Re Glenvine Pty Ltd (in liq)

[2020] NSWSC 866

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Glenvine Pty Limited (in liquidation) [2020] NSWSC 866

Hearing dates:

19, 26, 30 June 2020

Decision date:

03 July 2020

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Liquidator appointed without security as receiver of VBC Trust property and Darlinghurst Property with power of sale. Receiver permitted to draw reasonable costs and expenses, but not remuneration until approved by the Court, from realised funds. Parties to make further submissions as to costs.

Catchwords:

CORPORATIONS — Receivers and managers — Appointment of liquidator as receiver with power of sale — Where mortgaged property was the only substantial trust property — Where company in liquidation has right of exoneration for liabilities incurred under outstanding mortgage — Where there is outstanding judgment debt against company in liquidation in separate proceedings

EQUITY — Trusts and trustees — Transfer in equity — Imperfect gifts — Where no signed transfer had been delivered to transferee — Where certificate of title still held by mortgagee

FAMILY LAW — Property — Marriage — Adjustment of property interests — Proper construction of Family Court orders — Where trustee was not party to Family Court proceedings — Whether orders transferred title in property without compliance with orders for correspondence discharge of mortgage

Legislation Cited:

- Corporations Act 2001 (Cth) s 420, 436A, 440A(2)

- Evidence Act 1995 (NSW), s 128

- Family Law Act 1975 (Cth), ss79, 99AB, 99AE, 105, Pt VIIIAA

- Family Law Rules 2004 (Cth), r 6.02

- Home Building Act 1989 (NSW)

- Real Property Act 1900 (NSW), s 41

- Supreme Court Act 1970 (NSW), s 67

- Trustee Act 1925 (NSW), s 59

Cases Cited:

- 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) [1999] FCA 144; (1999) 30 ACSR 377

- Australian Securities and Investments Commission v Primelife Corporation Ltd [2007] FCA 1874

- Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485

- AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81

- Bastion v Gideon Investments Pty Ltd (in liq) [2000] NSWSC 939; (2000) 35 ACSR 466

- Brunker v Perpetual Trustee Co Ltd [1937] HCA 29; (1937) 57 CLR 555

- Bruton Holdings Pty Limited (in liq) [2008] FCAFC 184; (2008) 173 FCR 472

- Bruton Holdings Pty Ltd v Commissioner of Taxation [2009] HCA 32; 239 CLR 346

- Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 368 ALR 3

- Commissioner of Stamp Duties v Buckle [1998] HCA 4; (1998) 192 CLR 226

- Cremin, in the matter of Brimson Pty Ltd (in liq) [2019] FCA 1023

- Doyle v Commissioner of Police (No 2) [2020] NSWCA 34

- E Pty Ltd v Klearchos [2016] FAMCA 258

- Galante v Galante [2019] FamCA 756

- Harris v Conway [1989] Ch 32

- Hosking, Re Business Aptitude Pty Ltd (in liq) [2016] FCA 1438

- Isin v Ozen [2017] NSWCA 316

- Jones v Matrix Partner Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310

- Kennon v Spry (2008) 238 CLR 366

- Kerr, Re Angel’s Castle Pre-School Pty Ltd (in liq) [2010] FCA 786

- Knight & Ellington [2019] FamCA 488

- McLean v Hill, TMC Plumbing & Drainage Pty Ltd (in liq) [2019] FCA 1439

- Milroy v Lord (1862) 45 ER 1185

- Mullane v Mullane (1983) 158 CLR 436

- Ng v Van Der Velde [2011] FCAFC 35

- Octavo Investments v Knight (1979) 144 CLR 360

- Official Trustee v Mateo [2003] FCAFC 26; (2003) 127 FCR 217

- Palmer v Ayres; Ferguson v Ayres [2017] HCA 5; (2017) 91 ALJR 325

- Re Aberdeen All Farm Pty Ltd (in liq) [2020] NSWSC 770

- Re Australian Barrister Chambers Pty Ltd (in liq) [2017] NSWSC 245

- Re Australian Barrister Chambers Pty Ltd (in liq), unreported, 19 May 2017

- Re Crust’n’Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 Qd R 76; (1991) 5 ACSR 70; 9 ACLC 912

- Re Enhill Pty Ltd [1983] 1 VR 561; (1982) 7 ACLR 8

- Re Glenvine Pty Ltd [2020] NSWSC 642

- Re Gramarker Pty Ltd; Clifford Sanderson (as liquidator of Gramarker Pty Ltd) v Simon Kerr [2014] NSWSC 243

- Re Independent Contractor Services (Aust) Pty Ltd (in liq) (No 2) [2016] NSWSC 106

- Re Johnson; Shearman v Robinson (1880) 15 Ch D 548 at 552

- Re North Food Catering Pty Ltd [2014] NSWSC 77

- Re Parkway One Pty Limited (No 2) [2020] NSWSC 191

- Re Primespace Property Investment Limited (in liq) [2016] NSWSC 1821

- Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484; (2014) 103 ACSR 401

- Re Taylor, in the matter of CJ & KL Bond Pty Ltd (in liq) [2018] FCA 1430

- Shirlaw v Taylor (1991) 31 FCR 222

- Southwell v Jane [2011] FamCA 663

Category:

Procedural and other rulings

Parties:

Christian Peter Sprowles (Third Plaintiff)
Glenvine Pty Limited (in liquidation)
Billie Ashley Pty Ltd (Second Defendant)
Kelly Van Beek (Third Defendant)

Representation:

Counsel:
D R Stack (Third Plaintiff)
S J Philips (Second Defendant)
C R C Newlinds SC/R Barnett

Solicitors:
Bridges Lawyers (Third Plaintiff)
Matthews Dalton (Second Defendant)
Pikel Lawyers (Third Defendant)

File Number(s):

2020/44559

Judgment

1. By Interlocutory Process filed on 2 June 2020, Mr Sprowles, who is the liquidator (“Liquidator”) of Glenvine Pty Ltd (in liq) (“Glenvine”) seeks an order under s 67 of the Supreme Court Act 1970 (NSW) that, nunc pro tunc, he be appointed, without security, as the receiver and manager of all the property, assets and undertakings (“Assets”) of the VBC Trust (“VBC Trust”) including a property situated in Darlinghurst, NSW (“Darlinghurst Property”). He also seeks an order that he have, in respect of the Assets, powers provided under s 420 of the Corporations Act 2001 (Cth), with certain exclusions, and that he be permitted to draw amounts on account of his reasonable costs and expenses, including legal costs, from the Assets.

2. I subsequently directed the filing of a Points of Claim by the Liquidator and Points of Defence by the Second and Third Defendants, Billy Ashley Pty Limited (“BAPL”) and Ms Van Beek, and Ms Van Beek also filed a Cross-Claim Statement of Cross-Claim, which may require leave of the Court so far as it seeks to bring a claim for breach of trust against a Court-appointed liquidator. The parties agreed that I should determine the Liquidator’s application for the appointment as a receiver to the Assets, which plainly has elements of finality about it, and determine whether the matters raised in BAPL’s or Ms Van Beek’s Points of Defence and Ms Van Beek’s Cross-Claim provide a sufficient basis not to appoint, or to defer appointing, the Liquidator as receiver of the property, without finally determining those matters. The latter question has a similar character to the issues that might arise in an application for an interlocutory injunction, and a determination of it on that basis will not prevent Ms Van Beek pursuing her Cross-Claim (if she can obtain any necessary leave, in respect of the claim for breach of trust) on a final basis. All of the observations I make below in respect of Ms Van Beek’s and BAPL’s contentions are directed to the question whether a serious question to be tried or reason not to make the orders sought by the Liquidator is established, not to any final decision as to the issues raised, even if they are not expressly qualified in that way, for reasons of linguistic simplicity.

3. While the parties addressed a range of issues, I conclude below that this application can and should be determined on a narrower basis, having regard to facts that are largely common ground and well-established legal principles. I will, however, address the wider issues raised by the parties, on the limited basis that Ms Van Beek sought to have them determined, in deference to the detail of the parties’ submissions about them and against the contingency that they are relevant in any appeal from these orders.

Chronology and affidavit evidence

4. The basic facts emerge from the parties’ Points of Claim and Points of Defence, and are also established by documents, although the parties have also led affidavit evidence to which I refer below.

5. Glenvine was incorporated on 25 May 1989.  Mr Van Beek, who is Ms Van Beek’s former husband and with whom she has reconciled, is the sole director of Glenvine and he and Ms Van Beek each hold one share in Glenvine. At least from 9 January 1998, Glenvine was trustee of the VBC Trust under a Trust Deed (Ex CS-1, 22). Both the former administrator of Glenvine and the Liquidator have concluded, based on their review of Glenvine’s books and records, that Glenvine only ever carried on business as trustee of the VBC Trust (Ex CS-1, 149; Sprowles [45(c)]-[48]) although BAPL seeks to put that question in issue by its Points of Defence and submissions in this application. The initial beneficiaries of the VBC Trust were Mr Van Beek, Mr Cain, the Van Beek Family Trust and the Cain Family Trust and, by reason of an amending deed to which I refer below, the present beneficiaries are Mr Van Beek and the Van Beek Family Trust. Under clauses 9B(a), 9E and 15 of the Trust Deed, Glenvine was entitled to be indemnified for all liabilities incurred in its capacity as trustee of the VBC Trust. Clause 11 of the Trust Deed permitted the Principal to remove any trustee and also provided that the office of a trustee would ipso facto be determined and vacated if the trustee, relevantly, had a petition for its winding up presented to the Court.

6. On 11 June 1999, Glenvine, as trustee of the VBC Trust, purchased the Darlinghurst Property (Points of Claim [9]); that matter is not admitted by BAPL although it would be in Mr Van Beek’s knowledge (Points of Defence [3]) and is also not admitted by Ms Van Beek in her Points of Defence [6]). It is plain that the purchase was in that capacity from the documentation for the borrowings made to fund it and from other evidence to which I refer below. Monies were borrowed by Glenvine in its own right and as trustee of the VBC Trust to buy and hold that property, most recently from the Bank of Western Australia (“Bankwest”) and then from Australia and New Zealand Banking Group Limited (“ANZ”), which were secured by mortgage (Points of Claim [11]ff; that is again not admitted by BAPL although it would also plainly be in Mr Van Beek’s knowledge and is also not admitted by Ms Van Beek).

7. The Darlinghurst Property comprises a restaurant at ground level with a boarding house above. It is common ground that Glenvine has, since 11 June 1999, been and remains registered as proprietor of the Darlinghurst Property in the records maintained by the Land Titles Office under the Real Property Act 1900 (NSW). Mr Stack, who appears for the Liquidator, points to evidence that supports the view the Darlinghurst Property was or is held by Glenvine in its capacity as trustee of the VBC Trust, including MYOB extracts for the VBC Trust which record the Darlinghurst Property as an asset of that trust (Sprowles [47(a)(i)); the financial statements for the VBC Trust which also record the Darlinghurst Property as an asset of the trust (Ex CS-1, 389, 394, 399, 403, 407 and 411); the fact that the ANZ loan account for that property is in the name of Glenvine in its capacity as the trustee of the VBC Trust and the Letter of Offer by ANZ which indicated that the relevant mortgage was entered into by the Glenvine in its capacity as the trustee of the VBC Trust (Ex CS-1, 57, 58 and 61); and a letter dated 25 May 2020 from the solicitors for BAPL to the Liquidator demanding, in BAPL’s capacity as trustee of the VBC Trust, that Glenvine transfer the Darlinghurst Property to Ms Van Beek (Ex CS-1, 532). It appears that property is (or was) the only substantial asset of the VBC Trust.

