In the matter of KPD Knight Pty Ltd and KPD Portogallo Pty Ltd
[2020] VSC 253
•5 May 2020 (Ex tempore)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST - CORPORATIONS LIST
S ECI 2019 05442
IN THE MATTER OF KPD KNIGHT PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 142 784 816) and KPD PORTOGALLO PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 142 783 211)
| PAUL VARTELAS (IN HIS CAPACITY AS DEED ADMINISTRATOR OF BOTH KPD KNIGHT PTY LTD (ADMINISTRATOR APPOINTED) (ACN 142 784 816) AND KPD PORTOGALLO PTY LTD (ADMINISTRATOR APPOINTED) (ACN 142 783 211)) | First Plaintiff |
| and | |
| KPD KNIGHT PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 142 784 816) | Second Plaintiff |
| and | |
| KPD PORTGALLO PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 142 783 211) | Third Plaintiff |
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JUDGE: | Connock J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 May 2020 |
DATE OF RULING: | 5 May 2020 (Ex tempore) |
CASE MAY BE CITED AS: | In the matter of KPD Knight Pty Ltd and KPD Portogallo Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2020] VSC 253 |
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CORPORATIONS — Trustee company in administration — Trustee ceased to be trustee upon appointment of administrators — Trustee company subject to deed of company arrangement — Application by deed administrator for appointment as receiver and manager of business and assets of trust — Section 37 Supreme Court Act 1986 (Vic) — Rule 39.02 Supreme Court (General Civil Procedure Rules) 2015 (Vic) — Appointment of receiver without security.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | S Waldren | Comlaw |
HIS HONOUR:
Introduction and Summary
The first plaintiff, Mr Vartelas, is the deed administrator of deeds of arrangement entered into by each of the second plaintiff, KPD Knight, and the third plaintiff, KPD Portogallo (Trustee Companies). He was previously the administrator of each of the Trustee Companies.
The Trustee Companies were each effectively single purpose vehicles incorporated to facilitate the Knight and the Portogallo families undertaking a joint and equally funded property development on land at 16 Watton Street, Werribee, Victoria, that had been jointly purchased (Project). KPD Knight was trustee of the Knight Land Trust and KPD Portogallo was trustee of the Portogallo Land Trust (collectively, Land Trusts). The Project was to be undertaken by the Trustee Companies pursuant to what was described as a partnership of trusts agreement between the two Trustee Companies in that capacity.
Clause 17 of each of the relevant trust deeds provided, among other things, that the trustee would immediately cease to be a trustee upon the happening of various events. Relevantly, this included where an administrator was appointed to the trustee under the Corporations Act (Act). Because Mr Vartelas was appointed as administrator of each of the Trustee Companies on about 15 November 2018, they each ceased to be trustees of their respective trusts pursuant to the terms of the relevant trust deeds and became bare trustees. See, for example, Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd.[1]
[1](2018) 260 FCR 310 at [85], [142], [198].
Mr Vartelas and the Trustee Companies now apply by originating process for orders appointing Mr Vartelas without security as receiver and manager of the business and assets of each of the Land Trusts, together with related and consequential orders.
Mr Vartelas’ application for relief pursuant to s 1318 of the Act, referred to in paragraph 1 of the originating process, was not pressed and need not be addressed. That is without prejudice to Mr Vartelas’ right to bring a further application in this regard in due course should he choose to do so.
The application was supported by Mr Vartelas’ affidavit sworn 29 November 2019 and an affidavit of his solicitor, Mr Leonidas, sworn 17 December 2019. The plaintiff also relies upon his revised written submission of 27 February 2020 and a chronology filed shortly before that.
It is understood that the circumstances regarding the state of the development of the Project and the pending sales of units are such that it is at least desirable that this application be dealt with and determined expeditiously. The court has been assisted in this objective by being provided with detailed written submissions, the book of authorities, the chronology, and a court book in advance of the hearing. It is therefore proposed to deliver judgment ex tempore, stating briefly the reasons for my determination. Although the circumstances are currently such that it does not appear that more detailed reasons will be required, should circumstances change, this can be reviewed in the light of any change of circumstances at that time.
