Richardson v Lo Pilato

Solicitor for the First Defendant: Bradley Allen Love Lawyers

Solicitor for the Second Defendant: The second defendant did not appear

Solicitor for the Third and Fourth Defendants: Nicholl & Co

ACD 67 of 2012 Solicitor for the Plaintiffs: Nicholl & Co

Solicitor for the First Defendant: The first defendant did not appear

Counsel for the Second Defendant: Dr AJ Greinke

Solicitor for the Second Defendant: Colquhoun Murphy

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 36 of 2012

IN THE MATTER OF TROJAN HOSPITALITY (ACT) PTY LTD (IN LIQUIDATION) BETWEEN: KEVIN RICHARDSON

AND: FRANK LO PILATO AS LIQUIDATOR OF TROJAN HOSPITALITY (ACT) PTY LIMITED

TROJAN HOSPITALITY (ACT) PTY LIMITED (IN LIQUIDATION) (ACN 115 869 595)

JUSTINE LOUISE ROBINSON AS ADMINISTRATOR OF THE ESTATE OF CRAIG BRIAN ROBINSON, DECEASED

JUDGE: FOSTER J DATE OF ORDER: 20 AUGUST 2014 WHERE MADE: SYDNEY (VIA VIDEO LINK TO CANBERRA)

BY THE CONSENT OF THE PLAINTIFFS AND THE THIRD AND FOURTH DEFENDANTS, THE COURT:

1. Pursuant to s 471B of the Corporations Act 2001 (Cth), GRANTS leave to the plaintiffs to proceed against ACN 115 869 595 Pty Limited (In Liquidation) formerly called Trojan Hospitality (ACT) Pty Limited (In Liquidation) (Trojan).
2. DECLARES that Trojan holds the sum of $325,000 paid to it on 23 March 2009 in trust for Kevin Richardson, the first plaintiff herein.
3. GRANTS liberty to the plaintiffs and to the third and fourth defendants to apply in respect of such further relief as they, or any of them, consider may be necessary in order to give effect to the declaration made in par 2 above including for the making of orders for payment against Trojan and its liquidator or liquidators.
4. MAKES no orders as to the costs of this proceeding as between the plaintiffs, on the one hand, and the third and fourth defendants, on the other hand.
5. RESERVES the question of costs as between the plaintiffs and the first defendant and also as between the third and fourth defendants and the first defendant.
6. GRANTS liberty to all parties to apply to Foster J in Chambers on short notice in the event that agreement is reached in respect of all outstanding questions of costs.
7. ORDERS that the proceeding be listed for argument on the outstanding questions of costs and for the hearing of any other applications at 9.15 am on 10 October 2014 before the A.C.T. List Judge. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 67 of 2012

BETWEEN: JUSTINE LOUISE ROBINSON AS ADMINISTRATOR OF THE ESTATE OF THE LATE CRAIG BRIAN ROBINSON

AND: TROJAN HOSPITALITY (ACT) PTY LIMITED (ACN 115 869 595)

JUDGE: FOSTER J DATE OF ORDER: 20 AUGUST 2014 WHERE MADE: SYDNEY (VIA VIDEO LINK TO CANBERRA)

BY CONSENT OF THE PLAINTIFFS AND THE SECOND DEFENDANT, THE COURT:

1. ORDERS that the whole of this proceeding be dismissed.
2. ORDERS that the Counterclaim made by the first defendant against the plaintiffs be wholly dismissed.
3. MAKES no orders as to the costs of the proceeding or of the Counterclaim. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 36 of 2012

IN THE MATTER OF TROJAN HOSPITALITY (ACT) PTY LTD (IN LIQUIDATION) BETWEEN: KEVIN RICHARDSON

AND: FRANK LO PILATO AS LIQUIDATOR OF TROJAN HOSPITALITY (ACT) PTY LIMITED

TROJAN HOSPITALITY (ACT) PTY LIMITED (IN LIQUIDATION) (ACN 115 869 595)

