Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation

Advice relating to the restructure

1. On 12 November 2013, Mr Chris Batten of MGS Private Pty Ltd sent an engagement letter to Mr Peter Sleiman relating to the restructure of the properties and trusts. The covering email stated that Mr Batten had "calculated the approximate savings as set out below". The relevant savings in relation to PSI as trustee for the Sleiman Family Trust were described as: Stamp Duty: $472,515.00 Land Tax: $35,000.00 (It seems likely that the former amount reflected a one-off saving, while the latter was an annual saving).
2. By letter dated 26 November 2013, Mr Batten advised that PSI holding the properties on trust for the Sleiman Family Trust was "very inefficient", and proposed a course which, in his view, would not give rise to ad valorem stamp duty and which would save land tax. His letter relevantly concluded as follows: "I therefore submit that the Deed of Declarations to be signed by Peter Sleiman Investments Pty Ltd, Mr Peter Sleiman and Messrs Peter and George Sleiman will not, if they are executed, constitute a 'declaration of trust' within the meaning of that Expression in the Act. It follows that no liability for duty will be incurred."
3. The basis of that conclusion was an argument that a declaration that a company holds, or will hold, property "as trustee of the XYZ trust" was not a declaration of trust within the meaning of the Duties Act 1997 (NSW), because it was necessary in order for the statutory definition to be engaged for the declaration to "mention" the beneficiaries or charitable purpose, and identifying a pre-existing trust was insufficient to do so. It will not be necessary to express a view as to the correctness of that reasoning.

The documents executed on 25 November 2013

1. The steps taken on 25 November 2013 were as follows. 1. Mr Peter Sleiman as Appointor signed a letter addressed to his brother as director of PSI as trustee for the Sleiman Family Trust in the following terms: "In my capacity as Appointor of the Sleiman Family Trust I hereby consent to the proposed restructure of the assets of the Sleiman Family Trust whereby the properties of the trust will be moved to individual unit trusts. I note today is the day that you intend to execute various documents to give effect to the restructure including various declarations of trusts." 1. Mr George Sleiman executed a series of deeds of trust establishing separate unit trusts (each bearing a name related to the street address of the land) with a hundred initial units priced at one dollar per unit held by various related companies. Each document was stamped in the fixed amount of $500. 2. Mr George Sleiman then as sole director of PSI made a resolution recording that "I have executed a deed by which there is to be established the [particular] Unit Trust of which Peter Sleiman Investments Pty Ltd is the trustee". Mr Sleiman also signed a document as sole director of PSI certifying that the initial unit-holder was the registered holder of a hundred units in the unit trust. 3. Then, Mr George Sleiman as sole director executed a series of "Deeds of Declaration" on behalf of PSI as trustee of the Sleiman Family Trust. In the case of the Russell St property, the deed was relevantly as follows: "PREAMBLE 1. The Company, in its capacity of the Sleiman Family Trust [sic] (which was established on 14 September 1999) is the registered proprietor of the property referred to below ('the Property'), which is subject to a registered mortgage referred to below ('the Mortgage'). 2. In the Company's bona fide opinion the market value of the property after deducing [sic] the value of the mortgage is $252,000. 3. The Company is also the trustee of the ... Russell Unit Trust, a fixed trust for the purposes of s 3(a) of the Land Tax Management Act 1956, which was established earlier today. DECLARATION 4. The Company, pursuant to powers vested in it as trustee of the Sleiman Family Trust, hereby declares that it will henceforth hold the Property, subject to the Mortgage, as trustee of the ... Russell Unit Trust. 5. It is noted that the supply of the Property, constituted by this deed of declaration, is not subject to GST." 1. Following the execution of the deeds of declaration, George Sleiman as sole director of PSI caused the company in its capacity as trustee of the Russell Unit Trust to issue 252,000 units to PSI in its capacity as trustee of the Sleiman Family Trust. 2. Later that day, Mr George Sleiman, this time in his capacity as sole director of PSI as trustee for the Sleiman Family Trust, requested PSI as trustee for the unit trust to redeem all 252,000 of those units, noting that "the company understands that the amount payable to it on redemption will be $252,000". 3. Mr George Sleiman, as sole director of PSI in its capacity as trustee of the unit trusts, then determined to redeem all of those units, to pay the redemption amount of $252,000, and to record the redemption of those units in the register.

The character of the "deeds of declaration"

1. Putting to one side the typographical errors, on its face the deed of declaration purports to amount to a unilateral declaration of trust. The words "hereby declares that it will henceforth hold the Property" connote an immediate resettlement of the beneficial interest in the land formerly held on trust for the Sleiman Family Trust, made independently of the decision by the same company on the same day to issue units in the various unit trusts to it. If that characterisation were correct, then it would perhaps be open to treat the declaration as voluntary.
2. However, by the second day of the appeal, it was common ground that the deeds of declaration were not to be characterised as voluntary. Instead, it was common ground that they were for consideration. This, of course, goes directly to the question whether there was an alienation with intent to defraud creditors by PSI.
3. It was common ground that the consideration for the deeds of declaration was the issue of units, which was effected by a resolution signed by Mr George Sleiman as sole director of PSI later on 25 November 2013. Steps had been taken by Mr Peter Sleiman and Mr Batten to estimate the current market values of each of the properties. It was common ground when the appeal was heard that their valuations were (by some $2.5 million) greater than the actual market value. There is no occasion in this appeal to express any view as to the reason for this, which was the subject of evidence and submissions before the primary judge.
4. In the case of the Russell St property, the estimation of the market value less the indebtedness secured by mortgage was $252,000. PSI by director's resolution resolved that there be issued by PSI as trustee of the Sleiman Family Trust 252,000 units, and Mr George Sleiman signed a unit certificate consistent with that resolution.
5. Clause 10.3 of each of the deeds establishing the unit trusts provided that a determination by the trustee to redeem units subject to a request to redeem "shall become effective immediately when the determination is made whereupon the Units the subject of the determination shall be taken to be redeemed immediately and the Unit Holder shall be taken not to be a Unit Holder in respect of those units". The trustee was thereafter obliged (by clause 7) to pay, within 30 days, the "Current Unit Value" of those units.
6. The total debt created by the redemption of all of the units in each of the unit trusts was some $2,970,000. The primary judge said that it was not necessary to determine, and declined to determine, whether a total amount of $2,970,000 was subsequently paid to PSI following the redemption of its units in the various unit trusts: at [32]. On appeal, the appellants pointed to actual transfers in bank statements which were said to reflect those payments being made to PSI as trustee of the family trust, and thereafter being made at the direction of Mr Peter Sleiman in discharge of what was said to be a large beneficiary loan. Even so, there is no occasion to determine the point on appeal.
7. The Commissioner maintained that whether or not there was a beneficiary loan was an issue in the pending AAT proceedings. To be clear, the question of whether there was or was not existing indebtedness of PSI as trustee of the Sleiman Family Trust to Mr Peter Sleiman is also an issue which does not arise on this appeal, and is unaffected by this judgment.
8. The primary judge regarded the subsequent transfer of funds to or at the direction of Mr Peter Sleiman as having preferential effect. However, the Commissioner on appeal appeared to accept, and at any rate made no suggestion to the contrary, that: 1. PSI as trustee of the Sleiman Family Trust received 252,000 units, as consideration for the declaration of trust of the Russell St land; and 2. PSI as trustee of the Sleiman Family Trust received an entitlement to be paid $252,000 upon the redemption of those units.
9. As already noted, it was common ground that the deeds of declaration were not voluntary. It was also common ground that each was effective and could be relied upon, notwithstanding that none had been stamped. Without expressing a view one way or the other as to the correctness of the position, it may be noted that the advice of Mr Batten was that it would not be necessary for the documents to be stamped, and indeed in evidence was a letter from the Office of State Revenue dated 6 March 2012 advising that the deeds of declaration were not liable to duty in New South Wales.
10. That considerably simplified background will suffice to resolve all of the issues on the appeal and cross-appeal. It is convenient to address them in essentially reverse order.

