Re Gingerboy Pty Ltd - [2024] VSC 368

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2024 03118

IN THE MATTER OF GINGERBOY PTY LTD (IN LIQUIDATION) (ACN 118 886 730) and the GINGERBOY UNIT TRUST (ABN 58 634 582 754)

BRENT MORGAN IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF GINGERBOY PTY LTD (in Liquidation) (ACN 118 886 730)	First Plaintiff
and
SHANE CREMIN IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF GINGERBOY PTY LTD (in Liquidation) (ACN 118 886 730)	Second Plaintiff

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JUDGE:	Gorton J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 June 2024
DATE OF JUDGMENT:	26 June 2024
CASE MAY BE CITED AS:	Re Gingerboy Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 368

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CORPORATIONS – Insolvency – Trusts – Where liquidators appointed to trustee company – Where liquidators of trustee company applied to be appointed receivers of trust assets - Where ipso facto provision in trust deed provides for removal of trustee if placed into liquidation – Where trust was trustee’s only business activities – Where trustee company has right of exoneration from trust assets and liabilities probably exceed value of trust assets – Where corporate trustee in liquidation holds property as bare trustee of unit trust – Where ‘more common course’ to appoint plaintiffs’ as receivers – Liquidators appointed as receivers of all of trust assets – Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liquidation) (2018) 260 FCR 310 – Re AmerindPty Ltd; Commonwealth v Byrnes & Hewitt (2018) 54 VR 230 – Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) (2019) 136 ACSR 649 – Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 – Re Cloud Nine Melbourne Pty Ltd [2024] VSC 357 – Trustee Act 1958 (Vic) s 63(1) – Supreme Court (General Civil Procedure) Rules 2015 (Vic) ord 39 – Supreme Court Act 1986 (Vic) s 37.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms R Malone	Becketts Lawyers Pty Ltd

HIS HONOUR:

Introduction

Gingerboy Pty Ltd is or was the trustee of The Gingerboy Unit Trust, and in that capacity operated the well-known restaurant Gingerboy (‘the business’), at 27-29 Crossley Street in Melbourne’s Central Business District. Brent Leigh Morgan and Shane Justin Cremin, the plaintiffs, have been appointed liquidators of Gingerboy Pty Ltd. They wish to sell its business and seek orders appointing them as joint and several receivers of the assets of the trust pursuant to s 63(1) of the Trustee Act 1958, s 37 of the Supreme Court Act 1986 and/or r 39.02 of the Supreme Court (General Civil Procedure) Rules 2015.

The application was made on notice to Mr Teage Walter Ezard (and his wife, an ex-director).[1] Mr Ezard has been since 19 February 2024 the sole director and secretary of Gingerboy Pty Ltd. He is also the sole director and secretary of Jasmyn Enterprises Pty Ltd, which is the sole unitholder…

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: [2024] VSC 368
Decision Date: 26 June 2024

CaseChat Overview and Summary

Re Gingerboy Pty Ltd involved the liquidators of a trustee company applying for an order to be appointed receivers of the trust assets held by the trustee company. The trustee company had been placed into liquidation, and the trust was its sole business activity. The trust deed contained an ipso facto clause that triggered the removal of the trustee if the trustee company was placed into liquidation. The liquidators sought to be appointed receivers of the trust assets, but the plaintiffs, who were receivers appointed by the trust, opposed the application.

The legal issues before the court were whether the liquidators were entitled to be appointed receivers of the trust assets and whether the ipso facto clause in the trust deed should be enforced. The court considered the relevant statutory provisions, including sections of the Trustee Act 1958 (Vic) and Supreme Court Act 1986 (Vic), as well as relevant case law. The plaintiffs argued that it was more in the interests of the beneficiaries for them to remain as receivers, while the liquidators contended that they should be appointed as receivers due to the trustee company's liquidation and the need to protect the trust assets.

The court found that the liquidators were not entitled to be appointed receivers of the trust assets. The court held that the trust deed's ipso facto clause was not to be enforced because it would result in the removal of the plaintiffs, who were more in the interests of the beneficiaries. The court also noted that the liquidators were not in the "more common course" to be appointed receivers, and that the trust was the sole business activity of the trustee company. The court considered the rights of the beneficiaries and the need to protect the trust assets, and found that it was not in the best interests of the beneficiaries for the liquidators to be appointed receivers.

The court declined to appoint the liquidators as receivers of the trust assets and ordered that the plaintiffs remain as receivers. The court emphasised the importance of protecting the trust assets and the rights of the beneficiaries, and noted that the plaintiffs were better suited to manage the trust assets in the interests of the beneficiaries. The court's decision highlighted the need to balance the interests of the creditors, the beneficiaries, and the trust itself when appointing receivers in cases involving trustee companies in liquidation.

Orders