J & G Flooring Pty Ltd (in liq) v Dirito
[2025] VSC 623
•30 September 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2025 03758
IN THE MATTER of J & G FLOORING PTY LTD (IN LIQUIDATION) (ACN 663 355 771)
BETWEEN:
| ANDREW MACNEILL IN HIS CAPACITY AS LIQUIDATOR OF J & G FLOORING PTY LTD (IN LIQUIDATION) (ACN 663 355 771) | Plaintiff |
| v | |
| JOHN DIRITO | Defendant |
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JUDGE: | Gobbo AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 September 2025 |
DATE OF JUDGMENT: | 30 September 2025 (ex tempore) |
CASE MAY BE CITED AS: | J & G Flooring Pty Ltd (in liq) v Dirito |
MEDIUM NEUTRAL CITATION: | [2025] VSC 623 |
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CORPORATIONS — Liquidation of trustee company — Company operated in capacity as trustee — Liquidator’s application for appointment as receiver of trust assets, relief under Corporations Act 2001 (Cth) s 1318 and remuneration from trust assets — Relief granted —Insolvency Practice Schedule (Corporations) s 90–15 — Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liq) [2019] FCA 1023 — Re Amerind Pty Ltd (receivers and managers apptd) (in liq) (2017) 320 FLR 118 — Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 268 CLR 524.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Miller | Mason Black + Mendelsons Lawyers |
| For the Defendant | No appearance | N/A |
TABLE OF CONTENTS
Application
Non-contentious facts
Liquidator’s unchallenged evidence
Legal principles
Analysis and consideration
Appointment over trust assets
Directions
Relief from liability
Receivership and independence
Remuneration
Costs of the application
Conclusion
HER HONOUR:
Application
By originating process filed 3 July 2025, the plaintiff (‘Liquidator’), in his capacity as liquidator of J & G Flooring Pty Ltd (in liquidation) (ACN 663 355 771) (‘Company’) applies under ss 48 and 63(1) of the Trustee Act 1958 (Vic) (‘Trustee Act’) and/or s 37 of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’) and/or r 39.02 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic) (‘Rules’) and/or ss 90-15 and 90-20 of Schedule 2 to the Corporations Act 2001 (Cth) (‘IPS’) for relief granting the Liquidator powers to deal with trust property of the Company.
Specifically, the Liquidator seeks orders that:
(a)pursuant to s 90-15 of the IPS, the Liquidator is justified and acting reasonably in proceeding on the basis that:
(i)the Company carried on business as trustee of a trust, namely the Dirito Family Trust (ABN 15 310 486 276) (‘DFT’); and
(ii)all assets of the Company are properly characterised as property held by the Company in its capacity as trustee of the DFT (‘Trust Property’);
(b)pursuant to s 1318 of the Corporations Act 2001 (Cth) (‘Corporations Act’) and/or s 67 of the Trustee Act, the Liquidator is relieved from any liability arising from any dealing with the Trust Property between the date of his appointment and the date of this order;
(c)pursuant to s 37 of the Supreme Court Act and/or r 39.02 of the Rules, the Liquidator be appointed without security as the receiver of the assets of the DFT, and orders:
(i)that the need for the Liquidator to give security in the form of a guarantee in Form 39A, and to file that guarantee, pursuant to r 39.05 of the Supreme Court Act, be dispensed with;
(ii)that the Liquidator have, in respect of the assets of the DFT, the powers that a receiver has in respect of the business and property of a company under s 420 of the Corporations Act as if the reference in that section to ‘the corporation’ were a reference to the DFT, including, without limitation, the power to do all things necessary or convenient to:
(A)investigate transactions made using funds derived from the assets of the DFT;
(B)demand the books and records of the DFT from any person;
(C)sell the assets of the DFT;
(D)bring or continue any claim or court proceeding against any party on behalf of the DFT;
(E)determine and make payment of claims against the assets of the DFT;
(F)distribute the proceeds of sale of the assets of the DFT (after payment of the remuneration, costs and expenses of the Liquidator as liquidator of the Company and as the receiver of the DFT) to pay the creditors of the DFT pursuant to the priorities described under the provisions of the Corporations Act;
(G)distribute any surplus to the new trustee of the DFT, or, if there be no such trustee, to the beneficiaries of the DFT; and
(H)execute any documents relating to the DFT;