Should PSI be wound up? (ground 8)

1. This ground of appeal may be resolved quite readily, without entering into much of the complexity raised on both sides of the bar table. It was not in dispute that there was a discretion as to whether a winding up order, based on the unsatisfied judgment exceeding $9.6 million, itself based on an assessment subject of pending challenge in the AAT, should be made. PSI contended that the discretion had miscarried.
2. The primary judge formed the view that there was "no evidence as to the merit or potential outcome of PSI's application to the AAT", a finding which was challenged. However, his Honour also relied, at [84], on an unchallenged debt by way of GST which was owed by PSI to the Commissioner, which had not been paid and prima facie could not be paid from PSI's assets, and which was not the subject of any challenge. After observing at [90] that no appeal had been brought in respect of PSI's liability to pay GST, the primary judge said at [92]: "I do not consider that the winding up application should be either adjourned or dismissed in an exercise of discretion, by reason of the appeal to the AAT. As I have noted above, there is no evidence of substance that would allow me to form any view as to the substance of PSI's appeal to the AAT, or the likelihood of its success, or form any view that it will extinguish, or even materially reduce, the amount of the debt owed by PSI to the DCT. So far as a judgment presently exists against PSI, there is no offer to pay the amount of that judgment into Court, and it is apparent that PSI does not have the financial capacity to do so. I am also not satisfied that an appeal has been brought in respect of the GST debt, and there is no basis to exercise a discretion not to wind up PSI where it cannot pay the GST debt that is presently due and payable, merely because it contests the existence of, or the amount of, another debt which it also cannot pay."
3. Thus the unchallenged GST debt was regarded by the primary judge as a material factor in the exercise of the discretion.
4. However, as a condition of a stay pending appeal granted late last year, the GST debt has now been paid. This appeal is by way of rehearing, and it follows that the exercise of discretion made by the primary judge turned in part upon a consideration which is now shown not to be made out. Accordingly, it falls to be re-exercised.
5. It is quite plain that an order for the winding up of PSI in insolvency should be made, unless all or the very large majority of the assessment is set aside. Even if PSI is substantially successful in its Part IVC proceedings, it is difficult to see how, from its own funds, it will be able to pay the (smaller) debt it will owe to the Commissioner without recourse to some other source of funds. Against that, funds have been made available (the evidence does not disclose their source) to discharge PSI's GST liability to the Commissioner.
6. There was a debate on appeal as to whether there was "evidence of any substance" as to the strength of PSI's appeal. The Commissioner said that there was not, and that "there was no issue posed for the consideration of the Court as to what the sufficiency of the position in the AAT was, or to adduce evidence to seek to establish that question". PSI responded by pointing to the tender of material before the AAT. Once again, the fact that there was debate as to the ambit of the issues before the primary judge reflects another consequence of the failure by both parties to plead their cases in accordance with the rules.
7. There is no occasion in this appeal for a detailed consideration of the circumstances in which the undoubted discretion to stay the execution of a judgment founded upon an assessment is to be exercised in light of a pending appeal under Part IVC. Assistance may be obtained from Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Ltd [2012] FCA 363 at [26], where Robertson J summarised the effect of the applicable principles as follows: "There is no doubt that there is a discretion and that there are principles relevant to the exercise of that discretion. A principle of great importance is that the collection of the revenue should not be prejudiced. But there may be circumstances where an application to wind up the company on the grounds of insolvency should be adjourned until the outcome of Pt IVC proceedings is known. The circumstances in which such a discretion may be exercised include where the collection of the revenue is not prejudiced or any such prejudice is insubstantial, where a debtor company has a reasonably arguable case in proceedings under Pt IVC of the Administration Act and where those proceedings are soon to be heard."
8. The appropriate re-exercise of discretion in the present case is clear, having regard to the following. 1. First, the proceedings will be heard by the AAT in a matter of weeks. 2. Secondly, the winding up order has already been stayed, on terms, for the better part of five months. 3. Thirdly, the prejudice to the collection of the revenue from extending the stay for a short period is relatively insubstantial. 4. Fourthly, if a liquidator were appointed in the weeks or days immediately prior to the hearing of the appeal in the AAT, there would be the real risk of delay and cost, and the possibility that the hearing date which has now been fixed for some time might be lost. 5. Fifthly, senior counsel for PSI embraced the possibility raised by the Court on the second day of the hearing that the existing stay be extended to 31 May 2017, so as to enable the AAT hearing to proceed (transcript, 14 March 2017, p 112). Although contrary to his primary position, the Commissioner did not make any separate submission in opposition to that proposal.
9. Save to note that it has not been shown that the Part IVC proceedings are hopeless, it is unnecessary to express any view on the prospects of success in the AAT proceedings. The full material is not before this Court, and the parties' submissions based on that limited material were less than complete. In Southgate Investment Funds Limited v Deputy Commissioner of Taxation (2013) 211 FCR 274; [2013] FCAFC 10 at [77(c)], a Full Court comprising McKerracher, Jagot and Griffiths JJ said: "the merits of pending Part IVC proceedings may be a relevant consideration to be taken into account in the exercise of the discretion, but the court should not attempt to determine the merits unless it has sufficient material before it to do so and it should avoid speculation".
10. This is an unusual, but nevertheless clear, case for declining to set aside the winding up order, but continuing the existing stay on the existing terms for a further short period of time, until 31 May 2017, and with liberty to apply in the meantime. Following that time, the effect of this Court's orders will be to permit either party to apply to extend or discharge the stay, based upon matters including (i) the determination of the Part IVC proceedings, (ii) any concessions by either side during the course of those proceedings, and (iii) any potential prejudice to a liquidator or the company's creditors. To be clear, it will be seen that at the forefront of the considerations favouring the continuation of the stay is the imminence of the hearing in the AAT. If for any reason that hearing does not proceed, it would be appropriate to exercise the liberty to apply promptly. Because there will be a material change of position, this Court's orders will permit any such application to be made to a judge sitting in the Equity Division.

