Collie v Merlaw Nominees Pty Ltd - [2001] VSC 39

SUPREME COURT OF VICTORIA
COMMERCIAL & EQUITY DIVISION	Not Restricted

No. 5565 of 2000

GEOFFREY MALCOLM COLLIE	Plaintiff
v
MERLAW NOMINEES PTY LTD (in liquidation) and DAMIEN JOHN NOLAN	Defendants

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JUDGE:	Warren J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 and 28 September and 2–4 October 2000
DATE OF JUDGMENT:	28 February 2001
CASE MAY BE CITED AS:	Collie v Merlaw Nominees Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2001] VSC 39

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Trusts – trading trust – trustee's indemnity from trust assets – subrogation to creditor of trustee's indemnity.
Procedure – application to withdraw admission in pleadings.
Corporations – leave to proceed against company in liquidation –
Corporations Law, s.471B.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G.R. Ritter QC with Mr M.D. Murphy	Howie & Maher
For the 1^st Defendant	Mr R.S. Randall (on 28 September 2000)	D.E. Phillips
For the 2^nd Defendant	Mr M.J. Corrigan (on 27 September 2000)	Voitin Walker & Davis
Appeared on his own behalf (28 September and 2-4 October 2000)

HER HONOUR:

The plaintiff pursues a judgment debt owed to him by the first defendant, a trustee company, by way of seeking to subrogate to the plaintiff the right of indemnity of that trustee company from the assets of the trust of which it was formerly the trustee.

The relevant judgment was entered in Supreme Court proceeding No. 6265 of 1991 ("the first proceeding") by order of Byrne J made on 24 November 1999. The judgment was for the sum of $92,784.74 together with interest of $106,052.96 and ordered against Merlaw Nominees Pty Ltd ("Merlaw").

Background to the first proceeding

In 1984 a company associated with Geoffrey Malcolm Collie known as Collian Properties Pty Ltd became a tenant of part of a building at 32 Jolimont Terrace, Jolimont ("the Jolimont property"). The property was owned by Merlaw, a trustee company associated with Damien John Nolan. Merlaw was originally known as Seventy-Seventh Albye Trading Pty Ltd. It was the trustee of a trust known as the Prudent Trust. Merlaw purchased the Jolimont property in about 1981. The tenancy arrangement appeared to require the Collie interests to pay rent and a share of rates, taxes and outgoings to Merlaw. Mr Collie conducted a solicitor's practice from the Jolimont property. It seems that Mr Nolan at the same time conducted a number of other businesses from the property.

In late 1984 and early 1985 a number of transactions occurred affecting the Jolimont property. First, Merlaw borrowed $250,000 from Ogge Partners Nominees Pty Ltd and provided a mortgage over the Jolimont property as security. Second, Mr Nolan and Mr Collie entered into an arrangement of some complexity for the sale by Merlaw to Terramont Pty Ltd ("Terramont"). The latter was a shelf company proposed as a joint venture vehicle between Mr Nolan and Mr Collie. The circumstances of that arrangement and its terms warrant elaboration.

The joint venture arrangement consisted of the creation of two separate discretionary trusts, one relating to the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] VSC 39
Decision Date: 28 February 2001

CaseChat Overview and Summary

The case of Collie v Merlaw Nominees Pty Ltd involves the dispute between the plaintiff, Collie, and the defendant, Merlaw Nominees Pty Ltd, which is in liquidation. The primary issue before the court was the plaintiff's entitlement to indemnity from the trust assets, as well as the question of whether the trustee could be subrogated to the position of a creditor of the trustee's indemnity. The case also involved an application to withdraw an admission in the pleadings and a request for leave to proceed against a company in liquidation under section 471B of the Corporations Law.

The court was tasked with determining whether the plaintiff was entitled to indemnity from the trust assets and if the trustee could be subrogated to the position of a creditor of the trustee's indemnity. Additionally, the court had to consider whether the plaintiff's application to withdraw an admission in the pleadings should be granted and if leave to proceed against the company in liquidation should be granted under section 471B of the Corporations Law.

In reaching its decision, the court examined the legal principles surrounding trading trusts, the rights of trustees, and the provisions of the relevant legislation. The court concluded that the plaintiff was indeed entitled to indemnity from the trust assets and that the trustee could be subrogated to the position of a creditor of the trustee's indemnity. The court also found that the application to withdraw an admission in the pleadings should not be granted, as it would result in an unfair outcome for the defendant. Lastly, the court granted leave to proceed against the company in liquidation, finding that it was appropriate to do so under the circumstances of the case.

The final orders of the court included granting the plaintiff indemnity from the trust assets, allowing the trustee to be subrogated to the position of a creditor of the trustee's indemnity, denying the application to withdraw an admission in the pleadings, and granting leave to proceed against the company in liquidation under section 471B of the Corporations Law.

Orders