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Staley v Hill Family Holdings Pty Ltd[2024] QSC 176

Staley v Hill Family Holdings Pty Ltd[2024] QSC 176

SUPREME COURT OF QUEENSLAND

CITATION:

Staley v Hill Family Holdings Pty Ltd [2024] QSC 176

PARTIES:

KERIN ANNE STALEY

(first applicant)

AND

STALEY MANAGEMENT PTY LTD ACN 678 146 202 AS TRUSTEE OF THE HILL FAMILY TRUST

(second applicant)

v

HILL FAMILY HOLDINGS PTY LTD ACN 099 638 105 IN ITS OWN RIGHT AND AS (PURPORTED) TRUSTEE OF THE HILL FAMILY TRUST

(respondent)

FILE NO:

8456 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

16 August 2024

DELIVERED AT:

Brisbane

HEARING DATE:

12 July 2024

JUDGE:

Muir J

ORDER:

  1. The declarations sought by the applicant are refused.
  2. I will hear the parties as to the form of orders (including as to costs) and any declarations (if they are agreed) that follow from my findings.

CATCHWORDS:

EQUITY – TRUSTS – DISCRETIONARY TRUST – REMOVAL OF APPOINTOR – where the Trustee of a discretionary trust executed a Deed of Variation to remove and substitute the Appointor under the Trust Deed – where the Appointor seeks a declaration that the Deed of Variation is invalid – where the Appointer subsequently executed a Deed of Removal and Appointment replacing the Trustee – whether the power to vary the terms of the Trust Deed includes a power to change the identity of the Appointor or amend the terms of the Trust Deed to allow that to happen

Trusts Act 1973 (Qld), s 12.05

Armitage v Nurse [1998] Ch 241

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99

Byrnes v Kendle (2011) 243 CLR 253

Cachia v Westpac Financial Services Ltd (2000) 170 ALR 65

Cihan v Cihan [2022] NSWSC 538

Cott UK Ltd v FE Barber Ltd [1997] 3 All ER 540

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640

ING Funds Management Ltd v ANZ Nominees Ltd (2009) 228 FLR 444

International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151

Jenkins v Ellett [2007] QSC 154

Kearns v Hill (1990) 21 NSWLR 107

lezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350

Mercanti v Mercanti (2016) 50 WAR 495

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104

Palmer v Palmer [2018] QSC 217

Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541

Rinehart v Welker [2012] NSWCA 95

Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

COUNSEL:

C Heyworth-Smith KC with MEB Williams for the applicants

G Beacham KC with K Kluss for the respondent

SOLICITORS:

Thynne & Macartney for the applicants

Bartley Cohen for the respondent

  1. [1]
    The Hill Family Trust was established by Deed on 19 February 2002 at the instigation of Mr Hill. The respondent (Hill Family Holdings) is the named Trustee.  Mr Hill and his wife were the original directors and shareholders of this company. Mr Hill was the initial Appointor and primary beneficiary of the Trust with the secondary beneficiaries being his extended family. After Mr and Mrs Hill died, an unfortunate factional family dispute developed over the lawful identity of both the Appointor and the Trustee.
  2. [2]
    On the one hand, the first applicant (Mrs Kerin Staley) one of Mr and Mrs Hill’s two daughters, claims to be the Appointor under the Trust Deed. On the other hand, the respondent (which is now controlled by Mrs Brodie Mitchelmore, Mr and Mrs Hill’s granddaughter from their other daughter: Mrs Paula Porter, now deceased) claims that the correct Appointor is Paula’s widowed husband William (Martin) Porter.   
  3. [3]
    By an amended application filed by leave, Mrs Staley seeks a number of orders and declarations including consequential orders for the delivery up of books and records of the Trust.  The two primary declarations sought are that:
    1. a Deed of Variation of the Trust Deed signed by Hill Family Holdings dated 28 March 2024 purporting to remove her as Appointor is invalid; and
    2. a Deed of Removal and Appointment dated 19 June 2024 signed by her (as Appointor) replacing Hill Family Holdings with the second applicant (“Staley Management”) as Trustee is valid.   
  4. [4]
    The issue for this court’s determination is whether the power to vary the terms of the Trust Deed includes a power to change the identity of the Appointor or amend the terms of the Trust Deed to allow that to happen. For the reasons that follow, I am satisfied it does.
  5. [5]
    The construction of the Trust Deed is discussed under that heading later in these Reasons. The circumstances in which the Trust Deed came to be executed are not before the court; nor are the value of any Trust assets. The limited facts which give some context to the dispute are set out below.

