating the trust. (9) This section applies to trusts created either before or after the commencement of this Act.

The section is self-explanatory and requires little exposition. By virtue of it, execution and registration of the deed, either of appointment or retirement, is effective to provide for the vesting of the trust property except in relation to the following classes of property:

[page 578] (1) Land under the Real Property Act 1900 (NSW). (2) Crown land, and other land under the statutes identified in s 9(3A). (3) Property comprised in a mortgage where the property is not either land under the Real Property Act 1900 (NSW) or land conveyed on trust for securing debentures or debenture stock. (4) Property, a conveyance of which is under New South Wales or other laws required to be registered. (5) Property that is only transferable in books kept by a corporation, company or other body or in manner directed by a New South Wales or another Act. In addition to this section, there is provision in the sections relating to the appointment of new or additional trustees and the retirement of trustees that any conveyance or thing requisite for vesting the trust property, or any part thereof, jointly in the persons who are the trustees, or in the continuing trustees in the case of retirement of trustees, shall be done.3 In South Australia4 and in Tasmania,5 the position is the same as in New South Wales, provision being made in the legislation of those states for automatic vesting both in the case of an appointment out of court and in the case of a retirement out of court. Substantially the same is true in all other Australian jurisdictions.6

Vesting Orders [25-03] The only other way by which property may be vested in any person without a conveyance, transfer or assignment, or a deed of appointment or retirement of trustees, is by a vesting order made by the Supreme Court either pursuant to the trustee legislation or otherwise in its general equitable jurisdiction. A vesting order may be defined as an order by a superior court which has the effect of passing the legal estate or interest in any property in the same manner as though the legal estate or interest had been conveyed or transferred by the person in whom it was previously vested by the conveyance or transfer in the manner required by law for such conveyance or transfer. The

circumstances may be such that a conveyance becomes necessary and the person who should convey is not in a position to do so. For example, the person may be of unsound mind, or be under age, or have gone away and cannot be found; or he or she may refuse to convey, or a company may have been dissolved before executing a conveyance that should have been executed. In cases of this kind the court makes an order vesting the property in such person or persons as the court directs, without any other conveyance, transfer or assignment.7 The circumstances where vesting orders may be made, and their effect, are set out in all the trustee legislation of the various jurisdictions. In every jurisdiction there is an alternative course to the making of a vesting order, namely, the appointment of a person to convey the property or to release any contingent right. There is also provision in jurisdictions other than New South Wales, South Australia and Tasmania for the appointment of persons to convey [page 579] infants’ property. As the legislation is reasonably uniform, the New South Wales provision will be considered in some detail, and the other states’ equivalent provisions will be noted.

Vesting Orders Under the Trustee Acts: The General Power New South Wales and the Australian Capital Territory [25-04] Section 71(1) provides as follows: 71. (1) The Court may make an order in this Act called a vesting order, which shall have effect as provided in section 78.

This section deals with vesting orders of property the subject of a trust. By virtue of the definition in s 5 of the Act, the jurisdiction extends to constructive trusts, so that on a declaration of the existence of a constructive trust the court has power by its decree to vest the trust property in the beneficial owner.8 Thus, where a vendor has been paid the purchase price but has not conveyed, the court may vest the subject property in the purchaser.9 In proper cases, such as

on the proposed appointment of a new trustee, the court has power to make a prospective vesting order which will take effect on the actual appointment of the trustee or on the fulfilment of some other condition.10 Section 71(2) then provides: (2) A vesting order may be made in any of the following cases, namely: (a) where the Court appoints or has appointed a new trustee,11 (b) where a new trustee has been appointed out of court under any statutory or express power,

The purpose of para (b) is to provide for the case where a trustee removed under s 6 of the Act is out of the jurisdiction, or for some other reason cannot be compelled to execute or do any conveyance or thing which may, under s 9, be requisite for vesting the trust property in the persons who are the trustees. It also overcomes a difficulty which previously arose where all the trustees were deceased and new trustees were appointed under a power contained in the trust instrument. In that case, if there was no legal representative of the last surviving trustee, there was no person to convey the trust property and the court, since it had not itself appointed the new trustees, could not make a vesting order.12 Now, however, use may be made of this paragraph where necessary, that is to say, in cases where the property does not vest in the new trustees under s 9 without the execution of conveyances or transfers.13 (c) where a trustee retires or has retired,

This paragraph provides for the case where the retiring trustee is for some reason unable to execute conveyances or transfers requisite under s 9.14 (d) where a trustee is a minor,

[page 580] Although the appointment of a person under the age of legal capacity is, since 1 January 1931, void, a minor may still be a constructive trustee, as where previously to the Probate Act of 1890 a vendor of lands died before conveyance and the legal estate devolved on an infant.15 (e) where a trustee is an insane or an incapable person or person of unsound mind,

By s 5 of the Trustee Act 1925, an ‘insane person’ is defined as a person who has been found or declared, whether by inquisition or under any Lunacy Act in

force at the time, to be insane or of unsound mind and incapable of managing himself or herself or his or her affairs; this is to be read with the definition of ‘mentally ill person’ in ss 4 and 14 of the Mental Health Act 2007 (NSW). By the same section, ‘incapable person’ is defined as a person not a minor who is incapable through mental infirmity, arising from disease or age, of managing his or her affairs, but who is not an insane person. This paragraph is mainly applicable where a conveyance or transfer of trust property is necessary under s 9.16 (f) where a trustee is out of the jurisdiction of the Court, (g) where a trustee cannot be found,

In Re Price,17 an executor who had completed executorial duties and had become a trustee of the testator’s property, retired from the trusts of the will and left the jurisdiction without conveying the legal estate, as was then necessary, to the new and continuing trustees. The court made a vesting order in respect of the trust property in favour of the new and continuing trustees. In Re Throsby’s Settlement,18 one of two trustees of a marriage settlement left the jurisdiction after sale but before conveyance of certain lands, and an order was made vesting the lands in the other trustee and another person for the purpose of completing the sale.19 In Re McCarter,20 where a mortgagor had paid off all moneys due on his mortgage but was unable to locate the mortgagee so as to obtain his execution of a memorandum of discharge, an order was made vesting the mortgage in the mortgagor, on the footing that the mortgagee became, upon payment of all moneys secured by the mortgage, a trustee of the mortgage for the mortgagor. It was then open to the mortgagor to request the Registrar-General to enter a notification of the merger of the mortgage in the estate of the mortgagor. (h) where a trustee being a corporation is dissolved,

This paragraph, introduced in 1925, obviates a difficulty which had arisen where a company had been completely dissolved and yet had in its name property of which it was an express or constructive trustee. The power to make a vesting order where a trustee could not be found had been used,21 but it was not clear that this was an appropriate way of exercising the jurisdiction to make a vesting order in cases where no new trustee was appointed.22 Upon deregistration, property becomes vested in the Australian Securities and Investments Commission,23 but pre-existing rights and interests are preserved

and the jurisdiction under this paragraph, as well as the court’s inherent jurisdiction, is enlivened.24 Also, so that an effective vesting order can [page 581] be made, provision is made for the creation by the court of estates to replace those which have determined on dissolution of a corporation.25 The remaining paragraphs of s 71(2) are as follows: (i) where a trustee neglects or refuses to convey any property, or to receive the dividends or income of any property, or to sue for or recover any property according to the direction of the person absolutely entitled to the same for twenty-eight days next after a request in writing has been made to the trustee by the person so entitled, (j) where it is uncertain who was the survivor of two or more trustees jointly entitled to or possessed of any property, (k) where, as to the last trustee known to have been entitled to or possessed of any property, it is uncertain whether he or she is living or dead, (l) where there is no legal representative of a trustee who was entitled to or possessed of any property or where it is uncertain who is the legal representative of a trustee who was entitled to or possessed of any property, (m) where any person neglects or refuses to convey any property, or to receive the dividends or income of any property, or to sue for or recover any property in accordance with the terms of an order of the Court, (n) where the Court might have made a vesting order if this Act had not been passed, (o) where property is vested in a trustee, whether by way of mortgage or otherwise, either solely or jointly with any other person, and it appears to the Court to be expedient to make a vesting order.

Paragraph (n) makes it clear that the expression of the various circumstances in which a vesting order might be made under s 71 was not intended to limit the jurisdiction of the court to make vesting orders in any case where previously it might have done so.26 The other subsections of s 71 are as follows: (3) The provisions of paragraphs (d), (e), (f), (g), (h), and (i) of subsection (2) extend to a trustee entitled to or possessed of any property either solely or jointly with any other person. (4) Where the order is consequential on the appointment of a new trustee, the property shall be vested in the persons who, on the appointment are the trustees. (5) Where the vesting order is consequential on the retirement of one or more of a number of trustees, the property may be vested in the continuing trustees alone. (6) Subject to the provisions of subsection (4), the vesting order may vest the property in any

such person in any such manner and for any such estate or interest as the Court may direct, or may release or dispose of any contingent right to such person as the Court may direct. (7) The fact that the order is founded or purports to be founded on an allegation of the existence of any of the matters mentioned or referred to in subsection (2), shall be conclusive evidence of the matter so alleged in any Court upon any question as to the validity of the order. (8) This section shall not prevent the Court from directing a reconveyance or the payment of costs occasioned by any such order if improperly obtained, or from making a further vesting order. (9) Where by reason of the dissolution of a corporation either before or after the commencement of this Act a legal estate in any property has determined, the Court may by order create a corresponding estate and vest the same in the person who would have been entitled to the estate which determined, had it remained a subsisting estate.

Section 71 of the Australian Capital Territory legislation is similar. [25-05] One situation in which a vesting order is frequently made is on the death of a solicitor, particularly a sole practitioner, when there is often a need to operate on the office and trust bank accounts before the grant of general administration of the estate. This course has the [page 582] advantage of not requiring the publication of notices and the giving of bonds usually associated with the grant of probate. This was the course adopted by McLelland CJ in Eq in Re Croaker,27 where orders were made vesting moneys to the credit of a trust account in a solicitor and an accountant as new trustees. Another situation in which the making of a vesting order can be useful is where an applicant is entitled to an equitable interest in land under Torrens Title and the duplicate certificate of title is lost.28 However, there is a reluctance to make orders as a substitute for ordinary conveyancing practice.29 The High Court in Chang v Registrar of Titles (Vic)30 has held that an application for a vesting order is not the appropriate means for a purchaser to obtain the legal estate to land unless (a) the full purchase price has been paid and nothing further remains to be done by the purchaser, (b) the vendor has been joined as a party, and, possibly, (c) the contract is specifically performable.31 The Registrar-General should not be joined.32

Other jurisdictions

[25-06] The provisions of s 71 of the New South Wales and Australian Capital Territory Acts are reproduced almost precisely in the legislation of Victoria, Queensland and Western Australia.33 In South Australia, Tasmania and the Northern Territory, the legislation is to the same effect as in the other jurisdictions, except that land34 and other property35 are dealt with separately.

Vesting Orders Under the Trustee Acts: Particular Provisions [25-07] Although the sections just considered are the principal statutory source of power enabling a court to make a vesting order, there are supplementary provisions enabling the courts to make such orders in specific circumstances, as follows: (1) When it is desired to make a vesting order releasing property from the contingent rights of unborn persons and vesting in a person the estate to or of which the unborn persons would, on coming into existence, be entitled or possessed.36 (2) Where a mortgagee is a minor, or is an insane or an incapable person or a person of unsound mind.37 (3) Where a mortgagee is deceased.38 (4) Where there is a judicial order for sale or mortgage.39 [page 583] (5) Where there is a judicial order or decree for specific performance.40 (6) Where it is desired to make a vesting order with regard to property held in trust for charitable purposes.41

Effect of a Vesting Order Made Under the Trustee Acts [25-08] Section 78 of the New South Wales Trustee Act 1925 provides: 78. (1) In the case of a vesting order consequential on the appointment of a new trustee, or the

retirement of a trustee, the vesting order shall have the same effect as if the persons who before the appointment or retirement were the trustees, if any, had duly executed all proper conveyances of the property for such estate or interest as the Court directs, or if there is no such person, or no such person of full capacity, then as if such person had existed and been of full capacity, and had duly executed all proper conveyances of the property for such estate or interest as the Court directs. (2) In every other case the vesting order shall have the same effect as if the trustee or other person or description or class of persons to whose rights, or supposed rights, the provisions of this Part respectively relate, had been an ascertained and existing person of full capacity, and had executed a conveyance or release to the effect intended by the order. (3) In the case of land subject to the provisions of the Real Property Act 1900, the land shall not vest until the appropriate entries are made in accordance with the provisions of that Act, and in the case of any other land, the land shall not vest before the order is registered in the office of the Registrar-General as prescribed by regulation under the Conveyancing Act 1919. (4) In the case of property subject to the provisions of the Closer Settlement Acts, the Crown Lands Act 1989, the Mining Act 1992, the Offshore Minerals Act 1999, or any other Act relating to Crown lands, the proper officer is hereby authorised, upon the vesting order being registered as provided in subsection (3), to make all such entries as may be necessary to give effect thereto. (5) In the following cases the vesting order shall vest in the person named in the order the right to transfer or call for a transfer of the property or security, that is to say, in the case of: (a) any property that does not come within subsections (3) or (4) of this section, but a transfer of which is required to be registered by or under any Act, whether of this State or otherwise; (b) any security that is only transferable in books kept by a corporation company or other body, or in manner directed by or under any Act, whether of this State or otherwise. (6) In the case of any security or chose in action the vesting order shall vest in the person named in the order the right to receive the dividends or income thereof, and to sue for or recover the chose in action. (7) The person in whom the right to transfer or call for the transfer of any property or security is so vested may transfer the property or security to himself or herself or any other person according to the order, and all corporations companies associations and persons shall obey the order. (8) After notice in writing of the vesting order it shall not be lawful for any company association or person to transfer any property or security to which the order relates, or to pay any dividends thereon except in accordance with the order.

In Andco Nominees v Lestato,42 Santow J held that, where an order was made under s 71 of the Trustee Act which vested shares in a new trustee, s 78(5) and (7) prevented such a transfer from being frustrated by a board seeking to exercise its discretion under the articles to refuse to register the share certificates. [page 584]

The legislation of the other jurisdictions contains substantially the same provisions as s 78 of the New South Wales Act.43

Vesting Orders Under Other Statutes [25-09] Many other statutes make provision for vesting orders. New South Wales examples include ss 66E and 66G of the Conveyancing Act (vesting property held in co-ownership in trustees for sale) and s 66 of the Succession Act 2006 (vesting property for the purposes of making provision out of the deceased’s estate or notional estate).

Appointment of Persons to Convey [25-10] In all cases where a vesting order can be made, in all jurisdictions the court may, if it is more convenient, appoint a person to convey the property or release any contingent right, and a conveyance or release by that person in conformity with the order shall have the same effect as an order under the appropriate provision.44 The court has appointed a person to convey the entirety of an estate in which an infant held an undivided interest, the adult persons interested being parties to the sale.45

Appointment of Person to Convey Minor’s Property [25-11] In Victoria, there is special provision whereby the property of a minor may be dealt with by the appointment of a person to convey it. Section 55 of the Victorian Act (which in substance is adopted in Queensland, Western Australia and the Australian Capital Territory) provides: 55. Where a minor is beneficially entitled to any property the Court may, with a view to the application of the capital or income thereof for the maintenance, education, advancement or benefit of the minor, make an order — (a) appointing a person to convey such property; or (b) in the case of stock, or a thing in action, vesting in any person the right to transfer or call for a transfer of such stock, or to receive the dividends or income thereof, or to sue for and recover such thing in action, upon such terms as the Court thinks fit.

It is not easy to state with certainty the scope of the power given to the court

under this section. It is adopted from s 53 of the Trustee Act 1925 (Imp) and its effect and history were discussed in Re Gower’s Settlement.46 The section will only operate with a view to the application of the capital or income for the maintenance, education, advancement or benefit of the minor, but the word ‘benefit’ is so wide in this context that it would appear that any application of the proceeds of sale of the property which was materially advantageous to the minor would come within its terms.47 Under the circumstances, there does not appear to be any reason why the sale of a minor’s land, where the minor is the legal owner, should not be implemented under this section. One possible difficulty is that the section does not give power to enter into a contract for the sale of the minor’s land, but this problem would not arise where the minor has himself or herself entered into the contract,48 or, semble, where the minor’s guardian has entered into the contract on his or her [page 585] behalf. However, in Re Heyworth’s Contingent Reversionary Interest,49 Upjohn J pointed out that the section does not authorise the court to convey an infant’s property merely because it is for his or her benefit, but only ‘with a view to the application of the capital or income thereof for the maintenance, education, or benefit of the infant’. He accepted the view that the words ‘maintenance, education or benefit’ are words of the widest import, but held that the purpose of the conveyance must be that of applying the proceeds in accordance with the section. In that case, he found there was no such purpose, the purpose of the sale being in order to put an end to the trusts of the settlement by sale of the infant’s reversion to the life tenant. He said: ‘If I sanctioned this scheme on behalf of the infant I should be reading the section as though it empowered the court to convey the property of an infant whenever it was for her benefit.’50 It is suggested that the inclusion in the Australian legislation of the ‘advancement’ of a minor as a proper purpose of a vesting order does not alter this position. In Re White,51 Smith J, after a careful examination of the foregoing cases, concluded that the section lays down the following conditions which must be satisfied before an order can be made: (a) some application of the capital or income must be in contemplation; (b) it must be an application for the benefit of the infant owner;

(c) the court’s purpose, or one of its purposes, in making the order must be to cause or enable that application to be made; and (d) the circumstances must be such that the court considers it desirable that the discretionary power conferred by the section should be exercised. In this case, three infants were the legal and beneficial owners of shares in a company. These shares were hazardous investments for the infants and it was proposed to sell them at a price which equalled or exceeded the value of the shares to the infants or the proposed purchasers. The court was asked to make the necessary orders to carry the proposed sale into effect and to direct that the proceeds of sale in each case be held upon trust for the infant with powers of investments and application during infancy. Smith J held that the orders sought were for the purpose of an application of capital for the benefit of the infants within the section and ought to be made. The Australian Capital Territory, Queensland and Western Australian provisions are to the same effect as the Victorian provision,52 save that the precondition in the former two jurisdictions is broader: being merely that the court considers it necessary or desirable for the appointing or vesting to occur.53 The position in New South Wales is somewhat different. A section corresponding to s 53 of the Imperial Act was, until 1970, included as s 73 of the Trustee Act 1925. This section was applied in Re Newton.54 In that case, an ‘infant’ was a legal co-owner of certain lands and all the co-owners desired to mortgage the land. Application was made to the court for power to mortgage, the application being framed under s 151c of the Conveyancing Act 1919; Nicholas CJ in Eq held that the latter section was not applicable, since the infant was a legal as distinct from an equitable co-owner, but he held that he could make an order under s 73 appointing the other co-owners to convey by way of mortgage the share of the infant. He was satisfied that it was to the infant’s benefit so to do. [page 586] Section 73 of the Trustee Act 1925 (NSW) was replaced in 1970 by a much wider provision, s 50 of the Minors (Property and Contracts) Act 1970 (NSW). This section is cast in the following terms: 50. (1) Where a minor is beneficially entitled at law or in equity to property, the Supreme Court

may, on such terms as the Court thinks fit, make orders authorising a person, either generally or in any particular instance: (a) to make any disposition of the property, (b) to receive the proceeds of disposition of the property, (c) to call for a disposition of the property to the person so authorised or as the person directs, (d) to receive the income of the property, (e) to sue for and recover any chose in action comprised in the property, (f) to invest the property, or (g) to apply the capital or income of the property for the benefit of the minor. (2) The Court shall not make an order under this section unless it appears to the Court that the order is for the benefit of the minor.

One clear effect of this provision is to abolish the limitations on the power of the court which were discussed by Upjohn J in Re Heyworth’s Contingent Reversionary Interest. It appears that the only limitations which now exist are: (1) the minor must, at law or in equity, be beneficially entitled to property; and (2) it must appear to the court that the vesting order is for the benefit of the minor. In Tickle v Tickle,55 Young J held that s 50 gave him jurisdiction to alter a trust involving minors where circumstances had occurred which thwarted a settlor’s intention, and where the parties or their guardians had consented to a course which would give substantial effect to that intention. Although the power conferred is very broad, in practice the court will not ordinarily make an order which gives substantially unfettered powers to the trustees.56 _____________________________ 1.

See Chapter 6 ‘Express Trusts — Complete Constitution or Consideration’.

2. 3.

See Chapter 15 ‘The Appointment, Retirement and Removal of Trustees’. Trustee Act 1925 (NSW) ss 6(7), 7(7) and 8(6). On s 9, see State Wide Developments Pty Ltd (in liq) v Azure Property Group Holdings Pty Ltd (2012) 84 NSWLR 133.

4. 5.

Trustee Act 1936 (SA) s 16. Trustee Act 1898 (Tas) s 15.

6.

See Trustee Act 1925 (ACT) s 9; Trustee Act (NT) s 13; Trusts Act 1973 (Qld) ss 14 and 15; Trustee Act 1958 (Vic) s 45; Trustees Act 1962 (WA) ss 9 and 10, noting that although the Queensland, Victorian and Western Australian statutes have a different structure, each provides that it is the instrument of discharge which vests the trust property in the continuing trustees without any conveyance.

7.

Trustee Act 1925 (NSW) s 71(6). See, for example, as to a company, Re General Accident Assurance Corporation Ltd [1904] 1 Ch 147. This case was not followed in Re Taylor’s Agreement Trusts [1904] 2 Ch 737, but was followed in Re Richard Mills & Co (Brierly Hill) Ltd [1905] WN 36 and Re Clarke and Solomons’ Agreements Trusts (1905) 5 SR (NSW) 498.

8.

Sayer v McHugh (1985) 1 NSWLR 440 at 452; see also Commonwealth Bank of Australia v Nabi [2010] NSWSC 1425 at [14], citing the 7th edition of this work. Re Vaughn (1893) 14 LR (NSW) Eq 166; Re French (1902) 19 WN (NSW) 230; Re Clarke and Solomons’ Agreement Trusts (1905) 5 SR (NSW) 498.

9.

10. Plomley v Richardson & Wrench Ltd [1894] AC 632; Re Castlemaine Brewery & Wood Bros Ltd (1921) 38 WN (NSW) 45. 11. Cf Dodkin v Brunt (1868) LR 6 Eq 580; Plomley v Richardson & Wrench Ltd [1894] AC 632. 12. See Re Batho (1888) 39 Ch D 189. 13. See s 9(3), (3A), (4), (5); and see, for example, Sydney Markets Credit Services Co-operative Ltd v Taylor [2015] NSWSC 499 at [32]–[33]. 14. Cf Re Stretton [1942] WN 95. Prior to s 70(5), the court, although it might not reappoint the continuing trustees, could make an order vesting the trust property in such continuing trustees: Re Moore’s Will (1901) 1 SR (NSW) Eq 148; Re Eggleston [1940] VLR 474. 15. Re Lowry (1872) 15 LR (NSW) Eq 78; cf Re Cahill (1862) 1 SCR (NSW) Eq 26. 16. Cf Re West’s Will (1896) 17 LR (NSW) Eq 176; Re Chipman’s Trusts (1899) 20 LR (NSW) Eq 142. The trust property in such a case was vested in the person absolutely entitled. 17. (1902) 19 WN (NSW) 15. 18. (1868) 7 SCR (NSW) Eq 10. 19. See also Ex parte Ricketson (1873) 12 SCR (NSW) Eq 1, and for cases where a trustee could not be found, Ex parte Herring (1880) 1 LR (NSW) Eq 12; Re French (1902) 19 WN (NSW) 230; Re Graham (1938) 55 WN (NSW) 168. 20. Unreported, SC(NSW), McLelland CJ, 14 December 1961, noted in 35 ALJ 348. 21. For example, Re Clarke and Solomons’ Agreements Trusts (1905) 5 SR (NSW) 498. 22. Re No 9 Bomore Road [1906] 1 Ch 359; Re Albert Road, Norwood [1916] 1 Ch 289 (cases where a new trustee was appointed); Re General Accident Assurance Corporation Ltd [1904] 1 Ch 147. 23. Corporations Act 2001 (Cth) s 601AD(2). 24. Re Cenco Holdings Pty Ltd (2005) 53 ACSR 484 at [24]–[25]. 25. Trustee Act 1925 (NSW) s 71(9); cf Re Albert Road, Norwood [1916] 1 Ch 289. 26. See Re McCready (2004) 12 BPR 22,327 at [18]. 27. Unreported, SC(NSW), 13 May 1960. 28. Rizos v Rizos [1970] VR 150. 29. Dotter v Evans [1969] VR 41; Casella v Casella [1969] VR 49; Marshall v Williams [1974] VR 592 at 594; Re Purkiss [1999] 3 VR 223 at [18]. 30. (1976) 137 CLR 177; 8 ALR 285. 31. See also KLDE Pty Ltd (in vol liq) v The Commissioner of Stamp Duties for the State of Queensland (1984) 155 CLR 288 at 300–4; 56 ALR 337 at 346–50. 32. Chang v Registrar of Titles (Vic) (1976) 137 CLR 177 at 187–8; 8 ALR 285 at 293–4; Ex parte CRA Exploration Pty Ltd [1983] 1 Qd R 310; Re Purkiss [1999] 3 VR 223 at [22]. 33. Vic ss 51 and 52; Qld ss 82 and 83; WA ss 78 and 79.

34. SA s 36 and 37; Tas s 33; NT s 28. 35. SA s 41; Tas s 34; NT s 37. 36. ACT s 72; NSW s 72; NT s 29; Qld s 84; SA s 38; Tas s 35; Vic s 53; WA s 80. This provision was the subject of detailed consideration by Barrett J in Re McCready (2004) 12 BPR 22,327 at [20]–[30], who demonstrated that its application is now very limited, now that devised real property passes to the personal representative. 37. ACT s 74; NSW s 74; NT ss 30 and 38; Qld s 85; SA s 37(1)(b) (confined to land); Tas s 36; Vic s 54; WA s 81. 38. ACT s 75; NSW s 75; NT s 31; SA Trustee Act 1893 s 31; Tas s 37; Victoria, Queensland and Western Australia having no equivalent provision. 39. ACT s 76; NSW s 76; NT s 32; Qld s 88; SA Trustee Act 1893 s 32; Tas s 38; Vic s 56; WA s 83. 40. ACT s 77; NSW s 77; NT s 34; Qld s 89; SA Trustee Act 1893 s 34; Tas s 39; Vic s 57; WA s 84. If a memorandum of transfer has already been executed, there will be no utility in making the order: Bull v Wimble (2004) 12 BPR 22,223. 41. ACT s 80; NSW s 80; NT s 42; Qld s 93; SA s 45; Tas s 45; Vic s 61; WA s 88. 42. (1995) 17 ACSR 239. 43. ACT s 78; NT ss 35 and 37; Qld s 90; SA ss 39 and 41; Tas ss 34 and 40; Vic s 58; WA s 85. 44. ACT s 79; NSW s 79; NT s 36; Qld s 92; SA s 40; Tas s 41; Vic s 60; WA s 87. 45. Re Hurley’s Settled Estates (1920) 37 WN (NSW) 88. See also Borough of Burwood v Freehill (1906) 23 WN (NSW) 213; Borough of Drummoyne v Hogarth (1906) 23 WN (NSW) 243. 46. [1934] Ch 365; [1934] All ER Rep 796. 47. Re Peel [1936] Ch 161. See also Pilkington v IRC [1964] AC 612; [1962] 3 All ER 622. 48. Cf Re Newton (1936) 53 WN (NSW) 117. 49. [1956] Ch 364; [1956] 2 All ER 21. But see Re Cockerell’s Settlement Trusts [1956] Ch 372; [1956] 2 All ER 172, where Upjohn J distinguished his earlier decision. See also Re Meux [1958] Ch 154; [1957] 2 All ER 630. 50. [1956] Ch 364 at 371; [1956] 2 All ER 21 at 24. 51. [1959] VR 661 at 665; see also Gas and Fuel Corp of Victoria v Fitzmaurice (1990) 22 ATR 10. 52. ACT s 73; Qld s 87; WA s 82. 53. See Rubery v Rubery [2003] WASC 164. 54. (1936) 53 WN (NSW) 117. 55. (1987) 10 NSWLR 581. 56. Re Application by Klumper (2003) 11 BPR 21,225.

[page 587]

CHAPTER 26 Conversion Introduction Fletcher v Ashburner

[26-01] [26-02]

Partnership Land

[26-05]

Order of the Court

[26-06]

Contract to Sell

[26-07]

Settlements and Wills Directions to Convert Sale on Request or with Consent Mortgage with Power of Sale Conversion Depending on an Option to Purchase Time from which Conversion Takes Place Failure of Purposes for which Conversion is Directed

[26-08] [26-09] [26-10] [26-11] [26-12] [26-16] [26-17]

Reconversion Who May Elect so as to Effect a Reconversion Mode of Election Reconversion by Statute

[26-21] [26-22] [26-23] [26-24]

Effect of Application of Doctrine of Conversion

[26-25]

Introduction [26-01] Trust property may be realty or personalty. However, although property may in fact be realty in the hands of the trustee, it may be regarded in

equity as personalty. Conversely, although property may be personalty in the hands of the trustee, it may be regarded in equity as realty. This situation results from the application of what is known as ‘the equitable doctrine of conversion’. Conversion is a doctrine of equity whereby the nature of property is notionally or constructively changed so that realty may be treated by the law as personalty with the legal incidents of personalty, or personalty as realty with the legal incidents of realty. In practice, the doctrine is applied to treat land as money or money as land. It is founded on the equitable maxim that equity considers that as done which should be done. In England prior to 1925, the doctrine was extremely important in connection with intestacies, as the realty of persons dying intestate prior to that date descended to their heirs while personalty devolved on the next-of-kin under the Statutes of Distribution. This has not [page 588] been the case anywhere in Australia for many years past. But it should not be thought that the doctrine lacks modern application. One example is the compulsory acquisition of land forming the common property in a registered strata scheme — is the compensation payable to the strata company, or the proprietors of lots in the plan, and if the latter, the proprietors at the time of the acquisition or at the time, years later, when compensation was paid (see example (5) in [26-25])?1

Fletcher v Ashburner [26-02] The leading case on conversion is Fletcher v Ashburner,2 where the doctrine was stated by Sir Thomas Sewell MR:3 … nothing was better established than this principle, that money directed to be employed in the purchase of land, and land directed to be sold and turned into money, are to be considered as that species of property into which they are directed to be converted; and this in whatever manner the direction is given: whether by will, by way of contract, marriage articles, or otherwise, and whether the money is actually deposited or only covenanted to be paid, whether the land is actually conveyed or only agreed to be conveyed. The owner of the fund or the contracting parties may make land money, or money land.

In Fletcher v Ashburner, F by his will devised his realty and his personalty to

trustees upon trust for payment of his debts and then for his wife during widowhood and after her death to sell everything and divide the proceeds equally between his son and daughter. In case of the remarriage of his wife, the trustees were to sell everything and divide the proceeds equally among his wife, his son, and his daughter. He also provided that, if either the son or daughter should die before his or her legacy became due, the share of the one so dying should go to the survivor of them. The daughter came of age in her mother’s lifetime and died unmarried before her brother died. The brother, who was of full age at the testator’s death, also died in his mother’s lifetime, leaving no issue. The testator’s widow did not remarry. After her death, the son’s heir took proceedings against the trustees and the personal representatives of the testator and the widow to have a conveyance of the realty devised to the son. Clearly, on the death of the daughter the beneficial interest in the whole property was in the son subject to his mother’s life interest. When he died his mother was his sole next-of-kin. It was held that the property had vested in the son as money and therefore must go to the widow’s personal representatives. [26-03] Where money is directed to be laid out in land, as under a will, or is agreed to be laid out in land, as under a contract or covenant, then, for the purposes of the rules of equity, it immediately becomes land; and similarly where land is directed or agreed to be sold, without any provision that the proceeds are to be reinvested in land, the land becomes money, transmissible as such under a will. The fact that the directions to sell or to purchase land have not been carried out does not make any difference. The intentions of the settlor are not defeated by the neglect or failure of the trustees to carry out their duties. [26-04] The effect of the application of the doctrine of conversion is to make real estate personalty or personal estate realty although no actual conversion has taken place. There are four cases in which equity applies the doctrine: in respect of partnership land; under an order of the court; in respect of contracts to sell realty; and under settlements or wills.4 [page 589]

Partnership Land

[26-05] Land which is an asset of a partnership is, unless the contrary intention appears, to be treated as personalty and not realty, not only as between the partners themselves and their representatives after death, but also as between the persons entitled to the property of a deceased partner.5 The reason for this is that upon the dissolution of the partnership, the land will have to be sold for the purpose of division among the partners.

Order of the Court [26-06] Where a sale of realty is made by order of the court in an administration suit, there is conversion from the date of the order.6 In Re Grange,7 X mortgaged land, giving a power of sale, with a trust of the surplus proceeds for himself, ‘his heirs and assigns’. X became mentally incapable and died intestate. Before his death, but after he became mentally incapable, the property was sold and on his death it was held that the surplus was personalty. In New South Wales and Queensland, when real property held in coownership becomes subject to a statutory trust for sale, the land shall be deemed to be converted upon the appointment of trustees for sale unless the court otherwise directs.8

Contract to Sell [26-07] If a valid contract is entered into for the sale of land and the vendor dies before completion, the vendor’s representatives must convey the realty and, although not paid over in the vendor’s lifetime, the proceeds of sale form part of the vendor’s estate as personalty.9 In Hoddel v Pugh,10 a vendor agreed to sell realty but died before completion of the conveyance. His personal representatives were held entitled to enforce specific performance against the purchaser and to compel the heir to join in the conveyance. In Hudson v Cook,11 a purchaser under a contract of sale died intestate before completion. The vendor subsequently exercised a power of rescission reserved to him by the contract. The heir of the intestate purchaser was held entitled to receive out of the intestate’s personal estate the moneys that would have been

paid for the realty contracted to be purchased. At the time of the purchaser’s death, there was a valid and subsisting contract and if this had been carried out the heir would have received the land. Where land is taken compulsorily under powers given by statute, the property is converted as from the time notice of the resumption is published or, alternatively, the contract to sell is made, even if the vendor dies before title is conveyed.12 Similarly, in any case where the [page 590] transaction has definitely been settled, whether by agreement or by compulsion of statute. It is otherwise, however, where for example, there has been merely a notice to treat for purchase without any agreement being arrived at, although the land should be taken subsequently, after the owner’s death.13 In Watts v Watts,14 notice to treat was given by a railway company and was followed by an oral acceptance of a price fixed by arbitration. This was held a valid contract notwithstanding the Statute of Frauds. The vendor died before completion and a bequest of the leaseholds was held to be adeemed.

Settlements and Wills [26-08] The most common cause of a conversion is a direction given by a testator or settlor. Whenever trustees are directed to sell or to purchase realty, and there is some person who can insist upon their doing what they are directed to do, the property is treated as converted from the moment when the instrument comes into force. The mere fact that the trustees have failed to carry out their duty cannot alter the character of the property.

Directions to Convert [26-09] Directions to convert must be clear and imperative, for if there is merely an option to convert, the property will naturally be taken in the state in which it is found.15 Conversion frequently arises from powers of sale given to

trustees, and it is usually a matter of construction in each case whether the power is a mere authority to sell or is an imperative trust for sale. Distinction has to be made between a discretionary power of conversion and a trust for conversion with a discretion as to time and manner of conversion. In the former case, there will be conversion or not at the discretion of the trustees, while in the latter case there will be conversion, but the trustees have a discretion as to the time at which it will take place.16 A declaration by a settlor that personalty shall devolve on persons successively as realty, is not sufficient to create an imperative trust for conversion.17 Where an instrument coming into operation in New South Wales, Victoria or the Australian Capital Territory contains a power to invest money in the purchase of land, the land shall, unless the instrument otherwise provides, be held by the trustees on trust for sale. The result is that in such a case there is no conversion at all.18

Sale on Request or with Consent [26-10] Where the trustees are given a power of sale upon the request or with the consent of certain persons mentioned, the power may be a mere power or may be an imperative trust [page 591] for sale. It may be that they are not to sell at all unless requested to do so, the request or consent being a condition precedent to the power of sale. Alternatively, the trust for sale may be imperative and the provision for the request or consent is merely a means of insuring that the power will be exercised when request is made or consent given, and is not intended to prevent the exercise of the power until such request is made or consent given. In Thornton v Hawley,19 trustees of a marriage settlement were directed to invest moneys in land with all convenient speed after request made by the intended husband and wife or the survivor of them or the executors or administrators of such survivor. It was held that there was an imperative trust

for investment in land and that the trustees could invest the moneys in land although no request had been made. In Re Taylor’s Settlement,20 by a marriage settlement, property was conveyed and assigned to trustees upon trust on the request of the husband and wife, during their joint lives, and after the death of either, upon the request of the survivor, to sell the estate. There was no other power of sale mentioned, and from the general wording of the settlement it was clear that there was to be no sale and conversion except upon request.

Mortgage with Power of Sale [26-11] Where there is a mortgage of realty with a power of sale and a direction for payment of any surplus to the mortgagor, the devolution of the surplus will depend upon the time at which the sale takes place. If the property is sold in the mortgagor’s lifetime, the surplus moneys are personalty and form part of the mortgagor’s personal estate in case of his or her subsequent death. If, however, the sale is subsequent to the mortgagor’s death, the equity of redemption passes to the heir or devisee who will, accordingly, be entitled to any surplus.21

Conversion Depending on an Option to Purchase [26-12] Where a testator devises property which is, or subsequently becomes, the subject of an option to purchase, then if the option is exercised the proceeds descend as personalty in every case except in the case of a specific devise made subsequently to the creation of the option. In this last case, the devisee obtains the proceeds if the option to purchase is exercised after the death of the testator; for the property is deemed converted into personalty only as from the exercise of the option, the principle being that where the testator, knowing of the existence of the option, devises a specific property notwithstanding the option to purchase, the testator indicates an intention that the devisee should have all the interest therein, whether the property or the purchase money. The leading case on this is Lawes v Bennett.22 T leased a farm to D for seven years, giving D an option to purchase the fee simple for £3000 upon giving written notice before a certain date. D assigned the lease to X. T devised his realty to J and bequeathed his personalty to J and M in equal shares. After the testator’s death, X exercised the option and the property was duly conveyed to

him and the purchase money paid. It was held that the purchase money formed part of the personal estate of the testator. It is to be noted that in this case the devise, although made subsequently to the creation of the option to purchase, was general, not specific. [page 592] The decision in this case went upon the principle that if there is a valid contract to sell realty and the vendor dies before completion, the property forms part of the vendor’s personal estate, and in the case of the option to purchase, the whole matter was referred back to the original agreement giving the option. It is obvious that the problem could have been solved more in accordance with general principles by making the date of the exercise of the option the date of conversion. This leading case has, however, been followed ever since, but only where a contrary intention cannot be discerned. Such a case was Nicol v Chant.23 T, when he made his will, was possessed of a hotel property subject to a lease to A for a term of seven years. The lease gave to A an option to purchase during the term. The hotel property was subject to a mortgage. T, by his will, devised all his real estate to his trustee upon trust to pay the rents, and income thereof to his wife, B, for life and he directed his trustee after the death of B to stand possessed of his ‘said real estate’ upon trust to sell and convert and to divide the net proceeds and the rents and income until sale among C, D, E and F. T also bequeathed to his wife B ‘all my other personal property absolutely’. T empowered his trustee to raise any money on his real estate for the purpose of paying off any mortgage on his real estate. At T’s death, the hotel property was the only real estate which he had. It was still subject to the mortgage and to the lease containing the option to purchase. Four years after T’s death, A exercised the option to purchase. The High Court held that T had expressed an intention in his will, construed in the light of the surrounding circumstances, that the hotel property should not pass under the words ‘all other my personal property’ and that B took a life estate only in the hotel property. [26-13] Curiously enough, although the conversion is held to date from the creation of the option, the rents and profits in the meantime go to the heir or other person entitled to the realty.24 For example, in Weeding v Weeding,25 where there was a specific devise of realty and a bequest of residuary personalty,

and the testator subsequently gave an option to purchase over part of the realty, an option which was exercised after the testator’s death, the purchase money went to the residuary legatees, the profits until the option was exercised going to the devisees. [26-14] Where an option of purchase has been given and the person giving the option subsequently makes a specific devise of the property over which the option has been given, the purchase money will go to his or her personal representatives or to the devisee according as the option is exercised before or after his or her death, conversion in such circumstances dating from the exercise of the option. In Drant v Vause,26 lessees had an option of purchase of the demised lands. After the date of the lease, the lessor made a specific devise of the leased land. After the death of the lessor, the lessees exercised their option of purchase and it was held that the purchase money went as realty. Similarly, in Pyle v Pyle,27 where the devise and the option of purchase were created contemporaneously and the purchase money was held to belong to the devisee. [26-15] The principle acted upon in Lawes v Bennett is applied between real and personal representatives of the person giving the option to purchase; but it is not applied as between a vendor and a purchaser. For example, in Edwards v West,28 a landlord had covenanted to insure, the lessee having an option to purchase. Before the time for the exercise of the option, the demised buildings were burned down and the landlord received the insurance moneys. The tenant subsequently exercised his option and claimed the insurance moneys as part of his purchase, but it was held that he had no claim. In Reynard v Arnold,29 a tenant who had an option to purchase was bound to, and did, insure. The landlord also insured in a different office. [page 593] The premises were burned down and the insurance loss was apportioned between the two offices, the landlord receiving the amount thus payable under his policy. The tenant, shortly after the fire, gave notice of his intention to purchase. It was held that the landlord was not entitled to retain for his own benefit the insurance moneys received by him, nor was he entitled to insist on

the insurance moneys received by the tenant being applied to reinstating the premises after the tenant had exercised his option. In Re Cant’s Estate,30 a testator gave a direction to his trustees that upon the death of the life tenant under the will (his widow) they should offer the land to his son at a specified price. The land was purchased at a much higher price by a railway company acting under power given by their statute. It was held that the son was entitled to the difference between the price received and that at which he was entitled to purchase. In Re Cousins,31 an option of purchase given by a testator to his son was held to be a right personal to the son and not exercisable by the son’s executors.

