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[2026] NSWSC 318
General information, not legal advice.
Supreme Court of NSW
2026-04-02
Meek J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Deemhire Pty Limited as trustee of the Vartuli Family Trust v No Defendant [2026] NSWSC 318
Hearing dates: 29 May 2025, 8 August 2025 (hearing)
30 March 2026 (mention)
Date of orders: 2 April 2026
Decision date: 02 April 2026
Jurisdiction: Equity
Before: Meek J
Decision: Short minutes of orders to be brought in to give effect to reasons foreshadowing variation of cl 3(b) of the Trust Deed and appointment of an Appointor under the inherent jurisdiction – reserving possibility for further consideration of proposals.
Catchwords: TRUSTS — Family discretionary trusts — Family trust settled by patriarch (G) — G also appointor of the trust with power to appoint a new trustee and additional trustees and to remove any trustees — Certain trust provisions impacted by G’s death— Specifically (a) whilst G’s family grew generationally the range of beneficial objects to whom income could be appointed was reduced on G’s death as appointor (b) no mechanism was provided for a new appointor and (c) the power of variation was limited by reference to G’s lifespan as appointor — Trust operated for approximately 14 years post G’s death without an appointor — Trustee sought orders principally pursuant to Trustee Act 1925 (NSW), s 86A to alter the power to vary the trust, to appoint a new appointor, to give the majority of ‘beneficiaries’ power to remove and substitute the appointor and to effectively reinstate the greater breadth of beneficial objects to whom income could be appointed to the position prior to the death of G — Held partial relief given – Appointor to be appointed (under inherent power) and approval of variation (under s 86A) for beneficial class to whom income could be appointed to be revised to the position pre G’s death - Plaintiff to reflect upon reasons with opportunity to approach the Court for further relief if need be
EQUITY — Trusts — Approval of arrangements (proposals) for variation of trusts — Trustee Act 1925 NSW (Trustee Act), s 86A — Remedial nature of the legislation invites beneficial construction — Standing discussed — Trustees may apply (inter alia) on behalf of persons incapable of assenting or with no present entitlement — ‘Arrangement’ is terminology in the widest possible sense to cover any proposal which a person with standing may put forward for varying or revoking trusts
EQUITY — Trusts — Approval of variation proposals — Trustee Act s 86A — Extent of jurisdiction — Appointors and varying trusts generally — Differing views in other jurisdictions under cognate legislation regarding whether the variation approval power permits the appointment of appointors and variation of trusts generally
EQUITY — Trusts — Approval of variation proposals — Trustee Act s 86A — Relevance of Settlor’s purposes
APPOINTORS — Discussion of extent of role and sources of appointment — Discussion regarding nature of character of role of appointor and power of appointment of trustees — Characterisation of role of appointor as fiduciary or otherwise depends on the terms of the trust and circumstances in each particular case
EQUITY — Trusts — Court’s inherent jurisdiction —Equity preserves trusts, rather than destroying them and acts to perform or execute trusts, not to alter them
TRUSTS — Appointors — Inherent jurisdiction — Court’s inherent power to appoint an appointor discussed
TRUSTS — Advantageous dealings Trustee Act s 81 — Conferral of specific powers is by reference to management and administration of trust property
TRUSTS —Rights of beneficiaries — ‘Rule’ in Saunders v Vautier — Nature of power
WORDS & PHRASES – ‘appointor’
Legislation Cited: Duties Act 1997 (NSW)
Interpretation Act 1987 (NSW)
Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 (NSW)
Trustee Act 1925 (NSW)
Trustee Act 1936 (SA)
Trustee Act 1958 (Vic)
Trustees Act 1962 (WA)
Trusts Act 1973 (Qld)
Variation of Trusts Act 1958 (UK)
Variation of Trusts Act 1994 (Tas)
Cases Cited: Bathurst v Bathurst [2016] EWHC 3033
Beck v Henley [2014] NSWCA 201; (2014) 11 ASTLR 457
Blenkinsop v Herbert & Ors (2017) 51 WAR 264; [2017] WASCA 87 at 72
Bogan v Estate of Peter John Smedley (Dec'd) [2025] HCA 7; (2025) 422 ALR 94
Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606
Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26
Campbell v Campbell [2022] NSWSC 554
Catholic Metropolitan Cemeteries Trust v Attorney General of New South Wales (2024) 116 NSWLR 314; [2024] NSWCA 30
Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4
Cisera v Cisera [2023] NSWSC 1507
Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286
CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53
David & Ros Carr Holdings Pty Ltd v Ritossa (2025) 117 NSWLR 528; [2025] NSWCA 108
Dryandra Investments Pty Ltd (ACN 627 096 146) ato Dryandra Trust v Hardie by her guardian ad litem Blatchford [2024] WASC 248
El Sayed v El Hawach (2015) 88 NSWLR 214; [2015] NSWCA 26
Estate of the late John Currie Docherty Hamilton [2025] NSWSC 932
Gollin and Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455
Goulding v James [1997] 2 All ER 239
Grand View Private Trust Co Ltd v Wong [2022] UKPC 47
Hitchcock v Pratt Group Holdings Pty Ltd as trustee for the Pratt Family Holdings Trust [2024] NSWSC 1292
In re Coomber; Coomber v Coomber [1911] 1 Ch 723
In the Application of Nyasa No. 19 Pty Ltd [2023] NSWSC 578
Inland Revenue Commissioners v Holmden [1968] AC 685
JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426
Kennedy v Kennedy [2011] NSWSC 1619
Lord v Craig [2026] NSWSC 17
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42
Michelakis v Kalumic Pty Ltd as trustee of the Michelakis Family Trust [2026] NSWSC 276
Panizza v Clathington Pty Ltd as former trustee for the P. and D. Panizza Family [2025] WASC 246
Perpetual Trustee's Victoria Limited v Barns (2012) 34 VR 387; [2012] VSCA 77
Peter Sleiman Investments Pty Ltd (As trustee for the Sleiman Family Trust) v Deputy Commissioner of Taxation [2017] NSWCA 81
Re Dion Investments Pty Ltd & Anor (2014) 87 NSWLR 753; [2014] NSWCA 367
Re EM McPherson Settlement (2024) 76 VR 360; [2024] VSC 744
Re Harding [1923] 1 Ch 182
Re Jasmine Trustees Ltd and the Piedmont Trust [2015] JRC 196
Re PDC [2021] NSWSC 1701
Re Steed’s Will Trusts [1960] Ch 407
Re the Alan Synman Family Trust [2013] VSC 364
Reinhard v Denkel [2024] NSWSC 925
Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482
The Application of Dhuramein Nominees Pty Ltd [2025] NSWSC 1329
The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404; [1994] HCA 54.
W E Pickering Nominees Pty Ltd (as trustee of the W E Pickering Family Trust) v Pickering [2016] VSCA 273
W E Pickering Nominees Pty Ltd v Pickering [2016] VSC 71
WFT Capital Pty Ltd v Windt [2025] NSWSC 819
Texts Cited: Agnew, Sinead, Charles Mitchell, Jonathan Harris and Paul Matthews, Underhill and Hayton Law of Trusts and Trustees (LexisNexis, 19th ed, 2022)
Associated press, ‘Biggs Has Plans for Tyson’ Oroville Mercury Register (Oroville, 19 August 1987).
Bible - New International Version
Cambridge Dictionary, online ed
Charles Dickens, Great Expectations (New York: Books, 1868)
Explanatory Memorandum, Stronger Communities Legislation Amendment (Courts and Civil) Bill 2020 (NSW) (see endnotes for accessible link)
Heydon JD, and MJ Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis, 8th ed, 2016)
Hudson, Jessica, ‘The Proper Purpose Rule: Preventing Law’s Intentional Abuse’ (Paper), Supreme Court of NSW Annual Conference, 2024
Jowitt’s Dictionary of English Law (6th ed, 2023)
Luxton, Peter, 'Variation of Trusts: Settlors' Intentions and the Consent Principle' (1997) 60 Modern Law Review 719.
Macquarie Dictionary, online ed
New South Wales Legislative Assembly, Parliamentary Debates (LA Hansard), 16 September 2020
Tucker, Lynton, Nicholas Le Poidevin and James Brightwell, Lewin on Trusts (Sweet & Maxwell, 20th ed, 2020)
Tucker, Lynton, Nicholas Le Poidevin and James Brightwell, Lewin on Trusts (Sweet & Maxwell, First Supplement to 20th ed, 2023)
Category: Principal judgment
Parties: Deemhire Pty Limited (Plaintiff)
Representation: Counsel:
L Ellison SC (Plaintiff)
Solicitors:
Galluzzo Lawyers (Plaintiff)
File Number(s): 2025/00044326
HIS HONOUR: ‘Plans’ [1] are schemes of action or proposals by person(s) for doing or achieving something now that will impact events or things in the short or long term future. ‘Succession planning’ [2] particularly focuses upon a future event when some key person will no longer be available to carry out or assist a plan or to do certain things by dint of that person passing away, retiring, becoming incapable, or in the realm of business, leaving the business.
Frequently, such plans are designed and/or purposefully underpinned by some rationality. However, some plans or schemes in life are said to be ‘harebrained’ being irrational [3] . Some plans may be entirely transparent and borne out of exquisitely beautiful and pure motives. Other plans may be borne out of tragic experiences embittering a person, clothed as one thing but having a manipulative or Machiavellian purpose. In Charles Dickens’ Great Expectations, Miss Havisham’s plans affecting Pip [4] and ultimately self-destructive to herself were forged from such an event.
The success of such plans may depend on minimal or conversely many factors of varying importance. The mettle of plans may be tested by putting the plan theory into practice. Particularly in the sporting arena, game plans may be readily tested by the nature of the contest and found wanting. Mike Tyson famously said “Everybody has plans until they get hit for the first time” [5] .
Naturally people are interested to understand others plans and people may be unwilling to support or ‘buy into’ plans unless they both understand the plan and agree with its purposes. Such reluctance will often depend upon the trust reposed in the planner. Frequently, people of faith as they see life unfold are unable to know distinct purposes or understand why particular events affecting them or others occur. Nonetheless, they are or may be confident, patient, persevering and hopeful in the face of perplexing events or adversity because they trust the character of the deity. For example, this is described of Christians [6] . Similarly people might not question plans of others including family members because they trust the planner. As will be seen, likely that occurred in this case.
Giuseppe Vartuli (Giuseppe/settlor) was born in April 1923 and died on 20 July 2011 aged 88. He was a greengrocer. Consistent with his role as a market vendor of fresh produce, he was fruitful in life and business. He was blessed with a wife, children, grandchildren and great-grandchildren. He planned, provided for his family and prospered, in particular through means of a family trust, the Vartuli Family Trust (Trust). He achieved this by means of being both the Settlor and Appointor of the Trust. He was selfless in the sense that the terms of the Trust precluded benefiting himself in those capacities or otherwise as a beneficiary.
"(a) In paragraph 21, the words "At any time during the life of the Appointor and prior to the termination of the Trusts hereinafter declared" are deleted.
(b) In paragraph 21 in line 5, the words "three (3) months" are deleted and the words "fourteen (14) days" are inserted.
(c) In paragraph 21 in line 7 the words "the Appointor (or the Appointor shall have in writing agreed to dispense with such notice)" are deleted and the words "any one of the beneficiaries (or the beneficiaries shall have in writing agreed to dispense with such notice)" are inserted.
(d) In the first schedule the appointor be amended to read: "BRUNO VARTULI & FRANK PETER VARTULI".
(e) Add as paragraph 25 "The appointor from time to time may be removed and substituted with another appointor following a majority decision of the named beneficiaries and in the event of a named beneficiary being deceased, then by all the eligible beneficiaries".
(f) In paragraph 3(b) the words "eligible" be deleted".
