Plaintiff v First Defendant

**1 The plaintiff, Perpetual Trustees Victoria Limited, is the trustee of the estate of John Frederick Barns deceased. By his will, his estate was to be held on trust. The income of the trust fund was initially distributed to his widow. On her death the income was to be distributed to his daughter Timothea Barns. The terms of the trust provided for capital to be distributed to his widow if the trustee thought fit. A similar provision was not included in relation to his daughter. Otherwise on the death of his daughter, the corpus is to go to certain charities.

2 Ms Barns suffers from a form of autism. On her mother's death she was living at the family home. Subsequently she moved into shared accommodation. Presently she lives in a unit bought by the trustee and held as part of the corpus of the trust.

3 Ms Barns' financial needs now exceed the income generated by the estate. Her expenses are approximately $245,000 per annum. The income from the estate is approximately $170,000.[1] She requires intensive care. Carers reside in her unit with her. The trustee wishes to make advances from time to time to Ms Barns out of the corpus of the trust fund similarly to that which was allowed in relation to her mother but not allowed for Ms Barns under the will. To that end the trustee seeks to vary the terms of the trust in the will to allow capital advances such as were permitted to be made to the deceased's widow under s 63A of the Trustee Act 1958. Alternatively, the trustee seeks to be given the power to do so under s 63 of the Trustee Act 1958.

4 The trustee estimates that if $50,000 each year is advanced out of the corpus then when Ms Barns turns 85 (in the event she so lives) the estate will still be worth some $5.6 million as compared to its current value of $3.5 million. If the corpus is retained intact, the corpus should be worth some $7.3 million.[2]

5 The trustee applies for an order that clause 5 of the will be varied so as to read as follows:**

I DIRECT that notwithstanding the trusts hereinbefore contained concerning the Trust Fund my trustees may in their absolute discretion at any time or times or from time to time during the respective lifetimes of my said wife and daughter raise any sum or sums out of the capital of my residuary estate and pay the same to or for the benefit of my said wife and daughter freed and discharged from the said trusts. (Proposed variations bolded.)

**6 The Attorney-General who appears by Mr McInnes solicitor does not object to the application.

7 In substance I find that s 63 does not permit the court to vary the powers of a trustee to allow the beneficial interests in the estate to be altered inter se. I find that s 63A permits the Court to agree on behalf of a beneficiary, otherwise not able to agree, to an arrangement between the beneficiaries to vary the terms of a trust. That power does not, however, permit the Court to give effect to an arrangement to vary the beneficial interests of the beneficiaries that otherwise does not have the agreement of all the beneficiaries of the estate.

8 Accordingly, I find that the court does not have jurisdiction under s 63 or s 63A of the Trustee Act 1958 to make the order sought by the trustee.

10 The trustee relies on ss 63 and 63A of the Trustee Act 1958.[3] The sections provide:

63 Power of Court to authorize dealings with trust property

(1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other 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 trust instrument (if any) or by law, the Court 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 (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as between capital and income.

(2) The Court may from time to time rescind or vary any order made under this section, or may make any new or further order.

(3) An application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.

63A Power of Court to vary trusts

(1) Where property, whether real or personal, is held on trusts arising, whether before or after the commencement 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 minority 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 or 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) In the foregoing subsection protective trusts means trusts specified in paragraphs (a) and (b) of subsection (1) of section thirty-nine of this Act or any like trusts, the principal beneficiary has the same meaning as in the said subsection (1) and discretionary interest means an interest arising under the trust specified in paragraph (b) of the said subsection (1) or any like trust.

(3) Notice of an application to the Court for an order pursuant to subsection (1) of this section shall be given to such persons as the Court may direct.

(4) Nothing in the foregoing provisions of this section shall apply to trusts affecting property settled by Act of Parliament.

(5) Nothing in this section shall limit the powers conferred by section sixty-three of this Act section sixty-four of the Settled Land Act 1958 or section one hundred and seventy-one of the Property Law Act 1958.

