SPELLSON v GEORGE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY JA, HOPE and YOUNG AJA 31 October, 1 November 1991, 3 April 1992 [1992] NSWCA 293 Trust — Beach of Trust — Consent of Beneficiary Walker v Symonds (1818) 3 Swans 1 (36 ER 751); Duke of Leeds v Earl of Amherst (1846) 2 Ph 117 (41 ER 886); Phillipson v Gatty (1848) 7 Hare 516 (68 ER 213); Burrows v Walls (1855) 5 De G M & G 233 (43 ER 859); Lockhart v Reilly (1856) 25 LJ Ch 697; Stafford v Stafford (1857) 1 De G & J 193 (44 ER 697) ; Gardner v Gardner (1859) 1 Giff. 126 (65 ER 853); Morden v Porter (1860) 20 LJ MC 213; Life Association of Scotland v Siddal (1861) 3 De G F & J 58 (45 ER 800); Farrant v Blanchford (1863) 1 De GJ & S 107 (46 ER 42); Evans v Smallcombe (1868) LR 3 HL 249; R v Slattery (1877) 2 QBD 410; De Bussche v Alt (1878) 8 Ch D 286; Re Garrett (1885) 31 Ch D 1; Evans vBenyon (1887) 37 Ch D 329; Ford v Ford (1887) 10 NE 474; McCarthy v Railroad Corp (1889) 20 NE 182; O'Brien v Cunard SS Co Ltd (1891) 28 NE 266; Chillingworth v Chambers (1896) 1 Ch 685; Cashman v 7 North Golden Gate Gold Mining Co (1897) 7 QLJ 152; Swan v Perpetual Executors & Trustees (1897) 23 VLR 293; Fletcher v Collis (1905) 2 Ch 24; Bavne v Baillieu (1908) 6 CLR 38; Re Page (1910) 1 Ch 489; Glasson v Fuller (1922) SASR 148; Hourigun v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619; O'Connor v S P Bray Ltd (1936) 36 SR 248; Sidebottom v Cureton (1937) 54 WN (NSW) 88; Re Pauling (1962) 1 WLR 86; Bank of New South Wales v Murray (1963) NSWR 515; General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; Holder v Holder (1968) Ch 353; Holder v Holder (1968) Ch 353; Gartside v IRC (1968) AC 553; Tampion vAnderson (1973) 48 ALJR 11; Sargent v ASL Developments (1974) 131 CLR 634; Re Freeston'c Charity (1978) 1 WLR 741; Air Great Lakes Pr, Ltd v KS Easter (Holdings) Pry Ltd (1985) 2 NSWLR 309; Westpac Banking Corp v Aldred (1986) 10 Fam LR 1083; Orr v Ford (1989) 167 CLR 316, . A beneficiary under a discretionary trust was informed by his father- in-law who controlled the Company Trustee of proposals, involving breaches of trust, for the Trust to be wound up. The proposals were not fully worked out at that stage and it was not then certain they would proceed. The beneficiary raised no objection. The beneficiary was a director of the Trustee. Implementation of the scheme required decisions to be made and documents to be executed with the approval of the Board. The beneficiary was not given notice of any such board meeting. He brought proceedings for breach of trust. The defendants, without pleading to the statement of claim, moved for summary dismissal on the ground that the plaintiff, by his silence and inactivity with knowledge, had consented to the breaches. The judge ordered summary dismissal. On appeal: Held: Granting leave to appeal and allowing the appeal (1) summary dismissal was not appropriate because the defence of consent raised triable issues of fact on which the defendants, who had given no evidence, bore the legal onus of proof. In any event the proposed defence required the Court to consider whether "in all the circumstances" it would be "fair and equitable" for the beneficiary to complain of the breach. Such an issue was inherently unsuitable for summary disposal; (2) a decision that a beneficiary's conduct evinced consent despite contemporary silence and later denials involved issues of credit which could only properly be decided after trial; (3) consent to a breach of trust requires proof of a state of mind in the beneficiary and communication of that state of mind to the Trustee; (4) consent by a 2 UNREPORTED JUDGMENTS beneficiary to a breach of trust can only occur when the beneficiary has full knowledge of all material facts; (5) Per Handley JA: The defence of consent to a breach of trust may operate by estoppel and thus require proof of inducement and reliance by the Trustee; (6) Per Handley JA: A beneficiary confronted with knowledge of a possible future breach of trust is not called upon to make an immediate election to object or acquiesce in the proposed breach prior to acquiring full knowledge of all material facts. Handley JA In this appeal I have had the benefit of reading the reasons for judgment of the other members of the Court. I agree with the orders proposed by Young AJA, with the reasons for judgment of Hope AJA and generally with the reasons for judgment of Young AJA. However I wish to add some brief additional reasons of my own. The problems associated with the defendants' attempt to obtain summary dismissal of the proceedings are highlighted by the fact that the 1969 Trust Deed which established the Thomas George Discretionary Trust ("the Trust") was not in evidence nor was the Trust Deed which established the Sir Arthur George Family Trust to which the investments of the Trust were transferred after June 1980 as a result of the breaches complained of. The plaintiff stated in one of his affidavits tendered in the proceedings that he, his then wife, and their children and grandchildren were "contingent beneficiaries" under the Trust. This may mean that they were objects of a discretionary trust as to income or capital or both but in what circumstances and on what terms the Court does not know. A beneficiary under a discretionary trust has an interest in the trust fund which will be protected by a Court of Equity. See Gartside v IRC (1968) AC 553 at 617- 618. On the material presently before the Court it appears that at all relevant times until 7 May 1980 the trustee of the Trust was George Investments Pty Ltd. On that day the company retired as trustee and Lady Renee George was appointed sole trustee in its place. The statement of claim alleges that prior to 2 June 1980 the Trustee was controlled by Sir Arthur George or alternatively by Sir Arthur and Lady George and that the affairs of the Trust were controlled by Lady George, Sir Arthur George or by both of them. However the memorandum and articles of association of the Trustee were not in evidence and although both Sir Arthur George and the appellant were directors, the identity of the rest of the board does not appear. The statement of claim charges that the retirement of the Trustee and the appointment of Lady George as the new trustee was a breach of trust. Subject to that the other breaches charged were committed while Lady George was trustee. Sir Arthur George and the other defendants are sued as persons liable in Equity because they knowingly assisted and participated in the various breaches of trust. It is established by long standing authority that the consent of a beneficiary to conduct by trustees which would otherwise be a breach of trust may be a defence to any action by that beneficiary for that breach. However, as the other judgments demonstrate, the same authorities establish that consent is only a prima facie defence and that the Court must consider in detail "all the circumstances" in order to determine whether it would be "fair and equitable" for that beneficiary to be permitted to complain of that breach. An application for summary dismissal is a most inappropriate proceeding for the determination of this issue where the consent relied upon is informal and is sought- to be inferred from conduct. The reported cases in which the defence has been considered contain surprisingly little analysis of the defence or the manner in which it operates. In the present case the defence, if successful, would operate to extinguish or release URJ SPELLSON v GEORGE (Handley JA) 3 the appellant's interest in the Trust possibly without consideration or perhaps in exchange for a similar interest in the Sir Arthur George Family Trust. The defence upheld by Bryson J was that of consent, strictly so called, not estoppel or acquiescence. In principle consent must be a good defence to proceedings in a court of conscience for breach of trust. There is no reason for a Court of Equity to enforce an equitable obligation in favour of a party who consented to its breach against a party who acted with knowledge of that consent. Consent may take various forms. These include active encouragement or inducement, participation with or without direct financial benefit, and express consent. Consent may also be inferred from silence and lack of activity with knowledge. However consent means something more than a state of mind. The trustee must know of