The proposed amendments fall into essentially three categories:
First, amendments to cl 21 (a power to vary the Trust), which address references to the Appointor in that clause and timing provisions.
Secondly, the amendments seek to address both the nomination of an Appointor and a provision for ‘beneficiaries’ to appoint or remove a new Appointor.
Thirdly, the provisions address the range of beneficial objects to whom distributions may be made.
Principally, the submissions in the matter addressed only the third aspect of the relief sought. The Trustee made it clear that it wishes to continue to pay income at its discretion to all grandchildren and great-grandchildren as the Trustee would have been entitled to do pursuant to cl 3(a) prior to the death of Giuseppe as the Appointor.
Giuseppe was married to Rosina who was born in 1925 and died on 14 March 2024. They had four children, namely: Bruno (born in April 1953, aged 72); Francisco (variously referred to as Francisco, Frank and Frank Peter - I will use ‘Frank’); Maria; and Salvatore Domenico (known and referred to as Domenico).
Bruno is married to Nancy and they have 3 children, Rosanne (born August 1982), Robert (born February 1985) and Frank (born May 1987). Bruno has 7 grandchildren (Sophia, Gabrielle, Oscar, Elizabeth, Alesandro, Xavier and Spencer).
Francisco is married to Maria and they have 2 children, Joseph (born November 1977) and Anthony (born January 1982). Francisco has 2 grandchildren (Francisco and Stephanie).
Maria is married to Larry Gerace and has no children.
Salvatore was married but is now divorced. He has 2 children, a daughter Jessica (born January 1987) and a son Jordan (born July 1992). Salvatore has one grandchild, Elija.
Frank was the (or one of) the executors of Giuseppe’s estate.
In life, in law, and particularly in the realm of trust law, various labels and terminology are used to designate roles that persons (natural or corporate) undertake and the powers, obligations, duties, rights and entitlements of such persons. Dictionary definitions provide a general, standard or literal indication of the meaning of a word, and give an indication of a general rule about how a particular word should be used, and is, or might be said to be normative in that respect.
Other than ‘trustees’, it is not uncommon to find other roles such as ‘appointor’ and ‘guardian’ in Trust Deeds.
Specifically, within the realm of trusts, at times certain roles are created and powers distributed to provide checks and balances against risks that might potentially arise. Thus, certain powers of a trustee may only be exercisable with the consent of other persons or notice to other persons including for example appointors, guardians or protectors.
The term ‘discretionary trust’ is not normative, but rather descriptive of the particular features of such trusts [8] . Ultimately, it is necessary to resort to context and the particular sources that constitute a trust (principally the trust deed supplemented by any relevant statutory provisions, general law principles and court orders) and the terms of each trust to understand what a trust provides and what is permitted [9] . That is especially true of representative words such as ‘trustee’, ‘appointor’ (and other trust roles such as ‘guardian’).
The term ‘appointor’ is used in law to cover a number of roles varying according to context [10] . One role is simply that of being the donee of a power [11] . A power is an authority to take a step which affects rights and obligations [12] . A ‘legal power’ is said to be “generated by legal rules allowing a powerholder to change hers and/or another’s legal status by manifesting her intention to effect that change” [13] . There are various sorts of powers. These include administrative powers and dispositive powers. Another sense in which the term ‘appointor’ is used is a person who nominates another for an office [14] .
Frequently, in trust law the term ‘appointor’ is used to designate a donee empowered to appoint a trustee for a trust. The types of things that an ‘appointor’ may do will depend upon the source of the power creating the role.
New trustees may be appointed in accordance with the provisions made in the trust instrument or statutory enactment conferring a power to appoint [15] .
In most jurisdictions, the trust instrument is of primary importance, with statutory powers relevant only if the instrument is silent or if the provisions of the trust instrument do not apply [16] .
The adequacy of statutory powers of appointment of trustees and removal of trustees tend to count against the need for inclusion in trust deeds of express powers for appointment or removal of trustees. Nonetheless, the appetite of those in different jurisdictions to draft trust deeds to include appointor roles and powers of appointment and removal varies according to jurisdiction and other factors including the purposes attendant upon the creation of the trust.
In the UK it is said that the usual drafting practice for English family settlements is to provide to the application of the statutory power of appointment with or without modification [17] . In NSW, the main statutory power recognises that the instrument creating the trust may provide for such an appointor [18] . However, if there is no such person, or no such person able and willing to act, then the power to appoint may be exercised by the surviving or continuing trustees or trustee for the time being, or by the legal representative of the last surviving or continuing trustee [19] .
The appointor may be separate to the trustee. The power may be given to a beneficiary [20] including sometimes a principal beneficiary. Different persons may be nominated to appoint according to the specified sets of circumstances [21] .
The extent of the role of the appointor varies according to circumstances. It may be general or specify precise circumstances in which the power is to be exercised. The appointor may be empowered not only to appoint a trustee but also to appoint an additional trustee, to remove a trustee and to appoint an additional or replacement appointor and to consent or not consent to any amendments of the trust deed proposed by the trustee [22] . The trust terms may address the form of the appointment [23] .
The extent to which the appointor role and powers are fiduciary and whether the appointor is precluded from appointing themselves depends upon the circumstances of each case. The wording of the trust instrument might or might not preclude self-appointment [24] . Statutory powers vary on the issue. In NSW, self-appointment is specifically permitted [25] .
The character of the office or role of appointor and powers of appointment is case specific and discussed in detail in Lewin [26] . That said, generally speaking, the following may be noted.
The power of appointment of new trustees per se is not conferred for the personal benefit of the donee but is an administrative power the purpose of which is to enable a person to be appointed to the fiduciary office of trustee for the benefit of the beneficiaries as a whole [27] .
The appointor role per se and powers of appointment and removal are not necessarily fiduciary [28] . That this is so, is evident from some examples.
In El Sayed, the original appointor (who was also the settlor) was empowered relevantly to appoint a new trustee and new appointor. The appointor executed two inconsistent deeds - the first by which he resigned and appointed ‘A’ as new appointor and the second by which he resigned and appointed ‘B’ as new trustee and ‘C’ as new appointor. Litigation ensured over the effectiveness of the appointments. ‘A’ was a solicitor and also an eligible beneficiary under the trust. At first instance it was held that ‘A’s’ appointment was invalid by reason of ‘A’s’ breach of fiduciary duty (or the potential for such breach). The Court of Appeal held that there was no breach of fiduciary obligation in ‘A’ becoming the appointor of the trust. Rather, in El Sayed (or indeed in any case), the basis for a fiduciary obligation arising and the nature and scope of the obligations must be considered before any breach is inferred. Conflict as between interest and duty must be assessed realistically rather than theoretically [29] . On the facts, it was plain that the trustee could act self-interestedly, and there was no suggestion that the appointor’s power had been exercised, or had even been considered to be exercised [30] .
Lewin references a passage from Underhill and Hayton, stating that where a power of removal coupled with a power of appointment of trustees is vested in a principal beneficiary, the obvious inference is that the power has been conferred on the beneficiary to look after his own interests and not those of the beneficiaries as a whole, though without intimating that such a power is free from constraints of the “fraud in the power” doctrine [31] (or what is in more recent years is referred to as “proper purpose rule” [32] ).
This case, including the ex parte nature of it, does not give rise to particular occasion to consider the proper purpose rule regarding a donee’s intentional adherence to the terms according to which a power is held or conferred [33] . The operation of the rule varies according to the specific relational or institutional context, and the type of power involved [34] .
The Trust was established on 11 April 1986 pursuant to terms of a Trust Deed of that date. It was varied by deed of variation dated 3 May 2010 (variation deed) and purportedly amended after Guiseppe’s death by deed of amendment dated 26 November 2012 (amendment deed).
The variation deed added powers to appoint an attorney and power to borrow, raise and secure in cl 9 of the Trust Deed.
The amendment deed, amongst other things, made provision for inserting various new definitions, including definitions of ‘Distributed Income’, ‘Financial Year’, ‘Taxable Income’ and ‘Trust Income’. It also included a new cl 3A dealing with trust income and rules for distribution of income. There is, as Mr Ellison SC recognised, a very real issue as to whether the amendment deed is valid. However, on the application, he placed no reliance upon it submitting that it was irrelevant to the proceedings. The application before the Court does not seek to include terms provided for in the amendment deed. In the above circumstances I will proceed without particular reference to it.
It is convenient to refer to the Trust Deed as amended by the variation deed and (purportedly by) the amendment deed as simply the "Trust Deed".
Giuseppe was the ‘Settlor’ and ‘Appointor’ of the Trust. Deemhire from its inception has been the Trustee of the Trust. Bruno is one of the directors of the Trustee and at least as at 2012 Bruno was also the company secretary and Frank another director of the Trustee.
The principles that apply to the construction of a Trust Deed are the same as those that apply to construction of contracts [37] .
The deed is construed objectively based on the understanding of a reasonable person in the position of the parties to it by reference to the deed as a whole, its text, context and purposes, or objects [38] .
Sometimes Trust Deeds contain provisions which provide for a representative (such as an executor or some other person) to exercise a power in the event that the donee of the power is either deceased or unable to exercise the power. However, there is no such provision in the deed.
One of the anomalies of the Trust Deed is that despite the reference in clauses 3(a), 3(b) and 4 to "specified proportions" there is no such definition within the Trust Deed of "specified proportions". Further, there are references to 5 schedules in the Trust Deed but as will be seen below 2 schedule headings have been omitted from the form of the Trust Deed.
The Trust Deed created a form of what was described as a discretionary trust. Relevant provisions of the Trust Deed include the following.
1. In the interpretation of this Deed with the context permits:
(a) "The Trustees" means the Company, person, or persons named in the First Schedule hereto or Trustee or Trustees for the time being of the settlement created by this Deed;
..
(d) "the distribution date" means the day on which shall expire the period of twenty (20) years after the death of the last survivor of the descendants now living of His late Majesty King George VI or such earlier date as the Trustees shall in their absolute discretion appoint,
(e) "child or children" includes a child legally adopted whether before or after the execution of this Deed;
(f) "the Beneficiaries" mean the persons referred to in the second Schedule hereto,
(g) "the Eligible Beneficiaries" mean the persons referred to in the Third Schedule hereto;
(h) "relative " means father, mother, brother, sister, uncle, aunt, cousin, nephew, niece, grandchild, daughter- in-law, son-in -law, father-in-law , mother-in-law;
(i) "the Appointor" means the person referred to as the Appointor in the First Schedule hereto;
…
2 The Trustees shall hold the Trust Fund upon the Trusts herein after declared concerning the same.
3 (a) Until the distribution date or the prior death of the Appointor, the Trustees shall on or before each 30th day of June as they in their absolute discretion determine either :
(i) Pay the whole or any part of the net income arising from the Trust Fund in the annual accounting period ending on that 30th day of June to all or any one or more of the Beneficiaries or the spouses of the Beneficiaries or such of the issue of the Beneficiaries or the spouses of the issue of the Beneficiaries as shall then be living as the Trustees in their absolute discretion determine; or
(ii) Apply the whole or any part of such net income for the maintenance education, advancement or otherwise tor the benefit of the Beneficiaries or the spouses of the Beneficiaries or such of the issue of the Beneficiaries or the spouses of the issue of the Beneficiaries as shall then be living in such proportions as the Trustees in their absolute discretion determine.
PROVIDED HOWEVER that if the Trustees shall not have exercised such discretion within a reasonable time after the end of any accounting period in respect of the whole or any part of such net income of that annual accounting period ending on the 30th day of June, then such of the Eligible Beneficiaries as are named in the Third Schedule hereto as shall be living at the expiration of such annual accounting period shall share in such whole or such part of such net income in the specified proportions and be entitled to be paid the whole thereof in such specified proportions.
(b) Subject to Paragraph (a) hereof, after the death of the Appointor, the Trustees shall until the distribution date on or before each 30th day of June as they in their absolute discretion shall determine either pay such net income to or apply such net income for the benefit of such of the Eligible Beneficiaries as shall then be living and if more than one in the specified proportions.
