Background
Binah Constructions, a builder, contracted with Sunnice Pty Ltd, a property developer, to construct a major residential development (the Babylon project) of 364 apartments at Terry Road, Rouse Hill, NSW, for $133.3 million. Works commenced in March 2023. Binah claimed performance defects and obtained a judgment for $3,567,037.63 against Sunnice under the Building and Construction Industry Security of Payment Act 1999 (NSW) on 12 June 2026.
By late 2025, Sunnice faced financial crisis. It was unable to exercise its call option to acquire the underlying land (held in trust by Denvell as trustee of the Tsai Family Trust) due to inability to pay stamp duty and other costs. Major lenders—including the project financier Indigo, Denvell, and Mr Tsai Senior—demanded repayment of approximately $21 million in loans in December 2025. On 22 December 2025, Sunnice entered into a Deed of Settlement and Release under which it agreed to release all claims against Denvell in exchange for being appointed as co-trustee of the trust holding the land. This allowed Sunnice to settle its pre-existing sales contracts with apartment purchasers (entered into in its personal capacity) and direct net proceeds to repay the Indigo financing, but left Sunnice with no assets to satisfy Binah’s judgment.
Binah obtained an ex parte freezing order on 18 June 2026. The order was varied to permit Sunnice to complete certain sales, and the matter came before Hmelnitsky J for determination of whether the order should be continued.
The Court’s Holding
Justice Hmelnitsky held that the freezing order should be continued but modified. Although Binah’s judgment claim arose from the Building Contract (entered before Sunnice became a trustee) and does not relate to trust administration, the court found the Deed of Settlement and Release raised serious concerns. The deed had the effect of positioning Sunnice to satisfy all claims against it—to purchasers, to Indigo, to the family trust lenders—while leaving no assets whatever to meet Binah’s judgment. This structure invited scrutiny under s 37A of the Conveyancing Act 1919 (NSW), which allows courts to set aside deeds if they prejudice creditors.
The court doubted Sunnice’s submission that it held no valuable rights at the time of the deed. Contemporaneous evidence from Denvell’s own solicitors in December 2025 asserted that the call option remained alive (extended to 9 May 2026), contradicting Sunnice’s later claim that it had expired. Sunnice had issued a tax invoice to Denvell for development costs, suggesting it believed itself entitled to payment. The court found these inconsistencies left genuine doubt about whether Sunnice had truly relinquished all claims. The court also noted that no explanation was offered for how the substantial profits on the sales to date—apparently $150 million in gross realisations—had been accounted for.
The court rejected Sunnice’s proposal to transfer the remaining unsold apartments to a new trustee as part of refinancing. This transfer was not required by the lender; rather, it appeared designed to further fortify the claim that assets were beyond Binah’s reach. Allowing such a transfer would erode Sunnice’s ability to satisfy any judgment if Binah succeeded in setting aside the deed.
Key Takeaways
- A personal judgment against a trustee can survive the trustee’s subsequent appointment to a trust, if the claim arose before or outside the trustee’s fiduciary duties and does not relate to trust administration.
- Deeds that systematically eliminate a defendant’s assets available to all creditors except preferred ones may be challenged as unjust dealings under the Conveyancing Act s 37A, even where they purport to be consensual settlements.
- Trustees selling trust assets must ensure market-value pricing; selling below market or to related entities may signal an attempt to prefer certain creditors and attract court scrutiny.
- Courts will look beyond legal form to substance: becoming a trustee does not automatically insulate a person from personal judgments or eliminate the court’s power to prevent asset dissipation.
Why It Matters
This decision addresses a gap in creditor protection where defendants use trust restructuring to shield assets. Property developers and contractors should note that obtaining a judgment does not automatically evaporate merely because the defendant later becomes a trustee. Courts will police deeds of settlement that appear designed to frustrate recovery, particularly where the timing and structure raise inference of opportunism. The judgment also underscores that refinancings and trust transfers will not escape scrutiny if they lack genuine commercial rationale and primarily serve to place assets beyond reach. For secured lenders like Indigo, the case confirms that while their interests may be protected, courts will not permit trust restructuring simply to manufacture a legal shield around junior creditors’ claims.
More broadly, the decision signals judicial willingness to set aside trust appointments and deeds that are facially valid but fail the equity’s smell test—where a defendant has engineered a situation in which it can pay every creditor except the judgment creditor. That approach protects the enforcement machinery of civil judgments against sophisticated avoidance strategies while respecting the legitimate role of trusts in family wealth structuring.