Can a beneficiary prevent an appointor being changed?
This was considered in Brady Street Developments Pty Ltd v ME Asset Investments Pty Ltd  NSWSC 1755.
A discretionary beneficiary under a discretionary trust applied to the Supreme Court of New South Wales for declaratory relief in relation to the appointment of another discretionary beneficiary (Mr Hannah) as the appointor of the discretionary trust.
Mr Hannah was also the solicitor for the trust.
It was held that in any given situation his powers as appointor under the trust deed, his duties as solicitor for the trust and his personal interest as a member of the classes of eligible objects (i.e. being a discretionary beneficiary) may be a source of conflict.
For these reasons, the Court held that he should not be allowed to become appointor under the trust.
However, a discretionary beneficiary has no proprietary interest in the trust, but only a “mere expectancy or hope of consideration by the trustee” (Gartside v Inland Revenue Commissioner  UKHL 6). So did the discretionary beneficiary (given his limited interest under the trust) have standing to bring a claim to invalidate the appointment of Mr Hannah as appointor? His Honour said the answer to this question was “Yes”, following the case of Yazbek v Federal Commissioner of Taxation  FCA 39.
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