Infigo II Pty Ltd v Linmas Holdings Pty Ltd [2023] NSWSC 755

Supreme Court New South Wales

Medium Neutral Citation: Infigo II Pty Ltd v Linmas Holdings Pty Ltd [2023] NSWSC 755 Hearing dates: 26, 28 June 2023 Decision date: 29 June 2023 Jurisdiction: Equity - Duty List Before: Meek J Decision: Application for the continuation of freezing orders dismissed. Freezing orders discharged. Catchwords: CIVIL PROCEDURE — Interim preservation — Freezing orders — The plaintiff a building contractor entered into a construction contract with the first defendant (D1) a corporate entity — D1 is the trustee of a discretionary trust (the trust) owning property on which the construction works are to be carried out — D1 has an ABN in its own capacity — D1 as trustee of the trust has a separate ABN — The construction contract in its terms describes D1 (with the ABN in its own capacity) as being the contracting party and the standard terms provides (relevantly) that each person who executes the contract does so solely in its own legal capacity and not as agent or trustee of any other person — Four progress payments were made and paid, with the fourth payment being paid from an account referable to the trust — The plaintiff lodged an adjudication application — An adjudication was made and subsequently registered as a judgment in the District Court — Within three days of the adjudication determination the third defendant (D3) being the sole director and shareholder of D1 incorporated the second defendant (D2) — Attempts were made to execute on the judgment — Subsequently, D1 transferred the property to D2 — The plaintiff applied ex parte to the Court for freezing orders seeking final relief declaring the alienation of property void pursuant to s 37A Conveyancing Act 1919 (NSW) — Initial freezing orders were made and the matter adjourned — Freezing orders were continued and evidence served — The defendants' evidence disclosed to the plaintiff the existence of the trust — Held that weak prima facie case established, balance of convenience favours plaintiff but plaintiff's undertaking as to damages challenged on the basis of material adduced and the plaintiff failed to adduce further evidence going to capacity to meet undertaking — Freezing orders discharged LAND LAW — Alienation of property — Conveyancing Act 1919 (NSW), s 37A — Criteria summarised — Intent to defraud element explained PARTIES — The capacities of a trustee and the person of a trustee are different matters/concepts — A trustee in its personal capacity and in its capacity as a trustee remains the same legal person — Except as permitted by statute, whilst a trustee can contract in two different capacities it cannot contract with itself AGENCY — A legal person cannot act as agent for itself TRUSTS — Nature of a trust — The capacities of a trustee and the legal personality of a trustee are different matters/concepts — A trustee in its personal capacity and in its capacity as a trustee remains the same legal person — Except as permitted by statute, whilst a trustee can contract in two different capacities it cannot contract with itself CONTRACT — Parties — The capacities of a trustee and the legal personality of a trustee are different matters/concepts — A trustee in its personal capacity and in its capacity as a trustee remains the same legal person — Except as permitted by statute, whilst a trustee can contract in two different capacities it cannot contract with itself TRUSTS — Liabilities — A trustee is personally liable both for debts and liabilities incurred in the administration of the trust and those incurred in its personal capacity — Whether the trustee has incurred a liability in the performance of the trust depends on that being the correct legal characterisation of what occurred — That characterisation cannot be determined by the label or description given to the relevant conduct by the parties to it. Rather, it depends upon whether the conduct or action was, or must be taken to have been, undertaken in the proper execution of the trust TRUSTS — Reimbursement and exoneration — A trustee's right of reimbursement and right of exoneration distinguished — A right of reimbursement may be subrogated to by both "trust creditors" and creditors of the trustee in its personal capacity — Where the trustee has a right of exoneration, only a trust creditor may have recourse to trust assets to meet the liability by subrogating the trustee's right of indemnity CONSTRUCTION — The capacity in which a party contracts is determined objectively in the same manner as the contract itself is construed — Post-contractual evidence may not be used to identify the parties to a contract which is wholly written and which is not said to be a sham or to involve fraud or sought to be rectified in equity Legislation Cited: Conveyancing Act 1919 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; [2014] NSWCA 402 Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367; [2019] NSWSC 1086 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; [1998] HCA 26 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 268 CLR 524; [2019] HCA 20 Clay v Clay (2001) 202 CLR 410; [2001] HCA 9 Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 EMU20 v Anderson [2020] FCA 1585 Enertek AU Pty Ltd v 8StarEnergy Pty Ltd [2022] VSC 544 General Credits Ltd v Tawilla Pty Ltd [1984] 1 Qd R 388 Huntley Management Ltd v Timbercorp Securities Ltd (2010) 187 FCR 151; [2010] FCA 576 In re Richardson; Ex parte The Governors of St Thomas's Hospital [1911] 2 KB 705 In re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 Ingram v Inland Revenue Commissioners [1997] 4 All ER 395 Ingram v Inland Revenue Commissioners [2000] 1 AC 293 Ingram v Y Twelve Pty Ltd [2013] NSWSC 1777 Jones v Dunkel (1959) 11 CLR 298; [1952] HCA 8 Kelly v Mina [2014] NSWCA 9 Langdon v Gruber [2001] NSWSC 276 Leximed Pty Ltd v Morgan [2016] 2 Qd R 442; [2015] QSC 318 MacarthurCook Fund Management Ltd v Zhaofeng Funds Ltd [2012] NSWSC 911 Martello v Walton (Supreme Court (WA), Ipp J, 4 February 1999, unrep) McCausland v Surfing Hardware International Holdings Pty Ltd [2013] NSWSC 902 Minister Administering National Parks and Wildlife Act 1974 v Halloran [2004] NSWCA 118; (2004) 12 BPR 22,391 Octavo Investments Pty Ltd v Knight (1978) 144 CLR 360; [1979] HCA 61 P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 Puglia v Basol [2005] NSWSC 1271 Re Trautwein; Richardson v Trautwein (1944) 14 ABC 61 Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238; [2011] FCAFC 156 Suncorp Insurance and Finance v Commissioner of Stamp Duties [1998] 2 Qd R 285 TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291; (2013) 31 ACLC Williams v Lloyd (1934) 50 CLR 341; [1934] HCA 1 Texts Cited: Scott Austin, and William Fratcher, Scott on Trusts, (4th ed, 1988, Little, Brown and Company) Category: Principal judgment Parties: Infigo II Pty Ltd (Plaintiff) Linmas Holdings Pty Ltd (First Defendant) 2041House Pty Ltd (Second Defendant) Benjamin Jacob Hilmer (Third Defendant) Representation: Counsel: S Philips (Plaintiff) D Hand (Defendants)