THE HISTORY OF SECTION 63 AND SECTION 63A[4]

**11 Historically, the Courts of Chancery exercised jurisdiction in relation to trusts. In doing so, the Court had certain inherent jurisdictions. The inherent jurisdictions included a limited jurisdiction to grant powers to trustees to deal with trust property in an emergency.[5] In 1925, this jurisdiction was enhanced by s 57 of the Trustee Act 1925 (the English equivalent of s 61 of the Trustee Act 1958 (Vic)). As discussed below, this jurisdiction did not include a jurisdiction to re-arrange the beneficial interests inter se under the trust.[6]

12 After the Second World War, attempts were made in the United Kingdom to vary trusts to avoid the heavy inheritance taxes imposed by the new Labour Government. Reliance was placed on Chancery's inherent jurisdiction and s 57 of the Trustee Act 1925 (the English equivalent of s 61 of the Trustee Act 1958 (Vic)).

13 In 1954, however, the House of Lords, in Chapman v Chapman,[7] upheld the decision of the Court of Appeal in In re Downshire Settled Estates; Marquis of Downshire v Royal Bank of Scotland[8] that the Court did not have an inherent jurisdiction, or jurisdiction under s 57 of the Trustee Act 1925, to vary the beneficial interests inter se in the trust funds designated by the settlor. As a consequence, the British Parliament passed the Variation of Trusts Act 1958. The principal provision of that Act has been adopted in Victoria as s 63A.[9]

14 In Downshire, the appellants sought to vary the terms of a settlement to avoid potential estate duty. The variation had the effect of varying the beneficial interest of minors as specified in the relevant trust deeds, but to the minors' benefit. The appellants argued that the Court of Chancery had an inherent jurisdiction to modify or vary trusts provided that all persons interested, who were sui juris, assented, and that the modification was clearly shown to be for the advantage or convenience of all persons with an interest, who were not sui juris. That is, that the Court had unlimited jurisdiction in relation to the property of infants,[10] and would exercise that jurisdiction so as to secure any benefit or advantage for the infants or unborn persons, which they could have themselves secured had they been in esse and sui juris, even to the extent of sanctioning a departure from the beneficial trusts of the trust instrument from which the interests in question are derived[11] (my emphasis).

15 In other words, the arrangement assumed that the person on whose behalf the Court sanctioned the transaction was a beneficiary who could have themselves secured the benefit under the arrangement if that beneficiary was esse and sui juris. It is implicit that if the beneficiary could not have secured the benefit, because another beneficiary would not agree, then there was no basis for seeking the Court's approval of the arrangement, as the arrangement could not be given effect to.

16 The Court of Appeal rejected the contention concerning the variation of beneficial interests, which rejection was approved by the House of Lords in Chapman v Chapman.[12] The Court of Appeal, in doing so, also rejected the contention that s 57 of the Trustee Act 1925, (the English equivalent of s 61 of the Trustee Act 1958 (Vic)), was of any assistance. Subsequently, the legislature sought to overcome the problem of an infant not being able to consent to a variation of the terms of a trust to procure a benefit that they would have been able to secure it they were not an infant by adopting the Variation of Trusts Act 1958 (the equivalent of s 61A of the Trustee Act 1958 (Vic)). Nevertheless, there was never any suggestion that a variation of the trusts could be effected or sanctioned by the Court if the variation was not one that the infant could have secured if esse and sui juris.

17 In Downshire, the Master of the Rolls and Romer LJ explained the limited nature of the jurisdiction of the Court of Chancery to vary the power of trustees. They held that the limited power did not include the power to vary the beneficial interests of the beneficiaries inter se under the trust.

