Clarke v Ebdon - [2020] SASC 67

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CLARKE v EBDON
[2020] SASC 67
Judgment of The Honourable Justice Blue
29 April 2020
EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES - MISCELLANEOUS OTHER POWERS, DUTIES AND LIABILITIES - POWER TO AMEND TRUST DEED
The plaintiffs are the trustees of the Fairfax Foundation. The defendant is a representative of the actual and potential beneficiaries of the Foundation (including himself).
The plaintiffs apply for orders under section 59C of the Trustee Act 1936 (SA) varying the trust deed of the Foundation to provide that the proper law of the Foundation is the law of South Australia; provide that the trustees may distribute capital and either distribute or accumulate income; simplify and generalise the purpose for which benefits may be paid or provided to employees or dependants; modify the provision exempting the trustees from personal liability; modify the provision for amending the trust deed; and make drafting and minor modifications to modernise the language and style of the trust deed.
Held:
1. The Foundation is not invalid as offending the common law rule against perpetuities because it is protected by section 346 of the Companies Act 1936 (NSW) and its counterpart provisions (at [61]).
2. The criteria for the Court to exercise jurisdiction and vary the trust deed under section 59C of the Trustee Act 1936 are satisfied in respect of each of the modifications and when considered as a whole (at [83], [91], [101], [108] and [110]).
3. It was appropriate to exercise a discretion under section 59C of the Trustee Act 1936 to vary the terms of the trust deed (at [113]-[117]).
Companies Act 1934 (SA) s 402; Companies Act 1936 (NSW) s 346; Companies Act 1961 (NSW) s 382; Companies Act 1962 (SA) s 386; Companies Act 1981 (Cth); Companies (Application of Laws) Act 1981 (NSW); Companies (Application of Laws) Act 1982 (SA); Corporations Act 1989 (Cth) s 82; Corporations (New South Wales) Act 1990 (NSW); Corporations (South Australia) Act 1990 (SA); Corporations Act 2001 (Cth) s 1346; Corporations (Commonwealth Powers) Act 2001 (NSW); Corporations (Commonwealth Powers) Act 2001 (SA); Law of Property Act 1936 (SA) s 61; Perpetuities Act 1984 (NSW) s 13; Trustee Act 1936 (SA) ss 59C & 35B, referred to.
Hancock v Watson [1902] AC 14; Oesterlin v Sands (1969) 120 CLR 346, discussed.
Faye v Faye [1973] WAR 66; In re Ker’s Settlement Trusts [1963] Ch 553; In re Paget’s Settlement [1965] 1 WLR 1046; Retail Employees Superannuation Pty Ltd v Pain [2016] SASC 121; Salkeld v Salkeld (No 2) [2000] SASC 296; Thomas Hare Investments Limited v Hare (2012) 34 VR 656, considered.

CLARKE v EBDON
[2020] SASC 67
Civil
BLUE J:

The plaintiffs Jon Clarke, Kylie Boyle, Bernadette Courtney, Lawrence Cowen, Kylie Dennis, Susanne Hall, Stephen Hopkin and Janice Smith (the Trustees) are the trustees of a trust called the Fairfax Foundation (the Foundation). The defendant Kasey Ebdon is a representative of the actual and potential beneficiaries of the Foundation (including himself).
The plaintiffs apply for orders under section 59C of the Trustee Act 1936 (SA) (the Act) varying the trust deed of the Foundation to provide that the proper law of the Foundation is the law of South Australia; provide that the trustees may distribute capital and either distribute or accumulate income; simplify and generalise the purpose for which benefits may be paid or provided to employees or dependants; modify the provision exempting the trustees from personal liability; modify the provision for amending the trust deed; and make drafting and minor modifications to modernise the language and style of the trust deed.
Following the conclusion of the hearing of the application, I was satisfied that it was appropriate to make orders varying the trust deed and made those orders. These are my reasons for doing so.
Background
In 1959 the Sydney Morning Herald was published by John Fairfax & Sons Pty Ltd (John Fairfax & Sons), which was owned by the Fairfax family. Warwick Fairfax was the governing director. A new public company, John Fairfax Limited (John Fairfax), was formed to purchase the shares of John Fairfax & Sons. The Fairfax family decided to establish the Foundation for the benefit of employees, former employees or wives, widows and dependants of employees or former employees (collectively employees or dependants) of John Fairfax & Sons or any other company that might become the publisher of the Sydney Morning Herald or any subsidiary of John Fairfax & Sons or John Fairfax. They contributed money and property (being part of the consideration paid by John Fairfax for its shares in John Fairfax & Sons) of the value of approximately £100,000 to the Foundation.
On 9 April 1959 John Fairfax was incorporated.
On 20 July 1959 four members of the Fairfax family (including Warwick Fairfax) as “the Founders” and five persons (including Warwick Fairfax) as “the Trustees” executed a trust deed (the Trust Deed) to define and declare the trusts upon which the fund to be known as the Fairfax Foundation was and was to be held and the manner in which it was and was to be administered.
The primary class of eligible beneficiaries was defined as:
employees of the company known as John Fairfax & Sons Pty Limited or of any other company which may hereafter publish the newspaper known as the “Sydney Morning Herald” or of the former employees of any such company or the wives widows or dependants of any of such employees as aforesaid…
but the trustees, with the consent of the board of directors of John Fairfax, were empowered by clause 4(a) to make rules declaring that:
employees or former employees or wives widows or dependants of employees or former employees of any company being a subsidiary company (including a subsidiary of a subsidiary) of John Fairfax & Sons Pty Limited or of John Fairfax Limited shall be eligible as beneficiaries of the foundation.
Clause 3 of the Trust Deed provided that income of the Foundation was to be applied for the benefit of such eligible employees or dependants as were selected by the trustees:
in the form of payments of gratuities pensions or allowances or by way of loan or otherwise for the benefit of the person in whose respect the payment is made including without prejudice to the generality, retirement allowances and payments to assist in the maintenance education or advancement of any of the children of such person or for the relief of distress whether caused by bereavement sickness unemployment or other misfortune or for the alleviation of hardship howsoever arising.
Clause 7 empowered a majority of the trustees and the directors of John Fairfax to amend the deed in any respect which in their opinion was calculated to benefit past present or future employees of any company publishing the Sydney Morning Herald or of any company associated with any such company.
On 27 June 1969 the Trust Deed was amended by adding additional clause 2A empowering the trustees, with the consent of the board of John Fairfax, to borrow money on certain terms and additional clause 6A providing that no trustee should be under any personal liability for anything done or omitted to be done under the Trust Deed except for knowing or wilful breach of trust.
On 3 August 1977 the Trust Deed was amended to include, within the scope of rules made under clause 4(a), employees or dependants of an associated company of John Fairfax & Sons or of John Fairfax.
