Stanton (WA) Pty Limited (In Liquidation) v Vasquez Investments Pty Limited [No.2] [2017] NSWSC 258

Stanton (WA) Pty Limited (In Liquidation) v Vasquez Investments Pty Limited [No.2] [2017] NSWSC 258

The plaintiff's right of indemnity as trustee did not lapse upon its forced resignation and had crystallised when the Prinwalla judgment became binding. The removal of the plaintiff as trustee and appointment of the first defendant were undertaken in circumstances supporting an inference that they were intended to defeat judgment creditors. The related changes to the second defendant's share register should therefore be corrected. The subsequent issue of 19,000 shares was ineffective because the second defendant's constitution required a properly recorded and signed sole-director resolution and prior offer to existing shareholders or a general meeting resolution, none of which was...

Jurisdiction
Australia
Judgment Date
15 March 2017
Procedural Posture
Equity Commercial List Proceeding / Principal Judgment
Outcome
Plaintiff to have declarations and orders sought.
Legal Topics
['trustee Indemnity' 'fraudulent Disposition in Fraud of Creditors' 'correction of Share Register' 'share Issue and Dilution' 'company Constitution Compliance' 'receivership']
['trusts and Trustees' 'corporations' 'equity' 'insolvency'] ['trustee Indemnity' 'fraudulent Disposition in Fraud of Creditors' 'correction of Share Register' 'share Issue and Dilution' 'company Constitution Compliance' 'receivership']

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Procedural Posture

Equity Commercial List Proceeding / Principal Judgment

Legal Issues

  1. 1 ['Whether the plaintiff, after being removed as trustee of the Stanton Investment Trust, remained entitled to be indemnified out of trust assets for the Prinwalla judgment and other trustee liabilities.' "Whether the plaintiff's removal as trustee and replacement by the first defendant was a disposition or alienation of property in fraud of creditors." 'Whether the second defendant should correct its share register under s 175 of the Corporations Act 2001 (Cth).' "Whether the issue of further shares by the second defendant was ineffective because it did not comply with the second defendant's constitution or because it was undertaken in fraud of creditors."]

Ratio Decidendi

The plaintiff's right of indemnity as trustee did not lapse upon its forced resignation and had crystallised when the Prinwalla judgment became binding. The removal of the plaintiff as trustee and appointment of the first defendant were undertaken in circumstances supporting an inference that they were intended to defeat judgment creditors. The related changes to the second defendant's share register should therefore be corrected. The subsequent issue of 19,000 shares was ineffective because the second defendant's constitution required a properly recorded and signed sole-director resolution and prior offer to existing shareholders or a general meeting resolution, none of which was...

Court Disposition

Plaintiff to have declarations and orders sought.

Orders

  • ['Declarations and orders made in accordance with paragraphs 1 to 10 as amended of the short minutes of order dated 15 March 2017.' 'The plaintiff is entitled to declaratory relief recognising its right to indemnity out of trust assets.' 'Mr Barnden is to be appointed receiver of the property of the trust.' 'The...