Federal Court of Australia

Weston (Trustee) v Sanna (No 7) [2025] FCA 1205

ORDERS

THE COURT ORDERS THAT:

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.

REASONS FOR JUDGMENT

MARKOVIC J:

1    There are three applications before me for determination which arise from a settlement reached by several parties who claim an entitlement to the balance of the proceeds of sale of two properties: a property situated at Green Valley, New South Wales (Green Valley property) and a property situated at Copacabana, New South Wales (Copacabana property) (together Properties). More particularly they are:

(1)    Paul Gerard Weston who is the Trustee of the Bankrupt Estate of Lepa Sanna seeks approval for the disbursement of funds he currently holds in his solicitors’ trust account in accordance with the mediated settlement reached by parties who claim an interest in the funds as secured creditors. That approval is sought because Ms Sanna and Corrado Sanna, Ms Sanna’s husband, both of whom attended the mediation, do not agree to disbursement of the funds in accordance with the terms of the settlement reached (Settlement Application);

(2)    an application by the liquidator of Defined Properties Investments Pty Ltd (in liquidation) and by Defined pursuant to s 477(2A) and s 477(2B) of the Corporations Act 2001 (Cth) approving the entry into nunc pro tunc of a heads of agreement (HOA) and a Deed of Settlement in relation to the proposed settlement referred to in the preceding sub-para; and

(3)    an application by the liquidator of ACN 146 329 008 Pty Ltd (in liquidation) (formerly known as Wyse & Young International Pty Ltd) and Wyse & Young pursuant to s 477(2A) and s 477(2B) of the Corporations Act approving the entry into nunc pro tunc of the HOA and the Deed of Settlement.

2    In addition, there is an outstanding question in relation to the costs of an interim application filed by Ms Sanna which was returnable before me for hearing on 8 September 2025 but, on Ms Sanna’s application, was dismissed at the commencement of the hearing of the balance of the applications with costs reserved.

Background

3    The applications which remain to be resolved arise out of three related proceedings. They are:

(1)    NSD276/2016 which, at the time of commencement and hearing. was between the Trustee as applicant and Mr Sanna, as respondent (Transfer Proceeding). In that proceeding the Trustee sought to avoid two transfers (the Copacabana Transfer and the Green Valley Transfer) made by Ms Sanna to Mr Sanna, of her interests in the Copacabana property and the Green Valley property;

(2)    NSD1135/2019 which was first commenced and heard in the Supreme Court of New South Wales (as 2015/00217506) by Wyse & Young, Defined and Wolgan Consulting Pty Ltd as plaintiffs seeking to enforce certain agreements to which, among others, Mr Sanna and Ms Sanna were parties (Supreme Court Proceeding). The defendants to that proceeding are Mr Sanna, DCL Construction Group Pty Ltd, DLD (NSW) Pty Ltd (Deregistered) and Domenic Sanna as first to fourth respondents respectively. After a hearing and the making of Orders, the proceeding was transferred to this Court; and

(3)    NSD619/2016 which was first commenced in the Supreme Court (as 2015/00215624) between the Trustee as applicant and Ms Sanna as respondent and transferred to this Court. The Trustee sought an order for the extension of a caveat he had lodged over the Green Valley property, after Ms Sanna lodged a lapsing notice. This proceeding was heard together with the Transfer Proceeding.

4    The proceedings referred to above have a lengthy procedural history. A summary follows.

The Transfer Proceeding

5    I heard the Transfer Proceeding on 12, 13 and 14 March 2018 and delivered judgment on 24 January 2019: see Weston (Trustee) v Sanna [2019] FCA 32 (Weston v Sanna). I found that pursuant to s 121(1) of the Bankruptcy Act 1966 (Cth) the Copacabana Transfer and the Green Valley Transfer were each void against the Trustee and that declarations should be made to that effect: Weston v Sanna at [132] and [151]. I also made the following findings in Weston v Sanna:

(1)    for the purpose of s 121(5) of the Bankruptcy Act, Mr Sanna gave consideration of $818,000 for the Copacabana Transfer: at [138];

(2)    for the purpose of s 121(5) of the Bankruptcy Act, Mr Sanna gave consideration of $184,875.15 for the Green Valley Transfer: at [153]-[154];

(3)    by no later than 25 February 2016, when the Trustee commenced the Transfer Proceeding, Mr Sanna was no longer free to deal with the Copacabana property or any part of it: at [143]-[145];

(4)    after 25 February 2016 the Copacabana property was subdivided into two lots comprised in folio identifiers 331/1218658 (First Copacabana Lot) and 332/1218658 (Second Copacabana Lot) and on about 4 May 2016 the First Copacabana Lot was sold to a third party for $535,000: at [94]; and

(5)    Mr Sanna received all of the proceeds of sale from the First Copacabana Lot: at [94]-[95].

6    According to the Trustee and as found in Weston v Sanna from the proceeds of sale of the First Copacabana Lot:

(1)    $479,326.56 was paid to Westpac and part of those funds was used to discharge a debt of $184,875.15 owed to Westpac by Mr Sanna which was secured by a mortgage over the Green Valley property; and

(2)    funds advanced by St George Bank Ltd (and secured by the Copacabana property) were used to pay out the balance of the then existing Westpac Banking Corporation loan (also secured by the Copacabana property) and to pay $120,250 to Boral Construction Materials Group Ltd and Boral Limited (together Boral).

7    On 21 March 2019 the Court made the following orders to give effect to the reasons in Weston v Sanna:

1.    Pursuant to s 121(1) of the Bankruptcy Act 1966 (Cth) (Act), the transfer by [Ms Sanna] to [Mr Sanna] of the property located at 33-35 Circulo Drive, Copacabana in the State of New South Wales and contained in folio identifier 332/1218658 (Copacabana Property), is void against the [Trustee].