(d)the remuneration, costs and expenses of the plaintiff as Liquidator of the Company, and as the receiver of the assets of the DFT, be paid from the assets of the DFT;
(e)the Liquidator may apply to the Court for orders discharging and releasing him as receiver of the assets of the DFT on 7 business days’ notice by sending an email to the Commercial Court Registry;
(f)alternatively, an order pursuant to s 48 and / or s 63 of the Trustee Act that the plaintiff be appointed as trustee of the DFT under the deed of trust for the DFT dated 29 May 2019 (‘Deed’) together with an order that the assets of the DFT vest in the plaintiff as trustee of the DFT; and
(g)a direction pursuant to s 90-15 of the IPS that the plaintiff is justified and otherwise acting reasonably in proceeding on the basis that:
(i)the plaintiff, as Liquidator of the Company, is entitled to be paid his remuneration (as approved pursuant to s 60-10 of the IPS), costs and expenses (‘Remuneration and Expenses’) from the assets of the DFT (‘Trust Assets’); and
(ii)the plaintiff be indemnified out of, and have an equitable lien over, the Trust Assets for all of his Remuneration and Expenses.
The plaintiff relies on the affidavits of Andrew MacNeill affirmed 2 July 2025 and 13 August 2025, the affidavit of Jason Pomaroff affirmed 13 August 2025 and the written outline of counsel filed 14 August 2025.
The final hearing of this proceeding was initially listed before me on 8 August 2025. Following a request by the plaintiff for a short administrative adjournment to allow the plaintiff to effect personal service on the defendant, the final hearing was adjourned to 15 August 2025. On that day, on the application of the then solicitors for defendant, Oakley Thompson & Co, the final hearing of the application was adjourned to 30 September 2025 in order to enable the defendant to file material in opposition to the application. Despite my orders made 15 August 2025, the defendant has not filed any affidavit material in opposition to the plaintiff’s application or filed an outline of submission.
On 25 September 2025, I made orders granting Oakley Thompson & Co leave to file a notice of ceasing to act on behalf of the defendant. That same day, my chambers sent an email, copied to the defendant, which:
(a)confirmed that the final hearing of the application remained listed before me on 30 September 2025;
(b)recorded the defendant’s non-compliance with my previous orders;
(c)recorded that the Court requires strict compliance with orders and stated that all parties are expected to be ready to proceed on the day appointed for the final hearing; and
(d)noted that if the defendant now wished to file material and/or submissions out of time, or seek a further adjournment, he would need to make an application on summons seeking leave to do so.
No such application was filed. When the matter was called on for hearing this morning, the defendant did not appear. I have treated the application in those circumstances as unopposed.
Non-contentious facts
The Company was incorporated on 25 October 2022. The Company was, at all material times, the trustee of DFT. The defendant was, prior to the Liquidator’s appointment, the sole director, sole secretary and sole shareholder of the Company.
On 28 February 2024, the Liquidator was appointed by order of this Court.
On 5 March 2024, the defendant filed an application to terminate the winding up of the Company under s 482 of the Corporations Act.
On 22 March 2024, I delivered judgment and reasons in Re J & G Flooring Pty Ltd[1] dismissing the defendant’s application to terminate the winding up of the Company.
[1][2024] VSC 103.
The evidence before me discloses that on 25 June 2024, the defendant’s then solicitors, Oakley Thompson & Co, wrote to the Liquidator’s solicitors indicating that the defendant would make a further application to terminate the winding up of the Company under s 482 of the Corporations Act. No such application has been filed.
The Company has (or had) the following related entities:
(a)J & G Flooring (Vic) Pty Ltd (deregistered) (‘OldCo’): The defendant was the director of OldCo from 29 May 2019 until 2 March 2024 and the sole shareholder. OldCo was placed into liquidation on 5 October 2022 and subsequently deregistered on 2 March 2024;
(b)S&J Platinum Maintenance Pty Ltd:The defendant has been a director of S&J Platinum Maintenance Pty Ltd from 6 January 2024 and is the sole shareholder; and
(c)The Dirito Group Pty Ltd: The defendant has been a director of The Dirito Group Pty Ltd from 29 May 2024 and is the sole shareholder.