8. Glenvine, as trustee for the VBC Trust, developed several townhouses at Jindabyne in New South Wales, and in July 2007, contracted a company associated with Mr Van Beek to carry out the residential building work to build that property. The building was completed in 2008 and, on completion, an owners corporation became the owner of the common property and several townhouses were acquired by individual owners. Substantial defects in the building works had emerged by 2011.

9. On 11 July 2011, the Trust Deed was amended by a Deed Amending VBC Trust (Ex CS1, 45) to remove Mr Cain as a principal of the VBC Trust and remove Mr Cain and the Cain Family Trust as beneficiaries under the VBC Trust, and Mr Cain resigned as a director of Glenvine.

10. In 2012, proceedings were commenced between Mr Van Beek and Ms Van Beek in the Family Court of Australia and, in November 2012, Ms and Mr Van Beek filed with the Family Court of Australia an Application for consent orders for property settlement (Van Beek 24.6.20, [4]). On 13 February 2013, Ms and Mr Van Beek were divorced, although, as I noted above, they have since reconciled. On 28 March 2013, Ms and Mr Van Beek filed an Amended Application for consent orders for their property settlement in the Family Court of Australia (Van Beek 21.6.20, Annexure B). Item 72 of the Amended Application listed the value of the real estate that Ms Van Beek was to receive, including $1.8 million in respect of the Darlinghurst Property, which appears to be the net value of the property after the discharge or refinance into Ms Van Beek’s sole name of the then Bankwest loan, which was required by the proposed orders. Mr and Ms Van Beek also filed affidavits in support of the Amended Application addressing matters raised by the Registrar of the Family Court (Van Beek 24.6.20, pp 16-21).

11. On 3 April 2013, property orders (“2013 Orders”) were made in the Family Court proceedings (Ex CS-1, 90) by consent between Mr and Ms Van Beek. It is common ground that Glenvine was not a party to the proceedings in the Family Court or to the 2013 Orders, either in its own right or as trustee of the VBC Trust (Points of Claim [18]-[19], admitted by BAPL and Ms Van Beek). Order 2 of the 2013 Orders relevantly provided that:

“[Mr Van Beek] and [Ms Van Beek] shall within 28 days of the date of these orders do all acts and things necessary and sign all documents necessary to cause Glenvine to transfer to [Ms Van Beek] the [Darlinghurst] property.”

Order 3 relevantly provided that, simultaneously on compliance with order 2, Ms Van Beek would do all things necessary to discharge and refinance into her sole name the loan over the Darlinghurst Property and would also provide an indemnity to Mr Van Beek. Order 4 provided for Ms Van Beek to take further steps upon compliance with orders 2 and 3, including transferring her shareholding in Glenvine to Mr Van Beek or his nominee and relinquishing any entitlement she may have in the past, present or future as a trustee or potential trustee of the VBC Trust and assigning to Mr Van Beek all her entitlements in respect of the VBC Trust.

12. The Liquidator contends that the 2013 Orders do not include any order against Glenvine in its own right or as trustee of the VBC Trust or direct Glenvine to take any step in relation to the property of the VBC Trust, including the Darlinghurst Property (Points of Claim [20(a)-(b)]). That is not admitted by BAPL although it is obvious from the 2013 Orders, and is admitted by Ms Van Beek. The Liquidator also contends (Points of Claim [20(c), and BAPL and Ms Van Beek deny), that the 2013 Orders did not alter the rights, liabilities or property interests of Glenvine in its own right or as trustee of the VBC Trust in relation to the property of the Trust including the Darlinghurst Property. It is common ground between the Liquidator and Ms Van Beek that she did not comply with the 2013 Orders by doing all acts and things necessary to discharge or refinance the Bankwest facility in her sole name, or transfer her shareholding in Glenvine to Mr Van Beek or take the contemplated steps in respect of the VBC Trust (Points of Claim [24], not admitted by BAPL but admitted by Ms Van Beek). Mr Newlinds and Mr Barnett, who appeared for Ms Van Beek, frankly acknowledge Ms Van Beek’s non-compliance with the 2013 Orders in their opening written submissions as follows:

“Ms Van Beek was told that she would be unable to secure a discharge and refinance in her own name of the Bankwest loan and mortgage. Accordingly, she did not press for registration of the transfer. She did not seek a variation of the Family Court orders.”

13. In April 2014, the owners corporation and owners of the townhouses built on the Jindabyne property brought proceedings, initially against the builder of those townhouses and subsequently also against Glenvine, in the Consumer, Trader and Tenancy Tribunal, and claimed damages for defective building works in respect of that property. In mid 2015, those proceedings were transferred to this Court on the basis that the claimed rectification costs would exceed $500,000.

14. On 12 May 2015, Mr Van Beek signed a document (“Transfer”) by which Glenvine transferred or purportedly transferred its interest in the Darlinghurst Property to Ms Van Beek (Points of Claim [25]; not surprisingly, Ms Van Beek takes issue with “purported” in her Points of Defence [19]). The Transfer provided for Glenvine to transfer its interest in the Darlinghurst Property to Ms Van Beek and provided that:

“[Glenvine] acknowledges receipt of the consideration of Pursuant to [sic] Family Court orders dated 3 April 2013 and as regards the abovementioned land transfers to [Ms Van Beek] an estate in fee simple.”

15. It is plain that any such transfer was for no consideration, as between Glenvine and Ms Van Beek, and she received the property as a volunteer, since Glenvine was not party to 2013 Orders and received no benefit from them, even by way of any promise made to it by Ms Van Beek under them. Ms Van Beek contends that the executed stamped Transfer was delivered to her solicitors following its execution and has since then been in her possession or, strictly, in the possession of her solicitors on her behalf. It is common ground that the Transfer was not registered in the records maintained by the Land Titles Office under the Real Property Act for the Darlinghurst Property, and it is plain that the unregistered transfer did not transfer a legal interest in the Darlinghurst Property from Glenvine to Ms Van Beek by reason of s 41 of the Real Property Act.

16. By a letter of offer dated 1 March 2019 to Glenvine, ANZ offered a loan facility to Glenvine in its own capacity and as trustee for the VBC Trust (Ex CS-1, 54) and the facility schedule recorded that Glenvine would give a first registered mortgage in its own capacity and as trustee for the VBC Trust over the Darlinghurst Property and that Mr and Ms Van Beek would also give guarantees and indemnities in favour of ANZ in respect of Glenvine’s obligation in its own capacity and as trustee for the VBC Trust. The letter of offer was signed by Mr Van Beek in his capacity as sole director and secretary of Glenvine and guarantor acknowledgments were signed by each of Mr and Ms Van Beek.

17. Glenvine in its own right and as trustee of the VBC Trust appears to have granted a mortgage to ANZ over the Darlinghurst Property on the date of ANZ’s offer, 1 March 2019 (Ex CS1, 53) although it did not formally accept that offer until 24 March 2019 (Ex CS1, 60, 62). The memorandum to the ANZ Mortgage provides for “Default Event[s]” including if Glenvine is placed into administration or liquidation, or is insolvent or presumed to be insolvent or where a creditor enforces or takes out “a distress or execution order” (Ex CS-1, 76, cll 7.1(b)(i)(F)(1) and 7.1(b) (ii) and (iii)), all of which seem to have occurred. On a Default Event, ANZ can demand repayment and enforce its securities (Ex CS1, 77, cll 7.2 (b), 7.3) although it does not yet appear to have done so. As at 20 May 2020, Glenvine owed about $957,000 to ANZ under the ANZ Facility (Ex CS1, 338).

18. On 25 March 2019, Ball J delivered judgment in the proceedings brought against Glenvine in respect of the Jindabyne townhouses in favour of the owners corporation in the amount of $3,974,927 and for several individual owners in lesser amounts and Glenvine and the builder were also ordered to pay the plaintiffs’ costs of the proceedings. His Honour found, inter alia, that the evidence established that Glenvine in its capacity as trustee of the VBC Trust was the developer of the project for the purposes of the Home Building Act 1989 (NSW).

15. On 29 October 2019, the several owners of the Jindabyne townhouses issued a creditor’s statutory demand to Glenvine, relying on the judgment debt arising from Ball J’s judgment, which was not complied with. On 11 February 2020, two of the owners commenced these proceedings seeking an order that Glenvine be wound up.

16. On 6 March 2020, BAPL was incorporated with Mr Van Beek as its sole director, secretary and shareholder and a Deed of Change of Trustee also dated on or about 6 March 2020 removed Glenvine as trustee of the VBC Trust and appointed BAPL as trustee in its place (Ex CS1, 117ff, 126ff).

17. On 6 April 2020, the day before the winding up proceedings were to be heard, Glenvine was placed in voluntary administration under s 436A of the Corporations Act 2001 (Cth). On 14 May 2020, the then voluntary administrator of Glenvine unsuccessfully sought an order that the winding up proceedings be adjourned under s 440A(2) of the Corporations Act. That application was dismissed by Rees J, after a contested hearing. Glenvine was then wound up by order of the Court on 14 May 2020, based on its failure to comply with the creditor’s statutory demand, and Mr Sprowles was then appointed as its Court-appointed liquidator.

18. The Liquidator contends (Points of Claim [4]) that Glenvine continued as trustee of the VBC Trust until at least February 2020, when proceedings were commenced seeking orders that Glenvine be wound up, to which I refer below, or until several alternative dates. BAPL admits that Glenvine was trustee of the VBC Trust between 9 January 1998 and 6 March 2020 and contends that, on 6 March 2020, Mr Van Beek, as sole director and shareholder of Glenvine and others executed a Deed of Change of Trustee with respect to the VBC Trust, which removed Glenvine and appointed BAPL as the trustee of the VBC Trust.

19. With that background, I now turn to the affidavit evidence. The Liquidator relies on his affidavit dated 1 June 2020. The Liquidator’s evidence, based on his review of Glenvine’s books and records, is that it does not appear that Glenvine operated in its own capacity, and that it operated at all material times solely in its capacity as trustee of the VBC Trust. The Liquidator notes, for example, that bank accounts held by Glenvine were held in its capacity as trustee of the VBC Trust and the only financial statements and tax returns that he has been able to locate relate to the VBC Trust and not to Glenvine in its own right. The Liquidator also refers to numerous contemporaneous documents which record the Darlinghurst Property as an asset of the VBC Trust and notes that the voluntary administrator appointed to Glenvine, before it was wound up, recorded information provided by Mr Van Beek that the Company owned and operated the Darlinghurst Property in its capacity as trustee of the VBC Trust. The Liquidator also refers to a lease between Glenvine and Bills Restaurants Pty Ltd of the ground floor and basement of the Darlinghurst Property and a licence granted by Glenvine, while it was in voluntary administration, to Ms Van Beek in respect of a boarding house at the property. The Liquidator also there recognises a contest as to whether the Darlinghurst Property is beneficially owned by the VBC Trust or Ms Van Beek pursuant to the 2013 Orders.

20. The Liquidator’s affidavit also set out the work which he proposed to undertake as receiver, and expressed his view that the Darlinghurst Property should be sold and the net sale proceeds secured pending a determination of the beneficial entitlement to those proceeds. He also expressed the view that he believes that he is best placed to undertake the sale of the Darlinghurst Property where Glenvine is the current registered proprietor of the Darlinghurst Property and presently holds it as bare trustee, whether for BAPL or Ms Van Beek. The Liquidator also indicates his intention, following the sale of the Darlinghurst Property, to pay his reasonable costs and disbursements incurred in his capacity as receiver of the trust property, pay out the balance of the ANZ loan together with any interest and costs to ANZ, then pay his remuneration as receiver and manager of the trust property, and pay the balance of the proceeds of the sale of the trust property into Court, to be held pending further order of the Court as to the beneficial owner of the Darlinghurst Property. He also indicates his intention to approach the Court seeking appropriate directions and orders as to the way in which he would deal with the net sale proceeds of the Darlinghurst Property, after he had completed his investigation as to the true beneficial ownership of that property. Plainly, any directions or proceedings will also need to address the judgment debt in favour of the owners corporation and owners of the Jindabyne townhouses and any right of exoneration which Glenvine as trustee of the VBC Trust has against the Darlinghurst Property in that regard.

