Supreme Court New South Wales Medium Neutral Citation: Andrew John Fleming – The Estate of the Late Concetta Italiano [2024] NSWSC 630 Hearing dates: 23 May 2024 Date of orders: 23 May 2024 Decision date: 24 May 2024 Jurisdiction: Equity Before: Williams J Decision: Judicial advice given. Catchwords: SUCCESSION – application by interim administrator of deceased estate which includes units in a unit trust for judicial advice whether he would be justified in commencing proceedings to remove the trustee and appoint a new trustee under s 70 of the Trustee Act 1925 (NSW), and in relation to certain ancillary matters – no question of principle. Legislation Cited: Trustee Act 1925 (NSW), s 63 Cases Cited: Alexander v Perpetual Trustees WA Limited, (2004) 216 CLR 109; [2004] HCA 7 Texts Cited: JD Heydon and MJ Leeming, Jacobs Law of Trusts in Australia (8th ed, 2016, LexisNexis) Category: Principal judgment Parties: Plaintiff Andrew John Fleming Representation: Counsel: N Condylis Solicitors: Walker and White File Number(s): 2024/191894 Publication restriction: N/A JUDGMENT 1. The late Concetta Italiano died on 2 September 2023 (the deceased). 2. Pursuant to an order made by this Court on 29 April 2024 in proceedings 2023/360305, Mr Andrew John Fleming was appointed on an interim basis as the administrator ad litem to represent the deceased estate in those proceedings (the probate proceedings) and in proceedings 2021/115601 in this Court (the estate management proceedings). The terms of that order conferred a range of specific powers on Mr Fleming as administrator ad litem, including the power to collect and preserve all assets of the estate, and to do all such acts and things as are incidental to that power. 3. On 23 May 2024, Mr Fleming commenced the present proceedings in his capacity as interim administrator of the estate by filing in court a summons seeking judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) in respect of various matters concerning the estate's unit holding in the BP Trust including advice on an urgent basis that: "3. … in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in seeking orders for the production by the current liquidators of MCA Tag No.1 Pty Limited (ACN 637 649 515) of copies of all books, papers, documents and records of the Boulevarde Property Trust. 4. … in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in commencing proceedings to remove the current trustee, MCA Tag No.1 Pty Limited (ACN 637 649 515), of the Boulevarde Property Trust and to have himself appointed as trustee of the Boulevarde Property Trust pursuant to section 70 of the Trustee Act 1925 (NSW), which includes, for the avoidance of any doubt, also seeking alternative declaratory relief that MCA's trusteeship of the Boulevarde Property Trust terminated upon MCA's liquidation on or around 1 May 2024 in accordance with clause 85 of the Boulevarde Property Trust Deed. 5. … in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in lodging a caveat against the title of the property located at 163-167 The Boulevarde, Fairfield Heights in the state of New South Wales, being the whole of the land contained in Lot 260 of DP 835687. 6. … in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, that the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in intervening in the proceedings NSD605/2024 in the Federal Court of Australia, Sydney Registry to represent the interests of the Estate of the Late Concetta Italiano." 1. I ordered that the summons be returnable instanter, and heard the application for judicial advice in respect of the urgent matters referred to above on the afternoon of 23 May 2024. At the conclusion of the hearing, I was satisfied on the basis of the facts set out in the statement of facts that was tendered in support of the application, and the documents expressly referred to in that statement of facts which were tendered at the hearing, that advice should be given substantially in the terms of the summons referred to above. I made orders accordingly at the conclusion of the hearing on the basis that I would deliver short reasons as soon as possible. 2. The statement of facts discloses the following matters that are pertinent to my reasons for giving the advice. 3. The deceased estate is the sole unit holder in the Boulevard Property Trust (the BP Trust). 4. The BP Trust was established by deed dated 26 March 2020 (the BP Trust Deed), which names MCA Tag No. 1 Pty Ltd as the trustee of the BP Trust (MCA). 5. The assets of the BP Trust include a property at 163-167 The Boulevarde, Fairfield Heights, which is a service station and associated buildings (the Property). 6. The Property has an estimated value of $4,600,000. 7. On 12 July 2023, the Court made orders in the estate management proceedings: 1. restraining MCA and Mr David Conway (who was then the sole director and shareholder of MCA) from dealing with the Property until further order; 2. restraining MCA from making any further loans, advances or distributions from any account operated on behalf of the BP Trust, including specified bank accounts held with the Bank of Queensland and St George Bank, until further order; and 3. restraining Mr Conway from dealing with the shares in MCA until further order. 1. As I have already mentioned, the deceased passed away on 2 September 2023. 2. As I have already mentioned, Mr Fleming was appointed as the interim administrator of the estate by order of this Court in the probate proceedings on 29 April 2024. 