Judicial advice (The process)

 
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In an earlier article[1] I summarised the legal principles involved in the court’s jurisdiction to provide a legal personal representative or attorney with judicial advice[2]. This article examines the process involved in seeking that advice.

1.  The application is made in proceedings separate from the substantive litigation, and heard by a judge other than the one seized of that substantive litigation[3].

2.  The application is usually supported by counsel’s opinion[4] as to the prospects of success, and evidence as to the costs likely to be incurred, and the value and composition of the estate[5].

3.  Depending on its relevance in the particular circumstances, the opinion should contain or refer to facts concerning the means of the opposite party to the proceedings, a draft of any proposed statement of claim, the significance of the proposed litigation or other course of action for the trust, estate or principal (as relevant), and why the court’s directions are needed[6].

4.  The application is usually heard in the absence of the other party to the substantive litigation, or (at least) with that other party not being provided with the advice as to the merits (and being excluded from the Court during any submissions that might disclose the content of that advice)[7]. Similarly, counsels’ opinion will not usually be recounted in detail in the court’s reasons, as that opinion remains subject to legal professional privilege[8].

5.  The trustee or attorney’s evidence should be given by witness statement. In order to ensure that, if directions are given, the fiduciary is properly protected by the court’s advice, the fiduciary must ensure full disclosure of relevant matters, even if the case is to proceed with the participation of beneficiaries or the principal as defendants[9].

6.  If judicial advice is sought from the Supreme Court, the statement should comply with Uniform Civil Procedure Rule 2005, r55.1, which provides:

(1)  A statement under section 63 of the Trustee Act 1925:

(a) must be divided into consecutively numbered paragraphs, and
(b) must state the facts concisely, and
(c) must state the question for opinion, advice or direction.

(2) Despite rule 6.12 (2), the originating process in proceedings under section 63 of the Trustee Act 1925 need not state the question for opinion, advice or direction.”

although strict compliance with the rule is not insisted upon[10].

7.  An example of the prayers commonly sought in the summon appear in Application by John William Kellert (No 2) [2018] NSWSC 94 as follows:

“2 That the Court indicate, by way of advice pursuant to s63 of the Trustee Act 1925 (NSW), whether the plaintiffs would be justified in giving effect to the Deed of Settlement and Release dated 11 December 2017 entered into with Albert & May Pty Limited, PAMW Pty Limited, and certain other parties.
2A If not, that the Court indicate, by way of advice pursuant to s63 of the Trustee Act 1925 (NSW), whether the plaintiffs would be justified in:

a. Commencing proceedings seeking confirmation that, on the proper construction of the Will and Codicil of the late Clement Joseph Maloof (the deceased), the property owned by the deceased at 7 Harrow Rd, Bexley fell into residue;
b. Commencing proceedings against Albert & May Pty Limited (A&M) and PAMW Pty Limited (PAMW) seeking Orders under ss461(1)(k) and 467(4) of the Corporations Act 2001 (Cth) that PAMW purchase the shares in A&M owned by the deceased at the date of his death, or alternatively that A&M be wound up;
c. Commencing proceedings against A&M seeking Orders under ss232 and 233 of the Corporations Act 2001 (Cth) that have the effect of providing compensation to the estate of the deceased in respect of the conduct of A&M which has been oppressive to, unfairly prejudicial to, or unfairly discriminatory against, the estate.

3 An order that the plaintiffs’ costs of these proceedings be paid out of the assets of the estate of the late Clement Joseph Maloof on the indemnity basis.”[11].

8.  Where it exercises its discretion, the court has power to direct whether or not notice of the application should be given to persons affected by its decision. The court has limited power to limit the class of persons to whom that notice should be given. Where the court is satisfied that it would be impractical and give rise to unsatisfactory delay if notice had to be given to everybody who might be a discretionary or residuary beneficiary (and therefore someone “whose rights as beneficiary may be prejudiced by the conveyance or distribution”), the Court may “otherwise direct” so that a notice to the entire class does not have to be given[12]. Similarly, the court may otherwise direct where additional time should be provided to those persons[13].