21. Ms Van Beek in turn relied on her affidavits dated 18 June 2020 and 24 June 2020 and an affidavit of her solicitor, Mr Matthews, dated 24 June 2020. By her affidavit dated 18 June 2020, Ms Van Beek refers to her divorce from Mr Van Beek and the 2013 Orders. Ms Van Beek’s evidence was that she was told by Mr Van Beek that she could not secure a loan for the Darlinghurst Property in her name alone and that she did not give instructions to her solicitors to register the Transfer. (Her solicitor’s evidence, to which I refer below, is not entirely consistent with that evidence, since he indicates he was unable to register that Transfer since Bankwest’s mortgage was not discharged.) Plainly, Ms Van Beek also did not perform the other requirements of the 2013 Orders in respect of the loan secured by the Darlinghurst Property. Mr Newlinds did not read, but the Liquidator tendered, paragraphs 17-18 of that affidavit which record her subsequent dealings with ANZ in respect of the Darlinghurst Property by which Glenvine in its own right and as trustee of the VBC Trust obtained a loan over that property. Ms Van Beek also gives evidence of steps which she has taken “as owner” of the Darlinghurst Property since 2013, but they do not advance her position unless she was, in equity, the owner of the property, where she was plainly not the owner of that property in law.

22. Ms Van Beek’s evidence is that she had transferred “surplus funds” out of Glenvine’s account into an account in her name, and then transferred funds back to the ANZ account as they were required to make payments, purportedly because of a concern that the ANZ account could be frozen. It is not apparent how Ms Van Beek could have understood that she had authority to deal with Glenvine’s funds in that manner, and I will return to that issue in dealing with whether a receiver should be appointed below. Subsequently, it appears that Ms Van Beek also transferred Glenvine’s funds to an account in the name of BAPL, although she seeks to rely on legal advice as justification for that transfer. Ms Van Beek’s evidence is that interest payments in respect of the ANZ loan are currently suspended under COVID-19 arrangements, and no principal payments are required because the loan is interest only.

23. Ms Van Beek’s evidence is that:

“I oppose the appointment of a receiver over the Darlinghurst Property. My position is that I am the beneficial owner of the Darlinghurst Property in accordance with the property settlement and Consent orders made in 2013. … My long term plan for the Darlinghurst Property is to be retain the Darlinghurst Property and to live off the income it generates.”

28. Ms Van Beek also offers an undertaking in that affidavit to the Court and other parties that she would take certain steps in respect of the Darlinghurst Property, including depositing funds into the new account that had been established in the name of BAPL. That suggested undertaking, so far as it would divert funds to BAPL, does not recognise any entitlement of Glenvine to those funds in the exercise of its right of exoneration against the Assets.

29. By a second affidavit dated 24 June 2020 Ms Van Beek led further evidence of her understanding as to the position in respect of the Darlinghurst Property. Her evidence is that she “treated the Darlinghurst Property as [her] own for the purposes of making decisions about it, maintaining it, liaising with Bill’s Restaurant and conducting and managing the boarder/backpacker business in respect of the top floor of the property”. Her evidence is also that she believed that the VBC Trust was still the registered owner of the Darlinghurst Property and that income and expenses for the property, including the boarding and backpacker business, had to be recorded in the MYOB records for the trust. Ms Van Beek also gives evidence of having, in recent weeks, received legal advice to the effect that she has a claim that since the Transfer was executed she had been the true owner of the Darlinghurst Property.

30. I should note, for completeness, that Ms Van Beek also there records her “surprise” that a question arose, on the first day of the hearing of this application, as to whether her affidavit evidence as to the process by which a loan was obtained from ANZ on the basis that Glenvine was the owner of the Darlinghurst Property in its own right and as trustee for the VBC Trust and a mortgage would be given to the ANZ to secure its interests by Glenvine in its own right and in its capacity as trustee of the VBC Trust, and on a representation that no other persons had an interest in the property, could amount to a form of “fraud” (T25) if Glenvine was not the owner of that property in that capacity and Ms Van Beek was the true owner of the property. Ms Van Beek also records that she was “shocked” to hear that suggestion and did not understand how that matter could be suggested and denied such a suggestion. Mr Newlinds did not appear to share Ms Van Beek’s surprise that these matters might give rise to concern, and initially acknowledged that he understood that the Court could not protect Ms Van Beek against any disclosure of any offence arising from her evidence in chief (T25); he then sought to minimise the risk of such a disclosure by not reading the paragraphs of that evidence that were most likely to give rise to that risk; and he foreshadowed a contention that the Court should give a warning under s 128 of the Evidence Act 1995 (NSW) to Ms Van Beek and take steps to protect her against self-incrimination if she was cross-examined as to those matters. Although no allegation of an offence has been made by the Liquidator against Ms Van Beek in this application, it seems to me that Senior Counsel was right to be alert to that risk, where Ms Van Beek’s evidence raises a possibility that ANZ was induced to advance a substantial loan on an express representation in the transaction documentation that no other person other than Glenvine and the VBC Trust had an interest in the property, and that representation may have been or become false so far as Ms Van Beek then understood herself or now understands herself to be the true owner of the property, either in law or in equity, and then and now sought to deal with the property as her own.

31. Ms Van Beek also denies having knowledge of an earlier deed of company arrangement proposal which contemplated the sale of the Darlinghurst Property, the course which the Liquidator now proposes. Ms Van Beek also refers to correspondence with the ANZ since the Court hearing on 19 June 2020 where she has sought to explore the possibility of obtaining a loan and mortgage over the Darlinghurst Property in her own name. Ms Van Beek there advised ANZ that:

“[Mr Van Beek] and I divorced in 2013 and the property was awarded to me. At that time I was advised that I would not be able to gain finance in my name, at the time the borrowings were $1,150,000.00 and the building was valued at $2,000,000. So borrowings continued in the existing name and the transfer of the property was not done.”

32. That correspondence disclosed that the transfer of the Darlinghurst Property to Ms Van Beek was not registered, where she could not borrow the necessary funds in her own name. However, that correspondence did not disclose that Ms Van Beek now contends that she and not the VBC Trust (which is named in the transaction documentation) is the beneficial owner of the Darlinghurst Property and that the necessary result of that contention is the representation in the transaction documents that no other person has an interest in that property would (if that contention were correct) have become untrue.

33. Ms Van Beek was cross-examined at some length on her affidavits. She acknowledged in cross-examination (T28) that the Registrar of the Family Court had required further evidence of her ability to refinance the loan over the Darlinghurst Property, as contemplated by order 3 of the 2013 Orders, and she had arranged for an affidavit of Mr Van Beek to be provided to the Court in support of her ability to refinance that loan. The Registrar’s inquiries into those matters would have been otiose if, as Ms Van Beek now contends, order 2 of the 2013 Orders transferred the Darlinghurst Property to her, irrespective of whether she complied with the obligation to refinance it under order 3. Ms Van Beek accepted in cross-examination (T31) that she did nothing to progress the transfer of the Darlinghurst Property to her between 17 April 2013 and 12 May 2015, and did not obtain finance to pay out the Bankwest facility in respect of that property, because she was not able to obtain such finance at that time and could not then pay out that facility or take the property. She also accepted in cross-examination that, from 2013 until the present, she had not been able to secure finance to allow her to discharge ANZ’s loan to the VBC Trust (or, more precisely, to Glenvine as trustee of the VBC Trust), that it was not easy to do so, and that she had not been able to complete her side of the bargain she had struck with Mr Van Beek (as reflected in the 2013 Orders) in that respect “as yet” (T32). Ms Van Beek’s evidence in cross-examination was that that agreement could “possibly” be completed although she does not know when, and she accepted that it could not at present be completed (T33). It is not necessary for me to refer to other aspects of her cross-examination, and much of it was directed to the Liquidator’s estoppel claim which I have not found it necessary to decide. There is no reason to seek to reach, and I do not reach, any findings as to Ms Van Beek’s credit in this application.

34. An affidavit dated 24 June 2020 of a solicitor, Mr Matthews, refers to his holding an unsigned and undated transfer for the Darlinghurst Property and a transfer signed by Mr Van Beek. The transfer documents annexed to Mr Matthews’ affidavit are in two different versions, one containing names in lower case and the other in upper case, and containing different typescript but the same text referring to the 2013 Orders as consideration for the transfer, and one version is signed only by Ms Van Beek’s solicitor and the other is signed both by Mr Van Beek and Ms Van Beek’s solicitor. Mr Matthews’ evidence is that the Darlinghurst Property was then subject to a mortgage and he was unable to attend to registration of the Transfer (Matthews 24.6.20 [14]). As will emerge below, that evidence does not assist Ms Van Beek’s claim that Glenvine had done all that it could have done to bring about the transfer of the property to her, or her contention that she acquired equitable ownership of the Darlinghurst Property from the Transfer.

Whether the Liquidator should be appointed as receiver of the Assets and the Darlinghurst Property with a power of sale

35. I first address the question raised by the Liquidator’s application, whether he should be appointed as receiver of the Assets and the Darlinghurst Property with a power of sale. I conclude below that that order should be made, to permit the Liquidator to complete the winding up of Glenvine and exercise its subsisting right of indemnity in respect of the ANZ loan, rather than allowing that loan and Glenvine’s liability under it to remain on foot on an interest only basis for the indeterminate future. I reach that conclusion on the basis of several uncontested or uncontestable facts, namely that (1) Glenvine is the registered owner of the Darlinghurst Property; (2) Glenvine is presently liable to ANZ in respect of the principal of the loan on that property and for interest payments on that loan when they resume, even if Ms Van Beek seeks to pay them in practice; (3) there is no existing refinancing proposal for that loan that would discharge Glenvine’s liability, still less one that has ANZ’s approval; (4) the Liquidator will necessarily incur costs in dealing with the Darlinghurst Property of which Glenvine is now the bare trustee, whether for BAPL as the new trustee of the VBC Trust or for Ms Van Beek, including costs of at least some necessary involvement in the dispute that has arisen as to that trust and as to claims in respect of the Jindabyne property; and (5) although it is not necessary to any conclusion, the Liquidator is better placed to act independently in realising the Assets including the Darlinghurst Property than Ms Van Beek, where the owners corporation and owners of the Jindabyne townhouse have a substantial judgment against Glenvine in that regard. I conclude that order should be made even if Ms Van Beek could established that she is the equitable owner of the Darlinghurst Property, subject to Glenvine’s proprietary interest arising from its right of exoneration, at least where no alternative proposal presently exists to pay out the ANZ loan other than by a sale of the Darlinghurst Property.

36. I should first refer to aspects of the positions articulated in the Liquidator’s Points of Claim and Ms Van Beek’s and BAPL’s Points of Defence in this respect. The Liquidator contends (Points of Claim [5]) that Glenvine has only carried on business in its capacity as trustee of the VBC Trust, and Ms Van Beek does not admit that matter. BAPL does not admit that matter (Points of Defence [3]), although that would likely be in its director’s, Mr Van Beek’s, knowledge. It is not necessary to determine that matter, where Glenvine has incurred significant liabilities, including liabilities to judgment creditors, in that capacity, as to which it likely has a right of exoneration against trust assets. The Liquidator also contends that Glenvine was and is entitled to be indemnified and exonerated for all liabilities incurred by it in its capacity as trustee of the VBC Trust (Points of Claim [6]); BAPL does not admit that matter (Points of Defence [3]) and Ms Van Beek largely admits that proposition, with the qualification that it relates to liabilities properly incurred as trustee of the Trust and is a right of exoneration against assets which are the subject of the Trust at the time recourse is had (Points of Defence [4]). It is common ground between the Liquidator and Ms Van Beek that Glenvine’s entitlement to be indemnified for liabilities incurred in its capacity as trustee of the VBC Trust constitutes a proprietary interest in the assets of the VBC Trust which gives Glenvine a charge or right of lien over those assets and survives and is not otherwise affected by its removal as trustee of the VBC Trust, although Ms Van Beek emphasises that that right is limited to the assets of the Trust. BAPL again does not admit those matters.

