Harrison v Nandicorp Pty Ltd

First issue: is the East Perth Property an asset of the bankrupt estate or an asset of the TRM Trust? 2 This issue turns on the question of whether the property was owned by the late Mr Gunasegaram personally or in his capacity as the trustee of the TRM Trust. 3 In my view, the evidence establishes that Mr Gunasegaram purchased the property in his own right and not as the trustee of the TRM Trust. The property was acquired in 2003. Prior to its acquisition Mr Gunasegaram applied for a loan for that purchase and identified himself as the purchaser. He also contracted to purchase it in his own name on 4 August 2003. In his 2007 income tax return he identified himself as the owner of the property and returned rental income from the property as income derived by him. Further, in 2015 Mr Gunasegaram applied for a home loan secured by the East Perth Property and did not make any reference to the TRM Trust. In an affidavit prepared by his then solicitor on 2 June 2017, the East Perth Property was identified as being owned by Mr Gunasegaram personally. I infer that Mr Gunasegaram was the source of the instructions leading to the drawing of this affidavit. 4 There is evidence in the opposite direction but it is either unreliable or equivocal. The unreliable evidence includes the 2008-2017 income tax returns for the TRM Trust which all record the property as being owned by the TRM Trust. However, these tax returns were not created before 2018 when the tax agent who prepared them was first incorporated. The financial reports for the TRM Trust for the period 2009 to 2018 also record the East Perth Property as a trust asset however these too were not prepared until at least 2017. This was after it became apparent that judgment would soon be entered against Mr Gunasegaram in the Supreme Court. In fact, a different financial report for the TRM Trust for FY16 which was prepared prior to 2017 did not disclose that it owned the property. 5 The equivocal evidence includes the fact that the register of titles records Mr Gunasegaram as the registered proprietor. Its equivocal nature stems from the fact that a trust may not be recorded on the title of Torrens system real property unless presently irrelevant exceptions exist: s 55(1) Transfer of Land Act 1893 (WA). The equivocal evidence also includes the fact that the contract dated 4 August 2003 included an ability on Mr Gunasegaram's part to nominate the TRM Trust as the purchaser. Its equivocality stems from the fact that there is no evidence of any such nomination. 6 In those circumstances, I conclude that the proceeds of sale of the East Perth Property are an asset of the bankrupt estate and not the TRM Trust. 7 For completeness, before these reasons for judgment were delivered the appointor of the TRM Trust, Mrs Gunasegaram, appointed Nandicorp Pty Ltd ('Nandicorp') as the trustee of the TRM Trust. Nandicorp is a party to these proceedings. The interests of the TRM Trust are therefore represented in the proceeding and the suit is properly constituted.

Second Issue: was Mr Gunasegaram the trustee of the TRM Trust whilst he was employed by Blue Visions? 8 From October 2010 Mr Gunasegaram was contracted by Blue Visions Management Pty Ltd ('Blue Visions') to provide executive services to it by running its office in Western Australia. This employment ended in March 2014 shortly after which Blue Visions sued him in the Supreme Court of New South Wales in respect of his conduct whilst he was its employee. The Estate claims an indemnity from the assets of the TRM Trust on the basis that Mr Gunasegaram was its trustee during this period. 9 For the following reasons, I accept the bankrupt estate's contention that Mr Gunasegaram was the trustee of the TRM Trust during his employment by Blue Visions between October 2010 and March 2014. The TRM Trust is a discretionary family trust which was settled on 22 April 2003 by means of a deed of settlement ('Trust Deed'). At the time of its settlement Mr Gunasegaram was appointed as the trustee of the trust under the terms of the deed. 10 There is a deed dated 17 October 2007 which purports to replace Mr Gunasegaram as the trustee of the TRM Trust with Nandicorp. This deed came to light in the wake of the Supreme Court judgment against Mr Gunasegaram after Blue Visions sought freezing orders over his assets. These applications resulted in the coming to light of several documents including the deed of 17 October 2007. 11 I accept the Estate's submission that the deed cannot have been executed in 2007. It was signed by Mrs Gunasegaram (in her capacity as the appointor under the Trust Deed) and her signature was witnessed by Mr James Paul Clarke. There is also a document entitled 'Consent to Act' bearing the same date signed on behalf of Nandicorp by Mrs Gunasegaram and again witnessed by Mr Clarke. 