Facts

  1. [6]
    Mr Hill died on 18 December 2009.  Under the Trust Deed, Mrs Staley and her sister Mrs Porter (as Mr Hill’s executors) became the Appointors of the Trust. At that time, Mrs Hill became the sole director and shareholder of Hill Family Holdings. 
  2. [7]
    On 30 October 2013, Mrs Hill (on behalf of Hill Family Holdings) made an oral declaration, under clause 23.01 of the Trust Deed, removing Mrs Staley, her husband Dennis and their children, grandchildren and great-grandchildren as beneficiaries of the Hill Family Trust.  On that same day, Mrs Hill appointed Mrs Porter as a director of Hill Family Holdings.
  3. [8]
    On 18 November 2015, Hill Family Holdings purported to execute a Deed Poll removing Mrs Staley as Appointor and appointing Mrs Porter as a substitute Appointor of the Trust.  It is accepted that this Deed Poll is invalid.
  4. [9]
    On 22 July 2019, Mrs Porter appointed her daughter Mrs Mitchelmore as a director of Hill Family Holdings. Later that year, Mrs Porter died. Upon Mrs Porter’s death, Mrs Staley became the sole Appointor of the Trust.  On 29 December 2022, Mrs Hill died.
  5. [10]
    On 28 March 2024, Hill Family Holdings executed the Deed of Variation which purported to amend the terms of the Trust Deed, by the insertion of a new clause as follows:

“2.VARIATION

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

  1. This clause 22.04 only applies where Kerin Anne Staley is the Appointor.
  1. The Trustee may in 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.

3.REMOVAL OF APPOINTOR

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:

  1. removes Kerin as the Appointor of the Trust; and
  1. appoints the New Appointor as the Appointor of the Trust in her place.

…”

  1. [11]
    The New Appointor is not defined or named in the Background or Operative Provisions of the Deed of Variation but is identified as Mr Porter in the “Details of Parties” section at the start of the document. The Deed of Variation is signed by Mrs Mitchelmore as sole secretary and director of Hill Family Holdings and by Mr Porter as the New Appointor.
  2. [12]
    The recitals to the Deed of Variation include the following reference to the power in the Trust Deed to make such a variation:  
  1. “H.
    Pursuant to clause 14.01 of the Trust Deed, The Trustee may revoke, add to, release, delete or vary all or any of the trusts, power or provisions declared or included in the Trust Deed or any trust, powers or provisions declared by or included in any revocation, addition, release, deletion or variation made to the Trust Deed.
  2. I.
    Clause 14 of the Trust Deed does not require the Trustee to obtain prior consent from the Appointor before exercising the powers in clause 14.01.”
  1. [13]
    Mrs Staley was not told at the time about either of the attempts to remove her as Appointor. She only became aware of the Deed Poll in late May 2023 after she requested information about her mother’s estate.  It was only then that Mrs Staley also became aware that she (and her kin) had been removed as beneficiaries under the Trust Deed. This prompted Mrs Staley to execute the Deed of Removal and Appointment of Trustee of the Trust (on 19 June 2024).  About a week later (on 27 June 2024), Mrs Staley found out through the solicitors for Hill Family Holdings that she was apparently no longer the Appointor of the Trust due to the existence of the Deed of Variation, prompting this application.
  2. [14]
    On 30 June 2024, Hill Family Holdings determined to vest the Trust.  That step is on hold, pending the outcome of this application.

Relevant Legal Principles 

  1. [15]
    The rules applicable to the construction of agreements also apply to deeds and trusts.[1] The construction of a written agreement requires a consideration of the entire document to ascertain what a reasonable person would have understood the parties to the agreement to mean.[2] 
  2. [16]
    The rights and liabilities of the parties are to be determined objectively with consideration given not only to the language of the agreement, but also to the apparent purpose and object of any transaction created by or evidenced in the agreement.[3] The search for intention is as revealed by the words used in the trust instrument.[4]  In the context of the interpretation of trusts, the following observations of the High Court are instructive:[5]

“…the expressed intention of the parties is to be found in answer to the question, “What is the meaning of what the parties have said?”, not to the question, “What did the parties mean to say?””

  1. [17]
    A trustee does not have an implied power to vary a trust deed, but it is accepted that many “modern trust deeds” contain an express power which enables the trusts and the provisions of the trust deed to be varied.[6]  However, the extent and form of any permitted variation depends upon the language used and the apparent purpose of the variation clause in the context of the trust deed as whole.[7]
  2. [18]
    Some courts have been prepared to confine broad powers of variation so they do not extend to a variation altering the “substratum of the trust”.[8] But for trusts that are discretionary (such as the present), which are drafted to provide maximum flexibility in the use of the trustee’s powers, the substratum is often hard to identify beyond the conferral of benefits on the beneficiaries pursuant to the terms of the trust.[9]  In some cases, even a “fundamental reorganisation” of a trust does not necessarily destroy its substratum.[10]
  3. [19]
    Whether the power of the Trustee under clause 14.01 of the Trust Deed extends to   amending the terms of the Trust Deed to change the Appointor is a matter of construction.[11]  In interpreting the words as they appear in clause 14.01, it is therefore necessary to ascertain the natural and ordinary meaning of the words in the context in which they appear in the Trust Deed having regard to all of the provisions of the Trust Deed and with a view to achieving “harmony” among them.[12]

