1

READING GUIDE S2 2016

Lecturers:
Richard Joyce (CE)
Vicki Vann
Natalia Antolak- Saper

TRUSTS 406

Tutors:

Natalia Antolak-Saper
Nadine Huels
Elyse Schachna
Jackie Weinberg

LAW4170

Prescribed material:

Bryan, et al, A Sourcebook on Equity and Trusts in Australia (CUP, 2016)

(SB)
Trustee Act 1958 (Vic) latest reprint (available from www.austlii.edu.au)

Recommended material

Cases:

Michael Bryan and Vicki Vann, Equity and Trusts in Australia (Cambridge
University Press, 2012) (Bryan and Vann).
Susan Barkehall Thomas & Vicki Vann, Trusts Lexis Nexis Study Guide
(3rd ed, Butterworths, 2016).
Ford & Lee et al, The Law of Trusts (Thomson Reuters, 2010-) (available
in electronic form from Westlaw AU via Law Library web-site) (Ford and
Lee)
Heydon & Leeming, Jacobs Law of Trusts in Australia (7th ed,
LexisNexis Butterworths, 2006) (Jacobs).
Many but not all cases are extracted in the case book. Some cases will
need to be read online.
If you do not wish to use the source book at all, you can use the online
cases. The Library has created links to cases or databases to assist you.

TRUSTS 406
LAW4170
2016 Reading Guide
Essential reading is marked with an asterisk
1.

Introduction and Classification of Trusts

Ford and Lee, chapter 1; Jacobs, chapters 1 3; Bryan and Vann Ch 13
1.1

1.2

Classification of Trusts
(a)

Express

(b)

Resulting

(c)

Constructive

Trust Structures

Afundamentaldistinctionexistsbetweentruststhatareforpersonsandtruststhatare
forpurposes.
2.

Creation of Express Trusts

2.1

Consequences of creating a trust

Mallott v Wilson [1903]2Ch.494;

2.2

Certainty of Intention
Ford and Lee, chapter 2; Jacobs, [501-509]; Bryan and Vann ch 14
Intention is a fundamental requirement for the creation of an express trust. An
express trust can be created by declaration or by transfer. Both methods
require intention.

Re Armstrong [1960] VR 202; SB 14.2a note 2

Paul v Constance [1977] 1 All ER 195; SB 14.2a note 2
Byrnes v Kendle [2011] HCA 26; SB 14.2a

Lewis v Condon [2013] NSWCA 204

Korda v Australian Executor Trustees (SA) Ltd (2015) 317 ALR 225;
[2015] HCA 6 per Gageler J at [108] [110].

Re Williams [1897] 2 Ch 12; SB 14.2b;

Chang v Tjiong [2009] NSWSC 122
Cobcroft v Bruce [2013] NSWSC 774 at [1-8]; ]15-21]; [38-64]; SB
14.2c

The intention must be immediate:

3
* Harpur v Levy [2007] VSCA 123 at [1]-[23], [24]-[30], [38]-[71], [96]-[102]; SB 14.2d

2.3.

Certainty of Subject Matter

Ford and Lee, chapter 4; Jacobs chapter 24 and para 523; Bryan and Vann ch 14
A trust (created voluntarily) requires presently existing trust property.

*Note, the principles concerning the distinction between presently existing

property and future property, which were covered in Equity, are examinable.
The cases, as you will recall, are Norman v FCT and Shepherd v FCT. You should
revise this material in advance of assessment in this unit.

Trustpropertymustalsobecertain:

Hunter v Moss [1993] 1 WLR 934 at 945-7; [1994] 1 WLR 452 at 453-459; SB
14.3a
Shortall v White [2007] NSWCA 372 at [31], [33] affirming White v Shortall
(2006) 68 NSWLR 650; SB 14.3b
Mussoorie Bank v Raynor [1882] App. Cas. 321 at 331-2.

3.