For the reasons that follow it is appropriate that Mr Vartelas be appointed as receiver and manager of the business and assets of each of the Land Trusts and that additional related orders to the effect sought be made.
Background
The background is set out at some length in the affidavits of Mr Vartelas and Mr Leonidas, and further addressed in the written submissions and the chronology, and I have had regard to all of this material. It is also referred to in some detail in Mr Vartelas’ administrator’s report of 12 December 2018. Although it is not necessary to recite all of the detail here, it is convenient to make brief mention of the following.
The trustees of the Land Trusts were established in that capacity for the purpose of participating in the Project. There is also evidence to the effect that all of the activities of the Trustee Companies and the Land Trusts have been in relation to the Project, with no activities being carried out by the Trustee Companies in their own right.
The Project encountered financial difficulty, which at least initially appears to have been connected with the nominated builder being placed into liquidation only six months after its appointment as builder, and at a time when only the basement of the development had been completed. Not long after, the ANZ Bank demanded repayment of a loan facility that was in the order of $10 million, resulting in the need for expenditure of substantial sums in an attempt to get the land to a position where it might be attractive to a new lender.
This was not without its own difficulties but ultimately a development rights agreement (DRA), was entered into on 7 June 2017 with Gold Road No 2 Pty Ltd (Gold Road). Michael Elliott was the Gold Road director and the main person with whom the Trustee Companies dealt.
For present purposes, the detail of the terms of the DRA are not particularly germane. Broadly speaking, the DRA contemplated the Trustee Companies remaining as registered proprietors of the land with the Project development being carried out by Gold Road and any profits from the sale of the units being returned to the Trustee Companies after payment of various expenses and other amounts, including development costs to Gold Road.
The DRA contained default and termination provisions. Events of default included the appointment of an administrator to the Trustee Companies. In this context it also provided for Gold Road to be entitled to purchase the land pursuant to a contract of sale that, together with an executed transfer of land and powers of attorney, was being held in escrow. The purchase price initially recorded in those documents was $3 million.
Gold Road was said to have had difficulty obtaining finance for the Project and in the circumstances referred to in Mr Vartelas’ affidavit and the documents exhibited to it, the contract of sale, transfer instrument and powers of attorney being held in escrow were released, and Gold Road subsequently became the registered proprietor of the land, which is recorded as having occurred on 20 February 2018. The instrument of transfer recorded a price of $1,500,000 and not $3 million.
To date, neither of these amounts has been paid in respect of the land and it appears that this is, or may become, the subject of dispute with Gold Road, noting also that there is correspondence between the parties in the evidence where the parties seek to expressly reserve their rights.
Gold Road subsequently mortgaged the land and mortgages in favour of Payton Securities Pty Ltd and Payton Capital Pty Ltd are recorded as having been registered on 20 February and 19 September 2018 respectively.
On 15 November 2018, Mr Vartelas was appointed as administrator of each of the Trustee Companies by resolutions of the directors made pursuant to s 436A of the Act. Creditors’ meetings were subsequently held and his appointment was confirmed.
On about 12 December 2018, Mr Vartelas’ report to creditors was provided and notice of the second meeting of creditors was given, which was to be held on 20 December 2018. The report included a list of unsecured creditors totalling $9,281,352.64, of which $7,560,000 was said to be debt owed to related parties from whom the Trustee Companies received initial funding for the Project.
The list of creditors also included an amount of $1,444,326.24 in respect of Evergrande Properties Pty Ltd (Evergrande), which the evidence suggested is a company associated with Mr Elliott. In December 2018, Evergrande was provided with a proof of debt form and by email of 17 December 2018, Mr Elliott was asked whether Evergrande would be lodging a proof of debt, to which he responded that it did not intend to. This email was received shortly before the second creditors’ meeting.
On 19 December 2018, Mr Elliott sent a letter to Mr Vartelas stating that Gold Road terminated the DRA.
On 20 December 2018, the creditors resolved to cause each of the Trustee Companies to enter into a deed of company arrangement. On 11 January 2019, the deed of company arrangement was executed, as was the creditors’ trust deed that was referred to in the deed of company arrangement.
On 30 July 2019, Mr Vartelas caused the Trustee Companies to lodge a caveat on the land on the basis that each was an unpaid vendor under the contract of sale that had been previously held in escrow. Subsequent correspondence was exchanged in relation to the caveat, which is not relevant for present purposes but which facilitated the sale and settlement of certain units so as to enable sale proceeds to be paid to the mortgagees.
Mr Vartelas is continuing to investigate whether the Land Trusts have claims or other rights against Gold Road or others in relation to various matters, including the Project, the DRA, and the transfer of the land to Gold Road. Quite properly, the plaintiffs made plain in their submissions that this is not the occasion on which the court is asked to, or should, give any substantive consideration to the existence or otherwise of possible claims, or any rights the Trustee Companies or the Land Trusts may or may not have against Gold Road or others.
Because the Trustee Companies have ceased to be trustees of the Land Trusts Mr Vartelas seeks to be appointed receiver and manager of the business and assets of the Land Trusts and be given powers in relation to the same, including the power to bring any claims on behalf of the Land Trusts. It was in this context that this proceeding was commenced.
Notice
Notice of the application was given to the appointors and primary beneficiaries of each of the Land Trusts, the creditors listed in the list of creditors other than Evergrande, and ASIC. It was submitted that notice had been given to all identifiable interested parties and that the application was supported by them or, in the case of unsecured creditors, not opposed.
The primary beneficiaries and appointors of each of the Land Trusts each executed deed polls dated 26 November 2019, which, among other things: stated that no new trustee had been appointed or is to be appointed as trustee of the Land Trusts; confirmed that they consented to Mr Vartelas having the power and authority to act on behalf of the Land Trusts; and stated that they consented to Mr Vartelas being appointed, without security, as receiver and manager of the business and assets of the Land Trusts.
In addition, in letters addressed to the court from each of the appointors and primary beneficiaries they each acknowledged receipt of, and having had the opportunity to read, the originating process and Mr Vartelas’ affidavit. Each letter confirmed that its author supported the application under consideration and consented to the orders sought in the originating process being made.
The plaintiffs properly gave notice of their application to ASIC, which responded in its customary form by providing an email stating that it considered the application to be a matter properly left for the determination of the court and confirming that it did not propose to intervene or seek leave to appear. As is common in communications of this kind from ASIC, it stated that its position should not be taken as an expression of support for, or opposition to, the orders sought in the application.
During the hearing, counsel for the plaintiffs confirmed that they had not received any responses to their letters from the creditors and it is apparent that they have not sought to appear previously. It was also confirmed that notice was not provided to Evergrande because it had indicated that it did not propose to lodge a proof of debt and in those circumstances appeared not to be seeking to claim as a creditor.
Submissions
As mentioned, counsel for the plaintiffs prepared written submissions to which I have had regard and refer, but will not recite in detail here. They were supplemented orally. It is convenient briefly to mention the following:
(a) It was submitted that Mr Vartelas had standing as an external administrator of each of the Trustee Companies, with reference being made to ss 5-15 and 5-20 of Schedule 2 to the Act.
(b) On and from the appointment of Mr Vartelas as administrator, each of the Trustee Companies became bare trustees of the Land Trusts.
(c) The court was referred to the power to appoint receivers pursuant to s 37 of the Supreme Court Act 1986 (Vic) and r 39.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules). Among other things, it was submitted that the court may appoint a receiver of trust property in varying circumstances, including where that is necessary for the wellbeing of the trust or the safety of the trust property. Reference was made to well-known authorities, including, for example, Cheung v Makmur Australasia Pty Ltd,[2] Yunghanns v Candoora No 19 Pty Ltd[3] and Vladymir Martyniuk v Cecil King,[4] to which I have had regard.
[2][2002] VSC 335.
[3](2000) 35 ACSR 34.
[4][2000] VSC 319.
(d) Counsel referred to numerous authorities in the submissions and the folder of authorities where receivers have been appointed over trust assets in analogous circumstances, often involving liquidations. In so doing, reliance was placed upon the following observations of Moshinsky J in Re Brimson Pty Ltd; Ex parte Cremin (Re Brimson):[5]
[5](2019) 136 ACSR 649, 655-656 [49]-[50].
…It is now settled that the liquidator of an insolvent (former) corporate trustee cannot sell the trust’s property without order of the Court, or by appointment of a receiver over the trust assets ... The rationale for this position is that, on a proper understanding, the trust assets are not the “property of the company”, but are instead trust property in which the corporate trustee has a proprietary interest by way of lien or charge to secure its right of exoneration: see Jones v Matrix at [89]. Thus, to the extent that the subject of a sale is the whole of a trust asset, rather than merely the company’s lien or charge in respect of that asset, it is not authorised by the power of sale in s 477(2)(c).
The courts are generally willing, upon an appropriate application, to make orders permitting the liquidator of a (former) corporate trustee to sell trust assets. In situations where the property of the trust will be exhausted following its sale and subsequent distribution to creditors, it may be appropriate merely to give the liquidator a power of sale: see Jones v Matrix at [91]. The more common course is, however, for the liquidator of the insolvent (former) corporate trustee to apply to be appointed a receiver for the purpose of selling the trust assets and distributing the proceeds among trust creditors…Orders appointing a liquidator as a receiver for this purpose may be made nunc pro tunc to authorise sales of trust assets that have already occurred: Jones v Matrix at [91], [152], [198].
(e) Other decisions drawing upon and following the decision in Jones v Matrix Partner Pty Ltd; Re Killarnee Concrete & Contractors Pty Ltd (Re Killarnee)[6] and the decision in Re Brimson were referred to, to which I have had regard. They included Michell (Liquidator) v Delltta Holdings Pty Ltd (in liq) atf The Brookhill Trust;[7] Re Mohen, in the matter of Willco Breads Pty Ltd (in liq);[8] Ross v Manpak Holdings Pty Ltd (Manpak Holdings);[9] Re Pires Consulting Holding Pty Ltd (In Liquidation);[10] Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq);[11] Taylor (Liquidator) v CJ & KL Bond Super Pty Ltd (Trustee) in the matter of CJ & KL Bond Pty Ltd (in liq);[12] and McClean v Hill; in the matter of TMC Plumbing & Drainage Pty Ltd (in liq).[13]
[6](2018) 260 FCR 310.
[7][2019] FCA 2133 (Davies J).
[8][2019] FCA 1539 (Banks-Smith J).
[9](2018) 131 ACSR 1 (McKerracher J).
[10][2019] VSC 384 (Kennedy J).
[11][2018] FCA 2121 (Markovic J).
[12][2018] FCA 1430 (White J).
[13][2019] FCA 1439 (Moshinsky J).
(f) In addition, and drawing upon the observations of McKerracher J in Manpak Holdings and the observations of Allsop CJ in Re Killarnee, it was submitted that on the facts of the present case there was no material relevant distinction between there being a liquidator in other cases and a deed administrator in this case. In this regard, reference was made to various features of the deed of company arrangement and the creditors’ trust deed, including:
(i) the control of the Trustee Companies remaining with Mr Vartelas as deed administrator and the powers that he has;
(ii) the claims of creditors of the Trustee Companies becoming claims against the simultaneously created trust fund under the creditors’ trust deed;
(iii) the ‘Fund Amount’ under the deed of company arrangement being an amount that includes receipts of the Trustee Companies from the DRA that are then required to be paid to the trustee of the creditors’ trust;
(iv) trust funds under the deed of company arrangement being held on trust for the trust creditors and any surplus for the Trustee Companies on the terms of the creditors’ trust deed — but noting that the Trustee Companies will be holding any such trust assets as bare trustee;
(v) Mr Vartelas, as trustee of the creditors’ trust, being required to determine admissibility of claims in accordance with applicable provisions of the Act and to distribute the trust fund: first, in satisfaction of the trustee’s costs; next, to the administrators or deed administrators in respect of any amount which they are entitled to be paid or indemnified under the deed of company arrangement; next, to the relevant employees in respect of any employee priority claims, although it appears that there are none; and next, to each other trust creditor on a pro rata basis in accordance with the dollar value of the admitted claims of those trust creditors.
Consequently, it was submitted that where there are no priority creditors, the task of getting assets and determining claims and making the required distribution was consistent or analogous to the priorities operating under s 556 of the Act, and the insolvency regime as it applies in liquidation.
(g) It was further submitted that security ought not be required and the court should otherwise order pursuant to r 39.05 of the Rules. In addition, it was submitted that there was no actual or potential conflict that would prevent or militate against the orders being made.
(h) With respect to the question of apparent delay, it was submitted that any delay as there had been should not preclude the orders being made given the circumstances, and the desirability of a receiver obtaining and applying the trust assets for the benefit of the trust creditors.
It was submitted that if orders of the kind sought were not made it would present a material risk to trust creditors because persons who may be required to account for trust property may seek to resist so doing by contending that the deed administrator or the trustee of the creditor’s trust deed does not have the right to obtain such property.
(i) The court was also informed that all of the creditors are trust creditors and no issues arise concerning the application of trust assets to satisfy general creditors of the Trustee Companies.
(j) Finally, submissions were made regarding appropriate priority orders being made with respect to the costs and expenses of the deed administrator, trustee of the creditors’ trust and the receiver.
Disposition
Having regard to the evidence, the submissions, and the authorities to which reference has been made, in my view it is appropriate to make orders to the substantive effect sought. In so doing and to cater for the limited prospect of circumstances not currently foreseen, I also propose to make an order of the kind made by Moshinsky J in Re Brimson granting liberty to apply to any person who can demonstrate sufficient interest to modify or discharge one or more of the orders, with any such application to be made on not less than 72 hours’ written notice. For the avoidance of doubt, I add that this order is not made because I am currently aware of circumstances where it ought to be utilised or because I harbour concerns about the course that has been proposed.
I accept that the plaintiff has standing and that on the evidence before the court, and as things stand, there appears to be no question of an actual or potential conflict of a kind that militates in any material way against the granting of the relief sought. If circumstances change in that regard then Mr Vartelas and his advisers will need to give careful consideration to the same and take such action as is appropriate at that time. Again, this is not to suggest that such an issue is foreseen.
Given that clause 17 of the trust deeds for each of the Land Trusts has operated so as to remove the Trustee Companies as trustees and it appears that all creditors are trust creditors, it is in my view in the interests of the trust creditors that steps be taken to enable the assets of the Land Trusts to be dealt with for the benefit of trust creditors. Appointing a receiver for this purpose is one of the appropriate ways that this may be achieved and is, as was submitted, within the court’s power.
No question of interference with another trustee of the Land Trusts arises because the Trustee Companies are now bare trustees (and the plaintiffs in this proceeding). Further, the deed polls earlier referred to record that no new trustees have been or will be appointed. If this changes it will again be necessary for any new trustees and Mr Vartelas to give consideration to the changed circumstances.
Having regard to Mr Vartelas’ role as former administrator, as the deed administrator, as the trustee under the creditors’ trust deed, and his existing knowledge and familiarity with the affairs of the Trustee Companies, the land, the Land Trusts, the administration, the deed of company arrangement, and the creditors’ trust, I accept that there are cost, time and other efficiencies in Mr Vartelas being appointed as receiver and manager of the business and assets of the Land Trusts. In this context, and as I have said, I am mindful that no relevant issue of actual or potential conflict has been raised, or is apparent, that the Trustee Companies have only carried out activities in their capacity as trustees, and that the assets of the Land Trusts may include claims or other rights against third parties, which I note are to be further investigated.
I am satisfied on the material before the court that adopting the course proposed is in the interests of the creditors of the Land Trusts. It is apparent that it is directed at maximising the return to the trust creditors, and any surplus that might result, although as counsel properly acknowledged, the prospect of any surplus emerging after payment of trust creditors appears somewhat remote.
I am fortified in my conclusion regarding the course proposed being in the best interests of trust creditors and beneficiaries by the position taken by the appointors and primary beneficiaries in the deed polls and letters to the court, and the absence of opposition from creditors — noting also that the largest creditors are parties related to the Trustee Companies who contributed material amounts to the Project.
Counsel for the plaintiffs properly drew my attention to the fact that the authorities, including Re Brimson and Re Killarnee, addressed circumstances involving liquidations, and not deed administrators or trustees pursuant to creditors’ trusts, as is the case here. However, in the particular circumstances of this case, I accept the submission that, given the structure of the deed of company arrangement, the creditors’ trust deed, and that which is proposed, this distinction is not of any material concern in this case. In reaching this conclusion I am mindful of the terms of the deed of company arrangement and the creditors’ trust deed, the regime they create, and the powers that are proposed to be given to Mr Vartelas as receiver and manager of the business and assets of the Land Trusts.
In this context I have also been assisted by the authorities referred to by counsel for the plaintiffs, including the observations of McKerracher J in Manpak Holdings,[14] and those of Allsop CJ in Re Killarnee to which McKerracher J referred. The observations of McKerracher J included the following:
[14](2018) 131 ACSR 1, [23]–[25].
23The real question raised by the current application is whether there is any appreciable difference between liquidation and deed administration insofar as it relates to dealing with assets held on trust and utilising any proceeds thereof for the benefit of creditors. In this case, the priority of payments in under the DOCA is not dissimilar to the priority set out in s 556 of the Act (and specifically incorporates certain sub-paragraphs of that section). Clause 11.1 and cl 11.2 of the DOCA provide:
11.1 The Deed Administrators are to apply the Fund in the following order of priority:
(a) first, in payment of the remuneration, costs, disbursements and expenses of the Administrators, for acting in their capacity as the Administrators of the Company;
(b) second, in payment of the remuneration, costs, disbursements and expenses of the Deed Administrators, for acting in their capacity as the Deed Administrators of the Company;
(c) third, in accordance with clause 11.2 in payment in full to the Priority Creditors in respect of the Priority Creditors’ Claims other than the payment of unpaid wages, leave entitlements and termination/redundancy payment being s.556(1)(e)(g) and (h) of the Act for those employees employed by the Company as at the date of execution of the DOCA who do become employed by IGA pursuant to the terms of the Business Sale Agreement.
(d) finally, in respect of the remaining Fund, in payment of a dividend to the Participating Creditors to be distributed rateably among the Participating Creditors in accordance with the value of the Participating Creditors’ Claims.
...
25Subject to the proviso that the relief is sought with respect to a company in administration rather than in liquidation, the relief sought is consistent with the principles set out in, and flowing from, Killarnee. As noted in oral submissions, much of Allsop CJ’s reasoning in Killarnee was not couched in the confined language of ‘liquidations’, but rather his Honour’s reasons were prefaced by speaking of the ‘operation of the statutory insolvency regime’ generally. There is, in my view, no relevant distinction to be drawn in this instance from the status of Manpak being in administration rather than in liquidation. In either event, the Act regulates the actions of those in control. The relief accords with the wishes of creditors and is in their interest. It should be granted.
