In the matter of Allco Securities Pty Limited [2011] NSWSC 1250

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Allco Securities Pty Limited [2011] NSWSC 1250 Hearing dates: 21 October 2011 Decision date: 21 October 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: Make orders 1, 3, 5, 6 and 7 in the amended originating process filed on 4 October 2011 Catchwords: TRUSTS AND TRUSTEES - creation of trust - where company acquired substantial parcel of shares - company registered as holder - evidence that company acquired and held as nominee of members of investment syndicate - dividends passed through to syndicate members - evidence of proportions in which shares held for account of syndicate members - existence of trust sufficiently established - lack of writing signed by company except as to one beneficiary - writing not required by statute of frauds in the particular circumstances Legislation Cited: Conveyancing Act 1919, ss 23C(1)(c), 23C(2), 54A Cases Cited: Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241 Re Allco Securities Pty Ltd [2011] NSWSC 1113 Category: Principal judgment Parties: Liracroft Pty Limited, Monetti Pty Limited, Niab Capital Markets Pty Limited, Hallcross Pty Limited, Nettex Australia Pty Ltd, Keppoch Pty Limited, Mr Greg Jones - Plaintiffs Allco Securities Pty Ltd - Defendant Representation: Mr M K Condon - Plaintiffs DibbsBarker - Plaintiffs File Number(s): 2011/00290904

Judgment 1The plaintiffs claim that the defendant, Allco Securities Pty Ltd, holds a substantial parcel of shares in a company called Unique World Group Pty Ltd as a trustee or nominee for them in certain proportions. 2The defendant has no directors or officers and, although served by delivery to its registered office, unsurprisingly did not appear. 3The company of which the defendant is a wholly owned subsidiary is currently in the hands of both receivers and liquidators. The plaintiffs' solicitors gave notice of the hearing to the receivers and the liquidators. They acknowledged receipt and stated that they did not intend to seek to participate or to be heard. 4On the material before me, there is no other person who it might be thought should have been afforded an opportunity to be heard in the proceedings. 5Mr Condon took me to a large quantity of documentary evidence and to affidavits of the three persons who were the directors of the defendant at the time of relevant events, each of whom, I might say, is also either the principal or proprietor of one of the plaintiffs. 6I do not need to recite the evidence in these reasons. It is explicitly canvassed and discussed in Mr Condon's detailed written submissions which will be kept with the court file. 7For the reasons stated in the submissions, it is sufficiently shown, in my view, that the defendant was at all material times a receptacle within which investments of certain investment syndicates were for convenience housed; that the plaintiffs, as members of investment syndicates (the composition of which changed from time to time), paid for the investments recorded in the defendant's name; and that record keeping and other documentation within the defendant was on the clear basis that it was the investment syndicate members who were the real owners of the investments. 8In relation to the particular shares to which these proceedings relate, there is clear evidence that dividends received by the defendant as the registered holder were immediately passed through to plaintiffs as the syndicate members. 9In addition, the documentary evidence supplemented by the affidavit evidence supports a finding as to numbers of shares or proportions for the respective plaintiffs consistent with those they claim in these proceedings. 10Except in the case of one plaintiff (Mr Jones), there is no explicit written declaration or acknowledgement of trust executed by the defendant. Mr Condon very properly raised the question whether this poses any problem from the point of view of the statute of srauds. I accept his submission that it does not. 11Because the subject matter is not land, no question arises under s 54A of the Conveyancing Act 1919 . Nor does s 23C(1)(c) apply. While a declaration of trust in respect of property entails the creation of an interest in the property and therefore amounts to the disposition of an equitable interest (see for example Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241), s 23C(1)(c) is concerned only with the disposition of an equitable interest already subsisting at the time of the disposition (which was not the case here) - added to which the circumstance that the money for the acquisition of the shares was provided by the principals for whom the defendant acquired them brings the matter within the s 23C(2) exception. 12At an earlier stage, the court appointed a receiver in respect of the shares in Unique World Group Pty Ltd held by the defendant and empowered the receiver to sell the shares: Re Allco Securities Pty Ltd [2011] NSWSC 1113. 13The orders now sought are, in summary, orders empowering the receiver to commit the shares to a more complex realisation transaction and, having done so, to account to the plaintiffs for the consideration received with their participation being according to the proportionate interests established by the evidence to which I have referred. 14The plaintiffs have made out a case for the grant of that relief and I shall make the orders sought. 15I make orders in items 1, 3, 5, 6 and 7 of the amended originating process filed on 4 October 2011.