One T Development Pty Ltd v Peter Krejci in his capacity as liquidator of... [2023] NSWCA 120 | Case summary

Court of Appeal (NSW)|2023-04-20|Before: Ward P, Leeming JA, Mitchelmore JA

Background

In light of pending proceedings between the parties, which contain allegations of serious fraud (and are one reason why this appeal was expedited), it is best to be as brief as possible in describing the background to the dispute.
According to ASIC records summarised by the primary judge, Mr Robert Sebie was the original sole director of ENA, but later his mother was recorded as its sole director, in a document lodged with ASIC only in 2017 stating that she had been the sole director since incorporation on 24 June 2003. ASIC records also showed that Mr Ronald St Clair Jemmott was appointed an alternate director in September 2018, and was a director for periods in 2021. Counsel for the liquidator cross-examined Mr Jemmott, who gave evidence that he was a director of ENA and One T. Mr Robert Sebie did not give evidence before the primary judge.
Some documents suggested that ENA had formerly been the trustee of two trusts. One T claimed now to be the trustee of those trusts. The property specified in the orders which are the subject of the appeal is held, as we understand it, in the name of ENA. The Court was told, without opposition, that the pending litigation concerned the title to the land and shares identified in paragraphs (a) and (b) of the orders (it may have extended also to the relatively small amount of money, but in what follows we shall for concision simply refer to the land and shares). If the land and shares were held on one of the trusts of which ENA was formerly, and One T is presently, the trustee, then the former trustee will prima facie be obliged to transfer the property to the new trustee. Doing so will not of itself disentitle the former trustee from its entitlement to have recourse to trust property in support of its right of indemnity: Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 at [21]; Primary Securities Ltd v Willmott Forests Ltd (mgrs and recs apptd) (in liq) (2016) 50 VR 752; [2016] VSCA 309 at [1] and [53].
The liquidator faced a position where the company documents contained deeds of trust and minutes of meetings which suggested that the company held assets on trust. However, there was also reason to suggest that those documents did not reflect the true position. In particular, there is a trust deed purporting to be the "Unit Trust - Fixed Deed" establishing the "ENA Development Trust" dated 1 September 2009. The primary judge recorded at [28] that Mr Robert Sebie's brother Richard was said to be the sole unit holder of that trust. The deed was stamped in the amount of $200. There are a number of peculiarities about that stamping. 1. One is that it is found on the fifth page of the deed, rather than the front page. 2. A second is that the amount of duty at that time was $500. 3. A third is an email exchange from May 2022 to which the primary judge referred at [35]-[37]: Following his conversation with Mr Florian, and also on 12 May 2022, Mr Mentesh sent Mr Florian an email attaching a copy of what purports to be the 1 September 2009 deed establishing the Fixed Trust. That document appears to show that it was created by "Cleardocs" at 10:45am on 27 January 2015. The email also attached a set of instructions provided by "Cleardocs" in respect of establishing the purported trust, a tax invoice from "Cleardocs" to Onyx Tax Accountants on 27 January 2015 for "document package: Unit Trust - Fixed" for the client "ENA Development". This material suggests that the document purporting to be a trust deed created on 1 September 2009 was not in fact created until 27 January 2015.
It is not necessary, and in light of the pending litigation inappropriate, to deal with all of the matters casting doubt on the documents, or on the other matters considered by the primary judge. The matters referred to above were the central matters to which the parties' submissions in this Court were directed.
The liquidator faced the position that there was determined opposition to any claim that the property was beneficially owned by ENA. As much was clear from the way in which One T intervened in the application, seeking to tender many hundreds of pages of material, including lengthy affidavits made by Mr Jemmott. We shall deal below with the steps taken in the appeal in this Court. In addition, there was a separate application to set aside the orders made by the primary judge on 21 October 2022 (while the application for leave to appeal was pending in this Court) in In the matter of ENA Developments Pty Ltd (in liq) [2022] NSWSC 1478. More recently, orders have been made by a judge in the Equity Division pursuant to the Vexatious Proceedings Act 2008 (NSW) directed to Mr Robert Sebie and Mr Jemmott: In the matter of ENA Development Pty Ltd (in liq) (ACN 105 235 363) [2023] NSWSC 503. The present appeal was expressly excluded from the operation of those orders.
