Re the Private Practice Trust Fund and Re Section 63 of the Trustee Act, 1925-42 (New South Wales) As Applied and Modified In the Australian Capital Territory By the Trustee Ordinance 1957 As Amended Sca [1990] ACTSC 20 (15 June 1990)

SUPREME COURT OF THE ACT

IN THE MATTER OF THE PRIVATE PRACTICE TRUST FUND AND IN THE MATTER of Section
63 of the Trustee Act, 1925-42 (New South Wales) as applied and modified in
the Australian Capital Territory by the Trustee Ordinance 1957 as amended
S.C.A. No. 327 of 1986
Construction of Instruments

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Construction of Instruments - No new question of principle involved

HEARING

CANBERRA
15:6:1990

DECISION

The summons with which I am dealing seeks advice under s.63 of the Trustee Act (1925) of the State of New South Wales (the Act) applicable in the Australian Capital Territory by virtue of the Trustee Ordinance 1957 (the Ordinance).

2. Robert James Allen, Ian Michael Jeffery and Ramesh Kumar Gupta, who are described as the trustees of the Private Practice Trust Fund (the Fund) seek the following directions:-
"1. Whether any other party, body, person or persons

and if so which party, body, person or persons
should be joined as party to these proceedings.
2. Whether the Trustees ought to commence any
proceedings, and if so what proceedings, against
any former Trustees, and if so which Trustee or
Trustees, in respect of any breach of trust on the
part of such former Trustee or Trustees.
3. Whether the Trustees would be justified in paying out of the
moneys paid in in proceedings No. SC 1747 of 1983 the cost and
expenses incurred in the prepar accounts of (the Fund) and, if
so, orders for the payment out of such amounts as may be
appropriate.
4. A determination as to the person or persons
entitled to the balance of the moneys presently in
Court in proceedings No. SC 1747 of 1983 and
directions for the payment out accordingly.
5. Such further or other order or orders as the Court
deems meet."

3. The moneys referred to in paragraph 4 of the Summons have been paid into Court in action No. SC 1747 of 1983.

4. The genesis of the Fund in respect of which directions are sought is in clause 22 of an Agreement called "Conditions of Service Agreement" (the Agreement) entered into by salaried specialist medical officers employed by the Canberra Hospitals Management Board and its successors. Clause 22 of the Agreement read:-

"RIGHTS OF PRIVATE PRACTICE
22.1 The Board will allow full time specialist medical
officers limited rights to private practice up to
25% of salary. All accounts for services rendered
to private patients by Specialist Medical Officers
employed by the Board, are to be issued by the
Hospital acting as the agent for the Specialists,
in the Specialist's name, only with the prior
approval of the Specialist as to the fee. In no
case shall a fee be charged in excess of the fees
currently fixed in the A.C.T. or in excess of the
relevant 'most common fee' then applicable for the
purposes of Health Benefits.
22.2 From the amounts so collected, the Hospital will
deduct an amount sufficient to equal the costs
incurred by the Hospital consequent upon the
officer engaging in private practice. The net
amount remaining after deduction of these costs,
will be credited to a special account known as the
Private Practice Trust Fund.
22.3 Where specialist medical officers employed by the
Board in specialties where no charges are
rendered, thus preventing any opportunity to
participate in revenue producing private practice,
the Hospital shall pay to the Fund an annual
amount equal to 4% of the salary of such officers.
22.4 The administration of the Trust Fund will be by a
Committee consisting of three representatives of
the specialist medical officers and one
representative nominated by the Board.
22.5 The Trust Fund may be used as follows -
(a) For the payment of travel grants to officers
in connection with study leave as approved by
the Committee.
(b) For the improvement of facilities for private
patient work.
(c) For the payment of subscriptions to
professional associations, journals, books
etc.
(d) For funding research in any particular field
of interest.
(e) For payment of a bonus to salaried staff
specialists by way of a special grant made
annually but so as not to exceed 12 % of the
annual salary of any officer in any one year.
(f) For such other purpose as the Committee may
determine with the approval of the Chairman
of the Board."

