Barry v Borlas Pty Ltd - [2012] NSWSC 831

Supreme Court

New South Wales

Case Title: Barry v Borlas Pty Limited & Ors

Medium Neutral Citation: [2012] NSWSC 831

Hearing Date(s): 12 July 2012

Decision Date: 12 July 2012

Jurisdiction: Equity Division - Duty List

Before: White J

Decision:
Make orders 1, 3 and 4 in accordance with the summons.

Catchwords: TRUSTS - discretionary trusts - power of court to approve advantageous dealings - alteration of powers conferred on trustees - application by trustee to amend vesting day notwithstanding clause that trustee does not have power to vary trust deed insofar as it fixes vesting day - beneficiaries of trust support proposal - whether in the court's opinion it is expedient that the transaction take place - whether proposed amendment in management and administration of trust property - amendment to advance objectives of trust and minimise tax impacts - s 81 Trustee Act 1925 (NSW)

Legislation Cited: Trustee Act 1925

Cases Cited: Stein v Sybmore Holdings [2006] NSWSC 1004
Perpetual Trustees WA Limited v Attorney-General (Western Australia) (1992) 8 WAR 441
Riddle v Riddle [1952] HCA 12; (1952) 85 CLR 202

Texts Cited:

Category: Principal judgment

Parties: Robert Hugh Barry (Plaintiff)
Borlas Pty Limited (1st Defendant)
Nicholas Hugh Barry (2nd Defendant)
Kate Elizabeth McFadyen (3rd Defendant)
Andrew McCowan Barry (4th Defendant)
Sabrina Gai Barry (5th Defendant)

Representation

- Counsel: Counsel:
D Barlin (Plaintiff)
M Bennett (Defendants)

- Solicitors: Solicitors:
D H Dwyer Forbes & Yeo (Plaintiff)

File number(s): 2012/164816

Publication Restriction:

JUDGMENT

HIS HONOUR: This is an application for an order pursuant to s 81 of the Trustee Act 1925 that the first defendant is empowered and authorised, notwithstanding the exception to the power of amendment contained in paragraph 19(i) of the trust deed, to amend the vesting day specified in the schedule of the trust deed to a date not later than 14 June 2057.
Other incidental orders are also sought.
The trust is established by a deed made on 15 June 1977. The trust is a discretionary trust established by the plaintiff for the benefit of his wife, children and grandchildren. So much appears, both from the deposition of the plaintiff and from the terms of the deed.
The deed establishes three classes of discretionary objects. The primary beneficiaries were described as the plaintiff and his then wife, or other wife or widow, children and grandchildren.
Under clause 3 of the deed, the trustee has a discretion to appoint income amongst the primary beneficiaries, or, if there is no primary beneficiary living, or in existence at the time of determination, then amongst secondary beneficiaries.
Clause 6 provides that, on the vesting day, the trustee shall stand possessed of the capital of the trust fund upon trust for all of such of the primary beneficiaries as the trustee might determine and, if more than one, in such shares as the trustee might declare. If on the vesting day, the trustee has not made such a declaration, then the capital is to be held for the Residuary Beneficiaries…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Barry v Borlas Pty Ltd

Details

AGLC: Barry v Borlas Pty Ltd [2012] NSWSC 831
Case: [2012] NSWSC 831
Decision Date: 12 July 2012

CaseChat Overview and Summary

The case of Barry v Borlas Pty Ltd involved the trustees of a discretionary trust seeking to amend the vesting day of the trust deed. The beneficiaries supported the proposal, but the deed contained a clause stating that the trustees did not have the power to vary the vesting day. The court was required to determine whether it was in the interest of the beneficiaries for the court to approve the advantageous dealings and whether the proposed amendment was in the management and administration of the trust property, aimed at advancing the objectives of the trust and minimising tax impacts. The Trustees Act 1925 (NSW) provided the legislative framework within which the court considered the matter.

The legal issues before the court included whether the clause in the trust deed, which stated that the trustees did not have the power to vary the vesting day, could be overridden by the court's powers under section 81 of the Trustee Act 1925 (NSW). Additionally, the court needed to determine if the proposed amendment would indeed advance the objectives of the trust and minimise tax impacts, and if it was in the interest of the beneficiaries for the court to approve the advantageous dealings.

The court considered the nature of the trust, the objectives of the trust, and the support of the beneficiaries for the proposed amendment. It held that the clause in the trust deed did not preclude the court's power under section 81 to approve the advantageous dealings if it was in the interest of the beneficiaries. The court further found that the proposed amendment would advance the objectives of the trust and minimise tax impacts, and that it was in the interest of the beneficiaries for the court to approve the advantageous dealings. Consequently, the court granted the trustees' application to amend the vesting day of the trust deed.

The court ordered that the vesting day of the trust be amended as proposed by the trustees, subject to the terms and conditions set out in the court's judgment. The beneficiaries' support for the proposal and the potential benefits of the amendment in advancing the objectives of the trust and minimising tax impacts were key factors in the court's decision. The court's approval under section 81 of the Trustee Act 1925 (NSW) facilitated the advantageous dealings that were in the best interests of the beneficiaries.

Orders