Cooper v Mastrullo
[2019] FCCA 303
•12 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COOPER & ANOR v MASTRULLO & ANOR | [2019] FCCA 303 |
| Catchwords: BANKRUPTCY – Application pursuant to section 55(3) of the Bankruptcy Act – leave to take proceedings against bankrupt in District Court proceedings – District Court proceedings commenced prior to bankruptcy and after evidence completed but prior to delivery of judgment – application pursuant to section 120 of the Bankruptcy Act – trustee has commenced proceedings seeking to void antecedent transaction in respect of matter related to District Court proceedings – matters to be considered. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.19(1) 58, 120 |
| Cases cited: Koutavas v Struthers [2011] FCA 322 |
| Applicant: | NICHOLAS DAVID COOPER (IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF ALICIA DE PALMA & ELBIO PEREZ) |
| Respondent: | ROCKY MASTRULLO & ANOR |
| File Number: | ADG 366 of 2017 |
| Judgment of: | Judge Brown |
| Hearing date: | 29 January 2019 |
| Date of Last Submission: | 29 January 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 12 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr McGrath |
| Solicitors for the Applicant: | Ezra Legal |
| Counsel for the Respondent: | Mr Ryder |
| Solicitors for the Respondent: | O’Loughlins Lawyers |
ORDERS
Leave is granted to the respondents, pursuant to section 58(3) of the Bankruptcy Act 1966 (Cth), to take fresh steps in and conclude the judgment in District Court of South Australia proceedings No 1048/2016.
Each parties’ costs of these proceedings are reserved to the resolution of the application brought by the applicant trustee pursuant to section 120 of the Bankruptcy Act 1966 (Cth).
The applicants and Rocktan Pty Ltd file a response and any necessary supporting affidavit material in respect of the section 120 application within 35 days of today’s date.
The applicant trustee is given leave to relist the matter on short notice to make any application in respect of the monies currently held in the suitors fund of the District Court of South Australia in proceedings No 1048/2016 particularly whether they should be held in this court pending the finalisation of the proceedings brought by the trustee in this court pursuant to section 120 of the Bankruptcy Act 1966 (Cth).
Further consideration of the matter is otherwise adjourned for further directions to 9 April 2019 at 9:30am.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 366 of 2017
| NICHOLAS DAVID COOPER (IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF ALICIA DE PALMA & ELBIO PEREZ |
Applicant
And
| ROCKY MASTRULLO & ANOR |
Respondent
REASONS FOR JUDGMENT
Introduction
In 1976, Albio Perez and his partner Alicia De Palma[1] began a patisserie and café business, which baked and sold specialty cakes for distribution to cafés in Adelaide. They had premises at Newton. The business was operated through a trust, with a corporate trustee.
[1] Hereinafter referred to as “the bankrupts”
In 2014, Mr Perez decided he wanted to expand his business and needed capital to do so. His idea was to open a café in Norwood, which if successful, could be franchised and its products and themes licensed for use by others.
As a consequence, Mr Perez was introduced to Rocky Mastrullo and his wife Tania Mastrullo, who had money to invest. In August of 2014, an agreement was entered into between Mr Perez and Mr Mastrullo to develop the café idea. Premises were obtained and a lease entered.
Pursuant to this agreement, between September 2014 and January 2015, Mr Mastrullo paid to Mr Perez and companies related to him a significant amount of money. It does not seem particularly controversial that this sum was $500,000.00.
Very shortly after this sum of money had been paid, Mr Perez and Mr Mastrullo had a falling out. They agreed to go their separate ways and, for obvious reasons, Mr & Mrs Mastrullo wished to be repaid the sum advanced by them and to be free of any liabilities in respect of the business.
It would seem to be the case that as, by this time, steps had been taken to secure premises for the café business in Norwood, Mr Perez was not in a position to recoup to Mr Mastrullo the entirety of the sum advanced by him, as he (Mr Perez) had utilised funds to commence the previously agreed upon enterprise.