(c) Notwithstanding the provisions of Paragraphs (a) and (b) of this Clause in case any of the Beneficiaries or the Eligible Beneficiaries shall die prior to the distribution date (each such one of the Beneficiaries being hereinafter called the "deceased Beneficiary") the Trustees shall until the distribution date pay or apply the share of the net income of the Trust Fund of each accounting period to which such deceased Beneficiary would have been entitled to have paid to him or applied for his benefit if he were living at the expiration of each such accounting period to or for the benefit of such of the children of such deceased Beneficiary as shall be living at the expiration of such accounting period and would be entitled to the share (or part of the share) of the deceased Beneficiary in the corpus of the Trust Fund if the last day of such accounting period were the distribution date and, if more than one, in equal shares.
Thereafter each such child or children shall as to his share of the share of the deceased Beneficiary be treated as a Beneficiary under this Deed and the provisions of this Paragraph shall apply to him.
(d) For the purpose of determining the net income to be paid or applied as aforesaid all costs, charges and expenditure incurred in earning that income and such costs, charges and expenditure properly incurred in managing and administering the Trust Fund and any taxes for which the Trustees may be liable in their capacity of Trustees shall be charged or debited against the gross income derived or arising in each annual accounting period.
PROVIDED ALWAYS that this Clause shall be read and construed subject to Clause 19 hereof,
4 Subject as hereinafter provided the Trustees shall hold all the income of the Trust Fund then unpaid or unapplied (if any) together with the then corpus of the Trust Fund upon Trust for such of the Eligible Beneficiaries as shall survive the distribution date in the specified proportions.
…
21 At any time during the life of the Appointor and prior to the termination of the trusts hereinafter declared the Trustees may from time to time in their absolute unfettered discretion notwithstanding anything to the contrary herein contained but provided that three (3) months' notice of their intention to vary the Trusts as hereinafter provided shall have been given to the Appointor (or the Appointor shall have in writing agreed to dispense with such notice) by Resolution of their Directors or in the event of the Trustees being natural persons by instrument in writing vary the Trusts or provisions hereof in any manner whatsoever provided that any variation of the objects shall be in favour of any one or more of the persons then living, or being a Company then in existence, referred to in the Fourth Schedule, or any Trust in which any person referred to in the Fourth Schedule hereto then living has an interest whether vested or contingent, SUBJECT ALWAYS to no legal or equitable interest in or under the Trust Fund at any time being in any way acquired by or passing to the settler, his executors or administrators or the Trustees their successors in office or the person giving, transferring, making over and causing to be vested money or property referred to in Clause 19 hereof his executors or administrators consequent upon or pursuant to any such variation as aforesaid AND PROVIDED that no variation of the objects shall be made in accordance with this Clause. if as a consequence thereof the Rule against Perpetuities would be breached as a result of such variation.
…
23 In the construction of this Deed it shall be presumed conclusively that the children of the Appointer shall be the persons named in the Fifth Schedule hereto and such other children (if any) born subsequent to the date hereof of the Appointer.
The Trust Deed refers to and contains 5 schedules:
First Schedule - preamble, cl 1(a),(i),(n) (naming the ‘Settlor’, ‘Trustees’, ‘Appointor’ and ‘ Settlement’);
Second Schedule - cl 1(f) (naming ‘the Beneficiaries’);
Third Schedule - cl 1(g), proviso to cl 3(a) (naming ‘the Eligible Beneficiaries’);
Fourth Schedule - cl 21 (naming the persons, any one or more of whom any variation of the objects shall be in favour of); and
Fifth Schedule - cl 23 (naming children of the ‘Appointor’ and conclusively presuming the other persons named therein and such other children of the Appointor (if any) subsequently born to the date of the deed).
The First, Third and Fourth Schedules have specific headings, there is no schedule for what is self-evidently the Second and Fifth Schedules.
The First Schedule contains the name of the settlement and the ‘Name’ and ‘Address’ details for each of the Settlor, Trustee and Appointor. Giuseppe is identified as being the Settlor and Appointor and in addition, for those two roles there is a ‘Description’ specifying Giuseppe as ‘INVESTOR’. Deemhire is designated as the Trustee.
The Second to Fifth Schedules are as follows. For clarity, I have inserted in italics the introduction to what is self-evidently the Second and Fifth Schedules even though the names of those Schedules do not appear in the Trust Deed:
[Second Schedule]
Names of Beneficiaries:
Francesco Vartuli
Bruno Vartuli
Domenico Vartuli
Maria Vartuli
Rosina Vartuli
Any other child (if any) of the Appointor.
The spouse of the Appointor.
Any relative of the Appointor.
Any grandchildren of the Appointor .
THE THIRD SCHEDULE HEREINBEFORE REFERRED TO
Names of Eligible Beneficiaries:
Rosina Vartuli
Francesco Vartuli
Joseph Vartuli
Anthony Vartuli
Bruno Vartuli
Roseanne Vartuli
Joseph Vartuli
Domenico Vartuli
Maria Vartuli
Any other child (if any) of the Appointor .
THE FOURTH SCHEDULE HEREINBEFORE REFERRED TO
(i) The Spouse of Giuseppe Vartuli.
(ii) Any issue of Giuseppe & Rosina Vartuli
(iii) Any relative of Giuseppe Vartuli.
(iv) Any relative of Rosina Vartuli.
(v) Any Company or Corporation wheresoever incorporated of which any of the Beneficiaries or any of the persons named in this Schedule is a Director or Shareholder;
(vi) Any Trust in or under which any of the Beneficiaries or any of the persons named in this Schedule has an interest whether vested or contingent,
[Fifth Schedule]
Names of Children of Appointor:
Francesco Vartuli
Bruno Vartuli
Domenico Vartuli
Maria Vartuli
In this Trust in order to understand the significance and the role of the ‘Appointor’ it is necessary to refer to the terms of the Trust Deed.
In the Trust Deed, the term ‘Appointor’ is defined in cl 1(i) and the name of that person (Giuseppe) is specified in the First Schedule. Further reference to the ‘Appointor’ is set out in a number of clauses of the Trust Deed. Essentially there are tasks which the Appointor may carry out and there are various matters which may be affected by reference to the life of the Appointor in the sense of matters which can be done prior to the death of the Appointor but may not be effected after the death of the Appointor.
Thus:
income may be paid to or applied for the benefit of ‘the Beneficiaries’ up to the death of the Appointor: cl 3(a);
after the death of the Appointor, income distributions may be made to or for the benefit of ‘the Eligible Beneficiaries’ cl 3(b);
the Trustee's power or obligation to make payments or applications of income may be discharged by the Trustee depositing income with a company of which the Appointor is a director: cl 6(c);
the Trustee may during the life of the Appointor, in addition to other powers, pay or apply presumptive shares or interests of certain persons: cl 16;
benefits are not to be conferred upon the Appointor: cl 19;
the power to appoint a new trustee in place of or in addition to or to remove any trustee is vested in the Appointor: cl 20;
powers of variation of the Trust are crafted by reference to timing during the life of the Appointor and on notice to the Appointor: cl 21;
children of the Appointor are presumed to be conclusively the persons named in the Fifth Schedule of the Trust Deed and any other children born subsequent to the date of the Truste Deed: cl 23; and
there is a form of default provision in the event of failure of capital or income of the trust vesting absolutely by reference to next of kin of the Appointor: cl 24.
Generally the noun ‘relative’ means someone who is connected with another or others by blood or marriage [39] . However, the Trust Deed defines ‘relative’ in a more restrictive way such that (as I will detail below) it is limited.
Essentially, under cl 3(a) of the Trust Deed, the Trustee had power to distribute to beneficial objects being ‘the Beneficiaries’ including Giuseppe’s wife, children, grandchildren and ‘any relative’ defined in limited terms but relevantly to also include Giuseppe’s parents, siblings, piblings [40] , niblings [41] and immediate in-laws [42] . The power to distribute to beneficial objects became more confined from the date of Giuseppe’s death in his capacity as ‘Appointor’ to only ‘the Eligible Beneficiaries’ being Giuseppe’s wife, children and the 4 grandchildren (Joseph, Anthony, Roseanne and Jospeh Robert) who were alive at the time of the establishment of the Trust.
There is no other child of Giuseppe. Thus, as at the date of the Trust Deed the ‘Eligible Beneficiaries’ were simply the 9 listed persons in the Third Schedule. Today there is one less by dint of Rosina’s death.
At the time of Giuseppe's death there was no other spouse of the Appointor other than Rosina.
Thus, as at the time of the deed ‘the Beneficiaries’ included the 5 nominated persons, the grandchildren of Giuseppe (noting that after the date of the deed, three grandchildren were born namely Jessica, Jordan and Frank), Giuseppe’s parents, siblings, piblings, niblings and immediate in-laws.
No other grandchildren were born to Giuseppe by the time of his death. Indeed, there are no other grandchildren. However, he has great grandchildren.
In cl 21, the power to vary the Trust is given to the Trustee but on notice to the Appointor.
I have considered the possibility as to whether the variation power in cl 21 of the Trust Deed is able to be exercised after the death of Giuseppe as Appointor. The terminology in the opening two lines "at any time during the life of the Appointor and prior to the termination of the trusts hereinafter declared" might allow other possibility that the power could be exercised after the death of the Appointor but prior to the termination of the trusts.
However, such a construction is counted against by the fact that the clause goes on to provide for notice to be given to the Appointor. I consider the better construction is that variation is not permitted unless there is an Appointor.
It is not clear who drafted the Trust Deed.
Bruno had nothing to do with the creation of the Trust, and only learnt about its existence sometime after 1986. Bruno is unaware of why the Trust Deed contained two different categories of beneficiaries or why a distinction was made regarding distribution to different categories of beneficial objects before and after the death of Giuseppe. Nor does he know why the Trust Deed makes no provision for any appointor after Giuseppe's death.
Frank Galluzzo (Mr Galluzzo) was the accountant for the Trust from 1975 to 2004. He retired in 2016 and no longer has access to the records of the Trust. He was asked to comment regarding the history of the creation of the Trust, the drafting of the Trust Deed and why it provided that it could not be amended following the Appointor's death and why there were different classes of beneficiaries. Candidly, he says he does not recall the creation of the Trust or the reasons for its creation, or any specific provisions in the Trust Deed having regard to the time that has passed since its creation. Nonetheless, he believes that the form of the Trust Deed was a "standard precedent" used at the time.
Nick Ussia (accountant) was employed by Galluzzo Brothers Accounts in 1986 and assisted Mr Galluzzo at the time in respect of accounting work for the family and in respect to the Trust Deed. Indeed, he witnessed the signature of Giuseppe as Appointor. He frankly states that he cannot recall the history of the Trust or why certain provisions were made and is unaware as to why the Trust Deed contained provisions prohibiting amendment after the death of the Appointor or why there were different classes of beneficiaries.
The Trust Deed records that the sum of $100 was settled on the Trust. It appears that in 1986 (within the balance of the year after the trust was created), the Trustee purchased land at John Street, Cabramatta (John Street property).
Bruno indicates that, for all intents and purposes, Giuseppe made all the decisions with regard to the Trust and the Trust Deed. Bruno was not involved with the running of the Trust until after Giuseppe died in July 2011.
Bruno and (he believes) his siblings and Giuseppe’s grandchildren have no particular recollection of receiving dividends from the Trust prior to Giuseppe's death.
During Mr Galluzzo’s involvement with the Trust, he has no recollection of discussing the different classes of beneficiaries with Giuseppe nor any of the circumstances by which the whole of the available profits were distributed other than to “the named beneficiaries”. He has no recollection of discussing distribution proportions with Giuseppe.
