Federal Court of Australia

Pilato, in the matter of the Scorpion and the Frog Pty Ltd (in liq) [2026] FCA 98

ORDERS

THE COURT NOTES THAT:

A.    Rule 27.02(3) of the Federal Court Rules 2011 (Rules) states:

(3)    Before the Court makes an order under subsection 32AB (1) of the Federal Court of Australia Act 1976 (Act) transferring a proceeding from the Court to the Federal Circuit and Family Court of Australia (Division 2):

(a)    the Court must consult the Chief Justice of the Court in relation to the proposed transfer; and

(b)    the Chief Justice of the Court must consult the Chief Judge of the Federal Circuit and Family Court of Australia (Division 2) in relation to the proposed transfer.

B.    Following this hearing, Anderson J will advise the Chief Justice of the Federal Court of Australia, Mortimer CJ, of the interlocutory application dated 11 February 2026, made by Lorena Fernandez Collazo, and of Anderson J’s view that proceeding VID1340/2025, commenced in this Court by an originating process dated 1 October 2025, be transferred to the Federal Circuit and Family Court of Australia (Division 2), pursuant to s 32AB(1) of the Act. This will enable Mortimer CJ to confer with the Chief Judge of the Federal Circuit Court and Family Court of Australia (Division 2), Alstergren CJ, in relation to the proposed transfer.

C.    The Court will not make any order today effecting the transfer of the proceeding, so as to allow for the consultation process in r 27.02(3) of the Rules to take place.

D.    The Court will inform the parties of the outcome of the consultation process set out in r 27.02(3) of the Rules.

THE COURT ORDERS THAT:

1.    Pursuant to r 9.12 of the Federal Court Rules 2011, Lorena Fernandez Collazo be granted leave to intervene in this proceeding.

2.    Frank Lo Pilato, liquidator of The Scorpion and the Frog Pty Ltd (in Liquidation) (ACN 617 176 502) (Company) is to take no further step in the liquidation of the Company in respect of the assets of the trust known as Number Stations (ABN 56 855 988 129), other than what is required to preserve the assets of the Company, pending further order.

3.    The costs of the interlocutory application dated 11 February 2026 be costs in the proceeding.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

ANDERSON J:

iNTRODUCTION

1    The first plaintiff is the liquidator of the second plaintiff (Company). The liquidator and the Company apply for the relief set out in the originating process dated 1 October 2025.

2    The liquidator’s application raises five issues for determination.

3    First, the Company appears at all times to have carried on business solely in its capacity as trustee of Number Stations (ABN 56 855 988 129) (Trust) pursuant to a Trust Deed. The liquidator seeks a direction that he is justified and acting reasonably in proceeding on that basis.

4    Second, all relevant assets of the Company appear to be Trust property. Before the liquidator can deal with that property, the liquidator must be appointed as receiver and manager of the property, or powers to deal with the Trust property must be conferred on the Company. The liquidator seeks an order appointing him as receiver and manager.

5    Third, the liquidator seeks an order that he is justified and acting reasonably in proceeding on the basis that he can deal with, hold, apply and/or distribute the Trust property in accordance with Parts 5.5 and 5.6 of the Corporations Act 2001 (Cth).

6    Fourth, the liquidator has and will incur expenses in administering the Trust property and otherwise acting as receiver and manager. The liquidator seeks an order that he is justified and acting reasonably in paying from the Trust property his remuneration, costs and expenses properly incurred in preserving, realising and getting in the Trust property, in distributing the Trust property and in conducting the winding up of the Company.

7    Fifth, the Court has already ordered that paragraph [53] and confidential Annexure FLP-2 of the Lo Pilato Affidavit be kept confidential. The liquidator also sought that paragraph [50] of his written submissions be kept confidential to prevent prejudice to the proper administration of justice. The liquidator sought leave to file a version of the submissions that redact the parts of the text that are coloured grey.

8    However, counsel for the liquidator acknowledged in oral submissions that there is no need for an ongoing suppression order in respect of the above material and referred the Court to the decision of Stewart J in Joseph v Segelov [2025] FCA 1340 at [50].

Relevant Background

9    The Company was incorporated on 3 February 2017. Since its incorporation, Kelan Reg Casey has been the sole director and shareholder of the Company.

10    The liquidator has identified the unsigned Trust Deed dated 3 February 2017 in the Company’s books and records. Although it is not signed, it appears the Company was appointed exclusively as trustee of the Trust from 3 February 2017 in accordance with that deed.

