Federal Court of Australia

Silva, in the matter of Alon Pty Ltd (in liquidation) [2023] FCA 547

ORDERS

THE COURT ORDERS THAT:

1.    The Plaintiffs be appointed as receivers and managers (Receivers), without security, of the assets and undertakings of the Hewit Family Trust.

2.     The Receivers shall have all the powers that a receiver has in respect of the business and property of a company under s 420(1) of the Corporations Act 2001 (Cth) as if the reference in that section to “the corporation” were a reference to the Trust including, without limitation, the power to do all things necessary or convenient to:

(a)    enter into possession and take control of property of the Trust;

(b)    lease, let on hire or dispose of property of the Trust;

(c)    insure property of the Trust;

(d)    repair, renew or enlarge property of the Trust;

(e)    convert property of the Trust into money;

(f)    carry on any business of the Trust;

(g)    execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the Trust;

(h)    appoint a solicitor, accountant or other professionally qualified person to assist the Receivers;

(i)    appoint an agent to do any business that the Receivers are unable to do, or that it is unreasonable to expect the Receivers to do, in person;

(j)    distribute the proceeds of the sale of the assets of the Trust (after payment of the costs, expenses and remuneration of the Receivers in their capacity as the Receivers and as administrators and liquidators of Alon Pty Ltd (in liquidation) ACN 001 105 620) to any creditors of the Trust; and

(k)    distribute any surplus thereafter to the beneficiaries of the Trust.

3.    The costs, expenses and remuneration of the Receivers in:

(a)    respect of this application; and

(b)    acting as receivers and managers of the assets and undertakings of the Trust,

be paid from the assets of the Trust.

4.    Liberty be granted to the Plaintiffs to apply to the Court for orders discharging and releasing the Receiver on 7 business days’ notice by sending an email to the Associate to Cheeseman J.

5.    The requirement for the Receiver to file a guarantee under rr 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.

6.    Liberty be granted to any person affected by these orders, including any creditor of Alon or the Trust or any beneficiary of the Trust, and who was not previously notified of the Plaintiffs’ application, to apply to vary or set aside these orders on 7 business days’ notice to the Plaintiffs and to the Court by sending an email to the Associate to Cheeseman J.

7.    The costs of the interested party, Ronald Hewit, be paid by the other interested party, Alan Hewit.

THE COURT NOTES THAT:

8.    The Plaintiffs undertake to the Court to submit the Amended Trust Deed of the Hewit Family Trust dated 16 March 2011 to the Chief Commissioner of State Revenue under the Taxation Administration Act 1996 (NSW) and to pay any duty that is payable.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    These reasons relate to two applications which were heard together on 18 May 2023.

2    The first application is the subject of the further amended originating process brought by Brian Silva and Geoffrey Granger, the liquidators of Alon Pty Ltd (in liq). Since Alon’s incorporation, it has primarily acted as Trustee of the Hewit Family Trust. The liquidators seek to be appointed as Receivers and managers of the assets and undertakings of the Trust. They also seek related ancillary relief. The liquidators provided notice of the application and hearing date to all interested parties, being the named beneficiaries of the Trust, and the creditors and directors of Alon. Two members of the Hewit family were granted leave to be heard on the application. They are Ronald Hewit and Alan Hewit, both brothers and beneficiaries of the Trust as well as being directors of Alon at various times. I will refer to them by their first names, without intending any disrespect. Ronald was represented by senior counsel. He supported the liquidators’ claim for relief. Alan appeared in person. He opposed the liquidators’ application and filed an interlocutory application in which he, amongst other things, sought to be appointed as Receiver and manager of the property of the Trust. Apart from Ronald and Alan, no other interested party indicated to the liquidator that they sought to be heard. Two other beneficiaries of the Trust, Kim Hewit and Sarah Hewit, indicated that they consented to the liquidators’ application.

3    The interlocutory application filed by Alan went well beyond opposing the relief sought by the liquidators. The final iteration was filed by Alan in Court on the day of the hearing. I permitted the amended application to be filed after the liquidators and Ronald each confirmed they were in a position to deal with it.

4    Alan seeks various relief in relation to the Trust, the liquidation of Alon and the allocation of shares in Alon. Substantial parts of the broader relief sought by Alan were misconceived in that Alan relied on powers conferred on the Court under Part 5.3A of the Corporations Act 2001 (Cth) which has no application in the present context. In addition, parts of the broader relief sought by Alan were in the nature of final relief, and not properly the subject of an interlocutory application. Ronald, through his counsel, acted as a contradictor in respect of the more broad ranging aspects of Alan’s application.

5    The balance of Alan’s amended application is, in effect, a competing application that he be appointed as Receiver and manager of the property of the Trust instead of the liquidators. The liquidators acted as contradictor on this issue. Ronald adopted the liquidators’ submissions on this issue.

CONCLUSION IN SUMMARY FORM

6    The liquidators’ application to be appointed as Receivers is granted. I will make orders substantially in the form sought. For the reasons which follow, I am satisfied that upon the order of the Supreme Court of New South Wales being made for Alon to be wound up, Alon was reduced to a bare trustee, such that it is necessary to make an order to enable the assets of the trust to be managed. I am further satisfied that the appropriate mechanism is to appoint Receivers to the assets of the Trust and that the liquidators are best placed to fairly, competently and efficiently deal with the Trust property as Receivers.

7    Alan’s amended application must be dismissed. For the reasons which follow, the relief sought by Alan was misconceived, not amendable to interlocutory relief and / or an abuse of process.

