Clark v Inglis [2010] NSWCA 144

Clark v Inglis [2010] NSWCA 144

The appeal failed because accepted accounting evidence established that treating unrealised movements in the market value of marketable securities as income was a permissible accounting treatment, and no legal standard or provision of the trust deed precluded that approach. The accounts adopted by the company as trustee, through Dr Inglis as its controlling mind, validly treated the increases in value as income and supported the distributions and loan account entries. If the gains were otherwise capital, the trustee's adoption of the accounts was sufficient to constitute a determination under clause 6(f) to treat them as income.

Jurisdiction
Australia
Judgment Date
29 June 2010
Procedural Posture
Application for Leave to Appeal and Appeal From Orders of the Supreme Court of New South Wales, Equity Division After Separate Issues / Court of Appeal; Leave Granted and Appeal Dismissed
Outcome
Leave to appeal granted; appeal dismissed; appellants ordered to pay the respondents' costs of the appeal, including the application for leave to appeal.
Legal Topics
['discretionary Trust' 'construction of Trust Deed' 'meaning of Income' 'trustee Powers' 'unrealised Gains' 'beneficiary Loan Accounts' 'present Entitlement']
['trusts and Trustees' 'equity' 'taxation' 'accounting for Trusts'] ['discretionary Trust' 'construction of Trust Deed' 'meaning of Income' 'trustee Powers' 'unrealised Gains' 'beneficiary Loan Accounts' 'present Entitlement']

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Procedural Posture

Application for Leave to Appeal and Appeal From Orders of the Supreme Court of New South Wales, Equity Division After Separate Issues / Court of Appeal; Leave Granted and Appeal Dismissed

Legal Issues

  1. 1 ['Whether the trustee could, consistently with the trust deed, lawfully treat movements in the value of investments as income and distribute them to beneficiaries.' 'Whether the trustee in fact determined to include movements in net market value of investments as income.' 'Whether valid distributions to Dr William Inglis were made so that his loan account reflected the amounts in the accounts up to 30 June 2006.' 'Whether a determination under clause 6(f) of the trust deed was required or was made.']

Ratio Decidendi

The appeal failed because accepted accounting evidence established that treating unrealised movements in the market value of marketable securities as income was a permissible accounting treatment, and no legal standard or provision of the trust deed precluded that approach. The accounts adopted by the company as trustee, through Dr Inglis as its controlling mind, validly treated the increases in value as income and supported the distributions and loan account entries. If the gains were otherwise capital, the trustee's adoption of the accounts was sufficient to constitute a determination under clause 6(f) to treat them as income.

Court Disposition

Leave to appeal granted; appeal dismissed; appellants ordered to pay the respondents' costs of the appeal, including the application for leave to appeal.

Orders

  • ['Grant leave to appeal from the orders of the Equity Division on 7 July 2009.' 'Direct a notice of appeal be filed within seven days substantially in the form in the White Books filed adding to that notice the parties joined to the application on 6 May 2010.' 'Dismiss the appeal.' "Order that the appellants pay the...