Plaintiff v Defendant

2 If the answer to either of these questions is "yes", the liquidators ask to what extent, if any, are they entitled to a charge over the proceeds of the accounts with respect to their remuneration and disbursements in the winding up of Sports Alive and to whom, and in what amounts, should the liquidators distribute the proceeds of the accounts.

3 The ACT Gambling and Racing Commission (GRC) is a body established under s 5 of the Gambling and Racing Control Act 1999 (ACT), and is the regulator of ACT online licensed sports bookmakers. Persons who bet through Sports Alive were required to open an account with Sports Alive and deposit moneys with Sports Alive to the credit of their account. Sports Alive was bound to hold those moneys and any further winnings of the client in a trust account (called the segregated account) on trust for the client. Any losses incurred by the client were debited to his or her account and the relevant moneys could be withdrawn from the trust account. I shall describe those persons as betting clients.

4 The GRC appears at the hearing of the application in the interests of betting clients of Sports Alive and claims that the moneys in the term deposit accounts are trust moneys held on behalf of the betting clients. A notice has been placed on the liquidators' website notifying betting clients of the hearing and advising betting clients that they could seek copies of the filed application, the affidavit, and the annexures. No betting client appeared, although Mr Tuan-Mu, an account holder, did address the Court. Mr Tuan-Mu said that he was asked to address the court on behalf of a syndicate of account holders, as well as on his own behalf.

5 Mr Tuan-Mu contended that the winnings of clients should also be treated as held on trust. He also pointed to the understanding and expectation of clients that clients' moneys would be held on trust in accordance with the rules that governed the sports betting operations of Sports Alive.

6 During the hearing before me, the liquidators have taken the view that - given the position known by them to be taken by the GRC, (viz, that the money in the three term deposit accounts is held on trust for betting clients of Sports Alive) - it is appropriate for them to submit that none of the term deposits are held on trust, and instead are available for the general body of creditors of Sports Alive, including meeting employee entitlements.

(a) whether or not the moneys in the term deposits were sourced from the moneys received from betting clients of Sports Alive; and

(b) if the moneys in the term deposits were not sourced from moneys received from betting clients , whether or not the term deposits were in any event intended by Sports Alive to be held as trust moneys for the benefit of its betting clients.

8 In summary, I am not satisfied that the moneys in the term deposits were sourced from moneys received from betting clients, nor am I satisfied that the term deposits were intended by Sports Alive to be held on trust for its betting clients.

9 Accordingly, I have decided that the answer to the question "are any or all of the relevant accounts in the name of Sports Alive segregated accounts with in the meaning of the Act?" is "no". And the answer to the question "are the accounts otherwise held on trust for the betting clients?" is also "no". In view of that finding, it is unnecessary to answer the question concerning the Universal Distributors principle.

10 As indicated above, the liquidators seek the answer to certain questions arising in the winding up of Sports Alive. For the following reasons, I have decided that the appropriate course is to answer those questions even though substantive rights of betting clients may be affected. The alternative course would be to give directions that the liquidator would be justified in treating the term deposits as not being trust moneys.

the liquidator or any contributory or creditor, may apply to the Court:

(a) to determine any questions in the winding up of a company; or

(b) to exercise all or any powers that the Court might exercise if the company were being wound up by the Court.

12 The Court's powers are circumscribed by subsection (3) that provides that:

... the Court, if satisfied that the determination of the question or the exercise of the power will be just and beneficial, may accede wholly or partially to any such application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just.

13 The powers that the Court might exercise if Sports Alive were being wound up by the Court include the power to give directions to the liquidator in relation to any particular matter arising in the winding up as provided in s 479(3).

14 In Re Willmott Forests (No 2),[1] Davies J considered whether under s 511 the Court has the power to make orders of a substantive nature affecting third party rights. After reviewing authorities on s 479(3) and s 511, her Honour held that s 511 does give the Court the power to make orders that affect substantive rights of third parties. Her Honour held that it was a separate question whether that power should be exercised. Justice Davies referred to the limitation imposed on the Court's power by s 511(3). Her Honour also referred to the line of authority that held that it may be appropriate for applications for directions to be changed into proceedings for the determination of substantive rights: Re GB Nathan & CO Pty Ltd (in liq)[2] and Editions Tom Thompson Pty Ltd v Pilley.[3]

15 Justice Davies was dealing with forestry managed investment schemes and adjudicating on actions that the liquidators of the responsible entity wished to undertake that affected grower members' rights under the schemes. The liquidators wished to sell the land and trees. To do this they had to be able to give clear title. This required the liquidators to terminate and disclaim certain proprietary rights that growers enjoyed under the schemes.

16 Some growers were represented and opposed the application of the liquidators. All growers were given the opportunity to intervene if they wished. In the upshot, Davies J answered a series of questions relating to the sale by the liquidators of the scheme assets. Several of the answers affected substantive rights of growers.

17 In this case, the proceedings have been advertised and betting clients notified of the hearing. One group were heard as mentioned above. More importantly, the GRC have appeared and mounted a spirited case in favour of the term deposits being characterised as trust moneys held for the benefit of the betting clients. It is also important to determine the question of whether or not the moneys in the term deposits belong to Sports Alive. The liquidators can only complete their duties if this issue is resolved.

18 In those circumstances, I consider that it is just and beneficial that I determine the questions asked of me by the liquidators.

19 Sports Alive holds various bank accounts including two term deposits with the Bank of Queensland (BOQ) and one term deposit with the National Australia Bank (NAB), as follows:

(a) BOQ account 21447944, in the amount of $253,384.25 (BOQ Guarantee term deposit);

(b) BOQ account 21448895, in the amount of $302,443.68 (BOQ loan term deposit); and

(c) NAB account 17-482-9249, in the approximate amount of $260,000, being held as a term deposit (the NAB term deposit),

20 The question that the liquidators seek to resolve is whether or not these or any of them are held on trust for the betting clients of Sports Alive.

21 The liquidators estimate that there are in excess of 18,000 creditors of Sports Alive, largely comprised of account holders, as follows:

Corporations Act 2001 (Cth))

22 Sports Alive is the wholly owned subsidiary of Bet Worldwide Pty Ltd (BWW). BWW is the trustee for the Bet Worldwide Unit Trust (BWW Unit Trust). Tote Tasmania Pty Ltd (Tote Tasmania) is a sports betting company owned by the Tasmanian Crown. Tote Tasmania owns 1,218,532 units (25%) in the BWW Unit Trust.

23 Prior to its liquidation, since approximately 2003, Sports Alive operated an online sports betting business (originally under the name Sports Acumen). Sports Alive was licensed as a sports bookmaker under the Race and Sports Bookmaking Act 2001 (ACT) (the Act). The Act requires that a licensed sports bookmaker must provide the GRC with a security guarantee.

