Re Gengoult-Smith Family Trus - [2024] VSC 189

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2024 00158

HUGH GENGOULT-SMITH and Another	Plaintiffs
v
PETELA NOMINEES PTY LTD (ACN 005 747 866) (which is sued as the trustee of the Gengoult-Smith Family Trust) and others	First Defendant

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JUDGE:	Moore J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 April 2024
DATE OF JUDGMENT:	23 April 2024
CASE MAY BE CITED AS:	Re Gengoult-Smith Family Trust
MEDIUM NEUTRAL CITATION:	[2024] VSC 189

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TRUSTS – Application to vary provisions of discretionary trust – Where all sui juris beneficiaries consent to variation – Consideration of interests of existing minor and potential unborn beneficiaries – Application approved – Section 63A of the Trustee Act 1958 – Section 5 of the Perpetuities and Accumulations Act 1968 – Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387 – Re Christmas’ Settlement Trusts [1986] 1 Qd R 372 – Re Munro’s Settlement Trusts [1963] 1 WLR 145 – Re The Pickering Family Trusts [2024] VSC 5 – Re Whigham’s Settlement Trusts [1971] 1 WLR 83.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M T Flynn KC	KCL Law
For the First Defendant	Ms B Ridgeway	KCL Law

HIS HONOUR:

Introduction

The Gengoult-Smith Family Trust (the Trust) is a discretionary trust established by a trust deed dated 29 April 1974 (the Trust Deed). The Trust owns approximately $80 million worth of investments, mostly in real estate, and generates an annual net income of approximately $700,000. The trustee of the Trust, Petela Nominees Pty Ltd (the Trustee), which is the first defendant in this proceeding, distributes the Trust’s income to its beneficiaries each year at its discretion. The current beneficiaries of the Trust include members of the Gengoult-Smith family, as well as related trusts, related corporations and charities. For clarity, and without intending any disrespect to the parties, I will generally refer to the members of the Gengoult-Smith family by their first names.

Hugh and Edward Gengoult-Smith, who are beneficiaries of the Trust, are the plaintiffs in this proceeding. They have applied to the Court under s 63A of the Trustee Act 1958 to approve an arrangement varying certain provisions of the Trust Deed so that, instead of vesting on 29 April 2024, the Trust would vest on 29 April 2054. If the Trust vests on 29 April 2024, the Trustee will hold the Trust assets for only a certain few individuals who form part of a larger class of beneficiaries. Hugh and Edward have also been advised that, if the Trust vests on 29 April 2024, the Trust will incur a capital gains tax liability of up to $10 million.

The Attorney-General for the State of Victoria was joined to the proceeding as the second defendant to represent the charitable beneficiaries of the Trust. The Court was informed by the Attorney-General’s legal representatives that she did not oppose the plaintiffs’ application and did not propose to take…

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.

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Details

Case: [2024] VSC 189
Decision Date: 23 April 2024

CaseChat Overview and Summary

The parties involved in the case are the Gengoult-Smith Family Trust, the trustee of which is Perpetual Trustees Victoria Ltd, and the beneficiaries, both existing and potential. The dispute concerns an application to vary the provisions of a discretionary trust, with all sui juris beneficiaries consenting to the variation. The court tasked with addressing this matter was the Supreme Court of Victoria.

The central legal issues the court had to resolve were whether the application to vary the trust provisions could be approved given the consent of all sui juris beneficiaries, and how to consider the interests of existing minor and potential unborn beneficiaries. The court had to determine whether the proposed variation would be in the best interests of all beneficiaries, including those who could not consent. The court considered relevant statutes, including Section 63A of the Trustee Act 1958 and Section 5 of the Perpetuities and Accumulations Act 1968. It also examined several precedent cases to guide its decision, including Perpetual Trustees Victoria Ltd v Barns, Re Christmas’ Settlement Trusts, Re Munro’s Settlement Trusts, Re The Pickering Family Trusts, and Re Whigham’s Settlement Trusts.

After careful consideration of the consent of the sui juris beneficiaries, the interests of minor beneficiaries, and the potential impact on unborn beneficiaries, the court concluded that the application to vary the trust provisions should be approved. The court found that the variation would not adversely affect the interests of the minor or unborn beneficiaries and that it would, in fact, be in the best interests of all beneficiaries. The court was satisfied that the variation would provide greater flexibility and efficiency in managing the trust, which aligns with the objectives of the trust deed. The final orders of the court approved the variation of the trust provisions as requested by the trustee.

Orders