2.    Pursuant to s 121(1) of the Act, the transfer by [Ms Sanna] to [Mr Sanna] of her interest in the property located at 83B Lindeman Crescent, Green Valley in the State of New South Wales and contained in folio identifier 41/875272 (Green Valley Property), is void against the [Trustee].

8    During the hearing of the Transfer Proceeding, it became apparent that, in the event that the Trustee was successful in setting aside the Copacabana Transfer and/or the Green Valley Transfer, the parties were not in a position to deal with the consequences that flowed from findings to that effect. Late in the hearing, after Mr Sanna had been cross-examined, counsel for Mr Sanna attempted to tender further evidence to establish that he had discharged certain liabilities which he said were secured over the Green Valley property. In those circumstances, the parties agreed that the matter should proceed in two stages: first, the determination of whether the Copacabana Transfer and the Green Valley Transfer were void against the Trustee pursuant to s 120 or s 121 of the Bankruptcy Act; and secondly, the consequences of such findings, assuming that the parties could not resolve that issue by consent: Weston v Sanna at [6].

9    On 23 May 2019 the Court made orders providing for Mr Sanna to file and serve any points of claim and evidence in support of any claim in relation to the Green Valley property and the Copacabana property by 29 May 2019. On 30 May 2019 Mr Sanna filed a points of claim and an affidavit sworn by him on 29 May 2019 pursuant to that order. In that points of claim Mr Sanna sought orders pursuant to s 121(1) of the Bankruptcy Act that the Trustee pay to him an amount equal to that which he paid to Ms Sanna for Ms Sanna’s interest in the Properties. Mr Sanna later provided the Trustee with a points of claim dated 14 June 2022 which is more fully described below.

10    On 16 April 2020 the following parties, each of which had lodged a caveat and/or claimed to have security over or other interest in the Copacabana property and/or Green Valley property securing a debt owing by Mr Sanna, were joined to the Transfer Proceeding as second to twelfth respondents respectively: Boral Construction, E&B Pastoral Pty Ltd, Barrie Northcote Horne, Westpac, Hanson Construction Materials Pty Ltd, Ms Sanna, Michael Kevin Deakin, Bluescope Steel Ltd, Defined, Wyse & Young and Boral Limited.

The Supreme Court Proceeding

11    As set out above, the Supreme Court Proceeding concerned the enforcement of a number of agreements. The claims made by the plaintiffs included:

(1)    on the part of Wyse & Young a claim against Mr Sanna and DCL Construction for debts totalling $136,472.64 arsing as a result of professional services provided by Wyse & Young to Mr Sanna and DCL Construction pursuant to two costs agreements dated 21 October 2011 (first costs agreement) and 16 May 2012 (second costs agreement) respectively; and

(2)    on the part of Defined a claim against Mr Sanna and DCL Construction for $1,670,714.26 alleged to be owing under a deed of loan and a general security agreement both dated 26 July 2012,

see: Wyse & Young International Pty Ltd v Sanna [2019] NSWSC 683 at [2]-[3].

12    Ms Sanna gave evidence in the Supreme Court Proceeding, although she was not a party. Putting to one side the second costs agreement which was signed, Mr and Ms Sanna denied that they had signed any of the documents relied on by Wyse & Young and Defined and denied that they had executed mortgages over the Copacabana property and the Green Valley property: Wyse & Young at [56], [62]-[64]. Notwithstanding their denials, Brereton J was satisfied that they had in fact executed the documents and were bound by the deed of loan and the general security agreement: Wyse & Young at [109], [162].

13    The mortgages which were the subject of the findings in the Supreme Court Proceeding were granted in favour of Defined on 26 July 2021 by Mr Sanna and Ms Sanna over the Green Valley property and by Ms Sanna over the Copacabana property. Each of those mortgages incorporated an Annexure “A” which the Trustee submits is in identical terms. Annexure “A” to the mortgage over the Copacabana property included the following “all monies” clause:

… “the principal sum” means and includes all monies which the Mortgagor whether directly or indirectly or contingently or otherwise or presently or in the future is or may become liable to pay the Mortgagee or upon any guarantee bond account agreement document negotiable or other instrument or by reason of any transaction or event in or by which the Mortgagor is or may become in any manner whatsoever a creditor of the Mortgagee…

14    On 3 July 2019 the Supreme Court relevantly made the following orders:

(1)    in respect of the first costs agreement, judgment against Mr Sanna in favour of Wyse & Young in the sum of $62,056.95;

(2)    in respect of the second costs agreement, judgment against Mr Sanna and DCL Construction in favour of Wyse & Young in the sum of $124,227.61; and

(3)    in respect of the deed of loan and general security agreement, judgment against Mr Sanna in favour of Defined in the sum of $530,622.73,

see: Wyse & Young International Pty Ltd v Sanna (No 2) [2019] NSWSC 868 at [31].

15    In Wyse & Young (No 2), in considering the appropriate relief and the future conduct of the proceeding consequent on his Honour’s findings on liability in Wyse & Young, Brereton J said at [28]-[29]:

28    Any application for an order that the mortgage was valid and enforceable insofar as it affected Ms Sanna’s interest in the property would be an application for a declaration adverse to the title of the trustee in bankruptcy. So would be the application for a declaration that Ms Sanna’s personal property is charged in favour of DPI. As I foreshadowed in the judgment given on 23 August 2017, such applications would involve an aspect of “jurisdiction in bankruptcy” as defined in the (CTH) Bankruptcy Act 1966, s 5, which is a special federal matter for the purposes of the (CTH) Jurisdiction of Courts (Cross-vesting) Act 1987, s 3(e), such that this Court is obliged to transfer them to the Federal Court, unless there are “special reasons” for retaining them here and appropriate notice to the Federal and State Attorneys-General has been given.

