Broad Powers, Unintended Consequences: Trustee's Authority to Remove Appointor Upheld
Staley v Hill Family Holdings Pty Ltd [2025] QCA 95
In Staley, the Queensland Court of Appeal was asked to consider an application to invalidate a Deed of Variation that resulted in the removal of an appointor by the trustee, without the knowledge of the appointor. The Court held that the Deed of Variation was valid; the trustee enabled by the broadly drafted power of variation clause in the trust deed.
This decision highlights a two-fold issue that resulted in the reshaping of traditional dynamics between trustee and appointor:
the lack of consideration given to the succession of the appointor role; and
the unintentionally broad variation powers offered to the trustee.
Background
The Hill Family Trust (Trust) was established by deed of trust dated 19 February 2002 (Trust Deed). Hill Family Holdings Pty Ltd (Trustee) was appointed as the initial trustee of the Trust, the directors and shareholders of which were Mr Hill and his wife, Mrs Hill.
Mr Hill was the initial appointor of the Trust. The Trust Deed provided that upon Mr Hill ceasing to be an appointor, his legal personal representatives would become the appointors of the Trust.
Mr Hill died on 18 April 2008 leaving a will that appointed his two daughters, Mrs Staley and Mrs Porter as executors (i.e. the legal personal representative of his estate). By virtue of the provisions of the Trust Deed, Mrs Staley and Mrs Porter became appointors of the Trust. Mrs Hill became the sole director and shareholder of the Trustee.
In the years following Mr Hill’s death:
the Trustee made an oral declaration to remove Mrs Staley, her husband and their lineal descendants as beneficiaries of the Trust. Contemporaneously, Mrs Hill appointed Mrs Porter as a director of the Trustee;
the Trustee purported to execute a Deed Poll to remove Mrs Staley as appointor and appointed Mrs Porter as a substitute appointor of the Trust (this Deed Poll was accepted to be invalid); and
Mrs Porter appointed her daughter Mrs Michelmore as director of the Trustee. Mrs Porter died shortly after Mrs Michelmore’s appointment and Mrs Staley became the sole appointor of the Trust.
Mrs Hill then died on 29 December 2022 and the relationship between Mrs Staley and Mrs Porter became fractious. In 2024 the Trustee executed a Deed of Variation to:
amend the terms of the Trust Deed to include provision that where the appointor is Mrs Staley, the Trustee may remove Mrs Staley as the appointor provided that the Trustee nominates an appointor, who is not the Trustee, as the replacement appointor; and
remove Mrs Staley as appointor and appoint a new appointor. While not being expressly defined, the new appointor was identified in the Deed of Variation as Mr Porter, being Mrs Porter’s husband.
Mrs Staley was not made aware of the Deed of Variation removing her as an appointor of the Trust until such time as she made enquiries into Mrs Hill’s estate and sought to exercise her power as an appointor to remove and replace the Trustee by appointing Staley Management Pty Ltd as trustee. Upon learning of the Deed of Variation, Mrs Staley sought to have it set aside.
In her submissions, Mrs Staley claimed that she was the sole appointor, while the respondent argued that the correct appointor was Mr Porter. Mrs Staley sought declarations from the Court that:
the Deed of Variation removing her as an appointor was invalid; and
the deed of removal and appointment prepared by Mrs Staley replacing the Trustee in 2024 was valid.
Upon considering of the relevant provisions of the Trust Deed, the primary judge held the Deed of Variation by the Trustee was valid.
Mrs Staley appealed the primary judge’s decision claiming that:
allowing a trustee to remove an appointor would destroy the substratum (purpose or foundation) of the trust as the appointor has a position of power over the trustee; and
the Deed implied an exclusion of power to vary the trust so as to remove an appointor.
The Court rejected Mrs Staley’s arguments finding that:
the broad drafting of the variation clause empowered the trustee to … ‘vary all or any of the trusts, powers or provisions declared or included in this Deed’, including removing and replacing an appointor and therefore the Deed of Variation was valid and enforceable; and
the change of appointor did not vary the underlying purpose of the Trust. Mrs Staley was unable to persuade the court that the purpose of the Trust included a supremacy of the role of appointor. Notably, the Deed of Variation did not remove or limit the role of the appointor.
In reaching its decision, the Court noted that if the trustee powers of variation had been limited, or, had the position of appointor been explicitly protected so to have prohibited forceful replacement, the Deed of Variation would not likely have been upheld.
Key Takeaway
It is widely agreed that both the appointor and trustee hold positions of control in relation to discretionary trusts. Most commonly, the function of the appointor is to remove and replace the trustee, however trust deeds may also be drafted, or varied, to require the trustee to first obtain the consent to the appointor before making certain decisions. Notably, as demonstrated in Staley, where variation powers contained in a trust deed are unintentionally broad, there is risk that the appointor may be unilaterally removed and replaced by the trustee.
This decision reiterates that the construction of trust deeds turns on the particular provisions of the trust deed in question. Therefore, it is important to ensure that trust deeds are appropriately drafted and succession of key roles reflect your intentions to avoid future dispute.
For more information, please contact:
Alasdair Woodford
Principal
T 03 5225 5217 | M 0436 456 144
E awoodford@ha.legal
Tayla Berger
Senior Associate
T 03 5226 8559 | M 0407 825 365
E tberger@ha.legal
Joseph Flanagan
Senior Associate
T 03 5226 8504 | M 0491 307 550
E jflanagan@ha.legal
Ella Handreck
Lawyer
T 03 5225 5206
ehandreck@ha.legal
