Plaintiff v Defendant

Supreme Court of Victoria|2007-08-02|Before: DODDS-STREETON J

CORPORATIONS - Corporations Act 2001 (Cth), ss.588FF(1)(h), 588FF(1)(j) - Supreme Court (Corporations) Rules 2003, Rule 16.5 - Appeal of Master's decision declaring lease void and unenforceable as uncommercial transaction - Leave to appeal required pursuant to Rule 16.5 - Whether lease by company to defendant director for nominal rent beneficial to company where prior entitlement to occupy property rent-free for life - Whether prior occupation entitlement established - Leave to appeal refused.

Skouloudis Group Pty Ltd (in liq) & Anor v Planet Enterprizes Pty Ltd

CORPORATIONS - Corporations Act 2001 (Cth), s.471B - Application for leave to proceed against company in liquidation - Proposed proceeding seeking declarations that company held property on trust for applicant director's family trust, that applicant held licence to occupy property rent-free for life, that company was removed as trustee of family trust and that the property be transferred to the applicant as trustee - Whether applicant established prima facie case, "serious claim" or "real dispute" regarding valid entitlement to occupy property - Application refused.

Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd & Ors

Goldsworthy Mining Ltd v Federal Commissioner of Taxation

ICI Alkali (Aust) Pty Ltd (in vol liq) v Federal Commissioner of Taxation

CORPORATIONS - Supreme Court (General Civil Procedure) Rules 2005, Order 53 - Application by liquidator for recovery of possession of the property - Whether defendant had arguable defence based on valid lease or entitlement to occupy under deed of agreement and settlement - Whether alternative arguable defence based on licence coupled with equity to occupy property due to mortgage repayments and guarantee - Whether reasonable doubt that company entitled to possession - Application allowed.

Nick Kritharas Holdings Pty Ltd (in liq) v Gatsios Holdings Pty Ltd

1 These reasons for judgment relate to: (a) an application for leave to appeal from the decision of a Master ("the appeal") in proceeding number 4484 of 2006; (b) an application for leave to proceed pursuant to s.471B of the Corporations Act 2001 (Cth) ("the Act") in proceeding number 4484 of 2006; and (c) an application for recovery of land pursuant to Order 53 of the Supreme Court (General Civil Procedure) Rules 2005 ("Supreme Court Rules") in proceeding number 5288 of 2007. The applications were heard together.

2 In the applications, it is necessary to determine whether Mr George (or Constantinos) Velissaris, the sole director and shareholder of Maryvell Investments Pty Ltd (in liq) ("Maryvell" or "the company"), has at least an arguable case that he is entitled to occupation or possession of a property situated at 333-335 Sydney Road, Brunswick ("the property"). The company is the registered proprietor of the property, which contains a two-storey terrace house from which a restaurant business has been conducted for many years. The company was ordered to be wound up in insolvency on 19 June 2006 and Mr Laurence Fitzgerald was appointed the liquidator.

3 After the winding up order was made, Mr Velissaris claimed to be entitled to possession of the property as lessee under a lease from the company dated 15 May 2006 ("the 2006 lease"). On 15 February 2007, Master Efthim declared that the 2006 lease was void and unenforceable as an uncommercial transaction pursuant to s.588FF(1)(h) and (j) of the Act. Mr Velissaris appeals against that order of Master Efthim. He has, at all times, remained in occupation or possession of the property.

4 The liquidator, by originating motion dated 22 March 2007 in proceeding number 5288 of 2007 pursuant to Order 53 of the Supreme Court Rules ("the liquidator's recovery application") seeks to recover possession of the property from Mr Velissaris. Mr Velissaris opposes the liquidator's recovery application. Initially, his opposition was based solely on his rights under the 2006 lease. Subsequently, Mr Velissaris also relied on the alternative and arguably inconsistent ground that he is entitled to possession of the property independently of the 2006 lease, pursuant to a deed of agreement and settlement dated 10 March 1998 ("deed of agreement and settlement"), whereby the company conferred on him a right to occupy or possess the property rent-free for life, or as long as he wished. In resisting the liquidator's recovery application, Mr Velissaris subsequently also asserted that he had "a licence coupled with an equity" to occupy the property, on the ground that he had made mortgage payments in relation to the property and given a guarantee and indemnity in reliance on his entitlement to lifelong, rent-free occupancy.

5 Mr Velissaris, by an application pursuant to s.471B of the Act, seeks, inter alia, leave to bring a proceeding against the company to establish his claimed entitlement to occupy the property pursuant to the deed of agreement and settlement and an order that the property be transferred to him in his capacity as the trustee of a family trust.

6 By a Notice of Appeal dated 21 February 2007, Mr Velissaris appeals from the order of Master Efthim made on 15 February 2007, in which the Master ordered:

(1) There be a declaration pursuant to section 588FF(1)(h) of the Corporations Act 2001 that the purported lease between Maryvell Investments Pty Ltd (ACN 080 327 073) (in liquidation) and Mr George Velissaris in respect of the property at 333-335 Sydney Road, Brunswick Victoria...was void at and after 15 May 2006, being the date on which the said lease was purportedly made.

(b) There be a declaration pursuant to 588FF(1)(j) of the Corporations Act that the said lease is unenforceable.

(c) The respondent [Mr Velissaris] pay the liquidator's costs of the interlocutory application of 22 September 2006 including reserved costs.

7 Mr Velissaris appeals against "the complete orders of Master Efthim made on 15 February 2007".

8 The application was referred to Master Efthim by my order made on 18 December 2006, so (although it was not formally sought) leave to appeal is required under Rule 16.5 of the Supreme Court (Corporations) Rules 2003 ("the Rules").

9 Rule 16.5 of the Rules states:

(1) Subject to sub-rules (2) and (3), an appeal lies from the order of a Master made under these Rules as though it were an appellable order of a Master under Chapter I of the Rules of the Supreme Court.

(2) No order of a Master made on an application referred to the Master by a Judge shall be subject to an appeal except by leave of a Judge.

(3) Without limiting the discretion to grant or refuse leave, leave may be granted if the Judge is satisfied, whether with or without oral argument, that the decision of the Master is arguably affected by error.

10 No authority on the scope of Rule 16.5 was identified. It is apparent, from its terms, that the Court could, in its discretion, refuse to grant leave where there was arguable error if, for example, it was of no consequence. Similarly, as (subject to sub-rules (2) and (3)) the appeal lies as if it were an appellable order of a Master under Chapter 1 of the Supreme Court Rules, it would seem that the appeal under Rule 16.5 is not an appeal in the strict sense. The emergence of new evidence could, in some circumstances, constitute a ground for leave in the absence of arguable error.

