Re Estate of Stagliano
[2025] VSC 39
•14 February 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2023 04441
| IN THE MATTER of the Estate of NICOLA STAGLIANO, deceased | |
| SUZANNE MARY LYTTLETON (in her capacity as administrator and trustee of the estate of NICOLA STAGLIANO, deceased) | Plaintiff |
| v | |
| PATRICIA MARY STAGLIANO & ORS (according to the schedule attached) | Defendant |
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JUDGE: | Harris J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 October 2024 |
DATE OF JUDGMENT: | 14 February 2025 |
CASE MAY BE CITED AS: | Re Estate of Stagliano |
MEDIUM NEUTRAL CITATION: | [2025] VSC 39 |
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WILLS AND ESTATES – Administration of estate – Meaning of ‘personal chattels’ – Five luxury motor cars owned by intestate at date of death – Whether ‘used for business purposes’– Administration and Probate Act 1958 (Vic), s 5.
EQUITY AND TRUSTS – Judicial advice - Income of discretionary trust distributed to the estate of a deceased beneficiary – Whether distribution is authorised by distribution clause of trust deed – Whether the estate is within the definition of ‘beneficiary’ in the trust deed – Consequences of distribution of trust income other than in accordance with the trustee’s powers of distribution – Whether decision to distribute to living beneficiary severable from decision to distribute to estate – Whether decision to distribute void or voidable.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr B Orow | Suzanne Lyttleton Lawyers |
| For the First, Sixth and Seventh Defendants | Mr P Pascoe | Portfolio Law Pty Ltd |
| For the Second Defendant | Mr A P Dickenson | Cate and Co Lawyers |
| For the Third Defendant | In person | |
| For the Fourth Defendant | In person |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Facts giving rise to the questions for advice................................................................................. 2
The Chattels Question...................................................................................................................... 5
Relevant law................................................................................................................................... 5
Statutory provisions............................................................................................................ 5
Interpretation of ‘business purposes’.................................................................. 6
Examples of ‘personal chattels’ not used for ‘business purposes’.................. 9
The evidence about the acquisition and use of the cars........................................................ 11
The evidence of the Administrator................................................................................. 12
The evidence of John Stagliano....................................................................................... 14
The evidence of Susan Somerville................................................................................... 15
The evidence of Lisa Stagliano........................................................................................ 16
The evidence of Lauren Stagliano................................................................................... 16
The parties’ submissions............................................................................................................ 17
Consideration.............................................................................................................................. 20
Conclusion on the Chattels Question....................................................................................... 23
The Trust Question.......................................................................................................................... 23
The nature of the issue raised by the Trust Question............................................................ 25
Relevant legal principles............................................................................................................ 27
Interpretation of trust instruments................................................................................. 27
Constitution of trusts in the administration of estates................................................. 28
Submissions................................................................................................................................. 29
Submissions on whether the estate was a ‘trust’.......................................................... 29
Conclusion on the Trust Question............................................................................................ 31
The consequences of the defect in the Resolution.................................................................. 31
Submissions on consequences of defective Resolution................................................ 31
Consideration.............................................................................................................................. 35
Severability......................................................................................................................... 36
Whether any severable part of the Resolution is nevertheless void or voidable..... 37
Conclusion......................................................................................................................................... 38
HER HONOUR:
Introduction
On 14 September 2019, Mr Nicola Stagliano died without leaving a will. He was survived by his wife, Patricia Stagliano, who is the first defendant in this proceeding, and his children — John Stagliano, Lisa Stagliano, Susan (Sue) Somerville (nee Stagliano), Anne-Maree Papadopoulos (nee Stagliano), and Lauren Stagliano —who are the second to sixth defendants. John, Lisa, Susan and Anne-Maree were the children of Nicola from a previous marriage, and Lauren is the daughter of Patricia.
Nicola Stagliano’s estate includes a range of assets including five luxury cars. The effect of s 70L of the Administration and ProbateAct 1958 (Vic) is that if a person who dies intestate leaves a partner and ‘a child or other issue who is not the child or other issue of that partner’, the partner is entitled to the personal chattels of the intestate. The primary question for determination is whether the luxury cars are ‘personal chattels’ as defined by the Act.
A further issue for determination relates to the Stagliano Family Trust, which was established in 1997. The Settlement Deed for the Family Trust defines its beneficiaries as comprising Nicola Stagliano, his spouse, his children and grandchildren and their families, but also includes as a beneficiary ‘the trustee or trustees of any trust… of which a beneficiary or discretionary object thereunder is a beneficiary of the trust’. The power of distribution permits the payment or setting aside of income of the Family Trust to beneficiaries ‘who shall be living or … in existence at the time’ of the relevant distribution.
The seventh defendant, Hazeltone Pty Ltd, is the Trustee of the Family Trust, and Patricia is the sole director of that company. On 28 June 2020 the Trustee resolved that the income of the trust for the year ended 30 June 2020 was set aside for the benefit of the ‘estate of Nicola Stagliano’ as to 50% and to Patricia as to 50%. The defendants take issue with the validity of that Resolution, and the Administrator had ‘concerns as to whether at the time of distribution, the Estate was a trust then in existence at the time of payment, application or the setting aside’ of the distributed income.[1]
[1]Affidavit of Suzanne Mary Lyttleton sworn on 21 August 2023 (First Lyttleton Affidavit), [21].
The Administrator of Nicola Stagliano’s estate, Suzanne Lyttleton, applied to the Court for judicial advice on questions arising in the administration of the estate, in summary:
(a) are the luxury cars that formed a part of the inventory of assets of the estate of Nicola Stagliano as at the date of death ‘personal chattels’ within s 5 of the Administration and Probate Act; and
(b) in the year ended 30 June 2020, was the estate of Nicola Stagliano a ‘beneficiary’ as defined in the Stagliano Family Trust Deed of Settlement?
For the following reasons, the answer to the first question is, in summary, ‘Yes’, and the answer to the second question is ‘No’.
Facts giving rise to the questions for advice
After Nicola’s death in September 2019, letters of administration of Nicola’s estate were granted to Patricia on 4 September 2020.[2]
[2]Amended Originating Motion filed on 7 March 2024, D.
On 28 July 2020, Patricia filed an Inventory of Assets and Liabilities which, relevantly, included five motor vehicles:
(a) A 2015 Ferrari California T valued at $220,000;
(b) A 2010 Bentley Continental valued at $80,000;
(c) A 2012 Rolls Royce Ghost valued at $250,000;
(d) A 2015 Mercedes GL350 valued at $58,000; and
(e) A 2009 Mercedes SL 350 valued at $30,000.
The inventory also included a real property valued at $2 million, three bank accounts, shares in a company, NP Roofing Pty Ltd, valued at $733,111, and an unpaid beneficiary entitlement owed by the Family Trust in the amount of $1,410,346.56.[3]
[3]First Lyttleton Affidavit, Exhibit SML-1, 18-20.
On 28 June 2020, the Trustee of the Family Trust made the Resolution in the following terms:
Distribution of Income
It was resolved that pursuant to the powers vested in the company in the Trust Deed as Trustee of the trust, that the net income of the trust for the year ended 30 June 2020 is hereby set aside for the benefit of the following beneficiaries as follows:
Beneficiary
Estate of Nicola Stagliano 50.00%
Patricia Stagliano 50.00%
The net income of the Family Trust for the year ended 30 June 2020 was identified in the tax return of the trust for the year ended 2020 as $155,823, and the value of the unpaid distribution to the estate of Nicola Stagliano as $77,911.50.
The Amended Originating Motion referred to financial accounts of the Family Trust as at 30 June 2022 showing liability to the Estate of Nicola Stagliano of $1,483,204.38 described as an ‘unpaid beneficiary entitlement’.[4] This apparently was intended to reflect both the unpaid distribution referred to in the Resolution made on 28 June 2020, and other distributions made while Nicola Stagliano was still alive. There was one resolution in evidence of 28 June 2019, prior to Nicola’s death, by which the income of the trust for the year ending 30 June 2019 was set aside for Nicola and Patricia, each as to 50%. The parties took no issue as to the validity of unpaid entitlements of the Estate to income of the Family Trust insofar as they related to amounts the subject of unpaid distributions to Nicola, prior to his death.[5]
[4]Amended Originating Motion, par P. The financial statements were in evidence: First Lyttleton Affidavit, Exhibit SML-1, 63.
[5]Transcript 29/10/24, T23.12-T28.27.
On 5 August 2022, the Court made orders by consent removing Patricia as administrator of the estate and appointing the current Administrator.[6]
[6]First Lyttleton Affidavit, Exhibit SML-1, 15 (Orders of Justice McMillan made on 28 July 2022).
The Administrator sought the judicial advice the subject of this proceeding pursuant to Order 54.02 of the Supreme Court Rules on 14 September 2023.[7] Order 54.02 provides that a proceeding can be brought for any relief which could be granted in an administration proceeding, without claiming administration or execution of the estate or trust under the direction of the Court, including the relief of determination of a question arising in the administration of an estate or in the execution of a trust.[8]
[7]The date of the original originating motion. That was amended for reasons unnecessary to detail, with the Amended Originating Motion dated 7 March 2024.
[8]Supreme Court (General Civil Procedure) Rules, Order 54.02(1) and 54.02(2)(a)(i).
The Administrator sought the advice of the Court on the following two questions:
a.Whether the luxury car collection that formed a part of the inventory of assets of the estate of Nicola Stagliano as at the date of death is ‘personal chattels’ within section 5 of the Administration and Probate Act 1958 (Vic)? [the Chattels Question];
b.Whether, in the year ended 30 June 2020, the estate of Nicola Stagliano was a beneficiary within clause 3(1)(f) of the Stagliano Family Trust Deed of Settlement? [the Trust Question].
