JONATHON COLBRAN in his capacity as liquidator of RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886) & ANOR (according to the attached Schedule)	Plaintiffs
v
NAZIF DARDOVSKI & ORS (according to the attached Schedule)	Defendants

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	22–24 May 2023 and 14 August 2023
DATE OF JUDGMENT:	10 October 2024
CASE MAY BE CITED AS:	Re Richflow Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2024] VSC 618

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CORPORATIONS — Winding up — Corporations Act 2001 (Cth) — Company in liquidation registered proprietor of large semi-rural property — Adult children of deceased former director claim beneficial ownership of property — Shareholder of company and step-mother of children disputes claim — Whether property held by company on resulting trust and/or pursuant to declaration of trust — Section 90-15 (Schedule 2, Insolvency Practice Schedule (Corporations)) — Application by liquidator for directions from Court as to beneficial ownership of property.

TRUSTS — Resulting trust — Principles — Purchase of property in 1987 where limited contemporaneous documentation — Adult son and daughter allege payment of purchase price of property acquired in name of company owned and controlled by father and step-mother — Whether presumption of resulting trust — Whether presumption rebutted — Meaning and calculation of ‘purchase price’.

TRUSTS — Express trust — Requirements — Written declaration of trust — Whether properly executed by company — Where recital to declaration inaccurate — Whether trust valid and enforceable — Whether clear intention to create a trust — Whether trust a sham — Party alleging existence of sham also a necessary participant.

EQUITY — Purported gift of beneficial interest in property held under alleged trust — Whether donor has done all that is necessary to achieve assignment of equitable property.

EVIDENCE — Whether s 272(1) of Duties Act 2000 (Vic) (‘Duties Act’) precludes admissibility of written declaration of trust if insufficiently stamped — Instrument predates current legislation — Applicability of s 20 of predecessor Stamps Act 1958 (Vic) — Direction under s 272(2)(a) of Duties Act to admit into evidence later declarations confirming gift of beneficial interests under trust.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Kohn	Dimos Lawyers
For the Third and Fifth Defendants	Mr R Hay KC Mr N Paterson	Jem Lawyers Pty Ltd
For the Sixth Defendant	Mr N Jones	DSA Lawyers

TABLE OF CONTENTS

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

Background and dramatis personae............................................................................................... 1

Procedural history.............................................................................................................................. 7

Material relied upon by parties..................................................................................................... 13

Questions for determination.......................................................................................................... 14

Jurisdictional basis for proceeding............................................................................................... 16

Approach to assessing evidence.................................................................................................... 17

Witnesses and credibility of witnesses........................................................................................ 18

Resulting trust claim by Feim and Julie...................................................................................... 22

Legal principles concerning resulting trusts........................................................................... 22
Evidence concerning resulting trust claim.............................................................................. 26
Julie’s evidence in chief..................................................................................................... 27
Julie’s evidence under cross-examination...................................................................... 30
Fezije’s evidence in chief.................................................................................................. 35
Fezije‘s…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Richflow Pty Ltd (in liq)

Details

AGLC: Re Richflow Pty Ltd (in liq) [2024] VSC 618
Case: [2024] VSC 618
Decision Date: 10 October 2024

CaseChat Overview and Summary

The case of Re Richflow Pty Ltd (in liq) involved a dispute over the beneficial ownership of a large semi-rural property, which was held by the company, Richflow Pty Ltd, during its liquidation. The property was originally purchased in 1987, and the adult children of a deceased former director of the company claimed beneficial ownership of the property. The step-mother of the children, who was also a shareholder in the company, disputed this claim. The liquidator of the company applied to the court for directions regarding the beneficial ownership of the property.

The primary legal issues before the court were whether the property was held by the company on a resulting trust or pursuant to a declaration of trust, and whether the declaration of trust was valid and enforceable. The court examined the principles of resulting trusts, the requirements for an express trust, and the meaning and calculation of the ‘purchase price’ in the context of the alleged resulting trust. Additionally, the court considered whether the declaration of trust was a sham and whether the duties legislation precluded the admissibility of the declaration due to insufficient stamping.

The court found that there was insufficient evidence to support a presumption of a resulting trust in favour of the children. The court also found that the declaration of trust was not valid and enforceable, as it was not properly executed and contained inaccurate recitals. The court held that the declaration of trust was a sham, as the party alleging its existence was also a necessary participant. The court further held that the donor had not done all that was necessary to achieve an assignment of the equitable property. Finally, the court found that the duties legislation did not preclude the admissibility of the declaration of trust, and directed that later declarations confirming the gift of beneficial interests under the trust be admitted into evidence.

The court's decision resulted in the liquidator being directed to take appropriate action to determine the beneficial ownership of the property, including the potential sale of the property to satisfy the company's debts.

Orders