3. On 17 May 2024, Mr Fleming became aware that MCA was in liquidation, and that there were proceedings on foot in the Federal Court of Australia. Those proceedings were commenced on 14 May 2024 by Mr Hakki Hassan against the liquidators of MCA, Mr David Ingram and Mr David Ross. Mr Hassan seeks a declaration that resolutions purportedly passed for the issue of shares in MCA to Mr Juan Pablo Reyes Franco and Mr David Andreas Rodriguez Cardenas are invalid, a declaration that resolutions purportedly appointing Mr Reyes Franco and Mr Cardenas as directors of MCA are invalid, and a declaration that Mr Hassan has been the sole director and secretary of MCA since 23 April 2024. Mr Hassan also seeks a declaration that the members' resolution that MCA be wound up pursuant to s 491(1) of the Corporations Act 2001 (Cth) is invalid or, alternatively, an order removing Mr Ingram and Mr Ross as liquidators and appointing Mr John Morgan as liquidator. 4. Since being appointed as interim administrator, Mr Fleming has obtained a title search for the Property which discloses a mortgage registered against the title in favour of the Commonwealth Bank of Australia, being registered dealing AT470627. The mortgage was executed on 22 September 2023, after this Court made the orders referred to at [10] above in the estate management proceedings restraining MCA from dealing with the Property. 5. The terms of the mortgage are set out in registered memorandum AP112170. The mortgage secures all moneys owing under any "Secured Agreement". Clauses A21 and A22 of the memorandum provide that the mortgagor is in default if it fails to pay on time any amount owing, or if it defaults under a Secured Agreement. If the mortgagor is in bankruptcy, administration, or any insolvency process at the time of an event of default, the mortgagee may enforce the mortgage without giving prior notice to the mortgagor, unless it is required by Consumer Credit Law or some other law to give notice. 6. Mr Fleming is in possession of a signed copy of the BP Trust Deed, clause 85 of which provides (my emphasis): "The appointment of a trustee terminates automatically if any of the following occurs: - the trustee is found to be of unsound mind, or the trustee or his or her estate becomes liable to be dealt with in any way under a law dealing with mental health; - the trustee becomes bankrupt or makes an arrangement or composition with his or her creditors; - the trustee enters into compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction), or has an administrator, receiver, official manager, or receiver and manager appointed to any part of its assets." 1. Mr Fleming is also in possession of another signed copy of the BP Trust Deed that was annexed to an affidavit made by Mr Hassan in the Federal Court proceedings which contains clause 85 but omits the third bullet point that I have emphasised above. 2. Mr Fleming apprehends that, as a result of the winding up of MCA, its appointment as trustee of the BP Trust has automatically terminated and there is presently no trustee. However, there is some uncertainty about this due to the inconsistency in clause 85 of the two signed copies of the BP Trust Deed to which I have referred above. 3. Mr Fleming is also concerned that the winding up of MCA may cause the Commonwealth Bank of Australia to enforce its mortgage over the Property under the default provisions to which I have referred above. 4. Mr Fleming has requested the liquidators to cause MCA to transfer the assets of the Trust to him as interim administrator of the deceased estate of the sole unit holder. Mr Fleming has also requested the liquidators to convene a meeting for the purpose of resolving to remove MCA as trustee and to appoint him as trustee of the BP Trust. The liquidators have expressed some reluctance to engage with those requests in circumstances where the validity of their appointment is disputed, and that dispute remains to be determined in the Federal Court proceedings. 5. In those circumstances, Mr Fleming wishes to ensure that the assets of the BP Trust are protected and preserved for the benefit of the estate by commencing proceedings in this Court seeking orders for the removal of MCA as the trustee (if its appointment as trustee has not been automatically terminated), and for the appointment of himself as trustee pursuant to s 70 of the Trustee Act. Mr Fleming also wishes to seek orders for the production to him as interim administrator of the deceased estate of the sole unit holder of the BP Trust of all books, papers, documents and records of the BP Trust. In circumstances where MCA's appointment may have been terminated under clause 85 of the BP Trust Deed but it continues to hold the legal title to the Property, Mr Fleming also wishes to lodge a caveat against the title to the Property in respect of the beneficial interest in the Property of the deceased estate as the sole unit holder in the BP Trust. Mr Fleming apprehends that he may need to intervene in the Federal Court proceedings if and to the extent that the claims for relief in those proceedings concern or touch upon the assets of the Trust. 6. Subject to two clarifications and one qualification, I am satisfied that Mr Fleming would be justified in taking all of those steps in the circumstances set out in the statement of facts. 7. It is desirable that the uncertainty concerning the terms of clause 85 of the BP Trust Deed, and the question of whether the MCA's appointment has trustee was terminated when it went into liquidation, be resolved. If the office of trustee is vacant, it is highly desirable that a new trustee be appointed. If MCA remains as the trustee, there is an arguable case for Mr Fleming (or some other person considered by the Court to be suitable) be appointed as trustee, in circumstances where MCA appears from the matters stated in the statement of facts to have contravened the orders made by this Court on 12 July 2023 in the estate management proceedings by mortgaging the Property, and MCA's winding up gives rise to a risk that the Commonwealth Bank will take steps to enforce that mortgage. It is consistent with Mr Fleming's obligations as interim administrator that he take steps in the meantime to protect the estate's beneficial interest in the Property as the unit holder of the BP Trust by lodging a caveat against the title to the Property. In my opinion, MCA would need to be a defendant to any such proceedings. As MCA is in liquidation, Mr Fleming would require leave to commence those proceedings under s 500(2) of the Corporations Act. That is the first clarification to which I have referred above. The effect of the advice that I have given is that Mr Fleming would be justified in the circumstances set out in the statement of facts in commencing proceedings for the appointment of a new trustee (in substitution for MCA, if it remains the trustee), the first step of which would involve the application for leave under s 500(2). The determination of any such application for leave is entirely a matter for the Judge who hears the application. 