Supreme Court New South Wales

• Medium Neutral Citation: Attorney General in and for the State of New South Wales v Homeland Community Ltd [2013] NSWSC 723
• Hearing dates: 30 May 2013
• Decision date: 06 June 2013
• Jurisdiction: Equity Division
• Before: Ball J

Decision

Judicial advice refused

• Catchwords: TRUSTS - judicial advice pursuant to Trustee Act 1925 (NSW) s 63(1) - whether trust property can be used to defend proceedings - whether trustee acting in the best interests of the trust - charitable trusts
• Legislation Cited: Charitable Trusts Act 1993 (NSW); Income Tax Assessment Act 1997 (Cth); Trustee Act 1925 (NSW); Uniform Civil Procedure Rules 2005 (NSW)
• Cases Cited: Application of Macedonian Orthodox Community Church St Petka Incorporated [2006] NSWSC 392; Chesterman v Federal Commission of Taxation (1925) 37 CLR 31 7; Church of the New Faith v Commissioner of Payroll Tax (Victoria) (1983) 154 CLR 120; Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531; Commissioner of Inland Revenue v Raphael [1935] AC 96; Lenyo Pty Ltd; In the matter of Daquion Family Trust [2009] NSWSC 429; Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; Public Trustee v Attorney-General (NSW) (1997) 42 NSWLR 600; Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315; Verge v Somerville [1924] AC 496
• Texts Cited: G E Dal Pont, Law of Charity, (2010) LexisNexis Butterworths
• Category: Principal judgment
• Parties: Attorney General in and for the State of New South Wales (Plaintiff); Homeland Community Limited (ACN 003 609 943) (Defendant)
• Representation: Ms N L Sharp (Plaintiff); J Boyle, Solicitor (Defendant); Crown Solicitor's Office (Plaintiff); Boyle Associates (Defendant)
• File Number(s): 2012/315406
• Publication restriction: Nil

Judgment

Introduction

1 By a notice of motion filed in this proceeding (the Main Proceeding) and dated 29 April 2013, the defendant, Homeland Community Limited (Homeland), which is the trustee of a trust known as the Homeland Foundation Centre of Light (the Trust), seeks judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) (the Act) that it would be justified in applying trust assets in defending a claim brought in the Main Proceeding by the Attorney General under s 6 of the Charitable Trusts Act 1993 (NSW) for an order that Homeland be removed as trustee of the Trust.

2 Homeland's principal asset is a property situated in the Thora Valley near Bellingen (the Property). Constructed on the Property are 20 homes and 5 cabins. The Property is the permanent home for about 27 adults and at least 13 children. The occupants make contributions to Homeland for their right to occupy the Property. The questions on which Homeland seeks advice are not clearly expressed. However, it is apparent that the advice sought by Homeland is that it would be entitled to spend up to $50 000 held in its bank account in defending the Main Proceeding. The amount held in Homeland's bank account has been accumulated largely if not entirely from the occupation fees paid by residents. Homeland does not seek an order that it be permitted to use the Property to raise funds to defend the Main Proceeding.

3 By a notice of motion filed on 7 May 2013 the Attorney General sought leave to file evidence and to make submissions at the hearing of the application for judicial advice. I granted that leave. It is clear from the evidence relied on by the Attorney General (which is most of the evidence filed by the Attorney General in the Main Proceeding) that the Statement of Facts filed by Homeland, in accordance with s 63 of the Act and Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 55.1, gave an inadequate account of the facts relevant to the application for judicial advice. The statement of facts set out below has largely been obtained from evidence filed by the Attorney General.

Factual Background

4 On 17 May 1977 Terrance Kippax Plowright and Bruce Davis purchased the Property. At the time, Mr Plowright ran a centre known as the Awareness Centre, which offered workshops and lectures on "scientific, philosophy, psychological, religious and spiritual understandings and the potential of the human spirit". Mr Plowright ran the centre with the assistance of about 30 volunteers. Mr Davis at the time lived in an experimental community called "Santosha" in Mildura on a property which was owned by Mr Davis's parents. Mr Plowright and Mr Davis met some time in 1976 when Mr Davis and Mr Michael Roads travelled through Sydney to northern New South Wales to look for an appropriate property on which to establish what has been referred to in some of the material as a "Light Centre". The search for a Light Centre appears at least in part to have been inspired by a prayer written by Mr Roads known as the "Prayer of Manifestation". The prayer commences:

We are gathered together Father in your presence to ask for a Light Centre.

