Salkeld v Salkeld (No 2)

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.