12 Mr Clarke gave evidence on behalf of Mr Gunasegaram in the Supreme Court proceeding. In his affidavit he said that he had met Mr Gunasegaram whilst working at Worley Parsons. In Mr Gunasegaram's own affidavit evidence in the same proceeding, however, Mr Gunasegaram said that he had commenced working at Worley Parsons in March 2008. If this evidence be accepted it shows that Mr Clarke could not have witnessed either document in 2007. Nandicorp elected to take no part in the present proceeding beyond indicating that it opposed the granting of the relief sought by the Estate. Nor did Mrs Gunasegaram play an active role by the time the application came on for determination, for the proceeding as against her was dismissed by consent on 13 November 2020, with no order as to costs. 13 It would be open on this evidence to conclude that the deed of appointment and the consent to act were prepared sometime after 2008. In order for that inference not to be drawn I would need to conclude either that Mr Clarke's evidence that he met Mr Gunasegaram whilst working at Worley Parsons is incorrect (and that he in fact met him somewhere else) or that Mr Gunasegaram's evidence that he began working at Worley Parsons in March 2008 is in error. 14 Both possibilities strike me as unlikely. If, however, there was contemporaneous evidence which showed that Nandicorp had been acting as the trustee of the TRM Trust from 2007 onwards this might make the question more difficult. In fact, there is no such reliable contemporaneous material. Mr Gunasegaram's work for Blue Visions was invoiced in the name of the TRM Trust and paid into an account in the name of Mr Gunasegaram as trustee for the TRM Trust. The bank account statements for the TRM Trust are in Mr Gunasegaram's name as trustee for the TRM Trust. In 2012 Mr Gunasegaram applied for a car loan for a Mercedes which was then recorded as being held by the TRM Trust and in 2014 he applied for a car loan for a Volvo which was also recorded as being held by the TRM Trust. 15 Tending against that conclusion are the tax returns for the TRM Trust which I have referred to above, all of which indicate that Nandicorp was the trustee in the period 2008-2017. However, as I have concluded above these were all prepared after 2017 when the balloon had gone up. On the other hand, the financial report for the TRM Trust prepared for FY16 was prepared prior to 2017 and, indeed, I have relied upon it above to show that the East Perth Property was not a trust asset. This financial report does, however, indicate that the trustee of the TRM Trust was Nandicorp. It was prepared by Stewart Rodrigues of Rodrigues Accounting & Business Solutions Pty Ltd. That firm's office became the registered office of Nandicorp on 15 December 2015. I therefore infer that the FY16 financial statement was prepared on or after that date. Correspondence passing between Mr Rodrigues and Mr Gunasegaram may suggest that it was not prepared until after 20 May 2017 although at least on the question of the financial reports (as opposed to the tax returns) it is to an extent equivocal. The date of 20 May 2017 may be contrasted with the date on which judgment was entered against Mr Gunasegaram in the Supreme Court, 10 May 2017. However, as will be seen, it is not necessary to reach a view on that. 16 For completeness, I should note briefly some other matters to discount them. Mr Gunasegaram's solicitor in the Supreme Court proceedings, Mr Wilkinson, swore an affidavit in support of an application by Mr Gunasegaram to vary freezing orders obtained by Blue Visions. In it he said that Mr Gunasegaram was the former trustee of the TRM Trust. However, the material exhibited to the affidavit, according to Mr Wilkinson's summary of it, in fact only showed that Mr Gunasegaram was the trustee of the TRM Trust and I do not think that I should take from Mr Wilkinson's affidavit any more than that Mr Gunasegaram had told Mr Wilkinson that he was a former trustee. In the same category may be placed the affidavit of Mr Clive Davies who had been appointed as a director of Nandicorp after the judgment against Mr Gunasegaram. 17 In those circumstances, I propose to infer that the deed of replacement and consent to act were executed after March 2008 and that Mr Rodrigues was instructed by Mr Gunasegaram on or after 15 December 2015 that Nandicorp had become the trustee of the TRM Trust. It is not straightforward to make a finding about when the deed of replacement and the consent to act were actually executed. 18 There are two possibilities on the evidence. The first is that the deed of replacement and the consent to act are the only formal documents dealing with the position of the trustee. The second is that there is another deed of appointment and consent to act underpinning the instruction given to Mr Rodrigues. I consider the second option as unlikely since there is no explanation if such instruments existed why they would not have been produced. 19 I therefore infer that the only deed of replacement and consent to act which have ever been executed are those to which I have referred. On the facts I have found they were executed sometime between March 2008 when Mr Gunasegaram began working for Worley Parsons and around 15 December 2015 when, on the view most favourable to Mr Gunasegram, he may have told Mr Rodrigues that Nandicorp was the trustee of the TRM Trust (noting that it is also possible that this conversation occurred after judgment was entered against Mr Gunasegaram on 10 May 2017). 20 Blue Visions commenced its proceeding against Mr Gunasegaram on 30 June 2014. I think it more likely than not that it was after the commencement of this proceeding that Mr Gunasegaram prepared the deed of replacement and consent to act to make it appear that he was not the trustee of the TRM Trust at any time during his employment with Blue Visions. I therefore conclude that the deed was signed somewhere between 30 June 2014 and 15 December 2015 and deliberately backdated to 17 October 2007. 21 As such the execution of the deed and the consent to act were part of an attempted fraud. I do not consider them to be legally efficacious in that circumstance: Ballantyne Suites Pty Ltd v Ballantyne Chambers Pty Ltd (in liq) [2013] VSC 482 at [71]-[74]. Consequently, Nandicorp did not become the trustee of the TRM Trust whilst Mr Gunasegaram was employed by Blue Visions and the trustee at all times during that employment remained Mr Gunasegaram.

Third Issue: was Mr Gunasegaram (and is the Estate) entitled to an indemnity out of the assets of the TRM Trust 22 The Estate submits that Mr Gunasegaram (and therefore it) had an entitlement to be indemnified out of the assets of the TRM Trust in respect of his liability to Blue Visions. This was put on the basis that as Mr Gunasegaram was the trustee of the TRM Trust he was entitled to be indemnified in respect of any liabilities incurred by him in connection with the performance of his duties as trustee. Alternatively, it was submitted that even if his actions had not been in the performance of his duties as trustee, nevertheless, the TRM Trust had benefitted from his actions and he (and the Estate) were entitled to be indemnified up to the value of the benefit that the TRM Trust had received. The benefit received by the TRM Trust was some $749,427.29 paid by Blue Visions for the services that Mr Gunasegaram had rendered to it. 23 Turning then to the question of indemnity, it may be accepted that ordinarily a trustee is entitled to an indemnity out of trust property in respect of the liabilities, costs and expenses properly incurred in connection with the performance of his duties and the exercise of his powers and discretions as trustee: Vacuum Oil Company Pty Ltd v Wiltshire (1945) 72 CLR 319 at 324 per Latham CJ, 335 per Dixon J; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367 per Stephen, Mason, Aickin and Wilson JJ. The Trust Deed is governed by Queensland law. In Queensland s 72 of the Trusts Act 1973 (Qld) provides: Reimbursement of trustee out of trust property A trustee may reimburse himself or herself for or pay or discharge out of the trust property all expenses reasonably incurred in or about the execution of the trusts or powers. 24 Whether Mr Gunasegaram was, or the Estate is, entitled to indemnity therefore requires, on the one hand, an identification of those of his actions which gave rise to his liability and, on the other, a comparison of those actions against the nature of his duties as the trustee of the TRM Trust. 25 As to the former, Mr Gunasegaram was employed by Blue Visions as executive general manager and as such was nationally responsible for Blue Visions' project and services area. In the Supreme Court litigation, Mr Gunasegaram's liability arose because he was found to have made knowingly false representations to Blue Visions about a proposal by Woolworths to roll out Masters stores across Australia (Masters being a sometime competitor of Bunnings): see Blue Visions Management Pty Limited v Chidiac [2017] NSWSC 255. In effect, Ball J found that Mr Gunasegaram lied to Blue Visions in that he represented that: (i) he had a close relationship with one or more key people at Woolworths (when he did not); (ii) as a result of those relationships there was a good chance of Blue Visions being retained by Woolworths to project manage the roll out of the Masters stores (when there was not); and (iii) Blue Visions had in fact been retained by Woolworths to do that work (when it had not). Not only was none of this true, it was also held that Mr Gunasegaram knew it was not true. Consequently, Ball J held Mr Gunasegaram liable to Blue Visions in the tort of deceit. As a result of Mr Gunasegaram's misrepresentations Blue Visions had hired a number of extra staff. Ball J awarded Blue Visions damages to compensate it for the costs of those staff. 