5. In due course a committee of four was formed consisting of three representatives of the specialist medical officers, themselves specialist medical officers, and Mr Tozer as the representative nominated by the Board. Mr Tozer eventually resigned from the committee and does not appear to have been replaced. It seems that the members of the original committee, including Mr Tozer, were regarded as trustees. So much appears from a document headed "Private Practice Trust Fund" described as a Declaration of Trust (the Declaration) and bearing date 4 September 1975. The members of the committee, to whom I have referred, were named in the document. I set out some of its provisions, those which seem to me to be relevant. "B. Establishment

A Trust Fund known as 'The Special Purposes
Account (A.C.T. Health Commission Medical
Practitioner Specialists)' will be established by
the Trustees (with the provision that this may in
future be divided into Sub-Accounts if a
two-thirds majority of the contributing
specialists so elect) with the Canberra Branch of
the Commonwealth Bank of Australia.
C. Payments into Special Purposes Account.
(i) All fees due to a full-time medical officer
for private practice engaged upon within the
A.C.T. Health Commission Establishment and
with the consent of the Commission shall be
paid into the Trust Fund; and
(ii) For those full-time medical officers who are
unable to engage upon private practice
the Commission shall pay into the Fund 4%
per annum of the officer's salary, such
payments to be made on the basis of one
quarter of the total annual amount due to be
paid into the Fund each three months with
appropriate adjustments to be made
retrospectively for any retrospective
adjustment in salary.
D. Payments from the Fund shall be administered in
the following order:-
(i) Costs incurred in Administering private
practice activity shall be paid to the
Commission, these to be set at a rate of 20%
of fees collected for clinical practice and
60% of fees collected for radiological
examinations and other diagnostic
examinations as may be agreed from time to
time.
(ii) All costs incurred in administering the
Fund, such costs to be estimated each three
months.
(iii) For each Specialist on behalf of whom fees
are paid into the Fund, a special grant of
up to 12 % per annum of such Specialist's
gross annual salary shall be paid to him,
such grant to be paid each three months as
an amount of one quarter of the total annual
grant, or the total accrued fees less the
above costs in (i) and proportion of
estimated costs in (ii) whichever is less
provided that the Specialist can elect to
allow all or some of such grant to remain in
the Trust Fund.
(iv) Payment to the Commission annually of that
amount remaining which is in excess of 25%
of the combined gross salaries of all
specialists participating in the Trust Fund,
such payments to be made each three months.
(v) For those purposes required in paragraph
22.5 parts (a)(b)(c)(d) and (f) of the
proposed Conditions of Service Agreement for
Specialists employed by the A.C.T. Health
Commission.
(a) For the payment of travel grants to
officers in connection with study leave
as approved by the Committee (the
Trustees).
(b) For the improvement of facilities for
private patient work.
(c) For the payment of subscriptions to
professional associations, journals,
books etc.
(d) For funding research in any particular
field of interest.
(f) For such other purpose as the Committee
may determine with the approval of the
Chairman of the Board.
E. Declaration that the Trustees shall (i) receive
all fees and will hold and administer the Trust
Fund in accordance with above conditions;
(ii) shall hold at least one meeting each month
and may hold as many meetings as they see
fit in any year;
(iii) shall arrange that Auditors shall be
appointed annually and that such Auditors
shall audit the Trust Fund annually;
(iv) shall arrange for a copy of the annual
audited report to be transmitted to each
participating specialist and to the
Commission;
(v) shall arrange a meeting of all participating
specialists at least once each year to
present the audited statement of the Fund.
F. The power of appointing Trustees shall rest with
those specialists participating in the Fund in
respect of three Trustees (these to be elected by
simple majority) and with the Commission which
shall appoint one Trustee."

6. As appears from the affidavit of one of the applicants, Robert James Allen, both the Agreement and the Declaration were drafted by a doctor, one of those originally named as a trustee. Both documents were then submitted to the Canberra Hospital's Management Board for ratification which was duly effected.

7. No annual audit was arranged as was required by sub-paragraph (iii) of Clause E of the Declaration. Consequently the requirements of paragraphs (iv) and (v) of that Clause were not met either. Eventually, Mr Arnold Mann raised for determination by the Court the question of whether the present applicants were in breach of trust in failing to call or arrange a meeting of all participating specialists for the years 1982 and 1983.

8. On 16 November 1983 it was ordered that the trustee should call an annual general meeting of the participating specialists to be held on or before 16 December 1983. It was further ordered that the business of that meeting should include the presentation of the accounts of the Trust, in audited form if that could be arranged by 16 December 1983 but otherwise in unaudited form. The present applicants were ordered to pay the costs of and incidental to the application for those orders which was made by Notice of Motion. The next effective step was an application by Summons for directions for a declaration that the Declaration constituted a resulting trust. On 7 September 1984, by consent, a declaration was made that the Declaration constituted a resulting trust. It was further ordered by consent that accounts, audited on the basis that the trust was a resulting trust, should be completed no later than 5 October 1984 and be circulated by the trustees to beneficiaries by 4.00pm on 5 October 1984. It was further ordered that the trust be wound up, the winding up to take effect on 12 October 1984. Costs were reserved.

