Settled Land Act 1958

Settlement is defined broadly by s 8(1) to include any deed, will, agreement, Act of Parliament, or other instrument (or number of instruments) under or by virtue of which land stands for the time being limited to or in trust for persons by way of succession, or limited to or in trust for any person in possession for an entailed interest, a determinable fee, a fee-simple subject to an executory limitation over, or (if the person is a minor) for an estate in fee-simple or a term of years absolute. It also covers land charged with payment of a rentcharge or other periodical sums for portions, advancement or maintenance. A settlement is deemed to continue as long as any limitation, charge or power of charging under it subsists or is capable of being exercised (s 11). Land held on trust for sale is expressly excluded from the definition of a settlement (s 9). Settled land is land which is or is deemed to be the subject of a settlement (s 10). Tenant for life is defined as the person of full age beneficially entitled in possession to settled land for his or her life (s 12). If two or more persons are entitled concurrently as joint tenants or tenants in common, they together constitute the tenant for life (s 13). Section 16 extends the powers of a tenant for life to a range of other limited owners whose interests are in possession: a tenant in tail, a person entitled to a determinable fee, a tenant for years determinable on life, a person entitled to the income of land under a trust for payment to him during his life (unless the land is subject to an immediate binding trust for sale), and others. A statutory owner is defined (s 3(1)) as the trustees of the settlement or other persons who, when there is no tenant for life, have the powers of a tenant for life under the Act. The trustees of the settlement are identified in a cascading list in s 30: persons with power of sale of the settled land, persons declared trustees for the purposes of the Act, persons with trust for sale of other land under the same limitations, or persons appointed by deed by all those together able to dispose of the settled land in equity. If no trustees exist, the personal representatives of a deceased settlor become trustees (s 30(3)). Capital money arising under this Act includes money arising under the powers of the Act and receivable for the trusts of the settlement, as well as securities representing such money (s 3(1)). The Act mandates that capital money be paid to the trustees of the settlement or into court (s 75), and imposes restrictions on its investment and application (Part III). Improvements are defined by reference to the Second Schedule, which contains three Parts: Part I improvements (costs not required to be replaced by instalments), Part II (trustees or court may require repayment by instalments), and Part III (repayment by instalments mandatory unless the improvement is authorised by the settlement) (s 84).

The Act directly affects every person who holds a beneficial interest in settled land in Victoria, or who deals with such land. The primary actor is the tenant for life (ss 12, 16), who may be a life tenant, a tenant in tail, a person entitled to a determinable fee, a tenant for years determinable on life, a person entitled to income of land for life, or a married woman (even with a restraint on anticipation - s 25). Where the tenant for life is a minor, the trustees of the settlement exercise all powers on the minor’s behalf (s 26). If the tenant for life becomes a publicly represented person (e.g., under mental health laws), the State Trust may exercise his or her powers with a court order (s 27). Trustees of the settlement are central: they receive capital money, give (or withhold) consent to many dealings, and have duties to act in the interests of all parties. Trustees can be individuals or a trustee company (s 3(1) definitions). The Act also applies to purchasers (defined in s 3(1) as a purchaser in good faith for value, including lessees and mortgagees) who acquire an interest in settled land; they receive protection if they deal in good faith with the tenant for life (s 110). Remaindermen, reversioners, and other beneficiaries under the settlement are affected because the tenant for life must have regard to their interests (s 107) and because their equitable interests are overreached upon a disposition by the tenant for life, provided the capital money is paid to the trustees (s 72). Incumbrancers (holders of charges on the settled land) are affected by provisions allowing the shifting of incumbrances (s 69) and variation of incumbrance terms (s 70). Minors who are beneficially entitled to land in fee-simple or a term of years absolute are deemed to have a settlement (s 8(2)) and the trustees manage the land on their behalf (s 102). Assignees of the tenant for life’s interest are also affected: the tenant for life’s statutory powers are not assignable and cannot pass to an assignee (s 104). However, assignees for value have certain consent rights concerning capital money applications (s 104(4)). Statutory authorities may receive grants of water rights or land for public purposes under ss 54 and 55. Legal practitioners for the trustees must receive notice of proposed dealings (s 101). In short, the Act governs the legal relationships of everyone with an interest in land that is subject to a settlement, as well as those who acquire interests from or through the tenant for life.