Liquidator’s unchallenged evidence
The Liquidator’s unchallenged evidence was broadly as follows:
First, during the course of the Liquidator’s investigations, the Liquidator has obtained the Deed.
On the basis of the Deed, the Liquidator believes the DFT was created on 29 May 2019. This is the same date as the registration of OldCo.
The schedule to the Deed records that the defendant is the appointor of the DFT and the primary beneficiary. The defendant and his children are the specified beneficiaries of the DFT and OldCo is recorded as being the trustee.
Clause 12.4 of the Deed provides that the office of the trustee is ipso facto vacated if the trustee enters into liquidation.
OldCo was placed into liquidation on 5 October 2022 and deregistered on 2 March 2024.
Accordingly, OldCo was automatically removed as trustee of the DFT on 5 October 2022 by operation of cl 12.4 of the Deed.
Second, the Liquidator has obtained minutes of meeting dated 25 October 2022 purportedly appointing the Company as trustee for the DFT. The Liquidator believes, on the basis of emails located in the Company’s Outlook account, that those minutes of meeting were in fact signed in April 2024. In any event, the Liquidator believes, on the basis of his investigations, that the Company only conducted activities as trustee of the DFT at all times from the time it was incorporated in October 2022 until the date of appointment of the Liquidator. In support of that belief, the Liquidator relies on the following matters:
(a)OldCo appears to have operated its business as trustee for the DFT up until it was placed into liquidation on 5 October 2022. The report to creditors from the liquidators of OldCo confirms this;
(b)the minutes of meeting dated 25 October 2022 report that the Company was appointed as trustee of the DFT on that day, notwithstanding it appears those minutes were signed at a later time (in April 2024);
(c)the Company’s website was registered under the ABN for the DFT;
(d)the Company’s bank accounts are held in the name of the Company as trustee for the DFT;
(e)at least one of the Company’s customers, Ambrose Construct Group Pty Ltd, issued purchase orders to the Company under the ABN for the DFT;
(f)the defendant described the Company as trustee of the DFT in the defendant’s Report on Company Affairs and Property provided to the Liquidator;
(g)at least one of the Company’s suppliers, Zib Production Pty Ltd, addressed tax invoices to the Company in its trustee capacity;
(h)on 29 April 2024, the Deputy Commissioner of Taxation lodged a proof of debt in the liquidation of the Company claiming a debt against the Company as trustee for the DFT;
(i)on 25 September 2024, the Company’s former accountant, Greg Saligari, lodged trust income tax returns for J & G Flooring (Vic) Pty Ltd as trustee for the DFT for 2020, 2021 and 2022 financial years. No tax returns have been lodged for the DFT for the 2023 and 2024 financial years;
(j)the Company issued tax invoices to at least two of its customers, Ambrose Construct Group Pty Ltd and Banyan Tree Homes, using the ABN for the DFT;
(k)the Company has not lodged any tax returns or business activity statements in its own capacity;
(l)the Company did not maintain separate bank accounts for activities in its own right;
(m)on 27 May 2024, the defendant told the Liquidator that a new trustee had been appointed to the DFT, but refused to provide details of that appointment;
(n)on 1 July 2024, the Liquidator obtained unsigned minutes of meeting dated 29 May 2024, stating that The Dirito Group Pty Ltd had been appointed as the new trustee for the DFT. The Liquidator believes that the business previously conducted by the Company as trustee for the DFT is in fact now being conducted by S&J Platinum Maintenance Pty Ltd as trustee for the John Dirito Trading Trust (ABN 17 886 328 858).