Frank La Delfa began to handle all aspects of the management and tax issues regarding the Trust in 2008. For his part, he is unaware of the history of the Trust prior to the commencement of his employment with Mr Galluzzo’s firm in September 1998. He asserts (to the best of his recollection) that there has been no distribution whether it be in “specified proportions” or in the “absolute discretion” of the Trustee "because of the trustee not exercising its discretion in any accounting period". He further asserts that the question of ‘specified proportions’ or the exercise of some ‘absolute discretion’ as referred to in cl 3 (a), (b) and 4 of the Trust Deed had never been given any attention by the trustee. His recollection is that Bruno and Frank signed the Trust tax returns.
Following Giuseppe's death in 2011, Bruno with some assistance from Frank took over the running of the Trust. The real estate is mortgaged with Cross Mortgages and according to Bruno, the Trust has run at a profit since at least the time that he took over. Seemingly each year after 2011, all the net income has been paid out by way of distribution. The determinations in that regard were made by Rosina up until her death in 2024, in consultation with the trust accountant Frank Ladelfa. Bruno openly admits that Rosina's decision was accepted as the decision that the trustee would implement. He states that there has been no distribution whether it be in "specified proportions" or in the "absolute discretion" of the trustee.
From accounts for the trust for the 14 financial years between 30 June 2011 and 30 June 2024, without descending to exact detail, it is evident that across that period there have been distributions to beneficiaries or persons or entities other than ‘the Eligible Beneficiaries’. This includes distributions to spouses of Giuseppe's four children, grandchildren, great-grandchildren and corporate entities.
On 17 October 2023 the Trustee sought a private ruling from the Chief Commissioner of State Revenue (CSR) in respect of the proposed amendments that are the application before the Court.
The CSR on 24 June 2024, responded confirming that the then proposed amendments would not result in a dutiable transaction under the Duties Act 1997 (NSW).
On 13 November 2023, the Trustee also sought a private ruling from the Deputy Commissioner of Taxation on the consequences of the proposed amendment on the basis that the Supreme Court of Victoria [43] would approve the proposed amendment. The Deputy Commissioner of Taxation declined to make a private ruling notifying that on 16 April 2024.
The ‘inherent jurisdiction’ of courts of Equity exists to supervise, and in appropriate circumstances intervene in, the administration of trusts [44] . Under the general law, and subject to exceptional circumstances, the foundational equitable principle is that Equity preserves trusts, rather than destroying them [45] and acts to perform or execute trusts not to alter them [46] .
To that end the Court may remove a trustee, or appoint a new trustee, or (albeit only in rare cases) administer the trust [47] . Thus, generally, if trustees are unable to execute powers, receivers are appointed to execute the trust or trust powers rather than to wind up a trust [48] .
Leaving the statutory jurisdiction to one side, in NSW, there is no inherent power to vary a trust so as to permit its revocation [49] .
There is no general inherent power to alter trusts simply because that may advantage beneficiaries. Leeming JA in summarising the position has stated [50]
(a) courts had no general power to alter the terms of a trust on the ground that it appeared likely to advantage the beneficiaries, although (b) in a small number of tightly confined situations courts could sanction action by a trustee which was beyond power or even contrary to the terms of the trust, but (c) even in such situations it was usually insufficient merely that such action would be advantageous – something more, usually some form of emergency, was required.
There are cases which bear upon the question of the Court’s inherent jurisdiction to replace or appoint an appointor.
In Kennedy v Kennedy [51] , a discretionary family trust had been set up involving relevantly a son and his parents. The son had been appointed as trustee and appointor and his parents were named as the principal beneficiaries of the trust with various other discretionary objects. The son disappeared and extensive searches to locate him proved futile. The son’s disappearance gave rise to the consequence that there was no person to make the appointment to replace the trustee. The parents applied for orders. Slattery J in circumstances of the son having disappeared for almost 3 years in which nothing had been done to administer the trust in that period determined that the Court should intervene to remove the son as trustee. His Honour also considered that someone would need to be appointed as the appointor of the trust [52] .
His Honour, accepting that there were special circumstances, appointed the parents as trustees. However he declined to appoint them as appointors to the trust. He considered that they would need to find someone else to take that role. He granted liberty to the plaintiffs to advance in due course the name of another person to become appointor of the trust. His Honour considered that it would be preferable that that person was not a beneficiary but (could be) perhaps a professional adviser to the plaintiffs [53] . His Honour in appointing the parents as trustees referenced “the exercise of the Court's supervisory jurisdiction over this trust to appoint new trustees under Trustee Act 1925, s 70” [54] . It is not evident from the reasons for judgment (and this is no criticism as it is an ex tempore judgment) precisely what jurisdictional basis there was for the contemplated appointment of a new appointor.
In Blenkinsop, the Western Australian Court of Appeal appeared to accept that the Court had power to remove a guardian of a trust if it was necessary to secure, but not alter, the due execution of the trusts and that the proper characterisation of the guardian’s trustees powers affected discretion rather than jurisdiction [55] . On the facts there were joint guardians and issues arose by dint of the dysfunctional relationship between them. Neither Allanson J at first instance nor the Court of Appeal acted to remove and replace the guardian. The Court of Appeal on the facts did not accept that the primary judge had erred in failing to find that the powers of the guardians were fiduciary powers [56] .
In Dryandra, Master Russell addressed the question of whether the Court had inherent jurisdiction to appoint a replacement guardian and appointor. In reliance upon the Western Australian Court of Appeal's decision in Blenkinsop, her Honour found that the Court had power under its inherent supervisory jurisdiction to remove and, relevantly, replace both a guardian of a trust and an appointor if the circumstances were such as to warrant the exercise of the power. Her Honour considered that there was no fixed rule and each case must be considered on its own facts and circumstances including the terms of the relevant trust instrument [57] . Her Honour considered that it was appropriate to exercise the power in circumstances where the guardian and appointor did not have capacity to perform that role and the trust was unable to operate as intended [58] .
Beneficiaries in some circumstances have powers to bring trusts to an end. Thus, in Anglo-Australian law (contrary to the position in the United States), capable adult beneficiaries who enjoy an absolute vested and indefeasible interest in trust property, may act to call upon the trustee to transfer the trust property to them. The divergent approach in different jurisdictions reflects policy choices regarding how far a settlor should be permitted to control not only the disposition but also the enjoyment of property [63] .
The recognition of such a power predates 1841 but is often referred to as the so-called ‘rule’ in Saunders v Vautier [64] .
The exercise of the power does not involve the performance by a trustee of any part of its office as active trustee, rather it brings the office to an end. In doing so it effects a change in legal relationships [65] . The power, if available and acted upon prevails over or overrides restrictions imposed by testators and settlors in the trust instrument having the effect of bearing and defeating the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a will or trust instrument [66] .
The power is not unqualified. Thus, even when beneficiaries are unanimous and absolutely and indefeasibly entitled, the exercise of the power may be subject to qualifications including a trustee's right to reimbursement or exoneration for the discharge of liabilities incurred in the administration of the trust [67] .
81 Advantageous dealings
(1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or disposition, or any purchase, investment, acquisition, expenditure, or transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the instrument, if any, creating the trust, or by law, the Court--
(a) may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, including adjustment of the respective rights of the beneficiaries, as the Court may think fit, and
(b) may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.
(2) The provisions of subsection (1) shall be deemed to empower the Court, where it is satisfied that an alteration whether by extension or otherwise of the trusts or powers conferred on the trustees by the trust instrument, if any, creating the trust, or by law is expedient, to authorise the trustees to do or abstain from doing any act or thing which if done or omitted by them without the authorisation of the Court or the consent of the beneficiaries would be a breach of trust, and in particular the Court may authorise the trustees--
(a) to sell trust property, notwithstanding that the terms or consideration for the sale may not be within any statutory powers of the trustees, or within the terms of the instrument, if any, creating the trust, or may be forbidden by that instrument,
(b) to postpone the sale of trust property,
(c) to carry on any business forming part of the trust property during any period for which a sale may be postponed,
(d) to employ capital money subject to the trust in any business which the trustees are authorised by the instrument, if any, creating the trust or by law to carry on.
(3) The Court may from time to time rescind or vary any order made under this section, or may make any new or further order.
(4) The powers of the Court under this section shall be in addition to the powers of the Court under its general administrative jurisdiction and under this or any other Act.
(5) This section applies to trusts created either before or after the commencement of this Act.
Statutory powers need not (and often do not) reflect the general law position. Nonetheless, s 81 addresses the provision of power(s) to facilitate the management or administration of the trust assets. Powers might in some cases be conferred which have the effect of altering or impinging upon trusts but that is a consequential effect. There is no principal purpose in s 81 to authorise alteration of the trusts on which trust property is held which would have been beneficial to the interests of the beneficiaries, or to the fulfilment of the trust purpose, but which are not concerned with the management or administration of the trust assets [68] .
This aspect was emphasised by Barrett JA in in Re Dion Investments Pty Ltd & Anor (2014) 87 NSWLR 753; [2014] NSWCA 367 (Re Dion) as follows [69] :
Although "transaction" is a very wide expression, power for a trustee to effect a particular "transaction" may be supplied by the court only if, in the management or administration of any property vested in the trustee, the "transaction" is, in the court's opinion, "expedient" - that is, according to Dixon J in Riddle v Riddle (at 214), expedient "in the interests of the beneficiaries" or, according to Williams J (at 222), "advantageous", "desirable" or "suitable to the circumstances of the case" but, in every case, with expediency tied to management or administration of trust property.
Statutory construction depends upon the purpose, text, context, coherence and legislative history of the relevant provision [70] .
Expressions from one statutory context cannot be readily equated or appropriated to another even if broadly speaking, the general topic from each statutory context is similar [71] .
Often the history of a rule, as to its genesis and purpose, and the circumstances that are addressed in the authorities that have applied the rule, may provide useful guidance in considering how the power conferred by the rule should be exercised in a particular case, or at least give some insight as to its exercise [72] .
Nonetheless, it is inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words [73] .
Generally with New South Wales (NSW) legislation, headings to provisions of an Act or instrument, being headings to Parts, Divisions or Subdivisions into which the Act or instrument is divided, are taken to be part of the Act [74] . However, marginal notes, footnotes or endnotes are generally not taken to be part of the Act [75] .
The trust variation approval amendments to the Trustee Act (through the insertion of Division 3A being ss 86A, 86B and 86C) were affected by the Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 (NSW) with the provisions commencing on the date of assent, namely 28 September 2020.
Various miscellaneous amendment bills are typically introduced into Parliament each session as part of the government's regular legislative review and monitoring program. In that year, owing to the disruption caused by the COVID-19 pandemic, a miscellaneous amendment bill was not able to be introduced in the budget session of the Parliament, and instead four separate miscellaneous bills were introduced during the session in September [76] .
The legislative history of the provision was addressed by Lindsay J in Re PDC [77] . The explanatory note to the Bill relevantly indicated that the object of the Bill was
to bring NSW into line with other jurisdictions by allowing the Supreme Court to vary or revoke a trust where that is in the interests of the beneficiaries and fulfils the purpose of the trust [78] . [emphasis added]
The Bill was introduced into the Legislative Assembly on 16 September 2020. The Attorney General (Mark Speakman SC) explained in the Second Reading Speech that it introduced a number of miscellaneous amendments to address developments in case law, support procedural improvements and close gaps in the law that had become apparent relating to courts and civil procedure [79] .
So far as the Trustee Act was concerned, the Bill addressed the provisions of the Trustee Act which deal with maintenance for beneficiaries, including introducing a provision dealing with maintenance for adult beneficiaries. The other provision addressed by the Bill related to the variation of trust.