29    The plaintiffs seek that the proceedings be transferred. The defendants do not oppose it; indeed it was an application by the defendants for a transfer that resulted in the judgment of 23 August 2017, when their application for a transfer was adjourned for further consideration after determination of the plaintiffs’ claims for monetary judgments. The claims for declaratory relief and orders for possession in respect of the Green Valley property plainly provide a proper basis for supposing that there is a “special federal matter” involved, and thus for transferring the proceedings; and it seems to me that insofar as other issues arise, they would then fall within the accrued jurisdiction of the Federal Court.

    (Footnotes omitted.)

16    Accordingly, his Honour did not make any final orders in relation to the mortgages. Rather, his Honour made an order transferring the balance of the Supreme Court Proceeding to this Court: Wyse & Young (No 2) at [31]. Since that time, the Supreme Court Proceeding has been case managed together with the Transfer Proceeding. However, I pause to observe, as the Trustee points out, that having regard to the findings in Wyse & Young, it is now not open to either Mr Sanna or Ms Sanna to contest the validity of the mortgages or the debts the subject of the judgments delivered in the Supreme Court Proceeding.

Proceeding in the Federal Circuit and Family Court of Australia (Div 1)

17    In November 2019 Ms Sanna commenced a proceeding in the Federal Circuit and Family Court of Australia (Div 1) against Mr Sanna as respondent seeking property orders. On 21 June 2022 the Family Court made orders including an order by consent that “[Mr Sanna’s] interest in the Green Valley property be transferred to [Ms Sanna]” and noted that “[t]he interests of [Mr Sanna] in the Green Valley property is his legal and equitable interest to the extent that it might presently exist”.

Events leading up to the current applications

18    Since the joinder of the parties that had lodged caveats against either or both of the Properties to the Transfer Proceeding on 16 April 2020 (see [10] above), the Court has made a number of further orders in the Transfer Proceeding including relevantly:

(1)    on 15 June 2020 orders empowering Mr Weston to sell the Copacabana property and appointing Mr Weston and Ragu Nith as trustees pursuant to s 66G of the Conveyancing Act 1919 (NSW) for the sale of the Green Valley property. The Properties were subsequently sold and the sales completed on 8 July 2021. On settlement of the Copacabana property a debt of $1,103,440.36 owed by Mr Sanna to St George Bank and secured by a mortgage over the Copacabana property was paid out from the proceeds of sale, thereby satisfying the requirement that the Trustee repay the consideration paid by Mr Sanna for the Copacabana Transfer;

(2)    on 23 November 2021 orders referring to a Registrar the quantification of the amounts to which Messrs Weston and Nith were entitled in connection with the sale of the Properties;

(3)    on 24 March 2022 orders requiring those parties wishing to be heard on the distribution of the proceeds of sale of the Properties (following the filing by the Trustee of an interlocutory application on 6 March 2020) to file and serve points of claim. Eight parties, including Mr Sanna and Ms Sanna (Active Parties) did so;

(4)    on 15 February 2023 orders adopting in whole the referee’s report prepared pursuant to the orders made on 23 November 2021 and empowering Mr Weston to deduct from the proceeds of sale of the:

(a)    the Copacabana property - $284,091.33; and

(b)    the Green Valley property - $177,721.14; and

(5)    on 26 February 2025 orders for the Active Parties to attend a mediation and for the mediation fees to be paid out of the proceeds of sale of the Properties.

19    The mediation took place on 12 May 2025. As at 12 May 2025, prior to payment of the mediator’s fees, the remaining sale proceeds following sale of the Properties were:

(1)    Copacabana property - $139,245.38; and

(2)    Green Valley property - $471,020.52.

20    At the mediation, the Active Parties other than Mr Sanna and Ms Sanna reached an agreement to resolve the Transfer Proceeding, the Supreme Court Proceeding and NSD619/2016 and agreed that, in lieu of a priority contest, they would accede to a consensual distribution of the proceeds of sale between them (settlement agreement). The settlement agreement was recorded in the HOA signed at the mediation and was subsequently incorporated into the Deed of Settlement which was signed by the parties to the settlement agreement.

21    The mediator’s fees of $11,880 were deducted equally from each of the Properties leaving a total of $598,385.50 available for distribution made up as follows:

(1)    Copacabana Property - $133,305.38; and

(2)    Green Valley Property - $465,080.52.

22    The Deed of Settlement provides, among other things, that particular clauses, including bringing the settlement agreement into effect and releases, will not be enforceable until the fulfilment of certain conditions precedent, namely the obtaining of approval by the liquidators of Defined and Wyse & Young pursuant to subss 477(2A) and/or (2B) of the Corporations Act and the Court making the “Consent Orders” or orders substantially to the same effect. The Consent Orders include an order for specified amounts to be paid to each of the Trustee, Bluescope, Defined, Wyse & Young and E&B Pastoral from the balance of the proceeds of sale of the Properties.

The claims of the Active Parties who are party to the settlement agreement

23    The Active Parties’ claims, other than those of Mr and Ms Sanna, are summarised below.

24    Bluescope claims $118,414.53 together with interest at the rate of 12% (compounded daily) secured over Mr Sanna’s interest in the Properties pursuant to a charging clause in a guarantee signed by him. A copy of the commercial credit account application, which includes a guarantee, indemnity and charge, signed by Mr Sanna on or about 6 January 2019 both in his capacity as a director of DCL Construction and as guarantor was in evidence before me.

25    Defined claims $855,093.33 (as at 18 October 2022) secured by an equitable charge granted over the Properties protected by a caveat on title of each of the Properties.

26    Wyse & Young claims $186,284.56 pursuant to the orders made in the Supreme Court Proceeding secured by an equitable charge over the Green Valley property and the Second Copacabana Lot.

27    E & B Pastoral and Mr Horne claim $251,686.00 as at 10 May 2019 secured by unregistered mortgages over part of the Green Valley property. A copy of a deed of loan dated 1 September 2016 between E&B Pastoral and Mr Sanna and an unregistered mortgage granted by Mr Sanna over part of the Green Valley property was in evidence before me. E&B Pastoral obtained default judgment against Mr Sanna in the District Court of New South Wales for the sum claimed on 10 May 2019.