JUSTINE LOUISE ROBINSON AS ADMINISTRATOR OF THE ESTATE OF CRAIG BRIAN ROBINSON, DECEASED

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 67 of 2012

BETWEEN: JUSTINE LOUISE ROBINSON AS ADMINISTRATOR OF THE ESTATE OF THE LATE CRAIG BRIAN ROBINSON

AND: TROJAN HOSPITALITY (ACT) PTY LIMITED (ACN 115 869 595)

JUDGE: FOSTER J DATE: 20 AUGUST 2014 PLACE: SYDNEY (VIA VIDEO LINK TO CANBERRA)

REASONS FOR JUDGMENT 1 Trojan Hospitality ACT Pty Limited (ACN 115 869 595) (In Liquidation) (Trojan), which is now called ACN 115 869 595 Pty Limited, was placed into liquidation by its creditors on 13 September 2011. On the same day, Frank Lo Pilato and Andrew Bowcher were appointed as its liquidators. A Committee of Inspection was also appointed. Since 13 September 2011, Mr Lo Pilato has regularly purported to act as the sole liquidator of Trojan. Whether, in truth, he is the sole liquidator of Trojan or one of two liquidators of Trojan does not matter for present purposes. 2 On 21 September 2011, Trojan ceased trading. A sale of its entire business and undertaking was completed on the same day. 3 The liquidation of Trojan is almost complete. Taking into account all receipts and payments up to 31 March 2013, as at that date, the cash at bank held by the liquidators was $463,934.68. 4 On 18 August 2011, at a time when Trojan was under administration but not yet in liquidation, Rich and Son (ACT) Pty Ltd (ACN 130 976 260) (Rich & Son) submitted a proof of debt to the liquidators of Trojan by which Rich & Son claimed $325,000 (the contested sum) from Trojan. In its proof of debt, Rich & Son claimed that it had made a payment of $325,000 to Trojan on 23 March 2009 upon the basis that the said amount would be held in trust by it pending completion of a certain share sale transaction pursuant to which Rich & Son was to acquire one third of the issued capital of Trojan for $650,000. On 30 January 2012, Kevin Richardson, who is the principal of Rich & Son, also lodged a proof of debt in respect of the same payment of $325,000. Apparently, Mr Richardson was not sure whether he had paid the money to Trojan on his own behalf or on behalf of Rich & Son. On 1 May 2012, the liquidators rejected both proofs of debt. 5 On 15 May 2012, Mr Richardson and Rich & Son commenced a proceeding in this Court (ACD 36 of 2012) against Mr Lo Pilato, as liquidator of Trojan, against Trojan itself and against Justine Louise Robinson, in her own capacity and in her capacity as executor of the Will of the late Craig Brian Robinson, in which Mr Richardson or, in the alternative, Rich & Son, claimed repayment of the contested sum upon the basis that it was held on resulting trust by Trojan for one or other of the plaintiffs. The plaintiffs also appealed from the liquidators' rejection of their proofs of debt pursuant to s 1321 of the Corporations Act 2001 (Cth) (Corporations Act). 6 Craig Robinson and Justine Robinson were two of four vendors of shares in Trojan. Rich & Son was the purchaser of some of the shares held by the Robinsons in Trojan as well as other shares in Trojan held by other persons. The Robinsons were never paid anything for their shares in Trojan. The contested sum was apparently ultimately intended to be paid to the Robinsons in due course as the amount due to them for their shares in Trojan upon completion of the share transaction. As I have said, that payment never reached the Robinsons. 7 On 17 October 2012, Mr Lo Pilato filed a Submitting Notice in proceeding ACD 36 of 2012 by which he submitted to any order which the Court might see fit to make in that proceeding save as to costs. He wished to be heard on the question of costs. Trojan itself has not filed a Defence in that proceeding and has taken no active part in that proceeding. Mr Lo Pilato has never sought to withdraw his Submitting Notice. 8 On 23 June 2009, Justine Robinson, in her own right and as executor of her late husband's Will, commenced a proceeding against Trojan and against Rich & Son in the Supreme Court of the Australian Capital Territory. Until it was placed into liquidation, Trojan was represented in that proceeding by a firm of solicitors. Trojan took no further part in that proceeding after it was placed into liquidation. In broad terms, in that proceeding, Justine Robinson claimed the sum of $325,000 from each of the defendants. As against Trojan, she contended that the contested sum was held in trust for her. She had first demanded that sum from Trojan on 24 March 2009, the day after the payment was made to Trojan. In the alternative, she claimed an equivalent sum from Rich & Son as the unpaid purchase price of the shares in Trojan which Rich & Son had agreed to purchase from her husband and her. To the extent that Justine Robinson claimed that Trojan held the contested sum in trust for her, that claim was a claim to precisely the same amount which was the subject of the resulting trust claim and proof of debt claims made by the plaintiffs in proceeding ACD 36 of 2012. 9 On 31 August 2012, Master Harper made an order that the whole of the Supreme Court proceeding be transferred to this Court. Upon transfer, that proceeding became proceeding ACD 67 of 2012 in this Court. Trojan itself has taken no active part in proceeding ACD 67 of 2012. The liquidators of Trojan are not parties to proceeding ACD 67 of 2012. Justine Robinson and Rich & Son have always been the only active parties in that proceeding after Trojan went into liquidation. 