The Act confers a wide range of powers on the tenant for life, but almost all require the consent of the trustees of the settlement or an order of the Court. The principal powers are: to sell the settled land or any part thereof for the best consideration reasonably obtainable (ss 38, 39); to exchange settled land for other land, with possible money payment for equality (s 40); to lease the settled land for building, mining, or ordinary purposes for specified maximum terms (50, 60, and 21 years respectively) (s 41), subject to regulations including best rent, deed requirement, and re-entry covenant (s 42). Building leases require building agreements (s 44). Mining leases may have variable rents and a capitalisation requirement (three-fourths or one-fourth of rent as capital depending on whether the tenant for life is impeachable for waste) (s 45, 47). The tenant for life may also grant water rights to statutory bodies (s 54), grant land for public and charitable purposes (s 55), dedicate land for streets and open spaces (s 56), compromise claims (s 57), release or modify covenants (s 58), vary leases and grants (s 59), apportion rents (s 60), and complete predecessor’s contracts (s 63). With court approval, any transaction that could be effected by an absolute owner and is for the benefit of the settled land can be carried out (s 64). The tenant for life can cut and sell timber ripe for cutting with trustee consent, setting aside three-fourths of net proceeds as capital (s 66). Heirlooms settled with the land may be sold with consent (s 67). The tenant for life can also raise money by mortgage for discharging incumbrances, paying for improvements, equality of exchange or partition, and costs of other authorised transactions (s 71). A key duty is that the tenant for life must, in exercising any power under the Act, have regard to the interests of all parties entitled under the settlement and is deemed to be in the position of a trustee for those parties (s 107). The tenant for life must not assign or release his or her statutory powers, and any contract not to exercise them is void (s 104). The tenant for life must give at least one month’s notice to the trustees of intention to make a sale, lease, exchange, partition, mortgage, or charge, accompanied by sufficient particulars (s 101). Trustees have a duty not to withhold consent arbitrarily (s 93). Where the tenant for life is the sole trustee of the settlement, certain powers exercisable with trustee consent become exercisable only with a court order (s 20). Upon completion of a disposition, the conveyance overreaches the settlement limitations and all equitable interests except those having priority to the settlement, those securing money actually raised, and certain prior leases and grants (s 72). Capital money must be paid to the trustees (or into court) and applied only in the modes listed in s 73, including investment in government securities, discharge of incumbrances, payment for improvements, purchase of land, and others. The trustees have discretion in investment (s 75). Improvements are governed by Part IV: the tenant for life may submit a scheme to trustees or court, and payment is made on certificates from an engineer or surveyor (s 84). Improvements in Part III of the Second Schedule must be repaid by instalments out of income (s 84(4)). The tenant for life and successors must maintain and insure improvements (s 88). The trustees may manage the land during a minority or pending a contingency (s 102), with powers including felling timber, repairing buildings, and working mines.

The Act does not create criminal penalties. Enforcement occurs through civil remedies, court orders, and statutory consequences. The most significant enforcement mechanism is the power of the Court to make orders authorising trustees to act in place of a tenant for life who has ceased to have a substantial interest in the settled land (e.g., due to bankruptcy, assignment, or incumbrance) and has unreasonably refused to exercise his powers (s 21). While such an order is in force, the tenant for life cannot exercise the relevant powers (s 22). The Court also has wide jurisdiction under s 64 to authorise any transaction that could be effected by an absolute owner if it is for the benefit of the settled land. Section 93 permits a tenant for life who is dissatisfied with a trustee’s withholding of consent to apply to the Court for an order authorising the act. The Court may give directions as to costs. A failure by the tenant for life or successors to comply with the duty to maintain and insure improvements (s 88) gives rise to a right of action for any person with an estate or interest in the settled land. The estate of the defaulting tenant for life after death is liable for damages. Section 104 declares any contract by a tenant for life not to exercise statutory powers to be void, and any provision in a settlement that attempts to forbid or penalise the exercise of a statutory power is void (s 106). This renders such provisions unenforceable, but the Act does not impose a fine. Section 110 protects a purchaser dealing in good faith with a tenant for life: the purchaser is conclusively taken to have given the best price, consideration or rent and to have complied with all requisitions of the Act. This protects purchasers from later challenges. The Court may also make vesting orders and orders appointing a person to convey under the Trustee Act 1958, applied by s 113. The Court can direct costs to be paid out of settled property (s 114). Section 92 allows the court to approve proceedings for protection or recovery of settled land and order costs to be paid out of the settled property. In summary, the Act relies on the supervisory jurisdiction of the Court (the Supreme Court or, for land values within its jurisdiction, the County Court - see definition in s 3(1)) to resolve disputes, authorise dealings, and enforce the statutory duties of the tenant for life and trustees.

