Section 91 of the Trustee Act 1936 (SA)

The provisions of Section 91 of the Trustee Act 1936 (SA) were considered by Debelle J (ex tempore) in IOOF Australia Trustees Ltd & The Trustee Act 1936 [1999] SASC 461.

Debelle J stated at [2-5]:

2 IOOF’s application is for advice and directions pursuant to s 91 of the Trustee Act 1935 which, in turn, refers to ss 69 and 70 of the Administration and Probate Act 1919. Section 70 has no present application. The combined effect of s 91 of the Trustee Act and of s 69 of the Administration and Probate Act is that a trustee may, among other things, apply to a judge for advice and directions as to matters concerned with the administration of any trust: see s 69(1). Upon hearing the application, the judge may make any order, declaratory or otherwise, as he thinks fit as to the administration of the trust and also as to the costs of the application: see s 69(3).

3 The procedure of obtaining advice and direction is described by Napier CJ in re Hunter [1957] SASR 194 at 195 in these terms. “The Administration and Probate Act preserves the jurisdiction formerly given by Sir George Turner’s Act (see Forster v Schlesinger (1886) 54 LT 51; In re Mallen [1929] SASR 154 at 157). Under that procedure the affidavit, filed in support of the application, is equivalent to a case, stated for the opinion of the Court, in which the trustee vouches for the accuracy of the facts which he is putting to the Court, and asks for advice and directions. The direction given to him protects and indemnifies the trustee against any claim for breach of trust, provided always that the facts have been fully and fairly disclosed, but it leaves the question open as between beneficiaries who have not been cited to see the proceedings.” Neither s 91 of the Trustee Act 1936 nor s 69 of the Administration and Probate Act 1919 require all parties to be served. The question whether ex parte proceedings are appropriate will depend on many factors. It is the responsibility of the trustee to decide whether it is proper to make the application without notice to other interested parties: see re Martin [1958] SASR 365 at 379. An ex parte application is clearly appropriate in this case since the powers vested in IOOF as trustee are very wide in relation to matters the subject of the trust.

4 It is important to note that the application for advice and directions does not proceed to a final determination of the rights of parties. The procedure is not available for the determination of substantive issues between parties: re Hunter (supra) and re Union Trustee Co. of Australia Ltd (1936) QWN 6.

5 The procedure enables the court to advise the trustee whether it is lawful to exercise its discretion in a certain way but it cannot tell the trustee how to exercise that discretion or whether a proposed exercise of discretion is necessarily correct: see Gisborne v Gisborne (1877) 2 App Cas 300 per Lord Cairn at 307; re Osborne (1863) 2 SCR (NSW) Eq 89; re Driller and Nebneson [1972-1973] ALR 735; re Allen-Meyricks Will Trusts [1966] 1 WLR 499 at 503; and re Green [1972] VicRp 98; [1972] VR 848 at 850. There may be instances where the court will decide what will be in the best interests of the trust estate. Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198 is an example. But, where the court is being asked for advice and direction concerning a compromise of litigation, the court can do no more than consider whether it is proper for the trustee to consider a compromise. The terms of the compromise will be for the trustee to determine.

This procedure is inappropriate where the respective rights of beneficiaries and creditors is in issue. In this case a summons should be issued pursuant to the Supreme Court Civil Rules 2006 {Refer to Jacob’s Law of Trusts in Australia (5th ed. 1986 para 2134 and Re Kirkegaard (Dec) [1950] St Qd 144}.

Mayo J in Re Grose (Dec) [1949] SASR 55 at 60 stated:

“The protection given by the section will only be available when all material and relevant facts are substantially as submitted upon the application. If there are omitted circumstances, that are material and relevant, which, if proved, would have altered the advice or direction given, the order may be no defence to the trustees. Trustees are protected even against interested persons not represented, provided the facts submitted are true and complete. Parties represented upon the application will be bound by the judicial advice and direction, but with them, too,the order may not conclude the matter, if material facts are omitted from the case presented by the trustees as against parties not represented (if any).”

Subsection 69(1) and 69(2) of the Administration and Probate Act 1919 state:

(1) The Public Trustee shall, and any trustee, executor, or administrator may, when in difficulty or doubt, apply to a Judge for advice or direction as to matters connected with the administration of any estate, or the construction of any will, deed, or document.

(2) Such application may be made either without notice to or upon summons served upon any of the parties interested.