The Second Reading Speech addressing the variation of trusts was, relevantly, as follows [80]
Schedule 1.14 to the bill will make a number of amendments to the Trustee Act 1925 to improve the administration of trusts. Schedule 1.14 [4] to the bill amends that Act to permit the court to approve an arrangement varying or revoking a trust where this is beneficial to the interests of the beneficiaries or to the fulfilment of the trust purpose. Section 81 of the Trustee Act currently empowers the court to make orders relating to the management and administration of trust property that can be seen to be expedient.
The Court of Appeal has held that section 81 does not authorise the court to make orders for the variation of trusts, which will be beneficial to the interests of the beneficiaries or to the fulfilment of the trust purpose but which are not concerned with the management or administration of the trust assets. This amendment will ensure that the court can approve arrangements to vary or revoke trusts in these circumstances. There are legitimate reasons for which a trustee may seek to modify the terms of a trust in order to discharge their duty to a beneficiary. Set laws often create trusts without consideration to future circumstances and there may be a need to amend the trust to accommodate those circumstances in a way that is consistent with the intention of the settler. This would bring New South Wales law into line with the law in the United Kingdom and in other Australian States.
Item [4] aims to bring the State in line with other jurisdictions by allowing the Supreme Court to approve an arrangement varying or revoking a trust where this is beneficial to the interests of the beneficiaries or to the fulfilment of the trust purpose. [emphasis added]
86A Court order to approve arrangement
(1) If property is held in trust under any instrument creating the trust, the Court may, if it thinks fit, by order approve any arrangement to--
(a) vary or revoke all or any of the trust, or
(b) enlarge the powers of the trustees for the purpose of managing or administering any of the property subject to the purpose of the trust.
(2) An order under this section may be made by the Court only on behalf of--
(a) any person under the trust having an interest directly or indirectly, or vested or contingent, who by reason of being a minor or other incapacity is incapable of assenting, or
(b) any person who may become entitled, directly or indirectly, to an interest under the trust, and the entitlement is contingent on a future date or event that has not occurred at the time of application for an order under this section, or
(c) any unborn person, or
(d) any person in respect of any discretionary interest of the person under protective trusts where the interest of the principal beneficiary has not failed or determined.
(3) This section--
(a) extends to a trust created before the commencement of this section, and
(b) does not apply to trusts affecting property created by another Act, and
(c) does not limit the operation of section 81.
(4) In this section--
"discretionary interest" , in relation to protective trusts, means an interest arising under section 45(6).
"principal beneficiary" has the same meaning as in section 45.
"protective trusts" has the same meaning as in section 45.
86B Court order to benefit person subject to application
(1) The Court must not approve an arrangement on behalf of any person under section 86A unless the carrying out of the order would be for the benefit of that person.
(2) Subsection (1) does not apply to an approval of an arrangement under 86A(2)(d).
86C Court may direct notice of application to certain persons
Notice of an application to the Court for an order under section 86A must be given to any persons as the Court may direct.
The genesis of variation approval legislation is the UK legislation in 1958.
Relevantly the Variation of Trusts Act 1958 (UK) s 1 is in the following terms
Jurisdiction of courts to vary trusts.
(1) Where property, whether real or personal, is held on trusts arising, whether before or after the passing of this Act, under any will, settlement or other disposition, the court may if it thinks fit by order approve on behalf of—
(a) any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting, or
(b) any person (whether ascertained or not) who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of any specified description or a member of any specified class of persons, so however that this paragraph shall not include any person who would be of that description, or a member of that class, as the case may be, if the said date had fallen or the said event had happened at the date of the application to the court, or
(c) any person unborn, or
(d) any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined.
any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts, or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts: Provided that except by virtue of paragraph (d) of this subsection the court shall not approve an arrangement on behalf of any person unless the carrying out thereof would be for the benefit of that person.
[(2)-(6) – not reproduced]
The enactment of the Variation of Trusts Act 1958 (UK) was consequent upon recommendations of a law reform committee to "meet the mischief identified in Chapman v Chapman" and overcame the limitations identified by it to the effect that the court had no power to approve a beneficial alteration to the terms of a trust on behalf of beneficiaries who are incapable of giving such approval, whether by reason of their being minors or unborn or unascertained [83] .
In the UK it been said that the decision in Chapman v Chapman [84] did not affect the so-called Saunders v Va**utier power of beneficiaries, if they were all sui juris and together absolutely entitled, to determine a trust or resettle trust property on altered trusts, nor affect the jurisdiction of the Court to sanction a compromise of rights under a trust which were the subject of doubt, or dispute. However, the Court had no jurisdiction to sanction such change in reference to rights which were not in dispute [85] .
The UK legislation has thus been viewed by the courts as type of a statutory extension of the consent principle embodied in the rule in Saunders v Vautier. However, agreement as to the ambit of that analogy is not uniform [86] .
NSW was the last of the various Australian States to enact variation approval legislation. The relevant provisions being: Trustee Act 1958 (Vic), s63A; Trustees Act 1962 (WA), s90; Trusts Act 1973 (Qld), s95; (d) Trustee Act 1936 (SA), s59C; and Variation of Trusts Act 1994 (Tas), Part 3, ss 12-15.
In Cisera 2023 [87] Parker J, noted that with the possible exception of South Australia, the cognate variation approval legislation in NSW and the other States appears to have been influenced by the UK legislation observing that some align more closely with the UK legislation than others. His Honour summarised the material differences [88] .
In the UK for almost 40 years after the enactment of the legislation, the variation provisions were "invoked thousands of times" yet with remarkably few reported cases on its construction, until the decision of the Court of Appeal in Goulding v James [89] - the notable exception being the decision of the House of Lords in Inland Revenue Commissioners v Holmden [1968] AC 685 (Holmden).
It is evident that there are slight differences in wording in the various provisions in the UK and other Australian states. Discussion of the UK legislation and that of other Australian states and judicial application of the legislation is addressed both in texts and case law.
- Generally speaking, the variation of trusts legislation is recognised as remedial legislation which should not be given an unduly narrow construction. At least one limitation has however been identified. The authors of the most recent edition of Lewin on Trusts (L Tucker, N Le Poidevin, J Brightwell, 2020, 20th ed, Vol 2, Sweet & Maxwell) at [53-033] state (citation omitted):
The principal provision of the 1958 Act is that the trusts may be varied or revoked wholly or partially. There is, however, no power to approve a complete resettlement, and the claim form should not use the word “resettle”.
- The limitation is expressed by the authors of the most recent edition of Jacobs’ Law of Trusts in Australia (J D Heydon, M J Leeming, 2016, 8th ed, LexisNexis Butterworths) at [17-07] in the following way:
The most substantial limitation on the section stems from the doctrine that it does not confer jurisdiction to create an entirely new trust, as distinct from varying an existing one.
His Honour went on to discuss that limitation at length.
The Trust in this case was created prior to the commencement of s 86A, and subject to the question of standing, its provisions are not otherwise excluded by the reach of the section outlined in s 86A(3).
Standing in respect of an application under s 86A is addressed by reference to persons who in general terms have no immediate present entitlement in respect of the trust, but rather have an interest or may have an interest, but are unable to engage in respect of the variation or revocation proposal because they are either incapable of assenting, or their possible entitlement is contingent upon some future date or event that has not occurred at the time of the application or there is a protective trust involved or the person is unborn. In those cases that I have generally described (more precisely defined in s 86A(2)), the application may be made "on behalf of" such a person. It is unnecessary to dwell deeply on the wording "on behalf of". Clearly the words permit action by a representative of a person who is unable to readily make an application. The trustee of a trust readily fits that description.
The standing gateway to applications under s 86A so expressed by the section have natural application in relation to "discretionary trusts". Thus, nature of discretionary trusts where there are objects of power to appoint allows ready satisfaction of the standing criteria. This includes, for example, so-called "default beneficiaries" where persons are specified as taking in default of appointment.
[221] It will be seen that on the view I take, this potential difficulty does not arise. But I would add that there is no obstacle in statute amending the charitable purpose of a trust. I respectfully do not accept that it is “fundamental” that the terms of a trust are fixed at its inception. Trusts are a flexible institution, and it all depends on how the trust is constituted. It is rare to see a private discretionary trust that does not include a power of variation. Statutes have long conferred powers on courts to vary trusts — the power of advancement in s 44 of the Trustee Act 1925 (NSW) is a familiar example, and a broader power has more recently been conferred by s 86A. Turning more specifically to charitable trusts, the point of a cy-près scheme is to alter an existing charitable purpose. I see no reason in principle why a statute cannot alter the purpose of a charitable trust already in existence in equity. An example of a statute treating an altered purpose as a charitable trust is, in fact, s 8(3) inserted by the James Hardie Former Subsidiaries (Winding up and Administration)(2024) 116 NSWLR 314 at 369 Amendment (Trust Funds) Act 2006 (NSW), which provides that if certain changes took place, then “any trust fund that was originally established for the purposes referred to in subsection (1)(a) … continues to be a valid charitable trust”.
Mr Halpern also accepted that even the most determined settlor or testator cannot exclude the jurisdiction of the court under the 1958 Act. The court has a discretion to approve an arrangement under the Act, even though the settlement or will may make it crystal clear that the settlor or testator does not want any departure from any of the strict terms of the trust.
The fact that there could be legislation of such a character in Australia and even in the UK in 1958 is unsurprising. Family provision legislation applied properly can have an effect which may permit departure from purposes or terms which a testator has expressly laid down. Thus indeed, by general analogy to family provision jurisdiction, the statutory provisions may be seen as a legislative response to issues or limitations that arose in a context and permits discretionary curatorial intervention, which may impact the entitlement of beneficiaries in any given situation coming properly within the terms of the provisions. However, in the same way that family provision legislation does not extend to authorising general redistribution of estates, by reference to notions of general "fairness" or otherwise [103] , the variation approval legislation does not broadly permit resettlement of trusts, other than by proper application of the provisions to any given case.
The ultimate form of the explanatory note on the passing of the NSW provisions revealed a difference from that in the Bill as I have noted above. In the Act, the expression of object or purpose in allowing the Court to approve an arrangement varying or revoking a trust is expressed with the disjunctive "or" rather than the conjunctive "and". Thus, it was envisaged that in that expression of the objects the enlivening basis of the Court's intervention could occur in circumstances where the proposed arrangement is either beneficial to the interests of the beneficiaries or to the fulfilment of the trust purpose rather than both.
Lindsay J has recognised that whilst importance may attach to identification of continuity of purpose in comparison with a state of affairs before the making of an order and after, the Court is not necessarily anchored to the settlor’s or testator’s purposes upon the proper exercise of the jurisdiction [104] .
It has been observed that though the distinction between a variation and a revocation might be important in a particular case, the substance of what is sought must be kept in view [105] .
The variation provisions have been understood as beneficiary initiated rather than settlor or trustee initiated. Further, the role of the Court has been perceived as not itself, amending or varying the trusts, but acting on behalf of or is representing beneficiaries who are not in a position to give their own consent and approval [106] .
The Court in so acting has been described as being almost in the position of a "statutory attorney" behalf of the members of the class cannot act for themselves [107] .
The proposed arrangement must be consented to by everyone that is or will be affected by its imposition, whether that consent is provided by the individuals who are able to consent or in the case of those who are unable to consent by the Court on their behalf [108] .
In Barns, the Victorian Court of Appeal indicated that the Court must first be satisfied that the arrangement was and is both for incapacitated persons benefit and a fair and proper one overall, must take into account the purposes of the trusts and the intention of the of the testator and should engage in a "businesslike consideration of the arrangement, including the total amounts of the advantages which the various parties obtain, and their bargaining strength” [109] .
Approval applications have involved various proposals including claims to extend vesting dates, widen classes of beneficiaries and introduce powers of amendment. Invariably, it is helpful to understand concerns regarding jurisdictional limits by reference to facts of particular cases.
