Thomas Hare Investments Limited v Hare - [2012] VSC 200

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT

S CI 2012 01392

IN THE MATTER of the Hare Family Trust
And
IN THE MATTER of section 63A of the Trustee Act 1958

THOMAS HARE INVESTMENTS LIMITED (ACN 001 358 630) as Trustee of the Hare Family Trust	Plaintiff
v
RAYMOND THOMAS HARE AND ORS (according to the attached Schedule)	Defendants

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	12 APRIL 2012
DATE OF JUDGMENT:	15 MAY 2012
CASE MAY BE CITED AS:	THOMAS HARE INVESTMENTS LIMITED v HARE
MEDIUM NEUTRAL CITATION:	[2012] VSC 200

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Trusts – Variation of Deed of Settlement – Extension of Vesting Date – Variation of class of beneficiaries – Foreign element – Tax advantage – Court’s jurisdiction – Distributions in breach of trust – Trustee excused – Trustee Act 1958, ss 63A, 67.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr DKL Raphael	Marshalls & Dent
For the Defendants	No Appearance

HIS HONOUR:

Introduction

This is an application by the trustee of a family trust seeking orders varying the terms of the Deed of Settlement, an order and declarations concerning the validity of certain past distributions of the income of the trust and an order and a declaration excusing the trustee from any breach of trust in making the specified past distributions.

The Deed of Settlement

By a Deed of Settlement dated 25 June 1976 (“the Deed”) and made between DKLR Holding Co Pty Limited, as settlor, and Thomas Hare Investments Limited, as the trustee (“the trustee”), a discretionary family trust to be known as the Hare Family Trust (“the Hare Family Trust”) was established. The appointer was one Thomas Hare.

The “Beneficiary or Beneficiaries” of the Hare Family Trust were defined in clause 1(5) of the Deed to mean:

those persons described as same in the Schedule hereto and shall include persons who from time to time until the vesting date come within the category described in the Schedule respectively notwithstanding that such persons may not be in existence or have come into the defined category at the date of this Deed.

The following persons were listed as beneficiaries in the Schedule to the Deed:
Thomas Hare, Ruby Joyce Hare, Raymond Thomas Hare, Robyn Yvonne Hare, Stephen Mark Hare, Kylie Ann Hare, Mathew John Hare, Robert John Hare, Betty Anne Hare, Sharron Joyce Hare, Lynette Lisa Hare, Wayne John Hare, Alan Francis Hare, Dorothy Mary Hare, Michael Benjamin Hare, Bradley David Hare, John Edward Hare, Janet Anne Hare, Adam James Hare and Benjamin John Hare and any company in which any of the beneficiaries hold shares.

The mechanism by which the class of beneficiary could be expanded was contained in clause 3(a) of the Deed. It allowed the trustee to appoint any person “to be a Beneficiary and may with the like consent revoke such appointment prior to the Vesting Day” provided that the person to be appointed “must be a relative by…

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: [2012] VSC 200
Decision Date: 15 MAY 2012

CaseChat Overview and Summary

Thomas Hare Investments Limited was involved in a legal dispute with Hare, which was heard in the Supreme Court of Victoria. The case centred around the variation of a Deed of Settlement, specifically concerning an extension of the vesting date and a change in the class of beneficiaries. Additionally, the matter involved foreign elements and a tax advantage that was sought to be achieved through the variation. The court was required to determine the jurisdiction over the foreign element and whether it was appropriate to vary the Deed of Settlement in light of the proposed tax advantage.

The primary legal issues before the court included the interpretation of the Trustee Act 1958, sections 63A and 67, and whether these provisions allowed for the variation of the Deed of Settlement to extend the vesting date and alter the class of beneficiaries. Furthermore, the court had to consider whether the proposed variation would result in a breach of trust and if the trustee could be excused from such a breach under the statute. The court also needed to address whether it had the jurisdiction to consider the foreign element in the context of the variation.

In its reasoning, the court held that the variation of the Deed of Settlement was permissible under the Trustee Act 1958, sections 63A and 67. The court found that the trustee could be excused from any breach of trust caused by the variation, as long as the variation was in the best interest of the beneficiaries and did not result in any detriment to them. Regarding the foreign element, the court determined that it had jurisdiction to consider this aspect of the case, as the trust had a significant connection to Australia. The court concluded that the variation could proceed on the basis that it would provide a tax advantage without causing any harm to the beneficiaries.

The court ordered that the Deed of Settlement be varied to extend the vesting date and alter the class of beneficiaries as proposed. The trustee was excused from any breach of trust that might arise from this variation, provided that the best interests of the beneficiaries were upheld and no detriment resulted from the changes.

Orders