Background
Barratt Nominees Pty Limited was the trustee of the Barratt Property Trust, a discretionary family trust established in 1977. The deed provided that the trust’s “Distribution Date” would be the earliest of three dates: 2 May 2027, 21 years after the death of the last surviving descendant of King George VI who was alive when the trust was created, or an earlier date appointed by the trustee.
In November 2020, the trustee executed a deed poll purporting to extend the fixed period from 50 years to 80 years, moving that component of the distribution-date definition to 2 May 2057. The amendment power prohibited any amendment extending the Distribution Date beyond the latest date provided by the deed. The trustee sought judicial advice that it could administer the trust on the basis that the extension was valid; alternative claims, including statutory amendment or rectification, were held over.
The Court’s Holding
Parker J held that the purported 30-year extension was outside the trustee’s amendment power and therefore invalid. Because the amendment power was ambulatory, what the deed “provided” had to be assessed in the circumstances existing when the power was exercised. In November 2020, the royal-lives period was certain to continue until at least November 2041 and therefore then supplied the deed’s latest permissible date.
Although it was overwhelmingly likely that the royal-lives period would extend beyond May 2057, that was not certain. Extending the fixed period to that date therefore could postpone vesting beyond the royal-lives limit and conflict with the rule against perpetuities applicable to the trust. The Court advised that the trustee was not justified in administering the trust on the footing that the amendment was valid, while confirming that the invalidity did not affect the deed poll’s other amendments.
Key Takeaways
- A restriction tied to the latest date “provided” by a trust deed may be assessed when an ambulatory amendment power is exercised, rather than solely when the deed was executed.
- A fixed distribution date cannot be extended beyond a royal-lives period merely because the royal-lives period is highly likely to expire later; certainty matters.
- The Court left open possible alternative relief and granted the trustee 28 days to restore the proceedings to pursue other or amended claims.
Why It Matters
The decision limits trustees’ ability to prolong older family trusts whose deeds combine a fixed termination date with a royal-lives perpetuity backstop. An amendment that creates even a possibility of vesting outside that backstop may exceed the deed’s amendment power and offend the applicable perpetuity rule.
Trustees approaching a fixed distribution date should examine the precise amendment language and applicable perpetuity regime before relying on an extension. The judgment also indicates that narrower amendments or other forms of court relief may remain available, without deciding whether such relief should ultimately be granted.