CORPORATIONS – MEMBERSHIP, RIGHTS AND REMEDIES – PROCEEDINGS ON
BEHALF OF COMPANY BY MEMBERS AND OTHERS – STATUTORY
DERIVATIVE ACTION
– where the applicant in BS 3945/25 was married to the second respondent
Source
Original judgment source is linked above.
Catchwords
CORPORATIONS – MEMBERSHIP, RIGHTS AND REMEDIES – PROCEEDINGS ONBEHALF OF COMPANY BY MEMBERS AND OTHERS – STATUTORYDERIVATIVE ACTION– where the applicant in BS 3945/25 was married to the second respondentand later separated – wherethe second respondent filed proceedingsagainst the applicant in the Federal Circuit and Family Court of Australia(Division 2) seekingorders altering the property interests of the matrimonialproperty pool with the applicant – where the applicant and second
respondent were directors and shareholders of the first respondent – where
the first respondent was a trustee of a trust through
which the applicant and
second respondent purchased and developed land – where the applicant
alleged the second respondent
withdrew funds of the first respondent without the
applicant’s knowledge or authorisation and applied those funds for her
personal
benefit – whether the applicant should be granted leave under s
236 of the Corporations Act 2001 (Cth) to bring proceedings on behalf of
the first respondent against the second respondent for the alleged misuse of
funds
EQUITY – TRUSTS AND TRUSTEES – APPLICATIONS TO COURT FOR ADVICE
AND AUTHORITY – PETITION OR SUMMONS FOR ADVICE –
where the applicant
and respondent in BS 3947/25 were trustees of a trust – where the
applicant and respondent, as trustees
of that trust, executed a contract for the
purchase of land – where the applicant and respondent later separated
– where
the applicant and respondent signed loan and security documents
required to finance the purchase of the land after their separation
–
where the vendor terminated the contract to sell the land after the respondent
was not ready to settle the contract –
where the applicant alleged that
the trust suffered loss as a result of the termination of the contract –
where the applicant
applied for advice under s 96 of the Trusts Act 1973
(Qld) as to whether he would be justified in bringing an application to
remove the respondent as trustee of the trust and commencing
proceedings against
the respondent for breach of trust – where the respondent contended that
it would not be in the best interests
of the trust to commence any separate
proceedings for breach of trust in circumstances where the Federal Circuit and
Family Court
of Australia (Division 2) was required to consider any liability
which the respondent owes as trustee of the trust in the proceedings
commenced
in that Court – whether judicial advice should be granted under s 96 of
the Trusts Act 1973 (Qld)
Corporations Act 2001 (Cth) s
236
Family Law Act 1975 (Cth) s 4, s 79, s 81, s 90AE
Trusts Act
1973 (Qld) s 96
Aronis v Aronis [2019] QSC 275,
applied
Cooke v Denovan [2023] QSC 93, cited
Coore v Coore
[2013] QSC 196, cited
Federal Commissioner of Taxation v Bosanac (No
6) [2020] FCA 339, distinguished
Federal Commissioner of Taxation v
Tomaras (2018) 265 CLR 434
[2018] HCA 62, cited
Golden River Footwear
Pty Ltd v Charlton [2007] FCA 587, cited
Huang v Wang (2016) 114
ACSR 586
[2014] NSWCA 164, cited
Kennon v Spry (2008) 238 CLR 366
[2008] HCA 56, cited
Macedonian Orthodox Community Church St Petka
Incorporated v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox
Diocese
of Australia and New Zealand (2008) 237 CLR 66
[2008] HCA 42,
cited
Noah’s Ark Veterinary Services Pty Ltd v Hudson [2023] FCA
1094, applied
Pottie v Dunkley (2011) 82 ACSR 561
[2011] NSWSC
166, cited
Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313
[2002] NSWSC 583, cited
Valceski v Valceski (2007) 70 NSWLR 36
[2007]
NSWSC 440, applied
Judgment (73 paragraphs)
[1]
