Smith v Marra Capital Investments Pty Ltd, in the matter of Tri-City Trucks

Federal Court of Australia|2017-12-11|Before: Mr AJ, Gleeson J

Marra Capital Investments Pty Ltd is not a creditor of Tri-City Trucks (NSW) Pty Ltd (in liquidation).

On or before 18 December 2017, the parties approach Gleeson J's associate in order to list the matter on a date convenient to the Court and the parties for submissions on costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GLEESON J: 1 The plaintiff ("liquidator") seeks a declaration that the defendant ("Marra") is not a creditor of Tri-City Trucks (NSW) Pty Ltd (in liquidation) ("TCT") and ancillary relief. 2 Marra contends that it is a secured creditor of TCT in an amount of $743,251.95, pursuant to an assignment of rights of subrogation acquired by Smeaton Grange Holdings Pty Ltd ("Smeaton Grange") as trustee of the Smeaton Trust by virtue of the payment by Smeaton Grange to St George Bank ("St George") of TCT's debt under an overdraft facility.

Parties and relevant entities 3 TCT was registered as a corporation on 12 April 2002. At all relevant times, its sole director, secretary and shareholder was Michael Gerace. Until about 1 April 2012, TCT carried on the business of selling new and used trucks and machinery; selling truck and machinery spare parts; servicing trucks and machinery; and providing finance for the purchase of new and used trucks and machinery. On 8 March 2013, the liquidator was appointed by an order of this Court. 4 Marra was incorporated on 12 October 2000. Biagio Gino Marra is, and has been since the date of its incorporation, a director of Marra, its secretary and its sole shareholder. 5 At all relevant times, the sole director, secretary and shareholder of Smeaton Grange was Ralph Gerace, Michael Gerace's brother. Smeaton Grange was the trustee of the Smeaton Trust until 27 June 2014, when it was replaced as trustee by Dunn Property Holdings Pty Ltd ("Dunn"). Ralph Gerace is also the sole director and secretary of Dunn. The Smeaton Trust was the owner of the property at 10 Dunn Rd, Smeaton Grange, from which TCT's business was conducted. 6 On 1 March 2010, Sydney Trucks and Machinery Centre Pty Ltd ("STMC") was incorporated. At all relevant times, the sole director, secretary and shareholder of STMC was Rocco Papallo ("Mr Papallo"), the nephew of Michael and Ralph Gerace. In February 2016, Mr Papallo swore an affidavit in proceedings commenced by TCT against STMC, Michael Gerace and Mr Papallo in the Supreme Court of New South Wales. Portions of that affidavit were tendered in evidence in this case. Many of the facts set out below are based on that evidence. Mr Papallo attended court to give evidence in answer to a subpoena issued at the request of the liquidator. I accept the truthfulness of the portions of Mr Papallo's February 2016 affidavit that were in evidence, and which were generally unchallenged during Mr Papallo's cross-examination.

Financing arrangements with St George Bank 7 In around May 2006, St George provided a commercial overdraft facility to TCT ("TCT overdraft facility"). The facility was secured by: (1) a fixed and floating charge granted by TCT in favour of "St George Bank Ltd" and "St George Finance Ltd", dated 31 July 2006 and registered with the Australian Securities and Investments Commission ("ASIC"); and (2) a further fixed and floating charge granted by TCT in favour of "St George Bank Limited", dated 12 October 2006 and also registered with ASIC. 8 Sometime in 2006, a guarantee and indemnity was given by Smeaton Grange, in its own right and as trustee of the Smeaton Trust to St George, by which (among other things) Smeaton Grange unconditionally and irrevocably guaranteed payment to St George of: (1) all amounts that at any time are payable, are owing but not currently payable, or are contingently owing, by TCT to St George; (2) all amounts that St George has advanced or paid on Tri-City Trucks' behalf, or on TCT's express or implied request; and (3) all amounts that St George has paid or is liable to pay as a result of TCT's act or omission. 9 The terms of the TCT overdraft facility were amended in accordance with the terms of a further letter from St George to TCT dated 29 November 2010 by, in effect, requiring the provision of additional security in favour of St George.

STMC's acquisition of TCT's assets and business 10 From about late 2009, Mr Papallo had conversations with Michael Gerace about a "succession plan" for TCT's business. Michael Gerace proposed that Mr Papallo might take over the business. The proposal was discussed among other members of the family, including Ralph Gerace and Nick Papallo, Mr Papallo's father. In late 2009 or early 2010, Michael Gerace and Mr Papallo discussed the proposal with Vince Carlo, the external accountant for TCT and Smeaton Grange (and subsequently the external accountant for STMC). STMC was incorporated as a result of that discussion. 11 In about July 2011, STMC applied to St George for a commercial overdraft facility and a merchant banking facility. 12 Mr Papallo and Michael Gerace had further discussions about putting the succession plan into place between about late 2011 and March 2012. One of the conversations was to the following effect: Gerace said: "Also, you will have to take over Tri-City's overdraft as you will need to transfer the current overdraft. The combination of the overdraft and the trade debtor/creditor adjustment should account for the total purchase price. The overdraft typically sits at $700,000 to $800,000. You will have to sort this out with St George." [Papallo] said: "OK that sounds good to me, I agree. I'll have to work out how to transfer the floor plans and the other finance, if we can. I'll have to work on the information that the floor plan financiers are requesting which is probably what St George will be after as well." Gerace said: "Once all of this has been organised I think that we have covered all of the areas needed to complete the deal." 13 Mr Papallo was aware that the overdraft typically sat at around $700,000 to $800,000 prior to this conversation, as a result of one or more conversations with Suzanne Markowski, TCT's financial controller. Mr Papallo summarised the effect of the agreement he reached with Michael Gerace as follows, based on his account of conversations with Michael Gerace (including the conversation set out above) and his knowledge of the value of the elements discussed in those conversations: [T]he agreement I reached with Gerace would result in STMC taking on more liabilities than the value of the assets it would acquire. As those liabilities were to be offset against the value of the assets, no amount would be payable by STMC. 14 On about 1 April 2012, TCT and STMC entered into a written agreement entitled "Sale of Assets Agreement". The agreement provided for STMC to acquire the assets of TCT with effect from 1 April 2012. On behalf of Marra, it was submitted that this agreement was deficient in a number of respects. The agreement did not refer to the TCT overdraft facility. Mr Papallo stated that the written agreement did not reflect the terms of the agreement he had reached with Michael Gerace. 