Perpetuities and Accumulations Act 1968

The central concept in the Act is the rule against perpetuities, which the Act modifies but does not abolish. At common law, the rule provides that a disposition of property is void unless it must vest, if at all, within a life in being plus 21 years, plus a period of gestation. The Act introduces a statutory alternative perpetuity period: under section 5(1), a disposition may specify a fixed number of years not exceeding 80 as the perpetuity period. If no fixed period is specified but a date certain is specified as the vesting date, the instrument is deemed to specify a number of years equal to the period from the date the instrument takes effect to that vesting date (section 5(3)). The wait-and-see rule in section 6 is a central reform: it provides that a disposition which would otherwise be void for remoteness is treated as valid until it becomes established that vesting must occur, if at all, after the end of the perpetuity period. This shifts the inquiry from an ex ante assessment of possibilities to an ex post assessment based on actual events. The Act also defines key terms: disposition includes the conferring or exercise of a power of appointment (section 2(1)). A power of appointment includes any discretionary power to transfer or grant or create a beneficial interest in property without valuable consideration (section 2(1)). Special and general powers of appointment are distinguished in section 4: a power is special unless it is expressed to be exercisable by one person only and could at all times during its currency when that person is of full age and capacity be exercised by that person so as immediately to vest in that person the whole of the interest governed by the power without consent or other conditions (other than formal conditions relating to mode of exercise). The Act also introduces concepts of class membership and potential membership in section 2(3): a person is a member of a class if all conditions identifying a member are satisfied, and is a potential member if only some conditions are satisfied but there is a possibility the remainder will in time be satisfied. The domestic partner concept, inserted by later amendments, tracks the Relationships Act 2008 definition and includes both registered domestic relationships and de facto relationships irrespective of gender (section 2(1) definition of domestic partner). The unborn partner provision in section 10 extends the class of lives in being to include the surviving partner of a person who is a life in being, for dispositions in favour of that surviving partner and for certain dispositions that vest on the death of the survivor of the life in being and that surviving partner. The Act also distinguishes between administrative and dispositive powers: section 14 provides that the rule against perpetuities does not invalidate powers conferred on trustees to sell, lease, exchange or dispose of property for full consideration or to do other acts in the administration (as opposed to distribution) of property.

The Act affects a broad range of persons involved in the creation, administration, and contestation of property interests that may extend over long periods. It principally affects settlors and testators who create trusts, wills, and other dispositive instruments, as well as their legal advisers who must ensure compliance with the perpetuities rules when drafting. Trustees are directly affected: they hold powers subject to the Act, including the administrative powers preserved by section 14, and they may apply to the Supreme Court under section 7 for a declaration as to the validity of a disposition. Beneficiaries of trusts and estates are affected because the Act may save what would otherwise be void dispositions, potentially preserving their interests. Lessees and their successors in title are affected by section 15(1), which exempts from the perpetuities rule options to acquire a reversionary interest in a lease if certain conditions are met (the option is exercisable only by the lessee or successors and ceases to be exercisable within one year following determination of the lease). Lessors are affected by the same provision. Holders of options to acquire an interest in land (not being lease renewal options or options conferred by will) are affected by section 15(2), which renders such options void and unenforceable if they are or may be exercisable more than 21 years from the date of grant. Superannuation funds and their members are affected by section 17, which exempts from the perpetuities rule trusts or funds established for making provision by way of assistance, benefits, superannuation, allowances, gratuities or pensions for directors, officers, servants or employees of any employer, or for persons engaged in any lawful profession, trade, occupation or calling. This exemption is retroactive: it applies and is deemed never to have applied so as to render void such funds. Charities are affected: the rule against perpetuities does not apply to a gift over from one charity to another (section 16(2)), but the Act preserves the common law rule rendering non-charitable purpose trusts void for remoteness where trust property may be applied for the purposes of the trust after the end of the perpetuity period (section 18(1)). The Crown is bound by the Act and the rule against perpetuities, except in respect of dispositions of property made by the Crown (section 1(2)). Potential beneficiaries of class gifts are affected by section 9, which allows the exclusion of certain potential members or unborn persons to avoid the disposition being void for remoteness. Persons claiming an interest under a determinable fee simple, a determinable interest, or a conditional fee simple are affected by section 16, which applies the rule against perpetuities to possibilities of reverter and rights of entry for condition broken. The Act also affects persons involved in litigation concerning the validity of dispositions: they may rely on the statutory presumptions as to future parenthood in section 8, which presumes that males aged 12 and over can have children, that females aged 12 to 55 can have children, and that females over 55 cannot, but allows evidence to the contrary for living persons.

