New South Wales Supreme Court CITATION : Lucchese & Anor as trustee for the Neville Collis Family Trust v Collis & Anor [2005] NSWSC 1337 HEARING DATE(S) : 13 December 2005 JUDGMENT DATE : 13 December 2005 JURISDICTION : EQUITY DIVISION JUDGMENT OF : Lloyd AJ DECISION : 1. The plaintiffs to bring in short minutes of order to give effect to these reasons at 10:00 am tomorrow. 2. The plaintiffs to pay the costs of the first defendant and those costs to be included in the costs which must be paid to the plaintiffs by the second defendant. CATCHWORDS : TRUST AND TRUSTEES - Trust property - Accounting for trust assets Domenico Lucchese and Majorie Jean McBurnie as trustee for the Neville Collis Family Trust - Plaintiffs Murray Neville Collis - First Defendant PARTIES : Ian Collis - Second Defendant FILE NUMBER(S) : SC 6545 of 2004 M W Hadley - Plaintiffs COUNSEL : S B Loughnan - First Defendant N/A - Second Defendant Cater & Blumer incorporating Maquire & Martin - Plaintiffs SOLICITORS : Commins Hendriks - First Defendant N/A - Second Defendant LOWER COURT JURISDICTION : - 6 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Lloyd J Tuesday, 13 December 2005 6545 of 2004 FRANK DOMENICO LUCCHESE AND MARJORIE JEAN MCBURNIE AS TRUSTEES FOR THE NEVILLE COLLIS FAMILY TRUST v MURRAY NEVILLE COLLIS & ANOR EXTEMPORE JUDGMENT 1 HIS HONOUR: The plaintiffs are the trustees of the Neville Collis Family Trust, and seek to recover assets of the trust from the defendants, who were at one time trustee/directors of the previous trustee. The first defendant has appeared by his solicitor and counsel and submits to such order as the Court may make, other than an order for costs against him. There is no appearance by the second defendant. I am nevertheless satisfied by evidence that the second defendant is aware of the hearing today. 2 The relevant facts may be briefly described. Mr Neville Collis is the father of the two defendants, Murray Collis and Ian Collis. The evidence shows that for many years Neville Collis operated a transport business through a trust, which was called the Neville Collis Family Trust. The trustee was a company named Lerdane Pty Limited of which Murray Collis and Ian Collis were the directors. 3 By deed of appointment and removal of trustees, Neville Collis exercised a power to replace Lerdane Pty Limited with the plaintiffs as trustees. The plaintiffs have endeavoured to identify the trust assets. They have, it seems, received full assistance from the first defendant, Murray Collis, but not from the second defendant, Ian Collis. The trustee accepts that the first defendant has accounted for all trust assets that he held. 4 The assets of the trust at the time the plaintiffs took office consisted of real property, namely a yard apparently used for the transport business which was the business of the trust, together with numerous trucks and trailers. The yard premises have been sold and the funds have been transferred to the trust pursuant to court orders. No findings or orders are necessary with regard to this asset. Vehicles of the Trust 5 As to the large number of vehicles, it seems that registration and insurance records show the vehicles registered in the name of Lerdane Pty Limited when it was trustee. Some of the vehicles have been sold and accounted for, others have been sold with the proceeds being dealt with by the second defendant as if they were his own funds, and some of the vehicles were taken by the second defendant and provided to a truck dealer for sale, namely James Vos trading as Southern Equipment Sales. I note that there is a dispute as to whether the first defendant approved of some of those transactions. Nevertheless, the second defendant had control of the vehicles which are unaccounted for and/or the proceeds of sale. 6 There is a list of the vehicles which has been prepared, and evidence is before me to show what has happened in relation to each of those vehicles. It is convenient to make findings in respect of each of the vehicles which are said to be, or have been, the property of the trust. 7 Vehicle No. 1 is described as a Ford Truck. The vehicle was sold for $42,500 and the monies paid to the trustee's bank account. No orders are necessary in relation to this vehicle. 8 Vehicle No. 2 is described as an S/Line White. This vehicle was sold on 17 November 2000 and the funds were received by the second defendant, who admits receiving the proceeds on the sale of this vehicle, being $25,000, and he then dealt with the funds as if they were his own. It appears that these funds were loaned to Mr Vos in September 2002 and despite numerous demands Mr Vos has refused to repay them. 9 It is appropriate that there be an order that the second defendant transfer the sum of $25,000 to the plaintiffs within twenty-eight days of the making of the Court's formal orders. There is uncertainty about when the second defendant received the funds, but I accept that this must have occurred by 30 September 2002, and interest is to accrue from that date. If the second defendant does not have the funds then it falls to him to recover those funds from Mr Vos. 10 Vehicle No. 3 is said to be an S/Line Red. This vehicle was sold on 17 September 2000 and the purchase price of $48,000 was apparently deposited into the second defendant's own account. It is appropriate that there be an order that the second defendant transfer that sum plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of the making of these orders. 