Re Ingram Enterprises
[2024] VSC 395
•2 July 2024 (ex tempore)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2024 02509
| IN THE MATTER OF INGRAM ENTERPRISES (VIC) PTY LTD (ACN 143 705 088) (AS TRUSTEE FOR THE INGRAM FAMILY TRUST) | |
| Between | |
| LISA HASKER (IN HER CAPACITY AS THE EXECUTOR OF THE ESTATE OF THE LATE DAVID MATTHEW INGRAM) | Plaintiff |
| v | |
| INGRAM ENTERPRISES (VIC) PTY LTD (ACN 143 705 088) (AS TRUSTEE FOR THE INGRAM FAMILY TRUST) | Defendant |
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JUDGE: | Delany J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 July 2024 |
DATE OF RULING: | 2 July 2024 (ex tempore) |
CASE MAY BE CITED AS: | Re Ingram Enterprises |
MEDIUM NEUTRAL CITATION: | [2024] VSC 395 |
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CORPORATIONS – Application by executor of estate to be registered as holder of shares in defendant company as trustee of family trust – Application for orders for external administration – Current sole director, company secretary, and sole shareholder of the defendant company deceased – Just and convenient to appoint receiver over property and assets of the trust – Order as to remuneration, costs and expenses of liquidator – Taylor (Trustee), in the matter of Kwok v Goldana Investments Pty Ltd (receivers and managers appointed) (No 2) [2015] FCA 947 – Corporations Act 2001 (Cth), ss 175, 420, 461(1)(k), 556(1)(b), 1072E(1) – Supreme Court Act 1986 (Vic), s 37(1) – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 39.07.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | N Frenkel | Atticus Lawyers Pty Ltd |
HIS HONOUR:
The plaintiff in this proceeding, Lisa Hasker, in her capacity as executor of the estate of the late David Matthew Ingram, seeks the following relief:
(a) The 20 ordinary shares in Ingram Enterprises (Vic) Pty Ltd (ACN 143 705 088) (as trustee for the Ingram Family Trust) be vested in Ms Hasker pursuant to s 13 of the Administration and Probate Act 1958 (Vic);
(b) Ms Hasker be entitled to be registered as the holder of 20 ordinary shares in Ingram Enterprises (Vic) Pty Ltd (ACN 143 705 088) (as trustee for the Ingram Family Trust) pursuant to s 1072E(2) of the Corporations Act 2001 (Cth) (‘the Act’);
(c) Pursuant to s 175 of the Act, the register of members of the defendant be corrected to record that the shares presently registered in the name of David Matthew Ingram are registered in the name of Lisa Hasker (as executor of the estate of the late David Matthew Ingram), such order to take effect nunc pro tunc.
(d) The defendant be wound up pursuant to s 461(1)(k) of the Act;
(e) Timothy Mark Shuttleworth Holden be appointed liquidator of the Defendant. Mr Holden has provided his consent for such an appointment;
(f) Pursuant to s 37(1) of the Supreme Court Act 1986 (Vic), Mr Holden be appointed, without security, as receiver and manager over the property and assets of the Ingram Family Trust;
(g) The need for the receiver and manager to give and file a guarantee under r 39.05 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) be dispensed with;
(h) The receiver and manager be given all the powers set out in s 420 of the Act for the purpose of managing the property and assets of the Ingram Family Trust;
(i) The need for the receiver and manager to submit accounts under r 39.07 of the Rules be dispensed with;
(j) The receiver and manager be entitled to remuneration calculated in accordance with the rates set out on page 52 of exhibit ‘LH-1’ to the affidavit of Lisa Hasker affirmed on 16 May 2024; and
(k) The plaintiff’s costs of this application be paid out of the assets of the defendant as a priority payment pursuant to s 556(1)(b) of the Act.
Ms Hasker has given notice of her application to the defendant company, Ingram Enterprises (Vic) Pty Ltd, and to ASIC and no opposition has been notified to the relief sought.
The background to this application is as follows. Ingram Enterprises (Vic) Pty Ltd (‘the Company’) was incorporated on 17 May 2010 with David Matthew Ingram (now deceased) as its sole director and shareholder. Belinda Ingram, David’s wife, was the company secretary and a shareholder until 18 September 2023. Mr Ingram died on 7 February 2024.
At the date of this ruling, Mr Ingram, the deceased, is still recorded by ASIC as the Company’s sole director, company secretary and sole shareholder.
The Company is trustee for the Ingram Family Trust (‘the Trust’) of which the primary beneficiaries are the deceased, Belinda and their two sons. The Trust was established pursuant to a Trust Deed dated 17 May 2010 in which the Company was named as the trustee.