37. Mr Stack submits that Glenvine has a right to be indemnified out of and exonerated from the assets of the VBC Trust in respect of all liabilities that it has incurred as trustee of that trust, arising at general law (Octavo Investments v Knight (1979) 144 CLR 360 at 367; Commissioner of Stamp Duties v Buckle [1998] HCA 4; (1998) 192 CLR 226 at [49]); under s 59(4) of the Trustee Act 1925 (NSW); and under cll 9B(a), 9E and 15 of the Trust Deed. He submits that right to indemnity and exoneration constitutes a “proprietary interest” in the assets of the VBC Trust and that interest gives Glenvine “a charge or right of lien” over those assets: Octavo Investments v Knight above at 367 and 370; Commissioner of Stamp Duties v Buckle above at [49]-[50]; Bruton Holdings Pty Ltd v Commissioner of Taxation [2009] HCA 32; 239 CLR 346 at [43]; Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 368 ALR 390 at [32], [80] and [84]. He also submits that Glenvine’s right to indemnity and exoneration against the assets of the VBC Trust survives, and is not otherwise affected by, its removal as trustee: Octavo Investments v Knight above at 370; Bruton Holdings Pty Ltd v Commissioner of Taxation above at [43]; Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484; (2014) 103 ACSR 401 at [10].

35. In Commissioner of Stamp Duties v Buckle above at [47]-[50], the Court observed that:

“In aid of that right to reimbursement or exoneration for liabilities properly incurred in the administration of the trust, the trustee cannot be compelled to surrender the trust property to the beneficiaries until the claim has been satisfied. In that sense, the entitlement to reimbursement or exoneration confers a priority in the further administration of the trust. Accordingly, in an administration action, if it appears probable that the trust fund will be insufficient for the full recoupment of the trustee, the trustee is entitled to the insertion in the order for administration of a direction that there be payment in the appropriate order of priority.

Until the right to reimbursement or exoneration has been satisfied, "it is impossible to say what the trust fund is". The entitlement of the beneficiaries in respect of the assets held by the trustee which constitutes the "property" to which the beneficiaries are entitled in equity is to be distinguished from the assets themselves. The entitlement of the beneficiaries is confined to so much of those assets as is available after the liabilities in question have been discharged or provision has been made for them. To the extent that the assets held by the trustee are subject to their application to reimburse or exonerate the trustee, they are not "trust assets" or "trust property" in the sense that they are held solely upon trusts imposing fiduciary duties which bind the trustee in favour of the beneficiaries.

The entitlement to reimbursement and exoneration was identified by Lindley LJ as "the price paid by cestuis que trust for the gratuitous and onerous services of trustees". The right of the trustee has been described as a first charge upon the assets vested in the trustee, as one upon the "trust assets", and as conferring upon the trustee an "interest in the trust property [which] amounts to a proprietary interest".

… A court of equity may authorise the sale of assets held by the trustee so as to satisfy the right to reimbursement or exoneration. In that sense, there is an equitable charge over the "trust assets" which may be enforced in the same way as any other equitable charge. However, the enforcement of the charge is an exercise of the prior rights conferred upon the trustee as a necessary incident of the office of trustee.” [citations omitted; emphasis added]

39. In Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth above, the High Court considered the scope of that right of indemnity, including a right of exoneration. The plurality also pointed out (at [32]-[33]) that:

“The power of exoneration, like that of reimbursement, has been described as conferring upon the trustee “a proprietary interest” in the trust assets. These labels, “trust assets” and the trustee’s “proprietary interest”, describe the combination and effect of the legal and equitable rights which the trustee holds on trust. Hence, where a trustee has legal title, as well as equitable or statutory powers of indemnity that are concerned with ways in which the legal title can be used, the legal title is not independent of those powers of indemnity. The legal title held by the trustee has thus been described as subject to an equitable charge or lien in favour of the trustee to secure the powers of indemnity. As this Court explained in Chief Cmr of Stamp Duties (NSW) v Buckle, the “trust assets” are subject to competing “proprietary rights, in order of priority, of the trustee and the beneficiaries”. The trustee’s rights take priority over those of the beneficiaries to the extent of the trustee’s powers of indemnity. Where the “trust assets” need to be sold to reimburse or exonerate the trustee, the beneficiaries’ rights have lower priority than the trustee’s rights. A court may authorise the sale of assets held by the trustee so as to satisfy the power of indemnity, as a step in the process of the trustee exonerating itself from authorised liabilities, in the same manner as any other equitable charge.

This well-established priority that the trustee’s rights have over the equitable rights of the beneficiaries was justified in Re Johnson; Shearman v Robinson [(1880) 15 Ch D 548 at 552] by Jessel MR on the basis that:

“it would not be right that the cestui que trust should get the benefit of the trade without paying the liabilities; therefore the Court says to him, You shall not set up a trustee who may be a man of straw, and make him a bankrupt to avoid the responsibility of the assets for carrying on the trade.”” [citations omitted]

40. This observation is of critical importance but was largely not recognised in BAPL’s and Ms Van Beek’s approach, which repeatedly assumed or asserted that a right of indemnity could not be exercised against the Darlinghurst Property if it had been transferred to Ms Van Beek in equity. The obvious flaw in that approach was that Glenvine remained the owner of the property in law, at least as bare trustee, and Ms Van Beek could not acquire an equitable interest in the property free of Glenvine’s right of exoneration, at least in respect of the ANZ loan and potentially also in respect of contingent liabilities in relation to the Jindabyne development, so as to achieve the result of which Jessel MR had disapproved in Re Johnson; Shearman v Robinson above. The Court also there held that trust assets may only be used to pay trust creditors on exercising a power of exoneration in a receivership or in the liquidation of a trustee company, not following the earlier decision in Re Enhill Pty Ltd [1983] 1 VR 561; (1982) 7 ACLR 8.

41. In McLean v Hill, TMC Plumbing & Drainage Pty Ltd (in liq) [2019] FCA 1439, Moshinsky J helpfully noted that Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth above was authority, among other things, that the proceeds from the exercise of a corporate trustee’s right of exoneration may only be applied in satisfaction of the trust liabilities to which the right relates, including the costs of a liquidation and a liquidator’s remuneration where they constitute debts incurred by a company in discharging the duties imposed by the trust. His Honour also noted that no issue arises as to the application of trust assets in respect of general creditors where a company has only ever acted as the trustee of a single trust. His Honour also recognised (at [25]) that the High Court’s decision stood as authority that the proceeds from the exercise of the right of exoneration are to be distributed to the trust creditors in accordance with the order of priorities prescribed by the Corporations Act.

42. Mr Stack also points out that the effect of Glenvine’s removal as trustee of the VBC Trust is that it now holds the Darlinghurst Property as a ‘bare trustee’, with the limited duty of protecting that asset: Commissioner of Taxation v Bruton Holdings Pty Limited (in liq) [2008] FCAFC 184; (2008) 173 FCR 472 at [79]. He refers to Re Stansfield DIY Wealth Pty Ltd (in liq) above, where Brereton J noted that, even if the company in liquidation had ceased to be a trustee, the outgoing trustee would retain a right of indemnity from the trust assets secured by an equitable charge over them, for liabilities incurred by reason of its acting as trustee. His Honour also noted (at [10]) that:

“Where the trustee is removed and replaced, the outgoing trustee retains a right of indemnity from the trust assets, secured by an equitable charge over them, for its liabilities incurred by reason of acting as trustee …. However, the equitable lien securing the trustee's right of indemnity and exoneration does not of itself give the former trustee a power of sale; rather, it is a security which is enforceable by the trustee only by judicial sale or appointment of a receiver with a power of sale … . If the company has ceased, or ceases, to be trustee of the trust, then the powers of sale given to the trustee under the trust deed (or otherwise given, for example by statute, to a trustee) are no longer available to it.”

43. After a careful review of the authorities, Brereton J there noted that it was open to a liquidator of a corporate trustee (or former trustee) to seek appointment as a receiver of the trust, by way of enforcement of the lien over the trust’s assets for liabilities incurred by a corporate trustee in that capacity, and referred to earlier authorities where such an order had been made: Kerr, Re Angel’s Castle Pre-School Pty Ltd (in liq) [2010] FCA 786; Re Gramarker Pty Ltd; Clifford Sanderson (as liquidator of Gramarker Pty Ltd) v Simon Kerr [2014] NSWSC 243. His Honour noted that the appropriate remedy for the liquidator in that case was to seek appointment as a receiver of the trust assets, by way of enforcement of the (former) trustee’s right of indemnity.

44. In Hosking, Re Business Aptitude Pty Ltd (in liq) [2016] FCA 1438 at [17]-[19] and [21], Gleeson J in turn noted that “[t]he general ground upon which the Court appoints a receiver is the protection or preservation of property for the benefit of persons who have an interest in it; that, where a trustee is removed, it retains a right of indemnity from the trust assets secured by an equitable charge over them for its liabilities incurred by reason of acting as trustee”; and that:

“… it is well-established that a receiver and manager can be appointed over trust property to secure the trustee’s right of indemnity out of the assets of the trust.”

45. The view taken by Brereton J in Re Stansfield DIY Wealth Pty Ltd (in liq) above has since been taken by the Full Court of the Federal Court in Jones v Matrix Partner Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310 at [44], [89] and [196]; see also Re Taylor, in the matter ofCJ & KL Bond Pty Ltd (in liq) [2018] FCA 1430 at [16(c)]. Mr Stack also refers to Cremin, in the matter of Brimson Pty Ltd (in liq) [2019] FCA 1023 where Moshinsky J observed (at [50]) that:

“The courts are generally willing, upon an appropriate application, to make orders permitting the liquidator of a (former) corporate trustee to sell trust assets. In situations where the property of the trust will be exhausted following its sale and subsequent distribution to creditors, it may be appropriate merely to give the liquidator a power of sale… . The more common course is, however, for the liquidator of the insolvent (former) corporate trustee to apply to be appointed a receiver for the purpose of selling the trust assets and distributing the proceeds among trust creditors ...” [citations omitted],

46. In Re Parkway One Pty Limited (No 2) [2020] NSWSC 191, Rees J in turn referred to Hosking, in the matter of Business Aptitude Pty Ltd (in liq) and several of the other cases to which I have referred above and observed (at [14]-[17]) that, in a somewhat similar context to this case:

“It seems to me that, as submitted by the liquidator, the relief sought is necessary and appropriate as his appointment as receiver will enable the liabilities of the company to be met to the extent possible, with proper recourse to the trust assets. This is necessary to enable Mr Scott to fulfil his statutory function and “get in” the assets of the company. Those assets include its right of exoneration and lien with respect to debts incurred in the proper administration of the trust.

Further, uncertainty persists regarding the office of the trustee. To the extent that the company may have been removed and replaced, it is proper and necessary that Mr Scott be appointed receiver, as the company's powers under the trust deed will have been extinguished. …

To remove uncertainty as to the liquidator's powers and to enable the liquidator to bring in the assets and pay the debts of the company in an orderly fashion, the liquidator should be appointed as receiver and manager to all the assets of the Parkway One Trust Unit. The interests of creditors will likely be best served by the appointment of Mr Scott as receiver of the trust assets, such that creditor claims can be paid in an orderly fashion, thereby facilitating the proper winding up of the affairs of the company.”

47. I have also followed the same approach in several cases, the most recent being Re Aberdeen All Farm Pty Ltd (in liq) [2020] NSWSC 770 on which I have drawn for aspects of the summary that appears above.

