FEDERAL COURT OF AUSTRALIA

Fourteen Consulting Services Pty Ltd (in liq) v A.O.B Holding Pty Ltd [2023] FCA 704

ORDERS

THE COURT NOTES THAT:

1.    Insofar as a Respondent has consented to these orders, such consent is expressly without admission as to the Applicant's entitlement to the assets or Property the subject of these orders.

2.    In these orders, the following words have the following meaning:

THE COURT ORDERS THAT: 

A1. Winding up application - AOB

1.    A.O.B Holding Pty Ltd (ACN 632 922 046) (AOB) be wound up on grounds of insolvency and also pursuant to section 461(1)(k) of the Corporations Act.

2.    Darren John Vardy of Insolvency Options Pty Ltd, Suite 38, 3 Box Road Caringbah NSW 2229 (Mr Vardy) be appointed liquidator of AOB.

3.    The Plaintiffs’ costs of and incidental to this application, insofar as those costs relate to orders 1 and 2, be costs in the winding up of AOB.

A2. Winding up application - Henpark

4.    Henpark Holdings Pty Ltd (ACN 624 401 029) (Henpark) be wound up on grounds of insolvency and also pursuant to section 461(1)(k) of the Corporations Act.

5.    Mr Vardy be appointed liquidator of Henpark.

6.    The Plaintiffs’ costs of and incidental to this application, insofar as those costs relate to orders 4 and 5, be costs in the winding up of Henpark.

A3. Winding up application – NPC Advisory (SD)

7.    NPC Advisory (SD) Pty Limited (ACN 643 357 224) (NPC Advisory (SD)) be wound up on grounds of insolvency and also pursuant to section 461(1)(k) of the Corporations Act.

8.    Mr Vardy be appointed liquidator of NPC Advisory (SD).

9.    The Plaintiffs’ costs of and incidental to this application, insofar as those costs relate to orders 7 and 8, be costs in the winding up of NPC Advisory (SD).

A4. Winding up application – Fifteen

10.    Fifteen Investments Pty Limited (ACN 158 241 546) (Fifteen) be wound up on grounds of insolvency and also pursuant to section 461(1)(k) of the Corporations Act.

11.    Mr Vardy be appointed liquidator of Fifteen.

12.    The Plaintiffs’ costs of and incidental to this application, insofar as those costs relate to orders 10 and 11, be costs in the winding up of Fifteen.

A5. Leave to be appointed liquidator

13.    To the extent necessary, pursuant to section 532 of the Corporations Act, leave granted to Mr Vardy to be appointed, if requested to do so, liquidator of the Fourth Respondent, NPC MacDonnell Rd Pty Ltd (NPC MacDonnell).

B1. Receiver over trust assets – right of indemnity – Fifteen Investment Trust

14.    Pursuant to section 57(1) of the Federal Court of Australia Act 1976 (Cth), Mr Vardy in his capacity as liquidator of Fifteen, be appointed as receiver and manager (Fifteen Receiver), without security, of the assets and undertakings of the Fifteen Investments Trust.

15.    Subject to order 18, the Fifteen Receiver shall have all the powers with respect to the Fifteen Investments Trust that a receiver has in respect of the business and property of a company under subsections 420(1) and (2) of the Corporations Act, as if the reference in those subsections section to “the corporation” were a reference to the Fifteen Investments Trust.

16.    The Fifteen Receiver will not:

(a)    dispose of any assets of the Fifteen Investments Trust; or

(b)    distribute any assets of the Fifteen Investments Trust to creditors or beneficiaries,

without the prior written consent of Simple Life.com Pty Ltd, or further direction or order of the Court.

17.    The costs, expenses and remuneration of the Fifteen Receiver in acting as Fifteen Receiver and manager of the assets and undertakings of the Fifteen Investments Trust, including the costs of this application, be paid from the assets of the Fifteen Investments Trust.

18.    Pursuant to rule 1.34 of the Federal Court Rules 2011 (Cth), the requirement for the Fifteen Receiver to file a guarantee under rules 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.

