In the matter of ACN 092 138 442 Pty Ltd
[2013] NSWSC 305
•18 February 2013
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of ACN 092 138 442 Pty Ltd [2013] NSWSC 305 Hearing dates: 18 February 2013 Decision date: 18 February 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Application to vary or set aside orders 5.1 and 5.2 made on 14 February 2013 dismissed. Orders 5.3 and 5.4 made on that date continue until further order
Catchwords: CORPORATIONS - Winding up - application to set aside orders made requiring disclosure of new trustees - whether Liquidators entitled to know identity of Trustees Legislation Cited: (Cth) Corporations Act 2001, s 588
(NSW) Conveyancing Act 1919, s 37
(NZ) Companies Act 1993, s 241Cases Cited: Kassem & Anor as Liquidators of ACN 092 138 442 Pty Ltd v the LSW Group Pty Ltd & Anor (Unreported) 7 March 2012 Category: Interlocutory applications Parties: Bristrol Custodians Ltd (First Defendant)
Geoffrey Ronald Buckfield (Second Defendant/Applicant)
Bristrol Custodians (Aust) P/L (Third Defendant/Applicant)
Custodial Services (Aust) P/L (Fourth Defendant/Applicant)
Giovanni Holdings P/L (Fifth Defendant/Applicant)
Ozem Kassem and Bruno Secatore as Liquidators of ACN 092 138 442 P/L (in liq) (First Plaintiffs/Respondents)
ACN 092 138 442 P/L (in liq) (Second Plaintiff/Respondent)Representation: Counsel:
Ms B K Nolan (Defendants 2-5/Applicants)
Mr M Condon SC w Mr Wallis (Plaintiffs/ Respondents)
Solicitors:
Knightsbridge North Lawyers P/L (Defendants 2-5/Applicants)
Sage Solicitors (Plaintiffs/Respondents)
File Number(s): 10/ 245867
Judgment (ex tempore)
HIS HONOUR: In the substantive proceedings, the liquidators of a company now known as ACN 092 138 442 Pty Ltd (which was formerly the LSW Group Pty Ltd (Old LSW)) as first plaintiffs, and that company as second plaintiff, claim relief against the first defendant, Bristrol Custodians Limited (which until recently was the trustee of the LSW Group Property Trust and the second defendant, Geoffrey Ronald Buckfield, relief which for present purposes may conveniently be summarised as follows:
(a) Old LSW was the registered proprietor of lands in Yennnora and Bankstown ( "the Properties");
(b) Bristrol became the registered proprietor of the Properties, for no consideration, on 11 August 2006;
(c) At times unknown to the plaintiff, Old LSW was appointed trustee of the LSW Group Property trust ("the Trust") and purported to declare itself trustee of the Properties for the benefit of the trust;
(d) Old LSW received the benefit of a promissory note with a face value of $2.45 million issued by itself (as trustee of the Trust) as promisor;
(e) Old LSW has not received any part of the sum of $2.45 million, which it as trustee was obliged to pay itself absolutely;
(f) On 23 December 2005 Old LSW was removed as trustee of the Trust and Bristrol was appointed trustee in its place;
(g) Thus, Old LSW seeks an indemnity from Bristrol as the new trustee in relation to its obligations as trustee of the new trust, for whatever sums are payable pursuant to the promissory note;
(h) If, as the defendants at one point contended, there was no promissory note, then the passing of the equitable interest in the properties to Old LSW as trustee of the Trust constituted voidable transactions pursuant to ss 588FE(6A), 588FE(3), 588FE(4) and 588FE(5) of the (Cth) Corporations Act 2001, because the transactions were not reasonable, were insolvent and uncommercial ones, were made to a related entity of Old LSW and constituted an insolvent transaction;
(i) Further, the said transactions constituted an alienation of the properties with intent to defraud creditors and are thus voidable pursuant to (NSW) Conveyancing Act 1919, s 37A;
(j) In authorising the transaction, Mr Buckfield breached his statutory and fiduciary duties;
(l) Bristrol has received profits for the business owned by Old LSW;
(m) To the extent that any transfer of the business from Old LSW to Bristrol is set aside, Bristrol is liable to account for the benefits it had received from the use of the said businesses.
It will be seen that, while the relief claimed is not limited to proprietary relief, essentially the plaintiffs challenge the transfer to the first defendant of the properties at Yennora and Bankstown on the grounds that they were uncommercial transactions or transactions to defeat creditors, and claim consequential proprietary relief.
On 13 December 2010, Barrett J (as his Honour then was) by consent made directions for the conduct of the proceedings and also noted the following undertakings:
(a) The Plaintiffs, by their solicitor, give the usual undertakings as to damages;
(b) The First Defendant, by its solicitor, undertakes to the Court until further order, that:
(i) neither it nor its servants or agents will deal with, dispose of, or further encumber any of the First Defendants assets, including but not limited to real property located in New South Wales and identified by Folio Identifiers: 17/6/1625; Auto Consol 4712-235; Auto Consol 4712-212; 199/13506, other than:
i. in the ordinary and proper course of business, including paying business expenses bona fide and properly incurred; and
ii. paying legal expenses properly incurred in respect of this matter.
(ii) it will not retire as trustee of the LSW Group Property Trust or the LSW Property Trust without first giving 14 days notice in writing to the Plaintiffs.
