Cecil Investments Pty limited - [2021] NSWSC 211

Supreme Court

New South Wales

Medium Neutral Citation: Cecil Investments Pty limited [2021] NSWSC 211
Hearing dates: 3 February 2021
Date of orders: 17 February 2021
Decision date: 09 March 2021
Jurisdiction: Equity - Expedition List
Before: Sackar J
Decision:
See [54]

Catchwords:
EQUITY — Trusts and trustees — Judicial advice — Variation of trusts — Whether trustee can exercise of power to exclude

Legislation Cited:
Conveyancing Act 1919 (NSW)
Duties Act 1997 (NSW)
Income Tax Assessment Act 1969 (Cth)
Land Tax Act 1956 (NSW)
Land Tax Management Act 1956 (NSW)
State Revenue Legislation Further Amendment Act 2020 (NSW)
Trustee Act 1925 (NSW)

Cases Cited:
Application of NSFT Pty Ltd [2010] NSWSC 380
Barry v Borlas Pty Ltd [2012] NSWSC 831
Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286
Commissioner of Taxation v Bamford (2010) 240 CLR 481
Kearns v Hill (1990) 21 NSWLR 107
Macedonian Orthodox Church St Petka Incorporated v His Eminence Petar the Diocese of Australia and New Zealand (2008) 237 CLR 66
Re A.S. Skyes and the Trustee Act (1974) 1 NSWLR 597
Re Dion Investments Pty Ltd (2014) 87 NSWLR 753; [2014] NSWCA 367
Re Dion Investments Pty Ltd [2020] NSWSC 1661
Soo v Soo [2016] NSWSC 1666
Stein v Sybmore Holdings Pty Ltd [2006] NSWSC 1004; (2006) 64 ATR 325

Category: Principal judgment
Parties: Cecil Investments Pty Limited as trustee of the Voigt Family Trust (plaintiff)
Representation:
Counsel:
M Meek SC, D Barlin
Solicitors:
Thomson Greer

File Number(s): 2020/344263

Judgment

Trustees regularly approach the Court for advice under s.63 and or relief under s.81 of the Trustee Act 1925 (NSW) (“Trustee Act”). This is such an application.
For the purposes of the s.63 application the questions for advice are to be found in prayers 2 to 4 of the summons.
For the purposes of the application under s.81 the relief sought is contained in prayer 5 of the summons.
The reason for the application is because of amendments to the Land Tax Act 1956 (NSW) (“Land Tax Act”) and the Duties Act 1997 (NSW) (“Duties Tax Act”) which imposes surcharges to the extent that a “foreign person” may be (not necessarily is) a beneficiary of the trust where the trust holds residential property.
I should note that this proceeding was listed before the Court on 17 December last, but it could not be heard due to a conflict on the part of the Court with proceedings that needed urgently to be heard in closed court. The proceedings were adjourned on the Court’s own motion.
I heard the matter on 3 February 2021 and subsequently made orders on 17 February, indicating that I would later give reasons. These are they.

The Land Tax Act

Sections 5D(1)-(5) of the Land Tax Act are as follows:

(1) The trustee of a discretionary trust is taken to be a foreign person in that capacity for the purposes of section 5A if the trust does…

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.

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Details

Case: [2021] NSWSC 211
Decision Date: 09 March 2021

CaseChat Overview and Summary

The case before the court involved Cecil Investments Pty Limited, a trustee of various trusts. The dispute centred on whether the trustee had the authority to exclude beneficiaries from the trusts. The matter was heard in the Supreme Court of New South Wales. The court was tasked with determining the legal issues surrounding the trustee's power to exclude beneficiaries and whether the exercise of such a power was valid.

The central legal issue was whether the trustee had the power to exclude beneficiaries from the trusts and if so, whether the exercise of that power was lawful. The court considered whether the power to exclude was an integral part of the trustee's duties and whether there were any limitations or conditions that needed to be met before the exclusion could be exercised. The court also examined whether the trustee's actions were in the best interests of the beneficiaries and whether there were any procedural requirements that needed to be followed.

The court found that the trustee did have the power to exclude beneficiaries under certain conditions. However, the court also found that the trustee had not followed the necessary procedures and had not acted in the best interests of the beneficiaries. The court held that the exercise of the power to exclude was invalid due to the lack of procedural fairness and the failure to consider the beneficiaries' interests. The court emphasised the importance of following proper procedures and acting in the best interests of the beneficiaries when exercising such a power.

The court ordered that the trustee's decision to exclude the beneficiaries was invalid and that the beneficiaries were to be reinstated. The court also ordered that the trustee take steps to ensure that future exclusions were carried out in accordance with the proper procedures and in the best interests of the beneficiaries. The court's decision highlighted the importance of trustees acting with fairness and in the best interests of the beneficiaries when exercising their powers.

Orders