When Is a Trust Not A Trust?[1]
This paper examines common mistakes in practice when dealing with trusts, in particular:
- In deceased estates where a testamentary trust has not been created under an will;
- Where a family discretionary trust, that is, where the entitlement of a beneficiary to income, corpus or both is determined by the trustee exercising a power to make that selection from time to time, is in reality a bare trust; and
- Where a purported trust extension of the accumulation period fails and is of no effect.
Creation of Trusts
A trust is an equitable relationship which gives rise to personal rights and obligations, and to proprietary rights in the trust property. Notable revenue laws such as the Income Tax Assessment Act 1997 (Cth) and the Duties Act 1997 (NSW) often contribute to the familiar fallacy that a trust is an entity or legal person. A trust is a relationship governing the basis on which property is held. This is of course different to incorporated trust funds (which are afforded separate corporate legal personality), which merely use trusts in their investment structures.
Professor Scott’s definition is:
“The trust is the whole juridical device: the legal relationship between the parties with respect to the property that is its subject matter, including not merely the duties that the trustee owes to the beneficiary and to the rest of the world, but also the rights, privileges, powers and immunities that the beneficiary has against the trustee and against the rest of the world.” [3]
In Aussiegolfa Pty Ltd (Trustee) v Commissioner of Taxation[4] Steward J observed:
“…the term ‘trust’ refers to a legal relationship created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a special purpose”.
When considering trust arrangements it is important to keep in mind that a trust is an arrangement between people and property.
Trust Property
For a trust to exist, legal or equitable ‘trust property’ must be present to form the basis of the trust itself. In Federal Commissioner of Taxation v Thomas[5]the High Court held that a franking credit was not a separate source of income capable of being dealt with and distributed differently from the underlying cash dividends, which is a real item of property:
“ … the notion that franking credits are discrete items of income that may be dealt with or disposed of as if they were property under the general law… is contrary to the proper understanding of Pt 3.6 [Income Tax Assessment Act]. Franking credits are a creature of its provisions; their existence and significance depend on those provisions… Div 207 does not treat franking credits as a separate source of income capable of being dealt with and distributed.”[6]
When will something called a “trust” not be a trust?
There are numerous circumstances where the word ‘trust’ is used to describe a relationship that is not a trust in the full sense of the word.[7] For example, an incomplete gift which equity will perfect[8] may be described as a being held on “constructive trust” but the courts of equity will not describe the situation as an express trust.[9]
By way of example, a purported trust may fail because:
- It is impossible to ascertain with any certainty a class of beneficiaries;
- The property over which the trust is declared cannot be trust property;
- There was insufficiently clear conduct which demonstrated an intention to create a trust;
- The trust is a sham.
I have seen examples of all of these mistakes in my practice as a barrister.
Certainty of Object
As to (i), the objects (‘beneficiaries’) of a private trust must be identified with sufficient certainty for the trust to be valid. Mere difficulty in ascertaining the identity of the members of a class of beneficiaries does not render a trust invalid, but conceptual uncertainty will.[10]
Certainty of Subject matter
A trust may fail because the subject matter is not certain. The property upon which the trust is to operate must be clearly identified.[11] For example, placing “what remains” after a gift of “all my shares” on trust will likely be insufficiently clear for an inter -vivos trust, however the residuary of a will is always certain.
The beneficiaries of a discretionary trust must be defined so as to satisfy the “criterion certainty”. In McPhail v Doulton[12] a majority of the House of Lords held that a trust would be valid “if it can be said with certainty that any given individual is or is not a member of the class”.
Certainty of Intention to Create a Trust
As to the requirements of (iii), there need not be formal words as long as there is an intention manifested from all the circumstances that a trust be created.[13] In practice creatures known as precatory trusts are common, where the testator or settlor has used the word “trust” or “trustee”, but the document goes on to use words like “I desire” or “hope that my wife use this property to look after the children”, or “I recommend the house be…”. It is a question of construction, made in light of all the evidence, whether a trust was intended, or whether instead there was a beneficial gift to the donee with an unenforceable moral (rather than legal) obligation to use the property for the relevant purpose, noting that precatory words are not absolute barriers to the finding of a trust.[14] In Dean v Cole[15]the High Court held that no trust was created when a testator bequeathed to his wife his real and personal estate “trusting…she will during her life time or on her death divide…in fair just and equal shares among my children”.
There are also what are known as illusionary trusts, where no express trust exists at all because the settlor has done no more than create a revocable mandate. The concept of an illusionary trust is discussed in detail in Clayton v Clayton,[16]in which an illusionary trust was described as “a trust under which the [settlor acting as trustee] retains such control that the proper construction of the deed is that he did not intend to give or part with control of the property sufficient to create a trust”. More recently illusionary trusts and sham trusts have been the subject of an important decision of the English Chancery Division (Birss J) in JSC Mezhdunarodiny Promyshlenniy Bank v Pugachev & Ors.[17] (Pugachev’s case). Birss J found the description “illusionary trust” was unhelpful and analysed the overall effect of the trust deeds as “the True Effect of the Trust” before finding that the terms of the various trusts did not divest Mr Pugachev of the beneficial ownership he had of the assets he had transferred into the trusts. In substance the deeds allowed Mr Pugachev to retain his beneficial ownership of the assets. In reaching his conclusion his Honour, followed the decision in Clayton v Claytonthat:
“[W]hen considering what powers a person actually has as a result of a trust deed, the Court is entitled to construe the powers and duties as a whole and work out what is going on as a matter of substance.”
Birss J found that Mr Pugachev’s true intention was to retain control over, and beneficial ownership of, the assets that he had settled on the trusts. In such circumstances there could be no trust as Mr Pugachev as settlor had not manifested an intention of transferring a beneficial interest in the property to the discretionary beneficiaries named in the various trust deeds. Briss J found that Mr Pugachev regarded the trust assets as belonging to him and he intended to and did retain ultimate control of the trust assets.[18]
Revocable mandates are often seen where a debtor attempts to defeat his creditors by transferring his property on trust to a trustee to pay his debts. The question for the Courts will be: was it intended by the debtor that the creditors should be actual beneficiaries and the trusts should not be revocable, or was it for the debtor’s personal convenience and benefit?[19] In Beattie v Weine[20] the Court held that a voluntary transfer of property to a trustee to be applied for the benefit of the transferor in the absolute discretion of the trustee, could be revoked by the transferor and so no express trust was created, only a resulting trust in favour of the transferor.