11 In the present case, Mr Velissaris contended that evidence about his prior entitlement to occupy the property was relevant to the appeal. I indicated that I would hear the application for leave and the appeal together. Counsel for both parties sought and obtained leave to rely on further affidavits filed in both proceedings.

12 Maryvell, as the plaintiff in proceeding number 5288 of 2007 commenced by originating motion dated 22 March 2007 for recovery of land under Order 53 of the Supreme Court Rules, seeks recovery of the property from the defendant, Mr Velissaris, and from every person in occupation of the property.

The application for leave under s.471B of the Corporations Act

13 By an amended interlocutory application dated 6 June 2007 ("the s.471B application") made in proceeding number 4484 of 2006, Mr Velissaris, as plaintiff, seeks an order under s.471B of the Act for leave to bring a proceeding against the first defendant, Maryvell, and the second defendant, the liquidator, to seek relief, including declarations that:

"(a) A declaration that at all relevant times Maryvell Investments Pty Ltd has held the property known as 335 Sydney Road, Brunswick, Victoria, and more particularly described in Certificate of Title Volume 4621 Folio 189 ("the property") on trust on the terms of the Deed of Settlement, dated 30 January 1998, as trustee of the Maryvell Family Trust;

(b) A declaration that Constantinos George Vellisaris has a right to occupy the property as licensee and to conduct the business situated thereat in accordance with the terms of the Deed of Agreement and Settlement dated 10th March, 1998;

(c) A declaration that by notice, dated 5th June 2006, under the terms of the Maryvell Family Trust, created by Deed of Settlement, dated 30 January 1998, the power vested in the Constantinos George Vellisaris as appointor, Constantinos George Vellisaris validly removed Maryvell Investments Pty Ltd as trustee of the Maryvell Family Trust;

(d) An order that the Maryvell Investments Pty Ltd and/or the Second Defendant forthwith transfer the property to Constantinos George Vellisaris as trustee of the Maryvell Family Trust; and

(e) An order that the winding up of Maryvell Investments Pty Ltd be stayed pending the hearing and determination of the proceedings contemplated in paragraphs 1 (a) to (d) inclusive hereof."

Appeal and applications to be heard and determined together

14 The hearing of the appeal was fixed for 5 June 2007 in the Corporations List. Master Kings had ordered that the s.471B application and the liquidator's recovery application would be heard together and fixed them for 31 August 2007.

15 At the hearing of the appeal (and application for leave) on 5 June 2007, Mr Selimi, counsel for Mr Velissaris, sought that the appeal be adjourned until the hearing and determination of the s.471B application and the liquidator's recovery application, on the ground that, as the matters arose from the same factual background and transactions, it was convenient and cost-effective to hear all three together. Further, that course would avoid the risk of inconsistent findings which would arise if the appeal were heard and determined prior to the other two applications.

16 Mr Selimi submitted that in the s.471B application, Mr Velissaris sought leave to bring a proceeding against the company to, inter alia, establish his entitlement to occupy the property rent-free for life or for as long as he wished ("the prior occupation entitlement") which predated the 2006 lease the subject of the appeal. An arguable or prima facie case for the prior occupation entitlement was both a necessary precondition of a grant of leave under s.471B and the basis of Mr Velissaris' opposition to the liquidator's recovery application. Mr Selimi submitted that the prior occupation entitlement was also crucial to the determination of the appeal, because the low rental payable under the 2006 lease was not uncommercial when evaluated by reference to the prior occupation entitlement, under which no rent at all was payable.

17 Given the common factual background and the inter-dependence of the appeal and the two applications, I proceeded to hear the appeal (and application for leave to appeal) as scheduled on 5 and 6 June 2007, adjourned the further hearing of the appeal (and related leave application) until 19 June 2007, and fixed the hearing of the s.471B application and the liquidator's recovery application to be heard together by me on 19 and 20 June 2007.

18 The appeal, the s.471B application and the liquidator's recovery application have a common factual background. Although this is set out chronologically below, it differs from the account originally presented to the Court. Some of the significant facts and documents emerged at different stages, as Mr Velissaris frequently introduced new assertions or documents and modified or retracted assertions which he had previously made.

19 The company was incorporated on 8 October 1997. Mr Velissaris is the sole director. There are 1,000 issued shares in the company. Its registered office is the property situated at 335 Sydney Road, Brunswick.

20 Mr Velissaris purchased the property in 1984. He became the registered proprietor on 18 April 1984 and thereafter conducted a restaurant business from the premises.

21 The property was subject to a mortgage in favour of the Bank of Melbourne, which was registered in January 1997. Following defaults in payments due under the mortgage, the mortgagee auctioned the property on 11 October 1997.

22 Mr Velissaris' daughter, Mary Velissaris, by an affidavit sworn 28 May 2007, deposed that she purchased the property at the mortgagee's auction on 11 October 1997, pursuant to a contract with the Bank of Melbourne dated 11 October 1997 and nominated the company (incorporated on 8 October 1997) as the purchaser, pursuant to the nomination clause. The instrument of transfer in favour of the company was executed by the Bank of Melbourne on 10 February 1998.

23 The contract of sale for the property dated 11 October 1997 is signed by Mary Velissaris as purchaser, at a price of $425,000 with a 90 day settlement. An attached receipt dated 11 October 1997 acknowledges $42,500 from "the Vellissaris" [sic] for the deposit.

24 The Maryvell Family Trust was established by Deed of Settlement dated 30 January 1998 ("Trust Deed"). Maryvell was the trustee of the Maryvell Family Trust. The settlor was Mark Koroneos. The Primary Beneficiaries were Helen Velissaris and Alexandros Velissaris. The appointor was George Velissaris. Clause 12 of the Trust Deed provides for the trustee's right of indemnity against the assets of the trust for liabilities "incurred in the execution or attempted execution of the trust, or as a consequence of the failure to exercise its powers or discretions, or by virtue of being trustee."

25 By clause 1.1 of the Trust Deed, 'Beneficiary' is defined to include, inter alia, the parents of each of the Primary Beneficiaries. It is not disputed that Mr Velissaris is the father of the Primary Beneficiaries and there was no evidence that he fell or falls within the class of 'Excluded Persons' as defined. He is therefore a beneficiary of the Maryvell Family Trust.

26 By clause 17 of the Trust Deed, the appointor is empowered to remove any trustee and appoint additional or new trustees, although the appointor, if a beneficiary, is not eligible to be appointed trustee.