10 At the heart of both proceeding ACD 36 of 2012 and proceeding ACD 67 of 2012 is the question of whether, at all times since the contested sum was paid to Trojan, it has been held by Trojan and latterly its liquidators in trust for someone and, if so, for whom. Mr Richardson, and Rich & Son, on the one hand, and Justine Robinson, on the other hand, have always been the only real claimants to the contested sum. A decision as to who is entitled to the contested sum would entirely resolve proceeding ACD 36 of 2012 and very substantially resolve proceeding ACD 67 of 2012. 11 On 22 March 2013, Justine Robinson, Kevin Richardson and Rich & Son mediated their respective claims and reached a settlement of those claims upon the terms of a Deed of Settlement dated 26 June 2013 (Deed of Settlement). I have attached a copy of that Deed of Settlement as Attachment "A" to these Reasons for Judgment. 12 The liquidators did not participate in the mediation nor is either of them a party to the Deed of Settlement. 13 Under the Deed of Settlement: (a) Justine Robinson acknowledged and accepted that the Share Sale Agreement of December 2008 (to which I shall refer in more detail later in these Reasons) had been validly rescinded by Rich & Son; (b) Justine Robinson abandoned her claims to the contested sum and the other claims made by her in proceeding ACD 67 of 2012; (c) The parties agreed that proceeding ACD 67 of 2012 should be dismissed upon the basis that there be no orders as to costs; and (d) The parties agreed that Trojan holds the contested sum in trust for Mr Richardson and also agreed the terms upon which proceeding ACD 36 of 2012 should be resolved (cl 3.2). 14 Notwithstanding that Mr Lo Pilato had filed a Submitting Notice in proceeding ACD 36 of 2012 and that the liquidators were not parties to proceeding ACD 67 of 2012, Mr Lo Pilato filed an affidavit in the former proceeding on 25 June 2012 in which he explained why he had rejected the proofs of debt lodged by Rich & Son and Mr Richardson and why he favoured the claim of Justine Robinson to the contested sum over those of Mr Richardson and Rich & Son. In the events which have happened, it is not necessary to traverse the contents of Mr Lo Pilato's affidavit in detail. 15 In light of the fact that the claimants to the contested sum (Justine Robinson, Kevin Richardson and Rich & Son) had settled their differences, by Interlocutory Process filed on 28 June 2013 (the plaintiffs' Interlocutory Process), the plaintiffs in proceeding ACD 36 of 2012 (Kevin Richardson and Rich & Son) claimed the following relief, namely: 1. [An order that the] plaintiffs have leave to proceed against Trojan Hospitality ACT Pty Ltd (in liquidation). 2. A declaration that Trojan Hospitality ACT Pty Ltd (in liquidation) holds the sum of $325,000 on trust for Kevin Richardson. 3. The proceeding otherwise be dismissed. 4. There be no order as to costs as between the plaintiffs and the third and fourth defendants, including reserved costs. 5. Costs otherwise be reserved. 16 Those claims for relief were supported by an affidavit sworn by Kevin Richardson on 27 June 2013 (Mr Richardson's affidavit). Those claims are consistent with and specifically contemplated by the Deed of Settlement. 17 The plaintiffs' Interlocutory Process came before me for hearing on 5 July 2013. Prior to that hearing, the plaintiffs had filed a Written Submission in support of the relief which they sought. At the commencement of that hearing, Senior Counsel representing Mr Lo Pilato sought the leave of the Court to be heard in relation to the claims for relief made by the plaintiffs in their Interlocutory Process. 18 The legal representatives of each of Justine Robinson, Kevin Richardson and Rich & Son who appeared before me on 5 July 2013 consented to final orders being made then and there in each proceeding. In proceeding ACD 36 of 2012, the consent orders sought by the parties were in the terms of the relief claimed by the plaintiffs in the plaintiffs' Interlocutory Process. In proceeding ACD 67 of 2012, the orders sought were that the whole of the proceeding be dismissed upon the basis that there be no orders as to costs. 19 Senior Counsel who appeared for Mr Lo Pilato on 5 July 2013 suggested that certain of the Written Submissions made on behalf of Kevin Richardson and Rich & Son ought not to be accepted by the Court. Senior Counsel suggested that the contested sum was not traceable in the hands of Trojan and its liquidators and thus not held in trust for anyone. The basis of that submission was that, when the liquidators were appointed, the contested sum was no longer in the bank account into which it had been deposited. This point was not pressed by Mr Lo Pilato in his Written Submissions. Nonetheless, Senior Counsel stopped short of actively opposing the orders which the active parties had agreed that the Court should make. 20 Senior Counsel for Mr Lo Pilato sought an opportunity to file Written Submissions. I gave him that opportunity and also afforded to the other parties an opportunity to reply to Mr Lo Pilato's submissions. Those parties availed themselves of that opportunity. 21 By these Reasons for Judgment, I determine the claims for relief made by the plaintiffs in their Interlocutory Process and the related question as to whether proceeding ACD 67 of 2012 should now be dismissed in order to give effect to the settlement reached between Justine Robinson and the Richardson interests.