The Act does not impose many direct duties on persons; rather it modifies the legal framework within which rights and duties under property dispositions are determined. The most significant right is the right of a settlor or testator to specify a perpetuity period under section 5(1): any person making a disposition may specify a period of years not exceeding 80 as the perpetuity period applicable to that disposition. This right does not apply to a disposition made in exercise of a special power of appointment (section 5(2)), but the period specified in the instrument creating the special power applies to any disposition under the power. A related right exists under section 5(3): if no period is specified but a date certain is specified as the vesting date, the instrument is deemed to specify a number of years equal to the period from the date of taking effect to the vesting date. Trustees and persons interested under or on the invalidity of a disposition have the right under section 7(1) to apply to the Supreme Court for a declaration as to the validity of a disposition in respect of the rule against perpetuities. The Court may make a declaration on the basis of facts existing and events that have occurred at the time the declaration is made, but may not make a declaration in respect of any disposition the validity of which cannot be determined at that time (section 7(2)). A key right conferred by the wait-and-see rule in section 6 is the right to treat a disposition as valid until it becomes established that vesting must occur after the end of the perpetuity period. Under section 6(1), until such time as it becomes established that vesting must occur after the perpetuity period, the disposition is treated as if it were not subject to the rule against perpetuities, and its becoming established does not affect the validity of anything previously done in relation to the interest by way of advancement, application of intermediate income or otherwise. For general powers of appointment, section 6(2) provides analogous treatment until it becomes established that the power will not be exercisable within the perpetuity period. For other powers, options or rights, section 6(3) provides that any exercise of the right within the perpetuity period is treated as valid, and the disposition is void for remoteness only if and so far as the right is not fully exercised within that period. The reduction of age provisions in section 9 confer a right on the disposition to be treated as if the specified age had been reduced to the nearest age that would save the disposition from being void for remoteness, provided the reduction is to an age not exceeding 21 years. Section 9(3) and (4) confer the right to exclude certain class members if their inclusion prevents the disposition from being saved. Section 10 confers a right on the surviving partner of a life in being to be treated as a life in being for specified purposes: dispositions in favour of that surviving partner, and dispositions in favour of a charity or person that attains a vested interest on or after the death of the survivor of the life in being and that surviving partner. Section 11 provides that a disposition is not void for remoteness merely because it is ulterior to and dependent upon an interest under a disposition that is void for remoteness, and that vesting may be accelerated despite the prior interest failing due to remoteness. Section 14(1) provides that the rule against perpetuities does not invalidate administrative powers of trustees and does not prevent payment of reasonable remuneration to trustees. Section 19(1) provides that a direction to accumulate income is valid if the disposition of the accumulated income is or may be valid, but section 19(2) preserves the power of any person to terminate an accumulation that is for his or her benefit and any court jurisdiction to maintain or advance out of accumulations.

