Your client's family trust has distributed income the same way for eight years. Same formula. Same beneficiaries. Two children receive nothing. The trustee never asked about their circumstances. Never made any enquiries at all.
That was the problem in Owies v JJE Nominees Pty Ltd [2022] VSCA 142.
The Facts
A family trust settled in 1970 with assets of $23 million [1]. Three children (Michael, Deborah and Paul) each a primary beneficiary. The trustee's discretion was absolute and uncontrolled [24].
From 2011 to 2018, all net income went to Dr John (40%), Michael (40%) and Dr Eva (20%). Paul and Deborah received nothing. Distributions to Dr John and Dr Eva were lent straight back to the trust [120]. Deborah's health and financial situation were parlous [120-121]. She still received nothing.
The Court of Appeal held the trustee failed to give real and genuine consideration for 2017 and 2019 [13(a)]. Distributions were voidable [13(d)].
The Standard
Karger v Paul [1984] VR 161 sets the boundary. A trustee must act in good faith, upon real and genuine consideration, and in accordance with the purposes of the trust. If those elements are present, the court will not intervene.
Three things sank the trustee in Owies.
First, no enquiries. The trustee never enquired about Paul or Deborah's circumstances. Family breakdown did not relieve the trustee of that obligation [111]. The trustee must adequately inform itself to properly exercise the power [97].
Second, the formula. The 40/40/20 split was strikingly uniform [120]. No obvious reason why the trustee favoured those beneficiaries. A settled pattern repeated without reconsideration is inconsistent with an active exercise of discretion [125].
Third, the pattern viewed as a whole. The trial judge examined each year separately. The Court of Appeal held that approach understated the overall picture discernible from the pattern of distributions as a whole [125].
Need was not a qualifying factor [121]. But total exclusion of a beneficiary with demonstrable need, year after year, pointed to a lack of due consideration.
Practitioner Takeaway
Before 30 June, three things.
Do not recycle last year's resolution. Repeating the same formula without turning your mind to each beneficiary's circumstances is exactly what failed in Owies.
Make enquiries. Write to each beneficiary about their circumstances and needs. The trustee is not required to give reasons for its decision. But it must be informed before it decides.
Document the consideration. If the trustee decides not to distribute to a beneficiary, the decision should reflect actual consideration, not autopilot.
When did you last check whether your client's trustee is turning its mind to every beneficiary?
COMMENT (Jurisdiction Note)
A note on jurisdiction. Owies is a Victorian Court of Appeal decision and binds Victorian courts only. But the underlying principles are not Victorian. The High Court in Attorney-General (Cth) v Breckler [1999] HCA 28 adopted the same framework - a trustee's exercise of absolute discretion can be impugned where exercised without giving real or genuine consideration. That is nationally binding. Karger v Paul has been cited and applied across jurisdictions for decades. What Owies adds is the specific articulation - enquiries, not recycling formulas, viewing the pattern as a whole. A court in another state applying the same general principles would likely reach the same conclusion. The duty is not unique to Victoria. The case is.
General information only. This note was written as at 8 April 2026 and the law may have changed since. It is not legal or tax advice, does not take account of your circumstances, and must not be relied upon as a substitute for advice on your own matter.