24 Sports Alive ceased trading on 25 August 2011 and was wound up the next day. As at the date of the winding up, the total liabilities of Sports Alive are estimated by the liquidators as:

Segregated accounts - Requirements under the Rules

25 Rule 4 of the Race and Sports Bookmaking (Rules for Sports Bookmaking) Determination 2005 (No 4) (Determination No 4 or the Rules) provides that betting moneys received from betting clients must be held in trust in segregated bank accounts. Rule 4 provides:

4. Segregated Bank Accounts

4.1 A sports bookmaker must, for the purposes of the sports bookmaking business, maintain a segregated sports betting bank account for the purpose of betting monies received.

4.2 The segregated bank account for clause 4.1 must be recorded under a title which includes the name of the sports bookmaker and the purpose of the account such as a "Trust Account".

4.3 When a sports bookmaker opens an account for clause 4.1 the sports bookmaker must immediately advise the Commission in writing of:

(1) the name of the banking institution and address of the branch;

(2) the account title and account number.

4.4 If any changes occur to the account information stated in clause 4.3, or the account is closed, the sports bookmaker must immediately inform the Commission in writing of those changes.

4.5 Subject to clause 4.6 a sports bookmaker must deposit all betting monies received:

(1) into the segregated bank account; or

(2) if there are 2 or more such accounts - into 1 of those accounts;

not later than the next banking day after the day on which the money is received.

4.6 Where betting monies are paid by direct deposit or electronic transfer into an account operated by the sports bookmaker, the sports bookmaker must transfer that money into a segregated bank account in accordance with clause 4.5.

4.7 A sports bookmaker must not withdraw money from a segregated sports betting account until such time as the outcome of the bet is determined and in accordance with the betting contract

4.8 Money in the segregated sports betting account must not be utilised for the payment of debts of the sports bookmaker, (except as provided by these Rules) and those monies are not to be attached or taken in execution for satisfying a judgment against the sports bookmaker other than a judgment for a debt so payable.

4.9 Clause 4.7 does not apply to monies in the segregated sports betting account if those monies are as a result of interest earned on the account.

4.10 Interest earned on a segregated sports betting account may accrue to the sports bookmaker.

26 Pursuant to rule 4, a sports bookmaker must, for the purposes of the sports bookmaking business, maintain a segregated sports betting bank account for the purpose of betting monies received (clause 4.1). The segregated bank account must be recorded under a title, which includes the name of the sports bookmaker and the purpose of the account, such as "Trust Account" (clause 4.2). It is accepted by both the liquidators and the GRC that the moneys held in a segregated account would be held on trust for the betting clients. A sports bookmaker must not withdraw money from a segregated sports betting account until such time as the outcome of a bet is determined in accordance with the betting contract (clause 4.7). Further, money in the segregated sports betting account must not be utilised for the payment of debts of the sports bookmaker (except as provided for in the Rules) (clause 4.8). Interest earned on a segregated sports betting account may however accrue to the sports bookmaker (clause 4.10).

27 I now turn to the evidence. None of the evidence led be either party was disputed. Rather, the significance of the evidence and the inferences that could be drawn from the evidence was disputed.

Reports to the GRC when the segregated accounts were opened

28 When a sports bookmaker opens a segregated account, it must immediately advise the GRC in writing of the name of the banking institution, the address of the branch, the account title and the account number (clause 4.3).

29 Mr MacKinnon says that he does not know the date when the NAB term deposit was opened, but it was many years ago. He says that the BOQ term deposits were opened in May 2010. Mr MacKinnon has reviewed the books and records of Sports Alive and could not find any record that Sports Alive advised the GRC in writing of the details required under clause 4.3 when the term deposits were opened. Further, the BOQ and NAB term deposits do not include in their titles words to the effect that they are segregated accounts or trust accounts.

Source of the funds held in the BOQ and NAB accounts is unclear

30 Mr MacKinnon has conducted investigations in order to try and ascertain where the money in the BOQ and NAB term deposits came from (in particular, whether it came from Sports Alive's customers), and when the deposits were created. His findings on the source are as follows.

31 The earliest statement for this account found by Mr MacKinnon dates from 28 May 2010. Sports Alive's MYOB records do not disclose when the account was opened, or where the funds in the account came from.

The BOQ Guarantee term deposit (account 21447944)

32 A term deposit was held with NAB by Sports Alive in the amount of $250,000 (account number 6610 68651). The earliest statement found in respect of this account dates from 2 July 2008, and there is a letter from NAB amongst Sports Alive's records suggesting that the account was opened in March 2006. The Sports Alive's MYOB records do not disclose where the funds in this account were sourced.

33 Mr MacKinnon believes that the funds on this account were originally provided as a security bond for the GRC and that the money in this account was transferred to BOQ when Sports Alive refinanced with BOQ in or around May 2010.

34 Mr MacKinnon believes that this amount ultimately became the amount held in the BOQ Guarantee term deposit.

35 It appears that the BOQ Loan term deposit was also opened with BOQ at the time Sports Alive refinanced with BOQ, in May 2010.

36 From Mr MacKinnon's investigations, he believes that the amount held in the BOQ Loan term deposit came across to BOQ from a cheque account held with NAB, which held the amount of approximately $459,000 at the time Sports Alive refinanced.

37 As far as Mr MacKinnon can tell from Sports Alive's records, the amount held in the NAB cheque account came from two accounts held with NAB - a NAB term deposit (account 7529 25575) and a NAB term deposit security for market rate facility (account 1687 05530).

38 The earliest statements Mr MacKinnon has found for these two accounts date from July 2008. He has been unable to locate (through Sports Alive's MYOB records) where the funds in these two accounts came from, and both of these accounts were closed on 31 May 2010.

39 Sports Alive's accounts for 2009 and 2010 (which were audited) expressly reported that the moneys in the three term deposits (some $810,000) were an asset of the company, not monies held on trust by Sports Alive. The statutory accounts for 2010 were signed by Mr Chant and Mr Finley (directors of Sports Alive) as true and fair.

40 The statutory accounts disclose that Sports Alive generated a gross profit of $3.9m from betting in the financial year 2007-2008, and $5m in the financial year 2008-2009.

41 The statutory accounts disclose that in the financial year 2009-2010, Sports Alive borrowed $1,500,000 (borrowed from Mr Finley, on 31 May 2010) and $300,000 from the Bank of Queensland.

42 The statutory accounts disclose that in the financial year 2009-2010, Sports Alive issued share capital to Tote Tasmania of $5m (issued in September 2009).