28    The Trustee claims $152,562.58 made up of the Trustee’s claim to 50% of the debts owed to Westpac and Permanent Mortgages Pty Limited under the mortgage secured over the Green Valley property and 50 % of the debts owed to Boral secured against the Green Valley property. The amounts owing were paid out from the proceeds of sale of the First Copacabana Lot ($184,875.15 to Westpac and $120,250 to Boral) on 4 May 2016.

Ms Sanna and Mr Sanna’s points of claim

29    Both Ms Sanna and Mr Sanna have filed or provided points of claim.

30    In her points of claim Ms Sanna seeks the following relief:

I should be entitled to any surplus after the petitioning creditor only and the entitlement of the non-bankrupt spouse should be reinstated to what he is entitled to, of which was forced out of his hand so to also enable me to finalise a true family law property settlement between us.

I pause to observe that Ms Sanna was represented at the hearing of the applications and little, if any, reliance was in fact placed on her points of claim.

31    In his points of claim at [13] Mr Sanna seeks the following relief (as written):

a)    50% shares of the Green Valley property sale

b)    100% shares of the Copacabana property sale

c)    $818,000 to be paid as per Markovic J orders 24th January 2019

d)    Consideration into the purported deed dated 26th July 2012 not having terms fulfilled and correctly to negate all expenses and losses to be incurred and all damages relating to this deed not being fulfilled

e)    For disclosure of proof of debt from; Defined and Wyse and Young to supply all invoices and relevant full itemised accounts, deposits (according to the deed).

Settlement application

32    The Trustee’s application for approval to disburse the balance of the proceeds of sale of the Properties held in his solicitors’ trust account in accordance with the terms of the Deed of Settlement and the proposed Consent Orders is necessitated by the fact that, despite attending the mediation, Ms Sanna is not a party to the settlement agreement or the Deed of Settlement.

33    The question that arises for resolution is whether Ms Sanna or, indeed Mr Sanna, have articulated a claim which entitles either of them to a share in the net proceeds of sale of the Properties. As the Trustee points out any claim by either Ms Sanna or Mr Sanna to any residual equity in the Properties will necessarily fail at a practical level if the net proceeds are insufficient to satisfy claims of secured creditors which are established to the Court’s satisfaction.

34    Although Mr Sanna had provided a points of claim, there was no appearance by him or on his behalf when the applications were called on for hearing. However, towards the conclusion of the hearing, when the represented parties were addressing on costs, Mr Sanna attempted to appear. This was so despite being present in the Court room for the entirety of the hearing until that point. I refused his application to appear at that late stage to make submission in support of his points of claim given that he had not filed any written submission in accordance with the Court’s orders, the hearing was, in effect concluded, he had been present throughout the morning and he had not appeared when the matter was called at its commencement. It was simply too late and not in accordance with the requirements of s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to permit him to appear.

35    In any event, Mr Sanna’s opposition to the Consent Orders and his claim to any part of the proceeds of sale of the Properties rises no higher than Ms Sanna’s opposition. The reasons which follow in considering the basis for Ms Sanna’s opposition to the making of the Consent Orders apply equally to Mr Sanna.

Ms Sanna’s submissions

36    Ms Sanna opposes the proposed distribution of the balance of the proceeds of the sale of the Properties as set out in Order 7 of the Orders made by the Court on 5 June 2025 and it follows making of the Consent Orders in relation to the following matters:

(1)    no amount ought to be paid to the Trustee as set out in para 7(a) of the proposed distribution;

(2)    no amount ought to be paid to Bluescope as set out in para 7(b) of the proposed distribution;

(3)    no amount ought to be paid to Defined as set out in para 7(c) of the proposed distribution;

(4)    no amount ought to be paid Wyse & Young as set out in para 7(d) of the proposed distribution;

(5)    no amount ought to be paid to E&B Pastoral as set out in para 7(e) of the proposed distribution; and

(6)    accordingly no remaining amount ought to be paid to any of Bluescope, Defined, Wyse & Young or E&B Pastoral as set out in para 7(f)(ii) of the proposed distribution.

37    In addition, Ms Sanna opposes the orders sought by the liquidator of Defined and the liquidator of Wyse & Young pursuant to s 477(2A) of the Corporations Act in relation to entry into of the HOA and Deed of Settlement.

38    Ms Sanna submits that her grounds for opposition concern the nature of the alleged debts said to be owed to Bluescope, Defined, Wyse & Young and E&B Pastoral.

39    In relation to the alleged debts said to be owed to Defined and Wyse & Young, which Ms Sanna refers to as the alleged fraud debts, Ms Sanna submits that they are debts which arose out of instruments that Ms Sanna said she never executed and for which there appears to be evidence indicating that, prima facie, they should not be accepted. She submits that, in short, the Trustee is not obliged to accept them nor make a distribution for them.

40    Ms Sanna submits that the documents relied on by Defined and Wyse & Young in support of their claims were obtained in circumstances that could be said to amount in fraud, relevantly of George Dimitriou.

41    In relation to the documents relied on by Wyse & Young Ms Sanna notes that, although she apparently executed the first costs agreement, there is no witness to her signature and she never signed the second costs agreement.