18 They said that the Courts of Chancery had an inherent jurisdiction to confer upon trustees, quoad items of trust property vested in them, administrative powers to be exercised by them as the persons in whom the property is vested, where a situation has arisen in regard to the property creating what may fairly be called an "emergency" - that is a state of affairs that has to be presently dealt with - and such that it is for the benefit of every one interested under the trusts that the situation should be dealt with by the exercise of the administrative powers proposed to be conferred for the purpose. They said that this is so notwithstanding that such powers were not conferred by the trust instrument and particularly where there has arisen a situation not originally foreseen. Further, they said that the emergency did not imply that immediate action then and there was necessarily required.[13] They said that the power or jurisdiction did not extend to changes or re-arrangements of the beneficial interests inter se under the trust, as distinct from re-arrangements or reconstruction of the property itself.

19 In 1925, England introduced s 57 of the Trustee Act 1925 which has been adopted in Victoria in s 63 of the Trustee Act 1958. The English courts held that the section did not expand the jurisdiction of the courts to rewrite a trust. In Downshire, the Court of Appeal said the object of s 57 was:**

...to secure that trust property should be managed as advantageously as possible in the interests of the beneficiaries and, with that object in view, to authorize specific dealings with the property which the court might have felt itself unable to sanction under the inherent jurisdiction, either because no actual "emergency" had arisen or because of inability to show that the position which called for intervention was one which the creator of the trust could not reasonably have foreseen; but it was no part of the legislative aim to disturb the rule that the court will not rewrite a trust, or to add to such exceptions to that rule as had already found their way into the inherent jurisdiction.

**20 In coming to that conclusion, Evershed MR and Romer LJ observed that prior to the Act the judges of Chancery were not able to give powers to trustees to depart from the settlor's directions. They said that if Parliament intended to confer such a power it would have done so expressly. They observed that the section does not refer to beneficial interests. They noted that the powers that the section mentions, such as sale, leases, exchanges, mortgage etc are all instances of the management of property vested in the trustee and not those vested in the beneficiaries.[14] The decision of the Court of Appeal on these issues was affirmed by the House of Lords.[15]

21 Thus the English courts have rejected the contention that the courts had the jurisdiction to sanction on behalf of infant beneficiaries and unborn persons a rearrangement of the trusts if the rearrangement was beneficial to the infant beneficiaries or unborn persons.

22 As mentioned earlier, subsequent to the decision of the House of Lords, in Chapman v Chapman, England adopted the Variation of Trusts Act 1958 which enabled the courts to approve, on behalf of certain beneficiaries, such as minors, arrangements that affected the variation of trusts within strictly defined limits. The Act was adopted in Victoria as s 63A.**

DOES THE COURT HAVE JURISDICTION UNDER SECTION 63?

**23 Australian courts have considered the jurisdiction given by s 63 or similar provisions.

24 The High Court of Australia considered the equivalent provision in New South Wales in Riddle v Riddle[16] on an application to expand the power of the trustees of a deceased estate to invest in listed shares which were not an authorized investment for trustees under the Trustee Ac 1925 of NSW.

25 Dixon J said that an order empowering the trustees to invest in listed shares was a matter "in the management or administration of property vested in trustees." He said that "[q]uestions of investment are typically and traditionally matters arising in the administration of trust funds."[17] He said that expediency referred to in the provision meant expediency in the interests of the beneficiaries.[18] Dixon J said that the provision:**

.... is a provision conferring very large and important powers upon the Court which depend upon the Court's opinion of what is expedient, a criterion of the widest and most flexible kind. The power necessarily carries with it responsibilities of equal extent. The responsibilities imposed involve business and financial considerations, but responsibilities of that description have always fallen on courts of administration. I do not think that the powers given by [the provision] were intended to be restricted by any implications.[19]

**26 Williams J said that the provision was couched in the widest possible terms.[20] As to the nature of the jurisdiction, he said that "[t]he order must relate to the management or administration of the property so that the trusts or powers referred to must be administrative trusts or powers."[21]

27 Fullagar J dissented. He referred to the English prototype and the equivalent section in Victoria. He said that the jurisdiction granted by the section was one always held in equity, though equity "generally refused to exercise it if not more than 'expediency' were proved."[22] He said that the statute, in his opinion, was "to be regarded as a legislative direction to courts of equity that they are to regard expediency as prima facie affording sufficient ground for making an order or the kind described."[23] He would be prepared to give a wide scope to the statute.