The Amended Originating Motion also referred to an issue relating to the validity of the Resolution, which was not the subject of a formal question:
A question arises, in respect of which the Plaintiff seeks the advice of the Court, as to whether the Estate of Nicola Stagliano is a beneficiary within the terms of the Stagliano Family Trust Deed of Settlement. If the Court answers that question in the affirmative, the Plaintiff seeks a declaration that the relevant resolution is valid and that the Plaintiff is presently entitled to the income distributed in the year ended 30 June 2020.
At the hearing of this matter on 29 October 2024 the Administrator; Patricia, Lauren and the Trustee company; and John Stagliano were represented by separate counsel. Lisa and Susan appeared to represent themselves and made submissions.
The Chattels Question
The first question requires consideration whether the five cars each constitute a ‘personal chattel’ within the definition in the Administration and Probate Act. Although the question refers to the ‘collection of luxury cars’, it is necessary to consider each of them as they are separate items in the inventory. As will be seen, the characterisation of the cars as personal chattels requires a consideration of whether they were used for personal use or for a business, and it is appropriate to consider that issue by reference to each car. The description of a ‘collection’ of luxury cars may tend to suggest a personal usage, and it is notable that John Stagliano in his evidence referred to it as a vehicle fleet,[9] which tends to suggest a commercial usage. I will avoid using either of those collective nouns and will consider the application of the definition to each of the cars. However the evidence as to how Nicola came to acquire them and why he held multiple luxury cars will be relevant to the characterisation of each car.
[9]Affidavit of John Nicola Stagliano sworn 31 May 2024 (Second Affidavit of John Stagliano) [16]; [19] (‘fleet of transport vehicles’).
Relevant law
Statutory provisions
Section 70L(1) and (2) of the Act provide, relevantly to the current questions:
70LDistribution if intestate leaves partner and child or issue not the child or issue of that partner
(1)If an intestate leaves a partner and a child or other issue who is not the child or other issue of that partner, the partner is entitled—
(a)if the intestate's residuary estate is worth not more than the amount of the partner's statutory legacy,[10] to the whole of the estate, including the personal chattels of the intestate; and
[10]The ‘partner’s statutory legacy’ is defined by s 70B as meaning the amount to which a partner is entitled under Division 3 of the Act, as specified in s 70M(1) or s 70N (being in 2017 when the section was introduced, $451,909, with provision for indexation to the consumer price index in s 70M(2), which amount is published from time to time by the Minister under s 70N). It is unnecessary to consider this further as in either case, the ‘personal chattels’ of the intestate person go to the partner.
(b)if the intestate's residuary estate is worth more than the amount of the partner's statutory legacy, to—
(i) the personal chattels of the intestate; and
(ii) the amount of the partner's statutory legacy; and
(iii)interest on the partner's statutory legacy calculated at the legacy interest rate from the date of the death of the intestate to the date of payment of that legacy; and
(iv) one half of the balance of the residuary estate.
(2)If subsection (1)(b) applies, any children of the intestate are entitled to the other half of the balance of the residuary estate, and if more than one, in equal shares.
Section 5 of the Act defines ‘personal chattels’ as follows (bold emphasis added):
personal chattels means carriages horses stable furniture and effects (not used for business purposes) motor cars and accessories (not used for business purposes) garden effects domestic animals plate plated articles linen china glass books pictures prints furniture jewellery articles of household or personal use or ornament musical and scientific instruments and apparatus wines liquors and consumable stores but does not include any chattels used at the death of the intestate for business purposes nor money or securities for money.
In Re Foord,[11] McMillan J observed that the statutory construction of s 5 involved the consideration of the text, considered in the context including the general purpose and policy of the provision. Her Honour stated:[12]
In the [Administration and Probate Act], the phrase ‘personal chattels’ is used with reference to property distribution in the context of intestacy. Specifically, the personal representative is afforded the power to postpone the sale of the intestate’s estate, such that, unless there is a want of other assets, personal chattels must not be sold except for special reason, and personal chattels are property to which the intestate’s partner or partners are entitled. As such, an intention of parliament in using ‘personal chattels’ appears to have been distinguishing such property from the phrases ‘chattels real’ and ‘personal estate’ in a manner that affords that type of property certain protections from sale and directs it toward the intestate’s partner or partners. Of some note, the drafters of the definition of ‘personal chattels’ employed the words ‘means’ to commence the definition, before concluding that the definition ‘does not include’ specified items.
Interpretation of ‘business purposes’
[11]Re Foord [2019] VSC 444.
[12]Re Foord, [45].
The Administration and Probate Act defines personal chattels to mean, amongst other things, ‘motor cars and accessories (not used for business purposes)’. The phrase ‘motor car’ is not defined but no party sought to contend that the luxury cars were not motor cars. The focus is on whether the exception applies – that is, personal chattels are motor cars only if ‘not used for business purposes’. ‘Business purposes’ is not defined in the Administration and Probate Act.
The definition refers to ‘motor vehicles (not used for business purposes)’, then subsequently lists a series of other items before then stating a broad exclusion: ‘but does not include any chattels used at the death of the intestate for business purposes nor money or securities for money’. The cars were plainly not ‘money’, nor was there any evidence or submission to suggest that they were ‘securities for money’. Thus the focus is on whether they were ‘not used for business purposes’, a limitation applicable to motor vehicles and to the general exclusion. There is a question as to whether the qualification in the later exception as to chattels ‘used at the death of the intestate for business purposes’ would apply to motor cars. That is – is it necessary in order to be outside the definition of personal chattels, that the cars were being used for business purposes ‘at the death of the intestate’ or simply that they were motor cars ‘not used for business purposes’?
The phrase ‘motor cars and accessories (not used for business purposes)’ appears independently in the s 5 definition, so that the words in parentheses are a limit on the scope of motor cars which are personal chattels, separately from the general exception provided in the closing words in the definition. The limitation on the words ‘motor cars and accessories’ is not qualified by the temporal restriction which qualifies that general exception. Motor cars are chattels only if they satisfy the description ‘not used for business purposes’. It is not, therefore, strictly necessary to interpret the words ‘at the death of the intestate’ when considering whether motor cars fall within the definition. This is consistent with the analysis of the section by the learned authors of Wills and Intestacy in Australia and New Zealand, who observe:
In seeking to ascertain whether personal chattels were used for business purposes so as to be excluded from the relevant definition, one assesses the situation within a reasonable period before the owners death. One is not constrained by, for example, the New Zealand definition which refers to the position obtaining “at the death of the intestate”, to determine the issue solely by reference to the use that was made of the chattels on the day of death.[13]
[13]I.J. Hardingham, M.A. Neave, and H.A. Ford Wills and Intestacy in Australia and New Zealand (The Law Book Company Limited, 1989).
However, it is useful to note that even the words ‘at the death of the intestate’ have not been interpreted strictly to refer to use at the time of the intestate’s death. In Miller v Miller,[14] O’Leary CJ of the Supreme Court of New Zealand considered whether a car owned by the deceased was a ‘personal chattel’ under the Administration Amendment Act 1944 (NZ). Section 2 of that Act provided, relevantly, that ‘personal chattel’ means:
…motor-cars…but does not include any chattels used exclusively or principally at the death of the intestate for business purposes…
[14][1950] NZLR 945.
Chief Justice O’Leary stated:
An important question for preliminary decision is the effect to be given to the words “at the death of” the intestate. What point of time does this refer to? I cannot think that it is restricted to the day of death, for then, in most cases, there could only be one answer. In that great majority of cases, the intestate is unable to use his car or other chattel on the day of his death. I think due effect would be given to the words by holding that they cover a reasonable time before the day of death. Regard must also be had to the possibility of an owner’s changing the use of his car from exclusively or principally for business purposes to use for exclusively or principally private purposes.[15]
[15][1950] NZLR 945, 946.
Chief Justice O’Leary concluded that the purpose of the use of the deceased’s car changed from business to personal in the months before he died, which was enough to conclude that the car was not being used for business purposes at his death.[16]
[16][1950] NZLR 945, 946.
Counsel for the Administrator accepted that the focus is whether the chattel is used for a business purpose a ‘reasonable time’ before the death of the intestate.[17] He submitted that the inquiry is whether the chattel was available for a business purpose at the death of the intestate, not whether it was actively being used for that purpose at death.[18]
[17]Transcript 29/10/2024 T107.15-T108.15.
[18]Transcript 29/10/2024 T107.26-31.
Having regard to the purpose of the definition of personal chattels in the context of the work that term does in the statutory scheme as described by McMillan J in Re Foord,[19] I consider it appropriate to interpret the words ‘not used for business purposes’ in a practical way, having regard to the way the chattel was primarily used over the period of its ownership by the deceased to the extent that this is disclosed by the evidence.
Examples of ‘personal chattels’ not used for ‘business purposes’
[19]See [21] above.
In Re Foord, McMillan J observed that the definition of ‘personal chattels’ in s 5 was analogous to the definition of ‘personal chattels’ in s 55(1)(x) of the Administration of Estates Act 1925 (UK) (the UK Act), making authorities considering that Act relevant to the interpretation of the definition.[20]
[20]Re Foord [46]-[49].
Her Honour referred to authorities in which the phrase ‘articles of household or personal use’ in the UK Act was found to include a motor yacht; a stamp collection, a coin collection, and watches.[21]
[21]See Re Chaplin [1950] Ch 507, 509 (Vaisey J); Re Reynolds’ Will Trusts [1966] 1 WLR 19 (Stamp J); Re Collins’ Will Trusts [1971] 1 WLR 37; Re Crispin’s Will Trusts [1975] 1 Ch 245.