15 At para 105 of his February 2016 affidavit, Mr Papallo recorded his understanding of the effect of the agreement between him and Michael Gerace concerning the consideration to be paid by STMC to TCT, including that there was to be a deduction of $743,251.95 from the consideration to be paid by STMC to TCT for the "payment of Tri-City overdraft account with St George Bank". At para 121, Mr Papallo repeated his evidence that "pursuant to the Asset Sale Agreement, it was STMC that was liable to pay out the overdraft". 16 Concerning the "Sale of Assets Agreement", at para 152, Mr Papallo stated that he "was not aware that the requirement for STMC to pay out the overdraft was not included in the document". At para 153, Mr Papallo stated that he had expected that the agreement would include a provision that "STMC would pay out the overdraft and set up its own overdraft" and that the "discharge of the overdraft would be credited to STMC's account in respect of the purchase price". 17 From 1 April 2012, STMC conducted the business which had been conducted by TCT prior to that date, and TCT ceased to trade. Mr Papallo stated that, in accordance with his discussions and agreement with Michael Gerace, STMC paid trade creditors of TCT to the value of $2,446,019.08. 18 In conducting business from 1 April 2012, STMC used the TCT overdraft facility up to and including 8 March 2013. There is no dispute that TCT was aware of this. Marra submitted, and I accept, that the reason for STMC's use of the TCT overdraft facility was that STMC was waiting for the establishment of a separate and new commercial overdraft facility to be established by St George in the name of STMC. This had not occurred by 8 March 2013. 19 As at 1 April 2012, the TCT overdraft facility account had a credit balance of $317,223.98. Concerning the credit balance of the TCT overdraft facility as at 31 March 2012, Mr Papallo stated that the balance "did not reflect the true financial position of this account because at that date, the overdraft account was holding funds of at least $1,576,148.61 which it had received from customers which Tri-City was obliged to pay to its floor plan financiers".

TCT's external administration 20 On 11 December 2012, the Deputy Commissioner of Taxation commenced winding up proceedings against TCT. 21 On 26 February 2013, administrators were appointed to TCT. 22 There was a meeting on 1 March 2013 between the administrators of TCT, Michael Gerace, Vince Macri (TCT's former solicitor) and Mr Carlo. A file note of the meeting records that Mr Carlo: … advised that the overdraft facility of $1m had been transferred to the new entity - Sydney Trucks & Machinery ("STM") on 26 February 2013. That, he understands that no balance is due to [St George] by [TCT]. 23 If Mr Carlo said this, he was wrong. In oral evidence, Mr Carlo suggested that he may have been misunderstood. There was no other evidence to suggest that Mr Carlo may have believed (erroneously) that the TCT overdraft facility was transferred to STMC. I am not satisfied that Mr Carlo made the statement recorded in the file note. Nevertheless, the recorded statement is broadly consistent with the oral agreement between Michael Gerace and Mr Papallo to the effect that the overdraft should "account for the total purchase price" (together with a debtor/creditor adjustment) and that this element of the transaction "would result in STMC taking on … liabilities". 24 Concerning the "transmission of assets" from TCT to STMC, the file note records: … Macri noted that the sale included: • Inventory (truck parts) • Work-in-progress • The adoption by STM of o Trade liabilities, and o Secured creditors, and o A Director's Loan of $2m. No cash consideration was paid. The rationale given was that the liabilities assumed by STM exceeded the value of the assets acquired. 25 The last sentence is also broadly consistent with Mr Papallo's evidence set out above concerning the agreement between him and Michael Gerace. 26 By 8 March 2013, when the liquidator was appointed, the TCT overdraft facility account was in debit in an amount of about $675,000. 27 On about 20 March 2013, the liquidator lodged two separate reports as to affairs with ASIC. The reports disclosed that St George was a secured creditor of TCT, in respect of the TCT overdraft facility in the approximate sum of $850,000.

Further financing arrangements with St George Bank 28 Between 8 March 2013 and 25 June 2013, parties including St George, Smeaton Grange and STMC entered into a deed entitled "Overarching Deed". Marra submitted, and it was not disputed, that the deed was an agreement to put in place new facilities to ensure that St George was paid out the amount owing under the TCT overdraft facility. The recitals to the deed recorded relevantly that: (1) Smeaton Grange was a guarantor of the obligations of TCT to St George; and (2) St George had demanded payment from Smeaton Grange of the "Tri-City Trucks Debt". 29 The "Tri-City Trucks Debt" was defined to mean the amount of $679,874.23 as at 30 April 2013 together with interest and costs accrued but not yet allocated and interest and costs that accrue in the future. 30 The deed provided for two facilities: the "Smeaton Grange Variation Facility" and the "STMC Facility". By cl 4.2, the facility limit of the "Smeaton Grange Variation Facility" was the amount of the "Tri-City Trucks Debt" as at the date on which the facility was to be provided by St George to Smeaton Grange. Clause 4.3 states that "Smeaton Grange irrevocably authorises and directs St George Bank to apply the Smeaton Grange Funds in satisfaction of the liability of Smeaton Grange to St George Bank under the TCT guarantee". The "Smeaton Grange Funds" are defined as the additional funds to be made available to Smeaton Grange by the bank under the "Smeaton Grange Variation Facility". By cl 5.1, upon receiving the "Smeaton Grange Funds", St George released Smeaton Grange from its obligations under its guarantee. 31 The "STMC Facility" included an overdraft. By cl 3.2, STMC was permitted to draw upon the funds made available under the overdraft up to a limit equal to $1,000,000 less the amount outstanding under the "Smeaton Grange Variation Facility" from time to time. 32 Mr Papallo described the arrangement between St George, STMC, Smeaton Grange "and other parties" as follows: (a) Smeaton Grange was to be granted a variation of an existing facility it had with St George; (b) the facility variation would be applied to pay out the overdraft account of TCT "on behalf of STMC"; and (c) upon STMC having obtained its commercial overdraft facility with St George, STMC would repay to Smeaton Grange the amount it had paid to close TCT's overdraft account. 