43 As explained below, each of the three term deposits have been used by Sports Alive in a manner inconsistent with the accounts being held on trust and treated as moneys of Sports Alive.

44 Mr MacKinnon says that NAB has considered the moneys in the account as being available to it for setting off chargebacks under the credit card merchant facility agreement established between NAB and Sports Alive. Mr MacKinnon says that the availability of the account for set off against non-trust debts was inconsistent with the account being the subject of a trust.

45 The term deposit was established as security for Sports Alive's Commercial Rate Facility (with an overdraft limit the same as the term deposit) and Bank Guarantee Facility.

46 The BOQ Guarantee term deposit account (account 21447944) was used to support the provision of a bank guarantee to the GRC, in accordance with the requirement of a "security guarantee" of $250,000 required to be provided by Sports Alive pursuant to s 92 of the Race and Sports Bookmaking Act 2001 (ACT).

47 The liquidators submit that the requirement for a bank guarantee is a wholly separate obligation to the obligation to establish a segregated account or accounts pursuant to the Rules. The security guarantee is to ensure that the sports bookmaker can cover its betting losses, not to cover the balances in client accounts. The liquidators submit that its purpose was entirely inconsistent with it being an account composed of monies held on trust for clients. The liquidators say that the security guarantee was a prerequisite to the grant of the sports bookmaking licence - so the $250,000 needed to be in place before Sports Alive could properly receive moneys from betting clients.

48 The liquidators contend that this use of the term deposits supports an inference that Sports Alive deliberately set up the term deposits so that it could misinform the GRC of their existence as "segregated accounts", while in fact having the money in them available for its own use.

49 The GRC submits that no instrument of charge or security has been put before the Court; indeed, the "Irrevocable Direction" which the NAB (through its solicitors) sought Mr Chant to execute on 29 June 2012 would suggest that in the case of the NAB term deposit there was no security in that Bank's favour.

50 The GRC says that there is evidence in the company's historical extract that there was a fixed and floating charge granted by the company in favour of the BOQ which was discharged post-liquidation. The GRC says that to the extent that the two Banks claim any entitlement or interest over the term deposits, the same appears to arise by virtue of bankers' rights of set-off, lien or combination rather than from any specific or "express" grant of security over the term deposits given by the company. The GRC says that so much appears consistent with Mr MacKinnon's statement that the banks' rights of set-off or combination will only arise if the term deposits are held not to be "segregated accounts".

51 The liquidators point to the Banks treatment of the term deposits as constituting indicia that they were not held on trust. The GRC contends that how the Banks or any other third party may have "considered" or "treated" the term deposits is irrelevant in the ascertainment as to whether they are subject to a trust or not. The liquidators do not dispute this contention.

52 The GRC submit that the fact that Sports Alive may have used the term deposits as security does not determine whether the term deposits were held on trust. The GRC says that the misuse of trust moneys does not alter the fact that the moneys are trust moneys.

53 By letter dated 6 June 2003, Sports Acumen (the former name of Sports Alive) advised "ACT Gambling and Racing" of two bank accounts (the June 2003 letter). The June 2003 letter stated:

Please find attached a copy of two bank statements which, combined, accounts for the current cash position of Sports Acumen. These accounts are used for the purpose of holding funds on behalf of our clients.

Account 66 126 9998 is our active Segregated Account

Account 47 241 6135 is a term deposit.

The cash position is monitored daily to ensure that we comply with the requirement to have available at all times the total funds held on behalf of clients. We are able to access the term deposit account funds with 24 hours notice to our bank. Funds in our segregated accounts can be accessed without delay as required. ...

54 Account 66 126 9998 was described as "our active Segregated Account". The second account, number 47 241 6135 (with a balance of $235,883.24), was said to be "a term deposit account", details of which were provided in attached NAB term deposit statements. The June 2003 letter indicated a total cash position of $700,738.53 of which "current client balances were $515,489.60."

55 The GRC says that it may be inferred that the term deposit was also being held as a segregated account, as distinct from the active segregated account. The letter stated that these accounts were used for holding "funds on behalf of our clients". The GRC argues that the 6 June 2003 letter and the "Change in Customer Balances" reports (referred to below) give rise to the inference that from 2003 to 2011, it was the established practice of Sports Alive to use term deposits as a repository of client's moneys and as segregated accounts.

56 The GRC submits that the June 2003 letter appears to be in compliance with the then Rules, noting that there was no requirement contained in the Rules to identify the title of segregated bank accounts in a particular manner or to report to the GRC at all with respect to segregated bank accounts.

57 The liquidators say that the letter of June 2003 does not refer to any of the three term deposits the subject of this application. The liquidators say that one of these accounts (66126998) continued to operate as a betting clients' account and on liquidation was found to be empty. The liquidators point out that the 2003 term deposits exceeded the moneys owed to clients. The liquidators contend that the discrepancy shows that Sports Alive was not seeking to comply with Rule 4, but rather was intent on showing it had more cash on hand than was needed to pay clients. The liquidators say that the language used is not that appropriate to a trust account. The liquidators refer to the attachment to the letter which suggests that the accounts were working accounts.

58 For some fourteen months prior to liquidation (June 2010 to July 2011), Sports Alive was regularly reporting to the GRC that the three term deposits were being held as segregated funds for clients' moneys.

59 Sports Alive provided regular reports to the GRC through a document headed "Change in Customer Balances". The schedules of the changes of these customer balances and the accompanying bank statements were tendered in evidence. Those schedules refer to various "punter's bank accounts" and term deposits. The total of the amounts in the accounts are described as "Total segregated funds."

60 Attached to these documents were statements from the Bank of Queensland and the National Australia Bank to verify the amounts stated as being held in the (segregated) term deposits and which gave bank account details for these term deposits.

61 For example, the 30 June 2010 report (the June report) stated that customers closing balances on 30 June 2010 were $1,146,848.59, which sum is the same sum as stated in the certified statutory accounts for "customer balances and unsettled bets" as at 30 June 2010.

62 The closing balances as at 30 June 2010 were $1,008,409.46. This amount was said to be "represented by cash held in" eleven accounts, of which three were the term deposits the subject of this application. The total of these term deposits was $1,192,113.90 (described as the "total segregated funds"), which gave rise to a "surplus" of $45,267.31.

63 The statutory accounts stated the cash and cash equivalents as at 30 June 2010 as $1,193,557, which almost matches the sum of the "total segregated funds". As noted elsewhere, however, the statutory accounts treated the "segregated funds" as moneys of Sports Alive and not as trust moneys.

