Re Owies – Where Does It Leave Trustees When Exercising A Discretion?

A discretionary family trust generally gives a trustee discretion to distribute the income or capital for the benefit of one or more beneficiaries at the exclusion of others.

On 21 July 2022, the Supreme Court of Victoria Court of Appeal handed down its decision in Owies & Owies v JJE Nominees Pty Ltd [2022] VSCA 142 which highlights the emerging pattern of scrutiny by the Court of a trustee's exercise of its 'absolute' discretion.

Background

In 1970, Dr John Owies (John) and Dr Eva Owies (Eva) establish a discretionary family trust for the benefit of their family. John, Eva, and their three children, Michael, Deborah and Paul were the named beneficiaries of the trust. The trustee was JJE Nominees Pty Ltd (Trustee).