Supreme Court New South Wales

• Medium Neutral Citation: Marshin Holdings Pty Ltd v Attorney General of New South Wales & Ors [2013] NSWSC 326
• Hearing dates: 6 March 2013
• Decision date: 12 April 2013
• Jurisdiction: Equity Division
• Before: White J

Decision

Refer to para [21] of judgment

• Catchwords: EQUITY - trusts and trustees - application for judicial advice under s 63(1) of the Trustee Act 1925 - validity of power to appoint income and capital to anyone in the world except class of excluded persons - construction of trust deed - whether person can be appointed as member of "Appointed Class" under trust deed in its capacity as trustee
• Legislation Cited: Trustee Act 1925
• Cases Cited: Re Manisty's Settlement [1974] Ch 17; Re Hay's Settlement Trusts [1982] 1 WLR 202 Evans v Federal Commissioner of Taxation (1988) 19 ATR 1784
• Category: Principal judgment
• Parties: Marshin Holdings Pty Ltd (Plaintiff); Attorney General of New South Wales (1st Defendant); Teresa Jozefa Tkaczyk - (2nd Defendant); Melissa Naomi Hagenfelds (3rd Defendant); Alan Saffron (4th Defendant); Adam Brand (5th Defendant)
• Representation: Counsel: B Coles QC with A Harding (Plaintiff); R L Seiden (Defendant); Solicitors: TressCox Lawyers (Plaintiff); Crown Solicitors Office (1st Defendant)
• File Number(s): 2012/349675

Judgment

1 HIS HONOUR: The plaintiff, Marshin Holdings Pty Limited ("Marshin Holdings") is the trustee of a trust known as the Marshin Trust. It seeks judicial advice pursuant to s 63(1) of the Trustee Act 1925 on the following questions:

"1. ... whether on a proper construction of the Trust Deed ... and in the events that have happened:

(1) the trusts purportedly created by the Trust Deed are not rendered wholly or partly invalid by any failure to identify with sufficient particularity the persons who are members of the 'Appointed Class' as defined in the Trust Deed;

(2) the powers vested in the plaintiff by clauses 5 and 6 of the Trust Deed to appoint and remove members of the Appointed Class are valid;

(3) the nomination by the plaintiff on 3 September 2012 of the 8 grandchildren of Abraham Gilbert Saffron as members of the Appointed Class, and the declaration by the plaintiff on the same date removing the Arcadia Trust as a member of the Appointed Class, were valid and effective, such that:

(a) the current members of the Appointed Class are the 8 named grandchildren and all 'Eligible Charities' as defined in the Trust Deed;

(b) the plaintiff would be justified (after the outstanding claims for family provision against the Estate (the FPA Proceedings) have been determined) in making distributions of capital and/or income to one or more of the said Eligible Charities and/or the grandchildren;

(4) on a true construction of clause 6 of the Trust Deed, the trustee has power to nominate a person in that person's capacity as trustee, or a company in its capacity as trustee, to be a member of the Appointed Class."

2 Alternatively, it seeks declaratory relief in relation to the same questions.

3 The Marshin Trust was established by a deed dated 30 April 1980. This trust deed cannot be located. But the terms of the trust were amended and restated in a deed dated 3 June 1985. The recital to the deed of 3 June 1985 stated that the deed incorporated all of the variations and was adopted as the Deed of Trust governing the Marshin Trust to the exclusion of the deed dated 30 April 1980.

4 The deed was further amended on 10 June 1993, 29 August 1996, 3 October 2001 and 9 July 2004.

5 The trustee of the Marshin Trust is the residuary beneficiary under the will of the late Abraham Saffron who died on 15 September 2006. If the trusts created by the Marshin Trust Deed were wholly invalid then it would be arguable that to the extent assets were settled on the trustee by the late Mr Saffron, the trustee of the Marshin Trust holds such assets on a resulting trust for Mr Saffron's estate, and such assets might pass on intestacy. The second to fourth defendants to the amended summons are children of the late Mr Saffron who would be entitled on intestacy. The first defendant, the Attorney General, was joined to represent the interests of charities that are discretionary objects under the terms of the trust deed.

