Nisus Pty Ltd

[2022] NSWSC 369

Supreme Court

New South Wales

Medium Neutral Citation:

Nisus Pty Ltd [2022] NSWSC 369

Hearing dates:

22 February 2022

Date of orders:

22 February 2022

Decision date:

30 March 2022

Jurisdiction:

Equity - Expedition List

Before:

Sackar J

Decision:

See para [21]

Catchwords:

EQUITY — Trusts and trustees — Judicial advice — Variation of trusts — Whether trustee can amend vesting day — Whether objects of the powers to appoint income and capital of the trust estate can be extended — Whether the terms of the Trust Estate may be amended so that successor trustees cannot benefit for the purposes of s 54(3) of the Duties Act — Whether trustee can define the term “income” to include statutory income such as capital gains

Legislation Cited:

Duties Act 1997 (NSW)

Perpetuities Act 1984 (NSW)

Trustee Act 1925 (NSW)

Cases Cited:

Kearns v Hill (1990) 21 NSWLR 107

Category:

Principal judgment

Parties:

Nisus Pty Ltd – In the matter of the “Jennifer Trust”

Representation:

Counsel:
D Barlin (plaintiff)

Solicitors:
Medcalf Grant (plaintiff)

File Number(s):

2021/364819

Publication restriction:

N/A

Judgment

1. By way of Summons filed 23 December 2021 the trustee seeks judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW).

2. The Summons contains five prayers for relief which relate to the power to amend as contained in clause 2(a) of the Trust Deed.

3. In particular, the questions posed by these proceedings include whether the power to vary as contained in clause 2(a) of the Trust Deed can be exercised such that (and according to the prayers contained in the Summons):

1. the first prayer of relief - the term “vesting day” can be amended so as to exclude the fifty (50) year limitation, and retain the Royal lineage vesting period;

2. the second and third prayers of relief – the objects of the powers to appoint income and capital of the trust estate can be extended;

3. the fourth prayer of relief – the terms of the Trust Estate may be amended so that successor trustees cannot benefit for the purposes of s 54(3) of the Duties Act 1997 (NSW) (“Duties Act”); and

4. the fifth prayer of relief – the term “income” may be defined to include (as the default position) statutory income such as capital gains.

4. I heard this matter on 22 February 2022 having received detailed written submissions dated 17 February. I made orders at the conclusion of argument. I indicated I would provide reasons at a later date. These are they.

5. In the hearing before me the following evidence was relied upon:

1. the affidavit of Robin John Heming sworn on 7 November 2021 (“the Heming Affidavit”);

2. the affidavit of Robert Ross Medcalf sworn on 28 October 2021 (“the Medcalf Affidavit”);

3. the affidavit of Frank Butkovich sworn 23 November 2021 (“the Butkovich Affidavit”); and

4. the affidavit of Denis Meares sworn on 7 November 2021 (“the Meares Affidavit”);

5. the affidavit of Peta Edwina Howe (“Peta”) sworn on 11 February 2022 (“the Howe Affidavit”); and

6. the affidavit of Heidi Aminta Heming (“Heidi”) sworn on 11 February 2022 (“the HAH Affidavit”).

6. Peta and Heidi are the only children of Robin John Heming. They are the “first line” of the takers-in-default of the appointment of capital. They have an interest in the capital which is vested in interest (but not possession) contingent on them surviving the vesting date.

7. Both are aware of the proceedings and consent to the extension of the vesting date.

8. It may be noted that clause 1(i) of the Trust Deed contains the trusts of income. However the term “income” is not defined. Clause 1(ii) contains the trusts for income and capital upon the “Vesting Day” arriving. It is accepted that any extension of the vesting date would obviously affect the children of Robin John Heming but they have consented to the extension.

The definition of the term “vesting date”

9. The term “vesting date” is critical in determining the entitlements to income and capital of the Trust Estate.

10. The term “vesting date” is defined in the introductory section of the Trust Deed, as follows:

“Vesting date” means the date on which shall expire the period of fifty (50) years from the date of execution of this Deed or the date being twenty-one (21) years after the death of the last survivor of the descendants now living of His late Majesty King George VI whichever date shall first occur or such earlier date as the Trustee shall orally or in writing in its absolute discretion determine.”