9. By 8 October 1984, the auditor engaged to carry out the audit on the resulting trust basis indicated that he was unable to do it on that basis for, I think, reasons which will become obvious in due course. On 12 October 1984 it was ordered that the order by which the Trust was to be wound up should be vacated and that a sum of $6,653.00 held on trust by the trustees should be paid into court or alternatively into an interest bearing account not to be operated on without an order of the court.

10. On 21 February 1986 an order was made that the present applicants should pay Mr Mann's costs of and incidental to his action against them on a solicitor and client basis. By that time, of course, an audit of the Fund had been completed. In fact this was done on or before 26 June 1985. The Auditor's report was qualified because of deficiencies which had been found in the accounting system which had been adopted.

11. To show how the Fund operated it is, I think, sufficient to quote from an interim decision I made in this matter:-

"The audit examination documents included a "Summary of
operations of the Private Practice Trust Fund".
Thereafter there was a statement of transactions of the
Fund by participants for each financial year beginning
with that of 1975/76 and ending with that of 1983/84.
The first year's accounts opened with a balance of nil.
There were collections of $70,560.26, administrative
charges of $10,878.77 and payments of salary bonuses
totalling $30,213.11 and of moneys for the purposes
contemplated by clause 22.5 of the conditions of
employment and clause D(v) of the declaration of trust
totalling $7,288.52. This left a closing balance of
$22,179.86 to which was added, eventually, interest
received and from which was paid
an amount of $30 for legal fees leaving a cashbook
balance of $22,651.21.
That summary indicates sufficiently the way in which
the Fund was administered in its first four years of
existence. In the year ended 30 June 1980 a
substantial change in the method of operation took
place. The opening balance for that year is shown as
$245,979.89. Collections amounted to $538,384.06 and
administrative charges to $101,926.34. Payments of
salary bonuses amounted to $173,289.48 and for the
purposes envisaged in clause 22.5 of the conditions of
employment and clause D of the declaration of trust
payments of $281,531.91 were made. As well, there were
donations of $264,722.53 and refunds of $36,990.91.
With cheques of $215.40 written back there was a
closing balance at the end of the year of $100.00.
A similar approach was taken in subsequent years but it
is unnecessary to set out details except to point out
that there were debit balances in each of the years
ended 30 June 1981, 30 June 1982, 30 June 1983 and
30 June 1984. Cashbook balances for each of those
years were, however, in credit.
What brought about the change of approach was advice
from senior counsel dated 2 August 1979 that there was
a strong argument that the declaration of trust was
void for breach of the Rule against Perpetuities and
that therefore the income received was income of the
doctors and should have been treated as assessable
income. One way of avoiding that was to make donations
which would have been allowable deductions and very
considerable donations totalling $973,106.88 were made
in the four years from 1 July 1979 to 30 June 1983. I
am by no means certain that upon the true construction
of the agreement the income received was not the
property of their employer subject, of course, to its
being dealt with in accordance with the terms of the
agreement. The trustees then in office continued as
though the advice had not been given.
In the year ended 30 June 1984, a marked drop took
place as the trust came to be wound down because fees
were no longer being paid to the Fund in respect of
private practice services furnished by the salaried
specialist medical officers. There was a marked drop
in the level of services provided.
By the end of June 1980 there was a credit of
$39,695.06 at bank which represented accrued interest.
That amount increased by 30 June 1983 to $48,447.32.
Of that amount donations totalling $44,811.72 were made
to the Royal Canberra Hospital and Woden Valley
Hospital leaving a balance of $3,635.60.
The debit balances to which I have referred came about
as a result of accounting difficulties and deficiencies
and the lack of proper records.
Subsequently the present trustees of the Fund became
aware of the donations of $44,811.72 and arrangements
were made for their repayment. They were later paid
into Court as was another amount of $7,133.41, interest
on the Fund.
Accounts were kept in relation to each of the salaried
specialist medical officers who participated in the
scheme. The details of the transactions in relation to
each participant in the scheme are set out in
statements forming part of the accounts eventually
furnished. They speak for themselves and it is
unnecessary to refer to them in detail.
There is, however, one set of entries to which
attention ought to be directed particularly. In the
year ended 30 June 1979 the account of one of the then
trustees, Dr Dhall, in the Fund was overdrawn by
$33,282.89. The year before his account was in credit
of $9,045.85. Some time during the year ended
30 June 1980 his account came again into credit. The
exact dates when the account first went into debit and
when it was returned to credit do not appear.
According to the auditors' report, other accounts were
in debit at the close of the period for which the
accounts were audited. Only one of these was said to
be the account of a trustee, Dr Dhall. Subsequently,
the auditors advised Dr Dhall that his account was not
overdrawn at all. A similar letter was sent to two
other doctors, not trustees. I accept that evidence as
correct."