The Act does not create criminal offences or prescribe civil penalties in the conventional sense. Its enforcement mechanism is essentially the sanction of invalidity: dispositions that contravene the rule against perpetuities, as modified by the Act, are void for remoteness. This is a civil law consequence rather than a punitive one, but it has significant practical effects on the distribution of property. For example, under section 15(2), an option to acquire an interest in land (other than those exempted) or a right of pre-emption in respect of land that is or may be exercisable at a date more than 21 years from the date of its grant becomes void and not exercisable after the expiration of 21 years from the date of its grant, and no remedy lies in contract or otherwise for giving effect to it or making restitution for its lack of effect. This is a harsh consequence: the option holder loses the right entirely, and the law provides no remedy even in unjust enrichment. The wait-and-see rule in section 6 mitigates this in some cases by providing that a disposition is treated as valid until it becomes established that vesting must occur after the perpetuity period, and that the invalidity does not affect the validity of anything previously done by way of advancement or application of intermediate income. The reduction of age and class exclusion provisions in section 9 operate to save dispositions from being void, thereby avoiding the penalty of invalidity. Section 16 applies the rule against perpetuities to determinable interests: if a determinable fee simple does not determine within the perpetuity period, it continues as a fee simple absolute (section 16(1)(a)); if a possibility of a resulting trust on any other determinable interest does not determine within the perpetuity period, the interest continues as an absolute interest (section 16(1)(b)); if a right of entry for condition broken is not exercised within the perpetuity period, the fee simple continues as an absolute interest and any other interest continues free from the condition (section 16(1)(c)). The Act provides some protection for trustees: section 14(2)(a) provides that retrospective operation of the exemption for administrative powers does not render a trustee liable for acts done before the commencement of the Trustee Act 1953 or between that date and the commencement of the Act for which the trustee would not have been liable if the section had not been enacted. Similarly, section 17(2)(a) provides equivalent protection for trustees of superannuation funds. Section 8(2) gives the Court a discretionary power to make such order as it thinks fit for placing persons interested in property in the position they would have held if a question as to future parenthood had not been decided by treating a person as incapable of having a child, if that person subsequently does have a child. This is a remedial mechanism rather than a penalty. The Act does not provide for any regulatory authority, enforcement agency, or inspectorate; enforcement occurs through private litigation in the Supreme Court, typically in proceedings for construction of wills or trusts, administration proceedings, or applications for declarations under section 7.

The Act does not operate in a vacuum; it interacts with several other Victorian statutes and with the common law. Most fundamentally, the Act modifies the common law rule against perpetuities rather than replacing it entirely. The common law rule continues to apply except to the extent that the Act provides otherwise. Section 12 declares that the double possibility rule was abolished by section 161 of the Property Law Act 1928, but without prejudice to any other rule relating to perpetuities, confirming the interaction with that earlier reform. Section 13(2) provides that its restrictions on the perpetuity rule apply to instruments within the meaning of the Property Law Act 1958 coming into operation before or after the commencement of that Act, demonstrating the interaction with that Act. The Act also interacts with the Trustee Act 1958: section 14(2) refers to the commencement of the Trustee Act 1953 (a predecessor) and the Trustee Act 1958, and section 19(2) preserves powers of a trustee under the Trustee Act 1958 or under any other Act or law or under any instrument creating a trust or making a disposition. The Relationships Act 2008 is incorporated by reference in the definition of domestic partner: section 2(4)(a) provides that registered domestic relationship has the same meaning as in the Relationships Act 2008, and section 2(4)(b) provides that in determining whether persons who are not in a registered domestic relationship are domestic partners, all the circumstances of their relationship are to be taken into account, including any one or more of the matters referred to in section 35(2) of the Relationships Act 2008 as may be relevant. The Act interacts with the Property Law Act 1958 in relation to section 13, which declares that certain powers and rights (such as powers to distrain for rent, rentcharges created as indemnities, and rights of entry for mining, timber, repairs, and services) are and have never been subject to the rule against perpetuities. Section 13(2) provides that this section applies to instruments within the meaning of the Property Law Act 1958 coming into operation before or after the commencement of that Act, giving it retrospective effect in relation to that Act. The Act also interacts with the Supreme Court Act 1986, which amended the definition of Court in section 2(1) to mean the Supreme Court. The Act interacts with the Interpretation of Legislation Act 1984, which governs the interpretation of the Act through standard provisions about headings, examples, notes, punctuation, and provision numbers, as noted in the endnotes. The Act does not repeal or replace the common law rule against accumulations, but section 19 provides a limited statutory modification: a direction to accumulate income is valid if the disposition of the accumulated income is or may be valid. Section 19(2) preserves the power of any person to terminate an accumulation that is for his or her benefit and any jurisdiction or power of the Court to maintain or advance out of accumulations, which would include powers under the Trustee Act 1958 or under any instrument. The interaction with the common law is also evident in section 16, which applies the rule against perpetuities to possibilities of reverter, resulting trusts on determination of determinable interests, and rights of entry for condition broken, subject to the exception for gifts over from one charity to another. Section 18 preserves the operation of the rule of law rendering non-charitable purpose trusts void for remoteness where trust property may be applied after the end of the perpetuity period, but applies sections 5 and 6 to such trusts if they are not otherwise void. The Act does not interact with the Corporations Act 2001 (Cth) or superannuation legislation in a detailed way, but section 17 provides an exemption from the perpetuities rule for superannuation funds, which has implications for the operation of such funds under Commonwealth legislation.