On 3 August 1977 the trustees, with the consent of the board of directors of John Fairfax, made rules under clause 4 of the Trust Deed (the Rules). The Rules were subsequently amended on seven occasions between 1991 and 2018. The original version of the Rules was not tendered. However, I infer that the original Rules declared that employees or dependants of various named associated companies of John Fairfax were eligible beneficiaries. I infer that the original Rules also provided that half of the trustees were to be appointed by the board of directors of John Fairfax and the other half were to be nominated and elected by employees.
On 13 August 1987 Tryart Pty Ltd was incorporated. Tryart Pty Ltd later changed its name to John Fairfax Group Pty Limited.
On 28 May 1990 Tourang Limited was incorporated. Tourang Limited later changed its name to John Fairfax Holdings Ltd. I infer that John Fairfax Holdings Ltd acquired the shares in John Fairfax Group Pty Limited.
At some point, it was decided that John Fairfax Group Pty Limited would take over publication of the Sydney Morning Herald from John Fairfax & Sons.
On 28 February 1994 the Trust Deed was amended to substitute references to John Fairfax Group Pty Limited for all references to John Fairfax Limited. I infer that it was on about this date that John Fairfax Group Pty Limited took over publication of the Sydney Morning Herald from John Fairfax & Sons.
At some point John Fairfax Group Pty Limited changed its name to John Fairfax Publications Pty Limited and by 2008 it had changed its name to its current name, Fairfax Media Publications Pty Limited (Fairfax Media Publications).
On 12 January 2007 John Fairfax Holdings Ltd changed its name to Fairfax Media Ltd (Fairfax Media).
On 7 December 2018 Nine Entertainment Co Holdings Limited acquired all of the shares in Fairfax Media and thereby became the ultimate holding company of Fairfax Media Publications, the publisher of the Sydney Morning Herald.
On 14 December 2018 the Trustees instituted this action applying for variation of the terms of the Trust Deed.
On 26 February 2019 the Trustees gave notice to the Attorneys-General for South Australia and New South Wales of their application. On 29 April and 6 June 2019 respectively the Attorneys-General indicated that they did not seek to be joined as parties to, or participate in, the action.
Evidence
Kelly Cook was the executive officer of the Foundation between July 2011 and May 2018. Affidavits by Ms Cook affirmed on 12 December 2018, 11 April 2019 and 6 June 2019 were tendered. Ms Cook also gave oral evidence.
The various documents exhibited to Ms Cook’s affidavits were tendered, together with a separate tender bundle of documents.
An affidavit by the Trustees’ solicitor Thomas Dachs sworn on 7 June 2019 exhibiting the response sent on behalf of the Attorney-General for New South Wales was also tendered.
Section 59C
Section 59C of the Act provides:
59C—Power of Court to authorise variations of trust
(1)The Supreme Court may, on the application of a trustee, or of any person who has a vested, future, or contingent interest in property held on trust—
(a)         vary or revoke all or any of the trusts; or
(b)        where trusts are revoked—
(i)distribute the trust property in such manner as the Court considers just; or
(ii)resettle the trust property upon such trusts as the Court thinks fit; or
(c)enlarge or otherwise vary the powers of the trustees to manage or administer the trust property.
(2)In any proceedings under this section the interests of all actual and potential beneficiaries of the trust must be represented, and the Court may appoint counsel to represent the interests of any class of beneficiaries who are at the date of the proceedings unborn or unascertained.
(3)Before the Court exercises its powers under this section, the Court must be satisfied—
(a)that the application to the court is not substantially motivated by a desire to avoid, or reduce the incidence of tax; and
(b)that the proposed exercise of powers would be in the interests of beneficiaries of the trust and would not result in one class of beneficiaries being unfairly advantaged to the prejudice of some other class; and
(c)that the proposed exercise of powers would not disturb the trusts beyond what is necessary to give effect to the reasons justifying the exercise of the powers; and
(d)that the proposed exercise of powers accords as far as reasonably practicable with the spirit of the trust.
(4)An order made by the Supreme Court in the exercise of powers conferred by this section is binding upon all present and future trustees and beneficiaries of the trust.
(5)     This section does not apply to—
(a)         a trust affecting property settled by an Act; or
(b)         a charitable trust.
(6)This section does not derogate from any other power of the Supreme Court to vary or revoke a trust, or to enlarge or otherwise vary the powers of trustees.
This Court’s jurisdiction to entertain an application to vary a trust is conditioned on satisfaction of three[1] prerequisites:
1the existence of a trust;
2an application by a trustee of the trust or person with an interest in property held on trust;[2] and
3the interests of all actual and potential beneficiaries being represented in the proceeding.[3]
[1] There is also a negative requirement imposed by section 59C(5) that the trust not be a charitable trust or a trust affecting property settled by an Act but there is no suggestion that this applies in the present case and it can be ignored.
[2] Trustee Act 1936 (SA) s 59C(1).
[3] Trustee Act 1936 (SA) s 59C(2).
This Court’s power to vary a trust is conditioned on satisfaction of six prerequisites:
1there is good reason to make the variation;[4]
2the variation is in the interests of beneficiaries;[5]
3the variation will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class;[6]
4the variation accords as far as reasonably practicable with the spirit of the trust;[7]
5the variation will not disturb the trust beyond what is necessary to give effect to the reasons for the variation;[8] and
6the application is not substantially motivated by a desire to avoid or reduce the incidence of tax.[9]
[4]    This requirement is implicit in the requirement that the proposed exercise of powers would not disturb the trusts beyond what is “necessary to give effect to the reasons justifying the exercise of the powers” and would be “in the interests of beneficiaries”.
[5]    Trustee Act 1936 (SA) s 59C(3)(b). It may be that the second and third prerequisites are a single composite prerequisite but it is convenient to treat them separately.
[6]    Trustee Act 1936 (SA) s 59C(3)(b).
[7]    Trustee Act 1936 (SA) s 59C(3)(d).
[8]    Trustee Act 1936 (SA) s 59C(3)(c).
[9]    Trustee Act 1936 (SA) s 59C(3)(a).
If these prerequisites are satisfied, the Court has a discretion whether to exercise the power conferred by the section.
The prerequisites to jurisdiction
Existence of a trust
The Court’s jurisdiction to vary the terms of a trust is necessarily dependent on the existence of a trust in the first place. In applications under section 59C of the Act, ordinarily there is no question concerning the existence of the trust.
In the present case, it is necessary to consider whether the creation of the Foundation as a trust in 1959 offended the common law rule against perpetuities rendering the creation of the purported trust void.