(The supposed debit to the account of Dr Dhall just referred to was different from the $33,282.89 referred to in the penultimate paragraph.)

12. Dr Allen has set out the manner of operation of the Fund during his membership of it as follows:-

"10. During the period of my membership of the fund the
fund has operated in the following manner:-

(a) Fees payable to participating specialists for

services provided to private patients of
those specialists have been collected by the
hospital on whose staff the particular
specialist was retained.

(b) The fees received by the hospital were paid

by the hospital into the bank account of the
fund.

(c) Administration fees were paid to the

hospitals from the account of the fund. The
administration fee varied according to the
nature of the services provided by the
specialist concerned as indicated in the
Declaration of Trust. In the case of
radiology fees, the hospital retained its
administration fee from the fees received
from the patient and the hospital in such
case paid to the trustees the fees collected
by the hospital after deducting the
administration fee.

(d) The trustees maintained a record indicating

the amount received by them in respect of
services performed by each participating
specialist.

(e) In respect of each period of three months the

trustees paid to participating specialists a
sum equal to 12 % of the salary payable to
that specialist by the hospital by which he
was employed or the amount standing to his
credit whichever was less.

(f) From time to time participating specialists

made requests to the trustees for payments to
be made for particular projects in which the
participating specialist was involved or for
payments to be made for the purposes of
attendance at conference or for the provision
of other equipment for a particular
participating specialist. At regular
meetings of the trustees, a decision would be
made as to a payment to be made in accordance
with any such request. Payments made
pursuant to a request were made from funds
received by the trustees in excess of the
amounts distributed quarterly by way of
salary bonus as indicated above.

(g) Up to 30 June 1979, payments made for special

projects, travelling and equipment were made
from the excess irrespective of the amount
contributed by the participating specialist
concerned. During the year ended
30 June 1980 advice was received by the
trustees which was communicated to
participating specialists indicating that
participating specialists should treat all
fees received by hospitals in respect of
services provided by them as assessable
income of the particular participating
specialist. That advice resulted in a change
in the administration of the fund in that
from that time payments were made for special
projects, conferences, equipment and the like
in respect of a particular specialist only to
the extent of credit standing to the name of
that participating specialist in the books of
the fund. From that time and in subsequent
years where there was an excess standing to
the credit of a particular participating
specialist in the fund, the excess was made
the subject of donation to a charity
nominated by the particular participating
specialist usually being the Woden Valley
Hospital or Royal Canberra Hospital. As far
as practicable, the whole of the income of
the fund was distributed in that fashion
during the year of receipt."

13. Mr Mann's costs in the earlier proceedings have been agreed and paid.

14. The total cost of the audit was $31,653.51. This amount has been paid by the ACT Health Authority, rightly as I think, in the event.

15. Further costs which fall for consideration in relation to this action are as follows:-

. Dr Lomas - $5,797.54 - it should be noted that of this
amount counsel's fees totalling $1,950.00 had been paid
by the ACT Health Authority on the basis, as I
understand it, that, should it be appropriate, the
Authority will be reimbursed for that amount.
. Mr Mann's costs agreed at $3,300.00 have been ordered
to be paid from the moneys in court.
. The applicants' (the trustees) costs to 16 January 1987
inclusive of counsels fees and totalling $16,045.00 had
been paid by the ACT Health
Authority. The applicants seek that that sum be
reimbursed to the Authority.
. The trustees have incurred further costs which have to
be taken into account.

16. During the course of proceedings I sought information as to how much annual audits of the Fund would have cost had they been carried out as the Declaration envisaged. The Auditors, who are a well known firm of accountants, estimated that for the period from 1 July 1978 to 30 June 1984 the cost of the audit would have been $20,500.00. This estimate assumed that records would have been properly maintained and that the audits would have been trouble free.

