JT & CV Pty Ltd v Vaspak Pty Ltd

Case •

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•

9 December 2024 (ex tempore) (revised)
IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2024 01112

JT & CV PTY LTD (ACN 628 925 664) IN ITS CAPACITY AS TRUSTEE FOR THE JT & CV WEST SUPER FUND Plaintiff
v
VASPAK PTY LTD (ACN 078 460 134) IN ITS CAPACITY AS TRUSTEE FOR THE WEST UNIT TRUST First Defendant
- and -
TAYLOR SPLATT & PARTNERS (ABN 85 284 756 182) Second Defendant

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JUDGE:

SLOSS J

WHERE HELD:

Melbourne

DATE OF HEARING:

9 December 2024

DATE OF JUDGMENT:

9 December 2024 (ex tempore) (revised)

CASE MAY BE CITED AS:

JT & CV Pty Ltd v Vaspak Pty Ltd & Anor

MEDIUM NEUTRAL CITATION:

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CORPORATIONS – Application for appointment of receiver pursuant to s 37(1) of the Supreme Court Act 1986 and r 39.02 or r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015, alternatively for the appointment of a replacement trustee pursuant to s 48 of the Trustee Act 1958 (Vic) − Ongoing deadlock within corporate trustee constraining the ability of corporate trustee to make decisions – Where ongoing deadlock and resultant failure to release trust funds is causing loss to beneficiaries of the trust – Where just and convenient that a receiver be appointed to distribute the trust funds and for the trust then to be wound up.

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APPEARANCES:

 Counsel Solicitors
For the Plaintiff Ms G Douglas Macpherson Kelley
No appearance by or on behalf of the defendants

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 4

West Family Dispute.................................................................................................................... 4

The West Unit Trust...................................................................................................................... 5

West Family Trust......................................................................................................................... 6

West Family Superannuation Fund........................................................................................... 6

West Unit Trust holdings between 2015 and 2018................................................................... 7

Rollout of Jeremy & Charlotte West from West Family Superannuation Fund – November 2018................................................................................................................................................ 8

Ongoing dispute – trustee’s failure to distribute funds from the sale of 11 Elite Way.... 10

Status of West Unit Trust funds held by Taylor Splatt for benefit of West Unit Trust.... 12

The West Unit Trust Deed......................................................................................................... 14

Relevant principles.......................................................................................................................... 15

Plaintiff’s submissions................................................................................................................... 17

Consideration and disposition...................................................................................................... 21

Whether to appoint receiver or alternative trustee................................................................ 21

Consent of receiver..................................................................................................................... 25

Whether receiver is to provide security................................................................................... 26

Conclusion......................................................................................................................................... 26

Orders................................................................................................................................................. 27

HER HONOUR:

Introduction

  1. This proceeding is brought by the plaintiff, JT & CV Pty Ltd (ACN 628 925 664)
    (JT & CV) in its capacity as trustee for the JT & CV West Super Fund.  The directors of JT & CV are Ms Charlotte West and her husband, Mr Jeremy West.

  1. The first defendant is Vaspak Pty Ltd (ACN 078 460 134) (Vaspak), in its capacity as trustee for the West Unit Trust.  At all relevant times, there were four directors of Vaspak, being:

(a)        Ms Charlotte West;

(b)       Mr Jeremy West;

(c)        Mr Daniel West (the brother of Mr Jeremy West); and

(d)       Ms Joanne West (the wife of Mr Daniel West).

Each of Charlotte, Jeremy, Daniel and Joanne West was an (equal) shareholder of Vaspak.

  1. Vaspak was established on 7 May 1997 to be used as a corporate vehicle to purchase two commercial properties in Carrum Downs, Victoria, and machinery for use in the West’s Packaging Services Pty Ltd (WPS) business.  Vaspak itself holds no real estate assets in its own right.0F[1]

    [1]First Charlotte West Affidavit, at [19].

  1. The two brothers, Jeremy and Daniel West, were previously involved in business together as the owners and operators of the WPS business (each having a 50% shareholding).  The WPS business was originally commenced by their father, but the two brothers have been involved as the operators of the business since 1995 or thereabouts.1F[2]  Unfortunately, however, due to a relationship breakdown between the directors of Vaspak, or perhaps more correctly between Jeremy and Charlotte on the one hand and Daniel and Joanne on the other, Vaspak has been stymied because there is a director deadlock and Vaspak is practically unable to make decisions as the trustee of the West Unit Trust.  In particular, Vaspak has been unable to agree upon the distribution of trust funds to unitholders of the West Unit Trust, which are currently held in a term deposit account by the second defendant, Taylor Splatt & Partners (ABN 85 284 756 182) (Taylor Splatt) on trust for the West Unit Trust.  Accordingly, the plaintiff has brought this proceeding in an attempt to break the ‘log jam’ (so to speak) arising from the directors’ deadlock and enable the distribution of the West Unit Trust funds, which Taylor Splatt currently holds on term deposit, to the relevant unitholders, by seeking to have the Court appoint either a receiver and manager to the West Unit Trust or appoint a new trustee to replace Vaspak as trustee of the West Unit Trust.

    [2]First Charlotte West Affidavit, at [9].

  1. By its originating motion that was filed on 13 March 2024, the plaintiff seeks the following orders:

(a) an order pursuant to s 37(1) of the Supreme Court Act 1986 (Vic) (the Supreme Court Act) and r 39.02 or r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the Rules) that a receiver and manager be appointed to the West Unit Trust, to distribute the remaining income of the trust and then wind up the trust;

(b) in the alternative to order 1, an order pursuant to s 48 of the Trustee Act 1958 (Vic) (the Trustee Act), that an alternative trustee be appointed to the West Unit Trust, replacing the first defendant;

(c)        an order that the second defendant pay all monies in its possession held on behalf of the West Unit Trust into:

(i)         the trust account of the receiver appointed under order 1; or

(ii)       in the alternative, the Supreme Court of Victoria, to be held as funds in court, pending the resolution of the originating motion.

  1. Following the plaintiff filing the originating motion on 13 March 2024, the proceeding was case managed by me, and several directions hearings have been held and affidavits filed, as outlined below, to progress the matter.  The parties eventually reached a position in August 2024 whereby Mr Daniel West confirmed that he does not oppose the relief sought by the plaintiff.2F[3]  On the basis of those several communications, the position is, as the Court understands it, that Mr Daniel West is content for orders to be made for the appointment of a receiver and manager to the West Unit Trust and for the remaining funds to be distributed to the relevant unitholders.  Mr Daniel West’s wife, Ms Joanne West, has not taken any active part in the proceeding nor has she sought to be considered as an interested party. 

    [3]On 9 August 2024, counsel for Mr Daniel West informed the Court that Mr Daniel West does not oppose an order for the appointment of a receiver and manager to the West Unit Trust.  Further, by letter to the solicitors for the plaintiff on 14 August 2024, Scanlan Carroll (who then were acting for Mr Daniel West) stated that Mr Daniel West does not oppose the appointment of a receiver and manager to the West Unit Trust, to distribute the remaining funds and then wind up the trust.  Scanlan Carroll also confirmed to the Court on 19 August 2024 that ‘it remains Mr [Daniel] West’s position that he does not oppose the relief sought by the Plaintiff’.