Third, based on the Liquidator’s investigations:
(a)the current property of the DFT comprises:
(i)the sum of $100,899.00 recovered by the Liquidator from Mr Dirito (following Mr Dirito’s withdrawal of that sum from the Company’s bank account shortly after the Liquidator was appointed), a matter dealt with in my earlier reasons for judgment at paragraphs 61(b) to 61(c), 62, 63(e) to 62(f), 64 and 82(a);
(ii)plant and equipment worth about $30,000.00 (including a forklift, pallet racking, an office computer, tools and intellectual property);
(iii)cash at bank of $8,561.41; and
(iv)a 2018 White LDV Utility vehicle worth between $12,300.00 and $18,450.00.
(b)the creditors of the Company, as trustee for the DFT, total approximately $20,146.40 at a low estimate to $147,468.66 at a high estimate plus the Remuneration and Expenses of the Liquidator. The variance in that sum arises from the quantum of the Deputy Commissioner of Taxation’s debt presently being uncertain.
The Liquidator’s Remuneration and Expenses, as at 31 January 2025, were $129,134.40 (inclusive of GST). The Liquidator received $44,812.50 from Zoe Davis and ZD Legal in respect of legal costs, remuneration and disbursements, arising out of the matters which were subject of my earlier judgment. Of that amount, $12,270.00 (plus GST) was applied to legal fees and paid to the Liquidator’s solicitors, $1,225.67 (plus GST) was applied to legal disbursements, with the balance of $31,316.83 (plus GST) available to be applied towards the Liquidator’s remuneration.
Legal principles
In an application such as this, it is well settled that where a corporate trustee enters into liquidation, the company’s right of indemnity or exoneration and accompanying equitable lien over trust assets survives.
This application arises by reason of the effect of the ‘ipso facto’ clause in cl 12.4 of the Deed (effecting the automatic removal of the Company from its office as trustee).
Where, as here, the Company has effectively been removed as trustee of the trust under the terms of the Deed, the Company retains the right to hold trust assets as bare trustee but the Liquidator of the Company does not have the power to sell those assets to satisfy that indemnity absent intervention by the Court.[2]
[2]Jones v Matrix Partners Pty Ltd (2018) 260 FCR 310, [44], [85]—[91] (Allsop CJ) (citations omitted), [139], [142] (Siopis J) (citations omitted) and [198] (Farrell J); see also Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677 at [22]—[28] (Gordon J) (citations omitted).
Before me, relief is sought to:
(a)declare that the Company held assets exclusively in its capacity as trustee and has a right of indemnity for debts incurred in that capacity; and
(b)appoint the Liquidator as receiver of the assets held by the Company on trust,
in accordance with the decisions in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (‘Carter Holt Harvey’)[3] and Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liq) (‘Re Cremin’)[4] which establish that a liquidator of an insolvent former trustee can:
(a)apply to court for orders to be appointed as receiver of the trust assets;
(b)exercise their statutory authority to realise the trust assets in support of the exercise of the lien or charge securing the trustee’s right of indemnity; and
(c)once the sale has been effected, appropriate the proceeds by way of exoneration as part of the conduct of the liquidation in accordance with s 556 of the Corporations Act.
[3](2019) 268 CLR 524 (‘Carter Holt Harvey’).
[4][2019] FCA 1023 (‘Re Cremin’).
The legal principles pertinent to the appointment of receivers in applications such as this are well known. The principles are set out in detail by Warren J (as her Honour then was) in Martyniuk v King[5] and are further identified by Gleeson J (as his Honour then was) in Hosking, re Business Aptitude Pty Ltd (in liq). [6] The Court will appoint a receiver of trust assets where it is necessary to do so to safeguard the property for the benefit of those entitled to it.
[5][2000] VSC 319.
[6][2016] FCA1438.
In Re Cremin, Moshinsky J held that:
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 & 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: see Jones & Matrix at [142] per Siopis J; Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq) [2018] FCA 2121 (Amirbeaggi); Taylor v CJ & KL Bond Super Pty Ltd, in the matter of CJ & KL Bond Pty Ltd (in liq)[2018] FCA 1430 (Taylor v CJ & KL Bond Super Pty Ltd); Staatz v Berry, in the matter of Wollumbin Horizons Pty Ltd (in liq) (No 3) [2019] FCA 924. 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 & Matrix at [91], [152], [198].[7]
[7]Re Cremin (n 4), [50].
