Parkes -Linnegar v Watson - [2011] NSWSC 37

Supreme Court

New South Wales

Medium Neutral Citation: Parkes -Linnegar & Anor v Watson [2011] NSWSC 37
Hearing dates: 31 January 2011, 1 February 2011
Decision date: 11 February 2011
Jurisdiction: Equity Division
Before: Pembroke J
Decision:
See paragraph 39 of the judgment

Catchwords:
TRUSTS & TRUSTEES - termination of trust - Rule in Saunders v Vautier - grounds for trustee withholding consent to termination

TRUSTEE - right of indemnity from trust assets - not available in respect of property that is the subject of a specific bequest to the executor on trust
MISLEADING CONDUCT - proper characterisation of conduct in totality of circumstances - not trade or commerce - not business or professional activity
Legislation Cited: Trustee Act, 1925 (NSW)
Fair Trading Act, 1987 (NSW)
Cases Cited: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments (2009) 238 CLR 304
Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594
CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR
Saunders v Vautier (1841) Cr & Ph 240
Shahid v Australian College of Dermatologists (2008) 168 FCR 46
Texts Cited: Heydon J D, Leeming M J, Jacobs' Law of Trusts (Butterworths, Sydney, 2006,7th Edition)
Martyn J R, and Caddick N, Williams, Mortimer & Sunnucks, Executors, Administrators & Probate (Sweet & Maxwell, London 2007,19th Edition)
Category: Principal judgment
Parties: Gloria Joy Parkes-Linnegar - first plaintiff
Robert Parkes-Linnegar - second plaintiff
Michael Carl Watson - defendant
Representation: Counsel:
D Higgs SC with Vanessa Thomas - for the plaintiffs
N Cotman SC with David Williams - for the defendant
Solicitors:
Jackson Lalic Lawyers - for the plaintiffs
Spencer Whitby & Co - for the defendant

File Number(s): 2010/146970

Judgment

Introduction

This is an application by the plaintiffs to terminate a trust in accordance with the principle in Saunders v Vautier (1841) Cr & Ph 240; 49 ER 282. In CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 at [47] the modern formulation of that rule was enunciated by the High Court of Australia as follows:

Under the rule in Saunders v Vautier, an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation.

The defendant is a co-trustee of a trust of which the plaintiffs are the beneficiaries (the Trust). He has refused to consent to the termination of the Trust. Some of the grounds on which he has done so reflect poorly on him. Others may give rise to legitimate concerns on which it is necessary for me to rule. After the proceedings were commenced against him, the defendant sought to regularise his position by filing a cross summons seeking judicial advice pursuant to Section 63 of the Trustee Act . I will set out my response to…

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 Parkes -Linnegar v Watson

Details

AGLC: Parkes -Linnegar v Watson [2011] NSWSC 37
Case: [2011] NSWSC 37
Decision Date: 11 February 2011

CaseChat Overview and Summary

In the case of Parkes-Linnegar v Watson, the dispute involved the termination of a trust. The court was required to consider whether a trustee could withhold consent to the termination of a trust under the Rule in Saunders v Vautier. The case also addressed whether a trustee could claim an indemnity from trust assets in relation to property that was the subject of a specific bequest to the executor on trust. Additionally, the court examined whether the conduct of the trustee in withholding consent could be considered misleading conduct, particularly in the context of trade or commerce or a business or professional activity.

The legal issues before the court included the grounds upon which a trustee could withhold consent to the termination of a trust, the circumstances under which a trustee could claim an indemnity from trust assets, and the proper characterisation of the trustee's conduct as misleading. The court had to determine whether the trustee's actions fell within the scope of trade or commerce or constituted a business or professional activity, which would affect the applicability of certain legal principles.

The court concluded that a trustee could withhold consent to the termination of a trust under the Rule in Saunders v Vautier if there were valid grounds for doing so. It held that a trustee could not claim an indemnity from trust assets for property that was the subject of a specific bequest to the executor on trust. Furthermore, the court found that the trustee's conduct in withholding consent did not constitute misleading conduct, as it did not occur in the course of trade or commerce or in the context of a business or professional activity. The court's reasoning was based on a detailed analysis of the trust deed, the relevant legal principles, and the specific circumstances of the case.

The final orders of the court were that the trustee's consent to the termination of the trust was not necessary, and that the trustee was not entitled to an indemnity from trust assets for the property in question. The court also ruled that the trustee's conduct did not amount to misleading conduct. This decision provides important guidance for trustees and beneficiaries regarding the termination of trusts and the circumstances in which a trustee may or may not withhold consent.

Orders