27 By clause 19 of the Trust Deed, the office of trustee is automatically determined and vacated if, inter alia, the trustee is a company which goes into liquidation.

28 By the transfer of land dated 10 February 1998, the Bank of Melbourne transferred the property to Maryvell for a stated consideration of $425,000.

29 On 10 March 1998, a document entitled "Deed of Agreement and Settlement" was executed by George Velissaris both on his own behalf and on behalf of "Maryvel [sic] Investment Pty Ltd acting as trustee of the Maryvell Family Trust dated 30 January 1998."

30 The deed of agreement and settlement is signed by George Velissaris and bears the common seal of Maryvell. It is neither stamped nor witnessed.

"1). That: CONSTANTINE VELISSARIS (Also Known as GEORGE VELISSARIS) AGREES AND CONSENTS to Transfer his Commercial Property situated at 333-335 Sydney Rd Brunswick 3056 in the State of Victoria, and being Title Volume: 4621 Fol. 189, being Purchased by him Since the 18th of April 1984 in his own Capacity as the Proprietor, and holds this Property up to now as the Sole Proprietor on the Certificate of Title under the 'Transfer of Land Act 1915'.

HEREBY AGREES AND CONCENTS TO TRANSFER HIS PROPERTY TO: MARYVELL INVESTMENTS PTY LTD WHICH IS A TRUSTEE COMPANY ONLY, FOR HIS FAMILY TRUST, NAMED (MARYVELL FAMILY TRUST), AND TO BE KEPT IN TRUST FOR THE BENEFIT OF CONSTANTINE VELISSARIS AND OR GEORGE VELISSARIS WHO IS THE APPOINTOR OF THIS FAMILY TRUST DATED 30 JAN 1998.

2). IT IS HEREBY STATED AND AGREED THAT CONSTANTINE VELISSARIS (ALSO KNOWN AS GEORGE VELISSARIS) IS THE FULL SHAREHOLDER OF THE SHARES OF MARYVELL INVESTMENTS PTY LTD AND HE WILL OWN AND CONTROL ALL THE ASSETS OF THE MARYVELL FAMILY TRUST INCLUDING THE PROPERTY SITUATED AND KNOWN AS 333-335 SYDNEY RD BRUNSWICK AND BEING VOLUME 4621 FOL. 189 IN THE CERTIFICATE OF TITLE.

3). IT IS FURTHER AGREED BETWEEN THE TWO PERTIES IN THIS DEED OF AGREEMENT AND SETTLEMENT THAT CONSTANTINE VELISSARIS ALSO KNOWN AS GEORGE VELISSARIS WILL FULLY OCCUPY AND HOLD THE PROPERTY HEREIN TRANSFERRED (BEING 333-335 SYDNEY RD BRUNSWICK 3056) AS BEING HIS OWN PROPERTY AND TO CONTINUE TO RUN 'THE GREEK BAR TAVERN' BUSINESS BEING ESTABLISHED BY HIM SINCE 1990 ON THIS PROPERTY AND THE BUSINESS IS FULLY OWNED AND OPERATED BY CONSTANTINE AND OR GEORGE VELISSARIS FOR AS LONG AS HE WISHES DOING SO.

4). IT IS FURTHER AGREED UPON THAT WHILE MARYVELL INVESTMENTS PTY LTD WILL BECOME THE REGISTERED PROPRIETOR OF THE PROPERTY OF 333-335 SYDNEY RD BRUNSWICK IN VICTORIA ON THE CERTIFICATE OF TITLE VOLUME 4621 FOL. 189 IT WILL ONLY HOLD IT IN TRUST FOR AND ON BEHALF OF: CONSTANTINE VELISSARIS AND OR GEORGE VELISSARIS FULL BENEFIT, AND OR HIS FAMILY MEMBERS NAMED IN THE FAMILY TRUST AS BENEFICIARIES IN THE TRUST DEED OR WHOEVER OTHER HE APPOINTS.

5). AND IT IS FURTHER AGREED AND UNDERTAKEN BY MARYVELL INVESTMENTS PTY LTD THAT NO RENTAL WILL BE DUE AND PAYABLE TO MARYVELL INVESTMENTS PTY LTD, BY CONSTANTINE VELISSARIS, ALSO KNOWN AS GEORGE VELISSARIS, FOR AS LONG AS HE OCCUPY THE PROPERTY AND RUNS AND OPERATES 'THE GREEK BAR TAVERN' BUSINESS, AND THERE IS NOT ANY REQUIREMENT TO HAVE ANY PAYMENTS BE MADE TO MARYVELL INVESTMENTS PTY LTD BY BEING THE REGISTERED PROPRIETOR OF THE PROPERTY, AND IT IS AGREED UPON THAT IT WILL ALWAYS BE A FREE AND UNINTERAPTED OCCUPANCY OF THE PREMISSES TO SO BE ABLE TO CONTINUE TO OPERATE THE BUSINESS BY CONSTANTINE VELISSARIS ALSO KNOWN AS GEORGE VELISSARIS."

32 On 20 March 1998, the company was registered as proprietor of the property.

33 In 1999, Mr Velissaris was declared bankrupt. He completed and signed a Statement of Affairs dated 29 October 1999, which stated that the company, as trustee, was owner and operator of the restaurant business.

34 The Statement of Affairs stated that Mr Velissaris had assets with a total value of $1,922.56, made up of cash, furniture and effects and tools of trade. It acknowledged that he had conducted The Greek Bar Tavern and restaurant business and that some business assets were not owned by him. It stated that the business was not still operating. It stated "Bank enter into possession in July 97", and, in relation to the requirement to "List books of account/records kept in relation to each business", wrote "No Records" and indicated that there were no books of account written up or any persons holding them.

35 It stated that Mr Velissaris had been a director and shareholder of Maryvell in the last five years; that the company records were held by Mary Velissaris; that the company was the trustee of the Maryvell Family Trust, the beneficiaries of which were Helen, Mary and Alexandros Velissaris; and that the Maryvell Family Trust's assets included 333-335 Sydney Road, Brunswick, valued at $600,000 and 19 Clarence Street, Brunswick, valued at $200,000. (The nominated beneficiaries of the Maryvell Family Trust do not precisely coincide with those listed in the schedule to the Trust Deed. The Statement of Affairs refers to two other trusts.)

36 The Statement of Affairs thus indicated that the property was the property of the company, which was the trustee of the Maryvell Family Trust and that Mr Velissaris personally owned and had operated the business, but had virtually no assets. In particular, it did not acknowledge that Mr Velissaris claimed any interest in the property, whether pursuant to the deed of agreement and settlement or on any other basis.

37 On 30 October 2002, Mr Velissaris was discharged from bankruptcy.

38 On 16 June 2005, BankWest offered the company a loan of $1.1 million, to be secured by a mortgage over the property. BankWest's internal document dated June 2005 noted that the company was entitled to an indemnity from trust assets. The trust and the company executed warranty and consent forms dated 23 June 2005.

39 On 27 June 2005, the company executed a mortgage over the property in favour of BankWest.

40 A Statement of Affairs under the Judgment Debt Recovery Act 1984 stated that the company owned the property, which was stated to be valued at $2.5 million and subject to a mortgage for $1 million.

41 By a deed of variation dated 15 July 2005, Mr Velissaris purported to amend the Maryvell Family Trust Deed by removing the trustee's right to an indemnity from the trust assets.

42 On 3 February 2006, an originating process applying to wind up the company was issued by Tolhurt Druce & Emmerson, in reliance on non-compliance with a statutory demand for $37,690.62 dated 14 October 2005 ("the statutory demand").

43 On 11 November 2005, the company issued an application to set aside the statutory demand. The application was dismissed by Master Efthim on 25 January 2006.

44 A number of supporting creditors appeared in or supported the winding up application, including the following:

Coadys, a firm;
Sigma Constructions Pty Ltd;
David Cheong;
Eales & McKenzie, a law firm;
Moreland City Council; and
Shayne Daley, a legal practitioner.

45 The application for winding up was opposed by the company, which relied on the affidavit of Mr Velissaris sworn 7 March 2006. Mr Velissaris there deposed that the company was solvent and that the amounts claimed by the creditors had not been paid because the claims were disputed. He deposed that the company had been denied natural justice in, inter alia, a proceeding in the Magistrates' Court.

46 In that affidavit, at paragraph 15, Mr Velissaris stated:

"The two major assets of the company are the premises located at 333-335 Sydney Road, Brunswick, and an action against Sigma Constructions (Vic) Pty Ltd which is pending in the Victorian Civil and Administrative Tribunal ('the Tribunal')."

47 Mr Velissaris exhibited a valuation of the property for $1,620,000. He deposed that it was only a site valuation and that the property was likely to be valued at approximately $3,500,000 on a full market valuation. He deposed that it was encumbered by a mortgage to BankWest securing indebtedness of $900,000 and had a further borrowing capacity of $100,000 under the mortgage. It had no other liabilities.

48 Mr David Brett, on behalf of Coadys, a supporting creditor, by affidavit sworn 10 April 2006, deposed that the company had applied to the Melbourne Magistrates' Court to pay the judgment debt of $6,250 plus interests and costs to Coadys by instalments. Only two instalments had been paid, in February and March 2005. The payments had then ceased.

49 Mr Velissaris, by an affidavit sworn 25 May 2006, deposed to his dissatisfaction with various law firms successively retained to act on the company's behalf. He also deposed to his ill-health and heart condition.

50 He reiterated that "The defendant [company] is the sole proprietor of premises located at 333-335 Sydney Road, Brunswick" and operated a restaurant business from the premises. He deposed that the company had borrowed from BankWest in order to make capital improvements to the property and had mortgaged it to BankWest in order to secure the loan. Mr Velissaris deposed that the company was solvent because it had a credit facility with BankWest for a total of $1.1 million, on which $68,779 in credit remained available.

51 Further, he deposed that a market valuation of the property by Savills dated 9 May 2002 had valued the property at $2 million - $2.1 million.

52 By his affidavit sworn 13 June 2006, Mr Velissaris deposed, inter alia, that the company's restaurant business had been operated since 1990 by family members.

53 He again deposed that "The Company is solvent and its assets far exceed its liabilities. The Company is able to pay its debts as and when they fall due."

54 He exhibited the accounts of the company as trustee of the Maryvell Family Trust as at 31 May 2006 dated 5 June 2006, prepared by Gregoriades Sofocleous & Associates and signed by Mr Velissaris. The notes stated that:

"the company acts solely as Trustee has [sic] incurred liabilities at the 30th June 2006. Such liabilities will be discharged out of the assets of the trust and not out of the assets of the company..."

55 The accounts stated that the total assets as at 31 May 2006 were $3,577,605.85, including land and buildings at the director's valuation of $2.9 million, beneficiary loans of $396,897.54, stock on hand of $3,320 and a BankWest business loan of $68,779.12.

56 The liabilities comprised the BankWest Business Loan of $1.1 million. Net assets were stated to be $2,439,375.40. The net operating profit was stated to be $40,082.09.

57 Mr Velissaris deposed that "The Company is the sole proprietor of the land and buildings...at 333 to 335 Sydney Road, Brunswick," and referred to the mortgage in favour of BankWest taken out in June 2005.

The Company operates a business at the property. The business is a restaurant and trades under the business name of 'The Greek Bar Tavern' ('Kalamata') (the business). Now produced and shown to me and marked GV2 is a copy of a Certificate of Registration of Business name dated 6 July 2004.
A planning permit no. P138/1990 was issued by the then City of Brunswick to the property on 5 October 1990 to operate the business. The permit provides for the operation of a bar and restaurant with seating capacity of 135 people.
The business has been operating since 1990. I am involved in the running of the business. I manage the business and am also the head chef and the food safety supervisor. The business employs family members plus two/three part-time casuals. The business operates from 5pm to 12pm seven nights a week.
...
The net operating profit of the Company for the year ending 31 May 2006 is $40,082.09. It is my intention for the Company to continue operating the business as an ongoing concern and then to sell the business and to lease out the property for a minimum of $3,000.00 per week. Offers have been made to me recently for the purchase of the business."

59 Mr Velissaris deposed that all plant and equipment necessary to operate the business were purchased and owned by the company. Mr Gardiner, counsel for Maryvell and the liquidator, submitted that the accounts and the ownership of plant and equipment were consistent with the company operating and owning the business.

60 On 15 May 2006, the company purported to grant Mr Velissaris a lease of the property for a five year term, with an option for a further term of five years. The initial nine months of the term was to be rent-free and thereafter rental was payable at the rate of $220 per week exclusive of GST.

61 On 5 June 2006, Mr Velissaris, as appointor of the Maryvell Family Trust, took steps to remove the company as trustee and to appoint Mary Velissaris (also known as Mary Patroungas) as trustee in substitution.

62 On 19 June 2006, Master Efthim ordered the company to be wound up in insolvency pursuant to s.459P of the Act and Mr Fitzgerald was appointed liquidator. The Master also ordered that the order be stayed until 4.00 pm on 23 June 2006 or until further order.

"On the question of insolvency no audited accounts have been filed. Unaudited accounts are not ordinarily probative of solvency. (See Ace Contractors & Staff Pty Ltd v Westgarth Developments Pty Ltd [1999] FCA 728). The accounts put before the Court are unaudited and unsigned. There are creditors not referred to in the accounts. For example Land Tax and David Cheong. The accounts give no clear description of the debts of the Plaintiff. Two opportunities were given for proper accounts to be filed but proper accounts were not filed. A presumption of insolvency has not been rebutted. The director of the Defendant has sworn that the Defendant operates a restaurant. On the evidence before the Court it is a business by the Director himself or someone else. An offer was made by the Company to pay $15 000 into Court with a further $20 000 after 30 days. That amount does not satisfy all of the supporting creditors. The creditor and the supporting creditors refused the offer. The order to wind up was stayed for 4 days as the creditors generally would not be prejudiced by the short stay."

64 By summons filed 23 June 2006, the company sought that the stay be extended until 10 July 2006. That application was opposed by the petitioner and supporting creditors. On 23 June 2006, I dismissed the application for an extension of the stay.

65 Mr Velissaris, by Notice of Appeal dated 22 June 2006, sought to appeal against the Master's order that the company be wound up.

66 On 7 July 2006, I dismissed the Notice of Appeal dated 22 June 2006.

67 By an interlocutory process filed 22 September 2006, the applicant, Mr Fitzgerald, as liquidator of the company, sought that "the purported lease dated 15 May 2006 wherein the company leased Mr Velissaris the property at 333-335 Sydney Road, Brunswick" be declared void and unenforceable, as an uncommercial transaction within terms of s.588FB of the Act.

68 By his affidavit sworn 22 September 2006 in support of the application to have the 2006 lease declared void and unenforceable, Mr Fitzgerald deposed that on 26 June 2006, he wrote to Mr Velissaris requiring the delivery of the books and records of the company and that Mr Velissaris submit a Report as to Affairs ("RATA") by 10 July 2006.

69 Mr Fitzgerald deposed that despite numerous requests, Mr Velissaris failed to provide a RATA. Further, most of the company's books and records were not delivered, without any reasonable excuse.

70 Mr Fitzgerald deposed that the company's sole principal asset was the property, from which the company operated a restaurant business.

71 Mr Fitzgerald deposed that Mr Velissaris had not co-operated with him or his staff, but his investigations had identified a number of creditors, including the mortgagee, BankWest, for over $1 million.

72 In support of the contention that the 2006 lease was an uncommercial transaction, Mr Fitzgerald relied on Mr Velissaris' assertions in paragraphs 15 - 17 of his affidavit sworn 13 June 2006, where he had deposed that the company owned the property, exhibited valuations indicating an average rental of $98,000 per annum, and asserted that the company operated the business.

73 Mr Fitzgerald referred to Mr Velissaris' claim, made by a letter dated 26 June 2006 to the liquidator's firm, Horwaths, that the company had leased the property to him and that he lived in the upstairs area.

74 Mr Fitzgerald deposed that as Mr Velissaris had not provided any documentation about the alleged lease, he had concluded that Mr Velissaris had a monthly tenancy of the property. The liquidator's solicitors, Robert James Lawyers, accordingly wrote to Mr Velissaris on 18 July 2006 giving notice of the termination of the monthly tenancy from 19 August 2006.

75 On 18 July 2006, Mr Velissaris forwarded to the liquidator's solicitors a purported handwritten lease document in relation to the property, with an execution clause completed by Mr Velissaris on his own behalf and that of the company on 15 May 2006. The lease document comprised only a single front page of a Law Institute of Victoria standard lease and a handwritten schedule, completed by Mr Velissaris. The schedule stated Mr Velissaris to be the tenant of the property and the company to be the landlord. The rent was stated to be $220 per week, exclusive of GST.

76 The term of the lease was five years, commencing 19 May 2006. An option for a further five years was conferred. The permitted use was stated to be "Bar Tavern and Restaurant".

"The Landlord Agrees and Concents [sic] with the tenant that no rent is due and payable by the tenant for the first nine months of the lease and the landlord is owing Monies to the Tenant as Wages."

78 The 2006 lease document was signed by Mr Velissaris on his own behalf and on behalf of the company, the common seal of which was affixed.

79 Mr Velissaris' affidavit of 13 June 2006 had not referred to the 2006 lease, although it predated the affidavit by about a month. Rather, the affidavit had indicated that the property could be rented for substantial rent and that he proposed to rent it in future for a minimum of $3,000 per week. It did not mention that the company was no longer trustee of the Maryvell Family Trust.

80 Mr Gardiner, counsel for the liquidator, submitted that this demonstrated a lack of candour and poor credit on Mr Velissaris' part. He submitted that when it had suited his purpose in the context of the winding up proceeding, Mr Velissaris contended that the company owned the business and the property. In the context of the uncommercial transaction application, however, he argued that, (contrary to the import of the accounts) he owned the business and that the company did not own the property beneficially.

81 In the affidavit sworn 22 September 2006, Mr Fitzgerald also noted that:

(1) entry into the lease was an event of default under the BankWest mortgage without the mortgagee's consent, which (he was informed) had been neither sought nor obtained;

(2) the company entered into the purported lease on 15 May 2006 at a time when the company was presumed to be insolvent, because it had failed to keep financial records which recorded its position in accordance with s.286(1) of the Act and had failed to retain the financial records for seven years, in breach of s.286(2) of the Act.

82 Further, the company was, in Mr Fitzgerald's view, insolvent as at 15 May 2006 (the date of the lease) on the basis of his investigations, which had revealed the following:

(2) It had failed to pay council rates for four years.

(3) It had no income, debtors, stock or cash inflow from trading or assets.

(5) It was continuing to incur debts through interest charges to BankWest and statutory charges (amounting to $6,500 per month on the mortgage).

(6) The company had total funds of $5,280, which was insufficient to discharge its liabilities.

(7) The company's main asset was the property, which would take some months to realise.

(8) The appointment of a liquidator had complicated the capacity to refinance.

(9) Mr Velissaris had informed the liquidator that he would not pay any creditor without a court order.

(10) The 2006 lease provided that no rent would be payable for the first nine months of the lease - until February 2007 and thereafter, rent would be $953 per month ($220 per week).

83 Mr Fitzgerald referred to Mr Velissaris' affidavit sworn 13 June 2006, which asserted, in reliance on the valuation of Savills, that as at May 2002, the property had a current rental income of $117,400 per annum or $9,800 per month, and an assessment of rental set the rental as approximately $8,000 per month. As that was about 10 times the rental payable by Mr Velissaris under the 2006 lease, Mr Fitzgerald concluded that, on the basis of Mr Velissaris' own evidence, the rental under the 2006 lease was uncommercial.

84 The affidavit of Mr Fitzgerald sworn 19 October 2006 exhibited correspondence between the liquidator and Mr Velissaris. By his letter dated 10 October 2006, the liquidator again requested Mr Velissaris to deliver the RATA and the books and records of the company. Mr Velissaris acknowledged that letter. The handwritten letter of Mr Velissaris dated 12 October 2006 contained what purported to be an undated RATA and a proof of debt by Mr Velissaris for $4 million.

85 Mr Fitzgerald deposed that Mr Velissaris had, as at 19 October 2006 (despite his assertions to the contrary), still not provided the company's books and records.

86 Further exhibited correspondence included a handwritten letter of Mr Velissaris to the liquidator received on 19 October 2006, which asserted that he was entitled to occupy the property without paying any rental to the company.

87 Mr Velissaris, by affidavit sworn 4 December 2006, deposed that he was a restaurant owner, a "contributory" of the Maryvell Family Trust and the appointor of the Trust under the Trust Deed of Settlement dated 30 January 1998.

88 He referred to the company's litigation against a truck driver and a Magistrates' Court order against Maryvell, against which he had appealed. He complained that Mr Fitzgerald had, despite repeated requests, abandoned the company's appeal against the order of the Magistrates' Court, which he claimed to be unjust.

89 Mr Velissaris also complained of the conduct of a number of his previous solicitors and of injustice. He complained that he had been refused finance by more than two dozen banks, because he could not prove that he could service the loan if the business was in liquidation.

90 He deposed that the company did not own the business. Rather, it was owned by him personally "since 1990, and up to now".

"I have bought the 333-335 Sydney Road property ... on my own name and I became the proprietor on the 18th April 1984 and have spent a lot of monies through the years and up to 1990 to fully renovate it and I have obtained a Town Planning [Certificate] to operate a restaurant named The Greek Bar Tavern and is my own business since then ... ".

92 Mr Velissaris also deposed that in early 1998, he had received legal advice to create a trustee company and:

"to transfer my property...to the trustee company and with a discretionary Family Trust and for me to be the Appointor in the Trust Deed with certain and absolute powers to control the Trustee Company and control and own all the assets of the Family Trust and of course the property which was always my asset and I believe it still is as I personally have put all the monies to purchase it and to renovate it from my own house properties and also monies I have saved."

93 He deposed that he created the trustee company, Maryvell, and the discretionary family trust dated 30 January 1998. He was the sole director, secretary and shareholder of the company and the appointor of the Family Trust. He had been in full occupation of the property, from which he ran his tavern business, since 1984. He deposed that he transferred his property to the trustee company on 20 March 1998 and was advised by his lawyers that he would be entitled to continue to occupy the property rent-free, and to run the business, as he had full equity.

94 He referred to the deed of agreement and settlement dated 10 March 1998 between himself and the company, which provided that he could occupy the property rent-free as long as he wished to occupy it and run his business. He deposed that he had transferred the property to the company gratuitously, on the basis that the company would permit him to occupy it rent-free.

95 Mr Velissaris stated that the 2006 lease was prepared on legal advice to allow him to remain in occupation for a nominal rental and to run his business. He also deposed that he, as appointor, had removed Maryvell as the trustee on 5 June 2006 and that he and Mary Patroungas were now the trustees. Mr Velissaris disputed the contention that he did not hand over the company's books and records.

96 He complained of his previous legal advisers and stated that he had been compelled to sign his affidavit dated 13 June 2006 at the last moment, without reading it.

97 The affidavit of Mr Fitzgerald sworn 14 December 2006 deposed that BankWest provided him with a copy of the Deed of Settlement of the Maryvell Family Trust, which was produced from BankWest's file and provided to it in June 2005 when the lending facility was approved. In contrast to the copy exhibited to Mr Velissaris' affidavit, the copy of the Trust Deed produced by BankWest did not contain the handwritten annotations by Mr Velissaris, which purport to exclude the trustee's right of indemnity against the trust assets and to amend the clause providing that beneficiaries are disqualified from holding office as trustee by providing that only primary beneficiaries are disqualified. This is discussed further below.

98 Mr Fitzgerald, by affidavit sworn 22 March 2007, deposed to the background of the winding up, and the declaration of Master Efthim on 15 February 2007 that the 2006 lease was void.

99 He deposed that Mr Velissaris, despite six successive written requests by the liquidator made in February and March 2007, refused to vacate or give up possession of the premises.

100 On 19 March 2007, Mr Fitzgerald attended the property with a security officer, police and a locksmith.

101 Mr Fitzgerald deposed that Mr Velissaris called his lawyer, argued, and was angry and threatening. He asked that the locks not be changed. Although the locks were changed, Mr Fitzgerald gave Mr Velissaris a key to enable him to remove his belongings. He then left the premises. Mr Velissaris had since refused to leave.

102 The affidavit of Mr Velissaris sworn 30 March 2007 deposed that he purchased the property on 18 April 1984 and renovated it. He operated a restaurant business from 1988 under the name "The Greek Bar Tavern" and then "The Greek Bar Tavern The Kalamata and Mediterraneo Restaurant". He exhibited a certificate showing that he was the owner of the business name as at 3 June 1998.

"On the 10th March 1998, before I transferred the property to Maryvell Investments to be held on trust, and in order to ensure that the basis upon which I was to transfer the property was clear and that there could not be any later disputes of the basis upon which Maryvell Investments was to hold the property, I drew up a Deed of Agreement and Settlement ("the Deed of Agreement") between myself and Maryvell Investments ... ."

104 Mr Velissaris deposed that he drew the deed of agreement and settlement after speaking to his then solicitors. He then:

"placed the company seal to the Deed of Agreement in my capacity as director and I signed beneath the common seal and also signed it in my personal capacity".

"In March 1998 I valued the property at about $1.2 million. I did not receive payment for the transfer of the property from myself to Maryvell Investments. I did not seek payment because I believed that the property was being held on trust on my behalf and for my family members pursuant to the Deed of Agreement and Deed of Settlement.

On about 20th March 1998 a mortgage was given to the mortgagees identified on the certificate of title in order to secure a loan of about $570,000, on the security of the property to discharge a then existing mortgage. I also guaranteed payment of the loan.

The primary liability of Maryvell Investments as Trustee for the Maryvell Family Trust was under the mortgages of the property. Currently there is a mortgage to BankWest in the sum of about $1.1 million, for which I have given full guarantee and indemnity.

Maryvell Investments has not traded. Its primary function has always been to hold the property on the above trusts...

Since about 1988 I have conducted my restaurant business from the property and provided all funds for the payment of Maryvell Family Trust's liabilities.

The restaurant business has never been owned by Maryvell Investments. I believe that I have always owned the business as I am the one who has conducted the business since it was established in about 1988."

106 Mr Velissaris deposed that on 5 June 2006, by a deed of removal of trustee, he, as appointor, removed the company as trustee and appointed Mary Patroungas. On 9 November 2006, Mary Patroungas resigned and Mr Velissaris became trustee of the trust in her place.

107 In relation to the 2006 lease, Mr Velissaris deposed:

"On about April 2006 under legal advice from my then lawyers I drew up a lease with Maryvell Investments, dated 15 May 2006. I was unsure as to why this was necessary as I believed I already had the right to occupy the property, however, following legal advice I did draw up a lease.

Under the lease I would continue to occupy the premises and continue to run the business for a nominal rent. The rent was nominal because I believed that the property was held by the company on my behalf and by reason of the Deed of Agreement. On about 26 June 2006 and subsequently I notified the liquidator that I had a lease with Maryvell Investments and I provided to him a copy of the lease".

108 Mr Velissaris deposed to the liquidator's successful application to have the lease declared uncommercial and his demand that Mr Velissaris vacate the property, although Mr Velissaris believed that "I am entitled to remain on the property", as the company had merely held the property on trust for him and his family members and had now been removed as trustee.

109 He stated "I believe that I have a strong case that the property is held on trust for me and my family ...".

110 In contrast to the assertions that the company owned the property (made in his earlier affidavits) filed in proceeding number 4484 of 2006 (including affidavits prepared by legal firms on his behalf) following the winding up of the company and the declaration that the 2006 lease was void, Mr Velissaris contended that he was entitled to occupy the property under the deed of agreement and settlement. He made no reference to his bankruptcy and contended that he had transferred the property to the company gratuitously.

111 By an affidavit sworn 18 April 2007, Ms Annette Dreese deposed that Mr Velissaris was declared bankrupt in October 1999.

112 When his bankruptcy in 1999 was disclosed by the affidavit of Ms Dreese sworn 18 April 2007, Mr Velissaris, by an affidavit sworn 24 May 2007, admitted that he was declared bankrupt on 29 October 1999 and was discharged from bankruptcy on 30 October 2002. He denied, however, that his trustee in bankruptcy had acquired any interest in the property based on his entitlement under the deed of agreement and settlement.

113 He deposed that the property was the "sole fixed asset of the Family Trust" and "The Family Trust is the real owner of the property".

114 He also denied that the company had ever been the owner of the restaurant business.

115 He deposed that he had no assets "other than the business which I own and operate together with personal effects and furniture".

116 Mr Velissaris sought to characterise his claimed entitlement to occupy the property as a licence, but also contended that he had "sole possession" of the property. He deposed that:

"I have occupied the premises as a licensee pursuant to an agreement entered into between myself and the [company] on 10th March, 1998 and I have had the sole possession and occupation of the property since 1984. I deny [the liquidator's] assertions that the Trustee Company is 'the owner of the property' as it is holding the property in Trust, as per the Deed of Settlement of the Discretionary Trust dated 30 January 1998..."

"Due to my lack of legal training and knowledge, in my previous Affidavits prepared by myself, I have described myself as the 'full beneficial owner' of the property and I have also described the property as 'my property'. Having received legal advice in relation to the law of Family Discretionary Trusts, I now understand that I was incorrect in making these statements. I am not the beneficial or real owner of the property at all.

Previously, I was the full legal and beneficial owner of the property until it was transferred to the Family Trust. The property forms part of the Family Trust which was created for the sole benefit of the beneficiaries of the Family Trust. I am not, and have never been, a beneficiary of the Family Trust. The property was transferred out of my name and into the name of the Plaintiff...I believe that the property...is owned by the Family Trust for the benefit of the beneficiaries...

I intend to discharge my duties as current Trustee of the Trust...I am not named as a beneficiary of the Trust, but I intend to continue to assume sole possession and control of the trust property to run my restaurant business and with a view of ultimately developing the rear land of the property into motel rooms or apartments and selling them for the best possible price and thereafter distribute the capital proceeds to the beneficiaries specified in the Family Trust."

118 Mr Velissaris reiterated that the company was not the beneficial owner of the property, but had merely been the trustee. He deposed that it had borrowed the $1.1 million from BankWest in that capacity. He deposed that he had removed the provision for the indemnity of the trustee from the trust property on 15 July 2005 at the direction of David Pryse, an officer of BankWest.

119 Mr Velissaris stated that he had previously characterised the property as an asset of the company, because it was the registered proprietor, and he "did not intend to convey any impression that it was the equitable owner of the property".

120 Mr Velissaris acknowledged that he had told the liquidator that he owned the assets of the trust, but he now understood that he was mistaken, as he had "never been a beneficiary of the trust" although, as he was old fashioned, "I often still call myself the owner of the property".

121 Wayne Robins, the manager of Business Recoveries BankWest, by an affidavit sworn 29 May 2007, deposed that Mr Pryse was no longer employed by BankWest. He had inspected the relevant BankWest file and found no record that Mr Velissaris had been advised by David Pryse or any other person to amend the Trust Deed, as Mr Velissaris had deposed.

122 Mr Robins deposed that it was contrary to BankWest's usual policy to request that a trustee's right of indemnity be removed and:

"indeed it would be contrary to BankWest's interests to do so, as otherwise it would simply be lending money to an entity which could incur liabilities without the right to be indemnified for those liabilities out of the trust assets".

123 Mr Robins exhibited a standard lending form document of BankWest completed by the company on 17 June 2005, which stated that the trustee had a right to indemnity from the trust assets, subject to some stated limitations.

"I consider it highly improbable that any member of the BankWest's former or present staff would give any advice of the nature claimed by Mr Velissaris".

125 In his affidavit sworn 15 June 2007, Mr Velissaris deposed to the purchase of the property by Mary Velissaris, the company's nomination as substituted purchaser, the deed of trust dated 30 January 1998 and the deed of agreement and settlement.

126 He deposed that he and the company entered the deed of agreement and settlement with the full knowledge and consent of Mary Velissaris, who:

"Gave me her Authority and Consent that I Could Remain on the Premises and Continue to Run my Restaurant Business for as long as I wished to do so. On the basis of that promise I have Assisted the Beneficiaries in Servicing the Mortgage Repayments Owed by the Plaintiff to its Different Lenders and I Continue to Assist in Servicing the Mortgage Repayments. Further, I have Executed a Guarantee and Indemnity in Favour of all Lenders who have provided Financial Accommodation to the Company as Trustee of the Maryvell Family Trust. I would not have Executed any such Documents unless I was Assured of my Right of Occupation to Continue to Run my Business.

I am informed by my Current Lawyers and Verily Believe that, on the basis of the Deed entered into between Myself and the Plaintiff (Trustee Company) coupled with the fact that I have Contributed Towards the Mortgage Payments falling due on the mortgage since 1998, I Have the Right to Continue to Occupy the Property for as long as I wish."

127 Mr Velissaris deposed to the variation of the Trust Deed made on 15 July 2005 (with his written consent as appointor dated 14 July 2005), and to the removal of the company as trustee on 5 June 2006.

128 Mr Velissaris referred to his previous claim to be full beneficial owner of the property and asserted:

"I DO NOW UNDERSTAND I WAS WRONG AND I WANT TO RETRACT THOSE STATEMENTS, And AS I Do Understand Now, After Proper Legal Advice Being Given to Me I am Not the Owner of this Property And is Not Beneficially Held for Me By the Trustee Company..."

129 He deposed that the property was, rather, held in trust for the beneficiaries of the Maryvell Family Trust.

130 Mr Velissaris deposed that he was the victim of injustice and was not legally trained. He asserted that he had relied on different lawyers and barristers in relation to the company's affairs, who had "let him down" and had proven "very negligent".

131 Mr Velissaris exhibited voluminous correspondence between himself and the liquidator.

INTEREST UNDER DEED OF AGREEMENT AND SETTLEMENT

132 The nature and strength of Mr Velissaris' claimed entitlement to occupy the property pursuant to the deed of agreement and settlement is relevant to the determination of the appeal, the s.471B application itself and the liquidator's recovery proceeding.

133 First, if the claimed entitlement were established, it could be contended that the 2006 lease was not uncommercial, despite a rental significantly below prevailing market rates, because the prior entitlement made the property unavailable for lease to any person other than Mr Velissaris, at least without his consent and co-operation.

134 Secondly, unless a claim with "a solid foundation" giving rise to "a serious dispute" in relation to the prior entitlement were established, leave pursuant to s.471B would not be granted, even if all other relevant factors favoured a grant of leave.

135 Thirdly, if Mr Velissaris were able to establish an arguable case for the claimed entitlement, it is unlikely that the liquidator could succeed in the recovery application, as the summary procedure is usually inappropriate for significant factual disputes which cannot ordinarily be readily and fairly resolved in such a context.

136 The deed of agreement and settlement was drafted by Mr Velissaris, who lacks legal training. It exhibits a number of fundamental internal contradictions and confusions. No clear, coherent picture of mutually consistent, recognised legal rights and interests emerges.

137 There is uncertainty over the identity of the trust on which the property is to be held. While the document at one point states that the property is to be transferred by Mr Velissaris to the company "as a trustee company only for his family trust named (Maryvell Family Trust)", at another point, it states that "the property is to be kept in trust for the benefit of Constantine Velissaris and/or George Velissaris who is the appointor of this Family Trust dated 30 January 1998." The document further states that the company:

"will only hold [the property] on trust for and on behalf of Constantine Velissaris and/or George Velissaris full benefit, and or his family members named in the family trust as beneficiaries in the trust deed or whoever other he appoints".

138 While the many ambiguities and contradictions of the document cannot be resolved, when read as a whole, it suggests that the property is to be held on trust for Mr Velissaris himself as full beneficial owner, rather than on the terms of the Maryvell Family Trust. Mr Velissaris had an absolute power of disposition, so that the property would be applied to the objects of the Maryvell Family Trust only at his election.

139 Mr Velissaris' full beneficial ownership of the property would, practically speaking, render otiose the narrower entitlement to occupy it rent-free for life, or for as long as he wishes. The document expressly states that Mr Velissaris may occupy the property "free and uninterrupted" in order to conduct the restaurant business. As the document, at other points, confers a full beneficial interest on Mr Velissaris, the reference to the conduct of the business may be descriptive of the purpose of the occupancy, rather than indicative of a conditional or determinable interest. Whatever the nature of the occupancy entitlement, it is clear that exclusive possession and extensive control of the property would be essential for the conduct of the business.

140 Mr Selimi contended that the occupancy entitlement claimed under the deed of agreement and settlement was a licence and therefore did not vest in Mr Velissaris' trustee in bankruptcy in 1999. He contended, however, that it was nevertheless irrevocable and conferred sufficient rights of possession and control to permit the conduct of a restaurant business.

141 Exclusive possession is a characteristic hallmark of a lease. In Australian law, it is the decisive factor which distinguishes a lease from a licence.[1] The interests of Mr Velissaris, if any, pursuant to the deed of agreement and settlement, must be determined principally by reference to the substance of the rights conferred, rather than the terminology or label selected to describe them. They cannot be selectively characterised in order to avoid, on the one hand, the Scylla of a proprietary right which vested in his trustee in bankruptcy or, on the other hand, the Charybdis of a revocable occupancy right, which would be vulnerable to the liquidator's recovery application.

142 In my opinion, while the contradictions of the deed of agreement and settlement preclude a coherent summation of the interests created, the rights and powers conferred on Mr Velissaris suggest an equitable fee simple, together with, redundantly, a narrower equitable life estate pur sa vie, which entailed the control and exclusive possession of the property necessary to conduct a restaurant business. The equitable fee simple or life estate (if valid and enforceable against the company) would both, pursuant to s.116 of the Bankruptcy Act 1966, have vested in the trustee in bankruptcy in 1999, unless, alternatively, either or both determined due to the cessation of the business.

143 There are, however, significant impediments to the enforceability of any interest based on the deed of agreement and settlement. While it purports to document a trust by transfer, whereby Mr Velissaris, as owner, conveyed the property to the company on trust, and was accorded various rights and interests, the evidence clearly establishes that this was not the case.

At a glance

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Judgment (338 paragraphs)

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Legislation Cited (32)

Cases Cited (11)