Consequences for the remaining grounds of appeal

1. It follows from the foregoing that the challenge in ground 7 of the appeal to the freezing orders must be rejected, as must the challenge in grounds 4, 5 and 6 to the application for vesting orders. Against the possibility that PSI will be wholly or largely unsuccessful in its Part IVC proceedings, it is important, for the reasons given by the primary judge, that the status quo be preserved so that a liquidator may take such steps as he or she may be advised.
2. Grounds 1 and 3 relate to the declarations sought by PSI. PSI maintained at first instance and on appeal that it would suffice for there to be declarations to the effect that the properties were held by it as assets of the unit trusts, which is to say, without including the words "free of any estate or interest" in favour of the trustee of the Sleiman Family Trust. The primary judge rightly regarded the omission of those words as materially altering the character of a declaration: at [65]. It is one thing to declare that assets are assets of a particular trust. It is another to declare that a former trustee which may once have been able to have recourse to those assets pursuant to its right of indemnity is no longer able to do so. This issue is central to the Commissioner's cross-appeal, and is addressed below.
3. Confining attention to the limited extent to which declaratory relief was pressed, PSI contended that the restructure vested the real property assets in it as trustee of the unit trusts, and the Commissioner's case based on s 37A was based on the effectiveness of the deeds of declaration executed on 25 November 2013. In other words, the parties were to that extent in agreement, although their common position reflected different forensic goals.
4. In the absence of a proper contradictor, there is good reason to decline to grant relief: Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438. Further, there is force in the Commissioner's submission that the declarations might impact upon the exercise of powers given to a liquidator. These grounds must be rejected.
5. Ground 2 (the purported challenge to findings) will be addressed under the cross-appeal.

The Commissioner's cross-appeal

1. By his cross-appeal, the Commissioner claimed that the primary judge had erred in deciding that "the transactions by which the defendant came to hold properties as trustee for nine separate unit trusts were not alienations of those properties within the meaning of s 37A of the Conveyancing Act 1919 (NSW)".
2. Section 37A relevantly provides: "[E]very alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced."
3. In response, the cross-respondents contended that the rejection of the Commissioner's claim under s 37A could additionally be sustained on any of three other bases: (a) that the impugned alienations had the effect of enhancing the pool of assets or were implemented so as to achieve an ultimate effect of preferring one creditor (Mr Peter Sleiman) over the Commissioner, which was insufficient to enliven s 37A; (b) that the requisite intention to defraud must exist in relation to the impugned alienation "and is not to be elided with broader circumstances that have not been adequately pleaded", and (c) that the repayment by PSI of the indebtedness of Mr Peter Sleiman as a consequence of the redemption of the units "formed no part of the impugned transactions whereupon the Court below should not have entertained any submission that that repayment was made with fraudulent intent". It will be seen that, once again, the second and third grounds in the notice of contention turned upon the way in which the Commissioner's case was said to have been "pleaded".
4. In the Commissioner's submissions on the second day of the appeal, it was said that at the time of the "resettlements", PSI had both a legal and a beneficial interest in the real property, for either of the following two reasons: "Either, there were trust debts in respect of which a right of indemnity existed and its accompanying charge or lien (that is, a beneficial interest of PSI co-existing with, but with priority over, the beneficiary's claims): cf Octavo; Or more radically stating the position, because the trust was insolvent, with trust debts substantially in excess of the value of all assets of PSI (trust and otherwise) after secured debt was deducted, so that PSI's beneficial interest (charge and lien) overwhelmed any other possible beneficial interest (that is, no "equity" for the beneficiaries existed on any practical view of the assets and debt position), PSI could effectively deal with the assets as if they were its own, in an attempt to be fully indemnified."
5. According to the Commissioner, the resettlement: "purported to place all the beneficial interests in the real property held by PSI on SFT discretionary trust into the new unit trusts, which interest either was, or included a property right of PSI, by reason of its charge or lien for its right of indemnity."
6. That was said to "preclude PSI from exercising rights against the property, because it was now held on a different trust" and to "subject the legal title in the property held by PSI to the prospect of a new trustee and a vesting order, to vest the legal title from PSI".
7. The last point may be resolved immediately. The possibility that, at some stage in the future an application might be made for a vesting order, so that the legal title of property held on trust by PSI would become held by another trustee, cannot amount to an alienation of property. Nor can it be something raised in these proceedings, which at no stage included a claim based upon the possibility of such an application being made in the future. Accordingly, the last-mentioned way in which the Commissioner puts his case may be put to one side.
8. The more significant aspect of the Commissioner's case was the contention that PSI's lien or charge over the real property held as assets of the Sleiman Family Trust securing its right of indemnity was lost upon the resettlement when the land became held as assets of the unit trusts, in consideration of the issue of units by the trustees of the unit trusts to PSI as trustee of the Sleiman Family Trust. It is not necessary, in order to address this aspect of the case, to treat separately the two bases on which the Commissioner relied which have been reproduced above.
9. PSI submitted, not without force, that this contention had never squarely been "pleaded" or raised at trial. It had certainly never been pleaded because there were no pleadings. Nor does it seem that this way of identifying the alienation was squarely advanced at first instance. Nevertheless, it is difficult in the circumstances of this litigation, attacking a transaction entered into after very large assessments had been issued to PSI, and in light of the declaratory relief sought by both sides, to doubt that these well-advised parties could not but have been conscious of the possible effect of the transaction upon the trustee's right of indemnity to which the Commissioner claimed an entitlement to be subrogated to. It is better to address this issue substantively.
10. There is considerable scope for conceptual confusion because of the nature of the transaction. It is important to bear in mind two things: (a) that the legal title to the real property never changed, and (b) that PSI was at all times the trustee of the Sleiman Family Trust. The restructure did not involve PSI ceasing to hold office as trustee of the Sleiman Family Trust. Instead, it involved the exchange of real property assets of the Sleiman Family Trust for units and, later, debt. The fact that the trustee of the unit trusts, and the issuer of the units, was PSI itself does not alter the position.

