Tuesday, September 22, 2015

Another reminder to ‘read the deed’

As highlighted in last week’s post, the need to ‘read the deed’ before making any variation to a trust deed is critical (see for example http://blog.viewlegal.com.au/2015/09/always-read-deed.html).

The case (Jenkins v Ellett [2007] QSC 154) mentioned in passing, in a previous post (see - http://blog.viewlegal.com.au/2010/09/when-power-to-vary-is-not-power-to-vary.html) and again last week, remains a leading example of this mantra.

As usual, a full copy of the decision is available via the following link - http://www.austlii.edu.au/au/cases/qld/QSC/2007/154.html

Broadly the situation in this case was as follows:

A principal under a trust deed had the ability to remove and appoint the trustee of the trust.

The principal purported to rely on a power of variation to remove himself as principal and name a replacement, which effectively changed the schedule to the trust deed that automatically appointed the principal’s legal personal representative (LPR) as his replacement on death.

When the LPR of the principal purported to exercise the principal powers following the death of the original principal and was challenged, the Court held that the previous attempted variation was invalid, effectively confirming the LPR’s authority to act as the principal.

The attempted variation was held to be invalid because the relevant power in the trust deed was crafted so that it could only be used in relation to the ‘trusts declared’, and in particular did not extend to varying the schedule to the trust deed.

Until next week. 

Image credit: Jenni C cc