17. Dr Frederick Earl Lomas consented to be joined in the action as a party representative of the specialists' interests in the Fund the subject of this action. Objection to his appointment was taken by Dr Arnold Mann, formerly one of the salaried specialist medical officers, but I am satisfied that he was a person who could properly represent the interests in the Fund of the specialists. Eventually Dr Mann withdrew from the proceedings but his participation in them to that point was most helpful. Dr Lomas was represented by counsel at the hearing and I am grateful for his assistance and for that of counsel who represented the Trustees and the Health Commission.

18. Almost from the start of the operation of the Fund, doubts were expressed as to its validity as a trust.

19. By letter dated 30 July 1976 the then Deputy Crown Solicitor to the Australian Capital Territory advised the Commissioner of the Capital Territory Health Commission, inter alia, as follows:-
"3. Under sub-clause 22.1 all accounts in respect of

private work performed by a salaried specialist are to
be issued by the Hospital. However, in issuing the
accounts the Hospital is acting "as agent for the
specialists in the specialist's name". Presumably,
having regard to the fact that the accounts are to be
issued in the "Specialist's name", the word
"Specialists" should be understood to mean the
individual specialist who performed the duty which
resulted in the fee being charged. The capacity in
which the Hospital is to collect moneys paid is not
specified but it would presumably be interpreted in the
same as that in which it issued the accounts.
4. From the moneys so collected the Hospital is to
deduct its expenses. The balance is then "credited to
a special account known as the Private Practice Trust
Fund" (sub-clause 22.2). In addition the Hospital will
pay to the fund an amount equal to 4% of the salary of
officers who, because of being employed in specialities
where no charges are rendered, has no opportunity to
participate in revenue producing private practice.
Sub-Clause 22.4 provides that the Fund will be
administered by a Committee consisting of three
representatives of the salaried specialists and one
representative nominated by the Commission. The
Agreement then provides by sub-clause 22.5 the way in
which the moneys in the fund may be used. The Deed
also provides by Clause D for the funds to be
administered in a certain order. That order includes
objects which are not included in sub-clause 22.5 of
the Agreement for e.g. costs of administering private
practice activities (D (i)), costs incurred in
administering the funds (D (ii)), payments to the
Commission of funds in excess of 25% of the combined
gross salaries of the salaried specialists (D (iv)).
Furthermore, sub-clause D (iii) of the Deed limits the
amount of payments that may be made to the salaried
specialists whereas no such limitation appears in
sub-clause 22.5 of the Agreement.
5. In my opinion it is doubtful that a trust has been
validly created. In order to create an express trust
it is necessary that a sufficiently clear intention
that this be done is shown and I doubt whether a
provision in the Agreement to credit the funds "to a
special account", particularly when read in conjunction
with sub-clause 22.1 of the Agreement could be
interpreted as doing anything more than bringing about
an agency relationship. In any event, any trust
created in pursuant (sic) of the Agreement would have
to be read as subject to the Agreement and
to the extent of any inconsistency would be invalid, if
not entirely, to the extent of the inconsistency.
6. Accordingly, I do not consider that sub-clause
D(iv) of the Deed makes valid provision for the
disposal of funds received by the hospitals which
exceed 25% of the combined gross salaries of the
salaried specialists and that these funds should be
dealt with in accordance with sub-clause 22.5 of the
Agreement."

20. The ambiguity apparent in paragraph 6 of the advice is, I think, to be resolved by assuming that there should be inserted before the words "that these funds should be dealt with" the words "I think" or some such expression.

21. On 2 August 1979 Mr Andrew Rogers QC (as he then was) gave an advice on the question of whether moneys received by specialist medical officers in respect of private practice carried out by them in purported compliance with the permission granted in clause 22 of the Agreement were taxable income in their hands or whether they could be taxed only on so much as they received as beneficiaries of the alleged trust. He concluded, rightly as I think with respect, that the more likely outcome would be that for taxation purposes money so received would be regarded as part of a specialist's income. During the course of his opinion he made observations which I have found, again with respect, very helpful.

