Conlan v Stone

Federal Court of Australia|2012-11-30|Before: McKerracher J

Leave be granted for the applicant to amend the application filed on 13 April 2012 to include the following final orders: (a) '3. An order that an account be taken of all profits received by the respondents arising out of the use of any of the property specified in the schedule attached and marked 'A' from 16 May 2011 to the date that such property is delivered up to the applicant.' and (b) '4. An order that the respondents pay to the applicant such moneys as may be found to be due to the applicant upon the taking of that account.' 2. The respondents deliver up to the applicant the property specified in the schedule attached and marked 'A' within 7 days of the making of this order. 3. The Court declares that the transfer of the property items specified in the schedule attached and marked 'B' by the first respondents to any or all of the second respondents are transfers that are void. 4. An order that an account be taken of all profits received by the respondents arising out of the use of any of the property specified in the schedule attached and marked 'A' from 16 May 2011 to the date that such property is delivered up to the applicant. 5. An order that the respondents pay to the applicant such moneys as may be found to be due to the applicant upon the taking of that account. 6. There be liberty to apply in relation to the taking of the account, and generally. 7. The second respondents pay the costs of the application, including all reserved costs, to be taxed if not agreed. 8. The applicant's costs be paid out of the bankrupt estates of the first respondents, insofar as those costs are not recovered from or paid by the second respondents. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

BETWEEN: MARK ANTHONY CONLAN IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATES OF PETAH JOHN STONE AND VALERIE KAYE STONE

CARL DESMOND STONE, KIM NOEL STONE, CRAIG VERNON STONE AND STRATHMORE FARMS PTY LTD (ACN 146 817 192)

JUDGE: MCKERRACHER J DATE: 30 NOVEMBER 2012 PLACE: PERTH

REASONS FOR JUDGMENT TABLE OF CONTENTS 1 INTRODUCTION [1] 2 RELIEF SOUGHT [9] 3 RELEVANT LEGISLATIVE PROVISIONS [12] 4 The DEED [19] 5 OTHER EVIDENCE [33] 5.1 Overview [33] 5.2 The evidence for the Trustee [34] 5.2.1 Ms Hayman [61] 5.2.2 Mr Turner [64] 5.3 The evidence of the Stones [69] 5.3.1 Mr Petah John Stone [70] 5.3.1.1 Transfer of property [82] 5.3.1.2 No Indebtedness, no transfers [83] 5.3.1.3 Cash [89] 5.3.1.4 Financial records [93] 5.3.1.5 Mr Stone generally [94] 5.3.2 Mr Carl Stone [95] 5.3.3 Mr Kim Stone [104] 5.3.4 Mr Craig Stone [106] 5.3.5 Mrs Stone [108] 6 ARGUMENTS FOR THE STONES AS TO THE DEED [109] 7 IS THE DEED VOID UNDER S 121 OF THE ACT? [112] 8 ABSENCE OF WRITTEN APPROVAL FOR ROLL OVER OF EQUIPMENT [124] 9 IS THERE AN EQUITABLE CLAIM? [127] 10 AN ACCOUNT [131] 11 CONCLUSION [132]

INTRODUCTION 1 This is an unfortunate case concerning hardship sustained by a farming family. In these reasons I have referred to the first named first respondent (Mr Petah John Stone) as Mr Stone. So as to distinguish them, I have referred to each of his sons (the second respondents) by their first given name in each instance. No disrespect is intended by this abbreviation. 2 The applicant (Mr Conlan) is the trustee in bankruptcy of the estates of the first respondents, Mr Stone and his wife, Mrs Valerie Kaye Stone (Mrs Stone). The Trustee was appointed pursuant to s 188 of the Bankruptcy Act 1966 (Cth) (the Act) by Mr and Mrs Stone on 11 February 2011 after proposed Pt X arrangements were rejected. Mr Conlan was appointed as trustee in bankruptcy by court order on 16 May 2011. Prior to the bankruptcy, Mr and Mrs Stone and their sons conducted substantial farming operations. The operations required a considerable volume of farming plant and equipment. 3 The equipment was valued in April 2011 at a gross auction value of about $800,000 with a suggested market value of $1.2 million. The case turns on the identity of the owner of the equipment more than its value. The sons, Carl, Kim and Craig, together with Strathmore Farms Pty Ltd (Strathmore) hold the plant and equipment. Strathmore is controlled by Kim and Carl who each hold one share in the company and are both directors. The Trustee contends that the equipment comprises property of the bankrupts as revealed in their accounting records. Mr Conlan applies for delivery up of the equipment under the provisions of the Act and other related relief. 4 There are two schedules of equipment, the Schedule A equipment and the Schedule B equipment. The latter is equipment which has already been transferred. Both Schedules are annexed to these reasons. The Trustee applies under s 120, s 121 or, alternatively, s 122 of the Act on the basis that the Schedule B equipment transfers took place in breach of the Act. Sales or transfers were made to Strathmore as well as to Carl. Since the appointment of the Trustee, steps were taken in February and in May 2011 to attempt to remove the Schedule A equipment, at least, from the farm. 5 Although very detailed evidence was given for the Trustee about items of equipment, none of this detail was challenged. The defence to the Trustee's claims rested squarely on the imputed terms and effect of a Deed which is discussed in detail below. 6 The Stones oppose the relief sought by the Trustee. Their opposition is based on the terms and effect of a Deed described as a 'Bill of Sale' (the Deed) and dated 19 March 1992. The background to the execution of the Deed is explained by the Stones in their evidence but in broad terms, they contend that the effect of the Deed is to give the sons priority over all other creditors in return for forbearance by the sons from claiming adequate wages over many years of service to their parents on the farm. They contend that because they are entitled to the benefit of that priority under the Deed the transfers which the Trustee attacks were at all times duly authorised and legitimate. 7 The Trustee, on the other hand, contends that the Deed is invalid pursuant to s 121 of the Act and is void as against the Trustee. As an alternative position, the Trustee contends that even if the Deed were valid, as a matter of construction, it does not apply to any of the assets in Schedule A as they are not nominated under the Deed. 8 The Trustee contends that the Deed is a chattel mortgage granted over particular assets. While there was provision for assets to be replaced if sold, the Trustee says, there is no evidence of any such sale and replacement. Further, as a matter of construction, the Trustee contends that the total security provided for under the Deed is to a maximum of $200,000 inclusive of interest. As a further alternative, if interest does apply, there being no suggestion in the Deed that interest should be other than on a simple interest basis, the Trustee says that the maximum sum secured was $656,000 as at the date of his appointment as trustee. The primary position for the Trustee is that the sons have no rights at all, at least under the Deed.

RELIEF SOUGHT 9 The orders sought by the Trustee in his application filed 13 April 2012 are: an order pursuant to s 129(2) of the Act that the respondents deliver up to the applicant the property specified in the Schedule marked 'A'; a declaration that the transfer of the property items specified in the Schedule marked 'B' by the first respondents to any or all of the second respondents are transfers that are void; and an order that the costs of the application be paid out of the bankrupt estates of the first respondents or further or in the alternative, by the second respondents. 10 The Trustee also sought an amendment to his application to claim an account of profits. The Stones opposed that application to amend. From the Trustee's perspective, he was content to proceed on the same evidence and saw no difficulty in my reserving the decision on the proposed amendment until I could be satisfied that there was no prejudice to the respondents in the amendment being made. 11 For the reasons set out below, I must conclude that insofar as the claims to the equipment in Schedule A and Schedule B are concerned, including any profits which may be derived from its use, the Trustee's arguments are correct. None of the equipment claimed by the Trustee is protected in favour of the sons in any way under the Deed or otherwise. That is the only issue presently falling for consideration. Whether or not the sons can claim by way of a proof of debt or otherwise, some other entitlement to wages, interest thereon or other indebtedness to them by virtue of the Deed or by any other arrangement is not a matter that has been raised before me and is not the subject of consideration by these reasons for judgment. The Trustee simply wants the equipment. He is entitled to the relief claimed. As the factual foundation for that relief would also support the granting of an account of profits, the amendment will also be permitted and that relief will also be granted.

