Behnke v Bede Shipping Co Ltd

Judgment 1On 16 April 2013 the plaintiffs, Stephen James Parbery and Marcus William Ayres of PPB Advisory, were appointed by the Australian and New Zealand Banking Group Limited (ANZ) as joint and several Receivers and Managers of a number of companies (the Companies) of which the first defendant, Christopher William Crawley, and his wife, the second defendant, Judith Crawley, are directors. The Companies are Kavia Holdings Pty Limited, BVH Management Pty Limited, Rocks Catering Pty Limited, Marsico Holdings Pty Limited, J & J O'Brien Pty Limited, Aldonet Pty Limited and Batent Holdings Pty Limited. The Companies have been referred to at times as the J & J O'Brien group of companies. The principal business of the Companies is the ownership and operation of a number of hotels including Jackson's on George and the Belvedere Hotel in the Sydney CBD. 2On 16 April 2013 Quentin Olde and Michael Ryan of FTI Consulting (Australia) Pty Ltd, were appointed by ANZ as joint and several Administrators of the Companies. 3On 19 April 2013 the plaintiffs commenced these proceedings against the defendants seeking orders pursuant to s 420(2) and s 431 of the Corporations Act 2001 (Cth) (the Act) for the delivery up of the books and records of the Companies. The plaintiffs amended their claim to join Vensel Pty Ltd (Vensel) as the third defendant and to seek declarations and orders in respect of a Sunseeker Manhattan 62 boat (the Sunseeker) alleged to be owned by the second plaintiff, Aldonet Pty Ltd (Aldonet). 4The proceedings were heard on 25 and 26 July 2013 when Mr IR Pike SC, leading Mr DR Sulan, of counsel, appeared for the plaintiffs, and Mr DE Grieve QC, leading Mr A Ogborne, of counsel, appeared for the defendants. Judgment was reserved on 26 July 2013. On 8 August 2013 the plaintiffs made an application to re-open their case that was not opposed. The further hearing took place on 20 August 2013 after which judgment was again reserved. 5The plaintiffs relied upon the affidavits of Marcus William Ayres sworn on 19 April 2013, and affirmed on 15 May 2013 and 29 May 2013; Luke Alan Hamblen sworn on 28 May 2013 and 16 July 2013; Jessica Kang sworn on 18 July 2013; and Richard Yap sworn on 6 August 2013. The defendants relied upon the affidavits of Christopher William Crawley sworn on 24 May 2013, 9 July 2013, 25 July 2013 and 14 August 2013 and Alec Tomas Zeglis sworn on 14 August 2013. Issues 6The real issues in dispute are: (1) whether the defendants have failed to deliver up the books and records of the Companies, such that they should be ordered to do so; (2) whether the Sunseeker is an asset of Aldonet such that the plaintiffs are entitled to possession; (3) if, as the defendants allege, the Sunseeker was transferred by Aldonet to Vensel for $1 pursuant to a Bill of Sale dated 20 July 2011, whether that transfer was in breach of the first and second defendants' duties to Aldonet; and (4) whether Vensel took possession of the Sunseeker with knowledge of the first and second defendants' breach of duty. The Books and Records Issues 7The first category of the books and records of the Companies, the subject of the plaintiffs' claims, are those of the hotels, Jackson's on George (of which Marsico Holdings Pty Ltd was the owner) and the Belvedere Hotel (of which Kavia Holdings Pty Ltd was the owner). The first group of books and records is the Property Records being copies of any leases; subleases or licences; valuations of the properties that have been conducted; copies of any written offers to purchase Jackson's on George; and draft contracts for sale. The second group is the Due Diligence Records, being the floor plans and surveys for all levels; structural and building services reports; building certificates; pest reports; hazardous material reports; and gaming machine entitlement certificates. 8The next category of books and records sought by the plaintiffs is as described in paragraph 16 of the Statement of Claim: The books of the Companies includes any email record in relation to the business of any of the Companies stored on any email server used from time to time by the Companies including emails received by or sent by any of the first defendant, the second defendant or Ms Amanda O'Kane (Email Records). 9Ms O'Kane was employed as the financial officer of the Companies from about 2011 to 2013. The plaintiffs claim that they have requested these books and records from the first and second defendants and they have failed to provide them. 10The defendants submitted that the plaintiffs have the onus of adducing some evidence to demonstrate that they do not have documents of a particular kind which is in some way inhibiting them in the performance of their duties, in particular in proceeding with the sale of any of the hotels. It was submitted that the plaintiffs have proceeded presumptuously rather than by seeking to prove: (a) that certain identified documents exist; (b) that the defendants have possession of them; and (c) that an order for production is necessary. The defendants contend that there is no evidence to support the plaintiffs' claims and there is no utility in granting what amount to mandatory injunctions. Background 11The appointment of both Administrators and Receivers and Managers to the Companies on 16 April 2013 has created some difficulties in the efficient production of the books and records of the Companies to the plaintiffs. The Administrators served a Notice under s 438C of the Act on the Companies for delivery of the books of the Companies to the Administrators. 12Mr Ayres attended Mr Crawley's office on 19 April 2013 at approximately 3.00 pm. It is apparent that after he was ushered out of the office by Mr Crawley he attended upon his solicitors, Clayton Utz, and swore the affidavit in support of the Originating Process to be filed that afternoon. After Mr Ayres instructed Clayton Utz he returned to Mr Crawley's office and there met with the Administrator who, unbeknown to him, had made an arrangement with Mr Crawley for the collection of the books and records. 13On 22 April 2013 Mr Crawley wrote to the plaintiffs referring to his telephone conversation with Mr Parbery that morning. That letter included the following: I confirm my advice that the voluntary administrators have collected all of the books and records of the various companies and have advised that they will liaise with your offices in relation to access. Each of the companies have individual books and records and those are the books and records that were collected. Your Mr Ayres was present at my office on Friday afternoon when the voluntary administrators commenced the process of extracting those books and records. The books and records extracted were taken from my offices. On that basis alone, the application you have peremptorily brought to the Court should be dismissed. 14That letter included reference to the plaintiffs' request to gain access to the servers. Mr Crawley confirmed that the historical data could be provided and he understood there was a virtual server in "the cloud" that was not owned by any of the Companies. Mr Crawley advised that he had spoken with the IT company that provided services to the Companies and that it was possible for a physical copy to be taken and provided on a USB stick, but that this would take 10 to 12 hours. Mr Crawley further advised that the vast majority, if not the entirety, of the data were in the possession of the Administrators. That letter included the following: I emphasised in my earlier conversation that I wish to assist and give every cooperation, however what is now being sought is not what is referred to in your application. Notwithstanding the above, I sought some other options from the service provider to the independent entity which holds the IT contract. The proposed solution is that the service provider would provision new servers. All of the historical books and records of the company would be copied to the new servers and access would be given in relation to those servers over the network. As part of this process a new email server would be provisioned and the individual email boxes of the managers of the hotels to the extent of the material on them would be reloaded onto the new server. This would ensure that the confidential information is secured and that you receive a copy (electronic) of the books and records, notwithstanding as I have stated above that all the actual books and records are in the hands of the voluntary administrators. 15The Companies employed Origin Consulting Services Pty Ltd (OCS) as its IT provider. The director of OCS, Alec Zeglis, advised the Administrators' staff at 10.13 am on 23 April 2013 as follows: I can confirm that Mr Crawley has allowed OCS to proceed with the export of company books & records. I will be in Circular Quay at 1045, will call you on arrival. ... I understand there are a number of systems that J & J O'Brien use which coincide with Mr Crawley's other entities hosted on his servers. My recommendation is that OCS re-deploys the relevant servers & infrastructure for J&J O'Brien ASAP to continue operating across the same network and same applications. It will take approximately 48 hours to re-deploy the servers and migrate all J&J O'Brien data off Mr Crawley's existing cloud servers. An approximate set up bill of $5800 AUD exc GST is estimated and an ongoing expectation that the hosting fees will be fulfilled by the receivers at $3690 per month. This will secure H&L, Dynapay, ACCPAC, and Email Exchange systems. This will allow immediate & ongoing continuity of IT operations across the J&J O'Brien Group without any dependency of Mr Crawley's servers or infrastructure. Could you please pass my details on to the Receivers with the above correspondence? 16At 11.46 am on 23 April 2013 the Voluntary Administrators' staff forwarded the above email to the Receivers and advised as follows: Alec has advised that he has just left a message for Marcus in relation to providing assistance to the Receivers in obtaining information required. As of 11am this morning, the Administrators have now received the following information from Mr Crawley: ■ The physical files detailed in the updated listing (attached) (approx. 80 folders and some other document bundles) ■ A hard drive with copies of the following data files from the cloud server: ● Copies of the most recent data files from the Accpac accounting program for six companies (excluding Batent Holdings); ● Copies of payroll files for the relevant employing entities from two different payroll programs; and ● Copies of Winforecast files for a number of the trading businesses. To date, we have not received copies of the email files for the companies, nor other document files (such as word etc). I have asked Alec to provide guidance as to how these files can be obtained given that they are apparently co-mingled on the server with records of other Crawley entities which we have not been appointed over. Alec has detailed his approach below. 17The plaintiffs entered into a commercial arrangement with OCS to assist them in obtaining access to the books and records of the Companies. 18On 26 April 2013 Clayton Utz wrote to Bruce & Stewart Lawyers, the solicitors for the defendants. Clayton Utz advised that the plaintiffs had conducted a review of the hard copy documents produced to the Administrators by the defendants and that they had been unable to locate any of the documents comprising the Property Records and Due Diligence Records of Jackson's on George and the Belvedere Hotel. Clayton Utz requested that if the documents had been produced to the Administrators, the defendants should advise where the plaintiffs might locate them and if they had not been produced, that they be produced to the plaintiffs immediately. 19On 1 May 2013 Clayton Utz requested advice from Bruce & Stewart as to when the defendants were likely to be in a position to respond to the request for the books and records in their letter of 26 April 2013. Clayton Utz also requested access to a storage room in Surry Hills where Mr Crawley apparently stored a large number of the Companies' documents. 20On 3 May 2013 Bruce & Stewart responded to Clayton Utz earlier letter of 26 April 2013 indicating that the defendants did not understand that any documents were missing and stating that they were not withholding any documents. The letter included the following: To the extent to which your requests are nothing more than an enquiry to discover whether further documents may exist, our clients are more than willing to assist in that location exercise. There are at least 16 boxes of documentation located at Mr Crawley's legal practice, which were previously inspected by the administrators. Yesterday the Administrators' representative indicated to Mr Crawley that he would shortly be attending to further inspect (or collect) those 16 boxes. There may be some historical documents at the storeroom. Mr Crawley believes that the latest fire inspection reports remain on the premises of each hotel. There are other documents located at each of the hotels which may fall into some of the categories you have set out. When your writer last appeared in Court in this matter he informed Mr Pike SC that each hotel had a back office at which documentation was stored pertinent to that hotel and a request that attempts should be made by your clients to review those records prior to making further (off the cuff) allegations against our clients about missing documents and records. 21That letter also included advice that the storeroom contained voluminous files not related to any of the Companies but rather to Mr Crawley's legal practice. An invitation was extended to the plaintiffs to attend the Surry Hills premises and the plaintiffs subsequently collected documents from these premises. 22On 3 May 2013 the Administrators wrote to Mr Crawley referring to the Notices that had been served under s 438C of the Act and in terms that included the following: I note that you have previously arranged for copies of some emails relating to the trading businesses of the Companies to be provided to the Receivers and Managers (PPB Advisory) and to the Administrators. Thank you for providing this information. In addition to what has already been provided, the Administrators are also required to obtain a copy of all other email records of the Companies. You have previously advised that the email server used by the Companies is also used by other related parties such as A.F Crawley & Co, and that email records are intermingled. 23The Administrators then advised that they had consulted with Mr Zeglis of OCS who had advised that the emails contained in the server relating to the Companies were capable of being searched and identified by keyword. The Administrators also advised that once the relevant emails had been identified using the search criteria, further discussions could occur with Mr Crawley. 24On 9 May 2013 the Administrators wrote to Bruce & Stewart in terms that included the following: In my letter of 2 May 2013, I also provided a method for the Administrators to obtain all relevant email records of the Companies to which they are entitled to under s438 of the Act. The method is to deal with Mr Crawley's concerns regarding the privacy of the clients of his legal practice. My staff are ready to obtain copies of these records immediately, however Mr Crawley has not responded to our requests to arrange a time for this to occur. My staff and I have repeatedly advised that we have no interest in obtaining email records that are not books of the Companies to which the Administrators are entitled under s438C of the Act. ... Mr Crawley has previously advised my staff by email that he is "prepared to cooperate in every possible way". To date, the Administrators consider that the assistance Mr Crawley has provided has been selective and inadequate. Should the Administrators not receive the information and access to records detailed in this letter and our previous correspondence, I will be forced to report Mr Crawley's non-compliance with his duties as a director under the Act to ASIC. 25On 13 May 2013 Clayton Utz wrote again to Bruce & Stewart advising that the plaintiffs had reviewed the material stored in the 16 boxes that were collected