Campbell v Campbell  NSWSC 554
In the 1970s, Dad – a farm owner – planned to transfer his farm into a trust with a trust company as trustee and his family as beneficiaries.
If it worked, his wife and 4 kids could take the benefit of the farm without paying death duties.
At this time, rural families often faced death duties at “confiscatory levels” when farms passed to the next generation.
Dad died in 1976. Mum died in 2017. A number of disputes arose between the siblings and executors. Sadly, the legal fees associated with those eventually required the sale of the farm.
(For the child who worked the farm and hoped to go on, this loss was – understandably – sharply felt.)
Mum’s executors, and the son who would inherit the farm from her estate, said the farm was held by the trust company on a bare trust for Mum.
The farm had been acquired by Dad, from his father, in the 1950s. Over time, various parcels were added to it, and it was operated by various different partnerships.
After Dad’s 1976 death, Mum and the kids continued to work the farm.
Over the decades, Mum tried to discuss succession planning with the family, unsuccessfully.
Mum died in 2017 with her estate valued at $12.5m – crucially, that valuation was based on the assumption she (and not beneficiaries of the 1975 trust) owned the farm.
The Court’s understanding of the 1975 transaction was helped by the contemporaneous notes made by a young lawyer who was a family member (and who would go to the bar and take silk decades later.)
Their notes included a notation that it was likely that the scheme to avoid death duty would succeed. They were surprised to hear, decades later, that the effect of the transfer was in question.
Various documents were executed, and resolutions of the trust company and related entities passed. Ownership of the farm passed to the trust company.
After Dad’s death, his executors entered into various transactions on the basis Dad’s beneficial interest in the land had been validly transferred.
This conduct included a “well crafted, detailed and thoughtful” letter from Mum whose contents would not make sense unless Mum believed the transfer was effective.
In the following decades the parties proceeded as if the transaction had been effective including: Mum and others making a statutory declaration, swearing an affidavit, receiving legal and restructuring advice, the trust company giving guarantees, and the trust company’s repeated mortgaging of the farm over decades.
The Court found the trust company paid Dad valuable consideration for the transfer of the farm, and so the farm was part of the assets of the trust.
The scheme was effective, in accordance with how it had been treated by all relevant parties until 2020.