BACKGROUND

8    Alon was incorporated on 6 April 1973. As mentioned, Alon’s operations were primarily concerned with its role as Trustee of the Trust.

9    Since 21 October 2021, Richard Neal and Shah Rusti have been the directors of Alon. Prior to that date, the directors of Alon were recorded in the Australian Securities and Investments Commission (ASIC) register as follows:

(a)    David Whitty, from 1 September 2021 to 30 October 2021;

(b)    Alan, from 8 June 1979 to 21 October 2021;

(c)    Ronald, from 16 January 1981 to 18 October 2018; and

(d)    Paula Hewit, from 6 April 1973 to 1 March 2011.

10    The validity and duration of Mr Whitty’s appointment as a director has been the subject of proceedings in the Supreme Court and is addressed below.

11    Alon currently has 11 issued “A” class shares. “A” class shares are the only class of Alon shares with voting rights attached. Ronald holds one “A” class share, Alan holds one “A” class share and Mr Neal holds nine “A” class shares. Mr Neal is the court appointed administrator of the estate of the late Paula Hewit, the mother of Ronald and Alan, and holds his shares in his capacity as administrator of the estate. The current shareholdings reflect the outcome of proceedings taken to rectify the Alon share register.

12    The Trust was established by a trust deed dated 3 May 1973 (the Original Trust Deed). Alon was the Trustee and the Appointor of the Trust. The Original Trust Deed was amended by an Amended Trust Deed dated 16 March 2011. Alon continued as the Trustee and the Appointor of the Trust. The power to remove the Trustee vested in the Appointor. For this reason, whoever controls Alon, controls the assets of Alon and, subject to the operation of an ipso facto clause, the assets of the Trust.

13    The Amended Trust Deed introduced an ipso facto clause which provides that Alon is removed as Trustee and Appointor immediately upon Alon entering into a compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction). The Original Trust Deed did not include an ipso facto clause.

14    On 7 February 2022, orders were made by the Supreme Court for the winding up of Alon on the basis that the company was effectively paralysed by the deadlock between its members and it was just and equitable to wind up the company. The plaintiffs were appointed as liquidators: Re Alon Pty Ltd [2022] NSWSC 64 (the Alon Winding Up Proceedings). The liquidators’ application in these proceedings is premised on an acceptance of the fact that Alon’s status was reduced to that of a bare trustee upon its winding up, as a result of the operation of the ipso facto clause in the Amended Trust Deed. The liquidators seek to be appointed as Receivers and managers in order to be able to deal with the property of the Trust, including by exercising the power of sale, relying on the procedure recognised in Re Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409 at [3]; and in this Court in Cremin, in the matter of Brimson Pty Ltd (in liq) [2019] FCA 1023 at [49] to [50].

15    Alon’s assets include real property (being two residential Units located in Brighton Le Sands, New South Wales and six Parcels of land located in Marsden Park, New South Wales) and approximately $84,146.03 cash at bank. The temporal impetus which informs the timing of the liquidators’ application is the receipt by Alon of an offer from the NSW Department of Planning and Environment to compulsorily acquire the Parcels. The Department’s offer dated 14 March 2023 is subject to a 120-day deadline within which the liquidators must respond to the Department’s offer. The liquidators submit that there is some urgency for this application to be determined because within the period when the offer is open for acceptance, it may be necessary for them to obtain independent legal and valuation advice and to take steps to comply with certain conditions outlined in the offer if they wish to pursue the offer.

16    The relevant background to the present application includes three separate, related proceedings in the Supreme Court. It is necessary to provide an outline of each of the proceedings because the liquidators and Ronald submit that Alan’s attempt to agitate particular issues in these proceedings attracts an Anshun estoppel or is otherwise an abuse of process having regard to the Supreme Court proceedings.

Related Proceedings

17    The three related proceedings were each commenced in the Supreme Court by Mr Neal, as administrator, against Alon and Alan. The first proceeding was determined by Rees J on 13 August 2021: In the matter of Alon Pty Ltd [2021] NSWSC 1021. The second was determined by Gleeson J on 19 November 2021: Application of Mr Neal as administrator of the estate of the late Ms Hewit [2021] NSWSC 1489. The third proceeding, also before Gleeson J, was determined on 7 February 2022: Re Alon Pty Ltd [2022] NSWSC 64.

Register Rectification Proceedings

18    Mr Neal brought proceedings as the administrator of the estate of Ms Hewit against Alon and Alan. He sought an order, pursuant to s 1071F of the Corporations Act that nine “A” class shares held by Ms Hewit be transmitted to him as the administrator of her estate and an order to rectify the share register of Alon. I will refer to these proceedings as the Register Rectification Proceedings. Alan appeared in person. His position evolved during the hearing but in broad terms he opposed the application insofar as it concerned a number of the disputed share allotments.

19    In deciding these proceedings, Rees J made the following findings. First, that the Trust Deed was amended in 2011 (In the matter of Alon at [16]). Secondly, that the ASIC register showed that there were 11 “A” class shares on issue, nine held by Ms Hewit and one each by Alan and Ronald (In the matter of Alon at [20]). Thirdly, that on 21 August 2020 the Court issued letters of administration to Mr Neal in respect of Ms Hewit’s estate which were accompanied by an inventory or property which included nine “A” class shares (In the matter of Alon at [21]). Fourthly, that the transmission of Ms Hewit’s nine “A” class shares to Mr Neal would result in him becoming the majority shareholder in Alon (In the matter of Alon at [26]). Fifthly, that on 22 March 2021, at a time when Alan was sole director of Alon, he had notified ASIC of the purported transfer of Ms Hewit’s nine “A” class shares to himself for $9.00 and the purported issue to him of an additional 89 “A” class shares and 2,000 each of “B”, “C”, “D” and “E” class shares (In the matter of Alon at [36]).