  1. In support of its application, the plaintiff relies on the following affidavits and documents:

(a)        the affidavit of Ms Charlotte Vejlgaard West sworn on 13 March 2024 (First Charlotte West Affidavit);

(b)       the affidavit of Ms Eleftheria (Ritsa) Balfoort sworn on 21 August 2024 (First Balfoort Affidavit);3F[4]

[4]The plaintiffs filed two affidavit of Ms Balfoort on 21 August 2024, as the first affidavit filed on that date was missing some exhibit pages.

(c)        the second affidavit of Ms Balfoort sworn on 5 September 2024 (Second Balfoort Affidavit);

(d)       the second affidavit of Ms Charlotte West sworn on 18 October 2024 (Second Charlotte West Affidavit);

(e)        the third affidavit of Ms Balfoort sworn on 18 October 2024 (Third Balfoort Affidavit);

(f)        the third affidavit of Ms Charlotte West sworn on 29 November 2024 (Third Charlotte West Affidavit);

(g)       the fourth affidavit of Ms Balfoort sworn on 29 November 2024 (Fourth Balfoort Affidavit);

(h)       a written outline of submissions dated 29 November 2024;

(i)         a chronology of key events dated 29 November 2024; and

(j)         a suite of aide-mémoires that summarise details of the various trust entities and relevant transactions at particular points in time, as outlined in the affidavit material before the Court.

  1. All of the affidavits have been tendered by the plaintiff’s counsel and there was no cross-examination sought or which took place of any witness in the proceeding.

  1. In the Third Balfoort Affidavit, Ms Balfoort deposes to enquiries she made with Mr David Coyne of BRI Ferrier, who is a registered liquidator with 37 years’ experience in insolvency, to ascertain whether he would be available to accept an appointment by the Court as a receiver and manager or alternatively as a replacement trustee of the West Unit Trust, in the event that the Court were minded to grant such relief.4F[5]  Mr Coyne has confirmed his availability and a copy of Mr Coyne’s curriculum vitae and schedule of fees appears at Exhibit EZB-3, at pp 6-7. 

    [5]Third Balfoort Affidavit, at [6]-[8].

Background

  1. JT & CV,5F[6] the plaintiff, is a company that is the trustee for the JT & CV West Super Fund.6F[7]  The directors of JT & CV are Charlotte West and Jeremy West who, as mentioned earlier, are a married couple.7F[8]

    [6]The summary of facts below reflects in large part the plaintiff’s summary and the material contained in the suite of aide-mémoires prepared at the request of her Honour in advance of the hearing. 

    [7]For a more detailed overview of the factual background of the proceeding, see the plaintiff’s chronology of key events.

    [8]First Charlotte West Affidavit, at [1]-[2].

West Family Dispute

  1. Jeremy West is the brother of Daniel West.  Daniel West is married to Joanne West.  The two brothers, Daniel and Jeremy, were previously involved together as owners and operators of the “West Packaging Services” business, with each having a 50% shareholding in it.  The WPS business was originally begun by the father of Daniel and Jeremy West, but those two brothers have been the operators of the business since approximately 1995.8F[9]

    [9]First Charlotte West Affidavit, at [9].

  1. As was mentioned earlier, in about 2018 there was a breakdown in the relationship between the two brothers and their respective families.  In 2020, Jeremy West filed a proceeding in the Supreme Court of Victoria against Daniel West and WPS (S ECI 2022 02886 – the Oppression Proceeding).  In 2022, WPS went into liquidation and the Oppression Proceeding was dismissed by consent orders on 5 December 2022 with no order as to costs.9F[10]

    [10]First Charlotte West Affidavit, at [52]-[54].

The West Unit Trust

  1. There are three entities behind WPS that are relevant to the current application.  The first is the West Unit Trust which is the prime subject of the originating motion.  The West Unit Trust was created by a deed that was executed on 1 September 2008.10F[11]  The West Unit Trust was established with the specific intent of acquiring commercial property at 11 Elite Way, Carrum Downs in the State of Victoria (11 Elite Way).  The unit trust structure was adopted to enable the West family members (relevantly, Jeremy, Charlotte, Daniel and Joanne) to pool funds to purchase the property at 11 Elite Way, to then be used as a commercial property for the operation of the WPS business.11F[12]

    [11]The West Unit Trust Deed is at pp. 5-32 of Exhibit CW-3 of the Third Charlotte West Affidavit.

    [12]First Charlotte West Affidavit, at [11]-[12].

  1. When the West Unit Trust was created on 1 September 2008, the trustee that was appointed was Vaspak, the first defendant.12F[13]  There were at that time, and remain today, four directors of Vaspak – Charlotte, Jeremy, Daniel and Joanne West.13F[14]

    [13]See the ‘Schedule’ to West Unit Trust Deed at p. 31 of Exhibit CW-3 of the Third West Affidavit.

    [14]See company search for Vaspak Pty Ltd at Exhibit CW-1 to the First Charlotte West Affidavit, at 103-104.

  1. The 11 Elite Way property was purchased by the West Unit Trust in September 2008 for a purchase price of $2.52 million plus stamp duty and GST.  The purchase was fully financed by units in the West Unit Trust that were purchased by two associated family entities, the West Family Trust and the West Family Superannuation Fund.14F[15]

    [15]First Charlotte West Affidavit, at [31]-[32].

  1. When the West Unit Trust was established, there were 100 units issued – 85 of the units were held by Vaspak as trustee for the West Family Trust and the remaining 15 units held by Vaspak as trustee for the West Family Superannuation Fund.  Between 2008 and 2015, the units in the West Unit Trust changed to reflect the contributions, distributions and reinvestments of funds made by members over time.15F[16]

    [16]A summary of those changes is set out in the Second Charlotte West Affidavit, at 9.

  1. From 2008 through to the present day, the West Unit Trust did not acquire any other property, other than the 11 Elite Way property which has now been sold.16F[17]

    [17]Second Charlotte West Affidavit, at [11](j).

West Family Trust

  1. As set out above, the West Family Trust was one of the original unit holders in the West Unit Trust.  The West Family Trust was established in September 2008 for the purpose of investing in property.17F[18]  The beneficiaries of the West Family Trust at its inception were Jeremy West, Charlotte West, Daniel West and Joanne West.

    [18]First Charlotte West Affidavit at, [15]; The West Family Trust Deed is at Exhibit CW-1 to the First Charlotte West Affidavit, at 76-99.

West Family Superannuation Fund

  1. The West Family Superannuation Fund was also an original unit holder in the West Unit Trust.  The West Family Superannuation Fund is a self-managed superannuation fund which was established in October 1998.  The members of the West Family Superannuation Fund at establishment were Charlotte, Jeremy, Daniel and Joanne West.

  1. Over time, each of Charlotte, Jeremy, Daniel and Joanne, as members of the West Family Superannuation Fund, paid their yearly superannuation contributions into the fund from monies earned from their roles at WPS and in the case of Charlotte, she also contributed superannuation earned from her role at Brookmount Pty Ltd (Brookmount).18F[19]

    [19]Brookmount is Charlotte’s company that provides tax accounting services – see Second Charlotte West Affidavit, at [36].

  1. When the West Family Superannuation Fund was established, the original trustee was WPS.  This was changed to Vaspak in 1999 and then, in October 2013, another entity, JCDJ Pty Ltd became the trustee of the West Family Superannuation Fund.19F[20]

    [20]Second Charlotte West Affidavit, at [13](b).

