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The Law Reform Commission received the following terms of reference from the NSW Attorney General on 28 April 2017:
Pursuant to section 10 of the Law Reform Commission Act 1967, the NSW Law Reform Commission is asked to review certain aspects of the law of trusts in NSW and report on whether:
there is a need to enact statutory provisions to limit the circumstances if any in which the beneficiaries of trusts, as beneficiaries, should be liable to indemnify the trustee or creditors of the trust, if the trustee fails to satisfy obligations of the trust, or remove such liability
it is appropriate for the liability of investors in unit trusts to be limited to the amount (if any) unpaid on their units in the same way that the liability of investors in shares is limited to the amount (if any) unpaid on their shares.
As part of this review, the Commission is to have regard to:
the perceived uncertainty of the case law on the liability of trust beneficiaries in New South Wales and elsewhere
the widespread use of trusts in commercial contexts as well as in the community generally
the need for safeguards to ensure that any legislation limiting or removing such liability does not support the avoidance of responsibility for insolvent trading.
The Commission is also asked:
to propose the terms in which any legislation should be enacted, and
to consult and report on whether New South Wales should adopt the recommendations of the Report, Trading Trusts - Oppression Remedies, January 2015, of the Victorian Law Reform Commission.