the consent prior to the breach. In the present case the consent relied upon seems essentially to have arisen from silence and inactivity after the appellant had obtained knowledge of the material facts. Reliance was also placed on certain conduct by the appellant as involving participation by him in the breaches. There is authority for the proposition that consent to a breach of trust operates as an estoppel. In Philipson v Gatty (1848) 7 Hare -516 at 523 (68 ER 213 at 217) Wigram VC said:- ... they cannot successfully contend that they have been led into a breach of trust by anything [the beneficiary] either said or did to sanction the loan before it was made. The case of the trustees therefore... must depend upon some subsequent acquiescence on her part in a known breach of trust. In De Bussche v Alt (1878) 8 Ch D 286 at 314 James, Baggallay and Thesiger LJJ said:- If a person having a right and seeing another person about to commit, or in the course of committing an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he ssents to its being committed, he cannot afterwards be heard to complain of the act. This... may be defined as quiescence under such circumstances as that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct. In Swan v Perpetual Executors & Trustees (1897) 23 VLR 293 at 309 Holroyd J said: - The old rule... is that if a cestui que trust concur in a breach of trust he is forever estopped from proceeding against the trustee for the consequences of the breach. Such an estoppel can only affect the cestui que trust's own interest in the trust fund, and it can only debar him from proceeding in relation to the actual breach of trust in which he has concurred." See also Chillingworth v Chambers (1896) 1 Ch 685 at 704, 708 and Fletcher v Collis (1905) 2 Ch 24 at 31, 32, 33, 36 and 37 and compare Evans v Smallcombe (1868) LR 3 HL 249 at 256; and Orr v Ford (1989) 167 CLR 316 at 337-338. If this defence does operate by way of estoppel it would require proof of inducement and reliance thereon by the trustee. There was no evidence to this effect from the present defendants and on an application such as this it would be quite wrong to fill any gaps in the defendants' case by inference. 4 UNREPORTED JUDGMENTS A beneficiary cannot be held to have consented to a breach of trust unless he or she had full knowledge of all the material facts. See In Re Pauling's Settlement Trusts (1962) 1 WLR 86 at 106-108, Life Association of Scotland v Siddal (1861) 3 DeG F & J 58 (45 ER 800) at 74 (806); Farrant v Blanchford (1863) 1 DeG J & S 107 (46 E.R 42) at 119 (46-47). Because the appellant was a solicitor there is no need in this case to consider any requirement that may exist, in some cases, for the consenting beneficiary to have some knowledge of his or her rights. Compare Stafford v Stafford (1857) 1 De G & J 193 (44 ER 697) at 202 (701). On 11 March 1980 the appellant received a memorandum from Sir Arthur George which outlined the latter's proposals involving various trusts and companies including this Trust. On 28 March Sir Arthur George gave the appellant a copy of a letter of advice from an accountant which commented upon some aspects of the proposals. On 3 April he received a further memorandum from Sir Arthur George containing further details. There was no evidence that the plaintiff received any further communication from Sir Arthur George or anyone else which gave him clear and specific information as to what was going to happen and when until after the breaches of trust had taken place. The appellant's evidence was that this was the third proposal from Sir Arthur George to rearrange these trusts and companies since 1977 and that the previous proposals had come to nothing. The appellant was then a director of the Trustee and of LJS Investments Pty Ltd, shares in which comprised the principal investment of the Trust. On their face the implementation of Sir Arthur George's proposals required the convening of meetings of the directors of the Trustee to execute the deed of retirement and new appointment, to allot additional shares to Janango Pty Ltd the proposed trustee of the new Trust, and to register transfers of its shares by the trustee of the Diane Spellson No | and No 2 Trusts and by LJS Investments in favour of Janango. A meeting would also be required of the directors of LJS Investments to authorise the sale of its shares in the Trustee to Janango. Prima facie the appellant was entitled to expect that he would be given notice of those directors' meetings and thus a reasonable opportunity to consider the documents and transactions in their final form before they were executed or implemented. On his evidence this did not happen. He did not know in advance that a new trustee was to be appointed to the Trust on 7 May 1980 and he did not know when each of the other steps involved in the winding up of the Trust would occur. The most that could be said was that the plaintiff was informed by 3 April of some of the details of Sir Arthur George's proposals including his proposal for the winding up of the Trust. Moreover on the present evidence the appellant was not aware prior to the breaches of trust that a final decision had been made that Lady George was to be the new trustee, the final form of the new that Lady George was to be the new trustee, the final form of the new Trust Deed, the final structure of Janango, or the composition of its board of directors. The appellant did not know therefore whether the scheme would definitely proceed, when it would do so, and the form it would take. Moreover, he was not given notice of the directors' meetings at which the necessary decisions were, or should have been, taken and formally recorded. On the present evidence an inference arises that a deliberate decision was made, presumably by Sir Arthur George, to carry the proposals into effect at meetings of the directors of the Trustee and LJS Investments without notice to the URJ SPELLSON v GEORGE (Handley JA) 5 plaintiff. Any deliberate concealment by or on behalf of a trustee would be fatal to any attempt to rely upon an apparent consent thereby procured. The further inference is open that notice was not given because Sir Arthur George feared that the plaintiff would or might object. If consent of this kind is grounded on estoppel a finding of deliberate concealment would also establish that the plaintiff's conduct did not induce any belief that he was consenting and thus would also negative reliance. The remaining question is whether by 3 April 1980 or shortly afterwards the plaintiff was put to an election to either object or acquiesce in Sir Arthur George's proposals. or acquiesce in Sir Arthur George's proposals. In my opinion, on the present evidence, the plaintiff was not called upon to make an election prior to the breaches of trust because he had not yet acquired full knowledge of the material facts. Even if he had done so he would not have been put to.an immediate election. A beneficiary in that situation is entitled to wait and keep his or her options open until called upon to do some unequivocal act to or her options open until called upon to do some unequivocal act to carry the proposed breach into effect or perhaps until confronted with clear evidence that the breach is about to take place. Compare Sargent v ASL Developments (1974) 131 CLR 634 at 656. The plaintiff was not placed in any such position prior to the occurrence of the breaches. Moreover it seems that a trustee is not entitled to put a beneficiary to such an election. In Life Association of Scotland v Siddal (1861) 3 De GF & J 58 (45 ER 800) at 73-74 (806) Turner LJ said:- (1861) 3 De GF & J 58 (45 ER 800) at 73-74 (806) Turner LJ said:- It is the duty of the trustee to observe the trust... and I am not prepared to hold that he can be permitted to escape from the liability incident to that duty by simply informing the cestui que trust 'that he... intends to commit a breach of it. He cannot... throw upon the cestui que trust the obligation of telling him what his duty is, and of cautioning him to observe it... I am not prepared to say that where the trust is definite and clear a breach of trust can be held to have been sanctioned or concurred in by the mere knowledge and non interference on the part of the cestui que trust before his interest has come into possession. It is true that the plaintiffs interest in