Background
In earlier proceedings, Brereton J held that Adrian Kallidis held a Mount Pritchard property on constructive trust for Apastolis Raymond Lucas Galatidis and ordered its transfer, subject to the mortgagee’s rights and Mr Kallidis’s entitlement to recover a defined payment amount. The parties agreed the form of consequential orders made on 22 April 2026, including a declaration that the property “is held” by Mr Kallidis on trust for Mr Galatidis.
Mr Kallidis then applied to the Australian Taxation Office for a private binding ruling on the capital gains tax consequences of implementing the orders. The application asserted that the use of the present tense meant the trust arose only when the Court made its orders. Mr Galatidis sought a declaration, or a variation under the slip rule or the Court’s inherent jurisdiction, stating that the trust arose when the property was transferred to Mr Kallidis on 14 May 2016.
The Court’s Holding
The Court refused to make the requested declaration or vary the earlier order. The date on which the constructive trust arose had not been determined at trial or addressed before the agreed orders were made. That issue involved arguable questions, including when detriment occurred and whether third-party interests should affect the timing. The existing declaration accurately reflected the form sought and agreed by the parties; changing it would reflect impermissible “second thoughts,” not correction of an accidental slip or omission.
However, the Court held that Mr Kallidis’s tax-ruling application misstated the effect of the earlier reasons and orders. A present-tense declaration that property “is held” on trust recognises a state of affairs; it does not necessarily create a trust from the date of the declaration. The Court directed Mr Kallidis to provide the ATO officer with these reasons and a letter stating that the application had wrongly conveyed that the trust was created on and from the date of the April 2026 orders.
Key Takeaways
- A present-tense declaration of a constructive trust does not, by itself, mean the trust arose only on the date of the court order.
- The slip rule cannot be used to resolve an unargued substantive issue or to alter an order that accurately reflected the Court’s original decision.
- A court may make consequential directions to correct a party’s misstatement of its orders in a tax-ruling application required by those orders.
Why It Matters
The decision draws a careful line between recognising an institutional constructive trust and retrospectively imposing a remedial trust. It confirms that the wording of a declaration may not determine the date a trust arose, but also that parties must raise timing issues before final orders are settled.
For tax-sensitive property disputes, parties should ensure that private binding ruling applications accurately describe the effect of court reasons and orders. The ATO, rather than the Court in this application, will determine the taxation consequences.