33 By 11 September 2013, Smeaton Grange had not drawn on the "Smeaton Grange Variation Facility". That day, by letter from Kemp Strang to TCT (care of the liquidator), St George demanded immediate payment of $821,988.99 said to be outstanding under the TCT overdraft facility. Kemp Strang also wrote to Smeaton Grange. Kemp Strang's letter to Smeaton Grange: (1) referred to the demand made on TCT for repayment of the amount outstanding under the TCT overdraft facility; (2) referred to St George's provision of financial accommodation to Smeaton Grange of two bill facilities totalling $8,055,000; (3) complained that the bank had repeatedly requested the return of documents including: (a) a facility offer dated on or about 25 June 2013 to Smeaton Grange; (b) guarantees and indemnities from Michael Gerace, Ralph Gerace, Nick Papallo and accompanying declarations; and (c) the variation deed to the overarching deed; and (4) stated that if the documents were not returned by 19 September 2013, the bank would: … demand from Smeaton Grange, under its Guarantee and Indemnity, the immediate payment of the amount owing under the Tri-City Trucks Commercial Overdraft Facility. Events of default will occur under each of the Smeaton Grange Bill Facilities should Smeaton Grange fail to immediately pay the amount demanded by St George Bank. 34 The evidence included an unsigned "Deed of Variation". The recitals to the deed of variation included that: (1) since the execution of the overarching deed, the amount owing by Smeaton Grange under its guarantee had increased to $813,299.16 (plus interest and costs) as at 25 June 2013; and (2) as a consequence of the increase, Smeaton Grange had requested that the bank provide additional finance to it to meet its obligations under the guarantee. 35 The deed of variation provided for variations to the overarching deed to change the definition of "Tri-City Trucks Debt" in accordance with [34(1)] above, to increase the "Smeaton Grange Variation Facility" to $820,000 and to note the consequential effect on the operation of cl 3.2 of the overarching deed. It is likely that the deed of variation was executed sometime after 11 September 2013. 36 On about 11 and 19 December 2013, payments of $733,175 and $10,076.95 (totalling $743,251.95) were made into the TCT overdraft facility account. The payments came from an account in the name of Smeaton Grange as trustee for the Smeaton Trust, which appears to have been the "Smeaton Grange Variation Facility" referred to in the overarching deed and the deed of variation ("Smeaton Grange account"). 37 On 31 December 2013, St George recorded a debit of $3,724.18 on the Smeaton Grange account with the particulars "INTEREST CHARGES FROM 01DEC13 TO 31DEC13". On 2 January 2014, St George recorded a payment of $3,724.18 credited to the Smeaton Grange account with the particulars "SYDNEY TRUCKS LOAN PMT 553710731". Also on 2 January 2014, St George recorded a debit on STMC's account of $3,724.18 with the particulars "LOAN PMT 553710731 SMEATON GRANGE H". Mr Papallo's evidence was that a direct debit payment was set on STMC's account to make payments of this kind to Smeaton Grange, and that he became aware of the debits six to eight months after they commenced. 38 Mr Papallo said that the effect of the arrangement that he set out in paras 81 to 102 of his February 2016 affidavit was that: [103] … in accordance with the agreement reached with Gerace as set out above, the overdraft of Tri City Trucks was paid out by Smeaton Grange effectively on behalf of STMC. [104] STMC had the ultimate obligation to repay those funds and that arrangement was recorded as a loan provided by Smeaton Grange in the financials of both STMC and Smeaton Grange. Exhibited at pages 211 to 218 of RP-1 is a copy of STMC's Management Report for the year ended 30 June 2014 which identifies a loan by Smeaton Grange in the sum of $948,974.53. Exhibited at pages 219 to 226 of RP-1 is a copy of Smeaton Grange's Management Report for the year ended 30 June 2014 which identifies an amount of $948,974.53 owed by STMC. 39 The management reports referred to in para 104 of Mr Papallo's affidavit confirm that: (a) STMC recorded a change of approximately $816,000 in the negative value of a non-current asset called "Loan Smeaton Grange" in the year ended 30 June 2014; (b) the balance sheet as at 30 June 2014 for the trustee for the Smeaton Trust shows an increase of $819,570 for a non-current asset entitled "STMC Pty Ltd". 40 In oral examination, Mr Papallo agreed that, as he understood the position at the time, Smeaton Grange was paying out the TCT overdraft facility on behalf of STMC. In cross-examination, he agreed that Smeaton Grange had paid out the TCT overdraft facility because St George was bringing pressure to bear. 41 By letter bearing the date 7 January 2013 but sent in January 2014, St George wrote to Smeaton Grange as follows: In accordance with the Overarching Deed and the Facility Letter dated 27 June 2013, following settlement the amount of $733,175.00 was drawn from the Smeaton Grange Commercial Loan - Variable (account number 553 710 731) (Smeaton Grange Commercial Loan) and credited to the Commercial Overdraft account 552 595 786. This was done so to satisfy Smeaton Grange's guarantor obligations in respect of Tri-City Trucks (NSW) Pty Ltd (in Liquidation). The Tri-City Trucks (NSW) Pty Ltd (In Liquidation) Account 552 595 786 has been closed. In accordance with the Overarching Deed and the Facility Offer Letter dated 27 June 2013, the second leg of the transaction now needs to occur: 1. the balance of the Smeaton Grange Commercial Loan - Variable (account number 553 710 731) (Smeaton Grange Commercial Loan) is to be transferred to the STMC Commercial Overdraft (account number 553 413 569) (STMC Overdraft); and 2. once this has occurred, the Smeaton Grange Commercial Loan will be repaid in full and the Bank will arrange for this account to be closed and the limit of the STMC Overdraft will be increased to [sic] from $180,000 to $1,000,000. In order to progress this matter, could you please kindly sign and return the enclosed Authority and Direction authorising the Bank to undertake the above steps … 42 On this letter, the "second leg of the transaction" involved STMC paying out the "Smeaton Grange Variation Facility" by using the "STMC Facility" referred to in the overarching deed. 43 Concerning the "second leg of the transaction", Mr Papallo said: As STMC was potentially going to refinance with another bank, it did not proceed with the second leg of the financing arrangement as detailed in the Overarching Deed which involved STMC repaying $734,181.95 to Smeaton Grange on account of the $734,181.95 paid by Smeaton Grange on account of STMC's liability to payout the Tri-City overdraft account as agreed between myself and Gerace. 44 In cross-examination by Mr McInerney SC on behalf of Marra, Mr Papallo gave the following evidence concerning the position after the second leg of the transaction did not proceed: Q. The second leg of the transaction does not proceed? Yes. Q. STMC is not in a position to pay out Smeaton Grange Holdings, as has been - as previously foreshadowed by the second leg of the transaction; correct? --- Yes. Q. And in effect, thereafter all that you thought was that STMC had a moral obligation to Smeaton Grange Holdings; correct? … A. Well, Ralph being my uncle, yes, I would say we are morally obligated. ... Q. And it's your understanding, isn't it, that the management accounts record a loan account between Smeaton Grange Holdings and STMC because it was anticipated that there would be a loan put in place to give effect to the second leg of the transaction; correct? --- Yes. Q. And the position is, isn't it, that those loan accounts were established, but, in due course, all that they reflected, from your perspective, was that STMC had a moral obligation to Smeaton Grange Holdings; correct? --- Yes. 45 Between 2 January 2014 and 2 February 2015, STMC made 14 monthly payments totalling $85,692.36 which appear to have been equivalent to monthly interest payments incurred by Smeaton Grange on its $743,251.95 loan from St George. 