48. In oral submissions, Mr Newlinds at one point characterised these many decisions as reflecting “groupthink” in this Court or its Corporations List. It seems to me that, first, the consistency of decision-making in this respect is not limited to the Corporations List, but has at least also extended to several judges in the Federal Court of Australia, other State Supreme Courts and the Full Court of the Federal Court of Australia. Second, it reflects the proper operation of precedent; the need for consistency in decision-making, particularly in commercial and corporate matters with significant consequences for the wider community; and the recognition that judges deciding insolvency matters in respect of national corporations legislation should follow earlier decisions, at least unless persuaded that those other decisions were plainly wrong, adopting the approach taken in Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 492. I am not persuaded that the decisions to which I have referred above are plainly wrong and, to the contrary, they seem to me to be plainly right both in law and in their practical and policy outcomes.

49. The Liquidator identifies at least two bases on which he should now be appointed as receiver of the Assets and the Darlinghurst Property with a power of sale. The first is that Glenvine is liable to ANZ and that liability should be discharged. He points to advantages to Glenvine’s creditors in taking that course, but it does not seem to me to be necessary for him to do so. As Mr Stack points out, the loan must be paid out in the liquidation, and it cannot be paid out by Glenvine other than by selling the Darlinghurst Property. The need to pay out the loan is the necessary consequence of the nature of a winding up, which involves collecting a company’s assets, realising and reducing them to money, dealing with proofs of creditors and distributing the net proceeds, after providing for costs and expenses, to the persons entitled to them: Re Crusts’n’Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 Qd R 76 at 78; (1991) 5 ACSR 70 at 72; 9 ACLC 912; Palmer v Ayres; Ferguson v Ayres [2017] HCA 5; (2017) 91 ALJR 325 at [87] per Gageler J. There can be no suggestion that the Liquidator should defer realising the Darlinghurst Property for several months, or several years, prolonging the winding up at the expense of other creditors, in the hope that Ms Van Beek may be able to refinance and pay out the loan for which Glenvine is presently liable, and it is not to the point that ANZ is apparently not pressing for immediate repayment. This conclusion follows even if Ms Van Beek or BAPL can ultimately establish they are the equitable owners of the Assets and the Darlinghurst Property, since the claims of equitable owners or beneficiaries of a bare trust on which Glenvine holds the property are limited to the assets that remain after the right of exoneration is exercised.

50. I have not neglected Mr Newlinds and Mr Barnett’s further submission that:

“the desire by the [Liquidator] to sell the Darlinghurst Property arises because Glenvine is an insolvent trustee of a solvent trust (ie the bare trust). The solution is to transfer legal title to the trust assets to a new trustee and have that new trustee assume the trust liabilities and only to have recourse trust assets (i) to the extent that this cannot occur and (ii) for a proper purpose, being to satisfy liabilities presently due and payable and which cannot otherwise be met.”

51. I do not accept that that submission, which ignores the fact that there is no evidence that BAPL or Ms Van Beek have the capacity to refinance the Darlinghurst Property and thereby “assume the trust liabilities” (even to ANZ alone) or that ANZ would consent to their doing so and discharge Glenvine of any liability. It is not necessary to consider the position had BAPL or Ms Van Beek presented a viable refinancing which would allow Glenvine’s liability to be discharged, where BAPL has not done so and Ms Van Beek also has not done so or been able to do so for several years; Ms Van Beek fairly conceded that she could not do so in cross-examination as I have noted above, and there is no suggestion her financial position is stronger now than it has previously been. I do not accept Mr Newlinds’ further speculation in submissions as to how a refinancing could be done, which was inconsistent with the position over several years and with Ms Van Beek’s evidence.

52. Second, a liquidator of a corporate trustee has a well-established right to access to trust assets to meet his or her remuneration and costs and disbursements. In Shirlaw v Taylor (1991) 31 FCR 222 at 230ff, the Full Court of the Federal Court referred to Harris v Conway [1989] Ch 32 at 51 as authority that there is:

“A general principle that where a person seeks to enforce a claim to an equitable interest in property, the Court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property.”

53. In 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) [1999] FCA 144; (1999) 30 ACSR 377 at 385, Finkelstein J observed that a liquidator could claim indemnity out of trust assets for the work of:

“identifying or attempting to identify trust assets; recovering or attempting to recover trust assets; realising or attempting to realise trust assets; protecting or attempting to protect trust assets; distributing trust assets to the persons beneficially entitled to them.”

54. In Bastion v Gideon Investments Pty Ltd (in liq) [2000] NSWSC 939; (2000) 35 ACSR 466, where all of a company’s assets were trust assets and the liquidator had incurred costs and expenses in investigating the affairs of the company, Austin J similarly observed (at [71]) that:

“the liquidator is entitled to be paid his reasonable remuneration, costs and expenses both for the work done to date as liquidator (including the costs of these applications), and the work done to date on behalf of the trust, out of the assets of the company … ”

55. In Australian Securities and Investments Commission v Primelife Corporation Ltd [2007] FCA 1874 at [34], Goldberg J applied the principle in 13 Coromandel Place above to the position where a liquidator had preserved assets of a trust, although the company was not the trustee of the trust in that case:

“… In circumstances where there has been confusion or difficulties in relation to the activities of the true trustee of the [t]rust and where the liquidator has filled a lacuna and acted in the absence of the ability of the true trustee to do so for the purposes of securing and preserving trust assets.”

56. In Re North Food Catering Pty Ltd [2014] NSWSC 77 at [9]–[17], Brereton J also undertook a comprehensive review of the authorities and held (at [17]) that the result, in that case, was that:

“the liquidators are entitled to be paid their remuneration, whether for administering the trust assets or for general liquidation work, out of the trust assets, since the company has no assets other than trust assets.”

57. I followed that approach in Re Primespace Property Investment Limited (in liq) [2016] NSWSC 1821 and, in Re Independent Contractor Services (Aust) Pty Ltd (in liq) (No 2) [2016] NSWSC 106 at [25], where Brereton J also observed that:

“The company, as trustee, had, and its liquidator now has, a right of indemnity from, and lien over, the trust assets, which has priority over the interest of the beneficiaries, for liabilities it incurred in acting as trustee.”

I also recently reviewed the authorities in Re Aberdeen All Farm Pty Ltd (in liq) above on which I have drawn for the summary above.

58. Mr Newlind’s and Mr Barnett’s initial written outline of submissions largely did not address the case law applicable to the appointment of a liquidator of a corporate trustee as receiver of trust assets, although they briefly referred to Hosking and Parkway One and submitted that “those principles may have application where there is no dispute that the relevant assets are trust assets” but, implicitly, cannot be applied where there is dispute that the relevant assets are trust assets. The first difficulty with that submission is that there is here no such dispute, because Glenvine is registered owner of the Darlinghurst Property and plainly holds it as bare trustee for someone, although there is a dispute as to the claims against the property and, possibly, who are the beneficiaries of the trust. The second difficulty is that the identity of the beneficiaries makes no difference where their claim is to such assets as remain after the exercise of the trustee’s right of exoneration.

59. Mr Newlinds and Mr Barnett also submitted in their opening outline of submission that the order sought was not necessary to preserve the status quo and referred to the Court’s reluctance to make interlocutory orders for the appointment of a receiver in other contexts. I have had regard to those submissions, but I need not address them further since the case law in other contexts does not address the particular circumstances that arise from a liquidator’s obligation to discharge a company’s liabilities and realise its assets (including, relevantly, a right of exoneration) and the need for a power of sale over trust assets to do so. Mr Newlinds and Mr Barnett also submit that it is “axiomatic” than an undertaking as to damages is required. Such an undertaking has not generally (if ever) been required in this context, likely because there is no room for doubt, even at an interlocutory stage, as to the existence of a trustee’s right of exoneration over trust assets in respect of properly incurred expenses or as to the fact that a beneficiary’s interest in the assets is limited to those that remain after that right has been exercised. Those matters are, of course, addressed at length in the case law to which I have referred above.

60. Mr Newlinds and Mr Barnett also submit that the application assumes the answer to the question that is in issue, namely who is the beneficial owner of the trust property. I reject that submission, since the case law makes clear that, whoever is the owner of the trust property, their beneficial interest is limited to the assets that remain after the exercise of Glenvine’s right of exoneration. They also submit that there is no present threat to the property; assuming that is so, it does not assist Ms Van Been, because the Liquidator is obliged to bring in Glenvine’s assets and discharge its liabilities, and can only do so by a sale of that property. Mr Newlinds and Mr Barnett also submit that it is, in effect, wrong that the Liquidator should be able to discharge his past and future costs referable to disputes over the Darlinghurst Property from that property, rather than from his own resources. That submission, with respect, misunderstands both the role of a liquidator appointed by the Court to an insolvent trustee company (or former trustee) and the nature of the right of exoneration from trust assets. It is entirely appropriate, and well recognised in the case law, that a liquidator appointed by the Court to a trustee or former trustee, who is drawn into a dispute as to trust assets by reason of that appointment, should be able to exercise the right of exoneration in respect of his or her proper costs and disbursements of that dispute. It is regrettable but not to the point that, when one of the disputing beneficiaries or claimants against the trust assets ultimately prevails, those assets will likely have been reduced by the liquidator’s proper costs of the dispute.

61. For completeness, I note that Ms Van Beek developed a further submission that, if appointed as receiver, the Liquidator:

“will have to operate the boarder business [operated by Ms Van Beek in the Darlinghurst Property] – including cleaning linen and bathrooms and replacing toilet paper and the like – in Ms Van Beek’s place.”

That submission also does not provide any reason not to make the orders sought. There may be no necessity to continue to operate that business, pending a sale of the Darlinghurst Property and, if there is, the Liquidator may be able to licence Ms Van Beek to do so (as the voluntary administrator had previously done) or otherwise licence a third party to do so.

62. In their further written “Outline of Oral Argument” dated 30 June 2020, Mr Newlinds and Mr Barnett also contended, in respect of the right of indemnity, that the proprietary interest in a trust asset arising from the trustee’s right of indemnity did not survive “the freeing of that property from the terms of trust”. They submitted that the equitable interest of a purchaser, on a sale of a trust asset, would be inconsistent with the continuing equitable interest of the vendor trustee and that that also applies “to any alienation by the trustee of a trust asset”. The two difficulties with that submission seem to me to be, first, that the position of a volunteer is not the same as the position of a person who has acquired title in good faith and for valuable consideration and, second, that Glenvine here continues to hold the property on trust, albeit the identity of the trust and of the beneficiaries may be disputed, and a right of indemnity continues to subsist in respect of the ANZ loan on that basis. It ultimately does not matter, for the purposes of the application to appoint a receiver and confer a power of sale on the Liquidator, whether Glenvine holds the property on bare trust for the VBC Trust, or on trust for BAPL or on trust for Ms Van Beek under a separate trust as postulated by Mr Newlinds in the course of the oral submissions.

63. In their written “Outline of Oral Argument”, Mr Newlinds and Mr Barnett also submit that:

“On the footing that Glenvine is a bare trustee for Ms Van Beek, it must deal with the property in accordance with her wish that the property not be sold at this time. To act contrary to that direction is a breach of trust in itself.”

64. I also do not accept that submission because, to the extent that Ms Van Beek or any other relevant beneficiary (for example, BAPL) of any other relevant trust has an equitable interest in the Darlinghurst Property, that interest is subject to the proprietary interest of the trustee arising from its right of indemnity and the consequential lien and charge. A trustee may properly exercise a right of indemnity, by way of exoneration, in its own interests, particularly for the purposes of the winding up of that trustee. I do not accept the further submission that the “proper course” in that situation is to transfer the property to a new trustee, which is inconsistent with the many cases in which the Court and other Courts have appointed a liquidator of a former trustee as receiver of the trust property in that situation.