However a trust may be held to exist if the terms of the document in light of all the circumstances indicate a trust over property was intended to be irrevocable. In Rostirolla v Fiakos (No 2)[21] Gyles J held that a life insurance policy was held on trust for certain creditors of the assured because of various informal arrangements that the creditors were aware of and the document created a gift over of the balance of any proceeds under the policy.
Similarly a direction as to management by the employment of a person will usually not create a trust. For example in Re Larkin the testator directed the trustees to employ his son to manage the trust estate on a fixed salary. The direction to the trustee was held not to give rise to a trust, although the mention of a fixed salary was recognised as an equitable interest by the Court.[22]
Further, even though the Crown can be the trustee of property, in public law the use of the word “trust” in relation to the Crown or a Government authority does not denote a trust enforceable in a court of equity.[23]
Sham Trusts
Lastly in the case of so-called “sham trusts” it is the existence of the intention to create a sham that is relevant. In Snook v London West Riding Investments Ltd [24] Lord Diplock described sham as:
“[A]cts done or documents executed by the parties … which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the factual legal rights and obligations (if any) which the parties intend to create”.
A sham must not only deceive but it must be intended to deceive.[25] A sham was found to exist in Raftland Pty Ltd v Federal Commissioner of Taxation,[26] the question before the High Court was whether the resolution distributing income from Raftland to the E&M Trust was a sham. The inquiry of the Court was limited to the effect of the resolution to distribute to a beneficiary.
In the context of a trust there is ongoing debate as to whether the trustee needs to be implicated in the sham. That is, whether they are required to have a common intention with the settlor that the trust is to have no effect. It will usually not be sufficient to establish that the trust is a sham by showing that only the settlor had a shamming intention.[27]
In Raftland Kirby J observed that a sham could be developed over time “if there was a departure from the original agreement and the parties knowing do nothing to alter the provisions of their documents as a consequence”.
The legal conundrum of whether a trust that began genuinely may emerge as a sham has been to subject of a paper by His Honor G.T Pagone to STEP[28] where his Honour commented that the question:
“…points to the need to be precise about what is impugned as a sham because what may be challenged as a sham may not be the trust itself but some step, act or thing done purportedly pursuant to the trust”.
His Honour commented, “the fact that a sham may also be a breach of fiduciary duty may not deny the sham its character of sham, nor otherwise deny the trust as otherwise effective to impose duties on the trustee”. His Honour noted that identifying a sham trust will be a question of proof, evidence and the correct allocation of the onus of proof.
When considering the sham claim in Pugachev’s Case, Briss J observed that “what may or may not be a sham are the acts or documents which purport to set up the trust”.[29] A trust deed is a sham if it is intended to mislead third parties and the court as to the true basis on which the assets are held:
“…I find that at all material times he (Mr Pugachev) regarded all of the assets in these trusts as belonging to him and intended to retain ultimate control. The point of the trusts was not to cede control of his assets to someone else, it was to hide control of them. In other words Mr Pugachev intended to use the trusts as a pretence to mislead other people, by creating the appearance that the property did not belong to him when it really did. The role of Protector was the means by which the control was exercised.”[30]
Birss J found that no other individual involved in establishing the trusts had “an intention independent of Mr Pugachev”.His Honour found that the requirement of a“shamming intention” would be satisfied if the trustee prepared and signed a trust deed acting entirely recklessly as to the settlor’s true intentions.[31]
Ultimately given Birss J’s findings on the true effect of the Trusts claim (that the Trusts did not divest Mr Pugachev of control), his Honour held that the trust instruments where not shams because they fulfilled his true intention to retain control of the assets. However, his Honour went on to comment that:
“[I]f the proper approach to the construction of these deeds was to lead to a conclusion that the Protector’s relevant powers are fiduciary, as Mr Patterson (the trustee) now says they are, and that in turn led to a conclusion that under the deeds Mr Pugachev is not the beneficial owner, then those deeds are a sham. The settlors intended to use them to create a false impression as to his true intentions and the trustees went along with that intention recklessly.”[32]
Birss J observed there were two inconsistent but arguable constructions open with regard to the terms of the trust deed:[33]
“When the validity or effect of the trust is challenged, the trustee can put forward emollient submissions about the Protector’s powers being confided and narrow as a result of their fiduciary nature. But in other circumstances, for example when Mr Pugachev needs collateral for a Bank loan, a completely different stance can be taken in relation to the very same instrument. Mr Pugachev can be presented as the owner of the assets.…”
“Whether or not sham is a perfect description is not clear but it does not matter….the whole scheme always was in truth that the settlor would exercise covert control of the trustee and both settlor and trustee always intended that that would be so. In that sort of case the word sham accurately describes the trust deed.”
“ However whatever label is to be applied to this case, in my judgment the combination of circumstances here means that the Court should not give an effect to these instruments that would result in the assets being regarded as outside Mr Pugachev’s ultimate control. The whole scheme was set up to facilitate a pretence about ownership (or rather the absence of it) should the need arise.”
Consequences of Trust Failure
If a trust fails for want of certainty of object, the property is held on an automatic resulting trust for the settlor, or the residuary beneficiaries under a will.
If a trust fails because both the objects and the intention of the settlor are uncertain, then the person to whom the property is given will retain it unfettered by any trust.[34]
Focus of Paper
As stated above, the focus of this paper is to examine some common mistakes seen in practice. It will center on three particular areas:
- In deceased estates where a testamentary trust has not been created under an will;
- Where a family discretionary trusts is in reality a bare trust not an express trust. That is, where the entitlement of a beneficiary to income, corpus or both is determined by the trustee exercising a power to make that selection from time to time; and
- Where a purported trust extension of the accumulation period fails and is of no effect.
Testamentary Trusts
Testamentary trusts are trusts that are established under a will. Wills, which include the words “Executors and Trustees of this my Will” do not necessarily give rise to a testamentary trust. A question of construction arises in a similar fashion to cases concerning certainty of intention (discussed above).
It is not uncommon for a will (after providing for legacies) to grant a life interest in the matrimonial home to the testator’s spouse and then to leave the “rest and residue of the estate” to the children of the testator who survive the testator in equal shares.
Sometimes, the will is drafted so that the residuary estate is left to the children as “tenants in common absolutely”. This is more likely to be a direct and absolute gift to the named beneficiaries under the will.