11. As the Trust Deed was executed on 1 March 1972, the fifty (50) year period is to arrive on 1 March 2022.

12. Clause 2(a) of the Trust Deed is in the following terms:

The Trustee shall have power:-

(a)    From time to time until the date being twenty-one (21) years from the death of the last survivor of the descendants now living of His late Majesty King George VI or until the Settled Fund shall become vested absolutely in any person or persons pursuant to the trusts herein contained by deed or deeds revocable or irrevocable to alter or vary or absolutely revoke all or any of the trusts and / or powers (other than the power herein contained and the powers contained and the powers contained in Clause 3 hereof) herein declared concerning the Settled Fund or any part thereof or the income or any part thereof or the income or any part thereof to arise therefrom after the date of any such alteration, variation or revocation and in lieu of the trusts and / or powers so revoked to appoint and resettle in such manner and upon such powers and to such ends intents and purposes as the Trustee may in its absolute discretion from time to time think fit the Settled Fund or any part thereof and the income to arise therefrom as aforesaid to or among such one or more of the persons falling within the following descriptions and living at the date when the power of resettlement herein contained shall be exercised and for the following charitable institutions as the Trustee in its absolute discretion from time to time things fit:-

The wife of Robert John Heming at the time or times of the respective exercise of this power, or if he be then dead, the widow of Robin John Heming at such time or times

The children of Robin John Heming

The grandchildren of Robin John Heming

The spouse of any child of Robin John Heming at the time or times of the exercise of this power or if any child be then dead, the widow or widower of that child

The next-of-kin of Robin John Heming

Such Charitable Institutions as the Trustee in its absolute discretion shall determine.

13. There is no doubt that powers such as those contained in clause 2(a) should be construed widely and beneficially, Kearns v Hill (1990) 21 NSWLR 107 (a decision of the Court of Appeal).

14. As to prayer 1, I agree with counsel that the powers contained in clause 2(a) are wide enough to enable the proposed various amendments to be made. In particular in my view the Trustee is justified in varying the definition of the term “vesting date” using the power in clause 2(i) of the Trust Deed in the manner proposed by the relevant deletions.

15. The effect of the variation would be to have the Trust Estate’s “vesting day” occur pursuant to the Royal lineage provision or if the Trustee otherwise determines prior to that time. It will not however be 1 March 2022.

16. It would appear to be somewhat of a mystery why the 50 year period was chosen but that is not relevant given the width of the power in clause 2(i). In any event as the Trust Deed was executed on 1 March 1972 prior to the application of the Perpetuities Act 1984 (NSW) which applied from 31 October 1984. As a result the 80 year perpetuity period does not apply to the Trust Estate.

17. So far as prayer 2 is concerned in my view the Variation Power can be exercised to extend the objects of the power to appoint income to include Robin John Heming and his lineal descendants.

18. So far as prayer 3 is concerned again in my view the Variation Power can be exercised to extend the objects of the power to appoint capital to include Robin John Heming and his lineal descendants.

19. So far as prayer 4 is concerned it seeks to irrevocably exclude “successor trustees” from being able to benefit (by being beneficiaries) under the Trust Estate. The effect of the amendment is if there is a change of Trustee then nominal duty only would be payable pursuant to s 54(3) of the Duties Act as opposed to ad valorem which would otherwise be payable.

20. Given the term “income” is not defined in the Trust Deed the income dealt with in clause 1(i) is ordinary income and would not include for example capital gains. The proposed variation described in prayer 5 if made is in my view one which is one that relates to the trusts of income and capital as well as to appoint income and capital. It is within the scope of clause 2(a) of the Trust Deed.

21. It follows that I have answered each of the questions posed in the affirmative and would advise accordingly.

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Decision last updated: 31 March 2022