Miric v Romanous; In the matter of JR & KK Pty Ltd

By Amended Statement of Claim filed on 11 December 2024 (“ASC”) in the 2020/302966 proceedings (“2020 Proceedings”), the Plaintiff, Ms Miric, initially sought declaratory relief and other orders in respect of a trust.

There is a degree of common ground as to the relevant factual background. JR and KK Pty Ltd (“Company”) is the trustee of the Vivid Investment Holdings Unit Trust (“Trust”) which was constituted on or about 4 March 2016. Ms Miric and the Defendant, Mr Romanous, are the directors of, and equal shareholders in, the Company; 50 units in the Trust were issued to each of Ms Miric and Mr Romanous on or about 4 March 2016; and no further units in the Trust have been issued. It is common ground that, by 2017, the property owned by the Trust was constituted solely by a property in Tasmania (“Turners Beach Property”), another property in New South Wales (“Edward St Property”) and funds in a bank account of $64,977.35 (“Bank Funds”). I address the parties’ pleaded cases and the relief sought as to trust assets below. It is common ground that irreconcilable differences have arisen between Ms Miric and Mr Romanous and that the Company is now unable to carry its functions under the Trust Deed (ASC [21]; Amended Defence (“AD”) [10]). That common ground has significant implications for the further proceedings that I address below.

Ms Miric reads her affidavit dated 31 March 2025 which refers to the involvement of Mr Romanous and Ms Miric’s former husband, Mr Kowaltschny, in a building business and to the circumstances in which the Company was established as the trustee of the Trust. Ms Miric contends, by way of assertion, that she was a lender in respect a development at the Turners Beach Property and the Edward St Property and was also a guarantor for a third party loan in respect of the Turners Beach Property. She refers to a subsequent deterioration in the business relationship between Mr Kowaltschny and Mr Romanous and to the dissolution of their business relationship and her subsequent separation from Mr Kowaltschny. Ms Miric refers to her joinder to proceedings in the Federal Circuit Court, apparently relating to property issues arising in a divorce between Mr and Mrs Romanous and to the commencement of these proceedings.

By a second affidavit dated 14 July 2025, Ms Miric refers to her expectation, when the Trust Deed was entered in March 2016, that she would be a beneficiary to the Trust, separate to Mr Kowaltschny, because she wished to “set up” her son for his future (Miric 14.7.25 [10]). She refers to aspects of the Turner Beach and Edward St projects. Ms Miric says she was informed, in October 2019, that a solicitor was drafting a separation agreement between Mr Kowaltschny and Mr Romanous but was not informed that she would be party to that agreement or that the agreement would involve the Trust (Miric 14.7.25 [23]). She refers to the circumstances in which she signed that agreement dated 29 October 2019 between Mr Romanous and Vivid Build Pty Ltd (“Vivid”), Mr Kowaltschny and Ms Miric (“Termination Agreement”) (Romanous 2.5.25, Annexure JFR 12, 96) and says that she did not read that agreement. She denies Mr Romanous’ evidence that he had made loans to the Trust or cash contributions to purchase land for the Trust and says she would not have signed the Termination Agreement if she had been told she would not receive any money from the Trust because of the terms of the Termination Agreement. I will address the terms of the Termination Agreement in dealing with Ms Miric’s claim to set part of it aside below.

Ms Miric was cross-examined. It is apparent that she had significant commercial experience, having not only been a director of the Company since March 2016, but also having worked in the property industry for 27 years; as a real estate agent for over 17 years; in property technology and data analytics with Fairfax Media and RP Data for 10 years; as a channel manager and then a senior account manager for other digital media companies for some seven years; and she fairly accepted that she had substantial commercial experience (T4). Ms Miric also accepted that she had reviewed some legal documentation in respect of the Turners Beach Property and was in charge of leasing the Edward St Property and that she was familiar “to an extent” with contractual agreements in the context of the real estate industry (T5). She acknowledged that she had been in a de facto relation with Mr Kowaltschny since 2009; she had married him on about 30 June 2019; and the difficulties which arose in their relationship were in the 12 month period in 2020 (T6), subsequent to execution of the Termination Agreement, that is in issue in these proceedings, in October 2019.

