Trustee Amendment Bill
TRUSTEE AMENDMENT BILL
Suspension of standing and sessional orders agreed to.
The Hon. J. H. JOBLING [3.14]: I move:
I commend the Trustee Amendment Bill 1996 to the House. As honourable members are aware, previously in many country towns in New South Wales small halls were held by trustees. The maximum amount of money that could be expended was the sum of $1,000. If the trustees wished to expend more money they were obliged to proceed to the Supreme Court to seek permission to do so. In this day and age it seems absurd to place such a restriction on people who are simply looking after the halls for which they are trustees. The bill will allow the trustees to expend a greater sum of money. Originally it was proposed that the maximum sum to be expended should be $100,000, but that provision has been amended in the other House to $50,000 or 30 per cent of the value of the land. The amendments are acceptable to the Opposition. On behalf of the Opposition I commend the bill to the House.
The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [3.16]: On behalf of the Government I am pleased to lend my support to the bill. A proposal to amend section 82A of the Trustee Act 1925 was first raised in April this year by the honourable member for Myall Lakes in another place. Section 82A of the Trustee Act sets a limit on the amount of trust money which a trustee is permitted to spend on improving or repairing buildings and other structures erected on land vested in the trustee. Currently the limits are $1,000 or one-third of the value of the land, whichever is the lower amount. In the case of the Public Trustee or a trustee company, the limit is $10,000 or such other greater amount as agreed to by the persons beneficially interested in the trust.
The bill introduced by the honourable member for Myall Lakes in another place originally sought to increase the limit to $100,000 in all cases, without a link to the value of the property. Section 82A was inserted in the Trustee Act in 1938. Prior to that it was necessary in all cases in which the Trustee Act applied to seek the consent of the Supreme Court to spend trust funds on repairs and maintenance. It is important to note that this section of the Trustee Act applies only where the trust instrument is silent on the power of a trustee to expend funds on repairs or maintenance. Any competent legal adviser preparing a will or a deed creating a trust which includes real property with improvements will make provision for expenditure of funds on repairs to and maintenance of the property. Where such a provision has been included in the trust instrument there is no need to rely upon the Trustee Act. Nevertheless, it is agreed that the current limit on expenditure is far too low and regard should be had to increasing this amount.
In considering the honourable member's proposal the matter was referred to the Trustee Advisory Committee, which is a body established under section 14E of the Trustee Act to advise the Attorney General on matters relating to the investment of trust funds. The Trustee Advisory Committee rejected the proposal to permit trustees to spend up to $100,000 on maintenance and repair. The advisory committee noted that in considering amendment to section 82A it was necessary to consider the competing interests of life tenants and beneficiaries. It was important not to enable trustees to subsidise a life tenant or one beneficiary at the expense of other beneficiaries. The advisory committee, however, recognised that the section needed to be revised, and indicated that it would support a proposal to amend the Act to enable a trustee to expend up to $50,000 or 30 per cent of the value of the land, whichever was the greater, on improvements or repairs without the consent of the Supreme Court.
It is important to retain the link between the amount which may be expended on repairs or maintenance and the overall value of the property. This is to ensure that trust funds are not unnecessarily expended to the possible detriment of beneficiaries. The provision gives particular protection to beneficiaries of a trust in circumstances where there is a life tenant in occupation of the property by preventing unnecessary expenditure upon the property for the benefit of a life tenant but for the potential disadvantage of other beneficiaries. The bills currently under consideration will amend the Trustee Act to enable a trustee to expend an ample amount upon repairs or maintenance while maintaining relativity to the value of the property. That limit is set in the Charitable Trusts Act as an amount above which a variation of trust requires the consent of the Supreme Court. The current provision is retained whereby, in a trust administered by the
Public Trustee or a trustee company, the amount may be higher if agreed by all beneficiaries of the trust. This bill is an example of the Government quite appropriately accepting an idea put forward by a member of the Opposition, but negotiating with that member and modifying the original proposal to arrive at an entirely supportable and sensible proposal. It is an example of the parliamentary process working appropriately in a case to rectify what was clearly an anomaly or difficulty in the Trustee Act.
Reverend the Hon. F. J. NILE [3.20]: Call to Australia supports the Trustee Amendment Bill. We think it is a very practical measure and we congratulate the Hon. J. H. Jobling and the Government for cooperating on its passage through the House.
The Hon. J. H. JOBLING [3.20], in reply: On behalf of the Opposition, and also my colleague in the other House, I thank honourable members for their support, particularly the Attorney General for his fulsome support and explanation of the legal situation. I commend the bill to the House.
Motion agreed to.
Bill read a second time and passed through remaining stages.
That this bill be now read a second time.