20    Justice Rees held that Alan was obliged to register the transmission of Ms Hewit’s nine “A” class shares to Mr Neal and ordered that he do so (In the matter of Alon at [51]). Further, that Alan did not have the power to transfer Ms Hewit’s nine “A” class shares to himself because those shares were a “controlling interest” and thereby beyond Alan’s power under Article 78 of the Alon Memorandum and Articles (In the matter of Alon at [65]). Justice Rees made a declaration to that effect and that Alan’s purported transfer of Ms Hewit’s nine “A” class shares to himself was void and of no effect. Justice Rees similarly declared that the purported issue of the other classes of Alon shares to Alan was void and of no effect (In the matter of Alon at [66]).

21    In the end result, Rees J ordered, pursuant to s 175(1) of the Corporations Act, that Alon’s corporate register be corrected to record that:

(a)    Mr Neal, as the administrator of the estate of Ms Hewit held nine “A” class shares;

(b)    Alan held one “A” class share; and

(c)    Ronald held one “A” class share.

22    Pursuant to s 175(3) of the Corporations Act, Alon was ordered to lodge a notice of correction with ASIC and Mr Neal was ordered to provide ASIC with a copy of the Court’s orders. No orders were made directly against ASIC because it had not been joined as a party. An indemnity costs order in favour of Mr Neal was made against Alan.

23    Alan continued as the sole director of Alon as at the date Rees J delivered judgment. Justice Rees declined to order that Alan relinquish Alon’s corporate key at this time.

24    The decision of Rees J was not appealed.

25    In the proceedings before Rees J the validity of the Amended Trust Deed was not challenged.

Judicial Advice Proceedings

26    The second proceedings brought by Mr Neal as administrator of the estate of Ms Hewit against Alon and Alan were proceedings in which Mr Neal sought judicial advice under s 63 of the Trustee Act 1925 (NSW) (the Judicial Advice Proceedings). Alan was represented by counsel and solicitors in those proceedings.

27    Prior to the commencement of the Judicial Advice Proceedings, Alan, still being in control of Alon’s corporate key, purported to cause Alon to: appoint Mr Whitty as a director on 1 September 2021; and thereafter, on 21 October 2021, to issue 10 “A” class shares to him. Although not revealed in the Judicial Advice Proceedings, it emerged in these proceedings that on 27 September 2021 Alan and Mr Whitty purported to cause Alon to appoint Resolve Building Consultancy Services Pty Ltd as co-trustee of the Trust.

28    Mr Neal sought judicial advice, amongst other things, as to whether he would be justified in pursuing certain claims for relief against Alon and Alan, namely:

(a)    relief to determine whether the purported issue of the 10 “A” class shares which Alan caused to be made to himself on 21 October 2021 was valid, which included the question of whether Alan had obtained the fully informed consent of the other shareholders as at that date;

(b)    relief to determine whether resolutions passed on 21 October 2021 by Alon in a general meeting convened by Mr Neal as majority shareholder and by which Alan and Mr Whitty were removed as directors were valid. This turned on the advice given in answer to (a) and whether Mr Neal or Alan held a majority of “A” class shares as at 21 October 2021;

(c)    an application to wind up Alon on the ground that the shareholders were deadlocked; and

(d)    the appointment of a new trustee to the Trust.

29    For the purpose of providing judicial advice, Gleeson J relied on the terms of the Amended Trust Deed.

30    Gleeson J considered the consequences of Alon’s status as Trustee and Appointor under the Amended Trust Deed if it was wound up. Justice Gleeson held that by operation of cl 48, Alon would be automatically reduced to a bare trustee and by operation of cl 53 would be replaced as Appointor by the surviving named beneficiaries, including Alan. Further, that the effect of cll 47 and 73 of the Amended Trust Deed was that where there was more than one Appointor, the powers exercisable by the Appointor could only be exercised by the Appointors jointly, that is, unanimously.

31    In these circumstances, and having regard to Alon’s conduct as revealed in the Register Rectification Proceedings and the Judicial Advice Proceedings, Gleeson J found that it was likely that a deadlock amongst the group of Appointors would arise upon orders being made to wind up Alon. For that reason, Gleeson J held that Mr Neal would be justified in seeking the appointment of a new trustee to the Trust and advised accordingly.

32    In the Judicial Advice Proceedings, Alan did not by his counsel seek to impugn the validity of the Amended Trust Deed other than in one confined respect, which was ultimately not pressed: see Application of Mr Neal at [14] to [15].

Alon Winding Up Proceedings

33    The third proceedings were the Alon Winding Up Proceedings. As noted, Mr Neal brought these proceedings against Alan and Alon, seeking an order under s 461(1)(k) of the Corporations Act that Alon be wound up on the ground that it was just and equitable to do so. Alan was represented by Mr Li, solicitor, who had previously been his solicitor in the Judicial Advice Proceedings. Alan did not oppose the winding up application (Re Alon at [3]) and did not seek to impugn the Amended Trust Deed.

