Condon wins property sale proceeds despite court's refusal to brand trust a sham

More red carpet than the Academy Awards after a massacre.
The Robson Road Kenthurst property.
Photo: LJ Hooker

TRUSTEE in bankruptcy Schon Condon has won the right to almost a million dollars in property sale proceeds after the Federal Court ruled that bankrupt Colleen Anne Lewis (Rayhill) is a creditor of a discretionary trust, despite the trust's current trustee arguing she has no interest.

The judgement of Justice Jayne Jagot can be read in full at: Condon (Trustee), in the matter of Colleen Rayhill (Bankrupt) v Truthful Endeavour Pty Ltd. It represents a potentially encouraging outcome for trustees in bankruptcy and creditors who find themselves frustrated by the courts' general reluctance to rule that a trust is a sham or was created specifically to defeat creditors.

The ruling also suggests that submissions in separate proceedings that Condon has been harassing the Lewis family, also known as the Rayhill family, were given short shrift by Justice Jagot.

At the heart of Condon's application was the view that he, as trustee in bankruptcy of the estate of Colleen Lewis (Rayhill), was entitled to funds he alleged she used to buy a sprawling property on Robson Road, Kenthurst in Sydney's north west which was later sold.

Robson Road Kenthurst.
Photo: LJ Hooker

Purchased in 2001 for $1.7 million, the property was an asset of the Kenthurst Investment Trust. Condon has been arguing that payments the bankrupt made in relation to the Robson Road mansion substantially exceeded the eventual sale price and that the excess should pass to himself as trustee in bankruptcy.

The Kenthurst Investment Trust's current trustee is Truthful Endeavour, the respondent in these proceedings and a company connected to Louise Lewis, one of the bankrupt's daughters.  Previously, the bankrupt had been trustee of the Kenthurst Investment Trust.

Truthful Endeavour rejected Condon's claim that the bankrupt had made the payments, arguing that they were made by three companies and if there was a creditor to the trust it is the companies and not Colleen Lewis.

Further, Truthful Endeavour argued that Condon was estopped from bringing the proceedings, given earlier hearings in the Supreme Court.

Whilst declining to rule that the trust was a sham, Justice Jagot rejected the respondent's arguments, finding that Colleen Lewis is a creditor of the trust, that Condon was not estopped and that the bankrupt's entitlement to a portion of the Robson Road sale proceeds therefore vests with Condon.

The judge ordered that the proceeds be transferred to Condon and that Truthful Endeavour pay his costs. Calls to the respondent's solicitor Bruce Dennis seeking to determine if his client would appeal were not returned.

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