Trust Structures

3.1

Introduction
Ford and Lee chapter 5; Jacobs [247-263]; Bryan and Vann ch 13 DP
[18.80]

On the distinction between trusts for persons and trusts for purposes see
Morice v Bishop of Durham; SB 14.1.3
3.2

Modern Trust structures

Jacobs [310-316; 2901-2908]; Bryan and Vann
You may not be aware of many of the modern applications of trusts. Trust
structures are used for:

* public investment via the unit trust;

* retirement planning via the compulsory federal superannuation regime;
* tax effective income distribution via the discretionary trust.

3.3

Trusts and Powers

Ford and Lee chapter 12; Jacobs [524-529] and chapter 16; Bryan and
Vann ch 13 and ch 14
3.3.1 Classification
(a)

Fixed Interest Trusts

(b)

Powers of Appointment:
(i)

Special powers

(ii)

General powers

(iii) Hybrid powers

(c)

Exhaustive Discretionary Trusts

(d)

Trusts for Charitable purposes

3.3.2 Rights of beneficiaries and objects compared

A beneficiary under a fixed or unit trust has an equitable proprietary right to the trust
property, and those rights are capable of assignment.
An object under a discretionary trust does not have rights to the trust property, but
does have rights to enforce proper administration of the trust:
* Kennon v Spry per French CJ at [74] to [75], Heydon J at [148-162];
McPhail v Doulton [1971] AC 424 per Lord Wilberforce at 447-449; SB
14.4b
A person who is an object under a discretionary trust has no present
property right capable of assignment:

* Kennon v Spry [2008] HCA 56, per Heydon J at [160] to [162];

3.3.3 Certainty of Objects

For a fixed interest trust, list certainty must be satisfied:
McPhail v Doulton (Re Badens Deed Trusts) per Lord Wilberforce
above; SB 14.4b

It is not necessary to make a list of objects of bare powers and trust powers:
Re Gulbenkians Settlement [1968] 1 Ch. 126 at 134; SB 14.4a
McPhail v Doulton (Re Badens Deed Trusts) per Lord Wilberforce at
[450] to [457]; SB 14.4b
Re Manistys Settlement [1974] Ch. 17; SB 14.4b note 5
R v District Auditor No 3 Audit District of West Yorkshire [1986] RVR
24; SB 14.4b note 4
Further reading:
Creighton, P Certainty of Objects of Trusts and Powers: The Impact of

5
McPhail v Doulton in Australia [2000] 22 Sydney Law Review 93

3.4

Quistclose Trusts
Ford and Lee [1.3910]-[1.3970], [21040]; Bryan and Vann ch 14

Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; SB 13.2.1

and22.5a
Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at [1]-[4] and
[21]-[53], SB 13.3.5a

Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] UKHL 12 per Lord

Millett at [52] [103]; SB 22.5b
Salvo v New Tel Ltd [2005] NSWCA 281 at [33]-[54]
Quince v Varga [2009] 1 Qd R 359 at [25][40]

Legal Services Board v Gillespie-Jones; (2013) 300 ALR 430; [2013]

HCA 35 at [72] -[78]; [112] to [117]
3.5

Charitable Trusts

Ford and Lee, chapters 19-20; Bryan and Vann ch 16

(i)

Concept of charity
DP5 [29.10]; [29.15] and [29.25-30]; DP6 [29.15]; [29.20] and
[29.40-45]
* Statute of Charitable Uses; SB 16.2a
* Commissioner for Special Purposes of Income Tax v Pemsel [1891] AC
531; SB 16.2a note 1
* Dingle v Turner [1972] AC 601, at 614 onwards SB 16.8b
Re Segelman (decd) [1966] Ch 71;
Latimer v Commissioner Inland Revenue [2004] UKPC 13 at [29]-[37]
Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297; SB
16.8a

(ii)

The Head of Charity

Trusts for relief of poverty
*
*

Dingle v Turner [1972] AC 60; (above)

Downing v FCT (1971) 125 CLR 180; SB 16.3a

Trusts for advancement of education

Re Shaw [1957] 1 All ER 745; SB16.4a

See also Re Hopkins Will Trusts [1965] Ch 669 and Re Pinion [1965]

Trusts for the advancement of religion:

The Church of the New Faith v The Commissioner of Pay-roll Tax

(Victoria) (1983) 154 CLR 120 at 136, 148; 164-165; 173-174; SB
16.5a

United Grand Lodge of Ancient Free and Accepted Masons of England

v Holborn Borough Council [1957] 1 WLR 1080; SB note to 16.5a

Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1; SB

165b
*

Gilmour v Coats [1949] AC 426; SB 16.7a

Crowther v Brophy [1992] 2 VR 97; SB note to 16.7a

McCracken v Attorney-General for Victoria [1995] 1 VR 67 at 74-7

Trusts for other purposes beneficial to the community.

Incorporated Council of Law Reporting of The State of Queensland v

Federal Commissioner of Taxation (1971) 125 CLR 659 at 666-669;
SB 16.6a

A trust which is regarded as political in purpose will not be charitable in

the UK; this is no longer the law in Australia:

Aid/Watch Incorporated v Commissioner of Taxation (2010) 241 CLR

539; (2010) 272 ALR 417 at 421-2, 427-30; SB 16.7b
(iii) Trusts for mixed charitable and non-charitable purposes
Charities Act 1978 (Vic), Part 1B, s7M

(iv)

AnglicanTrustsCorporationOfTheDioceseOfGippslandvAttorney
GeneralForTheStateOfVictoria[2008]VSC352at[1][22]
Doctrineofcypres
Charities Act 1978 (Vic), s 2

4.

Statutory Writing Formalities

Ford and Lee, chapter 6; Jacobs [701-712]; Bryan and Vann ch 15

* Property Law Act ss.53, 54 and 55
*
*

DSS v James (1990) 95 ALR 615; SB 15.2b

Comptroller of Stamps (Vic.) v Howard-Smith (1936) 54 CLR 614 per

Dixon J; SB 9.7b

Halloran v Minister, National Parks and Wildlife Act (2006) 224 ALR 79 at
[69]-[82]
Grey v IRC [1960] AC 1 at 12-13 and 15-16; SB 9.7c
Adamson v Hayes (1973) 130 CLR 276; SB 15.2 note 2
PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241; [249-52]
Hagan v Waterhouse (1992) 34 NSWLR 308 at 385-6

5.

Constituting the Trust

Ford and Lee, chapter 3; Jacobs, chapter 6; Bryan and Vann ch 9 and 15
For the trust to be valid, trust property must be vested in the trustee. This is the
question of whether the trust has been completely constituted. In trusts by
declaration there is typically no issue of complete constitution. See:
Paul v Constance (above)

The question of constitution usually arises in trusts by transfer. As a trust by transfer

usually involves a voluntary transfer, the rules governing gifts will determine
whether the trust property has vested in the trustee. It will be sufficient if the trust
property has passed to the trustee in equity. The rules for gifts are studied in
Equity. You are expected to know them for this unit.
If the trust is not completely constituted, it will fail. Equally, a failed gift will not be
interpreted as a declaration of trust.

6.

Property Law Act 1958 (Vic.) s.134

Jones v Lock (1865) LR 1 Ch App 25
Paul v Constance (above)
Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185; SB 9.2a
Corin v Patton (1990) 169 CLR 540 per Mason CJ and McHugh J at 549-554
and 556-559 and per Deane J at 577-580; SB 9.2b
Marchesi v Apostolou [2007] FCA 986 at [56] to [77]
Norman v FCT (1963) CLR 9 per Windeyer J at 26-31; SB 9.3a and 9.4a

Duties and powers of trustees

Ford and Lee, chapters 9 & 10; Jacobs, chapters 17 & 18; Bryan and Vann ch 17
and 18
There are three main sources of a trustees duties:
terms and conditions contained in the trust deed
equitable principles
statute
We will be mostly concerned with equitable principles, although you should be aware
that the particular terms and conditions of the trust instrument may override these
equitable principles.
There is important legislation which governs trustees: Trustee Act 1958 (Vic), as
amended by the Trustees and Trustee Companies (Amendment) Act 1995 (Vic).
The statute is important to determine the trustees obligations in relation to investment
of the trust property. Relevant statutory provisions will be noted to the extent that they
affect a trustees equitable duties.