Time from which Conversion Takes Place [26-16] As a general rule, since a deed takes effect from the date of execution while a will speaks from the death of the testator, in the case of deeds, conversion takes place as from the time the deed becomes effective, and in the case of wills, from the death of the testator. This is subject, however, to the terms of the particular instrument. In Griffith v Ricketts,32 a debtor had an equity of redemption of realty which he conveyed to trustees for sale for the debtor, his executors, administrators and assigns. On the debtor’s death, it was held that the property was part of his personal estate, having been converted as from the date the deed was delivered. ‘The sale or non-sale of the trust property may affect the character in which any surplus may go to the party to whom the deed gives it, but cannot determine or assist in determining the person to whom it goes.’33 Where the conversion is a result of statute, the time from which conversion operates will depend upon the particular statute.34

Failure of Purposes for which Conversion is Directed [26-17] Where conversion is directed and the purposes for which conversion was to be made fail, the property, so far as the purposes fail, will remain in the eyes of the law in its original state, whether it be converted or not. The rule is the same whether the purposes for which conversion is directed fail entirely or fail only in part, and whether or not the property has already been actually converted. In other words, if land is directed to be converted into money for

certain purposes and the purposes fail entirely or fail in part then, in the first case, the whole of the land or the money which represents it and, in the second case, the part not required for the purposes which fail, will be treated by the law as though no conversion had been directed. The position is similar in the case of money directed to be laid out in land, where the necessity for laying it out in land does not exist because fulfilment of the purposes for which the investment in land was desired by the settlor is no longer possible.35 [page 594] It is in the power of the settlor to avoid the reconversion of the property in its original state by express declaration, followed by a gift-over in case of failure of the purposes for which conversion was directed. There must be a gift-over. A mere declaration that the property should be taken in one character or another is not, of itself, sufficient.36 [26-18] Although the property devolves as realty or as personalty as though no conversion had been directed, and as if it had retained its original form both actually and notionally, what has just been stated as to its devolution refers only to the determination of the persons entitled to take it. There still remains to be considered the form in which such persons take it. The problem may be illustrated thus: S devises certain land to his trustees upon certain trusts which fail owing to the death of the beneficiaries in the testator’s lifetime. The will contains a residuary devise to D, who dies a few days after the death of the testator. The trustees hold the land, according to the foregoing rules, for D, just as though there had been no direction to convert, notwithstanding the fact that in the view of equity the land is money. D has left a will by which D’s realty is to go to X and D’s personalty to Y. Who gets the land that came to D through the will of S? Similarly, if part of the land had been sold before the purposes failed and then D became entitled and died before receiving the property, who would take the still unsold land and who the proceeds of the land already sold? [26-19] The rule is that where the purposes for which conversion has been directed fail entirely, the property devolves as if it had not been directed to be converted and it devolves in its original character — that is to say, where land has been directed to be converted into money and the purposes of conversion

fail, the land goes to the real representative and goes as realty, even though it should actually have been converted into money. Likewise with the conversion of money into land, upon failure of the purposes of conversion, the money, or the land into which it has been converted, will go to the personal representative as personalty.37 [26-20] It is otherwise, however, in the case of partial failure of the purposes of conversion. In such a case, there must be conversion to carry out the purposes so far as possible and consequently, although the surplus devolves as though there had been no conversion, it devolves in the quality of the property into which it has been directed to be converted. For example, if land is directed to be converted into money and there is a partial failure of the purposes of conversion, the surplus will go to the devisee of realty, but it will be taken as personalty and in case there should be necessity to trace its further immediate devolution, such person’s personal representative would be entitled to it. Similarly with money into land — the surplus would go to the personal representative who would, however, take it as realty.38 In the case of deeds, the dispositions under which take effect upon delivery, any failure of the objects of conversion will make the property result to the settlor and consequently, it will revert to the settlor in its original form or in its converted form according as there is complete or partial failure of the purposes for which conversion was directed.39

Reconversion [26-21] If property directed to be converted comes into the hands of an absolute owner in its unconverted state, such owner may elect to take the property in its actual state and thus put an end to the conversion. [page 595] If money directed to be laid out in land comes into the hands of the person entitled to dispose of the land if purchased, the money is his or her absolute

property and becomes part of his or her personal estate, although otherwise it would have been treated as converted into realty.40 Similarly, in Seeley v Jago,41 where it was said in the judgment ‘it is vain to lay out this money in land for B and C when the next moment they may turn it into money; and equity, like nature, will do nothing in vain’. In the same way, if the real estate were directed to be sold and the proceeds to be paid to a particular person or to particular persons, that person or those persons could call upon the trustee to convey the realty in its actual state instead of selling and the property would then be reconverted.42 Where a beneficiary has received the property into his or her own hands, it is said to be ‘at home’, and once it is ‘at home’ the notional conversion is ended and the property belongs to the owner, as realty or personalty according to its actual state in his or her hands. The reconversion then occurs by operation of law without any election.

Who may Elect so as to Effect a Reconversion [26-22] (1) An absolute owner may elect. (2) Tenants in common may elect. In the case of money directed to be invested in land, any of the tenants in common may elect to take his or her share in money.43 But in the case of land directed to be sold and the proceeds divided, the owner of an undivided share cannot elect to take the share as land, for this would prejudice the sale of the remainder.44 (3) Remaindermen. Although a remainderman may decide as between his or her real and personal representatives who shall take the property, this does not really give a power of altering its nature. The remainderman may declare that it shall go as though it were, as the case may be, realty or personalty, but that is simply equivalent to devising or bequeathing the property specifically without in any way affecting its nature in the eye of the law. It was expressly laid down in Sisson v Giles45 that if the parties interested had only a limited or defeasible interest, there could be no reconversion. But one contingently entitled to the proceeds of real estate directed to be sold may, pending the contingency, elect to take the estate as realty and such election will become operative if the contingency shall happen on or before his or her death.46

Infants and the mentally incompetent. While their incapacity lasts, these (4) cannot reconvert, but the court may elect for them if the circumstances necessitate such action. It is to be remembered in this connection that an order of the court rightfully made for the sale of realty effects a conversion from the date of the order.47 The incapacity of an infant to make an election is well illustrated by the old case of Seeley v Jago,48 where a sum of money was left by will for the purchase of lands for several beneficiaries equally, and at the death of the testator, one of the beneficiaries was an infant. Application was made to the court on behalf of all the beneficiaries for payment of the money, and it was held that the adult beneficiaries [page 596] were entitled to their shares in money but that the share of the infant must be laid out in land for the infant’s benefit, as the infant was incapable of election. It may be mentioned here that, as a general rule, the acts of trustees will not cause a conversion interfering with the rights of the representatives of the infant should he or she die under age; and the court endeavours also to protect such rights when making order in connection with an infant’s property.49

Mode of Election [26-23] Election may be made either by express declaration or by conduct from which the court may presume an election. There are numerous cases as to what acts will be sufficient to raise a presumption of election, but as such cases merely supply illustrations of the various circumstances in which the court will infer the intentions of the persons concerned from their conduct, it is hardly necessary to quote them.

Reconversion by Statute [26-24] Where a statute provides for the reinvestment of the proceeds of sale of land in other land to be held on the same trusts, there is a reconversion of the

proceeds of sale into land.50 Where an order for sale is made by the court under a statutory power then, if the statute provides for reconversion of the shares of any of the beneficiaries, for example infants, the order of the court will not operate as a conversion of the shares of such beneficiaries.51

Effect of Application of Doctrine of Conversion [26-25] The effect of the application of the doctrine will be more readily understood from a few illustrations. (1) Sweetapple v Bindon.52 In this case, a sum of money was bequeathed to be invested in land and settled upon the daughter of the testator and the daughter’s children, with a gift-over in case the daughter died without issue. The daughter died before any land had been purchased and settled as directed, but her husband was nevertheless held to be entitled to his rights as tenant by courtesy. (2) Re Gosselin.53 Real estate was devised by G to his son, A, for life with remainders over in strict settlement. The life estate to A was limited upon conditions that A should enlarge the estate tail he held under his grandfather’s will in all the hereditaments devised by that will and resettle those hereditaments in the same manner as the hereditaments under G’s will were settled. There was a gift-over if A did not resettle in accordance with the condition. Part of the lands held under the grandfather’s will had been sold and the proceeds invested by the trustees in securities pending reinvestment in land. It was held that these securities were included in the term ‘hereditaments’ and must be resettled in accordance with the condition. (3) Wheldale v Partridge.54 Moneys were paid to a trustee upon trust for the purchase of land, the moneys to be invested in the meantime in securities approved by the settlors (husband and wife) and the interest to be paid to W (the husband) for life, the interests and principal [page 597]

then to go to S (his wife); if S died first, then, after W’s death, to their children, and, in default of children, as S should by will appoint. The money was duly invested in securities but no land was ever purchased. S predeceased her husband, dying without issue and without having executed the power of appointment. The moneys were claimed by the executors of W and also by the heirs of S. It was held that the property descended as money, the parties having all through treated it as money, notwithstanding the trust for the purchase of land. ‘The only question in every case similar to this is, whether the character of land or money is definitely or imperatively affixed to the property; or whether it is left as a matter of uncertainty in what manner the owner of the property intended it to descend.’55 (4) Re O’Grady.56 By a marriage settlement, O conveyed real estate to trustees upon trust for conversion, such conversion to take place during her lifetime only upon her request in writing, the property and the proceeds of sale to be held by the trustees as she should by deed or will appoint and in default of appointment, to herself for life, then to her husband for life, then upon further trusts. At the death of O, part of the real estate had been sold. She exercised her power of appointment by will and directed that the property subject to the settlement should be conveyed to the trustees named in her will and that these trustees were not to sell the property during her husband’s lifetime without his written consent. The trusts upon which they were to hold the property were then set out. A question arose as to whether the property passed under her will as realty or as personalty, its actual condition being part realty and part personalty. It was held that the original disposition of the property by the marriage settlement had converted the property in equity into personal estate and consequently, it was upon the property as personal estate that the will operated. (5) The Owners of Habitat 74 Strata Plan 222 v Western Australian Planning Commission.57 Land on the foreshore of the Swan River which was part of the common property of a registered strata plan was acquired compulsorily. Some years passed between the gazettal of the notice of acquisition and the payment of compensation, during which time some proprietors sold their lots. A dispute arose as to the distribution of the compensation: should it be paid to the owners corporation, and if so, on what terms, or should it be

paid to the individual proprietors, and if so, what was the effect of the conveyance of the lots of former proprietors to the new owners on the right to compensation? It was held that the effect of publication of the notice was that the estate and interest of every person in the land was converted into a claim for compensation: see [26-07]. Those entitled to the compensation were therefore those persons entitled to a distribution of personalty as at the date of gazettal. Under the Western Australian strata title legislation (which in this respect is different from that in some other states), the owners corporation did not hold (either legally or beneficially) the common property; this was held as tenants in common by all registered proprietors in shares proportionate to their holdings as shown on the plan. That right was not transferred when a former owner sold a lot, and was distinct from the former owner’s interest in the common property which was acquired by a purchaser. _____________________________ 1.

The trust for sale under the Property Law Act 1925 (UK) has its origin in this doctrine. See J McGhee, Snell’s Equity, 31st ed, pp 113–19; S Anderson, ‘The Proper, Narrow Scope of Equitable Conversion in Land Law’ (1984) 100 LQR 86. In the United Kingdom, the Trusts of Land and Appointment of Trustees Act 1996 has abolished the whole doctrine of conversion: see P Pettit, ‘Demise of Trusts for Sale and the Doctrine of Conversion’ (1997) 113 LQR 207.

2. 3.

(1779) 1 Bro CC 497; 28 ER 1259. (1779) 1 Bro CC 497 at 499; 28 ER 1259 at 1260.

4. 5.

For illustrative cases, see [26-25]. Partnership Act 1892 (NSW) s 22; Partnership Act 1891 (Qld) s 25; Partnership Act 1891 (SA) s 22; Partnership Act 1891 (Tas) s 27; Partnership Act 1958 (Vic) s 26; Partnership Act 1895 (WA) s 32.

6. 7.

Stead v Preece (1874) LR 18 Eq 192; Burgess v Booth [1908] 2 Ch 648. [1907] 2 Ch 20; see also Hyett v Mekin (1884) 25 Ch D 735; Re Dodson [1908] 2 Ch 638.

8. 9.

See Conveyancing Act 1919 (NSW) s 66G(7)(b); Property Law Act 1974 (Qld) s 38(7)(b). Lysaght v Edwards (1876) 2 Ch D 499; Brown v Heffer (1967) 116 CLR 344; [1968] ALR 89.

In the old case of Broome v Monck (1805) 10 Ves 597; 32 ER 976, A, by his will, devised realty to B and the residue of his personalty to C. Subsequently, A contracted for the purchase of certain land subject to the devisee making a good title and in a codicil he directed this contract to be carried out, the purchased lands to go to B. The vendor failed to make a good title and the contract accordingly failed. B claimed to be paid the

purchase money that would have been given for the land, but it was held that it went to C. See P Pettit, ‘Conversion Under a Contract for the Sale of Land’ (1960) 24 Conv (NS) 47. 10. (1864) 33 Beav 489; 55 ER 458. 11. (1872) LR 13 Eq 417. 12. Re Manchester and Southport Railway Co (1854) 19 Beav 365; 52 ER 391; The Owners of Habitat 74 Strata Plan 222 v Western Australian Planning Commission (2004) 137 LGERA 7. See also Lands Acquisition Act 1989 (Cth) s 41(4); Land Acquisition (Just Terms Compensation) Act 1991 (NSW) s 20(1); Acquisition of Land Act 1967 (Qld) s 12(5); Land Acquisition Act 1969 (SA) s 16; Lands Acquisition Act 1993 (Tas) s 19; Land Acquisition and Compensation Act 1986 (Vic) s 24; Public Works Act 1902 (WA) s 18. See illustration 5 in [26-25]. 13. See Re Shrewsbury and Hereford Railway (1853) 1 Drew 508; 61 ER 546. 14. (1873) LR 17 Eq 217. 15. Re Sanger (1903) 3 SR (NSW) 284. 16. See, for example, Cowley v Hartstonge (1813) 1 Dow 361; 3 ER 729 (as to discretion of trustees); Polley v Seymour (1837) 2 Y & C Ex 708; 160 ER 578 (discretionary power); Grieveson v Kirsopp (1838) 2 Keen 653; 48 ER 780 (direction to sell operating as a conversion); De Beauvoir v De Beauvoir (1852) 3 HL Cas 524; 10 ER 206 (blended property); Yates v Yates (1860) 28 Beav 637; 54 ER 511 (discretionary power); Miller v Miller (1872) LR 13 Eq 263 (devise to trustees to sell ‘when, in their discretion, it may seem advisable’); Minors v Battison (1876) 1 App Cas 428; [1874–80] All ER Rep 1069 (absolute trust for sale with discretion as to manner and time of selling); Re Bird [1892] 1 Ch 279 (mere power to sell, not an imperative trust for sale). 17. Re Walker [1908] 2 Ch 705. 18. Conveyancing Act 1919 (NSW) s 66C; Property Law Act 1958 (Vic) s 39; Civil Law (Property) Act 2006 (ACT) s 233. 19. (1804) 10 Ves 129; 32 ER 793. 20. (1852) 9 Hare 596; 68 ER 650. See also Re Tweedie and Miles (1884) 27 Ch D 315; Attorney-General v Dodd [1894] 2 QB 150 at 155. 21. Wright v Rose (1825) 2 Sim & St 323; 57 ER 369; Bourne v Bourne (1842) 2 Hare 35; 67 ER 15; Jones v Davies (1878) 8 Ch D 205; Re Grange [1907] 2 Ch 20. 22. (1785) 1 Cox 167; 29 ER 1111. Followed in Re Marlay [1915] 2 Ch 264; Re Blake [1917] 1 Ch 18; Verran v Public Trustee [1976] 1 NZLR 518 and Re Sweeting [1988] 1 All ER 1016 (applying the rule to conditional contracts). In Re Blake, an option to purchase was exercised after the testator’s death and the purchaser died insolvent before completion of the purchase. The testator’s trustees took possession of the premises under powers given in the original agreement. It was held that the property had been converted by the exercise of the option and was personalty notwithstanding the re-entry. 23. (1909) 7 CLR 569. 24. Townley v Bedwell (1808) 14 Ves 591; 33 ER 648. 25. (1861) 1 J & H 424; 70 ER 812. 26. (1842) 1 Y & C Ch Cas 580; 62 ER 1026. 27. [1895] 1 Ch 724; see also Emuss v Smith (1848) 2 De G & Sm 722; 64 ER 323; Verran v Public Trustee [1976] 1 NZLR 518. 28. (1878) 7 Ch D 858.

29. (1875) LR 10 Ch App 386. 30. (1859) 4 De G & J 503; 45 ER 196; [1843–60] All ER Rep 542. 31. (1885) 30 Ch D 203. 32. (1849) 7 Hare 299; 68 ER 122. 33. (1849) 7 Hare 299 at 315; 68 ER 122 at 129 per Sir James Wigram VC. See also Clarke v Franklin (1858) 4 K & J 257; 70 ER 107 (real estate settled by deed upon trust for sale held to be converted into personalty from the moment the deed was executed). 34. Clayton v Montgomery (1897) 18 LR (NSW) Eq 171. 35. The leading cases on this are Ackroyd v Smithson (1780) 1 Bro CC 503; 28 ER 1262 (land into money); Jessopp v Watson (1833) 1 My & K 665; 39 ER 832 (mixed fund derived from conversion of realty and personalty); Cogan v Stephens (1835) 1 Beav 482n; 48 ER 1027 (money into land); Bective v Hodgson (1864) 10 HLC 656; 11 ER 1181; [1861–73] All ER Rep 324. 36. Fitch v Weber (1848) 6 Hare 145; 67 ER 1117; Taylor v Taylor (1853) 3 De GM & G 190 at 197; 43 ER 76 at 78. 37. Re Lord Grimthorpe [1908] 2 Ch 675. 38. Smith v Claxton (1820) 4 Madd 484; 65 ER 784; Bagster v Fackerell (1859) 26 Beav 469; 53 ER 979. 39. Merriman v Perpetual Trustee Co Ltd (1895) 17 LR (NSW) Eq 325. 40. Chichester v Bickerstaff (1693) 2 Vern 295; 23 ER 791; Pulteney v Darlington (1796) 7 Bro PC 530; 3 ER 344. 41. (1717) 1 P Wms 389; 24 ER 438. 42. Re Daveron [1893] 3 Ch 421. 43. Seeley v Jago (1717) 1 P Wms 389; 24 ER 438. 44. Holloway v Radcliffe (1857) 23 Beav 163; 53 ER 64. 45. (1863) 3 De GJ & S 614; 46 ER 775. 46. Meek v Devenish (1877) 6 Ch D 566. 47. Burgess v Booth [1908] 2 Ch 648. 48. (1717) 1 P Wms 389; 24 ER 438. 49. See Ware v Polhill (1805) 11 Ves 257 at 278; 32 ER 1087 at 1095. 50. See, for example, Public Works Act 1912 (NSW) s 54(3)(b) (now repealed by the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) with no equivalent replacement); Conveyancing and Law of Property Act 1898 (NSW) s 63. 51. Charlton v Murray (1909) 10 SR (NSW) 49; Lodge v Permanent Trustee Co Ltd (1918) 18 SR (NSW) 112. 52. (1705) 2 Vern 536; 23 ER 947. 53. [1906] 1 Ch 120. 54. (1800) 5 Ves 388; 31 ER 643. 55. (1800) 5 Ves 388 at 397; 31 ER 643 at 648 per Sir Richard Arden MR. 56. [1916] 2 AC 231. 57. (2004) 137 LGERA 7; and see Owners of St John’s Court Rivervale Strata Plan 6012 v Western Australian Planning Commission [2004] WASC 196; Rosebanner Pty Ltd v EnergyAustralia (2009) 223 FLR 406 at [49].

[page 598]

CHAPTER 27 Tracing Trust Property Introduction Tracing at Common Law and in Equity Tracing and Claiming

[27-01] [27-02] [27-03]

Property Still Retained in Substance by the Trustee

[27-06]

Trust Property Mixed with the Trustee’s Own Property

[27-08]

Trust Property Mixed by Trustee with Other Trust Property

[27-10]

Trust Property Transferred to Third Persons Change of Position Intention Exclusion of Tracing Bankers Transferee Taking Legal Estate for Value

[27-12] [27-14] [27-15] [27-16] [27-17] [27-18]

Introduction [27-01] Loss occasioned to the beneficiary by a breach of trust may be recouped by a personal right of action against the trustee. In addition, the beneficiary, in certain circumstances, has a personal claim against a cobeneficiary or a third party who is sufficiently implicated in the breach of trust.1 Where one of the parties is insolvent, or where the trust property or its proceeds has increased in value,2 a proprietary claim will assume heightened importance. In certain circumstances the beneficiary will have a proprietary claim, that is to say, the beneficiary may trace the trust property from one hand to another and

from one form to another into the hands of the person who holds the property or that which represents it.3 Tracing is a doctrine whereby, in certain circumstances, the owner of property which has been converted into a different form is treated as being the owner of the new form.4 It is useful to [page 599] distinguish between tracing at law and in equity. It is also useful to draw a distinction between the process of demonstrating what has happened to property (which may have changed form or ownership) and a claimant’s entitlement to claim the traceable proceeds of the original asset. The former is sometimes called ‘tracing’, the latter ‘claiming’.5

Tracing at Common Law and in Equity [27-02] ‘Courts of law were concerned with legal ownership, and courts of equity with equitable ownership, but, up to a point, as is well known, the doctrines of the two systems were identical.’6 The High Court in Brady v Stapleton proceeded to identify the differences between tracing at common law and in equity, particularly, as had occurred in that case, where the property had become mixed. Dixon CJ and Fullagar J said, ‘Nothing could be clearer than the exposition of the common law by Lord Ellenborough CJ in Taylor v Plumer’ in which it was said that the ability of the common law to trace ceases ‘when the subject is turned into money, and mixed and confounded in a general mass of the same description’7 before turning to the rules in equity which were broader and permitted tracing in that case. Until the High Court otherwise decides, the law in Australia is that tracing is different at common law and in equity. An illustration may be found in Robb Evans of Robb Evans and Associates v European Bank Ltd:8 In the present kind of case, in my opinion, the legal owner of property who has a good claim at law cannot elect to trace in equity, at least in circumstances in which no issue of solvency of the person who owes the obligation at law has arisen.

True it is that Lord Millett, with the concurrence of Lord Hoffmann, has suggested in obiter dicta that there is ‘no sense in maintaining different rules for

tracing at law and in equity’.9 Lord Browne-Wilkinson rightly observed that the point did not arise and should not be determined, since the claimants were beneficiaries and there had been plain breaches of fiduciary obligation.10 For the purposes of the law of trusts, plainly it is the rules deriving from equity which are of importance. [page 600]

Tracing and Claiming [27-03] Further to the above, there is also a dispute as to terminology. Is ‘tracing’ merely the identification of property which, as a matter of law, is taken to be owned by the plaintiff? Or does it include the associated body of rules governing matters such as the elections the plaintiff may make? In Boscawen v Bajwa,11 Millett LJ said of tracing in equity: It is the process by which the plaintiff traces what has happened to his property, identifies the persons who have handled or received it, and justifies his claim that the money which they handled or received (and if necessary which they still retain) can properly be regarded as representing his property. He needs to do this because his claim is based on the retention by him of the beneficial interest in the property which the defendant handled or received. If the plaintiff succeeds in tracing his property, whether in its original or in some changed form, into the hands of the defendant and overcomes any defences which are put forward on the defendant’s behalf, he is entitled to a remedy. The remedy will be fashioned to the circumstances.

In Foskett v McKeown, the same judge said:12 Tracing is … neither a claim or a remedy. It is merely the process by which a claimant demonstrates what has happened to his property, identifies its proceeds and the persons who have handled or received them, and justifies his claim that the proceeds can properly be regarded as representing his property. Tracing is also distinct from claiming. It identifies the traceable proceeds of the claimant’s property. It enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. But it does not affect or establish his claim.

That classification has now been approved, repeatedly, by the Court of Appeal in New South Wales.13 Moreover, in Robb Evans of Robb Evans and Associates v European Bank Ltd there was criticism of the notion of a freestanding ‘right to trace’.14 In this chapter, the proprietary claim which relies upon tracing will be

considered under four heads: (1) where the trust property still remains in substance in the hands of the trustee; (2) where the trust property has been mixed with the trustee’s own property so as to make its identification impossible; (3) where the trust property has been mixed by the trustee with other trust property so as to make its identification impossible; and (4) where the trust property has been transferred by the trustee to third persons, being either beneficiaries or strangers. [27-04] The position at common law should briefly be compared with that in equity, although of course a beneficiary will have only equitable remedies directly available. By ‘common law tracing’ one refers to actions in conversion or detinue or for money had and received. The common law had no remedy which entitled a plaintiff to specific recovery of chattels; s 78 of the Common Law Procedure Act 1854 and its colonial counterparts gave the court a discretionary power to order specific restitution but otherwise a verdict for the plaintiff in trover sounded only in damages and vested legal title in the defendant, while a defendant in detinue had the choice of paying damages or returning the chattel. A verdict in damages for the plaintiff would entitle the plaintiff as an unsecured creditor only to a dividend in bankruptcy if the defendant were insolvent. The position of the plaintiff was even less secure where the chattels concerned were coin or notes, currency of the realm which passed from [page 601] hand to hand not only in point of possession but of property and in opposition to the maxim governing the general transmission of legal title, nemo dat quod non habet.15 The plaintiff had no title to the money in the hands of a third party; the plaintiff’s action was for conversion or detinue against the original malfeasor. But what if the malfeasor had exchanged the plaintiff’s money for some other chattel? Could this be claimed as the plaintiff’s property? The answer, according to the conventional wisdom of Lord Haldane LC in Sinclair v Brougham16 and of the Court of Appeal in Re Diplock17 was given by Lord

Ellenborough CJ in Taylor v Plumer.18 It was that the plaintiff could claim the chattel as ‘the product of, or substitute for the original thing [which] follows the nature of the thing itself; as long as it can be ascertained as such’. This right only ceases ‘when the means of ascertainment fail[s], which is the case when the subject is turned into money, and mixed and confounded in a general mass of the same description’. Thus, the right of the plaintiff at law was lost if the money became part of a mixed account, there being no means of severance.19 However, mere payment of money by the defendant into an unmixed bank account, did not prevent the plaintiff claiming the debt thus raised between the banker and the defendant.20 What appeared to be the settled law as to the shortcomings of common law tracing was altered by the decision of the House of Lords in Lipkin Gorman (a firm) v Karpnale Ltd.21 Cass was a partner in the plaintiff firm of solicitors. He procured the provision to himself of moneys from the firm’s trust account. The firm later brought an action for money had and received against the gambling club at which Cass had gambled the money. Curiously, despite the breaches of fiduciary duty by the firm of solicitors to their clients, and by Cass to his partners, no equitable claim was advanced; the claim was a personal claim in quasi-contract made by the firm. The issue was whether the firm could establish legal title to the money when received by Cass as proceeds of cheques drawn on the client account without authority. The House of Lords held that, the account being in credit, the bank was a debtor and the firm a creditor in respect of a legal chose in action. It followed, so it was decided, that the firm was able to trace its property at common law in that chose in action into its product, the cash drawn by Cass from the account. The result was said to be consistent with Taylor v Plumer. Although the result could readily have been supported had an equitable claim been advanced, the reasoning is problematic. First, and fundamentally, Cass had legal title to the cheques drawn on his firm’s trust account, yet the case proceeded on the basis of a concession by the defendant club that it had received the plaintiff firm’s money.22 Tracing — whether at common law or in equity — is about the plaintiff obtaining title to that into which the plaintiff’s property has been converted. Cass’s cheques were quite different from the securities in the possession of the fraudulent stockbroker in Taylor v Plumer, which had been signed by his principal, which were held by him as bailee, to which he never had legal title, and which (because the common law treated the pieces of paper as chattels apt to be converted)23 were capable of supporting a

tracing claim at common law by their owner. Secondly, much of the reasoning is cast in the language of unjust enrichment and restitution, which is not, in Australia, a free-standing cause of action.24 Thirdly, it has now been convincingly [page 602] demonstrated25 that Taylor v Plumer decided nothing as to ‘common law tracing’. The plaintiffs were the assignees in bankruptcy of the stockbroker of the defendant. The defendant had seized certain securities and bullion from the stockbroker as he sought to flee the country, and the plaintiffs brought an action in conversion in respect of that property. The plaintiff’s title came from the bankruptcy legislation but it provided that property in the possession of a factor (such as a stockbroker) empowered (as was so here) to dispose of it for his principal (the defendant) was to be treated as trust property and as such did not vest in the assignees on the factor’s bankruptcy. Thus the plaintiffs had no statutory or other right to immediate possession to challenge the defendant’s actual possession, certainly where any right of the plaintiffs was subject to the equitable rights of the defendant. This explains the repeated references by Lord Ellenborough to the assets in question as trust property, an interesting example of recognition at law of equitable titles before 1873.26 It follows that cases which rely on Taylor v Plumer as authority that A has sufficient right to possession to maintain an action in conversion against B where B has without the authority of A exchanged A’s property with C for some other asset, are misconceived. It is worth noting that in Re Hallett’s Estate27 Sir George Jessel MR made quite plain his belief that Lord Ellenborough in discussing tracing was dealing with equity not law. Professor Stoljar has explained28 that while the distinction between mixed and unmixed funds may have been crucial for the action in trover or detinue, it was not really relevant where the plaintiff claimed for money had and received; for here was claimed not specific chattels or their substitute, but an amount equivalent to the original moneys. Further, there were several eighteenth century cases29 which suggested that a plaintiff using this action might rank before other unsecured claims in a bankruptcy because the assignment in bankruptcy passed only such property as the bankrupt had been ‘conscientiously

entitled to’. But these authorities were not developed in the nineteenth century. The nub of the distinction between law and equity is that while the law did not develop an action to protect in specie the title of the true owner at law, equity by the medium of the equitable charge and the persistence of the beneficial title to a fund protean in form, was able both to follow money into mixed funds and to uphold that title against the claim of a trustee in bankruptcy. [27-05] Tracing is seen most simply as a proprietary remedy available to beneficial owners of property against miscreant trustees or third parties. But it should be emphasised that tracing cannot be so simply treated. It has long been available in cases falling short of the trustee–beneficiary relationship. Thus, a fiduciary in whom the plaintiff’s property is entrusted, albeit by a means falling short of a vesting of the legal title in a trustee, attracts the tracing remedy, which may also run against third persons claiming under the fiduciary. This circumstance and other recent developments have significant consequences. First, the courts on occasion have strained to find fiduciary relationships where one would not have expected them; two examples are the speech of Lord Parker in Sinclair v Brougham30 and the decision of Goulding J in Chase Manhattan Bank NA v Israel-British Bank (London) Ltd.31 Goulding J held that moneys paid by one bank to another in error were traceable and recoverable in full despite the subsequent insolvency of the payee and despite the absence of any prior relationship of a fiduciary character. The circularity of this reasoning — deriving the necessary fiduciary [page 603] relationship from the very transaction of which complaint is made — which had been criticised in previous editions of this work, was rejected by the House of Lords.32 Secondly, there is the increasingly vexed question of the relationship between tracing and the constructive trust. The constructive trust may be used to describe a personal liability to account for a profit or to restore losses (as in the case of the solicitor from whom indemnification was sought in Barnes v Addy33). In this aspect, there is no overlap with tracing because no proprietary claim to any asset or fund in specie is made, and this is so even if both constructive trust and tracing are seen as remedial rather than substantive institutions. But the constructive trust may be proprietary in the sense of

attaching to particular assets (for example, a parcel of land bought by a trustee from profits which that trustee made improperly). The attempt by the plaintiff in Hospital Products Ltd v United States Surgical Corp34 to attach a constructive trust to the defendants’ businesses (successful in the Court of Appeal but not in the High Court) affords a striking example. In this class of case, what practical utility or conceptual clarity is there in treating the trustee who has bought a parcel of land with an illicit profit (and usually is called a constructive trustee of the land) any differently from a trustee who has bought land with the proceeds of a bank account held on the trusts of a settlement (and usually is treated as an express trustee subjected to a tracing remedy)? In each case, the acquisition of the land flowed from a breach of trust and there is a proprietary remedy.35 Thirdly, the subject will intensify in difficulty and obscurity if the Australian courts take up the suggestion by Deane J in Hospital Products Ltd v United States Surgical Corp36 that the constructive trust (presumably in both its personal and proprietary aspects) may be a remedy in cases of tort and contract; this has not occurred to date.37

Property Still Retained in Substance by the Trustee [27-06] It is clear that where trust property has been converted by a trustee to the trustee’s own use a beneficiary has the right to follow it into the hands of the trustee even though the trustee has changed its nature so long as in its changed form it can be identified.38 In Brady v Stapleton,39 it was held that where a trustee held shares of a company, some of which were his own and some of which were held on trust, the fact that precise identification of the trust shares was not possible did not preclude the making of an order for a transfer of the trust shares by the trustee to the beneficiary. The trustee may have wrongfully disposed of trust property and applied the proceeds in an unauthorised investment. In that case the beneficial owner has a right to elect either to take the property purchased, or to hold it as a security for the amount of the trust money laid out in the purchase. This means the beneficiary may elect to assert beneficial ownership in the property or to have a charge or lien on it for the amount of the trust money, which will be exercisable by a sale order.

[27-07] If the subject matter of the dispute involves what the court classifies as a constructive trust, then this will carry with it the tracing remedy against both trustee and third parties within [page 604] its scope. For example, in America it appears settled that the owner of converted property has both an equitable lien on the product of the converted property and also a proprietary interest therein; equity raises a trust in invitum as between owner and thief.40 Steps have been taken in this direction, particularly in Australia. In Black v S Freedman & Co,41 the first defendant had stolen money from the plaintiff, his employer, and paid them into the bank account of his wife, the second defendant. The High Court treated the plaintiff as having an equitable title to relief either because the husband had acted in breach of his fiduciary duty as a servant (favoured by Griffith CJ)42 or more simply because, in the words of O’Connor J, ‘where money has been stolen, it is trust money in the hands of the thief, and he cannot divest it of that character’.43 O’Connor J’s view has been regularly endorsed by Australian intermediate courts of appeal.44 Against this, it has been said that a thief can have no title to stolen property and so cannot become a trustee for the true owner.45 But a thief is treated as having legal possession, and therefore a possessory legal title which is capable of being held on trust.46 It is necessary to distinguish between the principles upon which stolen funds can be traced when they have been used to acquire property, and the available approach to fact finding based on the inferences drawn in the presence of fraud and the lack of explanation when plainly called for.47 As was stated in Toksoz v Westpac Banking Corp:48 Money can be traced notwithstanding an inability of the follower to connect each link in the chain of accounts. Commonsense and reasonable inference play their part, especially if there is fraud involved and if there is a lack of explanation, when the circumstances cry out for honesty to be explained, if it can be.