46 On 27 January 2015, Smeaton Grange lodged an informal proof of debt with the liquidator. The asserted debt was in the amount of $1,195,039.31 "plus interest still accruing" for "rental expenses & bank overdraft", and was described as "unsecured". In cross-examination the liquidator accepted that, having received this informal proof of debt, he knew that Smeaton Grange had paid out the TCT overdraft facility. 47 At a creditors' meeting on 28 January 2015, the liquidator informed the meeting of creditors that TCT had no secured creditors. Smeaton Grange is listed on the attendance register for the meeting, with Mr Macri named as its proxy. The minutes record that Smeaton Grange was admitted to vote in an amount of $363,065.27 and that the chairperson (the liquidator): … advised that $363,065.27 represents the proved value of Smeaton Grange's claim and related to an amount paid to the ATO by Smeaton Grange on behalf of the Company. No further evidence has been provided by Smeaton Grange in respect of the claimed debt. 48 The Chief Commissioner of State Revenue was admitted to vote in an amount of $2,168,220.00. The minutes record the following submission by Mr Macri on behalf of Smeaton Grange: Vince Macri representing Smeaton Grange advised that [sic] the Chairperson that Smeaton Grange had commenced paying the OSR debt pursuant to the Notice of Assessment and Smeaton Grange is now entitled to an indemnity against the Company and accordingly should be able to vote for the value of the OSR debt. 49 Two resolutions were put to the creditors' meeting. The effect of the resolutions was that the liquidator would proceed to enter into a litigation funding agreement with a liquidation funder, and then instruct Watson Mangioni Lawyers to commence proceedings in the Supreme Court of New South Wales to recover damages against STMC, Michael Gerace, and Mr Papallo. The Chairperson exercised his casting vote to carry the motion.

Supreme Court proceedings against STMC 50 As Marra summarised the claim made by the liquidator against STMC, Mr Gerace and Mr Papallo, it was that nil or inadequate consideration had been paid by STMC to TCT to acquire the business and that STMC had operated the TCT overdraft facility during the period from 1 April 2012 up to and including 8 March 2013. 51 On 5 June 2015, TCT filed a statement of claim in the Supreme Court seeking various remedies against STMC, Michael Gerace and Mr Papallo. The claims included a claim that STMC was liable to pay TCT the balance of the purchase price allegedly due pursuant to the "Sale of Assets Agreement" and a claim for alleged failure to account for collected trade debtors. Relevantly to this proceeding, there was a claim for use of monies in TCT's overdraft facility account. The statement of claim pleaded: (a) the credit balance of $317,223.98 as at 1 April 2012; (b) STMC's use of the account since about 1 April 2012; and (c) an alleged liability to pay to TCT the sum of $317,223.98. 52 The proceedings were defended. In defences filed on 7 August 2015 and verified by Mr Papallo (as Mr Papallo acknowledged in cross-examination), STMC and Mr Papallo pleaded, relevantly, that: (1) STMC assumed liabilities of TCT including TCT's overdraft facility account; and (2) in the event that STMC was liable to pay any amount pursuant to the "Sale of Assets Agreement", then STMC was entitled to a set off, including in the amount of $743,251.95 in respect of payments "of the Tri-City overdraft debt". 53 On 10 August 2015, STMC filed a cross-claim in the Supreme Court proceedings seeking, relevantly, a declaration that STMC made the payments of $733,175 and $10,976.95 to TCT pursuant to the "Sale of Assets Agreement". A declaration was also sought, in the alternative, that STMC was a secured creditor of TCT in the amount of $743,251.95. The cross-claim was verified by Mr Papallo. 54 Under the heading "Assumption by STMC of liability for St George Bank Limited Overdraft", the cross claim set out the following allegations: 13. From at least late 2006 St George Bank Limited provided an overdraft facility to Tri-City. 14. After Tri-City was placed into liquidation, St George Bank Limited demanded payment of the monies owing to it. 15. In furtherance of the essential terms, STMC was to, and did, assume responsibility for the payment of all amounts payable by Tri-City to St George Bank Limited in respect of the overdraft facility provided by St George Bank Limited to Tri-City. 16. STMC assumed responsibility for the payment of all amounts payable by Tri-City to St George Bank Limited in respect of the overdraft facility in the following circumstances: (a) In or about February 2013 STMC applied to St George Bank Limited for a commercial overdraft facility. (b) The application was part of a suite of facilities sought by STMC and Smeaton Grange Holdings Pty Ltd (Smeaton Grange); (c) After negotiations had between STMC, Smeaton Grange and St George Bank Limited, St George Bank Limited agreed to issue facilities to STMC and to Smeaton Grange (the New Facilities). (d) The New Facilities, in effect, provided that: (i) Smeaton Grange would apply the funds advanced to it pursuant to the new facility to discharge its obligations as guarantor of the debt owed by Tri-City to St George Bank Limited; and (ii) STMC would apply the funds advanced to it pursuant to the new facility to discharge the debt Smeaton Grange incurred in order to discharge its obligations as guarantor of the debt owed by Tri-City to St George Bank Limited. (e) The ultimate effect of the application of the funds was that STMC discharged in full the obligations of Tri-City to St George Bank Limited pursuant to the overdraft. Particulars Overarching Deed dated 5 June 2003 between St George Bank Limited, STMC, Smeaton Grange and others. Deed of Variation dated 18 September 2013 between St George Bank Limited, STMC, Smeaton Grange and others. 17. On or about December 2013, monies were was transferred from a Smeaton Grange account with St George Bank Limited to the Tri-City St George overdraft account with the effect that the overdraft account was paid in full and the account was closed. Particulars The sum of $733,175 was paid on 11 December 2013. The sum of $10,076.95 was paid on 19 December 2013. 18. Upon payment of the monies identified in paragraph 17 above, STMC became indebted to Smeaton Grange for the total sum of $743,251.95. Particulars Overarching Deed dated 5 June 2003 between St George Bank Limited, STMC, Smeaton Grange and others. Deed of Variation dated 18 September 2013 between St George Bank Limited, STMC, Smeaton Grange and others. Letter dated 7 January 2013 (sic 2014) from St George Bank Limited to STMC and Smeaton Grange. 19. The payment of Tri-City's overdraft account and the corresponding assumption of the liability by STMC, referred to at paragraphs 17 and 18 above, represented a component of the consideration advanced by STMC to Tri-City for the purchase of the assets of Tri-City, in accordance with paragraph 5 above. 20. In the premises, the payments identified in paragraphs 17 above were made by STMC pursuant to an essential term under the Agreement, referred to at paragraph 5 above. 21. In the event that the Court does not order rectification of the Sale Agreement in accordance with the Agreement, Tri-City has been unjustly enriched by the amount of $743,251.95 paid by STMC as referred to in paragraph 17 above and Tri-City is liable to STMC to: (a) apply the sum of $743,251.95 as a set off to any amount of damages awarded against STMC in favour of the plaintiff; or (b) repay the sum of $743,251.95 as monies had and received. 22. In the alternative, in circumstances where STMC has paid in full the monies owed by Tri-City to St George Bank Limited pursuant to the Tri-City overdraft, as pleaded at paragraph 17 above, STMC: (a) is entitled to all of the benefits of the securities held by St George Bank Limited in respect of the Tri-City overdraft; (b) by operation of s 3 of the Law Reform (Miscellaneous Provisions) Act 1965 is entitled to an implied assignment of all rights held by St George Bank Limited in respect of the Tri-City overdraft; and (c) is entitled to be subrogated in equity to the security held by St George Bank Limited in respect of the Tri-City overdraft. ln consequence of the facts pleaded at paragraph 22 above, creditor of Tri-City to the amount of $743,251.95. 55 The liquidator disputed the allegations in the cross-claim. In particular, he denied that STMC was a secured creditor of TCT. 56 By letter dated 15 September 2015, O'Neill Partners, solicitors for Smeaton Grange, wrote to Watson Mangioni, who were by now the lawyers for the liquidator, as follows: In December 2013 Smeaton Grange paid an amount of $743,251.95 to the Bank in full and final satisfaction of [Tri-City]'s obligations to the Bank under the Commercial Overdraft Facility. As a result of our client's repayment to the Bank of the [Tri-City]'s Commercial Overdraft Facility in December 2013, Smeaton Grange is entitled to be subrogated to any securities, including the Charge given by [Tri-City] to the Bank. Would you please confirm that you acknowledge out client's rights as secured creditor of [Tri-City] for an amount of $743,251.95 plus interest and costs pursuant to the Charge… 57 By letter dated 15 December 2015 to O'Neill Partners, Watson Mangioni denied that Smeaton Grange satisfied a liability of TCT, saying relevantly: In December 2013 the monies owed, which were incurred by STMC as a result of its use of the Facilities in the amount of $743,251.95, were paid by Smeaton Grange from its own overdraft facility. Subsequently, STMC has repaid in full the said amount to Smeaton Grange. This is admitted by STMC in the Supreme Court proceedings. 58 On 2 September 2016, the parties to the Supreme Court proceeding attended a mediation and entered into a heads of agreement. Neither Smeaton Grange nor Dunn was represented at the mediation. 59 On 24 October 2016, the parties to the Supreme Court proceeding entered into a Deed of Settlement & Release. 60 On 24 November 2016, the liquidator received an email from Marra attaching a letter dated 23 November 2016, which said: I understand that a settlement has occurred and that you as liquidators are holdings [sic] approximately $1,500,000 in trust. Prior to the distribution of any funds please ensure that the sum of $743,251.33 plus interest (to be calculated) is paid to Marra Capital Investments Pty Limited.

Mr Carlo's evidence 61 Mr Carlo is the external accountant for the Smeaton Trust, a role which he has held since about 2007. He is also the external accountant for STMC and was the external accountant for TCT from about 2007 to about 2012. Mr Carlo gave evidence on behalf of Marra. 62 Mr Carlo confirmed that, when he prepared the ledgers and balance sheets for the Smeaton Trust for the 2014, 2015 and 2016 financial years, he treated the transfer of $733,175 from Smeaton Grange to the TCT overdraft facility as a loan from the Smeaton Trust to STMC. Mr Carlo confirmed that the general ledger for the Smeaton Trust recorded a loan granted by Smeaton Trust to STMC. 63 Mr Carlo's affidavit evidence was that he treated the transfer in this manner for the 2014 financial year in the expectation that the "second leg of the transaction" (described in the St George letter) would take place. Mr Carlo did not say when he prepared the Smeaton Trust management reports. Evidently, they were prepared some time before Mr Papallo swore his February 2016 affidavit. The unsigned 2014 management reports are dated 17 February 2015. The unsigned 2015 management reports are dated 2 September 2016. The unsigned 2016 management reports are dated 8 February 2017. 64 Mr Carlo gave the following evidence: 17. I realise that this was done by me in error. The second leg of the transaction described to in the letter from St George Bank referred to in paragraph 11(i) above did not occur. The Smeaton Grange Commercial Loan was never transferred to the STMC Overdraft. The Smeaton Grange Commercial Loan has not been repaid to the Smeaton Trust. My mistake was that I overlooked that the Smeaton Trust refinanced with the National Australia Bank, by which time I knew that the second leg of the transaction, described in the letter from St George Bank to the Smeaton Trust dated 7 January 2013 (sic 2014), had not occurred, and was never going to occur. In relation to this refinance with the NAB: (a) At Tab 11 of Exhibit VC-1 is a copy of an e-mail I was copied in on from Michael Gerace dated 7 November 2014; (b) At Tab 12 of Exhibit VC-1 is a copy of an e-mail I was copied in on from Toese Faapito of NAB dated 2 October 2014; (c) At Tab 13 of Exhibit VC-1 is a copy of a letter from NAB to Dunn dated 24 March 2015; and (d) At Tab 14 of Exhibit VC-1 is a copy of a letter from NAB to Dunn dated 15 July 2015. 18. I made a mistake in treating the Smeaton Trust payment of $733,175 to St George Bank in relation to TCT's overdraft as a loan by the Smeaton Trust to STMC. 19. The true position is that there was no loan from the Smeaton Trust to STMC in the sum of $733,175, but in truth only a debt owed by TCT to the Smeaton Trust in the sum of $733,175 for the payment made by the Smeaton Trust to the St George Bank in respect of the St George Bank TCT overdraft facility. 20. The Balance Sheets referred to in paragraph 12 above and the ledgers referred to in paragraph 13 above need to be corrected to reflect the true position that the amount of $733,175 remains owing by TCT to the Smeaton Trust, rather than by STMC to the Smeaton Trust. 65 In cross-examination, Mr Carlo said that he had understood that paying out the TCT overdraft facility "[w]as meant to be" the responsibility of STMC. He gave the following evidence: And so her Honour should proceed on a basis that your understanding of the transaction was this, wasn't it, that Smeaton - the Smeaton Trust loaned moneys to STMC and STMC used those moneys to discharge the liability under the Tri-City overdraft, correct?---In a round about way, correct. 66 Mr Carlo's evidence was that he found out, at some later time, that the Smeaton Trust was called upon by the bank to pay the loan out. As he put it: The issue was STMC pays out the overdraft, TCT. The bank intervened. Smeaton was forced to pay it. 67 Mr Carlo gave the following evidence: And so at the time when the relevant moneys were paid from or drawn down on the Smeaton Trust facility, as you understood it, what had been agreed was that those moneys were being loaned to STMC? That's how I understood it, yes. Yes. And they were being loaned to STMC, as you understood it, because STMC had the liability under the Tri-City overdraft? ..... the agreement. Yes. … … what I'm suggesting to you is this: that in respect of the subsequent leg of this transaction, that is, that STMC would open up its own overdraft and then use the moneys to pay out the Smeaton Trust facility - that was to be done by way of a repayment by STMC of the moneys it had borrowed from the Smeaton Trust. Correct? Yes. Yes. And all that happened was that it just didn't pay those moneys at that time, did it? It didn't get the loan, no. No? Yes. But it still owed the moneys to the Smeaton Trust? ..... yes. Yes. That's correct, isn't it? Yes. 68 However, when it was suggested to him that there was no error in his treatment of the payments discharging the TCT overdraft facility as loans in the respective accounts for STMC and Smeaton Trust, Mr Carlo gave the following evidence: Yes. And in respect of the fact that STMC didn't subsequently pay out the loan to the Smeaton Trust - doesn't change the characterisation of the transaction, does it? As the way I treated it, no. No. And let me suggest to you that was the proper way to treat it, wasn't it? It was the way I interpreted it, yes. Yes. So there was no error in the way in which you accounted for that transaction, was there? There was no error in the way I interpreted it. But the facts remain that the overdraft was titled Tri-City Trucks, the payment was from Smeaton Grange. So the second leg didn't occur. It shouldn't have been written down as a loan. 69 Ultimately, Mr Carlo maintained that his accounting treatment reflected his expectation "that STMC was going to pay out the overdraft."

Relief sought 70 The declaration was sought pursuant to s 479(3) of the Corporations Act 2001 (Cth). On 1 March 2017, s 479(3) was repealed and replaced by s 90-15 of Schedule 2 to the Act, although the commencement of the effect of the repeal and replacement was deferred to 1 September 2017. However, by s 1617, s 479(3) continues to apply to this proceeding, being a proceeding brought under the "old Act" in this Court in relation to the external administration of Tri-City Trucks before 1 March 2017. 71 Section 479(3) of the Corporations Act provided: The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up. 72 The correct approach to s 479(3) was summarised by Black J in Re Rolcross Pty Ltd (in liq) [2012] NSWSC 846 at [12] as follows: Section 479(3) of the Corporations Act allows a liquidator to apply to the court for directions in relation to a matter arising under a winding up. The function of a liquidator's application for directions under this section is to give the liquidator advice as to the proper course of action for him or her to take in the liquidation: Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 at 117; (1986) 4 ACLC 114; Re Ansett Australia Ltd (admins apptd) and Korda [2002] FCA 90; (2002) 115 FCR 409; 40 ACSR 433 at [46]. The court will typically not give directions where a matter relates to the making and implementation of a business or commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the decision, but may do so where a legal issue or attack on the propriety of the decision is raised: Sanderson v Classic Car Insurances Pty Ltd above at 117; Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 686-7; 5 ACSR 673; 9 ACLC 1291; Re Ansett Australia Ltd above at [65]. A liquidator is protected against a claim for breach of duty if he or she acts in accordance with a direction given by the court under s 479(3) of the Corporations Act and he or she has made full disclosure to the court in the relevant application. 73 The liquidator submitted that s 479(3) is available because: (a) the Liquidator has monies available for distribution to the unsecured creditors of Tri-City; (b) the Defendant has now asserted a right to those monies in priority to the unsecured creditors on the basis that it is the assignee of the rights of the Smeaton Trust against Tri-City arising from the Relevant Payments, and those rights include a right to be subrogated to the St George Charge, thus making it a secured creditor of Tri-City; (c) the Defendant's assertions are inconsistent with the assertions pleaded and evidenced by STMC in the Supreme Court Proceedings, to the effect that the Relevant Payments were, in fact, made by Smeaton Grange on STMC's behalf and that consequently STMC was subrogated to the St George Charge and was a secured creditor of Tri-City. STMC's rights against Tri-City were discharged through the Settlement Deed; and (d) consequently there is a "legal issue" in respect of who is entitled to the monies held by the Liquidator. 74 In Re ICS Real Estate Pty Ltd (in liq) [2014] NSWSC 479, Brereton J said, at [25]: Under s 479(3), the Court's only power is to give directions to the liquidator, and this does not extend to making orders binding upon or affecting the rights of third parties [see Editions Tom Thompson, 622; Re Southern Cross Airlines [2000] 1 Qd R 84], although such an application can be reconstituted as an inter partes proceeding for the determination of substantive rights [Re GB Nathan & Co, NSWLR 680; Editions Tom Thompson, 627; Re Willmott Forests Ltd (No 2), [44]-[45]]. 75 In Re Willmott Forests Ltd (No 2) [2012] VSC 125, Davies J concluded (at [44]) that a liquidator may seek substantive relief against a third party in an application for directions under s 479(3), citing Re GB Nathan & Co Pty Ltd (1991) 24 NSWLR 674 at 680. Her Honour concluded, at [45]: There is little doubt on the authorities on s 479(3) that the Court has the power under that provision to make orders of a substantive nature affecting third parties. It is a separate question as to whether the Court should exercise that power in a given case but the issue is one of discretion, not of power. In that regard, the cases on s 479(3) make it reasonably plain that the Court should not make substantive orders under that provision affecting the rights of third parties without first giving the affected parties the opportunity to be heard. This is a matter of process and procedure for the Court, not a matter of the power of the Court under s 479(3),[23] which is a facultative provision entitling the liquidator to apply for directions. 76 In this case the proceeding has been constituted as an inter partes proceeding. Marra did not suggest that the Court did not have power to make the declaratory relief sought. To the contrary, Marra's written submissions observed that the present dispute between it and the liquidator is "attached to specific facts", is "based on a concrete situation" and will give rise to "a binding decision raising a res judicata between parties": cf Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at [48]. 77 The Court has power to make declarations of right pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth). It is not presently necessary to determine whether the source of the Court's power to make the declaration sought is s 21 or s 479(3).

Who paid out the TCT overdraft facility? 78 There is no doubt that the $743,251.95 used to pay out the overdraft facility was paid from Smeaton Grange's funds, borrowed from St George for that purpose. There is also no doubt that Smeaton Grange was a guarantor of TCT's obligations to St George under the TCT overdraft facility. 79 Marra contends that Smeaton Grange, as guarantor, paid out TCT's indebtedness under the TCT overdraft facility. This is how St George characterised the payments, in its letter dated 7 January 2013 but sent in January 2014. 80 The liquidator characterises the payments as payments made by Smeaton Grange on behalf of STMC to discharge an obligation to TCT arising out of STMC's use of the TCT overdraft facility. As set out above, in his February 2016 affidavit, Mr Papallo of STMC characterised the payments as payments made on behalf of STMC to discharge an obligation to TCT arising out of the purchase of TCT's assets. 81 Marra relied on the following matters: (a) St George's statement in its letter that the amount of $733,175 was drawn from the Smeaton Grange loan account "so to satisfy Smeaton Grange's guarantor obligations"; (b) recital H of the overarching deed, which records that the bank had demanded payment from Smeaton Grange of TCT's indebtedness; (c) clause 4.3 of the overarching deed, set out in full above, by which Smeaton Grange authorised and directed St George to "apply the Smeaton Grange Funds in satisfaction of the liability of Smeaton Grange to St George" under the guarantee; (d) the funds used to pay out the TCT overdraft facility were drawn from a facility extended by St George to Smeaton Grange, and left Smeaton Grange exposed to liability to St George; (e) the principal of the asserted loan from Smeaton Grange to STMC has never been repaid; (f) the absence of any loan documentation for the asserted loan; (g) Mr Papallo's evidence that the loan accounts which were established reflected only that STMC had a "moral obligation" to Smeaton Grange; and (h) the liquidator's evidence that, from shortly after September 2015, on the basis of the letter from O'Neill Partners, his position was that Smeaton Grange was subrogated to the rights of St George. 82 Marra submitted that the management accounts of STMC and Smeaton Grange incorrectly record a loan between STMC and Smeaton Grange, and were prepared on the mistaken assumption that the "second leg of the transaction" would proceed. It argued that assertions in the companies' books do not of themselves prove the loan, citing Electrical Enterprises Retail Pty Ltd v Rodgers (1988) 15 NSWLR 473 at 489 and Manzi v Smith [1975] HCA 35; (1975) 132 CLR 671 at 674. Marra also argued that the "interest" payments made by STMC to Smeaton Grange were set up by St George, perhaps in preparation for the "second leg of the transaction" which never proceeded and without Mr Papallo's knowledge, should therefore be discounted as evidence of the alleged loan. 83 I accept that the matters identified on behalf of Marra support a conclusion that the payments were made by Smeaton Grange on its own behalf. However, in my view, the evidence that the payments were made on behalf of STMC, pursuant to a loan from Smeaton Grange to STMC, is stronger. In particular: (1) The 1 March 2013 file note of TCT's administrators records a statement to the administrators to the effect that no cash consideration was paid for the sale of TCT's assets because the liabilities assumed by STMC exceeded the value of the assets acquired. The file note is consistent with Mr Papallo's 2016 affidavit evidence of the arrangement between him and Mr Gerace concerning the overdraft facility. On Mr Papallo's version of events, the discharge of the overdraft facility by STMC was required to give effect to that arrangement and supported the contention (previously made to TCT's administrators and subsequently made in the Supreme Court proceeding) that STMC had no outstanding obligation to TCT for the purchase of TCT's assets. (2) The 14 monthly payments totalling $85,692.36 by STMC to Smeaton Grange between January 2014 to February 2015 are consistent with the asserted loan to STMC. Mr Carlo treated the payments as payments of interest. Even if they were made pursuant to a direct debit of which Mr Papallo was unaware for some months, these matters do not detract from the probable character of the payments as interest for Smeaton Grange's advance of funds to STMC. (3) At the creditors' meeting in January 2015, Smeaton Grange did not assert that it had any right of subrogation in respect of the pay out of the TCT overdraft facility in December 2013. (4) When Mr Carlo prepared the ledgers and balance sheets for the Smeaton Trust for the 2014, 2015 and 2016 financial years, he treated the transfer of $733,175 from the Smeaton Grange commercial loan to the TCT overdraft facility as a loan from the Smeaton Trust to STMC. His understanding was that the TCT overdraft facility was meant to be the responsibility of STMC and that Smeaton Grange lent money to STMC which STMC used to discharge the liability under the TCT overdraft. (5) In 2015, STMC, Michael Gerace and Mr Papallo defended the Supreme Court proceeding brought against them by the liquidator on the basis of a claim that STMC had assumed responsibility for the TCT overdraft as part of its agreement made in 2012 for the purchase of TCT's assets and in reliance upon the explicit contention that STMC discharged the obligations of TCT to St George Bank under the TCT overdraft facility. STMC's defence was supported by reference to the fact that both STMC and Smeaton Grange had recorded the pay out as a loan. (6) In 2016, Mr Papallo swore detailed evidence on oath of an arrangement between St George, STMC, Smeaton Grange and others pursuant to which Smeaton Grange was to be granted a variation of an existing facility, which would be applied to pay out the TCT overdraft facility on behalf of STMC on the basis that STMC would repay Smeaton Grange the amount paid. (7) The intended "second leg of the transaction" is consistent with a loan from Smeaton Grange to STMC as an earlier part of the transaction. It was intended to discharge a loan from Smeaton Grange to STMC, using funds to be advanced by St George. (8) I do not accept that the fact that the "second leg of the transaction" did not occur provides a basis for concluding that there was no loan from Smeaton Grange to STMC. I accept that, when the TCT overdraft facility was paid out, both Smeaton Grange and