Variation and Termination of Express Trusts. Associate Professor Cameron Stewart (with a few additions by Dr Lisa Ford, UNSW). Variation of Express Trusts . Powers to Vary Contained in Express Trusts
Associate Professor Cameron Stewart (with a few additions by Dr Lisa Ford, UNSW)
Powers to Vary Contained in Express Trusts
A trust instrument can contain provisions which give the trustee the power to make certain amendments to the trust arrangement. For example, it is common for discretionary trusts to grant a power to the trustee to add beneficiaries to the class of objects: Ford & Lee at . In Kearns v Hill (1990) 21 NSWLR 107 the NSW Court of Appeal found that the power of variation contained in a trust instrument was to be given its natural an ordinary meaning even where it included a power to vary the identity of the beneficiaries of the trust.
Inherent Power to Vary Trusts
Tickle v Tickle (1987) 10 NSWLR 581, Young J decided not to follow the restrictions placed on the courts power as set down by Chapman v Chapman. Instead, His Honour found at 586 that the inherent power might embrace circumstances where there was 'an element of salvage and a flavour of compromise and the combination of these factors may make it a proper case for the court to exercise jurisdiction to vary.' As such Young J thought it wise to add a fifth category where the power to vary should be exercised when circumstances have occurred which have tended to thwart the settlor's intention and where the parties have consented to a course which will effect an alternative scheme in line with the settlor's intention.
Statutory Power to Vary Trusts
LAW: Legal Title holders? (son and daughter)
Who gets beneficial title in the proceeds?
EQUITY: Resulting trust presumed for benefit of ‘real’ purchaser (mother)
EQUITY: Presumption of resulting trust is negated by presumption of advancement when purchase money provided by a parent and property put in name of a child
So unlike Tinsley v Milligan, Mrs Nelson had to rely on her illegal behaviour to show that she did not provide the purchase price for the benefit of her children.
This Part does not apply to:
(a) any provision of a deed, will or other instrument, whether made before or after the commencement of this Part, that confers charitable benefits, or enables charitable benefits to be conferred, on persons of a particular race, colour or national or ethnic origin; or
(b) any act done in order to comply with such a provision
1. Is this a perpetuity problem? IE is there a contingent remainder
2. When is the interest created? (death? Inter vivos)
3. Who is the life in being? (living person or closed class of living persons)
4. Is there any possibility that it will vest outside the period of LIB + 21 years
5. Is there some mitigating rule or statute (will talk about later)
B is life in Being
To A on trust B for life, then to any of B’s children that marry
At the time the gift vests, no one knows if the gravel pit will ever be exhausted.. Doesn’t matter if it is in fact exhausted before perp pd POSSIBILITY = VOID
gravel pit on trust to A to use until the pit is exhausted, and then to be sold and divided equally among the testator’s living issue
A (wife) is LIB
Brothers + Sisters of T can be born and have babies
Babies of brothers and sisters can reach 21
‘to A, my wife, for life, then to A’s children for life, then for such of any children of my brother and sister who attain 21’ (T’s parents are old but living at the time of death)
To soften the Rule against perpetuities, courts developed the Rule in Andrew v Partington (1791) 3 Bro CC 401; 29 ER 610. It is best explained through example.
TAKE THE VOID GIFT:
‘A on trust for B for life and then such of B’s children that attain 25 years’
B is LIB
B can have children until the day he dies
B’s children can turn 25 >21 years after B’s death
‘A on trust for B for life and then such of B’s children that attain 25 years’, where B is alive at the time death/effect
If one of B’s children turns 25 before the first interest vests, the class of B’s children is closed.
Children born after that date don’t get anything.
So the gift doesn’t offend the Rule