Richardson v Lo Pilato (Liquidator); In the Matter of Trojan Hospitality (ACT) Pty Limited (In Liq) [2014] FCA 888

Richardson v Lo Pilato (Liquidator); In the Matter of Trojan Hospitality (ACT) Pty Limited (In Liq) [2014] FCA 888

The Court accepted Mr Richardson's unchallenged evidence that he personally drew down and paid $325,000 to Trojan only to be used, if at all, for completion of the Share Sale Agreement and not for Trojan's benefit. The Share Sale Agreement did not complete and the specific purpose failed. Applying the Quistclose trust principles, Trojan held the contested sum on trust for Kevin Richardson. Because the claim was proprietary, leave under s 471B was appropriate. The Court was sufficiently satisfied that the consent orders giving effect to the settlement between the active parties should be made, despite the liquidator's non-consent and submissions.

Jurisdiction
Australia
Judgment Date
20 August 2014
Procedural Posture
Federal Court Corporations and Equity Proceedings Concerning Leave to Proceed Against a Company in Liquidation, a Trust Declaration, Appeals From Rejection of Proofs of Debt, and Settlement of Related Proceedings / Decided on the Papers on Interlocutory Process for Consent Orders Giving Effect to Settlement
Outcome
Orders made substantially by consent. In ACD 36 of 2012, leave was granted to proceed against Trojan and a declaration was made that Trojan holds $325,000 on trust for Kevin Richardson, with costs questions reserved. In ACD 67 of 2012, the proceeding and counterclaim were dismissed with no orders as to costs.
Legal Topics
['consent Orders' 'submitting Notice' 'quistclose Trust' 'company in Liquidation' 'leave to Proceed Under S 471 B of the Corporations Act 2001 (cth)' 'proofs of Debt' 'settlement of Proceedings']
['practice and Procedure' 'equity' 'corporations' 'trusts' 'insolvency'] ['consent Orders' 'submitting Notice' 'quistclose Trust' 'company in Liquidation' 'leave to Proceed Under S 471 B of the Corporations Act 2001 (cth)' 'proofs of Debt' 'settlement of Proceedings']

Case Brief

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Procedural Posture

Federal Court Corporations and Equity Proceedings Concerning Leave to Proceed Against a Company in Liquidation, a Trust Declaration, Appeals From Rejection of Proofs of Debt, and Settlement of Related Proceedings / Decided on the Papers on Interlocutory Process for Consent Orders Giving Effect to Settlement

Legal Issues

  1. 1 ['Whether the Court should make orders by consent to give effect to settlement of two proceedings where the liquidator had filed a submitting notice but wished to be heard and had not consented to the orders.' 'Whether the Court was satisfied on admissible and probative evidence that Trojan held the $325,000 paid on 23 March 2009 on trust for Kevin Richardson.' 'Whether leave should be granted under s 471B of the Corporations Act 2001 (Cth) to proceed against Trojan in liquidation.' 'Whether proceeding ACD 67 of 2012 should be dismissed to give effect to the settlement.']

Ratio Decidendi

The Court accepted Mr Richardson's unchallenged evidence that he personally drew down and paid $325,000 to Trojan only to be used, if at all, for completion of the Share Sale Agreement and not for Trojan's benefit. The Share Sale Agreement did not complete and the specific purpose failed. Applying the Quistclose trust principles, Trojan held the contested sum on trust for Kevin Richardson. Because the claim was proprietary, leave under s 471B was appropriate. The Court was sufficiently satisfied that the consent orders giving effect to the settlement between the active parties should be made, despite the liquidator's non-consent and submissions.

Court Disposition

Orders made substantially by consent. In ACD 36 of 2012, leave was granted to proceed against Trojan and a declaration was made that Trojan holds $325,000 on trust for Kevin Richardson, with costs questions reserved. In ACD 67 of 2012, the proceeding and counterclaim were dismissed with no orders as to costs.

Orders

  • ['In ACD 36 of 2012, pursuant to s 471B of the Corporations Act 2001 (Cth), leave granted to the plaintiffs to proceed against ACN 115 869 595 Pty Limited (In Liquidation) formerly called Trojan Hospitality (ACT) Pty Limited (In Liquidation).' 'In ACD 36 of 2012, declared that Trojan holds the sum of $325,000 paid...