In the matter of Courtenay House Capital Trading Group Pty Limited (in liquidation) and Courtenay House Pty Limited (in liquidation) [2019] NSWSC 1113

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Courtenay House Capital Trading Group Pty Limited (in liquidation) and Courtenay House Pty Limited (in liquidation) [2019] NSWSC 1113 Hearing dates: 24 July 2019 Date of orders: 28 August 2019 Decision date: 28 August 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: The beneficial owners of the funds deposited in the Westpac Accounts are specified categories of investors. Catchwords: CORPORATIONS – unregistered managed investment scheme – winding up – application for directions justifying distribution of funds deposited by particular category of investors – whether funds deposited by investors in the category held on trust for them.

EQUITY – trusts – express trust – intention – where funds variously expressed to be "managed on behalf of investors" or "held on trust" – where inconsistent usage of such expressions.

EQUITY – trusts – Quistclose trust – where funds expressed to be used to make trades "on behalf of" investors – where funds not applied for that purpose – whether funds held on Quistclose trust.

EQUITY – trusts – Black v S Freedman & Co trust – where companies were operating a Ponzi scheme – where scheme fraudulent in character – whether funds held on Black v S Freedman & Co trust. Legislation Cited: - Corporations Act 2001 (Cth) Sch 2, s 90-15 - Trustee Act 1925 (NSW) s 63 Cases Cited: - Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) [2000] HCA 25; (2000) 202 CLR 588 - Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) [1978] HCA 45; (1978) 141 CLR 335 - Australian Securities and Investments Commission v Idylic Solutions Ltd [2009] NSWSC 1306; (2009) 76 ACSR 129 - Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 - Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105 - Brady v Stapleton [1952] HCA 62; (1952) 88 CLR 322 - Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 225 CLR 62 - Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 - Re BBY Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] NSWSC 346; (2018) 363 ALR 492 - Re Courtenay House Capital Trading Group Pty Limited (in liq) and Courtenay House Pty Limited (in liq) [2018] NSWSC 404; (2018) 125 ACSR 149 - Re French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; (2003) 59 NSWLR 361 - Re Magarey Farlam Lawyers Trust Accounts (No 3) [2007] SASC 9; (2007) 96 SASR 337 - Re MF Global Australia Ltd (in liq) (2012) NSWSC 994; (2012) 267 FLR 27 - Russell Gould Pty Ltd v Ramangkura [2014] NSWCA 310 - Salvo v New Tel Ltd [2005] NSWCA 281 - Sons of Gwalia Ltd (subject to deed of company arrangement) v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 - Wambo Coal Pty Ltd v Ariff [2007] NSWSC 589; (2007) 63 ACSR 429 Texts Cited: - J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (LexisNexis Butterworths, 7th ed, 2006) Category: Procedural and other rulings Parties: Said Jahani and John McInerney in their capacity as joint and several liquidators of Courtenay House Pty Limited (in liq) and Courtenay House Capital Trading Group Pty Limited (in liq) (First Plaintiff) Courtenay House Capital Trading Group Pty Ltd (in liquidation) (Second Plaintiff) Courtenay House Pty Limited (in liq) (Third Plaintiff) J P Melocco Pty Ltd (First Defendant) LifeSmart Trading Pty Ltd (Second Defendant) Peter Caron and Anke Seidlitz (Third Defendants) Ralph Del Vecchio (Fourth Defendant) Representation: Counsel: R Scruby SC/L E Hulmes (Plaintiffs) M A Izzo SC/B Michael (First Defendant) I R Pike SC/B Ng (Second Defendant) E L Beechey (Third Defendants) D Barlin (Fourth Defendant)