The Relevant Facts 22 This summary of the relevant facts is taken from Mr Richardson's affidavit. 23 In 2008, Nicolas Konstantinovits, Samantha Louise Duggan, Craig Brian Robinson and Justine Louise Robinson owned all of the issued shares in Trojan. 24 During 2008, discussions took place between Kevin Richardson and Craig Robinson concerning the possibility that Mr Richardson or a company with which he was associated might acquire some shares in Trojan. 25 By an agreement made in December 2008, between Craig Robinson, Justine Robinson, Nicolas Konstantinovits and Samantha Duggan, as vendors, and Rich & Son, as purchaser, and Trojan (Share Sale Agreement), the vendors agreed to sell to Rich & Son one third of the shares held by them in Trojan, being: 50 A class shares held by Samantha Duggan; 50 B class shares held by Justine Robinson; 61 ordinary shares held by Nicolas Konstantinovits; and 61 ordinary shares held by Craig Robinson for the total purchase price of $650,000. Completion was to take place by 31 December 2008. The Share Sale Agreement did not provide for the proportionate allocation of the purchase price among individual vendors. The primary obligation of Rich & Son was to pay $650,000 to the vendors. 26 Mr Richardson said that, shortly after signing the Share Sale Agreement, he met with Craig Robinson, Mr Konstantinovits and Anthony Platt, Trojan's accountant, at the offices of Trojan. At this meeting, those present discussed the adjustments that were required to be made before settlement of the Share Sale Agreement could take place. Mr Richardson's view was that clauses 7, 8 and 9 of the Share Sale Agreement potentially required adjustments to be made to the purchase price at or prior to completion. 27 Agreement on those adjustments was not reached at the meeting referred to at [26] above. Mr Platt used a whiteboard in order to explain how he thought the adjustments should be made. However, according to Mr Richardson, an argument developed between Craig Robinson and Mr Konstantinovits which prevented an agreement being reached in relation to those adjustments. 28 By 31 December 2008, no agreement had been reached as to the adjustments which were necessary in order to effect a settlement of the Share Sale Agreement. 29 On 16 January 2009, Mr Richardson again met with Craig Robinson and Mr Konstantinovits at the Trojan offices. At this meeting, those present discussed payment of the sale price and the adjustments that were required to be made on settlement. They also discussed the clearing of all shareholder loan accounts prior to settlement. Unfortunately, once again, no agreement was reached as to any of these matters. The parties agreed to discuss the matter further when Craig Robinson returned from the USA. 30 On 26 January 2009, Craig Robinson died while in the USA. Justine Robinson was appointed his executor. 31 After Craig Robinson's death, a dispute developed between Mr Konstantinovits and Ms Duggan, on the one hand, and Justine Robinson, in her own capacity and as executor of Craig Robinson's Will, on the other hand. That dispute concerned the disposition of certain life insurance payouts and also a shareholders' agreement which had previously been entered into by Craig Robinson, Justine Robinson, Mr Konstantinovits and Ms Duggan. 32 Mr Richardson testified that, in March 2009, he obtained a line of credit in his person capacity from Bank of Queensland Limited. That line of credit was secured by a mortgage over his home at 8 Emerton Street, Evatt ACT. 33 After Mr Richardson had obtained this line of credit, he had a conversation with Mr Konstantinovits in which he told Mr Konstantinovits that he had obtained the line of credit. Mr Richardson said that, during this conversation, Mr Konstantinovits said to him: Pay the money [referring to the purchase price for the shares in Trojan] into the company's account [referring to Trojan's bank account] until we sort things out with Justine. 