In Montevento Holdings Pty Ltd v Scaffidi  HCA 48 the High Court affirmed two principles so apparently uncontroversial that you might be left wondering why special leave was granted, but the Court did correct the error made below. In doing so the Court confirmed that:
- a trust deed should in the first instance be construed according to its ordinary natural meaning, in the context of the document as a whole; and
- an individual is distinct from a company of which that individual is the sole shareholder and director.
The Court was called on to consider a clause in a discretionary trust deed that provided “[i]f, and so long as any individual Appointor is a Beneficiary that individual shall not be eligible to be appointed as a Trustee”. The Appointor, a beneficiary, had appointed his company (of which he was sole director and shareholder) trustee of the trust. Another beneficiary issued proceedings for a declaration that the appointment was invalid.
After the claim was dismissed at first instance, a majority of the Western Australian Court of Appeal overturned the decision on the basis that the appointment of the company in fact conferred on the appointor all of the rights and powers of the trustee, because he could direct the trustee company to act as he wished. He was, so the argument ran, in that sense appointed ‘as a trustee’ in contravention of the trust deed.
In dissent Buss JA noted that the trust deed distinguished between corporations and natural persons, and had done so in the clause under consideration by restricting the appointment of any individual Appointor as trustee.
The High Court unanimously rejected the majority’s approach:
The ordinary and natural meaning of the clause is that any natural person who holds the office of appointor may not be appointed as trustee. The words “as a” will not bear the weight which the first respondent sought to place upon them. Rather, when cl 11.03 is read in the context of the whole document, which repeatedly distinguishes between an “individual” (in the sense of a natural person) and a corporation, the clause must be read in the manner indicated by Buss JA.
This decision follows the recent case of Byrnes v Kendle  HCA 26 in treating the formation and construction of trust deeds in the same manner as commercial contracts.
In Byrnes, a question was raised as to whether the formation of a trust was manifested by the objectively perceived intention of the settlor, or whether subjective intention could be taken into account. Mr Kendle’s attempts to deny the existence of an express written trust were defeated when the High Court held that the trial judge should not have taken into account Mr Kendle’s subjective intentions.