The Act received royal assent on 10 December 1968 and came into operation on the same day. It has been amended by several subsequent Acts. The Supreme Court Act 1986 (No. 110/1986) amended the definition of Court in section 2(1) by substituting the Supreme Court for any earlier reference, effective from 1 January 1987. The Statute Law Revision Act 2000 (No. 74/2000) amended section 6(1) and section 17(1)(a) and (b) by making minor textual amendments, effective from 22 November 2000. The Statute Law Amendment (Relationships) Act 2001 (No. 27/2001) was a significant amending Act that inserted definitions of domestic partner, partner, and spouse into section 2(1), inserted section 2(4), amended the heading of section 10 and section 10 itself (substituting partner for husband or wife references), and amended section 17(1)(a) and (b) to include partners, children, grandchildren, parents, dependants and legal personal representatives of directors, officers, servants or employees and of persons engaged in professions, trades, occupations or callings. These amendments took effect on 28 June 2001. The Statute Law Revision Act 2007 (No. 28/2007) repealed section 20, effective from 27 June 2007. The Relationships Act 2008 (No. 12/2008) substituted the definition of domestic partner in section 2(1) and substituted section 2(4), effective from 1 December 2008, aligning the definition with the newly enacted Relationships Act 2008. The Relationships Amendment (Caring Relationships) Act 2009 (No. 4/2009) made further amendments to the definition of domestic partner and section 2(4), effective from 1 December 2009. The Statute Law Revision Act 2015 (No. 21/2015) repealed the heading preceding section 20 and made related amendments, effective from 1 August 2015. The endnotes indicate that section 20 was repealed by the 2007 Act, and the 2015 Act removed the heading that had preceded it. The version current as at 1 August 2015 is version 023, incorporating all these amendments. The table of amendments in the endnotes does not record any amendments from the period between 1968 and 1986, suggesting the Act remained largely untouched during that period. The Act has not been the subject of a major rewrite or consolidation; it retains its original structure and most of its original provisions, with the principal amendments being those that updated the definition of domestic partner and partner to reflect changes in family law and relationship recognition. The Act has not been amended to introduce a statutory perpetuity period beyond the 80-year maximum, nor has it been amended to abolish the rule against perpetuities entirely (as some other jurisdictions have done). The amendments have been largely technical or consequential, responding to changes in other legislation rather than reflecting any fundamental rethinking of perpetuities policy.