(c) The Second Defendant, by its solicitor, undertakes to the Court, until further order, that he will not replace the First Defendant as trustee of the LSW Group Property Trust or the LSW Property Trust without first giving 14 days notice in writing to the Plaintiffs.
So far as presently appears, the events which have prompted the present application may be summarised as follows.
On 29 June 2012, Bristrol transferred its one percent interest in a property held jointly with Lewisham Saw Works Pty Ltd to others for a sum of $7,400, without informing, or seeking the consent of, the plaintiffs. Of itself, the significance and magnitude of that transaction is such that, though it may prima facie be a breach of undertaking (b)(i), it would not be of particular concern and, in any event, it might be supported as being within one or other of the exceptions.
More significantly, on 13 January 2013, the second defendant Mr Buckfield exercised his powers as appointor of the LSW Property Trust to appoint three additional trustees of that trust. Then, on or about 30 January 2013, the sole shareholder of Bristrol - being one Jan Buckfield - resolved to place that company into liquidation, whereupon it became disqualified under the trust deed of the LSW Property Trust from continuing to act as trustee. The said Jan Buckfield is shown on the company extract for the company as sharing the same residential address as the second defendant, Geoffrey Ronald Buckfield.
As the liquidator was appointed by special resolution of the shareholders pursuant to (NZ) Companies Act 1993, s 241(2)(a), it appears that the liquidation is a members voluntary winding up. No reason for the winding up appears from the liquidator's report, which merely records as follows:
On the 13th of January 2013, three additional trustees were appointed to the LSW Property Trust. Two of which where unrelated. By reason of the company going into liquidation it ceased to be a trustee pursuant to the trust deed. The company has no assets in its own right, but retains a right of indemnity against the assets of the LSW Property Trust.
Since learning of those events, the plaintiffs' solicitors have endeavoured to ascertain the identity of the new trustees of the trust. In that, they have been unsuccessful. On 14 February, they approached the court ex parte, and I then made (relevantly) the following orders:
5. Upon the plaintiffs by their counsel providing to the court the usual undertaking as to damages:
5.1 Order that the second defendant produce to the court at 2.00 pm on 18 February 2013 a copy of any instrument effecting the appointment of new trustees to the LSW Property Trust since 1 January 2013. Reserve leave to the second defendant to apply on or before 18 February 2013 to vary or set aside this order.
5.2 Order that the second defendant on 18 February 2013 at 2pm inform the court of the names and addresses of the new trustees of the said trust. Reserve leave to the second defendant to apply on or before 18 February 2013 to vary or set aside this order.
5.3 Order that until and including 18 February 2013 the second defendant be restrained from exercising in any way his powers as appointor of the trust including without limiting the generality of the foregoing appointing any new trustee or trustees or removing any current trustee or trustees of the trust.
5.4 Order that until and including 18 February 2013 the second defendant be restrained from by himself his servants or agents instructing requesting causing or facilitating any trustee of the trust to alienate, encumber or otherwise adversely deal with any property of the trust.
Today, the second defendant applies pursuant to the leave reserved in paragraphs 5.1 and 5.2, to set aside those orders. Although the evidence traverses a wider field, the crux of the application is that it is unnecessary for the plaintiffs to know the identity of the new trustees, and that to reveal their identity would jeopardise sensitive negotiations currently on foot between the new trustees and third parties for a proposed investment in the trust, the particulars of which is otherwise unknown.
To my mind, the objective purpose of the original orders, made by consent, was to ensure that the assets of the trust would not be dissipated, reserving the usual exceptions. This was effectuated by obtaining an undertaking to that effect from the trustee that then had control of those assets, coupled with undertakings that it would not retire and that Mr Buckfield would not replace it thus ensuring that the worth of the principal undertaking could not be jeopardised by the replacement of the trustee.
What has happened - and whether it was designed to have that effect or not does not matter for present purposes - is to procure exactly what undertakings (b) and (c) together were intended to avoid: namely, the practical and effective replacement of the trustee by new trustees who are not known, who have control of the trust assets (albeit subject to the old trustees equitable right of indemnity), and who are not bound by any undertaking or other obligation not to deal with the trust property (including the particular properties the subject of the plaintiffs' claim).
In those circumstances, the trust assets - and, in particular, those to which the plaintiffs' lay claim - could be alienated or encumbered in a manner detrimental to the plaintiffs' claim and completely contrary to the intent manifested by the undertakings given to Barrett J.
Even if sensitive negotiations might be jeopardised by disclosure of the identity of the new trustees, that in my mind would be no answer to the forgoing. But the evidence of such sensitive negotiations and any risk from revealing the identity of the trustees is so slight that I am unpersuaded that there is, in any event, any such jeopardy.
Essentially, it seems to me that, intentionally or otherwise - it matters not - a situation has been procured quite inconsistent with that which the undertakings proffered to Barrett J were intended to establish, and that is ample ground to make the orders sought. It is also necessary for the plaintiffs to know the identity of the new trustees so that, if so advised, they may be joined as defendants to the proceedings, they now being the persons legally entitled to the property to which the plaintiffs make claim.
I therefore dismiss the application to vary or set aside orders 5.1 and 5.2 made on 14 February 2013. I order that orders 5.3 and 5.4 made on that date continue until further order of the court. As the usual undertaking as to damages was given on 14 February 2013, it enures in respect of the continuation of those orders. Costs of the application today will be plaintiffs' costs in the proceedings.
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Decision last updated: 12 April 2013
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