It is largely for that reason that courts have taken a robust view, at least where there is ‘evidence of an overall transaction embracing the coordinated

outward and inward movement of assets’,49 to facilitate tracing, even through an overdrawn account.50 [page 605]

Trust Property Mixed with the Trustee’s Own Property [27-08] The position here is more difficult. The leading case is Re Hallett’s Estate,51 which concerned a solicitor who had caused to be sold two parcels of bonds entrusted to him and deposited the proceeds in his own account. One parcel had been received by him from a client and the other was an asset of his marriage settlement, the funds of which the trustees had placed under his control. Upon the death of the solicitor an action was brought by a general creditor for administration of his estate and part of the credit in the deceased’s account was paid into court to the credit of the action. The client and the trustees applied for an order for payment out of the fund in court of sums representing the proceeds which had wrongfully been paid by the solicitor into his account. There was sufficient in the fund in court to satisfy both claimants in full. If the applicants could establish no proprietary claim to the fund then they would have stood on the same basis as the unsecured general creditors. The Court of Appeal held that: (1) both the client and the trustees were entitled to the tracing remedy, the former on the basis of the solicitor–client fiduciary relation (the status of the trustees was not disputed presumably because the course of dealing with the solicitor had rendered him a trustee of the assets coming within his control); (2) the fund was to be treated as containing the proceeds wrongly paid in, although there had between that date and the date of death been deposits of other moneys and withdrawals; (3) this was so because whatever the actual order of events the withdrawals by the solicitor (which apparently had been dissipated) were to be treated as representing deposits of his money and the moneys of the claimants were to

be treated as withdrawn only after the exhaustion of those deposits; (4) the reason for allocating withdrawals to the solicitor’s deposits was that wherever an act ‘can be done rightfully, [a fiduciary] is not allowed to say, against the person entitled to the property or the right, that he has done it wrongfully’;52 and (5) in these circumstances the rule in Clayton’s case, whereby it is assumed that, in the absence of evidence to the contrary, a person intends to draw from his account money in the order of payments in, was not applicable. This result is said to be based on the presumption that a trustee or other fiduciary in such a position intends to act honestly and so to draw out from a mixed account and dissipate the trustee’s own moneys first. However, as has been urged convincingly by Mr McConville,53 and is now confirmed in Australia,54 Clayton’s case regulates the state of account between banker and customer,55 and has nothing to say as to the relationship between trustee and beneficiary. Therefore, in Hallett’s case there was no need to exclude the rule in Clayton’s case by reference to a presumed intention, because in Hallett’s case the tracing remedy existed in respect of the mixed fund, without any intrusion by the rule in Clayton’s case. [page 606] As Campbell J has observed, there are three further difficulties with treating Hallett’s case as an authority on the applicability of the rule in Clayton’s case. First, there were sufficient funds in the bank account to meet the whole of the claims made by the client and the trustees, so there was no need for any determination of priority between them.56 And if Mr Hallett had been withdrawing what could only have been trust moneys from the mixed account, then it would seem odd to attribute any presumed intention to him, a trustee who was already in breach of trust having mixed trust moneys with his own and who was contemplating a further breach of trust.57 Thirdly, the fact that a beneficiary may elect, at the time of trial, between asserting a proprietary remedy over either the remnants of the mixed fund or the assets purchased from it, is inconsistent with the rule in Clayton’s case in effect predetermining the election.58

[27-09] The principles laid down in Hallett’s case have been elaborated and qualified as follows: (1) Where the trustee, having exhausted the trustee’s own funds in an account and drawn upon the trust funds, subsequently pays in further moneys, then, in the absence of an intention on the trustee’s part to replenish the trust fund, the beneficiary’s claim will not extend to them. This is because there is no presumption that a trustee having manifestly committed a breach of trust intends by his subsequent acts to repair it.59 The later authorities require this conclusion, but the first principles referred to in Hallett’s case as governing the position of a defaulting fiduciary are surely to the contrary. What equity has the fiduciary to prefer his title to the claim of the beneficiary? An adverse intention cannot be determinative of liability as a constructive trustee. (2) Similarly, where the trustee’s account is overdrawn, the authorities state that the bank is entitled to discharge the overdraft out of the money first paid in by the trustee, unless it has notice at the time that it was trust money.60 (3) Where there is no balance remaining in the account, but assets have been acquired by the trustee with the withdrawn money, it is assumed that the trustee intended the investment to be for the benefit of the fund. This is so irrespective of the order of withdrawals. Thus in Re Oatway,61 one of the two trustees paid into his account £31,000 representing trust funds, then bought shares worth £2000 and dissipated the balance in the account by later drawings. The shares were treated as trust property, even though they had been purchased with an early payment out, and on a literal reading of Hallett’s case the subsequent and dissipated drawings would be treated as representing trust moneys. (4) It is not clear whether the beneficiary’s claim will extend to either or both assets where there is not only a balance in the account but also an investment purchased with an early withdrawal, and neither alone is, but both are, sufficient to meet the beneficiary’s claim. It has been suggested that where a trustee improperly creates a mixed fund consisting partly of the credit in a mixed account and partly of assets purchased with drawings therefrom, the beneficiary has a charge over each and every part of the amalgam. Accordingly, in the

[page 607] situation just put the beneficiary would have a charge over each of the accounts and the investment to its full value in the sense that the beneficiary may exhaust either first before recouping the balance out of the other, or, the beneficiary would have a charge over each, proportionate to its value.62 (5) In Hallett’s case the Master of the Rolls said, obiter,63 that where it could be shown that property was purchased with unmixed trust funds the beneficiary had a choice. The beneficiary could take the property (presumably even if now increased in value) or assert a charge for the full amount involved (which would remain constant if the overall value of the property declined). However, if the property had been bought with mixed moneys the only remedy was stated to be a charge. This is not now the law. It has been rejected in Australia,64 the United States65 and in England.66 Were this not so, the trustee would be profiting from the breach of trust. In Foskett v McKeown, Lord Millett restated the rule as follows:67 Where a trustee wrongfully uses trust money to provide part of the cost of acquiring an asset, the beneficiary is entitled at his option either to claim a proportionate share of the asset or to enforce a lien upon it to secure his personal claim against the trustee for the amount of the misapplied money. It does not matter whether the trustee mixed the trust money with his own in a single fund before using it to acquire the asset, or made separate payments (whether simultaneously or sequentially) out of the differently owned funds to acquire a single asset.

In Australia, the High Court in Scott v Scott went so far only to the extent that the property purchased from the mixed fund was ‘specifically severable’ (as with shares or livestock), but indicated that even if that were not so, the beneficiary may claim a proportionate interest in the property itself rather than merely a charge over it, exercisable by sale order. Of course, if the value of the asset falls the quantum of the charge will remain constant and thus the charge may be the more attractive remedy. (6) What of any profit that arises from an investment made with a mixture of the fiduciary’s and the beneficiary’s money? Scott v Scott suggests that the beneficiary takes a proportionate share of the profit, but as Paul A Davies (Australia) Pty Ltd (in liq) v Davies68 shows, that will not always be so and the entitlement of the beneficiary both to the asset and to profits derived therefrom may exceed that share representing the direct contribution of

trust property to the acquisition of the asset in question. The Court of Appeal there pointed out that in Scott v Scott the fiduciary had contributed to the purchase from his own funds as well as those of the beneficiary, whereas in the case before it the defaulting fiduciaries had not done so but rather had raised money on the security of the asset to provide the balance of the purchase money. In such a case, as Hutley JA pointed out,69 the fiduciaries committed one breach of duty in applying the beneficiary’s money towards the purchase and another in mortgaging the property to raise the balance of the price; it followed that (a) the borrowed moneys were not to be treated as a contribution by the fiduciaries to the capital cost of the asset; and (b) any profits from enjoyment or realisation of the property belonged to the beneficiary. This conclusion appears plainly correct. (7) It is unsettled whether tracing extends to cases where the mixing by the trustee has involved the use of goods in a manufacturing process wherein those goods have lost their character in the emergence of some apparently distinct product. In Borden (UK) Ltd v Scottish Timber [page 608] Products,70 Bridge LJ expressed serious doubts as to whether tracing could reach the new product. But it is difficult to see why it should not do so. Why should not the plaintiff be entitled to a charge over it to the value of the raw materials contributed? Why should the plaintiff not also be entitled to a proportionate increase if the asset gains value? The reasoning of the High Court in Scott v Scott and the House of Lords in Foskett v McKeown, discussed above, supports these views. What the plaintiff would not be able to do would be to elect to sever and take a part of the total whole, at least where the whole was not ‘specifically severable’. In Hagan v Waterhouse,71 in which various matters relating to administration of family trusts were litigated in a dispute likened to an Icelandic saga, trust property in which the trustees held a two-thirds interest was mortgaged to assist a bookmaking business carried on by the trustees. Kearney J held that the trust estate was entitled to a one-third share of the profits from that

business during the term of the mortgage, after taking account of the business efforts of the trustees and just allowances for related benefits. (8) The authorities offer no guidance, other than that of basic principle, as to the proprietary remedies of a beneficiary where the trustee purchases an asset which increases in value, providing the purchase price partly from the trustee’s own independent resources and partly with mixed funds, but so as to leave in the mixed fund a residue insufficient to recoup the beneficiary in full. Suppose a solicitor pays into a bank account $1000 of the solicitor’s moneys, then $5000 of the client’s moneys, and that from this mixed fund of $6000, $2500 is drawn out by the solicitor (leaving $3500) and the $2500 is used by the solicitor with $7500 of the solicitor’s own moneys from other sources to purchase for $10,000 shares now worth $18,000. It is submitted that, on first principles, (a) the client (as discussed in paragraph (4) above) has a charge of $5000 over each of the $3500 left in the account and the shares, and that the client may exhaust either before turning to the other for the deficiency (if any) still outstanding; and (b) the client may, as an alternative to exercising the charge over the shares, claim one quarter of the shares, these representing his contribution of $2500 to the purchase price of $10,000; these shares would now be worth $4500, the $2000 being ‘profit’, but the client would still retain a charge over the balance of $3500 in the account in the sum of $2500 so as to yield in all the $5000 lost plus the $2000 profit in respect of the shares. It is also submitted that a similar result would be obtained where the asset purchased was an inseverable one, such as land; the client would have a proprietary interest in the land of one quarter.

Trust Property Mixed by Trustee with Other Trust Property [27-10] The rule in Clayton’s case has no application as between beneficiaries whose property has been mixed by a trustee. That is now the law in Australia and New Zealand, but not in England where the capriciousness of that rule continues. Judge Learned Hand rejected Clayton’s case as a guide in cases of competing beneficial claims to a mixed fund, opining that when the law adopts a fiction it should be for some purpose of justice, whereas to throw the loss first

upon one beneficiary through the mere chance of that fraud occurring earlier in time would be irrational and arbitrary: Re Walter J Schmidt & Co.72 However, he went on to hold that it did not follow the claimants should always divide the fund in the proportions of their original deposits, and instanced a case where $2000 of A’s fund of $5000 was dissipated before the remaining $3000 was mixed with B’s fund of $5000. In Judge Learned Hand’s view, the mixed fund of $8000 should be divided not equally between A and B, but as to $3000 to A and $5000 to B, because B should not be prejudiced by depredations made before B’s moneys were mixed with those of A.73 [page 609] [27-11] It is not only Judge Learned Hand who has challenged the view that the rule in Clayton’s case determines the rights of beneficiaries inter se. It has been convincingly argued that such a view is inconsistent with principle; that Clayton’s case is a rule of common law applicable to determine the rights of creditor as against debtor but inapplicable to determine the competing equitable rights of the beneficiaries in trust property; and that, for example, if a trustee misappropriates $500 of trust moneys belonging to A and subsequently mixes with it $500 of trust moneys belong to B and then withdraws and dissipates $500 from the mixed fund, the true solution should not be that A loses all rights to the remaining balance of $500, as an application of Clayton’s case would suggest, but that A and B each have an equitable charge over the remaining $500, which charges abate rateably.74 The traditional view that the rule in Clayton’s case governs such situations is also inconsistent with cases such as Re British Red Cross Balkan Fund.75 In that case, some £28,682 was subscribed to a charity over a period of time by 3254 persons. The charitable purpose was to assist the sick and wounded in a Balkan War. The full amount of the trust moneys was not expended, and at the end of the war a balance of £12,655 remained. The question before the court was for which subscribers this money was held by way of resulting trusts. The subscriptions had been received from time to time and placed in a bank account from which withdrawals of moneys had been made from time to time. If these withdrawals were to be set off against the first depositors, as an application of the rule in Clayton’s case would suggest, it would have meant that all subscriptions made prior to 8 November 1912 must have been taken to have been exhausted and that only those persons who

subscribed after that date would be entitled to receive back their money. However, Astbury J held that there was a resulting trust of the unexpended balance for all the subscriptions rateably. For the reasons already noted, the rule in Clayton’s case is inapplicable as between beneficiaries.76 The position in Australia and New Zealand is as follows: (1) where the trustee over a mixed fund purports to apply money on behalf of one of the beneficiaries, but uses the money not for the beneficiary, but for the trustee’s own purposes, then the money should be regarded as that beneficiary’s, because the matter depends on the intention of the trustee;77 (2) where it is not possible to attribute particular investments to the funds of particular beneficiaries, the court will ordinarily apportion the available fund rateably.78 However, in Barlow Clowes International Ltd (in liq) v Vaughan,79 the English Court of Appeal dealt with what is a matter of fundamental principle in an unsatisfactory manner. Their Lordships decided that: (a) the ‘first in, first out’ rule provided a convenient method of determining competing claims where the moneys of several beneficiaries had been blended in one account and there was a deficiency or where there had been a wrongful mixing of different sums of trust money in a single account; but [page 610] (b) any preferable alternative method of distribution might be applied if the application of the rule would be ‘impractical’ or would result in injustice between the investors because a relatively small number of investors would get most of the funds or the application of the rule would be contrary to the express or implied intention of the investors. Not surprisingly, English decisions have, on that basis, readily found the rule in Clayton’s case to be inapplicable.80

Trust Property Transferred to Third Persons

[27-12] In Hallett’s case,81 the right to trace was asserted against the original mixer who was also in a fiduciary relationship with those making the remedy against him. In Sinclair v Brougham,82 matters were taken a step further. The fiduciary relationship involved was said to have been that between the directors and depositors, but the mixing had occurred when the funds were paid by the directors to the bank account of the society. The directors had been the medium through which the mixing took place, but there had been no mixing by them of their moneys with those of the depositors. Finally, in Re Diplock’s Estate,83 the mixing involved trust moneys and moneys of third parties and was done by third parties. The facts in Re Diplock’s Estate were as follows: by his will, D gave his executors absolute discretion in disposing of his residuary estate for ‘charitable or benevolent’ objects. By 1939 they had distributed some £203,000 among 139 charitable institutions many of which had mixed their portion with their own funds. In that year D’s next-of-kin challenged the validity of the residuary bequest, and the executors therefore notified each of the 139 institutions of this and directed them not to deal with the distributed sums until they received further notice from the executors. In 1944, the House of Lords held the residuary bequest void84 and the next-of-kin sued the executors and the institutions for repayment of the money. The executors could not satisfy the claims in full and compromises were approved by the court. The claim for the balance was then pressed by the next-of-kin against the institutions and the Court of Appeal held that the plaintiffs had: (1) a right in personam (also held in appropriate cases by unpaid or underpaid creditors and legatees) to proceed in equity against those to whom the estate had been distributed by reason of a mistake of fact or law,85 provided that the primary remedy against the executors had first been exhausted (or compromised as in this case);86 and (2) a right in rem to trace the money, provided that it was possible to identify or disentangle it where it had been mixed with assets of the recipients. [27-13] The principles governing the right of a claimant to trace property into the hands of a third party may be summarised as follows: (1) If the property has been transferred to someone who has taken the legal estate for value without notice of the claim then the property cannot be followed.87

[page 611] (2) If the transfer is to a volunteer who takes without notice and there is no question of mixing, then the property is held on behalf of the true owner whose equitable right persists.88 (3) If the transfer is of money to a volunteer who innocently mixes it with money of his or her own (as was the case in Re Diplock’s Estate) special rules apply designed to balance the interests of the claimant and the volunteer:89 (a) The remedy is available even though the volunteer stood in no fiduciary relationship involving an equitable proprietary interest in the claimant in the sense discussed earlier in this chapter. (b) If there is such a relationship then the remedy is available against the volunteer who innocently mixes the claimant’s money with his or her own or receives it already mixed from a fiduciary agent. (c) Where the tracing remedy succeeds the claimant is entitled to the interest in fact earned by the moneys or the property into which they have been traced.90 (d) If the volunteer dissipates the trust moneys or mixed moneys, then the money has disappeared and there is no proprietary remedy. (‘The equitable remedies presuppose the continued existence of the money either as a separate fund or as part of a mixed fund or as latent in property acquired by means of such a fund. If, on the facts of any individual case, such continued existence is not established, equity is as helpless as the common law itself.’)91 (e) If the volunteer uses a mixed fund to acquire a new asset then a charge will be enforced by sale and distribution, each party getting back its part of the money put in to acquire the asset. (f) Where a ‘mixed’ asset is acquired by the volunteer (as in para (e)), the claimant does not acquire a proportionate share of any proceeds of realisation attributable to an increase in value or any proprietary interest in the asset itself. (g) Where the ‘mixed’ asset decreases in value before the charge is realised it is not settled whether the decline is to be borne by claimant

and volunteer rateably or primarily by the volunteer. (h) If the volunteer does not acquire an asset but uses mixed funds to alter and improve assets already owned, the money cannot be traced into the augmented asset and, in any event, a declaration of charge over the whole, the only remedy available to equity, would not produce an equitable result and thus is inapplicable. [page 612] (i) If the volunteer uses trust moneys to redeem a mortgage, the claimant cannot, by recourse to principles of subrogation applied in Butler v Rice92 stand in the shoes of the mortgagee; to do so would be to extend to the claimant rights in respect of the whole of the mortgaged property and this would not be equitable.93 (j) If the volunteer has applied trust moneys to pay unsecured debts the claimant is not subrogated to the rights of the unsecured creditors,94 although it might be thought not against conscience for the volunteer to be put in the same position as if the debts had not been discharged with moneys acquired gratuitously and which the volunteer never should have had. (k) Where it is necessary to characterise withdrawals by a volunteer from a mixed account, consistently with the authorities referred to in [2711] above, there is no room for the application of the rule in Clayton’s case, and instead a form of proportionate allocation should ordinarily be adopted. (l) If the volunteer maintains a mixed account but draws out a sum and places it in a special account which is treated in the accounts as representing trust funds, then the volunteer is bound by this further appropriation and ‘unmixing’. Applying these principles to the cases before the Court of Appeal in Re Diplock’s Estate, where there had been a mixing of trust money with charity money (or where it had been paid into a special account and remained unmixed), the next-of-kin were entitled to recover pari passu with the charity in the case of mixed funds (subject to a rateable reduction in respect of the amount

recovered from the executors).95 But where the moneys received by the charity had not been mixed with the moneys of the charity but had been expended on the alteration or improvements of their own assets, as by erecting buildings on their own land or in discharging debts of the charity, secured or unsecured, the trust money could not be disentangled, the equitable remedy of a charge would work an injustice, and the proprietary claim of the next-of-kin was no longer available.96

Change of Position [27-14] In dealing with the in personam claim in Ministry of Health v Simpson,97 Lord Simonds made it plain that there was, in equity, no general defence of change of position available to a third party against whom the plaintiff asserted equitable rights. His Lordship referred to the argument that Chancery would make no decree against a defendant who had not behaved in an unconscientious manner, and continued: The appellant or those through whom he claimed, having received a legacy in good faith and having spent it without knowledge of any flaw in their title, ought not in conscience to be ordered to refund. Upon the propriety of a legatee refusing to repay to the true owner the money that he has wrongly received I do not think it necessary to express any judgment. It is a matter on which opinions may well differ. The broad fact remains that the Court of Chancery, in order to mitigate the rigour of the common law or to supply its deficiencies, established the rule of equity which I have described and this rule did not excuse the wrongly paid legatee from repayment because he had spent what he had been wrongly paid. No doubt the plaintiff might by his conduct and particularly by laches have raised some equity against himself; but if he had not done so, he was entitled to be repaid. In the present case the respondents have done nothing to bar them in equity from asserting their rights. They can only be defeated if they are barred at law by some Statute of Limitations.

[page 613] However, with only casual reference to that decision, the House of Lords, in Lipkin Gorman (a firm) v Karpnale Ltd,98 has entertained such a defence in dealing with an action for money had and received where the plaintiff asserted ‘common law tracing’. In Boscawen v Bajwa,99 the English Court of Appeal said that the defence of innocent change of position applies to a claim where reliance is placed upon tracing in equity and in Foskett v McKeown there are suggestions that there is no distinction between tracing at common law and in

equity.100 The court said that this would call for a re-examination of decisions where the absence of a defence might have led the court ‘to distort basic principles in order to avoid injustice to the defendant’ and suggested that Re Diplock’s Estate, in its treatment of some of the claims against innocent third parties, might be such a case. In Lipkin Gorman’s case,101 Lord Goff stated that ‘principle’ as likely to be available only on comparatively rare occasions and as being that a defence of innocent change of position is available to a person whose position has so changed that it would be inequitable in all the circumstances to require restitution of that party or alternatively to require restitution in full. His Lordship added that the mere fact that the defendant has spent the money, in whole or in part, would not of itself render it inequitable that there be repayment. There is significant support for such a principle in the United States of America102 and some statutory adoption of it.103 It remains to be seen whether the principle, if there be one, be recognised in Australia, and, if so, what form that recognition will take.104 Little assistance is obtained from Gertsch v Atsas,105 where Foster AJ merely asserted that the defence was available to meet a proprietary claim consequent upon breach of trust, relying on what the High Court had said in David Securities Pty Ltd v Commonwealth Bank of Australia106 in respect of a common law action to recover moneys paid pursuant to a mistake, and without a mention of Ministry of Health v Simpson. In K & S Corporation Ltd v Sportingbet Australia,107 Besanko J doubted that the defence was available, notwithstanding that the plaintiffs accepted that it was.

Intention [27-15] Where the fiduciary’s breach of duty involves withdrawals from a fund in which the moneys of the beneficiary have been blended with those of the fiduciary, the principle laid down in Hallett’s case108 treats the fiduciary as bound by a presumption of honest intention, which may also be expressed as an irrebuttable presumption of intention. This will mean that the result will be no different if the fiduciary expressly manifested an intention of drawing out the beneficiary’s money first. However, where the fiduciary, after depleting the mixed fund, pays into it further moneys of his or her own, there is, it seems from the decisions in James Roscoe (Bolton) Ltd v Winder109 and Lofts v MacDonald,110 no presumption, and certainly no irrebuttable presumption, that the further payments in replace the lost moneys of the beneficiary. That is

[page 614] not to say, as the judgment in James Roscoe (Bolton) Ltd v Winder itself makes plain,111 that an intention of the fiduciary to restore the depleted fund with the later payments is to be ignored if it exists. It is to say that there is no presumption as to the existence of that intention. If the fiduciary pays money into the fund with the intention of effecting restitution, then the interest of the beneficiary in the fund will be the same as if the sum represented by the later payment in had never been withdrawn by the fiduciary.112 The existence of such an actual intention may be inferred from the facts, even if not manifested by direct evidence. What is the role of intention where the conflict is not between fiduciary and beneficiary, but between beneficiaries inter se? It has been seen113 that the better view is that the loss be borne between the beneficiaries pro rata. But would this result differ if the fiduciary had had an intention in respect of particular withdrawals to prejudice one beneficiary rather than another? In Re Stillman and Wilson,114 Clyne J concluded (it is suggested correctly) that in such circumstances the matter should be determined by the intention of the fiduciary, so that the money withdrawn should be regarded as that of the beneficiary on whose behalf it purported (by, for example, the manner in which the fiduciary recorded it in the books) to be withdrawn. The New Zealand Court of Appeal has taken the same view of the law in Re Registered Securities Ltd.115 Where new deposits are intended by the fiduciary as a restoration of a mixed fund of moneys of a plurality of beneficiaries, but there is no specific intention as to distribution between beneficiaries, it seems that they will share pro rata.116 In such a situation, if there were a specific intention, then, consistently with principle, that should be given effect to, even although this will be to the advantage of some beneficiaries over others. It is the duty of the wrongdoer to effect restitution to the beneficiaries, but as between themselves it is hard to see how they have an equity to prevent the repayment in full of one of their number.

Exclusion of Tracing

[27-16] Dealings between the parties in fiduciary relations may exclude or qualify the application of the tracing remedy. Thus in Re Goode,117 while it was held that clients who dealt with a stockbroker by one transaction at a time had full rights to trace (if vendors) their scrip into a pool of scrip held by the broker or to recover (as purchasers) money entrusted to the broker for settlements, those clients who operated on a running account with periodic balances and settlements were to be treated as having dealt with the broker in a mere debtor– creditor relationship carrying with it no tracing remedy. Further, statute may provide an exhaustive code of remedies which leaves no scope for the tracing remedy. In Butler v Broadhead,118 Templeman J held that, although there was a sufficient analogy between the position of an executor and a company liquidator to enable equity to intervene in favour of unpaid creditors against overpaid contributories, there was ‘no need or room for equity’ because the statutory provisions governing the distribution of company [page 615] property sufficiently regulated the rights of the parties in distributions by liquidators. Again, in Deputy Federal Commissioner of Taxation v Brown,119 the High Court of Australia held that: (1) the Income Tax Assessment Act 1936 (Cth) did not contain any provisions directly authorising the Commissioner to sue beneficiaries in estates to recover unpaid tax assessed upon income derived by a testator in his lifetime, where the tax could not be recovered from the trustees of his will because they had distributed the estate in due course of administration without notice of the Commissioner’s claim for tax; and (2) the Act provided an exhaustive code of the rights and remedies of the Commissioner. It follows that the Commissioner had no rights in equity to recover from beneficiaries by means of any tracing remedy.

Bankers [27-17] Reference has already been made to the equitable right of the

beneficiary to follow the trust funds into the trustee’s bank account. This right, however, is subject to the banker’s rights as bona fide holder for value. Thus in Pannell v Hurley,120 a trustee had a trust account and a private account at the same bank, his private account being overdrawn. To make up his private account he drew a cheque on his trust account and paid it into the credit of his private account. The bankers were held liable to the beneficiaries as constructive trustees to replace the moneys thus drawn from the trust account, because they had notice of the trust affecting them. Similarly, in British America Elevator Co v Bank of British North America,121 where the respondent bank knowingly credited drafts of the appellant company to the private account of the company’s agent which was largely overdrawn, it was held liable to the company for the resulting loss. But where a trustee’s bank account is overdrawn, the trustee’s bankers have a first and paramount lien on all moneys paid in, if they have no notice that they are trust moneys. In Thomson v Clydesdale Bank Ltd,122 a broker, employed to sell shares forming part of a trust estate, paid the proceeds into his bank account, which was largely overdrawn. Subsequently, he became insolvent. The bank was held not liable to replace the moneys, as it had no notice of the trust.

Transferee Taking Legal Estate for Value [27-18] It is a general principle of equity that not merely is the legal owner against whom an equitable interest first arose bound by that equitable interest, but so also, prima facie, is everyone who takes the legal estate out of which it issues and to which it is annexed. To this rule there is one important exception — namely, that any person who purchased that legal estate for valuable consideration and without notice at the time consideration was given will take the legal estate free from the equitable interest.123 Thus, if land is sold by a trustee in breach of trust to a purchaser for value without notice of the breach who acquires the legal estate, the beneficiaries’ rights against the land will be gone. Similarly, if the trustee used the trust funds to purchase goods for the trustee’s own use from someone without notice of the fraud, the beneficiaries’ right to follow the money would be gone. _____________________________ 1.

See Chapter 23.

2.

As in Scott v Scott (1963) 109 CLR 649; [1964] ALR 946 and Foskett v McKeown [2001] 1 AC 102; [2000] 3 All ER 97.

3.

A distinction between ‘tracing’ trust property as it changes form in the hands of the same person and ‘following’ trust property as it is transferred to another person has been drawn, particularly in academic writing, since articulated by Lord Millett in Foskett v McKeown [2001] 1 AC 102 at 127; [2000] 3 All ER 97 at 119, deriving from L Smith, The Law of Tracing, Clarendon Press, Oxford, 1997; cf D Murr, ‘Recovering Lost Assets: Tracing at common law and in equity’ (2006) 27 Aust Bar Rev 174 at 191. Although that distinction can be helpful, this chapter preserves the traditional terminology and uses the term ‘tracing’ to refer to both aspects. See Lord Denning, ‘The Recovery of Money’ (1949) 65 LQR 37; R Maudsley, ‘Proprietary Remedies for the Recovery of Trust Money’ (1959) 75 LQR 234; D McConville, ‘Tracing and the Rule in Clayton’s Case’ (1963) 79 LQR 388; P Higgins, ‘Re Diplock — A Re-appraisal’ (1963–64) 6 UWA Law Rev 428; F Babafemi, ‘Tracing Assets: A Case for the Fusion of Common Law and Equity’ (1971) 34 MLR 12; R Goode, ‘The Right to Trace and Its Impact on Commercial Transactions’ (1976) 92 LQR 360; P Birks, ‘Trusts in the Recovery of Misapplied Assets: Tracing, Trusts and Restitution’, in E McKendrick (ed), Commercial Aspects of Trusts and Fiduciary Obligations, Ch 8; A Oakley, ‘Proprietary Claims and Their Priority in Insolvency’ (1995) 54 CLJ 377; A Mountford, ‘Tracing: An Examination of the Applicability of Tracing Principles Today’ (1996) 70 ALJ 54; L Smith, The Law of Tracing, Clarendon Press, Oxford, 1997; C Band, ‘The Development of Tracing Rules in Commercial Cases’ [1997] LMCLQ 65; S Evans, ‘Rethinking Tracing and the Law of Restitution’ (1999) 115 LQR 469; M Stone and A McKeough, ‘Tracing in an Age of Restitution’ (2003) 26 UNSWLJ 377; S Thomas, ‘Tracing, Restitution and Innocent Donees: Who Wants to be a Volunteer Anyway?’ (2006) 18 Bond Law Review 47; D Murr, ‘Recovering Lost Assets: Tracing at common law and in equity’ (2006) 27 Aust Bar Rev 174; L Smith, ‘Simplifying Claims to Traceable Proceeds’ (2009) 125 LQR 338; D Sheehan, ‘Property in a Fund, Tracing and Unjust Enrichment’ (2010) 4 J Eq 225; M Conaglen, ‘Difficulties with Tracing Backwards’ (2011) 127 LQR 432; M Leeming, ‘Proprietary Relief and Tracing in Equity’ (2016) 90 ALJ 92.

4.

5. 6. 7. 8.

See Foskett v McKeown [2001] 1 AC 102 at 113, 128; [2000] 3 All ER 97 at 106, 119; Sze Tu v Lowe (2014) 89 NSWLR 317 at [466]–[467]. Brady v Stapleton (1952) 88 CLR 322 at 336; [1952] ALR 989 at 995. (1952) 88 CLR 322 at 337; [1952] ALR 989 at 996. (2004) 61 NSWLR 75 at [143]–[145]. See also Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at [96] (‘Tracing rules exist at law and in equity. The rules differ’); Shalson v Russo [2005] Ch 281; Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; 313 ALR 367 at [37]–[38].

9.

Foskett v McKeown [2001] 1 AC 102 at 128; [2000] 3 All ER 97 at 121; see also per Lord Steyn, dissenting, at 113; 106. 10. [2001] 1 AC 102 at 109; [2000] 3 All ER 97 at 102; see R Walker [2000] RLR 573; T H Wu (2001) 25(1) MULR 295. 11. [1995] 4 All ER 769 at 776–7; [1996] 1 WLR 328 at 334–5. 12. [2001] 1 AC 102 at 128; [2000] 3 All ER 97 at 120. 13. Robb Evans of Robb Evans and Associates v European Bank Ltd (2004) 61 NSWLR 75 at [133]; Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; 313 ALR 367 at [31]–[32]. 14. (2004) 61 NSWLR 75 at [133]. 15. See D Fox, Property Rights in Money, Oxford University Press, 2008, especially at [1.32]–[1.37]. 16. [1914] AC 398 at 419; [1914–15] All ER Rep 622 at 631. 17. [1948] Ch 465 at 518; [1948] 2 All ER 318 at 345–6.

18. (1815) 3 M & S 62; 105 ER 721. See L Smith, ‘Tracing in Taylor v Plumer: Equity in the Court of King’s Bench’ [2015] LMCLQ 240. 19. Agip (Africa) Ltd v Jackson [1991] Ch 547 at 563–6; [1992] 4 All ER 451 at 463–6; El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 733–4. 20. Banque Belge pour L’Etranger v Hambrouck [1921] 1 KB 321. 21. [1991] 2 AC 548; [1992] 4 All ER 512. 22. See Mason and Carter, Restitution Law in Australia, 3rd ed, [1634]. 23. Parsons v The Queen (1999) 195 CLR 619; 160 ALR 531 at [30]–[33]. 24. Equiticorp Industries Group Ltd v The Crown (No 47) [1996] 3 NZLR 586 at 611; New South Wales v Commonwealth Bank of Australia (2001) 217 ALR 691 at [114]–[116]. 25. S Khurshid and P Matthews (1979) 95 LQR 78, but cf S Stoljar, The Law of Quasi-Contract, 2nd ed, pp 128–9. 26. As to which see Meagher, Gummow and Lehane’s Equity, [1-205]–[1-265]. See L Smith (1994) 15 J Legal History 1; [1995] LMCLQ 240; D Fox [1999] RLR 55; M Leeming, ‘What is a Trust?’ (2008) 31 Aust Bar Rev 211 at 213–21; Jones & Sons (Trustee) v Jones [1997] Ch 159 at 169; [1996] 4 All ER 721 at 728–9, noted N Andrews and A Beatson (1997) 113 LQR 21. 27. (1880) 13 Ch D 696 at 717. 28. The Law of Quasi-Contract, 2nd ed, pp 129–30. 29. Scott v Surman (1742) Willes 400; 125 ER 1235; Zinck v Walker (1777) 2 Wm Bl 1154; 96 ER 681; Harrison v Walker (1792) Peake 150; 170 ER 111. 30. [1914] AC 398 at 441–2; [1914–15] All ER Rep 622 at 643. 31. [1981] Ch 105; [1979] 3 All ER 1025. 32. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714–15; [1996] 2 All ER 961 at 997; and see Wambo Coal Pty Ltd v Ariff (2007) 63 ACSR 429. 33. (1874) LR 9 Ch App 244. See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [253] and the authorities there cited. 34. (1984) 156 CLR 41; 55 ALR 417. 35. See further [27-08]. 36. (1984) 156 CLR 41 at 122–5; 55 ALR 417 at 474–5. 37. Agip (Africa) Ltd v Jackson [1991] Ch 547 at 566; [1992] 4 All ER 451 at 466; Westdeutsche Landesbank v Islington London Borough Council [1994] 4 All ER 890 at 962–3; [1994] 1 WLR 938 at 946–7. 38. See Lane v Dighton (1762) Amb 409; 27 ER 274; Buckeridge v Glasse (1841) Cr & Ph 126; 41 ER 438; Re Hallett’s Estate (1880) 13 Ch D 696 at 708; [1874–80] All ER Rep 793 at 795; New Zealand and Australian Land Co v Watson (1881) 7 QBD 374; Labe v Bayliss [1974] 1 All ER 1114; Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 3 All ER 75. 39. (1952) 88 CLR 322; [1952] ALR 989. 40. Scott and Fratcher, The Law of Trusts, 4th ed, §508.1. 41. (1910) 12 CLR 105; 17 ALR 541, applied in Spedding v Spedding (1913) 30 WN (NSW) 81. See also Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 426; 18 ALR 542; Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [36]–[38]. 42. (1910) 12 CLR 105 at 108–9; 17 ALR 541 at 542. 43. (1910) 12 CLR 105 at 110; 17 ALR 541 at 543. It is not clear from the report whether the wife’s account also contained her own money, so as to involve the exercise of the tracing remedy against a

volunteer with a mixed account. The observations of O’Connor J may be compared with those of Andrews J in a celebrated New York case, Newton v Porter 69 NY 133 (1877): ‘If a man steals my money and buys land, I am entitled to a lien on the land for the amount of the money which was stolen, or I am entitled to take the land. If a loss results from the activities of the thief the loss falls on him; if a gain results, the gain is mine.’ 44. See Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504 at [314]; Robb Evans of Robb Evans and Associates v European Bank Ltd (2004) 61 NSWLR 75 at [111]; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; 258 ALR 727 at [93]; Toksoz v Westpac Banking Corp (2012) 289 ALR 577 at [5], [11]; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22 at [255]; Ierino v Gutta (2012) 43 WAR 372 at [20]; Sze Tu v Lowe (2014) 89 NSWLR 317 at [141]– [149]; Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81 at [39]; see also K Handley, ‘The Black v Freedman Trust: Vindicating Property Rights or Remedying Wrongs’ in E Bant and M Bryan (eds), Principles of Proprietary Remedies, Thomson Reuters, 2013, 117 at 118. 45. See Shalson v Russo [2005] Ch 281 at [110]–[111]; S Thomas, ‘Thieves as Trustees: The enduring legacy of Black v S Freedman & Co Ltd’ (2009) 3 J Eq 52. 46. See D Fox, Property Rights in Money, Oxford University Press, 2008, pp 140, 143. It is well settled that a thief enjoys a good possessory title against someone who is a wrongdoer to the thief: Costello v Chief Constable of Derbyshire Constabulary [2001] 1 WLR 1437 at [14], [22]; Government of the Islamic Republic of Iran v The Barakat Galleries Ltd [2009] QB 22 at [15]; Bride v Shire of Katanning [2013] WASCA 154 at [72]. 47. Sze Tu v Lowe (2014) 89 NSWLR 317 at [468]. 48. (2012) 289 ALR 577 at [8]. For an example, see National Crime Agency v Robb [2015] Ch 520. 49. Federal Republic of Brazil v Durant International Corporation [2015] 3 WLR 599 at [41]. 50. See M Conaglen, ‘Difficulties with Tracing Backwards’ (2011) 127 LQR 432; Agricultural Credit Corpn of Saskatchewan v Pettyjohn (1991) 79 DLR (4th) 22; Relfo Ltd (in liq) v Varsani [2015] 1 BCLC 14, noted in S Watterson (2014) 73 CLJ 496. 51. (1880) 13 Ch D 696; [1874–80] All ER Rep 793. See Re Sutherland (2003) 59 NSWLR 361 at [43]– [65] and the chapter by G Virgo in C Mitchell and P Mitchell, Landmark Cases in Equity, Hart Publishing, 2012, for comprehensive analyses of this decision. 52. (1880) 13 Ch D 696 at 727; [1874–80] All ER Rep 793 at 805. 53. ‘Tracing and the Rule in Clayton’s Case’ (1963) 79 LQR 389. 54. Hagan v Waterhouse (1991) 34 NSWLR 308 at 358, a decision expressly approved by the Court of Appeal in Keefe v Law Society of NSW (1998) 44 NSWLR 451 at 460–1; Re Sutherland (2003) 59 NSWLR 361; 204 ALR 353 at [160]. The position in England is ‘not to challenge the binding nature of the rule but rather permit it to be distinguished by reference to the facts of the particular case’: Russell-Cooke Trust Co v Prentis [2003] 2 All ER 478 at [55]; and see Barlow Clowes International Ltd (in liq) v Vaughan [1992] 4 All ER 22; M Leeming (2016) 90 ALJ 92 at 94. 55. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 676; 78 ALR 157 at 164. 56. Re Sutherland (2003) 59 NSWLR 361; 204 ALR 353 at [52]. 57. (2003) 59 NSWLR 361; 204 ALR 353 at [64]. 58. (2003) 59 NSWLR 361; 204 ALR 353 at [83]–[86]. 59. James Roscoe (Bolton) Ltd v Winder [1915] 1 Ch 62 at 69 per Sargant J: ‘After having heard Re Hallett’s Estate stated over and over again, I should have thought that the general view of that decision was that it only applied to such an amount of the balance ultimately standing to the credit of the trustee as did not exceed the lowest balance of the account during the intervening period.’ This decision was

applied in Re Joscelyne [1963] Tas SR 4; Lofts v MacDonald (1974) 3 ALR 404; Bishopsgate Investment Management Ltd (in liq) v Homan [1995] Ch 211; [1995] 1 All ER 347; Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at [102]. See, however, Re Jones (1953) 16 ABC 169, and, as to the significance of intention, [27-15]. 60. Hancock v Smith (1889) 41 Ch D 456; [1886–90] All ER Rep 306; Re Tilley’s Will Trusts [1967] Ch 1179; [1967] 2 All ER 303; Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at [129]– [135]. 61. [1903] 2 Ch 356, followed by Learned Hand J in Primeau v Granfield 184 F 480 (1911) at 484–5. And see Scott v Scott (1963) 109 CLR 649 at 664; [1964] ALR 946 at 953–4; Boscawen v Bajwa [1995] 4 All ER 769 at 778; [1996] 1 WLR 328 at 336. 62. See P F P Higgins, ‘Re Diplock — A Re-appraisal’ (1963–4) 6 UWALR 428 at 434. 63. (1880) 13 Ch D 696 at 708–9; [1874–80] All ER Rep 793 at 795. 64. Scott v Scott (1963) 109 CLR 649 at 661–2; [1964] ALR 946 at 951–2. 65. Primeau v Granfield 184 F 480 (1911) at 482 by Judge Learned Hand (‘On principle there can be no excuse for such a rule.’); Restatement of the Law, Trusts, 2d, para 202h. 66. Foskett v McKeown [2001] 1 AC 102 at 130; [2000] 3 All ER 97 at 123. 67. Foskett v McKeown [2001] 1 AC 102 at 131; [2000] 3 All ER 97 at 123–4. 68. [1983] 1 NSWLR 440, followed by Bryson J in Australian Postal Corp v Lutak (1991) 21 NSWLR 584. 69. [1983] 1 NSWLR 440 at 450, and see Mavaddat v Lee (2007) 24 WAR 67. 70. [1981] Ch 25 at 41; [1979] 3 All ER 961 at 970. 71. (1991) 34 NSWLR 308 at 355–7. 72. 298 F 314 (1923) at 316. 73. See further Re Sutherland (2003) 59 NSWLR 361; 204 ALR 353 at [176]–[185]. 74. By D McConville, ‘Tracing and the Rule in Clayton’s Case’ (1963) 79 LQR 388. 75. [1914] 2 Ch 419; [1914–15] All ER Rep 459. The facts would have suggested that if the subscribers had given with a general charitable intent then what was needed was a scheme; it appears to have been assumed by all concerned that there was only a particular charitable intent and this had been exhausted. 76. See Re Magarley Farlam Lawyers Trust Accountants (No 3) (2007) 96 SASR 337 at [136]–[139], dealing with Australian, Canadian and English decisions and applying the previous edition of this text. 77. Re Stillman and Wilson (1950) 15 ABC 68. 78. Re Australian Home Finance Pty Ltd [1956] VLR 1 at 11; Windsor Mortgage Nominees Pty Ltd v Cardwell [1979] ACLC 32,195; Re Registered Securities Ltd [1991] 1 NZLR 545 at 552–5; Hagan v Waterhouse (1991) 34 NSWLR 308 at 358–9; Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (1994) 49 FCR 334 at 359–63; 121 ALR 626 at 652–4; Keefe v Law Society of NSW (1998) 44 NSWLR 451 at 460–1; Re Sutherland (2003) 59 NSWLR 361; 204 ALR 353 at [160]; Re Magarley Farlam Lawyers Trust Accountants (No 3) (2007) 96 SASR 337 at [145] (approving this paragraph). See L Aitken (2003) 77 ALJ 230. 79. [1992] 4 All ER 22. 80. See El Ajou v Dollar Land Holdings plc (No 2) [1995] 2 All ER 213; Russell-Cooke Trust Co v Prentis [2003] 2 All ER 478 at [55]. 81. (1880) 13 Ch D 696; [1874–80] All ER Rep 793; see also Charity Commission v Framjee [2015] 1 WLR 16.