34    Justice Gleeson found that Mr Neal held nine “A” class Alon shares. Further, that by reason of his shareholding, Mr Neal was a “contributory” and therefore had standing to apply to wind up the company (Re Alon at [2]). Next, that the Amended Trust Deed included an ipso facto clause which had the effect that Alon would be removed as Trustee and Appointor immediately upon entering into compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction) (Re Alon at [5]). Finally, that any liquidators who were appointed to Alon would be able to apply to be appointed as Receivers of the assets of the Trust (Re Alon at [20]).

ALAN’S AMENDED INTERLOCUTORY APPLICATION

35    By his amended interlocutory application, Alan, relevantly, seeks the following relief:

…

2.    An Order under s445G to make the Amended Hewit family Trust Deed dated 2011 invalid in its entirety.

3.    An Order under s445G declaring the Hewit Family Trust Deed dated 1973 is valid and in effect at all times.

4.    An Order under s447A declaring the allocation of 8 x A Class Shares by Paula Hewit to herself on or about 16 January 1991 [sic, this should be 1981] be declared invalid.

5.    An Order under s447A declaring the allocation of 1 x B Class Share to Alan Hewit by Paula Hewit on 23rd April 1991 be declared as valid.

6.    An Order under s447A that the liquidation of the Company Alon Pty Ltd ceases.

7.    An Order under s447A that the appointment of Trustees and Appointors to the Hewit Family Trust are to remain valid.

8.    An Order under s447A that the Hewit Family Trust is not placed into liquidation.

9.    An Order appointing Alan Hewit as Manager of the assets of the Hewit Family Trust.

10.    An Order appointing Alan Hewit as the Manager of the assets of the Company Alon Pty Ltd.

EvIDENCE

36    The plaintiffs relied on two affidavits in support of their application: an affidavit of Mr Granger, one of the liquidators, sworn 22 December 2022 and an affidavit of Anna Kuznetsova, a solicitor for the plaintiffs, sworn 16 March 2023. The plaintiffs tendered the exhibits which accompanied those affidavits. Four additional documents were also tendered at the hearing: (1) a letter dated 14 March 2023 from the Department containing an offer to compulsorily acquire the Parcels; (2) a document entitled “Brief regarding Marsden Park land transferred to Alon Pty Ltd 23 February 2023” and annexures thereto; (3) an email chain from Mr Granger to Alicia Lawrence of J Li Lawyers, the solicitors who represented Alan in the Alon Winding Up Proceedings, dated 23 February 2023; and (4) a further email from Mr Granger to the plaintiffs’ solicitor dated 18 May 2023. Alan relied on his three affidavits filed in these proceedings and the annexures thereto. Ronald did not adduce any evidence.

CONSIDERATION

37    The liquidators’ application is premised on the ipso facto clause introduced by the Amended Trust Deed, there being no equivalent clause in the Original Trust Deed. A primary focus of Alan’s application is his contention that the Amended Trust Deed is “invalid in its entirety”. For this reason, I will first consider the issue concerning the validity of the Amended Trust Deed.

Validity of the Amended Trust Deed and declaratory relief in respect of the Original Trust Deed

38    Alan’s challenge to the validity of the Amended Trust Deed and his claim for declaratory relief in respect of the Original Trust Deed are conveniently addressed together.

39    A preliminary point arises in relation to the tender of the Amended Trust Deed in circumstances where it has not been stamped. Alan did not object to the Amended Trust Deed when it was put into evidence but bearing in mind that he did not have legal representation that is not surprising. Section 304(1) of the Duties Act 1997 (NSW) relevantly provides:

304 Receipt of instruments in evidence

(1)    An instrument that effects a dutiable transaction or is chargeable with duty under this Act is not available for use in law or equity for any purpose and may not be presented in evidence in a court or tribunal exercising civil jurisdiction unless:

(a)    it is duly stamped, or

(b)    it is stamped by the Chief Commissioner or in a manner approved by the Chief Commissioner…

40    Section 9(3) of the Evidence Act 1995 (Cth) relevantly provides:

Effect of Act on other laws

…

(3)    For the avoidance of doubt, this Act does not affect a law of a State or Territory so far as the law provides for:

    …

(b)    the admissibility of a document to depend on whether stamp duty has been paid….

41    The Original Trust Deed was stamped, with duty paid in the sum of $0.60. It is not necessary for me to decide whether the Amended Trust Deed effected a “dutiable transaction” to which s 304 of the Duties Act applies because, when I raised this issue at the hearing, the liquidators, through their solicitor, provided an undertaking to the Court to submit the Amended Trust Deed for stamping and to pay the duty, if any, that may be payable. Alan submitted that the fact that the Amended Trust Deed was not stamped was relevant to his contention that the document was “merely a document” and not effective as a deed. I reject that submission. The fact that the Amended Trust Deed is not stamped is relevant to the issue of its admissibility, not to its legal effect.

42    In prayers 2 and 3 of his amended application, Alan relies on s 445G of the Corporations Act as the basis for the relief he seeks. Section 445G of the Corporations Act gives the Court a discretion to declare a deed of company arrangement void, or not void, in whole, or in part. The section has no application to the constituent documents of a discretionary family trust, such as the Trust in issue in these proceedings. Alan’s reliance on s 445G is misconceived.

43    As Alan was self-represented, and being mindful of the difficulties faced by litigants who do not have the benefit of legal representation, I will address the substance of Alan’s attack on the Amended Trust Deed, leaving to one side his reliance on s 445G of the Corporations Act. Alan has made three affidavits in these proceedings, provided written submissions and made oral submissions. Taking all this material into account, I am not persuaded that Alan’s challenge to the validity of the Amended Trust Deed, and specifically to the ipso facto clause, by way of interlocutory application in these proceedings weighs against granting the liquidators the relief they seek. My reasons are as follows.