42    Ms Sanna submits that, while the Court does not have to make a specific finding of fraud in relation to any of the documents relied on by Defined and Wyse & Young, it is open to make the following findings and she invites the Court to do so:

(1)    the Defined loan document, given the materials and evidence, should not be taken to be prima facie proof that her estate owes anything and should be treated with significant caution;

(2)    she has maintained that she did not execute the Defined loan agreement, the first costs agreement or the second costs agreement and while the judgment in Wyse & Young has been adduced before this Court, it is still open for this Court to consider whether the material provided by Defined and/or Wyse & Young is sufficient to prove their debts;

(3)    there appears, on the materials, to be no basis for Wyse & Young to allege that it is owed anything from Ms Sanna’s estate on at least the second costs agreement; and

(4)    there is a tension between materials that means that it is not necessarily required that either Defined or Wyse & Young’s debts need to be paid out of Ms Sanna’s estate or that the Trustee has to accept them for the purposes of distributions. She contends that this Court is entitled to review the alleged debts and whether they ought to be paid, relying on the decision in Re Quatrovision Pty Ltd (in liq) and the Companies Act 1961 [1982] 1 NSWLR 95 at 101.

43    Ms Sanna submits that it follows that if her estate is not subject to any of the documents relied on, it is not subject to any of the amounts claimed by the liquidators of Defined or Wyse & Young and the Trustee need not make any provision for them, he does not have to assume that they have any right to any distribution and it is not appropriate for there to be any distribution to them.

44    In the alternative Ms Sanna submits that where she did not appear to sign the second costs agreement there is no reason why the debt of $124,227.61 that attaches to that costs agreement needs to be accounted for by her estate. She submits that in those circumstances the amount under the proposed distribution to Wyse & Young of $80,000 is far too high and should not be made.

45    In relation to the amounts claimed by Bluescope and E&B Pastoral, which Ms Sanna refers to as the Mr Sanna debts, Ms Sanna submits that it is not appropriate, given that they were incurred by Mr Sanna, that distributions ought to be made to Bluescope or to E&B Pastoral. Ms Sanna submits that Bluescope’s debt arises out of a caveatable interest that was placed on the Copacabana property and the Green Valley property as security for a charge given by Mr Sanna in 2019 and E&B Pastoral’s debt arises out of caveatable interests created relying on loans to Mr Sanna under various instruments of loan in 2016 and 2018. She submits that neither of these creditors make any specific direct claim on her estate and that it is only by virtue of the Properties, upon which charges were put in relation to Mr Sanna’s debt, that any claim is made. Ms Sanna submits that prior to 8 May 2013 she was the only owner of the Copacabana property and was the half owner of the Green Valley property with Mr Sanna. She later purported to transfer the two properties to Mr Sanna which transfers this Court found to be void against the Trustee: see Weston v Sanna.

46    Ms Sanna submits that in these circumstances:

(1)    it is clear that, whatever the explanation or reason, Mr Sanna continued to “load” the Properties with caveatable interests to third parties for his own purposes;

(2)    as of 2019 the transfers of the Properties from her to Mr Sanna became voidable for the purposes of the Trustee under the ruling of this Court in Weston v Sanna;

(3)    the question of whether Mr Sanna had any right to impose charges on the Properties has not been the subject of any inquiry or judicial finding;

(4)    whether Ms Sanna actually took back the Properties subject to the relevant interests (and then had them vest in the Trustee) in 2019 is not necessarily obvious if there was any postponing conduct on the part of Bluescope, E&B Pastoral or Mr Sanna; and

(5)    the Trustee seems to have simply accepted that Bluescope and E&B Pastoral had claims on the security given by Mr Sanna over the Properties.

47    While Ms Sanna accepts that the Trustee has latitude in accepting either claim by Bluescope or E&B Pastoral, she submits that to accept those claims in the amount claimed against her estate in the circumstances does not necessarily reflect the proper position at law.

48    Ms Sanna submits that in the circumstances neither the amount claimed by Bluescope or E&B Pastoral ought to be paid.

Consideration

49    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.

50    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.

51    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.

52    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.

53    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.

54    In relation to the claim made by Wyse & Young based on the second costs agreement, Brereton J found at [143]:

It follows that I accept that the Sannas, and through them New DCL, had notice of the Second Costs Agreement and its terms, and with that notice instructed WYI to continue to perform work for them. In accordance with the terms of the Second Costs Agreement, that constituted an acceptance of its terms.

55    Based on the findings made in Wyse & Young the Supreme Court made orders in liquidated amounts in favour of Defined and Wyse & Young (see [14] above).

56    There was no appeal from the orders made in the Supreme Court Proceeding. The balance of that proceeding was transferred to this Court and is listed before me. The findings made in it are binding on me and there is no proper basis put for doubting the conclusions reached after a contested hearing in which Brereton J had the benefit of detailed evidence.

57    Ms Sanna relies on the decision in Quatrovision in support of the proposition that, given the tension between the materials, the Court is entitled to review the alleged debts claimed by Defined and Wyse & Young and whether they ought to be paid.

58    Quatrovision concerned an appeal against the rejection by a liquidator of a proof of debt lodged by Mr Criado in the winding up of Quatrovision Pty Ltd (in liquidation). After summarising the parties’ submission, Powell J said at 100-101:

It seems to have been long, and well, established that the rule of the Court of Bankruptcy was that where a person relied upon a judgment debt, either, to ground a petition for adjudication Ex parte Kibble; Re Onslow; (1875) 10 Ch App 373; Re Lennox; Ex parte Lennox (1885) 16 QBD 315; In Re Fraser; Ex parte Central Bank of London [1892] 2 QB 633; Re Hawkins; Ex parte Troup [1895] 1 QB 404; Corney v Brien (1951) 84 CLR 343; Wren v Mahony (1972) 126 CLR 212; Re Ferguson; Ex parte E N Thorne & Co Pty Ltd (in liq) (1969) 14 FLR 311) or to support a proof of debt (Re Van Laun; Ex parte Pattullo [1907] 1 KB 155, Bigham J, as he then was; sub nom Re Van Laun; Ex parte Chatterton [1907] 2 KB 23 (CA)), it is legitimate for the court, or the trustee, as the case may be, where the consideration for the judgment debt is disputed, to go behind the judgment in order to ascertain whether, in truth, there is consideration for the judgment debt. The bases upon which this rule was founded would seem to be:

1.    since the making of an order upon a petition would materially affect the rights of all creditors who were not before the court, the court ought not to make an order unless clearly satisfied that the debt claimed by the petitioner was a real debt; this basis is now given statutory force in the provisions of the Bankruptcy Act 1966 (Cth), s 52 which provide (inter alia) that on the hearing of a creditor’s petition “the Court shall require proof of … the fact that the debt … on which the petitioning creditor relies is … still owing …”;

2.    in so far as proofs of debt are concerned, what is in issue are the rights between the person claiming and the rights of the general body of creditors as represented by the trustee; in which case the trustee is not bound by any estoppel to which the bankrupt may have subjected himself and may go behind any judgment.

