FEDERAL COURT OF AUSTRALIA
Weston (Trustee) v Sanna (No 7) [2025] FCA 1205
File numbers: NSD 276 of 2016
NSD 619 of 2016
NSD 1135 of 2019Judgment of: MARKOVIC J Date of judgment: 1 October 2025 Catchwords: PRACTICE AND PROCEDURE – application for approval of proposed distribution of proceeds of sale of real properties – where appointment of trustees for sale pursuant to s 66G of the Conveyancing Act 1919 (NSW) – where proposed distribution pursuant to mediated settlement agreed by majority of parties – where opposition concerns the nature of the alleged debts – where basis of opposition dismissed pursuant to established judicial findings – application for approval of proposed distribution allowed
CORPORATIONS – applications for approval pursuant to s 477(2A) and s 477(2B) of the Corporations Act 2001 (Cth) – whether satisfied that compromise of debt and entry into deed of settlement is a proper exercise of the liquidators’ powers – whether approval should be granted nunc pro tunc – applications allowed
COSTS – where interim application abandoned at commencement of hearing – whether reason to depart from ordinary practice that costs should follow the event – costs awarded on party and party basis
Legislation: Bankruptcy Act 1966 (Cth) s 121
Corporations Act 2001 (Cth) s 477
Federal Court of Australia Act 1976 (Cth) s 37M
Conveyancing Act 1919 (NSW) s 66G
Cases cited: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher and Barnet (2015) 89 NSWLR 110; [2015] NSWCA 85
In the matter of77738930144 Pty Limited (in liq) (formerly Commercial Indemnity Pty Ltd) [2017] NSWSC 452
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Re HIH Insurance Ltd [2004] NSWSC 5
Re One.Tel Ltd (2014) 99 ACSR 247; [2014] NSWSC 457
Re Quatrovision Pty Ltd (in liq) and the Companies Act 1961 [1982] 1 NSWLR 95
Weston (Trustee) v Sanna [2019] FCA 32
Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43
Wyse & Young International Pty Ltd v Sanna (No 2) [2019] NSWSC 868
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 101 Date of hearing: 8 September 2025 Counsel for the Applicant in NSD 276 of 2016 and NSD 619 of 2016: A Spencer Solicitor for the Applicant in NSD 276 of 2016 and NSD 619 of 2016: Dentons Australia Counsel for the First Respondent in NSD 276 of 2016 and the First Defendant in NSD 1135 of 2019: There was no appearance by the First Respondent in NSD276/2016 and the First Defendant in NSD1135/2019 Counsel for the Second Respondent in NSD 276 of 2016: The Second Respondent in NSD276/2016 filed a submitting notice save as to costs Counsel for the Third and Fourth Respondent in NSD 276 of 2016: The Applicant in NSD 276…
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- Case
- [2025] FCA 1205
- Decision Date
CaseChat Overview and Summary
The court found that the Trustee, in his role as the delegate for the sale of properties, did not make any determination about the validity of claims made by various caveators. Instead, he sought approval from the court for the distribution as per the settlement agreement. The opposition by Ms Sanna was dismissed based on established judicial findings regarding the authenticity of signatures on certain documents. The court approved the proposed distribution of proceeds and granted approval nunc pro tunc for the liquidators to enter into the Heads of Agreement and Deed of Settlement. It also ruled that costs should be awarded on a party and party basis, and Ms Sanna should pay the Trustee’s costs in relation to the interim application.
The final orders included authorisation for the liquidators to enter into the Heads of Agreement and Deed of Settlement, the distribution of proceeds from the sale of the properties, and the allocation of costs among the parties. The proceedings were dismissed otherwise.
Orders
Orders of the court
1. Pursuant to s 477(2A) and s 477(2B) of the Corporations Act 2001 (Cth) Frank Lo Pilato in his capacity as liquidator of Australian Company Number 146 329 008 Pty Ltd (in liquidation) and Australian Company Number 146 329 008 Pty Ltd (in liquidation) are authorised nunc pro tunc to enter into the Heads of Agreement dated 12 May 2025.
2. Pursuant to s 477(2A) and s 477(2B) of the Corporations Act Frank Lo Pilato in his capacity as liquidator of Australian Company Number 146 329 009 Pty Ltd (in liquidation) and Australian Company Number 146 329 008 Pty Ltd (in liquidation) are authorised nunc pro tunc to enter into the Deed of Settlement dated 15 July 2025.
3. Pursuant to s 477(2A) and s 477(2B) of the Corporations Act Joanne Monica Keating in her capacity as liquidator of Defined Properties Investment Pty Ltd (in liquidation) and Defined Properties Investment Pty Ltd (in liquidation) are authorised nunc pro tunc to enter into the Heads of Agreement.
4. Pursuant to s 477(2A) and s 477(2B) of the Corporations Act Joanne Monica Keating in her capacity as liquidator of Defined Properties Investment Pty Ltd (in liquidation) and Defined Properties Investment Pty Ltd (in liquidation) are authorised nunc pro tunc to enter into the Deed of Settlement.
5. The applicant and his solicitors, Dentons Australia Limited, are authorised to deduct the amounts set out in Order 6 and pay the parties stated in Order 6 from:
(a) the proceeds of sale of the property located at 33-35 Circulo Drive, Copacabana in New South Wales and contained in folio identifier 332/1218658 pursuant to Orders 2(d), (i)-(iv) of the orders made by the Court on 15 June 2020 (15 June 2020 Orders), pursuant to Order 2 of the orders made by the Court on 15 February 2023 (15 February 2023 Orders), pursuant to Order 7 of the orders made by the Court on 26 February 2025 (26 February 2025 Orders) and pursuant to Orders l(a) and 2 of the orders made by the Court on 7 May 2025 (7 May 2025 Orders), (Copacabana Proceeds of Sale); and
(b) the proceeds of sale of the property located at 83B Lindeman Crescent, Green Valley in the State of New South Wales and contained in folio identifier 41/875272 pursuant to Orders 3(d), (i)-(iv) of the 15 June 2020 Orders, pursuant to Order 3 of the 15 February 2023 Orders, pursuant to Order 8 of the 26 February 2025 Orders and pursuant to Orders l(b) and 3 of the 7 May 2025 Orders (Green Valley Proceeds of Sale).
6. The following amounts are to be paid from the Copacabana Proceeds of Sale and Green Valley Proceeds of Sale:
(a) $215,000 to the Trustee of the Bankrupt Estate of Lepa Sanna;
(b) $60,000 to Bluescope Steel Ltd;
(c) $80,000 to Defined Properties Investments Pty Ltd (in liquidation);
(d) $80,000 to Australian Company Number 146 329 008 Pty Ltd (in liquidation);
(e) $80,000 to E&B Pastoral Pty Ltd; and
(f) the balance of the Copacabana Proceeds of Sale and Green Valley Proceeds of Sale in the amount of $83,385.90 are to be paid to Dentons Australia to be applied as follows:
(i) firstly, payment of the applicant’s costs and remuneration of obtaining the orders to give effect to the agreed distribution in (a) to (e) above; and
(ii) secondly, any remaining amount to be paid in equal shares to Bluescope Steel Ltd, Defined Properties Investments Pty Ltd (in liquidation), Australian Company Number 146 329 008 Pty Ltd (in liquidation) and E&B Pastoral Pty Ltd.
7. The seventh respondent is to pay the applicant’s costs of her interim application filed on 16 June 2025 and of the application for approval of the distribution in Orders 5 and 6.
8. The costs of Joanne Monica Keating in her capacity as liquidator of Defined Properties Investment Pty Ltd (in liquidation) and Defined Properties Investment Pty Ltd (in liquidation) for approval for entry into the Heads of Agreement and Deed of Settlement pursuant to s 477(2A) and s 477(2B) of the Corporations Act be costs in the liquidation of Defined Properties Investment Pty Ltd (in liquidation).
