Re Asset Growth Pty Ltd (Administrator Appointed)
[2024] WASC 89
•25 MARCH 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE ASSET GROWTH PTY LTD (ADMINISTRATOR APPOINTED); EX PARTE MATHIEU TRIBUT as administrator of ASSET GROWTH PTY LTD (ADMINISTRATOR APPOINTED) [2024] WASC 89
CORAM: HILL J
HEARD: 15 MARCH 2024
DELIVERED : 15 MARCH 2024
PUBLISHED : 25 MARCH 2024
FILE NO/S: COR 22 of 2024
MATTER: IN THE MATTER OF ASSET GROWTH PTY LTD (ADMINISTRATOR APPOINTED)
EX PARTE
MATHIEU TRIBUT as administrator of ASSET GROWTH PTY LTD (ADMINISTRATOR APPOINTED)
Plaintiff
Catchwords:
Corporations - External administration - Winding up - Where company in liquidation is bare trustee - Application for appointment of liquidator as receiver of trust property - Application for directions by liquidator - Turns on own facts
Legislation:
Corporations Act 2001 (Cth) s 420, Sch 2 s 90-15
Rules of the Supreme Court 1971 (WA), O 51 r 1
Supreme Court Act 1935 (WA), s 25(9)
Result:
Application granted and directions made
Category: B
Representation:
Counsel:
| Plaintiff | : | Ms S Paisal |
Solicitors:
| Plaintiff | : | Mendelawitz Morton Commercial Lawyers |
Cases referred to in decision:
Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 268 CLR 524
Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677
Re Australian Property Custodian Holdings Ltd (in liq) [2021] VSC 51
Re Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481
Re Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409
Re Mecfab Holdings Pty Ltd [2015] NSWSC 46
See Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript.)
On 6 November 2023, the plaintiff was appointed as liquidator of Asset Growth Pty Ltd (ACN 162 693 718) (Company). Prior to the appointment of the plaintiff as liquidator, the Company was the trustee of the Elite Property Group Unit Trust (Trust).
On 21 February 2024, the plaintiff filed an originating process in this Court pursuant to s 90-15 and s 90-20 of sch 2 to the Corporations Act 2001 (Cth) (Act),[1] seeking, among other things, orders that the plaintiff:
(a)be appointed as receiver of the assets of the Trust; and
(b)is acting properly and is justified in proceeding to conduct the affairs of the Trust on the basis that the Company carried on business solely in its capacity as trustee of the Trust, and all assets of the Company are properly characterised as property held by the Company in its capacity as trustee of the Trust.
[1] Further and alternatively pursuant to O 51 r 1(1) of the Rules of the Supreme Court 1971 (WA) or the court's inherent jurisdiction.
The originating process was initially listed to be heard before me on 23 February 2024. On that date, the originating process was adjourned until 1 March 2024 and then was further administratively adjourned until today.
Factual background
The plaintiff filed three affidavits in support of their application: two affidavits of the plaintiff filed 21 February 2024 and 14 March 2024 and an affidavit of service of Shivangi Paisal on the Australian Securities and Investments Commission (ASIC) filed 21 February 2024. This summary is taken from these affidavits.
The Company was incorporated on 5 March 2013. A current and historical company extract obtained from ASIC records discloses that the directors of the Company are Wendy Bosman and David McManus.
On 6 November 2023, the plaintiff was appointed administrator of the Company pursuant to s 436A of the Act. On 11 March 2024 at the second meeting of creditors, a resolution was passed pursuant to s 491 of the Act to wind up the Company and appoint the plaintiff as liquidator of the Company.
Based on the enquires undertaken to date, the plaintiff believes:
(a)the Company was the trustee of the Trust; and
(b)the Company did not operate any business or conduct any activities in any capacity other than as trustee of the Trust.
Among the books and records of the Company is a copy of the Elite Property Group Unit Trust Deed (Trust Deed). The Trust Deed discloses that the Trust was established on 22 September 2015. Pursuant to cl 16.4 of the Trust Deed, on the appointment of a liquidator, the Company is required to retire as trustee of the Trust and is disqualified from acting as trustee.
Service of the application
I am satisfied that ASIC has been served with copies of the originating process and the affidavit of the plaintiff, as required by r 2.8 of the Supreme Court (Corporations) Rules 2004 (WA).
No-one has given notice to the plaintiff's solicitors or to the court that they wish to be heard on the application.
