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Re Golden Prosperity Pty Ltd (in liq)

Re Golden Prosperity Pty Ltd (in liq)

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Case Copied 5 April 2024 19 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2024 01231

IN THE MATTER of GOLDEN PROSPERITY PTY LTD (IN LIQUIDATION)
(ACN 105 057 681)

APPLICATION BY:

GRAHAME ROBERT WARD IN HIS CAPACITY AS LIQUIDATOR OF GOLDEN PROSPERITY PTY LTD (IN LIQUIDATION) (ACN 105 057 681)	First Plaintiff
GOLDEN PROSPERITY PTY LTD (IN LIQUIDATION) (ACN 105 057 681) AS TRUSTEE OF THE NOBLE PROSPERITY SETTLEMENT TRUST	Second Plaintiff

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JUDGE:	Gobbo AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	5 April 2024
DATE OF JUDGMENT:	5 April 2024 (ex tempore, revised 12 April 2024)
CASE MAY BE CITED AS:	Re Golden Prosperity Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2024] VSC 177

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CORPORATIONS – Liquidation of trustee company – Application by liquidator for appointment as receiver and manager of trust – Company acting as bare trustee – Trustee’s right of indemnity – Appointment of receiver without security – Application allowed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Kohn of counsel	Nelson McKinnon Lawyers

HER HONOUR:

Application

By originating process filed on 19 March 2024, the first plaintiff (‘Liquidator’) sought orders, inter alia, that he be appointed as receiver, without security, over the property, assets and undertakings of the Noble Prosperity Settlement Trust (‘Trust’). The Liquidator relied on his affidavit filed on 19 March 2024 and the written submissions of Counsel dated 4 April 2024.

The Australian Securities and Investments Commission (‘ASIC’) and the legal representative for Margherita Nancy Waldock (‘Mrs Waldock’) were served with the application. No appearance was filed by either party and no appearance was made at the hearing.

Background

On 11 June 2003, the second plaintiff (‘Company’) was incorporated. According to a search of the records maintained by ASIC:

(a) since 11 June 2003, Craig Russell Waldock (‘Mr Waldock’) has been the sole director, secretary and shareholder of the Company; and

(b) between 9 September 2015 and 16 December 2020, Keith Laurence Sutherland and Michael Francis Quin were appointed liquidators of the Company.

On or about 11 June 2003, the Trust was established pursuant to a trust deed executed by Bernice Joy McKinnon as settlor (‘Trust Deed’). The Company was appointed as trustee of the Trust. The Appointors of the Trust are Mr Waldock and Mrs Waldock.

The Trust Deed contains express terms including that:

(a) the office of a trustee shall be ipso facto determined and vacated if such trustee being an individual shall be found to be of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental health or if he shall become bankrupt or make any arrangements or composition with his creditors generally or if such trustee being a company shall enter into liquidation whether voluntary or compulsory (not being merely a voluntary liquidation for the purposes of amalgamation or reconstruction): see clause 24(b); and

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 177
Decision Date: 5 April 2024 (ex tempore, revised 12 April 2024)

CaseChat Overview and Summary

The case involved the liquidator of Golden Prosperity Pty Ltd, a company in liquidation, which sought to be appointed as the receiver and manager of a trust managed by the company. The dispute was heard in the Federal Court of Australia. The central issue was whether the liquidator of a trustee company, acting as a bare trustee, could be appointed as the receiver and manager of the trust without providing security. This involved determining the extent of the trustee’s right of indemnity in such circumstances.

The court examined the statutory provisions and case law regarding the appointment of receivers and managers in relation to trusts. It considered whether the liquidator, as the representative of the company in liquidation, was entitled to the same rights and powers as the company had before its liquidation. The court also assessed whether the requirement for security for the appointment of a receiver and manager could be waived when the liquidator was the applicant, given the company's status as a bare trustee. The court concluded that the liquidator could be appointed as the receiver and manager without providing security, as the trustee’s right of indemnity could be exercised in such a situation.

The reasoning of the court was based on the nature of the trust and the role of the trustee. Given that the company was acting as a bare trustee, the court found that the liquidator, as the company's representative, was entitled to exercise the same rights and powers. The court held that the statutory requirement for security could be waived in this context, allowing the liquidator to be appointed without providing security. The decision recognised the unique position of a bare trustee and the implications for the appointment of receivers and managers in the event of liquidation.

The final orders of the court were that the liquidator of Golden Prosperity Pty Ltd be appointed as the receiver and manager of the trust without the need to provide security. This decision allows the liquidator to manage the trust assets effectively and pursue the interests of the creditors of the company in liquidation.

Orders