The prayer goes on to set out the desired characteristics of the Light Centre (which were ultimately satisfied by the Property). The prayer concludes:

We ask Father for these things to be manifested through your Holy Will. We bow before your infinite plan.

We come before you in love using our rights as creators to create a Centre of Harmony to demonstrate the Limitless Love and Truth of a new age.

We ask for all this to be manifested by the 1st April 1977, when we will leave here putting ourselves in your guidance towards this your Light Centre.

We thank you Father.

5 Mr Davis and Mr Roads found the Property and returned to Sydney where they spoke to Mr Plowright. Together they agreed to raise funds to buy the Property, which they did. The source of the funds is unclear. However, it is accepted that, in addition to Mr Plowright and Mr Davis, other contributors in raising the funds were Mr Roads, Yvonne Siems, Roger Dunston, Anatole Kononewsky and Bruce Hosken. The seven of them became the constituent members of what was known as the "Thora Community College of Light" and, on 29 August 1977, they registered the name "Homeland Centre of Light" and a number of other business names.

6 On 8 December 1977, Mr Plowright, Mr Davis, Mr Roads, Ms Siems, Mr Dunston, Mr Kononewsky and Mr Hosken entered into a deed entitled "Declaration of Trust for Homeland". The deed is expressed to be between Mr Plowright and Mr Davis as trustees and the others as beneficiaries. The deed relevantly records the following:

WHEREAS the Trustees are the registered proprietors of the lands and hereditaments and the chattels and rights described in the schedules hereto (hereinafter called the Property) and WHEREAS the property was purchased by the Trustees from funds entirely supplied by the beneficiaries NOW THIS DEED WITNESSETH that as testified by their execution hereunder the Trustees hold the property upon trust for the beneficiaries and their successors for the latters sole use and benefit absolutely.

7 Following settlement of the sale of the Property, on 17 May 1977 a number of members of the Santosha community and the Awareness Centre moved onto the property and, at the beginning at least, largely lived in caravans there. Included among the first to move onto the property were Mr Mark Davis, Mr Davis's brother. Both Mr Mark Davis and Mr Plowright have filed affidavits in the Main Proceeding giving evidence to the effect that it was their intention at least to establish a community modelled on the Findhorn Foundation in Scotland. Mr Plowright gives the following evidence concerning that community:

4. Findhorn was (and is) an educational community. It had a spiritual basis but was not linked to any particular religious denomination. It held regular workshops. I can recall workshops in a number of different areas including new age psychology, spirituality, the nature of the universe and the nature of human thought.

5. Discussion that I can recall from my time at Findhorn particularly concerned how humanity could develop a new way to work, relate and build in order to survive the oncoming effects of climate change, mass consumerism, narcissism, massive environmental degradation, mass animal extinctions, greed, and lust for power. These subjects were all regularly discussed at Findhorn workshops and other events.

6. I also recall discussion at Findhorn about gaining a new understanding of old religious concepts and beliefs. I recall God being referred to as a Universal Concept rather than a personal being. In relation to Christ, I recall expressions used such as "The Cosmic Christ", "the Christ who fills the universe in all its parts", and "Christ as the Mind of God".

7. I recall workshops and discussions at Findhorn about different religious texts. This included Christianity and the teachings of Jesus, but also some of the teaching of the Koran, or Zen Buddhism, Classical Buddhism, Krishnamurti, Hindi, Jainism, and at times even from the occult, like the Rosicrucians, or The Theosophical Society or Gurdjieff.

The evidence in the Main Proceeding, which does not appear to be disputed, is that Findhorn was established as a charitable trust.