9.  In considering the appropriateness of an application for judicial advice it is worth recalling that other alternatives may be available for a LPR, namely:

  • require funding or an adequate indemnity from the beneficiaries who stand to gain from taking or disputing the proposed action.
  • allowing the competing interested parties to fight out any litigation, with the relevant fiduciary being a party in name only[14].
  • take substantive action which may include seeking a declaration[15].

10.  In deciding to give or not give judicial advice the court will weigh these alternatives as well as factors such as:

  • the merits of the proceedings,
  • the nature of the proceedings,
  • the likely cost of the proceedings and
  • the likely benefit and burden of the proceedings[16].

Darryl Browne[17]

[1] The earlier article can be found at http://brownelinkenbaghlegalservices.com.au/judicial-advice/

[2] The Guardianship Division of the Civil and Administrative Tribunal of NSW (NCAT) also has jurisdiction to give judicial advice to an attorney.

[3] An application for judicial advice in respect of contemplated legal proceedings is often referred to as a Beddoe application after the authority Re Beddoe; Downes v Cottam [1893] 1 Ch 547.

[4] In the application of NSW Trustee & Guardian [2014] NSWSC 423 the court stated that “the opinion can be prepared by any suitably qualified and experienced member of the legal profession”. The court stressed the importance of the adviser’s independence.

[5] Glassock v the Trust Company (Australia) Pty Ltd [2012] QSC 15, [14]; Re Atkinson (deceased) [1971] VicRp 73; [1971] VR 612, 615; Robert Peter Campbell ATF the Joan Macpherson Trust and the Banandra Pastoral Settlement Trust [2016] NSWSC 1751, [35] – [38].

[6] Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328, [17]. The remarks of Palmer J in Re Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247, [80] are worth noting.

[7] Salmi v Sinivuori [2008] QSC 321, [14]- [15].

[8] Loblay and Loblay [2013] NSWSC 1195, [29]; Bianca Hope Rinehart trading as trustee of the Hope Margaret Hancock Trust [2017] NSWSC 282, [11].

[9] Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328, [17] citing Crnjanin v Ioos; Ioos v Crnjanin [2010] NSWSC 750, [28].

[10] See Application by John William Kellert [2017] NSWSC 897.

[11] [2018] NSWSC 94, [7].

[12] Stromovka Pty Ltd as Trustee of the Stromovka Trust [2016] NSWSC 1641, [22].

[13] This may occur if an affected person lives overseas, and the period allowed by UCPR r55.3 (28 days) appears to be insufficient: Brown as executor of the estate of the late Petar Vezmar (aka Peter Vezmar) (No 2) [2016] NSWSC 1752, [9] – [11].

[14] Evans v Evans [1986] 1 WLR 101; Re Dallaway [1982] 1 WLR 756; Alsop Wilkinson v Neary [1996] 1 WLR 1220, 1225; Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247, [62]; Salmi v Sinivuori [2008] QSC 321, [19]- [24]; Tschirn v Australian Executor Trustees Ltd [2016] SASC 149, [67] – [71].

[15] A declaration as to the person entitled to receive a death benefit from a SMSF was the approach taken in Cantor Management Services –v- Booth [2017] SASCFC 122.

[16] Coore –v- Coore [2013] QSC 196, [20]; Tschirn v Australian Executor Trustees Ltd [2016] SASC 149, [73].

[17] Darryl Browne is the principal of BROWNE. Linkenbagh Legal Services. He is an Accredited Specialist in Wills and Estates. He is the Chair of the Law Society’s Elder Law, Capacity and Succession Committee. He facilitates the Law Society’s Elder Abuse Working Group. He is a Councillor of the Law Society, a member of the Specialist Accreditation Board and Futures Committee. He is a member of the State government’s Prevention of Elder Abuse Steering Committee, the Law Council of Australia’s Elder Law and Succession Committee, the Legal Aid Board and the University of Sydney’s Law Extension Committee. He writes monthly Case Notes on wills and estates for LSJ and occasional other articles for that and other journals. He facilitates the Law Society’s online Wills and Probate Procedures for Solicitors. He designed and presents the Masterclass on Powers of Attorney. He is a member of STEP and SMSF Association. The opinions expressed in this article are his own.

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