The recent decision in the Western Australian Supreme Court (Allanson J) Blenkinsop v Blenkinsop Nominees Pty Ltd as Trustee for the Blenkinsop Family Trust [No. 2] is of significance as it discusses the role of a guardian/appointor under a discretionary trust deed.
The role of the guardian
The judgement outlines the powers of the trustee that requires the consent of the appointor. These powers include:
- To change the proper law for the deed
- To pay, apply or set aside the net income of the trust fund for an accounting period
- To transfer the whole or any part of the trust fund, or raise any sum out of the capital of the trust fund and pay that sum in addition to any income
- To lend any sum out of the trust fund to any general beneficiary or pay or apply any part of the capital or income for the benefit of an infant beneficiary
- To pay or transfer the whole or any part of trust fund to the trustee of any settlement under which all or any of the primary beneficiaries are beneficiaries
- To, by deed, revoke, alter or amend the trusts or confer any new additional powers on the trustee, or vary, delete or amend any of the trustee’s powers
The grounds of removal for the appointor
The grounds of removal for the appointor on which it was submitted was that the relationship between the appointors had deteriorated and thus they were unable to properly administrate the trust; additionally, there was a position of conflict by reason of all guardians also being beneficiaries. Although Allanson J recognised that the number of guardians and the requirement of unanimous consent may be impractical, the removal of guardians would disregard the intention of the deed. The argument that the guardians may have acted from self-interest is not the point as they are listed as beneficiaries and they may act in their own interests.
Implications of the decision
Allanson J assumed that the court has the power to remove a guardian exercising fiduciary powers pursuant to a trust deed; however, he did not discuss the potential power of the court to remove a person appointed under a trust, but not a trustee as it was not questioned. The self-interest of appointors hindering the trustee may ultimately lead to the detriment of all beneficiaries, however the removal of guardians would substantially depart from the terms of the trusts, and his Honour was not satisfied that it could be done.
If you are looking to establish a Family Trust or have more questions about a Family Trust, our experienced lawyers at The Quinn Group can assist you with all your requirements. Contact us today by submitting an online enquiry or call us on (02) 9223 9166.