Andtrust v Andreatta

[2015] NSWSC 38

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Andtrust v Andreatta [2015] NSWSC 38
Hearing dates:	06/02/2015
Decision date:	06 February 2015
Jurisdiction:	Equity Division
Before:	McDougall J
Decision:	Declaration made as to trustee’s power under trust deed to extend vesting date
Catchwords:	EQUITY – trusts - express trust - discretionary - construction - whether trust deed confers power on trustee to extend vesting date - whether power to vary trust by enlarging category of eligible beneficiaries has any meaning otherwise - whether proscription on varying trust so as to infringe the rule against perpetuities has any meaning otherwise EQUITY – trusts - express trust - discretionary - whether s 81 of the Trustee Act 1925 (NSW) empowers the court to confer a power on a trustee to extend vesting date
Legislation Cited:	Trustee Act 1925 (NSW)
Cases Cited:	Re Dion Investments Pty Limited [2014] NSWCA 367
Category:	Principal judgment
Parties:	Andtrust Pty Ltd (Plaintiff) Giovanni Vittorio Andreatta (First Defendant and 17 others)
Representation:	Counsel: M Lawson (Plaintiff) Solicitors: Atkinson Vinden Lawyers (Plaintiff)
File Number(s):	2014/328859

Judgment   (EX TEMPORE – REVISED 6 FEBRUARY 2015)

1. HIS HONOUR: The plaintiff is the trustee appointed under a deed of trust made on 23 August 1976. The trust may be described as, although it is not so called, “The Andreatta Family Trust”.

2. As one might expect, the trust deed specifies who are the eligible beneficiaries and what is the vesting date. It also provides for a class of nominated beneficiaries, being persons declared to be such from among the class of eligible beneficiaries.

3. The eligible beneficiaries in general terms are Mr Giovanni Andreatta, his wife Lucy, any child or grandchild of Mr Giovanni Andreatta born before the vesting day and any spouse of Mr Giovanni Andreatta or his children or grandchildren born before the vesting day.

4. The vesting date is defined relevantly, for present purposes, as being the expiration of forty years from the execution of the deed. It is thus 23 August 2016.

5. The principal assets of the trust are two parcels of real estate. They have increased substantially in value. If the trust were to be wound up on the vesting day (the deed uses variously the expressions “vesting date” and “vesting day” but nothing turns on this), significant sums would be payable (by the beneficiaries to whom the proceeds of sale would be distributed) in respect of that capital gain.

Further, bearing in mind the wide definition of “eligible beneficiaries” and the ages of some of the persons in question, it is entirely possible that there will be persons born after 23 August 2016 who would be grandchildren or spouses of children or grandchildren of Giovanni Andreatta, but not within the class of eligible beneficiaries because born after the vesting date.

6. In those circumstances, the plaintiff by further amended summons filed in Court today, seeks a declaration that the power of variation of the trusts conferred on it by cl 10 of the deed (to which I will turn in a moment) empowers it to extend the vesting date, but not so as to infringe the rule against perpetuities.

7. The plaintiff seeks in the alternative an order under s 81 of the Trustee Act 1925 (NSW). For the reasons given in Re Dion Investments Pty Limited [2014] NSWCA 367, I am constrained to hold that relief under s 81 is not available. Mr Lawson of counsel, who appeared for the plaintiff, submitted that Re Dion Investments was wrongly decided. That, of course, is a matter for another day and another Court.

8. I return to the application for declaratory relief based upon cl 10. Before I do so, I should note that all of the eligible beneficiaries who are legally competent have, by affidavit, indicated their support of the application. In respect of those who are not legally competent, their tutors have indicated that they consent on behalf of those people.

9. I should note also that although it is a matter for the plaintiff as trustee, if the power to vary under cl 10 is of the width for which the plaintiff contends, there are clearly matters relevant to be considered in deciding whether or not to exercise the power. To put it less obscurely, there are clearly factors that would justify a decision to exercise the power if it be available for exercise. However, if the power exists, its exercise is a matter for the trustee and no judicial advice is sought in respect of that exercise.