In these situations, the will often does not create a testamentary trust. Rather, “the rest and residue” of the estate is held by the “trustee” on a bare trust from which the property fully vests in the named beneficiaries, that is, the children of the testator in equal shares as tenants in common upon the death of the life tenant.
It may come as a surprise to the beneficiaries and the trustee that the property that formed the residue of their parents’ estate is not held on a testamentary trust, to be invested and distributed at the discretion of the trustees, among the beneficiaries; particularly when many years lapse before a distribution “under the will” is made.
This type of will, rather than creating a testamentary trust bequeaths a gift of a fixed share in the residue of the estate once a life interest falls in to the beneficiaries named in the will directly and absolutely.
A wrong analysis of what the testator intended creates all types of stamp duty and income tax complications. Consider a testamentary trust that was wrongly administered; the executor had no power to appoint trust income but the executor and surviving children have all filed tax returns on the basis that a testamentary trust was created and that the executor had the power to appoint income and capital to the named beneficiaries under the will. Everyone including the trustee will need to file amended tax returns, which can be extremely difficult, particularly if the error has gone unnoticed for many years.
In order to create a trust in a will, the language must show a sufficiently clear intention to create that trust.[35]
As Dixon CJ, Williams and Fullagar JJ in their joint judgment in Kauter v Hilton[36] stated:
“The mere fact that the donor intends the trust to take effect in possession upon his death does not make the gift testamentary. As it is pointed out in the joint judgment of Dixon J and Evatt J in Russell v Scott: ‘Law and equity supply many means by which the enjoyment of property may be made to pass on death. Succession post mortem is not the same as testamentary succession. But what can be accomplished only by a will is the voluntary transmission on death of an interest which up to the moment of death belongs absolutely and indefeasibly to the deceased.’”
The use of the words “trust and trustee” will not necessarily manifest an intention to create a trust if there appears that there was no intention to create a relationship so described.[37]
In Commissioner of Stamp Duties (Queensland) v Jolliffe[38] Knox CJ and Gavan Duffy J approved the following statement from Lewin on Trusts, 11th ed., at p. 85:
“It is obviously essential to the creation of a trust, that there should be the intention of creating a trust, and therefore if upon a consideration of all the circumstances the Court is of opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated.”
Four justices of the High Court in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd citing the majority in Jolliffewith approval said:[39]
“[I]n Kauter v Hilton, the Court treated Jolliffe as deciding, for the purposes of the legislation there in question, that ‘all the relevant circumstances must be examined in order to determine whether the depositor really intended to create a trust.”
In the context of a will, there is a strong presumption of an intention to create a trust if the donee is appointed trustee or the property is given “upon trust”.[40] However, a will may not give the property to the “trustees” for the benefit of persons named in the will, but rather bequeath those persons directly. For example, a will may state:
“I give devise and bequeath all of the rest and residue of my estate unto such of my sons, A, B, C, and D, as shall survive me and if more than one do so, then in equal shares as tenants in common absolutely”.
When a testator bequeaths property “absolutely” the beneficial and legal estate are usually held to pass directly to the donee, without the creation of a trust.[41] In Re Snowden (deceased)[42] Sir Robert Megarry VC held that the deceased, by telling her solicitor that she was leaving her estate to her brother absolutely in order for the brother to split up the estate among the relatives as he thought best, had not created a trust. At best, the deceased had imposed a moral obligation on her brother.
The phrase “as tenants in common absolutely” has been used in wills where a trust was in fact created.[43] As such, the use of the term “absolutely” does not necessarily mean the gift of both the legal and beneficial interest, but can merely mean “to the exclusion of others”. In this situation it is imperative that the intention of the testator is able to be ascertained from the construction of the will generally.
Where a testator gives property directly to the beneficiaries under the will, using language such as “I give and bequeath” and “I give and grant”, and the will makes no use of the terms such as “upon trust” and “for the benefit of”, although authorisation and powers may be given to the trustee of the will to deal with the property of the estate, these powers must be considered in the context of the direct bequests to the named beneficiaries to determine if a trust is created. It is not uncommon that the grant of authority and power to deal with the estate is given solely for the purpose of effectively administering the estate, and it cannot be construed as creating a continuing trust relationship.
A grant of powers and duties to persons named as trustees may indicate that a trust is created, for example, the power of sale of a property.[44] Often clauses in a will give the trustee certain discretionary powers, including a power of sale. However, this is not in itself enough to create a testamentary trust. It is necessary to look at the construction of the clause in the context of the will in its entirety, since such powers may only be operative if one or more of the beneficiaries named in the will predecease the testator leaving children.
A gift of the residuary estate may be to the testator’s respective donees, “as tenants in common absolutely provided always and I declare that should either of my said sons die in my lifetime, leaving child or children surviving, then such issue shall take, upon attaining the age of 21 years, and if more than one, equally between them, the share to which my said son would have become entitled had he survived me and attained a vested interest.”
Where such an event does not occur, because the named beneficiaries survive the testator, the power does not arise and cannot be relied upon to indicate that a trust was created. An absolute gift to the named beneficiaries may be given subject to an engrafted trust in certain events.[45] If such a trust fails for invalidity or lapses because the event does not occur, the initial gift is considered an absolute gift.[46]
It is not uncommon for a will to empower the trustee to retain part of the estate in the same state of investment as when the testator died, or to sell and convert into money such parts of the real and personal property as the trustee thinks fit, or to exercise any powers of a trustee for sale under the Trustee Act, or to apply all or part of the capital or income of a share to which any grandchild may from time to time be expectedly entitled for their maintenance, education and advancement as the trustee considers fit. The will may even go on to grant the trustee the fullest powers of investment. However, that does not of itself create a testamentary trust if such a clause relates to an engrafted trust that only arises in the event that a named beneficiary under the will predeceases the testator.
Where no child of the testator predeceases the testator, the engrafted trust fails, and the residuary estate is given as an absolute (i.e. beneficial) gift. The clause that authorises a trustee to invest the estate does not apply to create a trust estate over the residue of the estate for the named beneficiaries.
Where a will uses words of “direction”, “pray”, “trust” or “desire” it is always a question of intention whether a trust was intended, or whether there is a beneficial gift to the donee coupled with a moral obligation that is not binding on the donee. Where it is held that the words used do create a trust then the trust is identical to an express trust.