Of closer relevance to the present case is the consideration in Re Ogilby of whether a herd of cattle owned by an intestate was used for business purposes within the meaning of the UK Act.[22] The surviving partner contended that the deceased ran the cattle as a hobby rather than a business. In support of this, he pointed to the fact that she consistently made a loss from farming the cattle. Justice Simonds rejected this submission. His Honour referred to the broader context in which the deceased owned the cattle:
According to the ordinary use of the English language, the intestate carried on the business of a farm at Westwood Park and on the adjoining small holding, known as Spring Farm, and the live and the dead stock which she used for that purpose she used for the business of farming. It seems to me to be impossible to say that, in those circumstances, the livestock, including the cattle in question, and the dead stock, were not used for business purposes by her at her death, within the meaning of the Administration of Estates Act, 1925. It may be right to say that a person who keeps a cow or a pig or some other domestic animal purely for his own use does not do so for business purposes. It may sometimes be difficult to draw the line, but where you find farming on this scale, a home farm with a substantial acreage and live and dead stock valued for the purpose of probate at between 1400L. and 1500L., including thirty-one head of cattle and thirty-five head of sheep, there is no doubt on which side of the line the case falls. There is a farming business being carried on and the live and the dead stock are being used for the purpose of that business… It is, perhaps, relevant that during the intestate's lifetime, whether for the purpose of income tax or for that of rating, she claimed to be in occupation of the land which she farmed for the purpose of husbandry, and that she was carrying on a business in respect of which she was entitled to relief.[23]
[22]Re Ogilby [1942] 1 Ch 288, 288-289 (Justice Simonds in the Chancery Division of the High Court of England and Wales).
[23]Re Ogilby [1942] 1 Ch 288, 288-289.
In Re Hutchinson,[24] Danckwerts J considered whether racehorses which formed part of an intestate estate were ‘personal chattels’ within s 55(1)(x) of the Administration of Estates Act 1925 (UK). The deceased operated a stud farm, using separate accounts to his personal accounts, and paid tax on the profits from the stud farm. His Honour stated that:
It is clear from the evidence that the racehorses were in an entirely different category. One of them appears to have been ridden sometimes by the deceased, but otherwise the deceased did not ride any of the racehorses, but merely used them for recreation, that is to say, in racing them.[25]
[24][1955] Ch 255.
[25][1955] Ch 255, 258.
Counsel for the Administrator also referred the Court to cases which provide guidance on what constitutes the conduct of a business, on the basis that it was relevant to consider not only whether the cars were used for the purposes of a separate business, but whether the purchase and ownership of the cars was itself the relevant business. This was raised in the context of the submission of John Stagliano that ‘the cars were part of a business of buying and selling luxury cars…’. [26]
[26]Outline of Submissions for the Second Defendant, 2 June 2024, [12], referring to the Affidavit of John Stagliano sworn 28 March 2024 (First Stagliano Affidavit) at [12]-[13].
In Mould v Commissioner of State Revenue,[27] the Court of Appeal considered an appeal against an determination by the Commissioner with respect to land tax. The appeal concerned the question of whether, in addition to primary production, the land owner conducted a separate ‘business’ of renting residential properties on the land. The Court of Appeal considered the meaning of ‘business’ in the context of the Land Tax Act 2005 (Vic). Chief Justice Warren observed that the word ‘business’ may take on different meanings in different contexts.[28] Her Honour quoted the indicia of ‘business’ in the ordinary sense identified by the High Court in Spriggs v Federal Commissioner of Taxation:
The existence of a business is a matter of fact and degree. It will depend on a number of indicia, which must be considered in combination and as a whole. No one factor is necessarily determinative. Relevant factors include, but are not limited to, the existence of a profit-making purpose, the scale of the activities, the commercial character of the transactions, and whether the activities are systematic and organised, often described as whether the activities are carried out in a business-like manner (emphasis added).[29]
[27][2015] VSCA 285.
[28][2015] VSCA 285, [53]-[54].
[29][2015] VSCA 285, [55] quoting Spriggs (2004) 239 CLR 1, 19 [59].
The Spriggs indicia is often cited in taxation matters, but has also been referred to with approval outside the taxation context.[30]
[30]ASIC v PE Capital Funds Management Limited [2022] FCA 76, [59]-[60] (Cheeseman J).
Counsel for the Administrator also relied on observations of the Federal Court in Brajkovich v Federal Commissioner of Taxation to determine whether gambling could be characterised as a business:[31]
[31](1989) 20 ATR 1570, 1576 (Pincus, Gummow, and French JJ).
The principal criteria by which questions of the present sort appear to have been judged are the following:
1.Whether the betting is conducted in a systematic, organised and “businesslike” way;
2. Its scale: ie the size of the wins and losses;
3. Whether the betting is related to, or part of, other activities of a business-like character, eg breeding horses;
4.Whether the bettor appears to engage in his activity principally for profit or principally for pleasure;
5.Whether the form of betting chosen is likely to reward skill and judgment or depends purely on chance;
6.Whether the gambling activity in question is of a kind which is ordinarily thought of as a hobby or pastime.
The evidence about the acquisition and use of the cars
John, Lisa and Sue gave evidence by affidavit as to their recollection of their father’s cars and how they were acquired and used. The evidence also referred to numerous other cars bought and sold by Nicola Stagliano over several decades. None of the evidence was formally objected to, however, counsel for the Administrator and counsel for Patricia and Lauren submitted that the evidence relating to cars owned in the past had limited if any relevance.[32] It was submitted for John that it was relevant to consider evidence relating to the period before the intestate’s death as the context in which to consider whether a business was being operated.[33]
[32]Outline of Submissions of the Plaintiff,18 September 2024, [18](e); Transcript 29/20/24 T77.28-T78.06.
[33]Transcript 29/10/24, T88.11-.T89.02.
Lauren gave evidence about matters including the five cars listed on the estate inventory.[34] The Administrator tendered documentary evidence relating to the purchase, registration and transfers of the vehicles, and of business register search results relating to companies associated with Nicola. The evidence of all parties contained hearsay evidence to varying degrees but no party took issue with it and I have considered all of the evidence taking into account the appropriate weight it should be given, having regard to the source.
[34]Affidavit of Lauren Emma Stagliano sworn 21 October 2024.
There was no evidence giving any detail about the five cars, other than the information in the inventory as to their high value,[35] but it was not in issue as between all parties that they were luxury cars.
[35]See paragraph [8] above.
The evidence of the Administrator
Ms Lyttleton gave evidence about aspects of the administration of the estate and her interactions with the defendants, which is unnecessary to consider in order to answer the Questions for advice. Relevantly, Ms Lyttleton put in evidence:
(a) Information provided by VicRoads as to vehicle registration and transfers with respect to the five cars in the estate inventory, which disclosed the following information as to the date of purchase, registration and transfer:
Car Purchase Date Disposal date and reason 2015 Mercedes B GL350 Wagon
Registration ALT900
28 March 2018 18 November 2020
Transfer to spouse or domestic partner
2009 Mercedes B SL350 Roadster
Registration APM 015
25 July 2019 18 November 2020
Transfer to spouse or domestic partner
2012 Rolls Royce Sedan
Registration RGHOST
27 February 2014 18 November 2020
Transfer to spouse or domestic partner
2010 Bentley Continental Coupe
Registration KG50
20 April 2015 18 November 2020
Transfer to spouse or domestic partner
2015 Ferrari California Convertible
Registration NP13
27 September 2017 20 September 2020
Registration cancelled
Ms Lyttleton gave evidence that she had been informed by Lisa Stagliano that the Ferrari in the inventory was being driven by Lauren, and that she inferred that the registration had been cancelled and then subsequently registered in Lauren’s name. That evidence was not disputed by Lauren in her affidavit.
(b) The VicRoads information also showed that Nicola had owned, in addition to the five cars in the inventory, a 2011 Ferrari California convertible car which he had purchased in June 2013 and sold in September 2017 to Nick Theodosi Prestige Cars.
(c) Nicola was engaged in two businesses, one the roofing business conducted by NP Roofing, in which he held one of two shares, and the other a partnership with Patricia trading in livestock.[36] The personal income tax returns of Nicola in the years 2014–2016 referred to his employment by NP Roofing as managing director. Tax returns from 2014-2019 referred to income from primary production. Ms Lyttleton stated that these tax returns disclosed no deductions claimed for operating expenses of the vehicles as she would expect if they were used in the business of NP Roofing or the partnership. Tax returns of NP Roofing were not in evidence.
(d) In the investigations she had conducted, Ms Lyttleton had not found evidence of any pattern of trading in vehicles.
[36]Affidavit of Suzanne Mary Lyttleton sworn on 20 May 2024, [4].
Ms Lyttleton gave evidence that she had not found any material in the course of her administration which would indicate that the vehicles were used as security for money. She also stated that she had not found any evidence that the vehicles were used in the business of NP Roofing or in the partnership between Nicola and Patricia which had traded in livestock.[37] She gave evidence that the general ledger of NP Roofing for the years 2016-2019 showed payments for vehicles relating to NP Roofing but that these vehicles were two tractors, six trucks and a trailer, and did not include the luxury vehicles. The general ledgers included fuel costs, VicRoads registration expenses and cash payments but did not include expenses identifiable as being referable to the luxury vehicles.[38]
[37]Affidavit of Suzanne Mary Lyttleton sworn on 20 May 2024, [4]-[5].
[38]Affidavit of Suzanne Mary Lyttleton sworn 28 June 2024.
The evidence of John Stagliano
John Stagliano gave evidence[39] that Nicola always had cars and trucks for work.[40] He also ‘always’ had luxury cars which he used to ‘parade around and show off in’,[41] and was ‘always buying and selling cars’.[42] John said his father had taught him about luxury cars and how to buy, fix, and sell cars, and told him that people were willing to pay good money for luxury cars.[43]
[39]Affidavit of John Stagliano sworn on 28 March 2024 (First Affidavit of John Stagliano), [5]-[13].