A trustee's right of indemnity - principles

1. A trustee's right of indemnity ordinarily carries with it a right to discharge the trustee's liabilities by assets held by the trustee on trust. The position was authoritatively stated in Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367: "In such a case there are then two classes of persons having a beneficial interest in the trust assets: first, the cestuis que trust, those for whose benefit the business was being carried on; and secondly, the trustee in respect of his right to be indemnified out of the trust assets against personal liabilities incurred in the performance of the trust. The latter interest will be preferred to the former, so that the cestuis que trust are not entitled to call for a distribution of trust assets which are subject to a charge in favour of the trustee until the charge has been satisfied."
2. The trustee's right of indemnity may be vindicated in two distinct ways. The trustee may, if the trustee has discharged the liability, be reimbursed from trust property. Alternatively, if the liability has not been discharged, the trustee may apply trust property to do so. In some cases it is convenient to distinguish the former right of reimbursement from the latter right of exoneration. But common to both, of course, is the notion that the trustee can have recourse to assets held by the trustee on trust in support of the trustee's right of indemnity.
3. One consequence of the trustee's entitlement to have recourse to trust assets in support of its right of indemnity is that, until the trustee's entitlement has been satisfied, "it is impossible to say what the trust fund is": Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 at [48].
4. Where a trustee ceases to hold office (for example, where a new trustee is appointed), it may still enjoy a right of recoupment or exoneration in respect of liabilities incurred by it as trustee. But after trust assets are vested in the new trustee, its rights are necessarily enforced in a different way. No longer having legal title to trust assets, a former trustee may no longer simply appropriate trust assets to reimburse or exonerate it.
5. In Bruton Holdings Pty Ltd (in liq) v Commissioner of Taxation (2009) 239 CLR 346; [2009] HCA 32 at [43], the High Court said: "[B]y force of cl 13 of the Trust Deed, the appellant has a lien on the trust assets for all liabilities, costs and expenses properly incurred by it in administration of the Trust. Further, even without that express provision, the appellant has rights of recoupment or exoneration in respect of all obligations incurred by it in that administration. These rights were supported by a lien over the whole of the trust assets which amounted to a proprietary interest therein and they survived the appellant's loss of office as trustee." [footnotes omitted].
6. But it does not follow that a trustee which sells a trust asset without breach of trust and for fair value continues to enjoy any rights over the asset formerly held by it on trust. The nature of the rights of recoupment or exoneration - whereby a trustee deploys assets owned by it to discharge the trustee's liability - is that they extend to current assets. It will be noted that the formulations of principle in Octavo Investments and Bruton Holdings reproduced above refer in terms to the trustee's rights being in respect of trust assets, references which are to be understood as the trust assets from time to time.
7. Further, cl 4(g) of the deed establishing the Sleiman Family Trust provided that: "The Trustee shall be entitled to be indemnified out of the assets for the time being comprising the Trust Fund against liabilities incurred by it in the execution or attempted execution, or as a consequence of the failure to execute any of the trusts, authorities, powers and discretions hereof or by virtue of being the Trustee hereof." [Emphasis added].
8. That clause expressly confines the property in respect of which the right of indemnity exists to the assets of the trust for the time being. Reliance was not placed by either party on s 59(4) of the Trustee Act 1925 (NSW), and, at least in circumstances where the trustee receives market value, or more than market value, for an authorised disposition of a trust asset, there is no reason to read the statutory right any more broadly than is provided by cl 4(g). It is unnecessary to express a view as to the extent to which the statutory right of indemnity may be displaced by the trust deed, something which is not settled (as is noted in Primary Securities Ltd v Willmott Forests Ltd (rec and mgrs apptd) (in liq) [2016] VSCA 309 at [53]) and which may vary depending on the particular legislation applicable (for examples, see Trusts Act 1973 (Qld), ss 65 and 72, dictating what was said in this regard in Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576 at 585).

Application of principle

1. It is now common ground that the declarations of trust were not voluntary. The consideration for the declarations of trust was the issue of units in accordance with the valuations prepared by Mr Peter Sleiman and Mr Batten. It is common ground that all of those valuations over-valued the land. It is thus common ground that PSI as trustee of the Sleiman Family Trust received greater than market value for each of the properties the subject of the Deeds of Declaration - first, in the form of units, and then, later (although on the same day) in the form of debt. It has not been suggested that the restructure was a sham or that the suite of documents executed by Mr George Sleiman on 25 November 2013 did not take effect in accordance with their terms.
2. Accordingly, it is clear that to the extent that PSI as trustee of the Sleiman Family Trust was entitled to be indemnified from the real property assets of the Sleiman Family trust prior to 25 November 2013, it became entitled to be indemnified first from the units issued to it, and then from the debt owed to it when those units were redeemed.
3. It may be acknowledged that the restructure did not involve the sale by the trustee of a trading trust to a bona fide purchaser for value without notice. If it had, that would of course be a complete answer to a claim to be indemnified from the assets which it had sold.
4. PSI as trustee of the unit trusts had (complete) knowledge of the notices of assessment that had been issued upon it as trustee of the Sleiman Family Trust. But that does not mean that the trustee continues to be able to have recourse to assets now owned by a purchaser who has provided full consideration (or, in this case, more than full consideration) in a case where the disposition is not in breach of trust. To the contrary, the trustee has recourse to the consideration provided by the purchaser, namely, the units, which have become assets of the Sleiman Family Trust.
5. Thus, the effect of the declaration of trust and the receipt of the units was that the trustee's undoubted right of indemnity was no longer available in respect of the real property, but recourse could be had to the units it received in its place. The effect of the redemption was that recourse could thereafter be had not to the units but to the debts owed to the trustee of the Sleiman Family Trust by the trustees of the unit trusts which had issued the units to be redeemed. (The fact that PSI was trustee of the Sleiman Family Trust and the unit trusts does not alter the analysis.)
6. One thing that is clear is that the Commissioner's claim based on s 37A was, as the primary judge observed at [38], confined only to the deeds of declaration. The Commissioner's case that there was an alienation did not extend to the dealings in December 2013, when the indebtedness of PSI in its capacity as trustee of the unit trusts was, so it was said, discharged following a refinancing. In particular, the Commissioner's case did not extend to (what was said to be) the repayment of the (alleged) indebtedness to Mr Peter Sleiman by PSI. Indeed, Mr Peter Sleiman was not a party to the proceedings at first instance, although this Court directed that he be joined to the appeal.
7. In those circumstances, the primary judge was correct to hold there was no alienation. There was no alienation because the effect of the restructure on 25 November 2013 was only that the property to which the trustee might have recourse in support of its right of indemnity altered so that it became first an equitable interest (the units) in property held on a separate unit trust, and then a debt (reflecting the value of the units once a redemption notice was issued), in each case, without diminution in value. It is not necessary to address the position which would obtain had the properties been transferred for an undervalue or in breach of trust.
8. It follows that it is not necessary to address the challenge to the findings of intention by the primary judge (ground 2 of the appeal, which falls to be treated as a notice of contention). However, contrary to one submission advanced by PSI, it should be noted that there was nothing wrong with his Honour making a finding as to intention while at the same time finding that there was, in point of law, no alienation. His Honour had the benefit of seeing Messrs Peter and George Sleiman being cross-examined, and his finding accorded with settled judicial method. Judges should ordinarily determine all issues before them to assist the appeal process and obviate recourse to a new trial, as was recently noted in Gulic v Boral Transport Ltd [2016] NSWCA 269 at [7], by reference to longstanding authorities. The principle is not confined to the assessment of damages for personal injury in cases where liability has not been established, although that is its most common application.

