Beck v Henley

The New South Wales Court of Appeal considered an appeal concerning a dispute between two adult beneficiaries of a trust, Mr Beck and Ms Henley. Mr Beck, one of two beneficiaries with absolute vested and indefeasible interests in a parcel of shares in a private company, sought to direct the trustee to transfer half of his 50% shareholding to himself. Ms Henley, the other beneficiary, opposed this transfer. The primary court had granted judicial advice to the trustee to proceed with the transfer, and Mr Beck appealed this decision.

The central legal issues before the Court of Appeal were the nature of the "rule" in *Saunders v Vautier*, specifically in relation to the power of an adult beneficiary with an absolute vested and indefeasible interest in trust property to direct a trustee, and whether any "special circumstances" existed to justify departing from this rule. The court also considered the appropriateness of reviewing long-standing authorities on an application for judicial advice and the nature of an appeal from such advice.

The Court of Appeal affirmed the decision of the primary judge, holding that the rule in *Saunders v Vautier* applied. The court reasoned that Ms Henley's opposition, and the fact that the trust was a trust for sale with a power of postponement, did not constitute "special circumstances" that would warrant departing from the established authority. The duty of impartiality owed by the trustee did not preclude the transfer, as no quantified prejudice to Ms Henley was demonstrated, nor was there relevant prejudice merely in splitting the parcel of shares with a measure of control. The court found no sound basis to depart from the existing line of long-standing authority concerning parcels of shares.

Consequently, the appeal was dismissed with costs.