Read:
*J Debeljak, Trustees Powers of Investment: The Impact of the Trustees and Trustee
Companies (Amendment) Act 1995 (Vic.) (1997) 5 Current Commercial Law 99
A useful statement of trustees duties can be found in Green v Wilden Pty Ltd [2005]
WASC at [1]-[11], [466]-[511], [857]-[859]
Duties relating to the exercise of a trustees powers of investment are especially
important. On the meaning of investment under the Trustee Acts see:
*Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225
6.1

Duty to comply with trust deed

A trustees duty includes the duty to adhere to and carry out the terms of the trust
as set out in the trust instrument, unless otherwise authorised by the court.
As part of the obligation of complying with the trust deed, the trustee must
ensure that distributions from the fund are only made to people who are entitled
to distribution according to the trust deed. Distribution to persons other than
those entitled under the deed will be a breach of duty unless the trustee has
followed procedures set out in the Trustee Act s. 33 or the trustee is otherwise
entitled to rely on a defence.
Further, a trustee may only invest the trust fund in investments that are
authorised by the trust deed, legislation or the court. (Jacobs [1802]; Ford & Lee
[10010]-[10030], [101000])
Trustee Act 1958 (Vic) ss 4-12F, especially s 5

6.2

Equitable Principles
A trustee is a fiduciary see topics 1 and 2.1 above. All fiduciaries are subject to
the conflicts and profits rules:
Recall from Equity:
Keech v Sandford (1726) Sel Cas CL 61; 25 ER 223
Chan v Zacharia (1984) 154 CLR 178
In addition, equity specifies particular duties applicable to trustees. Many of
these specific duties are simply aspects of the fiduciary duty of utmost loyalty,
but others are duties that arise out of the specific role of the trustee in relation to
the trust property, and some are a mixture of the two.
(i)

Duty to avoid conflicts of interest

A trustee must avoid situations where it has a conflict of interest and

duty or a conflict of duty and duty (regarding the latter, recall
Farrington v Rowe McBride & Partners [1985] 1 NZLR 83) The more
usual conflict is a conflict between the trustees personal interests and
its duty to act solely in the interests of the beneficiaries.
Recall: Boardman v Phipps [1967] 2 AC 46;
(a)

A trustee is generally not permitted to purchase trust property,

for example.

Clay v Clay (2001) 178 ALR 193 at 208-210

(b)

In addition, a trustee must keep the trust assets separate from

other non-trust assets which may be held by the trustee
(sometimes referred to as the duty not to mix trust assets).
*

(ii)

Australian Securities Commission v AS Nominees (1995)

133 ALR 1 at 12-15, 62; 13 ACLC 1822 at 1830-3

Duty to act gratuitously

Equity prohibits a trustee from profiting from its trust.
Williams v Barton [1927] 2 Ch 9
In Re Drexel Burnham Lambert UK Pension Plan [1995] 1 WLR 32
at 36-7, 39-42
This equitable duty is often overridden by a provision in the trust
instrument specifically authorising the trustee to obtain remuneration.
In addition a court may order that a trustee be remunerated. See
Trustee Act 1958 (Vic) s. 77.

(iii)

Duty to act personally

(a)
At equity a trustee is required to act personally and is not able
to delegate its powers and discretions without express authority,
except in cases of necessity. For example: Re Hays Settlement Trust.
Most modern trust instruments would contain an express power to
delegate. See also Trustee Act 1958 (Vic) s.30.
(b)

However, delegation is distinguishable from agency and equity

will permit a trustee to appoint agents to implement the
trustees decisions. See also Trustee Act 1958 (Vic) s. 28, 30,
36(1).

(c)

The trustee must take care to select only suitable persons as

agents and to supervise the proper performance of their
functions, as far as possible.