The Trust Deed

  1. [20]
    The “Trustee’s Powers” are set out under that heading in clause 12 of the Trust Deed. These powers include the powers set out in the First Schedule [12.01] and the powers conferred on a trustee by the Trusts Act 1973 (Qld) [12.05]. Relevantly too, by clause 12.05 “[a]ll powers set out in this Deed shall be construed as widely as possible.”
  2. [21]
    The operative interpretation section of the Trust Deed defines “the Appointor” to be “the person named in Part 4 of the Second Schedule and any other person authorised to exercise the powers of the Appointor in accordance with this Deed”.
  3. [22]
    The exercise of power by the Appointor is set out in clause 22 relevantly as follows:
  1. “22
    EXERCISE OF POWER BY APPOINTOR
  1. 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.
  1. 22.02
    An Appointor may resign as Appointor.  The Appointor may appoint an individual 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.
  1. 22.03
    …”
  1. [23]
    The operative interpretation section of the Trust Deed defines “the Trustee” as “the person named in Part 3 of the Second Schedule and any other Trustees for the time being”.
  2. [24]
    Clause 21 provides for the removal, appointment and retirement of Trustees relevantly as follows:
  1. “21
    REMOVAL APPOINTMENT AND RETIREMENT OF TRUSTEES
  1. 21.01
    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.
  1. 21.01
    Any Trustee may resign on giving written notice to the Appointor and, after 30 days from the giving of notice, shall be discharged as Trustee…”
  1. [25]
    The powers of the trustee under clause 12 do not include a power of amendment. Hill Family Holdings conceded this but submitted that the power of variation under clause 14.01 allows for the Trust Deed to be amended as it was.
  2. [26]
    Clause 14.01 as it appears in the full context of clause 14 of the Trust Deed provides as follows:
  1. “14
    AMENDMENT AND VARIATION OF BENEFICIARIES
  1. 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 any way which infringes the law against perpetuities.
  1. 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.
  1. 14.03
    The powers of the Trustee under clause 14.01 include the power to appoint or remove beneficiaries.

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.”  [underlining added]

  1. [27]
    Hill Family Holdings submitted for a wide construction of this clause, Mrs Staley for a narrow construction.

Other cases

  1. [28]
    In support of their submission as to a narrow construction, counsel for Mrs Staley placed much reliance on the decision of Douglas J in Jenkins v Ellett [2007] QSC 154.  In that case, the family patriarch (George Snr) established a discretionary family trust (in 1996) of which he and another man (LM) were trustees. George Snr died in 2002.  He had a daughter, Joyce, and a son, George Jnr, who predeceased him but left three grandchildren who did not participate in the proceeding.
  2. [29]
    In 1999, George Snr as principal relied on a power to remove any trustee and to appoint any person as trustee to remove LM as trustee and replace him with Joyce. This meant George Snr and Joyce would be co-trustees. He then purported to use a power to “vary the trusts declared” and to remove himself as principal and appoint Joyce in his stead. After George Snr died, his granddaughter obtained probate of his will, appointing herself as his executor.  She then purported, as principal, to appoint herself and her brother as additional trustees alongside her aunt.
  3. [30]
    The issue in Jenkins was similar to the present, namely whether the power given to the trustee [in the deed] to vary the trusts declared extended to the removal of the principal in circumstances where it was the principal who, alone, in the trust deed as originally drafted, had the power to appoint and remove the trustee.[13] The power of variation relied on in Jenkins was as follows:
  1. “11.
    The Trustee may by Deed revoke add to release or vary all or any of the Trusts declared or any Trusts declared by any variation, alteration or addition made from time to time...” [Underlining added]
  1. [31]
    In determining that the power given to the trustee in that case did not extend to a removal of the principal, Douglas J relevantly reasoned as follows:[14]
  1. “[16]
    Clause 2, in declaring that the trustee holds the trust fund “upon the trusts subject to the powers and provisions contained in this Trust”, highlights the link to cl. 11’s power to amend the “Trusts declared”. The language of cl. 2 also makes the declaration of trust subject to the power, for example, vesting in the Principal to appoint new trustees in cl. 12. The power to amend in cl. 11 is not to amend “the trust constituted by and comprised in this Deed and the Schedule” but the “Trusts declared”, namely those declared in cl. 2. The difference between the singular and plural forms of the word “trust” is significant. It would have been easy for the drafter of the deed to provide the trustee with a broad power of amendment of “this Trust”, which is defined in cl. 1 to mean “the trust constituted by and comprised in this Deed and the Schedule” or of the deed and the schedule as a complete document if that were intended.
  1. [17]
    The limitation of the trustee’s power of amendment to the trusts declared, where those trusts were subject to the powers and provisions contained in “this Trust”, has led me to the view that cl. 11 should be construed so that its powers of amendment do not extend to a provision such as the definition of the Principal in the schedule to the deed.
  1. [18]
    The power to appoint a new trustee available to the Principal under cl. 12 does not seem to me to be one that requires easy amendment to add to any desirable flexibility in managing the fund; cf. Meagher JA in Kearns v Hill (1990) 21 NSWLR 107, 109. Clause 12’s purpose of allowing the removal of a trustee is also inconsistent with the possibility that the trustee could negate the operation of the power by amending the schedule to the deed to change the identity of the Principal. Nor is it the case that the structure of the deed requires some continuing identity 6 between the Principal and the trustee or trustees named under it so that there is a built-in safeguard against the Principal’s position being subverted.
  1. [19]
    The Principal’s ability to remove and replace a trustee seems to me to be one of the fundamental features of the structure of this deed, one setting up a family discretionary trust. The maintenance of that power is obviously designed to ensure that the control of the trust will remain with the significant intended beneficiary, here George Jenkins, and after him his spouse or his executor, as follows from the definition of “The Principal” in the schedule. To allow the power in cl. 12 to be subverted by the trustee it was designed to supervise purporting to use cl. 11’s powers to amend the deed rather than the trusts declared by the deed is not, in my view, permissible. It is akin to destroying the substratum of the deed.” [underlining added]
  1. [32]
    Jenkins was referred to, but distinguished by, the Western Australian Court of Appeal in Mercanti v Mercanti (2016) 50 WAR 495. In Mercanti, the family patriarch (Michael) established a retail business that was operated through a trust. The MMF Trust Deed provided that the trustee was a company (S Pty Ltd), of which Michael and his wife (Sybil) were directors. Michael was the “guardian” and the “appointor” under the MMF Trust Deed.  There were two sons (relevant to the case): the applicant, Jason, and the first respondent, Tyrone. Sometime after its establishment, Michael varied the MMF Trust Deed to change the “guardian” and the “appointor” to Tyrone. The trial judge (La Miere J) found that Michael’s intention was that Tyrone would take the business as an advance on his inheritance, with the other sons being provided for in his and Sybil’s wills.  Tyrone later varied the trust to substitute a different company, P Pty Ltd, as the trustee.  Jason took issue with this.  He failed at trial to have the change declared invalid and, again, on appeal.
  2. [33]
    Like the present case, Mercanti concerned a discretionary trust where the trustee purported to exercise a power of amendment to delete provisions concerning the appointment of a particular individual as the Guardian and Appointor and substitute new provisions appointing a different person as the Guardian and Appointor of the trust. The power of amendment relied upon was to “revoke, add to or vary any of the trusts, terms and conditions hereinbefore contained”. In upholding the amendment, the Court of Appeal emphasised that the power of amendment was one which (unlike clause 11 in Jenkins) applied to all of the terms of the trust deed.
  3. [34]
    The factors that distinguished Jenkins from those in Mercanti were described:
  1. by Buss P, as follows:[15]

