Legal Research
Cases
Salkeld v Salkeld (No 2)

Salkeld v Salkeld (No 2)

Case [2000] SASC 296 31 August 2000

Admissibility of Evidence

Trusts & Equity

Type to search within this case.

SALKELD and ORS v SALKELD and ANOR
[2000] SASC 296

Civil

1................ PERRY J.......................... This is an application for orders which, if granted, will have the effect of varying the terms of three trusts so as to enable them to be wound up and the capital distributed in accordance with a proposed deed of family arrangement.

The three trusts were established by Fred William Hughes, a Sydney wool merchant, for the benefit of his family. Deeds of settlement establishing the trusts were executed by Mr Hughes in March and April 1937. The trusts are known as the F.W. Hughes Settlement No 1, the F.W. Hughes Settlement No 2 and the F.W. Hughes Settlement No 3. The settlements now comprise in all assets in excess of $37 million, the bulk of which are in New South Wales.
Two of the plaintiffs are granddaughters of Mr Hughes, being children of his daughter Laura. They are the plaintiff Gwenneth Laura Salkeld (“Gwenneth”) (now aged 87) and Brenda Alice Linnell (“Brenda”) (now aged 84). The plaintiff Roger Salkeld and the defendant David John Salkeld are sons of Gwenneth. The remaining plaintiff, Janet Peta Linnell, is the daughter of Brenda and the cousin of Roger and David Salkeld.
Gwenneth and Brenda enjoy a life interest in the income of the three trusts. Various provisions will come into operation upon their death which will have the net effect of postponing final distribution of the trusts until 21 years after the last death of each of them.
The defendants David Salkeld and Perpetual Trustee Company Limited (“Perpetual”) are currently joint trustees of the three trusts. The deeds of settlement named other trustees, but the defendants have over a period of time assumed that office when their predecessors as such were replaced either on death or for other reasons.
There is now a relatively small number of living persons who could claim an interest in the various settlements, contingent upon the deaths of Gwenneth and Brenda.
A question of construction arises under each of the deeds of settlement, more particularly as to the meaning of the word “issue” which appears in various clauses in the deeds.
Roger and David Salkeld and Janet Linnell assert that they are the only persons who fall within the meaning of the word “issue” where that word is used. If that assertion is correct, they will be the only persons entitled to share in the income and capital of the settlements after the deaths of their mothers, assuming that they survive their mothers. Even in that eventuality, however, a final distribution, that is, final vesting of accumulated income and capital of the trusts, will not occur until 21 years after the death of the last survivor of Gwenneth and Brenda.
On the other hand, if the word “issue” refers to successive generations rather than to children, the class of beneficiaries would be much wider and could extend to remoter issue as yet unborn.
All of the living potential beneficiaries, assuming the wider construction…

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 Salkeld v Salkeld (No 2)

Details

AGLC: Salkeld v Salkeld (No 2) [2000] SASC 296
Case: [2000] SASC 296
Decision Date: 31 August 2000

CaseChat Overview and Summary

Salkeld v Salkeld (No 2) involved a dispute over the terms of three trusts established by Fred William Hughes, a Sydney wool merchant, for the benefit of his family. The trusts, known as the F.W. Hughes Settlement No 1, No 2, and No 3, contained assets in excess of $37 million, primarily located in New South Wales. The current trustees, David Salkeld and Perpetual Trustee Company Limited, were seeking to wind up the trusts and distribute the capital in accordance with a proposed deed of family arrangement. However, a question of construction arose concerning the meaning of the word "issue" in the deeds of settlement, which would determine the class of beneficiaries entitled to share in the income and capital of the settlements after the deaths of Gwenneth and Brenda.

The legal issues the court was required to decide were whether the court should exercise its inherent jurisdiction to approve a compromise affecting the interests of unborn persons, and whether the terms of the proposed compromise were such that the court should approve it. The court found that the power to sanction a compromise extended to unborn persons if there was genuine doubt or uncertainty as to their entitlement and a genuine arrangement between existing interested parties had been struck. Additionally, the court had the power to appoint a representative for the unborn persons under SCR r 29.01.

The court approved the compromise, finding it to be a fair estimation of the risk of an adverse outcome from the point of view of the parties to be benefited. The compromise involved setting aside amounts from each settlement fund to be devoted exclusively for the members of the class of unborn beneficiaries. The court accepted the opinion of Mr Besanko QC, who was appointed to represent the unborn beneficiaries, that the proposed amounts represented a fair and reasonable compromise for the unborn beneficiaries, having regard to the risks on the question of construction.

Final orders will be made after counsel have an opportunity to speak to the minutes.

Orders