44    As mentioned, the Amended Trust Deed was executed on 16 March 2011 by Ronald and Alan in their respective capacities as directors of Alon, the Trustee. Their signatures were witnessed by a Justice of the Peace. An ASIC company search confirms that they were each directors of Alon on 16 March 2011. On the face of the Amended Trust Deed, its execution was regular and in accordance with s 127(1) of the Corporations Act. The execution of the Amended Trust Deed was not irregular because the company seal was not affixed. I reject Alan’s submission to that effect.

45    Alan asserts that unspecified procedures dictated by the constitution of Alon and the Corporations Act have not been observed. His assertion is highly generalised and is not supported by evidence. Alan did not place the constituent documents of the company before the Court. Alan’s submission is contrary to the statutory assumptions which arise under Part 2B.2 of the Corporations Act in circumstances where the document was executed by Ronald and Alan who were the directors of Alon at the relevant time.

46    In his written submissions, Alan asserts that Ms Hewit was not consulted and did not participate in any decision to amend the Original Trust Deed. He did not adduce any evidence to support his assertion and did not explain why, if proved, that would be relevant having regard to the statutory assumptions.

47    In a similar vein, Alan makes submissions based on his own vague speculation as to what his parents might have subjectively intended when the Original Trust Deed was executed on 3 May 1973. He does not advance any argument as to why the putative subjective intentions of his parents in 1973 are relevant to the validity of the amendment effected by the Amended Trust Deed in 2011 which he, together with Ronald, executed in their capacity as directors of Alon.

48    Alan asserts, without evidence, that the person who drafted the Amended Trust Deed “lacked the appropriate knowledge”. To the extent that he seeks to have that inference on the basis of the deletion of the “royal lives” clause that was in the Original Trust Deed, I reject that submission. Alan does not explain why the asserted fact as to the drafter’s knowledge, or lack thereof, provides a basis on which to declare that the Amended Trust Deed is invalid, particularly in circumstances where he executed it..

49    By his further written submissions dated 10 May 2023, Alan advances a number of new arguments but again his arguments do not provide a reasoned basis to support his central contention that the Amended Trust Deed is invalid.

50    Alan contends that the Amended Trust Deed is “only a document” rather than a deed because it has been faxed, it appears to have had a staple removed, has a handwritten annotation on page 1 (“ORIGINAL 1/4”) and it is not stamped. I have addressed the issue in relation to stamping above. As to the balance of Alan’s submissions, I reject them. Alan executed the Amended Trust Deed. His submissions do not in substance attack the integrity of the copy of the Amended Trust Deed that is in evidence. The burden of Alan’s argument appears to be that the Amended Trust Deed was valid when executed, but that it has since lost is validity due to subsequent acts or omissions. I do not accept that the acts or omissions referred to by Alan undermine the integrity of the copy of the Amended Trust Deed which is in evidence.

51    Alan makes a number of arguments about the validity of the Amended Trust Deed based on the amendments which changed the eligible beneficiaries identified in the Original Trust Deed. It is neither necessary nor appropriate for the purpose of this application to trace through the arguments which Alan seeks to raise in this regard. By these arguments, Alan seeks relief in the nature of final relief that is substantively divorced from the matters in issue in these proceedings. Alan has not joined to the proceedings the other known beneficiaries of the Trust who would be affected by his contention that the Amended Trust Deed is wholly invalid because of the amendments which changed the beneficiaries of the Trust. Even if Alan’s various contentions on this issue had merit, Alan has not advanced any argument as to how that would impact the validity of the ipso facto clause in the face of the severance clause in cl 72 of the Amended Trust Deed.

52    Finally, Alan submits that the Amended Trust Deed is now (and presumably has been at all times since 2011) held in escrow. He does not advance a basis for that contention. He relies on Cihan v Cihan [2022] NSWSC 962, where an escrow was found to exist for a deed which changed the trustee of a trust, but does not advance any reason why the facts of that case are analogous to the circumstances in which the Amended Trust Deed was executed. There is no evidence to support the contention that the Amended Trust Deed was not to have immediate effect and was to be held in escrow.

53    Notwithstanding Alan’s misconceived attempt to base his claim for relief on Part 5.3A of the Corporations Act, I have endeavoured to address, to the extent necessary, the substance of the arguments which he raised in relation to the validity of the Amended Trust Deed. However, even if I am wrong in relation to those arguments, I am satisfied that Alan’s challenge to the Amended Trust Deed must be rejected. The earlier judgments of the Supreme Court present an insurmountable obstacle to Alan’s attempt in these proceedings to impugn the validity of the Amended Trust Deed.

54    I am satisfied that Alan is precluded from challenging the validity of the Amended Trust Deed in these proceedings on the basis of either Anshun estoppel or because to do so would, in the circumstances of this case, be an abuse of process. I prefer to rely on the ground of abuse of process in the present circumstances because the plaintiffs in these proceedings were not parties to the earlier Supreme Court proceedings. Despite the submission from Ronald’s senior counsel, it appears to me that the issue of whether Anshun estoppel is available in proceedings between privies of the parties to the earlier proceedings is not established by the authorities to which he referred. This is not an appropriate case to decide that issue given that the only contradictor is not legally represented and in circumstances where it is not necessary to do so.