11 Vehicle No. 4 is said to be an S/Line Blue. The evidence as to what has happened to this vehicle is incomplete. I make no formal findings in relation to this vehicle. I reserve liberty to apply should further relevant evidence be available relating to the location or disposition of this vehicle. 12 Vehicle No. 5 is said to be an S/Line 3600. The proceeds of sale of this vehicle have been accounted for and no orders are necessary. 13 Vehicle No. 6 is also said to be an S/Line 3600. This vehicle is described in a document called an "Agreement of Sale" as being one of the vehicles sold to Southern Equipment Sales with eight others for a total of $70,000. It is not clear whether this document is authentic, otherwise the contents would be reflected in a document created by Wesley Hall, the trustee accountant, on 8 February 2005 being Annexure "C" to the affidavit of Tara Kiss. There is also some doubt as to whether or when this vehicle was sold. 14 The total figure of $70,000 for nine vehicles described in the "Agreement for Sale", Annexure "E" to the affidavit of Tara Kiss, is only a small proportion of their total worth, which is estimated at $350,000. Although that document records the receipt by Lerdane Pty Limited of $70,000 there is no other evidence of this receipt. The plaintiffs have checked the bank statements for Lerdane Pty Limited and Ian Collis, and there is no such entry. It therefore appears that the document described as the "Agreement for Sale" is not authentic. 15 Thus, there should be an order that the second defendant account for either this vehicle or for the sum of $47,000 plus interest from 1 January 2002 to the plaintiffs within twenty-eight days of the making of these orders. This is because there is evidence that the vehicle was in fact sold for $47,000 and the proceeds of sale are in the Mr Vos' trust account. 16 Vehicle No. 7 is an S/Line 3600, the registration of which expired on 19 February 2003. It has not been re-registered. There is conflicting evidence about this vehicle. Mr Hall states in his affidavit that the vehicle is still in operation and then in Annexure "C" of his affidavit he states that it was sold for $67,000 and the proceeds of sale are in the Melbourne dealer's trust account, that is Mr Vos. 17 Mr Lucchese offered to purchase this vehicle for $92,000, but this was prior to his appointment as trustee. This is also the vehicle referred to in the affidavit of Mr Tripodi, which confirms that the second defendant gave this vehicle to Mr Vos. 18 It is also referred to in Annexure "E" to the affidavit of Tara Kiss as having been sold to Southern Equipment Sales with eight other vehicles for a combined total of $70,000, which is the document I have rejected as not authentic. 19 There is conflicting evidence about the value of this vehicle. Mr Hall says it was sold for $67,000. This maybe an under-value in light of Mr Lucchese's offer of $92,000. However, in the absence of valuation evidence I prefer the lower figure. The appropriate order is that the second defendant transfer the sum of $67,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 20 Vehicle No. 8 is an Alloy Tipper. The registration of this vehicle, which was acquired by Lerdane Pty Limited in 1989, expired on 17 September 2000 and it has not been re-registered. It appears that this vehicle was sold on 1 December 2000 for $35,000, and the funds were placed in the second defendant's bank account. This is consistent with the bank statement recording a deposit of $35,000 on 1 December 2000. 21 I am satisfied that these funds were obtained by the second defendant and dealt with as if they were his own. The appropriate order is that the second defendant transfer the sum of $35,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 22 Vehicle No. 9 is described as an Alloy Tipper. I note that this vehicle has not been listed in the points of claim, and no order is necessary in relation to it. 23 Vehicle No. 10 is also described as an Alloy Tipper and was acquired by Lerdane Pty Limited in 1996. Its registration expired on 23 April 2002 and it has not been re-registered. A letter from Mr Hall, being Annexure "C" to the affidavit of Tara Kiss, states that this vehicle was sold for $30,000 and the proceeds for sale are in trust account of the Melbourne dealers, that is Mr Vos' trust account. 24 This vehicle is another of those referred to in Annexure "E" to the affidavit of Tara Kiss as having been sold with eight others for a total of $70,000, which I have already said is not an authentic document. This is also another vehicle apparently provided to Mr Vos without authority and not accounted for. 25 The plaintiffs maintain, and I accept, that the second defendant must bear the consequences of his unauthorised conversion of this vehicle. It is therefore the obligation of the second defendant to make good the value of that asset and the appropriate order is that he transfer the sum of $30,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 26 Vehicle No. 11 is said to be an Alloy Tipper. This vehicle was acquired by Agrinational Pty Limited, trading as Dickie Bulk Grain Handling, on 11 March 2002. According to Annexure "C" to the affidavit of Tara Kiss the vehicle was sold for $28,000 and the proceeds of sale are in Mr Vos' trust account. This is another vehicle described in Annexure "E" to the affidavit of Tara Kiss, which I have said is not authentic. 