11    The liquidator believes that the Trust Deed was effective from 3 February 2017 onwards, and that the provisions of the Trust Deed are consistent with the intentions of the settlor at the time the Trust Deed was prepared. The liquidator reached this view essentially because the business was operated consistently with the Trust Deed.

12    The liquidator has not received a signed copy of the Trust Deed despite request.

13    The named beneficiaries of the Trust are Ms Lorena Fernandez Collazo, Knoa Mirko Casey Fernandez, and Lyra Vega Casey Fernandez (each a Beneficiary). The Trust Deed names Mr Casey, as appointor.

14    The Company, apparently in its capacity as trustee of the Trust, held various properties in New South Wales and Victoria (Properties). The Liquidator considers that the assets of the Trust are confined to the Properties. Except for one property, the Liquidator believes that none of the Properties are tenanted.

15    On 28 March 2025, the liquidator was appointed as liquidator of the Company pursuant to an order of the Court.

16    By terms of the Trust Deed, the Company ceased to hold the office of trustee upon the Company being placed into liquidation; it became bare trustee of the Trust’s assets.

17    On 29 April 2025, following the appointment of the liquidator, the liquidator received correspondence from Ms Collazo, one of the Beneficiaries, and the applicant to one of the applications before me today. Ms Collazo claimed that she had:

(a)    exercised powers to appoint a new trustee to the Trust;

(b)    called a meeting of the Trust on 25 April 2025; and

(c)    at the meeting, exercised powers as appointor of the Trust and appointed Bestiary Pty Ltd as the new trustee of the Trust.

18    Despite that correspondence, the liquidator formed the view that the change in trustee of the Trust by Ms Collazo was invalid as she was not appointor of the Trust, and that the Company remained and remains the bare trustee of the Trust. The liquidator is not aware of any basis on which Ms Collazo is permitted to exercise the powers of appointor.

Ms Collazo’s application

19    By interlocutory application dated 11 February 2026, Ms Collazo sought orders:

(1)    Pursuant to r 9.05 of the Federal Court Rules 2011, an order that Lorena Fernandez Collazo be joined to the proceedings.

(2)    In the alternative, Pursuant to r 9.12 of the Federal Court Rules 2011, an order that Lorena Fernandez Collazo be granted leave to intervene in this proceeding.

(3)    Pursuant to s 32AB of the Federal Court of Australia Act 1975, proceeding number VID1340/2025, commenced by way of originating application dated 1 October 2025, be transferred to the Federal Circuit Court and Family Court of Australia (Division 2).

20    Ms Collazo relies upon an affidavit made by her on 11 February 2026, in which she deposes to matters concerning proceedings in the Federal Circuit and Family Court of Australia (Division 2) concerning the relationship between Ms Collazo and her former husband, Mr Casey, who is the respondent in those proceedings (Family Court Proceedings).

21    The Family Court Proceedings were commenced by initiating application filed on Ms Collazo’s behalf on 2 October 2024. In that initiating application, Ms Collazo sought orders that she be declared sole trustee of various properties that were the subject of the Trust. Ms Collazo sought orders that she takes steps to realise the assets of the Trust, pay all debts associated with the Trust, and thereafter distribute the surplus proceeds between herself and Mr Casey in particular proportions (Proposed Property Orders);

22    Mr Casey has not appeared in the Family Court Proceedings since about July 2025.

23    On 3 October 2025, the Federal Circuit and Family Court of Australia (Division 2) made final parenting orders in Ms Collazo’s favour in respect of the two children.

24    The Family Court Proceedings are still on foot, because the Court did not make or rule on the Proposed Property Orders. Instead, the Family Court Orders state, in respect of the Proposed Property Orders, that:

The property settlement proceedings are adjourned to 16 March 2025 at 9.30am for a case management hearing NOTING that the husband remains in default of Orders for filing Response material and has failed to make full and frank disclosure, that the matrimonial assets of the parties is somewhat complex and involve a Family Trust and allegations of waste and the like, and that the Liquidator of the Corporate Trustee of the Family Trust will need to become a party to the proceedings.

The Family trust: assets and liabilities

25    At the time of swearing her affidavit, Ms Collazo has not been able to locate the executed Trust Deed.

26    The Trust was established by Mr Casey and Ms Collazo as a means to hold and manage the investments and assets acquired over the course of the marriage. Ms Collazo deposes to the Trust property representing all or substantially all of the joint property of her marriage to Mr Casey and that there is no other significant matrimonial property to be divided between them.