55    A failure to make a claim or raise an issue in an earlier proceeding which ought reasonably to have been made or raised in the earlier proceeding may constitute an abuse of process even where the earlier proceeding did not give rise to an estoppel: Tomlinson v Ramsay Food Processing Pty Limited [2015] HCA 28; 256 CLR 507 at 519, [26]; Walton v Gardiner [1993] HCA 77; 177 CLR 378 at 393. In this case, I am satisfied that it is an abuse of process for Alan to make a claim in this proceeding in relation to the validity of the Amended Trust Deed when he did not make that claim in any of the earlier proceedings where Alon was a party. To permit Alan to raise this issue in these proceedings would give rise to unfairness and oppression to the liquidators of Alon, Alon’s shareholders and the beneficiaries of the Trust. It would also undermine the integrity of the administration of justice because of the potential for inconsistent judgments.

56    I have reached this conclusion having regard to the history of the litigation in the Supreme Court involving Alan and Alon. First, while it is true that there was no direct issue about the validity of the Amended Trust Deed in the Judicial Advice Proceedings, the terms of the Amended Trust Deed were directly relevant to the judicial advice given by Gleeson J. Based on the Amended Trust Deed, Gleeson J advised that Mr Neal would be justified in seeking the appointment of a new trustee to the Trust in order to address the automatic removal of Alon under the ipso facto clause, and the deadlock which was likely to arise amongst Appointors upon the winding up of Alon by reason of the requirement that the Appointors act unanimously.

57    Given the issues upon which the court was required to advise, it was unreasonable for Alan not to make his claim as to the invalidity of the Amended Trust Deed in those proceedings. His claim as to the validity of the Amended Trust Deed was so closely connected with the subject matter of the Judicial Advice Proceedings that it was incumbent on him to raise it at that time if at all. To permit Alan to agitate his challenge to the validity of the Amended Trust Deed carries a risk of inconsistent judgments. Justice Gleeson proceeded on the basis that the Amended Trust Deed was valid. That was a matter which was essential to the advice given. Finally, to permit Alan to now make the claim in relation to invalidity would give rise to unfairness and oppression to Alon as Trustee and the beneficiaries, (including Ronald), who have proceeded on the basis of the advice given by Gleeson J, including by their participation in these proceedings. Allowing the issue to be raised now undermines the integrity and finality of the Judicial Advice Proceedings.

Validity of allotment of shares to Ms Hewit

58    By prayer 4, Alan seeks to challenge the validity of the allotment of eight “A” class shares to Ms Hewit on or about 16 January 1981. Alan grounds his claim for relief on s 447A of the Corporations Act. Section 447A provides that the Court may make such order as it thinks fit as to how Part 5.3A of the Corporations Act is to operate in relation to a particular company. Part 5.3A concerns the administration of an insolvent company’s affairs with a view to executing a deed of company arrangement. Alon was not wound up in insolvency. It is not being administered under Part 5.3A of the Corporations Act. Section 447A provides no basis for the relief which Alan seeks. The application relates to the shares previously held by Ms Hewit and now held by Mr Neal. Alan has not joined Mr Neal to the proceedings, which, in any event, seek final, and not interlocutory, relief. The proceedings are not properly constituted.

59    Even if this was not so, Alan has not led any evidence about factual matters relevant to the validity of the allotment of the eight “A” class shares to Ms Hewit. Alan’s basis for challenging the validity of the allotment of the eight “A” class shares to Ms Hewit is based on a “tit for tat” argument predicated on a misunderstanding of the basis upon which Rees J held that various purported allotments of Alon shares to Alan were invalid as beyond power in circumstances where Alan was the sole director at the time of the purported allotments. Alan’s argument must be rejected. The evidence demonstrates that the allotment to Ms Hewit that Alan seeks to impugn occurred at a time when Alon had a full complement of directors, including Alan himself.

60    In addition, I am satisfied that for Alan to raise the share allotment issue in these proceedings would be an abuse of process. Alan and Alon were both parties to the Register Rectification Proceedings and are both parties to the current proceeding. It was unreasonable for Alan not to raise the share allotment issue in the Register Rectification Proceedings. In that case the issues to be decided were: (1) the identity of the person who was entitled to be registered as owner of the eight “A” class shares; and (2) the correct shareholding of the company generally. Justice Rees made an order that Alon’s register be corrected to record the membership which her Honour found to be correct. Justice Rees found that eight “A” class shares were allotted to Ms Hewit in 1981. A finding in the current proceedings that the original allotment to Ms Hewit was invalid would be directly inconsistent with the judgment of Rees J.

61    Further, to allow Alan to agitate this issue now would give rise to unfairness and oppression to Alon and the beneficiaries of the Trust (including Mr Neal in his capacity as administrator of the Ms Hewit’s estate and Ronald). The shareholding as determined by Rees J were relied on as the basis for bringing the Judicial Advice Proceedings and also informed the Winding Up Proceedings. .

Whether Alan holds any “B” class shares

62    By prayer 5, Alan now contends that, in addition to his one “A” class share, he also holds one “B” class share. He grounds his claim for relief on s 447A of the Corporations Act. For the reasons given in relation to prayer 4, s 447A of the Corporations Act does not apply. The proceedings are also improperly constituted. Alan has not joined Mr Neal as a party. Whilst the existence of a “B” class share will not affect the voting rights of the “A” class shareholders, it may potentially affect the entitlement of other shareholders to share in the proceeds of the liquidation of Alon. Mr Neal, who holds the majority of the “A” class shares, may be affected by the determination of this issue. In any event, it is not appropriate for this issue to be dealt with as a side wind in the present proceedings. The relief that Alan seeks is in the nature of final relief. It is not an interlocutory issue relevant to the liquidators’ application to be appointed as Receivers and managers.