In Re Em McPherson Settlement [110] Harris J permitted a proposed variation to broaden a class of beneficiaries but not as wide as had been sought. Her Honour considered that the definition of beneficiaries ought to require a closer relationship between the family member beneficiaries and the corporate beneficiaries. Thus, a widening was permitted but on the basis that the variation was reworded to refer to private companies in which the beneficiary had a controlling interest [111] . Her Honour was concerned in permitting such an amendment to consider whether any significant broadening of the definition of "beneficiaries" would constitute such a change as to destroy the substratum of the trust or amount to a resettlement rather than the variation. Her Honour in allowing the variation was satisfied that the proposed amendment would not alter the basic purpose or substratum of the trust [112] .
In NSW the tension between what permissibly may be authorised under s 86A, and concerns regarding its limits have been helpfully discussed in WFT Capital by Hmelnitsky J.
His Honour addressed jurisdictional limits by reference to discussion of the ill-fated Cisera litigation. His Honour explained in detail why the applications were unsuccessful and the concerns addressed by Parker J. In the first decision of Parker J in 2017 (referenced by Hmelnitsky J as "Cisera I") Hmelnitsky J observed that orders in the form proposed would have not only extended the vesting date but altered the composition of the beneficial class by adding additional generations of the family contrary to what appeared to be a design limitation in the original trust [113] .
Cisera 2023 [114] involved an application under s 86A (in distinction from the earlier application under s 81). There were issues relating to both the life of the trust and expansion of beneficial class. Hmelnitsky J observed that Parker J had approached the resolution of issues through the prism of a ‘substratum’ test in terms of addressing whether changes made to the terms of the trust cross the boundary between variation and settlement [115] .
Hmelnitsky J observed that, at least in Australia, the question of whether a variation of trust amounts were resettlement is not answered by reference to whether the variations are essential or inessential, fundamental or immaterial, but rather by reference to whether there is continuity across indicia being the regime of trust obligations, the trust property and membership of the trust. His Honour stated [116] :
It is relevant to note that in Australia, the question of whether a variation of a trust amounts to a resettlement is not answered by reference to whether the variations are ‘essential or inessential, fundamental or immaterial’: Commissioner of Taxation v Commercial Nominees of Australia Ltd [2001] HCA 33; (2001) 75 ALJR 1172 at [35]. Rather, it is to be answered by reference to whether there is continuity across three indicia, being (a) the regime of trust obligations, that is, its so-called constitution, (b) the trust property, and (c) membership of the trust: at [36]; see also Federal Commissioner of Taxation v Clark (2011) 190 FCR 206; [2011] FCAFC 5 at [36]. Where there is continuity of these matters, there will be no resettlement no matter how fundamental or essential the changes might otherwise be seen to be.
Differing approaches in different jurisdictions have been taken to the question of whether the variation approval legislation permits the appointment of appointors.
In both the UK and NSW there are instances of the variation approval legislation being used to facilitate appointment of appointors. However, in Victoria and Western Australia there are decisions that go the other way. It is convenient to deal with them chronologically.
In Bathurst v Bathurst [2016] EWHC 3033 (Bathurst) an application under the Variation of Trusts Act 1958 proposed a change to the provision for the appointment of new trustees. There were competing proposals regarding who should have the power to appoint new trustees. All of the adult beneficiaries of the settlement and 3 of the 4 current trustees proposed that the principal beneficiary should have that power with the written consent of the trustees for the time being. On the other hand, the fourth trustee proposed that the trustees be the appointor, though with the consent of the principal beneficiary.
Essentially the issue was refined as to which of either the trustees or the principal beneficiary would have the appointor power subject to the veto of the other [117] . In the result, Master Matthews determined that the principal beneficiary ought to be the appointor. The reason being that he, knowing the situation of all the beneficiaries (members of his extended family) and having enjoyed a long relationship with the land part of the trust assets held in his family for many generations, was in at least as good a position as anyone and better than most to decide what qualities were needed in a new trustee [118] . There was no suggestion that the Court lacked jurisdiction to appoint an appointor under the legislation.
In W E Pickering Nominees Pty Ltd v Pickering [2016] VSC 71 [119] the plaintiffs conceded that there was no power in the deed to amend the deed for the appointment of an appointor to the trust [120] . Their submissions essentially rested on the propositions that such a variation was consistent with the deceased wishes as set out in his Will and they referenced a clause of the deed which provided for the trustee to exercise powers under the South Australian Trustee Act [121] . McMillan J was unconvinced that Victorian variation approval power conferred on the Court the ability to grant a general power to amend or a power to appoint an appointor [122] . Specifically, in regard to the power to appoint an appointor, her Honour considered that the provisions of the South Australian Act had sufficient breadth to address any issues that might arise concerning the appointment and removal of the trustee to the trust [123] .
There was an appeal to the Court of Appeal [124] on the basis that there had been a denial of procedural fairness. The parties had requested that her Honour deal with the matter on the papers. McMillan J had taken into account the position of potential unborn beneficiaries in deciding whether to grant relief. They complained that her Honour did not inform them that that would be an issue with the consequence that they did not address the position and had no opportunity to make submissions or file the evidence directed at the issue. An appeal was allowed. However, the Court of Appeal had no occasion to address the question of whether variation approval power conferred on the Court the ability to grant a general power to amend or power to appoint an appointor.
In Victoria a number of judges under the variation approval power (s 63A) have declined to accede to applications the effect of which would be to permit a variation trusts generally.
In Re the Alan Synman Family Trust [2013] VSC 364 (Re Synman) Ginnane J declined to approve an arrangement to vary a trust to give a trustee a general power of variation. His Honour intimated that the Court is better placed to assess specific proposals. Proposals of general variation may well make it difficult for the Court to properly assess whether it is in the best interests of the beneficiaries. His Honour stated [131]
In this, and in most applications under s 63A, the appropriate path is for a trustee to seek the court’s approval of an arrangement to vary specific provisions of the Trust Deed, rather than seeking approval of an arrangement giving the trustee a general power of variation. By the former path, the Court can, in most circumstances, best assess whether the carrying out of the arrangement would be for the benefit of persons who have an interest under the trust and who are incapable of giving their assent. It is far more difficult to reach that conclusion when the Court does not have the detail of all the variations that the trustee will make, once given the general power of variation.
McMillan J in Pickering was unconvinced that the Court had the jurisdiction to grant a general power to amend or a power to appoint an appointor [132] .
In McPherson, Harris J, whilst permitting a variation having the effect of widening a class of beneficiaries, declined to permit a variation to introduce a general power of amendment. Her Honour considered that was not possible to be satisfied that the introduction in carrying out of a general power of amendment would benefit current and future minor beneficiaries [133] .
Whilst the application in this case was amended to include reference to the statutory power under s 81(2) Trustee Act, no particular submissions were addressed to that provision. It is not evident that s 81(2) Trustee Act authorises what is proposed in the amended summons.
In relation to the s 86A Trustee Act relief, I accept that the Trustee has standing.
Mr Ellison SC submitted
27. The cases demonstrate the Courts have given particular attention and considered it to be "a" or "the" object of the (remedial) legislation that consideration be given to those who could not give their consent to the application which is before the Court. Into this category fall, particularly, minor beneficiaries and unborn (potential) beneficiaries. Nevertheless, it was considered that the overriding purpose of the legislation was for the benefit of the trust generally whether it be the continuation of the intent of the original settler or trustee, continuing family harmony or the legitimate minimisation of taxation. From the referred to cases, it does not appear the interest of unidentified (potential) discretionary objects was, of itself, a reason for refusing to exercise the jurisdiction.
..
31. Although Parker J notes the difference between Variation of Trusts Act 1958 (UK), s1 (b) and s86A(2)(b) it is submitted in New South Wales legislation by using the same introductory words - "any person who may become entitled ... " covers all those people in the apparently wider definition under the United Kingdom legislation , again, it being beneficial legislation to assist to achieving an end, the New South W ales legislation should, within its terms, be given a wide definition.
Each of the 8 surviving ‘Eligible Beneficiaries’ consents to the application before the Court (either by express form of consent or affidavit).
Despite Mr Ellison’s submission regarding differences between the Variation of Trusts Act UK s 1(b) and s 86A(2)(b) Trustee Act it is not evident to me that for the purposes of this application it is necessary to analyse and form particular views regarding the differences in the wording of those provisions. That is because on any view of the matter it seems to me that the provisions of s 86A(2) in terms of standing are engaged.
Mr Ellison SC referred to the decision of Master Russell in Dryandra Investments, in a context in which he recognised that her Honour found that the variation approved the legislation could not be used to appoint an appointor but found that the Court had an inherent power to appoint an appointor. However no particular other submissions were addressed to this relief.
Bruno (whether correctly or otherwise) has proceeded on the basis that cl 21 of the Trust Deed permitted variation of the trustee during the life of the Appointor. As indicated above I think that is the correct construction.
The role the Appointor has what might well be regarded as a protective role in relation to the power to vary the Trust. Thus, certainly on one view of clauses 20 and 21 if the Trustee proposes a variation of the Trust on notice to the Appointor in a form which is disagreeable to the Appointor, the Appointor may remove the Trustee before such variation is effected. However, there is no need for me to form any concluded view regarding whether that is the proper construction or whether the Appointor’s powers in this respect are fiduciary or otherwise. On any view of the matter, whilst the Trust can operate without the Appointor per se, it can be said that the Appointor’s role at the very least under cl 20 in appointing or removing trustees was (and would be if operative) facilitative to the due and proper execution of the Trust.
Having regard to the above authorities, there is some doubt as to whether the variation approval power may be exercised to appoint an appointor. In the absence of particular submissions on the issue I am not inclined at least at the moment to exercise the s86A power to that effect.
However, I am persuaded that there is an inherent power to secure, but not alter, the due execution of the Trust. Provisionally, I am prepared to use the inherent power of the Court to appoint an “Appointor” for the Trust. The proposal is that Bruno and Frank be appointed. Subject to one matter, I am prepared to appoint them as “Appointors”. The one matter is that under cl 19 of the Trust Deed the there is a very clear indication that no benefits may be conferred upon the Appointor notwithstanding that such a person is otherwise within the description of Beneficiaries or Eligible Beneficiaries.
I propose to give Bruno and Frank some time to consider whether they are prepared to be appointed on those terms.
It is one thing to approve arrangements in respect of the Trust for certain purposes which may be in the interests of beneficiaries. It is another to enlarge a power of variation of the trusts.
There are no Australian cases in which that has seemingly occurred. There is a real question regarding whether the proposal to vary the cl 21 variation power can be said to be within the interests of beneficiaries. No specific submissions were addressed to this point.
Nonetheless, it seems to me that once an Appointor is appointed there is arguably mechanism under the Trust Deed for the variation power to be operative. In those circumstances, I do not consider that at this point of time it is appropriate to make any order pursuant to s 86A to grant the relief in relation to clause 21. However, my decision in that regard is not to be construed as foreclosing any further potential application.
26 My siblings, our spouses, children and grandchildren have a good family social and economic relationship. I acknowledge distributions since the death of Giuseppe have been made without regard to the categories of eligibility (and consequent ineligibility). I believe it would be in the interests of continuing family harmony if the category of eligible beneficiary was restored to that which operated before the death of Giuseppe.
12. It is noted in the application under consideration the intent of the application is to restore the class of eligible persons to the wider class available inter vivos being those in the Second Schedule . The deceased's children and some of the grandchildren fall into both the Second and Third Schedules. Clearly, it would be in the interests of family harmony and still keeping the categories reasonably closed for the class of beneficiaries after the death of Guiseppe to be expanded to those who were able to take during his lifetime.
..
28. The practical intent of the proposed arrangement is to expand the post mortem beneficiaries (Third Schedule) to the class of inter vivos beneficiaries (Second Schedule). There are current minor grandchildren who have already benefited from inter vivos distributions - Francesco Vartuli born 18 January 2008 and Stephanie Vartuli born 8 February 2010 who are the grandchildren of Francesco Vartuli. They took benefits whilst the appointer was alive and have become disentitled following his death . There may be other grandchildren. The category or class of "any relative of the appointor" may also include minors and children yet to be born.