CORPORATIONS - MEMBERSHIP, RIGHTS AND REMEDIES - PROCEEDINGS ON BEHALF OF COMPANY BY MEMBERS AND OTHERS - STATUTORY DERIVATIVE ACTION - where the applicant in BS 3945/25 was married to the second respondent and later separated - where the second respondent filed proceedings against the applicant in the Federal Circuit and Family Court of Australia (Division 2) seeking orders altering the property interests of the matrimonial property pool with the applicant - where the applicant and second respondent were directors and shareholders of the first respondent - where the first respondent was a trustee of a trust through which the applicant and second respondent purchased and developed land - where the applicant alleged the second respondent withdrew funds of the first respondent without the applicant's knowledge or authorisation and applied those funds for her personal benefit - whether the applicant should be granted leave under s 236 of the Corporations Act 2001 (Cth) to bring proceedings on behalf of the first respondent against the second respondent for the alleged misuse of funds
[2]
EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO COURT FOR ADVICE AND AUTHORITY - PETITION OR SUMMONS FOR ADVICE - where the applicant and respondent in BS 3947/25 were trustees of a trust - where the applicant and respondent, as trustees of that trust, executed a contract for the purchase of land - where the applicant and respondent later separated - where the applicant and respondent signed loan and security documents required to finance the purchase of the land after their separation - where the vendor terminated the contract to sell the land after the respondent was not ready to settle the contract - where the applicant alleged that the trust suffered loss as a result of the termination of the contract - where the applicant applied for advice under s 96 of the Trusts Act 1973 (Qld) as to whether he would be justified in bringing an application to remove the respondent as trustee of the trust and commencing proceedings against the respondent for breach of trust - where the respondent contended that it would not be in the best interests of the trust to commence any separate proceedings for breach of trust in circumstances where the Federal Circuit and Family Court of Australia (Division 2) was required to consider any liability which the respondent owes as trustee of the trust in the proceedings commenced in that Court - whether judicial advice should be granted under s 96 of the Trusts Act 1973 (Qld)
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand(2008) 237 CLR 66; [2008] HCA 42, cited
RW Tooth for Mr Reggi, the applicant in both proceedings
[20]
H Clift for Ms Reggi, the second respondent in BS 3945/25 and the respondent in BS 3947/25
[21]
Enyo Lawyers for Mr Reggi, the applicant in both proceedings
[22]
Aitken Whyte Lawyers for Ms Reggi, the second respondent in BS 3945/25 and the respondent in BS 3947/25
[23]
[1] Mr Reggi and Ms Reggi were married on 22 November 2014 and subsequently separated on 30 May 2025. During their marriage, they acquired numerous lots of land and developed those lots by constructing commercial warehouses on them. Those activities were undertaken through various companies and trusts, including:
[2] On 3 September 2025, Mr Reggi filed two proceedings against Ms Reggi:
[26]
(a) in BS 3945/25, he seeks leave pursuant to s 237 of the Corporations Act 2001 (Cth) ('Corporations Act') to bring proceedings on behalf of Reggi Investments against Ms Reggi to recover the sum of $65,000 she took from Reggi Investments' bank account;
(b) in BS 3947/25, he seeks a direction under s 96 of the Trusts Act 1973 (Qld) ('Trusts Act') as to whether he would be justified in:
(i) bringing an application to remove Ms Reggi as trustee of the G&M Trust; and
(ii) commencing proceedings against Ms Reggi for breach of trust.
[27]
[3] When Mr Reggi filed these proceedings, he and Ms Reggi had been corresponding for some time (through their respective family law solicitors) about pre-action procedures before family law proceedings could be commenced.
[4] On 30 October 2025, Ms Reggi commenced proceedings in the Federal Circuit and Family Court of Australia (Division 2) (FCF Court) seeking that, pursuant to s 79 of the Family Law Act 1975 (Cth) ('Family Law Act'), the matrimonial property pool be distributed between her (60%) and Mr Reggi (40%).
[5] Ms Reggi submits that, following the commencement of the property settlement proceeding in the FCF Court, Mr Reggi is unable to demonstrate that it would be in the interests of Reggi Investments for leave to be granted to Mr Reggi to bring a derivative proceeding; or that he would be justified, in his capacity as trustee of the G&M Trust, in incurring the cost of the contemplated litigation against Ms Reggi.