“Seventh, I am not persuaded that “it would derogate from the fundamental purpose for which the power to amend was created" (as submitted on behalf of Michael Mercanti and Jason Mercanti) if cl 28 extends to empowering the Trustee to remove and replace the person occupying the office of Appointor (or a person who would, in future, occupy the office). The MMF Trust Deed does not contain an express provision which entrenches, for the duration of the trusts, the original provisions of the MMF Trust Deed with respect to the office of Appointor. There is no basis in the language of the deed for an implication to that effect. The decision in Jenkins is distinguishable on its facts. The declaration of trust in cl 2 of the trust deed under consideration in Jenkins and the power of variation in cl 11 of that trust deed were materially different from cl 2 and 28 of the MMF Trust Deed.”

  1. by Newnes and Murphy JJA as follows:[16]

“Unlike in Jenkins, in the present case, cl 28 includes the power to vary the “terms and conditions” of the deed, and not merely the trusts expressed in the deed. Also unlike the power purportedly relied on in Jenkins, the exercise of the power under cl 28 requires the consent of the Guardian. Under the MMF Trust Deed, if, with the consent of the Guardian, one Appointor is replaced with another Appointor, the Trustee remains amenable to removal by the Appointor under cl 21. The exercise of the reserved power under cl 28 to remove, relevantly, the Appointor does not affect, let alone destroy, the substratum of the MMF Trust Deed.”

  1. [35]
    Both Jenkins and Mercanti were considered by Mullins J (as her Honour then was) in Palmer v Palmer [2018] QSC 217. Palmer concerned a dispute between a trustee of a testamentary trust and the appointor of the trust. The trustee sought removal of the appointor and the appointment of a substitute appointor in his place. The identity of the appointor was established by a clause in the relevant will, by which the testamentary trusts were also established.[17] The issue was whether a power of amendment in a part of the will concerning the testamentary trusts conferred upon the trustee a power to replace the appointor.  Under the will, the position of the appointor was described as “an entrenched role in respect of the trust established under the will.”[18]
  2. [36]
    The relevant power to amend [cl 9(i)] was described by Mullins J as one by which “the trustee of each testamentary trust is given power to amend the powers given to the trustee under the relevant clauses of the will.”[19]  In Palmer, the relevant provision was one that “permits the trustee by deed to add, delete, amend or vary any of the powers given to the trustee under the provisions that apply to each of the testamentary trusts...”.[20]  As a matter of construction, Mullins J found that cl 9(i) did not give the trustee “a power to amend cl 9(j) in the will [which specified the appointor and its powers] pursuant to which no powers are conferred on the trustee, but pursuant to which the appointor and the powers of the appointor are specified”.[21]
  3. [37]
    Each of Jenkins, Mercanti and Palmer demonstrate that each case turns on the construction of the trust instrument under consideration.