that case was reversionary. However, I see no reason why the same principles should not apply to any beneficiary. In any event while the interest of a beneficiary under a discretionary trust is a present interest, he or she also has a contingent or future interest dependent upon an exercise of the Trustee's discretion in his or her favour. This makes the position of such a beneficiary similar to one having a reversionary interest. In my view therefore the principles stated by Turner LJ are applicable in the present case. The plaintiff was in a difficult position. He was married to Sir Arthur George's daughter, employed and paid by his father-in-law or by one of his companies and he and his family were living in a house owned by another company owned or controlled by his father-in-law. After he learned of Sir Arthur's proposals he asked his father-in-law for the title to his home to be transferred to a family trust or company controlled by him and his wife. This request was not expressed as the price or condition for his consent but both the plaintiff and Sir Arthur George may have regarded it as such. The trial judge could also decide that a reasonable person in Sir Arthur's position should have realised that any consent by the plaintiff was provisional and conditional on such a transfer. 6 UNREPORTED JUDGMENTS In the event the plaintiff's request was either ignored or deferred. On the present material the conclusion is certainly open that nothing occurred prior to the breaches of trust to make any implied consent unconditional. The difficult position in which the plaintiff was placed is also relevant to the question whether he made any election, whether he ever consented and if so whether in "all the circumstances" it would be "fair and equitable" to allow the plaintiff to complain of the breaches. These conclusions are necessarily based on the evidence presently before the Court. They are not intended to and should not fetter a trial judge who may have to make findings on these issues on the basis of very different materials. For these reasons the appeal should be allowed. Hope AJA I have had the advantage of reading the judgment of Young AJA. T agree with his Honour's orders and generally with his reasons, but I would like to add a few comments on two of the issues. The first of those issues is whether this was an appropriate case to exercise jurisdiction under Part 13 rule 5 of the Supreme Court Rules summarily to dismiss the plaintiff's proceedings. With respect to Bryson J, I am satisfied that this was not a proper case to be dealt with in such a way. First, at any rate in proceedings initiated by statement of claim, it would be rare for it to be appropriate summarily to dismiss the proceedings on the basis of a "confession and avoidance" defence before any defence was formally pleaded. The problems created for the plaintiff because of the absence of a formal defence were exacerbated in the present case because although Bryson J founded his decision on, and the matter was argued in this Court on the basis of, consent by the plaintiff to the alleged breaches of trust, other issues may have been argued by the defendants on the basis of the evidence before the Court. Secondly, as Young AJA has pointed out, it is difficult to conclude that no reasonable tribunal could accept the plaintiff's denial of a central matter charged against him, namely, consent, when he has not been subjected to any cross-examination whatsoever in relation to his denial of having given any consent. And thirdly, the nature of the defence of consent, the need in the present case to spell out consent, if there were one, from the actions of the plaintiff rather than from any formal or explicit consent, and the duty of the Court to consider all the circumstances, make it an inappropriate case to be dealt with summarily. Quite apart from these matters, I am satisfied that the plaintiff's case was not unarguable. The other issue in relation to which I wish to say something is the defence of consent itself. It is clear that consent (or concurrence) by a beneficiary to a breach of trust can be an important element in the defence of the trustee to proceedings brought against him by the beneficiary on the basis of that breach. However, as it seems to me, it is only part of the defence. Consent having been established, the beneficiary does not automatically fail. The Court must consider all the circumstances of the case and decide whether it is fair and equitable that the beneficiary should sue the trustee. This two-pronged nature of the defence of consent in proceedings for a breach of trust would seem to be well established. It appears in what is regarded as the authoritative statement of Wilberforce J in In re Pauling's Settlement Trusts, 'Younghusband v Couttes & Co (1962) 1 WLR 86 at 108, a passage approved by the English Court of Appeal in Holder v Holder (1968) Ch. 353 at 394, 399, and 406, and in Re Freeston's Charity, Sylvester v University College, Oxford (1978) 1 WLR 741 at 754: URJ SPELLSON v GEORGE (Hope AJA) 7 The result of these authorities appears to me to be that the court has to consider all the circumstances in which the concurrence of the cestui que trust was given with a view to seeing whether it is fair and equitable that, having given his concurrence, he should afterwards turn round and sue the trustees: that, subject to this, it is not necessary that he should know that what he is concurring in is a breach of trust, provided that he fully understands what he is concurring in, and that it is not necessary that he should himself have directly benefited by the breach of trust. This approach to the nature of the defence is reflected in the discussion of the nature of consent to a breach of trust to be found in the treatment of trusts in Halsbury's Laws of England, 4th ed, vol. 48, para. 966: Where a beneficiary sues in respect of a breach of trust, then if his consent or concurrence is relied on as a defence to his proceedings the court has to consider all the circumstances with a view to deciding whether it is fair and equitable that he should sue the trustees; but it is not necessary for the purpose of protecting them that the beneficiary should have known that it was a breach of trust in which he concurred, if he fully understood in what he concurred, nor is it necessary that he himself should have benefited from the breach. There is no hard and fast rule that ignorance of a legal right prevents an effective consent being given, but all the circumstances must be looked at to see whether it is just that the complaining beneficiary should succeed against the trustee. There must be a full and frank disclosure so that the beneficiary is put fully in the picture. The authorities relied upon for the first sentence in this paragraph are Re Pauling's Settlement Trusts and the decisions of the English Court of Appeal in which Wilberforce J's statement was approved. The first decision relied on by Wilberforce J in coming to his conclusion as to the nature of the defence of consent was that of Lord Eldon C in Walker v Symonds (1818) 3 Swans 1 at 64; 36 E.R. 751 at 774: It is established by all the cases, that if the cestui que trust joins with the trustees in that which is a breach of trust, knowing the circumstances, such a cestui que trust can never complain of such a breach of trust. I go further, and agree that either concurrence in the act, or acquiescence without original concurrence, will release the trustees: but that is only a general rule, and the Court must enquire into the circumstances which induced concurrence or acquiescence; recollecting in the conduct of that enquiry, how important it is on the one hand, to secure the property of the cestui que trust; and on the other, not to deter men from undertaking trusts, from the performance of which they seldom obtain either satisfaction or gratitude. Later in his reasons: 3 Swans at 74; 36 E.R. at 777, Lord Eldon had this to say about these cases: This is a case of great importance to trustees in general, and illustrates the necessity of attending to every word in transactions of this nature. It is one of the cases which convinced me at a mature period of my judicial life, that it is impossible to comprehend such questions without minute examination of every fact, and reference to all the documents. It is not entirely clear whether Bryson J