In its capacity as trustee, from late 2021, the Company operated a business known as the ‘Mentone Aquarium’ (‘the Business’). The Business is the only asset of the Trust.
By his Will dated 31 August 2012, David Matthew Ingram named Belinda Ingram as an executor. Belinda Ingram renounced her executorship. The plaintiff, Lisa Hasker, applied and was granted probate as alternate executor on 19 April 2024.
Ms Hasker has not had any involvement in the affairs of the Company, the Trust or the Business, and has limited information about their current financial or other circumstances.
Although she was at one point listed as the secretary of the Company, Belinda Ingram was not involved in managing the Company, the Business or the Trust. She too has limited knowledge of the financial and other circumstances of the Company, the Business and the Trust.
Ms Hasker has made inquiries about the affairs of the Company and the Trust, and although Mr Ingram did not keep accurate or complete records for the Business, Ms Hasker has learned:
(a) the Company’s PAYG payment summary statements record amounts paid in respect of wages: in 2022, of $128,800; and in 2023, of $366,671;
(b) the Company has GST liabilities of $142,438 and payroll liabilities of $137,082;
(c) the Company has not paid superannuation for its nine employees since the Business was purchased by it in late 2021. As a result it has unpaid superannuation liabilities expected to exceed $100,000; and
(d) the tax returns have not been completed since the Business was purchased in 2021.
The PAYG company statements for 30 June 2022 and 30 June 2023 refer to the Company as ‘trustee for Ingram Enterprises (Vic) Pty Ltd’. Although the description is confusing, it is clear that at relevant times the Company carried on business in its capacity as trustee of the Trust and not otherwise.
Clause 10.4 of the Trust Deed provides a right of indemnity in favour of the trustee out of the Trust assets. Clause 8.7 of the Trust Deed is an ipso facto clause which provides that upon the Company being placed into liquidation it shall cease to be trustee of the Trust.
There have been expressions of interest to purchase the business of the Company from former employees of the business. The Company has an insurance claim pending in relation to damage from water entering the Business premises during a storm on 16 January 2024. Neither the sale of the business nor the insurance claim can progress without the appointment of a director or other officer of the Company.
Winding up application
As Ms Hasker is not a shareholder in the Company, she currently does not have standing to apply to wind up the Company.[1] Since the Company also has no directors, Ms Hasker is unable to acquire any shares.
[1]Corporations Act 2001 (Cth) s 462; Treadtel International Pty Ltd v Cocco (2016) 316 FLR 318; 117 ACSR 176; [2016] NSWCA 360.
Ms Hasker is entitled to the shares previously held by the deceased in the company in her capacity as executor pursuant to section 13 of the Administration and Probate Act 1958 (Vic).
Section 1072E(2) of the Act provides:
A trustee, executor or administrator of the estate of a dead person who was the registered holder of a share in a corporation may be registered as the holder of that share as trustee, executor or administrator of that estate.
Section 175(1) of the Act provides:
A company or registered scheme or a person aggrieved may apply to the Court to have a register kept by the company or scheme under this Part corrected.
Section 461(1)(k) of the Act empowers the Court to wind up a company if it is of the opinion that it is just and equitable to do so.
The categories of circumstances in which the court may make a winding up order on the just and equitable ground under s 461(1)(k) are broad.
As Ms Hasker submitted, a company may be wound up on the just and equitable ground if it has no directors and there is no likelihood of any being appointed.[2] That is this case.
[2]CIC Insurance Ltd (prov liq apptd) v Hannan & Co Pty Ltd (2001) 38 ACSR 245; 19 ACLC 1217; [2001] NSWSC 437 [13]; Official Trustee in Bankruptcy v Buffier (2005) 54 ACSR 767; [2005] NSWSC 839; Phelan v Ambridge Corp Pty Ltd (2005) 55 ACSR 136; [2005] NSWSC 875 [18].
I accept Ms Hasker’s submission that the circumstances in this case are similar to those in Taylor (Trustee), in the matter of Kwok v Goldana Investments Pty Ltd (receivers and managers appointed).[3] In that case, Wigney J considered the same provisions of the Act to which I have referred. His Honour granted the application of a trustee in bankruptcy to be registered as the holder of the bankrupt’s shares in a company so as to provide the trustee in bankruptcy with standing to apply for the winding up of the company on the just and equitable ground in order to realise the assets of the company for the benefit of its creditors.
[3](No 2) (2015) 236 FCR 298; [2015] FCA 947.