8. In my opinion, Mr Fleming is also justified in seeking orders for production of the books and records of the BP Trust. As I understand it, he proposes to seek such an order in the proposed proceedings for the appointment of a new trustee. However, prayer 3 of the summons which I have set out above contemplates that the order to be sought would be directed to the liquidators of MCA rather than to MCA. The qualification to which I have referred above is that, in my opinion, such an order may properly be sought against MCA as the trustee, or former trustee, and not against the liquidators personally. As the interim administrator of the deceased estate of the sole unit holder in the Trust, Mr Fleming would have a right that is proprietary in nature to require the trustee to produce those documents: JD Heydon and MJ Leeming, Jacobs Law of Trusts in Australia (8th ed, 2016, LexisNexis) at [17-16]. Mr Fleming may also be entitled to orders requiring MCA to discover those documents in the proposed proceedings for the appointment of a new trustee. The confidential opinion of counsel which was tendered on the hearing of the application for judicial advice did not identify any basis for seeking an order for production against the liquidators of MCA personally. Whilst the liquidators of MCA will cause the company to comply with any order for production that may be made against the company, the company itself is the appropriate object of the order. 9. It seems to me that there is a real prospect that the proceedings in the Federal Court arising out of the winding up of MCA may in due course give rise to issues affecting the assets of the BP Trust, all of which are presently held in the name of MCA according to the statement of facts. If and to the extent that this occurs, Mr Fleming would be justified in intervening in those proceedings, subject of course to seeking any leave that he may require from the Federal Court, including leave in respect of any claims that he seeks to prosecute in those proceedings as the interim administrator of the deceased estate of the unit holder of the BP Trust which would require him to demonstrate special circumstances that warrant those claims being prosecuted by the unit holder rather than by the trustee: Alexander v Perpetual Trustees WA Limited (2004) 216 CLR 109; [2004] HCA 7 at [55] (Gleeson CJ, Gummow and Hayne JJ); see also JD Heydon and MJ Leeming, Jacobs Law of Trusts in Australia (8th ed, 2016, LexisNexis) at [23-03]. Whether or not leave should be granted to Mr Fleming to intervene in the Federal Court proceedings is entirely a matter for the Federal Court. That is the second clarification to which I have referred above. The effect of the advice that I have given is that he would be justified in seeking leave to intervene to the extent that those proceedings concern or touch upon the assets of the BP Trust of which the estate is the sole unit holder. 10. The substantive orders that I made at the conclusion of the hearing on 23 May 2024 (as amended pursuant to the slip rule on 24 May 2024) for the reasons explained above are as follows: Order pursuant to section 63 of the Trustee Act 1925 (NSW) that, in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in seeking orders for the production by MCA Tag No.1 Pty Limited (ACN 637 649 515) of copies of all books, papers, documents and records of the Boulevarde Property Trust to the plaintiff. Order pursuant to section 63 of the Trustee Act 1925 (NSW) that, in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in commencing proceedings to remove the current trustee, MCA Tag No.1 Pty Limited (ACN 637 649 515), of the Boulevarde Property Trust and to have himself appointed as trustee of the Boulevarde Property Trust pursuant to section 70 of the Trustee Act 1925 (NSW), which includes, for the avoidance of any doubt, also seeking alternative declaratory relief that MCA's trusteeship of the Boulevarde Property Trust terminated upon MCA's liquidation on or around 1 May 2024 in accordance with clause 85 of the Boulevarde Property Trust Deed. Order pursuant to section 63 of the Trustee Act 1925 (NSW) that, in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in lodging a caveat against the title of the property located at 163-167 The Boulevarde, Fairfield Heights in the state of New South Wales, being the whole of the land contained in Lot 260 of DP 835687. Order pursuant to section 63 of the Trustee Act 1925 (NSW), in the circumstances set out in the Statement of Facts dated 23 May 2024 and filed in these proceedings, that the plaintiff, as interim administrator of the Estate of the Late Concetta Italiano, would be justified in intervening in the proceedings NSD605/2024 in the Federal Court of Australia, Sydney Registry to represent the interests of the Estate of the Late Concetta Italiano in so far as those proceedings concern or touch upon the assets of the Boulevarde Property Trust. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 May 2024