appreciated that as well as considering the issue of consent, he had to consider also whether it would be fair and equitable in all the circumstances to allow the plaintiff to sue the defendants for the breaches of trust. In his reasons he said this: 8 UNREPORTED JUDGMENTS The personal nature of equitable remedies would appear to make it impossible in principle for them to be granted to a person who participated in the breach of which he complains, or concurred in.or consented to it; he could not have a claim that a court of conscience should compel another person not to behave towards himself in a manner to which he had consented or in which he had participated. This principle is so basic that it tends to be stated only incidentally to exceptions such as. lack of knowledge of rights or of other circumstances. His Honour then added at the end of his judgment: In my view any questions of fact relating to his knowledge or consent are only nominally raised, do not have substance and do not call for trial. If his Honour was intending by these words to deal with what I may call the second prong of the defence, in my opinion he did not direct himself to the proper questions, or deal with them adequately. His Honour's conclusions were based in part on a rejection of what he considered to be subjective as opposed to objective matters. In his reasons, he said in relation to certain matters relied upon by the plaintiff: These submissions are based on assertions by the plaintiff in his evidence about his state of mind; they are not based on any assertions about his behaviour, and in view of what was known to him and his quiescent behaviour, a finding that he had the state of mind which he asserts, and that he was reserving for a suitable occasion the expression of his opposition, would not be one which reasonable people could come to, in my view. Furthermore, it would not be relevant as in my opinion the question of his consent or acquiescence must be judged on an objective view of the meaning of his behaviour in his circumstances, and not on the subjective and uncommunicated state of his mind even if that can adequately be ascertained. With respect to his Honour, I do not think that his rejection of all subjective matters as being irrelevant accords with principle. It will be remembered that Wilberforce J said in relation to the defence of consent that it was necessary that the beneficiary should fully understand what he was concurring the beneficiary should fully understand what he was concurring in. He did not say simply that he must be informed of all relevant matters. "Understanding" can involve at least some matters which are not expressed or communicated. Again the undoubted requirement that in deciding whether it is fair and equitable to allow the beneficiary to sue the trustee, all the circumstances of the case must be considered, and considered minutely, seems to me to require a consideration of some at least, if not all, of the subjective matters relied upon by the plaintiff. Thus, in my opinion, it is very arguable that the plaintiff was entitled to assume that he could keep the position open until he had to exercise his vote as a director of the open until he had to exercise his vote as a director of the relevant companies or to do some similar formal act. Cf. the discussion by Jordan CJ in O'Connor v S P Bray Ltd (1936) 36 SR 248 at 257 and following in relation to the doctrine of election of the circumstances in which a person's actions will not produce an inrevocable result, and where he may change his mind. It may be that on an investigation of the facts, it will appear that the plaintiff understood that the defendants would disregard any such basic requirements of the law and would act as if they could do what they wished with the property and the previously existing trusts by the mere creation of pieces of paper. However I do not consider that matters such as this, albeit subjective matters, may be disregarded by the Court in determining whether the plaintiff is precluded by consent from suing the defendants. URJ SPELLSON v GEORGE (Young AJA) 9 Although there are general statements as to the rules to be applied in this class of case, the exact application of the principles has not yet been worked out, and to a still undefined extent the determination remains a matter of judgment as to fairness and equity. Again insofar as the principles have been decided, they sometimes seem to be expressed more widely or categorically than is justified. Thus although it may not be categorically than is justified. Thus although it may not be directly relevant to the present case, it is commonly put that the fact that the beneficiary does not know that that to which he is consenting is a breach of trust is irrelevant. For this proposition the statement of Wilberforce J in Re Pauling's Settlement Trusts is relied upon. An examination of what Wilberforce J said (this is set out above), and of Evans v Benyon (1887) 37 ChD 329, on which his Lordship relied for his statement (at 349 "consents to and is active in the distribution of" the trust fund), arguably shows that this principle has a of" the trust fund), arguably shows that this principle has a quite narrow as opposed to a general application. Outside those narrow limits it may well be that the fact that a consenting beneficiary did not know he was consenting to a breach of trust could well, be a fact relevant to the issue of fairness and equity. As I have said, this example may not be directly relevant to the present case, but it illustrates the care that must be taken before denying relief to a beneficiary. The case was one involving, among other things, a determination whether the evidence established unarguably that the plaintiff had consented to the alleged breaches of trust, that consent not being an explicit one, but one to be found in his actions. It was also a case where the Court had to consider whether it was fair and equitable that the plaintiff should sue the defendants. Without in any way suggesting what the answer is to these questions, I am satisfied that the plaintiff had an arguable case, and that it could not be said that it was one which should be summarily struck out. Young AJA This is an appeal from Bryson, J sitting in the Equity Division. His Honour reached the view that a motion filed by the defendants to strike out the plaintiff's claim pursuant to Part 13 rule 5(1)(b) or (c) of the Supreme Court Rules should succeed. His Honour accordingly dismissed the proceedings with costs. The plaintiff appealed. It would seem that the better view is that the plaintiff needed leave to appeal in these circumstances; see Re Page [1910] 1 Ch 489 and Tampion v Anderson (1973) 48 ALJR 11. However no objection to competency was filed under Part 51 rule 17A and it was not until written submissions were filed on the hearing of the appeal that the point was raised. Mr Downes, QC, for the appellant, made it clear he wished to argue that the appeal was competent. I can see grounds for such a submission. However the Court did not consider it a useful way to spend its time in hearing such submissions as it was of the view that in any event leave to appeal should be granted. When the motion proceeded before the learned Judge, the parties agreed that his Honour must assume that each of the facts pleaded in the Statement of Claim was true. The defendants as the moving parties then relied on affidavit material sworn by the plaintiff in other proceedings by tendering that material to the Judge. The plaintiff then countered by actually reading two affidavits of the plaintiff, one of which had already been tendered as an exhibit by the defendants. There was no cross examination; indeed, it does not appear that even a transcript was taken of the proceedings. The plaintiff's statement of claim alleged that he was a beneficiary under a discretionary trust, that immediately before 2 June 1980 that trust had large assets, but by reason of 2 June 1980 that trust had large 10 UNREPORTED JUDGMENTS assets, but by reason of rearrangements made in that month the value of the trust assets were considerably reduced. Furthermore, he says that between June and November 1980 the defendants purported to wind the trust up and distribute the whole of its assets to the plaintiffs two children. However those assets, when distributed, were only $12,286, far less than