Ms Miric nonetheless maintained in cross-examination that the communications relating to the Termination Agreement took place between Mr Kowaltschny and a solicitor, Ms Youssef (T6); that evidence was inconsistent with the emails dated 25 and 26 October 2019 to which I refer below, and I do not accept Ms Miric’s evidence as to that matter. Ms Miric’s evidence was also that the termination of the business relationship between Mr Kowaltschny and Mr Romanous was “bitter” where they had been both business partners and friends; that evidence was plainly plausible but does not advance her claim that she did not engage with the terms of the Termination Agreement. Ms Miric’s evidence in cross-examination (T7) was also that she did not understand that the Termination Agreement would involve the Trust and that she was “just told to sign it”. That proposition is an essential aspect of Ms Miric’s present attack on the Termination Agreement, but I am not persuaded of its truth having regard to her commercial experience and her involvement in prior emails concerning the Termination Agreement.

Ms Miric also gave evidence in cross-examination, after indicating that she did not recall reading the earlier emails sent to the solicitor that (T7):

Mr Romanous reads several affidavits, significant parts of which were not admissible and were not admitted over objection. By his affidavit dated 6 September 2024, Mr Romanous refers to the settlement on the sale of the Turners Beach and Edward St properties. He contends that the Edward St Property was sold at a loss, not including interest and other costs incurred in building the residences. By a second affidavit dated 18 December 2024, Mr Romanous gave evidence relating to a creditor’s statutory demand (“Demand”) dated 18 December 2024, which I will address below. That evidence was admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) as evidence of purported verification of the Demand and not as proof of the asserted facts. In any case, that affidavit did not verify, and it possibly could not have verified, that there was no genuine dispute to the amount claimed in the Demand.

By his affidavit dated 24 March 2025, Mr Romanous annexed a consent of liquidator of Ms Lott, and she subsequently confirmed that she also consented to appointment as receiver of the Trust assets. Mr Romanous has also executed a Deed of Indemnity and Guarantee in favour of Ms Lott, by which Mr Romanous guarantees payment of fees rendered by Ms Lott while acting as liquidator of the Company to a maximum amount of $30,000 plus GST (Ex D3). For completeness, the Company is purportedly party to that Deed but has not executed it. That indemnity and guarantee confirm that Ms Lott would be sufficiently funded, as liquidator, to conduct at least basic investigations of the Company’s affairs, which may well be sufficient to bring about a proper distribution of its remaining assets.

By a further affidavit also dated 24 March 2025, Mr Romanous gave evidence of service of the Demand upon Ms Miric, by email and by registered post. Mr Allen, who appears for Ms Miric, rightly pointed out that Mr Romanous had not led evidence that he had lodged a Form 519 notification of winding up with the Australian Securities and Investments Commission (“ASIC”) or published notice of the winding up application on ASIC’s insolvency website. I am satisfied that I should dispense with the requirements for the lodgement of the Form 519 and for publication in the relevant circumstances, where the liquidators’ investigations will likely identify any other creditors of the Company and the Trust.

By his affidavit dated 3 August 2025, Mr Romanous denies that Ms Miric had a conversation with him informing him of any intent to set up her son for his future. He refers to his having organised finance for the purchase of the Turners Beach Property by the Company including a loan in respect of the Turners Beach Property and a loan facility through National Australia Bank. Mr Romanous refers to a conversation between him and Mr Kowaltschny in the second half of 2019, when Mr Kowaltschny informed him that Ms Miric and Mr Kowaltschny wanted to take over full ownership of the construction business conducted by Vivid and Mr Romanous said he wanted to take over the Edward St Property. Mr Romanous also refers to the circumstances in which the Termination Agreement was executed. His evidence is that Mr Gerges, an accountant, read the entire Termination Agreement out loud at the relevant meeting and asked if, inter alia, Ms Miric had any questions and that Mr Kowaltschny, Ms Miric and Mr Romanous confirmed they had all read the Termination Agreement and had understood it.