STMC expected that there would be a "second leg". It was on the basis of that expectation that Smeaton Grange was prepared to make the loan to STMC. There is no contemporaneous evidence to suggest that the parties made an agreement that the advance would not be considered as a loan in the event that the "second leg" did not occur. Accordingly, I do not accept Mr Carlo's evidence that Smeaton Grange's refinancing with National Australia Bank and the fact that the "second leg" had "not occurred, and was never going to occur" are matters that affect Mr Carlo's earlier, and correct, understanding that his Smeaton Grange lent money to STMC which STMC used to discharge the liability under the TCT overdraft. (9) It makes commercial sense that Smeaton Grange would loan funds to STMC to pay out the TCT overdraft facility, whether because the payment was for the purchase of TCT's assets or for STMC's use of the overdraft facility, because such a loan would have provided the more likely avenue by which Smeaton Grange could obtain repayment of the funds that were required to be paid by reason of Smeaton Grange's guarantee. STMC was conducting a business. Conversely, there is no reason to think that Smeaton Grange had any expectation in December 2013 that the liquidation of TCT would provide the means to recover the funds. 84 St George's characterisation of the payments is not determinative: it reflects the opinion of its bank officer who, unsurprisingly, looked to Smeaton Grange to repay the TCT overdraft facility pursuant to the guarantee. STMC had no legal obligation to St George to repay the facility. The facts that the funds were drawn from a facility extended by St George to Smeaton Grange and left Smeaton Grange exposed to liability to St George are not inconsistent with the loan from Smeaton Grange to STMC: they merely reflect the apparent commercial reality that, as at December 2013, it was Smeaton Grange and not STMC that was able to obtain funds from St George. 85 The facts that the principal of the loan has not been repaid and the absence of loan documentation are not matters of significant weight in the context of the familial relationships between the directors of STMC, Smeaton Grange and TCT. I also discount Mr Papallo's evidence that STMC had only a "moral obligation" to Smeaton Grange arising from the payout of the TCT overdraft facility. That evidence was given with the acceptance that the loan was recorded in the management accounts in anticipation of the "second leg of the transaction". As I have said above, I do not accept that the loan was contingent in that sense and any such contingency is contradicted by the defence propounded by STMC in the Supreme Court proceeding. 86 Accordingly, I conclude that the payment of $743,251.33 in discharge of the TCT overdraft facility was made by STMC, from funds loaned to it by Smeaton Grange as trustee for the Smeaton Trust. TCT did not incur a debt of $743,251.33 to Smeaton Grange and Smeaton Grange did not acquire rights of subrogation by reason of the discharge of the TCT overdraft facility. 87 Marra accepts that its rights rise no higher than the rights of the Smeaton Trust. It follows that Marra is not a creditor of TCT.

Issues arising if STMC did not discharge the TCT overdraft facility 88 If I am wrong, and Smeaton Grange paid out TCT's indebtedness under the overdraft facility pursuant to its obligations as guarantor, then I would accept that Smeaton Grange acquired a right of subrogation in respect of rights formerly enjoyed by St George by reason of that payment: cf Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269 at [4]. Ultimately, the liquidator did not dispute the existence of such a right except to the extent that it might be affected by disentitling conduct on the part of Smeaton Grange or Dunn as trustee of the Smeaton Trust. The disentitling conduct was also said to give rise to an estoppel or an abuse of process. 89 Assuming that such an estoppel would operate against Marra, I would not accept that there is an estoppel of the kind alleged by the liquidator. First, contrary to the liquidator's closing written submissions, I do not accept that either Smeaton Grange or Dunn represented to the liquidator that it accepted that Smeaton Trust is not a secured creditor of TCT. As a matter of fact, I reject the contention that such a representation was made by silence following the liquidator's rejection of Smeaton Grange's request for the liquidator's acknowledgement of Smeaton Grange's rights as secured creditor. Similarly, I do not accept that this silence constituted a representation that the correct position was that STMC had made the relevant payments. Further, the liquidator gave the following evidence: There was nothing done, from the time of your appointment as liquidator on 8 March 2013 through until the making of orders to conclude the Supreme Court proceedings in late 2016 - nothing done by Smeaton Grange Holdings which had any bearing on any decision you took with respect to the Supreme Court proceedings; correct?---Yes. 90 On that evidence, I accept Marra's submission that the liquidator did not rely on any representation purportedly made by Smeaton Grange. 91 The liquidator contended that it would be an abuse of process for Smeaton Grange to be permitted to bring proceedings asserting that it is a secured creditor of TCT. 92 In this case, the liquidator has sought a declaration that Marra is not a creditor of TCT. Even assuming that the liquidator is correct as to the hypothetical abuse of process, the significance of that proposition for these proceeding was not explained. I am not satisfied that there is any significance. In particular, the liquidator did not explain why Marra was not entitled to participate in the proceedings as a contradictor against the relief claimed by the liquidator. 93 Finally, the liquidator disputed the validity of the asserted assignment of rights to Marra. While I accept that there are grounds for questioning the validity of the deed of assignment dated 14 April 2016 between Smeaton Grange and Marra, the liquidator did not explain why the deed of assignment between Dunn, Marra and Smeaton Grange was ineffective to cure any defect in the first deed of assignment. Accordingly, I would not have concluded that Marra was not an assignee of any right of subrogation acquired by Smeaton Grange as trustee of the Smeaton Trust. I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

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