65. In their written “Outline of Oral Argument”, Mr Newlinds and Mr Barnett, also submit that, even if the property has to be sold at some point, that would not be until every opportunity was given to Ms Van Beek to refinance. I also do not accept that submission, given the period of time which has already passed in which Ms Van Beek has not refinanced and her own evidence as to her inability to do so. There is no evidence of any change of circumstances in that regard, notwithstanding her recent further inquiry of ANZ which I addressed above. They also submit that the power to order that the Darlinghurst Property be charged with the Liquidator’s costs “must be a discretion to be exercised on a remuneration application”. I do not accept that submission, which confuses the position in respect of remuneration as to which a liquidator must apply to the Court for approval, and the position as to costs and disbursements properly incurred in respect of the administration of trust assets. There is, here, no suggestion of the existence of any material non-trust assets requiring any further inquiry as to that matter.

66. Mr Philips, who appears for BAPL, adopted Ms Van Beek’s submissions and contended that the Liquidator should not be appointed as receiver of the Darlinghurst Property until Ms Van Beek’s claim to be beneficial owner of the property is determined. I have explained above why the determination of that claim has no impact on Glenvine’s exercise of its right of indemnity, since Ms Van Beek’s claim is limited to the assets available after that right is properly exercised, and does not provide reason to defer the appointment. Mr Philips also submits that Glenvine and the Liquidator is duty bound to protect the Darlinghurst Property and a sale would be inimical to that duty. I do not accept that submission, where the trustee’s duty is limited by its entitlement to enforce its right of exoneration.

67. In supplementary submissions, Mr Philips identified a further reason that the Liquidator should be appointed as receiver, that it is “by no means certain” that the Liquidator (or, more precisely, Glenvine) has a right of indemnity in relation to the judgment debts in the proceedings before Ball J. It is by no means clear that Glenvine, or BAPL as its successor, can take that point given the findings of Ball J to which I referred above. However, it is also not necessary to determine that question, because the Liquidator’s appointment as receiver with a power of sale is sufficiently supported by Glenvine’s right of exoneration in respect of Glenvine’s liability to ANZ and costs and disbursements of administering the trust, and he intends to seek the Court’s directions as to the competing claims to the remaining Assets, which may in any event be determined by Ms Van Beek’s Cross-Claim.

68. Mr Philips, rather than advancing further oral submissions at the hearing on 30 June 2020, advanced short further written submissions for BAPL, contending that there was insufficient basis for a finding that Glenvine’s liability to the unsecured creditors was incurred in its capacity as trustee of the VBC Trust, notwithstanding the findings of Ball J to which I referred above, the preliminary view of the voluntary administrator appointed to Glenvine and the view that the Liquidator has formed, as set out in his evidence. I have referred to other documentary evidence as to Glenvine’s capacity as trustee of the VBC Trust above. It is not necessary to determine that question, which can be left to a final hearing, where the appointment of the Liquidator as receiver and the power of sale does not require a finding that liabilities to the owners corporation and owners of the Jindabyne townhouses was incurred in its capacity as trustee of the VBC Trust, as distinct from a finding that Glenvine holds the Darlinghurst Property as bare trustee and has a right of indemnity in respect of its liability to ANZ, irrespective of the identity of the trust or its beneficiaries.

69. I am satisfied that, having regard to the case law to which I have referred and the findings I have reached above, I should make the order sought by the Liquidator under s 67 of the Supreme Court Act for his appointment as receiver and manager without security over the Darlinghurst Property and any other Assets, and as to the powers which he should have in that capacity. It seems to me that that order is properly made because it is just and equitable so as to allow the Liquidator to realise Glenvine’s rights of indemnity as trustee of the trust (whether the VBC Trust or some other trust, and irrespective of the identity of the beneficiaries) and second, because it will place the Liquidator in a position that his entitlement to preserve and deal with any surplus which becomes available on sale of the Darlinghurst Property is made clear, subject to the directions that he proposed to seek from the Court.

Whether Ms Van Beek has a seriously arguable case that she acquired an equitable interest in the Darlinghurst Property by reason of the 2013 Orders without more

70. I now turn to other issues to which the parties gave detailed attention and which Ms Van Beek sought to have determined on an interlocutory basis. It is not strictly necessary to determine them, since the Liquidator would still be appointed as receiver of the Darlinghurst Property with a power of sale in order to complete the winding up of Glenvine and exercise its existing right of indemnity in respect of the ANZ loan, even if Ms Van Beek had established on a final basis that she was the equitable owner of the Darlinghurst Property, subject to Glenvine’s proprietary interest arising from its right of exoneration, since no alternative proposal has existed for several years or now exists to pay out that loan. However, as I noted above, I will address these wider issues on the limited basis that Ms Van Beek sought to have them determined, in deference to the detail of the parties’ submissions about them and against the contingency that they are relevant in any appeal from these orders.

71. Turning first to the parties’ contentions as to the effect of the 2013 Orders, I bear in mind that Court orders can be “can be construed in the light of the circumstances surrounding the making of the order, regardless of whether there is any ambiguity in the words of the order itself”: AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81 at [98]; Doyle v Commissioner of Police (No 2) [2020] NSWCA 34.

72. The Liquidator contends that the 2013 Orders did not, in themselves, vest either a legal or equitable interest in the Darlinghurst Property in Ms Van Beek (Points of Claim [27]-[29]). Ms Van Beek also addresses this issue in her Cross-Claim, Statement of Cross-Claim. Subject to leave being granted to proceed against Glenvine, where it is in liquidation, Ms Van Beek seeks a declaration that she is, and has at all times since 3 April 2013 or alternatively 12 May 2015 been the beneficial owner of the Darlinghurst property; that Glenvine is, and has at all times since those dates been bare trustee of the legal title to the Darlinghurst Property for her; and that, since 3 April 2013 or alternatively about 12 May 2015, the Darlinghurst Property has not been an asset of the VBC Trust. The reference to 3 April 2013 is to the date of the 2013 Orders and the reference to 12 May 2015 is to the date of the Transfer, to which I return below. Ms Van Beek also seeks a declaration that she is entitled to be registered as the registered proprietor of the Darlinghurst Property and that, in seeking the appointment of a receiver to the Darlinghurst Property to sell that property, Glenvine and the liquidator are acting in breach of the bare trust in favour of Ms Van Beek. Ms Van Beek may need the Court’s leave to bring that allegation against a Court-appointed liquidator. Ms Van Beek, in her Cross-Claim, also contends that the 2013 Orders provided that she and Mr Van Beek were to do all things necessary to cause Glenvine to transfer the Darlinghurst property to her. That pleading does not recognise the other aspects of the 2013 Orders including the corresponding obligations placed on Ms Van Beek, to which I have referred above and which she admits (in her Points of Defence) that she did not perform.

73. Ms Van Beek contends that the true effect of the 2013 Orders was to render her the full equitable or beneficial owner of the Darlinghurst Property and, upon the Family Court making those orders, Glenvine held that property on bare trust for her and was required to transfer legal title to her upon her calling for it, and that Glenvine was thereby bound by the 2013 Orders. It is implicit that Ms Van Beek also contends that those orders had that effect without compliance by Ms Van Beek with her obligations under them. It would, of course, have been a surprising result if orders made by the Family Court by consent, but after an apparently careful review by a Registrar, which were plainly intended by the parties to have the practical effect that a property was transferred from a trustee to Ms Van Beek on the basis that the trustee was discharged from liability on the loan secured over that property and Ms Van Beek assumed that liability to the exclusion of the trustee, brought about the former but not the latter result, so that Ms Van Beek immediately acquired the property and the trustee retained personal liability for the loan secured upon it. For the reasons noted below, it does not seem to be seriously arguable that the 2013 Orders had that result.

74. Mr Stack points to several suggested difficulties with Ms Van Beek’s contention, including that Glenvine was not party to the relevant proceedings; the 2013 Orders were not in terms directed to it; the 2013 Orders do not address its right of exoneration, a matter to which I return below; Ms Van Beek did not comply with those orders; her subsequent conduct was inconsistent with the position for which she contends, a matter which may be primarily relevant to the Liquidator’s estoppel claim, which I have not found it necessary to determine; and Ms Van Beek recognised in her affidavit evidence (and, I should add, in cross-examination) that a transfer of the property could not be completed until she could refinance the loan, which she has not been in a position to so.

75. Mr Newlinds and Mr Barnett, in written submissions and in oral submissions, undertook a detailed review of the Family Court’s jurisdiction, powers and practices, including a full analysis of the concept of the property of a party to a marriage and its application in discretionary trusts, as considered by the High Court in Kennon v Spry (2008) 238 CLR 366. Those submissions were lengthy and subtle and I have had regard to them as emphasising the width of the Family Court’s powers and also as part of the context in which the relevant orders were made. I have also had regard to the result as summarised in E Pty Ltd v Klearchos [2016] FamCA 258 at [33], on which Ms Van Beek relies, as follows:

“There is a consistent line of authority including Kennon v Spry (above), Harris and Harris [[2011] Fam CAFC 245] and Hurst v Werner [2012] Fam CA 469 that in order to prove that the assets of a discretionary trust are matrimonial property the court must be satisfied that one of the parties to the marriage controlled the distribution of the trust’s assets and that one of the parties was a beneficiary of the trust.”

I do not consider that I need summarise further those submissions or the Family Court’s powers, in respect of discretionary trusts or generally, where the Liquidator did not submit that the 2013 Orders were outside the Family Court’s powers, but only that it was not seriously arguable that they had the effect for which Ms Van Beek contended in bringing about an immediate transfer of the Darlinghurst Property to her in equity without her complying with her corresponding obligations under them.

76. In their written “Outline of Oral Argument”, Mr Newlinds and Mr Barnett also submitted that the 2013 Orders treated the Darlinghurst Property as property of the parties to the marriage, although Glenvine was the registered proprietor. They emphasised that Mr Van Beek was Glenvine’s sole director who controlled its power to apply or appropriate the Darlinghurst Property to a discretionary object of the VBC Trust; he was the “Principal” of the VBC Trust and a discretionary object of the trust; and Ms Van Beek was a discretionary object of the VBC Trust. I accept that the 2013 Orders treated the Darlinghurst Property in that way, so far as they directed Mr Van Beek to procure Glenvine to take steps in respect of that property, and I have noted above that there was no challenge by the Liquidator to the Court’s jurisdiction to make the 2013 Orders, although there is a contest as to their effect.

93. I have held above that the Liquidator is properly appointed as receiver of the Assets and the Darlinghurst Property and a power of sale is properly conferred as a consequence of Glenvine’s existing liability to ANZ, its right of exoneration in respect of that liability and the nature of a winding up, even if Ms Van Beek could establish that she were the equitable owner of the Darlinghurst Property, subject to that right of exoneration. Even if I had not formed that view, it seems to me that Ms Van Beek’s claim that the 2013 Orders alone brought about a transfer of equitable title to the Darlinghurst Property to Ms Van Beek, without any steps being taken by her or Mr Van Beek to perform their obligations under them or discharge Glenvine’s liability on the loan secured on that property, does not rise to the level of a seriously arguable case or provide sufficient basis, as matter of discretion, to decline to appoint the Liquidator as receiver of the Assets and the Darlinghurst Property or defer that appointment.

Whether Ms Van Beek has a seriously arguable case that she acquired a legal or equitable interest by reason of the Transfer

98. The Liquidator also contends that the Transfer did not, of itself, vest either a legal or equitable interest in the Darlinghurst Property in Ms Van Beek, and by reason of those matters, Ms Van Beek also did not obtain any legal or equitable interest in the Darlinghurst property under either the Transfer (Points of Claim [27]-[29]). BAPL does not admit those matters. Ms Van Beek responds, in paragraph 21 of her Points of Defence that:

“Irrespective of [the] effect of the Family Court orders, the execution and delivery to [Ms Van Beek] of the Transfer constituted:

1. an exercise of Glenvine’s power of appointment under clause 5(a) and/or appropriation under clause 5(f) of the Trust Deed in favour of [Ms Van Beek]; and/or

2. a completed assignment at equity such that from that point in time [Ms Van Beek] was the beneficial owner at equity of the Darlinghurst property.”

