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Whether my question on discretionary trusts is within the parameters of the restitution group I do not know, but I hope someone can enlighten me.

In the time between the establishment and winding up of a discretionary trust, in whom is the equitable interest in the relevant property vested. It is my understanding that the settlor does not retain it, the trustee only has the legal title and the objects of the trust have no proprietary interest in the assets. The latter only have the power to ensure that the trustee exercises its power to appoint.

Is this therefore a situation analogous to the Barclay's -v- Quistclose situation where the equitable interest in the loan funds "is in suspense" in the time between when the loan is made to the borrower and the carrying out of the purpose of the loan, as was stated in Re Northern Developments (per Megarry V-C)?

This issue seems to have profound implications for succession. For example, A puts his assets into a discretionary trust with the usual corporate trustee controlled by A or a reliable friend of A. A has no assets in his name when he dies. In his will A leaves everything to his wife and children in equal shares. Is there anything for the wife and children to inherit? Is this the essence of the litigation over the Michael Hutchence "estate"?

Any light that can be thrown on these issues would be greatly appreciated.

Peter Radan
Faculty of Law
University of Western Sydney Macarthur
P O Box 555
Campbelltown NSW 2560
AUSTRALIA

Tel: +61 (0)2 4620-3648 (Work)