30 September 2014
This matter concerned two identical applications, brought pursuant to s 94 of the Trusts Act 1973, to amend the vesting date of two discretionary trusts. The facts of this case are straightforward. The corpus of the trusts in issue included significant real property portfolios which, under the current taxation laws, would be subject to significant duties and taxes were the trusts to vest. In order to avoid the diminution of the portfolio a significant sum would need to be borrowed to meet these expenses. . The trustees submitted that this is not in the best interests of the beneficiaries, and brought the present application to avoid “the very substantial imposts and other financial detriment which [would] result if the current vesting date [stood].” . Not surprisingly, the application was supported by each of the beneficiaries. Id.
Section 94 grants the Court jurisdiction to make other orders “[w]here in the opinion of the court any . . . disposition or any purchase, investment, acquisition, retention, expenditure or other transaction is expedient in the management or administration of any property vested in a trustee, or would be in the best interests of the persons . . . beneficially interested under the trust, but . . . [it] can not be effected by reason of the absence of any power for that purpose vested in the trust instrument” the Court may confer upon the trustee the necessary power. Trusts Act, s 94(1), see also . The critical issue in this case was the definition of “transaction”, more specifically whether, as drafted, the term was sufficiently broad so as to encompass the act of extending the vesting date (amending the trust deed) – the principle submission of the applicants. .
In addressing this issue, the Court looked firstly to the language of the Trusts Act and also to the relevant cases, not only in Queensland but also in New South Wales and the United Kingdom. In all jurisdictions, it is well established that the term “transaction” in this context is a wide one, and is not confined to “dealing[s] between at least two parties.” , see also –. Though, while, there is a line of NSW authority which has held that an amendment to the trust deed can constitute a transaction in this context, –; see further Stein v Sybmore Holdings; Re Bowmil Nominees Pty Ltd; Barry v Borlas, recent cases, drawing upon decisions of the UK courts, have held that the definition of “transaction” did not extend to the amendment of trust deeds, given that the “legislature [had] not even mention[ed] beneficial interests . . . or give[n] the slightest indication that it was intending to give power to vary or interfere with such interests. . .” . The analogous provisions in both the UK and NSW, however, are more narrowly drafted than s 94 – the Queensland section is wider because it is not limited to orders which are expedient in the management or administration of trust property, but instead extends to circumstances where an order would be in the best interests of the beneficiaries. , . Given this difference, the Court concluded that the limitation articulated in the UK cases and followed in the recent NSW cases, was not applicable. . Thus, the Court concluded that it had the discretion to make the sought order, and that in light of the very substantial impact of taxes and duties on the trust funds and the unanimous approval of all potential beneficiaries it would exercise this discretion. . The Court granted the application.