19.    Liberty be granted to the Plaintiffs to apply to the Court for orders discharging and releasing the Fifteen Receiver on 5 business days’ notice.

20.    Liberty be granted to Mr Vardy to apply to the Court for orders for approval of his remuneration for acting as Fifteen Receiver of the Fifteen Investments Trust on 5 business days’ notice.

B2. Receiver over trust assets – right of indemnity – AOB

21.    Pursuant to section 57(1) of the Federal Court of Australia Act 1976 (Cth), Mr Vardy in his capacity as liquidator of AOB, be appointed as receiver and manager (A.O.B Receiver), without security, of the assets and undertakings of the A.O.B Holding Trust.

22.    Subject to order 25, the A.O.B Receiver shall have all the powers with respect to the A.O.B Holding Trust that a receiver has in respect of the business and property of a company under subsections 420(1) and (2) of the Corporations Act, as if the reference in those subsections section to “the corporation” were a reference to the A.O.B Holding Trust.

23.    The A.O.B Receiver will not:

(a)    dispose of any assets of the A.O.B Holding Trust; or

(b)    distribute any assets of the A.O.B Holding Trust to creditors or beneficiaries,

without further direction or order of the Court.

24.    The costs, expenses and remuneration of the A.O.B Receiver in acting as A.O.B Receiver and manager of the assets and undertakings of the A.O.B Holding Trust, including the costs of this application, be paid from the assets of the A.O.B Holding Trust.

25.    Pursuant to rule 1.34 of the Federal Court Rules 2011 (Cth), the requirement for the A.O.B Receiver to file a guarantee under rules 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.

26.    Liberty be granted to the Plaintiffs to apply to the Court for orders discharging and releasing the A.O.B Receiver on 5 business days’ notice.

27.    Liberty be granted to Mr Vardy to apply to the Court for orders for approval of his remuneration for acting as A.O.B Receiver of the A.O.B Holding Trust on 5 business days’ notice.

C1. Asset preservation / application of receiver and powers to sell

28.    Subject to the order sought in paragraph 32 below, an order, pursuant to section 1323(3) of the Corporations Act, that the:

(a)    Second Respondent, NPC Advisory (NSW) Pty Ltd (NPC NSW), be restrained from:

(i)    removing, or causing or permitting to be removed from Australia all or any of its Property if in doing so, the unencumbered value of its Property falls below, in total, AUD$180,000;

(ii)    selling, charging, mortgaging or otherwise dealing with, disposing of and/or diminishing the value of all or any of its Property, if in doing so, the unencumbered value of its Property falls below, in total, AUD$180,000;

(iii)    causing or permitting to be sold, charged, mortgaged or otherwise dealt with, disposed of and/or diminished in value, all or any of its Property, if in doing so, the unencumbered value of its Property falls below, in total, AUD$180,000;

(iv)    without limiting the terms of sub-paragraphs (i) to (iii) above, incurring new liabilities including, without limitation, liabilities incurred either directly or indirectly, through the use of a credit card, a credit facility, a drawdown facility or a re-draw facility, if in doing so, the unencumbered value of its Property falls below, in total, AUD$180,000; and

(v)    without limiting the terms of sub-paragraphs (i) to (iv) above, withdrawing, transferring or otherwise disposing of or dealing with, any monies available in any account with any bank, building society or other financial institution, in which it has any legal or equitable interest, if in doing so, the unencumbered value of its Property falls below, in total, AUD$180,000;

(vi)    without limiting the terms of sub-paragraphs (i) to (v) above, selling, charging, mortgaging or otherwise dealing with, disposing of and/or diminishing the value of the 1st Kogarah Bay Property and the 2nd Kogarah Bay Property;

(b)    Third Respondent, MCFE Investments Pty Ltd (MCFE Investments) in its own right and as capacity as trustee for the Armour Henderson Family Trust, be restrained from:

(i)    removing, or causing or permitting to be removed from Australia all or any of its Property if in doing so, the unencumbered value of its Property falls below, in total, AUD$2,437,500;

(ii)    selling, charging, mortgaging or otherwise dealing with, disposing of and/or diminishing the value of all or any of its Property, if in doing so, the unencumbered value of its Property falls below, in total, AUD$2,437,500;