27 For the reasons previously set out, the second defendant should reimburse the trust for the value of this vehicle, which giving him the benefit of doubt is not less than $28,000. The appropriate order is that the second defendant transfer the sum of $28,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 28 Vehicle No. 12 is said to be an Alloy Tipper. According to the records, this vehicle was acquired by Bryce Anthony Hanstock on 26 October 2003. Mr Hall states in Annexure "C" to his affidavit that the vehicle was sold for $35,000 and the proceeds of sale are in Mr Vos' trust account. 29 It appears that Mr Vos sold this vehicle to Mr Hanstock. There is evidence that the sale price was $47,000, but there may be nothing improper in Mr Vos buying it from Lerdane Pty Limited for $35,000. This is not an unusual occurrence in the second hand vehicle market. The appropriate order is that the second defendant transfer the sum of $35,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 30 Vehicle No. 13 is said to be a Blue Tautliner. According to Annexure "C" to the affidavit of Tara Kiss this vehicle was sold for $18,000 and the proceeds of sale are in Mr Vos' trust account. It also appears in Annexure "E" to the affidavit of Tara Kiss, the document which I have previously described as being not authentic. 31 This vehicle should be dealt with in the same manner as the earlier vehicles, and there should be an order that the second defendant transfer the sum of $18,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 32 Vehicle No. 14 is said to be a White Tautliner. According to Annexure "C" to the affidavit of Tara Kiss this vehicle was sold for $22,000 and the proceeds of sale are held in Mr Vos' trust account. It is also listed in Annexure "E" to the affidavit of Tara Kiss as part of the combined sale of eight vehicles for $70,000. The appropriate order is that the second defendant transfer this sum of $22,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 33 Vehicle No. 15 is said to be a Blue Convertible. According to Annexure "C" to the affidavit of Tara Kiss this vehicle was sold for $18,000 and the proceeds of sale are in Mr Vos' trust account. This is also one of the eight vehicles listed in Annexure "E" to the affidavit of Tara Kiss to which I have previously referred. 34 At the request of the plaintiffs I make no formal finding or order in relation to this vehicle, but liberty to apply will be reserved in the orders if further evidence comes to light in relation to it. 35 Vehicle No. 16 is said to be a Red Convertible Trailer. There is no evidence as to what has happened to this vehicle. The registration expired on 20 April 2002 when it was previously owned by Lerdane Pty Limited, and it has not been re-registered in New South Wales. Again I reserve liberty to apply in relation to this vehicle should any further evidence come to light. 36 Vehicle No. 18 is also said to be a Red Convertible Trailer. According to Annexure "C" to the affidavit of Tara Kiss this vehicle was sold for $15,000 and the proceeds are in Mr Vos' trust account. The appropriate order is that the second defendant transfer the sum of $15,000 plus interest from 8 February 2005 to the plaintiffs within twenty-eight days of the making of these orders. 37 Vehicle No. 19, a Rodeo Utility, has been the subject of a previous order and no further orders are sought in relation to it. 38 Vehicle No. 20 is also said to be a Rodeo Utility. According to Mr Hall and according to Annexure "C" to the affidavit of Tara Kiss, this vehicle was sold by the second defendant for cash in the sum of $9,000. It is therefore appropriate for an order that the second defendant transfer the sum of $9,000 plus interest from 1 January 2003 to the plaintiffs within twenty-eight days of these orders. 39 There are three other vehicles, namely a 1998 International ST 2670, an International S/Line 2600 Single Drive 230 Horse Power and an International S/Line 2600 Single Drive 250 Horse Power, about which no accurate details are known. I reserve liberty for the plaintiffs to apply for orders in relation to these vehicles, or the proceeds of any sale thereof, if further evidence becomes available. 40 I note that the first defendant has entered a submitting appearance and has co-operated at all times with the plaintiff. The appropriate order is that the plaintiffs pay the costs of the first defendant and those costs to be included in the costs which must be paid to the plaintiff by the second defendant. Bank Balance of Trust 41 In addition to the vehicles, bank statements produced by the Commonwealth Bank on subpoena show the trust account operated by Lerdane Pty Limited had a balance of $74,877 as at 30 December 2002, when it ceased operating the transport business. On 28 July 2003 $20,000 was transferred to the second defendant's account. When the plaintiff took office on 28 July 2004 the balance remaining in the account was $3,333. 42 The evidence shows that the second defendant closed the business down unilaterally, and thereafter he controlled the account. The second defendant has failed to account for the funds in this account. Accordingly there should be an order that the second defendant pay, within twenty-eight days of the date of these orders, the funds unaccounted for. 43 I direct the plaintiffs to bring in short minutes of order to give effect to these orders by 10:00 am tomorrow morning. 44 The matter will be placed in the list for short minutes of order for 10:00 am on 14 December 2005. The exhibits may be returned. I hereby certify that the preceding 44 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd. Associate Dated: 13 December 2005 ********** 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. 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