The Trust Deed No One Reviewed: Three Structural Defects That Took 39 Years to Discover
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Giuseppe Vartuli was a greengrocer who provided for his family through hard work and careful planning. In 1986, he settled a discretionary family trust, naming himself as both settlor and appointor. A corporate trustee, Deemhire Pty Ltd, held commercial property in Cabramatta and Liverpool along with a portfolio of listed shares. Four children, a growing number of grandchildren, and eventually great-grandchildren stood to benefit from the trust. For 25 years, nobody had reason to question it.
Giuseppe died in July 2011. For the next 14 years, his family continued to operate the trust, making annual distributions to the people they believed were entitled to receive them. Nobody realised that three structural defects in the trust deed had quietly narrowed the class of beneficiaries, eliminated the power to amend the trust, and left the appointor role permanently vacant. When the trustee finally brought the matter before the Supreme Court of New South Wales, the judgment exposed problems that had been embedded in the deed since the day it was signed.
On 2 April 2026, Meek J delivered judgment in Deemhire Pty Limited [2026] NSWSC 318. The decision exposes three structural defects in a standard precedent trust deed from the 1980s, and the 14 years of invalid distributions that followed. It has relevance for trust holders in Western Australia.
Three defects in one deed
The Vartuli Family Trust deed contained three structural problems, none of which were apparent on a casual reading.
The beneficiary class narrowed on the appointor’s death. Under clause 3(a), while Giuseppe was alive, the trustee could distribute income to a wide class of beneficiaries: his wife Rosina, his four children, their spouses, grandchildren, and relatives as defined in the deed. On his death, clause 3(b) operated to restrict distributions to a narrower group described as the “Eligible Beneficiaries”, being the nine persons listed in the Third Schedule at the date of the deed in 1986. This meant that grandchildren born after 1986, all great-grandchildren, spouses of children, and other relatives fell outside the class of persons to whom income could be distributed after Giuseppe died.
There was no mechanism for a successor appointor. The deed defined the appointor as Giuseppe, named in the First Schedule. It contained no provision for a replacement on his death, incapacity, or resignation. When Giuseppe died, the appointor role simply lapsed. There was no person who could exercise the power under clause 20 to appoint a new trustee, remove an existing trustee, or supervise the trust’s governance. The trust operated for 14 years without anyone holding that role.
The variation power was limited to the appointor’s lifetime. Clause 21 permitted the trustee to vary the trust “at any time during the life of the Appointor and prior to the termination of the trusts”, subject to three months’ notice to the appointor. Meek J considered whether the clause might be read to permit variation after the appointor’s death but before the trust’s termination. His Honour concluded that the better construction, reinforced by the requirement to give notice to the appointor, was that variation was not permitted unless there was a living appointor. The trust had therefore been incapable of self-amendment since 2011.
Nobody involved in the creation of the trust could explain why the deed was structured this way. Bruno Vartuli, Giuseppe’s eldest son, had nothing to do with setting up the trust and only learnt of its existence some time after 1986. The accountant who managed the trust from its inception, Frank Galluzzo, could not recall the reasons for the structure and believed the deed was a “standard precedent” used at the time. A second accountant, Nick Ussia, who witnessed Giuseppe’s signature as appointor, was equally unable to recall why the deed contained these provisions.
Fourteen years of invalid distributions
The consequences of these defects were not merely theoretical. After Giuseppe’s death in 2011, the trust continued to operate at a profit. Rosina, Giuseppe’s wife, informally directed distributions each year until her own death in March 2024. The trust accountant prepared the returns, Bruno and his brother Frank signed them, and distributions were made annually to what the family understood to be the beneficiaries of the trust.
The problem was that many of these distributions were made to persons who fell outside the “Eligible Beneficiaries” class that governed distributions after the appointor’s death. Across the 14 financial years between 30 June 2011 and 30 June 2024, the trustee distributed income to spouses of Giuseppe’s four children, to grandchildren born after 1986, to great-grandchildren, and to corporate entities. None of these recipients fell within the Third Schedule as “Eligible Beneficiaries” under clause 3(b).
This pattern of distribution went unchallenged because nobody, including the family, the accountants, and the trustee’s directors, realised there was a distinction between the two beneficiary classes or that the wider class had ceased to apply on Giuseppe’s death. The family was operating on the reasonable but incorrect assumption that the trust continued to function as it had during Giuseppe’s lifetime.
