Re RMATA Cutelli Pty Ltd (In Liq) - [2018] NSWSC 382

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of RMATA Cutelli Pty Ltd (in liq) [2018] NSWSC 382
Hearing dates: 20 March 2018
Decision date: 27 March 2018
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The First and Second Defendants hold the Hurstville Grove property, as to 95.71%, on a resulting trust for the Second Plaintiff. Adam Bernard Preiner and Liam Bailey are appointed trustees for sale of the property and are vested with powers reasonably necessary to complete the sale of the property, as pursuant to s 66G of the Conveyancing Act (NSW) 1919. A discharge of indebtedness to the Second Plaintiff and withdrawals on the Second Plaintiff’s bank account by the First and Second Defendants are unreasonable director-related transactions within the meaning of s 588FDA of the Corporations Act 2001 (Cth).

Catchwords:
EQUITY – resulting trust – where company directors have transferred the sale proceeds of company property to themselves to fund the purchase of a property – where there is no evidence of a contrary intention to rebut the presumption of a resulting trust – whether the Court will declare that property is held by directors on resulting trust for the company.
CORPORATIONS – unreasonable director-related transactions – where company directors have entered into transactions that no reasonable person in the company’s circumstances would have entered into – where the transaction confers no benefit on the company – where the transaction confers benefit to the company directors at the expense of the company’s creditors – whether the transaction was an unreasonable director-related transaction for the purpose of s 588FDA of the Corporations Act 2001 (Cth).
Legislation Cited: - Civil Procedure Act 2005 (NSW) s 100
- Conveyancing Act 1919 (NSW) ss 66F, 66G
- Corporations Act 2001 (Cth) ss 588FDA, 588FE, 588FF
Cases Cited: - Angus Carnegie Gordon in his capacity as liquidator of Lyon Form Pty Ltd (in liq) & Anor v Leon Plant Hire Pty Ltd (in liq) & Ors [2015] NSWSC 397
- Callahan v O’Neill [2002] NSWSC 877
- Calverley v Green (1984) 155 CLR 242
- Crowe-Maxwell v Frost [2016] NSWCA 46; (2016) 91 NSWLR 414; 111 ACSR 583
- Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81; (2016) 91 NSWLR 732
- Hogan v Baseden (1997) 8 BPR 15,723
- Lam v Lam [2016] VSC 298
- National Australia Bank Ltd v Pasupati [2011] NSWSC 540
- Ong v Lottwo Pty Ltd (in liq) [2013] SASCFC 57; (2013) 116 SASR 280
- Ross v Ross [2010] NSWCA 301
- Smith (in his capacity as liquidator of Action Paint Ball Games Pty Ltd) v Starke (No 2) [2015] FCA 1119; (2015) 109 ACSR 145
- Tory v Tory [2007] NSWSC 1078
- Vasudevan v Becon Constructions (Australia) Pty Ltd [2014] VSCA 14; (2014) 97 ACSR 627
- Weaver v Harburn [2014] WASCA 227
- Ying Mui Pty Ltd & Ors v Hoh (No 3) [2017] VSC 29;

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.

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Details

Case: [2018] NSWSC 382
Decision Date: 27 March 2018

CaseChat Overview and Summary

The liquidators of RMATA Cutelli Pty Ltd brought proceedings against the company’s former directors, seeking declarations that certain properties were held on resulting trust for the company. The directors had transferred the sale proceeds of company property to themselves and used the funds to purchase property. The liquidators argued that the directors held the properties on resulting trust for the company due to the absence of evidence showing an intention to create any other form of trust. The directors, on the other hand, claimed that the properties were purchased using their own funds.

The court had to determine whether the directors held the properties on resulting trust for the company, and if the transactions between the directors and the company constituted unreasonable director-related transactions under the Corporations Act 2001 (Cth). The court considered the legal principles surrounding resulting trusts and the statutory provisions governing director-related transactions. The court found that the directors' actions created a presumption of a resulting trust, which was not rebutted by any evidence presented. Furthermore, the transactions were deemed unreasonable as they conferred no benefit to the company and only served to benefit the directors at the expense of the company’s creditors.

The court declared that the properties were held by the directors on resulting trust for the company. Additionally, the court found that the transactions between the directors and the company were unreasonable director-related transactions under the Corporations Act 2001 (Cth). This decision ensures that the company's creditors are prioritised in the distribution of assets and holds directors accountable for their actions. The court's decision provides clarity on the application of resulting trusts in similar circumstances and reinforces the importance of directors acting in the best interests of the company and its creditors.

Orders