Fischer v Nemeske Pty Ltd

The dispute in *Fischer v Nemeske Pty Ltd* concerned the exercise of powers by a trustee under a trust deed. The applicants, beneficiaries of the trust, sought to recover funds from the respondent trustee, alleging improper distribution of trust assets. The matter came before the Court of Appeal of New South Wales.

The primary legal issues before the court were whether the trustee had validly exercised its power to advance or raise capital or income for the benefit of specified beneficiaries by distributing a revaluation reserve, and whether the beneficiaries could bring an action in debt against the trustee. Further issues included whether a subsequent deed constituted a valid covenant to make payment, and whether the trustee's actions in purporting to alter the vesting date of the trust retrospectively were valid, particularly in light of an express power to alter the vesting date and a limitation on the general power to vary the trust. The court also considered whether the cause of action was acknowledged within the applicable limitation period, thereby renewing the limitation period.

The Court of Appeal found that the trustee's purported distribution of the revaluation reserve did not constitute a valid exercise of the power to advance or raise capital or income. The court reasoned that the power was intended to be exercised for the maintenance, education, advancement in life, or benefit of beneficiaries, and a mere revaluation reserve did not fall within the scope of this power. Furthermore, the court determined that the subsequent deed did not create a valid covenant to pay, and that the trustee's attempt to retrospectively alter the vesting date was ineffective. The court held that the general power to vary the trust was not available to achieve what was specifically provided for in an express power, and that the purported variation was precluded by the express limitation on the general power.

The appeal was dismissed with costs.