This week’s session examines the Queensland Court of Appeal’s decision in Staley v Hill Family Holdings Pty Ltd [2025] QCA 95 and its implications for the concept of “substratum” in determining whether a trust variation constitutes a resettlement. The case highlights that replacing an Appointor under a broad amendment power does not alter the trust’s substratum or amount to a new trust. We will also consider broader principles of resettlement, contrasting the substratum test with a duty-focused analysis, drawing on Buckle, Clark, and other leading cases.
Pre-reading includes the Staley decision and the draft “Resettlements” chapter from Rankine and Cartland on Trusts, which critiques traditional formulations of resettlement and explores the fiduciary burden test.
Case Summary – Staley v Hill Family Holdings Pty Ltd [2025] QCA 95
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Background: The Hill Family Trust deed allowed amendments to “all or any” provisions. The trustee used this power to insert a clause enabling it to remove the Appointor and replace her. Litigation followed over whether this amendment exceeded the trustee’s powers or destroyed the trust’s substratum.
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Court’s Reasoning:
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Clause 14.01’s broad drafting authorised amendments beyond beneficiary interests.
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Replacing an Appointor did not destroy the substratum, as the trust’s purpose remained to benefit the family.
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Clauses on Appointor appointment did not restrict amendment powers.
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Equitable oversight, not implied limits, safeguards against abuse.
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Outcome: The appeal was dismissed; the variation was valid and effective.
Discussion Focus
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Limits of using “substratum” as a test for identifying resettlements.
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Fiduciary burden test: resettlement occurs when amendments impose new dispositive duties on trustees.
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Practical tax implications, including CGT event E1 and trust continuity issues.
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Comparison with Commercial Nominees, Clark, and Roome v Edwards.
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Drafting and litigation lessons from the Staley decision.
This session will challenge the adequacy of the substratum approach and explore a more precise fiduciary-duty-based analysis, crucial for advising on variations and restructures.
Please see below link to case materials which is assumed reading in order to participate in the discussion:
Staley v Hill Family Holdings Pty Ltd [2025] QCA 95
Rankine and Cartland on Trusts Draft Chapter 10 – Resettlements
Discussion led by Adrian Cartland.