28 In Hornsby v Playoust,[24] application was by the trustees of the Tattersall's estate. The trustees proposed to exchange the assets of Tattersall's for shares in a company that would acquire the trust assets. The trustees sought power under s 63 to distribute the shares to the beneficiaries of the estate. Mandie J held that granting of a power to the trustees to distribute the shares constituted a transaction in the "administration" of the trust property (constituted by those shares) for the purposes of s 63.

29 Mandie J held that "[i]n my opinion, the proposed distribution in specie of shares in Tattersall's Limited to the beneficiaries in satisfaction of their beneficial entitlements under the Will is a transaction which, on the facts of this case, arises in the 'administration' of the trust property constituted by those shares."[25]

30 He concluded that that "the Trustees may be granted, pursuant to s 63 of the Trustee Act, the power they seek to distribute the shares to the beneficiaries, provided that the Court is of the opinion that it is expedient do so, in the interests of the beneficiaries and in the context of the Restructure Proposal as a whole."[26]

31 The Court of Appeal of this Court considered the application of s 63 in Royal Melbourne Hospital v Equity Trustees.[27] There the trustees of the estate of Clements Langford sought powers of sale to sell real estate that formed part of Mr Langford's estate.

32 Mr Langford owned a large estate on the cliff tops at Sorrento called "Netley." Netley included a house, tennis court and several vacant blocks. Under his will, after other bequests, his grandchildren were permitted to use, occupy and enjoy Netley free of charge. Netley was to fall into the residue upon the death of the last grandchild. The difficulty faced by the estate was that land tax was eating up the estate's assets. The trustees had sold some blocks to meet tax liabilities but sought a broader power to sell all the land other than that on which the house and tennis court were. The trustees proposed to invest the proceeds and to use the same to pay the land tax which would itself be substantially reduced because of the land sales.

33 Bell AJA confirmed that in deciding what was expedient in the management or administration of the trust property, it was necessary to take into account the interests of the trust as a whole, which meant the interest of all the beneficiaries.[28]

34 In addressing the ambit of s 63, Bell AJA considered the issue of whether or not a power could be granted to a trustee that had the effect of altering the interest of a beneficiary.[29] He quoted with approval the observation of the Master of the Rolls in Downshire where he said the legislation was not to be interpreted as "intending to give power to vary or interfere with" the beneficial interests. [30] Bell AJA pointed out that to that general statement his Lordship attached an important qualification: "except to the extent that they might incidentally be affected by the exercise of the powers which the section does in terms confer."[31]

35 Consistently with these observations, Bell AJA held that under s 63, the Court may authorise the trustees to exercise a power that it finds is expedient for the "management or administration" of the trust property even though the exercise of that power might affect, even substantially, the content or practical exercise of the beneficial interests of beneficiaries. He held, however, that the Court could not grant a power that was to be used for the sole or main purpose of bringing about those effects on the beneficiaries.[32]

36 Bell AJA[33] then went on to hold that it was expedient that the trustees have the power to sell the vacant blocks even though that would limit the rights of enjoyment of the grandchildren to Netley as it was beneficial to the estate of the whole.

37 Recently, Kyrou J considered the application of s 63 in relation to charitable trusts established by Sir William Angliss in Ballard v AG for the State of Victoria.[34] He confirmed that the words "management or administration" have a limiting effect upon the jurisdiction of the Court under s 63(1). Nonetheless, he said that: [35]**

....the words 'management or administration' are 'of wide import and pick up everything that a trustee may need to do in practical or legal terms in respect of trust property.' Although their meanings may largely overlap, the disjunctive use of the words indicates that they are not necessarily synonymous and that an unduly narrow interpretation should be avoided. This Court has held that 'management' refers to 'the management of trust property in the commercial or practical sense', whereas 'administration' encompasses 'all of the legal powers and duties which might be possessed by a trustee in respect of trust property.'