64 On 21 May 2011, Mr Gary Benson, a client of Sports Alive, sent an email to Sports Alive and asked whether it maintained client funds in a separate "trust account." On 27 May 2011, Sports Alive responded to Mr Benson's question "Do you maintain client funds in a separate trust account?" with the answer "Yes - we maintain a number of segregated funds accounts - including term deposits". Sports Alive also stated that it guaranteed all its customer payments "in line with our regulatory requirements".

65 On Friday 19 August 2011, Mr Michael James Hines, the manager of compliance and investigations for the GRC, met with the Chief Executive Officer of Sports Alive, Mr Stephen Chant, and Sports Alive's financial controller, Mr Lane Watson. Mr Chant told Mr Hines that Sports Alive maintained four separate accounts exclusively for patron funds that related to each of the betting system "front end pay" pages. He also said that there were two term deposits containing patron funds on deposit. He said that term deposits locked away a portion of patron funds that were not required for day to day operations. He said that patron deposits and withdrawals were done from the various transaction accounts.

66 Between 30 April 2012 and 4 May 2012, the Supreme Court of Victoria heard the testimony of witnesses summoned for examination in accordance with Part 5.9, Division 1 of the Corporations Act 2001.

67 Mr Stephen Chant gave evidence on 30 April and 1 May 2012. His initial involvement with Sports Alive was in 2003, when he was retained as a consultant for a group of potential investors who were interested in acquiring the business. He subsequently worked as a "combination" of both "chief operating officer" and "chief financial officer". Mr Chant also became company secretary on 5 November 2003, and a director of Sports Alive on 28 September 2005. As at the date of liquidation, Mr Chant was the sole director of the company. He supervised "business development, marketing [and] general business operations." He supervised the financial affairs of the company.

68 Other witnesses summonsed for examination by the liquidator were Mr Finley, Mr Kent, Mr Hiles, and Mr Coleman. They confirmed that Mr Chant was - the Chief Executive Officer, Chief Financial Officer, responsible for the accounts and financial affairs of Sports Alive, and responsible for Sports Alive's compliance with regulations (see below).

69 Mr Chant gave evidence about Sports Alive's "segregated accounts". He stated that "segregated accounts" were maintained and that, to the best of his knowledge, each and every bet was placed in the segregated accounts.

MR GALBALLY QC: "Presumably over your time as the chief financial officer you ensured that segregated accounts were maintained, did you not?---Privileged. Yes, in conjunction with others.

But you were the chief financial officer, Mr Chant, and ultimately the buck stops with you, doesn't it, in terms of ensuring compliance?---Privilege. Yes, and the board."

...

MR GALBALLY QC: "How did you ensure that money, all moneys that were placed by way of bet or gambling were all kept in segregated accounts and were not used for any other purpose?---Privileged. It was procedures in place that enabled the segregation of accounts and application of funds.

That's what I'm asking you, what were those procedures?---Are you asking me to outline - - -

I'm asking you to outline what those procedures were?---I don't understand the question. Can you be specific?

I am adopting your phrase. You said there were procedures in place to ensure that the compliance was undertaken. What were those procedures? It's your phrase, it's not mine?---Privileged. The accounts were reconciled on a regular basis.

They might have been reconciled, Mr Chant, but did they comply with the legislation? Was each and every bet maintained within a segregated account and the money attributed to each bet not disposed of until after the race or the gaming event was completed?---Privileged. To the best of my knowledge it was."

70 Later, during questioning about a report on the operations of Sports Alive by Deloitte, he indicated that "customer balances" and "segregated accounts" were used quite interchangeably.

MR GALBALLY QC: "And that I understand from these accounts, the way you have prepared them, that is your customer balances and unsettled bets, what you would call segregated accounts?---Privilege, yes.

And that's how you describe them in these accounts, that's the description that you gave, other than referring to them as segregated accounts they were referred to as customer balances and unsettled debts?---Privilege. Yes."

71 In the statements provided to the GRC with respect to segregated accounts, Sports Alive customarily referred to the total of the moneys held in the specified accounts as "Total Segregated Funds" and identified the sufficiency or surplus of those funds over the amount of customer balances as at the statements' closing date.

72 Mr Chant gave evidence that Sports Alive used customers' funds to make term deposits. He was cross-examined on a number of the "Change in Customer Balances" that Sports Alive provided to the Commission.

MR WALKER: "Is that the way the Sports Alive used term deposits, that they placed a proportion of customer's funds into term deposits because there wasn't a need for a hundred percent of patrons'' money to be available all the time?---Privilege. Yes."

...

MR WALKER: "Sports Alive determined that it could put out on loan a certain amount of customer money and derive interest from it because it didn't need, as we said earlier, a hundred percent of customer funds at any one time, is that right?---Privilege.

That's what we see happening when we look at these customer balances?---Privilege. Yes.

And for the day-to-day demands of money in and money out and so forth, that was dealt with, was it, by the punters' bank accounts, they were the day-to-day transaction accounts, were they?---Privilege. Yes.

And it follows from that, that is why, when we turn to different statements, different customer account balance statements we see changes in the punters' bank account figures but the term deposit figures stay static?---Privilege. Yes."

73 Mr Finley gave evidence at the examination. He described himself as a non-executive director, although Mr Hiles regarded him as an executive director. He did not have day to day running of Sports Alive's business. He said he had been with Sports Alive from the beginning. He became a director on 10 December 2009 and ceased as a director on 23 August 2011. He relied upon Mr Chant to advise him about Sports Alive's accounts.

74 Mr Hiles is a solicitor. He had extensive involvement with Bet Worldwide Pty Ltd and with Sports Alive before he became a director of Sports Alive on 2 October 2009. He ceased as a director on 23 August 2011. He agreed that the person responsible for overseeing compliance with the ACT Sports Betting Rules was Mr Chant.

75 Mr Kent, the Chairman of Tote Tasmania, also gave evidence at the examination. Tote Tasmania held a 25% interest in Bet Worldwide. He described Mr Chant as the CEO of Sports Alive and in charge of the accounting systems of Sports Alive. He acknowledged that there was a shareholders agreement in existence which prohibited the removal of Mr Chant from the board of Sports Alive without the permission of Tote Tasmania.

76 Mr Coleman became a director of Sports Alive on 10 December 2009 and ceased to be a director on 14 April 2011. He became the chairman of Sports Alive. At the examination, he described Mr Chant as the CEO and the CFO. He stated that Mr Chant was responsible for Sports Alive's compliance with the legislation.

The liquidators' view of the directors' evidence

77 Mr MacKinnon contends that the answers given by Sports Alive's directors during the public examinations, referred to above, showed:

(a) a lack of understanding of the requirement for Sports Alive to hold segregated accounts;

(b) difficulties interpreting the Rules, and how they were to be applied; and

(c) doubt as to where the funds in the BOQ and NAB term deposits came from, and when the accounts were opened.