The common law rule against perpetuities was stated by the House of Lords in Hancock v Watson[10] in the following terms:
An executory devise is an infringement on the rules of the common law, and the conditions for its validity are well settled. So far back as the year 1787 Lord Kenyon, and Master of the Rolls, thus expresses himself in Jee v Audley: “The general principles which apply to this case are not disputed; the limitations of personal estate are void unless they necessarily vest, if at all, within a life or lives in being, and twenty-one years or nine or ten months afterwards…” And in advising this House in Dungannon v Smith … Creswell J stated the rule thus: “It is a general rule, too firmly established to be controverted, that an executory devise to be valid must vest, if at all, within a life or lives in being and twenty-one years after; it is not sufficient that it may vest within that period; it must be good in its creation, and unless it is created in such terms that cannot vest after the expiration of a life or lives in being, and twenty-one years and the period allowed for gestation, it is not valid, and subsequent events cannot make it so”.[11]
[10] [1902] AC 14.
[11] At 17-18 per Lord Davey (with whom Lord Shand, Lord Brampton, Lord Robertson and the Earl of Halsbury LC agreed).
It is common ground that the rule against perpetuities applies to inter vivos trusts as much as to testamentary dispositions and applies when the subject matter is personal property as well as real property. For ease of reference, I refer to the period of a life or lives in being plus 21 years and a period allowed for gestation as the perpetuity period.
There is no provision in the Trust Deed that addresses vesting of the fund or winding up of the trust. The Trust Deed contemplates that the Foundation will continue in perpetuity. I assume for present purposes that it is not an implied term of the Trust Deed that the fund is to vest within a period equal to or less than the perpetuity period.[12]
[12] See [62] below.
When the Foundation was created, there was a statutory exception to the rule against perpetuities. Section 346 of the Companies Act 1936 (NSW)[13] provided:
The rule of law relating to perpetuities shall not apply and shall be deemed never to have applied to the trusts of any fund or scheme for the benefit of any employees of a company whether such fund or scheme was established before after the commencement of this Act.
In this section—
“Company” includes any company or society formed, whether before or after the commencement of this Act, in pursuance of any Act or Imperial Act or of letters patent or royal charter or otherwise duly constituted according to law and a foreign company.
“Fund or scheme” includes any provident, superannuation, sick, accident, assurance, unemployment, pension, cooperative benefit or other like fund, scheme, arrangement or provision.
“Employee” includes a director or any person at any time in the employment of a company, and the wife, child, grandchild, parent, and any dependent of any such person and any other person entitled to or capable of receiving any benefit under any fund or scheme.
[13] Section 402 of the Companies Act 1934 (SA) was in similar terms, except it did not contain a definition of “company”.
In 1961-1962 the Uniform Companies Acts were enacted by the States. Section 382 of the Companies Act 1961 (NSW) effectively re-enacted section 346 of the Companies Act 1936 (NSW), except that it referred to a “dependant” instead of a “dependent”.[14]
[14] Section 386 of the Companies Act 1962 (SA) was in the same terms.
In 1981-1982 the Companies Codes were enacted by the States. The Companies (Application of Laws) Act 1981 (NSW) applied the substantive provisions of the Companies Act 1981 (Cth) as laws of New South Wales known as the Companies (New South Wales) Code.[15] Section 578 of the Companies Codes re-enacted, with some modifications, section 382 of the Companies Act 1961 (NSW). The reference in the definition of “employee” in the predecessor provisions to “any other person entitled to or capable of receiving any benefit under any fund or scheme” was omitted.
[15] The Companies (Application of Laws) Act 1982 (SA) likewise applied the substantive provisions of the Companies Act 1981 (Cth) as laws of South Australia known as the Companies (South Australia) Code.
In 1990 the Corporations Law was enacted by the States. The Corporations (New South Wales) Act 1990 (NSW) applied the Corporations Law enacted by section 82 of the Corporations Act 1989 (Cth) as laws of New South Wales known as the Corporations Law.[16] Section 1346 of the Corporations Law re-enacted section 578 of the Companies Codes, except that it referred to a spouse instead of a wife.
[16] The Corporations (South Australia) Act 1990 (SA) likewise applied the substantive provisions of the Corporations Law enacted by section 82 of the Corporations Act 1989 (Cth) as laws of South Australia known as the Corporations Law.

In 2001 the Corporations Act 2001 (Cth) was enacted by the Commonwealth pursuant to powers referred by the States.[17] Section 1346 of the Corporations Act 2001 (Cth) re-enacted section 1346 of the Corporations Law. Section 1346 of the Corporations Act 2001 (Cth) provides:
[17] The Corporations (Commonwealth Powers) Act 2001 (NSW) referred New South Wales powers to the Commonwealth. Likewise the Corporations (Commonwealth Powers) Act 2001 (SA) referred South Australian powers to the Commonwealth.
Non-application of rule against perpetuities to certain schemes
(1)The rules of law relating to perpetuities do not apply, and are taken never to have applied, to the trusts of any fund or scheme for the benefit of any employee of a corporation, whether the fund or scheme was established before, or is established after, the commencement of this section.
(2)In this section:
(a)a reference to a corporation includes a reference to a body corporate or society incorporated or formed, or otherwise duly constituted, whether before, at or after the commencement of this section, by or under:
(i)a law of the Commonwealth, of a State or Territory, of an external Territory or of a country outside Australia and the external Territories; or
(ii) letters patent or a royal charter; and
(b)a reference to a fund or scheme includes a reference to a provident, superannuation, sick, accident, assurance, unemployment, pension or co-operative benefit fund, scheme, arrangement or provision or other like fund, scheme, arrangement or provision; and
(c)a reference to an employee of a corporation includes a reference to:
(i) a director of the corporation; and
(ii)a spouse, child, grandchild, parent or any dependant of an employee or of a director of the corporation.
Each of the perpetuity rule provisions enacted since section 346 of the Companies Act 1936 (NSW) has been expressed to operate retrospectively.
Section 13 of the Perpetuities Act 1984 (NSW) provides:
13 Superannuation and other funds
(1)In this section:
"employees" includes directors, officers, servants and employees of any employer.

"fund" means a provident, superannuation, sick, accident, assurance, unemployment, pension or co-operative benefit fund, scheme, arrangement or provision or other like fund, scheme, arrangement or provision.

"self-employed persons" includes persons engaged in any lawful profession, trade, occupation or calling.
(2)The rule against perpetuities does not invalidate a fund established by a settlement for the benefit of:
(a) employees,
(b) self-employed persons,
(c) spouses, children, grandchildren, parents, dependants or legal personal representatives of employees or self-employed persons, or
(d)persons duly selected or nominated for that purpose by employees or self-employed persons pursuant to the provisions of the settlement.
(2A)The rule against perpetuities does not invalidate a trust established by a settlement and used for investing the assets of a fund referred to in subsection (2) (whether or not it is also used for investing other assets). This subsection does not affect the generality of subsection (2).
(3)This section applies to settlements taking effect before, on or after the appointed day.
