GROUNDS OF APPEAL
49 We propose to deal with the grounds of appeal upon the basis of the evidence which was before Greenwood J. Where Ms Ng now seeks to lead further evidence relevant to a particular ground, we will refer to it. However we will leave the question of whether she should be allowed to lead that evidence for resolution at a later stage.
50 Ground 1 in the amended notice of appeal is that the Corporations Act "does not apply because the subject matter of the litigation was not a corporate property but a trust property and the appellant was an individual who was a beneficiary of a family trust." For reasons which we have given the ground is misconceived. First, the liquidator may have to perform the trustee's duties. Second, the liquidator of an insolvent trustee may enforce any right of indemnity out of trust assets held by the company as trustee and the trustee's lien over such assets. In the course of the winding up, it may emerge that the trustee has defaulted in some respect in connection with its duty as trustee, causing loss to the trust. In those circumstances, the right to indemnity may be exercised only after such default has been remedied. If it appears that the outgoings were not properly incurred in the administration of the trust, there will be no right to indemnity in respect of them. In the present case, there is evidence that Riby incurred liabilities as trustee of the Jade Trust. Ms Ng may wish to dispute its right to indemnity, but that does not detract from the liquidators' duty to take into their custody or control, property to which Riby appears to be entitled. At the very least, Riby as trustee appears to have borrowed from APH and Westpac and applied the proceeds in discharging trust debts. To that extent, Riby is prima facie entitled to an indemnity out of trust assets and a lien over them to enforce such indemnity. Ms Ng may have an opportunity, in the course of the liquidation, to advance some of her claims, although her conduct in connection with the proceedings before Greenwood J may pose problems in that regard. We should add that Ms Ng also submits that Riby had no right to indemnity or lien in respect of 15 Brookvale Drive because of the operation of cl 13.9 of the trust deed. We will discuss that submission at a later stage.
51 Ground 2 addresses his Honour's finding that the transfer was void pursuant to s 468. Ms Ng again asserts that the property was trust property, and that the transfer was "a valid distribution of the trust property to a beneficiary by the Trustee in its absolute discretion in accordance with the Trust Deed". For present purposes we accept that pursuant to cl 7 of the trust deed the trustee has such a power. However s 468 strikes at all dispositions, even if they are otherwise lawful. His Honour proceeded on the basis that the transfer lodged and registered on 17 May 2006 was a disposition for the purposes of s 468. The registration of the transfer undoubtedly effected a disposition of Riby's legal title and of the benefit of the trustee's lien. As such disposition occurred after the commencement of the winding up, it was void. That finding does not necessarily exclude persons having claims against Riby as trustee from asserting them in the winding up. Despite her assertions to the contrary, prior to the alleged distribution to her, Ms Ng was not presently entitled to any benefit under the trust deed other than in the discretion of the trustee.
52 Had the terms of settlement been agreed after the winding up order, they may, subject to the operation of the Family Law Act, have been avoided pursuant to s 468. However, in the events which happened, only lodgement and registration of the transfer clearly occurred after the making of the order. Ms Ng asserts that the transfer of 15 Brookvale Drive was effected to resolve matrimonial property settlement issues between her and Mr Hastings. No basis has been shown for exempting such a transaction from the operation of s 468. We will discuss the significance of the orders of the Family Court at a later stage. Ms Ng asserts that the "distribution of the trust property to [her] was executed on 23rd December 2005, the date Riby Pty Ltd as Trustee signed the Transfer document", and that Rams actually caused the transfer to be lodged and registered on 17 May 2006. The date of signing is of no significance for present purposes. The relevant disposition was the registration of the transfer. The legal title remained with Riby until 17 May 2006. Although terms of settlement were apparently executed on 23 November 2005, the terms of settlement executed on 3 April 2006 replaced those terms. There was no evidence before the primary Judge as to the date upon which the transfer was settled. Ms Ng now seeks to lead evidence that it occurred on 21 April 2006. Whether she should be allowed to do so is a matter to which we will return. However the point is that notwithstanding the terms of settlement, Riby remained as registered proprietor, and at least as a bare trustee, until 17 May 2006 and, in that capacity, retained its right to indemnity as against 15 Brookvale Drive and its lien over that property in respect of outgoings properly incurred by it in administering the Jade Trust, subject to any requirement that it make good losses suffered by the trust estate as the result of any breach of duty, and subject to our subsequent consideration of the Family Law Act and the significance of cl 13.9 of the trust deed.
53 Ground 3 of the amended notice of appeal attacks the primary Judge's finding that the terms of settlement signed on 3 April 2006 constituted an agreement for transfer rendered voidable by operation of s 588FE of the Corporations Act. Ms Ng asserts that the terms of settlement were "in satisfaction" of property settlement issues between Mr Hastings and her, and that the terms of settlement were reached "after a long drawn process including negotiations between the husband and wife which started way back in October 2005 …". Ms Ng alleges that the consent orders made by the Family Court on 10 April 2006 giving effect to the terms of settlement were "to give full force and effect to the provisions of s 81 of the Family Law Act". It is then asserted that the terms of settlement do not "constitute an agreement for transfer of the Underwood property rendered voidable by operation of s 588FE … but rather it was an agreement made pursuant to Family Law Act provisions". Once again, no clear basis was advanced for exempting the terms of settlement from the operation of s 588FE. As we have said, we will consider the effect of the Family Law Act at a later stage.
54 Ground 4 of the amended notice of appeal deals with Riby's entitlement to an indemnity out of the trust assets and to a lien over such assets. Ms Ng asserts that the trust deed "provided specifically that the Trustee does not have any right of indemnity or recoupment from the Trust Fund for liabilities incurred by the Trustee. A liquidator's right over a trust property only exists if the Trustee has a right of recoupment or indemnity from the trust property to pass on to the liquidators". This proposition is incorrect. First, his Honour did not have the trust deed before him. In those circumstances, he was entitled to infer that there was a right of indemnity conferred by ss 65, 71 and 72 of the Trusts Act 1973 (Qld) (the "Trusts Act"). Queensland law applied to the trust deed pursuant to cl 24 thereof. Section 72 seems to be a sufficient basis for a claim to a lien. By virtue of s 65, the rights conferred by ss 71 and 72 exist notwithstanding any contrary intention appearing from the relevant trust deed. Thus the respondents need not rely on any right of indemnity conferred by the trust deed. In any event cl 13.9.1 of the trust deed provides:
13.9.1 the Trustee or former Trustee shall not have any charge or lien or right of compensation, reimbursement, contribution or indemnity except out of property then in the Trustee's or former Trustee's actual possession and then only if the Trustee or former Trustee, as the case may be, acted in good faith, and only in respect of liabilities incurred relating to the execution of the Trustee's or former Trustee's powers, duties, authorities or discretions and only in respect of property in the possession of the Trustee or former Trustee at all times during the period when the events giving rise to the liability in question occurred;
13.9.2 no Trustee or former Trustee shall have any such charge or lien or right of compensation, reimbursement, contribution or indemnity whatsoever over or in respect of any present or former property of the Trust not then in that Trustee's or former Trustee's actual possession; and
13.9.3 a Trustee or former Trustee shall not have any right of compensation, contribution, indemnity or other claim against any unit holder or any other person, whether in respect of any property or former property of the Trust, by reason of the Trustee's or former Trustee's having accepted the office of Trustee or incurred any liability for the benefit of or at the request express or implied of that unit holder or other person.
55 Ms Ng submits that at all material times 15 Brookvale Drive was occupied by Mr Hastings and her, or by her alone, and not by Riby. Thus, she submits, Riby was not in actual possession of that property and therefore, pursuant to cl 13.9.1 and cl 13.9.2, it had no right of indemnity or lien in respect of such property. As we have said, this says nothing about Riby's entitlement pursuant to ss 71 and 72 of the Trusts Act which would seem to authorize a trustee to retain so much of the trust assets as is necessary in order to recoup outgoings properly incurred in its capacity as trustee. In any event the argument misconceives cl 13.9.1 and cl 13.9.2 and Riby's relationship with 15 Brookvale Drive. There will always be potential difficulty in identifying "possession" of real property by a company, as trustee or otherwise. Such possession will necessarily be evidenced by legal ownership, by the presence thereon of the company's officers and staff and/or other use of it for the purposes of the company, including any trust purposes.
56 In these proceedings, little attention has been paid to the arrangements pursuant to which Mr Hastings and Ms Ng have resided at 15 Brookvale Drive. There has been no suggestion of a tenancy agreement or lease. The terms of settlement dated 23 November 2005 indicate that as between Mr Hastings and Ms Ng, it was Mr Hastings who was, until settlement, to occupy those premises. Clause 3.4.1 of the Terms of Settlement dated 3 April 2006 was to similar effect. The terms of settlement of 23 November 2005 show Mr Hastings and Ms Ng as residing at 15 Brookvale Drive and 7 Short Street Southport, respectively. The terms of settlement of 3 April 2006 and the order of 10 April 2006 show them both as living at 15 Brookvale Drive. In any event it seems that as between Mr Hastings and Ms Ng, Mr Hastings was to occupy the premises. However the real question is the basis upon which he or they purported to occupy those premises as against Riby. There is no evidence on this matter. It was open to the primary Judge to infer that Riby, by its agent, Mr Hastings, was in possession of the premises, at least until settlement. If possession was given up after that time, it was, on the evidence before his Honour, arguably pursuant to a transaction which was void pursuant to s 468 or voidable pursuant to s 588FE.
57 Mr Ng also claims that Riby as trustee did not act in good faith, and that it was therefore deprived of its indemnity. We understand the principle to be that the indemnity is in respect of outgoings incurred bona fide in the execution of the trust. However such indemnity may not be enforceable until the trustee makes good any loss suffered as the result of any breach of trust. In both respects see RWG Management Ltd v Commissioner for Corporate Affairs [1995] VR 385 at 396-399, per Brooking J. Ms Ng alleges both that outgoings were incurred other than for trust purposes, and that there were other defaults which may have caused loss. However the allegations are imprecise and/or do not identify any loss. The evidence establishes that at least some of the moneys borrowed from APH was used to pay debts incurred by Riby in connection with the acquisition of assets as trustee, including 15 and 58 Brookvale Drive, vehicles and other equipment. There may have been transactions, including transactions concerning those assets, which were not in good faith and which caused loss to the trust. Riby may be obliged to make good such losses. Those possibilities are raised, but not resolved on the evidence, to put the case at its highest from Ms Ng's point of view. Generally, such matters would be ventilated in the course of the winding up. However, as we have said, Ms Ng may face difficulty in seeking so to do, given her failure to raise or prosecute these issues before Greenwood J. Ground 4 is misconceived. Our conclusions concerning cl 13.9 of the trust deed also remove one of the qualifications upon our view that grounds 1 and 2 were without merit.
58 By ground 5 of the amended notice of appeal, Ms Ng asserts that she was denied natural justice and procedural fairness in the proceedings before Greenwood J. She asserts that she was under the impression that she was not required to attend. That impression was quite correct. She was not obliged to attend, but she was entitled to do so and to be heard. There is no suggestion other than that she was aware of the trial date and chose not to attend. She may well have felt that there was no point in her attending because of her inability to make submissions on her own behalf. However it does not follow that she was denied procedural fairness. There is nothing in this point.