Staley v Hill Family Holdings Pty Ltd
[2025] QCA 95
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- Unreported Judgment
- Appeal Determined (QCA)
- Staley v Hill Family Holdings Pty Ltd[2025] QCA 95
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Staley v Hill Family Holdings Pty Ltd[2025] QCA 95
Staley v Hill Family Holdings Pty Ltd[2025] QCA 95
SUPREME COURT OF QUEENSLAND
CITATION: | Staley v Hill Family Holdings Pty Ltd [2025] QCA 95 |
PARTIES: | KERIN ANNE STALEY (first appellant) STALEY MANAGEMENT PTY LTD as trustee of the HILL FAMILY TRUST ACN 678 146 202 (second appellant) v HILL FAMILY HOLDINGS PTY LTD in its own right and as (purported) trustee of the HILL FAMILY TRUST ACN 099 638 105 (respondent) |
FILE NO/S: | Appeal No 12196 of 2024 SC No 8456 of 2024 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane: [2024] QSC 176 (Muir J) |
DELIVERED ON: | 3 June 2025 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 4 March 2025 |
JUDGES: | Bond JA, Gotterson AJA and Bradley J |
ORDERS: |
|
CATCHWORDS: | EQUITY – TRUSTS AND TRUSTEES – DISCRETIONARY TRUSTS – CREATION AND EFFECT GENERALLY – where the Trustee of a discretionary trust executed a Deed of Variation to remove and substitute the Appointor under the Trust Deed – where the appellants seek a declaration that the Deed of Variation dated 28 March 2024 and executed by the respondent is invalid – where the first appellant, as Appointor, subsequently executed a Deed of Removal and Appointment of Trustee dated 19 June 2024 – where the trial judge refused the appellant’s application for declaratory and auxiliary relief against the respondent – where the Trust Deed conferred a broad power of amendment on the trustee under Clause 14.01 – where the appellants contended that the amendment impermissibly altered the substratum of the trust – where the appellants relied on an implied limitation on the trustee’s power to amend the Trust Deed based on other provisions regulating the Appointor’s role – where the trial judge found the Deed of Variation to be a valid exercise of the power to amend the Trust Deed – whether the trial judge erred in construing Clause 14.01 of the Trust Deed as authorising the insertion of a clause permitting the trustee to remove and replace the Appointor – whether the power to vary the Trust Deed was impliedly limited by provisions conferring specific powers on the Appointor – whether the insertion of clause 22.04 and the removal of the Appointor constituted an impermissible alteration to the substratum of the trust – whether the Deed of Variation was invalid as contrary to the structure or scheme of the Trust Deed Cachia v Westpac Financial Services Ltd (2000) 170 ALR 65; [2000] FCA 161, cited Jenkins v Ellett [2007] QSC 154, considered Mercanti v Mercanti (2016) 50 WAR 495; [2016] WASCA 206, cited Palmer v Palmer [2018] QSC 217, cited |
COUNSEL: | C C Heyworth-Smith KC, with M E B Williams, for the appellants G Beacham KC, with K J Kluss, for the respondent |
SOLICITORS: | Thynne & Macartney for the appellants Bartley Cohen for the respondent |
- [1]BOND JA: I agree with the reasons for judgment of Gotterson AJA and with the orders proposed by his Honour.
- [2]GOTTERSON AJA: This appeal is from an order made by Justice Muir in the Supreme Court of Queensland on 16 August 2024[1] dismissing with costs an application made by way of an Amended Originating Application.[2] The Originating Application filed on 28 June 2024[3] was amended by leave on 12 July 2024, the date on which the application was heard by her Honour.
- [3]The application concerned the Hill Family Trust which was established by a Trust Deed dated 19 February 2002.[4] Kerin Anne Staley, as First Applicant, and Staley Management Pty Ltd, as Second Applicant, sought declaratory and auxiliary relief against Hill Family Holdings Pty Ltd as Respondent. These parties are respectively the First and Second Appellants and the Respondent to this appeal.
- [4]The declaratory orders sought and refused were as follows:
- a declaration that the First Applicant is, and has been since 31 December 2019, the sole Appointor of the Hill Family Trust;
- a declaration that a deed styled “Deed of Variation – Hill Family Trust” dated 28 March 2024[5] and executed by Hill Family Holdings Pty Ltd is invalid; and
- a declaration that Staley Management Pty Ltd is, and has been since 19 June 2024, the sole Trustee of the Hill Family Trust.
- [5]To give context to the issues and the submissions in this appeal, it is appropriate to set out relevant provisions of the Trust Deed and then to summarise the circumstances in which the application arose.
The Trust Deed
- [6]Mr Sydenham James Hill instigated the establishment of the Hill Family Trust. Under the Trust Deed, which was prepared by his solicitors, he was named Appointor[6] and the Primary Beneficiary.[7] The Secondary Beneficiaries included his spouse, children and grandchildren, none of whom were identified by name.[8] Hill Family Holdings Pty Ltd, of which he and his wife, Shirley Hill, were the original directors and shareholders, was named as Trustee.[9]
- [7]Relevantly, Clause 1 of the Trust Deed defined “the Appointor” to be:
“the person named in Part 4 of the Second Schedule and any other persons authorised to exercise the powers of the Appointor in accordance with this Deed;”
and “the Trustee” to be:
“the person named in Part 3 of the Second Schedule and any other Trustees for the time being”.[10]
- [8]The Trust Deed conferred specific powers and responsibilities on the Trustee with respect to accumulation of income (Clause 4);[11] distribution of net income (Clause 5);[12] and distribution of capital (Clause 7).[13] By Clause 12, the powers of the Trustee include the powers set out in the First Schedule to the Trust Deed.[14] Significantly, Clause 12.05 provides:[15]
“The powers conferred upon the Trustee by this Deed are in addition to any powers conferred upon the Trustee by any rule of law equity or statute and are not limited or restricted in any way. All powers set out in this Deed shall be construed as widely as possible. Without prejudice to the generality of the foregoing the Trustee has the powers conferred on trustees by the Trusts Act 1973 (Queensland).”
- [9]Clause 14 of the Trust Deed is headed “Amendment and Variation of Beneficiaries”. It contains the following provisions of relevance for present purposes:
“14.01 The Trustee may revoke, add to, release, delete, or vary all or any of the trusts, powers or provisions declared or included in this Deed or any trusts, powers or provisions declared by or included in any revocation, addition, release, deletion or variation made to this Deed and may at the same time declare or include any new or other trusts, powers or provisions concerning the Fund PROVIDED THAT the Trustee must not exercise its powers under this clause so as to confer upon the Settlor any beneficial interests in any part of the Fund nor in the income from the Fund or in a way which infringes the law against perpetuities.
14.02 The powers of variation under clause 14.01 may be exercised by Deed, written memorandum or any other method permitted under this Deed.
14.03 The powers of the Trustee under clause 14.01 include the power to appoint or remove beneficiaries.
14.04 Subject to clause 27.01, but otherwise despite anything to the contrary in the Deed, the Appointor may at any time prior to the perpetuity date appoint additional beneficiaries by notice in writing to the Trustee or in the manner prescribed in clause 23.01.”[16]
- [10]A significant provision in the Trust Deed conferring an express power on the Appointor is Clause 21 headed “Removal Appointment and Retirement of Trustees”. To that end, Clause 21.01 provides:
“The Appointor may at any time by Deed, or in any other manner permitted in this Deed, remove any Trustee from office and may appoint any person or corporation to be a Trustee either alone or Jointly with any other Trustee, but the Appointor must not appoint the Settlor as Trustee.”[17]
Other provisions in Clause 21 permit the Trustee to resign at any time and appoint a successor or to be automatically removed in certain circumstances. As well, the Appointor has the power to appoint additional beneficiaries set out in Clause 14.04.
- [11]Exercise of power by the Appointor is regulated by Clause 22 which is so named. It contains the following provisions:
“22.01 Except to the extent otherwise provided in this Deed, any power, discretion or authority exercisable by the Appointor must, where more than one person is Appointor, be exercised by those persons jointly and by the survivor or survivors on the death of any of them and, upon the death of the survivor of all persons nominated as Appointors pursuant to the terms of this Deed, by the legal personal representatives of the last to die. Where a corporation is the Appointor, the corporation may exercise or concur in exercising any of the powers or discretions of the Appointor by resolution of its Board of Directors or other governing body or may delegate the right and power to exercise or concur in exercising any powers of discretions to one or more members of the Board of the corporation.
22.02 An Appointor may resign as Appointor. The Appointor may appoint an additional replacement Appointor on such terms as the Appointor thinks fit, provided that the Appointor cannot appoint the settlor or the legal personal representatives of the Settlor.
22.03 The position of an Appointor is automatically determined if the Appointor:
being an individual:
- is found to be of unsound mind; or
- is a person whose estate is liable to be dealt with under the laws relating to Mental Health; or
- becomes bankrupt; or
- enters into a Deed of Arrangement, assignment or composition with his or her creditors; or
being a company:
- has a receiver appointed; or
- enters into official management; or
- is wound up; or
- passes a resolution for its winding up; or
- enters into a scheme of arrangement.”[18]
The circumstances giving rise to the application
- [12]Mr Hill died on 18 December 2009. By his last Will made on 25 March 1994,[19] he appointed his two daughters, Paula Maree Porter and Kerin Anne Staley as his executors. The parties to this litigation have proceeded on the footing that, as executors, they also became Appointors pursuant to Clause 22.01 of the Trust Deed.
- [13]Also, on her husband’s death, Mrs Hill became the sole director and shareholder of Hill Family Holdings Pty Ltd. On 30 October 2013, Mrs Hill, on behalf of Hill Family Holdings Pty Ltd as Trustee, made an oral declaration pursuant to Clause 23.01 of the Trust Deed and in exercise of the power conferred by Clause 14.03 thereof, removing Mrs Staley, her husband and their children, grandchildren and great-grandchildren as beneficiaries of the Hill Family Trust.[20] (The validity of that declaration is not in issue in these proceedings). On the same day, Mrs Hill appointed Mrs Porter as a director of Hill Family Holdings Pty Ltd.
- [14]On 18 November 2015, Hill Family Holdings Pty Ltd purported to execute a Deed Poll[21] removing Mrs Staley as Appointor and appointing Mrs Porter as “Substitute Appointor” of the Hill Family Trust. It is accepted that this Deed Poll was invalid, the Trustee having had no power to do so under the terms of the Trust Deed at that time.
- [15]Mrs Porter was married to William James Martin Porter. On 22 July 2019, she appointed their daughter, Brodie Maree Mitchelmore, as a director of Hill Family Holdings Pty Ltd. Mrs Porter died on 31 December 2019 where upon Mrs Staley became the sole Appointor of the Hill Family Trust. Mrs Hill died on 29 September 2022.
- [16]It was in these circumstances that Mrs Mitchelmore, as sole director and secretary of Hill Family Holdings Pty Ltd, caused that company to execute the Deed of Variation as Trustee on 28 March 2024. The other party to the Deed of Variation is Mr Porter who was thereby labelled the “New Appointor”. Under the heading “Background”, the Deed of Variation recites some of the chronology that I have set out and refers to Clause 14.01 of the Trust Deed and the Trustee’s wish to vary the terms of the Trust Deed with effect from that date. Clause 1 thereof deals with matters of interpretation.
- [17]Clause 2 of the Deed of Variation is headed “Variation” and states:
“With effect on and from the Effective Date, the Trustee varies the Trust Deed by inserting the following new clause after clause 22.03:
22.04 Special Removal of Appointor
(a) This clause 22.04 only applies where Kerin Anne Staley is the Appointor.
(b) The Trustee may in in (sic) its absolute discretion remove Kerin Anne Staley as the Appointor, provided that the Trustee nominates a person (other than the Trustee) to become the replacement Appointor.”[22]
- [18]Clause 3 of the Deed of Variation is headed “Removal of Appointor” and exercises the discretion conferred by the new clause 22.04 in the following terms:
“On the Effective Date and immediately following the variations made by the Trustee in clause 2, the Trustee, in accordance with its power in clause 22.04 of the Trust Deed:
- removes Kerin as the Appointor of the Trust; and
- appoints the New Appointor as the Appointor of the Trust in her place.”[23]
- [19]By Clause 4 thereof, the New Appointor, by executing the Deed of Variation accepts his appointment as Appointor of the Hill Family Trust. Mr Porter executed the Deed of Variation on 28 March 2024. I note that Mrs Staley was not advised of the execution of the Deed of Variation at that time.
- [20]Mrs Staley had also not been informed of the oral declaration removing her and her kin as beneficiaries when it was made. She became aware of it shortly after a statutory declaration to that effect was provided to her solicitors on 8 March 2024.[24]
- [21]This prompted Mrs Staley to execute a Deed of Removal and Appointment of Trustee of the Hill Family Trust on 19 June 2024.[25] By this Deed, Mrs Staley, as Appointor, acted pursuant to Clause 21.01 of the Trust Deed to remove Hill Family Holdings Pty Ltd as Trustee and appoint Staley Management Pty Ltd in its stead.
- [22]It was about one week later, on 27 June 2024, that Mrs Staley’s solicitors were informed by the solicitors for Hill Family Holdings Pty Ltd that the Deed of Variation removing her as Appointor had been executed some three months earlier. The Originating Application was filed on the following day.[26]
- [23]The solicitors for Hill Family Holdings Pty Ltd also advised Mrs Staley’s solicitors on 27 June 2024 that sometime earlier, Hill Family Holdings Pty Ltd had determined “to vest” the Hill Family Trust on 30 June 2024 and that Hill Family Holdings Pty Ltd intended to proceed to do so. That step has not been taken pending the determination of these proceedings.
The proceedings at first instance
- [24]The principal issue for determination by Justice Muir was whether the amendment of the Trust Deed, removal of Mrs Staley and appointment of Mr Porter as Trustee by means of the Deed of Variation were valid exercises of power by Hill Family Holdings Pty Ltd. If they were, then Mrs Staley would have ceased to be Appointor on 28 March 2024 and would not have had power as such on 19 June 2024 to remove Hill Family Holdings Pty Ltd as Trustee of the Hill Family Trust and appoint Staley Management Pty Ltd in its place.
- [25]Justice Muir concluded that, properly construed, Clause 14.01 of the Trust Deed authorised Hill Family Holdings Pty Ltd to amend Clause 22 thereof by the insertion of Clause 22.04, as it did by Clause 2 of the Deed of Variation. Her Honour also concluded that the removal of Mrs Staley as Appointor and the appointment of Mr Porter as Appointor in her place, effected by Clause 3 of the Deed of Variation was valid. Accordingly, she refused to make the declarations sought by Mrs Staley and Staley Management Pty Ltd.
- [26]Justice Muir referred to relevant rules of construction applicable to deeds and trusts[27] and relevant provisions in the Trust Deed.[28] Her Honour also considered three decisions which concerned a trustee’s power of amendment where the power had been exercised to replace an Appointor or a principal in an analogous position.[29] They are the decisions of Douglas J in Jenkins v Ellett,[30] of the Court of Appeal of Western Australia in Mercanti v Mercanti,[31] and of Mullins J (as her Honour then was) in Palmer v Palmer.[32]
- [27]Her Honour then turned to submissions made for Mrs Staley and Staley Management Pty Ltd in support of invalidity of the Deed of Variation, which she summarised as follows:
“(a) Consistent with the heading, clause 14.01 is confined to amendment and variations of beneficiaries or otherwise ought to be construed narrowly;
- Clause 14.01 does not confer a power to amend the schedules to the Trust Deed (and the identity of the Appointor is specified in the Second Schedule);
- The interpretation of clause 14.01 as conferring upon the Trustee a power to amend the Trust Deed to remove and replace the Appointor would be inconsistent with the fundamental feature of the Trust Deed by which the Appointor is empowered to remove and replace the Trustee; and would destroy the substratum of the Trust Deed; and
- The Execution of the Deed of Variation was in breach of the Trustee’s duty to act honestly and in good faith and was a fraud on the power given to the Trustee under the Trust Deed.”[33]
- [28]Justice Muir considered each of the submissions separately and gave reasons for rejecting them. It is unnecessary to traverse those reasons at this point. I propose to refer to them as is appropriate in order to decide the grounds of appeal.
The grounds of appeal
- [29]A Notice of Appeal[34] was filed on behalf of Mrs Staley and Staley Management Pty Ltd on 13 September 2024. It lists as the grounds of appeal some eight errors which it contends were made by Justice Muir. These errors are grouped into four parts (Parts A – D) in the Appellants’ Amended Submissions on the appeal.
- [30]None of these errors relate to her Honour’s rejection of the submission that execution of the Deed of Variation by Hill Family Holdings Pty Ltd was a fraud on the Trustee’s power. Thus, this Court is not required to consider whether the amendment of the Trust Deed itself to include Clause 22.04 or the exercise of the discretion conferred by it were fraudulent, that is to say, not in good faith. I would add that it would be inappropriate for it to attempt to do so given that fraud was, and is, denied; the ambit of relevant disputed fact has not been identified by pleadings; and all evidence bearing upon such disputed fact appears not to have been before Justice Muir, nor was such of the evidence that was relevant subject to cross-examination.
- [31]Furthermore, the Appellants’ Submissions do not renew the contention that the powers conferred on the Trustee by Clause 14.01 of the Trust Deed are limited by the heading to Clause 14 to variation of beneficiaries or amendment of provisions of the Trust Deed applicable to the beneficiaries. Such a contention is unsustainable having regard to the express authority given by Clause 14.01 to the Trustee “to add to”, or “vary all or any of … the provisions” in the Trust Deed; the express provision in Clause 12.05 that all powers set out in the Trust Deed “shall be construed as widely as possible”; and the structure of Clause 14 itself with Clause 14.01 conferring the power to amend the Trust Deed and Clause 14.03 confirming that such a power includes the power to appoint or remove beneficiaries. In my view, the heading to Clause 14 is unambiguous in context. It means that the clause deals with amendment of the Trust Deed as provided for in the clause, including amendment that varies the beneficiaries.
- [32]As conferred by Clause 14.01 and reinforced by the provision in Clause 12.05 to which I have referred, the power to amend the provisions of the Trust Deed is cast in very broad terms. The Appellants’ case on appeal is that other provisions of the Trust Deed and the general law constrain the scope of the power to vary the provisions of the Trust Deed conferred by Clause 14.01 such that it did not extend to conferring an absolute discretion on the Trustee to remove Mrs Staley as Appointor provided that it nominate a replacement Appointor.
- [33]The Appellants’ Submissions focus upon other provisions of the Trust Deed, in particular Clause 22 in its original form, which, it is argued, deals exhaustively with the appointment and removal of an Appointor, upon the absence of an express provision empowering the Trustee to remove or appoint an Appointor, and upon the conception of inviolability of the substratum of a trust which, it is contended, in this instance includes supremacy of the role of Appointor over that of Trustee.
- [34]In oral argument, counsel for the Appellants did not make separate submissions with regard to each of the errors listed as grounds of appeal. Instead, two broad themes which encapsulate the Appellants’ contentions of error were advanced. It is convenient to adopt those themes as the frame of reference for considering this appeal.
The substratum theme
- [35]A recurrent theme in the Appellants’ oral submissions was that Clause 14.01 ought not be interpreted so as to allow an amendment to the Trust Deed that would alter the substratum of the trust “or have the potential to do so”.[35] The Appellants submitted that Clause 21.01 confers supremacy on the role of Appointor over that of Trustee by expressly empowering the Appointor to remove any Trustee from office and appoint a replacement in circumstances where the Trust Deed does not expressly empower the Trustee to, do likewise with respect to the Appointor. The supremacy of the Appointor’s role is, it was further submitted, an element of the substratum of the Hill Family Trust which the insertion by the Trustee of Clause 22.04 “tipped on its head”.[36]
- [36]The notion of alteration of the substratum of a trust as a limitation upon a power to vary a trust deed was considered by Hely J in Cachia v Westpac Financial Services Ltd.[37] His Honour’s analysis of the authorities was cited by the High Court in Federal Commissioner of Taxation v Bargwanna[38] per French CJ, Gummow, Hayne and Crennan JJ at [13].
- [37]
“101 Hely J said that the authorities which suggest that a power to vary a trust deed may be held not to extend to a variation which would ‘alter the substratum of the trust’ may be ‘no more than an application of the equitable doctrine of fraud on the power’. His Honour's view is, in my respectful opinion, correct, having regard to the decisions of the High Court in Byrnes[40] and Montevento[41], which have held that the rules applicable to the construction of contracts apply also to trusts, and to the decision of the High Court in Bargwanna. In other words, the notion of an alteration to the substratum of the trust is not an aspect of the rules applicable to the construction of a trust deed but is, rather, an application of the equitable doctrine of fraud on a power.”
That case concerned the validity of amendments to a trust deed including an amendment that removed an Appointor and appointed a new Appointor in his place.
- [38]More recently, in Re EM McPherson Settlement,[42] Harris J considered an application for court approval of variations to a trust deed under s 63A of the Trustee Act 1958 (Vic). His Honour said:
“124 It is apparent from Re McGowan[43] and other cases referred to above that the question of whether amendments or variations would destroy the substratum of the trust has continuing relevance to the question of whether the Court may approve variations to a trust under s 63A of the Trustee Act. In the case of amendments made by a trustee in the exercise of a power conferred by the trust instrument, the question of whether an amendment would destroy the substratum of the trust engages the same considerations as the application of the equitable doctrine of fraud on the power, as explained by Hely J in Cachia and the Court of Appeal of Western Australia in Mercanti v Mercanti. In the case of the Court considering whether to approve an arrangement under s 63A, the relevance is primarily as to whether the changes to the trust to be effected by the arrangement are so significant that the arrangement cannot be regarded as a ‘variation’ within the terms of s 63A, but as a resettlement of a trust.
125 There may be a secondary relevance, even in the context of a statutory variation of the conception of the substratum test as a species of the ‘fraud on a power’ doctrine, in that if the arrangement is proposed by the trustee, an arrangement could not be considered to be a fair and proper one if it would be regarded as involving a fraud on the power of the trustee to put forward the arrangement. There is however little utility in considering any such secondary consideration in this case where the beneficiaries, legally advised, agree with the Trustee that the amendments are appropriate and within the purposes of the Trust. The primary question remains whether the arrangement can properly be regarded as a ‘variation’, rather than a resettlement or a substitution of the trust.”
- [39]In light of the references in these authorities to the equitable doctrine of fraud, there is an obvious difficulty for the Appellants in contending that the Deed of Variation impermissibly altered the substratum of the Hill Family Trust. That is so because it is not alleged in this appeal that execution of the Deed was a fraud on the Trustee’s power to amend under Clause 14.01 or akin to a fraud.
- [40]However, there are other difficulties with the contention. The Appellants need to persuade this Court that the substratum of the Hill Family Trust includes supremacy of the Appointor’s role. Why that would be so is not apparent. It does not follow that whilst the office of Appointor might arguably form part of the substratum of the trust, the supremacy of the Appointor’s role is also part of it. In any event, the Deed of Variation neither abolished the office of Appointor nor limited the Appointor’s power under Clause 21 or its manner of exercise under Clause 22.
- [41]What the Deed of Variation did was to provide a means for the removal of the named person as Appointor and for her replacement. Whether a change of identity of an office holder would alter the substratum of a trust was considered by Buss P in Mercanti. His Honour observed:
“265 I am also of the opinion that the execution of the MMF Trust Deed of Variation did not alter the ‘substratum’ of the MMF Trust. The determination of the substratum of a discretionary family trust is not without difficulty. That is especially so where, as in the present case, the trust deed is drafted to confer maximum flexibility in relation to the beneficiaries of the trust, the distribution or accumulation of capital and income, and the management and control of the trust. … I consider that, on the proper construction of the MMF Trust Deed as a whole in the context of a trust which may not vest until the Vesting Day (namely, 30 June 2055), the substratum of the MMF Trust was the conferral of benefits from time to time on one or more of the Beneficiaries for the time being of the MMF Trust, as determined from time to time by the Trustee for the time being, subject to the provisions of the MMF Trust Deed, including any consent required from the Guardian for the time being pursuant to cl 10 of the MMF Trust Deed. The substratum was not, in my view, to be ascertained or defined by reference to the identity of the persons or entities who, at the date of execution of the MMF Trust Deed, held the offices of Trustee, Guardian or Appointor. ...”. (emphasis supplied).
- [42]In my view, the reasoning in these observations, with which I respectfully agree, have application to the present case. I note that in Mercanti, the Court of Appeal held that on its proper construction, a clause similar in ambit to Clause 14.01 empowered the Trustee to remove an Appointor and appoint a new Appointor in his place.
- [43]The Appellants have placed reliance on the decision of Douglas J in Jenkins v Ellett.[44] The question in that case was whether the power of amendment in a trust deed available to the trustees included a power to remove or change the identity of the Principal. His Honour found that it did not. The power of amendment in that case was limited to “Trusts Declared”, that is to say, those declared in Clause 2 of the deed which in turn were “subject to the powers and provisions in this Trust” including the power of the Principal to remove the Trustee. Douglas J noted that it would have been easy for the drafter of the deed to have provided the trustee with a broad power of amendment had that been intended.[45] Such a power is conferred by Clause 14.01 in this case. Its breadth precludes argument by analogy that a similar finding should be made in this case.[46]
- [44]For these reasons, the Appellants’ submissions based upon an alteration of the substratum of the Hill Family Trust ought not, in my view, succeed.
The interpretation theme
- [45]The Appellants submit that the power conferred on the Trustee by Clause 14.01 is limited in its scope by other provisions in the Trust Deed. The limitation is not in express terms, but is to be implied.
- [46]The relevant limitation for which the Appellants contend is that the power to amend may not be exercised by the Trustee to remove an Appointor as was done in this case by the Deed of Variation. Such a limitation, it is argued, is to be derived from the comprehensiveness of other provisions in the Trust Deed relating to the appointment and resignation of Appointors and a necessity to avoid a circularity that could arise, for example, with respect to the identity of beneficiaries.
- [47]I turn first to the other provisions in the Trust Deed to which reference was made. It is submitted for the Appellants that Clause 22 provides a comprehensive regime for appointment to, tenure of, and resignation from office as Appointor such as to preclude implicitly the removal and replacement of the Appointor by the Trustee.
- [48]In my view, Clause 22 does not withstand scrutiny as establishing such a regime. Moreover, it is ambiguous in certain respects.
- [49]During argument of the appeal, the members of the Court questioned the shared assumption for the parties that both Mrs Staley and Mrs Porter, as Mr Hill’s executors, had become Appointors upon his death pursuant to Clause 22.01. It is unnecessary to elaborate upon the interpretative aspects of this issue. It became common ground during argument that a strained reading of the first sentence of that clause, to the point of ignoring some part of it, was necessary in order to validate the assumption.
- [50]Further, the first sentence of Clause 22.01 also gives rise to a question whether the line of persons entitled to exercise the powers, discretions or authorities exercisable by the Appointor concludes with the legal personal representatives of the last surviving person nominated under the Trust Deed as Appointor,[47] or whether the line continues from legal personal representative to legal personal representative.[48] That such a question arises illustrates the inconclusiveness of this clause.
- [51]Clause 22.02 is ambiguous in that it is not clear whether the power to appoint an “additional replacement Appointor” in the second sentence is conditioned upon the Appointor having first resigned as permitted by the first sentence. Further, if the power to appoint is not so conditioned, then it is questionable whether the expression “additional replacement Appointor” is to be read as “additional or replacement Appointor”.
- [52]With regard to Clause 22.03, provision is made for the automatic determination of the position of Appointor held by an individual in four specified circumstances, including being found of unsound mind or becoming bankrupt. However, neither that clause nor any other provision of the Trust Deed, provides for the appointment of a replacement Appointor in such an event.
- [53]Having regard to these aspects of Clause 22, I am unable to discern within in an implied exclusion from Clause 14.01 of a power to vary the provisions of the Trust Deed so as to provide for the removal of a named person as Appointor and replacement with another.
- [54]The Appellants illustrate their argument based on circularity by hypothesising an instance in which the Trustee exercises the power under Clause 14.03 to remove certain beneficiaries whereupon the Appointor exercises the power under Clause 14.04 to reappoint the same persons as beneficiaries. Were the Trustee minded to remove those beneficiaries again, then, in order to forestall their reappointment, it might, at the same time, remove the Appointor and appoint a compliant Appointor in their place, assuming that the Appointor had not, in the meantime, removed the Trustee.[49]
- [55]The Appellants submit that in order for that not to happen, there is a need for a “circuit-breaker”. That, the Appellants argue, is provided by Clause 21.01 which confers an express power on the Appointor to remove and replace the Trustee. They further submit that if the Trustee can effectuate removal of the Appointor pursuant to Clause 14.01, such an circumstance would subvert the express power of the Appointor under Clause 21.01 and facilitate circularity of the kind posited.[50]
- [56]I am unpersuaded that the Appellants’ hypothesis provides a sufficient basis for the implication of an exclusion from Clause 14.01 of the kind for which they contend. Such an implication is not necessary in order to address the hypothesised circumstances. Both Appointor and Trustee must exercise their powers according to duties imposed upon them by equity. If such duties are transgressed, as they might very well be in such circumstances, then a court of equity will intervene to provide redress. In that way, it is the court that acts as a circuit-breaker.
- [57]For these reasons, I do not accept the Appellants’ submissions that on its proper construction, Clause 14.01 did not empower the Trustee to execute the Deed of Variation.
Conclusion
- [58]The Appellants have not established that the orders of Justice Muir should be set aside for error. It is unnecessary for this Court to consider the contention advanced by the Respondent[51] otherwise in support of the orders made.
- [59]In these circumstances, the appeal should be dismissed with costs. I would propose the following orders.
Orders
- Appeal dismissed.
- The Appellants are to pay the Respondent’s costs of and incidental to the appeal on the standard basis.
- [60]BRADLEY J: I agree with the proposed orders and reasons given by Gotterson AJA.
Footnotes
[1] AB, 10–11.
[2] AB, 125–127.
[3] AB, 28–30.
[4] Affidavit of KA Staley, affirmed 8 July 2024, Exhibit KAS-01; AB, 66.
[5] Affidavit of VA Martin, affirmed 8 July 2024, Exhibit VAM-05; AB, 137–141.
[6] Second Schedule, Part 4; AB, 81.
[7] Second Schedule, Part 5; AB, 81.
[8] Ibid.
[9] Second Schedule, Part 3; AB, 81.
[10] AB, 68–69.
[11] AB, 70.
[12] AB, 70–71.
[13] AB, 71.
[14] Clause 12.01; AB, 72.
[15] AB, 72–73.
[16] AB, 73.
[17] AB, 75.
[18] AB, 76.
[19] Affidavit of KA Staley, Exhibit KAS-03; AB, 89–95.
[20] Ibid, Exhibit KAS-10; AB, 113–114.
[21] Affidavit, MT Manning, sworn 12 July 2024, Exhibit “A”; AB, 186–190.
[22] AB, 138.
[23] AB, 130.
[24] Affidavit of KA Staley, para 12; AB 62.
[25] Affidavit of VA Martin, Exhibit VAM-03; AB, 131-133.
[26] Ibid, Exhibit VAM-04; AB 135.
[27] Reasons, [15]–[19].
[28] Ibid, [20]–[27].
[29] Reason, [28]–[36].
[30] [2007] QSC 154.
[31] (2016) 50 WAR 495.
[32] [2018] QSC 217.
[33] Reasons, [38].
[34] AB 1–9.
[35] Tr 1-4, ll16-17.
[36] Tr 1-8, ll28-44.
[37] (2000) 170 ALR 65.
[38] [2012] HCA 11; (2012) 244 CLR 655.
[39] [2016] WASCA 206; (2016) 50 WAR 495.
[40] Byrnes v Kendle (2011) 243 CLR 253.
[41] Montevento Holdings Pty Ltd v Scaffidi (2012) 246 CLR 325.
[42] [2024] VSC 744.
[43] (2021) 63 VR 449.
[44] [2007] QSC 154.
[45] At [16].
[46] Justice Muir distinguished Jenkins for similar reasons: Reasons, [57], [58].
[47] As contended for by the Respondent in a Notice of Contention filed on 24 January 2025.
[48] As contended for by the Appellants.
[49] Tr 1 – 9, l5 – Tr 1 – 10, l3.
[50] Tr 1 – 10, l7 – Tr 1 – 11, l14.
[51] Notice of Contention filed on 24 January 2025.