10

Speight v Gaunt (1883) 22 Ch D 727; SB 17.3.9a

Dalrymple v Melville (1932) 32 SR (NSW) 596; SB 20.3.2d
(d)

As an extension of the duty to act personally, a trustee must

not fetter the exercise of its discretions and must not act
under the dictation of another person.
Re Brockbank [1948] Ch 206
* Re Mulligan [1998] 1 NZLR 481;

(iv)

Duty to act in the interest of beneficiaries and to get in trust assets

(a)
A trustee must act solely in the best interests of the
beneficiaries, which has been held to comprise their best financial
interests. Acting in the best interests of the beneficiaries can involve
consideration of arrangements which are in the beneficiaries interests
overall.
*
*
*

Trustee Act 1958 (Vic) s.7 (2) (a)

Cowan v Scargill [1985] Ch 270; SB 18.5a
Harries v Church Commissioners [1992] 1 WLR 1241 at 12434, 1246-8, 1249-51; SB 18.5b
Asea Brown Boveri Superannuation Fund No1 Pty Ltd v Asea
Brown Boveri Pty Ltd [1999] 1 VR 144 at 159-161

Trustees also have an obligation to get in trust assets for the benefit of the
trust and to make investments.

*
(v)

Permanent Trustee v Perpetual Trustee (1994) 15 ACSR 722 at

722-6, 728-31

Duty to act with reasonable prudence

In carrying out the fiduciary obligations in relation to property, the trustees

conduct will be measured according to the standard of reasonable
prudence.
*
(a)

Trustee Act 1958 (Vic) s 5-8, 12C and 12D

A trustee is required to act as a prudent business person would act in
considering the interests of a person for whom he or she felt morally bound
to provide. This general standard may be higher in the case of a professional
trustee. There is also now a statutory standard of prudence.

(b)

The standard of prudence is particularly relevant in an investment context

and precludes investments of a speculative nature.
* Speight v Gaunt (1883) 22 Ch D 727; SB 17.3.7a
* Bartlett v Barclays Bank Trust Co Ltd [1980] Ch 515 at 529-35, 537-8;
SB 17.3.7b

11

Australian Securities Commission v AS Nominees (1995) 133 ALR 1 at

12-15, 62; 13 ACLC 1822 at 1830-3
Nestle v National Westminster Bank [1993] 1 WLR 1260 at 1266-9,
1274-7, 1280-1, 1281, 1284-5; SB 18.4b
* HLB v Trust Company Ltd [2010] QCAT 40
Specific defences apply in the context of investment duties:
*

Trustee Act ss 12C, 12D

J Debeljak, Trustees Powers of Investment: The Impact of the Trustees and

Trustee Companies (Amendment) Act 1995 (Vic.) (1997) 5 Current
Commercial Law 99

(c)

A trustee has a duty to seek advice on matters outside the trustees expertise,
such as the making of investments:

(vi)

Trustee Act 1958 (Vic) ss. 7(2) (d), 7(4)

Duty to act impartially

A trustee must act impartially as between individual beneficiaries and
fairly as between groups of beneficiaries. However, what is the extent
of this duty?

Trustee Act 1958 (Vic) s. 7(2)(c)

Nestle v National Westminster Bank [1993] 1 WLR 1260; above; SB
17.3.8b
Re Mulligan; above
VBN v APRA (No 5) [2006] 92 ALD 259 at 345

(vii)

Duty to keep accounts and inform.

(a)

Trustees have a duty to keep proper accounts and records of the trust
fund and to provide information to beneficiaries about the financial
state of the fund. The duty to inform extends to telling the
beneficiaries of their rights under the trust instrument.