Section 13 of the Perpetuities Act 1984 (NSW) is in similar, but not identical, terms to section 1346 of the Corporations Act 2001 (Cth). Leaving aside drafting differences, section 13 of the Perpetuities Act 1984 (NSW) is not limited to employees etc of corporate employers and does not refer to companies at all. In addition, the definition of “fund”, while very similar to the definition of “fund or scheme”, is expressed in definitive rather than inclusive terms. For ease of reference, I refer to a “fund or scheme” or “fund” defined in the statutory provisions as a benefit fund. Section 13 of the Perpetuities Act 1984 (NSW) is, like the companies legislation provisions, expressed to be retrospective.
The Trust Deed provides for the payment of benefits to “employees” within the meaning of the definition in section 346 of the Companies Act 1936 (NSW) and the later statutory provisions referred to above because:
1an employee or former employee referred to in the Trust Deed falls within the term “any person at any time in the employment” of a company in the definition in section 346 of the Companies Act 1936 (NSW) and, in respect of the later statutory provisions, it is clear from the references to unemployment and pension benefits that there is no requirement that a recipient of a benefit be an employee when the benefit is paid;
2a wife or widow referred to in the Trust Deed falls within the term “wife” or “dependent” in section 346 of the Companies Act 1936 (NSW) and in any event falls within the term “any other person … capable of receiving any benefit under any fund or scheme” in the definition in section 346 of the Companies Act 1936 (NSW) and, in respect of the later statutory provisions, falls within the term “spouse” or “dependant”;
3a dependant referred to in the Trust Deed falls within the term “dependent” and in any event falls within the term “any other person … capable of receiving any benefit under any fund or scheme” in the definition in section 346 of the Companies Act 1936 (NSW) and, in respect of the later statutory provisions, falls within the term “dependant”.
The Trust Deed provides for benefits to employees of a “company” within the meaning of the definition in section 346 of the Companies Act 1936 (NSW) because eligible beneficiaries must have been employees or dependants of employees of John Fairfax & Sons Pty Ltd, John Fairfax Limited or a company being a subsidiary or associated company of John Fairfax Limited. There is no requirement for a company to be involved under section 13 of the Perpetuities Act 1984 (NSW).
Accordingly, the question whether section 346 of the Companies Act 1936 (NSW) or the later statutory provisions apply to the Foundation turns on the question whether the Foundation was a benefit fund within the meaning of section 346 or the later statutory provisions. The definition of a benefit fund is largely the same across all of the statutory provisions. The only difference is that it is expressed in inclusive terms in the companies legislation but in definitive terms in the Perpetuities Act 1984 (NSW).
I first consider the construction of the statutory definition from first principles and whether the Foundation falls within the definition. I then consider the High Court’s decision in Oesterlin v Sands.[18] Both the Trustees and Mr Ebdon contend that the Foundation is a benefit fund with the statutory definitions and that the statutory provisions apply to it.
[18] (1969) 120 CLR 346.
The statutory definition includes eight specific types of fund, scheme, arrangement or provision (collectively fund) as well as any “like” fund. The eight specific types of fund are a provident, superannuation, sick, accident, assurance, unemployment, pension or cooperative benefit fund. To determine what is a “like” fund, it is necessary to determine the relevant genus to which the eight species belong.
The eight species each have in common that a payment is made to an employee or dependant for the personal benefit of the employee. The payment is not made for the benefit of the employer as such, nor is it made for the benefit of employees collectively. Thus, to pick one of the matters mentioned in the Trust Deed, a payment to an employee to assist in the education of the employee’s child would be a payment made to an employee for the personal benefit of the employee. Conversely, the provision of a failsafe mechanism on dangerous machinery in a factory would not be for the personal benefit of an employee but rather for the benefit of employees collectively and for the benefit of the employer.
There is nothing in the statutory definition that excludes the administrator of a benefit fund exercising a discretion as to which specific employees are to receive benefits and in what specific amounts. Thus a sickness fund within the meaning of the statutory definition may involve a discretion by the administrator whether to pay a benefit if an employee suffers sickness and, if so, in what amount. There is nothing in the statutory definition that requires that eligibility for and the amount of a payment must be fixed as opposed to discretionary. Any such constraint would eliminate funds which it was the evident intention of the statutory provisions to protect.
Similarly, there is nothing in the statutory definition that requires that a benefit fund may only pay one type of benefit or which limits the type of benefits that may be paid (beyond the requirement that the payment be for the personal benefit of an employee or dependant). On the contrary, it may be expected that a given fund might pay a benefit in the event of say sickness, accident, unemployment or death. The statutory definition does not require that there be four separate funds: one paying sickness benefits, one paying accident benefits, etc. There is nothing in the statutory definition that excludes the administrator of the fund from exercising a discretion whether to make a payment out of the fund to an employee or dependant depending on the personal circumstances of the employee without those circumstances having to be predetermined.
The context and evident purpose of the statutory provisions exempting benefit funds support this construction. The context of the definition of a benefit fund is that it is exempted from the common law rule against perpetuities. It is considered by the legislature to be in the public interest that benefit funds may continue in perpetuity and are not required to be wound up within the perpetuity period. The existence of such funds advances the public good by making payments to employees for their personal benefit and thereby relieving what might otherwise be an obligation on the community at large. Such funds may be cooperative or contributory funds but equally they may be supported by benefaction. In the latter case, they are likely to be discretionary funds rather than fixed benefit funds.
On its proper construction, and before having regard to authority, the statutory definition of a benefit fund encompasses funds that make payments to employees or dependants for the personal benefit of the employee or dependant and does not extend to funds that make payments for the benefit of employees collectively or the employer.
Turning to the provisions of the Trust Deed, clause 3 provides:
The income of the fund shall be applied by the Trustees subject to any rules affecting the same that may be made from time to time in such manner as the Trustees may from time to time think fit for the benefit of such of the employees of the Company known as John Fairfax & & Sons Pty Limited or of any other company which may hereafter publish newspaper known as “The Sydney Morning Herald” or of the former employees of any such company or the wives widows or dependants of any such employees as aforesaid or for the benefit of any other persons who pursuant to the powers hereafter contained are declared to be eligible as beneficiaries under the said foundation in the form of payments of gratuities pensions or allowances or by way of loan or otherwise for the benefit of the person in whose respect the payment is made including without prejudice to the generality, retirement allowances and payments to assist in the maintenance education or advancement of any of the children of such person or for the relief of distress whether caused by bereavement sickness unemployment or other misfortune or for the alleviation of hardship howsoever arising.