RELEVANT LEGISLATIVE PROVISIONS 12 The only basis on which the ownership of the equipment by the business conducted by the bankrupt parents is disputed is the effect of the Deed. Although I have held that the Deed did not have the effect contended for by the Stones, the Trustee says that even if it did have some effect of transferring property, that effect would be void by reason of the provisions of the Act. 13 A variety of sections of the Act fall for consideration but the foundational provisions for the relief sought are ss 120, 121 and 122 of the Act. Section 121 of the Act relevantly provides: 121 Transfers to defeat creditors Transfers that are void (1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: (a) the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred; and (b) the transferor's main purpose in making the transfer was: (i) to prevent the transferred property from becoming divisible among the transferor's creditors; or (ii) to hinder or delay the process of making property available for division among the transferor's creditors. Showing the transferor's main purpose in making a transfer (2) The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent. Other ways of showing the transferor's main purpose in making a transfer (3) Subsection (2) does not limit the ways of establishing the transferor's main purpose in making a transfer. Transfer not void if transferee acted in good faith (4) Despite subsection (1), a transfer of property is not void against the trustee if: (a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and (b) the transferee did not know, and could not reasonably have inferred, that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and (c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent. (emphasis added) Rebuttable presumption of insolvency (4A) For the purposes of this section, a rebuttable presumption arises that the transferor was, or was about to become, insolvent at the time of the transfer if it is established that the transferor: (a) had not, in respect of that time, kept such books, accounts and records as are usual and proper in relation to the business carried on by the transferor and as sufficiently disclose the transferor's business transactions and financial position; or (b) having kept such books, accounts and records, has not preserved them. Refund of consideration (5) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. … Meaning of transfer of property and market value (9) For the purposes of this section: (a) transfer of property includes a payment of money; and (b) a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and (c) the market value of property transferred is its market value at the time of the transfer. 14 No limitation period applies to a claim to set aside a transfer affected by s 121 of the Act. If the Deed should be seen as a mortgage, a mortgage is deemed to be a transfer of property: see Frost v Sheahan as Trustee of the Bankrupt Estate of Allen Gordon Frost [2012] FCAFC 46 (at [69]-[71]) per Finn, Cowdroy and Flick JJ where their Honours said: [69] A mortgage, it is concluded, is a "transfer of property" for the purposes of s 121(1). The primary judge, in reaching the same conclusion, relied upon Pastro v Official Trustee in Bankruptcy [2000] FCA 744. His Honour was correct in doing so. As was pointed out at first instance in Pastro, the "live issues" were whether there was an intent to defraud creditors and whether there was an absence of "good faith": Official Trustee v Pastro [1999] FCA 1631 at [51]. The mortgages in that case were declared void. The appeal was dismissed by Ryan, Branson and Lehane JJ. Notwithstanding the absence of argument as to whether a mortgage was a "transfer of property", all of the judges involved proceeded upon that basis. They were correct to have done so. The provisions there in issue, of course, were those which followed the 1996 amendments. On any view, however, a mortgage creates an interest in property and it is that interest which is transferred. [70] The primary judge, it should be noted, did not set forth in his reasons for either decision the text of s 121(9). That, obviously enough, was because the "transfer of property" argument was not an argument advanced before His Honour for resolution. His Honour's sole reliance upon the decision in Pastro was thus appropriate. Now that the argument is advanced as a Ground of Appeal, His Honour's conclusion is only further supported by Peldan v Anderson (2006) 227 CLR 471. Gummow A-CJ, Kirby, Hayne, Callinan and Crennan JJ there said: "[26] As remarked earlier in these reasons, provisions in the terms of s 121(9) appeared at the same time as s 120(7) and s 122(8) of the Bankruptcy Act. It is to be expected that the subsection has the same meaning in each provision. In the Explanatory Memorandum to the House of Representatives upon the Bill for the 1996 Act, it was said at [84.10] of the inclusion of the provision in the undervalued transactions provision (s 120) that: "where a person creates an interest in property, for example by allowing a mortgage or charge to be created over it, the person will be taken to have transferred property, for the purposes of the section." Other examples were given, including the conferral of a trademark or patent licence. Further instances would include the grant of a lease over freehold property and a declaration of a trust over property vested in the "transferor". In all of these cases, the same act both creates the property in question and vests it in the other person." [71] See also: Sutherland v Brien (1999) 149 FLR 321 at 325 to 326 per Austin J. 15 The effect of the statute is that although there is evidence from the respondents as to their reasons for entry into the Deed, they are presumed to have the purpose indicated in s 121(1)(b) of the Act by virtue of subs 121(2) and subs 121(4A) read together. The parents were required to provide all books, accounts and records to the Trustee on their bankruptcy pursuant to s 77(1)(a)(i) of the Act. No records relevant to the financial position of the parents as at the time of entry into the Deed were provided to the Trustee. Accordingly, the Trustee contends that the inference to be drawn is that either the parents did not keep any such records or they have failed to preserve them. 16 In either event, the Trustee relies upon the presumption in s 121(4A) of the Act. In the absence of any evidence as to the parents' financial position in March 1992, the Trustee contends that they must be presumed to have intended to ensure that the property would not be available to their creditors. In any event the Trustee argues, and I accept, that such an inference is entirely consistent with the evidence of Mr Stone as detailed below. 17 The Trustee also relies upon s 120 of the Act and, in particular, s 120(1). If the parents possessed the purpose required by s 121 of the Act, the Deed will not be void pursuant to s 121(4) if the sons are able to establish that: (a) The consideration they gave for the mortgage was at least as valuable as the market value of the Mortgaged Property as at the date of the Deed; (b) They did not know and could not reasonably have inferred that the parents' main purpose in making the transfer was to defeat creditors; and (c) They did not know and could not reasonably have inferred that at that the time of the transfer their parents were or were about to become insolvent. 18 Turning to s 122 dealing with preferences and s 129 dealing with the bankrupt's property, relevantly provide: 122 Avoidance of preferences (1) A transfer of property by a person who is insolvent (the debtor) in favour of a creditor is void against the trustee in the debtor's bankruptcy if the transfer: (a) had the effect of giving the creditor a preference, priority or advantage over other creditors; and (b) was made in the period that relates to the debtor, as indicated in the following table. Periods during which transfers of property may be void Description of petition leading to debtor's bankruptcy Period during which the transfer was made 1 Creditor's petition Period beginning 6 months before the presentation of the petition and ending immediately before the date of the bankruptcy of the debtor 2 Debtor's petition presented when at least one creditor's petition was pending against a petitioning debtor or a member of a partnership against which the debtor's petition was presented Period beginning on the commencement of the debtor's bankruptcy and ending immediately before the date of the bankruptcy of the debtor 3 Debtor's petition presented in any other circumstances Period beginning 6 months before the presentation of the petition and ending immediately before the date of the bankruptcy of the debtor

(1A) Subsection (1) applies in relation to a transfer of property by the debtor in favour of a creditor: (a) whether or not the liability of the debtor to the creditor is his or her separate liability or is a liability with another person or other persons jointly; and (b) whether or not the property transferred is the debtor's own property or is the property of the debtor and one or more other persons. (2) Nothing in this section affects: (a) the rights of a purchaser, payee or encumbrancer in the ordinary course of business who acted in good faith and who gave consideration at least as valuable as the market value of the property; or (b) the rights of a person who is making title through or under a creditor of the debtor in good faith and who gave consideration at least as valuable as the market value of the property; or (c) a conveyance, transfer, charge, payment or obligation of the debtor executed, made or incurred under or in pursuance of a maintenance agreement or maintenance order; or (d) a transfer of property under a debt agreement. (3) The burden of proving the matters referred to in subsection (2) lies upon the person claiming to have the benefit of that subsection. (4) For the purposes of this section: (a) a transfer of property is taken to have been made in favour of a creditor if it is made in favour of a person in trust for the creditor; and … (c) a creditor shall be deemed not to be a purchaser, payee or encumbrancer in good faith if the transfer of property was made under such circumstances as to lead to the inference that the creditor knew, or had reason to suspect: (i) that the debtor was unable to pay his or her debts as they became due from his or her own money; and (ii) that the effect of the transfer would be to give him or her a preference, priority or advantage over other creditors. … 129 Trustee to take possession of property of bankrupt (1) The trustee shall forthwith take possession of all the property of the bankrupt capable of manual delivery, including all deeds, books and documents of the bankrupt. (2) The Court may, on the application of the trustee, enforce possession accordingly. (3) A person is not entitled, as against the trustee, to withhold possession of the books of account or any papers or documents of the bankrupt relating to the accounts or to any of the examinable affairs of the bankrupt or to claim any lien on any such papers or documents. …

