Baba v Sheehan (No 2) [2020] NSWSC 468

Baba v Sheehan (No 2) [2020] NSWSC 468

Payments to Mrs Baba and Mr Carney described as salary sacrifice/distributions for 2015 to 2018 were in substance payments on account of unit holder distribution entitlements, so repayment by Mrs Baba was not ordered; instead the Trust accounts and tax returns should reflect their true character. Consultancy fees and the June 2016 salary sacrifice payment to Mr Baba were treated as payments referable to annual leave entitlements and were not repayable merely because they were mischaracterised. The October 2016 payments to Mr and Mrs Baba described as cash-outs of long service leave were unjustified because no entitlement was proved and had to be repaid. Normal salary sacrifice payments...

Jurisdiction
Australia
Judgment Date
30 April 2020
Procedural Posture
Equity Corporations List; Cross Claim for Repayment of Monies Paid Out of the Funds of the SSO Trust / Supplementary Judgment on Consequential Orders Following Principal Judgment
Outcome
Cross-claim partly upheld in principle; certain payments were found repayable, other alleged improper payments were to be addressed by correcting the Trust accounts and tax returns, and the proceedings were adjourned for quantification and costs.
Legal Topics
['unit Trusts' 'trust Accounts' 'distribution Entitlements' 'salary Sacrifice Arrangements' 'repayment of Unauthorised Payments' 'trustee Authority']
['equity' 'trusts' 'corporations' 'taxation'] ['unit Trusts' 'trust Accounts' 'distribution Entitlements' 'salary Sacrifice Arrangements' 'repayment of Unauthorised Payments' 'trustee Authority']

Case Brief

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Procedural Posture

Equity Corporations List; Cross Claim for Repayment of Monies Paid Out of the Funds of the SSO Trust / Supplementary Judgment on Consequential Orders Following Principal Judgment

Legal Issues

  1. 1 ['Whether consultancy fees and salary sacrifice payments made to Mustafa Baba and Anna Monica Baba out of the SSO Trust funds were improper and repayable.' 'Whether payments described as salary sacrifice/distributions were truly payments on account of unit holder distribution entitlements and should be repaid or reflected by amendments to the Trust accounts and tax returns.' 'Whether consultancy fees and purported salary sacrifice payments constituted cash-outs of annual leave or long service leave entitlements.' 'Whether normal salary sacrifice payments made after Silktote was appointed trustee were authorised.' 'How interest should be dealt with on any amounts repayable.']

Ratio Decidendi

Payments to Mrs Baba and Mr Carney described as salary sacrifice/distributions for 2015 to 2018 were in substance payments on account of unit holder distribution entitlements, so repayment by Mrs Baba was not ordered; instead the Trust accounts and tax returns should reflect their true character. Consultancy fees and the June 2016 salary sacrifice payment to Mr Baba were treated as payments referable to annual leave entitlements and were not repayable merely because they were mischaracterised. The October 2016 payments to Mr and Mrs Baba described as cash-outs of long service leave were unjustified because no entitlement was proved and had to be repaid. Normal salary sacrifice payments...

Court Disposition

Cross-claim partly upheld in principle; certain payments were found repayable, other alleged improper payments were to be addressed by correcting the Trust accounts and tax returns, and the proceedings were adjourned for quantification and costs.

Orders

  • ['I adjourn the proceedings for 7 days or such other period as may be agreed with my Associate.' 'I direct that the cross-claimant bring in a minute of order giving effect to this judgment, and dealing with costs.']