Construction of the Trust Deed

  1. [38]
    Mrs Staley submitted that clause 14.01 did not empower the Trustee to change the Appointor, and that the Deed of Variation is invalid for a myriad of reasons (some overlapping), which can be summarised in the following four ways: 
    1. Consistent with the heading, clause 14.01 is confined to amendment and variations of beneficiaries or otherwise ought to be construed narrowly;
    2. 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);
    3. 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
    4. 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. 
  2. [39]
    Each of these matters are addressed in turn below.

Construction of clause 14.01: is it confined to amendment and variation of beneficiaries?

  1. [40]
    The heading of clause 14 is “Amendment and Variation of Beneficiaries”.  The Trust Deed does not contain a provision to the effect that headings are a mere aid to interpretation and are not to be taken into account when interpreting a provision of the deed.[22]  The heading is therefore relevant in the interpretation of clause 14.[23]  Although the consideration of the heading cannot override the clear meaning of the clause in the overall context of the document,[24] or create ambiguity where it does not otherwise exist.[25]
  2. [41]
    The modern approach is to take punctuation into account as part of the interpretative process.[26] It follows that this includes punctuation in headings.  Hill Family Holdings submitted that there are two topics dealt with by clause 14: “amendment” [14.01 and 14.02] and “variation of beneficiaries” [14.03 and 14.04]. In other words, the heading “Amendment and Variation of Beneficiaries” should be read as if there was a comma after the word “amendment”.  For Mrs Staley, it was submitted that clause 14.01 is “replete with punctation” and therefore the court would not insert a comma in the heading as suggested by Hill Family Holdings. The difficultly in this case is that whilst the drafter of the Trust Deed has been consistent with the use of relevant headings throughout the Trust Deed, they have not been consistent with the use of commas in the headings. For example, the heading to clause 18 ‘Expenses, charges and indemnity” correctly uses a comma but clause 21 does not use one in the heading “Removal appointment and retirement of trustees”. So, it should not readily be assumed the absence of a comma was deliberate.
  3. [42]
    Mrs Staley submitted that the heading to clause 14 imports a limitation upon the text under it and that clause 14.01 is confined to amendments to the Trust Deed as they concern beneficiaries. Although, in oral submissions Senior Counsel for Mrs Staley accepted that clause 14.03 [which references clause 14.01] is at least “capable” of broader meaning but not so broad as to allow an amendment that changes the Appointor. This concession is a sensible one.  Plainly, the reference in clause 14.03 that the powers of the Trustee under clause 14.01 “include” the “power” to appoint or remove beneficiaries means that the powers of the Trustee referred to in clause 14.01 are not limited to beneficiaries. 
  4. [43]
    A consideration of the body of clause 14 supports the conclusion that no comma needs to be read into the heading but rather the word “and” should be read conjunctively.  That is, the heading signals that the clause is concerned with amendment and variation of beneficiaries.
  5. [44]
    With the relevant legal principles set out above in mind, I am satisfied that the variation power in clause 14.01 ought to be construed broadly for the following four reasons.
  6. [45]
    First, consistent with the natural and ordinary meaning of the language of the clause, the Trustee has the express power to “... add to... or vary... the... powers or provisions declared or included in this Deed...”.
  7. [46]
    Second, the term “provisions” is clearly capable of referring to any clause of the Trust Deed.[27] The use of the same term throughout the Trust Deed supports this interpretation: [see for example clauses 31.01 (last dot), 21.05, 25.01].
  8. [47]
    Third, contrary to Mrs Staley’s submission, clause 22.01 [Exercise of Power by Appointor] does not justify a narrow reading of clause 14.01. Clause 22.01 plainly deals with the natural succession of the office of Appointor. It is not inconsistent with there also being a power to vary the Trust Deed in a way that adds a further power, to remove a person from the position of Appointor.
  9. [48]
    Fourth, the construction of clause 14 is an objectively reasonable one. Absent the ability to use the variation power to change an Appointor, the Appointors provided for by the Trust Deed [Second Schedule, Part 4; clauses 22.01, 22.02] would effectively be entrenched for the duration of the Trust.  There is no express provision to this effect, and there is no basis in the text and context of the Trust Deed for an implication to this effect.[28] Further, given the constraints of clause 22.01 (which provides for the replacement of the Appointor in a limited way) it is also objectively reasonable that the variation power could be used to deal with the office of Appointor. If the power to change the Appointor was restricted only to that contained in clause 22.01, once Mrs Staley’s personal representatives pass away, there is no provision for any other Appointors to take their place. In contrast, the Trust Deed was drafted to provide for Mr Hill’s grandchildren over a period of 79 years.
  10. [49]
    My finding that the power of variation under clause 14.01 should be construed widely and not narrowly, is consistent with the clear and unambiguous language of clause 12.05 of the Trust Deed which provides that “[a]ll powers set out in this Deed shall be construed as widely as possible".