Clause 3 refers to several specific types of benefits that plainly fall within the statutory definition. These include the following benefits:
·retirement allowances;
·payments for the relief of distress caused by bereavement;
·payments for the relief of distress caused by sickness;
·payments for the relief of distress caused by unemployment;
·payments for the relief of distress caused by other misfortune;
·payments for the alleviation of hardship;
·payments to assist in the maintenance of a child of an employee or dependant;
·payments to assist in the education of a child of an employee or dependant; and
·payments to assist in the advancement of a child of an employee or dependant.
Clause 3 of the Trust Deed also refers to “payments of gratuities pensions or allowances or by way of loan or otherwise for the benefit of the person in whose respect the payment is made”. Pensions are specifically mentioned in the statutory definition. Gratuities and allowances are benefits that are like the benefits to employees specifically mentioned in section 346 of the Companies Act 1936 (NSW). A loan is likewise such a benefit, albeit not necessarily as much of a benefit as a gratuity or allowance. The reference to “otherwise” appears to have been inserted out of an abundance of caution because in practice payments are likely to fall within the category of gratuities, pensions, allowances or loans.
Clause 3 is confined to providing for payment of benefits to individual employees or dependants. It does not provide for the provision of benefits for employees collectively or benefits for the employer. Subject to consideration of the High Court’s decision in Oesterlin v Sands,[19] the Trust Deed creates a benefit fund within the meaning of the statutory provisions.
[19] (1969) 120 CLR 346.
In Oesterlin v Sands[20] Mr Crockett was the governing director and a major (if not the principal) shareholder of Crockett & Co Pty Ltd, holding 5,760 shares in that company. In his self-prepared will, Mr Crockett provided that those shares were to be held by his trustees in perpetuity. The dividends on the shares were to be paid to his wife and daughters during their lifetimes. After their deaths, the fund was to be held “in trust for the employees generally of Crockett & Co Pty Ltd and administered by my executors and trustees in their interests”.[21] He added that he did not mean in the interests of the directors exclusively or unduly but in the interests of the whole staff and for the good of the business. He directed specifically that a named employee might be assisted to acquire shares in the company so as to become eligible to become a director. The High Court held that this trust did not comprise a benefit fund within the meaning of section 382 of the Companies Act 1961 (NSW).
[20] (1969) 120 CLR 346.
[21] At 348.
Menzies J agreed with the reasons of Kitto J but added his own articulation of the reason why the trust was not protected by the statutory provision, saying:
The section refers to the trusts of any fund or scheme "for the benefit of any employee of a company" and indicates thereby that it is the rights of particular employees to benefit under a trust, which are to be saved from extinction by reason of the remoteness. The testator, however, has been careful not to give any employee of the company any ascertainable rights. The trust to be established is one "for employees generally" and it is to be administered in the interests of employees generally, not of particular employees. This language shows that the testator did not intend to give any employee any right, capable of definition, to benefit, but was concerned rather to give the trustees power to expend the trust moneys in the interests of the general body of employees of the company while, at the same time, indicating that, in some circumstances, payments to particular employees would be within his intended bounty, e.g., payments to assist an employee, suitable to be made a director for the benefit of employees generally, to obtain the necessary share qualification. It would, no doubt, be within the power of the trustees to establish a fund or scheme of the description to be found within s. 382. The important point is, however, that the power of the trustees would not be limited to doing what falls within the section. For instance, if the trustees were to decide that the installation of air-conditioning in the factory would be in the interests of employees generally, then expenditure from the fund to provide that amenity would be authorized.
It follows that I do not think the language of the section is apt to protect a trust of such a general character as that to be found in the will.[22]
Kitto J said:
Though the word "includes" in a provision such as sub-s. (2) usually indicates that what follows is intended to be extensive rather than definitive of the meaning of the expression to which it relates that can hardly be its effect here, for the drag-net expression "other like fund, scheme, arrangement or provision" excludes by necessary implication any fund, scheme, arrangement or provision which is not "like" those that are specifically described. Wide though the descriptions are, they all postulate, I think, what indeed the very expression "fund or scheme" itself suggests strongly enough where used in relation to employees of a company, that provision is made for entitling an employee, either absolutely or subject to the discretionary judgment of a person or body of persons, to receive benefits in particular eventualities the nature of which determines the appropriateness of the descriptive title. The eventualities may be of a wide class as in the case of a provident fund, or of a more specific kind as in the case of a sick or accident fund ; they may consist in temporary situations as in the case of an unemployment fund, or continuing situations as in the case of a superannuation or pension fund ; they may be involuntary events as in the case of an assurance fund, or repeated acts of the employee as in the case of a co-operative benefit scheme ; but always there are rules which by limiting the kinds of events or situations for which the fund, scheme, arrangement or provision exists to provide give it is special character and thus qualify it for one of the descriptive titles. A fund or scheme, it seems to me, could not properly be described as "like" those to which the titles apply unless it be governed by rules or prescriptions which limit its purposes to benefiting or assisting an employee of the company in defined circumstances.
The trusts which the testator's will purports to set up in the interests of employees is not so governed. It is not directed to any particular situation. It fits none of the specific descriptions in the definition of "fund or scheme", and for want of anything in the nature of rules or directions or limiting guide-lines it cannot be described as a "like" fund, scheme, arrangement or provision. It is a provision for the general benefit of such employees of the company as may be selected by the trustees upon no ascertainable principle, and it therefore qualifies for no more particular description than that of a trust to benefit employees of the company. The protection of s. 382 could not be applied to it without striking the definition of "fund or scheme" out of the Act.[23]
McTiernan J agreed with both Kitto J and Menzies J.
[22] At 351-352.
[23] At 350-351.
In respect of the result, the trust established by Mr Crockett’s will, which did not require payments for the personal benefit of employees, fell outside the scope of the statutory definition of a benefit fund. On the contrary, as observed by Menzies J, installation of air-conditioning in the factory would have fallen within the scope of the powers conferred on the trustees.
In respect of the construction of the statutory definition, there are passages in the judgment of Kitto J that, at first sight, might be regarded as requiring that a payment be limited to one defined circumstance. However, considered as a whole, and in the context of the reasons of Menzies J, Kitto J did not adopt such a narrow construction. First, Kitto J accepted that the receipt of a benefit might be subject to “the discretionary judgment of a person or body of persons”. Secondly, Kitto J accepted that the eventualities in which a person might, subject to a discretionary judgment, receive a payment might be “of a wide class”. Thirdly, on the facts in that case, there was nothing in the terms of Mr Crockett’s will that identified any circumstances in which payment of a benefit might be considered appropriate (apart from the acquisition of shares in the company itself to enable a person to qualify as a director, which would be for the benefit of the company rather than an employee). Fourthly, Kitto J referred to the want of “anything in the nature of rules or directions or limiting guide-lines”, thereby anticipating that there would not necessarily be rigidly defined circumstances in which an employee was eligible for consideration of a benefit but the more flexible concept of guidelines. Fifthly, Menzies J, who gave his own reasons for concluding that the trust fell outside the statutory definition of a benefit fund in terms very similar to my analysis above, agreed with the reasons of Kitto J.