The Act does not itself cite any case law, and the source text provided does not include any judicial decisions. The Act's provisions have been the subject of litigation in the Supreme Court of Victoria and other Australian courts, but the source does not name any specific cases. The Act was modelled on earlier reforms in Western Australia (the Law Reform (Property, Perpetuities and Succession) Act 1962 (WA)), the United Kingdom (the Perpetuities and Accumulations Act 1964 (UK)), and New Zealand (the Perpetuities Act 1964 (NZ)), as indicated by the comparative references (Cf.) in the marginal notes. This means that case law from those jurisdictions interpreting comparable provisions may be persuasive in Victorian courts. For example, the wait-and-see rule in section 6 has been the subject of considerable judicial consideration in the UK and New Zealand, and Victorian courts may have regard to that case law. The unborn partner provision in section 10, which deems the surviving partner of a life in being to be a life in being, is a statutory innovation that may have been judicially considered. The reduction of age and class exclusion provisions in section 9 have been litigated in other jurisdictions and may have been considered in Victoria. The options provisions in section 15, particularly the 21-year limit on options to acquire land other than lease options, have been litigated in various Australian jurisdictions. The section 7 power to apply to the Supreme Court for a declaration as to validity is a procedural mechanism that has likely been the subject of practice and procedure decisions. The Court's discretion under section 8(2) to make orders where a person subsequently has a child after having been treated as incapable of having a child has likely been exercised in some cases. The determinable interests provisions in section 16 represent a significant reform that has probably been litigated in the context of conditional gifts and determinable fees. The interaction between section 16 and the common law rules on conditions subsequent and determinable interests has been judicially considered. The superannuation exemption in section 17 has been the subject of litigation concerning whether particular funds fall within the exemption. The non-charitable purpose trust provisions in section 18 have been litigated in the context of trusts for purposes such as maintaining graves, monuments, or animals. The accumulation provisions in section 19 have been considered in cases concerning directions to accumulate income and the validity of accumulation directions where the disposition of accumulated income is invalid. The definition of power of appointment in section 2(1) and the classification of general and special powers in section 4 have been the subject of judicial interpretation. The wait-and-see rule in section 6(4) provides that nothing in the section makes any person a life in being unless that person's life is expressed or implied as relevant by the terms of the disposition and would have been reckoned a life in being if the section had not been enacted, which has likely been litigated in class gift cases.

Several provisions of the Act contain traps for the unwary practitioner. Section 5(1) permits a perpetuity period of up to 80 years to be specified, but section 5(2) provides that this does not apply where the disposition is made in exercise of a special power of appointment; in that case, the period specified in the instrument creating the special power applies. This means that a person exercising a special power cannot choose their own perpetuity period; they are stuck with the period (if any) specified in the creating instrument. Section 5(3) is a trap: if no period of years is specified but a date certain is specified as the vesting date, the instrument is deemed to specify a number of years equal to the period from the date of taking effect to the vesting date. If that period exceeds 80 years, the deemed specification will be invalid. Section 6(4) limits the wait-and-see rule: a person is not made a life in being for the purposes of ascertaining the perpetuity period unless that person's life is expressed or implied as relevant by the terms of the disposition and would have been reckoned a life in being if the section had not been enacted. In the case of a class gift, any person living at the date of the disposition whose life is expressed or implied as relevant for any member of the class may be reckoned. This prevents the wait-and-see rule from expanding the class of measuring lives. Section 8(1)(b) allows evidence to be given to show that a living person will or will not be capable of having a child at a particular time, but sections 8(2) and (3) contain traps: if a question is decided by treating a person as incapable and that person subsequently has a child, the Court may make such order as it thinks fit for placing persons interested in the property in the position they would have held if the question had not been so decided, but this is discretionary. Section 8(3) provides that once a question is decided in relation to a disposition by treating a person as capable or incapable, that treatment applies for any subsequent question on the rule against perpetuities in relation to the same disposition, subject to subsection (2). Section 9(1) applies only where the specified age exceeds 21 years; if the specified age is 21 years or less, the section does not operate. Section 9(3) and (4) allow the exclusion of class members, but section 9(4) provides that exclusion does not apply if excluding the potential members or unborn persons would exhaust the class. Section 10 deems the surviving partner of a life in being to be a life in being, but only for dispositions in favour of that surviving partner and for dispositions that vest on or after the death of the survivor of the life in being and that surviving partner. It does not apply to all dispositions. Section 15(1) exempts certain options to acquire a reversionary interest in a lease from the perpetuities rule, but only if the option is exercisable only by the lessee or successors in title and ceases to be exercisable at or before the expiration of one year following the determination of the lease. Section 15(2) provides that options to acquire an interest in land (other than lease options or options conferred by will) that are exercisable more than 21 years from the date of grant are void and no remedy lies in contract or otherwise for giving effect to them or making restitution. This is a particularly harsh provision: even if the option has been partly performed, the option holder cannot recover anything. Section 16(1) applies the rule against perpetuities to determinable interests: if a determinable fee simple does not determine within the perpetuity period, it becomes a fee simple absolute; if a determinable interest does not determine, it becomes an absolute interest; if a right of entry is not exercised within the perpetuity period, it is lost. Section 17 exempts superannuation funds, but only those established for the purposes specified in section 17(1)(a) or (b): directors, officers, servants or employees of any employer, or persons engaged in any lawful profession, trade, occupation or calling, plus associated family members and legal personal representatives. Funds established for other purposes are not exempt. Section 18(1) preserves the rule that non-charitable purpose trusts are void for remoteness, and the Act does not save them; section 18(2) applies sections 5 and 6 only if the trust is not otherwise void. Section 19(1) provides that a direction to accumulate income is valid only if the disposition of the accumulated income is or may be valid. This means that if the disposition of accumulated income is void for remoteness, the accumulation direction is also void. The Act does not provide a statutory perpetuity period for accumulations.