82. [1914] AC 398; [1914–15] All ER Rep 622. 83. [1948] Ch 465; [1948] 2 All ER 318. 84. Chichester Diocesan Fund v Simpson [1944] AC 341; [1944] 2 All ER 60. A bequest in these terms would not fail in Australia, see Chapter 10. 85. See [23-18]. 86. This action is one peculiar to the administration of deceased estates and does not lie where administration of a settlement is in question — see Ministry of Health v Simpson [1951] AC 251 at 265–6; [1950] 2 All ER 1137 at 1140; Hagan v Waterhouse (1991) 34 NSWLR 308 at 367–70. The judgment of the Court of Appeal on this claim was upheld by the House of Lords on further appeal. The House did not consider the action in rem. See [23-19] for the legislative changes effected in Queensland and Western Australia. 87. Re J Leslie Engineers Co Ltd [1976] 2 All ER 85; [1976] 1 WLR 292. 88. Strang v Owens (1925) 42 WN (NSW) 183. If the volunteer attributes a specific asset on its own to money received then the claimant would be entitled to a charge over that asset, but it is not clear whether that charge will extend to recovery of a proportionate part of the proceeds as representing profit or whether, by analogy to Scott v Scott (1964) 109 CLR 649; [1964] ALR 946, the claimant is also entitled to the proprietary interest in the asset, which will carry any increase in value. 89. The Court of Appeal explained its attitude as follows ([1948] Ch 465 at 539; [1948] 2 All ER 318 at 357): ‘It would be inequitable for the volunteer to claim priority for the reason that he is a volunteer: it would be equally inequitable for the true owner of the money to claim priority over the volunteer for the reason that the volunteer is innocent and cannot be said to act unconscionably if he claims equal treatment for himself. The mutual recognition of one another’s rights is what equity insists upon as a condition of giving relief.’ The court emphasised that there was available to the recipient of the property wrongly distributed no general defence of ‘change of position’. But in Western Australia and Queensland it is now provided by legislation (Trustee Act 1962 s 65 and Trusts Act 1973 s 109, respectively) that, where the recipient has so altered his or her position in reliance upon the propriety of the distribution that it would be inequitable to enforce the remedy, the court may make such order as it considers to be just in all the circumstances. 90. Re Diplock’s Estate [1948] Ch 465 at 517, 557; [1948] 2 All ER 318 at 345, 366. This is not so with the claim in personam. 91. Re Diplock’s Estate [1948] Ch 465 at 521; [1948] 2 All ER 318 at 347. 92. [1910] 2 Ch 277. However, there is no reason in principle why in a suitable case the plaintiff may not vindicate its rights by the combination of tracing and subrogation. This was so held by the English Court of Appeal in Boscawen v Bajwa [1995] 4 All ER 769; [1996] 1 WLR 328. 93. Cf Raulfs v Fishy Bite Pty Ltd [2008] NSWSC 1195 at [26]–[27], querying this proposition. 94. Re J Leslie Engineers Co Ltd [1976] 2 All ER 85; [1976] 1 WLR 292. 95. See also Clark v Cutland [2003] 4 All ER 733; [2004] 1 WLR 783. 96. See also Re Diplock’s Estate [1948] 2 All ER 429. 97. [1951] AC 251 at 276; [1950] 2 All ER 1137 at 1147. 98. [1991] 2 AC 548; [1992] 4 All ER 512. 99. [1995] 4 All ER 769 at 776–7; [1996] 1 WLR 328 at 334–5. See also P Key, ‘Change of Position’ (1995) 58 MLR 505. 100. See [27-02]. 101. [1991] 2 AC 548 at 578ff; [1992] 4 All ER 512 at 532ff. See also Goss v Chilcott [1996] AC 788 at 798–9; [1997] 2 All ER 110 at 117–18.

102. Palmer on Restitution, 1978, Vol 3, [16.8]. 103. Law Reform (Property, Perpetuities and Succession) Act 1962 (WA) s 24; Trustee Act 1962 (WA) s 65(8); Trusts Act 1973 (Qld) s 109; Judicature Act 1908 (NZ) s 94B. 104. See Bank of New South Wales v Murphett [1983] 1 VR 489; Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 682; 78 ALR 157 at 169; and see C Rotherham [2003] RLR 57 at 71–8. 105. (1999) 10 BPR 97,855 at [22]. 106. (1992) 175 CLR 353; 109 ALR 57. 107. (2003) 86 SASR 312 at [155]–[158]. 108. (1880) 13 Ch D 696; [1874–80] All ER Rep 793. 109. [1915] 1 Ch 62 at 69. 110. (1974) 3 ALR 404. In the United States, there is authority for a presumption in such cases in favour of restoration: United Nation Bank v Weatherly 75 NYS 3 (1902). 111. This case is often cited as if authority that intention were irrelevant, whereas in truth it is authority to the contrary. The case was one where no intention was deducible, but as Sargant J said (at 69): ‘Of course, if there was anything like a separate trust account, the payment of further moneys into that account would, in itself, have been quite a sufficient indication of the intention of the debtor to substitute those additional moneys, and accordingly to impose, by ways of substitution, the old trusts upon those additional moneys.’ 112. Ex parte Kingston (1871) LR 6 Ch App 632; Taylor v London & County Banking Co [1901] 2 Ch 231 at 254; Matter of Van Ingen 100 NYS 2d 244 (1950); Re Gottfried Banking Co 312 F Supp 643 (1970); Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at [103]. 113. See [27-11]. 114. (1950) 15 ABC 68 at 72. 115. [1991] 1 NZLR 545 at 553–4; Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at [193]– [194]. 116. Re T A Mclntyre & Co 181 F 960 (1910). 117. (1974) 4 ALR 579. 118. [1975] Ch 97; [1974] 2 All ER 401; cf Re EO Farley Ltd (1940) 40 SR (NSW) 240. 119. (1958) 100 CLR 32; [1958] ALR 285. 120. (1845) 2 Coll 241; 63 ER 716. 121. [1919] AC 658; see also Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; [1968] 3 All ER 651. 122. [1893] AC 282; see also Coleman v Bucks and Oxon Union Bank [1897] 2 Ch 243, where the bank had some notice, but not sufficient to render it a constructive trustee. 123. These paragraphs are intended only as a broad outline of the principles applicable to the defence of a purchaser for value without notice. For a fuller treatment of this subject, reference should be made to Meagher, Gummow and Lehane’s Equity, [8-240]–[8-300].

[page 616]

CHAPTER 28 Trusts in the Conflict of Laws The Convention

[28-01]

The Convention — General Application of the Convention Application Scope of the Convention

[28-02] [28-02] [28-03]

The Convention — Chapter II — Applicable Law Express or Implied Choice of Law Proper Law Where No Express or Implied Choice Extent of Application of Proper Law Application of Conflicts Rules of Forum Application of Provisions of Lex Fori Irrespective of Conflicts Rules Public Policy Fiscal Matters

[28-06] [28-06] [28-07] [28-08] [28-09]

The Convention — Chapter III — Recognition Duty to Recognise Entitlement of Trustee to Register Non-recognition of Trusts Application of More Favourable Rules

[28-13] [28-14] [28-15] [28-16] [28-17]

Matters Not Dealt With by Convention General Vesting in the Trustee Jurisdiction Trusts Created by Operation of Law

[28-18] [28-18] [28-19] [28-20] [28-21]

[28-10] [28-11] [28-12]

The Convention [28-01] A significant role is now played by the provisions of the Hague Convention relating to trusts in consequence of their enactment in Australia. However, those provisions do not exhaustively regulate the field. This chapter constitutes an elementary summary of the position. [page 617]

The Convention — General Application of the Convention Application [28-02] By virtue of s 6 of the Trusts (Hague Convention) Act 1991 (Cth), the Convention, which is a Schedule to that Act, has the force of law in Australia.1 By Art 21, any Contracting State may reserve the right to apply the provisions of Ch III of the Convention, which deals with recognition, only to trusts the validity of which is governed by the law of a Contracting State. Australia has not made a reservation of that kind. Accordingly, Ch III obliges Australia to recognise trusts, whether or not their validity is governed by the law of a Contracting State. By Art 22, the Convention applies to trusts regardless of the date on which they were created. A Contracting State may reserve the right not to apply the Convention to trusts created before the date on which the Convention enters into force in relation to that state, but Australia has not done so. By virtue of s 4, the Act extends to the external territories. By virtue of s 5, the Act binds the Crown, in right of the Commonwealth, of each of the states of the Commonwealth, of the Australian Capital Territory, of the Northern Territory and of Norfolk Island. The Act does not apply in relation to conflicts arising solely between the laws of different states or territories of the Commonwealth in respect of trusts: s 7(1)

and see Art 24. However, s 7(1) does not preclude or limit the application of a law of a state or territory of the Commonwealth that applies the provisions of the Convention in relation to conflicts of the kinds referred to in s 7(1). It has been said that a court dealing with conflicts arising solely between the laws of different states or territories ‘should hesitate long before adopting a principle of law … that would be patently out of step with the principles adopted in the Convention. …’2 Article 23 provides that for the purpose of identifying the law applicable under the Convention, where a state comprises several territorial units each of which has its own rules of law in respect of trusts, any reference to the law of that state is to be construed as referring to the law in force in the territorial unit in question.

Scope of the Convention [28-03] Chapter I of the Convention deals with its scope. Article 1 provides that the Convention specifies the law applicable to trusts (by Ch II) and governs their recognition (by Ch III). The word ‘law’ means the rules of law in force in a state other than its rules of conflict of laws (for example, not the renvoi doctrine): Art 17. [page 618] Article 2 defines the term ‘trust’: For the purposes of this Convention, the term ‘trust’ refers to the legal relationships created — inter vivos or on death — by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. A trust has the following characteristics — (a) the assets constitute a separate fund and are not a part of the trustee’s own estate; (b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee; (c) the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law. The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.

Plainly, the expression ‘assets have been placed under the control of a trustee’ includes a conveyance by a settlor to a trustee for the benefit of the objects of the trust. Does it include declarations of trust by a settlor, so that what the settlor formerly owned absolutely is now held on trust for the benefit of the objects? It would be a narrow and inconvenient construction which excluded this very common way of creating a trust. The better view is that that type of declaration is within Art 2: before the declaration the assets were not under the control of a trustee, but by force of it they have been placed under the control of a trustee. The words ‘for a specified purpose’ appear to ensure that the Convention applies not only to trusts for charitable purposes, but also to trusts for noncharitable purposes (which are not common in Australian law: see Chapter 11).3 The expression ‘the assets constitute a separate fund and are not a part of the trustee’s own estate’ does not require that a Convention trust be limited to the Anglo-Australian trust, with its recognition for certain purposes of proprietary interests in the beneficiaries. The same is true of the second sentence of Art 11: see [28-14]. It is sufficient that the trust assets constitute a separate fiduciary fund, protected from the trustee’s personal creditors, spouse and claimants on the trustee’s death, and recoverable if mingled with the trustee’s personal assets or alienated: see Art 11 discussed at [28-14].4 Thus a ‘trust’ which is invoked in Australian jurisdictions as a matter of domestic law may nonetheless be in a trust for Convention purposes. Article 2(b) may create a problem. How far do the words ‘in the name of another person on behalf of the trustee’ extend? Do they extend to agents?5 [28-04] Article 3 provides that the Convention applies only to trusts created voluntarily and evidenced in writing. It follows that the Convention does not apply to oral trusts not evidenced in writing, to trusts created by operation of law, for example, implied, some resulting and some constructive trusts, and to trusts created by statute. Other resulting trusts will be within Art 3, for example, those which arise where a trustee continues to hold property after the express trusts have been exhausted, provided they were created voluntarily and evidenced in writing. And some constructive trusts may be within Art 3, for example, those which arise from mutual wills, those which arise under specifically enforceable contracts, and half-secret trusts, provided in each case that the trust is created voluntarily and evidenced in writing. It is difficult to see

how constructive trusts enforced against the recipients of trust property can be said to have been created voluntarily.6 [page 619] Article 3 does not require trusts to have been created in writing. Accordingly, declarations of trust respecting land evidenced by writing signed by the settlor pursuant to the equivalents s 23C(1)(b) of the New South Wales Conveyancing Act 1919 will suffice: see [7-02]. And for the purposes of Art 3, the evidence of a trust respecting property other than land could come from a person other than the settlor. Hayton has persistently advocated7 the view that the judgment of a court stating that a resulting trust exists can amount to evidence in writing. This is very questionable. The word ‘evidenced’ would appear to refer to evidence generated by the conduct of the parties before disputes break out. Further, if ‘the affirmation of a constructive trust by judicial decision provides the requisite formalities as to the existence of that trust, then it is not easy to see why “judicial trusts” needed to be excluded from the Convention [by Art 2, Art 3 and Art 20] in the first place’.8 It is not clear whether the transfer of additional assets to a trustee to hold on the terms of an existing trust which was evidenced in writing must itself be evidenced in writing. On the one hand, the existing trust was evidenced in writing. On the other hand, the expression in Art 2 ‘when assets have been placed under the control of a trustee’ raises the possibility that the transfer of the additional assets was the creation, as to them, of a new trust. [28-05] Article 4 provides that the Convention does not apply to preliminary issues relating to the validity of wills or of other acts by virtue of which assets are transferred to the trustee. These issues are discussed below: see [28-19]. Article 5 provides that the Convention does not apply to the extent that the law specified by Ch II does not provide for trusts or for the category of trusts involved.

The Convention — Chapter II — Applicable Law Express or Implied Choice of Law [28-06] Article 6 provides, in its first paragraph, that a trust shall be governed by the law chosen by the settlor. Article 6 also provides, in its second paragraph, that the choice must be express9 or be implied10 in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary, in the light of the circumstances of the case. It is only when determining whether there is an implied choice that resort may be had to the circumstances of the case.11 An express choice of law cannot be overridden on the ground that the result is repugnant to the settlor’s desires unless relief in the nature of rectification is available.12 The words ‘in light of the circumstances of the case’ were held to permit regard to the facts that the settlor was domiciled in Papua New Guinea at the time he made his will, and that much of his property and the majority of his business interests were in Papua New Guinea at that time.13 What was said at the time the trust was set up, and its matrix, were relevant considerations.14 Finally, Art 6 provides in its third paragraph that where the law chosen under the second [page 620] paragraph does not provide for trusts or the category of trust involved, the choice shall not be effective and the law specified in Art 7 shall apply. Subject to Arts 15, 16 and 18, it is possible for a settlor to do now what it was probably not possible to do under the general law, namely select a law having no objective connection with the trust. A conclusion that an implied choice of law has been made can be drawn by references to a particular law or to jurisdiction clauses in the instrument creating the trust.

Proper Law Where No Express or Implied Choice

[28-07] Article 7 provides: Where no applicable law has been chosen, a trust shall be governed by the law with which it is most closely connected. In ascertaining the law with which a trust is most closely connected reference shall be made in particular to — (a) the place of administration of the trust designated by the settlor; (b) the situs of the assets of the trust; (c) the place of residence or business of the trustee; (d) the objects of the trust and the places where they are to be fulfilled.15

The date for assessing the connection under Art 7 in relation to a trust created by will has been held to be the date of the making of the will, not the date when the assets of the trust vested in the trustee following the administration of the estate and assent by the executor.16 The factors listed in Art 7 are not exhaustive. Another may be the place of execution, although it will have little weight if fortuitous or contrived to take advantage of a favourable law of that place.17 Others may be the residence of the settlor and beneficiaries. Indian law has been selected for trusts which ‘were drafted in India by Indian lawyers for a family of Indian origin with strong Indian ties’.18 The difficulty of getting money out of a jurisdiction may be a pointer against the law of that jurisdiction being the proper law.19 It can be difficult to determine the ‘place of administration’, as where property is placed on trust in two countries with distinct administrations.20 On occasion (for example, the appointment of a new trustee), a single place of administration may have to be identified: in one case, the place where the bulk of assets was held,21 in another, the place where the trustee resided.22 Paragraphs (a) and (d) of Art 7 direct attention to factors that exist at the time the trust is created; this suggests that that is the relevant time for all factors determining the law with which a trust is most closely connected. That conclusion is supported by Art 10, which provides that the law applicable to the validity of the trust shall determine whether that law or the law governing a severable aspect of the trust may be replaced by another law. [page 621]

Extent of Application of Proper Law

[28-08] The first sentence of Art 8 provides: The law specified by Article 6 or 7 shall govern the validity of the trust, its construction,23 its effects, and the administration of the trust.

The question whether the administration of a trust could be governed by a law different from the proper law was controversial at common law.24 The initial position established by Art 8 is that the same law governs both matters, unless Art 9 applies. Article 9 provides for what is known as ‘dépeçage’ (cutting up): In applying this Chapter a severable aspect of the trust, particularly matters of administration, may be governed by a different law.25

Article 8 continues by providing that the law specified by Art 6 or Art 7 shall, in particular, govern: (a) the appointment, resignation and removal of trustees, the capacity to act as a trustee, and the devolution of the office of trustee; (b) the rights and duties of trustees among themselves; (c) the right of trustees to delegate in whole or in part the discharge of their duties or the exercise of their powers; (d) the power of trustees to administer or to dispose of trust assets, to create security interests in the trust assets, or to acquire new assets; (e) the powers of investment of trustees; (f) restrictions upon the duration of the trust, and upon the power to accumulate the income of the trust; (g) the relationships between the trustees and the beneficiaries including the personal liability of the trustees to the beneficiaries. (h) the variation or termination of the trust; (i) the distribution of the trust assets; (j) the duty of trustees to account for their administration.

In Art 8(a) the words ‘the capacity to act as a trustee’ refer to a different type of capacity from the capacity to receive and hold property at all, which, by Art 4, is not dealt with under the Convention: see [28-05] and [28-19]. Paragraphs (f) and (h) of Art 8 ensure that where English law is the proper law, the rule in Saunders v Vautier26 applies.27 Before the Convention was enacted, it was said that the court of the forum would have statutory jurisdiction to vary interests in property held on trust even though the proper law of that trust conferred no power of that kind, at least where the forum was the seat of administration of the trust.28 It has been contended that even though Art 8(h) provides that the governing law identified

in accordance with Art 6 or Art 7 is to govern questions of variation of the trust, the position has not changed, on the ground that Art 8(h) is ‘a choice of law rule and does not directly affect the jurisdiction of the’ courts of the forum.29 This is questionable. The preferable [page 622] view is that if ‘the law governing the trust does not permit variation, then the jurisdiction under the [lex fori] should not be exercised’.30

Application of Conflicts Rules of Forum [28-09] Article 15 provides: The Convention does not prevent the application of provisions of the law designated by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by voluntary act, relating in particular to the following matters — (a) the protection of minors and incapable parties; (b) the personal and proprietary effects of marriage; (c) succession rights, testate and intestate, especially the indefeasible shares of spouses and relatives; (d) the transfer of title to property and security interests in property; (e) the protection of creditors in matters of insolvency; (f) the protection, in other respects, of third parties acting in good faith. If recognition of a trust is prevented by application of the preceding paragraph, the court shall try to give effect to the objects of the trust by other means.31

The last sentence leaves it obscure as to how the court is to make the attempt, and what other means might be employed. In Re Barton; Tod v Barton,32 it was argued that Art 15 applied where the beneficiaries under a trust the proper law which was English invoked the rule in Saunders v Vautier33 by a ‘deed of variation’ to bring it to an end even though the law of Texas, which was the testator’s domicile, did not recognise that rule. The argument was rejected by Lawrence Collins J:34 The purpose of Article 15 is to preserve the mandatory effect of the rules of law designated by the conflicts of laws rules for matters other than trusts [,for example,] the rules that matter for succession to personal property are governed by the law of the testator’s domicile at death. If he is domiciled in a country which gives indefeasible rights of succession to children, then the relevant rules of the country must be given effect notwithstanding the creation of a trust which

purports to override those rights. But in this case there is an insuperable hurdle to the application of Article 15. The only possible relevant reference to Texas law which is required by the English rules of the conflict of laws is to Texas law as the domicile of [the testator] to determine the essential validity of the will. By that law the will is valid. All of the provisions of the will have been carried in effect, and in the circumstances of this case no rule of the English conflict of laws refers the validity of the deed of variation to Texas law, or permits or requires the application of the rule which rejects Saunders v Vautier in the present context.

It will often be undesirable to determine the application of Art 15 on a strikeout or summary application.35

Application of Provisions of Lex Fori Irrespective of Conflicts Rules [28-10] The first paragraph of Art 16 provides: The Convention does not prevent the application of those provisions of the law of the forum which must be applied even to international situations, irrespective of rules of conflict of laws.

[page 623] An example, in the context of a particular type of contract subject to a trust, is s 67 of the Australian Consumer Law, Sch 2 to the Competition and Consumer Act 2010 (Cth), which provides: If: (a) the proper law of a contract for the supply of goods or services to a consumer would be the law in any part of Australia but for a term of the contract that provides otherwise; or (b) a contract for the supply of goods or services to a consumer contains a term that purports to substitute, or has the effect of substituting, the following provisions for all or any of the provisions of this Division: (i) the provisions of the law of a country other than Australia; (ii) the provisions of the law of a State or a Territory; the provisions of this Division apply in relation to the supply under the contract despite that term.

Public Policy [28-11] Article 18 provides:

The provisions of the Convention may be disregarded when their application would be manifestly incompatible with public policy (ordre public).

Fiscal Matters [28-12] Article 19 provides: Nothing in the Convention shall prejudice the powers of States in fiscal matters.

The Convention — Chapter III — Recognition [28-13] Chapter III of the Convention contains the following provisions relating to the recognition of trusts. The ‘recognition’ involved is not the recognition of foreign judgments on trusts. Instead, the function of the recognition rules is to assist the courts of contracting parties in determining what effect should be given to a trust in their legal system.36

Duty to Recognise [28-14] The first paragraph of Art 11 provides: A trust created in accordance with the law specified by the preceding Chapter shall be recognised as a trust. Such recognition shall imply, as a minimum, that the trust property constitutes a separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he may appear or act in this capacity before a notary or any person acting in an official capacity.

Article 11 continues: In so far as the law applicable to the trust requires or provides, such recognition shall imply, in particular — (a) that personal creditors of the trustee shall have no recourse against the trust assets; (b) that the trust assets shall not form part of the trustee’s estate upon his insolvency or bankruptcy; (c) that the trust assets shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustee’s estate upon his death; (d) that the trust assets may be recovered when the trustee, in breach of trust, has mingled trust assets with his own property or has alienated trust assets. However, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the forum.

[page 624] Resolution of Art 11(3)(d) issues depends on the choice of rules applicable to property transfers.37

Entitlement of Trustee to Register [28-15] Article 12 provides: Where the trustee desires to register assets, movable or immovable, or documents of title to them, he shall be entitled, in so far as this is not prohibited by or inconsistent with the law of the State where registration is sought, to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed.

Non-recognition of Trusts [28-16] Article 13 provides: No State shall be bound to recognise a trust the significant elements of which, except for the choice of the applicable law, the place of administration and the habitual residence of the trustee, are more closely connected with States which do not have the institution of the trust or the category of trust involved.

Application of More Favourable Rules [28-17] Article 14 provides: The Convention shall not prevent the application of rules of law more favourable to the recognition of trusts.

Matters Not Dealt With by Convention General [28-18] Various issues relevant to trusts in the conflict of laws are not dealt with in the Convention. These include issues of whether property is validly vested in the trustee, issues of jurisdiction and issues to do with trusts created by operation of law.

Vesting in the Trustee [28-19] Article 4 provides: The Convention does not apply to preliminary issues relating to the validity of wills or of other acts by virtue of which assets are transferred to the trustee.

Hence, where the owner of property transfers it inter vivos to a trustee to hold for the beneficiaries, the question whether the owner of the property effectively transferred it to the trustee is not governed by the Convention. But the question whether the transfer from the trustee to another is valid is determined by the Convention. In Akers v Samba Financial Group,38 a settlor resident in Saudi Arabia had purported to declare himself trustee of shares in Saudi Arabian banks, being shares located in Saudi Arabia, for the benefit of a Cayman Islands company which became insolvent (‘SICL’). SICL then transferred the equitable interests in the shares to the defendants. The liquidators of SICL challenged the latter transaction. It was alleged on one side that the transactions said to create the trusts were for the most part governed by Saudi Arabian law, which did not recognise any division of the legal and beneficial interests in shares. It was alleged on the other side that the transactions said to create the trusts [page 625] were governed by Cayman Islands law, which did recognise the division. The English Court of Appeal held that Art 4 did not prevent the liquidators of SICL from challenging the latter transaction. Article 4 only applied to the steps by which assets were transferred to the trustee. It did not remove from the Convention consideration of whether the settlor’s declaration of trusts was valid, and whether SICL’s transfers were valid. Those issues were to be resolved by reference to the governing law of the trust (the law of the Cayman Islands), not the lex situs, the law of Saudi Arabia. Article 4, in excluding ‘preliminary issues’, excluded issues concerning the transfer of assets to the trustee, not issues concerning what the trustee did with the assets. When the settlor-trustee declared the trust, no assets were being transferred to him; he already owned the shares and was merely declaring that he now held them beneficially for SICL.

Thus the declarations of trust and the later transfers were not preliminary issues.39 The Court of Appeal said that its construction of Art was ‘purposive’, as if that were a passport to approbation. But does it not lead to an anomaly? If the settlor had transferred the shares to the trustee on trust for SICL, Art 4 would have prevented Cayman Islands law from applying. By declaring the trust with himself as trustee, he was said to prevent Saudi Arabian law applying. Yet functionally the two forms of transaction serve the same purpose. Where a trust is created by S transferring property on trust for B, Art 4 is easy to apply. That is not so where the trust is created by S declaring that he, she or it will hold property on trust for B. In that context it cannot be said that Akers v Samba Financial Group is clear, and the questions raised by Art 4 are likely to remain controversial. The question whether legal title to immovables and tangible chattels is passed to the trustee inter vivos depends on the lex situs.40 The question whether legal title to intangible property has passed to the trustee inter vivos depends on the law governing its assignment.41 The question whether legal title has passed to the trustee by will depends on choice of law rules relating to capacity, to the nature of the property, to whether the question is one of form or validity, and to whether the question is one of construction.42 If the law governing the transfer to the trustee differs from the law governing the trust, the trust may fail for impossibility; for example, where a trust governed by English law was created over land in Jersey otherwise than for pecuniary consideration and the law of Jersey did not recognise trusts of that kind, the trust failed.43

Jurisdiction [28-20] The Convention does not deal with questions relating to the jurisdiction of Australian courts in relation to the administration of trusts. At common law, the jurisdiction of an Australian court in relation to the administration of trusts depends on the exercise of jurisdiction in personam over the trustees by personal service within the forum or by service outside the jurisdiction in accordance with the statutory provisions and rules of court governing service outside the jurisdiction.44 If they are so served, the court can

exercise jurisdiction over the trust whatever its proper law and wherever the location of its assets. The court can: (1) administer the trust;45 (2) remove the trustees and appoint new ones;46 (3) make whatever orders against the trustees are necessary in order to [page 626] give effect to the rights of the beneficiaries;47 (4) order the trustees to provide accounts;48 and (5) enforce a resulting trust.49

Trusts Created by Operation of Law [28-21] Trusts created by operation of law — implied trusts, some resulting trusts, constructive trusts, and trusts created by statute — are not covered by the Convention. Article 20 does provide that any Contracting State may at any time declare that the provisions of the Convention will be extended to trusts declared by judicial decisions. Australia has not yet made such a declaration. There is a surprising paucity of authority at common law. It is suggested that resulting trusts of movables taking effect upon failure of an express trust are governed by the proper law of the express trust. There is a rebuttable presumption that parties who supply consideration for a purchase have an intention that the legal title will be held as trustee for them by the party to whom the property is transferred. The parties are presumed to be in the same position as if there were an express trust created by the parties supplying the consideration as settlors. It follows from this, in the absence of express authority, that resulting trusts of movables are governed by their proper law, being that with which, in the absence of express intention by the settlors, the transaction has its closest and most real connection. In Damberg v Damberg,50 the New South Wales Court of Appeal recognised a resulting trust in favour of a father, the provider of the purchase price of certain pieces of land situated in Westphalia which he placed in the names of his children after transactions in Westphalia, both father and children being at the time residents of Westphalia. No party pleaded or proved foreign law, and the lex fori was applied in default (save that the New South Wales Court of Appeal declined to make any assumption about the anti-avoidance provisions of

German capital gains tax law51). Accordingly, all questions which the facts might raise as to whether the recognition of a resulting trust should depend on the lex situs of the land, the lex domicilii of any of the parties, or the lex loci actus of the transactions must be left to a case in which the parties perceive advantage in any particular contention and in which they plead and prove the relevant foreign law. [28-22] Many constructive trusts will arise from abuse of an express trust; examples are the third party who acquires trust property not as a bona fide purchaser,52 and the trustee who uses his or her position to make a secret profit. Such trusts thus involve abuse in the course of administration of the primary trust and this suggests that the accountability of the defendant as constructive trustee of movables will be determined by the law of the place of administration of the primary trust; there is United States authority to this effect.53 The accountability as constructive trustee of an errant company director should be determined by the law of the place of incorporation of the company as the source of the company’s legal personality, powers and rights. Finally, where the issue arises from contractual relations between the parties, or also from a subsisting fiduciary relationship of a kind not already dealt with in this paragraph, the existence of a constructive trust of movables should be determined, in the case of contractual antecedents, by the proper law of the contract and, where there has been a fiduciary relationship, the proper law thereof, being that selected by the parties or in lieu thereof the law with which the pursuit of that relationship had the closest and most real connection.54 _____________________________ 1.

For the law before this legislation, see the 5th edition of this work, Ch 28 and A Wallace, ‘Choice of Law for Trusts in Australia and the United Kingdom’ (1987) 36 ICLQ 454. For analyses of the law under the Convention as adopted by United Kingdom legislation which are much fuller than the elementary account in this chapter, see D Hayton, ‘The Hague Convention on the Law Applicable to Trusts and on their Recognition’ (1987) 36 ICLQ 260; see J Fawcett and J Carruthers (eds), Cheshire, North and Fawcett: Private International Law, 14th ed, 2008, Ch 34; L Collins (ed), Dicey, Morris and Collins on the Conflict of Laws, 15th ed, 2012; Lewin on Trusts, Ch 11; J Harris, The Hague Trusts Convention (2002) (a very detailed work which includes a useful Explanatory Report by Alfred E von Overbeck as an Appendix); J Harris, ‘The Trust in Private International Law’ in J Fawcett (ed), Reform and Development of Private International Law (2002); Underhill and Hayton, Ch 25; Tiong Min Yeo, Choice of Law for Equitable Doctrines, 2004, [6.20]–[6.37]; R Stevens, ‘Resulting Trusts in the Conflict of Laws’ in P Birks and F Rose (eds), Restitution and Equity Vol 1: Resulting Trusts and Equitable Compensation, p 147; Tiong Min Yeo, ‘Choice of Law for Equity’; R Stevens, ‘Choice of Law for Equity: Is it Possible?’ in S Degeling and J Edelman (eds), Equity in Commercial Law, pp 147–84; M

Davies, A Bell and P L G Brereton (eds), Nygh’s Conflict of Laws in Australia, 9th ed, 2014, Ch 34. 2.

3.

In the Estate of Webb (dec’d) (1992) 57 SASR 193 at 204 per Prior J. A common law principle which plainly exists, however, must be applied if it has not been abolished by statute. The Australian Law Reform Commission on Choice of Law (ALRC 58, 1992), [9.38] recommended that the Convention regime should be legislatively adopted for intra-Australian conflicts issues relating to trusts. J Harris, The Hague Trusts Convention, p 105.

4. 5.

See Underhill and Hayton, [100.4] pp 1318–9. See Underhill and Hayton, [100.57]–[100.58] pp 1321–2.

6.

For constructive trusts outside the Convention, see R W White, ‘Equitable Obligations in Private International Law: The Choice of Law’ (1986) 11 Syd LR 92; A Chong, ‘The Common Law of Choice of Law Rules for Resulting and Constructive Trusts’ (2005) 54 ICLQ 155. For example, D Hayton, ‘The Hague Convention on the Law Applicable to Trusts and on their Recognition’ (1987) 36 ICLQ 260 at 264.

7. 8. 9.

J Harris, The Hague Trusts Convention, p 130; see also p 127. This conforms to the common law position: for example, Augustus v Permanent Trustee Co (Canberra) Ltd (1971) 124 CLR 245 at 252–7; [1971] ALR 661 at 664–8 (deed); Re Lord Cable (dec’d) [1976] 3 All ER 417 at 431; [1977] 1 WLR 7 at 20 (will); Paramasivam v Flynn (1998) 90 FCR 489 at 502; 160 ALR 203 at 216. See, for example, Re Barton; Tod v Barton [2002] WTLR 469 at 478–9.

10. This too conforms to the common law position: Augustus v Permanent Trustee Co (Canberra) Ltd (1971) 124 CLR 245 at 252; [1971] ALR 661 at 664; Chellaram v Chellaram (No 2) [2002] 3 All ER 17 at [166]; Re Barton; Tod v Barton [2002] WTLR 469 at 480. 11. Re Barton; Tod v Barton [2002] WTLR 469 at 478. 12. Re Barton; Tod v Barton [2002] WTLR 469 at 479. 13. Re Constantinou (decd) [2013] 2 Qd R 219 at [25]. 14. Berezovsky v Abramovich [2011] EWCA Civ 153 at [108]. 15. The position is similar at common law: Lindsay v Miller [1949] VLR 13; Chellaram v Chellaram [1985] Ch 409 at 425; [1985] 1 All ER 1043 at 1051–2. See, for example, Re Barton; Tod v Barton [2002] WTLR 469 at 479. 16. Re Constantinou (decd) [2013] 2 Qd R 219 at [44]. 17. D McLean and V Ruiz Abou-Nigm (eds), Morris, The Conflict of Laws, 8th ed, 2012, p 479. 18. Chellaram v Chellaram (No 2) [2002] 3 All ER 17 at [167]. 19. Re Carapiet’s Trusts; Manoogian (Armenian Patriarch of Jerusalem) v Sonsino [2002] WTLR 989 at [12]. 20. Re Tyndall [1913] SALR 39. 21. Permanent Trustee Co (Canberra) Ltd v Permanent Trustee Co of New South Wales Ltd (1969) 14 FLR 246 at 252–3. 22. Re Smyth [1898] 1 Ch 89 at 94. 23. This was so at common law: Perpetual Trustees and Executors Association of Australia Ltd v Roberts [1970] VR 732 at 742. 24. A positive answer was tentatively propounded in the 5th edition of this work at [2807]–[2808]. A negative answer received recent support: Chellaram v Chellaram [1985] Ch 409 at 432; [1985] 1 All ER 1043 at 1056–7; In the Estate of Webb (dec’d) (1992) 57 SASR 193 at 202–4. 25. Crociani v Crociani [2014] UKPC 40 at [24]. 26. (1841) Cr & Ph 240; 49 ER 282.

27. Re Barton; Tod v Barton [2002] WTLR 469 at 480. 28. Re Ker’s Settlement Trusts [1963] Ch 553; [1963] 1 All ER 801. According to Cross J in Re Paget’s Settlement [1965] 1 All ER 58 at 60; [1965] 1 WLR 1046 at 1049, the contrary view was not argued. See also Faye v Faye [1973] WAR 66. 29. Dicey and Morris on the Conflict of Laws, 13th ed, Vol II, [29-018]. 30. Cheshire and North’s Private International Law, p 1043. See also J Harris, The Hague Trusts Convention, pp 263–4; A J Oakley (ed), Parker & Mellows: The Modern Law of Trusts, 8th ed, p 859. This is the view apparently now taken in L Collins (ed), Dicey, Morris and Collins on the Conflict of Laws, 15th ed, 2012, Vol 2, [29-61] p 1512. 31. C v C (Ancillary Relief: Nuptial Settlement) [2005] Fam 250. 32. [2002] WTLR 469. 33. (1841) Cr & Ph 240; 49 ER 282. 34. [2002] WTLR 469 at [42]. 35. Akers v Samba Financial Group [2015] Ch 451 at [66]. 36. See Underhill and Hayton, [100.50], pp 1319–20. 37. The “W D Fairway” (No 3) [2009] 2 Lloyd’s Rep 420 at [24]. 38. [2015] Ch 451. 39. [2015] Ch 451 at [37]–[57], discussing Joint Administrators of Rangers Football Club plc, Noters 2012 SLT 599 at [24]. 40. M Davies, A Bell and P L G Brereton (eds), Nygh’s Conflict of Laws in Australia, 9th ed, 2014, Ch 32. 41. M Davies, A Bell and P L G Brereton (eds), Nygh’s Conflict of Laws in Australia, 9th ed, 2014, Ch 32. 42. M Davies, A Bell and P L G Brereton (eds), Nygh’s Conflict of Laws in Australia, 9th ed, 2014, Ch 37. 43. Re Pearse’s Settlement [1909] 1 Ch 304. 44. In the Estate of Webb (dec’d) (1992) 57 SASR 193 at 195–6. 45. Ewing v Orr Ewing (1883) 9 App Cas 34. 46. Letterstedt v Broers (1884) 9 App Cas 371 at 385–6; [1881–5] All ER Rep 882 at 886. 47. Chellaram v Chellaram [1985] Ch 409 at 428; [1985] 1 All ER 1043 at 1053–4. 48. In the Estate of Webb (dec’d) (1992) 57 SASR 193. 49. Webb v Webb [1992] 1 All ER 17; [1991] 1 WLR 1410. 50. (2001) 52 NSWLR 492. 51. Similar caution was revealed in R Griggs Group Ltd v Evans [2005] Ch 153 at [53]. 52. For example, El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 737. 53. Campbell v Albers 39 NE (2d) 672 (1942). 54. Parts of this sentence were quoted with approval in Murakami v Wiryadi (2010) 268 ALR 377 at [142], after discussing National Commercial Bank v Wimbourne (1978) 5 BPR 11,958 at 11,982; Paramasivam v Flynn (1998) 90 FCR 489; 160 ALR 203 and criticising A-G v R [2002] 2 NZLR 91 at [28]–[30]. See further Nicholls v Michael Wilson and Partners Ltd (2010) 243 FLR 177 at [340]–[346]; Piatek v Piatek (2010) 245 FLR 137 at [117]–[121].

[page 627]

CHAPTER 29 The Trust Aspects of Superannuation Introduction

[29-01]

The Role of Statute The Enactments The Regulatory Bodies The Reasons for Regulation Superannuation Entities Key Regulatory Elements

[29-02] [29-02] [29-03] [29-04] [29-05] [29-06]

The Trust Character of Superannuation Arrangements Trust Structure The Purposes Implied Covenants Indemnity and Exemption Autonomy of Trustees Statutory Restrictions on Amendment

[29-07] [29-07] [29-08] [29-09] [29-10] [29-11] [29-12]

Effect of SIS Act on Capacity to be Trustee Disqualified Persons: Individuals Procedure for Ensuring Equal Representation

[29-13] [29-13] [29-14]

Effect of SIS Act on Appointment and Removal of Trustees Procedure for Ensuring Equal Representation APRA Powers of Removal and Appointment Consent

[29-15] [29-15] [29-16] [29-17]

Effect of SIS Act on Duties of Superannuation Trustees Statutory Covenants Honesty

[29-18] [29-18] [29-19]





Care, skill and diligence Best interests of beneficiaries Role in cases of conflict Duty to act fairly in dealing with classes of beneficiaries Duty to act fairly in dealing with beneficiaries within a class Separation of trust assets Fettering conduct

[29-20] [29-21] [29-22] [29-23] [29-24] [29-25] [29-26] [page 628]





Management of reserves Access to information and documents Specific covenants: investment Specific covenants: insurance Specific covenants: risk Covenants relating to corporate trustee directors Covenants relating to self managed superannuation funds Covenants relating to self managed superannuation funds corporate trustee directors Covenants to repay amounts to beneficiaries in approved deposit funds Covenants prescribed by regulation Remedies Relief Prudential Standards Operating Standards The Intensity of Regulation Inquiries and Complaints Duties of Investment Manager Retention of Documents Adverse Events Changes in Status of Self Managed Superannuation Fund Arm’s Length Investments

[29-27] [29-28] [29-29] [29-30] [29-31] [29-32] [29-33] [29-34] [29-35] [29-36] [29-37] [29-38] [29-39] [29-40] [29-41] [29-42] [29-43] [29-44] [29-45] [29-46] [29-47]



Payment to Employer Beneficiary’s Rights Nature of beneficiary’s rights Protection of beneficiary’s rights under SIS Regulations Nomination

The Employment Aspects of Superannuation Trusts General Principles of Construction The Employer’s Duty of Good Faith Nature of Powers The Amendment of Trust Deeds The Distribution of Surpluses Conflict of Duty and Interest Breach of Trust

[29-48] [29-49] [29-49] [29-50] [29-51] [29-52] [29-52] [29-53] [29-54] [29-55] [29-56] [29-57] [29-58] [29-59]

[page 629]

Introduction [29-01] It is a common incident of the employer–employee relationship for each side to contribute funds over time to provide a pension or capital sum or both for the employee on retirement. Non-employees can also make similar arrangements. These systems of saving are commonly administered by ‘superannuation funds’ in the form of trusts.1 The federal government, motivated by a desire to reduce the dependence of retired persons on the old-age pension funded out of general revenue, has endeavoured by taxation concessions to encourage citizens to invest in superannuation in order to provide for their old age. It has also made it compulsory for employers to contribute a certain percentage of the employee’s salary for these purposes.2 Partly as a result, in modern conditions large amounts of assets are administered by the trustees of superannuation funds, and they have increasingly come under detailed statutory regulation. For some people,

superannuation is their most valuable asset apart from their houses. It may be even more valuable. Employer superannuation is a key part of employee remuneration. It is method of attracting employees. It is ‘deferred pay’.3 Because of the potentially lengthy time periods over which superannuation savings are accumulated, it was natural, and it is now in many instances mandatory, for a trust to be employed.4 Hence principles of the general law, both of contract and of trusts, are also centrally important, and are intertwined with the statutory scheme. This chapter concentrates on the trust aspects of superannuation, but the statutory background must be sketched.

The Role of Statute The Enactments [29-02] The principal enactments dealing with superannuation are the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). The legislation makes provision for superannuation funds to be regulated by the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO).5 The relationship between the three regulatory bodies is broadly as follows.

The Regulatory Bodies [29-03] APRA is responsible for the prudential supervision of superannuation funds in general (amongst its other responsibilities for banks, life insurance companies and general insurance companies) and the scheme under the SIS Act and the SIS Regulations in particular: Australian Prudential Regulation Authority Act 1998 (Cth) s 8(1). ASIC is responsible for promoting marketing integrity and consumer protection in relation to superannuation: Australian Securities and Investments Commission Act 2001 (Cth) s 12A(2)– (4). The ATO administers taxation laws affecting superannuation together with self managed superannuation funds. The role of the ATO arises because there

are taxation concessions in favour of superannuation funds conducted in accordance with the SIS Act and the SIS Regulations. [page 630] The detailed allocation of responsibilities for the administration of various provisions in the SIS Act is found in s 6 of the SIS Act.

The Reasons for Regulation [29-04] The tightness with which superannuation funds are regulated stems partly from the legislature’s determination to prevent the tax concessions that accompany them from being abused. It also exists because the size of the assets in superannuation funds is so great, the numbers of potential trustees are so large, the opportunities for carelessness or worse to lead to dissipation of the assets are so many, and the consequential adverse effects on the Commonwealth’s liability to pay old-age pensions are seen by it as potentially severe.

Superannuation Entities [29-05] The SIS Act regulates ‘superannuation entities’. That expression comprises ‘regulated superannuation funds’, ‘approved deposit funds’ and ‘pooled superannuation trusts’: see definitions in s 10(1). A regulated superannuation fund is a superannuation fund which satisfies three conditions. First, it must have at least one trustee: s 19(2). Secondly, either the trustee must be a trading or financial corporation in the sense employed in s 51(xx) of the Constitution, or the governing rules of the fund must provide that the sole or primary purpose of the fund is the provision of old-age pensions: s 19(3). Thirdly, the trustee or trustees must have given APRA a notice electing that the SIS Act is to apply to the fund: s 19(4). It is compulsory for wide classes of superannuation funds to become regulated superannuation funds: s 19(7). The present point is that regulated superannuation funds must have trustees. So must pooled superannuation funds and (in large measure) approved deposit funds (which expressions are defined in s 10(1)). In consequence, unless the trustee

legislation or the rules governing the trust provide to the contrary, the general law of trusts, particularly the general law on the duties of trustees, applies.6 The legislation imposes numerous additional duties on trustees. Those duties are backed by a wide variety of civil remedies, and sometimes civil penalty provisions and criminal sanctions.

Key Regulatory Elements [29-06] Among the key regulatory elements of the SIS Act are the following. First, in general, loans or other financial assistance using the resources of a regulated superannuation fund are not to be extended to members of the fund or their relatives: s 65. Secondly, there are complex rules regulating the making of investments in ‘in-house assets’, that is, the making of investments with entities closely related to the fund: Pt 8. Thirdly, special duties are imposed on the auditors and actuaries of superannuation entities: Pt 16.

The Trust Character of Superannuation Arrangements Trust Structure [29-07] The bulk of superannuation entities have a trust structure. The structure is that of an express trust constituted by a trust deed. It is common, however, for the trust instrument to comprise not only a trust deed, but rules. There is a trustee, trust property and, as, in general, with all non-charitable trusts, beneficiaries. Unless a superannuation fund is a public sector superannuation scheme, it will be an indefinitely continuing fund. That is because the definition of ‘superannuation fund’ in s 10(1) of the SIS Act requires that the fund be ‘a provident, benefit, [page 631] superannuation or retirement fund’ and be ‘indefinitely continuing’. A

superannuation fund is a fund bona fide directed as its sole purpose to providing for employees who are participants money benefits (or benefits having a money value) upon their reaching a prescribed age or on their retirement, death, or other cessation of employment.7 It is not necessary that the benefits be ‘fully secured’: the trustee may have a discretion as to who is to be given benefits and in what amount.8 The general law of trusts applies to superannuation funds unless excluded by the provisions of the trust instrument or of legislation. Thus the rule against perpetuities would apply,9 but for s 343 of the SIS Act which provides: ‘The rules of law relating to perpetuities do not apply, and are taken never to have applied, to the trusts of any superannuation entity. …’ There are some provisions in the SIS Act which affect the contents of superannuation trust deeds.

The Purposes [29-08] The Act requires trustees of regulated superannuation funds to ensure that the fund is maintained solely for one or more ‘core purposes’ or for one or more core purposes and one or more ‘ancillary purposes’: s 62(1). The core purposes are the provision of benefits for members of the fund on retirement, or on attaining a certain age, or on earlier death. The ancillary purposes include the provision of benefits for members after termination of employment, or cessation of work because of ill-health, or death after retirement, or death after attaining a certain age.

Implied Covenants [29-09] Further, s 52 of the SIS Act implies various covenants by trustees into the trust deeds of superannuation entities.10 It follows that the covenants implied by the Act do not strictly speaking create statutory duties. Instead they have the status of terms of the trust which are incapable of being excluded by express terms. Breach of them permits the beneficiary to sue the trustee for breach of trust. Further, there is an express statutory right to sue to recover loss or damage caused by any person who contravenes one of the covenants: s 55(3).

Indemnity and Exemption [29-10] A provision in the governing rules of a superannuation entity is void if it purports to preclude a trustee from being indemnified out of the assets of the entity in respect of any liability incurred while acting as trustee of the entity or limits the amount of the indemnity: s 56(1). A provision of that kind is also void in so far as it would have the effect of exempting a trustee of the entity from, or indemnifying a trustee of the entity against, either liability for breach of trust if the trustee failed to act honestly or intentionally or recklessly failed to exercise the required degree of care or diligence, or liability for a money penalty under a civil penalty order or other liabilities and payments: s 56(2). Section 57, which has effect despite s 241 of the Corporations Act 2001 (Cth), contains provisions corresponding to those of s 56(1) and (2) in relation to the directors of corporate trustees of superannuation entities. Section 57(3) provides: ‘A director of the trustee of a superannuation entity may be indemnified out of the assets of the entity in accordance with provisions of the entity’s governing rules that comply with this section.’ Further, s 56(3) provides: ‘Nothing in the governing rules of a superannuation entity [page 632] prohibits a trustee of the entity from seeking advice from any person in respect of any matter relating to performance of the duties or the exercise of the powers of a trustee.’ It also renders void any provision in the governing rules that purports to preclude a trustee of the entity from being indemnified out of assets of the entity in respect of the cost of obtaining such advice, or to limit the amount of such an indemnity.

Autonomy of Trustees [29-11] Subject to the exceptions set out in s 58(2), the governing rules of a superannuation entity other than a superannuation fund with fewer than five members or an excluded approved deposit fund must not permit a trustee to be subject, in the exercise of any of the trustee’s powers under those rules, to direction by any other person. Among the exceptions are directions given by

the court, by certain authorities, by persons acting under power in the regulations, and by beneficiaries in relation to benefits payable to them.11 Section 59(1A) provides that despite s 59(1), the governing rules of a superannuation entity may, subject to a trustee of the entity complying with any conditions contained in the regulations, permit a member of the entity, by notice given to a trustee of the entity in accordance with the regulations, to require a trustee of the entity to provide any benefits in respect of the member on or after the member’s death to a person or persons mentioned in the notice, being the legal personal representative or a dependant or dependants of the member. Section 59(1) provides that subject to s 59(1A), the governing rules of a superannuation entity other than a self managed superannuation fund, must not permit a discretion under those rules that is exercisable by a person other than a trustee of the entity to be exercised unless: (a) those rules require the consent of the trustee, or the trustees, of the entity to the exercise of that discretion; or (b) if the entity is an employer-sponsored fund: (i) the exercise of the discretion relates to the contributions that an employer-sponsor will, after the discretion is exercised, be required or permitted to pay to the fund; or (ii) the exercise of the discretion relates solely to a decision to terminate the fund; or (iii) the circumstances in which the discretion was exercised are covered by regulations made for the purpose of this subparagraph.

Governing rules inconsistent with s 59(1) are, to the extent of the inconsistency, invalid: s 59(2). Sections 58(1) and 59(1) were not contravened where a trustee acted, as it was obliged to under the trust deed, on the advice of an actuary as to what each member’s ‘equitable share of the Plan’ was: the decision as to what it was remained that of the trustee even though it acted on the actuary’s advice, and the trustee was not bound to act on erroneous advice from the actuary.12

Statutory Restrictions on Amendment [29-12] Section 60(1) provides that the governing rules of a superannuation entity other than a self managed superannuation fund must not permit those rules to be amended unless: (a) the trustee, or the trustees, of the entity have consented to the amendment; or (b) if the entity is an employer-sponsored fund: (i) the amendment relates to the contributions that an employer-sponsor will, after the

amendment, be required or permitted to pay to the fund; or

[page 633] (ii) the amendment relates solely to the termination of the fund; or (iii) the circumstances in which the amendment was made are covered by regulations made for the purposes of this subparagraph; or (c) the amendment is made solely for the purpose of conferring on the trustee, or the trustees, the power to consent to amendments of those rules.

Further, s 60(2) provides that the governing rules of a regulated superannuation fund must not permit those rules to be amended in such a way that: (a) a person other than a constitutional corporation would be eligible to be appointed as trustee unless the rules provide, and will continue to provide after the amendment is made, that the fund has, as its sole or primary purpose, the provision of old-age pensions; or (b) the sole or primary purpose of the fund would be a purpose other than the provision of oldage pensions unless the rules provide, and will continue to provide after the amendment is made, that the trustee must be a constitutional corporation.

And s 60(3) provides that if the governing rules of the superannuation entity are inconsistent with s 60(1) or s 60(2) the subsection concerned prevails, and the governing rules are, to the extent of the inconsistency, invalid. Another restriction on amendment is to be found in reg 13.16. Section 31(1) of the SIS Act provides that the regulations may prescribe standards applicable to the operation of regulated superannuation funds. Regulation 13.16(1) prescribes the following standard: ‘that a beneficiary’s right or claim to accrued benefits, and the amount of those accrued benefits, must not be altered adversely to the beneficiary by amendment of the governing rules or by any other act carried out, or consented to, by the trustee of the fund’. That is subject to reg 13.16(2), which creates various exceptions, including consent by beneficiaries.13

Effect of SIS Act on Capacity to be Trustee Disqualified Persons: Individuals [29-13] Not every legal person can be trustee of a superannuation entity. An

individual is a disqualified person if the individual is convicted of an offence of dishonesty under Australian or foreign law,14 or if a penalty order was made in relation to the person; if the individual is an insolvent under administration; or if the individual has been disqualified under s 126A on the ground of contravention of the SIS Act or a related statute or on the ground of not being a fit and proper person: s 120(1). A body corporate is a disqualified person on certain conditions where it knows, or has reasonable grounds to suspect, that a person who is, or is acting as, a responsible officer (that is, a director, secretary or executive officer) of the body corporate is a disqualified person: s 120(2)(a). A body corporate is also a disqualified person if a receiver, or receiver and manager, has been appointed, or it is in various forms of administration, or a provisional liquidator has been appointed, or the body has begun to be wound up: s 120(2)(b)–(e).

Procedure for Ensuring Equal Representation [29-14] A further restriction on the character of trusteeship in relation to superannuation funds concerns trustees of standard employer-sponsored funds. A standard employer-sponsored fund is a regulated superannuation fund with at least one employer who contributes to the fund (or would do so apart from a temporary cessation of contributions) for the benefit of members who are employees of the employer or the associates of the employer, or the dependants of the member in the event of death: s 16. Where a standard employersponsored fund has individual [page 634] trustees, there must be equal numbers of employer representatives and member representatives: s 89(1)(a). Where a standard employer-sponsored fund has a single corporate trustee, its board must consist of equal numbers of employer representatives and member representatives: s 89(1)(b). A member representative is a member nominated by the members of the fund, or by a trade union, or other organisation, representing the interests of those members: definition in s 10(1).

Effect of SIS Act on Appointment and Removal of Trustees Procedure for Ensuring Equal Representation [29-15] The general law on appointment and removal of trustees is qualified by the SIS Act in casting a duty on trustees of standard employer-sponsored funds, so far as they are bound by the equal representation rule, to establish rules setting out a procedure for appointing the member representatives and ensuring that member representatives so appointed can only be removed by the same procedure as that by which they were appointed, except in the event of death, mental or physical incapacity, retirement, termination of employment, disqualification, suspension or removal: s 107.

APRA Powers of Removal and Appointment [29-16] The general law on appointment and removal of trustees is supplemented by s 133 of the SIS Act. That section gives power to APRA to suspend or remove a trustee of a superannuation entity on various grounds, including the following: if the trustee is a disqualified person, or it appears that conduct of the trustee or any other trustees of the entity may result in the financial position of the entity or any other superannuation entity becoming unsatisfactory. Section 134 gives APRA power to appoint an acting trustee during periods in which all the trustees of a superannuation entity have been suspended, or where all the trustees have been removed: s 134(1) and (2). An individual cannot be appointed by APRA as acting trustee of a superannuation entity unless the governing rules of the entity provide that the sole or primary purpose of the entity is the provision of old-age pensions: s 134(3).

Consent [29-17] A person is not eligible for appointment as a trustee of a superannuation entity, or as a director of a corporate trustee of a superannuation entity, unless the person has consented in writing to the appointment: s 118.

Effect of SIS Act on Duties of Superannuation Trustees Statutory Covenants [29-18] Section 52(1) provides that if the governing rules of a registrable superannuation entity do not contain covenants by trustees to the effect of those in s 52(2), the governing rules are taken to contain covenants to that effect. This does not affect the other obligations imposed on the trustees under the trust deed or other general legal principles.15 As a preliminary matter it is necessary to note that s 51A provides that each of the covenants referred to in s 52 (and in ss 52A, 52B, 52C and 53), and prescribed under s 54A, and each obligation referred to in ss 29VN and 29VO that applies to a trustee of a superannuation entity, or a director of a corporate trustee of a superannuation entity, applies in addition to every other covenant or obligation referred to in those sections that applies to the trustee or director. There are 10 general covenants in s 52(2). [page 635]

Honesty [29-19] The first is to act honestly in all matters concerning the superannuation entity: s 52(2)(a). This must correspond substantially with the general law. Trustees have a duty to act bona fide in the best interests of beneficiaries. That duty cannot include a licence to act dishonestly towards third parties in furtherance of it: there is a more fundamental duty to obey the law,16 and dishonest conduct will very often be unlawful.

Care, skill and diligence [29-20] The second covenant is ‘to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as a prudent superannuation trustee would exercise in relation to an entity of which it is trustee and on behalf of the beneficiaries of which it makes investments’. This

covenant was changed in 2013. In its earlier form, the second covenant was ‘to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide’: s 52(2) (b). This standard corresponded with the test applied under the general law.17 It did not adopt the higher standard which the uniform legislation in the states and territories has applied to professional trustees.18 However, there is no reason why that higher standard, if otherwise applicable, will not extend to superannuation trustees. The existence of an express covenant in a trust deed to attain a particular standard, or a covenant implied by s 52(1), does not of itself exclude a rule of the general law creating a higher standard. That conclusion is reinforced by s 350 of the SIS Act: ‘It is the intention of the Parliament that this Act is not to apply to the exclusion of a law of a State or Territory to the extent that the law is capable of operating concurrently with this Act.’ Section 52(3) provides that a ‘superannuation trustee’ is a person whose profession, business or employment is or includes acting as a trustee of a superannuation entity and investing money on behalf of beneficiaries of the superannuation entity. The amendment to the s 52(2)(b) covenant from 2013 creates a higher standard than its predecessor. A breach of the covenant can be found in a failure to act with reasonable despatch.19

Best interests of beneficiaries [29-21] The third covenant is ‘to perform the trustee’s duties and exercise the trustee’s powers in the best interests of the beneficiaries’. This too was changed in 2013. The pre 2013 version of the covenant was ‘to ensure that the trustee’s duties and powers are performed and exercised in the best interests of the beneficiaries’: s 52(2)(c). This covenant corresponds with the general law.20 It has been said: ‘the words “to ensure” add nothing; an obligation is an obligation. … [T]o “ensure” does not turn the question of exercise of a discretionary power [page 636]

into one of strict liability. There is liability if the discretionary power is exercised improperly, but otherwise there is not.’21 The words ‘“to ensure” emphasise the seriousness of this covenant and the requirement that it be strictly observed’.22 Hence the amendment probably makes no difference. It was said of the s 52(2)(c) covenant in its pre 2013 form that it amalgamated two obligations. One was the trustee’s duties of loyalty or fidelity to the trusts, duties to act in the best interests of beneficiaries by treating them as paramount, to be placed above the trustee’s own interests, and duties not to have regard to extraneous considerations. The second obligation was the duty to pursue to the utmost, with appropriate diligence and prudence, the interests of the beneficiaries.23 Read by itself, s 52(2)(c) is capable of supporting this analysis. But read as part of s 52 as a whole, it can be seen that s 52(2)(c) overlaps with various of the other covenants, for example, s 52(2)(b) and (d). In view of the generality of the words in which the duties are necessarily expressed, this is not surprising. The s 52(2)(c) covenant does not require that the trustee’s conduct in fact achieved the best possible outcome for beneficiaries, so long as the trustee’s conduct was in the best interest of the beneficiaries in the senses described above.24 The duty is to act in the best interest of ‘beneficiaries’. This includes both present and future beneficiaries.25 It can also include persons other than members of the fund if, for example, the trust deed permits dependants of deceased members to be beneficiaries.26 There is authority that even though an employer may be entitled to participate in a surplus, the words ‘best interests of the beneficiaries’ probably do not extend to the employer.27 Where the trustee has legal personality distinct from that of the employer, it is not clear why this conclusion is drawn. Indeed, it has been said that the fact that much of the property in a superannuation trust will have been contributed by members makes the general law duty on the trustees to exercise their powers in the best interests of beneficiaries even more important.28

Role in cases of conflict [29-22] The fourth covenant is set out in s 52(2)(d):

where there is a conflict between the duties of the trustee to the beneficiaries, or the interests of the beneficiaries, and the duty of the trustee to any other person or the interests of the trustee or an associate of the trustee: (i) to give priority to the duties to and interests of the beneficiaries over the duties to and interests of other persons; and (ii) to ensure that the duties to the beneficiaries are met despite the conflict; and (iii) to ensure that the interests of the beneficiaries are not adversely affected by the conflict; and (iv) to comply with the prudential standards in relation to conflicts.

[page 637] The ‘prudential standards’ are those which ss 34B–34F give APRA power to determine, vary or revoke in relation to registrable superannuation entities. Section 52(4) provides that the obligations of a trustee under the s 52(2)(d) covenant override any conflicting obligations an executive officer or employee of the trustee has under Pt 2D.1 of the Corporations Act 2001 (Cth) or Pt 2, Div 3, Subdiv A of the Public Governance, Performance and Accountability Act 2013 (Cth) (which deals with the general duties of officials) or any rules made for the purposes of that Subdivision.

Duty to act fairly in dealing with classes of beneficiaries [29-23] The fifth covenant is set out s 52(2)(e): ‘to act fairly in dealing with classes of beneficiaries within the entity’. This was introduced in 2013. In a broad sense it corresponds with the general law.29

Duty to act fairly in dealing with beneficiaries within a class [29-24] The sixth covenant is set out in s 52(2)(f): ‘to act fairly in dealing with beneficiaries within a class’. This was introduced in 2013. Again, in a broad sense it corresponds with the general law.30

Separation of trust assets [29-25] The seventh covenant is set out in s 52(2)(g):

to keep the money and other assets of the entity separate from any money and assets, respectively: (i) that are held by the trustee personally; or (ii) that are money or assets, as the case may be, of a standard employer-sponsor, or an associate of a standard employer-sponsor of the entity.

This duty existed before, and was not changed in, 2013. The covenant corresponds with the general law.31 In part, it flows from the duty of trustees not to place themselves in a position where their trust duties conflict with their interests or other duties.

Fettering conduct [29-26] The eighth covenant is set out in s 52(2)(h): ‘not to enter into any contract, or do anything else, that would prevent the trustee from, or hinder the trustee in, properly performing or exercising the trustee’s functions and powers’. This covenant existed before 2013. Although it does not correspond in explicit terms with any particular duty under the general law, it does correspond with what is implicit in the general law rules. For to behave in the manner forbidden by the covenant set out in s 52(2)(h) would contravene, for example, the duties of trustees in exercising their discretions and also their duties of skill, care and diligence.32 Section 52(5) provides that the covenant referred to in s 52(2)(h) does not prevent the trustee from engaging or authorising persons to do acts or things on behalf of the trustee. Section 52(5) is not inconsistent with the general law rules relating to the employment of agents.33

Management of reserves [29-27] The ninth covenant is set out in s 52(2)(i). It is a covenant which applies if there are any reserves of the entity. It is a covenant ‘to formulate, review regularly and give effect to a strategy for [the] prudential management [of the reserves], consistent with the entity’s [page 638] investment strategies and its capacity to discharge its liabilities (whether actual

or contingent) as and when they fall due’. This was introduced in 2013. It overlaps with the covenant about investment appearing in the pre 2013 form of s 52(2)(f) and with the covenant referred to in the present s 52(6) — for a strategy for the prudential management of reserves is a policy related to that of investment. There is no corresponding duty under the general law save for that relating to investment powers.34

Access to information and documents [29-28] The tenth covenant is set out in s 52(2)(j): ‘to allow a beneficiary of the entity access to any prescribed information or any prescribed documents’. Depending on what is prescribed, the covenant set out in s 52(2)(j) is capable of giving the beneficiaries greater rights than those conferred by the general law.35 Regulation 4.1 has prescribed for the purpose of s 52(2)(j) and s 52B(2)(h) the information and documents that are available to a concerned person under s 1017C of the Corporations Act 2001 (Cth). Those classes are extensive. Although s 1017C(2) and (3) require the issuer of a superannuation product (which could include a superannuation trustee) to supply the prescribed information to members and beneficiaries, and to employer-sponsors, s 1017C(4) creates an important exception: (4) This section does not require (and does not, by implication) authorise the disclosure of (a) internal working documents of the issuer; or (b) information or documents that would disclose, or tend to disclose: (i) personal information of another person if, in the circumstances, the disclosure would be unreasonable; or (ii) trade secrets or other information having a commercial value that would be reduced or destroyed by the disclosure; or (c) information or documents in relation to which the issues owes to another person a duty of non-disclosure.

This leaves it unclear how far the duty of disclosure goes beyond the duty imposed by the general law.

Specific covenants: investment [29-29] In addition to the general covenants in s 52(2) it is necessary to survey three specific covenants. They relate to investment, insurance and risk. Section 52(6) creates covenants about investment:

(a)

to formulate, review regularly and give effect to an investment strategy for the whole of the entity, and for each investment option offered by the trustee in the entity, having regard to: (i)

(ii)

(iii) (iv) (v) (vi)

the risk involved in making, holding and realising, and the likely return from, the investments covered by the strategy, having regard to the trustee’s objectives in relation to the strategy and to the expected cash flow requirements in relation to the entities; and the composition of the investments covered by the strategy, including the extent to which the investments are diverse or involve the entity in being exposed to risks from inadequate diversification; and the liquidity of the investments covered by the strategy, having regard to the expected cash flow requirements in relation to the entities; and whether reliable valuation information is available in relation to investments covered by the strategy; and the ability of the entity to discharge its existing and prospective liabilities; and the expected tax consequences for the entity in relation to the investments covered by strategy; and

[page 639] (vii)

the costs that might be incurred by the entity in relation to the investments covered by the strategy; and

(viii) any other relevant matters; (b) to exercise due diligence in developing, offering and reviewing regularly every investment option; (c) to ensure the investment options offered to each beneficiary allow adequate diversification.

Despite anything in the governing rules of the superannuation entity, any provision of an agreement between a trustee of the entity and an investment manager that purports to exempt the investment manager from liability for negligence, or to limit that liability, is void: s 116. The covenant described in s 52(6) is not inconsistent with the provisions in the uniform legislation about investments.36

Specific covenants: insurance [29-30] Section 52(7) provides that the covenants referred to in s 52(1) include the following covenants by each trustee of the entity: (a) to formulate, review regularly and give effect to an insurance strategy for the benefit of beneficiaries of the entity that includes provisions of each of the following matters: (i) the kinds of insurance that are to be offered to, or required for the benefit of, beneficiaries;

(ii) the level, or levels, of insurance cover to be offered to, or required for the benefit of, beneficiaries; (iii) the basis for the decision to offer or require insurances of those kinds, with cover at that level or levels, having regard to the demographic composition of the beneficiaries of the entity; (iv) the method by which the insurer is, or the insurers are, to be determined; (b) to consider the costs of or beneficiaries of offering or requiring insurance of a particular kind, or at a particular level; (c) to only offer of acquire [sic] insurance of a particular kind, or at a particular level, if the cost of the insurance does not inappropriately erode the retirement income of beneficiaries; (d) to do everything that is reasonable to pursue an insurance claim for the benefit of a beneficiaries, if the claim has a reasonable prospect of success.

Specific covenants: risk [29-31] The covenants referred to in s 52(1) include the following covenants by each trustee of the entity: (a) to formulate, review regularly and give effect to a risk management strategy that relates to: (i) the activities, or proposed activities, of the trustee, to the extent that they are relevant to the exercise of the trustee’s powers, or the performance of the trustee’s duties and functions, as trustee of the entity; and (ii) the risks that arise in operating the entity; (b) to maintain and manage in accordance with the prudential standards financial resources (where the capital of the trustee, are reserve of the entity or both) to cover the operational risk that relates to the entity.

Covenants relating to corporate trustee directors [29-32] Section 52A(1) provides that if the governing rules of a registrable superannuation entity of which a trustee is the body corporate do not contain covenants to the effect of the covenants set out in s 52A(2), those governing rules are taken to contain covenants to that effect. The covenants are covenants by each director of the corporate trustee of the entity. Section 52A(6) provides that a s 52A(2) covenant operates as if the director were a party to the governing rules. Thus the covenants permit enforcement by the beneficiaries of the covenants against the directors, not merely against the trustees. Section 52A(2) contains six covenants. Five of them correspond to those in s 52(2)(a), (b), (c), (d) and (h). The sixth, in s 52A(2)(f), [page 640]

is: ‘to exercise a reasonable degree of care and diligence for the purposes of ensuring that the corporate trustee carries out the covenants referred to in s 52’. Section 52A(5) provides that the reference in s 52A(2)(f) to a reasonable degree of care and diligence is a reference to the degree of care and diligence that a superannuation entity director would exercise in the circumstances of the corporate trustee.

Covenants relating to self managed superannuation funds [29-33] Section 52B(1) provides that if the governing rules of a self managed superannuation fund do not contain covenants to the effect of those set out in s 52B, the governing rules are taken to contain covenants to that effect. There are eight covenants in s 52B(2). Seven of them correspond with s 52(2)(a)–(c) and (g)–(j). The eighth is similar but not identical to that described in s 52(6). Section 52B(3) corresponds with s 52(5).

Covenants relating to self managed superannuation funds corporate trustee directors [29-34] Section 52C(1) provides that if the governing rules of a self managed superannuation fund of which a trustee is a body corporate does not contain a covenant to the effect of the covenant in s 52C(2), those governing rules are taken to contain a covenant to that effect. The covenant in s 52C(2) is a covenant by each director of the corporate trustee of the fund to exercise a reasonable degree of care and diligence for the purpose of ensuring that the corporate trustee carries out the covenants referred to in s 52B. The reference in s 53C(2) to a reasonable degree of care and diligence is a reference to the degree of care and diligence that a reasonable person in the position of director of the corporate trustee would exercise in the circumstances of the corporate trustee. Section 52C(4) provides that the s 52C(2) covenant operates as if the director were a party to the governing rules.

Covenants to repay amounts to beneficiaries in approved deposit funds [29-35] Section 53(2) describes covenants by the trustees and directors of corporate trustees of certain approved deposit funds to pay the beneficiaries.

Section 53(1) provides that if the governing rules do not contain s 53(2) covenants, they are taken to do so.

Covenants prescribed by regulation [29-36] Section 52A(1) provides that the regulations may prescribe covenants to be included in the governing rules of a superannuation entity if those rules do not contain those covenants. But s 54A(3) provides that covenants prescribed under s 54A(1) must be capable of operating concurrently with all the covenants referred to in ss 52–53 and the SIS Act.

Remedies [29-37] Section 55(1) provides that a person must not contravene a covenant contained, or taken to be contained, in the governing rules of a superannuation entity. Section 55(3) provides that a person who suffers loss or damage as a result of conduct of another person that was engaged in contravention of s 55(1) may recover the amount of the loss or damage by action against that person or against any person involved in the contravention. Section 55(4A) provides that certain actions against directors of corporate trustees of registrable superannuation entities require the leave of the court. Section 55(5) provides that it is a defence to an action for loss or damage suffered by a person as the result of the making of investment by or on behalf of a trustee of a superannuation entity if the defendant establishes that the defendant has complied with all of the covenants referred to in ss 52–53 and prescribed under s 54A, and all of the obligations referred to in ss 29VN and 29BO, that apply to the defendant in relation to each act, or failure to act, that resulted in the loss or damage. Section 55(6) provides that it is a defence to an action for loss or damage suffered by a person as a result of the management of any reserves by a trustee of a superannuation entity if the defendant establishes that the defendant has complied with all of the covenants referred to [page 641] in ss 52–53 and prescribed under s 54A, and all of the obligations referred to in

ss 29VN and 29VO, that apply to the defendant in relation to each act, or failure to act, that resulted in the loss or damage. It is not to be inferred from s 55(5) and (6) that the cause of action created by s 55(3) is limited to problems arising from investment and management of reserves.37

Relief [29-38] Section 310(1) of the SIS Act provides that if, in a civil proceeding against a superannuation official (trustee, officer, auditor or actuary of a superannuation entity) for official misconduct (negligence, default, breach of trust or breach of duty) in a capacity as such a person, it appears to the court that the person is or may be liable in respect of the official misconduct, the court may relieve the official either wholly or partly from the liability on such terms as the court thinks fit. Section 310(2) provides that the precondition to relief is that the official has acted honestly and, having regard to all the circumstances of the case, including those connected with the official’s appointment, he or she ought fairly to be excused for the official misconduct. This form of relief is not available to corporate trustees.38

Prudential Standards [29-39] Section 34C provides that APRA may determine prudential standards that must be complied with by the registrable superannuation entity (RSE) licensees of registrable superannuation bodies and related persons. Section 34C(4) contains a long list of prudential matters. They centre on the protection of the interests of beneficiaries of a registrable superannuation entity and on meeting their reasonable expectations. Section 34C(6) gives APRA power to vary or revoke a prudential standard. Section 34D provides that a prudential standard may be determined that elaborates, supplements or otherwise deals with any aspect of a prudential matter to which a covenant referred to in ss 52–53 or prescribed under s 54A relates, or a prudential matter to which a provision of the SIS Act or the regulations relates. Section 34D(2) provides that a prudential standard is of no effect to the extent to which it conflicts with the SIS Act or the regulations.

Operating Standards [29-40] Section 31(1) provides that the regulations may prescribe standards applicable to the operation of regulated superannuation funds and trustees and RSE licensees of those funds.

The Intensity of Regulation [29-41] It is obvious that the legislature has chosen to regulate superannuation trusts in a close and detailed way. Apart from the general law, it is necessary to consider the effect of the SIS Act, the SIS Regulations made pursuant to various sources of power, the prudential standards made under s 34C, and the operating standards prescribed under s 31(1). Among other aspects of regulation not mentioned above, there are also RSE licensee conditions imposed by s 29E. This structure has, not without cause, been criticised. It is complex. In practice the changing requirements can be inaccessible, generating a risk of inconsistency. It involves the devolution of wide law-making powers to persons other than the legislature.39 [page 642]

Inquiries and Complaints [29-42] Trustees of regulated superannuation funds (other than self managed superannuation funds and approved deposit funds) must take all reasonable steps to ensure that there are at all times in force arrangements under which beneficiaries, their executors and administrators, can make inquiries or complaints about the operation and management of the fund in relation to them, and under which those inquiries and complaints will be properly considered and dealt with within 90 days: s 101.40

Duties of Investment Manager [29-43] Section 102(1) provides that if the trustees of a superannuation

entity enter into an agreement with an investment manager under which money of the entity will be placed under the control of the investment manager, the trustee, or the trustees, must: (a) ensure that the agreement contains adequate provision to enable the trustee, or the trustees, of the entity to require the investment manager from time to time: (i) to provide appropriate information as to the making of, and return on, the investments; and (ii) to provide such information as is necessary to enable the trustee, or the trustees, of the entity to assess the capability of the investment manager to manage the investments of the entity; and (b) whenever it is necessary or desirable to do so, require the investment manager to provide the information.

Retention of Documents [29-44] Section 103 creates a duty on trustees to keep and retain for at least 10 years minutes of all meetings of the trustees at which matters affecting the superannuation entity were considered. There is also a duty to keep and retain for at least 10 years up-to-date records of all changes in trustees, changes in directors of any corporate trustee, and all consents to act in those capacities under s 118: s 104. There is a duty on trustees of a regulated superannuation fund and an approved deposit fund to ensure that copies of member and beneficiary reports are kept and retained so long as they are relevant and in any event for at least 10 years, and to make them available for inspection by a member of APRA’s staff on request: s 105.

Adverse Events [29-45] Section 106 creates a duty on trustees of a superannuation entity who become aware of the occurrence of an event having a significant adverse effect on the financial position of the entity, to ensure that a trustee of the entity gives written notice to APRA immediately: s 106(1). Section 106(2) provides that an event has a significant adverse effect on the financial position of an entity if, as a result of the event, a trustee of the entity will not, or may not, be able, at a time before the next annual report by the trustee, or the trustees, to beneficiaries entitled to the report, to make payments to beneficiaries as and when the obligation to make those payments arises.

[page 643]

Changes in Status of Self Managed Superannuation Fund [29-46] Section 106A(1) provides that if a trustee of a superannuation entity has knowledge that the superannuation entity has ceased to be a self managed superannuation fund, or that the superannuation entity has become a self managed superannuation fund since first becoming a superannuation entity, the trustee must ensure that a written notice is given to the Commissioner of Taxation.

Arm’s Length Investments [29-47] Section 109(1) provides that a trustee or investment manager of a superannuation entity must not invest in that capacity unless one of two conditions is satisfied. The first is that the trustee or investment manager and the other party to the relevant transaction are dealing with each other at arm’s length in respect of the transaction. The second requires satisfaction of each of two limbs. The first is that the trustee or investment manager and the other party to the relevant transaction are not dealing with each other at arm’s length in respect of the transaction. The second limb is that the terms and conditions of the transaction are no more favourable to the other party than those which it is reasonable to expect would apply if the trustee or investment manager were dealing with the other party at arm’s length in the same circumstances. Section 109(1A) provides that if a trustee or investment manager of a superannuation entity invests in that capacity, and at any time during the term of the investment the trustee or investment manager is required to deal in respect of the investment with another party that is not at arm’s length with the trustee or investment manager, the trustee or investment manager must deal with the other party in the same manner as if the other party were at arm’s length with the trustee or investment manager.

Payment to Employer

[29-48] Trustees of a standard employer-sponsored fund are obliged, subject to exceptions, not to pay an amount, or permit an amount to be paid, out of the fund to a standard employer-sponsor: s 117(3).41

Beneficiary’s Rights Nature of beneficiary’s rights [29-49] There is authority that a beneficiary’s right in a superannuation trust is only an expectancy,42 on the ground that the right to a benefit depends on satisfying some condition like death or retirement, and until that time the member has no beneficial interest. If so, a superannuation fund trust deed creating a protective trust in the event of the member’s bankruptcy43 will be effective to prevent s 302A of the Bankruptcy Act 1966 (Cth) rendering the protective trust clause void, since s 302A operates on a clause which cancels, forfeits, reduces or qualifies ‘the beneficial interest of a member’. However, the matter must depend on the precise terms of each trust deed. [page 644]

Protection of beneficiary’s rights under SIS Regulations [29-50] There are detailed provisions in the SIS Regulations seeking to regulate the costs charged against a member’s benefits, the investment return to be credited or debited to a member’s benefits, and member protection minimum benefits: SIS Regulations reg 5.01–5.08.

Nomination [29-51] Where the interest of a beneficiary in a superannuation trust survives that beneficiary’s death, the question of who is to take the interest will depend on the terms of the trust deed and, if the beneficiary has acted on a power of nomination, on the terms of the nomination.44

The Employment Aspects of Superannuation Trusts General [29-52] While superannuation trusts need not be related to employment, a very common kind of superannuation trust is that which operates as part of the relationship between an employer and the employees. This has several consequences for the character of superannuation trusts.