9. The costs of Frank Lo Pilato in his capacity as liquidator of Australian Company Number 146 329 008 Pty Ltd (in liquidation) and Australian Company Number 146 329 008 Pty Ltd (in liquidation) for approval for entry into the Heads of Agreement and Deed of Settlement pursuant to s 477(2A) and s 477(2B) of the Corporations Act be costs in the liquidation of Australian Company Number 146 329 008 Pty Ltd (in liquidation).
10. The proceedings are otherwise dismissed.
THE COURT NOTES THAT:
11. The Copacabana Proceeds of Sale amount to $133,305.38 and are held in the trust account of the applicant’s solicitors.
12. The Green Valley Proceeds of Sale amount to $465,080.52 and are held in the trust account of the applicant’s solicitors.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Ms Sanna submits that in the circumstances neither the amount claimed by Bluescope or E&B Pastoral ought to be paid. Consideration As a preliminary matter there seems to be some confusion on the part of Ms Sanna as to the capacity in which the Trustee: first, holds the balance of the proceeds of sale; and secondly, seeks that the Court make the Consent Orders as part of the settlement agreement. As is apparent from the history of the Transfer Proceeding set out above, there were numerous caveats lodged against the title of the Properties, including one by the Trustee. The Court made orders for sale of the Properties and appointed the Trustee as its delegate to sell the Copacabana property and the Green Valley property together with Mr Nith. After payment to the mortgagee and of the costs associated with the sales, payment out to the claimant had to await the determination of the priorities claimed by the parties who had lodged caveats against the Properties. As the Trustee submits, in that capacity (ie sale of the Properties and holding the proceeds for distribution subject to the outcome of the dispute as to priorities) the Trustee was acting in a role analogous to a court appointed receiver. He did not act in the role of Trustee of Ms Sanna’s estate, does not hold the balance of the proceeds of sale of the Properties in that capacity and does not seek approval for the distribution of those proceeds in that capacity. However, the Trustee has a second role in this dispute as one of the caveators claiming an interest in the balance of the proceeds of sale. That claim is made by the Trustee in his capacity as trustee of the bankrupt estate of Ms Sanna. It follows from the above that the Trustee has not made, and will not make, any determination about the validity or otherwise of the claims made by the various caveators and/or the amounts to be paid to them. Rather, he approaches the Court seeking that the Court make the Consent Orders which is a condition precedent to the operation of aspects of the mediated settlement recorded in the Deed of Settlement. To the extent that Ms Sanna makes submissions about the Trustee having the former role and that he should not permit the payment, those submissions cannot succeed. Ms Sanna says that there is some doubt about the validity of the claims made by Defined and Wyse & Young. That is because according to Ms Sanna there is doubt that she signed the documents on which those parties rely in support of the sums claimed. However, the questions of whether Ms Sanna signed the deed of loan, the general security agreement and the first costs agreement were the subject of findings in Wyse v Young. At [52] Brereton J noted that, until very late in the proceeding, the sole defence advanced by the defendants was that, among others, their signatures appearing on the first costs agreement, the second costs agreements, the deed of loan and the general security agreement were forgeries and that they had never executed those documents. After referring to the evidence before him, including evidence given by Ms Sanna, Brereton J concluded (at [109]) that he was satisfied, on the balance of probabilities, that the signatures of Mr Sanna and Ms Sanna on each of the disputed documents were indeed their genuine signatures. His Honour set out his reasons for reaching that conclusion at [109]-[118]. At [119] Brereton J relevantly said:I therefore reject the defence that the documents on which the plaintiffs sue – in particular the First Costs Agreement, the Deed of Loan and the General Security Agreement, and the Saving Fee Agreement – were not executed by the relevant defendants; I am satisfied that they were so executed. There was no plea of non est factum. It follows that, subject to the other defences referred to below (including in particular, in the case of the Deed of Loan and General Security Agreement, breach of fiduciary duty and the CRA), the defendants are bound by those documents. This does not apply to the Second Costs Agreement, which the plaintiffs do not allege was executed, but contend was accepted by conduct.