6 Clause 2 of the trust deed provides that "the original trustees" (namely, Marshin Holdings) declares that it holds the trust fund upon the trusts contained in the settlement. The trust fund comprises an original sum of $100 and all money, investments or other property paid or transferred to and accepted by the trustee as additions to the trust fund or declared by any person to be held by him or them in trust for the trustees for the purpose of the trust deed and accepted for such purposes. It includes the investments and property from time to time representing the initial sum and all accretions thereto. Clause 3(1)(a) provides that:

"The Trustee shall have power ... to appoint that all or any part or parts of the Trust Fund and/or the income thereof shall be held upon such trusts for the benefit of any one or more to the exclusion of the other or others of the Appointed Class at such age or time or ages or times and if more than one in such shares or proportions and with and subject to such (if any) terms provisions limitations and with and upon such (if any) discretionary powers and trusts for the benefit of them or any of them (and whether any such discretion be exercisable by the Trustees or by any other person or persons) and generally in such manner in all respects of as the Trustees may think fit."

7 Clause 3(1)(b) confers power on the trustee from time to time to pay or apply all or any of the income of the Trust Fund to or for the benefit of all or any one or more to the exclusion of the other or others of the Appointed Class.

8 The "Appointed Class" is defined in clause 1(g) as follows:

"(g) 'the Appointed Class'

(i) All eligible charities

(ii) Such individuals trusts or Companies if any (not being Excluded Persons) as are for the time being in existence before the Closing Date and are the subject of a nomination duly made and not withdrawn pursuant to Clause 6 hereof."

9 "Eligible Charity" is defined as follows:

"(f) 'Eligible Charity'

Any corporation body of persons or trust established for charitable purposes only."

10 "Charitable" is defined as follows:

"(e) 'Charitable'

Charitable in accordance with the laws of New South Wales."

11 "Excluded Person" is defined as follows:

"(d) 'Excluded Person'

(i) any person who is or has been a Trustee or Protector,

and

(ii) any person who shall have provided or undertaken to provide any funds or assets directly or indirectly for the purposes of the settlement constituted by this Deed, and

(iii) any person who has or shall have provided directly or indirectly any funds or assets which by virtue of any appointment or advancement or transfer made in a fiduciary capacity shall have become part of the Trust Fund, and

(iv) the spouse for the time being of any of the persons aforesaid,

(v) any person or class of persons constituted an Excluded Person pursuant to Clause 5 hereof,

(vi) any Company in which any Excluded Person holds any beneficial interest whether as owner of shares stocks or securities issued by such Company or otherwise."

12 Clause 4 provides:

"4. In default of and subject to any and every exercise of the powers conferred by clause 3 hereof, the Trustees shall hold the Trust Fund and the income thereof

(i) Upon trust for so long as the law then applicable to this trust fund may allow to accumulate the whole of the income of this trust fund and add the accumulations (and any income therefrom) to the capital of the trust fund, but with power at any time or times before the closing date to treat all or any part of the accumulations then made as current income.

(ii) On and from the Closing Date upon trust as to both capital and income for such eligible charities as the Trustees may on or prior to the Closing Date by Deed appoint and subject to and in default of any appointment upon trust for charitable purposes generally."

13 Clause 5 provides, in effect, that with the prior written consent of the Protector, the trustee can declare that a person or members of a class shall either cease to be a member of the Appointed Class or be an Excluded Person. Such a declaration can be revoked.

14 Clause 6 empowers the trustee with the prior written consent of the Protector to nominate one or more individuals or companies (none of whom is an Excluded Person) to be a member or members of the Appointed Class.

15 Clause 19 relevantly provides:

"19(i) The Trustees shall exercise the powers and discretions vested in them as they shall think most beneficial for the benefit of all or any of the persons interested under this deed and may exercise (or refrain from exercising) any power or discretion for the benefit of any one or more of them without being obliged to consider the interest of the others or other.

