Re Glen Peter Oldham as liquidator of Ruby Base Pty Ltd
[2023] WASC 115
•11 APRIL 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE GLEN PETER OLDHAM as liquidator of RUBY BASE PTY LTD; EX PARTE GLEN PETER OLDHAM as liquidator of RUBY BASE PTY LTD [2023] WASC 115
CORAM: HILL J
HEARD: 5 APRIL 2023
DELIVERED : 5 APRIL 2023
PUBLISHED : 11 APRIL 2023
FILE NO/S: COR 51 of 2023
MATTER: IN THE MATTER OF GLEN PETER OLDHAM as liquidator of RUBY BASE PTY LTD
EX PARTE
GLEN PETER OLDHAM as liquidator of RUBY BASE PTY LTD
First Plaintiff
RUBY BASE PTY LTD
Second Plaintiff
Catchwords:
Corporations - Where plaintiff as liquidator of company seeks orders nunc pro tunc to approve sale of assets - Where company in liquidation was trustee of trust - Company removed as trustee on liquidation by terms of trust deed - Application for relief under s 89 of Trustees Act 1962 (WA) - Application for appointment of liquidator as receiver of trust property - Turns on own facts
Legislation:
Insolvency Practice Schedule 2016 (Corporations) (Cth) 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
Category: B
Representation:
Counsel:
| First Plaintiff | : | J M Healy |
| Second Plaintiff | : | J M Healy |
Solicitors:
| First Plaintiff | : | WSR Law |
| Second Plaintiff | : | WSR Law |
Case(s) referred to in decision(s):
Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 268 CLR 524
Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677
In the matter of Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409
In the matter of Mecfab Holdings Pty Ltd [2015] NSWSC 46
Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310
Rathner (liquidator), Re Garrows Close Pty Ltd (in liq) [2021] FCA 505
HILL J:
On 29 January 2023, the first plaintiff, Glen Peter Oldham, was appointed as administrator of the second plaintiff, Ruby Base Pty Ltd, and on 1 March 2023 was appointed liquidator. Prior to the appointment of Mr Oldham as liquidator, Ruby Base Pty Ltd (Company) was the trustee of the Ruby Base Trust (Trust).
On 28 March 2023, the Liquidator filed an originating process in this court seeking:
(a)directions that the Liquidator has been acting reasonably and justified in the administration and liquidation of the Company to date;
(b)orders that the Liquidator be appointed as receiver and manager of the assets of the Trust, pursuant to O 51 r 1 of the Rules of the Supreme Court 1971 (WA), further and alternatively s 90-15 of the Insolvency Practice Schedule (Corporations) (Insolvency Practice Schedule) and s 89 of the Trustees Act 1962 (WA) (Trustees Act);
(c)orders that the Liquidator, in acting as receiver and manager, has the powers under s 420 of the Corporations Act 2001 (Cth) (Act), as if the reference to 'corporation' in that section was a reference to the Trust.
Factual background
The plaintiffs filed two affidavits of Mr Oldham in support of their application: the first on 28 March 2023, and the second on 4 April 2023. This summary is taken from these affidavits.
The Company was incorporated on 26 May 2008.[1] A current and historical company extract obtained from the records of the Australian Securities and Investments Commission (ASIC) discloses that the sole director, company secretary and shareholder of the Company is Diana Vozila.[2]
[1] Affidavit of Glen Peter Oldham filed 28 March 2023 'GPO-3'.
[2] Affidavit of Glen Peter Oldham filed 28 March 2023 'GPO-3'.
On 1 March 2023, the first plaintiff was appointed liquidator of the Company.[3]
[3] Affidavit of Glen Peter Oldham filed 28 March 2023 'GPO-2'.
Based on the enquires undertaken to date, the Liquidator believes:[4]
(a)the Company was the trustee of the Trust;
(b)the Company did not trade in its own right; and
(c)the Company only acted in its capacity as trustee of the Trust and did not conduct any other business or hold any assets in any other capacity.