As Lord Lindley in Re Hamilton[47] observed:
“When a trust is once established, it is equally a trust, and has all the effects and incidents of a trust, whether declared in clearly imperative terms by the testator, or deduced upon a consideration of the whole will from language not amounting necessarily and in its prima face meaning to an imperative trust.”
As already mentioned, no trust will be valid unless the subject matter and the object of the trust are expressed. If on the face of the will it appears that no trust is created, the property is held on resulting trust for the residuary beneficiaries under the will.
In the case when the testator bequeaths the property “absolutely” to the donee, subject to life tenancy, they will have likely created no more than a bare trust. A bare trust is created when the trustee has no active duties to perform beyond the conveyance of the property to the beneficiaries when required to do so.
In Herdegen v Federal Commissioner of Taxation[48] the court noted that a “bare trustee” has no interest in the trust assets
“…other than that existing by reason of the office and the legal title as trustee, and without any duty or further duty to perform, except to convey it upon demand to the beneficiary or beneficiaries or as directed by them, for example, on sale to a third party.”
Bare trusts may be distinguished from other trusts by the absence of active duties of management.[49] While certain clauses may convey some duties and powers on the trustees, it is not uncommon that such powers never come into effect because they cease on the death of the life tenant or the engrafted trust falls in prior to the death of the testator.
A bare trust cannot exist in favour of a beneficiary of a deceased estate until the administration of the estate has been completed.[50] Once the administration of the estate is completed a bare trust remains, which vests in the beneficiaries upon the death of any life tenant, or when an engrafted trust fails. In other words, the property vests, in interest and in possession, in the beneficiaries named in the will on the death of the life tenant or failure of an engrafted trust and there is no longer any property the subject of a trust estate. It is well-settled[51] that there can be no trust without trust property and no change of trustee without a trust.
Another example is a will that ostensibly grants a life estate in the following terms:
“I give devise and bequeath to my daughter… a Life Estate in my principal residence… to reside therein free of charge during her natural life on the following conditions that my said daughter attend to the following:
- Pay all rates and taxes and other outgoings;
- Keep in a good habitable state of repair, fair wear and tear and damage by fire, lightning, flood, and other inevitable accident expected; and
- Keep it insured against fire, storm tempest and other insurable risks”.
This indicates the testator merely intended to grant a license to occupy the house provided the life tenant fulfilled those conditions. If the life tenant never satisfied any of the conditions imposed under the will it is possible the license to occupy never came into existence, or if it did for a time it was revoked when the life tenant failed to keep the property in good repair and pay all the outgoings (the condition of the life tenancy). In other words, the will granted a defeasible life estate which was bought to an end when the life tenant failed to fulfill the conditions on which the right to reside or license to occupy was given and the property devolves to the remainder man.
Discretionary Trusts
It is worth reiterating a discretionary trust does not have beneficiaries whose interest together aggregate the beneficial ownership of the trust property; a discretionary beneficiary is “an eligible object of the trust”.[52] “Instead there is a class of persons, usually described in wide terms, who are the objects of a power to appoint either income or corpus or both to selected members of the class. The members of a class are objects of a power, rather than beneficiaries in the strict sense… At best, they are potential beneficiaries, not beneficiaries”.[53]
Example 1
A Trust Deed that confers a power on a trustee to advance the income for the maintenance of beneficiaries before they reach a certain age, may not be a discretionary trust if the trustee has no right to select from a nominated class, either once or from time to time, which of the beneficiaries is entitled to receive a distribution of income or corpus or both.
A beneficiary of a class of possible objects of appointment has no proprietary interest in the trust assets, although the beneficiary has standing to compel the proper administration of the trust.
A trust deed that directs the trustee to hold property upon trust for:
“John and Fred (the children of the settlor) as shall attain the age of twenty-five years and if both of them in equal shares as tenants in common and in the event of neither child attaining a vested interest under the said trust, the corpus and income accrued thereunder shall be held in trust for Mary (the default beneficiary)”
is a trust under which the interests of the children being the named beneficiaries are vested upon the date of settlement, subject to being divested if neither of them attain the age of twenty-five.
If both children attain the age of twenty-five the property is not divested, and they retain the right to call for the transfer of the property from the trustee to themselves as beneficiaries.[54] In this scenario the deed of settlement does not establish what we understand to be a family discretionary trust where the trustee has the power to distribute income among named capital beneficiaries that might take under a default clause.
This is so even if the deed contains a power that allows the trustee to advance income to maintain a beneficiary until they have reached a certain age. The power of advancement is a passive duty if the trust exists only for the purpose of guarding the property prior to the conveyance to the beneficiaries upon the attainment of that certain age.
Where there is a gift to A when they attain a specific age with a gift over to B on failure to attain that age, A’s interest is not contingent upon attaining that age, but is a vested interest arising on the date of the gift, subject to being divested if they fail to reach the nominated age.[55]
Example 2
A settlor settles property on terms of the trust deed for the benefit of a named beneficiary; often a grandchild of the settlor, and the trust deed provides that:
“the trustee hold the income of the trust fund for the benefit of any capital beneficiaries as the trustee in its discretion determines, exclusive of the other or others of them, in such shares or proportions if more than one as the trustee thinks fit and may make provision for their respective maintenance or other benefit and the trustee may determine to accumulate all or any part of the income of the Trust fund in their absolute discretion.”
It then goes on to provide a default clause; if the trustee fails to make a determination prior to the end of a financial year, the income is applied for the benefit of a named default beneficiary, often the parent of the grandchild.
The trustee is directed to hold the capital of the fund in favor of the grandchild upon the grandchild attaining twenty-one years of age.
Often such Deeds provide the trustee with the power to delay vesting of the capital for a further period, say another ten years.
The trustee is also directed to use the capital to make provision for the capital beneficiary’s maintenance, education or other benefit as the trustee thinks fit.
In these settlements, typically the trust is named in the name of the capital beneficiary, e.g. William, who will be an infant at the time of settlement.
Until the vesting date, the trustee of the trust has an absolute discretion to hold the income of the trust for the benefit of one or more capital beneficiaries (often William’s siblings or parents) and to apply the income for the maintenance, education or other benefit of a capital beneficiary according to the needs and requirements of the members of that class of beneficiary.[56]
However, on William attaining the specified age, say twenty-one, the trust property vests in William absolutely. Despite very broad powers of investment that may be found in the trust deed, the trust is not what we understand to be a family discretionary trust that allows the trustee to continue to make distributions to other named capital beneficiaries, even if William has not called for the trust to be vested. From the vesting date the trustee ceases to have the power of appointment. The trustee may only deal with the trust capital and income in a manner consistent with the ownership interest of William.[57]
If, for example, the trustee extends the vesting date for another 4 years, until William turns 25, although such an extension of the trust period is within the trustee’s power and permitted by the trust deed, if the trustee exercises that discretion after William reaches his majority, which in New South Wales is 18, there is a question of whether the extension of the trust period is valid notwithstanding the terms of the trust deed.
Determining whether a power of variation conferred by the trust deed permits variation with retrospective effect is a matter of construction of the variation power.[58] It would be a surprising construction of a trust deed if allowed a trustee to revoke, add to, or vary any provision of the trust deed to the extent that doing so would affect an interest that has vested prior to the date of the purported variation, alteration or addition.
In the event that William survives until the vesting date, that is when he turns twenty-one, William’s right becomes a vested indefeasible interest in possession in the trust fund and a variation of the terms of the trust after that date would be void.
Usually the deed will provide for a gift over to another beneficiary on the failure of William to attain that age. But this does not make William’s interest contingent upon attaining that age. Rather, that interest is vested at the date of settlement, subject to being divested if William fails to reach the nominated age.[59]
On attaining the specified age the trust falls to William and the contingent interests of the default beneficiaries fall away, that is, there is no gift over that could be argued to result in the capital beneficiary having a contingent, defeasible interest in the capital of the trust. The trustee becomes subject to the duties of the trustee of a fixed trust to safe guard the trust estate and deal with it only on the terms of the trust, in this example as directed by William.
The “rule” in Saunders v Vautier essentially allows adult beneficiaries who enjoy an absolute and indefeasible interest in trust property to override restrictions imposed by the settlor in the trust instrument.[60]
On the basis of Anglo-Australian law, the capital beneficiary as an adult beneficiary who enjoys an absolute vested and indefeasible interest in the trust property has the power before the vesting date, which in the example of William is 21, to collapse the trust and call for a transfer of the legal title to the trust property to their own name.
Essentially, adult beneficiaries who are absolutely and indefeasibly entitled have the power to “overbear and defeat the intention of a testator or settlor to subject property to the continuing trust, powers and limitations of a will or trust instrument.”[61]
An amendment made after the beneficiary reaches the age of majority to extend the vesting date, which would prevent that beneficiary from being regarded as the absolute owner in equity of the trust property, would be open to challenge by the capital beneficiary as not being for a proper purpose.
The trustees must only exercise powers for the benefit of the beneficiary, not for an ulterior purpose.[62] In this regard, Lord Radcliffe pointed out in Pilkington v Inland Revenue Commissioners[63] that the court retains supervisory jurisdiction. The trustees would need to establish that the conferral of vested indefeasible rights in the trust property would be to the capital beneficiary’s disadvantage by demonstrating special circumstances that would prevent the rule in Saunders v Vautier being enlivened.
The courts have been rather careful to define in precise terms exactly what “special circumstances” mean.[64] Postponing a beneficiary’s entitlement in possession to the trust property may well be within power, but it is a sufficiently odd exercise of that power, which is meant to be exercised for the benefit of the beneficiary, to require some explanation by the trustee as to why it is done to be seen as bona fide and not expose the exercise of power being set aside by the court.
If a beneficiary, fully informed of the reasons for the otherwise invalid exercise of the power, does not then object to its exercise, they cannot later claim that the reasons were improper.
Unless the trustees are within power and act for the capital beneficiary’s benefit in amending the trust deed to extend the vesting date, thereby preventing the capital beneficiary from having an absolute indefeasible interest in the trust property at the age of 21, the trustees may not refuse to accede to a Saunders v Vautier direction given to them by the capital beneficiary after he or she reaches the age of majority and before they turn 21.
The Court of Appeal in Beck v Henley[65] noted:
“A power to end the settlement is a power on the part of the beneficiaries with a correlative liability on the part of the trustees. The exercise of the power does not involve the performance by the trustee of any part of their office as active trustee; instead it brings the office to an end.”
It can come as a shock when some trustees (usually the parents of the capital beneficiary) realise that once the capital beneficiary has an absolute vested and indefeasible interest in the trust property, the trustee ceases to hold the trust property pursuant to a discretionary trust and the property is held on fixed trust for the capital beneficiary. Further s 97 of the Income Tax Assessment Act 1936 operates to include in the capital beneficiaries’ assessable income the taxable income of that trust.[66] Similarly, any capital gain made by the trustee from the sale of the trust property will be included in any calculation of the capital beneficiaries’ income. Finally, distributions to other members of the class of capital beneficiaries that may have occurred after Williams turns 21 would have been made beyond power and would be invalid. The trustee would be obliged to reinstate the trust estate to the extent of the overpayment, by recourse to its own assets. The trustee would be entitled to recoup the overpayment out of any trust capital or income remaining in the trust. Ordinarily the over paid beneficiary would be required to reimburse the trustee for the overpayment.
A variation of a trust deed cannot disturb a vested right, that is the trustee must make any variation before William turns 21.
In Fischer v Nemeske Pty Ltd[67] the Court[68] said:
“It may be accepted that a power of amendment can be framed in such a away that bona fide exercise of it will defeat accrued but unsatisfied rights. But an amendment cannot take away (or somehow call back) an interest in property that has already passed or been created. I take this to be the import of Young CJ in Eq’s observation in Global Custodians Ltd v Mesh that the exercise of a power to amend cannot affect any vesting, which has already taken place, since the power to alter the trusts is itself an interest in the trust and its exercise cannot affect an already vested interest”.
Vesting generally
As a matter of trust law, the vesting of the trust does not automatically put an end to the trust or create a new trust over the trust assets.[69] Unless the beneficiaries have actually called for the trust to be wound up, the trustee will continue to hold the trust property for the named beneficiary under the same arrangements as exited prior to vesting, although the tax aspects of the arrangements have changed.