Does clause 14 extend to the amendment of Schedules?

  1. [50]
    It was submitted by Mrs Staley that there is “no reference at all” to the schedules to the Trust Deed in clause 14.01, and so therefore that clause does not confer a power to amend the schedules to the Trust Deed.  I do not accept this submission because it overlooks the following two matters.
  2. [51]
    First, the Deed of Variation does not seek to amend or vary the schedule. It purports to vary the Trust Deed by the insertion of a new provision which provides for the Trustee to remove Mrs Staley and replace her with another Appointor.
  3. [52]
    Second, the Schedules are plainly incorporated and form part of the provisions of the Trust Deed; they are cross referenced in the operative interpretation section of the Trust Deed; and the execution section of the Trust Deed appears at the end of the schedules.   

Has the substratum of the trust changed: is it now the survival of the fittest?

  1. [53]
    Senior counsel for Mrs Staley submitted that there is no indication in the Trust Deed that Mr Hill intended to set up a “conflict situation” and that it would be “pistols at dawn” over control of the Trust or imputing an element of Lord of the Flies to construe the Trust Deed otherwise.[29] Such a situation was described by counsel for the Nominator in Cihan v Cihan [2022] NSWSC 538 as an “unseemly race.”[30] That might be the outcome. Indeed, the Trustee won that race in Cihan. Emotive descriptions aside,  this court’s role remains to determine the extent of any express power to vary the Trust, based upon the language and apparent purpose of the amendment and variation clause in the context of the Trust Deed as a whole.[31]  In doing so, it is important to keep in mind that it may not necessarily matter that the variation has the ultimate effect of removing rights or powers from a person because (subject to the doctrine of fraud on a power) “[i]t is an incident or aspect of every right arising from that instrument that the amendment powers may alter or abolish the right.”[32] 
  2. [54]
    In the present case, I am not satisfied that it is possible to identify the “substratum” of the Trust beyond saying that the Trust was obviously established for the benefit of Mr Hill’s descendants. Like the deed in Mercanti, I am satisfied that the Trust Deed was drafted to confer maximum flexibility on the Trustee.  It is also instructive that in Mercanti the amendment power required the consent of the Guardian. The present Trust Deed does not.  So, in that sense, the variation power in the present case is wider. That distinction is also I accept, relevant in the following way as submitted by Hill Family Holdings:

“And can we make a second point about that, that if, … the role of appointor in this trust was to be so fundamental that the appointor was intended to be entrenched so that the appointor could be the guardian angel of the trust. Then all that had to happen was that there was a device in the variation power, like the one in Mercanti, that the variation could only be made with consent of the appointor. 

Now…there’s a thousand ways you could do it. You could have a proviso that it couldn’t be used in that way, or you could have some other provision in there. But if it was intended that this role would be entrenched in that way, then, that’s an obvious way in which it could have been done, a permission provision in the clause. There’s no such provision. And that’s why, ultimately, we would submit to your Honour, that here, the role of appointor is simply not the kind of fundamental entrenched – I say – guardian angel type of role that is talked about in the other cases.”

  1. [55]
    It also cannot be said that the change of Appointor varies a particular purpose of the trust.[33] Given my findings at paragraph [47] and [48] above, there is no obvious reason why the personal identity of the Appointor, rather than the existence of an Appointor, is central in that way. The definition of Appointor in clause 1 of the Trust Deed is “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.” It follows that the definition of “Appointor” is not specifically tied or limited to the people described in clause 22.01. It also follows that the substratum cannot be ascertained by reference only to the people identified in clause 22.01 of the Trust Deed.
  2. [56]
    I accept that in Jenkins the court found that an amendment to change a “Principal” was held to change the substratum of the trust, but that decision is distinguishable from the present for two reasons.
  3. [57]
    First, the power in Jenkins was to vary the “Trusts declared”, which was construed as the trusts granted in clause 2 which in turn were “subject to the powers and provisions contained in this Trust” including the power of the Principal to remove the Trustee.[34] But clause 14.01 is far broader as it expressly extends to the “powers or provisions” in the Trust Deed.
  4. [58]
    Second, in Jenkins, the Principal’s ability to remove and replace a Trustee was held to be a fundamental feature of the structure of the Deed. I can see no basis for that conclusion in this case.