West Unit Trust holdings between 2015 and 2018

  1. At the end of the 2015 financial year, the West Unit Trust was comprised of a total of 2,737,119.39 units, of which the West Family Trust owned 1,863,081.20 units and the West Family Superannuation Fund held 874,037.19 units.20F[21]  Between 30 June 2015 and 30 November 2018, the unit holding proportions in the West Unit Trust did not change, but the underlying asset of 11 Elite Way continued to increase in value.  This increase in value of the 11 Elite Way property, was indicated in each balance sheet for the West Unit Trust as “Change in Market Value” – as appears in the 30 June 2016 West Unit Trust balance sheet.21F[22]

    [21]Exhibit CW-2 to the Second Charlotte West Affidavit, at 31-33 (the West Unit Trust Balance Sheet as at 30 June 2016, setting out 30 June 2015 unit holdings as well).

    [22]Second Charlotte West Affidavit, at [77](b) (regarding 2017 West Unit Trust statements); Exhibit CW-1 to the First Charlotte West Affidavit, at 290 (regarding 2016 West Unit Trust statements).

  1. Between 1 July 2015 and 30 November 2018, the profit earned by the West Unit Trust from the rent of the 11 Elite Way property (that was paid in each case by WPS which was leasing the premises) was distributed to the unit holders each year, such that there were no retained earnings or reinvestments into the West Unit Trust in this period.22F[23]

    [23]Second Charlotte West Affidavit, at [65](c), [77](c), [88](c). Exhibit CW-1 to the First Charlotte West Affidavit, at 290 (2016 Balance Sheets for the West Unit Trust), 133-139 (2017 West Unit Trust Tax Return), at 272 (2017 Balance Sheet West Unit Trust), at 273 (2019 West Unit Trust Return (which includes the 2018 financial position)).

  1. As at 30 June 2018, the West Unit Trust continued to be comprised of a total of 2,737,118.39 units, of which the West Family Trust held 1,863,081.20 units and the West Family Superannuation held 874,037.19.23F[24]

[24]Second Charlotte West Affidavit, at [88](a); Exhibit CW-1 to the First Charlotte West Affidavit, at 273; Exhibit CW-2 to the Second Charlotte West Affidavit, at 31-33.

Rollout of Jeremy & Charlotte West from West Family Superannuation Fund – November 2018

  1. In August 2018, Charlotte and Jeremy West notified Daniel and Joanne West that Charlotte and Jeremy would be rolling out of the West Family Superannuation Fund.24F[25]  I note about this time the oppression proceeding was in the background and there was obviously some disharmony between the parties.  A further email was sent on 22 October 2018 by Charlotte West to Daniel and Joanne West, outlining the structure of the rollout process which was envisaged to occur at market value in proportion to the membership entitlements of Jeremy and Charlotte in the West Family Superannuation Fund.25F[26]

    [25]First Charlotte West Affidavit, at [24]; Exhibit CW-1 to the First Charlotte West Affidavit, at 123.

    [26]First Charlotte West Affidavit, at [25]; Exhibit CW-1 to the First Charlotte West Affidavit, at 124-141.

  1. As at 30 November 2018, prior to the rollout, the West Family Superannuation Fund held 874,037.19 units in the West Unit Trust, which had a total of 2,737,118.39 units.26F[27]

    [27]Second Charlotte West Affidavit, at [88](a).

  1. On 30 November 2018, Charlotte West chaired a meeting of JCDJ Pty Ltd (which was then the trustee of the West Family Superannuation Fund), with Jeremy West in attendance.  A resolution was passed at that meeting to transfer Jeremy and Charlotte West’s portion of the unit holdings in the West Family Superannuation Fund into a newly established superannuation fund called the JT & CV West Super Fund, of which the plaintiff in this proceeding is the trustee.27F[28]

    [28]First Charlotte West Affidavit, at [26]; Exhibit CW-1 to the First Charlotte West Affidavit, at 143-144 (Minutes of 30 November 2018 meeting and unit transfer form).

  1. This rollout process included the transfer of units in the West Unit Trust that were held by the West Family Superannuation Fund to the JT & CV West Super Fund, based upon the value of Jeremy and Charlotte West’s balance in the West Family Superannuation Fund account as at 30 June 2018.  The closing balance of the West Family Superannuation Fund as at 30 June 2018, based upon members’ contributions was a total of $1,404,820 reflected as follows:28F[29]

(a)        as between Jeremy and Charlotte West, whose contributions accounted for 51.8% of the fund, Jeremy West held contributions recorded of $418,123, which equated to 29.8% of the total fund and Charlotte West accounted for $309,141, which equated to 22% of the total fund; and

(b)       as between Daniel and Joanne West, whose contributions accounted for 48.2% of the fund, Daniel’s contributions accounted for $432,693 which equated to 30.8% of the total fund and Joanne West’s contributions accounted for $244,863, which equated to 17.4% of the total fund.

[29]Second Charlotte West Affidavit, at 24-25; Exhibit CW-2 to the Second Charlotte West Affidavit, at 140-143 (auditor’s report for the West Family Superannuation Fund for the 2018 financial year); Exhibit CW-2 to the Second Charlotte West Affidavit, at 144-151 (annual return for the West Family Superannuation Fund).

  1. Accordingly, at the completion of the rollout on 30 November 2018, 51.8% of the units in the West Unit Trust that were held by the West Family Superannuation Fund were transferred to the JT & CV West Super Fund to reflect Jeremy and Charlotte’s proportionate entitlement to funds in the West Family Superannuation Fund, being the 452,751 units mentioned earlier. 29F[30]

    [30]Second Charlotte West Affidavit, at [92].

  1. In her second affidavit, Charlotte West deposes as to both her and her husband Jeremy’s respective superannuation withdrawal entitlement in the West Family Superannuation Fund as at 30 November 2018 being as follows:

(a)        Charlotte West’s superannuation withdrawal entitlement in the West Family Superannuation Fund was $307,868.12,30F[31] comprised of 192,288.18 units in the West Unit Trust and the balance of the cash payment of $83,375.09, both of which were moved across into the newly established JT & CV West Super Fund.31F[32]

(b)       Jeremy West’s superannuation withdrawal entitlement in the West Family Superannuation Fund was $418,750.02,32F[33] comprised of 260,463.08 units in the West Unit Trust and the balance of his superannuation withdrawal benefit in cash of $114,664.01 at the date of rollover were moved into the newly established JT & CV West Super Fund.33F[34]

[31]It appears that the correct value is $307,868.18.

[32]Second Charlotte West Affidavit, at [95]; Exhibit CW-1 to the First Charlotte West Affidavit, at 156-157.

[33]Exhibit CW-1 to the First Charlotte West Affidavit, at 150 (the West Family Superannuation Members Information Statement as at 30 November 2018).

[34]Second Charlotte West Affidavit, at [97]; Exhibit CW-1 to the First Charlotte West Affidavit, at 156-157.

  1. After the rollout of Jeremy and Charlotte West’s interests from the West Family Superannuation Fund was completed, the unit holdings of the West Unit Trust were as follows:34F[35]

    [35]Second Charlotte West Affidavit, at [33]; Exhibit CW-2 to the Second Charlotte West Affidavit, at 31-33.