[40]First Affidavit of John Stagliano, [5].
[41]First Affidavit of John Stagliano, [5].
[42]First Affidavit of John Stagliano, [12].
[43]First Affidavit of John Stagliano, [5]-[6].
John gave evidence that when he was a small boy in the 1960s, Nicola had ‘special cars’, and that he used to race at the Melbourne Speedway track.[44] Over the years, Nicola bought many cars, including an HG Monaro, Mercedes Benz, Mustang, XY GT Ford Ute, Holden Torana SLR 5000, and a Lamborghini Espada.[45] He had sold the Monaro and Ford to buy the Lamborghini. Some or all of those cars were garaged at ‘East Street, Glenroy’,[46] which appears to have been the family home.[47]
[44]Second Affidavit of John Stagliano, [5]-[19].
[45]First Affidavit of John Stagliano, [8]-[9].
[46]First Affidavit of John Stagliano, [7].
[47]Affidavit of Lisa Stagliano sworn on 10 July 2024, Exhibit LNS-1 (Birth Certificate of Lisa Stagliano)
John gave evidence that Nicola ‘love[d] to talk about luxury cars, fix them and flip them. He was obsessed with them. He liked to search for them and then he’d drive them around for a while and he would say “people will pay me a lot of money for these cars”.’[48]
[48]First Affidavit of John Stagliano, [13].
John also gave evidence that his father had two ‘Leyland tippers trucks’ which he sold to start a business called Cobra Motors, which was later named ‘Cobra Auto Wreckers’.[49] In or about 1974, John started working for MT Motors which he recalled his father ‘had some involvement with’, and then after finishing his apprenticeship, he worked with Nicola at Cobra Auto Wreckers. [50] John gave evidence that ‘for work Dad would drive a variety of cars with the Cobra Motors logo on it’. One of those cars was the XY GT Ford Ute.[51] Nicola would drive luxury cars to ‘show off to customers’ now and again, and he would use the cars ‘to advertise the business’.[52]
[49]First Affidavit of John Stagliano, [11].
[50]First Affidavit of John Stagliano, [5], Affidavit of John Stagliano sworn on 31 May 2024 (Second Affidavit of John Stagliano) [13].
[51]First Affidavit of John Stagliano, [5]; Second Affidavit of John Stagliano [12], [14(d)].
[52]First Affidavit of John Stagliano, [7]; Second Affidavit of John Stagliano [12], [17].
John also gave evidence that he had been told by Lisa that Nicola had gone to Sydney in 2000 to buy a Rolls Royce for $25,000, which he believed he sold for $50,000.[53]
[53]Second Affidavit of John Stagliano, [15].
John Stagliano gave evidence that the cars in the estate inventory were stored at Nicola’s business, NP Roofing, in Reservoir Road, Yan Yean at the date of his death.[54] He said he had seen his father at a vehicle auction about 12 months before he died and that he was driving his ‘daily driver the black Mercedes’, and that earlier in July 2018 while at an auction he had seen Nicola driving the red Ferrari.[55]
[54]Second Affidavit of John Stagliano, [6].
[55]Second Affidavit of John Stagliano, [6], [7].
The evidence of Susan Somerville
Susan gave evidence[56] that her father was a mechanic all his life and that he ‘bought and sold cars always for him to make profit’. She also recalled him going to Italy when she was young to purchase and bring to Australia a Lamborghini Espada, which he ‘often drove … to Cobra Motors and used it for business purposes’, and later sold for profit.[57] She gave evidence that:[58]
Starting at his business at Cobra Motors, Dad worked on all types of cars and trucks; it was his business that was what he thrived on. Moving on to Cobra Auto Wreckers he [bought], repaired and sold cars for profit.
[56]Affidavit of Susan Somerville nee Stagliano sworn 19 June 2024 (First Susan Somerville Affidavit) and Affidavit of Susan Somerville sworn 9 July 2024 (Second Susan Somerville Affidavit).
[57]First Susan Somerville Affidavit, [5]-[6]; Second Susan Somerville Affidavit, [8].
[58]First Susan Somerville Affidavit, [7].
Susan also gave evidence that the first four of the cars listed in the estate inventory (the Ferrari, the Bentley, the Rolls Royce and the 2015 Mercedes Benz) were registered and insured at her father’s business address at Reservoir Road, Yan Yean, ‘where he lived and ran his business from 24 hours a day 7 days a week’ but the fifth, the 2009 Mercedes, was at an address in Plenty Road, Yan Yean which he owned with Patricia.[59]
[59]Second Susan Somerville Affidavit, [8].
The evidence of Lisa Stagliano
Lisa gave evidence that her father Nicola was a mechanic and had bought and sold cars all his life, including through his business Cobra Motors. Lisa had worked for her father as bookkeeper and personal assistant for around ten years. She gave evidence that her father had used his credit card to pay for fuel for his luxury cars, which in turn was paid from the account of NP Roofing as a business cost. NP Roofing would also pay the costs of the cars being serviced.[60]
[60]Affidavit of Lisa Nicole Stagliano sworn 18 June 2024 (First Affidavit of Lisa Stagliano), [5]; [8].
Lisa also gave evidence that her father would use the luxury cars to take business clients to lunch, that he would drive to the accountant and to auctions and to the Grand Prix for business purposes, with the expense billed to NP Roofing.[61]
[61]First Affidavit of Lisa Stagliano, [9].
In a reply affidavit filed on behalf of the Administrator, Ms Lyttleton gave evidence of records which identified Lisa’s period of employment with NP Roofing as having concluded in December 2005.[62] Lisa’s evidence was that she had last spoken to her father in June 2019.[63]
[62]Affidavit of Suzanne Mary Lyttleton sworn 28 June 2024, [6].
[63]Affidavit of Lisa Nicole Stagliano sworn 10 July 2024, [10].
The evidence of Lauren Stagliano
Lauren gave evidence in an affidavit filed on behalf of herself and her mother, which responded to the evidence of John, Susan, and Lisa. Relevantly, she gave evidence that the five luxury cars were parked in the garage at Plenty Road in Yan Yean, which was her home with her father Nicola and her mother Patricia.[64]
[64]Affidavit of Lauren Emma Stagliano sworn 21 October 2024, [7].
Lauren gave evidence that the Bentley, the Rolls Royce and the Ferrari were registered but not insured under a comprehensive insurance policy, and that her father had told her that he did not want to pay the comprehensive insurance premiums on those cars because he did not use them on a regular basis. She gave evidence that the two Mercedes Benz were insured and that the 2015 car was her father’s ‘everyday car’, and that the other three cars would often sit in the garage at Plenty Road, Yan Yean ‘on a trickle charger for months on end’.[65]
[65]Affidavit of Lauren Stagliano, [11]-[12].
Lauren stated that she was an administrative clerk for NP Roofing. She gave evidence that registration and relevant insurances for the cars were paid by NP Roofing and ‘were charged against my father’s director’s loan account of NP Roofing’ and that ‘[f]or convenience the five luxury cars were listed on NP Roofing’s Eastlink account together with trucks owned by the company and used in its business’. In 2019 there were tolls of $79.51 charged to the company by Eastlink which were referable to the cars. She said she had not thought to charge those amounts to her father’s director’s loan as they were so small but would cause the company to be reimbursed that amount.[66]
[66]Affidavit of Lauren Stagliano, [15].
The parties’ submissions
The Administrator submitted that the cars were motor vehicles which were not used for business purposes and were not security for money, so that the cars remained within the definition of ‘personal chattels’. The Administrator accepted that Nicola had been engaged in two businesses, NP Roofing and the primary production partnership with Patricia,[67] but her position was simply that there was no evidence that the five cars were used in the conduct or for the purposes of either business.[68] The Administrator’s position was that the only question that need be answered was ‘whether the luxury car collection was itself an activity in the nature of business’.[69] Counsel for the Administrator referred to the criteria identified in Mould and other cases as to the factors relevant to the carrying on of a business and submitted that:[70]
[67]Affidavit of Suzanne Mary Lyttleton sworn on 20 May 2024, [4].
[68] Outline of Submissions for the Plaintiff, 20 May 2024, [23].
[69]Outline of Submissions for the Plaintiff, 20 May 2024, [24].
[70]Outline of Submissions for the Plaintiff, 20 May 2024, [26]-[34]; Second Outline of Submissions for the Plaintiff, 18 September 2024, [31]-[39]; Fourth Outline of Submissions for the Plaintiff, 29 October 2024, [39]-[46].
(a) The nature of the activities was not such as to indicate a profit making purpose for the five cars, and was more suggestive of a hobby of collecting luxury cars than a business, and there was no evidence even of an intention to profit from them (which would not in any case be sufficient);
(b) There was no pattern of trading in luxury vehicles by Nicola;
(c) The scale of the activities was more suggestive of collecting cars, rather than having a business of buying and selling for profit;
(d) There was no systematic or businesslike activity in Nicola’s car collecting, and no evidence of any business plan.
Counsel for the Administrator referred to cases on whether gambling could be a business, which indicated that gambling would rarely be characterised as a business, given its nature also as a pastime, unless it could be shown to involve a high degree of systematic and organised operation.[71]
[71]Second Outline of Submissions for the Plaintiff, 18 September 2024, [35]-[37] referring to Brajkovich v Federal Commissioner of Taxation (1989) 20 ATR 1570 and Ruling IT 2655. See also Transcript 29/10/24, T54.05-T55.04, referring also to Evans v Federal Commissioner of Taxation (1989) 89 ATC 4540 and Babka v Federal Commissioner of Taxation (1989) 20 ATR 1251.