59    Ms Sanna relies on this passage to support her proposition that the Court in this instance should question and go behind the judgment in Wyse & Young. However, Powell J went on to consider whether the rule in bankruptcy to which his Honour referred applied in the case of a winding up. Although it was not strictly necessary for him to determine the correct position when a challenge is made to the judgment on which a winding up petition was based, his Honour expressed the view (at 102) that the Court would not, on the hearing of the petition, go behind the judgment. His Honour said that the likely course would be that:

… if a petitioner has obtained a judgment in his favour, he cannot upon an allegation that the judgment was obtained by fraud or collusion, be called upon, as a preliminary to his right to obtain an order, to go into further evidence to support his claim; but that if the company or opponents to the petition were to undertake to commence proceedings to have the judgment set aside it would be appropriate then to adjourn the petition. Such an approach would not unlike the approach of the court in cases where the petitioner’s debt — not being the subject of a judgment — is disputed by the company.

60    In contrast to Quatrovision this case does not involve a liquidator or trustee in bankruptcy adjudicating on the admissibility of proofs of debt. It concerns a trustee seeking the Court’s approval of orders which have been agreed by a number of parties to resolve the issues that arise between them as to their competing priorities over the remaining proceeds of sale of the Properties. In such a case it is not the Court’s role to go behind a judgment. Rather as set out above, the question is whether Ms Sanna has established a claim which entitles her to a share in the net proceeds of sale of the Properties.

61    As for the Mr Sanna debts, the claims by Bluescope and E&B Pastoral are secured by those companies’ interests in the Green Valley property. Mr Sanna’s share in that property was transferred to Ms Sanna subject to the relevant interests charged against that property and only to the extent that Mr Sanna had any legal or equitable interest in that property, as recorded in the Orders made by the Family Court. Once again, the Trustee has not formed any views about the claims made by Bluescope and/or E&B Pastoral but simply comes to the Court seeking that it make the Consent Orders. There is evidence before me in support of the claims made by each of Bluescope and E&B Pastoral. On the other hand, Ms Sanna has not put anything before me that would suggest that those claims are not genuine.

62    Ms Sanna has not established that she has a claim that entitles her to a share in the net proceeds of sale of the Properties. For completeness I note that the same conclusion necessarily applies to Mr Sanna.

63    The parties that assert secured interests in the Properties have come to an agreement as to how to allocate the net proceeds of sale. They have done so in the interests of avoiding a lengthy and costly dispute in relation to their claims and, assuming they could establish their claims, their relative priorities. In doing so they have each compromised their claims as was necessary given the limited available pool of funds. It is in the interests of the parties and in conformity with the objectives of s 37M of the FCA Act that the Consent Orders be made. Contrary to Ms Sanna’s submission, there is utility in making the Consent Orders in relation to payment of the net proceeds of sale and in bringing the dispute as to priorities and the proceeding to an end. To do otherwise would simply dissipate further the available funds.

64    The outcome is unfortunate for Ms Sanna who participated in the mediation and who, on the evidence before me, rejected an offer of payment out of the net sale proceeds of the Properties, which included a contribution towards her costs of obtaining legal advice in relation to the settlement agreement. As a result, she will not receive any funds.

Applications by the liquidators of Defined and Wyse & Young

65    Joanna Monica Keating, the liquidator of Defined, Defined, Frank Lo Pilato, the liquidator of Wyse & Young, and Wyse & Young each seek orders nunc pro tunc pursuant to s 477(2A) and/or s 477(2B) of the Corporations Act approving the entry into of the HOA and Deed of Settlement.

66    Ms Sanna opposes the making of those orders “to the extent that any person seeking relief pursuant to s 477(2A) of the [Corporations Act] is not authorised to enter into” the HOA and/or the Deed of Settlement.

Legislative framework and legal principles

67    Section 477 of the Corporations Act relevantly provides:

(2A)    Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not compromise a debt to the company if the amount claimed by the company is more than:

(a)    if an amount greater than $20,000 is prescribed—the prescribed amount; or

(b)    otherwise—$20,000.

(2B)    Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company’s behalf (for example, but without limitation, a lease or an agreement under which a security interest arises or is created) if:

(a)    without limiting paragraph (b), the term of the agreement may end; or

(b)    obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;

more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.

68    In Re One.Tel Ltd (2014) 99 ACSR 247; [2014] NSWSC 457 Brereton J said in relation to s 477(2A) at [28] that it:

…is concerned with the compromise of debts due to the company, which would otherwise be assets in the administration, and has the effect that the liquidator cannot compromise substantial debts without the approval of the committee of inspection, the creditors, or of the Court. Essentially, its purpose is to ensure that the interests and wishes of those affected by a compromise, chiefly the creditors, are a major consideration in making such a compromise”.

69    Section 477(2A) applies only in relation to a “debt”. In that regard, the terms of the release in the HOA and the Deed of Settlement are broad and provide for a release from “all claims” which Defined and/or Wyse & Young may have arising out of Ms Sanna’s bankrupt estate, the Properties and the various proceedings and thus is likely to include “debts”: see Re One.Tel at [64]-[66]. In any event, the approach of dismissing an application for approval under s 477(2A) because the claim in question is not a debt in the strict sense should only be adopted in the clearest of cases because s 477(2A) goes to the existence of a liquidator’s power: see Re HIH Insurance Ltd [2004] NSWSC 5 at [12].