The vesting of a trust will not necessarily create a new trust, if no new trust is created s 104-55 of the Income Tax Assessment Act 1997 (Cth) (CGT event EI) will not operate. Whether a new trust is created will often depend on the construction of the trust deed. A trust deed drawn in a way that contemplates and facilitates events such as changing the investments, taking in new beneficiaries or amending the deed from time to time would tend to indicate “a singular continuing trust relationship”.[70]
However where the takers on vesting become absolutely entitled as against the trustee to a CGT asset of the trust (in the above example when William turns 21 as the trust property vests in him in interest and in possession at that time) s 104-75 (CGT E5) will operate. The time of the CGT event is when the beneficiary becomes absolutely entitled as against the trustee to the CGT asset. The trustee will make a capital gain if the market value of the asset at the date the beneficiary becomes absolutely entitled is more than its cost base. The beneficiary will make a capital gain if the market value of the asset on vesting is more than the cost base of the beneficiary’s interest in the trust capital to the extent that it relates to the asset.
If that does not occur, when there is a distribution of a trust asset to a beneficiary after the vesting date s 104-85 (CGT Event E7) will operate. The time of the CGT event is when the disposal to the beneficiary occurs. A beneficiary will make a capital gain if the market value of the asset at the time of disposal is more than its cost base.
A capital gain or loss from CGT events E5 and E7 by a beneficiary are disregarded if the trust interest was acquired for no consideration.
Finally, it is worth remembering that the rule in Saunders v Vautier does not empower the beneficiaries to act together to unilaterally vary a trust. Beneficiaries are absolutely entitled to terminate the trust but they are not absolutely entitled to vary the trust. In Re Dion Investments Pty Ltd[71] the Court summarised the position as follows:
“Under the principal in Saunders v Vautier… beneficiaries in that position are entitled to put an end to the trust and to require that the trust property be transferred to them. Their capacity to produce that result also enables them to require, as an alternative, that the property be held by the trustee upon varied trusts.”
The beneficiaries have the right to request the trustee to hold property on different trusts to the trusts on which the property is currently held. The trustee may however not be compelled to accept or perform those new trusts. In this case the beneficiaries can bring the trust to an end.[72] This may amount to a resettlement of the trust. The power to vary a trust has been held to be limited to the power to make changes to the terms of the trust that do not affect the “substratum of the trust”.[73]
In relation to all the Australian jurisdictions where the relevant Trustee Act follows s 57 of the Trustee Act 1925 (UK) the law as it currently stands is eloquently stated in Jacobs Law of Trusts[74] as:
“Apart from making adjustments to the terms of the trust or the rights of beneficiaries which are incidental to or consequential on the advantageous dealing, the court has no power to vary the trust.”
Trust extensions without power
From 31 October 1984, s 31 of the Conveyancing Act was repealed. It was relevantly in the following terms:
“(1) No person (in this section called a Settlor) shall settle or dispose of any property so that the income thereof shall be wholly or partially accumulated:
(a) For any longer period than:
(i) the life of the Settlor;
(ii) twenty-one years from the death of the Settlor; or
(iii) the infancy of any person who shall be living at the death of the Settlor; or
(iv) the infancy of any person who under the trusts of the instrument directing the accumulation would for the time being, if of the age of twenty-one years, be entitled to receive the income so directed to be accumulated;
(b) For the purchase of land only, or for any longer period than that mentioned in subparagraph (iv) of paragraph (a).
(2) In every case where any accumulation is directed otherwise than aforesaid, such direction shall be void, and the income so directed to be accumulated shall, so long as the same is directed to be accumulated contrary to the provisions of this section, go to such person as would have been entitled thereto if such accumulation had not been directed.”
That section, together with what was then s 31A of the Conveyancing Act reproduced the provisions of the English Thelluson Act which was passed to overcome the decision of Thelluson v Woodford.[75] That decision showed that it was possible to accumulate income for an extremely long period despite the modern rule against perpetuities. While these sections were repealed as from 31 October 1984, deeds and wills which came into operation before that date are still controlled by that section. Documents coming into operation after that date are governed by s 18 of the Perpetuities Act1984 (NSW).
Section 31 provided for the Settlor to choose one of four possible periods of accumulation. If the Settlor did not include the choice explicitly, the court would construe the instrument to discover which was the applicable period.[76] In summary, the four periods were (a) the life of the Settlor; (b) twenty-one years from the Settlor’s death; (c) the minority of a person alive at the Settlor’s death; and (d) the minority of a beneficiary.
It was common to see the vesting date defined to mean:
The first to occur of the following dates:
- the date specified in the Schedule as the vesting date (stipulated as the 21 anniversary of the date of the trust deed)
- the date 21 years after the date of the death of the last survivor of descendants now living of his late Majesty King George IV
- the date fixed by the trustee as the Vesting Date
Typically the deed then provided that on vesting, the income and corpus would be held for certain beneficiaries absolutely, and if there was more than one beneficiary, in equal shares as tenants in common. Usually on vesting, the trustee’s powers to appoint income or corpus to some but not all the beneficiaries, to change investments, to classify amounts as capital or income are at an end.
Unfortunately, it is not uncommon for the trustee and the beneficiaries to focus on para (b) and continue to operate the trust as if it continued to exist notwithstanding para (a). It may be years before it is drawn to the trustee’s or beneficiaries’ attention that the trust vested. In these cases, the trustee and the beneficiaries may attempt to exercise a clause that allows general amendment to the trust deed to extend the vesting date. As discussed above, any attempt to extend the vesting date after the trust has vested is void, and distribution to one beneficiary would be unauthorised and in breach of trust. The trustee would be obliged to reinstate the trust estate, but would be entitled to recoup from any trust assets remaining. The overpaid beneficiary would be obliged to reimburse the trustee for the overpayment. The underpaid beneficiary would have an equitable interest in the misapplied funds, which will be traced into the hands of the overpaid beneficiary. The taxation position is just as complicated. Distributions post vesting that are inconsistent with the vested beneficiaries fixed interests are void and amended tax returns, sometimes going back years need to be filed.
Example 1
In practice it was not uncommon for the period of accumulation in a trust to be for the minority of the youngest grandchildren then living. Sometimes the trustees, often the parents of the Settlor’s grandchildren, made a decision that it was in the beneficiaries’ interest to extend the period of accumulation under the original trust.
In an attempt to achieve this aim, the trustees (parents) sought to establish a new trust ostensibly with the capital settled on the original trust for a period that extended the life of the original trust to the life of the parent (trustee). This usually involved the exercise of a power of advancement under s 44 of the Trustee Act 1925.
For example, a Grandfather establishes a trust for three grandchildren in the 1950s. In the 1960s the trustees of the 1950s trust (the parents of the named beneficiaries) execute deeds, one for each of the named beneficiaries under the 1950s trust, purporting to settle subsequent trusts with money out of the assets of the 1950s trust. The accumulation period under the 1960s trust is until the death of the last surviving settlors of that trust, in our example the parents of the named beneficiaries.