Compliance with the Perpetuities and Accumulations Act 1968 requires practitioners to adopt a structured approach when drafting wills, trusts, options, and other dispositive instruments. First, consider whether to specify a perpetuity period under section 5(1). If a fixed period is desired, specify a number of years not exceeding 80, and ensure that the specification is clear and unambiguous. If a specific vesting date is intended but no period is specified, section 5(3) will deem the period to be the number of years from the date of taking effect to that vesting date, so the drafter must ensure that this period does not exceed 80 years. Second, classify any powers of appointment in the instrument as general or special using the test in section 4. A power is special unless it is expressed to be exercisable by one person only and could at all times during its currency when that person is of full age and capacity be exercised by that person so as immediately to vest in that person the whole of the interest governed by the power without consent or other conditions (other than formal conditions relating to mode of exercise). This classification affects which perpetuity period applies: if a special power is being exercised, the perpetuity period is that specified in the creating instrument (if any), and the person exercising the power cannot specify their own period. Third, consider the application of the wait-and-see rule in section 6. The disposition will not be void merely because it might vest outside the perpetuity period; it will be treated as valid until it becomes established that vesting must occur after the period. This means that the drafter should not assume that a disposition that might be remote is automatically void; however, it also means that uncertainty persists until events unfold. To reduce uncertainty, consider applying to the Supreme Court under section 7 for a declaration as to validity based on facts existing at the time of the application. Fourth, ensure that any age contingency does not exceed 21 years, or if it does, be aware that section 9 may reduce it to the nearest age that would save the disposition. To avoid the need for reduction, consider specifying ages of 21 years or less. If a class gift is involved, consider whether excluding certain potential members might avoid remoteness under section 9(3) and (4). Fifth, for options, distinguish between options to acquire a reversionary interest in a lease (section 15(1)) and other options to acquire an interest in land (section 15(2)). For lease options, ensure the option is exercisable only by the lessee or successors and ceases to be exercisable within one year following determination of the lease. For other options, ensure the option cannot be exercised more than 21 years from the date of grant, or if it may be, be aware that it will become void and unenforceable after 21 years. Sixth, for determinable interests and conditions subsequent, be aware that the rule against perpetuities applies under section 16, and if the determining event does not occur within the perpetuity period, the interest becomes absolute and the right of entry is lost. Seventh, for superannuation funds, section 17 provides an exemption from the perpetuities rule, but only for funds established for the specified purposes. Ensure the trust deed falls within the scope of section 17(1)(a) or (b). Eighth, for non-charitable purpose trusts, be aware that the Act does not save them from the rule against perpetuities; section 18(1) preserves the rule that such trusts are void for remoteness if trust property may be applied after the end of the perpetuity period. Section 18(2) applies sections 5 and 6 only if the trust is not otherwise void, so the drafter should not rely on the Act to validate a non-charitable purpose trust. Ninth, for accumulations, ensure that any direction to accumulate income is accompanied by a valid disposition of the accumulated income, as section 19(1) provides that the accumulation is valid only if the disposition of the accumulated income is or may be valid. Tenth, when dealing with class gifts, apply the definitions in section 2(3) to distinguish between members and potential members.