78 In October 2009, prior to Tote Tasmania's investment in Sports Alive (via its investment in the BWW Unit Trust), Deloitte, chartered accountants, provided a report to Tote Tasmania on specific financial aspects of the BWW Unit Trust and Sports Alive, to assist Tote Tasmania in its due diligence enquiries.

79 The report noted the requirement for Sports Alive to maintain a separate segregated bank account for deposits from customers from which Sports Alive is not allowed to withdraw until such time as the outcome of the bet is determined. Deloitte observed that $1 million had been transferred from the bank accounts into the bet back and proactive trading accounts.

80 Further, Deloitte reported a term deposit of $359,000 was used to satisfy the segregated funds regulation; however, the term deposit was also held as a security for the BWW Unit Trust loan facilities. Deloitte noted that for Sports Alive to comply going forward, a $1.4 million injection may have been needed into the segregated bank account in order to rectify the deficiency.

81 The liquidators contend that the Deloitte reference to trapped cash in a term deposit account does not deal with the source of the money in the deposit and thus provides no evidence to support the contention that the moneys in the term deposits are subject to the statutory trust.

82 The GRC relies on the report as evidence that Deloitte identified a term deposit with NAB that was being held as a segregated account. Their report refers to a NAB requirement that $359,000 must be held as security in a term deposit. Deloitte says about this deposit:

This deposit sits within the Sports Alive entity as trapped cash for the purposes of the segregated bank account. There is a risk that the term deposit, as it is being used as security for the NAB facilities, does not satisfy the segregated funds regulations dictated by Race and Sports Determination 2005.

83 I now turn to the submissions of the liquidators and the GRC.

84 The liquidators accept that clause 4 of the Rules required Sports Alive to maintain a segregated sports betting bank account for the purpose of betting monies received. The liquidators also accept that betting monies received from clients were intended, by operation of the clause 4 of the Rules, to be held in trust for Sports Alive's clients, until they were either withdrawn by the clients, or lost as a result of the client losing a bet, in which case they could be withdrawn by Sports Alive. The liquidators accept that these moneys include the winnings received by betting clients. Thus, if the trust accounts for clients moneys were properly kept, the moneys in the segregated trust accounts should have matched the net balance of the sum of the clients' betting accounts with Sports Alive.

85 The liquidators accept the contention of the GRC that a statutory trust (imposed by the Rules) would come into existence automatically over betting moneys received by Sports Alive. The liquidators concede that this appears to be the intention of clause 4 of the Rules. The liquidators further accept that this would be the case even if betting monies received were not placed into a segregated sports betting account in accordance with rules 4.5 and 4.6, but dealt with otherwise by Sports Alive (in breach of trust). Equitable principles of tracing would then apply, to the extent that the monies so received could still be identified.[4]

86 The liquidators also accept that a trust may arise if Sports Alive declared and intended that certain identified moneys in an account were to be held on trust.

87 The liquidators submit that whether or not the term deposits constitute a statutory trust in favour of the betting clients of Sports Alive is a question of fact. The liquidators do not dispute the relevant authorities relied on by the GRC: Walker v Corboy;[5] Brazzill & Ors v Willoughby & Ors;[6] Re Lehman Brothers International (Europe);[7] and Re Australian Home Finance Pty Ltd.[8]

88 The liquidators say that these cases indicate that the first necessary step is to determine whether any funds were received on trust and then to identify where the funds were then held.

89 The liquidators contend that the relevant question is not whether Sports Alive received moneys on trust. There is no dispute that it did. The relevant question is not to ask whether the trust that applied to those moneys applies to the term deposits. Rather, the liquidators say that the essential question is whether the moneys in the term deposits are the moneys that were the subject of a statutory trust.[9]

90 The liquidators contend that the Court is unable to find that the moneys in the term deposits are subject to a trust unless the Court is satisfied on the evidence that the moneys in the term deposits are the moneys that were the subject of a trust.

91 The liquidators accept that tracing principles could apply to monies in the three term deposit accounts, if there was evidence in support of such tracing. However, as Mr MacKinnon has deposed, the liquidators contend that the source of the funds held in the three term deposit accounts is not wholly clear: specifically, there is no evidence available to him showing how the funds in those accounts first became assets of Sports Alive.

92 The liquidators submit that it is simply conjecture as to whether those monies were made up of amounts which were originally:

(1) capital or loan funds made available to Sports Alive without ever having been "betting monies" provided by clients;

(2) monies lost by clients as a result of unsuccessful bets (which would then properly be the property of Sports Alive); or

93 The liquidators concede that the betting moneys received between 2009 and August 2011 were trust moneys, but these trust moneys were not deposited in the term deposits. The term deposits were already in existence.

94 The liquidators submit that the earliest statement for the NAB term deposit dates from 28 May 2010. Thus, it is possible the moneys in that account were sourced from the share issue.

95 The liquidators point to the evidence that Sports Alive did not treat the term deposits as trust moneys but treated them as its own. They refer to the use of the deposits as the guarantee required by the GRC and the use of the BOQ term deposits as security for borrowings from the BOQ.

96 The certified and audited statutory accounts also treated the term deposits as assets of Sports Alive and not as trust moneys.

97 The GRC says, however, that if Sports Alive had misused trust moneys by using them as its own, this does not necessarily establish that the source of the moneys so misused was not clients' betting moneys.

98 The liquidators submit that if Sports Alive had treated betting moneys received in accordance with the Rules, then upon liquidation the liquidators could have expected to find one or more trust accounts whose combined balances represented the totality of the balances of the individual client accounts (together with any interest earned on those trust accounts which had not been transferred to Sports Alive pursuant to its rights under rules 4.9 and 4.10). But that is not what the liquidators have found.

99 The liquidators contend that what they have found, and disclosed to the Court, appears to be a wholesale, long-term disregard by Sports Alive of its legal obligations pursuant to clause 4 of the Rules. Mr MacKinnon found that although the totality of the balances of the individual client accounts upon his appointment was in the order of $3.8 million (and therefore should also have found a trust account or trust accounts with a balance totalling the same amount), there were no accounts which could be said to represent those "betting monies received". Sports Alive had not maintained funds in any such accounts. The liquidators submit that instead, Sports Alive appeared to have received betting monies from clients into a number of accounts and then used the monies so received as its own. The liquidators contend that none of these accounts are the three term deposits the subject of this proceeding.

100 The liquidators submit that Sports Alive appears (as can be seen from its returns filed with the GRC in June 2003, July 2010 to June 2011) never to have maintained separate trust accounts composed of betting monies received, but rather sought to establish that it had sufficient cash at bank (in various accounts) which exceeded the total amount standing to the credit of client accounts.

101 The liquidators submit that the assertion by Sports Alive to the GRC, for (purported) compliance purposes, that funds were "segregated" does not make them betting monies received, such as to attract the statutory trust created by clause 4 of the Rules. The liquidators similarly submit that assertions by Sports Alive's representatives to representatives of the GRC or third parties in the months leading up to liquidation that it maintained segregated accounts can be given little or no weight by the Court in determining the source of the funds in the three term deposit accounts, particularly given Mr MacKinnon's evidence as to the discrepancy.

102 In summary, the liquidators contend that the primary matters against the funds in the NAB term deposit (17-482-9249) being held on trust for betting clients are that:

(1) Sports Alive's accounts for 2009 and 2010, which were audited, reported the monies as an asset of the company, not as monies held on trust;

(2) the account has no indicia that it is an account held on trust for any person;

(3) it appears that NAB has considered the monies in the account as being available to it for setting off chargebacks under the credit card merchant facility agreement established between NAB and Sports Alive. The availability of the account for set off against non-trust debts would be inconsistent with the account being the subject of a trust; and

(4) the lack of evidence that the source of the deposits was trust moneys.

The BOQ Guarantee term deposit and the BOQ Loan term deposit

103 The liquidators submit that the primary matters against the funds being held on trust for betting clients are that:

(1) Sports Alive's accounts for 2009 and 2010, which were audited, reported the monies as an asset of the company, not as monies held on trust;

(2) the account has no indicia that it is an account held on trust for any person. Identification of various matters regarding accounts established by a person on trust for another was a requirement of the terms and conditions relevant to the account;

(4) the lack of evidence that the source of the deposits was trust moneys.

104 The liquidators accept that in principle a trust could have arisen if, at the time of its creation, the intention of Sports Alive was to hold all or any of the three term deposit accounts on trust independently of the statutory trust contemplated by clause 4 of the Rules, but deny that the evidence establishes that Sports Alive ever did evince such an intention.

105 The liquidators agree with the statements of legal principle put forward by the GRC (in its submissions) as to the finding of such a trust, which were as follows:

[91] The distinction between unsecured creditors and trusts is that in the case of debtors there is no identifiable fund in which the debtor has an equitable interest.[10]

[92] In Lyell,[11] the Earl of Selbourne said (with the concurrence of Lord Fitzgerald and Lord Halsbury LC) that to constitute a trust, no express words were necessary. Anything that may satisfy a Court of Equity that the money was received in a fiduciary character is enough. It was not necessary that there be an acknowledgement of such a trust to the cestui que trust. Indeed, the beneficiaries need not know of the existence of the trust in order for it to be valid: Moriarty v Various Customers of BA Peters Plc (In Administration).[12]

[93] It is not necessary that the word "trust" or "trustee" be used. The relevant enquiry is whether at the time of establishment it was the creator's intention that a trust be created: Registrar of the Accident Compensation Tribunal (Vic) v Federal Commissioner of Taxation[13]; Re Kayford[14].

[94] In this case the relevant creator may be considered to be the legislature whose purpose in the requirement of segregated bank accounts was to create a trust in the protection of clients. Alternatively, Sports Alive as trustee may be the creator whose words and conduct evidenced an intention to create a trust and who held itself out as doing so. Any subsequent breach of trust duty cannot deny or derogate from the existence of the trust, nor the intention to create the trust as at the time of its creation nor deprive the character of the client moneys as trust moneys.

[95] Segregation indicates that the money is trust property not available to the general creditors of the company: Re Chelsea Cloisters[15]. The inference to be drawn from the separate accounts is that Sports Alive cannot use the moneys as its own: Re Nanwa Goldmines Ltd[16].

106 The liquidators agree that in this context the assertions made by Sports Alive's representatives to representatives of the GRC or third parties, both in the context of its returns to the GRC and the oral representations in the months leading up to liquidation, that it maintained segregated accounts have some relevance as to whether Sports Alive intended to have created a trust over any or all of the three term deposit accounts. The liquidators contend, however, that these representations, and the truth of them (and the reasons why they might be untrue), need to be considered in light of all the evidence which is before the Court rather than accepted on their face.

107 The liquidators contend that the same reservations should apply in respect of the evidence given by officers of Sports Alive at the public examination which the GRC seeks to rely upon (as discussed below). The liquidators submit that it can readily be seen that the officers might have a motive for giving evidence that they either were causing, or were endeavouring to cause, Sports Alive to comply with its legal obligations as the holder of an ACT sports bookmaking licence.

108 The liquidators submit that this evidence is not being given to this Court, which does not have the benefit of observing the examinees; nor has it been properly tested by the putting of adverse propositions.[17] The liquidators contend that the Court cannot determine whether the evidence should be accepted as a fact. The liquidators submit, however, that admissions made by the officers as to their lack of understanding and non-compliance might be more readily relied upon by the Court as being more likely to be true as they are adverse to the examinees' interests.

109 The liquidators submit that the existence of statutory obligations upon Sports Alive to observe particular and general compliance standards (as the holder of an ACT sports bookmaking licence) fall into a similar category. The liquidators submit that the evidence of Mr MacKinnon tends to show a wholesale failure by Sports Alive to comply with its statutory obligations under clause 4 of the Rules, and that there is clearly a significant shortfall of funds available to meet client monies claims (let alone the other creditors of the company).

110 The liquidators submit that in such a case there can be no basis (if there could, in any case) for the Court presuming that Sports Alive intended to comply with its statutory obligations as part of the matters considered in determining whether a trust or trusts exist over the three term deposit accounts.

111 As discussed below, the GRC rely on the accounts provided to the GRC, the representation by Sports Alive to Mr Hiles, the email to Mr Benson, the evidence of Mr Chant and the Deloitte report. The liquidators say that theses were all representations by Sports Alive that it was complying with its obligations, and are not by themselves, evidence that Sports Alive did comply with its obligations.

112 The liquidators ask where is the evidence that Sports Alive actually intended to hold those deposits on trust. The external and internal accounts did not treat them as trust moneys. The moneys were used essentially as moneys against which Sports Alive could raise other moneys. The BOQ loan term deposit of $300,000 was used as security for Sports Alive's commercial rate facility (which had a $300,000 overdraft).

(a) that the term deposits were identified and treated as segregated accounts by Sports Alive, and the liquidator is unable to establish that the source of the funds was not clients' moneys;

(b) even if the liquidator could establish the source of the term deposits was moneys other than the clients' moneys, Sports Alive intended the term deposits to be held as trust moneys and so treated them; and

(c) further or alternatively, in circumstances where Sports Alive received trust moneys, the onus rests on the liquidator to prove that the moneys are not trust moneys received by Sports Alive.

114 As mentioned above, the GRC relies on the several pieces of evidence where Sports Alive has described the term deposits as segregated accounts, and other evidence that Sports Alive used term deposits for the purpose of holding clients' moneys as follows:

(1) The 3 June 2003 letter confirming a term deposit was used as a segregated fund.

(2) The letter of response to the client inquiry including that Sports Alive referred to the holding of client funds in segregated accounts including term deposits.

(3) The evidence of Mr Chant and Mr Hiles confirming that Sports Alive maintained term deposits for segregated accounts.

(4) The monthly "Change in Customer Balances" reports to the GRC in which Sports Alive included accounts which it described as holding "segregated funds".

115 The GRC contends that Rules 4.9 and 4.10 permit Sports Alive to retain the interest which it earns on segregated accounts Mr Chant explained that as not 100% of client funds are needed at all times, some of those funds are placed on term deposit. The GRC submits that this usage does not deprive them of the character of client funds or of segregated accounts moneys within the meaning and intent of the Rules.

116 The GRC takes issue with the liquidators' contentions that the source of the funds in the three term deposits could have been from share capital or loan funds. The GRC contends that the source could not have been the $5m injected by Tote Tasmania (received 10 September 2009) or from Mr Finlay's loan of $1,500,000 (received on 31 May 2010) as these moneys were received after the time at which the liquidators were able to identify the existence of the term deposit funds.

117 The GRC refers to the liquidators speculation that the funds could have been sourced from share issues of $2m prior to 1 July 2007. The GRC contends that the liquidators do not refer to any evidence to support their speculation that these moneys were the source of the moneys in the term deposits, and without more the GRC is unable to address this possible source.

118 The GRC submits, however, that even should there have been a share issue, the question is then raised as to why the company would have placed these funds in the accounts it reported as segregated to the GRC rather than its own company accounts. Further, the GRC submits that the company's sole business was that of sports bookmaking. In the year ending 30 June 2009, Sports Alive earned $5,049,669 revenue from bookmaking operations. The equivalent figure in the year ending 30 June 2010 was $2,254,997.

119 The GRC points out that the BOQ Guarantee term deposit was sourced from a NAB term deposit that dated from 2 July 2008. Thus, the GRC contends that on the liquidators' own submissions the moneys received from Tote Tasmania, Mr Finlay and bookmaking operations between 2009 and August 2011 could not be the source of the moneys in the BOQ Guarantee term deposit.

120 The GRC refers to the evidence that the BOQ Loan term deposit was sourced from NAB accounts. The earliest records for these accounts was July 2008. Thus, the GRC contends that on the liquidators own submissions the moneys received from Tote Tasmania, Mr Finlay or bookmaking operations between 2009 and August 2011 could not be the source of the moneys in the BOQ Loan term deposit.

121 The GRC says that Sports Alive operated its own separate bank accounts for the conduct of its business affairs and administration in addition to those reported to the Commission as segregated, and the liquidator does not suggest that it did not.

122 The GRC says that Sports Alive established and operated the bank accounts reported by it to the Commission as holding "segregated funds" and the evidence of its Chief Executive Officer and Chief Financial Officer, Mr Chant, was that the term deposits were established with betting moneys paid by the company's clients. The GRC says that that evidence was not sought to be challenged by Counsel on behalf of the liquidator appearing at the public examination.

The GRC response to alleged failure to advise the GRC of trust account

123 As indicated above, the liquidators assert that they were unable to find an record of Sports Alive informing the GRC that it had opened a trust account as required under its statutory obligations. The GRC says that the liquidators are unable to say when the NAB term deposit was opened. As to the BOQ term deposits, they were opened on or after 31 May 2010. The GRC says that it was notified of those accounts by 31 July 2010. The GRC says that this constituted satisfactory compliance of Sports Alive's obligation to do so.

The GRC's alternative argument on statutory trust

124 The GRC contends that if the Court finds that the source of the funds is incapable of identification, this still does not defeat a trust over the term deposits in favour of Sports Alive's clients.

125 The GRC says that a trustee cannot be allowed to take advantage of its own wrong.[18] It cannot take trust funds and in breach of trust mix these with its own funds and use them for its own purposes, and then assert that as the trust funds cannot be identified the trust is defeated. If that were permissible, a trustee could by its breach of the trust convert the beneficiaries' funds to its own. If this were the law, the more egregious the breach, the greater the likelihood that the original trust funds would be incapable of discrete identification and the more likely the trustee would be to succeed in claiming the funds as its own. It is however, not the law.

126 The GRC cite Ungoed-Thomas J in In Re Tilley's Will Trusts:

If a trustee mixes trust assets with his own, the onus is on the trustee to distinguish the separate assets, and to the extent that he fails to do so they belong to the trust.[19]

127 The GRC contends that in this case, the burden of proof is on the liquidator to prove the source of the moneys in the term deposits, and if they cannot do so the money belongs to the trust. The GRC rely on Hospital Products Ltd v United States Surgical Corporation;[20] Re Australian Home Finance Pty Ltd;[21] and Re Hallett's Estate.[22]

128 The liquidators accept such a principle would apply if there was evidence to establish that trust funds had been mixed with the company's in the term deposits. There is no doubt trust funds had been received by Sports Alive. The liquidators contend there is, however, no evidence that these trust moneys were mixed with Sports Alive's own assets in the term deposits.

The intention of Sports Alive to create a trust

129 The GRC contends that the evidence canvassed above does evince an intention by Sports Alive to hold the term deposits on trust for the clients. The GRC says that Sports Alive was at all times obliged to comply with the Rules. The very basis upon which Sports Alive received clients' funds paid over to them was within the framework of the statutory regime (upon which its licence and business depended) and it held and received those betting moneys in accordance with the Rules and upon trust.

130 The GRC says that Sports Alive held out to the world - in its reporting to the Commission - that the funds in the reported segregated accounts were held by it on trust for its clients and on their behalf. It reported the names and details of the term deposits, stating that the funds in those term deposits comprised a part of the total segregated funds specified in the reports. It further reported that the accounts were used for the purpose of holding funds on behalf of its clients. In response to its client's inquiry, it informed that client that funds were held in a number of separate/segregated accounts including term deposits.

131 The GRC says that even absent a "promise", declaration or statement of intent on the part of the trustee company, a statutory provision to hold the moneys separate will suffice for the Court to find the existence of a trust: see Re Nanwa Gold Mines Limited; Ballantyne v Nanwa Gold Mines Limited,[23] and see also Walker v Corboy.[24]

132 On the issue of the statutory trust, the primary submission of the liquidators is that for the Court to recognise that the term deposits are held on trust for the clients the Court must be satisfied on the evidence produced that the source of the term deposits was client's moneys, and thus the source was trust moneys. (The liquidators accepted that if trust moneys were mixed with Sports Alive's moneys, equity could impose a tracing exercise.)

133 The GRC disputes this contention. The GRC submits that in the circumstances, where Sports Alive received trust moneys and should have held some $1.3m on trust at liquidation, the burden of proof is on the liquidators to prove that the moneys in the term deposits are not sourced from trust moneys. The GRC says that if the liquidators are unable to do so the moneys in the term deposits are held on trust.

134 On this preliminary issue, I find that merely because Sports Alive received trust moneys, along with moneys from share issues and the gross profits from its betting operations, the onus does no lie on the liquidator (who contends that the term deposits are not held on trust) to prove that the source of the moneys in the term deposits was not trust moneys.

135 On the contrary, I find that for the Court to find that the moneys in the term deposits are held on trust then the Court must be satisfied that the source of the moneys in the term deposits were trust moneys, or, in other words, moneys received from or for betting clients.

136 Neither the liquidators nor the GRC have been able to identify the source of the moneys in the term deposits.

137 The liquidators rely on other evidence that suggests the moneys were not sourced from clients' moneys. They refer to the use of the moneys to provide security, the statutory accounts, the absence of any indicia on the records of the term deposits that they are trust account, and the evidence of the failure of Sports Alive to comply with its statutory obligations to report the opening of the trust accounts and to keep the moneys on trust separate from its own moneys.

138 The GRC refer to the fact that a substantial amount of trust moneys should have been held on trust, the representations of company officers to the GRC, and the customer balance returns that identified the funds held in the term deposits as segregated funds.

139 However, I note that the customer balance returns referred to all the cash at bank held by the company as segregated funds. The statutory accounts showed that the representation was made about all the cash Sports Alive held. I am satisfied that in practice, Sports Alive drew no distinction between moneys that should have been held on trust and its own moneys. Unless there is credible evidence that the moneys in the term deposits were sourced from trust moneys, I am not prepared to rely on the representations of the officers of Sports Alive to find that the term deposits were sourced from trust moneys.

140 As to the contention that Sports Alive evinced an intention to hold the term deposits on trust, for similar reasons I do not consider that the representations by its officers, in the light of the statutory audited accounts and the manner in which the term deposits were used, satisfy me that Sports Alive did in fact hold such an intention.

141 The evidence relied on by the GRC is essentially of representations by Sports Alive to the regulator that it was complying with its obligations. I accept the liquidators' contentions that Sports Alive was not complying with its obligations. I accept the liquidators' submissions that essentially Sports Alive was seeking to have cash balances that equalled or exceeded the net balance of the clients' betting accounts, but otherwise treated those moneys as their own.

142 I accept that Sports Alive, in its statements of "Change in Customer Balances" from 31 July 2010 through to 30 June 2011 that it submitted to the GRC, characterised the three term deposits as segregated funds. Sports Alive ceased trading on 25 August 2011, some two months after the last of these statements. These statements seek to reconcile the balance of customer accounts with cash held in several accounts, including the term deposits, which are described as "segregated funds." This is consistent with Sports Alive's statutory obligations.

143 The Chief Executive Officer of Sports Alive gave evidence on oath in the Supreme Court of Victoria that to the best of his knowledge Sports Alive maintained the required segregated accounts.

144 The liquidators raise several points to rebut the inference that arises from this evidence. First, the liquidators say that they were unable to identify from the accounts of Sports Alive where the term deposits were originally sourced from; that is, whether the moneys were the moneys of betting clients, or borrowings, or share capital, or otherwise. They did identify that some of the accounts were constituted by the rolling over of other accounts, but ultimately they could not source the funds. The liquidators suggested that the source of the term deposits could have been share issues or the borrowings in May 2010. I do not accept that submission.

145 The liquidators pointed to sloppy bookkeeping by Sports Alive and showed that Sports Alive did not observe its obligations under the Rules. The liquidator pointed to the fact that the term deposits do not bear any indicia of being a trust account. Further, the liquidators point to the accounts being used as a guarantee and as security, which is inconsistent with them being trust moneys.

146 The audited accounts of Sports Alive for the years 2009 and 2010 did not describe the term deposits as an asset of the company, nor as moneys held on trust. In the 2009 accounts, some $1.6m was due to betting clients. The accounts make no reference to this liability being supported by any trust fund at all or the obligation that these liabilities should have been matched by a trust fund. The audited accounts, without explanation, do not seem to assist one way or the other.

147 Where does this leave the Court? As at liquidation, Sports Alive should have held some $3.9m in segregated trust accounts. Sports Alive did not. This by itself establishes Sports Alive's failure to comply with its statutory obligations and throws doubt on the reliability of the evidence of Mr Chant.

148 In those circumstances, I am not satisfied on the evidence that the moneys in the term deposits are held on trust for the betting clients of Sports Alive.

149 In my opinion, the questions for determination should be answered "no", with the result that term deposits are assets of Sports Alive, available in the liquidation accordingly.

150 In those circumstances, it is unnecessary for me to answer the question alone as to the liquidators costs and expenses. I will hear submissions on the costs of the GRC.

[1] [2012] VSC 125; (2012) 88 ACSR 18.

[2] (1991) 24 NSWLR 674.

[3] (1997) 77 FCR 141.

[4] Re Hallett's Estate (1880) 13 Ch D 696, 708.

[5] (1990) 19 NSWLR 382.

[6] [2009] EWHC 1663 (Ch).

[7] [2012] UKSC 6.

[8] [1956] VicLawRp 1; [1956] VLR 1.

[10] Heydon & Leeming, Jacobs Law of Trusts in Australia, note 4, pp 12-13.

[12] [2008] EWHC 2205 at [18].

[13] [1993] HCA 1; (1993) 178 CLR 145 at 165 per Mason CJ, Deane, Toohey & Gaudron JJ.

[14] [1975] 1 All ER 604.

[15] (1980) 41 P & Cr 98, CA.

[16] [1955] 3 All ER 219.

[17] The evidence of Mr Chant relied on by the GRC was given after his examination by the liquidators had concluded.

[18] Re Hallett's Estate (1880) 13 Ch D 696; see also Farnell v Cox [1898] NSWLawRp 67; (1898) 19 LR (NSW) Eq 142, 144.

[19] [1967] Ch 1179, 1183.

[20] [1984] HCA 64; (1984) 156 CLR 41, at 107 and 109.

[21] [1956] VR 1.

[22] [1889] 13 Ch D 696.

[23] [1955] All ER 219, at 223-4.

[24] (1990) 19 NSWLR 382.