In such a case, the purported 1960s trust extension of the accumulation period is void and of no effect by reason of the contravention of s 31 of the Conveyancing Act. Of course, since the enactment of the Perpetuities Act 1984 (NSW), the period adopted will usually be 79 or 80 years.
Furthermore it is not uncommon that the purported 1960s trust extension is made without power under the original deed, as the trustees of the 1960s trust were not granted power over the settled assets of the 50s trust to settle a new trust or trusts and thereby extend the period of accumulation.
In simple terms, the trustees of the 1960s trust had neither an express nor a statutory power under the terms of the original 1950s trust deed to extend the terms of the trust and any attempt to do so is of no effect.
In these circumstances, the grandchildren originally named as beneficiaries under the 1950s trust are entitled to the assets of the 1950s trust upon each of them attaining their majority, in cases of trusts established in the 50s that was twenty-one years; but see in this respect the now repealed s 36 of the Conveyancing Act. That Section was repealed consequent on the enactment of the Perpetuities Act 1984 (NSW).
Once the beneficiaries attained their majority, the assets over which the original trust was declared should have vested in them at that time. The fact that the 1960s trust extension of the accumulation period was of no effect had the result that any property acquired by the trustees of the 1960s trust out of funds settled on the 1950s trust would be impressed with the trusts established by 1950s trust deed. Any dealings by the trustees named in the 1960s trusts are of no effect and are void.
Notwithstanding that the beneficiaries named in the 1950s trust had not called for the transfer of the trust property to them, the 1950s trust had vested but had not come to an end when those beneficiaries attained their majority, that is twenty-one years, and the trustees named in the 1950s trust held that property on trust for those beneficiaries absolutely.
If, as was often the case, the 1950s trust conferred no active duties on the trustees other than to hold the trust property until the named beneficiaries attained a certain age, the original trustees had no interest or duties over the trust property after the trust vested. It was common that under the terms of that trust the beneficiaries were to take as tenants in common in equal shares. In this scenario once the last beneficiary attained his or her majority, the subject of the 1950s trust was no more than a bare trust of the property.
It often surprised the trustees to learn that the original deed provided no power to resettle the trust, or to vary the beneficiaries’ entitlement to take on the death of a beneficiary.
Furthermore, there was often no evidence that the sum settled on the original trust was used by the trustees to settle sub-trusts established in the 1960s.
Even if there was sufficient evidence to demonstrate that the settled sum was used to establish the sub-trusts, the clause relied upon to resettle the trust, which conferred a power on the trustees “in their absolute discretion to pay or apply for the benefit of the beneficiaries the whole of the settled property,” was unlikely to operate to justify the trustees attempted extension of the accumulation period.
The word “benefit” has been held to cover expenditure that would not strictly be considered “maintenance” or “education” but it is highly unlikely that a purported resettlement extending the terms of the original trust from the date the beneficiaries attained their majority to the death of the last settlor of the 1960s sub-trusts could be said to have been for the “benefit” of such beneficiary.
Section 44 of the Trustee Act 1925 (NSW) deals with the power of the trustee to apply capital money for the “advancement or benefit” of any beneficiary. It is doubtful in this example that the terms of the 1960s deed would be held to be more advantageous to the beneficiaries than those of the 1950s deed, often the latter deed is patently less advantageous. In which case, s 44 would not be enlivened and empower the 1960s deed because there was no “advancement”.
In this situation, any attempted resettlement would be nugatory. The beneficiaries, once the last attained their majority, were entitled to call for the trust property to be sold or transferred at their direction and the trustees were under a duty to advise the beneficiaries that this was the position.
In old trusts it is not uncommon that the trustees named in the original trust deed are deceased before the beneficiaries realise that the original trust had vested years ago and they were entitled to call for the trust property to be transferred to them.
The legal personal representative of the estate of the deceased trustee does not assume the office of trustee of the property. “The trustee is clothed with the office of trustee and an estate in trust property. On death of a trustee, the office does not devolve to the trustee’s legal personal representative.”
On the death of the surviving trustee of the original settlement, the office of trustee falls vacant.
Section 6(1) of the Trustee Act 1925 (NSW) provides that “a new trustee may, by registered deed, be appointed in place of a trustee, either original or otherwise, and whether appointed by the court or otherwise.” Section 6(2)(a) Trustee Act1925 further provides that a new trustee may be appointed “where a trustee is dead”.
In the case where the instrument creating the trust does not nominate a person or persons to appoint a new trustee, s 6(4)(b) Trustee Act provides that the appointment may be made “by the legal personal representative of the last surviving or continuing trustee”.
The legal personal representative of the estate of the last surviving trustee would have no authority to execute the powers of the trust under the original trust deed, although they could execute a deed appointing a trustee nominated by the beneficiaries. The alternative is to apply to the Court under s 70 of the Trustee Act for the appointment of a new trustee and then for a vesting order in the new trustee under s 71.
However, in the current example, the trust estate became a bare trust upon the beneficiaries attaining their majority and at that time the trustees had no active duties to perform other than to transfer the property to the beneficiaries when called upon to do so. In this situation the legal personal representative of the deceased trustee would have a power to transmit the property to those beneficiaries who are absolutely entitled.[77]
In the event that the trust property is real property, s 96 Real Property Act 1900 (NSW) operates to protect the trusts over the trust property. The legal personal representative of the deceased trustee could only be registered as a fiduciary registered proprietor and would hold any real property “for the persons for whom and of the purposes for which that estate or interest is applicable by law, but for the purposes of any dealings therewith the fiduciary shall be deemed to be the absolute proprietor thereof“.
Where legal personal representatives of deceased trustees are not amenable to executing transmissions of shares or the transfer of real property, or they themselves are deceased, the beneficiaries have to apply to the Supreme Court in New South Wales under s 70 of the Trustee Act (NSW) and Part 54 of the Uniform Civil Procedures Act 2005 (NSW) to seek orders that the Court appoint a new named trustee, the trust estate be executed and the sale of trust property occur under the supervision of the Court. This can be used as an alternative to seeking vesting orders in terms of s 71 of the Trustee Act (NSW). Often the only remedy available to a beneficiary is to approach the court for vesting orders.
