Australian Karting Association Ltd v Karting (New South Wales) Incorporated

The Australian Karting Association Ltd (AKA) appealed to the New South Wales Court of Appeal against a decision concerning the nature of unpaid distributions from a discretionary trust. The dispute centred on whether certain amounts credited to beneficiaries' loan accounts, as reflected in the trust's audited accounts, constituted distributions that were payable at call. Karting (New South Wales) Incorporated was the respondent in the appeal.

The Court of Appeal was required to determine whether the trustee of the discretionary trust had intended to exercise its power of distribution in favour of the beneficiaries, thereby creating a debt payable at call. A key issue was the evidentiary weight to be given to matters stated or recorded in the audited accounts of the trust, particularly in the absence of a formal resolution by the trustee (which was a company) to distribute income to the beneficiaries. The Court also considered whether the approval of the audited accounts justified an inference as to the trustee's intention and an informal resolution to make distributions.

The Court of Appeal reasoned that the audited accounts, which acknowledged the unpaid distributions as debts owed to the beneficiaries, provided strong evidence of the trustee's intention to make those distributions. Section 1305 of the Corporations Act 2001 (Cth) was considered in relation to the evidentiary weight of such accounts. The Court held that the trustee's conduct, as reflected in the accounts, supported the inference that distributions had been made and that these amounts were therefore payable at call. The Court found no error in the trial judge's findings and dismissed the appeal.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal.