The decision in CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CR 98


The Victorian Commissioner of State Revenue assessed land tax against the unit holders in a number of unit trusts that held shopping centres. The taxpayers held 100% of the units in some trust and less than 100% in others.

One company (CPT) in particular held all of the issued units of a unit trust.

It was held in the lower court that CPT was in a position to bring an end to the unit trust (applying Saunders v Vautier (1841) 49 ER 282).

CPT challenged this proposition.


Whether the unit holders were “owners” of the land under a portion of the definition of that term that included every person entitled to any land for any estate of freehold in possession.


The Court (in distinguishing Charles v FCT (1954) 90 CLR 598), held that the entitlements of the unit holders in terms of its trust deed did not confer proprietary interest in the underlying land and did not make the unit holders owners for the land tax purposes.

The rule in Saunders v Vautier did not apply to constitute a single unit holder with 100% of the units the owner of the trust fund.

Note, the modern formulation of Saunders v Vautier is as follows:

“An adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation”

In the trust deed, the manager covenanted with the trustee to ensure that there were at all times sufficient readily realisable assets of the Trust available for the Trustee to raise the fees to which the Manager and the Trustee were entitled under the Deed

  • These stipulations made the Trustee and the Manager interested in due administration of the trusts of the Deed
  • This meant that the unit holders were not the persons in whose favour alone the trust property might be applied by the trustee

It was impossible to say what the trust fund in question was until satisfaction of the rights of recoupment or exoneration, as the unsatisfied trustee’s right of indemnity was expressed as an actual liability in the accounts of the trust.

  • The modern consideration of Saunders v Vautier did not give consideration of this right


The rule in Saunders v Vautier does not apply to a situation where the trustee’s right of indemnity (reimbursement or exoneration) has yet to be satisfied. In such an instance, the trustee has a lien on the trust property, such that the beneficiaries do not have an absolute interest in the trust property.

Inconsistencies between the decisions in CPT and ISPT

While CPT was concerned with whether or not there was ownership, ISPT was concerned with a change in ownership.

In CPT, there was no ownership for two reasons. Firstly, the beneficiaries had no interest in any specific asset, and secondly because of the provisions in the trust deed that gave rights to the trustee and manager. No such similar rights existed in ISPT.

The lack of an interest in any specific underlying asset would not exclude ownership if the beneficiary or beneficiaries were otherwise entitled to rely upon the principle in Saunders v Vautier and terminate the accumulation.

The trustee’s rights did not change in ISPT.

Peter Gell

Peter was admitted as a solicitor in 1981 and holds qualifications in law and a Masters degree in taxation conferred by the University of NSW. Peter practises in taxation advisory, estate planning and wills, probate and commercial law.