29. Especially with reference to those who took whilst Guiseppe was alive, they had a "clear'' interest which was either suspended or terminated on the death of Guiseppe. It is submitted this class was not the class contemplated by Parker J at [131] when he spoke of a "lacuna".
…
32. The subject trust is a closely knit and harmonious family trust. It is a historical quirk following the death of the appointer (Guiseppe) the categories of beneficiaries significantly narrowed from children, Guiseppe's wife, and any grandchildren and "relative" of Guiseppe to his wife, his four children and grandchildren living at the date of death. Bruno's children consent to the application. Bruno's affected grandchildren Joseph, Anthony, Rosanne and Joseph also consent. It those named four grandchildren who might be "adversely" affected once the categories of eligibility expand so as to return to the pre-Guiseppe date of death class.
33. For reasons of family harmony and practicality the arrangement should be approved .
18 It is submitted the present application does not constitute anything which would resemble or constitute a re-settlement. All it does is to remove what might be seen as an "anomaly" which distinguishes beneficiaries from eligible beneficiaries solely by their existence (or otherwise) at the date of death of the appointer. Overall, the persons entitled to benefit from the trust remain the same being close family members.
On balance I am prepared to accede to the application to approve the proposed amendment to cl 3(b) of the Trust Deed.
The notion of family harmony is in the context of a family discretionary trust perhaps generally, but more specifically, in this case a reasonable consideration in favour of the proposed arrangement. In Perenna, McMillan J observed that benefit could include familial benefits [136] . Further, I note that under the Tasmanian variation approval legislation there are various matters specified that the Court must have regard to including any non-financial benefit to and the welfare of the family of the (relevant) person [137] .
The proposal does not create any broader class of beneficiaries entitled to distributions than was permissible during Giuseppe's lifetime.
The proposal does not affect the persons who would ultimately be entitled to a distribution of the Trust on its termination and distribution under cl 4. Clause 4 of the Trust Deed contains specific reference to ‘the Eligible Beneficiaries’ and the proposal does not seek to widen that class.
The effect of the proposed amendment to cl 3(b) of the Trust Deed would permit the Trustee to distribute income as indicated to ‘the Beneficiaries’ as defined which relevantly would include the grandchildren of Giuseppe other than the 4 grandchildren who are specified as being ‘Eligible Beneficiaries’ and also ‘any relative’ of Giuseppe.
Each of the 8 ‘Eligible Beneficiaries’ who might be affected by the arrangement have in substance consented to the arrangement, expressly conscious of the fact that although they are only objects of appointment of income and have no necessary right to the appointment of income to the extent that there is a more limited class of persons to whom income may be distributed, they are content for the Court to approve a proposal which might dilute their interests.
Ultimately, it seems to me that it can be said that the proposed alteration to cl 3(b) is in the interests of beneficiaries both those who are unable to consent and the beneficiaries as a whole. I propose to make that order.
The application sought a raft of relief principally pursuant to s 86A Trustee Act. Ultimately, I am persuaded that only a limited part of that relief should be given, at least at this stage in relation to the beneficial class provisions.
The further issues which arise in relation to use of s 86A Trustee Act in respect of variations regarding nomination of the Appointor, permitting a majority decision of the “named beneficiaries” to remove or substitute another Appointor, and amendments (including timing and recipient of notice) to the variation power were not the subject of specific submissions and I consider can await reflection by the plaintiff and family members on these reasons for judgment.
Consistent with what I have indicated above I am prepared to act upon the inherent power of the Court to appoint appropriate ‘Appointors’ whether they be Bruno and Frank or some other suitable person.
The costs of the application to date may be paid out of the Trust on the indemnity basis. I direct the plaintiff to bring in short minutes of order to give effect to the reasons for judgment.
**********
Macquarie Dictionary, (online at 1 April 2026) ‘plans’.
Cambridge Dictionary, (online at 1 April 2026) ‘succession planning’.
Ibid. See also Estate of the late John Currie Docherty Hamilton [2025] NSWSC 932 at [58].
Charles Dickens, Great Expectations (New York: Books, 1868).
Associated press, ‘Biggs Has Plans for Tyson’ Oroville Mercury Register (Oroville, 19 August 1987) 1B. Referenced on a number of occasions including before a fight against Tyrell Biggs in 1987. Several variations of Tyson’s quote have been coined and attributed to him.
Bible - New International Version - Exodus 34:6-7; Isaiah 55:8-9; Romans 5:1-8, 8:28; Colossians 1:15-20. God’s ‘wisdom’ is revealed by his Word and Spirt: Psalm 19:7-14; Corinthians 2; Hebrews 4:12.
Macquarie Dictionary, (online at 1 April 2026) ‘epergne’ (an ornamental piece for the centre of a dinner table, often elaborate in design, for holding fruit, flowers, etc).
Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 at [8] (Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ); El Sayed v El Hawach (2015) 88 NSWLR 214; [2015] NSWCA 26 (El Sayed) at [14]; Peter Sleiman Investments Pty Ltd (As trustee for the Sleiman Family Trust) v Deputy Commissioner of Taxation [2017] NSWCA 81 at [13] per Leeming JA.
Sleiman at [13].
Gollin and Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 at 470.
Jowitt’s Dictionary of English Law (6th ed, 2023) ‘appointor’ (def 2).
JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis, 8th ed, 2016) (Jacobs) at [2-46].
Jessica Hudson, ‘The Proper Purpose Rule: Preventing Law’s Intentional Abuse’ (Paper), Supreme Court of NSW Annual Conference, 2024 (Hudson) at 4.
Jowitt’s Dictionary of English Law (6th ed, 2023) ‘appointor’ (def 1).
Jacobs at [15-04].
Jacobs at [15-04].
Lynton Tucker, Nicholas Le Poidevin and James Brightwell, Lewin on Trusts (Sweet & Maxwell, 20th ed, 2020) (Lewin) at [15-001].
Trustee Act s 6(4)(a).
Trustee Act s 6(4)(b).
Jacobs at [15-05].
Jacobs at [15-05] citing Re Harding [1923] 1 Ch 182.
See e.g. the trust deed in El Sayed at [17], [70].
Jacobs at [15-05].
Jacobs at [15-12].
Trustee Act s 6(3).
Lynton Tucker, Nicholas Le Poidevin and James Brightwell, Lewin on Trusts (Sweet & Maxwell, First Supplement to 20th ed, 2023) (Lewin Supplement) in particular at [15-047]-[15-053].
Lewin at [15-048].
Lewin at [15-051]; Jacobs at [15-85].
El Sayed at [63]-[69] citing inter alia In re Coomber; Coomber v Coomber [1911] 1 Ch 723 at 728-729 (Moulton LJ); Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606 at 636 and 638 (Upjohn LJ).
El Sayed at [71]-[73].
Lewin at [15-0528] referencing Sinead Andrew, Charles Mitchell, Jonathan Harris and Paul Matthews, Underhill and Hayton Law of Trust and Trustees (LexisNexis, 19th ed, 2022) [71.7].
Grand View Private Trust Co Ltd v Wong [2022] UKPC 47 (Grand View) at [56], Lord Richards for the Board. See my comments in Hitchcock v Pratt Group Holdings Pty Ltd as trustee for the Pratt Family Holdings Trust [2024] NSWSC 1292 at [160]-[164].
Hudson at 2, 12.
Hudson at 3.
At [33]-[45] especially [45].
Lewin and Lewin Supplement at [15-052].
Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [102]–[116] (Heydon and Crennan JJ).
Dryandra Investments Pty Ltd (ACN 627 096 146) ato Dryandra Trust v Hardie by her guardian ad litem Blatchford [2024] WASC 248 (Dryandra) at [41] (Master Russell).
Macquarie Dictionary, (online at 1 April 2026) ‘relative’.
Cambridge Dictionary, (online at 1 April 2026) ‘pibling’ (a sibling of one's parent i.e. aunts and uncles).
Macquarie Dictionary, (online at 1 April 2026) ‘nibling’ (i.e. nieces and nephews).
Specifically, daughter-in-law, son-in-law, father-in-law and mother-in-law.
This is the reference in the letter.
David & Ros Carr Holdings Pty Ltd v Ritossa (2025) 117 NSWLR 528; [2025] NSWCA 108 (Carr) at [237] per Leeming JA (Stern JA at [258] and Griffiths AJA at [259] agreeing).
Carr at [238(3)], [246].
Carr at [239], [243]; Blenkinsop v Herbert & Ors (2017) 51 WAR 264; [2017] WASCA 87 (Blenkinsop) at 72.
Carr at [238(3)].
Carr at [238]-[239].
Carr at [244].
Carr at [244].
Kennedy v Kennedy [2011] NSWSC 1619 (Kennedy).
Kennedy at [18].
Kennedy at [21]-[22].
Kennedy at [1].
Blenkinsop at [75].
Blenkinsop at [2].
See Dryandra at [102]-[103].
See Dryandra at [103].
Panizza at [14], [41].
Panizza at [37].
Panizza at [38].
Panizza at [40].
Beck v Henley [2014] NSWCA 201; (2014) 11 ASTLR 457 (Beck) at [32]-[34] per Leeming JA (Beazley P at [1] and Sackville AJA at [97] agreeing).
Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482 (Saunders v Vautier)
Beck at [33].
Beck at [35] citing Goulding v James [1997] 2 All ER 239 (Goulding) at 247; CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98; [2005] HCA 53 (CPT Custodian) at [43].
Beck at [36] citing CPT Custodian at [50]-[51].
Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286 at [68]-[70] per White JA (Bathurst CJ at [1]-[2] and Beazley P at [4] agreeing); Carr at [244].
Re Dion at [92] (Beazley P at [1] and Gleeson JA at [117] agreeing).
Bogan v Estate of Peter John Smedley (Dec'd) [2025] HCA 7; (2025) 422 ALR 94 (Bogan) per Gageler CJ, Gordon, Gleeson, Jagot and Beech-Jones JJ at [63]-[65].
Bogan at [67]-[78].
See e.g. Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 (Macedonian Church Case) at [44] per Gummow ACJ, Kirby, Hayne and Heydon JJ.
Macedonian Church Case at [55] per Gummow ACJ, Kirby, Hayne and Heydon JJ, citing inter alia The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; [1994] HCA 54.
Interpretation Act 1987 (NSW) (Interpretation Act) s 35(1).
Interpretation Act) s 35(2).
New South Wales Legislative Assembly, Parliamentary Debates (LA Hansard), 16 September 2020 at 3434.
Re PDC [2021] NSWSC 1701 (PDC).
Explanatory Memorandum, Stronger Communities Legislation Amendment (Courts and Civil) Bill 2020 (NSW) overview of bill 2(r), chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.parliament.nsw.gov.au/bill/files/3785/XN Stronger Communities Legislation Amendment (Courts and Civil) Bill 2020.pdf accessed 2 April 2026.
New South Wales Legislative Assembly, Parliamentary Debates (LA Hansard), 16 September 2020 at 3434.
New South Wales Legislative Assembly, Parliamentary Debates (LA Hansard), 16 September 2020 at 3435–3436.
Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 (NSW) s86A explanatory note item [4].chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://legislation.nsw.gov.au/view/pdf/asmade/act-2020-24 accessed 2 April 2026.
PDC at [84].
Goulding at 245 (Mummery LJ); WFT Capital at [32].
Chapman v Chapman [1954] AC 429.
Goulding at 245f-g.
See e.g.. Peter Luxton, 'Variation of Trusts: Settlors' Intentions and the Consent Principle' (1997) 60 Modern Law Review 719 at 721-726.
Cisera v Cisera [2023] NSWSC 1507 (Cisera 2023) - the most recent of at least five cases before Justice Parker and the Court of Appeal involving the Cisera Family Trust.
