History of Seeking Judicial Advice

The history of a trustee’s statutory right to seek judicial advice was reviewed by Young J in Re Permanent Trustee Australia Ltd [1994] 33 NSWLR 547.

“…it would appear that the right first came into being by s30 of the Trust Property Act 1862. That section provided that a trustee should be at liberty, without the institution of a suit, to apply to the primary judge in equity for the judge’s opinion on a question, and the application was to be served, or the hearing attended by all persons interested in the application, or such of them as the judge should think expedient. The purpose of the section, obviously, was to avoid the expense of an administration suit and the consequent payment by the trustee of all the assets of the trust into court, to be administered by the court.

The next case in which the matter was consider in England that I have been able to discover is Smith v Croft [1986] 1 WLR 580; [1986] 2 All ER 551, where, in a minority shareholders action, Walton J said at 588:558) that it was tempting to compare the sort of application before him to a Beddoe-type application where:

…”The beneficiaries concerned are joined, and basically whether or not the action proceeds is determined by a majority vote of beneficiaries.

The right of a trustee to seek advice and directions from the court is recognised as general law: Taylor v Garnville (1818) 3 Madd 176 at 178; 56 ER 457 per Leach VC; Goodson v Ellisson (1827) 3 Russ at 589; 38 ER 694 per Lord Gifford MR; Talbot v Earl of Radnor (1834) 3 My & K 252 at 253; 40 ER 96 per Leach MR; Gardiner v Downes (1856) 22 Beav 395 at 397; 52 ER 1160 per Romilly MR; Re Earl of Radnor’s Will Trusts (1890) 45 Ch D 402 at 423; 59 LJ Ch 782 per Lord Esher MR.

South Australia

The Administration and Probate Act 1919 (SA) s 69 applies to trustees as defined in the Trustee Act 1936 (SA) permits a trustee, when in difficulty or doubt, to apply to a judge for advice and directions as to matters connected with the construction of any deed or document.

Refer to Martin v Hayward (1908) SALR 187; Re Jackson [1944] SASR 82; Re Scott (dec’d) [1948] SASR 193; Re Magarey Farlam Lawyers Trust Accounts (no.3) (2007) 96 SASR 337; [2007] SASC 9 at [40]-[47] per Debbelle J; Public Trustee v O’Donnell (2008) 101 SASR 228 [2008] SASC 181 per Gray J.

The Hon Justice Gray stated in Public Trustee v O’Donnell (2008) 101 SASR 228 [2008] SASC 181 at [25-30] :

The Court’s Power to Give Directions

The scope of the Court’s power to give directions to those administering the affairs of others was fully canvassed by McClelland J in Re GB Nathan and Co Pty Ltd (in liq),[7] and more recently by Debelle J in Re Magarey Farlam Lawyers Trust Accounts (No 2).[8] With respect I adopt the summary of the relevant principles as set out in those decisions. With assistance from those decisions, I make the following observations relevant to the within proceedings.

The modern statutory procedure for application for directions by a trustee, executor or administrator, has a pedigree in the United Kingdom. The practice of the English Court of Chancery under the general law extended to giving directions to those entrusted with the administration of property under the control of the Court.[9] The two main classes of such persons were, firstly, trustees of trust property, or executors or administrators of a deceased estate, under administration by the Court pursuant to a decree for general administration and, secondly, receivers (and managers) appointed by the Court in respect of property the subject of litigation. This practice was subsequently legislatively recognised in 1859, through the enactment of section 30 of the Law Property Amendment Act 1859 (UK) (22 and 23 Vict. c 35). Section 30 gave liberty to a trustee, executor or administrator to apply to the Court for opinion, advice or direction on any question respecting the management or administration of the trust, property, or the assets of any testator or intestate.

In 1860, section 30 of the United Kingdom Act was adopted and enacted in South Australia by section 25 of The Property Act of 1860 (SA), which was almost in identical terms to section 30. In 1880, the ability to obtain the advice and direction of this Court was extended to Public Trustee by section 28 of the Public Trustee Act 1880 (SA).

In 1891, section 99 of the Administration and Probate Act 1891 (SA) was enacted, giving liberty to the Public Trustee and any trustee, executor or administrator to apply to a judge for advice or direction as to matters connected with the administration of any estate and the construction of any will, deed or document. Section 99 of the 1891 Act was the immediate predecessor to section 69 of the Administration and Probate Act 1919 (which consolidated and repealed the 1891 Act), and was identical in terms to section 69, save that section 69 is now set out in six subsections which correspond to the four subsections in section 99 of the 1891 Act.

The directions procedure provides protection to an official administrator, be they a trustee or receiver appointed by the Court, but it does not, as a general rule, enable the determination of substantive rights as between parties.[10] In the context of section 69 of the Administration and Probate Act, the following observation of Debelle J in Re Magarey Farlam Lawyers Trust Accounts (No 2)[11] is pertinent: So, where a trustee of the estate of a deceased person applies pursuant to s 69 of the Administration of Probate Act 1919 for the advice or the directions of the Court, those directions protect and indemnify 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 in the proceedings: Re Mallen; Executor, Trustee & Agency Co of South Australia Ltd v Wooldridge [1929] SASR 154 at 157; In Estate of Hunter [1957] SASR 194 at 196. Where it is desirable or necessary to obtain a final determination of the rights of parties, it is necessary to proceed inter parties: Estate of Hunter (ibid). As was noted, however, by McClelland J in Re GB Nathan & Co Pty Ltd (in liq),[12] the Court’s procedures are sufficiently flexible to enable directions proceedings to be changed into substantive proceedings in certain circumstances:

The procedures of the court are sufficiently flexible to enable proceedings commenced as an application for directions to be changed into proceedings for the determination of substantive rights, and this is sometimes a convenient course in order to avoid the need to commence further proceedings involving additional cost and delay: see, eg, Anmi Pty Ltd v Williams [1981] 2 NSWLR 138 at 156-157. However it is important that the distinction between the two kinds of proceedings be not lost sight of or blurred, and such a fundamental change should not be permitted unless the court is satisfied that those affected either consent to that course (see, eg, Re Standard Insurance Co Pty Ltd (1963) 5 FLR 292; 80 WN (NSW) 1355 and Murdoch [[1986] VR 97] (at 100-101)), or will not suffer injustice in consequence of the alteration to the status of the proceedings.

Notes:

[8] Re Magarey Farlam Lawyers (No 2) [2006] SASC 382; (2006) 96 SASR 323 at [20]- [30].

[9] Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 677.

[10] Re Magarey Farlam Lawyers (No 2) [2006] SASC 382; (2006) 96 SASR 323 at [27].

[11] Re Magarey Farlam Lawyers (No 2) [2006] SASC 382; (2006) 96 SASR 323 at [27].

[12] Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 680. See also Re Magarey Farlam Lawyers (No 2) [2006] SASC 382; (2006) 96 SASR 323 at [28].


facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

This tab updated on 16 February 2016