Ms Van Beek otherwise denies the paragraphs. Although she here relies on the Transfer “irrespective” of the 2013 Orders, I recognise, in dealing with this issue, that the Transfer took place in the context that those orders had been made although they had not been complied with.

99. In her Cross-Claim, Statement of Cross-Claim, Ms Van Beek also seeks a declaration that she is, and has at all times since 12 May 2015 been the beneficial owner of the Darlinghurst Property; that Glenvine is, and has at all times since at least that date been bare trustee of the legal title to the Darlinghurst Property for her; and that, since that date, the Darlinghurst Property has not been an asset of the VBC Trust. The reference to 12 May 2015 is to the date of the Transfer. Ms Van Beek also pleads in her Cross-Claim that the execution by Mr Van Beek (for Glenvine) of the Transfer and delivery of the executed transfer to her on or about 12 May 2015 constituted a complete assignment at equity in favour of her in accordance with the Family Court orders. It also does not seem to me that that proposition rises to the level of a seriously arguable claim or provides sufficient basis, as a matter of discretion, not to appoint the Liquidator as receiver of the Darlinghurst Property with a power of sale, or to defer that appointment, if it is otherwise appropriate, for the reasons to which I now turn.

100. In order to establish an assignment of the Darlinghurst Property in equity arising from the Transfer, Ms Van Beek must show that Glenvine had done everything that, according to the nature of the property, was necessary to be done in order to transfer that property and render that transfer binding on it: Milroy v Lord (1862) 45 ER 1185. Mr Stack submits, and I accept, that an unregistered instrument, of itself, does not vest in the transferee either a legal or equitable interest in the relevant property, as was noted by Latham CJ in Brunker v Perpetual Trustee Co Ltd [1937] HCA 29, (1937) 57 CLR 555 at 581. Dixon J (with whom Rich J agreed) also there observed (at 602-603) in respect of the equitable assignment of land, that:

“That delivery of the transfer to the donee or the donee's agents is a condition which must be fulfilled before such a right will arise, appears to me to be clear. It is only by the control or possession of the instrument that the transferee could effect registration without any liability to interference or restraint on the part of the transferor. Further, I think that the donee must obtain property in the piece of paper itself and property in the paper could pass only by delivery (Cochrane v Moore (1890) 25 QBD 57). If property in the transfer remained in the transferor, his power of recalling it must also remain. For he would be entitled to possession of the paper, he could refuse to present it for registration, and he could destroy it. But, if by delivery to the donee or someone as bailee for her, the transferor has given her property in the instrument itself, then unless some further condition is expressly or impliedly prescribed by the statute, it would appear that the instrument, assuming it to be registrable, may be registered by the transferee independently altogether of the donor, and in spite of any objection on his part.”

101. The steps necessary for an equitable assignment in respect of Torrens title land were again considered in Corin v Patton [1990] HCA 12; (1990) 169 CLR 540. Mason CJ and McHugh J there observed (at 559) that:

“... the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognize the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. ‘Necessary’ used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.”

102. Their Honours also observed (at 560) that:

“Where a donor, with the intention of making a gift, delivers to the donee an instrument of transfer in registrable form with the certificate of title so as to enable him to obtain registration, an equity arises, not from the transfer itself, but from the execution and delivery of the transfer and the delivery of the certificate of title in such circumstances as will enable the donee to procure the vesting of the legal title in himself. Accordingly, s41 [of the Real Property Act 1900 (NSW)] does not prevent the passing of an equitable estate to the donee under a completed transaction ...

Whether or not it is correct to say that the production of a certificate of title is "necessary" to achieve registration of a transfer of Torrens system land, it is apparent that a gift of such land cannot be regarded as complete in equity while the donor retains possession or control of the certificate of title: Dixon J in Brunker, at 600-605; Scoones v Galvin and the Public Trustee [1934] NZLR 1004. That is because it can scarcely be said that the donor has done everything necessary to be done by him if he has retained the certificate of title, by virtue of the possession of which the gift might well be thwarted.”

103. Deane J observed (at 580) that:

“…an intended gift under such a voluntary assignment will be effective in equity only if the overall circumstances of the case are such that the stage is reached where equity regards the gift as complete, that is to say, as having been actually made. Until that stage is reached, equity will neither recognize the existence of a trust nor protect the donee from the exercise by the donor of any legal rights remaining in him. The reason why that is so is that, in the absence of special circumstances giving rise to particular doctrines such as the doctrine of equitable estoppel, equity does not recognize an obligation in conscience that requires a person who remains the owner of property to adhere to or to give effect to an intention to give it away: "a man who forms an intention to make a gift is under no conscientious or other obligation to complete the gift" (per Higgins J, Anning v Anning (1907) 4 CLR 1049, at 1080). However, if the stage is reached where equity regards a gift of specific property as having been already made, it will necessarily treat the beneficial interest in that property as having passed to the donee.”

104. His Honour also observed (at 582) that:

“That test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title. In that regard, it is not a matter of equity ignoring the provisions of s 41 of the Act and treating the unregistered transfer as effective of itself to assign the beneficial interest in the land. It is simply that equity, acting upon the 'fact or circumstance' that the donor has placed the vesting of the legal title within the control of the donee and beyond the donor's recall or intervention, looks at the substantial effect of what had been done and regards the gift as complete ...”

105. His Honour also observed (at 583) that:

“In the present case, the fact that Mrs Patton had taken no step to enable Mr Corin to procure the production of the duplicate certificate of title which was held by the bank meant that she had not done all that was necessary to place the vesting of the common law title within Mr Corin's control ... The plain fact remains however, that registration of the transfer and vesting of the legal title could not be said to be within Mr Corin's control for so long as he was not entitled to procure production of the document of title. In any event, it is apparent that it remained in Mrs Patton's power to intervene to prevent the vesting of any legal interest in him."

106. Those principles were in turn applied by Hallen J in Isin v Ozen [2016] NSWSC 1480 at [168]ff. His Honour there held that a transfer of Torrens title property without consideration was not effective in equity where the mortgage debt was not paid, the registered mortgage was not discharged or able to be discharged, and the certificate of title remained with the mortgagee, as follows:

“In my view, in November 2011, [the transferors] had not done all that was

required to be done by them to transfer the legal title of the Property to [the transferee]. If they, or either of them, had paid the balance of the debt then secured by the registered mortgage, and had authorised the mortgagee Bank to hand the discharge of mortgage and the Certificate of Title to [the transferee’s] solicitor, the Transfer could have been registered and the legal title would have passed. This they did not do. The mortgage debt was not paid, the registered mortgage was not then discharged, or then able to be discharged, and the Certificate of Title to the Property remained with the registered mortgagee Bank.

Accordingly, as donors, [the transferors] had not done all that was necessary

to render the gift of the Property binding upon them. Nor had they armed or

equipped [the transferee], or her solicitors, with the means of securing registration of the signed Transfer. The legal transfer of the Property could not be effected without further action on their part.”

107. On appeal in Isin v Ozen [2017] NSWCA 316 at [39], White JA (with whom other members of the Court agreed) summarised the reasoning of Hallen JA, without expressing any immediate disapproval of it. His Honour also observed (at [57]) that it was there common ground that the gift of the relevant property was not completed in 2011 because the “certificate of title was still held by the mortgagee and [the donors] had not done what was necessary on their part to provide the certificate of title to [the donee]”.

108. The evidence led by Ms Van Beek would likely establish the delivery of the Transfer to Ms Van Beek, which is a first step to establishing the transfer of the title to the Darlinghurst Property to her in equity. However, the case law to which I have referred above establishes that an equitable assignment to a volunteer is not established by the delivery of a transfer without a direction by the donor to the mortgagee to deliver the certificate of a title to the donee and possibly also a discharge of a mortgage over the land to allow that to occur.

109. Mr Newlinds and Mr Barnett submit that, by reason of the 2013 Orders, neither Mr Van Beek nor Glenvine could have recalled the Transfer or interfered with its registration. A first difficulty with that submission is that it likely depends on whether Glenvine was bound by the 2013 Orders, since Mr Van Beek’s control of Glenvine would be displaced if a liquidator (or provisional liquidator or receiver) was appointed to Glenvine. For the reasons noted above, I have not been persuaded that it is seriously arguable that Glenvine was bound by those orders. The second is that that submission does not establish that Glenvine could not have recalled the transfer, but only that it may have needed leave from the Family Court to do so. The grounds on which such leave could be granted might have included, for example, that Ms Van Beek had not complied with her corresponding obligations under order 3 of those orders. I am also not persuaded by Mr Newlind’s and Mr Barnett’s further submission that Ms Van Beek could at all times, as guarantor, pay out the mortgage and require the certificate of title and an assignment of the mortgage, since her evidence in cross-examination demonstrates that she at all times lacked the financial capacity to do so.

110. Mr Newlinds and Mr Barnett also submit that Corin v Patton above establishes that it would have been sufficient for Mr Van Beek to deliver a direction signed by Glenvine to the mortgagee and that Isin v Ozen above is wrongly decided in requiring that the transferor also deliver the certificate of title or discharge the mortgage in order to do so. It is not necessary to decide that question where, here, Glenvine did not deliver either the certificate of title or a direction to the mortgagee to make the certificate of title available or cause the mortgage to be repaid. Mr Newlinds and Mr Barnett seek to avoid this difficulty by the further submission that Glenvine did not need to take any of those steps to do all that was necessary for it to do to place Ms Van Beek in a position to register the Transfer, because the then mortgagee, Bankwest, would have released the certificate of title to allow the Transfer to be registered on production of the 2013 Orders to it. It also does not seem to me that submission provides a seriously arguable basis for this claim. It is unsupported by evidence of Bankwest’s policies or practices; it is inconsistent with the evidence of Ms Van Beek’s solicitor that he in fact could not register the Transfer because of the mortgage; and, if one were to speculate as Mr Newlinds and Mr Barnett do, a more plausible speculation is that the 2013 Orders would not have supported the release of the certificate of title by Bankwest to allow the Transfer to be registered, both because they were not directed to Bankwest’s customer, Glenvine, and because they expressly required Ms Van Beek to repay the Bankwest loan to Glenvine simultaneously with any transfer, which she had not done and could not do.

111. For these reasons, the contention that Glenvine had done all that it could do, without giving a direction to the mortgagee as contemplated by Corin v Patton or discharging the loan to secure the release of the certificate of title as contemplated by Isin v Ozen does not, alone or together with other matters, provide a sufficient basis not to appoint the Liquidator as a receiver of the Darlinghurst Property with a power of sale or to defer that appointment.

112. Alternatively, Ms Van Beek contends that the execution by Glenvine of the Transfer and delivery of the executed Transfer to her constituted or evidenced the exercise by Glenvine of a power of appointment or appropriation of the Darlinghurst Property in favour of her under clauses 5(a) or 5(f) of the VBC Trust Deed. Mr Newlinds and Mr Barnett submit that:

“… to the extent that the [2013] Orders did not themselves render Ms Van Beek the owner at equity of the Darlinghurst Property, the Court would find that the execution and delivery of the registrable instrument of transfer was an application or appropriation by Glenvine of an asset of the VBC Trust to Ms Van Beek under clauses 4A, 5(a) and/or 5(f) of the VBC Trust Deed. Again, once that application or appropriation was made, neither Glenvine nor Mr Van Beek had the power to recall or revoke it having regard to the [2013] Orders.