26 The terms of TRM Trust did not authorise Mr Gunasegaram as trustee to enter into an employment relationship or to make knowingly false statements to his employer. Consequently, it cannot be said that his liability arose from the performance of his duties as the trustee of the TRM Trust. On ordinary principles, therefore, Mr Gunasegaram (and hence the Estate) would not be entitled to an indemnity out of the trust assets. 27 The Estate then submitted that a trustee was also entitled to be indemnified on a second basis, namely, that a trustee might be indemnified in respect of a liability improperly incurred to the extent to which the trustee acting in good faith had benefited the trust estate. In support of this proposition it cited RWG Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 at 396; Park v Whyte [2015] QSC 287 at [116]-[118] per Jackson J; Nolan v Collie [2003] VSCA 39; 7 VR 287 ('Nolan') at [58] per Ormiston J; Vyse v Foster (1872) LR 8 Ch App 309; and Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628 at [150] per Finkelstein J. 28 On this view, whilst Mr Gunasegaram's conduct was not authorised by the terms of the trust, the fact remained that by reason of his actions Mr Gunasegaram had enriched the TRM Trust to the extent of $749,427.29, that being the total remuneration which Blue Visions had paid to it in respect of Mr Gunasegaram's employment. 29 I do not accept this submission for two reasons. First, Mr Gunasegaram's liability to Blue Visions was incurred as a result of a deliberate deceit. I do not accept that his actions in doing so were of any benefit to the TRM Trust. Secondly, I do not think it can credibly be said that Mr Gunasegaram's actions were in good faith. 30 As to the first matter, it is important not to conflate Mr Gunasegaram's employment by Blue Visions (which resulted in the conferral of a benefit on the TRM Trust) with those of his actions giving rise to his liability in deceit. I do not think that it can be said that it was his deceitful conduct, as distinct from his employment more generally, which resulted in the payment of $749,427.29 to the TRM Trust. Whatever view one may take of the contract of employment, it was not within the scope of Mr Gunasegaram's duties as an employee deliberately to deceive his employer. As such, it cannot be said that this conduct took place in the performance of the duties for which he was remunerated, and therefore that it was conduct from which the TRM Trust benefited. Blue Visions was not paying Mr Gunasegaram to lie to it. 31 As to the second matter, regardless of whether good faith is to be considered as between the trustee and the beneficiaries (as the Estate submitted) or, as in a tort case, as between the trustee-tortfeasor and his victim, in this case it is I think clear that Mr Gunasegaram cannot have acted in good faith. It is thus not necessary therefore to address the tension between Nolan at [58] per Ormiston J and the New South Wales Court of Appeal's decision in Gatsios Holdings Pty Ltd v Nick Kritharas Holdings Pty Ltd (in liq) [2002] NSWCA 29 ('Gatsios'). 32 Wherever the line is to be drawn between those liabilities and expenses which may be recovered pursuant to a right of indemnity and those which may not, it seems to me that fraudulent conduct lies on the wrong side of the line. This was the position which Meagher JA accepted 'in principle' at [47] in Gatsios. Further, as Mason P observed at [42], 'some outer limit needs to be drawn in order to recognise that certain types of grossly improper frolics by trustees will put them outside the presently uncertain boundary of the right now in question.' I do not accept that Mr Gunasegaram is entitled to be indemnified out of the assets of the TRM Trust for the consequences of his fraudulent conduct. 33 Consequently, I conclude that the Estate is not entitled to an indemnity out of the assets of the TRM Trust. For completeness, the Estate did not seek to rely upon the provisions of Pt VI Div 4A of the Bankruptcy Act 1966 (Cth) ('Bankruptcy Act').

Fourth issue: whether April 2015 transfer of $475,150 from Mr Gunasegaram to the TRM Investments Trust is a voidable transaction 34 On 30 April 2015 Mr Gunasegaram borrowed from the Commonwealth Bank of Australia ('CBA') sums totalling $1,018,900. From these proceeds he paid an amount of $475,150.00 into a loan account held in the name of Mr Gunasegaram as the trustee of the TRM Investments Trust (account 3950). Immediately prior to this credit on 30 April 2015 that loan account was in debit in the amount of $950,150.00. After the credit it was in debit in the amount of $475,000.00. I therefore accept that the amount of $475,150 was transferred to the TRM Investments Trust as alleged. 35 It is not strictly necessary in that circumstance to consider the Estate's submission that the FY15 accounts for the TRM Investments Trust contain false entries. There were two points. First, that the reduction in account 3950 had not been recorded in those accounts. I reject that submission. The accounts correctly record the balance of that loan account as $475,000. The second point was that the accounts falsely included an apparent liability on account 4748 in the sum of $475,150. I accept the Estate's submission that account 4748 was never a debit account and was not in debit in the amount of $475,150. On the other hand, the FY15 accounts fail to record a loan from Mr Gunasegaram of $475,150 (being the amount transferred from him to account 3950). These two errors would appear to me to cancel themselves out and therefore to make questionable the Estate's submission at s67 that the accounts falsely claim that '$475,150 was borrowed when it was not'. The problem is not that the accounts do not record a loan of $475,150 - they do - the problem is that they falsely suggest that the lender was the CBA when it was actually Mr Gunasegaram. 36 There is no evidence that Mr Gunasegaram received anything in return for the transfer of the sum of $475,150.00 and I accept the Estate's submission that the transfer of the sum was for nil consideration. 37 A transfer of property by a person who later becomes bankrupt is void against the trustee in bankruptcy if it took place within the five years before the bankruptcy commenced and if the transferee, relevantly, gave no consideration for it: s 120(1) Bankruptcy Act. A transfer of property includes a payment of money: s 120(7)(a). Mr Gunasegaram's bankruptcy commenced in December 2018 when his debtor's petition was accepted so that the payment occurred within the requisite five year window. Consequently, I accept the Estate's submission that s 120(1)(a) applies and that the transfer of the $475,150.00 is voidable against the Estate.

Fifth Issue: Mr Gunasegaram's payments for five sets of improvements on the family home 38 Mr Gunasegaram maintained an account in his name with the CBA with an account number ending in 2119. Between 25 May 2015 and 6 July 2015, 8 transactions took place on this account which the Estate submits were voidable transactions. The transactions comprised the drawing of cheques, the transfer of funds and the withdrawal of cash sums. The gist of the Estate's case is that the evidence shows that these funds were used to make improvements to the house in which Mr Gunasegaram and his family lived which was a trust asset of the TRM Investments Trust. The house is situated in Daytona Drive in Iluka, a beachside suburb near Perth ('the Iluka Property'). 39 I accept each step in the Estate's submissions about this. First, I accept that the Iluka Property was an asset of the TRM Investments Trust. The registered proprietor of the Iluka Property was Mr Gunasegaram. Evidence was given on behalf of Mr Gunasegaram in the Supreme Court proceedings that the Iluka Property was owned by him in his capacity as the trustee of the TRM Investments Trust rather than in his personal capacity. This evidence is consistent with the loan application Mr Gunasegaram completed with the CBA on 13 November 2014 where he listed himself as the trustee of the TRM Investments Trust as the applicant for the loan. Bank statements subsequently issued by the CBA in respect of that loan also record Mr Gunasegaram as trustee for the TRM Investments Trust as the borrower. I am satisfied that the Iluka Property was an asset of the TRM Investments Trust. The Iluka Property is recorded as a rental property 100% owned by the TRM Investments Trust in each of its FY 2015, 2016, 2017 and 2018 income tax returns. Although the returns all appear inaccurately to suggest that the Iluka Property was not being used as the family home this does not detract from their evidentiary value in proving its ownership of the property in each of those years. I therefore accept that the Iluka Property was a trust asset of the TRM Investments Trust. 40 Secondly, I accept that Mr Gunasegaram maintained an account in his own name with an account number ending in 2119. There is no evidence which suggests that this account was an account which Mr Gunasegaram held in his capacity as trustee either of the TRM Trust or the TRM Investments Trust. I conclude that Mr Gunasegaram held this account in his own capacity. 41 Thirdly, I accept that between 25 May 2015 and 6 July 2015 drawings were made on this account which were used to improve the Iluka Property in five ways.

(a) Handyman improvements to the Iluka Property: $7,649.00 42 These improvements most likely relate to the front wall of the property and were in the sum of $7,649.00. A cheque was drawn on the account on 25 May 2015 in the sum of $4,399.00. The payee of this cheque was 'JL Nurthen'. A Mr JL Nurthen operates a business known as 'Johns Handyman WA'. Two days later there was a cash withdrawal on the account of $3,250.00. The sum of $4,399.00 and $3,250.00 is $7,649.00. On the same day that the cheque was drawn an identical sum was paid into the 2119 account from another account maintained by Mr Gunasegaram in his own name. The description in the other account of the purpose of that transfer is 'DD Front Wall bal'. I infer that 'DD' denotes Daytona Drive and that 'Front Wall bal' refers to the final sum due for work done to the front wall at Daytona Drive. I therefore infer that the cheque and cash payment were for the purpose of paying Mr Nurthen for the completion of the front wall at the Iluka Property. Why Mr Gunasegaram decided to split the payments in a cash/cheque blend is unclear but does not, in my view, matter.

(b) Installation of solar panels: $10,699.00 43 A cheque was drawn on the account in the sum of $8,699.00 on 9 June 2015 to the payee 'Solar Earth Solutions'. On the same day, cash in the amount of $2,000 was withdrawn from the account. The depreciation schedule for the TRM Investments Trust for the year FY18 records the purchase on 9 June 2015 of 'Solar Panels - Iluka' for a price of $10,699. I conclude that $10,699 of Mr Gunasegaram's funds were used to acquire solar panels for the Iluka Property.

(c) Purchase of driveway and shed: $6,830.00 44 On 15 June 2015 a cheque was drawn on the account in the sum of $4,490.00 and a cash withdrawal made of $2,340. These totalled $6,830.00. The cheque was made out to 'Craftsmen Fencing'. The description for the cash withdrawal is 'DD Shed & DW'. The FY18 financial report for the TRM Investments Trust records the purchase on 5 June 2015 of 'Driveway - Iluka' for $2,100. I infer that $6,830.00 of Mr Gunasegaram's funds from the account were used to pay for a driveway and a shed on the Iluka Property.

(d) Electricity Bill: $996.25 45 On 28 June 2015 Mr Gunasegaram paid from the account by means of BPAY the sum of $996.25 to 'SYNERGY'. The transaction details record 'DD Elec 0615'. I infer that Synergy is a retail electricity provider and that this transaction shows that Mr Gunasegaram paid the June 2015 electricity bill for the Iluka Property.

(e) Installation of electricity supply in wall: $1,900 46 On 6 July 2015 Mr Gunasegaram withdrew $1,900.00 in cash from the account. On the same day, the same amount was transferred into the account from another account held in Mr Gunasegaram's name. The transaction details for that account record 'DD Wall Elec Retic'. I infer that Mr Gunasegaram spent $1,900.00 on the installation of an electricity supply in a wall at the Iluka Property. 47 In the case of (a), as I have noted, this was preceded by a payment from another account in Mr Gunasegaram's name of the same amount. There is no evidence to suggest that that account was held by Mr Gunasegaram in his capacity as the trustee of either trust. In relation to (b)-(e) these transactions were preceded by a transfer from the same account of the sum of $20,000. In neither case does this appear to me to matter. 48 For completeness, the Estate spent some effort demonstrating that these funds flowed, in part, from other funds which it alleged also belonged to Mr Gunasegaram. I do not think this matters. I see no reason not to proceed on the basis that the funds that were drawn on Mr Gunasegaram's account ending in 2119 belonged to him. 49 Thirdly, I accept that the effect of these five sets of improvements is that Mr Gunasegaram, for no consideration, paid for improvements on property owned by the TRM Investments Trust. Prima facie, s 120(1) applies and the transaction is void against the Estate. Section 120(3) provides: (3) Despite subsection (1), a transfer is not void against the trustee if: (a) in the case of a transfer to a related entity of the transferor: (i) the transfer took place more than 4 years before the commencement of the bankruptcy; and (ii) the transferee proves that, at the time of the transfer, the transferor was solvent; or (b) in any other case: (i) the transfer took place more than 2 years before the commencement of the bankruptcy; and (ii) the transferee proves that, at the time of the transfer, the transferor was solvent. 50 Section 120(3)(a) does not apply. Making the assumption that Mr Gunasegaram was a related entity, the transactions nevertheless took place between 25 May 2015 and 6 July 2015 which was less than 4 years before the commencement of Mr Gunasegaram's bankruptcy. Section 120(3)(b) does not apply either. Whilst the transactions did take place more than 2 years before the commencement of the bankruptcy, it has not been proven that at the time that they occurred that Mr Gunasegaram was solvent. 51 In principle I accept therefore that the Estate is entitled to declaratory relief that the payments made between 25 May 2016 and 6 July 2015 are voidable as against the Estate.