[4] Affidavit of Glen Peter Oldham filed 28 March 2023 [8], [16] - [17].
Among the books and records of the Company is a copy of the Trust deed. The Trust deed discloses that the Trust was established on 9 September 2019.[5] Pursuant to cl 8.7(b) of the Trust deed, on the appointment of a liquidator, the Company was required to retire as trustee of the Trust and was disqualified from acting as trustee.
[5] Affidavit of Glen Peter Oldham filed 28 March 2023 [18], 'GPO-9'.
Service of Application
I am satisfied that ASIC has been served with copies of the originating process and the affidavit of Mr Oldham a reasonable time before the hearing of the application,[6] as required by r 2.8 of the Supreme Court (Corporations) Rules 2004 (WA).
[6] Second affidavit of Glen Peter Oldham filed 4 April 2023 'GPO-12'.
No one has given notice to the plaintiffs' solicitors or to the court that they wish to be heard on the application.
Legal principles for appointment of receiver
The legal principles that govern this application are well known and can be summarised in the following terms.
Where a corporate trustee enters into 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 holds 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.[7]
[7] 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) and [198] (Farrell J); Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [22] ‑ [28] (Gordon J).
The Liquidator, in essence, has two options available to him. One, to apply for an order conferring on him the power to deal with the assets of the trust or, two, to apply to be appointed as receiver and manager of the Trust.
In this case, the first plaintiff seeks to be appointed as receiver and manager of the Trust and also seeks orders under s 90‑15 of the Insolvency Practice Schedule and s 89 of the Trustees Act 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 Insolvency Practice 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 ss 479(3) and 511 of the Act.
The power under s 89 of the Trustees Act is also relatively broad. It enables the court to confer upon a trustee the power to deal with trust assets.[8] It has been accepted by courts in respect of similar, but not identical legislation, that, by necessary implication, this power not only permits the conferral of power on a corporate trustee, but also its liquidators in such a capacity.[9]
[8] Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [30] (Gordon J).
[9] Rathner (liquidator), Re Garrows Close Pty Ltd (in liq) [2021] FCA 505 [8] (Beach J).
Courts are generally willing, upon an appropriate application, to make orders permitting the liquidator of a (former) corporate trustee to sell trust assets.
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. Orders may be made nunc pro tunc to authorise any sale of assets that has already occurred.[10]
[10] Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [91], [152], [198].
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.[11]
[11] See In the matter of 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 external administration. This aids in the vindication of the trustee company's right of indemnity out of the trust's assets.[12]
[12] See In the matter of 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.[13] This includes the costs of the liquidation.
[13] 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 8.7(b) of the Trust deed, on the appointment of Mr Oldham 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. The Company only acted as trustee of the Trust and in no other capacity and all assets held were held as trustee of the Trust.
The orders sought by the plaintiffs are consistent with the legal principles that I have outlined above. In particular, it is clear on the evidence before the court that the entitlement of the Company to the exoneration from the assets of the Trust far exceed the assets of the Company. Given the evidence before the court, I accept that it is expedient for Mr Oldham to have the power to sell the property of the Trust and that orders be made nunc pro tunc from the time of his appointment as liquidator.
I also accept that the proposal to appoint the Liquidator as receiver and manager of the Trust without security 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.
In these circumstances, I accept there are advantages with the proposal that the first plaintiff as liquidator be appointed as receiver and manager of the Trust. These include that he 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.
I accept that 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 of this application.
I also accept Mr Oldham's evidence that the Company has acquired assets and incurred liabilities only as Trustee of the Trust. For this reason, it is appropriate to make orders under s 90-15 of the Insolvency Practice Schedule 2016 that the first 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 comprised the assets of the Trust.
Finally, in relation to the costs of the application, the plaintiffs sought orders for the costs of the application be paid from the Trust property. I consider this to be the appropriate costs order and make that order.
For these reasons, at the conclusion of the hearing, I made orders 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.
FD
Associate to the Honourable Justice Hill
11 APRIL 2023
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