Mr Romanous was also cross-examined and readily accepted that he had not personally taken any steps to explain the Termination Agreement to Ms Miric. He contended that, contrary to Ms Miric’s evidence, the meeting at which the Termination Agreement was executed lasted no more than a half an hour, rather than ten minutes; and that the accountant, Mr Gerges, read out the Termination Agreement in full. I am not persuaded by that evidence, given the length of that agreement, but little turns on it where reading out the Termination Agreement would not have amounted to an explanation of its operation. Mr Romanous readily accepted that the Trust then owned the relevant properties and was deriving rental income from them, although little turned on that evidence which did not address the corresponding liabilities or net asset or income position of the Trust. Mr Romanous also readily accepted that he had taken no steps prior to 29 October 2019, when the Termination Agreement was signed, to inform Ms Miric of the financial circumstances of the Trust and that Mr Kowaltschny was interested in receiving the shares in Vivid because it was the holder of a building licence (T30). It does not, of course, follow that Ms Miric was not aware of the financial circumstances of the Company, whatever they might have been, or that it was disadvantageous for Mr Kowaltschny and Ms Miric to acquire the shares in Vivid so as to allow Mr Kowaltschny to continue to conduct its business for their common benefit.

Ms Miric had initially sought declarations that the proceeds of the sale of the Turners Beach Property (“Turners Beach Proceeds”) constitute income to the Trust and that she and Mr Romanous are holders of 50% of the units in the Trust and are entitled to 50% of the Turners Beach Proceeds in a trust account of a solicitors’ firm. It is common ground that the Turners Beach Property was sold for $1,560,000 between May and June 2020 and the net proceeds of sale were $321,980.49 (ASC [12]–[13], AD [3]). Ms Miric contends, and Mr Romanous does not admit, that the Turners Beach Proceeds constitute income or, alternatively, capital of the Trust. Ms Miric rightly did not press the application for those declarations. I likely would not have made the first declaration where the amount of the Turners Beach Proceeds would merely be the starting point for the assessment of creditors’ claims against the Trust so as to determine any amount available for a distribution to unitholders. I would likely not have made the second declaration where it does not take account of liabilities of the Trust, and it is not apparent that unitholders in the Trust are entitled to proceeds of the sale of a particular property in priority to any right of indemnity of the Company and any claims of creditors.

Ms Miric initially sought a corresponding declaration and order in respect of the proceeds of sale of a property at Sylvania (“Edward St Proceeds”). It is common ground that, on 10 October 2020, the Edward St Property was sold for $1,675,000 and the proceeds of the sale were anticipated, when the proceedings were commenced, to be approximately $691,000. The parties did not subsequently plead the actual sale proceeds of that property. Ms Miric did not press the application for those directions which I likely would not have made for the same reasons I would not have done so as to the Turners Beach Property.

Ms Miric also initially contended, and Mr Romanous does not admit, that the Bank Funds constitute income or capital of the Trust (ASC [11]; AD [2]) and sought an order that Mr Romanous do all things necessary to transfer half of the monies held in a specified account to her. Mr Miric rightly did not press that claim for relief, which I likely would not have ordered where the money on that account is property of the Trust; a liquidator will be appointed to the Company and a receiver appointed to Trust assets in parallel proceedings; and the Company, by right of indemnity, and trust creditors would have priority to any claims of Ms Miric as unitholder to funds held in that account.

Ms Miric also initially sought an order that the Trust be determined but did not press that claim at the hearing; Mr Romanous responds that the Trust was terminated by the parties by the Termination Agreement on 29 October 2019 (ASC [24]; AD [13]). Ms Miric pleaded, and Mr Romanous does not admit, the circumstances in which the Termination Agreement was signed.

Ms Miric initially contended that a release of her claim to a distribution from the Trust in the Termination Agreement was not enforceable in equity, by reason of lack of intent to release her rights, and at law, by reason of lack of consideration. She also rightly did not press those claims at the hearing. I would likely not have granted relief on the first basis, where Ms Miric’s asserted lack of subjective intention to grant the releases given by the Termination Agreement which she executed does not, without more, provide a basis for equitable relief from that agreement where no other element amounting to, for example, unconscionability is pleaded or established. I would likely not have granted relief on the second basis, where Mr Romanous gave consideration under the Termination Agreement by promising to transfer, and then transferring, the shares in Vivid to Ms Miric and Mr Kowaltschny and by promising to assist Vivid in specified ways.

