In the recent WA case of Mercanti the issue was the control of a family trust.
The trust had been established in the late 70s and functioned as the operating entity for a significant family business. In 2004 the control of the trust (and therefore family business) was handed over to the youngest son who became the managing director as well as the appointor and guardian (replacing the father) of the trust. Nine years later, there was a falling out between the father and the son. While the son was overseas on a business trip, the father took control of the trust by removing the son as a director and CEO.
The son exercised his powers as appointor to replace the current trustee company with a company he controlled and subsequently re-established his control over the business.
The Court of Appeal upheld the son’s actions. The 2004 changes were effective and the son’s exercise of the power to change trustees was not defective (as being a fraud on the power of appointment) as the exercise was to return the trust to its previous position.
Case Reference [2016] WASCA 206.
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