SUPREME COURT OF QUEENSLAND
CITATION:
Re Humphreys & Anor [2018] QSC 241
PARTIES:
ROBERT COLIN HUMPHREYS AS LIQUIDATOR OF HARTS TRANSPORT (QLD) PTY LTD (IN LIQUIDATION) (A.CN. 081 358 563)
(first applicant)
and
HARTS TRANSPORT (QLD) PTY LTD (IN LIQUIDATION) (A.CN. 081 358 563) IN ITS CAPACITY AS TRUSTEE OF THE JL & BA HART FAMILY TRUST(second applicant)
FILE NO/S:
SC66/2018
DIVISION:
Trial
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court at Mackay
DELIVERED ON:
16 October 2018
DELIVERED AT:
Mackay
HEARING DATE:
15 October 2018
JUDGE:
Crow J
ORDER:
The Court directs that:
1. Pursuant to clause 90-15 of the Insolvency Practice Schedule the applicants are justified in distributing the unfair preference proceeds and the assets of the JL & BA Hart Family Trust:
a) Firstly, in payment of those debts and claims (including the first applicant’s expenses and remuneration) entitled to priority by s 556 of the Corporations Act 2001 (Cth) and in the order set out in s 556;
b) Secondly, as to the balance, proportionately among the admitted creditors of Harts Transport (Qld) Pty Ltd (in liquidation) A.C.N. 081 358 563.
The order of the Court is that:
1. The applicants’ costs of and incidental to this application be paid from the assets of the JL & BA Hart Family Trust on the indemnity basis.
CATCHWORDS:
CORPORATIONS – TRUSTS AND TRUSTEES – LIQUIDATION – where the company traded solely as trustee of the trust – where notwithstanding the company’s liquidation, it has remained the trustee – where under the control of the first applicant as liquidator, the trust assets have been realised by the company – where because the company remains the trustee there was no need for the first applicant to seek to be appointed receiver in order to be authorised to sell the trust assets – where the trust assets are insufficient to meet the amounts owing by the company (as trustee) to creditors – where the company (as trustee) is entitled to have recourse to trust assets to discharge the liabilities the company has incurred as trustee (the right of exoneration) – where the factual circumstances mean the company’s recourse to its right of exoneration will exhaust all assets of the trust – whether the priority regime established by the Corporations Act 2001 (Cth) applies to the distribution of the proceeds of the trustee’s right of exoneration amongst trust creditors – whether the trust assets are to be applied by the applicants in accordance with the priority regime established in s 556 of the Corporations Act 2001 (Cth) – whether the company’s interest in the trust assets in the form of its right of exoneration is property of the company within the meaning of the Corporations Act 2001 (Cth) – whether the trustee’s right of exoneration is property of the company
Corporations Act 2001 (Cth) s 501, s 560, s 556
Trusts Act 1973 (Qld) s 72, s 96Jones (liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil and Concrete…
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- AGLC
- Re Humphreys and Anor [2018] QSC 241
- Case
- [2018] QSC 241
- Decision Date
CaseChat Overview and Summary
The court had to determine whether the priority regime established by the Corporations Act 2001 (Cth) applied to the distribution of the proceeds from the trustee's right of exoneration among the trust creditors. The liquidators argued that the trust assets were insufficient to meet the company's liabilities as trustee, and therefore, the company's right of exoneration would exhaust all assets of the trust. The central issue was whether the priority regime applied to the distribution of the proceeds of the trustee's right of exoneration among the trust creditors, and whether the company's interest in the trust assets in the form of its right of exoneration constituted property of the company.
The court concluded that the priority regime under the Corporations Act 2001 (Cth) applied to the distribution of the proceeds of the trustee's right of exoneration. The court held that the trust assets were to be applied by the applicants in accordance with the priority regime established in section 556 of the Corporations Act 2001 (Cth). Additionally, the court found that the company's interest in the trust assets, in the form of its right of exoneration, constituted property of the company. Consequently, the court directed that the unfair preference proceeds and the assets of the JL & BA Hart Family Trust be distributed in a specific order, with priority given to debts and claims entitled to priority under section 556, followed by proportionate distribution among the admitted creditors of Harts Transport (Qld) Pty Ltd. The court also ordered that the applicants' costs of and incidental to the application be paid from the assets of the JL & BA Hart Family Trust on the indemnity basis.
Orders
Orders of the court
The Court directs that:
1. Pursuant to clause 90-15 of the Insolvency Practice Schedule the applicants are justified in distributing the unfair preference proceeds and the assets of the JL & BA Hart Family Trust:
a) Firstly, in payment of those debts and claims (including the first applicant’s expenses and remuneration) entitled to priority by s 556 of the Corporations Act 2001 (Cth) and in the order set out in s 556;
b) Secondly, as to the balance, proportionately among the admitted creditors of Harts Transport (Qld) Pty Ltd (in liquidation) A.C.N. 081 358 563.
The order of the Court is that:
1. The applicants’ costs of and incidental to this application be paid from the assets of the JL & BA Hart Family Trust on the indemnity basis.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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