Mr Miric also contended that the Termination Agreement was unjust within the meaning of s 9 of the Contracts Review Act 1980 (NSW) (“CRA”) and sought an order that it be varied by setting aside or refusing to enforce cll 5.6.4 and 5.6.5 of that agreement. She pressed that claim at the hearing, and Mr Allen sought to expand that claim to the whole of cll 5.6 of the Termination Agreement.

Before turning to the Termination Agreement, I should first note the evidence of prior correspondence as to its terms. On 25 October 2019, Ms Miric sent Ms Youssef, a solicitor who was acting for her and Mr Kowaltschny, an email (Ex D1) which forwarded an email from Mr Kowaltschny to Ms Miric that outlined the terms which the parties had agreed should be contained in the Termination Agreement, including that Mr Romanous was to transfer 5683 shares in Vivid to each of Mr Kowaltschny and Ms Miric; he was to step down as director and secretary of Vivid and undertake specified obligations as to that company’s continued operation; all properties held by the Trust were to be sold and “[o]nce all properties have been sold the Trust is to dissolve”; the remaining funds in the Trust’s bank account were to be transferred to Mr Romanous; and Ms Miric “has surrendered her right to any profit or property claims in lieu of [sic] the sale of Vivid Built Pty Ltd”. In cross-examination, Ms Miric denied having read that email before forwarding it to Ms Youssef. Having regard to the extent of Ms Miric’s commercial experience and the significance of the transaction, I am unable to accept her evidence in that respect.

On 26 October 2019, Ms Youssef responded to Ms Miric’s email providing instructions as to the terms of the Termination Agreement and forwarded a draft Termination Agreement to Ms Miric in Word format and also noted that some details of the corporate vehicles would need to be inserted by Ms Miric before the Termination Agreement was finalised. Again, I am not persuaded that Ms Miric left Mr Kowaltschny to deal with those matters to her exclusion.

The Termination Agreement between Mr Romanous, Vivid, Mr Kowaltschny and Ms Miric was then executed at a meeting on 29 October 2019, which was also attended by an accountant, Mr Gerges. Neither Vivid nor Mr Kowaltschny have been joined as party to these proceedings. The Termination Agreement recites that the parties are bound by a contract dated 1 June 2015 and propose to terminate that contract. Clause 1 of the Termination Agreement provides for termination and cancellation of that contract effective on 29 October 2019, the date of the Termination Agreement. Clause 2 provides that, in addition to his agreement to cancel and terminate the partnership agreement (which is presumably the contract referred to), Mr Romanous will provide specified consideration, including the transfer of shares in Vivid to Mr Kowaltschny and Ms Miric and doing all things necessary and signing all required documentation to remove himself as director and secretary of Vivid, and he will remain the qualified supervisor of Vivid until 30 June 2020 or until Vivid engages another qualified supervisor, with no fee to be charged for that role. Clause 3 provides for Vivid to provide specified consideration and cl 4 provides for Mr Kowaltschny and Ms Miric to provide specified consideration.

Clause 5 provides for an agreement as to the distribution of the Trust, referring to the sale of the Edward St Property, the sale of the Turners Beach Property and the transfer of another property in Edward St from the Trust to Mr Romanous, after he has obtained suitable finance for its purchase; the dissolution of the Trust on the sale of the properties, with the distribution of the surplus sale proceeds in specified amounts, including a substantial payment to a third party who is also not party to these proceedings. By cll 5.6.4 and 5.6.5 of the Termination Agreement, which Ms Miric now challenges, she released her right under cl 25 of the Trust Deed to receive a pro rata distribution from the Trust upon the winding up of the Trust. Clause 6 contains an acknowledgement that the consideration provided by each party is “fair just and reasonable” and cl 7 contains a release.