the value of the trust assets prior to 2 June. The plaintiff sued on his own behalf and not as representative of his children or any other discretionary beneficiary under the trust. The defendants never put on a defence. However they moved under Part 13 rule 5 to dismiss the plaintiffs claim on the basis that the plaintiff's case was doomed to failure. This was because, they said, the plaintiff had consented and concurred in the alleged breach of trust and accordingly could not complain in a court of equity about what had occurred. Bryson, J upheld the defendants' submissions. I do not think I can do better than to set out, with words that are not essential to the decision of the instant appeal omitted, his Honour's to the decision of the instant appeal omitted, his Honour's reasons for upholding the defendants' motion:- I see the defence as one of consent by the plaintiff or concurrence by him in a series of breaches of duty, and I do not see the matters argued before me as raising for decision questions of laches, delay or estoppel, nor of acquiescence, a term which might better be applied to conduct and inactivity after breach has occurred.... The personal nature of equitable remedies would appear to make it impossible in principle for them to be granted to a person who participated in the breach of which he complains, or concurred in or consented to it; he could not have a claim that a Court of conscience should compel another person not to behave towards himself in a manner to which he had consented or in which he had participated. This principle is so basic that it tends to be stated only incidentally to exceptions such as lack of knowledge of rights or of other circumstances. His Honour then referred to Ford and Lee on Trusts 2nd Ed para 1809 and to various authorities there referred to and continued:- In the present case the plaintiff's affidavit evidence would show that he wishes to put in issue whether, in his own mind, he knew what was taking place, and knew that the scheme of reconstruction... was actually being carried out. The details of the scheme and of what Sir Arthur George (one of the defendants) was doing and having the plaintiff and others do to fulfil it were spelt out in detail and in all their enormity in written communications to the plaintiff which he received and, in as much as he was called on to do so, acted on; manifold breaches of duty and other irregularities were spelt out for him to see, understand and participate in; he did participate, and he had obvious opportunities to disrupt or prevent the fulfilment of the reconstruction if he wished to. In my view any questions of fact relating to his knowledge or consent are only nominally raised, do not have substance and do not call for trial. It seems to me that the issues arising on this appeal can be dealt with under the following five headings:- 1. Procedural matters; 2. What is a consent to a breach of trust; 3. . Must consent be established on a subjective or objective basis; 4. What information must a person have before they disentitle themselves to relief against a breach of trust because of consent; and 5. Consequential matters. URJ SPELLSON v GEORGE (Young AJA) 11 1. I do not think that time need be spent on discussing whether the present involves an appeal from a discretionary judgment or the powers of an appellate court to review a discretionary judgment. If the judgment below is affected by the Judge acting upon some wrong principle, then it would be appropriate for this Court to interfere. Something does need to be said, however, about the procedure that is available under Part 13 rule 5. Particularly when court lists are so over-crowded with serious disputes between citizens or between citizens and government awaiting trial, the Court must be vigilant to see that those cases are not unduly delayed by cases which have no reasonable chance of success clogging the lists. Accordingly there is almost a duty on the trial courts to strike out proceedings as an abuse of process which are doomed to failure. However, it is a very serious matter to deny to a litigant the right to have his or her case heard at a trial, so that extreme care must be used when deciding to make use of the power to strike out under Part 13 tule 5. There are various matters about Part 13 rule 5 which appear to be abundantly clear on the authorities. First, one does not apply the rule where there is any serious conflict as to any matter of fact: Sidebottom v Cureton (1937) 54 WN (NSW) 88. Secondly, one does not deprive a party of the right to go to trial if there is a question of credit involved even though one may have a strong prima facie view as to the result; cf Bank of New South Wales v Murray [1963] NSWR 515. Thirdly, where the defence is one of confession and avoidance it will rarely be appropriate to strike out a statement of claim before a defence has been filed. It is, I think, unhelpful to discuss examples because circumstances in which an application under the rule might be made differ so markedly. However, when the defendant says that he has a defence which must succeed, it is only proper that that defence should be properly pleaded. In the instant case the motion was heard on the basis that the defence was that the plaintiff had consented to the breaches. As will appear from these reasons, that defence might have taken various forms. In the end, his Honour made it quite clear that the case was fought before him as not being one of acquiescence nor of estoppel, but of pure consent or concurrence. However, it must have been very awkward for the plaintiff's counsel to defend the application without the defence being properly pleaded. Finally, it must be remembered that the onus is on the defendants to show that there is no possibility of the claim by the plaintiff succeeding consistently with the pleadings and the facts: Bavne v Baillieu (1908) 6 CLR 382, 387. Although the jurisdiction must be exercised with great care, it is not limited to those cases where argument is unnecessary to point out the futility of the plaintiff's claim: General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125, 130 and see Westpac Bankina Corp v Aldred (1986) 10 Fam LR 1083, 1084-5. As will be apparent from what appears hereunder, the defendants did not plead to the plaintiff's statement of claim. They did not specifically spell out what their exact defence was, they merely proferred a defence of "consent to the breaches". To succeed the defendants had to establish that the plaintiff had consented despite (a) his denial on oath that he had done so, (b) the fact that he was not cross examined on that denial, and (c) the defendants themselves not swearing that they believed at the time that he was consenting. 2. Underhill on Trusts, 13th Ed p 738, says that the rule, to which there are several provisos, is that "A beneficiary who has assented to, or concurred in a breach of trust, or who has subsequently released or confirmed it, or even acquiesced in it, cannot afterwards charge the trustees with it." It is obvious from 12 UNREPORTED JUDGMENTS this passage and from the authorities cited in the footnotes that this defence covers a number of distinct, but superficially similar, situations. First, the matter which disqualifies the beneficiary from bringing an action may be something that the beneficiary has done before or eo instanti with the breach. Alternatively after the breach the beneficiary may have done something which operates as a release in equity of his or her right to complain. Looking at it another way, there may be at least six different categories where concurrence by a beneficiary might deprive that beneficiary of rights. These could be shortly listed as (1) acquiescence, (2) connivance, (3) election, (4) estoppel, (5) waiver, and (6) consent. Although there may be some overlapping and some authorities may use words in slightly different senses, essentially these are different categories. From the passage cited from Bryson, J's judgment earlier in these reasons it is clear that in the instant case the Court is not concerned with acquiescence stricly so called, or estoppel, but with consent.of a kind that disqualifies a person who participates or concurs in a breach of trust from thereafter obtaining equitable relief in respect of that breach. It seems abundantly clear that a person who has induced or encouraged the