Re Daics35 Pty Ltd (in liq)
[2025] VSC 651
•17 October 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2025 04833
IN THE MATTER of DAICS35 PTY LTD (IN LIQUIDATION) (ACN 642 495 029)
BETWEEN:
| CON KOKKINOS (in his capacity as Liquidator of DAICS35 PTY LTD (IN LIQUIDATION) (ACN 642 495 029) | First Plaintiff |
| and | |
| DAICS35 PTY LTD (IN LIQUIDATION) (ACN 642 495 029) | Second Plaintiff |
---
JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 17 October 2025 |
DATE OF JUDGMENT: | 17 October 2025 |
CASE MAY BE CITED AS: | Re Daics35 Pty Ltd (in liq) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 651 |
---
CORPORATIONS – Company that carried on business as trustee of a trading trust – Trustee company now in liquidation – Company removed as trustee by reason of ‘ipso facto’ clause in trust deed – Application by liquidator for an order pursuant to s 63 of the Trustee Act 1958 (Vic) – Application for relief from liability pursuant to s 1318 of the Corporations Act 2001 (Cth) – Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 – Jones v Matrix Partners Pty Ltd; Re Killarnee Silver & Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310 – Cremin, in re Brimson Pty Ltd (in liq) (2019) 136 ACSR 649 – Pitard Consortium Pty Ltd atf the Pitard Trust v Les Denny Pty Ltd (2019) 58 VR 524 – In the matter of Urban Property Pty Ltd [2021] VSC 847.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr N Angelakis | Vectigal Legal |
| For the Defendant | Not applicable | Not applicable |
HIS HONOUR:
The first plaintiff (Liquidator) is the liquidator of the second plaintiff (Company). The Company was the trustee of the Talgi Family Trust (Trust) until its office was vacated by reason of a provision in the trust deed establishing the Trust, commonly known as an ipso facto clause the effect of which is determine the relationship of Company and trustee in the event of the liquidation of the Company. The Liquidator seeks that powers be conferred on the Company pursuant to s 63 of the Trustee Act 1958 (Vic) and ancillary relief so that he might carry on and complete the liquidation of the Company. The Company has a modest cash balance of $65,009 and known creditors totalling $153,036.39.
By originating process filed 21 August 2025, the plaintiffs seek orders and directions that:
(a) the Company carried on business as trustee, the property held by the Company is Trust property, and the Company’s debts are Trust debts;
(b) the Company be granted powers to deal with the Trust property, including by paying Trust creditors;
(c) the Liquidator’s dealings with the Trust property are governed by Parts 5.5 and 5.6 of the Corporations Act 2001 (Cth);
(d) to the extent necessary, the Liquidator be relieved from liability arising from his dealings with the Trust property from the date of his appointment; and
(e) the Liquidator’s remuneration and expenses be paid from the Trust property.
The plaintiffs rely on affidavits of the Liquidator sworn 20 August 2025 (Kokkinos 1) and 7 October 2025 (Kokkinos 2), and of the Liquidator’s solicitor, Paul William Goldin, sworn 9 October 2025. The Liquidator has given notice to ASIC and known beneficiaries and creditors and is not aware of an objection to the application. The director of the Company (who is also appointor of the Trust) consents to the application.
I heard the application on 17 October 2025 and made orders substantially in the terms sought. These are the reasons for the making of the orders.
Factual Background
The Company was incorporated on 9 July 2020. Jihad Talgi (Director) has been the sole director and member of the Company since incorporation.[1]
[1]Kokkinos 1, [6]–[7] and Exhibit CK-1, 1–18 (ASIC extract).
The Liquidator was appointed by a resolution of the Director (as sole member) pursuant to s 491(1) of the Corporations Act on 24 April 2025.[2]
[2]Kokkinos 1, [3].
The Trust was established on 4 December 2019 by a Deed of Settlement (Trust Deed). The Company was appointed trustee in 2020.[3] The Trust Deed provides:
[3]Kokkinos 1, [15] and Exhibit CK-1, 297–328 (Trust Deed) and 329-331 (Deed of Retirement).
(a) the Trust is a discretionary trust by which the Company might in its discretion pay income (clause 5.3) or apply capital (clause 6.2);
(b) the Director is the Appointor (clause 8.5(a) and Schedule) with power to remove or replace the Company as trustee (clause 8.6); and
(c) the beneficiaries of the Trust are:
(i) the ‘Primary Beneficiaries’ being the Director, Fiona Faye Talgi, Sabah Breeanna Talgi, Jaida Isabella Talgi, and Jaxson Ryder Talgi;[4]
[4]The Liquidator understands that Fiona is the Director’s spouse, and the other Primary Beneficiaries are their minor children: Kokkinos 2, [8].
(ii) the ‘Secondary Beneficiaries’ being the relatives of the Primary Beneficiaries and the relatives of those persons; and
(iii) the ‘Tertiary Beneficiaries’ being other corporations, trustees, associations, and entities specified in the Trust Deed.
The Trust Deed contains an ipso facto clause providing that the office of trustee shall be determined and vacated if the Trustee shall enter liquidation. The Liquidator considers the clause is operative, such that the Company is a bare trustee with no powers in respect of the Trust property under the Trust Deed.[5]
[5]Kokkinos 1, [17] and Exhibit CK-1, 310 (Trust Deed, cl 8.1(c)). Extracted below at [29].
As trustee of the Trust, the Company operated a pizza bar and restaurant ‘Uncle Drew’s Pizza and Ribs on the Run ’in Carrum, Victoria.[6] The Company executed a contract for the sale of the business that settled on or around 9 December 2024. The Company received proceeds of $157,374.05, of which $92,365.05 was used pay the Company’s employee entitlements and other liabilities, and a balance of $65,009 remained.[7]
[6]Kokkinos 1, [8].
[7]Exhibit CK-1, 209–234 (Contract of sale); 287-8 (Statutory report); 37 (Bank statement).
Prior to the Liquidator’s appointment, the Director transferred the balance into the Liquidator’s trust account (Cash). The Liquidator considers that the Cash is the only recoverable property of the Company, but he has identified potential claims (against the Director for a loan account and in respect of voidable transactions).[8]
[8]Kokkinos 1, [19] and Exhibit CK-1, 281, 286-288 (Statutory report).
The Liquidator is aware of two claims made against the Company. The first is made by the Commissioner of Taxation in respect of a RBA deficit debt of $150,011.39.[9] The second is a $3,025 debt claimed by the Company’s former accountants, Tic Tax Accounting Pty Ltd.[10]
[9]Exhibit CK-1, 190–193 (ATO Letter and POD).
[10]Exhibit CK-1, 283 (Statutory Report).
Legal Principles
General Principles
A trustee is personally liable for liabilities incurred in the execution of the trust but is indemnified out of the trust assets, whether by recoupment or exoneration. The indemnity arises by contract, statute, or general law. It is secured by an equitable lien or charge on the trust assets, which takes priority over beneficiaries’ interests.[11]
[11]Naaman v Jaken Properties Australia Pty Ltd (2025) 99 ALJR 295, [1] and [13] (Gageler CJ, Gleeson, Jagot, and Beech-Jones JJ) and [51] (Gordon, Edelman and Steward JJ); Trustee Act, s 36(2).
Upon being ejected from office, a corporate trustee ceases to be trustee of the trust but continues to hold the trust assets as a bare trustee. The bare trustee’s duties, powers, and rights are limited to protecting the trust assets, and transferring the trust assets at the direction of the beneficiaries.[12] However, the right of indemnity and accompanying equitable lien over the trust assets survives ejection.[13]
[12]Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677, [23]–[26] (Gordon J).
[13]Jones v Matrix Partner Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310, [85] and [142] (Alsop CJ) and [198] (Farrell J).
A liquidator of a former corporate trustee cannot sell trust property without an order of the Court, or their appointment as receiver over the trust property.[14] A sale of the trust property absent such an order is a breach of trust.[15] As Moshinsky J explained in Re Cremin, the Court is generally willing, upon an appropriate application, to make orders permitting the liquidator to sell trust assets.[16] The Court may confer powers on the former trustee pursuant to s 63(1) of the Trustee Act, or it might appoint a receiver where it is ‘just and convenient’ under s 37 of the Supreme Court Act 1986 (Vic) (SCA). Orders under s 63 of the Trustee Act are appropriate where:[17]
[14]Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (In Liq)) (2019) 136 ACSR 649, [49] (Moshinsky J).
[15]Break Fast Investments Pty Ltd v Sclavenitis (2022) 67 VR 132, [53]–[55] (Riordan J).
[16]Re Cremin, [50].
[17]Caterpillar, [35]–[36].
(a) the company has become a bare trustee upon the liquidator’s appointment;
(b) the company only acted as trustee of the trust and in no other capacity;
(c) all assets are held as trustee, and all liabilities were incurred as trustee; and
(d) no new trustee has been appointed.
Conferral of Powers or Appointment of Receiver?
As I noted in In the Matter of Urban Property Melbourne Pty Ltd:[18]
There is no bright line about whether the preferable course is to confer power under the Trustee Act or to appoint a receiver under the Supreme Court Act.
[18][2021] VSC 847, [34].
The appointment of a receiver has been favoured where a third-party has power to replace the trustee and there is a risk of the appointment of a replacement trustee. A former trustee has no right to retain trust assets against a successor trustee,[19] which vest automatically in a successor trustee,[20] and the successor owes no fiduciary obligation to the former trustee to preserve their right of indemnity.[21] The appointment of a receiver pre-empts difficulties encountered by a liquidator that would arise if a replacement trustee were appointed.[22]
[19]Pitard Consortium Pty Ltd aft the Pitard Trust v Les Denny Pty Ltd (2019) 58 VR 524, [38] (McDonald J).
[20]Trustee Act, s 45.
[21]Naaman, [26]–[30] (Gageler CJ, Gleeson, Jagot, and Beech-Jones JJ).
[22]Re Waratah Group Pty Ltd (in Liq) [2020] VSC 523, [44]–[48] and [56]–[57] (Delany J).
On the other hand, the conferral of powers under the Trustee Act has been favoured where there is no risk of the company being removed as trustee and the property of the company will be exhausted following its sale and distribution.[23] That course carries with it efficiency and costs savings given the liquidator acts in a single capacity, and need not make a further application for his or her discharge as receiver.[24] As Delany J said in Re Cloud Nine Melbourne Pty Ltd (In Liq):[25]
Given the modest funds available in the administration, to make orders pursuant to the Trustee Act is more cost efficient than appointing the liquidator as receiver. If that course would be adopted it will be necessary for two separate administrations to proceed concurrently, winding up and receivership. That is not the case if the orders that are sought by the Liquidator are made pursuant to the Trustee Act.
[23]Re Trident Star Enterprises Pty Ltd (admin apptd) [2025] VSC 215, [52]–[58] (Cosgrave J).
[24]Trident Star, [56] and [58].
[25][2024] VSC 357, [22].
In Re Civil Construction Network Services Pty Ltd (in liq), Delany J considered that the following factors supported orders made under the Trustee Act in preference to orders appointing the liquidator as receiver over the trust assets:[26]
[26][2020] VSC 474, [30]; see also Cloud Nine, [20]–[21].
(a) the trust property will be exhausted following its sale and subsequent distribution to creditors;
(b) the conferring of power of sale upon the liquidator appears the most convenient and efficient way to proceed;
(c) the company is not trading, such that there is no on-going business to be conducted by the liquidator; and
(d) where the liquidator is given power of sale, there is no risk of confusion as to the roles or as to the capacity in which the liquidator is acting as might be the case if the appointment was as receiver and manager.
Directions as to Capacity
The right of exoneration only permits the company to realise assets of a trust to satisfy debts owed to creditors of that trust, and not to any other creditors. No issue arises where the company only carried on business as trustee. In that circumstance, the liquidator may pay their costs and expenses, and the creditors, from the trust property without any need to segregate or apportion the property, in accordance with the statutory priorities contained within the Corporations Act.[27]
[27]Re Cremin, [51]; Re AAA Financial Intelligence Ltd (in liq) [2014] NSWSC 1004, [13(1)] (Brereton J).
Section 90-15 of the IPSC empowers the Court to make such orders as it thinks fit in relation to the external administration of a company. In applications such as the present, liquidators commonly seek directions confirming the capacity in which the company held assets and incurred liabilities.[28] That course is taken to confirm that trust assets might be applied towards debts and costs of the liquidation.
[28]Trident Star, [38]–[40].
Whether a company trades in its own right or as a trustee largely depends on factors which are specific to the circumstances. There is no one determinative factor or set criteria. The following matters have been considered by Courts in making that determination:[29]
[29]Re Amerind Pty Ltd (in Liq) (2017) 320 FLR 118, [46] (Robson J).
(a) the existence of constituent trust documents which establish a trust, including any draft trust documents which cross-reference one another;
(b) accounts having been maintained separately to the company’s operational expenditure accounts and/or the company’s own property;
(c) the company’s name in its capacity as trustee being noted on key employment documents, such as letters of employment and tax file declarations;
(d) invoices rendered by the company in question having been issued by the company in its capacity as trustee of the trust;
(e) company meeting minutes disclosing the existence of a trust, or disclosed that the company was operating as a trust;
(f) expenses being accounted as receipts of the company as trustee; and
(g) records, contained in the general ledger of the company, recording activity consistent with the operation of a trust, such as the issue of units.
Relief from Liability
By s 1318 of the Corporations Act, and s 67 of the Trustee Act, the Court may excuse a liquidator who inadvertently deals with trust assets when they lacked the power to do so.[30] To obtain relief, the liquidator must establish that:
[30]See Trident Star, [65]–[74]; Re Civil Construction, [34].
(a) the liquidator has reason to apprehend that a claim would, or might, be made against them;
(b) such a claim is in respect of negligence, default, breach of trust or breach of duty in the capacity as liquidator; and
(c) the liquidator acted honestly in relation thereto.
Although there need not be evidence that a person has raised a question or concern over dealings with the trust’s assets, there must be an objective basis for believing that the claim will or might be made against that person. The claim must have a ‘real, not fanciful or remote possibility’.[31]
[31]Trident Star, [69] and [72].
Directions Application
The Liquidator seeks directions which are to the effect that:
(a) all assets and debts of the Company were held, and incurred, by the Company in its capacity as trustee of the Trust;
(b) Parts 5.6 and 5.6 of the Corporations Act govern the Liquidators’ possession, realisation and distribution of the Trust property; and
(c) the Liquidator may pay his remuneration and expenses from the Trust property as otherwise permitted by s 556 of the Corporations Act.
The Liquidator has formed the view that the Company only carried on business, held assets, and incurred liabilities, as trustee of the Trust. That view is supported by the following:
(a) the Deed of Retirement names the Company as trustee of the Trust, having been appointed to that office in 2020;[32]
[32]Exhibit CK-1, 329 (Deed of Retirement).
(b) the Trust maintained an ABN (53 266 346 682) which was registered for GST and linked to a business name held by the Trust — whereas the Company did not, in its own right, maintain an ABN, business name, or GST registration;[33]
[33]Kokkinos 2, [19] and Exhibit CK-2, 22–23 (ABR and ASIC extracts).
(c) the Company maintained a single bank account in the name of ‘DAICS35 Pty Ltd as trustees for the Talgi Family Trust Trading as Uncle Drew’s Pizza and Ribs on the Run’, from which the Company paid expenses and received revenue which appeared to relate to the business;[34]
[34]Kokkinos 1, [8(a)]; Exhibit CK-1, 30 (Bank statement). See, eg, receipts from Uber and Menulog and payments towards electricity, small goods, ingredients, accounting, and wages (at 38–41).
(d) the Company incurred all taxation liabilities as trustee of the Trust, given the Commissioner has not made a claim against the Company other than in its capacity as trustee of the Trust;[35]
[35]Kokkinos 1, [8(b)]; Exhibit CK-1, 190–193 (Commissioner’s POD).
(e) Tic Tax Accounting informed the Liquidator that:[36]
[36]Kokkinos 1, [8(c)]; Exhibit CK-1, 194 (Email from Jasser Hallak dated 12 June 2025).
Daics35 Pty Ltd (in Liquidation) (‘the Company’), only acted as Trustee for The Talgi Family Trust and I confirm that it did not trade outside of that capacity.
(f) the Company’s financial accounts were prepared as trustee of the Trust, and recorded (inter alia) trading income and expenses — and the Liquidator has not received financial accounts prepared for the Company in its own right;[37] and
(g) the Company executed the contract of sale for the business in the name of the Company but by utilising the ABN of the Trust as an identifier.[38]
[37]Kokkinos 1, [8(d)]; Exhibit CK-1, 196–208 (Financial report for year ended 30 June 2025).
[38]Kokkinos 1, [8(e)]; Exhibit CK-1, 209–234 (Contract of sale).
The only known creditors are the Commissioner and Tic Tax Accounting. The Commissioner claims against the Company as trustee, and Tic Tax Accounting stated the Company only acted as trustee. The only known assets are the loan account and the Cash. The loan account is reported in the Trust’s accounts as a ‘beneficiary loan’.[39] The Cash was generated from the sale of the business (which appeared to be carried on trustee) under the contract of sale (which specified the Trust’s ABN) and was paid into the Company’s only bank account (which was maintained in the name of the Company as trustee for the Trust). The assets therefore appear to be Trust assets.
[39]Exhibit CK-1, 201 (Financial report for year ended 30 June 2025).
The Trust Deed confers a right of the indemnity by clause 10.4:[40]
… providing the Trustee shall have acted in good faith, the Trustee shall be entitled to be indemnified out of the assets for the time being comprising the Trust Fund against liabilities incurred by it in the execution or attempted execution or as a consequence of the failure to exercise any of the trusts authorities, powers and discretions conferred upon it by this Deed or by virtue of being the Trustee hereof … [save that it] shall not apply where the Trustee shall be proved to have been liable in respect of any gross negligence, wilful default or breach of duty committed, made or omitted in personal conscious fraudulent bad faith.
[40]Exhibit CK-1, 317.
Based on the above matters, the Liquidator submits there is a sufficient basis for the directions as the characterisation of the Company’s assets and liabilities. The direction as to the possession, realisation and distribution of the Trust assets follow from the Company’s right of indemnity, and the principles outlined above.
Trustee Act Application
The Liquidator seeks an order pursuant to s 63 of the Trustee Act that the Company be empowered to carry on the Trust’s business for the purpose of its winding up, and to deal with its assets, pay creditors and costs and expenses of the winding up from the Trust property in accordance with the Corporations Act.
By clause 8.1(c) of the Trust Deed, the Company ceased as trustee of the Trust upon the appointment of the Liquidator. That clause provides that:[41]
The office of Trustee shall ipso facto be determined and vacated if … the Trustee being a company shall enter liquidation whether compulsory or voluntarily (not being a voluntary liquidation for the purposes of amalgamation or reconstruction) …
[41]Exhibit CK-1, 310.
Absent the Court’s intervention, the Cash is held by the Company as bare trustee.[42] The Liquidator is concerned that, if an order conferring power is not made, then he will remain disabled from paying the Cash towards expenses of the winding up and the claims of creditors. It is appropriate that the Liquidator have recourse to the Cash for the purposes of the winding up, and the only real question is whether the Court should proceed by conferring powers under the Trustee Act, or by appointing the Liquidator as receiver over the Trust assets under the SCA.
[42]The Cash is held in an ‘administration account’ maintained by the Liquidator in relation to the liquidation of the Company for the purposes of ss 65-5 to 65-25 of the Insolvency Practice Schedule (Corporations). On one view, the asset (in its current form) is a chose in action against the banker (see Police (SA) v Smith [2024] SASCA 37, [24] (S Doyle JA and Stein AJA)) held by the Company, or the Liquidator (on trust for the Company). With that said, nothing falls on the technical nature of the asset. The Cash represents proceeds of the Trust property, and whatever the nature of the rights that the Company has to the Cash, they are rights held for the benefit of the Trust’s beneficiaries and subject to its right of indemnity. Authority is necessary to apply the Cash in discharge of the Company’s right of exoneration.
While the Liquidator is somewhat ambivalent, his preference is that the Company be conferred powers under the Trustee Act. I accept that this is the appropriate course.
First, the evidence suggests that the Company only ever acted as trustee of the Trust — and the assets, including the Cash, and the liabilities, are Trust assets and liabilities. The Company is a bare trustee, and no new trustee has been appointed.
Secondly, the Director is the Appointor of the Trust with the power to remove and appoint trustees of the Trust.[43] There is little risk of the Director moving to replace the Company as trustee of the Trust, in circumstances where he:
[43]Exhibit CK-1, 311 (Clauses 8.5 and 8.6) and 322 (Schedule).
(a) sold the business of the Company prior to the winding up of the Company, such that the Trust no longer carries on a business;
(b) transferred the balance of the purchase price received by the Company (being the Cash) to the Liquidator prior to his appointment; and
(c) has been given notice of this application and consents to the orders sought.
Thirdly, the appointment of a receiver is unnecessary. The Liquidator is not carrying on the Company’s (former) business. He seeks the conferral of power primarily so that he can apply the Cash in the winding up, after which it will be exhausted. He also seeks the order so that he might collect the loan account, should he consider it commercial to do so.[44]
[44]With that said, his preliminary investigations have not been particularly promising, and he currently holds the view that the Cash is the only recoverable asset of the Company: see Kokkinos, [19] and [23(b)]; Exhibit CK-1, 281 (Statutory Report).
Fourthly, the Liquidator’s proposed course is also supported by the following factors:
(a) the liquidation of the Company is a modest undertaking (involving limited assets) and it is necessary that the Liquidator conduct a cost-efficient administration;
(b) the appointment of the Liquidator as receiver would result in additional cost to the liquidation because, inter alia, the Liquidator would later need to apply to the Court in order to seek his discharge as receiver;
(c) given the Company’s meagre assets, there is a risk that any additional costs incurred by the Liquidator arising from a concurrent receivership may not be recoverable from the Trust property.
Relief from Liability
The Liquidator also seeks relief under s 1318 of the Corporations Act and s 67 of the Trustee Act, for any breaches, failures or omissions arising from any dealing with the Trust property.
As matters stand, the Cash is the only known Trust asset with which the Liquidator has dealt. There have been no unauthorised sales of non-cash assets. The Cash was transferred into the Liquidator’s trust account prior to his appointment. The Liquidator has not drawn remuneration from the Cash, but he has paid expenses from the Cash (being ‘Searches’ and ‘Administration Charges’ and ‘Legal Fees’) totalling $1,719.90.[45]
[45]Kokkinos 1, [28]; Exhibit CK-1, 281 and 290-1 (Statutory report).
The Liquidator apprehends a claim might be made against him, for breach of trust, arising from his receipt of the Cash, and his payment of expenses of the winding up at a time when the Cash was held as bare trustee.
The Liquidator acknowledges that, in other cases, similar issues have arisen — and the Court has not been minded to make orders of the kind sought.[46]
[46]Urban Property, [40]–[43]; Re Civil Construction, [35].
Although I accept that the evidence to date shows that the Liquidator’s actions have been indisputably honest, I do not consider a grant of relief is necessary. I am not satisfied that there is a real possibility of any claim being made against the Liquidator in the circumstances given the small amount of cash deployed ostensibly for proper purposes. In the unlikely event that such a claim is brought, it shall remain open to the Liquidator to seek dispensation.
---
0
12
0