34 Mr Richardson said that, on 23 March 2009, he drew down $325,000 against his personal line of credit by way of bank cheque payable to Trojan. He said that he handed this bank cheque to Mr Konstantinovits and requested him to pay the cheque into Trojan's account. 35 On the same day (23 March 2009), the said bank cheque was deposited into business cheque account No 86-538-3717 (BSB No 082-902) conducted by Trojan with National Australia Bank Limited. 36 At pars 22-33 of his affidavit, Mr Richardson said: 22. At no time did I intend that Trojan was to have the benefit of these funds. I intended that funds were to be used, if at all, for completion of the Share Sale Agreement. It was important to me, however, that first the directors' loan accounts were cleared and that the dispute with Ms Robinson and the Estate was resolved. 23. The dispute regarding the life insurance and Shareholders Agreement did not resolve, and later in 2009 those parties commenced proceedings in the Supreme Court of the Australian Capital Territory (SC 898 of 2009). 24. The Share Sale Agreement did not complete. No agreement was ever reached as to the adjustments discussed with Mr Robinson prior to his death. 25. The directors loan accounts were never repaid. 26. No party attended a settlement meeting for the Share Sale Agreement. 27. I never authorised the release of the $325,000 either to Mr Konstaninovits or to Ms Robinson or the Estate. 28. Rich & Son were never given any share certificates. 29. Trojan was later placed into liquidation. 30. On 17 July 2012 my solicitors Colquhoun Murphy sent a letter to Nicholl & Co Lawyers, rescinding the Share Sale Agreement. Although I had not received any share certificates, I had become aware that notices had been lodged with ASIC for the change of shareholding. My solicitors' letter included executed share transfer forms. 31. Annexure KR4 is a copy of this letter and the share transfer forms. 32. On 14 March 2013, I instructed my solicitors to request updated financial information about Trojan Hospitality ACT Pty Ltd (in liquidation) from Bradley Allen Love, Solicitors for the Liquidator. They responded on 21 March 2013. Annexure KRS is a copy of the letter, liquidator's report and liquidator's summary of receipts and payments sent by Bradley Allen Love on 21 March 2013. 33. The matters in this affidavit are from my own knowledge. 37 In their letter dated 17 July 2012 to Justine Robinson's lawyers, Colquhoun Murphy argued that the Share Sale Agreement had never been completed, that it could not by then be completed and that Rich & Son had been induced to enter into that Agreement by representations made by Craig Robinson. They purported to rescind or terminate the Share Sale Agreement because it had been entered into as the result of those misrepresentations. 38 There is no evidence that the share transactions agreed in the Share Sale Agreement were ever recorded in the register of members kept by Trojan. 39 It appears that some steps were taken towards completion of the Share Sale Agreement. For example, share transfers were prepared and signed although it is not entirely clear in whose possession they were later found. Nor was the basis upon which that person held those transfers articulated or established with any precision. 40 There is some suggestion that Rich & Son paid a sum of money to Mr Konstantinovits in connection with the Share Sale Agreement but no hard evidence as to this was tendered before me.

Consideration 41 As is apparent from what I have already said, Justine Robinson and the Richardson interests have resolved their differences upon terms set out in the Deed of Settlement. They are the only active parties in proceedings ACD 36 of 2012 and ACD 67 of 2012. Mr Lo Pilato is a party in proceeding ACD 36 of 2012 but is not a party in proceeding ACD 67 of 2012. He has filed a Submitting Notice in proceeding ACD 36 of 2012 and continues to adhere to the terms of that Notice. Yet, notwithstanding these circumstances, Mr Lo Pilato has entered the fray and, at the heel of the hunt, endeavoured to persuade the Court not to make the orders in proceeding ACD 36 of 2012 which the active parties agreed should be made. Mr Lo Pilato appears to justify this interference in the active parties' settlement of both sets of proceedings upon the basis that, in his firm opinion, the contested sum was at all times truly held by Trojan for Craig and Justine Robinson, not for Kevin Richardson and that, should the Court decide otherwise, the general body of creditors of Trojan would be seriously prejudiced. This alleged prejudice will come about, so it is said, because Mr Lo Pilato intends to set off Justine Robinson's entitlement to receive the contested sum against the balance of the loan funds due from Craig and Justine Robinson to Trojan which, in mid-2012, amounted to approximately $261,730. 42 It must be remembered that the only direct evidence given before me as to the circumstances in which the contested sum was paid to Trojan on 23 March 2009 came from Kevin Richardson in the form of his affidavit sworn on 27 June 2013. He was not cross-examined. None of the other shareholders in Trojan gave evidence before me. Senior Counsel for Mr Lo Pilato read and relied upon Mr Lo Pilato's affidavit sworn on 12 June 2012 and filed in proceeding ACD 36 of 2012 on 25 June 2012. In that affidavit, Mr Lo Pilato gave an account of the progress of the liquidation up to June 2012 and put forward arguments and reasons as to why, in his opinion, the contested sum is held for Justine Robinson and not for Kevin Richardson. Mr Lo Pilato has no direct or first hand knowledge of the circumstances in which the contested sum was paid to Trojan. His evidence carries little weight on the critical issue here (viz who is entitled to the contested sum) when compared with the sworn and unchallenged evidence of Mr Richardson. 43 Given that the active parties have agreed upon the orders to be made in each proceeding and given that Mr Lo Pilato has submitted to any order that the Court might make in the only proceeding in which he is a party, at first blush it may be thought that I should simply ignore his protestations and make the consent orders sought by Justine Robinson and the Richardson interests. 44 However, because the declaration which is sought will bind the liquidators and thus potentially affect the ultimate return to the general body of creditors of Trojan, the active parties submitted (and I accept) that I need to reach an appropriate level of satisfaction as to the strength of Mr Richardson's claims to the contested sum before making the declaration and orders now sought by them. That satisfaction must be arrived at after due consideration of all probative evidence in admissible form which was, in fact, tendered at the hearing before me. 45 It was submitted on behalf of the active parties that the appropriate analogy is where a compromise is reached in probate proceedings in which the Court is asked to pronounce for or against a Will. In such cases, as discussed by Macrossan CJ in Vandeleur v Franich [1991] 1 Qd R 481 at 485, the Court will require appropriate evidence as a basis for the pronouncement. What will be appropriate in any given case will depend upon all the circumstances of that case. I agree with that submission. 46 Counsel for the Richardson interests, in his initial Written Submission, submitted that the evidence given by Mr Richardson in his affidavit should be accepted by the Court. He then submitted that that evidence more than justified the orders which are now sought. 