Orders

1. PSI has been substantially unsuccessful on its appeal, and the Commissioner has failed on its cross-appeal. There is no reason to displace the ordinary order as to costs of each proceeding.
2. For those reasons, the appropriate orders are:
3. Appeal allowed in part.
4. Subject to 5 below, confirm the winding up order made on 24 November 2016.
5. The existing stay of the winding up order continue until 31 May 2017.
6. Liberty to apply, on three days' notice, to the Equity Division, in respect of the continuance or extension of the stay.
7. In the event that the assessments giving rise to the judgment debt on which the winding up order was based are materially varied, or there is other material change in circumstances, then grant liberty to apply, on three days' notice, to the Equity Division to discharge the winding up order or, alternatively, to terminate the winding up.
8. Otherwise dismiss the appeal, with costs.
9. Dismiss the cross-appeal, with costs.
10. EMMETT AJA: This appeal and cross appeal arise out of a restructure of the property of a trust estate (the Family Trust) of which Peter Sleiman Investments Pty Ltd (PSI) is the trustee (the Restructure). The Restructure involved the resettlement of interests in nine parcels of land (the Properties) held by PSI in its capacity as trustee of the Family Trust. As a result of the resettlement, PSI held the interests in the Properties in its capacity as the trustee of nine newly created unit trusts (the Property Unit Trusts). The Restructure occurred within a relatively short time after the Deputy Commission of Taxation (the Commissioner) issued tax assessments (the Assessments) to PSI in its capacity as trustee of the Family Trust. The Commissioner has now obtained judgment against PSI in respect of the amounts owing under the Assessments.
11. By amended summons filed on 12 April 2016, the Commissioner sought orders that certain transactions engaged in by PSI in the course of the Restructure be avoided under s 37A of the Conveyancing Act 1919 (NSW), on the basis that they were alienations of property with the intent to defraud the Commissioner. The Commissioner also sought an order under the Corporations Act 2001 (Cth) that PSI be wound up in insolvency, on the basis that it has failed to satisfy, and cannot satisfy, the judgment in favour of the Commissioner.
12. Shortly after the commencement of the proceedings, freezing orders were made by a judge of the Equity Division on the application of the Commissioner. Relevantly, an order was made that PSI must not in any way dispose of, deal with or diminish the value of its interest in any of the Properties. The view has been taken, not unreasonably, that the appointment of a new trustee of the Property Unit Trusts could well involve a contravention of that order.
13. By amended cross-claim filed on 5 October 2016, PSI sought, relevantly, declarations that it holds each of the Properties on trust under and in accordance with the relevant deeds of trust establishing the Property Unit Trusts. In its cross-claim, PSI also sought an order under s 70 of the Trustee Act 1925 (NSW) that it be removed as trustee of the Property Unit Trusts and that Procorp Investments Pty Limited (Procorp) be appointed as trustee of the Property Unit Trusts. PSI also sought discharge of the freezing order to enable such appointment of a new trustee for each of the Property Unit Trusts.
14. On 24 November 2016, for reasons published on that day, a different judge of the Equity Division (the primary judge) ordered that PSI be wound up in insolvency. However, his Honour dismissed the Commissioner's claim for orders under s 37A of the Conveyancing Act and ordered that the amended summons be otherwise dismissed. His Honour made no order as to the costs of the amended summons in so far as it was dismissed. However, his Honour ordered that the Commissioner's costs of the application to wind-up PSI be paid out of the assets of PSI. The primary judge also declined to grant any relief under the amended cross-claim and ordered that it be dismissed. His Honour made no order as to the costs of the cross-claim.
15. PSI appeals from the dismissal of its cross claim. The Commissioner cross-appeals from the dismissal of the claim under s 37A of the Conveyancing Act.
16. By its notice of appeal, PSI asked that the orders for its winding-up, the appointment of a liquidator and the dismissal of the amended cross-claim be set aside. PSI also sought an order that the hearing of this winding-up application be deferred pending the final hearing and determination of an appeal by PSI to the Administrative Appeals Tribunal (the Tribunal) from the Commissioner's objection decision rejecting PSI's objection to the Assessments. Finally, PSI also sought orders on the appeal that the relief sought in its cross-claim for declarations and appointment of new trustees for the Property Unit Trusts be granted.
17. On 14 December 2016, McColl JA granted leave for the holders of units in the Property Unit Trusts to be joined as appellants in the appeal. On the hearing of the appeal and cross appeal, this Court ordered that Mr Peter Sleiman, the primary beneficiary under the Family Trust, be joined as a respondent to the appeal. The Court also directed that another person be joined to represent the other general beneficiaries under the Family Trust.
18. I have had the advantage of reading in draft form the proposed reasons of Leeming JA. I agree with the conclusions reached by his Honour and generally with his Honour's reasons. However, I propose to say something about the questions raised in the appeal and the cross-appeal.

The Restructure

1. The Restructure involved several steps. It is necessary to explain the steps in order to identify what are asserted by the Commissioner to be "alienations" to which s 37A might apply. Numbers of instruments were executed bearing the date 25 November 2013. There was no suggestion that they were brought into existence on any date other than the dates they bear.
2. The interests that PSI held in the Properties were equities of redemption following mortgages to National Australia Bank Limited (NAB). Since each of the Properties is held under the provisions of the Real Property Act 1900 (NSW), and the mortgages to NAB were registered, PSI remained the registered proprietor of an estate in fee simple in the Properties.
3. The steps in the Restructure were as follows: (1) First, PSI executed deeds of trust establishing a separate Property Unit Trust for each of the Properties. Each of the deeds recited that it was intended to establish a fixed unit trust to be administered for the benefit of the unit holders. Initially, 100 units were issued in each Property Unit Trust on its establishment. The deeds of trust empowered PSI, as trustee, to create additional units. The deeds also empowered a unit holder to request the trustee to redeem units and empowered the trustee to redeem units and pay the current unit value of the units to the unit holder. (2) Next, PSI, in its capacity as trustee of the Family Trust, exercised powers under the deed establishing the Family Trust to execute deeds of declaration in relation to each of the Properties. By each of the deeds of declaration, PSI recited that it was the registered proprietor of the relevant Property, that it had formed a bona fide opinion as to the market value of the Property, that it was the trustee of the Property Unit Trust relating to that Property and that the relevant Property was subject to a registered mortgage in favour of NAB. PSI declared that it would thenceforth hold the relevant Property as trustee of the relevant Property Unit Trust, subject to the mortgage in favour of NAB. (3) PSI, in its capacity as trustee of the Family Trust then applied for units in each of the Property Unit Trusts equal to the estimated value of the relevant Property. (4) PSI, in its capacity as trustee of each Property Unit Trust, then resolved to issue to itself as trustee of the Family Trust the number of units applied for. A certificate was issued by PSI showing that it held that number of units in each of the Property Unit Trusts as trustee for the Family Trust. In effect, the consideration paid by PSI, in its capacity as Trustee of each Property Unit Trust, in the form of the units issued, was equal to the value of the equity of redemption in the Properties held by PSI in its capacity as Trustee of the Family Trust. (5) PSI as trustee for the Family Trust requested itself, as trustee for the Property Unit Trusts, to redeem all of the units held in the Property Unit Trusts for an amount equal to their value. (6) PSI, as trustee of each of the Property Unit Trusts, then determined to redeem all of the units held by it in its capacity as trustee of the Family Trust for the amount equal to the estimated value of the relevant Property. (7) Further funds were borrowed from NAB by PSI, in its capacity as Trustee of the Property Unit Trusts, on the security of the Properties, together with the assistance of security given by a third party mortgagor over other properties. (8) The amount raised from NAB was paid by PSI, in its capacity as Trustee of the Property Unit Trust, to itself, in its capacity as Trustee of the Family Trust, by means of a series of book entries, in satisfaction of the debts created on redemption of the units. (9) The amounts received, representing the value of the equity of redemption in the Properties, were paid to Mr Peter Sleiman, or at his direction, purportedly in repayment of loans owing to him by PSI in its capacity as trustee of the Family Trust.

The Commissioner's Claim

1. In the proceedings in the Equity Division and in the appeal proceedings, the Commissioner asserted that some part of the steps outlined above constituted an "alienation of property" by PSI, in its capacity as trustee of the Family Trust, within the meaning of s 37A.
2. Section 37A relevantly provides that "every alienation of property, made … with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced", except for "any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors". There could be no suggestion that PSI, in its capacity as trustee of the Property Unit Trusts, did not have notice of the relevant intent, if such intent is held to have been present.
3. Thus, the first question is whether there was an alienation. The second question is whether, if there were properly an alienation within the meaning of s 37A, that alienation was effected with the requisite intent under s 37A. The third question is whether the applicant for an order was thereby prejudiced.
4. The proceedings were conducted before the primary judge on the basis of an amended summons filed by the Commissioner on 12 April 2016. Since there was no statement of claim, there was no allegation of the facts said to enliven s 37A. The prayer in the summons simply sought an order that "the alienation" of the Properties by PSI, in its capacity as trustee of the Family Trust, to itself as trustee of the Property Unit Trusts, is "void". It is unfortunate that there were no pleadings in which the Commissioner's case as to what constituted the relevant alienation of property and the relevant intent to defraud creditors was particularised.
5. The solicitors acting for PSI sought particulars as to the case that the Commissioner sought to make in support of the relevant prayer in the amended summons. In a letter dated 27 April 2016 (the April Particulars), the Australian Government Solicitor, who acts for the Commissioner, said that for the allegation that "the alienation of the properties by PSI" is void the Commissioner placed reliance on s 37A, in that "the purported transfers" amounted to an attempt to defraud a creditor, namely, the Commissioner. The reference in the April Particulars to "the purported transfers" is not entirely clear. It might be taken to be a reference to the deeds of declaration or, perhaps, the deeds of declaration in conjunction with the application for and redemption of units, which constituted the consideration for the deeds of declaration. The use of the term "transfer" is unhelpful in the context where there was no instrument purporting to effect any "transfer" of any property.
6. The solicitors for PSI also sought particulars as to the following:

• by whom, to whom and when it was alleged that each of the alleged alienations took place;
• in relation to each of the alleged alienations, what were the facts, matters and circumstances upon which the Commissioner relied to found the allegation that the alienation was void. The April Particulars responded "collectively" to these two requests for particulars.

1. Thus, the April Particulars alleged that PSI restructured its holdings of assets under the Family Trust by declaring that it held, for a new set of unit trusts of which it is the trustee, the beneficial interest in the Properties in respect of which it held the legal estate. It was said that the "alienation of property" was purportedly effected by PSI executing a "declaration of trust" in relation to each Property, by which it declared that it held that Property on trust for the relevant Property Unit Trust, rather than for the Family Trust. Units asserted to be of a value equivalent to the value of each Property, less an amount asserted to represent the value of the NAB mortgage on the Property, were issued to PSI, which then immediately redeemed the units but did not receive any payment of funds in accordance with the redemption. Instead, each of the Property Unit Trusts owed PSI a debt representing the "value" of the units at the date of redemption. Therefore, the April Particulars said, it appeared to the Commissioner that PSI purported no longer to hold the beneficial interests in the Properties but instead held, as the trust property of the Family Trust, debts owed to it by the Property Unit Trusts.
2. The April Particulars then referred to affidavit evidence filed on behalf of PSI that, as trustee of both the Property Unit Trusts and the Family Trust, PSI had permitted the borrowing of further money from NAB, secured on the Properties, in the amount of all the then "equity" in the Properties, being the difference between the market value and the aggregate debt then owed to NAB. The letter asserted that the purpose was to place trust property of the Family Trust at the disposal of the beneficiaries of the Property Unit Trusts, in circumstances where no distribution of the trust property of the Family Trust could properly be made, by reason of the right of indemnity held over the Properties by PSI as trustee of the Family Trust for debts incurred to the Commissioner in that capacity.
3. The April Particulars also referred to affidavit evidence filed on behalf of PSI that it had received money from the Property Unit Trusts in purported discharge of the debts owing on the redemption of units and had disbursed the whole of the money by payment to, or at the direction of, Mr Peter Sleiman. The April Particulars asserted that each of the "events" outlined in the April Particulars constituted facts and matters disclosing an alienation of assets by PSI, as trustee of the Family Trust, which had the purpose and effect that PSI was unable to employ the assets of the Family Trust to pay the debts of PSI incurred as trustee of the Family Trust.
4. The Commissioner accepts that, up to the time of the redemption of the units, the value of the estate of the Family Trust had not been diminished, because the consideration received by PSI, in its capacity as trustee of the Family Trust, being the units in the Property Unit Trust, had a value not less than the value of the Properties. There is nothing in the deeds of declaration that links them to the application for, and allotment of, units in the Property Unit Trusts. On the other hand, the proceedings have been conducted on the basis that the allotment of units in the relevant Property Unit Trusts represented adequate consideration for the making of the deeds of declaration.