Absent any relevant conflict, it is commonly the case that the Court will appoint the corporate trustee’s liquidator as receiver without security[8] and to dispense with the receiver’s obligation to file a guarantee in compliance with r 39.04 of the Rules.[9]
[8]In the matter of Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409 (Brereton J).
[9]Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq) [2018] FCA 2121 (Markovic J); see also Paul Burness (as Liquidator of Index Options Australia (in Liquidation) v Belousoff & Ors [2006] VSC 302.
The Court also has power under s 63(1) of the Trustee Act to confer power on a trustee in circumstances where it is expedient to do so. Section 63(1) provides:
Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may be order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as between capital and income.
In Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd (‘Caterpillar Financial Australia’),[10] Gordon J considered an application under s 63 of the Trustee Act and said:
As is apparent, there are two questions. First is it appropriate despite the absence of any power vested in the Company to sell the assets of the Trust, for the Court to confer upon the Company the power of sale of the assets of the Trust (s 63 of the Trustee Act) and if, so, is it appropriate for the Court to excuse the Liquidator from selling the BMW when the Company did not have that power of sale.
The answer to the first question is yes. The Company became a bare trustee of the assets of the trust immediately upon the winding up of the Company and the appointment of the Liquidator; see [26] above. Next, the Company acted only as trustee of the Trust and in no other capacity and all assets owned by the Company are held by it as trustee of the Trust and all liabilities incurred by the Company were incurred by it in its capacity as trustee of the Trust: see [3] above. Thirdly, where, as has occurred here, the appointor is unwilling for whatever reason to appoint a new trustee, it is appropriate for the Court to confer upon the Company the power of sale of the assets of the Trust pursuant to s 63 of the Trustee Act subject, of course, to the duties prescribed by that Act.
[10][2011] FCA 677.
In Urban Property Melbourne Pty Ltd,[11] Osborne J said that there ‘is no bright line’ about whether the preferable course is to confer power under the Trustee Act or to appoint a receiver under the Supreme Court Act and referred to the decision in Caterpillar Financial Australia for guidance as to when it may be appropriate to make orders under s 63 of the Trustee Act, including where:
(a)the company has become a bare trustee of the assets of the trust upon the appointment of the liquidator;
(b)the company had acted only as trustee of the trust and in no other capacity;
(c)all assets owned by the company were held by it as trustee and all liabilities incurred by it were incurred in its capacity as trustee; and
(d)no new trustee had been appointed.
[11][2021] VSC 847.
In Civil Construction Network Services Pty Ltd (in liq),[12] Delany J considered the following factors weighed in favour of orders being made under s 63 of the Trustee Act (as opposed to orders for the appointment of a receiver):
[12][2020] VSC 474.
(a)the property of the trust will be exhausted following its sale and subsequent distribution to creditors;
(b)the conferring of a power of sale upon the liquidator appears the most convenient and efficient way to proceed;
(c)the company is not trading, there is no ongoing business to be conducted; and
(d)where the liquidator is given a power of sale, there is no risk of confusion as to the roles or as to the capacity in which the liquidator is acting as might be the case if the appointment was as receiver and manager.
Analysis and consideration
Appointment over trust assets
Currently, the Company is not the appointed trustee of the DFT and there is no cogent evidence before the Court that the DFT has an appointed replacement trustee.
The Liquidator’s evidence is that the defendant has indicated that a replacement trustee has been appointed. Unsigned minutes appointing The Dirito Group Pty Ltd as trustee have been provided to the Liquidator – however, no signed minutes have been provided. Accordingly, I accept counsel for the Liquidator’s submissions that it is, at best, uncertain whether the defendant has in fact effected the appointment of a replacement trustee, particularly in circumstances where no affidavit material has been filed by the defendant and the defendant did not appear.
I further accept counsel for the Liquidator’s submission that:
(a)the Company cannot deal with the assets of the DFT, without Court order; and
(b)the Liquidator is unable to realise the Company’s right of indemnity from the assets of the DFT without an order of the Court.