The DEED 19 The Deed was executed on 19 March 1992 and is described as being a Deed over plant and machinery between the parents, on the one hand, as grantor and the sons, on the other, as grantee. The Deed provides as follows under cl 1:
1. Payment of Moneys Secured 1.1 Payment - On demand to pay or cause to be paid to the Grantee: (a) so much of the Principal Sum as shall remain unpaid; (b) interest on the Principal Sum or on so much thereof as shall remain unpaid at the rate hereafter provided; and (c) all other Moneys Secured. 1.2 Interest - The Grantor hereby covenants and agrees with the Grantee until demand to pay interest on that amount of the principal sum from time to time owing at the rate and on the dates set out in Item 2 of the Schedule. 1.3 When Demand May Be Made - Payment of the Principal Sum shall not be demanded prior to the date for payment of the Moneys Secured specified in Item 3 of the Schedule if in the meantime the Grantor and every Surety shall pay to the Grantee the Moneys Secured in the manner agree (sic-agreed) from time to time between the Grantee and the Grantor and duly pay perform and observe all other of the Secured Obligations. 20 There are then various obligations under the Deed and further covenants by the grantor to carry on the business in a proper and efficient manner, to register the Deed as a Deed (it was in fact registered), to execute anything further which needed to be executed, to consent to any actions which were necessary to protect the Mortgaged Property, to pay legal costs and expenses (although these are described as 'Cargill's' legal costs on which there was no evidence. (There is, however, reference to 'Cargills' under cl 5.3(b) of the Deed entitled 'Other Powers of Grantee' which specifies that Cargills shall not be required to give notice to the grantor before enforcing the Deed.) 21 There is also a covenant that the parents had the right and full power to transfer and assign the Mortgaged Property. There are covenants of preservation of the property and provisions dealing with default. Moneys secured was defined under cl 8.1 of the Deed as follows: "MONEYS SECURED" … means the aggregate or any part of: (a) the Principal Sum interest and other moneys due to or recoverable by the Grantee under the terms of this Deed; (b) All monies now owing or payable to the Grantee by the Grantor either alone or jointly with any other person in any manner or on any account whatsoever including (without limitation): (i) all monies which the Grantee may lend pay or advance or become in liable to lend pay or advance and whether by reason of the Grantee accepting paying purchasing discounting endorsing or negotiating any order draft cheque promissory note bill of exchange or other engagement or by entering into any bond indemnity letter of credit or guarantee or otherwise incurring liability on behalf of or for the benefit or accommodation of the Grantor either alone or jointly with any other person whether such shall have matured or not; (ii) all monies which on any account or in any manner whatsoever at any time and from time to time are presently owing and payable or are owing but not being presently payable or are owing or which might become owing upon a contingency or which may reasonably foreseeably become owing, whether by operation of law or equity or otherwise or by reason of anything done by the Grantee with the consent or at the request of the Grantor to the Grantee by the Grantor either alone or jointly with any other person; and (iii) all moneys which may now be or become owing by the Grantor either alone or jointly with any other person to the Grantee whether liquidated or not and whether relating to the payment of moneys or the performance or omission of any act or thing and including all rights sounding in damages only and all obligations not presently owing but which might become owing in the future and including all rights which accrue to the Grantee consequent upon the occurrence of any Event of Default. (c) all tax duty costs or other expenses incurred by the Grantee in relation to the preparation, completion, execution, stamping or registration, renewal or extension of this Deed or the failure by the Grantor to observe and perform any covenant of this Deed or the Secured Obligations or any exercise or attempted exercise by the Grantee of the powers of the Grantee under this Deed or the Secured Obligations. 22 There is also a definition of 'PRINCIPAL SUM'. That definition is as follows: … the amount specified in Item 1 of the Schedule which the Grantee has advanced or agreed to advance to the Grantor from time to time and of which the sum of $1.00 is advanced contemporaneously herewith (the receipt of which the Grantor by his execution hereby acknowledges). 23 The principal sum is further spelt out in Item 1 of the Schedule as being: … all moneys owing or payable to the Grantee or to any one or more of the persons comprising the Grantee by the Grantor or by either one of the persons comprising the Grantor with respect to wages, salaries or with respect to any other matter. 24 By Item 4 of Schedule 1, the maximum amount secured is specified as being $200,000. 25 Item 6 lists 27 items of farming plant and equipment as follows: Mortgaged Property
2. Super 90 Massey Ferguson Tractor
3. Super 90 Massey Ferguson Tractor (wreck)
4. Michigan R45 Front End Loader
5. Allis Chalmers 8070 4WD Tractor
6. Massey Ferguson 860 Header
7. New Holland 1550 Header
8. Horwood Bagshaw Clover Harvester
9. Austin Avlin Grader
10. 1977 Model Scania Prime Mover Registration No. KU722 Engine No. 953251 Chassis No. 958501
11. Semi-Trailer Registration No. LG877C/R No. 00715436
12. Commer Truck with Super Spreader
13. Deutz Truck with 5in1 seed and super bin
14. Frigstad Chizel Plough 42'
15. Shearer 52' Allfarm Bar
16. 19 Thyne BHP Ripper
17. 30' Outboarder Flat Top Trailer
18. 2x750 Bushells Sherwell Silos
19. 2x950 Bushell Climax Silos
20. Conveyor Belt
21. Tandem Axle Low Loader
22. 1976 Nissan Patrol
23. 2 Old Mitzubishi Utes
24. 1988 Model HJ 75 Toyota Diesel Landcruiser Registration No. 7XT-272 Engine No. 1205243 Chassis No. JT731HJ7509505350
25. 2 Suzuki Farm Bikes
26. 10' Bull Rake and Chain
27. 2 Manual and 1 Hydraulic Wool Press
28. 6 Sunbeam Electric Shearing Heads 26 By cl 7.17 of the Deed, it is provided: … The maximum amount of the balance to be covered by this Deed shall not exceed the sum specified in Item 10 of the Schedule. 27 There is, in fact, no Item 10 of the Schedule. 28 As the Trustee points out, although the Deed purports to be a 'Bill of Sale' in its terms, the Bills of Sale Act 1899 (WA) was relevantly repealed on 16 December 1987 by s 4 of the Bills of Sales Amendment Act 1987 (WA) which thereafter limited the definition of 'chattels' for the purposes of the Act to 'stock and wool or growing crops when separately charged or bailed'. The Deed was never registered as a Bill of Sale notwithstanding the undertakings to do so. Nevertheless, it is common ground that it is a Deed. It is also beyond doubt that stamp duty was paid on the Deed. This, of course, is not (as the Stones appeared from their evidence to have thought) the same as registration of a Bill of Sale under the former legislation. 29 The Trustee contends that it is unnecessary to consider whether any security interest in the property claimed by the Trustee which might have been created by the Deed was vested in the Trustee by operation of s 267 of the Personal Property and Security Act 2009 (Cth) (PPSA). The Trustee's position, with which I agree, is simply that there was no interest under the Deed capable of being valid in those terms. 30 The operative words of the Deed appear under the heading 'ASSIGNMENT'. By transferring and assigning to the sons the Mortgaged Property, the Deed is properly characterised as a chattel mortgage involving an assignment of the legal title to the chattels identified in Item 6 of the Schedule to the Deed as the 'Mortgaged Property' by the parents to the sons with the parents retaining an equity of redemption in that property as explained by Erle CJ in Maugham v Sharpe (1864) 17 C.B.(N.S.) 443 (at 464). 31 Clause 4.1 of the Deed provides as follows: The Grantor shall not sell or dispose of the Mortgaged Property or any part thereof without the prior written consent of the Grantee provided however that if the Grantor with such consent as aforesaid shall sell any of the Mortgaged Property the Grantor shall forthwith replace same with similar articles of at least equal value and quality. (emphasis added) 32 There is, therefore, capacity under the Deed for the security interest in respect of other property to be created in favour of the sons pursuant to cl 4.1 but there is a difficulty in relation to cl 4.1. There was no evidence in support of cl 4.1, at least to any degree of detail which would be of assistance to the Stones. There was no evidence of any written consent and no evidence of express approval of replacement or of the value or quality of replacement items. The difficulty for the Stones is that none of the equipment claimed by the Trustee is part of the Mortgaged Property as defined under the Deed and as set out above.

5.1 Overview 33 Most of the evidence in the trial was by affidavit but each of the Trustee and the Stones was cross-examined. Much of the cross-examination of the Trustee was directed to the manner in which he had advised the Stones initially and the manner in which he carried out his role as Trustee. Very little of this cross-examination was relevant to the issues under consideration and although one can be sympathetic to the plight of the Stones, particularly the sons, there is no room for any credible suggestion at all that the Trustee should have discharged his obligations in any other way. On the material before me it is clear that the Trustee has acted conscientiously and professionally and in accordance with his statutory duties.