22. Amongst other things Mr Rogers said,

"The Declaration of Trust provides that all fees due to
a full time Medical Officer for private practice shall
be paid into the Trust Fund (c(i)). This clause seems
misconceived for two reasons. Firstly, the fees were
to be the subject of a deduction at the hands of the
Hospital in the first instance under the Conditions of
Agreement (Clause 22.2) and secondly, it is doubtful
whether the moneys were accurately described as fees
due to the Specialist. The document purports to deal
with the requirements of Clause 22.2
by the provision made in Clause D(i). Having regard to
the fact that the Hospital is not a party to the
Declaration of Trust, it is difficult to see how this
assessment could be binding on the Hospital. The
document then goes on to provide that payments from the
Fund should be applied in respect of costs incurred in
administering the Fund. It is to be noted that no such
specific provision is made in Clause 22.5, although
presumably the expenditure would fall within sub-clause
(f). The discretionary power to pay to the Specialists
a bonus of up to 12 % of the annual salary contained in
Clause 22.5(e) of the Agreement is converted into an
obligation by the Trustees to pay such sum to the
Specialist and it is to be noted that the obligation is
introduced with the words "for each Specialist on
behalf of whom fees are paid into the fund" (my
emphasis). There is then to be paid to the Commission
so much of the amount remaining as is in excess of 25%
of the combined gross salaries of all Specialists
participating in the Trust Fund (Clause D(iv)) which
again is a payment which can only be justified, if at
all, on the basis of Clause 22.5(f). The balance, if
any, is then to be disbursed conformably to the
provisions of Clause 22.5 (a),(b),(c),(d) and (f) of
the Conditions of Agreement. There is, therefore[,! a
large measure of doubt as to the extent to which the
gentlemen describing themselves as Trustees were
authorised to enter into the Declaration of Trust. The
moneys in question were payable by reason of the
Contracts with the Fund. (I rather think Mr Rogers
here meant to say "the moneys in question were payable
by reason of the Contracts with the Hospital".) The
Fund was to be applied conformably to the dictates of
Clause 22. The Managers of the Fund were not entitled
to go outside the constraints of Clause 22. Certainly
Clause 22.5(f) is very wide in its terms but it is
difficult to see any justification for a payment to the
Commission as called for by Clause D(iv) of the so
called Trust Deed."

23. Mr Rogers referred to some further anomalies appearing in the conduct of the management of the Fund. He referred to the reference at a meeting of 16 September 1976 to receipt of income in excess of the permitted maximum level in respect of private work and to a resolution of 11 August 1977 whereby it was agreed by the "Trustees" to increase the bonus payable to participating specialists to 16% instead of 12 %. He pointed out that the committee plainly conducted the management of the Fund on the basis that money received as a result of private work done in private practice by a participating specialist was treated very much as his or her money. It seems to me to be consistent with the evidence to hold that the fees earned by such a specialist were treated by the committee as funds available to that specialist for purposes which the committee considered came within the provisions of Clause D(v) of the Declaration of Trust, there having been deducted from those fees, no doubt, the percentages referred to in Clause D(i) and the costs referred to in Clause D(ii). But, as it seems to me, that is not what the Agreement contemplated. Clause 22.2 meant, as I understand it, that from the fees collected there should be deducted the cost of administration of the scheme. There was no provision which permitted the deductions referred to in Clauses D(i) and D(ii) unless it be the case that sub-paragraph (f) of Clause 22.5 of the Agreement may be taken to have permitted such deduction. In my opinion, however, sub-paragraph (f) of Clause 22.5 ought to be read as having a meaning eiusdem generis as the other uses provided for in Clause 22.5 C. I am the more confident of this interpretation because the Fund, according to the Agreement, should never have had available for distribution to the specialists partaking in the scheme any of the costs incurred by the Hospital consequent upon the specialists engaging in private practice because these should have been deducted from the fees received.

24. During the years in question payments were made for objects contemplated by Clause 22 so that, inter alia, specialists taking part in the scheme received bonuses in accordance with sub-paragraph (e) of Clause 22.5. As to the other purposes contemplated by Clause 22.5, those referred to in sub-paragraphs (a),(b),(c),(d) and (f), individual specialists made requests to the committee concerning objects for which expenditure might be made and moneys were paid out in accordance with that request. Separate records were kept in respect of individual specialists. It has therefore been possible to identify the specialists who performed services in respect of which fees were paid into the account of the fund. Those fees were credited, as I have indicated, to an account in the name of the specialist concerned. As disbursements were made for an appropriate purpose contemplated by Clause 22.5 of the Agreement and sub-paragraph (v) of Clause D of the Declaration of Trust at the request of the individual specialist, the amount of the disbursements was debited to the specialist's account.