Conclusion
This paper has sought to explore common difficulties in the practice of trust law. In particular, it has canvassed the complexities of declarations of testamentary trusts, the distinction between a family discretionary trust and a bare trust and attempted extensions of the accumulation period. The common thread in these situations is that the identification of successful and valid trust interests as distinct from failed trusts or other legal or equitable interests is often a matter of careful construction of the relevant circumstances.
[1] An earlier version of this paper was previously delivered by Louise McBride to the Society of Trusts and Estates Practitioners on 18 February 2015. Another version of the paper was published by Oxford University Press in Trusts & Trustees, Vol. 23, No. 2, March 2017, pp. 190-198. This paper was delivered at a seminar to the City of Sydney Law Society on 2 May 2019.
[2] Louise McBride is Junior Counsel in the state of New South Wales, practicing in Revenue Law.
[3] A W Scott and W F Fratcher, The Law of Trusts (Little, Brown and Company, 4th ed, 1987) vol 1 [2.4].
[4] [2018] FCAFC 122; 130 ACSR 1 [189].
[5] [2018] HCA 31 [17]; (2018) 264 CLR 382.
[7] Tito v Waddell (No 2) [1977] Ch 106, 227 (Sir Robert Magearry).
[8] Corin v Patton (1990) 169 CLR 540 approving Milroy v Lord (1862) 45 ER 1185; Costin v Costin (1997) 7 BPR 15.
[9] F W Maitland, A H Chaytor and W J Whitaker, Equity: A Course of Lectures by F W Maitland (Cambridge University Press, 2nd ed, 1936) 71.
[10] Re Gulbenkian’s Settlement Trust [1970] AC 508, 524.
[11] Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246; Sprange v Barnard (1789) 29 ER 320.
[13] Re Armstrong [1960] VR 202.
[14] J D Heydon and M J Leeming, Jacobs’ The Law of Trusts in Australia (LexisNexis Butterworths, 8th ed, 2016) 53-54 [5-06].
[17] [2017] EWHC 2426 (Ch) [167]-[169] (‘Pugachev’s Case’).
[23] Registrar of Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145, 162-163; Aboriginal Development Commission v Treka Aboriginal Arts and Crafts Ltd [1984] 3 NSWLR 502, 513; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 [44]-[65].
[25] Lewis v Condon (2013) 85 NSW 99 [59], [60].
[27] Shalson v Russo [2005] Ch 281 [190] (Rimer J).
[28] G T Pagone, ‘Sham Trusts’ (Address, Trust Symposium, Society of Trusts and Estate Practitioners, 9 March 2012).
[29] Pugachev’s Case (n 16) [145].
[34] Sale v Moore (1877) 5 Ch D 225.
[35] Re Armstrong [1960] VR 202.
[36] (1953) 90 CLR 86, 100; Russell v Scott (1936) 55 CLR 440, 454.
[37] Commissioner of Stamp Duties (QLD) v Joliffe (1920) 28 CLR 171 at 181; Hyhonie Holdings Pty Ltd. v Leroy [2003] NSWSC 624.
[40] Hammat v Chapman (1914) 14 SR (NSW) 416, 418.
[41] Heydon and Leeming, above n 13, 51 [5.02], 83 [7-16].
[43] Re Peacock, deceased, Midland Bank Executor and Trustee Co Ltd, v Peacock [1957] Ch 310.
[44] Kafataris v Deputy Commissioner of Taxation [2008] FCA 1454 [65].
[45] Lassence v Tierney [1849] 41 ER 1379.
[46] Hancock v Watson [1902] AC 14.
[49] Jessup v Lawyers Private Mortgages Ltd [206] ASC 3 at [54]; CGU Insurance Ltd v One.Tel Ltd (in liq) (2010) ALJR 576 [36].
[50] Commissioner of Stamp Duties (QLD) v Livingston [1965] AC 649.
[51] Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246, 283-285.
[52] Kennon v Spry (2008) 238 CLR 306 [125].
[53] Justice Paul Brereton, ‘A Trustee’s Lot Is Not A Happy One: Discretionary Trusts and Self Managed Superannuation Funds’ (Address, National Family Law Conference, 19 October 2010).
[54] Saunders v Vautier (1841) EWHC Ch 82.
[55] Collins v Equity Trustees (1997) 2 VR 166, 169; Phipps v Ackers (1842) 8 ER 539; see DKL Raphael, “Questions Raised in Phipps v Ackers” (2006) 80 Australian Law Journal 227.
[56] Re Bulowski [1954] QSR 286, 293-294.
[57] Hancock v Rinehart ( 2015) 106 ACSR 207 [128].
[58] Gra-Ham Australia Pty Ltd v Perpetual Trustees WA limited & Others (1989) 1 WAR 65, 85 (Malcolm CJ).
[59] Collins v Equity Trustees (1997) 2 VR 166, 169.
[60] CPT Custodians Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98 [43]-[44]; Beck v Henley [2014] NSW CA 201 [32]-[44].
[61] Goulding v James [1997] 2 All ER 239, 247.
[62] Vatcher v Paull [1915] AC 372, 378.
[64] Re Sandeman’s Will Trusts [1937] 1 All ER 368, 372.
[66] Commissioner of Taxation v Bamford (2010) 240 CLR 481, 507-508; Zeta Force Pty Ltd v Commissioner of Taxation (Cth) (1998) 89 FCR 70, 75.
[68] Beazley P, Barrett and Ward JA.
[69] Clay & Ors v James & Ors [2001] WASC 18 [11]; Fischer & Ors v Nemeske Pty Ltd & Ors [2016] HCA 11 [96]-[98] (Gageler J).
[70] Aussiegolfa Pty Ltd (Trustee) v FCT [2018] FCAFC 122 (Steward J); Federal Commissioner of Taxation v Clark [2011] FCAFC 5; 190 FCR 206 (Dowsett, Edmonds and Gordon JJ)
[71] (2014) 87 NSWLR 753 at [45].
[72] Ibid [46] (Barrett JA); CPT Custodians Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98 [44].
[73] Re Dyer; Dyer v Trustees, Executors & Agency Co Ltd [1935] VLR 273; Re Ball’s Settlement [1968] 1 WLR 899, 905 (Megarry J); Kerns v Hill(1990) 21 NSWLR 107.
[74] Heydon and Leeming, above n 13, 342 [17-06]; Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; Hancock v Reinhart (2015) 106 ACSR 207 [186]-[193].