8 On 2 March 1978, Mr Davis, Mr Roads, Ms Siems, Mr Dunston, Mr Kononewsky and Mr Plowright executed a further trust deed (the 1978 Trust Deed). It seems clear that that deed was prepared with the assistance of legal advice.

9 The recitals of the 1978 Trust Deed relevantly record that the parties were:

:... desirous of establishing a Trust to be known as The Homeland Foundation Centre of Light at Thora ... for the purposes of making available to all persons suitable facilities for living according to and studying the natural laws of God as applicable to the earth and its inhabitants and for teaching and propounding those laws in order to promote the physical mental and spiritual well being of and to provide guidance and support for those in need of help and assistance to attain a spiritual way of life.

10 Clauses 1, 2 and 3 of the deed provide:

1. There shall be and there is hereby constituted a charitable Trust known as The Homeland Foundation Centre of Light of which the Trustees shall be Trustees thereof in accordance with the terms contained and implied herein.

2. The property of the Trust shall comprise the lands and hereditaments more particularly described in the Schedule hereto and the business names "The Homeland Foundation Centre of Light", "Homecoming", "Simply Open", "Sweet Earth" and "Sweet Earth Enterprises", together with such other real and personal property as shall from time to time hereafter be created acquired or received by the Trustees ... and such property of the Trust aforesaid together with the income from same shall be held by the Trustees for the purpose of furthering the objects of the aforesaid Trust and for no other purpose and shall be dealt with by us in accordance and those (sic) presents as amended from time to time.

3. The objects of the aforesaid Trust are:-

(a) the advancement of religion and religious studies and practice in any part of the world by teaching, example and demonstration of the validity of the essential truths of all religious and spiritual teachings and by such means to encourage and help those who sincerely seek by the increase of their knowledge and the development of their being to achieve a greater understanding of the purpose and meaning of life and its relationship to God's universal plan;

(b) for the foregoing purposes to maintain at Thora New South Wales aforesaid or elsewhere and as and when expedient to establish elsewhere in any part of the world a college or other teaching centre and to provide residential accommodation for persons attending such college or other teaching centre;

(c) to promote the objects of the Trust by lectures, talks, group discussions and other teaching techniques, by practical demonstration and by the provision of facilities and not only for study and meditation, but for all such activities as shall help in any way to forward the foregoing purposes;

(d) to publish or promote the publication and circulation of literature, films, recordings or other methods from time to time available for the dissemination of information;

(e) to promote research into religious and spiritual studies not necessarily restricted to Christianity and in the discretion of the Trustees to make grants of money for the purpose of assisting any person or persons to pursue at universities, colleges or elsewhere such studies or research.

11 Clause 5 of the trust deed provides:

The general management and control of any real or personal property and the contents thereof forming part of the Trust and used as a teaching centre or college or for administrative, residential or other purposes shall be vested in a Committee of Management whose constitution, powers and procedure shall be regulated by Rules to be made by the Trustees.

12 Clause 11 of the trust deed gives the trustees power to wind up the Trust and, in that event, the power to transfer the Trust assets "to any other trust, institution or body which in the opinion of the Trustees shall have or include among its objects the studies, advancement and encouragement of religion and religious and spiritual studio [sic] and practices provided that such trust, institution or body shall be established for charitable purposes only ...".

13 Clause 12 gave the trustees power to vary or modify the purposes of the Trust provided that the purposes were not varied or modified "so as to cause the Trust hereby constituted to be a Trust for purposes which are not solely charitable or cause the Trust hereby constituted to cease to be recognised as a charitable trust".

14 On the same day the trustees executed the 1978 Trust Deed they executed a document setting out the rules contemplated by cl 5 of the trust deed. Those rules established a committee of management consisting of not less than 11 persons and not more than 25 persons and identify the first members of the committee. Rule 5 relevantly provides:

The Committee of Management shall be responsible for the general management, administration and control of The Homeland Foundation Centre of Light and any college or teaching centre (including any administrative or residential accommodation associated therewith) ...

The rule goes on to identify the functions of the committee as including:

(a) The acceptance of applications for admission to The Homeland Foundation Centre of Light or any college or teaching centre belonging to the Trust and for this purpose the Committee of Management shall establish and maintain a register of members containing such particulars as the committee shall from time to time require.

(b) The determination of fees to be charged in any such college or teaching centre with power to vary, reduce or waive such fees in any particular case;

(c) The planning and carrying out of the Syllabus of any such college or teaching centre;

(d) The employment, management, remuneration and dismissal of teaching, administrative, domestic or other staff;

...

15 It was originally intended that Mr Hosken would execute the 1978 Trust Deed. However, his name was struck out from the deed. It appears that he refused to sign it. In his affidavit, Mr Mark Davis says that he had a conversation with Mr Hosken in early 1978 in which Mr Hosken said words to the effect of:

I agree that there should be a charitable trust for Homeland but I disagree with some of the rules of the Committee of Management. In particular I do not agree that the decision making processes of the Committee of Management should be unanimous. I don't stand in the way of things moving forward but I am not able to sign the document.

Mr Hosken and his wife were in their 50s at the time. The evidence is that they have since died.

16 On 29 November 1979, the trustees appointed as additional trustees Mr Mark Davis, Ms Phyl Hosken (Mr Hosken's wife) and Ms Treenie Roads, although those appointments were not finalised until 11 May 1983 when the original trustees (other than Mr Dunston) executed a deed of appointment of trustees.

17 On 18 July 1983, the trustees executed a deed of variation of trust. The deed of variation deleted cl 5 of the existing deed and instead inserted a clause which vested management of the Trust in the trustees with a power of delegation.

18 Over time, the original trustees ceased to live on the land. According to Mr Mark Davis, Mr Plowright left in late 1979, Mr Roads and his wife moved close by to Bellingen in late 1979, Mr Davis and his wife left in early 1980, Mrs Hosken left in late 1980 and Mr Dunston and his wife returned to Sydney at about the same time. Mr Mark Davis left with his wife in December 1980 and moved to Melbourne. The only original trustee who remained on the Property was Ms Siems.

19 From about that time, there were discussions between the trustees and existing residents of the Property concerning the future direction of the Homeland Foundation Centre of Light.

20 In or around 1987, the then trustees, Mr Plowright, Mr Davis, Mr Kononewsky, Ms Maree Mackintosh and Mr Mark Davis, signed an agreement with a number of the residents on the Property relating to its future. Under the terms of the agreement, the trustees agreed to transfer the assets of the Trust to a company to be formed by the residents, which became Homeland. The agreement contained the following terms:

4. The Memorandum of Company shall contain objects substantially similar to the Trust and of the nature as set out in the draft Memorandum of Association annexed hereto and marked "2" but subject to minor variations as may be agreed between the parties.

5. The Articles of Memorandum of Association shall contain a provision that in the event of the winding up of the Company after payment of its just debts and obligations any surplus shall be gifted to a charity or organisation of a like nature having similar aims and objectives to the Company.

...

7. It is further agreed that at the time of incorporation the land comprised in Certificate of Titles Volume XXXX Folio XXX shall be transferred to the Chrysalis School for Rudolph Steiner Education Ltd for a consideration of $10,000.00 (ten thousand dollars) payable in four (4) annual instalments of $2,500.00 (two thousand five hundred dollars) per annum plus the transferors legal costs in consideration thereof shall be paid to the Company Ltd by Guarantee to be formed in accordance with this agreement.

8. The Members acknowledge and confirm that they agree to maintain and nurture the original essence of "Homeland" as stated in the prayer of manifestation as set out in the annexure hereto and this shall be an ongoing commitment for all members and shall be expressed and protected by the structure of the Memorandum of Articles of the proposed Company Limited by Guarantee.

21 The "Prayer of Manifestation" is not annexed to the agreement. However, the reference to the "Prayer of Manifestation" is clearly a reference to prayer written by Mr Roads in 1977.

22 On 30 December 1988, the existing trustees executed a number of documents the effect of which was that Homeland was constituted the sole trustee of the Trust.

23 A considerable amount of other evidence has been filed in the Main Proceeding concerning the use of the Property following the establishment of Homeland. The Attorney General relies on some of that material as constituting admissions by Homeland that the 1978 Trust Deed established a trust for charitable purposes. Homeland seeks to rely on much of the material as demonstrating that it has never operated as a charitable trust. Nothing more, however, needs to be said about that material in the present context. It is clear that the intention of the parties who executed the 1978 Trust Deed must be derived primarily from the terms of the deed itself and the facts known to the parties at the time: Commissioner of Inland Revenue v Raphael [1935] AC 96 at 142-3.

24 It is, however, relevant to observe that on 21 May 2012, Homeland resolved to amend its constitution. In particular, the memorandum of association setting out the objects of the company were amended to read relevantly as follows:

(a) To take over the present unincorporated association known as the Homeland Foundation Centre of Light including its activities, real property, funds and other assets and liabilities and, in particular, to:

(i) act in accordance with the role and responsibilities of the Company as the Trustee, in respect of the trust deed of 1978 (as amended) establishing the Homeland Foundation Centre of Light;

(ii) maintain an ongoing commitment to maintain and nurture the original essence of "Homeland";

(iii) invoke the highest sources of spiritual energies to work through us, the members and residents, in the manifestation of Homeland as a Light Centre; and,

(iv) work towards the creation of a Centre of Harmony to demonstrate the Limitless Love and Truth of a new age.

(b) To create an environment to encourage and help those who seek a greater understanding of the purpose and meaning of life and in particular to:

(i) maintain that environment for all people to explore and share their spiritual, religious, social and personal values;

(ii) promote natural wholeness and healthy living;

(iii) provide facilities principally for group education, therapy, learning, sharing or for any other educational purpose relating directly to the principal objects of the Company.

(c) To further the vision of a free and loving network of people throughout the planet dedicated to the realisation of the harmony within all creation.

(d) To promote by example and in other ways:

(i) the principles and methods of permaculture, bio-dynamics and other natural approaches to agriculture and horticulture.

(ii) the use of renewable resources and natural energy systems.

(iii) regional self-sufficiency.

(iv) rural re-settlement by hamlet or village clusters according to guidelines which protect the environment.

(v) rural employment in socially and environmentally useful work.

(e) To provide services which will promote the personal, social, educational, spiritual, recreational and economic interests of members and their children.

The parties' contentions in the Main Proceeding

25 As I have said, the Main Proceeding is brought by the Attorney General under s 6 of the Charitable Trusts Act. That section relevantly provides:

(1) Charitable trust proceedings are not to be commenced in the Court unless:

(a) the Attorney General has authorised the bringing of the proceedings, or

(b) leave to bring the proceedings is obtained from the Court.

...

(4) Nothing in this section applies to the bringing by the Attorney General, with or without a relator, of charitable trust proceedings or any other proceedings relating to a charitable trust.

"Charitable trust proceedings" is defined in s 5(1) to mean "proceedings in the Court brought, whether by any trustee of a charitable trust or by any other person, under the Court's statutory or general jurisdiction with respect to any breach or supposed breach of a charitable trust, or with respect to the administration of a charitable trust".

26 The Attorney General alleges that Homeland is not using the Property for the charitable purposes for which the Trust was established. Rather, the Property is being used for the benefit of the members of Homeland (including persons who become members in accordance with by-laws made pursuant to cl 19 of Homeland's articles of association) to establish and operate a residential community that subscribes to the objects set out in the memorandum of association. It is essentially for that reason that the Attorney General says that Homeland should be removed as trustee of the Trust.

27 Homeland's principal defence is that the original trustees failed to establish a charitable trust by the 1978 Trust Deed. It says that the purposes for which the Trust was established could not be described as charitable purposes either because those purposes could not be described as religious or because the trust was never intended to benefit the public or a sufficiently large segment of the public. Homeland also submits that the Trust was not validly created because Mr Hosken did not sign the 1978 Trust Deed. Finally, Homeland submits that the Trust has never operated or called itself a charitable trust. It follows, according to Homeland, that the Attorney General does not have standing under s 6 of the Charitable Trust Act to bring the Main Proceeding.

Relevant legal principles

28 A trust for the advancement of religion is one of the recognised categories of charitable trust: see G E Dal Pont, Law of Charity, (2010) LexisNexis Butterworths at page 159; Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531; Chesterman v Federal Commission of Taxation (1925) 37 CLR 317. "Religion" is defined broadly in this context. For example, in Church of the New Faith v Commissioner of Payroll Tax (Victoria) (1983) 154 CLR 120 at 136, Mason ACJ and Brennan J defined "religion" in these terms:

[T]he criteria of religion are twofold: first, belief in a supernatural Being, Thing or Principle; and second, the acceptance of canons of conduct in order to give effect to that belief, though canons of conduct which offend against the ordinary laws are outside the area of any immunity, privilege or right conferred on the grounds of religion. Those criteria may vary in their comparative importance, and there may be a different intensity of belief or acceptance of canons of conduct among the adherents to a religion. The tenets of a religion may give primacy to one particular belief or to one particular canon of conduct.

Similarly, Wilson and Deane JJ expressed the concept in these terms (at 174):

One of the more important indicia of "a religion" is that the

particular collection of ideas and/or practices involves belief in the

supernatural, that is to say, belief that reality extends beyond that

which is capable of perception by the senses. If that be absent, it is unlikely that one has "a religion". Another is that the ideas relate to man's nature and place in the universe and his relation to things

supernatural. A third is 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. A fourth is that, however loosely knit and

varying in beliefs and practices adherents may be, they constitute an identifiable group or identifiable groups. A fifth, and perhaps more controversial, indicium ... is that the adherents themselves see the collection of ideas and/or practices as constituting a religion.

29 In order for a trust to be a charitable trust it must be "for the benefit of the community or an appreciably important class of the community" (to use the words of Lord Wrenbury in Verge v Somerville [1924] AC 496 at 499). As Dixon CJ explained in Thompson v Federal Commissioner of Taxation (1959) 102 CLR 315 at 321-3:

The tendency of the trust must be to benefit the public, a condition that is satisfied if it tends to the benefit of the public at large, or a class or section of the public. The trusts may be limited in their operations by reference to locality, to conditions of people, to their disabilities, defects or misfortunes and by reference to many other attributes of men and things, yet the trusts may retain their "public" character. Not a little difficulty has been felt in defining the conception of "public", "public charity" or "public benefit" which this involves but the contrast is, of course, to private advantage ...

Large as is the membership of the masonic order in New South Wales it forms but a society of persons bound together as a voluntary association into which members are admitted by the election of the existing members as provided by the rules adopted contractually for the government of the society. The size and importance of the order cannot give it any different character.

It is true that the benefit of the William Thompson Masonic Schools and Hostels is enjoyed by the children of deceased or incapacitated brethren, not the brethren themselves. But as was remarked by Lord Normand in refusing to regard as material a similar distinction in Oppenheim's Case there is no public relationship between parent and child. On the same point Lord Simonds said in that case: "I can make no distinction between children of employees and the employees themselves. In both cases the common quality is found in employment by particular employers."

The fact is that it is part of the advantages which a member of the masonic order obtains in virtue of his membership that his child should become eligible thus to be provided with part of his education and upkeep. (citations omitted).

30 However, where a trust is for the advancement of religion, the court presumes that there is a public benefit unless the contrary is demonstrated: Public Trustee v Attorney-General (NSW) (1997) 42 NSWLR 600 at 604 per Santow J.

31 Section 63 of the Act relevantly provides:

(1) A trustee may apply to the Court for an 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.

(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.

...

32 The operation of s 63 of the Act in the context of charitable trusts was considered by the High Court in Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 (Macedonian Orthodox). The plurality - consisting of Gummow ACJ, Kirby, Hayne and Heydon JJ - made it clear in that case that the court had power, and it was often appropriate, under s 63 to give advice in adversarial proceedings, even where those proceedings involved an allegation of breach of trust and sought removal of the trustee. As the plurality explained (at [114]):

Much emphasis was given in the Court of Appeal to the fact that, in the Main Proceedings, the plaintiffs claim that the Association had acted in breach of trust and that it should be removed as trustee. But as the primary judge pointed out, the principal issue between the parties in the Main Proceedings centres upon the terms of the trust on which the property is held, and the primary judge concluded that it was in the interests of the trust that the uncertainty about those terms should be resolved. Where, as here, the trust is a charitable purpose trust, identifying the dispute between the parties as centring upon allegations of breach of trust and claims for removal of a trustee is an incomplete description of the issues that are tendered in the litigation. It is an incomplete description because describing the dispute in this way suggests that the trustee has no more than a personal pecuniary interest in the outcome of the litigation. That may be the case where a trustee of a private trust is sued for breach of trust in managing the trust fund and beneficiaries claim compensation for losses allegedly sustained as a consequence. But in this litigation the interests at stake are larger and more complex than whether a defaulting trustee should make good the financial consequences allegedly flowing from mismanagement of a trust fund. There is a public aspect to those interests because they concern the administration of a charitable purpose trust.

There is no reason why the same principle should not apply where the issue is whether a charitable trust was created at all. The Attorney General did not suggest otherwise.

33 In considering whether to give judicial advice, it is not appropriate for the court to embark on a determination of the main proceedings. As the plurality explained in Macedonian Orthodox (at [74]):

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. In deciding that question a judge must determine whether, on the material then available, it would be proper for the trustee to defend the proceedings. But deciding whether it would be proper for a trustee to defend proceedings instituted is radically different from deciding the issues that are to be agitated in the principal proceeding. The two steps are not to be elided. In particular, the judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings.

34 One matter the court needs to consider in determining whether it would be proper for a trustee to defend proceedings is the trustee's prospects of success. For that reason, it is usual on an application under s 63 for the trustee to provide the court with advice that the trustee has obtained from a suitably qualified legal practitioner on the prospects of successfully defending the claim. The Attorney General submitted that the court needed to be satisfied that it was more likely than not that the trustee would prevail. In making that submission, he relied on the following statement by Young CJ in Eq in Application of Macedonian Orthodox Community Church St Petka Incorporated [2006] NSWSC 392 at [23]:

[W]here the advice sought is in connection with litigation, the trustee must show not just that it has advice that it is more likely than not that it will be successful, but also that in pursuing the litigation it will be acting in the best interest of the trust.

35 However, in my opinion, the real question is whether the trustee is acting in the best interests of the trust. The trustee's prospects of success will be relevant to that question, but there is no separate threshold that must be met in order for the court to be satisfied that it is in the best interests of the trust that the proceedings be defended. For example, the issue raised in the case may involve the proper interpretation of the instrument creating the trust. In those circumstances, the existence of significant doubt about the true meaning of the relevant provision may be sufficient to justify the trustee defending proceedings in which the interpretation of that provision is in issue. Similarly, where the proceedings have only just been commenced and the material before the court is limited, it may be appropriate to give advice that further investigations are appropriate where it appears that a defence is not unarguable: see Lenyo Pty Ltd; In the matter of Daquion Family Trust [2009] NSWSC 429 at [7] per Brereton J. On the other hand, different considerations will apply where the evidence is largely complete and the trustee is in a position to obtain legal advice on its prospects of success having regard to that evidence.

Consideration

36 Homeland provided the court with an opinion of Mr Willmott SC. It is clear, however, that that opinion was provided before the Attorney General served his evidence. As I have said, that evidence includes detailed evidence of the circumstances in which the Trust was established from persons involved at the time. None of the witnesses relied on by Homeland were involved at the time. Mr Boyle, who appeared for Homeland, submitted that Homeland had not filed its evidence in reply and that it was possible that Homeland would file evidence from witnesses who participated in the establishment of the Trust. There was, however, no evidence to that effect. In those circumstances, little weight can be placed on the opinion of Mr Willmott SC.

37 In my opinion, Homeland has not established that it is entitled to the advice that it seeks.

38 In my opinion, the fact that Mr Hosken did not execute the 1978 Trust Deed cannot provide an arguable defence to the claim that the trust deed established a charitable trust. It is clear that those who did execute the 1978 Trust Deed intended to create a charitable trust and to hold their interests in the Property on trust for that purpose. The evidence of Mr Mark Davis is that Mr Hosken also intended to create a charitable trust and Mr Mark Davis's evidence is consistent with the fact that Mr Hosken remained on the Property for a time and his wife became a trustee of the Trust. Homeland has produced no evidence to suggest that Mr Hosken ever asserted a continuing interest in the Property. Homeland itself claims to be the owner of the Property on the basis of a transfer executed by the trustees. In those circumstances, I do not think that it has an arguable case that Mr Hosken's estate retains a continuing interest in the Property which would in some way or another affect the creation of the trust established by the 1978 Trust Deed.

39 I doubt that it is arguable that the Trust fails as a charitable trust because it is not for the advancement of religion or is not for a public purpose. Homeland submits that the Trust is not for religious purposes because the set of beliefs which formed the basis of the establishment of the Thora Community College of Light do not amount to a religion. That submission, however, misses the point. The question is not whether the original trustees intended to create a religion. There is no evidence that they did. The question is whether they intended to create a trust for the advancement of religion and religious studies and practices by teaching, example and demonstration. It is not necessary for the trust to be established for the advancement of any particular religion. It is difficult to see how it could be said that the parties to the 1978 Trust Deed did not intend to create a trust for the advancement of religion given the terms of cl 3 of that document. Homeland says in its further amended defence that other objects are referred to in cl 3. However, it is clear that those other objects are directed at achieving the object stated in cl 3(a).

40 In addition, there is no evidence to suggest that the original trustees did not intend to create a trust for the public benefit. There is nothing in the 1978 Trust Deed, for example, which suggests that the facilities and services that the Trust was set up to provide were not available to anyone who wanted to take advantage of them.

41 There is, however, a more fundamental problem with Homeland's application. It is not easy to understand precisely how Homeland puts its case in the Main Proceeding. It accepts that it holds the Property on trust. It is not clear whether it asserts that it holds the Property on trust for its members. But whether it does or not does not matter. What Homeland does accept is that, even on its own case, there are a range of possible beneficiaries. If the Trust fails, one possibility (which Homeland does not appear to accept) is that the 1978 Trust Deed evinces a general charitable intent with the result that the trust assets should be the subject of a cy pres scheme. Another possibility is the trust fails altogether with the result that Homeland holds the Property on a resulting trust or a constructive trust for the original donors or for the existing residents. However, whatever the position, it is plain that Homeland is not acting in the interests of the Trust in resisting the Attorney General's application in the Main Proceeding. Rather, it is seeking to advance the interests of its members who are the current residents on the Property. That is made clear by the following submission of Mr Boyle's:

Obviously they are caught by surprise by this action and there's an overriding issue of general justice to give these people, a chance to have their day in court and to have any determination about what the situation is judicially and properly determined. Because that will - if it does arise which is certainly the plaintiff's intention in that proceeding that the place they would be evicted from the place or the place had to be sold or some other trustee is going to take it over, that has very serious public community consequences for that area.

It is not surprising that Homeland should take that position, since it is controlled by the existing residents. However, in taking that position, Homeland is seeking to use trust funds to advance the interests of one class of possible beneficiaries. In those circumstances, it rather than the Trust should bear the costs of doing so.

42 It might be thought that it is appropriate to give the advice that Homeland seeks because Homeland only seeks to use the money in its bank account and that money has been contributed by existing residents of the Property. However, the difficulty with that submission is that it is clear that that money has been paid for the right to occupy the Property. The Property is clearly the subject of the Trust and money paid to Homeland for use of the trust assets must also belong to the Trust. Homeland did not seek to advance a contrary argument.

43 For those reasons, the advice sought by Homeland should be refused. Homeland's notice of motion should be dismissed.

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Decision last updated: 06 June 2013