In a recent decision the Supreme Court of Queensland amended the
vesting day of two discretionary trusts when there was no power
contained in the trust deeds for such an amendment to be made.
The trustees made application to the Supreme Court seeking to
postpone the vesting date for the maximum period of 80 years.
The trusts held substantial real estate holdings valued at more
than $15,000,000. The vesting day expressed in the trust deeds was
There was no provision in the trust deeds which allowed the
vesting date to be deferred.
There would have been capital gains tax of more than $1,000,000
payable on the vesting of the trusts and it was also estimated that
stamp duty of more than $700,000 would be payable as a result of
The trusts did not have the funds to pay these amounts. Funds
would have to be borrowed or assets sold to pay these amounts.
The Court application was made pursuant to a section of the
Queensland Trusts Act which is identical with s89 of the Trustees
Act in Western Australia. The section provides that:
"Where in the opinion of the court any sale,
lease, mortgage, surrender, release or other disposition, or any
purchase, investment, acquisition, retention, expenditure or other
transaction is expedient in the management and administration of
any property vested in a trustee or would be in the best interests
of all of the persons, or a majority of persons, beneficially
interested under the trust but it is inexpedient or difficult or
impractical to effect the disposition or transaction without the
assistance of the court, or it or they cannot be effected by reason
of the absence of any power for the purpose vested in the trustee
by the trust instrument or by law the court may by order confer
upon the trustee the necessary power ..."
All of the persons or companies to whom the income of the trusts
could be paid or who could share in the capital on the vesting of
the trusts supported the application to the Court.
The Court held the work "transaction" should be given
the widest possible meaning and could include a unilateral
amendment which did not involve any of the parties.
The Court said the aim of the legislation was not to permit the
substantial alteration of the trusts or their termination but to
give the trustees power to administer the trusts in a more
satisfactory and efficient manner.
The Court held that the amendment to the trust deeds to change
the vesting day could be fairly characterised as a transaction
which would be in the best interests of all of the members of the
class of potential beneficiaries.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Kott Gunning is a proud member of
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).