Alienation of Property

1. In the cross-appeal, the Commissioner appeals from the refusal of the primary judge to make an order under s 37A of the Conveyancing Act. The Commissioner contends that his Honour erred in holding that there was no "alienation of property" within the meaning of s 37A. By notice of contention, PSI, as respondent to the cross-appeal, contends that, even if there were an alienation of property, there was no finding of a relevant intent to defraud creditors.
2. The Commissioner contends that the object or purpose of the Restructure, as described above, was to generate funds for PSI to apply, in its capacity as trustee of the Family Trust, in making a payment to, or at the direction of, Mr Peter Sleiman. The payment was made to Mr Sleiman purportedly in repayment of loans allegedly made by him to PSI in its capacity as trustee of the Family Trust. At various times during the hearing of the appeal, the Commissioner asserted that there was doubt as to whether there was in fact any indebtedness of PSI to Mr Sleiman. On the other hand, it appears that the proceedings were conducted before the primary judge on the basis that the payment made to Mr Sleiman was to discharge indebtedness owed to him, although the payment may have given him a preference over other creditors of PSI in its relevant capacity, including the Commissioner in relation to the Assessments.
3. The primary judge was satisfied that the deeds of declaration and the application for and redemption of units in the Property Unit Trusts were made or undertaken for a substantial purpose of facilitating the raising of additional funds from NAB, secured upon the Properties, the application of those funds to redeem the units and then the payment of those funds to Mr Peter Sleiman, with the result that the equity redemption in the Properties would not be available to meet the judgment in favour of the Commissioner against PSI. However, his Honour concluded that the Restructure did not constitute an "alienation of property" within the meaning of s 37A of the Conveyancing Act. While, his Honour considered that, if the Restructure amounted to an alienation for the purpose of s 37A, an order could have been made to declare the deeds of declaration void under s 37A, it may well have been necessary to afford to any other persons whose interest may have been affected by such an order an opportunity to be heard before the order was made.
4. The primary judge observed that the Commissioner attacked only the deeds of declaration and not the other aspects of the Restructure, as described above and also said that the "transaction" that was challenged by the Commissioner consisted of the deeds of declaration. However, it is clear that the deeds of declaration cannot be treated in isolation. Thus, PSI was responsible in one capacity or another for all of the steps in the Restructure and would not have made the deeds of declaration unless, at the same time, it proceeded with the application for, and allotment of, units in the Property Unit Trusts. The application for, and allotment of, the units clearly constituted the consideration for the making of the deeds of declaration.
5. The redemption of units in the Property Unit Trusts may fairly be regarded as a separate juridical act from the deeds of declaration and application for allotment of units. Clearly, the payment of the proceeds of redemption to Mr Peter Sleiman was also a separate juridical act. The question is whether, in those circumstances, the deeds of declaration in isolation, or the deeds of declaration in conjunction with the application for, and allotment of, units, constitute an alienation of Property within the meaning of s 37A and, if so, whether it was effected with the relevant intent.
6. Nothing in the documentation described above affects or purports to affect PSI's entitlement to be indemnified out of the property that for the time being constitutes the trust property of the Family Trust and the charge over that property to secure that indemnity. The Commissioner's complaint is that the nature of the property over which the charge subsisted was altered by the Restructure. Thus, the "alienation of property" impugned by the Commissioner is the substitution of units in the Property Unit Trusts, and subsequently the debt or funds arising on the redemption of the units, for the equity of redemption in the Properties.
7. The essence of the Commissioner's complaint is that the Restructure involved a change in the property available to PSI to indemnify it against its liabilities to the Commissioner. The right to indemnification out of the estate of the Family Trust in respect of liabilities to the Commissioner personally incurred by PSI in its capacity as trustee of the Family Trust is a right that PSI holds in its own right. There can be no doubt that that right of indemnification extends to whatever property was part of the estate of the Family Trust from time to time. The nature of the property in the estate of the Family Trust changed but the right to indemnification from the property of the estate did not alter. There was no disposition or alienation by PSI of its right to indemnification.
8. It is important to distinguish between property held by PSI in its capacity as trustee of one or other of the trusts involved, on the one hand, and property held by PSI in its own right, on the other. Thus, it has not been suggested on behalf of the Commissioner that PSI held any interest in the Properties in its own right, except to the extent that it was entitled to be indemnified out of the Properties, as trust property of the Family Trust, in respect of the personal liability under the Assessments that it had incurred to the Commissioner in its capacity as trustee of the Family Trust, in respect of which it had a charge over the trust property of the Family Trust.
9. The Commissioner's complaint is that the effect of the Restructure was that the property over which PSI had a charge to secure its indemnity was changed from the equity of redemption in the Properties to units in the Property Trusts and, when the units were redeemed payment was made, the money representing the payments so made.
10. The intent required by s 37A must relate to the effect of the alienation of property existing at the time of the relevant intent. [1] That is to say, it must be shown that the "alienation of property" that is impugned was intended to have the effect of defrauding creditors. In these proceedings, the Commissioner does not impugn the payment made to, or at the direction of, Peter Sleiman, which may well have constituted an alienation voidable under s 37A. Any alienation of the equity of redemption of the Properties that occurred was for a consideration at least equal to the full value of the equity of redemption. Rather, the Commissioner's contention is that the Restructure was undertaken with the intention of converting the property of the Family Trust into money that was capable of being paid to, or at the direction of, Peter Sleiman. The real complaint by the Commissioner seems to be the dissipation of the money generated by the redemption of the units by paying it away to, or at the direction of, Mr Peter Sleiman.
11. The evidence indicates that the value attributed to the Properties for the purposes of the Restructure was in excess of the then market value of the Properties. It would follow that, immediately following the Restructure, apart from the payments to, or at the direction of, Peter Sleiman, the overall financial position of the Family Trust was enhanced, since the value of its assets had been increased. Accordingly, an important question is whether the Commissioner was prejudiced by the transactions that are impugned, namely, the deeds of declaration and the application for, and allotment of, units in the Property Unit Trusts. It is difficult to see how the Commissioner was prejudiced by those steps in circumstances where the estate of the Family Trust was not diminished by the steps, because the value of the units allotted was at least equal to the value of the Properties.
12. I do not consider that the making of the deeds of declaration by PSI in consideration of the allotment of units constituted an alienation of property with the intent to defraud creditors within the meaning of s 37A. It may well be that they constituted alienation of property by PSI with the intent that money would become available to PSI which it would alienate to Mr Peter Sleiman. However, the question is not whether that alienation was to discharge a debt owing to Mr Peter Sleiman, or was a payment without consideration such that it may have constituted an alienation within s 37A. The question is whether the deeds of declaration were alienations within s 37A. For the reasons outlined they were not. It is thus not necessary for me to decide the two further questions outlined above at [17].

Adjournment of Winding-up Application

1. It appears that, in the years of income to which the Assessments relate, substantial payments were received by PSI in its capacity as trustee of the Family Trust. It is the characterisation of those payments that is in issue between the Commissioner and PSI. The Commissioner's investigations suggested that the payers had characterised many of the payments as rent. On the other hand, PSI, in its capacity as trustee of the Family Trust, sought to characterise the receipts in its hands as loans.
2. The evidence intended to be relied upon by PSI in the Tribunal was not available to the primary judge and the material before his Honour certainly did not satisfy him that PSI's appeal to the Tribunal has strong prospects of success. The Commissioner asserts that PSI did not attempt to adduce the evidence necessary to demonstrate to the primary judge that it had any prospects of success in its appeal to the Tribunal. Accordingly, PSI's answer to the Assessments was not sufficiently explained. If the evidence adduced at the hearing before the Tribunal demonstrated that there was at least a reasonably arguable case, it may be appropriate to order that the hearing of the winding-up application be deferred until after the completion of the hearing of the appeal to the Tribunal.
3. The primary judge considered that there was no evidence as to the merit or potential outcome of the appeal to the Tribunal, "even if it were otherwise relevant". His Honour accepted that the fact of the commencement of proceedings in the Tribunal did not affect the legal status of the Assessments, which would only be affected if the Assessments were varied or set aside by the Tribunal. That is clearly correct, in so far as the existence of the debts owing to the Commissioner is concerned. However, the possibility that the Assessments might be set aside is a relevant consideration in the exercise of the discretion of whether to make a winding-up order, refuse to make a winding-up order or adjourn the hearing of the winding-up application.
4. PSI indicated that, before the Tribunal, it proposed to rely on a proposition concerning the basis upon which it held the Properties, namely, that it held "the rental properties … on a negatively geared basis and that it has not derived a net income position". The primary judge considered that there was no substantive evidence before him to enable him to make an assessment of the likelihood of that proposition being accepted by the Tribunal.
5. The proceedings in the Tribunal are fixed for hearing towards the end of May of this year. The question is whether the primary judge erred in the exercise of his discretion in failing to accede to PSI's application to adjourn the hearing of the winding up application, at least until after the hearing before the Tribunal. It is unlikely that a decision would be given by the Tribunal immediately after the hearing. Further, there could well be a further appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from the decision of the Tribunal to the Federal Court of Australia on a question of law. Such an appeal could be heard by a single judge of the Federal Court, from whom an appeal would lie as of right to the Full Court of the Federal Court. Thus, the chances of an early resolution of the question are very slim.
6. At the time of the hearing before the primary judge, the hearing before the Tribunal had not been fixed and there was, at that stage, no requirement for PSI to have filed its evidence in the Tribunal. His Honour had to exercise the discretion just described in those circumstances. It would have been appropriate for his Honour, in deciding how to exercise the discretion, to weigh in the balance two matters. The first was the detriment to the public interest in permitting PSI to continue operating, in circumstances where it was clearly insolvent if the Assessments stand and, on one view, may have been insolvent even if they were set aside in their entirety. The second was the possible prejudice to the beneficiaries of the Family Trust if a winding-up order were made and the liquidator of PSI declined to prosecute the appeal to the Tribunal.
7. There was no suggestion that PSI was engaged in trading activities or was likely to incur any liability to a third party. While delay in the appointment of a liquidator could have some prejudice for the liquidator in conducting investigations into the affairs of PSI, no specific matter was adverted to. On the other hand, it would have been open to the beneficiaries of the Family Trust to make an offer to the liquidator to fund the appeal to the Tribunal on the basis that the liquidator would have no exposure to costs. That, however, would be a matter for the liquidator and there could not be certainty that an accommodation in that regard could be reached with the liquidator.
8. A significant consideration for the primary judge in deciding whether to make a winding-up order was the existence of a debt to the Commissioner for goods and services tax (GST). His Honour considered that there was no basis to exercise his discretion not to wind-up the Company in circumstances where it could not pay the GST debt that was presently due and payable to the Commissioner, merely because it contested the existence of, or the amount of, another debt that it also could not pay, namely, the debt under the Assessments. However, as a condition of the stay of the winding-up order, pending this appeal the GST debt has now been paid.
9. I agree with Leeming JA that, in circumstances where this appeal is by way of rehearing, the discretion as to the making of a winding-up order or the grant of a stay falls to be re-exercised. I also agree that an order for the winding-up of the Company in insolvency should be made unless the majority of the Assessments is set aside. In the circumstances, I agree with Leeming JA, for the reasons proposed by his Honour, that the Court should decline to set aside the winding-up order but should continue the existing stay on the existing terms until 31 May 2017, with liberty to apply in the meantime. I agree with his Honour's observations in relation to the circumstances in which that leave might be availed of.