In contrast to the position under Mr Crockett’s will, the Trust Deed defines circumstances in which a benefit may, subject to the trustee’s discretion, be paid to an employee or dependant. Those circumstances encompass retirement allowances; pensions; payments for the relief of distress caused by bereavement, sickness, unemployment or misfortune; the alleviation of hardship; and payments to assist in the maintenance, education or advancement of a child of an employee or dependant. The Trust Deed therefore contains rules defining circumstances in which a benefit might be paid. The mere fact that the trustees have a discretion to pay a personal benefit in other circumstances does not entail that the Foundation falls outside the statutory definition of a benefit fund.
It follows that the Foundation did not offend the rule against perpetuities and is not invalid. The first prerequisite to jurisdiction, namely the existence of a trust, is satisfied.
For the sake of completeness, I note that four alternative contentions were advanced as to why the Foundation does not offend the common law rule against perpetuities or why the Court has jurisdiction under section 59C of the Act even if it does. These were that the Trust Deed implicitly created a series of annual powers of appointment that were valid for at least 21 years; that subsection 4(2) of the Perpetuities Act 1984 (NSW) validates the exercise of a power of appointment after 1984; that it is an implied term of the Trust Deed that the Foundation subsist until 21 years after the last to die of the founders (James Fairfax being the last founder to die in 2017); or that, if the creation of the Foundation was void, there is a resulting trust in favour of the founders and the Court has jurisdiction to vary the terms of that resulting trust. Each of these contentions is problematic but it is unnecessary to consider them given my conclusion that the Foundation is a benefit fund within the meaning of the statutory provisions.
Application by trustee
The second prerequisite to jurisdiction is satisfied because the application is made by all of the trustees of the Foundation.
Representation of all beneficiaries
The third prerequisite to jurisdiction is satisfied because, pursuant to an order made on 5 March 2019, Mr Ebdon represents the interests of all actual and potential beneficiaries of the Foundation.
Variations to Trust Deed
The Trust Deed is a relatively short document. Clause 1 provides that the moneys and property transferred to the trustees, together with any future accretions, additions or gifts shall be held upon the trusts thereafter declared.
Clause 2 provides that the capital of the fund shall be invested by the trustees in such investments as they think fit and clause 3 provides that the income of the fund shall be applied for the benefit of employees or dependants in the terms set out at [8] above.
Clause 2A empowers the trustees, with the consent of the board of Fairfax Media Publications, to borrow moneys.
Clause 4 empowers the trustees, with the consent of the Board of Directors of Fairfax Media Publications, to make rules declaring that employees or dependents of a subsidiary or associated company of Fairfax Media Publications or John Fairfax & Sons shall be eligible as beneficiaries; prescribing maximum or minimum benefits payable in specified circumstances or events; or providing for the appointment of trustees, the holding and conduct of trustees’ meetings and the administration of the fund.
Clause 5 provides that, unless provided otherwise by the rules, a quorum for a meeting of trustees for the purpose of making rules shall be five and otherwise, is three. Clause 6 provides that, unless provided otherwise by the rules, a trustee shall not vote on any matter in respect of which they are financially interested.
Clause 6A provides that no trustee shall be under any personal liability in respect of anything done or omitted to be done under the Trust Deed, except for a knowing or wilful breach of trust.
Clause 7 empowers an amendment of the terms of the Trust Deed if the amendment is in the opinion of the majority in number of the trustees and the directors of Fairfax Media Publications calculated to benefit past present or future employees of the company publishing the Sydney Morning Herald or any associated company.
The Trust Deed is expressed in the language and style of its era (the nineteen fifties).
The Trustees seek variations to the Trust Deed:
·to provide that the trustees may distribute capital and either distribute or accumulate income;
·to simplify and generalise the purpose for which benefits may be paid or provided to employees or dependants;
·to provide that the deed is governed by the laws of South Australia;
·to modify the provision exempting the trustees from personal liability;
·to modify the provision for amending the Trust Deed; and
·by way of drafting and minor modifications to modernise the language and style of the Trust Deed.
Distribution of capital and income
Clause 2 of the Trust Deed provides that the capital of the fund shall be invested. There is no power to make payments to employees or dependants out of capital.
Clause 3 provides that the income of the fund shall be applied for the benefit of employees or dependants in the terms set out at [8] above. There is no explicit power to retain income and accumulate it as capital. It is arguable that the trustees do not have power to apply only part of the income of the fund in respect of an accounting period. It is not necessary to reach a concluded view on that question.
The Trustees seek variations to the Trust Deed to empower the trustees to pay capital of the fund for the benefit of employees or dependants (new clause 3(a)(2)); to empower the trustees to pay some or all of the income of the fund for the benefit of employees or dependants (new clause 3(a)(2)); and to empower the trustees to accumulate and retain as part of the fund so much of the income and capital as they think fit (new clause 5.1).
Ms Cook gave evidence that in recent decades the trustees have not received sufficient applications from employees or dependants for payments out of the fund to apply all of the annual income of the Foundation. This is in part due to changes that have occurred over the decades since the Foundation was established, including compulsory superannuation for employees, the number of employees in the Australian print media industry diminishing and the Employee Assistance Program available to staff of the Fairfax group and their immediate families. The inability to apply all of the income of the fund has occurred despite substantial efforts by the trustees to make employees or dependants aware of the existence of the Foundation and encourage applications for assistance. As a result of income exceeding payments to employees or dependants, the capital of the Foundation has grown such that the net assets of the Foundation as at 30 June 2017 had a value of $29.9 million. The equity of the Foundation comprised $200,000 settlement fund; $6.7 million retained earnings and $23 million reserves as a result of realised and unrealised capital gains.
The proposed amendments would ensure that, on the one hand, the trustees have power to not distribute 100 per cent of the income of a given year (in circumstances in which they have not practically been able to achieve that) and, on the other hand, have power to distribute capital if they think fit.
The defendant does not oppose the proposed amendments but suggests three refinements. The first refinement is that a clause be added to the Trust Deed requiring the trustees, in exercising their discretion to pay or apply capital, to consider future beneficiaries and the intention of the founders for the trust to be perpetual. The Trustees agree to such a clause being added, and new clause 3(b) provides that, “in exercising their discretion to pay or apply the capital of the Trust Fund, the trustees must consider the future beneficiaries and the intention of the founders of the trust for the trust to be perpetual”.
The second refinement suggested by the defendant is that a clause be added to the Trust Deed requiring the trustees annually to formulate or review the proposed strategies concerning the approximate extent of the accumulation or distribution of income or capital of the fund. The Trustees agree to this and new clause 4(a)(2)(C) requires that the trustees “must formulate, and regularly review, processes, policies or guidelines identifying … the proposed strategies concerning the approximate extent of the accumulation or distribution of income or capital of the Trust Fund”.
