The decision of Harris v Public Trustee (Estate of Pennington) [2025] WASC 128 provided for the Court’s approval of a deed of arrangement dated 28 November 2024 to terminate a testamentary trust created by the Will of Joseph Pennington Senior, who passed away on 12 October 2023, who was the last surviving spouse of Melita Pennington, who passed away in August 2023. This case was heard and the decision delivered on the same day 15 April 2025. The testamentary trust held around close to $5 million.

Joseph Senior and Melita had two children, Bernice Harris (married to Mark Harris) and Joseph Pennington Junior (unmarried at the time). Melita predeceased Joseph Senior and therefore her equal part of the residual of Joseph Senior’s estate became equally divided between Joseph Junior and Bernice.

The residual would be held on testamentary trust by the Public Trustee with equal annual income distribution rights to Bernice and Joseph Junior until the 21st anniversary of Joseph Senior’s death (in the year 2044), at which time the testamentary trust would vest to Bernice and Joseph Junior in equal shares.

The testamentary trust deed terms included that if Bernice or Joseph Junior were to pass away before the 2044 trust vesting date then their respective children would receive their share equally, and if they had no children then the other sibling would receive their share.

Bernice had two children, Braxton and Landry, and did not intend to have future children, while Joseph Junior had no children and intended to have children in the future.

Bernice, Joseph Junior and the Public Trustee entered into the deed of arrangement to terminate the trust in large part due to the ongoing fees charged by the Public Trustee, which would be paid for 21 years until 2044 if the testamentary trust were not to be terminated.

Bernice amongst other things would use the estate funds received to pay down the mortgage on her residential home.

Joseph Junior had his will in place naming Bernice and her children as beneficiaries, which he would change if he had children to benefit his own children.

Here, the Court referred to the earlier judgments of Public Trustee as Executor of the Will of Fiedler (decd) v Fiedler [2007] WASC 296 (Fiedler) and Muhling v Perpetual Trustees WA Ltd as Executor and Trustee of the Estate of Herbert Ross Andrew (Dec) [2001] WASC 225 (Muhling) in relation to mandatory criteria for the Court to consider in making a discretionary order under section 90(1) of the Trustees Act 1962 (WA) including whether the Court’s approval of the deed of arrangement to terminate the testamentary trust would detriment unborn children under section 90(1)(c). As quoted from the decision in Muhling which in turn referred to a much older judgment:

A function of the Court on an application of this nature is to act as a substitute for the persons who are incapable, either because they lack capacity or because they are not born, to signify their consent… : Faye & Ors v Faye & Ors [1973] WAR 66.

The unborn children of Joseph Junior would be the primary consideration in this aspect, given Bernice had two children and Bernice deposed that she did not intend to have any future children. The Court here raised discussion of this issue from the judgment in Fielder:

[In Fielder...] counsel for the Attorney General submitted that the appointment of the Attorney General to represent unborn children in a matter which does not raise broad public interest issues is not consistent with the established understanding of the parens patriae jurisdiction of this court as it has developed and is exercised. [...] It was also not necessary to consider appointing another appropriate individual to represent the unborn children, as counsel for the Attorney General had, nonetheless, made extensive submissions.

As observed by Jenkins J in Fielder, there is undoubtedly a benefit to any unborn children in the limited assets of the estate being distributed in a fair manner between the testator's family as soon as possible and with as little cost to the estate and the various members of the family as possible. Any unborn children are members of the family and receive an indirect benefit from such a result. I consider the same position applies in relation to children who have already been born [Bernice’s two children Braxton and Landry].

The Court here found that neither Bernice’s children Braxton and Landry had any present interest in the trust property unless Bernice and Mark would pass away before 2044, being the testamentary trust vesting year of the 21st anniversary of Joseph Senior’s death. It was expected that both Bernice (42) and Joseph Junior (37) would live to and past the Australian average life expectancy and therefore past the year 2044.

If Joseph Junior were to have children and the testamentary trust had been terminated by approval of the Court, then those children would immediately benefit from that termination through the benefits being paid immediately to Joseph Junior, rather than waiting until 2044.

In concluding the Court stated:

Whilst there is a risk of detriment to the children - in the form of the extinguishment of their contingent interest - I have had regard to the degree of risk, and I am satisfied that it is a risk that an adult would be prepared to take to achieve the benefits to be derived from the arrangement. I have reached that conclusion having had regard to the very small likelihood that the children's contingent interest will ever crystallise; the immediate indirect benefits to the children from the arrangement; the immediate benefits to the welfare and honour of the family to which the children belong [i.e. to Bernice and to Joseph Junior]; the removal of the requirement to pay fees to the Public Trustee for 21 years; [...]

In this case none of the parties were in dispute. The first defendant, the Public Trustee, would not oppose the application and would abide by the decision of the Court.

There was no mention in this Judgment of whether Joseph Senior’s superannuation had been withdrawn before his death or otherwise dealt with by BDBN to his two adult children or whether his superannuation death benefits had subsequently passed to his estate legal personal representative under the superannuation trust deed or into a superannuation proceeds trust.

The Judgment also doesn’t go into the reason behind the Public Trustee being chosen as executor and trustee for the estate of Joseph Senior apart from that this was part of his Will which was prepared much earlier dated 7 August 2009, when Bernice and Joseph Junior were in their mid-late 20s.

In this case the parties have acted swiftly within a year and ten days of the testator passing away on 12 October 2023 (probate having been granted to the Public Trustee on 4 April 2024) having filed substituted originating summons to the Court on 22 October 2024 and signing the deed of arrangement to terminate the testamentary trust dated 28 November 2024, with the hearing and Judgment being delivered on the same day 15 April 2025.