25. I have been assisted greatly in this matter also by an advice given by Mr Emmett QC as will be apparent from what I have just said.

26. Mr Emmett advanced the thesis that it was by no means clear whether the fees generated within the limitations imposed by Clause 22 were intended to be the property of the specialists or of the Board. He pointed out that Clause 22.1, in providing that accounts for services rendered to private patients were to be issued by the Hospital "acting as agents for the specialists, in the specialist's name" suggested ownership by the specialists. But if that was so, the provision of Clause 22.5 would have been of no effect because if the fees belonged to the specialists there would be no restriction on the manner in which they might be disbursed at the direction of the specialist concerned. As an alternative, he said that the correct analysis might be that fees generated from the private practice belonged to the Board or the Commission. In support of this proposition, he pointed out that the fees were generated from the work of specialists who were full time employees of the Board or of the Commission. He pointed out that the products of the efforts of a full time employee from services performed in the discharge of the duties of his office would normally belong to his employer. If that were the case, Clause 22.5 would have the effect of imposing an obligation on the Board and its successor, the Commission, as one of the terms of employment, to apply the fees received by one or other of them as a result of the efforts of their full time employees in a particular manner. If that analysis were correct it would follow, according to Mr Emmett, that at all material times the Fund (and it must be remembered that the moneys in the Fund were to be the balance only after deduction of costs) would have been owned by the Board or Commission, as the case might be, subject to a contractual right of specialists to have moneys from time to time standing to the credit of the Fund applied as contemplated by Clause 22.5.

27. Perusal of Clause 22.5 leads to the conclusion, I think, that the Fund might be administered in such a way as not to reflect a view that the moneys standing to the credit of an individual specialist were necessarily to be expended in and about requests which he or she might make for any of the purposes set out in Clause 22.5. In particular, it seems to me that upon analysis of sub-paragraph (e) of Clause 22.5 there is no requirement that all specialists should receive the bonus referred to therein. If, for example, a specialist had entered into participation in the scheme at the beginning of whatever accounting year was used by the Committee and if, during the course of that year, his or her earnings from private practice amounted to a sum greater than the total disbursements made to him or her in the year under the provisions of sub-paragraphs (a),(b),(c),(d) and (f) plus a bonus paid in the full amount permitted by sub-paragraph (e) together with the amount of costs deducted, whether under the Agreement or the Declaration of Trust, could it be said that thereafter the specialist would have a right of action against the Board or Commission for recovery of the balance standing to his or her account after the conclusion of that year? I think not.

28. These arguments lead, I think, to the conclusion that the money in the fund belongs to the Board, Commission or its successor subject to the contractual duty imposed upon it to deal with it in some fashion provided for by Clause 22.5 of the Agreement. This conclusion is further supported by the provisions of sub-paragraphs D(i) and (iv). Mr Emmett analysed the situation brought about by the presence in the Declaration of Trust of those two sub-paragraphs as follows:-

"At an early stage, some doubt was apparently felt
concerning the effect of the Declaration of Trust.
Advice was obtained from the Deputy Crown Solicitor's
Office on 30 July 1976. That advice expressed the
opinion that it was doubtful that a trust had been
validly created on the ground that the provision in the
Conditions of Service Agreement requiring the crediting
of funds to the Special Account did no more than bring
about an agency relationship. The Deputy Crown
Solicitor concluded, therefore, that Item D(iv) of the
Declaration of Trust did not make a valid provision of
the disposition of funds in excess of 25% of the salary
of the specialists and that those funds should be dealt
with in accordance with Clause 22.5 of the Conditions
of Service Agreement. The Deputy Crown Solicitor's
opinion suggests that there is no warrant in the
conditions of Service Agreement for Items D(i), D(ii)
and D(iv) of the Declaration of Trust. However if the
alternative analysis which I have suggested is correct
the fees in excess of 25% of salary belong to the
Commission rather than the specialists. In that way,
Item D(iv) can be reconciled with Clause 22.1 and Item
D(i) can be reconciled with Clause 22.1. Item D(ii),
dealing with costs of administering the Fund, may arise
as a matter of law in any event."

29. I accept this analysis and propose, therefore, to answer the fourth question posed in the Summons accordingly.

30. The first question has been overtaken by the events which have happened.

31. I refer again to the fact that, had the accounts been properly audited, as was the intention of all concerned, the fees involved would have been of the order of at least $20,500.00.