Fraud on the Power

  1. [59]
    There are no pleadings in relation to the assertion of there being a fraud on the power. However, Mrs Staley’s case is that Hill Family Holdings’ conduct in executing the Deed of Variation was a deliberate breach of the duty incumbent upon it to act honestly and in good faith in relation to its role as Trustee of the Trust;[35] and that this breach was committed out of a desire to avoid its removal from the role of Trustee and to secure its own position as Trustee.
  2. [60]
    In support of this contention Mrs Staley submitted as follows:

“..there is evidence available from which the Court may infer that Hill Family Holdings’ breach of the duty to act honestly and in good faith was deliberate, on account of Hill Family Holdings’ conduct in having not informed the extant Appointor of its intention to remove her from the role of Appointor:

  1. at any time prior to it having executed the Deed of Variation; or
  1. proactively at any time thereafter, until such time as Kerin gave notice of an exercise by her of her powers as Appointor and her intention to commence this proceeding.”
  1. [61]
    Hill Family Holdings denies that any such “nefarious purposes” are made out on the evidence.
  2. [62]
    I am not satisfied that Mrs Staley has established on the material before me that there has been a fraud on the power and or any deliberate breach of duty by Hill Family Holdings as alleged, for the following six reasons.
  3. [63]
    First, the application was brought on and heard urgently in the applications list on the basis that it was a straightforward construction issue to be resolved and that there was no factual dispute. The inferences this court is being asked to draw involve serious allegations against Hill Family Holdings; require resolution of disputed factual matters; and ought not be determined without pleadings or points of claim and defence.
  4. [64]
    Second, the uncontroversial evidence is that the Deed of Variation was only entered into after it was ascertained by the solicitors for Hill Family Holdings that the Deed Poll was invalid. 
  5. [65]
    Third, this is not a case where the incoming Trustee is looking to stay in power – to the contrary, the evidence is that the Trustee intends to vest the Trust.
  6. [66]
    Fourth, there is no evidence that Mrs Staley as the Appointor took any interest in the Trust for a period of at least some 8 years (until about the end of 2022) when she started making enquiries about the Trust after the death of her mother.
  7. [67]
    Fifth, the submission by Mrs Staley that there was a fraud on the power is underpinned by the notion that the purported amendment to the Trust Deed is incompatible with the fundamental feature of the structure of the Trust Deed by which the Trustee is capable of being held to account by the Appointor. A proposition I have rejected in paragraphs [53] to [58] above.
  8. [68]
    Sixth, as emerges from these reasons, I am satisfied on a proper construction of clause 14.01 that the Deed of Variation was effective.             

Conclusion

  1. [69]
    The declarations sought are refused. I will hear the parties as to the form of orders (including as to costs) and any declarations (if they are agreed) that follow from my findings.

Footnotes

[1]Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at [9]-[10] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Byrnes v Kendle (2011) 243 CLR 253 at [53] per Gummow and Hayne JJ [102]-[107] per Heydon and Crennan JJ.

[2]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35] per French CJ, Hayne, Crennan and Kiefel JJ; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [46]-[47] per French CJ, Nettle and Gordon JJ. 

[3]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at [8] per Gleeson CJ, and [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ.

[4]Mercanti v Mercanti (2016) 50 WAR 495 p 516 at [73].

[5]Byrnes v Kendle at [53] per Gummow and Hayne JJ at [102]-[107], per Heydon and Crennan JJ.

[6]Mercanti p 518 at [82].

[7]Mercanti p 518 at [82].  Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 at 553 per Kirby P (as his Honour then was).

[8]Cachia v Westpac Financial Services Ltd (2000) 170 ALR 65 at [68].

[9]Cihan v Cihan [2022] NSWSC 538 at [95], [98]; referring to the observations of RP Meagher JA in Kearns v Hill (1990) 21 NSWLR 107 at 109D-E and 110G-111A.  See also Mercanti at [265].

[10]Cihan (supra) at [98].

[11]Palmer v Palmer [2018] QSC 217 per Mullins J (as her Honour then was) at [48].

[12]Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at p 109–110 per Gibbs J.

[13]The trust deed used the word “Principal”, but the role was that of appointor.

[14]Jenkins at [16]-[19].

[15]Mercanti p 528 at [153].

[16]Mercanti p 566 at [358]. 

[17]Clause 9(j) Palmer at [2] and [40].

[18]Palmer at [41] per Mullins J.

[19]Palmer at [49].

[20]Palmer at [42].

[21]Palmer at [49].

[22]For example, such a provision is found in clause 1.1(a) of the [purported] Deed of Variation which states that “[h]eadings are for convenience only and do not affect the interpretation of this document.”

[23]Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 at 360-361, per McPherson JA.

[24]See the discussion and authorities referred to on this issue in Lewison and Hughes: ‘The Interpretation of Contracts in Australia’, Thomson Reuters Lawbook Co 2012 at p 514.

[25]With reference to the observations of Judge Hegarty QC in Cott UK ltd v FE Barber Ltd [1997] 3 All ER 540 at [545].

[26]Mercanti at p 527 at [144].

[27]See, for example, Kearns v Hill (1990) 21 NSWLR 107 at 110.

[28]Mercanti p 528 at [153].

[29]T1-12 ll 14-29.

[30]Cihan v Cihan [2022] NSWSC 538 at [90].