Through their respective solicitors, Mr Perez and Ms De Palma, on the one hand and Mr & Mrs Mastrullo, on the other attempted to negotiate a settlement of the various issues in dispute between them. A settlement deed was entered into between them on or about August 2015. In general terms, the deed indicated as follows:
·In 2014, Mr Mastrullo had paid Mr Perez the sum of $500,000.00;
·The two men wished to end their business relationship completely;
·It was agreed that Mr Perez would pay Mr Mastrullo the sum of $550,000.00, in recognition of the fact that he had had the benefit of the original advance for a period of twelve months;
·The sum of $550,000.00 was to be paid on or before 1 November 2016 but if not paid, by this date, the sum would increase to $600,000.00.
Other provisions of the settlement deed dealt with the transfer of shares in various companies incorporated by Mr Perez and Mr Mastrullo in respect of the business concerned, prior to the breach of their relationship and the transfer of a liquor licence obtained in respect of the Norwood premises.
It appears to be uncontroversial that between 20 August 2015 and 11 March 2016 Mr Mastrullo received the sum of $204,170.00. These sums have relevance in respect of proceedings brought as a consequence of Mr Perez and Ms De Palma’s subsequent bankruptcy.
The Norwood café, which had originally brought Mr Perez and Mr Mastrullo together, did not go well. In April of 2016, Mr Perez decided to sell the business. Accordingly, he was not in a position to make any further payments to Mr and Mrs Mastrullo and, from their perspective, Mr Perez had breached the settlement agreement.
As a consequence, Mr & Mrs Mastrullo and their company Rocktan Pty Ltd commenced proceedings against Mr Perez, Ms De Palma and their company Elbio Business Investment Group Pty Ltd, in the District Court of South Australia, alleging breaches of the deed of settlement and some ancillary matters. The case proceeded to trial in February of 2017 before Chief Judge Evans, with judgment being delivered on 15 February 2018.[2]
[2] See Mastrullo & Ors v Perez & Ors [2018] SADC 47
At an earlier stage of proceedings, on 26 August 2016, it was ordered that the proceeds of the sale of the Norwood café be paid into court. The sum in question is $146,450.00.16. For obvious reasons, Mr & Mrs Mastrullo would like the sum to be paid to them, given their significant investment in the business so liquidated.
The applicant in these proceedings opposes the release of the sum in question to Mr and Mrs Mastrullo pending the outcome of other proceedings instituted by him, in this court, pursuant to the provisions of the Bankruptcy Act 1966 (Cth).[3]
[3] Hereinafter referred to as “the Act”
The Norwood café was not Mr Perez and Ms De Palma’s only business enterprise. Through a trust, the Elbio Family Trust, they operated their business in Newton, which has been described as a “Latin American wholesale patisserie and café”. It employed a significant number of staff.
On 18 March 2017, Mr Perez was served with a bankruptcy notice, issued in favour of the Deputy Commissioner of Taxation, in an amount of $951,000.20. The bankruptcy notice was not settled on terms satisfactory to the Deputy Commissioner of Taxation and, as a consequence, on 25 May 2017, a creditor’s petition issued seeking the sequestration of Mr Perez’s estate.
Accordingly, the petition was issued after Chief Judge Evans had heard the evidence in the case regarding Mr Mastrullo’s dispute with Mr Perez regarding the breach of the deed of settlement between the two, but prior to the delivery of the judgment in question.
In broad terms, in his February 2018 judgment, Chief Judge Evans found in favour of Mr Mastrullo and his wife. His Honour found as follows:
·Mr Perez and Ms De Palma had no right to terminate the settlement deed;[4]
·Mr Perez and Ms De Palma were in breach of the terms of the deed by failing to pay monthly instalments stipulated in respect of the original advance;[5]
·In these circumstances, the sum of $345,830.00 was owing immediately to Mr & Mrs Mastrullo, together with an additional amount of $50,000.00.[6]
[4] Ibid at [107]
[5] Ibid at [108]
[6] Ibid [109] – [110]
During the course of the proceedings, Mr & Mrs Mastrullo had lodged caveats over real property owned by Ms De Palma and had sought to charge other businesses related to Mr Perez and Ms De Palma. Chief Judge Evans found that the relevant deed of charge to be valid. In his reasons for judgment, Chief Judge Evans said as follows:
“By an order of this Court of 26 August 2016 the proceeds from the sale of the cafe business by Elbie Norwood were paid into Court on 6 September 2016.
Elbio Norwood was deregistered on 6 February 2017.
There has been some evidence that there were other creditors of Elbio Norwood. Counsel for the defendants submitted that there were no other secured creditors, however 'the Taxation Department and Superannuation are seeking payment'.