The Settled Land Act 1958 does not operate in isolation. It interacts with several other Victorian statutes, as expressly referenced in the Act and its definitions. The Property Law Act 1958 is frequently cross-referenced. The definition of entailed interest in s 3(1) adopts the meaning in the Property Law Act. The definition of trust for sale, trustees for sale, and power to postpone a sale also adopt the Property Law Act meanings (s 3(1)). Section 9 of the Settled Land Act expressly excludes land held upon trust for sale from the definition of a settlement, sending such land to the trust for sale regime under the Property Law Act. The Trustee Act 1958 is applied by s 113: its provisions relating to vesting orders and orders appointing a person to convey apply to vesting orders made under the Settled Land Act. The general law of trusteeship also applies to trustees of the settlement, supplemented by specific protections in Part VI (ss 94-103). The Transfer of Land Act 1958 is specifically addressed in s 5, which provides that the Settled Land Act applies to land under the Torrens system, but the procedures, forms, and requirements of the Transfer of Land Act are to be followed as far as practicable. This means dealings with settled land under the Transfer of Land Act must comply with both statutes, including registration requirements. The Marriage Act 1958 is relevant historically: s 8(1)(d) includes as a settlement land limited to a married woman with a restraint on anticipation, and s 24 applies the Act to married women with full capacity. The explanatory note 3 to s 8(1)(d) and note 7 to s 24 refer to the Marriage Act 1958. The Supreme Court Act 1986 and the County Court (Amendment) Act 1989 have amended the definition of “Court” in s 3(1) to include the County Court for land within its jurisdictional limit. The State Trust Corporation of Victoria Act 1987 replaced earlier provisions about persons of unsound mind; s 27 now refers to a tenant for life becoming a “publicly represented person” and the State Trust may exercise powers with a court order. Older amendments also relate to the Statute Law Revision Acts and the Trustee Companies Act 1984. The Legal Practice Act 1996 and Legal Profession Uniform Law Application Act 2014 updated references from “solicitor” to “legal practitioner” in s 101 and elsewhere. In practice, the Settled Land Act also interacts with the general law of property and conveyancing: a conveyance by a tenant for life under s 72 overreaches equitable interests and vests legal title in the purchaser free of the settlement. Section 108 provides that the powers under the Act are cumulative and do not take away powers under the settlement, but in case of conflict the Act prevails. Section 109 allows the settlor to confer additional or larger powers, which then operate as if conferred by the Act.

The Settled Land Act 1958 is a consolidating Act that replaced the Settled Land Act 1928 (Act No. 3771) and several other amending Acts, as listed in the First Schedule. It received royal assent on 30 September 1958 and came into operation on 1 April 1959. Since then, numerous amendments have been made, the most recent incorporated in this version being as at 1 July 2015. Significant amendment Acts include: Statute Law Revision Act 1959 (No. 6505) which made minor textual adjustments. Age of Majority Act 1977 (No. 9075) reduced the age of majority from 21 to 18, affecting provisions concerning minors (ss 8, 26, 102). Statute Law Revision Act 1984 (No. 10087) made a minor amendment to s 75(1). Trustee Companies Act 1984 (No. 10168) updated the definition of “trustee company”. Courts Amendment Act 1986 (No. 16) substituted the definition of “Court” to include the County Court for land values within its jurisdiction, and repealed s 7 (which had defined the Court for other purposes). Supreme Court Act 1986 (No. 110) repealed certain procedural subsections in s 113. State Trust Corporation of Victoria Act 1987 (No. 55) substituted s 27 (formerly dealing with lunatics, now “publicly represented person”) and amended various provisions to replace references to the Public Trustee with the State Trust, and to permit trustee companies. County Court (Amendment) Act 1989 (No. 19) repealed s 113(1). Water (Consequential Amendments) Act 1989 (No. 81) amended the Second Schedule by substituting references to relevant authorities. State Trustees (State Owned Company) Act 1994 (No. 45) amended definitions and references from “State Trust” to “State Trustees” and updated trustee company references. Legal Practice Act 1996 (No. 35) amended references from “solicitor” to “legal practitioner” in s 101. Legal Profession (Consequential Amendments) Act 2005 (No. 18) inserted the definition of “legal practitioner” in s 3(1). Statute Law Revision Act 2011 (No. 29) amended the definition of “trust for sale” in s 3(1) to cross-reference the Property Law Act. Finally, Legal Profession Uniform Law Application Act 2014 (No. 17) amended the definition of “legal practitioner” in s 3(1) by substituting a reference to an Australian legal practitioner. The Table of Amendments in the endnotes lists all Acts from 1959 to 2014 that have amended the Act. No amendments have been identified as not in operation for this version.