**38 The Attorney-General submits that the Court does have power to approve the amendment to the will under s 63. The Attorney-General contends that s 63 allows the Court to bestow on trustees power to deal with trust property in a way not permitted by the trust instrument. The Attorney-General submits that what is sought in this proceeding, when properly understood, does not represent an alteration of the beneficial interests of the daughter of the testator on the one hand, and 'charity' on the other, notwithstanding that such an impression may be gained initially. The Attorney-General says that may be its ultimate effect, but the grant of power as such fits within s 63(1).

(a) The proposed power is for the 'management of administration of ... property vested in trustees'.

(b) It would confer no vested right on the first defendant. Power would be given to the trustee which it could exercise or not in its discretion.

(c) It is expedient to grant the power for the management and administration of the trust property. In the particular circumstances of the case, it is clear that it was the testator's intention that the trust property be held to produce income for the support of his disabled daughter during her life. The gift to charity in remainder can properly be seen as a considered way of disposing of the corpus of the fund once the income is no longer needed for the primary purpose. The will does not evidence a wider charitable intention.

(d) While it is true that Ms Barns may well benefit from the grant of power, the interests of the trust as a whole will not be adversely affected.

40 In this case the testator provided in his will:**

After the death of the survivor of my said wife and daughter to hold as well the capital as the income of my residuary estate for such of the general charitable purposes or charitable institutions in Victoria ....in such shares as my trustees in their absolute discretion think fit and in default of appointment for the Lord Mayor's Fund.

**41 There appears to be some confusion in the words "as well the capital as the income." Nevertheless, it is clear that Mr Barns intended the corpus of the residuary estate to pass to charity.

42 The Attorney-General says that it is expedient to grant the power for the management and administration of the trust property. He says that in the particular circumstances of the case, it is clear that it was the testator's intention that the trust property be held to produce income for the support of his disabled daughter during her life. I agree with that proposition. The Attorney-General says that the gift to charity in remainder can properly be seen as a considered way of disposing of the corpus of the fund once the income is no longer needed for the primary purpose. The will does not evidence a wider charitable intention.

43 In my view, upon the death of the wife, the trustees hold the income of the residuary estate for Ms Barns and the capital on trust for the nominated charities. The issue arises, however, would the power of the trustees to raise sums out of the capital of the residuary estate be considered an alteration of the destination of a trust fund contrary to the will of the testator or merely the granting of a power for the management or administration of the estate? The Attorney-General contends that the trust fund held for charities is merely the corpus of the fund "once the income is not longer needed for the primary purpose."

44 I agree with the Attorney-General that s 63 is concerned to bestow on trustees power to deal with trust property in a way not permitted by the trust instrument. The Attorney-General seeks to characterise the order sought in this case as a bestowal of power rather than an alteration of beneficial interests. The Attorney-General has conceded he does not have power to consent to such an alteration. It is implicit that he also does not consider the court has power to do so under the circumstances of this case, if that was sought to be done. As mentioned, however, he says that is not the effect of what is sought to be done.

45 The section presupposes that the Court's intervention is required as the trustee does not posses the power of management or administration to carry out the transaction. If the Court considers the transaction expedient, then it may empower the trustee to carry out the transaction. Thus the section contemplates a managerial or administrative action that is expedient.

46 The transactions mentioned are any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction. These are administrative or management transactions. They do not include altering the beneficiaries or altering the objects of the trust.