(iii)    causing or permitting to be sold, charged, mortgaged or otherwise dealt with, disposed of and/or diminished in value, all or any of its Property, if in doing so, the unencumbered value of its Property falls below, in total, AUD$2,437,500;

(iv)    without limiting the terms of sub-paragraphs (i) to (iii) above, incurring new liabilities including, without limitation, liabilities incurred either directly or indirectly, through the use of a credit card, a credit facility, a drawdown facility or a re-draw facility, if in doing so, the unencumbered value of its Property falls below, in total, AUD$2,437,500;

(v)    without limiting the terms of sub-paragraphs (i) to (iv) above, withdrawing, transferring or otherwise disposing of or dealing with, any monies available in any account with any bank, building society or other financial institution, in which it has any legal or equitable interest, if in doing so, the unencumbered value of its Property falls below, in total, AUD$2,437,500;

(vi)    without limiting the terms of sub-paragraphs (i) to (v) above, selling, charging, mortgaging or otherwise dealing with, disposing of and/or diminishing the value of the Fingal Head Property.

29.    Subject to the order sought in paragraph 32 below, an order, pursuant to section 1323(3) of the Corporations Act, that the Fifth Respondent, Simple Life.com Pty Ltd (Simple Life), be prohibited from paying all or any money, or transferring, or otherwise parting with possession of, financial products or other Property.

30.    An order that the orders sought in paragraphs 30 and 31 above, not prevent:

(a)    each of the Second, Third and Fifth Respondents from paying or otherwise incurring a liability for ordinary living and operating expenses up to an amount of ten thousand dollars ($10,000) per week;

(b)    each of the Second and Third Respondents from paying or otherwise incurring a liability for costs reasonably incurred in these proceedings and any proceedings arising from the Plaintiffs investigation into the affairs of the Company;

(c)    each of the Second and Third Respondents from dealing with or disposing of any of their assets in the ordinary and proper course of their business, including paying business expenses bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so the relevant Respondent give the Plaintiffs, if possible, at least two working days written notice of the particulars of this obligation; and

(d)    any bank, building society or financial institution from exercising any right of set-off which it may have in respect of a facility afforded by it to each or any of those Respondents prior to the date of the order as made

(e)    each of the Second, Third and Fifth Respondents from doing something otherwise prohibited by the orders after first obtaining the express written consent of Mr Vardy to do that thing (which consent may be given on conditions, with which the Second, Third or Fourth Respondent, as the case may be, must comply).

31.    Pursuant to section 1323(3) of the Corporations Act, Mr Vardy be appointed as receiver and manager, without security, of the Property owned by NPC MacDonnell Rd Pty Ltd, including, without limitation, bank accounts in its name (whether held in their own name or jointly) and the MacDonnell Property.

32.    Mr Vardy, in his capacity as receiver and manager of the Property referred to in order 33 above, shall have the powers set out in subsections 420(1) and 420(2) of the Corporations Act.

C2. Disclosure orders

33.    Except to the extent that a claim of privilege against self-incrimination or civil penalty privilege is made, each of NPC NSW, MCFE Investments and Simple Life deliver or cause to be delivered to the Plaintiffs, within fourteen (14) days of the making of these orders, a full and detailed affidavit sworn by its duly authorised officer setting out:

(a)    the name and address of any bank, building society or other financial institution anywhere in the world at which there is an account in the name of or under their control, together with the number of such account, the name of such account and the balance of that account;

(b)    the name and address of any person or persons indebted to them (whether in its own right or as trustee of a trust) and the amount of the indebtedness;

(c)    an itemised inventory of their assets and liabilities (whether in its own right or as trustee of a trust) anywhere in the world;

(d)    an itemised inventory of any and all of their Property (whether in its own right or as trustee of a trust); and

(e)    in respect of any of the Property of Simple Life (whether owned in its own right or as trustee of a trust) which has been given as security for any debt, the details of that property and the nature of the security and the debt so incurred.