Principles of Construction [29-53] Where the language of the superannuation trust for the benefit of employees — a pension scheme — is not clear, it has been held appropriate to construe it in a ‘practical and purposive, rather than detached and literal’ way,45 with a view to giving ‘reasonable and practical effect’ to the scheme,46 bearing in mind that it has to be operated against a constantly changing commercial background, and to construe it in its ‘matrix of fact’, namely as part of an employment relationship.47 It is also relevant that the beneficiaries are not volunteers, but have given valuable consideration in the form of their services as employees and their contributions.48 And the statutory background can be relevant to the construction of pension scheme documents.49 [page 645]

The Employer’s Duty of Good Faith [29-54] There is no rule of the general law that an employer’s power to consent to the exercise of powers by the trustee of a superannuation fund must be exercised reasonably.50 However, Sir Nicolas Browne-Wilkinson VC has said:51 In every contract of employment there is an implied term — that the employers will not, without reasonable and proper cause, conduct

themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee … … I will call this implied term ‘the implied obligation of good faith’. In my judgment that obligation of an employer applies as much to the exercise of his rights and powers under a pension scheme as they do to the other rights and powers of an employer.

He gave as an illustration a capricious decision by a company to consent to an increase in the pension benefits of members of one union but not another. He also said that the remedies ought not to be limited to damages, but could include ‘a mandatory order that the company do exercise its powers in a particular way’.52 The duty is ‘objective’.53 It is not clear on what basis the term is implied — whether by implication from the express terms, whether to give the contract business efficacy,54 or whether by reason of implication as a matter of law unless excluded by the parties.55 But Sir Nicolas Browne-Wilkinson VC derived the obligation in the case before him not only from the contract of employment, but from the pension trust deed and the rules, construed against the background of the contract of employment.56 He said it would be a breach of the obligation of good faith if the company were to say it would never consider whether or not to consent to an amendment increasing benefits, for the obligation of good faith required it to consider each proposal for amendment put forward at the time it was put forward in the light of the then existing circumstances. It would also be a breach of the obligation of good faith for the company to refuse consent as a means of coercing a closed class of employees to give up its rights, including rights to any surplus on determination of the fund.57 It is clear, however, that the implied obligation of good faith does not prevent employers acting in their own interests.58

Nature of Powers [29-55] A discretionary power conferred on the trustee of a superannuation fund will usually be fiduciary.59 The same is true of a discretionary power conferred on the employer alone.60 Where rules were to be made by the employer with the consent of the trustees and of subsidiaries of the employer, the power in these subsidiaries’ hands was held not to be fiduciary.61 The same [page 646]

conclusion was reached about an employer’s power of amendment subject to restrictions which recognised that, subject to the employer complying with them, it was entitled to act in its own interests.62 Where a power is exercised for a purpose which is outside its proper ambit, the exercise is liable to be set aside as a fraud on the power — an improper use of the power for a collateral purpose.63 Not every decision by a trustee of a superannuation trust is discretionary. Some may be decisions which the trustee has a duty to make, one way or the other, even though they are decisions which depend on factors which are difficult to weigh, and on matters of impression and judgment.64 To these decisions the principles in Karger v Paul65 will not apply. Hence curial control of them is easier. Does it follow that in relation to those decisions it would not be relevant to inquire whether ‘the decision is one which no reasonable trustee could make on the material which was before it’?66 Is it the case that the relevant inquiry rather would be: ‘was the decision wrong?’67 Another illustration of the difference between discretionary decisions to which Karger v Paul applies and non-discretionary decisions to which it does not apply concerns the trustee’s duty of inquiry. Under Karger v Paul, a discretionary decision is reviewable for want of ‘properly informed consideration’, for if a decision is not properly informed it is not genuine. But in the case of a decision to which Karger v Paul does not apply it has been said that there is a high duty of inquiry which is more intense than that applied under Karger v Paul.68 The state of the law has been summed up by Nettle JA thus:69 … trustees of superannuation funds are no longer to be conceived of in the same way as custodians of charitable or family settlements through the exercise of whose absolute discretion testators have chosen to channel their beneficence. The economic, industrial and ultimately social imperatives which inform the advent of the superannuation industry, not to mention that beneficiaries of the kind with which we are concerned in one way or the other invariably purchase their entitlements, are productive of legitimate expectations which the law will enforce. Superannuation fund trustees are bound to give properly informed consideration to applications for entitlements and, if that necessitates further enquiries, then they must make them.

The Amendment of Trust Deeds [29-56] It is common for trust deeds to contain a provision conferring a power of amendment on the trustee with the consent of the principal employer, or a power of amendment on the principal employer with the consent of the trustee. The requirements in the regulations referred to above70 must be

complied with. So must the express terms granting and controlling the power of amendment. Thus where an amendment could not prejudice any benefits ‘secured’ [page 647] it was held impermissible where it defeated a clause permitting surplus to be used to provide such further benefits to members as the employer might direct.71 Where an amendment could not reduce or adversely affect a member’s interest in the fund, and surplus was to be distributed among members, an amendment making the employer a potential beneficiary of the surplus was impermissible.72 An amendment to the trust deed after the plan had been discontinued with a view to conferring an interest on the employer was impermissible where this was expressly prohibited by the trust deed; and it was impermissible first to amend by removing the prohibition, for the ‘trustees could not achieve by two steps what they could not achieve by one’.73 The duty to comply with the terms of the clause permitting amendment requires the person having the power to amend to construe the clause correctly, for any opinion at which that person is to arrive can only be formulated validly if the correct understanding of the question to be considered is arrived at.74 The construction of particular powers of amendment must take place in the context of the entire trust instrument,75 and should not be such as ‘unduly’ to fetter them.76 That is because superannuation trusts ‘commonly operate over a lengthy period and need, if they are to achieve their objectives, to be able to accommodate major changes in the nature and financial condition of the employer settlor and in the identity of the employee beneficiaries’.77 In one case, the power of the employer to amend the trust deed was held to be subject to the implied obligation of good faith, but not to be a fiduciary power.78 In another, it was said that the power of the employer, which was shared with the trustees, to amend the deed was a fiduciary power, precluding the employer from using it so as to benefit itself.79 It has been said that a power of amendment, however broad, cannot be utilised for the purpose of defeating the ‘substratum’ of the trust or altering its main purpose.80 But this does not create a distinct barrier. ‘[W]hat is the substratum is to be determined as a matter of construction of the deed and

having regard to the circumstances. If the amendment is as a matter of construction within power, it cannot be an infringement of the substratum.’81 The law of trusts requires the trustee’s power to amend, or consent to an amendment, to be exercised in good faith. The implied obligation of good faith resting on the employer has the same result in relation to the employer. Trustees must exercise their powers of amendment, like their other powers, in the best interests of the beneficiaries.82 It is erroneous to reason that since the purpose of a superannuation trust for employees is to provide benefits for them, once the benefits have been fully provided the purpose is fulfilled. It is erroneous because superannuation trusts are for beneficiaries, not for the effectuation of purposes in the sense in which that term is employed in discussing non-charitable purpose [page 648] trusts.83 However, it does not follow from the trustees’ duty to act in the interests of members that a trust deed can never be altered in the interests of employers. ‘Trustees are free to negotiate with an employer for a package of amendments that may include benefits to the employer if in the opinion of the trustees that would benefit the members.’84 The circumstances relevant to assessing the validity of each amendment are the circumstances that exist at the time of the amendment, not the circumstances when the original trust deed was executed. ‘By changes made gradually over a long period, alterations may be made which would not be acceptable if introduced all at once. Even the main purpose may be changed by degrees.’85 But it is not the case that: … a plain and unambiguous limitation of the objects of a superannuation trust, as for example to the provision of benefits to employees only, can be amended to give an interest in those funds to the employer by exercise of a general power of amendment, let alone that this can be done when the trust deed also contains a prohibition against any part of those funds being paid to or reverting to the employer. Put another way, the concept of incremental assessment has not been put forward as absolving the Court from having regard to the limitations expressed in the deed as then amended when assessing the validity of each step.86

Differing circumstances have caused differing conclusions on whether an amendment is invalid only as against members admitted before it was made87 or

all members88 or, by reason of an estoppel, all members except some admitted after it was made.89

The Distribution of Surpluses [29-57] A superannuation fund may be said to have generated a surplus when its assets exceed its liabilities. This is very rare for ‘accumulated funds’, where the benefits of a particular member do not depend on a formula calculated by reference to the member’s years of service and final salary, but simply on the size of the member’s share of the fund’s assets, whether the result of good investment experiences or bad. However, it is very common for ‘defined benefit funds’ to generate surpluses. This is because the calculation of the benefits going to each member depends on a formula usually based on years of service and final salary, and the calculation of what contributions from member and employer were needed to ensure that those benefits could be paid over the years as members retired because of illness or age, or died, depends on the making of assumptions at a particular point in time. The relevant assumptions include assumptions about future earnings to be gained from investing the assets of the fund, future salary levels, the number of departures from the scheme by members, the number of members who will retire early, the number of members who will die and leave dependants, and the like. These assumptions can easily be falsified by later experience over time. The likelihood of defined benefit funds generating surpluses exists whether the trust property was the result of a fixed percentage of wages being paid by the employees and a fixed percentage of wages also being paid by the employer, or whether the employer was only bound to contribute whatever sums the actuary certified as necessary to make the fund actuarially solvent (a ‘balance of cost’ scheme).90 [page 649] At present, defined benefits schemes are out of favour, and the risk of surpluses arising is therefore less than in earlier decades. But where a surplus has arisen, questions can often spring up as to how it is to be divided as between employer and members. First, it is necessary to notice a statutory restriction. Section 117(3) of the SIS

Act prohibits the trustee of a standard employer-sponsored fund from paying an amount, or permitting an amount to be paid, out of the fund to a standard employer-sponsor. However, s 117(3) does not apply where s 117(5) is complied with. It provides: An amount may be paid out of a standard employer-sponsored fund to a standard employersponsor if the following requirements are fulfilled: (a) apart from this section, the governing rules would require or permit the amount to be paid to the employer-sponsor; (b) whichever of the following subparagraphs is applicable has been complied with: (i) if the fund has a single corporate trustee: (A) the directors of the trustee have, by resolution, declared their intention to pay the amount out of the fund to the employer-sponsor; and (B) when that resolution was passed, the board of the corporate trustee consisted of equal numbers of employer representatives and member representatives; (ii) if the fund has a group of individual trustees: (A) the trustees have, by resolution, declared their intention to pay the amount out of the fund to the employer-sponsor; and (B) when that resolution was passed, the group of trustees consisted of equal numbers of employer representatives and member representatives; (iii) in any other case—the trustee has declared his or her intention to pay the amount out of the fund to the employer-sponsor; (c) before the resolution referred to in subparagraph (b)(i) or (ii), was passed or before the declaration referred to in subparagraph (b)(iii) was made: (i) an actuary had given a written certificate to the trustee, or the trustees, of the fund stating that, if the amount were paid, the fund would remain in a satisfactory financial position; and (ii) the trustee, or the trustees, were satisfied that the payment of the amount and the making of the changes (if any) to the governing rules were reasonable having regard to the interests of the employer-sponsor and of the beneficiaries in the fund; (d) a trustee of the fund gave notice in accordance with the governing rules to all members of the fund: (i) stating the intention to pay the amount to the employer-sponsor; and (ii) stating that an actuary has given a certificate to the trustee, or the trustees, of the fund as required by subparagraph (c)(i); and (iii) setting out particulars of any changes to the governing rules that were proposed to be made if the amount were paid to the employer-sponsor; (e) at the end of 3 months after the notice mentioned in paragraph (d) was given to members, the provisions of whichever of the following subparagraphs is applicable were complied with: (i) if the fund has a single corporate trustee—the directors of the corporate trustee passed a resolution agreeing to pay the amount out of the fund to the employersponsor;

(ii)

if the fund has a group of individual trustees—the trustees passed a resolution agreeing to pay the amount out of the fund to the employer-sponsor;

(iii) in any other case—the trustee decided to make the payment; (f) any other requirements made by the regulations.

Section 117(6) provides that APRA may waive any rule of the s 117(5) requirements. The time for consideration of what to do with the surplus may be the moment when it terminates. At that time the surplus is called a ‘realised surplus’. The consideration of what should be done with the surplus may also take place before that time, in which event the surplus is called an ‘actuarial surplus’. Usually the trust deed will make adequate provision for what should be done with a realised surplus, and all the trustee need do is comply. If the trust deed does not adequately deal with [page 650] the destination of the surplus, it may be possible to amend the trust deed. If that is not possible, the prima facie position is that the surplus will pass on resulting trust to those who provided the funds which generated it, whether members or employers or both.91 If it is clear that the presumption of resulting trust is rebutted by an express or implied term in the trust deed, the property will go to the Crown as bona vacantia.92 A clause purportedly precluding any claim by the employer will: … generally be construed as forbidding the repayment of contributions under the terms of the scheme, and not as a pre-emptive but misguided attempt to rebut a resulting trust which would arise dehors the scheme. The purpose of such clauses is to preclude any amendment that would allow repayment to the company. … [They do not prevent] the company from retaining a beneficial interest by way of a resulting trust in so much of the surplus as is attributable to its contributions.93

The fact that a payment to a fund has been made under contract and that the payer has obtained all that he or she bargained for under the contract is not necessarily decisive against a resulting trust.94 Where an actuarial surplus arises, it is ‘purely notional’.95 It will have arisen because past actuarial estimates have proved erroneous; but the later actuarial estimates which lead to the conclusion that there is a surplus could be equally erroneous the other way. Hence an actuarial surplus is not only notional, but

can be fragile and evanescent. That fact alone, however, does not nullify the validity of attempts to deal with actuarial surpluses.96 Nor is it open to prevent payment of a surplus to an employer by reasoning that the main purpose of a pension scheme is to provide pensions for employees, and that it is inconsistent with that purpose to pay part of the trust fund to the employer, for a ‘surplus is (by definition) money in excess of what is needed to effect the main purpose of the scheme’.97 The problem of an actuarial surplus can be dealt with in several ways. One is to suspend contributions. Another is to reduce contributions. Another is to improve member benefits. Another is to amalgamate the fund containing a surplus with others which do not. Another is to pay the surplus to the employer. If the trust deed permits any particular method, the conditions stipulated must be complied with. If the trust deed does not permit any particular method, any attempt to amend the trust deed will depend on the terms of the clause permitting amendment and the principles of the general law on the subject of amendment. Where the trustees had a power to consent to amendments to permit the employer to share in the surplus, they were held entitled, while having a duty to act in the best interests of the members, to take into account the interests of the employer in deciding whether to consent, and if they were satisfied on reasonable grounds that the overall package of amendments was a resolution which was fair to both the employer and to the members, they were entitled to consent.98 [page 651]

Conflict of Duty and Interest [29-58] The fact that the trust deed provides for trustees (or the directors of a corporate trustee) to include representatives of the members, as s 89 of the SIS Act requires for standard employer-sponsored funds, prevents trustees who are representatives of members from contravening the rule of equity that trustees must not place themselves in a position where their interest conflicts with their duty. It is not the trustees who do that; it is the rules.99 A proposal by four trustees who were members of a pension fund to exercise a

power on winding-up to apply a surplus in securing further benefits to members and to apportion any further surplus among employers, being a scheme partially benefiting members and partly benefiting employers, was held valid despite their position of conflict: the proposal had been consented to by all parties after expert advice had been taken and adjustments made, and no trustees had taken advantage of their position to enhance benefits for the category of members to which they belonged.100

Breach of Trust [29-59] A trustee is not liable for breach of trust in relation to an act done in fulfilment of an obligation imposed by the SIS Act or the SIS Regulations: SIS Act s 341. _____________________________ 1.

Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1407 describes the structure of a non-trust pension scheme. See also R Walker, ‘Some Trust Principles in the Pension Context’ in A J Oakley (ed), Trends in Contemporary Trust Law, p 123; D J Hayton, ‘Pension Trusts and Traditional Trusts: Drastically Different Species Trusts’ (2005) 69 Conv 229.

2. 3.

See Superannuation Guarantee (Administration) Charge Act 1992 Pt 3. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1407.

4. 5.

See generally Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; 271 ALR 236 at [33]–[35]. The Chief Executive Medicare has a relatively limited administrative role which does not call for treatment in this work.

6.

Cowan v Scargill [1985] Ch 270 at 292; [1984] 2 All ER 750 at 764; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 609–10. Scott v FCT (No 2) (1966) 40 ALJR 265 at 278; Mahony v Commissioner of Taxation (1967) 41 ALJR 232; Cameron Brae Pty Ltd v Commissioner of Taxation (2007) 243 ALR 273 at [102].

7. 8. 9.

Cameron Brae Pty Ltd v Commissioner of Taxation (2007) 243 ALR 273 at [34], [106]–[107]. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1408.

10. See [29-18]–[29-36]. 11. There is a distinction between a precondition for entitlement and a direction contrary to s 58: Seafarers’ Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 at [25]. And s 58 does not invalidate a requirement that the exercise of power by a trustee have the consent of another person: LGSS Pty Ltd v Egan [2002] NSWSC 1171 at [96]. 12. Boeing Superannuation Pty Ltd v Glanville (2004) 138 FCR 165 at [43]–[49]. 13. The meaning of ‘accrued benefits’ has long been controversial. See J Edstein, ‘The Meaning of Accrued Benefits’ (1996) 25 Australian Taxation Review 35. 14. This type of disqualification may be waived by APRA if the offence leading to disqualification is not an offence involving serious dishonest conduct (that is, where the penalty imposed is at least two

years’ imprisonment or a fine of at least 120 penalty units): s 126B. 15. Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd (2006) 15 VR 87 at [106]. 16. Cowan v Scargill [1985] Ch 270 at 287; [1984] 2 All ER 750 at 760. 17. For example, Government Employees Superannuation Board v Martin (1997) 19 WAR 224 at 273. See, to the same effect, Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167 at [120], which is inconsistent with the unsatisfactory view of the Administrative Appeals Tribunal: P Collins, ‘The Best Interests Duty and the Standards [of] care for Superannuation Trustees’ (2014) 88 ALJ 632 at 645. 18. See [18-09]. 19. Apostolovski v Total Risk Management Pty Ltd (2010) 79 NSWLR 432. 20. See [17-11]. See also Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [57]–[59]; Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167 at [121]. Decisions of the Administrative Appeals Tribunal to the contrary are unconvincing: see P Collins, ‘The Best Interests Duty and the Standard [of] Care for Superannuation Trustees’ (2014) 88 ALJ 632 at 642–3. 21. Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167 at [121] per Giles JA. 22. Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd (2006) 15 VR 87 at [105] per Byrne J. 23. Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd (2006) 15 VR 87 at [107]. 24. Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167. 25. Cowan v Scargill [1985] Ch 270 at 286–7; [1984] 2 All ER 750 at 760. 26. Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd (2006) 15 VR 87 at [109]. See also Cowan v Scargill [1985] Ch 270 at 292; [1984] 2 All ER 750 at 764. 27. Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [57]. 28. Cowan v Scargill [1985] Ch 270 at 290; [1984] 2 All ER 750 at 763. The same consideration was stressed by the Victorian Court of Appeal in Alcoa of Australian Retirement Plan Pty Ltd v Frost (2012) 36 VR 618 at [57], [59], citing Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; 271 ALR 236 at [32]–[36]. 29. See [17-11] and Chapter 19. 30. See [17-11] and Chapter 19. 31. See [17-20]. 32. See [16-06]–[16-15] and [17-18] respectively. 33. See [17-23]–[17-34]. 34. See [18-07]–[18-22]. 35. See [17-13]–[17-16]. 36. See [18-07]–[18-22]. 37. Apostolovski v Total Risk Management Pty Ltd [2010] 79 NSWLR 432 at [42]–[44]. 38. Apostolovski v Total Risk Management Pty Ltd [2010] 79 NSWLR 432 at [48]–[51]. 39. K Lindgren, ‘Administrative Law in the Superannuation Context’ (2013) 87 ALJ 688 at 696. 40. The Superannuation (Resolution of Complaints) Act 1993 established the Superannuation Complaints Tribunal to conciliate complaints and review the conduct to which they relate. The

Tribunal has power to affirm the decision of trustees, remit it to the trustees, vary it or set it aside and substitute another. The Tribunal does not, however, invalidly exercise the judicial power of the Commonwealth: Attorney-General for the Commonwealth v Breckler (1999) 197 CLR 83; 163 ALR 576, overruling Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd (1998) 79 FCR 469; 152 ALR 332. As explained in [39] of Breckler’s case, an election by a trustee to follow a course leading to concessional treatment under income tax law subjects the exercise of the trustee’s powers to constraints they would not otherwise be subject to; in particular, an unjust or unreasonable exercise by the trustees of a discretionary power may attract the complaints procedure even though there had been no breach of trust by the trustee. 41. See [29-56]. 42. Re Coram (1992) 109 ALR 353 at 356–7; Wrightson Ltd v Fletcher Challenge Nominees Ltd [2002] 2 NZLR 1 at [28] (‘the members have no proprietary interests’ in a defined benefits scheme). Cf Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 608; [1991] 1 WLR 589 at 599 (where Sir Nicolas Browne-Wilkinson VC described the rights of an employee in a pension fund as a ‘species of property’); Official Assignee v NZI Life Superannuation Nominees Ltd [1995] 1 NZLR 684 at 696–7. 43. For example, Re Scientific Investment Pension Plan Trusts [1999] Ch 53; [1998] 3 All ER 154. 44. See Richardson, ‘Superannuation Trustees and the Exercise of Discretionary Powers’ (2001) 22 Queensland Lawyer 57. 45. Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] 1 WLR 1587 at 1610. It is often questionable whether there can be different approaches in many contexts: see, for example, Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; 271 ALR 236 at [27]. 46. Re Courage Group’s Pension Schemes [1987] 1 All ER 528 at 537; [1987] 1 WLR 495 at 505. 47. Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] 1 WLR 1587 at 1610; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602; Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 297, 306; Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at [215]–[216]. 48. Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537, 549–50; [1990] 1 WLR 1587 at 1610, 1618; Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 605; [1991] 1 WLR 589 at 597; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602; Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1407; Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at [236]–[237]. 49. Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] 1 WLR 1587 at 1610; National Grid Co plc v Mayes [2001] 2 All ER 417 at [18]; [2001] 1 WLR 864; Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at [215]. 50. Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 605; [1991] 1 WLR 589 at 596–7. 51. Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 606; [1991] 1 WLR 589 at 597; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 607–8; British Coal Corp v British Coal Staff Superannuation Scheme Trustees Ltd [1995] 1 All ER 912 at 927–8. See also Mahmud v Bank of Credit and Commerce International SA [1998] AC 20; [1997] 3 All ER 1 (common ground). 52. Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 606; [1991] 1 WLR 589 at 598. 53. Malik v Bank of Credit and Commerce International SA (in liq) [1998] AC 20 at 47; [1997] 3 All ER 1 at 17.

54. Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 448; 131 ALR 422 at 448. 55. Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468. 56. Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 606; [1991] 1 WLR 589 at 597–8. 57. Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 607–8; [1991] 1 WLR 589 at 599. 58. National Grid Co plc v Mayes [2001] 2 All ER 417; [2001] 1 WLR 864 at [16]. 59. Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 588; [1990] 1 WLR 1511 at 1537. 60. Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 511; [1990] 1 WLR 1587 at 1619–20. 61. Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 588; [1990] 1 WLR 1511 at 1537. 62. Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 607. See also Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 604–5; [1991] 1 WLR 589 at 596. 63. Hillsdown Holdings plc v Pensions Ombudsman [1997] 1 All ER 862 at 883. 64. Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; 271 ALR 236 at [28]–[36]. See also the discussion in Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276 at [4]–[6], [25]–[31], [33]–[34]. In Minehan v AGL Employees Superannuation Pty Ltd (1998) 134 ACTR 1 at [55], there is a suggestion that as a matter of construction a conclusion that a decision is of a Karger v Paul kind should be avoided as absurd. 65. [1984] VR 161. 66. Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276 at [26] per Callaway JA. 67. This was left open in Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; 271 ALR 236 at [66]. 68. Finch v Telstra Super Pty Ltd (2010) 24 CLR 254; 271 ALR 236 at [66]. This was followed in Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618 at [39]–[40]. In that case, Heitman v Guardian Assurance Co Ltd (1992) 7 ANZ Ins Cases 61-107 and Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397 were not followed. 69. Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618 at [49], approving Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 601–2; Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 at 605. See generally J C Campbell, ‘Exercise by Superannuation Trustees of Discretionary Powers’ (2009) 83 ALJ 159. 70. See [29-12]. 71. Wilson v Metro Goldwyn Mayer (1980) 18 NSWLR 730; Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [49]; BHLSPF Pty Ltd v Brashs Pty Ltd (2001) 8 VR 602 at [35]–[41]. Cf Hockin v Bank of British Columbia (1990) 71 DLR (4th) 11 (prohibition on amending so as to reduce ‘accrued’ benefits not contravened where possible interest in surplus on termination was affected — a case no longer followed in Canada: BHLSPF Pty Ltd v Brashs Pty Ltd (2001) 8 VR 602 at [40] n 10). 72. Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294. 73. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1411. 74. Wilson v Metro Goldwyn Mayer (1980) 18 NSWLR 730 at 735. 75. Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602. 76. Re Courage Group’s Pension Schemes [1987] 1 All ER 528 at 537; [1987] 1 WLR 495 at 505. 77. Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 307. 78. Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 608.

Wilson v Metro Goldwyn Mayer (1980) 18 NSWLR 730 at 736. See also Simes & Martin Pty Ltd (in liq) 79. v Dupree (1990) 55 SASR 278 at 288 (trustee and employer identical). 80. Re Courage Group’s Pension Schemes [1987] 1 All ER 528 at 541–2; [1987] 1 WLR 495 at 505; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602; Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 308–9; Barclays Bank plc v Holmes [2000] PLR 339 at [114]–[115]. 81. Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 606–7. 82. Cowan v Scargill [1985] Ch 270 at 287; [1984] 2 All ER 750 at 760; Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [57]–[59]. 83. Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [60]–[64]. 84. Asea Brown Boveri Superannuation Fund No 1 Pty Ltd v Asea Brown Boveri Pty Ltd [1999] 1 VR 144 at [65]. 85. Re Courage Group’s Pension Schemes [1987] 1 All ER 528 at 537; [1987] 1 WLR 495 at 505–6. 86. Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 308. 87. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1411. 88. BHLSPF Pty Ltd v Brashs Pty Ltd (2001) 8 VR 602 at [44]. 89. Briffa v Hay (1997) 75 FCR 428 at 443–5; 147 ALR 226 at 240–1. 90. Imperial Group’s Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 600; [1991] 1 WLR 589 at 591. 91. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1411; Wrightson Ltd v Fletcher Challenge Nominees Ltd [2002] 2 NZLR 1 at [23]. 92. Rees v Dominion Insurance Co of Australia Ltd (in liq) (1981) 6 ACLR 71; Simes & Martin Pty Ltd (in liq) v Dupree (1990) 55 SASR 278; Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 591–3; [1990] 1 WLR 1511 at 1540–2. See [12-08]. 93. Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1412. 94. Davis v Richards & Wallington Industries Ltd [1991] 2 All ER 563 at 593; [1990] 1 WLR 1511 at 1541– 2. The reasons of the court for rejecting a resulting trust in that case were criticised in Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 at 1412–13. 95. Re Imperial Foods Pension Scheme [1986] 2 All ER 802 at 812; [1986] 1 WLR 717 at 727. 96. National Grid Co plc v Mayes [2001] 2 All ER 417; [2001] 1 WLR 864 at [16]. 97. National Grid Co plc v Mayes [2001] 2 All ER 417; [2001] 1 WLR 864 at [16]. 98. Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 610. 99. Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 609; Re Drexel Burnham Lambert UK Pension Plan [1995] 1 WLR 32 at 40–1; Edge v Pensions Ombudsman [1998] Ch 512 at 539–42; [1998] 2 All ER 547 at 573–5. Cf British Coal Corp v British Coal Staff Superannuation Scheme Trustees Ltd [1995] 1 All ER 912 at 925–6. 100. Re Drexel Burnham Lambert UK Pension Plan [1995] 1 WLR 32 at 41–2.

Index References are to paragraph numbers

A Accounts beneficiaries information of, to be given to …. 17-15 inspection, right of …. 17-16 rendered, to be …. 17-14 trustee’s duty to keep …. 17-13

Accumulations, rule against see Rule against accumulations Administration jurisdiction …. 28-20

Administrators see also Executors appointment of trustee …. 15-03 de bonis …. 15-03 functus officio …. 15-03 rights of …. 2-42

Advancement Presumption of see Presumption of advancement

Aged and infirm persons charitable trust …. 10-21–10-22

Agency trust, distinguished …. 2-10–2-12

third parties, liability to …. 2-12

Agent see also Agency; Estate agents; Fiduciary agents employment by trustee …. 17-31 fiduciary relationship to principal …. 2-02, 2-10, 13-21 lease renewals Keech v Sandford, rule in …. 13-16

Alienation restrictions on …. 9-18–9-19

Aliens trustee, capacity to be …. 14-03

American Law Institute Restatement of the Law of Trusts …. 1-02

Animals charitable trusts …. 10-57 trust for upkeep of …. 11-02

Annuities apportionment …. 19-26 definition …. 19-26 impartiality of trustee losses and outgoings …. 19-58 terminable annuities not convertible …. 19-15

Applicable law application of …. 28-08 determination of …. 28-07 express or implied choice …. 28-06

Appointment of trustee additional trustees Australian Capital Territory …. 15-30 New South Wales …. 15-30

Northern Territory …. 15-34 Queensland …. 15-32 South Australia …. 15-33 Tasmania …. 15-34 Victoria …. 15-31 Western Australia …. 15-31 costs …. 15-43 court, by bankrupt …. 15-63 bankrupt trustee …. 15-49 beneficiary …. 15-59 near relative of …. 15-60 solicitor for …. 15-64 breach of trust …. 15-56 constructive trustees …. 15-55 continuing trustees …. 15-58 convict trustee …. 15-50 corporations …. 15-68 feme-sole …. 15-65 incorporated body dissolved …. 15-51 infant trustees …. 15-48 inherent jurisdiction …. 15-46–15-47 mental incapacity …. 15-53 missing trustee …. 15-52 near relative of trustee …. 15-61 number of trustees …. 15-69 outside jurisdiction …. 15-54 partner …. 15-62 persons appointed …. 15-57 persons out of jurisdiction …. 15-67

physical incapacity …. 15-53 practice …. 15-72 separate sets of trustees …. 15-70 spouse of intestate deceased …. 15-66 statutory powers …. 15-46 vesting of property in new trustees …. 15-71 where no trustee appointed …. 15-02 evidentiary provisions …. 15-44 infant exercising power of appointment …. 15-07 new trustees …. 15-04, 15-11 evidentiary provisions …. 15-44 generally …. 15-45 power to appoint …. 15-45 powers …. 15-42 state legislation …. 15-04, 15-45 vesting of trust property …. 25-02 number appointed …. 15-22 Australian Capital Territory …. 15-23 New South Wales …. 15-22–15-23 Northern Territory …. 15-22, 15-29 Queensland …. 15-22, 15-25 South Australia …. 15-22, 15-26 Tasmania …. 15-28 Victoria …. 15-22, 15-24 Western Australia …. 15-27 original trustees …. 15-01 actual trustee …. 15-03 court, appointed by …. 15-02–15-03 no trustee …. 15-02 state legislation …. 15-03

trust, definition …. 15-03 retirement out of court vesting of trust property …. 25-02 separate sets of trustees Australian Capital Territory …. 15-35 New South Wales …. 15-35 Northern Territory …. 15-41 Queensland …. 15-37 South Australia …. 15-39 Tasmania …. 15-40 Victoria …. 15-36 Western Australia …. 15-38 statutory power, under another person, appointment to be …. 15-12 circumstances where appointment made …. 15-11 absence from jurisdiction …. 15-11 corporation, dissolved …. 15-11 death of trustee …. 15-13 desire to be discharged …. 15-15 incapable of acting …. 15-18 infant …. 15-11 refusal to act …. 15-16 removal of trustee …. 15-11 trustee abroad …. 15-14 unfit to act …. 15-17 exercise of power …. 15-19–15-20 mode of …. 15-21 proper person as trustee, appointment …. 15-20 persons authorised to appoint …. 15-06 able and willing, whether …. 15-08

continuing trustee …. 15-09 personal representatives …. 15-10 persons nominated …. 15-07 superannuation fund, of see Superannuation trust instrument power of appointment under …. 15-05

Armed forces charitable gifts …. 10-56

Attorney-General charitable trusts, powers under …. 10-67

Audits trustee’s power to obtain …. 20-55

Australian Capital Territory appointment of trustee additional trustees …. 15-30 number appointed …. 15-23 separate sets of trustees …. 15-35 augmentation of capital …. 19-35 calls on shares …. 20-54 retirement of trustee out of court without appointment of new trustee …. 15-79 security, realising …. 18-33 trust property, repair and improvement to …. 17-08 trustee’s liability lapse of time …. 22-24 trustee’s power delegation of …. 17-25 insurance of property …. 20-37 mortgage of trust property …. 20-29

renewal of leaseholds …. 20-26 repairs and improvement to property …. 20-34 sale of trust property …. 20-04 exercise of …. 20-10–20-12 postponement …. 20-09 sale on terms …. 20-18 vesting orders …. 25-04

Australian Prudential Regulation Authority (APRA) adverse events, notification of …. 29-45 appointment and removal of superannuation trustees …. 29-16 prudential standards, determination of …. 29-39 regulatory role …. 29-03

Australian Securities and Investments Commission (ASIC) regulatory role …. 29-03

Australian Taxation Office (ATO) regulatory role …. 29-03

B Bailees fiduciary relationship …. 2-02

Bailment trust, distinguished …. 2-09

Bankers fiduciary agents …. 13-21 tracing trust property …. 27-17

Bankrupt capacity to create trusts …. 4-07 trustee appointment by court in place of …. 15-49, 15-63

capacity to be …. 14-13, 15-17

Bankruptcy gift-over avoidance by third parties …. 9-37 remoteness of vesting …. 9-20 trustee, of …. 21-14, 22-11 effect of …. 22-11 preferential payments, recovery of …. 21-16 void dispositions of property fraudulent conveyances …. 9-41 transactions to defeat creditors …. 9-38, 9-40 undervalued transactions …. 9-38–9-39

Bare power …. 5-11 Bare trust breach of trust by trustee, liability for …. 22-03 make-up of …. 3-15

Barnes v Addy, rule in …. 13-33 Bearer securities trustee, custody of …. 17-22

Beneficial interest non-disposal, in resulting trusts …. 12-02–12-09

Beneficiary accounts information of, to be given to …. 17-15 inspection, right of …. 17-16 rendered, to be …. 17-14 age of majority, reduction rule against perpetuities …. 9-29 appointment by court as trustee …. 15-59

near relative of …. 15-60 solicitor of …. 15-64 beneficiary’s interest assigned interest …. 21-26 procedure …. 21-28 trustee-beneficiary …. 21-27 trustee’s right to impound …. 21-21 breach of trust …. 21-22–21-25 cestui que trust …. 1-07 charitable trusts …. 1-07 class of persons …. 1-07 element of trust …. 1-04, 1-07 identification of …. 8-04 infants and unborn beneficiaries alteration to terms of trust …. 17-07 injunction to restrain trustee …. 16-03 knowledge of breach of trust …. 22-33 legal personality distinct from trust …. 1-01 non-charitable trusts …. 1-08–1-09 obligation of trustee, to …. 1-03 private trust …. 1-09 protectors, personal liability of …. 3-20 public or charitable trusts …. 1-07 purported trust, no beneficiary …. 1-08 purpose trust …. 1-08 requirement for, modification by statute …. 1-08 rights of …. 23-01 see also Trustee’s duties; Trustee’s rights approach court on questions of construction and administration …. 2306–23-07 decree for general administration, through …. 23-06

originating summons, by …. 23-07 claim in personam against third party who has received trust property, to …. 23-18 change of position …. 23-19 Queensland …. 23-21 trusts other than deceased persons’ estates …. 23-20 Western Australia …. 23-21 extinguishing trust …. 23-08–23-12 ascertained, sui juris and consent, where …. 23-12 basis of rule …. 23-14 consent principle …. 23-08 discretionary trusts …. 23-15 modification of trust …. 23-13 powers of advancement …. 23-16 Saunders v Vautier, rule in …. 23-08 sub-trusts, difficulties with …. 23-12 follow trust property, to …. 23-17 performance of trust, to compel …. 23-03 money to be paid into court …. 23-03 renewal of expiring lease …. 23-03 sue in own name …. 23-03 sue trustee for execution of trust …. 23-03 possession of trust property, to …. 23-02 restrain breach of trust, to …. 23-04 injunction, grant of …. 23-04 receiver of trust property, appointment of …. 23-05 superannuation fund, of see Superannuation tracing trust property see Tracing trust property trust property, purchase from …. 17-47 trustee, and

duty to act impartially …. 17-11 fiduciary relationship …. 2-07, 2-40 legal personality distinct from …. 1-01 obligation of …. 1-03 overpayments …. 17-37–17-38 pay and transfer trust property to …. 17-35 trustee may be …. 1-07 unborn person …. 1-07

Benevolent purposes charitable trusts, whether …. 10-48 hospitality or entertainment …. 10-50 political purposes …. 10-51 sport …. 10-49

Blind trust make up of …. 3-17

Bonus dividends capital or income, principles …. 19-36–19-37 cash or specie …. 19-38–19-39 distribution of profits of company …. 19-40

Books of account distribution of business profits …. 19-50

Breach of fiduciary duty breach, whether …. 13-30 constructive trustee, liability …. 13-31 remedy …. 13-30, 13-32 scope of duty …. 13-30 third parties, difficulties with …. 13-32

Breach of trust accessory liability, categories of …. 13-35

beneficiary’s right to restrain for …. 23-04 receivers, appointment …. 23-05 new trustee appointed by court …. 15-56 third parties …. 13-33 Barnes v Addy, rule in …. 13-33 bankers, position of …. 13-40 elements of second limb …. 13-39 first limb — knowing receipt or dealing …. 13-34 liability, non-exhaustive nature of …. 13-34 reach of second limb …. 13-38 second limb — knowing assistance …. 13-34 constructive notice …. 13-35–13-37 knowledge …. 13-36 tracing trust property see Tracing trust property trustee authority to commit …. 21-33 costs …. 21-10 failure to carry out duties …. 23-03 investment made in …. 19-25 right of contribution and recoupment …. 21-18–21-20 statutory jurisdiction to relieve …. 16-04

Business Trustee carrying on see Trustee’s powers

Business profits distribution by trustee …. 19-41 books of account …. 19-50 business carried on temporarily …. 19-51 carrying on business …. 19-42–19-46 station properties …. 19-47–19-49

C Capacity to create trust bankrupts …. 4-07 corporations …. 4-08 declaration inter vivos or by will …. 4-01 drunken persons …. 4-06 element of trust …. 1-04 minors …. 4-02–4-05 persons of unsound mind …. 4-06

Carrying on business see Trustee’s powers Certainty charitable trust certainty of objects and property bound …. 10-60–10-61 trustee’s discretion …. 10-62 discretionary trust …. 5-25, 5-28–5-29 express trust, certainty of intention to create …. 5-02 commercial transactions …. 5-22 communication of intention …. 5-23 governmental trusts …. 5-20–5-21 illusory trusts …. 5-12 intention to create …. 5-03 legality of trust …. 5-04 management, directions as to …. 5-17–5-19 precatory trusts …. 5-05–5-11 revocable mandates …. 5-13–5-16 creditors party to deeds …. 5-15–5-16 no trust intended …. 5-13–5-14 Totten trust, United States …. 5-03 fixed trust …. 5-25–5-27

identification of trust property …. 1-06 object of trust …. 5-25–5-30 requirement of …. 5-29 subject matter of trust, of …. 5-24

Charge see Equitable charge Charitable institutions …. 10-05 Charitable trusts Attorney-General, powers of …. 10-67 beneficiaries, no individuals as …. 1-07 certainty see Certainty charitable, meaning …. 10-01 classification of …. 10-04 Commonwealth legislation, effect of …. 10-87 community, purposes beneficial to see Community court, controlling power of …. 10-67 declared private trusts, and …. 10-01 definition …. 1-02, 10-02 education, advancement of see Education elements of …. 1-04 enforcement of …. 10-67 beneficiary ceased to exist …. 10-67 carrying out intentions of founder …. 10-67 charity claims against another …. 10-67 protection of property …. 10-67 remain forever as …. 10-67 general principles …. 10-01–10-04 charitable purpose …. 10-01–10-03 determination of purpose …. 10-03 list of uses deemed charitable …. 10-02

