Hamer v Parity Partners Pty Ltd

In the case of Hamer v Parity Partners Pty Ltd, the applicants, presumably unitholders, sought the appointment of a receiver over the trust assets managed by Parity Partners, the trustee. The applicants alleged that the trustee was incompetent and that the trust assets were at risk due to mismanagement and breaches of duty. They argued that an independent and experienced receiver should be appointed to preserve the trust’s assets pending the determination of the investors' rights and entitlements. The legal issues before the court were whether the trustee was unfit to manage the trust and whether it was just and convenient to appoint a receiver without security over all assets held or purportedly held by the trustee.

The court found that the applicants had levelled numerous complaints against Parity Partners, but only one, related to the failure to provide unitholder tax statements, demonstrated substance. While some other complaints revealed a lack of attention and errors, the more serious allegations were not substantiated. The court was not satisfied that the case in favour of appointing a receiver was strong, that the drastic remedy of appointing a receiver was inappropriate, or that there was a convincing case that a receiver was necessary. The court considered that other remedies were likely to be perfectly adequate and effective. The court also noted that Parity Partners had offered to consent to orders involving additional directors being appointed and for the parties to give cross-undertakings, which the court did not interpret as a tacit concession that a receiver was appropriate.

The court dismissed the application for the appointment of a receiver and ordered that the parties be heard on the form of the orders and costs. This decision highlights the importance of substantiating allegations of mismanagement and the need for a strong case to be made for the appointment of a receiver.