47 As discussed in Downshire, s 63 can not be used to for the purpose of varying the terms of the trust. But as explained by Bell AJA in Royal Melbourne Hospital an order that grants a power which is considered expedient to the administration or management of the trust property may have the incidental effect of altering a beneficiaries' beneficial interest so long as the power is to be exercised for the benefit of the trust estate as a whole.

48 In my opinion, that construction of s 63 does not assist the application. In this case, the power is not being sought in respect of the management or administration of the trust property to benefit the estate as a whole but only Ms Barns. The sole purpose for which the power is being sough is to benefit Ms Barns at the expense of the corpus.

49 Under the existing will, Ms Barns is entitled to the income of the estate. The corpus is to go to charity. Under the will with the varied powers Ms Barns would be entitled to the income and any further sum that the trustee makes out of the corpus. The charities would be entitled to the corpus less any sums paid out of the corpus to Ms Barns.

50 No authority has been referred to which would characterise such a alteration as one dealing with the management or administration of the trust property. Rather it is a power which deals with the distribution of the trust property inter se.

51 As Downshire established, s 63 does not deal with giving the trustees a power to alter the distribution of trust property to beneficiaries inter se, but rather the management or administration of the trust property in the hands of the trustee. I accept that in the exercise of such a power, the interests of the beneficiaries may be incidentally affected as discussed above. However, I find that the Court does not have jurisdiction under s 63 to grant the trustee power as the trustee seeks.**

DOES THE COURT HAVE JURISDICTION UNDER s 63A?

**52 The power of the Court to approve an arrangement to vary trusts applies where property is held on trust under any will, settlement or other disposition.[36] There are four categories of beneficiary that the court may approve an arrangement to vary the trust on behalf of. The relevant one in this application is 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. The plaintiff relies on this category in the application.

53 The court may, if it thinks fit, by order approve 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 or managing or administering any of the property subject to the trusts; provided that except by virtue of paragraph (d) of the 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.

54 The word 'arrangement' is 'deliberately used in the widest possible sense to cover any proposal which any person may put forward for varying or revoking the trust.'[37]

55 A consequence of the provision is that where the court is asked to approve an arrangement on behalf of a beneficiary who by reason of incapacity is incapable of assenting to the arrangement the Court may not do so unless the carrying out of the arrangement would be for the benefit of that person.

56 In this case, the arrangement is proposed by the trustee, as it can be. Further, the Court is being asked to approve the arrangement on behalf of a person having a direct interest under the trust and it is for her benefit.

57 Counsel for the trustee initially informed the court that both Ms Barns by her administrator, Kim Powers, and the Attorney-General consented to the order sought.[38] Subsequently, the Attorney General submitted written submissions where he indicated that he does not oppose the making of the orders sought.[39]

58 I asked counsel for the Attorney-General could the Attorney-General appearing on behalf of a charity consent to the variation of a charity's beneficial interest in the trust fund. The Attorney-General concedes that he has no independent authority to change the destination of a trust fund against the will of the testator. Mr McInnes referred me to the decision of Murray CJ in In re. Vosz: Public Trustee v Steele[40] where he said:**

In the third place, although the Attorney-General has large powers in relation to charities, and in many cases is a necessary party to proceedings in the Court relating to charitable trusts, he has no independent authority to change the destination of a trust fund against the will of the testator. In certain cases the right to dispose of property left for charity is vested in the Crown, whose adviser in the matter the Attorney-General is, but in other cases the jurisdiction is in the Court.

**59 The Attorney-General contends that the primary purpose of s 63A is to allow the Court to sanction, on behalf of beneficiaries who are not able to do so for themselves, schemes which adjust the entitlements inter se of the beneficiaries of a trust with the important proviso that any arrangement must be for the benefit of the person on whose behalf the Court is asked to assent.

60 The Attorney-General did not make any submissions in support of the trustee's contention that s 63A empowers the Court to make the order sought in this case. Rather, as discussed above, the Attorney-General sought to support the power of the Court to make the order sought under s 63.

61 The order under s 63A does not itself amend of vary the trusts. The arrangement does that. That was made clear by Lord Reid in In re Holmden's Settlement Trusts.[41] He said:**

Under the Variation of Trusts Act the court does not itself amend or vary the trusts of the original settlement. The beneficiaries are not bound by variations because the court has made the variation. Each beneficiary is bound because he has consented to the variation. If he was not of full age when the arrangement was made he is bound because the court was authorised by the Act to approve of it on his behalf and did so by making an order. If he was of full age and did not in fact consent he is not affected by the order of the court and he is not bound. So the arrangement must be regarded as an arrangement made by the beneficiaries themselves. The court merely acted on behalf of or as representing those beneficiaries who were not in a position to give their own consent and approval.

**62 In my view, the authorities make it clear that s 63A will not give the trustees power to access the corpus to make further payments to Ms Barns. The Court's consent on her behalf will not have any have any effect on the trustee's powers under the will.

63 The Court is being asked to approve, on behalf of Ms Barns, the variation of the trust that could not be varied by the agreement of Ms Barns if she was capable of assenting to the variation.

64 Mr Pascoe of counsel who appeared for the trustee has referred me to three Victorian authorities on s 63A.

65 In Re Pittari[42] Winneke CJ applied s 63A to vary the powers of the trustee. The recipient of the trustee property was of unsound mind. He was entitled to a life interest in half of the income from his mother's deceased estate. The trustee applied to vary the powers so that the income could be paid to his sister to apply for his benefit without her being responsible for the application thereof and to accumulate the unexpended balance. There was no suggestion of any alteration of his beneficial interest to half the income.

66 In Re Keysborough Blue Danube Soccer Club,[43] the terms of a trust that held property on behalf of members of a social club were sought to be amended. All the members consented. The Court expressly referred to the problem in Re Suffert's Settlement,[44] which I will come to in a moment. There was no suggestion of any person who was sui juris and with an interest in the trust property not consenting.

67 In Re Suffert's Settlement, Buckley J considered an application under the English equivalent of s 63A. Under a settlement, in the events that had happened, the income of a trust was held on protective trusts for the daughter of the settlor during her life. The daughter had a power of appointment of the corpus of the trust fund. If she made no appointment the property would pass to the persons entitled under an intestacy at the date of her death. The daughter sought to vary the terms of the settlement. The daughter was unmarried. She had four cousins. Two appeared on the application and consented. The other two were not parties to the summons. The cousins had all attained 21 years.

68 Buckley J held that the four cousins fell within the proviso to subsection (b), so that the order could not be made on their behalf. As such, they had not been joined nor consented to the variation of the terms of the settlement. The order that Buckley was prepared to make would not bind the two absent potential next of kin and the result would be that the trustees would not be free except at their own risk to treat the trust as effectively varied until they have obtained the consent of the two cousins who have a contingent interest in the trust. He said that he was willing to make an order to bind anyone else who is unascertained who might become interested.

69 This decision supports the view that an order under s 63A will not bind those interested in the estate who are capable of consenting but have not done so. As in this case, the Attorney-General has not and can not consent on behalf of the nominated charities.

70 Finally, in George v Kollias,[45] Hansen J exercised his powers under s 63A to provide consent to a variation of a discretionary trust on behalf of those who could not consent where all those who were sui juris had consented.

71 His Honour made it clear that the Court order does not make the variation. Rather it merely provides a consent to the arrangement by an on behalf of those who cannot otherwise give consent. Hansen J said:**

An order of approval is and operates as a consent to the variation by those who by reason of being a minor or other incapacity or being unborn cannot consent as those who are sui juris can.

Under s 63A an arrangement cannot be approved unless the carrying out thereof would be for the benefit of those who cannot consent. ....The context is that the court is empowered to approve an arrangement 'on behalf of' the members of a specified class. As Lord Denning MR said in Re Weston's Settlements...., 'in exercising its discretion, the function of the court is to protect those who cannot protect themselves'."