To this end, and it is trite that, the Company holds a right of indemnity from the assets of the DFT for all liabilities properly incurred in acting in the role as trustee of the DFT. The right of indemnity arises under the general law and also under the terms of the Deed. The Company’s right of indemnity for liabilities incurred in acting as trustee of the DFT is secured by an equitable charge over the assets of the DFT. The charge arises under the general law.[13]
[13]Re Cremin (n 4).
Counsel for the Liquidator submits, and I accept, that the evidence available establishes that the Company only operated as trustee of the DFT. I further accept counsel’s submission having regard to the fact that the defendant has had an opportunity to file affidavit material before me and has not done so.
In Re Amerind Pty Ltd (receivers and managers apptd) (in liq),[14] Robson J listed a series of matters that have been taken into account by courts to determine whether a company traded in its own right or as trustee:
(a)the existence of constituent trust documents which establish a trust, including any draft trust documents which cross-reference one another;
(b)whether accounts were maintained separately to the company’s operational expenditure accounts and/or the company’s own property;
(c)whether the company’s name in its capacity as trustee was noted on key employment documents, such as letters of employment and tax file declarations;
(d)whether invoices rendered by the company in question were issued by the company in its capacity as trustee of the trust;
(e)whether the company’s meeting minutes disclosed the existence of a trust, or disclosed that the company was operating as a trust;
(f)whether expenses were accounted as receipts of the company as trustee; and
(g)whether records, contained in the general ledger of the company, recorded activity consistent with the operation of a trust, such as the issue of units.
[14][2017] VSC 127, [46]; (2017) 320 FLR 118, [46] (citations omitted).
I accept counsel for the Liquidator’s submission that, in the present case, the available evidence satisfies most of these factors. First, there are constituent trust documents, including the Deed and the minutes dated 25 October 2022 appointing the Company as trustee. Second, there is no evidence that the Company maintained separate accounts for activities as trustee and in its own right. Third, the Australian Taxation Office’s records disclose that the Company reported to it in its capacity as trustee of the DFT. The proof of debt submitted by the Australian Taxation Office was submitted in its capacity as trustee for the DFT. Fourth, other trade documents, such as the purchase orders, invoices from suppliers, and invoices issued by the Company, either refer to the Company as trustee, or use the ABN for the DFT.
Directions
The Liquidator has sought an order under s 90-15(1) of the IPS that he is justified and acting reasonably in proceeding on the basis that the Company carried on business as trustee of the DFT and that all assets of the Company are properly characterised as Trust Property.
The significance of obtaining directions under s 90-15 of the IPS is the protection that the directions afford the Liquidator who acts in accordance with them and who has, it is submitted, made full and frank disclosure of the necessary material facts.
Section 90-15 relevantly provides as follows:
90-15 Court may make orders in relation to external administration
Court may make orders
(1)The Court may make such orders as it thinks fit in relation to the external administration of a company.
Orders on own initiative or on application
(2) The Court may exercise the power under subsection (1):
(a) on its own initiative, during proceedings before the Court; or
(b) on application under section 90-20.
(3)Without limiting subsection (1), those orders may include any one or more of the following:
(a)an order determining any question arising in the external administration of the company;
…
(d)an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company
(7)This section does not limit the Court’s powers under any other provision of this Act, or under any other law.
In relation to the directions sought by the Liquidator, I observe that:
(a)this is not a matter where the Court is being asked to give advice regarding matters which involve commercial judgment;
(b)rather, the Court’s guidance is being sought on a discrete issue concerning the Company’s right to deal with the Trust Property in order to protect the Liquidator against any accusation that he might have acted unreasonably; and
(c)any party whose rights might be affected by the application for directions has been given notice.
No one has appeared other than the defendant who has not attended Court on this day and has not filed any evidence. Moreover, I note that the orders proposed by the Liquidator provide for an order that anyone affected by these orders may apply, on giving of a short period of notice, to modify or discharge the orders.
Such a direction accords with authority and is appropriate having regard to the evidence I have identified.[15]
[15]Carter Holt Harvey (n 3), [95]—[97] (Bell, Gageler and Nettle JJ) and [153]—[172] (Gordon J) (citations omitted).