breach of trust or has received a pecuniary benefit from it cannot obtain relief in respect of that breach. As Lord Cranworth, LC said in Lockhart v Reilly (1856) 25 LJ Ch 697, 701, "It is a proposition revolting to one's common understanding that a person should desire his trustee to do a particular act, he being sui juris, and under no influence, and then afterwards file a bill against him for having done that which he desired him to do." However a beneficiary may be disentitled to relief on this ground where he or she received property as a result of a breach instigaged by someone else. See eg Stafford v Stafford (1857) 44 ER 697, 700. The degree of participation in the breach and the matters which may constitute such participation will need to be considered in more detail such participation will need to be considered in more detail later in these reasons. It is, however, clear that mere knowledge of a pending breach of trust and a failure to protest will not in itself amount to an operative consent to or participation in that breach, (see Phillipson v Gatty (1848) 68 ER 213) at least until a time when the beneficiary is called upon to make some election. Thus if a breach of trust becomes apparent at a company meeting and a beneficiary was present and did not protest, one might conclude that the beneficiary at that stage had acquiesced. Likewise if there was such a meeting stage had acquiesced. Likewise if there was such a meeting before the breach of trust occurred at which the trustee indicated what was about to occur, there may be participation in the breach. That question, however, does not arise in the the breach. That question, however, does not arise in the instant appeal and should be put aside for another day. A large number of cases are cited by Underhill in the footnotes to the passage which I have quoted. I have read all of them but most of them are not relevant to the present case. However, it is useful to cite briefly from three of them. In Walker v Symonds (1818) 36 ER 751, 778, Eldon, LC said, "When three trustees are involved in one common breach of trust, a cestui que trust suffering from that breach, and proving that the transaction was neither authorised nor adopted by him, may proceed against either or all of the trustees." His Lordship uses the word "authorised" in lieu of "participated in" or "consented to" which are referred to in other authorities. Evans v Benyon (1887) 37 ChD 329, 344, Cotton, LJ in a judgment which Hannen, P and Lopes, LJ, concurred, said, "That if a person consented to and actively concurred in the distribution of money amongst URJ SPELLSON v GEORGE (Young AJA) 13 his own daughters he must be taken to have assented to the division so that it should defeat any claim he might have had against the trustee. Finally, Underhill refers to a case which has loomed. large in this appeal, namely, the decision of Wilberforce, J as his Lordship then was, in Re Pauling [1962] 1 WLR 86. At 106, his Lordship sets out the corresponding passage from the 11th Edition of Underhill and passages from Walker v Svmonds and Evans v Benvon supra as well as other authorities and then concludes at p 108, "The result of these authorities appears to me to be that the Court has to consider all the circumstances in which the concurrence of the cestui que trust.was given with a view to seeing whether it is fair and equitable that, having given his concurrence, he should afterwards turn around and sue the trustees: that, subject to this, it is not necessary that he should know that what he is concurring in is a breach of trust, provided that he fully understands what he is concurring in, and that it is not necessary that he should himself have directly benefited by the breach of trust." That passage has been directly approved in subsequent cases; see eg Holder v Holder [1968] Ch 353 at 369 and 394 and Re Freeston's Charity [1979] 1 All ER 51, 62. Accordingly it is quite clear that the degree of co-operation by a beneficiary in a breach of trust which will disqualify that beneficiary from bringing proceedings has never been defined with precision. This of itself demonstrates that the present case is inherently not a suitable one for summary judgment under Part 13 rule 5 because the ultimate result must depend on all the facts and circumstances. Bryson, J did not, however, find any difficulty about this matter and it is necessary to note what his Honour did in order to see whether his decision can stand. order to see whether his decision can stand. The following summary is taken from his Honour's judgment. On 11 March 1980 the plaintiff received a memorandum from Sir Arthur George of that date with an attached document headed "Proposed Reconstruction of George Investments Groups". He looked through it and made alterations. From these documents He looked through it and made alterations. From these documents the plaintiff became aware that Sir Arthur George was the plaintiff became aware that Sir Arthur George was considering the implementation of a plan whereby three existing trusts including the trust in question would be terminated and trusts including the trust in question would be terminated and the investments held by them transferred to a new trust. The the investments held by them transferred to a new trust. The plaintiff made some notes. Shortly after 28 March Sir Arthur George gave the plaintiff a copy of a letter of advice from an accountant commenting on a proposed reconstruction and on a few accountant commenting on a proposed reconstruction and on a few clauses in a proposed trust deed. The plaintiff made some clauses in a proposed trust deed. The plaintiff made some comments to Sir Arthur George about this document, dealing only with incidental and minor matters. On 3 April 1980 the with incidental and minor matters. On 3 April 1980 the plaintiff received another memorandum from Sir Arthur George dealing with the proposed reconstruction. This memorandum directed a Mr Caldwell, a solicitor and a partner of Sir Arthur George, and the plaintiff do certain things with the command "I George, and the plaintiff do certain things with the command "I want you to do the following". There was also a similar demand want you to do the following". There was also a similar demand made on an accountant. made on an accountant. 14 UNREPORTED JUDGMENTS Before us it was acknowledged by counsel for the first and second respondents that the last document which the plaintiff received which dealt directly with the trust before the acts which for present purposes have been assumed to be breaches of trust was on April 3. Bryson, J said of the documents of 11 March, "In my opinion when the plaintiff saw these documents he was challenged in a very clear manner to voice objections to anybody's carrying in a very clear manner to voice objections to anybody's carrying out any part of the scheme if he was not prepared to conform out any part of the scheme if he was not prepared to conform with the whole of it. As a trained lawyer he ought to have had an unusually clear view that this was so, but it should have been obvious to any reasonable person that events in the proposed reconstruction would begin very soon after 11 March 1980 and that if any part of it was unacceptable so that he was not prepared to join in it or wished to prevent it from happening, he had to act at once. Instead of making any objection the plaintiff went through, correcting errors, ticking parts he approved of and putting question marks or crosses parts he approved of and putting question marks or crosses against parts of which he disapproved, but did nothing to intervene against the carrying out of the main structure of the scheme. It is to be remembered that the case made against the plaintiff was not one of acquiescence after breach but rather concurrence in the breach. Accordingly, although it may perhaps be relevant to look at conduct after the breach, one must focus on what happened before the breach to see whether there was an authorisation of the breach, participation in the breach or concurrence in the breach, phrases that may be used interchangeably. Bryson, J seemed to place some store on the fact that the plaintiff made some ticks or question marks or crosses on the documents he received. There is no evidence as to what these marks meant, and certainly no evidence that they were communicated. 