Paloto Pty Ltd v Herro - [2015] NSWSC 445

Supreme Court

New South Wales

Medium Neutral Citation: Paloto Pty Limited v Herro [2015] NSWSC 445
Hearing dates: 10 April 2015
Date of orders: 10 April 2015
Decision date: 10 April 2015
Jurisdiction: Equity Division
Before: Darke J
Decision:
Proceedings dismissed.

Catchwords: EQUITY – trusts and trustees – trustee seeks conferral of power, or authorisation, to vary the vesting date in respect of trust property – vesting of trust property would give rise to capital gains tax liabilities for beneficiaries – scope of inherent jurisdiction of Court to sanction deviations from the terms of trust – whether an emergency has arisen in the course of administration that needs to be resolved to preserve trust property – held, not an appropriate case for exercise of inherent power
Legislation Cited: Chapman v Chapman [1954] AC 429
Gartside v Inland Revenue Commissioners [1968] AC 553
Gonzales v Claridades [2003] NSWCA 227; (2003) 58 NSWLR 21
Harold Alfred Templeton v The Leviathan Proprietary Limited (1921) 30 CLR 34
In re Crago; Crago v Crago (1908) 8 SR (NSW) 269
In re Crawshay; Dennis v Crawshay (1888) 60 LT 357
In re Morrison; Morrison v Morrison [1901] 1 Ch 701
In Re New; In Re Leavers; In Re Morley [1901] 2 Ch 534
In re Strang (1941) 41 SR (NSW) 114
In re Tollemache [1903] 1 Ch 457
In re Tollemache [1903] 1 Ch 955
In Re Toohey; Freehill v Toohey (1906) 6 SR (NSW) 538
Re Dion Investments Pty Ltd [2014] NSWCA 367
Re Hazeldine's Trust [1908] 1 Ch 34
Re Jackson (1882) 21 Ch D 786
Saunders v Vautier (1841) 4 Beav 115; 49 ER 282
Tickle v Tickle (1987) 10 NSWLR 581
Cases Cited: Chapman v Chapman [1954] AC 429
Gartside v Inland Revenue Commissioners [1968] AC 553
Gonzales v Claridades [2003] NSWCA 227; (2003) 58 NSWLR 21
Harold Alfred Templeton v The Leviathan Proprietary Limited (1921) 30 CLR 34
In re Crago; Crago v Crago (1908) 8 SR (NSW) 269
In re Crawshay; Dennis v Crawshay (1888) 60 LT 357
In re Morrison; Morrison v Morrison [1901] 1 Ch 701
In Re New; In Re Leavers; In Re Morley [1901] 2 Ch 534
In re Strang (1941) 41 SR (NSW) 114
In re Tollemache [1903] 1 Ch 457
In re Tollemache [1903] 1 Ch 955
In Re Toohey; Freehill v Toohey (1906) 6 SR (NSW) 538
Re Dion Investments Pty Ltd [2014] NSWCA 367
Re Hazeldine's Trust [1908] 1 Ch 34
Re Jackson (1882) 21 Ch D 786
Saunders v Vautier (1841) 4 Beav 115; 49 ER 282
Tickle v Tickle (1987) 10 NSWLR 581
Texts Cited: J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (7th ed 2006, LexisNexis)
Category: Principal judgment
Parties:
Paloto Pty Limited (plaintiff)
Luke Herro (first defendant)
Anthony John Khalil Herro (second defendant)
Belinda Louise Herro (third defendant)
Matthew James Herro by his tutor Luke Herro
(fourth defendant)
Julia Madeline Herro by her tutor Luke Herro (fifth defendant)
Madeleine Kate…

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 Paloto Pty Ltd v Herro

Details

AGLC: Paloto Pty Ltd v Herro [2015] NSWSC 445
Case: [2015] NSWSC 445
Decision Date: 10 April 2015

CaseChat Overview and Summary

The plaintiff sought a declaration that the defendants, as trustees of a trust, were authorised to vary the vesting date of certain trust property to avoid capital gains tax liabilities for the beneficiaries. The case was heard by the Federal Court of Australia. The central issue before the court was whether the trustees had the authority to alter the vesting date, and if not, whether the court's inherent jurisdiction could be invoked to permit such a variation.

The court examined the trust deed and relevant legislation to determine the trustees' powers. It was established that the trustees did not possess the authority to change the vesting date. Consequently, the court had to decide whether it could exercise its inherent jurisdiction to authorise the trustees to act in a manner that deviated from the terms of the trust. The court considered the circumstances surrounding the trust and the potential for an emergency that necessitated such a deviation. However, the court found that the situation did not meet the stringent criteria required for the exercise of the inherent jurisdiction to sanction a variation of the trust terms.

The court concluded that the trustees did not have the power to alter the vesting date, and the circumstances did not justify invoking the court's inherent jurisdiction. Therefore, the plaintiff's application for a declaration was dismissed. The court did not grant the trustees the authority to vary the vesting date, and no declaration was made in favour of the plaintiff.

Orders