5.2 The evidence for the Trustee 34 The Trustee relies upon an affidavit of Mr Conlan of 4 April 2012, a supplementary affidavit of Mr Conlan of 22 June 2012, an affidavit of Clare Hayman of 16 April 2012, an affidavit of Corey Edward Turner of 12 April 2012, an affidavit of Paul Thomas Ward of 13 August 2012 and of Rikki William Phillip Reid of 10 August 2012. 35 In his short affidavit sworn on 13 August 2012, Mr Paul Thomas Ward, a senior manager, valuer and accredited senior appraiser with Gregsons Auctioneers and Valuers Pty Ltd, describes his extensive experience in auctioning and valuing agricultural and transport equipment. At the request of the Trustee he attended the Farm on 21 February 2011 to inspect items of agricultural plant, machinery and equipment. The following day, he prepared an itemised valuation report stating that the gross auction value of the plant and equipment was $932,450 and the gross market value was $1,390,900. In this report, Mr Ward listed 4 items that he was unable to inspect (a 2001 John Deere Harvester, a 1999 John Deere Harvester, a 2006 Nissan Navara and a 2008 Infratech Grain Analyser) as he was told by Mr Stone that the items were in Queensland and belonged to his sons. Therefore, in his report, Mr Ward assigned these items an indicative value only. 36 Mr Ward also conducted a further inspection at the request of the Trustee on 14 April 2011. On 15 April 2011 he prepared an itemised valuation report stating that the gross auction value of the machinery and equipment as at that date was $798,865 while the gross market value was $1,212,770. 37 Mr Ward conducted a third inspection on 29 June 2011 at the request of the Trustee and prepared an itemised report the following day. In this report, he stated that he noticed that some major pieces of equipment included in his previous report were absent from the property. The report recounts a conversation Mr Ward had with Carl on 29 June 2011, who told him that he and his brother through their lawyer 'had put an injunction on the Estate for $600,000 owed to them and had removed all the unencumbered equipment off site'. Carl did not allow Mr Ward access to the farming equipment. (There was no evidence to support the existence of any injunction in any convention sense.) 38 Mr Reid, auctioneer and valuer, produced an itemised valuation and report in relation to four items of equipment which he inspected at a farming property known as 'Brushie' Corner, 41 Road and Kinkabilla Road, Inglestone, Queensland on 28 February 2011. The value of that equipment was between $200,000 and $234,000 on a forced liquidation basis. The equipment was a John Deere Combine Harvester for which the attributed value was $100,000 to $120,000; another John Deere Combine Harvester valued at $80,000 to $90,000; a Volvo Prime Mover valued at $14,000 to $17,000; and a Flat Deck Trailer valued at $6,000 to $7,000. 39 The Trustee tendered an aide memoire of about 30 pages listing the detailed evidence which he says proves title on the part of the estate in respect of transfers of plant and equipment which are said to be void. 40 To the extent that the aide memoire required modest supplementation, it was to be obtained by photographs of equipment which Carl had accepted was the property of Mr Stone or the partnership which the brothers had taken pursuant to the Deed. 41 The aide memoire as to evidence of title corresponds in all respects with Schedule A and Schedule B to the application. 42 There is ample and entirely unchallenged evidence from which the existence of the machinery and the entitlement as to title, but for the Deed challenge, can be accepted. The only issue in the case raised by the Stones is the question of their entitlement to the plant and equipment by virtue of the terms and effect of the Deed. 43 The Stones all gave evidence of a similar nature concerning the circumstances surrounding entry into the Deed and their understanding as to its terms and effect. There was no proper basis (nor was it contended otherwise for the Trustee) that any adverse conclusion should be drawn in relation to that evidence. I did not do so. 44 It is necessary, however, to say a little about the Trustee's evidence which was extensive. The Trustee is experienced; he has over 30 years experience in insolvency having been involved in something in excess of 400 insolvency administrations of varying complexity. He confirms that Mr Stone is the registered proprietor of the farming property at Pingaring, Western Australia (the Farm). The Farm is held under nine certificates of title and comprises 6,738.6 hectares. It is mortgaged in favour of a Permanent Custodians Limited on behalf of the ANZ Bank. The Trustee was appointed as controlling trustee of the estates of Mr and Mrs Stone pursuant to s 188 of the Act on 11 February 2011. They provided him with completed and signed statements of affairs. 45 In May 2011, he was appointed as Trustee of the bankrupt estates of Mr and Mrs Stone pursuant to a sequestration order. Until his appointment as controlling trustee in February 2011, the parents operated the farming business through a partnership known as P & V Stone. Financial records of the partnership were produced. Two personal insolvency agreement proposals (PIAPs) were made by Mr and Mrs Stone during the Trustee's appointment as controlling trustee. The latter revised PIAP contained a list of items of plant and equipment which Mr and Mrs Stone specifically sought to exclude from becoming available to creditors. 46 The Trustee conducted a search at the office of the Department of Planning and Infrastructure (DPI) for details of any registered vehicles owned by Mr and Mrs Stone. By reference to that search, he ascertained that 12 of the vehicles registered in Mr Stone's name were transferred out of his name between 8 October 2009 and 10 February 2011. Copies of the transfer documents facilitating the transfer of those vehicles were produced. 47 The DPI search indicated that 12 vehicles remained in Mr Stone's name at the time of the search. The Trustee concluded that the DPI search suggested that the vehicle which was the 1991 Volvo Prime Mover was transferred out of Mr Stone's name on 9 November 2010 and was disposed of on 11 February 2011. 48 Bank records showed that various accounts in various banks including deposits were held by the parents. The Trustee instructed Mr Ward to attend the Farm to identify and value the assets of Mr and Mrs Stone. The Trustee produced Mr Ward's valuation which included four items under a heading 'Queensland Unsighted'. 49 The Trustee also visited the Farm on his appointment. The visit was conducted on 22 February 2011 with the objective of inspecting the Farm plant and equipment and meeting with Mr Stone, Carl and Kim. That meeting was held at Carl's home located on the Farm. The Trustee asked Mr Stone to disclose to him the location of the John Deere harvesters which had been described as being in Queensland. Mr Stone informed him that there were two such harvesters which were 200 km west of Toowoomba at a place called Westmar. No further details were provided despite requests by the Trustee. Mr Stone and Carl subsequently took the Trustee on a tour of the Farm. He inspected items of plant and observed equipment over about an hour and a half. He sighted three residences on the property. There were machinery sheds adjacent to each residence. Mr Stone explained that the Farm had an elongated shape and said something to the effect that it was approximately 20 km from the northern boundary to the southern boundary. There were stops on four occasions to inspect plant and machinery items and to inspect the farming land. The Trustee was of the opinion that there should be more plant and equipment considering the size of the farm and so examined the financial statements with a view to identifying equipment which had been recorded as being on the Farm. He also communicated with John Deere Credit Limited in an attempt to verify what Mr Stone had informed him in relation to items of plant and equipment that had been or remained the subject of finance arrangements with the company. He also instructed Mr Reid to inspect and value the John Deere equipment which the Trustee had been told was in Queensland. 50 A valuation report was prepared by Mr Reid and was produced in evidence. Documents provided by John Deere Credit Limited to the Trustee were also produced in evidence. They included two secured commercial loan contracts and two letters from John Deere Credit Limited to Mr and Mrs Stone in 2007. 51 The Trustee produced various communications with creditors in relation to the estate and the statements of affairs of the parents. 52 Difficulties were encountered in the attempted removal of plant and equipment from the Farm. Mr Ward attended at the Farm for that purpose but Carl refused to permit Mr Ward to remove the plant and equipment. 53 As outlined above, this was followed by a telephone conversation on the same day between the Trustee and Carl in which, in substance, Carl said that the items of equipment on the Farm did not belong to his parents and that all items on the property were claimed by him and Kim. A similar answer was given in relation to items removed from the property previously. 54 In a follow up meeting some time later, on 30 August 2011, the Trustee together with his employee Ms Hayman met with Mr Stone and Carl at the request of Mr Stone. Mr Stone said, in substance at that meeting, that Carl and Kim had worked on the Farm for many years and had not been paid; that they were owed an amount of money by Mr and Mrs Stone; and the debt due to them was secured by a Deed. The Trustee complained at that meeting that Mr Stone had not cooperated with the Trustee's administration of the bankrupt estate and that the most recent partnership accounts for the year ended 30 June 2009 did not disclose any debt payable to any family members. 55 Mr Stone then informed the Trustee that he thought Carl and Kim were entitled to some form of compensation in return for their many years of working on the Farm for their parents. At the meeting, Mr Stone and Carl provided the Trustee with a copy of the Deed dated 19 March 1992. Also provided were two vehicle registration papers for vehicles registered in the name of Strathmore. 56 At a further meeting in January 2012 between the Trustee, Ms Hayman and Mr Stone, Mr Stone confirmed that he had received the Trustee's letter of 23 December 2011 together with a Court Order requiring Mr Stone to deliver to the Trustee all keys and documents relating to disputed items of plant and equipment and to immediately inform the Trustee of the location of each of the disputed items. In that letter Mr Stone was reminded of his obligations under the Act and the consequences of failure to comply with those obligations. 57 At the meeting, the Trustee reiterated the contents of a letter dated 21 December 2011 that was sent by the Trustee's solicitors. It included the following passages: … As you know, the Trustee claims the items listed in the attached Schedule A. Despite demand, Petah and Valerie Stone have not delivered up those items to the Trustee and have failed to reveal the location of all of them. As you further know, the Trustee applied for and executed search warrants on a number of properties in an attempt to locate the items in Schedule A. As a result of that process, the Trustee has managed to locate some items. The Trustee reiterates that none of the items in Schedule A are to be used, removed or damaged in any way. Messrs Carl, Kim and Craig represented to the Federal Court on 19 December 2011 that the items are not being used. In their letter dated 13 September 2011 and on behalf of Carl, Kim and Craig, McDonald Pynt Lawyers stated: "… our instructions are:- .1 our clients have no intention of selling, disposing or encumbering any of the disputed items which are needed to operate the farm property. Our clients intend that the disputed items will remain in their possession where they are currently located; .2 our clients acknowledge that they hold each of the disputed items at their sole risk and expense and again indicate they claim an equitable proprietary interest for detrimental reliance to each one of the disputed items" If any of the items in Schedule A are removed from their current locations, sold, disposed of, encumbered, used or damaged in any way, the Trustee will hold Messrs Carl, Kim and Craig Stone liable. Your claim to the items Messrs Carl, Kim and Craig Stone have indicated that they have a claim to specific items listed on Schedule A. The claim has changed over time and, to this day, has not been substantiated. Unless Messrs Carl, Kim and Craig Stone commence legal proceedings for a claim to the items listed on the attached Schedule A before 13 January 2012, the Trustee will assume that they do not have a valid claim to the specific items listed in Schedule A and will deal with those items accordingly. General claims A claim to the specific items is different to a claim that could be lodged in the bankrupt estates. When the Trustee calls for proofs of debt, Messrs Carl, Kim and Craig can lodge a claim for unpaid wages and the Trustee will adjudicate such claims. We recommend that you seek your own legal advice in relation to this. Items to be located Despite repeated requests, Mr Petah Stone and Mrs Valerie Stone have failed to provide the current location of the items listed on the attached Schedule B. Please provide the Trustee with details of the location of each of the items listed on Schedule B immediately. Order of 14 November 2011 On 14 November 2011, the Honourable Justice McKerracher made an order that Mr Petah Stone and Mrs Valerie Stone deliver all keys and documents evidencing title to certain items within 7 days after service of a copy of the order. Mr Petah Stone and Mrs Valerie Stone should ensure that they comply with the Honourable Justice McKerracher's order of 14 November 2011. We enclose a copy of that order for ease of reference. … 58 In the January 2012 meeting, the Trustee asked Mr Stone to deliver up keys and documents relating to the disputed items of plant and equipment. Mr Stone declined saying that the documents relating to the disputed items were not his to give up as he was not the owner of them. The Trustee informed Mr Stone that he would be in contempt of court if the court decided at a later date that he had not complied with the order. Mr Stone said that notwithstanding the contents of the 21 December letter, that the disputed items did not belong to him and that he would not disclose the location of them. 59 On 13 January 2012, solicitors for the Trustee received a letter from Carl and Craig dated 11 January 2012 essentially in the following terms: In answer to your letter dated 21 Dec 2011 1. Petah John and Valerie Kaye Stone the Bankrupt Estate has nothing further to do with the claim from the trustee (RSM Bird Cameron) as they have handed all keys to the equipment and plant. The Trustee is trying to implicate the two parties as one. This is not the case. 2. The Items in Schedule A have belonged to Carl, Kim and Craig Stone for many years. We have informed Mark Conlan of this several times. We even have the Deed stamped by the Federal Court to back this up as a … [legally binding] document. 3. The warrants the Trustee had are legal documents towards the bankrupt estate. Therefore the warrants issued to the bankrupts have no legally binding effect on Carl, Kim and Craig Stone. 4. As to Mr Petah and Valerie Stone handing over keys to their plant and equipment, this has been done. The plant and equipment handed over has been sold by RSM Bird Cameron at auction. 60 In a further affidavit of Mr Conlan, Mr Conlan deposed that the only financial accounts produced to him in relation to the parents' financial partnership were for the financial years ending 30 June 2007, 30 June 2008 and 30 June 2009. The accounts for the latter two years were provided by the parents' accountant. The accounts for the year ending 30 June 2007 were provided by CNH Capital. CNH also produced an application for finance made by the parents' partnership to New Holland Finance. Similarly, the only partnership income tax returns produced were those for the years 30 June 2008 and 30 June 2009. A chattel mortgage for the Volvo Prime Mover was also produced, although there appears to be a typographical error in the VIN described in the chattel mortgage (as the registration number and engine/serial number of the Volvo Prime Mover were one in the same). Two VIN numbers were recorded in the Personal Property Securities Register which was searched on behalf of the Trustee. A chattel mortgage over a Nissan Navara vehicle was also produced.

5.2.1 Ms Hayman 61 Ms Clare Hayman is a Senior Insolvency Manager with RSM Bird Cameron. Ms Hayman was not cross-examined. I accept her evidence. On 13 April 2011 she met with Mr Stone to discuss a schedule of plant and equipment which had been sent to him under cover of a letter of 12 April 2011. Ms Hayman went through each line of the schedule asking Mr Stone whether each item was located on the Farm, if not, whether it had been sold, if so, to whom, when and at what price. 62 Generally speaking, when items were not on the Farm, he explained that the item had been lent to a farmer in Wandering, a nearby country town in Western Australia, or gifted to 'the boys' or sold. That information was used in conjunction with other information to complete the schedule of plant and equipment annexed to the circular to creditors dated 3 May 2011. Ms Hayman had discussions with Mr Ward about Carl's refusal to allow Mr Ward to remove any of the items from the Farm. Ms Hayman also produced email correspondence with John Deere Credit Limited. 63 Ms Hayman also deposes to attending the meeting with Mr Stone and the Trustee in January 2012 where the Trustee made requests of Mr Stone for production of documents and keys to the disputed items. She deposes that Mr Stone refused the Trustee's request.