Counsel for Patricia and Lauren agreed with the submissions of the Administrator on the Chattels Question. It was contended that there was no evidence that the five luxury cars were used for business purposes. The cars were registered in Nicola’s personal name, not in the name of NP Roofing, and there was Lauren’s evidence relating to recent years, that three of the cars were not comprehensively insured, not regularly used, and were garaged at a home at which Nicola, Patricia and Lauren lived.[72] The evidence given by John, Lisa and Susan about the usage of cars by Nicola related to cars other than the five vehicles in question.[73]
[72]Transcript 29/10/24, T78.31-T79.17.
[73]Transcript 29/10/24, T77.21-T78.06; T79.18-T80.05.
John, Lisa and Susan made submissions which were broadly consistent.[74] They submitted that the cars had been used for a business purpose on the basis of their evidence that:
(a) Their father had engaged in buying and selling cars for profit for many years, from when they were young.
(b) Their father had also used cars for the purposes of his business Cobra Motors, by using the cars to advertise the business, and also for the business NP Roofing, to impress clients, to ‘ferry clients around’, and bring attention to the business.
[74]Submissions on behalf of the Second Defendant, 2 June 2024; Submissions on Behalf of the Third Defendant, 30 May 2024 and 22 September 2024; Submissions on Behalf of the Fourth Defendant, 30 May 2024.
Counsel for John submitted that the evidence as to the use to which the five luxury cars had been put was, contrary to the submission of the Administrator, not unequivocal. The fact that the cars used the NP Roofing Eastlink account and had incurred charges during 2019 was consistent with use of the cars on occasions to take clients out and show off the business.[75] Counsel suggested that I could draw some inference from the fact that Lauren was a bookkeeper for the company but had not produced evidence relating to where the cars had been driven on these days. I do not accept that it would be appropriate to draw any inference, primarily because any such evidence, even if available, would not of itself produce any compelling conclusions as to the purpose of any trips, so would not necessarily have been understood by Lauren to be evidence of any significant relevance.[76]
[75]Transcript 29/10/24, T93.03-21.
[76]Transcript 29/10/24, T94.05-T95.13.
Consideration
I am satisfied from John, Susan and Lisa’s evidence that Nicola had a love of cars, that he raced them, worked with them as a mechanic, and did for a period buy and sell cars with some frequency. That period of his life was described as being in the 1960s and 1970s.[77] I do not accept the submission of the counsel for Patricia and Lauren[78] that this evidence was, for that reason, entirely irrelevant. The evidence of the past usage of cars gave some insight into the way in which Nicola used luxury and notable cars, and should be considered to discern whether there was any pattern of trading, or to advance other business interests, a matter relevant to whether they were used for the purposes of any business. Specifically, with respect to the issue of whether Nicola used the relevant five cars in a business of buying and selling cars, it is unduly restrictive, given that they remained in Nicola’s possession at the time of death, to expect any relevant pattern of trading to be established by reference only to those five cars themselves. Past buying and selling of cars may have some relevance in considering the position of the five luxury cars, where there was ultimately only limited evidence as to how they were used.
[77]Second Susan Somerville Affidavit, [8]. First Affidavit of John Stagliano, [5] and [6]; Second Affidavit of John Stagliano [9]-[13].
[78]Transcript 29/10/24, T77.28-T78.06.
However, the evidence was ultimately insufficient to establish whether Nicola was, at any time during the period of which John, Sue and Lisa had close knowledge, conducting a business of buying and selling. It is unnecessary to definitively determine that issue as their evidence indicates that the cars their father was buying and selling or ‘flipping’ in the 1960s and 1970s were not the five cars in the inventory. There was a significant period between then and the acquisition by Nicola of the relevant cars in the period between February 2014 and July 2019 which were held at the time of his death. There was no evidence that he had purchased them with the proceeds of other cars he owned; nor that he was attempting to sell those cars, so that there is no evidence at all that those cars were used in a business of buying and selling cars for profit. The possibility that he had, at a period some decades ago, bought and sold other cars for profit with some degree of regularity could not alter the characterisation of why the five luxury cars in the inventory were held from 2014 onwards.
The fact that another luxury car, the 2011 Ferrari California convertible, was purchased by Nicola in June 2013 and sold in September 2017, also does not alter that position. It was held for over four years, and considered with the other cars owned in the same period this shows a fairly stable ownership more indicative of a collection than a business of buying and selling. The evidence to the effect that Nicola bought a Rolls Royce in 2000 and later sold it for a profit also does not indicate any systematic business of buying and selling which extended to the period in which he owned the five cars. It was a single example, which even taken with the sale of the 2011 Ferrari in 2017 is insufficient to indicate a pattern of buying and selling, and also insufficient to enable the purpose for which the other cars were held to be characterised as a business purpose of buying and selling for profit.
It is then necessary to consider whether the cars were used for the purposes of another business. I accept the evidence of John, Lisa and Susan that he also used at least one of his cars in the past for the purposes of his then business Cobra Motors. The evidence indicates that at least one car was branded with the Cobra Motors logo and was used in the context of that business. That car was owned some years ago, in the 1960s or 1970s, and was not one of the five luxury cars.
Even accepting that I could have regard to Nicola’s past practice as to how he used cars, the primary issue is how Nicola used the five cars in the inventory, and there is little evidence that he used those cars in connection with the NP Roofing business. It was not controversial between the parties that NP Roofing was conducting a business, being the sale of roofing material.[79] However, having considered the whole of the evidence, I consider that there is little if any basis on which it could be concluded that the cars or any of them were used ‘for the purposes of’ that business.
[79]Outline of Submissions for the Plaintiff, 20 May 2024, [23].
John’s evidence was that he saw his father in the Mercedes Benz at an auction in 2019, and I accept it can be inferred that this was one of the Mercedes Benz in the inventory. However John described it as his ‘daily driver’,[80] which is more suggestive of regular personal use, than any use for his business. That is consistent with Lauren’s evidence that the 2015 Mercedes Benz was her father’s ‘everyday car’.[81]
[80]Second Affidavit of John Stagliano, [6].
[81]Affidavit of Lauren Stagliano, [13].
John’s evidence that he saw his father driving the Red Ferrari in July 2018 at a car auction[82] is also inconclusive, and is not evidence that it was being used for a business purpose rather than a personal one.
[82]Second Affidavit of John Stagliano, [7].
Lauren’s evidence that the five cars used the Eastlink account of NP Roofing is relevant. However the evidence that the cars had incurred charges on that account indicated fairly limited usage, in that there were tolls amounting to only $79.51. There was also no evidence of where or why the cars were used on toll roads. Although including the cars on the NP Roofing Eastlink account was not entirely consistent with them being held for purely personal purposes, the evidence was also that Nicola had a ‘director’s loan account’ with NP Roofing and did fund personal expenses with that loan account.[83] I do not consider that the evidence of the cars using NP Roofing’s Eastlink account alone was sufficient to suggest that they were used for the purposes of that business.
[83]Affidavit of Lauren Stagliano, [14]-[15].
The fact that the cars were registered at the Reservoir Road address in Yan Yean, which was the address of the NP Roofing business, rather than at the Plenty Road address which was the home shared with Patricia and Lauren, does warrant consideration. As Susan Stagliano observed, and counsel for John submitted, this was the address at which the trucks and heavy vehicles which were clearly used by NP Roofing were registered.[84] This would be consistent with the luxury cars being used for that business, and relevant if there was any other evidence that the cars were being used for the business. However, the evidence does not indicate any specific examples of those cars being used for the NP Roofing business.
[84]Transcript T102.13-30. Submissions for the Second Defendant, 2 June 2024, [7]-[8].
The evidence as a whole points quite strongly to the conclusion that the cars were purchased by Nicola Stagliano because of his love of luxury cars, and desire to own notable luxury cars. At that time of his life, between 2014 and 2019, he was not using them in any significant way in his business, which was the NP Roofing business, and the primary production partnership. The effect of the evidence as a whole is that three of the cars, the Rolls Royce Ghost, the Bentley Continental Coupe, and the 2015 Ferrari were rarely used, and they were kept at the family home. This, and the fact that they were not comprehensively insured, is most consistent with them not having been used for business purposes. The evidence is to the effect that the 2015 Mercedes Benz was used for daily use, which I have concluded[85] was daily personal use. There is no evidence that the 2009 Mercedes Benz was used in any particular way. In the absence of other evidence I conclude that it was also not used for business purposes.
[85]At [67] above.
Conclusion on the Chattels Question
For the reasons above, I conclude that the five cars in the estate inventory were not used for business purposes, and that they were personal chattels within the definition of personal chattels in s 5 of the Administration and Probate Act.
The Trust Question
The Trust Question addresses whether it was open for the Trustee to have resolved in June 2020 to use the distribution power to set aside funds for the estate of Nicola Stagliano.
Clause 4(1) of the Deed for the Family Trust provides:
The Trustee shall stand possessed of the income of the trust fund of a financial year which is available for distribution upon trust to pay apply or set aside the same or any part or parts thereof to or for the benefit of the beneficiaries, other than a default beneficiary who is not otherwise a beneficiary, or any one or more of them exclusive of the other or others who shall be living or which shall be in existence at the time payment, application or setting aside of such income is made in such shares or proportions and from such category or categories of income as the trustee in its discretion may determine (emphasis added).
Clause 3(1) of the Deed provides, relevantly:
The beneficiaries of the Trust shall comprise:
(a)The following persons: Nicola Stagliano;
(b) any person who shall at any time be or have been a spouse of NICOLA STAGLIANO;
(c) any child or grandchild of NICOLA STAGLIANO born before the termination date;
(d)the parents, brothers, sisters, spouse, widows, widowers, cousins, children and remoter issue and next of kin of the specified beneficiary or specified beneficiaries and the spouses, widows, widowers, children and grandchildren of such parents, brothers, sisters, spouses, widows, widowers, cousins, children and remoter issue and next of kin;
(e)Corporations: Any company which now or before the termination date is incorporated, of which a director, or person who beneficially owns a share carrying a right to vote at general meetings, is a beneficiary by reason of a preceding paragraph of this sub-clause.
(f)Secondary trust: the trustee or trustees of any trust, whether now existing or hereafter created, (‘the secondary trust’) of which a beneficiary or discretionary object thereunder is a beneficiary of the trust and where the provisions of the secondary trust require a vesting in interest of the trust property prior to the termination date and that the beneficiaries shall always be such as not to cause this deed to breach any applicable rule or law against perpetuities (bold emphasis added).
On 28 June 2020, the trustee of the Family Trust, by its sole director Patricia, made the Resolution, against the heading ‘Distribution of Income’.
It was Resolved that pursuant to the powers vested in the company in the Trust Deed as Trustee of the trust, that the net income of the trust for the year ended 30th June 2020 is hereby set aside for the benefit of the following beneficiaries as follows:
Beneficiary
Estate of Nicola Stagliano 50.00%
Patricia Stagliano 50.00%It was also Resolved that, for the avoidance of doubt, regardless of any adjustment to the income of the Trust, the income of the Trust shall be distributed as specified above.
The income of the trust was $155,823.[86]
[86]Exhibit P4 (Compilation report of Stagliano family trust containing special purpose financial statement for year ended 30 June 2020); T26.19-T27.03.
The resolution was made after Nicola died on 14 September 2019 and before the Court granted letters of administration to Patricia on 4 September 2020.[87]
[87]Affidavit of Susan Mary Lyttleton filed on 22 September 2023, Exhibit SML-1, 14 (Order of the Registrar of Probates dated 4 September 2020).
The Administrator raised the question of whether this resolution was valid having regard to whether Nicola’s estate was a beneficiary of the Family Trust at the relevant time.[88]
[88]Amended Originating Motion, Paragraph S.
The Administrator submitted that the estate was not an entity within the scope of the definition of beneficiary of the Family Trust for the year ended 30 June 2020.[89] Patricia, Lauren and the Trustee, and separately John, agreed with the Administrator on this point.[90] Lisa and Susan stated that they disagreed with the Administrator, but acknowledged it was a complex legal question.[91]
[89]Outline of Submissions of the Plaintiff filed on 20 May 2024, [53]-[56]; Consolidated Outline of Submissions for the Plaintiff filed on 25 October 2024, [68]-[73].
[90]Submissions on Behalf of the First, Sixth and Seventh Defendants filed on 30 May 2024, [11]; Outline of Submissions for the Second Defendant filed on 3 June 2024, [13]; Transcript, T82.23-T84.29 and T97.02-04.
[91]Submissions on Behalf of the Third Defendant, [6]-[8]; Submissions on Behalf of the Fourth Defendant, [8]. Transcript 29/10/24 T104.11-T105.04.
At hearing, the parties also made brief submissions on the consequences that would follow if the Court found that the Trustee’s resolution was defective. Given the complexity of the issues and the amount in question ($77,911.50), the parties indicated that they would confer with a view to resolving the Trust Question.[92] By email to chambers on 12 December 2024, the parties informed the Court that, following conferral, they were unable to resolve the issues giving rise to the Trust Question.
[92]Transcript of proceedings on 29/10/2024, T97.02-12; T111.03-T112.04.
The nature of the issue raised by the Trust Question
The Trust Question raises whether in the year ended 30 June 2020, Nicola’s estate was a ‘beneficiary’ within the definition of that term in cl 3(1)(f) of the Deed. The parties focussed on the issue of whether the estate constituted a trust at the relevant time, focussing on the cl 3(1)(f) definition of beneficiaries which relevantly refers to the ‘trustee … of any trust, whether now existing or hereafter created … of which a beneficiary or discretionary object thereunder is a beneficiary of the trust’ and the reference in the distribution clause in cl 4 of the Deed to a beneficiary ‘which shall be living or which shall be in existence’.
On one view, the Trust Question could be resolved without determining that issue. This is because the definition of beneficiaries does not include trusts themselves, and refers only to ‘the trustee or trustees of any trust’. No party suggested that the estate itself could be a trustee, and there is no legal basis on which such a conclusion could be reached.
The terms of the Resolution were to set aside income of the trust for the estate – described as the ‘Estate of Nicola Stagliano’ – rather than to a trustee of the estate. This would, construing the Resolution according to its terms, be sufficient basis to conclude that it was invalid, at least insofar as the Trustee purported to set aside 50% of the Family Trust’s 2020 income for the estate. However, the way in which the Trust Question is phrased requires consideration of whether the estate was a ‘beneficiary’ at the relevant time. As this is how the parties have approached the question I will address that issue.
There was a further question, arising if the answer to the Trust Question was that the estate was not a beneficiary, as to whether the resolution was valid only in part (insofar as it purported to set aside income for the estate) or in full. The validity of the Resolution was raised in the Amended Originating Motion[93] but there were no written submissions addressing the question of whether it was invalid in whole or as to that part relating to distribution to the estate only. There was some resistance on the part of counsel for the Administrator and by counsel for John to that issue being addressed due to its complexity, and because it had not already been addressed in outlines, but both counsel were able to make some helpful oral submissions.
[93]Amended Originating Motion, 7 March 2024, par S.
The question relating to the validity of the Resolution as a whole or in part related at most to the $77,911.50 distributed to Patricia given my ultimate conclusion that the distribution to the estate was invalid. As it had been within the scope of the matters raised by the Amended Originating Motion, I considered that this did not warrant a further hearing, and was reluctant to have further written submissions given that the parties had already made extensive written and oral submissions.[94] I accepted a submission from counsel for John to the effect that given the limited financial value of the remaining amount, and the cost of any further submissions, it should be expected that the parties could resolve that issue without further legal process. It was for this reason that I gave the parties time to inform me of whether the trusts issue required any further consideration.
[94]Including four sets of written submissions from the Administrator.
As they have advised my chambers that they had been unable to resolve the issues relating to the Resolution and the Trust between them, I also consider below the question of the consequences of the defect in the Resolution.
Relevant legal principles
The principles applicable to the construction of the Deed and the point at which the assets of an estate constitute a trust were not in issue between the parties.[95]
[95]Submissions on Behalf of the First, Sixth and Seventh Defendants filed on 30 May 2024, [11]; Transcript, T82.23-T84.29; Outline of Submissions of the Second Defendant filed 3 June 2024, [13]; Transcript, T97.02-13. The third, fourth and fifth defendants (Lisa, Susan, and Anne-Marie) did not make any submissions on the applicable principles.
Interpretation of trust instruments
In Schreuders v Grandiflora Nominees, the Court of Appeal gave the following guidance on the construction of trust instruments, which are relevant to construing both the distribution power and the definition of beneficiaries in the Deed:[96]
…trust instruments are to be given their natural and ordinary meaning unless they have a special or technical meaning. The terms of an instrument must be construed in the context of the entire document and in such a way that renders them ‘all harmonious one with another’.
The parties’ intention must be found in the wording of the trust instrument rather than in what was on their minds when they executed the instrument. Evidence of the actual intention of the parties will not be admissible except in an action for rectification and other limited circumstances.[97]
[96][2016] VSCA 93, [21]-[22] (Kyrou, Ferguson, and McLeish JJA) (citations omitted).
[97][2016] VSCA 93, [21]-[22] (Kyrou, Ferguson, and McLeish JJA). Cited with approval in The Trust Company (Nominees) Ltd v Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2016] VSCA 324, [35] (Ashley, Beach and McLeish JJA), and Mercanti v Mercanti [2016] WASCA 206, [80] (Buss P; Newnes and Murphy JJA).
Constitution of trusts in the administration of estates
The essence of the Trust Question is whether the estate, at the time of the Resolution on 28 June 2020, prior to letters of administration for the estate having been granted, was a trust.
The following authorities are relevant to that question.
In Re Constantinou, Dalton J of the Queensland Supreme Court explained the status of the interests of a deceased person’s property following their death and until completion of the administration of the estate:
On death the entire interest in property (legal and beneficial) owned by a deceased person passes to the deceased person’s executor for the purpose of administration under the will. While the estate remains in the course of administration, no person entitled under the will has any proprietary interest in any particular asset.
While an estate remains unadministered, persons entitled under the will have a chose in action to require the deceased’s estate to be duly administered, and that right is disposable and transmissible. It carries with it the right to receive the fruits of the chose in action when they mature. It is recognised by the law that this is an inchoate interest of a kind in the assets of the estate. But that interest can be defeated by the executor using the assets to pay the liabilities of the estate. No doubt, from the time of demise the executor was subject not only to duties as executor but fiduciary duties in respect of the trusts established by the will.
However, it is not until the executor has completed the administration of the estate and assents that property passes to those entitled under the will. Those taking property at that point in time take under the will, not by reason of the assent, but the dispositions of the will become operative because of the assent.
This estate is still under administration, the executor has not assented. Thus, the executor still holds the entire legal and beneficial interest in all the property and there is no property the subject of the will trusts. There cannot be any extant trusts because, as yet, there is no property held on trust.[98]
[98][2013] Qd R 219, [33]-[36] (emphasis added).
The reference to the ‘assent’ is to the power of the executor or administrator to agree to the vesting in other persons of interests in the deceased’s real and personal property. The effect of the assent is to vest in the person the estate or interest in which the assent relates.[99]
[99]Administration and Probate Act, s 41(2).
In Official Receiver in Bankruptcy v Schultz, the High Court considered the specific question of when a trust may come into existence with respect to the assets in an estate. Mason CJ, Brennan, Deane, Dawson and Gaudron JJ stated:[100]
…prior to administration of the deceased estate, there is no specific property capable of constituting the subject property of any trust in favour of the beneficiary. It could not be said at that stage what part or parts of the testator's property would need to be realised for the purposes of administration.
[100](1990) 170 CLR 306, 312 (emphasis added and citations omitted).
In Re Roth, McMillan J made the following observations as to the status of the executor of an estate during the period of administration, which is not generally that of trustee, at least until administration of the estate has concluded:[101]
The executors of an estate have duties to get in the deceased’s assets, pay the deceased’s debts, distribute the assets and produce accounts. Unlike trustees, executors take both the legal and equitable interest in the estate property.
…
An executor can become the trustee of estate property at different times so that he may act in different capacities in relation to different property at the same time. However, as explained in Jacobs’ Law of Trusts in Australia:
In practice it is not easy to determine exactly when a person ceases to act as executor and commences to hold the property as trustee. The test is clear —have the person’s executorial duties in respect of that property ended; but the difficulty in practice is to ascertain precisely whether that is the case.
[101]Re Roth [2022] VSC 511, [60] and [63].
Submissions
Submissions on whether the estate was a ‘trust’
The Administrator submitted that the administration of Nicola’s estate had not reached a stage at which it could be characterised as a trust at general law, as the administration had not even commenced on 28 June 2020: letters of administration had not yet been granted.[102] Letters of administration were granted to Patricia on 4 September 2020.[103] It followed from the authoritative and uncontroversial caselaw discussed above that Nicola’s estate was not within the definition of a beneficiary in cl 3(f) of the Trust Deed when the Trustee resolved to make the distribution. The Administrator also submitted that it is unlikely that the expression ‘trust’ in cl 3(f) was intended to mean anything different to the meaning of a trust at general law.[104]
[102]Consolidated Outline of Submissions for the Plaintiff filed on 25 October 2024, [68]; Transcript, T60.12-15 and T62.23-25; Transcript, T64.01-09.
[103]Affidavit of Suzanne Mary Lyttleton sworn on 21 August 2023, Exhibit SML 1, 14.
[104]Consolidated Outline of Submissions for the Plaintiff filed on 25 October 2024, [70].
Patricia, Lauren, and the Trustee accept that, as at 28 June 2020, Nicola’s estate was not a ‘beneficiary’ of the Family Trust within the meaning of that term in cl 3 of the Trust Deed.[105] They expressly agreed with the Administrator’s reasoning from those principles that Nicola’s estate had not constituted a trust by 28 June 2020 and, as such, could not meet the definition of ‘beneficiary’ in cl 3(f) of the Trust Deed.[106] In support of this, in oral submissions, counsel pointed to the fact that the assets of the estate had not been called in, matters relating to Nicola’s business partnership had not been dealt with, and there were outstanding questions as to the valuation of the assets of the estate.[107]
[105]Submissions on Behalf of the First, Sixth and Seventh Defendants filed on 30 May 2024, [11]; Transcript, T82.23-T84.29.
[106]Submissions on Behalf of the First, Sixth and Seventh Defendants filed on 30 May 2024, [11].
[107]Transcript, T83.01-16.
John accepted that Nicola’s estate was not a beneficiary of the Family Trust at the time of the Trustee’s Resolution.[108]
[108]Outline of Submissions of the Second Defendant filed 3 June 2024, [13]; Transcript, T97.11-13.
Lisa and Susan submitted that they did not agree with the Administrator’s submissions on the Trust Question.[109] At the hearing, Lisa stated that they did not wish to make oral submissions on the Trust Question.[110]
[109]Outline of Submissions of the Third Defendant filed on 22 September 2024, [6]-[8]; Outline of Submissions of the Fourth Defendant filed on 23 September 2024, [8].
[110]Transcript, T105.02-05.
Conclusion on the Trust Question
The estate of Nicola Stagliano was not a ‘trust’ within the meaning of cl 3(1)(f) of the Deed at the time of the Resolution, nor in any relevant sense under general law. It is clear from the authorities that a deceased estate, prior to administration and while under administration, does not constitute a trust, as there is no specific property capable of constituting the subject property of any trust.[111] There is no difficulty in this case of the kind acknowledged in Re Roth of determining whether the administration of the estate had concluded, as letters of administration had not yet been granted by the time of the Resolution, and the administration of the estate had not yet commenced.
[111]Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306, 312; Re Constantinou [2013] Qd R 219, [33]-[36].
Further, as noted above, the definition of beneficiary refers in cl 3(1)(f) refers to the ‘trustee or trustees of any trust’ as a class of beneficiary, and not to a trust. The estate was plainly not a trustee.
Nicola’s estate was not a ‘beneficiary’ under the Deed of the Stagliano Family Trust and the answer to the Trust Question is, therefore, ‘No’.
The consequences of the defect in the Resolution
Submissions on consequences of defective Resolution
Counsel for John submitted that, if the distribution to the estate was defective, the entirety of the money set aside, including that set aside for Patricia, must be returned to the Trustee.[112] This is because the whole Resolution was tainted by the error.[113] It was submitted that it was not an effective determination, and that cl 4(3) of the Deed would apply. That clause states:
Default
If the trustee shall fail to effectively pay, apply or set aside the whole of the income of a financial year as provided in sub-clause 1 of this clause or to effectively resolve to accumulate the same as provided in sub-clause 2, then to the extent to which such income may not have been paid applied set aside or accumulated the trustee shall hold the same on trust absolutely for the default beneficiaries named or described in sub-paras (i) and (ii) of para (d) of cl 13(2) and if more than one equally, and if there shall be no such persons, then for the default beneficiaries described in the succeeding sub-para of cl 13(2)(d).
[112]Transcript, T96.29-31.
[113]Transcript, T97.13-T98.08.
Clause 13(2) of the Deed deals with ‘Procedure on Termination’ of the Trust. Clause 13(2)(d) provides, relevantly:
(d)to the extent to which the capital of the Trust shall not have been so distributed or dealt with, the trustee shall stand possessed of so much as remains of the trust fund for the following default beneficiaries as shall then be living and if more than one in equal shares as tenants in common:
(i)the spouse, parents, brothers, sisters, widows, widowers, cousins, children and remoter issue and next of kin of the said NICOLA STAGLIANO …
It was, therefore, contended for John that in circumstances where the determination reflected in the Resolution was not effective, the whole of the distribution for that year should go in equal shares to the default beneficiaries, who were in any event parties to the proceeding. Given the amount in dispute it was a matter which they should be able to resolve by agreement.[114]
[114]Transcript T73.25-T74.09.
The Administrator took the Court to Lewin on Trusts (Vol II), which states:[115]
[115]Transcript. T70-T75, referring to Lynton Tucker et al Lewin on Trusts (Volume II) (Thompson Reuters, 12th Ed), 123-124, [30-016]-[30-017]; [30-019].
There is an excessive execution of the power if an exercise is expressed so as to exceed the scope of the power or it if is in breach of some rule of law. Common ways in which an exercise may exceed the scope of the power are the purported grant of an excessive interest, the attempt to appoint in favour of persons who are not objects of the power [etc]…
Where there is an excessive execution, it is plain that such part of the exercise as is not warranted by the terms of the power or infringes some rule of law cannot stand.[116] The principal question which then arises is whether the whole exercise is vitiated or whether it is possible to sever the invalid part from the remainder of the exercise and so allow the latter to take effect. That question will ordinarily arise in connection with dispositive powers. Severance is possible if, as a conceptual matter, it is possible to distinguish the boundary between the valid and the invalid, but in the case of a fiduciary power it is then material to enquire also whether the trustees would not have exercised the power at all, or would have exercised it differently, if they had been properly instructed as to the limits on the power, for otherwise, though the exercise will not be void, the so-called principle in Re Hastings-Bass may make it liable to challenge. …
…
A power to appoint in favour of one or both of A and B is plainly not well exercised by an appointment in favour of C or of A, B, and C. A slip of that kind may occur when the objects of the power are the children of a given person but do not include illegitimate, legitimated or adopted children; if the power is purportedly exercised in favour of children in a wider sense there is an excessive execution. The same applies if the power is in favour of children born by a given date but is purportedly exercised to include later-born children. Such appointments take effect as follows:
(1)Where the appointment is in favour of named persons in fixed shares as beneficial tenants in common, then the share of any non-object goes in default of appointment but the appointment is valid as to the remainder. The same applies where they take as beneficial joint tenants, at least if the property is personalty, but there may be a doubt if it is realty.
…
An appointment of an interest in favour of an object followed by an interest in favour of a non-object is valid as to the former and void as to the latter.
[116][Footnote 60 in original:] It is void: Crociani v Crociani [2017] JRC 146 at [345] (reversed in part on other points sub nom BNP Paribas Jersey Trust Corp. Ltd v Crociani [2018] JCA 136A).
I observe at this point that the reference in the above extract of the text to ‘the so-called principle in Re Hastings-Bass’ is a reference to an authority of the Chancery Division of the Court of Appeal of England and Wales.[117] In that case, Buckley LJ, in a single judgment delivered for the Court of Appeal, stated:[118]
…. [w]here, by the terms of a trust … a trustee is given a discretion as to some matter under which he acts in good faith, the court should not interfere with his action notwithstanding that it does not have the full effect which he intended, unless (1) what he has achieved is unauthorised by the power conferred upon him, or (2) it is clear that he would not have acted as he did (a) had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account.
[117][1975] Ch 25.
[118][1975] Ch 25, 41.
Pitt v Holt,[119] a 2013 decision of the United Kingdom Supreme Court, explained that authority in some detail. It adequate for present purposes to refer to the summary of the relevant conclusions in Pitt v Holt by the Court of Appeal of this Court in Owies v JJ Nominees Pty Ltd:[120]
In Pitt, the Supreme Court of the United Kingdom considered the circumstances in which a disposition of property or income by a trustee will be set aside. In doing so, the Court distinguished between those cases where the disposition is plainly beyond power and those dispositions that are within power, but in respect of which there has been some breach of duty. An example of the first category is a purported distribution to an entity that is not a beneficiary under the trust. An example of the second category is a distribution that is made to a beneficiary within the terms of the trust, but where there has been a failure by the trustee of its duty to give proper consideration to relevant matters or its duty to give real and genuine consideration to the power. Lord Walker described this class of case as involving ‘inadequate deliberation’ and the former as involving ‘excessive execution’, which adequately captures the distinction.[121] A fraud on the power, such as where the power is exercised ostensibly within the terms of the trust but for an improper purpose, would appear to fit within the excessive execution category.[122]
[119][2013] 2 AC 108.
[120][2022] VSCA 142, [141].
[121][Footnote 86 in the original] Pitt [2013] 2 AC 108, [60]; [2013] UKSC 26.
[122][Footnote 87 in original]: Ibid [61]-[62] (Lord Walker).
The Court in Owies noted with apparent approval that the view of the Court in Pitt v Holt was that where there was a breach involving inadequate deliberation, the breach made the decision voidable but not void.[123]
[123]Owies, [143]; see Pitt v Holt at [43]; [60]; [93].
Counsel for the Administrator submitted that, applying the principles summarised in Lewin on Trusts, the appointment to Patricia and the estate are in fixed shares and, if the appointment to the estate fails, ‘it should go in default of appointment’.[124] If the Trustee had been aware that the estate was not a beneficiary, counsel said ‘the probability, I say, is that the only inference that we have is that they would have distributed it all to Patricia’.[125] He did not address specifically the question of whether the resolution, insofar as it set aside 50% for Patricia, could be severed and remain valid.
[124]Transcript, 29/10/24, T75.03-16.
[125]Transcript, 29/10/24, T75.17-22.
Counsel for Patricia, Lauren, and the Trustee submitted, consistent with the submissions made by counsel for John, that the consequence of the error affecting the resolution was to be determined by the terms of the Deed as properly construed. He submitted that ‘there is a very clear outcome that clause 13 deals with the matter in a way that sends the ineffective resolution to the default beneficiaries …’. [126]
[126]Transcript, 29/10/24, T83.24-T84.26.
Consideration
As this matter was not fully argued, I will express some preliminary views only on the effect on the Resolution of the Trustee’s erroneous understanding that there was power to set aside income for the estate of Nicola. I have found the submissions that counsel were able to make on the issue at the hearing helpful in arriving at the tentative conclusions below.
First, it is clear that the Trustee’s Resolution was invalid insofar as it purported to set aside income for the estate of Nicola. The Trustee’s power under cl 4(1) of the Deed to make a distribution or set aside income was limited to doing so ‘to or for the benefit of the beneficiaries … or any one or more of them exclusive of the other or others who shall be living or which shall be in existence at the time payment, application or setting aside of such income is made…’. The estate was not a beneficiary as defined at the time the Resolution purported to set aside the income.
The Deed then addresses expressly, in cl 4(3), the consequences of a failure to pay, apply or set aside the whole of the income of the Family Trust in a financial year, or to fail effectively to resolve to accumulate the income. It states, as relevant to the present situation, if ‘the trustee shall fail to effectively … set aside the whole of the income of a financial year as provided in sub-clause (1) of this clause, … then to the extent to which such income may not have been … set aside … the trustee shall hold the same on trust absolutely for the default beneficiaries’ in cl 13(2)(d), and ‘if there is more than one equally’.
The Resolution did not effectively set aside the whole of the 2020 financial year income, as it invalidly purported to set aside 50% of the income for the estate of Nicola, a non-beneficiary. The setting aside of income could also not be said to be ‘for the benefit of the beneficiaries’ within the meaning of cl 4(1), at a time when the estate remained unadministered and it was not clear how beneficiaries would benefit from the final administration of estate assets.
The Resolution was clearly beyond the Trustee’s power insofar as it purported to set aside income for the estate of Nicola, and was in my view void.[127]
[127]See Pitt [30], [43], [60]; Owies at [93].
However several complex questions arise as to the status of that part of the Resolution by which the Trustee set aside income for Patricia. I express only preliminary conclusions on those questions, given the incomplete nature of the argument, in the hope that this may assist the parties to resolve this issue fully.
Severability
The first question is whether that part of the Resolution relating to setting aside income for Patricia is severable, or whether it renders the entirety of the Resolution an ‘ineffective resolution’. If the entirety of the Resolution is an ineffective resolution, it falls to be dealt with pursuant to cl 4(3), as submitted by counsel for Patricia, Lauren and the Trustee, and counsel for John.
The passages from Lewin on Trusts identified by counsel for the Administrator and referred to above may suggest that the part of the Resolution relating to Patricia may be severable, on the basis that it is possible to ‘distinguish the boundary between the valid and the invalid’. A distinct distribution to a beneficiary may not fail by reason that there is also a purported distribution in excess of power to a non-object. Here it could be said that it was clear that the intention was that Patricia have half of the income set aside for her benefit, and the invalid setting aside of the remaining half does not affect that.
It could, however, also be said that where the Resolution distributed percentages of the trust income to two intended objects and one distribution fails as being beyond power, it has an effect on the entirety of the resolution. The Resolution is prefaced as being ‘pursuant to the powers vested in the company in the Trust Deed’, but the powers in the Deed did not empower the Trustee to set aside the income as she did. On that view, it would not be appropriate to sever parts of the Resolution and it would in whole be an ineffective resolution.
Whether any severable part of the Resolution is nevertheless void or voidable
If the part of the Resolution by which income was set aside for Patricia is severable, it remains to be considered, in the language employed in Lewin on Trusts, ’whether the trustees would not have exercised the power at all, or would have exercised it differently, if they had been properly instructed as to the limits on the power’.[128] It is relevant that the Trustee, in allocating the entire Family Trust income for the year, had distributed half to Patricia and the other half to an entity (the estate) which in a general sense engaged the interests of Patricia but also potentially of Nicola’s wider family.
[128]See [106] above.
Had Patricia, as director of the Trustee, been aware that the Trustee was unable to set aside income of the Trust for Nicola’s estate, she may well have thought it appropriate on behalf of the Trustee to distribute all of the income in a completely different way, and not just the 50% wrongly set aside for the estate. The Trustee would at least have been required to give real and genuine consideration, in the exercise of the distribution power, to whether or not to exercise the power, and if she did so, as to how she should exercise it.[129] It should not be assumed, contrary to the submission of the Administrator, that the Trustee, through its sole director Patricia, would have resolved to allocate the entire income to Patricia.[130] Having exercised the power on the wrong assumption that 50% of the income would be set aside for Nicola’s estate, it could potentially be said by beneficiaries of the Family Trust that she has taken an irrelevant or wrong factual or legal consideration into account. It could also be said that it was not a properly informed consideration of the distribution power, in the sense identified by the High Court in Finch v Telstra Super Pty Ltd[131] and applied by the Court of Appeal in Owies.[132]
[129]Owies, [82]-[92].
[130]Cf submission of the Administrator referred to at [110] above.
[131](2010) 242 CLR 254, 280 [66] (French CJ, Gummow, Heydon, Crennan and Bell JJ).
[132]Owies, [92]-[93].
If that were the case, the Resolution as a whole may be regarded as voidable at the instance of a beneficiary. The analysis, although not directly applicable to what constitutes an ineffective distribution for the purposes of cl 4(3) of the Deed, does support a conclusion that the Resolution, if voidable, should be regarded as an ineffective distribution within the scope of cl 4(3), with the result that the entirety of the income for the 2020 financial year should be dealt with in accordance with that clause.
Conclusion
In light of my reasons above, I will answer the Questions in the following way:
Question:Whether the luxury car collection that formed a part of the inventory of assets of the estate of Nicola Stagliano as at the date of death is ‘personal chattels’ within section 5 of the Administration and Probate Act 1958 (Vic)?
Answer:Yes the luxury cars which formed part of the inventory of assets were personal chattels.
Question:Whether, in the year ended 30 June 2020, the estate of Nicola Stagliano was a beneficiary within clause 3(1)(f) of the Stagliano Family Trust Deed of Settlement?
Answer:No. The estate of Nicola Stagliano was not a beneficiary within clause 3(1)(f) of the Stagliano Family Trust Deed of Settlement.
Noting that no relief was sought with respect to the validity or effect of the Resolution, I will go no further than expressing the views that I have on that issue in paragraphs [112] to [123] above.
I raised the question of costs with the parties during the hearing. It was accepted that it was not to be regarded as adversarial litigation, and that it was appropriate for all defendants to have appeared to make submissions on the questions. The submissions of all parties assisted me, and in particular the submissions made by counsel for John which properly identified legal and factual considerations as contradictor to the submissions made for the Administrator as plaintiff. Susan and Lisa as self-represented litigants acknowledged that they had not incurred costs on this application.[133]
[133]Transcript 29/10/24 T106.03-15.
I will therefore order that the costs of the plaintiff; of the first, sixth and seventh defendants, and of the second defendants, be paid out of the estate on an indemnity basis.
SCHEDULE OF PARTIES
| S ECI 2023 04441 | |
BETWEEN: | |
| SUZANNE MARY LYTTLETON (in her capacity as administrator and trustee of the estate of NICOLA STAGLIANO, deceased) | Plaintiff |
- and - | |
PARTICIA MARY STAGLIANO | First Defendant |
JOHN NICOLA STAGLIANO | Second Defendant |
LISA NICOLE STAGLIANO | Third Defendant |
SUSAN MARY SOMERVILLE | Fourth Defendant |
ANNE-MARIE PAPADOPOULOS | Fifth Defendant |
LAUREN EMMA STAGLIANO | Sixth Defendant |
HAZELTONE PTY LTD (ACN 077 188 482) | Seventh Defendant |
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5
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