Mortmain Act 1736 (Eng) …. 10-02 Statute of Elizabeth I, preamble to …. 10-02–10-04 lapse charitable institution ceases to exist …. 10-84–10-86 charitable purposes cannot be carried out …. 10-85 cy-près scheme …. 10-84 disclaimer of trust by trustee …. 10-86 gift to particular charitable purpose rather than particular charity, whether …. 10-84 institution changes work or place of operation, where …. 10-85 institution never existed …. 10-86 intention to make gift conditional not carried out …. 10-86 no general charitable intention, principles where …. 10-85 private purposes, cannot be resumed for …. 10-86 when does charity cease to exist …. 10-84 Pemsel classes …. 10-04 poverty, relief of see Poverty, relief of problems certainty of objects and property bound …. 10-60–10-61 lapse see lapse above mixed charitable and non-charitable trusts apportionment between charitable and non-charitable objects …. 10-63 charitable purposes and those of indefinite nature …. 10-63 general overriding trust for charitable purposes …. 10-63 invalid trusts …. 10-64–10-66 valid trusts …. 10-64 private and charitable trusts contrasted …. 10-60 purpose outside state …. 10-59 rule against accumulations …. 10-82 rule against perpetuities …. 10-81

directions to pay income only …. 10-83 trustee’s discretion …. 10-62 public charities …. 10-05 public trust …. 10-01 purposes not persons, for Baddeley’s case …. 10-11 changed circumstances …. 10-13 charitable institutions …. 10-05 control of court, whether under …. 10-15 legislation, promoting …. 10-12, 10-16 motive of donor …. 10-14 object of society …. 10-16 public benefit …. 10-10 question of fact …. 10-16 public purposes …. 10-06–10-09 religion, advancement of see also Religion …. 10-04, 10-33–10-46 rule against perpetuities …. 10-81 limitation of property, rule forbidding inalienable …. 10-81 remoteness of vesting, rule against …. 10-81 Saunders v Vautier, rule in …. 10-82 schemes see Schemes

Charities Act 2013 (Cth) charity, definition …. 10-87 preamble …. 10-87

Chattels voluntary trusts …. 6-20

Children see also Infants illegitimate, trust in favour of …. 9-09 parent and, trust to bring about separation of …. 9-15

Children (Equality of Status) Act 1976 (NSW) conveyance or distribution of property …. 17-36

Choice of law express …. 28-06 implied …. 28-06

Chose in action trust property, as …. 24-03 voluntary trust …. 6-20–6-21

Churches see also Religion charitable trusts building and maintaining churches …. 10-35 church ornaments …. 10-38 churchyards and tombs …. 10-35–10-36 clergy and church workers …. 10-39

Churchyards and tombs charitable trusts …. 10-36–10-37

Classification of trusts declaration of trust …. 3-03 executed …. 3-03, 3-05 executory …. 3-03 intention to create trust …. 3-01, 3-05 constructive …. 3-01, 3-05–3-06, 3-08 express or declared …. 3-01–3-02, 3-05–3-06, 3-09 advisory trustees …. 3-19 bare trust …. 3-15 blind trust …. 3-17 custodian trustees …. 3-18 discretionary trust …. 3-14 trading trust …. 3-16

trustee as monopolist …. 3-21 trustees and protectors …. 3-20 unit trusts …. 3-10–3-14 implied or resulting …. 3-01, 3-05, 3-07 methods of classification …. 3-01 nature of duties imposed on trustee …. 3-04–3-05 simple special …. 3-04–3-05 objects of trust …. 3-02, 3-05

Community charitable trusts for purposes beneficial to …. 10-04, 10-47, 10-52 animals …. 10-57 armed forces …. 10-56 benefit of the public …. 10-47 benevolent purposes …. 10-48 capable of being controlled by court …. 10-47 cremation, encouragement …. 10-58 distress, relief of …. 10-55 gardening, encouragement of …. 10-58 hospitality or entertainment …. 10-50 law reporting, encouragement …. 10-58 native fauna and flora, encouragement …. 10-58 places of historic interest …. 10-58 political purposes …. 10-51 public nature …. 10-47 public works …. 10-53 rates or national exchequer, relief of …. 10-54 recreational charities …. 10-49 school sport, encouraging …. 10-49 Statute of Elizabeth I preamble …. 10-47

temperance, encouragement …. 10-58 validity of …. 10-47 vegetarianism, furtherance of …. 10-58 war memorial …. 10-58

Companies company shares …. 6-20

Condition trust, distinguished …. 2-30–2-33

Conflict of laws see also Trusts (Hague Convention) Act 1991 (Cth) applicable laws, identification of …. 28-02 operation of law …. 28-18

Constructive trust advantages of …. 13-11 breach of fiduciary duty …. 13-30 constructive trustee, liability of …. 13-31 third parties, difficulties with …. 13-32 categories …. 13-02 additions to …. 13-09 borderline …. 13-03 interest of purchaser under uncompleted contract …. 13-08 non-compliance with formalities …. 13-06 recipients of trust property …. 13-04 tracing …. 13-05 trustee de son tort …. 13-03 vendor and purchaser trust before completion …. 13-07 constructive trustee liability …. 13-31 reimbursement …. 13-43

remuneration …. 13-43 created inter vivos …. 7-04 creation by operation of law …. 28-21–28-22 domestic arrangements …. 13-44–13-54 Australian position …. 13-51–13-54 Baumgartner v Baumgartner …. 13-52, 13-54 Bryson v Bryan …. 13-53 English position ‘common intention’ constructive trust …. 13-54 ‘new model’ constructive trust …. 13-45–13-48 ‘new model’ constructive trust …. 13-45–13-48 Australian rejection of …. 13-51 Bannister v Bannister …. 13-48 Binions v Evans …. 13-47 criticisms of …. 13-49 Heseltine v Heseltine …. 13-46 other remedies …. 13-50 orthodox approach …. 13-44 principles of law and equity …. 13-44 equity construes the circumstances …. 13-01 express trust distinction …. 13-01, 13-41 non-compliance with formalities …. 13-06 fiduciary agents agents …. 13-21 bankers …. 13-21 bribes …. 13-23–13-24 directors …. 13-27 employees …. 13-26 equitable remedies …. 13-23–13-24

estate agents …. 13-21, 13-25 illicit commissions …. 13-22–13-24 joint venturers …. 13-29 lottery ticket syndicate …. 13-21 promoters …. 13-28 solicitors …. 13-21 imposition by court …. 3-08 institutional and remedial, distinguished …. 13-11 Keech v Sandford, rule in …. 13-12–13-20 lease renewals …. 13-12 agents …. 13-16 executors, by …. 13-14 matrimonial home …. 13-20 mortgagors and mortgagees …. 13-18 partners …. 13-17 reversion, purchase of …. 13-19 husband and wife …. 13-20 tenants for life …. 13-15 trustee, by …. 13-13 remedial character …. 13-10–13-11 Australian position …. 13-11 breach of antecedent duty …. 13-10 English position …. 13-11 personal liability …. 13-10 United States position …. 13-11 resulting trust distinction …. 13-01 third party, breach of trust by …. 13-33 accessory liability, categories of …. 13-35 Barnes v Addy, rule in …. 13-33

bankers, position of …. 13-40 elements of second limb …. 13-39 first limb — knowing receipt or dealing …. 13-34 liability, non-exhaustive nature of …. 13-34 reach of second limb …. 13-38 second limb — knowing assistance …. 13-34 constructive notice …. 13-35–13-37 knowledge …. 13-36 transactions voidable in equity equitable fraud …. 13-41 mutual wills …. 13-42 secret trusts …. 13-41

Contract sale of goods Romalpa clause …. 2-47–2-51 third party contract, principles governing …. 2-17–2-25 privity of contract, doctrine of …. 2-17–2-18 Queensland and Western Australia, position in …. 2-25 third party’s rights at equity …. 2-21–2-24 third party’s rights at law …. 2-17–2-20 whether trust found or not …. 2-22–2-24

Conversion application of doctrine of contract to sell …. 26-07 effect of …. 26-25 order of court …. 26-06 partnership land …. 26-05 settlements and wills …. 26-08 directions to convert …. 26-09

failure of purposes …. 26-17–26-20 mortgage with power of sale …. 26-11 option to purchase, depending on …. 26-12–26-15 sale on request …. 26-10 sale with consent …. 26-10 time from which conversion takes place …. 26-16 testator’s direction …. 26-08 equitable doctrine of conversion …. 26-01–26-04 application of doctrine …. 26-04 Fletcher v Ashburner …. 26-02 land treated as money or money treated as land …. 26-03 modern day application …. 26-01 reconversion …. 26-21 election as to absolute owner, by …. 26-22 infants, by …. 26-22 mentally incompetent …. 26-22 remaindermen, by …. 26-22 tenants in common, by …. 26-22 mode of election …. 26-23 statute, by …. 26-24 settled property pending destination of income of …. 19-08–19-25 date of conversion …. 19-10 securities retained under power to postpone …. 19-12 trustee, converted to own use …. 22-28 wasting and reversionary property permanent investment …. 19-02 power to postpone …. 19-06 power to retain …. 19-06

Conveyancing Act 1919 (NSW) lease of trust property …. 20-20 requirement of writing fraud, where …. 7-09–7-13 trust created inter vivos …. 7-02–7-13 s 23C trust created inter vivos realty or leaseholds …. 7-03, 7-05 s 23C(1)(a) assignment of trusts validity …. 7-03, 7-06 writing, in …. 7-06, 7-08 s 23C(1)(b) declaration of trust …. 7-03 person able to declare …. 7-07 writing, in …. 7-08 s 23C(1)(c) assignment of trust …. 7-08 declaration of trust validity …. 7-03, 7-06 writing, in …. 7-05 statutory power of sale …. 20-04 postponement of sale …. 20-08 trustee of infant’s property …. 20-75 trustee’s duty of impartiality annuities, dividends and rents …. 19-26 apportionment generally …. 19-26 vesting orders …. 25-09

Convict

trustee appointed by court in place of …. 15-50

Corporate trustee directors, covenants relating to …. 29-32 right of indemnity effect of winding up on …. 21-14

Corporations appointment as trustee …. 15-68 creation of trusts …. 4-08 trustee, capacity to be …. 14-04 trustee companies New South Wales …. 14-05 other jurisdictions …. 14-07 Victoria …. 14-06

Costs outgoings and losses administration costs …. 19-54 trustee appointment …. 15-43 court, approach to …. 21-36 reimbursement and indemnity …. 21-09–21-10 removal of …. 15-87

Court appointment of trustee by see Appointment of trustee beneficiary right to approach on questions of construction and administration …. 23-06 charitable trust control of court, whether under …. 10-15

enforcement, controlling power …. 10-67 constructive trust, imposition by …. 3-08 execution of trust under control of charitable trusts …. 10-15–10-16 order cy-près scheme, for …. 10-70 doctrine of conversion …. 26-06 ouster clauses …. 16-13 removal of trustee …. 15-85–15-87 retirement of trustee …. 15-81 in a suit …. 15-83 summary jurisdiction …. 15-82 trustee carrying on trust business …. 20-42 compounding debts …. 20-47 powers conferred by court …. 20-01 controlling exercise of …. 16-21 right to approach …. 21-31–21-36 right to pay trust money into …. 21-30

Creditors right of subrogation …. 21-12 testamentary, rights of …. 21-13

Crown trustee, capacity to be …. 5-20–5-21, 14-12

Custodian trustees …. 3-18 Cy-près scheme achieving charitable purpose by …. 10-68 charitable trust in foreign country, where …. 10-72 court order for, situations where …. 10-70

impossibility to carry out general charitable intention …. 10-70–10-71 initial impossibility …. 10-70 original purpose exhausted and surplus funds remain …. 10-70–10-71 supervening impossibility …. 10-70–10-71 evidence court may take into account …. 10-73 lapse of gift …. 10-84 legislation concerning …. 10-74 principles taken into consideration …. 10-72 religious discrimination in bequest, where …. 10-72

D Death dividends accruing at time of …. 19-29 trustee, of …. 15-13, 15-75, 22-10

Debt trust, distinguished …. 2-13–2-16 ‘Quistclose trust’, 2-14–2-16, 12-06 trust created or debt incurred …. 2-13 trustee liability for …. 21-02 power to compound see Trustee’s powers statute-barred debt, indemnity against …. 21-08

Declared trust see Express trust Directors fiduciary agents …. 13-27 fiduciary relationship to company …. 2-03, 13-27 liability to account …. 13-27 trustees, distinguished …. 2-07

Discretionary trust

beneficiary’s right to extinguish …. 23-15 certainty as to object …. 5-28–5-29 express trust, form of …. 3-14 Saunders v Vautier, rule in …. 23-15

Distress, relief of charitable trusts …. 10-55

Dividends accruing at date of death, apportionment …. 19-29 apportionment …. 19-26 bonus see Bonus dividends definition …. 19-26 no apportionment …. 19-31

Doctrine of ademption …. 19-16 Dormant Funds Act 1942 (NSW) effectuation of charitable trust …. 10-75

Drunken persons creation of trusts …. 4-06

Dwelling house trustee’s purchase of …. 17-09, 18-22

E Education charitable trusts for advancement of …. 10-04, 10-26 academic research educative, whether …. 10-29 charitable purpose …. 10-26 education of a class …. 10-30 donor’s relatives …. 10-30 employees or relatives of employees …. 10-30 erection or maintenance of buildings …. 10-28

foundation of institutions …. 10-28 law reporting …. 10-27 learning alone not enough …. 10-26 particular branches of study …. 10-31 political education …. 10-29 scholarships and prizes …. 10-28 sports and recreational activities …. 10-32

Employees charitable trusts education of class …. 10-30 constructive trustee …. 13-26

Engrafted trusts failure of, result of property where …. 12-09

Entertainment benevolent purposes …. 10-50 music, advancement of …. 10-50 non-charitable trust …. 10-50 object of trust to be charitable …. 10-50

Equitable charge trust, distinguished …. 2-26–2-28 creation of charge …. 2-26 intention of transferor …. 2-28 trust or charge, determination of …. 2-28

Equitable interest trust property, as …. 1-05, 24-02

Equitable lien trust, distinguished …. 2-29

Equitable personal obligation trust, distinguished …. 2-34–2-39

equitable charge or trust …. 2-34 gifts as personal obligations …. 2-34–2-36 intention to create trust or charge …. 2-37

Estate agents constructive trustees, declaration as to …. 13-25 fiduciary agent …. 13-21 illicit commissions …. 13-22–13-24

Executed and executory trusts beneficiaries, identification of …. 8-04 distinguished …. 3-03, 8-04, 8-06–8-07 executed trust …. 3-03, 8-04, 8-09 executory trust …. 3-03, 8-04, 8-05 declaration without details …. 8-04 definition …. 8-04 form of declaration …. 3-05 interpretation executed trusts …. 3-03, 8-08–8-09 construing language …. 8-09 rules of law …. 8-08 executory trusts …. 3-03, 8-08, 8-10 intention of settlor …. 8-08 intentions expressed informally …. 8-10

Executors lease renewals Keech v Sandford, rule in …. 13-14 rights of …. 2-42 trustee, distinguished …. 2-40–2-45 wasting and reversionary property, trustee’s duty to sell …. 19-07

Executory trust see Executed and executory trusts

Expectancies or possibilities trust property, as …. 24-04

Expenses trustee’s entitlement to …. 21-07

Express trust see also Voluntary trust abuse of …. 28-22 alienation and remoteness of vesting …. 9-18 gift-over on bankruptcy …. 9-20 protective trusts …. 9-21–9-27 restrictions on …. 9-19 certainty of intention to create …. 5-02 commercial transactions …. 5-22 communication of intention …. 5-23 governmental trusts …. 5-20–5-21 illusory trusts …. 5-12 legality of trust …. 5-04 management, directions as to …. 5-17–5-19 precatory trusts …. 5-05–5-11 revocable mandates …. 5-13–5-16 creditors party to deeds …. 5-15–5-16 no trust intended …. 5-13–5-14 savings bank accounts …. 5-03 Totten trust, United States …. 5-03 classification of trusts …. 3-01–3-05 consideration …. 6-25–6-26 constitution completely constituted …. 6-02 declaration of trust …. 6-22–6-23 incompletely constituted …. 6-02–6-03

third party, direction to …. 6-24 transfer to trustee …. 6-16–6-21 voluntary trusts …. 6-15 constructive trust, distinction …. 13-01 created inter vivos or by will …. 3-02 creation age of discretion …. 4-02 bankrupts …. 4-07 corporations …. 4-08 declaration inter vivos …. 4-01, 6-01 drunken persons …. 4-06 methods …. 6-01 minors, by …. 4-02–4-05 persons of unsound mind …. 4-06 transfer of trust property …. 6-01 failure …. 9-01, 12-05 illegal purpose …. 9-01–9-02, 9-17 created partly for …. 9-07 lawful and unlawful purpose …. 9-07–9-08 no legal or equitable rights …. 9-03 operation of statute law …. 9-02 examples …. 9-04–9-06 statutory construction …. 9-06 public policy …. 9-02 immorality, trust promoting illegitimate children …. 9-09 invasion of sanctity of marriage …. 9-14 religious faith, conditions as to …. 9-16 restraint upon marriage …. 9-11–9-13 separation deeds …. 9-10

separation of parent and child …. 9-15 intention to create trust …. 3-03, 3-06 modern uses …. 3-09–3-21 object of trust …. 3-02 certainty as to …. 5-25–5-30 peerage, trust to procure …. 9-17 private trust …. 3-02 protective trusts see Protective trusts public office, where prohibition on …. 9-17 public or charitable trust …. 3-02 public policy, where contrary to …. 9-17 religious faith, condition of adoption of …. 9-16 remoteness of vesting, gift-over on bankruptcy …. 9-20 royal force, trusts prohibiting entry …. 9-17 rule against accumulations see Rule against accumulations rule against perpetuities see Rule against perpetuities separation deeds, future separation of husband and wife …. 9-10 setting aside …. 9-01 settlor, avoidance by …. 9-35 general rule …. 9-35 setting aside trust …. 9-36 subject matter, certainty of …. 5-24 third party, avoidance by …. 9-01, 9-37–9-47 Bankruptcy Act 1966 (Cth) …. 9-38, 9-41 Family Law Act 1975 (Cth) …. 9-47 frauds on subsequent purchasers …. 9-46 fraudulent conveyances …. 9-41–9-45 avoidance of settlement …. 9-45 intent to defraud …. 9-43 onus of proof of intent …. 9-42

settlement based on valuable consideration …. 9-44 receivers …. 9-37 transfers to defeat creditors …. 9-40 trustee in bankruptcy …. 9-37 undervalued transactions …. 9-39 trust obligation …. 1-05 writing, requirement of …. 7-01 trust created by will …. 7-02, 7-14–7-36 trust created inter vivos …. 7-02–7-13

F Feme-sole appointment as trustee …. 15-65

Fiduciary trustee, distinguished …. 2-02–2-08

Fiduciary agents constructive trusts agents …. 13-21 bankers …. 13-21 bribes …. 13-22–13-24 directors …. 13-27 discretionary remedy …. 13-24 employees …. 13-26 estate agents …. 13-21, 13-25 illicit commissions …. 13-22–13-24 joint venturers …. 13-29 liability to account …. 13-21 lottery ticket syndicate …. 13-21 promoters …. 13-28

proprietary remedy …. 13-23 solicitors …. 13-21

Fiduciary duty breach of see Breach of fiduciary duty directors to company …. 2-03 duty analogous to …. 2-04 notion of …. 2-06 protectors …. 3-20

Fiduciary nature trusts …. 1-02

Fiduciary relationship agent to principal …. 2-10 directors to company …. 2-03 distinguishing element of …. 2-02 tracing trust property see Tracing trust property trust as a …. 2-02–2-08

Fixed trust certainty as to object …. 5-25–5-27

Foreign country charitable trust in scheme to effect …. 10-72

Foreign property trustee, delegation of power …. 17-32

Fraud fraudulent conveyances …. 9-41 avoidance of settlement …. 9-45 intent to defraud …. 9-43 onus of proof of intent …. 9-42 settlement based on valuable consideration …. 9-44

secret trusts, prevention of fraud …. 7-15 subsequent purchasers, on …. 9-46 trustee concealed fraud …. 22-30 Statute of Limitations …. 22-26 trusts, required to be in writing oral evidence in case of fraud …. 7-09–7-13

G Gifts charitable and non-charitable gifts …. 10-65, 10-66 lapse of …. 10-84 religious orders, to …. 9-31 unincorporated associations, to …. 9-30–9-32

Governmental trust certainty of intention to create …. 5-20–5-21

Graves or monuments trusts for erection or maintenance of …. 11-03

H Hospitality benevolent purposes …. 10-50 music, advancement of …. 10-50 non-charitable trust …. 10-50 object of trust to be charitable …. 10-50

Hotchpot clause will, in …. 19-16

Howe v Dartmouth, rule in trustee’s duty of impartiality

calculation of income …. 19-08 investments …. 19-09 real property …. 19-09 date of conversion …. 19-10 disposition of personal property …. 19-02 enjoyment in specie …. 19-21 trusts for sale and conversion …. 19-22 executory limitations …. 19-07 intention …. 19-04–19-05 mode of apportionment investments improperly retained …. 19-11 reversionary interests and debts …. 19-14 securities retained …. 19-12

Husband and wife see also Marriage; Matrimonial home presumption of advancement …. 12-17 English cases …. 12-18 reversion, purchase of …. 13-19–13-20 separation deeds …. 9-10

I Illusory trust certainty of intention to create …. 5-12

Impartiality of trustee apportionment generally …. 19-26–19-30 dividends accruing at date of death …. 19-29 intentions of settlor …. 19-26 New South Wales legislation …. 19-26 no apportionment …. 19-31 dividends …. 19-31

express stipulation …. 19-31 income accrued …. 19-31 policies of assurance …. 19-31 potential profit …. 19-31 principle of apportionment, operation …. 19-27 rents, between life tenant and remainderman …. 19-30 settled interest arising under will …. 19-28 augmentation of capital …. 19-32 bonus dividends …. 19-36–19-40 distribution of profits by company …. 19-40 principles …. 19-37 exceptions to rule …. 19-33–19-34 general principle …. 19-32–19-35 injustices under rule …. 19-35 state legislation …. 19-35 beneficiaries, between …. 17-11, 19-01 business profits, distribution …. 19-41 books of account …. 19-50 business carried on temporarily until sold profitably …. 19-51 station properties …. 19-47–19-49 trustees carrying on business …. 19-42–19-46 changes in stock …. 19-46 life tenant’s death, effect of …. 19-44 losses …. 19-45 general principle …. 19-01 outgoings and losses, apportionment …. 19-52 abnormal losses …. 19-57 administration costs …. 19-54 annual charges …. 19-56 annuities …. 19-58

capital improvements …. 19-55 charges and encumbrances …. 19-53 current repairs …. 19-56 non-permanent improvements …. 19-57 outgoings of trustee-mortgagee in possession …. 19-59 protection of trust property …. 19-54 realisation of insufficient security, loss on …. 19-60–19-63 rules, application of …. 19-01 settled property pending conversion advancements made, where …. 19-16 two methods …. 19-17–19-19 amounts actually received income payable from …. 19-20 apportionment, mode of Howe v Dartmouth, rule in …. 19-11 power to postpone conversion, securities retained under …. 1912–19-13 unauthorised investments, improperly retained …. 19-11 breach of trust …. 19-25 destination of income of …. 19-08 date of conversion …. 19-10 investment of trust funds …. 19-09 practically inconvertible …. 19-09 real property …. 19-09 reversionary property …. 19-09 securities …. 19-09 wasting property …. 19-09 enjoyment in specie …. 19-21–19-24 life tenant …. 19-21–19-24 property specifically bequeathed …. 19-23

trusts for sale and conversion …. 19-22 reversionary interests and debts …. 19-14 terminable annuities, not immediately convertible …. 19-15 wasting and reversionary property, duty to sell …. 19-02 executory limitations …. 19-07 intention of testator …. 19-04–19-05 rule to be applicable …. 19-02–19-03

Implied trusts see Resulting trusts Inalienable property public policy, because of …. 24-05 statute, by …. 24-06

Incorporated body dissolution, trustee appointed by court …. 15-51

Indemnity trustee see Trustee’s rights

Infants see also Children age of discretion …. 4-02 alteration to terms of trust trustees …. 17-07 consent, release or acquiescence breach of trust …. 22-33 creation of trusts by …. 4-02–4-05 election for reconversion …. 26-22 minor’s property, appointment of person to convey …. 25-11 trustee appointed by court in place of …. 15-48 capacity to be …. 14-02 exercising power of appointment …. 15-07 vesting of trust property where …. 25-04

trustee of infant’s property powers to appoint …. 20-75–20-76 sale of property …. 17-10

Injunction breach of trust, to restrain …. 16-03, 23-04

Insurance superannuation fund …. 29-30 trustee to insure trust property …. 17-19 trustee’s power see Trustee’s powers

Inter vivos trust created see Trust created inter vivos

Interest trustee, allowed against chargeable with …. 22-07 compound interest …. 22-08 mercantile rate …. 22-07 simple …. 22-07 trustee rate …. 22-07

Investment of trust funds court pursuant to statutory power, authorised by …. 18-24 mortgage investment …. 18-25 authorised security, loss on …. 18-28 changing investments …. 18-35 imprudent investments in authorised securities …. 18-30 unauthorised securities, compared with …. 18-30 investigation of securities …. 18-36 leasehold security, loan on …. 18-29 legislation, terms of …. 18-26 particular conditions …. 18-27

independent valuer …. 18-27 reliance on advice of valuer …. 18-27 two-thirds rule …. 18-27 realising security …. 18-33 release of part security …. 18-32 retention of securities …. 18-34 security of shorter title …. 18-31 other statutes, authorised by …. 18-23 superannuation fund, where see Superannuation trust instrument, authorised by …. 18-02 absolute discretion …. 18-03 investment clauses …. 18-02, 18-03 investment, meaning …. 18-04 personal security …. 18-05 security, meaning …. 18-04 speculation not permitted …. 18-06 Trustee Acts, authorised by …. 18-07 duties under …. 18-09–18-14 act in best interests of beneficiaries …. 18-10–18-11 advice, obtaining of …. 18-10, 18-14 care, diligence and skill, exercise of …. 18-09 impartiality …. 18-10, 18-13 non-speculative or hazardous investments …. 18-10, 18-12 matters to which trustees must have regard …. 18-15 charitable trustees in South Australia, where …. 18-20 diversification of investments, desirability of …. 18-17 exclusionary role of trust instrument …. 18-19 inflation, likelihood of …. 18-18 investment in company shares …. 18-21 investment in securities under RITS system …. 18-21

needs and circumstances of beneficiaries …. 18-16 purchase of dwelling house for beneficiary …. 18-22 purpose of trust …. 18-16 power to invest and vary investments …. 18-08 trustee’s duty generally …. 17-12, 18-01, 18-37

J Joint venturers fiduciary agents …. 13-29

K Keech v Sandford, rule in …. 13-12–13-20 renewal of lease …. 13-12 agents …. 13-16 executors, by …. 13-14 matrimonial home …. 13-20 mortgagors and mortgagees …. 13-18 partners …. 13-17 reversion, purchase of …. 13-19 husband and wife …. 13-20 tenants for life …. 13-15 trustee, by …. 13-13

L Land old system land …. 6-20 Torrens system land …. 6-20

Lapse charitable trusts, of see Charitable trusts

Law reporting charitable purpose, whether …. 10-27, 10-58

Lease renewals see Renewal of lease trust property, power to lease …. 20-19 New South Wales …. 20-20 other states …. 20-21 Victoria …. 20-22 renewal of leaseholds …. 20-25–20-26 surrender of onerous leases …. 20-23–20-24, 20-26

Legal institutions trust, distinguished …. 2-01

Liability of trustee bankruptcy of trustee …. 22-11 breach of trust, where …. 22-01–22-02 co-trustees jointly and severally liable …. 22-09 state legislation …. 22-09 wilful neglect or default …. 22-09 death of trustee …. 22-10 erroneous advice of counsel, where …. 22-02 generally …. 22-01–22-02 immunity clause …. 22-02 no loss no liability …. 22-05 relief from liability consent, release and acquiescence …. 22-33 infancy …. 22-33 knowledge of beneficiary …. 22-33 generally …. 22-12

acted honestly and reasonably …. 22-13 degree of education of trustee …. 22-19 mistake of law …. 22-16 mortgage investments …. 22-15 onus of proof …. 22-22 ought fairly to be excused …. 22-14 probable liability …. 22-21 professional trustee …. 22-18 reliance on co-trustee …. 22-20 remunerated trustee …. 22-17 lapse of time …. 22-23 concealed fraud …. 22-30 consent, release and acquiescence …. 22-33 contribution …. 22-32 conversion …. 22-28 disability …. 22-31 effect of legislation …. 22-25 fraud …. 22-26 property ‘still retained by’ …. 22-27 time begins to run …. 22-29 remedies account, to …. 22-04 equitable compensation …. 22-04–22-05 interest …. 22-07–22-08 make good loss …. 22-03 recovery of profit …. 22-06 restore trust funds …. 22-03 wilful fault and neglect, where …. 22-01

Lien see Equitable lien

Life tenant augmentation of capital …. 19-32 fiduciary relationship …. 2-05 income from property, enjoyment in specie …. 19-21 lease renewals, rule in Keech v Sandford …. 13-15 trustee’s duty of impartiality …. 19-01 advancements made …. 19-16 apportionment generally …. 19-26–19-30 no apportionment …. 19-31 apportionment of rents …. 19-30 augmentation of capital …. 19-32 bonus dividends …. 19-36 breach of trust …. 19-25 calculation of income …. 19-08 conversion of trust property …. 19-09 date of conversion of property …. 19-10 distribution of business profits …. 19-41 books of account …. 19-50 business carried on temporarily …. 19-51 station properties …. 19-47 enjoyment in specie …. 19-21 executory limitations …. 19-07 income payable from amounts received …. 19-20 intention of testator …. 19-04–19-05 no direction to convert …. 19-11 outgoings and losses, apportionment …. 19-52 abnormal losses …. 19-57 annual charges …. 19-56 annuities …. 19-58 capital improvements …. 19-55

charges and encumbrances …. 19-53 insufficient security, loss on …. 19-60 non-permanent improvements …. 19-57 repairs …. 19-56 trustee-mortgagee in possession …. 19-59 postponing conversion …. 19-12 reversionary interests and debts …. 19-14 terminable annuities …. 19-15 wasting and reversionary property, duty to sell …. 19-02

Liquidators fiduciary relationship …. 2-02

Loans failure of purpose …. 12-06 trustee’s duty to invest trust funds loan for fixed period …. 19-21

Losses see Outgoings and losses Lottery ticket syndicate fiduciary agent …. 13-21

M Management certainty of intention to create trust directions as to management …. 517–5-19

Management trust …. 3-11 Marriage see also Husband and wife covenant in marriage settlement …. 6-11–6-14 invasion of sanctity of …. 9-14 restraint upon …. 9-11–9-13

Matrimonial home Keech v Sandford, rule in …. 13-20

Minors see Infants Mistake of law trustee, relief from liability …. 22-16

Mortgage mortgage investment see Investment of trust funds trustee’s power to mortgage see Trustee’s powers

Mortgagee fiduciary capacity of …. 2-05 investments by trustee, relief from liability …. 22-15 lease renewals, rule in Keech v Sandford …. 13-18 possession, in, outgoings of trustee …. 19-59

Mortgagors lease renewals, rule in Keech v Sandford …. 13-18

Mortmain Act 1736 (Eng) …. 10-02 Municipal corporations trustee, capacity to be …. 14-11

Mutual wills voidable in equity …. 13-42

N New South Wales accounts of trust …. 17-13 appointment of infant as trustee …. 14-02 appropriation of assets …. 20-71–20-72 valuation …. 20-73 augmentation of capital …. 19-35 authorised departure from terms of trust …. 17-06 beneficiaries advancement …. 20-58–20-59, 20-62

appropriation of assets …. 20-71–20-72 discretion …. 20-63 maintenance …. 20-58–20-59, 20-60–20-61 calls on shares …. 20-54 charitable and non-charitable gifts …. 10-65–10-66 charitable trust effectuation of …. 10-76 income expended outside state …. 10-59 co-trustees, liability …. 22-09 Conveyancing Act 1919 (NSW) see Conveyancing Act 1919 (NSW) conveying or distributing property …. 17-36 creation of trusts infants, by …. 4-04–4-05 custodian trustee, no legislation for …. 3-18 forfeiture of trust, destination of income …. 9-25–9-26 infants’ property, powers to appoint trustees of …. 20-75 inter vivos, trust created writing, requirement of …. 7-02 investments authorised by court pursuant to statutory power …. 18-24 minor’s property, appointment of persons to convey …. 25-11 mixed charitable and non-charitable trusts …. 10-65 NSW Trustee …. 14-08 retirement of trustee out of court without appointment of new trustee …. 15-79 rule against accumulations …. 9-33 rule against perpetuities duration of perpetuity period …. 9-29 security, realising …. 18-33 Succession Act 2006 s 6, conformity with …. 7-14 trust property, repair and improvement to …. 17-08

trustee abroad …. 17-33–17-34 additional …. 15-30 delegation of powers …. 17-25 number appointed …. 15-23 outgoings of, mortgagee in possession …. 19-59 right to pay money into court …. 21-30 separate sets of trustee …. 15-35 trust property, duties …. 17-36 unincorporated associations …. 14-14 trustee companies …. 14-05 trustee’s duty to invest trust funds varying investment …. 18-08, 18-37 trustee’s liability lapse of time …. 22-24–22-25 relief from …. 22-12 trustee’s powers appointing trustee of infants’ property …. 20-75 audits and valuations, obtaining …. 20-55 carrying on business …. 20-43 delegation of …. 17-25 insurance of property …. 20-36 lease of trust property …. 20-20 renewal of leaseholds …. 20-25 surrender of onerous leases …. 20-24 making advancements …. 20-62 mortgage of trust property …. 20-28 receipts, power to give …. 20-49 repairs and improvements …. 20-33 sale of trust property …. 20-04 depreciatory conditions …. 20-14

duration of power …. 20-06 exercise of …. 20-10–20-12 infant’s property …. 17-10 postponement …. 20-08 sale on terms …. 20-17 shares, new issue of …. 20-53 valuations, obtaining …. 20-55 variation of terms of trusts …. 17-06, 17-08–17-10 vesting of trust property …. 25-02, 25-04, 25-08

New Zealand charitable and non-charitable gifts …. 10-65–10-66

Non-charitable trusts beneficiaries …. 1-08–1-09 benevolent purposes …. 10-48 hospitality or entertainment …. 10-50 religion …. 10-46 sport …. 10-49 charitable and non-charitable trusts, mixed apportionment between objects …. 10-63 charitable and other purposes …. 10-63 invalid trusts …. 10-64–10-66 Leahy v A-G (NSW) …. 10-66 New South Wales courts …. 10-65–10-66 New Zealand courts …. 10-65–10-66 overriding trust for charitable purposes …. 10-63 purposes of indefinite nature …. 10-63 separate and distinct objects …. 10-65 trustees’ discretion to apportion …. 10-63 vague or uncertain terms of gift …. 10-65 valid trusts …. 10-64

Victorian courts …. 10-65–10-66

Northern Territory beneficiaries maintenance and advancement …. 20-69 rule against accumulations …. 9-33 trust property, repair and improvement to …. 17-08 trustees additional …. 15-34 delegation of duties and powers …. 17-28 liability of lapse of time …. 22-24 number appointed …. 15-29 separate sets of …. 15-41 trustee’s powers insurance of property …. 20-37 lease of trust property …. 20-21 renewal …. 20-26 repairs and maintenance …. 20-34 sale of trust property duration of power …. 20-07 vesting orders …. 25-06–25-07

O Outgoings and losses apportionment by trustee …. 19-52 abnormal losses …. 19-57 administration costs …. 19-54 annuities …. 19-58 capital improvements …. 19-55

charges and encumbrances …. 19-53 current annual charges …. 19-56 current repairs …. 19-56 insufficient security loss on realisation …. 19-60–19-61 non-permanent improvements …. 19-57 outgoings of trustee-mortgagee in possession …. 19-59

P Parents children and, trust to bring about separation from …. 9-15

Partners appointment as trustee …. 15-62 fiduciary duty …. 2-07 lease renewal Keech v Sandford, rule in …. 13-17 property vested in …. 2-08

Partnership land doctrine of conversion …. 26-05

Pension scheme interpretation of …. 8-03

Perpetuities, rule against see Rule against perpetuities Person of unsound mind court appointed trustee in place of …. 15-53 creation of trusts …. 4-06 election for reconversion …. 26-22 trustee vesting of trust property where …. 25-04

Personal liability

trustee see Liability of trustee; Trustee’s rights

Personal obligation element of trust …. 1-04

Personal representative definition …. 20-05

Physical incapacity new trustee appointed in place of trustee …. 15-53

Policies of assurance no apportionment …. 19-31

Politics charitable trusts political education …. 10-29 political purpose …. 10-51

Poor relations charitable trust for relief of poverty …. 10-24–10-25

Poverty, relief of charitable trust …. 10-04 absolute destitution not necessary …. 10-17 poverty, meaning …. 10-17 test for poverty …. 10-18 valid charitable trusts …. 10-17–10-18 aged impotent …. 10-21–10-22 form of relief immaterial …. 10-19 locality or class, restrictions to …. 10-23 poor relations …. 10-24–10-25 public purpose test, application of …. 10-25 specific reference to poverty not necessary …. 10-20

Power of appointment donee’s analogous duty to fiduciary duty …. 2-04

meaning of …. 2-46

Power to dispose of property duty analogous to fiduciary duty …. 2-04

Powers bare power, creation of …. 5-11 trusts, distinguished …. 2-46

Precatory trust certainty of intention to create …. 5-05 obligation intended …. 5-08 precatory words …. 5-06–5-11 wills …. 5-09–5-10

Presumed trusts see Resulting trusts Presumption of advancement diminishment of …. 12-17 husband to wife …. 12-12, 12-17 English cases …. 12-18 parent to child …. 12-12 rebuttal …. 12-13, 12-16, 12-18 wife to husband …. 12-17

Private trust charitable trusts distinguished …. 10-60

Profits business see Business profits trustee …. 17-39, 17-42, 17-49

Promoters fiduciary agents …. 13-28 fiduciary relationship …. 2-02 company, to …. 13-28

Protective trusts

forfeiture under …. 9-23–9-24 destination of income …. 9-25–9-27 New South Wales legislation …. 9-25–9-26 property held for persons in succession …. 9-27 intention to create charge …. 9-24 making of …. 9-21 sequestration order …. 9-23 trust period …. 9-22

Protectors beneficiaries, personal liability to …. 3-20 duties and liabilities …. 3-20 fiduciary duty …. 3-20

Public benefit charitable trusts Baddeley’s case …. 10-11 benefit presumed …. 10-10 question of fact …. 10-16 religion, advancement of …. 10-34

Public charities …. 10-05 Public or charitable trust see Charitable trusts Public policy property inalienable through …. 24-05

Public purposes charitable trusts …. 10-06–10-09 beneficiaries, whether defined by reference to purely personal relationship …. 10-06 public and private, distinguished …. 10-06 section of the public …. 10-07–10-08 trust for relief of poverty, whether applicable to …. 10-09

Public Trustee …. 14-10 Public works charitable trusts …. 10-53

Purpose trusts categories of …. 11-01 charitable trusts, distinguished …. 11-01 definition …. 1-02 difficulties with …. 11-07 enforcement …. 11-08 failure of …. 11-06 graves or monuments, erection or maintenance of …. 11-03 miscellaneous examples …. 11-05 Morice v Bishop of Durham …. 11-06–11-07 trust period …. 11-08 underlying principle of …. 11-06 unincorporated non-charitable associations, for purpose of …. 11-04 upkeep of animals …. 1-02, 11-02 validity …. 1-02, 11-01, 11-06–11-07