The third refinement, or qualification on the defendant’s non-opposition to the proposed variations, is that the proper law of the Foundation be changed to the law of South Australia to ensure that it can remain a perpetual trust. This variation is sought by the Trustees in any event.
I am satisfied that it is appropriate to make these variations to the terms of the Trust Deed. In circumstances in which it has not proved practicable for the trustees to distribute all of the income of the Foundation, it should be put beyond doubt that the trustees have power to accumulate income. In circumstances in which capital has accumulated over the years as a result of the under-distribution of income and the realisation of capital gains, the trustees should have power to distribute capital. However, that capital should be subject to the constraint contained in new clause 3(b), which will protect future potential beneficiaries against an undue erosion of the capital of the Foundation. In addition, the beneficiaries are protected by the fiduciary obligation of the trustees to act in the best interests of the beneficiaries as a whole. For reasons given below, it is appropriate to change the proper law of the trust to the law of South Australia.
Ultimately, it is necessary to consider the variations sought holistically in determining whether the requisite criteria are satisfied. However, considered initially in isolation, the variations addressed under this heading (coupled with the change to the proper law of the Foundation) meet those criteria. There is good reason to make the variations; they are in the interests of beneficiaries; they will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class; they accord as far as reasonably practicable with the spirit of the trust and they will not disturb the trust beyond what is necessary to give effect to the reasons for the variations.
Purposes of provision of benefits and proper law
Clause 3 of the Trust Deed specifies the purposes for which benefits may be paid to employees or dependants. The Trustees seek the broadening of those purposes so as to not specify any specific purposes but rather specify that the trustees may pay or apply income or capital for the benefit of any eligible beneficiaries “in the form of payments or loans or other benefits as the Trustees decide”.
Ms Cook gave evidence that the Trustees consider that it would be in the interests of potential beneficiaries to be able to broaden the range of benefits provided, including providing non-personal benefits. This includes scholarships and bursaries and the provision of well-being programs and activities and holiday accommodation. The Foundation has in more recent times been providing discounted holiday accommodation and subsidisation of membership of the Retired Employees Association.
The defendant suggests that a clause be added to the Trust Deed requiring the trustees to formulate or review annually the categories of benefits intended to be available and the manner in which eligible beneficiaries may apply for such benefits. The Trustees agree to this and new subclauses 4(a)(2)(A) and (B) require that the trustees “must formulate, and regularly review, processes, policies or guidelines identifying … the categories of benefits which are intended to be available (without constraining the Trustees’ powers and discretions to provide benefits under this Trust Deed)” and “the manner in which the Eligible Beneficiaries may apply for such benefits (if applicable)”.
The Trust Deed does not contain a clause specifying the governing law of the trust. However, it is common ground that, because the Trust Deed was made in New South Wales, at present the proper law of the trust is the law of New South Wales.
The Trustees seek a variation to the Trust Deed to insert a new clause 9 to provide that proper law of the trust is the law of South Australia. This would ensure that the Foundation does not offend the common law rule against perpetuities because section 61 of the Law of Property Act 1936 (SA) abolishes the common law rules against perpetuities and excessive accumulations.
I am satisfied that it is in the interests of potential beneficiaries to broaden the benefits that can be provided by the Foundation so as to encompass payments that are not for the personal benefit of an individual employee. The beneficiaries are protected by the fiduciary obligation of the trustees to act in the best interests of the beneficiaries as a whole.
It is a necessary concomitant of a variation to broaden the benefits in this way that the proper law be changed to the law of South Australia. Otherwise, there is a risk that the variation in relation to benefits may result in the Foundation ceasing to be a benefit fund within the meaning of section 1346 of the Corporations Act 2001 (Cth) or section 13 of the Perpetuities Act 1984 (NSW). This variation accords with the spirit of the trust because the founders intended the Foundation to be perpetual.
There is good reason to make the variations; they are in the interests of beneficiaries; they will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class; they accord as far as reasonably practicable with the spirit of the trust and they will not disturb the trust beyond what is necessary to give effect to the reasons for the variations.
Exemption of trustees from personal liability
Clause 6A of the Trust Deed provides:
6A.No Trustee shall be under any personal liability in respect of this Deed or of anything done or omitted thereunder or pursuant thereto except for some breach of trust knowingly or wilfully committed by him.
The Trustees seek a re-casting of this clause in the following terms:
6.1Indemnity
Subject to clause 6.2, each of the Trustees and each member of the Foundation Staff, where purporting to act in the exercise of the trusts of this deed or in the exercise of powers or discretions under this deed or in the administration and management of the Trust is:
(a)not liable for any loss or liability; and
(b)entitled to be indemnified from the Trust Fund in respect of any loss, liability, costs and expenses relating to:
(1)income tax and other taxes and all fines and penalties payable in relation to those taxes;
(2)establishing, operating, administering, amending, terminating and winding up the Trust;
(3)any acts or things done in connection with or incidental to the operation of the Trust.
6.2Limitations
Notwithstanding clause 6.1, each of the Trustees and each member of the Foundation Staff may be liable for any loss or liability, and is prohibited from being indemnified from the Trust Fund, to the extent that the loss, liability, cost or expense is attributable to:
(a)the dishonesty of that Trustee, or member of the Foundation Staff;
(b)the gross negligence or recklessness of that Trustee or member of the Foundation Staff; or
(c)a deliberate act or omission known by that Trustee, or member of the Foundation Staff, to be a breach of trust.
To a large extent, the proposed re-drafted clause represents a change to reflect modern drafting. However, there are three substantive changes.
The first substantive change is that an indemnity against liability is added to the exemption from liability.
The second substantive change is that the exemption from liability is extended to encompass not only the trustees but also a member of the Foundation Staff, which is defined to mean employees of the trust engaged under a contract of employment with the trust and individuals engaged by or on behalf of the trustees on secondment or like arrangement to assist the trustees to perform services in relation to the administration and management of the trust.
The third substantive change is that the exclusion from the exemption is extended from a wilful or knowing breach of trust to encompass also gross negligence or recklessness.
In relation to the first substantive change, trustees have a general right to be indemnified out of trust assets in respect of liabilities incurred as trustees, subject to general law or trust deed exclusions. The trustees would be entitled, without amendment to the Trust Deed, to be indemnified provided that their exemption from personal liability is not excluded because of a wilful or knowing breach of trust.
In relation to the second substantive change, I accept the Trustees’ contention that the rationale for the exemption of trustees from personal liability applies equally, if not with greater force, to Foundation Staff. I consider that this modification is more than balanced by the third substantive change.
In relation to the third substantive change, this significantly reduces the exemption from liability by excluding gross negligence or recklessness.