10. I turn to cl 10, which reads as follows:

10.   At any time prior to the vesting day the trustee may by deed under his hand (or if a company under its common seal) vary any of the trusts, powers discretions or duties herein set forth in any manner whatever including but without in any way limiting the generality of the foregoing, enlarging any category of eligible beneficiaries so far as this power shall not infringe the rule against perpetuities.

11. The power relied upon is the power to “vary any of the trusts” set out in the trust deed “in any manner whatever” by, among other things, “enlarging any category of eligible beneficiaries”. In the event that any of the present eligible beneficiaries marry or remarry, or that further grandchildren are born (in each case after 23 August 2016), a consequence of extending the vesting date would be to enlarge the existing category of eligible beneficiaries.

12. It is to be noted that the power given by cl 10 is not limited to variation of the trusts set out in the deed. It also includes variation of the powers, discretions or duties given to or imposed on the trustee by the trust deed.

13. When one turns to what are “trusts” set out in the deed, they are those contained in cll 2, 3 and 4. By cl 2, the trustee acknowledges that it holds the trust fund on the trusts set out in the deed, subject to the powers, discretions and duties set out in the trust deed.

14. By cl 3, the trustee is empowered up until the vesting date, to hold the income of the trust fund upon trust for the benefit of the nominated beneficiaries, or some of them, as the trustee should see fit. Of course, the trustee has also a power to accumulate income, but nothing of present moment turns on it.

15. By cl 4, which operates “upon and from the vesting day”, the trustee is directed to hold the capital of the trust fund on the trusts set out in (a) to (d). Relevantly, by para (a), if there are nominated beneficiaries alive on the vesting day, the capital is to be held upon trust for them, or some of them, in accordance with the trustee’s determination.

16. By para (c), if there are no living nominated beneficiaries on the vesting date, the capital is to be held for the eligible beneficiaries then living, or such of them as the trustee determines.

17. That is a relatively compendious description of the trusts established by the deed that are the subject of the power of variation created by cl 10.

18. It does not seem to me to be stretching language unduly to say that a trust to distribute or hold income up until a defined date, and upon that date to distribute capital, is “varied” if that defined date is extended. Thus, as a matter of language, it seems to me that the power to vary the trusts set out in the deed should be taken to include a power to vary them by extending the time for which they are to enure. Of course, such a power could not operate so as to permit the trustee to infringe the rule against perpetuities, but that eventuality is covered by cl 10 itself.

19. In my opinion, there is support for this view in the language of cl 10. As Mr Lawson submitted, the qualification established by the concluding words of the first (unnumbered) subparagraph shows very clearly that the settlor and the trustee contemplated that, if those words were not there, the power of variation might give rise to infringement of the rule against perpetuities.

20. No variation of the powers, discretions or duties could of itself infringe the rule against perpetuities. Such infringement could occur only by reason of variation of the trusts; and it could occur only, so it seems to me, if the variation had the effect of extending the vesting date. That follows because, on any view, the vesting date as defined by the trust deed does not (as the deed presently stands) offend the rule against perpetuities.

21. Further, it seems to me, support for the view which I have expressed, as to the width of the power to vary the trusts, comes from the reference to enlargement of any category of eligible beneficiaries. That could only happen if (relevantly) children, grandchildren or spouses of children or grandchildren were included who otherwise would be excluded because they were born after the vesting day. Thus, the concept of enlargement of the class of eligible beneficiaries of itself contemplates that the vesting day (or date) might be extended through exercise of the cl 10 power.   

22. For these reasons, I conclude that the plaintiff is entitled to the relief sought by prayer one of its further amended summons. For the reasons I have given, it is not entitled to the alternative relief sought by prayer two.

23. I make a declaration in terms of prayer one of the further amended summons filed in Court today, and I make an order in accordance with prayer three.

24. I direct that the exhibits be retained with the papers.

**********

Amendments

03 March 2015 - Party surname only.

Decision last updated: 03 March 2015