Fordyce v Ryan

Case [2016] QSC 307

SUPREME COURT OF QUEENSLAND

CITATION:

Fordyce v Ryan & Anor; Fordyce v Quinn & Anor [2016] QSC 307

PARTIES:

ANN FORDYCE AS TRUSTEE IN BANKRUPTCY OF MICHAEL MORRISON QUINN

(applicant)

v
TMOTHY JOHN RYAN AS TRUSTEE OF THE RYAN FAMILY TRUST

(first respondent)
and
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
(second respondent)

AND

ANN FORDYCE AS TRUSTEE IN BANKRUPTCY OF MICHAEL MORRISON QUINN

(applicant)

v
SEAN MICHAEL MORRISON QUINN

(first respondent)
and
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
(second respondent)

FILE NOS:

No 8893 of 2016

No 8889 of 2016

DIVISION:

Trial

PROCEEDING:

Applications

DELIVERED ON:

20 December 2016

DELIVERED AT:

Brisbane

HEARING DATE:

20 September 2016, further submissions 22 September 2016

JUDGE:

Jackson J

ORDER:

The applications are dismissed.

CATCHWORDS:

BANKRUPTCY – ADMINISTRATION OF PROPERTY – PROPERTY AVAILABLE FOR PAYMENT OF DEBTS – PROPERTY DIVISIBLE AMONGST CREDITORS – PROPERTY BELONGING TO OR VESTED IN BANKRUPT AT COMMENCEMENT OF BANKRUPTCY – where the bankrupt was a general beneficiary under a purely discretionary trust, was the director of the trustee company and had been the only beneficiary to receive distributions from the trust – where the trustee in bankruptcy applied to appoint a receiver for the relevant trusts with power to “wind up” the trusts – whether the bankrupt’s right as a general beneficiary under a discretionary trust was “property” within the meaning of the Bankruptcy Act 1966 (Cth) that vested in the trustee in bankruptcy – whether the trustee in bankruptcy otherwise had standing to bring the application

EQUITY – TRUSTS AND TRUSTEES – GENERALLY – where each of the relevant trusts lacked a trustee – where the trustee in bankruptcy applied to appoint a receiver for the relevant trusts with power to wind up the trusts – where the applicant proposed to appoint experienced liquidators as receivers in circumstances where there were limited trust assets and it was not suggested that complex management was required – whether a receiver should be appointed with power to wind up the trusts

Bankruptcy Act 1966 (Cth), s 5, s 58

Civil Proceedings Act 2011 (Qld), s 12

Ashrafinia v Ashrafinia [2014] NSWCA 676, approved
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63, cited
Australian Securities and Investments Commission v Carey (No 6) (2006) 153 FCR 509; [2006] FCA 814, considered
Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247; [1998] HCA 49, cited
Colton v Colton (1888) 127 US 300, cited
Dwyer v Ross (1992) 34 FCR 463, approved
Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547, cited
Holmes v Penney (1856) 3 K&J 90; 69 ER 1035, considered
Horwath Corporate Pty Ltd v Huie (1999) 32 ACSR 413; [1999] NSWSC 583, considered
Jackson v Sterling Industries Ltd (1987) 162 CLR 612; [1987] HCA 23, cited
Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56, distinguished
Lewis v…

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AGLC
Fordyce v Ryan [2016] QSC 307
Case
[2016] QSC 307
Decision Date

CaseChat Overview and Summary

The matter of Fordyce v Ryan involved the administration of property under the Bankruptcy Act 1966 (Cth) and the relevant equitable principles concerning discretionary trusts. The bankrupt, Fordyce, was a general beneficiary under a discretionary trust, which was managed by a trustee company of which Fordyce was also the director. The trustee in bankruptcy applied to appoint a receiver for the trusts with the power to wind up the trusts. The primary legal issues were whether the bankrupt's right as a general beneficiary under a discretionary trust constituted "property" within the meaning of the Bankruptcy Act, and if the trustee in bankruptcy had standing to bring the application.

The court considered the nature of the bankrupt’s interest in the discretionary trusts, noting that the bankrupt had been the sole beneficiary to receive distributions from the trusts. The court examined whether such an interest, being purely discretionary, constituted property that vested in the trustee in bankruptcy. It was also necessary to determine if the trustee in bankruptcy had standing to bring the application given the lack of a trustee for the trusts. The court concluded that the bankrupt's interest in the discretionary trusts was not property within the meaning of the Act, as it was contingent and not a vested interest. Furthermore, the court found that the trustee in bankruptcy did not have standing to bring the application because the trusts were effectively unadministered due to the absence of a trustee.

Based on these findings, the court dismissed the applications brought by the trustee in bankruptcy. The court held that the bankrupt's interest in the discretionary trusts did not vest in the trustee, and therefore, there was no property available for the payment of debts. Additionally, the court determined that the trustee in bankruptcy lacked the necessary standing to appoint a receiver with the power to wind up the trusts.

Orders

Orders of the court

The applications are dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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