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24 Nov 10 Corporate trustee given leave to appeal - Bruton Holdings

The Federal Court (Jagot J) has granted Bruton Holdings Pty Limited (in liquidation) (Bruton) leave to appeal from the decision of Graham J in FCT v Bruton Holdings Pty Limited (in liquidation) [2010] FCA 978 (3 September 2010).

In that decision, Graham J held that Bruton, as trustee, was not entitled to be indemnified out of the assets of a trust for expenses that it incurred in successfully pursuing legal proceedings against the Commissioner after the time (28 February 2007) that it ceased to be trustee of the trust, at which time it became only a bare trustee of the assets of the trust.

Jagot J said, at para 6:

"In this case: – (i) the issues are of general importance to the powers and rights of trustees, (ii) the state of the law regarding the powers and rights of bare trustees is not settled (for example, and as cited by Bruton, see Herdegen v FCT (1988) 84 ALR 271 at 281-282, Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370 at 398 and Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1998) 45 NSWLR 639 at 651), and (iii) the declarations finally determine Bruton’s rights and preclude it from seeking indemnity. The considerations of sufficiency of doubt and substantial injustice are not necessarily independent from each other. These factors support the conclusion that the grant of leave is appropriate."

Bruton Holdings Pty Limited (in liquidation) v FCT [2010] FCA 1278 (Federal Court, Jagot J, 23 November 2010).


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