63    The evidence before me includes an ASIC company search which records that Alan is the holder of one “A” class share and no other shares. Alan seeks to go behind this evidence by reference to a Form 207 by which ASIC was notified of the allotment of one “B” class share on 23 April 1991. The identity of the person to whom the “B” class share was apparently allotted in the Form 207 is a mixture of typing and handwriting, suggesting that the Form 207 was completed at two different times. The surname “Hewit” is typed. The given names “Alan Michael” appear in handwriting and, apart from the purported signature of “P. Hewit”, is the only part of the form that is not typed. The underlying allotment notified in the Form 207 is not supported by any evidence of the allotment having occurred by way of a resolution by Alon or its directors, and Alon’s share register does not record the issue of the “B” class share to Alan. The register maintained by ASIC records the receipt of a Form 207, but not that the information in that form was ever recorded in ASIC’s register. Why that is so is not apparent from the evidence before me.

64    Alan asserts that, on the evidence before me, I should infer that ASIC erred in failing to record the allotment. In the context of the way in which Alon’s affairs have been conducted, including in relation to disputes going back many years as to the respective entitlements of Alan and Ronald, I am not satisfied that the inference which Alan seeks should be drawn in the face of other, equally available, inferences. For example, the Form 207 may have provoked a requisition from ASIC which was not answered, or not answered to ASIC’s satisfaction. The fact that the ASIC register does not now record the allotment may not be an error at all. Even if error by ASIC is assumed, it does not follow that the error in question was a failure by ASIC to record the information in the Form 207. Other errors by ASIC may account for the current state of the ASIC register, such that the ASIC register correctly records that Alan does not now hold one “B” class share.

65    Finally, the facts currently recorded in the ASIC register accord with the orders made by Rees J. For the reasons already given it would be an abuse of process for Alan to raise this issue in circumstances where he did not do so in the Register Rectification Proceedings. To the extent that Alan asserts he was not aware of the Form at the time of the Register Rectification Proceedings, that may well be so, but the lodgement of the Form was recorded in the register maintained by ASIC and was discoverable with reasonable diligence. For this reason, an application to re-open the Register Rectification Proceedings would have been unlikely to succeed even if Alan had applied to do so. To permit him to challenge the decision of Rees J in the way he seeks to in these proceedings would be an abuse of process. It would be oppressive to the other parties and undermine the finality of litigation.

Relief in respect of the liquidation of Alon

66    By prayer 6 of his amended application, Alan seeks an order “under s 447A” of the Corporations Act “that the liquidation of [Alon] ceases”. For reasons already given, Alan’s appeal to the Court’s power under s 447A of the Corporations Act is misconceived. Alon was wound up under s 461(1)(k) of Part 5.4A of the Corporations Act, not as an insolvent company under Part 5.4 of the Corporations Act. The provisions of Part 5.3A of the Corporations Act on which Alan seeks to rely do not apply. The order to wind up Alon was made on 7 February 2022 and was not appealed. The liquidation has been in progress for over a year. Alan has not advanced any basis upon which the Court should order that the liquidation should cease. The circumstances giving rise to the deadlock which warranted the court making an order was that it was just and equitable to wind up the company persist, and is evident by the stance Alan has taken in these proceedings.

67    By prayer 8, Alan seeks an order again purportedly under s 447A of the Corporations Act “that the [Trust] is not placed into liquidation”. The relief which Alan seeks is misconceived. In addition to his misplaced reliance on s 447A of the Corporations Act, Alan misapprehends the manner in which a Trust may be terminated or wound up. To the extent he means to apply for an injunction preventing the Trust from being wound up or terminated, that application is entirely hypothetical — there is no application before the Court to wind up the Trust. In the event that what he is actually seeking is to prevent the realisation of the assets of the Trust based on his contention that the liquidators, if appointed as Receivers, will sell the assets of the Trust at an undervalue, there is no reliable evidence to support that contention. Further, if the liquidators are appointed as Receivers they will be bound by the duty of care in exercising the power of sale imposed under s 420A of the Corporations Act, which includes the obligation to exercise reasonable care to sell the property for not less than the market value (if any) and for the best price that is reasonably attainable having regard to the circumstances in which the property is sold.

Order that appointment of Trustees and Appointors remains valid

68    By prayer 7, Alan seeks an order, again purportedly under s 447A of the Corporations Act, “that the appointment of Trustees and Appointors to the Hewit Family Trust are to remain valid”. Again, his reliance on s 447A of the Corporations Act is misplaced. This is a new prayer introduced in Alan’s latest amended interlocutory application. It is not supported by evidence or by written submissions. It appears that this claim is dependent on Alan’s claims which seek to invalidate the Amended Trust Deed and restore the Original Trust Deed. As such, it falls with Alan’s attempt to invalidate the Amended Trust Deed. To the extent that Alan seeks to validate the purported appointment of Resolve Building as a co-trustee, I am satisfied that it would be an abuse of process to allow him to agitate that issue in these proceedings given his failure to raise the issue before Gleeson J in the Judicial Advice Proceedings. It is to be remembered that the purported appointment of Resolve Building occurred less than two months before judgment was delivered in the Judicial Advice Proceedings. An issue in respect of which judicial advice was given was whether Mr Neal would be justified in seeking the appointment of a new trustee. If it was the case, that Alon had purported to appoint Resolve Building as a trustee, then that was a matter that was relevant to the Judicial Advice Proceedings, to which Alan was a party, and it was unreasonable for him to have failed to raise the issue.

