In NSW, there is also the question of whether a change of trustee deed should be registered to be legally valid and take effect.

“On the question of registration, the case law on point remains unsettled, but there are some main views reflected in recent court judgements,” Hurley said.

Under the legislation contained in section 6 of the Trustee Act, a change of trustee deed should be registered in NSW if the trust deed specifically requires it, or legislation provides for it.

Additionally, section 6(1) states that “a new trustee may by registered deed be appointed in place of a trustee, either original or substituted, and whether appointed by the Court or otherwise”.

Hurley said in accordance with section 6(1), changes of trustee can be affected by registered deed if it is being done in circumstances under s 6(2) including where a trustee is dead, where a trustee remains out of NSW for more than one year without having properly delegated the execution of the trust, or where a trustee remains out of NSW for more than two years.

It also states a change can be made where a trustee desires to be discharged from all or any of the trusts or powers reposed in or conferred on the trustee, where a trustee refuses or is unfit to act in such trusts or powers, or is incapable of acting therein, or is a minor, where a trustee is removed under a power contained in the instrument creating the trust, and finally, where a trustee that is a corporation is dissolved.

“The primary judgement in Statewide Developments Pty Ltd (in liquidation) (receivers and managers appointed) v Azure Property Group (Holdings) Pty Ltd [2012] NSWSC 616 (Statewide) provides an interesting discussion of the relevant NSW legislation,” Hurley said.

In this case, Pembroke J was asked to determine if the words “may be appointed by registered deed” restricted a change of trustee for the change to be effective or whether a change must be by way of a registered deed.

The facts of the case show that Pembroke J was critical of the drafting of the section and formed his view based on the following grammatical observations of s 6, which stated:

“The first is that the word ‘may’ is classically permissive. The second is that the adverbial phrase ‘by registered deed’ must modify the passive subjunctive ‘may be appointed’. It must describe the way in which such an appointment is to be effected, namely by registered deed. It is not however a prescriptive formula. The use of ‘may’ makes clear that any such appointment may - or may not - be affected by registered deed”.

“This was a departure from the unreported decision of Young J 15 years earlier, who took the view that the plain meaning of the section required that a change of trustee be effective only if there was a registered deed,” Hurley said.

“Instead, Pembroke J preferred the interpretation of a Queensland Supreme Court justice in Muir J in Kendell v Sweeney & Ors [2005] QSC 64, who focused on the legislative intention which he found not to be restrictive or to override any express powers that the trust instrument conferred, with ‘statutory powers only relevant if the instrument is silent or if the provisions of the trust instrument do not apply’.”

Hurley said Pembroke J’s view has since been adopted in at least one case, however, the decision in Statewide was appealed and it was not necessary for the court of appeal to determine the dispute regarding s 6.

“It is recommended that a quality deed supplier be used for changes of trustees,” she concluded.