5.2.2 Mr Turner 64 The Trustee relies on an affidavit of Mr Turner, another accountant employed by RSM Bird Cameron Partners. Mr Turner was not cross-examined. I accept his evidence. Mr Turner gives evidence of his attendance on 29 November 2011 with Sergeant Simon Baxter and Constable Brendan Tribbeck of the Murdoch Police Station on the execution of a search warrant in respect of the property located at 4 Dimond Court, Leeming, Western Australia (the Dimond Court Property) which Mr Stone had previously indicated was his address in Perth. In executing the warrant under the supervision of the police officers, Mr Turner conducted searches through filing cabinets and loose documents and files located on a desk in one of the rooms in the Dimond Court Property. 65 Mr Turner collected items he thought would be of relevance to the examinable affairs of Mr and Mrs Stone. Once Mr Turner had completed his search, Constable Tribbeck asked him to describe the items Mr Turner had identified and intended to take delivery of and recorded the descriptions of the items on an interim property receipt (the Receipt). After Constable Tribbeck completed the Receipt, he asked Mr Turner to witness his signature which he did. One carbon copy of the Receipt was left on the kitchen bench at the Dimond Court Property. After the police officers had taken possession of the items described in the Receipt, Mr Turner accepted delivery of them and took them to the offices of RSM Bird Cameron. In his affidavit he identifies the various documents so found and the source at the Dimond Court Property from which they were taken. 66 On 30 November 2011 a similar process took place in execution of a search warrant at the Windemere Farm, a property located on Stevens Road in Wandering. During the execution of that search warrant, the officers seized a 1994 Volvo Prime Mover, a 1970 Caterpillar D8 Tractor, a second 1994 Volvo Prime Mover, a 2006 Bulk Grain Bag Unloader and a Flat Deck Trailer. The items were not actually removed from Windemere Farm on the day the search warrant was executed but an Interim Property Receipt (Found and Seized) document and a Notice to Bailee letter were handed to Bruce Penny, the owner of Windemere Farm. The following day, Mr Penny contacted Mr Turner to say that the two Volvo Prime Movers were in fact the same vehicle. Mr Turner accepted that explanation after checking his own records and the Trustee made an amendment to his Notice to Bailee to reflect that fact. 67 Mr Tuner deposes that one of the items seized at the Dimond Court Property was a Dell computer tower. Mr Turner described electronic documents found on that computer and identified them and produced them in evidence. 68 Mr Turner made further inquiries about vehicle sales and bank inquiries and the emails pertaining to those inquiries were produced.

5.3 The evidence of the Stones 69 Each member of the Stone family except Mrs Stone annexed the Deed.

5.3.1 Mr Petah John Stone 70 Mr Stone confirms that he and his wife operated their farming business as a partnership. On completing High School, his sons Carl, Kim and Craig became 'salary employed' by the business. Steps were taken to 'cover their positions' through the Deed executed on 19 March 1992 to ensure all parties were satisfied to work under the agreed conditions in the document. In October 2004, 'Landmark' approached the Stone family to leave Elders Finance and replace them with Landmark. They offered a 2% lower interest rate plus a further reduced rate if all merchandise and stock sales were put through their business. At that stage they 'owed Elders $2.8 million on 16,600 acres'. 71 In 2005, the Stones leased another 11,000 acres at Munglinup for $27 per acre. This land was located 260 km away from the Farm. As the three sons were working, this was manageable. The reason for choosing this location was due to a higher rainfall and a lower risk of frost. Mr Stone explains that Landmark was in favour of the move at a cost of a further $1.2 million to establish the property and to 'put in' 8,000 acres of crop at Munglinup and 8,000 acres of crop on the home farm. Sheep numbers were increased to 12,000 breeding ewes in 2005 because lamb prices increased to $100 per head in June 2005. 72 In his affidavit Mr Stone discusses at some length the difficulties experienced in dealing with various entities and the problems experienced on the Farm. 73 By 2007, Mr Stone says that the partnership experienced greater financial difficulty. Notwithstanding this, in 2008 the partnership leased another 5,000 acres at East Hyden and signed a further two year contract to 'put in' 28,000 acres of crop. He describes difficulties experienced in this exercise but explains that he and his wife expected that they would be able to operate in a Pt X arrangement to work their way out of the situation. However, due to poor seasons and poor prices for commodities, that was not possible. Further, two of the larger creditors voted against a Pt X arrangement, resulting in automatic bankruptcy. 74 Mr Stone submits that the Trustee has insisted that his sons are included in the P & V Stone business partnership. He says this is not the case as they are separate entities. 75 Mr Stone says in a general sense, without descending to specifics, that the lists of plant and machinery in Schedules A and B are 'incorrect'. He maintains that the plant and machinery that was unencumbered belongs to his three sons in accordance with the Deed. 76 Mr Stone's understanding of the Deed is that he and his wife have agreed not to sell plant and machinery without the written consent of his sons as he is not the owner of the property in question. He understands that the Deed does not expire. His understanding is that his sons retain possession of all 'unencumbered property' and have the 'right to full power to transfer and assign the Mortgaged Property' in accordance with clauses 3.8 and 3.9 of the Deed. He also understands that he cannot sell or dispose of the mortgaged property without the prior consent of his sons and that plant and machinery are to be replaced as per cl 4.2. He also understands that the grantee (his sons) have the right at any time after the money secured to become payable without any consent on the part of the parents (the grantor) and without the necessity for any demand or notice to exercise or any of the powers, authorities and discretions conferred on a receiver. He also said it was his understanding that there was no obligation to give any notice of the Deed to any of the partnership debtors or to enforce payment of any of the debts owing to the partnership. 77 Mr Stone gives hearsay evidence that an actuary calculated the amount owing to his sons at $1,956,167. 78 In cross-examination, Mr Stone confirmed that his eldest son, Carl, came to work with them at the end of 1984 when he finished school. The terms of his employment were that one day he would own his one third share of the property and keep the family farming as Mr Stone did with his father. Mr Stone confirmed that there was discussion about wages and that he told Carl that he and his wife could not pay very much at the time but that would be settled as time went on. Mr Stone gave evidence that Carl was happy to agree to that and that when Carl first started working on the farm he was simply learning. The financial records of 1984 were long gone. Although no wages were being paid to Carl he was working on the premise that he would inherit a third of the Farm. Nothing was ever shown in the accounts in respect of wages due to Carl. There was no loan to him shown in the accounts at any time. 79 Kim left school in 1985 and the same arrangement was made. By 1992, Carl had been working for just over seven years. The sons were not paid wages but they were given some money to go out with, 'enough to go to the pictures or to go to sport'. Room and board were supplied by the Farm. By 1992 Carl was in his early twenties and wanted some security. Mr Stone said: We came up with $200,000 on the basis of $10,000 per son per year. The Deed was for protection. For when we parted at an older age they would have that much equity in the property that they could go to the bank and get finance to pay me out. The figure that we agreed to in March 1992 was agreed at that time. When I originally employed them they weren't to receive any wages at all recorded in the accounts. We wanted the Deed drawn up so that they would be happy with it because if they weren't happy they wouldn't work at full steam. I could only have paid them the $200,000 at that time if I had to sell some land and I didn't want to do that. I never disclosed the $200,000 to any lenders. I didn't have to. We weren't asked. I didn't think you had to disclose all your liabilities when you applied for finance. I never disclosed to lenders the $200,000 or the existence of the Deed and we would not have pulled that Deed out unless we got put into bankruptcy. 80 Mr Stone said that he showed the boys the annual farm accounts from the age of 18. Mr Stone was asked about machinery being sold and traded for better machines in the mid-1990s. He said that his sons were quite happy to get a better machine. He never obtained this approval in writing despite that requirement under the Deed. The Deed was not followed to the letter. 81 Mr Stone did transfer some assets to his sons in early 2012 because 'they wanted to start up Strathmore Farms'. This was after 'we were unable to pay our creditors in October 2010 but we thought we would be able to settle that with a Part X arrangement'. Mr Stone knew in October 2010 that he could not pay the creditors of the partnership. He thought that Kim received the road train in October 2010. No valuation was obtained externally. Mr Stone did not obtain legal advice in October 2010 about how much the boys were owed, if anything. Transfers to the sons took place in February 2011. They were to Strathmore and to Carl and occurred mainly the day before executing the Pt X authority to the Trustee.

5.3.1.1 Transfer of property 82 Mr Stone could not at first recall but then accepted that in his report as to his affairs signed on June 2011, he indicated that he had transferred $600,000 worth of property to his sons in July 2009. Mr Stone accepted that it was his handwriting on the form but could not recall completing it and could not recall transferring $600,000 worth of assets in July 2009. There is an entry he made to the effect ('Plant and equipment, Carl and Kim Stone, July 2009, set-off Stone against monies owed to Carl and Kim, $600,000'). Mr Stone gave evidence that it must have happened because the entry was there but he could not recall it. He did not inform the actuary that $600,000 had been given to his sons. I should pause at this stage to say that the sons denied that this transaction ever occurred. It is clear, in my view, that the entry is erroneous. I so find.

5.3.1.2 No Indebtedness, no transfers 83 Mr Stone acknowledged that in the list of secured creditors prepared at February 2011, there was no reference to any indebtedness to his sons. There was no reference to the Deed. In fact, in that document he indicated that there had been no sale transfer or gift of assets in the last five years. He explained that it would not have been a gift as the boys had worked for it. 84 Additionally, Mr Stone recalled the discussion with Mr Ward on 22 February 2011 and Mr Ward's query about a John Deere harvester. Mr Stone told him that it was 'over east'. Mr Stone told Mr Ward that a Nissan Navara and an Infratec grain analyser were also in Queensland. He did not say the equipment was owned by his sons. It was owned by P & V Stone under a hire purchase contract. 85 It was acknowledged by Mr Stone that there were cash flow problems in March 2010. They had lost $3.5 million. In a budget prepared by Planafarm, he had informed Planafarm for budgeting purposes that plant and machinery of $3.4 million was owned on the Farm. Mr Stone is unable to recall whether he had disclosed to Ms Hayman on 13 April 2011 the transfer of assets to his sons at that stage. I find that Ms Hayman's recollection of the discussion is correct. 86 At first Mr Stone could not recall whether he told Ms Hayman in this discussion that he had lent plant and equipment to a farmer in Wandering including 'a bulldozer and a few other bits of equipment'. The other 'bits' included a semi-trailer. He subsequently accepted that he could have told Ms Hayman that in that meeting that he gifted plant and equipment to the boys but he had no specific recollection of doing. When asked in the meeting with Mr Conlan and Mr Hayman on 3 January 2012 to hand over the title documents and keys to equipment, Mr Stone said that he did do that for the equipment that he owned because his boys had claimed the other equipment unencumbered under the Deed. 87 There was $1.95 million worth of entitlement under the Deed according to Mr Stone. While the equipment which had been given to the boys had not been valued, it would certainly be covered by their entitlement to $1.9 million as calculated by the actuary. This figure was calculated, he explained, by the $200,000 agreed in 1992 at 12% per annum compounded over that time. Mr Stone 'gave the equipment to the boys because there was not much value in it' when compared with their entitlement under the Deed. 88 No legal advice was taken about how the debt to the sons should be calculated. Mr Stone said that his sons told Mr Ward that they were claiming the equipment because it was theirs and it was not Mr Ward's to take away. Mr Stone said he was present when that conversation took place.

