Kirk v Westlink Pty Ltd

Case [2025] QSC 152

SUPREME COURT OF QUEENSLAND

CITATION:

Kirk v Westlink Pty Ltd [2025] QSC 152

PARTIES:

DARRYL EDWARD KIRK AS RECEIVER AND MANAGER OF WESTLINK PTY LTD (RECEIVERS AND MANAGERS APPOINTED) ACN 133 049 948

First applicant

and

STEPHEN PHILLIP EAREL AS RECEIVER AND MANAGER OF WESTLINK PTY LTD (RECEIVERS AND MANAGERS APPOINTED) ACN 133 049 948

Second applicant

v

WESTLINK PTY LTD (RECEIVERS AND MANAGERS APPOINTED) ACN 133 049 948

Respondent

FILE NO:

BS 16645/24

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

14 April 2025 (ex tempore)

DELIVERED AT:

Brisbane

HEARING DATE:

14 April 2025

JUDGE:

Hindman J

ORDER:

Pursuant to Corporations Act 2001 (Cth), s. 424(1), the applicants would be justified in performing their obligations, and in causing the respondent to perform its obligations, under the Deed of Settlement dated 19 December 2024 between the respondent, the applicants, Quinbrook Asset Management Pty Ltd and Perpetual Corporate Trust Ltd.

The applicants’ costs of the application (which are not met by Quinbrook Asset Management Pty Ltd) are their costs in the receivership of the respondent and are to be paid on the indemnity basis, including reserved costs.

CATCHWORDS:

CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – POWERS – TO APPLY TO COURT FOR DIRECTIONS – where the applicants are the receivers of a company – where the applicants seek judicial advice concerning the receivership of the company, namely that they would be justified in performing certain obligations and in causing the company to perform certain obligations under a deed of settlement – whether this case is one in which the giving of judicial advice is appropriate – whether the judicial advice sought by the applicants ought be given

Corporations Act 2001 (Cth), s. 424

GGPG Pty Ltd v Golden Eagle Property Group Pty Ltd [2024] FCA 1188, cited
Heenan v Ralan Paradise No 1 Pty Ltd (No 2) (2021) 156 ACSR 86, cited
Marley v The Mutual Security Merchant Bank and Trust Co Limited [1991] All ER 3, distinguished
Merchant Banking Company of London v The London and Hanseatic Bank [1886] 55 LJ Ch 479, cited
One T Development Pty Ltd v Peter Krejci(in his capacity as liquidator of ENA Development Pty Ltd) [2023] NSWCA 120, cited
Palk v Mortgage Services Funding PLC [1993] Ch 330, cited
RCR Tomlinson Ltd [2018] NSWSC 1859, cited
Re ACN 004 410 833 Ltd [2021] NSWSC 799, cited
Re Ansett Australia Ltd and Korda (No 3) (2002) 115 FCR 409, cited
Re Banksia Securities Ltd (2022) 371 FLR 133, cited
Re G B Nathan & Co Pty Ltd (1991) 24 NSWLR 674, cited
Re IG Energy Holdings (Australia) Pty Ltd (2023) 168 ACSR 104, cited
Re Mirabela Nickel [2018] WASC 335, cited
Re Octaviar Administration Pty Ltd [2017] NSWSC 1556, cited
Re Octaviar Ltd [2016] NSWSC 16, cited

Re One.Tel Network Holdings Pty Ltd (2001) 40 ACSR 83, cited

COUNSEL:

C A Wilkins KC and A G…

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AGLC
Kirk v Westlink Pty Ltd [2025] QSC 152
Case
[2025] QSC 152
Decision Date

CaseChat Overview and Summary

The case of Kirk v Westlink Pty Ltd involved the receivers of Westlink Pty Ltd, who sought judicial advice concerning the receivership of the company. Specifically, the receivers wanted to know if they would be justified in performing certain obligations and causing the company to perform certain obligations under a deed of settlement. The court had to determine whether this was a case where judicial advice should be given and, if so, what that advice should be. The primary issue was whether the sought judicial advice was appropriate given the commercial nature of the decision, especially considering the complexity and time pressure involved in balancing competing interests within a large corporate group.

The court considered two main issues. The first was whether it was appropriate to give judicial advice in this case, particularly given the commercial nature of the decision. The second was, if advice was to be given, what that advice should be. The court determined that this was indeed an appropriate case for judicial advice, noting that the decision being sought was complex, made under time pressure, and involved balancing competing interests. The court concluded that there was an “intrinsic unfairness” in exposing the receivers to personal liability if they made a decision that involved risks for affected constituencies, especially when the decision was complex.

In reaching its decision, the court noted that the receivers had gathered sufficient information to allow the court to consider and give the sought advice. The court was satisfied that the commercial decision to be made was being done under circumstances where not all relevant information was known. The court then proceeded to provide the judicial advice, allowing the receivers to perform their obligations and cause the company to perform its obligations under the deed of settlement, subject to certain conditions. The court also ordered that the receivers' costs of the application would be paid on the indemnity basis.

This decision underscores the importance of judicial advice in complex corporate receivership cases, particularly when the decisions involved are of a commercial nature and made under significant pressure. The court's ruling highlights the need to balance the risks of personal liability for receivers against the potential for intrinsic unfairness in such situations.

Orders

Orders of the court

Pursuant to Corporations Act 2001 (Cth), s. 424(1), the applicants would be justified in performing their obligations, and in causing the respondent to perform its obligations, under the Deed of Settlement dated 19 December 2024 between the respondent, the applicants, Quinbrook Asset Management Pty Ltd and Perpetual Corporate Trust Ltd.

The applicants’ costs of the application (which are not met by Quinbrook Asset Management Pty Ltd) are their costs in the receivership of the respondent and are to be paid on the indemnity basis, including reserved costs.

Background

Background to the litigation

It seems to me that, in an application of this nature, there are two main issues that need to be addressed. The first is whether it is the type of case where judicial advice should be given at all. That looms large in a case such as this where the content of the judicial advice, in a general way, might be described as providing commercial-type advice, as distinct from strict legal-type advice which the court is ordinarily very willing to give. The second is then, if advice is to be given, what that advice should be, which effectively, although not precisely, is like the court putting itself in the position of the Receivers, to see if the steps that the Receivers wish to get advice about are reasonable steps for the court to endorse. Those two main issues do overlap to some extent. Factual background There is no dispute between any of the parties that have appeared today about the background to the proceeding or the principles that are to be applied.Westlink and the appointment of the Receivers Westlink was incorporated on 2 September 2008, and was appointed as the trustee of the Westlink Industrial Trust (the WIT) on 4 September 2008. It had Mr Craig Doyle as its sole director from incorporation until October 2023, when he was replaced as a director by his brother Mr Mark Doyle. On 25 May 2022, the Receivers were appointed to all the assets of Westlink and the WIT by Starkorp Pty Ltd as trustee for the Swedish Style Family Trust (Starkorp) pursuant to a deed dated that day. Starkorp is the second ranking secured creditor of Westlink and the WIT pursuant to a loan agreement between Starkorp and Mr Craig Doyle dated 24 June 2019, a deed of guarantee between Starkorp and Westlink dated 24 June 2019 and a general security deed between Westlink and Starkorp dated June 2019. As at 31 August 2024, Starkorp was owed approximately $5 million on its loan. Since then, the debt owed to Starkorp has grown with interest (being simple interest at 20% per annum) and enforcement costs to more than $5.5 million. Starkorp’s security is registered on the Personal Property Securities Register as an “all present and after acquired property” (All PAP) security. There is one security interest registered on the PPSR in priority to Starkorp’s interest, being an All PAP interest dated 14 July 2017 in favour of McInnes Wilson Lawyers Pty Ltd which has since been transferred to DFF as the trustee for the DFF Trust. The allegation in the material is that the debt that is owed to DFF is in the order of $1.9 million, which debt, as between DFF and Starcorp, has priority, I understand is subject to dispute, and is not for me to resolve in this application. I have been informed by Ms Long for the Doyle Interests, though I am not sure it is actually in the material, that there are no other substantial creditors of Westlink that need to be considered.Westlink and the Lockyer Energy Project On or about 5 January 2009, Westlink as trustee of the WIT acquired a parcel of land at Lot 191 Rangers Road, Adare, Queensland (the Land). It obtained a development approval for the purpose of constructing an open-cycle gas turbine peaking power station on the Land (the Development Application). The project to develop the Land has become known as the Lockyer Energy Project (the Project).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

A court may give also advice despite a decision being of a commercial or business nature where the decision “is complex, made under time pressure and involves the balancing of competing interests in respect of a large corporate group” on the basis that there is an “‘intrinsic unfairness’ in exposing an administrator to risk of personal liability where the decision is complex and ‘where any decision that is made, including making no decision, will have inevitable risks for some or all of the affected constituencies’”: Re IG Energy Holdings (Australia) Pty Ltd (2023) 168 ACSR 104 at [22] per Halley J, citing RCR Tomlinson Ltd [2018] NSWSC 1859 at [14] per Black J.Legal consideration Turning then to the two issues that I identified as the main issues: first, whether this is the type of case where judicial advice should be given at all, and second, if the answer to the first issue is “yes”, what that judicial advice should be. Is this the type of case where judicial advice should be given?Should judicial advice be given at all in this case? It does seem uncontroversial between the parties that this is an appropriate case for judicial advice to be given. No party contended any reason to conclude to the contrary. It is, of course, ultimately a matter for the court to determine whether it is appropriate to give judicial advice. I am satisfied that is an appropriate case in which judicial advice should be given. I note that, as I have already mentioned, the advice sought primarily concerns what I think is properly categorised as a commercial decision. There are, in the circumstances that exist, three options that appear reasonably open to the Receivers. They can be described as, first, a “wait and see” approach, which means that the Receivers just sit by, not seeking to convert any securities to cash to pay out the secured creditor, on the hope that, in due course, income will be received by Westlink pursuant to Special Condition 14.1. The second option is litigation, in particular litigation in the nature of the proposed claim that has been prepared against Quinbrook, which in essence alleges that Quinbrook has not been taking the steps necessary to fulfil its obligations that are owed to Westlink that would see money start to be received under Special Condition 14.1. And the third option that is on the table at the moment is settlement. The option that the Receivers have chosen to pursue, which is settlement, is contentious. That can be seen in the correspondence in the material from the Doyle Interests. As I have already noted, those concerns have not been retracted, despite their alleged neutral position in relation to the application. I think it is appropriate to give judicial advice in this case. I am satisfied that sufficient information has been gathered by the Receivers and placed before the court to allow the advice to be considered and given. I can readily accept that the commercial decision to be made is being made in circumstances where not all relevant information is known to the Receivers or the court.