70    As to s 477(2B) of the Corporations Act, in In the matter of 77738930144 Pty Limited (in liq) (formerly Commercial Indemnity Pty Ltd) [2017] NSWSC 452 Gleeson JA (sitting at first instance) summarised the applicable principles at [53]-[54]:

53    The object of the approval process under s 477(2B) is to ensure that contractual provisions as to timing do not cut across the general expectation that the winding up will proceed in an expeditious fashion as circumstances allow: Re HIH Insurance Ltd [2004] NSWSC 5 at [15] (Barrett J); Re HIH Overseas Holdings Ltd (in prov liq) [2001] NSWSC 426 at [5] (Barrett J).

54    The following propositions can be derived from the authorities, when deciding whether to grant approval under s 477(2B):

(1)    the controlling consideration is the interests of creditors concerned in the winding up;

(2)    the court pays regard to the commercial judgment of the liquidator;

(3)    although the court is not a rubber stamp for whatever the liquidator puts forward, it is not the role of the court to independently appraise the commercial desirability and commercial terms of the transaction,

(4)    the court will generally not interfere unless there can be seen to be some lack of good faith, some error in law or principle, or some real and substantial ground for doubting the prudence of the liquidator’s proposal.

See Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85–6; State Bank (NSW) v Turner Corporation Ltd (1994) 14 ACSR 480 at 483; Re HIH Insurance Ltd [2004] NSWSC 5 at [15] and Re G A Listing & Maintenance Pty Ltd (1994) 15 ACSR 308 at 311.

71    In relation to both s 477(2A) and s 477(2B) the Court can give approval that has retrospective effect: see Re One.Tel at [67].

Some additional facts

72    According to the liquidator’s report to creditors, Defined was incorporated on 31 August 2010. From 31 August 2010 to 26 August 2019 the sole director of Defined was George Dimitriou, from 26 August 2019 Louie Nehme was a director and from 30 August 2019 Mr Nehme was the sole director.

73    On 17 November 2023, on the application of the Deputy Commissioner of Taxation, Defined was wound up.

74    Wyse & Young was wound up by order of the Supreme Court on 18 July 2019.

75    On 26 February 2024 Mr Dimitriou was sentenced in the District Court to a term of imprisonment of three years and six months having been convicted of dishonestly causing a financial disadvantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900 (NSW). An appeal against that conviction was unsuccessful: see Dimitriou v R [2025] NSWCCA 18.

76    On 30 August 2019 Mr Dimitriou was made bankrupt.

77    As reported to creditors, shortly after her appointment, Ms Keating visited the address which was recorded as Defined’s registered office to find that the firm then occupying that address did not know of Defined. Ms Keating’s further attempts to contact the director were not fruitful. However, since that time she has obtained some books and records from the trustee of Mr Dimitriou’s bankrupt estate.

78    Based on her investigations, Ms Keating:

(1)    has formed the view that the directors of Defined failed to maintain proper books and records of Defined as required by s 286 of the Corporations Act;

(2)    has not identified any substantial assets of Defined other than the judgment it obtained against Mr Sanna and DCL Constructions in the Supreme Court Proceeding (see [14] above); and

(3)    has concluded that there are insufficient funds in the liquidation to meet the costs of pursuing any further investigations or any recovery action.

79    Mr Lo Pilato also deposes to the fact that there are insufficient funds available in the liquidation of Wyse & Young to fund any further recovery action.

80    As set out above, on 12 May 2025 Ms Keating and Mr Lo Pilato participated in the mediation with all other Active Parties. Defined and Wyse & Young are parties to the settlement reached at that time which is recorded in the HOA signed on 12 May 2025 and the Deed of Settlement, both of which are subject to Ms Keating and Defined and Mr Lo Pilato and Wyse & Young obtaining approval pursuant to s 477 of the Corporations Act.

81    Each of Ms Keating and Mr Lo Pilato have formed the view that it is more commercial to participate in the settlement agreement than litigate their claims and/or that the amount available pursuant to the settlement agreement represents a fair commercial compromise.

82    The creditors of each of Defined and Wyse & Young were notified by Defined and Wyse & Young of their intention to compromise their respective claims and to make the application pursuant to s 477 of the Corporations Act. Ms Keating received two responses to her correspondence seeking further information but not opposing the proposed course while Mr Lo Pilato received no responses. No party appeared at the hearing of the applications other than Ms Sanna.

Consideration

83    Ms Sanna submits that if the defects claimed in relation to the alleged fraud debts and the Mr Sanna debts are made out, I would refuse to make the orders sought pursuant to s 477(2A) and s 477(2B) of the Corporations Act. However, for the reasons set out at [49]-[60] in relation the alleged fraud debts and [61]-[62] in relation to the Mr Sanna debts, Ms Sanna has failed to make out the alleged defects.

84    The alternative to the settlement reached pursuant to the settlement agreement is for the parties to litigate the dispute in relation to priorities, which will involve a complex, potentially lengthy and costly hearing in relation to a limited fund which is insufficient to meet the claims of all of the parties who would press a claim. Further, as the respective liquidators of Defined and Wyse & Young point out, the potential principal witness, Mr Dimitriou, is currently serving a term of imprisonment thus further complicating and potentially delaying resolution of any litigated outcome. On the other hand, the parties have reached a resolution in which both Defined and Wyse & Young will receive a portion of the net proceeds of sale of the Properties in satisfaction of their respective claims. There is obvious utility and benefit to creditors in Defined and Wyse & Young in entering into the HOA and the Deed of Settlement. I am satisfied that the orders sought pursuant to s 477(2A) should be made.