An order approving an arrangement enables the sui juris parties to proceed to effect the variation by entering into a Deed as in this case proposed. The court order does not make the variation, it merely provides a consent to the arrangement by and on behalf of those who cannot otherwise give consent.[46]

**72 So too in this case, the court is not being asked to make the arrangement but to approve an arrangement on behalf of a party who is otherwise unable to approve it for reasons set out in the section. The arrangement has not been consented to by those who will become entitled to the corpus of the estate upon the trustee so appointing, or in default the Lord Mayor's appeal.

73 In the circumstances, I do not consider it appropriate for the Court to provide the consent on behalf of Ms Barns. As discussed, the court does not have jurisdiction to affect the variation itself.**

**74 In conclusion, I must dismiss the application. Neither s 63 nor 63A give jurisdiction to the Court to make the order sought by the trustee of the estate.

75 In argument, I mentioned that Part IV of the Administration and Probate Act 1958 might offer an avenue to achieve further provision for Ms Barns. I express no view on the merits of such an application. If one were to be made, I would be prepared to entertain the application.**

[1] Affidavit of Kim Power of 16 February 2011, [15].

[2] Affidavit of Lou Caifa of 1 April 2011, [6]-[7].

[3] Initially the Trustee relied on s 63A only. After the hearing concluded, I received submissions from the Trustee which sought to rely on s 63.

[4] A useful summary of the history appears in Thomson Reuters Legal Online, Commentaries, the Law of Trusts, The Variation of Trusts; accessed 21 June 2011. This has been adapted from Ford and Lee Principles of the Law of Trusts chapter 15 "The variation of trusts" revised by Mr W A Lee in September 2009.

[5] See discussion by Fullagar J in Riddle v Riddle [1952] HCA 12; (1952) 85 CLR 202 at 227.

[6] In re Downshire Settled Estates; Marquis of Downshire v Royal Bank of Scotland [1953] 1 Ch 218 (Downshire) at 231-235 per Evershed MR and Romer LJ.

[7] [1954] UKHL 1; [1954] AC 429.

[8] In re Downshire Settled Estates; Marquis of Downshire v Royal Bank of Scotland [1953] 1 Ch 218 (Downshire) at 231-235 per Evershed MR and Romer LJ.

[9] It has been adopted in Queensland as s 95, Western Australia s 90 and New Zealand (Trustee Act 1956) as s 64A and a modified version in South Australia.

[10] The Court also included unborn cestuis que trustent with infants.

[12] [1954] UKHL 1; [1954] AC 429.

[13] Downshire at 235 per Evershed MR and Romer LJ.

[15] Chapman v Chapman [1954] UKHL 1; [1954] AC 429.

[16] [1952] HCA 12; (1952) 85 CLR 202 (Riddle).

[24] [2005] VSC 107 (Hornsby).

[27] [2007] VSCA 162; (2007) 18 VR 469 (Royal Melbourne Hospital).

[28] Royal Melbourne Hospital at [155]-[160].

[29] Royal Melbourne Hospital at 179.

[32] Royal Melbourne Hospital at [175].

[34] [2010] VSC 525 (Ballard).

[36] The power does not extend to trusts affecting property settled by Act of Parliament: s 63A(4).

[37] Re Steed's Will Trusts [1960] Ch 407.

[38] Transcript of 12 May 2011 1 lines 31-32.

[39] Submissions on behalf of the Attorney-General of 23 May 2011 by Mr McInnes who appeared as solicitor for the Attorney-General.

[40] [1926] SASR 218 at 233.

[41] [1967] UKHL 7; [1968] AC 685 at 701.

[42] [1967] VR 801.

[43] [2003] VSC 119 per Ashley J.

[44] [1961] Ch 1 per Buckley J.

[45] [2007] VSC 46 (George) at [43].