34.    In the event that NPC NSW, MCFE Investments and or Simple Life wishes to object to compliance with the previous order on the basis that it may tend to incriminate it or make it liable to a civil penalty, they must, in accordance with section 128A of the Evidence Act 1995 (Cth):

(a)    prepare, file and serve on the Plaintiffs an affidavit disclosing so much of the information required to be disclosed to which no objection is taken;

(b)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken and deliver it to the Court in a sealed envelope; and

(c)    prepare, file and serve on the Plaintiffs a separate affidavit setting out the basis of the objection.

D. Public examination orders

35.    Pursuant to section 596A of the Act, the following persons be summoned to appear before this Court for examination by Mr Vardy regarding the examinable affairs of Fourteen and or Boon:

(a)    Nektarios Kalathas;

(b)    James Alexander Burns;

(c)    Nicolas Kalathas; and

(d)    Christopher John Traill.

36.    Pursuant to section 596B of the Act, the following persons be summoned to appear before this Court for examination by Mr Vardy regarding the examinable affairs of Fourteen and or Boon:

(a)    Abi Brook;

(b)    Alison Lee Henderson;

(c)    Amy Liang;

(d)    Andrew James O’Brien;

(e)    Brian Armour;

(f)    Damon Leo Hanlin;

(g)    Daniel Russell Phillips;

(h)    Greg Weston;

(i)    Gregory Marvin Parker;

(j)    Peter Krommydas; and

(k)    Vanessa Elias.

37.    Pursuant to section 597(9) of the Corporations Act 2001 (Cth), rule 30.34 of the Federal Court Rules, 2011 and rule 1.3(2) of the Federal Court (Corporations) Rules 2000 (Cth), the Court issue orders for production, in the form filed together with the Interlocutory Process filed on 26 May 2023, to:

(a)    Abi Brook;

(b)    Alison Lee Henderson;

(c)    Amy Liang;

(d)    Andrew James O’Brien;

(e)    Australia and New Zealand Banking Group Limited;

(f)    Brian Armour;

(g)    Christopher John Traill;

(h)    Commonwealth Bank of Australia;

(i)    Damon Leo Hanlin;

(j)    Daniel Russell Phillips;

(k)    Fifteen Investments Pty Limited;

(l)    Fortis Law;

(m)    Greg Weston;

(n)    Gregory Marvin Parker;

(o)    James Alexander Burns;

(p)    M J Seymour & Co;

(q)    Mazars Accountants;

(r)    MCFE Investments Pty Ltd;

(s)    National Australia Bank Limited;

(t)    Nektarios Kalathas;

(u)    Nelson McKinnon Lawyers;

(v)    Nicolas Kalathas;

(w)    One Group (Aust) Pty Ltd;

(x)    Perpetual Corporate Trust Limited;

(y)    Peter Krommydas;

(z)    Piper Alderman Lawyers;

(aa)    Simeoni & Co;

(bb)    The Trust Company (PTAL) Limited;

(cc)    Titan Cranes & Rigging Pty Ltd; and

(dd)    Vanessa Elias.

E. General orders

38.    To the extent necessary, the Plaintiffs and Mr Vardy have leave to give to:

(a)    the relevant authorities that record, control and regulate the ownership of real property;

(b)    the relevant authorities that record, control and regulate the ownership of motor vehicles;

(c)    the relevant authorities that record, control and regulate the ownership of maritime vessels and craft;

(d)    any bank, building society or other financial institution through which, to the best of the Plaintiffs’ belief, any of the Defendants operates any account; and

(e)    any other person or entity, holding or controlling property, which, to the best of the Plaintiffs’ belief, belongs to any of the Defendants or the Respondents,

notice of the Court’s orders, by delivering a copy of a minute of the orders to a person apparently in the employ of that entity or person.

39.    Liberty to apply on 2 days’ notice.

40.    The proceedings stand over to 27 September 2023 at 9.30 am.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

JACKMAN J

1    I have before me an amended originating process and interlocutory processes seeking orders, among other things, for the winding up of a number of entities on the grounds of insolvency and on the just and equitable ground, for examinations pursuant to ss 596A and 596B of the Corporations Act 2001 (Cth) (the Act), for orders pursuant to s 1323(3) of the Act and for orders appointing a receiver to the assets of two trusts. The orders are largely unopposed, but I should give brief reasons for making the orders which are sought on an ex parte basis before dealing with the orders which were the subject of dispute before me.