from the Surry Hills premises and had also reviewed the "back offices" of the hotels. They advised that none of the Property Records or the Due Diligence Records, as requested in their letter of 26 April 2013, were located in either of those places. Clayton Utz also noted the ongoing dispute between the defendants and the Administrators regarding the provision of emails in relation to the Companies. In that regard the letter included the following: We note that in a letter dated 3 May 2013 to Mr Crawley, the voluntary administrators suggested the means by which Mr Crawley could use search terms to separate the emails comprising books and records of the Companies from those which do not. In light of your clients' obligations under the Corporations Act 2001 (Cth), they are required, as a matter of urgency, to either utilise the procedure suggested by the voluntary administrators and deliver up all email documentation belonging to the Companies, or devise an alternative means of doing so. 26Clayton Utz requested that these matters be attended to by 5.00 pm on 15 May 2013. Although the solicitors communicated further in relation to the books and records of the Companies, the defendants have resisted any production of the Email Records. 27Mr Ayres gave evidence that he was concerned to have access to the Property Documents and Due Diligence Documents in relation to the hotels to ensure that prospective purchasers were provided with the necessary details in relation to the hotels (tr 31). Although the Information Memorandum provided to the prospective purchasers by Jones Lang LaSalle in relation to the sale of Jacksons on George includes a disclaimer, Mr Ayres did not agree that this disclaimer protected him from personal liability for non-disclosure (tr 42). 28In respect of the Email Records Mr Ayres gave the following evidence-in-chief (tr 34-35): Q. Why do you require Mr Christopher Crawley's emails? A. Through the course of my dealings with this company, Mr Crawley, which included preparing a report for the ANZ Bank as an independent accountant, I was advised through the course of that review, that particular aspects of the operations of these businesses fell solely in Mr Crawley's auspices, and that no other person had control of that information, and for that reason, I believe that Mr Crawley actually had some information that might be relevant to the marketing campaign or our understanding of the asset that we're trying to sell. Q. In that answer, you referred to, I think the phrase "particular aspects". Do you recall doing that? A. I do. Q. Are you able to elaborate on what those particular aspects are? A. Certainly. The proposition was put to me that Mr Crawley dealt with the hire and property issues. HER HONOUR: Q. The which? A. The hire and property issues. To explain that, Jacksons on George is part of a rezoning, or I should say, buildings adjacent to Jacksons on George are part of a significant rezoning in the Circular Quay precinct. The position of Jacksons on George and the relevant property aspects, whether there's encumbrances, approaches made to particular parties about joining forces or joining properties to better place the property on the market, all those matters as I understood it, were dealt with by Mr Crawley. 29Mr Crawley was asked about the use of emails for communications with staff in relation to the business of the Companies. He gave the following evidence in cross-examination (tr 47): Q. And that contact was regular? A. I would go to meetings with them, yes, on the various premises. Q. You would also communicate with them, would you not, by email? A. Very infrequently. Q. But you would, would you not, communicate with them by email? A. Yes, very infrequently. 30In later evidence Mr Crawley said that his contact with his employees was always face to face and that his email communications were "minimal" (tr 82). 31Mr Crawley was asked further questions in relation to the emails that he sent in relation to the business of the Companies and he gave the following further evidence (tr 88-89): Q. You have not provided access, have you, to your email account? A. No, I refuse to. Q. Even though you accept that in that email account, there would be communications from you in relation to the companies. That's correct, isn't it? A. Minimal, and anything sent to the managers [would] be in their inboxes. The fact that it's sent doesn't matter. They've already got it. Q. You haven't gone back, have you, and reviewed your email account? A. I had Mr Zeglis look at it, and he said there's over 13,000 emails there, and if you wanted to do the search that your fellow said, it would take in excess of six months because you'd have to read every email and see what the context was. ... HER HONOUR: ... Q. The receivers want to know, you see, the receivers want to look at your emails in respect of your dealings, in particular, in relation to the Sunseeker. You understand that, don't you? A. Sorry? Q. In particular, in relation to the Sunseeker? A. Yes, your Honour. Q. And so you still resist any access to your email account? A. Yes, your Honour, because mixed in it are all of my client matters. Consideration 32A receiver of property of a corporation has power to take possession of the property of that corporation: s 420(2)(a) of the Act. There is no issue between the parties that the plaintiffs are entitled to take possession of the books and records that are the property of the Companies. 33Mr Crawley refused to provide some of the books and records of the Companies to the plaintiffs on the basis that they were the subject of a lien. It is unnecessary to deal with this claim because the evidence in support of it was rejected and no leave was taken up to call evidence to sustain it. It was accepted that the lien argument had "fallen away" (tr 27). 34The defendants submitted that the general order sought by the plaintiffs for the delivery up of the books and records of the Companies is in reality a mandatory injunction. It was submitted that the mere fact that the Act provides that the receivers have an entitlement to the books and records of the Companies does not assist the plaintiffs in these proceedings. It was submitted that the defendants are entitled to know precisely what they are supposed to produce. It was submitted that caution needs to be exercised and any order must be formulated in very precise terms. In this regard the defendants relied upon Redland Bricks Ltd v Morris [1970] AC 652 at 666. 35The defendants accepted that an order should be made for the production of the documents that had been the subject of the lien claim. That order was made at the conclusion of the hearing on 26 July 2013. After Mr Crawley was cross-examined on 26 July 2013 an order was also made for the production of Ms O'Kane's emails. 36Mr Yap is a director of PPB Advisory and is assisting the plaintiff, Mr Ayres, with the conduct of the receivership of the Companies. After orders were made for access to Ms O'Kane's email account (on 26 July 2013) Mr Yap reviewed those emails and grouped and collated them for the period May 2012 to 17 April 2013. Mr Yap also printed out a sample of the emails of the communications between Mr Crawley and Ms O'Kane in that period. During the period May 2012 to 17 April 2013 Mr Crawley sent 547 emails to Ms O'Kane or approximately 45 per month. The plaintiffs claimed that Mr Crawley's evidence that his communications by email were "very infrequent" or "minimal" is unreliable evidence and should be rejected. 37Notwithstanding the infelicitously worded claim in paragraph 16 of the Statement of Claim, there is no real issue between the parties that what the plaintiffs are entitled to under the Act are the books and records "of" the Companies rather than the books "in relation to the business" of the Companies: Hall v Sherman (2001) 165 FLR 1 at 12-14 [64]-[78]. In Hall v Sherman, Austin J said at 14 [77]: Nor would it be appropriate, by declaration or order, to impose on the liquidators the duty, either immediately or in the future, of trawling through tens of thousands of documents to ascertain which documents were books of the corporation to which the plaintiff's statutory right would attach. 