The Act itself does not cite any decided cases. However, the structure of the Act anticipates frequent recourse to the Court. The Court is given jurisdiction to make orders in a wide range of circumstances: appointing trustees of a settlement (s 36), authorising transactions (s 64), giving directions on the exercise of powers (s 92, 93), and sanctioning conditional contracts (s 92(2)). The provision that the trustees are not to withhold consent arbitrarily (s 93) naturally invites applications where a tenant for life considers consent unreasonably withheld. Section 68 requires court approval for any dealing between the tenant for life and the estate, which would generate litigation. The protection given to purchasers (s 110) and to persons taking under compound settlements (s 34) are designed to reduce challenges, but any question as to whether a disposition was “in accordance with the provisions of this Act” could be litigated. Section 87 allows the court to authorise payment for improvements even where no prior scheme was approved, indicating that after-the-fact applications are possible. Section 105, dealing with surrender of a life estate, has the potential to raise questions about whether an assurance has the effect of extinguishing the tenant for life’s interest. The Act also interacts with the general law of trusts and property, so disputes about whether a particular instrument creates a settlement (s 8), or about who are the trustees for the purposes of the Act (s 30), are likely to come before the Court. Because the Act is a consolidation of earlier legislation (dating back to the Settled Land Act 1928 and before), there is a body of case law in other jurisdictions interpreting similar settled land legislation. However, the user has provided only the Act text; accordingly, no specific cases are named here. The explanatory details in the endnotes cross-reference other Victorian Acts (Property Law Act s 149(3), Trustee Act s 13(3), etc.), suggesting that litigation on those provisions may also involve the Settled Land Act. In practice, the most litigated issues likely concern the validity of a tenant for life’s actions without proper consent, the application of capital money, and the scope of improvements requiring repayment.

Several provisions in the Act contain traps for the unwary practitioner. (1) Inalienable powers: The tenant for life’s statutory powers cannot be assigned or released, and any contract not to exercise them is void (s 104). This means a tenant for life cannot bargain away his or her ability to sell or lease, and any attempt to do so in a settlement is ineffective. (2) Void prohibitions: Any provision in a settlement that forbids or tends to prevent the exercise of a statutory power is void (s 106). A gift over on exercise of a power is also void. (3) Trustee status: The tenant for life is deemed a trustee for all parties under the settlement (s 107). This fiduciary duty means the tenant for life must act even-handedly and cannot put his or her own interests ahead of remaindermen. A breach could lead to an action for breach of trust. (4) Consent requirement: Most major powers (sale, exchange, lease over 21 years, mortgage, etc.) require the consent of the trustees of the settlement or a court order. It is not enough to have the trustees’ consent after the fact; the Act requires consent before the disposition. (5) Notice to trustees: Unless it is a lease for 21 years or less at best rent without fine (s 42(5)), the tenant for life must give at least one month’s notice to each trustee by registered post, with a statement of particulars (s 101). Failure to give notice may invalidate the transaction, though a purchaser in good faith is not concerned to inquire (s 101(5)). (6) No self-dealing without court approval: Any sale, lease, mortgage, or other disposition to the tenant for life personally requires court approval under s 68. This includes cases where the tenant for life is a trustee. The transaction is not effective until approved by the court. (7) Capital money must go to trustees: On a sale, the purchase money must be paid to the trustees of the settlement, not to the tenant for life (s 48(d)). The trustees must be at least two in number (or a trustee company) to give a valid receipt (s 94). (8) Sole trustee restrictions: If the tenant for life is also the sole trustee of the settlement, the tenant for life cannot exercise those powers that require trustee consent without a court order (s 20). (9) Improvement repayment traps: For improvements in Part III of the Second Schedule (e.g., electric lighting, steam rollers), the whole of the capital money must be repaid by instalments out of income, unless the improvement is authorised by the settlement (s 84(4)). Failure to comply may result in the trustees requiring repayment. (10) No purchase of land outside Victoria: Capital money cannot be invested in land outside Victoria unless the settlement expressly authorises it (s 73(2)). (11) Surrender of life estate: If the tenant for life absolutely surrenders his estate to the next remainderman, his statutory powers cease and shift to the trustees or the remainderman as if the tenant for life had died (s 105). (12) Compound settlements: Where a settlement is created by multiple instruments, the trustees of the instrument under which there is a tenant for life become trustees of the whole compound settlement unless trustees are appointed for the prior instrument (s 31). A purchaser’s title is protected even if the instruments did not actually constitute a compound settlement (s 34). (13) Timber proceeds: The tenant for life can only cut ripe timber with trustee consent, and three-fourths of the net proceeds must be set aside as capital (s 66). Timber includes trees of any species that have market value for their wood. (14) Minors and contingency: When a minor is entitled to land in fee-simple, a settlement is deemed to exist and the trustees manage the land (ss 26, 102). During a contingency, the trustees have management powers but must not commit waste (s 102(2)). (15) Leases without consent: A lease for not more than 21 years at the best rent without fine, and without exempting the lessee from waste, can be made without trustee consent and without notice (s 42(5)). However, the lease must still be in conformity with other requirements.

Practical compliance with the Settled Land Act 1958 requires careful identification of the settlement and the relevant actors, and strict adherence to the procedural requirements before any dealing. The following steps should be taken. Step 1: Determine whether the land is settled land. Examine the instruments of title to see if any deed, will, or other instrument creates limitations by way of succession, an entailed interest, a determinable fee, a fee-simple subject to an executory limitation, or a life interest. Also check if a minor is entitled in fee-simple or if a married woman is subject to a restraint on anticipation (s 8). If the land is held on trust for sale, it is not settled land (s 9). Step 2: Identify the tenant for life or statutory owner. The person of full age in possession for life is the tenant for life (s 12). If there is no such person, the trustees of the settlement have the powers of a tenant for life (s 19). If a minor holds possession, the trustees act on his behalf (s 26). Step 3: Identify the trustees of the settlement. Follow the cascading list in s 30: look first for persons with a power of sale of the settled land; then persons declared trustees for Act purposes; then persons with a power of sale over other land under the same limitations; then persons with a future power of sale; then persons appointed by deed by those together able to dispose of the land. If none, the personal representatives of the deceased settlor become trustees (s 30(3)). Ensure there are at least two trustees (or a trustee company) to receive capital money (s 94). Step 4: For any proposed transaction, give notice to the trustees. The tenant for life must send a registered letter to each trustee (and their legal practitioner if known) at least one month before the transaction is to take place, accompanied by a statement of particulars sufficient to enable the trustees to decide whether to give consent (s 101). The notice is not required for a lease of 21 years or less at best rent without fine (s 42(5)), but is required for sales, exchanges, partitions, mortgages, charges, and longer leases. Step 5: Obtain the consent of the trustees (or a court order) for the specific transaction. The Act requires consent for sale, exchange, partition (s 38), leases other than those excepted (s 41), surrenders and regrants (s 52), acceptance of leases (s 53), grants of water rights and public/charitable purposes (ss 54, 55), compromises (s 57), variations of leases and covenants (ss 58, 59), raising money by mortgage (s 71), and many others. The consent should be in writing and recorded. If consent is withheld and the tenant for life considers it arbitrary, an application to the Court may be made under s 93. Step 6: Ensure the transaction complies with the substantive requirements. Sales must be for the best consideration reasonably obtainable (s 39). Leases must be by deed, take effect in possession within 12 months, reserve the best rent, and contain a covenant for payment of rent and a re-entry condition (s 42). Building leases require building agreements (s 44). Mining leases must capitalise part of the rent (s 47). Step 7: Ensure capital money is paid to the trustees. On a sale, the purchase money must be paid to the trustees (or into court) (s 48(d), s 75). The trustees must invest or apply the capital money only in the modes authorised by s 73 (e.g., government securities, discharge of incumbrances, purchase of land). The tenant for life must not receive capital money directly. Step 8: For improvements, submit a scheme to the trustees or court (s 84). Obtain a certificate from a competent engineer or surveyor certifying that the work has been properly executed, and the amount payable. For improvements in Part III of the Second Schedule, ensure the capital money is repaid by instalments out of income unless the improvement is authorised by the settlement (s 84(4)). Step 9: Maintain records. The tenant for life should keep copies of all notices, consents, court orders, and certificates. The trustees must keep records of capital money received and invested. Step 10: If in doubt, apply to the Court for directions. Section 92 allows any person interested to apply for the Court’s decision or directions on any matter relating to the exercise of powers. This is particularly important when the tenant for life is a sole trustee (s 20), when the tenant for life wishes to deal with himself (s 68), or when there is a dispute with the trustees. Step 11: Comply with the Transfer of Land Act 1958. If the land is under Torrens title, the dealing must be effected by the appropriate form of transfer or lease, and registered in accordance with that Act (s 5). Step 12: Do not attempt to contract out of the Act. Any provision in a settlement that restricts the tenant for life’s powers is void (s 106), and any contract not to exercise powers is void (s 104). The tenant for life should not agree to such restrictions.