(b)

A trustee must allow the beneficiaries to inspect trust documents (Re

Londonderrys Settlement [1964] 3 All ER 855; SB 17.3.6C but the
trustee is not required to disclose its reasons for making its decisions
and accordingly it is under no duty to disclose internal deliberative
documents such as its minutes or confidential correspondence
between trustees.
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 407-8,
431-7, 442-7;
Spellson v George (1987) 11 NSWLR 300 at 315-6 ; SB 17.3.6a

12

Mandie v Memart Nominees Pty Ltd (as trustee for Mandie Family
Trust) [2014] VSCA 181

Rouse v IOOF (1999) 73 SASR 484 at 484-7, 495-501

Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 SB 17.3.6c
McDonald v Ellis (2007) NSWLR 605; SB 17.3.6e
Breakspear v Ackland [2008] EWHC 220 (Ch) at [15]-[73]

6.3

Exercise of power or discretion

A bare power and a trust power both contain a discretion to be
exercised.Atrusteehasadutytoconsiderwhetherornottoexercisea
discretionarypower:
Re Gestetners Settlement [1953] Ch 672 at 688
Re Hays Settlement [1982] 1 WLR 202 at 207-214

McPhail v Doulton per Lord Wilberforce (above);

Kennon v Spry per Heydon J (above);
A trustee who does not turn his or her mind to the question will have failed
to exercise the duty (Turner v Turner [1984] Ch 100).
Where a trustee has been vested with a power or discretion, the court will
prevent him or her from exercising it improperly, but otherwise will not
interfere. This principle applies generally, not only to powers of
appointment but to other sorts of powers and discretions (such as powers of
investment).
Tempest v Lord Camoys 21 Ch. D 571
In addition, a trustee must exercise the discretion in accordance with the
purpose for which the power was conferred.

Karger v Paul [1984] VR 161; SB 17.3.10.1a

Curwen v Vanbreck Pty Ltd [2009] VSCA 284 at [6-14]; [24-25] and
[33-50]
Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276 per Callaway JA
esp at 282 -285 and Batt JA at 285-6.
* Finch v Telstra Super Pty Ltd [2010] HCA 39 esp at [28-37]; [57-66];
SB 17.3.10.1b
Dunstone v Irving [2000] VSC 488 at [97]-[128]

A trustee should not exercise its powers for the purpose of benefiting a nonbeneficiary. See Hillsdown Holdings PLC v Pension Ombudsman [1997] 1
All ER 862

13

7.

Defences and limitations on liability

The trust deed may provide that the trustee is not liable for certain types of
breaches. Such a provision will be closely scrutinised by the courts.

Armitage v Nurse [1998] Ch 241; SB 20.3.1a

Green v Wilden Pty Ltd [2005] WASC 83 at 481-493, 858
Wilden Pty Ltd v Green [2009] WASCA 38 at [157] to [163]
MJ Jacometti Pty Ltd v Boomeroo Nurseries & Wholesale Supplies Pty Ltd
[2011] VSC 612 at [40] to [50]

Trustees who have acted honestly and reasonably may be protected from liability:

s 67 Trustee Act

Bartlett v Barclays Bank Trust Co Ltd [1980] Ch. 515 at 537-8 (above)
Green v Wilden Pty Ltd [2005] WASC 83 at 504-511
Beneficiaries may consent to conduct that would otherwise be a breach of
duty:
Spellson v George (1992) 26 NSWLR 666 at 679 -685; SB 20.4a

8.

Rights of trustees
Ford & Lee, chapters 13, 14 ; Bryan and Vann ch 19
We will be concentrating on two of the trustees rights.
8.1

Right of indemnity

(i)

Out of trust assets

A trustee who has properly incurred expenses on behalf of the trust is able to
pay those expenses out of trust funds, or be reimbursed from the fund if the
trustee paid the expenses:
Trustee Act s. 36(2)
Re Raybould [1900] 1 Ch 199; SB 19.3a
Gatsios Holdings v Kritharas Holdings [2002] NSWCA 29 at [1]-[35], [40][42], [46]-[50];SB 19.3b
Nolan v Collie (2003) 7 VR 287 at 302-8; SB 19.3c
Hayman v Equity Trustees [2003] 8 VR 557 at 566-70
A significant consequence of the trustee having a right of indemnity against
trust assets is that the trustee obtains a lien over the fund.
*

Octavo Investments v Knight (1979) 144 CLR 360;

Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226
at 244-247; SB 19.2a

There are limitations on the availability of the right of indemnity. The right
may be lost, or possibly excluded.