Legal principles
The legal principles that govern this application are well known and can be summarised as follows.
Where a corporate trustee enters external administration, the company's right of indemnity and accompanying equitable lien over the assets of the trust survives the appointment. Where a company has been removed as trustee of the trust by reason of the terms of the trust 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] See Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310 [44], [85] - [91] (Allsop CJ), [139], [142] (Siopis J), [198] (Farrell J); Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677 [22] - [28] (Gordon J).
The liquidator, in essence, has two options. First, to apply for an order that confers power on the liquidator to deal with the assets of the trust or, second, to apply to be appointed as receiver and manager of the trust.
In this case, the plaintiff seeks to be appointed as receiver and manager of the Trust, and seeks orders under s 90-15 of sch 2 of the Act (Schedule) to facilitate their dealing with the assets of the Company to enable the winding up of the Company and the Trust to proceed.
Section 90-15(1) of the Schedule provides that the court may make 'such orders as it thinks fit in relation to the external administration of a company'. The power is broad and is at least as extensive as the powers formerly available under s 479(3) and s 511 of the Act.[3]
[3] See Re Australian Property Custodian Holdings Ltd (in liq) [2021] VSC 51 [35] (Sloss J); Re Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481 at [7] - [8] (Gleeson CJ).
Order 51 r 1 of the Rules of the Supreme Court 1971 (WA) deals with the court's power to appoint a receiver. The court also has power, pursuant to s 25(9) of the Supreme Court Act 1935 (WA), to appoint a receiver where it appears to be just and convenient.
In the absence of any relevant conflict, it is commonly the case that the court will appoint the liquidator of the corporate trustee as receiver without security.[4]
[4] See Re Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409 (Brereton J).
Appointing a liquidator or administrator of a corporate trustee as a 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 liquidation. This aids in the vindication of the trustee company's right of indemnity out of the trust's assets.[5]
[5] See Re Mecfab Holdings Pty Ltd [2015] NSWSC 46 [9].
Once the sale of the trust's assets has occurred, the proceeds may be appropriated by way of exoneration as part of the conduct of the liquidation in accordance with the statutory priorities set out in pt 5.6, div 6 of the Act.[6] This includes the costs of the liquidation.
[6] See Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 268 CLR 524 [55] - [58] (Kiefel CJ, Keane & Edelman JJ), [95] - [97] (Bell, Gageler & Nettle JJ), [171] (Gordon J).
Disposition
On the evidence before me, I accept that by reason of cl 16.4 of the Trust Deed, on the appointment of the plaintiff as liquidator, the Company was required to retire as trustee of the Trust and was immediately disqualified from acting as trustee. As a consequence, the Company is now a bare trustee of the Trust's assets and does not have the power to sell or otherwise deal with the assets of the Trust. No new trustee has been appointed.
I am satisfied that the Company only acted as trustee of the Trust and in no other capacity, and that all Trust assets held by the Company were held in its capacity as trustee of the Trust.
I am also satisfied that the orders sought by the plaintiff are consistent with the legal principles that I have outlined above.
Given the evidence before the court, I consider it appropriate to appoint the plaintiff as receiver and manager of the Trust without security. This is in accordance with the legal principles outlined above and will protect the Company's right of indemnity, as well as the position of creditors.
Other advantages with the proposal include that the plaintiff is subject to the regulatory regime applicable to insolvency practitioners, he has professional indemnity insurance, and is subject to the continued supervision of the court.
The form of orders sought in terms of service of the court's orders and the allowance for any aggrieved party to apply to this court to vacate or vary these orders protects the creditors of the Company from any possible prejudice that might otherwise arise from this application.
In relation to the orders sought under s 90-15 of the Schedule, I accept the plaintiff's evidence that the Company has acquired assets and incurred liabilities only in the capacity as trustee of the Trust.
For this reason, it is appropriate to make orders that the plaintiff will be acting properly and is justified in proceeding to conduct the affairs of the Trust on the basis that the business and assets of the Company comprise the assets of the Trust.
Finally, in relation to the costs of the application, the plaintiff sought orders for the costs of the application be costs in the winding up of the Company and otherwise be paid from the Trust property. In my view, these are the appropriate costs orders.
Conclusion
For these reasons, I consider it is appropriate to make the orders sought, in terms of 'Annexure A'.
Annexure A
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
25 MARCH 2024
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