IN THE MATTER of a trust created by deed of settlement dated 27 June 1972 (EM McPherson Settlement)
-and-
IN THE MATTER of an application pursuant to sections 63 and 63A of the Trustee Act 1958 (Vic)
APPLICATION BY:
DAVID JOHN BERRY as trustee for the EM McPherson Settlement
Plaintiff

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JUDGE:	Harris J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 April, 2 September 2024
DATE OF JUDGMENT:	4 December 2024
CASE MAY BE CITED AS:	Re EM McPherson Settlement
MEDIUM NEUTRAL CITATION:	[2024] VSC 744

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TRUSTS – Application to vary terms of family trust – Approval on behalf of beneficiaries who are unable to consent - Extension of vesting date and introduction of statutory perpetuity period – Enlargement of class of beneficiaries to include corporations and trusts in which existing beneficiaries have an interest – Whether a resettlement of the trust – Amendments to avoid adverse taxation outcomes – Whether open to vary trust to introduce general power of amendment for trustee – Trustee Act1958 (Vic), s 63, s 63A – Perpetuities and Accumulations Act 1958 (Vic), s 5.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr P Bender	Nathan Yii Lawyers
Appearing as amicus curiae appointed by the Court	Ms K Chan

TABLE OF CONTENTS

The Ethel McPherson Settlement Trust, and the Application.................................................. 1

The beneficiaries of the Trust.......................................................................................................... 2

The issues for determination........................................................................................................... 4

The Court’s powers under the Trustee Act.................................................................................... 6

Relevant provisions of the Trustee Act....................................................................................... 6
Principles on the exercise of power under s 63A and s 63 of the Trustee Act....................... 7
Section 63A........................................................................................................................... 7
Section 63.............................................................................................................................. 9

Amendment to extend the vesting date....................................................................................... 10

The current provisions of the Deed and the proposed variation......................................... 10
Whether an extension of the vesting date would be for the benefit of the Relevant Beneficiaries and is a fair and proper arrangement............................................................................. 12
The power to authorise a change in perpetuity period to a fixed number of years.......... 15
The submissions of the Trustee and the Contradictor as to the form of amendment....... 19
Consideration.............................................................................................................................. 23
Instrument ‘by which any disposition is made’............................................................ 24
Instrument which ‘specifie[s]’ the perpetuity period................................................... 25
Do the original Deed, with the deed of amendment, consents and order of the Court, constitute an instrument for the purposes of s 5(1)?........................................ 26
Multiple instruments together may be regarded as one instrument for the purposes of s 5(1).................................................................................................. 28

The terms in which the consents of the adult beneficiaries are expressed............... 28

Conclusion – extension of vesting date.................................................................................... 29

Amendment to widen the class of beneficiaries........................................................................ 30

Submissions of the Trustee and the Contradictor.................................................................. 32
Whether the change is for the benefit of Maya or unborn beneficiaries................... 32
The reference to ‘living’ beneficiaries in distribution clause...................................... 34
Submissions as to the intention of settlor, destruction of the substratum of the trust, and resettlement…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re EM McPherson Settlement

Details

AGLC: Re EM McPherson Settlement [2024] VSC 744
Case: [2024] VSC 744
Decision Date: 4 December 2024

CaseChat Overview and Summary

The matter before the court involved an application by a trustee to vary the terms of a family trust, specifically the EM McPherson Settlement. The dispute centred on whether the court could approve changes to the trust, including extending the vesting date, introducing a statutory perpetuity period, and enlarging the class of beneficiaries to include corporations and trusts in which existing beneficiaries have an interest. The applicants argued that these changes were necessary to avoid adverse taxation outcomes and improve the administration of the trust.

The primary legal issues were whether the court had the jurisdiction to approve such variations, particularly in the absence of consent from all beneficiaries. The court also needed to determine if the proposed changes constituted a resettlement of the trust, which would require additional legal steps. Furthermore, the court had to consider whether it was appropriate to include a general power of amendment for the trustee, given the potential for future conflicts among beneficiaries.

The court found that it had the jurisdiction to approve the variations, as the beneficiaries who could not consent were adequately represented and the changes did not undermine the trust's fundamental purpose. The court determined that the proposed amendments did not amount to a resettlement of the trust but were rather modifications within the trustee's powers. Importantly, the court declined to include a general power of amendment for the trustee, citing the potential for abuse and the importance of maintaining the original terms of the trust. The court's decision was influenced by the need to balance the interests of all beneficiaries and to ensure the trust's administration remained in line with the settlor's intentions.

The final orders of the court allowed the trustee to implement the approved variations to the EM McPherson Settlement. The court's decision provided clarity on the permissible scope of changes and reinforced the importance of careful consideration when modifying family trusts. The ruling underscored the court's role in protecting the interests of all beneficiaries, especially those unable to consent, and highlighted the need for trustees to act in accordance with the original terms of the trust, absent explicit authority to the contrary.

Orders