By letter dated 17 December 2019 (Romanous 2.5.25, Annexure JFR 12, 104), after the Termination Agreement was executed, Ms Youssef (the solicitor who had acted for Mr Kowaltschny and Ms Miric in drafting that agreement) wrote to Mr Romanous on behalf of Mr Kowaltschny, Ms Miric and Vivid and indicated that she had also been instructed to act for Ms Miric in respect of her interest in the Company. She there referred to execution of the Termination Agreement by Mr Romanous and contended that Mr Romanous had breached that agreement. She also referred to payments made by Mr Kowaltschny and Ms Miric under the Termination Agreement and to steps taken by them in compliance with that Termination Agreement. She also addressed the position in respect of the sale of the Edward St Property and referred to alleged “threatening behaviour” by Mr Romanous. It is notable that Mr Kowaltschny and Ms Miric there relied on the terms of the Termination Agreement, rather than Ms Miric asserting its invalidity, in whole or in part. I recognise that, in cross-examination, Ms Miric attributed that letter Mr Kowaltschny. It is not necessary to reach any credit finding as to her evidence in that respect in order to determine these proceedings.

I now turn to the applicable principles and I have here drawn in part on my judgment in Mitchell v Gibbins [2024] NSWSC 1524 for the summary of those principles. Section 7(1) of the CRA relevantly provides that:

In West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620 (“West v AGC (Advances)”), McHugh JA observed that a contract may be unjust, for the purposes of s 7(1) of the CRA, in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both. In Kowalczuk v Aecom Finance Pty Ltd (2008) 77 NSWLR 205; [2008] NSWCA 343 at [86], Campbell JA (with whom Hodgson and McColl JJA agreed) similarly observed, by reference to authority, that a contract could be unjust by reason of substantive injustice, because its terms, consequences or effects were unjust, or because of procedural injustice, by reason of the unfairness of the methods used to make it. His Honour noted that two distinct steps are involved in applying the CRA, the first being to determine whether the contract was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9 of the CRA, and involving a broadly based value judgment, and the second being whether any relief should be granted, and what that relief should be.

In Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7], Allsop P (as his Honour then was) in turn summarised the evaluation involved in determining whether relief should be allowed under the CRA as follows:

Section 9(2) of the CRA directs the Court to have regard to specified matters to the extent they are relevant to the circumstances, without affecting the generality of s 9(1) of the CRA. In West v AGC (Advances) at 621, McHugh JA noted that the provisions of s 9(2) of the CRA do not exhaustively indicate the criteria that may be taken into account in determining whether a contract or any of its provisions are unjust, and the Court is entitled to have regard to all the circumstances of the case, subject to s 9(4) of the CRA, and the public interest; and a similar view was expressed in Spina v Permanent Custodians Ltd [2009] NSWCA 206 at [105].

The first matter specified in s 9(2)(a) of the CRA is whether or not there was any material inequality in bargaining power between the parties to the contract. I am not persuaded there was any such inequality at the time of entry into the Termination Agreement, and I have addressed Ms Miric’s claimed lack of involvement in negotiations toward the Termination Agreement above. The second and third matters specified in ss 9(2)(b)–(c) of the CRA are whether or not, prior to or at the time the contract was made, its provisions were the subject of negotiation, and whether or not it was reasonably practicable for the party seeking relief under the CRA to negotiate for the alteration of or to reject any of the provisions of the contract. I accept that the Termination Agreement was not the subject of negotiation by Ms Miric, although she at least conveyed its essential terms to the solicitor who drafted it. The fourth matter specified in s 9(2)(d) of the CRA is whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract. That is not established here because any distribution of trust assets on termination of the Trust would need to allocate assets between the parties and the Termination Agreement here allocated the shares in Vivid, which undertook the construction business, to Mr Kowaltschny and Ms Miric and other assets to Mr Romanos. There is no evidence that allocation was unreasonable.

The fifth and sixth matters specified in s 9(2)(e)–(f) of the CRA are, relevantly, whether or not any party to the contract (other than a corporation) was not reasonably able to protect his or her interests because of his or her age or the state of his or her physical or mental capacity; and the relative economic circumstances, educational background and literacy of the parties to the contract (other than a corporation). The seventh matter specified in s 9(2)(g) of the CRA is, where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed. There is no basis to think that Ms Miric could not have protected her interests or understood the Termination Agreement had she taken steps to do so. There were no difficulties with the intelligibility of form of the Termination Agreement for the purposes of s 9(2)(g) of the CRA, particularly given the depth of Ms Miric’s commercial experience.