With respect to the question of delay, I accept that this is not a factor that weighs heavily in the balance. The sequence of events has been openly addressed in the evidence before the court and it is apparent that Mr Vartelas approached the court in a relatively expeditious way upon becoming aware of the issue. In any event, it remains the position that it is in the interests of trust creditors that appropriate steps be taken to secure and deal with the trust assets for the benefit of trust creditors, noting again that no issue with respect to general creditors appears to arise.
The appointment of receivers without security is supported by the appointors and primary beneficiaries, and is not opposed by ASIC or the creditors to whom notice has been given. I have also had regard to the plaintiff’s submissions regarding the existence of insurance, Mr Vartelas being an official liquidator, Mr Vartelas being the deed administrator, the professional role of Mr Vartelas, and the analogous circumstances addressed in cases such as Sapphire (SA) Pty Ltd t/as River City Grain Co v Ewens Glen Pty Ltd[15] and Re Pires Consulting Holding Pty Ltd (In Liquidation).[16]
[15][2011] FCA 714, [4], (Besanko J).
[16][2019] VSC 384, [47]–[49] (Kennedy J).
Consistent with the approach taken in those cases, and having regard to the position of Mr Vartelas, the structure and arrangements in the present case, and the need for the trust assets to be secured and applied for the benefit of trust creditors given the cessation of the Trustee Companies as trustees of the Land Trusts, I accept that it is appropriate to appoint Mr Vartelas as receiver without requiring security to be provided.
I also accept that it is appropriate to make an order that the costs and expenses of the administrator, the deed administrator, the trustee of the creditors’ trust, and the receivers be paid in priority, noting also the evidence regarding fees approved to date.
Conclusion
It is appropriate to appoint Mr Vartelas as receiver and manager of the business and assets of each of the Land Trusts, and to make orders to the substantive effect sought. As I have said, to cater for the possibility of circumstances unforeseen, I propose to grant liberty to apply to any person who can demonstrate sufficient interest to apply to modify or discharge any one or more of the orders, upon giving of no less than 72 hours’ written notice to the plaintiffs.
Subject to addressing the precise form of orders with counsel, I propose to make orders to the following effect:
(1)Pursuant to s 37 of the Supreme Court Act 1986 (Vic), Mr Vartelas, an official liquidator, be appointed without security as receiver and manager over the business and assets of:
(a)the Knight Land Trust; and
(b)the Portogallo Land Trust;
(the Receiver).
(2) The need for the Receiver to file a guarantee under rule 39.05 of the Rules be dispensed with.
(3) The Receiver have, in respect of the business and assets of each trust referred to in paragraph (1), the powers that a receiver has in respect of the business and property of a company under s 420 of the Corporations Act 2001 (Cth) (Corporations Act) (other than s 420(2)(s), (t), (u) and (w)) as if the reference in that section to ‘the corporation’ were a reference to each of those trusts including without limitation, the power to do all things necessary or convenient to:
(a) carry on the business of the trust;
(b) employ any person in connection with the business of the trust;
(c) sell the assets of the trust;
(d) pay the creditors of the trust from the proceeds of the assets, pursuant to the priorities prescribed under the provisions of the Corporations Act;
(e) compromise any claim made against the second and/or third plaintiff in its capacity as trustee of the trust or against any of the trust property on any terms the Receiver sees fit;
(f) bring any claim against any party on behalf of the trust; and
(g) execute any tax returns, financial statements or other documents relating to the trust.
(4) The costs, expenses and remuneration incurred by Mr Vartelas as Administrator, Deed Administrator of the second and third plaintiffs, Trustee of the KPD Creditor’s Trust dated 11 January 2019, and as the Receiver, including the costs of this application, be paid in priority from the property of the trusts referred to in paragraph (1).
(5) There be liberty to apply to any person who can demonstrate sufficient interest to modify or discharge the orders in paragraphs (1) to (4) on not less than 72 hours’ written notice to the first plaintiff.
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