COMMERCIAL COURT
SEMINAR
TRUST DISPUTES
Applications to Vary a Trust
by Michael Flynn SC
APPLICATIONS TO VARY TRUSTS
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Application to ct necessary if trust does not confer sufficient
power on trustee to take desired action
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Section 63 of Trustee Act 1958 (Vic)
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Section 63A of Trustee Act 1958 (Vic)
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Both provisions confer discretionary jurisdiction on court
SEC 63 OF TRUSTEE ACT
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Where in management/admin of property vested in trustee
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any sale, … disposition … or other transaction
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is in the opinion of the court expedient
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but cannot be effected because power is absent
Court can confer the necessary power
SEC 63 OF TRUSTEE ACT
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Sec 63(3) – application may be brought by trustee or by any
beneficiary.
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Applications usually brought by trustee
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Beneficiaries do not need to be joined initially
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But it is desirable to join principal beneficiaries, beneficiaries most
affected by order and dissenting beneficiaries.
SEC 63 OF TRUSTEE ACT
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Two important limitations –
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Court cannot alter beneficial interests
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There must be a “sale … or other disposition or any purchase,
investment, acquisition, expenditure or other transaction”
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Re Dion Investments Pty Ltd (NSW CA 2014) – conferring power of
amendment on trustee is not a “transaction”
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Therefore a number of post-1997 decisions incorrect, including
James N Kirby Foundation Ltd v A-G (NSW Sup Ct), Stein v
Sybmore (NSW Sup Ct), Hutchinson v A-G (Vic Sup Ct), Ballard v
A-G (Vic Sup Ct)
SEC 63 OF TRUSTEE ACT
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In past trustees often sought to enlarge investment powers
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No longer any need to do so
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Examples where power has been used:
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to confer power of sale (Community Welfare Foundation v A-G (Vic));
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to restructure a large trading trust (Arakella Pty Ltd v Paton);
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to empower trustees to execute documents to reconstruct an ailing
company: Re ANZ Nominees Ltd
Usually better to apply under s 63 rather than s 63A – trustee can
apply, fewer defendants and no need to obtain consent of adult
beneficiaries
SEC 63A OF TRUSTEE ACT
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Sec 63A – Ct may approve arrangement, by whomsoever proposed
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varying or revoking all or any of the trusts, or
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enlarging the powers of the trust or managing or administering any of the property
On behalf of:
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(a) any person having an interest who by reason of minority or other incapacity is
incapable of assenting
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(b) any person who may become entitled to an interest 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 excluding 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
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(c) any person unborn or
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(d) any person in respect of any discretionary interest of his under protective trusts
SEC 63A OF TRUSTEE ACT
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Plaintiff can be trustee, settlor, beneficiaries, other?
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Trustee should only apply if no beneficiary will: Re Druce’s
Settlement Trusts
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Defendants should include trustee (if not the pl).
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Usually include adult consenting beneficiaries (if not pls)
SEC 63A OF TRUSTEE ACT
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Sec 63A is statutory extension of consent principle in Saunders v
Vautier
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Ct does not vary trusts – beneficiaries do.
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Sec 63A can apply to a discretionary trust
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Challenge to obtain consent of all adult beneficiaries.
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Consider narrowing beneficiary classes before hearing eg Re
Plator Nominees Pty Ltd (2012)
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Ct’s discretion takes into a/c advantages the various parties
obtain and their bargaining strength
SEC 63A OF TRUSTEE ACT
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Common reason for applications – to extend vesting date.
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Trustee may have power to extend vesting date but is unable to
extend perpetuity period.
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Variation under s 63A may fix new perpetuity period: Re Holt’s
Settlement (1967)
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Should be no CGT – Taxation Determination TD 2012/21