RWG Management Ltd v CCA (Vic) [1985] VR 385 at 385, 388-9, 392-6,

14
397-402
JA Pty Ltd v Jonco Holdings (2000) 33 ASCR 691 at [50], [86]-[88]
Statutory provisions exist to make directors of corporate trustees liable in
certain circumstances:

Corporations Act s.197]

(ii)

8.2

Against beneficiaries personally

Hardoon v Belilios [1901] AC 118; SB 19.4a
J W Broomhead (Vic.) Pty Ltd (In Liq.) v J.W. Broomhead Pty Ltd [1985]
VR 891 at 893-895; 923, 930 -941; SB 19.4b
Balkin v Peck (1998) 43 NSWLR 706 at 710-11, 713-15

Right to approach the Court

Macedonian Orthodox Community Church St Petka Incorporated v His
Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese
of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [33][48], [56]-[65], [67]-[74], [192]-[198]; SB 19.5a
* Order 54, Rules of Supreme Court (Vic)

9.

Rights of beneficiaries
9.1

Right to call for trust property

Saunders v Vautier (1841) 4 Beav 115; 41 ER 482
Sir Moses Montefiore Jewish Home v Howell and Co (No 7) Pty Ltd [1984] 2
NSWLR 406 at 411 and 420
Beck v Henley [2014] NSWCA 201 at [2]-[20], [25] [44], [72] [85]
CPT Custodian v Commissioner of State Revenue (2005) 221 ALR 196; at
[47] to [51]
Perpetual Trustee (WA) v NASO (1999) 21 WAR 191 at 196-199
Stephenson v Barclays Bank Trust Co Ltd [1975] 1 All ER 625

9.2

Right to remove trustee

Trustee Act ss.41, 48

Hancock v Rinehart [2015] NSWSC 646 at [118]-[336].

Monty Financial Services Ltd v Delmo [1996] 1 VR 65 at 66-8

10.

Remedies for breach of trust

Ford & Lee, chapter 17; Bryan and Vann ch 20 and 21

9.1Personal remedies
The personal remedies of equitable compensation and account of profits
are available against a defaulting trustee.

15
The appropriate person to commence an action for breach of trust is
usually the trustee:
Young v Murphy [1996] 1 VR 279; SB 20.2a
The obligation on the trustee is to reconstitute the fund; not to
compensate individual beneficiaries.
* Permanent Trustee v Perpetual Trustee (1994) 15 ACSR 722 at 728
The remedies of account for profits and compensation are alternatives;
* Tang Man Sit v Capacious Investments Ltd [1996] AC 514 at 518-26
Specific rules apply to compensation for breach of trust, rather than
compensation for breach of fiduciary duty, generally:

recall: Re Dawson [1966] 2 NSWLR 211;

Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15 at

[64]-[70]
Compare this approach with the recent decision in the UK:
AIB Group Plc (UK) v Mark Redler & Co [2014] UKSC 58

Proprietary remedies

As you should recall from Equity, a very important consequence of being a

beneficiary of a trust is the ability to obtain a proprietary remedy. In Equity
you studied the principles of tracing and how a beneficiary can obtain
proprietary rights over assets which have been purchased with beneficiary
funds and trustee funds, or transferred into the hands of third parties:

16

Recall
Scott v Scott (1962) 109 CLR 649,
Foskett v McKeown [2000] 3 All ER 97, per Lord Millett.
Re Diplock
You are expected to know these principles.
Devayne v Noble (Claytons Case) (1816) 1 Mer 572; [1814-23] All ER 1.
Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22
Re French Caledonia Travel (2003) 184 FLR 280 [2003] NSWSC 1008; per
Campbell J at [61]-[65]; [85]-[86], [149]-[172]
Re Halletts Estate (1880) 13 Ch D 696 at 706 onwards
Re Oatway [1903] 2 Ch 356
You are expected to know these principles.