Trusts:  S.182 - the High Court applies Ward v Ward and creates three new Trusts

Within weeks of the Court of Appeal’s decisions in X v X and Ward v Ward the High Court has had the opportunity to take a more pro-active approach to the use of s 182 of the Family Proceedings Act – the section that allows the Courts to modify pre-nuptial and post-nuptial settlements.

Williams v  Williams (1 May 2009, French J) involved a couple who had owned a lifestyle block and who subsequently transferred it to a Trust.  There were four Trustees: the husband, the wife, a relative of the husband and a relative of the wife.  When the marriage failed the Trust became ungovernable and the wife applied to remove the Trustees.  Shortly before the hearing, the husband agreed that it was appropriate for the Trustees to go.  The other two Trustees had taken no role in the litigation and the Court decided that as the Trust was “deadlocked and dysfunctional” it was appropriate for all of the Trustees to be removed.  The Public Trust was appointed in their place.

The husband also agreed at the last minute that it was appropriate for s 182 to be invoked but the parties could not agree on the type of order that should be made.

There were two assets of the Trust:  the lifestyle block valued at $680,000 and a debt of $93,000 that the wife owed the Trust.   The Court has directed that there should be three Trusts:

(a)    A Trust containing 10% of the net sale proceeds of the Trust’s assets to be settled on the Trust for the benefit of the children.  The Public Trust is to be the sole Trustee.  The two children are to have vested interests and are to receive their interests on attaining the age of 25.

(b)    55% of the balance of the assets are to be re-settled on a Trust for the sole benefit of the wife.  The wife is to be a Trustee of that Trust.

(c)    45% of the balance is to be re-settled on a Trust for the husband, for his benefit.  He is to be a Trustee of that Trust.

The “wife’s” Trust is to have a greater share of the assets because following the separation the husband had occupied the property without paying rent and she had also suffered some other post-separation disadvantages which the Judge thought entitled her to a greater share of the assets.