38Mr Crawley has conducted all the discussions and negotiations with the plaintiffs. Mrs Crawley has taken no active or obvious role in respect of the plaintiffs' requests for the books and records of the Companies. 39The submission that the plaintiffs have not established that the defendants have resisted the production of the books and records of the Companies cannot be sustained. It is not in issue that there has been quite a deal of co-operation by Mr Crawley with the plaintiffs. However the resistance to the production of Ms O'Kane's emails; the resistance to the production of the documents that were the subject of the lien claim; and the resistance to the production of Mr Crawley's emails clearly establish that it was necessary for the plaintiffs to bring these proceedings. 40The only outstanding express resistance to production is in respect of Mr Crawley's emails. The defendants submitted that because Mr Crawley utilised the email account of his legal practice and intermingled the Companies' emails with those of the legal practice, the defendants are not obliged to produce them to the plaintiffs. I do not accept this submission. There is no doubt that mechanisms can be put in place, with the appropriate confidentiality regime, if necessary, to ensure that the books and records of the Companies are produced from the email account in which the Companies' records were created. 41It is clear from the evidence that when acting as a director of the Companies, Mr Crawley communicated by email with at least Ms O'Kane on a regular basis in the conduct of the affairs of the Companies. However the defendants submitted that it was not necessary for Mr Crawley's email account to be accessed because all of the emails that he sent to Ms O'Kane and to the Managers of the various Hotels operated by the Companies (all of whose emails have been produced) would be in the recipients' inboxes. It was submitted that there is no necessity to get the "other side" of the email from Mr Crawley's email account. That submission cannot be sustained. The fact that the recipients of the emails may have received communications from Mr Crawley does not mean that they are the only recipients of emails from Mr Crawley. Mr Crawley's communications as a director of the Companies with third parties are also the records of the Companies. 42I am satisfied that the defendants' submissions in relation to the plaintiffs' failure to prove their case must be rejected. Since 19 April 2013 Mr Crawley has resisted production and refused to allow the plaintiffs access to the books and records of the Companies that comprise the email communications he generated or received as a director of the Company. 43On the final day of the hearing it was submitted that the documents in the email accounts are owned by the legal firm "even if they speak about matters which relate to the affairs of" the Companies (tr 137). No authority was relied upon in support of this submission. 44When Mr Crawley was acting as a director of the Companies the emails he was generating and receiving on behalf of the Companies (notwithstanding that he was utilising the email address of the legal firm and notwithstanding that he is a practising lawyer) are the books and records of the Companies and remain the property of the Companies. 45Mr Crawley was quite adamant that he had "minimal" email communication as a director of the Company. I am satisfied that this claim was without foundation. Mr Crawley's protestations cannot be trusted. I am satisfied that it is appropriate to make an order in general terms that Mr Crawley and Mrs Crawley produce the books and records of the Companies including but not limited to the email accounts of AF Crawley & Co that contain the books and records of the Companies. There has previously been some discussion, the subject of evidence in the proceedings, that a mechanism can be put in place to extract the books and records of the Companies from the emails. The parties should agree on a form of Order for that to occur. Sunseeker Issues 46The plaintiffs seek a declaration that the Sunseeker is an asset of Aldonet and that it is the subject of a Fixed and Floating Charge dated 29 January 2009 granted by Aldonet in favour of ANZ. The plaintiffs make an alternative claim for a declaration that the Sunseeker is an asset of Aldonet in its capacity as trustee for the Christopher Crawley Trust No 2. 47The plaintiffs also seek an order pursuant to s 66 of the Supreme Court Act or s 1324 of the Act that the defendants be restrained by themselves, their servants or agents from disposing, transferring, encumbering or otherwise dealing with the Sunseeker. The plaintiffs also seek an order that the first and second defendants do all things necessary to deliver to them the Sunseeker and the books and records relating to the Sunseeker. 48The plaintiffs allege that the first and second defendants have claimed that the Sunseeker was sold by Aldonet, as trustee for the Christopher Crawley Trust No 2 to Vensel, or alternatively to Vensel in its capacity as trustee of the Christopher Crawley Family Trust No 1, on or about 20 July 2011 for $1. The plaintiffs claim that if the purported sale resulted in the transfer of title of the Sunseeker from Aldonet to Vensel, or alternatively to Vensel in its capacity as trustee of the Christopher Crawley Family Trust No 1, the first and second defendants breached their duties owed to Aldonet under ss 180(1) and 181(1) of the Act. It is also alleged that the defendants have breached their fiduciary duties owed to Aldonet to exercise their powers and to discharge their duties in good faith and in the best interests of Aldonet. It is alleged that the consideration paid to Aldonet by Vensel did not give fair or reasonable value to Aldonet for the transfer of title in the Sunseeker. 49The plaintiffs claim that the first defendant is a director of both Aldonet and Vensel and that he signed the Bill of Sale that recorded the amount paid by Vensel for the Sunseeker as $1. The plaintiffs claim that Vensel in its own right, or in its capacity as trustee of the Christopher Crawley Family Trust No 1, took title of the Sunseeker with knowledge of the defendants' breaches of statutory and fiduciary duties and that Vensel holds the Sunseeker on constructive trust for the plaintiffs. The plaintiffs make an alternative claim that Vensel was directly or indirectly knowingly concerned in and party to the contraventions by the defendants within the meaning of s 1324(1)(e) of the Act. 50The defendants claim that the Sunseeker was purchased by Vensel for valuable consideration and that the plaintiffs have adduced no evidence to prove that it was not a bona fide purchaser. The defendants also claim that the Charge granted by Aldonet to ANZ operated as a floating charge over the Sunseeker and not as a fixed charge. It is contended that the floating charge over the Sunseeker had not become a fixed charge at the time of the sale (20 July 2011) because the event which crystallised it, the appointment of the plaintiffs, did not occur until 16 April 2013. It was submitted that, in any event, the Charge does not purport to secure any interest over the Sunseeker. The defendants deny that there has been any breach of the Act or their fiduciary duties owed to Aldonet. Background 51The Sunseeker was completed in 1994. Its first year of registration under the Shipping Registration Act 1981 (Cth) (the SR Act) was 1996. 52On 8 January 1999 Aldonet, as Owner, entered into a Deed of Covenants Ship's Mortgage with debis Financial Services Inc (debis). That Deed included the following: 1.1 Parties This Deed of Covenants ("Deed") is made and delivered by Owner to debis. Owner is the absolute, beneficial, and unencumbered owner of 64/64th of the vessel described above. 53Aldonet is registered as the holder of the business name "Blue Diamond Charters" for the period from 17 December 1996 to 17 December 2014. 54On 21 December 2001 Anchorage Marine Underwriting Agency Pty Ltd issued a renewal certificate for Marine Hull Insurance to the "Insured", Aldonet "trading as Blue Diamond Charters". The premium for that coverage was $13,243.45. The total sum insured was $1.6 million. 