3. It must always be remembered that when the word "consent" is used in any legal proposition, the speaker may be referring to any one of a number of similar, yet legally distinct situations. As I illustrated in my "Law of Consent", pp 20-26, there may be a difference between consent and submission, consent and acquiescence, consent and agreement, consent and assent, consent and concurrence, consent and a situation where a person knows of the facts, hopes that the proposed course will take place but does nothing to assist it. Apart from such distinctions, there may arise various other situations, viz - (a) The situation where X in fact had formed the mental view that he would consent to Y borrowing his boat but Y never asked for such consent and it was not communicated. An example is Morden v Porter (1860) 20 LJ MC 213, which holds that such a situation is not a defence to a charge of theft. (b) X did not in fact consent but Y might reasonably have understood that X had consented. This may be the situation in sexual assault cases; see eg R v Slattery (1877) 2 QED 410, 414, and applies in many other situations as well. and applies in many other situations as well. (c) X has consented to Y's act and has communicated that consent by either words or actions or both. In the instant case it seems accepted that one is dealing with the third situation. That is, one is not looking to see whether reasonable persons in the position of the trustees would have assumed from Mr Speilson's actions or inactions that he had consented, but rather that he did in fact consent. If it was the second situation which was relevant it was significant that there was no evidence before the learned Judge that any of the respondents had that belief. URJ SPELLSON v GEORGE (Young AJA) 15 When taxed with this counsel for the respondents said that the learned Judge could have inferred such a matter. That is correct. However, it must be very rare for a Judge, even at trial, to draw an inference in favour of the party with the onus of proof who refrains from giving direct evidence on the matter. In my opinion no such inference should be drawn on an application to strike out proceedings as doomed to failure on an issue on which the defendants bear the onus of proof. If one is looking at the third situation, that is, whether there was in fact a consent, it is significant that the plaintiff swore that he did not in fact consent. The respondents say that when one looks at the whole of the evidence one can see that the facts speak so clearly that one is entitled, as the learned Judge did, to disregard what the plaintiff says. However it must be a rare case, if ever, where a Court, on a strike out application, can disbelieve the sworn evidence of a plaintiff on an issue on which he does not bear the onus of proof, when he has not been cross examined. Bryson, J said, "In view of what was known to [the plaintiff) and his quiescent behaviour, a finding that he had the state of mind which he asserts, and that he was reserving for a suitable occasion the expression of his opposition, would not be one which reasonable people could come to, in my view. Further it would not be relevant as in my opinion the question of his consent or acquiescence must be judged on an objective view of the meaning of his behaviour in his circumstances, and not on the subjective and uncommunicated state of his mind even if that can adequately be ascertained. Tam not at all sure what "an objective view of the meaning of his behaviour" means in the circumstances of this case. In Air Great Lakes Ptv Ltd v KS Easter (Holdings) Ptv Ltd (1985) 2 NSWLR 309, Mahoney and McHugh, JJA, held that in contract one looks to objective evidence to determine whether the parties have made what the law categorises as a binding contract. Hope, JA, said that one looked to the subjective intentions of the parties, but the other two Judges also said that subjective intention to contract is a matter which the Court takes into account when making its determination. The same principles do not necessarily apply where one is looking to see whether one person has given a unilateral consent. However see whether one person has given a unilateral consent. However if subjective evidence is admissible in contract cases then a fortiori it must be admissible on such an issue. In the instant case the question was whether the plaintiff had consented to the proposed breaches of trust. That means, had the plaintiff proposed breaches of trust. That means, had the plaintiff formed in his mind an attitude of consent and communicated it? If the plaintiff says that he never had any such intention, it is difficult to see how a Court can decide otherwise on an application to strike out a claim as doomed to failure. A party who did not subjectively consent but whose conduct induces another to reasonably believe that he was consenting may be bound by an estoppel. It is not clear however that a true consent will exist in such a case. It is also possible that conduct of an equivocal nature may constitute consent where the person concerned intended to consent. It is certainly true that consent can be manifested by conduct. The classic illustration is O'Brien v Cunard SS Co Ltd (1891) 28 NE 266. There the plaintiff had landed in America and required evidence of vaccination against smallpox before she could leave the ship. She joined a line of people passing by the ship's surgeon. The doctor looked at her arm and said that there was no mark that she had been vaccinated and that he would need to have her vaccinated again. The plaintiff then held up need to have her vaccinated again. The plaintiff then held 16 UNREPORTED JUDGMENTS up her arm to be vaccinated, was vaccinated, and accepted a printed ticket certifying to that fact which she then used to pass ticket certifying to that fact which she then used to pass through quarantine control into the United States. She later sued for assault. The voluntary action of the plaintiff in holding up her arm to a doctor who had a needle that he obviously intended to use to vaccinate her constituted consent to the vaccination. Although she had said nothing, the plaintiff's action indicated that she had formed the intention to consent. However, in dealing with the case, Knowlton, J said at p 266, "If the plaintiff's behaviour was such as to indicate consent on her part, he [the surgeon] was justified in his act, whatever her unexpressed feelings may have been. In determining whether she consented, he could be guided only by her overt acts and the manifestations of her feelings Ford v Ford (1887) 10 NE and the manifestations of her feelings Ford v Ford (1887) 10 NE 474; McCarthy v Railroad Corp (1889) 20 NE 182." In O'Brien's case the facts could only lead to one conclusion. That, however, may not always be the case. Supposing Ms O'Brien, in a sleeveless dress, joined a queue on board the ship which she thought was handing out concession vouchers for attractions which she might visit when she left the ship, but she had joined the wrong queue and was vaccinated by a doctor who thought that the bare arm presented was for doctor who thought that the bare arm presented was for vaccination. In Ford's case, Oliver Wendell Holmes, J, when sitting in the Massachusetts Supreme Court said at p 475, "Without the consent' means without the manifested consent and that the undisclosed emotions of the deserted party do not affect his rights. We think that this view is sustained by the general analogies of the law, as well as by considerations specially applicable to the particular case. If a plaintiff in assault and battery should admit that he hoped that the assault would be committed, and rejoiced when it was, because of the prospect of committed, and rejoiced when it was, because of the prospect of damages, he might still recover if, so far as his demeanour to the defendant was concerned, he stood upon his legal rights. The consent required to disprove the assault is a licence. So, when a wife leaves her husband, he may be glad to be rid of her, but stand upon his rights, and give her a home as long as she but stand upon his rights, and give her a home as long as she will accept it. Of course, proof that he entertained the feelings supposed might make it hard to believe that he did not show them, and thus express his consent to the separation, for the consent can be expressed by conduct