Declarations

1. The question of the effect of the instruments constituting the Restructure is, in a sense, nothing to do with the Commissioner. To the extent that there is a question as between the beneficiaries under the Family Trust, on the one hand, and the unit holders under the Property Unit Trusts, on the other, if the facts before the Court disclose that there has been a change in beneficial interest, there is no reason why the Court should not make a declaration to that effect. Mere refusal of a declaration, unless it is on the basis of a positive conclusion that there has been no change in beneficial interest, leaves open the prospect of further litigation.
2. The question, of course, would not arise, if an order were made under s 37A. However, absent an order under s 37A, there is no reason immediately apparent as to why the documentation described above should not be regarded as effective as between those entitled under the Family Trust, on the one hand, and those entitled under the Property Unit Trusts, on the other. A declaration to that effect would be binding on those parties, although it may not be binding on persons who are not parties to the proceedings.
3. However, there has been no real contradictor. In those circumstances, it would be undesirable to grant declaratory relief where there does not appear to be any real dispute between the beneficiaries of the Family Trust on the one hand, and the holders of the units in the Unit Trusts, on the other. Whether or not there is force in the Commissioner's contention that the declarations might impact upon the exercise of powers given to a liquidator of the Company, the possibility that they may is another reason for declining to grant declaratory relief.

Appointment of New Trustees

1. The jurisdiction to remove a trustee should be exercised with a view to the interests of the beneficiaries, the security of the trust property and the efficient and satisfactory execution of the trusts. In deciding to remove a trustee, the Court is required to form a judgment, based on various considerations, as to whether the welfare of the beneficiaries is opposed to the continued occupation of the office of trustee. Such a judgment is discretionary. [2] The jurisdiction of the Court to remove a trustee is ancillary to its principal duty to see that the trusts are properly executed. If the Court is satisfied that the continuation of the appointment of the trustee would prevent the trust being properly executed, the trustee should be removed. The main guide in the exercise of that discretion is the welfare of the beneficiaries, not whether the trustee has committed a breach of trust. [3]
2. The curious situation in the present case is that PSI wishes to be removed as trustee of the Property Unit Trusts and the beneficiaries of the Property Unit Trusts want PSI to be removed as trustee. However, PSI is prevented from exercising the power to remove itself conferred by the deeds of trust establishing the Property Unit Trusts by the existence of the freezing order referred to above.
3. The primary judge concluded that the order sought by PSI under the Trustee Act should not be made in circumstances where the Property Unit Trusts would come under the control of entities of which Mr George Sleiman, Mr Peter Sleiman's brother, is the sole director and in respect of which Mr Peter Sleiman was likely to exercise practical control. His Honour had regard to Mr George Sleiman's lack of understanding of, and lack of commitment to performing or causing a corporate trustee to perform, his and its duties. His Honour considered that Mr George Sleiman neither acknowledged any deficiency in the previous performance of his duties as a director nor gave evidence that he would in future conduct himself in any different matter, even when given the opportunity to give additional evidence to address the issues that had arisen from his cross-examination in that respect (at [78]).
4. Having regard to the conclusions that he reached, the primary judge considered that the proper administration of the Family Trust and each of the Property Unit Trusts would be promoted by leaving PSI as Trustee, under the control of the liquidator, as an officer of the Court, rather than by appointing companies of which Mr George Sleiman was the sole director. His Honour declined to take the course of affording PSI the opportunity to nominate alternative entities as trustees. His Honour did so because that was not the basis upon which PSI's application had been brought. Further, as his Honour observed, such an application could be pursued separately by any liquidator appointed to PSI, if the liquidator considered that it was in the interests of PSI, its creditors or potential beneficiaries of the trusts, to pursue such an application. In addition, his Honour stated that such an application could potentially be brought by a beneficiary with an interest in the relevant trusts.
5. If the Company proceeds into liquidation, its liquidator will have to take a view as to whether the Company should continue to be a trustee of both the Family Trust and the Unit Trusts. No immediate prejudice to the holders of units in the Unit Trusts has been foreshadowed by the continuation. In the circumstances, I agree with Leeming JA that the appropriate course is to refuse to make orders for the appointment of new trustees for the Unit Trusts. However, it may be for the holders of the units at some time in the future to make a similar application, depending upon the outcome of the proceedings in the Tribunal and the winding-up of the Company.

Conclusion

1. I agree with the orders proposed by Leeming JA.

Endnotes

1. See DM Cannane v J Cannane Pty Ltd (1998) 192 CLR 557 at [10]
2. Miller v Cameron (1936) 54 CLR 572 at 580-581
3. Porteous v Rinehart (1998) 19 WAR 495 at 508

Amendments 18 April 2017 - [7] - "request to particulars" amended to "request for particulars"

[42] - "15 November 2013" amended to "25 November 2013."

[103] - "indemnity" amended to "indemnify." 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: 18 April 2017