(a)        there was a total number of units in West Unit Trust (as before) of 2,737,118.39;

(b)       the West Family Trust held 1,863,081.20 units;

(c)        the West Family Superannuation Fund (which by then reflected the interests of Daniel and Joanne) held 421,285.93 units; and

(d)       the newly established JT & CV West Super Fund (which reflected the interests of Jeremy and Charlotte West) held 452,751.26 units.

Ongoing dispute – trustee’s failure to distribute funds from the sale of 11 Elite Way

  1. On 25 July 2022, the 11 Elite Way property was sold, with the agreement of the directors of Vaspak (the trustee of the West Unit Trust), pursuant to a contract of sale with a sale price of $5,850,000.35F[36]  On 3 October 2022, the 11 Elite Way property settled and the residual proceeds of $5,735,593.26 were deposited into the trust account of Taylor Splatt (the lawyers acting for Vaspak as vendor on the sale of 11 Elite Way).36F[37]

    [36]First Charlotte West Affidavit, at [36]; also see contract of sale at Exhibit CW-1 to the First Charlotte West Affidavit, at 184-257.

    [37]First Charlotte West Affidavit, at [37].

  1. After the funds from the sale of 11 Elite Way were received in October 2022, the directors of Vaspak were unable to reach agreement on the distribution of the sale proceeds.37F[38]  Daniel and Joanne West, on the one hand, refused to allow Taylor Splatt to distribute the funds in October 2022, and this resulted in both family groups obtaining legal representation.  Daniel and Joanne West were then represented by Harwood Andrews and Charlotte and Jeremy West were represented by Macpherson Kelley.38F[39]

    [38]First Charlotte West Affidavit, at [37]-[38].

    [39]First Charlotte West Affidavit, at [38]-[41].

  1. Between October 2022 and January 2024, the directors of Vaspak (via their respective law firms) continued to correspond about the money held in trust by Taylor Splatt, but were unable to reach agreement as to the distribution of those funds.39F[40]  The directors were, however, able to agree that Taylor Splatt should place the monies in a higher interest yielding account with the National Australia Bank (NAB), which is where the monies are currently held under Taylor Splatt’s control.40F[41]

    [40]First Charlotte West Affidavit, at [38]-[43], [60]-[90]; Exhibit CW-1 to the First Charlotte West Affidavit, at 273-355.

    [41]First Charlotte West Affidavit, at [39]-[44]

  1. JT & CV’s position is that the breakdown of the relationship between the West family members and a continued failure of the directors of Vaspak (as trustee of the West Unit Trust) to agree to distribute the West Unit Trust monies remaining after the sale of 11 Elite Way is causing ongoing losses to the JT & CV West Super Fund as well as the other beneficiaries.  This is because the JT & CV West Super Fund is unable to re-invest those monies in the manner it desires, and accordingly, the plaintiff contends the fund has suffered a loss of opportunities to earn further returns from those monies during that time.41F[42]

    [42]First Charlotte West Affidavit, at [99]-[102].

  1. In essence, the plaintiff contends that the current holding of the monies in the Taylor Splatt account with NAB, is a less than optimal investment and as the members of the fund are drawing closer to retirement with each passing year, that less than optimal investment will cause some damage to be suffered by them if action is not taken to release the funds and allow them to be invested in the manner they desire.

  1. Charlotte West has outlined the ways she would have preferred to have invested the money of the JT & CV West Super Fund,42F[43] if the funds had been distributed by the trustee in a timely manner, or even within the financial year 2023 when the 11 Elite Way property was sold.  The plaintiff contends that the inability to access the West Unit Trust funds that are the beneficial entitlement of the JT & CV West Super Fund is effectively causing the fund to suffer ongoing losses.

    [43]At paragraphs [99]-[102] of the First Charlotte West Affidavit.

  1. The originating motion was filed in March 2024 as a means of seeking to resolve the ongoing stalemate between the directors of Vaspak, which is causing the trust monies of the West Unit Trust held by Taylor Splatt in the NAB account to not earn the interest or other earning capacity that it might otherwise enjoy.  The plaintiff proposes that the deadlock should be remedied by a neutral and appropriately qualified person being appointed as receiver to the West Unit Trust, to distribute the funds of the trust and wind up the trust.  In the alternative, the plaintiff applies for a replacement trustee to be appointed to replace Vaspak so as to enable the remaining trust funds to be distributed.  In that regard, the plaintiff contends that the current arrangement is one where the trustee is hamstrung and the appointment of a neutral trustee would be preferable. 

Status of West Unit Trust funds held by Taylor Splatt for benefit of West Unit Trust

  1. As at 7 May 2024, there was a total of $6,077,524.18 available for distribution held in the Taylor Splatt NAB account on behalf of the West Unit Trust.43F[44]

    [44]Fourth Balfoort Affidavit, at [7].

  1. After the first directions hearing in this proceeding on 3 May 2024, some consensus was achieved between directors of Vaspak when they agreed upon a partial distribution of the funds held by Taylor Splatt, to provide for the distribution of monies for the benefit of the West Family Trust.  The West Family Trust is not a superannuation trust and the agreement that was reached was that the West Family Trust, which was the unitholder of 1,863,081.20 units out of the total of 2,737,118.39 units in the West Unit Trust would enable, effectively, a distribution of $4,136,803.54 to the West Family Trust out of the $6,077,524.18 held by Taylor Splatt on trust.44F[45]

    [45]Pursuant to consent orders dated 31 May 2024.

  1. This agreement of the directors was submitted to the Court by way of consent orders and effected pursuant to order 3 of the Court’s orders made on 31 May 2024, whereby the parties agreed that $4,136,803.54 of the funds held in trust by Taylor Splatt be distributed to the West Family Trust, with the monies to be divided 50:50 to the beneficiaries of the West Family Trust (the June Distribution).45F[46]  The June Distribution resulted in:

(a)        $2,068,401.77 to be distributed to Daniel and Joanne West; and

(b)       $2,068,401.77 to be distributed to Charlotte and Jeremy West.

[46]See order 3 of the orders dated 31 May 2024.

  1. After the June Distribution, there was approximately $1,940,720.64 held in trust by Taylor Splatt, for the West Unit Trust (Remaining West Unit Trust Funds).  Between June 2024 and November 2024, the directors of Vaspak have continued to be unable to agree as to the proportion of distributions from the Remaining West Unit Trust Funds that should be paid out to the remaining unit holders, being the West Family Superannuation Fund and the JT & CV West Super Fund.46F[47]  Therefore, there is a deadlock whereby the ongoing dispute between the directors of Vaspak continues to prevent Vaspak as the trustee of the West Unit Trust from making a decision to distribute the Remaining West Unit Trust Funds.  And in circumstances where each of the remaining unitholders are superannuation funds, which themselves are subject to a rigorous suite of regulatory rules that are required to be complied with, there is an ever present risk of non-compliance.

    [47]Exhibit EZB to the First Balfoort Affidavit, at 135-152.