The eighth matter specified in s 9(2)(h) of the CRA is whether or not and when independent legal or other expert advice was obtained by the party seeking relief under the CRA. The ninth matter specified in s 9(2)(i) of the CRA is the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under the CRA, and whether or not that party understood the provisions and their effect. I accept that Ms Miric did not have independent advice and, even if the lengthy Termination Agreement were read out loud, that would not provide an adequate explanation of its terms to Ms Miric, if she had not previously understood them. The tenth matter specified in s 9(2)(j) of the CRA is, relevantly, whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under the CRA by any other party to the contract. I should not reach such a finding against Mr Kowaltschny, where he was not joined and has no opportunity to be heard in respect of it, and I am not satisfied that that matter has been established against Mr Romanous.

Mr Douglas, who appears for Mr Romanous, also referred to the observations of Leeming JA in Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198, where his Honour observed (at [89]) that a case where a plaintiff “with a deal of commercial experience” sought to rescind an agreement which provided a valuable benefit to her, having, in that case, obtained accounting advice and successfully sought amendments to the agreement, was (at [225]) a “fair distance removed” from cases to which the CRA applies. I recognise that there is here evidence of Ms Miric’s substantial commercial experience, but no evidence that she obtained independent advice or made any attempt to negotiate the terms of the Termination Agreement to protect her personal interests.

I am not persuaded, as to the first step in an application under the CRA, that Ms Miric has established that the Termination Agreement (or cl 5.6 of it or only cll 5.6.4 and 5.6.5 of it) was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9 of the CRA or, as to the second step, that relief should be granted by either setting aside or varying that agreement after significant parts of it have been implemented, including by a transfer of shares in Vivid to Mr Kowaltschny and Ms Miric. There is here no valuation or other evidence to show that the transaction implemented by the Termination Agreement was unjust, so far as Ms Miric surrendered benefits from the Trust and received the transfer of shares in Vivid to her (and to Mr Kowaltschny) and commitments from Mr Romanous to provide assistance to that company. To the contrary, the relief now sought by Ms Miric would allow her to retain any benefit from the transfer of the shares to her and from any services provided by Mr Romanous, while depriving Mr Romanous of the benefit for which he had contracted under that agreement. I am not persuaded that I should make orders that, in effect, alter the operation of one aspect of the Termination Agreement in Ms Miric’s favour without any compensatory adjustment in the corresponding benefits and detriments incurred by other parties to that agreement.

For completeness, I noted that Mr Kowaltschny and Vivid are parties to the Termination Agreement but were not joined in the proceedings and have not had an opportunity to be heard. Where I have declined relief on other grounds, it is not necessary to decide whether their rights would be directly affected by the relief sought so that the Court not only should not, but arguably could not, grant that relief where they were not joined as party: News Ltd v Australian Rugby Football League Ltd (1996) 139 ALR 193 at 298–299; John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131]–[132]. Mr Allen here drew attention to Mizzi v Reliance Financial Services Pty Ltd [2007] NSWSC 37 at [81], where Brereton J referred to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 6.23 as authorising the determination of the issues in proceedings despite the non-joinder of a party, although a person who has not been joined and was affected by the orders made in the proceedings would then be entitled to have the orders set aside. I need not determine this question where I would not make the orders sought by Ms Miric under the CRA in any event.

Ms Miric also sought a declaration that upon payment of the specified amounts, the Trust is thereby determined. That order should not be made, both because its premise will not be established where orders will not be made for payment of those amounts in those terms; and that order would not permit the payment of trust creditors or the Company’s right of indemnity, including as to the liquidator’s costs incurred in respect of the Trust. Ms Miric did not identify a basis on which the Court could “determine” the trust in any event.