[6] For the reasons which follow, I accept Ms Reggi's submission. Both of Mr Reggi's applications will be dismissed.
[28]
Property settlement proceedings under the Family Law Act
[29]
[7] The nature of the power conferred by s 79 of the Family Law Act to alter the property interests of the parties to a marriage was explained by Gordon J in Federal Commissioner of Taxation v Tomaras:[1]
[30]
In property settlement proceedings, s 79 in Pt VIII provides that a court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property. However, the court must not make an order under s 79 unless it is satisfied that in all the circumstances it is just and equitable to make the order and, in considering what order (if any) should be made in property settlement proceedings, the court must take into account certain matters. Those matters include the financial and non-financial contributions, both direct and indirect, by the parties to the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage; the effect of any proposed order on the earning capacity of either party to the marriage; any other order made under the Family Law Act affecting a party to the marriage; and the matters referred to in s 75(2), so far as they are relevant.
[31]
[8] A three stage approach is adopted:[2] first, the pool of property of the parties must be identified and valued; secondly, the parties' respective contributions of the types referred to in s 79(4) of the Family Law Act - being contributions to the acquisition, conservation and improvement of the parties' property (both financial and non-financial contributions, and both direct and indirect contributions) and contributions to the welfare of the family - must be identified, evaluated and balanced; and thirdly, it must be determined what (if any) adjustment to the contribution-based assessment is required having regard to considerations relating to current and future circumstances set out in s 79(5) of the Family Law Act to produce a just and equitable result.
[9] The term "property" is broadly defined in s 4 of the Family Law Act as follows:
[32]
... in relation to the parties to a marriage or either of them - means property to which those parties are, or that party is, as the case may be, entitled whether in possession or reversion.
[33]
[10] The right of a beneficiary to the due administration of a trust (which is accompanied by the fiduciary duty of a trustee to consider whether and in what way the power should be exercised) is property for the purposes of s 79 of the Family Law Act.[3]
[11] In property settlement proceedings under s 79 of the Family Law Act, the court exercising jurisdiction in proceedings brought under the Family Law Act has broad powers to make orders affecting third parties, including orders that direct a third party to do a thing in relation to the property of a party to the marriage, and orders that alter the rights, liabilities or property interests of a third party in relation to the marriage: s 90AE.
[12] Importantly, in property settlement proceedings, the court exercising jurisdiction in proceedings brought under the Family Law Act must, as far as practicable, make orders that will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them: s 81.
[34]
The application to bring a derivative proceeding on behalf of Reggi Investments
[35]
[13] Reggi Investments was incorporated on 20 February 2020. Both Mr Reggi and Ms Reggi were appointed as directors and hold 50% of the issued shares. The company is the trustee of the G&M Reggi Trust 2, one of three trusts through which Mr Reggi and Ms Reggi undertook their land development activities. Mr Reggi and Ms Reggi are each a beneficiary of the G&M Reggi Trust 2. The other beneficiaries are Mr Reggi's children from his previous marriage (Sofia and Lores Reggi) and Ms Reggi's children from her previous marriage (Gianno and Lucas Guardala).
[14] Mr Reggi asserts that, between 23 June 2025 and 24 July 2025, Ms Reggi withdrew $65,000 from Reggi Investments' bank account without the knowledge or authorisation of himself or the company. He says that those withdrawals were not made for any legitimate business reason associated with either Reggi Investments or the G&M Reggi Trust 2. On that basis, Mr Reggi submits the withdrawals were made in breach of trust, and in breach of Ms Reggi's statutory and fiduciary duties as a director of Reggi Investments.
[15] Ms Reggi does not deny making the withdrawals but says she did not have access to any credit cards and that Mr Reggi used funds controlled by Reggi Investments for his own uses. Mr Reggi disputes that assertion.
[36]
[16] Pursuant to s 236(1) of the Corporations Act, a person may bring proceedings on behalf of a company if that person is (among other things) a member or an officer of the company and is acting with leave granted under s 237.
[17] Under s 237(2), the court must grant leave to bring proceedings on behalf of a company if it is satisfied of five matters:
[37]
(a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and
(b) the applicant is acting in good faith; and
(c) it is in the best interests of the company that the applicant be granted leave; and
(d) the proposed proceeding raises a serious question to be tried; and
(e) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and the reasons for applying (or, alternatively, that it is appropriate to grant leave even though the requirement for written notice to be given was not satisfied).
[38]
[18] It is well established that if each of those criteria are satisfied the court is required to grant leave and, conversely, if any criteria is not made out, the court should refuse leave. The court has no discretion to grant leave where the criteria are not satisfied or withhold leave where the criteria are satisfied.[4]
[19] As to the requirement that the applicant be acting in good faith, the court will have regard to two interrelated factors. The first is whether the applicant honestly believes that a good cause of action exists and has reasonable prospects of success. The second factor is whether the applicant is seeking to bring the derivative proceeding for a collateral purpose that would amount to an abuse of process.[5]
[20] As to the best interests of the company, at least in circumstances where the company concerned is solvent its best interests will predominantly reflect the interests of the shareholders in that capacity.[6]
[21] When considering whether a grant of leave is in the best interests of the company, the court will usually take into account the costs of the proposed proceedings, the prospects of success of the proposed proceeding, the likely recovery of the proceeding if it is successful and the likely effect of the proceeding on the company. The court will also consider whether the applicant for leave has another way of obtaining the substance of the redress sought without requiring that the company be brought into litigation against its will. If the applicant can obtain a similar result by other means that will be an important consideration, although not a conclusive one, in determining whether or not the proposed proceeding is in a company's best interests.[7]
[39]
[22] Mr Reggi is entitled to apply for leave under s 237 as a shareholder and director of Reggi Investments.
[23] As to the criteria in s 237(2), I am satisfied that if leave is not granted then Reggi Investments will not itself bring a proceeding against Ms Reggi. As Mr Reggi submits, the directors are deadlocked such that the company is effectively prevented from commencing proceedings itself. I am also satisfied that there is a serious question to be tried as to whether Ms Reggi's withdrawal of $65,000 from the company's account for her personal use was done in breach of her fiduciary and statutory duties as a director of Reggi Investments. I am also satisfied that Mr Reggi gave the required written notice of his intention to apply for leave under s 237 to Reggi Investments. Ms Reggi did not dispute that these three criteria are satisfied.
[24] The requirement that Mr Reggi bring the application for leave in good faith may be a relatively low threshold in circumstances where (as a beneficiary of the G&M Reggi Trust 2) he stands to benefit from the proposed proceeding.[8] As I have already accepted that there is a serious question to be tried, I also accept that Mr Reggi honestly believes that Reggi Investments has a good cause of action against Ms Reggi with reasonable prospects of success. Despite there being some evidence that Mr Reggi may bear some personal animosity to Ms Reggi following the breakdown of the marriage, there is no evidence that he is acting for any collateral purpose. Ultimately, I am satisfied that in seeking leave to bring the claim on behalf of Reggi Investments, Mr Reggi is acting in good faith.
[25] Most of the parties' argument concerned the requirement that the grant of leave be in the best interests of Reggi Investments.
[26] Mr Reggi submits that, as trustee of the G&M Reggi Trust 2, Reggi Investments is obliged to take action to protect the beneficiaries' interests in the trust property. A failure to take action would constitute a breach of trust such that it must be in the company's interest to cure any breach of trust. Further, Mr Reggi has deposed that the commencement of proceedings by Reggi Investments will not impact the conduct of its business and Ms Reggi appears to have sufficient assets to satisfy a claim for recovery of the $65,000.
[40]
[33] The G&M Trust was settled on 13 March 2015. Mr Reggi and Ms Reggi are the co-trustees. Ms Reggi is the primary beneficiary. The children from each of Mr Reggi's and Ms Reggi's previous marriages are secondary beneficiaries.
[34] On 27 March 2025, Mr Reggi and Ms Reggi, as trustees of the G&M Trust, executed a contract to purchase a vacant block of land at Park Ridge. Pursuant to the contract:
[41]
(a) the purchase price was $3,881,250.00;
(b) the deposit was $194,062.50;
(c) the finance date was 21 days from the date the contract was executed;
(d) the date of settlement was 16 June 2025 (although this date was later extended to 23 June 2025).
[42]
[35] On 30 March 2025, the applicant caused the deposit to be paid from the bank account of the G&M Trust.
[36] On 17 April 2025, Westpac Banking Corporation approved finance for the purchase of the Park Ridge land and Mr Reggi instructed Peter Campbell, the solicitor acting for the trustees on the conveyance, to inform the vendor's solicitors that the finance condition had been satisfied.
[37] On 30 May 2025, Mr Reggi and Ms Reggi separated.
[38] After that separation both Mr Reggi and Ms Reggi executed the loan and security documents required to finance the purchase. Ms Reggi signed those documents on about 11 June 2025, and Mr Reggi on about 13 June 2025.
[39] On 18 June 2025, Ms Reggi sent an email to Mr Campbell indicating that she had signed the loan and security documents under duress.
[40] On 23 June 2025, the parties attended settlement through their solicitors. Mr Reggi and the vendor were ready to settle. Ms Reggi was not ready to settle. The contract did not settle on that date.
[41] On 25 June 2025, the vendor terminated the contract and forfeited the deposit.
[42] Mr Reggi asserts that, because of the termination of the contract, the G&M Trust suffered direct losses of $494,594.00 (although it may be possible to apply for a refund of the transfer duty of $226,015.50). Mr Reggi also asserts that the termination of the contract meant that the G&M Trust lost the opportunity to earn a profit of $3,200,00.00 on the development and sale of the Park Ridge land.
96 Right of trustee to apply to court for directions
[45]
(1) Any trustee may apply upon a written statement of facts to the court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.
[46]
(2) Every application made under this section shall be served upon, and the hearing thereof may be attended by, all persons interested in the application or such of them as the court thinks expedient.
[47]
[44] The nature of the power conferred by s 96 was explained by Bowskill J (as the Chief Justice was) in Aronis v Aronis:[12]
[48]
As the High Court confirmed in Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand[2008] HCA 42; (2008) 237 CLR 66 ['Macedonian Orthodox'], the discretionary power conferred on the court by a provision such as s 96 of the Trusts Act is broad, unconstrained other than by the subject matter, scope and purpose of the provision (at [55]-[60]); the procedure contemplated is a summary one, designed to facilitate the court's administration of trusts in an efficient way (at [61]-[63]); the merits of any particular decision made under the section will depend upon the context and on the particular circumstances of the case (at [67] and [76]); and the purpose of such proceedings is not only directed to the personal protection of a trustee but also, importantly, the protection of the interests of the trust itself (at [72]-[73]). Further, the court's sole purpose in giving judicial advice is to determine what ought to be done in the best interests of the trust estate (at [104]-[107]).
[49]
[45] In the Macedonian Orthodox decision, the High Court acknowledged that the time and cost involved in giving judicial advice at an early stage of litigation, when the issues involved in disputes about rights may not be fully sharpened and it may not be possible for the factual position to be as efficiently exposed as in a trial, may be factors relevant to a decision not to grant judicial advice but to let the matter be examined in conventional litigation, but said these were not factors which either automatically bar judicial advice or are so weighty as to generally compel the court not to grant the advice.[13] Further, in addition to considering whether it is in the interests of the trust estate for proceedings to be commenced, continue or defended, the court must also consider whether it is practical and fair for trust assets to be used for that purpose.[14]
[50]
[46] Mr Reggi submits that, despite Ms Reggi's assertions in correspondence that she signed the loan and security documents under duress, she has not deposed to that effect. Ms Reggi's evidence on the judicial advice application goes no further than her assertion that if the acquisition and development of the Park Ridge land was financially unsuccessful then virtually all her assets were at risk because of the security required by Westpac. Mr Reggi submits that evidence provides no explanation or justification for what (on his case) amounts to a breach of Ms Reggi's obligations as trustee after she had earlier agreed to the acquisition and development of the Park Ridge land and signed the contract.
[47] On that basis, Mr Reggi submits that the commencement of proceedings against Ms Reggi to recover a loss caused to the G&M Trust is in the interests of the beneficiaries because:
[51]
(a) the claim against Ms Reggi for breach of trust has good prospects of success;
(b) there is evidence that Ms Reggi has valuable assets that would be available to meet the claim;
(c) if proceedings are not commenced by Mr Reggi as trustee then there is no means by which loss caused to the other beneficiaries could be recovered.
[52]
[48] Ms Reggi submits that, in considering whether to make an order under s 79 of the Family Law Act in the property settlement proceeding, the FCFCourt will be required to take into account any liability which Ms Reggi owes as trustee of the G&M Trust. In those circumstances, Ms Reggi submits that it would not be in the best interests of the G&M Trust for that issue to be made the subject of separate proceedings.
[49] In support of that submission, Ms Reggi relies on the decision of Brereton J in Valceski v Valceski ('Valceski').[15] That case did not concern an application for judicial advice. It concerned an application to transfer a proceeding commenced in the Supreme Court of New South Wales to the (then) Family Court of Australia to be consolidated with family law proceedings concerning adjustment of the matrimonial property pool of an estranged husband and wife. The proceeding in the Supreme Court had been commenced by the husband's father claiming declarations as to an equitable interest in the husband and wife's former matrimonial home. Brereton J accepted that it was necessary for the Family Court to determine the extent of any equitable interest the husband's parents held in the matrimonial home in the property settlement proceeding and that, by ss 78 and 79 of the Family Law Act, the Family Court had the power to declare existing rights and title of a party in property in relation to third parties.[16] In deciding to transfer the parents' proceeding to the Family Court, Brereton J observed:[17]
[53]
In my opinion, justice can best be done by one court resolving the whole justiciable controversy, in order to avoid both duplication and inconsistency. In the present context, the Family Court is the more appropriate court for that purpose, because the larger controversy, of which the smaller forms part, is a matter properly and primarily in the jurisdiction of the Family Court. It follows that the proceedings must be transferred to the Family Court. If as a matter of principle the effect of this decision is that third parties who, in the context of a marriage breakdown, assert rights against matrimonial property, should join in existing matrimonial proceedings rather than commence separate litigation, then the beneficial result is that all issues are litigated only once and only in one court, the risks and costs of duplication and inconsistency are avoided, and forum-shopping and collateral litigation is discouraged. Third parties - especially associates, such as parents or children or private companies, of one or other of the spouses - who use the occasion of the demise of a marriage to assert a right against the property of one or other (or both) of them, cannot reasonably complain if their claim is treated as part of the larger matrimonial dispute in the context of which it arises.
[54]
[50] In response, Mr Reggi submits that overlap between issues raised in a proceeding in this court and issues raised in family law proceedings does not mean that the FCF Court of Australia (Division 2) is the appropriate forum for the issues to be resolved. As an example, he refers to the decision in Commissioner of Taxation v Bosanac (No 6) ('Bosanac (No 6)'),[18] in which McKerracher J dismissed an application to transfer a proceeding commenced in the Federal Court to the Family Court. I accept that the mere existence of overlapping issues cannot compel a conclusion that the court hearing the family law proceeding must be the appropriate forum for determining the interest of a party to a marriage in specific property. Every case will turn on its facts. The facts in Bosanac (No 6) were quite different to those in Valceski. In Bosanac (No 6), the Federal Court proceeding had been commenced by the Federal Commissioner of Taxation seeking a declaration that an estranged wife held a half interest in a property on resulting trust for her estranged husband. That proceeding had been on foot for approximately five years before Ms Bosanac commenced her family law proceeding and was listed for trial only a short time after the transfer application was heard. Further, there was no dispute between Ms Bosanac and Mr Bosanac in the family law proceeding as to whether Ms Bosanac held a half interest in the property on trust for Mr Bosanac. Both parties to the marriage asserted that was not the case. It was only the Commissioner of Taxation who advanced that position. Given these factual differences, it is not surprising that the outcome in Bosanac (No 6) was different to that in Valceski.
[51] The present case is not an application to transfer a proceeding to the FCF Court of Australia (Division 2). I must decide whether to grant Mr Reggi the judicial advice he seeks in accordance with the principles set out at [44]-[45] above, guided by an assessment of what ought to be done in the best interests of the trust estate.
[52] As to that, I am satisfied that the assets of the G&M Trust form part of the matrimonial property pool. Accordingly, whatever right Mr Reggi might have, and conversely whatever liability Ms Reggi might be subject to, as a consequence of Ms Reggi's refusal to complete settlement of the contract to purchase the Park Ridge land will fall for consideration by the FCF Court in the property settlement proceeding. In determining whether to make an order under of the , the FCF Court will first have to determine whether Ms Reggi is liable for breach of trust as part of its identification of the existing liabilities of the parties to the marriage under Likewise, in determining the considerations to be taken into account under , it will be required to determine whether, by her conduct, Ms Reggi intentionally or recklessly wasted property or financial resources of the parties, or (further or alternatively) incurred a liability for breach of trust. It follows that (as I have concluded at above in relation to the application for leave to bring a derivative proceeding) the question Mr Reggi wishes to ventilate in the proposed proceeding about which he seeks judicial advice - whether Ms Reggi is liable for breach of trust by reason of her refusal to complete the purchase of the Park Ridge land - is an issue which the FCF Court will consider in the property settlement proceeding.
[55]
[55] The originating application filed in each of proceeding BS 3945/25 and BS 3947/25 is dismissed.
[27] In opposing the grant of leave, Ms Reggi relies on the decision in Noah's Ark Veterinary Services Pty Ltd v Hudson,[10] in which Perram J was not satisfied that it was in the best interests of a company for leave to be given to a shareholder to bring proceedings in the company's name against two directors (one of whom was the applicant's former wife) for breach of their statutory and fiduciary duties arising from the diversion of part of the company's business to a new entity. As in this case, the application was determined in circumstances where there was a family law proceeding on foot involving the applicant for leave. One of the reasons Perram J was not satisfied that it was in the best interests of the company for leave to be granted was that the question the applicant wished to raise in the derivative proceeding - whether the directors diverted the company's business to the new entity - was the same issue that would be determined in the family law proceeding. The extent to which the new entity's business should be treated as an asset of the marriage was a live issue in the family law proceeding; and the extent to which it would be treated as such an asset would depend on the extent to which the court was persuaded that a diversion of the company's business had occurred. On that basis, the family law proceeding made the derivative proceeding unnecessary.[11] Ms Reggi submits I should reach a similar conclusion on this application.
[28] I accept Ms Reggi's submission.
[29] As explained at [10] above, the interest which each of Mr Reggi and Ms Reggi have in the due administration of the G&M Reggi Trust 2 forms part of their matrimonial property pool. I am satisfied that whatever rights either of the parties may have, and conversely whatever liabilities either of them may be subject to, as a consequence of the asserted use of trust property by either of them for their personal benefit will fall for consideration by the FCF Court in the property settlement proceeding. First, s 79(3)(a)(ii) of the Family Law Act requires that, in considering what (if any) order should be made in the property settlement proceeding, the court is to identify "the existing liabilities of the parties to the marriage or either of them". Consequently, determining whether Ms Reggi is liable to Reggi Investments for breach of her fiduciary and statutory duties as director will be a step taken in identifying and valuing the matrimonial property pool. Secondly, s 79(3)(b)(ii) requires that the court take into account the considerations relating to current and future circumstances set out in s 79(5), including (relevantly): as set out in s 79(5)(d), the effect of any material wastage, caused intentionally or recklessly by a party to the marriage, of property or financial resources of either of the parties to the marriage or both of them; and, as set out in s 79(5)(e), any liabilities incurred by either of the parties to the marriage or both of them, including the nature of the liabilities and the circumstances relating to them. In determining whether to make an order under s 79, the FCF Court will have to decide whether Ms Reggi, through her use of trust funds held by Reggi Investments for her personal benefit, intentionally or recklessly wasted property or financial resources of the parties, or (further or alternatively) incurred a liability to Reggi Investments for breach of her fiduciary and statutory duties. For these reasons, the question Mr Reggi wishes to ventilate in the proposed derivative proceeding - whether Ms Reggi is liable to Reggi Investments for breach of her fiduciary and statutory duties as director - is an issue which the FCF Court will consider in the property settlement proceeding.
[30] Counsel for Mr Reggi accepted that if the FCF Court were to find that Ms Reggi had taken trust property in breach of her statutory and fiduciary duties then it would be possible for that conduct and any resulting liability to be brought into account in whatever order that court might ultimately make adjusting the parties' interests in the property of the marriage. However, Mr Reggi submits that even if such an adjustment is made then Reggi Investments would still have a claim against Ms Reggi for breach of her statutory and fiduciary duties unless some specific order was made to the contrary effect.
[31] As explained at [11]-[12] above, in adjusting the interests of the parties in the matrimonial property pool, including their interests in the property of the G&M Reggi Trust 2, the FCF Court has power to make orders affecting Reggi Investments and the other beneficiaries of the G&M Reggi Trust 2. The orders that are made should, as far as practicable, finally determine the financial relationships between Mr Reggi and Ms Reggi and avoid further proceedings between them. It therefore appears likely that at the conclusion of the property settlement proceeding, Mr Reggi and Ms Reggi will no longer jointly control Reggi Investments. As part of the matrimonial property pool, the property of the G&M Reggi Trust 2 will be divided between them in accordance with the determination of the FCF Court as to what is just and equitable. If a liability Ms Reggi is found to owe to Reggi Investments in respect of her use of trust assets is brought to account in that division then, consistently with the duty imposed on the FCF Court under s 81 of the Family Law Act, it seems most unlikely that orders made in the property settlement proceeding would leave a claim by Reggi Investments against Ms Reggi unresolved.
[32] On that basis, I accept Ms Reggi's submission that the property settlement proceeding in the FCF Court provides a means by which Mr Reggi can obtain the substance of the redress he seeks without requiring Reggi Investments to bring proceedings against Ms Reggi. It is not in the interests of Reggi Investments to be engaged in proceedings founded on a complaint which the FCF Court will consider in the property settlement proceeding. Accordingly, I am not satisfied that it is in the best interests of Reggi Investments that leave be granted. The application for leave under s 237 of the Corporations Act must be dismissed.
[53] Further, for the same reasons already set out at [31] above, I am satisfied that the FCF Court can make orders which take account of the claims of other beneficiaries of the G&M Trust. To finally determine the financial relationships between Mr Reggi and Ms Reggi, and avoid further proceedings between them, the FCF Court can determine whether Ms Reggi should be removed as trustee of the G&M Trust pursuant to s 80(1)(e). Further, as part of the matrimonial property pool, the assets of the G&M Trust will be divided between Mr Reggi and Ms Reggi in accordance with the determination of the FCF Court as to what is just and equitable. If a liability of Ms Reggi for breach of the trust is brought to account in that division then it seems very unlikely that orders made in the property settlement proceeding would leave a claim by Mr Reggi as trustee of the G&M Trust against Ms Reggi unresolved.
[54] Ultimately, I do not consider it to be in the best interests of the trust estate for Mr Reggi to bring proceedings in this court to remove Ms Reggi as trustee of the G&M Trust or for breach of trust when the questions he proposes to litigate will be determined in the property settlement proceeding. If Mr Reggi commences such a proceeding it could be expected that Ms Reggi will apply to transfer it to the FCF Court to be heard as part of the larger property settlement proceeding. The factors considered by Brereton J in Valceski, which has a far greater factual similarity to the present case than Bosanac (No 6), suggests such an application would enjoy good prospects of success. In those circumstances, I cannot see how it could be in the interests of the trust estate to expend trust funds in commencing and pursuing a proceeding in this court which will consider issues which arise for consideration and determination in the property settlement proceeding. I do not consider that Mr Reggi would be justified in commencing such a proceeding. The application for judicial advice will also be dismissed.