Wood v Inglis [2009] NSWSC 601

New South Wales Supreme Court

CITATION : Wood v Inglis [2009] NSWSC 601

HEARING DATE(S) : 30, 31 March, 1 April, 4 May 2009

JUDGMENT DATE : 30 June 2009

JURISDICTION : Equity Division

JUDGMENT OF : Brereton J

DECISION : Trustee was entitled to treat movements in net value of investments on income account. Controlling director of trustee company had implied actual authority in respect of all affairs of the Trust, accepted accounts prepared on market revaluation basis, and thereby validly determined to treat increase in market value of investments as income for each relevant year. Trustee validly and effectively made irrevocable and absolute distribution of whole of income shown in annual accounts for each relevant year, by default if not expressly. Accordingly, trust was indebted to deceased on loan account at date of death for $1,242,640.20. Estate has not released debt. Trustee was not entitled retrospectively to revoke irrevocable and absolute distributions previously made and to extent that reconstruction of Trust accounts pursuant to resolutions had that effect, they were beyond Trustee's power and void. Cross-claimant is entitled to judgment against first cross-defendant for payment to executors of estate of $1,242,640.20, and interest. Cross-claimant is entitled to judgment against first cross-defendant for payment to herself of $215,327.72, and interest.

CATCHWORDS : TRUSTS AND TRUSTEES – Powers of trustees - Capital and income – whether trustee of discretionary trust entitled to treat as income unrealised capital gain on investments – whether trustee validly and effectively did so – whether trustee validly made distributions of such income to beneficiary – whether trustee entitled after beneficiary's death to revisit treatment of unrealised capital gain so as to revoke distributions previously made – whether beneficiary's estate released debt on beneficiary current account. - CORPORATIONS – Directors – authority – where other directors leave conduct of affairs of corporation entirely to controlling director – whether controlling director has implied actual authority in respect of all relevant affairs of company