Infigo II Pty Ltd v Linmas Holdings Pty Ltd

In the case of Infigo II Pty Ltd v Linmas Holdings Pty Ltd, the plaintiff, a building contractor, entered into a construction contract with the first defendant (D1), which is the trustee of a discretionary trust. The dispute arose when the plaintiff lodged an adjudication application following the making of four progress payments. The adjudication was subsequently registered as a judgment in the District Court. Within three days of the adjudication determination, the third defendant (D3), being the sole director and shareholder of D1, incorporated the second defendant (D2). The plaintiff attempted to execute on the judgment but faced difficulties due to the transfer of the property from D1 to D2. The plaintiff then applied ex parte to the Court for freezing orders, seeking final relief to declare the alienation of property void under s 37A of the Conveyancing Act 1919 (NSW).

The primary legal issues before the court were whether the plaintiff had established a weak prima facie case, if the balance of convenience favoured the plaintiff, and if the plaintiff's undertaking as to damages was challenged. Additionally, the court considered the nature of the trust, the capacities of a trustee, and the principles of agency and contract law as they applied to the case. The court had to determine whether D1, in its personal capacity and as a trustee, was the same legal person and if a trustee can contract with itself.

The court found that while a weak prima facie case had been established and the balance of convenience favoured the plaintiff, the plaintiff's undertaking as to damages was challenged based on the material adduced. The plaintiff failed to adduce further evidence going to its capacity to meet the undertaking. The court discharged the freezing orders, noting that the plaintiff did not meet the criteria under s 37A of the Conveyancing Act 1919 (NSW). The court also emphasised the distinction between the capacities of a trustee and the legal personality of a trustee, as well as the principles of agency and contract law as they apply to the case.

The court did not make any final orders in this case but discharged the freezing orders. The case highlights the importance of understanding the capacities of trustees and the implications of contracting in different capacities, as well as the need for careful consideration of the balance of convenience and the undertaking as to damages in interim preservation matters.