47 I have no difficulty accepting the evidence of Mr Richardson. It was not challenged and is substantially consistent with the position adopted by him and Rich & Son, both formally in the proceedings under consideration and in discussions and correspondence with Mr Lo Pilato over the years. 48 It was submitted on behalf of the Richardson interests that the present case falls within the scope of what has been described as a Quistclose trust being that species of trust explained by the House of Lords in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567. For present purposes, the relevant principle was explained by Gibbs ACJ in Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (In Liq) (1978) 141 CLR 335 at 353 in the following terms: That case [referring to Quistclose] is authority for the proposition that where money is advanced by A to B, with the mutual intention that it should not become part of the assets of B, but should be used exclusively for a specific purpose, there will be implied (at least in the absence of an indication of a contrary intention) a stipulation that if the purpose fails the money will be repaid, and the arrangement will give rise to a relationship of a fiduciary character, or trust. 49 In Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491, Gummow J (when a Judge of this Court) said (at 501.5): … the essential reason why the insolvency law did not strike at the transaction in question in Quistclose was that the moneys represented by the cheque drawn by Quistclose in favour of Rolls Razor and banked in the special account of Rolls Razor never any at stage became the beneficial property of Rolls Razor. It acquired no more than what Dixon J called a dry legal interest: see Commissioner of Stamp Duties (NSW) v Perpetual Trustee Co Ltd (1941) 64 CLR 492 at 510. On its part, Quistclose had both a contractual right to repayment out of the general assets of Rolls Razor, as a general creditor, and the beneficial interest in a fund, whether by way of resulting trust or as the second limb of an express trust. 50 It was also submitted on behalf of the Richardson interests that the Quistclose principle is not limited in its application to money paid for the purposes of discharging debts but also has application where the funds in question are to be applied for other purposes, such as money paid to buy equipment (Re EVTR; Gilbert v Barber [1987] BCLC 646) or to subscribe for shares (Re Associated Securities Ltd [1981] 1 NSWLR 742). 51 In pars 32-35 of their Written Submissions dated 5 July 2013, the Richardson interests submitted as follows: 32. In this case Mr Richardson was not a party to the Share Sale Agreement. He obtained a line of credit in his own name on which he drew the sum of $325,000. The money was paid in anticipation of completion of the Share Sale Agreement. That purpose is apparent not only from the circumstances but also the conversation between Mr Richardson and Mr Konstantinovits. There was no intention for Trojan to have any beneficial interest in the funds … 33. The liquidator of Trojan also accepts that the company [referring to Trojan] does not have any beneficial interest in the monies paid by Mr Richardson. In rejecting the proofs of debt lodged by the plaintiffs, the liquidator concluded that Trojan held the $325,000 on trust for the Robinson parties. 34. The liquidator has not defended the proceeding on the basis that Trojan has any beneficial interest in those monies. Instead of filing a defence to the statement of claim the liquidator instead filed and served a submitting notice. 35. Making the declaration sought by the plaintiffs therefore does not prejudice the interests of creditors because the liquidator did not treat those monies as available for distribution to creditors, and ought properly to have interpleaded. 52 The Richardson interests also submitted that they were entitled to an order giving them leave to proceed against Trojan itself pursuant to s 471B of the Corporations Act. It was submitted that leave will readily be granted for a proprietary claim because such a claim cannot be accommodated appropriately within the proof of debt procedure (Hewlett Packard Australia Pty Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672 at [7]; Chahwan v Euphoric Pty Ltd [2006] NSWSC 1002 at [40]; Oliveri v PM Sulcs & Associates Pty Ltd (In Liq) [2012] NSWSC 1311 at [10]). 53 The above submissions were supported by the solicitor for Justine Robinson, acting in her own right and in her capacity as executor of the Will of her late husband, Craig Brian Robinson. 54 I think that the submissions made on behalf of the Richardson interests are correct and I accept them. I do so broadly for the reasons advanced by Counsel for the Richardson interests in his Written Submissions. 55 Before leaving the matter, it is necessary to say something about the Written Submissions made on behalf of Mr Lo Pilato on 10 July 2013. The essence of those Submissions was: (a) Mr Lo Pilato's position has always been that the contested sum was held by Trojan in trust for the Robinson parties. His submitting appearance filed in proceeding ACD 36 of 2012 can be explained upon the basis that, given that he favoured the Robinson parties on the critical issue, he would, in due course, if they were successful, be able to offset the quantum of their loan accounts against their entitlement to the contested sum. (b) Mr Lo Pilato adheres to the consequences of having filed a Submitting Notice in proceeding ACD 36 of 2012. (c) Before making orders in accordance with the settlement reached between the Richardson interests and Justine Robinson, the Court must be satisfied that the orders sought by those parties are appropriate. (d) The Court is not bound to accept the agreement reached between Justine Robinson and the Richardson interests to the effect that the Share Sale Agreement has been validly rescinded. To the contrary, the Court should find that the Agreement was completed. Mr Lo Pilato pointed to a number of indications in materials which he had unearthed during his investigations which, in his opinion, tended to support this conclusion. As part of that exercise, he advanced a submission that, upon the true construction of the Share Sale Agreement, no adjustments were required. In addition, he claimed that the meetings about which Mr Richardson testified concerning adjustments did not take place. 56 I have allowed Mr Lo Pilato considerable latitude in making submissions in opposition to the orders now sought by Justine Robinson and the Richardson interests. I have allowed that latitude notwithstanding that, in proceeding ACD 36 of 2012, Mr Lo Pilato has at all times submitted to any order which the Court might make save as to costs. I did so because it seemed to me that Mr Lo Pilato had a legitimate interest in bringing forward arguments in the interests of the general body of creditors of Trojan directed to the question of whether or not I should be satisfied that the orders now sought were appropriate. In this way, in substance, I acceded to the submissions made on behalf of Mr Lo Pilato which I have summarised at [55(a), (b) and (c)] above. 57 In light of my acceptance of Mr Richardson's evidence, the remaining points captured in [55(d)] above fall away and I reject them. 58 Mr Lo Pilato has made specific submissions directed to costs and his remuneration. The Richardson interests have requested the costs be reserved. 59 I think that I should give the parties an opportunity to consider the question of costs in light of these Reasons for Judgment. For that reason, I propose to reserve the question of costs. 60 Otherwise, subject to one further matter, there will be orders substantially in the terms sought by Justine Robinson and the Richardson interests. That further matter is this: It may be necessary for the Court to make further orders (including orders for payment) in order to ensure that the declaration which I intend to make as to Mr Richardson's entitlement to the contested sum is accorded appropriate effect. Although the active parties have not sought any orders consequent upon the making of the declaration sought in the plaintiffs' Interlocutory Process, I think that those parties should have an opportunity to do so should difficulties arise. To that end, I will not dismiss the balance of proceeding ACD 36 of 2012 at this stage. I will also grant an appropriate liberty to apply. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.