Ms Miric sought an order under Part 46 rules 3 and 4 of the UCPR that the Third Defendant provide an account to the Court of the affairs of the Trust. There is presently no Third Defendant in the proceedings and Mr Allen sought to vary and expand the terms of that relief in submissions, and to have the order for an account made against Mr Romanous. Rules 46.3–46.4 of the UCPR provide that the Court may make orders for the taking of an account or the making of any inquiry and give direction concerning the taking of the account. I recognise that, in equity, in an accounting in common form, the trustee must account for what had actually been received and disposed of from the trust and the beneficiaries may challenge the accounting by asserting that more was received or less was disposed of, and, in an account on the basis of wilful default, the trustee must also account for what should have been received if its duties had been properly discharged: White v Thompson [2011] NSWCA 161 at [44]ff.

Mr Douglas submits that the Court should not order an account, where that would delay a winding up of the Company, and both Mr Romanous and Ms Miric accept that the Company should be wound up on just and equitable grounds. He responds to Mr Allen’s submissions that a liquidator would have no knowledge of the Company’s affairs by pointing to a liquidator’s independence and professional obligations. It seems to me that, here, the advantage of an independent investigation by a liquidator and receiver appointed to the Trust assets significantly outweighs any disadvantage arising from lack of previous familiarity with the Company’s affairs. Mr Douglas also recognises the possibility that the Court could appoint the liquidator as receiver of the assets, property and undertaking of the Trust and I will make that order below.

It is here not apparent why Mr Romanous, rather than the Company, which is the trustee of the Trust and of which he and Mr Miric are directors, should be the subject of any order for an account. It is also not apparent that the Company could practically give such an account, where Mr Romanous and Ms Miric are likely to be in dispute as to its content. It is also not apparent that such an account would have any useful purpose where the Company is to be wound up and a receiver is to be appointed to the Trust and her inquiries will likely address the same matters as would be addressed in any account. I will therefore not make the order that is sought for an account.

By Amended Originating Process dated 2 May 2025, Mr Romanous applies to wind up the Company in insolvency, relying on its failure to comply with Demand or alternatively on the just and equitable ground. I will briefly deal with the winding up sought by reference to the Demand, which is of limited significance where the Company plainly should be wound up on the just and equitable ground.

The Demand claimed the amount of $928,489.74 by reference to an amount described in the schedule, which referred to several loans that Mr Romanous claimed to have made to Company on 11 April 2016, 28 June 2016, 28 September 2017, 4 October 2017, 12 December 2017 and in 2015–2016. Importantly, the supporting affidavit dated 18 December 2024 did not contain any statement as to the absence of a genuine dispute as to the amount claimed in the Demand, and I will find below that that is sufficient basis not to make a winding up order on the basis of that Demand. By an affidavit dated 22 January 2025 in support of the winding up application, Mr Romanous referred to service of the winding up application and confirmed that no payments had been made by the Company in respect of the debt.

Mr Romanous also relies on his affidavit dated 2 May 2025 in support of the winding up application. He there refers to a first loan alleged to have been made in respect of properties situated in regional New South Wales, a second loan said to have been made in respect of the Turners Beach Property and the financing of the Edward St Property. Again, significant parts of that affidavit were inadmissible and were not admitted over objection.

Ms Miric, by her notice of appearance, contends that the Court should not act on the Demand when Ms Miric did not have standing to set aside the Demand. I do not accept that submission, where it was open to Ms Miric to seek derivative leave to bring an application in the Company’s name to set aside the Demand. Such applications are often made and granted. Second, Ms Miric there contends that the winding up proceedings are an abuse of process, on the basis that Mr Romanous knows that Ms Miric disputes the alleged debt. I accept that the disputed character of the debt, and an associated defect in the Demand, provides sufficient reason not to make the winding up order on the basis of the Demand. Ms Miric also there contends that a winding up order should not be made because Mr Romanous has sought to wind up the Company in order to frustrate Ms Miric’s claim in the 2020 Proceedings. I do not accept that submission, where, whatever Mr Romanous’ original intent, the winding up proceedings and the 2020 Proceedings were listed at the same time and a winding up application will bring about an orderly liquidation of the Company and, on the appointment of the liquidator as receiver of the trust assets, the winding up of the Trust.

