E Co [a pseudonym] v Q [a pseudonym] (No 4) [2019] NSWSC 429

E Co [a pseudonym] v Q [a pseudonym] (No 4) [2019] NSWSC 429

It would be inequitably harsh and disproportionate to grant relief recognising a constructive trust and acceleration of the plaintiffs' expectations over all the properties if it caused a significant CGT liability falling solely on the defendant; therefore, relief is structured as (1) a declaration of constructive trust (from July 2003 or acquisition date) over all but one property, (2) immediate transfer of those properties to plaintiffs (the sons) upon payment of a reduced notional sum representing living expenses (and not market rent or book debts) to the defendant, (3) Property No 11 to be sold to satisfy any CGT liability arising, with balance (if any) paid to plaintiffs as...

Parties
First Plaintiff: E Co [a pseudonym]; Second Plaintiff: EM Co [a pseudonym]; Third Plaintiff: A [a pseudonym]; Fourth Plaintiff: B [a pseudonym]; Fifth Plaintiff: C [a pseudonym]; First Defendant: Q [a pseudonym]; Second Defendant: Second Defendant
Jurisdiction
Australia
Judgment Date
18 April 2019
Procedural Posture
Civil (common Law, Equity) / Final Judgment Following Re Opened Hearing After Principal Judgment and Further Evidence/submissions as to Relief
Outcome
Final orders proposed following reopened hearing—relief in substance for plaintiffs with significant structuring to ameliorate CGT effects and avoid undue harshness to defendant; costs reserved.
Legal Topics
Proprietary Estoppel, Constructive Trusts, Relief—acceleration of Expectation, Proportionality—relief Vs. Detriment, Capital Gains Tax (cgt) Consequences, Financial Capacity to Comply With Orders, Clean Break Principle, Declaratory Relief, Compulsory Transfer of Land, Shareholdings in Family Companies
Equity Civil Procedure Property Law Estoppel Trust Law Proprietary Estoppel Constructive Trusts Relief—acceleration of Expectation +7 more

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Parties

E Co [a pseudonym]

First Plaintiff

EM Co [a pseudonym]

Second Plaintiff

A [a pseudonym]

Third Plaintiff

B [a pseudonym]

Fourth Plaintiff

C [a pseudonym]

Fifth Plaintiff

Q [a pseudonym]

First Defendant

Second Defendant

Second Defendant

Procedural Posture

Civil (common Law, Equity) / Final Judgment Following Re Opened Hearing After Principal Judgment and Further Evidence/submissions as to Relief

Legal Issues

  1. 1 Whether making good the plaintiffs' expectations would be inequitably harsh in all the circumstances;
  2. 2 Whether conditions such as payment of market rent or repayment of book debts should be imposed on acceleration of plaintiffs' expectations;
  3. 3 Whether imposition of capital gains tax liability flowing from the relief granted would render relief wholly disproportionate;

Ratio Decidendi

It would be inequitably harsh and disproportionate to grant relief recognising a constructive trust and acceleration of the plaintiffs' expectations over all the properties if it caused a significant CGT liability falling solely on the defendant; therefore, relief is structured as (1) a declaration of constructive trust (from July 2003 or acquisition date) over all but one property, (2) immediate transfer of those properties to plaintiffs (the sons) upon payment of a reduced notional sum representing living expenses (and not market rent or book debts) to the defendant, (3) Property No 11 to be sold to satisfy any CGT liability arising, with balance (if any) paid to plaintiffs as...

Court Disposition

Final orders proposed following reopened hearing—relief in substance for plaintiffs with significant structuring to ameliorate CGT effects and avoid undue harshness to defendant; costs reserved.

Orders

  • Judgment for the plaintiffs on their second further amended statement of claim.
  • Dismissal of the first defendant's cross-claim.