  1. Against that background, the plaintiff contends that a receiver should be appointed to the West Unit Trust and distribute the Remaining West Unit Trust Funds, now approximately $1,985,575.6147F[48] (with interest continuing to accrue) to those unit holders of the West Unit Trust which have not yet received their distribution from the 11 Elite Way sale proceeds.  That is to say, the West Family Trust has already received its proportionate share, and it is now the two superannuation entities that hold units in the trust that are awaiting the receipt of their distribution from the 11 Elite Way sale proceeds in the following unit holding proportions:48F[49]

(a)        the JT & CV West Super Fund (holder of 452,741.26 units in the West Unit Trust) – equating to 51.8% of the Remaining West Unit Trust Funds; and

(b)       the West Family Superannuation Fund (holder of 421,285.93 units of West Unit Trust) – equating to 48.2% of the Remaining West Unit Trust Funds.

[48]Fourth Balfoort Affidavit, at [8].

[49]Second Charlotte West Affidavit, at [102]-[106].

  1. On 19 August 2024, Mr Daniel West’s lawyers, Scanlan Carroll, notified the Court that he does not oppose the appointment of a receiver to the West Unit Trust, but would not otherwise take part in this proceeding.49F[50]

    [50]Exhibit EZB-1 to the First Balfoort Affidavit, at 144-145.

  1. It remains the case that no-one has appeared in the proceeding at the hearing today or at any point since Mr Daniel West’s solicitors (and counsel) went off the record, and informed the Court that he does not propose to take any (further) part in the proceeding.

  1. It appears that the only other asset of the West Unit Trust is a Westpac bank account (BSB 033-179) held in the name of Vaspak as trustee for the West Unit Trust, in the amount of approximately $976.42.50F[51]  The plaintiff contends that this money, if it is not expended in the course of the receivership, should be distributed in proportion to all unit holders in the West Unit Trust.  That is to say, to the West Family Trust, the West Family Superannuation Fund and the JT & CV West Super Fund.

    [51]Fourth Balfoort Affidavit, at [9].

The West Unit Trust Deed

  1. The plaintiff has drawn the Court’s attention to the following provisions of the West Unit Trust Deed as being relevant in the context of the relief sought in the originating motion:51F[52]

    [52]Exhibit CW-1 to the First Charlotte West Affidavit, at 48-74.

(a)        Clause 38 (The distribution of income): The Trustee must distribute the remaining income of the trust for a financial year to those who, immediately before the commencement of the next financial year, are unit holders.  The trustee must do so in proportion to the number of units they hold.

(b)       Clause 40 (Other Distributions): The Trustee must distribute the remaining income of the trust for a financial year to those who, immediately before the commencement of the next financial year, are unit holders.  The trustee must do so in proportion to the number of units they hold.

(c)        Clause 41 (Failure to resolve distributions or retention): If, before the commencement of the next financial year, the trustee fails to resolve to distribute remaining income from a financial year or to retain it, that income must be credited to a separate account in the books of the trust in the names of the unit holders.  The money will be a debt to the unit holders and will not bear interest.

(d)       Clause 81 (Termination of the appointment of the trustee): The appointment of a trustee terminates automatically if any of the following occurs:

(iii)      The Trustee enters into compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction), or has an administrator, receiver, official manager or receiver and manager appointed to any part of its assets.

(e)        Clause 92 (Statements and accounts): The Trustee must establish and maintain proper books of account which accurately reflect all receipts and outgoings of the trust.  The trustee must separately record all income and capital of different categories referred to in this deed;

(f)        Clause 93 (Financial Statements): The Trustee must ensure that financial statements are prepared as at the end of each financial year. The statements are to include a profit and loss account and a balance sheet.  They are to be certified by a practising accountant to be a true and proper statement of the affairs of the trust …

Relevant principles

  1. The plaintiff in its originating process filed on 13 March 2024 seeks an order pursuant to s 37(1) of the Supreme Court Act and r 39.02 or r 54.02 of the Rules that a receiver and manager be appointed to the West Unit Trust, to distribute the remaining income of the trust and then wind up the trust, or in the alternative, an order pursuant to s 48 of the Trustee Act, that an alternative trustee be appointed to the West Unit Trust, replacing the first defendant.

  1. The Court’s discretion to appoint a receiver to a trust is wide, and available where the Court considers the circumstances render it ‘just and convenient’ to do so.52F[53] In addition, the Court has a wide discretion to remove or replace trustees, which is part of the Court’s inherent jurisdiction and manifest in the expression in s 48 of the Trustee Act.53F[54]

    [53]Yunghanns v Candoora No 19 Pty Ltd [2000] VSC 300, at [65], citing Manchester and Liverpool District Banking Co Ltd v Parkinson (1888) 22 QBD 173.

    [54]Deutsch v Deutsch [2011] VSC 345.

  1. Section 37 of the Supreme Court Act provides that the Court may appoint a receiver if it is ‘just and convenient’ to do so. Similarly, r 39.02 of the Rules provides that the Court may appoint a receiver at any stage of the proceeding.

  1. The Court may appoint a receiver of trust property where that step is necessary for the well-being of the trust or the safety of the trust property.54F[55]

    [55]Deutsch v Deutsch [2011] VSC 345, at [24].

  1. As was stated by Warren J (as her Honour then was) in Yunghanns v Candoora No 19 Pty Ltd:55F[56]

The general legal principle is that if misconduct, waste, or improper disposition of assets can be shown, or if it appears that the trust property has been improperly managed, or is in danger of being lost or if it can be satisfactorily established that parties in a fiduciary position have been guilty of a breach of duty there is a sufficient foundation for the appointment of a receiver …

[56][2000] VSC 300, at [64] (Yunghanns).

  1. Section 48 of the Trustee Act, on the other hand, provides that the Court may, whenever it is expedient to appoint a new trustee, and it is found inexpedient, difficult or impracticable to so do without the assistance of the Court, make an order appointing a new trustee in substitution for an existing trustee.

  1. The key considerations in deciding whether to exercise the Court’s power to appoint a new trustee are the preservation of the trust property and the welfare of beneficiaries.56F[57]

    [57]Deutsch v Deutsch [2011] VSC 345, at [13].

  1. As was stated by Brereton J in Basecove Pty Ltd v Dolores Lavin Management Pty Ltd & Ors:57F[58]

Plainly, where the management of a corporate trustee is deadlocked by internecine dispute between two parties, who are equal director/shareholder/appointor and in consequence the trustee is not attentive to the trust or performing its office, considerations of the need for preservation of the trust property and regard for the welfare of the beneficiaries may arise.

[58][2009] NSWSC 1315, at [13].

Plaintiff’s submissions

  1. The plaintiff submits that the ongoing deadlock or stalemate between the directors of Vaspak, which is resulting in the residual sale proceeds of the 11 Elite Way Property being held in a term deposit account, should be remedied by a receiver being appointed to the West Unit Trust to distribute the funds of the trust and wind up the trust.  In the alternative, the plaintiff submits that a replacement trustee should be appointed to replace Vaspak, so as to enable the remaining funds to be distributed.

  1. The plaintiff submits that a receiver should be appointed to the West Unit Trust and distribute the residual sale proceeds being held in the term deposit account (totalling $1,985,575.61) to the unit holders of the West Unit Trust that have not yet received their proportionate distribution from the sale of the 11 Elite Way Property,58F[59] in the following unit proportions:

(a)        48.2% to the West Family Superannuation Fund, reflecting the 421,285.93 units held by Daniel and Joanne West; and

(b)       51.8% to the newly established JT & CV West Super Fund, reflecting the 452,741.26 units held by Charlotte and Jeremy West.