Elbio Norwood is not in liquidation. It is unclear what priority, if any, the Taxation Department may have if it is owed money.
I am not prepared to make an order for the payment out of money until I hear further from the parties as to whether there are any competing claims which would prevent payment out to the first and third plaintiffs. Subject to there being no such competing claims I am satisfied that the first and third plaintiffs have an entitlement to payment out of the monies standing to the credit of this action in court.”[7]
[7] Ibid [124] – [128]
Given the tenor of His Honour’s order, the matter is next before the District Court on 14 February 2019. Due to the bankruptcy of Mr Perez, as foreshadowed in His Honour’s judgment, issues arise regarding the claims of other creditors of Mr Perez besides Mr & Mrs Mastrullo.
Similar considerations relate to Ms De Palma, as she is also currently bankrupt. For obvious reasons, Mr Mastrullo wishes to finalise the proceedings, ostensibly determined in his favour, as soon as possible. The trustee of Mr Perez and Ms De Palma’s bankruptcy has statutory duties to their various creditors, including the ATO.
On 25 August 2017 Nicholas Cooper was appointed the trustee of Ms De Palma’s bankrupt estate and on 28 September 2017 was appointed the trustee of Mr Perez’ bankrupt estate.[8] Given his statutory duties, the trustee is anxious to secure the sum currently held in the District Court, which in his view is potentially amenable to the bankruptcy of Mr Perez and Ms De Palma.
[8] Hereinafter it is convenient to refer to Mr Cooper as “the trustee”
Given the bankruptcy of Mr Perez and Ms De Palma, the provisions of section 58(3) of the Bankruptcy Act are engaged. Mr & Mrs Mastrullo require this court’s leave, which has jurisdiction in bankruptcy proceedings, to take any fresh steps in and continue with the proceedings before the District Court, particularly in respect of the payment out of any moneys held by that court.
Section 58(3) of the Act provides as follows:
“(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.”
I appreciate that the provisions of section 58 of the Act are central to the administration of insolvency in Australia. In particular, pursuant to section 58(1), when a person becomes a bankrupt, the property of the bankrupt person vests in the trustee appointed to administer the bankrupt’s estate.
The duties of a bankruptcy trustee are set out in section 19(1) of the Act. They include the following:
“(a) notifying the bankrupt’s creditors of the bankruptcy;
(b) determining whether the estate includes property that can be realised to pay a dividend to creditors;
…
(e) determining whether the bankrupt has made a transfer of property that is void against the trustee;
(f) taking appropriate steps to recover property for the benefit of the estate;
(g) taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt’s duties under this Act;
…
(k) exercising powers and performing functions in a commercially sound way;”
Accordingly, in generic terms, a bankruptcy trustee has a duty to discharge his statutory responsibilities under the Act, even-handedly and to ensure that one creditor is not advantaged over another. It is in this context, that the specific provisions of section 58(3) should be considered.
In Kassem, in the matter of Koutavas v Struthers[9] Yates J indicated that a trustee in bankruptcy had a role of primacy in respect of the recovery of assets, in respect of the bankrupt estate being administered by him/her, in order to ensure the equitable distribution of all relevant property amongst all of the unsecured creditors of the bankrupt concerned.
[9] See Kassem, in the matter of Koutavas v Struthers [2011] FCA 322
In this context, he approved the following observations of Beaumont J in Fraser v Commissioner of Taxation:[10]
“… a central feature of the established scheme of bankruptcy is an equitable or rateable distribution of property among all unsecured creditors. Any mechanism to secure this objective can allow for the recovery of assets by one person only and that is the trustee, acting on behalf of the general body of creditors. In exercising that function, the trustee will need to make administrative decisions, or judgments, from time to time. But it is for the trustee alone to make those judgments, in the interests of creditors as a whole; even if, where appropriate, the trustee may take into account their expressed wishes. The point is that there is no scope here for any role to be played by individual creditors acting on their own initiative; and if litigation is to be instituted with a view to the recovery of assets, it is the trustee's function, and responsibility, to be the dominus litis and thus entirely in charge of the litigation to the exclusion of individual creditors. In other words, the relevant scheme of the legislation, specifically that of s 58(3), is that individual creditors have no right to decide to pursue, or not pursue, the assets of the bankrupt with a view to the satisfaction of individual debts. This is a matter, in terms of authority, as well as responsibility, for the trustee exclusively. Section 58(3) should be interpreted in a way that gives practical effect to this legislative purpose.”