The TRM Trust 52 I have concluded above that the East Perth property forms part of the bankrupt estate. On 20 September 2021 the CBA exercised its power of sale over the property and entered into a contract to sell the property for $653,741.60. The amount owing to the CBA is $720,957.41. It seems likely that there will be no property once that sale is completed. In that circumstance, I will grant a declaration as sought by the Estate.

The TRM Investments Trust 53 A question arises as to whether the interests of the TRM Investments Trust are represented in this proceeding and as to whom any such relief might be directed. The Estate submitted that the office of the trustee of the TRM Investments Trust is currently vacant but that all parties who could possibly be interested are before the Court. I accept both of these submissions. 54 As to the first, the TRM Investments Trust was created by a deed settled on 24 November 2008. At that time Mr Gunasegaram was its trustee. The trust is a unit trust and at inception Mr Gunasegaram was the owner of all of the units. There is a deed dated 8 December 2008 purporting to appoint Nandicorp as the joint trustee. Under cl 4 of the deed any change of trustee required a resolution passed by the registered holders of at least 51% of the units present and voting at a duly convened meeting of unitholders. There is no evidence that the deed of 8 December 2008 was preceded by such a vote at such a meeting and indeed, the deed appears to have proceeded on the incorrect assumption that there were no unitholders (had that assumption been correct the deed would have been valid). As such no power arose to add Nandicorp as a trustee and the deed of 8 December 2008 was ineffective to do so. 55 Another deed was executed on 18 October 2018 purporting to remove Mr Gunasegaram as the trustee. Again, however, the deed was not preceded by the necessary meeting of and resolution by a majority of unitholders. It too was ineffective. No clause in the trust deed had the effect of removing Mr Gunasegaram as the trustee upon his bankruptcy. Consequently, Mr Gunasegaram remained the trustee of the TRM Investments Trust. Upon his death the office became vacant. 56 All of the units in the TRM Investments Trust are presently held by the trustee in bankruptcy having been transferred to him by Mrs Gunasegaram. The only possibly interested parties are therefore the trustee in bankruptcy and Nandicorp both of whom are parties to the proceeding. Nandicorp opposed the grant of relief in this case but, as I have already noted, it took no active part in the present application. 57 The only assets of the TRM Investments Trust are the net proceeds of sale of the Iluka Property (following a mortgagee sale) which are $361,817.72. This is being held in an account with the CBA's solicitor pending the determination of these proceedings. The Estate is entitled to a declaration that the $475,150.00 transferred from Mr Gunasegaram to the TRM Investments Trust is a voidable transaction as are the eight transactions resulting in improvements to the Iluka Property. These total $28,074.25. This totals $503,224.25. The proceeds of sale will be charged with that amount. Since this exceeds the proceeds of sale I will order that the proceeds be paid to the Estate. 58 The Estate seeks its costs. The relief was opposed by Nandicorp although it did not do any more than signal its opposition. If the Estate wishes to pursue its claim for costs it may do so by making submissions of fewer than 5 pages to be served on Nandicorp within 14 days. Nandicorp should also then be allowed a similar period to respond, with a 2 week gap to be inserted into the timetable to account for the Christmas period. I would also be assisted with a brief affidavit from the trustee explaining his thinking in bringing these proceedings in relation to the TRM Trust. No doubt there is more to the story than presently appears, but on its face the presence of a significant secured creditor appears to undermine the utility of the proceedings. 59 The Estate is to bring a minute of order by 21 January 2022 giving effect to these conclusions. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.