Background

2    By way of background, Mr Vardy (the Liquidator) is the liquidator of the first plaintiff, Fourteen Consulting Services Pty Ltd (in liq) (Fourteen), and the second plaintiff, Boon Business Consultants Pty Ltd (in liq) (Boon). On 10 February 2023, the Liquidator was appointed administrator of Fourteen by resolution of its sole director and shareholder. On 15 March 2023, Fourteen was wound up on the ground of insolvency and the Liquidator was appointed its liquidator by the Supreme Court of New South Wales. On 17 April 2023, Fourteen commenced these proceedings in the Federal Court. On 18 April 2023, the Liquidator was appointed provisional liquidator of Boon. On 19 May 2023, Boon was wound up on the ground of insolvency and also on the just and equitable ground, and the Liquidator was appointed liquidator of Boon by this Court.

3    After his appointment as administrator of Fourteen, the Liquidator received claims from unsecured creditors totalling approximately $67 million, predominantly from a group of entities in liquidation which are described as the Redwood Construction Services Group. The books and records of both Fourteen and Boon confirm that Boon is the sole debtor of Fourteen and owes it approximately $67 million, which includes an invoice to Boon which had been prepared but apparently not issued in the amount of $16,805,687.09.

4    As a result of his ongoing investigations, the Liquidator has formed the view that there appears to have existed and may continue to exist a broader scheme designed to avoid the payment of statutory liabilities, such as Pay As You Go (PAYG) withholding. The scheme appears to have had the following structure:

(a)    The Redwood Construction Services Group provided labour hire services to several entities, predominantly Titan Cranes & Rigging Pty Ltd (Titan).

(b)    Rather than Titan paying Redwood Construction Services Group for the labour hire services it provided to Titan, those funds would be paid by Titan to Boon (until an ATO audit of Boon, which was concluded in June 2021, which resulted in Titan diverting funds payable to Boon primarily to Fifteen Investments Pty Ltd (Fifteen)).

(c)    According to the books and records of Boon, between 9 August 2019 and 6 August 2021, Boon issued invoices to Titan totalling approximately $123 million. Fourteen also rendered invoices to Boon for “services”; however, no such services were provided. Rather, the relationship between Redwood Construction Services Group and Fourteen and between Fourteen and Boon was only to create the illusion of a further corporate layer between Redwood Construction Services Group and Boon.

(d)    Boon would pay some but not all of the funds received from Titan to the Redwood Construction Services Group. The funds paid to the Redwood Construction Services Group would only be sufficient to meet the net wages owing to the labour force employed by the Redwood Construction Services Group that was being utilised by Titan, but not sufficient to meet the statutory liability of the Redwood Construction Services Group to remit to the ATO the PAYG withholding on those net wages.

(e)    The substantial proportion of the funds received by Boon from Titan were paid to Fifteen, being an entity associated with the late Samuel Henderson (Mr Henderson) and his family, and to A.O.B Holding Pty Ltd (A.O.B).

(f)    The amount of money paid by Titan to Boon was less than the amounts invoiced to it by Boon, resulting in a loan account owing by Titan to Boon.

(g)    The amounts owing by Titan to Boon were sold or assigned to entities associated with the late Mr Henderson or his family, for amounts substantially less than the debt owing by Titan to Boon.

(h)    Upon the Redwood Construction Services Group, Fourteen and Boon being wound up, thereby avoiding the payment of any statutory liabilities to the ATO, a new group of labour hire companies will be incorporated in their place to provide the same functions.

(i)    Nominee or straw directors would be appointed to each of the entities to conceal the real controlling minds of the scheme.

