Application of Tatham

Case [2021] NSWSC 540


Supreme Court


New South Wales

Medium Neutral Citation: Application of Tatham [2021] NSWSC 540
Hearing dates: 9 April 2021
Date of orders: 18 May 2021
Decision date: 18 May 2021
Jurisdiction:Equity
Before: Henry J
Decision:

See [58]

Catchwords:

EQUITY – trusts and trustees – powers, duties, rights and liabilities – powers of trustees – statutory jurisdiction of the court to confer powers on trustees pursuant to Trustee Act 1925 (NSW), s 81 – where trustees seek orders authorising advances of capital and income to residual beneficiaries under cl 5 of will – where one remaining beneficiary to receive capital at specified ages – where substantial trustee fees and holding costs likely incurred before specified ages reached – expedient in the management and administration of the trust to grant additional powers sought

Legislation Cited:

Charitable Trusts Act1993 (NSW), s 12

Trustee Act 1925 (NSW), ss 81, 93

Cases Cited:

Application of Country Road Services Pty Ltd (Re Browne Family Trust) [2019] NSWSC 779

Arakella Pty Ltd v Paton (2004) 60 NSWLR 334; [2004] NSWSC 13

Cameron v Jeffress [2014] NSWSC 702

Cisera v Cisera Holdings Pty Ltd [2018] NSWCA 286

Degan v Lee (1939) 39 SR (NSW) 234

Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646

Hornsby v Playoust (2005) 11 VR 522; [2005] VSC 107

In the Estate of Lee; Perpetual Trustee Co (Canberra) Ltd v Rasker (1986) 84 FLR 268

Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785

Perpetual Trustees Victoria Ltd v Barns [2011] VSC 314

Re Cecil Investments Pty Ltd [2021] NSWSC 211

Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367

Re Downshire Settled Estates [1953] Ch 218

Re Grant (as trustee of the Grant Family Testamentary Trust) [2013] NSWSC 1603

Riddle v Riddle (1952) 85 CLR 202; [1952] HCA 12

Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162

Saunders v Vautier (1841) 4 Beav 115; 49 ER 282

Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482

Trust Company Fiduciary Services Ltd v Challenger Managed Investments Ltd [2008] NSWSC 1155

Waine v King (Supreme Court (NSW), Hodgson J, 5 October 1994, unrep)

Texts Cited:

HAJ Ford and WA Lee, Thomson Reuters, Principles of the Law of Trusts, vol 2 (Update 184)

JD Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

RFD Barlow et al, Williams on Wills (10th ed, 2014, LexisNexis)

Category:Principal judgment
Parties: Hendra Jean Tatham (First Plaintiff)
Scott Anthony McDonald (Second Plaintiff)
Representation:

Counsel:
L Ellison SC (Plaintiffs)

Solicitors:
Sparke Helmore Lawyers (Plaintiffs)
File Number(s): 2020/319366
Publication restriction: Nil

Judgment

  1. The plaintiffs, Hendra Tatham and Scott McDonald, are the current trustees (Trustees) of the estate of the late Patricia Ann Withofs who died on 17 November 1998 (deceased) leaving a will made on 6 November 1998 (Will).

  2. By their summons filed on 9 November…

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Application of Tatham [2021] NSWSC 540
Case
[2021] NSWSC 540
Decision Date

CaseChat Overview and Summary

In the application of Tatham, the respondents, as trustees of a discretionary trust, sought court orders to permit the advancement of capital and income to residual beneficiaries under clause 5 of a will. The dispute centred around the need for these advancements to be made before the specified ages at which the sole remaining beneficiary would receive their capital, to avoid substantial trustee fees and holding costs. The application was heard by the Supreme Court of New South Wales, which was required to determine whether it had the jurisdiction to confer additional powers on the trustees under section 81 of the Trustee Act 1925 (NSW).

The central legal issue before the court was whether it had the authority to grant the trustees additional powers to advance capital and income to the beneficiaries, despite the constraints imposed by clause 5 of the will. The court needed to consider whether the proposed actions were within the scope of the statutory jurisdiction provided by section 81 and whether granting such powers would be expedient in the management and administration of the trust.

The court found that it did have the jurisdiction to confer the additional powers sought by the trustees, based on the provisions of section 81 of the Trustee Act 1925 (NSW). The court reasoned that the trustees' proposal to advance capital and income to the beneficiaries before the specified ages would be beneficial in managing the trust and avoiding unnecessary costs. The court was satisfied that the trustees had acted reasonably and in the best interests of the beneficiaries by seeking these additional powers. Consequently, the court granted the orders sought by the trustees.

The final orders of the court authorised the trustees to advance capital and income to the beneficiaries under the specified conditions, reflecting the court's determination that it was expedient in the management and administration of the trust to grant the additional powers. The court's decision was based on the clear statutory authority provided by section 81 and the potential benefits of avoiding substantial trustee fees and holding costs.

Orders

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Background

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Evidence

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Decision

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