See [50]-[56].
Goulding at 246f-g.
Campbell v Campbell [2022] NSWSC 554 (Campbell).
In the Application of Nyasa No. 19 Pty Ltd [2023] NSWSC 578 (Nyasa).
Reinhard v Denkel [2024] NSWSC 925 (Reinhard).
WFT Capital Pty Ltd v Windt [2025] NSWSC 819 (WFT Capital).
The Application of Dhuramein Nominees Pty Ltd [2025] NSWSC 1329 (Dhuramein Nominees).
Michelakis v Kalumic Pty Ltd as trustee of the Michelakis Family Trust [2026] NSWSC 276 (Michelakis).
Perpetual Trustee's Victoria Limited v Barns (2012) 34 VR 387; [2012] VSCA 77 (Barns).
e.g. see Campbell at [206] per Slattery J, PDC at [84] per Lindsay J; Dhuramein Nominees at [8] per Kunc J, WFT Capital at [32) per Hmelnitsky J; Reinhard at [59] per Williams J
Cisera 2023 at [68]-[69].
Re Steed’s Will Trusts [1960] Ch 407 at 419 per Lord Evershed MR (with whom Willmer and Upjohn LJJ agreed); Barnes at [25].
Catholic Metropolitan Cemeteries Trust v Attorney General of New South Wales (2024) 116 NSWLR 314; [2024] NSWCA 30 at [221].
Goulding at 251d.
Goulding at 251e.
Lord v Craig [2026] NSWSC 17 at [110].
PDC at [95].
PDC at [96].
Holmden at 701 (Lord Reid); Goulding at 246; Barnes at [18].
Goulding at 249g–h.
Perenna at [81].
See [36].
Re EM McPherson Settlement (2024) 76 VR 360; [2024] VSC 744 (Re EM McPherson Settlement)
See [140]-[158].
See Re Em McPherson Settlement at[147]-[154].
See WFT Capital [46].
Referenced by Hmelnitsky J as “Cisera III”.
See WFT Capital at [51].
See WFT Capital at [55].
Bathurst at [5].
Bathurst at [11].
W E Pickering Nominees Pty Ltd atf W E Pickering Family Trust v Pickering [2016] VSC 71 (Pickering).
Pickering at [26].
Pickering at [35]-[39].
Pickering at [60]–[61]
Pickering at [62].
W E Pickering Nominees Pty Ltd (as trustee of the W E Pickering Family Trust) v Pickering [2016] VSCA 273.
See Dryandra at [5], [27].
See Dryandra at [3], [8].
Dryandra at [38]-[40] citing Jacobs at [14-01], [14-02].
Dryandra at [79].
Dryandra at [80].
See Dryandra at [72]-[90].
Re Synman at [26].
Pickering at [60]–[61].
McPherson at [204].
Goulding at 249f.
Goulding at 250j.
Perenna at [83(a)].
Variation of Trusts Act 1994 (Tas) s 14(c),(d).
[1]: comma inserted after “retiring” Subsection heading “Experience from other jurisdictions” amended to “Experience from other jurisdictions and locally”
Deemhire Pty Limited as trustee of the Vartuli Family Trust
No Defendant [2026] NSWSC 318
(2017) 51 WAR 264
(2025) 422 ALR 94
(2011) 243 CLR 253
(2024) 116 NSWLR 314
(1998) 192 CLR 226
(2018) 98 NSWLR 747
(2005) 224 CLR 98
(2025) 117 NSWLR 528
(2015) 88 NSWLR 214
(1983) 153 CLR 455
(2008) 237 CLR 66
(2012) 34 VR 387
(2014) 87 NSWLR 753
(2024) 76 VR 360
(1994) 181 CLR 404
(2001) 75 ALJR 1172
(2011) 190 FCR 206
My strong impression is that Giuseppe’s intentions for his family were the best of intentions (unlike those of Miss Havisham). However, despite his undoubted benevolence, his actions in respect of the Trust in a few respects were remiss though not in any obvious untoward way.
First, the Trust Deed has a few glitches in it. Secondly, whilst Giuseppe’s family grew generationally, the range of beneficial objects to whom income could be appointed was not merely ‘frozen in time’ by reference to a critical event namely his death as Appointor, but it in fact was reduced. Thirdly, he failed to provide a mechanism for a successor Appointor prior to his demise which also impacted the power of variation of the Trust. Fourthly, he failed to inform his family or accounting/legal professionals who assisted him with the trust of the ‘game plan’ or reasons for curtailing post-mortem the above Trust aspects.
The above matters have become the centrepiece (or in fruitful expression ‘epergne’ [7] ) for an application by the plaintiff, the trustee of Trust (Deemhire/Trustee), supported by family members to seek to address the above issues.
Failure by Giuseppe to record or impart his reasoning and the purposes to be achieved for his plans to prosper the family through the Trust have given rise to some but not insurmountable difficulties in this application.
The proceedings were commenced by a summons filed on 3 February 2025, which summons was amended on 31 July 2025 with orders sought (as specified below) pursuant to ss 81(2) and 86A Trustee Act 1925 (NSW) (Trustee Act). For convenience, I will refer to ss 86A, 86B and 86C Trustee Act and cognate or equivalent legislation elsewhere as ‘variation approval’ legislation.
It suffices to note that irrespective of whether in any given situation an appointor has fiduciary duties, there is a legitimate question as to the application of the proper purpose rule to the exercise by an appointor of a power of appointment.
Some different views have been expressed regarding the extent to which the proper purpose rule applies to the exercise by an appointor of a power of appointment.
For example, in Re Jasmine Trustees Ltd and the Piedmont Trust [2015] JRC 196, the Royal Court considered that a power of appointment was attended by certain duties including duties to act in good faith and in the interests of the beneficiaries as a whole, to reach a decision open to a reasonable appointor, to take into account relevant matters and only those matters and not to act for an ulterior purpose [35] .
On the other hand, Lewin and Lewin Supplement [36] reference, with caution, the decision of Briss J in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 as an example in which a power of appointment of new trustees was held to be a beneficial power exercisable solely for the benefit of the appointor, free even from the constraints of the fraud on the power doctrine.
In Panizza v Clathington Pty Ltd as former trustee for the P. and D. Panizza Family [2025] WASC 246 (Panizza) there was litigation over a family trust. The litigation principally involving the two children (a son and daughter) of Mr and Mrs Panizza, commenced in 2015 and spanned a decade. In 2019, orders were made removing an existing trustee and appointing another trustee. In 2021 an account was ordered to be taken by the Registrar of the Court. Relevantly at that time Kenneth Martin J had indicated that the account should be finalised before determination of the question of who ought to be the guardian and appointor of the trust. In January 2025 the Registrar provided an account and a preliminary question required determination as to whether the Court should remove the daughter as the guardian and appointor of the trust and appoint the son.
Whitby J determined that the daughter should be removed as the guardian and appointor of the trust and the son appointed to those roles [59] . Her Honour was satisfied that the roles were fiduciary in nature. Unlike in Blenkinsop the powers of the guardian were not confined to merely consenting to decisions of the trustees but there were active powers. Specifically, her Honour considered that a power to act within a certain time of notice to the guardian to change the nature of the trust and significantly restrict and reduce the role and powers of the trustee were protective of the beneficiaries of the trust and the guardian role was fiduciary rather than personal in nature [60] . Whilst the trustee was silent on matters that the guardian or appointor must consider, her Honour was of the view that the nature of the powers conferred meant that the guardian and appointor must consider the best interest of the beneficiaries to the exclusion of their own interests [61] .
Her Honour considered that the principles applicable to the removal of a guardian and appointor holding a fiduciary role were akin to those applicable to removing a trustee and the guiding principle was the welfare of the beneficiaries and due administration of a trust in their favour [62] .
For the position up to 2016, a helpful background is given by the learned authors of Jacob's Law of Trusts in Australia, 8th edition at [17–07].
In NSW the first decision dealing with the variation provisions is that of Justice Lindsay in 2021 in PDC.
Since PDC there have been relatively few decisions in NSW. Chronologically the decisions are: in 2022 - Slattery J in Campbell v Campbell [90] ; in 2023 decisions of Kunc J in In the A**pplication of Nyasa No. 19 Pty Ltd [91] and Parker J in Cisera 2023; in 2024 - Williams J in Reinhard v Denkel [92] ; in 2025 - Hmelnitsky J in WFT C**apital Pty Ltd v Windt [93] and Kunc J in The Application of Dhuramein Nominees Pty Ltd [94] and in 2026 - Hammerschlag CJ in Eq Michelakis v Kalumic Pty Ltd as trustee of the Michelakis Family Trust [95] . There is no Court of Appeal decision in NSW addressing section 86A.
The leading appellate decision dealing with an Australian equivalent of the trust variation legislation is that of the Victorian Court of Appeal in 2014 in P**erpetual T**rustee's Victoria Limited v Barns [96] .
It is evident that the Victorian Court of Appeal in dealing with the Victorian provisions and judges in New South Wales dealing with s 86A have consistently referenced the remedial nature of the legislation indicating that its provisions should be construed beneficially [97] .
In Cisera 2023, Parker J similarly recognised the remedial nature of the legislation, though referenced at least one limitation. His Honour stated [98]
Master Russell in Dryandra in which equivalent Western Australian variation approval power (s 90 Trustees Act 1962) was proposed to affect variations to a Trust Deed to ameliorate the adverse consequences of the loss of mental capacity of the appointor and guardian of a discretionary family trust [125] . The appointor (Mrs Hardie) became appointor and guardian of the trust upon the death of her husband. However, by reason of suffering from dementia caused by Alzheimer's disease she did not have and had not had since her appointment capacity to act as appointor or guardian [126] . Further, there was no provision in the trust deed for the appointment of a replacement guardian after Mrs Hardie’s death or in circumstances where she did not have capacity. There was no relevant provision under the trust deed which addressed the consequences of lack of capacity. Her Honour determined that a lack of mental capacity did not of itself affect the validity of the appointment as appointor/guardian [127] . Rather, the consequences of the lack of capacity is that it prevented the valid exercise by the donee of the power or powers conferred.
There were two proposed variations to the trust deed. The first involved augmenting the definition of ‘guardian’ to include in default of an appointment, a legal personal representative. The second proposed an attorney of the appointor or guardian exercising the powers of the appointor guardian in the event of lack of capacity.
Her Honour considered use of the variation approval power. Neither her Honour nor counsel had identified any authority in support the proposition that the power might be used to approve a variation to a trust where the consent of the guardian is required to vary the trust or trust instrument and it is the guardian who is incapable of assenting [128] . Her Honour was not satisfied that power extended to approve a variation that required the consent of a guardian who lacked capacity to provide such consent [129] .
Her Honour was of the view that the statutory power was principally directed to the situation of a person whose interests under the trust would or may be affected by the arrangement. Conceptually, whilst a guardian may also be a beneficiary her Honour noted that the guardian as such did not have an interest in the trust property acting in its capacity as such. Rather, the guardian’s role is limited to exercising the powers of that office. Ultimately, her Honour was not persuaded that the variation approval power could be used to appoint a replacement appointor or guardian at least in circumstances where the existing appointor and guardian could not validly exercise powers [130] .
In Michelakis, Hammerschlag CJ in Eq acted under s 86A Trustee Act to approve an arrangement to appoint an appointor of a discretionary family trust in circumstances where the trust deed made provision for the appointment of an appointor including place for the appointor’s name to be stated with no name having been inserted. His Honour appointed the plaintiff, who was one of a number of primary beneficiaries as appointor, subject to notice being given to a nominated secondary beneficiary. Under the trust deed, once appointed, an appointor had power to exercise powers to remove a trustee, appoint a new trustee and vary or amend the provisions of the deed other than the name of the trust or the vesting date.