as well as by words. But we are not considering the effect of a state of feeling as evidence of overt acts, but its legal operation apart.from any overt acts or conduct expressive of it. The admission in the present case is not merely that, after becoming satisfied of his wife's adultery, the libelant was glad that she remained absent, but, fairly construed, it is that he would not have received her back. This further element by itself is not enough to change our opinion upon the case. When one party terminates the cohabitation by desertion, the other is not bound to take any steps to restore it. If he remains silent until he files his libel, his silence does not take away his right to a decree. Conduct which in itself is proper cannot be made improper by enquiring what he would have done in an event which did not happen. The mode of testing that was for the wife to offer to return.... In general, a person does not lose rights which he may lawfully renounce until he has renounced them by an overt act. URJ SPELLSON v GEORGE (Young AJA) 17 There are, of course, some cases where despite protestations that a person did not consent, his or her acts may show otherwise. One example is McCarthv's case in Massachusetts cited above. Another is the famous line of Lord Byron in Don Juan, "A little still she strove and much repented, and whispering, 'I will ne'er consent,' consented". However a judicial decision that a person's conduct evinced consent despite contemporary protests or later denials involves issues of credit which can only properly be decided after a trial in which witnesses can be cross examined and the tribunal of fact has an opportunity to assess the whole of the relevant conduct in its context. The judgment of Holmes, J cited above is relevant for another reason. Bryson, J said that the plaintiff could not reserve for a suitable future occasion the expression of his opposition but that on or shortly after 11 March he had to make a choice and demonstrate his determined opposition to the proposed breaches. It must be remembered, however, that there was no obligation on the plaintiff to object to the breach of trust until, at the earliest, he had to exercise his vote as a director of the relevant companies or do some other formal act. It may be that at the trial the Judge will come to the conclusion that anyone in the position of Mr Spellson would have realized from past experience that unless he did interfere Sir realized from past experience that unless he did interfere Sir Arthur George would do what he liked and that "tame" accountants would prepare minutes of meetings that never took place. would prepare minutes of meetings that never took place. However it does seem very difficult for a Judge hearing a strike out application to conclude that such circumstances existed and out application to conclude that such circumstances existed and that the plaintiff was not entitled to wait to make his point of view known until after he had full information and when he was view known until after he had full information and when he was asked to participate in the process in some formal way. Although many of the messages from Sir Arthur George seem to be predicated on the supposition that the plaintiff would fall in with anything he wished, this was not necessarily so and indeed the plaintiff, in his affidavit, indicated that at least until certain matters were clarified, he was not necessarily going to give his whole-hearted approval. 4. However, even if the above analysis is incorrect, it is difficult to see how what the plaintiff did could have amounted to a consent. The matter can easily be tested this way. If the trustees were pleading a formal release by deed, they would have to establish that the beneficiary whose action they were to establish that the beneficiary whose action they were resisting had signed the release with full knowledge of all material facts; see eg Burrows v Walls (1855) 43 ER 859, 867-8 and Re Garnett (1885) 31 ChD 1. Why, might it be asked rhetorically, should the trustees be in some superior position when they do not rely on a formal release by deed, but on an informal consent to be gleaned from conduct? All counsel agreed that the degree of knowledge required in a beneficiary before he or she will be prevented from suing the trustee is that laid down by Wilberforce, J, as his Lordship then was, in the passage I have already quoted from Re Pauling [1962] 1 WLR 86, 108. Mr Downes, QC, for the appellant, submitted that broad awareness of what the trustee might be doing was not sufficient, and that the beneficiary had to have full knowledge, but not and that the beneficiary had to have full knowledge, but not necessarily a full understanding, of all the material facts. Here, Mr Downes says, the situation is that Mr Spellson was the son-in-law of a very forceful man. Mr Spellson and his then wife were living in accommodation which was provided by 18 UNREPORTED JUDGMENTS his father-in-law or one of his companies or trusts and he had to tread carefully in any discussions with his father-in-law because he was endeavouring to obtain title or control of his family home. He admits that he saw various memoranda from Sir Arthur George, but he never at any stage saw the final draft of the trust deed. There may well be material differences between the draft which Mr Spellson saw, and the deed as executed. The class of discretionary beneficiaries was increased by including two of the plaintiff's wife's uncles. Moreover as at March/April 1980 there was as yet no finality in the structure of Janango, the proposed trustee of the new trust. The memorandum of 11 March stated that Sir Arthur and Lady George should be the only shareholders and that new articles should be drawn to ensure that control of Janango was vested in a manner approved by them. Mr Downes' points all seem to me to have substance. However it is difficult to evaluate the significance of the first point because the 1969 trust deed was not put in evidence so one just does not know whether there was any power in that deed to expand the class of beneficiaries. Senior counsel for the respondents took the Court through a large number of authorities which consider the requirement that a beneficiary have full knowledge of the material facts before he or she can be held to have consented to a breach of trust. These included Duke of Leeds v Earl of Amherst (1846) 41 ER 886, 888; Life Association of Scotland v Siddal (1861) 45 ER 800, 807; Evans v Smallcombe (1868) LR 3 HL 249; Cashman v 7 North Golden Gate Goldmining Co (1897) 7 QLJ 152, 153-4; Glasson v Fuller [1922] SASR 148; Gardner v Gardner (1859) 65 ER 853; Stafford v Stafford (1857) 44 ER 697 and Hourigan v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619, 651. It is difficult to see how these authorities can affect, at this stage, the validity of the matters raised by Mr Downes. In my opinion these are sufficient to make it realistic to suppose that if they are raised at the trial the Court may find that the appellant did not have such full knowledge as would enable the defence to succeed. 5. It seems to me that whichever way one looks at this matter, this was not a case where it could be said that the plaintiff's suit was doomed to failure and thus it was not appropriate for the proceedings to be dismissed. Accordingly in my opinion the following orders should be made:- Grant leave to appeal. Appeal allowed with costs. Order of Bryson J that the proceedings be dismissed with costs set aside. In lieu thereof order that the defendants' motion for summary dismissal of the proceedings be dismissed with costs. The respondents, if qualified, to have certificates under the Suitors Fund Act. RYN wm Grant leave to appeal. Appeal allowed with costs. Order of Bryson J that the proceedings be dismissed with costs set aside. In lieu thereof order that the defendants' motion for summary dismissal of the proceedings be dismissed with costs. 5. The respondents, if qualified, to have certificates under the Suitors Fund Act. Counsel for the appellant: G K Qownes QC, and F P Carnovale Counsel for the first and second respondent: R B S Macfarlan QC with P Brereton RYN URJ SPELLSON v GEORGE (Young AJA) 19 Counsel for the third and fourth respondent: D Jackson QC with R Dubler Solicitor for the appellant: Briggs Paul 5 Solicitor for the respondents: Corrs Chambers WESTGARTH