Q Queensland beneficiaries appropriation of assets …. 20-74 maintenance and advancement …. 20-65 provision of house …. 17-09 charitable trust, effectuation of …. 10-77 custodian trustees …. 3-18 duties of trustees variation of beneficial interests …. 17-07

investment powers of trustees …. 18-07 Public Trustee …. 14-10 rule against accumulations …. 9-33 rule against perpetuities duration of perpetuity period …. 9-29 security, realising …. 18-33 third party contracts …. 2-25 rights at law against promisor …. 2-18 trust property, repair and improvement to …. 17-08 trustee companies …. 14-07 trustee abroad …. 17-33–17-34 additional …. 15-32 delegation of powers …. 17-27 number appointed …. 15-25 purchase of house for beneficiary …. 17-09 separate sets of …. 15-37 trustee’s liability, lapse of time …. 22-24 trustee’s powers carry on business …. 20-43 delegation of …. 17-27 failure to exercise court’s power to order reasons …. 16-15 insurance of property …. 20-39 lease of trust property …. 20-21 renewal of leaseholds …. 20-26 surrender of onerous leases …. 20-26 mortgage of trust property …. 20-29 receipts, power to give …. 20-49 repairs and improvements …. 20-34

sale of trust property …. 20-05 business to company …. 20-45 duration of power …. 20-07 exercise …. 20-13 postponement …. 20-09 sale on terms …. 20-18 sue and be sued …. 20-56 vesting orders …. 25-06–25-07

Quistclose trust …. 2-14–2-16, 12-06 R Receipts trustee’s power to give …. 20-49

Receivers appointment charitable trust, to …. 23-05 trust property, over …. 23-05 fiduciary relationship …. 2-02

Reconversion see Conversion Recreational charities states, recognised in …. 10-49

Religion charitable trusts for advancement of …. 10-04, 10-33 charitable purpose …. 10-33 general or particularised terms, expressed in …. 10-33 choir, musical services …. 10-45 church ornaments …. 10-38 churches, building and maintaining …. 10-35 churchyards and tombs …. 10-36

methods of providing for …. 10-37 securing maintenance of …. 10-37 clergy and church workers …. 10-39 closed orders …. 10-41 masses for the dead …. 10-40 non-charitable objects …. 10-46 organ, maintenance of …. 10-45 prayer …. 10-43 corporate public prayer …. 10-44 private prayer …. 10-43 public benefit …. 10-44 public benefit requirement …. 10-33–10-34 religion meaning …. 10-33 what constitutes …. 10-33 worship …. 10-42–10-45 conditions as to, trust as to …. 9-16 gifts to religious orders …. 9-31

Religious Successory and Charitable Trusts Act 1958 (Vic) effectuation of charitable trust …. 10-79

Remainderman election for reconversion …. 26-22 postponing conversion …. 19-12 reversionary interests and debts …. 19-14 terminable annuities …. 19-15 wasting and reversionary property duty to sell …. 19-02 trustee’s duty of impartiality …. 19-01 advancements made …. 19-16 apportionment generally …. 19-26–19-30

no apportionment …. 19-31 apportionment of rents …. 19-30 augmentation of capital …. 19-32 bonus dividends …. 19-36 breach of trust …. 19-25 calculation of income …. 19-08 conversion of trust property …. 19-09 date of conversion of property …. 19-10 distribution of business profits …. 19-41 books of account …. 19-50 business carried on temporarily …. 19-51 station properties …. 19-47 enjoyment in specie …. 19-21 executory limitations …. 19-07 income payable from amounts received …. 19-20 intention of testator …. 19-04–19-05 no direction to convert …. 19-11 outgoings and losses, apportionment …. 19-52 abnormal losses …. 19-57 administration costs …. 19-54 annual charges …. 19-56 annuities …. 19-58 capital improvements …. 19-55 charges and encumbrances …. 19-53 insufficient security, loss on …. 19-60–19-61 non-permanent improvements …. 19-57 protection of property …. 19-54 repairs …. 19-56 trustee-mortgagee in possession …. 19-59

Renewal of lease

Keech v Sandford, rule in …. 13-12–13-20 agents …. 13-16 executors, by …. 13-14 matrimonial home …. 13-20 mortgagors and mortgagees …. 13-18 partners …. 13-17 reversion, purchase of …. 13-19 husband and wife …. 13-20 tenants for life …. 13-15 trustee, by …. 13-13

Rent apportionment …. 19-26, 19-30 definition …. 19-26

Resulting trusts automatic resulting trusts …. 12-01 non-disposal of beneficial interest …. 12-02 failure of engrafted trusts …. 12-09 failure of express trust …. 12-05 failure of purpose of loan …. 12-06 no trust stated …. 12-03 surplus subscriptions …. 12-08 trust declared as to part of property …. 12-04 unexhausted residue …. 12-07 circumstances for …. 3-07 constructive trust, distinguished …. 13-01 creation by operation of law …. 28-21 establishment of …. 3-07 presumed resulting trusts …. 12-01 exceptions to rule …. 12-10

husband and wife …. 12-17 English cases …. 12-18 improvement of property, where …. 12-19 legal presumption …. 12-10 presumption of advancement …. 12-10, 12-12 purchase in another’s name …. 12-10 purchase money lent …. 12-10 purchase price …. 12-11 rebuttal of presumption …. 12-10, 12-13 Australian law …. 12-14–12-15 cohabitating couples …. 12-14 English courts …. 12-14 evidentiary means of …. 12-18 fiduciary duty, where …. 12-16 intention of purchaser …. 12-13 partial rebuttal …. 12-16 principles …. 12-15 transaction is gift or loan …. 12-13 transfer to wife or child …. 12-13 unequal shares of purchase money …. 12-10 voluntary transfers land …. 12-20 personalty …. 12-21 Re Vandervell’s Trusts (No 2) …. 12-01

Retirement of trustee conditions for …. 15-76 appointment of new trustee out of court …. 15-78 court, by …. 15-81 in a suit …. 15-83 summary jurisdiction …. 15-82

out of court without appointment of new trustee Australian Capital Territory …. 15-79 New South Wales …. 15-79 Victoria …. 15-80 trust instrument provides for retirement, where …. 15-77 duty of retiring trustee …. 15-84

Reversion purchase of husband and wife …. 13-19–13-20 Keech v Sandford, rule in …. 13-19

Reversionary property trustee’s duty to sell …. 19-02 conversion date of …. 19-10 permanent investments …. 19-02 power to postpone …. 19-06 executory limitations …. 19-07 intention of testator …. 19-04–19-05 investments, power to retain …. 19-06

Romalpa clause contract for sale of goods …. 2-47 features present in provisions …. 2-47 legal and equitable relationships …. 2-48 legal title remains with seller …. 2-49 limbs of Romalpa clause …. 2-47, 2-51 original Romalpa case …. 2-48 proceeds of sale of goods …. 2-51 reservation of beneficial title to goods …. 2-51

reservation of legal title …. 2-50–2-51

Roman Catholic Relief Act 1-29 (Eng) …. 10-40 Romilly’s Act 52 Geo III c 101 effectuation of charitable trust …. 10-78

Rule against accumulations charities, application to …. 10-82 common law rule …. 9-33 Saunders v Vautier, rule in …. 9-34, 10-82 state legislation …. 9-33

Rule against perpetuities absolute gift for charitable purposes, where …. 10-81 accelerated vesting where void ulterior interest …. 9-29 age of majority, reduction in …. 9-29 application of rule …. 9-29–9-32 class gifts …. 9-30–9-32 exclusion of members …. 9-29 individual members …. 9-30–9-32 purposes of the body …. 9-32 religious orders …. 9-31 unincorporated associations …. 9-30 common law rule …. 9-28 creation of gift events subsequent to …. 9-31 infringement of rule …. 9-31 perpetuity period …. 9-29 proprietary interest …. 9-32 state legislation …. 9-29 determinable interests …. 9-29, 9-32 directions to pay income only, where …. 10-83

exceptions to rule, gifts to charity …. 9-32 gift to one charity and gift-over to another charity …. 10-81 gift to vest in time allowed …. 9-29 legislative modifications …. 9-28 limitation of property, rule forbidding inalienable …. 10-81 perpetuity period allowed …. 9-29 remoteness of vesting, rule against …. 10-81 statement of rule …. 9-29 successive limitations …. 9-31–9-32 unincorporated associations, gifts to …. 9-30–9-32 vesting …. 9-31–9-32 wait and see approach …. 9-29

Rules of law application of …. 28-17

S Sale of goods reservation of title see Romalpa clause

Sale of land contract to sell, doctrine of conversion …. 26-07 executors and administrators special powers in relation to …. 2-44

Sale of trust property trustee’s powers …. 20-02 depreciatory conditions New South Wales …. 20-14 other states …. 20-15 duration of power New South Wales …. 20-06 other states …. 20-07

exercise of power Australian Capital Territory …. 20-10–20-12 New South Wales …. 20-10–20-12 other states …. 20-13 implied power …. 20-03 postponement of sale New South Wales …. 20-08 other states …. 20-09 sale on terms …. 20-16 New South Wales …. 20-17 other states …. 20-18 statutory power Australian Capital Territory …. 20-04 New South Wales …. 20-04 Queensland …. 20-05 South Australia …. 20-05 Tasmania …. 20-05 Victoria …. 20-05 Western Australia …. 20-05

Saunders v Vautier, rule in absolute vested gift …. 9-34 avoidance of …. 23-12 basis of rule …. 23-08, 23-14 discretionary trusts …. 23-15 gift to charity, applicable to …. 9-34 modifications of trust beneficiaries, by …. 23-13 rule against accumulation …. 9-33 sub-trusts, difficulties with …. 23-12

Schemes Charitable Funds Act 1958 (Qld) …. 10-77 Charitable Trusts Act 1993 (NSW) …. 10-76 Charities Act 1978 (Vic) …. 10-80 cy-près scheme see Cy-près scheme Dormant Funds Act 1942 (NSW) …. 10-75 effectuation of charitable trust by …. 10-68 charitable trust in foreign country, where …. 10-72 donor’s directions insufficient, where …. 10-68–10-69 features unacceptable to trustee, where …. 10-72 general and cy-près scheme, distinguished …. 10-68 general and particular charitable intention, distinguished …. 10-68 out-and-out gift to charity and general charitable intention, distinguished …. 10-68 Religious Successory and Charitable Trusts Act 1958 (Vic) …. 10-79 Romilly’s Act 52 Geo III c 101 …. 10-78 types …. 10-68

Schools see also Education charitable trust for foundation of …. 10-28

Secret trust definition …. 7-16 fraud, prevention of …. 7-15 gift to several donees or legatees …. 7-29–7-31 imperfect obligation, of …. 7-26–7-27 increase or reduction of legacy …. 7-25 oral trust …. 7-15 rationale of …. 7-32–7-36 communication of trust …. 7-32 intention of testator …. 7-32 partly and fully secret …. 7-35–7-36

possibilities …. 7-35 promise of trustee …. 7-32 refraining from making will …. 7-22 standard of proof required to establish …. 7-16 trust not shown, where …. 7-17 absolute gift …. 7-20 acceptance by executor …. 7-18 communication to executor …. 7-18 creation of trust, time of …. 7-19 definite intention of testator …. 7-18 fraud, based upon …. 7-18 making of will …. 7-18 resulting trust …. 7-21 unlawful trusts …. 7-26 criminal purpose …. 7-28 will shows trust intended …. 7-23–7-24

Securities retained under power to postpone conversion …. 19-12 trustees’ duty to invest funds see Investment of trust funds

Sham trust sham, legal notion of …. 5-04 trust to defraud creditors …. 5-04

Shareholder trustee-shareholder, powers of …. 20-50–20-54

Solicitors fiduciary agents …. 13-21 purchase of trust property …. 17-45 solicitor from client …. 17-46 solicitor-trustee

Cradock v Piper, rule in …. 17-41 remuneration …. 17-40

South Australia beneficiaries maintenance and advancement …. 20-66 charitable trust, where matters trustee must take into account …. 18-20 custodian trustee …. 3-18 mixed charitable and non-charitable trusts …. 10-66 Public Trustee …. 14-10 rule against accumulations …. 9-33 security, realising …. 18-33 trust property, repair and improvement to …. 17-08 trustee abroad …. 17-33–17-34 additional …. 15-33 delegation of powers …. 17-28 number appointed …. 15-26 separate sets of …. 15-39 trustee companies …. 14-07 trustee’s duties keep records as may be prescribed …. 17-13 variation of beneficial interest …. 17-07 trustee’s liability lapse of time …. 22-23 trustee’s powers delegation of …. 17-28 insurance of property …. 20-37 lease of trust property …. 20-21 renewal of leaseholds …. 20-26 surrender of onerous leases …. 20-26

mortgage of trust property …. 20-29 repairs and improvements …. 20-34 sale of trust property …. 20-05 exercise …. 20-13 sale on terms …. 20-18 vesting orders …. 25-06–25-07

Speculation trustees, not permitted by …. 18-06

Sports charitable trusts recreational charities …. 10-49 school sport, encouraging …. 10-49 sports and recreational activities …. 10-32 non-charitable gifts …. 10-49

State Trustees Victoria …. 14-09 Station properties distribution of business profits …. 19-47

Statute of Elizabeth I preamble to …. 10-02–10-04, 10-21–10-22, 10-47

Succession Act 2006 (NSW) vesting order under …. 25-09

Superannuation administration …. 29-01 adverse events, notification of …. 29-45 approved deposit funds payment of beneficiaries in …. 29-35 arm’s length investments …. 29-47 assets, separation of …. 29-25 beneficiaries

access to information and documents …. 29-28 protection of …. 29-39 rights of …. 29-37, 29-49 nomination …. 29-51 protection of …. 29-50 trustee to act in best interest of …. 29-21 contributions …. 29-01 corporate trustee, covenants relating to …. 29-32, 29-38 documents access to …. 29-28 retention of …. 29-44 employer-sponsored funds payment to employer …. 29-48 trustees of appointment and removal of …. 29-15 equal representation, procedure for ensuring …. 29-14 employment aspects of …. 29-52 amendment of trust deeds …. 29-56 breach of trust …. 29-59 conflict of duty and interest …. 29-58 employer’s duty of good faith …. 29-54 nature of powers …. 29-55 principles of construction …. 29-53 surpluses, distribution of …. 29-57 inquiries and complaints …. 29-42 insurance provisions …. 29-30 investment manager, duties of …. 29-43 investments, management of …. 29-29 legislation …. 29-02–29-06 key elements …. 29-06

reasons for …. 29-04 regulatory bodies …. 29-03 superannuation entities …. 29-05 Superannuation Industry (Supervision) Act 1993 (Cth) …. 29-02 Superannuation Industry (Supervision) Regulations 1994 …. 29-02 operating standards …. 29-40 prudential standards …. 29-39 registrable superannuation entity (RSE) licensee conditions …. 29-41 operating standards …. 29-40 prudential standards …. 29-39 regulation, intensity of …. 29-41 relief from liability …. 29-38 remedies where contravention of governing rules …. 29-37 reserves, management of …. 29-27 risk management strategy …. 29-31 self-managed …. 29-33 changes in status of …. 29-46 corporate trustee directors …. 29-34 statutory covenants corporate trustee directors, relating to …. 29-32 general …. 29-18–29-28 regulation, prescribed by …. 29-36 repay amounts to beneficiaries in approved deposit funds …. 29-35 self managed superannuation funds, relating to …. 29-33 corporate trustee directors …. 29-34 specific …. 29-29–29-31 supervision of …. 29-03 trust, employment of …. 29-01 trust character of …. 8-03, 29-07–29-12

amendment, statutory restrictions on …. 29-12 implied covenants …. 29-09 indemnity and exemption …. 29-10 purposes …. 29-08 trust structure …. 29-07 trustees, autonomy of …. 29-11 trustee …. 29-05 appointment and removal of …. 29-15–29-17 APRA powers …. 29-16 consent in writing for …. 29-17 employer-sponsored funds, in …. 29-15 autonomy of …. 29-11 capacity to be …. 29-13–29-14 disqualified persons …. 29-13 equal representation, procedure for ensuring …. 29-14–29-15 definition …. 29-20 disqualified person …. 29-13 body corporate as …. 29-13 general duties of …. 29-18–29-28 access to information and documents …. 29-28 act fairly with beneficiaries within a class …. 29-24 act fairly with classes of beneficiaries …. 29-23 act honestly …. 29-19 best interests of beneficiaries …. 29-21 care, skill and diligence …. 29-20 cases of conflict, where …. 29-22 fettering conduct …. 29-26 management of reserves …. 29-27 separation of trust assets …. 29-25 liability, relief from …. 29-38

T Tasmania beneficiaries maintenance and advancement …. 20-68 trustee of infant’s property …. 20-76 custodian trustee …. 3-18 duties of trustees variation of beneficial interest …. 17-07 Public Trustee …. 14-10 rule against accumulations …. 9-33 trustee abroad …. 17-33 additional …. 15-34 delegation of powers …. 17-29 liability lapse of time …. 22-23 number appointed …. 15-28 separate sets of …. 15-40 trustee companies …. 14-07 trustee’s powers insurance of property …. 20-40 lease of trust property …. 20-21 renewal of leaseholds …. 20-26 mortgage of trust property …. 20-29 repairs and improvements …. 20-34 sale of trust property …. 20-05 duration of power …. 20-07 exercise …. 20-13 vesting orders …. 25-06–25-07

Taxes charitable trusts …. 10-54

Tenants for life see Life tenant Tenants in common election to effect reconversion …. 26-22

Testator direction to convert …. 26-08–26-09 failure of purposes …. 26-17–26-20 mortgage with power of sale …. 26-11 option to purchase, depending on …. 26-12–26-15 sale on request or with consent …. 26-10 time from which conversion takes place …. 26-16 intention wasting and reversionary property trustee’s duty to sell …. 19-04–19-05

Third parties trusts and contracts for benefit of …. 2-17–2-25 privity of contract, doctrine of …. 2-17–2-18 Queensland and Western Australia, position in …. 2-25 third party’s rights at equity …. 2-21–2-24 third party’s rights at law …. 2-17–2-20 whether trust found or not …. 2-22–2-24

Title deeds custody by trustee …. 17-21

Tort trustee’s liability …. 21-02

Tracing trust property claiming trust property, compared to …. 27-01, 27-03 common law tracing …. 27-02 shortcomings of …. 27-04

constructive trust and, relationship between …. 27-05 equitable doctrine of tracing …. 27-02–27-04 common law tracing, comparison with …. 27-02, 27-04 fiduciary relationships …. 27-05 proprietary claim …. 27-01, 27-03, 27-05 trust property other trust property, mixed with …. 27-10–27-11 Clayton’s case, non-application of …. 27-10–27-11 transferred to third persons …. 27-12 bankers …. 27-17 change of position …. 27-14 Diplock’s Estate case …. 27-12 exclusion of tracing …. 27-16 intention …. 27-15 principles …. 27-13 right of claimant …. 27-13 transferee taking legal estate for value …. 27-18 trustee, retained by …. 27-06 constructive trust, where …. 27-07 trust in invitum …. 27-07 trustee’s own property, mixed with …. 27-08 Hallet’s case …. 27-08–27-09

Trust acceptance by trustee …. 15-73 administration of …. 28-20 agency, distinguished …. 2-10–2-12 bailment, distinguished …. 2-09 bare trust see Bare trust beneficiary see also Beneficiary right to extinguish …. 23-08–23-12

basis of rule …. 23-14 discretionary trust …. 23-15 modification of trust …. 23-13 powers of advancement …. 23-16 blind trust …. 3-17 capacity to create see Capacity to create trust certainty of intention to create …. 5-01–5-02 cestui que trust see Cestui que trust charitable trust see Charitable trusts classification of see Classification of trusts condition, distinguished …. 2-30–2-33 constructive trust see Constructive trust contracts for benefit of third parties and …. 2-17–2-25 privity of contract, doctrine of …. 2-17–2-18 Queensland and Western Australia, position in …. 2-25 third party’s rights at equity …. 2-21–2-24 third party’s rights at law …. 2-17–2-20 whether trust found or not …. 2-22–2-24 debt, distinguished …. 2-13–2-16 categories not mutually exclusive …. 2-14–2-16 intention of parties …. 2-13 ‘Quistclose trust’ …. 2-14–2-16, 12-06 trust created or debt incurred …. 2-13 definition …. 1-01–1-03, 28-03 description …. 1-01 disclaimer by trustee …. 15-73 discretionary trust see Discretionary trust elements of …. 1-04–1-10 equitable charge, distinguished …. 2-26–2-28 transferor, intention of …. 2-28

trust or charge, determination of …. 2-28 equitable lien, distinguished …. 2-29 equitable personal obligation, distinguished …. 2-34–2-39 equitable charge or trust …. 2-34 gifts as personal obligations …. 2-34–2-36 intention to create trust or charge …. 2-37 executed or executory see Executed and executory trusts express trust see Express trust fiduciary nature of …. 1-02 fiduciary relationship …. 2-02–2-08 implied or resulting see Resulting trusts insolvent, priorities upon administration …. 21-15 inter vivos, created by see Trust created inter vivos interpretation …. 8-01–8-10 general canons …. 8-01–8-02 non-recognition of …. 28-16 object of, certainty as to see Certainty operation of law, created by see Trust created by operation of law performance of, beneficiary’s right to compel …. 23-03 personal obligation annexed to property …. 1-10 powers, distinguished …. 2-46 private …. 3-02, 3-05 property see Trust property public or charitable see Charitable trust purpose trust …. 1-02 no human beneficiary …. 1-08 recognition of …. 28-13–28-17 secret see Secret trust simple or special trusts …. 3-04–3-05 superannuation see Superannuation

terms, trustee to be acquainted with …. 17-01 trading trust …. 3-16, 14-04 trust property see Trust property trustee see Trustee trustee and beneficiary, legal personality distinct from …. 1-01 unit trusts see Unit trusts validity …. 5-27, 5-30 will, created by see Trust created by will

Trust created by operation of law constructive trusts …. 28-21–28-22 implied trusts …. 28-21 resulting trusts …. 28-21 trust created by statute …. 28-21

Trust created by will capacity to create …. 4-01 express trusts …. 3-02 precatory trusts …. 5-09–5-10 presumption of intention to create …. 5-02 secret trust see Secret trust statutory requirements …. 7-14

Trust created inter vivos capacity to create trust …. 4-01, 6-01 infants …. 4-03 constructive trust …. 7-04 express trust …. 3-02 fraud, admission of oral evidence …. 7-09–7-13 minors, by …. 4-03 personalty assignment …. 7-05

oral declaration …. 7-05 transfer or declaration in writing …. 7-05 realty assignment, trust created by …. 7-07 declaration of trust …. 7-06 informal writing of trust …. 7-08 no particular form required …. 7-08 signature …. 7-08 terms of trust …. 7-08 writing subsequent to declaration …. 7-08 person able to declare trust …. 7-07 writing, in …. 7-06 writing, requirement of …. 7-02 Conveyancing Act 1919 (NSW) …. s 23C s 23C(1), relationship between paras (a), (b) and (c) …. 7-03 s 23C(1) and (2), relationship between …. 7-04 fraud, where …. 7-09–7-13 personalty, application to …. 7-05 realty, application to …. 7-06–7-08

Trust property beneficiary right to follow …. 23-17 right to possession …. 23-02 third party in receipt of, claim against …. 23-18–23-21 certainty in identification of property …. 1-06 chose in action …. 1-06 chose in possession …. 1-06 corporeal or incorporeal …. 1-06 element of trust …. 1-04, 1-06 personal obligation annexed to …. 1-10

property capable of being held on trust …. 1-06 property vested in fiduciary …. 2-08 purchase barrister …. 17-46 beneficiary, from …. 17-47 setting aside …. 17-48 solicitor from client …. 17-46 solicitors …. 17-45 trustee, by …. 17-43 trustee retired …. 17-44 purported trust with no beneficiary void …. 1-08 realty or personalty …. 26-01 tangible or intangible …. 1-06 tracing trust property see Tracing trust property trustee’s duties see Trustee’s duties trustee’s powers see Trustee’s powers what amounts to …. 24-01 choses in action …. 24-03 equitable interest in realty or personalty …. 24-02 expectancies …. 24-04 inalienable property public policy, because of …. 24-05 statute, by …. 24-06 possibilities …. 24-04

Trustee acceptance of trust …. 15-73 acting gratuitously …. 17-39 advisory …. 3-19–3-20 agent, distinguished …. 2-10 aliens …. 14-03

appointment see Appointment of trustee bankrupt …. 14-13 bankruptcy of …. 21-14, 22-11 effect of …. 22-11 preferential payments, recovery of …. 21-16 beneficiary may be …. 1-07 breach of trust …. 20-44 statutory jurisdiction to relieve …. 16-04 capacity to be …. 14-01 ceasing to be …. 15-74 death, by …. 15-74–15-75 execution of trust, by …. 15-74 removal by court, by …. 15-74, 15-85–15-87 retirement, by …. 15-74, 15-76–15-84 constructive trustee liability …. 13-31 reimbursement …. 13-43 remuneration …. 13-43 corporations …. 14-04 Crown …. 5-20–5-21, 14-12 custodian …. 3-18, 3-20 death of …. 15-74–15-75 director, distinguished …. 2-07 disclaimer of trust …. 15-73 discretion of, in charitable trusts …. 10-62 duties see Trustee’s duties element of trust …. 1-04–1-05 executor distinguished …. 2-40–2-45 fiduciary distinguished …. 2-07–2-08 fiduciary duty …. 2-07

fiduciary relationship …. 2-02 impartiality see Impartiality of trustee incapacity or failure of …. 14-13 infants …. 14-02 investment of trust funds see Investment of trust funds lease renewals Keech v Sandford, rule in …. 13-13 legal or equitable interest in trust property …. 1-05 legal personality distinct from trust …. 1-01 liability see Liability of trustee monopolist, as …. 3-21 municipal corporations …. 14-11 NSW Trustee …. 14-08 obligation to beneficiary …. 1-03 one or more …. 1-05 personal obligation, under …. 1-10 right in rem …. 1-10 trustee in personam …. 1-10 powers see Trustee’s powers profits see Trustee’s duties protectors and …. 3-20 Public Trustee …. 14-10 registration of assets and documents …. 28-15 removal of …. 15-85 circumstances where removed …. 15-86 costs where …. 15-87 time for …. 15-87 remuneration, right to …. 17-39 retirement of see Retirement of trustee rights see Trustee’s rights

superannuation fund, of see Superannuation third parties, liability to …. 2-12 tracing trust property see Tracing trust property trust obligation …. 1-05 trust property see Trust property trustee companies New South Wales …. 14-05 other jurisdictions …. 14-07 Victoria …. 14-06 unincorporated associations …. 14-14 vesting in …. 28-19 Victoria, State Trustees …. 14-09

Trustee Act 1925 (Eng) variation of terms of trusts …. 17-06–17-08

Trustee companies make-up of …. 14-04 New South Wales …. 14-05 other jurisdictions …. 14-07 Victoria …. 14-06

Trustee’s duties accounts keeping …. 17-13 rendering …. 17-14 act gratuitously …. 17-39 Cradock v Piper, rule in …. 17-41 remuneration …. 17-39 solicitor-trustee, where …. 17-40 adhere to and carry out terms of trust …. 17-04–17-05 non-statutory qualifications …. 17-05

repairs to property, deviation in case of …. 17-08 statutory qualifications …. 17-06 variation of beneficial interests …. 17-07 bearer securities, custody of …. 17-22 beneficiaries acting impartially between …. 17-11 information as to trust property …. 17-15 inspect trust accounts and documents …. 17-16 overpayments to …. 17-37–17-38 classification of …. 16-01–16-02 dealing with trust property for own benefit prohibited …. 17-42 departure from, injunction to restrain …. 16-03 discretionary powers, where …. 16-08 foreign property, delegation where …. 17-32 impartiality see Impartiality of trustee information, to supply …. 17-13, 17-15 beneficiaries, to …. 17-15 strangers, to …. 17-17 insurance …. 17-19 investment of trust funds see Investment of trust funds not to delegate …. 17-23 pay and transfer trust property and income overpayments …. 17-37–17-38 right persons, to …. 17-35 New South Wales legislation …. 17-36 person claiming title, where …. 17-35 trust property destroyed or stolen, where …. 17-35 positive and negative …. 16-02 power coupled with …. 16-05, 16-16 profiting by trust prohibited …. 17-39, 17-42, 17-49

reasonable care, to exercise …. 17-18 statutory right to delegate …. 17-24, 17-31 agents, employment of …. 17-31 impact of …. 17-31 state legislation …. 17-25–17-29 comparison of provisions …. 17-30 superannuation funds, under see Superannuation terms of trust, become acquainted with …. 17-01 title deeds, custody of …. 17-21 trust funds …. 17-20 trust instrument beneficial interests under …. 17-07 exempting clauses …. 16-19–16-20 fraud or deliberate misconduct, where …. 16-20 not impeach validity of …. 17-03 significance of …. 16-17 statute and, interrelation of …. 16-18 trust property buying dwelling house …. 17-09, 18-22 get in and control …. 17-02 nature and circumstances of …. 17-01 repair and improvement …. 17-08 sale of infant’s property …. 17-10 trustee abroad …. 17-33–17-34

Trustee’s powers appropriation of assets in satisfaction of shares inherent jurisdiction …. 20-70 New South Wales …. 20-71–20-72 valuation …. 20-73 other states …. 20-74

audits and valuation, power to obtain …. 20-55 beneficiaries, in relation to maintenance and advancement inherent jurisdiction …. 20-57 Northern Territory …. 20-69 Queensland …. 20-65 South Australia …. 20-66 Tasmania …. 20-68 Victoria …. 20-64 Western Australia …. 20-67 New South Wales …. 20-58–20-59 advancement …. 20-62 discretion …. 20-63 maintenance …. 20-60–20-61 carrying on business …. 20-42 court’s sanction …. 20-42 creditors …. 20-44 sale of business to company …. 20-45 statutory intervention …. 20-43 classification of …. 16-01 compound debts …. 20-46 compromise claim …. 20-48 court’s approval …. 20-47 states’ trustee legislation …. 20-46 court conferred by …. 20-01 controlling exercise of …. 16-21 discretionary powers …. 16-06–16-15 ambit of discretion …. 16-11 bona fide exercise of …. 16-14

duties where …. 16-08 duty coupled with …. 16-16 fiduciary character of …. 16-07 honesty of intention and fair consideration of issues …. 16-10 mala fides …. 16-09, 16-14 ousting jurisdiction of court …. 16-13 reasons for decisions …. 16-10 court’s power to order …. 16-15 setting aside …. 16-12 infant’s property, powers to appoint trustees …. 20-75–20-76 insurance of property …. 20-35 Australian Capital Territory …. 20-37 New South Wales …. 20-36 Northern Territory …. 20-37 Queensland …. 20-39 South Australia …. 20-37 Tasmania …. 20-40 Victoria …. 20-38 Western Australia …. 20-41 lease of trust property see Lease of trust property mere power …. 16-07 mortgage of trust property …. 20-27–20-29 nature of …. 16-06 receipts, power to give …. 20-49 repairs and improvements to property …. 20-30 compulsory works …. 20-32 statutory provision …. 20-33–20-34 trustees with power of management …. 20-31 sale of trust property see Sale of trust property statute, conferred by …. 20-01

sue and be sued, power to …. 20-56 trust instrument conferred by …. 20-01 exempting clauses …. 16-19–16-20 significance of …. 16-17 statute and, interrelation of …. 16-18 trustee-shareholder, powers …. 20-50 call on shares …. 20-54 company reconstruction …. 20-52 new issue of shares …. 20-53 voting power, exercise of …. 20-51 vesting powers in surviving trustee …. 20-01

Trustee’s rights approach court …. 21-31–21-36 breach of trust, authority to commit …. 21-33 construction of trust instrument, concerning …. 21-32 costs …. 21-36 opinion, advice and direction of court …. 21-34 early distribution of estate …. 21-35 beneficiary’s interest, right to impound …. 21-21 assigned interest …. 21-26 breach of trust by trustee consent of beneficiary …. 21-22–21-25 procedure …. 21-28 trustee-beneficiary …. 21-27 contribution and recoupment …. 21-17–21-20 breach of trust, where …. 21-18–21-20 co-trustees between …. 21-18 claim against …. 21-18

joint and several liability …. 21-17 passive trustee, where …. 21-19 solicitor-trustee …. 21-20 discharge, right to …. 21-29 pay trust money into court …. 21-30 protection from personal loss …. 21-01 reimbursement and indemnity …. 21-02–21-16 bankruptcy or winding-up of trustee …. 21-14 costs …. 21-09 breach of trust, where …. 21-10 lack of reasonableness …. 21-10 obstinacy in pursuing claim …. 21-09–21-10 own benefit …. 21-09 priority …. 21-10 creditor’s right of subrogation …. 21-12 exclusion of …. 21-06 expenses properly incurred …. 21-07 indemnity out of trust assets …. 21-04 insolvent trust, priorities upon administration of …. 21-15 personal indemnity …. 21-05 personal liability of trustee …. 21-02 charges and expenses, reimbursement …. 21-02 exclusion of …. 21-03 liability for debts …. 21-02 liability for torts committed …. 21-02 preferential payments, recovery of …. 21-16 set-off and retainer …. 21-11 statute-barred debt …. 21-08 testamentary creditors …. 21-13

Trusts (Hague Convention) Act 1991 (Cth)

applicable law …. 28-07 determination of …. 28-07 extent of application of …. 28-08 application of …. 28-02, 28-04–29-05, 28-09–28-12 conflicts rules of forum, where …. 28-09–28-10 extra-territorial …. 28-02 public policy, incompatible with …. 28-11 state fiscal powers, application to …. 28-12 conflict of laws …. 28-02 conflicts rules of forum, application of …. 28-09–28-10 definitions …. 28-03 exclusions …. 28-18–28-22 express or implied choice of law …. 28-06 recognition of trusts …. 28-13–28-17 application of more favourable rules …. 28-17 duty to recognise …. 28-14 entitlement of trustee to register …. 28-15 non-recognition of trusts …. 28-16 role of …. 28-01 scope …. 28-03

U Unborn person beneficiary …. 1-07 alteration to terms of trust …. 17-07

Unincorporated associations gifts to …. 9-30–9-32

Unit trusts advantages …. 3-13

disadvantages …. 3-13 family trust, extension of …. 3-10 management trust …. 3-11 ownership …. 3-12 units in …. 3-10, 3-12

Universities see also Education charitable trust for foundation of …. 10-28

V Valuations trustee’s power to obtain …. 20-55

Vesting of trust property appointment of new or additional trustees, on …. 25-02 generally …. 25-01 new trustees, in …. 15-71 remoteness of vesting gift-over on bankruptcy …. 9-20 restrictions on …. 9-18 rule against …. 10-81 retirement of trustee out of court, on …. 25-02 rule against perpetuities see Rule against perpetuities trustee, in …. 28-19 vesting orders, by …. 25-03–25-04 appointment of persons to convey …. 25-10 minor’s property …. 25-11 death of solicitor, where …. 25-05 equitable interest in land and certificate of title lost, where …. 25-05 other statutes, under …. 25-09 Trustee Acts, under …. 25-04, 25-06

effect of …. 25-08 particular provisions …. 25-07

Victoria Attorney-General, powers of …. 10-67 augmentation of capital …. 19-35 beneficiaries appropriation of assets …. 20-74 maintenance and advancement …. 20-64 trustee of infant’s property …. 20-76 charitable and non-charitable gifts …. 10-65–10-66 charitable trust, effectuation of …. 10-80 custodian trustee …. 3-18 minor’s property, persons to convey …. 25-11 retirement of trustee out of court without appointment of new trustee …. 15-80 rule against accumulations …. 9-33 rule against perpetuities duration of perpetuity period …. 9-29 State Trustees …. 14-09 trust property, lease of …. 20-22 renewal of leaseholds …. 20-22 surrender of onerous leases …. 20-22 trustee abroad …. 17-33–17-34 additional …. 15-31 delegation of powers …. 17-26 duty to invest trust funds vary investment …. 18-08 liability lapse of time …. 22-24–22-25

number appointed …. 15-24 trustee companies …. 14-06 trustee’s powers carry on business …. 20-43 compound debts …. 20-46 insurance of property …. 20-38 mortgage of trust property …. 20-29 receipts, power to give …. 20-49 repairs and improvements …. 20-34 sale of trust property …. 20-05 duration of power …. 20-07 exercise of …. 20-13 postponement …. 20-09 sale on terms …. 20-18 separate sets of …. 15-36 variation of beneficial interests …. 17-07 vesting orders …. 25-06–25-07

Voluntary transfers resulting trust, presumption of …. 12-20–12-21

Voluntary trust see also Express trusts completely constituted effect of equity …. 6-02 enforcement …. 6-02 consideration …. 6-25–6-26 constitution …. 6-02, 6-15 application of principles …. 6-05 completely constituted …. 6-02, 6-15 covenant in marriage settlement …. 6-11–6-14 equity will not assist a volunteer …. 6-02–6-04

Fletcher v Fletcher …. 6-09–6-10 Re Pryce …. 6-11–6-14 valuable consideration …. 6-06–6-09 creation …. 6-01 declaration of trust …. 6-22–6-23 direction to third party …. 6-24 incompletely constituted …. 6-02–6-03 effect of equity …. 6-03 interpretation …. 8-01–8-02 transfer to trustee assignment inter vivos …. 6-16 assignment of property, where ineffective …. 6-17 assurance of legal property …. 6-19 chattels …. 6-20 chose in action …. 6-20–6-21 company shares …. 6-20 old system land …. 6-20 Torrens system land …. 6-20 no equity to perfect an imperfect gift …. 6-18 will, by …. 6-16

W Wasting property trustee’s duty to sell …. 19-02 conversion date of …. 19-10 permanent investments …. 19-02 power to postpone …. 19-06 executory limitations …. 19-07 intention of testator …. 19-04–19-05

investments, power to retain …. 19-06

Western Australia augmentation of capital …. 19-35 beneficiaries appropriation of assets …. 20-74 maintenance and advancement …. 20-67 trustee of infant’s property …. 20-76 custodian trustees …. 3-18 duties of trustees variation of beneficial interests …. 17-07 mixed charitable and non-charitable trusts …. 10-66 Public Trustee …. 14-10 recreational charities …. 10-49 rule against accumulations …. 9-33 rule against perpetuities duration of perpetuity period …. 9-29 security, realising …. 18-33 third party contracts …. 2-25 rights at law against promisor …. 2-18 trust property, repair and improvement to …. 17-08 trustee abroad …. 17-33–17-34 additional, appointment of …. 15-31 delegation of powers …. 17-27 municipal corporations …. 14-11 number appointed …. 15-27 separate sets of …. 15-38 trustee companies …. 14-07 trustee’s duty to invest trust funds dwelling house, purchase of …. 17-09

trustee’s powers delegation of …. 17-27 failure to exercise court’s power to order reasons …. 16-15 insurance of property …. 20-41 lease of trust property …. 20-21 renewal of leaseholds …. 20-26 surrender of onerous leases …. 20-26 mortgage of trust property …. 20-29 receipts, power to give …. 20-49 repairs and improvements …. 20-34 sale of trust property …. 20-05 duration of power …. 20-07 exercise …. 20-13 postponement …. 20-09 sale on terms …. 20-18 sue and be sued …. 20-56 vesting orders …. 25-06–25-07

Wills direction to convert …. 26-08–26-09 failure of purposes …. 26-17–26-20 mortgage with power of sale …. 26-11 option to purchase, depending on …. 26-12–26-15 sale on request or with consent …. 26-10 time from which conversion takes place …. 26-16 mutual, voidable in equity …. 13-42 precatory trusts …. 5-09–5-10 secret trust see Secret trust trust created by see Trust created by will voluntary trust

transfer to trustee by will …. 6-16

Winding-up effect on trustee …. 21-14

Writing requirement of …. 7-01 Conveyancing Act 1919 (NSW) s 23C s 23C(1), relationship between paras (a), (b) and (c) …. 7-03 s 23C(1) and (2), relationship between …. 7-04 trust created by will …. 7-02, 7-14–7-36 trust created inter vivos …. 7-02–7-13