[59]As the plaintiff contends the West Family Trust was paid out the entirety of its beneficial interest in the West Unit Trust pursuant to the June Distribution.

  1. The only other asset of the West Unit Trust is the $976.42 held in the Westpac bank account in the name of Vaspak as trustee for the West Unit Trust.  In this regard, the plaintiff submits that any portion of that money that is not expended in the receivership should be distributed in proportion to all unit holders in the West Unit Trust.59F[60]

    [60]Plaintiff’s submissions dated 29 November 2024, at [40].

  1. The plaintiff submits that the following legal principles, amongst others, are relevant to the Court’s consideration of an application to appoint a receiver to a trust:60F[61]

    [61]Plaintiff’s submissions dated 29 November 2024, at [42]-[55].

(a)        there is a sufficient foundation for the appointment of a receiver if it appears that the trust property is in danger of being lost;61F[62]

[62]Yunghanns at [84] and [64], citing W W Kerr, Kerr on Law and Practice as to Receivers and Administrators, 17th ed, Sweet & Maxwell, London, 1989, at 13-14.

(b)       the discretion available to the Court to appoint a receiver to a trust is wide, and available where the Court considers the circumstances render it ‘just and convenient’ to do so;62F[63]

[63]Yunghanns at [65], citing Manchester and Liverpool District Banking Co Ltd v Parkinson (1888) 22 QBD 173.

(c)        the Court may appoint a receiver if such an appointment will result in the safeguarding, protection or preservation of property for the benefit of persons who have an interest in it;63F[64]

[64]Yunghanns at [65], citing Halsbury Laws of England 4th edition (Vol 39, para 827).

(d)       the Court may appoint a receiver of trust property where such an appointment is necessary for the well-being of the trust;64F[65]

(e)        a receiver may be appointed if the appointment is required for the safety of the trust property or the due administration of the trust;65F[66] and

(f)        there are a range of matters which may make the appointment of a receiver necessary, including where the trustees cannot agree in circumstances which put the trust property in jeopardy.66F[67]

[65]Yunghanns v Candoora No 19 Pty Ltd [2000] VSC 300, [66] per Warren J (prior to her Honour’s appointment as Chief Justice) citing H A J Ford and W A Lee, Principles of the Law of Trusts, 2nd ef, Law Book Co, Sydney, 1990, at [1739].

[66]Yunghanns at [73], citing Halsbury Laws of England 4th edition (Vol 39, para 831); Re Fowler; Fowler v Odell (1881) 16 Ch D 723; Nastas Investments [2020] VSC 653 at [74], per Delany J.

[67]Yunghanns at [67].

  1. The plaintiff submits that the following legal principles, amongst others, are relevant to the Court’s power to appoint a replacement trustee:67F[68]

(a)        the Court has a wide discretion to remove or replace trustees; and

(b)       the critical considerations in applications for the appointment of a replacement trustee are the preservation of trust property and the welfare of the beneficiaries.68F[69] 

[68]Plaintiff’s submissions dated 29 November 2024, at [56]-[60].

[69]Deutsch v Deutsch [2011] VSC 345.

  1. The plaintiff submits the Court should exercise its discretion to appoint a receiver to the West Unit Trust, for the following reasons:69F[70]

    [70]Plaintiff’s submissions dated 29 November 2024, at [61].

(a)        the ongoing deadlock in decision making between the directors of the corporate trustee is resulting in the trustee being unable to make management decisions for the trust that need to be made, and in a timely way.  This has resulted in the trustee not complying with various obligations under the West Unit Trust Deed, such as its obligation to distribute income in the relevant financial year.  The failure to make decisions in a timely way also places the trustees of the superannuation funds that are unit holders in the West Unit Trust at risk of not complying with their reporting obligations, including obligations under superannuation law;

(b)       the appointment of a receiver would secure the proper management of the trust, which was a key consideration by Delany J in Nastas Investments v Think Partitions Pty Ltd;70F[71]

[71][2020] VSC 653.

(c)        it is in the interests of the beneficiaries that the trustee’s powers be exercisable by an impartial person such as a receiver who is not hamstrung by the deadlock;71F[72]

(d)       the ongoing failure to release the funds is causing loss to the plaintiff, and to the beneficiaries of the West Unit Trust;72F[73] and

(e)        there is no opposition to the appointment of a receiver to the West Unit Trust, which supports the plaintiff’s contention that it is ‘just and convenient’ to appoint a receiver to the West Unit Trust.73F[74]

[72]Vinci & Bamco Pty Ltd v Imperial Bourke Nominees Pty Ltd & Ors [2000] VSC 12, Mandie J.

[73]The plaintiff contends that if the funds were released in a timely fashion, JT & CV would invested their distribution of the funds in various investments which would have earned higher returns compared with the moderate interest yielding account in which the funds are currently held.

[74]Daniel West has expressly notified the Court that he supports the appointment of a receiver to the West Unit Trust, and Joanne West has elected not to take a further role in the proceeding after approving the June Distribution, and has been served with all material filed by the plaintiff in the proceeding.

  1. Further, the plaintiff contends that a receiver should be appointed to the West Unit Trust, rather than  adopting the alternative course of appointing a replacement trustee, as the purpose of the West Unit Trust was to enable the purchase of the 11 Elite Way Property.  However, now that the 11 Elite Way Property has been sold and the relationship of the beneficiaries has deteriorated, it is demonstrably in the best interests of the beneficiaries to distribute the assets of the trust and wind up the trust.  In those circumstances, the plaintiff submits that there is ‘no need for a trustee to continue to have ongoing management of the West Unit Trust over the coming years, as the assets of the trust will be dissolved by the distribution of the [residual sale proceeds] and [the funds in] the Westpac bank account.74F[75]

    [75]Plaintiff’s submissions dated 29 November 2024, at [61(f)].

  1. In the alternative, the plaintiff submits that should the Court appoint a replacement trustee to the West Unit Trust, the following reasons would be relevant:75F[76]

    [76]Plaintiff’s submissions dated 29 November 2024, at [62].

(a)        a replacement trustee would break the ongoing deadlock of decision making that is vexing the current corporate trustee;

(b)       a replacement trustee would be in a position to arrange for the distribution of the residual sale proceeds and that would halt the ongoing losses that are alleged to be accruing by the beneficiaries, who are unable to access and invest their respective entitlements; and

(c)        there is no opposition to the appointment of a replacement trustee to the West Unit Trust.76F[77]

[77]Daniel West has indicated that he does not oppose the relief sought by the plaintiff, which includes in the alternative an appointment of a replacement trustee to the West Unit Trust, and Joanne West has elected not to take a further role in the proceeding after approving the June Distribution, and has been served with all material filed by the plaintiff in the proceeding.

Consideration and disposition

Whether to appoint receiver or alternative trustee

  1. In the present case, there is no dire risk of jeopardy to the assets of the West Unit Trust of the kind mentioned in some of the cases to which counsel for the plaintiffs referred, nor has there been any misfeasance on the part of the directors.  Rather, this is a case where there is a genuine deadlock between the directors because of a falling out between two brothers and their wives and families.  The position is that Vaspak cannot administer the West Unit Trust in accordance with its responsibilities under the trust deed, which in turn is likely to render it difficult for the trustees of the unit holder superannuation trusts to comply with their regulatory requirements and reporting responsibilities. 

  1. Further, in the current regime, where the funds remaining following the sale of 11 Elite Way have not been fully distributed to the relevant unitholders, being the superannuation fund unitholders, they are unable to make the investment decisions their members seek be made, with the result that a large sum of money is being held in a term deposit account, and earning less than optimal returns.

  1. In the present circumstances, I am satisfied that there is a clear need to appoint either a receiver to the West Unit Trust, or a replacement trustee, given the directors of the current corporate trustee, Vaspak, are simply unable to make the management decisions that must be made for the West Unit Trust.

  1. In Vinci & Bamco Pty Ltd v Imperial Bourke Nominees Pty Ltd & Ors,77F[78] Mandie J (as his Honour then was) when faced with a deadlock within a corporate trustee which constrained the ability of the corporate trustee to operate the business, took the step of appointing a registered company liquidator to act as a receiver and manager of the corporate trustee and the assets and undertakings of the trusts.  In doing so, Mandie J observed:78F[79]

At the moment the trustees are incapable of performing their proper or any functions.  It is in the interests of all beneficiaries that the trustees’ powers therefore be exercisable and exercised by a qualified person who is impartial and not hamstrung by the deadlock existing between those controlling the trustees.

…

The costs involved, regretfully, cannot be avoided because the parties are at complete loggerheads and apparently irreconcilable.

[78][2000] VSC 12, at [12].

[79]Vinci & Bamco Pty Ltd v Imperial Bourke Nominees Pty Ltd & Ors [2000] VSC 12, at [12].

  1. As a result of the apparent deadlock, an order to appoint either a receiver or a replacement trustee is necessary for the preservation of the trust property and the welfare of the beneficiaries.79F[80]  Furthermore, as two of the unit holders in the West Unit Trust are superannuation funds, some special treatment or attention may be required to ensure that they are able to comply with their regulatory obligations.

    [80]Deutsch v Deutsch [2011] VSC 345, at [13].

  1. It is not an issue in dispute in the proceeding that the Court has the power to either appoint a receiver and manager, or appoint an alternative trustee. The key issue, however, is whether to appoint a receiver pursuant to s 37 of the Supreme Court Act or to confer powers pursuant to s 48 of the Trustee Act.

  1. As recently stated by Delany J in Re Waratah Group Pty Ltd (in liq)80F[81] and M Osborne J in ReUrban Property Melbourne Pty Ltd,81F[82] there is no ‘bright line’ distinguishing between whether to appoint a receiver pursuant to the Supreme Court Act or to confer power pursuant to the Trustee Act.

    [81]Re Waratah Group Pty Ltd (in liq) [2020] VSC 523, at [41].

    [82]Re Urban Property Melbourne Pty Ltd [2021] VSC 847, at [34].

  1. In Re Brimson,82F[83] Moshinsky J described the appointment of a liquidator as receiver as the ‘more common course’.83F[84]  In that case, Moshinsky J justified the appointment of a receiver on the basis that the relevant trustees had been removed by operation of the trust deeds by an ipso facto clause, and there had been the prospect of the business continuing to trade. 

    [83](2019) 136 ACSR 649, at 656.

    [84](2019) 136 ACSR 649, at 656 [50].

  1. In Basecove Pty Ltd v Dolores Lavin Management Pty Ltd & Ors,84F[85] Brereton J considered an application to appoint a receiver to a corporate trustee where there was a deadlock in decision making between the two directors of the corporate trustee.  One director sought orders that a receiver should be appointed, with a view to winding up the trust and the other director sought orders that a new trustee be appointed to enable the trust to continue to operate.85F[86]  Brereton J held that to bring the relationship between the parties to an end, and in circumstances where the trust was operating at a loss, it was just and equitable to appoint a receiver to the trust assets.86F[87]

    [85][2009] NSWSC 1315.

    [86][2009] NSWSC 1315 at [6].

    [87][2009] NSWSC 1315 at [11]-[12].

  1. In Nastas Investments Pty Ltd v Think Partitions Pty Ltd,87F[88] in circumstances where as a result of a relationship breakdown between the unit holders of the trust, Delany J preferred the appointment of an independent receiver over the appointment of an alternative trustee.  Delany J considered that the appointment of a receiver was the most efficient and cost-effective mechanism in the circumstances to enable the orderly sale and realisation of assets and distribution of the trust property.88F[89]  However, on the basis that the corporate trustee and sole director of the corporate trustee agreed to provide suitable undertakings in relation to the proper management of the affairs of the trust, and the orderly sale of the trust property, Delany J found it was not necessary to order that a receiver be appointed.

    [88][2020] VSC 653.

    [89]Nastas Investments Pty Ltd v Think Partitions Pty Ltd [2020] VSC 653, at [97].

  1. More recently, in Re All Purpose Labour Pty Ltd (In Liq),89F[90] when faced with the question of whether to appoint liquidators as receivers and managers or as a replacement trustee, I held that:90F[91]

A reason to prefer the appointment of the Liquidators as receivers and managers over the Trust property rather than to make orders pursuant to s 63 of the Trustee Act is that there is the potential, albeit very minimal, for the unitholder unilaterally to appoint a new trustee, which would result in the Liquidators (as former trustee) potentially losing their right to retain trust assets as security for their accrued right of indemnity. This is because cl 12 of the Trust Deed provides for the appointment of a new trustee by the unitholder in the following situations …

[90][2024] VSC 547.

[91][2024] VSC 547, at [57].

  1. In the present case, cl 80 of the West Unit Trust Deed provides that the unit holders may remove a trustee at any time in accordance with law or by passing a special resolution, being a resolution passed by 75% of the unit holders present and entitled to vote.  The trustee may convene a meeting of unit holders at any time,91F[92] however 7 clear days’ written notice of the meeting must be given to all unit holders.92F[93]  Given the deadlock position between the directors of Vaspak in the present situation, it is unlikely that a special resolution could be passed by the unit holders of the West Unit Trust and therefore there is no real potential for the appointment of a new trustee by the directors.

    [92]Clause 50 of the West Unit Trust Deed, at Exhibit CW-3.

    [93]Clause 51 of the West Unit Trust Deed, at Exhibit CW-3.

  1. As mentioned above, it is open to the Court to appoint either a receiver and manager to the West Unit Trust, or a replacement trustee.  In my view, the preferable course is to appoint a receiver to the West Unit Trust.

  1. In the present circumstances, as cl 87 of the West Unit Trust Deed provides that the trust terminates if the trustee decides in the interests of the unit holders that it should terminate the trust, if a replacement trustee were appointed the replacement trustee could proceed to terminate the trust following the distribution of assets of the West Unit Trust.

  1. However, the difficulty with this course is that the replacement trustee would be under no obligation to wind up the trust, and may only do so if the replacement trustee forms the view that it is in the interests of the unit holders.

  1. As noted above, however, cl 81 of the West Unit Trust Deed provides that the appointment of a trustee terminates automatically if:93F[94]

the trustee enters into compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction), or has an administrator, receiver, official manager, or receiver and manager appointed to any part of its assets.

[94]Exhibit CW-3 to the Third Charlotte West Affidavit, at 17 (emphasis in bold added).

  1. It appears, therefore, that the appointment of a receiver to the West Unit Trust will bring about the termination of the appointment of the corporate trustee and bring the ‘deadlock’ between the parties to an end, following which the remaining funds may be distributed and the trust may be wound up.   In my view, this is the most efficient and cost-effective mechanism available.

  1. In addition, in this regard I note that Mr Daniel West is not opposed to appointing a receiver and manager to the West Unit Trust, to distribute the remaining trust funds and then wind up the trust.94F[95]

    [95]On 9 August 2024, counsel for Mr Daniel West informed the Court that Mr Daniel West does not oppose an order for the appointment of a receiver and manager to the West Unit Trust.  Further by letter to the solicitors for the plaintiff on 14 August 2024, Scanlan Carroll (acting for Mr Daniel West) stated that Mr Daniel West does not oppose the appointment of a receiver and manager to the West Unit Trust, to distribute the remaining funds and then wind up the trust.  Scanlan Carroll also confirmed to the Court on 19 August 2024 that ‘it remains Mr [Daniel] West’s position that he does not oppose the relief sought by the Plaintiff’.

  1. Given the apparent deadlock in decision making within Vaspak, and that the purpose for which the West Unit Trust was originally established has run its course given that the Elite Way Property has now been sold, in my view it is demonstrably ‘just and convenient’ within the meaning of s 37 of the Supreme Court Act, that a receiver be appointed to distribute the trust funds and wind up the West Unit Trust.

Consent of receiver

  1. Rule 39.04 of the Rules provides that before a person is appointed receiver the person’s written consent to the appointment shall, unless the Court otherwise orders, be filed.

  1. Mr Coyne in his email to Ms Balfoort dated 30 September 2024 confirms that he has not identified any potential conflicts and therefore can act as receiver of the West Unit Trust, or alternatively as trustee.95F[96]

    [96]Exhibit EZB-3 to the Third Balfoort Affidavit, at 4.

  1. In those circumstances, I am satisfied that Mr Coyne has provided his written consent to the appointment.

Whether receiver is to provide security

  1. Rule 39.05 of the Rules provides that unless the Court otherwise orders, a receiver shall give security, approved by the Court, that the receiver will account for what it receives as receiver, and deal with it as the Court directs.

  1. In Re Pires Consulting Holding Pty Ltd (In Liquidation),96F[97] Kennedy J applied the reasoning of Besanko J in Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd,97F[98] where his Honour did not order that security be paid, essentially because ‘the receivers and managers were joint and several liquidators and, therefore, already subject to obligations under the Act.’98F[99]

    [97][2019] VSC 384.

    [98][2011] FCA 714.

    [99][2019] VSC 384, at [47].

  1. It has become customary to appoint official liquidators as receivers without security on the basis that receivers are subject to obligations to the Court, and consequently they are unlikely to create situations which would expose themselves to litigation.99F[100]

    [100]Yunghanns, at [82] citing in Glazier Holdings Pty Ltd v Australian Mens Health Pty Ltd (unreported).

  1. Given that orders are proposed to be made to appoint Mr David Coyne of BRI Ferrier Victoria Pty Ltd, a registered liquidator, with approximately 37 years’ experience in insolvency,100F[101] as the receiver of the West Unit Trust property, it is appropriate, in my view, to dispense with any requirement for security to be provided pursuant to r 39.05 of the Rules.

    [101]Third Balfoort Affidavit, at [7]; Exhibit EZB-3, at 3-7.

  1. Similarly, following the approach of Besanko J in Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd,101F[102] the receiver and manager is not required to provide an undertaking as to damages.

    [102][2011] FCA 714.

Conclusion

  1. As the Court is satisfied that it is appropriate to appoint a receiver to the West Unit Trust, I propose to make orders essentially along the lines of the proposed minute of orders provided by Ms Douglas of counsel prior to the hearing and as amended during the course of the hearing.   

  1. The orders will include that there be liberty to apply to any person who can demonstrate sufficient interest to modify any directions, orders and/or declarations made pursuant to the originating process on giving not less than 72 hours’ notice to the plaintiff.  That order would also, of course, include the receiver and manager as a person affected by the orders.

Orders

  1. The following orders were made:

1. Pursuant to s 37(1) of the Supreme Court Act 1986 (Vic), David John Coyne, registered liquidator, be appointed as receiver and manager (Receiver) to the assets of the West Unit Trust (the Trust).

2. The need for the Receiver to file a guarantee under r 39.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) be dispensed with.

3.   By 4.00pm on Monday, 16 December 2024, the Receiver shall open a receiver’s bank account for the management of the Trust funds, and shall provide the second defendant with the relevant details of the receiver’s bank account.

4.   The second defendant shall by 4.00pm on Friday, 20 December 2024, pay all monies held in its possession on behalf of the Trust into the bank account nominated by the Receiver for the management of the Trust funds.

5.   The Receiver is authorised to have possession of and call in the assets comprising the trust property (including bank accounts of the Trust), and shall as soon as reasonably practicable distribute Trust income to unitholders of the Trust, discharge the liabilities of the Trust (if any), finalise the tax and financial accounts for the Trust, and at the conclusion of those steps terminate the Trust.

6.   The Receiver will have the power to:

a.   take possession and call in the assets comprising the Trust property (including bank accounts and any other assets);

b.   discharge any liabilities of the Trust;

c.   distribute any surplus proceeds from:

i.the sale of the Trust property (at 11 Elite Way, Carrum Downs, in the State of Victoria), to the trustees of the beneficiaries of the Trust that have not yet received their proportionate distribution (being the superannuation fund entities JT & CV West Pty Ltd as trustee for the JT & CV West Super Fund and JCDJ Pty Ltd as trustee for the West Family Superannuation Fund), taking into account the June Distribution already made to the West Family Trust (a unit holder/beneficiary of the Trust); and

ii.any other funds of the Trust to the trustees of the beneficiaries of the Trust;

d.   finalise the tax and financial accounts for the Trust;

e.   after the completion of the tasks at orders 6(a) to 6(d) above, take all steps necessary and incidental to terminate the Trust; and

f.    wind up and terminate the Trust, in the manner contemplated by clauses 87 and 88 of the West Unit Trust Deed.

7.   The Receiver shall be paid remuneration on a time basis at a reasonable fee according to the hours for which he, or any employee of BRI Ferrier Victoria Pty Ltd, is engaged in work necessary for and relevant to the purpose of the receivership, such remuneration to be calculated at the standard rates of BRI Ferrier Victoria Pty Ltd as set out in the schedule of rates exhibited to the third affidavit of Ms Eleftheria (Ritsa) Balfoort sworn on 18 October 2024, together with all out of pocket expenses.

8.   The costs, expenses and remuneration incurred by the Receiver in acting as Receiver be paid in priority from the assets of the Trust.

9.   The costs and expenses of the plaintiff of and incidental to the proceeding, shall be paid from the assets of the Trust, to be taxed in default of agreement, on the standard basis.

10.   By no later than 4.00pm on Friday, 11 April 2025, the Receiver shall provide a report (by way of affidavit) to the Court and to the parties on the progress of the receivership.

11.   There be liberty to apply to any person who can demonstrate sufficient interest to modify any directions, orders and/or declarations made pursuant to this Originating Process on not less than 72 hours’ notice to the plaintiff.


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Yunghanns v Candoora No 19 Pty Ltd (No 2) [2000] VSC 300
Deutsch v Deutsch [2011] VSC 345
Re Waratah Group Pty Ltd (in liq) [2020] VSC 523