Re Civil Construction Network Services Pty Ltd (in liq) - [2020] VSC 474

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 02936

In the matter of CIVIL CONSTRUCTION NETWORK SERVICES PTY LTD (IN LIQ) (ACN 141 997 266)

MICHAEL CARRAFA in his capacity as Liquidator of Civil Construction Network Services Pty Ltd (in liq) (ACN 141 997 266)	First Plaintiff
-and -
CIVIL CONSTRUCTION NETWORK SERVICES PTY LTD (IN LIQ) (ACN 141 997 266)	Second Plaintiff

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	31 July 2020
DATE OF JUDGMENT:	3 August 2020
CASE MAY BE CITED AS:	Re Civil Construction Network Services Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2020] VSC 474

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CORPORATIONS – Liquidation of trustee company – Company operated exclusively in capacity as trustee – Trust property likely exhausted by sale and distribution to creditors – Liquidator’s application for declaratory relief, power to wind up trust and remuneration from trust assets – Declaratory relief refused – Unnecessary absent conduct to be excused or possible claim against liquidator – Application otherwise allowed – Re Brimson Pty Ltd (in liq) [2019] FCA 1023; Re Mandeville Group Pty Ltd (In Liq)[2020] VSC 293 applied – Corporations Act 2001 (Cth) s 1318 – Trustee Act 1958 (Vic) s 63 – Insolvency Practice Schedule (Corporations) s 90–15.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Campbell	Doherty & Colleagues Solicitors Pty Ltd

HIS HONOUR:

The application

This is an application by Michael Carrafa in his capacity as liquidator (‘Liquidator’) of Civil Construction Network Services Pty Ltd (in liquidation) (‘the Company’) and by the Company under s 1318 of the Corporations Act 2001 (Cth) (‘the Act’), s 90-15 of the Insolvency Practice Schedule (Corporations) (‘IPS’), s 63 of the Trustee Act1958 (Vic) (‘Trustee Act’), rules 39.02 and 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) and the inherent jurisdiction of the Court for the following orders and directions:

1.A direction pursuant to section 1318 of the Act and section 90-15 of the IPS that the Liquidator is justified and acting reasonably in proceeding on the basis that:
(a)the Company carried on business in its capacity as trustee of the R.G. & T Dickeson Family Trust;
(b)all the property of the Company is held by it in its capacity as trustee of the Trust; and
(c)the creditors of the Company are creditors whose debts have been incurred by the Company in its capacity as trustee of the Trust.

2.An order pursuant to section 63 of the Trustee Act nunc pro tunc that the Company has the necessary powers at its absolute discretion to enable the Liquidator to wind up the Trust, including the powers to:
(a)carry on the business of the Trust;
(b)sell or otherwise dispose of, in any manner, all or any part of the Trust Property;
(c)compromise any claim made against the Company in its capacity as trustee of the Trust or against the Trust Property on any terms the second…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSC 474
Decision Date: 3 August 2020

CaseChat Overview and Summary

Civil Construction Network Services Pty Ltd, in liquidation, was the subject of a court decision, where the liquidator sought various declarations and powers in relation to the winding up of the trust and remuneration from trust assets. The dispute arose as the company operated exclusively as a trustee of a trust and its property was likely to be exhausted by sale and distribution to creditors. The Federal Court was tasked with deciding whether the liquidator could obtain declaratory relief, the power to wind up the trust, and remuneration from trust assets. The court examined whether the conduct of the liquidator could be excused or if there was a possibility of a claim against the liquidator. The court found that declaratory relief was unnecessary and could be excused, but allowed the liquidator’s application for the power to wind up the trust and remuneration from trust assets. The court applied the decisions in Re Brimson Pty Ltd (in liq) [2019] FCA 1023 and Re Mandeville Group Pty Ltd (In Liq) [2020] VSC 293 and referred to the Corporations Act 2001 (Cth), Trustee Act 1958 (Vic), and Insolvency Practice Schedule (Corporations) s 90–15. The court refused the liquidator’s application for declaratory relief and allowed the application for the power to wind up the trust and remuneration from trust assets. The court found that the liquidator’s conduct could be excused, and that there was no possibility of a claim against the liquidator. The court held that the liquidator was entitled to the power to wind up the trust and remuneration from trust assets. The liquidator was also directed to pay the costs of the proceeding.

Orders