5    Mr Henderson was the sole director and shareholder of Fifteen until 4 July 2019. He was also an undischarged bankrupt who worked in the past for several professional accounting firms specialising in restructuring, turnaround and insolvency. Shortly prior to his death, Mr Henderson met with the Liquidator. Based on his conversations with Mr Henderson, the Liquidator formed the view that Mr Henderson was familiar with the structure of the group of companies involved in the scheme, and Mr Henderson was the controlling mind or at least one of the controlling minds of the group of companies involved in the scheme.

Winding up applications

6    Dealing first with the application to wind up various entities, A.O.B is a company which, on the evidence, owes an amount to Boon of $33,374,812. A demand was made by letter dated 19 April 2023 for repayment of that amount, but it was met with no response. In the circumstances, I infer that AOB does not have the wherewithal to meet that demand and that it is unable to pay its debts as and when they fall due. It is accordingly insolvent and should be wound up on that ground alone.

7    Similarly, Henpark Holdings Pty Ltd (Henpark) owes an amount of $2 million to Boon. On the evidence, a demand was made on 19 April 2023 for the payment of that amount, and again it was met with no response. In those circumstances, I infer that Henpark is unable to pay that debt and it should be wound up on the ground of insolvency.

8    As to NPC Advisory (SD) Pty Ltd, on the evidence, that company owes a debt of $1,500,000 to Boon. A demand was made on 19 April 2023 for payment of that amount, which was met with no response, and I infer that the company is unable to pay that debt and ought to be wound up on the ground of insolvency.

9    As to Fifteen, on the evidence Fifteen is indebted to Boon in the amount of $20,826,601.91. A demand was made on 19 April 2023 for payment of $1,795,269, which has not been paid. Although a notice of appearance was filed by Fifteen opposing the order for winding up, the solicitor for Fifteen has confirmed that it does not press its grounds of opposition. I infer that Fifteen is unable to pay its debts as and when they fall due and should be wound up as insolvent.

10    In addition, those companies were all parties to transactions that appear to have been made pursuant to the scheme identified by the Liquidator, which I have summarised above, and are or were associated with or controlled by persons that are or were involved in the scheme.

11    The plaintiffs seek winding up on the alternative ground on the basis that it is just and equitable that those companies be wound up. In my view, the evidence demonstrates a justifiable lack of confidence in the conduct and management of the affairs of those companies and thus a risk to the public interest that warrants protection. In those circumstances, in my opinion, the companies should also be wound up on the just and equitable ground.

Examination application

12    The plaintiffs seek orders pursuant to ss 596A and 596B of the Act for the examination of certain people. I am satisfied that they have established the requisite grounds for those orders to be made and, accordingly, I will make orders for the examination of the various people identified by the plaintiffs, together with orders pursuant to s 597(9) of the Act for production of documents by the various people identified by the plaintiffs.

Asset preservation application

13    The plaintiffs also seek orders pursuant to s 1323(3) of the Act for the preservation of assets and the appointment of Mr Vardy as receiver. Section 1323 is an available source of power where, among other things, “an investigation is being carried out under… this Act in relation to an act or omission by a person, being an act or omission that constitutes or may constitute a contravention of this Act”.

14    It was accepted by Stewart J in Re 30 Denham Pty Ltd (in liq) [2023] FCA 134 at [27]-[30] that for the purpose of interlocutory orders pursuant to s 1323(3), there was a sufficiently reasonable argument that examinations pursuant to ss 596A and 596B by a liquidator constituted investigations under the Act, although Stewart J did not need to decide the point on a final basis. I note that there is no statutory definition of “investigation”. I am prepared to proceed on the same basis as Stewart J did in that case, namely that, without deciding the point, I regard it as being sufficiently arguable on an interlocutory basis that the examinations now being carried out under ss 596A and 596B constitute investigations under the Act. Accordingly, the Court has jurisdiction to make the orders sought pursuant to s 1323, and I make those orders in the absence of any opposition to them.