I accept Ms Hasker’s submission that it is untenable for the Company to continue to manage the Business on behalf of the Trust without a director or other officer as it is unable to make any decisions.
I accept that it is appropriate to make the orders in relation to the shares sought by Ms Hasker. It is also appropriate and just and equitable that the Company be wound up.
I will make orders in accordance with orders 1-3 of the plaintiff’s proposed form of order. Those orders will have the result that Ms Hasker is able to be registered as the holder of the shares in the Company as trustee for the family trust.
Appointment of Receiver and Manager to the Trust
I will also make the orders appointing Mr Holden as liquidator, following the winding up of the Company, also provided for in the draft orders.
Appointing Mr Holden as liquidator will not be sufficient if he is to deal with the property of the Trust.
In Cremin, re Brimson Pty Ltd (in liq),[4] Moshinsky J said:
[49] …It is now settled that the liquidator of an insolvent (former) corporate trustee cannot sell the trust’s property without order of the Court, or by appointment of a receiver over the trust assets…The rationale for this position is that, on a proper understanding, the trust assets are not the ‘property of the company’, but are instead trust property in which the corporate trustee has a proprietary interest by way of lien or charge to secure its right of exoneration…
[50] The courts are generally willing, upon an appropriate application, to make orders permitting the liquidator of a (former) corporate trustee to sell trust assets. In situations where the property of the trust will be exhausted following its sale and subsequent distribution to creditors, it may be appropriate merely to give the liquidator a power of sale…The more common course is, however, for the liquidator of the insolvent (former) corporate trustee to apply to be appointed a receiver for the purpose of selling the trust assets and distributing the proceeds among trust creditors…
[4][2019] FCA 1023 [49], [50] (Moshinsky J), referred to with approval in Deppeler, in the matter of Old Port Road Pty Ltd (in liq) [2021] FCA 980 [16] (O’Bryan J); Anderson (Liquidator) v Aravanis (Trustee), in the matter of Anderson [2021] FCA 1185 [11] (Colvin J).
In Jones, in his capacity as liquidator of Killarnee Civil & Concrete Contractors Pty Ltd(in liq) v Matrix Partners Pty Ltd,[5] the full Federal Court held that the liquidator of an insolvent corporate trustee cannot sell the trust property without an order of the Court or by appointment of a receiver over the trust assets. The trust assets are not property of the company but rather trust property in which the corporate trustee has an interest by way of a lien or charge to secure its right of exoneration.
[5][2018] 260 FCR 310.
Ms Hasker has applied for an order that Mr Holden be appointed a receiver under s 37(1) of the Supreme Court Act 1986 (Vic) and Mr Holden has provided his consent to act in that capacity. Section 37(1) provides:
The Court may by order, whether interlocutory or final, grant an injunction or appoint a receiver if it is just and convenient to do so.
In National Australia Bank v Redside Pty Ltd,[6] Osborne J said in relation to s 37(1):
The words ‘just or convenient’ mean ‘where it is practicable, and the interests of justice require it’. The Court’s power to appoint a receiver is construed broadly and must be exercised with a view to all the circumstances of the case. The power includes the power to appoint a receiver and manager.
[6][2023] VSC 145 [44] (citations omitted).
I accept that it is ‘just and convenient’ in the circumstances of this case to appoint Mr Holden as receiver over the property and assets of the Trust. There is no ongoing dispute between parties or expected loss that may arise by reason of the appointment. It is clear that upon his appointment to act as receiver, Mr Holden will be able to deal with the sale of the Business and also with the insurance claim.
It is appropriate to dispense with the need to provide security as per the proposed orders.
As liquidator, Mr Holden will have to report to the creditors of the Company. In those circumstances, it is appropriate as proposed that I dispense with the need for Mr Holden, acting in his role as receiver, to submit accounts under r 39.07 of the Rules. To require him to submit accounts would result in unnecessary work and duplication.
Costs and remuneration
Ms Hasker seeks an order that the costs of this application are to be paid as a priority payment out of the assets of the Company pursuant to section 556(1)(b) of the Act and that as receiver Mr Holden is entitled to remuneration calculated in accordance with the rates set out in Ms Hasker’s affidavit affirmed on 16 May 2024.
It is appropriate to make the orders sought concerning the cost of this application and also concerning the remuneration, costs and expenses of the winding up.
Although no party has appeared to oppose the orders sought, and even though notice has been given, it is appropriate to include an order granting liberty to apply to any person or creditor with sufficient interest on three business days’ notice to the liquidator.
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