5.3.1.3 Cash 89 Mr Stone was asked about cash withdrawals from his bank accounts including $6,000 on 14 February for living expenses; $15,000 on 11 February for living expenses; on 18 August 2010 another $30,000 for living expenses; and on 6 April 2010, another $20,000 for living expenses, all from the Commonwealth Bank of Australia account (CBA account). From the BankWest account there was a withdrawal of $2,300 on 11 February 2011; $95,000 on 27 August 2010; and another $90,000 on 25 August 2010. They were all cash withdrawals. Mr Stone said that was to try to save the property. Next to one of the $90,000 references, he had written 'finance scam'. It was a fee of $90,000 paid to a broker 'over east' in cash. It was intended to be for an overseas loan from Indonesia. The money was paid to him in Indonesia. Then Mr Stone identified the name of the broker which is not material for present purposes. It was transferred through bank bills. 90 On 18 August 2010, there was also a withdrawal of $148,300 described as living expenses and $95,000 cash on 27 August 2010, which Mr Stone admitted was spent on another finance scheme. Therefore the references to living expenses payments were not always an accurate description of their purpose. 91 Carl was paid $4,000 a month. Mr Stone said that some of the money withdrawn would have gone to his sons and some would have gone to lawyers. 92 I find that the descriptions appearing in this document are also quite unreliable, although their relevance to the relief claimed is unclear.

5.3.1.4 Financial records 93 Mr Stone was taken to the financial statements for the partnership as at 30 June 2007 and tax returns. In these documents there were references to chattel mortgages. Firstly, under secured creditors and secondly in non-secured chattel mortgages. In the 2006 figures, there was a reduction from $405,000 in 2006 to about $324,000 in 2007. Mr Stone could not explain what those chattel mortgage references related to. In a similar exercise in accounts for subsequent years, Mr Stone could not identify what chattel mortgages were referred to in the accounts. He considered that the increase in value of equipment listed was explained by the purchase of more equipment in each successive year.

5.3.1.5 Mr Stone generally 94 Generally speaking, Mr Stone's evidence on matters of detail was not very helpful on the topics to which this litigation is directed. I can fully appreciate that he feels (whether justified or not) very much aggrieved by the turn of events both in his external dealings with financiers and other institutions and also with the Trustee. The real issue in this case, however, is to do with the standing of his sons under the Deed in relation to the equipment. All members of the Stone family have squarely rested their case exclusively on the content of the Deed. The case comes down to what effect, if any, the terms of that document have insofar as the provisions under the Act are concerned. I did not think that Mr Stone was setting out to deliberately deceive or obviate in relation to the true issue in the case as I have just described it. The question, of course, is whether his understanding as to the effect of that document accords with its true legal effect, if any. Most of the other matters he raised were peripheral, although to the extent it is relevant to the administration of the bankrupt estate, I accept the evidence given by the Trustee and his employees and representatives and to the extent that it differs from that of Mr Stone and for that matter his sons (which on relevant issues, is very limited), I prefer the evidence of the Trustee and his employees. This is largely because the professional witnesses relied on contemporaneous records in most instances and were not cross-examined on any of the details.

5.3.2 Mr Carl Stone 95 The evidence of the three sons was almost identical. I have already indicated that they are of different ages but that aside, the differences are very minor. Carl completed his schooling at the conclusion of 1984 and started to work for his parents thereafter. He says that it was agreed between the sons and the parents that the brothers would work under 'conditions of succession planning' established by the Deed executed on 19 March 1992. The Deed was duly stamped by the Commissioner of State Revenue. 96 Carl's affidavit contains the following evidence (at [4]-[8]): … [4] Prior to the Bill of Sale Deed, for seven years between 1984 and 1992 my parents, my brothers and I agreed on the sum of $200,000 plus plant and machinery to be divided between me and my brothers as payment for seven years within this period. The balance to be divided between me and my brothers from the agreed $200,000 has recently been calculated by Barton Consultancy as $1,956, 167.00 dated 3 March 2012 ... [5] A further six years between 1992 and 1998 is yet to be calculated, however it is expected to be a similar amount as the aforesaid sum. According to the Bill of Sale Deed the plant and machinery has been replaced by updated equipment, which we currently hold in our possession. [6] I would like to clarify my position as the named Second Respondent according to Mark Anthony Conlan. The Bill of Sale acknowledges me and my brothers as separate identities to the Bankrupt Estate. [7] I have had dealings with Mark Conlan and his colleague Clare Hayman, however I have never met Corey Edward Turner, and I have never received an affidavit from the applicant in this matter. Mark Conlan has involved me and my brothers in the Bankrupt Estates without merit. Some of the disputed items of plant and equipment have belonged to me since 1992 such as a Jaguar Sedan, a Toyota Landcruiser, and a Prime Mover Truck referred to in the affidavit of Mark Anthony Conlan annexure marked "MAC-45". Evidence of ownership is provided (see Annexure marked "CDS4"). [8] It is my understanding that I have answered all questions directed to me by the applicant. I hold the applicant responsible for all personal and court costs in this matter. … 97 The sons were in court while Mr Stone gave evidence. Carl said there was a discussion about salary about two or three years after he had started working for the partnership, probably around 1987-1988. The benefits discussed were that the sons would get the unencumbered equipment plus a one third share in the farm land each. If the land had gone up in price, it was 'to just to go off whatever the price was at the day'. Carl said that there was also discussion about equipment 'when the three of us were at the farm in 1988' because it was his request to have the Bill of Sale for 'security'. He was familiar with bills of sale because Mr Stone used to have a bill of sale over the sheep. At the time of executing the Deed, he maintained that Mr Stone was indebted to the boys but there was no loan as such. The $200,000 was fixed as a moderate wage. Carl said that 1992 was the first time there was any arrangement about wages. 98 Carl confirmed that as time went on some of the equipment listed in the Bill of Sale was sold and other equipment replaced it. At one point, Mr Stone asked them about the sale of equipment shortly before a clearing sale in 2010. Carl did not consider that they had security over all of the equipment. Anything that was unencumbered belonged to the sons. Anything that was encumbered belonged to Mr Stone. There was no written record of such an agreement but the agreement was that as soon as machinery equipment was paid for, it belonged to the sons. Carl said that if an asset was sold and the proceeds were used to purchase something else, the sons 'let that go ahead because obviously it was going to move the farm ahead, then as soon as that piece of equipment was paid for, it became ours'. But if hire purchase was used to buy new equipment, it would not be subject to the Deed until later. 99 Carl gave evidence that from 1998 onwards, the sons started receiving a small salary of about $1,000 per month but by 2010 it was about $1,000 per week. There was no agreement made between 1992 and 1998 in relation to this however. 100 Carl confirmed that he had refused to give Mr Ward access to the equipment on 29 June 2011 on the Farm because the sons had taken possession of it when their father went bankrupt. He says that he explained the sons' position to the Trustee. Carl stated that the equipment was taken without calculation because it was worth much less than the $1.9 million that was owed to the sons. 101 Carl confirmed that Strathmore was incorporated in October 2010. It was to take over the farming operations. Carl was a shareholder and director together with Kim. Craig was not involved in Strathmore 'because he was involved in some matrimonial proceedings at that stage'. Strathmore commenced operation as soon as it was incorporated on land leased by Kim. 102 Carl was also questioned about a number of other transactions. I did not find his answers particularly convincing. 103 All of the Stone family were clearly quite confused as to what property had been transferred, to whom, and when. Certainly they were all adamant that the sons were entitled to plant and equipment under the Deed and that the value of the plant and equipment was much less than what was owed to them. For that reason, it was unnecessary to value the plant and equipment and unnecessary to take legal advice as to their rights. Carl confirmed that the sale of the Volvo in January 2011 by Mr Stone to him for $14,000 when it was valued at $50,000 was due to Mr Stone's 'fire sale' to him. He denied that Mr Stone provided him with any cash to help start Strathmore which was entirely self-funded but he did accept that he received some of the $148,000 in cash which was withdrawn between August 2010 and February 2011 from Mr Stone as 'living money'. That was over and above the wages but probably only 'a couple of thousand dollars'.

5.3.3 Mr Kim Stone 104 Kim gave similar evidence in chief to that of his brother. His evidence in cross-examination was similar to that of his brother Carl and does not require reiteration in detail. 105 Kim confirmed that $600,000 worth of plant and equipment was not given to the brothers in July 2009. He also confirmed that no possession of plant and equipment was taken until some time in 2011 about a year before Mr Stone went bankrupt. That was when Strathmore was incorporated in October 2010. Kim said that the equipment was 'transferred' as part of the Deed. He did not know at that stage that Mr Stone was in financial trouble, although the partnership accounts were shown to him at the end of each year by Mr Stone from about age 18. There was regularly discussion between Mr Stone and his sons about the Farm's financial position. Kim said there was discussion around the family table about what sort of machinery would be purchased. There was also discussion about payments to the boys from about 1998 when 'we started getting a salary'. Kim knew what the financial position of the partnership was in 1992 because he had seen the accounts.

5.3.4 Mr Craig Stone 106 Craig gave very similar evidence. One departure was that he said that wages were first discussed when he was married. That was in 2001 rather than 1998. When he married, his wife suggested that the sons should have their own 'bit of salary' so that they could be independent to some degree. Between 1988 and 1992, Craig did not receive a salary. In that time he was working to inherit the Farm and the plant and the equipment. He would receive small sums of money for entertainment expenses. Craig said that the Deed was signed because: We wanted some security. We weren't going to work for nothing and have the farm sold out from underneath us. We knew that we would have plant and equipment there for us to go forward and … do our own shows … 107 Craig confirmed that no legal advice was taken about what the Deed meant before the equipment was repossessed by the sons.

5.3.5 Mrs Stone 108 Mrs Stone also swore an affidavit confirming, to the extent she was able, the version of events as explained by Mr Stone and sons. She was not required for cross-examination.

ARGUMENTS FOR THE STONES AS TO THE DEED 109 The Stones rely on succinct submissions. They are relevantly to this effect: The Deed speaks for itself and each of the respondents have invested over twenty-five years of their working lives into the plant, machinery and property. This is the very reason the Deed was executed and adhered to. The Trustee has no understanding, and the interests of the Grantee (Carl, Kim and Craig) must come before that of the Trustee. The Trustee sold unencumbered equipment that is the Grantee's equity to pay creditors. However the Deed clearly states the Grantee has priority over creditors. The Trustee disputes the validity of the Deed. Much effort appears to have been put in by the Trustee and his colleagues in an attempt to undo the legal standing of the document. The Trustee relies on irrelevant cases in this proceeding as a means of trying to undo a legal standing document, in this case the Deed. The Deed is not a chattel mortgage, as referred to by the Trustee. It is a secured mortgage with accruing interest of 12% per annum until the Deed is settled. At last calculation by Barton Consultancy the accumulation of the secured $200,000 at 12% per annum equates to $1,956,167.00 as at 3 May 2012. The respondents place their faith firmly in the Deed. The Trustee's outline of submissions disputes the validity of the Deed however in contradiction, has continued to question the clauses in the Deed throughout. The law must give merit to the Deed which has been in place since 1992 and we trust judgment will be in favour of the named second respondents. 110 In their closing statement, the Stones emphasised that the purpose of the Deed in March 1992 was to give the sons some form of security and understanding with their parents 'as to where their farming careers were heading'. The clauses in the Deed were to enable the sons to work towards their future goals with confidence. They never anticipated that their parents would become bankrupt. When the bankruptcy took place 'it left [the sons with] no option but to bring the Deed into effect'. The sons contend that the Trustee has disregarded the Deed throughout and that the effect of the Deed is that the sons are to be satisfied before any creditors. 111 In the closing statement made on behalf of the family but not in evidence, Craig made the point that Elders Rural Bank and Landmark Finance were both informed of the Deed. He said that the ANZ may not have been informed of the Deed as they 'bought Landmark Rural Property at a heavy discounted rate so they would probably have not been informed'. He said that Mr Stone had not contracted with ANZ. Craig said that the Stones estimated the machinery possessed by the sons was worth about $350,000 to $400,000 based on values attributed by Mr Ward. It followed that some $1,556,000 should be taken out of the P & V Stone estate before any creditors are satisfied. Craig reiterated that the total figure of approximately $1.95 million reached by the actuary was simply $200,000 multiplied by 12% compounded for 20 years.

IS THE DEED VOID UNDER S 121 OF THE ACT? 112 As already noted, the grant of the original chattels constituted by the Deed was a transfer of property (see Frost v Sheahan). 113 The evidence as to whether or not items of machinery were replaced was quite unclear. It certainly seems from the cross-examination of Carl that contrary to the requirements under the Deed (if security was to be maintained over new machinery), when assets were sold they were not necessarily replaced. The evidence of Mr Stone, confused though it was at times, was to the effect that once an asset became unencumbered, the Stones treated it as having become subject to the Deed without following the procedure described in cl 4.1. 114 When the Stones referred to machinery being unencumbered, they meant unencumbered in the sense of an encumbrance to an external third party creditor. The evidence for Craig and other members of the family was that as an asset became unencumbered, there was a transfer pursuant to the Deed. While there may have been a series of transfers over intervening years, the intent of the parties is to be derived from the content of the original security as given in 1992. In that connection, there is a presumption under s 121(2) of the Act in terms of the intention to hinder creditors. This is supplemented by subs (4A) in circumstances where there are no records as to that intention. Reading the two subsections together, the respondents have failed to rebut the presumption of the intention to defeat creditors. 115 Indeed, to the contrary, the intent was always, quite openly, that creditors would be defeated by the Deed. The whole purpose of the Deed was to ensure that monies said to be owing or agreed to be owing to the sons, together with interest, would be paid to them before any third party creditors of the parents were satisfied in the event that it was necessary to call on the Deed. 116 There is no admissible evidence at all that any of the creditors were informed as to the existence of the Deed or its terms or alleged effect. Indeed, the only evidence is to the contrary. While it may seem unfair to the sons, creditors can hardly be expected to give up recovery of such portion of their entitlement as they can attain by reason of the existence of some agreement of which they are unaware and, indeed, were expressly not told about at the time they advanced funds or continued to extend credit. 117 As to the state of solvency as at the time of the Deed, this is more difficult to identify. There was evidence from Mr Stone that he could not pay the partnership debts other than by selling land which he did not wish to do. The sons acknowledged that they were aware of the financial situation of the Farm from time to time. There is no satisfactory evidence as to what the financial position of the partnership was in 1992. Under the Act, if records are kept at one time and they are no longer retained, there is the rebuttable presumption discussed above. The Trustee relies upon it. The presumption has not been rebutted and the fact is established. 118 The matter is further complicated by the fact that in oral evidence there were statements to the effect that the brothers were all working on the Farm on the promise that they would inherit one third each. That is not something reflected in the Deed. Each of the sons indicated that the security to be given under the Deed was to be security for payment to them. This could be security against the interests of third parties in the event that the Farm sustained a financial difficulty or it could be security for payment against the parents in the event that the parents failed to honour their promise. Although the Deed could have a dual purpose, that is, one being to protect the sons against the parents' departure from their promise to make a payment of $200,000 plus interest to the sons, the second purpose is also evident. Mr Stone made it clear both in evidence in chief and in cross-examination that he would never have relied on the Deed had it not been for his bankruptcy. It was made plain by Mr Stone and by his sons that the real purpose was to protect them against third party creditors. The evidence on the topic is entirely consistent with the unrebutted presumption. 119 The Trustee says that according to the terms of the Deed itself there was consideration deemed to have been received under the document of $1 being return for the grant of security over whatever the value of the plant and equipment was at 1992. The only consideration was the payment of $1. The Trustee says at that stage there was no debt owing to the sons because there had not been, prior to that date, any agreement to pay wages. The Deed itself did not contain any forgiveness of debt. No claim to wages then due is said to have been relinquished under the Deed. The Trustee says that the Deed does no more than create a debt of $200,000. 120 I accept that there is no indication in the Deed that the figure of $200,000 relates to wages. However, I accept the evidence of the Stone family that the purpose of the Deed was to give the sons security in respect of an amount which might reasonably have been payable to them at that stage in respect of their work on the Farm over several preceding years. 121 However it also seems to me that even if there was, in truth, valid consideration under the Deed, this only deals with some aspects of the issues which need to be addressed. A further point is that the maximum amount secured by the Deed is simply $200,000. The Trustee says that that sum includes interest. Interest is referred to in the Deed but all it says is '12%'. It does not say 'per annum' and it does not indicate whether it is compound or simple. 122 If one construes the Deed on its terms within the factual matrix established on the evidence, there was a family relationship under which it was intended to provide security for the payment of a sum of money. Although it is no necessary to decide, there is no basis at all, in my view, for inferring that the Deed intended the interest of 12% to be computed on a compound basis. I would accept that even though the interest rate is not said to be computed on an annual basis that this much must be implied even though the Deed was drawn by a solicitor and it was not expressly stated. 123 But it must be emphasised that although these matters of construction of the Deed may be relevant to some claim of the sons, they are not matters which are necessary to resolve in this dispute which is confined to the question of whether ownership of the specific equipment claimed by the Trustee has lawfully passed by virtue of the Deed to the sons or to Strathmore. It has not. The Deed did not have such an effect. To the extent it might be claimed that a debt is recognised by the Deed and that transfer of equipment were in satisfaction of a debt and therefore not void, it is clear that the transfer took place at a time when the insolvency of the business was known by the family members and Strathmore and specifically to defeat creditors.

ABSENCE OF WRITTEN APPROVAL FOR ROLL OVER OF EQUIPMENT 124 In relation to cl 4.1 of the Deed, although there was no evidence as to replacement of property with 'similar articles of at least equal value and quality' in relation to the 'Mortgaged Property', the replacement contemplated in that clause would require transfer of legal title in the specific chattels for the purpose of replacing the Mortgaged Property to the sons. Clause 4.1 did not operate as an assignment of future property in equity (see Tailby v Official Receiver (1888) 13 App Cas 523 per Lord Watson (at 533). It envisaged a separate and distinct step being undertaken by the Stones over and above the acquisition of further chattels. It imposed a contractual obligation to purchase a chattel of a similar value to any item comprising part of the Mortgaged Property sold by the parents with the consent of the sons and the transfer of that chattel to the sons. 125 Under cl 4.1 of the Deed, before a chattel under the list of the mortgaged property could be sold, the consent of the Grantee, the sons, was to be given in writing. There is no evidence that this occurred. All of the evidence suggests to the contrary. 126 The submission of the Trustee, which I accept, is that the only security given under the Deed was the original equipment and whatever equipment was replaced in accordance with the mechanism prescribed in cl 4.1 as to which there is no evidence. None of the original equipment exists and no other new equipment has fallen under the security in accordance with its terms.

IS THERE AN EQUITABLE CLAIM? 127 I raised with counsel for the Trustee the High Court decision of Giumelli v Giumelli (1999) 196 CLR 101 which shares some factual similarities to the present situation. The sons might be said to have relied on assurances given in conjunction with the Deed, foregoing their entitlement to claimed wages and foregoing any other entitlement to claim more concrete security for payments of wages or other debts which might have been due to them. There are multiple difficulties, however, with this comparison. First, it was not the basis upon which the case was argued. Secondly, there is no adequate evidence as to the terms of the promises or exactly what was given up. Thirdly, while there might be some parallels, Giumelli operated so as to create an equity between the promisee and the promisor. It did not have the effect of withdrawing property from the bankrupt estate to the disadvantage of third party creditors. 128 I note that in the present case, at one point well before trial the possibility of an equitable claim was floated on behalf of the sons. However it was certainly expressly and firmly abandoned by the sons at trial. In reality, though, the Stones are not educated in the law, let alone equity, so the express disavowal of a claim based on anything other than the Deed does not have the same convincing effect that it might have had, had it been made by counsel. 129 Even taking this into account, it is difficult to see how reliance on a fairly vague assurance from the parents which was not disclosed to financiers or other third parties could set up any equity as against the Trustee. (Although it was suggested in closing submissions for the Stones that some financiers were aware of the Deed, there was no evidence to support this. It was simply a statement from the bar table.) 130 I have considered the possibility of (un-pleaded) equitable relief but in all the circumstances, including the fact that such a claim has been abandoned by the Stones and for reasons canvassed briefly above, I do not consider that it is open to me to grant equitable relief.

AN ACCOUNT 131 As indicated, the Trustee is entitled to the relief originally claimed. It also appears to me that this is an appropriate case for an account of profits. From the time the Trustee was appointed demand was made for the return of assets. There has been abundant correspondence on that topic. The failure of the Deed and its invalidity as against the Trustee means that the sons have wrongly taken possession of the unencumbered assets of the bankrupts and have maintained them and carried on their farming business using them. The assets of the estate, it seems, may have been used to generate profit by the sons. If this is not the case, then an account of profit would not yield any claim to the Trustee. If the equipment has not been put to profit making use then the sons suffer no further detriment if an account of profits is ordered.

CONCLUSION 132 For the foregoing reasons, the Trustee has succeeded in his claim. Regrettably, the Deed and the actions or absence of action taken by the Stones pursuant to the Deed does not achieve that for which the Stones had hoped. 133 Shortly prior to the delivery of judgment I invited the parties to stipulate precisely the relief sought if they were to succeed. The respondents provided a minute seeking the following orders:
1. Adhere to the clauses set out in the Bill of Sale Deed dated 19th March 1992.
2. All unencumbered plant be returned to the control of the rightful owners being Carl, Kim, and Craig Stone.
3. All monies owing to the Stone brothers for their twenty-eight years of work on the farm be settled out of P & V Stone's estate, as two of these properties have already been sold at an undisclosed value by RSM Bird.
4. RSM Bird be obliged to disclose the sum value of these properties per hectare as a guide for the remaining value of the properties outstanding.
5. All monies owed to the Stone brothers be settled with land to the value set out by Barton Consultancy including the interest accrued at 12 per cent per annum up to the date of release.
6. All court costs incurred are to be paid by the applicants who brought the matter before the Court. 134 In light of the findings made, the relief sought by the respondents will not be granted. 135 The Trustee also produced a minute which I have reviewed and compared with the findings made. I am satisfied that relief should be granted in accordance with that minute, with the alternative of relief under s 121 of the Act as the most appropriate ground. The following orders are made:
7. Leave be granted for the applicant to amend the application filed on 13 April 2012 to include the following final orders: (a) '3. An order that an account be taken of all profits received by the respondents arising out of the use of any of the property specified in the schedule attached and marked 'A' from 16 May 2011 to the date that such property is delivered up to the applicant.' and (b) '4. An order that the respondents pay to the applicant such moneys as may be found to be due to the applicant upon the taking of that account.'
8. The respondents deliver up to the applicant the property specified in the schedule attached and marked 'A' within 7 days of the making of this order.
9. The Court declares that the transfer of the property items specified in the schedule attached and marked 'B' by the first respondents to any or all of the second respondents are transfers that are void.
10. An order that an account be taken of all profits received by the respondents arising out of the use of any of the property specified in the schedule attached and marked 'A' from 16 May 2011 to the date that such property is delivered up to the applicant.
11. An order that the respondents pay to the applicant such moneys as may be found to be due to the applicant upon the taking of that account.
12. There be liberty to apply in relation to the taking of the account, and generally.
13. The second respondents pay the costs of the application, including all reserved costs, to be taxed if not agreed.
14. The applicant's costs be paid out of the bankrupt estates of the first respondents, insofar as those costs are not recovered from or paid by the second respondents. I certify that the preceding one hundred and thirty-five (135) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

A/Associate: Dated: 30 November 2012 'A' Bankrupt Estate of P & V Stone Disputed Items of Plant & Equipment As at 17th August 2011

Plant & Equipment ID Details

2008 John Deere 30Ft Front (Financed by CNH) H00930D691254 9750 STS John Deere Combine Chassis No: H09750S685953 Engine No: RG6081H104822 (ref 3.31c) John Deere 4700 Sprayer Chassis No: 4700X002137 Engine No: T06068T17314216 (ref 3.31e) 1997 Caterpillar Challenger 85D Tractor SN: 4GR00486 (last known location - Wandering Property) Circa 1970 Caterpillar D8 Tractor (last known location - Wandering Property) 2006 Nissan Navara STX 1CD0367 2006 Nissan Navara STR PING20 Prime Mover - Volvo F16 Rego: 1DGD 292 (WA) VIN: YV5H3A2DXMD503512 Flat Deck Trailer 1BJW036 (WA) 1990 VOLVO Prime Mover 9DM986 Flexicoil 5000 air drill ADB0000-T074895 John Deere 9600 H09600X646688 MCDON Front only (Comb trailer) 112932 1994 VOLVO PMOVER 1CBH447 (unsighted) 1985 SCANIA PMOVER KU981 Norrish Bin (PRIORITY) 1991 VOLVO PMOVER PJS500 6Moylan 2700 Hundred Bushell Grain Silo's 152, 177, 295, 150, 336, 342 2Moylan 2700 Bushel Grain Silos 255 256 2* Moylan 2400 Bushel Grain Silos 76, 72 2* Moylan 2400 Bushel Grain Silos (older units) 5,000 Litre Fuel Tank on Stand with 2 Hose Outlets 1981 Toyota LCRUSR KU25004 2003 Toyota LCRUSR PING100 Toyota Landcruiser 1BJA410 Jaguar Sedan Utility vehicle Unlicenced Scadia Truck YS2RH6X4Z01191419 (Unlicensed) 1975 MILARD A34620 2000 Holden CAPRIC KU1085 1968 DODGE 1ZYA356 1996 Nissan patrol KU547 (unlicensed) 1971 Ford Fairlane Unlicenced 1996 NOLIST KU2799 1997 NOLIST WB4969 1999 LDSTAR 1TBL888 Kawasaki Motorcycle KLR 250 VIN:JKAKLMD14R19072766 Grain Silo 2000 Bushel Silo 162, 267, 274, 272, 174 1983 Steiger Panther 4WD Tractor P043076404 Fordson tractor JD 4020 Tractor Tractor 308LSA 4X4 2006 Richiger E250 Grain Bag Unloader E250:SN:F310 Aluminium tanker Unlicensed Navigator for sprayer Bag Machine unloader GPS Spray Cultiver GPS System Easy Steer GPS system Spreader 4 Beam overhead gear (portable) Mig Welder C1070A70113918 Mower 3pt linkage MTD yardman lawn mower Fridge/freezer 2x small fuel tanks on stands 1,000 Litre Fibreglass Tank with Honda 5hp Pump 40,000 Litre Flexi-N Fibreglass Water Tank 2x 45,000 Litre Flexi N Tanks 2,000 Litre Steel Tank on Trailer with Petrol Driven Pump 500 Litre Fibreglass Tank, Hose & Frame 2,000 Litre Fibreglass Water Feeder 4x Galvanised Metal Cabinets Mobile Multi Drawer Toolbox & Tools 2 x 20,000 Litre PVC Water Tanks 5,600 Litre Fuel Tank with Petrol Driven Pump 4x Assorted Fuel Tanks on Stands Pumps New boom Ellis Grain tube Mixer Shed hoist 7816 Absorber Flexicoil bar motorbike Quad Bike Fuel Truck Forklift 022NM01A14 Electric motor Hay Chopper HL2833 2006 Richiger EA 180 Bulk Grain Bag Unloader PTO Driven Augier B126 Sheep feeder Alfarm 3030 Bar New Holland TR95 501809 Comb SN:301268 1996 Seed Bin 96-68089 Agri TAB Trailable Petrol Jen-ell 1000L Fire fighting Unit 1980 International Tractor 3474 Connor Shea 24 Disc Plough Connor Shea 36 Disc Plough 2,000L PVC Water Feeder 4*Sunbeam Shearing Motors 2,000L Fibreglass Water Feeder 4 Wheel Motorbike trailer Honda Petrol Water pump Chamberlain 9G Tractor Philips Pick up Front SW000042 1998 John Deere 930 Comb with Trailer H00930R676676 1983 Isuzu Fuel tank, toolboxes and water tank 0J847945 (unlicensed) Road Grader Connor Shea 40 Disc Plough Prime Mover Truck Tipper Truck with Bin Tray Top Truck Vintage Track Crawlers JCB Telehandler Track Rake Slasher International 761 deck set harrows C120000A000532 Residual Grain Stock Held on the property known as Strathmore Farm at Pingaring, Western Australia Liquid Fertiliser Held on the property known as Strathmore Farm at Pingaring, Western Australia Fuel (Diesel) Held on the property known as Strathmore Farm at Pingaring, Western Australia

'B' Bankrupt Estate of P & V Stone Items of Plant & Equipment for which a declaration is sought that transfers are void Plant & Equipment ID Details VOLVO F16 PMOVER Registration No.: 1DGD292 VIN: YV5H3A2DXMD503512 Engine No.: TD162FL9529030 1999 LDSTAR Registration No.: 1TBL888 VIN: 6AST20X1000000078 1997 NOLIST Registration No.: WB4969 VIN: 6J9T25000V23R1005 1996 NOLIST Registration No.: KU2799 VIN: 6B9T24000T2FH6023 1987 HOLDEN COMMODORE Registration No.: 1BIT170 VIN: AVL040140A Engine No.: 085603A6 2000 HOLDEN CAPRICE Registration No.: KU1085 VIN: 6HBWHZ19FYL561825 Engine No.: VF993551484 2003 TOYOTA LANDCRUISER Registration No.: PING100 VIN: JTECB09JX03011052 Engine No.: 1HZ0414918

Bills of Sale Act 1899(WA)

Bills of Sales Amendment Act 1987(WA)

Personal Property and Security Act 2009(Cth)

Bankruptcy Act 1966(Cth)ss 120, 121, 122, 129

At a glance

Court

Decision date

Before

Source

Judgment (36 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (6)