The primary judge delivered a substantial judgment on 11 July 2022, shortly after the receipt of further written submissions: In the matter of ENA Development Pty Ltd (in liq) [2022] NSWSC 919. His Honour addressed the evidence bearing upon the company's ownership of each of the assets the subject of the directions sought by the liquidator. Most of this need not be summarised.
The primary judge said at [29] that he had "grave doubts as to the genuineness of" the deed of trust. His Honour continued: There is evidence to suggest that it was not created on the date it bears, 1 September 2009, but over five years later, on 27 January 2015.
If the trust was created in 2015, that has important consequences for the beneficial ownership of the assets the subject of the order and for company documents pre-dating 2015 purporting to record the assets being held on trust. These are explained in the reasons of the primary judge, especially at [70], [82] and [112]. As noted above, it is inappropriate to express any views on those matters in light of the pending proceedings.
Mr Rogers of counsel, who appeared for the appellant in this Court but not before the primary judge, very candidly did not dispute that there was a proper basis for there to be doubt about the authenticity of the documents. Early in his submissions, he accepted that: All of those things no doubt are matters which weigh in favour of inferences that his Honour Stevenson J made and against what I'm about to put. I accept all of that.
It will be sufficient for the purposes of resolving this appeal to proceed on that uncontested basis. So that there may be no doubt about it, these reasons do not expressly or by implication determine whether documents have been brought into existence with a view to supporting a claim that some of the property owned by the company is held on one or more trusts created in 2009.
No such finding was made by the primary judge. Indeed, Mr Rogers did not suggest that any such finding had been made. His main point was that whilesoever there was some basis for concluding that the documents were authentic, it was wrong for the primary judge to have made the orders in favour of the liquidator. It was put thus: The proposition for which I contend is that it can never be within the scope of the provisions of the Act to give directions to a liquidator that where there is a seriously contestable question as to the ownership of property, that is the beneficial ownership of property, coupled with the fact that there are the interests of third parties involved and those people relevantly would be Rose Sebie and Richard Sebie who Richard Sebie in particular as the named beneficiary under the trust deed which I referred and coupled with the further fact that in order to - I'll try not to go further than I need to here, but to draw inferences adverse to the proposition that the trust deed is a genuine document, there has to underpin that the thought that there's been a large and not insignificant fraud committed by a number of people, not least of all being Rose Sebie and Richard Sebie and I'll take your Honour to the instances of that.
Separately, and relating to ground 2, the appellant pointed to an invoice dated 1 September 2009 in the amount of $450 (plus GST) for "Trust Deed ENA" to which the primary judge did not refer which tended to support the bringing into existence of a deed of trust in September 2009. There was also evidence (in the form of a printout of an "ABN Lookup" page purporting to be of a register maintained by the Commonwealth) that the "ENA Trust" was trading from at least 22 August 2013 and that Revenue NSW accepted that one trust was stamped on 4 September 2009 (in the form of an email from an officer of Revenue NSW).
There followed this exchange: ROGERS: … Against that [ie the proposition that the trust deed was not created in September 2009], is this, this is a document to which his Honour did not make reference. I think that's at p 536 of the white book and that's an invoice dated 1 September 2009 from a firm of accountants, Onyx Tax Accountants who featured in the matter to some extent and there's a reference that there's a charge of $495 for apparently the creation of a trust deed. That is corroborative of the idea, if I can put it that way, of the document not being a forgery. LEEMING JA: Was it in evidence before him and was it the subject of anyone's submission before him? ROGERS: It wasn't a subject of submissions I understand. LEEMING JA: It may well be that we should infer it was p 1505 of some [improbably long] court book before his Honour on this informal directions hearing. I would not be critical of a judge who didn't refer to p 1505 of a court book if no party referred him to it and someone's put Petar on the list, which says exactly that. ROGERS: Again, one accepts that a judge is not expected to read of large bundles of documents and my impression is that there was a great deal of material before his Honour at the trial. I accept all that.
The reference to "p 1505" was to a pagination on the document which was different from the pagination of the white folder and had the appearance of a pagination in a court book used at trial. The question about whether that document was in evidence or the subject of submissions reflected the absence at that stage of the transcript and the written submissions. The reference to "Petar" was a reference to the passage in the joint judgment in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [120]: [W]hen a court is invited to make a discretionary decision, to which many factors may be relevant, it is incumbent on parties who contend on appeal that attention was not given to particular matters to demonstrate that the primary judge's attention was drawn to those matters, at least unless they are fundamental and obvious.
The transcript of the hearing before the primary judge was made available during the hearing of this appeal, and it quickly revealed that much of the affidavit material that had been included in the white folder as if it had been read before the primary judge had in fact been ruled inadmissible. Indeed, much of the first half of the first day of the hearing before the primary judge was occupied with rulings on the voluminous evidence which had been sought to be tendered by One T.
After the luncheon adjournment there was the following exchange: WARD P: Because I have to say, I've over the luncheon adjournment read the transcript of what went on before his Honour and it would seem that there's large numbers of objections taken in relation to paragraphs of affidavits and all the like, and it is impossible to tell from what's in the court book what was before his Honour and what wasn't. ROGERS: I accept all of that.
At the conclusion of the hearing, directions were made for the rapid production of a white folder which included the material which it should properly have included in order to resolve the appeal (the originating process, the oral and written submissions, and the evidence insofar as it was relevant to the arguments, marked so as to indicate the parts which had been ruled inadmissible). The Court was told, an opportunity having been given to confirm its practicality, that this would take a day. In the interests of transparency and in light of what occurred subsequently, it is appropriate to record precisely what occurred: WARD P: When are we getting this material? ROGERS: That will come from my solicitor. WARD P: Yes, I said "When", not "From whom". ROGERS: Sorry. The aim is to do it this afternoon. I don't like to say that because when one says "The aim is" it implies that I'm-- WARD P: Your instructing solicitor wants to give you some further instructions on that. ROGERS: May I turn my back, your Honour? Mr Carbone has asked me whether he could have an indulgence till 9am tomorrow morning, by which time he says he can do the job. WARD P: Yes. Then I will direct that by 9am tomorrow morning we have an itemisation of what material has to come and be removed from the white book because it was not before the primary judge, what material - with copies of that material needs to go into the white book because it was before the primary judge and copies of the submissions that I've already asked for that are referred to in the cover sheet. You will need to provide that to Mr Giles' instructing solicitors first so that there's no issue about what we're being provided with. If the affidavit material that was read before his Honour needs to be marked up to indicate what was rejected and what wasn't, what was part of the document ruling and what wasn't, what was part of any conversation ruling or the like, so that we know precisely what was in evidence before his Honour.
It is to be borne in mind that: 1. the appeal was expedited in light of the other litigation; 2. the task was entirely mechanical - the transcript made it plain what evidence had been ruled admissible and what had been rejected; 3. the task did not call for instructions from the client; 4. one of the grounds of appeal turned upon an evidentiary ruling said to have been made, although the ruling itself was not in the white folder; 5. the white folder provided by the appellant in advance of the hearing of its appeal did not contain the originating process, nor the orders from which the appeal was to be brought, but it did contain a series of other judgments, and hundreds of pages of emails and affidavits, many post-dating the judgment and, of those which did not, none of the paragraphs which were rejected by the primary judge, or admitted on a limited basis, was marked, and 6. finally, this was an appeal from a discretionary decision where, if House v The King error were established, One T was asking this Court to re-exercise a discretion, and thus it was necessary for the Court to have the evidence said to be relevant to its exercise.
In short, it should have been obvious to the lawyers acting for One T that the white folder supplied after the grant of leave, which it may be inferred had not been prepared by them, was woefully inadequate.
More than four weeks later, on 22 May 2023, and after two directions hearings before the Registrar, five volumes of new white folders were provided. We shall not recount the emails received during that time concerning the delay in performing the administrative task. The five volumes comprise slightly more than 2,000 pages. The "index" of half a page is of decidedly limited assistance. The new folders include affidavits and emails which post-dated the hearing, which are sought to be adduced by way of fresh evidence pursuant to a motion filed on 25 October 2022, of which no mention had been made in the appellant's oral submissions or written submissions supplied prior to the hearing. The new folders also include an affidavit which was not read before the primary judge, on the basis that "Evidence should have been read by Stevenson J due to the application in front of Stevenson J was interlocutory and did not require cross examination". Of the affidavits which were in fact read before the primary judge none is marked up to describe what was ruled inadmissible. Various pages are missing from those which have been included. There has ensued a response from the respondents identifying what they say are the difficulties with the white folders, and (on 29 May 2023) a further reply from One T, including further submissions for which no leave was given.
It would serve no purpose to speculate why this position has been reached. It is quite clear, however, that a great deal of ill-directed efforts have been made which have led to delay without achieving the essentially administrative and straightforward task, which falls upon the appellant, of preparing appeal books. We shall return to this when dealing with costs.

The nature of the orders made by the primary judge

The starting point is the juristic nature of the orders made by the primary judge. Nothing has been determined in this litigation as to the title to the land and shares.
The liquidator is in dispute with persons who were formerly involved in the ownership and management of ENA. Further, the liquidator is required to make decisions and take action based on information and materials which may well turn out to be incomplete. That is scarcely an uncommon situation.
Companies legislation has long conferred power upon courts to give directions to liquidators. Previously, s 479(3) of the Corporations Act 2001 (Cth) had simply provided: The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up.
That power, and its earlier equivalents, was construed as being subject to important restrictions. As much is clear from the decision of McLelland J in Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 679-680 explaining the scope of the power: The historical antecedents of s 479(3), the terms of that subsection and the provisions of s 479 as a whole combine to lead to the conclusion that the only proper subject of a liquidator's application for directions is the manner in which the liquidator should act in carrying out his functions as such, and that the only binding effect of, or arising from, a direction given in pursuance of such an application (other than rendering the liquidator liable to appropriate sanctions if a direction in mandatory or prohibitory form is disobeyed) is that the liquidator, if he has made full and fair disclosure to the court of the material facts, will be protected from liability for any alleged breach of duty as liquidator to a creditor or contributory or to the company in respect of anything done by him in accordance with the direction. Modern Australian authority confirms the view that s 479(3) "does not enable the court to make binding orders in the nature of judgments" and that the function of a liquidator's application for directions "is to give him advice as to his proper course of action in the liquidation; it is not to determine the rights and liabilities arising from the company's transactions before the liquidation".
However, since 2017 (in the circumstances described in In the matter of Glengrant Civil Pty Ltd (in liq) [2017] NSWSC 843 at [12]-[30]), s 90-15 of Schedule 2 to the Corporations Act (being the Insolvency Practice Schedule (Corporations)) has made the following much more elaborate provision: 90-15 Court may make orders in relation to external administration Court may make orders (1) The Court may make such orders as it thinks fit in relation to the external administration of a company. Orders on own initiative or on application (2) The Court may exercise the power under subsection (1): (a) on its own initiative, during proceedings before the Court; or (b) on application under section 90-20. Examples of orders that may be made (3) Without limiting subsection (1), those orders may include any one or more of the following: (a) an order determining any question arising in the external administration of the company; (b) an order that a person cease to be the external administrator of the company; (c) an order that another registered liquidator be appointed as the external administrator of the company; (d) an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company; (e) an order in relation to any loss that the company has sustained because of a breach of duty by the external administrator; (f) an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company. Matters that may be taken into account (4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account: (a) whether the liquidator has faithfully performed, or is faithfully performing, the liquidator's duties; and (b) whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and (c) whether an action or failure to act by the liquidator is in compliance with an order of the Court; and (d) whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and (e) the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group. …
It is plain that the current form of the conferral of power is broader than its predecessor. The restriction noted by McLelland J concerning determining rights and liabilities cannot survive the express power in subsection (3)(a). The former power, framed in terms of authorising the liquidator to "apply to the Court for directions in relation to any particular matter arising under the winding up", has been expanded so as to include, specifically, "an order determining any question arising in the external administration of the company". There is no reason not to read the new grant of power broadly, nor is there any reason to prevent "any" from bearing its ordinary meaning. After all, it is "quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words": Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 421; [1994] HCA 54, and, in the context of the Corporations Act, see Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270; [2000] HCA 30 at [17] and Glenfyne International Holding Ltd v Glenfyne Farms International AU Pty Ltd (in liq) (2019) 101 NSWLR 358; [2019] NSWCA 304 at [61]. The basic question posed by statute is whether the order relates to the external administration of the company.
Those principles are apparent in decisions on the new provision. The position was described by Gleeson JA, sitting in the Corporations List, in In the matter of Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; 125 ACSR 355 at [6]-[8] as follows: Section 90-15(1) of Sch 2 of the Corporations Act - Insolvency Practice Schedule (Corporations) - applies to this application, given the repeal of s 479(3) of the Corporations Act by the Insolvency Law Reform Act 2016 (Cth). Section 90-15(1) provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. A company is taken to be under external administration, if, among others, a liquidator has been appointed in relation to the company: s 5-15(c), Sch 2. Among other things, a court can make an order determining any question arising in the external administration of the company: s 90-15(3)(a). The ambit of s 90-15 has not yet been fully considered in the authorities. In Reidy, In the Matter of eChoice Limited (Admin Apptd) [2017] FCA 1582, Yates J at [27] accepted that an application by an administrator for directions, that formerly would have been made under s 447D(1) of the Corporations Act (now repealed), would fall within the purview of the statutory power in s 90-15 to make an order that determines a question arising in the external administration of a company. In Walley, In the Matter of Poles & Underground Pty Ltd (Admin Apptd) [2017] FCA 486 at [41], Gleeson J remarked that the question of whether to exercise the power in s 90-15 was "to be answered by reference to the principles applied to the exercise of the discretions previously contained in s 479(3) and s 511 of the Act". That may be accepted insofar as the external administrator seeks the directions of the Court, but the power under s 90-15 to "make such orders as it thinks fit in relation to the external administration of a company" (s 90-15(1)) including "an order determining any question arising in the external administration of a company" (s 90-15(3)(a)), is wider and accommodates the determination of substantive rights. Of course, the Court would not do so without affording potentially affected parties an opportunity to be heard: Meadow Springs Fairway Resort Ltd (in liq) v Balance Securities Ltd [2007] FCA 1443, at [49]-[51] (French J, referring to Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (1994) 49 FCR 334 at 352; [1994] FCA 1031 (Northrop J)); Re Willmott Forests Ltd (No 2) [2012] VSC 125; 88 ACSR 18 at [45]-[46] (Davies J); In the Matter of ICS Real Estate Pty Ltd (in liq) [2014] NSWSC 479 at [25] (Brereton J).
There is no reason to doubt that the current form of the power extends to the determination of substantive rights, although that could only occur, as Gleeson JA observed, with necessary and proper parties being given an opportunity to be heard, and (it might be added) joined.
However, the orders from which this appeal has been brought do not determine any title to property. They merely confirm that, in advance of a determination of beneficial title to property in the company's name, the liquidator would be justified in proceeding on the basis that the property was owned beneficially by the company and is available for the benefit of creditors. They are to that extent unusual, insofar as there will have been a hearing as to whether the liquidator would be justified in proceeding on a basis, and also a hearing which will determine finally whether that basis is correct. However, the nature of the opposition taken to the liquidator explains the course which has been taken.
A somewhat comparable position arose in Bastion v Gideon Investments [2000] NSWSC 939; 35 ACSR 466. The incomplete records of the company suggested, but fell far short from establishing, that it was the trustee of a trust; if so, then some of the company's creditors had proprietary rights in relation to some assets held at law by the company. The liquidator applied under s 479(3) for orders that he would be justified in recognising the existence of an express trust and recognising certain persons as beneficiaries of that trust (see at [40]). Austin J made those orders, saying at [48]-[49]: In my opinion the subject matter of the first application is a proper subject matter for an application for directions under s 479(3). It is appropriate for the liquidator, confronted by unsatisfactory corporate records and uncertain indications that a large part of the company's business was conducted as trustee, to bring the facts before the Court and seek the protection of directions under s 479(3). It is appropriate for the Court to give the direction sought by the liquidator once it is satisfied, as I am, that all reasonable inquiries have been made by the liquidator to establish the true facts. In this case I am impressed by the thorough and systematic investigations that have been conducted. The directions are sought by the applicant as liquidator under s 479(3). No direction is sought by the company in liquidation under s 63 of the Trustee Act 1925 (NSW). I should note the very limited scope of the protection that directions under s 479(3) will give in the present circumstances. The directions will not determine as between the company and the investors whether there is a trust or any particular person is a beneficiary or any particular assets are held by the company in trust for the investors, and will not protect the company or liquidator from any claims by persons who do not receive a distribution but are able to establish that they should have been recognised as beneficiaries. As McLelland J pointed out in the G B Nathan case (at 681), the significance of the directions is only that if the liquidator acts in accordance with them and has made full and fair disclosure of the material facts, he will be protected from claims by unsecured creditors or contributories in respect of any alleged breach of his duties as liquidator.
Another case where a liquidator has been given a direction that the liquidator would be justified in treating assets as held on trust may be seen in In the matter of Montpac Pty Ltd (in liq) and Global Network Link Pty Ltd (in liq) [2020] NSWSC 1237; 149 ACSR 138 at [12]-[20], to which the primary judge referred. Significantly, the power extends to cases where there is a lively contest as to whether or not the assets are held on trust. Sometimes it will be possible and appropriate for the liquidator to let the competing claimants take primary carriage of resolving the disputed ownership of assets. For example, if incomplete corporate records suggest the same assets are held under separate trusts, each in favour of a different beneficiary, there will be good reason for the liquidator to take a neutral role (a more complicated example of this may be seen in In re MF Global Australia Ltd (in liq) [2012] NSWSC 994; 267 FLR 27 at [2]). However, there may also be cases where it is appropriate for the liquidator to assume primary carriage of a dispute over the beneficial ownership of company assets. The possibility that the liquidator's view although properly founded might turn out to be wrong and the certainty that substantial costs will be incurred will, in an appropriate case, favour the exercise of the power to give some protection to a liquidator.
In the present case, the issue is not so much whether all reasonable inquiries have been made by a liquidator faced with incomplete or unsatisfactory corporate records (as was the case in Bastion v Gideon Investments) but whether there is a proper basis for the liquidator to proceed on the basis that the trust was not created in 2009. But it is not disputed (subject to grounds 2 and 3 which are addressed below) that the primary judge was, in light of the material before his Honour, entitled to be sceptical of the authenticity of the deed of trust.
The effect of the orders is limited. They do not determine title to any property. Instead, they provide qualified comfort to the liquidator in the event that it turns out that he is wrong to proceed on the basis that the assets are assets held beneficially by the company being wound up. Ultimately, Mr Rogers accepted that the orders had only two consequences adverse to One T (or any other person): they tended to stand in the way of any interlocutory relief restraining a sale or dealing with the property by the liquidator, and they tended to prevent any costs order being sought personally against the liquidator if it turned out the property was not beneficially that of the company, insofar as the liquidator could point to the orders to justify the reasonableness of his conduct.
This Court was not taken to any evidence suggesting the likelihood of a dealing, still less some dealing with irreversible consequences in the event that it turned out that the property was not beneficially owned by the company. Thus the only practical consequence of the orders was the possibility that, in the event that it is determined that the property is not beneficially owned by the company, it could not be said that the liquidator had behaved without a proper foundation, always assuming there had been a candid disclosure of all relevant matters by him to the court when the application was heard.
That is to say, all that has been determined is that the liquidator would be justified and acting reasonably to proceed on the basis that certain assets owned in law by the company in liquidation were owned by it beneficially. The principal purpose for that order is, it may be inferred, the other litigation in which questions of title will be determined, to which the company is a necessary party and in respect of which the liquidator will have to determine his stance.
The appellant submitted that the primary judge should not have drawn the inference that there were grave doubts that the trust deed had not been created in 2009. However, that submission cannot be reconciled with the proper and candid acknowledgement that there was a proper basis in the evidence for his Honour to have the doubts he did.
The appellant also submitted that his Honour should not have expressed those doubts in circumstances where there were disputed facts and the Court was not being asked to make a binding declaration as to beneficial ownership. However, the doubts were an inherent element of the reasons for concluding that the liquidator would be justified in proceeding on the basis that the company owned the assets beneficially, and in the somewhat unusual circumstances of this dispute there was no error in making orders with the limited effect described above in order to provide protection to the liquidator. The consequence of those orders is that, if the liquidator fails and the property is found not to be beneficially owned by the company, he will not be able to be criticised for improperly making groundless and unwarranted allegations of serious fraud, unless it be shown that there had been material nondisclosure at the time the orders were made.
Contrary to the appellant's submission, there was nothing wrong - still less any appellable error in the exercise of a discretion - in the primary judge giving the directions in the present case. Nothing that we have seen in the conduct of this litigation suggests that there was anything inappropriate in taking that course; to the contrary, everything we have seen and read about the conduct of this proceeding, and this appeal, confirms that it could not be said to have involved appellable error to grant relief.

Remaining grounds

Ground 2 was that the primary judge erred in "failing to have regard to evidence that the beneficial interest in the property resided other than in [ENA Development]". This was articulated as his Honour having failed to have taken into account two documents which appear to have been pages 1064 and 1505 of the voluminous court book supplied to him. It is now plain that reference was made to at least one of those documents in written submissions supplied after the hearing to the primary judge. To be fair to his Honour, it should be added that there was nothing like the prominence given to this document in this Court, and the written submissions ranged widely over many matters not properly before his Honour.
While it is true that both the "ABN Lookup" document and the receipt from the accountancy firm are relevant to the issue whether ENA held the land and shares prior to 2015, they are of no great weight. The former suggests that an ABN number was obtained for the purposes of registration for GST on 22 August 2013. That is not especially probative one way or the other in relation to the matter as to which the primary judge had grave concerns, namely, whether the trust deed was brought into existence in 2015 or 2009. The other suggests a trust deed was brought into existence around 1 September 2009, and to that extent supports the case One T wishes to advance. However, it falls well short of explaining why the wrong amount of stamp duty appears on an unusual page of the deed of trust on which One T relies and the contemporaneous emails summarised above.
In short, those documents do not materially detract from the appropriateness of the exercise of discretion by the primary judge.
In submissions supplied after the hearing, by Mr Mohammad El-Masri, who purported to write "On behalf of Ronald Jemmott and One T Development Pty Ltd", attention was directed to the documents dated 27 January 2015 to which the primary judge had referred, and which were part of his foundation for doubting the date on which the deed had been brought into existence. It was put, by reference to extracts of what were said to be attachments to the email, that in fact the "Cleardocs" email was received on 30 January 2017, not 27 January 2015. It is true that in the documents provided to this Court, Mr Florian's email refers to an establishment kit dated 27 January 2015 provided by Cleardocs and an invoice of the same date (Amended White Folder, vol 3 p 1119) while a copy of what appears to be a part of the document attached to the email bears the date 30 January 2017 (pp 1119 and 1120 of the same volume). This Court cannot resolve the discrepancy, nor would it be appropriate to do so. The material does not persuade us that there was any error in the judge forming the doubts that he did as to the authenticity of the documents or in making the orders from which One T appeals. We shall return to the submissions supplied after the hearing below.
Ground 3 maintained that there was error in "ruling that certain evidence as to a conversation should be admitted only as to the fact that something was said but then treating the evidence as probative of the matters said to have occurred in the conversation". This ground was not elaborated in the written submissions supplied before the hearing of the appeal. The ruling was made in the transcript, but the transcript had not been supplied in the white folder. Counsel was asked, after he concluded his submissions, whether the ground was pressed. Thereafter, counsel articulated a concise submission supporting this ground.
The ground was directed to the following parts of the reasons of the primary judge at [31]-[34]: On 12 March 2022, Mr Max Florian, an employee of Mr Krejci, telephoned Mr Erkan Mentesh from Onyx Tax Accountants. According to Mr Florian's unchallenged evidence before me, they had this conversation: "[Mr Florian]: Hi Erkan, I am calling from BRI Ferrier on behalf of the liquidator of ENA Development. I am calling about the section 530B notice. Mr Mentesh: Yes, ok. [Mr Florian]: What is your relationship with the company? Mr Mentesh: I was approached by Rose and Robert Sebie who wanted my assistance to set up the ENA Development Trust. They first got in contact with me in early 2015 through a reference provided by a former client. During that time I provided advice on setting up the trust and I prepared the Trust Deed using the services of Cleardocs.com. After preparing the Trust Deed, Robert Sebie advised me that he would get the trust deed stamped with the OSR. He then asked me for a screenshot on how an OSR registration stamp appears. I then provided it to him. [Mr Florian]: Was Robert the only one giving you the instructions? Mr Mentesh: Yes. Also, I want to make clear that I was not an accountant or a tax agent of the Company. My engagement was solely for the purpose of setting up the Trust." (Emphasis added.) I allowed this evidence only as evidence that the conversation between Mr Florian and Mr Mentesh took place, and not as evidence that what Mr Mentesh said was true. However, it shows that Mr Mentesh was available to give evidence that, first, he was only approached by Mr Robert Sebie and Mrs Rose Sebie concerning establishment of the Fixed Trust in "early 2015" and that Mr Robert Sebie made the enquiry Mr Mentesh describes concerning the "OSR registration stamp".
This ground is not made out. The evidence which was admitted on a limited basis was not used improperly. But in any event, the contemporaneous documents - the trust deed with an unusually placed stamp in the wrong amount, and the seemingly contemporaneous email disclosing that the trust deed was created in 2015 - sufficed, in the present case, to warrant the making of the directions.

Conclusion and orders

For those reasons, the appeal must be dismissed. The notice of motion to adduce further evidence, which was not addressed in oral or written submissions supplied prior to the hearing, will also be dismissed.
The grant of leave to appeal carries with it important responsibilities upon the appellant and the lawyers retained by it. Ordinarily, when appeals are propounded by litigants who have retained lawyers, those responsibilities are discharged without complaint. In this case, that did not occur.
In circumstances where an applicant for leave has sought and obtained leave to appeal and is legally represented, the primary responsibility rests upon the appellant's lawyers to prepare the matter so that the appeal can be heard and determined efficiently and fairly. That involves primary responsibility for the preparation of the appeal books and, to the extent necessary, updating or replacing the written submissions so that they are addressed to the merit of the appeal.
Based on the material presently available to the Court, it is impossible to resist the conclusion that the respondents have been put to needless expense by the conduct of the appellant in failing to perform an elementary and essentially administrative task, which should have been undertaken prior to the hearing of the appeal. The appellant's abject failure in this regard has also led to delay in the determination of this expedited appeal.
Our present view is that the appellant should pay the respondents' costs of the appeal, with such costs as have been incurred after the hearing of the appeal to be paid on an indemnity basis. In the event that the appellant wishes to be heard against such order, application may be made by motion within the time specified by r 36.16 of the Uniform Civil Procedure Rules.
There is one final point. On the evening before the hearing, and the morning before the hearing, a notice of motion, submissions and affidavits were supplied purportedly by One T directly to the Court. We accept that One T's counsel and solicitor had no knowledge of this. A company has no right to appear in the Supreme Court. One T appears through its solicitor and counsel retained by that solicitor. The same thing is recorded in the transcript as having occurred before the primary judge. The same thing is recorded in the transcript as having occurred before this Court, differently constituted, when the application for leave to appeal was heard. It should not be necessary to say so, but it is quite wrong for a represented party to communicate with the Court other than by the legal practitioners who appear for it or by the counsel they have retained.
This practice continued after judgment was reserved in the appeal. We have referred above to a 16 page submission supplied under cover of an email from Mr El-Masri on 12 May 2023. Mr Carbone from Sydney Law Practice remains on the record for One T. Further, leave was not granted to supply further submissions of the nature received by the Court (and as to which the respondents have not been heard). Although ordinarily we would simply disregard those submissions, in the unusual circumstances of this appeal we have considered them, and addressed the point made concerning the Cleardocs documents. But once again, it is necessary to say that the time for submissions is the hearing, and it is quite wrong after judgment is reserved to advance further submissions without leave. The submissions also attach a letter seeking a wide suite of orders, which go well beyond the scope of the appeal. Out of an abundance of caution, that application will be dismissed. The Court also received an affidavit made by Mr Jemmott on 24 April 2023, which made an application to adduce fresh evidence in the form of emails from September 2021 and July 2022 between himself and the Office of State Revenue. They were plainly available at trial, and special grounds required by s 75A(8) of the Supreme Court Act 1970 (NSW) have not been established.
Mr Robert Sebie sought during the hearing of the appeal to make oral submissions on the notice of motion received on the eve of the hearing. That motion was not before the Court but instead, as was stated at the time his application to be heard was rejected, was listed for directions before the Registrar on 24 April 2023.
The Court makes the following orders:
Appeal dismissed, with costs, and (subject to the determination of any application of the kind provided for by order 4 below), costs after the hearing of the appeal are to be on the indemnity basis.
For the avoidance of doubt, the notice of motion filed 22 October 2022 is dismissed.
For the avoidance of doubt, the application for further orders attached to the email from Mr Mohamad El-Masri to the Court dated 12 May 2023 is dismissed.
If any application is to be made by the appellant for a different costs order than that suggested in the reasons for judgment, that application is to be made within the time specified by UCPR r 36.16, and accompanied by submissions not exceeding two pages to be supplied by email to the Associate to the President, with submissions in response not exceeding two pages to be supplied within 7 days thereafter, and any submissions in reply not exceeding two pages within a further 7 days, with the application then to be determined on the papers.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 June 2023

Solicitors: Sydney Law Practice (Appellant) ERA Legal (First and Second Respondents) File Number(s): 2022/223074 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division - Corporations List Citation: [2022] NSWSC 919 Date of Decision: 11 July 2022 Before: Stevenson J File Number(s): 2022/32115

(2019) 101 NSWLR 358

One T Development Pty Ltd v Peter Krejci in his capacity as liquidator of ENA Development Pty Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (5 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (30)

Cited By (8)