85    Defined and Wyse & Young and their respective liquidators also seek orders pursuant to s 477(2B) of the Corporations Act. They do so because of their concern that there may be some uncertainty as to the interaction between the HOA and the Deed of Settlement and, in particular, whether the HOA remains operative after execution of the Deed of Settlement. They accept that, on one view, the HOA was fully executed when the parties entered into the Deed of Settlement. However, against the risk that the HOA remained operative after that time, their obligations under its terms may not be discharged before the expiry of three months from the date the HOA was entered into, i.e. 12 May 2025. I accept that there is an argument that the HOA remained operative after entry into of the Deed of Settlement and, given that, the orders sought pursuant to s 477(2B) of the Corporations Act should be made.

Costs

86    The final matter to address is that of costs.

87    The Trustee seeks his costs of his application for approval to disburse the balance of the proceeds of sale of the Properties in accordance with the terms of the Deed of Settlement on the basis that the application was necessitated by the fact that, despite attending the mediation, Ms Sanna was not a party to the settlement agreement and ultimately opposed the proposed distribution.

88    The Trustee also seek his costs on a party and party basis of Ms Sanna’s application that was dismissed at the commencement of the hearing. He submits that in circumstances where he was required to prepare submissions addressing the relief sought in that application, including by canvassing the relevant authorities, the starting position ought to be that he is entitled to his costs of that application notwithstanding that it was ultimately not pressed.

89    Defined and Wyse & Young and their respective liquidators also seek their costs of their applications under s 477 of the Corporations Act. They say that Ms Sanna elected to oppose those applications and that they should therefore be entitled to their costs.

90    Ms Sanna submits that Defined and Wyse & Young and their respective liquidators would at least have had to bring their application, including with appropriate evidence and submissions, to satisfy the Court in relation to the s 477 applications. She says that is so irrespective of the position she elected to take in relation to the settlement agreement.

91    Ms Sanna submits that consideration should be given to the fact that, although she abandoned her application late, it was ultimately not pressed thereby saving the Court and the parties the further expense of having to address her application at the hearing. She says that being in Court and having multiple matters ventilated at the hearing militates against costs being awarded in relation to each application, or that they should at least be apportioned accordingly.

92    For the following reasons I am satisfied that Ms Sanna should pay the Trustee’s costs of his approval application and the costs incurred by the Trustee in relation to her abandoned interim application. The costs of the respective approval applications by Defined and Wyse & Young and their respective liquidators should be treated as costs and expenses in the winding up of those companies and be paid out of the assets of those companies.

93    The Court has a broad discretion to order costs under s 43 of the FCA Act: Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43 at [20]. The ordinary rule is that costs should follow the event and that a party is entitled to those costs on a party and party basis: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67]; Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232.

94    The Trustee was successful in his application for approval of the proposed distribution. That application was necessitated by the fact that, despite attending the mediation and rejecting an offer made to her, Ms Sanna was not a party to the settlement agreement and opposed the distribution in accordance with its terms at the hearing. That an application may have been required by Defined and Wyse & Young and their respective liquidators for approval under s 477 of the Corporations Act does not in my view warrant departure from the general position that costs should follow the event in relation to the Trustee’s application for approval of the proposed distribution. The Trustee incurred costs in preparing for and refuting Ms Sanna’s opposition to the Court making the Consent Orders and he should be entitled to his costs accordingly.

95    The same reasoning supports the conclusion that the Trustee ought to be entitled to the costs incurred by him in relation to Ms Sanna’s interim application.

96    On 18 June 2025 I relevantly made orders that Ms Sanna and the Trustee file and serve their submissions in relation to Ms Sanna’s interim application by 14 August and 1 September 2025 respectively. Ms Sanna did not file any submission by that time, or at all. The Trustee, without the benefit of any submissions from Ms Sanna and expecting to be required to address the relief sought by Ms Sanna in her interim application, filed written submissions in response to the application on 1 September 2025. It was not until the commencement of the hearing on 8 September 2025 that Ms Sanna abandoned the relief sought in the interim application. The Trustee incurred costs in preparing to oppose Ms Sanna’s interim application which, given Ms Sanna’s belated abandonment of the relief sought, he should be entitled to recover.

97    In relation to the applications by Defined and Wyse & Young and their respective liquidators for approval under s 477 of the Corporations Act, I accept that these applications would have been required to seek Court approval to enter into the HOA and/or the Deed of Settlement irrespective of the position taken by Ms Sanna and her appearance at the hearing. As observed by Bathurst CJ in Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher and Barnet (2015) 89 NSWLR 110; [2015] NSWCA 85 at [125] “the court does not act as a mere rubber stamp and will confer the power only when it is satisfied that a case for its exercise, in the particular circumstances, has been shown”.

98    Although the application by the companies and their liquidators may have been a simpler one, they would have still been required to satisfy me (as they have done) that the orders they sought should be made. In doing so Defined and Wyse & Young and their respective liquidators would in my view have been required at least to disclose Ms Sanna’s opposition, even if she did not appear. Moreover, Ms Sanna’s opposition was in reality a continuation of her opposition to the Trustee’s proposed distribution application, that is, that the orders should not have been made based on the defects claimed in relation to the alleged fraud debts and the Mr Sanna debts.

Conclusion

99    I am satisfied that the Consent Orders approving the proposed distribution of the proceeds of sale of the Properties by the Trustee in accordance with the terms of the Deed of Settlement should be made. I am also satisfied that Defined and Wyse & Young and their respective liquidators should be granted approval nunc pro tunc pursuant to s 477(2A) and s 477(2B) of the Corporations Act approving the entry into of the HOA and Deed of Settlement.

100    Ms Sanna should pay the Trustee’s costs of his proposed distribution application and in relation to her interim application. The costs of the applications by Defined and Wyse & Young and their respective liquidators should be treated as costs and expenses in the winding up of those companies.

101    I will make orders accordingly.

Associate:

Dated:    1 October 2025

SCHEDULE OF PARTIES