Ms Van Beek may or may not have been a spouse of Mr Van Beek within the meaning of the VBC Trust Deed at the time the transfer was executed so as to be a Beneficiary on that basis. However, Beneficiary under the VBC Trust also included any person determined by the Principal to be a Beneficiary and Mr Van Beek was the Principal (Ex CS-1, pp 24 and 42). Mr Van Beek was directed to do all things necessary to cause Glenvine to transfer the Darlinghurst Property to Ms Van Beek. To the extent that that required a determination by him as Principal that Ms Van Beek is a beneficiary, and a determination by him as sole director the Glenvine to apply or appropriate the Darlinghurst Property to Ms Van Beek, the Court would infer that is what occurred.

113. Mr Newlinds and Mr Barnett in turn refer to cl 4A of the Trust Deed which provides that the trustee shall have the power from time to time to pay or apply such part or parts of the capital of the Trust Fund as the trustee may in its absolute discretion deem fit to or for the benefit of the Beneficiaries or any one or more of them. The term “Beneficiaries” is defined in cl 1 of the Trust Deed includes not only the spouses of the persons named in the Schedule but also any person (not being the Settlor) determined by the Trustee or the Principal to be a beneficiary for the purposes of the Deed. Ms Van Beek relies, for this aspect of the claim, on the fact that cl 5(a) of the Trust Deed for the VBC Trust relevantly provides that Glenvine may, in its absolute discretion and from time to time prior to the Vesting Day, pay or apply the whole or any part of the capital, income or accumulated income of the trust fund towards the maintenance, advancement, benefit or education of all or any one or more of the Beneficiaries in such proportions or such manner as the trustee shall in its absolute discretion from time to time deem fit. Clause 5(f) provides that Glenvine may in its absolute discretion and from time to time appropriate any part of the trust fund in the actual condition or state of investment at the time of appropriation towards satisfaction of the share of any person in the trust fund as the trustees may deem just and reasonable. Ms Van Beek also relies on the fact that the Beneficiaries (as defined) include Mr Van Beek’s spouse or any person determined by Glenvine or Mr Van Beek to be a beneficiary for the purposes of the VBC Trust Deed.

114. An immediate difficulty with that submission is that it depends on the Court inferring that Mr Van Beek knew of the relevant powers, made the relevant determination that Ms Van Beek should be treated as a beneficiary and then properly exercised those powers. It does not seem to me to be seriously arguable that the Court would draw that inference where Mr Van Beek did not give evidence to that effect, and it is not apparent why the Court should infer without evidence that he would have or should have applied or appropriated the Darlinghurst Property from the VBC Trust to Ms Van Beek where she had not taken the simultaneous steps contemplated by the 2013 Orders that would confer benefits on him, or at least protect the VBC Trust from continuing liability on the loan.

113. It seems to me that Ms Van Beek has not established a sufficient basis for this aspect of her claim to justify not appointing or deferring the appointment of, the Liquidator as receiver of the Darlinghurst Property with a power of sale if that order is otherwise justified. The Transfer does not support any suggestion that Glenvine was then exercising any power under the terms of the Trust Deed, so far as it refers to the consideration arising from the 2013 Orders and not to any exercise of a discretion under the Trust Deed; there is no contemporaneous documentary reference to the exercise of such a discretion; and Ms Van Beek leads no other evidence of the exercise of such a discretion, including any evidence from Mr Beek that he knew of the existence of such powers or intended to exercise them. There is no evidence to suggest that Glenvine turned its corporate mind to the proper exercise of any power of appointment or appropriation of the Darlinghurst Property to Ms Van Beek and it seems to me that that proposition is not arguable, without evidence that it did so. While Ms Van Beek points to trust powers in the Trust Deed which could have supported an advance or appropriation, if Glenvine had properly exercised them, there is no basis to infer without evidence that it did so, still less that it properly did so. It is therefore not necessary to address any further question whether, if it had done so, the exercise of that power would have been void as a fraud on the power in the particular circumstances.

114. Ms Van Beek also contends in her Cross-Claim that, as against Glenvine and the Liquidator, she is entitled to register the transfer of the Darlinghurst Property. It does not seem to me that claim, alone or with other matters, warrants deferring the appointment of the Liquidator as receiver of that property, given the weaknesses in Ms Van Beek’s claim that she is the equitable owner of the Darlinghurst Property, and where that property is subject to a registered mortgage to the ANZ and ANZ has not indicated that it is willing to release that mortgage or make the certificate of title available to Ms Van Beek to allow her to register the Transfer. The position, in that respect, is no better than it was at the time her solicitor was unable to register the transfer in 2015 because of the then mortgage to Bankwest. It is not necessary to address Ms Van Beek’s further contentions as to removal of caveats over the Darlinghurst Property in order to determine whether the Liquidator should now be appointed as receiver of that property, and that matter can be dealt with by lapsing notices or at a final hearing.

115. As I have previously noted, I have held above that the Liquidator would properly be appointed as receiver of the Assets and the Darlinghurst Property and a power of sale would properly be conferred as a consequence of Glenvine’s existing liability to ANZ, its right of exoneration in respect of that liability and the nature of a winding up, even if Ms Van Beek could establish that she were the equitable owner of the Darlinghurst Property, subject to that right of exoneration. Even if I had not formed that view, I would not have been persuaded that the matters raised in Ms Van Beek’s Points of Defence and her Cross-Claim, Statement of Cross-Claim are sufficiently arguable that they would warrant the Court declining to appoint the Liquidator as receiver of the Darlinghurst Property with a power of sale or deferring such an appointment.

The Liquidator’s further claim arising from dealings with ANZ

118. The Liquidator in turn sets out claims as to Ms Van Beek’s involvement in steps by which Glenvine (in its capacity as trustee of the VBC Trust) obtained a further loan facility in respect of the Darlinghurst Property from the ANZ, subject to a mortgage, and on the basis that the applicant for the loan was the “VBC Trust” and the Darlinghurst Property would be offered as security for that facility (Points of Claim [30]ff). The Liquidator also contends (Points of Claim [36]) that Ms Van Beek is estopped from asserting the contrary to several matters. Ms Van Beek denies that an estoppel is established. The Liquidator contends (Points of Claim [37]) and Ms Van Beek denies that her conduct in respect of the ANZ loan and mortgage amounts to consent to any interest which she may have in the Darlinghurst Property being subordinated to Glenvine having, to the extent of its liability under the ANZ facility, a proprietary interest in the Darlinghurst Property as an asset of the VBC Trust which is superior to Ms Van Beek’s interest and, by virtue of that interest, a charge or right of lien over the Darlinghurst Property. It is not necessary to determine these matters given the findings I have reached on other grounds.

119. The Liquidator also pleads (Points of Claim [37]ff) other matters relating to Glenvine’s liability to ANZ, its position as bare trustee, for either the VBC Trust or Ms Van Beek and the recognition of competing claims, including liabilities in excess of $5.87 million pursuant to a judgment of Ball J against Glenvine in its capacity as trustee of the Trust. It is not necessary to determine these matters at this point given the findings I have reached on other grounds.

Conclusion and orders

120. I have held above that, irrespective of the existence of a dispute as to who owns the Darlinghurst Property in equity, the Liquidator should be appointed as receiver of that property with a power of sale where Glenvine is presently liable on the ANZ loan and that liability must be discharged to progress the winding up. There is no detriment to Ms Van Beek in that order, beyond the detriment that results from the well-established position that a beneficiary’s rights are deferred to the right of exoneration of a former trustee in respect of proper trust liabilities. Although it is not necessary to my decision, I have also held above that Ms Van Beek has not established a sufficiently arguable case that she has an equitable interest in the Darlinghurst Property to justify not making that order or deferring that order.

121. I am satisfied that it is both appropriate and necessary now to make an order that the Liquidator be appointed as receiver of the Assets. Given the findings that I have reached above, there is no relevant distinction between this case and many other cases where this Court and the Federal Court of Australia have appointed a liquidator as receiver of trust assets to allow that liquidator to discharge a trustee company’s liabilities by exercising its right of exoneration against trust assets. The appointment of the Liquidator as receiver of the Assets and the orders conferring the necessary powers on him will also protect Glenvine’s right of exoneration against the Assets from further erosion by Ms Van Beek transferring Glenvine’s monies to accounts under her or BAPL’s control; will allow the realisation of trust assets as appropriate to pay his costs and disbursements and proper remuneration from the Assets; and will create a fund to meet the claims of persons entitled to those assets, who may include Ms Van Beek. I should add, for completeness, that the orders that I will make will prevent Ms Van Beek from undertaking further steps that would interfere with the Liquidator’s control of the Assets, since any such interference with a Court-appointed receiver in the performance of his or her duties would be a contempt of Court unless the leave of the Court is first obtained: Meagher, Gummow and Lehane’s Equity, Doctrines and Remedies, 5^th ed, [29-120]; Re Australian Barrister Chambers Pty Ltd (in liq) [2017] NSWSC 245 at [7]ff. Such an interference could also be restrained by injunction, if it were necessary to do so: Re Australian Barrister Chambers Pty Ltd (in liq), unreported, 19 May 2017.

122. My preliminary view is that Ms Van Beek and BAPL (without recourse to assets of the VBC Trust) should pay the costs of this application. My preliminary view is also that those costs should be payable forthwith and the Liquidator should have liberty to have them determined promptly by the Court on a lump sum basis, if he seeks to do so. It would arguably be most unfortunate if those costs were to be paid, as a matter of convenience for the Liquidator, from the Assets or the Darlinghurst Property to the potential detriment of any unsecured creditors of Glenvine as trustee of the VBC Trust, rather than from Ms Van Beek’s and BAPL’s personal assets. However, this is only a preliminary view and I will allow the parties an opportunity for written submissions as to costs.

123. For these reasons, I make the following orders, largely in the form sought by the Liquidator:

1. Order pursuant to section 67 of the Supreme Court Act, that, nunc pro tunc, Christian Peter Sprowles of HoganSprowles be appointed, without security, as the receiver and manager (“Receiver”) of all the property, assets and undertakings of the VBC Trust ABN 76 450 179 784 (“Trust”) and the property located at 433-437 Liverpool Street, Darlinghurst NSW 2010 (being Folio Indentifier 1/901132) (together, “Assets”).

2. Order that the need for the Receiver to file a guarantee under rule 26.3 of the Uniform Civil Procedure Rules 2005 (NSW) be dispensed with.

3. Order that the Receiver have, in respect of the Assets, all the powers provided for under ss 420 of the Corporations Act 2001 (Cth) (other than those in paragraphs 420 (2)(s), (t), (u) and (w) of the Corporations Act 2001 (Cth)) as if reference in that section to “the corporation” were a reference to the trust, including, without limitation, the power to do all things necessary and convenient to effect the sale of the Assets.

4.   Order that the reasonable costs, expenses and remuneration incurred by the Receiver, as receiver of the Assets, including the reasonable costs and expenses of and incidental to this application, be paid in priority from the Assets.

5.   Order that the Receiver be permitted to draw from the Assets amounts on account of his reasonable costs and expenses, including but not limited to reasonable legal costs, but excluding any amount by way of remuneration that has not been first approved by the Court.

6.   Order that the Receiver have liberty to apply to the Court for further orders, directions and/or advice including in relation to the Receiver’s remuneration.

7.   Direct the Liquidator to file and serve, and send to the Associate to Black J, its submissions as to costs and any application for a gross sum costs order by 4pm on 10 July 2020, returnable in the Corporations Motions at 9.15am on 20 July 2020.

8.   Direct the Second and Third Defendants to file and serve, and send to the Associate to Black J, their submissions as to costs by 4pm on 17 July 2020.

9.   List the Liquidator’s Interlocutory Process and Ms Van Beek’s Cross-Claim for directions in the Corporations Motions List at 9.15am on 20 July 2020.

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