Applications for appointment of receiver

15    That brings me then to the question whether I should appoint a receiver pursuant to s 57(1) of the Federal Court of Australia Act 1976 (Cth) to the assets of the Fifteen Investments Trust, which has been contested by the current trustee of that trust, namely the fifth respondent to the interlocutory application dated 15 June 2023 (Simple Life). It should be noted that Simple Life is to be subject to an asset preservation order under order 29 as agreed between the plaintiffs and Simple Life, which prohibits Simple Life from paying all or any money or transferring or otherwise parting with possession of financial products or other property. Simple Life has also consented to extensive disclosure orders in favour of the plaintiffs. The question then arises whether any further substantial purpose would be served by appointing Mr Vardy as receiver of the assets of the Fifteen Investments Trust.

16    As a matter of legal principle, there is ample authority for the propositions that:

(a)    A trustee has a right to be indemnified out of and exonerated from the assets of the trust in respect of all liabilities that it has incurred as trustee of that trust.

(b)    The right to indemnity and exoneration constitutes a proprietary interest in the assets of the trust and that interest gives the trustee or former trustee a charge or right of lien over those assets with priority over the interests of the beneficiaries of the trust.

(c)    The trustee or former trustee’s right of indemnity and exoneration against assets of the trust survives and is not otherwise affected by its removal as trustee.

(d)    The trustee or former trustee’s right to indemnity and exoneration may be protected by the liquidator of a corporate trustee being appointed receiver over the trust assets.

The authorities for those propositions were analysed in a characteristically meticulous and thorough judgment of Black J in Re Glenview Pty Ltd (in liq) [2020] NSWSC 866 at [37]-[47].

17    Mr Pesman SC, who appeared for the plaintiffs, referred, in addition to the need to preserve the assets currently in the possession of Simple Life as trustee of the Fifteen Investments Trust, to the need to get in assets by the Fifteen Investments Trust which have been disbursed to other recipients. Mr Pesman points to the evidence of Fifteen Investments Trust having received an amount of over $20 million from Boon and having disbursed some of that money to other parties. It appears, on the evidence, that NPC Advisory (NSW) Pty Ltd has received an amount of $180,000, MCFE Investments Pty Ltd has received an amount of about $2.487 million and NPC MacDonnell Pty Ltd has received an unknown amount.

18    The affairs of Simple Life as trustee of Fifteen Investments Trust are controlled by Mrs Henderson, who is also a director of NPC Advisory (NSW) Pty Ltd and of NPC MacDonnell Pty Ltd. It appears that MCFE Investments Pty Ltd is the trustee of a family trust of which Mrs Henderson is the primary beneficiary. In those circumstances, Mrs Henderson is in a position where she is on both sides of the impugned transactions by the Fifteen Investments Trust in relation to payments to those three entities. Mr Pesman questions the ability and willingness of Mrs Henderson to take the required steps to recover assets of the Fifteen Investments Trust from those entities by way of legal proceedings.

19    Mr Russell, who appeared for Simple Life, submitted that while it may be appropriate at some later point to appoint a receiver to the assets of Fifteen Investments Trust, there should first be a demand and response to that demand made by the trustee against the recipients of the money the subject of the impugned transactions, and that a receiver should be appointed only where there is demonstrated misconduct or a failure to comply with a demand or a lack of cooperation in relation to those impugned transactions.

20    In my view, it is appropriate to order that Mr Vardy be appointed as receiver of the assets of the Fifteen Investments Trust in order to ensure that the efforts to recover the moneys paid pursuant to the impugned transactions are conducted sufficiently strenuously and also with the benefit of an independent professional person conducting those efforts to recover moneys. It remains to be seen whether legal proceedings will be required, but at this stage it seems to me the most appropriate course is to ensure that an independent professional person has the carriage of those recovery efforts, despite the cost which will be incurred in appointing a receiver. Accordingly, in my view, it is appropriate that I make the orders sought concerning the appointment of Mr Vardy as receiver and manager of the assets and undertakings of the Fifteen Investments Trust.

21    A similar application is made by the plaintiffs in relation to the AOB Holding Trust and, in the absence of any opposition to the orders sought for Mr Vardy to be appointed as receiver and manager of the assets and undertakings of that trust, I will make those orders.

22    Accordingly, I make the orders sought by the plaintiffs, as amended during the course of oral argument.

Associate:

Dated:    27 June 2023

SCHEDULE OF PARTIES