McColl JA at [1]; Leeming JA at [2]; Sackville AJA at [118]
Decision:
Orders in 2013/66225
1. Grant leave to appeal.
2. Appeal allowed.
3. Set aside the orders made on 22 February 2013, and in lieu thereof, declare that the Property is an asset of the Kenthurst Investments Trust.
4. Order that the respondent pay the appellant’s costs at first instance and on appeal.
5. Dismiss the notice of contention.
6. Remit the proceedings, including the motion dated 7 June 2013, to the primary judge to consider what further relief (if any) is appropriate.
Orders in 2013/71832
1. Dismiss the summons seeking leave to appeal.
2. Order that Mr Condon pay the costs of the summons.
Catchwords:
TRUSTS AND TRUSTEES – creation of trust – property settled on trust in order to deceive former husband and to evade taxation – whether trust a sham – improper purpose not sufficient for trust to be a sham – creation of discretionary trust consistent with improper purpose – subsequent conduct inconsistent with trust would amount to breach of trust, not “emerging sham”
TRUSTS AND TRUSTEES – powers, duties, rights and liabilities – power of variation – purported replacement of trustee and appointor – purported exercise of power of appointment
TRUSTS AND TRUSTEES – beneficiaries – standing of beneficiary to bring proceedings – special circumstances
BANKRUPTCY – effect of bankruptcy on property – effect on trust property – effect on power of appointment
JUDGMENTS AND ORDERS – declaration in related caveat proceedings involving trustee – whether gives rise to res judicata
APPEAL – when appeal lies – no appeal from findings
[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
AGLC
Lewis v Condon [2013] NSWCA 204
Case
[2013] NSWCA 204
Decision Date
CaseChat Overview and Summary
The dispute in *Lewis v Condon* concerned the validity of a trust and the ownership of property purportedly settled on that trust. The appellant, Ms Lewis, sought to have the property declared an asset of the Kenthurst Investments Trust, while the respondent, Mr Condon, argued the trust was a sham. The matter was heard in the Court of Appeal of New South Wales before McColl and Leeming JJA and Sackville AJA.
The primary legal issues before the Court of Appeal were whether the Kenthurst Investments Trust was a sham, and consequently whether the property in question was an asset of the trust or available to Mr Condon. Related issues included the effect of bankruptcy on the trust property and the powers of appointment, the standing of a beneficiary to bring proceedings, and whether a prior declaration in related caveat proceedings gave rise to *res judicata*.
The Court of Appeal reasoned that the mere fact that a trust was created for an improper purpose, such as to deceive a former husband or evade taxation, did not render the trust a sham. A trust is a sham if the parties to its creation did not intend to create the trust relationship, but rather intended to give the appearance of creating a trust. In this case, the discretionary trust was validly created, and any subsequent conduct inconsistent with the trust would constitute a breach of trust, not an "emerging sham". The Court allowed the appeal, setting aside the primary judge's orders and declaring the property to be an asset of the Kenthurst Investments Trust. The proceedings were remitted to the primary judge for consideration of further relief.
Orders
Orders of the court
Orders in 2013/66225
1. Grant leave to appeal.
2. Appeal allowed.
3. Set aside the orders made on 22 February 2013, and in lieu thereof, declare that the Property is an asset of the Kenthurst Investments Trust.
4. Order that the respondent pay the appellant’s costs at first instance and on appeal.
5. Dismiss the notice of contention.
6. Remit the proceedings, including the motion dated 7 June 2013, to the primary judge to consider what further relief (if any) is appropriate.
Orders in 2013/71832
1. Dismiss the summons seeking leave to appeal.
2. Order that Mr Condon pay the costs of the summons.