What the Court decided
The trustee sought relief principally under section 86A of the Trustee Act 1925 (NSW), which gives the Court power to approve arrangements varying the terms of a trust on behalf of persons who cannot consent for themselves.
Appointing a replacement appointor. Meek J declined to use section 86A to appoint an appointor, noting doubt about whether the statutory power extended that far. His Honour surveyed conflicting authority across jurisdictions. In the United Kingdom, the High Court in Bathurst v Bathurst [2016] EWHC 3033 had found no difficulty using variation legislation to determine who holds an appointor power. In New South Wales, Hammerschlag CJ in Eq had used section 86A for exactly that purpose in Michelakis v Kalumic Pty Ltd [2026] NSWSC 276, decided only weeks before Deemhire. In Victoria, McMillan J in Pickering [2016] VSC 71 was unconvinced that the Victorian equivalent conferred this power. In Western Australia, Master Russell in Dryandra Investments Pty Ltd [2024] WASC 248 held that section 90 of the Trustees Act 1962 (WA) could not be used to appoint a replacement appointor, on the basis that the statutory power is directed at persons with an “interest” under the trust, and an appointor as such does not hold a beneficial interest.
Instead, Meek J relied on the Court’s inherent supervisory jurisdiction over trusts: the power to secure the due execution of a trust, rather than to alter it. His Honour was persuaded that the appointor’s role, particularly the power to appoint or remove trustees under clause 20, was central to the due and proper execution of the trust. He foreshadowed appointing Bruno and Frank as joint appointors under this inherent power.
Restoring the beneficiary class. This relief was approved under section 86A. Meek J accepted that the amendment to clause 3(b), which would restore the income distribution class to its pre-death breadth, was in the interests of beneficiaries. His Honour’s reasoning rested on several grounds: the proposal did not create any broader class than had existed during Giuseppe’s lifetime; all eight surviving Eligible Beneficiaries consented to the arrangement; the amendment did not amount to a resettlement, because the continuity of trust obligations, trust property, and membership was preserved; and family harmony was a legitimate consideration, noting that “benefit” for the purposes of section 86A can include non-financial benefits such as familial harmony.
Variation power and appointor succession mechanism. The Court declined to grant relief on these points at this stage. Meek J reasoned that once an appointor was appointed, the existing variation power in clause 21 might become operative again, since it required a living appointor. No specific submissions had been addressed to the variation power or the proposed mechanism for future removal and substitution of appointors. The trustee was given liberty to return to court if further relief was needed.
What this means for Western Australian trusts
The judgment cites three decisions of the Supreme Court of Western Australia with immediate implications for trusts in WA.
In Blenkinsop v Herbert [2017] WASCA 87, the Court of Appeal accepted that the Court had power to remove a guardian of a trust if that was necessary to secure the due execution of the trust. In Dryandra Investments [2024] WASC 248, Master Russell extended this reasoning to hold that the Court had inherent jurisdiction to appoint a replacement guardian and appointor where the existing appointor lacked capacity. Her Honour also held that the statutory variation approval power under section 90 of the Trustees Act 1962 (WA) could not be used for that purpose, because the power is directed at persons with an interest under the trust, and an appointor does not hold such an interest in that capacity. In Panizza v Clathington [2025] WASC 246, Whitby J removed a guardian and appointor and appointed a replacement, confirming that the principles applicable to removal of a guardian and appointor holding a fiduciary role were akin to those applicable to removing a trustee.
If the appointor role has lapsed in a Western Australian trust, the statutory route to appointing a replacement under section 90 is doubtful. The inherent jurisdiction of the Supreme Court is available, but it requires proceedings in the Supreme Court, with the cost, delay, and uncertainty that entails. The Deemhire judgment confirms that where these structural defects exist, court intervention can resolve them; however, the process is neither quick nor inexpensive.
Where the trust deed contains a variation power that is still operative, the better course is to review the deed now, while the appointor is alive and has capacity, and insert a succession mechanism by deed of variation. Not every deed will permit this, which is itself a reason to review sooner rather than later.
Reviewing your own trust deed
The problems that surfaced in Deemhire were not exotic. They arose from a standard precedent deed executed by a careful family patriarch who was, by all accounts, acting in good faith. The trust operated for decades before anyone recognised the defects. The following questions are worth considering in respect of any discretionary family trust.
Does the trust deed name a successor appointor, or provide a mechanism for appointing one on the current appointor’s death, incapacity, or resignation? If not, the power to appoint or remove trustees may lapse entirely, as it did in Deemhire.