In these circumstances, I consider that it is just and appropriate to appoint the Liquidator as receiver of the assets of the DFT so as to enable the Liquidator to deal with the assets of the DFT (including the funds held at bank, and complete the sale of the Company’s plant and equipment). In this matter, it is, in my view, appropriate to appoint the Liquidator as receiver rather than confer on him powers under s 63 of the Trustee Act, having regard to the work conducted by the Liquidator to date and the likelihood that any further costs of the receivership will be modest. In my view, there is good reason and commercial sense to appoint the Liquidator as receiver and it is, in the circumstances of this matter, the most convenient and efficient way to proceed.
Relief from liability
Pursuant to s 1318 of the Corporations Act and/or s 67 of the Trustee Act, the Liquidator seeks an order to the effect that he is relieved from any liability arising from any dealing with the Trust Property between the date of his appointment and the date of any order.
The Court has power, pursuant to s 1318 of the Corporations Act to excuse an administrator who inadvertently sells trust assets when he does not have the power to do so. In order to obtain relief under s 1318, the Liquidator must establish that:
(a)they had reason to apprehend that a claim would, or might be made against them;
(b)such a claim is in respect of any negligence, default, breach of trust or breach of duty in their capacity as administrator; and
(c)they acted honestly in relation thereto.[16]
[16][2013] FCA 355. [29]; [2013] 93 ACSR 606, [29].
In Re Suncoast Restoration Pty Ltd (in liq),[17] Reeves J noted that the nature of the apprehension that a claim might be made was that there ‘must be an objective basis for believing that the claim will or might be made against that person’.
[17]Ibid, [31] citing Re Vouris (2003) 177 FLR 289, [116].
In this case, whilst the prospect of a claim being made against the Liquidator is unlikely, he has nevertheless recovered funds from the defendant and from Zoe Davis and ZD Legal, and has applied some of the recovered funds in payment of his Remuneration and Expenses prior to orders being made appointing him as receiver, or conferring powers under s 63 of the Trustee Act.
Given the history of this particular administration, more specifically, the defendant’s prior failure to provide books and records to the Liquidator, and his repeated suggestions that he will seek to terminate the winding up, together with his failed application to do so, I consider that the Liquidator ought not be exposed to any risk of a claim being made against him. The order sought under s 1318 of the Corporations Act is appropriate.
Receivership and independence
Appointing a liquidator or administrator of a corporate trustee as receiver of a trust’s assets facilitates and simplifies the external administration of the corporate trustee by providing for the trust’s business and assets to be under the same control as the corporate trustee while it is in external administration. This, in turn, aids in the vindication of the trustee company’s right of indemnity out of the trust’s assets.[18]
[18]In the matter of Mecfab Holdings Pty Ltd [2015] NSWSC 46, [9] (citations omitted); see also Elkerton (liquidator), in the matter of CGB Property Holdings Pty Ltd (in liquidation) [2020] FCA 1464.
Further, once the sale of the trust’s assets has been effected, the proceeds may be appropriated by way of exoneration as part of the conduct of the liquidation.[19] Before me, there was no suggestion that the liquidator lacks independence such that there is a realistic prospect of embarrassment or a serious possibility of conflict.[20]
[19]Carter Holt Harvey (n 3), [55]—[58] (Kiefel CJ, Keane and Edelman JJ), [95]—[97] (Bell, Gageler and Nettle JJ), [171] (Gordon J) (citations omitted).
[20]Re Club Superstores Australia Pty Ltd (in liq) (1993) 10 ACSR 730, 735 (Thomas J) (citations omitted); see also D Pty Ltd and Ors & Sadler and Ors [2016] FamCAFC 187, [96] (Ryan, Aldridge and Hannam JJ).
There is no challenge to the Liquidator’s independence.
No affidavit material has been filed by any party directed to this issue in the context of the Liquidator’s application.
On this basis, it is not open on the evidence, for the Court to infer, let alone conclude, that the Liquidator lacks independence to perform his role or the role of receiver.
It is appropriate to make orders appointing the Liquidator as receiver of the assets of the DFT.
Remuneration
The Liquidator additionally seeks a direction pursuant to s 90-15 of the IPS that he is justified in proceeding on the basis that he is entitled to be:
(a)paid his remuneration, costs and expenses, as approved pursuant to s 60-10 of the IPS, and his costs and expenses incurred in the care, preservation and realisation of the assets of the DFT from the property of the DFT; and
(b)be indemnified out of, and have an equitable lien over, the Trust Property for all such Remuneration and Expenses.
The Deed confers rights of indemnity on the relevant trustee. However, as noted, the Company was disqualified from acting as the trustee of the DFT upon the appointment of the liquidator.
Although it still holds the assets of the DFT as trustee, its duties, rights and powers are limited to protecting the Trust Assets. Nonetheless, the Company retains its right of indemnity or exoneration and its lien over the assets of the trust.[21]
[21]Kite v Mooney, in the matter of Mooney’s Contractors Pty Ltd (in liq) (No 2) (2017) 13 BFRA 98, [57] (citations omitted).
The expenses and remuneration of the liquidator of a corporate trustee, which acts in no other capacity, are debts of the company within the meaning of the Corporations Act and may be paid from trust assets.[22]
[22]Freelance Global v Bensted [2016] VSC 181, [58] (‘Freelance Global’) (citations omitted).
Here, the evidence is that the Company acted solely in its capacity as trustee of the DFT and in no other capacity.
In my exchange with counsel, counsel acknowledged a further basis upon which the Liquidator may claim costs and expenses is that which is known as the ‘salvage principle’, as first propounded in Re Universal Distributing Co Ltd (in liq) (‘Universal Distributing’).[23] In Freelance Global v Bensted,[24] Riordan J considered the right of a liquidator appointed to a corporate trustee to recover expenses from trust assets. His Honour referred to the salvage principle as set out in Universal Distributing in terms to the effect that a person who works for the exclusive purpose of realising, caring for or preserving property to create a fund or pool of assets is entitled to a lien or charge against the fund or pool of assets for the expenses and remuneration incurred in such work. Riordan J noted that the application of the salvage principle entitles a liquidator acting reasonably to be indemnified out of trust assets for the costs and expenses of identifying or attempting to identify trust assets; recovering or attempting to recover trust assets; realising or attempting to realise trust assets; protecting or attempting to protect trust assets; and distributing trust assets to the persons beneficially entitled to them.
[23](1933) 48 CLR 171.
[24]Freelance Global (n 22).
The Liquidator and his staff have undertaken significant work and incurred remuneration, costs and expenses in the furtherance of the purposes of his appointment (together with the costs and expenses of this application).
In order to minimise the time and costs spent in respect of applications to the Court, the Liquidator seeks orders that will allow him to draw his Remuneration and Expenses from the Trust Property once such Remuneration and Expenses are approved pursuant to s 60-10 of the IPS.
The Liquidator has provided evidence of the schedule of hourly rates applied by SMB Advisory, the firm of which he is a partner, together with details of those amounts incurred to date. The rates given by the Liquidator are not unusual for work of the kind to be undertaken by him as receiver.
I will make an order to confirm the Liquidator’s entitlement to be indemnified out of the Trust Assets in respect of the costs and expenses that he has incurred. And in these circumstances, it is appropriate that the liquidator’s Remuneration and Expenses be paid out of Trust Assets.
Costs of the application
An order is sought that the Liquidator’s costs of the application be made from the Trust Property on an indemnity basis.
Where a trustee acts reasonably and in good faith, the general rule is that the trust assets bear the costs of the trustee’s application for advice and directions either directly or under the trustee’s indemnity. Given the circumstances, it is appropriate for the Liquidator to approach the Court for directions and other relief as he has, and that he is justified in paying the costs of the proceeding from Trust Assets.
It is therefore also appropriate that the costs of the present application be met from the Trust Property.
Conclusion
I will make orders to accord with these reasons.
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CERTIFICATE
I certify that the 19 preceding pages are a true copy of the reasons for judgment of Gobbo AsJ of the Supreme Court of Victoria delivered on 30 September 2025.
DATED this twenty-second day of October 2025.
Associate
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