(ii) Subject to the sub-clause (i) of this clause and to any requirements of this settlement providing for the consent of the Protector every discretion vested in the Trustees shall be absolute and uncontrolled and every power vested in them shall be exercisable at their absolute and uncontrolled discretion and the Trustees shall have the same discretion in deciding whether or not to exercise any such power."

16 Prior to 3 September 2012 the sole member of the Appointed Class (other than Eligible Charities) was the Arcadia Trust, the trustee of which was and is Arcadia Securities Pty Ltd. On 3 September 2012 the directors of Marshin Holdings resolved that the Arcadia Trust ceased to be a member of the Appointed Class and that the eight grandchildren of Mr Saffron be nominated as members of the Appointed Class. This was done with the written consent of the Protectors.

17 The principal question raised on the application is whether the power to appoint income and capital of the trust to any individual trust or company in the world other than Excluded Persons is valid. The parties were agreed that the power vested in the trustee was an intermediate bare power and not a trust power and is valid. As this was the common position of each of the parties and is supported by Re Manisty's Settlement [1974] Ch 17, Re Hay's Settlement Trusts [1982] 1 WLR 202, and Evans v Federal Commissioner of Taxation (1988) 19 ATR 1784, I will give judicial advice accordingly. In the absence of any contrary submission it would be inappropriate for me to embark on any analysis of the reasoning underlying the decisions in Re Manisty's Settlement and Re Hay's Settlement Trusts and the conclusion in those authorities that no question of administrative unworkability arises from the existence of the discretionary power to appoint property to anyone in the world, except for a small number of specified persons.

18 The only point of disagreement concerned a submission made by counsel for the Attorney General as to whether the trustee has power to nominate a person as a member of the Appointed Class in that person's capacity as trustee or a company in its capacity as trustee. Counsel for the Attorney General submitted that that question should be answered "no" on the ground that clause 6(i) entitles the trustee to nominate only one or more individuals or companies (none of whom is an Excluded Person) to be a member of the Appointed Class.

19 Para (ii) of the definition of "Appointed Class" provides that the members of the Appointed Class are individuals, trusts or companies nominated pursuant to clause 6. The reference to "trust" in the definition in para (ii) of "the Appointed Class" supports the contention that individuals and companies can be nominated in their capacity as a trustee of a trust. A "trust" is not a legal entity. Hence, the reference to "trust" in the definition of "the Appointed Class" must be to an individual or company in his, her or its capacity as a trustee. Accordingly that question should be answered "yes".

20 As there was no controversy between the parties in relation to the substantive questions, I do not think it appropriate to make declarations as distinct from giving judicial advice. There is no controversy that such declarations would quell.

21 Accordingly, I make the following orders:

1. Order under s 63 of the Trustee Act 1925 (NSW) that the plaintiff be advised that:

(a) the trust created by the Trust Deed dated 3 June 1985 ("Trust Deed") in respect of the Marshin Trust are not rendered wholly or partly invalid by any failure to appoint with sufficient particularity the persons who are members of the "Appointed Class" as defined in the Trust Deed;

(b) the powers vested in the plaintiff by clauses 5 and 6 of the Trust Deed to appoint and remove members of the Appointed Class are valid;

(c) the nomination by the plaintiff on 3 September 2012 of the eight grandchildren of Abraham Gilbert Saffron as members of the Appointed Class, and the declaration by the plaintiff on the same date removing the Arcadia Trust as a member of the Appointed Class, were valid and effective such that:

(i) the current members of the Appointed Class are the eight named grandchildren and all 'Eligible Charities' as defined in the Trust Deed;

(ii) the plaintiff would be justified after the outstanding claims for family provision against the estate have been determined in making distributions of capital and/or income to one or more of the said Eligible Charities and/or the grandchildren;

(d) on a true construction of clause 6 of the Trust Deed, the trustee has power to nominate a person in that person's capacity as trustee, or a company in its capacity as trustee, to be a member of the Appointed Class; and

(e) it would be justified in acting accordingly.

2. Order that the plaintiff's costs of the application be paid on the trustee basis out of the trust estate.

22 I will hear the parties in relation to the defendants' costs.

Decision last updated: 12 April 2013