27    Ms Collazo deposes that to her knowledge, the Trust property comprises a number of properties in NSW and Victoria. Ms Collazo deposes that her estimate of the combined value of the Trust assets is approximately $1 million.

28    Ms Collazo deposes that to her knowledge the Trust has liabilities of approximately $550,000.

29    Ms Collazo deposes that, to her understanding, the liquidator in his application, is seeking to recover his renumeration of expenses incurred by him as liquidator of the Company from the Trust assets. The liquidator has estimated his remuneration in the liquidation of the Company will be in the order of $70,000 plus GST and disbursements.

LIQUIDATION OF THE COMPANY

30    Ms Collazo deposes that on 2 April 2025, shortly after becoming aware that the Company had entered into liquidation she sent an email to the liquidator’s office seeking clarification of the steps required to regularise the Trust’s affairs. In that email, Ms Collazo volunteered to repay the debt owed by the Company to bring the Trust’s affairs back into proper order and requested a payout figure from the liquidator for that purpose.

31    On 2 April 2025, Ms Collazo spoke with the liquidator by phone and expressed her wishes to be appointed as new trustee. Ms Collazo advised again that she would be happy to repay the debt and bring the Trust into “good health”. To date, Ms Collazo has not received from the liquidator any indication of the lump sum necessary to repay the debt of the Trust.

32    The proposed property orders sought in the Family Court Proceedings provided that the Company be removed as trustee and Ms Collazo appointed trustee of the Trust.

CORRESPONDENCE REGARDING FAMILY COURT PROCEEDINGs

33    From about April 2025 and continuing, various correspondence had been sent between the liquidator, the liquidator’s solicitors, KHQ Lawyers, and Ms Collazo and her legal advisors from time to time. In that correspondence, Ms Collazo raised with the liquidator concerns that she had regarding the liquidator taking proper measures to protect the Trust assets and to ensure an accurate presentation of the Company’s financial position.

34    In that correspondence, Ms Collazo also raised concerns that Mr Casey continued to have access to funds which were the subject of the Trust. Ms Collazo also raised concerns that the statutory report to creditors overstated liabilities substantially and referred the liquidator to evidence filed in the Family Court Proceedings to make good the claim that the statutory report had overstated liabilities of the Company by some $500,000.

THE TWO APPLICATIONS BEFORE THE COURT

35    As I have said earlier, there are two applications before me today, the liquidator’s application and Ms Collazo’s application, which both concern in substance, the substantive control of assets the subject of the Trust. In the Family Court Proceedings, Ms Collazo seeks orders that she be appointed Trustee of the assets the subject of the Trust.

36    In this Court, the liquidator seeks orders that he be appointed receiver of the Trust assets for the purpose of carrying out functions conferred by the Insolvency Practice Schedule (Corporations), contained in Sch 2 of the Corporations Act. The liquidator opposes the transfer of this proceeding to the Federal Circuit and Family Court of Australia (Division 2) for the following reasons:

(a)    the liquidator is concerned to ensure there are proper investigations in relation to the Trust;

(b)    the Federal Circuit and Family Court of Australia (Division 2) does not have jurisdiction under the Corporations Act to hear the liquidator’s application. Although counsel for the plaintiffs, Mr Hibbard conceded that, pursuant to s 32AB(8B) of the Federal Court of Australia Act 1975, the Federal Circuit and Family Court of Australia (Division 2) would have jurisdiction if this proceeding is transferred to it pursuant to s 32AB(1) of the Federal Court Act;

(c)    the Federal Circuit and Family Court of Australia (Division 2) would not have power to grant relief under s 90-15 of the IPS. I do not consider such relief is necessary in this proceeding;

(d)    the liquidator will incur further costs; and

(e)    the Trust was likely trading insolvently, and it is unlikely an individual, who does not owe duties to the Court, would be appointed trustee to assets that are subject to an insolvent estate.

37    Critical to determining whether, pursuant to s 32AB of the Federal Court Act, this proceeding, VID1340/2025, commenced by originating application dated 1 October 2025 be transferred to the Federal Circuit and Family Court of Australia (Division 2), are the matters identified in s 32AB (6) of the Federal Court Act, which provides:

(6)    In deciding whether to transfer a proceeding to the Federal Circuit and Family Court of Australia under subsection (1), the Court must have regard to:

(a)    any Rules of Court made for the purposes of subsection (4); and

(b)    whether proceedings in respect of an associated matter are pending in the Federal Circuit and Family Court of Australia; and

(c)    whether the resources of the Federal Circuit and Family Court of Australia are sufficient to hear and determine the proceeding; and

(d)    the interests of the administration of justice.