32. The second question arises out of the fact that in one year, that ending 30 June 1979, Dr Dhall, one of the "trustees" at the time, overdrew beyond the amount standing to his credit in the books of account as they were then kept, an amount of $33,282.89. The evidence does not enable me to say upon what date or dates the overdrawing took place. Nor does it enable me to say when during the following year, that ended 30 June 1980, the amount overdrawn was repaid, as it was, so that by the end of that year the amount standing to the credit of his account was a total of $13,148.58.

33. The question is whether, in allowing his account to be overdrawn to that extent, Dr Dhall was in breach of his duties as a trustee and, if yes, whether the trustees of the funds should institute proceedings against him for the recovery of damages in respect of the breach. The damages would, as it seems to me, in any event be limited to the amount of interest which might have been paid on the amount or amounts overdrawn during the period in question until Dr Dhall's account was again placed in credit. As I have said, the evidence does not enable me to say what were the relevant dates of the overdrawing or overdrawings and the repayment or repayments. It seems to me probable that the ascertainment of these dates would require a very considerable amount of investigation, an investigation which would, I think, be labour intensive and costly. The rate of interest that might be recovered would, I think, be no more than 10%. It is to be noted that on the amount of a judgment ordered in the Supreme Court of New South Wales in respect of the period between September 1974 and October 1982 prejudgment interest at the rate of 10% would have been ordered to be paid. See Part 40, rule 7 of the Rules of the Supreme Court of New South Wales. The same figure has been adopted by this Court as a guide for interest payable on sums owed at the dates with which I am concerned.

34. There also arises a question whether the fund was in truth a trust fund. It seems to have offended against the rule of perpetuities and was not, as I view the objects to which the Fund might have been put, for charitable purposes. In those circumstances there was a real question as to whether Dr Dhall was a trustee or simply one of the managers of an account which he was required to administer in accordance with the Agreement rather than the Declaration of Trust. Of course, Dr Dhall could, on the findings I have made regarding the ownership of the Fund, argue that he was not overdrawn at all because on the findings I have made, none of the participating specialists could be entitled to claim beneficial ownership of the amount credited to him or her in the books of the fund. On the other hand it could be argued that in any event he has taken advantage of his position as a quasi-trustee or as a trustee dealing with moneys held under a resulting trust to use during one year much more than one would normally expect to be available to a participating specialist.

35. It will be a matter for the Commission having regard to the findings I have made whether it agrees with the difficulties of proof of the arguments which could be put for and against. I would, I think, have advised the applicants/trustees that they should not proceed against Dr Dhall in respect of an alleged breach of trust had the beneficiaries been the participating specialists without receiving appropriate indemnities from the supposed beneficiaries.

36. The difficulty which arises as a result of the conclusion to which I have come is that the Commission has disclaimed any interest in the moneys in the Fund. I do not, however, think that such a disclaimer entitles it to unburden itself of the task of deciding how to deal with the money in accordance with the terms of Clause 22.5 of the Agreement. It is, as I see the position, still bound by the terms of the contract into which it entered and in that regard, there may be said to be a resulting trust of some kind, a trust to be administered in the light of Clause 22.5.

37. Unfortunately when accounts were ordered in this matter they were ordered, by consent, to be taken on the basis of a resulting trust but the critical question as to who were the beneficiaries of that resulting trust was not gone into. In the events that have happened, the accounts have been taken and have been paid for out of the fund and various orders for costs have been made in respect of the action taken by Dr Mann. These orders had all been made by consent or without dispute and I think were proper orders in the circumstances.

38. There remains only the question of what the Commission should do. In my opinion, it should deal with the moneys in the Fund in accordance with Clause 22.5 of the Agreement. It may be that since the Fund has been effectively wound up except for the sum in question, the better course is to take some appropriate action under Clause 22.5 (f). If this were done and the moneys disbursed in respect of some objects which accorded with the general intent of Clause 22.5, it seems to me that equity would be done. But, as I have indicated, it remains a matter for the Commission.

39. In the result, therefore, I would propose to answer the questions asked as follows:-

1. Need not be further dealt with.
2. No, except on receipt of appropriate indemnities.
3. Yes. I will hear submissions on the detailed orders
which ought to be made.
4. The Capital Territory Health Commission, or its lawful
successor, is the person entitled to the balance of the
money presently in Court.

40. I will hear submissions on the form of orders I should make.