Plaintiffs v Defendants

Plaintiffs v Defendants - [2016] VSC 71 - VSC 2016 case summary — Zoe

[18]

(d) The persons specified as Roger Stewart Pickering, Daryl John Pickering and James Stewart Pickering are to hold office as joint appointors.

(e) If the appointor ceases to be an appointor and a successor has not been appointed in accordance with clauses 15(f) or 15(i), the trustee may appoint a new appointor.

(f) Any person for the time being holding office as an appointor may by instrument in writing appoint some other person or persons to be appointor in succession.

(g) An appointor may resign his office by giving not less than 30 days' notice in writing to the trustee.

(h) If an appointor resigns from office and there is at any time after such resignation no appointor in office, he may (notwithstanding his resignation) by instrument in writing appoint himself or some other person to be the appointor.

(i) The appointor has power to remove a trustee and to appoint any new trustee by notice in writing. The appointor has the power to make a determination in the event of a disagreement between the trustees.

(j) If at any time there is more than one person holding office as appointor, then any powers or discretions capable of being exercised by the appointor pursuant to this deed require the unanimous consent of all such persons holding office as appointor.

(k) A person ceases to be appointor if he is found to be a lunatic or of unsound mind or if he dies whilst in office. If at the date of his death no other person holds office as appointor, the executor or administrator of the estate of that person or, if more than one, the executors or administrators acting jointly are to hold office as appointor.

(l) If no appointor is in office, the trustee or trustees has power by instrument in writing at any time and from time to time in its absolute discretion to appoint any new or additional trustees on such terms and subject to such conditions as it thinks fit.

(m) An appointor who commits an act of bankruptcy or has an action brought against him under the Corporations Act shall be disqualified from the position of appointor.

[78]

The reasons behind the Bill are these: It often happens that when property is subject to a trust, it is desirable to vary the provisions of the trust in the interests of the people who benefit from it - the persons who are beneficiaries under the terms of the trust. If those beneficiaries are all in existence, and if they are not under any legal disability, such as infancy, or unsoundness of mind, they can, by their own agreement, vary the terms of the trust and, by mutual agreement, make any arrangement they like. If any of the beneficiaries is under some legal disability - one of them could be an infant or a lunatic - or is not yet ascertained, or is unborn, there is no way of varying the trust except under very special circumstances.

Before 1954, the court in Victoria exercised jurisdiction to make orders in cases where it considered that a variation of the trust was for the benefit of a person under disability. In other words, the court took to itself certain jurisdiction to enable it to act in the interests of the beneficiaries. However, in 1954, a decision of the House of Lords in the case of Chapman v Chapman revealed that the court had no inherent jurisdiction of that kind, and that its power to make those orders related only to a rather limited class of case. One type of case in which the court could make an order varying a trust was where there was some dispute as to the rights of the beneficiaries, and the court was able to sanction a compromise on behalf of infants if the compromise was considered to be for the infants' benefit.

In addition, the court had certain statutory powers which may be found in section 63 of the Trustee Act 1958, and section 64 of the Settled Land Act 1958. With respect to the provisions of the Trustee Act, the view taken is that it applies only to matters arising in the management of the trust property and does not authorize the sanctioning of any arrangement which would vary the interests of persons under the trust. In the Settled Land Act, the provision gives the court wider powers, but it applies only where the trust property is land. Therefore, it is apparent that the existing power of the court is extremely restricted.

It is clear that the question whether the court has any power in any particular case to sanction an arrangement on behalf of a person under disability might depend on whether there is a dispute between the beneficiaries, or whether the trust property is some interest in land or personal property. In England, the Law Reform Committee also referred to the fact that under the English Divorce Act 1950, the divorce court has power to vary a marriage settlement for the benefit of the children of the marriage, and a similar power is conferred on the court in Victoria by section 86 of the Commonwealth Matrimonial Causes Act 1959. Therefore, there are scattered throughout our Commonwealth and State legislation certain provisions which allow a court to intervene where it believes the interests of the beneficiaries so dictate, but no general power exists for such action to be taken.

...

I should like to quote two paragraphs from the report of the English Law Reform Committee, which were also quoted by the Chief Justice's Law Reform Committee in Victoria. The first paragraph reads -

[82]

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The Bill is designed to remove these defects and anomalies and to give the court the powers which prior to 1954 it was commonly thought to have. The court will be able to give its approval to an arrangement varying a trust on behalf of interested persons who are unable to consent to the variation themselves - that is, persons who are under some legal disability, which prevents them from giving the necessary consent. It gives the court no power to force any arrangement on any beneficiary. The approval given by the court on behalf of beneficiaries who are under disability will enable the arrangement to be carried into effect if the other beneficiaries agree to it.

The Bill does this by providing for the insertion into the Trustee Act 1958 of a new section 63A. Sub-sections (1) and (2) of the new section reproduce the main provision of the English Act and provide that the court may approve of an arrangement on behalf of a number of different classes of persons: First, persons who are incapable of assenting to the arrangement by reason of infancy or other incapacity; secondly, persons who may become entitled to an interest if they fulfil a specified requirement at a future date - in other words, potential beneficiaries; thirdly, unborn persons, who may also be held to be potential beneficiaries; and, fourthly, persons who have discretionary interest under what are known are protective trusts - that is, trusts where the principal beneficiary is entitled to the property until he charges it or deals with it in such a way as to bring about a forfeiture, in which case the trustees are directed to hold the property on trust for the maintenance of the principal beneficiary and a number of other persons referred to in the trust instrument.

...

The House will agree that in its general approach, the measure effects a desirable reform which will enable a number of suitable arrangements to be made and a number of beneficiaries to receive advantages which, at present, are denied them on a somewhat arbitrary basis.

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