55On 7 February 2003 Aldonet (in a letter signed by Mr Crawley) wrote to the ANZ in the following terms: RE: ALDONET PTY LIMITED RE SUNSEEKER VESSEL PAYOUT TO DEBIS FINANCIAL SERVICES I refer to our conversation last week and your advices of "the in principal (sic) facility" being available to Aldonet for the equivalent in Australian dollars for an advance of approximately US$ 420,000.00. The purchase of the vessel was effected through a transaction with an off-shore party and the funding of the purchase by Aldonet in part was provided by debis Financial Securities, (the Damlier Benz Chrysler Finance Company arm). The Australian dollar having risen in recent weeks has provided and (sic) opportunity to pay out the US dollar loan and also take advantage of the lower interest rates. Aldonet is in the process of negotiating the sale of the boat, its intention being to sell the boat this financial year. The boat will be sold with the business operation being Blue Diamond Cruises. The package of boat and business is being offered for sale and a prospective purchaser has indicated his willingness to purchase the boat with the price to be negotiated between $1.25 and $1.35 million. Accordingly I should be obliged to receive your confirmation to the terms of the advance to be secured not to Aldonet but to myself as I will on-lend the funds to Aldonet in order to facilitate the re-payment of the current liability. The term and nature of the facility, either as a fully drawn advance with fixed interest or variable rate can be determined on your confirmation of the approvals as advised. 56On 12 February 2003 Mr Crawley personally authorised ANZ to pay out the debt to debis. 57In Aldonet's Financial Report for the year ending 30 June 2008, the Balance Sheet included an item of "Property, Plant and Equipment" which recorded the "Motor cruiser" at $1,264,349.08 for 2007 and for the same value in 2008. The defendants signed the Directors' Declaration on 6 February 2009. 58Aldonet's Financial Statements for the year ended 30 June 2009 included the same entries. Once again the defendants signed the Directors' Declaration. 59Aldonet's Trading, Profit and Loss Statement for the year ended 30 June 2010 included charter fees of $50,840.52, marina fees of $15,680 and charter agency fees of $430. Once again the motor cruiser was listed as an item of Property, Plant and Equipment with a value of $1,264,349.08. The Depreciation Schedule to the Company Tax Return for 2010 listed the motor cruiser with a figure of $1,192,767 as cost of plant as at 15 August 1998. The opening written down value was recorded as $84,505. The diminishing value was recorded at $16,901. The closing undeducted cost was recorded as $67,604. 60Aldonet's Financial Report for the year ended 30 June 2011 once again included the motor cruiser with a value of $1,264,349.08. The Company Tax Return for 2011 also listed the motor cruiser in the Depreciation Schedule with a closing undeducted cost of $54,083. 61Mr Crawley gave the following evidence in paragraph 20 of his affidavit sworn on 24 May 2013: At no time have I authorised or directed Aldonet's accountants to include the Sunseeker as an asset of that company or to claim depreciation in its name. 62Mr Crawley gave evidence in cross-examination that when he declared that the contents of Aldonet's financial statements were true, he would have read the contents of the document and satisfied himself that they were accurate (tr 66). He also accepted that the financial statements recorded the Sunseeker as an asset of Aldonet in its own right and that they also recorded the revenue and expenses from the operation of the Blue Diamond Charters business (tr 66). 63Mr Crawley was taken to each of the declarations that he made as a director of Aldonet in which the Sunseeker was recorded as an asset and agreed that he took his obligations as the public officer of Aldonet seriously (tr 69). He gave the following evidence (tr 68): Q. What I want to suggest to you, Mr Crawley, is that each of the financial statements and tax returns that have been provided to the receivers, either by you or by your accountants, record the boat as being an asset of Aldonet in its own right? A. That's correct. Q. You're not able to point to any financial statement? A. No, I'm not. Q. That records the boat as being other than an asset of Aldonet in its own right? A. No, I cannot. 64In the circumstances of this evidence it is not possible to accept Mr Crawley's affidavit evidence that at no time did he authorise or direct the accountants to include the Sunseeker as an asset of Aldonet or to claim depreciation in its name. Mr Crawley sought to suggest that the financial officer, Ms O'Kane, was the person responsible for drawing up or causing the financial statements to be drawn up. However that is a very poor excuse for giving affidavit evidence of the kind that he gave when clearly he had declared as accurate the contents of the financial statements in which the Sunseeker was listed as an asset of Aldonet in its own right. 65Mr Crawley claimed in his affidavit of 24 May 2013 that "at no time" had any application for finance been made by Aldonet to ANZ in respect of the Sunseeker (par 12). Clearly the letter of 7 February 2003 seeks finance from the ANZ to pay out debis. However, Mr Crawley requested the ANZ provide the advance to him so that he could "on-lend the funds to Aldonet". 66By Mortgage Debenture executed on 29 January 2009, Aldonet granted ANZ a Charge which included the following (cl 1.1): charged property the Company's undertaking and all its assets, both present and future, including, without limitation: (a) its uncalled capital and uncalled premiums; (b) all assets held by the Company as a trustee; and (c) all assets acquired after the date or dates on which the floating charge created under this charge crystallises; ... property real and personal property and includes any estate, share and interest in any real or personal property, any thing in action, and any other right or interest of any kind; 67Part 2 of the Charge includes the following relevant provisions: 2.1 Charging provision The Company charges in favour of ANZ as security for payment to ANZ of the secured money: (a) as trustee, all of the charged property held now or in the future by the Company as trustee; and (b) as beneficial owner, all other charged property. 2.2 Fixed Charge This charge is a fixed charge over all of the Company's right, title and interest (legal or beneficial), both present and future in, to, under or derived from: (a) any freehold or leasehold property or any fixtures, plant and equipment (other than stock in trade); ... 2.3 Floating Charge Subject to clause 2.6, this charge is a floating charge over any of the charged property which is not subject to an effective fixed charge. 2.4 Restrictions on dealing with charged property The Company will not, unless ANZ agrees first in writing: (a) mortgage, charge or otherwise encumber the charged property (or attempt to do so); (b) permit any encumbrance other than this charge to exist over the charged property; or (c) part with, sell, transfer or otherwise dispose of the charged property or any interest in the charged property (or attempt to do so) other than as permitted by clause 2.5. 2.5 Dealing with assets subject to floating charge The Company may, in the ordinary course of its ordinary business, dispose of or deal with any of the property in respect of which this charge operates as a floating charge. 68The floating charge becomes a fixed charge "over all the property previously subject to a floating charge, automatically and immediately, without any further act on ANZ's part being necessary" if the charge "becomes enforceable" (cl 2.6(a)(i)). 69A Bill of Sale dated 20 July 2011, was signed under seal by Mr and Mrs Crawley. That Bill of Sale included under the heading "Particulars of Sale" the seller's full name as Aldonet "as Trustee for the Christopher Crawley Trust No. 2". The Buyer's full name was identified as "Vensel Pty Limited". Although what was originally typed in this section was "as Trustee for the Christopher William Crawley Family Trust No 1", those words were crossed out. In their place the Company's address was handwritten together with the words "Australian Company incorporated in the State of New South Wales". The amount paid as consideration was recorded as $1.00. The Bill of Sale is stamped as having been "Entered in Register on 25 May 2012 at 16.22 pm". 70On 13 June 2012 a Registration Certificate was issued in which the Deputy Registrar of Ships certified that the Sunseeker was registered under the Shipping Registration Act 1981 (Cth) (the SR Act) and that, inter alia "the particulars of ownership" set out in the Certificate were "in accordance with the relevant entry in the Australian Register of Ships". The Particulars of Ownership in the Certificate recorded Vensel as the owner of 64 shares. 71On 24 December 2012 Club Marine Insurance issued a new policy of insurance to Vensel as the insured. The policy type was recorded as "Pleasurecraft Commercial" for the period commencing on 24 December 2012 and ending on 24 December 2013. 72In its letter of 24 April 2013 to Bruce & Stewart, Clayton Utz advised as follows in paragraph 7: In the meantime, we have been instructed that J & J O'Brien Pty Limited ACN 001 872 966 appears to have owned at least one boat (a Sunseeker Manhattan 62) and that boat was transferred to Vensel Pty Ltd ACN 000 304 647 (an entity of which the first defendant is a director and the company secretary) (Vensel) on or about 27 December 2012. We have been further instructed that the books and records do not contain any documents which relate to this asset or the transfer of this asset to Vensel. As a matter of urgency, please arrange for the defendants to deliver up all books and records relating to this asset or this transaction to the plaintiffs. 73On 24 April 2013 Bruce & Stewart responded in terms that included the following: As to the matter set out at item 7 of your letter, we are instructed that the short answer to that enquiry is that there are no books and records to deliver up because at no time has J&J O'Brien Pty Limited ACN 001 872 966 owned a boat (whether a Sunseeker Manhattan 62 or any other) and for that reason no transfer documents by that entity exist (or existed). 74At this time the Sunseeker was moored at Birkenhead Marina. On 7 May 2013 Mr Crawley advised the Marina Manager that "no one is to go on his boat whilst at the Marina". On the morning of 8 May 2013 the Marina Manager noticed that the Sunseeker was no longer at the Marina. When he telephoned Mr Crawley, he was advised that he had organised for someone to take it from Birkenhead because he did not want to accumulate any more Marina fees. 75On 13 May 2013 Clayton Utz wrote to Bruce & Stewart in terms that included the following: We first informed you on 24 April 2013 that following our clients' preliminary review of the material made available by your clients, it appeared that certain books and records of the Companies were missing, particularly in relation to the apparent transfer of a boat (a Sunseeker Manhattan 62) (Boat) to Vensel Pty Ltd or some other entity with which your clients are involved. We note that, to date, there has been no response whatsoever from your clients regarding the whereabouts of the books and records relating to the Boat. 76On 15 May 2013 Clayton Utz wrote to Bruce & Stewart in terms that included the following: 4 For the reasons set out in the affidavit of Marcus Ayres, we have been instructed that the Sunseeker is an asset of Aldonet Pty Ltd (Administrators Appointed) (Receivers and Managers appointed) (Aldonet). Accordingly, it is charged property under the fixed and floating charge granted by Aldonet in favour of the Australia and New Zealand Banking Group Limited. ... 6 Further, on the basis that the Sunseeker is property of Aldonet, we have been instructed to seek: (a) an order that your clients do all things necessary to deliver up to the Receivers possession of the Sunseeker and all books and records in relation to the Sunseeker, including but not limited to any documents of title in respect of the Sunseeker; and (b) an order that your clients be restrained by themselves their servants or agents from disposing, transferring, encumbering or otherwise dealing with the Sunseeker. 77Mr Crawley accepted that the 2009 Charge given by Aldonet to the ANZ charged the property that it held both in its own right and as trustee for the Christopher Crawley Trust No 2 (tr 51-52). 78In respect of the Ship's Mortgage between Aldonet and debis, Mr Crawley gave the following evidence in cross-examination (tr 55-56): Q. Can we take it that you would have been comfortable at the time of executing the document that what is set out in it is accurate? A. Yes, at the time. Can I just explain something? Q. If you wish? A. On the shipping register you had to comply with Australian law and you cannot register a boat under a trust, you are not allowed to have any outstanding equitable interests, and hence the boat registration and everything else then went into Aldonet, as you have seen in the accounts et cetera, notwithstanding that it was held as trustee. ... Q. What you were telling or what you had agreed on behalf of Aldonet was true, was that Aldonet was the absolute beneficial and unencumbered owner of the vessel, that is correct, isn't it? A. It had to be, yes, for the purposes of the shipping law here. 79In further cross-examination Mr Crawley was taken to each of the Financial Statements of Aldonet in which the "Motor cruiser" was listed and valued at over $1 million. He gave the following evidence (tr 69-70): Q. I want to suggest that you that the tax return at 605 - 619 accurately set out the position at the time, did it not? A. It does, yes. Q. And that is that the boat was owned by Aldonet in its own right. That's correct, isn't it? A. In these documents, yes. The circumstances were that I had paid for the boat personally, and they had got into Aldonet, so we just left it there, and that was it, from time immemorial. Q. As an asset of Aldonet? A. It is, yes. It should have been in the trusts. Q. It wasn't in the trust, was it? A. I suppose in my mind, it was, and that's where it should have been, but the error had happened so we left it there. Q. Left it there as an asset of Aldonet? A. Aldonet in its own right, yes. Q. Lest there be no doubt, Mr Crawley, what I want to suggest to you is that at all times, the boat was recorded as an asset of Aldonet in its own right. That's correct, isn't it? A. It is correct, yes. Q. Whatever may have been an earlier intention, that intention was never actuated on, was it? A. It couldn't have been. Q. And therefore it wasn't, correct? A. It should have been but it didn't happen, so that's where we ended up. Q. "Where we ended up" is that at all times, the boat was owned by Aldonet in its own right? A. Correct. 80Mr Crawley's evidence that he paid for the Sunseeker personally is inconsistent with the documentary evidence. The letter from Aldonet to the ANZ on 7 February 2003 clearly states that Aldonet funded the purchase which "in part" was provided by debis. It also includes reference to Mr Crawley lending the funds to Aldonet to allow Aldonet to pay out the debis' loan. There was no suggestion that the Sunseeker belonged to Mr Crawley or that Mr Crawley had paid for it "personally" as he claimed in the evidence extracted above. I do not accept this evidence. Mr Crawley was only lending the money to Aldonet. It was not a payment by Aldonet for Mr Crawley. 81Mr Crawley was cross-examined about the Bill of Sale and gave the following evidence (tr 70-71): Q. It purports to be dated 20 July 2011, correct? A. It was dated 20 July 2011, yes. Q. It is dated 20 July 2011? A. Mm-hmm. Q. You were the person who caused the bill of sale to be prepared, correct? A. Yes. Q. I want to suggest to you that at the time you caused it to be prepared, you were aware that the boat was an asset that was charged in favour of the ANZ Bank. You were aware of that, weren't you? A. I didn't really think of it to be that way, no. I - I hadn't thought of it as being charged at all because I had, with all of the other assets that they had of some 170 million in value at one stage, they were specifically charged, and this boat was never charged and it was never intended to be charged. Q. I've taken you earlier to the terms of the charge. A. Yes, I know you did. I'm just explaining what the circumstances were. Q. The boat was, you've agreed with me, an asset of Aldonet, correct? A. Yes, I have. Q. Part of the charge property was all of the assets after [of] Aldonet, correct? A. That's exactly right. It was not the intention however that that asset be charged. Q. But it was charged as at 20 July 2011, wasn't it? A. Whether the charge is effective for the ship, I don't know. That's a matter of law. Q. What I want to suggest to you is, you well understood as at the time of preparation of the bill of sale, that the boat was an asset charged in favour of the ANZ Bank, is that correct? A. No, the answer is no. Q. What I want to suggest to you is, you're also aware that the terms of the charge prohibited you on behalf of Aldonet from causing the asset to be transferred. That's correct, isn't it? A. That is incorrect. Q. And that with knowledge Aldonet was prohibited from doing it, you went ahead and did it anyway, didn't you? A. That is incorrect. Q. The amount paid or consideration referred to on the bill of sale, is a dollar. Do you see that? A. Yes. Q. You don't suggest that that was the market value of the boat as at 20 June 2011, do you? A. It was going from one trust to another. That's what it was meant to be doing. Q. You don't suggest that as at 20 July 2011 the market value of the boat was one dollar? A. I don't think so, no. Q. It was substantially in excess of that, correct? A. Yes, it was in excess of it, yes. Q. And indeed, you arranged for it to be ensured [insured] subsequent to July 2011 for a market value of a million dollars. That's correct, isn't it? A. I'm not sure if it's a million or its replacement value, I can't recall. 82Mr Crawley gave further evidence in relation to the Bill of Sale as follows (tr 74-75): Q. If you go to the bill of sale, you told me a while ago it was just from one trust to the other? A. Yes, your Honour. Q. On the left-hand side it has seller's full name, Aldonet as trustee for your trust No 2? A. Yes. Q. To whom was it sold? A. Vensel as trustee of the other Crawley Trust, your Honour. Q. It says for the Australian, I am not quite sure I read that correctly, but the -- A. Oh, I see. It is just Vensel as, I couldn't have as trustee, so, then you had to say whether it was an Australian company or not for the purpose of the Shipping Act apparently, Shipping Registration Act! Q. So it went from on your left-hand side, purportedly, a trustee to a corporation, Vensel? A. Well, you can't describe Vensel on the shipping, under the Shipping Registration Act as a trustee. They don't let you do it for some prohibition your Honour, I am not sure why. ... Q. So, really the bill of sale as it purported to transfer the boat if it were to be accurate on the record should have been simply from Aldonet? A. They didn't cross that out when they sent it back to me, so. Q. The question was it should have been from Aldonet not as trustee? A. Yes, on the -- 83Mr Crawley was provided with the opportunity to explain his conduct in relation to moving the Sunseeker from Birkenhead after the plaintiffs requested the documents in relation to it. He gave the following evidence (tr 94-95): Q. It is said that you moved the boat? A. I did because there were arrears to be paid, he wanted a larger amount of money for the marina. I spoke to the skipper of the boat, and he said he could get a cheaper marina parking just around the corner from a friend, from his friend who managed the marina. So that the rate was less because by this stage, all my income stream from those businesses had stopped. Q. And so far as the claim that you make in respect of Aldonet is concerned, I think it wasn't really until 15 May, if you go to page 139, you'll see there, 139, a letter from Clayton Utz? A. Yes. Q. So that's when it looks like Clayton Utz became aware of Aldonet's ownership at least prima facie ownership of the boat. Is that correct, as far as you know? A. Yes, as far as I know, yes, your Honour. Q. And then there were some negotiations, I understand, for you to not move or do things with the boat, is that right, not to deal with the boat? A. Yes, there was something done, yes, your Honour. Q. And so when you told the receiver's solicitors that there was no record in relation to the Sunseeker transaction, that is the sale or the ownership of J & J O'Brien or the transfer, was there some reason that you didn't tell them that it was in Aldonet's name? A. I was advised that was how the answer was being given, your Honour. Consideration 84The SR Act provides relevantly: 36 Transfer of ship etc. (1) Subject to section 37, a ship or a share in a ship shall be transferred by a bill of sale made in accordance with the regulations. ... 37. Transmission of ship etc. by operation of law (1) Where a ship or a share in a ship is transmitted to a person by any lawful means other than by a transfer under section 36, a declaration of transmission made by that person under subsection (2) together with such evidence of transmission as is prescribed shall be lodged by that person with the Registrar within 14 days of that transmission taking place or within such longer period as the Registrar, in special circumstances, allows. ... 45. Powers of disposal by owner The owner of a ship or of a share in a ship has power, subject to this Act and to any rights and powers appearing in the relevant register to be vested in any other person, absolutely to dispose of the ship or share and to give effectual receipts in respect of the disposal. 46. Trusts not recognised Notice of a trust, express, implied or constructive, shall not be entered in the relevant register or be receivable by the Registrar. 85Regulation 23 of the Shipping Registration Regulations 1981 (Cth) provides relevantly: Transfer of ship etc (1) A bill of sale for the purposes of subsection 36(1) of the Act in relation to a ship must: (a)specify: (i) the name and official number of the ship; (ii) the number of shares in the ship to which the bill of sale relates; (iii) the name and address of each transferor; (iv) the name and address of each transferee; and (b) be duly signed by each transferor. 86The defendants' written submissions contended that the evidence is clear that Aldonet was not the beneficial owner of the Sunseeker but that it was owned as trustee for the Christopher Crawley Trust No 2. Those submissions were made on 25 July 2013, the day before Mr Crawley's cross-examination occurred. The evidence clearly establishes that Aldonet owned the Sunseeker in its own right and not as trustee for the Christopher Crawley Trust No 2. Aldonet was the legal and beneficial owner of the Sunseeker. 87The defendants submitted that the Bill of Sale must be construed in accordance with the SR Act rather than by "casting around and drawing inferences from the range of documents" (tr 112). The so called "range of documents" lead to the irresistible conclusion that the true owner of the Sunseeker was Aldonet in its own right. There was no indication at any stage that that the Sunseeker was owned by Aldonet on behalf of any trust. The first time that any document was created in which it was suggested that the owner of the Sunseeker was Aldonet as trustee of the Christopher Crawley Family Trust No. 2 was the Bill of Sale dated 21 July 2011. Although Mr Crawley claimed in his oral evidence that it was merely a transfer of an asset from one trustee to another, the Bill of Sale purports to transfer the Sunseeker from Aldonet as trustee to Vensel in its own right and not as trustee for any trust. In any event, even if Mr Crawley's claims in this regard were accurate, it would not have been a simple change of trustee. The initial plan, as can be seen from the Bill of Sale was to transfer the Sunseeker to Vensel as trustee of a different trust to that of which Aldonet was trustee. 88The defendants submitted that the Sunseeker is an article of personal property and is treated in law no differently than any other item of personal property: s 29(2) SR Act; Behnke v Bede Shipping Co Ltd [1927] 1 KB 649 at 659. They contend that the Bill of Sale complies with the requirements of regulation 23(1) by correctly specifying the name of the transferor, Aldonet. It was submitted that the fact that the Bill of Sale goes on to specify the capacity in which the transferor is purporting to act does not negate the fact that the name of the "transferor" has been correctly specified. It was further submitted that any error in the statement of the capacity in which Aldonet was purporting to transfer the Sunseeker did not render the Bill of Sale non-compliant with regulation 23(1). Accordingly it was submitted that the Sunseeker was transferred from Aldonet to Vensel in accordance with the SR Act. 89The system of registration of ships has a similarity to the Torrens system in that they both exclude from the register reference to any trust, albeit that there are a couple of exceptions to this in the Torrens system. In a recent case in which a party claimed that it was not liable for a debt because the bank had made the loan to a company, without any reference to its status as a trustee of a particular trust, Young AJ referred to this aspect of the Torrens system and rejected the defendant's claim: Commonwealth Bank of Australia v ACES Sogutlu Holdings Pty Ltd [2013] NSWSC 1184 at [24]-[27]. In the present case Aldonet was the registered owner of the Sunseeker and the details in the Bill of Sale were entered in the Register of Ships. The Register now records Vensel as the owner of the Sunseeker. 90It is the Bill of Sale, rather than its subsequent registration, that passes legal title: Bluecorp Pty Ltd (in liq) v ANZ Executives and Trustee Company Ltd (1995) 18 ACSR 566 at 577 per Fitzgerald P; Kent v SS "Maria Luisa" (No 2) (2003) 130 FCR 12 at 28 [42] per Tamberlin and Hely JJ. Although registration is prima facie evidence of ownership it is not "an incident of ownership": Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) (2005) 143 FCR 43 at 64 [80]-[81]. 91The defendants submitted that the expression "plant and equipment" in clause 2.2(a) of the Charge cannot apply to the Sunseeker. If that be correct then the fixed charge does not attach to the Sunseeker and it would only be a floating charge. It was submitted that the floating charge does not attach to the Sunseeker because the relevant event had not occurred at the time of the transfer of the Sunseeker. These submissions should be rejected. The Sunseeker has always been described in the financial records of Aldonet as "Plant and Equipment". It is the plant and equipment of the business, Blue Diamond Charters, that was conducted by Aldonet. 92I am satisfied that Mr Crawley knew that the Sunseeker was recorded in Aldonet's Financial Statement as an asset of Aldonet in its own right and that it was recorded as part of Aldonet's plant and equipment. He knew that ANZ held a charge over Aldonet's plant and equipment. I am also satisfied that he knew that if the charge applied to the Sunseeker the plaintiffs were entitled to take possession of it. I do not accept Mr Crawley's evidence that it was never intended that the Sunseeker be the subject of the charge to ANZ. His instructions to his solicitors, or alternatively his acceptance of their advice, to respond to Clayton Utz' request in relation to the Sunseeker without disclosing its ownership was quite unsatisfactory. It sent the plaintiffs on a journey to search the books and records of Aldonet without his assistance, when he should have been assisting them by informing them that the Sunseeker was owned by Aldonet until he caused it to sell it for $1 pursuant to a Bill of Sale dated 20 July 2011. His conduct in removing the boat from the Marina within days of the request from the plaintiffs' solicitors is indicative of his lack of co-operation with the plaintiffs in this regard. 93The defendants submitted that Vensel is the legal owner of the Sunseeker unless the plaintiffs are able to prove that it was not a bona fide purchaser for value from Aldonet. I am satisfied that they have done so. 94On the assumption that the Bill of Sale is effective, it is quite clear on the evidence that Vensel was well aware that the Sunseeker was worth at least $1 million. Mr Crawley was a director of both Aldonet and Vensel and knew of its value recorded in the books and records of Aldonet. He knew it had been insured over the years and valued in the books of Aldonet at over $1 million. Indeed Vensel insured it for a similar amount. 95Aldonet was entitled to have its directors act in accordance with its best interests and not to sell an asset worth over $1 million for $1. The directors owed a statutory duty to Aldonet under ss 180(1) and 180(2) of the Act not to sell an asset worth more than $1 million for a mere $1. The directors owed Aldonet a fiduciary duty not to sell an asset worth $1 million for only $1. 96There is no evidence in relation to Mrs Crawley. It is not possible to make a finding against Mrs Crawley of a breach by her of her obligations without some evidence that establishes her knowledge at the relevant time. It is not clear at what point Mrs Crawley signed the Bill of Sale. It may be that she was advised that all that was happening (as erroneously claimed by Mr Crawley in his evidence) was a change of trustee. 97The evidence does not support Mr Crawley's claim that he paid for the Sunseeker personally. If Mr Crawley's claim in his oral evidence that it was intended that the Sunseeker should be in the trust, was proffered as some explanation for his extraordinary conduct in causing Aldonet to transfer it to Vensel for $1, it is not a proper explanation. The suggestion that it was a transfer from one trustee to another was very unimpressive. I regard Mr Crawley's evidence as unreliable. I regard his standard of conduct as a director of Aldonet and of Vensel as lacking propriety. 98I am satisfied that the plaintiffs have proved that Mr Crawley's conduct was without due care for Aldonet's best interests. I am also satisfied that the plaintiffs have proved that Mr Crawley improperly removed an asset from Aldonet at a vast undervalue for the purported benefit of his family trust in breach of his obligations under the Act and in breach of his fiduciary duties to Aldonet. I am also satisfied that Vensel was well aware that the Sunseeker was worth more than $1 and that it was knowingly concerned in Mr Crawley's breaches. Conclusion 99I am satisfied that it is appropriate to make a general order for the first and second defendants to deliver up to the plaintiffs the books and records of the Companies. 100I am also satisfied that at the date of the Bill of Sale, 20 July 2011, the Sunseeker was charged property the subject of the Fixed Charge dated 29 January 2009 granted by Aldonet in favour of ANZ. 101I am satisfied that a declaration should be made that Mr Crawley contravened his duties owed to Aldonet under s 180(1) and s 181(1) of the Act in causing Aldonet to sell the Sunseeker to Vensel for $1. 102I am satisfied that a declaration should be made that Mr Crawley contravened his fiduciary duty owed to Aldonet in causing Aldonet to sell the Sunseeker to Vensel for $1. 103I am satisfied that a declaration should be made that Vensel holds the Sunseeker on trust for Aldonet. 104An order will be made that the defendants be restrained by themselves, their servants or agents from disposing, transferring, encumbering or otherwise dealing with the Sunseeker. 105An order will be made that the defendants do all things necessary to deliver up to the plaintiffs possession of the Sunseeker and the Sunseeker records including, but not limited to, documents of title. 106The parties are to prepare Short Minutes of Order reflecting these findings including an agreed order as to costs. If the parties are unable to agree on a costs order I will hear argument at 10.00 am on 12 September 2013 when the matter is listed for the filing of Short Minutes of Order.