[10] See Fraser v Commissioner of Taxation: [1996] 69 FCR 99 at 114
The competing applications before the court
The trustee commenced proceedings, in this court, on 6 September 2017, seeking orders that he be appointed the receiver and the manager of the Elbio Family Trust. It was through this trust that Mr Perez and Ms De Palma operated their Latin American wholesale patisserie and café in Newton.
In his affidavit in support of his application, the trustee indicated that Mr Perez and Ms De Palma jointly and severally owed creditors as follows:
·ATO $796,757.00
·Bank of SA overdraft $60,000.00
·57 trade creditors $193,931.00
On 13 November 2017, an order was made appointing the trustee as the receiver and manager of the assets of the trust in question. In the relevant order, it was noted that his duty was to take possession of all assets of the trust and collect its debts, whilst carrying on its business of, until that business could be realised.
The trustee has subsequently deposed that the amount in fact owing to the ATO is much greater than originally anticipated. The Deputy Commissioner of Taxation has provided a proof of debt, to the trustee, in an amount of $1.5million, which relates to failures to pay the superannuation guarantee and other taxes relating to the business.
Mr Cooper has deposed that he intends to place the Latin American wholesale patisserie business and its various assets for sale in the near future. However, whether any such sale has occurred and what its proceeds have been, is unknown to me, at this juncture. In particular, I do not know whether the sum realised will be sufficient to meet the current liabilities.
I would anticipate that, if a judgment is ultimately granted in their favour, by Chief Judge Evans, Mr & Mrs Mastrullo will be in a position to file their own proof of debt with the trustee. However, ultimately that remains a matter for them.
On 5 November 2018, Mr & Mrs Mastrullo filed an application in which they sought the following orders:
“That leave be granted, to the extent it is required, pursuant to s58(3)(b) of the Bankruptcy Act 1996 (Cth), for a step to be taken in the District Court of South Australia proceeding number DCCIV 1048/2016:
for the trial Judge in District Court of South Australia action number DCCIV 1048/2016 to deliver judgment, in accordance with his reasons for decision dated 18 February 2018 and to make such further or other orders, including as to declaratory relief, as he considers appropriate;
that if considered appropriate to do so, for the trial judge in District Court of South Australia action number DCCIV 1048/2016 to order declaratory relief that the Deed of Charge dated 18 August 2015 is valid;
for the Plaintiffs to make an application for an order that all monies standing to the credit of District Court of South Australia action number DCCIV 1048/2016, together with all interest accrued thereon to the date of payment out, be paid to the Plaintiffs, Rocky Mastrullo, Tanya Mastrullo and RockTan Pty Ltd or their nominee;
for the trial Judge in District Court of South Australia action number DCCIV 1048/2016 to make such further or other consequential order or declaration in District Court of South Australia proceeding number DCCIV 1048/2016 to give effect to the above; and
for the trial Judge in District Court of South Australia action number DCCIV 1048/2016 to make such order as to costs as he deems fit;”
Mr & Mrs Mastrullo’s application first came before the court on 13 November 2018. On this occasion, the following orders were made:
“The Trustee in Bankruptcy file and serve a response to the application filed 5 November 2018 within 42 days of today’s date.
Further consideration of the matter is adjourned to 29 January 2019 at 2:15pm for hearing.”
The trustee did not comply with this order. Rather, on 24 January 2019, the trustee filed an application seeking the following orders:
“Pursuant to section 120(1) of the Bankruptcy Act (Cth) 1966, an order that the payments made by the Bankrupts pursuant to the Deed dated 18 August 2015 described in the affidavit of Nicholas David Cooper exhibited to the affidavit of Damian Gerard McGrath sworn on 24 January 2019 are void as against the Applicant as Trustee of the Estates of the Bankrupts.
Pursuant to section 120(1) of the Bankruptcy Act (Cth) 1966, an order that the Applicant recover from the First, Second and Third Respondents, proceeds paid by the Bankrupts to the First, Second and Third Respondents as a result of the Deed to the extent of the undervalue of the transaction.
That this matter be made specially returnable to before His Honour Judge Brown to the date and time of the next hearing being 29 January 2019 at 2.15pm.
Interest
Costs”
In an affidavit filed in support of this application, the trustee asserts that the amount of $204,170.00 paid to Mr & Mrs Mastrullo and/or their company Rocktan Pty Ltd, by Mr Perez and Ms De Palma, between 20 August 2015 and 11 March 2016, should be declared void on the basis that they are transactions which occurred in the relating back period of Mr Perez and Ms De Palma’s bankruptcy.
Section 120(1) of the Act reads as follows:
(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:
(a) the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and
(b) the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.
The current section 120 was inserted into the Act by the Bankruptcy Legislation Amendment Bill 1996. The relevant Explanatory Memorandum to the Bill reads as follows:
“A fundamental feature of the law of bankruptcy is that in certain circumstances, it operates to enable property and money given or transferred by a person who subsequently becomes bankrupt to be recovered by the bankruptcy trustee, to enable its sale, and the distribution of the proceeds of sale to the bankrupt’s creditors… The Bill proposes changes to this area of the law to simplify it, and to change the focus of the provisions away from the intentions of the parties to particular transactions, to the nature of the transactions and the likely effect on the creditors.”[11]
[11] See Explanatory Memorandum to the Bankruptcy Legislation Amendment Bill 1996 at [23]
At this juncture, given the lateness of the application having been filed, neither Mr or Mrs Mastrullo nor indeed the bankrupts themselves have had any opportunity to consider the implication of the trustee’s application and particularly whether the transfers sought to be impugned by the trustee fall within in any of exceptions provided by section 120(2)-(5) of the Act, particularly section 120(3)(b).
Discussion
In Hudson v Sigalla[12] the Full Court (Allsop CJ, Jagot and Katzman JJ) said as follows:
“The purposes of s 58(3) are the same as those of cognate provisions in the legislation governing corporate insolvency, such as ss 471B and 500(2) of the Corporations Act 2000 (Cth). The purposes are to assist in the orderly administration of the insolvent estate by protecting a bankrupt, and the property of the erstwhile debtor (as now vested in the trustee), against the enforcement of remedies. This is done by enabling the court to supervise the handling of claims through the procedure of proof of debt (administered by the trustee or liquidator), by ensuring that the assets of the estate are not expended on costs in a multiplicity of litigation, and by ensuring that no one creditor gets an advantage over the others…”
[12] Hudson v Sigalla [2015] FCAFC 140 at [25]
As such, in determining whether granting the leave sought, it is incumbent on the court to consider how to ensure the orderly administration of the bankrupt estate in question with a view to protecting the rights of creditors and the avoidance of unnecessary expense. The jurisdiction in this regard is supervisory in nature.
Mr Ryder, who appears on behalf of Mr and Mrs Mastrullo, seeks only that leave be granted to allow Chief Judge Evan to complete the proceedings commenced by his clients in the District Court prior to the bankruptcy of Mr Perez and Ms De Palma.
In this way, the exact amount of any unsatisfied judgement debt will be crystallised. He does not agitate for any immediate payment out of the funds held in the District Court to his clients and concedes that the trustee may have some claim on them, which is yet to be resolved. In general terms, he does not oppose payment out of the sum, from the District Court, into the security of this court.
In my assessment, this appears eminently sensible. The District Court proceedings have been on foot for a significant period of time and should be finalised so that Mr and Mrs Mastrullo are aware of what sum is potentially due to them from their suit against the bankrupts, so that they can pursue their claim as they deem fit.
How any such sum will be satisfied is a question which falls within the jurisdiction of this court, along with the other issue, recently raised by the trustee, concerning the payments made by the bankrupts to Mr and Mrs Mastrullo, in the relating back period. These issues are potentially complex and I am uncertain whether the evidence canvassed before Chief Judge Evans was specifically relevant to them.
In my view, the central controversies arising between Mr and Mrs Mastrullo on the one hand and the trustee on the other centre on the security of the monies resulting from the sale of the Norwood café business and which court is best placed to determine how the sum is to be allocated between competing creditors.
Issues, as yet inchoate, but potentially complex, regarding the solvency of Mr Perez and Ms De Palma, when the sums in question were paid to Mr and Mrs Mastrullo, have been raised to which Mr and Mrs Mastrullo have not yet responded. This is likely to be the evidentiary substance of the section 120 proceedings.
Clearly this court has jurisdiction, pursuant to the provisions of section 120 of the Act, and it would appear to me to be logical that, in the absence of agreement to the contrary, this court maintain security in respect of the sum pending the outcome of the application commenced by the trustee in regards to it in this court. However that it is a matter which remains live before His Honour Chief Judge Evans and I do not wish to appear to be presumptuous in that regard.
The proceedings in the District Court were commenced prior to the bankruptcy in question. Ultimately, it is likely to be the case that Mr and Mrs Mastrullo will wish to utilise any judgement granted in their favour as a provable debt. The fresh step which they envisage cannot, in my view, be regarded as a substantive one in respect of the action which they most likely commenced in 2016 and which has been largely completed.
As such, it is hard to see that there can be any prejudice to other creditors of Mr Perez and Ms De Palma or indeed the trustee, by the proceedings being completed. In addition, whatever is the ultimate outcome of the proceedings in the District Court, it will not lead to the automatic payment of the sum held to Mr and Mrs Mastrullo.
In addition, it is open to the trustee to apply to have the funds in question transferred to this court to await the finalisation of the trustee’s application pursuant to section 120, if the parties themselves do not agree it. Clearly, with respect, His Honour Chief Judge Evans is alive to the potential of other claims arising in respect of the sum.
The legal nicety of the case is that, once Chief Judge Evans has completed his judgment, there may well be no basis for the proceeds of sale of the Norwood café business to remain in the suitors’ fund of the District Court. However, until the judgment is finalised, none of the parties concerned can either go forward or back. In my view, the impasse must be resolved.
In my view, the question of whether leave should be granted to pursue the fresh step is one which should be determined by reference to issues concerning the convenience of the parties; the limitation of expense; and the protection of the rights of other creditors.
In this context, I am satisfied that the balance of convenience favours the granting of leave; the step will not involve any significant costs being incurred by the trustee; and, in my view, is not likely to effect the rights of other creditors of the bankrupts, particularly given that proceedings are on foot in this court.
In the circumstances of the case, Mr and Mrs Mastrullo cannot be criticised for taking proceeding on their own initiative in order to advance their own interests above those of other creditors, given their action was commenced prior to the relevant bankruptcy. That the defendants in that action were rendered bankrupt, after the evidence had been completed, but prior to judgment being delivered, is unfortunate but is not due to any act or omission on the part of Mr and Mrs Mastrullo.
Mr and Mrs Mastrullo require the finalisation of the proceedings in the District Court to establish that they have a provable debt against the bankrupts. Where that debt will rank against those of other creditors and indeed whether other monies advanced to them prior to the bankruptcy are the subject to void transactions are issues, which fall within the jurisdiction of this court.
Without the completion of the proceedings, Mr and Mrs Mastrullo are stymied in respect of their debt. This is unfair to them. Any prejudice to the trustee can be ameliorated by orders in respect of the sum held in the District Court, which can be potentially sought, by the trustee in that court.
For those reasons, I propose to grant leave to Mr and Mrs Mastrullo to pursue any fresh steps necessary to finalise their suit before the District Court. I will reserve the costs of this application.
If one of the consequences of any order Chief Judge Evans makes is to release the funds concerned, it is open to the trustee to make application either to His Honour or to this court to redirect the sum in question to some other appropriate secure location. Mr Ryder has indicated his clients’ acquiescence in this regard.
His Honour is also well aware of the potential of other creditors in this regard. In this context, the trustee has also declared his hand that he intends to impugn various transactions arising from the settlement deed. This court has jurisdiction to determine this claim. At this stage, the attitude of Mr and Mrs Mastrullo to the application is unknown to me.
I will direct that Mr and Mrs Mastrullo and Rocktan Pty Ltd file a response and any necessary supporting affidavit material in respect of the section 120 application within 35 days of today’s date and adjourn the matter for further directions to 9 April 2019 at 9:30am.
I will also grant the trustee liberty to relist this matter, at short notice, in the event of any matters arising as a consequence of the finalisation of the District Court proceedings, particularly in respect of issues relating to the security of the sum currently held in that court’s suitors fund.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 12 February 2019
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