38    Firstly, whether proceedings in respect of an associated matter are pending in the Federal Circuit and Family Court of Australia: s 32AB(6)(b). I am satisfied on the evidence that there are proceedings in respect of an associated matter pending in the Federal Circuit and Family Court of Australia as the substratum of facts which underpin the property law claims in the Family Court Proceedings substantially overlap with the facts which are relevant to the liquidator’s application.

39    Second, whether the resources of the Federal Circuit and Family Court of Australia are sufficient to hear and determine the proceedings: s 32AB(6)(c). The proceedings in this Court are relatively straightforward and the orders which are sought by the liquidator are commonly made in this Court. They are not of such a complexity or so demanding of the resources of the Court that they cannot be dealt with in the Federal Circuit and Family Court of Australia.

40    Third, the interests of the administration of justice: s 32AB(6)(d). I am satisfied that the administration of justice favours the transfer of this proceeding to the Federal Circuit and Family Court of Australia (Division 2). I am of that view for the following reasons.

41    First, the relief which Ms Collazo seeks in the Family Court Proceedings, to be appointed trustee of the Trust is relief which she will be denied if the liquidator’s application proceeds in this Court. Ms Collazo’s application to be appointed trustee on the affidavit material filed by her in this case, is not hopeless or untenable but has a real prospect of success. If the proceeding in this Court is not transferred, then Ms Collazo will be deprived of the opportunity to make an application to be appointed trustee of the Trust.

42    Second, I was informed by counsel for Ms Collazo, Mr Marcel Delany, that the proceeding in the Federal Circuit and Family Court of Australia (Division 2) is ready to be heard and that no additional costs will be incurred if this proceeding is transferred to the Federal Circuit and Family Court of Australia.

43    Third, the liquidator’s position and entitlement to a right of indemnity out of the Trust assets will not be affected if this proceeding is transferred to the Federal Circuit and Family Court of Australia. Mr Delany has acknowledged that Ms Collazo accepts that the liquidator is entitled to his right of indemnity out of the Trust assets.

44    Fourth, the affidavit evidence of Ms Collazo is that the liquidator, in claiming remuneration of $70,000 plus GST and disbursements, approximates 10% of the assets of the Trust. If Ms Collazo is appointed trustee this will minimise any further costs which will result in a greater pool of assets being available to pay creditors of the Trust, and any surplus to be paid to the Beneficiaries.

45    Fifth, Ms Collazo deposes that the Trust’s main creditor, a Mr Warren Baker, has deposed in an affidavit sworn in the Family Court Proceedings that in a letter dated 5 December 2024 addressed to Mr Casey, he had formally requested “Mrs Fernandez Collazo or another third party be appointed as trustee to ensure the Trust's compliance with the repayment terms of the mortgage”. Plainly, Mr Baker, as the largest creditor of the Trust, does not oppose the appointment of Ms Collazo as trustee.

46    Sixth, the proper administration of justice and the overarching purpose of s 37M of the Federal Court Act, dictates, in my view, that this proceeding be transferred to the Federal Circuit and Family Court of Australia (Division 2).

47    Finally, I consider s 32 AB(6)(a) which requires that I have regard to any Rules of Court made for the purposes of subsection (4) of s 32AB. I note that r 27.01of the Rules provides for the transfer to the Federal Circuit and Family Court of Australia, subrule (2) requires that before the Court makes an order under s 32AB (1) of the Federal Court Act transferring a proceeding from the Federal Court to the Federal Circuit and Family Court of Australia (Division 2), the Chief Justice of the Federal Court must consult with the Chief Judge of the Federal Circuit and Family Court of Australia (Division 2), in relation to the proposed transfer.

48    In practical terms, I propose to inform the Chief Justice of the Federal Court of the proposed transfer of these proceedings and the requirement for the Chief Judge of the Federal Circuit and Family Court of Australia (Division 2) to be consulted pursuant to the requirements of the Rules. I will make the following orders:

(a)    Ms Collazo is granted leave to intervene in this proceeding;

(b)    the liquidator is to take no further step in the liquidation of the Company in respect of the assets of the Family Trust, other than what is required to preserve the assets of the Company, pending further order; and

(c)    the costs of the application be costs in the proceeding.

Associate:

Dated:    16 February 2026