Does the beneficiary class expand to capture future generations, including grandchildren and great-grandchildren born after the deed was executed? Or is the class frozen at a point in time, or narrowed by a triggering event such as the appointor’s death?
Is the variation power limited by reference to the appointor’s lifetime, so that the trust becomes permanently incapable of amendment once the appointor dies? Clause 21 of the Vartuli Family Trust deed had exactly this limitation, and Meek J held that it rendered the power inoperative after Giuseppe’s death.
Have distributions actually been made in accordance with the deed, or has the trustee been distributing to a wider class than the deed permits? In Deemhire, this went undetected for 14 years. The trustee distributed to spouses, later-born grandchildren, great-grandchildren, and corporate entities without anyone realising that the permissible class had narrowed.
When was the trust deed last reviewed by a lawyer, rather than simply used as the basis for annual tax returns? The Vartuli Family Trust deed was a standard precedent from 1986 that went unreviewed for 39 years.
A sound deed is not the whole picture
The defects in the Vartuli Family Trust were structural: the deed itself was the problem. Problems may also arise, however, when the deed is perfectly adequate and the trustee does not exercise its powers properly. In Campion v Mainray Nominees Pty Ltd [2026] WASC 120, decided by the Supreme Court of Western Australia on 13 April 2026, Lemonis J confirmed that a trustee must follow a proper process when exercising its discretion, particularly where the person controlling the trustee is also a beneficiary competing with other family members for distributions. For a discussion of that decision, see our article “When the Trustee Does Not Consider: Campion v Mainray Nominees” (April 2026).
The role of professional advisers
Professional advisers, including accountants and financial advisers, often have the most regular contact with a family trust structure. They prepare annual returns, draft distribution resolutions, and correspond with the trustee each year. In many cases, the adviser is the only professional who sees the trust deed on a recurring basis.
In Deemhire, the accountants who managed the trust from its inception could not recall why the deed was structured as it was. The distinction between the two beneficiary classes, a distinction that governed every distribution made after 2011, was not picked up in the course of annual compliance work. This is not a criticism of the accountants involved; the deed did not make the distinction obvious, and the structural consequences of the appointor’s death were embedded in clauses that would not ordinarily be reviewed as part of a tax return.
Structural features of the deed that go beyond the current year’s distribution, particularly appointor succession, beneficiary class definitions, and limitations on the variation power, are worth flagging when they come to light. Where any of these features raises a question, a legal review of the deed can identify issues before they become problems.
A standard precedent, 39 years later
Giuseppe Vartuli’s intentions were good. He provided for his family through a trust structure that generated income from commercial property and listed shares for decades. But the trust deed he signed in 1986 was, by the accountant’s own description, a “standard precedent” that nobody reviewed. The structural defects in that precedent lay dormant for 25 years during his lifetime, then operated silently for another 14 years after his death before anyone recognised them.
The trust ran at a profit throughout. Distributions were made every year. The family remained harmonious. And yet, for more than a decade, the trustee was distributing income to persons outside the permitted class, operating without an appointor, and unable to amend the deed to correct any of it.
A trust deed review, conducted while the appointor is alive and the variation power is still operative, would have identified every one of these problems. The cost of that review is a fraction of what it costs to bring an application in the Supreme Court.
For a related discussion of how trust assets interact with estate planning, including why a will alone is not sufficient where a family trust is involved, see our article “Why Your Family Trust Will Not Follow Your Will” (April 2026).
How Opportuna Legal can help
Opportuna Legal advises on trust structuring, succession planning, and corporate governance for business owners and family groups across Western Australia. If your trust deed has not been reviewed since it was settled, or if you are uncertain whether the appointor role, the beneficiary class, or the variation power will operate as intended after the current controller’s death or incapacity, contact Opportuna Legal to arrange a trust deed review.
Contact: reception@opportunalegal.com.au | +61 8 6110 3748
Anthony Jarvis | Director, Opportuna Legal
Anthony Jarvis is the Director of Opportuna Legal, a corporate and commercial law firm based in Perth, Australia. Anthony advises private companies, founders, and boards on M&A, capital markets, corporate governance, and commercial contracts. Anthony advises business owners and family groups on trust structuring, succession planning, and corporate governance.
This article is general information only and does not constitute legal advice. Readers should obtain professional advice specific to their circumstances before acting on any of the information contained in this article.
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