Considered as a whole, I am satisfied that it is in the interests of beneficiaries to make the variation to the exemption from personal liability clause. There is good reason to make the variation; it is in the interests of beneficiaries; it will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class; it accords as far as reasonably practicable with the spirit of the trust and it will not disturb the trust beyond what is necessary to give effect to the reasons for the variation.
Amendment power
Clause 7 of the Trust Deed provides:
7.The trusts of this deed may be altered in any respect which is in the opinion of the majority in number of the Trustees and of the Directors of [Fairfax Media Publications Pty Ltd] as expressed by a resolution of that Board or otherwise calculated to benefit past present or future employees of any company publishing the said “The Sydney Morning Herald” or of any company associated with any such company.
The Trustees seek a re-casting of this clause in the following terms:
7.Amending this deed
(a)The Trustees may by deed revoke, add to or vary any of the provisions of this deed, as long as the revocation, addition or variation is calculated, in the opinion of the majority of the Trustees and the majority of the directors of the Publishing Company to benefit past present or future employees of any company publishing “The Sydney Morning Herald” or any other Eligible Companies.
(b)Section 35B of the Trustee Act 1936 (SA) is expressly excluded from applying to this deed.
The term “Publishing Company” is defined to mean “the company which is publishing “The Sydney Morning Herald” from time to time,” presently Fairfax Media Publications. The term “Eligible Companies” is defined to mean “the Publishing Company” or “any body corporate being a Related Body Corporate to the Publishing Company”. The term “Related Body Corporate” is defined to have the same meaning as in section 50 of the Corporations Act 2001 (Cth).
Having regard to the definitions, predominantly the variations to clause 7 are confined to drafting techniques. There are three substantive changes. The first substantive change is that it is expressly provided that an amendment requires a separate majority of the trustees and a separate majority of the directors. The present wording of clause 7 is ambiguous and might be read as merely requiring an overall majority of the combined trustees and directors. The alteration is in the interests of beneficiaries because it ensures that the directors cannot outvote a majority of trustees.

The second substantive change is that the reference to the directors of Fairfax Media Publications is changed to a reference to the directors of the Publishing Company. Given the first substantive change, this change is of less significance because any amendment will require the support of a majority of trustees in any event. However, this second substantive change is in the interests of beneficiaries because there is nothing which ensures that Fairfax Media Publications have any connection to the ongoing publication of the Sydney Morning Herald.
The third substantive change is that clause 7(b) is added to exclude the application of section 35B of the Trustee Act 1936 (SA) to the Trust Deed. Subsection 35B(1) empowers the trustees of any employees’ benefit fund to vary the instrument creating the fund as they think fit, subject to the observance of specified conditions. Subsection 35B(7) provides that section 35B applies unless the instrument creating the fund expressly provides that it shall not apply. Subsection 35B(8) provides that the instrument creating the fund may itself provide for its own variation. This third substantive change is in the interests of beneficiaries because, subject to the first and second substantive changes, it preserves the existing power of amendment.
Considered as a whole, I am satisfied that it is in the interests of beneficiaries to make the variations to the amendment clause. There is good reason to make the variations; they are in the interests of beneficiaries; they will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class; they accord as far as reasonably practicable with the spirit of the trust and they will not disturb the trust beyond what is necessary to give effect to the reasons for the variations.
Drafting and minor modifications
The Trustees propose various drafting modifications to reflect modern drafting language and style and various relatively minor modifications or additions.
I am satisfied that these modifications are in the interests of beneficiaries.
Conclusion
Ultimately, as observed above, it is necessary to consider holistically whether it is appropriate to make an order for variation of the Trust Deed.
The Trustees produced a revised set of rules which they undertook to make by way of replacement for the existing rules within 14 days of an order varying the trust. Those rules include:
·an obligation on the trustees to formulate or review the processes, policies or guidelines identifying the categories of benefits intended to be available; the manner in which the Eligible Beneficiaries may apply for such benefits (if applicable); and the proposed strategies concerning the approximate extent of the accumulation or distribution of income or capital of the Trust Fund (rule 1.1);
·an obligation on the trustees to adopt an investment strategy for the Trust Fund and review the performance against the strategy and review the strategy itself in respect of each accounting period (rule 2(a)); and
·a provision that there be eight trustees, comprising four trustees appointed by the Publishing Company and four trustees who are Employees of and are elected by Employees of any of the Eligible Companies (rule 3.1(a)).
Considered as a whole, I am satisfied that it is in the interests of beneficiaries to make the variations sought by the Trustees. There is good reason to make the variations; they are in the interests of beneficiaries; they will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class; they accord as far as reasonably practicable with the spirit of the trust and they will not disturb the trust beyond what is necessary to give effect to the reasons for the variations.
I am satisfied holistically that the application is not substantially motivated by a desire to avoid or reduce the incidence of tax and the variations considered as a whole could not have that effect.
There is no jurisdictional requirement under section 59C of the Act that there be any connection between the trust and South Australia.[24] However, the Court has a discretion to decline to entertain an application if it considers that the connection with South Australia is too tenuous.[25]
[24] See In re Ker’s Settlement Trusts [1963] Ch 553 at 556 per Ungoed-Thomas J; In re Paget’s Settlement [1965] 1 WLR 1046 at 1050 per Cross J; Retail Employees Superannuation Pty Ltd v Pain [2016] SASC 121 at [181]-[182] per Blue J.
[25] In re Paget’s Settlement [1965] 1 WLR 1046 at 1050 per Cross J; Faye v Faye [1973] WAR 66 at 70 per Lavan J; Salkeld v Salkeld (No 2) [2000] SASC 296 at [26] per Perry J; Thomas Hare Investments Limited v Hare (2012) 34 VR 656 at [33] per Habersberger J; Retail Employees Superannuation Pty Ltd v Pain [2016] SASC 121 at [182] per Blue J.
There is a substantial connection between the Foundation and South Australia. Associated companies of Fairfax Media Publications operate throughout Australia, including South Australia. They include Fairfax Media Publications Pty Ltd; Fairfax Media Events Pty Ltd; Agricultural Publishers Pty Ltd; Rural Press Printing Pty Ltd; Rural Press Pty Ltd; SA Regional Media Pty Ltd and Stock Journal Publishers Pty Ltd; each of which employ employees based in South Australia. There is no reason to decline jurisdiction on the ground that the connection with South Australia is too tenuous.
For these reasons, and on the undertaking of the Trustees to make the proposed rules within 14 days, I made an order varying the terms of the Trust Deed as summarised above.
Other relief
Originally, the Trustees sought other relief apart from variation of the terms of the Trust Deed by way of declarations and advice under section 90 and exoneration under section 50 of the Trustee Act 1936 (SA). However, the Trustees do not ultimately press for such relief.