RECEIVERSHIP APPLICATIONS

69    I now turn to address the competing applications by the liquidators and Alan to be appointed as Receivers and managers of the property of the Trust.

Principles

70    Pursuant to s 57(1) of the Federal Court of Australia Act 1976 (Cth), the Court may, at any stage of the proceeding, appoint a receiver on such terms and conditions as it thinks fit if it is just and convenient to do so.

71    Relevantly, I summarised the general principles relevant to an application for the appointment of a liquidator of a corporate trustee as a receiver and manager of the property of the trust in Sanderson, in the matter of Taylorsix Pty Ltd (in liq) [2021] FCA 1123 at [14]. It is not necessary to reproduce that summary in these reasons. The principles are well established and are not controversial in the present context. Indeed, that was recognised by Gleeson J in the Alon Winding Up Proceedings at paragraph [20]. I apply those principles in relation to the present applications, supplemented to the extent necessary based on the present circumstances and identified below.

72    I will address first whether Alan should be appointed as Receiver and manager before considering the liquidators’ application.

Should Alan be appointed as Receiver and manager?

73    The short answer is no. Alan is disqualified from being appointed as Receiver pursuant to s 418 of the Corporations Act. He is relevantly precluded from acting as a receiver because he is not a registered liquidator (s 418(1)(d)) and because he claims a security interest in property of the company (s 418(1)(a)). Alan is not independent — he is a Trust beneficiary, an Alon shareholder and claims to be a creditor of Alon and / or the Trust. There is no evidence that Alan is appropriately qualified by his skills and qualifications to deal with the Trust property. The litigation in the Supreme Court demonstrates the ongoing conflict between him and other interested parties.

74    For all these reasons, Alan’s claims in prayers 9 and 10 of his amended application must be dismissed.

Should the liquidators be appointed as Receivers and managers?

75    I now turn to consider the liquidators’ substantive application. I am satisfied that the liquidators should be appointed as Receivers for the following reasons.

76    First, although Alon acted as Trustee of the Trust in addition to its other activities, that is not an impediment to the liquidators being appointed as Receivers and managers. In In the matter of Double Bay Property Management Pty Ltd (in liq) [2020] NSWSC 203, Gleeson J appointed liquidators as Receivers and managers of the assets of a trust in the circumstances where at least part of the business of the company appeared to have been conducted in its capacity as trustee of the trust (at paragraph [4] and [6]).

77    Secondly, the Trust assets in these proceedings are limited and it is appropriate that powers be granted to enable the liquidators to deal efficiently with the assets of the Trust.

78    Thirdly, the liquidators submit, and I accept, that appointing them as Receivers will facilitate and simplify the administration of Alon by enabling the Trust’s assets to be under common control. This in turn will facilitate the vindication of Alon’s right of indemnity out of the Trust’s assets.

79    Fourthly, appointing the liquidators as Receivers will facilitate the proper maintenance and safekeeping of the Units and a proper consideration of the compulsory acquisition offer in respect of the Parcels for the benefit of the beneficiaries of the Trust. As things presently stand, Alon has been reduced to a bare trustee. There are actions required to be taken in relation to the trust property, not only in terms of regular maintenance, but also potentially in relation to asbestos remediation if the Department’s offer is to be pursued. The liquidators submit, and I accept, that their appointment as Receivers is the most efficient way of dealing with the Trust’s assets for the benefit of all interested parties.

80    Fifthly, there is no alternative in prospect, for two reasons. For the reasons identified by Gleeson J in the Judicial Advice Proceedings, any attempt to appoint a replacement trustee utilising the mechanism in the Amended Trust Deed is likely to be mired in further disputation and stagnation. In addition, the only qualified persons who have been put forward are the liquidators.

81    Sixthly, the appointment of the liquidators is supported by the three beneficiaries who have communicated their positons. Alan is the only known opponent. I will grant leave to any person affected by these orders, including any creditor of the Company or the Trust or any beneficiary of the Trust, who was not previously notified of the plaintiffs’ application, to apply to vary or set aside these orders on 7 business days’ notice to the plaintiffs and to the Court by sending an email to my Associate.

82    For these reasons, I consider that appointing the liquidators as Receivers is the appropriate course in the whole of the circumstances. It will facilitate the property being maintained and dealt with efficiently. It should not significantly increase the cost of the liquidation. To the extent that the costs involved may be increased, such extra costs are warranted insofar as they protect the integrity of any sale process, and thereby protect the interests of all interested parties. The liquidators are suitably qualified, independent professionals with a background knowledge of the Trust assets and of the operations of Alon. Accordingly, I am satisfied that the liquidators are best placed to fairly, competently and efficiently deal with the Trust property. There being no suggestion of any relevant conflict, it is appropriate that the liquidators be appointed as Receivers without security.

CONCLUSION

83    For these reasons, I will make orders dismissing Alan’s interlocutory application in its entirety, and make orders substantially in the form sought by the liquidators.

84    The liquidators seek an order that their costs of this application are to be paid out of the assets of the Trust. I consider it appropriate to make that order. Ronald submits, and I accept, that Alan should pay Ronald’s costs associated with this application as the relief sought by Alan’s amended interlocutory application directly affected Ronald’s interests as a beneficiary of the Trust and as a shareholder of Alon. Ronald was a proper contradictor of these issues. I reject Alan’s submission that each party should bear their own costs associated with these proceedings in circumstances where many aspects of Alan’s amended interlocutory application were in the nature of an abuse of process. I will make orders accordingly.

Associate:

Dated:    30 May 2023