[31]Mercanti p 518 at [82].

[32]Mercanti at [96] citing Barrett J in ING Funds Management Ltd v ANZ Nominees Ltd (2009) 228 FLR 444 at [149].

[33]Cf. Mercanti p 546 at [265].

[34]Jenkins (supra) at [16]-[17].

[35]See Rinehart v Welker [2012] NSWCA 95 at [139]-[140] and generally, Armitage v Nurse [1998] Ch 241.

Close

Editorial Notes

  • Published Case Name:

    Staley v Hill Family Holdings Pty Ltd

  • Shortened Case Name:

    Staley v Hill Family Holdings Pty Ltd

  • MNC:

    [2024] QSC 176

  • Court:

    QSC

  • Judge(s):

    Muir J

  • Date:

    16 Aug 2024

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2024] QSC 17616 Aug 2024Application for declaratory and auxiliary relief in respect of family trust: Muir J.
Notice of Appeal FiledFile Number: CA 12196/2413 Sep 2024Notice of appeal filed.
Appeal Determined (QCA)[2025] QCA 9503 Jun 2025Appeal dismissed: Gotterson AJA (Bond JA and Bradley J agreeing).

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Armitage v Nurse [1998] Ch 241
2 citations
Jump To
Cite 1 - [1998] Ch 241
Cite 2 - [1998] Ch 241
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
2 citations
Jump To
Cite 1 - (1973) 129 CLR 99
Cite 2 - (1973) 129 CLR 99
Byrnes v Kendle (2011) 243 CLR 253
2 citations
Jump To
Cite 1 - (2011) 243 CLR 253
Cite 2 - (2011) 243 CLR 253
Cachia v Westpac Financial Services Ltd (2000) 170 ALR 65
2 citations
Jump To
Cite 1 - (2000) 170 ALR 65
Cite 2 - (2000) 170 ALR 65
Cihan v Cihan [2022] NSWSC 538
4 citations
Jump To
Cite 1 - [2022] NSWSC 538
Cite 2 - [2022] NSWSC 538
Cite 3 - [2022] NSWSC 538
Cite 4 - [2022] NSWSC 538
Cott UK Ltd v FE Barber Ltd (1997) 3 All ER 540
2 citations
Jump To
Cite 1 - (1997) 3 All ER 540
Cite 2 - (1997) 3 All ER 540
Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd and Ors (2014) 251 CLR 640
2 citations
Jump To
Cite 1 - (2014) 251 CLR 640
Cite 2 - (2014) 251 CLR 640
Funds Management Ltd v ANZ Nominees Ltd (2009) 228 FLR 444
2 citations
Jump To
Cite 1 - (2009) 228 FLR 444
Cite 2 - (2009) 228 FLR 444
International Air Transport Association v Ansett Australia Holdings Limited & Ors (2008) 234 CLR 151
2 citations
Jump To
Cite 1 - (2008) 234 CLR 151
Cite 2 - (2008) 234 CLR 151
Jenkins v Ellett [2007] QSC 154
2 citations
Jump To
Cite 1 - [2007] QSC 154
Cite 2 - [2007] QSC 154
Kearns v Hill (1990) 21 NSWLR 107
4 citations
Jump To
Cite 1 - (1990) 21 NSWLR 107
Cite 2 - (1990) 21 NSWLR 107
Cite 3 - (1990) 21 NSWLR 107
Cite 4 - (1990) 21 NSWLR 107
Mercanti v Mercanti (2016) 50 WAR 495
3 citations
Jump To
Cite 1 - (2016) 50 WAR 495
Cite 2 - (2016) 50 WAR 495
Cite 3 - (2016) 50 WAR 495
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104
2 citations
Jump To
Cite 1 - (2015) 256 CLR 104
Cite 2 - (2015) 256 CLR 104
Palmer v Palmer [2018] QSC 217
3 citations
Jump To
Cite 1 - [2018] QSC 217
Cite 2 - [2018] QSC 217
Cite 3 - [2018] QSC 217
Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541
2 citations
Jump To
Cite 1 - (1991) 25 NSWLR 541
Cite 2 - (1991) 25 NSWLR 541
Rinehart v Welker [2012] NSWCA 95
2 citations
Jump To
Cite 1 - [2012] NSWCA 95
Cite 2 - [2012] NSWCA 95
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45
2 citations
Jump To
Cite 1 - (2002) 240 CLR 45
Cite 2 - (2002) 240 CLR 45
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
2 citations
Jump To
Cite 1 - (2004) 219 CLR 165
Cite 2 - (2004) 219 CLR 165
Watkins Pacific (Qld) Pty. Ltd. v Iezzi Constructions Pty. Ltd.[1995] 2 Qd R 350; [1994] QCA 49
2 citations
Jump To
Cite 1 - [1995] 2 Qd R 350
Cite 2 - [1995] 2 Qd R 350

Cases Citing

Case NameFull CitationFrequency
Staley v Hill Family Holdings Pty Ltd [2025] QCA 951 citation
1

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