As I noted above, Mr Romanous’ supporting affidavit in support of the Demand did not contain any statement as to the absence of a genuine dispute as to the amount claimed in the Demand. The knowledge of a person who swears an affidavit in support of the statutory demand provides a filtering mechanism to prevent unwarranted demands, and a failure of a creditor to verify that there is no genuine dispute regarding the debt would generally warrant an order setting aside a statutory demand under s 459J(1)(b) of the Corporations Act 2001 (Cth) (“Act”): Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262. The absence of such verification here would have been sufficient basis not to make a winding up order on the basis of that Demand.

However, as I noted above, it is common ground in the 2020 proceedings that irreconcilable differences have arisen between Ms Miric and Mr Romanous and that the Company is now unable to carry its functions under the Trust Deed (ASC [21]; AD [10]). Mr Romanous also seeks a winding up order on the just and equitable ground and I here draw on my summary of the applicable principles in Re Gerringong Storage Pty Ltd [2025] NSWSC 302 at [190]ff.

The "just and equitable" ground for winding up a company in s 461(1)(k) of the Act is not limited by particular categories: Re CNPR Ltd [2018] NSWSC 989 at [8]; Re Spitfire Q Pty Ltd [2021] NSWSC 866 at [12]. Where a company was established on a basis of relationships of mutual confidence, a winding up order may be made on the just and equitable ground under s 461(1)(k) of the Act where irreconcilable differences emerge between its members: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 (“Fexuto”) at [89]; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 at [97]–[98] (“Nassar”). The circumstances in which the Court may make a winding up order under s 461(1)(k) of the Act also include circumstances where the substratum of the company has failed: Re Catombal Investments Pty Ltd [2012] NSWSC 775 at [19]ff.

In Read-Zorn v Origin Distillers Group Pty Ltd [2023] FCA 280 at [19]–[23], Jackman J summarised the applicable principles as follows:

In Haycraft v AF1 Services Pty Ltd (2023) 168 ACSR 489; [2023] FCA 774 at [73]ff, Stewart J observed that:

Section 467(4) of the Act applies where a winding up order is sought on the just and equitable ground and requires the Court to have regard to the availability of some other remedy and whether a plaintiff would be acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy. However, there is no absolute rule that the Court will not wind up a solvent company, although winding up is a last resort: Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914 at [76]; Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd (2018) 125 ACSR 227; [2018] QCA 048 at [46]; Snell v Glatis (No 2) [2020] NSWCA 166 at [6]. I am satisfied that an order to wind up the Company on just and equitable grounds is properly made here given the failure of the relationship between Ms Miric and Mr Romanous and the need to investigate, get in and distribute the Company’s and Trust’s assets in a manner that the parties plainly cannot achieve for themselves.

Section 67 of the Supreme Court Act 1970 (NSW) provides that the Court may, at any stage of the proceedings, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient to do so, and there are many cases in which the Courts have made such an appointment in favour of a liquidator appointed to a trustee company in respect of trust assets. That appointment can be made on the basis of a former trustee’s right of indemnity and exoneration in respect of trust assets, which is available even where a trustee’s office is vacated by reason of the appointment of a liquidator to the trustee company: Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FLR 17; (2014) 103 ACSR 401; [2014] NSWSC 1484; Re Double Bay Property Management Pty Ltd (in liq) [2020] NSWSC 203; Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866; Re Munja Bakehouse Pty Ltd [2024] NSWSC 6 at [30].

The Trust Deed for the Trust is annexed to Ms Miric’s first affidavit of the 31 March 2025. Mr Douglas fairly points out that the Trust Deed does not have a provision that automatically terminates the appointment of the Company as trustee of the Trust on the appointment of a liquidator. That does not prevent the appointment of a liquidator appointed to the Company as receiver of the Trust’s assets, where the powers conferred on a liquidator under s 477 of the Act would likely not extend to trust assets. I will appoint the liquidator appointed to the Company as receiver to Trust assets to allow her to realise and distribute the Trust assets to creditors and unitholders.

Both parties have substantially failed in obtaining significant parts of the relief they sought in the two proceedings and there should be no order as to the costs of the proceedings. I will reserve liberty to a party would contends for a different costs order to apply within seven days, although such an application might well amount to a further waste of costs for the parties.

For these reasons, I order that: